AWC Facility ... dated June 2008

AWC, primarily engaged in integrated facility management (IFM) and M&E engineering services, provided the centralised waste collection system for the Prime Minister’s residence and office in Putrajaya and Singapore Changi Airport Terminal 3. It has a 20 years’ experience in building automation and air-conditioning system controls as its competitive advantage.

What’s NEXT!

Facility management outfit AWC Facility Solutions Bhd aims to go full steam in the Middle East market by January 2009 after the completion of its current restructuring exercise.

It is looking to tap into the Middle Eastern mechanical and electrical (M&E) engineering services market either via a local partnership or a standalone venture to market our automated vacuum waste collection system - Stream - to that region.

The firm would also focus on the Singaporean M&E business market by riding on the country’s strong construction demand, specifically commercial, industrial and high-rise residential buildings.

According to an analyst, the firm’s M&E engineering business has a strong market presence locally, and it has undertaken works in 70% of Klang Valley buildings in the past 10 years.

AWC was currently undergoing the second and implementation stage of its restructuring exercise and expected the revamp to reach completion by the end of this year (2008).

AWC will incur restructuring and other related costs, with its M&E services’ order book thinning, but the management is confident that it will capture more market share next year (2009).

Financial Results …

The firm slipped into the red for its second quarter ended Dec 31, 2007 (2QFY08), even though turnover increased 3% to RM27.8 million from RM27 million a year earlier due to lower margins of certain businesses in its M&E division.
AWC’s net profit for the fiscal year ended June 30, 2007 (FY07), rose 24% to RM6.2 million from RM5 million the previous year due mainly to the inclusion of Infinite QL Sdn Bhd.

Revenue grew 24% to RM107.2 million from RM86.5 million a year ago, while net cash from operations jumped to RM22.9 million from RM2.6 million. Long-term debt narrowed to RM2.7 million from RM3.2 million.

AWC’s IFC division, which derives most of its revenue from public contracts to maintain buildings and facilities, also enjoys a stable stream of revenue that provides recurring cash flow.

The division currently holds a 10-year concession agreement, which will end 2008 with a renewal option for another five years, to maintain federal government buildings in Johor, Melaka, Negeri Sembilan and Sarawak.

AWC generated minimum revenue of RM25 million annually from the contracts, which is expected to increase upon the renewal for another five years due to the increase in raw material prices.

It had also landed a three-year RM10 million worth of jobs early 2008 to undertake building maintenance works at the Prime Minister’s office in Putrajaya.

AWC would also expand into the private sector and expected revenue contribution from both sectors to equal within two to three years. The private sector currently contributes less than 30% to group revenue.

The firm was currently bidding for RM100 million worth of building and facilities maintenance works.