UEM EDGENTA BERHAD ANNUAL REPORT 2021 1 2 3 4 5 6 7 KEY MESSAGES 33 32 (17.1) (-12%) 93.3 (67%) 41.0 (30%) 21.0 (15%) 82.5 (4%) CFO’S REVIEW CFO’S REVIEW Summary of Statement of Financial Position FY2021 RM’mil FY2020 RM’mil Variance RM’mil % Total Assets 2,855.1 2,807.4 47.7 1.7 Property, plant and equipment 166.5 193.7 (27.2) (14.0) Right-of-use assets 37.3 40.8 (3.5) (8.7) Intangible assets 699.2 718.3 (19.1) (2.7) Inventories 66.8 77.9 (11.1) (14.2) Trade and other receivables 700.4 580.0 120.4 20.8 Contract-related assets 389.3 361.0 28.3 7.8 Short-term investment 28.3 11.8 16.5 139.9 Cash, bank balances and deposits 600.4 678.0 (77.6) (11.4) Total Liabilities 1,315.7 1,298.1 17.6 1.4 Borrowings 443.5 483.2 (39.6) (8.2) Trade and other payables 738.5 670.6 67.9 10.1 Lease liabilities 33.6 37.6 (4.0) (10.5) Contract liabilities 30.3 30.7 (0.4) (1.1) Total Equity 1,539.4 1,509.3 30.1 2.0 Shareholder's fund 1,535.8 1,500.7 35.2 2.3 Non-controlling interest 3.5 8.6 (5.1) (59.0) Net asset per share 1.85 1.80 0.05 2.8 Gross gearing ratio 0.29 0.32 (0.03) (9.4) Net cash position 185.2 206.6 (21.4) (10.4) Cost escalation and margin erosion are some of the key business challenges that our business face. Market competition, minimum wage in Malaysia and progressive wages in Singapore and Taiwan, will continue to drive down our business margins. To remain competitive and to be market relevant, the Group will continue to differentiate our capabilities and competencies, rather than just competing on pricing strategy. Operationally, the Group will look into various cost savings initiatives as well as structural cost transformation. This will ensure we build long-term competitive advantage and drive long-term sustainability. Dedicated cross-functional cost restructuring team are looking at various business and operational processes, which includes LEAN programme, rationalisation exercises and strategic cost saving initiatives. Further, the development of a Group-wide supplier financing programme and strategic vendor management programme, will lead to the creation of a sustainable vendor system/supply chain programme which in turn will further optimise costs without compromising on quality from our suppliers and vendors. The Group’s ability to generate sustainable cashflows from existing businesses, maintain structural cost advantages and to be agile in the way we operate will highly depend on our ability to optimise cost and set a lean cost structure. Our key focus for the year ahead will be on prudent cash and liquidity management to optimise our business. We will continue to invest cautiously to explore new revenue streams and businesses, expand to new geographical market and monetise our digital products and solutions under EoTF2025. Our improved performance in FY2021 enable us to resume a single-tier interim dividend of 3 sen per share for financial year ended 31 December 2021. We will continue to deliver shareholders’ value and commit to our dividend policy of 50%-80% of PATANCI. Financial Position During the period under review, our net cash position remained healthy as we focused on cash flow management through improved collections from customers and optimised payments to suppliers. However, higher upfront payments for COVID-19 related businesses and higher working capital requirements from the Healthcare Support division, resulted in a Y-o-Y lower net cash position of RM185.2 million as at year end (FY2020: RM206.6 million). The Group ended the year with a net asset per share of RM1.85 per share (FY2020: RM1.80 per share), the increase is in line with the growth of our assets from RM2.81 billion to RM2.86 billion. Continued strengthening of our working capital in tandem with an optimised capital structure reduced our borrowings by 8.2% Y-o-Y to RM443.5 million. In addition, a final settlement of a loan in relation to the acquisition of subsidiary companies in Singapore in 2016 drove our gross gearing ratio to a low of 0.29x (FY2020: 0.32x). Our low gearing, strong financial position and healthy cash balance augurs well for the Group to navigate any short term volatility whilst still maintaining the capacity to leverage for future strategic and opportunities growth. Outlook The Group is taking a great effort to mitigate the effects of the ongoing COVID-19 pandemic and proactively address developments in order to best manage its effect on our businesses. As border re-opens and Malaysia transition into endemic phase, the Group expects a gradual recovery in the operating environment and the business performance in the coming financial year. We will continue to remain agile and adaptable as we pursue our growth strategy with a focus on new products and solutions, expansion into new geographies and forging regional partnerships. Operating in the New Normal, our priorities are driven by the need to optimise and enhance the way we operate to ensure we create sustainable longterm return to our shareholders. HILLARY CHUA PEI SUM Chief Financial Officer RM1.85 NET ASSET PER SHARE 2.8% RM2,855.1 million TOTAL ASSETS 1.7% 0.29x GROSS GEARING RATIO 9.4% RM185.2 million NET CASH POSITION 10.4% * Normalised PBT excluding: FY2021: Staff rationalisation cost (RM12.6 million) FY2020: One-off forex translation gain upon settlement of an intercompany loan (RM19.2 million) Healthcare Support Infrastructure Services Property & Facility Solutions Asset Consultancy Revenue Normalised PBT* (11.0) (-8%) 97.3 (71%) 38.7 (28%) 12.5 (9%) 2020 1,432.5 (63%) 594.4 (26%) 163.0 (7%) 2021 88.1 (4%) 1,233.4 (61%) 549.1 (27%) 149.2 (8%) 2020 2021
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