2018 UEM Edgenta Annual Report

The Property & Facility Solutions division also performed well with 19.0% year-on-year Revenue growth and PAT growth of 50.5%. Key projects secured during the year include integrated facilities management for additional CIMB buildings, bringing the total to 9 sites as well as for Bank Negara Malaysia (BNM), and energy performance contracting (EPC) for PROTON facilities. The Asset Consultancy business, however, saw a downturn during the year, largely due to the deferment of key infrastructure projects that did not materialise, as well as delays in the awarding of new consultancy work packages for the Pan Borneo Highway project in Sabah and Sarawak. Gearing Up for Future Growth We remain optimistic about our prospects, especially in the healthcare and infrastructure sectors. As the industry leader in these sectors, we will focus on protecting our market share, as well as expand and deepen our value chain offerings. The Malaysian Government’s 7.8% year-on-year increase in the budget allocation for public healthcare spending to RM28.7 billion in 2019 augurs well for the Company as we look to partner with the Malaysian Government on more initiatives in this segment. In Singapore, the Ministry of Health is restructuring the public healthcare sector into three (3) integrated clusters which opens up opportunities for us to expand the healthcare business, while In Taiwan, we are looking to upsell more services to our existing customers. For Infrastructure Services, we plan to invest more in technology and innovation on top of the RM100 million in CAPEX incurred in the past three years. We will continue with the roll-out of operational excellence initiatives, including LEAN programmes for process improvements and the Innovation Garage to tackle high-impact problem statements; continue with the development of new and more durable products to be used in road pavement through PRC; and optimise the ongoing implementation of PBC which sets in motion our revamped service delivery model to drive efficiency and innovation. Our improved offerings will simplify processes in our effort to develop more durable material and ultimately minimise inconveniences from road closures to the public. The Property & Facility Solutions division will see the Company focused on maintaining its growth trajectory as we look to differentiate our service offerings with a focus on customers’ asset enhancement via technology applications and platforms. This will also improve our own efficiency and profitability within the division. Despite the underperformance of the Asset Consultancy division in 2018, we are optimistic of the long-term prospects of the infrastructure sector, on the back of the Government’s commitment towards implementing the Pan Borneo Highway, the Klang Valley Double Tracking projects and Sarawak Coastal Road Network & Second Trunk Road project, as well as significant funding set aside in the federal and state government budgets of Sabah and Sarawak for development and infrastructure projects such as roads, bridges, railways and public transportation. MD/CEO’S STATEMENT Dato’ Azmir Merican’s briefing and site visit to enhance work safety in our operations 2018 PERFORMANCE OVERVIEW The commendable performance in 2018 is a demonstration of the strategies in place, as well as the required resilience and professionalism of our people in sustaining the business. Our business approach calls for the rethinking of our existing approach and adoption of new technologies and innovation in shaping an operationally excellent environment to drive growth - with a philosophy to continuously improve our operations. Bolstered by our wealth of experience, we continued to give our best and delivered on our promises. The Healthcare Support division completed an impressive year, contributing 45% in Revenue and PAT for the Group. Revenue was up 8.9% year-on-year while PAT grew to RM86.5 million from RM80.7 million in 2017. The division’s performance is largely attributable to the strategic move to secure new contracts in Taiwan and Singapore for the Commercial business, and the continued automation and mechanisation efforts in the Concession business. I am pleased that our acquisition of UEMS in 2016 has delivered value we promised shareholders. The performance of the Infrastructure Services division was moderate and sustained as some key infrastructure projects which we had targeted did not materialise. Nevertheless, its contribution to the Group remained strong (41% of Revenue and 42% of PAT). I am pleased that we made several steps in improving our operations and delivery such as: 1) The rolling out of Performance-Based Contracting (“PBC”) for pavement works sets in motion UEM Edgenta’s revamped service delivery model to drive efficiency and innovate towards recording improved margins in the future; 2) Investment in Pavement Research Centre (“PRC”) which is part of UEM Edgenta’s strategy to develop new and better products to be used in road pavement; 3) The commencement of CI initiatives such as LEAN programmes and the Innovation Garage; 4) The development and adoption of software-based applications such as Road Asset Management System (“RAMS”) integrated with Building Information Modelling (BIM) to enable 3D modelling, resulting in a comprehensive realtime integrated enterprise system to improve efficiency and effective service delivery; and 5) Investment in technology and innovation such as the introduction of the MULAG Grass Cutter to improve safety and productivity. Management Discussion & Analysis UEM Edgenta Berhad Annual Report 2018 About UEM Edgenta Chairman’s Statement 70