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Extracted from Annual Report 2018

DEAR VALUED SHAREHOLDERS,

ON BEHALF OF THE BOARD OF DIRECTORS OF APM AUTOMOTIVE HOLDINGS BERHAD (“COMPANY”) AND ITS SUBSIDIARIES (“GROUP”), I AM HONOURED TO BE GIVEN THIS OPPORTUNITY TO PRESENT THE COMPANY’S ANNUAL REPORT FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2018.

While the outcome of Malaysia’s 14th General Election made headlines around the world, with many hailing it as an example of democracy at work, the year was also defined by many other highlights. These include the initiative by the current government to “zero-rate” the Goods and Services Tax (“GST”) from June to August 2018, the introduction of corporate liability and the intensified pursuit and prosecution of corrupt practices on a large-scale basis.

The Company also experienced some changes, most notably the retirement of the Company’s long serving Independent Non-Executive Director, namely Dato’ Haji Kamaruddin @ Abas Bin Nordin and the appointment of Dato’ Chan Choy Lin.

OVERALL PERFORMANCE OF THE MALAYSIAN AUTOMOTIVE INDUSTRY FOR 2018

Many had slated 2018 as a challenging year for the Malaysian automotive industry but according to the Malaysia Automotive, Robotics and IoT Institute or MARii, this sector continues to be a significant contributor to the economy in 2018, contributing 4.2% to the country’s gross domestic product (GDP).

By all account, one can say that the local automotive market rallied and rebounded after two years of contraction (source: Malaysia Automotive Association (“MAA”) Press Conference January 2019).

Driven mainly by the zero-rating of the GST and its abolishment thereafter, the Total Industry Volume for 2018, according to MAA registered an increase of 3.8%, i.e. 598,714 units against 576,625 units in 2017.

AWARDS, ACCOLADES AND ACHIEVEMENTS

As a testament to our commitment to excellence, we received several prestigious awards, including the Most Sustainable Brand Award for 2017/2018 by The Brand Laureate, the Best Company to Work in Asia by HR Asia 2018 and numerous performance awards from our Original Equipment Manufacturer (“OEM”) customers in terms of quality, safety, on time delivery, etc.

Rest assured, the Company will continuously strive to better ourselves in delivering outstanding performances, products and services.

HR Asia Awards 2018

SUSTAINABILITY

2017 was our inaugural year for the launch and implementation of the Group’s sustainability framework. The outcome thus far, which can be viewed with more details in the Sustainability Statement of this Annual Report, can be described as modest but we are nevertheless proud of the work and efforts put in by our people in making it work.

GROUP FINANCIAL PERFORMANCE REVIEW

The Group registered a revenue of RM1.3 billion and profit before tax of RM77.4 million for the year, representing an increase of 12.3% and 8.5% respectively, compared to 2017.

The increase in revenue was contributed by all divisions except for Electrical and Heat Exchange Division which experienced lower sales. The Interior and Plastics Division, the largest contributor to the Group’s top-line, at 56% of the Group’s revenue, recorded the highest increase in revenue of RM122.3 million. The higher demand from OEM customers, resulting from the good car sales during the zero-rated GST period, was the key contributor to the increase. In line with the increase in revenue, the Group’s profitability has improved.

The Group’s financial performance and business segments performance review are further detailed in the “Management Discussion and Analysis” section of this Annual Report.

DIVIDENDS

The Board recommends the payment of a final dividend of 7.0 sen per ordinary share for the financial year ended 31 December 2018 (2017: 8.5 sen per ordinary share) for shareholders’ approval at the forthcoming Annual General Meeting. Combined with the earlier interim dividend of 5.0 sen per ordinary share paid on 8 October 2018, the total dividend for the year is 12 sen per ordinary share (2017: 13 sen per ordinary share), if the proposed final dividend is approved by the shareholders. For the financial year ended 31 December 2018, the total dividend distribution is approximately RM23.5 million, representing about 61% of the net profit attributable to the owners of the Group.

LOOKING AHEAD – OUTLOOK FOR THE AUTOMOTIVE INDUSTRY IN 2019

MAA forecasts the outlook for the automotive industry in 2019 to remain challenging. Its findings are largely based on: (i) the uncertainties related to the on-going trade tension between the world’s largest and second largest economies, namely the United States of America (“USA”) and China; (ii) the declining crude oil prices; (iii) lower public investment; and (iv) the persistent weakening of the Malaysian Ringgit. Moderation of consumer spending is also a factor that MAA has considered when it forecasted its outlook for 2019.

Marketing booth at the Company’s 2018 AGM

MAA’s 2019 forecast was expected as the writings have always been on the wall. There will always be hurdles. It is true in life and in business. The environment that the Company operates in is very competitive. The question is what we will do when we encounter an unexpected barrier on our path to success. Let us assure you that we will not allow these hurdles to impede our progress. We will learn from those moments, pause, gather strength, and then forge ahead undaunted.

Our core values have allowed us to build a foundation that can withstand even at the most challenging times. It is robust and resilient. This foundation is what we believe to be one of the cornerstones for our success.

In 2018, we maintained our efforts to enhance productivity, process improvement, manufacturing automation and the intensification of research and development activities. We have also involved ourselves in the alternatives and sustainable automotive business sectors for revenue growth and opportunities. Despite the anticipated challenges ahead, our unwavering pursuit for growth and sustainability will continue.

ACKNOWLEDGEMENTS

On behalf of the Board, I would like to express our heartfelt appreciation to the Management and staff for their effort and contribution to the Group’s progress, as well as our shareholders for their support and confidence. I would also like to thank all our business partners, suppliers and distributors for their commitment in working with us and loyalty over the years. In conclusion, I express my sincere gratitude to my fellow Board members for their valuable advices and guidance in shaping the Group strategies to secure sustainability.

The Group would also like to take this opportunity to thank Dato’ Haji Kamaruddin @ Abas Bin Nordin for his services and to extend a warm welcome to Dato’ Chan Choy Lin.


On behalf of the Board,

Dato' Tan Heng Chew
President