CEO's Statement

Rising To The Challenge

An upsurge of interest in E-commerce made competition in the express delivery service industry even more intense during the year under review. Many existing players as well as the emergence of newcomers with new technology have poured huge amount of funds into the industry in their efforts to compete and take market share. This has resulted in an increasingly crowded and highly challenging marketplace. Meanwhile, the improvement in exports and continued recovery in commodity prices, especially crude oil, have set Malaysia's economy on a steadier course.

In spite of this tough background, the Group continued its growth path. For the year ended 30 June 2017, Group profit before taxation improved 10.7% to RM44.5 million. This came on the back of a 14.0% increase in turnover to RM250.5 million. Group profit after taxation increased to RM36.8 million from RM34.4 million previously.

The Group's EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) increased to RM57.3 million from RM51.1 million previously.

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Operations

In the face of such challenges, the management has to become even more vigilant. We devoted much energy and resources to raise the level of competence and capabilities during this trying period. Topmost, we recruited more employees, both new and experienced, to increase our workforce. We continued to reinforce and strengthen areas that are fast growing, repositioning and promoting workers who showed good potential.

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The management ensured that proper training was given to new recruits to ensure they understand the standard operating procedures and assimilate the GDEX culture, as the latter promotes unity and cooperation amongst all levels of employees. Staff who are motivated and hardworking were given advanced training and promoted to positions with more responsibilities, thus ensuring upward mobility, talent retention and a better future for all who are dedicated and committed to the growth of GDEX. Our staff strength increased to 3,513 from 2,984 while total manpower training hours amounted to 37,672 hours compared to 31,354 hours previously.

To increase operations efficiency, the management continued to invest heavily in systems and processes, both hardware and software. We extended our automated conveyor belt system to cater for increased volume. The conveyor system can now sort up to 120,000 parcels daily compared to 90,000 parcels previously.

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Our development capabilities has been further enhanced with the acquisition of 30.0% stake in Web Bytes Sdn Bhd, a business software solutions company. We aim to co-develop more innovative solutions to enhance customer experience.

The management also introduced new delivery solutions such as Mobile Applications and cloud-based Call Center. We also fine-tuned our customised logistics solutions and warehousing services by offering faster and more secured delivery solutions.

The increased demand for express delivery services also necessitates the continued investments in delivery trucks and infrastructure. We increased the number of delivery trucks to 831 units from 654 units previously, with a carrying capacity of 2,289.6 tonnes compared to 1,682.5 tonnes.

To ensure the smooth flow of incoming and outgoing trucks with their delivery loads into the hub, the management converted an adjoining piece of property into an outbound waiting area, so as to reduce the congestion of inbound vehicles during peak operations.

The review of financial performance is contained in our Management Discussion and Analysis on page 16.

Goverment Adoption Of E-commerce

The introduction of the Digital Free Trade Zone (DFTZ) by the government in April this year augurs well for the express delivery service industry. The management is studying ways and means to participate meaningfully in the expected increase in express delivery services with the government's adoption of the E-commerce platform.

Collaboration With Third Parties

Our collaboration with international co-loaders remain strong as management is able to meet their exacting requirements in last mile express delivery services. We maintain a close rapport and cooperation with our strategic partners, Yamato and Singapore Post. We also continue to maintain good relations with Pos Indonesia as our collaborative partner in Indonesia.

Strategic Investment Overseas

The subscription of RM10.4 million in 5-year convertible bonds in PT Satria Antaran Prima (PTSAP), a fast growing express carrier in Indonesia with 56 branches and more than 1,500 employees, is our first major investment overseas. The bonds upon conversion will give GDEX a 40.0% stake in the company, as well as a stronger foothold in the Indonesian express delivery service market.

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Investor Relations

We continue to have a very pro-active investor relations programme where we meet regularly with investment analysts and fund managers. In such meetings, we share the latest market and corporate developments, as well as enunciate the rationale for our various activities to bring about better understanding of GDEX operations.

Corporate Sustainability

In striving to be a responsible corporate citizen, the management works hard to ensure future generations will continue to enjoy what we have currently, in terms of natural resources, training and education.

The management continues to focus and emphasise on our four pillars of corporate sustainability, ie, The Economy, The People, The Community and The Environment.

Details of our efforts are contained in our Corporate Sustainability Report on page 36.

GDEX Foundation

The GDEX Foundation, set up in 2013 with the objective of promoting the welfare of the community, has yet to identify any meaningful corporate social responsibility activity. Pending that, it will continue to build on its resources.

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Acknowledgement

No corporation can survive without the support of its customers. We are extremely grateful for our customers' continued support. I would also like to thank our vendors, business service partners and the relevant government agencies for their support.

Last but not least, I would like to express my sincere appreciation and thanks to the board of directors for their guidance and support.


I look forward to further progress and improvement in GDEX as we strive to fulfil our goal of becoming the leading express carrier in the region.

Thank you.

Teong Teck Lean
Managing Director and Group Chief Executive Officer