RESILIENCE THROUGH DIVERSITY ... Motors Sime Darby Motors is the automotive arm of Sime Darby Berhad

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Transcript of RESILIENCE THROUGH DIVERSITY ... Motors Sime Darby Motors is the automotive arm of Sime Darby Berhad

  • RESILIEN C

    E TH RO

    U G

    H D

    IV ERSITY

    Sim e D

    arby Berhad A nnual Report 2020

    Annual Report 2020

    RESILIENCE THROUGH DIVERSITY

  • Live Broadcast

    Function Room, Ground Floor, Menara Sime Darby,

    Oasis Corporate Park, Jalan PJU 1A/2, Ara Damansara, 47301 Petaling Jaya,

    Selangor Darul Ehsan, Malaysia

    Thursday, 12 November 2020 at 10.00 a.m.

    14th Annual General Meeting

    Our Vision To be the leading Motors and Industrial player in Asia Pacific.

    Our Mission 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.

    Our Core Values Integrity Uphold high levels of personal and professional values in all our business interactions and decisions.

    Respect & Responsibility Respect for the individuals we interact with and the environment that we operate in (internally and externally) and commit to being responsible in all our actions.

    Excellence Stretch the horizons of growth for ourselves and our business through our unwavering ambition to achieve outstanding personal and business results.

    Enterprise Seek and seize opportunities with speed and agility, challenging set boundaries.

    About This Report 08 At a Glance Group Overview 10 Corporate Structure 12 Highlights 13

    Management Discussion & Analysis: Strategic Review Chairman’s Statement 14 Group Chief Executive Officer’s Review 20 Business Environment 26 Business Model 34 Value Creation Plan 36 Engaging Stakeholders 38 Material Issues 40 Risk Management 43

    Management Discussion & Analysis: Performance Review Group Chief Financial Officer’s Review 52 Divisional Operations Review 60

    Creating Sustainable Value Overview 86 Safety 89 People 94 Community Contributions and Development 98 Environmental Sustainability 100

    Governance Board of Directors 106 Executive Leadership 112 Chairman’s Statement on Corporate Governance 116 Leadership & Effectiveness 118 Effective Audit & Risk Management 126 Integrity in Corporate Reporting and Meaningful Relationships with Stakeholders 134 Statement on Risk Management and Internal Control 136 Additional Compliance Information 144 Statement of Responsibility by the Board of Directors 148

    Financial Statements Directors’ Report 150 Statement by Directors 155 Statutory Declaration 155 Independent Auditors’ Report 156 Statements of Profit or Loss 164 Statements of Comprehensive Income 165 Statements of Financial Position 166 Statements of Changes in Equity 168 Statements of Cash Flows 171 Notes to the Financial Statements 175

    Appendices Corporate Information 292 Analysis of Shareholdings 293 Properties of the Group 296 Notice to Shareholders 304 Notice to Proxies 308 Independent Assurance Report 312 Notice of Annual General Meeting 314 Statement Accompanying Notice of Annual General Meeting 321 Form of Proxy

    Contents

  • Industrial Sime Darby Industrial is a major player in the global heavy equipment sector, partnering with one of the biggest names in the industry, Caterpillar, for over 90 years. Sime Darby Industrial is also associated with a comprehensive range of complementary products and industrial solutions throughout Asia Pacific.

    Read more on page 60

    Healthcare Ramsay Sime Darby Health Care delivers world-class healthcare services, utilising the latest in medical technologies at our hospitals and specialist facilities in Malaysia, Indonesia and Hong Kong.

    Read more on page 76

  • Motors Sime Darby Motors is the automotive arm of Sime Darby Berhad and is involved in the retail, distribution and assembly businesses, in nine markets across the Asia Pacific region. It represents luxury brands such as BMW, Jaguar, Land Rover, Porsche and Volvo, and super-luxury names such as Rolls-Royce, Lamborghini, Ferrari and McLaren, as well as broad-appeal market brands such as Ford and Hyundai.

    Read more on page 68

    Logistics Sime Darby Logistics is the primary operator of Weifang Port in Shandong Province, China, and the owner of three major river ports along the Grand Canal in Jining, also in the Shandong Province. Its shipping network services customers throughout North-eastern China, Southern China, and East Asia.

    Read more on page 80

  • RESILIENCE THROUGH DIVERSITY Sime Darby Berhad (Sime Darby) is a thriving multinational. Throughout its 110-year evolution, the Group’s diversified portfolio, business innovation and disciplined determination have proven resilient to the challenges of local and global market forces. Sime Darby has time and time again proven its business acuity and dexterity to convert opportunities to gains. This strategic advantage complements its unwavering commitment to grow alongside its stakeholders, cementing a foundation to create sustainable value for years to come.

    Diversification

    Digitalisation

    Optimisation

    02

    04

    06

    of Sectors and Geographies

    from Offline to Online

    Driven by Financial Management Discipline

  • South Korea

    Papua New Guinea

    Maldives

    Christmas Island

    Indonesia

    Brunei

    Thailand

    Malaysia

    Taiwan

    Australia

    China

    Macau

    Vietnam

    Singapore

    New Caledonia

    Solomon Islands

    New Zealand

    Hong Kong

    Dato’ Jeffri Salim Davidson Group Chief Executive Officer (GCEO)

    The outlook for the global economy is set to be challenging, amid depressed sentiments brought about by the pandemic. Sime Darby’s time-tested strategy of geographical and sectoral diversification which provides a broader earnings base, is ever relevant in weathering and navigating the uncertain times ahead.

    18 countries and territories across the Asia Pacific region allows for a balanced exposure throughout the business cycle

    Strategic Focus The Group’s broad geographical footprint has been key to its resilience. In FY2020, revenue contribution from its two largest geographical locations, China and Australasia, are at 40% and 28% respectively. During the COVID-19 pandemic, the Industrial Australasian operations provided a stable foundation for the Group to rely on when other markets were harder hit. The Group’s China operations also recovered quickly to provide further support. As a result, the Group was able to maintain consistent revenue streams and strong cash flow.

    of Sectors and Geographies

    Diversification

    02 Sime Darby Berhad Annual Report 2020

  • The Industrial Division registered a PBIT increase of 21% to RM967 million in FY2020 due to higher profits from its Australia and China operations. Sime Darby Industrial’s Australia operations were mostly spared from the negative impact of the COVID-19 pandemic while its China operations made a strong recovery in the fourth quarter of FY2020, supplemented by incentives from Caterpillar (CAT).

    An Essential Industry Sime Darby Industrial’s operations in China were impacted by the pandemic during the months of January and February 2020. Operations were disrupted as authorities implemented pandemic countermeasures such as movement restrictions and temporary business closures in a majority of the provinces where the Group operates. Sime Darby Industrial’s China operations resumed in March 2020 when these restrictions were relaxed.

    Fortunately, mining in Australia was classified as an essential sector, and Sime Darby Industrial’s Australian

    operations remained uninterrupted all year. Customers in the heavy equipment business continued to depend on Sime Darby Industrial for maintenance and parts, which bolstered its performance for the year, with the strongest results out of Australia. The solid performance served to mitigate the impact of China’s lockdown in January and February 2020, and the subsequent lockdown in South-east Asia.

    The Group’s “ambidexterity” in tapping onto different markets is certainly an advantage in times of crisis.

    03

  • Datuk Thomas Leong Yew Hong Group Chief Strategy Officer (GCSO)

    Our focus on accelerating our digitalisation plans has provided much needed resilience during these trying times. The move to digital has never been more urgent, with technology fundamentally changing how businesses are run and how we work. Sime Darby has spearheaded technological adoption across all our businesses, preparing the Group for a digital future with the potential to unlock new growth opportunities both in terms of sales and productivity.

    Digitalisation from Offline to Online

    The Sime Darby Industrial Australia Integrated Digital Ecosystem Sime Darby Industrial Australasia (SDIA) is transforming the way they do business by implementing an integrated digital ecosystem. The digital ecosystem aims to simplify processes for customers and employees, boost productivity, save costs and essentially deliver value to shareholders. Built with the future in mind, the systems are designed to integrate with future technologies and enable the seamless connection for the business and its customers.

    The focus of t