ENRA Group Berhad Annual Report 2021

LEADERSHIP ENRA Group Berhad | Annual Report 2021 20 FINANCIAL POSITION OVERVIEW (CONT’D) Given the current instability in the markets as a result of the pandemic, we will remain prudent in managing our cash according to the needs of our existing businesses while at the same time, carry on investing in new products, services and revenue lines to build a stronger income-generating base for the Group. FUTURE PROSPECTS Energy Services The Energy Services Division is primarily an “essential service” and thus, has been allowed to operate even during the various movement control orders. When economic activity begins to pick up once the pandemic begins to wane, we anticipate oil & gas activities to rebound, which ENRA Group plans to take advantage of. The downstream specialty chemicals distribution business continues to see orders and deliveries for its products and services as its customers – refineries, petrochemicals plants, and gas producers/suppliers – need to continue operating. Moving forward post-pandemic, the Group expects a healthy contribution from this business in its current form as all its customers operations would have generally normalised. However, despite being blessed with a stable specialty chemicals business, we intend to continue pursuing new product lines such as corrosion protection coatings, oilfield and mining chemicals, and agricultural chemicals and fumigants to replicate the significant growth that this division has successfully demonstrated over the years. In fact, having outgrown its original rented facilities, ENRA Kimia completed a new facility in Kemaman (as mentioned above) which will allow the business to have the capacity to introduce new products and services. For our FSO business, despite the initial cost increases during the early months of the pandemic, it has generally been business as usual as the Yetagun field is still operational. However, we are mindful of the uncertainties surrounding Myanmar, and are closely monitoring the situation while remaining in constant contact with PETRONAS on the matter. We also intend to identify opportunities to support PCML in extracting more value from its various operations. The MRO business has successfully supported Hibiscus Petroleum’s oilfield activities for the last 2 years, and with such a track record, ENRA Energy Solutions is actively pursuing new MRO opportunities in the oil & gas market and beyond. Property Development Like many other businesses around the world, our planned real estate projects had to be delayed during the height of the pandemic in Malaysia and the UK throughout FYE 2021. Not only have economic activities since picked up at the time of writing, land offices and approving authorities are open and operational, and as such, we have resumed operations. The key to riding on this recovery phase is building the right product for the right market. In Malaysia, this division is planning to develop several landed residential projects located in urban areas around the Klang Valley that will be priced at affordable levels but of a quality build. We successfully launched our maiden project in Teluk Panglima Garang in March 2021, which has fully sold out. We have 2 confirmed project launches in the upcoming year, with approximately RM38 mil GDV in total, and already have an additional 4 projects with a GDV of approximately RM80 mil in the planning stages. However, ENRA Land is cognisant that the pandemic is still ongoing, and movement control orders may slow down progress of the projects. Notwithstanding this operational challenge, we are still optimistic on the outlook of ENRA Land’s unique projects, especially after the positive reaction to our Teluk Panglima Garang project which has given us confidence that we are on the right track in an underserved market, namely homes that are geared towards quality and affordable living. In the UK, we are evaluating our options on the development of a lifestyle retirement home development in Rugby, UK which has completed its planning enhancement and approval. Due to travelling challenges that still persist, combined with anticipated increases in raw materials and construction costs as a result of the unforeseen pandemic, managing a property project of this scale will be challenging, and we are identifying a solution that will allow us to begin generating returns from this investment. Fundamentally, we are of the view that the project is still sound and that the demand for such a niche product catering to the ageing population outweighs supply. We also believe that this niche product would be even more relevant under the current environment as prospective buyers in our target market seek out opportunities to have standby health, safety and basic medical support as part of their retirement years. MANAGEMENT DISCUSSION AND ANALYSIS