GROWTH THROUGH TECH-BASED TRANSFORMATION A N N U A L R E P O R T 2 0 2 1
UEM EDGENTA BERHAD ANNUAL REPORT 2021 GROWTH THROUGH TECH-BASED TRANSFORMATION Our Annual Report cover this year depicts UEM Edgenta Berhad’s (“UEM Edgenta” or “Group” or “Company”) foray to becoming a Technology-Enabled Solutions Company with a focus on healthcare by 2025 in our next phase of growth through new products and market expansion which is in line with our Edgenta of the Future 2025 (“EoTF2025”) vision to drive digital transformation. As a market leader in Asset Management and Infrastructure Solutions in the region, we embrace technological advancements to improve productivity and enable the Company to grow swiftly through the Edgenta Way, which is our promise to go above and beyond in delivering world-class standards, whether we are creating opportunities, generating assets or providing services and solutions. INSIDE THIS REPORT ABOUT THIS REPORT 2021 Key Highlights 4 Who We Are 6 Vision I Mission I Our Values 7 Our Presence 8 Our Corporate Structure 10 What We Do 12 Edgenta Digital Ecosystem Platform 16 OVERVIEW OF UEM EDGENTA BERHAD 1 Scan QR code to view UEM Edgenta Annual Report 2021 microsite. Chairman’s Statement 20 MD/CEO’s Statement 24 CFO’s Review 30 • 5-Year Group Financial Summary 34 • Financial Highlights 36 • Simplified Statements of Financial Position 37 • Segmental Analysis 38 • Value Added Statement & Value Distribution 39 • Group Quarterly Performance 40 KEY MESSAGES 2 HOW WE RUN OUR BUSINESS Our Operating Environment 42 Market Trends 44 Stakeholder Engagement 46 • Investor Relations 48 Our Material Matters 52 Our Value Creation Business Model 54 Edgenta of the Future 2025 56 Key Risks and Mitigation 58 HOW WE PERFORMED Business Review Healthcare Support 62 Property & Facility Solutions 66 Infrastructure Services 68 Asset Consultancy 70 Sustainability Review Sustainability at UEM Edgenta 72 Sustainability Governance 72 Sustainable Economic Growth 76 Minimising Environmental Impact 79 Social Value Creation 85 MANAGEMENT DISCUSSION & ANALYSIS 3 Corporate Information 107 Board of Directors 108 Board of Directors’ Profile 110 Company Secretary’s Profile 120 Executive Leadership 121 Executive Leadership Profile 122 Organisation Structure 126 LEADERSHIP 4 Corporate Governance Overview Statement 128 Audit Committee Report 146 Additional Compliance Information 149 Statement on Risk Management and Internal Control 150 Corporate Integrity and Ethical Business Conduct 160 GOVERNANCE 5 Directors’ Report 163 Statement by Directors 169 Statutory Declaration 169 Independent Auditors’ Report 170 Statements of Comprehensive Income 176 Statements of Financial Position 178 Statements of Changes in Equity 182 Statements of Cash Flows 185 Notes to the Financial Statements 187 FINANCIAL STATEMENTS 6 Analysis of Shareholdings 315 Properties Held by the Group 318 Recurrent Related Party Transactions 320 Glossary 332 Notice of the 59th Annual General Meeting 335 Statement Accompanying Notice of the 59th Annual General Meeting 340 • Form of Proxy • Group Directory SHAREHOLDERS’ INFORMATION 7 Private PPV Medical Field Hybrid ICU Experiment & Mobile Lab Computed Tomography Scanning System Facilities Management Services COVID-19 Support Healthcare Support Health Attendant Services Facility Management Digital Healthcare RFID e-Bracelets Smart Facilities Management Road Asset Management System Infrastructure Assets Network Maintenance Services Project Management Engineering & Technical Expressways and State Roads Cyber Security WHAT THESE ICONS REPRESENT
ABOUT THIS REPORT ABOUT THIS REPORT UEM EDGENTA BERHAD ANNUAL REPORT 2021 3 2 1 2 3 4 5 6 7 ABOUT THIS REPORT REPORTING THAT IS BUILT ON BENCHMARKED PRINCIPLES, FRAMEWORKS AND GUIDELINES. UEM Edgenta is pleased to present the Annual Report 2021 with the confidence that it is a fair representation of UEM Edgenta’s performance throughout the year 2021. We believe that the report addresses all material matters and presents a balanced and fair account of the Group’s performance for the financial year from 1 January 2021 to 31 December 2021. It takes guidance from an internationally recognised integrated reporting framework and provides an accurate reflection of our strategic commitments for the short, medium and long term. The credibility of this report is supported by strong governance practices and external verification by Ernst & Young PLT, our auditors for financial information. NAVIGATING OUR REPORT We aim to produce a report that is interactive, engaging and easy to understand. To help you navigate around our Annual Report, we use the following navigational icons to highlight our reporting of the six capitals of value creation, as described in the IIRC Framework, as well as the material matters that impact our value-creation process: At UEM Edgenta, technology and digitalisation is our business licence to operate. It is a conduit for how we live our lives and work. It not only allows our people to work more efficiently, but also enables cost savings and more importantly, it is a critical tool in the creation of new revenue streams for the Group. With our EoTF2025 strategies, we have aligned our growth to meeting the needs of the world, innovating, responding and improving the asset management and infrastructure solutions for our clients. Although our business strategies have been calibrated to deliver sustainable returns for our shareholders, our responsibility does not end there. It goes beyond financial considerations, to supporting the needs of our wider community, being positive stewards to protect our precious environment and underpinning all that we do with a committed foundation of strong governance. SCOPE AND BOUNDARY This Annual Report covers the reporting period from 1 January 2021 to 31 December 2021, unless otherwise stated. The information presented relates to the activities of UEM Edgenta comprising our subsidiaries, joint operations, joint ventures and associates. The sustainability Statement 2021 marks the 4th year of UEM Edgenta’s Sustainability Reporting journey. The Sustainability Statement 2021 will communicate the Group’s key sustainability initiatives, performance and commitments in relation to material matters the Group prioritised. The reporting period of the Statement is aligned with Annual Report. Further, the Sustainability Statement covers UEM Edgenta’s operations in Malaysia and select geographical locations it operates in, namely Singapore, Taiwan and the United Arab Emirates (“UAE”). UEM Edgenta will strive to include other geographical areas in future reports. OUR TARGETED READERS This is our primary report to stakeholders and is intended to address the information requirements of our shareholders and prospective investors. We also present information relevant to the way we create value for other key stakeholders, including our employees, clients, regulators and communities. REPORTING GUIDELINES AND FRAMEWORKS Corporate Section Financial Section • Bursa Malaysia’s Main Market Listing Requirements • Bursa Malaysia’s Corporate Governance Guidelines, 4th Edition • Bursa Malaysia’s MD&A Guidelines • Bursa Malaysia’s Sustainability Guidelines 2nd Edition • Malaysian Code on Corporate Governance 2021 • Companies Act 2016 • With reference to the Global Reporting Initiative (“GRI”) Standards • Value Reporting Foundation • United Nations’ Sustainable Development Goals (“UNSDGs”) • The International Integrated Reporting Council’s (“IIRC”) framework for integrated reporting • Bursa Malaysia Securities Berhad Main Market Listing Requirements • Malaysian Financial Reporting Standards (“MFRS”) • International Financial Reporting Standards (“IFRS”) • Requirements of the Companies Act 2016 in Malaysia The Group’s sustainability efforts are aligned to the UNSDGs. This year, following our materiality review, we identified five UNSDGs that have material impact on our businesses and stakeholders THE CAPITALS THE MATERIAL MATTERS Financial Capital Intellectual Capital Manufactured Capital Human Capital Social And Relationship Resource Capital Natural Capital M1 Business Ethics M2 Innovation and Technology-based Operational Excellence M3 Economic Development M4 Supply Chain Management M5 Climate Change & Energy M6 Environmental Management M7 Occupational Health and Safety M8 Employment Culture M9 Customer Satisfaction M10 Human Rights Assessment M11 Local Community FEEDBACK We look forward to receiving and responding to any feedback on this report from our stakeholders. Please channel your feedback or query to: Head, Corporate Communications Level 16, Menara UEM Tower 1, Avenue 7 The Horizon, Bangsar South City No. 8, Jalan Kerinchi 59200 Kuala Lumpur Tel : +603 2725 6688 Fax : +603 2711 8057 E-mail : communications@edgenta.com Online Version This report and additional information on UEM Edgenta is available online at our corporate website, www.uemedgenta.com FORWARD-LOOKING STATEMENTS This report contains certain forward-looking statements relating to future performance. These statements and forecasts are based on current assumptions and circumstances, which could change, hence involve uncertainty. Various factors could cause actual results to differ materially from those expressed or implied by these forward-looking statements.
ANNUAL REPORT 2021 5 4 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD 2021 KEY HIGHLIGHTS 2021 KEY HIGHLIGHTS Normalised PAT (RM million) 57.3 PATANCI (RM million) 42.0 Gross Gearing Ratio 0.29x Net Cash Position (RM million) 185.2 Net Assets Per Share (RM) 1.85 BUSINESS HIGHLIGHTS Revenue (RM million) 2,292.4 EBITDA (RM million) 157.1 Profit Before Tax (RM million) 78.6 Profit After Tax (RM million) 43.4 Total Cash, Bank Balances, Deposits & Short Term Investment (RM million) 628.7 Total Assets (RM million) 2,855.1 Earnings Per Share (sen) 5.10 Shareholders’ Fund (RM million) 1,535.8 Completed installation of 14 units Field Hybrid ICU facilities which increase the ICU beds to 140 units nationwide Converted our UEM Edgenta Learning Centre into a private COVID-19 Assessment & Vaccination Centre and administered over 25,500 vaccine doses Developed Clinical Home Quarantine Management System and deployed 30,000 units of Radio-frequency Identification e-Bracelets for real-time monitoring of COVID-19 patients Signed a Memorandum of Business Exploration with Asma Advanced Solutions LLC to explore the Middle East market Registered 23 new accounts for soft services contracts in Taiwan at Wanfang Hospital, National Taiwan University Hospital East and Taiwan Semiconductor Manufacturing Healthy prospects of RM10.8 billion order book. More than RM1 billion new contract wins Edgenta of the Future 2025 transformation strategy contributed to a fundamental shift towards a highly sustainable and futureproof business model FINANCIAL HIGHLIGHTS AWARDS & ACHIEVEMENTS The Malaysia Technology Expo (“MTE”) Outstanding Innovation Award One Gold Award Four Silver Awards Enabling Mark Award Silver Award Malaysia Facilities Management Company of the Year Annual Productivity & Innovation Showcase (“ArISe”) Three “5 Star” Awards Mini Innovation Showcase Team Excellence (“MTEx”) Three Gold Awards Regional Innovation Showcase Team Excellence (“RISTEx”) Three Gold Awards Malaysian Society For Occupational Safety & Health (“MSOSH”) Occupational Safety & Health (“OSH”) Award Three Gold Class 1 Award Three Gold Class 2 Award Occupational Health and Safety Management General Guideline for Safe Working during the COVID-19 Pandemic Safeguard Certification First Malaysia Corporate Building Certified Energy Management Gold Standard 3-Star for 30 Hospitals in Perak, Kedah, Perlis and Penang 2-Star for two hospitals in Penang and Kedah 1st Runner Up for Energy Management Small and Medium Building Category Hospital Yan Winner for Energy Management Small and Medium Building Category Hospital Yan
ANNUAL REPORT 2021 7 6 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD WHO WE ARE VISION, MISSION & OUR VALUES Our services, commitment to smarter thinking and improved solutions place us at the forefront of the industry. We create opportunities for clients and assets that positively influence society. MISSION FIRST is the Edgenta Way and it describes our beliefs and values. It is the guiding philosophy for all we do, particularly when engaging with internal and external clients, as well as stakeholders. It defines our organisation’s personality, commitment and culture. CORE VALUES Optimising Assets to Improve Lives VISION UEM Edgenta is the region’s leading Asset Management & Infrastructure Solutions company, with a clear vision to optimise assets and improve lives. Our expertise encompasses Healthcare Support and Property & Facility Solutions within our Asset Management segment; Infrastructure Services covering expressways and rail; and project management and engineering design capabilities through Asset Consultancy. We promise the Edgenta Way of providing quality services to our clients by going beyond standards and offering technology-based solutions as a guarantee of efficiency. Our mindset is anchored on safety across our operations for the benefit of all our stakeholders. Towards realising our vision of Edgenta of the Future, we are leveraging the implementation of digital solutions across multiple industries to turn the Group into a powerhouse Technology-Enabled Solutions Company with a focus on healthcare by 2025. * as at 31 December 2021 One of the region’s largest Asset Management & Infrastructure Solutions entities with group assets of (RM billion) 2.9* 22,359* Employees serving our clients in the region 80 years Combined experience in Asset Management & Infrastructure Solutions of more than Total Revenue (RM billion) 2.3* Market Capitalisation (RM billion) 1.3*
ANNUAL REPORT 2021 9 8 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD OUR PRESENCE OUR PRESENCE As the region’s leading Asset Management and Infrastructure Solutions company, we have demonstrated our expertise in Healthcare Support and Property & Facility Solutions, Infrastructure Services for expressways and rail, among others, as well as project management & engineering design capabilities through Asset Consultancy. Our dedicated personnel have gone above and beyond to deliver essential services with cutting-edge technologies and solutions, while making significant contributions to communities through our social responsibility efforts. Throughout the pandemic, UEM Edgenta has stood resilient, working diligently at the front lines, together with our clients at hospitals, highways, buildings and other facilities under our care. Our agility and continuous ability to deliver uninterrupted services, even in the face of the toughest of circumstances, have benefited our clients, society and markets. We endeavour to expedite our journey with our clients, whilst maintaining our vision of optimising assets and improving lives for all our stakeholders, the Edgenta Way. * Faber Sindoori Management Services Pte. Ltd. is accounted as an associate of UEM Edgenta LEGEND: Healthcare Support Infrastructure Services Property & Facility Solutions Asset Consultancy MALAYSIA SINGAPORE INDONESIA Malaysia Operations Non-Malaysia Operations TOTAL REVENUE (RM BILLION) 2.3 TOTAL EMPLOYEES 22,359 Malaysian Non-Malaysian 68.6% 31.4% Presence in 6 countries TAIWAN INDIA UNITED ARAB EMIRATES TOTAL REVENUE (RM million) 78.7 TOTAL REVENUE (RM million) 117.8* TOTAL REVENUE (RM million) 429.5 TOTAL REVENUE (RM million) 381.2 TOTAL REVENUE (RM million) 28.2 TOTAL REVENUE (RM million) 1,374.8 60.0% 40.0%
ANNUAL REPORT 2021 11 10 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD OUR CORPORATE STRUCTURE As at 21 March 2022 OUR CORPORATE STRUCTURE As at 21 March 2022 100% 69.14% UEM Edgenta Berhad UEM Group Berhad Khazanah Nasional Berhad ASSET MANAGEMENT INFRASTRUCTURE SOLUTIONS 100% Edgenta Healthcare Management Sdn. Bhd. 100%* Edgenta Mediserve Sdn. Bhd. 100% Edgenta Healthtronics Sdn. Bhd. 100% Edgenta Mediserve (Sabah) Sdn. Bhd. 40% Sedafiat Sdn. Bhd. 100% Cermin Cahaya Sdn. Bhd. 40% One Medicare Sdn. Bhd. 40% Biomedix Solutions Sdn. Bhd. 100% Edgenta Mediserve (Sarawak) Sdn. Bhd. 100% Edgenta (Singapore) Pte. Ltd. 100% UEMS Pte. Ltd. (Singapore) 100% UEMS Solutions Pte. Ltd. (Singapore) 100% Edgenta UEMS Ltd. (Taiwan) 100% Edgenta UEMS SC Ltd. (Taiwan) Other Subsidiary 100% Edgenta Facilities Sdn. Bhd. 100% Edgenta Facilities Management Sdn. Bhd. 51% Faber Sindoori Management Services Private Limited (India) Other Subsidiary 100% Edgenta GreenTech Sdn. Bhd. Other Subsidiaries 100% Edgenta Township Management Services Sdn. Bhd. Other Subsidiaries 100% Edgenta Energy Projects Sdn. Bhd. 70% Edgenta Energy Services Sdn. Bhd. 100% Edgenta PROPEL Berhad 100% Edgenta Infrastructure Services Sdn. Bhd. 99.9% PT Edgenta PROPEL Indonesia Other Subsidiary 100% Edgenta Environmental & Material Testing Sdn. Bhd. 100% Opus International (M) Berhad 100% Opus Group Berhad 100% Edgenta NXT Sdn. Bhd. (formerly known as General Field Sdn. Bhd.) Other Subsidiaries 30% Opus Consultants (M) Sdn. Bhd. Other Subsidiaries HEALTHCARE SUPPORT PROPERTY & FACILITY SOLUTIONS INFRASTRUCTURE SERVICES ASSET CONSULTANCY TECHNOLOGY INNOVATION OTHERS 100% Edgenta UEMS Sdn. Bhd. * Direct & Indirect Interest CONCESSION COMMERCIAL
ANNUAL REPORT 2021 13 12 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD WHAT WE DO ASSET MANAGEMENT WHAT WE DO ASSET MANAGEMENT As the largest hospital support services provider in Southeast Asia, serving over 300 hospitals in Malaysia, Singapore, Taiwan, and India, UEM Edgenta’s Healthcare Support division is an internationally recognised market leader in non-clinical healthcare support services. Our extensive expertise and experience from many industries gives us an advantage in delivering optimal solutions to improve the non-clinical support services demanded by today’s healthcare providers and other commercial sectors. As a strategic partner to healthcare institutions, we are highly dedicated to ensuring that our clients’ hospital assets and facilities work at peak efficiency. HEALTHCARE SUPPORT Our innovative technology-driven solutions are the product of our desire to modernise and enable smart healthcare infrastructure to enhance patient care experiences. The new digital healthcare platform such as UETrack™, Clinical Home Quarantine Management System for COVID-19 RFID E-Bracelet Tracking Programme and QuickMed allows healthcare providers to manage their daily operations efficiently, making it easier to focus on their clinical and non-clinical services delivery. The division will continue to focus on developing and using new technologies specifically in the area of robotics, IoTisation and digitalisation in line with Healthcare of the Future vision and transformation of UEM Edgenta to be a TechnologyEnabled Solutions Company by 2025. UEM Edgenta’s Property & Facility Solutions provides performance-based programmes, supported by technology-driven green building solutions and data-driven building asset management solutions. The division adopts a people-centric strategy to deliver world-class services centered on occupant wellbeing and user experience. From innovative workplace solutions to infrastructure and commercial property facilities management, our aim is to improve experiences by connecting people, assets, and processes. Ongoing reliance on fossil fuel energy poses an increasing risk to businesses and communities, as the country transitions towards a low-carbon economy. Being the market leader in developing and managing energy efficient solutions, we offer impartial and specialised guidance for accelerated problem troubleshooting and resolution; making it our goal to remove all implementation barriers towards a sustainable future for generations to come. Underlining our programmes, the Edgenta SmartConnect technology platform, which allows our clients to experience better governance with the convergence of human, big data analytics and IoT technologies. 163.0 Contribution to Group Revenue (RM million) 17.9 Contribution to Group Profit (RM million) PROPERTY & FACILITY SOLUTIONS For more information about PROPERTY & FACILITY SOLUTIONS, please scan the QR code. 1,432.5 Contribution to Group Revenue (RM million) 77.4 Contribution to Group Profit (RM million) For more information about HEALTHCARE SUPPORT, please scan the QR Code. 14 GBI-rated Energy Efficiency Solutions at buildings in Malaysia 20 to 40% Our Energy Efficiency Solutions reduce electricity consumption between 500 Facility management services at over buildings and facilities RM30 million kWh energy savings per annum More than 3.0 million sqm2 Maintaining over of cleanable area daily 7,900 Incinerating metric tonnes of clinical waste annually 51,000 BEMS Preserving the lifespan of more than assets worth over RM1.4 billion RM1.8 billion Caring for more than worth of FEMS assets 19,200 Annual processing output of tonnes of soiled linen
ANNUAL REPORT 2021 15 14 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD As Malaysia’s foremost infrastructure maintenance specialist, we have over 30 years of experience in the infrastructure industry, providing network maintenance services for expressways and state roads across Malaysia and Indonesia. Today, our services have expanded beyond highways to include trains, airports, ports, oil and gas, plantation roads, and other commercial and industrial sectors. Our team of experienced and skilled professionals has the ability to deliver optimal results, making us an ideal partner to provide new solutions and shape landscapes that meet our clients’ demands. The division strives for continual performance improvement by deploying technology systems and process improvement concepts for quality project delivery to further strengthen our forte in asset maintenance. 594.4 Contribution to Group Revenue (RM million) 17.3 Contribution to Group Profit (RM million) UEM Edgenta’s Asset Consultancy is represented by Opus Consultants, a leading engineering and asset management consultant with more than three decades of experience in delivering mega projects. Our continuous efforts to bring the best out of our clients’ investments by providing innovative and practical solutions for large-scale infrastructure and transportation projects have propelled us to the forefront of the Asset Consultancy industry. Backed by a team of committed and innovative individuals, we are dedicated to working closely with our clients to deliver highly professional project management, asset management and technical consultancy services, with a strong emphasis on quality, thoroughness, and timeliness. With a proven track record in delivering quality services and results within the specified time, budget, and standards, we are well-positioned to expand our client base. 82.5 Contribution to Group Revenue (RM million) (20.9) Contribution to Group Profit (RM million) For more information about ASSET CONSULTANCY, please scan the QR code. For more information about INFRASTRUCTURE SERVICES, please scan the QR Code. INFRASTRUCTURE SERVICES WHAT WE DO INFRASTRUCTURE SOLUTIONS WHAT WE DO INFRASTRUCTURE SOLUTIONS ASSET CONSULTANCY >RM10 billion worth of infrastructure assets managed 4,000 km Approximately of expressways and state roads in Malaysia and Indonesia 1,500 km Road Asset Management System bringing expressway & state road assets online Expressways, State Roads, Airports, Plantations & Rail Involved in RM110 billion Involved in over worth of infrastructure projects (including projects currently under construction) 400 professionals, including engineers and project managers across Malaysia 2 Sectors • Highways & Bridges • Rail Represented by
ANNUAL REPORT 2021 17 16 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD EDGENTA DIGITAL ECOSYSTEM PLATFORM EDGENTA NXT Edgenta NXT is the Company’s first digital focused subsidiary, spearheading the vision of EoTF2025. The mission of Edgenta NXT is to transform UEM Edgenta into a technology powerhouse, creating resilience in the digital age by establishing a digital ecosystem to unlock the potential of platform economies. With Edgenta NXT, this is the commitment of the Company to foray into tech-enabled business and accelerate innovation. Edgenta NXT specialises in the commercialisation of technologies and the development of tech-based intellectual properties, with the aim of accelerating organisation-wide digital transformation whilst enabling rapid international expansion. Since its inception in July 2021, Edgenta NXT has established a range of offerings, namely Smart Asset Management, Smart Roadways, Smart Project Management, and more importantly, the two new tech platforms, Asseto and QuickMed. The platforms are hosted within the Edgenta NXT Cloud, powered by Alibaba Cloud. Beyond that, the Edgenta NXT Marketplace is where the partners’ solutions are stored. The concept is similar to most tech marketplaces, fusing all the relevant technologies into a single place for ease of integration to better serve our customers. Edgenta NXT Procure is another initiative in the pipeline to expand the digital ecosystem. How Can We Transform What We Are Doing Right Now Into A Better Tomorrow? World-class cloud technology, as well as access to a suite of proprietary cloud-based management solutions Access to a host of solutions, developed in collaboration and supported by Edgenta NXT technologies Find, secure quotes and procure faster, with a platform that aims to streamline the process more efficiently FIVE KEY BUSINESS PRIORITIES: Challenging Industry Norms: Disrupt business norms in the industries in which we operate • Reset boundaries • Challenge status quo • Spur growth and expansion Leading Technology Transformation: Accelerate technology transformation and at the forefront of enabling future innovations • Start-up culture • Agile, fast-paced team • Always innovate, always ahead Establishing a Digital Ecosystem: Build a future-ready platform that houses and connects all solutions in a single, efficient and convenient ecosystem • Connects all solutions • Provide ecosystem for local and international start-up • Bolster expansion Enabling Integrated Connectivity: Enable seamless and integrated connectivity by consolidating a broad range of solutions in one place • Digitalising our core businesses • Seamless integration Establishing Healthcare Info Exchange: Expanding possibilities in digital healthcare • Expansion into new frontiers • Providing a platform for different players EDGENTA DIGITAL ECOSYSTEM PLATFORM EDGENTA NXT
ANNUAL REPORT 2021 19 18 1 2 3 4 5 6 7 OVERVIEW OF UEM EDGENTA BERHAD UEM EDGENTA BERHAD EDGENTA DIGITAL ECOSYSTEM PLATFORM QUICKMED QuickMed is a digital healthcare solution by UEM Edgenta, that aims to improve accessibility and the quality of healthcare by bridging the gap between healthcare professionals and the public. EDGENTA DIGITAL ECOSYSTEM PLATFORM QUICKMED Our Specialties • Clinic Management System (QuickMed Clinic) • COVID-19 screening booking platform • Home Quarantine Monitoring System (“HQMS”) which has vastly contributed to the fight against the COVID-19 pandemic in the country Healthcare at Your Fingertips Beyond its COVID-19 products, QuickMed Clinic offers a cloud-enabled solution for medical professionals to digitally manage the entire clinic’s operations by automating data processes and providing the ability to attend to patients remotely. Our Response to the COVID-19 Global Pandemic • QuickMed HQMS is a cloud-based COVID-19 management system that uses teleconsultation to triage home quarantined COVID-19 patients • It was used by the country’s first private CAC and deployed to several other CAC and Private Quarantine Centres shortly thereafter • Paired with an RFID and GPS-equipped e-Bracelet to track inbound passengers to Malaysia • It was deployed in airports and used by the Ministry of Health of Malaysia’s (“MoH”) CAC across the country • Focused on developing a platform to improve the quality of care for Malaysian 7,000 COVID-19 patients QuickMed HQMS has processed more than and managed over 50,000 home quarantine days 48,000 users HQMS with digital tracker capabilities has successfully ensured more than adhered to their home quarantine orders 1,000 patients QuickMed COVID-19 Screening Solution has helped screen more than
UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 21 20 CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT The challenges brought about by the pandemic tested the determination and agility of our teams, who tackled them head on, focusing on maximising synergies across the businesses, making transformative organisational changes and introducing innovation and agility into the operating model. Despite an unprecedented external environment, UEM Edgenta has delivered a resilient set of results. The challenges brought about by the pandemic tested the determination and agility of our teams, who tackled them head on, focusing on maximising synergies across the businesses, making transformative organisational changes and introducing innovation and agility into the operating model. Given the significant disruption and uncertainty they faced every day, the remarkable resourcefulness of our people left a lasting impression on me and I am very grateful to everyone in our organisation for their hard work and dedication. Our sympathies go to our colleagues who have suffered or are suffering from the COVID-19, or who may have lost their family members or friends during the pandemic. We remain committed to doing all we can to support them. While the accelerated vaccine rollout is encouraging, the road ahead remains treacherous. However, I am confident that our purposeful culture of innovation and collaboration, our passion for quality, and our ‘can do’ attitude – all of which have made this business successful – will continue to underpin the Group’s performance through the next phase of growth. accessibility and quality of healthcare by bridging the divide between healthcare service providers and the public through an intelligent, mobile-friendly platform. During the year under review, a Memorandum of Understanding (“MoU”) was signed with Universiti Teknologi Mara (“UiTM”) to collaborate in accelerating digital healthcare solutions. This is in line with our EoTF2025 vision of becoming a scalable technologyenabled solutions company through new products and market expansion. The sustainability of our business has been anchored by our diversification strategy with our international businesses accounting for 40% of Group revenue and 54% of new contracts wins. Significant contributions from Taiwan where new verticals and Integrated Facilities Management (“IFM”) contracts amounting to RM336.7 million and Singapore where IFM services accounted for RM144.1 million sustained the growth for FY2021. In expanding our international footprint, the Group signed a Memorandum of Business Exploration (“MoBE”) with Asma Advanced Solutions LLC on 29 April 2021. This partnership leverages on the growth of the healthcare support services and integrated facilities management services in the region. This was followed with a MoBE with Byte Blanket FZE (“Byte Blanket”) and Disrupt-X DMCC (“Disrupt-X”) on 1 April 2022. Our partnership with Byte Blanket and Disrupt-X looks to introduce the concept of ‘Hyper-Aware Buildings’, utilising a combination of Internet of Things (“IoT”) and contextual data to ensure buildings are made more adaptive to the environment as well as its occupants’ needs, which in turn allows situational awareness for better efficiency, productivity, reliability, safety and security. On 10 March 2022, a joint venture agreement was signed between Opus International (M) Berhad and PPES Consults Sdn. Bhd. to provide project management services and engineering design consultancy for mega infrastructure COMMENDABLE PERFORMANCE AND A RETURN TO DIVIDENDS The Group delivered commendable results for the financial year ended 31 December 2021 (“FY2021”) through our collective efforts in taking swift action to respond to the continual operational challenges brought about by the COVID-19 pandemic and the constant improvisation of new strategies to manage the headwinds caused by the startstop economy and rapid transmissions of the new pandemic variants. The Group’s topline revenue returned to prepandemic levels, recording RM2.3 billion at the end of FY2021, a growth of 13% from RM2.0 billion in the previous year. We are pleased to report that the Group is resuming dividend payments this year, a testament to the promises made to uphold the Company’s Dividend Policy. In line with the Dividend Payout Ratio Policy of between 50% and 80% of the Profits-After-Tax and Non-Controlling Interests (“PATANCI”), the Board has declared a single tier interim dividend of 3.00 sen per ordinary share for the year in appreciation of the continuous support and trust from our shareholders. CREATING STRATEGIC VALUE FY2021 was a year of transition for the Group as its new business model anchored on EoTF2025 took hold and delivered immediate results. In advancing the development of technology-enabled solutions, the Group launched its first digital ecosystem platform – Edgenta NXT. Venturing into cloud-enabled and Software-as-a-Service (“Saas”) model, Edgenta NXT facilitates the development of a full-suite of ready-solutions which include digital healthcare and smart asset management platforms, supported by our cloud partner, Alibaba Cloud. Its maiden healthcare product - QuickMed, aims to improve the TAN SRI DR. AZMIL KHALID Independent Non-Executive Chairman
UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 23 22 As the global economic recovery gathers pace in 2022, on the back of transitioning to an endemic phase, our global expansion strategy will be executed in earnest by integrating facilities management with technology through IoT and realtime analytics, while actively positioning ESG solutions as our key competitive advantage in our target growth markets. The Group’s EoTF2025 strategy promises a greater focus on our solutions base and continued expansion into international markets in our pursuit to transform ourselves to becoming a leading technology-based solutions Company by the year 2025. Increased emphasis on the importance of ESG in our strategies will bolster our fundamentals and lead us towards a path of sustainable growth. We will be commercialising more technology solutions such as SaaS and Platform-as-a-Service (“PaaS”) with our array of Artificial Intelligence (“AI”) solutions as a differentiator and disruptor. Prime examples of the adoption of our solutions can be seen in the development of the smart facilities management systems for the Integrated Building Command Centre (“IBCC”) at KLCC. IBCC was designed modularly to monitor and control energy management, life and safety, and vertical transportation. In Healthcare Support, we have implemented BEMS IoT to track asset movement and utilisation, in addition to leveraging on mechanisation and robotics to increase productivity in service delivery. On Infrastructure Services, the Group will be actively pursuing opportunities in Sabah and Sarawak as part of our Pan Malaysia expansion strategy, in addition to exploring opportunities in neighbouring countries, including Indonesia’s East Kalimantan capital city development. With the successful trial of the recycled pavement product developed inhouse, we are building a Recycled Asphalt Premix (“RAP”) plant, hence reducing waste and its consequent use natural resources, whilst also lowering our emissions that will enable us to utilise sustainable products in our road pavement projects. I look forward to the future with confidence as UEM Edgenta delivers on its vision of Optimising Assets to Improve Lives. I truly believe that through our focus on transforming our technology base towards the needs of the industry, backed by the commitment of our talented colleagues and the financial strength of our business, the Group is well placed to deliver high-quality, sustainable growth to all stakeholders in our ecosystem. CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT projects in the State of Sarawak. This strategic partnership serves as an anchor to our Pan Malaysia Strategy for Infrastructure Solutions and is expected to support the development of the State’s local engineering expertise. In broadening our integrated healthcare solutions, the Group took a leading position and proactively supported the Government’s efforts in combating the pandemic through a wide range of pandemic management solutions, ranging from the construction of 14 Field Hybrid Intensive Care Units (“ICU”) to assist the MoH in relieving pressure on the Nation’s ICU capacity, conversion of our private COVID-19 Assessment Centre (“CAC”) to a private Vaccination Centre (“PPV”) in support of the National COVID-19 Immunisation Programme and the deployment of Radio-frequency Identification (“RFID”) digital tracker and Home Quarantine Monitoring System for the tracking and monitoring of inbound travellers by the MoH. Additionally, through our Biomedical Engineering Maintenance Services (“BEMS”), we successfully assisted MoH to replace 20 units of medical equipment through the Replacement-ThroughMaintenance programme (“RTM”). DRIVING THE SUSTAINABILITY AGENDA Our commitment to sustainability has never been greater. We recognise that in order to remain relevant and self-sustaining, preserving our core business must remain a priority. To protect the core elements of our existence, we have started taking a measured approach in tackling sustainability issues prevalent to our business and industry. This year we produced the fourth edition of our Sustainability Statement. It describes how we craft our very own sustainability story and path at UEM Edgenta, underpinned by environmental, economic and social commitments. I am proud to note that in December 2021, we kick started a project to improve our sustainability reporting practices and develop an Environmental, Social, and Governance (“ESG”) roadmap for UEM Edgenta. Some of the work undertaken is demonstrated through enhancements we have incorporated in our Sustainability Statement. The Statement carried elevated levels of disclosures to better communicate how we approach sustainability, how we engage with our valued stakeholders and the work we have done in making our business more viable. We interact with a multitude of stakeholders, and through these interactions, we have become cognisant of the various matters that our stakeholders deem as important for us to address when delivering our services. I am pleased to communicate with our stakeholders that in December 2021 as part of our ESG roadmap project, we undertooks an initiative to analyse the internal and external matters that matter most to our business operating environment. We prioritised these matters into a materiality Through a robust governance structure, we have and will continue to invest significant resources needed to meet the complexities of the evolving regulatory agenda, such as those relating to ESG and the Malaysian Code on Corporate Governance (“MCCG”) 2021. The Board therefore shall remain steadfast to deliver high standards of corporate governance and embed the right culture and behaviour throughout the business to ensure that stakeholders’ interests are given due consideration. It is also essential to ensure that we have the right balance of skills, diversity and experience to challenge and guide the business through its next stage of growth. These factors have been key as we have evolved and strengthened the skill set of the Board throughout the year. In July 2021, we were delighted to announce the appointments of Shirley Goh and Jenifer Thien Bit Leong to the Board. Both bring exceptional experience and strengthen the skills and diversity of the Board. In January 2022, we also welcomed Mohd Asrul Ab Rahim as a Non-Independent Non-Executive Director, bringing us sound investment and consultancy experience across a range of industries. We thank our outgoing Directors Elakumari Kantilal, Emily Kok and Wong Shu Hsien, for their invaluable contributions to our Board oversight agendas. THE ROAD AHEAD The Government is maintaining the Nation’s economic growth projection in the range of 5.5% to 6.5% for 2022, driven primarily by: matrix that is guiding us in addressing our sustainability risks and achieving our ESG goals and targets. Some of these goals and targets have been expressed in our Sustainability Statement. Corporate responsibility will remain the core component of our sustainability framework. It will continue to shape the day-today running of our business. We will maintain our stance to set a high bar for ourselves in terms of the way we manage our business overall. We believe that it is important for us to act in a way that means we are responsible corporate citizens, whether that is how we relate to our clients, employees, local communities, or wider society. We know that the way we conduct our business matters – and we do so, in ways that will continue to have a positive impact. COMMITTED TO STRONG GOVERNANCE Adherence to regulatory standards and the management of operational risks have remained our priorities. This helps to ensure excellent client outcomes and enable us to demonstrate transparency and value to our clients. I am proud to note that as we rode our sustainability journey in 2021, we started work to put in place a sustainability governance structure to be driven by the Board of Directors well supported by the Board Governance and Risk Committee and an internally set up ESG Steering Committee to shape and implement the Group’s sustainability roadmap in our business. Work is currently progressing at great momentum to further develop this nascent governance framework into a fully operational sustainability corporate structure run by the best talent to implement our sustainability endeavours and initiatives. The expansionary Budget 2022 1 Normalisation in economic and social activities premised on high vaccination rates 2 The resumption of projects with high multiplier effects 3 Strong external demand, especially from major trading partners 4 Budget 2022 initiatives such as the RM4.8 billion JaminKerja that will guarantee 600,000 jobs, as well as SemarakNiaga worth RM40 billion to help businesses restart, will further support our growth for the coming year. TAN SRI DR. AZMIL KHALID Independent Non-Executive Chairman The Group took a leading position and proactively supported the Government’s efforts in combating the pandemic through a wide range of pandemic management solutions, ranging from the construction of 14 Field Hybrid Intensive Care Units (“ICU”) to assist the MoH in relieving pressure on the Nation’s ICU capacity, conversion of our private COVID-19 Assessment Centre (“CAC”) to a private Vaccination Centre (“PPV”) in support of the National COVID-19 Immunisation Programme and the deployment of Radio-frequency Identification (“RFID”) digital tracker and Home Quarantine Monitoring System for the tracking and monitoring of inbound travellers by the MoH.
UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 25 24 In this year’s statement, UEM Edgenta’s Managing Director/Chief Executive Officer, Syahrunizam Samsudin, describes how the Group has continued to grow despite the challenges of the pandemic, as well as how it has further embraced its supporting role in the Government’s response to the COVID-19 pandemic in 2021. The year 2021 saw the resurgence of the pandemic, an event that disrupted economic recovery and threatened livelihoods. What was the Group’s main approach in navigating this year’s challenges? MD/CEO’S STATEMENT MD/CEO’S STATEMENT SYAHRUNIZAM SAMSUDIN Managing Director/Chief Executive Officer Q1 We approached 2021 in two ways. Firstly, a sustained focus on business execution and growth, and in this context, we have certainly delivered good results from our diversification strategy, which has delivered new contracts across multiple geographies and in new business verticals and sectors. We have also seen higher revenues in almost all our business segments and profits boosted by a disciplined approach to drive cost efficiencies. I will expand more on this below. Secondly, I would like to recognise the Group’s unrelenting effort in helping the Government in its fight against the COVID-19 pandemic. Ever since COVID-19 first arrived on our shores, the Group has been proactive in leveraging our capabilities, assets and technology to bolster the nation’s health defence. In 2021, we continued along this path, supporting the Government’s vaccination efforts by converting our private CAC at the UEM Edgenta Learning Centre (“UELC”) facility in Petaling Jaya into a private COVID-19 Assessment & Vaccination Centre. In addition, from the single Field Hybrid ICU that we constructed in 2020, we have established an additional 14 Field Hybrid ICUs to support the needs of the MoH, especially when the number of critically ill patients rose significantly in 2021. As part of our frontline efforts, we also helped to boost the MoH’s capabilities in pandemic management solutions with the introduction of the QuickMed application, which served as a digital tracker and was crucial for managing Malaysia’s home quarantine programme for inbound travellers. While these efforts represent new revenue streams, it was not our main consideration before embarking on these initiatives. We needed to do what was right, and in my mind, this meant helping to protect lives and ensuring the continuity of service for critical assets like hospitals, highways, offices and industrial assets. The result of doing the right thing has inevitably led to some interesting spinoff business opportunities that I believe will balance the interests of our shareholders against our broader obligation to help the nation. We needed to do what was right, and in my mind, this meant helping to protect lives and ensuring the continuity of service for critical assets like hospitals, highways, offices and industrial assets. We have certainly delivered good results from our diversification strategy which has delivered new contracts across multiple geographies and in new business verticals and sectors
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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