22% Net Profit Jump Marks Improved Earnings After Sale Of Opus International Consultants Limited In FY2017
Full Release: KUALA LUMPUR, 5 March 2019 – UEM Edgenta Berhad (“UEM Edgenta” or “Company”), the region’s leading Asset Management and Infrastructure Solutions company, recorded a strong set of financial results for the year ended 31 December 2018 (“FY2018”), which saw the Company posting a net profit of RM152.2 million, a surge of 22% on a year-on-year (“Y-o-Y”) basis, compared to RM125.1 million for FY2017. 2 of 4
Q4 FY18 results
Growth was attributed to a strong performance in Q4 FY2018 which registered a Profit Before Tax (“PBT”) of RM82.9 million, a threefold increase when compared to Q3 FY2018 PBT of RM25.1 million. This is on the back of a 23% increase in revenue to RM647.4 million in the quarter, which saw two of the Company’s core divisions, the Healthcare and Infrastructure Services divisions, contributing almost 90% of revenue and PBT for FY2018. On a Y-o-Y basis for the quarter, the PBT for Q4 FY2018 was also 10% higher than Q4 FY2017 with a slight decline in revenue.
Amidst a challenging operating environment, UEM Edgenta was able to record a 3% increase in revenue to RM2.2 billion for FY 2018 as compared to FY 2017’s revenue of RM2.1 billion. The revenue growth was derived across all of UEM Edgenta’s major business divisions.
PBT increased to RM198.2 million for FY2018 which was mainly due to improvements realised through group-wide efficiency and lower financing costs, resulting in a PBT margin increase to 9% in FY2018 as compared to 8% in FY2017. Correspondingly, net profit and profit after tax and non-controlling interest (“PATANCI”) stood at RM152.2 million and RM148.2 million respectively. Excluding a one-off accounting gain on disposal of OIC of RM274.9 million, PATANCI of RM148.2 million is higher than PATANCI in FY2017 with share of results of OIC up to disposal in December 2017 of RM143.3 million.
Notably, the Healthcare Support division delivered a strong 8% increase in revenue and 7% increase in PBT on a Y-o-Y basis. Revenue grew on the back of new contracts secured in FY2018 in Singapore and Taiwan, coupled with a high customer retention rate of almost 90% in its commercial business. UEM Edgenta’s Healthcare Support division has also benefited from the continuous sharing of best practices and technology transfer between its concession and commercial businesses such as the introduction of UETrackTM, the commercial business’ proprietary technology for service delivery, in Malaysian Government hospitals.
Additionally, UEM Edgenta maintained its robust balance sheet with a net cash position of RM70.1 million as at end-2018. This was attributable to strong cashflow from operations of RM209.3 million in FY2018. UEM Edgenta was also able to maintain its gross gearing ratio at a conservative 0.35 times.
Dato’ Azmir Merican, Managing Director / Chief Executive Officer of UEM Edgenta commented, “Our increased profitability and consistent cashflow generation has enabled us to deliver yet another strong full year dividend payout of 14 sen to our shareholders. We made a decision to capitalise on the sale of OIC in FY2017 which has paid off well, increasing our net profit by 22% to RM152.2 million. We pared down debt, redeployed cash and rewarded shareholders, and at the same time delivered better results and growth.” 3 of 4
Dividend for FY2018
On the back of profits generated for the financial year, coupled with its strong financial position as at end-2018, UEM Edgenta has declared a 2nd interim dividend for FY2018 of 8 sen. Combined with the earlier 1st interim dividend of 6 sen declared in August 2018, total dividend payout is 14 sen and is equivalent to a payout ratio of 78.5% on FY2018’s results, in line with the Company’s enhanced dividend policy of at least 50% and up to 80% payout. The total dividend payout in FY2018 also represents a yield of 5.1% based on share price as at 31 December 2018 of RM2.72.
In recent months, UEM Edgenta has secured several notable contracts, namely for the provision of hospital support services to the Ministry of Health’s 9 Klinik Kesihatan in Penang and Cardiac Vascular Sentral Hospital in Kuala Lumpur, National Taiwan University Hospital and Taipei Medical University Hospital in Taiwan, Tan Tock Seng Hospital, Assisi Hospice and Jurong Medical Centre in Singapore; upgrading of sewage treatment plants and ancillary facilities along the North-South Expressway; integrated facility management services at Bank Negara Malaysia’s recovery sites and Wasl development’s Deira Zone 1 & 2 in Dubai; as well as energy performance contracting for PROTON and Hospital Universiti Sains Malaysia. In addition, the Company is looking forward to servicing the new, state-of-the-art Women and Children Hospital in Kuala Lumpur which received its first patient on 25 February 2019.
All these new projects, which will be accretive in FY2019 onwards, coupled with a healthy pipeline of new projects, will enable organic growth for UEM Edgenta. The Company remains optimistic of its prospects in Healthcare Support and Infrastructure Services, where it is also exploring opportunities to provide project management services for new highways and roads. As the industry leader in these sectors in the countries it operates, UEM Edgenta will focus on protecting its market share, as well as expand and deepen value chain offerings. The Company’s work-in-hand as at 31 December 2018 stood at RM13.4 billion, driven by both of its core divisions to provide the business sustainable returns over the long-term. UEM Edgenta is positive on the outlook to secure more work-in-hand in FY2019.
Additionally, shareholders may look forward to increased profitability as UEM Edgenta continues the operational excellence initiatives implemented over the course of FY2018 to optimise profit margins such as the “Lean” programme to build capabilities across the Company via process improvements and training, as well as technology and innovation-centric programmes to tackle high-impact operational areas.