Annual Report 2024 (Spread)

AR

REPORTING PHILOSOPHY AND PRINCIPLES

Welcome to Sime Darby Berhad’s Annual Report (SDAR) FY2024. It provides an overview of both the financial and non-financial performance of Sime Darby Berhad (Sime Darby) and serves as a means to communicate our key development highlights, challenges faced, strategies formulated and solutions implemented during this financial year to our stakeholders.

Annual Report 2024

REPORTING FRAMEWORKS AND GUIDELINES

We continuously adhere to and comply with various international frameworks and guidelines to guide us during our reporting progress.

• Integrated Reporting Framework ()
• Malaysian Code on Corporate Governance 2021 (MCCG 2021)
• Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad
• Malaysian Financial Reporting Standards (MFRS)
• International Financial Reporting Standards (IFRS)

Throughout this report, we are guided by the Global Reporting Initiative (GRI) Standards and United Nations Sustainable Development Goals (UN SDGs).

Following the recent developments in global disclosures and the disbandment of the Task Force for Climate-Related

HOW WE CAN FURTHER IMPROVE

We strive to maintain fair and transparent engagement with all our stakeholders, as their values and feedback can significantly enhance Sime Darby’s reporting method and content. Please contact our Investor Relations team if you have any comments and feedback.

(603) 7623 2000

investor.relations@simedarby.com

CROSS REFERENCES

This report provides a detailed account of the Group’s performance, initiatives and outcomes. It outlines our advancements towards achieving our objectives and shares insights into our strategies, operations and sustainable practices. Furthermore, it also serves as the primary communication tool to ensure our stakeholders are equipped with the necessary information for an informed evaluation of our performance.

Financial Disclosures (TCFD), we plan to adopt the International Financial Reporting Standards (IFRS) S1 and S2 which fully incorporate the recommendations of TCFD.

Theme 3: Engaging in Sustainable Partnerships

1. Customer Satisfaction
2. Business Continuity
3. Business Ethics and Compliance (Including Anti-Bribery/Corruption)
4. Responsible Supply Chain

Theme 4: Driving Sustainable Innovation and Technology

2 Technology and Innovation

Sime Darby Berhad

Annual Report 2024

What’s

Inside

This

Report

Scan this QR code for a direct link to our Annual Report online

www.simedarby.com

The acquisition of UMW adds Toyota and Perodua to our portfolio, complementing our existing partnerships with BMW, Porsche, Caterpillar (CAT) and many others, providing a balanced profit distribution across our key markets, Malaysia, Australia and China.

C H A I R M A N ’ S

S TAT E M E N T

Tan Sri Samsudin Osman

Chairman

Dear Valued Shareholders,

I am pleased to present the Sime Darby Berhad Annual Report for FY2024. At the start of the year, we embarked on a new 5-Year Strategy Master Plan which anchors on reinforcing our core businesses in Motors and Industrial.

It has been a busy year of transformation for us as we press on with the execution of our strategy. We successfully divested our healthcare business, Ramsay Sime Darby Health Care (RSDH), which we had identified to be non-core. This has allowed us to direct our resources towards our core businesses, which included during the year, our acquisition of UMW Holdings Berhad (UMW) and Cavpower Pty Ltd.

We are excited about our future together with our new partners and we warmly welcome new colleagues to the Group.

FY2024 IN REVIEW

FY2024 was a challenging year, in some markets more than others. Despite many obstacles, I saw how my colleagues in Sime Darby remained resilient and committed to delivering value to our stakeholders, which I believe has helped us deliver a strong set of results in FY2024.

Additionally, the diversity of our geographical spread allowed us to rely more on the performing markets. This year in China, overcapacity in the automotive market led to industry-wide aggressive discounting which impacted our margins. On the other hand, our Industrial business in Australia and our Motors operations in Malaysia and Singapore, as well as our new acquisitions Onsite and UMW have all delivered solid results.

The acquisition of UMW adds Toyota and Perodua to our portfolio, complementing our existing partnerships with BMW, Porsche, Caterpillar (CAT) and many others, providing a more balanced revenue distribution across our key markets, Malaysia, Australia and China.

Net Profit

RM3.3 billion

Dividend Payout

RM886 million

Dividend

13 sen

Per Share

UMW Aerospace Sdn Bhd made its mark in the aviation industry when it became Malaysia’s first homegrown Tier-1aero-engine component supplier to Rolls-Royce in the Asia Pacific region.

Our strong relationships with our original equipment manufacturers (OEMs) have also enabled us to grow our business in FY2024 with greenfield BMW dealerships established in China and the expansion of Porsche’s facility at Inokom. Similarly, our long-standing partnership with CAT was key in the expansion of our heavy equipment operations into South Australia through the acquisition of Cavpower.

UPHOLDING THE BOARD’S ROLE WITH EFFECTIVE GOVERNANCE

Sime Darby’s strong leadership has been key in navigating this period of change and remains critical to our future success. Supported by a solid governance framework, the collective effort of the Board and Management has ensured clarity in roles and responsibilities across the organisation.

In FY2024, we developed a new Conflict of Interest (COI) Guidelines for Directors and key senior leaders, aligning with Bursa Malaysia’s recent amendments to the Main Market Listing Requirements. These guidelines were also validated by international legal advisors for compliance in our overseas markets.

CHAIRMAN’S STATEMENT

In FY2024, the Industrial Division achieved another year of positive financial results, with revenue and profit before interest and tax (PBIT) surpassing the results in FY2023.

Communities form the broader context within which we operate and we remain dedicated to empowering members of our local communities. Through Yayasan Sime Darby, our philanthropic arm, we contributed RM30 million in FY2024 to support scholarships and grants for education, sports, culture and the environment. Outside of Malaysia, our businesses are actively engaged in corporate social responsibility (CSR) projects, supporting local communities in their respective areas of operations. These initiatives encompass a broad spectrum, including education, health, sports and community welfare, demonstrating our commitment to fostering sustainable development and positive social impact where we operate.

For more details on our community efforts, please refer to the Creating Sustainable Value section on page 83 of this report.

INTEGRATING SUSTAINABILITY IN EVERYTHING WE DO

The Board has endorsed Sime Darby Berhad’s Net Zero commitment with a target to achieve net zero emissions across our portfolio by 2050.

THE YEAR AHEAD

Looking ahead to FY2025, our outlook remains cautiously optimistic. While we anticipate economic fluctuations in some of our markets, we are confident that our strategic vision, resilient infrastructure and dedication to excellence will sustain our momentum. Our focus will be on enhancing the Group’s Return on Equity (ROE), reducing debt, prioritising

The Board has been instrumental in driving sustainability, fostering a culture of accountability and continuous improvement through the Risk Management & Sustainability Committee (RMSC). In addition to driving sustainability, the Board’s deliberations in FY2024 included strategic decisions such as the acquisition of UMW and Cavpower, as well as the divestment of RSDH. During the year, we prioritised data privacy and security, working to implement stronger data governance frameworks in line with global regulations.

In recognition of the importance of diverse expertise in leadership, we welcomed Professor Datuk Ts. Ir. Dr. Siti Hamisah Tapsir as an Independent Non-Executive Director to our Board. With Professor Datuk Dr. Siti Hamisah’s storied career as an educator and the Secretary General of Ministry of Science, Technology and Innovation (MOSTI), her expertise is a valuable addition to our Board.

PRIORITISING OUR STAKEHOLDERS AND CREATING VALUE

Delivering value to our stakeholders is central to our success. Regular engagements with key stakeholders allow us to understand their needs and incorporate their perspectives in our decision-making.

We remain committed to delivering robust returns for our shareholders and investors. For FY2024, we declared a dividend payout of 13 sen per share, amounting to RM886 million. We have maintained the same dividend quantum as FY2023 at 13 sen per share as proceeds from the disposals of RSDH and Malaysia Vision Valley land had been largely used to partly finance the UMW acquisition. Nevertheless, our Total Shareholder Return (TSR) for the year was 35%, outperforming the Kuala Lumpur Composite Index (KLCI)’s TSR of 21%. Our share price increased from RM2.05 per share at the start of the financial year to RM2.62 per share on 28 June 2024.

Through Yayasan Sime Darby, our philanthropic arm, we contributed RM30 million in FY2024 to support scholarships and grants for education, sports, culture and the environment.

Our vision lies in delivering sustainable value to all stakeholders. We are constantly monitoring developments in the market and evaluating strategic opportunities that could potentially enhance shareholder value.

Our sustainability journey is a constant work in progress as we embed sustainable practices across our businesses. The Group’s Sustainability Blueprint, now in its fourth year, has driven tangible progress across our operations.

We have strengthened our governance framework, incorporated recommendations from the Task Force on Climate-Related Financial Disclosures (TCFD) and established local ESG Councils which comprises senior executives tasked to integrate ESG principles into their respective business units and align their operations with our Flagship Initiatives* to deliver results.

In line with Malaysian Accounting Standards Board’s (MASB) adoption of the International Sustainability Standards Board (ISSB)’s requirements and Malaysia’s National Energy Transition Roadmap, the Board has endorsed Sime Darby Berhad’s Net Zero commitment with a target to achieve net zero emissions across our portfolio by 2050.

Our commitment reinforces the importance of climate change and the push for Malaysia to become a net zero greenhouse gas (GHG) emissions nation by 2050. It aims to accelerate the progress that has been accomplished through our Sustainability Blueprint thus far. Using guidelines set by Bursa Malaysia, we will align our roadmap to net zero with rigorous international standards.

As we move forward, our goal remains to lead by example, continuously adapting and enhancing our sustainability efforts to create long-term value for our stakeholders.

integration for our new acquisitions and strengthening our partnership with Toyota and Daihatsu Japan.

On behalf of the Board, I extend my profound appreciation to all our stakeholders for their support of Sime Darby. We are grateful to our shareholders for your steadfast commitment, our principals for their confidence, our customers for their trust and our employees for their dedication and hard work. As we continue to serve you, we remain devoted to fulfilling our vision of becoming the leading Motors and Industrial player in the Asia Pacific region.

Tan Sri Samsudin Osman

Chairman

• Our Flagship Initiatives outline the efforts we put in to achieve the goals set in our Sustainability Blueprint.

Dato’ Jeffri Salim Davidson

Group Chief Executive Officer

FROM THE DESK OF THE

GROUP CHIEF

E XECU TIVE OFFICER

Net profits of

RM3.3 billion

Core net profit increased by 14% to

RM1.3 billion

Revenue rose by 39% to

RM67.1 billion

We successfully concluded the acquisition and privatisation of UMW Holdings. This was a strategic move to further scale up and strengthen our presence in the Malaysian automotive sector, adding two absolutely iconic brands into our Malaysian portfolio – Toyota and Perodua.

1. The Group is clearly struggling with profitability in China. What is happening there?

FROM THE DESK OF THE GROUP CHIEF EXECUTIVE OFFICER

Whilst there may some “ups and downs”, the long-term outlook for our Industrial Australia businesses is extremely positive.

GROUP

CHIEF

FINANCIAL

OFFICER’S

REVIEW

Muhammad Noor Abd Aziz @ Hashim

Group Chief Financial Officer

Dear Stakeholders,

The Group reported another post-demerger record net profit in FY2024, registering RM3,306 million, 127% higher than the RM1,458 million recorded in FY2023. This was mainly due to the RM2.0 billion gain on disposal of Ramsay Sime Darby Health Care (RSDH). The Group also recorded its highest core net profit post demerger in FY2024 at RM1,316 million, 14% higher than the RM1,154 million recorded in FY2023. This was mainly due to profit contribution from the newly acquired UMW Division and higher profit from Industrial Australasia (partly from the Onsite and Cavpower acquisitions) as well as Motors Malaysia.

In terms of returns, the Group’s return on average shareholders’ equity (ROE), calculated using quarterly average shareholders’ equity, increased from 9.1% in FY2023 to 18.1% in FY2024, largely due to the gain on disposal of RSDH as mentioned above. Core ROE however, was flat at 7.2% due to the higher average shareholders’ equity in FY2024 despite the higher core net profit.

The Group’s overall strong results in FY2024 underscore our resilience in the face of challenging business conditions.

STATEMENT OF PROFIT OR LOSS

Revenue

Revenue from continuing operations increased by 39% from RM48.3 billion in FY2023 to RM67.1 billion in FY2024.

The Industrial Division recorded a 23% growth in revenue for FY2024, reaching RM20.5 billion compared to RM16.7 billion in FY2023. This growth was mainly driven by our Australasian operations, which registered increased equipment and parts revenues. Acquisitions also contributed significantly, with the full year revenue contribution from Onsite at RM1.1 billion (FY2023 – RM0.3 billion) as well as revenue contribution from Cavpower at RM0.7 billion.

RM billion 100

5048.3

40

30

20

10

0

2023 2024

REVENUE CONTRIBUTION BY DIVISION

Industrial Division

UMW Division

RM9.4 billion

Motors Division also recorded higher revenue, with an 18% increase to RM37.2 billion from RM31.6 billion in FY2023. Revenue increase was registered across most major markets, especially in Malaysia and Singapore.

UMW Division contributed revenue from continuing operations of RM9.4 billion, mainly from the automotive business.

In terms of geographical segments, approximately 71% of the Group’s revenue is from overseas operations, mainly from China (26%) and Australasia (33%). This has reduced from over 80% recorded since the demerger with the UMW acquisition significantly increasing percentage of revenue from Malaysia (from 16% in FY2023 to 29% in FY2024).

Profit Before Interest and Tax (PBIT)

Group profit before interest and tax (PBIT) from continuing operations increased by 32% from RM2,084 million in FY2023 to RM2,758 million in FY2024.

The Industrial Division’s PBIT grew by 40% to RM1,467 million from RM1,051 million in FY2023, on the back of the division’s strong performance in Australasia and contribution from recently acquired Onsite and Cavpower. PBIT from Australasia increased 40% from RM910 million in FY2023 to RM1,275 million in FY2024. Profit contribution from Onsite (acquired in April 2023) was RM189 million, while Cavpower (acquired in November 2023) contributed RM53 million (excluding associates and acquisition costs), both after acquisition accounting related adjustments.

PBIT for the Motors Division declined from RM1,052 million in FY2023 to RM584 million in FY2024. The FY2024 results include provisions and impairments of RM229 million while the FY2023 results include a RM179 million gain from the disposal of properties in Hong Kong. The impairments and provisions in FY2024 include those for closure of operations and impairment of goodwill. Excluding these items, PBIT declined by 7%. This decline was primarily due to challenging market conditions in China, which recorded a LBIT (excluding impairments and provisions) of RM123 million compared to PBIT of RM124 million in FY2023. However, this decline was partially offset by strong performances in Malaysia and Singapore. PBIT (excluding impairments and provisions) from the Malaysia operation increased from RM455 million in FY2023 to RM613 million in FY2024 while PBIT (excluding impairments and provisions) for Southeast Asia excluding Malaysia increased from RM74 million to RM140 million.

UMW contributed PBIT from continuing operations of RM480 million for the slightly over six months post-acquisition period. This was primarily contributed by its automotive segment and is after adjustments for acquisition accounting related adjustments.

GROUP CHIEF FINANCIAL OFFICER’S REVIEW

The LBIT recorded by the China operations and PBIT following the acquisition of UMW (where the profit is largely contributed by Malaysian operations) have significantly changed the geographical breakdown of the Group’s PBIT by region. In FY2024, about 55% of the PBIT from continuing operations is from overseas operations and 45% from Malaysia, compared to 82% and 18% respectively in FY2023.

Finance Income and Costs

Finance income from continuing operations increased from RM70 million to RM142 million, mainly due to consolidation of the interest income of UMW, higher average cash balances and higher average interest rates. Cash balances were high during the first half of FY2024 mainly due to proceeds from disposal of RSDH and Malaysia Vision Valley (MVV) land but it has reduced by 30 June 2024 after utilisation to partly fund the UMW acquisition and repayment of borrowings.

Finance costs also increased from RM333 million to RM719 million in FY2024 mainly due to higher average debt (borrowings and leases). The Group’s borrowings increased significantly due to the borrowings raised for the UMW, Cavpower and Onsite acquisitions and consolidation of UMW’s debt. Weighted average cost of borrowings was slightly lower at 5.0% as at 30 June 2024 against 5.1% as at 30 June 2023, mainly due to the higher proportion of lower interest rate borrowings in Malaysia as at 30 June 2024. The borrowings raised for the major acquisitions remain on floating rates based on the assessment of prevailing market conditions and cost considerations. This position would be reassessed periodically.

Taxation

The Group recorded a higher tax expense from continuing operations of RM698 million in FY2024 compared to RM484 million in FY2023 mainly due to higher profit before tax from continuing operations and higher effective tax rate. The effective tax rate for FY2024 (excluding share of results of associates and joint ventures) was 36.3% compared to the applicable tax rate of 25.7%. This variance was mainly due to the impact of provision for deferred tax liability on unremitted earnings and change in tax legislation in New Zealand (collectively RM102 million) and higher non-deductible expenses (e.g. interest cost on borrowings raised for the UMW acquisition and acquisition expenses). These effects were partly offset by non-taxable dividend income and lower tax on the gain on disposal of MVV land.

STATEMENT OF FINANCIAL POSITION

The Group’s total assets increased from RM37.0 billion as at 30 June 2023 to RM51.8 billion as at 30 June 2024 mainly due to consolidation of assets from the UMW and Cavpower acquisitions, capital expenditure by operating units (including rental fleet additions) and higher working capital during the financial year.

Total debt increased from RM8.5 billion as at 30 June 2023 to RM13.2 billion as at 30 June 2024, mainly due to borrowings raised for the UMW and Cavpower acquisitions of approximately RM4.5 billion and consolidation of debt of UMW (RM1.6 billion as at acquisition date).

Group profit before interest and tax (PBIT) from continuing operations increased by

32%

from RM2,084 million in FY2023 to RM2,758 million in FY2024.

The Industrial Division’s PBIT grew by 40% to

RM1,467 million from

RM1,051 million in FY2023, on the back of the division’s strong performance in Australasia and contribution from Onsite and Cavpower.

PBIT for the Motors Division declined from RM1,052 million in FY2023 to

RM584 million

in FY2024.

32%

3,200

2,758

2,400

2,084

1,600

800

0

INDUSTRIAL DIVISION PBIT

RM million

1,200

1,051

900

600

300

0

2023 2024

MOTORS DIVISION PBIT

RM million

1,500

1,200

1,052

900

300

0

2023 2024

Debt/equity ratio increased from 48.9% as at 30 June 2023 to 56.6% as at 30 June 2024, while the debt-adjusted EBITDA ratio also increased from 2.47 times as at 30 June 2023 to 2.67 times as at 30 June 2024, primarily due to the higher debt as explained above.

STATEMENT OF CASH FLOWS

Operating cash flow from continuing operations decreased from RM1.0 billion in FY2023 to RM0.5 billion in FY2024, mainly due to the increase in working capital and expenditure for rental assets.

Capital expenditure (excluding rental assets) for FY2024 was higher, mainly due to higher spend for Motors Division’s expansion in Malaysia and Chinese Mainland, as well as the upgrading of facilities in Industrial Australia and the consolidation of UMW’s capital expenditure.

There is a significant increase in spend for acquisitions due to the purchase of UMW and Cavpower.

DIVIDEND

The Group declared a total dividend of 13 sen per share amounting to RM886 million for FY2024 and equivalent to approximately 27% of FY2024’s net profit of RM3.3 billion. The relatively low dividend payout ratio was mainly because the proceeds from disposals of RSDH and MVV land were largely set aside to partly finance the acquisition of UMW. Excluding the gain on disposals of RSDH and MVV land, the dividend payout ratio would have been at about 85%, much higher than the minimum 50% dividend payout policy of the Group.

FY2025 FOCUS

The Group’s gearing, measured using the Debt/Equity ratio, increased significantly to over 60% after the UMW and Cavpower acquisitions. However, this was reduced to about 57% as at 30 June 2024, mainly through higher utilisation of cash balances to repay borrowings. Gearing is anticipated to reduce further in FY2025 with the expected proceeds from disposals of MVV land and UMW Komatsu Heavy Equipment Sdn Bhd (UKHE). Working capital and operational expenditure improvement would continue to remain in focus, together with the ongoing integration of the operations of the acquired companies.

Muhammad Noor Abd Aziz @ Hashim

Group Chief Financial Officer

OVERVIEW OF

SIME DARBY BERHAD

PURPOSE

WE BRING THE BEST PRODUCTS AND SOLUTIONS TO ENABLE

ACT W

IT

ASIA PACIFIC TO MOVE AND DEVELOP

H INTE G R I T Y

1. Chinese Mainland
2. Hong Kong SAR

Total Employees

31,448

VISION

TO BE THE LEADING MOTORS AND

INDUSTRIAL PLAYER IN ASIA PACIFIC

MISSION

Defines how we build trust

C A

R E

F

O

R

A

L

L

4 2 6

7

3 Japan

7 Maldives

8 Malaysia

9 Brunei

10 Indonesia

Industrial Division

9,999

Staff Strength

Motors Division

15,257

Staff Strength

UMW Division

5,844

Staff Strength

We are committed to developing a winning portfolio of sustainable businesses.

We subscribe to good corporate governance and high ethical values.

We continuously strive to deliver superior financial returns through operational excellence and high-performance standards.

We provide an environment for our people to realise their full potential.

Defines how we succeed

17

18

Note:

Excluding discontinuing operations

11New Caledonia

12 Papua New Guinea

17 Australia

18 New Zealand

Group Head Office

169

Staff Strength

Other Businesses

179

Staff Strength

Countries &

Territories

18