Page 28 - ar2010

Ensure Sustainable Growth

The year also saw the Group’s plans for continued growth remain on target, driven by pivotal strategies including:

KPJ today has more than 20 hospitals in Malaysia and two in Indonesia. With the trust and confdence that our customers have placed in us, these hospitals continue to grow from strength to strength and a number of them have now reached full capacity. To ensure continued sustainability of the business, strategic initiatives have been undertaken, ultimately leading to the physical expansion of existing hospitals such as KPJ Ampang Puteri Specialist Hospital, KPJ Johor Specialist Hospital, KPJ Selangor Specialist Hospital, KPJ Seremban Specialist Hospital and Puteri Specialist Hospital, which should be completed within a year or two.

To strengthen our market position, KPJ has set a goal to add one or two new hospitals each year to the existing network, be it via acquisition or greenfeld projects ~ and we are currently on track. Two new hospitals, namely Rumah Sakit Bumi Serpong Damai in Jakarta, Indonesia and the KPJ Tawakkal Specialist Hospital in Kuala Lumpur commenced operations early and in the middle of the year under review, respectively. The Group also acquired a 51% stake in Sabah Medical Centre (SMC), in Kota Kinabalu, completed in June 2010. With the acquisition of SMC, work has started on the development of a new 250-bedded hospital building for its relocation, at a cost of RM180-200 million which began in December 2010, and slated to complete in two years.

The Group has also spread its wings to include two more new hospitals with the acquisition of Sibu Specialist Medical Centre in Sarawak, completed in the frst quarter of 2011 and the anticipated commencement of KPJ Klang Specialist Hospital in Selangor by the 4th Quarter of 2011.

Our strategy to inject assets into Al-’Aqar KPJ REIT to unlock value and free up cashfow for further development has played an integral part in KPJ’s expansion.

To date, three tranches of asset injection exercises involving 18 hospital buildings and one college building worth a total of RM943 million have been completed and the fourth tranche involving three hospital buildings for RM139 million is in progress, having obtained shareholders’ approval on 17 December 2010. This brings the total value of the injected KPJ assets to RM1.08 billion.

Proceeds go towards trimming borrowings to cut interest costs, funding working capital and other capital-intensive expansion requirements such as development of new hospitals.

Health Travel is another key sector in which KPJ plans to strengthen its ventures. This sector has been identified by PEMANDU as one of the nation’s three primary healthcare sub-sectors under the ETP, wi th the other two being pharmaceuticals and medical technology products.

To this end, KPJ signifcantly contributes to the extensive national efforts to enhance health tourism in the country. Our efforts in supporting the Government’s initiatives spearheaded by MIDA, MATRADE and the recently-established Malaysia Healthcare Travel Council (MHTC), as the nation’s primary agency to promote and to develop the country’s health tourism industry since its inception in 2009 will be enhanced. KPJ further participates in programmes undertaken by the Association of Private Hospitals of Malaysia (APHM) to promote Malaysian hospitals to the international market.

Leveraging on the industry’s strong potential, KPJ established a multi-pronged strategy to expand our foothold in the medical tourism market including through sales visits, participation in international exhibitions abroad with the support of our Medical Consultants, and through the development of foreign partnerships for medical tourism services.

As we turn the page to a new year, such efforts will continue in 2011 as we head out to new markets such as the United States and Europe, as well as existing ones like Indonesia, Indo-China and the Middle East.

Continuing to raise

its bar within bursa’s top listed 100 companies

kpj’s ranking improves from 91 st at

end-2009 to 85 th at end-2010.