UEM EDGENTA BERHAD PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP CAPITAL OF ASIA INTEGRATED FACILITY SOLUTIONS PTE LTD

Transcription

1 UEM EDGENTA BERHAD PROPOSED ACQUISITION OF THE ENTIRE ISSUED AND PAID-UP CAPITAL OF ASIA INTEGRATED FACILITY SOLUTIONS PTE LTD Extraordinary General Meeting: 2 nd December 2016 Empowered by science, inspired by humans

2 Contents 1. Overview of Proposed Acquisition 2. Overview of AIFS/UEMS 3. Rationale of Acquisition

3 Section 1 Overview of Proposed Acquisition

4 SUMMARY OF THE PROPOSED ACQUISITION UEM Edgenta is acquiring 100% equity interest of Asia Integrated Facility Solutions Pte. Ltd. ( AIFS ), which indirectly owns 100% of UEMS Pte. Ltd ( UEMS ), an established integrated facility management ( IFM ) services provider focusing in the healthcare sector. The acquisition opportunity arose from a competitive bid process to dispose of 100% equity interest in UEMS. The existing shareholding structure of AIFS is as follows: Asia IFM Solutions Ltd 84.6% Management Shareholders 15.4% Management shareholders consist of the following individuals: AIFS 100% AFS Shareholder No. of shares % Holding Chan Cheow Hong 31, % Tan Cheh Tian 16, UEMS Lim Wah Seng 6, UEMS Solutions Sdn Bhd Operating companies UEMS Solutions Pte Ltd UEMS Solutions Taiwan Ltd UEMS ServiceCorp Ltd John Bong Kim Fook Srinidhi Gopalakrishna 4, , TOTAL 62, % 4 4

5 SUMMARY OF THE PROPOSED ACQUISITION (CONT D) The existing shareholding structure of AIFS post completion of the Proposed Acquisition is as follows: UEMEd 100% Edgenta (Singapore) Pte Ltd 100% Under the Investment Agreement, the Management Shareholders shall reinvest no less than SGD5.0 mil into UEMS which translates to 2.6% stake in UEMS: 100% 97.4% AIFS AFS Management Shareholders 2.6% Shareholder No. of shares % Holding Chan Cheow Hong 44, Tan Cheh Tian 23, UEMS Lim Wah Seng 9, John Bong Kim Fook 7, UEMS Solutions Sdn Bhd Operating companies UEMS Solutions Pte Ltd UEMS Solutions Taiwan Ltd UEMS ServiceCorp Ltd Srinidhi Gopalakrishna 4, TOTAL 88, % 5 5

6 SUMMARY OF THE PROPOSED ACQUISITION (CONT D) Key terms of the Proposed Acquisition are as follows: Competitive Binding Bid Process In July 2016, UEMEd submitted a binding offer to acquire 100% of UEMS Purchase Consideration Settlement and Source of funding Condition Precedent Indicative Timeline SGD185,915,000 (approx. RM563.2mil), subject to post-closing adjustments Based on common valuation methodologies, historical performance and growth prospects of UEMS To be satisfied in cash and fully funded via bank borrowings UEM Edgenta shareholders approval Expected to complete by end of

7 SUMMARY OF THE PROPOSED ACQUISITION (CONT D) The valuation of SGD185,915,000 was arrived after the following considerations: Historical Financial Performance Audited financial statements of UEMS and its subsidiaries, AIFS and AFS, and ServiceMaster Hong Kong Limited Unaudited management accounts for AIFS Group ended 30 June 2016 Future Financial Performance Financial projections of UEMS Singapore, Malaysia and Taiwan as well as UESC for the financial years ending 2016 to 2020 Sum-of-the-parts valuation of AIFS, AFS, and UEMS and its subsidiaries Valuation of UEMS Group based on Income Approach namely the discounted cash flow (DCF) method After considering comparable trading EV/EBITDA and P/E multiples Implied FY2015 EV/EBITDA & PE of 9.7x and 13.5x Qualitative Traits Access to new markets Strengthening healthcare sector presence for UEMEd Cross-selling opportunities of complementary services Process optimization / Technology adoption 7 7

8 Section 2 Overview of AIFS/UEMS

9 OVERVIEW OF UEMS Established IFM services provider focusing in the healthcare sector Among the top 2 players in the provision of housekeeping and portering services to the healthcare sector in Singapore Since its inception in the 1980s, UEMS has been focused on the healthcare sector Serving over 90 public and private hospitals and healthcare institutions across its markets in SG, TW and MY UEMS provides a wide range of IFM services with a leadership position particularly in the housekeeping and portering market in SG and TW Total employees stood at 4,605 as at Dec 2015 across all regions Awards and recognitions include, but not limited to: Business Snapshot #2 in Healthcare segment (c. 40% of hospital beds) #1 In middle to large sized hospitals (c.28% of hospital beds) #1 In private healthcare segment (c. 20% hospital beds) Environmental Services (Soft FM) Housekeeping Portering Linen and Laundry Management Stone Care Services Grounds and Landscape External Façade Maintenance Pest Control Facilities Engineering Services and Maintenance (Hard FM) Facilities Engineering Services Service Offerings Engineering Asset Management Indoor Air Quality and Duct Cleaning Engineering - HVAC/ACMV Maintenance Property Management Services and Others Property Management Services - Managing Agent - Fire Safety Management Services - Project Management and Consultancy Condition Appraisal Training and Development 9 9

10 MARKET SHARE & KEY CLIENTELE OF UEMS Good diverse blue chip customer base across healthcare, public and financial sectors Contract renewals are healthy at 85% - 90% Singapore Malaysia Market Standing 1 of the only 2 FM players that provides housekeeping and portering services in Singapore healthcare sector ~40% of hospital beds One of the leading players in Taiwan servicing ~28% of hospital beds for middlesized and large hospitals with at least 100 beds No. 1 player in Malaysia for private healthcare market (for middle & large hospitals), servicing circa 20% of hospital beds in private market. Market Share Servicing over 20 hospitals and healthcare institutions Servicing over 50 hospitals and healthcare institutions Servicing over 20 hospitals and healthcare institutions Key Clientele 10 10

11 3-YEAR PROFORMA FINANCIAL HIGHLIGHTS OF AIFS GROUP Strong performance over the period , with revenue growth CAGR of 13.5% from SGD82.1 mil to SGD105.7 mil in PAT grew by CAGR of 92.4% from SGD3.7 mil in 2013 to SGD13.7 mil in Revenue growth has been achieved organically by securing new contracts in Singapore, Malaysia and Taiwan. PAT growth has been achieved via improved operating efficiency PAT growth was due to improvement in labour productivity via the adoption of technology solutions and optimization of work process. Revenue Performance REVENUE PERFORMANCE PAT Performance PAT AND MARGIN PERFORMANCE SGD mil CAGR 13.5% CAGR 92.4% RM206.6 mil 82.1 RM252.5 mil 97.8 RM300.1 mil SGD mil % 5.8% RM9.4 mil 3.7 RM14.6 mil % RM39.0 mil A 2014A 2015A A 2014A 2015A 11 11

12 Section 3 Rationale of Acquisition

13 KEY RATIONALE OF PROPOSED ACQUISITION Towards creation of the region s largest Total Asset Solutions company Establish immediate presence in Singapore, Taiwan and advance into Private Healthcare Market 5 Adopt and blend UEMEd and UEMS best practices to further enhance operating efficiencies 1 Towards creation of the region s largest Total Asset Solutions company 4 Opportunity to cross-sell UEM Edgenta s capabilities to new clientele and geographies 2 Established immediate presence in Singapore and Taiwan and advance into Private Healthcare Market 3 Value accretion to UEM Edgenta (Proforma FY15 EPS accretion of 8%) 13 13

14 IMMEDIATE FINANCIAL ACCRETIONS (PROFORMA FY15) Revenue and PATANCI increase by RM300.1mil and RM15.2mil, accretion of 10% and 8% respectively EPS increases by 8%, an increment of 1.87 sen per share REVENUE 10% 8% 8% Combined Revenue RM3.4 bil Combined PATANCI RM206.4 mil Combined EPS 25.37sen 90% 92% 92% Accretions to UEMEd based on the consolidation of AIFS Group FY2015 proforma financials and after deducting the estimated financing related expenses 14 14

15 SINGAPORE TAIWAN MALAYSIA INDUSTRY OVERVIEW & PROSPECTS Strong demand for IFM services in all 3 countries due to development of new infrastructure and government initiatives UEMS is well positioned to continue its growth trajectory and expected to contribute positive earnings to UEM Edgenta IFM PROSPECTS: High demand on operational efficiency Strong implementation of energy efficiency policies HEALTHCARE PROPECTS: Healthcare 2020 Master Plan - Aim of doubling healthcare expenditure IFM PROSPECTS: One of the top countries for Leadership in Energy & Environmental Design ( LEED ) certifications and development of green buildings HEALTHCARE PROSPECTS: Government's promotion as a medical tourism destination, focusing on attracting visitors from China IFM PROSPECTS: Growth in infrastructure sector and development corridors such as Iskandar, Johor Transformation of older buildings to smart connected buildings HEALTHCARE PROSPECTS: Government s initiative and budget to enhance quality of healthcare IFM Industry Projections (2015A 2021F) USD MIL SG: CAGR 6.2% TW: CAGR 10.5% MY: CAGR 7.4% Singapore Taiwan Malaysia IFM Industry (2015 Actual) IFM Industry (2021 Projected) Source: Frost & Sullivan s report on Integrated Facilities Management in South East Asia, Forecast to 2021 (September 2016) 15 15

16 CONCLUSION & RECOMMENDATION The Proposed Acquisition will enable UEM Edgenta to accelerate into new geographies and private healthcare sector Enhance shareholders value and is in line with UEM Edgenta s strategic direction Immediate Expansion into New Geographies Towards creation of the region s largest Total Asset Solutions company with leading position in Singapore, Taiwan and Malaysia Private Healthcare Advance into private healthcare services allowing UEM Edgenta to serve both the public and private sector Earnings and Value Accretive Revenue and PATANCI accretion by 10% and 8% respectively (proforma FY15) EPS accretion by 8%, an increment of 1.87 sen per share from sen to sen (proforma FY15) Synergistic Acquisition Realisation of UEM Edgenta s Strategic Direction UEMS businesses complement the core services of UEM Edgenta; Opportunity to cross-sell UEM Edgenta s capabilities to new clientele and geographies. The combined entity would create strong customer network, opportunity to leverage on each other s strength To enhance the service offerings and grow non-concession business of Healthcare services To strengthen regional presence and expansion into Southeast Asia regions 16 16

17 THANK YOU