Message from Chairman of the Board of Directors
Mrs. Paichit Rattananon
Chairman of the Board of Directors
In 2018, Thailand’s domestic construction industry was growing from last year. An aggregate of construction service revenues for the year as posted by SET publicly listed companies under the Construction Services sector has been reported at Baht 180,611 million, rising from the year 2017 by Baht 2,402 million or 1.35%. With respect to the milieu of pipeline system construction segment, the competition was getting high, especially following the decision of PTT Public Company Limited – the country’s leading player in the natural gas exploration and production industry – to reduce its investment earmarked for the year 2018 from Baht 246,613 million to Baht 221,294 million whereby the investment reduction was mostly in oil and natural gas transmission pipeline business. In addition, the fact that the Company’s competitors, ranging from offshore conglomerates to Thai-national construction firms of mid- and large-size, seemed to have been relentless to sign up as many newly-launched projects as they could to build up their backlog has compounded the intensity of rivalry among all players in the construction industry. As its effort to explore new horizons of opportunity, the Company set out to increasingly participate in tenders for works beyond the familiar territories, introduce some changes to its operating strategy, and invest more in the development of blue-ocean, innovative projects as replacement of the declining backlog of pipeline works e.g. the construction of automated warehouses, underground electrical conduits, etc. In 2018, the Company has also seen a growth in revenues from the construction of industrial plants and civil works as a result of the government’s ongoing investment in infrastructure megaprojects and further investment planning for medium- and small-size projects being funded by government’s annual public budget which effectively help reinvigorate private sector’s investment in construction.
Speaking of the outlook of Thailand construction industry in 2019, the growth is expected to continue from the prior year owing to the proliferation of construction-related projects including megaprojects of infrastructure in Bangkok and vicinities, not least in the provincial area and the Eastern Economic Corridor (EEC) zone. Several more projects are also anticipated to roll out and open up for tenders e.g. Map Ta Phut Industrial Port Development Project, Phase 3; the Western Extension of MRT Orange Line (Thailand Cultural Center – Bang Khun Nont), etc. Furthermore, there have been the private sector’s petrochemical projects that were already launched for bidding and is currently in the initial phase of construction e.g. the Baht 4,825 million Clean Fuel Project (CFP) owned by Thai Oil PLC, a series of projects by IRPC PLC, etc. According to the report provided by SCB Economic Intelligence Center (IEC), it is projected that the combined revenues to be generated by builders and contractors from projects owned by both private enterprises and state bodies would grow at 8% annually during 2019 – 2020, contributing to increasing demand of labor/employment and rising wage rates. With its revised operation strategy and corporate profile in terms of experience, capability in engineering, technology and human resources, the Company is confident that TRC Group is fully capable of taking in projects of even more diverse nature and effectively managing the work required to complete all projects on hand.
In response to changing business landscape, the Board of Directors meeting held in November 2018 has resolved to approve, first, the proposed corporate vision – “A pioneer organization who delivers innovative project solution in the region (CLMVT)” – , second, the revision of corporate value and, third, the 3-year (2019 – 2021) aspiration; that is, being listed in the top 10 in total revenue in construction service industry and the top 5 in percent net profit margin in construction service industry (percent of revenue), and from investments more than Baht 100 million with threshold more than 15%.
With respect to the operating results of the Company and its subsidiaries for the year 2018, an aggregate of revenues decreases 5.39% from the previous year to Baht 2,305 million and the loss attributable to the Company’s equity holders is posted at Baht 2,041 million (equivalent to -88.55% in net loss margin) while the prior year was Baht 93 million in profit attributable to equity holders (or, 3.81% in net profit margin). The main reason for the net loss in 2018 is the unsettling situation with the development of mining project of the Company’s associate ASEAN Potash Chaiyaphum PLC which led to the Company’s decision to create provision accounts for debts and expenses incurred to the Company in connection with the potash mining project; that is, a bad debt account, an allowance for doubtful debts, an impairment loss on investment, and a share of loss from investments in the associate, whereas the fallout on the Company’s financial statements amounts to Baht 2,093.76 million. In absence of these newly-created accounts, the net profit of the Company and its subsidiaries would have been Baht 53.19 million, equivalent to 2.31 percent in net profit margin.
In doing business, the Company has always recognized the importance of embodying and maintaining corporate culture, and ensuring that executives and officers in all levels comply with corporate governance code and code of conduct. According to the results of the 2018 Corporate Governance of Thai Listed Companies Survey conducted by Thai Institute of Directors Association, the Company has achieved, 2 years in a row, a CG score of “Excellent” level of recognition. The Company has also recognized the importance of the Company’s engagement in social activities that will bring good to the society, community, and the environment through CSR programs focusing particularly on youth educational development and learning, public interest donation, and environmental protection campaigns. In 2018 CSR activities organized by the Company include hosting the event of National Children’s Day at a school nearby the headquarters, Back to Hometown program, donations to several foundations, Go Green project championing garbage sorting to reduce waste by all employees, etc.
On behalf of the Company’s Board of Directors, I would like to express my sincere gratitude to all shareholders, customers, vendors, financial institutions, the public and private sectors, business partners and the Company’s management and employees for the continued support and trust in our organization. The Company is firmly determined to evolve and strengthen business position to ensure continual growth, stability, and sustainability while still adhering to the good corporate governance code the best interests of shareholders, stakeholders and the nation.