2018 UEM Edgenta Annual Report

Overview of Performance by Business Segment (RM million) Dec-17 2,112.6 80.4 30.3 19.7 6.4 66.8 2,182.6 Healthcare Support Property & Facility Solutions Infrastructure Services Property Development Asset Consultancy Dec-18 Healthcare Support recorded higher revenue of RM80.4 million attributable to the new contracts secured in Taiwan and Singapore and RM8.2 million arising fromMFRS 15 prior year adjustment. Earnings before interest, tax, depreciation and amortisation (“EBITDA”) and PAT increased by RM14.0 million and RM5.8 million respectively on the back of these contracts, as well as from increased profitability in the concession business, offset by lower share of results from associates during the year. Property & Facility Solutions also recorded higher revenue of RM30.3 million, as well as PAT of RM5.6 million, arising from new contracts secured for facilities management, township management, energy performance contracting services, and higher share of profit from associates as well as recognition of deferred tax asset during the year. The transition to the Smart Connect Platform improved operational efficiency while the implementation of TIDE and CI initiatives resulted in savings which further contributed to the margins improvement achieved by the division. Infrastructure Services registered growth in revenue of RM19.7 million resulting from higher pavement and civil works carried out for expressways. EBITDA and PAT showed marginal movements as the revenue growth offset the costs incurred for the commencement of the Pavement Research Centre. Key highlights during the year include securing competitive tenders for upgrading of Sewage Treatment Plants and ancillary facilities along the North-South Expressway, as well as Design & Build contracts for Pavement Structural Overlay from PLUS. Additionally, we also generated revenue from other clients for pavement and traffic management works, such as JKR for Selangor State Roads, MRT2 and LRT3, as well as environmental testing and services for various external clients. The Asset Consultancy division saw a downturn due to the delay of consultancy works for the Pan Borneo Highway and several targeted key infrastructure projects that did not materialise. Financial Position As has beenmentioned by both the Chairman and the MD/CEO in their respective statements, the Company is in a healthy financial position with net assets of RM1.5 billion as at 31 December 2018 to achieve further growth. PATmargin grew to 7% from5.9% on the back of lower financing costs and operational excellence initiatives starting to bear fruit, while gross gearing ratio has beenmaintained at 0.35x and net cash position at RM71.0million. Return on equity increased to 9.6% and the dividend payout was 14 sen for 2018, representing a 79% dividend payout ratio. Moving Forward We expect to see similar growth for Healthcare Services in 2019 with the commercial side expected to secure more business in Singapore and expand its scope of services in Taiwan. In Malaysia, we see strong growth potential with the Government’s commitment towards improving public healthcare services. Additionally, there will be an upside on revenue with the newly completedWomen and Children’s Hospital in Kuala Lumpur and from the cross-selling and sharing of best practices between the concession and commercial business segments. Property & Facility Solutions is expected tomaintain its growth trajectory in 2019 as it continues to differentiate its service offerings with a focus on customer asset enhancement via technology applications and platforms, which will also improve our own efficiency and profitability. Infrastructure Services will continue to roll-out operational excellence initiatives, including LEAN programmes for process improvements. We expect to see improvedmargins for the year ahead with further improvements in efficiency and innovation with the ongoing roll-out of the Performance-Based Contracting (“PBC”) model, and the potential of new and better products developed through the Pavement Research Centre. The Consultancy business currently contributes about 5% to the Company’s financial position, but we envision long-termgrowth potential on the back of the Government’s commitment to proceed with the Pan Borneo Highway in East Malaysia. This will be further supported by the Klang Valley Double Tracking and Sarawak Coastal Network and Second Trunk Road projects, as well as the potential of new projects with the significant funds set aside by the Federal and State Governments of Sabah and Sarawak for development and infrastructure projects. We are confident that we will continue to grow the business - Healthcare Support and Infrastructure Services divisions represent our core resilient sectors, and collectively they contribute close to 90% of our revenue and profit. We will continue to focus in sustaining the growthmomentumwithin these divisions, as well as push further across the board to spur organic revenue growth. Work-in-Hand is equally healthy at RM13.4 billion, and the RM118.8million capital expenditure will be allocated for automation and technology-related activities to further improve efficiency and reduce costs to drive margin expansion. MUHAMMAD NOOR BIN ABD AZIZ @ HASHIM Chief Financial Officer Healthcare Support Revenue RM984.6 million 8.9% year-on-year Profit After Tax RM86.5 million 7.2% year-on-year FY2018 SEGMENTAL PERFORMANCE AT A GLANCE Property & Facility Solutions Revenue RM189.4 million 19.0% year-on-year Profit After Tax RM16.7 million 50.5% year-on-year Infrastructure Services Revenue RM882.0 million 2.3% year-on-year Profit After Tax RM82.0 million 0.6% year-on-year Asset Consultancy Revenue RM114.1 million 36.9% year-on-year Profit After Tax RM7.7 million 68.3% year-on-year Financial Review Stakeholder Information AGM Information 73 Governance Review of Sustainability Activities