16 LEADERSHIP ENRA GROUP BERHAD ANNUAL REPORT 2023 Management Discussion and Analysis (Cont’d) FINANCIAL POSITION OVERVIEW ENRA ends the financial year with a positive balance sheet: • Net assets have decreased from RM111.3 million as at 31 March 2022 to RM87.3 million as at 31 March 2023; • Gearing has remained low, 0.16 times in FYE 2023 compared to 0.03 times in FYE 2022; • Cash and cash equivalents have decreased from RM20.3 million in FYE 2022 to RM12.8 million in FYE 2023, which is still sufficient to support our existing working capital needs. Our Group’s balance sheet remains healthy and our maintenance of low gearing has ensured our current favourable position. FUTURE PROSPECTS The general economic environment, including Malaysia’s, is expected to remain challenging due to prevailing inflation, high interest rates and a variety of geopolitical uncertainties. Energy Services The Energy Services division, which is now exclusively focused on energy logistics, is poised for a promising outlook in the upcoming year. This division has been operating Ratu ENRA and a Single Point Mooring system (“SPM”) for an 8-month contract ending June 2023, which has been extended for another 3 weeks as part of a disconnection process. After a planned dry dock, Ratu ENRA will be chartered on a bareboat basis for a 5+5-year period. Given the current elevated oil prices and prevailing geopolitical environment, the logistics of oil, gas and related cargo for storage or transport purposes is anticipated to be in high demand, which bodes well for this division. Furthermore, as we continue to expand the business, management will continue to explore SPM opportunities within the South East Asian region as well as the Middle East. This would not only be limited to leasing but will also include the provisioning and fabrication of new SPM systems. Property Development The property sector as a whole is experiencing various challenges, notably escalating material costs which has placed significant strain on our contractors and necessitated revisions to our existing construction contracts. To address these concerns, we have implemented an industrialised building system (IBS) to effectively manage costs and optimised manpower requirements. In order to support our target market, we also have introduced competitive pricing schemes and benefits. Management is currently assessing the feasibility of our Rugby project and considering its sale. The planning approval for the project, encompassing extra-care residences and care homes, remains valid. Despite the aforementioned challenges, we are actively exploring opportunities and adopting an objective perspective to decide between development and sale. Moving forward, the Group has determined that our resources should be consolidated and focused on projects primarily within Malaysia. Therefore, this division will prioritise on completing all existing projects before embarking on the development of new sites. Our team remains open to exploring potential opportunities both within and beyond the affordable housing market, provided they are viable.
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