ENRA Group Berhad Annual Report 2018

18 E N R A G R O U P B E R H A D ( 2 3 6 8 0 0 - T ) MANAGEMENT DISCUSSION AND ANALYSIS INTRODUCTION ENRA Group Berhad is pleased to conclude the FYE 31 March 2018 with a stronger balance sheet and a successful diversification into the energy sector via its Oil & Gas (“ O&G ”) businesses. For the year under review, the Group: i. Raised RM85.15 million from the divestment of ENRA’s low yielding investment properties (“Divestment Exercise”) ENRA had announced the disposal of its investment properties, Holiday Plaza in Johor Bahru, Johor and Shamelin Business Centre in Cheras, Kuala Lumpur on 15 May 2017. These investment properties have limited growth and ENRA intends to deploy the realised proceeds to pare down debt and into higher yielding businesses and investments. The Divestment Exercise is expected to be completed in the second quarter of FYE 31 March 2019. ii. Reached 96.5% sales for its Shamelin Star development The Shamelin Star project was completed in FYE 31 March 2017 andas of 30 June 2018, ENRA only has 15 units remaining for sale. iii. Developed the O&G division into a major contributor to the Group’s earnings For our downstream specialty chemical business, ENRA Kimia Sdn. Bhd. (“ENRA Kimia”) has grown to become a major contributor to the Group. We envisage that ENRA Kimia’s business has further potential to grow once the PETRONAS RAPID project becomes operational. Our 60%-owned subsidiary, ENRA SPM Sdn. Bhd. (“ENRA SPM”), also clinched an approximate USD48 million contract in July 2017 to install and lease a storage tanker and single point mooring system (“SPM”) to PC Myanmar (Hong Kong) Limited (“PCML”) for one of their gas fields in Myanmar. We successfully executed the installation of the storage tanker and SPM in April 2018 and expect the project to begin contributing revenue. iv. Pursued the acquisition of a specialty chemicals trading company in Australia On 15 May 2018, ENRA announced the conditional acquisition of International Chemicals Engineering Pty. Ltd. (“ICE”), a specialty chemicals trading firm in Australia that would expand ENRA Kimia’s geographical reach. Efforts to acquire ICE began in the financial year under review, and is expected to complete in July 2018. As such, ICE’s financial performance will be reflected in the next financial year. As a result of the various exercises above, the Group starts FYE 31 March 2019 on a positive footing. The Divestment Exercise and strong property sales places ENRA on a firm financial position to support funding requirements for any new projects and/or investments that can contribute to earnings in the future, whilst the new projects that have already been implemented would contribute to financial performance and cashflow in FYE 31 March 2019 and onwards.