Attachment 2 - SP 2020-2024 -16.05.19.pptx

Strategy plan

1. Strategic Planning 2020-2024 (For Hospitals /Support Service/Company)

2. 2 Contents 1 Executive Summary 2 Environmental Analysis 3 Business Strategy 4 Risk Management Plan 5 Performance Analysis 6 Operational Projection 7 Financial Projection 8 Conclusion

3. EXECUTIVE SUMMARY 3 1

4. 4 2019 2024 CAGR (%) 1. EXECUTIVE SUMMARY

5. *Note: To define and give example for each objectives. 1.2 GENERAL & SPECIFIC OBJECTIVES SHORT TERM (2020) GENERAL OBJECTIVES SPECIFIC OBJECTIVES MEDIUM TERM (2021-2022) LONG TERM (2023-2024) Strive to ensure the business sustainability in the industry Recognized and known as SMART Hospital KPJ Loan Full Settlement by 2020 Member of 200 million club by 2022 Dividend 15% in 2021 EBITDA margin 18% by 2023 Net Profit Margin of 15% by 2023 Better data collection for analysis in decision making

6. ENVIRONMENTAL ANALYSIS 6 2 External Analysis PESTEL Competitor Analysis Regional, current, and future competitor Internal Analysis SWOT

7. 2.1.1 CURRENT INDUSTRY SCENARIO PESTEL ANALYSIS POLITICAL ECONOMY SOCIAL TECHNOLOGY ENVIRONMENT LEGAL Private Healthcare Facilities and Services Act 1998, Law regulation, Local Authority & MoH Moving closer to the goal of paperless environment Advancement in medical devices for greater and faster diagnosis = patient care Betterment of society’s income level = Good quality healthcare provider Higher unemployment = lower cost healthcare alternative Changes of regulation on tax policy

8. 2.1.2 COMPETITOR ANALYSIS

9. Existing Competitors Manipal Hospital Distance from KPJ Hospital (KM) - 5.4km 5km 7km 8.2km No. of Registered Beds 116 215 60 (83) 143 220 No. of Consultants 34 83 20 42 46 Resident 30 33 19 35 41 Sessional 1 19 1 5 3 Visiting 3 31 - 2 2 Medical Officer 8 4 3 4 8 New Consultants 2 2 - 1 4 OT 5 6 3 3 3 ICU Bed 8 10 6 6 5 Delivery Suites 2 5 3 2 3 2.1.3 MAJOR EXISTING COMPETITORS IN INDUSTRY (Contd.) KPJ Klang Sri Kota Med Centre Columbia Asia Klang Pantai Klang

10. Existing Competitors Manipal Hospital Sub - Specialty Neuro Surgery Sports Medicine Joint Replacement Vitreo Retinal Paeds Endochrine Gastro & Hepato Spine Surgery Laparoscopy Colorectal OSH Electrophysiologist Respiratory Hand & Micro Oncology Vitreo Retinal Spine Surgery Joint Replacement Gastro & Hepato Joint Replacement Breast Surgery Bariatric Surgery Dermatology Sports medicine Colorectal Gastro & Hepato Oral & Maxillofacial Paeds Surgery Dermatology Oncology Psychiatry Gastrointestinal Cardiology Hepatobiliary Surgery Sports Medicine Spine Surgery Dermatology OSH 2.1.3 MAJOR EXISTING COMPETITORS IN INDUSTRY KPJ Klang Sri Kota Med Centre Columbia Asia Klang Pantai Klang

11. Existing Competitors M anipal Hospital Technology MRI Cardiac (1.5T MRI) 64 slice CT Scanner MRI 1.5T Toshiba CT 128S 128 Slice CT (CTA Cardiac) 1.5T MRI Toshiba 128 Multislice CT Scan Siemens Magnetom 1.5 T MRI GE : MRI 1.5T CT 128S Philips Digital Radiography Expansion plan New Wards at level 6 Dialysis expansion; additional 18 machines Spacious Physio & Rehab Centre Cluster Specialist Clinics at level 3A Full capacity licensed bed - 87 Additional medical bulding ; current open carpark space New product / services Nil Nil Nil 2.1.3 MAJOR EXISTING COMPETITORS IN INDUSTRY KPJ Klang Sri Kota Med Centre Columbia Asia Klang Pantai Klang

12. 2.1.4 REGIONAL, CURRENT, AND FUTURE COMPETITOR Sri Kota Medical Centre Manipal Hospital 5km 5.4km 7km 8.2km Razif Maternity Hospital Hospital Wanita Metro 3km 7km Pusat Bersalin Barakah 10km

13. STRENGTHS WEAKNESSES OPPORTUNITIES THREATS W S T O SWOT A N A L Y S I S. Well-known Brand Established & Accredited DOSH Certified Fully digitalized System Young & energetic team Areas for expansion Lack of sub-specialty Consultants Underutilized equipment Skilled staff shortages of skilled staff Weak product promo Moderate internalization culture Low weekend BOR – 55% COE – Kidney Health Centre Int. Market expansion (Indonesia) Untapped domestic market SMART Hospital recognition Intense competitions Economic uncertainty Upcoming competitors (MSU & UiTM ) Skilled Staff leaving for competitors

14. BUSINESS STRATEGY 14 3

15. BLUE OCEAN STRATEGY

16. 3.0 BLUE OCEAN STRATEGIES 1. Strategy Canvas for Company/Hospital

17. 1 st Tier Non-customer who are on the edge ready to jump Price Sensitive customer Undecided/non-loyal Strategy : Modest promo with attractive price strategy via mass public roadshow Continuous brand projection via digital marketing brand placement; sub-conscious mind 2 nd Tier Refusing non-customer – their needs are dealt by other means or ignored. Current competitor’s loyal customer Strategy : 3 rd parties' involvement for redirection towards KPJ Klang – Influencer Continuous brand projection via digital marketing brand placement; sub-conscious mind Extensive eye-catching pricing strategy on selected highly demanded package on thematic campaign; unique demand 3 rd Tier Unexplored customers - who are in the market distant. Potential business growth; untapped market: Kuala Selangor district Sabak Bernam District Kuala Langat District Strategy : 3 rd parties' involvement for redirection towards KPJ Klang – Influencer Engagement through focused event via community leader Tailor-made services/packages ; domestic medical tourism Three Tiers of Non-customers Blue Ocean Strategies

18. FOUR ACTIONS FRAMEWORK ELIMINATE CREATE REDUCE RAISE STRATEGY FOCUS AREA Conventional non-productive marketing initiatives Focus directed towards initiatives with sales-oriented with higher ROI Engagement via identified market segment instead of mass-public; Sniper approach instead of Short-Gun approach ELIMINATE

19. 19 FOUR ACTIONS FRAMEWORK ELIMINATE CREATE REDUCE RAISE REDUCE STRATEGY Supply Chain Operational Cost Direct Supply Multi-platform appointment system to increase convenience & reducing waiting time Simplified Registration Form, reducing staff movement & more MO at A&E Capitalizing big data for research Pharmaserve as negotiator instead of distributor FOCUS AREA

20. FOUR ACTIONS FRAMEWORK ELIMINATE CREATE REDUCE RAISE CREATE STRATEGY Maximizing technology adoption External foreign party partnership Digital health / Big data leveraging Artificial Intelligence in clinical ops Developing software/apps to support day-to-day ops Technology based network – satellite structure Kidney Health Centre as Hospital COE FOCUS AREA

21. FOUR ACTIONS FRAMEWORK ELIMINATE CREATE REDUCE RAISE RAISE STRATEGY Price flexibility Market penetration Offering attractive packages Discovering Greater Klang as untapped market CS personnel appearance Develop/Acquire hospitals at strategic location Personalized care International brand collaboration FOCUS AREA

22. 3.0 BLUE OCEAN STRATEGIES (CONTD.) 3.2.1 THE ‘TO BE‘ STRATEGY CANVAS

23. RISK MANAGEMENT PLAN 23 4

24. 24   SEVERITY OF CONSEQUENCE Insignificant 1 Minor 2 Moderate 3 Major 4 Extreme 5 LIKELIHOOD OF OCCURENACE Most Certain 5 5 10 15 20 25 Certain 4 4 8 12 16 20 Possible 3 3 6 9 12 15 Less Likely 2 2 4 6 8 10 Unlikely 1 1 2 3 4 5   Low (1-4) Current control measures are adequate. Risk is accepted at the current level.     Moderate (5-9) To consider the need for additional control measures; enhance current control and compliance.     High (10-15) High priority for RTP. Current controls (if any) are inadequate. To establish controls. RTP may be established (if necessary) to adequately address the risk.   Extreme (16-25) Immediate controls are required. CEO to ensure RTP is implemented before operations on this can resume / be carried out. 4.1 RISK MATRIX *Note: Please refer to the next slide for Risk Category 1 2 3 4 5 6 7 8

25. 4.1.1 RISK CATEGORIES *Note: Not all the categories will be relevant to each Hospitals/Support Service/KPJHQ Services/Companies Risk Categories 1. Clinical and Patient Care 8. Human Resource 15. Social 2. Compliance, Regulatory and Other Requirements 9. Integrity 16. Security (including physical & information security) 3. Economics 10. Leadership 17. Strategic 4. Environmental 11. Legal including any legal actions (e.g. Medico Legal) 18. Supply Chain 5. Facilities & Equipment 12. Market 19. Technological 6. Financial 13. Operational 7. Health & Safety 14. Political

26. 4.1.1 RISK MANAGEMENT PLAN   Risk Category Description Cause Impact Preventive / Mitigating Risk Category 1. Clinical & Patient Care Increased risk to the delivery and quality of direct patient care due to the level of staff nurse vacancies Vacancies, increased staffing requirements and unable to recruit to post. Poor quality delivered. Work-place stress. Bank and agency shifts must be filled to uplifted nursing levels, however some shifts are not being filled Moderate Risk 2. Compliance regulatory & other requirements Authority new requirements and regulations MOH - Renewal hospital license and licensing new service KPJ Corporate Governance Others – License for allied health personnel Changes in Medical by Laws, SOPs & WIs   New equipment to add in   Increase in wages for professional personnel Time consuming.       Additional OPEX.   Additional OPEX Preparedness in knowledge and competency staffs to deliver the job task. Technology “Know WHO” Moderate Risk     Moderate Risk   Moderate Risk 3. Strategic People source for cheaper services (government hospitals) and alternative providers.   Rising in numbers of competitors in the market zone (MSCUC, Avisena Women and Children, Selgate,-IJN). Increasing cost of livings proportionally increase of hospital OPEX.     High demand for affordable healthcare providers. Affected the company's net earnings, net profit, net income or earnings per share.   To develop competitive packages and value-added services to attract patients. Moderate Risk

27. 4.1.1 RISK MANAGEMENT PLAN 4. Hazard Biological or chemical (hazard substances) exposures, can induce a harmful response and may affect soil, water, air, natural resources, staffs and community. Contagious disease outbreak.   Hazard substances leakages or spillages or pollution. Penalties of violation. Damages resulting from faulty or defective construction or materials. Expenses for clean-up of emissions. Enhance personal protective equipment, fire safety, chemicals management, waste and wastewater management.   Environmental policies compliance.   Moderate Risk 5. Financial Losses and expenses that could impact the company's net earnings, net profit, net income or earnings per share. Credit risk. Debtors who cannot meet obligations to pay. Problems of liquidity; to convert facilities purchased into revenue.   Cash flow affected. This will jeopardize further development and operation of hospital. Stimulates revenue growth by deploying effective marketing activities and increasing efficiency (cost cutting, multitasking, lean management) High Risk 6. Human Resource Ensuring availability of key medical staff Due to changing of workforce demographics & the type of skills required to deliver services in the future, The workforce may not have the skill, experience or capacity to deliver the type & quality Continuous development of a people plans. High Risk

28. 4.1.1 RISK MANAGEMENT PLAN 7. Operational Medical Litigation Competitive package for skillful clinical talents Maximizing facilities utilization Maintenance Cost Network Security and backup system Incompetency Loss of revenue   Medico-legal summons   Indemnity insurance   Compliance to rules and regulations High Risk 8. Technological Data could be inappropriately extracted or modified from DMV database by entering SQL commands into input fields Hackers + Criminals / SQL Injection Loss of data Loss of confidence from public Implementation ISO 27001. Ensure that all parameters are validated before used’. Extreme Risk

29. 29 5 PERFORMANCE ANALYSIS

30. 5.1 GAP ANALYSIS Key Hospital Indicators Actual Jan - Apr 2019 (A) Budget 2019 (B) Var (B/A) Forecast 2019 (D) Var (D/B) Inpatient Services No of Beds Capacity No of Days review Total Bed Available Inpatient Days 122 365 122 10,379 142 365 142 36,620 16% 0% 16% 253% 142 365 142 31,137 0% 0% 0% -15% Occupancy Rate With ICU/CICU Without ICU/CICU 66% 71% 66% 73% 1% 3% 56% 60% -15% -18% Ave No of Beds Occupied 87 104 20% 85 -18% No of Admission Resident Non Resident 3,880 47 13,810 167 256% 255% 11,663 118 -16% -29% No of day Cases Resident - Non Resident 451 5 1,550 31 244% 520% 1,353 15 -13% -52% Total Admission 3,927 13,977 256% 11,781 -16% Ave. Length of Stay 2.64 2.62 -1% 2.64 1% Total Outpatients Total Outpatient Clinic Total A&E Cases 25,958 4,238 84,251 13,715 225% 224% 77,874 12,714 -8% -7% Total Outpatient Services 30,196 97,966 224% 90,588 -8% Statistic Projection *Note: Actual: Jan-April 2019 Budget: 2019 budget that has been approved last year Forecast: for 1 year(based on Actual)

31. 5.1 GAP ANALYSIS Financial Projection Forecast 2019 Financial Performance Actual 2019 RM’000 (A) Budget 2019 RM’000 (B) Var (B/A) Forecast 2019 RM’000 (D) Var (D/B) Total Hospital Income 29,323,160 99,354,031 239% 93,164,943 -6% Total Consultant Incomes 11,696,287 38,638,161 230% 36,490,747 -6% Gross Operating Revenue 41,019,447 137,992,192 236% 129,655,691 -6% Less: Discount Allowed (667,865) (2,333,655) 249% (2,443,942) 5% Net Gross Operating Revenue 40,351,582 135,658,537 236% 127,211,749 -6% Less: App to Consultant (10,517,637) (35,837,445) 241% (33,249,245) -7% Less Cost of Sales Material Cost Direct Staff Cost Operating Overhead 7,345,765 6,305,291 2,535,207 24,129,258 22,013,041 7,315,848 228% 249% 189% 23,931,347 18,094,438 10,581,357 -1% -18% -45% Total Cost of Sales 16,186,263 53,458,147 230% 52,607,142 -2% Gross Operating Profit 13,647,683 46,362,945 240% 41,355,362 -11% Add: Other Incomes 937,947 3,446,991 268% 3,315,082 -4% Total Operating Profit 14,585,629 49,809,936 242% 44,670,444 -10% Less Administrative Expenses Indirect Staff Cost Administrative Overhead - Rental (Land & Building) 1,922,802 4,592,616 2,402,167 5,478,407 13,412,698 8,222,114 185% 192% 242% 5,768,407 13,777,847 7,206,500 5% 3% -12% *Note: Actual: Jan-April 2019 Budget: 2019 budget that has been approved last year Forecast: for 1 year(based on Actual)

32. 5.1 GAP ANALYSIS Financial Projection Forecast 2019 Financial Performance Actual 2019 RM’000 (A) Budget 2019 RM’000 (B) Var (B/A) Forecast 2019 RM’000 (D) Var (D/B) Total Administrative Expenses 8,917,585 27,113,219 204% 26,752,754 -1% EBITDA 5,668,045 22,696,717 300% 17,917,690 -21% Less: Depreciation 481,398 5,950,860 1136% 1,444,194 -76% Less: Financial Expenses 349,509 822,336 135% 1,048,528 28% Profit Before Tax 4,837,137 15,923,521 229% 15,424,968 -3% Gross Profit Margin 34% 34% 1% 33% -5% Net Profit Margin (W/Out Reits ) 10% 10% -4% 10% 3% *Note: Actual: Jan-April 2019 Budget: 2019 budget that has been approved last year Forecast: for 1 year(based on Actual)

33. No Target Plan 2019 Progress of the plan Action Plan Impact on Financial Statement (RM) (if any) Contingency Plan Dateline 1. Interactive portal – Online GL request In progress to develop GL portal Progressive meeting being conducted to design attractive and informative GL portal. 2. 5.1 GAP ANALYSIS - (Based on previous Strategic Plan presentation in 2018) Example:

34. 34 Current Project New Project Timeline To construct 2 ward with 78 bed in total. Building 2 stories at level 5 open yard Level 5 – Rehabilitation Centre Level 6 - Administrative Office Additional 14 cluster consultant suites Expansion of Dialysis – add 18 machines March 2020 CURRENT AND NEW PROJECT *Note: Elaboration for project that impact on current year performance 5.1 GAP ANALYSIS

35. 35 6 OPERATIONAL PROJECTION

36. INDICATOR 2019 2020 2021 2022 2023 2024 No of beds 142 142 162 162 182 182 Beds occupancy (BOR) 73% 78% 72% 76% 72% 76% No of Beds occupied 103 111 116 122 130 137 No of inpatient days 36,620 40,427 42,340 45,552 47,501 49,932 No of consultants 31 32 33 34 35 36 No of inpatients 13,977 15,256 15,977 17,189 17,925 18,842 No of outpatients 97,966 103,738 108,651 116,917 121,955 128,178 Conversion rate IP/OP 0.14 0.15 0.15 0.15 0.15 0.15 Revenue per occpd . bed (RM’000) 1,339 1,470 1,629 1,668 1,810 1,850 Revenue per inpatient (RM‘000) 7 8 8 8 9 10 Material cost ratio 25% 25% 25% 25% 25% 25% 6.1 OPERATIONAL PROJECTION

37. No SERVICES / FACILITIES 2019 2020 2021 2022 2023 2024 1. Number Of Operating Beds 122 142 142 162 162 182 2. Number Of License Bed 110 142 142 162 162 182 3. No Of Bed Occupied 105 111 117 123 117 131 4. Occupancy Rate 74% 78% 72% 76% 72% 72% 5. Number Of OT 3 3 3 3 3 3 A. Major 2 2 3 3 3 B. Minor - - - - - 6. Number Of Delivery Room 2 2 2 2 2 2 7. Number Of COT 13 13 13 13 13 - 8. Number Of Basinet 7 7 7 7 7 7 9. Number Of Surgery 4,307 4,738 5,212 5,733 6,306 A. Orthopaedic 1,518 1,670 1,837 2,021 2,223 B. Cardiac 2,789 3,068 3,375 3,712 4,083 C. General 216 227 238 250 263 10. Number Of Deliveries 130 137 143 151 158 166 A. Normal 86 90 95 100 105 110 B. Caesarean 2 2 3 3 3 3 6.2 Current Business (services/facilities)

38. 6.2 Current Business (services/facilities) No SERVICES / FACILITIES 2019 2020 2021 2022 2023 2024 11. Number Of Consultants 41 42 43 44 45 46 A. Resident 33 34 35 36 37 38 B. Visiting 2 2 2 2 2 2 C. Seasonal 6 6 6 6 6 6 12. Number Of Staff 473 500 527 554 576 A. Administrative 160 170 179 188 196 B. Nursing 256 270 285 300 311 C. Allied Health 57 60 63 66 69 13. Average Length Of Stay 2.62 2.65 2.65 2.65 2.65 14. Income Per Inpatient Day 3,859 4,059 4,279 4,492 4,735 15. Number Of Outpatients 98,418 103,738 107,108 114,449 128,276 16. Number Of Inpatients 14,473 15,256 16,757 17,837 18,842

39. 6.2 OPERATIONAL STRATEGY *Note: To determine the effective strategy in order to achieve the objective

40. CATEGORY 2019 (current) 2020 2021 2022 2023 2024 2025 Medical Officer 10 10 12 12 13 14 14 14 Clinical 201 230 254 277 296 323 349 361 Clinical support 44 53 61 65 69 73 77 79 Non clinical 127 132 163 168 171 175 176 176 Total 382 425 490 522 549 585 616 630 6.2 MANPOWER PLANNING

41. 6.2 SUCCESSION DEVELOPMENT PLANNING Level of Readiness Medical Officer Nursing Allied Health Support Service Total 2019 Total 2018 Action to be taken R0 1 2 3 1 Send for leadership and development programme to strengthen their skills and knowledge R1 2 15 1 9 27 18 R2 1 1 2 11 Identify their competencies and send for upgrading programme R3 2 Identify their strength and weakness, expose on more training. NA NR NQ GRAND TOTAL 2 16 4 10 32 32

42. 42 7 FINANCIAL PROJECTION

43. Services Total Capex Approved for 2019 (RM’000) Utilized as at Q2 2019 (RM'000) Requirement for Q3 2019 (RM'000) BANDAR BARU KLANG SPECIALIST HOSPITAL SDN BHD 1,794 564 500 7.1 CAPEX 2019

44. Financial Performance 2019 2020 2021 2022 2023 2024 Hospital Income 96,505,031 114,169,900 132,199,096 142,368,258 164,592,832 177,253,820 Consultant Incomes 41,487,161 49,081,224 56,831,910 61,203,595 70,757,859 76,200,771 Gross Operating Revenue 137,992,192 163,251,124 189,031,006 203,571,853 235,350,691 253,454,591 -) App to Consultant (35,837,445) (40,673,102) (49,314,548) (52,383,236) (62,605,438) (64,951,680) -) Cost of Sales 53,458,147 67,617,537 75,804,992 81,583,258 92,257,108 101,689,295 Gross Operating Profit 46,362,945 51,695,463 60,130,846 65,533,922 75,781,132 81,744,524 +) Other Incomes 3,446,991 3,446,991 3,456,991 3,486,141 3,516,748 3,516,748 -) Administrative Expenses 27,113,219 32,108,072 35,307,558 37,259,909 40,449,528 43,735,777 EBITDA 22,696,717 23,034,382 28,280,280 31,760,153 38,848,352 41,525,494 -) Depreciation 5,950,860 6,230,860 6,460,860 6,590,960 7,354,843 7,500,960 -) Financial Expenses 822,336 550,000 300,000 300,000 150,000 150,000 PROFIT BEFORE TAX 15,923,521 16,253,522 21,519,420 24,869,193 31,343,509 33,874,534 GROSS PROFIT MARGIN 34% 32% 32% 32% 32% 32% EBITDA MARGIN 16% 14% 15% 16% 17% 16% NET PROFIT MARGIN 12% 10% 11% 12% 13% 13% 7.1 FINANCIAL PROJECTION (6 YEARS)

45. 7.2 PROJECTED PROFIT & LOSS ACCOUNTS

46.     Budget RM’ 000 Actual   2019 2020 2021 2022 2023 2024   CASHFLOW FROM OPERATIONS Operating revenue               Operating Expenses               Finance & Interest               Taxation               Dividends               Subtotal outflows               Surplus from operation                 Issue of shares MI               Borrowings               Subtotal inflows               Capital expenditures               Investments               Loan Repayments               Subtotal outflows               Surplus/(Deficit) from financing                 Total surplus               Beginning balance               B/F balance               7.2 CASHFLOW STATEMENTS

47. CONCLUSION 47 8

48. 10. CONCLUSIONS GOOD STRATEGY CHARACTERISTICS Compelling tagline ‘All in Fees’ WORK WITH HeART & SOUL Divergence “Be Different, Not Just Better ”