Explanation and Analysis of Financial Status and Result of The Operation

In the fiscal year 2023, the consolidated financial statements of Qualitech Public Company Limited (hereafter referred to as the Company) reported total revenue of 430.61 million Baht. This represents a decrease of 27.06 million Baht, or 5.92 percent, compared to the previous year. The decline in revenue was primarily attributed to a reduction in income from Inspection and Certification / Plant Integrity and Industrial, and non-destructive testing. This decrease was a result of the postponement of new projects by project owners, leading to a decrease in anticipated revenue. Regarding expenses, total operating costs, sales costs, and administrative expenses amounted to 572.98 million Baht, increasing by 139.52 million Baht, or 32.19 percent, from the previous year. This increase was driven by the Company’s and its subsidiaries’ initiatives to expand their customer base to boost revenue. Additionally, there was an expansion of the sales and marketing teams. Furthermore, losses were incurred from the sale of common shares in an associated company, Property Aim Solutions Company Limited due to financial liquidity issues and severe internal problems, rendering it unable to continue operations. The Company also experienced increased employee-related expenses due to restructuring efforts to accommodate future business expansions. Moreover, there was a recognition of potential credit losses resulting from an increase in delinquent customer payments. Consequently, in the fiscal year 2023, the Company reported a loss of 141.34 million Baht in the portion attributable to the main company, compared to a profit of 17.86 million Baht in fiscal year 2022, representing a decrease in operating performance of 159.20 million Baht, or 891.38 percent.

Financial Performance Analysis for the Year Ended December 31, 2023 The company incurred a loss of 141.34 million Baht attributable to the parent company for the year, compared to a profit of 17.86 million Baht in the previous year, representing a decrease in operating results of 159.20 million Baht, or 891.38 percent. The main reasons for this are as follows :

1 Sales and service revenue totaled 427.59 million Baht, decreased by 27.78 million Baht or 6.10 percent. The decline in revenue was mainly attributed to reduced income from inspection services, Plant Integrity and Industrial, and non-destructive testing due to delays in anticipated projects, resulting in decreased revenue.

2 Sales and service costs, distribution costs, and administrative expenses amounted to 572.98 million Baht, an increase of 139.52 million Baht or 32.19 percent compared to the previous year. This increase includes higher distribution costs, up by 2.46 million Baht from the previous year, driven by the company’s expansion of its customer base. Additionally, administrative expenses increased by 126.02 million Baht from the previous year, attributed to losses recognized from the sale of ordinary shares in a joint venture (Property Aim Solutions Company Limited), which faced financial difficulties and internal issues, rendering it unable to continue operations. Moreover, there were increased employee-related expenses due to restructuring efforts to accommodate future business expansions.

3 Losses from expected credit defaults amounted to 7.09 million Baht, compared to reversals of expected credit losses of 9.37 million Baht in the previous year, representing an increase of 16.46 million Baht. This increase is attributed to the company receiving payments from disputed customer claims against Nacap Asia Pacific (Thailand) Limited, amounting to 9.59 million Baht, resulting in the reversal of expected credit losses. However, the company experienced an increase in outstanding customer payments during the current year, leading to the recognition of expected credit losses from trade receivables.

Assets

As of December 31, 2023, the company’s total assets amounted to 391.72 million Baht, decreased from December 31, 2022, by 132.10 million Baht, or 25.22 percent. The major components of this decrease are as follows :

• Investments in joint ventures decreased by 122.93 million Baht due to the sale of ordinary shares in a joint venture (Property Aim Solutions Company Limited). This decision was made as the joint venture faced financial liquidity issues and severe internal problems, rendering it unable to continue operations.
• Land, buildings, and equipment decreased by 14.53 million Baht due to the sale of depreciated tools and equipment. Additionally, there was an increase in depreciation expenses resulting from the reassessment of the useful life and salvage value of new vehicles. Furthermore, the company did not make significant investments in machinery, equipment, and vehicles for service provision.
• Cash and cash equivalents decreased by 3.20 million Baht due to the allocation of funds to purchase additional ordinary shares in the subsidiary (Qualitech Solution Energy Company Limited). This increased the company’s equity stake in the subsidiary from 70 percent to 99.99 percent.

Liabilities

As of December 31, 2566, the company’s total liabilities amounted to 96.02 million Baht, increased from December 31, 2565, by 15.38 million Baht, or 19.08 percent. The majority of these liabilities stem from :

• Overdrafts and short-term loans from financial institutions increased by 6.63 million Baht, or 85.71 percent. This rise is attributed to the company utilizing these funds as working capital for its operations.
• Accrued employee benefits increased by 3.65 million Baht, or 18.27 percent, due to the company’s increased workforce necessitating additional reserves for employee benefits.
• Lease liabilities increased by 2.84 million Baht, or 82.35 percent, as the company expanded its operational vehicle leasing.
• Trade payables and other current liabilities increased by 2.02 million Baht, or 4.72 percent, primarily driven by expenses related to specialized expert hiring and trade payables resulting from engaging specialized contractors.

Equity Shareholding of the Parent Company

As of December 31, 2023, the company had an equity shareholding in the parent company amounting to 295.88 million Baht, a decrease from December 31, 2022, by 141.88 million Baht, or 32.41 percent. This reduction was attributed to the net loss incurred in the fiscal year 2023, amounting to 142.08 million Baht, in the equity shareholding of the parent company.