2019 UEM Edgenta Annual Report

MD/CEO’s Statement For the year 2019, I am pleased to note that UEM Edgenta registered a solid performance despite a slower economy and a more volatile operating environment domestically. We were able to navigate through these conditions by staying true to our focus, disciplined execution, driving operational excellence and leveraging on technology to do more with less. Our people no doubt understood what it takes and delivered results to make the difference. All our businesses registered growth in FY2019, the Company’s revenue rose to RM2.4 billion, recording a 10.5% growth or a RM228.6 million increase. Profit After Tax was at RM188 million recording a growth of 23.4% an increase of RM35.6 million. Overall, I am pleased that the Company was able to register another strong growth for FY2019, a result which could only be achieved by the hard work of our people and support from our clients for the past years as we execute our business strategies to make our growth a sustainable success. THE UEM EDGENTA JOURNEY The UEM Edgenta of today represents a culmination of several corporate transactions which took place between 2014 to 2017. These then set the step for transformation and organic growth through diversification of our business beyond traditional contracts, regional expansion into Singapore, Indonesia and Taiwan, reducing our exposure to low growth markets and using technology, IT, mechanisation and sustainability to power the transformation thinking. Since the creation of UEM Edgenta in 2014, the Company embarked on an ambitious programme to set itself as a clear industry leader in Asset Management 36 MD/CEO’s Statement 37 UEM Edgenta Berhad MESSAGE FROM OUR LEADERSHIP STRATEGIC FOCUS OPERATIONAL REVIEW SUSTAINABILITY EFFORTS CORPORATE GOVERNANCE INTRODUCTION FINANCIAL REVIEW ADDITIONAL INFORMATION UEM EDGENTA AT A GLANCE and Infrastructure Solutions. Today, we are proud that our leadership position is not only acknowledged in Malaysia, but beyond, and our market position and multiple awards reflect this. Since then, we have nurtured the evolution of our businesses. Previously disparate, we are now focused on Asset Management and Infrastructure Solutions with a balanced portfolio of concession and commercial contracts, regional presence and involvement in marque projects across our sectors. To anchor our growth, we have inculcated operational and organisational excellence initiatives, as well as technological and HSSE leadership, and best practices from other industries. This has not only benefited our organisation, but also transformed and elevated the industries we operate in. Following these efforts undertaken throughout the years, we have registered a compounded annual growth rate (“CAGR”) of 13.4% in our core revenue from RM1.27 billion in 2014 to RM2.38 billion in 2019, while core PAT has risen at a CAGR of 13.2% from RM101.0 million to RM188.0 million during the same period. As highlighted in our Chairman’s Statement on pages 33 - 35 of this Report, the Revenue RM2,411.2 million year-on-year 10.5% Earnings Before Interest, Tax, Depreciation and Amortisation RM325.1 million year-on-year 22.0% Profit After Tax RM188.0 million year-on-year 23.4% Dato’ Azmir Merican Managing Director/Chief Executive Officer journey we embarked on in 2014 has borne fruit, evidenced by more than RM850.0 million in dividends paid out from 2014 to 2019 enjoyed by shareholders. Annual Report 2019 CAGR 13.4% 1,272 12% 62% 1% 25% 2014 1,443 1% 10% 63% 26% 2015 11% 1,531 51% 8% 30% 2016 2,115 8% 41% 8% 43% 2017 2,170 5% 41% 9% 45% 2018 2,384 39% 8% 48% 5% 2019 (RM MILLION) CORE REVENUE* 2014 - 2019 Healthcare Support Infrastructure Services Property & Facility Solutions Asset Consultancy * Excludes Opus International Consultants, East Malaysia Healthcare Support Concession and Property Development. (RM MILLION) CORE PAT* 2014 - 2019 CAGR 13.2% 2015 117 15% 62% 1% 22% 2016 136 22% 43% 11% 24% 2017 129 12% 41% 6% 41% 2018 155 4% 42% 9% 45% 2019 188 5% 48% 10% 37% 2014 101 6% 41% 58% -5% BUSINESS OVERVIEW UEM Edgenta has, over the years, built an agile and resilient business with clear focus areas. In 2019, the Healthcare Support business in Singapore successfully secured contracts worth close to RM944 million to provide Hospital Support Services at the Ministry of Health (“MoH”) Singapore’s restructured hospitals. Apart from that, the Singapore business also managed to obtain a visitor management services contract, which will be provided to the Singapore General Hospital. The division also received the Enhanced Clean Mark accreditation from the National Environment Agency of Singapore in recognition of our high cleaning standards and services in delivering sustainable, value-added results. In Malaysia, we have rolled out energy management programmes including Energy Performance Contracting (“EPC”), which has resulted in energy cost savings of RM55.0 million between 2017 and 2019; out of which RM41.0 million was generated for MoH Malaysia’s hospitals. Furthermore, we have also supported the MoH Malaysia with a new Replacement Through Maintenance programme for hospital equipment, as well as the development and maintenance of the Blood Bank Information System (“BBIS”) project which is a comprehensive system that covers vein-to- vein functionalities in Transfusion Service across MoH Malaysia’s blood banks and hospitals. At present, MoH Malaysia has deployed the system at 22 transfusion centres including National Blood Centres nationwide. Following our previous consolidation, during the year in review, we continued with our rebranding and repositioning exercise initiated at the end of 2018. In 2019, we undertook the rebranding of UEMS Malaysia to Edgenta UEMS and UEMS Taiwan to Edgenta UEMS Taiwan, efforts aimed at simplifying and streamlining the UEM Edgenta brand across the business. We also changed the name of KFM Holdings Sdn. Bhd. to Edgenta GreenTech Sdn. Bhd., serving as one of the key business units for our Property & Facility Solutions (“PFS”) division. To strengthen our brand positioning initiatives and deepen stakeholder engagement efforts, we launched our new corporate website in November 2019 which projects our current values and beliefs, as well as our corporate profile and service offerings. Through our PFS division, we also carried out facility management for additional wasl Group sites in Dubai, as well as secured an Integrated Facility Management contract for Menara Bumiputera-Commerce for Pelaburan Hartanah Berhad, bringing our coverage of CIMB Group buildings to nine. We also carried out an EPC project at Proton’s Centre of Excellence at the Sime UEP Industrial Park and the Tanjung Malim manufacturing plant. Our Infrastructure Services division also secured significant contracts during the year. These include a three-year maintenance and asset management contract for the Cikampek-Palimanan Highway in Indonesia, which we will undertake in partnership with Astra Group. The contract is for a period of three years with an option to extend for two years. Additionally, the division achieved a major milestone with its first productisation of our Road Asset Management System (“RAMS”) technology, which we first developed in-house for our own use and is now commercialised for Sarawak State Roads via working with a strategic local partner. In our Asset Consultancy division, we were appointed as the project management consultant for the Sarawak Coastal Road Network and Second Trunk Roads, as well as to undertake a condition survey on the rail assets of MRT Corp’s MRT Line 1. An exciting development which is poised to make a big impact in the near future is the monetising of our investment in technology and IT. For every area of our business, we are able to offer software-driven solutions to drive efficiency and provide useful intelligence. These solutions range from efficient-based hospital-related solutions such as UE Track TM , asset monitoring sensors on equipment such as chillers, ambulances and hospital