2 LEADERSHIP INSIGHTS 37 We remain focused on strengthening the quality of our portfolio and building a financial platform that supports sustainable growth. FY2025 was a year shaped by a combination of external headwinds that weighed on performance across our industry. Rising regulatory and compliance costs, a sustained softening in client spending, and continued pressure on contract economics created a challenging backdrop, and our businesses felt those pressures alongside the rest of the sector. In response, we took necessary actions to strengthen the quality of our revenue base and align our asset values with current market realities. We exited contracts where margins no longer met our return requirements and undertook a comprehensive reassessment of asset values at year end. These steps weighed on our reported results. However, they also leave us with a higher quality portfolio, a stronger cash position and a clearer financial roadmap for the years ahead. Ultimately, our headline results do not fully reflect the underlying strengths of the business, including the technology-enabled capabilities we have built, our broader international footprint and the more focused operating base created through the rationalisation actions taken during the year. Together, these leave us better placed to respond to future growth opportunities and drive improved performance over time. GROUP FINANCIAL HIGHLIGHTS We recorded revenue of RM2,861.0 million in FY2025, 6.2% lower than the RM3,049.8 million recorded in FY2024. This drop reflected the impact of more cautious client spending which led to lower activity levels, deferment and revision of project plans, and reduced work orders, as well as the strengthening of the Malaysian Ringgit against operating currencies in Singapore, Taiwan and the Middle East, diluting the translated contribution from new contract wins in those markets. Our portfolio optimisation initiatives were another contributing factor, leading to a smaller revenue base. However, these actions were essential to improve the overall quality and sustainability of our earnings base and sharpen focus on higher-value opportunities. The drop in revenue, combined with margin erosion from sustained cost pressures across manpower, materials and direct project costs, were the primary drivers of our reported loss of RM412.9 million for FY2025, compared with a net profit of RM45.2 million in FY2024. The result was further impacted by one-off, non-recurring impairment charges, including impairment of goodwill, non-current assets, receivables and contract assets balances following a comprehensive and disciplined assessment of asset values and recoverability, incorporating current market conditions, contract performance and forward-looking cash flow projections in line with applicable accounting standards. The charges comprised impairment of goodwill of RM151.1 million, impairment of other non-current assets, including tangible assets, leased assets and intangible assets, of RM73.6 million, and impairment of receivables and contract assets of RM34.8 million. These are non-cash accounting adjustments and do not impact the Group’s immediate cash flow or operational capability. The asset review took into account higher regulatory compliance costs, persistent external cost pressures, limited recoverability of certain cost increases under existing contracts and revised expectations for margin recovery across parts of the contract portfolio. In selected cases, competitive pricing dynamics at renewal also weighed on our assessment of recoverable value. This led to revised expectations around future margins and updated cash flow projections, providing us with a clearer view of our prospects and key areas of focus as a business. FINANCIAL POSITION AND CASH FLOWS Set against our reported loss for the year, our cash and liquidity position remained a key source of resilience. Cash, bank balances, deposits and short-term investments rose to RM851.2 million supported by improved net operating cash flow by RM101.7 million to RM292.6 million in FY2025. The divergence between the reported loss and operating cash flow was largely attributable to the non-cash impairment charges recognised during the year, as well as improvements in working capital management, particularly in receivables collection and cost discipline. Net cash used in investing activities decreased by RM59.6 million compared with the prior year, reflecting a more cautious approach to capital spending, and net cash flow from financing activities remained broadly in line with prior year levels. Our net assets decreased by 31.6% from RM1.55 billion to RM1.06 billion, reflecting the combined effect of the year’s loss, adverse movements in the foreign currency translation reserve as the Malaysian Ringgit strengthened, and the non-recurring impairments recognised during the year. Net assets per share declined from RM1.85 to RM1.26. Taken as a whole, our financial position remains supported by materially stronger cash generation, a manageable leverage profile and continued operational activity across our core markets. Our gearing ratio increased from 0.28x to 0.37x, not as a result of additional borrowings, which in fact declined during the year, but due to the reduction in equity following the loss and foreign currency movements. The ratio remains manageable and provides us with flexibility to support operations and near-term strategic priorities. In view of the year’s result and our focus on preserving financial flexibility, the Board has determined that no dividend will be declared for FY2025.
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