STRATEGY OF RATIONALISATION...PROTON has regained the market’s confidence with the X70, Iriz,...

“

“

The financial year ended 31 March 2019 (“FY2018/19”) was challenging on several fronts, yet DRB-HICOM Berhad (“DRB-HICOM” or “the Group”) made significant progress as the Company continued to streamline its operations, focusing on core competencies and monetising certain assets. The Group was validated in their long gestation period for PROTON’s turnaround when the national carmaker exceeded all expectations with the launch of the X70 SUV. Almost every other key company within the stable also performed well, enabling DRB-HICOM as a whole to emerge from the year fundamentally stronger and better prepared for the future.

STRATEGY OF RATIONALISATION

In response to the multifaceted challenges that faced by DRB-HICOM’s three key businesses – namely Automotive, Services and Properties – the Company outlined a five-year plan in FY2016/17 to tighten its operations and refocus on core competencies. The plan also required the exit from unprofitable businesses while right-sizing resources; venture into emerging growth sectors; rationalise/consolidate organisational structures for effective cost management; pursue strategic partnerships; and ensure consistently high quality as well as quick delivery.

Since then, a number of the Group’s automotive companies have diversified into new businesses, some even into non-automotive sectors. Under-performing companies, were reviewed and some others consolidated. A milestone was achieved in 2017 when PROTON entered into a strategic partnership with Zhejiang Geely Holding Group Co., Ltd. (“Geely”). In FY2018/19 the first golden fruit of this partnership made its debut, in the form of the Proton X70 sports utility vehicle (“SUV”). Launched on 12 December 2018, PROTON’s SUV has become a star within its segment, creating record sales which have helped turn around not only PROTON but the entire Automotive Sector.

110ALIGNED FOR THE FUTURE

MANAGEMENT DISCUSSION AND ANALYSIS

Within the Services Sector, DRB-HICOM began a massive transformation of its Postal & Logistics business by acquiring new assets and consolidating them under Pos Malaysia Berhad (“Pos Malaysia”) as it builds the group into a leading logistics player. Separately, in FY2018/19, the Company entered into an agreement to divest Alam Flora Sdn. Bhd. (“Alam Flora”), its waste management services provider, to Malakoff Corporation Berhad (“Malakoff”). The sale will enable DRB-HICOM to unlock value of the concessionaire and use the proceeds to reduce gearing and to part-finance PROTON’S 10-year business plan. The deal should be finalised by end of 2019.

Meanwhile, to streamline their Properties Sector, towards the tail end of FY2017/18, DRB-HICOM entered into transactions to divest of their retail and leisure assets in order to leverage on more than 30 years of experience in developing and selling industrial land. These transactions, too, are expected to be completed within 2019.

FINANCIAL REVIEW

Despite a tough operating landscape, DRB-HICOM’s revenue increased by 1.9% year-on-year to RM12.48 billion from RM12.25 billion, with the Group’s Automotive Sector contributing 59% of the total, Services of 37% and Properties of 4%.

Automotive recorded a 6.7% increase in revenue from RM6.9 billion to RM7.4 billion mainly as a result of PROTON’s contribution, underscored by strong sales of the X70 SUV with more than 14,000 units delivered from its launch till end of March 2019. Services recorded a 2% increase in revenue from RM4.49 billion to RM4.58 billion due to better performance by Bank Muamalat Malaysia Berhad (“Bank Muamalat”), Alam Flora and PUSPAKOM Sdn. Bhd. (“PUSPAKOM”), their vehicle inspection concessionaire.

Properties, however, saw a 37.3% dip in revenue from RM862.6 million to RM540.9 million, primarily due to progressive completion of two construction projects being undertaken, namely Media City in Kuala Lumpur and the Immigration, Customs, Quarantine and Security (“ICQS”) Complex at the Thai border. The nature of construction projects sees revenue varying throughout the various stages of completion, with payment percentages tied to the progress.

Profit before tax (“PBT”) decreased by a marginal 0.7% from RM283.8 million to RM281.9 million. According to sector, Properties saw a more than doubling in profit from RM104.6 million to RM259.7 million. Automotive’s profit dropped 45.8% from RM92.9 million to RM50.4 million while Services declined 30.2% from RM295.9 million to RM206.4 million.

With the exception of Pos Malaysia, all key operating companies achieved strong results for the financial year.

111 DRB-HICOM ANNUAL REPORT 2019

Key Highlights

A definite highlight of the year was the launch of the Proton X70 SUV (“X70”) which, given its tremendous reception, has become the carmaker’s flagship product. It was not, however, the only model introduced to become a market darling. Soon after the financial year ended, PROTON also rolled out the facelifted Persona compact sedan and Iriz hatchback in April 2019, followed by the upgraded Exora multi-purpose vehicle (“MPV”) in May 2019, all featuring entertainment systems connected to the internet. These models, along with the X70, have become Malaysia’s only connected cars and are leading in their respective segments.

Other Significant Achievements

As part of the PROTON turnaround, the carmaker has invested in a new RM1.2 billion plant within the existing Tanjung Malim facility. As announced previously, the entire operations of PROTON will eventually move to Tanjung Malim and this new plant marks a beginning to that move. Construction of the plant has been completed and trial runs for production of the X70 have begun in preparation for commissioning by the second half of 2019.

PROTON also made headway in plans to build its international sales. In August 2018, a deal was signed with Geely for the export of PROTON to China, while another agreement was penned with ALHAJ Automotive, appointing it to establish a PROTON assembly plant in Karachi, Pakistan to tap the currently underserved Pakistani car market.

The strategic partnership with Geely is also creating spin-off benefits in terms of knowledge transfer and capability-building. To date, no less than 200 PROTON engineers have spent time at Geely’s research and development (“R&D”) centres for technical upskilling. In addition, Geely’s vendors have been invited to form partnerships with PROTON’s local vendors. In January 2019, HICOM-Teck See Manufacturing Malaysia Sdn. Bhd., one of PROTON’s main suppliers, signed a joint venture (“JV”) agreement with Jiangsu Xinquan Automotive Trim Co. Ltd. to establish XINQUAN HICOM Malaysia Sdn. Bhd. These collaborations will further enhance the influx of foreign direct investment into the country.

OPERATIONAL REVIEW

AUTOMOTIVE SECTOR

Other than PROTON, the Automotive Sector in general has seen an overall improvement in performance. India’s TATA Motors Limited (“TML”) will begin completely knocked-down (“CKD”) assembly of the new Super Ace pick-up and Ultra trucks that have been proven popular in the markets where they have already been launched. In March 2019, Audi broke a two-year dry spell by introducing the latest Q series models, followed by the Audi A3, A4 Quattro, A5, A6 and A7 with two more new models to follow later in 2019.

Composites Technology Research Malaysia Sdn. Bhd. (“CTRM”), which has a strong focus on the aerospace sector, maintained steady growth riding on the upswing in the aviation industry. It earned an extra stripe by being named by global aircraft giant Airbus SE as their Best Performer in 2018, essentially recognising CTRM as one of their best suppliers globally. In the defence segment, we continued to exceed delivery targets.

While car rental represents a smaller part of the Group’s automotive business, Avis Malaysia did the Group proud by winning the Licensee of the Year Award 2018 from Avis Budget Group Inc. for excellent performance all round, beating over 100 other franchisees from Europe, the Middle East, Asia Pacific and Africa.


Segment Key Risks Mitigating Actions

Vehicle Distribution Competition from other brands leading to thinner profit margins

• Increase sales volume to gain market share by offering various incentives to dealers

• Increase new product launches to excite the market and increase sales

Government policies that are becoming outdated, e.g. on pricing

• Constant engagement with the relevant authorities for greater flexibility and possible change in policies

Components Manufacturing

Requirement by OEMs for lower prices in order to reduce their costs

• All Group manufacturing companies engage in continuous improvement programmes for enhanced efficiencies to reduce cost

• Manufacturing and Engineering (“M&E”) companies serving the same clients are collaborating to create synergies and cost efficiencies

• Increase in volume of manufacturing (e.g. for PROTON) reduces price per unit

Work in Progress

National motorcycle company Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) is now on the cusp of a new era. Similar to PROTON, a path is being outlined for Malaysia’s national motorcycle manufacturer in terms of partnering with foreign Original Equipment Manufacturer (“OEM”) to enhance its product line-up. From its existing partnership with India’s Bajaj, the fourth largest motorcycle manufacturer in the world, it launched the popular Dominar 500 street bike in April 2018 which contributed to an increased share of this particular segment from 21% to 36%. In April 2019, Kawasaki Heavy Industries, Ltd. (“KHI”) increased its stake in MODENAS from 11% to 30%, heralding a new beginning for the company. KHI is a founding shareholder of MODENAS and the increased role of this world-renowned marque will augur well for the company and for the market it serves.

Key Risks & Mitigating Actions

What We Can Look Forward To

PROTON has regained the market’s confidence with the X70, Iriz, Persona and Exora, and has promised to keep fans enthralled with the launch of at least one new model a year. Already in the pipeline are the locally-assembled version of X70 and an improved Saga. Meanwhile, PROTON’s ongoing retail outlet revamp will ensure greater customer satisfaction and a better brand experience.

In order to meet their clients’ requirements, our manufacturing companies will continue to manage their costs under proven programmes such as Lean Six Sigma and Kaizen. Cost reduction initiatives will also feature prominently among our distribution companies as they maintain their focus on introducing new and/or updated exciting models. There will also be a greater push towards local assembly to leverage the tax structure which is more favourable to CKD as opposed to completely built-up (“CBU”) models.



Within the Services Sector, DRB-HICOM involved in postal & logistics services provided by the Pos Malaysia group; waste management and vehicle inspection offered by Alam Flora and PUSPAKOM respectively; Islamic banking by Bank Muamalat; and tertiary education focused on the automotive industry at DRB-HICOM University of Automotive Malaysia (“DRB-HICOM U”).

Key Highlight

A significant corporate decision was made to divest of Alam Flora in order to realise its value and use the funds to support PROTON’s turnaround. Hence, on 1 August 2018, HICOM Holdings Berhad (“HHB”) entered into a conditional share sale agreement with Tunas Pancar Sdn. Bhd. (“TPSB”), a wholly-owned subsidiary of Malakoff, for the proposed disposal of HHB’s entire equity interest of 97.4% in Alam Flora. This transaction is now awaiting the necessary regulatory approvals for completion.


PUSPAKOM has been working assiduously to enhance its customer delivery and made progress during the year by rolling out the myPUSPAKOM app nationwide while introducing an e-wallet option for payment and installing live feed display units at all inspection centres. The digital innovations enable customers to better manage their time as online booking means they only need to arrive at the inspection centre 20 minutes prior to their appointment,

SERVICES SECTOR

while the ability to see progress on their vehicle’s inspection takes away the discomfort of not knowing how long more they will have to wait. In preparation for increased inspections when this becomes mandatory for e-hailing drivers, PUSPAKOM extended its service hours on weekdays at selected outlets and opened some of its high-volume centres throughout the weekend. Meanwhile, its contract for the provision of hire-purchase inspection service was extended by the Government for another three years.

The company has also been strengthening its governance and transparency, and gained further ground in this regard by becoming one of the first organisation in Malaysia to be MS ISO 37001:2016: Anti-Bribery Management System (“ABMS”) certified.

Bank Muamalat made significant strides in terms of its customer delivery. In August 2018, it became the first domestic full-fledged Islamic financial institution to provide premier banking facilities via Muamalat Beyond Premier Banking. To better understand its customers, it launched its Customer Relationship Management (“CRM”) platform. It also enhanced its mobile banking platform with biometric authentication enabling customers to view their balance without having to log in.

DRB-HICOM U continued to focus on increasing its student intake by introducing more programmes and catering to distance learners by identifying seven programmes to be conducted online. Further integrating itself with the industry, six programmes are to be offered under the Work-Based Learning and 2-Year University, 2-Year Industry (“WBL” and “2U2I”) platforms combining practical experience with theoretical learning. Another feather in its cap was gaining ISO 9001:2015 certification, reflecting high levels of quality and safety.


Company Key Risks Mitigating ActionsPos Malaysia Competition from other

brands leading to thinner profit margins

• Proposal to revise tariffs for domestic and international products as well as to deregulate certain product

• Focus on courier business to serve growing demand for e-commerce

Loss-making retail network, as it is expensive to maintain a presence in low-density areas

• Relocate or convert non-profitable post offices (“POs”) to Pusat Pos Laju while closing loss-making POs

• Outsource certain retail businesses to third parties under an agency model to optimise operations and cost

Alam Flora Escalating cost of doing business

• Achieve operational excellence through innovation and digital systems while re-aligning productivity through mechanisation and automation

• Manage fleet maintenance cost such as old ageing machineries, vehicles and bins; optimise field operations costs; carry out manpower rationalisation programme; and manage operating expenditure prudently

PUSPAKOM Possible discontinuation of inspection service as its concession expires in 2024

• PUSPAKOM will continue to deliver the highest level of service while maintaining transparency and cost efficiency

Bank Muamalat A tougher banking landscape

• Expand revenue growth opportunities• Effective management of balance sheet• Improve cost efficiency and productivity• Drive innovation and process transformation through digital

technologiesDRB-HICOM University

Competition from other institutions preventing it from becoming an ASEAN automotive university

• Collaborate with regional agencies such as Southeast Asian Ministers of Education Organisation (“SEAMEO”) and ASEAN Universities Network

• Collaborate with Geely University and other foreign institutions on student exchange and other programmes

• Promote programmes geared towards the ASEAN automotive market

• Recruitment exercise in Thailand, China, Indonesia and other targeted countries

Work in Progress

A 13% decline in mail volume together with high costs to deliver to a growing number of addresses (which has increased 17% to 8.9 million over the last five years) exerted a financial toll on Pos Malaysia. However, the management is working closely with the regulators to review and revise the current tariff, and is hopeful of a resolution in the near future. Meanwhile, various transformation initiatives are in place to capitalise on growing e-commerce; consolidate its transport logistics; enhance cost efficiencies and build new revenue streams. In addition, Pos Malaysia is placing greater emphasis on rebuilding its relationship with customers through trust in the quality of its service.



While the companies within this sector represent a range of activities, they have one underlying commonality: the fact that they are service providers. In this respect, all the companies share a need to please the customer. They have all embarked on digital and other initiatives towards this end as they continue to drive greater cost efficiencies and further develop their people. Ultimately, their goal is to offer the best service at the most competitive and profitable price.



PROPERTIES SECTOR

Key Highlights

During the year, DRB-HICOM achieved significant milestones in the Media City development. It completed the first parcel of the RM860 million project to redevelop Angkasapuri’s broadcast studios and complex, while the second parcel will be completed by end of 2019 and the entire development will be handed over by the middle of 2020. Some of Radio Televisyen Malaysia (“RTM”) programmes are now produced and broadcast from their new facilities.

Full completion and handover of the ICQS facility in Bukit Kayu Hitam will see the 28-year leasing concession of the facilities kick in. Northern Gateway Infrastructure Sdn. Bhd., a subsidiary of the Group was awarded the concession for the rights to design, finance, develop, construct, complete and lease the facilities and infrastructure and to carry out the asset management services for the ICQS Complex.


On 8 March and 11 July 2018, DRB-HICOM entered into various agreements to dispose of certain property assets and investments to Prisma Dimensi Sdn. Bhd. and Kelana Ventures Sdn. Bhd. The disposals will relieve the Group of landbank earmarked for residential development as well as their leisure and hospitality assets which are capital intensive as they require periodic refreshes to keep up with market trends.

DRB-HICOM’s shareholders agreed to these disposals at an Extraordinary General Meeting (“EGM”) held on 15 October 2018, and the Group expects to fulfil the conditions within 2019.



The Group is now managing the completed ICQS, which is operated 24 hours a day for commercial vehicles transporting goods across the Malaysian/Thai border under a three-month pilot programme. If successful, the round-the-clock operations will continue as it would enhance bilateral trade. At the same time, the Company aims to progressively handing over the final phases of Media City and then managing the complex as specified under the concession.

In the longer term, DRB-HICOM are looking at developing integrated industrial parks – offering better shared facilities – for the high-tech sector in support of Industry 4.0.

Key Risks Mitigating ActionsOverhang in the residential sector due to supply-demand mismatch and tighter financing requirements is expected to persist for another two years

• DRB-HICOM has exited the residential property market • The Group is also more focused on the industrial sector and is targeting

community-centred developments that support Fourth Industrial Revolution (“IR4.0”)


BUSINESS REVIEWAutomotive Sector

DRB-HICOM Group has more than 40 subsidiaries involved in automotive manufacturing/assembly, distribution, import and export, sales and after-sales as well as rental/leasing. This encompasses passenger and commercial vehicles, defence vehicles, specialty vehicles and motorcycles. The Group’s comprehensive automotive ecosystem includes the manufacture of composites and other components for the aerospace industry.

PROTON Holdings Berhad (“PROTON”)

PROTON, established in 1983 as Malaysia’s national car company, is involved in key automotive value chain activities covering research and development (“R&D”), product and powertrain engineering, vendor development, vehicle and key component manufacturing, as well as marketing, sales and after-sale services. In 2017, DRB-HICOM entered into a strategic partnership with Geely to reinvigorate the PROTON brand, regain its domestic leadership while achieving greater success abroad.

Key accomplishments in FY2018/19 demonstrate PROTON is on the right track. Progress in the domestic front has led to the brand regaining second spot in terms of market share, after a three-year hiatus. This serves as huge motivation for PROTON’s employees to continue to work hard to deliver better results consistently.

The brand’s stellar performance can be distilled to a 10-year business plan established immediately upon completion of the partnership deal in September 2017, outlining seven strategic thrusts, namely:

1) Develop attractive, technologically-advanced products

2) Expand its plant capacity and upgrade its manufacturing processes by adopting advanced equipment and automation systems

3) Implement progressive localisation of components, especially systems and sub-systems of advanced technologies

4) Adopt group practices on quality management throughout the value chain


5) Attain globally-competitive cost in line with group practices

6) Upgrade dealer outlets to offer integrated services of sales, after-sale services, spare parts (“3S”) and spray booth body repair (“4S”), as well review business policy between PROTON and its dealers

7) Develop in-house talent and concurrently attract global talents to join the interesting journey in reviving PROTON

During the year, PROTON delivered positive outcomes in each strategic area. Most prominently, on 12 December 2018, PROTON launched its first and much awaited SUV, the X70. As at 30 June 2019, the model has recorded sales of 16,418 units making it the most popular SUV in 2019. At the same time, PROTON expanded much effort to upgrade its existing model range. The uplifted Persona

and Iriz were officially rolled out on 23 April 2019, while the Exora was launched on 28 May. These models offer a new design appeal and at the same time boast enhanced driving performance incorporating intelligent connectivity features, famously known as the talking-car, “Hi Proton”. In terms of capacity, expansion of the Tanjung Malim plant has been progressing well and operations are expected to commence in the second half of 2019. The localised Proton X70 will be manufactured in this new plant, followed by other new PROTON models. The plan is for all PROTON production to take place in Tanjung Malim by 2023. Aligned to the IR4.0, the new plant will feature the latest technologies in producing cutting-edge models, including energy-efficient vehicles and autonomous features.


Local vendor development is ongoing to progressively increase local content value and develop the capability of local vendors, especially in the areas of new technology investment, advanced manufacturing processes, quality assurance and globally-competitive costs. With quality and competitiveness being driven to enhance the customer experience, PROTON is upgrading its dealer network to one-stop 3S and 4S centres providing sales and after-sales services, spare parts, as well as body and paint services. There are now 84 upgraded outlets reflecting the ‘new PROTON’, embodying a refreshed, efficient and customer-centric feel.

In addition, much emphasis is being placed on developing PROTON’s human resources, with employees and key talent being provided opportunities to escalate their capabilities towards career growth with PROTON. PROTON has also been working to build its export business. On 18 August 2018, it signed an agreement with Geely to conduct feasibility studies for the development and distribution of PROTON cars in China. While the overall export strategy is being reviewed holistically, PROTON signed a Distributorship Agreement as well as a Licensing and Technical Assistance Agreement with ALHAJ Automobile for the latter to assemble and market PROTON vehicles in Pakistan. For the financial year, PROTON recorded sales of 67,928 passenger vehicles in Malaysia and 1,544 units in the international market, mainly Egypt, Jordan, the United Arab Emirates and Brunei, achieving RM3.94 billion in revenue. The management will continue to pursue the company’s transformation programme in realising shareholders’ aspirations of returning to a healthy financial position and regaining market confidence.

DISTRIBUTION COMPANIES

Honda Malaysia Sdn. Bhd. (“Honda Malaysia”)

Honda Malaysia assembles and markets Honda cars in Malaysia. It has the capacity to produce 100,000 cars per annum at its plant in Pegoh, Melaka. Sales and after-sales services are provided by a network of 88 outlets nationwide.

In FY2018/19, Honda Malaysia sold 101,101 cars, a marginal drop from 106,341 cars in the previous financial year due to delays in the HR-V model and Civic model facelifts launches. Yet, the company maintained its top position in the non-national car segment for the fourth consecutive year in 2018; and number 2 position for overall car sales for the third consecutive year.

All seven CKD models, namely the Jazz, City, BR-V, HR-V, Civic, Accord and CR-V, continued to be segment leaders. The City contributed to 34% of total volume of sales revenue, followed by CR-V and Civic at 14% and 13% respectively.

Forever upgrading its capabilities, in FY2018/19 Honda Malaysia invested RM101 million on its plant and machinery. Its investments in technology means Honda is able to introduce to Malaysia new models being developed using its Next Generation Advanced Technology. These include the new Odyssey, launched in February 2018, the third model after the CR-V and new Accord to be equipped with Honda SENSING; and the new HR-V Hybrid equipped with advanced Sport Hybrid i-Dual-Clutch Drive. Malaysia was the first country outside Japan to introduce the HR-V hybrid, in the last quarter of FY2018/19.

BUSINESS REVIEWAutomotive Sector


Honda Malaysia continued to receive a string of awards reflecting the quality of its cars. Among the highlights for the financial year were being named as the Top Selling Hybrid Brand by Malaysia Automotive Institute (“MAI”)/Malaysia Car of The Year 2018 Awards; winning seven awards from Carlist.my – People’s Choice Awards 2018; a Gold for the People’s Choice 2018 Automotive at the Putra Brand Awards; the Car Sifu Editors’ Choice Awards 2018 for the Best Large-Size MPV; Vehicle of The Year 2018: Hybrid Of The Year by DSF.my Allianz; and eight awards at the 2018 Cars of Malaysia.

To maintain its market leadership, Honda Malaysia will seek continuously to improve its product quality and after-sales service while launching great-value-for-money models which exceed market expectations. Mitsubishi Motors Malaysia Sdn. Bhd. (“MMM”)

MMM is the official distributor of Mitsubishi Motors vehicles in Malaysia. The company is represented by 54 showrooms of which 48 are 3S Centres; and 55 service outlets throughout Malaysia. It has 15 showrooms in East Malaysia – eight in Sabah, seven in Sarawak.

During the financial year 2018, MMM launched an enhanced Outlander SUV and a new Mitsubishi Triton. The Outlander was introduced in May 2018, boasting an all-round monitor and premium leatherette seats. The Triton followed in January 2019, carrying the concept of ‘Engineered Beyond Tough’ and offering four pillars under the 4Sure Handling USPs: 4Sure Power, 4Sure Control, 4Sure Agility and 4Sure Safety.

MMM enabled Malaysians to experience the thrill of high-speed rides and off-road driving, as well as the proven capabilities of the new Triton, by hosting the Mitsubishi 4Sure Thrill Event in March 2019. The event, featuring two-time Dakar Rally Champion, Hiroshi Masuoka, and Malaysia Motorsports Athlete, Leona Chin, was a hit.

The two new models picked up a total of four awards between them during the year. The Outlander won the Family SUV of Malaysia by Cars of Malaysia 2018, Best Family Ride by The Star- Carsifu, and Midsize SUV of the Year by MAI, while the Triton was named the best Pick Up Truck in Malaysia by Cars of Malaysia 2018.

Complementing its quality products MMM is also known for excellent service. It ranked highest among eight selected brands in the J.D. Power Malaysia Customer Service Index Mass Market Study 2018. The company has consistently ranked among the top three in the study since 2015, reflecting a firm commitment to provide a rewarding and positive customer experience. To inspire its people to offer the best service, MMM is an advocate of the Omotenashi philosophy that extols the virtues of SHARP, namely ‘Smile, Heartfelt, Attentive, Ready and Polite’.

Isuzu Malaysia Sdn. Bhd. (“Isuzu Malaysia”)

Isuzu Malaysia markets and distributes Isuzu commercial vehicles, namely the light-duty ELF, medium-duty FORWARD, heavy-duty GIGA and GIGA Prime Movers, D-Max pick-up trucks; as well as the MU-X sports utility vehicle.

Isuzu’s commercial vehicles continued to dominate the local market in 2018, achieving the number 1 position in the truck segment for the fifth consecutive year, and number 1 position in the light-duty truck segment for the seventh consecutive year. Overall, Isuzu is ranked ninth as a brand.

In 2018, a total of 6,036 units commercial vehicle trucks were sold, achieving 35% market share and 5,067 units of Isuzu D-Max were sold which made up 12% of the total pick-up segment.

Isuzu Malaysia was number 1 in J.D Power’s Initial Quality Study in the pick-up segment for year 2018. The Isuzu Pick-up was also the Car Sifu Editor’s Choice in the Star Car Sifu awards, and won for the category of Proven Durability Vehicle in the carlist.my’s Editors’ Choice Award 2018.

In July 2018, the company launched a limited edition Isuzu D-Max X-Series boasting a sporty urban look and enhanced accessories.


MOTORCYCLES

Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”)

MODENAS is Malaysia’s homegrown motorcycle manufacturer. In its 100 acres land size factory located in Gurun, Kedah, the plant is readily equipped for welding, electro-disposition plating, painting and coating, conveyorised assembly lines, vehicle final testing, tools calibration lab, design centre including motorcycle and components testing, engine casting, assembly and test bench.

DRB-HICOM Commercial Vehicles Sdn. Bhd. (“DHCV”)

DHCV is the exclusive assembler and distributor of TATA commercial vehicles in Malaysia, with nine sales and 34 service centres nationwide.

The year saw Indian OEM, TML launch three models in April 2018 – the TATA Super Ace (small pick-up), Ultra 814 (7,500kg) and 1014 (10,400kg). Boasting competitive performance, durability, safety and low maintenance, all have been well received. TML is working with DHCV to fast-track the local assembly of these models, which to be rolled out in FY2019/20.

DHCV also collaborated with TML to develop specialised body applications for TATA Super Ace and Ultra to cater for local business needs. It also strengthened its dealer network via training, and continued to build strong relationships with banks and financiers so as to ensure adequate financing support for the purchase of TATA commercial vehicles.

Looking beyond, TML and DHCV will continue to assess the market and select the most suitable products from the TATA portfolio that are able to meet customers’ increasing demand for wider transportation needs. New segments to be explored include Heavy duty trucks, buses and military vehicles. DHCV also plans to expand their dealers network to cater for the business expansion.

Automotive SectorBUSINESS REVIEW


The motorcycle market has grown in a positive index for the second consecutive year by achieving 8.5% in the calendar year of 2018 with sales of 552,514 units, as opposed to 509,425 units in 2017. Propelled by new models introduction and robust promotions, MODENAS itself had leaped its share in the Street Bikes segment via Pulsar and exciting new model of Dominar 400.

Moving forward in strengthening its position in the Malaysian market and Asean region, MODENAS has embarked a strategic partnership collaboration with Kawasaki Heavy Industries, Ltd., Japan (“KHI”). With KHI’s strategic partnership via expansion of shareholding position in MODENAS, more new models and technology transfer will be anticipated which shall generates better efficiency, leaner cost, faster to market products and wider market reach. The MODENAS’s annual production capacity of 130,000 units is anticipated to be maximised in next five years aligning to reaching economies of scale for the Gurun plant.

RETAIL COMPANIES

Edaran Otomobil Nasional Berhad (“EON”)

EON is the holding company for Euromobil Sdn. Bhd. (“ESB”), EON Auto Mart Sdn. Bhd. (“EAM”), HICOM Auto Sdn. Bhd. (“HASB”), DRB-HICOM Leasing Sdn. Bhd. (“DLSB”) and DRB-HICOM EZ-Drive Sdn. Bhd. (“EZ-Drive”). It is involved in the retail sales of Audi, Mitsubishi and Volkswagen (“VW”) vehicles, spare parts and accessories via ESB, EAM and HASB, respectively; as well as vehicle rental and leasing services via EZ-Drive and DLSB.

EON also has 48% equity in Mitsubishi Motors Malaysia Sdn.Bhd. (“MMM”), the distributor of Mitsubishi vehicles in the country. Meanwhile, the company’s Jeep business has ceased with the appointment of third party authorised service dealer to continue servicing Jeep vehicles.

Since 2016, EON has been consolidating the Finance, Human Capital, IT and Procurement functions across its group of companies as part of efforts to contain costs and create efficiencies. It will continue with this process by further extending its shared services to other automotive distribution companies within the group. At the same time, it aims to increase its income by attracting tenants to occupy currently vacant land and premises belonging to the company.

EON Auto Mart Sdn. Bhd.

EAM being the largest MMM dealer with 8 outlets nationwide accounting for 17% of Mitsubishi market share in the country, providing sales and after-sales services to all Mitsubishi customers.

During the year, EAM embarked into network rationalisation exercise and focus on after-sales service efficiencies throughout the outlets. This includes implementation of new Mitsubishi visual identity. At the same time, the company will build on its strategy of driving fleet sales while looking to grow it’s after-sales revenue and profitability through greater expansion of the body and paint services.


HICOM Auto Sdn. Bhd.

HASB is an authorised dealer for Volkswagen (“VW”) with two sales and service outlets contributing 7% to VW volume.

HASB’s outlook is bright, with sales to corporate fleets expected to contribute significantly to its performance in FY2019/20. The company is also confident of a 25% growth in vehicle throughput given VW’s launch of Volkswagen Care Plus (“VCP”), a customer care programme to keep customers returning even after their five-year warranty expires.

With the introduction of new models line-up will definitely benefit HASB. In the interim, it will concentrate on enhancing its sales volume via more targeted marketing efforts complemented by extensive roadshows.

Automotive Corporation (Malaysia) Sdn. Bhd. (“ACM”)

ACM is the largest dealer of Isuzu trucks, pick-ups and SUVs in Malaysia. The company’s sales centre in Shah Alam, Selangor, is supported by a network of Sales, Service and Spare Parts (“3S”) centres in Batu Caves, Selangor; Kuantan, Pahang; Juru, Penang; Ipoh, Perak; and Johor Bahru in Johor.

ACM specialises in supply of Isuzu truck with customised body application to suit specific business needs. This is made possible through experience of more than 30 years in commercial vehicle industry and strong relationships with numerous prestigious body builders. With strong financial position, ACM is capable of fulfilling the needs of fleet customers which usually involve massive number of units.

ACM aims to further enhance its customer service through offering more comprehensive and competitively priced service maintenance packages with lower total cost of ownership for the fleet and government agency business.

Euromobil Sdn. Bhd.

Euromobil is the largest Audi dealer in Malaysia with centres in Damansara, Chan Sow Lin, Glenmarie and Johor Bahru. It accounts for 75% of Audi’s total sales in the country.

After two years of not introducing any new models, in March 2019 Audi launched the latest Q series range – Audi Q2, Q5, Q7, and all-new Q8 – once again giving fans something to look forward to. This was followed by the arrival of the Audi A3, A4 Quattro and A5 in April 2019. The premium Audi A8L and all-new Audi Q3 will debut later in 2019.

In FY2018/19, without any new models, a total of 294 Audi cars were sold in Malaysia of which 225 units were accounted for by Euromobil. Euromobil maintained its lead as Audi’s dealer by purchasing all 78 units of unsold Audi cars manufactured in 2015/2016 from Audi Malaysia in March 2018, thus boosting its own sales. Meanwhile, as part of ongoing efforts to reduce costs, it invested in digital marketing through which it has been able to target specific audiences.

Re-strategising its after-sales operations, in July 2018 the Chan Sow Lin Service Centre was transformed into a Running Gear Competence Centre – a first-in-Malaysia dedicated facility equipped with the latest technology to ensure Audi cars continue to deliver the best ride possible. Further, to reduce the workshop overload at the Damansara Service Centre, all major jobs such as engine overhaul have been diverted to Chan Sow Lin. This led to the Damansara outlet being recognised with the honorary Customer Experience Management (“CEM”) Improvement Award from Audi.

2019 looks set to be an exciting year given the new product launches.



In response to an industry that looks set to remain challenging, DHAS has outlined various initiatives to maintain its business momentum. These include extending its contracts with existing customers that are introducing new CBU and CKD models. A bright spot is the PROTON-Geely collaboration which will see the introduction of many new CKD models in Malaysia from end of 2019 onwards. DHAS also intends to play a key role in the import and export of new CKD motorcycle models to ASEAN.

At the same time, the company seeks to strengthen its yard management services by attracting customers from outside of the DRB-HICOM Group such as Mercedes-Benz and Hap Seng Trucks. It also intends to grow its trading activities, especially in components manufacturing, while exploring opportunities in DRB-HICOM’s non-automotive sectors such as aerospace and property.

As it continues to strengthen its operational excellence, DHAS is also rightsizing its Vehicle Preparation Centre operations to bring about even greater cost savings, setting it up for better performance in the coming years.

SERVICES COMPANIES

DRB-HICOM Auto Solutions Sdn. Bhd. (“DHAS”)

DHAS provides end-to-end logistics solutions for the automotive industry, from the import of CBU vehicles and completely knocked-down (“CKD”) kits, to forwarding and clearance, vehicle yard management, pre-delivery inspection and final delivery to dealer networks. Its broad customer base includes major marques such as PROTON, Audi, VW, Honda, Mitsubishi, Isuzu, TATA, Suzuki Motorcycle and MODENAS.

In 2018, DHAS recorded an increase in the number of imported CBU kits with the inclusion of a new Triton model. However, its import volume of CKD kits decreased following the cessation of Proton Ertiga production in September 2018. This offset the increase in motorcycle CKD kits brought in for MODENAS as well as the slight increase in volume of incoming VW CKD kits during the GST tax holiday.

Although the discontinuation of Proton Ertiga together with cost reduction initiatives by customers resulted in a 23% dent in DHAS’ revenue, its Profit Before Zakat and Tax (“PBZT”) stood at RM7.7 million, relatively unchanged from the previous financial year.


DRB-HICOM EZ-Drive Sdn. Bhd.

DRB-HICOM EZ-Drive, which owns DRB-HICOM Leasing Sdn. Bhd., represents Avis Malaysia. It is the leasing arm of the DRB-HICOM Group, offering short-term vehicle rental and long-term leasing of passenger and commercial vehicles as well as agricultural equipments. The year was positive overall as EZ-Drive continued to grow its fleet by 26% to more than 4,000 units while expanding its network of stations to 14 from 12 at the end of FY2018/19, and further building its agricultural equipment business. Operationally, it was able to maintain a high vehicle utilisation rate, 10% higher than AVIS Asia Pacific standard rate. It also established a Kaizen department to drive a continuous improvement programme. Its business expansion and diversification enabled the company to overcome competition from ride hailing set-ups to achieve 23.1% growth in revenue year-on-year to more than RM100 million, with 4.1% growth in PBT, mainly supported by the introduction of agricultural equipment leasing business. EZ-Drive’s operational and financial successes were duly recognised when Avis Malaysia won the Avis Budget Group 2018 Licensee of the Year Award at the International Licensee Conference 2018, held in Prague, Czech Republic. The award recognise licensee partners that have demonstrated growth in annual financial performance, measured against their respective country’s economic conditions, excellence in customer service and alignment with the brand’s initiatives. Avis Malaysia has been independently owned and operated since 1973, was also recognized for its long, successful tenure with an additional “45-year award” at the event. During this time, Avis Malaysia has been offering customers and businesses alike a wide selection of well-maintained vehicles, as well as ancillary services and coverages to enhance the overall driving experience. Going forward, the company will continue to tap into the potential of commercial vehicle leasing and market its services more aggressively with state governments. It also seeks to leverage potential synergies within Albukhary Group of companies; and capitalise on its International Licensee of the Year win. To further meet increase in demand, it will further strengthen its fleet size and add another two outlets to its network in FY2019/20.

The company’s prospects look good as demand for leased vehicles is set to increase, driven by cash-strapped organisations, the establishment of more multinational corporations (“MNCs”) and foreign operations in the country, and ongoing mega projects.

MANUFACTURING AND ENGINEERING

ISUZU HICOM Malaysia Sdn. Bhd. (“IHM”)

IHM manufactures ISUZU commercial vehicles such as the N-Series light-duty trucks, F-Series medium and heavy-duty trucks and D-Max pick-up trucks.

For year 2018, ISUZU sales for light, medium and heavy-duty trucks totalled 5,975 units, capturing 39% of the market, further entrenching the brand as a firm leader in its segment. At the same time, sales of pick-up trucks stood at 5,067 units, making up 11.4% of the market. With this performance, ISUZU retained its pole position for all trucks for the fifth consecutive year. It is also the number 1 light-duty truck brand for the ninth consecutive year.

In quality, the ISUZU D-Max was presented the IQS Award by J.D Power for the second consecutive year. In addition to that, IHM as a company received the High Productivity Enterprise Using Local Talent Award from Malaysia Productivity Corporation. The company has also achieved the highest score for Chemical and Ergonomic safety under a voluntary Systematic Occupational Health Enhancement Level Programme (“SoHELP”) run by the Department of Occupational Safety and Health. IHM was subsequently invited to share its best practices at the National SoHELP Convention 2018.

To further strengthen its market position, IHM plans to upgrade ISUZU N-Series, ISUZU F-Series as well as ISUZU D-Max. Following approval from the Road Transport Department in April 2018, it has also embarked on a frame extension project under which it performs frame modifications for trucks at a new workshop.

IHM is confident of maintaining its leadership in the commercial vehicles segment as it continues to introduce the latest ISUZU models while complying with all local and international regulatory requirements.



HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd. (“HA”)

HA assembles the Mercedes-Benz C, E and S Class, GLC, GLC Coupe as well as Actros and Mitsubishi Fuso Light and Medium-Duty trucks, in addition to the VW Passat, Tiguan, Vento and Polo Hatchback at its plants in Peramu Industrial Estate, Pekan.

During FY2017/18, HA achieved a significant milestone with the commercial launch of a new high-tech paint shop which doubles HA’s capacity to 50,000 units a year. HA leveraged its additional capacity by signing a five-year contract with Mercedes Benz Malaysia and a three-year contract with Hap Seng Truck Distribution for commercial vehicle assembly.

Assembly of the Mercedes-Benz GLC Coupe and S Class 560e plug-in hybrid commenced in February and March 2019 respectively. Another feather in their cap was when HA scored 10/10 points in the Daimler Surveillance Audit during the financial year.

Capitalising on its high-end painting capabilities and infrastructure as well as skilled employees, HA is looking at further volume expansion in the years to come. The focus for FY2019/20 will be new Mercedes-Benz and VW models, as well as a project it has embarked on with a new customer.

HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd. (“HYMM”)

HYMM manufactures and assembles Yamaha motorcycle engines and parts, with current production catering for three moped and two scooter models.

During the financial year, three of the models – namely the B17, 55D and 2WB – were upgraded, contributing to a surge in demand which exceeded HYMM’s manufacturing capacity. This led to production line balancing and cycle time improvement to cater for higher volumes. Excitingly, the ramp-up in production also saw HYMM achieving a milestone when the 3,000,000th engine rolled out from its plant on 25 February 2019.

In its effort to boost productivity, HYMM continued to focus on its Total Productive Maintenance programme, which contributed to an Assembly Overall Equipment Effectiveness (“OEE”) of more than 97% and a Machining OEE of more than 91%. HYMM has also achieved its fourth consecutive gold in the annual Yamaha Motor Company Limited (Japan) audit in 2018 for the implementation of Shikkari Kihon manufacturing principles. It also won three Global Benchmarking Awards at the Yamaha Japan Annual Monozukuri 2018 – for Best Performance Assembly, Best Improvement Machining Crankcase and Best Improvement Crankshaft lines.

Yamaha’s market share has inched up from 44% in 2017 to 47% in 2018, reinforcing the brand’s leadership. This is also reflected in the overall HYMM financial performance which sees HYMM revenue and PBT exceeding the Annual Management Plan by 22.1% and 40.5% respectively.

For FY2019/20, there are plans for B17, 55D and 2WB models facelift, as well as B92 in order to excite the market. This excitement is expected to further increase Yamaha’s market share. In order to cater for the increase in demand, HYMM is upgrading its production capabilities with the installation of three new machining lines which is for crankcase and head cylinder in FY2019/20, followed by crankshafts machining lines in FY2020/21. It is also improving its assembly cycle time from 0.60 minutes to 0.55 minutes in its effort to increase productivity as to meet the increase in demand.


HICOM-Teck See Manufacturing Malaysia Sdn. Bhd. (“HTS”)

HTS provides precision plastic injection moulding, blow moulding, laser cutting, vacuum foaming, assembly, painting and electroplating services. From manufacturing of cockpits, bumpers, door modules and chrome parts for the automotive industry, it has diversified into the non-automotive sector with the supply of road furnitures, mobile garbage bins and sound barriers. It is also gearing up to supply for the aerospace industry.

Moving up the value chain, HTS is now currently upgrading its technology while focusing on people development to deliver excellence in manufacturing and service while maintaining a competitive cost structure. Taking its technological transformation a step higher, it has formed a joint venture company with Jiangsu Xinquan Automotive Trim Co. Ltd. (“XINQUAN”) in January 2019 to design, develop and manufacture instrument panels using a new slush moulding technology, which is currently not available or used in Malaysia.

XINQUAN was incorporated in Jiangsu, China in 1982 and was listed in the Shanghai stock exchange on 17 March 2017. It currently has 10 production plants in various parts of China supplying instrument panels, floor console and door trims to Geely, SAIC Motor, Chery, Volkswagen, Nissan, FOTON and Fiat Chrysler Automobiles (“FCA”).

Results of HTS’ process and people development have been evident in recognition gained. In December 2018, it received the Technical Development Award from PROTON. This was followed by a gold award from Perodua for the implementation of Karakuri Kaizen in January 2019.

The company recorded a total revenue of RM329.8 million for FY2018/19, where PROTON contributed 38%, Perodua 22% and HA 14%.

HICOM HBPO Sdn. Bhd. (“HHBPO”)

HHBPO designs, develops and supplies front end modules (“FEMs”) for PROTON, VW and BMW at its plants in Tanjung Malim, Perak; Pekan, Pahang; and Kulim, Kedah respectively.

This financial year saw HHBPO recording a steady growth with increase in sales, contributed primarily by BMW and PROTON. Demand from the former increased with the launch of the second project namely, MINI (F60), X3 (G01) and X4 (G02); while that from PROTON was driven by higher than expected sales of Prevé. Together with VW sales, HHBPO’s revenue for the year exceeded its target by 30%.

Its quality and efficiency were recognised in December 2018, when PROTON bestowed HHBPO the Excellent Contribution Award for outstanding performance in Quality, Delivery & Cost Reduction.

Moving forward, HHBPO has been nominated to supply the FEM for the Proton X70 and X50 once local production commences. Concurrently, HHBPO is engaging with the local OEMs and collaborating with the Malaysian External Trade Development Corporation to explore opportunities for export within ASEAN.

Launches from BMW, PROTON and VW, as well as other brands should boost HHBPO further.



PHN Industry Sdn. Bhd. (“PHN”)

PHN is a Tier-1 manufacturer of automotive components, specialising in metal stamping, roll forming, welding and modular assembly, dies design and manufacturing, as well as electrical and electronic device assembly. It fully owns Oriental Summit Industries Sdn. Bhd. (“OSI”), one of the largest chassis manufacturers in the country; and DRB-HICOM Mechatronics Sdn. Bhd. (“DHMSB”), a supplier of automotive batteries and electrical/electronic devices. In recent years, PHN has diversified into the non-automotive sector via the production of premium fan blades, industrial air filters and the assembly of agricultural vehicles.

In FY2018/19, PHN entered into technical partnerships with TOPRE and ATSUMITEC Japan, to enhance the development of components for three new Honda vehicles. In addition to that, it acquired the rights to supply 24 parts for the Perodua Aruz; and 22 parts for PROTON’s upgraded Persona and Iriz.

In anticipation of increase in customer demand, PHN has embarked on additional production capacity project. Collaborating with PROTON, it has established a new sub-assembly plant within Proton Tanjung Malim complex. A newly completed second plant in Pegoh will be ready to supply to Honda by August 2019. The Bukit Beruntung plant is now expanded to cater for additional volume from Perodua.

For business diversification, PHN is currently developing premium fan blades for BAFCO and supplying agricultural vehicles to Tradewinds Plantation via AVIS. PHN also aims to enhance its export business especially in non-automotive products such as industrial air filters.

PHN continues to service and quality recognition. It received Perodua’s “Excellent Delivery Award” and “Excellent Quality Vendor Award”, PROTON’s “Best Cooperation and Technology Award” and HONDA’s “Delivery Appreciation Award” as well as “Environment Appreciation Award”.

HICOM Diecastings Sdn. Bhd. (“HDSB”)

HDSB manufactures aluminium parts and components for the automotive and non-automotive sectors. It specialises in engine components such as cover cylinder heads, cover timing chains, oil pumps, water pump covers, fuel pipe delivery, steering housing and engine brackets, supplying to OEMs such as PROTON, Perodua, Mazda, Honda and Bosch, amongst others.

During the financial year, HDSB achieved a revenue of RM67.3 million, of which 93% was from automotive products and 67% export.

In FY2018/19, the company secured a total of seven new projects from Mazda Corporation Japan, PROTON and Perodua. This is the third consecutive year it has secured new businesses from Mazda. HDSB was also nominated by PROTON to supply parts for the X70. For Perodua, HDSB was awarded a contract to supply parts for new turbo engine.

The company will continue to grow its export market, especially with the existing customers such as Mazda, Magna Powertrain and Bosch Group. Strengthening its core technology of high-pressure diecasting, it is also expanding its customer base and new business segment such as electric vehicles and other green technology products.


DEFENCE DIVISION

DRB-HICOM Defence Technologies Sdn. Bhd. (“DEFTECH”)

DEFTECH is a key player in the local defence and security industry community, with an entrenched position in land-based mobility platforms, and increasing presence in selected aerospace domains. It comprises four main subsidiaries, namely Defence Services Sdn. Bhd. (“DSSB”), an automotive engineering, maintenance, repair and overhaul (“MRO”) powerhouse; DEFTECH Aviation Sdn. Bhd. (“DAV”) which provides aviation MRO; DEFTECH Systems Integration Sdn. Bhd. (“DSI”) which provides avionic, optronic and systems integration services; and DEFTECH Unmanned Systems Sdn. Bhd. (“DUS”), which specialises in unmanned aerial vehicles (“UAVs”) and unmanned ground vehicles. The entire group caters to, and serves, both the military and non-military segments.

Despite a slight reduction in the government’s budget for defence and security, and a temporary hold on various MRO contracts, DEFTECH recorded a comfortable revenue of RM908.3 million and PBT of RM229.9 million for FY2018/19. The ongoing AV-8 GEMPITA Project, for the supply of 255 units of the armoured vehicles and four units of Commercial off the Shelf vehicles for the Malaysian Army, continues to be the main revenue contributor, at RM905 million, while the spare parts businesses and the delivery of Explosive Ordnance Disposal vans to the Royal Malaysian Police Force contributed to the remainder.

DEFTECH’s strategy continues to focus on ensuring delivery excellence for current contracts while securing new defence, security and commercial projects. It also aims to excel in the MRO sphere while pushing for growth in aerospace and unmanned technologies-based services and product and system integration.

Adhering to this strategy, the Group is confident of continuing to secure more government contracts in the new architecture of open tenders and competitive bidding. DEFTECH firmly believes it stands in good stead to be a significant force of growth in the defence and security industry in the coming years, and is actively pursuing several programmes under the Army Mobility Phase 2 (2021-2025) and Royal Malaysian Air Force (“RMAF”) CAP 55. Briefly:

a) Following the near completion of the AV-8 GEMPITA programme, DEFTECH is embarking on the armoured 6x6 combat vehicles bid for the Malaysian Army

b) In partnership with Turkish Aerospace, DEFTECH is in the running to supply the Medium Altitude Long Endurance UAV under RMAF’s CAP 55 plan for which the Request for Inquiry was called in January 2019

c) DEFTECH is in the final stages of commercial negotiations and has submitted its proposal to the Ministry of Defence for the maintenance contract of the AV-8 GEMPITA, which will be in service for at least the next 20 years

d) It is eyeing the supply of soft-skinned vehicles and trucks for various security agencies within the Ministry of Home Affairs

e) DEFTECH is participating in tenders for non-military trucks, UAVs, weapons and specialised vehicles for governmental agencies such as the Fire Department, Agensi Penguatkuasaan Maritim Malaysia, Customs and Jabatan Kemajuan Orang Asli

In FY2019/20 itself, DEFTECH will continue to deliver the AV-8 to the Army; fulfil its MRO and spare parts contracts and bid for the tender to deliver 25 units of HANDALAN trucks. In the mid and longer term, collaboration with leading international players such as Turkish Aerospace Industries, FNSS, Aselsan, Rheinmetall, Berretta and Kia Military Vehicle, places DEFTECH on a formidable footing to continue its march towards continuous business growth and sustainability.



AEROSPACE DIVISION

Composites Technology Research Malaysia Sdn. Bhd. (“CTRM”)

CTRM is a leading composites aero-structure manufacturer in Asia Pacific, and the first Asian composites manufacturer with a Nadcap AC7122-accredited test lab. It also manufactures composite non-aero structures.

Continued growth of the aviation industry meant increased demand for aircraft, which contributed to CTRM group increasing its revenue by 3.3% to RM953.2 million. CTRM’s Aero Structure business was the main revenue earner, with 55% of the total contributed by wing components while Nacelles and others (aircraft tail, main landing gear door and EC130 Fenestron) accounted for 42% and 3% respectively. The increase in revenue, together with cost optimisation from reduced material consumption and purchase prices, competitive bidding and commercial negotiations with suppliers, led to a 26.9% increase in PBT to RM60.3 million.

In the Non-Aero Structure business, CTRM Composites Engineering Sdn. Bhd. (“CTRMCE”) participated in several bidding exercises related to aircraft cabin interiors and satellite communication. Meanwhile, CTRM Testing Laboratory Sdn. Bhd. (“CTRMTL”) is gaining greater recognition due to investment in product development. It expects to grow its calibration capabilities, and is exploring the possibility of collaborating with Pos Malaysia, SIRIM and Vas Aero in both calibration as well as testing activities. Two prominent French companies have been identified for knowledge sharing and technology transfer. Along with other activities, CTRMTL will continue in its pursuit to gain Airbus Independent Laboratory status.

CTRM recognises the importance of offering its capacity and capability at competitive cost. This is being driven by operational excellence and the introduction of digital management tools such as ERP/MRP, APQP, eSalary, eAttendance and LCD monitoring systems which help to reduce process time, optimise product quality and manage its people. Research and Technology (“R&T”) also features prominently in CTRM’s business strategy. It is rolling out a five-year R&T road map established in 2017 focused on processes including Out of Autoclave materials, Resin Transfer Molding, Hot Press and AFP layup.

All these initiatives are supported by strategic human capital development. CTRM has adopted a holistic approach encompassing skills and leadership development, knowledge and career management to enhance its human capital.

As a result of its wide-ranging efforts to enhance efficiencies and quality, in 2018 CTRM was awarded the Best Performer award (Tier 2) from Airbus under its Supply Chain & Quality Improvement Programme (“SQIP”), based on delivery and quality performance.

Moving forward, CTRM seeks to secure new contracts with existing and new customers in the aerostructure and non-aerostructure industries. With the completion of a new facility, Building 6 at its Composites Technology City in Melaka, it has the capacity to take on new work packages without any further significant capex.


BUSINESS REVIEWServices Sector


DRB-HICOM offers a range of services, from postal & logistics to waste management, environmental services, vehicle inspection, banking and education. Its logistics network is the most comprehensive in the country, while the Group’s university distinguishes itself through its unique curriculum based on the concept of being ‘by the industry, for the industry’.

POSTAL & LOGISTICS

Pos Malaysia Berhad (“Pos Malaysia”)

Pos Malaysia, the nation’s postal service provider for over 200 years, has evolved beyond traditional mail and parcel delivery. Leveraging its extensive network of more than 3,700 touch points across the country, it offers end-to-end logistics capability with an asset fleet that includes three freighter aircraft, two bulk carrier vessels, 374 prime movers, 2,369 trailers and 377 lorries in addition to 3,020 delivery vehicles and 6,599 motorcycles. As a result of a series of acquisitions in recent years, Pos Malaysia owns Pos Aviation Sdn. Bhd. (“Pos Aviation”), Pos Logistics Berhad (“Pos Logistics”) and Pos Asia Cargo Express Sdn. Bhd. (“Pos ACE”). Together with its subsidiaries, it is principally involved in five core businesses, namely Postal Services; Courier, Express and Parcel (“CEP”); Aviation; Logistics and International Business. In FY2018/19, revenue from Postal Services decreased by RM36.9 million from FY2017/18 due to a continuing structural decline in mail volume (13% year-on-year). Coupled with the high costs of fulfilling its Universal Service Obligation (“USO”), Postal Services continued to incur a loss. In the last five years itself, the number of new addresses has increased by 17% to 8.9 million. In mitigation, the management is working closely with the regulator to review and rebalance the tariff – which was last changed in 2010 – and is hopeful of a positive outcome.


Riding on Malaysia’s e-commerce wave, revenue from the CEP business increased by RM50 million. Supporting this growth, the aggregated total capacity of Pos Malaysia’s automated processing has been increased to 530,000 items a day from 300,000 items a day with the completion of the second integrated processing centre (“IPC”) in KLIA. The first IPC is in Shah Alam. The Aviation business, which provides a range of ground handling services at airports including cargo handling, saw a 4.8% increase in revenue year-on-year. This was due to higher cargo tonnage at the Sabah and Sarawak stations as well as enhanced cargo volume. Revenue from the Logistics business dropped by 29%, mainly as a result of completion of the RAPID project in Johor. The International Business, comprising the cross-border delivery of e-commerce items (either via transshipment or direct entry), recorded RM147.2 million in revenue. Overall, Pos Malaysia saw a 4.8% year-on-year drop in revenue to RM2.36 billion compared to RM2.47 billion in the previous financial year.

Profit before tax (“PBT”) plunged from RM117.3 million to a loss before tax of RM158.4 million, mainly as a result of widening losses from mail and impairment charges of RM39.6 million from the impairment loss of goodwill in Pos Logistics. Postal Services’ losses stem from continuing double-digit contraction in mail volume and bill payments as these are replaced by electronic communication. The impairment of goodwill in Pos Logistics was due to lower-than-expected performance resulting from competition. Moving forward, Pos Malaysia is embarking on a Digital Transformation journey and expanding its capabilities to serve growing e-commerce demand. Overarching its digital strategy are comprehensive efforts to become more customer centric. Pos Malaysia seeks to elevate the customer experience and build trust through greater transparency and visibility of service. Along with e-commerce growth, the long-term outlook for Pos Malaysia is bright as more and more people shop online. In the shorter term, it is hopeful of the tariff negotiations coming to fruition. This, together with strategies for revenue growth and cost containment, places Pos Malaysia on a surer footing to expand its business with the best infrastructure and solutions to serve the market.

Services SectorBUSINESS REVIEW


CONCESSIONAIRES

Alam Flora Sdn. Bhd. (“Alam Flora”)

Alam Flora is responsible for solid waste management (“SWM”) and public cleansing services in Kuala Lumpur, Putrajaya and Pahang under a concession from the government which extends up to year 2033. Through its subsidiary, DRB-HICOM Environmental Services Sdn. Bhd. (“DHES”), it is also involved in non-concession business activities such as building cleaning, landscaping, landfill management, waste management, integrated facility management, recycling and the collection of industrial scrap material.

FY2018/19 marked the seventh year of Alam Flora’s privatisation, during which it remained steadfast in its pursuit of providing excellent service to the public. The company continued to invest in the best equipment to mechanise and automate its operations. It also reinforced its lobby for an expansion of its concession services to Kelantan and Terengganu, following which it would be the biggest private solid waste management company in Malaysia. At the same time, it made greater inroads into the non-concession business, including waste treatment, through negotiations with the DRB-HICOM and Albukhary Groups.

The company’s vision for expansion is reflected in a strategic plan that had been mapped in 2018. For FY2019/20 – FY2020/21 the goal is to venture into integrated waste and facilities management, the waste processes business and recovery and recycling business. The ultimate objective is to become a holistic waste management solutions provider and a smart waste management partner to the government. Alam Flora is technically equipped to be a partner to the government to achieve its goals of increasing the nation’s recyclable rate to 30% and reducing the solid waste management industry’s carbon footprint by 40% by 2020.

The Group’s conscientious efforts to carry out its functions efficiently led to another year of positive results, with revenue increasing 8.3% year-on-year to RM880.1 million, and Profit Before Zakat and Taxation (“PBZT”) remaining at RM98.6 million.

In FY2019/20, Alam Flora plans to extend its SWM services to Tioman Island thus cover the entire state of Pahang. Meanwhile, DHES’ refurbishment and full operation of mini incinerators in Cameron Highlands and Pulau Pangkor will enhance the company’s earnings.


PUSPAKOM Sdn. Bhd. (“PUSPAKOM”)

PUSPAKOM celebrates its silver jubilee this year. In that time, it has played a significant role in motorists’ safety as the only authorised vehicle inspection body in Malaysia. In addition to this mandatory function, it offers a suite of services for private vehicles that includes inspection for hire-purchase financing, ownership transfer, registration of imported vehicles and voluntary vehicle inspection.

Yet another digital innovation has been to install live feed display units at all inspection centres allowing customers to monitor their vehicle inspection status while waiting.

On the ground, PUSPAKOM has continued to grow its mobile inspection network, extending the number of operation days and hours of operation at major branches while relocating and upgrading branches for greater customer convenience and experience. It has also been engaging more diligently with the public to enhance awareness of the importance of inspection.

Its Hire-Purchase Inspection service was extended for another three years in December 2018 when PUSPAKOM won a tender issued by the Ministry of Domestic Trade and Consumer Affairs.

Since being awarded its concession in 1994, PUSPAKOM has been conscientious about fulfilling its service mandate by continuously enhancing the customer experience. A key focus area currently is to harness digital technology for more holistic, hassle-free solutions. This saw the launch of online reservation and payment system, MyPUSPAKOM, in FY2017/18. In FY2018/19, PUSPAKOM rolled out the digital service to all inspection centres in Peninsular Malaysia, Kuching and Kota Kinabalu while also extending it for its mobile truck services. In addition, PUSPAKOM introduced its own e-wallet as a new payment option besides credit and debit cards as well as financial process exchange.

Higher demand for inspection services along with an overall increase in TIV during the year led to a 3.8% growth in net revenue year-on-year to RM145.5 million, while PBZT rose to RM9.9 million from RM8.1 million. PUSPAKOM conducted a total of 3.35 million inspections in FY2018/19, compared to 3.31 million in FY2017/18.

Meanwhile, its commitment to excellence was reflected in more accolades and accreditation. PUSPAKOM was awarded the Malaysia Best Employer Brand Award 2018 by World HRD Congress, and received the MS ISO 37001:2016: Anti-Bribery Management System (“ABMS”) accreditation, becoming among the first organisations in Malaysia to do so.

Going forward, to meet increasing demand for mobile inspections PUSPAKOM seeks to grow its mobile service fleet. With strengthened resources, it will also take its services to as yet untapped markets.



OTHER SERVICES

Bank Muamalat Malaysia Berhad (“Bank Muamalat”)

Bank Muamalat is one of only three full-fledged Islamic banking institutions in Malaysia. It has 63 branches across the country and RM22.9 billion in assets. It is the first and the only Islamic bank in the world to become a member of the Global Alliance for Banking Values (“GABV”).

It recorded a total revenue of RM1.33 billion in FY2018/19 and a PBZT of RM241.2 million, marking 4.6% growth from the previous financial year. This was driven by a 3.5% increase in total net income to RM712 million underpinned by higher financing and investment securities income as well as higher gain in foreign exchange transactions.

During the financial year, the Bank’s gross financing base expanded by 3.9% to RM15.47 billion. Deposits from customers closed at RM19.14 billion, with current account and savings account (“CASA”) contributing 27.9% of this total. The Bank’s gross non-performing financing (“NPF”) ratio has also improved to 1.43% as at end of March 2019 from the 1.92% recorded in March 2018. Meanwhile, its capital position remained healthy with the Tier I capital ratio and total capital ratio at 15.8% and 18.6%, respectively.

In November 2018, the Bank was awarded the Best Alternative Investment Asset for Wealth and Society in Malaysia (Shariah Compliant Gold Investment) Award at the Global Wealth and Society Awards 2018 held in London. It also received various awards from Amanah Saham Nasional Berhad (“ASNB”) at the ASNB Starz Awards Night 2018, for outstanding performance as an ASNB agent.

Moving forward, Bank Muamalat will continue to focus on five strategic thrusts that have been outlined in its five-year business plan, namely to:

1) harness digital technologies; 2) become the preferred investment solutions provider;3) be the banker of choice for each localised community;4) be recognised as a socially responsible bank; and5) further excel in the area of customer service.

This five-pronged transformation is being strengthened by initiatives to expand its revenue, better manage its balance sheet, and improve cost efficiency and productivity. Further underlining its commitment to be a values-based bank, a number of plans have also been put in place to ensure a continuous positive impact on society and the environment.

Bank Muamalat seeks to tap into new markets for existing products while growing its Small Medium Enterprise business in collaboration with guaranteed providers and other financial institutions. It will also optimise its returns while managing risks through prudent provisioning for financing; offering more floating rates; and attracting more CASA deposits. In terms of cost efficiency and productivity, it will press ahead with process automation, centralised documentation and shift routine transactional banking tasks into less-cost banking channels.

Bank Muamalat’s ultimate goal is to ethically deliver best value to its stakeholders, society and the environment.


DRB-HICOM University of Automotive Malaysia (“DRB-HICOM U”)

DRB-HICOM U is a full-fledged university offering foundation, diploma, degree and post-graduate programmes in engineering, technology, business and management to Malaysian and international students. Located within DRB-HICOM’s Automotive Complex in Pekan, Pahang, it is the only university in Malaysia that focuses on producing graduates who are automotive industry-ready.

Enrolment in FY2018/19 stood at 377, a number that is targeted to increase to 700 in FY2019/20 as a result of more aggressive marketing as well as new scholarship packages. In the next five years, DRB-HICOM U aims to have a total student population of 3,000.

As part of efforts to increase its student intake, the Engineering Faculty is streamlining its resources to focus on the most sought-after programmes. It has also identified six work-based learning (“WBL”) programmes that would combine on-the-job experience with theoretical lessons. This is in line with the Malaysian Education Development Plan 2015-2025 (Higher Education) to produce graduates who are talented, skilled, knowledgeable and ready to

face the challenges of the 21st century. Currently, 2-Year University, 2-Year Industry (“2U2I”) programmes have obtained provisional accreditation from the Ministry of Education: the Diploma of Engineering Technology in Aerospace Composites Manufacturing; and Bachelor of Engineering Technology in Aerospace Composites Manufacturing.

Meanwhile, the Faculty of Business and Management’s newly approved Bachelor Business Administration (“BBA”) in Entrepreneurship and Innovation saw its first intake in February 2019; and plans to offer programmes in flipped classroom mode under the School of Advanced and Distance Learning (“SADLe”) are progressing. Out of seven undergraduate programmes to be offered through the virtual campus, the SADLe is starting with two programmes for the June 2019 intake.

The quality of DRB-HICOM U programmes is assured through relevant accreditation. To date, a total of 14 out of 55 programmes have been accredited. Another seven were audited in the first half of 2019 and have been provisionally accredited. The remaining programmes will be audited for full accreditation in the coming years. To ensure relevancy and continuous enhancement of the programmes, industrial advisors and subject matter experts have been appointed to appraise the curriculum contents.



The University has also started to offer scholarships as a means of broadening its pool of incoming students. A total of 76 students have been awarded scholarships for the Foundation programmes; 50 have been awarded the DRB-HICOM Apprentice Scholarship; three international students have received scholarships; and 237 students have received partial non-Foundation programme scholarships.

Research continues to be emphasised, and 21 indexed publications were produced in 2018. The University received a total of RM279,160 in external grants for research purposes from the Public Private Research Network and Knowledge Transfer Programme Fund which was used to fund 10 projects.

In 2018, the University won three awards each at the Malaysia Technology Expo and International Invention, Innovation & Technology Exhibition, and a gold at the Hackathon PSAS 2018 - Smart Car System. In addition, 46 teams won awards at the Ideas in Business & Engineering Exhibition hosted by the university. The University also won the Worldskill Malaysia Competition in 2018 and was awarded the Prime Minister’s Golden Hand Award.

Making its presence felt within ASEAN and beyond, the university’s newly set up Centre of Academic Collaboration and Transformation is engaging with both foreign and local institutions of higher learning. In FY2018/19, no less than 13 Memorandums of Understanding were signed to promote staff exchange, academic programme development, student mobility and student exchange.

In anticipation of a significant number of Chinese students from Beijing-Geely University starting at DRB-HICOM U in September 2019, the University has been training its administrative staff to speak Mandarin. Staff training is integral to overall quality enhancement which includes coaching for academic staff by visiting and adjunct professors; and a series of competency programmes by professional trainers.

The University received the ISO 9001:2015 certification in 2018, reflecting its commitment to maintaining quality and safety in an environment of continual improvement.


DRB-HICOM is involved in property development and management as well as construction. It is currently developing Proton City in Perak, residential properties in Johor, Media City in Kuala Lumpur and an Immigration, Customs, Quarantine and Security (“ICQS”) Complex at the Malaysia-Thai border – the latter two under concessions with the government. Although it also owns and manages hotels and a golf club, these are being phased out under an agreement to dispose of land parcels and leisure assets. The objective is to focus on industrial properties.

BUSINESS REVIEWProperties Sector


PROPERTY DEVELOPMENT

Glenmarie Properties Sdn. Bhd. (“GPSB”)

GPSB is the primary property development arm of DRB-HICOM. It is currently involved in the development of the residential Glenmarie Johor and the HICOM Pegoh Industrial Park.

• Glenmarie Johor is a 69-acres freehold mixed residential project that will feature a total of 477 units once completed. The development is located at the epicentre of Johor’s bustling and mature Tebrau region, highly sought-after due to its proximity to Johor Bahru’s central business district as well as the Malaysia-Singapore Causeway.

Phase 1A of Glenmarie Johor, made up 189 units of link houses was completed in February 2018. Phase 1B, comprising 102 units of link houses, was completed during the financial year under review and handed over Phase 1C, comprising of 56 units of semi-detailed houses and cluster homes, was launched in April 2018. The semi-detached units have an approximately built-up area of 3,000 sq.ft. While the cluster homes measure 2,600 sq.ft.

Occupying land areas of 40’ x 80’ and 34’ x 80’ respectively, prices range from RM1,098,000 to RM1,398,000 for standard units. To date, 30% of the units have been sold.

• HICOM Pegoh Industrial Park is designed to be a premier integrated industrial estate spanning 729 acres, one of the largest freehold industrial parks in Melaka. Located strategically along the North South Expressway, it will be easily accessible via the Alor Gajah/Simpang Empat Interchange in Alor Gajah, Melaka.

To date, approximately 326 acres of the industrial estate have been developed, and approximately 93% of the land has been sold. In FY2019/20, GPSB targets to sell approximately 22 acres of industrial land in Phase 2A while developing 69 acres in Phase 3 in the first half of 2020.

Proton City Development Corporation Sdn. Bhd. (“PCDC”)

PCDC is the developer of Proton City, a 4,000-acres township in Tanjung Malim, Perak. The development comprises residential, commercial, institutional as well as industrial parcels surrounded by lakes. Proton City also houses Universiti Pendidikan Sultan Idris, a premier university in the country.

In July 2018, PCDC launched a total of 169 single storey and 1½-storey link houses on standard lot sizes of 22’ x 70’. The single storey units have built-up areas of 1,000 sq.ft. while the 1½-storey link houses measure 1,586 sq.ft. in size. Priced from RM279,000 and RM390,000 respectively, about 30% of the units have been sold.


CONCESSION DEVELOPMENT AND CONSTRUCTION

Media City Ventures Sdn. Bhd. (“MCVSB”)

MCVSB, 51%-owned by DRB-HICOM, is the parent company of Media City Development Sdn. Bhd. (“MCDSB”), which is developing Media City, an upgraded and expanded Angkasapuri, the national TV and radio complex. MCDSB has a 23-year concession that includes the design, construction and upgrade of the buildings and media facilities, and subsequent management of Media City Complex. It has delivered the first parcel of Media City, which entailed installing the latest broadcast equipment required for high definition digital TV programmes. The second parcel, comprising new TV studios and radio contis, will be delivered by end of 2019.

Northern Gateway Infrastructure Sdn. Bhd. (“NGISB”)

NGISB was set up to develop and manage a new ICQS complex in Bukit Kayu Hitam, Kedah under a 28-year concession with the government beginning in June 2014. Phase 1 of the complex was officially opened on 1 November 2017, and has been operating flawlessly by 14 government agencies helmed by Jabatan Imigresen Malaysia. Construction of Phase 2 commenced in January 2018 and was completed as per schedule. It is now being commissioned for opening to the public by end of June 2019.

Properties SectorBUSINESS REVIEW


ASSET AND FACILITY MANAGEMENT

Glenmarie Golf & Country Club (“GGCC”)

GGCC is one of the most prestigious golf courses and club houses in the country, attracting high-profile tournaments such as the Bridgestone ASEAN Amateur Open 2018 – Grand Finals. Other tournaments hosted during the year included the Professional Golf of Malaysia (“PGM”) Northport Championship, PGM Ladies Championship, 13th Ambank Group-SportExcel International Junior Golf Championship and the Senior Golfers’ Society of Malaysia Interstate Team Championship 2019. Total revenue from membership and events for the financial year amounted to RM22.0 million.

Holiday Inn Kuala Lumpur Glenmarie (“HIKLG”)

HIKLG is a business and leisure resort-styled hotel in Shah Alam, Selangor. As a result of the slowdown in tourism, it recorded a lower number of guest arrivals than in the previous year, achieving an average occupancy rate of 45.2%, with revenue totalling RM19.4 million.

Vivanta by TAJ - Rebak Island, Langkawi

Vivanta by TAJ - Rebak Island, Langkawi is a luxury resort under the globally renowned TAJ brand. Offering the lure of staying on a private island, the five-star resort continues to attract an ever-increasing number of guests, achieving an occupancy rate of 65% for the year and revenue of RM24.3 million.


KEY INITIATIVES145 Sustainability Report


SUSTAINABILITY REPORTFor Financial Year 2018/19

This picture of our headquarters, Wisma DRB-HICOM, was hand-drawn by Kennard Lee Kean Aun (“Ken”), one of six differently-abled individuals employed by the Company under our People with Disabilities (“PWD”) Programme. Ken is a staff of the Creative Services Department at Group Strategic Communications Division.


As I stated last year, DRB-HICOM’s sustainability initiatives focus on five themes: Safety and Health; Energy Management; Waste Management; Human Capital, and Corporate Responsibility. This sustainability journey is a demanding one, what more for an organisation such as DRB-HICOM. With some 55,000 people in our ranks, this alone poses so many challenges.

Our wide geographic reach also means that our carbon footprint is larger than most. Our postal services, for example, cover the far reaches of our nation, and thus we endeavour to be responsible in the way we impact the environment within which we operate.

Our size means we consume more energy when compared to the smaller organisations. But we are cognisant to take proactive steps to ensure wherever we can, we manage energy consumption while not impacting the output of work.

The satisfaction is in the results we have achieved. This year, we are proud that the efforts across the Group have borne fruit. These are detailed in this report and I hope you will celebrate with us the small successes that will lead to greater ones.

On behalf of the Board, I extend my gratitude to our employees for embracing sustainability as they have done. This report details their success, and also the route charted towards building a more sustainable DRB-HICOM. In the end, their role in this journey with DRB-HICOM is one that will benefit future generations, and that must be a prime motivating factor for each and every one of us.

Thank you.

Syed Faisal Albar

Dear shareholders,

Following our Sustainability Report last year, we continue our efforts as a Group to improve the impact of our businesses towards the surrounding and the public. We realise that our stakeholders want all the elements related to sustainability – climate change, human rights, integrity, diversity and safety – be addressed while at the same time deliver quality products and credible financial performance that brings about long-term business value.


Reporting Approach

This report focuses on the sustainability strategy and practices of DRB-HICOM and its subsidiaries, namely the material Economic, Environmental and Social aspects of our business operations.

This report has been prepared in reference to the reporting framework stipulated by the Global Reporting Initiative (“GRI”) Standards and meets the statutory requirement prescribed by Bursa Malaysia Securities Berhad (“Bursa Malaysia”). The reporting principles covered in this report includes:

The Materials established as the reporting perimeters in this report are as stated below:• GRI 203 Indirect Economic Impacts 2016• GRI 302 Energy 2016• GRI 306 Effluents and Waste 2016• GRI 403 Occupational Health and Safety 2016• GRI 404 Training and Education 2016• GRI 407 Freedom of Association and Collective

Bargaining 2016• GRI 413 Local Communities 2016

Reporting Period

This report refers to the financial year period from 1 April 2018 to 31 March 2019, unless indicated otherwise.

ABOUT THIS REPORT

Scope and Boundaries

The scope of the report is confined to subsidiaries in which DRB-HICOM has more than 50% equity, unless indicated otherwise.

Memberships and Associations

DRB-HICOM is actively involved in nationally recognised memberships and associations in Malaysia. Examples of include, but are not limited to, the list below:• MIGHT – Malaysian Industry-Government Group for

High Technology• FMM – Federation of Malaysian Manufacturers• MIER – Malaysian Institute of Economic Research • MIM – Malaysian Institute of Management• MEF – Malaysian Employers Federation• MICG – Malaysian Institute of Corporate Governance• MAA – Malaysian Automotive Association• IIAM – The Institute of Internal Auditors Malaysia• FPLC – Federation of Public Listed Companies

References

References to “DRB-HICOM”, “the Company”, “the Organisation”, “the Group” and “we” refer to DRB-HICOM and its subsidiaries.

Feedback

For further details, you may contact:Name : Mahmood Abdul RazakDesignation : Head, Group Strategic Communications

DivisionEmail : [email protected]

SUSTAINABILITY REPORT

• Stakeholder Inclusiveness

: capturing our stakeholders’ expectations and concerns

• Sustainability Context

: presenting our performance in the wider context of sustainability

• Materiality : identifying and prioritising the key sustainability issues that our Group encounters

• Completeness : reporting all sustainability topics that are relevant to our Group, and those that influences our stakeholders.


A. Asia Sustainability Reporting Awards 2018 • Finalist – Asia’s Best Sustainability Report within Annual

Report • Finalist – Asia’s Best SDG Reporting

B. TalentCorp Life at Work Awards 2018 – Outstanding Practice (Workforce)

C. Excellent Technology Development Award Geely Auto 2019 Annual Supplier Conference awarded

to PHN Industry Sdn. Bhd.

D. Best Performer 2018 Award Airbus Supply Chain & Quality Improvement

Programme (“SQIP”) awarded to Composites Technology Research Malaysia Sdn. Bhd. (“CTRM”)

E. HR Asia Awards Best Companies to Work For in Asia 2018

AWARDS AND RECOGNITION

F. HR Excellence Awards 2018 • Gold Winner – Excellence in HR Team Collaboration • Bronze Winner – Excellence in Graduate Recruitment &

Development

G. Malaysia HR Awards 2018 Employer of Choice Award (Private Sector)

H. Human Resources Asia Recruitment Awards 2018 In-House Recruitment Professional of The Year (Silver) awarded to Vilashini Ananda Rajah, Head of Group Talent Acquisition

I. Rentalcars.com Customer Favourite Award 2018 Avis Malaysia’s Kuching and Kota Kinabalu branch

C D

A B


THIS IS DRB-HICOM SUSTAINABILITY

Today, with over 100 years of experience and growth, DRB-HICOM strives to lead by example in driving our Group’s sustainability agenda. The group is among the region’s leading conglomerates with over 70 subsidiaries covering three main sectors (across Automotive, Services and Properties) nationwide, employing more than 55,000 strong employees base. Working with different sectors, people and needs, we have always aspired to reform the sustainability-sphere to achieve noteworthy and continuing improvement in economic, environmental and social outcomes. This is a commitment for all our business sectors, and Group as a whole, as we work together to incorporate sustainability into all our daily operations.

Building on a strong foundation of corporate governance, sustainability principles permeate decisions and actions we undertake to ensure responsible business practices, manage the environmental impact of our operational activities, provide an inclusive workplace for our employees and meet the needs of wider society. We recognise the responsibility we owe to our various stakeholders in delivering not only quality but ethical and responsible services and products. We continue to strive towards inculcating sound corporate governance practices that is in line with the Malaysian Code on Corporate Governance (“MCCG”) and adhere to related industrial best practices (see page 63 to 74 for details).

Sustainability Vision To be a frontrunner in meeting the sustainable standards set by the nation.

Our Commitment

Sustainability MissionTo ensure that business activities of our core sectors align with the expectations of our stakeholders while also enhancing the long-term value of the Company through sustainable initiatives.

Being one of the largest conglomerates in Malaysia with a market capitalisation of RM3.7 billion, DRB-HICOM has experienced extensive growth since the millennial merger to become the only corporation in the country involved in the entire automotive value ecosystem, as well as the only organisation nationwide that provides end-to-end logistics services, Islamic banking, vehicle inspection, waste management and automotive industry-related tertiary education including vocational training. In the property market, we have built a strong reputation for quality developments under the Glenmarie brand, and are now focused on the development of industrial parks.

Our Ecosystem

We have formed specific themes and assigned teams to take responsibility in managing these themes and their impacts. The teams have developed specific goals, targets (e.g. 2% reduction per year for safety and health & energy) and initiatives to ensure there is continuous progress within the Group in managing all the material concerns. We are certain this will ensure a sustainable business model for the Group.

Our Themes

Safety and Health

Energy Management

Waste Management

Human Capital

Corporate Responsibility


Automotive

Services

Properties


Our value chain strategy

Given the diverse nature of our business operations, sustainable practices and responsible business strategy form the basis of our ability to create long-term value for our stakeholders. We allocate and channel our capital in the form of financial, manufactured, intellectual, human, social and relationship as well as natural capital into all our business operations with the objective to minimise our negative impact and generate sustainable value to our diverse stakeholders.

As we believe that our global presence needs us to be forward looking and be supportive on both global and national agendas, we therefore incorporate Sustainable Development Goals (“SDGs” or “Goals”) introduced by the United Nations into the Group’s sustainable strategy. These set of 17 Goals include calls of action to end poverty, protect the environment and help people lead a peaceful and prosperous life. Malaysia is committed to support and implement the 2030 Agenda for Sustainable Development and its 17 Goals. We at DRB-HICOM reaffirm our support, aligning to the national aspirations towards achieving the Goals.

• Capital expenditure• Creditworthiness• Equity• Grant

• Presence in three key countries across three diverse industries in Malaysia, Indonesia and Thailand

• Research and Development

• More than 55,000 employees under the Group

• Training and safety programmes

• Stakeholder engagement survey

• Community engagement

• Natural resources such as energy, water and raw materials

• Profit• Government tax• Dividend• Employee benefits

• Top class quality on products and services

• Patents on product and process

• Skilled employees• Safe and healthy

workplace

• Stakeholders’ concerns are addressed

• Waste• Wastewater• Emissions

• Economical, ecological and societal value to the people and nation

• Future-proof workforce

• Local community well-being

• Sustainable growth across the Group

• Brand value and reputation

Our Capital Our Input Our Output Our Impact

Financial

Manufactured

Intellectual

Human

Social and Relationship

Natural


Managing Our Supply Chain

We have strengthened the relationships we have with our vendors and suppliers through years of mutual trust and respect via transparent business transactions. Given the multi-faceted nature of our services, we believe this is essential for the success of our business.

At DRB-HICOM, we are committed to providing equal and fair business opportunities through our tendering and Request for Quotation (“RFQ”) processes. Our process ensures all the participants are evaluated in a transparent manner by the appointed committee members. We screen all potential suppliers through our pre-qualification (“pre-Q”) evaluation before the tender or RFQ invitation is issued. Suppliers who pass the pre-Q are qualified to move forward their participation of the tender/RFQ. To encourage local supplier participation, we award additional points to them in our tender/RFQ evaluations where applicable.

We are dedicated to conducting our business in an ethical manner and ensuring transparency across all our business functions. The Ethics and Procurement clause in our Group Procurement Policy (“GPP”) details the ethical requirement for procurement personnel. We manage conflicts of interest, procurement relationships and ethical conduct of suppliers through our Invitation To Bid (“ITB”) documents. These documents are issued during the tender exercises to all participating suppliers. The ITB documents provide the requirements suppliers have to strictly adhere to. The following are the relevant clauses:

1. Clause 2.7 : Confidentiality2. Clause 2.8 : Bidder’s Undertaking3. Clause 2.16 : Bribery and Solicitation4. Clause 2.17 : Compliance to Safety, Health and

Environment Regulations and Guidelines5. Clause 2.18 : Immigration Regulations

We encourage all our stakeholders to report any unethical behaviour and have provided a safe platform to do so. They may access this platform easily through our Group’s toll-free Whistleblower hotline at 1-800-88-2005, which is mentioned both in GPP and ITB.

DRB-HICOM Green Procurement Policy

The Group established the DRB-HICOM Green Procurement Policy to require all employees to conduct purchasing and contracting activities in a resource efficient manner. It recommends each necessary purchase to consider the below:

1. Fit for purpose, provide value for money 2. Energy and resource efficient 3. Minimum use of virgin materials 4. Non-polluting 5. Durable, easily upgraded and repairable 6. Minimum packaging 7. Reusable and recyclable

Engaging PROTON’s Supply Chain on Energy Management

PROTON has expanded its aspiration to reduce energy consumption to its supply chain. As part of the PROTON Green Initiatives, PROTON actively engages and provides technical assistance to its vendors as well as PROTON showrooms to facilitate the implementation of energy reduction initiatives in their operations.

To learn more on how PROTON engages its supply chain on energy management, please refer to page 162 to 163.



Sustainability Governance

Recognising sustainability as a key business differentiator and a driver of our business, the spirit of sustainability is embedded in every level of operation in DRB-HICOM. Starting at the Board of Directors level, the governance of sustainability in the Group encompasses our three business sectors (Automotive, Services, and Properties) and Group Corporate Support Services.

The Board Risk and Sustainability Committee (“BRSC”) has general oversight of our sustainability strategy and performance. The BRSC reviews our sustainability-related progress on a quarterly basis.

Chaired by Group Director for Financial Services Division, our Sustainability Steering Committee (“SSC”) comprises of the Head of Group Risk Management Department; Head of Group Strategic Communications Division; Head of Group Human Capital Division and Head of Group Safety, Health and Environment Department. The committee is responsible to drive and ensure our sustainability strategy is effectively incorporated into all areas of our business.

The Sustainability Working Committee (“SWC”) is our cross-functional ‘activation arm’ that effectively drives focus on the execution of strategic plans for our priority material topics. This diverse working committee reviews the status of strategic plans for our priority material topics and emerging material topics. The SWC is also accountable for analysing which stakeholders and programmes have the most impact on DRB-HICOM’s reputation as well as working proactively across the organisation to foster engagements around the progress of our goals and sustainability commitments.

Kindly refer to Risk Management statement in the Annual Report on the pages 75 to 80 and 95 to 102 for more details on sustainability governance in DRB-HICOM.

DRB-HICOM Board of Directors

Board Risk and Sustainability

Committee

SustainabilitySteering

Committee

Sustainability Working

Committee

DRB-HICOM Sustainability Governance Structure

Group Corporate Support ServicesServices

PropertiesAutomotive



Sustainability Risk Management

At DRB-HICOM, risks related to climate change, market and industries, reputation, and organisation are perceived as the overarching foundation for sustainability risk management. These risks are managed by the Group’s three lines of defense, namely Sector and Business Units, Group Risk Management Department and Group Internal Audit Division, alongside initiatives conducted to measure and mitigate risks across all sectors, units and divisions on a consistent basis.

Risks Description Actions Taken

Climate-Related Risk

According to the Task Force on Climate-related Financial Disclosures (“TCFD”), climate-related risks can be divided into two categories, 1) risks related to the transition to a lower-carbon economy and 2) risks related to physical impacts of climate change.

At DRB-HICOM, we undertake a similar approach to understand our climate-related risks. We align our commitment to Malaysia’s aspiration on carbon reduction in order to safeguard our business as well as the community we serve from climate-related risks. This means we constantly explore innovative ways and cutting edge technology to reduce our energy consumption as well as carbon footprint not only within the Group but also in our supply chain.

Legal & Compliance Risk

The newly restructured Ministry of Energy, Science, Technology, Environment and Climate Change (“MESTECC”) has emphasised on the participation of private sector in addressing climate change and other environmental issues in Malaysia. The government is currently looking into establishing policies on climate change and energy efficiency. This may result in increased compliance costs for businesses especially those which are involved in high energy intensity industries.

With this in mind, the Group frequently engage with the government as well as industry experts to ensure we are well prepared for regulatory transitions.

Health & Safety Risk

The health and safety of our employees as well as all our stakeholders is an integral part of DRB-HICOM’s operational excellence that we will not compromise.

Guided by the Group Safety, Health and Environment (“SHE”) Policy, we conduct stringent checks and employee trainings as well as implement control systems and standard operational procedures to ensure disruptions from health and safety related incidents at our workplace are effectively mitigated.

Opportunities Description Actions Taken

Circular Economy within DRB-HICOM Ecosystem

Over 70 subsidiaries spanning across three diverse sectors - Automotive, Services and Properties, DRB-HICOM has built an economic ecosystem that possesses sizable potential in minimising waste and making the most out of resources within our subsidiaries. For example, waste generated by one of our subsidiaries can be a source of raw material for other subsidiaries.

The Group is currently exploring methods to adopt the circular economy approach and gradually move away from the traditional linear “take, make, dispose” industrial processes. We believe this will enable the Group to minimise risks associated with raw material and natural resources in the long term.

Decarbonise Our Environmental Footprint

In supporting Malaysia’s commitment towards achieving a 45% nationwide carbon reduction by year 2030 compared to base year 2005, the Group has been actively reducing its carbon footprint through energy reduction initiatives as well as adoption of renewable energy sources.

We align our energy management strategy with Malaysia’s committment to carbon reduction. Since FY2016/17, the Group has recorded a reduction of over 42 million kWh in energy consumption, which is equivalent to a reduction of more than 28,000 tonnes of carbon emissions. While the Group continues to yield energy savings from energy reduction initiatives, our main subsidiaries PROTON and CTRM have plans to adopt and instal solar panels at their premises in the upcoming years.

These Economic, Environmental and Social (“EES”) risks and opportunities also complement the Group’s Enterprise Risk Management (“ERM”) framework. More information can be found in the Risk Management Statement on the pages 75 to 80 and 95 to 102 of the Annual Report.


Stakeholders Mode of Engagement Frequency of Engagement Scope of Interest

Customers Website / Social media platforms Continuous • Direct economic value generated and distributed• Materials (recycled materials and reclaimed

products)• Employment (turnover rate and benefits)

Media conferences As needed

Employees DRB-HICOM Talent Development Programme Continuous• Training and education• Materials (recycled materials and reclaimed

products)• Employment (turnover rate and benefits)

Excellence award and scholarship programmes AnnuallyCode of Ethics and Business Practice (“COEBP”) ContinuousWhistleblower Policy ContinuousDialogue with national and in-house unions As neededDRB-HICOM Safety, Health and Environment Council

Quarterly

Suppliers and Contractors

Business negotiation As needed • Occupational health and safety• Anti-corruption• Effluents and waste

DRB-HICOM Group Procurement Policy ("GPP") ContinuousVendor development programme Annually

Local Community Participation in and sponsorship of community service events / NGO events

As needed • Materials (recycled materials and reclaimed products)

• Human rights assessment• Indirect economic impacts

Social and environmental contribution programme

As needed

Safety, health and environment campaigns Quarterly

Investors Community

In-house, one-to-one and small group meetings with stakeholders

Continuous • Direct economic value generated and distributed• Environmental compliance• Employment (turnover rate and benefits)Annual General Meeting (“AGM”) Annually

Extraordinary General Meeting (“EGM”) of shareholders

As needed

Financial results announcements QuarterlyDialogue / Teleconference between the Group and investors

Continuous

Non-deal roadshows As neededPlanned visits / Business showcase Annually

Regulators Attend workshops and seminars organised by regulatory agencies to stay abreast of any regulatory requirement

Continuous • Anti-corruption• Energy• Training and education

Pro-active engagement / consultation with the relevant regulatory bodies on corporate compliance matters

Continuous

ENGAGING OUR STAKEHOLDERS

Our stakeholders are an integral part of our business, thus understanding and addressing their expectations and concerns is key towards ensuring continuity in the DRB-HICOM sustainability journey. We are grateful and humbled by the involvement of our stakeholders in this journey, particularly in identifying areas for improvements and defining the expectations on our sustainability areas.

Over the years, we have nurtured our relationship with our stakeholders by placing an emphasis in prioritising our people, the quality of our products, the personalised services we provide, the social impact we create, the economic performance we achieve and our diligence in complying with relevant laws and regulations.

This year, DRB-HICOM has taken a digital approach by reaching out to our stakeholders via an online survey to understand their expectations and concerns about our businesses.

The table showcased below has been revised as per data we have collated from our engagement with stakeholders throughout FY2018/19.


DRB-HICOM Materiality Matrix


MATERIALITY ASSESSMENT

Our closed loop materiality assessment is a key component of our sustainability reporting journey, primarily in defining the reporting expectations and boundaries. Following the Materiality Matrix that was established in FY2017/18, DRB-HICOM has reviewed and revised the existing matrix by incorporating local and global sustainability trends as well as perspectives from our internal and external stakeholders via various engagements. The survey undertaken to engage our stakeholders was managed and verified by an independent third party consultant. The results were compiled and mapped according to the influence of sustainability issues emphasised by stakeholders and the significance of economic, environmental and social impacts to the business. Further to the establishment of the Materiality Matrix, it was discussed and approved by the BRSC. The Group strives to review the Materiality Matrix on an annual basis.

OccupationalHealth and Safety

Training andEducation

Energy

Indirect EconomicImpacts

Local Communities

Effluents andWaste Freedom of Association

and Collective Bargaining

Anti-corruption

Water

Supplier EnvironmentalAssessment

Diversity and EqualOpportunity

Human RightsAssessment

SIGNIFICANCE OF ECONOMIC, ENVIRONMENTAL & SOCIAL IMPACTS High

High

Low

INFL

UEN

CE O

F ST

AKEH

OLDE

R AS

SESS

MEN

T &

DEC

ISIO

N

Emissions

DRB-HICOMMateriality

AssessmentApproach

Current StateAssessment

• Analyse previous year reports to identify

improvements to be incorporated into this year’s

report.

Identify Local andGlobal Trends• Utilise media search and subject matter experts’ inputs to identify local and global sustainability trends that are relevant to DRB-HICOM and its subsidiaries.

Climate Check• Align report to Bursa Malaysia requirement, GRI Standards and United Nations Sustainable Development Goals (“UNSDGs”).• Conduct comparative analysis on peers and best-in-class.

StakeholderEngagement• Bottom-up approach to identify internal and external stakeholders' concerns on sustainability issues via periodical engagements and online surveys.

ManagementDiscussion

• Conduct a series of management meetings and focus group discussions to incorporate

stakeholders' concern into the Group’s Materiality Matrix.

Validation• Align the Materiality Matrix

with DRB-HICOM Sustainability Themes.

• BRSC discusses and approves the finalised Materiality Matrix.

1 2

5 4

36

Respective indicators can be found in GRI Standards Content Index on the pages 193 and 194


Safety & Health Key Highlights InFY2018/19

reduction in total number of incidents as compared to FY2017/18

13%were awarded SoHELP Level 5 Achievement of Excellence

5 Subsidiaries

reduction in total Lost Time Injuries as compared to FY2017/18

81%with the Group SHE practitioner to share successful SHE initiatives

Open Dialogue

Safety, Health & Environment (“SHE”) practitioners throughout the Group as of 31 March 2019

191

GOOD HEALTHAND WELL-BEING

3

DECENT WORKAND ECONOMIC

GROWTH

8AFFORDABLEAND CLEAN

ENERGY

7

RESPONSIBLECONSUMPTION AND

PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5

CLEAN WATERAND SANITATION

6INDUSTRY

INNOVATION ANDINFRASTRUCTURE

9REDUCED

INEQUALITIES

10

SUSTAINABLECITIES AND

COMMUNITIES

11LIFE BELOW

WATER

14

PEACE JUSTICEAND STRONGINSTITUTION

16PARTNERSHIPSFOR THE GOALS

17

NOPOVERTY

1


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1

Cardiopulmonary Resuscitation (“CPR”) training during Safety, Health & Environment Dialogue and Awareness Training.


Why It Matters

Our people matters. It is our primary aim to provide a safe and healthy working environment for our employees. It is important to the Group that we ensure the safety of all our stakeholders that do businesses at our premises are prioritised. With a business influence sphere that spans throughout Malaysia, it is our duty to be compliant with all relevant safety and health requirements.

We have put in place stringent checks, systems and processes to ensure that safety and health is never compromised, as we see these as not just a priority, but a necessity. We have also invested heavily in training and re-training courses, as well as run safety awareness and training programmes to instil a safety and health conscious culture in employees at all levels. This focus continues to be strongly reflected in the Group’s policies, procedures and plans.

How We Approach It

Safety, health and environment (“SHE”) matters at DRB-HICOM are guided by the Group’s SHE policy. The policy focuses on four major objectives that include Compliance, Prevention of Pollution, Communication and Continual Improvement. These broad scopes underpin our overarching commitment towards protecting the environment where we operate while emphasising our employees’ safety and health. The policy is applicable to all our business activities and premises.

The Group formed a SHE Council, headed by the Group Managing Director with the Group SHE Department acting as secretariat to monitor and advise on all SHE matters at Group level. The Council, with active participation from Senior Management of the Group, has a role in determining the overall safety and health strategies and initiatives, as well as to drive effective implementation. They meet quarterly to review the Group’s SHE strategies, examine the progress on the Group’s SHE performances, and evaluate audit results.

A strong safety culture relies on effective communication in the workplace. Today, there are more than 190 SHE practitioners across the Group who ensure and drive compliance monitoring with regard to managing SHE risks.

To comply with all legislative and regulatory requirements related

to SHE, as well as code of conduct, best practices and

behaviour.

To identify and reduce the potential hazards, risks and impact to safety, health and

environment in order to achieve continuous improvements in all

activities and working condition.

To engage and educate SHE Policy to all employees, partners,

contractors and stakeholders working within our premises.

To identify and implement Best Green Practices for the

workplace and to minimise and prevent at source where

possible.

Compliance

Prevention ofPollution Communication

ContinuousImprovement

Key Objectives of DRB-HICOM’s Group SHE Policy



Integrated Reporting Occupational Safety, Health & Environment (“IROSHE”)

In 2015, Group SHE introduced IROSHE, a web-based data management system that enables us to monitor our SHE performance not only at Group level but also at subsidiary level. It is compulsory for all subsidiaries to report their SHE performance (e.g. energy, waste and safety & health) via IROSHE on a monthly basis.

IROSHE helps in generating effective reports and analysis from the data collected. All results will be subsequently reported to the SHE Council on a periodic basis.

Our Performance

We continue to monitor our Group’s safety and health performance by tracking both total Lost Time Injuries1 (“LTI”) and total number of incident cases2. Based on the results3, we are progressing positively based on a year-to-year comparison.

For FY2018/19, we managed to reduce the total number of incident cases by approximately 13% compared to the previous year. The number of cases decreased from 760 to 676 and 591 for FY2016/17, FY2017/18 and FY2018/19 respectively. This is a significant progress as the Group aspires to have a consistent year-to-year reduction of 2% in the total number of cases.

Based on the year-to-year comparison, the Group has recorded a significant drop in the total LTI for FY2018/19. We have recorded zero fatality cases, thus the aforementioned results. It is our utmost priority to ensure our people are safe and healthy while conducting their responsibilities to the company. We will continue to evaluate our current processes, monitor and find better ways to improvise our safety and health matters.

Near-Miss Reporting

We encourage our employees to report near-miss incidents across all operations as part of the measures to prevent any such recurrence. Our near-miss reporting system is designed to ensure that all near-miss incidents (including minor incidents) are reported, recorded and investigated in a consistent and effective manner.

1 Total Lost Time Injuries is the total lost workdays - the number of workdays on which the employee would have worked but could not because of occupational injury or occupational poisoning or occupational disease.

2 Total number of incident cases - the total number of employees who change in status from one state of health to another (such as non-disease to disease) over a specific period of time.

3 This includes data from ISUZU HICOM Malaysia Sdn. Bhd. and HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.

Total Number of Incident Cases in DRB-HICOM

0

3,000

6,000

9,000

12,000

15,000

FY2018/19

FY2017/18

FY2016/17

FY2018/19

FY2017/18

FY2016/17

1,59

8

760

676

591

8,21

2

14,3

33

0

100

200

300

400

500

600

700

800

FinancialYear

ManDays

IncidentCases

FinancialYear

Total Lost Time Injuries in DRB-HICOM(Man Days)


Systematic Occupational Health Enhancement Level Programme (“SoHELP”)

The SoHELP programme is a systematic intervention programme aimed to help companies enhance hygiene standards in the workplace while meeting relevant regulatory requirements. The programme focuses on three main aspects: chemical management, ergonomic issues and hearing conservation. The Group has identified champions among the SHE practitioners as SoHELP Enablers to assist the companies to self-regulate and monitor. Department of Occupational Safety and Health (“DOSH”) acts as the SoHELP Verifier to evaluate and certify the level of achievement from Level 1 to 5. For FY2018/19, five companies have achieved Level 5 – Excellent, i.e. Perusahaan Otomobil Nasional Sdn. Bhd. (“PROTON”), ISUZU HICOM Malaysia Sdn. Bhd., Bank Muamalat Malaysia Berhad, CTRM Aero Composites Sdn. Bhd. and Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”).

Key Initiative 1: DRB-HICOM Emergency Assistance Team (“D-HEAT”)

Element 1Chemical

Management

Element 2Noise

Management

Element 3Ergonomic

Management

EXCELLENTADVANCEDINTERMEDIATEBASICENTRY

LEVEL


Established in the wake of floods in Pahang back in December 2014 to January 2015, D-HEAT is a trained team that responds to any disaster or crisis as and when the Management of DRB-HICOM deems fit for it to be deployed.

D-HEAT members are selected according to the criteria issued by Fire and Rescue Department of Malaysia (“BOMBA”). The members have undergone various training courses under the guidance of Balai Bomba Seksyen 15, Shah Alam. Some of the trainings comprised Light Search and Rescue (Land and Water), Self-Contained Breathing Apparatus (“SCBA”), first aid, firefighting and rappelling.

D-HEAT Training Preparation for Flood Relief

D-HEAT Team participated in one-day flood relief preparation training which include water pump testing, chainsaw testing, rigging testing and equipment handling.

Our D-HEAT members attended High Angle Rescue Training and Water Rescue Training provided by BOMBA Bukit Jelutong in 2019.


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Key Initiative 2: Safety, Health & Environment Dialogue and Awareness Training

From 26 to 28 September 2018, Group SHE organised a dialogue session with more than 190 SHE practitioners across DRB-HICOM’s Group of Companies. Through the dialogue, we conducted open discussions to get feedback and opinions on SHE matters, including inviting our subsidiary, PHN Industry Sdn. Bhd. to demonstrate their ‘Safety Dojo’ amongst SHE practitioners, ensuring continued improvements to make DRB-HICOM a safe place to work. The dialogue included presentation on corrective / preventive SHE-related action plans, SHE awareness training as well as providing cardiopulmonary resuscitation (“CPR”) training to other employees in Wisma DRB-HICOM.

Key Initiative 3: Safety, Health and Environment Campaign

The SHE team organised a safety, health and environment campaign on 24 and 25 October 2018 in Wisma DRB-HICOM. About 10 external exhibitors participated in this two-day event providing healthcare advice, free optometry check-ups and fire safety awareness. One of the key events for the campaign was a blood donation drive in collaboration with the National Blood Bank or Pusat Darah Negara where more than 80 DRB-HICOM employees donated their blood.


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Energy Management Key Highlights inFY2018/19

reduction in Group’s total energy consumption as compared to FY2017/18

3.0%

for CTRM new manufacturing plant – Building 6

Certified Green Building

PROTON Green Initiatives reduced

to PROTON showrooms as an extension of PROTON Green Initiatives

Expanded Energy Audits

energy consumption across all operations

> 2.2 million kWh



3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1

Dunham-Bush Green Chiller verified by AHRI* installed in Wisma DRB-HICOM.

*AHRI- Air Conditioning, Heating & Refrigeration Institute based in United States.


Why It Matters

According to the World Resources Institute, more than 70% of global Greenhouse Gas (“GHG”) emissions are contributed by energy sectors. It suggests that many global challenges associated with climate change we currently face are mainly due to a rapid increase in human activities and energy consumption in our economy since the mid-20th century. While we acknowledge that climate change is expected to impact not only the communities we serve but also our businesses in the long run, especially industries that are inherently energy-intensive, we strongly believe it is our responsibility to take an active role towards finding a sound solution towards embracing a low carbon society for our future generation.

How We Approach It

At DRB-HICOM, we are pleased to be entrusted with an imperative role in contributing to the betterment of the nation due to the Group’s strong presence with more than 70 subsidiaries across various sectors in Malaysia. We align our energy management strategy with Malaysia’s commitment to carbon reduction as well as United Nations Sustainable Development Goals (“UNSDGs”) to demonstrate our commitment towards energy management. This means the Group constantly engages with our subsidiaries to not only reduce energy consumption through adopting industry best practices and international standards but also to drive them to explore new and innovative ways such as opting for renewable energy to transform the way we manage our energy consumption.

Energy Management at PROTON

PROTON has further escalated energy-related matters as one of the material sustainability topics via its Green Initiatives in September 2015. This has subsequently fostered the launch of PROTON Green Initiatives that drives PROTON towards reducing 40% of total energy consumption by 2020 in comparison with the base year 2015.

In January 2019, PROTON streamlined their energy reduction efforts by introducing the New Energy Management (“NEM”) department to spearhead and oversee energy reduction initiatives across all PROTON operations. Their Registered Electrical Energy Managers (“REEMs”) are certified under the Energy Commission to achieve PROTON’s energy reduction target, in tandem with PROTON’s aspiration towards becoming the leading ASEAN automotive company.

To date, PROTON has successfully implemented PROTON Green Initiatives Phase 1 (Energy Management System), Phase 2 (Energy Efficiency) and Phase 3 (Waste and Water Management). Notably, PROTON has commissioned Energy Performance Contracting (“EPC”) in PROTON Tanjong Malim Plant and PROTON Centre of Excellence in January 2019.

Based on the United Nations Industrial Development Organisation (“UNIDO”) Energy Management System Tool adopted by PROTON to monitor and evaluate its energy performance on monthly basis, initiatives implemented under Phase 1 and Phase 2 have yielded up to 34% total energy consumption reduction against the base year, which is equivalent to more than RM18 million cost savings across PROTON. Phase 3 is currently underway in PROTON Tanjung Malim Plant via the Recycled Water Initiative. Kindly refer to page 168 for more details on PROTON’s Phase 3 – Waste & Water Management.

In FY2019/20, PROTON is ready to step into the PROTON Green Initiatives Phase 4 (Renewable Energy) with new and exciting initiatives in the pipeline. While PROTON continuously adopts best practices in optimising energy performance in its manufacturing process, it plans to install a 9.75 Mega-Watt peak (“MWp”) Solar Photovoltaic (“PV”) system as well as implement the conversion of energy source from Liquefied Petroleum Gas (“LPG”) to Compressed Natural Gas (“CNG”) in the PROTON Tanjong Malim Plant. It is estimated that both measures will generate more than RM 5.5 million energy savings once it is completed in FY2019/20.

ISO 14001:2015 Certification

12 DRB-HICOM subsidiaries received ISO 14001: 2015 certification:

• HICOM Automotive Manufactures (Malaysia) Sdn. Bhd.• HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.• HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.• HICOM Diecastings Sdn. Bhd.• PHN Industry Sdn. Bhd.• Oriental Summit Industries Sdn. Bhd.• DRB-HICOM Environmental Services Sdn. Bhd.• Glenmarie Properties Sdn. Bhd.• Composites Technology Research Malaysia Sdn. Bhd.• HICOM HBPO Sdn. Bhd.• PROTON Tanjung Malim Sdn. Bhd.• Alam Flora Sdn. Bhd.


Energy Management at CTRM

As a prominent player in the Aerospace and Composites industry in Malaysia, CTRM actively supports government initiatives in climate change as the industry is considered inherently energy-intensive among other industries. CTRM’s commitment to energy management not only reflects CTRM’s corporate responsibility towards the environment but also subsequently reduces its overall product costing that is highly associated with energy cost.

To advocate the efficient usage of energy, CTRM established the Energy Management Policy back in 2014. It lays the foundation for all CTRM employees to continuously improve the use of energy efficiency with minimum waste and without compromising on regulatory compliance as well as product quality for customer satisfaction. To further demonstrate its determination in optimising its energy management practices, CTRM has set an annual 2% electricity consumption reduction target across its operations.

This year, CTRM sets its focus on improving energy efficiency while preparing itself towards embracing the usage of renewable energy within its manufacturing plants. Several replacements and upgrades were conducted to further improve its energy performance (see details in page 166). CTRM also introduced the Building Management System (“BMS”) to monitor its energy consumption in its newly built manufacturing plant Building 6. As for the adoption of renewable energy, CTRM has initiated an in- house 10kWp Solar PV system that will be installed on top of the main guard house at Building 3.


Reducing Energy in PROTON’s Supply Chain

After its success in reducing energy consumption within PROTON’s operations in the past three years, PROTON believes it is time to expand its aspiration to reduce energy consumption through its upstream and downstream supply chain by assisting them towards adopting energy efficiency initiatives.

This year, PROTON has embarked on an energy audit programme across its branches in Malaysia with the objective to achieve energy reduction by 5% per branch. To date, we have completed energy audits in seven branches located in Northern and Southern region of Peninsular Malaysia. We plan to complete energy audit in all branches, including branches in East Malaysia, by end of FY2019/20. Apart from our PROTON branches, we are also in the midst of engaging with our vendors as well as our subsidiaries to implement effective energy reduction initiatives.

Phase 1: (2014-2015)Energy Management

System

Phase 2: (2016-2018)Energy Efficiency

Phase 4: (2018-2020)Renewable Energy

Phase 5: (2021)Energy Digitalisation

(AI)

Phase 3: (2019-2020)Waste & Water Management

PROTON Green Initiatives Strategy


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Our Performance

The Group has experienced a downward trend in its total electricity consumption with a reduction rate of 11.8% since FY2016/174. This has been contributed by the increasing number of subsidiaries that have aligned their energy management strategy with the Group’s aspiration in transforming the way we consume energy. This year, we saved a total of 9.6 million kWh in electricity, or a 3.0% reduction as compared to last year, which is equivalent to a reduction of more than 6,400 tonnes of CO2 emissions5.

As PROTON and CTRM constitute a large portion of the Group’s total energy consumption, both subsidiaries have been active in reducing their energy consumption. Total energy usage in PROTON reduced 3.4% this year, augmenting the 15.6% reduction in the previous year. Meanwhile, CTRM experienced an increase of 2.5% in total electricity consumption as compared to FY2017/18 as the aforementioned completed Building 6 comes online. However, this is mitigated by several energy reduction initiatives that has resulted in improved energy efficiency in CTRM’s production process.

Certified Green Building for the new CTRM Plant

Occupying a floor size of more than 21,000 square meters, the new CTRM manufacturing plant in Melaka – Building 6 or B6 - is completed and will be fully operational in FY2019/20. The plant serves as CTRM’s additional capacity to deliver its upcoming new orders.

From design to construction, B6 took into account various environmental considerations. Apart from incorporating natural lighting as well as adopting LED lighting into the plant, B6 is equipped with other environmental-friendly features such as rainwater harvesting, water leak detection and air handling unit (“AHU”) condensate water recycling system.

B6 was certified Platinum under the GreenRE’s non-residential green building certification. It is also the first manufacturing building equipped with Buidling Management System within the Group.

4 This includes data from Isuzu HICOM Malaysia Sdn. Bhd. and HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd. The data does not include branches from Pos Malaysia Berhad and Bank Muamalat Malaysia Berhad.

5 This is calculated via World Resources Institute GHG Protocol tool for purchased electricity, Version 4.8.

0

50

100

150

200

250

300

350

400

FY2018/19

FY2017/18

FY2016/17

356.

9

324.

3

314.

6

Total Electricity Consumption in DRB-HICOMGroup of Companies4

Kilo

wat

t-ho

ur (m

illio

n)

Moving forward, CTRM will consistently uphold its commitment to reduce its environmental impact by adopting best practices in energy management into its operations. This will be complemented by the installation of two MWp Rooftop Solar PV system alongside with the implementation of conversion from LPG to CNG that are both planned for full operation by end of FY2019/20.


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


0

30

60

90

120

150

0

10

20

30

40

50

FY2018/19

FY2017/18

FY2016/17

FY2018/19

FY2017/18

FY2016/17

141.

2

119.

2

45.9

44.8

115.

2

45.9

PROTON Shah Alam Plant PROTON Tanjung Malim Plant PROTON Casting Plant PROTON Centre of Excellence

Key Initiative 1: PROTON Green Initiatives in FY2018/19

PROTON Green Initiatives has been an integral part of the journey towards transforming PROTON into a leading Malaysia automotive company in energy efficient production. Since 2015, PROTON has continuously invested its efforts and resources into optimising energy performance across its operations. This year, PROTON has conducted several initiatives under the PROTON Green Initiatives which have resulted in more than 2.22 million kWh of energy reduction. Approximately 40% of the energy reduction is contributed by PROTON Casting Plant through maximum demand management of its induction furnace.


Initiatives Facility Location Reduced Energy (kWh)

Maximum demand management 913,920

Dust collector operation controlling and monitoring 481,920

Installation of LED lightings 438,608

Air compressor operation controlling and monitoring 376,433

Optimisation of fan system 18,636

PROTON Green Initiatives activities in FY2018/19

Total Electricity Consumption in PROTON Total Electricity Consumption in CTRM

Kilo

wat

t-ho

ur (m

illio

n)

Kilo

wat

t-ho

ur (m

illio

n)


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Waste in Alam Flora

Alam Flora is one of the leading environmental management companies in Malaysia. They are dedicated to help the environment by providing innovative solutions for waste minimisation and management in the community.

Through Alam Flora together with its fully-owned subsidiary, DHES, DRB-HICOM is contributing towards shaping consumer behaviour to adopt and move towards advanced waste management practices in their day-to-day habits. The following five key initiatives demonstrate our efforts and progress in the area for the current financial year.


We aim to support national initiatives to improve waste management in Malaysia and have launched the S@S programme to support the enactment of Solid Waste and Public Cleaning Management Act 2007. The programme was launched with the aim to encourage households in separating recyclable and non-recyclable wastes. The recyclables waste which are collected through the S@S programme are sold to recycling vendors appointed by Ministry of Urban Wellbeing, Housing and Local Government.

Since April 2016, we have collected a total of 2,426 tonnes of recyclables. The items include paper, plastic, metal, aluminium, glass and other recyclable materials.

Key Initiative 1: Separation @ Source (S@S) Programme


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Key Initiative 2: Buy Back Centre and 3R on Wheels


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1

Since 2004, Alam Flora has built eight Buy Back Centres (“BBCs”) located around Kuala Lumpur, Putrajaya and Cyberjaya, which functions as a one-stop platform for the public to sell used items such as paper, iron scrap, aluminium cans and used cooking oil, at market price.

As an extension of BBCs, 3R on Wheels (“3RoW”) was officially launched on 1 December 2018 by the Minister of Housing and Local Government, in conjunction with the National Recycling Day.

With its main aim of providing easy access to members of the public to recycling activities, 3RoW has managed to bring about greater awareness on waste segregation at home and at same time, seeing waste as an additional source of income. The locally-fabricated 3RoW is a six wheeler, seven-tonne truck which had been fitted with a giant LED screen on its side together with a retractable stage for organising awareness talks and demonstrations on S@S.


Why It Matters

DRB-HICOM, through its subsidiary Alam Flora Sdn. Bhd. (“Alam Flora”), has established itself as one of the key players in the waste management sector in Malaysia. Proper waste management is essential to develop a nationwide long-term strategy for environmental protection. We believe it is our responsibility to contribute to this agenda and help promote initiatives in line with the national target of ‘22% recycling rate in 2020’ as embodied in Malaysia’s Green Technology Master Plan.

This target has been actively promoted and implemented by the Ministry of Energy, Science, Technology, Environment and Climate Change (“MESTECC”). We have started promoting the use of state-of-the-art waste management practices within the Group, and hope to eventually bring these efforts to the public by collaborating with the local communities.

How We Approach It

We are determined to conduct our business in a responsible manner and aim to reduce the waste generated by the Group as a whole. Our SHE Policy provides guidance to ensure adherence to all applicable environmental laws and regulations across all our operations. We engage with responsible and ethical waste management contractors to ensure proper collection and disposal of the waste generated by the Group.

At DRB-HICOM, we have established a Green Procurement Policy and encourage all our subsidiaries to conduct procurement in a resource-efficient manner. The Policy provides guidance to conduct purchasing and contracting activities by preferably selecting and purchasing goods, services and processes, which utilise reusable, recyclable materials with minimal packaging.

Our Performance

At Wisma DRB-HICOM, our waste is segregated in different bins and collected by DRB-HICOM Environmental Services Sdn. Bhd. (“DHES”) on every Thursday. This year, we generated a total of 3.3 tonnes of waste in the form of paper, cardboard and plastic. While we acknowledge that more than 95% of waste generated in our head office is paper, we strive to reduce our paper consumption by promoting digital reporting of documents and reports.

As this is the first year of reporting our head office’s waste production, we will consider this year’s (FY2018/19) disclosed data as the baseline for our future reports and will subsequently include waste production data of other subsidiaries in the future.

Waste Production in Wisma DRB-HICOM in FY2018/19

Type of waste Amount of waste (kilogram)

Paper 3,142

Cardboard 128

Plastic 33

It is our commitment to continually improve our waste management performance through initiatives such as PROTON Recycled Water Initiative at its Tanjong Malim Plant. As part of PROTON Green Initiatives, PROTON recycles wastewater from the plant back into its manufacturing process, resulting in significant reduction in water consumption. We are always looking for ways to adopt best practices and make progress in our waste management practices.


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1

Recycled Water Initiative in PROTON Tanjong Malim Plant

Apart from significant water savings generated by the adoption of dry scrubber tools in its paint shop, the PROTON Tanjong Malim Plant has implemented recycled water initiative since 2017 to channel wastewater discharge from the plant back to its manufacturing process.

Over the past two years, PROTON Tanjong Malim plant has reused over 153,000 m3 recycled water, averaging 58% in wastewater recycling7. This has resulted in approximately RM214,000 cost savings after taking into account of the operating cost of the water recycling system. Moving forward, PROTON Tanjong Malim Plant will continue to explore best practices in water management such as rainwater harvesting as part of PROTON’s commitment in embracing sustainable practices across its business to reduce their environmental impact.

7 This is dated from January 2017 to December 2018.


Waste in Alam Flora

Alam Flora is one of the leading environmental management companies in Malaysia. They are dedicated to help the environment by providing innovative solutions for waste minimisation and management in the community.

Through Alam Flora together with its fully-owned subsidiary, DHES, DRB-HICOM is contributing towards shaping consumer behaviour to adopt and move towards advanced waste management practices in their day-to-day habits. The following five key initiatives demonstrate our efforts and progress in the area for the current financial year.


We aim to support national initiatives to improve waste management in Malaysia and have launched the S@S programme to support the enactment of Solid Waste and Public Cleaning Management Act 2007. The programme was launched with the aim to encourage households in separating recyclable and non-recyclable wastes. The recyclables waste which are collected through the S@S programme are sold to recycling vendors appointed by Ministry of Urban Wellbeing, Housing and Local Government.

Since April 2016, we have collected a total of 2,426 tonnes of recyclables. The items include paper, plastic, metal, aluminium, glass and other recyclable materials.

Key Initiative 1: Separation @ Source (S@S) Programme


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1


Key Initiative 2: Buy Back Centre and 3R on Wheels


3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1GOOD HEALTH

AND WELL-BEING

3


GROWTH


ENERGY

7


PRODUCTION

12CLIMATEACTION

13

LIFE ONLAND

15

QUALITY EDUCATION

4ZERO

HUNGER

2ZERO

HUNGER

5


6INDUSTRY


9REDUCED

INEQUALITIES

10


COMMUNITIES

11LIFE BELOW

WATER

14



17

NOPOVERTY

1

Since 2004, Alam Flora has built eight Buy Back Centres (“BBCs”) located around Kuala Lumpur, Putrajaya and Cyberjaya, which functions as a one-stop platform for the public to sell used items such as paper, iron scrap, aluminium cans and used cooking oil, at market price.

As an extension of BBCs, 3R on Wheels (“3RoW”) was officially launched on 1 December 2018 by the Minister of Housing and Local Government, in conjunction with the National Recycling Day.

With its main aim of providing easy access to members of the public to recycling activities, 3RoW has managed to bring about greater awareness on waste segregation at home and at same time, seeing waste as an additional source of income. The locally-fabricated 3RoW is a six wheeler, seven-tonne truck which had been fitted with a giant LED screen on its side together with a retractable stage for organising awareness talks and demonstrations on S@S.


STRATEGY OF RATIONALISATION...PROTON has regained the market’s confidence with the X70, Iriz,...

Documents

Transcript of STRATEGY OF RATIONALISATION...PROTON has regained the market’s confidence with the X70, Iriz,...