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.
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