MY E.G. SERVICES BERHAD Registration No. 200001003034 (505639-K) 24 CAPITAL AND OPERATIONAL EXPENDITURE In pursuit of growth opportunities, CAPEX was stepped up in FY2021, though management continued to exercise prudence in managing CAPEX for the financial year. In essence, the strategy remains centred on balancing between investing to unlock business growth and expansion while conserving adequate capital. Similarly, efforts to manage and ensure efficiency of OPEX were also prioritised. In FY2021, the Group saw CAPEX of RM280.23 million, 53.19% higher year-on-year (FY2020: RM182.93 million), while OPEX stood at RM397.28 million, 54.4% higher year-on-year (FY2020: RM261.72 million). CAPEX and OPEX incurred in FY2021 were mainly for the following: CAPEX OPEX Technologies and services revolving around digital health travel pass; Development of blockchain and related modules; Decentralised finance; E-government services related modules; and Office and IT equipment Personnel-related expenses and operating expenses; Advertising and promotion expenses; Maintenance and operating expenses for MYEG’s building (“MYEG Tower”); and Depreciation and amortisation charges. On a separate note, on 17 June 2021, MYEG had sought its shareholders’ approval for the allocation of employees’ share option scheme (“ESOS”) options to eligible directors of MYEG, at an extraordinary general meeting (“EGM”). As the ESOS was implemented on 24 December 2020 and the basis of allocation had been determined for all employees, the objectives of allocation of ESOS Options to eligible directors is to recognise the contribution of Executive Directors in MYEG’s businesses and foster the participation of Non-Executive Directors in MYEG towards effective and balanced decision-making in the Board. The basis in determining the allocation of the ESOS Options to the Board were detailed in the Circular dated 16 June 2021. ASSETS AND LIABILITIES, CASH AND BANK BORROWINGS MYEG’s assets continue to far outweigh its liabilities. Increases in both current and non-current assets brought MYEG’s total asset position to a new high of RM1.88 billion, 32.39% higher year-on-year (FY2020: RM1.42 billion). Of note, property and equipment increased by 5.04% to RM300.72 million (FY2020: RM286.30 million). Trade receivables had also increased significantly by 68.29% to RM290.78 million (FY2020: RM172.78 million). Development costs in FY2021 increased by 88.32% to RM322.52 million (FY2020: RM171.26 million). The Group’s cash and bank balances as at 31 December 2021 decreased by 61.85% to RM75.82 million (FY2020: RM221.87 million). The decrease in cash is attributed to the use of funds for CAPEX, including the purchase of property and equipment and other investments. MYEG continues to possess sufficient cash to meet working capital requirements. MYEG’s total borrowings consisting of current and non-current secured loans arising from term loans, as well as unsecured loans comprising revolving credit, was marginally lower at RM160.55 million for FY2021 (FY2020: RM165.52 million). MYEG continues to maintain a healthy debt-to-equity ratio of 0.16 times (FY2020: 0.03 times). MANAGEMENT DISCUSSION AND ANALYSIS REVIEW OF THE MACRO-OPERATING ENVIRONMENT (CONT’D)
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