UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 27 26 MD/CEO’S STATEMENT MD/CEO’S STATEMENT In supporting the government and the nation during this time, it would appear that the Social aspect of the ESG agenda has driven the Group’s approach of late and has also contributed to positive business results. What else has the Group focused on in this area? Q2 Within the ESG agenda, the Social aspect has been of particular importance as we viewed our business through the lens of the pandemic over the past two years and learnt over time what we needed to do to ensure we would all exit this unprecedented situation intact. This is where I have shared with our stakeholders that the challenging situation that we are in is one that we have to face together. More importantly, while imparting this message, I also explained to our business partners in particular that while we are all affected, UEM Edgenta would definitely not be leaving anyone behind. For our business partners, their main concern is ultimately about the business continuity of the Group and we were able to address this effectively as we did not stop investing or spending or innovating even during the most challenging of times. I hope it has inspired confidence within our ecosystem as we supported them, as they supported us, through thick and thin as we demonstrated that we are a resilient organisation that can always be relied upon. To our people, the message of togetherness has been similar. This has been a period where a human-centred approach has prevailed over everything else and we have responded accordingly. We have maintained open channels of communication during this challenging time, clearly indicating our willingness to listen to and support our employees, especially in the context of their mental wellbeing. We have also, for the first time, engaged directly with the union representatives who we recognise as important stakeholders within our value creation ecosystem. While significant, I believe that the intention is more important, as making an effort to engage will compel the other party to also engage. It also puts to rest the ‘corporate versus the people’ narrative which is clearly counterproductive to the progress of any organisation. While we may not be able to solve all the issues overnight, it is a starting point that brings us closer and helps us understand their concerns better. In engaging with our employees domestically and in our international locations, cognisant of the fact that a one-size fits all approach will not work in managing our greatest assets. The higher profits in 2021 were partly a result of disciplined cost optimisation initiatives. What can you share about where the Group is on this journey, as well as its targets? Q4 The impetus to lower our costs is clear given that we operate in a low-margin environment, but it was certainly the pandemic that accelerated our efforts and in fact, enabled certain shifts in behaviour to take place faster. For instance, because of the pandemic, we had to streamline our operations and become sharper, leaner and more efficient in procurement to obtain best-in-class service from our contractors and suppliers. We also took this opportunity to work more closely with our clients and partners to extract greater value from our ongoing engagements. In 2021, we continued implementing new measures to improve the efficiency of our maintenance works for our client, PLUS Malaysia Berhad (“PLUS”), while maintaining our focus on reducing cost. As a result, we have achieved annual savings of approximately RM90 million, including routine maintenance work and Research & Development of Stress Absorbent Membrane Interlayer (“SAMI”) pavement. Internally, we optimised the efficiency of a significant portion of our processes and operations. I encouraged our leaders to challenge the norm to unlock greater efficiencies and will continue to challenge them to do so. The pandemic also impacted work patterns, for example, working from home allows people to do more when commuting time is saved, resulting in cost optimisation. We were also fortunate that we were able to harness and leverage the technology that we have to enable business continuity, which has also helped lower costs. Our strong digital presence enabled us to seamlessly transition to working from home and we enhanced this further to ensure that crucial parts of the business could also be run remotely. These initiatives will remain the cornerstone of how we manage our operations and are also helping to globalise how we work in Malaysia, which is important for us to implement rapidly given our growing global footprint. Revenue RM2.29 billion 13% Normalised Profit After Tax RM57.3 million 27% In terms of business performance, we signed new contracts totalling more than RM1 billion, which is a significant achievement given the difficult operating environment. As alluded to above, the international segment is growing steadily, accounting for 54% of the new contracts. This is the trend we are seeing globally as the healthcare sector improves on the back of the large addressable market and is therefore aligned with our strategy to diversify our revenue base. The continued fight against COVID-19 is also giving us the added opportunity to apply our skills in hospital support services, facilities management, energy efficiency and asset management, enabled by technology. Our order book also remains strong at RM10.8 billion which indicates the resiliency of our cash flows and our ability to continue building on our track record to chart our way forward. I am very proud of the team’s achievement in 2021 as they brought together resources, talent and technology to produce a strong performance. Q3 How did the Group’s business perform in 2021 given the challenging operating environment? I am pleased to share that from the financial perspective, we finished strong in 2021, delivering higher revenue with year-on-year (“Y-o-Y”) growth of 13% to RM2.29 billion. Of this revenue, 75% was from our non-concession business. In addition, our market diversification initiative, which is part of the EoTF2025 strategy, has also yielded results with almost 40% of our revenue in 2021 being derived from our international business, and setting the scene for an even bigger share of revenue going forward. Normalised Profit After Tax (“PAT”) grew by 27% Y-o-Y to RM57.3 million and as a result, we were able to resume dividend payouts after pausing in 2020 due to the pandemic-induced economic downturn. The higher profits were driven by higher revenue from most of our divisions, especially from the Healthcare Support division’s COVID-19 management business, as well as lower operating expenses and finance cost as a result of cost optimisation initiatives. Within the ESG agenda, the Social aspect has been of particular importance as we viewed our business through the lens of the pandemic over the past two years and learnt over time what we needed to do to ensure we would all exit this unprecedented situation intact.
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