A RESILIENT PERFORMANCE

Against the backdrop of unprecedented operating conditions, we recorded a commendable revenue of RM2.0 billion for the year ended 31 December 2020 (FY2020), from RM2.4 billion in the previous financial year (FY2019).

The Group’s normalised net profit, excluding write-down of unsold property inventories, totalled RM64.4 million compared with RM165.0 million in FY2019. The lower profit factored in a one-off write-down of RM50.0 million undertaken in the first half of FY2020, as part of efforts to restructure and rationalise our non-core businesses.

Our balance sheet remained healthy with a low gross gearing ratio of 0.32 times, a strong net cash position at RM206.6 million.

Of significance, we ended the year with a robust long-term orderbook of RM12.2 billion, which will see us through to 2038. We continued to win new contracts throughout the turbulent year in all four of our business segments, totalling RM1.44 billion, of which 92% were from non-concession businesses and 60% from international businesses. These demonstrate our resilience and the ability to break into new markets as we expand our support services, technology and digital-based offerings while continuing to focus on operational 2 and service delivery excellence.

Our Healthcare Support division has been playing a pivotal role in supporting national COVID-19 recovery efforts across the region, serving over 300 hospitals in Malaysia, Singapore, Taiwan and India. Despite the macroeconomic 5 uncertainties, higher operational costs exacerbated by the pandemic and compressed margins, the division reported higher year-on-year revenue growth supported by key contract wins from both commercial and concession businesses valued at RM1.0 billion representing 71% of all new contracts for the year. Notable wins include Biomedical Engineering Maintenance Services (“BEMS”) contracts for the Sarawak General Hospital in Malaysia, Replacement Through Maintenance (“RTM”) contracts for the MoH Malaysia, and four soft services contracts, mainly in public and environmental health-related operations, for Sengkang General Hospital and Changi General Hospital in Singapore, and for Cheng Hsin General Hospital and Yang Ming University Hospital in Taiwan. These contributed to the division’s revenue of RM1.23 billion and Profit Before Tax (“PBT”) of RM97.3 million.

The Group’s Property & Facility Solutions division registered a decrease in revenue at RM149.2 million and PBT of RM12.5 million, mainly due to the completion of township management contracts and projects in Dubai as well as the progression of Energy Performance Contract (“EPC”) projects from the installation phase to the maintenance phase. Restrictions imposed during the pandemic also saw a reduction in facilities management works because of project delays and reprioritisation of expenditure by businesses. On a positive note, the division gained traction during the year by securing new facilities management and maintenance services contracts for CIMB Bank branches and Universiti Teknologi Petronas’ District Cooling Plant in Malaysia.

Revenue from our Infrastructure Services fell during the year due to the suspension and deferment of work owing to reduced traffic volume from recurring Movement Control Order restrictions and curbs on inter-state travel. The division, which currently manages the maintenance of 3,500 km of highways and state roads in Malaysia and Indonesia, recorded a respectable revenue of RM549.1 million. Despite new contract wins for the maintenance of the Sarawak State Road and pavement work packages for the Pan Borneo Sarawak Highway, as well as a pavement contract for Selangor Public Works Department (“JKR”), PBT contracted to RM38.7 million.

Reprioritisation and deferment in government expenditure for big infrastructure projects, as well as reduced work packages for Network Maintenance Management and Pan Borneo Sabah, led to our Asset Consultancy division registering lower revenue of RM88.1 million. In tandem with the decrease in revenue and lower utilisation of project employees, the division’s PBT contracted to RM8.2 million. Nevertheless, the division won contracts to carry out project management consultancy for the Sarawak Coastal Road Network Phases 1 & 2 and the Second Trunk Road Phase 2. It also acquired an additional scope of service for the Pan Borneo Sarawak Highway Phase 2 and consultancy expertise for Pavement Structural Overlay works on the North-South Expressway.

OUR CONTRIBUTIONS TO PANDEMIC RECOVERY EFFORTS

In a proactive move to support the Government’s efforts to contain the virus as well as to stimulate economic recovery, we established various healthcare infrastructure and digital solutions during the year.

Our National Crisis Preparedness and Response Centre (“CPRC”) is a cloud- based real-time information system that connects all hospitals and quarantine centres that care for COVID-19 patients nationwide. The National CPRC system is used to collect patient details and clinical data; produce reports and statistics; manage capacity utilisation across the hospitals; and facilitate the management of resources such as personal protective equipment, manpower and laboratories.

We also provided a Field Hybrid Intensive Care Unit (“ICU”) at the Tengku Ampuan Rahimah Hospital in Klang, Selangor, to take in patients who could not be accommodated at the Sungai Buloh Hospital – the country’s main COVID-19 treatment centre – when its ICU was overcrowded. As these Field Hybrid ICUs are prefabricated, they can be assembled quickly to meet the demand for ICU beds in overcrowded hospitals.

In addition, we provided sanitisation and disinfection services to hospitals under the MoH Malaysia and COVID-19 quarantine centres. We also introduced more accessible and convenient COVID-19 testing facilities in the Klang Valley and Melaka in the form of drive-through screenings for businesses and individuals who require the Rapid Test Kit (“RTK”) or the Polymerase Chain Reaction (“PCR”) test. These innovative solutions represent new revenue streams and growth opportunities for the Group, and form part of our holistic COVID-19 business solutions playbook under our COVID-19 economy initiatives. The playbook, which was launched recently, encompasses UEM Edgenta’s digital-based solutions for the new normal. In this way, the Group is ever-ready to further support the Government in its ongoing national recovery efforts, as well as to provide our clients with post-pandemic solutions.

BECOMING A TECH-ENABLED SOLUTIONS COMPANY

Emerging trends and technologies brought about by the pandemic have presented us with new opportunities, with the potential to unlock new growth, new revenue streams and differentiated products and service offerings. One area where we have seen burgeoning growth is digitalisation. While there has been a rise in digital adoption over the years, there is no doubt that COVID-19 accelerated these trends.

In staying ahead of the competition, we began our transformation strategy, taking digital to the core in 2020. We believe our focus on accelerating our digitalisation plans has provided the much needed resilience during these challenging times. We will spearhead our technological adoption across all our businesses under our refreshed strategy and vision to be a Technology-Enabled Solutions Company with a focus on healthcare by 2025 – Edgenta of the Future 2025 (“EoTF25”).

EoTF25 is a fundamental shift towards a highly sustainable and future-proof business model. It enables UEM Edgenta to operate in the new environment of innovative low-cost, scalable, high-growth and differentiated solutions, whilst sustaining and extracting more value from our concession-based business. The shift also allows us to operate under a leaner cost structure with flexibility in managing costs by adopting technology and mechanisation while pursuing output-based contracts in growing markets. Essentially, these endeavours will provide us with top-line growth and margin expansion as the organisation is transformed into a key technology-enabled solutions company focused on growing our healthcare support, infrastructure, and facilities management (“IFM”) sectors.

Through rapid digitalisation and consolidating cost structures, we aim to save RM100 million over the next five years. This will be achieved through more efficient internal processes and organisation structure and will relate to procurement savings, tax and operating efficiency, digitalisation and mechanisation.

EoTF25 focuses on three pillars – diversifying markets, driving cost efficiency, and disrupting the industry with new products and services. We will gradually migrate away from our concession-based businesses and move into commercial businesses that will bring longer term returns and enable us to compete in international markets.

This diversification will involve both inorganic and organic growth strategies and partnerships, where we will push our boundaries beyond our shores. The goal is to grow into larger addressable markets in the Middle East, Europe and generally written as Southeast Asia.

Beyond Malaysia, we aim to expand our healthcare support services in existing markets. We currently have a dominant market position in providing soft support services in Singapore where we manage 11 of the 15 public hospitals, and in Taiwan, where we operate in more than 75% of all government public health facilities. We are exploring niche support services such as Facilities Engineering Maintenance Services (“FEMS”) and BEMS in Singapore, which are currently being provided to our concession-based HSS businesses in Malaysia. At the same time, we aim to pursue an inorganic strategy to acquire an ME-15 license in Singapore which would allow us to compete in larger government tenders thus enable us to penetrate the IFM sector.

UEM Edgenta’s future technology offerings in IFM will be based on our proven solutions in Healthcare Support businesses operating in Malaysia, Singapore and Taiwan. We are looking into expanding these services into high-value commercial IFM contracts including for industrial-based buildings, engineering, procurement and construction; and technology-based solutioning, particularly in the Middle East, where we have built inroads in Dubai, through our wholly owned subsidiary Operon Middle East.

We are also expanding our footprint in Singapore’s Smart Facilities Management (“FM”) business, which is aligned to the Singapore Government’s ambition to drive Smart FM adoption. Our existing UETrack^TM platform, which features Smart FM systems for building owners, has been implemented in an integrated community and lifestyle building in Singapore. Plans are in the pipeline to upgrade UETrack^TM with new features and modules to meet increasing operational demands.

For our infrastructure solutions, we will be focusing on delivering our current projects, driving efficiencies, and optimising cost savings as well as pursuing our expansion plans in Pan Malaysia. Our thrust into Borneo – Sarawak, Sabah and Kalimantan – will pave the way for our regional expansion, with Opus Consultants providing an existing beachhead through our involvement in the Sarawak Coastal Road Network and Second Trunk Road Phase 2 Project. We believe we will be able to capitalise on upcoming opportunities especially in view of recent developments including plans for better transportation and connectivity in Sarawak as well as Indonesia’s decision to relocate its capital city from Jakarta to Kalimantan. At the same time, we will continue to explore opportunities in Peninsular Malaysia’s highways and roads infrastructure segment.

We seek to disrupt our industry via a digitalisation strategy with a platform company rolling out cloud-based digital healthcare services. Our participation in various exciting post-COVID-19 initiatives are at an exploratory stage. For example, QuickMed, our virtual clinic platform, was successfully piloted during a nationwide COVID-19 screening for the Company’s 3,755 essential front liners. It allows users easy access and convenience to primary healthcare management and services.

Technology will play a crucial role in how we deliver our services. Our achievements are a testament of the capability of our teams, and we will continue to leverage on our in-house capabilities as well as new partnerships to introduce a combination of mechanisation and automation, Artificial Intelligence (“AI”), Internet of Things (“IoT”) and performance or output-based contracting services. This will enable us to transform our delivery model from being commodified, labour intensive and conventional, to one that is platform-based, mechanised, automated and differentiated from our competition. Our first wave of products will focus on digital healthcare to provide the market with convenient access to primary healthcare services, followed by more technology- enabled and cloud-based solutions for the property and infrastructure segments. We believe these offerings will revolutionise our products and services as we disrupt the conventional way of providing such services.

REVITALISING OUR CORE VALUES

As an important part of our journey towards building EoTF25, we have revitalised our core values. We believe that as the Group evolves, so will the way we make decisions, work, think and interact with each other. As such, our core values must stay relevant and current in changing times.

Core values represent the fabric of the culture we intend to build. Having a strong culture, established on a clear set of values, guides better decision-making, drives innovation and helps us stay on track in reaching our goals amidst business environment changes.

In redefining our core values, we undertook an employee-led exercise to encourage employees to voice out their thoughts. This also enabled us to incorporate diverse and inclusive perspectives into our core values, which led to the creation of FIRST – Future Focused; Imagine New Ways; Respect For All; Solutioning Mindset; and True to Our Word. Specific behaviours have been defined for each of the values which steer our preferred ways of working and form an integral part of our desired culture.

For UEM Edgenta, communicating our revitalised core values is just as important as defining them. We continue to ensure that they are embedded across our culture through various methods and communication channels. Additionally, my leadership team and I have taken the lead to champion and cultivate these core values, with each of us taking the role of an ambassador for a specific value to ensure that they are always at the forefront of each activity, initiative or programme carried out throughout the Group. It is our hope that every employee embraces and lives by these core values in everything they do.

OUTLOOK

With a global recovery from the pandemic now on the horizon, several recovery trends are expected to emerge from the prolonged crisis.

As the Malaysian Government gradually eases Movement Control Orders and lifts inter-state travel bans, we expect demand for domestic travel to increase, requiring more critical and non-critical maintenance from our Infrastructure Services division.

Additionally, our EPC solutions, driven by our Property & Facility Solutions division, will help drive cost efficiency for many asset owners in the new normal.

Future healthcare delivery models will shift away from traditional delivery models into new areas such as value- based care, preventive healthcare, medical technology, as well as telemedicine. These are areas that UEM Edgenta is currently pivoting into, and where we see new growth opportunities.

UEM Edgenta will continue to remain agile and responsive as we reposition ourselves for further growth by focusing on regional partnerships, new markets and new solutions, backed by a solid business model. We are confident that UEM Edgenta is well positioned to capitalise on post-pandemic recovery trends and emerge stronger going into FY2021.

ACKNOWLEDGEMENTS

In closing, I would like to take this opportunity to thank my predecessor Dato’ Azmir Merican, for his leadership, guidance and contributions in bringing UEM Edgenta to where it is today.

I wish to also express my gratitude to our shareholders, partners and clients – thank you for the trust, confidence and support through the years. We remain steadfast in our promise to continue creating shareholder value and are confident that our strategies have set us up well for the future.

To our Board of Directors, thank you for steering us through an unusually challenging year with your astute insights and guidance.

My deepest appreciation goes to our workforce across the organisation especially our front liners who keep the hospitals and buildings running in the backend, ensuring our roads remain safe and public spaces have been sanitised throughout the pandemic. Our people have demonstrated remarkable dedication, agility, and resilience through the year in unprecedented circumstances. And, to my leadership team, thank you for your unwavering support in driving our strategies. Stepping in as MD/CEO in July 2020, I am indeed honoured to lead such an amazing and talented team. With your support and our determination to build a sustainable business, I am confident that we will achieve our vision to be a Technology-Enabled Solutions Company with a focus on healthcare by 2025. Together, let us build a stronger UEM Edgenta.

SYAHRUNIZAM SAMSUDIN
Managing Director/Chief Executive Officer