CEO's Statement

It was a period of hectic and extremely fierce competition, whereby many cash-rich logistics players have rushed in to try grab a share of the express delivery market. It seemed every major operator in the logistics sector has jumped into the bandwagon of last mile deliveries, making it a very crowded market. The aggressive tactics of these newcomers are giving the existing operators a run for their money.

Against this tough and bruising battlefield, the Group continued to grow even though our business profit margins are under pressure. For the year ended 30 June 2018, Group profit before taxation improved 0.3 percent to RM44.6 million. This came on the back of a 17.0 percent increase in turnover to RM293.0 million. Group profit after taxation (PAT) declined 35.8 percent to RM23.6 million.

Despite the drop in PAT, the Group's EBITDA (Earnings before Interest, Tax, Depreciation and Amortisation) increased to RM61.4 million from RM57.3 million previously.

CEO Review 1

Operations

In the face of ferocious and intense competition, the Group had to adopt a very aggressive strategy to fast-track all its investment commitments and strive to strengthen every aspect of its operations to meet the challenge. During the period reviewed, we opened several new branches, acquired more trucks, embarked on expansion of the operational hub, leased bigger warehouse spaces, developed more systems and processes, trained and employed more staff and introduced more innovative products to meet customers changing needs.

We opened 13 new branches in Peninsular Malaysia and East Malaysia, bringing the total number of branches to 85 from 72. We launched a new E-commerce and linehaul hub in Kuching, Sarawak that not only enlarges our express delivery footprint but also provide greater convenience and connectivity to E-commerce customers in East Malaysia.

Early in the year, we entered into an agreement with Hino Motor Sales (M) Sdn Bhd to purchase an additional 300 units of trucks on top of the earlier purchase of 200 new trucks last year. As at financial year ended 30 June 2018, we have a total of 1,069 trucks, with a carrying capacity of 3,028 tonnes up from 2,289 tonnes previously.

We are in the process of expanding our all-weather operational hub at headquarters by upgrading and enhancing the conveyor system which will enable the Group to improve its efficiency.

All these expansionary activities necessitated an increase of manpower. During the year, we took in 475 new employees, increasing our staff strength to 3,988 from 3,513 previously.

Continuous training to improve the skills and knowledge of our staff remains our top priority to ensure there is upward mobility and talent retention. Our staff under went a total of 36,324 man hours in training compared to 37,672 man hours previously.

During the year reviewed, the Group launched GDEX Academy, a specially-designed tertiary education programme where school-leavers and those interested in building a career in the express delivery service industry can enroll as professional students. The programme, developed jointly by GDEX and the Skills Development Board of the Human Resources Ministry, will be taught by GDEX skilled operations personnel who will share their on-the-job experience and management expertise with the students. The GDEX Academy will not only engender greater professionalism but also provide a steady source of skilled manpower to the industry.

CEO Review 2

We invested heavily in our systems and processes, both software and hardware, so that the backroom operations can synchronise well with the front end to meet the increased workload. In fact, our development capabilities to improve customer experience have been further enhanced by our associate, Web Bytes Sdn Bhd, a cloud-based software developer.

We continue to churn out new innovative products to meet the increasing customers expectations. Our customised logistics solutions and warehousing services have also been strengthened with faster and more secured delivery solutions.

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

Collaboration With MCMC and Third Parties

During the year reviewed, the Group embarked on a collaborative agreement with Malaysian Communications and Multimedia Commission (MCMC) and three other parties to promote and stimulate E-commerce activities in the rural areas.

As mentioned in our Chairman's Statement, this initiative, called "Kampung By GDEX", will enable GDEX to provide express delivery solutions to rural small businesses and entrepreneurs to promote their products to bigger market place. This is done by creating special packaging products which can only be found at 15 selected Malaysia Internet Centers - in Selangor (4), Negeri Sembilan (5) and Melaka (6). All these selected Malaysia Internet Centers are appointed as GDEX Re-Seller Agency. The special price offered for the products will assist these business owners and entrepreneurs to increase their earnings.

With the current rapid growth of E-commerce activities, both in the main cities and the rural areas, we plan to open more One-Stop Centers in the rural areas to allow the villagers to have easy access to E-commerce and express delivery services. Indirectly, through the products and services offered, this can further spur the express delivery industry in Malaysia. At the same time, the rural people can sell their products easier and faster.

Collaboration With Third Parties

CEO Review 2

We continue to collaborate well with our international coloaders as we strive to meet their exacting requirements in last mile express delivery services. Likewise, we have close rapport and cooperation with our strategic partners, Yamato and Singapore Post, while continuing to maintain good relations with our collaborative partner in Indonesia.




Investor Relations

CEO Review 2

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 shared the latest market and corporate developments, as well as enunciate the rationale for our various activities to bring about better understanding of GDEX group operations.




Corporate Sustainability

CEO Review 2

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 emphasize 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

CEO Review 2

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