Business Overview

6. INFORMATION ON OUR GROUP 6. INFORMATION ON OUR GROUP 6.1 Background and history Our Company was incorporated in Malaysia under the Act on 11 May 2010 as a private limited company under the name Fiscal Start Sdn Bhd. We assumed the name Berjaya Auto Sdn Bhd on 14 February 2011 and were subsequently converted into a public company on 11 JUly 2011. Our Company is the listing vehicle for the Listing. On 26 February 2013, we entered into the Bermaz Acquisition SPA with the Vendors wherein our Company acquired 100% equity interest in Bermaz comprising 80,000,000 Bermaz Shares for a total purchase consideration of RM503,999,997 which was satisfied via the issuance of 719,999,996 new BAuto Shares at an issue price of RMO.70 per BAuto Share, as follows: No. of new No. of Bermaz % in Bermaz Purchase BAuto Shares Vendors Shares held being acquired consideration issued RM BGroup 60,320,000 75.40 380,016,347 542,880,496 Podium Success 6,354,640 7.94 40,034,190 57,191,700 Tunku Aminah Binti 3,680,000 4.60 23,183,860 33,119,800 Tunku Ibrahim Ismail BHJ Marketing 3,215,120 4.02 20,255,200 28,936,000 Konsep Aktif 3,215,120 4.02 20,255,200 28,936,000 Terrific Dynamics 3,215,120 4.02 20,255,200 28,936,000 Total 80,000,000 100.00 503,999,997 719,999,996 The Bermaz Acquisition was completed on 26 September 2013. In conjunction with the Bermaz Acquisition, BGroup also acquired all the 4 existing BAuto Shares at a total cash consideration of RM2.80 which is equivalent to RMO.70 per BAuto Share. Following the completion of the said acquisition, Bermaz became our wholly-owned subsidiary. Pursuant to the above acquisitions, we are principally involved in the following: (i) distribution and retailing of Mazda vehicles; and
(ii) provision of after sales services for Mazda vehicles.

Our associated company, MMSB, is principally involved in the following: (i) local assembly of Mazda vehicles by third party contract assembler using local parts and imported Mazda supplied parts; and
(ii) domestic distribution of locally assembled Mazda vehicles through Bermaz and export of Mazda vehicles assembled in Malaysia.

6. INFORMATION ON OUR GROUP (Cont’d) 6.2  Our corporate structure Our Group’s corporate structure, including our associated Acquisition and prior to the Public Issue is as follows:  company,  after  the  Bermaz  BGroup I 75.40%  Podium Success 7.94%  Other shareholders* I 16.66%
BAuto 100% BermazII
100%I 100% ____J_~O~~~% III BMTSB I BMIL MMSBII1__________ 1

III I 60.00% BAPII
~ —“i Our associated company 1_—1 Note: The other shareholders ofour Company are Tunku Aminah Binti Tunku Ibrahim Ismail who holds 4.60% equity interest and BHJ Marketing, Konsep Aktif and Terrific Dynamics who respectively hold 4.02% equity interest each in our Company. Our Group’s corporate structure, including our associated company, upon Listing and assuming none of the ESOS Options are exercised is as follows: Podium PublicOurBGroup Success  Directors  shareholders*  I  67.63%  I  7.12%  I 0.16%  I 25.09%  I  BAuto  I  I 100%  Bermaz  I  I 100%  I I 100%  I ____ l:~~?%  I BMTSB  I  I  IBMIL I60.00%  I : MMSB : ~–­______ I  I  BAP  I
f:::J Our associated company 46 6. INFORMATION ON OUR GROUP (Cont’d) Note: Public shareholders include, amongst others, Tunku Aminah Binti Tunku Ibrahim Ismail who will hold 4.13% equity interest and BHJ Marketing, Konsep Aktif as well as Terrific Dynamics who respectively will hold 3.60% equity interest each in our Company. 6.3 Share capital and changes in share capital As at the LPD, our authorised share capital is RM500,000,000 comprising 1,000,000,000 BAuto Shares, of which 720,000,000 BAuto Shares have been issued and fully paid-up. The changes in the issued and paid-up share capital of our Company since the date of our incorporation up to the LPD, are as follows: Cumulative issued Date of No. of ordinary and paid-up allotment shares allotted Par value Consideration share capital RM RM 11.05.2010 2 1.00 Subscribers’ shares 2 16.06.2011 4 0.50 Subdivision of the 2 subscribers’ 2 shares of RM1.00 each to 4 ordinary shares of RMO.50 each
26.09.2013 719,999,996 0.50 Shares issued as consideration 360,000,000 for the Bermaz Acquisition As at the LPD, save as disclosed in Section 4.4 of this Prospectus, neither our Company nor our subsidiaries and associated company have any outstanding warrants, options, convertible securities or uncalled capital. Our Company intends to offer up to 40,138,150 ESOS Options to our eligible Directors and employees excluding our dormant subsidiaries, who meet the eligibility criteria to participate in the ESOS as set out in the By-Laws in Section 15 of this Prospectus, subject to the discretion of the ESOS committee, representing 5% of our issued and paid-up share capital upon Listing, assuming the 40,138,150 ESOS Options are fully exercised into 40,138,150 new BAuto Shares.

6.4 Subsidiaries and associated company As at the LPD, our subsidiaries and associated company are as follows: Authorised Issued and Effective Date/Place of share paid-up equity Name incorporation capital share capital interest Principal activities RM’OOO RM’OOO % Subsidiary of SAuto Bermaz 06.09.1988/ 100,000 80,000 100 Investment holding and Malaysia distribution of Mazda vehicles under licence in Malaysia 6. INFORMATION ON OUR GROUP (Cont’d) Name Subsidiaries of Bermaz BMTSB BMIL BAP 02.05.1970/ Malaysia 08.06.2012/ Labuan, Malaysia 10.08.2012/ The Republic of the Philippines 1,000 200 100 J1) 100 220,000(3) 209,000(3) 60.00 Associated company of Bermaz MMSB 10.09.2012/ 100,000 85,000 30.00 Malaysia Notes: Distribution and retailing of new and used Mazda vehicles and the provision of after sales services in respect thereof in Malaysia Investment holding Purchasing, acqUlnng, owning, leasing, selling, transferring, encumbering and generally dealing in all types of new automobiles, trucks and other motor vehicles and dealing in all types of supplies used by all types of motor vehicles Local assembly of Mazda vehicles by third party contract assembler using local parts and imported Mazda supplied parts and domestic distribution of locally assembled Mazda vehicles through Bermaz and export of Mazda vehicles assembled in Malaysia (1) Under the Labuan Companies Act 1990, there is no requirement for a Labuan company to have an authorised share capital and par value for its shares. (2) In USD. (3) In Peso.
6.4.1 Bermaz (Company no. 173654-K) (i) History and business Bermaz was incorporated in Malaysia under the Act on 6 September 1988 as a private limited company under the name Cotton Collection Sdn Bhd. Bermaz changed its name to South Pacific Shoes Sdn Bhd on 24 March 1989, to South Pacific Synthetic Fibre Sdn Bhd on 29 September 1989, to South Pacific Synthetic Fibres Sdn Bhd on 27 November 1989, to Berjaya Synthetic Fibre Sdn Bhd on 10 March 1992 and subsequently, Bermaz assumed its present name on 26 February 2008. As at the LPD, Bermaz is a wholly-owned subsidiary of BAuto.

6. INFORMATION ON OUR GROUP (Cant/d) The principal activities of Bermaz are investment holding and distribution of Mazda vehicles under licence in Malaysia. Bermaz commenced operations on 1 April 2008 after Bermaz and Mazda Japan entered into an agreement on 28 February 2008 in which Mazda Japan awarded Bermaz the distributorship of specific models of Mazda CBU vehicles, spare parts, accessories and tools in Malaysia, which was subsequently extended for a further 3 years expiring on 31 March 2014 via the execution of the Malaysia CBU Agreement on 31 March 2011. Mazda Japan had, via its letter dated 14 January 2013, agreed to further extend the Malaysia CBU Agreement upon the expiry of the said agreement on 31 March 2014, for another 5 years expiring on 31 March 2019, sUbject to an annual minimum purchase quota of Mazda CBU vehicles to be mutually agreed upon. Bermaz also had arrangements with Mazda Japan for the supply of CKD packs, spare parts, accessories and tools for Mazda3 CKD vehicles for the purpose of local assembly and subsequent distribution in Malaysia. On 29 April 2010 and 7 September 2012, Bermaz obtained the approvals of the MITI for the contract assembly of Mazda3 CKD and Mazda CX-5 CKD vehicles in Malaysia, respectively. Subsequently, on 16 January 2013, Bermaz entered into the Transfer of Operation Agreement with Mazda Japan and MMSB to facilitate the transfer of the assembly activities of CKD vehicles of Mazda to MMSB with effect from 1 February 2013. Further details on the transfer of CKD assembly activities from Bermaz to MMSB are set out in Section 7.1 of this Prospectus. (ii) Share capital As at the LPD, Bermaz’s authorised share capital is RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each, of which 80,000,000 ordinary shares of RM1.00 each have been issued and fully paid­up. The changes in the issued and paid-up share capital of Bermaz for the past 3 years preceding the LPD are as follows: Cumulative issued Date of No. of ordinary Par and paid-up allotment shares allotted value Consideration share capital RM RM 30.04.2010 10,000,000 1.00 Bonus issue 20,000,000 13.12.2010 10,000,000 1.00 Bonus issue 30,000,000 28.04.2011 10,000,000 1.00 Bonus issue 40,000,000 29.11.2012 40,000,000 1.00 Bonus issue 80,000,000 (iii) Subsidiaries and associated company The direct subsidiaries of Bermaz are BMTSB and BMIL, and the indirect subsidiary of Bermaz is BAP, details of which are set out in Sections 6.4.2 to 6.4.4 of this Prospectus. The associated company of Bermaz is MMSB, details of which are set out in Section 6.4.5 of this Prospectus.
6. INFORMATION ON OUR GROUP (Cont’d) 6.4.2 BMTSB (Company no. 9529-K) (i) History and business BMTSB was incorporated in Malaysia under the Act on 2 May 1970 as a private limited company under the name Hercules Automotive Engineers Sdn Bhd. Hercules Automotive Engineers Sdn Bhd was successfully acquired by Bermaz in April 2008 and commenced Mazda operations in 2008. It assumed its current name, BMTSB on 2 May 2008. BMTSB isa wholly-owned subsidiary of Bermaz. BMTSB is primarily engaged in the distribution and retailing of new and used Mazda vehicles and the provision of after sales services in respect thereof in Malaysia. (ii) Share capital As at the LPD, BMTSB’s authorised share capital is RM1,OOO,000 comprising 1,000,000 ordinary shares of RM1.00 each, of which 200,000 ordinary shares of RM1.00 each have been issued and fully paid-up. There has been no change in the issued and paid-up share capital of BMTSB for the past 3 years preceding the LPD. (iii) Subsidiary and associated company As at the LPD, BMTSB does not have any subsidiary or associated company.
6.4.3 BMIL (Company no. LL08990) (i) History and business BMIL was incorporated in Labuan, Malaysia under the Labuan Companies Act, 1990 on 8 June 2012 as a private limited company under its present name. BMIL is a wholly-owned subsidiary of Bermaz. BMIL commenced operations in October 2012 and is principally involved in investment holding. (ii) Share capital As at the LPD, the issued and paid-up share capital of BMIL is USD10,OOO comprising 10,000 ordinary shares. There has been no change in the issued and paid-up share capital of BMIL since its incorporation. (iii) SUbsidiary and associated company As at the LPD, BAP is a 60%-owned subsidiary of BMIL, which is a wholly­owned subsidiary of Bermaz which in turn is our wholly-owned subsidiary, details of which are set out in Section 6.4.4 of this Prospectus. BMIL does not have any associated company as at the LPD.

6. INFORMATION ON OUR GROUP (Cont’d) 6.4.4 SAP (Company no. CS201214749) (i) History and business BAP was incorporated and registered with the Securities and Exchange Commission in the Republic of the Philippines on 10 August 2012 as a private limited company under its present name. BAP is a 60%-owned sUbsidiary of BMIL, which is a wholly-owned subsidiary of Bermaz. BAP commenced operations on 2 January 2013. The principal activities of BAP are purchasing, acquiring, owning, leasing, selling, transferring, encumbering and generally dealing in all types of new automobiles, trucks and other motor vehicles and dealing in all types of supplies used by all types of motor vehicles. (ii) Share capital As at the LPD, BAP’s authorised share capital is Pes0220,OOO,OOO comprising 220,000,000 ordinary shares of Pes01.00 each, of which 209,000,000 ordinary shares of Pes01.00 each have been issued and fUlly paid-up. The changes in the issued and paid-up share capital of BAP since its incorporation up to the LPD are as follows: Cumulative issued No. of ordinary and paid-up Date of allotment shares allotted Par value Consideration share capital Peso Peso
10.08.2012 10,000,000 1.00 Cash 10,000,000 29.11.2012 199,000,000 1.00 Cash 209,000,000 As provided for in the Philippines CBU Agreement, Mazda Japan may decide to participate in the capital of BAP after undertaking the relevant feasibility studies. In the event BAP issues new shares to Mazda Japan, the shareholdings of the other shareholders of BAP, inclUding BMIL, will be diluted. In addition, in the event BCorporation decides to sell the whole or part of its shares in BAP or increases the share capital of BAP, Mazda Japan has a first right of refusal to acquire such BAP shares at fair market value (exclUding goodwill) to be separately agreed between the relevant parties. Please refer to Section 7.13(iv) of this Prospectus for further details on the right of Mazda Japan to invest in BAP. (iii) Subsidiary and associated company As at the LPD, BAP does not have any subsidiary or associated company.

6. INFORMATION ON OUR GROUP (Cont’d) 6.4.5 MMSB (Company no. 1016319-P) (i) History and business MMSB was incorporated in Malaysia under the Act on 10 September 2012 as a private limited company under its present name. MMSB is a 30% associated company of. Bermaz, whilst the remaining 70% equity interest is held by Mazda Japan. MMSB commenced operations on 1 February 2013. MMSB is principally involved in the following activities: (a) local assembly of Mazda vehicles by third party contract assembler using local parts and imported Mazda supplied parts; and
(b) domestic distribution of locally assembled Mazda vehicles through Bermaz and export of Mazda vehicles assembled in Malaysia.

(ii) Share capital As at the LPD, MMSB’s authorised share capital is RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each, of which 85,000,000 ordinary shares of RM1.00 each have been issued and fUlly paid­up. The changes in the issued and paid-up share capital of MMSB since its incorporation up to the LPD are as follows: Cumulative issued  No. of ordinary  Par  and paid-up  Date of allotment  shares allotted  value  Consideration  share capital  RM  RM
10.09.2012 2 1.00 Subscribers’ shares 2 19.10.2012 14,999,998 1.00 Cash 15,000,000 27.02.2013 35,000,000 1.00 Cash 50,000,000 31.05.2013 35,000,000 1.00 Cash 85,000,000 (iii) Subsidiary and associated company As at the LPD, MMSB does not have any subsidiary or associated company. As at the LPD, neither our Company nor our subsidiaries and associated company are involved in any bankruptcy, receivership or similar proceedings.

7. -BUSINESS OVERVIEW 7.1 Overview Our Group is principally involved in the distribution and retailing of Mazda vehicles and provision of after sales services for Mazda vehicles. On 28 February 2008, Bermaz entered into an agreement with Mazda Japan which awarded Bermaz the distributorship of specific models of Mazda CBU vehicles, spare parts, accessories and tools in Malaysia for a period of 3 years from 1 April 2008, which was SUbsequently extended for a further 3 years expiring on 31 March 2014 via the execution of the Malaysia CBU Agreement on 31 March 2011. Mazda Japan had, via its letter dated 14 January 2013, agreed to further extend the Malaysia CBU Agreement upon the expiry oLthe said agreement on 31 March 2014, for another 5 years expiring on 31 March 2019, subject to an annual minimum purchase quota of Mazda CBU vehicles to be mutually agreed upon. Following Mazda Japan’s appointment of Bermaz as the distributor of specific models of Mazda CBU vehicles in Malaysia, Bermaz had entrusted the importation of the said vehicles to Prima Merdu, which then became the sole AP holder for Mazda CBU vehicles. Pursuant thereto, Bermaz had sought and obtained Mazda Japan’s approval for the said entrustment via an entrustment letter dated 18 February 2009. Our business relationship with Prima Merdu is currently governed under the Distributorship and Collaboration Agreement and our latest entrustment letter dated 10 January 2013 issued to and agreed by Mazda Japan. Under this arrangement, Prima Merdu shall, amongst others, import Mazda CBU vehicles from Mazda Japan for supply to Bermaz and Bermaz in turn shall carry out the distribution activities in Malaysia. In addition, Prima Merdu is also one of our dealers. On 29 February 2008, Bermaz entered into a share sale agreement with CCB to purchase 100% of the issued and paid-Up share capital in Hercules Automotive Engineers Sdn Bhd (now known as BMTSB), the company that acquired the entire assets, liabilities and operations of the Mazda division from CCB. In June 2008, Bermaz acquired a 4.5 acres of freehold land in Padang Jawa, Shah Alam, Selangor from CCB, which is presently used as a pre-delivery inspection centre and a storage site for all incoming CBU Mazda vehicles prior to being transported to our local dealers throughout Malaysia. In January 2011, we established a 3S centre in Padang Jawa. In April 2010, our 1S centre at Lot 9 Branch was upgraded to a 3S centre. The upgrading of the centre has enabled us to improve our after sales service to Mazda vehicle owners and enhance brand loyalty among our customers. Our facilities at the centre include 58 working bays as well as facilities for spray paint and body repairs. We also launched the Mazda Apprenticeship Programme (“MAP”) in 2010, which is a formal and structured training programme aimed at creating skilled technicians for our workshops. We conduct training for this programme at the training centre which is also located at this centre. Bermaz also had arrangements with Mazda Japan for the supply of CKD packs, spare parts, accessories and tools for Mazda3 CKD vehicles for the purpose of local assembly and subsequent distribution in Malaysia. Upon obtaining the MIT/’s approval on 29 April 2010, Bermaz commenced preparations for the assembly activities of Mazda3 CKD vehicles and in October 2010, Bermaz appointed Inokom, a contract assembler, to carry out the assembly of Mazda3 CKD vehicles at Inokom’s plant in Kulim, Kedah. The roll out of the first Mazda3 CKD vehicle was successfully undertaken on 18 January 2011. On 7 September 2012, Bermaz also obtained the approval of the MITI for the contract assembly of Mazda CX-5 CKD vehicles.
7. BUSINESS OVERVIEW (Cont’d) On 11 September 2012, Bermaz entered into the Joint Venture Agreement with Mazda Japan for an assembly programme with the purpose of increasing local assembly activities of CKD vehicles of Mazda in Malaysia. Pursuant to the Joint Venture Agreement, MMSB was established to, amongst others, assemble and supply CKD vehicles of Mazda in Malaysia. Under the Joint Venture Agreement, Mazda Japan will provide the assembly and technical expertise to MMSB’s operations in the rolling out of CKD vehicles of Mazda and Bermaz will provide support to the operations in all matters of administration. MMSB has entrusted its Malaysian distribution of locally assembled Mazda CKD Vehicles to Bermaz. The Joint Venture Agreement is expected to increase localisation activities which will help to reduce the costs of assembly of CKD vehicles of Mazda. The increase in production volume resulting from the introduction of a wider range of Mazda CKD models and the export of locally assembled Mazda CKD models is also expected to result in lower production cost per unit. This, in turn, would allow the CKD vehicles of Mazda to be priced more competitively which can be expected to improve the demand and sales of CKD vehicles of Mazda in Malaysia, in particular. Pursuant to the Joint Venture Agreement, the assembly activities of CKD vehicles of Mazda are to be transferred from Bermaz to MMSB and in order to facilitate the assembly activities of Mazda CKD Vehicles by MMSB, Mazda Japan and Bermaz had on 28 November 2012 and 21 December 2012, respectively submitted 2 separate application letters to the MITI to seek its approval for the transfer of the approvals’ granted by the MITI to Bermaz for the contract assembly of Mazda CKD Vehicles to MMSB (“Transfer of MITI Approvals”). To facilitate the implementation of the Transfer of MITI Approvals, Mazda Japan and MMSB had on 12 December 2012 entered into a component supply and distribution agreement for the supply of CKD packs, spare parts, accessories and tools for Mazda CKD Vehicles by Mazda Japan to MMSB for the assembly and sale of Mazda CKD Vehicles and the sale of spare parts, accessories and tools for Mazda CKD Vehicles in Malaysia. Additionally, Bermaz had on 16 January 2013 entered into the Transfer of Operation Agreement with Mazda Japan and MMSB to facilitate the transfer of the assembly activities of CKD vehicles of Mazda to MMSB and Inokom has been retained by MMSB as its contract assembler to carry out the assembly of Mazda3 CKD vehicles at Inokom’s plant in Kulim, Kedah. The MITI has, vide its letter dated 30 January 2013, approved the Transfer of MITI Approvals. Pursuant to the said MITl’s approval, the assembly activities of Mazda CKD Vehicles have been undertaken by MMSB with effect from 1 February 2013. Pursuant to the Transfer of MITI Approvals, the Transfer of Operation Agreement and other arrangements between the parties, Bermaz ceased to be directly involved in Mazda CKD assembly activities and MMSB commenced its Mazda CKD assembly operations on 1 February 2013. SUbsequent thereto, our Group’s involvement in Mazda CKD assembly activities is through our 30% investment in MMSB pursuant to the Joint Venture Agreement. Bermaz, via BAP, had also on 12 September 2012, entered into the Philippines CBU Agreement with Mazda Japan for the distributorship of specific models of Mazda CBU vehicles, spare parts, accessories and tools in the Philippines for a period of 3 years from 1 October 2012 to 30 September 2015. BAP commenced operations on 2 January 2013. The Malaysia CBU Agreement and the Philippines CBU Agreement set out the right of Bermaz and BAP to distribute Mazda CBU vehicles in Malaysia and the Philippines, respectively. Notwithstanding this, Mazda Japan reserves the right to sell, export and deliver Mazda CBU vehicles, directly or through any person, to any of the following persons: (i)  Public government (whether federal,  state  or  municipal)  or  public departments and  bodies directly or indirectly controlled by the public government;  (ii)  Diplomatic and consular representations and members or employees thereof;

7. BUSINESS OVERVIEW (Cont’d) (iii) Non profit making international bodies and organisations and employees thereof such as United Nations, United Nations Educational, Scientific and Cultural Organisations (UNESCO) and the like; (iv) Companies directly or indirectly controlled by Mazda Japan and/or employees of the said companies;
(v) Any multinational Japan based companies or companies directly or indirectly controlled by corporate entities or individuals established or domiciled in Japan, acquiring more than 10 vehicles per year by indication of the Japanese shareholder; or
(vi) Any companies and/or employees of the said companies which are agreed upon by the parties.

We distribute Mazda vehicles through our own branches and third party dealers in Malaysia as well as through third party dealers in the Philippines. As at the LPD, we have established 4 branches in Malaysia, all of which are 3S centres, and we have also appointed 68 dealers nationwide. Save for the Mazda CKD Vehicles which are locally assembled, all the other Mazda models distributed in Malaysia are CBU units which are imported from Mazda Japan’s manufacturing plants located in Japan and Thailand via Prima Merdu and all the Mazda models distributed in the Philippines are CBU units imported directly by BAP. Our marketing strategy is aimed at creating and imprOVing brand awareness among the Malaysian and the Philippines market while increasing sales volume for the Mazda range of vehicles. In Malaysia, we organise roadshows at regular intervals throughout the year as part of our marketing strategy. These roadshows are held at shopping malls nationwide. We have also established a dedicated CRM team to improve the Mazda ownership experience and to enhance the Mazda brand image. For further information on our sales and marketing strategy in the Malaysian and Philippines markets, please refer to Section 7.11 of this Prospectus. Our headquarters is located at No.7, Jalan Pelukis U1/46, Temasya Industrial Park, Seksyen U1, 40150 Shah Alam, Selangor. We have also leased space at a warehouse at The Ship, No.1, One Logistics Hub, Persiaran Sungai Hampar, Seksyen 32, 40460 Shah Alam, Selangor for the storage of Mazda vehicle components and spare parts. 7.2 Key achievements and milestones The following table highlights our key achievements and milestones: 28 February 2008 Awarded distribution rights for Mazda CBU vehicles in Malaysia by Mazda Japan. 1 April 2008 Completed the acquisition of Hercules Automotive Engineers Sdn Bhd (now known as BMTSB) from CCB. 1 April 2010 Awarded distribution rights from Mazda Japan to locally assemble and distribute Mazda3 CKD vehicles in Malaysia. 29 April 2010 Obtained assembly approval from the MITI to carry out CKD assembly for the Mazda3 CKD vehicles at Inokom’s manufacturing facility. 18 January 2011 Rolled out the first Mazda3 CKD vehicle at (nokom’s plant. 2 March 2011 Nationwide launch of Mazda3 CKD vehicles for the Malaysian market. . 31 March 2011 Extended the Malaysia CBU Agreement with Mazda Japan for the supply of Mazda CBU vehicles, spare parts, accessories and tools for distribution in Malaysia for a period of 3 years up to 31 March 2014. 15 May 2012 Launched the Mazda CX-5 model, the first Mazda model equipped with the “Skyactiv Technology”. 7 September 2012 Obtained assembly approval from the MITI to carry out CKD assembly for the Mazda CX-5 CKD vehicles at Inokom’s manufacturing facility.
7. BUSINESS OVERVIEW (Cont’d) 11 September 2012 Entered into a joint venture agreement with Mazda Japan to collaborate for the assembly and supply of CKD vehicles of Mazda in Malaysia. 12 September 2012 Entered into the Philippines CBU Agreement with Mazda Japan for the supply of Mazda CBU vehicles, spare parts, accessories and tools to BAP for distribution in the Philippines for a period of 3 years up to 30 September 2015. 4 June 2013 Nationwide launch of Mazda CX-5 CKD vehicles for the Malaysian market. 7.3 Our competitive strengths We believe that we are in a position to deliver growth based on the following competitive strengths: (i) Experienced key management team with extensive industry knowledge and vast exposure in the automotive segment Our management team is well-equipped with the knowledge and experience to successfully manage and grow our Group’s business. Our key management team comprises experienced managers with extensive industry knowledge and vast exposure in the automotive segment and has exposure across a broad spectrum of business activities, from operations to sales and marketing, and also has a proven track record in the market entry, distribution and retailing of a number of automotive brands. Our Chief Executive Officer/Executive Director, Dato’ Yeoh Choon San has over 40 years of experience in the automotive industry, encompassing the various fields of retail, distribution and manufacturing. He Jed the team that was responsible for turning around the sales performance of the Hyundai’s passenger vehicles in the Malaysian market, and managed its distribution and retail in Malaysia between 2000 and 2007. Upon joining Bermaz in 2008, we believe that it was the experience and expertise of Dato’ Yeoh Choon San and the key management that played a major role in securing the distributorship of Mazda vehicles in Malaysia and subsequently in the Philippines from Mazda Japan. Our sales of Mazda vehicles in Malaysia have grown from 2,113 units in FYE 30 April 2010 to 4,826 units for FYE 30 April 2011, 5,909 units in FYE 30 April 2012 and 8,142 units in FYE 30 April 2013. This represents an impressive growth of 285.3% since FYE 30 April 2010. In addition, as at the LPD, we own four 3S centres and have 68 dealers throughout Malaysia which we plan to expand and grow further in the future. (ii) Established business relationship with Mazda Japan We have a good collaboration and cordial working relationship with Mazda Japan which we have nurtured since 2008 when we were first awarded with the distributorship of Mazda CBU vehicles in Malaysia. In fact, our business relationship with Mazda Japan has allowed us to have a good understanding and guidance on the latest or up-and-coming Mazda models to match local consumer preferences and trends. This would enable us to make more informed and strategic decisions to expand our distribution and retail business. In addition, we have been exchanging market knowledge and providing.valuable feedback to Mazda Japan on a progressive basis. They have given us a lot of business support and their long history and great success enables us to tap into their vast knowledge in the motor vehicle distribution and retail business.
7. BUSINESS OVERVIEW (Cont’d) We believe that the recently executed Philippines CBU Agreement and the Joint Venture Agreement are testament to and recognition of our capabilities and experience in launching, distributing and retailing established and global automotive brands in Malaysia. (iii) Mazda is a well-recognised and internationally acclaimed brand Mazda vehicles have a long history and track record as Mazda Japan first started its automotive production back in the 1930s. In fact, Mazda Japan has continued to evolve as it recognises the importance of brand image in order to compete with other carmakers. Over the years, Mazda vehicles have won numerous awards and recognitions all over the world. As at the LPD, we distribute 10 Mazda models, comprising 24 variants of Mazda passenger and commercial vehicles, which cater to the different market segments in Malaysia. Our Directors strongly believe that Mazda vehicles have attained recognition and are fast gaining popularity in Malaysia. We believe that this level of acclaim and recognition for the Mazda brand in Malaysia has been achieved on the back of the following initiatives and efforts: (a) focused brand management initiatives;
(b) effective marketing strategies across our distribution network;
(c) creative advertising efforts via traditional and non-traditional media; and
(d) targeted CRM programme.

In fact, our branding and marketing strategy is part of Mazda’s worldwide unified “Zoom Zoom” campaign, and this is reinforced and supported by our advertising efforts and CRM programme. Please refer to Section 7.11 of this Prospectus for further information on the “Zoom Zoom” tagline. The significant growth in our revenue from RM286.8 million in FYE 30 April 2010 to RM1,064.3 million in FYE 30 April 2013 is testimony of the successfulness of this branding and marketing strategy. Our efforts to-date has also enabled us to be identified as an automotive company which markets premium and sporty Japanese performance vehicles, and our extended range of Mazda vehicles coupled with competitive selling prices has enabled us to target various segments of consumers in Malaysia. This has resulted in increased awareness and popularity of Mazda vehicles among customers in Malaysia. Mazda Japan’s award of the distributorship of Mazda vehicles in the Philippines to Bermaz has given Bermaz an opportunity to expand our business over the next 3 years through its competitive range of products made available for the Philippines market. (iv) Strong support from the BCorporation Group Our ultimate holding company, BCorporation, is a diversified conglomerate listed on the Main Market of Bursa Securities with interests in various sectors inclUding financial services, marketing of consumer products and services, motor trading and distribution, environmental and clean technology services, food and beverage, property development and investment in properties, development and operation of hotels, resorts and other recreational activities, gaming operations comprising Toto betting, leasing of on-line lottery equipment, provision of software support and the manufacture and distribution of computerised lottery and voting system as well as investment holding. 57
7. BUSINESS OVERVIEW (Cont’d) As a subsidiary of BCorporation, we are able to leverage on the BCorporation Group’s well established businesses and presence in various sectors as part of our marketing strategy. We have long term partnerships with the BCorporation Group for our CRM programmes such that all Mazda owners are able to enjoy certain privileges at selected BCorporation Group’s retail outlets. Please refer to Section 7.11 of this Prospectus for further information on the marketing initiatives undertaken by our Group, in collaboration with the BCorporation Group. 7.4 Our business strategies and future plans Our aim is to further strengthen our competitive position in the automotive segment, increase shareholders’ value and our market share by adopting the following strategies: (i) Expand our range of CKD vehicles of Mazda and increase utilisation of local contents The establishment of MMSB is intended to enable the achievement of economies of scale given that with the introduction of a wider range of Mazda CKD models and the export of the locally assembled CKD models, production volume is expected to increase and in turn, is expected to result in lower production cost per unit. This will allow the CKD vehicles of Mazda to be priced more competitively and consequently, boost the demand as well as sales of CKD vehicles of Mazda in Malaysia, in particular. The establishment of MMSB is in line with the NAP and the Government’s initiatives to encourage more foreign automotive manufacturers to be involved in our domestic automotive segment. Presently, MMSB utilises parts that are both imported from Japan and sourced from local suppliers, with the aim of progressively increasing the percentage of local contents in the CKD vehicles of Mazda. This will indirectly reduce the cost of CKD vehicles of Mazda, making them more affordable to a larger segment of Malaysians and increase our competitiveness in Malaysia. On 15 August 2013, MMSB commenced export of its locally-assembled Mazda GX-5 CKD vehicles to Thailand. Besides exporting Mazda GX-5 vehicles to Thailand, MMSB is looking to identify other potential export markets in order to increase the export of locally-assembled Mazda vehicles to neighbouring countries. (ii) Expand our distribution network and dealerships Our revenue has increased significantly from RM286.8 million in FYE 30 April 2010 to RM1,064.3 million in FYE 30 April 2013 as a result of our sales and marketing efforts as well as distribution strategies. As at the LPD, our distribution network comprises 4 branches and 68 dealers throughout Malaysia. The Joint Venture Agreement is expected to result in the introduction of more Mazda CKD models and competitive pricing schemes which in turn will give rise to a need to expand our dealers’ network in Malaysia.

7. BUSINESS OVERVIEW (Cont’d) We intend to expand our market presence and distribution network by penetrating further into key markets in Malaysia, by establishing new branches and appointing new dealers in these areas through the following: (a) strengthen our marketing capabilities through the Retail Management Trainee (“RMT”) programme. Candidates who have completed this programme will be placed at Mazda outlets throughout Malaysia, to contribute and be responsible for the safes and marketing activities; and
(b) widen our penetration in prime marketing areas in the Northern and Southern regions of Malaysia.

(iii) Launch the latest models of Mazda vehicles in the Malaysian and Philippines markets Our customers have shown a wide range of preference for motor vehicles and technologies that are relevant in today’s automotive segment, such as driving dynamics, efficient performance, environmental friendly features and energy saving factor. We believe that we need to continuously keep up with changes in customers’ preferences in both the Malaysian and Philippines markets. In doing so, we have been working closely with Mazda Japan in extending the range of Mazda vehicles available for retail in these countries. We also plan to introduce viable new Mazda models which are not yet available in the Philippines market at an appropriate time. In addition, we will also continuously introduce various new and facelitt Mazda models into the local market as and when. they become available. In line with new product launches, we will create corresponding marketing and promotional strategies to promote the sales of these models. Pursuant to the Joint Venture Agreement, MMSB also has plans to export locally assembled Mazda vehicles overseas. 7.5 Products As at the LPD, we distribute 10 Mazda vehicle models with a total of 24 variants to suit different market segments. In May 2012, we launched a new vehicle model, Mazda CX-5. It is a crossover-SUV and the first Mazda model to fUlly incorporate all the elements of the “Skyactiv Technology”. SUbsequently, in March 2013, we launched the new Mazda6, which is also equipped with Skyactiv Technology. “Skyactiv Technology” is a series of technologies that reduce fuel consumption and carbon emissions as well as increase fuel efficiency (petrol or diesel) and engine output which encompass new engines, transmissions and chassis. The “Skyactiv Technology” is environmentally friendly, enhances engine efficiency and improves car safety. [The rest of this page is intentionally left blank]

7. BUSINESS OVERVIEW (Cont’dj As at the LPD, our vehicles line-up is as follows: 7.5.1 CKD passenger vehicles Model Description Visual Mazda3 Sedan • 1.6L and 2.0L variant
• MZR Engine InLine 4-Cylinder DOHC 16 Valve with S­VTNIS/ECTITSCV

6,000 rpm and 144 Nm of torque at .1——–;.The 1.6L produces 103 PS at r~I~III~IIII;~l4,000 rpm . • The 2.0L produces 147 PS at 6,500 rpm and 182 Nm of torque at 4,200 rpmMazda3 Hatchback • 2WD (Mid Spec and High Spec) • AWD (High Spec) CX-5 (2WD and

• SKYACTIV-G 2.0L InLine 4­AWD)

 

Cylinder DOHC 16-Valve • Produces 157 PS at 6,000 rpm and 200 Nm of torque at 4,000 rpm

7.5.2 CBU passenger vehicles Model Description Visual Mazda2 Sedan  • MZR 1.5L Engine InLine 4-Cylinder DOHC 16-Valve  • Produces 103 PS at 6,000 rpm and 135 Nm of torque at 4,000 rpm
7. BUSINESS OVERVIEW (Cont’d) Model Description Visual • MZR 1.5L Engine InLine 4-Cylinder  DOHC 16-Valve  Mazda2 Hatchback  • Produces 103 PS at 6,000 rpm and  Mazda3 MPS  135 Nm of torque at 4,000 rpm • MZR 2.3L Direct Injection Spark Ignition (“DISI”) Turbocharged InLine 4-Cylinder DOHC (Double Overhead Cam Shaft) • Produces 255 PS at 5,500 rpm and 380 Nm of torque at 3,000 rpm • Specially tuned 6-speed manual transmission  Mazda5 Mazda6 Sedan Mazda6 Hatch Touring Mazda8  • 2.0L MZR LF-lnLine 4-Cylinder DOHC 16-Valve • Produces 142 PS at 6,500 rpm and 180 Nm of torque at 4,500 rpm • 2.0L and 2.5L variant • SKYACTIV-G, InLine 4-Cylinder, Direct Injection, DOHC 16-Valve • The 2.0L produces 157 PS at 6,000 rpm and 200 Nm of torque at 4,000 rpm • The 2.5L produces 189 PS at 6,000 rpm and 256 Nm of torque at 3,250 rpm • 2.5L SKYACTIV-G, InLine 4­Cylinder, Direct Injection, DOHC 16-Valve • Produces 189 PS at 6,000 rpm and 256 Nm of torque at 3,250 rpm • MZR 2.3L InLine 4-Cylinder 16­Valve DOHC with S-VT • Produces 163 PS at 6,500 rpm and 203 Nm of torque at 3,500 rpm
7. BUSINESS OVERVIEW (Cont’dJ CX-7 (2WD and AWD)  • MZR 2.3L DISI Turbocharged Inline 4-CylinderDOHC 16-Valve • Produces 234 PS at 5,000 rpm and 350 Nm of torque at 2,500 rpm  CX-9 (2WD and AWD)  • 3.7L V6 DOHC 24Valve S-VT • Produces 277 PS at 6,250 rpm and 367 Nm of torque at 4,250 rpm   MX-5  • MZR 2.0L InLine 4-Cylinder 16 Valve DOHC S-VT • Produces 160 PS at 6,700 rpm and 188 Nm of torque at 5,000 rpm
7.5.3 CBU commercial vehicle Model Description Visual • 2.2L Manual (Mid Spec and High Spec), 2.2L Auto and 3.2L Auto Diesel MZ-CD DOHC Turbo Diesel • 2.2L (Manual/Auto) -Produces 152 BT-50 PS at 3,700 rpm and 375 Nm of torque at 1,500 rpm • 3.2L -Produces 203 PS at 3,000 rpm and 470 Nm of torque at 1,750 rpm.
I Company No. 900557-M I 7. BUSINESS OVERVIEW (Cont’d) 7.5.4 List of awards Our range of Mazda vehicles have received various awards in Malaysia as follows: (i) Mazda2 Year Country Awarding body Award
2010 Malaysia Asian Auto Magazine and Asian Auto -VCA Auto Industry Awards 2010: Best Value for Money Compact Car Viewer’s Choice Award (“VCA”)
(ii) Mazda3 Year Country Awarding body Award

2011 2011 2011 2011 2011 2012 (iii) Mazda5 Year 2011 (iv) Mazda6 Year 2010 2010 2011/2012 2013 Malaysia Malaysia Malaysia Malaysia Malaysia Malaysia Country Malaysia Country Malaysia Malaysia Malaysia Malaysia Asian Auto Magazine Asian Auto Magazine Asian Auto Magazine Shell V-Power and Autoworld.com.my Asian Auto and Ambank
Asian Auto Magazine and VCA
Awarding body
Asian Auto Industry Awards 2011: Best Local Assembly Family Car -Mazda3 1.6L Asian Auto Industry Awards 2011: Best Value for Money Sports Car -Mazda3 MPS Asian Auto Fuel Efficiency Awards 2011: Small Premium Family Cars -3’d Place: Mazda31.6L Shell V-Power Autoworld Car of the Year Awards 2011: Best Value for Money Performance Car -Mazda3 MPS Fuel Efficiency Awards 2011: Best Performance Hot Hatch -3’d Place: Mazda Turbo MPS Fuel Efficiency Award 2012 -Mazda 3 1.6L (Small Premium Family Car) Award AUTOCAR (Malaysia) AUTOCAR Asean Car of the Year Awards 2011, Small/Midsize MPV Awarding body Awarc;l Asian Auto Magazine Autoworld.com.my and CIMB group Wheels Weekly Asian Auto Magazine and VCA
63 Fuel Efficiency Awards 2010: 1st Place Luxury Family Cars CIMB Autoworld Car of the Year Awards 2010: Best Passenger Car: Mid-Size Live Life Drive: Car of the Year -Large Executive Asian Auto Allianz Auto Industry Award 2013: Best Value for Money Executive Car ­Mazda62.0L I Company No. 900557-M I 7. BUSINESS OVERVIEW (Cont’d) (v)  Mazda8  Year 2010 2010 2011/2012  Country Malaysia Malaysia Malaysia  Awarding body Asian Auto Magazine and VCA AUTOCAR (Malaysia) Wheels Weekly  Award Fuel Efficiency Awards 2010: 3ra Place Luxury MPV AUTOCAR Asean Car of the Year Awards 2010, Large MPV Live Life Drive: Car of the Year -Full Size MPV  (vi)  CX-5  Year 2012 2012 2012 2012 2012  Country Malaysia Malaysia Malaysia Malaysia Malaysia  Awarding body Asian Auto Magazine and Allianz MTM Multimedia Sdn Bhd New Straits Times and Maybank Autoworld.com.my AUTOCAR (ASEAN)  Award Asian Auto Industry Awards 2012: Best Value for Money SUV Car of the Year Award: Small/Midsize SUV Car of the Year Award: SUVofthe year Autoworld Car of the Year Awards 2012: Best SUV/Crossover Car of the Year Award: Small/ Midsize SUV  (vii)  CX-7  Year 2010 2010  Country Malaysia Malaysia  Awarding body The New Straits Times Press and Maybank group Asian Auto Magazine  Award Car of the Year Award: Premium SUV of the Year 2010 Fuel Efficiency Awards 2010: 1st Place Luxury MPV  (viii)  CX-9  Year 2011/2012 2013  Country Malaysia Malaysia  Awarding body Wheels Weekly The Brand Laureate  Award Live Life Drive: Car of the Year -Luxury SUV Best Brand in Automotive -Sedan
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I Company No. 900557-M I 7. BUSINESS OVERVIEW (Cant’d) Mazda vehicles has achieved international acclaim in various categories and countries including the following, which are by no means exhaustive: (i)  Mazda3  Year  Country  Awarding body  Award  2010 2010  United States Japan  MotorWeek Nikkei Inc.  Drivers’ Choice Award 2010 -Best Small Car Nikkei Excellent Products and Services Award -Award for Excellence -Shimbun Award: Automotive  Nikkei Sangyo  (ii)  Mazda6  Year 2010 2013  Country United Kingdom – Awarding body Fleet World World Car Award  Award 2010 Fleet World Honours: Best Estate Car 2013 World Design Car of the Year -One of the 3 Finalist  (iii)  MX-5  Year 2010  Country United Kingdom  Awarding body J.D. Power and Associates  Award 2010 UK Vehicle Ownership Satisfaction Studi-Sest Sports Car  (iv)  CX-5  Year 2012-2013 2012  Country Japan Japan  Awarding body Japan “Car of the Year” committee Japan Automotive Hall of Fame (“JAHFA”)  Award Japan Car of the Year Award 2012-2013 JAHFA Car Technology of the Year
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7. BUSINESS OVERVIEW (Cont’d) 7.6 Principal markets Our revenue is mainly derived in Malaysia, from the sales of Mazda vehicles and spare parts as well as the maintenance and fitting of Mazda vehicle accessories. Our revenue by activities for the past 4 FYE 30 April 2010, 2011, 2012 and 2013 is as follows: FYE 30 April Activity 2010 2011 2012 2013 RM’OOO % RM’OOO % RM’OOO % RM’OOO % Sale of CBU vehicles 278,091 97.0 556,440 93.9 439,933 66.3 818,514 76.9 Sale of CKD vehicles 16,499 2.8 204,779 30.9 208,960 19.7 Sale of spare parts 7,982 2.8 18,041 3.0 16,791 2.5 29,063 2.7 Maintenance and fitting of 756 0.2 1,623 0.3 2,078 0.3 7,812 0.7 motor vehicle accessories(1) Total 286,829 100.0 592,603 100.0 663,581 100.0 1,064,349 100.0 Note: (1) The revenue from the maintenance and fitting of motor vehicles accessories includes the sales of the accessories for Mazda vehicles. Our sales volume by geographical location for the past 4 FYE 30 April 2010,2011,2012 and 2013 is as follows: FYE 30 April 2010 2011 2012 2013 Units % Units % Units % Units % Malaysia 2,113 100.0 4,826 100.0 5,909 100.0 8,142 92.5 Philippines 657 7.5 Total 2,113 100.0 4,826 100.0 5,909 100.0 8,799 100.0 Our sales volume in Malaysia is further analysed into regions as below: FYE 30 April Region 2010 2011 2012 2013 Units % Units % Units % Units % Central(1) 1,422 67.3 3,031 62.8 3,669 62.1 5,267 64.7 Northern(2) 301 14.2 813 16.8 928 15.7 1,143 14.0 Southern(3) 146 6.9 490 10.2 828 14.0 1,003 12.3 Eastern(4) 71 3.4 153 3.2 188 3.2 243 3.0 Sabah and Sarawak 173 8.2 339 7.0 296 5.0 486 6.0 Total 2,113 100.0 4,826 100.0 5,909 100.0 8,142 100.0 Notes: (1) Central region comprises Wilayah Persekutuan Kuala Lumpur and Selangor.
(2) Northem region comprises Per/is, Kedah, Pulau Pinang and Perak.
(3) Southern region comprises Melaka, Negeri Sembi/an and Johor.
(4) Eastem region comprises Pahang, Kelantan and Terengganu.

7. BUSINESS OVERVIEW (Cont’d) 7.7 Location of operations and services Details of our operation and service centres are set out below: Company Location Main function Bermaz and BMTSB  No.7, Jalan Pelukis U1/46 Temasya Industrial Park Seksyen U1 40150 Shah Alam Selangor  Headquarters, administrative office and 3S centre  BMTSB  Lot 765, Jalan Padang Jawa Seksyen 16 40200 Shah Alam Selangor  Pre-delivery inspection centre, Mazda vehicles storage site and 3S centre  BMTSB  Lot 9, Jalan 219 46100 Petaling Jaya Selangor  3S centre and training centre  BMTSB  214, Jalan Ampang 50450 Kuala Lumpur  3S centre  BAP  9th Floor, Rufino Building Ayala Avenue Makati City Philippines  Headquarters and administrative office  BAP  Km. 52, Bo. Lawa Calamba City Laguna, Philippines  Leased warehouse storage facility
We have also leased space at a warehouse located at The Ship, No.1, One Logistics Hub, Persiaran Sungai Hampar, Seksyen 32, 40460 Shah Alam, Selangor for the storage of Mazda vehicles components and spare parts. In addition, all our appointed dealers have their own facilities throughout Malaysia to carry out the retailing of Mazda vehicles and/or provision of after sales services for Mazda vehicle owners. In the Philippines, our third party dealers have facilities to carry out the retailing of Mazda vehicles and/or provision of after sales services. [The rest of this page is intentionally left blank] 7. BUSINESS OVERVIEW (Cont’d) 7.8 Business processes The processes involved in the distribution and retailing of our Mazda vehicles are as follows:

7.8.1 Process flow for Mazda CBU vehicles (i) Stock ordering. We submit our orders for the Mazda CBU vehicles by model and colour to Prima Merdu for importation from Mazda Japan.
(ii) Stock delivery. The Mazda CBU vehicles will be shipped from Mazda Japan’s production facilities in Japan or Thailand directly to our warehouse at the Padang Jawa Branch via Port Klang on instruction from Prima Merdu.

(iii) Storage. The Mazda CBU vehicles will be stored at the warehouse prior to distribution to our branches and dealers. (iv) Pre-delivery inspection. We have a dedicated team to carry out pre-delivery inspection, including visual inspection, for all Mazda CBU vehicles received. For details of our quality control measures of pre-delivery inspection, please refer to Section 7.10 of this Prospectus.
(v) Process dealers’ orders and payment. We will process the orders and payments submitted by our dealers prior to releasing the Mazda CBU vehicles.
(vi) Release vehicle. Our team at the warehouse will release the Mazda CBU vehicles to transporters upon confirmation of payment from our National Sales Department. Dealers are responsible for making their respective vehicle transportation arrangements.

7. BUSINESS OVERVIEW (Cont’d) 7.8.2 Process flow for Mazda CKD vehicles (i) Stock ordering. We submit our orders to MMSB for assembly of Mazda CKD vehicles.
(ii) Stock delivery. Upon completion of the assembly, MMSB will arrange for the delivery of assembled Mazda CKD vehicles from Inokom to our pre-delivery inspection centres.

(iii) Storage. The Mazda CKD vehicles will be stored at the warehouses prior to distribution to our branches and dealers. (iv) Pre-delivery inspection. We have a dedicated team to carry out pre-delivery inspection, including visual inspection, of all assembled Mazda CKD vehicles.. For details of our quality control measures of pre-delivery inspection, please refer to Section 7.10 of this Prospectus.
(v) Process dealers’ orders and paymentS. We will process orders and payments submitted by our dealers prior to releasing the vehicles.
(vi) Release vehicle. Our team at the warehouse will release the Mazda CKD vehicles to transporters upon confirmation of payment from our National Sales Department. Dealers are responsible for making their respective vehicle transportation arrangements.

7.9 Raw materials We purchase completed CBU and CKD Mazda vehicles from our suppliers, namely Prima Merdu and MMSB respectively, following the transfer of the CKD assembly activities to MMSB with effect from 1 February 2013. As such, we do not purchase any raw material for our operations. 7.10 Quality control We believe that quality is important in delivering a positive driving experience to our customers. We place high importance on carrying. out the quality control and pre-delivery inspection’ on each Mazda vehicle prior to delivering the Mazda vehicles to our dealers, and eventually our customers. All Mazda vehicles undergo the following quality control measures at our pre-delivery inspection centre at the Padang Jawa Branch for Mazda CBU vehicles and Kajang for Mazda CKD vehicles: (i) For the Mazda CBU vehicles, the vehicle protective packaging is removed and sent for washing;
(ii) Visual inspection to ascertain any possible damages such as scratches, dents and windscreen cracks;

(iii) Vehicle engine start-up to check engine and display panels; (iv) Body repair work to be carried out, if necessary;
(v) Fitting of accessories; and

(Vi) Vehicle is rechecked upon completion of accessories fitting. 7. BUSINESS OVERVIEW (Cont’d)
7.11 Sales and marketing Our branding and marketing strategy is part of Mazda’s global strategy. This strategy focuses on creating a niche image of luxury and uniqueness, and sporty performance for Mazda vehicles. The strategy also aims to impart the lifestyle experiences that can be enjoyed by owners of Mazda vehicles. We continue to promote Mazda’s “Zoom Zoom” tagline in Malaysia, which was developed by Mazda Japan in 2000. The “Zoom Zoom” tagline emphasises on the “emotion of motion” which stands for continuous delivery of fun and exhilarating driving experiences to our customers. In.line with this, we have created a focused marketing strategy “it’s different, it’s stylish, it’s unique”, which is an extension of the “Zoom Zoom” tagline aiming to highlight the uniqueness of Mazda vehicles. The effort is further enhanced with the introduction of Mazda’s Skyactiv technology which is a product of intense research in the automotive base technology development which is further described in Section 7.5 of this Prospectus. Other marketing initiatives undertaken by our Group include the following: Channel Description Advertisements Event sponsorships We utilise both traditional media, such as magazine, newspaper and TV advertisements, and non-traditional media, such as online advertising and dedicated microsites, to advertise our range of Mazda vehicles. New model launches are prominently featured in major daily newspapers. Apart from that, our Group also utilises social media such as Facebook, Mazda Microsite and Online Motor Magazine for online advertising and promotion. For example, we organised a video contest on our Facebook Page to create the hype on Mazda brand among our Facebook fans using a web application. We believe that this channel of advertising enables us to carry out more targeted efforts aimed at various segments of consumers in Malaysia. We have routinely provided sponsorship for various golf competitions such as MAZDA Malaysian Ladies Amateur Open and annually for Kelab Golf Negara Subang (“KGNS”)-Mazda Ladies Amateur Open, which are associated with Malaysian Ladies Golf Association (MALGA) and KGNS. This approach allows our brand to target women in the higher income group. In addition, we participated in motor events in Malaysia such as the Goodyear Formula DRIFT Malaysia 2010,which was organised by ESPN Star Sports’and Dewan Bandaraya Kuala Lumpur and the Foster Motor Sports Endurance event in 2012. Our participation in these events has enabled us to gain traction in promoting the profile of the Mazda brand and our latest model of Mazda vehicles. In order to further strengthen our Mazda’s brand as a performance vehicle, we also engaged in local motorsport events. In December 2012, we announced our collaboration with Fawster Motorsport, in which 2 Mazda3 track cars were modified and competed in its debut race, the Sepang 1,000km race 2012. The cars were fully sponsored by us as a symbol of dedication and confidence in motorsport activities. We also sponsored a saloon cars racing competition, which was organised by Grass Racing Autosport (“GRA”) called the Mazda GRA Autocross 2013. It is a racing event held intermittently in various venues locally. As an effort to publicise our brand, we have also sponsored various contests such as Lazada Giveaway Extravaganza, Tropicana Twister Live Love Life, Watson CNY Giveaway and Citibank Speed and Win. 7. BUSINESS OVERVIEW (Conf’dj Channel Description Roadshows Joint promotions CRM and social club networking Media public relations Sales promotion Corporate social responsibility Note: We frequently organise roadshows in various high traffic shopping centres throughout Malaysia to create awareness for the Mazda range of vehicles and introduce new Mazda models to the public. We launched several joint promotions with various brands, namely Citibank, Dutch Lady, Procter & Gamble, Hong Leong Bank and Shell Helix for various contests or campaigns. These promotional activities provide a platform for us to further increase the Mazda brand awareness to the public. In addition, our customers can also use BLoyalty card to retrieve loyalty point for each payment made at our after sales service which can be redeemed at all BCorporation Group’s retail outlets as well as other participating third .party retail outlets. This helps to promote BCorporation members’ services and enhances our partnership within BCorporation. We believe in the importance of long term loyalty of our customers. In view of this, we created the CRM programme to maintain close contact with existing . Mazda vehicle owners and remain as their preferred automotive brand. Upon purchase of Mazda vehicles, customers are presented with a welcome pack which includes Mazda premium items, 3 years warranty, free 3 years services and maintenance package, BLoyalty Card and Mazda newsletter, and customers are also welcomed into our Mazda owners club. These Mazda vehicle owners will be able to keep abreast of club events via the Mazda Malaysia fanpage on Facebook. Club members will be able to participate in events such as family outing day and members’ gathering day. In addition, members will also be entitled to privileges at selected retail outlets operated by companies within the BCorporation Group. We believe in continuously engaging our media partners, journalists and enthusiastic auto bloggers. We frequently organise test drives throughout the year for these individuals. Apart from that, we utilise several tools in enhancing the image of Bermaz such as news releases and announcements that are sent to the media as well as company newsletters, namely “Zoom Zoom Newsletter”, that we send out regularly to our customers in order to inform them of upcoming activities or promotions. As part of our marketing strategy in Malaysia, we introduce sales promotions from time to time in order to boost the sales of our Mazda passenger vehicles. We offer 3 years’ free service and maintenance (labour and spare parts) or 60,000 kilometres (km), whichever comes first, on all Mazda passenger vehicles(1). Additionally, we also provide vehicle exterior protection coating (fribos) that can preserve the vehicle’s new look to all our CBU passenger vehicles. These are efforts to add value to our products in order to maintain our competitiveness. We believe in helping and improving the life of the under privilege. In 2011, we participated in Berjaya Founder’s Day Carnival in 2011 and sponsored a Mazda2 for the lucky draw together with Berjaya Sompo Insurance Berhad. All proceeds from the Berjaya Founder’s Day were channelled to charitable organisations. We also contributed RM303,OOO to Japan’s earthquake and tsunami victim through BAKTI in April 2011. On 9 August 2012, we organised a visit to an orphanage located in Rawang which coincided with the fasting month where we shared our fortuity by providing breaking of fast sustenance, donation, gifts and ‘duit raya’. In June 2013, we donated approximately RM11,OOO and RM5,000 to Pusat Jagaan Titian OKU Nur and the Red Crescent charity dinner, respectively. (1) From November 2012 up to the LPD, we provide a 5-year warranty or 100,000 kilometres, whichever comes first, for certain Mazda models as part of our promotional activities. 71 7. BUSINESS OVERVIEW (Cont’d) In the Philippines market, the promotion of the Mazda brand image consists of 3 pillars of marketing communications which comprises “Skyactiv Technology”, “YOJIN3” and the Mazda “KODO” design language. For further information on “Skyactiv Technology”, please refer to Section 7.5 of this Prospectus. “YOJIN3” is our latest marketing strategy which provides free 3-year periodic maintenance, free 3-year nationwide emergency roadside assistance with concierge service and free 3-year bumper-to-bumper product warranty. Mazda “KODO” design language refers to Mazda’s design philosophy wherein all future Mazda vehicles are expected to be designed to express faster, more forceful movement and includes a more soulful element. For the Philippines market, a portion of our marketing budget is dedicated to the Mazda dealer marketing fund programme which is jointly funded by SAP and the dealers in the Philippines. Under this marketing programme, our third party dealers will organise sales promotions of Mazda vehicles on every weekend in shopping malls throughout the year. 7.12 Distribution strategy Our range of Mazda vehicles are marketed to end customers via our branches and appointed dealers. These branches and dealer showrooms can be categorised as 1S, 2S or 3S centres. Our 1S centres consist of showrooms only. Our 2S centres offer after sales vehicle servicing facilities and selling of Mazda related spare parts. Our 3S centres have all the 3 features, namely showrooms, after sales vehicle servicing facilities and selling of Mazda related spare parts. A summary of our dealers for the past 4 FYE 30 April 2010, 2011,2012 and 2013, and as at the LPD is as follows: Total dealers  As-at  As at  As at  As at  As at  Region  30 April 2010  30 April 2011  30 April 2012  30 April 2013  the LPD  1S  28  38  18  28  38  18  28  38  18  28  38  18  28  38  Central (1)  9  1  5  13  1  7  16  2  6  16  2  9  16  2  9  Northern (2)  3  3  3  4  3  5  4  3  6  4  3  6  4  3  6  Southern (3)  3  6  1  3  4  2  3  6  2  4  4  4  3  3  5  Eastern (4)  3  2  2  3  2  3  4  3  2  4  3  1  4  3  1  Sabah and Sarawak  1  5  1  6  1  4  3  2  4  3  2  4  Total  19  12-­ 16  24  10 -­ 23  28  15 -­ 20  31  14-­ 24  30  13-­ 25  Grand total  47  57  63  69  68
Notes: (1) Central region comprises Wilayah Persekutuan Kuala Lumpur and Selangor.
(2) Northern region comprises Perlis, Kedah, Pulau Pinang and Perak.
(3) Southern region comprises Melaka, Negeri Sembi/an and Johor.
(4) Eastern region comprises Pahang, Kelantan and Terengganu.

The total number of dealers increased from 47 dealers as at 30 April 2010 to 68 dealers as at the LPD, mainly due to the increase in number of 1S and 3S dealers in line with our expansion plans. However, the total number of 3S dealers had declined slightly from 23 as at 30 April 2011 to 20 as at 30 April 2012 resulting from the mutual agreement between Sermaz and the 3S dealers to terminate the contracts. SUbsequently, the total number of 3S dealers increased to 24 as at 30 April 2013 mainly due to an increase in the sales volume of Mazda vehicles in Central and Southern regions which in turn require the presence of more 3S centres. 72 7. BUSINESS OVERVIEW (Cont’d) We place priority in selecting capable dealers for our range of Mazda vehicles and frequently receive applications from potential dealers. We conduct visits to the facilities of these applicants as part of the evaluation and appointment process. A potential dealer will be evaluated based on the following criteria: (i) It must possess past experience and track record in managing an automotive dealership;
(ii) The dealership is operated by a business owner;

(iii) It is preferred to have a minimum ownership of 2 air-conditioned shoplots for showroom; (iv) It should have a sound financial track record; and
(v) It must have a sales manager together with a sales team.

Upon appointment, the dealers will have to comply with Mazda Japan’s guidelines on, amongst others, outlet layout, signage, tools and spare parts, and standard operating procedures where applicable. 7.13 Highly dependent contracts As at the LPD, save as disclosed below, there are no contracts, agreements, arrangements or other matters which our Group is highly dependent on: (i) Malaysia CBU Agreement By an agreement dated 31 March 2011 entered into between Bermaz and Mazda Japan (which replaces an agreement dated 28 February 2008 which has since expired), Mazda Japan has agreed to supply specific models of Mazda CBU vehicles and relevant spare parts, accessories and tools to Bermaz for distribution in Malaysia. In consideration of the distribution rights granted to Bermaz as the authorised distributor in Malaysia, Bermaz shall pay a distribution right fee to Mazda Japan on a monthly basis. Pursuantto the Malaysia CBU Agreement: (a) Bermaz is allowed to purchase other motor vehicles, spare parts, accessories and tools supplied by any other parties other than Mazda Japan for sale in Malaysia, provided that Mazda Japan, in its sole right, upon reasonable grounds determines that such sale will not adversely affect the sale of the Mazda CBU vehicles and relevant spare parts, accessories and tools;
(b) Bermaz is not allowed to sell, directly or indirectly, Mazda CBU vehicles and relevant spare parts, accessories and tools outside of Malaysia;
(c) Mazda Japan is allowed to supply motor vehicles other than Mazda brand motor vehicles and relevant spare parts, accessories and tools to other parties other than Bermaz, directly or through any person, for sale in Malaysia;

7. BUSINESS OVERVIEW (Cont’d) (d) Bermaz is required to purchase a specified number of Mazda CBU vehicles to achieve a minimum market share during the term of the Malaysia CBU Agreement, failing which Mazda Japan will have the right to terminate the said agreement. The minimum purchase quota for the first year of the Malaysia CBU Agreement has been determined whereas the minimum purchase quota for the second year and the third year of the said agreement are to be mutually determined by both parties. However, the minimum purchase quota for the second year and the third year of the said agreement may be revised, subject to the mutual agreement of both parties, after taking into consideration, the changes in the marketing situation in Malaysia and/or marketing programme of Mazda Japan;
(e) Bermaz is allowed to use the trademarks and other marks owned by Mazda Japan for the promotion of sales of Mazda CBU vehicles and for service operations on Mazda brand vehicles in such manner as directed by Mazda Japan; and
(f) Either party may terminate the Malaysia CBU Agreement at any time by way of a notice in writing to the other party in the event the other party has committed any breach of the provisions of the Malaysia CBU Agreement and has failed to rectify such breach within 2 months after the service of the notice in writing to the other party in default requiring such rectification or upon the occurrence of any of the following events:
(1) attachment, provisional attachment, auction, petition for bankruptcy, winding up, receivership, petition for corporate reorganisation or disposition for public sale due to arrears of taxes;
(2) insolvency, suspension of payment;
(3) transfer of the whole or any substantial part of the business undertaking or assets, or suspension of the business actiVities; or
(4) dissolution, merger.

 

The Malaysia CBU Agreement also contains the following provisions in relation to any change in the shareholding of Bermaz: (a) Bermaz is required to notify Mazda Japan of any changes in its firm name, address, representative, capital and/or legal organisational structure; and
(b) Mazda Japan has the right to terminate the Malaysia CBU Agreement at any time with a notice in writing to Bermaz in the event Mazda Japan is of the opinion that it is impossible to continue business transactions with Bermaz due to any change of Bermaz management and/or due to any change in the legal organisation structure or substantial change in composition of the shareholders or investors of Bermaz.

The Malaysia CBU Agreement is valid for a term of 3 years expiring on 31 March 2014. Mazda Japan, via its letter dated 14 January 2013, has agreed to further extend the Malaysia CBU Agreement upon the expiry of the said agreement on 31 March 2014, for another 5 years expiring on 31 March 2019, SUbject to an annual minimum purchase quota of Mazda CBU vehicles to be mutually agreed upon. The Malaysia CBU Agreement is governed by the laws of Japan and any dispute, controversy or difference which may arise between Mazda Japan and Bermaz is to be settled by arbitration in Japan. 74 7. BUSINESS OVERVIEW (Cont’d) (ii) Distributorship and Collaboration Agreement By an agreement dated 12 March 2008 entered into between Bermaz and Prima Merdu, the parties agreed that Prima Merdu shall amongst others, import specific models of Mazda CBU vehicles from Mazda Japan, and both Bermaz and Prima Merdu shall collaborate through their respective network of branches and/or dealers to co-retail the Mazda CBU vehicles. Prima Merdu had entered into an importation agreement with Mazda Japan on 28 February 2008 whereby Prima Merdu was given the franchise to import Mazda CBU vehicles from Mazda Japan into Malaysia. The said importation agreement was renewed on 2 December 2011 for a term of 3 years expiring 31 March 2014, which is concurrent with the expiry of the Malaysia CBU Agreement. Via the entrustment letter dated 10 January 2013, Mazda Japan and Bermaz had also agreed to entrust Prima Merdu to continue to import the Mazda CBU vehicles from Mazda Japan for supply to Bermaz and Bermaz in turn shall carry out the distribution activities in Malaysia. Pursuant to the Distributorship and Collaboration Agreement: (a) Prima Merdu shall import and supply such models and volume of Mazda CBUvehicles to Bermaz as agreed by both parties (subject to Prima Merdu’s total allocation of AP) for distribution in Malaysia; and
(b) The parties shall collaborate through their respective network of branches and/or dealers to co-retail Mazda CBU vehicles in Malaysia and jointly develop and maintain a network of after-sales facilities, services and activities.

The Distributorship and Collaboration Agreement was valid for an initial period of 3 years from 12 March 2008 and upon its expiry on 12 March 2011, the said agreement was automatically renewed for an additional term of 3 years. (iii) Joint Venture Agreement By an agreement dated 11 September 2012 entered into between Bermaz and Mazda Japan, MMSB will be jointly established by Bermaz and Mazda Japan to produce and distribute Mazda brand vehicles (exclUding Mazda brand CBU vehicles) in Malaysia. Pursuant to the Joint Venture Agreement: (a) MMSB shall entrust the assembly of CKD vehicles of Mazda to Inokom or other assemblers;
(b) MMSB shall entrust the distribution of CKD vehicles of Mazda in Malaysia to Bermaz;
(c) Bermaz shall provide support in areas relating to the arrangement of equipment order and parts order to local suppliers, coordination and negotiations with local business partners, as well as administration of MMSB;
(d) Mazda Japan shall provide support in areas relating to cost improvement activities or localisation of Mazda vehicles, technical supports regarding .production of CKD vehicles of Mazda, as well as brand building activities;
(e) Mazda Japan and Bermaz shall not transfer, pledge or otherwise dispose all or part of the shares in MMSB without obtaining the authorised resolutions of the shareholders meeting of MMSB; and

75 7. BUSINESS OVERVIEW (Cont’d) (f) One party may terminate the Joint Venture Agreement by written notice to the other in the event the other party falls under any of the following: (1) if such party violates any provisions of this agreement, and, notwithstanding the demand from the other party that such violation be remedied, fails to remedy such violation within 90 days;
(2) if such party has become the sUbject to any attachment, provisional attachment, provisional disposition, disposition of public auction, attachment for failure to pay taxes or other disposition by any public authority, or any petition seeking the commencement of civil rehabilitation proceedings, the commencement of corporate reorganisation proceedings, special mediation or bankruptcy or other insolvency proceedings has been filed, and such event has a material impact to the operation of the business of MMSB;
(3) if such party transfers, or makes a resolution to transfer, all or substantial portion of its business;
(4) if such party becomes insolvent including the cases where such party is unable to make payment or any bill or cheque issued or accepted by such party is dishonoured;
(5) if such party has become SUbject to the disposition of discontinuation of business, or revocation of business licence or business registration by the competent supervising agency;
(6) if such party has made a resolution to dissolve itself other than by way of the discontinuation of its business or merger;
(7) if any event that has a material impact to the operation of the business of MMSB occurs, such as a change in the substantial control of the management of Mazda or Bermaz due to the merger, corporate split, transfer of business or other reorganisation or change in the major shareholders; or
(8) if any event that substantially destroys the trust relationship as partners of a joint venture occurs.

The Joint Venture Agreement is governed by the laws of Japan and any dispute, controversy or difference which may arise between Mazda Japan and Bermaz is to be settled by arbitration in Japan. (iv) Philippines CBU Agreement By an agreement dated 12 September 2012 entered into between BAP and Mazda Japan, the parties agreed that BAP shall import and distribute specific models of Mazda CBU vehicles and relevant spare parts, accessories and tools in the Philippines. In consideration of the distribution rights granted to BAP as the authorised distributor in the Philippines, BAP shall pay a distribution right fee to Mazda Japan on a monthly basis. 7. BUSINESS OVERVIEW (Cont’d) Pursuant to the Philippines CBU Agreement: (a) BAP is allowed to purchase other motor vehicles, spare parts, accessories and tools supplied by any other parties other than Mazda Japan for sale in the Philippines, provided that Mazda Japan, in its sale right, upon reasonable grounds determines that such sale will not adversely affect the sale of Mazda CBU vehicles and relevant spare parts, accessories and tools;
(b) BAP is not allowed to sell, whether directly or indirectly, Mazda CBU vehicles and relevant spare parts, accessories and tools outside of the Philippines;
(c) Mazda Japan is allowed to supply motor vehicles other than Mazda brand motor vehicles and relevant spare parts, accessories and tools to any other party other than BAP, directly or through any person, for sale in the Philippines;
(d) BAP is required to purchase a specified number of Mazda CBU vehicles to achieve a minimum market share in each year during the term of the Philippines CBU Agreement, failing which Mazda Japan will have the right to terminate the said agreement. However, the minimum purchase quota for the second year and the third year of the said agreement may be revised, subject to the mutual agreement of both parties, after taking into consideration, the changes in the marketing situation in the Philippines and/or marketing programme of Mazda Japan;
(e) BAP is allowed to use the trademarks and other marks owned by Mazda Japan for the promotion of sales of Mazda CBU vehicles and for service operations on Mazda brand vehicles in such manner as directed by Mazda Japan;
(f) Mazda Japan may undertake feasibility studies on BAP in relation to Mazda Japan’s capital injection in BAP and BAP shall agree to Mazda Japan’s capital participation in BAP and sell its shares to Mazda Japan at fair market value (excluding any goodwill) to be separately agreed between the relevant parties if Mazda Japan determines to invest in BAP;
(g) BAP assures Mazda Japan that it shall have the first right of refusal to purchase such share of BAP at fair market value (excluding goodwill) to be agreed separately by relevant parties in the event BCorporation plans to sell the whole or part of its shares in BAP or to increase the capital of BAP. Notwithstanding the foregoing, the sale of shares in BAP to any third party, including public offering, shall be subject to Mazda Japan’s prior written agreement; and
(h) Either party may terminate the Philippines CBU Agreement at any time by way of a notice in writing to the other party in the event the other party has committed any breach of the provisions of the Philippines CBU Agreement and has failed to rectify such breach within 2 months after the service of the notice in writing to the other party in default requiring such rectification or upon the occurrence of any of the following events:
(1) attachment, provisional attachment, auction, petition for bankruptcy, winding up, receivership, petition for corporate reorganisation or disposition for public sale due to arrears of taxes;
(2) insolvency, suspension of payment;

 

77 7. BUSINESS OVERVIEW (Cont’dj (3) transfer of the whole or any substantial part of the business undertaking or assets, or suspension of the business activities; or
(4) dissolution, merger.

The Philippines CBU Agreement also contains the following provisions in relation to any change in the shareholding of BAP: (a) BAP is required to notify Mazda Japan of any changes in its firm name, address, representative, capital and/or legal organisational structure in the Philippines; and
(b) Mazda Japan has the right to terminate the Philippines CBU Agreement at any time with a notice in writing to BAP in the event Mazda Japan is of the opinion that it is impossible to continue business transactions with BAP due to any change of BAP management and/or due to any change in the legal organisation structure or substantial change in composition of the shareholders or investors of BAP.

The Philippines CBU Agreement is valid for a term of 3 years expiring on 30 September 2015. The Philippines CBU Agreement is governed by the laws of Japan and any dispute, controversy or difference which may arise between Mazda Japan and BAP is to be settled by arbitration in Japan. 7.14 Technology used We do not depend on any specific or advanced technology for our business operations in the distribution and retailing of Mazda vehicles. 7.15 R&D As at the LPD, we do not have any R&D policies and we do not undertake any R&D activities. 7.16 Major customers We distribute Mazda vehicles to a broad range of retail customers across different demographic groups through our own branches and our dealers nationwide. However, only one of our customers, Prima Merdu, accounted for 10% or more of our total revenue in the past 4 FYE 30 April 2010, 2011, 2012 and 2013 as follows: Approximate As a percentage of total revenue (%) length of FYE 30 Aprilrelationship Customer (years) 2010 2011 2012 2013 RM’OOO % RM’OOO % RM’OOO % RM’OOO % Prima 5.5 11,364 4.0 58,555 9.9 74,032 11.2 153,274 14.4 Merdu 7. BUSINESS OVERVIEW (Cont’dj 7.17 Major suppliers Our suppliers that accounted for 10% or more of our total purchases for the past 4 FYE 30 April 201 0, 2011, 2012 and 2013 are as follows: Approximate As a percentage of total purchases (%) length of FYE 30 Aprilrelationship Supplier (years) 2010 2011 2012 2013 RM’OOO % RM’OOO % RM’OOO % RM’OOO % Prima Merdu 5.5 248,597 92.0 556,640 85.0 269,811 55.3 652,958 66.6 (Mazda CBU Vehicles) Mazda Japan 5.6 6,428 2.4 24,621 3.8 73,026 15.0 95,011 (2) 9.7 (Mazda CBU vehicles, CKD packs and spare partsi1) Notes: (1) The supply from Mazda Japan includes the supply of CKD packs and spare parts for Mazda CKD assembly activities in Malaysia and the supply ofMazda CBU vehicles and spare parts for distribution in the Philippines, which was imported directly by BAP.
(2) Pursuant to the transfer of the assembly activities of CKD vehicles of Mazda from Bermaz to MMSB, Mazda Japan ceased to be the major supplier of CKD packs and parts to Bermaz with effect from 1 February 2013. MMSB has become the supplier of CKD vehicles to Bermaz.

With effect from 1 February 2013, the CKD vehicles of Mazda assembled by MMSB through Inokom for distribution in the Malaysian market will be sold to Bermaz. Although Mazda Japan is not our direct supplier, we are indirectly dependent on Mazda Japan for the supply of the Mazda vehicles. 7.18 Interruption in business operations Our Group has not experienced any interruption in business which has had a material effect on our operations during the past 12 months period preceding the LPD. 7.19 Seasonality We have historically experienced a slight increase in sales of our Mazda vehicles as we approach festive periods such as Chinese New Year and marginal decline during year end as customers may prefer to register their vehicles in the following year. However, we do not expect any major fluctuations in our business due to seasonality. 7.20 Intellectual property We are allowed to use the “Mazda” trademark and other marks owned by Mazda Japan for the promotion of sales of Mazda vehicles and for service operations on Mazda vehicles pursuant to the Malaysia CBU Agreement and the Philippines CBU Agreement. There are also certain corporate images set by Mazda Japan that our branches and our dealers have to adhere to at their respective showrooms. 7. BUSINESS OVERVIEW (Cont’d) 7.21 Employees As at the LPD, we have a total workforce of 219 employees, of which 142 are in sales, after sales and marketing department, with the remaining 77 in other various support departments. The breakdown of our employees by department is as follows: Total number of employees As at 30 April Length of service up to the LPD As at 1-5 >5 Department 2010 2011 2012 2013 the LPD < 1 year years years(1) Sales, after sales 49 90 113 131 142 30 67 45 & marketing Planning and 15 16 17 17 8 9 distribution Accounts 13 13 17 20 18 3 12 3 Human resource 12 12 19 23 23 1 15 7 and administration
CKD Project(2) 5 49 Information 5 7 8 81247 Technology Business 2 2 2 development! Corporate Affairs
Special project! 2 2 internal auditor Technical Supplyl 2 2 Domestic Operations Legal 111 1 Total 87 144 186 205 219 39 111 69 Notes: (1) Whilst Bermaz only commenced distribution/retail activities in 2008, some of our employees have been with us for more than 5 years as they were under the employment of BMTSB, which was involved1n the distribution of Mazda vehicles under the previous franchise holder, CCB.
(2) All personnel from the CKD project department were transferred to MMSB in 2013 with the exception of 2 employees who have been redeployed into Bermaz operations.

The total number of our employees increased by 65.5% in FYE 30 April 2011 due to an internal management restructuring implemented during the year. In line with the rapid expansion of our business to cater for customers’ demand and expectations, the total number of our employees further increased by 29.2% in FYE 30 April 2012 and 10.2% in FYE 30 April 2013. None of our employees are represented by any unions. 7. BUSINESS OVERVIEW (Cont’d) 7.21.1 Training and development programmes We recognise the importance of our employees and we place strong emphasis on human resource development in order to maintain a competent and dynamic workforce. Our training policies are geared towards ensuring that the knowledge and skills of our employees remain relevant in the rapidly changing environment. Since 2010, we have devoted a substantial sum for training and development and such expenditure has grown in tandem with the increase in our total workforce. Our training and development initiatives are focused on 5 key training areas, namely technical training, sales training, public programme, overseas training and certification-based training. Technical training mainly focuses on enhancing the technical skills of our workshop employees, especially our mechanics/technicians, foremen and service advisers in the areas of car repair, diagnosis and overall maintenance. The training is both in the form of classroom and on-the-job training relevant to the specific model of the vehicle. Sales training is a continuous programme aimed at upgrading the performance and skill set of our sales team in order to provide efficient and first class services to our potential customers. Employees’ participation in selected public programmes and overseas trainings are based on their needs and are reviewed on an individual basis. Each salesperson who has completed the training programme holds a ‘Training Passport’, which is a testimony that they have undergone certain compulsory training with regards to the different models of Mazda vehicles. Besides technical product training, we also provide effective communication training in order to enhance their soft skills. Our largest investment in training and development is in the certification-based training, namely the MAP and RMT. MAP targets school leavers who are interested in the automotive segment as their career of choice. The training is conducted in-house and upon successful completion of the programme, the apprentices will be awarded with a Sijil Kemahiran Malaysia (SKM) Level 1, 2, and 3, accredited by the Department of Skills Development, Ministry of Human Resources, as motor vehicle mechanics and will be ready to serve in our workshops. The first intake for this programme comprised of 30 apprentices who were successfully recruited during the year 2010. SUbsequently, we recruited 18 apprentices in 2011, 25 apprentices in 2012 and 28 apprentices in 2013. This initiative will continue with each annual intake. RMT is another. unique development programme with the objective of developing future managers in the automotive retail business. This programme, through collaboration with the Institute of Motor Industry, UK, selects graduates from local and overseas universities in any field of study who will be exposed to various sectors of the automotive business environment such as sales, marketing, after sales, accounts, human resource and planning and distribution, which adopts a combination of both classroom and on-the-job training. Upon completion of a 2-year rotation, they will be awarded with a Diploma in Automotive Sales Management and the candidates will be ready to manage a new branch or showroom. The first intake for this programme comprised of 7 trainees who were recruited during the year 2010. SUbsequently, we recruited 1 trainee each in 2011 and 2012. There has not been any intake in 2013 as we have yet to identify suitable candidates for the programme. 7. BUSINESS OVERVIEW (Cont’d) 7.21.2 Management succession plan We recognise the importance of our ability to attract and retain our key management. Hence, we have made concerted efforts to identify and groom middle management in all key areas as an integral part of our management succession plan. The plan includes offering a competitive remuneration package and providing training and career development opportunities for our employees in all key functions of our operations. We also have key initiatives to groom young talent for future succession via the MAP and RMT. 7.22 Regulatory requirements and environmental issues Save as disclosed below, and to the best of our knowledge, we are not in breach of any regulatory requirements or environmental issues which may materially affect our operations and utilisation of our assets: (i) Customs Act 1967 and AP System The AP for motor vehicles is an import licence issued by the MITI for the importation of motor vehicles into Malaysia subject to the provisions of the Customs Act 1967. An AP is required for the import of all new or used CBU vehicles and CKD packs, including motorcycles and commercial vehicles. MMSB is currently an AP holder for the Mazda CKD packs whilst Prima Merdu is the sole AP holder for the importation of the Mazda CBU vehicles for distribution by Bermaz in Malaysia. (ii) Environment Quality Act 1974 (UEQA”) The EQA and regulations made thereunder contain provisions and regulations for the prevention, abatement, control of pollution and enhancement of the environment. No person shall deal with ‘scheduled waste’, as defined in the EQA, unless prior approval of the Director General of Environment Quality is obtained. Our Group has appointed Anggun Kitar Resources Sdn Bhd and SP Metro (M) Sdn Bhd as the third-party service providers who are in compliance with the EQA, to dispose waste oil from our service centres. (iii) Factories and Machinery Act, 1967 (UFMA”) The FMA regulates factories and machineries by ways of registration and examination of such machinery to ensure compliance with health and safety standards, including welfare of the parties involved. Pursuant to the FMA, no person shall install or cause to be installed any machinery in any factory or any machinery in respect of which a certificate of fitness is prescribed, except with the written approval of the inspector. Our Group has obtained the requisite certificates of fitness in relation to the safety of the lifts and hoists used in our workshops. 7. BUSINESS OVERVIEW (Cont’d) (iv) NAP On 22 March 2006, the NAP was introduced to expedite the required transformation and integration of the domestic automotive segment into regional and global industry networks. The NAP is aimed at increasing Iiberalisation of the industry to enable global competitiveness and was established as the main driver for the strategic directions of the automotive segment under the Third Industrial Master Plan (IMP3), 2006-2020. The NAP is intended to maximise the long term contribution of the domestic automotive segment to the national economy, and at the same time, benefit the consumers. On 28 October 2009, the Government announced a review of the NAP, which came into effect on 1 January 2010. The NAP review introduced new policies and measures that are expected to provide significant contribution to the overall growth of the industry and the country. Greater emphasis will be put in attracting both local and foreign investments in high value-added manufacturing activities. One of the most significant measures of the NAP review in relation to non-national manufacturers is the opening up of the manufacturing sector for manufacturing and assembling in selected vehicle segments: cars with engine capacity of 1,800cc and above and on­the-road price of RM150,OOO and above, hybrid and electric cars, pick-Up trucks, commercial vehicles and motorcycles with engine capacity of 200cc and above. The new measure is aimed at attracting new investments and expanding existing investments in high value-added manufacturing activities. There will be no equity conditions imposed on the manufacturing licence and hence foreign manufacturers will be allowed to hold 100% equity in firms. The Government is expected to announce a further review of the NAP by 2013 to address the trends and technological advancements of the global automotive segment to facilitate growth. (v) Occupational Safety and Health Act, 1994 (“OSHA”) The OSHA regulates the safety, health and welfare of persons at work. Every employer shall ensure, so far as is practicable, the safety, health and welfare at work of all its employees. Our Group has a safety team in place in compliance with OSHA requirements. (vi) Road Transport Act 1987 (“RTA”) The RTA regulates the classification, registration and licensing of motor vehicles and drivers. Pursuant to the RTA, a manufacturer, a repairer or a dealer in motor vehicles may apply for a “motor trade licence” in respect of all motor vehicles used at their respective business premises for a prescribed fee. However, no person shall sell, or supply or offer to sell or supply a motor vehicle that does not comply with the RTA. The RTA also makes provision for the protection of third parties against risks arising from the usage of motor vehicles.

 

 

 

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