Wah Seong Corporation Berhad Annual Report 2021 36 OIL AND GAS (‘WASCO’) Discussion of strategies, operational capabilities to achieve the desired business objectives and results During the year, Wasco’s earnings were mainly driven by multiple projects successfully delivered by the engineering, procurement and construction business and the pipe manufacturing business. The contribution from these two businesses was offset by the low activity level in the pipe coatings business which was affected by delay in the start of secured projects and delay in award of new projects. Wasco’s new pipe coating plant in Qatar was completed and commissioned during 2021 and has secured its first project. Project execution started at the end of 2021 and the impact of this will be seen in 2022. Further projects are under bid at the moment and Wasco is well placed to secure these projects. Although 2021 proved to be a challenging year for Wasco, as the year progressed, Wasco has seen an uptake in pre award activity levels in all sectors where it has a presence. This gives Wasco the confidence that the short and medium term outlook for it is bright. Discussion on Key Financial and Operational Indicators for the segment In 2021, the Oil and Gas segment generated a revenue of RM868.53 million and a loss before taxation of RM110.60 million. The losses were mainly contributed by one-off adjustments for impairments related to Associate and Join Venture Companies. Excluding this, the segment had a loss before taxation of RM4.87 million. Despite this, the segment generated an EBITDA of RM41.80 million (RM71.11 million excluding one-off adjustments). The results were also affected by the impact that the pandemic had on operations, especially on logistics, human capital movement, as well as the start of secured projects and the award of new projects. At present, the segment has an order book in excess of RM2.37 billion compared with RM0.87 billion in the previous year. There has been a significant increase in the order book for the pipe coatings business. This is expected to have a positive contribution to the segments results in 2022 and beyond. The Oil and Gas segment recorded 47,728,040 Manhours without Loss Time Injury (‘LTI’) in 2021. Wasco has embarked on various programmes to further enhance its safety culture. These programs are further discussed in the Sustainability Development section of the Annual Report on page 30. MANAGEMENT DISCUSSION AND ANALYSIS
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