Chemical Company of Malaysia Berhad Annual Report 2018

Chairman’s Statement Dear Shareholders, On behalf of the Board of Directors of Chemical Company of Malaysia Berhad (CCM or the Group), it is my privilege to present our Annual Report for the financial year ended 31 December 2018 (FY 2018). This is my first statement to you in my capacity as the Group’s newly appointed Chairman and I am pleased to put across the collective input of my colleagues on the Board and the senior management team. While I only recently took on this role in March this year, I am happy to say that the team has quickly brought me up to speed on the workings of the Group. In my short time here, I have come to understand, appreciate and respect the efforts of the team as they have stepped up to the plate to deliver their promises. Despite a host of market and operational challenges over FY 2018, I am delighted to report that CCM made commendable progress in its efforts to become a leaner, stronger and much- improved group. AYEAR OF ONGOING TRANSFORMATION The year 2018 was a year of continuing transformation for CCM. Following our exit from the Pharmaceuticals business at the end of 2017, we focused our efforts on strengthening and growing our Chemicals and Polymers businesses. Our efforts bore fruit with the Group registering a 6.8% and 250.5% rise in revenue and profit before tax respectively in FY 2018 over the preceding year’s results . Benefiting from Strategic Divestments As part of our ongoing business rationalisation efforts, July 2018 saw us concluding the disposal of two major non-core assets of the Group, namely our land in Shah Alam for RM190.0 million and our shares in Pangen Biotech Inc for RM59.2 million. In March 2019, we completed our third divestment exercise involving the Group’s land in Nilai for RM21.5 million. The bulk of the RM270.7 million raised from these transactions have gone towards paring down our existing borrowings. I am pleased to report that as of 31 December 2018, our debt to equity ratio was at 0.61 times in comparison to 1.67 times as at 1 January 2018. The Group is expected to benefit from interest expenses savings of about RM13.6 million per annum, given now that our borrowings have been significantly reduced. Today, CCM boasts a healthier balance sheet given the lower gearing, plus considerable cash in hand to invest into our business in maintaining our competitive advantage. Expanding Capacity for Future Growth To expand our manufacturing capacity and meet growing market demand for our products, we began investing approximately RM100.0 million in capacity expansion initiatives for our Chemicals and Polymers Divisions in FY 2018. The year saw us reactivating ANNUAL REPORT 2018 10