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CEO's Statement

Maintaining the Competitive Edge

Competition in the express delivery services industry has become much more intense despite a slowing of the economy following the protracted trade row between US and China. Demand for express delivery services continued to grow but the downside was that it attracted many newcomers to "gatecrash" an already crowded industry. In fact, competition has become so robust and vicious that many players resorted to throwing prices just to get market share. As a result, most express carriers are operating on much reduced operating margins or even running into losses.

Due to the very challenging environment, the Group posted a decline in earnings. For the year ended 30 June 2019, Group profit before taxation declined 27.4 percent to RM32.4 million. However, Group turnover increased 7.1 percent to RM313.9 million. Group profit after taxation (PAT) also increased 37.7 percent to RM32.5 million.

The Group's EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) declined to RM53.7 million from RM61.4 million previously.

Operations

In order to maintain its competitive edge, the Group had intensified its efforts to improve every aspect of its operations and service capabilities in the year under review. In particular, the management focused on improving quality through the introduction of new digitalbased apps, upgraded the digital infrastructure and systems to speed up the response time for customers. We also emphasised on improving the skillsets and welfare of our people.

Education and Training

The highly competitive nature of the express delivery business has resulted in rampant pinching of skilled and well-trained staff in the industry. To combat this perennial problem, the management has drawn up various programmes to boost the welfare and well-being of employees and offer opportunities academically. We believe a happy, satisfied and well-trained workforce will help in staff retention and improve operational efficiency.

The development of GDEX Academy is one such step. Now in its second year of operations, GDEX Academy has successfully developed a full certified programme with the Jabatan Pembangunan Kemahiran Malaysia (Department of Skills Development Malaysia). Graduates will be able to secure a professional qualification in logistics and express delivery.

Conducted by GDEX's certified trainers, this programme will not only raise the standard of professionalism, but will also create a sustainable pool of educated and skilled workers.

We increased the workforce to ensure our expanded operations are adequately staffed. We took in 297 new employees, increasing our staff strength to 4,285 from 3,988 previously.

In line with our continuous improvement philosophy, we continue to provide year-round training to new and existing staff to ensure there is work familiarisation, upward mobility and talent retention. Our staff underwent a total of 39,287 man hours in training compared to 36,324 man hours previously.

Enhancing Customer Experience

The Group rolled out several innovative packages designed to increase efficiency and provide greater convenience for customers. To enhance customer experience, the Group's call centres are now equipped with VOIP (Voice Over Internet Protocol) technology, which speeds up the response time in answering calls considerably. The Group has also rolled out better access to our services via myGDEX portal platforms which provide better shipping experience for customers.

In our drive to create easier and wider access, we have started introducing new GDEX Point of Presence (POP) by leveraging on the retail outlets of other businesses. We also opened 13 new branches in both Peninsular and East Malaysia, bringing the total number of branches and stations to 98. We also completed the upgrading of the HQ operational hub which will speed up the processing of shipments into and out of the hub.

To meet the expanded operations, we also commissioned the use of 192 new trucks, bringing the total of trucks in service to 1,261 and raising carrying capacity to 3,580 tonnes from 3,028 tonnes previously.

We also shifted our warehousing and customised logistics service (CLS) operations to a bigger and more modern facility in Shah Alam to accommodate bigger warehousing space and to facilitate our logistics operations.

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

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Collaboration with Third Parties

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The Group embarked on a collaborative agreement with RedCargo Logistics, the cargo and logistics arm of the Air Asia group, which will enhance GDEX's reach in the Asia Pacific region. This tie-up will enable GDEX customers to ship their goods more efficiently.

Collaboration with our international co-loaders remain strong as we strive to achieve their last mile fulfillment requirements. Likewise, we continue to maintain close rapport and cooperation with our strategic partners, Yamato and Singapore Post, while continuing to collaborate and share technical expertise with our Indonesian associate PT Satria Antaran Prima.

Investor Relations

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We continue to meet regularly with investment analysts and fund managers as we believe a strong pro-investor relations programme is vital to the long term health of the Group. In such meetings, we shared the latest market and corporate developments, as well as articulate on our various corporate activities to bring about better understanding of GDEX's operations.




Corporate Sustainability

In striving to be a more responsible corporate citizen, the management has put in place a programme of corporate sustainability that will ensure future generations continue to enjoy what we have currently, in terms of resources, training and education.

The management continues to focus and emphasise on our key pillars of corporate sustainability, ie, the Economy (which include the marketplace and the workplace), the Community and the Environment.

Details of our efforts are contained in our Corporate Sustainability Report on page 38.

Acknowledgement

We are always grateful to our customers for their continued support.

I would like to thank our vendors, business service partners and the relevant government agencies for their support.

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

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