ENRA Group Berhad Annual Report 2019

16 ENRA GROUP BERHAD ∞ Annual Report 2019 page SEGMENTAL PERFORMANCE ENERGY SERVICES DIVISION Since FYE 2016, the Group’s efforts have been geared towards building a successful oil & gas division from scratch alongside the Group’s active Property Development Division. The Energy Services Division is now the Group’s largest contributor to revenue and profit, though this is also due to the Group’s conservative approach to property development arising from the soft Malaysian real estate market. These efforts have culminated in notable financial performances from the specialty chemicals trading business that has grown consistently since FYE 2016, and the storage tanker & single point mooring (“SPM”) system operations that started in FYE 2019. Collectively, this division achieved RM157.3 million in revenue, growing 236.7% from FYE 2018’s RM46.7 million while profit before tax (“PBT”) improved by 23.5% to RM14.0 million (FYE 2018: RM11.4 million). EKSB contributed RM95.8 million (FYE 2018: RM43.3 million) in revenue and RM9.6 million (FYE 2018: RM7.1 million) in PBT. EKSB’s operations have expanded considerably during the year and the team has already made headways outside of Malaysia – in Australia, Brunei and Indonesia – by providing similar products and services to its regional clients. ESPM generated RM46.4 million in revenue and RM0.5 million in PBT from the leasing of the storage tanker & SPM system to PC Myanmar (Hong Kong) Ltd (“PCML”), a subsidiary of PETRONAS. The contract will continue to provide recurring revenue and income for the next three years. In line with the diversification of this division into recurring and long-term income projects, the Energy Services Division’s PBT margins reduced to 8.9% in FYE 2019 (FYE 2018: 24.3%). Energy Services Division’s Financial Performance Our core focus moving forward remains the same, that is to build and nurture our capabilities in niche sub-segments of the oil & gas industry and provide optimum solutions in a cost-sensitive operating environment. The ICE acquisition and the four year contract between PCML and ESPM are examples of such objectives and we will continue similar efforts to expand the Energy Services Division’s business. EKSB will also continue to bid for opportunities to support the Refinery & Petrochemical Integrated Development project’s specialty chemicals requirements. EKSB, via ICE, is also venturing into design and engineering solutions related to its odorant distribution business, and has won its maiden design and engineering contract to develop and install a Liquefied Natural Gas Odorant Injection Package in Victoria, Australia. ICE plans to bid for more jobs of a similar nature to diversify beyond odorant distribution and supply. We retain an openness to operational or geographical diversification and will continue to evaluate various opportunities that are synergistic with or expansionary to our existing businesses. PROPERTY DEVELOPMENT DIVISION Since Shamelin Star’s completion in December 2016 and despite the project’s successful sales record, the Group has been cautious about pursuing the next property development project in Malaysia due to the soft domestic real estate market. As such, until new projects are developed, financial contribution from this division in the short term lies primarily with the continuing sales of the remaining unsold Shamelin Star units (of which 4 were sold in FYE 2019), and the continuing sales of Portland Chambers’ apartments (of which the two largest units have already been sold in the first half of the financial year of 2020). RM39.8 mil RM46.7 mil RM157.3 mil RM14.0 mil RM3.9 mil FYE2017 FYE2018 Revenue PBT FYE2019 RM11.4 mil Management Discussion and Analysis