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KEDAH

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PENANG Cycle & Carriage 8 Bintang is one of 9 the leading PERAK Mercedes-Benz dealer in Malaysia.

Today, Cycle & Carriage Bintang Berhad (“CCB”) and its subsidiaries (“Group”) operate 13 outlets across Peninsular 4 Malaysia providing sales and after-sales SELANGOR 3 5 services for Mercedes-Benz passenger 2 cars and commercial vehicles. In addition, 6 1 the Group provides sales and after-sales services for FUSO trucks. KUALA LUMPUR

SELANGOR

1 PETALING JAYA JOHOR 2 GLENMARIE 3 MUTIARA DAMANSARA 4 BATU CAVES 7

KUALA LUMPUR PENANG

5 TREC KL 10 GEORGETOWN 6 CHERAS 11 BUKIT TENGAH 12 JURU AUTOWORLD JOHOR KEDAH 7 JOHOR BAHRU 13 ALOR SETAR

PERAK

8 IPOH 9 GOPENG Cycle & Carriage Bintang Berhad Annual Report 2018 1

Corporate Profile

Cycle & Carriage began an exceptional journey in 1899 in Kuala Lumpur. As we celebrate our 120th anniversary in 2019, we remain committed to serving those who have made the journey with us. We thank our customers, partners, colleagues and communities, and aspire to create more exceptional journeys together.

Listed on Bursa Malaysia Securities Berhad, Cycle & Carriage Bintang Berhad (“CCB”) and its subsidiaries (“Group”) is today one of the leading Mercedes-Benz dealers in Malaysia with a network of 13 outlets, providing high quality sales and after-sales services for Mercedes-Benz passenger cars and commercial vehicles. In addition, the Group provides sales and after-sales services for FUSO trucks. CCB is a member of the Jardine Cycle & Carriage (“JC&C”) Group.

JC&C is a Singapore-listed company with strategic interests in market-leading companies across Southeast Asia. It has a majority interest in Astra – a diversified business group in Indonesia, an established automotive presence in in Singapore, Malaysia, Myanmar, Indonesia and Vietnam, as well as other diversified interests in key Southeast Asian economies. Together with its subsidiaries and associates, JC&C employs more than 250,000 people across Southeast Asia. JC&C is 75% owned by the Jardine Matheson Group, a diversified business group focused principally on markets in Greater China and Southeast Asia.

Cycle & Carriage. Exceptional Journeys.

Contents

OVERVIEW Independent Auditors’ Report 49 Corporate Profile 1 Consolidated Statement of 53 Financial Highlights 2 Comprehensive Income Corporate Information 3 Consolidated Statement of Financial Position 54 Consolidated Statement of Changes in Equity 55 PERFORMANCE Consolidated Statement of Cash Flows 56 Chairman’s Statement 4 Company Statement of Comprehensive Income 57 Management Discussion and Analysis 5 Company Statement of Financial Position 58 Company Statement of Changes in Equity 59 GOVERNANCE Company Statement of Cash Flows 60 Board of Directors 7 Summary of Significant Accounting Policies 61 Key Management 9 Notes to the Financial Statements 71 Corporate Governance Overview Statement 11 Statement on Risk Management and 19 OTHER INFORMATION Internal Control Five-Year Summary 106 Audit Committee Report 22 Financial Charts 107 Statement of Nominating Committee 24 Corporate Structure 108 Additional Compliance Information 26 Group Properties 109 Statement of Directors' Responsibility for 27 Shareholding Statistics 110 Preparing the Financial Statements Financial Calendar 112 Sustainability Statement 28 Notice of Annual General Meeting 113 Statement Accompanying Notice of 116 STATUTORY FINANCIAL STATEMENTS Annual General Meeting Directors’ Report 45 Statement by Directors 48 Proxy Form Statutory Declaration 48 2 Financial Highlights

l Revenue up by 7% on the back of higher unit sales

l Significant net profit increase due to better trading performance and receipt of insurance compensation

l Dividend received from Mercedes-Benz Malaysia Sdn. Bhd. (“MBM”)

l Daimler AG exercised its call option to buy the Group’s 49% interest in MBM for RM66.0 million

“While the Group’s performance improved in 2018, margins remain challenging. The exercise of the call option by Daimler AG will not impact the Group’s trading operations. However, the Group’s profitability will be negatively impacted following cessation of dividends from MBM upon completion of the transaction.”

Results Year ended 31 December 2018 2017 Change RM’ mil RM’ mil % Revenue 1,513.3 1,420.1 7 Net profit/(loss): (a) Mercedes-Benz operations 11.1 (23.7) 147 (b) Dividend income 11.2 11.2 – 22.3 (12.5) 278 Net profit/(loss) attributable to shareholders 22.3 (12.5) 278

sen sen % Earnings/(Loss) per share 22 (12) 283

As at As at 31.12.2018 31.12.2017 RM’ mil RM’ mil % Shareholders’ funds 293.3 271.0 8

RM RM % Net asset per share 2.91 2.69 8 Cycle & Carriage Bintang Berhad Annual Report 2018 3

Corporate Information As at 28 February 2019

Board of Directors

Chairman Haslam Preeston Tang Saw Hua (Alternate: Chan Tze Choong Eric) Anthony Albert Collingridge Deputy Chairman Rossana Annizah binti Ahmad Rashid (Alternate: Teng Wei Ann Adrian)

Audit Committee

Chairperson Rossana Annizah binti Ahmad Rashid Tang Saw Hua Anthony Albert Collingridge

Remuneration Committee

Chairman Anthony Albert Collingridge Haslam Preeston Tang Saw Hua

Nominating Committee

Chairman Haslam Preeston Anthony Albert Collingridge Tang Saw Hua

Secretaries Administration and Polling Agent Yeap Kok Leong Boardroom Share Registrars Sdn. Bhd. Lim Hooi Mooi (formerly known as Symphony Share Registrars Sdn. Bhd.) Ong Wai Leng Level 6, Symphony House Pusat Dagangan Dana 1, Jalan PJU1A/46 Auditors 47301 Petaling Jaya PricewaterhouseCoopers PLT Selangor Darul Ehsan Chartered Accountants Telephone : 03-7841 8088/8099 Level 10, 1 Sentral, Jalan Rakyat Facsimile : 03-7841 8100 Kuala Lumpur Sentral 50706 Kuala Lumpur Registered Office Unit 30-01, Level 30, Tower A Registrar Vertical Business Suite Tricor Investor & Issuing House Services Avenue 3, Bangsar South Sdn. Bhd. No. 8, Jalan Kerinchi Unit 32-01, Level 32, Tower A 59200 Kuala Lumpur Vertical Business Suite Telephone : 03-2783 9191 Avenue 3, Bangsar South Facsimile : 03-2783 9191 No. 8, Jalan Kerinchi 59200 Kuala Lumpur Website Telephone : 03-2783 9299 www.cyclecarriage.com.my Facsimile : 03-2783 9222 Stock Exchange Listing Bursa Malaysia Securities Berhad (Main Market) Stock Code : 2925 Stock Name : CCB 4 Chairman’s Statement

Overview The Group benefitted from improved trading conditions and the initial impact of the Group’s business-improvement strategy, supported by the receipt of insurance compensation and Mercedes-Benz Malaysia Sdn. Bhd. (“MBM”) dividend income. On 30 November 2018, Daimler AG exercised its call option to buy Cycle & Carriage Bintang Berhad’s (“CCB”) 49% interest in MBM.

Performance Sustainability The Group’s revenue for the year ended 31 This year, CCB is publishing its second Sustainability December 2018 increased by 7% to RM1,513.3 Statement, and its first applying the Global million, with unit sales higher than the previous Reporting Initiative (GRI) Standards. year, benefitting from the zero rate of Goods & Service Tax from June to August 2018. Competition Pursuant to Bursa Malaysia Securities Berhad’s remained intense within the premium car segment, Listing Requirements, companies listed on Main while the shift in the model mix from S-Class to Market and/or ACE Market are required to report on the lower-priced E, GLC and GLA-Classes affected the company’s sustainability performance annually margins. by detailing the management of material economic, environmental and social risks and opportunities. Net profit of RM11.1 million was recorded by Mercedes-Benz operations, compared to a loss of Consideration of non-financial factors contribute RM23.7 million in the previous year, primarily due to the long-term viability of the business. As such, to improved sales performance, and the receipt the Group strives to balance commercial focus with of RM9.8 million in insurance compensation for sustainability factors. damages suffered from floods in Penang, which was recorded as a loss in 2017. Excluding the insurance The Group will continue to develop its approach to compensation, Mercedes-Benz operations registered sustainability during 2019. The Group is committed a net profit of RM1.3 million. The Group’s after-sales to disclosing its performance applying globally division continued to perform satisfactorily. The recognised standards in an open and transparent overall net profit after tax of RM22.3 million included manner, and communicating its progress to dividend income of RM11.2 million from the Group’s stakeholders. investment in MBM, in line with the previous year. People On 30 November 2018, Daimler AG exercised its I would like to thank the Management team and our call option to buy CCB’s 49% interest in MBM for staff, for their dedication and hard work in facing RM66.0 million. The disposal will complete on 30 the challenges of the last few years and achieving November 2019 at the end of a 12-month notice an improved performance in 2018. I also wish to period. Following the exercise of call option by thank our customers, shareholders and business Daimler AG, CCB will cease to be entitled to the partners for their continued support. annual dividend from MBM upon completion of the transaction and payment of dividends due to CCB. Prospects While the Group’s performance improved in 2018, The Group’s net debt increased to RM235.8 million, margins remain challenging. The exercise of the compared to RM216.3 million at the end of 2017, call option by Daimler AG will not impact the mainly due to higher working capital requirements Group’s trading operations. However, the Group’s and showroom renovation costs. profitability will be negatively impacted following cessation of dividends from MBM upon completion In view of the investments being made in upgrading of the transaction. and expanding network infrastructure, the Board is not recommending a dividend for the financial year ended 31 December 2018 (2017: Nil). Haslam Preeston Chairman 26 February 2019 Cycle & Carriage Bintang Berhad Annual Report 2018 5

Management Discussion and Analysis

Company profile Cycle and Carriage Bintang Berhad (“CCB”) l The Group's commitment to provide the highest is listed on the Main Market of Bursa Malaysia level of after-sales service quality was recognised Securities Berhad and is principally involved in the when 50% of the finalists in the 2019 MBM skills retailing and after-sales servicing of Mercedes- competition finals came from CCB. The Group Benz passenger cars and commercial vehicles. It was also awarded the second runner-up position is a leading Mercedes-Benz passenger car dealer in the MBM service excellence award: the third in Malaysia with an extensive network coverage. (3rd) consecutive year with a podium finish. The Group’s flagship body and paint repair centre at Batu Caves has been certified by Daimler AG as l The Group has completed the installation of its among the highest ranking Centres of Competence business improvement methodology on the sales for collision repairs globally. front, which has seen early success in improving retail sales performance. Objectives and Strategy The Group aims to become the partner of choice to l On 30 November 2018, Daimler AG exercised its both customers and its Principal, call option to buy CCB’s 49% interest in MBM for Mercedes-Benz Malaysia Sdn. Bhd. (“MBM”). We RM66.0 million. The disposal will complete on 30 intend to achieve this by focusing on delivering a November 2019 at the end of a 12–month notice customer-centric experience. The Group has period. Following the exercise of the call option embarked on refurbishment and expansion plans to by Daimler AG, CCB will cease to be entitled to support MBM’s network development and upgrade. the annual dividend from MBM upon completion These initiatives are aimed at enhancing the Group’s of the transaction and payment of dividends due ability to capture growth and deliver long term to CCB. sustainable results. 2018 Performance The Malaysian automotive market recorded a Total Industry Volume (“TIV”) of 598,700 units in 2018 compared to 576,600 units in 2017, an increase of 3.8%. The TIV benefitted from the zero rate of Goods and Services Tax (“GST”) from June to August. The passenger vehicle segment saw growth of 3.6%, accounting for 533,200 units compared to 514,700 units in 2017, whilst the commercial vehicle segment grew 5.8% in 2018, registering 65,500 units, compared to 61,900 units in 2017. Mercedes- Benz passenger vehicle car volumes grew by 7% to 13,000 units in 2018, allowing the brand to maintain its number one (1) position in the premium luxury segment.

Highlights The Group’s revenue increased by 7% to RM1.5 l In support of MBM's network development, inbillion for the year ended 31 December 2018, due the second quarter of 2018, the Group extended to a higher number of vehicle units sold. A total its Glenmarie facilities, incorporating an express of 4,800 Mercedes-Benz passenger cars and body and paint facility to manage its growing commercial vehicles were sold, an increase of 9% customer base as well as to enhance the outlet’s over the previous year. The Group’s after-sales offerings. division continued to grow steadily with 80,000 vehicles serviced, an 11% increase in throughput from l The Group began its refurbishment initiatives 2017. in Johor Bahru, Ipoh and Mutiara Damansara in alignment with Daimler AG’s global MAR2020 Key operational indicators corporate identity standards. On completion, the 2018 2017 2016 Group will be the first dealer to have three (3) of the most modern outlets in Malaysia. Vehicles sold (units)* 4,800 4,400 4,900 l The Group has launched the Mercedes-Benz Throughput (units)** 80,000 72,000 62,000 Star Mobile, a new service - the first of its kind in Malaysia and currently available to Cycle & Gross profit margin (%) 9.7% 6.8% 8.8% Carriage Bintang customers in the Klang Valley - No. of employees 847 794 740 which offers customers best-in-class after-sales selected services with minimal wait * Rounded to nearest hundred time, conveniently at their doorstep. ** Rounded to nearest thousand 6 Management Discussion and Analysis

Gross profit increased by 53% to RM146.5 million The Group recorded a profit after tax from its in 2018 and the gross profit margin rose from trading operations of RM11.1 million, compared to a 6.8% to 9.7%. The higher gross profit margin was loss after tax of RM23.7 million in the previous year. due primarily due to better sales performance, Profit after tax attributable to shareholders was benefitting from the zero rate of GST from June to RM22.3 million, after accounting for dividend income August 2018 as customers purchased vehicles ahead received from MBM, compared to a loss after tax of of the implementation of the Sales and Services RM12.5 million in the previous year. Tax (“SST”) in September 2018, as well as various business improvement strategies. Higher throughput Financial Position and Liquidity volumes in after-sales also improved gross profit Property, plant and equipment increased by RM10.0 margins. million to RM168.6 million at the end of 2018, mainly due to capitalised building costs related to the Sales model mix largely remained the same as last improvement of existing showrooms. Trade and year, reflecting a shift to lower-priced models with other receivables increased by 39% to RM128.5 the E, GLC and GLA-Classes accounting for a large million, as more vehicles were sold towards the proportion of the sales volumes. During second half end of the year, while inventories increased RM33.1 of the year, the new E300 model was introduced, million to meet dealer stockholding levels. followed by the C-Class facelift, S450 and the all new A-Class. The Group’s net borrowings increased by RM19.5 million to RM235.8 million at the end of 2018, largely due to higher working capital requirements and showroom renovations in 2018. The Group’s gearing ratio was stable at 80%. The Group’s funding structure and arrangements are regularly reviewed and various factors are carefully considered to maintain an appropriate balance between equity and short-term and long-term debt.

Outlook The Malaysian economy is forecast to grow by 4.9% in 2019, compared to 4.8% in 2018. Despite this, the absence of a clear stimulus for the automotive industry means that the outlook for the vehicle market in 2019 is expected to remain subdued. The Malaysian Automotive Association projects TIV to Other operating income increased by 55% to grow very marginally by 0.2% to 600,000 units in RM35.4 million, mainly due to the receipt of RM12.9 2019, with the rising cost of living remaining a key million insurance compensation for damages concern for consumers. Global and local economic suffered from a flood in Penang in late 2017. environment uncertainties, high household debt Other operating income also comprised of MBM levels, moderation of consumer spending and the dividend income of RM11.2 million, insurance agency continuation of strict lending guidelines for hire commissions, rental income and interest income purchase loans by financial institutions, will impact which was little changed from previous year. car demand.

Selling, distribution and administrative costs increased by 12% to RM144.6 million, mainly due to higher staff costs, marketing and promotion expenses as well as repair, maintenance and depreciation costs.

The Group recorded an operating profit of RM37.3 million, compared to an operating loss of RM10.6 million in the previous year.

Finance costs were 42% higher at RM9.1 million, as a result of the full year impact of the borrowings to finance the acquisition of the Sungai Besi site in November 2017 and higher working capital requirements. Cycle & Carriage Bintang Berhad Annual Report 2018 7

Board of Directors

Haslam Preeston Rossana Annizah Tang Saw Hua binti Ahmad Rashid Chairman Senior Independent Non-Independent Deputy Chairman Non-Executive Director Non-Executive Director Non-Independent Non-Executive Director Chairperson of Audit Committee Chairman of Remuneration Member of Remuneration Committee Member of Audit Committee Committee Member of Nominating Committee Member of Nominating Committee Aged 53, Female, Malaysian Aged 42, Male, Australian Aged 59, Female, Malaysian Ms Rossana was appointed to Mr Preeston was appointed to the the Board on 19 April 2016 as Ms Tang was appointed to the Board on 21 February 2014 as a Non-Independent Non-Executive Board on 17 February 2017 as Non-Independent Non-Executive Director. On the same date, she an Independent Non-Executive Director. On 19 April 2016, he was also appointed as the Deputy Director. On the same date, she was appointed as Chairman Chairman of the Board. was also appointed as a member of the Board, Chairman of the of the Audit, Remuneration and Remuneration Committee and Ms Rossana has Bachelor of Arts Nominating Committees. She was a member of the Nominating in Banking and Finance, Canberra redesignated as the Chairperson of Committee. College of Advance Education the Audit Committee on 21 April (now known as University of 2017 and as Senior Independent Mr Preeston has a Bachelor of Arts Canberra). She was a career Non-Executive Director on 23 April (War Studies) from King’s College professional having held several 2018. London, University of London, and leadership positions in the a Master of Arts (Chinese Studies) telecommunications and banking Ms Tang is a member of both from the School of Oriental and sectors. She previously served in the Malaysia Institute of Certified African Studies, University of various senior management roles Public Accountants and the London. He also completed the with TIME dotCom Berhad, Maxis Malaysian Institute of Accountants. General Management Programme Berhad and RHB Bank Berhad, at Harvard Business School. after beginning her career with Prior to this, she held the position Following an early career in the Citibank Malaysia. of Group Chief Financial Officer British army, he joined Jardine of Destination Resorts and Hotels Matheson in 2001 where he With a combined 30 years Sdn. Bhd., a wholly owned undertook various roles in Jardine of experience, she has broad subsidiary of Khazanah Nasional Wines & Spirits, Jardine Motors, experience in business strategy, Berhad. Apart from that, she Jardine Matheson Limited and identifying sustainable has also held several leadership Hongkong Land, in which time he monetisation models, positions in the automotive was based in Beijing, Macau, Hong understanding customers and and oil and gas industries such Kong and Indonesia. competition, as well as the need as Head of Finance division in for reviewing monetisation models Edaran Otomobil Nasional Berhad, Currently, he holds the position focusing in both revenue and cost General Manager of Finance of Regional Managing Director of managements. division of Proton Edar Sdn. Bhd., Jardine Cycle & Carriage Limited Group Financial Controller of (“JC&C”) and is responsible for Currently, she holds the position the Oil and Gas division in UMW overseeing JC&C’s group’s direct of Country Chairman of Jardine Holdings Bhd. and Senior General motor operations in Singapore, Matheson Group of Companies Manager of Integrated Petroleum Malaysia, Myanmar and Indonesia in Malaysia. Further, she serves Services Sdn. Bhd. (excluding those held by Astra). as member of the Investment Panel and Investment Panel Risk Directorship in other public He is also the Chairman of Cycle Committee of Malaysia’s Employee companies and listed issuers: & Carriage Myanmar and a Provident Fund since 1 June 2015 Nil. commissioner of Tunas Ridean. and as a director of Parkway Trust Further, he sits on the Board of the Management Limited. British Chamber of Commerce in Singapore and was its Chairman in Directorship in other public Indonesia from 2011 to 2014. companies and listed issuers: • IHH Healthcare Berhad Directorship in other public • Celcom Axiata Berhad companies and listed issuers: Nil. 8 Board of Directors

Anthony Albert Collingridge Chan Tze Choong Eric Teng Wei Ann Adrian

Independent Non-Executive Alternate Director to Alternate Director to Rossana Director Haslam Preeston Annizah binti Ahmad Rashid

Chairman of Nominating Aged 49, Male, Singaporean Aged 47, Male, Singaporean Committee Member of Audit Committee Mr Chan was appointed as the Mr Teng was appointed as the Member of Remuneration Alternate Director to Haslam Alternate Director to Rossana Committee Preeston with effect from 24 July Annizah binti Ahmad Rashid on 2014. 23 April 2018. Aged 59, Male, British He holds a Bachelor of Arts He holds a Master of Science in Mr Collingridge was appointed to from the National University of Public Policy and Management the Board on 31 October 2018 as Singapore, and has also completed from the School of Oriental and an Independent Non-Executive the Executive Programme of the African Studies, University of Director. On the same date, he London Business School and IMD London; a Master of Business was appointed as the Chairman Business School of Management. Administration from University of the Nominating Committee as of Illinois at Urbana-Champaign, well as a member of Audit and He joined Cycle & Carriage USA; and a Bachelor of Science, Remuneration Committees. Industries in 1995 and served as summa cum laude, from Creighton its Chief Operating Officer prior University, USA. He also has Currently, he also serves as an to his current appointment. With earned the Executive Diploma in Independent Non-Executive over 20 years of experience in the Directorship from the Singapore Director of Prudential Assurance automotive industry, he now leads Institute of Directors & Singapore Malaysia Berhad and holds the JC&C’s direct motor operations Management University. position of Managing Director of in Singapore in his capacity as Delta Gate Solutions Sdn. Bhd. the Managing Director of Cycle & He is a member of the Association He is also a Board Member of Carriage Singapore. of Corporate Treasurers, UK the British Malaysian Chamber and Association for Financial of Commerce and a Member of Directorship in other public Professionals, USA. the Asian Advisory Council for companies and listed issuers: Nottingham University. Nil. He joined Jardine Matheson in 2010 in Hong Kong as Group Prior to this, he served United Treasurer. He was previously Kingdom Government for from Alvarez & Marsal, where almost 39 years from November he had been a senior director in 1978, holding various positions the Financial Industry Advisory in Department of Energy, Services division in London. Prior Department of Trade & Industry to that, he worked with ABN and Department of International AMRO and Citibank in London, Trade. His last position with United Shanghai, Tokyo and New York. Kingdom Government was as Director of Trade and Investment He is the Group Finance at the British High Commission in Director of JC&C since 1 April Kuala Lumpur. 2016. He is also a director of Astra International and Siam Directorship in other public City Cement and Refrigeration companies and listed issuers: Electrical Engineering Corporation. • Prudential Assurance Malaysia Berhad Directorship in other public companies and listed issuers: Nil.

None of the Directors (including the Alternate Directors) have any family relationship with any Directors and/or major shareholders of the Company, any conflict of interest with the Company, any convictions for offences (other than traffic offences, if any) within the past 5 years, and public sanction or penalty by relevant regulatory bodies during the financial year ended 31 December 2018. Cycle & Carriage Bintang Berhad Annual Report 2018 9

Key Management

Wilfrid Foo Tsu-Jin Wan Qian-Wen Kumaraguru Nadaysen

Chief Executive Officer Chief Financial Officer Senior Advisor

Aged 41, Male, Singaporean Aged 39, Female, Singaporean Aged 58, Male, Malaysian

Mr Foo joined the Company as its Ms Wan joined the Company as Mr Nadaysen was appointed as the Chief Executive Officer on 17 May its Chief Financial Officer on Interim Chief Financial Officer of 2017. 1 November 2016. the Company in the absence of Ms Wan during her approved leave of Mr Foo holds an Executive Masters Ms Wan holds a Bachelor of absence. With effect from of Business Administration from Accountancy degree from 1 March 2019, he serves as a Rutgers State University of New Nanyang Technological University, Senior Advisor to the Company. Jersey and a Bachelor of Business Singapore and is a member of the degree from Monash University, Singapore Institute of Chartered Mr Nadaysen holds a Master of Melbourne and has graduated Accountants. Business Administration, Strategic from the Advanced Management Management from the University Programme from INSEAD. Prior to joining the Company, of Canterbury, New Zealand and she was with Jardine Cycle & is a member of the Chartered Prior to joining the Company, he Carriage Limited (“JC&C”) holding Institute of Management was the Business Executive Officer the position of corporate finance Accountants (UK) and the at a multinational FMCG company manager. Before joining JC&C, Malaysian Institute of Accountants. and has spent approximately 9 she has 14 years of experience in years in that company where he the accountancy and finance field Prior to joining the Company, he held several senior roles locally, where she was based in Australia, spent more than 14 years with regionally and globally, in strategy, Singapore, United Kingdom and the Astra International Group brand management, marketing, Malaysia. and its subsidiaries in Indonesia sales, food technology, account where he served in senior roles management and global change Directorship in other public as Finance Director and Chief of projects where he was based in companies and listed issuers: Group Internal Audit and Risk Singapore, Switzerland, China and Nil. Management. He has been with Malaysia. the Jardine Cycle and Carriage Group since 1997. Directorship in other public companies and listed issuers: Directorship in other public Nil. companies and listed issuers: Nil. 10 Key Management

Thomas Tok Chek Kuan Andrew Lim Goo Tiong Kwan

General Manager, General Manager, General Manager, Head - Sales Head - After-sales Head - Commercial Vehicles

Aged 47, Male, Singaporean Aged 55, Male, Singaporean Aged 36, Male, Malaysian

Mr Tok joined the Company as its Mr Lim joined the Company as Mr Goo joined the Company General Manager of Sales division its General Manager in the After- as its General Manager in the in January 2017. sales division Company in October Commercial Vehicles division in 2016. June 2017. Mr Tok holds a Bachelor of Science from the University of London. Mr Lim holds a Degree in Business Mr Goo holds a Bachelor of Arts and Management from the in Business Administration from Prior to joining the Company, Mr University of Bradford. University of East London and a Tok was with JC&C, Singapore Master of Business from Charles since the year 2000 where he He started off his career with Cycle Sturt University. has held several appointments in & Carriage Industries, Singapore sales management, sales support where he held various roles with With 9 years in the commercial functions, leasing business and its After-sales division for 28 years. vehicles industry, he has held new car logistics operations for all In 2010, he moved to China where various roles in established franchises. he held the position of General automotive companies. Prior to Manager of a luxury automobile his current appointment, he held Throughout his career, he also company. the position of Sales Director, spent a number of years with commercial vehicles with Volvo Zung Fu, China as its dealership Directorship in other public Malaysia. General Manager. companies and listed issuers: Nil. Directorship in other public Directorship in other public companies and listed issuers: companies and listed issuers: Nil. Nil.

None of the Key Management personnel have any share in the Company or its subsidiaries, family relationship with any Directors and/or major shareholders of the Company, any conflict of interest with the Company, any convictions for offences (other than traffic offences, if any) within the past 5 years, and public sanction or penalty by relevant regulatory bodies during the financial year ended 31 December 2018. Cycle & Carriage Bintang Berhad Annual Report 2018 11

Corporate Governance Overview Statement

The Board of Directors (“Board”) fully supports (iv) overseeing the conduct of the Group’s the recommendations of the Malaysian Code on business to evaluate whether the business Corporate Governance 2017 (“MCCG 2017”) which is being properly managed; sets out the broad principles, intended outcomes, practices and guidance to cultivate a corporate (v) ensuring that the Group has an culture anchored on accountability, transparency appropriate business risk management and sustainability. process, including an adequate control environment which covers the internal The Board remains committed to applying the control systems and management recommendations of MCCG 2017 to ensure that information systems; good corporate governance is practised and instilled throughout the Group to effectively discharge its (vi) ensuring that there is in place an responsibilities to ensure sustainable growth as appropriate succession plan for members well as protect and enhance shareholders’ value. of the Board and Senior Management; The Group’s corporate governance practices are and periodically reviewed to ensure its relevance and effectiveness. Where there might be departures (vii) ensuring that there is in place an from the principles set out in MCCG 2017, efforts appropriate investor relations and will be made to review these practices with a view communications policy which to compliance. encourages shareholders’ participation at general meetings and promotes This Corporate Governance Overview Statement effective communication and proactive sets out generally the Group’s compliance with engagements with shareholders. the practices of MCCG 2017 for the financial year ended 31 December 2018. This statement is The Jardine Group adopts an annual staff prepared in compliance with the Main Market Listing planning process. In the context of the Requirements (“MMLR”) of Bursa Malaysia Securities Company, the discussion takes place at Jardine Berhad (“BMSB”). For full details in relation to the Cycle & Carriage Group level, in consultation compliance and/or departure from each practice set with Jardine Cycle & Carriage Regional Director out in MCCG 2017 during the financial year ended – Human Resources. The Chief Executive 31 December 2018, please refer to the Corporate Officer (“CEO”) of the Company and Regional Governance Report made available on Director – Human Resources will evaluate www.cyclecarriage.com.my. the bench-strength of core and/or mission- critical positions and identify and review the A. BOARD LEADERSHIP AND EFFECTIVENESS flight risk and development opportunities of the Company’s key management personnel The Board of Directors during the annual assessment process. Such The Board has overall responsibility stafffor planning process is done in tandem with the strategic direction of the Group while the business strategy and imperatives over a exercising oversight on the Management. midterm period, with tactical plans reviewed The Board meets once quarterly to review annually for relevance. corporate strategies, operations and performance of business units within the Board Committees Group. All Board members bring their The Board has established and delegated independent judgement to bear on issues certain specific responsibilities to three of strategy, performance, resources and (3) Board Committees, namely the Audit, standards of conduct. Remuneration and Nominating Committees. These Board Committees have the authority Having regard to their fiduciary responsibilitiesto deal with particular issues under its and obligations, the Board will steer the purview and will report to the Board with their direction and supervise the Management of the recommendations, if any. Nonetheless, the business and affairs of the Group including: ultimate responsibility for the final decision on the recommendations still lies with the entire (i) ensuring that the Group’s goals and Board. objectives are clearly established and that a strategic plan which promotes Board Charter and Code of Conduct sustainability is in place to achieve them; The Company has in place a Board Charter that sets out, among others, the (ii) establishing policies for strengthening responsibilities, authorities, procedures, the performance of the Group including evaluations and structures of the Board and ensuring that Management is proactively Board Committees, as well as the relationships seeking to build the business; of the Board with the Company’s Management and shareholders. (iii) adopting performance measures to monitor implementation and performance of the strategies, policies, plans and legal and fiduciary obligations that affect the business; 12 Corporate Governance Overview Statement

In addition, Jardine Matheson Group * has Anthony a Albert Collingridge was appointed as code of conduct (“CoC”) which establishes Independent Non-Executive Director with effect the standards and values which the Jardine from 31 October 2018. Matheson Group wishes to uphold in operating ** Tan Sri Dato’ Sulaiman bin Sujak retired as a all of its businesses to ensure compliance with Senior Independent Non-Executive Director upon local laws and regulations. The Group treats conclusion of the Company’s Annual General compliance with the CoC as essential. All Meeting (“AGM”) on 23 April 2018. members of the Board and employees of the Group are required to read, understand and *** Teng Wei Ann Adrian resigned as a Non- comply with the CoC, which is communicated Independent Non-Executive Director upon via the Company’s workplace portal. Failure of conclusion of the Company’s AGM on 23 April which can result in serious consequences being 2018 and was appointed as the Alternate Director to Rossana Annizah binti Ahmad Rashid taken against the individual concerned. on the same day.

The Board Charter and CoC can ****be Datuk Syedaccessed Zaid bin Syed Jaffar Albar joined on the Company’s website at as an Independent Non-Executive Director on www.cyclecarriage.com.my. 9 March 2018 but subsequently resigned on 8 October 2018 to take up appointment as the Board Meetings Chairman of Securities Commission Malaysia with During the financial year ended 31 effectDecember from 1 November 2018. 2018, four (4) Board meetings were held. The record of attendance of the Board members is Based on the above, it is noted that during set out below: the financial year ended 31 December 2018, all members of the Board have complied with the 50% attendance requirement in respect No. of of Board meetings specified in paragraph meetings 15.05(3)(c) of the MMLR. attended/ No. of Apart from the aforesaid four (4) Board meetings meetings, the Board have also discussed, held deliberated and approved certain matters whilst in requiring its approval by way of written Directors Designation office resolutions, where necessary. Haslam Chairman and 4/4 Preeston Non-Independent Board Balance Non-Executive As at 31 December 2018, the Board had four Director (4) members, comprising one (1) Senior Independent Non-Executive Director, one (1) Rossana Deputy Chairman 3/4 Independent Non-Executive Director and two Annizah binti Non-Independent (2) Non-Independent Non-Executive Directors. Ahmad Rashid Non-Executive Together, the Directors bring a wide range of Director business and financial experiences relevant to Tang Saw Hua Senior 4/4 the strategic direction and objectives of the Independent Group. A brief description of each Director’s Non-Executive background is presented in pages 7 to 8 of this Director Annual Report. Anthony Independent 1/1 The current composition of the Board Albert Non-Executive comprising of two (2) female Directors, Collingridge* Director both of whom are Malaysians and two (2) Tan Sri Dato’ Senior 2/2 male Directors, both of whom are non- Sulaiman bin Independent Malaysians also reflects the gender and cultural Sujak** Non-Executive background diversity as recommended by Director MCCG 2017. The Board is committed to retain Teng Wei Ann Non-Independent 2/2 such diversity in the event the Board increases Adrian*** Non-Executive in its size. Director Datuk Syed Independent 2/2 Zaid bin Non-Executive Syed Jaffar Director Albar**** Cycle & Carriage Bintang Berhad Annual Report 2018 13

Corporate Governance Overview Statement

In compliance with MCCG 2017, theOn positions8 October 2018, Datuk Syed Zaid bin of Chairman and CEO of the Company are Syed Jaffar Albar resigned from the Board to held by different individuals. A clear division of take up appointment as the Chairman of the responsibility between the Chairman and the Securities Commission Malaysia effective from CEO exists to promote accountability as well 1 November 2018. The Board subsequently as to ensure a balance of power and authority. appointed Mr Anthony Albert Collingridge as Formal position descriptions for the Chairman an Independent Non-Executive Director of and the CEO outlining their respective roles the Company on 31 October 2018 in place of and responsibilities are set out in the Board Datuk Syed Zaid bin Syed Jaffar Albar. He was Charter. In the event that the Group does not also appointed as the new Chairman of the have a CEO, such other person appointed Nominating Committee as well as a member by the Board shall have overall charge of the of the Audit Committee and the Remuneration Group to the extent determined by the Board. Committee on the even date. The division of responsibilities between the Chairman and the CEO is reviewed annually by Access to Advice and Information the Nominating Committee. The Management is duty bound to furnish the Board with all material information for the The composition of the Board is Boardfurther to discharge its responsibilities. In order balanced by the presence of Independent Non- for the Board to function effectively, matters Executive Directors. Although all Directors for the Board’s consideration are presented to have equal responsibility for the Group’s all the Directors with sufficient time to enable business directions and operations, the role of the Directors to examine the issues and to these Independent Non-Executive Directors obtain further explanation, where necessary. is particularly important in ensuring that the strategies proposed by the Management The Management endeavours to comply with are fully discussed and evaluated, having Guidance 1.5 of MCCG 2017 which stipulates considered the long term interests of all that Board papers should be circulated for interested parties, including shareholders, the Board’s review at least five (5) business employees, customers, suppliers and the days prior to any scheduled Board meeting. community as a whole. The Board papers include, among others, the following: Practice 4.1 of MCCG 2017 states l thatMinutes at of previousleast Board meeting half of the Board should comprise Independent l Minutes of meetings of Committees of the Directors. During the financial year ended 31 Board December 2018, half of the Board was made l Directors’ Written Resolutions up of Independent Directors in accordance l Monthly performance report of the Group with the best practice advocated under l Operational matters Practice 4.1 of MCCG 2017. The Board will l Financial matters continue to monitor and review the Board l Funding requirements size and composition as may be needed to l Business strategy matters strengthen the Board composition and the l Project papers Company’s standards of corporate governance. l Schedule of Board and Committee meetings Practice 4.2 of MCCG 2017 states that the tenure of an Independent Director should not There is a schedule of matters reserved exceed a cumulative term of nine (9) years. specifically for the Board’s decision, including Upon completion of the nine (9) years, an the approval of corporate plans and budgets, Independent Director may continue to serve acquisition and disposal of major assets, major on the Board as a Non-Independent Director. investments, changes to the Management If the Board intends to retain an Independent and control structure of the Group and issues Director beyond nine (9) years, annual in respect of key policies, procedures and shareholders’ approval will be sought for the authority limits. retention. Given that Tan Sri Dato’ Sulaiman bin Sujak has served on the Board for more The Board has also approved a procedure for than nine (9) years, he retired from the Board Directors, whether as a full Board or in their after the conclusion of the 50th AGM of the individual capacities, to take independent Company held on 23 April 2018. advice, where necessary, at the Group’s expense in furtherance of their duties. Following Tan Sri Dato’ Sulaiman bin Sujak’s retirement, Ms Tang Saw Hua was appointed as the new Senior Independent Director. Datuk Syed Zaid bin Syed Jaffar Albar was appointed as the new Chairman of the Nominating Committee as well as a member of the Audit Committee and the Remuneration Committee in place of Tan Sri Dato’ Sulaiman bin Sujak. 14 Corporate Governance Overview Statement

The Company has appointed three While(3) qualifiedthe Board does not have an established named secretaries for the Company and its policy (or targets or measures), it gives subsidiaries. All secretaries are members of consideration to each candidate’s gender, Malaysian Institute of Chartered Secretaries ethnicity, age and nationality, in addition and Administrators (“MAICSA”) and they to each candidate’s skills, experience and play a supportive role to the Board and core competencies, as well as what each their committees by advising the Board on quality brings to the Board in deciding corporate governance matters, ensuring Board membership. The Board is committed adherence to the Board Charter, policies and to diversity and has an equal opportunity procedures from time to time. policy where there are no barriers by reason of a candidate’s gender, ethnicity, age and All Directors have access to the nationality.advice Asand at 31 December 2018, the Board services of the Company Secretaries including had two (2) female Directors making 50% of the following: the Board.

(i) advise the Board and the Management onThe Nominating Committee reviews each corporate governance issues; proposal for the appointment of a new member to the Board. The candidate will be (ii) ensure compliance of listing and related assessed for his or her suitability and potential statutory obligations under Companies contribution to the Board, taking into account Act 2016 (“Act”), which came into effect the existing competencies, knowledge and on 31 January 2017, MMLR of BMSB and experience of the other Board members. After Capital Market and Services Act 2007; considering factors such as the candidate’s professional qualifications, business experience (iii) ensure that Board procedures follow the and capabilities, and cultural background, applicable rules and regulations and that suitable candidates will be nominated to the such procedures for the conduct of the Board for approval. The Board is encouraged affairs of the Board are complied with; to utilise independent sources to identify suitable qualified candidates. For future (iv) attend the Board, Board Committee and appointments to the Board, the Group general meetings, and ensure the proper will consider sourcing suitable candidates recording of minutes of meetings; from directors’ registry and professional associations. (v) ensure proper upkeep of statutory registers and records of the Company; A summary of the activities of the Nominating and Committee in the discharge of its duties during the financial year ended 31 December 2018 (vi) assist the Chairman in the preparation for are set out in the Statement of Nominating and conduct of meetings. Committee in pages 24 to 25 of the Annual Report. Appointments to the Board The MCCG 2017 endorses, as good Policy practice, on External Appointments a formal procedure for appointments to the The Group recognises that its Directors may Board, with a Nominating Committee making be invited to become Directors of other recommendations to the Board. The MCCG companies and that exposure to other 2017, however, states that this procedure organisations can broaden the experience and may be performed by the Board as a whole, knowledge of its Directors which will benefit although, as a matter of best practice, it the Group. Directors are therefore at liberty to recommends that this responsibility be accept other board appointments so long as delegated to a committee. such appointments are not in conflict with the business of the Group and do not adversely The Board has adopted the best affectpractice the Directors’ and performance as a member the Nominating Committee is delegated with of the Board. All such appointments must first the responsibility to evaluate candidates and be discussed with the Chairman of the Board recommend new appointments to the Board. before being accepted.

The Board takes note of Practice In 4.5 addition,of MCCGthe Directors are required to 2017 pertaining to the need to establish a disclose and update their directorships and policy formalising the approach to boardroom shareholdings in other companies as and when diversity and to set targets and measures for necessary. The Board confirms that none of the the adoption of the said recommendation. Directors hold directorships in more than five (5) listed issuers in Malaysia. Currently, only Rossana Annizah binti Ahmad Rashid holds directorships in other listed issuers in Malaysia. Cycle & Carriage Bintang Berhad Annual Report 2018 15

Corporate Governance Overview Statement

Directors’ Training l Silicon Valley trip: Technology innovations As an integral part of the process that ofcould impactappointing Jardines businesses new Directors, the Nominating Committee and/or create opportunities. ensures that there is an orientation programme l SMU-SID Executive Certificate in for new Board members to familiarise Directorship (Module 2 & Module 4) themselves with the Company’s businesses, l Sustainable Investment Forum their roles and responsibilities. From time to time, Directors also receive further training The Board confirms that all Directors attended on developments which may have a bearing trainings during the financial year ended 31 on their duties and contribution to the December 2018. Board, from professional bodies, regulatory institutions and corporations. Re-election and Appointment of Directors In accordance with the Company’s In their effort to keep abreast withConstitution, the all newchanges Directors who are in the industry, legislation and regulations appointed by the Board are subject to affecting the Company, the Directors have re-election by shareholders at the AGM in the course of the financial year ended 31 following their appointment. The Company’s December 2018 attended various programmes Constitution also provides that at least covering areas such as financial reporting, one-third of the remaining Directors are economy, governance and strategic planning subject to re-election by rotation at each which included the following: AGM and all Directors are to offer themselves l Acibadem Maslak Hospital Tour for re-election once every three (3) years. l Advanced Leadership Program, Hong Kong The Nominating Committee also makes l Advanced Leadership Program, London recommendations to the Board on the l Advanced Leadership Workshop, Hong re-election of the Directors. Kong l Asian Retail Leaders Conference, Singapore In accordance with the Company’s l Bursa Malaysia Independent Directors Constitution, Rossana Annizah binti Ahmad Programme “The Essence of Independence” Rashid retires by rotation and Anthony Albert l CCS Management Conference – Digital Collingridge, who was appointed as a Director solutions in transforming traditional during the financial year ended 31 December business by Alibaba.com, Hangzhou, China 2018, is required to retire at the forthcoming l Daimler Forum for IT, Jakarta, Indonesia AGM. Both of them are eligible and have l Daimler Product Forum, Stuttgart Germany offered themselves for re-election at the l Digitization Trends in Automotive Sector forthcoming AGM. l Direct Motor Interests Senior Management Conference, Singapore B. REMUNERATION l DMI Conference & Strategy Workshop in Singapore The Company is guided by the practices and l DMI Conference & Strategy, Digital guidance as recommended by MCCG 2017 Learning & Startup Autobahn Workshop, to determine the remuneration for Directors. Retail & Design-Thinking by Consulus in In the case of Non-Executive Directors, the Singapore level of remuneration reflects the level of l Effective Boards in a VUCA World responsibilities undertaken by such Directors. l EPF Global Private Equity Summit 2018 Remuneration packages of the Management l EPF International Social Security are structured so as to link rewards to the Conference achievement of corporate and individual l EU-ASEAN Business Briefing - Investing performance. in Myanmar & the new Wholesale & Retail Regulations, Singapore Remuneration Procedure l Gleneagles Hong Kong Hospital Tour The Board agrees that a well-designed l GTE 2018 Training in Ibiza, Spain remuneration policy is critical to attract, retain l Harvard Business School - Professor Karim and motivate Directors and the Management. Lakhani: A Case Discussion on Google Car, The Remuneration Committee recommends Singapore to the Board the framework of executive l IHH Quality Summit remuneration and its cost, including the l Induction training at CCB remuneration package for the CEO. The l Jardine Cycle & Carriage Limited/Direct Remuneration Committee also recommends Motor Interests’ Finance Conference the framework of fees payable to Non- l Khazanah Megatrends Forum Executive Directors. The Remuneration l Kia Distributors’ Convention, Seoul, Korea Committee may draw on the expertise of l Linkedln for Leaders Workshop in consultants before making recommendations Singapore to the Board. The final decision on any l Media Training, Singapore remuneration package offered to the CEO and l MSSG Reporting and CG Guidelines the fees payable to Non-Executive Directors is l Product Forum 2018 for Mercedes-Benz the responsibility of the entire Board. Passenger Car, Stuttgart, Germany 16 Corporate Governance Overview Statement

Remuneration Committee (iii) Bonus Scheme As at 31 December 2018, the membersThe ofGroup the operates a bonus scheme Remuneration Committee are: for all employees, including the CEO. l Haslam Preeston – Chairman The qualification and eligibility for the (Non-Independent Non-Executive Director) scheme is linked to the performance of l Anthony Albert Collingridge (Independent the Group’s business activities and an Non-Executive Director) assessment of the employee’s individual l Tang Saw Hua (Senior Independent performance and contribution. The Non-Executive Director) CEO’s bonus is dependent on the level of profit achieved for the Group’s business The Remuneration Committee met twice activities against targets, together with an during the financial year ended 31 December assessment of his performance during the 2018 and details of attendance of members of year. Bonus payable to him is reviewed the Remuneration Committee are as follows: by the Remuneration Committee and approved by the Board. No. of meetings (iv) Benefits in Kind attended/ Other customary benefits (such as car, No. of driver, club membership, allowances) are meetings made available as appropriate. held during the (v) Employees Provident Fund term as a Contributions are made to the Employees Directors member Provident Fund, the national mandatory defined contribution plan. The rate of Haslam Preeston (Chairman) 2/2 contribution is above the mandatory Anthony Albert Collingridge* 1/1 requirement in accordance with the Tang Saw Hua 2/2 Group’s employment scheme and it applies to all executive employees. Tan Sri Dato’ Sulaiman bin Sujak** 1/1 (vi) Service Contract * Anthony Albert Collingridge was appointed There is currently no service contract with as a member of the Board and Remuneration Committee on 31 October 2018. any Director.

** Tan Sri Dato’ Sulaiman bin Sujak retired at the Directors’ Remuneration conclusion of the AGM held on 23 April 2018. Directors’ fees for the Non-Executive Directors for the financial year ended 31 December 2018 Remuneration Structure are shown in the following table: The remuneration structure of Directors and the Management is as follows: Directors’ fees (i) Basic Salary Directors RM’000 The Remuneration Committee recommends the annual basic salary Haslam Preeston¹ 83 of the CEO after having considered his Rossana Annizah binti Ahmad 52 performance. In the evaluation process, Rashid² consideration is given to the salary scales for similar jobs in the industry. Tang Saw Hua 79 Anthony Albert Collingridge 15 (ii) Directors’ Fees Directors’ fees are only payable Tanto Sri Dato’Non- Sulaiman bin Sujak* 28 Executive Directors. The Remuneration Teng Wei Ann Adrian¹^ 21 Committee recommends the framework Datuk Syed Zaid bin Syed Jaffar 36 of Directors’ fees to the Board. The fees Albar** structure is determined after a study of comparable organisations’ practices or Total 314 available professional studies/surveys as well as the level of responsibilities ¹ Director’s fees paid to Jardine Cycle & Carriage involved. Limited.

² Director’s fees paid to Jardine Matheson Non-Executive Directors receive annual (Malaysia) Sdn. Bhd. fixed fees based on the tenure of directorship and attendance fees based ^ Teng Wei Ann Adrian resigned at the conclusion on attendances at Board and Board of the AGM held on 23 April 2018. He is currently Committee meetings. The fees are paid the Alternate Director to Rossana Annizah binti quarterly in arrears. Ahmad Rashid. Cycle & Carriage Bintang Berhad Annual Report 2018 17

Corporate Governance Overview Statement

* Tan Sri Dato’ Sulaiman bin Sujak retired at theItems of special business included in the conclusion of the AGM held on 23 April 2018. notice of AGM will be accompanied by a full explanation of the effects of a proposed ** Datuk Syed Zaid bin Syed Jaffar Albar resigned resolution. Separate resolutions are proposed on 8 October 2018 to take up appointment as the Chairman of the Securities Commission for separate issues at the meeting and the Malaysia effective from 1 November 2018. Chairman declares the number of proxy votes received both for and against each separate C. INTEGRITY IN CORPORATE REPORTING resolution, where appropriate. AND MEANINGFUL RELATIONSHIP WITH STAKEHOLDERS Further, the Company endeavours to comply with Practice 12.1 of MCCG 2017 which The Board recognises the importance recommendsof that notice of an AGM should maintaining an effective communications be given to the shareholders at least 28 days policy that enables both the Board and the prior to the meeting. In 2018, the notice of Management to communicate effectively with the AGM and annual report were released and investors, stakeholders and the general public. announced a month before the date of AGM. The Board acknowledges that transparent and regular engagement and communication Poll Voting assist investors, both existing and potential, In line with the amendments to the MMLR of in making informed investment decisions BMSB, the Company implemented electronic while also assisting the Company to address poll voting system for all resolutions tabled stakeholders’ expectations. at the AGM held during the financial year ended 31 December 2018 and appointed an Dialogue between the Company and independent scrutineer to validate the votes Investors cast at the AGM. Voting results were provided The Company adheres strictly to theto shareholdersdisclosure on the same day at the AGM requirements under the MMLR of BMSB. and announced via Bursa LINK thereafter. Financial results of the Group are announced quarterly to BMSB via Bursa LINK after being D. ACCOUNTABILITY AND AUDIT approved by the Board. Material transactions and events which occurred are also Audit Committee announced through press releases and timely As at 31 December 2018, the members of the announcements made to BMSB. Audit Committee were: l Tang Saw Hua – Chairperson (Senior Investor information regarding the Company,Independent Non-Executive Director) the Annual Report, Board Charter and Code of l Rossana Annizah binti Ahmad Rashid Conduct can be accessed on the Company’s (Non-Independent Non-Executive Director) website at www.cyclecarriage.com.my. l Anthony Albert Collingridge (Independent The Management Discussion and Analysis Non-Executive Director) contained within the Annual Report provides an overview of the Group’s performance, In line with Practice 8.1 of MCCG 2017, the operations and prospects as well as factors Chairperson of the Audit Committee is not the which impact the Group’s performance and Chairman of the Board and comprises solely shareholders’ value. Non-Executive Directors. The Board takes note of the recommendation for all members AGM of the Audit Committee to be Independent At each AGM, the Board presents Directors.to Asthe at 31 December 2018, the Board shareholders the performance of the business comprised of four (4) members, of which two for the most recently concluded financial year. (2) were Independent Directors and both the To ensure that its shareholders are able to Independent Directors were members of the make informed voting decisions at the AGM Audit Committee. and to provide opportunity for shareholders to engage each Director, the Company ensures Apart from the requirement to consist solely of that the Chairman, the Directors and Senior Independent Directors, the composition of the Management team attend the meeting and are Audit Committee has complied with all other available to provide meaningful response to requirements set out in Paragraph 5.09 of shareholders’ questions raised during the AGM. Chapter 15 of the MMLR of BMSB.

Four (4) Audit Committee meetings were held during the financial year ended 31 December 2018 and details of attendance of members of the Audit Committee are as follows: 18 Corporate Governance Overview Statement

No. of Risk Management and Internal Control The Board acknowledges its responsibility meetings for the Group’s system of internal controls attended/ which covers financial controls, operational No. of and compliance controls as well as risk meetings management. held during the The Audit Committee reviews the overall term as a scope of the Group’s internal audit and Directors member oversees the Company’s risk management. Tang Saw Hua (Chairperson) 4/4 The Audit Committee meets with the Group’s Internal Auditors to discuss the results of Rossana Annizah binti Ahmad 1/2 their examinations and their evaluation of Rashid^ the system of risk management and internal Anthony Albert Collingridge* 1/1 controls of the Company and its subsidiaries.

Teng Wei Ann Adrian** 2/2 The Statement on Risk Management and Tan Sri Dato’ Sulaiman bin 2/2 Internal Control set out in pages 19 to 21 of Sujak*** this Annual Report provides an overview of the risk management strategies and state of Datuk Syed Zaid bin Syed Jaffar 1/1 internal controls adopted by the Group. Albar#

^ Rossana Annizah binti Ahmad Rashid was Whistle Blowing Policy appointed as a member of the Audit Committee The Group has in place a Whistle Blowing at the conclusion of the AGM held on 23 April Policy designed to create a positive 2018. environment in which employees can raise genuine concerns without fear of recrimination * Anthony Albert Collingridge was appointed as aand enable prompt corrective action to be member of the Board and Audit Committee on taken where appropriate. The Whistle Blowing 31 October 2018. Policy can be accessed on the Company’s website at www.cyclecarriage.com.my. ** Teng Wei Ann Adrian resigned as a member of the Audit Committee at the conclusion of the Relationship with External Auditors AGM held on 23 April 2018. Key features underlying the relationship of the Audit Committee with External Auditors *** Tan Sri Dato’ Sulaiman bin Sujak retired as a member of the Audit Committee at the are included in the Audit Committee’s terms conclusion of the AGM held on 23 April 2018. of reference as detailed in the Board Charter which can be found on the Company’s website # Datuk Syed Zaid bin Syed Jaffar Albar was at www.cyclecarriage.com.my. appointed on 23 April 2018, and resigned on 8 October 2018. During the financial year ended 31 December 2018, the Audit Committee invited the A summary of the activities of Company’sthe Audit external auditors to attend all Committee during the year are set out in the Audit Committee meetings to update the Audit Committee Report in pages 22 and 23 of Audit Committee on the changes in major this Annual Report. accounting standards and its subsequent implementation, and to answer the concerns Financial Reporting raised by the Audit Committee during their In presenting the annual financial statementsmeetings. The Audit Committee met with the to shareholders and the announcements of External Auditors once during the financial quarterly financial results, the Board aims to year ended 31 December 2018 without the present a balanced assessment of the Group’s presence of the Management. financial position and prospects. The Audit Committee recommended the re-appointment of Messrs The Audit Committee assists the Board in PricewaterhouseCoopers PLT (“PwC”) overseeing the financial statements to ensure as external auditors for the financial year that the financial statements give a true ending 31 December 2019 after evaluating and fair view in accordance with Malaysian their performance as an external audit firm, Financial Reporting Standards, International suitability, independence and objectivity, audit Financial Reporting Standards and the scope and audit fees. After due deliberation, requirements of the Act. the Board at its meeting held on 26 February 2019 approved the recommendation by The Audit Committee reviews and deliberatesthe Audit Committee for the shareholders’ on matters and issues pertaining to the annual approval to be sought at the forthcoming AGM financial statements prior to recommending on the re-appointment of PwC as external the same for approval by the Board and auditors of the Company for the financial year issuance to shareholders. ending 31 December 2019.

Cycle & Carriage Bintang Berhad Annual Report 2018 19

Statement on Risk Management and Internal Control

Introduction Once a year, a written report is presented to the The preparation of this statement is in compliance Audit Committee on the significant risks, measures with Paragraph 15.26(b) of the Main Market Listing taken by the Management to address them and Requirements (“MMLR”) of Bursa Malaysia Securities residual risk exposure impacting the Group. The Berhad (“BMSB”) which requires the Board of Board annually reviews and discusses with the Directors (“Board”) of public listed companies to Management at Board meetings the summary of include in its Annual Report a “statement about risk tolerance and additional internal control to be the state of internal control of the listed issuer as a implemented, if any. group”. The following are the major residual risk exposures: The Board is committed to maintaining sound internal control in the Group and is pleased to 1. Dependence on single dealership and related present the Statement on Risk Management and risks Internal Control for the financial year ended 31 The Group has been appointed by Mercedes- December 2018 as guided by the Statement on Benz Malaysia (“Principal”), as a Dealer of Risk Management and Internal Control: Guidelines Mercedes-Benz Passenger Vehicles and the for Directors of Listed Issuers and taking into Group’s current business model is entirely consideration the recommendations underlying based on this single dealership. Whilst Principle B of the Malaysian Code on Corporate the Group endeavours to achieve targets Governance 2017. and comply with Dealer standards and continuously takes efforts to improve Dealer Responsibility infrastructure and business performance, The Board recognises the importance of sound changes in Principal’s strategies and decisions internal control and risk management practices may be outside management control. to good corporate governance. The Board affirms This could lead to the termination of the its overall responsibility for the Group’s system relationship between the Group and the of internal control and risk management, and for Principal which may have a catastrophic effect reviewing the adequacy and effectiveness of the on the Group’s business, financial condition, internal control and risk management systems. prospects and results of operations. It should, however, be noted that such systems of internal control and risk management are only In addition, the Group is exposed to risks designed to manage rather than totally eliminate arising from the Principal’s supply chain and the risk of failure to achieve business objectives. product related issues which are beyond Accordingly, such systems can only provide the control of the Group. Whilst the Group reasonable rather than absolute assurance against mitigates it by having adequate inventory material losses, misstatements or other significantly levels and regular discussions with the adverse consequences. Principal, as well as Principal backed warranty, unforeseen disruptions or problems to their Risk Management Framework production facilities or products may arise The Group has in place a formal risk management that can impact the Group’s operations and process to identify, evaluate and manage financial performance. significant risks impacting the Group. The process is supported by policies as well as detailed Technological disruptions that are currently procedures, methodologies, evaluation criteria taking place globally may evolve and threaten and documentation requirements with the aim the dealership business model going forward. of ensuring clarity and consistency of application Whilst the Group endeavours to monitor the across the Group. These procedures and trends, initiate and implement improvements methodologies are regularly reviewed to include incorporating digitalisation strategies and new elements that aim at enhancing the reporting works closely with the Principal, technological process in order to make it more comprehensive, disruptions are unpredictable with rapid of greater value to the Audit Committee and in line velocity. This could lead to changes in with current best practices. dealership model or Principal’s strategies and consequently may have an impact on the The Management is required to comprehensively Company’s financial performance, assets and identify and assess significant risks in terms of operations. likelihood of occurrence, magnitude and speed of impact. The Management is also required to identify and evaluate the adequacy and implementation of mechanisms to manage, mitigate, avoid or eliminate these risks. The process encompasses assessments and evaluations at business unit process level before being examined from a Group perspective. Reports are updated on a bi-annual basis and submitted to Jardine Cycle & Carriage Limited. The Internal Auditors will update the Audit Committee on the Group’s internal audit activities by tabling the Internal Audit Report to the Audit Committee on a quarterly basis. 20 Statement on Risk Management and Internal Control

2. Competition, economic cycle and government Internal Control System regulations The embedded internal control system is designed The Group faces intense competitionto facilitatewithin achievement of the Group’s business the automotive industry. If the Group is unable objectives. It comprises the following: to compete successfully against its existing competitors or new entrants to the automotive l Organisation structure with well-defined lines industry, its business, financial condition and of responsibility and delegated authority results of operations will be adversely affected. The organisation structure includes defined If the vehicles it retails are less competitive lines of responsibility and delegation of in the market in terms of design, technology authority to the Committees of the Board, and/or price, or there is an intensification the Chief Executive Officer (“CEO”) and in competition, the Group’s market share operating units through defined sets of may be diluted. This may lead to price terms of references, position descriptions reductions, increased expenses in marketing and authorisation levels for all aspects of the and distribution and the Group not meeting business as set out in the Board Charter and its Target Agreements with its Principal. The Limits of Authority. Besides the predominantly Group can also be impacted by changes in non-executive standing committees such government regulations, particularly changes as Audit, Nominating and Remuneration to the National Automotive Policy, which could Committees, the Board is supported affect the price of the vehicles it retails. Any operationally by the Senior Management which of these events may have an adverse effect consists of senior members of the organisation on the Group’s business, financial condition, including the CEO and Chief Financial Officer prospects and results of operations. (“CFO”). The Senior Management convenes regularly to discuss its strategic business 3. Cyber security agenda thus channeling appropriate inputs Cyber security is a growing concernto theworldwide. Board for its oversight of the Group’s Targeted cyber attacks may directly impact the operations and maintenance of effective Group’s facilities and operations or those of its control over the entire operations. suppliers and customers, and have an adverse impact to the Group’s earnings and reputation. l Independence of the Audit Committee While the Group invests to enhance its cyber The Audit Committee comprises non-executive securities measures, such risk cannot be totally members of the Board, with the majority eliminated. being Independent Directors. The Audit Committee has full and unrestricted access to 4. Financial risk any information pertaining to the Group and The Group’s activities expose it to has adirect varietycommunication channels with the of financial risks, including the effects of External and Internal Auditors. The primary changes in debt and equity markets and objectives of the Audit Committee are to interest rates. It manages its exposure to assist the Board in monitoring the Group’s financial risks by using a variety of techniques management of its business and financial risks and instruments guided by strict policies and the determination of appropriate internal that prohibit speculative transactions. The control to manage these risks. Group regularly monitors its liquidity and cash position to ensure its financial obligations are l Comprehensive budgeting and monitoring met whenever they are due. Notwithstanding processes the above risk management policies, any Detailed and comprehensive budgets for both unanticipated financial market fluctuations may business and support units are prepared on have an impact on the Group’s earnings. an annual basis for approval by the Board together with an indication of future business 5. Natural disasters direction under a two-year operating plan. Natural disasters may directly impact Actualthe performance is monitored against the Group’s physical assets, facilities or those of budget on a monthly basis and appropriate its suppliers and can have an impact on the explanations on significant variances are Group’s operations, earnings and total assets. documented. Forecasts are periodically revised Whilst the risk cannot be totally eliminated, to reflect significant changes in the business the Group has taken appropriate mitigating environment. Management reports setting out measures such as insurance, disaster recovery the performance of the business and support and business continuity plans as part of its risk units against the budget, forecast, prior year management. results and key business indicators are tabled and deliberated at the Senior Management and Board meetings for proper monitoring of performance. Cycle & Carriage Bintang Berhad Annual Report 2018 21

Statement on Risk Management and Internal Control

l Performance Measurement Review of this Statement The Group has adopted a performanceAs required by Paragraph 15.23 of the MMLR of appraisal for the CEO. The Remuneration BMSB, the External Auditors have reviewed this Committee and the Board assess the CEO’s Statement on Risk Management and Internal performance on an annual basis. The Board Control. Their limited assurance review was has delegated authority to the CEO to performed in accordance with Audit and Assurance review and assess the performance of the Practice Guide (“AAPG”) 3 issued by the Malaysian Management. Senior Management also Institute of Accountants. Based on their review, the conducts performance appraisals for the staff External Auditors have reported to the Board that on a yearly basis. nothing has come to their attention that causes them to believe that this Statement is inconsistent Monitoring and Review with their understanding of the process the Board The effectiveness of the Group’s systems of internal has adopted in the review of the adequacy and control and risk management are monitored integrity of internal control and risk management through periodical review of business processes, of the Group. AAPG 3 does not require the External the state of internal control and business risk profile Auditors to form an opinion on the adequacy and by operating units. The results of the review will be effectiveness of the risk management and internal examined by a team within the organisation and control systems of the Group. after due process, the Management will identify the significant areas to be reported to the Audit Conclusion Committee. The Management continuously looks to For the financial year under review and up to the strengthen and refine its systems of internal control, date of issuance of the Financial Statements, the where necessary. Board has received assurance from the CEO and CFO that the Group’s systems of internal control The Management’s proposals on the Group’s and risk management are operating adequately and strategic plans are tabled to the Board for effectively in all material aspects. No material losses, approval with the Management providing updates contingencies or uncertainties have arisen from to the Board from time to time. In view that the any inadequacy or failure of the Group’s systems of Management will update the Board from time internal control and risk management that require to time, the Board will only follow up when it is separate disclosure in the Group’s Annual Report. necessary.

Independent appraisals by Internal Auditors also ensure compliance with policies, procedures, standards and legislation and give reasonable assurance on the effectiveness of the Group’s systems of internal control and risk management.

No significant matter of serious concern was reported during the financial year. 22 Audit Committee Report

The Audit Committee was established by the Board During the financial year ended 31 December 2018, in 1977. the Audit Committee carried out its duties as set out in the terms of reference. In particular, the As at 31 December 2018, the members of the functions of the Audit Committee were to review Committee were: accounting policies, statutory financial statements l Tang Saw Hua - Chairperson (Senior and related party transactions of the Company and Independent Non-Executive Director) its subsidiaries, establish effective risk management l Rossana Annizah binti Ahmad Rashid (Non- and internal control framework within the Group Independent Non-Executive Director) and ascertain that the financial statements of the l Anthony Albert Collingridge (Independent Non-Group are consistent with operational information Executive Director) on behalf of the Board. The full term of reference for the Audit Committee is available online in the In compliance with Paragraph 15.09(1)(b) of the Corporate Governance section at Main Market Listing Requirements (“MMLR”) of www.cyclecarriage.com.my. Bursa Malaysia Securities Berhad (“BMSB”), the members of the Audit Committee consist solely of To ensure that the financial statements of the Non-Executive Directors, the majority of whom are Group complied with the requirements of the independent. Companies Act 2016 and the applicable financial reporting standards, the Audit Committee invited The Audit Committee held four (4) meetings during the External Auditors to attend all Audit Committee the financial year ended 31 December 2018 and meetings to update the Audit Committee on the details of the attendance of members of the Audit changes in accounting standards and its subsequent Committee are as follows: implementation, and to answer the concerns raised by the Audit Committee during their meetings. No. of meetings The Audit Committee discussed with the External attended/ Auditors the audit plan which stated the nature and No. of scope of audit and the results of examination arising meetings from the external audit. held during the In addition, the Audit Committee reviewed the term as a quarterly announcements to BMSB, the financial Name of Committee Members member statements of the Company, and the consolidated Tang Saw Hua (Chairperson) 4/4 financial statements of the Group as well as the statutory auditors’ report thereon. During the Rossana Annizah binti Ahmad Rashid* 1/2 Audit Committee meetings, the Audit Committee Anthony Albert Collingridge& 1/1 and Senior Management deliberated on significant matters including financial reporting issues and Tan Sri Dato’ Sulaiman bin Sujak^ 2/2 significant judgement made by the Management. Teng Wei Ann Adrian@ 2/2 The Audit Committee recommended to the Board, Datuk Syed Zaid bin Syed Jaffar Albar# 1/1 subject to the shareholders’ approval, the selection of the Company’s and its subsidiaries’ statutory * Rossana Annizah binti Ahmad Rashid was appointedauditors. as a member of the Audit Committee at the conclusion of the AGM held on 23 April 2018. The Audit Committee had on its meeting held & Anthony Albert Collingridge was appointed as a on 26 February 2019 assessed the suitability and Director and member of the Audit Committee on 31 independence of External Auditors by obtaining October 2018. affirmation from the External Auditors that it maintained its independence in accordance with its ^ Tan Sri Dato’ Sulaiman bin Sujak retired at theinternal requirements and with the provision of By- conclusion of the AGM on 23 April 2018. Laws on Professional Ethics, Conduct and Practice @ Teng Wei Ann Adrian resigned at the conclusion of theof the Malaysian Institute of Accountants. The Audit AGM on 23 April 2018. Committee recommended the re-appointment of PricewaterhouseCoopers PLT (“PwC”) as External # Datuk Syed Zaid bin Syed Jaffar Albar was appointedAuditors for the financial year ending 31 December on 23 April 2018, and resigned on 8 October 2018. 2019 after considering their performance. Members of Senior Management were invited It is noted that the audit engagement partner would to attend meetings of the Audit Committee to be required to rotate every seven (7) years as per appropriately brief and furnish members of the Audit Committee with the relevant information and PwC’s internal policy, which was in accordance with clarification to relevant items on the agenda. The the By-Laws (on Professional Ethics, Conduct and Group’s Internal and External Auditors attended Practice) of the Malaysian Institute of Accountants. all the meetings held during the year. The Audit The current audit engagement partner has held the Committee met with the External Auditors position for one (1) year, and will be rotated in the once during the year without presence of the financial year ending 31 December 2024. Management. Cycle & Carriage Bintang Berhad Annual Report 2018 23

Audit Committee Report

In performing its functions, the Audit Committee During the year, the Management worked hand also reviewed the overall scope of the Group’s in hand with the Internal Auditors in identifying internal audit. It met with the Internal Auditors to risk areas, implementing control measures and discuss the results of their examinations and their monitoring controls. Taking into consideration the evaluation of the internal control system of the issues highlighted to the Audit Committee during Company and its subsidiaries. the financial year ended 31 December 2018, the Internal Auditors have found that the overall control In its endeavours to fulfill its responsibilities, the environment of the Group to be generally effective. Audit Committee focused its attention on key aspects of business operations that have significant The Internal Auditors updated the Audit Committee impact on profitability. Other main issues discussed on the internal audit plan of the Group on a by the Audit Committee were as follows: quarterly basis to ensure that the Audit Committee l Review of the Group’s risk management reports;was kept abreast of the internal control environment l The new financial reporting standards issuedof the Group. by the Malaysian Accounting Standards Board, International Financial Reporting Standards and The total costs incurred for the internal audit their applicability to the consolidated financial function of the Group for the financial year ended statements for the financial year ended 31 31 December 2018 was RM324,000. December 2018; l The disclosure requirements of the MMLR ofStatement on Share Issuance Scheme by Audit BMSB; and Committee l Key audit matter, in relation to stock writeThere down, were no Share Issuance Scheme in place addressed in the auditors’ report for the financial during the financial year ended 31 December 2018. year ended 31 December 2018. Annual Performance Assessment Internal Audit Function The Board has conducted an annual review of the The Group uses the services of the Jardine term of office and an annual assessment of the Matheson Group Internal Auditors to fulfil its internal composition, performance and effectiveness of the audit requirements. Jardine Matheson Group Audit Committee based on the recommendation Internal Auditors have adequate resources and of the Nominating Committee as required by appropriate standing to undertake their activities the MMLR of BMSB and as recommended under independently and objectively to provide reasonable Principle B of MCCG 2017. assurance to the Audit Committee regarding the adequacy and effectiveness of the Group’s internal The Board is satisfied that the Audit Committee and control systems, and assist the Board in monitoring its members have effectively discharged its duties and managing risks and internal controls. in accordance with its term of reference and the Committee has provided valuable recommendations The Internal Auditors review internal controls in to assist the Board in making informed decision all key activities of the Group and recommend leading to effective and efficient Board meetings. improvement in controls and procedures. The The Board was well informed on the Audit Internal Auditors are independent of the activities Committee’s deliberations on a timely basis where they audit and perform their audit with impartiality the Report by the Audit Committee’s Chairperson is and due professional care. Findings of the Internal a standing agenda item in the scheduled meetings Auditors are reported regularly to the Audit of the Board. Committee on quarterly basis.

The Audit Committee approves the internal audit plan of the Internal Auditors each year. The scope of the internal audit covers the audits of significant units and operations, including subsidiaries. In addition, the Internal Auditors also audit the various computer application systems and network of the Group. 24 Statement of Nominating Committee

The Nominating Committee has been established * Anthony Albert Collingridge was appointed as the by the Board of Directors (“Board”) and is made Chairman of the Nominating Committee on up exclusively of Non-Executive Directors with a 31 October 2018. majority of them being Independent Directors. ** Tan Sri Dato’ Sulaiman bin Sujak retired at the conclusion of the Annual General Meeting (“AGM”) As at 31 December 2018, the members of the on 23 April 2018. Nominating Committee are: l Anthony Albert Collingridge - Chairman Members of the Senior Management attended (Independent Non-Executive Director) these meetings upon invitation by the Committee l Haslam Preeston (Non-Independent Non- Chairman. Executive Director) l Tang Saw Hua (Senior Independent Non- The Nominating Committee is governed by its own Executive Director) terms of reference which is accessible on the Group's official website at www.cyclecarriage.com.my. The Nominating Committee is responsible for identifying and recommending suitable candidates Each year, the Nominating Committee assesses the to the Board for approval and for appointments effectiveness of the Board and Board Committees, to the Board of the Company and its subsidiaries, contributions and performance of each individual either to fill vacancies or as additions to meet the Director, as well as the Chief Executive Officer changing needs of the Group. (“CEO”), and the independence of the Independent Directors. It also ensures an appropriate framework The Nominating Committee meets at least once and plan for Board and the Management’s a year. Additional meetings are scheduled when succession for the Group. considered necessary by the Nominating Committee or Committee Chairman. The Nominating The Nominating Committee conducts an annual Committee may establish any procedures from time review and recommends to the Board the structure, to time to govern its meetings, keeping of minutes size, balance and composition of the Board and and its administration. Board Committees. This requires a review of the required mix of skills and experience, including Its secretary is appointed by the Committee core competencies, which Non-Executive Directors from time to time. Its meeting agenda are the should bring to the Board and other qualities for the responsibility of the Nominating Committee Board to function effectively and efficiently. Chairman with input from Nominating Committee members. The Chairman may also request the The Nominating Committee also considers, Management to participate in this process. The evaluates and proposes to the Board any new agenda for each meeting including supporting board appointments, whether of executive or non- information is circulated at least five (5) business executive position. The Nominating Committee days before each meeting to the Nominating will consider the calibre, background, skills and Committee members and all those who are required experience, and core competencies of the candidate to attend the meeting. when making a recommendation to the Board. The appointment of any new member to the Board The Nominating Committee met two (2) times is a formal and transparent process by which a during the financial year ended 31 December candidate could be identified via a recommendation 2018 and details of attendance of members of the by a Board member or Management, or sourced Nominating Committee are as follows: through the Jardine Matheson Group’s extensive network of contacts. No. of meetings In accordance with the Company’s Constitution, attended/ all new Directors who are appointed by the Board No. of are subject to re-election by shareholders at the meetings AGM following their appointment. The Company’s held Constitution also provides that at least one-third of during the the remaining Directors be subject to re-election term as a by rotation at each AGM and all Directors are to Name of Committee Members member offer themselves for re-election once every three (3) years. The Nominating Committee also makes Anthony Albert Collingridge recommendations to the Board on the re-election of (Chairman)* 1/1 the Directors. Haslam Preeston 2/2 Tang Saw Hua 2/2 Currently, none of the Independent Directors have served on the Board for more than nine (9) years. Tan Sri Dato’ Sulaiman bin Sujak** 1/1 Cycle & Carriage Bintang Berhad Annual Report 2018 25

Statement of Nominating Committee

Thereafter, the Board carries out its own assessment Board Effectiveness Assessment based on the recommendations made by the The Nominating Committee conducted an annual Nominating Committee and determines the assessment of the Board’s effectiveness, as a whole appointments to be made. The Company Secretary and the contribution of each Director, in respect of ensures that all appointments are properly made the financial year ended 31 December 2018 using and that legal and regulatory obligations are met. a set of customised self-assessment questionnaires completed by the Directors. The Board takes note of Practice 4.4 of Malaysian Code of Corporate Governance 2017 and is The criteria for Board Committees and Board committed to ensure that the appointment of assessment cover areas such as purpose, the Board and Senior Management are based composition and process, contributions in topics on objective criteria, merit and with due regard like strategic perspective, governance, integrity, for diversity in skills, experience, age, cultural commitment and ethics, judgement and decision background and gender. The Board is committed to making, teamwork and communication. These diversity and has an equal opportunity policy where relate directly to areas in which a Director would there are no barriers by reason of an individual’s be expected to contribute and are designed to gender, ethnicity, age and nationality. encourage the Director to be more effective.

Apart from the above, the Nominating Committee The results of the self-assessment by Directors and also carries out the evaluation on the following on the Board’s effectiveness as a whole was compiled an annual basis: by the Company Secretary and tabled to the Nominating Committee for review and notation. (a) the independence of each Independent Director; The Board was satisfied with the results of the annual assessment and is of the view that the (b) each Director’s ability to contribute to the current size and composition of the Board is effectiveness of the Board and the relevant appropriate and well-balanced with the right mix Board Committees and to provide the of skills, comprising individuals of high calibre, necessary feedback to Directors in respect of credibility and having the necessary skills and their performance; qualifications, to enable the Board to discharge its duties and responsibilities effectively. (c) the effectiveness of the Committees of the Board; and

(d) the effectiveness of the Board as a whole.

Other duties of the Nominating Committee include the following: l Making recommendations to the Board on the re-appointment and re-election of Directors who are subject to retirement at the forthcoming AGM; l Evaluating and recommending the appointment of senior executive positions, including that of the CEO, their duties and the continuation of their service; and l Recommending to the Board appropriate training and education programmes including orientating new Directors with respect to the business, structure and management of the Group as well as the expectations of the Board with regards to their contribution to the Board and Group. 26 Additional Compliance Information

In compliance with the Main Market Listing Material Contracts Requirements (“MMLR”) of Bursa Malaysia Securities There were no material contracts entered into by Berhad (“BMSB”), the following information is the Company and its subsidiaries involving interests provided: of Directors and major shareholders either still subsisting at the end of the financial year ended 31 Utilisation of Proceeds December 2018 or, if not then subsisting, entered There were no proceeds raised by the Company into since the end of the previous financial year. from any corporate proposal during the financial year ended 31 December 2018. Recurrent Related Party Transactions The Company had at the Annual General Meeting Audit and Non-Audit Fees (“AGM”) held on 23 April 2018 obtained a The amount of audit fees and non-audit fees paid shareholders’ mandate for the Company and/or and payable to PricewaterhouseCoopers PLT the Group to enter into recurrent transactions of (“PwC” or “External Auditors”) and firms affiliated revenue or trading nature (“RRPTs”), which are to the External Auditors’ firm by the Company and necessary for its day-to-day operations and are in the Group for the financial year ended 31 December the ordinary course of business, with related parties. 2018 are as follows: The said general mandate has been in effect from 23 April 2018 until the conclusion of the forthcoming AGM of the Company. The Company Group Company intends to seek its shareholders’ approval for the (RM’000) (RM’000) renewal of the said general mandate for RRPTs at Audit Fees paid/payable to: the forthcoming AGM of the Company.

PwC 349 260 The details of the renewal of the existing RRPT Non-Audit Fees mandate to be sought have been furnished in the Circular to Shareholders dated 25 March 2019 - PwC 24 24 together with this Annual Report. - PricewaterhouseCoopers International Assignment Details of the RRPTs entered into during the Services Sdn. Bhd. 20 20 financial year ended 31 December 2018 pursuant - PricewaterhouseCoopers to the said mandate are disclosed in Note 26 to Taxation Services Sdn. the financial statements, of which none of the Bhd. 167 62 aggregate value of the said transactions conducted pursuant to the shareholders’ mandate sought Total 560 366 previously exceeded the applicable prescribed threshold under Paragraph 10.09(2)(e) of the MMLR The non-audit services rendered during the financial of BMSB during the financial year. year were in respect of review of Statement of Risk Management and Internal Control, tax compliances, Employee Share Scheme and transfer pricing reporting. In considering The Company did not establish any employee share the nature and scope of the non-audit fees, the scheme and does not have any subsisting employee Audit Committee was satisfied that they were not share scheme during the financial year ended 31 likely to create any conflict of interest nor impair December 2018. the independence and objectivity of the External Auditors.

The audit and non-audit fees as mentioned above are also disclosed in Note 6 to the financial statements.

Cycle & Carriage Bintang Berhad Annual Report 2018 27

Statement of Directors' Responsibility for Preparing the Financial Statements

The Directors are required by the Companies Act In preparing the financial statements, the Directors 2016 (“Act”) to prepare financial statements for have: each financial year which have been made out in l adopted suitable accounting policies and accordance with Malaysian Financial Reporting applied them consistently; Standards, International Financial Reporting l made judgements and estimates that are Standards, the requirements of the Act and the reasonable and prudent; and Main Market Listing Requirements of Bursa Malaysia l prepared the financial statements on a going Securities Berhad. concern basis as the Directors have a reasonable expectation, having made enquiries, that The Directors are responsible to ensure that the the Group and the Company have adequate financial statements give a true and fair view of the resources to continue operations for the state of affairs of the Group and of the Company at foreseeable future. the end of the financial year, and of the results and cash flows of the Group and of the Company for the The Directors acknowledge the responsibility for financial year. ensuring that the Company keeps accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company and which enable them to ensure that the financial statements comply with the Act.

The Directors have overall responsibilities for taking such steps as are reasonably open to them to safeguard the assets of the Group, to prevent and detect fraud and other irregularities. 28 Sustainability Statement

Sustainability at CCB This is the Group’s second Sustainability Statement, and first in accordance with the Global Reporting Initiative Sustainability Reporting Standards (“GRI Standards”): Core option.

This statement focuses on the Group’s approach and management of material economic, environmental and social risks and opportunities. The statement covers an overview of activities carried out by the Group during the financial period from 1 January to 31 December 2018.

The Group strives to balance its commercial goals and objectives with sustainability factors. To this end, the Group is committed to continuously engage its stakeholders and report on the efforts to address the issues that matter to them.

This statement is prepared in accordance with Part III, Practice Note 9 of the Main Market Listing Requirements (“Listing Requirements”) issued by Bursa Malaysia Securities Berhad (“BMSB”). There are no restatements of information and we have not sought external assurance of the information contained in this statement at the time of report.

Feedback on this statement or the practices highlighted can be shared by contacting [email protected]

Sustainability Management CCB’s Board of Directors (“Board”) is ultimately responsible for the Group’s sustainability matters and places importance on sustainability being integrated with operations. The Board is supported by the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), who oversee and implement the Group’s sustainability initiatives and strategies. Please refer to pages 11 to 18 for the full Corporate Governance Overview Statement.

Principles and Standards of Behaviour The Group adopts the Jardine Matheson Group Code of Conduct (“CoC”) which applies to Jardine Matheson group companies including CCB, which is 59.1% held by Jardine Cycle & Carriage (“JC&C”). The CoC requires compliance with all relevant laws, rules and regulations applicable to the business and with proper standards of conduct.

The CoC sets out the standards and values upheld in business operations. All new employees are provided with a copy of the CoC and all employees (excluding bargainable employees), existing and new, are required to undergo regular online training on this. Although bargainable employees do not undergo the online training, they are trained on the broad principles of the CoC.

Stakeholder Engagement The Group recognises the importance of understanding and addressing stakeholder’s concerns and issues for business sustainability. It aims for stakeholder engagement to be a continuous dialogue. From time to time, the Group engages with the following groups of stakeholders through meetings, reviews, discussions, calls, surveys and focus groups to better identify and understand any sustainability expectations these stakeholders may have:

l Employees l Business partners and principal l Investors and shareholders l Customers l Suppliers l Communities l Government and regulators l Industry associations

Having engaged internal and external stakeholders for two (2) consecutive years as part of the sustainability reporting cycle, the Group’s engagement in 2018 reached out to external stakeholders who are subject-matter experts. The engagement was focused on understanding the energy and water management practices in Malaysia to better support environmental practices.

In 2019, the Group will continue to identify effective channels for interacting with its stakeholders and will expand engagement to re-visit material topics to ensure the relevance of these material matters to the Group. Cycle & Carriage Bintang Berhad Annual Report 2018 29

Sustainability Statement

Supply Chain The Group’s supply chain covers a variety of activities, engaging over 1,400 vendors. CCB’s primary supplier is its motor vehicle principal Mercedes-Benz, with other vendors also supporting sales and after-sales services as well as administrative matters and property management. Business activities across the Group are mainly performed by employees, with the exception of cleaning, security, car wash and grooming that are contracted to vendors. Some activities relating to new car logistics are also outsourced, such as vehicle transportation and supply of upholstery and electronic accessories.

Sales & After-sales related: Administration & Property Management:

l Parts and accessories l Facilities management services l Logistics and warehousing l Water and electricity l License plates l Cleaning and maintenance of properties l Signage l Printing and stationery l Marketing and advertising l Courier l Cleaning and grooming l Events l Paint supply l Insurance l Engine oil supply l Diagnostic equipment and maintenance

Material Topics and Boundaries Material topics were established in 2016 following a comprehensive materiality process conducted by JC&C, which included CCB. The process involved context review, engagement with CCB’s internal stakeholders, and assessment of materiality and review by the JC&C executive committee which included CCB’s Chairman. Through internal engagement and further assessment with Senior Management of CCB, 12 material topics were identified for the Group.

The material topics were reviewed again in 2017 through a process of both internal and external stakeholder engagement. The topics were confirmed and signed-off by the Board.

The 12 material topics remain unchanged in 2018 to allow the Group to further focus on sustainability management and performance on these key areas.

Corporate governance Waste management

Energy conservation Health & safety Water management Hazardous material Gender and diversity management Climate change Employee welfare

Data fraud or theft Compliance

Employee sustainability Transparency and awareness anti-corruption

Importance to stakeholders to Importance Community engagement Sustainable products Economic performance SDGs and community Emergency investment Human tracking and Industry preparedness Product Sustainable sourcing foreign worker rights education and response responsibility

Significance to business

Material Topics

Governance Environment Social

 Strong corporate governance  Managing energy  Providing a healthy and safe workplace  Compliance with laws and regulations  Managing water  Ensuring the welfare of our employees  Transparency and anti-corruption  Managing waste  Preventing data fraud and theft measures  Managing hazardous materials  Engaging communities  Economic performance 30 Sustainability Statement

Boundary/Where the Impact Occurs Principals Customers Regulators Investors & Investors Shareholders Communities Government/ Government/ Our employees Within the Group/ the Group/ Within Business Partners & Partners Business Material Topic Strong Corporate Governance x x x x x x Compliance with laws and regulations x x x x x x Transparency and anti-corruption measures x x x x x x Economic performance x x x x Managing energy x x x Managing water x x x x Managing waste x x x x Managing hazardous materials x x x x Providing a healthy and safe workplace x x x x Ensuring the welfare of employees x x x Preventing data fraud and theft x x x x x Engaging communities x x x

CCB seeks to establish baselines for each material topic against which to improve the Group’s sustainability in the future. In 2019, CCB is working to develop both short and long term targets to track its sustainability performance.

Material Sustainability Matters: Governance

Corporate Governance The Board recognises that sound corporate governance is essential for the long-term sustainable growth of the Group. Consequently, the Board, together with the Senior Management team, are responsible to ensure that high standards of corporate governance are applied throughout the Group. The Board Charter sets out, among other things, the responsibilities, authorities, procedures, evaluations and structures of the Board and Board Committees, as well as the relationship between the Board with the Management team and shareholders. The current Board Charter is available online on the CCB website, www.cyclecarriage.com.my. See pages 11 to 18 for further details and the full Corporate Governance Overview Statement.

CCB’s corporate governance policies and procedures are actively monitored and constantly under review and assessment. Changes to approaches are made as appropriate to comply with the latest developments in the laws, regulations and practices of corporate governance in Malaysia which includes Listing Requirements, the Malaysian Code of Corporate Governance 2017 (“MCCG 2017”), and the Companies Act 2016 (“Act”), in addition to the following measures:

1) Semi-annual return on matters of serious concern reporting; 2) Semi-annual control and compliance assurance return; and 3) Quarterly legal report submitted to JC&C parent company.

CCB’s Board fully supports the recommendations of the MCCG 2017 and are committed to applying the recommendations of the MCCG 2017 (as applicable) to ensure that good corporate governance is practised to effectively discharge its responsibilities. The effectiveness of this management approach is evaluated through engaging professional advisors, liaising with JC&C’s legal team, and certain aspects, where applicable (e.g., financial reporting, risk management and internal controls) are reviewed by Internal and External Auditors. Cycle & Carriage Bintang Berhad Annual Report 2018 31

Sustainability Statement

Compliance Compliance is an essential standard and value that we uphold in operating our business. Observing the relevant policies and guidelines is important to achieve the necessary controls that are conducive to successful operations, reputable business practices and proper risk management. To this end, the Group applies its Policy on Dealing in Listed Securities By Directors and Principle Officers, Division Standard Operating Procedures, Whistle Blowing Policy, Good Compliance Practices, and Occupational Safety and Health Manual in managing compliance matters.

Key laws and regulations applicable to the Group’s business and operations include the Listing Requirements, the MCCG 2017, the Act, Income Tax Act 1965, Personal Data Protection Act 2010 and Environmental Quality Act 1974. CCB’s CEO and Management team are obliged to ensure full compliance with the applicable laws and regulations. Measures to assess compliance include a semi-annual return on matters of serious concern reporting and control and compliance assurance return, quarterly legal reports submitted to JC&C, and an annual fraud questionnaire completed for the external auditors. Both external and internal audits are reviewed by CCB’s Audit Committee and elevated to the Board if there is any non-compliance to applicable laws and/or regulations and/or Group policies recorded.

No cases of non-compliance with applicable laws or regulations were identified during the financial year ended 31 December 2018, with the exception of a nominal fine imposed due to an error in waste labelling and a delay in filing to Malaysia’s eSWIS portal (Electronic Scheduled Waste Information system), which has since been rectified.

Transparency and Anti-Corruption The Group is committed to high standards of integrity and accountability in the conduct of its business. Being transparent and combating corruption are fundamental to ensure that the Group’s operations are conducted in a fair and lawful manner.

The CoC sets out policies on illicit payments, as well as gifts, favours and entertainment. The CoC is aimed at upholding high standards of honesty, integrity and fair dealing. Updates to the CoC are communicated to the Group’s employees from time to time. The latest version of the CoC is made accessible to all employees on CCB’s internal communications platform (Workplace by Facebook) as well as available to the public online on the CCB website at www.cyclecarriage.com.my.

New employees are provided with a copy of the CoC and a Good Compliance Practices brochure during on- boarding.

All non-bargainable new hires in 2018 completed their Jardine Matheson e-training on the CoC (“CoC Training”) within one (1) month of joining. A refresher CoC Training is required to be completed by all existing employees (except for bargainable employees) once every two (2) years.

Total staff Staff required for Percentage CoC Training trained training trained

Training for new hires and first-time trainees in 2018 Senior management employees 2 2 100% Middle management employees 20 20 100% Function group (administration, technical, production, etc.) 107 111 96.4%

Refresher e-learning in 2018 Senior management employees 11 11 100% Middle management employees 43 43 100% Function group (administration, technical, production, etc.) 185 194 95.4% Group Total 368 381 96.6%

The Group plans to conduct a refresher training for all its employees on the Group’s Good Compliance Practices in 2019. 32 Sustainability Statement

As part of the Group’s ongoing efforts to enhance the overall compliance robustness in its businesses, the Group has also implemented a compliance framework applicable to its commercial vehicle business. This framework requires that prior to entry into any transactions with third parties who will either (a) on-sell commercial vehicles to customers directly or (b) deal with government agencies on the Group’s behalf, the Group will conduct third party due diligence on such third party as well as cause such third party to enter into a compliance declaration which contains stringent anti-bribery and anti-corruption provisions.

Effectiveness of anti-corruption measures is assessed in liaison with the JC&C Legal and Risk Management teams with external advisors engaged, where applicable.

Economic Performance The importance of the Group’s economic performance for both existing and potential shareholders, principals and employees makes this topic material for the business.

The Group’s capital structure is regularly reviewed to ensure optimal function and shareholder returns, taking into consideration future capital requirements and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditure and projected strategic investment opportunities, before the distribution of economic value to shareholders.

A significant component of the Group’s economic performance is also derived from profitability. This is measured regularly against budgets, forecasts, and projections assessed on a periodic basis.

The CoC also has policies and procedures in place to ensure that goods and services procured represent good value and are obtained on fair and competitive terms, employees are treated fairly, impartially and with respect, and the Group complies with applicable tax laws and regulations. The CoC also sets out policies which prevent illicit payments and governs matters such as gifts, favours and entertainment aimed at upholding honesty, integrity and fair dealing. Further, the Group also believes in making a positive socio-economic contribution by giving back to fundraising and awareness programmes to meet societal needs. In 2018, the Group supported the Otomotif College as detailed in “Engaging Our Communities” on page 39.

No governmental financial assistance or tax relief or credits was received in 2018.

A full breakdown of the economic performance of the Group in the financial year ended 31 December 2018 is given in the Financial Highlights presented on page 2 and the Statutory Financial Statements given in pages 53 to 105 of this Annual Report.

Future Plans and Targets

Corporate The Group will continue to adhere to and strengthen its compliance to the principles of governance & the MCCG 2017, focusing on strong corporate governance practices and maintaining high compliance standards of accountability and conduct.

Transparency and The Group will continue to ensure that all employees are trained on and abide by the anti-corruption CoC. The Group targets to maintain a 100% year-on-year rate for training of new hires and refresher training of existing employees.

Economic The Group actively and regularly reviews and manages its capital structure, taking into performance consideration future capital requirements of the Group, capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditure and projected strategic investment opportunities.

Material Sustainability Matters: Environment Given the nature of the Group’s automotive business, managing environmental factors is material for its operations in reducing its environment footprint.

The principal activities of the Group are distributing, retailing and servicing of Mercedes-Benz motor vehicles in Malaysia. Through the course of these activities, the Group strives to ensure that energy and water consumption are properly managed together with its waste generation.

At CCB, electricity consumption and water usage are managed by the individual facility’s managers with the support of the Corporate Real Estate (“CRE”) team. Procedures for energy and water conservation are applied throughout the business. Waste management falls under the responsibility of the Group’s after-sales service managers, with specific procedures applied as specified in CCB’s Scheduled Waste Management Safe Working Procedure (SWP). Cycle & Carriage Bintang Berhad Annual Report 2018 33

Sustainability Statement

Energy Conservation CCB does not generate its own electricity. Electricity is sourced from the national grid and the tracking of the Group’s electricity consumption is based on the utilities bills issued by its power supplier, Tenaga Nasional Berhad.

In 2018, CCB had a total energy consumption of approximately 22,734.8GJ. Energy saving initiatives applied by the Group in 2018 include the application of energy-saving LED lighting to all new development projects. In 2018, the Group also began the process of replacing older high bay lighting with LED lighting technology. In addition, a back-office energy conservation awareness campaign was launched using the internal communications platform, Workplace by Facebook, and posters were put up across all operations to increase awareness on energy conservation.

Energy Consumption 2018 Units Value

Electricity consumption kJ 22,600,690,200 Fuel consumption from non-renewable sources: Diesel# kJ 134,069,755 Total energy consumption kJ 22,734,759,955 Total energy consumption GJ 22,734.8

# Diesel use for CCB was estimated based on a monthly average at two (2) service locations. Energy conversion factors were applied based on ‘Greenhouse gas reporting - Conversion factors 2018 (UK Department for Business, Energy & Industrial Strategy)’.

Managing Water Water is a precious natural resource and is important to the Group’s operations. The Group, therefore, seeks to ensure the sustainability of its business and reduce its utilities costs through careful management of water consumption.

Water is supplied by the national water agency, with supplemental supply provided through rainwater collected at CCB’s Cheras branch. In 2018, CCB had a total water consumption of 89,091m3. Consumption figures are derived from the utilities bills issued by the water suppliers across all of the Group’s operations in Malaysia. The Group also used an additional 1,233m3 of rainwater collected at CCB’s Cheras branch in 2018. CCB is currently assessing the feasibility of rainwater collection at its other branches within Klang Valley to supplement its water supply.

Water Consumption 2018 Units Value

From Municipality m3 87,858 From Rainwater m3 1,233 Total water consumption m3 89,091

Managing Waste and Hazardous Materials In 2018, the Group continued to comply with the applicable environmental laws and regulations on waste disposal. It also engaged licensed waste disposal contractors to collect and dispose both hazardous and non- hazardous waste on its behalf.

An estimated 1,482kg of general waste was generated in 2018 by the Group, based on approximate extrapolated rates across its larger outlets. All general waste was disposed to landfill.

The Group’s service centres generate certain hazardous materials such as oily water, used engine oil, used batteries, scrap metal and waste sludge, which could have an environmental impact if disposed irresponsibly or discharged accidentally. 34 Sustainability Statement

The disposal method of hazardous materials in Malaysia is governed by the Department of Environment, Ministry of Energy, Science, Technology and Climate Change. Procedures in the handling and transporting of hazardous materials to the contractors’ premises are established and agreed with the licensed waste disposal contractors. CCB’s Scheduled Waste Management SWP further dictates additional requirements and procedures for waste disposal, including safe storage, labelling, and procedure in the event of a spillage.

In 2018, CCB added wastewater treatment facilities at its branches. It also contracted licensed scheduled waste contractors to dispose 192,400L of used engine oil, with the waste routed through a recovery process with the derivatives routed to further treatment systems and disposal externally.

No environmental non-compliance issues were identified in 2018, with the exception of a nominal fine imposed for an error in waste labelling and a delayed entry to Malaysia’s eSWIS portal (Electronic Scheduled Waste Information System). This issue was rectified through discussion and professional advice with our licensed scheduled waste contractor to give a briefing to the relevant team to ensure implementation of correct practices to avoid reoccurrence in the future.

Waste Generation 2018 Unit Value

Used engine oil L 192,400 Used battery kg 50,912 Scrap metal kg 22,513 General waste# kg 1,482

# Estimates from approximate number of boxes disposed of at a larger outlet and scaled across operations. Waste from Glenmarie 2 (body and paint) facility is only included from 3Q2018 onward.

Future Plans and Targets

Managing Energy & The Group will continue to track both energy and water consumption to understand its Water usage. The Group will evaluate setting reduction targets, introducing specific initiatives or cost saving measures over the next reporting cycle.

Managing Waste & The Group will seek to standardise the general waste recorded from the Group’s different Hazardous Materials premises. The Group will also consider starting a register of waste consignment notes for its hazardous/scheduled waste collections.

Material Sustainability Matters: Social

Health & Safety The health and safety of the Group’s employees is paramount in safeguarding the welfare of its people and ensuring that its business operates with minimal disruption.

The Group ensures compliance with Malaysia’s Occupational Safety & Health Act 1994, with implementation of health and safety measures such as staff briefings and training on health and safety procedures provided by the CRE service managers at each of the Group’s branches.

Health and safety obligations are set out in the Collective Agreement with the trade union. They include personal protective equipment, joint management via an employee health and safety committee, training and educating employees on health and safety topics such as work injury compensation, and provision of a feedback mechanism for employees for resolving problems. Cycle & Carriage Bintang Berhad Annual Report 2018 35

Sustainability Statement

The Group’s Occupational Safety and Health Manual, which includes the Health and Safety Policy, guides the way in managing operations and sets out procedures for a safe working environment.

Health & Safety figures 2018# Male Female Total

Fatalities 0 0 0 Fatality rate* - - 0 Major injuries 3 0 3 Major injury rate* - - 1.7 Lost days 142.5 0 142.5 Lost day rate* - - 81 Absentee days 2,963 1,350 4,313 Absentee days rate* - - 2,446 Occupational disease 0 0 0 Occupational disease rate* - - 0

* Rates are calculated based on per million working hours adopted from the International Labour Organisation (ILO). Figures are based on number of permanent employees working 8-hours day. # Incidents are recorded via an Accident Report Form for work place accidents which is submitted to Human Resources (“HR”). Only Major injuries are reported.

Health & Safety Definitions

Major injuries Injuries that require beyond first aid treatment Minor injuries Injuries that can be treated with first aid Days that could not be counted as work because of workers being unable to perform Lost days their usual work due to an occupational accident or disease Lost days and absence leave excluding permitted leave absence such as parental Absentee days leave and study leave Occupational disease Disease arising from a work situation or activity, or from a work-related injury

Employee Welfare The Group recognises that commitment to the welfare of employees is fundamental to its long-term success as it contributes to improved efficiency and performance. The Group’s HR Policy guides practices and procedures for hiring, employment, compensation and benefits as well as training and development of its employees. An employee handbook is also in place covering employment, learning and development aspects. The handbook is reviewed frequently by the respective HR divisions taking into consideration feedback from new hire/exit interviews, performance reviews, and stakeholder comments.

The Group’s HR division aligns practices with the Employees Social Security Act 1969 and the Employment Insurance System Act 2017. All HR staff attended training on the latest legislative requirements. Provisions for bargainable employees’ welfare are also set out in the collective agreement with the trade union.

The effectiveness of the Group’s approach to the welfare of employees is assessed through its employee engagement surveys undertaken once every three (3) years, as well as through employee feedback during exit interviews and performance reviews, combined with the measurement of indicators through data analysis and scheduled reporting. Additionally, sampling of employee records is reviewed from time to time to ensure legal compliance. The Group also established a grievance procedure for employees to communicate any labour concerns.

In its efforts to step-up its engagement with the employees, the Group has taken a proactive approach to offer a collaborative and productive platform for employee engagement. Workplace by Facebook was launched for the Group’s operations in March 2018 to enable greater staff cohesion within the organisation. Since the launch, 94% of its workforce is now connected on this platform. 13% 13% 36 Sustainability Statement 36%

20% 36% 20% In 2018, the Group employed a total of 847< 30 staff in Malaysia, with good gender diversity (as set out below), especially considering the automotive nature of the Group’s business. The workforce is not influenced by seasonal variations, with hiring based on long-term30 - 39 planning and demand. In-house contractors are< also 30 used to supplement and support some of the Group’s40 business- 49 needs, such as new car logistics and after-sales30 - services. 39 However, most activities are performed by> its 50 own employees. 40 - 49 31% > 50 Employee figures 2018 31%

Numbers by employment contract Numbers13% by employment type (permanent only)

Permanent (Male)1% 580 Full-time (Male) 580

Permanent (Female) 255 Full-time (Female)1% 255 Temporary19% (Male) 10 Part-time (Male) 0 19% Temporary (Female) 2 Part-time (Female) 36% 0 Total 847 20%Total 835 39% Proportion of total employees covered by collective bargaining agreements 28% 39% < 30 Although the Group does not have in place a workforce diversity policy or target, it is committed to30 diversity- 39 Malay and have an equal employment opportunity policy. There are no gender, ethnicity, age or nationality40 -barriers 49 to employment or development within theChinese Group. The Group is of the view that employees withMalay diverse backgrounds bring unique experiences and viewpoints to the team and can benefit the Group by strengthening> 50 Indian Chinese responsiveness41% to changing conditions. Information on the Group’s workforce31% in terms of gender, ethnicity, age Others Indian and nationality as at 31 December 2018 is disclosed below:41% Others Gender Ethnicity

1%

30% 19%

30%

39%

70% 70% Malay Chinese Indian Male 41% Female MaleOthers Female

Age Nationality 2%

2% 13% 30%

36% 20% 98% 70% 98% < 30 30 - 39 Malaysian Male 40 - 49 Non-Malaysian MalaysianFemale > 50 Non-Malaysian 31%

2%

1%

19%

98% 39%

Malaysian Malay Non-Malaysian Chinese Indian 41% Others

30%

70%

Male Female

2%

98%

Malaysian Non-Malaysian Cycle & Carriage Bintang Berhad Annual Report 2018 37

Sustainability Statement

The Group believes that the welfare of its people is integral to the success of its business. Apart from complying with the relevant statutory requirements related to employment in Malaysia, including retirement provision (Employee Provident Fund - EPF), SOCSO (social security protection) and EIS (Employment Insurance System; effective 1 January 2018), benefits such as life and medical insurance are provided for all full-time employees.

The Group believes in actively supporting working mothers and fathers by providing them with equal employment opportunities. All employees are eligible for parental leave, being 60 consecutive days for working mothers, while working fathers receive 4 consecutive days of paternity leave. In 2018, the Group recorded a parental leave return to work rate of 100% for male and 100% for female staff. Retention rate after 12-month following parental leave was 79.2% across the Group.

Parental Leave 2018 Male Female Total

Parental leave taken in 2018 21 9 30 Return after parental leave in 2018 21 9 30 Return after parental leave in 2017 16 8 24 Still employed 12 months after return in 2017 (retention rate) 12 7 19 Return rate after parental leave 100% 100% 100% Retention rate after parental leave 75% 87.5% 79.2%

Group employees who have been confirmed will undergo an annual performance and career development review. The review also serves to align the learning needs of employees with overall business objectives. In 2018, all eligible employees (being all confirmed permanent employees – 89.2% of the Group’s total employees) received a review. Developing employees’ capabilities for their current and future roles is essential for employee engagement and retention as well as key to the long-term sustainability of the business.

Total Review Performance and Development Reviews 2018* Employees# Reviews Rate

Male 580 519 89.5% Female 255 226 88.6% Senior management employees 28 23 82.1% Middle management employees 45 42 93.3% Function employees 762 680 89.2% Overall (all employees) 835 745 89.2%

* As at 31 December 2018 # Applicable to all confirmed permanent employees. Employees undergoing probation will only receive a career review upon completion of their probation.

The Group acknowledges that investing in employees’ training and personal development is essential for employees’ retention apart from the objective of improving performance and efficiency. Relevant personnel are nominated by the individual business units and the HR department to attend specific training programmes such as Mercedes-Benz certification programmes as well as JC&C and Jardine Matheson training programmes. Representatives from individual business units, the product training department, and the Goal Alignment & Continuous Excellence department also work with the HR department to organise periodic internal and external training programmes. 38 Sustainability Statement

Average Hours Percentage Training in 2018* of Training Employees Trained

Male employees 21.1 78.3% Female employees 11.6 56.9% Senior management employees 18.4 60.7% Middle management employees 9.9 46.7% Function employees 18.7 73.6% Overall (all employees) 18.2 71.7%

* As at 31 December 2018 for all confirmed permanent employees

The average length of stay of employees with the Group is approximately eight (8) years. The Group recognises employees’ loyalty and has in place a long service award programme to reward employees who have been with the Group for ten (10) years or more. In 2018, a special appreciation award was presented to an employee to celebrate his 40 years’ service to the Group.

To continually improve the Group’s retention rate, the HR department conducts quarterly review of the information gathered from exit interviews, performance review and employees’ feedback throughout the year to ascertain areas for improvement in the coming year. An overview of the Group’s employment and turnover rates in 2018 are set out below:

Age group Gender New hires and turnovers in 2018 Under 30 30-50 Over 50 Male Female Total

Total employees* 303 425 107 580 255 835 New employees Number of joiners 127 58 6 128 63 191 hired in 2018 Hire rate 42% 19% 6% 22% 25% 23% Total employees* 303 425 107 580 255 835 Employee turnover Number of leavers 70 60 13 93 50 144 in 2018 Turnover rate 23% 14% 12% 16% 20% 17%

* Confirmed permanent staff as at 31 December 2018

In addition, the Group conducts annual townhall meetings to provide an open forum for the discussion of the business with its Senior Management. To foster the bond between employees and instil teamwork, each department further conducts a three-day team building session once every two (2) years. The Group will also hold a Group wide dinner every two (2) years to provide the opportunity for employees from different branches to mingle and bond.

To foster further engagement with its employees, the Group also provides the children of its employees with cash awards ranging from RM500 to RM3,000 for their excellent academic results as a reward for their hard work and to motivate them towards further achievements.

Preventing Data Fraud and Theft Given the Group’s customer-based operations, preventing data fraud and theft is important to safeguarding customer data and preventing unauthorised use of information. As the Group continues to revamp and develop its websites and mobile apps to engage with its customers, the Group has undertaken additional Information Technology (“IT”) security measures to prevent security breaches and ensure its digital properties are not compromised.

The Group adopts the CoC, where employees must comply with all information laws and regulations, including all applicable data privacy, data retention and computer security laws. Availability, integrity and confidentiality of information must be safeguarded by adhering to information security policies and procedures applicable to their business.

The Group applies an Information Security Policy together with a Personal Data Protection Policy to safeguard its financial, employees’ and customers’ information. In addition, only authorised users in the respective departments can perform data extraction or changes to customer, employee or financial records. Regular network, infrastructure security review and technology updates are employed and only authorised users in the IT department are able to perform any network configuration changes. Cycle & Carriage Bintang Berhad Annual Report 2018 39

Sustainability Statement

Relevant information security awareness materials are posted regularly on the Group’s Workplace by Facebook portal to heighten the Group’s employees’ awareness and educate them on how to identify and deal with potential phishing emails.

There was no digital attack incident or digital security breach incident recorded by the Group in 2018.

Engaging Our Communities An important part of being a responsible business is supporting the local community in meeting under-served societal needs. The Group’s initiatives in the community seek to make a positive social contribution by providing financial assistance and participating actively in programmes to raise awareness and funds.

In 2018, the Group donated to The Otomotif College, a leading Approved Higher Education Institution. The Otomotif College aims to push the boundaries and shape the future of students and alumni in the automotive industry in Malaysia. The Group also donated 60 units of used computers to a local secondary school for their students to use for school assignments.

In 2019, the Group plans to roll-out a corporate social responsibility (“CSR”) programme which focuses on meaningful contributions that are purposely selected in line with its corporate values to create greater positive social impact for its communities and its business. The Group’s HR department will be responsible for the Group’s CSR initiatives and activities, and will collaborate with the Marketing department to promote the Group’s forthcoming CSR programme.

Future Plans and Targets

Health & Safety The health and safety of its people are of upmost importance, and it is the Group’s responsibility as an employer to ensure that the health, safety and welfare of its employees are protected. The Group targets a zero-fatality rate year-on-year.

Employees Welfare The Group will continue to focus on the professional development and welfare of its employees. The Group targets an average of 16 hours annual training per person for its permanent employees.

Preventing Data The Group targets zero data fraud and theft incident year-on-year. Fraud and Theft

Engaging The Group will continue to support and further drive community projects that are Communities focused on creating positive social impact. A new CSR approach will be launched in 2019.

Sustainability Scorecard

FY2018 FY2017

Economic CoC training for new hires 100% 100% Environmental Electricity used (million kWh) 6.3 6.0 Water used (m3) 89,091 84,985 Social Permanent employees 835 790 New hires 191 143 Turnover rate 17% 12% Female employees (% permanent employees) 30.5% 30.4% Number of reported major work injuries 3 2 Fatal accidents 0 0 40 Sustainability Statement

GRI Standards Index: Core Option

General disclosures

GRI Standard 102: General Disclosures 2016 Disclosure Description Page reference or additional comment Organisational Profile 102-1 Name of the organisation Pages 1, 51 and 71 102-2 Activities, brands, Management Discussion and Analysis: Pages 1, 51 and 71 products, and services Primary brand: Mercedes-Benz Products: Passenger cars and commercial vehicles, spare parts Services: After-sale services 102-3 Location of headquarters Notes to the Financial Statement: Page 71 CCB is headquartered and listed in Malaysia. 102-4 Location of operations Management Discussion and Analysis: Pages 1 and 71 Malaysia operations: www.cyclecarriage.com.my/ corporate-profile 102-5 Ownership and legal Pages 1, 47 and 108 form Shareholding Statistics: Pages 110 to 111 CB is a member of the Jardine Cycle & Carriage (JC&C) Group which holds 59.1% of the Company and represents the Group’s direct motor interests in Malaysia. www.cyclecarriage.com.my/corporate-structure 102-6 Markets served Corporate Profile: Page 1 102-7 Scale of the organisation Management Discussion and Analysis: Page 5 and inside front cover 102-8 Information on Management Discussion and Analysis: Pages 5 and 6 employees and other Sustainability Statement: Pages 35 to 38 workers 102-9 Supply chain Sustainability Statement: Page 29 102-10 Significant changes to The Group announced in December 2018 that pursuant to a 2002 the organisation and its agreement, Daimler AG was exercising their call option over supply chain 66,003,000 shares of Mercedes-Benz Malaysia Sdn Bhd currently held by CCB. Completion of the disposal will take place 12 months from the exercise date. CCB has had a longstanding relationship with Mercedes-Benz for over 50 years and reiterate that this will not directly impact any trading operations, trading performance or support of customers. 102-11 Precautionary principle Statement on Risk Management and Internal Control: Pages 19 to and approach 21

102-12 External initiatives l Sustainability Statement under Bursa Malaysia Securities Berhad’s Listing Requirements l Malaysian Code of Corporate Governance 2017

102-13 Membership of l Malaysian Automotive Association associations l British Malaysian Chamber of Commerce l Malaysian Employer Federation Strategy 102-14 Statement from the most Chairman’s Statement: Page 4 senior decision-maker Ethics and integrity 102-16 Values, principles, Sustainability Statement: Page 28 standards and norms of behaviour such as codes of conduct and codes of ethics. Cycle & Carriage Bintang Berhad Annual Report 2018 41

Sustainability Statement

GRI Standard 102: General Disclosures 2016 Disclosure Description Page reference or additional comment Governance 102-18 Governance structure Corporate Governance Overview Statement: Pages 11 to 18 Sustainability Statement: Page 28 Stakeholder engagement 102-40 List of stakeholder Sustainability Statement: Page 28 groups 102-41 Collective bargaining Sustainability Statement: Page 36 agreements 102-42 Identifying and selecting Sustainability Statement: Page 28 stakeholders 102-43 Approach to stakeholder Sustainability Statement: Page 28 engagement 102-44 Key topics and concerns Sustainability Statement: Pages 28 to 30 raised Reporting Practice 102-45 Entities included in the Notes to the Financial Statements: Pages 98 and 108 consolidated financial statements 102-46 Defining report content Sustainability Statement: Pages 28 to 30 and topic boundaries 102-47 List of material topics Sustainability Statement: Pages 29 to 30 102-48 Restatements of There are no restatements of information. information 102-49 Changes in reporting This year is the first Sustainability Statement prepared in accordance with the GRI Standards: Core option 102-50 Reporting period Sustainability Statement: Page 28 1 January to 31 December 2018 102-51 Date of most recent Annual Report 2017, published on 23 March 2018. report 102-52 Reporting cycle Reports are published on annual basis. 102-53 Contact point for Sustainability Statement: Page 28 questions regarding the Feedback on this statement or the practices highlighted can be report shared by contacting [email protected]. 102-54 Claims of reporting in Sustainability Statement: Page 28 accordance with the GRI This report is prepared in accordance with the GRI Standards: Core Standards option. 102-55 GRI content index Sustainability Statement: Pages 40 to 44 102-56 External assurance Sustainability Statement: Page 28 No external assurance has been sought for this report. 42 Sustainability Statement

Topic-specific disclosures

Page reference or additional GRI Standard Disclosure Description comment Topic: Corporate Governance GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 30 components 103-3 Evaluation of the management Sustainability Statement: Page 30 approach Non-GRI CG-1 Standards and regulation applied Sustainability Statement: Page 30 Topic: Transparency and Anti-Corruption GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 31 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 31 components to 32 103-3 Evaluation of the management Sustainability Statement: Pages 31 approach to 32 GRI 205: Anti- 205-2 Communication and training Sustainability Statement: Page 31 corruption 2016 about anti-corruption policies and Information is not available for procedures communication of policies to business partners or training of governance body members. Topic: Compliance GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 31 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 31 components 103-3 Evaluation of the management Sustainability Statement: Page 31 approach Non-GRI C-1 Management of compliance as a Sustainability Statement: Page 31 business practice Topic: Economic Performance GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and 32 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 32 components 103-3 Evaluation of the management Sustainability Statement: Page 32 approach GRI 201: 201-1 Direct economic value generated Sustainability Statement: Page Economic and distributed 32, and financial Statements from Performance Pages 53 to 105 2016 Financial Highlights: Page 2

201-4 Financial assistance received from Sustainability Statement: Page 32 government No governments are present in the JC&C group shareholding structure. Cycle & Carriage Bintang Berhad Annual Report 2018 43

Sustainability Statement

Page reference or additional GRI Standard Disclosure Description comment Topic: Energy Conservation GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 32 to 33 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 33 components 103-3 Evaluation of the management Sustainability Statement: Page 33 approach GRI 302: Energy 302-1 Energy consumption within the Sustainability Statement: Page 33 2016 organisation Topic: Waste Management GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 32 to 34 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 33 components to 34 103-3 Evaluation of the management Sustainability Statement: Pages 33 approach to 34 GRI 306: 306-2 Waste by type and disposal method Sustainability Statement: Page 34 Effluents & Waste 2016 Topic: Water Management GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 32 to 33 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 33 components 103-3 Evaluation of the management Sustainability Statement: Page 33 approach GRI 303: Water 303-1 Water withdrawal by source Sustainability Statement: Page 33 2016 Topic: Management of Hazardous Materials GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 32 to 34 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 33 components to 34 103-3 Evaluation of the management Sustainability Statement: Pages 33 approach to 34 GRI 306: 306-4 Transport of hazardous waste Sustainability Statement: Pages 33 Effluents and to 34 Waste 2016 Topic: Employee Welfare GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 35 to 38 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 35 components to 38 103-3 Evaluation of the management Sustainability Statement: Pages 35 approach to 38 GRI 401: 401-1 New employee hires and turnover Sustainability Statement: Page 38 Employment 401-2 Benefits provided to full-time Sustainability Statement: Page 37 2016 employees that are not provided to temporary or part-time employees 401-3 Parental leave Sustainability Statement: Page 37 44 Sustainability Statement

Page reference or additional GRI Standard Disclosure Description comment GRI 404: Training 404-1 Average hours of training per Sustainability Statement: Page 38 & Education employee 2016 404-2 Programs for updating employee Sustainability Statement: Pages 37 skills and transition assistance to 38 programs A transition assistance programme is not in place. 404-3 Percentage of employees receiving Sustainability Statement: Page 37 regular performance and career development reviews Topic: Health and Safety GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 34 to 35 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 34 components to 35 103-3 Evaluation of the management Sustainability Statement: Pages 34 approach to 35 GRI 403: 403-2 Types of injury and rates of injury, Sustainability Statement: Page 35 Occupational occupational diseases, lost days, Health & Safety and absenteeism, and number of 2016 work-related fatalities 403-4 Health and safety topics covered Sustainability Statement: Page 34 in formal agreements with trade unions Topic: Data Fraud or Theft GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 29 Management and its boundary to 30 and Pages 38 to 39 Approach 2016 103-2 The management approach and its Sustainability Statement: Pages 38 components to 39 103-3 Evaluation of the management Sustainability Statement: Pages 38 approach to 39 GRI 418: 418-1 Substantiated complaints Sustainability Statement: Pages 38 Customer concerning breaches of customer to 39 Privacy 2016 privacy and losses of customer data Non-GRI DF-1 Total number of identified digital Sustainability Statement: Page 39 attacks or digital security breach incidents DF-2 Digital security measures and Sustainability Statement: Pages 38 preparedness/response procedures to 39 Topic: Community Engagement GRI 103: 103-1 Explanation of the material topic Sustainability Statement: Pages 28 Management and its boundary to 30 and Page 39 Approach 2016 103-2 The management approach and its Sustainability Statement: Page 39 components 103-3 Evaluation of the management Sustainability Statement: Page 39 approach GRI 413: Local 413-1 Operations with local community Sustainability Statement: Page 39 Communities engagement, impact assessments, Community impact assessments or 2016 and development programs other development programmes have not been undertaken. Non-GRI CE-1 Community engagement focus Sustainability Statement: Page 39 areas Cycle & Carriage Bintang Berhad Annual Report 2018 45

Directors' Report

The Directors of Cycle & Carriage Bintang Berhad present their report to the members together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2018.

Principal Activities The principal activities of the Company consist of the retailing of motor vehicles, sale of spare parts and servicing of vehicles, whilst the principal activities of the subsidiaries are as stated in Note 25 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

Financial Results

Group Company RM’000 RM’000

Profit before tax 28,227 7,999 Income tax expense (5,908) (1,144) Net profit for the financial year 22,319 6,855

Dividend No dividend has been paid or declared by the Company since 31 December 2017. The Directors do not recommend any dividend for the financial year ended 31 December 2018.

Reserves and Provisions Material transfers to or from reserves and provisions during the financial year are shown in the financial statements.

Directors The Directors in office during the financial year and during the period from the end of the financial year to the date of the report are:

Haslam Grey Preeston Rossana Annizah binti Ahmad Rashid Teng Wei Ann Adrian (resigned on 23 April 2018) (redesignated as Alternate Director to Rossana Annizah binti Ahmad Rashid on 23 April 2018) Tang Saw Hua Anthony Albert Collingridge (appointed on 31 October 2018) Chan Tze Choong Eric (Alternate Director to Haslam Grey Preeston) Tan Sri Dato’ Sulaiman bin Sujak (retired on 23 April 2018) Datuk Syed Zaid bin Syed Jaffar Albar (appointed on 9 March 2018 and resigned on 8 October 2018)

In accordance with the Company’s Constitution, Rossana Annizah binti Ahmad Rashid retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers herself for re-election.

In accordance with the Company’s Constitution, Anthony Albert Collingridge retires under casual vacancy at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election.

Directors’ Benefits During and at the end of the financial year, no arrangements subsisted to which the Company is a party being arrangements, with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than those disclosed in Note 5 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest other than share options. 46 Directors' Report

Directors’ Interests in Shares According to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financial year in the ordinary shares and options over ordinary shares in the Company and its related corporations are as follows:

Number of ordinary shares At At 1.1.2018 Acquired Sold 31.12.2018

Shares in Jardine Cycle & Carriage Limited (“JCCL”) held by: Chan Tze Choong Eric 11,166 0 0 11,166

Options over ordinary shares of US$0.25 each At At 1.1.2018 Granted Exercised 31.12.2018

Options in Jardine Matheson Holdings Limited held by: Haslam Grey Preeston 13,334 0 0 13,334 Teng Wei Ann Adrian 48,334 0 0 48,334

None of the other Directors who held office at the end of the financial year held any interest in shares or options in the Company or its related corporations during the financial year.

Indemnity and Insurance Costs During the financial year, the Company maintained Directors’ and Officers’ Liability Insurance Policy to provide appropriate insurance cover for Directors and Officers of the Group subject to the terms of the policy. The insurance premium paid during the financial year amounted to RM26,600.

Directors’ Remuneration Details of Directors’ remuneration are set out in Note 5 to the financial statements.

Other Statutory Information Before the financial statements of the Group and of the Company were prepared, the Directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate provision had been made for doubtful debts; and

(b) to ensure that any current assets, which were unlikely to be realised in the ordinary course of business including the values of current assets as shown in the accounting records of the Group and of the Company had been written down to an amount which the current assets might be expected so to realise.

At the date of this report, the Directors are not aware of any circumstances:

(a) which would render the amounts written off for bad debts or the amount of the provision for doubtful debts inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or

(c) which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate. Cycle & Carriage Bintang Berhad Annual Report 2018 47

Directors' Report

Other Statutory Information (continued)

At the date of this report:

(a) there are no charges on the assets of the Group or of the Company which have arisen since the end of the financial year which secures the liabilities of any other person; and

(b) there are no contingent liabilities in the Group and in the Company which have arisen since the end of the financial year.

No contingent or other liability of any company in the Group has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Company and its subsidiaries to meet their obligations when they fall due.

At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Group and of the Company which would render any amount stated in the respective financial statements misleading.

In the opinion of the Directors,

(a) the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature, except for compensation on an insurance claim of RM12,910,181 as a result of unprecedented flood in Penang in the previous financial year as disclosed in Note 6; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

List of Directors of Subsidiaries The list of Directors of the subsidiaries during the financial year and during the period from the end of the financial year to the date of the report are:

Wilfrid Foo Tsu-Jin (appointed on 29 January 2018) Wan Qian-Wen Tan Tee Yong Ramasamy Devaraju (resigned on 30 January 2018) Soh Bing Quan (resigned on 31 December 2018)

Ultimate Holding Company The Directors regard Jardine Matheson Holdings Limited, a company incorporated in Bermuda, as the Company’s ultimate holding company.

Subsidiaries Details of subsidiaries are set out in Note 25 to the financial statements.

Auditors’ Remuneration Details of auditors’ remuneration are set out in Note 6 to the financial statements.

Auditors The auditors, PricewaterhouseCoopers PLT (LLP0014401-LCA & AF 1146), have expressed their willingness to accept re-appointment as auditors.

Signed on behalf of the Board of Directors in accordance with their resolution dated 26 February 2019.

HASLAM GREY PREESTON TANG SAW HUA Director Director 48 Statement by Directors Pursuant to Section 251(2) of the Companies Act 2016

We, Haslam Grey Preeston and Tang Saw Hua, two of the Directors of Cycle & Carriage Bintang Berhad, state that, in the opinion of the Directors, the financial statements set out on pages 53 to 105 are drawn up so as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018 and of the financial performance of the Group and of the Company for the financial year ended on that date in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

Signed on behalf of the Board of Directors in accordance with their resolution dated 26 February 2019.

HASLAM GREY PREESTON TANG SAW HUA Director Director

Statutory Declaration Pursuant to Section 251(1) of the Companies Act 2016

I, Kumaraguru Nadaysen, the officer primarily responsible for the financial management of Cycle & Carriage Bintang Berhad, do solemnly and sincerely declare that, the financial statements set out on pages 53 to 105 are, in my opinion, correct, and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.

KUMARAGURU NADAYSEN (MIA No. 7526)

Subscribed and solemnly declared by the abovenamed Kumaraguru Nadaysen.

At: Kuala Lumpur

On: 26 February 2019

Before me:

MOHAN A.S. MANIAM No. W710

Commissioner for Oaths Cycle & Carriage Bintang Berhad Annual Report 2018 49

Independent Auditors' Report To the Members of Cycle & Carriage Bintang Berhad (Incorporated in Malaysia) (Company No. 7378-D)

Report on the audit of the Financial Statements

Our opinion In our opinion, the financial statements of Cycle & Carriage Bintang Berhad (“the Company”) and its subsidiaries (“the Group”) give a true and fair view of the financial position of the Group and of the Company as at 31 December 2018, and of their financial performance and their cash flows for the financial year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

What we have audited We have audited the financial statements of the Group and of the Company, which comprise the statements of financial position of the Group and of the Company as at 31 December 2018, and the statements of comprehensive income, statements of changes in equity and statements of cash flows of the Group and of the Company for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 53 to 105.

Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the “Auditors’ responsibilities for the audit of the financial statements” section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence and other ethical responsibilities We are independent of the Group and of the Company in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants (“By-Laws”) and the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (“IESBA Code”), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code.

Our audit approach As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements of the Group and the Company. In particular, we considered where the Directors made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Group and of the Company, the accounting processes and controls, and the industry in which the Group and the Company operate.

Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the Group and of the Company for the current financial year. These matters were addressed in the context of our audit of the financial statements of the Group and of the Company as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. 50 Independent Auditors' Report To the Members of Cycle & Carriage Bintang Berhad (Incorporated in Malaysia) (Company No. 7378-D)

Report on the audit of the Financial Statements (continued)

Key audit matters (continued)

Key audit matters How our audit addressed the key audit matters

Inventory write down The carrying values of the motor vehicles inventories We discussed with management on the basis used of the Group and of the Company as at 31 December to write down certain models of motor vehicle 2018 amounted to RM304.4 million and RM224.2 inventory balance to their net realisable values as at million respectively. the reporting date.

We focused on the amount of write down of For new motor vehicles, the basis used by inventories recognised as an expense in the current management to determine the net realisable value financial year as it involved significant management was to consider the prevailing market conditions and judgement such as determining the timing of expected promotional costs to be incurred in relation the launch of new models, the general economic to the new vehicles to be sold in the following conditions of the country and the consumer’s calendar year. We selected a number of new motor demand. The determination of the estimated net vehicle models that were written down to their net realisable value of the motor vehicles inventory realisable values, and checked against the transacted balance is also subject to high estimation uncertainty. prices after the reporting date, where available, or the estimated discounts expected to be given on Refer to Note H in the summary of significant these models based on certain factors determined accounting policies and Notes 3(a), 6 and 15 to the by management. financial statements. For used motor vehicles, management had determined the net realisable value based on information gathered from third party e-commerce websites that sell used cars and made certain adjustments, where necessary. We assessed the reasonableness of the net realisable values of certain models of the inventory balance by checking the net realisable value of these used cars to the prices of similar car models published on the third party e-commerce websites. We also selected a number of used motor vehicle models that were written down to their net realisable values, and checked against the transacted prices after the reporting date, where available, or estimated discounts expected to be given to the customers based on certain factors determined by management.

Based on the above procedures performed, we noted no material exceptions.

Information other than the financial statements and auditors’ report thereon The Directors of the Company are responsible for the other information. The other information comprise the Directors’ Report, Management Discussion and Analysis, Corporate Governance Overview Statement and other sections of the 2018 Annual Report, but does not include the financial statements of the Group and of the Company and our auditors’ report thereon.

Our opinion on the financial statements of the Group and of the Company does not cover the other information and we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements of the Group and of the Company, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Group and of the Company or our knowledge obtained in the audit or otherwise appears to be materially misstated.

If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Cycle & Carriage Bintang Berhad Annual Report 2018 51

Independent Auditors' Report To the Members of Cycle & Carriage Bintang Berhad (Incorporated in Malaysia) (Company No. 7378-D)

Report on the audit of the Financial Statements (continued)

Responsibilities of the Directors for the financial statements The Directors of the Company are responsible for the preparation of the financial statements of the Group and of the Company that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia. The Directors are also responsible for such internal control as the Directors determine is necessary to enable the preparation of financial statements of the Group and of the Company that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements of the Group and of the Company, the Directors are responsible for assessing the Group’s and the Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no realistic alternative but to do so.

Auditors’ responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Group and of the Company as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:

(a) Identify and assess the risks of material misstatement of the financial statements of the Group and of the Company, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

(b) Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Group’s and the Company’s internal control.

(c) Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Directors.

(d) Conclude on the appropriateness of the Directors’ use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Group’s or the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the financial statements of the Group and of the Company or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Group or the Company to cease to continue as a going concern.

(e) Evaluate the overall presentation, structure and content of the financial statements of the Group and of the Company, including the disclosures, and whether the financial statements of the Group and of the Company represent the underlying transactions and events in a manner that achieves fair presentation.

(f) Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the financial statements of the Group. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 52 Independent Auditors' Report To the Members of Cycle & Carriage Bintang Berhad (Incorporated in Malaysia) (Company No. 7378-D)

Report on the audit of the Financial Statements (continued)

Auditors’ responsibilities for the audit of the financial statements (continued) We also provide the Directors with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with the Directors, we determine those matters that were of most significance in the audit of the financial statements of the Group and of the Company for the current financial year and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

Other Matters This report is made solely to the members of the Company, as a body, in accordance with Section 266 of the Companies Act 2016 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

PRICEWATERHOUSECOOPERS PLT HEW CHOOI YOKE LLP0014401-LCA & 03203/07/2019 AF J 1146 Chartered Accountants Chartered Accountant

Kuala Lumpur 26 February 2019 Cycle & Carriage Bintang Berhad Annual Report 2018 53

Consolidated Statement of Comprehensive Income For the Financial Year Ended 31 December 2018

Note 2018 2017 RM’000 RM’000 Restated

REVENUE 4 1,513,296 1,420,119 Cost of sales (1,366,846) (1,324,071) Gross profit 146,450 96,048

Other operating income - dividend income from an equity investment 11,229 11,229 - interest income 841 578 - others 23,360 10,965 Selling and distribution costs (107,392) (100,680) Administrative expenses (37,172) (28,776) OPERATING PROFIT/(LOSS) 37,316 (10,636)

FINANCE COST (9,089) (6,425) PROFIT/(LOSS) BEFORE TAX 6 28,227 (17,061) INCOME TAX (EXPENSE)/CREDIT 7 (5,908) 4,591 NET PROFIT/(LOSS) AND TOTAL COMPREHENSIVE INCOME/(LOSS) FOR THE FINANCIAL YEAR 22,319 (12,470)

NET PROFIT/(LOSS) AND TOTAL COMPREHENSIVE INCOME/(LOSS) ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY 22,319 (12,470)

Attributable to: OWNERS OF THE PARENT 22,319 (12,470)

sen sen Basic earnings/(loss) per share attributable to shareholders of the Company 9 22.15 (12.38) 54 Consolidated Statement of Financial Position As at 31 December 2018

Note 31.12.2018 31.12.2017 1.1.2017 RM’000 RM’000 RM’000 Restated Restated

NON-CURRENT ASSETS Intangible assets 10 9,842 9,842 9,842 Property, plant and equipment 11 168,561 158,584 94,907 Equity investment - available-for-sale 13 0 66,003 66,003 Deferred tax assets 14 13,394 14,727 9,103 191,797 249,156 179,855

CURRENT ASSETS Inventories 15 335,910 302,802 299,714 Trade and other receivables 16 128,546 92,634 75,550 Tax recoverable 6,560 9,775 2,857 Cash and cash equivalents 17 47,712 32,648 47,573 518,728 437,859 425,694 Asset held for sale 13 66,003 0 0 584,731 437,859 425,694 TOTAL ASSETS 776,528 687,015 605,549

NON-CURRENT LIABILITIES Deferred tax liabilities 14 0 0 62 Borrowings 18 62,095 61,960 0 62,095 61,960 62

CURRENT LIABILITIES Provisions for liabilities and charges 19 39 869 632 Current tax liabilities 32 28 25 Trade payables and other liabilities 20 174,314 140,067 144,052 Contract liabilities 21 25,277 26,103 24,283 Borrowings 18 221,464 187,000 148,000 421,126 354,067 316,992 TOTAL LIABILITIES 483,221 416,027 317,054 NET ASSETS 293,307 270,988 288,495

EQUITY CAPITAL AND RESERVES ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY Share capital 23 124,602 124,602 100,745 Share premium 0 0 23,857 Retained profits 168,705 146,386 163,893 TOTAL EQUITY 293,307 270,988 288,495 Cycle & Carriage Bintang Berhad Annual Report 2018 55

Consolidated Statement of Changes in Equity For the Financial Year Ended 31 December 2018

Attributable to shareholders of the Company Issued and fully paid ordinary shares Number Retained of shares Amount profits Total ’000 RM’000 RM’000 RM’000

At 1 January 2018 100,745 124,602 146,386 270,988 Net profit and total comprehensive income for the financial year 0 0 22,319 22,319 At 31 December 2018 100,745 124,602 168,705 293,307

Attributable to shareholders of the Company Issued and fully paid ordinary shares Number Share Retained Note of shares Amount premium profits Total ’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2017 100,745 100,745 23,857 163,893 288,495 Transition to no-par value regime 0 23,857 (23,857) 0 0 Net loss and total comprehensive loss for the financial year 0 0 0 (12,470) (12,470) Final dividend paid for the financial year ended 31 December 2016 8 0 0 0 (5,037) (5,037) At 31 December 2017 100,745 124,602 0 146,386 270,988 56 Consolidated Statement of Cash Flows For the Financial Year Ended 31 December 2018

Note 2018 2017 RM’000 RM’000 Restated

OPERATING ACTIVITIES Net cash flow used in operations 24 (1,157) (37,999) Interest paid (8,826) (5,727) Interest received 841 578 Claims/service and warranty provision utilised 19 (270) (13) Income tax paid (1,356) (8,010) (9,611) (13,172) Net cash flow used in operating activities (10,768) (51,171)

INVESTING ACTIVITIES Proceeds from disposal of plant and equipment 6 31 Purchase of property, plant and equipment 11 (19,774) (70,937) Dividend received from an equity investment 11,229 11,229 Net cash flow used in investing activities (8,539) (59,677)

FINANCING ACTIVITIES Drawdown of term loans 0 62,500 Drawdown of bankers’ acceptance 912,900 1,062,000 Repayment of bankers’ acceptance (959,200) (1,023,000) Drawdown of revolving hire-purchase floorplan 53,586 0 Drawdown of finance lease liabilities 70,358 0 Repayment of finance lease liabilities (43,273) 0 Transaction cost on borrowings paid 0 (540) Dividend paid 8 0 (5,037) Net cash flow from financing activities 34,371 95,923

NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR 15,064 (14,925) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 32,648 47,573 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 17 47,712 32,648 Cycle & Carriage Bintang Berhad Annual Report 2018 57

Company Statement of Comprehensive Income For the Financial Year Ended 31 December 2018

Note 2018 2017 RM’000 RM’000 Restated

REVENUE 4 1,117,958 1,054,682 Cost of sales (1,011,692) (972,415) Gross profit 106,266 82,267

Other operating income - dividend income from an equity investment 11,229 11,229 - interest income 2,525 2,728 - others 9,871 9,892 Selling and distribution costs (78,007) (74,271) Administrative expenses (34,958) (26,019) OPERATING PROFIT 16,926 5,826

FINANCE COST (8,927) (6,425) PROFIT/(LOSS) BEFORE TAX 6 7,999 (599) INCOME TAX (EXPENSE)/CREDIT 7 (1,144) 1,023 NET PROFIT AND TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 6,855 424 58 Company Statement of Financial Position As at 31 December 2018

Note 31.12.2018 31.12.2017 1.1.2017 RM’000 RM’000 RM’000 Restated Restated

NON-CURRENT ASSETS Property, plant and equipment 11 161,412 151,672 89,382 Investments in subsidiaries 12 & 25 47,704 47,704 47,704 Equity investment - available-for-sale 13 0 66,003 66,003 Deferred tax assets 14 11,634 9,903 8,098 220,750 275,282 211,187

CURRENT ASSETS Inventories 15 249,415 227,320 213,362 Trade and other receivables 16 155,954 144,537 123,344 Tax recoverable 4,328 6,566 1,636 Cash and cash equivalents 17 38,976 26,792 38,393 448,673 405,215 376,735 Asset held for sale 13 66,003 0 0 514,676 405,215 376,735 TOTAL ASSETS 735,426 680,497 587,922

NON-CURRENT LIABILITY Borrowings 18 62,095 61,960 0 62,095 61,960 0

CURRENT LIABILITIES Provisions for liabilities and charges 19 39 850 600 Trade payables and other liabilities 20 147,417 118,196 124,336 Contract liabilities 21 21,747 21,319 19,192 Amounts due to subsidiaries 22 26,144 26,152 26,161 Borrowings 18 206,109 187,000 148,000 401,456 353,517 318,289 TOTAL LIABILITIES 463,551 415,477 318,289 NET ASSETS 271,875 265,020 269,633

EQUITY CAPITAL AND RESERVES ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY Share capital 23 124,602 124,602 100,745 Share premium 0 0 23,857 Retained profits 147,273 140,418 145,031 TOTAL EQUITY 271,875 265,020 269,633

Cycle & Carriage Bintang Berhad Annual Report 2018 59

Company Statement of Changes in Equity For the Financial Year Ended 31 December 2018

Attributable to shareholders of the Company Issued and fully paid ordinary shares Number Retained of shares Amount profits Total ’000 RM’000 RM’000 RM’000

At 1 January 2018 100,745 124,602 140,418 265,020 Net profit and total comprehensive income for the financial year 0 0 6,855 6,855 At 31 December 2018 100,745 124,602 147,273 271,875

Attributable to shareholders of the Company Issued and fully paid ordinary shares Number Share Retained Note of shares Amount premium profits Total ’000 RM’000 RM’000 RM’000 RM’000

At 1 January 2017 100,745 100,745 23,857 145,031 269,633 Transition to no-par value regime 0 23,857 (23,857) 0 0 Net profit and total comprehensive income for the financial year 0 0 0 424 424 Final dividend paid for the financial year ended 31 December 2016 8 0 0 0 (5,037) (5,037) At 31 December 2017 100,745 124,602 0 140,418 265,020 60 Company Statement of Cash Flows For the Financial Year Ended 31 December 2018

Note 2018 2017 RM’000 RM’000 Restated

OPERATING ACTIVITIES Net cash flow from/(used in) operations 24 6,733 (41,925) Interest paid (8,695) (5,727) Interest received 2,525 2,728 Claims provision utilised 19 (270) 0 Income tax paid (637) (5,712) (7,077) (8,711) Net cash flow used in operating activities (344) (50,636)

INVESTING ACTIVITIES Proceeds from disposal of plant and equipment 1 28 Purchase of property, plant and equipment 11 (18,226) (68,625) Repayment of loan from a subsidiary 480 480 Dividend received from an equity investment 11,229 11,229 Net cash flow used in investing activities (6,516) (56,888)

FINANCING ACTIVITIES Drawdown of term loans 0 62,500 Drawdown of bankers’ acceptance 912,900 1,062,000 Repayment of bankers’ acceptance (959,200) (1,023,000) Drawdown of revolving hire-purchase floorplan 47,436 0 Drawdown of finance lease liabilities 51,247 0 Repayment of finance lease liabilities (33,339) 0 Transaction cost on borrowings paid 0 (540) Dividend paid 8 0 (5,037) Net cash flow from financing activities 19,044 95,923

NET CHANGE IN CASH AND CASH EQUIVALENTS DURING THE FINANCIAL YEAR 12,184 (11,601) CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 26,792 38,393 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 17 38,976 26,792 Cycle & Carriage Bintang Berhad Annual Report 2018 61

Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

Unless otherwise stated, the following accounting policies have been applied consistently in dealing with items that are considered material in relation to the financial statements. These policies have been consistently applied to all the financial years presented, unless otherwise stated.

A Basis Of Preparation The financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards and the requirements of the Companies Act 2016 in Malaysia.

The financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies below.

The preparation of financial statements in conformity with MFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported period. It also requires Directors to exercise their judgement in the process of applying the Group and the Company’s accounting policies. Although these estimates and judgement are based on the Directors’ best knowledge of current events and actions, actual results could differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 3.

(i) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company and are effective.

The new accounting standards, amendments and improvements to published standards and interpretations that are effective for the Group’s and the Company’s financial year beginning on or after 1 January 2018 are as follows:

l MFRS 9 Financial Instruments l MFRS 15 Revenue from Contracts With Customers l Amendments to MFRS 140 - Transfer of Investment Properties l IC Interpretation 22 Foreign Currency Transactions and Advance Consideration

The Group and the Company have adopted MFRS 9 and MFRS 15 for the first time in the 2018 financial statements, which resulted in changes in the accounting policies. The detailed impact of the changes in accounting policies are set out in Note 30 to the financial statements.

Other than that, the adoption of the other amendments and interpretations listed above did not have any impact on the current period or any prior period and is not likely to affect future periods.

MFRS 15: Full retrospective transition method The Group and the Company have applied MFRS 15 retrospectively. Comparative information for 2017 have therefore been restated to reflect the new requirements. The effects of the change in accounting policy were reflected in the Group’s and the Company’s statements of financial position as at 1 January 2017. There is no cumulative effect affecting retained profits as at 1 January 2017.

MFRS 9: Comparative information not restated The Group and the Company have applied MFRS 9 retrospectively with the date of initial application of 1 January 2018. In accordance with the transitional provisions provided in MFRS 9, comparative information for 2017 was not restated and continued to be reported under the previous accounting policies governed under MFRS 139. Equity investment has been reclassified from available-for-sale to financial asset measured at fair value through other comprehensive income as at 1 January 2018. There is no cumulative effect affecting retained profits as at 1 January 2017.

(ii) Standards early adopted by the Group and the Company.

There were no standards early adopted by the Group and the Company. 62 Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

A Basis Of Preparation (continued)

(iii) Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group and the Company but not yet effective.

Effective on or after 1 January 2019:

l Amendments to MFRS 9 - Prepayment Features With Negative Compensation l Annual improvements to MFRS 2015 - 2017 Cycle l MFRS 16 Leases l IC Interpretations 23 Uncertainty Over Income Tax Treatments l Amendments to MFRS 128 - Long-term Interests in Associates and Joint Ventures

Effective date: 1 January 2020:

l The Conceptual Framework for Financial Reporting (Revised 2018) l Amendments to MFRS 3 - Definition of A Business l Amendments to MFRS 101 and 108 - Definition of Material

The adoption of the above new standards, amendments and interpretations when they become effective are not expected to have any material impact on the Group’s and the Company’s financial statements except for MFRS 16.

Overview of assessment activities – MFRS 16 Leases Under MFRS 16, a lease is a contract (or part of a contract) that conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

MFRS 16 eliminates the classification of leases by the lessee as either finance leases (on statement of financial position) or operating lease (off statement of financial position).

The new requirements in MFRS 16 require a lessee to recognise a “right-of-use” of the underlying asset and a lease liability reflecting future lease payments for most leases. The right-of-use asset is depreciated in accordance with the principle in MFRS 116 and the lease liability is accreted over time with finance cost recognised in profit or loss.

Potential impact to the financial statements The Group and the Company intend to apply the full retrospective approach and the comparative information will be restated for the year prior to first adoption.

As at the reporting date, the Group and the Company have non-cancellable operating lease commitments of RM7.5 million and RM4.4 million respectively, see Note 29 to the financial statements. The Group and the Company are expected to recognise right-of-use assets of approximately RM72.8 million and RM68.4 million respectively and lease liabilities of RM79.4 million and RM74.9 million respectively on 1 January 2019. The impact to the retained profits of the Group and of the Company amounted to RM6.6 million and RM6.5 million respectively.

The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

B Consolidation The consolidated financial statements include the financial statements of the Company and its subsidiaries on the basis set out below.

A subsidiary is an entity over which the Group has control. The Group controls an entity when the Group is exposed to, or has right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-consolidated from the date that control ceases. Cycle & Carriage Bintang Berhad Annual Report 2018 63

Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

B Consolidation (continued) The Group applies the acquisition method to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred to the former owners of the acquiree and the equity interest issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. The Group recognises any non-controlling interest in the acquiree on an acquisition-by-acquisition basis, either at fair value or at the non-controlling interest’s proportionate share of the recognised amounts of acquiree’s identifiable net assets.

Acquisition-related costs are expensed as incurred.

Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration that is deemed to be an asset or liability is recognised in accordance with MFRS 9 in profit or loss. Contingent consideration that is classified as equity is not re-measured, and its subsequent settlement is accounted for within equity.

All intercompany transactions, balances and unrealised surpluses and deficits on transactions between group companies have been eliminated. Where necessary, accounting policies for subsidiaries have been changed to ensure consistency with the policies adopted by the Group.

C Investments in Subsidiaries In the Company’s separate financial statements, investments in subsidiaries are carried at cost less accumulated impairment losses, where applicable. On the disposal of investment in subsidiaries, the difference between disposal proceeds and the carrying amounts of the investments are recognised in the profit or loss.

D Property, Plant and Equipment Freehold land is stated at cost less impairment losses, where applicable. Freehold buildings, the building component of owner-occupied leasehold properties and all other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses, where applicable. The cost of an item of property, plant and equipment initially recognised includes its purchase price and any cost that is directly attributable to bringing the asset to location and condition necessary for it to be capable of operating in the manner intended by management. Cost also includes borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (refer to accounting policy K on borrowing costs).

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the Company and the cost of the item can be measured reliably. The carrying amount of the replaced part is de-recognised. All other repairs and maintenance are recognised as expenses in the profit or loss during the financial period in which they are incurred.

Freehold land is not depreciated as it has an infinite life. Leasehold land is amortised in equal instalment over the periods of the respective leases which range from 45 to 91 years. Buildings are depreciated using the straight-line method over their estimated useful economic lives or the estimated remaining period of the lease, whichever is shorter.

All other property, plant and equipment are depreciated on the straight-line basis to write off the cost of each asset to their residual values over their estimated useful lives at the following annual rates:

Buildings 3⅓% - 20% Plant and machinery 14% - 33% Motor vehicles, equipment and fixtures 10% - 33%

Depreciation on assets under construction commences when the assets are ready for their intended use.

The residual value, useful lives and depreciation method of property, plant and equipment are reviewed at the end of each reporting period and adjusted, if appropriate.

At the end of the reporting period, the Group and the Company assess whether there is any indication of impairment. If such indications exist, an analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the carrying amount exceeds the recoverable amount. See accounting policy F on impairment of non-financial assets.

On disposal of property, plant and equipment, the difference between the net disposal proceeds and the carrying amount is included in the profit or loss. 64 Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

E Intangible Assets

(i) Goodwill Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the acquisition date. If the cost of acquisition is less than the fair value of the net assets acquired, the difference is recognised directly in the profit or loss. Goodwill on acquisition of subsidiary is tested annually for impairment or whenever events or changes in circumstances indicate that the carrying value may not be recoverable and are carried at cost less accumulated impairment losses.

Goodwill is allocated to cash-generating units or groups of cash-generating units for the purpose of impairment testing.

(ii) Dealership rights Dealership rights, which are rights under dealership agreement, are separately identified intangible assets acquired as part of a business combination. This dealership agreement is expected to continue for an indefinite period and, where these agreements do not have indefinite terms, it is believed that renewal of these agreements can be obtained without costs, taking into account the historical renewal and the relationship between the dealer and contracting parties. Dealership rights are not amortised, but tested annually for impairment and carried at cost less accumulated impairment losses, where applicable.

F Impairment of Non-Financial Assets The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less cost to sell and its value-in-use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

Impairment losses are recognised in the profit or loss except for assets that are previously revalued where the revaluation was taken to other comprehensive income. Impairment losses would be allocated first to reduce the carrying amount of any goodwill allocated to the CGU and then to the other assets of the CGU on a pro rata basis, based on the carrying value of each asset in the CGU. In this case, the impairment is also recognised in other comprehensive income up to the amount of any previous revaluation.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in the profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

G Financial Assets

Accounting policies applied from 1 January 2018

(i) Classification From 1 January 2018, the Group and the Company classify its financial assets in the following measurement categories:

l those to be measured subsequently as fair value through (either other comprehensive income (“OCI”) or through profit or loss); and l those to be measured at amortised cost.

(ii) Recognition and derecognition Regular way purchases and sales of financial assets are recognised on trade-date, the date on which the Group and the Company commit to purchase or sell the asset. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group and the Company have transferred substantially all the risks and rewards of ownership. Cycle & Carriage Bintang Berhad Annual Report 2018 65

Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

G Financial Assets (continued)

Accounting policies applied from 1 January 2018 (continued)

(iii) Measurement At initial recognition, the Group and the Company measure a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (“FVTPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVTPL are expensed in the profit or loss.

Equity instruments

The Group and the Company subsequently measure its equity investment at fair value. Where the Group’s and the Company’s management has elected to present fair value gains and losses on equity investment in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the de-recognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s and the Company’s right to receive payments is established.

(iv) Subsequent measurement – Impairment From 1 January 2018, the Group and the Company assess on a forward looking basis the expected credit loss associate with its debts instruments carried at amortised cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group and the Company apply the simplified approach permitted by MFRS 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables.

Accounting policies applied until 31 December 2017 Financial assets are initially recognised at fair value plus transaction costs. Subsequent measurement of financial assets depends on the classification of the financial assets.

The Group classifies its financial assets in the following categories: loans and receivables and available- for-sale financial assets. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

(i) Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and receivables are carried at amortised cost using the effective interest method, less impairment. They are included in current assets, except for maturities greater than 12 months after the end of the reporting period. These are classified as non-current assets. Loans and receivables are classified as “trade and other receivables” and “cash and cash equivalents” in the statement of financial position.

(ii) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this category or not classified in any other categories. They are stated at fair values and are included in non-current assets unless management intends to dispose off the investment within 12 months of the end of the reporting period. Unrealised gains and losses arising from changes in the fair value of these investments are recognised in other comprehensive income and accumulated under equity in the fair value reserve. On disposal of investments or when an investment is determined to be impaired, the cumulative gains and losses previously deferred in equity is recognised in the profit or loss.

All purchases and sale of investments are recognised on the trade date, which is the date that the Group commits to purchase or sell the investment. Investments are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

The Group assesses at the end of each reporting period whether there is an objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity investments classified as available-for-sale, a significant or prolonged decline in the fair value of the investment below its cost is considered in determining whether the investments are impaired. If any such evidence exists for available- for-sale financial assets, the cumulative loss (measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in the statement of comprehensive income) is removed from the fair value reserve within equity and recognised in the profit or loss. Impairment losses recognised in the statement of comprehensive income on equity investments are not reversed through the statement of comprehensive income, until the equity investments are disposed off.

66 Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

G Financial Assets (continued)

Accounting policies applied until 31 December 2017 (continued) In the case of trade and other receivables, evidence of impairment indications that the debtors or a group of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation, and where observable data indicate that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults.

H Inventories Inventories are stated at the lower of cost and net realisable value. Cost is generally determined using the specific identification method except for spare parts, where cost is determined on the weighted average method. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and applicable variable selling expenses.

I Cash and Cash Equivalents Cash and cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

For the purposes of the statement of cash flows, cash and cash equivalents comprise cash in hand, deposits held at call with banks and bank overdrafts. In the statement of financial position, bank overdrafts are shown within borrowings in current liabilities, where applicable.

J Financial Liabilities Financial liabilities are classified according to the substance of the contractual arrangement entered into and definitions of a financial liability.

Financial liabilities, within the scope of MFRS 9, are recognised in the statement of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

The Group’s and the Company’s financial liabilities include trade payables, other liabilities and borrowings.

Trade payables and other liabilities are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method.

For other financial liabilities, gains and losses are recognised in the profit or loss when the liabilities are derecognised, or through the amortisation process.

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability, and the difference in the respective carrying amounts is recognised in the profit or loss.

K Borrowings and Borrowings Costs

(i) Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently carried at amortised cost; any difference between initial recognised amount and the redemption amount is recognised in profit or loss over the period of the borrowings using the effective interest method.

Fees paid on the establishment of loan facilities are recognised as transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case, the fee is deferred until the draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down, the fee is capitalised as a prepayment for liquidity services and amortised over the period of the facility to which it relates.

Borrowings are removed from the statement of financial position when the obligation specified in the contract is discharged, cancelled or expired. The difference between the carrying amount of a financial liability that has been extinguished or transferred to another party and the consideration paid, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. Cycle & Carriage Bintang Berhad Annual Report 2018 67

Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

K Borrowings and Borrowings Costs (continued)

(i) Borrowings (continued) Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the end of the reporting period.

(ii) Borrowing costs General and specific borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale. All other borrowing costs are recognised in profit or loss in the period in which they are incurred.

L Provisions Provisions for service and warranty and claims are recognised when the Group and the Company have a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

Provisions are measured at the present value of the expenditures expected to be required to settle the obligation using a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the obligation. The increase in the provision due to passage of time is recognised as interest expense.

M Share Capital

(i) Classification Ordinary shares are classified as equity.

(ii) Dividends Interim dividends are accounted for in shareholders’ equity as an appropriation of retained profits in the period in which they are declared whilst final dividend is accounted for when approved by shareholders at the Annual General Meeting.

N Revenue/Other Income Recognition

(i) Revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contracts. Revenue from contracts with customers is measured at its transaction price, being the amount of consideration which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, net of goods and service tax, returns, rebates and discounts. Transaction price is allocated to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time.

(a) Sale of vehicles and spare parts Revenue from the sale of goods is recognised when the Group and the Company sell the vehicle to the customers and control of the vehicle and spare parts has transferred, being when the vehicle and spare parts are delivered to the customer.

The retail of spare parts normally occurs during the performance of after-sale services, see Note N (i)(b) below.

Consistent with market practice, the Group collects deposit from customers for sale of vehicle. A contract liability is recognised for the customer deposits as the Group has an obligation to transfer the vehicle to the customer in respect of the deposits received. Customer deposits would be recognised as revenue upon sale of vehicle to the customer.

No element of financing is deemed present as the sale of vehicles are guaranteed by financiers which typically settles within 7 days while spare parts sales are made with a credit term of 30 days, which is consistent with market practice.

A receivable is recognised when the vehicle is delivered as this is the point in time that the consideration is unconditional because only the passage of time is required before payment is due. 68 Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

N Revenue/Other Income Recognition (continued)

(i) Revenue from contracts with customers is recognised by reference to each distinct performance obligation in the contracts. Revenue from contracts with customers is measured at its transaction price, being the amount of consideration which the Group and the Company expect to be entitled in exchange for transferring promised goods or services to a customer, net of goods and service tax, returns, rebates and discounts. Transaction price is allocated to each performance obligation on the basis of the relative standalone selling prices of each distinct good or services promised in the contract. Depending on the substance of the contract, revenue is recognised when the performance obligation is satisfied, which may be at a point in time or over time. (continued)

(b) Performance of after-sales services Revenue from rendering of services is recognised when services are rendered. The Group and the Company provide after-sale services or routine vehicle maintenance services and revenue from after-sale services is recognised over the period of performance of services to customers.

The sale of vehicle to customer may be bundled together with free services or service credits. The free services and service credit are separate performance obligations and the transaction price is allocated to the service obligations based on its relative standalone selling prices. The free services and service credits are deferred and recorded as contract liabilities. Free services are recognised as revenue over the period when the free services are performed while service credits are recognised as revenue as and when the credits are redeemed by the customers within the redemption period.

No element of financing is deemed present as the credit after-sales services are made with a credit term of 30 to 60 days, which is consistent with market practice.

Where consideration is collected from customers in advance of after-sales services being performed, a contract liability is recognised. The contract liability would be recognised as revenue when the services are rendered.

(ii) Other income is recognised on the following basis:

(a) Interest income is recognised on the accruals basis on a time-proportion basis unless collection is in doubt. (b) Dividend income is recognised when the right to receive payment is established. (c) Insurance agency commission is recognised on the effective commencement or renewal dates of the related vehicle insurance policies.

O Employee Benefits

(i) Short term employee benefits Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group and the Company.

(ii) Defined contribution plan The Group’s and the Company’s contributions to the Employees’ Provident Fund, a defined contribution plan regulated and managed by the Government, are charged to the profit or loss in the period to which they relate. Once the contributions have been paid, the Group and the Company have no further financial obligations.

P Leases

(i) Finance lease - Accounting by lessee Leases of property, plant and equipment where the Group and the Company have substantially all the risks and rewards of ownership are classified as finance leases. Finance leases are capitalised at the lease’s commencement at the lower of the fair value of the leased property, plant and equipment and the present value of the minimum lease payments. Cycle & Carriage Bintang Berhad Annual Report 2018 69

Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

P Leases (continued)

(i) Finance lease - Accounting by lessee (continued) Each lease payment is allocated between the liability and finance charges so as to achieve a constant rate on the balance outstanding. The corresponding rental obligations, net of finance charges, are included in non-current borrowings except for those with maturities of less than 12 months which are included in current borrowings. The interest element of the finance is charged to the profit or loss over the lease period so as to produce a constant periodical rate of interest on the remaining balance of the liability for each period. The property, plant and equipment acquired under finance leases are depreciated over the shorter of the useful lives of the asset or the lease term, if there is no reasonable certainty that the Group and the Company will obtain ownership of the asset at the end of the lease term.

Initial direct costs incurred by the Group and the Company in negotiating and arranging finance leases are added to the carrying amount of the leased assets and recognised as expense in the profit or loss over the lease term on the same basis as the lease expense.

Leasehold land which is in substance is a finance lease is classified as property, plant and equipment.

(ii) Operating lease - Accounting by lessee Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the profit or loss on the straight-line basis over the lease period.

Initial direct costs incurred by the Group and the Company in negotiating and arranging operating leases are recognised in the profit or loss when incurred.

Q Income Tax Income tax expense comprises current and deferred tax. Income tax expense is recognised in the profit or loss, except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current income tax is provided based on the tax payable on the taxable profit for the financial year, using income tax rate enacted or substantively enacted by the end of the reporting period, and any adjustment to tax payable in respect of previous financial years.

Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed to assets and liabilities for income tax purposes and their carrying amounts in the financial statements. The principal temporary differences arise from depreciation on property, plant and equipment, impairment of assets and unutilised tax losses carried forward; and in relation to acquisitions, on the difference between the fair values of the net assets acquired and their tax bases. Deferred tax is measured at the tax rates that are expected to apply to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets are recognised for temporary differences which will result in deductible amounts in future periods, carry-forward of unused tax losses and tax credits but only to the extent that it is probable that future taxable profits will be available against which these temporary differences, losses or tax credits can be utilised.

R Foreign Currencies

(i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using currency of the primary economic environment in which the entity operates (“functional currency”). The financial statements are presented in RM, which is the Company’s functional and presentation currency.

(ii) Transactions and balances Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency monetary assets and liabilities have been converted into RM at the rates of exchange ruling at the end of reporting date. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are recognised in the profit or loss. 70 Summary of Significant Accounting Policies For the Financial Year Ended 31 December 2018

S Segment Reporting Operating segments are reported in the manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Chief Executive Officer, who is primarily responsible for the Group’s and the Company’s strategic decisions.

T Non-current Assets held for Sale Non-current assets are classified as assets held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are stated at the lower of carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement.

An impairment loss is recognised for any initial or subsequent write down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition.

Non-current assets are not depreciated or amortised while they are classified as held for sale. Non-current assets classified as held for sale are presented separately from the other assets in the statement of financial position. Cycle & Carriage Bintang Berhad Annual Report 2018 71

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

1 General Information Cycle & Carriage Bintang Berhad (“the Company”) is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad.

The immediate and ultimate holding companies of the Company are Jardine Cycle & Carriage Limited, a company incorporated in Singapore and Jardine Matheson Holdings Limited, a company incorporated in Bermuda respectively.

The principal activities of the Company consist of the retailing of motor vehicles, sale of spare parts and servicing of vehicles, whilst the principal activities of the subsidiaries are as stated in Note 25 to the financial statements. There have been no significant changes in the nature of these activities during the financial year.

The address of the registered office of the Company is as follows:

Unit 30-01, Level 30, Tower A Vertical Business Suite Avenue 3, Bangsar South No. 8, Jalan Kerinchi 59200 Kuala Lumpur

The address of the principal place of business of the Company is as follows:

Lot 19, Jalan 51A/219 46100 Petaling Jaya Selangor Darul Ehsan

2 Financial Risk Management Objectives and Policies The Group’s and the Company’s activities expose it to a variety of financial risks, including market risk (interest rate risk and foreign currency exchange risk), credit risk and liquidity risk. The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders. Financial risk management is carried out through risk reviews, internal control systems and adherence to Group’s financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which covers the management of these risks.

(a) Interest rate risk Interest rate risk is the risk that the fair value of future cash flows of the Group’s and the Company’s financial instruments will fluctuate due to changes in market rates. As the Group and the Company have no significant long term interest bearing financial assets, the Group’s and the Company’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s and the Company’s interest bearing financial assets are mainly short term in nature and have been placed mostly in overnight placements. The Group’s and the Company’s interest on borrowings are issued at variable rates and fixed rates at inception and hence exposes the Group and the Company to rate changes. 72 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

2 Financial Risk Management Objectives and Policies (continued)

(a) Interest rate risk (continued) The following table sets out the carrying amounts of the Group’s and the Company’s financial instruments that are exposed to interest rate risk:

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Fixed rate Amounts due from subsidiaries 0 0 53,687 67,707 Bankers acceptance (unsecured) (140,700) (187,000) (140,700) (187,000) Finance lease liabilities (secured) (27,178) 0 (17,973) 0 Revolving hire-purchase floorplan (secured) (53,586) 0 (47,436) 0

Floating rate Deposits with licensed banks 36,048 24,013 36,048 24,013 Term loans (unsecured) (62,095) (61,960) (62,095) (61,960) Net exposure (247,511) (224,947) (178,469) (157,240)

As interest rate risk arising from the Group’s and the Company’s operations is not material, sensitivity analysis is hence not presented.

(b) Foreign currency exchange risk The Group and the Company are exposed to foreign currency exchange risk when entering into transactions that are not denominated in their functional currency. The Group manages its exposure to foreign currency exchange risk through the use of foreign currency forward contracts. There is no open foreign currency forward contract as at financial year end.

The Group’s and the Company’s principal total foreign currency exposure mainly relates to Singapore Dollar (“SGD”) as at the reporting date.

The Group’s and the Company’s exposure to foreign currencies at the reporting date is as follows:

Group and Company 2018 2017 RM’000 RM’000

Trade and other payables denominated in: - SGD 333 0 - United States Dollar (“USD”) 0 39 Total exposure 333 39

As foreign currency risk arising from the Group’s and the Company’s operations is not material, sensitivity analysis is hence not presented. Cycle & Carriage Bintang Berhad Annual Report 2018 73

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

2 Financial Risk Management Objectives and Policies (continued)

(c) Credit risk The Group’s and the Company’s credit risk are primarily attributable to deposits with banks, credit exposures to customers and unsecured loans and advances to its wholly-owned subsidiaries. The Group and the Company have credit policies in place and the exposures to these credit risks are monitored on an ongoing basis. The Group and the Company have no significant concentrations of credit risk.

The Group’s and the Company’s trade and other receivables and amounts due from subsidiaries are subject to the expected credit loss (“ECL”) model which incorporates forward looking information. ECL represents a probability-weighted estimate of the difference between present value of cash flows according to contract and present value of cash flows the Group and the Company expect to receive, over the remaining life of the financial instrument.

The Group’s and the Company’s trade receivables are subject to the ECL model and the Group and the Company apply a simplified approach to measure ECL which uses a lifetime ECL for all trade receivables. Note 16 to the financial statements sets out the measurement details of ECL.

The Group and the Company apply the general 3-stage approach for impairment of the other receivables, deposits and amounts due from subsidiaries. At each reporting date, the Group and the Company measure ECL through loss allowance at an amount equal to 12-month ECL if credit risk on a financial instrument or a group of financial instruments has not increased significantly since initial recognition. For all other financial instruments, a loss allowance at an amount equal to lifetime ECL is required.

Cash and cash equivalents are also subject to the impairment requirements of MFRS 9, however the identified impairment loss is expected to be immaterial.

The measurement of ECL reflects:

l unbiased and probability-weighted amount that is determined by evaluating a range of possible outcomes; l time value of money; and l reasonable and supportable information that is available without undue cost or effort at the reporting date about past events, current conditions and forecasts of future economic conditions.

Significant increase in credit risk The Group and the Company consider the probability of default upon initial recognition of asset and whether there has been a significant increase in credit risk on an ongoing basis throughout each reporting period. To assess whether there is a significant increase in credit risk, the Group and the Company compare the risk of a default occurring on the asset as at the reporting date with the risk of default as at the date of initial recognition. It considers available reasonable and supportable forward- looking information.

The following indicators are incorporated:

l internal credit rating; l actual or expected significant adverse changes in business, financial or economic conditions that are expected to cause a significant change to the debtor’s ability to meet its obligations; and l significant changes in the expected performance and behaviour of the debtor.

Macroeconomic information (such as market interest rates or growth rates) is incorporated as part of the internal rating model.

A significant increase in credit risk is presumed if a debtor is more than 30 days past due in making contractual payment.

Definition of default and credit-impaired financial assets The Group and the Company define a financial instrument as default, which is fully aligned with the definition of credit-impaired, when the counterparty fails to make contractual payment within 90 days of when they fall due and the debtor indicates significant financial difficulty such as it becomes probable that the debtor will enter bankruptcy or other financial reorganisation or the debtor is insolvent. Trade and other receivables that are credit-impaired are assessed on an individual basis. 74 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

2 Financial Risk Management Objectives and Policies (continued)

(c) Credit risk (continued)

Write off

(i) Trade receivables Trade receivables are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group and the Company. Impairment losses on trade receivables are presented as net impairment losses within selling and distribution expenses in the statement of comprehensive income. Subsequent recoveries of amounts previously written off are credited against the same line.

(ii) Other receivables, deposits and amounts due from subsidiaries The Group and the Company write off financial assets, in whole or in part, when they have exhausted all practical recovery efforts and have concluded that there is no reasonable expectation of recovery. The assessment of no reasonable expectation of recovery is based on unavailability of debtor’s sources of income or assets to generate sufficient future cash flows to repay the amount. The Group and the Company may write off financial assets that are still subject to enforcement activity. These are presented as net impairment losses within administrative expenses in the statement of comprehensive income. Subsequent recoveries of amounts previously written off are credited against the same line item.

The Group’s and the Company’s bank balances and short term deposits are placed with creditworthy local licensed banks. The credit risks arising thereof are minimised in view of the financial strength of the banks.

The Group and the Company have policies in place to ensure that sales on credit without collateral are made principally to corporate companies with appropriate credit worthiness and where necessary are partially backed by bank guarantees. Sales to other customers are made in cash or by major credit cards.

The Company provides unsecured loans and advances to its wholly owned subsidiaries and monitors the results of the subsidiaries regularly.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of financial position after deducting any impairment as set out in Note 16 and Note 17 respectively.

(d) Liquidity risk The Group and the Company adopt prudent liquidity risk management by maintaining sufficient cash and an adequate amount of available committed credit facilities. Cycle & Carriage Bintang Berhad Annual Report 2018 75

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

2 Financial Risk Management Objectives and Policies (continued)

(d) Liquidity risk (continued) The table below analyses the Group’s and the Company’s non-derivative financial liabilities into relevant maturity groupings based on remaining periods at the reporting date to the maturity dates. The amounts disclosed in the table are contractual undiscounted cash flow:

On Demand/ Between Between Between Less than 3 to 6 6 months 1 year 3 months months to 1 year to 5 years Total RM’000 RM’000 RM’000 RM’000 RM’000

At 31 December 2018 Group Trade payables and other liabilities 160,870 11,380 2,064 0 174,314 Borrowings 212,156 11,091 1,474 70,605 295,326 373,026 22,471 3,538 70,605 469,640

Company Trade payables and other liabilities 136,008 10,805 604 0 147,417 Amounts due to subsidiaries 26,144 0 0 0 26,144 Borrowings 197,066 10,737 1,474 70,605 279,882 359,218 21,542 2,078 70,605 453,443

At 31 December 2017 Group Trade payables and other liabilities 134,474 1,280 4,313 0 140,067 Borrowings 187,000 0 0 76,271 263,271 321,474 1,280 4,313 76,271 403,338

Company Trade payables and other liabilities 113,949 0 4,247 0 118,196 Amounts due to subsidiaries 26,152 0 0 0 26,152 Borrowings 187,000 0 0 76,271 263,271 327,101 0 4,247 76,271 407,619

(e) Capital management The Group’s and the Company’s objectives when managing capital are to safeguard the Group’s and the Company’s ability to continue as a going concern while seeking to maximise benefits to shareholders and other stakeholders. Capital is equity as shown in the consolidated statement of financial position plus net debt. 76 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

2 Financial Risk Management Objectives and Policies (continued)

(e) Capital management (continued) The Group and the Company actively and regularly review and manage the capital structure to ensure optimal capital structure and shareholder returns, taking into consideration the future capital requirements of the Group and the Company and capital efficiency, prevailing and projected profitability, projected operating cash flows, projected capital expenditure and projected strategic investment opportunities. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce debt. There has been no change in the Group’s and the Company’s approach to capital management during the financial year. The Group and the Company are not subjected to any externally imposed capital requirements.

The Group monitors capital on the basis of the Group’s consolidated gearing ratio and consolidated interest cover. The gearing ratio is calculated as net debt divided by total equity. Net debt is calculated as total borrowings less bank balances and other liquid funds. Interest cover is calculated as underlying business performance divided by net financing charges. The ratios are monitored by corporate management.

The gearing ratios and interest cover as at the reporting dates were as follows:

2018 2017

Gearing ratio 0.80 0.80 Interest cover (times) 4.1 nm*

* nm – not meaningful

(f) Fair value of financial instruments Fair value recognised in the statement of financial position is measured using the following fair value hierarchy:

l Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities l Level 2 - Inputs other than quoted price included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) l Level 3 - Inputs for the asset or liability that are not based on observable market data (that is, observable inputs)

The carrying amounts approximate fair values in respect of cash and cash equivalents, receivables and payables due to the relative short term nature of these financial instruments.

The fair value of unquoted investment, which is classified as equity investment measured at fair value through other comprehensive income, (2017: available-for-sale) is measured based on the present value of future expected cash flows. The inputs used are categorised as Level 3, taking into consideration the terms of the shares and the call and put option which is exercisable anytime giving 12 months’ notice at the initial cost of investment.

(g) Price risk The Group and the Company are not exposed to significant equity securities price risk in respect of unquoted investments held by the Group and the Company in Mercedes-Benz Malaysia Sdn. Bhd. (“MBM”) which has been classified in the statement of financial position as fair value through other comprehensive income (2017: available-for-sale) as set out in Note 13. Cycle & Carriage Bintang Berhad Annual Report 2018 77

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

3 Critical Accounting Estimates and Judgement Estimates and judgements used in preparing the financial statements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant effect on the carrying amounts of assets and liabilities are discussed below:

(a) Write down of inventories The Group and the Company review its inventories periodically and write down the inventories based on an assessment of their net realisable values. Inventories are written down when events or changes in circumstances indicate that the carrying amounts exceed the net realisable values. The identification of the write down requires the use of estimates. Changes in the estimates would result in revision to the valuation of the inventories.

For new motor vehicles, the net realisable value is determined based on prevailing market conditions and expected promotional costs to be incurred on these vehicles which will be sold in the following calendar year.

For used motor vehicles, the net realisable value is based on information gathered from third party e-commerce websites that sell used cars and adjustments are made, where necessary, depending on the number of cars held and prevailing market conditions.

(b) Income taxes Significant judgement is required in determining the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group and the Company recognise liabilities for anticipated tax audit issues based on estimates of whether additional taxes will be due.

Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

Recognition of the deferred tax assets, which principally relate to tax losses and provisions, depend on the management’s expectation of future taxable profits that will be available against which these tax benefits can be utilised. The outcome of their actual utilisation may be different.

(c) Impairment of intangible assets Goodwill and dealership rights are tested for impairment annually. This requires an estimation of value-in-use of cash generating units to which goodwill and dealership rights are allocated.

When value-in-use calculation are undertaken, management is required to estimate the expected future cash flows from the asset or cash generating unit and choose a suitable discount rate in order to calculate the present value of the cash flows. Further details of the carrying value, the key assumptions applied in the impairment assessment of goodwill and dealership rights and sensitivity analysis to changes in the assumptions are given in Note 10.

(d) Dealership rights Dealership rights, which are rights under dealership agreement, are separately identified intangible assets acquired as part of a business combination. This dealership agreement is expected to continue for an indefinite period and, where these agreements do not have indefinite terms, it is believed that renewal of these agreements can be obtained without costs, taking into account the historical renewal and the relationship between the dealer and contracting parties. Dealership rights are not amortised, but tested annually for impairment and carried at cost less accumulated impairment losses, where applicable. 78 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

4 Revenue Revenue of the Group and of the Company comprise sale of motor vehicles, spare parts and servicing of motor vehicles, excluding goods and services taxes, excise duties and net of discounts.

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Restated Restated

Sale of motor vehicles and spare parts – point in time 1,452,377 1,363,270 1,072,100 1,011,989 Servicing of motor vehicles – over time 60,919 56,849 45,858 42,693 1,513,296 1,420,119 1,117,958 1,054,682

5 Directors’ Remuneration The emoluments received by Directors of the Company during the financial year are as follows:

Group and Company 2018 2017 RM’000 RM’000

Non-Executive Directors: - Fees 314 380

6 Profit/(Loss) Before Tax

(a) Profit/(Loss) before tax is arrived at after charging:

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Defined contribution pension plan 10,395 8,188 8,241 6,506 Salaries, bonuses and other employee benefits costs 83,129 70,420 67,433 57,898 Inventories - write down, net (Notes 15 & 24) 0 10,066 2,522 5,097 - write offs (Note 24) 0 10,794 0 0 Costs of inventories/materials/ consumables 1,330,179 1,251,780 980,969 931,076 Depreciation of property, plant and equipment (Notes 11 & 24) 9,769 7,204 8,462 6,281 Leasing of equipment 1,787 1,478 1,237 1,040 Directors’ remuneration 314 380 314 380 Auditors’ remuneration @ 560 668 366 458 Rent for land and buildings 5,502 4,738 4,509 3,565 Write offs of plant and equipment (Notes 11 & 24) 24 16 24 14 Cycle & Carriage Bintang Berhad Annual Report 2018 79

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

6 Profit/(Loss) Before Tax (continued)

(a) Profit/(loss) before tax is arrived at after charging: (continued)

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Provisions for liabilities and charges (Notes 19 & 24) 0 250 0 250 Impairment on receivables, net (Notes 16 & 24) 0 4,528 0 2,184 Finance costs on borrowings (Note 24): - interest expenses 8,954 6,425 8,792 6,425 - amortisation of transaction cost 135 0 135 0 Group service fees 1,811 1,137 1,811 1,137 Group internal audit fees (Note 26) 324 304 324 304 Loss on disposal of plant and equipment (Note 24) 0 9 0 12 Demonstration car expenses 20,936 15,504 15,535 11,280 Foreign exchange loss – net 5 64 0 64

@ The analysis of remuneration paid or payable to PricewaterhouseCoopers PLT and its member firms are:

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

PricewaterhouseCoopers PLT

Statutory audit 349 353 260 268 Fees for other services: - non-statutory audit related services 24 23 24 23 373 376 284 291

Member firms of PricewaterhouseCoopers PLT - tax compliance and other advisory services 187 253 82 128

Member firms of PricewaterhouseCoopers International Limited - tax compliance 0 39 0 39 Total remuneration 560 668 366 458 80 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

6 Profit/(Loss) Before Tax (continued)

(b) And crediting:

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Gain on disposal of plant and equipment (Note 24) 2 0 1 0 Interest income from: - subsidiaries (Notes 24 & 26) 0 0 1,684 2,150 - deposits with licensed banks (Note 24) 841 578 841 578 Insurance agency commissions 4,565 4,663 4,301 4,425 Management fee income from subsidiaries (Note 26) 0 0 2,823 2,734 Rental income from: - subsidiaries (Note 26) 0 0 566 550 - external parties 184 81 184 81 Reversal of: - write down of inventories, net (Notes 15 & 24) 76 0 0 0 - provisions for liabilities and charges (Notes 19 & 24) 560 0 541 0 - impairment on trade receivables, net (Notes 16 & 24) 627 0 574 0 Foreign exchange gain – net 0 0 7 0 Compensation on insurance claim 12,910 0 0 0

Significant event during the financial year The Group received a compensation on an insurance claim of RM12,910,181 as a result of unprecedented flood in Penang in the previous financial year.

7 Income Tax (Expense)/Credit

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000

Current tax (4,575) (1,095) (2,875) (782) Deferred tax (Note 14) (1,333) 5,686 1,731 1,805 (5,908) 4,591 (1,144) 1,023

Current tax: - tax expense for the financial year (5,161) (1,032) (3,070) (730) - over/(under) accrual in prior financial years (net) 586 (63) 195 (52) (4,575) (1,095) (2,875) (782) Deferred tax: - origination and reversal of temporary differences (Note 14) (1,333) 5,686 1,731 1,805 (5,908) 4,591 (1,144) 1,023 Cycle & Carriage Bintang Berhad Annual Report 2018 81

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

7 Income Tax (Expense)/Credit (continued) The effective income tax rates of the Group and of the Company differ from the prevailing statutory income tax rate of 24% (2017: 24%) due to the following:

Group Company 2018 2017 2018 2017 % % % %

Statutory Malaysian income tax rate 24 (24) 24 (24) Tax effects of: - expenses not deductible for income tax purposes 9 13 26 295 - income not subject to tax (10) (16) (34) (450) - (over)/under accrual in prior financial years (net) (2) 0 (2) 9 Average effective income tax rate 21 (27) 14 (170)

8 Dividends The dividends paid in 2018 and 2017 are as follows:

Group and Company 2018 2017 Gross Amount of Gross Amount of per share dividend per share dividend sen RM’000 sen RM’000

Final single-tier dividend in respect of the previous financial year ended 31 December 2016, paid on 24 May 2017 0 0 5 5,037

The Directors do not recommend any dividend for the financial year ended 31 December 2018.

9 Earnings/(Loss) per Share Basic earnings/(loss) per share is calculated by dividing the Group’s profit/(loss) attributable to shareholders of the Company for the financial year by the weighted average number of ordinary shares in issue during the financial year.

Group 2018 2017

Net profit/(loss) for the financial year attributable to shareholders of the Company (RM’000) 22,319 (12,470) Weighted average number of ordinary shares in issue (’000) 100,745 100,745 Basic earnings/(loss) per share (sen) 22.15 (12.38)

No diluted EPS is computed for the Group as there are no dilutive potential ordinary shares in issue. 82 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

10 Intangible Assets

Group

Goodwill on Dealership acquisition rights Total RM’000 RM’000 RM’000

At 1 January/31 December 2018 4,501 5,341 9,842

At 1 January/31 December 2017 4,501 5,341 9,842

The goodwill of RM4,501,000 represents the expected synergies and economies of scales from combining operations of Cycle & Carriage Bintang (Northern) Sdn. Bhd. (“CCBN”) with the Group.

Impairment test on intangible assets Intangible assets relating to CCBN have been allocated to the cash generating unit of CCBN. Management has performed an impairment review of the carrying amount of the intangible assets at 31 December 2018 and concluded that no impairment has occurred.

The impairment review of intangible assets was made by comparing the carrying value of CCBN, including intangible assets, with the recoverable amount of CCBN based on the value-in-use calculation. This calculation uses cash flow projections based on financial budget approved by the Board of Directors covering a five-year period. Cash flows beyond the 5-year budget (2017: 5-year budget) period are extrapolated using the following assumptions:

- Gross margin of 9% (2017: 9%) based on business plan; - Long-term growth rate of 3% (2017: 3%) which takes into consideration the long-term growth rates of the automotive industry; - Pre-tax discount rate of 9% (2017: 9%) which reflects business specific risks relating to the relevant industries; and - The Group will continue to have the right to distribute Mercedes-Benz motor vehicles for the duration of the cash flow projection period.

Sensitivity to changes in assumptions With regard to the assessment of the value-in-use of the cash generating unit, management believes that any reasonable possible change in any of the above key assumptions would not cause the carrying value, including intangible assets, of the cash generating unit to materially exceed its recoverable amount. Cycle & Carriage Bintang Berhad Annual Report 2018 83

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

11 Property, Plant and Equipment

Motor vehicles, Plant equipment Construction Freehold Leasehold and and work-in- land land Buildings machinery fixtures progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2018

Net book value at 1 January 23,846 71,038 45,746 4,720 9,999 3,235 158,584 Additions 0 0 3,378 3,318 4,923 8,155 19,774 Reclassification 0 0 403 46 249 (698) 0 Disposals 0 0 0 (4) 0 0 (4) Write offs (Notes 6 & 24) 0 0 0 (5) (19) 0 (24) Depreciation charge (Notes 6 & 24) 0 (1,601) (3,073) (1,715) (3,380) 0 (9,769) Net book value at 31 December 23,846 69,437 46,454 6,360 11,772 10,692 168,561

At cost 23,846 75,458 82,021 17,012 41,833 10,692 250,862 Accumulated depreciation 0 (6,021) (32,775) (10,652) (30,061) 0 (79,509) Accumulated impairment losses 0 0 (2,792) 0 0 0 (2,792) Net book value at 31 December 23,846 69,437 46,454 6,360 11,772 10,692 168,561 84 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

11 Property, Plant and Equipment (continued)

Motor vehicles, Plant equipment Construction Freehold Leasehold and and work-in- land land Buildings machinery fixtures progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group 2017

Net book value at 1 January 23,846 9,798 48,312 3,162 9,789 0 94,907 Additions 0 61,696 374 2,876 2,756 3,235 70,937 Disposals 0 0 0 0 (40) 0 (40) Write offs (Notes 6 & 24) 0 0 0 (7) (9) 0 (16) Depreciation charge (Notes 6 & 24) 0 (456) (2,940) (1,311) (2,497) 0 (7,204) Net book value at 31 December 23,846 71,038 45,746 4,720 9,999 3,235 158,584

At cost 23,846 75,458 78,240 13,908 37,921 3,235 232,608 Accumulated depreciation 0 (4,420) (29,702) (9,188) (27,922) 0 (71,232) Accumulated impairment losses 0 0 (2,792) 0 0 0 (2,792) Net book value at 31 December 23,846 71,038 45,746 4,720 9,999 3,235 158,584

Cycle & Carriage Bintang Berhad Annual Report 2018 85

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

11 Property, Plant and Equipment (continued)

Motor vehicles, Plant equipment Construction Freehold Leasehold and and work-in- land land Buildings machinery fixtures progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Company 2018

Net book value at 1 January 23,559 72,893 41,177 3,024 8,482 2,537 151,672 Additions 0 0 3,378 2,636 4,366 7,846 18,226 Write offs (Notes 6 & 24) 0 0 0 (6) (18) 0 (24) Depreciation charge (Notes 6 & 24) 0 (1,601) (2,800) (1,182) (2,879) 0 (8,462) Net book value at 31 December 23,559 71,292 41,755 4,472 9,951 10,383 161,412

At cost 23,929 77,249 74,196 12,923 35,773 10,383 234,453 Accumulated depreciation 0 (5,957) (29,104) (8,451) (25,822) 0 (69,334) Accumulated impairment losses (370) 0 (3,337) 0 0 0 (3,707) Net book value at 31 December 23,559 71,292 41,755 4,472 9,951 10,383 161,412

2017

Net book value at 1 January 23,559 11,653 43,504 2,192 8,474 0 89,382 Additions 0 61,696 374 1,797 2,221 2,537 68,625 Disposals 0 0 0 0 (40) 0 (40) Write offs (Notes 6 & 24) 0 0 0 (7) (7) 0 (14) Depreciation charge (Notes 6 & 24) 0 (456) (2,701) (958) (2,166) 0 (6,281) Net book value at 31 December 23,559 72,893 41,177 3,024 8,482 2,537 151,672

At cost 23,929 77,249 70,818 10,317 32,452 2,537 217,302 Accumulated depreciation 0 (4,356) (26,304) (7,293) (23,970) 0 (61,923) Accumulated impairment losses (370) 0 (3,337) 0 0 0 (3,707) Net book value at 31 December 23,559 72,893 41,177 3,024 8,482 2,537 151,672

86 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

12 Investments in Subsidiaries

Company 31.12.2018 31.12.2017 RM’000 RM’000

Unquoted investments, at cost 66,185 66,185 Less: Impairment losses (18,481) (18,481) 47,704 47,704

A list of subsidiaries is set out in Note 25.

13 Equity Investment - Available-For-Sale/Fair Value through Other Comprehensive Income The equity investment - fair value through other comprehensive income (2017: available-for-sale) consists of the Group’s and the Company’s investment in MBM, a joint-venture company with Daimler AG (“DAG”). The Company has a 49% interest (Class B shares) in MBM while DAG has a 51% interest (Class A shares). MBM is not considered an associate of the Group and the Company as the Company’s interest in the Class B shares do not carry any voting rights nor any right to share in the equity interest.

Put and call options granted to CCB and MBM, respectively to sell and purchase the Class B shares were not exercisable prior to 31 December 2012. The exercise of either option requires at least 12 months prior written notice on or after 1 January 2013 at the exercise price equal to the par value paid-up in respect of the Class B shares.

On 24 July 2013, the Company entered into an amendment agreement (the “Amendment Agreement”) with DAG. The Joint Venture Agreement (the “JV Agreement”) previously provided that the Company was entitled to be paid approximately RM11.2 million (“CCB Dividend”) every year by way of a fixed annual dividend in respect of its shareholding in MBM. The terms of the Amendment Agreement provide that this will cease to be a fixed annual dividend, but instead the CCB Dividend will only be paid to the Company in a year in which MBM also declares a distribution of dividends to DAG (“DAG Dividend”). If a DAG Dividend is not paid for any given year, the annual dividend will not be paid to the Company for such year (the “Non- Paid Out Annual Dividend”). The Non-Paid Out Annual Dividend will be paid in the next year in which the above requirement for the pay out of the annual dividend is fulfilled. The annual dividend due in the next year to the Company and the Non-Paid Out Annual Dividends for all preceding years will be paid to the Company up to the amount of dividend that MBM declares to DAG.

On 30 November 2018, the Company received a letter from DAG exercising their call option over the Class B shares. Pursuant to the exercise of the such call option, the Company will be obliged to sell the Class B shares to DAG (or such persons as DAG may nominate) for a consideration of RM66,003,000. The exercise of the call option will take place 12 months from the exercise date of the call option. As the call option has been exercised, the equity investment has been reclassified as current asset as at 31 December 2018.

During the financial year ended 31 December 2018, the Group and the Company recognised a dividend income of RM11.2 million (2017: RM11.2 million). Cycle & Carriage Bintang Berhad Annual Report 2018 87

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

14 Deferred Taxation Deferred tax assets and liabilities are offset when there is a legally enforceable right to set-off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the statements of financial position:

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

At 1 January 14,727 9,041 9,903 8,098

(Charged)/Credited to the profit or loss (Note 7): - property, plant and equipment (146) 68 (63) 79 - provisions and payables 883 3,462 1,794 1,726 - unutilised tax losses and capital allowances (2,070) 2,156 0 0 (1,333) 5,686 1,731 1,805 At 31 December 13,394 14,727 11,634 9,903

Subject to income tax:

31.12.2018 31.12.2017 RM’000 RM’000

Group

Deferred tax assets (before offsetting) Provisions and payables 15,874 14,991 Unutilised tax losses and capital allowances 86 2,156 15,960 17,147 Offsetting (2,566) (2,420) Deferred tax assets (after offsetting) 13,394 14,727

Company

Deferred tax assets (before offsetting) Provisions and payables 12,621 10,827 Offsetting (987) (924) Deferred tax assets (after offsetting) 11,634 9,903 88 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

14 Deferred Taxation (continued)

31.12.2018 31.12.2017 RM’000 RM’000

Group

Deferred tax liabilities (before offsetting) Intangible assets 1,335 1,335 Property, plant and equipment 1,231 1,085 2,566 2,420 Offsetting (2,566) (2,420) Deferred tax liabilities (after offsetting) 0 0

Company

Deferred tax liabilities (before offsetting) Intangible assets 0 0 Property, plant and equipment 987 924 987 924 Offsetting (987) (924) Deferred tax liabilities (after offsetting) 0 0

Subject to agreement with the Inland Revenue Board, the amount of deductible temporary differences and unutilised tax losses for which no deferred tax assets have been recognised in the statements of financial position are as follows:

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Deductible temporary differences 1,011 1,011 0 0 Unutilised tax losses 6,260 6,260 0 0 7,271 7,271 0 0

Pursuant to the Budget 2019 announcement by the Malaysian Government, with effect from Year of Assessment (“YA”) 2019, the unutilised tax losses brought forward from YA2018 shall be allowed to be utilised for another seven consecutive YAs, up to YA2025. Any amount which remains unutilised by YA2025 shall be disregarded from YA2026 onwards. The deductible temporary differences are not affected by the change in the tax regulations and have no expiry date. Cycle & Carriage Bintang Berhad Annual Report 2018 89

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

15 Inventories

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

At cost Motor vehicles 49,064 89,509 37,238 74,888 Spare parts 30,026 22,919 24,084 17,377 79,090 112,428 61,322 92,265

At net realisable value Motor vehicles 255,296 189,074 186,925 134,086 Spare parts 1,524 1,300 1,168 969 256,820 190,374 188,093 135,055 335,910 302,802 249,415 227,320

Inventories where the realisable values are expected to be below the carrying amounts are written down. During the financial year, the Group has written back a net amount of inventories of RM76,000 (2017: write down of RM10,065,752) while the Company has written down a net amount of inventories of RM2,522,276 (2017: RM5,096,822).

16 Trade and Other Receivables

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Trade receivables Trade receivables – third parties 97,786 72,857 73,699 57,821 Less: Accumulated impairment (2,549) (4,188) (683) (2,002) 95,237 68,669 73,016 55,819 Warranty claims receivables 25,168 18,991 21,762 14,717 Less: Accumulated impairment (2,553) (1,547) (1,930) (1,185) 22,615 17,444 19,832 13,532 117,852 86,113 92,848 69,351

Deposits 2,516 2,203 2,062 1,784 Others 8,178 4,318 7,357 5,695 Amounts due from subsidiaries 0 0 55,761 69,781 Less: Accumulated impairment 0 0 (2,074) (2,074) 0 0 53,687 67,707 128,546 92,634 155,954 144,537

Credit terms of trade receivables range from 30 to 90 days (2017: 30 to 90 days).

Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation and default or delinquency in payment are considered indicators that the debtor is impaired and an allowance for impairment is made based on the estimated irrecoverable amount determined by reference to past default experience. 90 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

16 Trade and Other Receivables (continued) The Group applies the simplified approach to measure expected credit loss that is a lifetime expected loss allowance for trade receivables. To measure the expected credit loss, trade receivables have been grouped based on shared credit risk characteristics and the days past due. As for warranty claims receivables, the expected credit loss is measured based on specific rates applied to unapproved warranty claims and unaudited claims as at the reporting date.

Concentrations of credit risk with respect to trade receivables are limited as the more significant debts are partially backed up by bank guarantees and payment track records of the customers. The Group’s and the Company’s impairment loss is based on the individual customer basis, based on estimated irrecoverable amount. Management believes that no additional credit risk beyond amounts impaired for collection losses is inherent in the Group’s and the Company’s trade receivables. Other than the amounts which have been impaired, the remaining balance of the Group’s and the Company’s trade receivables (including warranty claims receivable) arise from financiers in respect of finance provided to end customers, sales to reputable public listed companies and government or semi government institutions and the principal, and therefore the likelihood of default by these customers is minimised.

The expected loss rates are based on the historical payment profiles of sales and the corresponding historical credit losses. The historical loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors and industry trends affecting the ability of the customers to settle the receivables.

The gross carrying amounts of trade receivables of the Group and of the Company as at the reporting date amounted to RM122,954,109 and RM95,461,363 (2017: RM91,847,611 and RM72,537,914) respectively and represent the Group’s and the Company’s maximum exposure to credit risk. The expected credit loss of the Group and of the Company as at the reporting date amounted to RM5,102,175 and RM2,613,309 (2017: RM5,735,477 and RM3,187,564) respectively and represents the Group’s and Company’s lifetime expected loss allowance for trade receivables and individual assessment for credit-impaired debtors. The net trade receivables balance is deemed to be performing.

Included in the other receivables above is an amount receivable from the immediate holding company of RM18,263 (2017: Nil) for transactions as disclosed in Note 26.

The amounts due from subsidiaries are unsecured, bearing interest at 3.8% (2017: 3.8%) per annum and are repayable upon demand except for interest free portion amounting to RM1,609,792 (2017: RM144,787). Amounts due from subsidiaries are assessed on an individual basis for ECL measurement, as the credit risk information can be obtained and is monitored based on each individual balance. The amounts due from subsidiaries is deemed to be performing as these subsidiaries are able to settle the balances with their liquid assets.

Movements in the impairment of trade receivables:

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

At 1 January 5,735 1,369 3,187 1,003 Impairment during the financial year (Note 6) 3,369 4,553 3,091 2,209 Bad debt written back (Note 6) (3,996) (25) (3,665) (25) Written off during the financial year (6) (162) 0 0 At 31 December 5,102 5,735 2,613 3,187

The other classes within trade and other receivables do not contain impaired assets.

The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivable mentioned above. Where necessary, the Group and the Company would request for bank guarantees as collaterals. Cycle & Carriage Bintang Berhad Annual Report 2018 91

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

17 Cash and Cash Equivalents

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Deposits with licensed banks 36,048 24,013 36,048 24,013 Cash and bank balances 11,664 8,635 2,928 2,779 47,712 32,648 38,976 26,792

Cash and cash equivalents are denominated in Ringgit Malaysia.

The weighted average annual interest rate that was effective as at the reporting date is as follows:

Group and Company 31.12.2018 31.12.2017 % % per annum per annum

Deposits with licensed banks 3.00 2.75

Deposits with licensed banks of the Group and of the Company have an average maturity period of 1 day (2017: 1 day). Bank balances are deposits held at call with banks and earn no interest.

18 Borrowings

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Non-current Term loans (unsecured) 62,095 61,960 62,095 61,960

Current Bankers acceptance (unsecured) 140,700 187,000 140,700 187,000 Finance lease liabilities (secured) 27,178 0 17,973 0 Revolving hire-purchase floorplan (secured) 53,586 0 47,436 0 221,464 187,000 206,109 187,000 283,559 248,960 268,204 248,960

The above borrowings are denominated in Ringgit Malaysia and carry an effective interest rate of 3.7% (2017: 4.1%) per annum. 92 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

18 Borrowings (continued)

Finance lease liabilities

Present Future value of minimum minimum lease lease payments Interest payments RM’000 RM’000 RM’000

At 31 December 2018

Group Less than one year 27,424 (246) 27,178

Company Less than one year 18,133 (160) 17,973

Included in the Group’s and the Company’s finance lease liabilities are motor vehicles purchased as inventories under finance leases with a tenure of 4 months from the date of purchases during the financial year. The title of the inventories remain with the Group and the Company during the lease period.

Revolving Finance hire- Bankers’ lease purchase Term loans acceptance liabilities floorplan Total RM’000 RM’000 RM’000 RM’000 RM’000

Group 2018

As at 1 January 61,960 187,000 0 0 248,960 Drawdown during the financial year 0 912,900 70,358 53,586 1,036,844 Repayment during the financial year 0 (959,200) (43,273) 0 (1,002,473) Finance cost 3,151 5,285 629 24 9,089 Finance cost paid (2,977) (5,314) (535) 0 (8,826) Net changes in prepayment of interest 0 29 0 0 29 Net changes in interest payable (39) 0 (1) (24) (64) As at 31 December 62,095 140,700 27,178 53,586 283,559 Cycle & Carriage Bintang Berhad Annual Report 2018 93

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

18 Borrowings (continued)

Revolving Finance hire- Bankers’ lease purchase Term loans acceptance liabilities floorplan Total RM’000 RM’000 RM’000 RM’000 RM’000

Group 2017

As at 1 January 0 148,000 0 0 148,000 Drawdown during the financial year 62,500 1,062,000 0 0 1,124,500 Repayment during the financial year 0 (1,023,000) 0 0 (1,023,000) Finance cost 698 5,727 0 0 6,425 Finance cost paid 0 (5,727) 0 0 (5,727) Transactions cost paid (540) 0 0 0 (540) Net changes in interest payable (698) 0 0 0 (698) As at 31 December 61,960 187,000 0 0 248,960

Company 2018

As at 1 January 61,960 187,000 0 0 248,960 Drawdown during the financial year 0 912,900 51,247 47,436 1,011,583 Repayment during the financial year 0 (959,200) (33,339) 0 (992,539) Finance cost 3,151 5,285 468 23 8,927 Finance cost paid (2,977) (5,314) (404) 0 (8,695) Net changes in prepayment of interest 0 29 0 0 29 Net changes in interest payable (39) 0 1 (23) (61) As at 31 December 62,095 140,700 17,973 47,436 268,204

2017

As at 1 January 0 148,000 0 0 148,000 Drawdown during the financial year 62,500 1,062,000 0 0 1,124,500 Repayment during the financial year 0 (1,023,000) 0 0 (1,023,000) Finance cost 698 5,727 0 0 6,425 Finance cost paid 0 (5,727) 0 0 (5,727) Transactions cost paid (540) 0 0 0 (540) Net changes in interest payable (698) 0 0 0 (698) As at 31 December 61,960 187,000 0 0 248,960 94 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

19 Provisions for Liabilities and Charges

Service and warranty Claims Total RM’000 RM’000 RM’000

Group

At 1 January 2018 19 850 869 Unused amounts reversed and credited to profit or loss (Note 6) (19) (541) (560) Utilised 0 (270) (270) At 31 December 2018 0 39 39

At 1 January 2017 32 600 632 Additional provisions during the financial year (Note 6) 0 250 250 Utilised (13) 0 (13) At 31 December 2017 19 850 869

Company

At 1 January 2018 0 850 850 Unused amounts reversed and credited to profit or loss (Note 6) 0 (541) (541) Utilised 0 (270) (270) At 31 December 2018 0 39 39

At 1 January 2017 0 600 600 Additional provisions during the financial year (Note 6) 0 250 250 At 31 December 2017 0 850 850

Claims The amounts represent a provision for certain legal claims brought against the Group and the Company arising from the ordinary course of business. The Directors are of the view that the outcome of these legal claims will not give rise to any significant loss beyond the amounts already provided as at 31 December 2018. Cycle & Carriage Bintang Berhad Annual Report 2018 95

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

20 Trade Payables and Other Liabilities

31.12.2018 31.12.2017 1.1.2017 RM’000 RM’000 RM’000 Restated Restated

Group

Trade payables 69,485 72,994 57,830 Other liabilities and accruals 104,829 67,073 86,222 174,314 140,067 144,052

Company

Trade payables 55,123 57,769 46,467 Other liabilities and accruals 92,294 60,427 77,869 147,417 118,196 124,336

Trade payables and other liabilities are denominated in the following currencies:

31.12.2018 31.12.2017 1.1.2017 RM’000 RM’000 RM’000 Restated Restated

Group

Currency RM 173,981 140,028 144,032 SGD 333 0 20 USD 0 39 0 174,314 140,067 144,052

Company

Currency RM 147,084 118,157 124,316 SGD 333 0 20 USD 0 39 0 147,417 118,196 124,336

Credit terms of trade payables granted to the Group and the Company vary from 30 to 90 days.

Included in other liabilities above are interest free amounts payable to Mercedes-Benz Services Malaysia Sdn. Bhd. (“MBSM”) of RM67,558,073 (2017: RM38,842,661) and RM62,084,133 (2017: RM38,842,661) for the Group and the Company respectively pertaining to a revolving hire-purchase floorplan facility. A pre-determined interest free period has been granted by MBSM. The unpaid amount beyond the interest free period has been classified as borrowings in Note 18 to the financial statements. Included in the other liabilities above are amounts payable to the immediate holding company of RM259,070 (2017: Nil) for transactions as disclosed in Note 26. 96 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

21 Contract Liabilities The amounts represent monies collected from customers for performance obligations which have yet to be fulfilled by the Group and the Company.

The contract liabilitiesat the beginning of the financial year have been recognised as revenue during the financial year.

Customer deposits relate to purchases of vehicles which have yet to be delivered by the Group and the Company at the reporting date. The Group and the Company apply the practical expedient in MFRS 15 of not disclosing the aggregrate amount of the revenue expected to be recognised in the future period as the performance obligation is part of a contract that have an original expected duration of less than one year.

22 Amount due to a Subsidiary The amount due to a subsidiary is denominated in Ringgit Malaysia, unsecured, interest free and repayable upon demand.

23 Share Capital

Group and Company 31.12.2018 31.12.2017 Number Number of shares Amount of shares Amount ’000 RM’000 ’000 RM’000

Issued and fully paid-up ordinary shares: At 1 January/31 December 100,745 124,602 100,745 124,602

Transition to no-par value regime on 31 January 2017 under the Companies Act 2016 (“the Act”) The Act which came into force on 31 January 2017 has repealed the Companies Act, 1965. The Act has abolished the concept of authorised share capital and par value of share capital. In accordance with Section 618(2) of the Act, any amount standing to the credit of the Company’s share premium account became part of the Company’s share capital upon commencement of the Act. Notwithstanding this provision, the Company may within 24 months from the date of the Act came into effect, use the amount standing to the credit of its share premium accounts of RM23,857,000 for purposes as set out in Section 618(3) of the Act. The Company did not exercise its rights to use the credit amounts which is now part of the Company’s share capital. Cycle & Carriage Bintang Berhad Annual Report 2018 97

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

24 Net Cash Flow (used in)/from Operations

Group Company 2018 2017 2018 2017 RM’000 RM’000 RM’000 RM’000 Restated Restated

Profit/(Loss) before tax 28,227 (17,061) 7,999 (599)

Adjustments for: Property, plant and equipment: - depreciation (Notes 6 & 11) 9,769 7,204 8,462 6,281 - (gain)/loss on disposal (Note 6) (2) 9 (1) 12 - write offs (Notes 6 & 11) 24 16 24 14 Interest income (Note 6) (841) (578) (2,525) (2,728) Finance cost (Note 6): - interest expense on borrowings 8,954 6,425 8,792 6,425 - amortisation of transaction cost on borrowings 135 0 135 0 Inventories (Note 6): - (write back)/write down of inventories, net (76) 10,066 2,522 5,097 - write offs 0 10,794 0 0 (Reversal of impairment loss)/Impairment on trade receivables, net (Notes 6 & 16) (627) 4,528 (574) 2,184 Provisions (Notes 6 & 19) (560) 250 (541) 250 Dividend income from an equity investment (11,229) (11,229) (11,229) (11,229) 5,547 27,485 5,065 6,306 33,774 10,424 13,064 5,707

Changes in working capital: Inventories (33,032) (23,948) (24,617) (19,055) Receivables (35,285) (21,612) (24,862) (18,002) Payables (Note 30) 34,212 (4,683) 29,189 (6,838) Contract liabilities (Note 30) (826) 1,820 428 2,127 Subsidiaries’ balances 0 0 13,531 (5,864) (34,931) (48,423) (6,331) (47,632) Net cash flow (used in)/from operations (1,157) (37,999) 6,733 (41,925) 98 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

25 Subsidiaries The subsidiaries, which are all incorporated in Malaysia and directly owned by the Company, are detailed below:

Issued Group’s share capital 2018 2017 Principal activities RM’000 % %

Cycle & Carriage Bintang 1,710 100 100 Retailing of motor vehicles, (Perak) Sdn. Bhd. sale of spare parts and servicing of vehicles. Srisari Sdn. Bhd. 0* 100 100 Dormant. Selecsama Sdn. Bhd. 5,000 100 100 Dormant. Cycle & Carriage (Malaysia) 31,000 100 100 Dormant. Sdn. Berhad Cycle & Carriage Bintang 4,898 100 100 Retailing of motor vehicles, (Northern) Sdn. Bhd. sale of spare parts and servicing of vehicles. Lowe Properties Sdn. Bhd. 200 100 100 Renting of premises.

* Issued share capital of RM2

All subsidiary companies are audited by PricewaterhouseCoopers PLT.

26 Related Party Disclosures In addition to related party disclosures disclosed elsewhere in the financial statements, set out below are other significant related party transactions and balances.

The significant related party transactions described below were carried out on terms and conditions agreed by the related parties.

Company 2018 2017 RM’000 RM’000

(a) With subsidiaries:

Income: (i) Transfer of motor vehicles and parts to subsidiaries 193,366 117,414 (ii) Receipt of rental (Note 6) 566 550 (iii) Receipt of management fee (Note 6) 2,823 2,734 (iv) Receipt of interest income, net (Note 6) 1,684 2,150 (v) Repayment of loan from a subsidiary 480 480

Expense: (i) Transfer of motor vehicles and parts from subsidiaries (176,048) (98,121) (ii) Share of insurance contributions and overhead expenses to subsidiaries (640) (693) Cycle & Carriage Bintang Berhad Annual Report 2018 99

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

26 Related Party Disclosures (continued)

Group and Company 2018 2017 RM’000 RM’000

(b) With the immediate holding company:

Provision of management services (975) (947) Receipt of insurance premium support 554 457

(c) With a subsidiary of the immediate holding company:

Provision of training programme 0 (50) Provision of management services (836) (190)

(d) With subsidiaries of the ultimate holding company:

Jardine Matheson & Co., Ltd: - provision of internal audit services (Note 6) (324) (304) - provision of executive development program and certificates (92) (112) Purchase of computer software, peripherals and copier charges from JOS Malaysia Sdn. Bhd. (939) (1,104)

(e) With an associate of the ultimate holding company:

Purchase of insurance from Jardine Lloyd Thompson Sdn. Bhd. (3,122) (428)

(f) With a Director of the immediate holding company:

Sale and servicing of vehicle 371 0

(g) With a Director of the Company:

Sale and servicing of vehicle 264 0

(h) With a principal officer of the Group and the Company:

Sale and servicing of vehicle 340 0

(i) Remuneration of key management personnel of the Group:

Short-term employee benefits 4,781 3,201 Other long-term benefits 321 845 5,102 4,046

Significant related party balances related to the above transactions are disclosed in Notes 16, 20 and 22. 100 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

26 Related Party Disclosures (continued) Relationships with the above related parties are as follows:

Related party Relationship

Jardine Cycle & Carriage Limited The immediate holding company of the Company. Cycle & Carriage Industries Pte Limited Subsidiary of Jardine Cycle & Carriage Limited, the immediate holding company of the Company. Jardine Matheson & Co., Ltd Subsidiaries of Jardine Matheson Holdings Limited, the Innovix Distribution Sdn. Bhd. ultimate holding company of the Company. JOS Malaysia Sdn. Bhd. } Jardine Lloyd Thompson Sdn. Bhd. Associate of Jardine Matheson Holdings Limited, the ultimate holding company of the Company.

Outstanding balances with the above related parties arose from trade and non-trade transactions during the financial year.

27 Financial Instruments The carrying amounts of the financial assets and liabilities of the Group and of the Company at the reporting date approximated their fair values. Cycle & Carriage Bintang Berhad Annual Report 2018 101

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

28 Segment Reporting The activities of the Group are conducted within Malaysia as shown in the following business segments:

l Automotive industry - retailing of motor vehicles, sale of spare parts and servicing of vehicles. l Investment - investment in MBM. Refer to Note 13 for further details.

Automotive industry Investment Total RM’000 RM’000 RM’000

2018

Revenue 1,513,296 0 1,513,296 Results: Segment results 25,246 11,229 36,475 Interest income 841 0 841 Finance cost (9,089) 0 (9,089) 28,227 Income tax expense (5,908) Net profit 22,319

Net assets: Segment assets 690,571 66,003 756,574 Unallocated assets 19,954 776,528

Segment liabilities 483,189 0 483,189 Unallocated liabilities 32 483,221

Other information: Capital expenditure 19,774 0 19,774 Depreciation 9,769 0 9,769 Write back of inventories, net (76) 0 (76) Reversal of impairment loss on receivables, net (627) 0 (627) Compensation on insurance claim (12,910) 0 (12,910)

As at 31 December 2018, the unallocated assets comprise deferred tax assets and tax recoverable while unallocated liabilities comprise current tax liabilities. 102 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

28 Segment Reporting (continued)

Automotive industry Investment Total RM’000 RM’000 RM’000

2017

Revenue 1,420,119 0 1,420,119 Results: Segment results (22,443) 11,229 (11,214) Interest income 578 0 578 Finance cost (6,425) 0 (6,425) (17,061) Income tax credit 4,591 Net loss (12,470)

Net assets: Segment assets 596,510 66,003 662,513 Unallocated assets 24,502 687,015

Segment liabilities 415,999 0 415,999 Unallocated liabilities 28 416,027

Other information: Capital expenditure 70,937 0 70,937 Depreciation 7,204 0 7,204 Write down of inventories, net 10,066 0 10,066 Inventories written off 10,794 0 10,794 Impairment on receivables, net 4,528 0 4,528

As at 31 December 2017, the unallocated assets comprise deferred tax assets and tax recoverable while unallocated liabilities comprise current tax liabilities.

29 Commitments

(a) Capital commitments Capital expenditure not provided for in the financial statements is as follows:

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Property, plant and equipment - Approved and contracted 53,205 8,260 49,011 6,006 - Approved but not contracted 9,741 12,458 8,303 10,729 62,946 20,718 57,314 16,735 Cycle & Carriage Bintang Berhad Annual Report 2018 103

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

29 Commitments (continued)

(b) Operating lease commitments The Group and the Company lease various properties under non-cancellable operating lease agreements. The leases have varying terms and renewal rights.

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

Group Company 31.12.2018 31.12.2017 31.12.2018 31.12.2017 RM’000 RM’000 RM’000 RM’000

Within one year 3,832 5,645 2,514 4,389 Between one and five years 3,635 3,910 1,930 1,197 7,467 9,555 4,444 5,586

30 Comparative Figures MFRS 15 and MFRS 9 came into effect for the financial year beginning 1 January 2018. The adoption of both MFRSs did not have a material impact on the Group and the Company except for MFRS 15 which requires segregation of revenue streams and reclassification of receivable balances arising from contracts with customers.

MFRS 15 establishes a comprehensive 5-steps framework for the recognition of revenue, which replaces MFRS 111 “Construction Contracts” and MFRS 118 “Revenue”, and covers contracts for goods and services. The core principle in the framework is that revenue is recognised when control of a good or service transfers to a customer. It provides clarification on the recognition criteria for certain revenue elements, resulting in restatements to components of revenue and trade and other liabilities as set out below. MFRS 15 has been accounted for retrospectively, and the comparative financial statements have been restated.

Under MFRS 9, the changes in fair value (if any) of the Group’s and the Company’s equity investment, previously classified as available-for-sale will be continued to be recognised in the other comprehensive income. The equity investment is classified as equity investment at fair value through other comprehensive income.

There is no additional impairment arising from the adoption of MFRS 9.

(a) The financial effects arising from the adoption of MFRS 15 are as follows:

As previously As reported Adjustments restated RM’000 RM’000 RM’000

Statements of Comprehensive Income

Group 2017

Revenue Sale of motor vehicles and spare parts 1,360,261 3,009 1,363,270 Servicing of motor vehicles 59,858 (3,009) 56,849 104 Notes to the Financial Statements For the Financial Year Ended 31 December 2018

30 Comparative Figures (continued)

(a) The financial effects arising from the adoption of MFRS 15 are as follows: (continued)

As previously As reported Adjustments restated RM’000 RM’000 RM’000

Statements of Comprehensive Income

Company 2017

Revenue Sale of motor vehicles and spare parts 1,009,303 2,686 1,011,989 Servicing of motor vehicles 45,379 (2,686) 42,693

Statements of Financial Position

Group 31.12.2017

Trade payables and other liabilities 166,170 (26,103) 140,067 Contract liabilities 0 26,103 26,103

1.1.2017

Trade payables and other liabilities 168,335 (24,283) 144,052 Contract liabilities 0 24,283 24,283

Company 31.12.2017

Trade payables and other liabilities 139,515 (21,319) 118,196 Contract liabilities 0 21,319 21,319

1.1.2017

Trade payables and other liabilities 143,528 (19,192) 124,336 Contract liabilities 0 19,192 19,192

Cycle & Carriage Bintang Berhad Annual Report 2018 105

Notes to the Financial Statements For the Financial Year Ended 31 December 2018

30 Comparative Figures (continued)

(a) The financial effects arising from the adoption of MFRS 15 are as follows: (continued)

As previously As reported Adjustments restated RM’000 RM’000 RM’000

Statements of Cash Flows

Group 2017

Changes in working capital: Payables (2,863) (1,820) (4,683) Contract liabilities 0 1,820 1,820

Company 2017

Changes in working capital: Payables (4,711) (2,127) (6,838) Contract liabilities 0 2,127 2,127

(b) The financial effects arising from the adoption of MFRS 9 are as follows:

As previously As reported Adjustments restated RM’000 RM’000 RM’000

Statements of Financial Position

Group and Company 1.1.2018

Equity investment, available-for-sale 66,003 (66,003) 0 Equity investment, fair value through other comprehensive income 0 66,003 66,003

31 Approval of Financial Statements The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 26 February 2019. 106 Five-Year Summary

2014 2015 2016 2017 2018 RM'000 RM'000 RM'000 RM'000 RM'000 Restated Restated Restated Restated

Consolidated Statements of Comprehensive Income Revenue 922,463 1,580,024 1,486,345 1,420,119 1,513,296

Profit/(Loss) before tax 14,955 67,041 48,823 (17,061) 28,227 Income tax (expense)/credit (5,060) (16,044) (10,412) 4,591 (5,908) Net profit/(loss) and total comprehensive income/ (loss) attributable to shareholders 9,895 50,997 38,411 (12,470) 22,319

Earnings/(Loss) per share (sen) 9.8 50.6 38.1 (12.4) 22.2 Gross dividend per share (sen) - 5.0 5.0 - -

Consolidated Statements of Financial Position Intangible assets 9,842 9,842 9,842 9,842 9,842 Property, plant and equipment 79,908 81,400 94,907 158,584 168,561 Equity investment - available-for-sale 66,003 66,003 66,003 66,003 - Other net non-current assets 5,621 8,573 9,041 14,727 13,394 Net current assets, other than net cash/(borrowings) 6,501 78,566 209,129 238,144 337,357 Net cash/(borrowings) 36,249 10,737 (100,427) (216,312) (235,847) Net assets 204,124 255,121 288,495 270,988 293,307

Share capital 100,745 100,745 100,745 124,602 124,602 Reserves 103,379 154,376 187,750 146,386 168,705 Shareholders' funds and capital employed 204,124 255,121 288,495 270,988 293,307

Net assets value per share (RM) 2.0 2.5 2.9 2.7 2.9

Consolidated Statements of Cash Flows Net cash flow from/(used in) operating activities 91,213 (29,577) (97,923) (51,171) (10,768) Net cash flow from/(used in) investing activities 9,910 4,065 (8,204) (59,677) (8,539) Net cash flow (used in)/from financing activities (87,552) 24,998 117,963 95,923 34,371 Net cash flow per share from/(used in) operating activities (RM) 0.9 (0.3) (1.0) (0.5) (0.1)

Key Ratios Gearing - - 35% 80% 80% Interest cover (times) 17 107 13 nm 4 Dividend cover (times) - 10.1 7.6 - - Dividend payout - 10% 13% - - Return/(Loss) on shareholders' funds 5.0% 22.2% 14.1% (4.5%) 7.9%

Notes: 1. Earnings/(Loss) per share is computed based on the net profit attributable to shareholders divided by the weighted average number of shares in issue. 2. Gross dividend per share represents the dividend declared and dividend proposed per share for the financial year. 3. Net assets value per share is computed based on shareholders' funds divided by the number of shares in issue at the end of the financial year. 4. Net cash flow per share from/(used in) operating activities is computed based on the net cash flow from operating activities divided by the weighted average number of shares in issue. 5. Gearing is computed based on net borrowings divided by shareholders' funds. 6. Interest cover is computed based on profit before interest expense and tax expense divided by interest expense. 7. Dividend cover is based on the net profit attributable to shareholders divided by net dividend declared and dividend proposed for the financial year. 8. Dividend payout is based on net dividend declared and dividend proposed for the financial year divided by net profit attributable to shareholders. 9. Return/(Loss) on shareholders' funds is computed based on net profit attributable to shareholders divided by average shareholders' funds. nm- not meaningful Cycle & Carriage Bintang Berhad Annual Report 2018 107

Financial Charts

RM' million RM' million Sen

1,600 60 60

1,400 50 50

1,200 40 40

1,000 30 30

800 20 20

600 10 10

400 0 0 14 15 16 17 18 14 15 16 17 18 200 -10 -10

0 -20 -20 14 15 16 17 18

Revenue Net profit/(loss) and total comprehensive Earnings/(Loss) per share income/(loss) attributable to shareholders

RM' million RM RM' million %

350 3.50 350 25

300 3.00 300 20

250 2.50 250 15

200 2.00 200 10

150 1.50 150 5

100 1.00 100 0

50 0.50 50 -5

0 - 0 -10 14 15 16 17 18 14 15 16 17 18 Capital employed Shareholders' funds Net assets value per share (RM) Return/(Loss) on shareholders' funds (%) 108 Corporate Structure

CYCLE & CARRIAGE BINTANG BERHAD

Cycle & Carriage Bintang (Perak) Sdn Bhd 100%

Cycle & Carriage Bintang (Northern) Sdn Bhd 100% 100% Lowe Properties Sdn Bhd

Cycle & Carriage (Malaysia) Sdn Bhd* 100%

Selecsama Sdn Bhd* 100%

Srisari Sdn Bhd* 100%

Notes:

n All of the subsidiaries are wholly owned subsidiaries of Cycle & Carriage Bintang”). Berhad (“CCB

n Subsidiaries marked with * are currently dormant entities.

n CCB holds 49% shareholding in Mercedes-Benz Malaysia Sdn Bhd (“MBM”). The Board of Directors of CCB had on 3 December 2018 announced that it had, on 30 November 2018 (“Exercise Date”) received a letter from Daimler AG (“DAG”) exercising their call option over 66,003,000 shares of MBM (“MBM Shares”) currently held by CCB. Pursuant to the exercise of such call option, CCB will be obliged to sell the MBM Shares to DAG (or such persons as DAG may nominate) (“Disposal”) for a consideration of RM66,003,000. Completion of the Disposal will take place 12 months from the Exercise Date. Upon completion, CCB will cease to hold any shares in MBM. Cycle & Carriage Bintang Berhad Annual Report 2018 109

Group Properties As at 31 December 2018

Approximate Land Age of Land Tenure Net Book Building Area (expiry of Value Acquisition Location of Property Description (Years) (sq. ft.) lease) RM’000 Date

1. Lot 5, MB Autohaus - 22 178,118 Leasehold 7,919 14.12.1982 Jalan Perusahaan Satu, service centre, (05.09.2074) Kawasan Perindustrian parts retail PKNS, and office. 68100 Batu Caves, Selangor.

2. No. 102, Jalan Skudai, MB Autohaus - 27 223,799 Freehold 8,943 30.01.1991 81200 Johor Bahru, vehicle showroom, Johor. service centre, parts retail and office.

3. No. 75, Jalan Tunku MB Autohaus - 15 100,155 Freehold 2,965 24.12.1983 Abdul Rahman, vehicle showroom, 30010 Ipoh, service centre, Perak. parts retail and office.

4. No. 37A, Lot 82, Holiday bungalow. 42 50,569 Leasehold 23 23.11.1977 Jalan Kamunting, (30.08.2037) Tanah Rata, 39007 Cameron Highlands, Pahang.

5. No. 16, Jalan PJU 7/5, MB Autohaus - 13 63,217 Freehold 17,572 07.04.2005 Mutiara Damansara, vehicle showroom, 47800 Petaling Jaya, service centre, Selangor. parts retail and office.

6. Lot 19, Jalan 51A/219, MB Autohaus - 13 102,997 Leasehold 18,386 21.04.2004 46100 Petaling Jaya, vehicle showroom, (07.01.2067) Selangor. service centre, parts retail and office.

7. No. 1619, Jalan MB Autohaus - 22 90,018 Freehold 4,107 13.05.2011 Pengkalan, service centre, Bukit Tengah, parts retail and 14000 Bukit Mertajam, office. Penang.

8. Lot 338, Jalan Sungai Future MB N/A 45,639 Leasehold 60,093 03.11.2017 Besi, 57100 Kuala Autohaus - (17.09.2062) Lumpur, Wilayah service centre, Persekutuan Kuala parts retail and Lumpur. office.

110 Shareholding Statistics

Analysis of Shareholdings by Range Groups as at 28 February 2019

No. of % Over Total No. of % Over Total Size of Shareholdings Shares Shares Holders Shareholders

1 - 99 3,426 0.00 280 6.54 100 - 1,000 1,005,869 1.00 1,285 30.00 1,001 - 10,000 8,763,644 8.70 2,215 51.72 10,001 - 100,000 12,169,951 12.08 459 10.72 100,001 - 5,037,224 19,258,610 19.12 43 1.00 5,037,225 and above 59,543,000 59.10 1 0.02 100,744,500 100.00 4,283 100.00

Thirty Largest Shareholders as at 28 February 2019

No. Investor Name/Beneficiary Name No. of Shares %

1. Affin Hwang Nominees (Asing) Sdn. Bhd. 59,543,000 59.10 DBS Vickers Secs (S) Pte Ltd for Jardine Cycle & Carriage Limited 2. CIMSEC Nominees (Tempatan) Sdn Bhd 3,440,400 3.41 Exempt an for CIMB Trustee Berhad (CO1046) 3. Chinchoo Investment Sdn. Berhad 1,909,000 1.89 4. Key Development Sdn. Berhad 1,183,000 1.17 5. Gan Teng Siew Realty Sdn. Berhad 1,049,900 1.04 6. Muar Ban Lee Group Berhad 1,027,400 1.02 7. Koperasi Permodalan Felda Malaysia Berhad 981,900 0.97 8. Mikdavid Sdn Bhd 864,900 0.86 9. UOB Kay Hian Nominees (Asing) Sdn Bhd 696,800 0.69 Exempt an for UOB Kay Hian Pte Ltd (A/c Clients) 10. AllianceGroup Nominees (Tempatan) Sdn. Bhd. 597,700 0.59 Pledged Securities Account for Chok Chew Lan (8125568) 11. Affin Hwang Nominees (Tempatan) Sdn. Bhd. 550,000 0.55 Pledged Securities Account for Chok Chew Lan 12. Chai Koon Khow 529,100 0.53 13. Ramly Bin Abdullah 444,000 0.44 14. CIMSEC Nominees (Tempatan) Sdn Bhd 400,000 0.40 CIMB Bank for Tan Kian Chuan (MY2204) 15. Quek See Kui 384,300 0.38 16. Wong Yu @ Wong Wing Yu 370,800 0.37 17. RHB Nominees (Asing) Sdn Bhd 346,700 0.34 Exempt an for RHB Securities Singapore Pte. Ltd. (A/c Clients) 18. RHB Nominees (Tempatan) Sdn. Bhd. 335,200 0.33 Pledged Securities Account For Chia Siew Fung 19. Gemas Bahru Estates Sdn. Bhd. 334,600 0.33 20. Lee Joo Chew @ Lee Sean Wah 330,000 0.33 21. Chong Kok Fah 320,000 0.32 22. Sinjin Pertama Holdings Sdn. Bhd. 200,000 0.20 23. Yeo Khee Huat 200,000 0.20 24. Sin Ee Nam 182,300 0.18 Cycle & Carriage Bintang Berhad Annual Report 2018 111

Shareholding Statistics

Thirty Largest Shareholders as at 28 February 2019 (continued)

No. Investor Name/Beneficiary Name No. of Shares %

25. Maybank Nominees (Tempatan) Sdn Bhd 177,700 0.18 Pledged Securities Account for Tai Siew Huat 26. JF Apex Nominees (Tempatan) Sdn Bhd 172,300 0.17 Pledged Securities Account for Chok Chew Lan (Margin) 27. Tan Geek Joo 161,100 0.16 28. Ng Poh Cheng 144,200 0.14 29. Lee Chee Mei 140,000 0.14 30. Ng Choon Sing 133,500 0.13 77,149,800 76.58

Substantial Shareholders as at 28 February 2019

Direct Indirect No. Name No. of Shares % No. of Shares %

1. Jardine Cycle & Carriage Limited 59,543,000 59.10 - - 2. Jardine Matheson Holdings Limited - - 59,543,000* 59.10 3. JMH Investments Limited - - 59,543,000* 59.10 4. Jardine Strategic Holdings Limited - - 59,543,000* 59.10 5. JSH Asian Holdings Limited - - 59,543,000* 59.10 6. Jardine Strategic Singapore Pte Ltd - - 59,543,000* 59.10

* Deemed interest by virtue of Section 8(4)(c) of the Companies Act 2016

Directors’ Shareholding as at 28 February 2019

None of the Directors hold shares in the Company. 112 Financial Calendar

Financial Year Ended 31 December 2018 Financial Year Ending 31 December 2019 Announcement of results: Proposed dates for announcement of results: – first quarter 23 April 2018 – first quarter 23 April 2019 – second quarter 23 July 2018 – second quarter 30 July 2019 – third quarter 2 November 2018 – third quarter 1 November 2019 – fourth quarter 26 February 2019 – fourth quarter 26 February 2020 Issue of Annual Report 25 March 2019 2019 Annual General 23 April 2019 Meeting Cycle & Carriage Bintang Berhad Annual Report 2018 113

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN That the 51st Annual General Meeting of the Company will be held at Concorde Ballroom 1, Lobby Level, Concorde Hotel, Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 23 April 2019 at 11:30 a.m. for the following purposes:

AGENDA

As Ordinary Business:

1. To receive the Audited Financial Statements for the financial year ended 31 December Refer to 2018 together with the Reports of the Directors and the Auditors thereon. Explanatory Note 1

2. To approve the payment of Directors’ fees of up to RM384,000 for the financial year Ordinary ending 31 December 2019 (2018: RM384,000). Resolution 1

3. To re-elect Rossana Annizah binti Ahmad Rashid, who is retiring pursuant to Article 98 Ordinary of the Constitution of the Company. Resolution 2

4. To re-elect Anthony Albert Collingridge who is retiring pursuant to Article 103 of the Ordinary Constitution of the Company. Resolution 3

5. To re-appoint Messrs. PricewaterhouseCoopers PLT as Auditors and to authorise the Ordinary Directors to fix their remuneration. Resolution 4

As Special Business:

To consider and if thought fit, to pass the following resolutions with or without modifications:

6. Authority to issue new ordinary shares pursuant to Sections 75 and 76 of the Ordinary Companies Act 2016 (“Act”) Resolution 5

“THAT, pursuant to Sections 75 and 76 of the Act and the Constitution of the Company and subject to the approvals from Bursa Malaysia Securities Berhad and other relevant government/regulatory authorities, where such approval is necessary, the Directors of the Company be and are hereby empowered pursuant to Sections 75 and 76 of the Act to issue shares in the Company at any time until the conclusion of the next Annual General Meeting and upon such terms and conditions and for such purposes as the Board of Directors may, in their absolute discretion, deem fit provided that the aggregate number of shares to be issued during the preceding 12 months does not exceed 10% of the total number of the issued shares (excluding treasury shares) of the Company for the time being AND THAT the Board of Directors be and are also empowered to obtain approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad.”

7. Authority for Proposed Renewal of Shareholders’ Mandate for Recurrent Related Ordinary Party Transactions of a Revenue or Trading Nature (“RRPTs”) Resolution 6

(i) “THAT, subject to the Companies Act ”) 2016and the (“MainAct Market Listing Requirements of Bursa Malaysia Securities Berhad (“Listing Requirements”), approval be and is hereby given to the Company and its subsidiaries to enter into RRPTs which are necessary for the day-to-day operations and on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders as set out in Paragraph 2.3 of the Circular to Shareholders dated 25 March 2019 (“Circular”) (“Proposed Shareholders’ Mandate”) and that the authority conferred by this resolution shall take effect immediately upon the passing of this resolution;

(ii) THAT such Proposed Shareholders’ Mandate is subject to annual renewal and such approval shall continue to be in force until:

(a) the conclusion of the next Annual General Meeting of the Company following this Annual General Meeting, at which time it will lapse unless, by a resolution passed at the meeting, the authority is renewed; 114 Notice of Annual General Meeting

(b) the expiration of the period within which the next Annual General Meeting after the date is required to be held pursuant to Section 340(2) of the Act (but must not extend to such extension as may be allowed pursuant to Section 340(4) of the Act); or

(c) revoked or varied by resolution passed by the shareholders in general meeting;

whichever is earlier;

(iii) THAT the Directors of the Company be and are hereby authorised to complete and do all such acts and things (including executing all such documents as may be required) as they may consider expedient or necessary to give effect to the Proposed Shareholders’ Mandate;

(iv) THAT the estimates given of the RRPTs specified in Paragraph 2.3 of the Circular being provisional in nature be accepted and that, the Directors and/or any of them be and are hereby authorised to agree to the actual amounts thereof provided always that such amount or amounts comply with the procedures set out in Paragraph 2.4 of the Circular; and

(v) THAT the aggregate value of the transactions conducted pursuant to the Proposed Shareholders’ Mandate during the financial year be disclosed in the annual report in accordance with the Listing Requirements.”

8. Special Resolution Special Proposed Adoption of the New Constitution of the Company Resolution 1

“THAT approval be and is hereby given to revoke the existing Memorandum and Articles of Association of the Company with immediate effect and in place thereof, the proposed new Constitution of the Company as set out in the Circular accompanying the Company’s Annual Report 2018 for the financial year ended 31 December 2018 be and is hereby adopted as the Constitution of the Company AND THAT the Board of Directors of the Company be and is hereby authorised to assent to any conditions, modification, variation and/or amendments as may be required by any relevant authorities, and to do all acts and things and take all such steps as may be considered necessary to give full effect to the foregoing.”

9. To transact any other business of which due notice shall be given in accordance with the Companies Act 2016.

By Order of the Board

Yeap Kok Leong (MAICSA 0862549) Lim Hooi Mooi (MAICSA 0799764) Ong Wai Leng (MAICSA 7065544) Company Secretaries

Kuala Lumpur

Dated: 25 March 2019 Cycle & Carriage Bintang Berhad Annual Report 2018 115

Notice of Annual General Meeting

Notes:

1. A Member of the Company entitled8. Where a Member of the Company number of scheduled Board and to attend and vote at the meeting is is an exempt authorised nominee Committee meetings for 2019 and entitled to appoint a proxy or in the which holds ordinary shares in the assuming that all Non-Executive case of a corporation, to appoint a Company for multiple beneficial Directors will hold office until the end representative to attend and vote owners in one (1) securities account of the financial year. This resolution in his place at a general meeting (“Omnibus Account”), there is no is to facilitate payment of Directors’ of the Company. A proxy need not limit to the number of proxies which fees on current financial year basis. be a Member of the Company and the exempt authorised nominee In the event the Directors’ fees a Member shall appoint not more may appoint in respect of each proposed is insufficient (e.g. due than two (2) proxies to attend and Omnibus Account it holds. to enlarged Board size), approval vote at the same meeting. will be sought at the next Annual 9. An exempt authorised nominee General Meeting for additional fees 2. Where a member appoints more refers to an authorised nominee to meet the shortfall. than one (1) proxy the appointments defined under the SICDA which is shall be invalid unless he specifies exempted from compliance with the 3. Item 6 of the Agenda - Proposed the proportions of his holdings to be provisions of subsection 25A(1) of Resolution 5 represented by each proxy. A proxy SICDA. appointed shall exercise all or any Approval for Issuance of New of his rights to attend, participate, 10. For the purpose of determining Ordinary Shares pursuant to speak and vote at a general meeting a Member who shall be entitled Sections 75 and 76 of the Act of the Company. to attend the 51st Annual General Meeting, the Company shall The Proposed Resolution 5 is for 3. The Proxy Form must be signed be requesting Bursa Malaysia the purpose of seeking a renewal of by the appointor or his attorney Depository Sdn Bhd, in accordance the general mandate to empower duly authorised in writing or if the with Article 58(2) of the Constitution the Directors to issue new shares appointor is a corporation either of the Company and Section 34(1) in the Company up to a number under common seal or under the of SICDA to issue a General Meeting not exceeding ten per cent (10%) of hand of an attorney or an officer Record of Depositor as at 16 April the total number of issued shares duly authorised. 2019. Only a depositor whose name (excluding treasury shares) of the appears therein shall be entitled to Company for such purposes as 4. In the event the Member duly attend the said meeting or appoint the Directors consider would be in executes the Proxy Form but does a proxy to attend and/or vote in his the best interest of the Company. not name any proxy, such Member stead. This authority, unless revoked or shall be deemed to have appointed varied by the Company at a general the Chairman of the meeting as his Explanatory Notes on Ordinary meeting, will expire at the next proxy. Business: Annual General Meeting.

5. Any alterations in the Proxy Form1. Item 1 of the Agenda - Audited The mandate will provide flexibility must be initialled. Financial Statements for the to the Company to issue new Financial Year Ended 31 December shares for any possible fund raising 6. To be valid, the Proxy Form duly2018 activities, including but not limited completed must be deposited at to further placement of shares, the Company’s Administration The Audited Financial Statementsfor the purpose of funding current and Polling Agent’s office at in Agenda 1 is meant for discussion or future investment project(s), Boardroom Share Registrars Sdn only as the approval of shareholders working capital, acquisition(s), Bhd (formerly known as Symphony is not required pursuant to the repayment of bank borrowings, Share Registrars Sdn Bhd), Level 6, provisions of Section 340(1)(a) issuance of shares as settlement Symphony House, Pusat Dagangan of the Act. Hence, this Agenda of purchase consideration or such Dana 1, Jalan PJU1A/46, 47301 is not put forward for voting by other applications that the Directors Petaling Jaya, Selangor Darul shareholders of the Company. may in their absolute discretion Ehsan, Malaysia not less than 48 deemed fit. hours before the time for holding 2. Item 2 of the Agenda - Proposed the general meeting or adjourned Resolution 1 As at the date of this Notice, the general meeting. Company did not issue any shares Approval for Directors’ Fees pursuant to the mandate granted 7. Where a Member is an authorised to the Directors at the last Annual nominee as defined under the Directors’ fees approved for General the Meeting. Securities Industry (Central financial year ended 31 December Depositories) Act 1991 (“SICDA”), it 2018 was up to RM384,000. The 4. Item 7 of the Agenda - Proposed may appoint not more than two (2) actual Directors’ fees for Non- Resolution 6 proxies in respect of each Securities Executive Directors paid during the Account it holds with ordinary financial year 2018 was RM314,000. Proposed Renewal of Shareholders’ shares of the Company standing The Directors’ fees proposed for the Mandate for Recurrent Related to the credit of the said Securities financial year ending 31 December Party Transactions of a Revenue or Account. 2019 are calculated based on the Trading Nature 116 Notice of Annual General Meeting

For further information on Proposed a. To ensure compliance with the Shareholders’ approval is being Resolution 6, please refer to the amended Listing Requirements sought under Special Resolution Circular to Shareholders dated 25 which was issued on 29 for the Company to adopt the March 2019 accompanying the November 2017; and proposed new Constitution as set Company’s Annual Report for the b. To provide clarity and out in the Circular accompanying financial year ended 31 December consistency with the the Company’s Annual Report 2018 2018. amendments that arise from the for the financial year ended 31 Act effective 31 January 2017. December 2018 in accordance with 5. Item 8 of the Agenda - Proposed Section 36(1) of the Companies Special Resolution 1 In view of the substantial amountAct 2016.of The Proposed New proposed amendments made to the Constitution shall take effect once Proposed Adoption of the New Constitution, the Board of Directors the proposed Special Resolution Constitution of the Company proposed that the proposed new 1 has been passed by a majority Constitution as set out in the Circular of not less than seventy-five per The Proposed Special Resolutionaccompanying 1 the Company’s centum (75%) of such members is meant for the proposed adoption Annual Report 2018 for the financial who are entitled to vote and do of a new Constitution to replace the year ended 31 December 2018 vote in person or by proxy at the existing Memorandum and Articles be and is hereby adopted as the 51st Annual General Meeting. of Association (Constitution) of the Constitution of the Company to Company mainly for the following replace the existing Memorandum purposes: and Articles of Association of the Company.

Statement Accompanying Notice of Annual General Meeting Pursuant to Paragraph 8.27(2) of the Listing Requirements

There is no Director standing for election at the 51st Annual General Meeting of the Company. PROXY FORM CDS Account No. No. of Shares Held Cycle & Carriage Bintang Berhad (7378-D) (Incorporated in Malaysia)

I/We Tel: [Full name in block, NRIC No./Company No. and telephone number] of being a member/members of Cycle & Carriage Bintang Berhad, hereby appoint:

Full Name (in Block) NRIC / Passport No. Proportion of Shareholdings

No. of Shares %

Address and/or (delete as appropriate)

Full Name (in Block) NRIC / Passport No. Proportion of Shareholdings

No. of Shares %

Address or failing him, the Chairman of the Meeting as my/our proxy to vote for me/us and on my/our behalf at the 51st Annual General Meeting of the Company to be held at Concorde Ballroom 1, Lobby Level, Concorde Hotel, Jalan Sultan Ismail, 50250 Kuala Lumpur on Tuesday, 23 April 2019 at 11:30 a.m., and to vote as indicated below:

Resolutions For Against Ordinary Resolutions 1. Payment of Directors’ fees. Resolution 1 2. Re-election of Rossana Annizah binti Ahmad Rashid who retires Resolution 2 pursuant to Article 98 of the Constitution of the Company. 3. Re-election of Anthony Albert Collingridge who retires pursuant to Resolution 3 Article 103 of the Constitution of the Company. 4. Re-appointment of Messrs. PricewaterhouseCoopers PLT as Resolution 4 Auditors of the Company. 5. Authority to issue new ordinary shares pursuant to Sections 75 Resolution 5 and 76 of the Companies Act 2016. 6. Proposed Renewal of Shareholders’ Mandate for Recurrent Resolution 6 Related Party Transactions of a Revenue or Trading Nature.

Special Resolution Special 7. Proposed Adoption of the New Constitution of the Company. Resolution 1

Please indicate with an “X” in the space provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific direction, your proxy will vote or abstain as he thinks fit.

Signed this day of , 2019

Signature of Shareholder/Common Seal Fold This Flap For Sealing

Then Fold Here

Stamp

THE ADMINISTRATION AND POLLING AGENT Cycle & Carriage Bintang Berhad (7378-D)

Boardroom Share Registrars Sdn Bhd (formerly known as Symphony Share Registrars Sdn Bhd) Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU1A/46 47301, Petaling Jaya Selangor Darul Ehsan

1st Fold Here

Notes:

1. A Member of the Company entitled to attend and vote at the meeting is entitled to a proxy or in the case of a corporation, to appoint a representative to attend and vote in his place at a general meeting of the Company. A proxy may, but need not be a Member of the Company and a Member shall appoint not more than two (2) proxies to attend and vote at the same meeting. 2. Where a member appoints more than one (1) proxy the appointments shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy. A proxy appointed shall exercise all or any of his rights to attend, participate, speak and vote at a general meeting of the Company. 3. The Proxy Form must be signed by the appointor or his attorney duly authorised in writing or if the appointor is a corporation either under common seal or under the hand of an attorney or an officer duly authorised. 4. In the event the Member duly executes the Proxy Form but does not name any proxy, such Member shall be deemed to have appointed the Chairman of the meeting as his proxy. 5. Any alterations in the Proxy Form must be initialled. 6. To be valid, the Proxy Form duly completed must be deposited at the Company’s Administration and Polling Agent’s office at Boardroom Share Registrars Sdn Bhd (formerly known as Symphony Share Registrars Sdn Bhd), Level 6, Symphony House, Pusat Dagangan Dana 1, Jalan PJU1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan, Malaysia not less than 48 hours before the time for holding the general meeting or adjourned general meeting. 7. Where a Member is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991 (“SICDA”), he/she may appoint not more than two (2) proxies in respect of each Securities Account it holds with ordinary shares of the Company standing to the credit of the said Securities Account. 8. Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds. 9. An exempt authorised nominee refers to an authorised nominee defined under the SICDA which is exempted from compliance with the provisions of subsection 25A(1) of SICDA. 10. For the purpose of determining a Member who shall be entitled to attend the 51st Annual General Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 58(2) of the Constitution of the Company and Section 34(1) of SICDA to issue a General Meeting Record of Depositor as at 16 April 2019. Only a depositor whose name appears therein shall be entitled to attend the said meeting or appoint a proxy to attend and/or vote in his stead.