Year End Message By Chairman
The year 2020 has been like no other in our lifetime and has brought upon unprecedented challenges to the country, following the change in the administration with the announcement of a new government on 1st March 2020 and secondly the COVID-19 outbreak which has become a global pandemic.
We are proud and grateful for the continuous support and patience of HEB family whose resilience, adaptability, flexibility and prudence were integral to HEB Group’s effort in securing the health and safety of its employees while remaining focused on ensuring business continuity and mitigating the inevitable financial impact.
Having weathered the challenges of 2020, we are cautiously confident of our future and will continue to focus on protecting the future growth of our business having a healthy tender book value with more than 50% success rate based on our track record.
This year we welcomed a new Board member, Miss Vanessa Santhakumar as a Non Independent and Non-Executive Director. Our congratulations and warm welcome to her. We would like to record our sincere appreciation and gratitude to Dato’ Ir. B Nitchiananthan for his contribution and dedicated service of more than thirty years to HEB Group. Dato Nitchi’s impact on this organization goes far beyond what can be seen on paper and I know his absence will be felt by all of us and we wish him the very best in his future endeavors.
Following his resignation, the Board has appointed me as Acting Group CEO of HSS Engineers Berhad (HEB) and Puan Sharifah Azlina as the Acting CEO of HSS Engineering Sdn Bhd.
As part of our commitment, towards good corporate governance and ensuring compliance with applicable anti-corruption laws, HEB and four of its subsidiaries and associate companies have attained ISO 37001:2016 Anti-bribery Management System Certification, with two more looking to obtain similar certification in 2021.
SMHB has also achieved the ISO 14001:2015 Environmental Management Systems and ISO 45001:2018 Occupational Health and Safety Management System certifications issued by SIRIM in July 2020.
I am proud of the commitment from all levels of staff in securing the certifications.
This year, in support of the initiative by the Ministry of Entrepreneur Development for unemployed graduates, we have implemented the “PROTEGE Ready to Work (RTW) Program”, which aims to provide “On the Job” and Soft Skills training. To date, HSS has appointed eight (8) protégés in various divisions and through this program, is thus carrying out our role towards nation building by training and nurturing young talent in the industry.
When reviewing 2020, I cannot help but reflect on the unprecedented impact of the COVID-19 pandemic. HEB Group’s resilience in the face of this global health and economic challenges is largely down to the determination of its people, clients and business associates, through their continuous support. The worst of the impact was avoided through improvisation,
leveraging on available technologies and fostering stronger relationships with clients and business associates. Credit must also be extended to the dogged dedication and determination of our leadership team.
The scale and impact of the COVID-19 pandemic has provided the construction industry in Malaysia a window of opportunity for positive change. The capabilities and tools already exist to create a construction industry in Malaysia that can deliver a low carbon built environment with the ultimate aim of achieving net-zero carbon emissions in Malaysia. I believe our advisory role to clients should enable us to play our role as a responsible corporate citizen towards creating a sustainable future by influencing the development of key projects ranging from infrastructure, transportation, housing, energy and manufacturing.
REGIONAL EXPANSION – DIVERSIFICATION OF REVENUE
2020 saw the continuation of our regional expansion efforts focusing on India, Philippines and Indonesia. However, given the impact of the pandemic and the rising nationalism in relation to their infrastructure development projects, the Group will need to cautiously evaluate its expansion strategy and the realistic mid to long term opportunities.
We are collaborating with leading Japanese consultants around the region and have commenced supervision services for North-South Commuter Railway Extension (NSCR-EX) project in Philippines through our Japanese partner, Oriental Consultants Global.Date: 28 December 2020.
In June 2020, the Ministry of Road Transport and Highways (MORTH), India decided to formulate a policy framework on the usage of precast concrete on National Highways Authority of India (NHAI) structures. We are part of the “Expert Committee” with IIT Mumbai in a lead role to develop a roadmap for the policy framework with the ultimate objective of achieving reduced cost, reduced time, better quality product and reduced environmental pollution. To date, we have worked with IIT Mumbai to prepare the draft report which has been circulated to MORTH and NHAI for comments.
HEB is working closely with MoRTH, Government of India to provide Value Engineering Solutions for some of the mega projects in India with “Accelerated Bridge Construction (ABC)” technique and innovative alternative materials.
RECURRING AND LONG TERM INCOME
We remain committed to our pursuit of a fourth vertical to our current revenue portfolio which is an important part of our on-going strategy to provide a longer term sight on revenue that is recurring. On September 2nd 2020, we have submitted our bid for a Development of 50MW AC Solar plant under the Large Scale Solar@MEnTARI (LSS) 3B. We are also exploring the “non-guaranteed offtake” opportunities in the areas of water concessions and toll highway as another potential area of recurring income for the Group.
As the year ends, we look back on what we have managed to achieve together despite the challenging landscape. We applaud our team’s commitment, perseverance, flexibility and adaptability in ensuring the Group continues to deliver on its mandates to the respective clients, including for off-shore projects.
The year 2020 started on a high note having just secured the landmark RM 2.5 billion, Iskandar Malaysia BRT Project in Johor. This is the first Gold Standard BRT project to be implemented in Malaysia. HSSI was appointed as the lead consultant for 51km BRT lines comprising Infrastructure Works for the Iskandar Puteri Line, Skudai Line and Tebrau Line to be implemented in a conventional build only contract and BRT Systems, Buses and Bus Operations to be implemented via Public Private Partnership (PPP). Concurrently, our railway team were working full swing on several different mandates for East Coat rail Link (ECRL) such as the:-
- Railway scheme for the 80km length of ECRL from Gombak to Port Klang
- The Preliminary and Detailed Designs for the 210km ECRL from Kota Bharu to Dungun Feasibility Study of the 25km ECRL realignment at Kuantan Port City
- Supervision of the Construction Works for the ECRL stretch from Kota Bharu to Dungun.
The COVID-19 health hazard which has affected all project work fronts and created new working environment including our MRT Line 2 project. The government granted special dispensation for MRT 2 vital work to continue with stringent health testing conditions, social distancing and strict access control to sites. Our staff had to work diligently with innovative ideas such as the usage of drones to verify progress in supporting our client to meet the requirements during these challenging times.
SMHB has just completed the final report on the feasibility study for Landeh Water Treatment Plant, Sarawak for Kuching Water Board (KWB). The construction of the new Landeh water treatment plant is necessary in order to provide adequate clean and treated water to residents in and around the Borneo Highland areas and is expected to cost about RM 994 million. SMHB is also currently engaged by PWC to work on a study investigating the feasibility of an integrated water operator for Sarawak. The MOU is keen on exploring the idea of merging the existing water operators (KWB, SWB, LAKU and JBALB) into a single entity.
On the Selangor front, SMHB has just completed the feasibility study of the Rasau scheme in Selangor. This scheme will essentially abstract water from Sg. Klang and take into consideration the use of multiple ex-tin mining ponds to enhance the yield, reliability and possibly the water quality of the source water. SMHB has also been appointed by Pengurusan Air Selangor Sdn Bhd (AiS) to be the Owners Engineer for the Rasau Water Supply Scheme.
The State Government of Selangor has also embarked on a new project to improve the security of supply associated with Sg. Selangor. The existing Sg Selangor plants have been frequently shut down due to pollution, causing major disruption in supply and discontent with the public and commercial/ industrial sectors. The project entails the use of raw water from an off river storage pond in the vicinity of the plants , in the event of future pollution incidents. SMHB is engaged for the detailed design of the remedial measures.
In the year 2020, our bridge department has successfully completed the design of many bridges, and the constructions of which are on-going. The main focus on the design of the 50km viaduct for the East Coast Rail Link (ECRL) is the standardisation and the use of precast elements for the superstructure deck.
The construction is almost 50% complete for the Sg Pulai Bridge project, which involves construction of 160m long balanced cantilever box girder bridge under marine condition out of total 3km long bridge. One of the key challenges in faced by our design team is the subsoil condition which exhibits one distinct trend, very soft to soft alluvium, comprising of Silt and Marine Clay deposits between 15m to 24m thick overlaid on stiff to hard alluvium. This soft compressible overburden soil layer of SPT N of less than 4 would require at least 16 months of surcharge period to achieve the required consolidation. In view of the timeframe and logistic issues during construction, “Vacuum Consolidation” was opted to be implemented as an Date: 28 December 2020 alternative to expedite the consolidation process. The system consists of the installation of a drainage system (using PVD and Horizontal Drains), an isolation system and a series of vacuum pumps.
We have also completed the design of bridge in India with “Ultra High Performance Fibre Concrete (UHPFC) Box Girder” in segments for the bridge superstructure deck. The developer intended to launch this new technology with UHPFC materials in India. The Government of India formed one ‘National Panel of Experts (NPE)’ comprising professors from IIT and other experts from different Govt Sectors to review the design and performance of this innovative technology. The bridge is under construction and the UHPFRC Box Girders Segments have already been transhipped to India from Malaysia. We have also completed the preliminary design of another bridge in India using this UHPFRC materials involving Extradosed Bridge for the Main Span and Box Girder for the Approach Spans.
To address the long term consolidation settlement challenge for the Access and Main Roads to Pengerang Refinery and Petrochemical Integrated Development (RAPID) project, our innovative design incorporated combination of PVD with surcharge and Piled Embankment solutions, which proved to be successful as the amount of recorded settlements are within the tolerable magnitudes and the desired driving comfort at the zones was achieved, HSS during the Year 2020 finalised the detailed design for the iconic STS Port project and currently is awaiting for the signing of the Concession Agreement between the Project Proponent and the Government to begin construction activities for the fully off-shore structure. With Westports Phase II having also nearly obtained all the required technical approvals, it is expected to be a busy 2021 for the HSS Port team as we move into the reclamation & dredging designs and subsequently construction for the first four Container Terminals which will span over several years. We are proud to be a part of these large marine infrastructure development that are fully privately funded.
We were also appointed by IJM Holdings Sdn. Bhd. as the C&S and M&E Consultant for a twenty (20) storey office building for Lembaga Hasil Dalam Negeri Malaysia (LHDNM) in Penang with a total build-up area of 121, 000 sqft with large column place d strategically to achieve column free office space and 4.0 meters floor to floor height. The construction of the project is expected to start by February 2021.
Our M&E division assisted Scatec Solar complete their 30MW solar farm and working with the relevant authorities in getting them to achieve their Commercial Operations Date (COD) as per their agreement with the Energy Commission (EC). Another key milestone is the successful completion and commencement of operations at Sahara Dyson’s new factory in Senai, Johor. The biggest challenge we had in reviewing and managing the installation of the M&E works during the MCO period given that the client and their project Manager were based in Singapore was to remotely monitor the works using available technologies like VC calls and ZOOM meetings. The PM and Client had very different SOP based on Singapore guidelines as opposed to us here in Malaysia. The working criteria to adhere and comply had to use creativity and innovation in presenting and advising them to ensure that the work was in line with their needs and requirements for operations to commence.
HEB BIM Team has assimilated the ISO 19650 standards in their BIM workflow and processes efficiently. The culmination of these efforts is obtaining the ISO 19650 certification in 2021 which is in tandem with ourdirection of obtaining BIM Level 2 certification. The Covid19 has significantly accelerated the adoption of digital technology catalysing the need for BIM as one of the trends shaping the construction industry. Despite the current economic adversity and frailties, we have successfully secured BIM consultancy services for Iskandar Malaysia Bus Rapid Transit (IMBRT) in Johor. We are also in pole position in securing several health facilities projects and extension to our current mandate with Samsung.
It’s an honour to mention that HEB Engineers and its management were nominated in the 10th Malaysia Investor Relations (IR) Awards 2020 in the following five (5) categories:
- Best Company for IR
- Best CFO for IR – Ms. Ng Kuan Yee
- Best IR Website
- Most Improved Service from IR Team
- Quality of One-on-One Meetings
It is with great pleasure that we congratulate Ms. Ng Kuan Yee for being awarded “Best Chief Financial Officer for IR (Small Cap)” at the 10th Malaysia Investor Relations Awards 2020.
Further to that, it also gives me a pleasure to congratulate our Executive Director, Pn Ir Sharifah Azlina bt Raja Kamal Pasmah, who was conferred the Prestigious ASEAN Federation of Engineering Organisations Honorary Member in recognition of her contributions to Women in Science , Engineering & Technology (WISET) I am also pleased to announce that I have been elected as an International Fellow Member by the Royal Academy of Engineering (Royal Academy of Engineering), being the first and only Malaysian Professional Engineer as an International Fellow since the Academy was established in 1976. Beyond a personal achievement, this election is due to what we all have accomplished firstly as an engineering group and secondly as a nation in the engineering industry and this recognition opens the pathway for Malaysians to make a difference in the engineering industry not only in UK but also the world. Date: 28 December 2020 Page 7
We are reporting a healthy financial performance for FY 2020 on the back of higher revenue recorded and implementation of strict cost control measures. The Group posted revenue of RM125m for three successive quarters of the current financial year ended 30 September 2020 with a profit after taxation of RM7.7m recorded to date turning around from a loss position in the same corresponding period last year.
As an engineering consultancy firm, the Management values our staff contribution as our human capital to propel the Group forward and hence the salary reduction implemented since 2018 under Cost Management 2.0 have been fully reinstated and paid back to the affected staff in 2020.
HEB is a potential beneficiary of the mega infrastructure projects to be revived or rolled out by the Government of Malaysia, we expect earnings are on track to achieve good financial close for FY 2020 whilst assessing key risks which include political uncertainties that may affect the timing of roll-out of infrastructure projects.
2021 – YEAR AHEAD
Budget 2021 which was passed on 15th December 2020 is an expansionary budget and the implementation of large infrastructure projects will be the government’s core effort to restore the country’s economy in the face of the Covid- 19 Pandemic. The Government has also affirmed its commitment on some of the key mega projects such as the Mass Rapid Transit Line 3 (MRT 3), Kuala Lumpur- Singapore High Speed Rail (KL-Spore HSR), Penang Transport Master Plan (PTMP), Johor Bahru – Singapore Rapid Transit System (RTS) and Pan Borneo Highway in Sabah and Sarawak.
We aim to be part Sarawak’s growth story as we envisaged Sarawak to be a major beneficiary from Indonesia’s decision to build its new capital city in Kalimantan. As for the Sarawak Metro project, we have completed the feasibility studies for a proposed autonomous rapid transit (ART) system network and hope to participate the detailed engineering design consultancy works for Phase 1 to be roll-out in the first quarter of 2021. Meanwhile, in the water sector, the Melaka State Government along with the Federal Government is actively pursuing the implementation of the Jerneh dam to address water shortages in Melaka and the implementation of the Tasik Biru Scheme. In view of the recent episodes of pollution of Sg Selangor which has caused severe water disruption to consumers,
the State Government of Selangor has studied measures to deal with such pollution in the future. With our extensive experience and long track record in spearheading the progress of notable mega projects, we are poised to positively leverage on our expertise, and support the resurgence of the local construction and infrastructure developments.
As we embrace the ‘new normal’ and embark on these era of change, I hope that each of us will seize this opportunity to advocate what we do, be agile and courageous with new ideas and pursue further innovation or even pivot new business models which will pave the way for greater improvement towards operational and financial efficiency whilst always considering the health and safety of our staff.
We have come through a year that was filled with crisis of unprecedented nature and effects and I wish to express my most heartfelt thanks to each and every one of you, the people of HEB as we have managed to adapt very quickly and continue to strive during these challenging times. Let us together as HEB work to make 2021 a success where we continue to be looked upon as the Foremost Engineering Services provider in the country and regionally.
I would like to wish you and your family a happy and safe New Year, knowing that 2021 brings great promise and ne
w beginnings With best regards
Tan Sri Ir. Kuna Sittampalam