Wah Seong Corporation Berhad Annual Report 2017

FROM THE BOARD OF DIRECTORS AND KEY SENIOR MANAGEMENT WAH SEONG CORPORATION BERHAD ANNUAL REPORT 2017 23 MANAGEMENT DISCUSSION AND ANALYSIS Discussion on Key Financial and Operational Indicators for the segment For the year under review, ITS segment recorded revenue of RM520.4 million and a segment loss of RM0.5 million. Although the Division’s revenue was higher than the preceding year, the performance was adversely impacted by the losses from its overseas trading operations which are being wound down. ITS enters 2018 with an order backlog of RM70.6 million. Discussion of anticipated or known risks that may have a material effect on, among others, the sustainability of the group’s results or operations, financial condition or liquidity With the slowing down in the residential sector, focus is directed on the infrastructure segment of the Construction industry which still faces stiff competition and narrowing of profit margins. The recent hike in interest rate by Bank Negara will further strain liquidity and heighten credit risks. To mitigate this, the management is closely monitoring costs and improving operational efficiencies through digitisation initiatives apart from seeking greater product diversification. Internal control systems and procedures which are in place will continue to complement the Division in managing credit risks exposure. Discussion of expectations of future results The business outlook of ITS segment remains highly challenging going into 2018 due to tighter liquidity and higher finance costs. However, ITS’s segment customer base has expanded to include infrastructure players aside from the traditional players who were involved solely in construction industry. This broadening of customer base through the provision of operational and maintenance services on power generation and construction equipment, and to seek product diversification are expected to contribute positively to the segment in the future. Oil and Gas segment recorded revenue of RM1,557.1 million RM1,557.1 MILLION Renewable Energy segment recorded revenue of RM280.3 million RM280.3 MILLION Industrial Trading & Services segment recorded revenue of RM520.4 million RM520.4 MILLION