Annual Report 2020 PEOPLE I TECHNOLOGY I SOLUTIONS Edgenta of the FuturE
Thank You, Shareholders The global COVID-19 pandemic will be a pivotal moment in our history. At the heart of the challenges faced across all our business segments, our resilience has allowed us to respond efficiently, and perform our role as the guardian of our clients’ assets. We thank you for your confidence and trust in UEM Edgenta, and our aim is to ensure the Company remains sustainable for the long-term and we are committed in our support towards national recovery efforts.
Winning Together Our business spans across the region, serving clients operating in key industries within this economic landscape. As an essential service provider at the front lines, our preparedness to face crises and disasters was put to the ultimate test in 2020. It was our responsibility to ensure our clients’ operations remained uninterrupted throughout the pandemic, in which we transitioned to comply with heightened health and safety standards, as well as formulate new operational protocols, which effectively strengthened our core offerings; all while we adapt our business to the new normal.
Powering UEM Edgenta Forward At UEM Edgenta, our people are at the heart of the solutions which we offer to the market. The Company connects our essential front line operations through digital workforce management capabilities, while using innovative technologies to manage asset performance data and create an ‘always on’ decision support system. This provides us the ability to remotely ensure the assets under our care are always managed efficiently for our clients. Our business ecosystem also provides our people with the tools to operate effectively from home; all while ensuring that their emotional health, safety and well-being are taken care of.
Commitment to Social Impact We are committed to efforts which can positively impact the lives of society at large, and create shared prosperity for communities living within our operational boundaries. Our support towards national recovery efforts during this time of crisis, providing our digital healthcare products and biomedical equipment services, was supplemented with immediate relief for deserving families to help weather the impact brought by the COVID-19 pandemic. We continue to drive our corporate responsibility activities which are predicated by Environmental, Social and Governance principles.
Getting Businesses Back in Motion The UEM Edgenta COVID-19 Business Solutions was launched to provide the market with convenient access to a holistic suite of solutions for their business. Our existing and potential clients now have the option of solutions which have been carefully designed through our experience operating at the front lines across the region, implementing globally-acknowledged standards and best practices into our rituals for the safety and health of their teams.
Transitioning Our People with New Values As a solutions company, our values play an important role in shaping our purpose as an organisation to achieve the needs of our clients. In our efforts to create an up-to-date service-oriented culture, we have established a new set of values to spur refreshed beliefs and winning mindsets among our people in response to current market demands, as well as to realise our vision of ‘Edgenta of the Future’.
Scope and Boundary Forward-Looking Statements Our Targeted Readers Materiality Independent Combined Assurance Statement ABOUT OUR REPORT The cover of our Annual Report this year symbolises a window into Edgenta of the Future, for our stakeholders to embrace and understand more about the innovative, technology-enabled solutions we offer to the market. Head, Corporate Communications Level 16, Menara UEM Tower 1, Avenue 7 The Horizon, Bangsar South City No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel: +603 2725 6688 Fax: +603 2711 8057 E-mail: communications@edgenta.com It displays our vision to engineer quality, smarter solutions for the healthcare support and infrastructure industries which we currently serve. These solutions have been enabled by harnessing technology to provide world-class, tailored services for our clients, in order to deliver sustainable growth. Laying the foundation for this is the ‘Edgenta Way’, which is our promise to deliver world-class solutions for our clients. We pride ourselves in pushing boundaries, challenging the status quo and breaking conventions to harmonise state-of-the-art technologies and innovation in all our different operations, establishing us as the leading Asset Management & Infrastructure Solutions company in the region. Online Version: This report and additional information on UEM Edgenta Berhad (“UEM Edgenta” or “Group” or “Company”) is available online at our corporate website, uemedgenta.com Feedback: We look forward to receiving and responding to any feedback on this report from our stakeholders. Please channel your feedback or query to:
Navigation Icons CAPITALS Intellectual Capital Human Capital Natural Capital Social and Relationship Capital Financial Capital Manufactured Capital TRANSFORMATION PILLARS Extract More Value from Our Core Businesses Enhance Product and Technology Proposition Expand Our Footprint and Deepen Solutions Base Waste Management Carbon Emissions People Development Technologybased Operational Excellence Internal Stakeholder Management Community Engagement Ethics & Integrity Vendor Development Programme Diversity & Inclusivity Thought Leadership & Advancing Industry Health & Safety MATERIAL MATTERS KEY STAKEHOLDERS Supply Chain Partners Community Media Employees Shareholders & Investors Clients & Partners Government & Regulators, Industry & Business Associates UNITED NATIONS' SUSTAINABLE DEVELOPMENT GOALS This Annual Report covers the reporting period of 1 January 2020 to 31 December 2020, unless otherwise stated. Information presented relates to the activities of the Group comprising our subsidiaries, joint operations, joint ventures and associates. This report contains certain forward-looking statements relating to future performance. These statements and forecasts are based on current assumptions and circumstances, which could change, hence involve uncertainty. Various factors could cause actual results to differ materially from those expressed or implied by these forward-looking statements. This is our primary report to stakeholders and is intended to address the information requirements of long-term investors (our equity and preference shareholders and prospective investors). We also present information relevant to the way we create value for other key stakeholders, including our employees, clients, regulators and communities. The information presented in this report addresses matters that are most material to our business and stakeholder value. We identify, prioritise and validate our material matters via a three-step materiality assessment. The credibility of this report is supported by strong governance practices. Assurance for this report is provided by our Board of Directors, supported by external verification by Ernst & Young PLT, our auditors for financial information and providers of limited assurance on selected non-financial information. Corporate Section • Detailed disclosures on UEM Edgenta Group, our business strategies and sustainability performance based on the issues identified as material to the Group and our stakeholders • Provides a comprehensive assessment of the Group’s performance for 2020 and outlook for 2021 Corporate Section • Companies Act 2016 • Bursa Malaysia Main Market Listing Requirements • Malaysian Code on Corporate Governance 2017 • Adopts Bursa Malaysia’s Sustainability Reporting Guide & Toolkits • Guided by the International Integrated Reporting Council’s framework for integrated reporting and the Global Reporting Initiative’s Standards for Sustainability Reporting CONTENTS REGULATIONS COMPLIED Financial Section • Provides the full set of the Group and Company’s audited financial statements Financial Section • Bursa Malaysia Securities Berhad Main Market Listing Requirements • Malaysian Financial Reporting Standards (“MFRS”) • International Financial Reporting Standards (“IFRS”) • Requirements of the Companies Act 2016 in Malaysia
ABOUT OUR REPORT OVERVIEW OF UEM EDGENTA BERHAD 16 Who We Are 17 Vision I Mission I Our Values 18 Our Presence 20 2020 Key Highlights 22 Awards & Achievements 24 Our Corporate Structure 26 What We Do 30 Our Technology Solutions 32 Our Milestones KEY MESSAGES 34 Chairman’s Statement 38 MD/CEO’s Statement 44 CFO’s Review 48 Our Response to the COVID-19 Global Pandemic MANAGEMENT DISCUSSION & ANALYSIS A. Strategic Review 50 An Integrated Approach to Value Creation 52 Our Operating Environment 54 Market Trends 56 Stakeholder Engagement 60 Key Risks and Mitigation 64 Our Material Matters 70 Edgenta of the Future 2025 72 Our Key Resources 74 Our Value Creation Business Model 76 Key Achievements B. Business Review 78 Healthcare Support 82 Property & Facility Solutions 84 Infrastructure Services 86 Asset Consultancy C. Performance Review 88 5-Year Group Financial Summary 90 Financial Highlights 91 Simplified Statements of Financial Position 91 Segmental Analysis 92 Value Added Statement & Value Distribution 93 Group Quarterly Performance 94 Investor Relations INSIDE THIS REPORT Chairman’s Statement 34
C O N T E N T S LEADERSHIP 99 Corporate Information 100 Board of Directors 102 Board of Directors’ Profile 111 Company Secretary's Profile 112 Executive Leadership 114 Executive Leadership Profile 118 Organisation Structure GOVERNANCE 120 Corporate Governance Overview Statement 134 Audit Committee Report 137 Additional Compliance Information 138 Statement on Risk Management and Internal Control 148 Corporate Integrity and Ethical Business Conduct SUSTAINABILITY REPORT 150 Sustainability Statement 152 Environmental 158 Social 168 Governance FINANCIAL STATEMENTS 176 Directors’ Report 181 Statement by Directors 181 Statutory Declaration 182 Independent Auditors’ Report 187 Income Statements 188 Statements of Comprehensive Income 189 Statements of Financial Position 192 Statements of Changes in Equity 195 Statements of Cash Flows 197 Notes to the Financial Statements SHAREHOLDERS’ INFORMATION 312 Analysis of Shareholdings 314 Properties Held by the Group 316 Recurrent Related Party Transactions 329 Glossary 332 Notice of the 58th Annual General Meeting 336 Statement Accompanying Notice of the 58th Annual General Meeting Form of Proxy Group Directory Business Review 78
UEM EDGENTA BERHAD 16 WHO WE ARE UEM Edgenta is the region’s leading Asset Management & Infrastructure Solutions company. We promise the Edgenta Way of delivering quality services to our clients by going beyond standards and offering technology-based solutions as a promise of efficiency, anchored upon a mindset to ensure safety across our operations for the benefit of all our stakeholders. Our expertise covers Healthcare Support and Property & Facility Solutions within our Asset Management segment, and Infrastructure Services, along with Asset Consultancy within Infrastructure Solutions. Today, we have embarked on a vision towards Edgenta of the Future, where we are determined to become a Technology-Enabled Solutions Company with a focus on healthcare by 2025. Overview of UEM Edgenta Berhad Market Capitalisation RM1.6 BILLION* One of the region’s largest Asset Management & Infrastructure Solutions entities with group assets of RM2.8 BILLION* Revenue RM2.0 BILLION*
MISSION Optimising Assets to Improve Lives VISION Our services, commitment to smarter thinking and improved solutions place us at the forefront of the industry. We create opportunities for clients and assets that positively influence society. ANNUAL REPORT 2020 Our core values play an integral role in defining our identity in the industries we serve, setting a cultural foundation to reaffirm and reflect our beliefs, philosophies, and priorities, especially for our clients and stakeholders. As part of the Company’s culture transformation efforts to align with the Company’s next phase of growth against the backdrop of an ever-changing global market, a refreshed set of values were introduced. Our new core values, FIRST, represent our role in creating a holistic and inclusive identity for our people, while delivering value-added solutions for our stakeholders. OUR VALUES 21,798 employees serving our clients in the region* Presence in 6 COUNTRIES Malaysia, Singapore, Indonesia, Taiwan, India & United Arab Emirates Combined experience of more than 80 YEARS in Asset Management & Infrastructure Solutions 17 *as at 31 December 2020 we prepare for tomorrow’s challenges, today we imagine new ways to deliver better work we treat our colleagues & stakeholders with respect we solve challenges to deliver results we are guided by integrity to build trust 1 2 3 4 5 6 7 8
UEM EDGENTA BERHAD UEM Edgenta is the region’s leading Asset Management and Infrastructure Solutions company. We have established our expertise in Healthcare Support and Property & Facility Solutions together with Infrastructure Services covering, but not limited to, Expressways and Rail, including project management & engineering design capabilities via Asset Consultancy. * Faber Sindoori Management Services Pte. Ltd. is accounted as an associate of UEM Edgenta OUR PRESENCE 18 Healthcare Support Infrastructure Services Property & Facility Solutions Asset Consultancy UNITED ARAB EMIRATES REVENUE RM61.6 million MALAYSIA REVENUE RM1,232.1 million INDIA* REVENUE RM100.0 million Overview of UEM Edgenta Berhad
we operate in 6 countries across the region 33% 67% Malaysian Non-Malaysian Employees 21,798 TOTAL EMPLOYEES TOTAL REVENUE 39% 61% Malaysia Operations Non-Malaysia Operations billion RM2.0 ANNUAL REPORT 2020 Our people have gone above and beyond to deliver our essential services driven by the latest technological innovations and solutions, as well as contributed earnestly through social responsibility efforts for the community. Throughout the global pandemic, UEM Edgenta has stood strong with resilience and discipline at the front lines, working closely with our clients at hospitals, highways, buildings and facilities under our care. Our continuous resilience and agility to deliver uninterrupted services, even under the most challenging of situations has positively impacted our clients, society and markets. We want to accelerate our journey moving forward with our clients and continue our vision to optimise assets and improve lives for all our stakeholders, the Edgenta Way. 19 SINGAPORE REVENUE RM322.9 million TAIWAN REVENUE RM377.2 million INDONESIA REVENUE RM34.9 million 1 2 3 4 5 6 7 8
RM55 million in energy bill savings through our Energy Performance Contracting programme 27% reduction in electricity consumption annually More than 10 GBI-certified Green Buildings LEED v4 Gold Rating Sultanah Maliha Hospital, Langkawi – the only healthcare facility in the world to achieve LEED v4 Gold Rating 9 tonnes of recyclable waste diverted from landfills 2020 KEY SUSTAINABILITY HIGHLIGHTS HEALTH & SAFETY GOVERNANCE Workforce Diversity 52.8% Women 47.2% Men 35.8% of top management positions held by women Learning & Development 10 hours average learning hours per employee More than RM2.1 million spent on training and development programmes in 2020 Ratio of digital vs face-to-face learning 49.8% to 50.2% (digital) (face-to-face) ENVIRONMENT 11% reduction in water consumption annually Maintaining over 3.6 million m² of cleanable surfaces every day SOCIAL Communities 24 livelihood projects & stakeholder engagements 4,624 individual beneficiaries of zakat funds in 2020 (1,718 in 2019) Scored 93.71% ASEAN Corporate Governance Scorecard* by Minority Shareholder Watch Group (“MSWG”)** Ranked #50 out of 866 Public Listed Companies for Overall Corporate Governance & Performance in 2019 by MSWG** 9 initiatives to strengthen the Anti-Bribery & Anti-Corruption (“ABAC”) Guide 0 Number of Fatalities (as at 31 December 2020) Injury Rate of 1.7 (in 2020) compared to 2.8 (in 2019) Safety Excellence across operations network with over 250 professionally trained experts * for financial year ended 31 December 2018 ** latest results published in year 2020 UEM EDGENTA BERHAD 20 Overview of UEM Edgenta Berhad
HIGHLIGHTS BUSINESS HIGHLIGHTS FINANCIAL HIGHLIGHTS RM2,028.7 million Revenue RM131.6 million EBITDA 0.32x Gross Gearing Ratio RM1,500.7 million Shareholders’ Fund 1.5 sen Earnings Per Share RM12.9 million PATANCI RM64.4 million Normalised PAT RM14.4 million Profit After Tax RM689.8 million Total Cash, Bank Balances, Deposits & Short-Term Investment RM1.80 Net Asset Per Share RM2,807.4 million Total Assets RM46.9 million Profit Before Tax RM206.6 million Net Cash Position Biomedical Engineering Maintenance Services, Computerised Asset Management System & Facilities Management contract for WEIDA Sarawak General Hospital extension Provision of biomedical equipment and operational supplies to Kudat Hospital under the Sabah MATCH Hub COVID-19 Emergency Relief New contracts in Singapore for Sengkang General & Community Hospital and Changi General Hospital New contracts in Taiwan for Hospital Support Services at Tri-Service General Hospital, Cheng Hsin General Hospital and others Integrated Facilities Management services for 287 CIMB branches nationwide Project Management Consultant for Sarawak Coastal Road Network and Second Trunk Road Phase 2 Pavement contract with Dumas Holdings for the Pan Borneo Sarawak Highway Donation of ventilators and patient monitoring systems to the Ministry of Health Malaysia Development of a cloud-based Epidemic Management System for the Ministry of Health Malaysia and National Crisis Preparedness & Response Centre Setting-up of a hybrid Intensive Care Unit facility at the Tengku Ampuan Rahimah Hospital in Klang, Selangor ANNUAL REPORT 2020 21 1 2 3 4 5 6 7 8
Annual Productivity & Innovation Conference and Exposition (“APIC”) Three “5 Star” Awards Mini Convention on Team Excellence (“MTEx”) Three Gold Awards Regional Convention on Team Excellence (“RTEx”) Three Gold Awards AWARDS & ACHIEVEMENTS Leadership in Energy and Environmental Design (“LEED”) for Sultanah Maliha Hospital, Langkawi LEED v4 Gold Rating Hospital Malaysia Facilities Management Company of the Year Australasian Fleet Management Association AfMA Fleet Safety Award (“AfMA”) UEM EDGENTA BERHAD 22 Overview of UEM Edgenta Berhad
ENERGY STAR Sultanah Maliha Hospital, Langkawi Energy Star 100 ASEAN Energy Management Scheme Energy Management Gold Standard 3-Star (Batu Gajah & Selama Hospitals) Energy Management Gold Standard 2-Star Sultanah Maliha Hospital, Langkawi National-Level “World Toilet Day 2020” Second Place in the “Public Lay-Bys” – Hentian Sebelah Senawang (Northbound) Toilets Malaysian Society for Occupational Safety & Health (“MSOSH”) Occupational Safety & Health (“OSH”) Award Four Gold Class 1 Award Gold Class 2 Award Silver Award The Edge Billion Ringgit Club Industrial Products & Services Highest Growth in Profit After Tax Over Three Years Singapore National Environment Agency Enhanced Clean Mark Accreditation Scheme (Gold) Award ANNUAL REPORT 2020 23 1 2 3 4 5 6 7 8
HEALTHCARE SUPPORT 100% Edgenta Healthtronics Sdn. Bhd. 100% Edgenta UEMS Sdn. Bhd. 100% Edgenta Mediserve (Sarawak) Sdn. Bhd. 100% Cermin Cahaya Sdn. Bhd. 100% Edgenta Mediserve (Sabah) Sdn. Bhd. 100% 100% 100% 51% Other Subsidiaries Other Subsidiaries 40% Sedafiat Sdn. Bhd. 100% Edgenta UEMS SC Ltd. (Taiwan) 40% One Medicare Sdn. Bhd. 40% Biomedix Solutions Sdn. Bhd. PROPERTY & FACILITY SOLUTIONS 97.46% UEMS Pte. Ltd. (Singapore) 100% Edgenta Healthcare Management Sdn. Bhd. 100% Edgenta (Singapore) Pte. Ltd. 100% Edgenta Facilities Sdn. Bhd. 100% Edgenta GreenTech Sdn. Bhd. 100% Edgenta Energy Projects Sdn. Bhd. 70% Edgenta Energy Services Sdn. Bhd. Edgenta UEMS Ltd. (Taiwan) UEMS Solutions Pte. Ltd. (Singapore) Edgenta Facilities Management Sdn. Bhd. Faber Sindoori Management Services Private Limited (India) Other Subsidiaries Other Subsidiary 100%* Edgenta Mediserve Sdn. Bhd. 100% 69.14% ASSET MANAGEMENT CONCESSION COMMERCIAL 100% Edgenta Township Management Services Sdn. Bhd. * Direct & Indirect Interest Khazanah Nasional Berhad UEM Group Berhad UEM EDGENTA BERHAD 24 Overview of UEM Edgenta Berhad OUR CORPORATE STRUCTURE As at 17 March 2021
ASSET CONSULTANCY 100% 100% 30% Other 99.9% 100% Edgenta PROPEL Berhad 100% Opus Group Berhad 100% Edgenta Environmental & Material Testing Sdn. Bhd. Edgenta Infrastructure Services Sdn. Bhd. Opus International (M) Berhad Opus Consultants (M) Sdn. Bhd. Subsidiaries PT Edgenta PROPEL Indonesia Other Subsidiary Other Subsidiaries INFRASTRUCTURE SERVICES INFRASTRUCTURE SOLUTIONS UEM Edgenta Berhad ANNUAL REPORT 2020 25 1 2 3 4 5 6 7 8
v HEALTHCARE SUPPORT Contribution to Group Revenue Contribution to Group Profit RM1,233.4 million RM84.1 million Our Healthcare Support division comprises both our commercial and concession businesses that cater to specific clients and stakeholders in the region. Through our diverse knowledge and experience in multiple industries, we are able to deliver optimal solutions in improving the non-clinical support services demanded by today’s healthcare providers and other commercial industries. Against the backdrop of the COVID-19 pandemic, we had the monumental task of providing our support to the Malaysian, Singaporean and Taiwanese Governments in their efforts to contain this pandemic by providing hygiene services, among others. In Malaysia, efforts included donations of mobile ventilators, patient monitoring systems, as well as a cloudbased healthcare information system to the Ministry of Health (“MoH”) Malaysia. We also launched our COVID-19 Business Solutions for existing and potential stakeholders to keep their businesses up-and-running during these challenging times. Our innovative solutions Powered by Edgenta serve as the catalyst in delivering value-added results to our clients’ hospital assets and facilities at an optimum level of efficiency. Serving over 300 hospitals & healthcare facilities across the region Managing more than 50,000 biomedical equipment worth over RM3 billion Annual processing output of 18,000 tonnes of soiled linen 32 MoH Malaysia hospitals attained Energy Management Gold Standard certification Optimised manpower utilisation by over 20% through our portering service Featured Clients: Cardiac Vascular Sentral Tri-Service General Hospital KPJ Healthcare Ministry of Health Malaysia Sengkang General Hospital Pantai Hospitals Taipei Medical University Hospital Changi General Hospital R UEM EDGENTA BERHAD 26 Overview of UEM Edgenta Berhad WHAT WE DO ASSET MANAGEMENT
PROPERTY & FACILITY SOLUTIONS Contribution to Group Revenue Contribution to Group Profit RM149.2 million RM8.9 million Our Property & Facility Solutions division offers performance-based approaches, supported by technology-driven green building solutions and data grounded asset management with a focus on asset optimisation and energy solutions. From smart workplace solutions to infrastructure and commercial properties facilities management, we enhance experiences through seamless connection of people, assets and processes. In the stir of the COVID-19 pandemic, we annexed the opportunity to elevate our sanitisation and disinfection services, offering clients heightened protection at their buildings and facilities through the utilisation of SDPro cleaning solutions towards creating a safe and clean workplace environment. Our role as the custodian of assets and facilities is evident through our Smart FM technology which enables comprehensive and thorough predictive maintenance through the ‘Internet of Things’ (“IoT”) architecture. Featured Clients: Proton Holdings wasl Group Etiqa Silterra Malaysia KLCC Property Holdings CIMB Bank Berhad Prime Minister's Office, Putrajaya, Malaysia Total savings of RM55 million on energy spending since 2017 for clients Energy efficiency solutions at 28 GBI-rated buildings 9 tonnes of recyclable waste diverted from landfills 78% reduction in chemical oxygen demand 81.4 million kWh energy savings per annum Facility management services at over 300 buildings & facilities ANNUAL REPORT 2020 27 1 2 3 4 5 6 7 8
INFRASTRUCTURE SERVICES Contribution to Group Revenue Contribution to Group Profit RM549.1 million RM26.1 million UEM Edgenta’s Infrastructure Services division offers industry-leading expertise on Highway Network Maintenance, including innovative Pavement Works & Solutions services through our Pavement Research Centre. With the ongoing COVID-19 pandemic, we remain steadfast in ensuring that our clients’ assets are continuously maintained and managed to ensure that they are optimised in the long-term. We constantly find new and innovative solutions to provide our clients with the best services for their assets with extensive research & development, and ideas from our talents. Our wealth of experience totalling more than 30 years in the field has also allowed us to further enhance these assets nationwide and across the region with an extensive knowledge on maintaining roads, highways and infrastructure assets to better serve the community during the pandemic. Creating robust partnerships with our stakeholders is a testament to our promise in delivering high-quality infrastructure services in the region. Involved in Expressways, State Roads, Airports, Plantations & Rail Approximately RM10 billion worth of infrastructure assets managed Road Asset Management System bringing 1,500 km of expressways and its assets online More than 30 years of experience in Highway Maintenance Over 3,500 km of network management and maintenance of expressways in Malaysia and Indonesia Featured Clients: LATAR Expressway Endaya ASTRA Infra PLUS Malaysia Berhad Malaysian Public Works Department Lebuhraya Pantai Timur 2 Sdn. Bhd. UEM EDGENTA BERHAD 28 Overview of UEM Edgenta Berhad WHAT WE DO INFRASTRUCTURE SOLUTIONS
ASSET CONSULTANCY Contribution to Group Revenue Contribution to Group Profit RM88.1 million RM6.4 million We are represented by Opus Consultants, Malaysia’s leading engineering and asset management consultancy firm with more than 30 years of experience delivering mega projects worth over RM100 billion. Committed towards working closely with our clients, we help visualise and realise goals in transportation infrastructure, utilities, buildings and integrated development. Our multitude of expertise and knowledge in transport infrastructure such as roads, rails and bridges have allowed us to offer our quality services to meet our clients’ needs and overcome project challenges. With a team of dedicated and talented engineers, planners, as well as specialists from various disciplines, we strive to achieve the desired results for our clients with quality and value-added services. Featured Clients: Sarawak Public Works Department Delivered over RM100 billion worth of infrastructure projects Asset lifecycle management for tolled expressways covering 1,171 km 400 professionals, including engineers and project managers across Malaysia Over 30 years delivering professional engineering services Represented by Ministry of Works Malaysia PLUS Malaysia Berhad Ministry of Health Malaysia Ministry of Transport Malaysia 2 Sectors ∙ Highways & Bridges ∙ Rail ANNUAL REPORT 2020 29 1 2 3 4 5 6 7 8
• Central hub for the remote monitoring and management of assets • Connected to 34 hospitals, over 1,000 km of highways and 248 properties • Key clients from both private and public sectors • In-house talents comprising data analysts, data engineers and data scientists • Cloud computing, data analytics, machine learning, and Artificial Intelligence. • Security and confidentiality for all clients’ data • We embrace innovation in our processes, solutions and technology • Our skunkworks team analyses data and information to acquire knowledge in further innovating and generating new ideas • Pavement Research Centre – sustainable pavement solutions • Engineers/subject matter experts with more than 30 accumulative years of engineering experience • The Fourth Industrial Revolution (“IR4.0”) • Company-wide investment in process re-engineering and modernisation, laying the foundation for accelerated digital transformation INNOVATION GARAGE, R&D AND ENGINEERING INITIATIVES We create and deploy digital solutions and innovative technologies, helping our clients reduce cost and accelerate operational efficiencies. This powers our sustainable business through continuously improving our solutions in the market by offering a holistic, secure and scalable suite of services for clients across their asset’s lifecycle. We develop and integrate technology products and digital solutions to address clients’, as well as market demands, and this will play a key role in our vision and strategy towards Edgenta of the Future. EDGENTA TECHNOLOGY SOLUTIONS UEM EDGENTA BERHAD 30 Overview of UEM Edgenta Berhad OUR TECHNOLOGY SOLUTIONS
Commercialisation of technologies and productisation of solutions through Edgenta Cloud, Marketplace, Mall, Digital Healthcare (QuickMed, Wellthily), and smart asset & infrastructure management solutions. FUTURE FOCUS Enabling tomorrow’s healthcare, today by empowering the collaboration of different stakeholders on a common cloud-based, patient-centric healthcare platform and ecosystem which allows medical services to be delivered without boundaries. Accelerating rapid data exchange between patients, healthcare professionals, labs, third-party administrators and many more for seamless experiences and innovation. DIGITAL HEALTHCARE MULAG Mechanised Grass Cutter, DULEVO Road Sweeper, Hymach Slope Grass Mower • To support the Ministry of Works Malaysia’s goal to empower the nation’s infrastructure maintenance by leveraging on Automation & Mechanisation to be more efficient and cost effective • Reduce labour demands and enhance safety, minimising exposure to live traffic when performing routine and maintenance works AUTOMATION & MECHANISATION DIGITALISATION GPS • Digital and Remote workforce management • Real-time Cloud, platform, scalability, Software as a Service (“SaaS”) monitoring • Predictive analytics, machine learning and AI • Fully digital operations and data management • Performance assessment and lifecycle management • Automated client reporting – live dashboarding • Central Command & Contact Centre for asset monitoring and management • Operational and cost efficiencies • Consistent delivery of quality output • Safer operations HOW THE MARKET & OUR STAKEHOLDERS BENEFIT • Hybrid Intensive Care Unit (“ICU”) – mobile ICU which can be assembled in a short amount of time • Epidemic Management System – Smart asset management and data monitoring of COVID-19 statistics, connecting hospitals and quarantine centres nationwide • Predictive maintenance to ensure medical equipment availability EMPOWERING NATIONAL RECOVERY EFFORTS THROUGH TECHNOLOGY ANNUAL REPORT 2020 31 1 2 3 4 5 6 7 8
UEM EDGENTA BERHAD 2016 2017 32 CREDIT RATINGS MARC AASTABLE INDICES REPRESENTATION Bursa Malaysia Overview of UEM Edgenta Berhad OUR MILESTONES Jointly provided Biomedical Engineering Maintenance Services (“BEMS”) to all Government hospitals in Sarawak (BEMS is today a current service provided by our Healthcare Support division). Appointed to provide asset consultancy services to Borneo Highway PDP Sdn. Bhd., the Project Delivery Partner for Pan Borneo Highway Sabah. Project win for the provision of Hospital Support Services (“HSS”) to the National Cancer Institute, Malaysia. Completed disposal of 61.2% equity stake in Opus International Consultants Ltd. (“OIC”) which marks UEM Edgenta’s exit from the water sector and consultancy business in five countries. Completed an 80% equity stake acquisition in KFM Holdings Sdn. Bhd. Successful establishment of PT Edgenta PROPEL Indonesia. Incorporation of Edgenta Energy Projects Sdn. Bhd. to offer energy management services and renewable energy services through capital investments. Grew our commercial healthcare business via the completion of 100% equity stake acquisition in Asia Integrated Facility Solutions Pte. Ltd., which owns UEMS Pte. Ltd. Operationalisation of the Command & Contact Centre (“CnC”). Established output-based contracting for network management and maintenance of the North-South Expressway, and execution of a ‘Heads of Terms’ with PLUS Malaysia Berhad (“PLUS”). Project win for the provision of Integrated Facilities Management (“IFM”) for six CIMB buildings.
ANNUAL REPORT 2020 2018 2019 2020 1 2 3 4 5 6 7 8 33 Hosted the first Partners Operations Dialogue (“POD”), a platform for UEM Edgenta to engage with contractors and share best safety and operational practices towards achieving our ‘Goal Zero’ target. Embarked on the Trending, Innovation, Disruption, Entrepreneurship (“TIDE”) programme introduced by, Khazanah Nasional Berhad, resulting in the setting-up of the Innovation Garage programme to harness innovation in delivering solutions to existing problems, as well as creating new value for the Company. Revision of dividend policy payout of at least 50%, and up to 80% of Profit After Tax (“PAT”) and Non-Controlling Interests (“PATANCI”). Signing of the first output-based agreement for pavement works with PLUS. Won the Inaugural Clinic Support Services (“CSS”) contract for nine state clinics in Penang. Secured a string of major project wins for Property & Facility Solutions from Proton, Universiti Sains Malaysia Hospital and wasl Asset Management Group in Dubai. UEMS businesses in Malaysia, Singapore and Taiwan officially rebranded as Edgenta UEMS. Name change of KFM Holdings Sdn. Bhd. to Edgenta GreenTech Sdn. Bhd., serving as one of the key business units for Property & Facility Solutions. Official launch of our new mechanised vehicles for highway maintenance operations, an initiative under Innovation Garage. Edgenta UEMS wins new HSS contracts from the Ministry of Health Singapore. First win for Edgenta UEMS to provide Environmental Services to KPJ Healthcare Group’s new facility block at KPJ Ampang Puteri Specialist Hospital, Selangor. Entered into a Memorandum of Understanding with the Malaysian Highway Authority (“MHA”) and Construction Industry Development Board (“CIDB”) to explore potential collaboration opportunities between MHA, CIDB and UEM Edgenta. Opus Consultants appointed Project Management Consultant for the Sarawak Coastal Road Network and Second Trunk Roads project, overseeing upgrading and construction works. Secured Sime Darby Motors Auto Fitout contract offering retrofitting and design & build works. During the COVID-19 pandemic, UEM Edgenta played a key role in supporting national recovery efforts: • Contribution of 30 ventilators and 30 patient monitoring systems for use by MoH Malaysia • Development of a cloud-based Epidemic Management System for MoH Malaysia and National Crisis Preparedness & Response Centre • Introduced drive-through & on-site Polymerase Chain Reaction and Rapid Test Kit COVID-19 testing facilities in the Klang Valley and Melaka • Setting-up of a hybrid ICU facility at the Tengku Ampuan Rahimah Hospital in Klang, Selangor • Engaged with MERCY Malaysia to provide biomedical equipment and operational supplies to Kudat Hospital under the Sabah MATCH Hub COVID-19 Emergency Relief Project The Edgenta brand turns 5 in April since its merger. Appointment of new Managing Director/ Chief Executive Officer, Syahrunizam Samsudin. Portering and cleansing contract wins for several hospitals in Singapore and Taiwan including Sengkang General Hospital, Changi General Hospital, Cheng Hsin General Hospital and National Yang Ming University Hospital. Secured the BEMS, Facilities Management (“FM”) and Computerised Asset Management System (“CAMS”) contract for WEIDA at Sarawak General Hospital extension. Replacement Through Maintenance (“RTM”) initiative at the Sultanah Maliha Hospital in Langkawi. Secured asset lifecycle cost contract for the Prime Minister's Office in Putrajaya. Secured FM services for 287 CIMB branches nationwide. Pavement contract win with Dumas Holdings for the Pan Borneo Sarawak Highway. Sustainable Pavement Solution programme in collaboration with the Taiping Municipal Council in Perak. Continuation of Independent Consulting Engineer (“ICE”) with additional scope of services for Sarawak Pan Borneo Highway. Menara UEM recognised as the first corporate building in Malaysia to be certified by Bureau Veritas for complying with the implementation of hygiene excellence and safety controls, and against the spread of COVID-19.
TAN SRI DR. AZMIL KHALID Independent Non-Executive Chairman NEW TECHNOLOGIES WILL FURTHER CHANGE THE WAY WE WORK TO ACHIEVE OUR BUSINESS GOALS AND PROFITABILITY. “ “ Dear Shareholders, 2020 was a test of our resilience and fundamentals with the COVID-19 pandemic dominating all aspects of life and business. The resulting containment measures, from restricted movements to lockdowns, significantly impacted business operations across industries, and UEM Edgenta was no exception. Key Messages UEM EDGENTA BERHAD 34
STATEMENT CHAIRMAN’S Key priorities during the year were to assess our strategic initiatives and drive operational efficiencies against the backdrop of a fast-evolving and volatile economy. Moving into 2021, we will be embarking on a transformational journey to be a TechnologyEnabled Solutions Company with a focus on healthcare by 2025. In the face of adversity, however, we emerged stronger and I am pleased to report that we recorded a resilient performance for the financial year ended 31 December 2020 (“FY2020”). Navigating our business through an unprecedented landscape was made possible by the sheer strength and tenacity we have built over the years, combining our expertise and experience with leading-edge technologies and innovative solutions. In FY2020, we registered commendable financial results across all our business segments despite the challenging operating environment. In further demonstrating our resilience, we continued to win key contracts in healthcare support services in Malaysia, Singapore and Taiwan, and introduced new technology-enabled innovative solutions to meet areas of growing demand. These achievements are testament to the fact that our Company’s fundamentals remain intact and that we continue to be adaptable even in trying times. Key priorities during the year were to assess our strategic initiatives and drive operational efficiencies against the backdrop of a fast-evolving and volatile economy. We also focused on prudent cash flow and resource management to ensure sustainable growth. We have been keeping a close watch on emerging trends from the pandemic and identified new opportunities that are opening up. New technologies will further change the way we work to achieve our business goals and profitability. We believe the future will be shaped by the deepening and acceleration of several recovery trends, particularly digitalisation and datafication. As such, the Management has undertaken a strategic review of our business model with an aim to reposition our business for further growth in untapped markets and diversify our revenue streams. Moving into 2021, we will be embarking on a transformational journey to be a Technology-Enabled Solutions Company with a focus on healthcare by 2025. More details on this strategy are provided in the Managing Director/Chief Executive Officer’s (“MD/CEO”) review. ANNUAL REPORT 2020 35 1 2 3 4 5 6 7 8
enhance the environment. Through our Energy Performance Contracts (“EPC”), for example, we help customers implement energy efficient systems in their premises, reducing their carbon footprint. We have also started installing solar photovoltaic systems which help to decrease electricity consumption from the grid, hence also contributing to lower emissions. Meanwhile, under the Sustainability Programme offered to hospitals, we carry out retrofitting and refurbishment works to replace various systems with energy efficient alternatives. In 2020, we were pleased when the Sultanah Maliha Hospital in Langkawi, managed by our Healthcare Support division, received a Gold certification under the ‘Leadership in Energy and Environmental Design (“LEED”) v4 – Building Operations and Maintenance: Existing Buildings’ from the US Green Building Council (“USGBC”), making it the only hospital in the world to be recognised. Through our Sustainability Programme, we have helped the hospital to save 74,381 kWh of energy a month, equivalent to 55 tonnes of carbon emissions. Supporting our Infrastructure Services, we conduct research on environmentfriendly pavement solutions and have developed a system of using 100% recycled pavements. In August 2020, we embarked on a one-year trial programme to apply the system in Taiping, Perak, in collaboration with the Taiping Municipal Council. The results from the trial will be used for our locally-sourced reclaimed asphalt pavement in more road projects nationwide to achieve greater savings on the use of natural resources. Our operations also contribute directly to social well-being. Through the maintenance of roads and other physical infrastructure, we create a safer environment for the community. Our healthcare solutions, meanwhile, make a difference to the quality of care received by patients. Beyond our operations, in 2020, we were very proud to be able to support front line action in the battle against COVID-19 as our healthcare employees continued to carry out their role in hospitals around the country. In addition, we donated ventilators and patient monitoring systems to the MoH Malaysia; and provided biomedical equipment, as well as logistics capabilities to MERCY Malaysia and the Malaysian Red Crescent Society in support of their patient care efforts in Sabah. We also helped to build a Field Hybrid Intensive Care Unit (“ICU”) for the Tengku Ampuan Rahimah Hospital in Klang, Selangor, to meet the additional demand for ICU beds. During FY2020, we were unable to carry out a number of our community outreach programmes in the usual manner due to restrictions imposed by the pandemic. Nonetheless, we still A number of our products and solutions serve either directly or indirectly to enhance the environment. Through our Energy Performance Contracts, for example, we help customers implement energy efficient systems in their premises, reducing their carbon footprint. OUR FRONT LINERS, OUR CHAMPIONS We take immense pride in our contributions to the nation, and particularly in supporting the Malaysian, Singaporean and Taiwanese Governments by deploying innovative solutions to help manage and overcome the pandemic. Our front liners joined the fight to contain the virus in full force, working around the clock to ensure uninterrupted service at the over 300 hospitals in the countries which we serve; as well as on highways, roads and in buildings under our care by maintaining the integrity of the infrastructure to keep people and communities who use these assets safe. You may read more about our contributions during the pandemic in the MD/CEO’s statement. DRIVING ESG A key outcome of the pandemic has been greater awareness of social inequities and environmental issues that require multi-stakeholder efforts to help resolve. As a responsible organisation, we have always been aware of such issues and contributed in our own way towards their redressal. Today, we are making it a greater priority to play a positive role in managing pertinent global issues through our Environmental, Social and Governance (“ESG”) agenda. A number of our products and solutions serve either directly or indirectly to UEM EDGENTA BERHAD 36 Key Messages CHAIRMAN’S STATEMENT
held an engagement session with the MACC on ‘Cultivating Integrity & Eradicating Corruption’. The aim was to ensure we remain up-to-date with applicable laws, regulations and best practices. DIVIDEND POLICY The Company will continue to uphold our dividend policy of 50% to 80% of Profit After Tax And Non-Controlling Interest (“PATANCI”), which will be derived from a diversified business and commercial income base, operating under a leaner, more efficient organisation structure. In FY2020, due to the unprecedented impact of the COVID-19 pandemic to our operations for both our healthcare and infrastructure divisions and our financial performance, the Management made a prudent decision to preserve our cashflow and withheld dividends for the year. However, we remain committed to returning to our dividend policy as a key priority in FY2021. We will continue to enhance shareholder value through executing our strategies for our refreshed business model which is expected to build a more sustainable future-proof business. OUR APPRECIATION On behalf of my fellow Directors on the Board and the Management, I would like to thank Dato’ Azmir Merican, who retired as MD/CEO of UEM Edgenta, for his leadership and dedication. We wish Dato’ Azmir all the best in his future endeavours. Let me take this opportunity to also welcome Syahrunizam Samsudin, who came on board on 1 July 2020 as the MD/CEO of UEM Edgenta. With his wealth of experience in technology and engineering management, we are excited to see UEM Edgenta’s next phase of growth. reached out by helping to disinfect prisons, mosques and other places of worship; providing financial assistance to veteran fire fighters; and supplying essentials to the underprivileged. These efforts mirror our belief that we have a responsibility to the community as we continuously reaffirm our social citizenry. We feel privileged to have been able to use our resources to make a meaningful difference to lives around us and will continue to enhance our contributions in the years to come. OUR COMMITMENT TO GOOD CORPORATE GOVERNANCE We recognise that good corporate governance is essential in supporting our businesses to execute their strategies, generating long-term shareholder value and sustainable financial performance as well as safeguarding our stakeholders’ interests. The Company upholds the highest standards of transparency, accountability and integrity in managing our businesses and are taking proactive measures to further enhance our corporate governance framework. A particular area of focus during the year was ensuring readiness to meet the requirements of Section 17A of the Malaysian Anti-Corruption Commission (“MACC”) Act 2009. The Act, enforced on 1 June 2020, was amended to introduce corporate liability for corruption offences of commercial organisations. While our policy is clear, in that we do not tolerate acts of bribery or corruption in any aspect of our business, we have taken the necessary steps to reinforce awareness, strengthen due diligence procedures, review controls, and identify potential corruption risks as well as put in place adequate mitigation measures. In further building a culture of integrity and compliance in the Company, our Risk, Integrity & Compliance Department, in collaboration with Edgenta Academy, Additionally, I would like to express our gratitude to our valued shareholders, for your faith and support in our business and operations; to our clients, for your continued trust in our ability to provide innovative solutions and deliver on projects; and to our business associates, partners and financiers, for your confidence in our business. To our workforce, and especially our front liners, thank you for your dedication and commitment. And finally, to my colleagues on the Board, thank you for your good judgement and counsel. The Board is optimistic about the future of UEM Edgenta and we will continue to strive to build a more competitive, resilient and sustainable UEM Edgenta. TAN SRI DR. AZMIL KHALID Independent Non-Executive Chairman ANNUAL REPORT 2020 37 1 2 3 4 5 6 7 8
SYAHRUNIZAM SAMSUDIN Managing Director/Chief Executive Officer Trends and data emerging from the crisis helped us identify growth opportunities which in turn prompted a strategy refresh. We saw the need to pivot to a more sustainable business model that will continue to drive long-term value for our stakeholders under the new normal. Ultimately, 2020 was a year for us to reflect, reset and reposition our businesses to be future-proof. “ “ Dear Shareholders, FY2020 was an unprecedented year during which significant disruptions caused by the COVID-19 pandemic left a devastating impact on people and the economy. Our resilience, agility and adaptability have been key in helping us navigate through this incredibly unpredictable period, enabling us to quickly emerge with confidence and rigour as we continue to deliver our services and solutions amid the pandemic. Key Messages UEM EDGENTA BERHAD 38
STRONG NET CASH POSITION AT RM206.6 million Of particular importance is our role in supporting the Malaysian Government to contain the spread of the virus through our digital healthcare solutions, which today power critical healthcare infrastructure nationwide. Our endeavours in this area are detailed under the section on Our Contributions to Pandemic Recovery Efforts. At the forefront of the battle against the virus are our colleagues who deliver uninterrupted essential services at the hospitals, highways, offices and industrial assets under our care. Their courage, dedication and selfless sacrifice are an inspiration to us all and we would like to take this opportunity to commend these front liners who have been working tirelessly to strengthen the nation’s line of defence against the virus, as well as to keep us safe on the roads, at our workplaces and in public places. Undoubtedly, our business segments were impacted by the repercussions of the pandemic, from restricted movements to delays and postponements in projects, rising operating costs and unemployment. Recognising early on that the impact may last beyond the year, we reviewed our business priorities and portfolio. Trends and data emerging from the crisis helped us identify growth opportunities which in turn prompted a strategy refresh. We saw the need to pivot to a more sustainable business model that will continue to drive long-term value for our stakeholders under the new normal. Ultimately, 2020 was a year for us to reflect, reset and reposition our businesses to be future-proof. A RESILIENT PERFORMANCE Against the backdrop of unprecedented operating conditions, we recorded a commendable revenue of RM2.0 billion for the year ended 31 December 2020 (FY2020), from RM2.4 billion in the previous financial year (FY2019). The Group’s normalised net profit, excluding write-down of unsold property inventories, totalled RM64.4 million compared with RM165.0 million in FY2019. The lower profit factored in a one-off write-down of RM50.0 million undertaken in the first half of FY2020, as part of efforts to restructure and rationalise our non-core businesses. Our balance sheet remained healthy with a low gross gearing ratio of 0.32 times, a strong net cash position at RM206.6 million. Of significance, we ended the year with a robust long-term orderbook of RM12.2 billion, which will see us through to 2038. We continued to win new contracts throughout the turbulent year AT THE FOREFRONT OF THE BATTLE AGAINST THE VIRUS ARE OUR COLLEAGUES WHO DELIVER UNINTERRUPTED ESSENTIAL SERVICES AT THE HOSPITALS, HIGHWAYS, OFFICES AND INDUSTRIAL ASSETS UNDER OUR CARE WE CONTINUED TO WIN NEW CONTRACTS THROUGHOUT THE TURBULENT YEAR IN ALL FOUR OF OUR BUSINESS SEGMENTS, TOTALLING RM1.44 BILLION, OF WHICH 92% WAS FROM NON-CONCESSION BUSINESSES AND 60% FROM INTERNATIONAL BUSINESSES STATEMENT MD/CEO’S in all four of our business segments, totalling RM1.44 billion, of which 92% were from non-concession businesses and 60% from international businesses. These demonstrate our resilience and the ability to break into new markets as we expand our support services, technology and digital-based offerings while continuing to focus on operational and service delivery excellence. Our Healthcare Support division has been playing a pivotal role in supporting national COVID-19 recovery efforts across the region, serving over 300 hospitals in Malaysia, Singapore, Taiwan and India. Despite the macroeconomic uncertainties, higher operational costs exacerbated by the pandemic and ANNUAL REPORT 2020 39 1 2 3 4 5 6 7 8
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