ANALYST BRIEFING 2015 Full Year Results
1st March 2016
Empowered by science, inspired by humans DISCLAIMER
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1 Contents
1. Key Highlights 2. Financial Overview 3. Key Business Division Updates 3.1 Asset Consultancy 3.2 Infra Services 3.3 Healthcare Services 3.4 Property Services 3.5 Others 4. Strategic Direction and Outlook 5. Discussion / Q&A Section 1 Key Highlights RECAP OF FY2015 Year of integration, consolidation and rationalisation for UEM Edgenta Key milestones includes, amongst others:
New business model & expansion of commercial sector business
Formation of Edgenta Energy Services with RDM Asia; Set up of Utilities relocation unit - expected to generate encouraging business traction with completion of installation revenue in 2016 of energy management system in 33 MOH hospitals in the Set up of UEM Edgenta’s Research and Development Northern region Centre to produce innovative product for UEM Sunrise Edgenta TMS (UEMSET) and Medini commercialisation Iskandar (M) Sdn Bhd formed JV company to undertake Creation of Environmental and Material Testing township management of Medini Iskandar (“EMT”) Services to expand into environmental testing New Consultancy contracts secured in UAE and Saudi Secured Selangor Zone III State Road maintenance Arabia contract (5 years - RM109 million) – marked first foray Awarded three-year contract for routine maintenance of into state road maintenance Cikampek-Palimanan highway. In good position to tender Strengthened Facilities Management market share in for more highway projects Malaysia and Middle East via proposed acquisition of KFM Holdings Sdn Bhd
Signing ceremony with Township Management Services Sdn Bhd (“TMS”) for management of Proposed UEM Edgenta’s Research and Medini Township Development Centre 4 RECAP OF FY2015 (Cont’d) Year of integration, consolidation and rationalisation for UEM Edgenta Key milestones includes, amongst others:
Corporate recognition Rationalisation & Integration
Frost & Sullivan Asia Pacific - Integrated Facilities Acquisition of 40% Healthtronics’ share from SSP Management Competitive Strategy Innovation and Medical Technologies Sdn Bhd Leadership Award Implemented Mutual Separation Scheme (“MSS”) - Forbes - Asia’s ‘Best Under a Billion’ list cost of RM30.6 mil Inclusion in FTSE4Good Bursa Malaysia Index - Strong Rationalised vendors and outsourcing of cleansing Environmental Social & Governance Practices services
Productivity & Innovation Conference (APIC) – Gold HR Initiatives Awards Malaysian Construction Industry Excellence Award Launch of EDGE20 programme (MCIEA) - Best Project Award (Infrastructure-Major) for the Design, Revised KPI & PMS framework and implemented Construction, Completion, Testing & Commissioning (Special performance-based incentives Mention) - Electrified Double Track Between Ipoh & Padang Besar Project
2015 Frost & Sullivan Asia Pacific - Forbes Asia’s ‘Best Under a Billion’ list EDGE 20 Launch event Integrated Facilities Management Competitive Strategy Innovation and Leadership Award 5 KEY FINANCIAL HIGHLIGHTS
• Commendable performance in light of challenging REVENUE market condition RM 3.12 bil Revenue grew marginally by 1.1% ▲ 1.1% Normalised PBT up by 17.4% after excluding one-off cost of RM45.4 mil
Normalised PAT up by 11.6% Normalised PBT
Normalised PATANCI up by 19.4% RM 350.8 mil ▲ 17.4%
• Declared interim dividend of 15 sen, representing payout ratio of 64% Normalised PAT RM 247.3 mil ▲ 11.6% • Strong Balance Sheet Cash and cash equivalent1 of RM798 mil Normalised PATANCI Net cash(1) of RM423 mil RM 223.2 mil Gearing ratio of 0.24x ▲ 19.4%
(1) Includes investment securities 6 SELECTED PROJECT WINS IN 2015
Selangor Zone III State Road Consultancy Services to KKR: Supply, Install, Testing Maintenance Performance Based Contract for Commissioning, Training & Federal Roads in Peninsular Maintenance of Medical Equipment Malaysia for Women and Child Hospital
RM109 mil over a period of 5 years RM12 mil over a period of 19 months RM20 mil over a period of 5 years
Huntly Section, Waikato West Coast Network Outcome Water Management Services for Expressway, NZ Contract, NZ Saint John Clean Drinking Water Program, Canada
Capital Value NZD458 mil1 Capital Value NZD115 mil1 Capital Value NZD215 mil1
Note: 1) Total capital value (NZD), won in conjunction with other parties 7 Section 2 Financial Overview REVENUE AND GROSS PROFIT CAGR OF 6.6% and 6.7% respectively Revenue and gross profit (ex-East Malaysia concession and property) grew by CAGR of 9.2% and 10.0% respectively
Revenue (RM mil)
3,089 3,123 19 25 2,699 339 282 2,516 34 2,415 306 357 400 157 222 281 300 370 762 891 416 335 660 518 2,731 2,816 505 2,359 1,977 1,994 1,612 1,329 1,525 1,057 1,141
2011 2012 2013 2014 2015
Gross Profit (RM mil) 981 1,021 6 8 858 883 69 788 12 73 58 93 59 96 73 87 82 122 137 83 94 84 82 67 68 902 944 798 722 714 646 675 622 495 526
2011 2012 2013 2014 2015
Asset Consultancy (AC) Infra Services (IS) IFM (ex-East Msia Concession) IFM (East Msia Concession) Property Development (PD)
Note: IFM includes contribution from healthcare services, environmental & material testing services, facilities services and energy services 9 FINANCIAL HIGHLIGHTS (FY2015 vs FY2014) Normalised PATANCI increased by 19.4% to RM223.2 mil; Normalised PATANCI Margin improved by 1.0% to 7.1%
Figures in RM Million unless otherwise stated FY2015 FY2014 Variance Amount % Reported Financials Revenue 3,123.0 3,089.3 33.7 ▲ 1.1% Gross Profit 1,021.8 981.3 40.5 ▲ 4.1% Gross Margin (%) 32.7% 31.8% ▲ 0.9% EBITDA 363.4 364.9 (1.5) ▼ -0.4% EBITDA Margin (%) 11.7% 11.8% ▼ -0.1% PBT 305.4 324.5 (19.1) ▼ -5.9% PBT Margin (%) 9.8% 10.5% ▼ -0.7% PAT 209.5 241.9 (32.4) ▼ -13.4% PAT Margin (%) 6.7% 7.8% ▼ 1.1% PATANCI 191.2 202.4 (11.2) ▼ -5.5% PATANCI Margin (%) 6.1% 6.6% ▼ -0.5%
Normalised Financials Normalised EBITDA 408.8 339.2 69.6 ▲ 20.5% Normalised EBITDA Margin (%) 13.1% 11.0% ▲ 2.1% Normalised PBT 350.8 298.8 52.0 ▲ 17.4% Normalised PBT Margin (%) 11.2% 9.7% ▲ 1.5% Normalised PAT 247.3 221.5 25.8 ▲ 11.6% Normalised PAT Margin (%) 7.9% 7.2% ▲ 0.7% Normalised PATANCI 223.2 186.9 36.3 ▲ 19.4% Normalised PATANCI Margin (%) 7.1% 6.1% ▲ 1.0% 10 FINANCIAL HIGHLIGHTS (FY2015 vs FY2014) Strong balance sheet with net cash of RM423.2 mil
Figures in RM Million unless otherwise stated FY2015 FY2014 Variance Amount % Balance Sheet Property, plant and equipment 213.0 188.1 24.9 ▲ 13.3% Intangible assets 453.4 475.0 (21.6) ▼ -4.5% Trade and other receivables 955.0 752.2 202.8 ▲ 27.0% Cash and investment securities 797.5 1,068.9 (271.4) ▼ -25.4% Borrowings 374.3 351.2 23.1 ▲ 6.6% Trade and other payables 656.9 724.4 (67.5) ▼ -9.3% Shareholders' equity (Excl. non-controlling interest) 1,339.9 1,159.4 180.5 ▲ 15.6%
Cash Flow Statement Cash flow from operating activities 1.1 337.0 (335.9) ▼ -99.7% Cash flow from investing activities 6.2 (265.9) 272.1 ▼ -102.3% Cash flow from financing activities (228.9) 68.9 (297.8) ▼ -432.2% Net increase / (decrease) in cash (221.6) 140.0 (361.6) ▼ -258.2%
Basic EPS (Sen) 23.50 24.88 (1.38) ▼ -5.5% BVPS 1.65 1.43 0.22 Gearing Ratio 0.24x 0.26x -0.01x Return on Equity (ROE) 15.3% 15.9% -0.6% Return on Invested Capital (ROIC) 13.9% 16.5% -2.6%
11 BREAKDOWN OF REVENUE FY2015 revenue contribution from services and sectors remained comparable to FY2014
2015 2014
1% 1% 4% 1% 6%
21% 10% 22% 1% 6% 38% 12% 4% 36%
Services 49% 52% Sectors Geography 53% 55% 64% 62% 25% 25% 24%
28%
AC IS Malaysia NZ IFM PD Non-Concession Concession Canada & USA UK Others Australia Others
12 YOY REVENUE & PBT Revenue increased marginally by 1%; Reported PBT dropped by 6% mainly due to one-off costs (goodwill impairment and MSS cost)
YoY Revenue (FY2015 vs FY2014) YoY PBT (FY2015 vs FY2014)
Figures in RM’mil
+17% 324.5 +1% +36% 128.4 +35% 6.5 3,123.0 28.0 -6% (10.3) (3.6) 305.4 3,089.3 (2.4) +38% -2% -16% -40% (6.5) +9% +65% 8.6
(46.9) (87.3) -32% -5%
FY14 AC IS IFM PD Others FY15 FY14 AC IS IFM PD Others FY15
AC recorded lower revenue by 5% due to overall weak economic condition in Australia, coupled with the continued decline in oil and gas prices affecting project commencement in Opus Stewart Weir IS revenue increase by 17% due to higher work progress and certifications for North-South Expressway (“NSE”) fourth lane widening and Bayan Lepas Expressway project. The Division also recognized higher civil and pavements works carried out for NSE IFM revenue is lower by 2% due to reduction in contribution from its Sarawak operations. However, PBT is higher by 36% due to higher fees from the new Concession, better efficiencies and higher incineration cost for treatment of medical waste in Sabah recorded in the preceding year.
13 Reported PBT to Normalised PBT Reconciliation Bridge FY15 Normalised PBT is RM350.8 mil, RM45.4 mil higher than the reported PBT.
FY15 Reported PBT to Normalised PBT Reconciliation Bridge
Figures in RM’mil +45.4 (14.9%) 1. The fair value of deferred consideration 3 payable for the acquisition of Opus Stewart 350.8 30.6 Weir (‘’OSW’’) was assessed to be lower than the amount estimated at the acquisition date due to lower probability of OSW 2 meeting the set performance targets. 36.1 2. The performance of OSW has been 305.4 adversely affected by the weak global crude oil prices. As a result, planned capital projects were either shelved or cancelled. Thus, goodwill impairment of RM36.1 mil (21.3) was recognised based on value in use 1 calculation using projected cash flows.
3. Mutual separation scheme cost breakdown by division:
i. Asset consultancy: RM7.2 mil ii. Infra services: RM10.8 mil iii. Healthcare services: RM10.2 mil iv. HQ and others: RM2.4 mil Reported PBT Reversal of Impairment of Mutual Seperation Normalised PBT deferred Goodwill Scheme Cost consideration
FY14 FY14 324.5 298.8 14 COST BREAKDOWN Better efficiency and cost control measures being implemented resulted in 0.3% decrease in the company’s total operating cost (excl. one-off cost) versus a 1.1% increase in revenue
FY2015 Total Operating Cost (Excl. one-off cost) 17% Employee Cost 18% Consultant / Subcontractor RM2,794 mil 4% Cost 3% 41% ▼ RM8 mil (-0.3%) 42% Consumable Cost 8% 10%
Raw Material Cost FY2014 Total Operating Cost 27% Others (1) (Excl. one-off cost) 30% RM2,802 mil
2015 2014
Notes: (1) Others include administrative cost, professional service, depreciation, operating lease and etc. (2) One-off cost for FY15 and FY14 are RM66.7 mil and RM25.1 mil respectively comprising of impairment on goodwill, MSS cost and other non-recurring cost 15 DIVIDENDS From 2011 – 2015, UEM Edgenta has declared / paid cumulative gross dividend of 86 sen1
92% 75% 58% 64% 37% 25%
20%
20
18
15 8 10 10 5
2011 2012 2013 2014 2015
Final / Interim Dividend Special Dividend Net Payout Ratio (ex Special Dividend) Net Payout Ratio (inc Special Dividend)
DIVIDEND POLICY
The company has adopted a dividend policy of distributing up to 70% of PATANCI, subject to availability of cash flow and future capital expenditure requirements.
Note: 1) Dividends paid between 2011 to 2012 are gross dividend while dividends declared and/or paid in 2013 to 2015 are single-tier (net) dividend 16 Section 3 Key Business Division Updates UEM EDGENTA CORPORATE STRUCTURE
As at 31 Dec 2015
100%
70.68%
Environmental & Material Asset Consultancy Healthcare Services Infra Services Facilities Services Energy Services Testing Services
100% 100% 100% 100% 70% 100% Opus Group Berhad Edgenta Healthcare Edgenta PROPEL Berhad Edgenta Facilities Sdn Bhd Edgenta Energy Services Edgenta Environmental & Management Sdn Bhd (fka Projek Penyelenggaraan (fka Faber Facilities Sdn Bhd) Sdn Bhd Material Testing Sdn Bhd (fka (fka Faber Healthcare Lebuhraya Soil Centralab Sdn Bhd) 100% Management Sdn Bhd) Berhad) Opus International (M) 51% Berhad Faber Sindoori 100% Management Services Property Services Property Development Edgenta Mediserve Sdn Bhd Private Limited (fka Faber Medi-serve 100% 100% Sdn Bhd) 100% Opus International (NZ) Faber Development Holdings Sdn Edgenta Township Limited Bhd Management Services 40% Sdn Bhd 100% Sedafiat Sdn Bhd* 61.21% Faber Union Sdn Bhd Opus International 70% Consultants Limited 40% UEM Sunrise Edgenta One Medicare Sdn Bhd* TMS Sdn Bhd (fka ETMS Sdn Bhd) Other subsidiaries 18 Note: * indirect interest held by Edgenta Mediserve Section 3.1 ASSET CONSULTANCY: FINANCIAL HIGHLIGHTS 5% and 9% decrease in Total Revenue and Operating EBIT respectively
Figures in RM mil Variance FY2015 FY2014 RM mil % New Zealand Revenue 752.8 778.0 (25.2) ▼ -3.2% Operating EBIT 99.0 77.9 21.1 ▲ 27.1% Operating Margin (%) 13.2% 10.0% ▲ 3.2%
Canada & USA Revenue 305.9 371.7 (65.8) ▼ -17.7% Operating EBIT 3.9 20.5 (16.6) ▼ -80.9% Operating Margin (%) 1.3% 5.5% ▼ -4.2%
Australia Revenue 137.5 174.3 (36.8) ▼ -21.1% Operating EBIT (7.0) (1.8) (5.2) ▲ 280.5% Operating Margin (%) -5.1% -1.1% ▼ -4.0%
Our Asset Consultancy capabilities span across United Kingdom planning and design, to procurement, contract Revenue 174.9 133.4 41.5 ▲ 31.1% management and project management with core Operating EBIT 7.2 3.1 4.1 ▲ 128.6% expertise in the transportation and building sectors Operating Margin (%) 4.1% 2.3% ▲ 1.8% and a strengthening specialist capabilities in the water Malaysia(1) sector. Revenue 137.9 142.1 (4.2) ▼ -2.9% Operating EBIT(2) 29.8 39.1 (9.3) ▼ -23.9% We have undertaken major projects for over 12,000 Operating Margin (%) 21.6% 27.5% ▼ -5.9% clients worldwide in the expressways and highways, built environment, airports and railways as well as Others (Contribution by other countries, share of JV results and unallocated corporate cost) utilities sector. Revenue 16.0 12.9 3.1 ▲ 23.7% Operating EBIT (12.2) (5.8) (6.4) ▲ 111.2%
Notes: (1) FY14 revenue and operating EBIT for Malaysia is restated to TOTAL excludes contribution from Environmental and Material Testing Revenue 1,525.0 1,612.4 (87.4) ▼ -5.4% services which were transferred out of Opus Malaysia in Aug 2015 (2) ▼ and other countries (MENA and Indonesia) which were reported Operating EBIT 120.7 133.0 (12.3) -9.3% separately Operating Margin (%) 7.9% 8.2% ▼ -0.3% (2) Excludes MSS cost of RM7.2 mil incurred for AC division 19 Section 3.1 ASSET CONSULTANCY: REVENUE BREAKDOWN New Zealand contributed to half of Asset Consultancy revenue; revenue mix evenly split between public and private clients
1% 1%
3% 13% 9% 12% 9%
10% 49% 48% Sector 12% Geography Client 52% 28% 9%
20% 24%
Building New Zealand Transport Asset Development Canada & USA Transport Asset Management Water United Kingdom Public Private Resources Australia Asset Management Building Infrastructure Malaysia Energy Other Others
20 Section 3.1 ASSET CONSULTANCY: Headcount Headcount reduction to align capacity with market demand
3,907 3,822 Malaysia • ~48% of the employees are based in New Zealand. 799 3,375 778 461 • Simplification of business in New United Kingdom Zealand, Canada and Australia to 354 398 improve operational efficiencies and 434 371 collaboration, resulting in aggregate 313 281 reduction of headcount by 166 (6%). Australia 643 667 • Sharp decrease in headcount in 569 Malaysia by 317 mainly due to transfer of over 160 employees to Canada & USA Environmental and Material Testing Services division, transfer of support functions personnel to HQ as well as 1,740 1,666 1,630 reduction caused by MSS exercise. New Zealand • We continue to attract top talent across all our markets increasing the diversity of our thought leadership. 2013 2014 2015
21 Section 3.1 ASSET CONSULTANCY: Country Update & Outlook Positive outlook for New Zealand; Canada market to remain challenging due to decline in oil price
1 year order book as Update Outlook % of budget revenue
• New Zealand business has • Positive outlook due to the following: New performed strongly over the year i. Various transport / network management contracts are Zealand underpinned by a strong coming to market in 2016; performance in major transportation work ii. Opus is part of a PPP consortium bidding on the 18.5km Puhoi to Warkworth transport link; • The New Zealand-wide 48% restructure completed in early iii. NZ government has announced that it is providing up to 2015 has delivered positive NZD115 mil on 4 projects to continue improving regional impact where operating margin highways; and increased to 13.2% from 10.0% iv. Strong growth potential in rural water sector.
• Challenging market condition in • The short to medium term outlook for Opus Stewart Weir remain Canada Canada following the plunge in challenging due to curtailed investment intentions, & US oil price environmental concerns in British Columbia over pipeline expansion, LNG development and tanker traffic along the • However, second half northern coast; performance was a significant improvement reflecting the • The new Canadian Liberal federal government has committed to impact of management actions doubling of infrastructure investment to $125 billion over the next 47% taken early in 2015 in response 10 years. Dedicated funding was promised in three priority to declining oil prices areas: transit, social infrastructure, and “green” infrastructure; and • We are positioning ourselves to manage these short term impacts including adjusting resourcing to meet demand and focusing on LNG opportunities to offset the decline in oil derived work.
22 Section 3.1 ASSET CONSULTANCY: Country Update & Outlook (Çont’d) Continuous aligning capacity with revenue for Australia; UK recorded best performance to date and Opus is well position to bid for further large county council transport asset management contracts
1 year order book as Update Outlook % of budget revenue
• Aligning of capacity with revenue • The outlook for the Australian business remains Australia resulted in the closure of three offices challenging. A full review has been conducted, and headcount reduced by 32 implementing a number of cost-saving and other measures to improve performance. • Recent project wins such as the $1.6m 33% Reticulation Design component of Stage 2 of the WestConnex project improved Australia’s order book
• Recorded best performance to date for • Positive outlook due to the following: FY2015 back of our transportation and i. Opus is well positioned to bid for further large county United rail asset management Kingdom council transport asset management contracts which • Large increase in the order book are coming to market; reflects the success in winning higher ii. Partnering with a member of the £5bn Collaborative value commission projects Delivery Framework for Highways England; 67% iii. The government’s Road Investment Strategy announced £15bn will be committed to 100 major schemes to 2020; and iv. Network Rail’s £38bn programme of work, sees the continued electrification of key lines, as well as commitment to other key transformational Projects.
23 Section 3.1 ASSET CONSULTANCY: Country Update & Outlook (Cont’d) Positive outlook on Malaysia due to strong infrastructure projects pipeline
1 year order book as Update Outlook % of budget revenue
• Delivered commendable results in • Positive outlook and opportunities arising from the Malaysia FY2015 which are in line with FY14 range of projects announced in the Government’s contributed mainly by LRT2 extension infrastructure spending plan, the 11th Malaysia Plan as and PLUS network maintenance well as the Economic Transformation Plan; and 67% management contract • Actively pursuing various opportunities for offering engineering consulting and asset management services to Lebuhraya Pantai Timur 2 and Pan Borneo Highway.
24 Section 3.1 Sample Project (Asset Consultancy): Huntly Section, Waikato Expressway
Auckland
Hamilton
Services: Asset Consultancy Contract Period: March 2015 – End 2019 Capital Value: NZD458 mil(1) Client: NZ Transport Agency
The Waikato Expressway will improve safety and reliability and reduce travel times and congestion on SH1 by delivering a four-lane highway in the North Island of New Zealand. Opus International Consultant has been commissioned to undertake detailed design work of the Huntly Section, Waikato Expressway as well as construction phase services and technical support up to the completion of the construction. Our history with the Expressway goes back 40 years. Our local, highly skilled team has collaborated on many successful outcomes for the NZ Transport Agency – local knowledge makes a world of difference in projects like this.
Note: (1) Total capital value (NZD), won in conjunction with other parties 25 Section 3.1 Sample Project (Asset Consultancy): LRT Extension Project
Prasarana intends to enhance the LRT services effectively and efficiently by reaching and serving new areas by extending the LRT line to highly populated residential and commercial areas. Several catchment areas in dire need of a reliable public transport system has been identified.
The existing Kelana Jaya Line has 24 stations within 29 kilometres line from Kelana Jaya to Terminal Putra. The Kelana Jaya Line Extension project will involve construction of an elevated twin track from Lembah Subang to USJ 23/Putra Heights.
The existing Ampang Line has 25 stations within the 27 km line from Ampang to Sentul Timur and Sri Petaling. The Ampang Line Extension project will involve construction of an elevated twin track spanning from Sri Petaling Station to Putra Heights. Services: Asset Consultancy Contract Period: July 2010 – June 2016 Opus Malaysia together with Ace Vector Consortium is providing Client: Prasarana Negara consultancy services to Prasarana in respect to quality, time, cost Berhad and risk through careful planning, progress monitoring, reporting and control for the design review, system engineering, construction works, contract administration, cost control and application of any other specialised project management services for the implementation of the Kelana Jaya Line Extension and Ampang Line Extension projects.
26 Section 3.2 INFRA SERVICES 17% increase in revenue largely driven by strong growth in work orders and projects
FY15 FY14 Variance RM mil % of total RM mil % of total RM mil %
Total Revenue(1) 894.4 765.1 129.3 ▲ 17% Routine maintenance 247.1 27.6% 237.1 31.0% 10.0 ▲ 4%
Work orders 318.3 35.6% 229.2 30.0% 89.1 ▲ 39%
Projects (one-off) 329.0 36.8% 298.8 39.0% 30.2 ▲ 10%
Operating EBIT(1)(2) 117.8 97.3 20.5 ▲ 21%
Operating Margin 13.2% 12.7% - ▲ 0.5% INFRA Services encompass structural works and maintenance of key infrastructures primarily consisting of roads, bridges, One-off projects contributed positively to FY2015 revenue, largely driven by NSE railways. Services include: Fourth Lane Widening project, Bayan Lepas Expressway upgrade, Cikampek- • Pavement rehabilitation Palimanan Expressway and Senai Desaru Expressway.
• Bridge & Slopes Maintenance Strong growth in work orders due to contribution from pavement structural overlay • Mechanical, Electrical & Electronics contract being included as part of PLUS Master Maintenance Agreement. Maintenance Routine maintenance and work orders to remain a stable contributor to revenue • Traffic Management stream. • Utilities Relocation The recently awarded 5-year contract for Selangor Zone III State Road Maintenance marked our first foray into state road maintenance.
Notes: (1) Before intersegment elimination and corporate cost allocation (2) Excludes MSS cost of RM10.8 mil incurred for IS division 27 Section 3.2 Sample Project (Infra Services): PLUS Master Maintenance Agreement & Network Maintenance Management Agreement
PLUS Expressways is the largest toll expressway operator in Malaysia and operates expressways of over 1,000 km in length comprising of North-South Expressway, ELITE, Seremban-Port Dickson Highway, New Klang Valley Expressway (“NKVE”), Malaysia-Singapore Second Link, Butterworth-Kulim Expressway and Penang Bridge.
Edgenta PROPEL has been undertaking the following works on the North-South Expressway since 1988. The services offered by Edgenta PROPEL includes:- 1) Pavement Repair & Rehabilitation 2) Pavement Structural Overlay 3) Traffic and Safety Management 4) Civil Routine Maintenance Works (tunnels, slopes, bridges, landscaping, line markings, building maintenance, toll plazas and rest & service areas) 5) Mechanical, Electrical & Electronic Routine Maintenance Works Services: Infra Services & (street lights, power, telecommunication systems) Asset Consultancy
Contract Period: As per PLUS In addition, OPUS Malaysia provides Asset Management and Technical concession Advisory services for the aforementioned expressways under the Client: PLUS Expressway network maintenance management agreement. Berhad
28 Section 3.2 Sample Project (Infra Services): Road Maintenance for Zone III State Roads of Selangor
Rural and major urban areas in Selangor is linked via a 4,079km state road which is managed by JKR Selangor.
In December 2015, Edgenta Propel was awarded a 5-year contract for one of the three zones i.e. 1,364 km road which encompass Kuala Langat, Hulu Langat and Sepang district.
Routine Maintenance scope of work includes the following:- 1. Civil Works (Grass cutting, drainage, bridges & culverts, road cleaning and road furniture) 2. Pavement Works (Pothole, Road shoulder and Roadline) 3. Mechanical, Electrical & Electronic Works
Services: Infra Services Contract Period: Feb 2016 – Jan 2021 Contract Value: RM109 mil Client: JKR, Selangor
29 Section 3.3 HEALTHCARE SERVICES Total Revenue for Healthcare Services dipped marginally by 1% to RM652.4 mil due to loss of revenue from restructuring of contracts for Healthcare Support Services in East Malaysia hospitals.
FY15 FY14 Variance RM mil % of total RM mil % of total RM mil % Total Revenue(1) 652.4 658.9 (6.5) ▼ -1% Northern Peninsular 370.5 56.8% 319.2 48.5% 51.3 ▲ 16% East Malaysia 281.9 43.2% 339.7 51.5% (57.8) ▼ -17% Gross Profit(1) 145.9 128.2 17.7 ▲ 14% Northern Peninsular 77.0 52.8% 52.8 41.2% 24.2 ▲ 46% East Malaysia 68.9 47.2% 75.4 58.8% (6.5) ▼ -9% Gross Profit Margin 22.4% 19.5% - ▲ 2.9% HEALTHCARE Services covers a wide range (1)(2) of solutions for hospitals and healthcare Operating EBIT 105.4 79.8 25.6 ▲ 32% institutions. With 33 public hospitals under our Operating Margin 16.2% 12.1% - ▲ 4.1% belt and a further 49 in East Malaysia via JVs with local partners, we are well positioned to deliver services in the following areas: 1% revenue drop from FY2014 largely attributed to reduction in contribution • Facilities Engineering Maintenance Services from East Malaysia due to nCA. (FEMS)
• Biomedical Engineering Maintenance Higher revenue from the Northern Peninsular due to higher fees from the Services (BEMS) revised rates under the nCA and better contribution from non-concession business (mainly from National Cancer Institute). • Clinical Waste Management • Cleansing Services Operating margin increased by 4.1% to 16.2% due to better efficiencies as well • Linen & Laundry Services as the higher incineration and transportation cost for treatment of clinical waste in Sabah recorded in preceding year of RM16.5 mil. • Sustainability Programme (Energy Management/Indoor Air Quality) For FY15, we recognized share of associates profit of RM8.3 mil for the East Malaysia concession JV companies.
Notes: (1) Before intersegment elimination and corporate cost allocation (2) Excludes MSS cost of RM10.2 mil incurred for Healthcare services division 30 Section 3.3 Healthcare Services: New Concession Agreement with MoH
Pursuant to the new Concession Agreement signed on 11 March 2015, Edgenta Mediserve was awarded a 10-year concession to provide support services to 33 MoH hospitals located at Northern Peninsular region.
We provide the following services to the MoH hospitals: • Facilities Management Services • Facilities Engineering Maintenance Service • Biomedical Engineering Maintenance Services • Linen and Laundry Services • Healthcare Waste Management Services • Cleansing Services
In addition to the above, a new scope of works granted to Edgenta Mediserve includes the following:
Services: Healthcare Services • Asset and Services Information System Contract Period: Apr 2015 – Mar 2024 • Sustainability Programme (Concession) Contract Value: RM3.08 billion Client: Ministry of Health (“MoH”) 31 Section 3.4 PROPERTY SERVICES: Growth Momentum via Township Management The signing of a Joint Venture Agreement with Medini Iskandar (M) Sdn Bhd and UEM Sunrise Berhad marks the beginning of a new era for Property Services.
JV Structure of the Property Services
JV between UEM Edgenta and UEM Sunrise Medini UEM Edgenta UEM Sunrise • On 30 November 2015, Edgenta Township Iskandar Management Services Sdn Bhd, a wholly-owned subsidiary of UEM Edgenta entered into a JV (UEM 100% Sunrise Edgenta TMS) with UEM Sunrise Berhad. Edgenta • The JV provides UEM Edgenta the opportunity to Township leverage on UEM Sunrise’s current and future Management developments to undertake property and township Services management services for assets developed by UEM Sunrise.
70% 30% 100%
JV between UEM Sunrise Edgenta TMS and Medini Iskandar
• On 13 January 2016, UEM Sunrise Edgenta TMS Sdn UEM Sunrise Township Bhd (formerly known as ETMS Sdn Bhd) entered into a Edgenta TMS Management JV (Edgenta TMS Sdn Bhd) with Township Services Management Services Sdn Bhd, a wholly-owned subsidiary of Medini Iskandar (M) Sdn Bhd. 70% 30% • The purpose of the JV is to provide integrated facility management services which includes building facility management services, security management services, estate management Edgenta TMS services and related services for building owners and residents of Medini and Iskandar Puteri (formerly known as Nusajaya) townships. 32 Section 3.4 PROPERTY SERVICES: Evolution of Township Management Services The demand for township management services has evolved from basic utilities maintenance towards asset and community-focused services
Asset Services Community- Basic Utilities Focus Focused Maintenance Services
Integrated Facilities Integrated Basic Utilities Services Management Services Community-Focused Services
Essential Building Remote Waste Services Maintenance Monitoring Basic Environmental Collection Utilities Security Management Performance Management Management
Facilities Road Basic Public Management Auxiliary CRM Energy Cleaning Facilities Landscape Police Management Management
Property Waste Management Management Essential Value Added Services Services
Essential Services Enhanced Services Lifestyle-Sustainability Services 33 Section 3.4 PROPERTY SERVICES: Catalyst to be the Best In Class Holistic approach that integrates all Property / Asset Development and Asset Management experiences and framework through a single core Total Assets Solutions Lifecycle framework.
• UEM Edgenta and UEM Sunrise has the advantage of becoming the best in class township management services provider as both companies are leaders in Property/Asset Development and Asset Management.
• Both companies will bring more than 20 years of experiences and established framework in each phases of the Asset Lifecycle and will be able to provide an integrated Total Assets Solutions
Total Asset Solutions Lifecycle Capabilities
Asset Management Property / Asset Development
34 UEM Edgenta’s area of expertise and core business UEM Sunrise’s area of expertise and core business Section 3.4 PROPERTY SERVICES: JV between UEM Edgenta and UEM Sunrise The JV company, UEM Sunrise Edgenta TMS Sdn Bhd (UEMSET) will spearhead the new integrated offerings in township management services.
The Joint UEMSET Venture
Aspirations Community Operations Business Environmental Technology Focused Optimization Sustainability Sustainability Driven
Core Capabilities
Integrated Township Centralized Security Building Facilities Property Estate Management Command Center Management Management Management Management (Cloud & IoT)
35 Section 3.4 Township Management for Medini Iskandar and Iskandar Puteri
Iskandar Puteri
• Iskandar Puteri spans across an area around 22,000 acres. • UEM Sunrise (UEMS) owned approximately 7,600 acres and at various stages of development. • UEMS aims to develop a vibrant and dynamic city offering holistic and integrated lifestyle in sustainable environment.
Medini Iskandar • A mixed development project spearheaded by Medini Iskandar Malaysia Sdn Bhd (MIMSB) spanning 2,230 acres located in the heart of Iskandar Puteri. • MIMSB plans to build a total of 31.9 mil square feet of residential, commercial and mixed development type properties. • MIMSB aims to create a high quality, integrated and safe environment for its community.
Common Aspirations
• To build an integrated and smart city in safe and sustainable environment. • UEMSET and MIMSB via its wholly owned subsidiary, Township Management Services Sdn Bhd (TMS) forms a joint venture to realize UEMS and MIMSB’s aspirations.
36 Section 3.5 OTHER DIVISIONS
Formed JV with RDM Asia to Completed the transfer of Soil The Facilities Services Maintain cautious approach offer integrated energy Centralab Sdn Bhd from Opus business is being jointly towards entry into the Oil and management solutions; Malaysia to UEM Edgenta; developed with energy services Gas sector given the current and property services by market outlook but is on the Completed the roll out of To transform the environmental offering one-stop FM solutions lookout for consolidation energy management services and material testing unit into a to building / asset owners; opportunities and new in 33 government hospital key support business for our investments for the long term located at northern Peninsular core business; and Inorganic growth via the outlook. region; proposed acquisition of KFM In the midst of setting up which is a key market player in Upbeat on the prospect of pavement research centre to the facilities management developing remote monitoring produce innovative product for sector with presence in and control solutions via this commercialisation to support Malaysia and UAE; and JV; and our pavement maintenance work under Infra Services. Actively seeking strategic We aim to establish Active partnership to be able to Facility Management harness the power of Internet capabilities within the South of Things (IoT) and Big Data East Asia market. Analytics (BDA) to offer one- stop facilities management solution to building and asset owners.
37 Section 3.5 Sample Project (Energy Services): Sustainability Programme for MoH Hospitals in Northern Peninsular Malaysia
Edgenta Energy Services Sdn Bhd, the JV company between UEM Edgenta and RDM Asia provides energy savings solutions to 33 MoH hospitals located in the Northern region of Peninsular Malaysia
By leveraging on our advanced remote monitoring system, it enables us to monitor and capture building services data in real time and translate them into useful actionable output for quick decision making. By measuring the consumption at downstream level, the plan in promoting higher efficiency operation culture can be implemented at all the hospitals, through addressing the potential wastages in energy usages.
The installation of Energy Monitoring System across these hospitals were completed in December 2015 which was inline with MoH’s Services: Energy Services objectives under the Sustainability Programme in order to reduce 10% of energy consumption. Client: MoH
38 Section 3.5 Sample Project (Environmental and Material Testing Service): Soil Investigation works for West Coast Expressway
The West Coast Expressway (WCE) or Lebuhraya Persisiran Pantai Barat will be constructed along the west coast of Peninsula Malaysia, connecting Taiping in Perak, to Banting in Selangor with a length of 233 kilometers with 20 toll plazas and 21 interchanges.
The expressway will be built by Konsortium Lebuhraya Pantai Barat (KLPB) led by Kumpulan Europlus Berhad, the project majority owner, and Road Builder Group, a subsidiary of IJM Corporation Bhd.
Edgenta Environmental & Material Testing Sdn Bhd (formerly known as Soil Centralab Sdn Bhd) is undertaking the instrumentation & soil investigation works for the Main Contractor of sections 3, 4, 5, 8 & 9 of the proposed alignment.
The scope of works include the following:-
a) Install Standpipe Piezometer and Inclinometer (for water level and lateral movement monitoring);
Services: Environmental and b) Boring work, Standard Penetration Test and Mackintosh Material Testing Service Probe Test for engineering design purpose; and Contract 32 months (August 2015 Period: to April 2018) c) Soil investigation including Cone Penetration Test, Soil Laboratory & Testing. Client: IJM Construction Sdn Bhd
39 Section 4 Strategic Direction and Outlook FY2016 Strategic Themes
i) Sustaining performance in midst of macro-economic uncertainty; ii) Protect and enhance core business offerings i.e. Healthcare services, Infra Services and Asset Consultancy; iii) Growth and effective delivery of new business lines / offerings (incl. Property Services, Environmental and Material Testing services and Energy Services); iv) Continue with integration and rationalization efforts; v) Improve technology utilisation; deployment of Active FM; and vi) Strengthen regional presence (incl. Indonesia and Middle East).
In addition, UEM Edgenta will continue to explore inorganic growth opportunities as and when they arise.
41 FY2016 Guidance
GP / EBITDA Revenue DIVIDEND Margin
To sustain performance In line with historical trend* To sustain AC ◄► performance IS ▲ (Up to 70% payout IFM ▼ ratio#)
Notes: * Excluding special dividend # Subject to availability of cash flow and future capital expenditure requirements 42 Section 5 Discussion / Q&A THANK YOU