25 annual general meeting - investor relations

25th Annual General

Meeting

23 April 2018

Welcome Remarks

by the Chairman Dato’ Kamaruzzaman

Abu Kassim

25th Annual General

Meeting

25th Annual General

Meeting

Poll Voting

The Chairman is authorised to regulate the meeting by virtue to Paragraph 8.29A of the

MMLR, all resolutions tabled at General Meeting to be voted by poll

25th Annual General

Meeting

Poll Administrator & Scrutineers

Poll Administrator : Tricor Investor & Issuing House

Services Sdn Bhd

Scrutineers: Coopers Professional Scrutineers Sdn Bhd

Opening Remarks

by the Chairman

Dato’ Kamaruzzaman

Abu Kassim

25th Annual General

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Presentation to Shareholders by

President & Managing Director

Dato’ Amiruddin Abdul Satar

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2017 Highlights

3.18

2.97

2017 2016

Revenue (bil)

+7%

442

430

2017 2016

EBITDA (mil)

+3%

233

220

2017 2016

PBZT (mil)

+6%

3.70

3.43

2017 2016

Basic EPS (sen)

+8%

Outpatients 2017 – 2,473,857 2016 – 2,464,704

0.4% Inpatients 2017 – 286,465 2016 – 279,794

2.4%

No. Operating Beds 2017 – 3,052 2016 – 2,929

4.2%

Occupancy Rate 2017 – 65.2% 2016 – 66.2%

-1.5%

Avg Length of Stay 2017 – 2.54 days 2016 – 2.53 days

-0.4% Employee 2017 – 13,422 2016 – 12,635

6%

1.78

1.2

2017 2016

Dividend

+48%

KPJ FBMKLCI

KPJ Share Price Performance

1,797

%

1.04

0.97

1,647 9%

(6.7)%

8

KPJ vs FBMKLCI

Subdivision of ordinary shares, which involved splitting 1 Ordinary Shares into 4 Split Ordinary Shares took effect on 26 September 2017. Total KPJ shares issued increased from 1,070,156,823 units to 4,280,627,292 units. Reference price was adjusted to RM1.07 per share.

Subdivision of Shares

KPJ Share Price

As at 31 December 2017, the number of Individual shareholders increased by 37.4% to 4,597 shareholders from 3,346 shareholders year-on-year.

Individual Shareholders

Share Related Key Figure (Year End)

Note: The above figures for the years prior to the Subdivision of Shares have been adjusted for meaningful comparison.

Activities in 2017/2018

IBM Watson for Oncology – first private healthcare provider in Malaysia to launch the cognitive online platform for cancer treatment

In 2017, launched 3 KPJ Healthshoppe outlets (retail pharmacies) at KPJ Selangor, KPJ Damansara and KPJ Pahang and plan to open another 4 retail pharmacies at KPJ Penang, KPJ Ipoh, KPJ Johor and KPJ Bandar Dato’ Onn

In 2018, KPJ Sabah and KPJ Pahang obtained MSQH accreditation

Improving Efficiency with Technology

Improving Access to Pharmacies

Online Pharmacy – KPJ Healthshoppe is currently offering over-the-counter products online, with plans for e-prescription later

Quality Assurance and Certification

In 2018, Lablink entered into strategic partnership with Quadria Capital to grow its Pathology and Diagnostic Business in Malaysia and to explore new growth markets in Southeast Asia

Strategic Partnership

Our 4th Senior Living Care opened in Feb 2018 at KPJ Kuantan Health Centre.

Caring for the Aged

KPJ Perlis is committed to open by 2Q 2018 KPJ Bandar Dato’ Onn is scheduled to open in 3Q 2018

Hospital Network Expansion

Adopting focused strategies to generate continuous growth

2018 Strategy Focus

Exploring new markets and JV with international players

KPJ’s ambulatory and outpatient medical care services

Niche and sub-specialisation medical services

To improve patient experience (facilities) Driving analytics based on data (system) More Centralised Operations and Management

(finance, hr etc) Securing data and system

Efficiency

New Growth Areas

Medical Tourism

Cross selling doctors / consultant, medical services and treatments

Offer Group wide packages – treatment with high margins

Establish Healthcare Tourism Friendly hubs at selected hospitals

Digitalisation

Competitiveness & differentiation strategy

Leveraging KPJ’s synergies

1

2018 Strategy Focus

Continue to create employment opportunities for future generations

To achieve full university status in 2020 Continuous Professional Development

programs tailored to market needs Target for 2,800 students

Talent Pipeline

Aggressive and intelligent marketing on online and social media

Social media as platform to generate effective marketing campaigns

Personalised promotion to right target audience

KPJUC Initiative

Sustained Marketing Campaign

Target Market

2

3

2018 Strategy Focus

Superior Customer Service

Clinical > Patient Centric benefits

Stroke Management Centre Remote Healthcare Digital

Monitoring System (Jcorp) mQuit Smoking Cessation

Programme (MOH) QR Coding New HIMS structure

Continuous clinical education programs to enhance service delivery of nurses

Doctors Portal (updated with Clinical Governance Policy)

Statistical Performance Control Chart

Patient Initiatives

Nursing Initiatives

Doctors Initiatives

4

2018 Strategy Focus

Superior Customer Service (cont’d)

Customer Service > Continuous development of a strong service culture

Train-the-Trainers program KPJ Service Academy (by 2021) Produce qualified trainers

Planetree project SQM enhancements KPJ Care Card

Talent

Service Deliveries

Culture Promoting positive employee ecosystem to instill patient-centric culture

4

2018 Strategy Focus

Successful migration to KCIS2 and HITS2

NextGen HIMS

Target 27 hospitals ISO9001 & ISO27001 compliance KCIS2 & HITS2

5

Awards

Anugerah Perdana Menteri, Anugerah Kecemerlangan Industri (AKI) 2016 awarded by MATRADE – KPJ Klang Specialist Hospital

MSWG-ASEAN Corporate Governance Recognition 2017 Awards-Industry Excellence Award within the Healthcare category

Global Health and Travel APAC Award 2017

EU-Malaysia Chamber of Commerce and Industry (EUMCCI) Sustainability Award 2017 for Best Social Impact (Large Companies)

Awards

Asian Hospital Management Awards 2017 – Excellence award given to KPJ Johor Specialist Hospital under the Innovations in Healthcare Technology Project category

Kuala Lumpur Mayor’s Tourism Awards 2017 – KPJ KPJ Tawakkal Specialist Hospital and KPJ Tawakkal Health Centre obtained the Platinum Award for the Medical Tourism Category

International Innovative and Creative Circle – KPJ Pahang Specialist Hospital

Network Expansion – New Hospitals 2018/2019

19

BDC Specialist Hospital, Kuching

Bandar Dato’ Onn Specialist Hospital, Johor Bahru

KPJ Miri Specialist Hospital, Miri

Network Expansion- New hospital-lease 2018/2019

20

KPJ Batu Pahat Specialist Hospital Batu Pahat (2018)

KPJ Damansara Empire Specialist Hospital Kuala Lumpur (2019)

Kluang Specialist Hospital Kluang (2019)

THANK YOU

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Q&A

Questions raised by

MSWG and EPF

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25th Annual General Meeting

(EPF)

1. What was the Management’s KPI target for FY2017 and its achievement? Could the management gives a guidance on the expected financial performance in

FY2018?

Target 2017 Actual 2017 Target 2018

EBITDA RM440 mil RM442 mil RM490 mil

PBZT RM 230 mil RM 233 mil RM263 mil

PAT RM167 mil RM167 mil RM186 mil

Gearing

> Debit to equity ratio

<1.5 0.88 <1.5

Total debt / Total asset ratio

<1.0 <0.38 <1.0


(EPF & MSWG)

2. What is/are the reasons for underperforming hospitals in Indonesia? And what is the management strategy to address this issue?

Reasons for underperforming

1) Lower inpatient volume by 9%

2017 : 8,294 2016 : 9,091

• Due to low outpatient-to-inpatient conversion rate for even though outpatient volume grew 11%

• Outpatient has low margin yield, Inpatient has higher margin yield – affected earnings

2) Shift in patient profile

• With BPJS scheme in place since 2014, cash-paying and private insurance patients converted to BPJS scheme

• In 2017, 30% patient volume growth from BPJS for both hospitals and reduction in cash-paying and private insurance patients.

2. What are the reasons for underperforming hospitals in Indonesia? And what is the management strategy to address this issue?

Strategies to address this issue

1) Attract more doctors and expand services

> Specialist & Sub-specialist > Appointment of additional / new full time and part time doctors

2) Strengthen relationship with corporates, insurance companies & BPJS referral centres > to increase the number of corporate panels and increase private patients > MOUs with GPs and health centres

3) Focus on BPJS cases with high coverage value: > Orthopedic/Dialysis/Physio/ Opthalmology / General Surgery

4) Introduce new services & upgrade equipment and facilities > Cathlab for RSMPH > Oncology Centre for RSMBSD


(MSWG & EPF)

25th Annual General

Meeting

3. Could you please comment on the Indonesia operation outlook and the impact of BPJS to KPJ?

We are still bullish about our Indonesian operations as Indonesia with its 260 million population with strong growth potential, is an attractive market for KPJ in the medium to long term horizon. The BPJS scheme gives KPJ greater access to patients that previously could not afford private healthcare services. Although introduced in 2014, it is still faced with teething problems about its funding mechanism that will pose some challenges to our hospitals in terms of coverage values and cash-flow. We are confident that we can overcome these current challenges and be able to leverage further the strong KPJ brand awareness amongst Indonesians.

4. What is the update on Jeta Garden disposal?

We have appointed an agent to expedite the proposed disposal of our stake in Jeta Garden. Given the soft market condition in Australia at present, we will intensify our effort to ensure a good exit in 2018.


(EPF)

5. As stated in Management Discussion & Analysis (“MD&A”) on page 33 of the Annual Report, the Company is exploring collaborations with property developers to set up Senior Living Care centres or retirement villages with KPJ as the operator. Could the Board update on this collaborations progress?

There have been several discussions on possible collaboration but nothing has been agreed as yet. We will make the requisite announcement if and when such a collaboration has been finalised.


(MSWG)

6 . As stated in Management Discussion & Analysis (“MD&A”) on page 21 of the Annual Report, the Company had incurred higher costs in terms of repair and other capital expenditure as a result of investment into developing world class medical facilities. i) How much was the total capital expenditure (“CAPEX”) incurred for the financial

year under review? ii) How much CAPEX would be incurred for FY2018?

i) In 2017, total CAPEX incurred was RM466.6mil comprising of the following:- CWIP, Land, Building & Renovations RM388.9mil Medical Equipment RM54.7mil Others RM23.0mil ii) For 2018, we are expecting CAPEX to be in the region of RM300mil.


(MSWG)

6. As stated in Management Discussion & Analysis (“MD&A”) on page 25 of the Annual Report under Medical Tourism, the Company aimed at increasing Group revenue and patient loads by venturing into new markets such as China, India and the Pacific Islands. Could the Board enlighten shareholders on the above expansion plans?

As part of the Malaysian Government’s initiative to make Malaysia the leading medical hub in South East Asia, KPJ has over the years created 5 medical tourism hubs within its network of hospitals, namely Klang Valley, Southern Johor, Penang, Sarawak and Sabah. One of the key drivers for KPJ’s aggressive expansion plan is building dedicated facilities in order to tap into the medical tourism segment in a meaningful way.

Connectivity and ease of travel for our patients to our hospitals are important considerations, whereby a short travel time of within 4 hours range and availability of well developed infrastructure and facilities for the patient and family would make attractive propositions.

We have appointed marketing agents in those target countries and where possible, have tie-ups and collaboration with their public and private sector healthcare providers. KPJ adopts a targeted approach leveraging on our strength in areas that we excel like oncology, bariatric surgeries, orthopaedic, cardiovascular, cerebrovascular and fertility services.


(MSWG)

8. In Note 25 on page 243 of the Annual Report, Other Receivables increased from RM54.5 million in FY2016 to RM134.8 million in FY2017.

What are the reasons for the increase?

These are non-trade receivables that are transitional in nature, awaiting completion of documentation and relate to the Group’s treasury activities for advances for project development and other capital expenditure made by HQ on behalf of some of the subsidiaries.


(MSWG)

AGENDA

25th Annual General

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25th Annual General

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Ordinary Business Agenda 1

To receive the Audited Financial Statements for the year ended 31 December 2017 and

the Reports of the Directors and Auditors thereon.

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Ordinary Business Agenda 2

To re-elect the following Directors of the Company who will retire in accordance with the Articles of

Association of the Company:-

i) Tan Sri Datin Paduka Siti Sa’diah Sh Bakir - Article 96 ii) Prof. Dato’ Dr. Azizi Hj Omar - Article 96 iii) Mohd Sahir Rahmat - Article 97 iv) Dato’ Dr. Zaki Morad Mohamad Zaher - Article 97

Ordinary Business

Agenda 2 (Resolution 1) Re-election of

Tan Sri Datin Paduka Siti Sa’diah Sh Bakir

25th Annual General

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Ordinary Business Agenda 2 (Resolution 2)

Re-election of

Prof. Dato’ Dr. Azizi Hj Omar

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Re-election of

Mohd Sahir Rahmat

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Re-election of

Dato’ Dr. Zaki Morad Mohamad Zaher

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To approve the following payment to Directors :-

Fees of RM925,000 for the financial year ended 31 December 2018 (2017 : RM925,000)

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To approve the following payment to Directors :- Remuneration (excluding Proposed Directors’ fees) to Non-Executive Directors for the period from 1 May 2018 until the conclusion of the next AGM of the Company (Relevant Period)

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To re-appoint Messrs

PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors to fix

their remuneration.

25th Annual General

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Special Business Ordinary Resolution 8,9 & 10

CONTINUING IN OFFICE AS INDEPENDENT NON-EXECUTIVE DIRECTORS

Zainah Mustafa, Datuk Azzat Kamaludin and Dr. Kok Chin Leong have expressed their intention not to seek for re-appointment. They will retire at the conclusion of the Twenty Fifth (25th) AGM. Hence resolutions no 8, 9 and 10 will not be put to the vote.

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Special Business Ordinary Resolution 11

Authority to issue and allot shares does not

exceed 10 percent (10%) of the total number of issued shares of the Company, Pursuant to

section 75 of the Companies Act, 2016.

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PROPOSED RENEWAL OF THE SHARE BUY-BACK AUTHORITY

Subject to Section 127 of the Act, the provisions of the MMLR and all other applicable laws, rules, regulations and guidelines for the time being in force, the Directors of the Company be and are hereby authorised, to make purchase(s) of ordinary shares in the Company on Bursa Securities subject to the items that set out in Resolution 12 of the Notice of 25th AGM.

25th Annual General

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To authorise the Company and/or its subsidiaries, to enter into and give effect to the Recurrent Related Party Transactions of a Revenue or Trading nature, all with the particulars of which are set out in Part B of the Circular to Shareholders dated 22 March 2018 (“Circular”) with the Related Parties as described in the Circular, provided that such transactions are stated in the Resolution 13 of the Notice of 25th AGM.

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Special Resolution Ordinary Resolution 14

Proposed adoption of the new constitution of the

Company as set out in Part C of the Circular to Shareholders dated 22 March 2018 (“Circular”).

POLL VOTING

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POLL RESULTS

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Heartfelt appreciation to

our previous Directors

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Director

Independent Non-executive

Pn Zainah Mustafa

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Director


Datuk Azzat Kamaludin

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Director


Dr. Kok Chin Leong

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PROPOSED NEW DIRECTORS

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New Director

Dato’ Muthanna bin Abdullah

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New Director

Dato’ Dr Bajit Kor

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New Director

Ms Christina Foo

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New Director

Pn Jasimah Hassan

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Thank You

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25 annual general meeting - investor relations

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