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Chairman's Statement

Dear Shareholders,

I am pleased to present my twelfth Annual Report to our fellow stakeholders for the financial year ended 30 June 2016.

Despite being buffeted by many global and domestic headwinds, the Malaysian economy continues to be resilient, registering a GDP growth of 4.5 per cent. Sharply reduced revenue from oil exports with oil prices falling to an unprecedented low of US$27 per barrel, the ringgit weakness and slow exports threatened our growth. This was offset by the timely introduction of Goods & Services Tax (GST) in April 2015 and the strengthening of the ringgit towards the second half of the financial year. Against this background, our Group continued to make steady progress in earnings and performance.

Our Performance In 2016

For the period under review, GDEX's group turnover increased to RM219.8 million from RM196.8 million. Group profit before taxation increased 28% to RM40.2 million from RM31.3 million, while group profit after taxation showed a 22% rise to RM34.4 million from RM28.3 million.

Net basic earnings per share improved to 2.66 sen per every five sen share from 2.43 sen per share.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 23% to RM51.1 million from RM41.4 million.

Dividend Payment

The Board of Directors has declared a first and final dividend of one sen for every five sen share. The Board has also decided to continue with its Dividend Reinvestment Plan (DRP) which provides an option for the dividends received to be converted into shares.

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Significant Developments

In the last review, I mentioned that the Group was gearing for regional expansion.

I am pleased to inform that Yamato Asia Pte Ltd, a wholly owned subsidiary of Yamato Holdings Co., Ltd has emerged as the second largest shareholder of the Group with a stake of 22.8% arising from the private share placement of 124,893,548 ordinary shares of five sen each. Together with the DRP, the Company's share capital increased to 1,383,239,537 ordinary shares of five sen each from 1,236,328,268 ordinary shares of five sen each.

Yamato Holdings Co., Ltd, Japan's largest door-to-door delivery service company also signed a business collaboration agreement to explore opportunities in the ASEAN express delivery service market. The ASEAN region is home to a combined population of 600 million.

It is imperative for the Group to strengthen its capabilities and capacities in terms of technology, infrastructure, network, processes and manpower.

Strengthening Our Resources

The Group continues to refine its internal re-structuring exercise, placing much emphasis on human capital development which encompasses talent enrichment, skills training and re-assigning the right people according to their skills set and competency to harness their full potential.

The Group also increased its vehicle fleet size to 654 from 578 trucks.

The Special Projects team, under the direct supervision of the CEO, has also been strengthened with more industry specialists. This team is instrumental in identifying fresh opportunities and strengthening and speeding up many of the operational processes in the Group.

Challenges And Opportunities

The proliferation of e-Commerce through ICT and the internet may have paved the way for logistics companies to grow rapidly in recent years. The Group's success in Malaysia so far has benefitted from the country's extensive infrastructure, modern telecommunications and educated workforce.

However, not every country in the ASEAN region has the same characteristics due to challenging infrastructure, language and work culture.

Thus, while there are tremendous opportunities in terms of market size and population for our Group to venture into the ASEAN region, we must also overcome these challenges faced by these countries.

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Strategising The Next Move

Thus, before the Group embarks on regional expansion, it must plan its move carefully, understanding the unique situation in each country and apply the right strategy to optimise its resources.

The Future

The ASEAN region is entering into an era of unprecedented growth and prosperity, especially with the formation of the ASEAN Economic Community (AEC) and the signing of the Trans Pacific Partnership Agreement (TPPA). Both seek to liberalise trade, lower tariffs and promote foreign investment among companies within the region. The TPPA is expected to generate increased trade and foreign investment opportunities proffered by the 12 member countries with a market population of 793 million with a combined GDP of US$27.5 trillion effective 2018.

In order to reap the benefits of TPPA and AEC, the Group must further strengthen its capabilities and capacities to cater for the increased trade opportunities.

Acknowledgement

I wish to thank the Management and staff for their continued dedication and untiring efforts to expand the Group.

My sincere thanks and appreciation also go to our customers, vendors, business associates and the various statutory and government bodies which have facilitated the Group in its operations.

I would also like to express my heartfelt thanks to Mr Lim Cheng Sung @ Lim Cheng Sang who has retired as director on 26 May 2016. I would also like to take this opportunity to welcome Mr Chua Khing Seng and Ms Ho Swee Fong to the Board.

My sincere thanks also go to our shareholders for their patience and confidence in us.

I would also like to commend my Board of Directors for having fulfilled their commitments and obligations admirably.

Thank you all for your valuable contributions. I look forward to a better year ahead.

Dato' Capt. Ahmad Sufian @ Qurnain bin Abdul Rashid
Chairman