CCM GROUP NETWORKING SESSION WITH FUND MANAGERS 3 DECEMBER 2015
CHEMICAL COMPANY OF MALAYSIA BERHAD Presented by: Leonard Ariff Abdul Shatar, Group Managing Director Date: 3 rd December 2015 Global Islamic Economy Award 2015 Food & Health Category
CONTENT 1 Overview a Pharmaceuticals Division b Chemicals Division c Fertilizers Division 2 Financial Performance
CCM GROUP Vision, Mission and Values Vision Enhancing Quality of Life Mission To be a responsible company committed to enhancing quality of life by providing sustainable solutions based on innovative sciences. Core Values Passion Excellence Teamwork Integrity Responsible Respect
CCM GROUP Brief Background Since 1966, Chemical Company of Malaysia Berhad (CCM) has had a significant corporate presence in Malaysia. CCM Group offers a wide range of products and services to the chemicals, healthcare and agricultural industries. Year Key Milestones 1963 CCM Berhad was incorporated 1966 CCM Berhad was listed on the main board of Bursa Malaysia Start up of the compound fertiliser and chlor-alkali plants (1st in Malaysia) 1991 Relocate chlor-alkali plant to Pasir Gudang 1994 Management Buy Out (MBO) of ICI s equity in CCM 1995 Acquired Upha Corporation (M) Sdn Bhd and CCM Pharma, thus establish its pharmaceuticals division 1996 Joint venture with Orica Investments Pte Ltd to form Orica-CCM Energy Systems Sdn Bhd 2005 2007 2008 Ground Breaking Ceremony of CCM Pharmaceutical s second plant in Bangi Acquire 33.4% of Duopharma Biotech Berhad Ground Breaking Ceremony of CCM Fertilizers Division plant in Bintulu Acquire Malayan Pharmaceutical's established brands and assets for RM22 million Acquire Enersave Water Sdn Bhd to expand its Watercare Business Acquire polymer coating specialist, Innovative Group of Companies 2009 Official Opening of CCM R&D Centre, Innovax Sdn Bhd 2012 Official Opening of the Lahad Datu fertilizers plant 2013 CCM awarded the Anugerah Majikan 1Malaysia (Kategori Syarikat GLC) 2015 CCM awarded the Halal Excellence Award 2015 2015 Consolidation of Pharmaceutical businesses under CCM Duopharma Biotech Berhad
Board of Directors CCM GROUP Board Structure and Board Members Audit and Compliance Committee Chairman: Khalid bin Sufat - Integrity Committee Chairman: Datin Paduka Kartini binti Hj. Abdul Manaf Board Members Group Managing Director Leonard Ariff Abdul Shatar Risk Management Committee Chairman: Dato Azmi bin Mohd Ali Nomination and Remuneration Committee Chairman: Khalid bin Sufat Finance and Investment Committee Chairman: Dr. Leong Chik Weng Non-Independent Non-Executive Director Dato Azmi bin Mohd Ali Senior Independent Non-Executive Director Khalid bin Sufat Independent Non-Executive Director Dr. Leong Chik Weng Non-Independent Non-Executive Director Dato Seri Ir. Dr. Zaini bin Ujang Non-Independent Non-Executive Director Datin Paduka Kartini binti Hj. Abdul Manaf Independent Non-Executive Director Tan Sri Siti Sa diah binti Sh Bakir
CCM GROUP Senior Management Team Group Managing Director Leonard Ariff Abdul Shatar Director Government Relations & Program Office Abd. Rahman Abdullah Thani Director Finance & Corporate Services Nik Fazila Nik Mohamed Shihabuddin Director Sustainability & Halal Mohamed Nazmi Sallehhudin Director Group Corporate Development Norzaimah Maarof Group Company Secretary Noor Azwah binti Samsudin General Manager, Legal/Company Secretary Ibrahim Hussin Salleh General Manager, Group Integrity Assurance Wan Aishah Idris
Permodalan Nasional Berhad CCM Berhad CCM GROUP Corporate & Equity Structure Chemicals Division: CCM Usaha Kimia (M) Sdn Bhd Fertilizers Division: CCM Agrimax Sdn Bhd Pharmaceuticals Division: CCM Marketing Sdn Bhd CCM Investments Ltd Yayasan CCM Pan Gen Biotech Inc Permodalan Nasional Berhad (PNB), Malaysia s largest private equity fund managed by the Government of Malaysia, holds the majority shares thus making CCM a Government- Linked Company (GLC). (as at 30 September 2015)
PHARMACEUTICALS DIVISION
PHARMACEUTICALS DIVISION Brief Background CCM Pharmaceuticals Division comprises of CCM Duopharma Biotech Berhad, CCM Pharmaceuticals Sdn Bhd and Innovax Sdn Bhd. It develops, manufactures and market generic drugs and branded pharmaceuticals products for consumers. CCM is the No.1 generic pharmaceutical manufacturing company in Malaysia and this division has a vision to be in the TOP 5 generic pharmaceutical company in ASEAN by 2022. Several of its main medications include Omesec and Vascor. It also produces many established brands such as Champs, Proviton, Flavettes, Donna and Diamelon. CCM Pharmaceuticals Division is committed to expanding both its ethical and over-the-counter (OTC) products to fulfil the emerging customer needs and strengthen our presence particularly in ASEAN region. Year 1995 2005 2007 Key Milestones Acquired Upha Corporation (M) Sdn Bhd and CCM Pharma, thus establish its pharmaceuticals division Ground Breaking Ceremony of CCM Pharmaceutical s second plant in Bangi Acquire 33.4% of Duopharma Biotech Berhad CCM signed S&P Agreement to acquire Malayan Pharmaceutical's established brands and assets for RM22 million 2009 Official Opening of CCM R&D Centre, Innovax Sdn Bhd 2012 CCM s pharmaceuticals division inks strategic collaboration with Korea s PANGEN Biotech Inc. to pioneer development of biosimilars for kidney failure treatment in Malaysia 2015 Consolidation of all Pharmaceuticals assets under CCM Duopharma Biotech Berhad
Chemical Company of Malaysia Berhad CCM Marketing Sdn Bhd CCM Duopharma Biotech Berhad PHARMACEUTICALS DIVISION Corporate Structure CCM Pharmaceuticals Sdn Bhd Innovax Sdn Bhd Duopharma (M) Sdn Bhd CCM International (Philippines) Inc Upha Pharmaceuticals Manufacturing (M) Sdn Bhd CCM Pharma Sdn Bhd CCM Pharmaceuticals (S) Pte Ltd
PHARMACEUTICALS DIVISION Facilities Snapshot Facilities Bangi Plant Established Workforce Types of Products 1976 534 people Ethical and OTC Products mainly in OSD, soft gels, liquids and cream forms Glenmarie Plant Klang Plant Established Workforce Types of Products Established Workforce Types of Products 2008 72 people Cephalosporin facility producing granules, capsules and tablets Innovax Sdn Bhd, the division s R&D center is located in this plant 1979 468 people Oral solids, Haemodialysis & SVI Products, LVI Irrigation Solution Products, Dental Cartridge Production and Sterile Cephalosporin
CHEMICALS DIVISION
CHEMICALS DIVISION Brief Background CCM Chemicals Division has been the leading industrial and specialty chemicals in Malaysia for over 70 years. CCM Chemicals aims to become the principal in water treatment and polymers for rubber glove, apart from manufacturing and trading of extensive range of general and specialty chemicals. CCM Chemicals is the leading chlor-alkali producer in Malaysia and represents many world renowned principals in the supply of industrial and performance chemical products with regional offices in Singapore, Indonesia and Philippines. CCM Chemicals is a recognized leader and steward in corporate safety and environmental management. The division maintain a high standard for Safety, Health & Environment (SHE) and has numerous CICM Responsible Care awards under its belt. Year Key Milestones 1992 Commissioned 1 st Chlor Alklai Plant in Pasir Gudang (PGW1) 1996 Commissioned 2 nd Chlor Alkali Plant in Pasir Gudang (PGW2) 1997 Commissioned 1 st Coagulant Plant in Pasir Gudang (PGW3) 1999 Commissioned Calcium Nitrate Plant in Shah Alam 2000 MS ISO 9001 2003 OHSAS 18001 2008 Acquired Innovative Group of Companies, a polymer coating solution specialist 2011 ISO 14000 EMS Certificate
Chemical Company of Malaysia Berhad CCM Usaha Kimia (M) Sdn Bhd CHEMICALS DIVISION Corporate Structure CCM Singapore Pte Ltd CCM Chemicals Sdn Bhd CCM Water Systems Sdn Bhd PT CCM Indonesia Orica-CCM Energy Systems Sdn Bhd CCM Watercare Sdn Bhd CCM Innovative Solutions Sdn Bhd Innovative Polymer Sdn Bhd Delta Polymer Systems Sdn Bhd
CHEMICALS DIVISION Facilities Snapshot Facilities Pasir Gudang Plant Shah Alam Plant Established Workforce Capacity Types of Products Established Capacity Workforce Types of Products 1992 [PGW1 Chlor-alkali Plant] 1996 [PGW2 Chlor-alkali Plant] 1997 [PGW3 Coagulant Plant] 129 people 40,000 ECU [Chlor-alkali Plant] 25,200 MT [Coagulant Plant] Liquid Chlorine, Caustic Soda, Hydrochloric Acid, Sodium Hypochlorite [Chlor-alkali Plant] Polyaluminium Chloride [Coagulant Plant] 1999 6,000 MT 6 people Calcium Nitrate Bangi Plant Established Workforce Capacity Types of Products 2009 49 people 12,000 MT Polymer Coatings
FERTILIZERS DIVISION
FERTILIZERS DIVISION Brief Background Fertilizers division of CCM engaged in the manufacturing, marketing and supply of fertilisers products. It started off as a subsidiary of ICI United Kingdom in 1930. The company was formally incorporated in 1963 and listed in the Main Board of Malaysia in 1966, where it commissioned a NPK fertilizer compound plant and a chlor-alkali manufacturing plant, the first of such facilities in Malaysia. A Management Buy-Out in 1994, effectively ended ICI s involvement in the company and CCM s diversification into the pharmaceuticals business. Year Key Milestones 1966 Commissioning of the first compound fertiliser manufacturing facility in Malaysia 1997 1998 Awarded Malaysia Palm Oil award by Palm Oil Registration and Licensing Authority for achieving the highest recorded yield of 46 tonnes per hectare. Establishment of Golden Growers Club, a non-profit organisation with the objective of educating and providing technical update for stakeholders in the agricultural industry 2005 Highest production recorded at Shah Alam plant at 283,107 MT per year 2008 Successful commissioning of Bintulu plant 2009 Decommissioned ammonia sphere and nitric acid facility at the Shah Alam plant to convert to a more flexible and environmentally friendly process 2011 Successful commissioning of Lahad Datu plant 2012 Initiated Lean Six Sigma programme 2015 Announcement of closure of the Shah Alam plant
FERTILIZERS DIVISION Corporate Structure Chemical Company of Malaysia Bhd (CCMB) Lembaga Tabung Haji (LTH) 49.9% 50.1% CCM Fertilizers Sdn Bhd (CCMF) CCM Agri-Max Sdn Bhd (CCMAG) CCM Agriculture Sdn Bhd (CCMA) CCM Agriculture (Sabah) Sdn Bhd (CCMAS) Shah Alam Plant 240 kmt Capacity Bintulu Plant 130 kmt Capacity Lahad Datu Plant 130 kmt Capacity
FERTILIZERS DIVISION Facilities Snapshot Facilities Shah Alam Plant* Bintulu Plant Lahad Datu Plant *Shah Alam plant is in the process of being closed down Start-up Year Capacity 2011 2012 2013 Workforce Start-up Year Capacity 2011 2012 2013 Workforce Start-up Year Capacity 2011 2012 2013 Workforce 1966 240,000 tonnes per annum 100% capacity 76% capacity 47% capacity 231 people (168 permanent; 63 contract) 2008 130,000 tonnes per annum 68% capacity 62% capacity 69% capacity 131 people (51 permanent; 80 contract) 2011 130,000 tonnes per annum 28% capacity 48% capacity 27% capacity 116 people (42 permanent; 72 contract)
CONTENT 1 Overview a Pharmaceuticals Division b Chemicals Division c Fertilizers Division 2 Financial Performance
FINANCIAL PERFORMANCE Group Financial Snapshot FPE Q3 2015 (RM mil) FPE Q3 2014 (RM mil) Variance Revenue 775.1 848.5 (9%) Gross Profit 183.3 158.5 (16%) PBT 23.6 13.2 79% PAT 17.8 10.0 78% G.Margin % 23.6% 18.7% ROE % 2.0% 1.1% As at 30.09.15 (RM mil) As at 31.12.14 (RM mil) Assets 1819.1 1,639.1 Cash 286.6 208.2 Equity 868.4 880.6 Borrowings 718.2 594.0 Gearing 0.83x 0.67x Net asset per share 1.62 1.65 Profit before tax RM' mil Financial Period Ended Q3 YoY Division 2015 2014 % Pharmaceuticals 32.7 22.7 +44% Chemicals 18.4 11.9 +55% Fertilizers (14.3) (12.1) -18% Others and interco elimination (13.2) (9.3) -42% Group 23.6 13.2 +79% Key Salient Points Group revenue decreased by 9% y-o-y, brought down by 24% contraction in Fertilizers Division s sales. Despite lower revenue, Group PBT grew by 79% as higher margins recorded in Pharmaceuticals and Chemicals had managed to mitigate poorer performance in Fertilizers. Debt/Equity ratio stood at 0.83x compared to 0.67x last year. Additional borrowing were due to drawn down pursuant to the completion of reorganisation of Pharmaceuticals Division. ROE stand at 2.0% compared to 1.1% y-o-y. 22
Turnover (RM mil) SEGMENTAL FINANCIAL PERFORMANCE Pharmaceuticals Division PBT / PAT (RM mil) 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 Turnover, PBT & PAT 2013 2014 FPE Q3 2015 Turnover 295.9 320.4 245.4 PBT 30.8 35.7 32.7 PAT 24.0 27.5 24.0 (in RM'million) 2013 2014 FPE Q3 2015 Non-current assets 431.4 445.5 418.1 Current assets 245.7 279.9 377.6 Equities 484.9 517.0 617.8 Liabilities 192.2 208.3 178.0 Gearing 0.01x 0.04x 0.19 Return on Equity 4.9% 5.3% 3.9% 40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0 0.0 KEY HIGHLIGHTS Strong performance shown both in private and government markets. Maintain its position as #1 local pharmaceutical company and 6 th position (by value) among all pharmaceutical companies in Malaysia (source : IMS Flash Report Sep 2105) Continue with brand visibility of OTC products focusing on 4 major brands i.e. Champs, Proviton, Flavettes & Naturalle. Continue to champion halal pharmaceuticals products. CCM was accorded the winner of the 2015 Islamic Economy Awards under Food and Health category at the Global Islamic Economy Summit 2015 convened in Dubai on 5 th Oct 2015. Continuous collaboration and partnering with key pharmaceutical players like Biocon Ltd., Pangen Biotech Inc.
Turnover (RM mil) SEGMENTAL FINANCIAL PERFORMANCE Chemicals Division PBT / PAT (RM mil) 350.0 300.0 250.0 200.0 150.0 100.0 50.0 0.0 Turnover, PBT & PAT 2013 2014 FPE Q3 2015 Turnover 299.5 279.0 217.5 PBT 16.6 18.9 20.7 PAT 9.9 14.3 13.0 (in RM'million) 2013 2014 FPE Q3 2015 Non-current assets 225.9 251.7 215.5 Current assets 181.3 198.9 186.9 Equities 254.1 275.9 220.7 Liabilities 153.1 174.8 181.7 Gearing 0.15x 0.15x 0.16x Return on Equity 3.9% 5.2% 5.9% 25.0 20.0 15.0 10.0 5.0 0.0 KEY HIGHLIGHTS Stable local businesses, both in chlor alkali and polymer coating businesses. On the chlor alkali segment - Market price rebound, Caustic Soda and Chlorine prices has risen by >10% this year. As of 2015, CCM Innovative Solutions has world market share of 42% for polymer coatings and 36% for cleaners. Continuous cost improvement initiatives via various operational efficiency projects. 24
Turnover (RM mil) PBT / PAT (RM mil) SEGMENTAL FINANCIAL PERFORMANCE Fertilizers Division 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 Turnover, PBT & PAT 2013 2014 FPE Q3 2015 Turnover 693.0 488.7 304.9 PBT (12.9) (69.5) (11.6) PAT (13.5) (69.2) (8.7) 0.0 (10.0) (20.0) (30.0) (40.0) (50.0) (60.0) (70.0) (80.0) KEY HIGHLIGHTS Sales trending downward ; low CPO prices influencing decision on fertilizers purchasers delays in procurement, switching to cheaper straight or mix fertilizers. Closure of Medan plant, impairment made of RM36.8m in 2014. (in RM'million) 2013 2014 FPE Q3 2015 Non-current assets 126.0 117.3 121.7 Current assets 395.9 280.5 288.4 Equities 46.5 16.9 21.8 Liabilities 475.4 380.9 388.3 Gearing 3.86x 6.50x 10.5x Return on Equity (28.9%) (408.7%) (40.0%) Closure of Shah Alam Plant in 2015, estimate impairment of RM30million (including retrenchment costs and assets write down). 25
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