Management Discussion and Analysis

Operating Results for the year ending December 31, 2021

During 2021, the Company had total revenues of Baht 1,503 million which consisted of;

  • Baht 1,270 million on Sales which decreased by Baht 24 million or 1.85% from the previous year. The comprises of Baht 166 million on body care products, Baht 315 million on facial skin care products, Baht 669 million on cosmetics, Baht 25 million on accessories, Baht 82 million on furniture, marketing tools and other, Baht 13 million on food and beverage section.
  • Income from warehouse rental and warehouse services amounted to Baht 21 million equal to last year.
  • Income from bad debt repayment and amount received to compensate losses of Baht 202.30 million. The company received payment from a former subsidiary. The payment consists of repayment of past outstanding liabilities, amount received to compensate deposits of past purchases, and amount received to compensate losses from sales of all inventories related to the project to upgrade the 470MHz Mobile Telephone Network to CDMA2000 1X.
  • Other incomes totaled of Baht 10 million, decreased from the previous year by Baht 1 million or 9.09% which comprises of gain on disperse of assets Baht 1 million and others of Baht 9 million.

During the year 2021, The Total Expenses was Baht 1,132 million which comprises of;

  • Cost of sales amounted to Baht 673 million which increased from the previous year by Baht 35 million or 5.49%. The cost of sales is directly proportional to the Sales Revenue. The gross profit margin was 46.97% which was similar to the previous year.
  • Cost of warehouse rentals and warehouse services were Baht 0.16 million.
  • Selling and Administrative expenses totaled of Baht 458 million which decreased from the previous year by Baht 51 million or 10% which consisted of the selling expenses decreased by Baht 38 million in response to the market conitions. The administration expenses decreased by Baht 13 million. Year 2020 out of which Baht 22.11 million is Microsoft licensing fee incurred along with interests payable as ordered by the Civil Court of Thailand, Exchange loss Baht 11.58 million.
  • Loss on fair value adjustment of investment properties amounted to Baht 0.10 million increased from the previous year by Baht 0.80 million.
  • Share of gain from investments in joint venture and associate Baht 0.46 million increased from the last year Baht 1.70 million because associate gain performance
  • Finance income amounted to Baht 0.79 million decreased from the previous year by Baht 0.21 million.
  • Finance cost of the Company on the interest expenses totaled of Baht 8 million decreased from the previous year Baht 2 million.
  • Income tax expenses of Baht 72 million increased from the previous year by Baht 38 million or 111.76%.

During the year 2021, the Company had 23.06% net profit of sales which increased

from the previous year 124.76%. In 2020 - 2021 ; there was an epidemic of coronavirus 2019 the company has sale decreased by Baht 24 million but the selling expenses decreased by Baht 38 million in response to the market conitions administrative expenses decreased from the previous year by Baht 13 million out of which Baht 22.11 million is Microsoft licensing fee incurred along with interests payable as ordered by the Civil Court of Thailand, exchange loss Baht 11.58 million and Income from bad debt repayment and amount received to compensate losses of Baht 202.30 million. The company received payment from a former subsidiary. The payment consists of repayment of past outstanding liabilities, amount received to compensate deposits of past purchases, and amount received to compensate losses from sales of all inventories related to the project to upgrade the 470MHz Mobile Telephone Network to CDMA2000 1X.

The business operation profit during the year 2021 resulted in the rate of return on equity at 27.21% in the previous year 13.19% during the year 2021, the Company had increased profit from operating activities and income from bad debt repayment and amount received to compensate losses.

Financial Status as at December 31, 2021.

1.1 Composition of Assets

The total assets at the year end 2021 was Baht 1,715 million which increased from the previous year by Baht 194 million or 12.75%.

1.1.1 Current Assets amounted to Baht 858 million, increased by Baht 155 million or 22.04% from the previous year. The details are as follows;
  • Cash and cash equivalents of Baht 152 million which increased from the previous year by Baht 143 million because Net cash from operating activities Baht 433 million, net cash used in investing activities Baht 79 million and net cash used in financing activities Baht 211 million.
  • Trade accounts receivable and other account receivable at Baht 320 million, decreased from the previous year by Baht 3 million or 0.92% due to the Company had decreased the sales due to the coronavirus epidemic situation.
  • Current portion of finance lease receivables and finance lease receivables - net of current protion Baht 6 million decreased from the previous year Baht 4 million 40% because of the company received debt repayment continuously.
  • Current portion of short - term loans to non - related party Baht 4 million, increased from the previous year or 100%.
  • Inventory of Baht 334 million which comprises on consumer products and raw material which increased from the previous year by Baht 6 million or 1.82%
  • Other Current Assets of Baht 44 million, increased from the previous year Baht 7 million of 18.91%.

1.1.2 Non-Current Asset amounted to Baht 857 million which decreased by Baht 39 million or 4.76% from the previous year as follows;
  • Investment in the subsidiary of Baht 181 million, decreased from the previous year Baht 9 million or 4.73% because the Company share of gain from investments in associate in and dividend income The Iconic Property Company Limited.
  • Properties Investment was at Baht 121 million, decreased from the previous year by Baht 1 million or 0.81% because the investment properties of the Company represent land and building used for providing warehouse service. Their fair value has been determined based on the valuations performed by an accredited independent valuer, using the income approach.
  • Property, Plant and Equipment - net amounted to Baht 467 million with an increase from the previous year by Baht 23 million or 5.19% because the Company bought Land Baht 20 million, Motor vehicles Baht 3 million.
  • Land awaiting for future development Baht 8.28 million. The Company had land awaiting for future development amounting to Baht 8.28 million. The Company has placed land with net book value by Baht 3.2 million as collateral for short-term and long-term credit facilities granted by commercial banks.
  • Right - of - use assets Baht 28.55 million include land Baht 0.55 million building Baht 8.26 million motor vehicles Baht 19.72 million increased from the previous year by Baht 3.27 million because 1 January 2020 reclassification to right - of - use assets due to the adoption of TFRS16
  • Intangible Assets - net at Baht 1 million decreased from the previous year by Baht 1 million amortization during the year.
  • Other Non-Current Assets was Baht 11 million equal to last year.
  • Deposits for purchase of Land Baht 36 million increased from the previous year by Baht 35 million or 100% because Pa Donphutsa Co., Ltd, entered into an agreement to purchase and sell land in Nakhon Pathom Province for Baht 236 million and paid Baht 36 million for the deposit of the land purchase.

1.2 Quality of Assets

In 2020 trade and other receivables Baht 320 million or 18.65% of total assets. Account receivable average collection period was 96 days, decrease from the previous year 10 days. (106 days in 2020) due to the fact that the cash sales for consumer goods had decreased, and instead decreased on modern trade channels credit sales with 30 - 90 days term of payment.

An adequate reserve was set according to the prediction of non-collectable debt. The reserve for the year 2021 non-collectible debt was budgeted at 4.47% of the outstanding account receivable at the year-end.

Inventories Baht 334 million or 19.47% of total assets. Average inventory turnover of 115 days decreased from the previous year 9 days (124 days in 2020).

Investment properties Baht 121 million or 7.05% of total assets by an accredited independent valuer, using the income approach. Key assumptions used in the valuation include discount rate, yield rate and long-term growth in rental rate.

2.1 Cash flows

In 2021, the Company’s net cash flows cash and cash equivalents was Baht 152 million, compared to 2020 which was Baht 9 million, increased by Baht 143 million net cash from operating activities Baht 433 million, net cash used in investing activities Baht 79 million as the Company purchase of land equipment and intangible assets and acquisition of investment is in subsidiary, net cash used in financing activities Baht 221 million as the Company dividend paid short - term loans from related party and long - term loans from financial institution paid.

2.2 Liquidity Ratios

Current ratio (current asset/current liabilities) in 2021 was 1.73:1 which shows high liquidity as the Company’s current assets can be easily cashed in a short period of time such as short-term cash or cash equivalents 8.81%, account receivables 18.65%, inventories 19.47% of total assets.

The company average debt collection period was between 96 days. Average inventory turnover of 115 days as same as the previous year due to the fact that Karmart products had a higher turnover.

2.3 Collection and Payment Periods

Average debt collection period was 96 days while average account payment period was 154 days. This is because the Company at present has selected the payment option by issuing the letter of credit through the commercial banking and prolonging the credit term around 120 - 180 days through the bank’s granted Trust Receipt.

During the year, the Company had in capital expenditures was mainly from the assets under installation and construction in progress, building machine and equipment at Baht 41.08 million for supporting the business growth.

4.1 Capital Structure

In 2021, debt/equity ratio was 0.48:1. The company had total liabilities Baht 554 million increased from the previous year Baht 40 million or 7.78% equity attributable to owners of the company Baht 1,154 million increased from the previous Baht 155 million or 15.51%.

4.2 Shareholders’ Equity

In 2021, shareholders’ equity increased by Baht 155 million to Baht 1,154 million from the operating profit during the year of Baht 293 million while the dividend payment was Baht 141 million and other comprehensive income for the year Baht 3 million.

4.3 Liabilities

The Company’s total liabilities was Baht 554 million, increased by Baht 40 million or 7.78% from the previous year.

Current Liabilities was Baht 497 million, increased by Baht 59 million or 13.47% from the previous year. The Details are as follows:

  • Bank overdrafts and Short-term loan from bank was Baht 163 million, decreased by Baht 19 million from the Company’s promissory notes decreased from the previous year Baht 4 million interest rate 2.63 - 2.77 short - term loans from financial institutions decreased from the previous year Baht 15 million interest rate 1.80 - 3.00.
  • Trade and other payables of Baht 147 million, increased by Baht 1 million.
  • Share subscription payable from investment in subsidiary Baht 2.2 million increased from the previous year Baht 2.2 million or 100% from directors and related persons.
  • Short-term loan from related party amounted Baht 56 million increased from the previous year from directors and related person interests at a rate 1.5 - 2% per annum.
  • Current portion of Liabilities under financial lease agreements due within 1 year and Liabilities under financial lease agreements - net of current portion was Baht 25 million which increased by Baht 1 million or 3.84% the Company due to the adoption of TFRS16.
  • Current portion of long-term loans from financial institution Baht 16 million decreased from the previous year Baht 2 million a long-term of the Company under credit facilities of Baht 80 million, both principal and interest, is monthly repayable in 60 installments. The loan carries interest at a rate of 4.5% per annum.
  • Income Tax Payable at Baht 56 million, increased from the previous year of Baht 37 million due to the Company’s increase in net profit.
  • Other Current Liabilities was Baht 45 million increased from the previous year of Baht 13 million or 40.62% because allowance for return of goods increased Baht 12 million.

Non-current liabilities was Baht 57 million, decreased by Baht 19 million or 25% from the previous year, The Details are as follows:

  • Long-term loans from financial institution-net of current portion Baht 0 million decreased from the previous year of Baht 15 million or 100% a long-term loans of the Company under credit facilities of Baht 80 million, both principal and interest, is monthly repayable in 60 installments. The loan carries interest at a rate of 4.5% per annum.
  • Provision had been made for long-term employee benefits of Baht 17 million, which decreased from the previous year of Baht 2 million due to the new standard of accounting for employee benefit reservation No.19 had taken effect.
  • Deferred Tax Liabilities at Baht 26 million, decreased by Baht 1 million or 3.70% from right - of - use assets and current portion of liabilities under finance lease agreements, liabilities under finance lease agreements - net current portion.

The Executive Committee set up annual business plan and strategic actions to achieve its annual goals. These ensure that the Company is able to adjust its management style in a flexible manner to cope with significant factors which may affect the Company as listed below.

Main Factors
  1. Sufficient procurement of products and changes in product trend and fashion
  2. Human Resources Development
  3. The Price of products and Wages
  4. Financial Assistant to Associated or Subsidiary companies and Contingent Liabilities in the future.
Action Plan
  1. The Company is capable of product adjustment to cope with the changing trend of product popularity and its procurement system can manage inventory level to service the changing demand and changing trend and fashion.
  2. The Company supports Human Resources Development by providing adequate both internal and external training to increase employee skills and proficiency.
  3. The Company has a special unit and system of procurement of raw material finished products from quality sources with competitive prices.
  4. In case of rendering financial assistant to the Associated or Subsidiary company, the Company completely and transparently follows the rules and regulations of SET and able to be audited. The independent directors are to review and monitor the Company’s operations closely, for the most benefit of investors and stakeholders.