Wah Seong Corporation Berhad Annual Report 2020

31 ANNUAL REPORT 2020 Discussion on key Financial and Operational Indicators for the segment The ITS segment recorded revenue of RM301.1 million for the year under review and a segment profit of RM20.0 million, including a one-off gain from the above-mentioned disposal. The segment generated an EBITDA of RM5.6 million, excluding a one-off gain in the year. ITS had an order backlog of RM43.6 million at the beginning of 2020 and ended the year with RM28.8 million. Discussion on 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 The impact of the COVID-19 outbreak on the Malaysian economy and the volatility in the market’s credit environment continue to be significant risk factors for ITS. Prudent measures were taken to manage its credit exposures and its customer portfolio is generally resilient with a satisfactory financial track record. This prudent action has also allowed ITS to manage its cash flow and meet its trade finance obligations accordingly. Discussion of expectations of future results Malaysia’s pump-priming initiatives for the construction industry, including significant large-scale publ ic infrastructure projects, are expected to improve the sector’s outlook in the second half of 2021. Increased demand for natural resources fueled by global economic recoveries post COVID-19 will encourage growth in the mining and logistics sectors, thereby spurring market requirements for the ITS construction and industrial equipment portfolio of products. Efforts to further digitalise Malaysia via initiatives such as MYDIGITAL will encourage more investment in data centres - a core market segment of the ITS power system division. Nonetheless, there remains much uncertainty in the aftermath of the pandemic, which may further impact investment decisions and result in project delays. ITS therefore, remains cautiously optimistic on its business outlook for 2021, and expects it to be another challenging year. MANAGEMENT DISCUSSION AND ANALYSIS