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Quarterly Report For The Financial Period Ended 30 June 2018

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Condensed Consolidated Statements Of Profit Or Loss And Other Comprehensive Income
For The Quarter Ended 30 June 2018 - unaudited

Income Statement Ended 31 March 2017

The above condensed consolidated statements of profit or loss and other comprehensive income should be read in conjunction with the audited financial statements for the year ended 31 December 2017 and the accompanying explanatory notes attached to these interim financial statements.

Condensed Consolidated Statements Of Financial Position
As At 30 June 2018 - unaudited

Balance Sheet Ended 31 March 2017

The above condensed consolidated statements of financial position should be read in conjunction with the audited financial statements for the year ended 31 December 2017 and the accompanying explanatory notes attached to these interim financial statements.

Operating Segments Review

Statement of Financial Position

The financial stability of the Group is reflected in the net assets per share of RM6.23 (2017: RM6.29).

Total assets had decreased marginally from RM1,645.9 million as at 31 December 2017 to RM1,613.9 million as at 30 June 2018. The decrease was mainly due to payment of 2017's final dividend of RM16.6 million on 25 June 2018. Trade Receivable Turnover days had reduced from 69 days to 66 days, due to better collection, from both the Interior and Plastics and Suspension segments. Property, Plant & Equipment decreased by 1.7%, mainly due to the changes in the exchange rate on the assets held Overseas, mainly in Indonesia and Australia.

Prompt payment to suppliers had resulted in total liabilities decreasing by 7.4%. Payables turnover days for June 2018 is 33 days (2017: 41 days).

Capital Expenditure and Cash Flow Position

Despite better performance, cash and cash equivalents had decreased by 10.3% to RM215.7 million from RM240.5 million. This was mainly due to no new drawdown of loan and absence of noncontrolling shareholder's subscription of shares in subsidiary.

Looking ahead, the Group's strong cash and cash equivalents provide flexibility in pursuit of growth and expansion. This is further strengthened with the availability of the Islamic Commercial Papers ("ICPs") Programme and Islamic Medium Term Notes ("IMTNs") of up to RM1.5 billion in nominal value which could be used to fund the capital investment.

Analysis of Performance of All Operating Segments
2Q18 vs. 2Q17

In the current quarter, the Group recorded a revenue of RM295.4 million which shows an increase of 7.2% compared to 2Q17 of RM275.5 million. Similar to previous quarter, Interior and Plastics Division registered a higher demand from certain OEM models.

Despite the increase in revenue, Group's profit before tax dipped slightly by 1.2%. The lower profitability was mainly due to higher material costs and unfavorable foreign exchange on export sales suffered by the Suspension division.

Year-to-date 2018 vs. Year-to-date 2017

On a year to date basis, revenue had increased by 8.1% from RM569.6 million in second half of 2017 to RM615.8 million. The higher revenue was contributed by almost all segments except for Electrical and Head Exchange Division which registered lower revenue by 11.9%. The increase in revenue was mainly contributed by higher demand from OEM customers and export sales.

Correspondingly, the Group's profit before tax increased by 35.0% to RM39.3 million in the sixmonth period as a result of higher demand from OEM customers coupled with favorable products mix that generated higher margin.

Segment Review
Suspension Division

In the 2Q18, revenue for Suspension Division increased by 9.2% to RM52.2 million against RM47.8 million in 2Q17 which was contributed by higher export sales of leaf spring products. Despite the increase in revenue, profit before tax for the quarter under review had reduced to RM1.2 million. The decrease resulted from weaker US Dollar against MYR as most export sales were traded in USD. Moreover, the rise in raw material price had adversely impacted the margin.

Similar to quarterly review, the Suspension Division's recorded revenue of RM108.9 million, an increase of 12.2%. Despite the increase, profit before tax had decreased by 47.6% to RM5.3 million in the first half of 2018. The decrease was due to higher material costs and lower average export price as explained above. Besides that, during the first half of 2017, the reversal of provision for product warranty claim had resulted in higher profitability for that period.

Interior & Plastics Division

The revenue for Interior and Plastics Division had increased by 9.2% from RM178.4 million in 2Q17 to RM194.8 million in the quarter under review. The increase was mainly due to higher demand by OEM customers and an introduction of new model. In line with the increase in sales, profit before tax had increased by 46.5% to RM9.7 million, largely due to favorable products mix that generated higher margin.

Consistent with the above quarterly review, revenue and profit before tax for the six-month period of 2018 had increased from RM374.5 million to RM412.7 million and RM16.9 million to RM26.4 million respectively, which were due to the reasons mentioned above.

Electrical & Heat Exchange Division

Despite the better performance from the other divisions, revenue for Electrical & Heat Exchange division saw a decrease by 13.9% from RM33.7 million to RM29.0 million in the previous corresponding quarter. The decrease was due to lower call-in for two major customers and one of its products had reached end of product lifecycle since October 2017. Despite the decrease, profit before tax had increased slightly to RM0.3 million mainly due to price adjustment (due to foreign exchange fluctuation) for one of its customers.

For year-to-date 2018, revenue for the year had decreased by 11.8% to RM62.8 million from RM71.2 million in the same period last year. The lower revenue was mainly due to lower demand from customers and end of product lifecycle as explained earlier. Profit before tax on the other hand had increased from RM0.6 million to RM3.9 million contributed by favorable price adjustments in 2018. In addition, the division had improved led by the efficiency of its operation including cost control.

Marketing Division

Revenue for the current quarter for marketing division grew by 4.7% or RM2.9 million from RM61.7 million in 2Q17 to RM64.6 million, driven by higher export of leaf spring products to Europe and Pacific. The Sales from the local replacement markets had improved, thanks to the increased logging activities in East Malaysia and launches of new products. With the increase in revenue, profit before tax had increased by 63.2% to RM3.1 million from RM1.9 million in 2Q17. Favorable net foreign exchange gain (realized and unrealized) on the trade receivables/creditors had also contributed an increase to the bottom line.

Consistent with the above, revenue for the six-month period of 2018 had increased from RM119.4 million to RM131.3 million which had been explained earlier. The increase in revenue is the major contributor for the increase in profit before tax by 38.9% to RM6.7 million.

Non-reportable segment, Malaysia

This segment comprises mainly operations relating to the rental of properties in Malaysia, provision of management services, and engineering and research services for companies within the Group. The revenue from these services formed part of inter-segment elimination for the total Group's results (as depicted in Note A9). In addition, this segment also comprises the business of casting, machining and assembly of aluminum parts and components and distribution of motor vehicle to internal and external customers.

For the current quarter, the non-reportable segment, Malaysia's revenue increased significantly by 30.3% to RM20.1 million. The increase was contributed by the higher sale of motor vehicles to consumers due to festivities-driven sales campaigns, new model launches and increased customers demand arising from "tax holiday" sales in Malaysia. Despite the increase in revenue, profit before tax had reduced due to higher administrative expenses and lower billing of service fee within the Group.

Consistent with current quarter, on the year-to-date basis, revenue had increased by 15.8% amounting to RM5.0 million from RM31.3 million in current quarter. The segment recorded a loss of RM1.7 million compared to marginal profit of RM0.1 million in the previous year same period.

Indonesia Operations

Indonesia Operations refers to the manufacture of suspension products such as coil spring and leaf spring and the Group's investment in joint venture and associate in Indonesia.

Revenue for Indonesia operations had increased by 2.7% to RM11.3 million from RM11.0 million in 2Q17. The increase was contributed by the higher sales of leaf spring. Despite improved sales, the associate had incurred loss due to inventory written off and this had offset the contribution gained from the higher sales of leaf spring. Hence, the Indonesia operation's bottom line registered slight improvement with loss of RM3.1 million for the current quarter compared to loss of RM3.2 million in the previous corresponding period.

Consistent with the above-mentioned factors, the revenue in Indonesia Operations for the six months of 2018 increased by 5.1% to RM25.9 million whilst losses had narrowed by RM1.6 million, i.e. 29.5%.

All Other Segments

This business segment refers to our operations in Thailand, Vietnam, Australia, the United States of America, Netherlands and Myanmar ("Operations Outside Malaysia").

The revenue for Operations outside Malaysia had increased by 1.6% for the 2Q18 to RM31.2 million. After relocation of plant in previous year, the Australia operation has normalized and thus, chalked an increase in revenue. In line with higher revenue, the Division has registered profit before tax of RM0.1 million as compared to loss of RM0.2 million in 2Q17.

For year-to-date, revenue decreased by 0.9% to RM60.2 million mainly due to lower off-take from OEM customers in the Vietnam's seat plant as the product is approaching end of product life cycle. Profit before tax had reduced from RM1.7 million to RM1.2 million. The lower profit margin is also caused by higher material price, especially steel bar suffered by Vietnam's leaf spring operation.

Commentary On Prospects and Targets, Strategies and Risk

APM is principally involved in the design, manufacturing, assembly and production of automotive and mobility components. APM's main operation is located in Malaysia but it is also present in various other jurisdictions including United States of America, Netherlands, Australia, Thailand, Vietnam and the Republic of Indonesia.

Changes in policies and regulations as well as economic and currency uncertainty are the primary factors that could affect APM's performance. In this respect, APM has always exercised prudence in its business dealings.

With the trade war between the US and China, re-introduction of Sales and Services Tax particularly toward the last quarter of the year and with stringent hire purchasing rules expected to continue, the automotive business will become more challenging. The Malaysian Automotive Association ("MAA") has revised downward their original forecast for 2018 Total Industry Volume ("TIV") from 590,000 to 585,000 despite the encouraging car sales during the zero Good and Services Tax ("GST') period in June 2018.

APM acknowledges that change is constant and in order to maintain sustainable growth, APM is prepared to embrace change or risk being left behind. Accordingly, APM has to-date embarked on various projects involving the use of alternative energy and disruptive technology. When these projects materialize, they will provide APM with more sustainable revenue streams.

In addition to the above, APM is always on a look out for viable commercial acquisitions. APM is confident it has in place all the necessary measures to mitigate any eventualities.

Although the business environment is anticipated to remain challenging, the Group expects to perform satisfactorily this year.