TCMH ar2013_TanChongNew 4/22/14 3:24 PM Page A TCMH ar2013_TanChongNew 4/22/14 3:24 PM Page A Annual General Meeting of TAN CHONG MOTOR HOLDINGS BERHAD will be held at Pacific Ballroom, Level 2, Seri Pacific Hotel nd Kuala Lumpur, Jalan Putra, 42 50350 Kuala Lumpur, Malaysia on Wednesday, 28 May 2014 at 3:00 p.m. TCMH ar2013_TanChongNew 4/22/14 3:24 PM Page 1 CONTENTS 02 Corporate Information 03 Business Divisions 05 Report of the Board of Directors 09 8 Years Financial Highlights 10 Profile of Directors 13 Corporate Social Responsibility Report 16 Corporate Governance Statement 25 Internal Control Statement 27 Other Statements and Disclosures 28 Audit Committee Report 31 Daily Share Price & Volume Traded on Bursa Malaysia Securities Berhad 33 Financial Statements 149 Ten Largest Properties of the Group 150 Shareholders’ Statistics 153 Notice of Annual General Meeting Form of Proxy TCMH ar2013_TanChongNew 4/22/14 3:24 PM Page 2 Corporate Information Directors Audit Committee Registered Address Dato’ Tan Heng Chew Seow Thiam Fatt (Chairman) 62-68 Jalan Ipoh Executive Deputy Chairman Dato’ Ng Mann Cheong 51200 Kuala Lumpur and Group Managing Director Dato’ Haji Kamaruddin @ Abas bin Nordin Telephone : (03) 4047 8888 Siew Kah Toong Facsimile : (03) 4047 8636 Dato’ Ng Mann Cheong Website : www.tanchong.com.my Senior Independent Non-Executive Director Nominating Committee E-mail : [email protected] Dato’ Haji Kamaruddin @ Abas bin Nordin Dato’ Ng Mann Cheong (Chairman) Registrars Independent Non-Executive Director Dato’ Haji Kamaruddin @ Abas bin Nordin Seow Thiam Fatt Tricor Investor Services Sdn Bhd Seow Thiam Fatt Siew Kah Toong Level 17, The Gardens North Tower Independent Non-Executive Director Mid Valley City Board Risk Management Committee Lingkaran Syed Putra Siew Kah Toong 59200 Kuala Lumpur Independent Non-Executive Director Siew Kah Toong (Chairman) Telephone : (03) 2264 3883 Dato’ Ng Mann Cheong Facsimile : (03) 2282 1886 Dato’ Khor Swee Wah @ Koh Bee Leng Dato’ Haji Kamaruddin @ Abas bin Nordin E-mail : [email protected] Executive Director Seow Thiam Fatt Dato’ Tan Heng Chew Auditors Ling Ou Long @ Ling Wuu Long (Alternate: Ling Ou Long @ Executive Director Ling Wuu Long) KPMG Ho Wai Ming Company Secretaries Listing Executive Director Lee Kwee Cheng Bursa Malaysia Securities Berhad Yap Bee Lee (Listed on the Main Board on 4 February Chang Pie Hoon 1974) TCMH ar2013_TanChongNew 4/22/14 3:25 PM Page 3 Business Divisions 1 ASSEMBLY - Motor Vehicles 2 SALES AND DISTRIBUTION - Passenger Cars - Light Commercial Vehicles - Trucks 3 - Buses AFTER-SALES SERVICES - Spare Parts - Workshop 4 FINANCIAL SERVICES - Hire Purchase - Leasing 5 - Insurance Agency - Money Lending PROPERTY - Management and Investment 6 EDUCATION SERVICES - Skilled-based training Automotive; Alternative Energy; Sales & Marketing; Hospitality; Hairdressing - Post Graduate Education & Research MBA; MSc; MEng; Corporate Training 3 TAN CHONG MOTOR HOLDINGS BERHAD Annual Report 2013 TCMH ar2013_TanChongNew 4/22/14 3:25 PM Page 4 NISSAN ALMERA NISMO PERFORMANCE PACKAGE There’s plenty to ensure a comfortable drive all the way, but that’s just one thing to be excited about. Nissan Almera Nismo Performance Package treatment enhances the performance of your ride further with a touch of sportiness. It’s a sedan infused with racing DNA for your driving pleasure. TCMH ar2013_TanChongNew 4/22/14 3:25 PM Page 5 Report of the Board of Directors Dear Shareholders, We continue with our aspirations to build our foundation steadily in Asean with investments into various strategic locations. We remain committed to our goals and our roots as a truly Malaysian home-grown company while We are pleased to present Tan Chong continue branching out across the Asean countries as a regional automotive Motor Holdings Berhad’s Annual Report player. Despite the bumpy ride on the road to regional expansion, we remain for the financial year ended 31 December confident in the future of Asean and its potential to turn into the world’s next economic powerhouse in the coming years. Tan Chong Motor Group must 2013. be ready to ride the next wave of economic growth to drive our Group forward. As we entered 2013, Tan Chong Motor Review of Financial Performance Group witnessed a year marked with Revenue: up 27% to RM5,198 million continuing uncertainties in the global Profit before tax: up 60% to RM360 million economy that was still facing headwinds Net Profit: up 44% to RM236 million on the road towards economic recovery. Net assets per share: up 38% to RM4.15 Return on shareholders’ equity: 10.7% The Malaysian automotive sector hit some We are delighted to inform that for the first time, Tan Chong Motor Group’s bumps along the road in 2013. In the first revenue has crossed the RM5 billion threshold with recorded revenue of half 2013, there was a growing market RM5,198 million. This is an increase of 27% compared to RM4,088 million recorded last year. perception of potential car price reduction which caused many consumers to adopt Profit before tax was RM360 million. This is a jump of 60% in comparison to a wait-and-see approach in their buying financial year (FY) 2012 profit before tax of RM225 million. Profit attributable to shareholders increased by 51% to RM251 million in 2013 (RM165.9 million decisions. This gained traction during the in 2012). This was in spite of the RM56 million (equivalent to USD16.98 th run-up to the 13 General Elections held million) tax provision for Nissan Vietnam Co. Ltd. Earnings per share (EPS) in May 2013 coupled with the anticipation for the year stands at 38.44 sen compared to 25.41 sen in FY 2012. of the long awaited announcement on the The Group continues to maintain a healthy financial position with revised National Automotive Policy. shareholders’ funds at RM2,708 million, cash and cash equivalents of RM313 million and net gearing ratio of 0.36 times of shareholders’ funds as at 31 In spite of the challenging business December 2013. Net assets per share remain healthy at RM4.15 (up 38% environment faced by Tan Chong Motor from FY 2012). The Group undertook a revaluation exercise on its properties to reflect their current market value. This has resulted in an increase of Group both in Malaysia and the regional RM620 million to the net assets or equivalent to RM0.95 per share. The countries, the Group has delivered a revalued properties consist of buildings, leasehold land and freehold land commendable set of results for 2013 with situated in Malaysia, Vietnam and Laos. some notable achievements for the Group. Inventories stood at RM1,726 million (up 22% from FY 2012). CKD vehicle packs for Nissan Almera, New Nissan Grand Livina and CBU Serena Hybrid made up a substantial portion of the inventories in order to meet customers’ bookings. Danang Assembly Plant 5 TAN CHONG MOTOR HOLDINGS BERHAD Annual Report 2013 TCMH ar2013_TanChongNew 4/22/14 3:25 PM Page 6 Report of the Board of Directors Dividends Nevertheless, FY 2013 will go down in the also given a fresh new look and launched Group’s history as a milestone year where at the tail end of third quarter 2013. The Board recommends the payment of the Group achieved many firsts. This year final single tier dividend of 12% (2012 : was momentous for Tan Chong Motor The Vietnamese automotive industry has 12% less tax of 25%) for shareholders’ Group such as setting a new benchmark shown budding signs of stabilisation and approval at the forthcoming Annual for highest number of Nissan vehicles was slowly recovering from the weak General Meeting. Combined with the delivered in Malaysia and the Group’s first market in 2012. In June 2013, we earlier interim dividend of 12% less tax of overseas automotive assembly plant in witnessed the birth of the first Nissan 25% (2012: 12% less tax of 25%) and Vietnam commenced operations. Sunny (known as Almera in Malaysia) as special dividend of 18% less tax of 25% it rolled out of our newly-completed (2012: Nil) paid on 30 September 2013, While these are milestones to our automotive assembly plant in Danang the total net dividend for the year is 17.25 achievements, it is by no means the City, Vietnam. The assembly plant sen per share (2012 : 9 sen per share). finishing line. Tan Chong Motor Group enables the Group to establish a strategic The net dividend payment for FY 2013 takes cognisance of the fact we cannot foot-hold in Vietnam and brings us closer will be RM112.6 million. rest on our laurels and must continue to to their domestic market. strive to earn our success every day, Gross Dividend Rate especially in a challenging environment The Group’s revenue from Vietnam was 50% leading into 2014 with rising costs, highly RM179 million (2012 : RM102 million). 42% competitive market place and The Vietnam operations have yet to yield 40% increasingly discerning customers. any profit in 2013 as the country endeavours to tame inflation, weaken 30% Vehicle Assembly, Manufacturing, Vietnamese Dong and to regain 24% 24% Distribution & After-sales Services economic stability. The Group’s profit (automotive) before tax has taken into consideration 20% the RM56 million (equivalent to The sales of new motor vehicles in USD16.98 million) provision for customs 10% Malaysia or Total Industry Volume (TIV) taxes for Nissan Vietnam Co. Ltd. There in 2013 recorded a high of 655,793 units is no tax payment made to-date as this 0% 2011 2012 2013 of vehicles, representing an increase of matter is still pending appeals to the 4.5% from 2012. [source: Malaysian relevant Vietnamese authorities. Automotive Association (MAA)].