A N N U A L R E P O R T 2 0 2 2 ENRA GROUP BERHAD 199201005296 (236800-T)
SCAN QR CODE to obtain a softcopy of Annual Report 2022 OUR VISION Through shared values, innovation and technology, ENRA will enable its people to create sustainable enterprise value in a manner that is responsible to its stakeholders, community and environment OUR SHARED VALUES COVER RATIONALE “In an environment of continuing challenges, we will keep pushing forward” ETHICAL NOBLE RELIABLE ACCOUNTABLE To make decisions that promote goodness and avoid harm To behave in a manner that is respectful to others To keep and deliver promises that have been made To take ownership of all outcomes and never passing blame
WHAT’S INSIDE OVERVIEW 02 Corporate Information 03 Corporate Structure PERFORMANCE REVIEW 05 Five-Year Financial Highlights 07 Chairman’s Statement LEADERSHIP 08 Board of Directors’ Profile 12 Key Senior Management’s Profile 13 Management Discussion and Analysis CORPORATE GOVERNANCE 18 Corporate Governance Overview Statement 23 Sustainability Report 59 Audit and Risk Management Committee Report 63 Statement on Risk Management and Internal Control 70 Additional Compliance Information 72 Statement of Directors’ Responsibilities FINANCIAL STATEMENTS & OTHERS 73 Financial Statements 171 Properties owned by ENRA Group 173 Analysis of Shareholdings 176 Analysis of Warrantholdings 179 Notice of Annual General Meeting 186 Statement Accompanying Notice of 30th Annual General Meeting Form of Proxy enclosed ENRA Group Berhad
ENRA Group Berhad | Annual Report 2022 OVERVIEW 2 CORPORATE INFORMATION AUDIT AND RISK MANAGEMENT COMMITTEE Chairman Tan Sri Dato’ Seri Shamsul Azhar bin Abbas Members Datuk Ali bin Abdul Kadir Dato’ Wee Yiaw Hin Tunku Afwida binti Tunku Abdul Malek (appointed on 8 March 2022) BOARD NOMINATION AND REMUNERATION COMMITTEE Chairman Dato’ Wee Yiaw Hin (redesignated on 8 March 2022) Members Tan Sri Dato’ Seri Shamsul Azhar bin Abbas Tunku Afwida binti Tunku Abdul Malek (appointed on 8 March 2022) BOARD OF DIRECTORS Datuk Ali bin Abdul Kadir Chairman, Independent Non-Executive Director Tan Sri Dato’ Kamaluddin bin Abdullah President & Group Chief Executive Officer Kok Kong Chin Executive Director Tan Sri Dato’ Seri Shamsul Azhar bin Abbas Senior Independent Non-Executive Director Dato’ Wee Yiaw Hin Independent Non-Executive Director Loh Chen Yook Independent Non-Executive Director Tunku Afwida binti Tunku Abdul Malek Independent Non-Executive Director (appointed on 8 March 2022) EMPLOYEES’ SHARE SCHEME COMMITTEE Chairman Dato’ Wee Yiaw Hin Members Tan Sri Dato’ Seri Shamsul Azhar bin Abbas Tunku Afwida binti Tunku Abdul Malek (appointed on 8 March 2022) COMPANY SECRETARY Chin Soo Ching @ Chen Soo Ching MAICSA 7042265 SHARE REGISTRAR Bina Management (M) Sdn. Bhd. Lot 10, The Highway Centre Jalan 51/205, 46050 Petaling Jaya Selangor Darul Ehsan Tel : +603-7784 3922 Fax : +603-7784 1988 REGISTERED OFFICE D3-U6-15, Block D3 Solaris Dutamas No. 1, Jalan Dutamas 1 50480 Kuala Lumpur Tel : +603-2300 3555 Fax : +603-2300 3550 Email : info@enra.my Website : www.enra.my AUDITORS BDO PLT LLP0018825-LCA & AF 0206 Level 8 BDO @ Menara CenTARa 360 Jalan Tuanku Abdul Rahman 50100 Kuala Lumpur PRINCIPAL BANKERS CIMB Bank Berhad Malayan Banking Berhad Bank Pembangunan Malaysia Berhad STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad Stock Code : 8613 Stock Name : ENRA
ENRA Group Berhad | Annual Report 2022 3 CORPORATE STRUCTURE As at 16 June 2022 ENRA Group Berhad ENERGY SERVICES ENRA Engineering & Construction Sdn. Bhd. ENRA Engineering and Fabrication Sdn. Bhd. Makmur Homes Sdn. Bhd. BRP Homes Sdn. Bhd. PROPERTY DEVELOPMENT Q Homes Sdn. Bhd. ENRA Property (UK) Limited Fitzrovia Developments Limited Abode Senior Living Limited Abode Caldecott Square Development Limited Caldecott Square Rugby Limited ENRA Land Sdn. Bhd. DV Homes Sdn. Bhd. Prominent Archway Sdn. Bhd. Merpati TPG Sdn. Bhd. ENRA Labuan Sdn. Bhd. PROPERTY DEVELOPMENT ENERGY SERVICES Entities are 100% owned unless otherwise stated. DIVISION ENRA Energy Sdn. Bhd. 60% ENRA Energy Solutions Sdn. Bhd. MSMENRA Sdn. Bhd. ENRA Oil & Gas Services Sdn. Bhd. ENRA SPM Sdn. Bhd. ENRA SPM Labuan Limited ENRA IOL Sdn. Bhd. 51% 60% 51% 51% 75% Hamptons Homes Sdn. Bhd.
ENRA Group Berhad | Annual Report 2022 4 DEFINITIONS GENERAL Bursa Securities Bursa Malaysia Securities Berhad Board Board of Directors ENRA or the Group ENRA Group Berhad and its group of subsidiaries and associate interests ENRA Group Specifically, ENRA Group Berhad, the investment holding company of the Group MCCG 2021 Malaysian Code on Corporate Governance 2021 MMLR Main Market Listing Requirements FINANCIAL EBITDA Earnings Before Interest, Taxes, Depreciation and Amortisation EI Exceptional Items FYE Financial Year Ending/Ended 31 March LATAMI Loss After Tax and Minority Interest LBT Loss Before Tax PATAMI Profit After Tax and Minority Interest PBT Profit Before Tax ROA Return on Assets ROE Return on Equity ENERGY SERVICES Energy Services division ENRA Energy, ENRA Engineering & Construction Sdn. Bhd., and their respective subsidiaries and associate interests ENRA Energy ENRA Energy Sdn. Bhd (a subsidiary of ENRA Group) ENRA Energy Solutions ENRA Energy Solutions Sdn. Bhd. (a subsidiary of ENRA Engineering & Construction Sdn. Bhd.) EEFAB ENRA Engineering and Fabrication Sdn. Bhd. (a subsidiary of ENRA Engineering and Construction Sdn. Bhd.) ENRA IOL ENRA IOL Sdn. Bhd. (a subsidiary of EEFAB) ENRA Kimia ENRA Kimia Sdn. Bhd. (disposed of on 30 November 2021) ENRA SPM ENRA SPM Sdn. Bhd. (a subsidiary of ENRA Oil & Gas Services Sdn. Bhd.) FSO Floating Storage and Offloading ICE International Chemicals Engineering Pty. Ltd. (disposed of on 30 November 2021) MRO Maintenance, Repair and Overhaul PCML PC Myanmar (Hong Kong) Limited Ratu ENRA ENRA SPM’s oil/chemical tanker, currently converted into an FSO vesel SPM Single Point Mooring PROPERTY DEVELOPMENT ENRA Land ENRA Land Sdn. Bhd. (a subsidiary of ENRA Group Berhad) GDV Gross Development Value Property Development division ENRA Land, ENRA Labuan Sdn. Bhd., and their respective subsidiaries and associate interests Q Homes Q Homes Sdn. Bhd. (a subsidiary of ENRA Land) UK The United Kingdom
ENRA Group Berhad | Annual Report 2022 5 PERFORMANCE REVIEW FIVE-YEAR FINANCIAL HIGHLIGHTS As at 31 March 2022 FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 Restated Restated Continuing Operations - Revenue (RM’000) 75,286 164,706 226,646 55,302 62,707 - Gross profit (RM’000) 21,367 32,569 43,927 16,693 19,853 - PBT/LBT before EI (RM’000) (5,482) 4,346 8,362 2,003 (4,092) - Profit/(Loss) After Tax (RM’000) (3,534) (26,317) 4,481 (8,053) 5,596 - PATAMI/LATAMI (RM’000) (2,676) (24,613) 2,480 (6,360) 7,319 - PATAMI before EI (RM’000) (6,768) (1,915) 2,480 3,380 (6,787) - EPS (sen) (1.98) (18.24) 1.84 (4.71) 5.42 - EBITDA (RM’000)* 1,752 12,827 36,475 2,518 15,615 - EBITDA before EI (RM’000) (2,340) 37,365 36,475 12,259 5,274 Shareholders' equity (RM’000) 151,321 123,075 121,825 114,256 111,307 Number of shares (excluding treasury shares) (‘000) 134,919 134,919 134,919 134,919 134,919 Net assets per share (RM) 1.12 0.91 0.90 0.85 0.82 Share price as at year end (RM) 2.66 1.15 1.20 0.62 0.87 Market capitalisation as at year end (RM’000) 358,883 155,156 161,902 83,649 117,379 Exceptional Items (RM’000) (above RM1.0 million) Derecognition of contingent consideration for business acquisition (4,092) - - - - Net realisable value write down for inventories - 9,276 - - 241 Full impairment of the remaining balance of a trade receivables - 15,262 - - - Impairment on goodwill on acquisition - - - 8,536 - Mutual separation scheme - - - 1,205 - Gain on disposal of Subsidiaries - - - - (19,588) Impairment of Property Plant and Equipment - - - - 9,006 Total Exceptional Items (4,092) 24,538 - 9,741 (10,341) EBITDA working (RM’000) PBT/(LBT) (1,390) (20,192) 8,362 (7,738) 6,249 (+) Interest expenses (including MFRS 116 and MFRS 16) 760 5,280 3,979 2,799 1,981 (+) Depreciation & amortisation (including MFRS 116 and MFRS 16) 2,382 27,739 24,134 7,457 7,385 EBITDA 1,752 12,827 36,475 2,518 15,615
ENRA Group Berhad | Annual Report 2022 6 FIVE-YEAR FINANCIAL HIGHLIGHTS As at 31 March 2022 REVENUE FROM CONTINUING OPERATIONS (RM’000) PBT/LBT BEFORE EI (RM’000) 75,286 (5,482) (4,092) (6,768) (6,787) (1.98) 164,706 4,346 (1,915) (18.24) 226,646 8,362 2,480 1.84 55,302 62,707 2,003 3,380 (4.71) 5.42 EPS (SEN) PATAMI/LATAMI BEFORE EI (RM’000) FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022 FYE 2018 FYE 2019 FYE 2020 FYE 2021 FYE 2022
ENRA Group Berhad | Annual Report 2022 7 In my Chairman’s Statement last year, I highlighted the importance of our strategic decision 7 years ago to diversify into areas other than real estate, and shared my belief that ENRA would be able to weather the pandemic. Though ENRA has always been operationally stable and profitable, that decision to diversify has been most rewarding over the last 2 years. In fact, FYE 2022 was an active year for ENRA: • After growing ENRA Kimia consistently for 5 years (including an expansion into Australia), we took the opportunity to divest the company and realised a significant return on investment; • An interim dividend of 7.4 sen per share was declared to reward to our shareholders; • ENRA SPM completed another year of operations with Ratu ENRA, our maiden FSO vessel, running confidently and safely; • Q Homes’ maiden project in Teluk Panglima Garang, which was completely sold in FYE 2021, has been progressing well and is anticipated to complete on time; • ENRA Energy Solutions, ENRA’s MRO business, successfully completed its primary contract with Hibiscus Petroleum Berhad and has begun providing its services for the Malaysian operations for one of the world’s largest international oil companies; and • ENRA IOL, the energy and lighting solutions business, completed the installation of energy efficient lights for a Malaysian highway. ENRA ended FYE 2022 with a strong balance sheet and 3 active main business – property development, and two energyrelated divisions in Energy Logistics (FSO and SPM services) and MRO. The ENRA management continues to tread forward cautiously. Though the pandemic is largely over, a series of significant challenges have arisen, in the form of logistical log jams and global inflation driven by pent-up consumer demand after the pandemic, and the Russian special operations in Ukraine. Raw materials, cost of labour, and cost of logistics have all increased significantly, and we will need to be wise and disciplined in managing our expenses and sales strategy, otherwise our profit margins may shrink. I am immensely appreciative of my fellow Board members and the ENRA team for their dedication and hard work during another difficult year for everyone. Despite the continuing challenging environment, I believe that the management team will be able to forge ahead. Datuk Ali bin Abdul Kadir Chairman 23 June 2022 CHAIRMAN’S STATEMENT Dear Shareholders, It is my pleasure to present, on behalf of the Board, the Annual Report and Audited Financial Statements of ENRA Group Berhad for the financial year ended 31 March 2022.
ENRA Group Berhad | Annual Report 2022 8 LEADERSHIP Datuk Ali was appointed to the Board as Chairman on 1 June 2015. He is also a member of the Audit and Risk Management Committee. He is a Fellow of the Institute of Chartered Accountants in England and Wales (“ICAEW”), member of the Malaysian Institute of Certified Public Accountants (“MICPA”) and the Malaysian Institute of Accountants (“MIA”). He is also an Honorary Fellow of the Institute of Chartered Secretaries & Administrators (UK). Datuk Ali is currently the Chairman of JcbNext Berhad and a Board member of Glomac Berhad, Ekuiti Nasional Berhad, Citibank Berhad, and other private companies and foundations. He is also the Chairman of Amanah Lestari Alam, Tropical Rainforest Conservation and Research Centre and Persatuan Makanan Ehsan. Datuk Ali was appointed as Chairman of the Securities Commission of Malaysia on 1 March 1999 and served in that capacity until 29 February 2004. He also served on a number of national-level committees including the Foreign Investment Committee, the Oversight Committee of National Asset Management Company (Danaharta). Prior to his appointment to the Securities Commission, he was the Executive Chairman and Partner of Ernst & Young and its related firms. He was also the former President of the MICPA, chairing both its Executive Committee and Insolvency Practices Committee and cochairing the Company Law Forum. He was appointed an Adjunct Professor in the Accounting and Business Faculty, University of Malaya (2008 till 2011) and was then appointed to the Advisory Board of the same Faculty. He was the Honorary Advisor to ICAEW-KL City Chapter from 2000 to 2021. Datuk Ali was awarded the Panglima Jasa Negara (PJN) by the Yang di-Pertuan Agong in 2001. In 2012, he was bestowed the Lifetime Achievement Award by ICAEW and the President’s Award by MICPA. He does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. Tan Sri Dato’ Kamaluddin was appointed to the Board on 20 April 2015 as a Non-Independent Non-Executive Director. He was redesignated as Executive Deputy Chairman of the Company on 1 June 2015 and subsequently as the President & Group Chief Executive Officer of the Company on 1 December 2021. He is also the Chairman of the Executive Committee. He graduated with a Bachelor of Arts (Hons) in Law from the University of Cambridge, United Kingdom. He is also a Barrister-at-law of the Middle Temple. He started his career with the Sime Darby Group, a major multi-national company, based in Malaysia. During his 5 years term with the Group, he served in the tyre manufacturing and plantations divisions covering the areas of marketing, corporate affairs, human resources, administration and legal affairs. After his stint in Sime Darby, he joined Dewina Berhad, a diversified food group listed on Bursa Securities and served as its Group Executive Director. He was also a major shareholder of Dewina Berhad. He does not have any family relationship with any director and/or substantial shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. BOARD OF DIRECTORS’ PROFILE Datuk Ali bin Abdul Kadir Chairman, Independent Non-Executive Director Tan Sri Dato’ Kamaluddin bin Abdullah President & Group Chief Executive Officer Nationality : Malaysian Age : 55 Gender : Male Nationality : Malaysian Age : 73 Gender : Male
ENRA Group Berhad | Annual Report 2022 9 Mr. Kok was appointed to the Board on 26 February 2016 as a Non-Independent Non-Executive Director. He was redesignated as an Executive Director of the Company on 1 August 2016. He is a member of the Executive Committee. He graduated from the National University of Malaysia with a BBA (Hons) degree and holds an MBA from Schulich School of Business, York University, Canada. He has also completed the Advanced Leadership Programme by Judge Business School, University of Cambridge. He has over 30 years of experience in the areas of strategy, general management, private equity, corporate and investment banking. The key positions he has held include Head of Equity Markets and Derivatives, Co-Head of Investment Banking, Head of International Banking & Transaction Services of CIMB Investment Bank Berhad, Head of Regional Banking of CIMB Group Berhad, Independent Non-Executive Director of Ping Petroleum Ltd. and GroupManaging Director of Tropicana Corporation Berhad. Currently, he is the Independent Non-Executive Chairman of Pekat Group Berhad. He does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. BOARD OF DIRECTORS’ PROFILE Kok Kong Chin Executive Director Tan Sri Dato’ Seri Shamsul Azhar bin Abbas Senior Independent Non-Executive Director Tan Sri Dato’ Seri Shamsul Azhar was appointed to the Board on 15 June 2015. He is the Senior Independent Non-Executive Director of the Company. He is also the Chairman of the Audit and Risk Management Committee, a member of the Board Nomination and Remuneration Committee and Employees’ Share Scheme Committee. He holds a Master’s of Science in Energy Management from the University of Pennsylvania, United States of America, a Degree in Political Science from Universiti Sains Malaysia as well as a Technical Diploma in Petroleum Economics from Institute Francaise du Petrole in France. He joined Petroliam Nasional Berhad (“PETRONAS”) in 1975 and served in various capacities during his 40 years tenure with the organisation including his last held position as President and Chief Executive Officer of PETRONAS from 2010 to 2015. During the tenure of his leadership, he guided PETRONAS in undertaking strategic landmark projects (both for PETRONAS and Malaysia), such as the Pengerang Integrated Refinery and Petrochemical Project (RAPID), the Bintulu Train 9 project, the construction of 2 PETRONAS Floating Liquified Natural Gas (“LNG”) facilities and Malaysia’s first Regasification terminal in Malacca. Tan Sri was the President/Chief Executive Officer of MISC Berhad from 1 July 2004 until 31 December 2008 and was its Chairman from February 2010 to 1 August 2011. He also served as Pro-Chancellor of Universiti Teknologi PETRONAS, a member of the Board of Trustees of the Razak School of Government and the Chairman of the National Trust Fund of Malaysia. He was the Chairman of MMC Corporation Berhad and MMC Ports Holdings Sdn. Bhd. from 16 July 2015 to 31 August 2020 and the Chairman of Sapura Energy Berhad from 30 July 2020 to 7 May 2022. He is currently the Chairman of the Board of Universiti Malaysia Terengganu (UMT) and a Board member of Deleum Berhad. He does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. Nationality : Malaysian Age : 70 Gender : Male Nationality : Malaysian Age : 56 Gender : Male
ENRA Group Berhad | Annual Report 2022 10 Dato’ Wee was appointed to the Board on 24 August 2016. He is also a member of the Audit and Risk Management Committee and was re-designated as the Chairman of the Board Nomination and Remuneration Committee on 8 March 2022. He is also the Chairman of the Employees’ Share Scheme Committee. He has more than 30 years of experience in the Oil & Gas Industry across the Exploration & Production (“E&P”) and Gas & Liquefied Natural Gas value chain. He spent 21 years in Shell in Malaysia and overseas where he took up a number of senior positions in countries including the United Kingdomand South Africa. InMalaysia, he was the Vice President, Upstream Asia and Managing Director of Shell Malaysia E&P Companies from 2006 to 2010. He joined Petroliam Nasional Berhad as Executive Vice President and Chief Executive Officer of Upstream Business in May 2010. He retired from PETRONAS in April 2016. Presently, he also sits on the board of Cagamas Berhad, Anton Oilfield Services Group, which is listed on the Hong Kong Stock Exchange. He is an Audit Committee member of Anton Oilfield Services Group. He does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. Mr. Loh was appointed to the Board on 1 June 2015 as a Non-Independent Non-Executive Director. Prior to the change in substantial shareholders of the Company following a mandatory general offer in 2015, Mr. Loh was the Managing Director of the Company, then known as Perduren (M) Bhd., from year 2007 to year 2014. He resigned from the Board on 20 April 2015 and was reappointed as Non-Executive Director on 1 June 2015 to the new Board of the Company which had assumed the new name, ENRA Group Berhad. With effect from 29 November 2018, Mr. Loh was redesignated as an Independent NonExecutive Director. Mr. Loh has over 30 years of experience in property development, infrastructure, building construction as well as timber logging business. Currently, he is also the Chairman of Karyon Industries Berhad. He does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. He has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. He attended all 9 Board meetings held during the financial year under review. BOARD OF DIRECTORS’ PROFILE Dato’ Wee Yiaw Hin Independent Non-Executive Director Loh Chen Yook Independent Non-Executive Director Nationality : Malaysian Age : 67 Gender : Male Nationality : Malaysian Age : 63 Gender : Male
ENRA Group Berhad | Annual Report 2022 11 BOARD OF DIRECTORS’ PROFILE Tunku Afwida was appointed to the Board on 8 March 2022. She is also a member of the Audit and Risk Management Committee, Board Nomination and Remuneration Committee and Employees’ Share Scheme Committee. She holds a Bachelor of Science (Honours) degree in Economics and Accountancy from City University London, UK; qualified as a Chartered Accountant from the Institute of Chartered Accountants in England and Wales and is a member of the Malaysian Institute of Accountants. Tunku Afwida has held senior roles in investment banks. From 2006 until 2008, she was the Chief Executive Officer (“CEO”) and Executive Director (“ED”) of Kenanga Investment Bank Berhad. Prior to that, from 2003 to 2006, she was CEO and ED of MIMB Investment Bank Berhad (now known as Hong Leong Investment Bank Berhad) and from 1995 to 2003, she was ED/Chief Investment Officer of Commerce Asset Fund Managers Sdn. Bhd. She was also a Director of Asia Equity Research Sdn. Bhd. from 2015 to 2022. She is currently the Chairman of Affin Hwang Investment Berhad and a Board member of Telekom Malaysia Berhad (“TM”), SAM Engineering & Equipment (M) Berhad and DXN Holdings Berhad. She is also the Chairman of Webe Digital Sdn. Bhd. and Director of GITN Sdn. Bhd., subsidiaries of TM. She does not have any family relationship with any director and/or major shareholder of the Company, or any conflict of interests in any business arrangement involving the Company. She has not been convicted for any offences within the past 5 years nor has been imposed any public sanction or penalty by the relevant regulatory bodies during the financial year under review. There were no Board meetings held during the time she held office during the financial year under review. Tunku Afwida binti Tunku Abdul Malek Independent Non-Executive Director Nationality : Malaysian Age : 56 Gender : Female
ENRA Group Berhad | Annual Report 2022 12 KEY SENIOR MANAGEMENT’S PROFILE Amir Ruqaimi bin Ngah Chief Financial Officer Daniel Lau Lee Hoong Chief Investment Officer Dato’ Idzham Mohd Hashim Chief Commercial Officer / Chief Executive Officer of ENRA Land Sdn. Bhd. Nationality : Malaysian Age : 37 Gender : Male Qualifications • Bachelor of Accounting, University of Malaya, Malaysia • Chartered Global Management Accountant (CIMA) • Member of MIA Working Experience • MSM Trading International DMCC (MTID) Dubai, UAE – Head of Finance • MSM Malaysia Holdings Berhad, Malaysia – Accountant • Felda Holdings Berhad – Finance Executive Directorship/Relevant Appointments (outside ENRA) • N/A Nationality : Malaysian Age : 39 Gender : Male Qualifications • Masters in Accounting & Business, Aston Business School • Bachelor’s Degree with Honours in Computer Science, University of Warwick Working Experience • CIMB Investment Bank Berhad • Maestro Capital Sdn. Bhd., a boutique M&A advisory firm Directorship/Relevant Appointments (outside ENRA) • N/A Nationality : Malaysian Age : 36 Gender : Male Qualifications • MBA – Bristol Business School (UWE) • Bachelor of Commerce – The University of Melbourne • Cambridge “A” Level – Kolej Yayasan UEM Working Experience • Naza TTDI Group of Companies – Group Executive Director/Chief Operating Officer • Naza Corporation Sdn. Bhd. – Advisor to the Deputy CEO • Naza TTDI Group of Companies – Chief Strategy Officer • Highpoint Education Group Sdn. Bhd. – Deputy President/Director • Kirkby International College Sdn. Bhd. – Executive Director • Edaran Pekemas Berhad – Manager, Managing Director’s Office • Permodalan Nasional Berhad – Management Executive Directorship/Relevant Appointments (outside ENRA) • Panel of experts (ministry of housing and local government)
ENRA Group Berhad | Annual Report 2022 13 MANAGEMENT DISCUSSION AND ANALYSIS ENRA Group Berhad concludes the financial year ending 31 March 2022 on a profitable note. The divestment of ENRA Kimia generated a substantial return on investment to the Group and the proceeds provide a platform for ENRA to accelerate the growth of its existing businesses and look for new opportunities. FINANCIAL SNAPSHOT FOR THE YEAR UNDER REVIEW FYE 2021 Change FYE 2022 Remarks RM mil % RM mil Revenue 55.30 13.4 62.71 Energy Services 53.63 12.0 60.03 Improved contribution from ENRA IOL Property Development 1.67 59.7 2.68 Billings of sold units from successful launch of property project Gross Profit 16.69 19.0 19.86 Energy Services 16.41 17.9 19.35 Improved operational efficiencies after fully transitioning to our Ratu ENRA vessel Property Development 0.28 82.1 0.51 In line with ongoing billings of the current project PATAMI/(LATAMI) (6.36) n.m. 7.32 Includes the gain of RM19.6 mil from the divestment of ENRA Kimia, and provisions for impairment of assets ROE (5.6%) n.m. 6.6% ROA (2.6%) n.m. 3.9% * financial figures exclude contributions from ENRA Kimia KEY HIGHLIGHTS FOR THE YEAR i. ENRA Group disposed ENRA Kimia which generated a gain on disposal of RM19.6 mil, and an overall return on investment of RM30.5 mil; ii. ENRA IOL’s improving track record and expertise allowed it to land a sizeable contract supplying lighting solutions for a major highway in the Klang Valley; iii. ENRA SPM nears completion of its maiden FSO and SPM system contract with PCML in Myanmar. As a result, there is an opportunity to redeploy both assets in an environment where energy prices have significantly increased; and iv. ENRA Energy Solutions completed its maiden major contract, and is continuing to expand into the energy market by providing MRO services to a major integrated oil company (“IOC”) to service its power generation assets.
ENRA Group Berhad | Annual Report 2022 14 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL PERFORMANCE ENRA’s FYE 2022 total revenue increased by 13.4% (RM7.4 mil) as a result of growth from our Energy Services and Property Development divisions. Though there was an increase in operating expenditure for the year as well as provisions for the impairment of assets and the demobilisation of ENRA SPM’s PCML contract, the Group generated a higher PATAMI primarily as a result of the one-off gain from the divestment of ENRA Kimia. Energy Services REVENUE PATAMI RM55.3 mil RM62.7 mil FYE 2021 FYE 2021 FYE 2022 FYE 2022 (RM6.4 mil) RM7.3 mil mil mil m ENERGY SERVICES RM53.6 mil RM16.4 mil RM4.1 mil Revenue Gross Profit PBT RM60.0 mil RM19.4 mil RM23.0 mil FYE 2021 FYE 2022
ENRA Group Berhad | Annual Report 2022 15 After the disposal of ENRA Kimia, the Energy Services division’s main active businesses are now the provision of FSO and SPM services (under ENRA SPM), MRO services for power generation systems (under ENRA Energy Solutions), and smart lighting solutions (under ENRA IOL). The Energy Services division continues to be the main contributor for the Group, generating 95.7% of total revenue and 97.4% of total gross profit for FYE 2022. ENRA SPM successfully operated its FSO and SPM system contract with PCML for the year, and hence revenue from this business was generally stable. The team has performed admirably - their safety track record has been excellent since the integration of the Ratu ENRA vessel to the Yetagun field in 2020 and there have been no operational issues. There was a demobilisation provision of approximately RM4 mil that had to be incurred during the year as part of the preparation to conclude the contract. ENRA Energy Solutions completed its maiden major contract during the year, and also initiated a partnership to pursue new businesses in a variety of industries with MTU Services (Malaysia) Sdn. Bhd. This partnership successfully acquired a major IOC as a new client to ENRA Energy Solutions. ENRA IOL won a key contract to supply the lighting solutions for a major highway in the Klang Valley, which was successfully started and completed in the same year. The increase in revenue for the Energy Services division for FYE 2022 was primarily from this contract. Property Development MANAGEMENT DISCUSSION AND ANALYSIS Revenue for the Property Development division improved as a result of continued billings from Q Homes’ first project at Teluk Panglima Garang, Selangor. Although there were some delays as a result of the various movement control orders throughout the year, we are still on track to deliver the product on time to the buyers. The gross profit increase for the year is in line with revenue from progressive billings of the construction. The decrease in PBT was due to a net realisable value loss on our inventory (i.e., freehold title) in the UK. PROPERTY DEVELOPMENT Revenue Gross Profit PBT RM0.3 mil RM2.7 mil RM0.5 mil (RM1.5 mil) RM1.7 mil (RM1.3 mil) FYE 2021 FYE 2022
ENRA Group Berhad | Annual Report 2022 16 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL POSITION OVERVIEW ENRA ends the financial year with a healthy balance sheet: • Net assets decreased slightly from RM114.3 mil as at 31 March 2021 to RM111.3 mil as at 31 March 2022; • Gearing decreased from 0.54 times in FYE 2021 to 0.03 times in FYE 2022 from the continual servicing of the loan in relation to ENRA SPM’s acquisition of Ratu ENRA in FYE 2020. RM2.5 mil of this loan remains as at the end of FYE 2022; and • Cash and cash equivalents stand at RM20.3 mil which is sufficient to support existing working capital requirements. The Group continues to remain prudent in managing our cash according to the needs of our existing businesses while continuing to invest in new products, services and revenue lines to build a stronger income-generating base for the Group. FUTURE PROSPECTS Global growth is expected to slow significantly in 2022 as a result of war-induced commodity price increases, broadening price pressures due to supply chain disruptions, and increasing inflation and interest rates. The recovery of the Malaysian economy is expected to gain momentum this coming year on the back of continuing strong demand for its specific manufactured products, and rising energy and commodity prices. However, inflation has picked up mainly as a result of higher food prices, which will have a follow-on effect to operating costs such as manpower and transportation. In addition, rising raw material prices will result in headwinds for businesses. Energy Services As our PCML contract is nearing completion, we have begun the process of identifying redeployment opportunities for Ratu ENRA and the SPM. We expect more activity in the market as a result of the current climate of increased energy prices. However, we are also cognisant that there will be increases in operational costs such as manpower and fuel. With this in mind, we intend to take an accurate and fair approach to our pricing so that the risk of compressed margins will be mitigated. In addition to the ongoing MRO services provided to a major IOC, ENRA Energy Solutions continues to actively pursue new MRO opportunities in the oil & gas market and beyond. ENRA IOL is also actively seeking new opportunities, given that we have demonstrated our capability to deliver a largescale LED lighting solution with the recent highway contract. Property Development Our previously planned launches in FYE 2022 were delayed due to authority office closures as a result of intermittent movement control orders. However, for this coming financial year, we have five project launches planned with approximately RM93 mil GDV in total. We are confident that these launches will be successful and foresee that these types of developments will contribute to the growth of the Property Development division. Further, we have revisited our market plan for our upcoming developments and remain positive that our pricing and products will be able to accommodate the industry-wide cost increases. Though quality affordable homes are our main market, we are not limiting ourselves to this type of product only and are evaluating other types of developments. In order to optimise allocation of our resources, we have decided to consolidate our interests and focus our attention on projects in Malaysia. We have begun marketing the sale of our 1.8-acre land parcel in Rugby, UK, which has planning approval for extra-care residences and care homes.
ENRA Group Berhad | Annual Report 2022 17 CONCLUSION ENRA has been resilient throughout the COVID-19 pandemic as a result of our discipline in managing costs, having sufficient buffers in place, and our decision to diversify our revenue streams and not be reliant on just one sector. The Group ends the year with a strong balance sheet and various assets that can be utilised or monetised to potentially generate further profits and cash. We are pleased, therefore, that the Group has been able to bounce back towards profitability for the FYE 2022 period. Overall, while ENRA and its management foresee challenges in the economic recovery post-pandemic, we are confident that we have instilled the necessary measures to steward the Group through these uncertain times. We will continue to remain vigilant with the projects we embark on while maintaining a healthy balance sheet. The Group declared a special dividend of 7.4 sen per share to shareholders for FYE 2022. The Board’s consideration to reward shareholders will continue to be guided by the Group’s operational needs and investment opportunities. MANAGEMENT DISCUSSION AND ANALYSIS
ENRA Group Berhad | Annual Report 2022 18 CORPORATE GOVERNANCE CORPORATE GOVERNANCE OVERVIEW STATEMENT The Board of ENRA is committed to ensuring that high standards of corporate governance (“CG”) principles and practices are applied throughout the ENRA Group as a fundamental part of discharging its responsibilities to safeguard shareholders’ investments and protect the interests of all stakeholders. This Corporate Governance Overview Statement is prepared in compliance with the MMLR of Bursa Securities and takes guidance from the key CG principles as set out in the MCCG 2021. This statement is supplemented with the Corporate Governance Report (“CG Report”) which provides the details on how the Company has applied each practice of good governance with the relevant provisions as prescribed in the MCCG 2021 during the financial year ended 31 March 2022. The CG Report is available on the Company’s website at www.enra.my. This Corporate Governance Overview Statement should also be read in conjunction with the other statements in the Annual Report, namely, the Statement on Risk Management and Internal Control, the Audit & Risk Management Committee Report and the Sustainability Report as the depth of certain CG practices may be better explained in the context of the respective statements. PRINCIPLE A: BOARD LEADERSHIP AND EFFECTIVENESS I. Board Responsibilities The Board has the overall responsibility for the sustainability, governance, strategic leadership and direction, the conduct of the Group’s businesses, risk management and internal controls, investor relations, management succession plan and business operations of the Group. Beyond the matters reserved for the Board’s decision, the Board has delegated the authority to achieve the corporate objectives and day-to-day management of the business of the Group to the Executive Committee comprising the President & Group Chief Executive Officer and the Executive Director. There is a formalised Limits of Authority which defines the applicable limits specifically reserved for the Board’s approval and those delegated to the Executive Committee, the President & Group Chief Executive Officer, the Executive Directors and Management. These authority limits are reviewed and revised as and when required, to ensure an optimum structure for efficient and effective decision-making in the Group. The Executive Directors remain accountable to the Board for the authority that is delegated to them for the performance of the Group. The Board places great importance on sustainability and had taken the necessary steps to ensure high standards of environmental, social and governance across the Group’s operations. This includes formalising guidelines, frameworks and processes relating to, amongst others, ENRA’s capital allocation management and investment appraisal practices in managing future risks and opportunities as the Group continues to build a responsible and sustainable business. Further information on ENRA’s sustainability agenda and initiatives for the year under review are disclosed in the Sustainability Report section of this Annual Report. While the Board is responsible for creating the framework and policies within which the Group should be operating, the Management is accountable for the execution of the expressed policies and attainment of the Company’s corporate objectives. This demarcation complements and reinforces the supervisory role of the Board. The roles of the Chairman and the President & Group Chief Executive Officer are distinct and separate to engender accountability to facilitate a clear division of responsibilities. The Chairman is responsible for ensuring Board effectiveness and standards of conduct while the President & Group Chief Executive Officer is responsible for the overall management of the Group, including smooth running of the businesses and implementation of strategies and policies. In carrying out its function, the Board has delegated specific responsibilities to Board Committees, namely, the Audit and Risk Management Committee (“ARMC”) and the Board Nomination and Remuneration Committee (“BNRC”). During the financial year, the Board has set up an Employees’ Share Scheme Committee (“ESSC”) to administer the implementation of the Employees’ Share Scheme of the Company. In order to ensure that the direction and control of the Group remain with the Board, the Board has defined the terms of reference for each Committee and receives reports from the Board Committees of their proceedings and deliberations together with their recommendations and relevant decisions. The Chairman of the respective Board Committees will report to the Board on the outcome of these meetings. These Board Committees were formed in order to enhance business and operational efficiency and efficacy but the Board remains fully responsible for the direction and control of the Company and the Group. The ultimate responsibility for the final decision on all matters lies with the Board. The terms of reference for the ARMC, the BNRC and the ESSC can be found on the Company’s website (www.enra.my).
ENRA Group Berhad | Annual Report 2022 19 The Board has adopted a Board Charter, which sets out its roles, functions, composition, operation and process giving consideration to the principles of good corporate governance and requirements of the MMLR of Bursa Securities. During the financial year, the Board had revised the Board Charter and reviewed the terms of reference of all Board Committees incorporating the new amendments to MCCG 2021 and MMLR. The Board Charter which serves as a source of reference for all Directors will be reviewed and updated periodically in accordance with the needs of the Company and any new regulations that may have an impact on the discharge of the Board’s responsibilities. The Board has also adopted a Directors’ Code of Ethics, which outlines the conduct required of the Board members individually in order for them to discharge their duties in a professional, honest and ethical manner. A Code of Business Conduct which is applicable to employees within the Group was adopted and it governs the desired standards of behavior and ethical conduct expected from each individual to whom the Code applies. The Board has also put in place a Whistleblowing Policy, which sets out the principle and grievance procedures for employees to raise genuine concerns of possible improprieties perpetrated within the Group. The Whistleblowing Policy is intended to directly support the Company and the Group’s Core Values, Code of Business Conduct and other governance requirements and compliance requirements and to encourage and enable employees, directors, shareholders or any parties with a business relationship with the Company to raise concerns regarding any illegal conduct or malpractice at the earliest opportunity without being subject to victimisation, harassment or discriminatory treatment and to have such concerns properly investigated within the Company and the Group prior to seeking resolution outside the Company. A disclosure of wrongdoing or improper conduct may be made orally or in writing (via such channels as a letter or electronic mail). Subsequent to the introduction of Corporate Liability Provision for bribery and corruption under Section 17A of the Malaysian Anti-Corruption Commission Act 2009 (“MACC Act”), the Board had in May 2020 adopted ENRA Group’s Anti-Corruption Policy & Procedure which sets out the policies and procedures towards compliance with the MACC Act. The Anti-Corruption Policy & Procedure will be reviewed periodically to assess its effectiveness, and in any event, at least once every three years. The Company has further enhanced its Anti-Corruption Policy & Procedure by developing the Gifts and Hospitality Reporting Guidelines to set out quantitative guidance for the acceptable standard and to maintain the high level of integrity and public trust in the conduct of ENRA Group’s businesses associated gifts and hospitality. The details of the Board Charter, Directors’ Code of Ethics, Code of Business Conduct, Whistleblowing Policy AntiCorruption Policy & Procedure and the Gifts and Hospitality Reporting Guidelines are available on the Company’s website (www.enra.my). The Directors have unrestricted access to all information pertaining to the Group’s business and affairs to enable them to carry out their duties effectively and diligently. The Board also has unrestricted access to the service of the Company Secretary who is qualified to act under Section 235(2) of the Companies Act 2016. The Company Secretary provides advisory services to the Board in relation to corporate governance matters and compliance with the relevant policies and procedures. II. Board Composition The strength of the Board lies in the composition of its members, who have a wide range of expertise, extensive specialised experience in ENRA’s various business areas and diverse backgrounds. As of the date of this Statement, the Board consists of seven members comprising five Independent Non-Executive Directors and two Executive Directors (including the President & Group Chief Executive Officer) which meets the requirement of Practice 5.2 of the MCCG 2021 where at least half of the Board comprises Independent Directors and in line with the requirements of Paragraph 15.02 of the MMLR of Bursa Securities. The Directors collectively bring with them not only the industry knowledge but also a wide range of experience and expertise in areas such as finance, engineering, strategic planning, economics and project management. There is no individual Director or group of Directors who dominates the Board’s decision-making. The Non-Executive Directors contribute significantly in areas such as policy and strategy, performance monitoring, allocation of resources as well as improving governance and controls. The Independent Non-Executive Directors apply objective and independent judgement to the decision-making process of the Board, and provide the check and balance. CORPORATE GOVERNANCE OVERVIEW STATEMENT
ENRA Group Berhad | Annual Report 2022 20 Accordingly, and taking into account the experience, qualifications, capabilities and knowledge of the Company’s Independent Non-Executive Directors, the Board is satisfied that the current Board composition fairly reflects the interests of the Company’s minority shareholders and is adequate to ensure that the highest standards of corporate governance, ethical conduct and integrity are maintained by the Company for the benefit of all stakeholders. Nonetheless, the Board takes cognisant of the recommendation to have gender diversity on the Board. The Board through the BNRC is taking steps to ensure that women candidates are sought as part of its recruitment exercise when vacancies on the Board arise. During the financial year, following the resignation of Dato’ Mazlin bin Md Junid, the President & Group Chief Executive Officer of the Company on 30 November 2021, Tan Sri Dato’ Kamaluddin bin Abdullah has been re-designated to assume the role of President & Group Chief Executive Officer on 1 December 2021. In line with gender diversity requirement by Bursa Securities, on 8 March 2022, Tunku Afwida binti Tunku Abdul Malek (“Tunku Afwida”), was appointed as an Independent Non-Executive Director subsequent to the resignation of Datuk Anuar bin Ahmad. The BNRC had reviewed and assessed the qualification, industry experience, integrity, competencies and time commitment of Tunku Afwida as well as confirmation of independence by Tunku Afwida, having been satisfied with all the credentials, the BNRC recommended her appointment to the Board for approval. The BNRC analysed and discussed the evaluation report on the effectiveness of the Board and Board Committees on an annual basis. The BNRC reviews the comments and areas of improvement highlighted in the evaluation reports. Save and except for Tunku Afwida who was appointed to the Board on 8 March 2022, all the Directors had participated in the Board and Board Committees assessment and evaluation process for the financial year 2022. The size and composition of the Board and its Board Committees will be reviewed annually to determine if the Board and the Board Committees have the right size and sufficient diversity that fit the Company’s objectives and strategic goals. III. Remuneration The BNRC is responsible for recommending to the Board the appropriate remuneration of the Directors to ensure that the Group attracts and retains Directors of the necessary caliber, experience, knowledge and quality needed to manage the Group successfully. The BNRC considers the principles recommended by the MCCG 2021 in determining the Executive Directors’ remuneration, whereby the Executive Directors’ remuneration is designed to link rewards to the Group’s performance. The remuneration of the Non-Executive Directors is determined in accordance with their experience and the level of responsibilities assumed. The determination of the remuneration of the Non-Executive Directors is a matter for the Board to consider and individual Directors do not participate in decisions regarding their own remuneration package, and are subject to the prior approval of shareholders at the Annual General Meeting (“AGM”) of the Company. The Company reimburses reasonable expenses incurred by the Non-Executive Directors in the course of their duties as Directors. On 24 February 2022, the Board has formalised a Remuneration Policy for Directors and Senior Management which outlines the principles for the BNRC to determine and propose an appropriate level of remuneration for the Directors and Senior Management. The policy is available on the Company’s website at www.enra.my. Details of the remuneration of the Directors of the Company for the financial year ended 31 March 2022 are provided in Practice 8.1 of the CG Report. CORPORATE GOVERNANCE OVERVIEW STATEMENT
ENRA Group Berhad | Annual Report 2022 21 PRINCIPLE B: EFFECTIVE AUDIT AND RISK MANAGEMENT I. Audit and Risk Management Committee The Board has established an ARMC to provide robust and comprehensive oversight on the financial reporting matters as well as the external and internal audit processes. The ARMC comprises four members, all of whom are Independent Non-Executive Directors. The Company also complies with Practice 9.1 of the MCCG 2021 that the Chairman of the ARMC is not the Chairman of the Board. In line with the requirements of Paragraph 15.09 (1)(c) of the MMLR of Bursa Securities, two of the members of ARMC are member of the Malaysian Institute of Accountants. The Board upholds the integrity of financial reporting by the Company. As such, it has established procedures, via the ARMC, in assessing the suitability and independence of the external auditors. Such procedures entail the provision of written assurance by the external auditors, confirming that they are, and have been, independent throughout the conduct of the audit engagement with the Company in accordance with the independence criteria set out by the Malaysian Institute of Accountants. The ARMC has met with the external auditors without the presence of the Executive Directors and Management twice during the financial year ended 31 March 2022. The ARMC is satisfied in its review that the provision of non-audit services by Messrs. BDO PLT to the Group for the financial year ended 31 March 2022 did not in any way impair their objectivity and independence as external auditors of the Company. On an annual basis, the ARMC reviews and monitor the suitability and independence of the external auditors. The ARMC is satisfied with the competence and independence of the external auditors and had recommended the reappointment of Messrs. BDO PLT as external auditors for shareholders’ approval at the 30th Annual General Meeting. II. Risk Management and Internal Control Framework The Board is ultimately responsible for the establishment of a sound framework to manage risks. The President & Group Chief Executive Officer oversees these risk management processes and activities and reports to the Board. The Management assists the Board in the implementation of the Board’s policies and procedures on risk management and internal control. The Board acknowledges its responsibility for the Group’s systems of internal control and risk management and for reviewing the effectiveness of those systems. Such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives. Any system can only provide reasonable but not absolute assurance against material misstatement, loss or fraud. The Statement on Risk Management and Internal Control as set out on pages 63 to 69 in this Annual Report provides an overview of the management of risks and the state of internal controls within the Group. The Company has in its employment, an internal auditor (“Internal Auditor”) who reports directly to the Chairman of the ARMC. The internal audit function reviews the controls and processes of the organisation in accordance with the approved audit plan which adopts a risk-based approach toward planning and audit execution. The scope of work covered by the internal audit function during the financial year is set out on page 62 of this Annual Report. CORPORATE GOVERNANCE OVERVIEW STATEMENT
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