Chairman and group ceo’s
joint statement
The growth in the O&G Division was mainly due to the
successful execution of major projects. The projects
include the Petronas EVA-NMB gas delivery system
contract worth RM232.1 million, which was completed
in the third quarter of financial year 2014 and the on-
going execution of the Polarled Development Project,
for Statoil, worth USD$198.0 million.
On the strategic investment front, Wasco acquired a
49% stake in Alam-PE Holdings (L) Inc. (“Alam-PE”)
for RM106.0 million. Alam-PE is a company engaged
in ship-owning and chartering of offshore support
vessels and ship management services. With the
successful acquisition, Wasco had positioned itself
to gain a longer-term, sustainable and stable income
stream. This together with the existing investment in
Petra Energy Berhad is expected to generate recurring
earnings stream in the longer term to supplement the
current project based earnings stream.
A licensing collaboration was signed between
PETRONAS and Wasco in December 2014, whereby,
Wasco was given the exclusive rights to market, sell,
supply and apply REMCOAT™, a PETRONAS proprietary
product for pipeline coating.
Whilst the O&G Division achieved its best performance,
2014 ended on a sombre note with oil prices falling
substantially in the final quarter of the year. The
falling oil prices have temporarily clouded the O&G
landscape. However, the current oil crisis is not
unlike the ones we have seen in the past, where we
had managed to weather the economic uncertainties
brought about by weakening oil prices. We have
already begun to proactively manage the imminent
slowdown – our continued focus towards looking into
strategic investments and partnerships is just one of
the many steps we have undertaken to avoid cyclical
fluctuations. Against this backdrop, Wasco remains
steadfast in facing the challenges ahead.
RENEWABLE ENERGY DIVISION
The RE Division delivered a commendable performance
for the year under review, recording revenue of
RM342.5 million and segment profit before taxation
of RM62.1 million. The growth in RE’s business was
primarily due to increase in sales of steam turbines,
boilers and kernel crushing plants for palm oil and
agro-based industry.
In 2014, the Division made various key notable
achievements. The Division’s waterfront expansion
project in Telok Panglima Garang, Selangor is already
in its 2
nd
phase of development. It is targeted to be
completed by end of 2015 and will result in engineering
fabrication facilities with a combined production
capacity exceeding 20,000 metric tons. With the
development of the new waterfront fabrication facility,
it will also be capable of fabricating bigger engineering
structures and modules. The Division achieved a
milestone following the successful sales of the 1,000
th
unit of Shinko steam turbine by PMT Industries Sdn
Bhd (“PMT”). Building on its long experience in the
palm oil industry, PMT undertook a turnkey contract
to build and commission a 15MT palm oil mill in
Honduras. The Division also cemented its footing in the
biomass power generation sphere in Cambodia with its
first rice husk biomass power plant under the “Build-
Own and Operate” model. Plans to supply power to
Cambodia’s national grid are on target and expected to
be commissioned in 2016.
Looking at year 2015, the O&G and Petrochemical
sectors are expected to be the main contributors
to the Division’s revenue, capitalising on Petronas
RAPID project at Pengerang. The strategic
partnership with Shinko Ind. Ltd. and successful
launch of the steam turbine manufacturing line at
our Shah Alam facility will enable the RE Division to
be more competitive by enhancing capabilities to
play a key role in manufacturing and distributing
Shinko steam turbines in the Asean region and
worldwide. In order to fulfil and sustain WSC’s
RE Division’s strong track record in servicing industries
across the world, we made inroads into new overseas
market, such as the Latin America, East Asia and Africa.
INDUSTRIAL TRADING & SERVICES DIVISION
For the year under review, ITS Division recorded a
revenue of RM595.2 million and lower segment profit
before taxation of RM6.6 million. Financial year 2014
was a challenging year for the ITS Division particularly
for PPI Industries Sdn Bhd (“PPI”) where many targeted
infrastructure and water pipes projects were delayed or
shelved, despite an improvement from the previous
year due to better sales margin. Meanwhile, Syn Tai
Hung Trading Sdn Bhd (“STH”) saw a decline in revenue
primarily due to a planned reduction in steel bar sales.
This was part of its strategies to shift the company’s
product mix towards higher margin strategic products.
The operating environment for the ITS Division
is expected to be challenging in year 2015. The
Management is cautious on the various current
issues that could affect its trading business such as
the impact of the GST implemented in April 2015 and
the slowdown in property development nationwide.
Measures introduced by Bank Negara to tighten
6
Wah Seong Corporation Berhad • Annual Report 2014
