Drb-hicom Bhd. · MYX:DRBHCOM
Drb-hicom Bhd — Shareholder Meeting (September 2016)
20 slides from Drb-hicom Bhd's shareholder meeting presentation, Sep 29, 2016
Slide 1: Annual General Meeting: Queries & Answers for MSWG
Annual General Mee+ng Queries & Answers for Minority Shareholder Watchdog Group (MSWG) 29 September, 2016
Slide 2: Question 1: Revenue decline and pre-tax loss
Ques+on 1: As disclosed in the Group Managing Director’s Review of Opera+ons, DRB-HICOM Group revenue dropped to RM12.17 billion from RM13.69 billion in the previous year. The Group also incurred pre-tax loss of RM821.27 million compared with a pre- tax profit of RM 501.83 million the previous year.
Slide 3: Question 1 (cont'd)
Ques+on 1 (cont’d): (i) What were the companies that contributed to the Group’s decline in revenue and pre-tax loss? (ii) Which are the factors that contributed to the lower revenue and pre-tax loss of the Group? 3
Slide 4: Answer 1(i) & (ii): Group Revenue
Answer 1(i) & (ii): Group Revenue The decline in Group’s revenue by RM1.5 billion was mainly caused by lower sales of PROTON and Volkswagen motor vehicles. PROTON group sold 95,690 vehicles in FY 2016 compared with 113,021 vehicles in the previous year, whilst the sales of Volkswagen vehicles by DRB
Slide 5: Answer 1(i) & (ii) (cont'd): Revenue by company
Answer 1(i) & (ii) (cont’d): The lower economic growth alongside with vola+le foreign exchange rates, weaker consumer sen+ments and stringent bank lending condi+ons affected the performance of the automo+ve companies. FY 2016 FY 2015 Variance Group Revenue RM’000 RM’000 RM’000 PROTON 4,834,463 5,823,
Slide 6: Answer 1(i) & (ii) (cont'd): Group Pre-Tax Loss
Answer 1(i) & (ii) (cont’d): Group Pre-Tax Loss The adverse results of PROTON caused the Group to suffer a pre-tax loss of RM821.27 million in FY 2016. PROTON incurred a pre-tax loss of RM1.48 billion which was par+ally mi+gated by the total profits achieved by other opera+ng companies in the Group to
Slide 7: Answer 1(i) & (ii) (cont'd): PROTON losses
Answer 1(i) & (ii) (cont’d): The lower revenue and higher losses of PROTON were mainly due to: 1) Lower sales volume (95,690 vehicles vs 113,021 vehicles) coupled with unfavourable sales mix resul+ng in lower margins. 2) Higher sales campaign and promo+onal expenses in view of s+ff compe++on and chal
Slide 8: Question 1(iii): Measures to improve performance
Ques+on 1(iii) Moving forward, what are the measures taken to improve the performances of these companies? In the increasingly challenging business landscape, the Automo+ve companies will con+nue their efforts to improve cost management and enhance opera+onal efficiencies whilst intensifying their mark
Slide 9: Answer 1(iii) (cont'd): PROTON turnaround plan
Answer 1(iii) (cont’d): PROTON is also focused on the execu+on of its turnaround plan to develop a strong founda+on for sustainable business and currently undertaking a Request for Proposal (RFP) exercise to seek a strategic partner who can provide a strategic and opera+onal business model to grow i
Slide 10: Question 2: Growing other businesses
Ques+on 2: In the Group Managing Director’s Review of Opera+ons, it was stated that the Group will focus on growing its other businesses to create new revenue streams in an effort to shig the posi+on of the Automo+ve sector as the Group’s largest revenue generator due to the Automo+ve sector being ex
Slide 11: Answer 2: Integrated logistics business focus
Answer 2: The integrated logis+c businesses will be the new business focus for DRB-HICOM Group. The recent integra+on of postal and logis+c services via the injec+on of KL Airport Services (KLAS) group into Pos Malaysia will enable seamless integrated logis+cs services which not only provides the fir
Slide 12: Question 3: Lotus self-sufficiency
Ques+on 3: It was reported in the Annual Report that “as part of the turnaround plan, Lotus aims to be self-sufficient, enabled by the development of new models, global network expansion plan and the synergy with PROTON on technical collabora+ons.” (i) Is the Board confident that Lotus would be self-su
Slide 13: Answer 3(i) (cont'd): Lotus key actions
Answer 3(i) (cont’d): As part of its efforts to improve financial performance and working capital, the following key ac+ons have been undertaken between 2014 and 2016: 1) Reduc+on of overhead cost from £58.2 million to £35.4 million 2) Reduc+on of inventories from £35.7 million to £16.6 million 3) Low
Slide 14: Question 3(ii): Lotus FY2016 and FY2017 performance
Ques+on 3(ii): How did Lotus perform for FY 2016 and how does the Board expect it to perform for FY 2017? We expect Lotus to improve its performance in FY2017 through the following: 1) Lotus has successfully launched the new Evora 400 in the US market in August 2016. 2) The produc+on from September
Slide 15: Answer 3(ii) (cont'd)
Answer 3(ii) (cont’d): 3) Lotus is on track to increase dealers from 137 in March 2014 to 215 dealers by March 2017. 4) Lotus Engineering is expected to achieve its target of £12 million revenue in 2017 which will contribute to stabilising revenue and margins. 5) Lotus is currently developing the ne
Slide 16: Question 4: Allowance for doubtful debts
Ques+on 4: Allowance for doubkul debts (net of write back) for project development receivables amounted to RM120.5 million (FY 2015: Nil). (i) What was the nature of this amount? (ii) What is the likelihood of recovery for these receivables? 16
Slide 17: Answer 4(i) & (ii): EV project allowance
Answer 4(i) & (ii): This allowance is in respect of research and development costs incurred in rela+on to the Electric Vehicle (EV) project by PROTON. Due to certain technical and commercial issues, the implementa+on of the project was delayed. In accordance with the accoun+ng standards, an amount o
Slide 18: Question 5: Increase in other expenses
Ques+on 5: What was the reason for the increase in other expenses from RM113.95 million in FY 2015 to RM327.72 million in FY 2016? Included in the other expenses are the following major items that have been charged to the profit and loss account in accordance with the requirements of the respec+ve fin
Slide 19: Answer 5 (cont'd): Major expense items
Answer 5 (cont’d): 1) Impairment loss of intangible assets (FRS 136) of RM81.47 million. 2) Marked to market loss on financial deriva+ves (FRS 139) of RM62.23 million. 3) Foreign exchange differences (FRS 121) of RM58.94million. 4) Impairment loss of investment securi+es: available-for-sale (FRS 139)
Slide 20: Thank You
THANK YOU
DRB-HICOM Berhad — Shareholder Meeting (September 2016) on 6ix