TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
5
REPORT OF THE BOARD OF DIRECTORS
The business environment in Indo-China region continues
to be sluggish. These emerging economies were afflicted by
weaker domestic currencies and a stronger US Dollar, and
continuing uncertainties in the global economy.
In spite of the challenging domestic and regional business
environments, Tan Chong Motor Group has pulled together
to deliver a healthy Profit Before Taxation (“PBT”) of RM171
million for the financial year 2014.
REVIEW OF FINANCIAL PERFORMANCE
Revenue
: RM4,760 million
Profit before tax
: RM171 million
Net profit
: RM120 million
Net assets per share
: RM4.22
Return on shareholders’
equity
: 3.9%
For the financial year ended 31 December 2014, the Group
recorded a revenue of RM4,760 million (2013: RM5,198
million) with profit before tax of RM171 million (2013: RM360
million) and net profit of RM120 million (2013: RM236
million). Earnings per share for the year stands at 16.22 sen
compared to 38.44 sen in FY 2013.
The Group’s businesses saw intense competition in the
automotive sector with a slew of new model launches and
aggressive sales and marketing campaigns during the year.
The intensely competitive trading environment has resulted
in lower profit contributions to the Group compared to
previous year.
Dear Shareholders,
The financial year 2014 was a challenging and bumpy ride for Tan Chong Motor Group. The
domestic automotive industry landscape was filled with intense competition and aggressive
promotion campaigns by major automotive players. We faced higher operating costs due to a
weaker Malaysian Ringgit in the second half of 2014. Banks tightened lending requirements for
car loan applicants. Hire purchase loan interest rates increased. Consumers’ spending spirits
were dampened due to rising costs of living, continuing subsidies rationalization compounded
by broader concerns over uncertainties in the prices of goods after implementation of the
Goods and Services Tax (“GST”). The combination of these unfavorable factors had put a drag
on the Group’s performance in 2014.
The financial position of the Group remains healthy with
shareholders’ funds at RM2,755 million (2013 : RM2,709
million), cash and cash equivalents of RM341 million (2013
: RM313 million), and net gearing ratio of 0.34 (2013 : 0.36)
times of shareholders’ funds as at 31 December 2014. Net
assets per share increased to RM4.22 (2013 : RM4.15). The
Group undertook a revaluation exercise on its investment
properties to reflect their current market value. This has
resulted in a net gain on revaluation of RM6.7 million for FY
2014.
Inventories stood at RM1,514 million (down 12% from FY
2013). A substantial portion of the inventories comprises
CKD vehicle packs for Nissan Almera, New Nissan Grand
Livina and Serena S-Hybrid.
