Chemical Company of Malaysia Berhad Annual Report 2019

| Chairman’s Statement | Our acquisition of a piece of land and a factory in Bangi to relocate the Polymers Division’s centralised warehouse and head office also augurs well for us. Works are underway at our Bangi site to house a new Kleeners facility which will produce the cleaning solution used for ceramic formers supplied to glove manufacturers. The plants that have undergone or are undergoing capacity expansion are expected to begin generating revenue once they become operational (expected by end Q4 2020) and this bodes well for CCM’s financial performance over the short to mid-term. Reaping the Rewards of Strategic Divestment In March 2019, we fully completed the divestment of several non-core assets as part of the de-gearing exercise that we had embarked on back in FY 2018 to create sustainable growth and long-term value for shareholders. The RM270.9 million in proceeds from the entire exercise was utilised to pare down the Group’s existing borrowings, saving the Group RM14.4 million in interest expense for FY 2019. This exercise has transformed the Group into a more agile organisation with a robust balance sheet given the more moderate gearing. In addition, we have considerable cash in hand for strategic growth and expansion. As of 31 December 2019, our debt to equity ratio was slightly lower, at 0.60 times in comparison to 0.61 times recorded as at 1 January 2019. As at 31 December 2019, the Group’s net assets per share grew to RM1.92 from RM1.89 previously. Leveraging on New Growth Opportunities Our successful bid in supplying caustic soda to the RAPID project is expected to drive up the Group’s caustic soda revenue. The three-plus-one-year contract with PETRONAS calls for the supply of up to a maximum volume of 351,000 metric tonnes of caustic soda for the contract period. The uptake from the said contract with PETRONAS is expected to commence in the second half of 2020. Given that 40% of the Group’s revenue comes from the sale of caustic soda, this is set to have a tangible impact on our revenue streams. Contract Handover between Petronas & CCM Chemicals for the supply of caustic soda 12 CHEMICAL COMPANY OF MALAYSIA BERHAD