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DELEUM BERHAD
Management Discussion and Analysis
Capital Management
The Group’s objective in capital
management is to safeguard its ability to
sustain its operations and to maintain an
optimum capital structure while
maximising shareholders’ value. In order
to achieve and maintain an optimal capital
structure, the Group may adjust the
amount of dividends, return capital to
shareholders, issue new shares or
increase the borrowings. The capital
structure consists of borrowings, cash
and cash equivalents and total equity.
Future Commitments and Funding Sources
The capital commitments for property,
plant and equipment are as disclosed in
Note 33 to the Financial Statements
section of this Annual Report.
As at 31 December 2012, the Group had
net cash of RM61.9 million after taking
into account bank borrowings of RM19.0
million. Net cash is calculated based on
cash and cash equivalents (including
restricted cash) less total borrowings.
Details of the borrowings and their
maturity profiles are disclosed in Note
23 to the Financial Statements section
of this Annual Report.
BUSINESS PERFORMANcE REVIEW
Power and Machinery
The Power and Machinery segment is a
major revenue contributor within the
Deleum Group, which focuses on the
entire value chain of supplying, installing
and maintaining gas turbine packages,
providing turnkey solutions for combined
heat and power plants, the supply, repair,
maintenance and installation of valves
and flow regulators, provision of subsea
umbilicals and piping insulation solutions.
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Overhauling Gas Turbine Preparation for Gas Turbine Testing
In further support of its aftermarket
services, the Group has an integrated
facility in Senawang offering overhaul and
repair services for gas turbines as well as
performing simulation tests on control
retrofits for the local and regional
customers. The facility also serves as a
training centre and is equipped with
simulators to facilitate hands-on training
on related packages and system upgrades.
During the year under review, the Power
and Machinery segment’s contribution to
the Group’s revenue increased by 19.6%
from RM317.3 million in 2011 to RM379.5
million, mainly as a result of increased
demand from robust exploration and
production activities. This commendable
performance was attributable to greater
supply of gas turbine parts and services,
retrofit projects, gas turbine engines
overhaul, field representative services and
the supply, repair, maintenance and
installation of valves and flow regulators.
The Group managed to secure new
package orders for various onshore and
offshore oil and gas projects, including for
brown fields and marginal field development
off Peninsular Malaysia, Sabah and
Sarawak waters. In addition, the Group
saw a marked increase in demand for
after sales services of gas turbine packages
renewals and upgrades which resulted in
an increase in sales of parts, repair
services, overhauls and field services.
Notwithstanding the challenges currently
faced on the natural gas supply, the
Industrial Power Generation (IPG) unit was
boosted by a new contract for the supply
of gas turbine packages for a combined
heat and power plant project in Kerteh.
The control and safety valves business
continued to perform well during the year
as a result of increased activities in
marginal fields, deepwater as well as
Enhanced Oil Recovery (EOR) which were
highly emphasised following the
development of the ETP initiatives to
sustain domestic oil and gas production.
Additional revenue was also recognised
from the completion of delivery of
umbilicals for a deepwater project off East
Malaysia and the delivery of mooring
system parts during the year under review.