2021 UEM Edgenta Annual Report

UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 31 30 CFO’S REVIEW CFO’S REVIEW FINANCIAL PROGRESS AND CAPITAL DISCIPLINE Financial strength underpins delivery of our strategy Heading into FY2021, the New Normal brought with it margin erosion and higher operating costs as a result of compliance with pandemic SOPs. Correspondingly, the Group’s financial strategy was centred on growing top line revenue whilst managing overall costs. The Group looked to enlarge its addressable market and build capabilities as well as exploring new revenue streams in driving top line growth. In managing costs, the Group sought cost savings and efficiencies through process improvements, cost restructuring and operational efficiencies. These initiatives included adopting the LEAN programme, Edgenta Idea Bank, Innovation Garage, staff rationalisation and various procurement cost optimisation initiatives. In addition, tech-based solutions were deployed to further drive cost reduction as we provide value added services to our clients. As a result of our financial strategies, the Group achieved higher revenue for the year under review of RM263.7 million (13.0% Y-o-Y), from RM2.028.7 million to RM2,292.4 million. This was attributed to higher pavement work orders and billable expressway work, in-line with increasing traffic volume on expressways. There were also increase in revenue from COVID-19 related businesses, i.e. Field Hybrid ICUs, RFID e-Bracelets and other billable work from the Healthcare Support division in Malaysia, Singapore and Taiwan. Most business segments recorded revenue growth except Asset Consultancy, as the business was impacted by interstate border restrictions which resulted in the delay of staff deployment to our East Malaysia projects, as well as the deferment of award of major works and contracts. For better analysis of operating profitability of the Group, we excluded staff rationalisation costs and one-off foreign exchange (“forex”) translation loss following the completion of voluntary wind-up of Faber LLC in FY2021 and the write-down of unsold property inventories and one-off forex translation gains upon settlement of an intercompany loan in FY2020. Normalised PAT was higher by RM12.1 million (or 26.8% Y-o-Y) driven by better business performance, successful cost optimisation initiatives and cash flow management. This has resulted to lower operating expenses and finance cost in FY2021. Group Financial Performance FY2021 FY2020 Variance RM’mil RM’mil RM’mil % Revenue 2,292.4 2,028.7 263.7 13.0 PBT 78.6 46.9 31.7 67.6 PAT 43.4 14.4 29.0 201.4 Normalised PBT* 94.8 77.7 17.1 22.0 Normalised PAT* 57.3 45.2 12.1 26.8 * Normalised profit excluding: FY2021: Staff rationalisation cost (RM10.3 million) and one-off forex translation loss following completion of voluntary wind-up of Faber LLC (RM3.6 million) FY2020: Write-down of unsold property inventories (mixed residential developments by Faber Development Holdings) (RM50.0 million) and one-off forex translation gain upon settlement an intercompany loan (RM19.2 million) Financial performance by segments A major contributor to Group revenue, the division reported higher revenue of RM199.1 million (or 16.1% Y-o-Y) contributed by new revenue streams such as Field Hybrid ICUs and RFID e-Bracelets. There were also successful installation of nine BEMS assets under RTM for MoH and increase in billable works for Malaysia. The division also recorded higher revenue from Singapore and Taiwan contributed by mobilisation of new contracts, including housekeeping and portering services at Sengkang General & Community Hospital and kitchen stewarding services at Ng Teng Fong General Hospital. Healthcare Support Recorded both higher revenue and PBT of RM13.8 million (9.2% Y-o-Y) and RM8.5 million (68.2% Y-o-Y), respectively. This was due to higher contributions from projects in Dubai and new projects in Malaysia, which includes contracts from Menara Etiqa, Synthomer, Perbadanan Insurans Deposit Malaysia (“PIDM”), IBCC-KLCC and H&M stores nationwide. Higher PBT was a direct result of flow through of higher revenue and share of profits from an associate in India. Property & Facility Solutions Achieved higher revenue of RM45.3 million (8.3% Y-o-Y) on the back of increases in pavement and maintenance works done for expressways in Malaysia. This was in line with the recovery of traffic volume as we saw less restrictive inter-state travel. Excluding staff rationalisation costs amounting to RM10.3 million in FY2021, normalised PBT was higher by RM2.3 million (5.9% Y-o-Y) comparative to the previous year, primarily driven by higher revenue. Infrastructure Services Recorded lower revenue of RM5.6 million (-6.4% Y-o-Y) stemming from the delay in staff mobilisation to East Malaysia and a reduction in contract value for Network Maintenance Management (“NMM”) contract. Excluding staff rationalisation costs amounting to RM2.3 million in FY2021 and one-off forex translation gain amounting to RM19.2 million in FY2020, normalised loss before tax increased by RM6.1 million (-55.6% Y-o-Y). Asset Consultancy I am pleased to report our commendable set of results amidst the challenging economic and operating environment. Despite the prolonged movement control order (“MCO”) and subdued economy, our financial performance strengthened with the gradual recovery of the economy postpandemic. We are progressing well towards our EoTF2025 goals. The lifting of various restrictions and gradual reopening of the economic and social sectors augured well for the Group. As we progress towards normalcy in the second half of 2021, we witness recovery in our revenue to the pre-pandemic level. Under the new COVID-19 environment, while we continue to deliver our project on-hand with an order book of RM10.8 billion, we also managed to capitalise on various COVID-19 management solutions such as Field Hybrid ICUs and RFID e-Bracelets for the Ministry of Health. Our strategic focus, operational resilience and revenue diversification to international markets have enabled us to successfully navigate the impacts and uncertainties caused by the continual global pandemic. Stringent cash flow management and various cost optimisation initiatives were in-place as we learnt to operate in the new normal despite rising COVID-19 compliance cost. HILLARY CHUA PEI SUM Chief Financial Officer

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