Annual Report 2007

Transcription

Annual Report 2007

DRB-HICOM Berhad
(203430-W)
www.drb-hicom.com
M
o m
e n t u m
Annu al Report 20 0 7
u
r
DRB-HICOM Berhad (203430-W)
Level 5, Wisma DRB-HICOM
No. 2, Jalan Usahawan U1/8
Seksyen U1, 40150 Shah Alam
Selangor Darul Ehsan
g
B u i l d i n
Annual Report 2007
O
... the mechanics of motion...
Contents
statutory
reporting
Corporate
Information
Performance
Review
Corporate
Responsibility
Corporate
Governance
Financial
Statements
Other
Information
01
02
08
09
26
Chairman’s
Statement
Group Managing
Director’s Review of Operations
50
60
78
33
53
38
192 S
hare Movement
Chart
193 Analysis of
Shareholdings
196 Material Properties of DRB-HICOM
Group
41
45
04
Corporate Profile
Group’s Six Year
Financial Highlights
Notice of Annual
General Meeting
10
12
18
20
22
Financial Calendar
Corporate
Information
Board of Directors
Profile of Directors
Management Team
Group Corporate
Structure
Group Corporate
Structure by Sector
31
51
52
- Automotive
sector
- Services
sector
- Property &
Infrastructure
- Defense
sector
Corporate Social
Responsiblity
Human Resource
Caring for the
Environment
Calendar of Events
67
69
74
77
Statement on
Corporate
Governance
Statement on
Internal Control
Audit Committee
Report
Additional
Compliance
Information
Statement
of Director’s
Responsibility
Financial
Statements
Form of Proxy
Our Vision
To be Number 1 and continuously excel in all that
we do.
Our Mission
To lead in the growth of the Nation in the areas
of DRB-HICOM’s Core Business.
Our Shared Values
• Excellence
• Teamwork
• Integrity
• Innovation
Designed with a wheel mounted to spin against the resistance of change in its orientation, the gyroscope’s
principle mechanism enables the device to maintain a consistent balance without loss of control in its
continual rotation.
• Transparency
The analogy demonstrate DRB-HICOM’s consistent direction in building the momentum to evolve, remaining
focused on harnessing its diversity of experience and expertise in seizing the potential of available
resources, and forging the motion of new partnerships and global opportunities that awaits ahead.
Cover Rationale
... today, and everyday, in
Building our Momentum
Corporate Profile
DRB-HICOM Berhad is one of Malaysia’s leading companies listed on the Main Board of Bursa Malaysia
Securities Berhad, playing an integral role in the nation’s road to industrialisation.
We are diversified yet focused, and have interests in key sectors of the economy mainly:-
|
Automotive
The Group’s leadership within
this sector is reflected through
niche segmentation and continued
strategic alliances with renowned
global names such as General
Motors, Honda, Suzuki, Isuzu,
Kawasaki, Mahindra and TATA. We
continuously develop new business
potentials and seek new alliances
to strengthen our base further.
|
Services
The rapidly growing servicebased industry represents new
opportunities for DRB–HICOM. Our
interests amongst others include
Information Technology (IT), solid
waste management, financial
services, vehicle inspection, cargo
handling and leisure.
|
Property & Infrastructure
DRB–HICOM is extensively
involved in retail, commercial and
residential property development,
and has made strong inroads in
the construction sector.
DRB-HICOM will continue to look for opportunities that will benefit the Group and the country.
|
Defence
DRB–Hicom currently provides
a variety of defence related
work to the Malaysian Armed
Forces as well as pursuing other
opportunities.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
02
Group’s Six Years Financial Highlights
2007
RM’000 Share Capital Retained Earnings Shareholders’ Equity Minority Interests #2006 RM’000 2005 RM’000 2004 RM’000 2003
RM’000 1,007,607
999,772 985,670 980,673 965,115 919,483 537,620
428,415 629,274 515,515 358,877 185,887 2,601,396
737,678
2002
RM’000
2,462,190 2,649,215 2,519,157 2,342,215 2,284,864 664,780 672,157 668,792 623,612 481,053
Long Term and
Deferred Liabilities 1,665,941
1,954,593 1,528,838 1,570,175 1,776,567 Current Assets 3,285,430
3,550,898 3,662,619 3,894,377 3,617,962 3,421,604 Current Liabilities 2,069,778
2,577,671 3,119,525 3,446,474 3,482,756 4,662,384 Net Current Assets/(Liabilities) 1,215,652
973,227 543,094 447,903 779,875 135,206 (1,240,780)
Property, Plant and Equipment/Investment Properties 2,243,997
2,069,053 2,392,425 2,451,156 2,644,313 2,691,844 Investments 2,535,399
2,659,409 2,453,050 2,204,705 2,038,373 2,008,411 Total Assets 8,232,218
8,544,283 8,628,345 8,652,375 8,459,356 8,280,727 Operating Revenue 2,905,421
3,522,835 4,506,595 4,500,255 4,898,043 4,329,289 Profit/(Loss) Before Taxation 187,131
(196,744) 276,702 389,905 457,826 391,108
Profit/(Loss) After Taxation 156,531
(146,574) 198,259 247,416 268,572 227,749 Net Profit/(Loss) Attributable to
Equity Holders of the Company 95,073
(204,975) 141,407 194,917 206,784 176,112 Dividend Less Taxation 21,801
21,307 17,688 14,081 13,866 13,156
2.58
2.46 2.69 2.57 2.42 2.48 Debt/Equity Ratio (Times) 0.7
0.8 0.8 0.9 1.1 1.1 Return on
Shareholders’ Equity (%) 3.7
(8.3) 5.3 7.7 8.8 7.7 9.47
(20.72) 14.39 20.01 21.66 19.28 Net Assets Per Share (RM) Earnings/(Loss)
Per Share (sen) (Basic) # Certain figures have been restated to conform to the requirements of new/revised Financial
Reporting Standards.
DRB-HICOM Berhad
(203430-W)
We build
2007 Annual Report
VALUE
03
Shareholders’ Equity
Net Assets Per Share
Basic Earnings/(Loss) Per Share
(RM’000)
1
2
3
4
5
(RM)
6
1
2
3
4
(sen)
1
6
5
2
3
4
6
5
1
2
3
4
5
6
2002
2003
2004
2005
2006
2007
2,284,864
2,342,215
2,519,157
2,649,215
2,462,190
2,601,396
Operating Revenue
1
2
3
4
5
6
2002
2003
2004
2005
2006
2007
2.48
2.42
2.57
2.69
2.46
2.58
Profit/(Loss) Before Taxation
(RM’000)
3
2002
2003
2004
2005
2006
2007
19.28
21.66
20.01
14.39
(20.72)
9.47
Total Assets
(RM’000)
2
1
1
2
3
4
5
6
(RM’000)
2
4
1
3
1
2
3
4
5
6
4
5
6
6
5
1
2
3
4
5
6
2002
2003
2004
2005
2006
2007
4,329,289
4,898,043
4,500,255
4,506,595
3,522,835
2,905,421
1
2
3
4
5
6
2002
2003
2004
2005
2006
2007
391,108
457,826
389,905
276,702
(196,744)
187,131
1
2
3
4
5
6
2002
2003
2004
2005
2006
2007
8,280,727
8,459,356
8,652,375
8,628,345
8,544,283
8,232,291
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
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Notice of Annual General Meeting
ORDINARY BUSINESS
NOTICE IS HEREBY
GIVEN that the
Seventeenth Annual
General Meeting of DRBHICOM Berhad (“the
Company”) will be held at
the Glenmarie Ballroom,
Holiday Inn Glenmarie
Kuala Lumpur, No. 1,
Jalan Usahawan U1/8,
Seksyen U1, 40150 Shah
Alam, Selangor Darul
Ehsan on Thursday, 20 September 2007
at 10.00 a.m. for the
following purposes:-
1.
To receive and adopt the Audited
Financial Statements for the
financial year ended 31 March
2007 together with the Reports of
Directors and Auditors thereon.
Resolution 1
2.
To approve the declaration of a
final gross dividend of 2.5 sen per
share less income tax of 27% for
the financial year ended 31 March
2007.
Resolution 2
4.
To
re-appoint
Messrs
PricewaterhouseCoopers as
Auditors of the Company and to
authorise the Directors to fix their
remuneration.
Resolution 8
SPECIAL BUSINESS
5.
To consider and if thought fit,
to pass the following Ordinary
Resolution:-
3.
To re-elect the following Directors
who retire in accordance with
t h e C o m p a n y ’s A r t i c l e s o f
Association:-
Proposed Shareholders’
Mandate For Recurrent Related
Party Transactions Of A Revenue
Or Trading Nature (“RRPTs”)
(Resolution 9)
Under Article 80
(i) Y.A.M. Tan Sri Dato’ Seri Syed
Anwar Jamalullail
Resolution 3
“THAT pursuant to Paragraph
10.09 of the Listing Requirements
of Bursa Securities, the Proposed
Mandate be and is hereby granted
in respect of the existing and
new RRPTs (all defined terms
shall bear the meaning set out
in the Circular to Shareholders of
DRB-HICOM Berhad dated 29
August 2007, hereinafter referred
to as “the Circular”), namely to
allow the recurrent related party
transactions of a revenue or trading
nature, which are necessary for
the day-to-day operations of the
DRB-HICOM Group, to be entered
into by relevant companies in the
DRB-HICOM Group in the ordinary
course of business, at anytime
(ii) D
atuk Haji Mohd Khamil bin
Jamil
Resolution 4
Under Article 86
(i) Tan Sri Marzuki bin Mohd
Noor
Resolution 5
(ii) M
ohd Redza Shah bin Abdul
Wahid
Resolution 6
(iii) Dato’ Noorrizan binti Shafie
Resolution 7
during the Mandate Period, provided
that such transactions are entered
into at arm’s length basis and on
normal commercial terms which
are not more favourable to the
related parties than those generally
available to the public, and are not
to the detriment of the minority
shareholders of the Company, the
particulars of such RRPTs are set
out in Section 2.2 of Part A of the
Circular AND THAT the authority
conferred by this resolution shall
commence immediately upon the
passing of this Ordinary Resolution
and shall continue to be effective
and in force until:(a) t he conclusion of the next
annual general meeting of the
Company (“AGM”) (following
the general meeting at which
the Proposed Mandate is
passed), at which time it
shall lapse unless by an
ordinary resolution passed
at the Eighteenth AGM, the
authority is renewed, either
unconditionally or subject to
conditions;
(b) t he expiration of the period
within which the Eighteenth
AGM is required to be held
pursuant to Section 143(1)
of the Companies Act, 1965
(but shall not extend to such
extension as may be allowed
pursuant to Section 143(2) of
the Companies Act, 1965); or
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
05
(c) r evoked or varied by resolution
passed by the shareholders
of the Company in general
meeting,
whichever is earlier,
NOTICE OF DIVIDEND PAYMENT
NOTICE IS HEREBY GIVEN that the final gross dividend of 2.5 sen per share less income tax
of 27% in respect of the financial year ended 31 March 2007, if approved by the shareholders
at the Annual General Meeting, will be paid on 18 October 2007 to the shareholders whose
names appear in the Record of Depositors of the Company at the close of business on
25 September 2007.
AND THAT the Directors of the
Company or any one of them be
authorised to complete and do
all such acts, deeds and things
(including without limitation, to
execute such documents as may
be required to give effect to the
RRPTs) in such manner as they
may deem expedient or necessary
in connection with this Ordinary
Resolution.”
A depositor shall qualify for entitlement to the dividend only in respect of:-
6.
To consider and if thought fit,
to pass the following Special
Resolution:-
By Order of the Board
Proposed Amendments to the
Articles of Association of the
Company
(Resolution 10)
“THAT the Proposed Amendments
to the Articles of Association of
the Company as set out in Part
B, Appendix I of the Circular to
Shareholders dated 29 August 2007,
be and are hereby approved.”
(a) S
hares deposited into the depositor’s securities account before 12.30 p.m. on
21 September 2007 in respect of shares exempted from mandatory deposit;
(b) S
hares transferred into the depositor’s securities account before 4.00 p.m. on
25 September 2007 in respect of transfers; and
(c) S
hares bought on Bursa Malaysia Securities Berhad on a cum-entitlement basis
according to the Rules of Bursa Malaysia Securities Berhad.
CHAN CHOY LIN (MIA 3930)
Company Secretary
Shah Alam, Selangor Darul Ehsan
29 August 2007
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
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Notice of Annual General Meeting
NOTES:1. Proxy
(a) A member entitled to attend the meeting may appoint a proxy or proxies who may
but need not be a member of the Company.
(b)The instrument appointing a proxy shall be in writing under the hand of the
appointor or his attorney duly authorised in writing or, if the appointor is a
corporation, either under its common seal or under the hand of an officer or
attorney duly authorised in writing.
(c) The instrument appointing a proxy together with the power of attorney or other
authority, if any, under which it is signed or a certified copy thereof, shall be
deposited at the Share Registrar’s Office, Symphony Share Registrars Sdn Bhd,
Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah,
50100 Kuala Lumpur not less than forty-eight (48) hours before the time set for
holding this meeting.
2.Explanatory notes on special business:
(a) P roposed Shareholders’ Mandate For Recurrent Related Party Transactions
(“RRPTs”) (Resolution 9)
(b)Proposed Amendments to Articles of Association of the Company (Resolution 10)
The Proposed Resolution 10, if passed, will update the Articles of Association of the
Company to be consistent with the current provisions of the Listing Requirements
of Bursa Malaysia Securities Berhad and to provide clarity to the provisions of
certain existing Articles as well as to reflect the current market practice.
F urther information on the Proposed Shareholders’ Mandate and Proposed
Amendments to the Articles of Association are set out in the Circular to Shareholders
dated 29 August 2007 accompanying the Company’s 2007 Annual Report.
T he Proposed Resolution 9, if passed, will enable the Company and/or its
subsidiaries to enter into Recurrent Related Party Transactions of a revenue or
trading nature which are necessary for the Group’s day-to-day operations. This
authority unless revoked or varied at a general meeting will expire at the next
Annual General Meeting.
Corporate Information
08 Financial Calendar
09 Corporate Information
10 Board of Directors
12 Profile of Directors
18 Management Team
20 Group Corporate Structure
22 Group Corporate Structure by Sector
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
08
Financial Calendar
FINANCIAL YEAR END
31 MARCH 2007
ANNOUNCEMENT OF RESULTS
First Quarter 29 August 2006
Second Quarter 28 November 2006
Third Quarter 23 February 2007
Fourth Quarter 30 May 2007
PUBLISHED ANNUAL REPORT AND FINANCIAL STATEMENTS ANNUAL GENERAL MEETING 29 August 2007
20 September 2007
DIVIDENDS
Interim
• Announcement Date 23 February 2007
• Entitlement Date
14 March 2007
• Payment Date 13 April 2007
Final
30 May 2007
25 September 2007
18 October 2007
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Corporate Information
09
as at 24 July 2007
Directors
AUDIT COMMITTEE
REGISTRAR
Chairman
Ong Ie Cheong
Symphony Share Registrars Sdn Bhd
Level 26, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel : (03) 2721 2222
Fax : (03) 2721 2530/31
REMUNERATION COMMITTEE
AUDITORS
Chairman
Datuk Haji Mohd Khamil bin Jamil (ex-officio)
PricewaterhouseCoopers
Chartered Accountants
11th Floor, Wisma Sime Darby
Jalan Raja Laut
50350 Kuala Lumpur
Tel : (03) 2693 1077
Fax : (03) 2693 0997
NOMINATION COMMITTEE
BANKS
Chairman
Affin Bank Berhad
AmBank Berhad
CIMB Bank Berhad
Malayan Banking Berhad
RHB Bank Berhad
Datuk Haji Abdul Rahman bin Mohd Ramli
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Chairman/Senior Independent Non-Executive Director
Datuk Haji Mohd Khamil bin Jamil
Group Managing Director
Mohd Redza Shah bin Abdul Wahid
Executive Director/Group Chief Operating Officer
Members
Dato’ Syed Mohamad bin Syed Murtaza
Dato’ Noorrizan binti Shafie
Tan Sri Ab. Rahman bin Omar
Members
Non-Independent Executive Director/
Executive Advisor-Automotive
Ong Ie Cheong
Non-Independent Non-Executive Director
Ibrahim bin Taib
Y. A. M. Tan Sri Dato’ Seri Syed Anwar
Jamalullail
Members
Independent Non-Executive Director
Ibrahim bin Taib
PRINCIPAL SOLICITORS
SECRETARY
Chan Choy Lin (MIA 3930)
Ong Ie Cheong
Tan Sri Marzuki bin Mohd Noor
Hisham Sobri & Kadir
Shahrizat Rashid & Lee
REGISTERED OFFICE
STOCK EXCHANGE LISTING
Tel : (03) 2052 8000
Fax : (03) 2052 8118
Main Board of Bursa Malaysia Securities Berhad
(Listed since 4 September 1992)
Stock Code : 1619
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
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Board of Directors
Mohd Redza Shah bin
ABdul wahid
Executive Director/
Group Chief Operating Officer
Datuk Haji Mohd
Khamil bin Jamil
Y.A.M. Tan Sri Dato’ Seri
Syed Anwar Jamalullail
Chairman / Senior Independent Non-Executive Director
tan sri aB. rahman
bin omar
Non-Independant Executive Director/
DRB-HICOM Berhad
(203430-W)
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2007 Annual Report
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11
Ibrahim bin Taib
Dato’ Syed Mohamad
bin Syed Murtaza
Independent
Non-Executive Director
Dato’ Noorrizan
binti Shafie
Ong Ie Cheong
datuk haji abdul
rahman bin mohd
ramli
Independent Non-Executive
Director
Tan Sri Marzuki BIN Mohd noor
Independent
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
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Chairman/Senior Independent Non-Executive Director
Y.A.M. Tan Sri Dato’ Seri Syed Anwar
Jamalullail, a Malaysian, aged 55, was
appointed Chairman when he joined the
Board on 28 October 2005. He is also
Chairman of the Nomination Committee.
He is a Chartered Accountant and Certified
Practising Accountant. He holds a Bachelor
of Arts (Accounting) Degree from Macquarie
University, Sydney, Australia.
Tan Sri Dato’ Seri Syed Anwar started
his career as a financial accountant with
Malaysia Airlines System Berhad in 1975,
then joined Price Waterhouse (Australia)
as Senior Auditor in 1979. 3 years later
he joined D & C Nomura Merchant Bank
Berhad as Manager, Investment. In 1985, he
joined Amanah Merchant Bank Berhad as
Manager, Corporate Finance. After pursuing
his own business from 1989 to October
1998, he joined Amanah Capital Partners
Berhad as Group Managing Director,
resigning on 1 March 2002. He served
as the Chairman of Malaysian Resources
Corporation Berhad and Media Prima
Berhad until his resignation on 12 January
2005 and 12 March 2005 respectively.
Tan Sri Dato’ Seri Syed Anwar is also the
Chairman of EON Capital Berhad, HICOM
Holdings Berhad, HICOM Berhad and Cahya
Mata Sarawak Berhad, and also sits on the
boards of Nestle (Malaysia) Berhad, Maxis
Communication Berhad and several private
limited companies. He is Chairman of the
Investment Panel of Lembaga Tabung Haji.
Tan Sri Dato’ Seri Syed Anwar does not
have any family relationship with any
other Director and/or major shareholder
of the Company and has no conflict of
interest with the Company. He has had no
convictions for offences within the past
ten years.
Tan Sri Dato’ Seri Syed Anwar attended all
eight Board Meetings of the Company held
in the financial year ended 31 March 2007.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
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Y.Bhg. Datuk Haji Mohd Khamil bin Jamil,
a Malaysian, aged 51, was appointed to the
Board on 19 July 2005 and became Group
Managing Director on 1 March 2006. He
is also a member of the Remuneration
Committee (ex-officio). He holds a Bachelor
of Laws (Honours) Degree from the
University of London and is a Barrister-atLaw at Gray’s Inn, England and was called
to the English Bar in 1983.
Datuk Haji Mohd Khamil had his first
executive career with Bank Bumiputra
Malaysia Berhad (BBMB) from August 1980
until December 1989. He was called to the
Malaysian Bar in September 1990 and was
a practicing partner of several legal firms
before venturing into business in 2001.
Datuk Haji Mohd Khamil also sits on
the boards of Edaran Otomobil Nasional
Berhad, HICOM Holdings Berhad, HICOM
Berhad, Horsedale Development Berhad
and several private limited companies.
Datuk Haji Mohd Khamil is a Director and
has a 10% shareholding in Etika Strategi
Sdn Bhd, a substantial shareholder of
the Company.
Datuk Haji Mohd Khamil does not have any
family relationship with any other Director
and/or major shareholder of the Company
and has no conflict of interest with the
Company. He has had no convictions for
offences within the past ten years.
Datuk Haji Mohd Khamil attended seven
out of eight Board Meetings of the
Company held in the financial year ended
31 March 2007.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
14
Executive Director/Group Chief Operating Officer
Non-Independent Executive Director/
Mohd Redza Shah bin Abdul Wahid, a
Malaysian, aged 44, was appointed as Executive
Director on 28 November 2006. He has been
the Group Chief Operating Officer since
1 March 2006. He holds a Bachelor of Science
in Economics in Industry and Trade (Honours)
from London School of Economics, University
of London. He also holds a Master of Science
of Economics in International Banking and
Finance from University of Wales, Cardiff. He
is an Associate Chartered Accountant (ACA)
and member of the Institute of Chartered
Accountants in England and Wales (ICAEW).
such as Silterra Malaysia Sdn Bhd, Khazanah
Nasional Berhad, Arab Malaysia Corporation
Berhad and Touche Ross & Co., London.
Prior to joining DRB-HICOM, he was the
Group Chief Executive Officer of Tradewinds
Corporation Berhad from 2002 to November
2005 and Acting Chief Executive Officer of
Tradewinds (M) Berhad from 2004 to 2005.
He has also served several other companies
Mohd Redza attended all three Board Meetings
of the Company held in the financial year ended
31 March 2007 following his appointment to
the Board on 28 November 2006.
Y.Bhg. Tan Sri Ab. Rahman bin Omar, a
Malaysian, aged 60, was appointed as
Executive Director on 16 December 2005. He
is also Executive Advisor to the Automotive
Division. He holds a Bachelor of Economics
(Honours) Degree from the University of
Malaya, Malaysia.
Tan Sri Ab. Rahman is the Chairman of
Edaran Otomobil Nasional Berhad, Perusahaan
Sadur Timah Malaysia Berhad and Chemical
Company of Malaysia Berhad, and also sits
on the boards of Wah Seong Corporation
Berhad, HICOM Holdings Berhad, Horsedale
Development Berhad and several private
limited companies.
From 1970 to 1973, Tan Sri Ab. Rahman served
in the Administration & Diplomatic Service of
the various Government Departments i.e. the
Statistics Department, the Ministry of Commerce
& Industry and the Ministry of Primary Industry
before opting out of civil service. He was
with Pineapple Cannery Malaysia Sdn Bhd
from December 1973 to April 1980, and with
Perusahaan Sadur Timah Malaysia Berhad from
May 1980 to July 1995. He was Managing
Director of Perusahaan Otomobil Kedua Sdn
Bhd from 1996 to April 2004.
Mohd Redza also sits on the boards of Edaran
Otomobil Nasional Berhad, HICOM Holdings
Berhad, Horsedale Development Berhad and
several private limited companies. He does
not have any family relationship with any
other Director and/or major shareholder of the
Company and has no conflict of interest with
the Company. He has had no convictions for
Tan Sri Ab. Rahman does not have any family
relationship with any other Director and/or
major shareholder of the Company and has
no conflict of interest with the Company. He
has had no convictions for offences within the
past ten years.
Tan Sri Ab. Rahman attended all eight Board
Meetings of the Company held in the financial
year ended 31 March 2007.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
15
Y.Bhg. Dato’ Noorrizan binti Shafie, a
Malaysian, aged 51, was appointed to the
Board on 28 November 2006. She is a member
of the Audit Committee. She holds a Bachelor
of Economics (Honours) Degree and Master
of Business Administration from the National
University of Malaysia (UKM).
Dato’ Noorrizan is currently the Under
Secretary, Monitoring and Control Division,
Treasury, Ministry of Finance. She started her
career in the Civil Service in 1981 and has
served in various positions with Economic
Planning Unit, Prime Minister’s Department,
Public Services Department and Ministry
of Finance.
Dato’ Noorrizan also sits on the board of
HICOM Holdings Berhad.
Dato’ Noorrizan is a Non-Executive Director
nominated by the Ministry of Finance
representing Khazanah Nasional Berhad, a
substantial shareholder of the Company. She
does not have any family relationship with any
the Company. She has had no convictions for
Dato’ Noorrizan attended two out of three
Board Meetings of the Company held in
the financial year ended 31 March 2007
following her appointment to the Board on
28 November 2006.
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CHARACTER
Encik Ibrahim bin Taib, a Malaysian, aged 52,
was appointed to the Board on 18 March 2004.
He is a member of the Nomination Committee.
He holds a Bachelor of Laws (Honours) Degree
from the University of Malaya, Malaysia and
a Master of Laws (LLM) from University
of London.
In July 1992, he was posted to Employees
Provident Fund Board and currently holds the
position of Deputy Chief Executive Officer.
Ibrahim started his career in Judicial Legal
Service in 1978 as a Magistrate in the
Magistrate Court, Jalan Duta, Kuala Lumpur.
Thereafter, he was transferred to Magistrate
Court, Segamat. In 1982, he was a Legal
Advisor with the Road Transport Department.
Later in 1986, he was posted to the Ministry
of Human Resources as a Legal Advisor.
In October 1989, he was attached to the
Attorney-General Chambers as a Deputy Public
Prosecutor for Selangor. In 1992, he served
as a Judge in the Session Court, Kota Bharu.
Ibrahim is a Non-Executive Director nominated
by the Company’s substantial shareholder, the
Employees Provident Fund Board. He does
not have any family relationship with any
the Company. He has had no convictions for
Ibrahim also sits on the boards of Bandar EcoSetia Sdn Bhd, Hartanah Progresif Sdn Bhd
and Kumpulan Wang Amanah Pencen.
Ibrahim attended all eight Board Meetings of
the Company held in the financial year ended
31 March 2007.
Ibrahim bin Taib
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
16
Y.Bhg. Datuk Haji Abdul Rahman bin Mohd
Ramli, a Malaysian, aged 68, was appointed
to the Board on 28 October 2005. He
is Chairman of the Audit Committee and
member of the Remuneration and Nomination
Committees. He is a member of the Institute
of Chartered Accountants in Australia (ACA),
the Malaysian Institute of Certified Public
Accountants (MICPA) and the Malaysian
Institute of Accountants (MIA).
Datuk Haji Abdul Rahman was General
Manager of United Asian Bank Berhad, Group
Managing Director of Pernas Sime Darby Sdn
Bhd, Group Chief Executive of Golden Hope
Plantations Berhad and Chairman of Johore
Tenggara Oil Palm Berhad prior to joining the
DRB-HICOM Board.
Y.Bhg. Dato’ Syed Mohamad bin Syed Murtaza,
a Malaysian, aged 59, was appointed to the
Board on 28 October 2005. He is also Chairman
of the Remuneration Committee and a member
of the Audit Committee.
Dato’ Syed Mohamad has over 35 years of
vast experience in business industries. He
completed his high school certificate at Penang
Free School. He then joined Kah Motors and
has since been appointed to key positions in
various organisations. He has gained wide
experience whilst holding various positions in
companies such as Shell Malaysia, Penang Port
Commission, etc.
Currently, Dato’ Syed Mohamad is the
Managing Director of Amstrong Auto Parts Sdn
Bhd and Amstrong Cycle Parts (Sdn) Berhad.
He also heads Penang Tourists Centre Bhd,
MITTAS Bhd, Motorcycle, Scooter Assembly &
Distributor Association of Malaysia and Usains
Group of Companies. He is the president of The
Datuk Haji Abdul Rahman is the Chairman of
Horsedale Development Berhad and Kenyir
Splendour Berhad, and also sits on the
boards of Malayan Banking Berhad, Maybank
International (L) Ltd., Maybank International
Trust (Labuan) Berhad, Maybank (PNG) Ltd,
Kuala Lumpur – Kepong Berhad, Malaysia
Nasional Insurance Berhad and Takaful
Nasional Sdn Bhd.
Datuk Haji Abdul Rahman does not have any
family relationship with any other Director
and/or major shareholder of the Company and
has no conflict of interest with the Company.
He has had no convictions for offences within
the past ten years.
Datuk Haji Abdul Rahman attended seven out
of eight Board Meetings of the Company held
in the financial year ended 31 March 2007.
Federation of Asian Motorcycle Industries and
Steering Committee International Motorcycle
Manufacturers Association.
Dato’ Syed Mohamad is the Chairman of Hunza
Consolidation Berhad and sits on the boards of
Universiti Sains Malaysia, Yayasan Bumiputra
Pulau Pinang Bhd, Boon Siew Credit Bhd,
Tourism Entrepreneur Centre Bhd and several
private limited companies. In addition, he has
held many other appointments at state and
national levels.
Dato’ Syed Mohamad does not have any family
major shareholder of the Company and has no
conflict of interest with the Company. He has
had no convictions for offences within the past
ten years.
Dato’ Syed Mohamad attended all eight Board
Meetings of the Company held in the financial
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
17
Mr Ong Ie Cheong, a Malaysian, aged 66,
was appointed to the Board on 28 October
2005. He is also a member of the Audit
and Remuneration Committees. He holds a
Bachelor of Science Degree from the University
of Malaya, Malaysia.
Mr Ong does not have any family relationship
with any other Director and/or major
shareholder of the Company and has no
conflict of interest with the Company. He has
had no convictions for offences within the past
ten years.
Mr Ong was the Executive Chairman of PPB
Group Bhd, Managing Director of Central
Sugars Refinery Sdn Bhd and a Board member
of PPB Oil Palms Berhad and Tradewinds (M)
Berhad. He also sits on the board of HICOM
Holdings Berhad, HICOM Berhad and several
private limited companies.
Ong Ie Cheong attended seven out of eight
Board Meetings of the Company held in the
financial year ended 31 March 2007.
Y. Bhg. Tan Sri Marzuki bin Mohd Noor,
a Malaysian, aged 59, was appointed to
the Board on 28 November 2006. He holds
a B.A. (Honours) from the University of
Malaya, Malaysia.
Malaysia to Japan from 1999 to July 2006
before his retirement.
He commenced his career in the Administrative
and Diplomatic Service of Malaysia in 1972 and
retired from the service in August 2006. From
1972 to 1988, he has served as Second/First
Secretary to the Embassy of Malaysia in Rome,
Baghdad in Iraq, Assistant High Commissioner
in Chennai, India, Commissioner in Hong Kong
and later as Minister-Counsellor/Minister in
Brussels, Belgium in 1988.
In 1990, Tan Sri Marzuki was appointed as
Deputy Director General ASEAN I, Ministry
of Foreign Affairs Malaysia and later in 1992
as Ambassador of Malaysia to Argentina
with concurrent accreditation to Paraguay
and Uruguay. In 1996 he was appointed as
High Commissioner of Malaysia to India
(concurrently accredited as Ambassador to
Nepal). He was also the Ambassador of
Ong Ie Cheong
Tan Sri Marzuki also sits on the board of
Horsedale Development Berhad and several
private limited companies.
Tan Sri Marzuki does not have any family
major shareholder of the Company and has
no conflict of interest with the Company. He
has had no convictions for offences within the
past ten years.
Tan Sri Marzuki attended all three Board Meetings
of the Company held in the financial year ended
31 March 2007 following his appointment to the
Board on 28 November 2006.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
18
Management Team
1
2Tan Sri Ab. Rahman bin Omar
Executive Advisor, Automotive
3
Datuk Abu Samah bin Bachik
Advisor, Services Companies
4Abdul Malek bin Abdul Majid
roup Director, Human Resource &
G
Administration
5
Datuk William Chong Wei Yoon
Group Director, Assigned Business
6Mohd Paudzi bin Abdullah
ead, Automotive Component &
H
Engineering
7Nik Hamdam bin Nik Hassan
Head, Automotive Distribution
8Benedict Ho Kok Keong
Head, Business Development
4
5
6
7
3
1
2
8
DRB-HICOM Berhad
(203430-W)
9Mohd Redza Shah bin
Abdul Wahid
2007 Annual Report
Group Chief Operating Officer
10Nik Najihah binti Nik Wan
Acting Head, Legal Affairs
11 Chan Choy Lin, Carol
Principal Company Secretary
12Raja Shahrul Azman
bin Raja Omar
Head, Public Affairs & Investor Relations
13Amir bin Salleh
Group Director, Property
14Lim Teck Gam
Head, Group Procurement
15Mohammed Shukor bin Ismail
Acting Head, Internal Audit - EIP
16 Dato’ Ir. Zahri bin Abd Ghani
Head, Infrastructure & Contract
17 Khalid bin Abdol Rahman
12
Head, Corporate Planning
14
13
15
17
16
11
10
9
We build
performance
19
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Group Corporate Structure
20
(Operating Companies) as at 31 March 2007
Pusat Pemeriksaan Kenderaan
Berkomputer Sdn. Bhd.
E.I. : 100%
Motosikal Dan Enjin
Nasional Sdn. Bhd.
E.I. : 55%
Puspakom Teknik
Sdn. Bhd.
E.I. : 100%
Edaran Modenas
Sdn. Bhd.
E.I. : 55%
Uni.Asia Life
Assurance Berhad
E.I. : 51%
Multi Automotive Service
and Assist Sdn. Bhd.
Equity : 55%
Scott & English Electronics
Holdings Sdn. Bhd.
E.I. : 70%
Desa Puchong
Sdn. Bhd.
E.I. : 100%
HICOM Communications
Sdn. Bhd.
E.I. : 100%
Scott & English
Electronics Sdn. Bhd.
E.I. : 70%
HICOM Network
Services Sdn. Bhd.
E.I. : 100%
Edaran Otomobil
Nasional Berhad
E.I. : 29.31%
EON Capital Berhad
Siemens VDO Instruments
MY Sdn. Bhd.
E.I. : 33.33%
NSE Development
Sdn. Bhd.
E.I. : 100%
Bukit Kledek
Development Sdn. Bhd.
E.I. : 100%
HICOM Teck-See
Manufacturing Malaysia Sdn. Bhd.
E.I. : 51%
HICOM Teleservices
Sdn. Bhd.
E.I. : 100%
Ladang Kupang
E.I. : 100%
HICOM Holdings
Berhad
E.I. 100%
Uni.Asia General
Insurance Berhad
E.I. : 34.73%
HICOM Engineering
Sdn. Bhd.
E.I. : 100%
Gadek (Malaysia)
Berhad
E.I. 100%
Ladang Gadek Development
Sdn. Bhd.
E.I. : 100%
Mega Consolidated
Sdn. Bhd.
E.I. 100%
Uni.Asia Capital
Sdn. Bhd.
E.I. : 51%
Flora Areana
Sdn. Bhd.
Equity : 100%
HICOM Diecastings
Sdn. Bhd.
E.I. : 100%
DRB-HICOM Auto
Solutions Sdn. Bhd.
E.I. 100%
DRB-HICOM Information
Technologies Sdn. Bhd.
E.I. : 90%
Malaysian Truck &
Bus Sdn. Bhd.
E.I. : 80%
Proton City Development
Corporation Sdn. Bhd.
E.I. : 60%
KL Airport Services
Sdn. Bhd.
E.I. : 60%
HICOM Automotive
Plastic (Thailand) Ltd.
E.I. : 50.99%
Alam Flora
Sdn. Bhd.
E.I. : 55%
Oriental Summit
Industries Sdn. Bhd.
E.I. : 70%
KLAS Engineering
Services Sdn. Bhd.
E.I. : 60%
E.I. : 20.20%
HICOM-HONDA
E.I. : 48%
HICOM-YAMAHA
E.I. : 45%
SUZUKI Motorcycle
Malaysia Sdn Bhd
E.I. : 29%
ZF Steerings (Malaysia)
Sdn. Bhd.
E.I. : 30%
TRW Steering &
Suspension (Malaysia) Sdn. Bhd.
E.I. : 20%
Niro Ceramic (M)
Sdn. Bhd.
E.I. : 24.50%
Navi & Map Sdn. Bhd.
E.I. : 20%
Automotive Components
Engineering Centre Sdn. Bhd.
E.I. : 70%
PHN Industry
Sdn. Bhd.
E.I. : 53.47%
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
We build
Suzuki Malaysia
Automobile Sdn. Bhd.
E.I. : 100%
21
foundations
Honda Malaysia
Sdn. Bhd.
E.I. : 34%
Hicomobil Sdn. Bhd.
E.I. : 100%
Isuzu Malaysia
Sdn. Bhd.
E.I. : 49%
DRB-HICOM Defence
Technologies Sdn. Bhd.
E.I. : 100%
Imatex Sdn. Bhd.
E.I. : 100%
Imatex Management
Services Sdn. Bhd.
E.I. : 100%
USF-HICOM (Malaysia)
Sdn. Bhd.
E.I. : 100%
Directional (Malaysia)
Sdn. Bhd.
E.I. : 100%
Automotive Corporation
(Malaysia) Sdn. Bhd.
E.I. : 100%
Auto Prominence (M)
Sdn. Bhd.
E.I. : 100%
Automotive Manufacturers
E.I. : 93%
Scott & English
E.I. : 70%
Comtrac Sdn. Bhd.
HICOM Berhad
E.I. : 70%
E.I. : 100%
HICOM United Leasing
Sdn. Bhd.
E.I. : 70%
Comtrac Trading
Sdn. Bhd.
E.I. : 70%
Glenmarie Cove
E.I. : 89.50%
Scott & English
(Cambodia) Ltd.
E.I. : 70%
Comtrac Builders
Sdn. Bhd.
E.I. : 67.90%
HICOM Megah
Sdn. Bhd.
E.I. : 74.63%
Myanmar Scott & English
Company Ltd.
E.I. : 70%
Comtrac Glenview
Sdn. Bhd.
E.I. : 35.70%
Scott & English Trading
(Sarawak) Sdn. Bhd.
E.I. : 35.70%
Sectorial
Automotive
Services
Property & Construction
Investment Holding
Note
E.I. DRB - HICOM Group’s Effective Interest
Corwin Holding
Pte. Ltd.
E.I. : 67.17%
Defence Services
Sdn. Bhd.
E.I. : 100%
HICOM Properties
Sdn. Bhd.
E.I. : 100%
Kenyir Splendour
Berhad
E.I. : 100%
HICOM Facility
Management Berhad
E.I. : 100%
HICOM Indungan
Sdn. Bhd.
E.I. : 100%
Rebak Island Marina
Berhad
E.I. : 60%
Horsedale Development
Berhad
E.I. : 70.60%
HICOM-Gamuda
E.I. : 35.30%
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Group Corporate Structure by Sector
22
as at 31 March 2007
automotive
100.00% HICOM Diecastings Sdn. Bhd.
53.47% PHN Industry Sdn. Bhd.
100.00% USF-HICOM (Malaysia) Sdn. Bhd.
51.00% HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.
100.00% Automotive Corporation (Malaysia) Sdn. Bhd.
50.99% HICOM Automotive Plastic (Thailand) Ltd.
100.00% Directional (Malaysia) Sdn. Bhd.
49.00% Isuzu Malaysia Sdn. Bhd.
100.00% HICOM Engineering Sdn. Bhd.
48.00% HICOM-HONDA Manufacturing Malaysia Sdn. Bhd.
100.00% DRB-HICOM Auto Solutions Sdn. Bhd.
45.00% HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.
100.00% HICOMOBIL Sdn. Bhd.
34.00% Honda Malaysia Sdn. Bhd.
100.00% Suzuki Malaysia Automobile Sdn. Bhd.
33.33% Siemens VDO Instruments MY Sdn. Bhd.
93.00% Automotive Manufacturers (Malaysia) Sdn. Bhd.
30.00% ZF Steerings (Malaysia) Sdn. Bhd.
80.00% Malaysian Truck & Bus Sdn. Bhd.
29.31% Edaran Otomobil Nasional Bhd.
70.00% Oriental Summit Industries Sdn. Bhd.
29.00% Suzuki Motorcycle Malaysia Sdn. Bhd.
70.00% Automotive Components Engineering Centre Sdn. Bhd.
20.00% TRW Steering and Suspension (Malaysia) Sdn. Bhd.
55.00% Motosikal Dan Enjin Nasional Sdn. Bhd.
20.00% Navi & Map Sdn. Bhd.
55.00% Edaran Modenas Sdn. Bhd.
services
100.00% Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd.
100.00% HICOM Communications Sdn. Bhd.
100.00% HICOM Teleservices Sdn. Bhd.
100.00% HICOM Network Services Sdn. Bhd.
90.00% DRB-HICOM Information Technologies Sdn. Bhd.
70.00% Scott & English (Malaysia) Sdn. Bhd.
70.00% Scott & English Electronics Sdn. Bhd.
60.00% KL Airport Services Sdn. Bhd.
55.00% Alam Flora Sdn. Bhd.
51.00% Uni.Asia Life Assurance Berhad
34.73% Uni.Asia General Insurance Berhad
20.20% EON Capital Berhad
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
23
Property &
Infrastructure
100.00% Imatex Sdn. Bhd.
60.00% Proton City Development Corporation Sdn. Bhd.
100.00% HICOM Berhad
60.00% Rebak Island Marina Berhad
100.00% HICOM Properties Sdn. Bhd.
35.30% HICOM-Gamuda Development Sdn. Bhd.
100.00% HICOM Indungan Sdn. Bhd.
24.50% Niro Ceramic (M) Sdn. Bhd.
100.00% Kenyir Splendour Berhad
100.00% Bukit Kledek Development Sdn. Bhd.
100.00% NSE Development Sdn. Bhd.
100.00% Ladang Kupang Development Sdn. Bhd.
100.00% Ladang Gadek Development Sdn. Bhd.
100.00% Desa Puchong Sdn. Bhd.
89.50% Glenmarie Cove Development Sdn. Bhd.
74.63% HICOM Megah Sdn. Bhd.
70.60% Horsedale Development Berhad
70.00% Comtrac Sdn. Bhd.
Defence
100.00% DRB-HICOM Defence Technologies Sdn. Bhd.
100.00% Defence Services Sdn. Bhd.
Subsidiary Companies
Jointly Controlled Entities
Associated Companies
Performance Review
39
%
43
%
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
25
13 5
%
%
26
Chairman’s Statement
31
Group Managing Director’s Review of Operations
33
• Automotive Sector
38
• Services Sector
41
• Property & Infrastructure
45
• Defence Sector
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
26
We build the
FUTURE
“The future will bring a whole
new driving experience.”
Chairman
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
27
Dear Shareholders,
It is my privilege to present, on behalf of the Board of
Directors, the Annual Report of DRB-HICOM Berhad for the
financial year ended 31 March 2007. The year under review
has seen the Group facing and overcoming many challenges
prevalent throughout the year, and I am confident of the
Group’s prospects in the coming financial year.
Overview
The Group has moved swiftly to capitalise on opportunities
offered and to improve operating efficiency, including
through the continued application of cost reduction
measures. The Group is pro-actively finding solutions to
the challenges posed by globalisation and is pursuing
avenues and opportunities to enhance its business
platform by focusing on good prospects within our core
business sectors.
In overcoming the challenges the Group faced during
the year, we successfully engaged our strategic foreign
partners, by allowing these principals to become the
majority shareholders in some of our former subsidiary
companies. This was done to ensure the long term
participation and commitment of the principals and
to assist the companies to compete in the market by
leveraging our partner’s experience in the global market.
Ladies and gentlemen,
There was a significant downturn in the automotive
industry in 2006. Total Industry Volume of vehicle sales fell
by 10.9 percent in 2006 as compared to 2005, from 551,042
units to 490,768 units. The non-national car segment, in
which the Group is involved experienced a drop of 16.8
percent from the previous year, while the national car
segment contracted by 10.2 percent. This was caused by
the slower second hand car market, tighter credit controls
by financial institutions and much lower trade in value for
cars when consumers sought to buy new cars.
The challenging environment that characterised the
automotive industry in the year under review subsequent
to the introduction of the National Automotive Policy (NAP)
was a motivating factor for the Group’s automotive sector.
To seize the opportunities offered by the NAP, DRBHICOM has begun to place more emphasis on assembling
Completely-Knocked-Down (CKD) versions for the various
vehicle makes and models in our stable. February 2007 saw
the launch of the robotic arm assembly line for the Suzuki
Swift CKD at the Automotive Manufacturers Malaysia
plant in Pekan, and we look forward to assembling other
CKD models at our facilities there. We are aggressively
pursuing vehicle assembly deals for our Group companies
and have been successful in streamlining our product
line by placing more importance on our better selling
models.
In addition, the Group has been diligently pursuing
opportunities to penetrate the global auto components
market, and has achieved a degree of success with
component orders received from other parts of Asia as
well as Europe and North America. The Group will build
on these successes to make the DRB-HICOM Group a
recognised player in the worldwide auto components
market. The Group’s automotive division remained our
largest revenue generator, bringing in more than RM1.277
billion in revenue and accounting for 44% of the Group’s
total revenue.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
28
The Group’s Services sector turned
in a strong performance. The Group’s
subsidiary companies PUSPAKOM and
KLAS secured long term concession
agreements with the government
and with Malaysian Airports Berhad
respectively. This will assist in
ensuring the continued contribution
of the companies to the Group’s
revenue into the foreseeable future.
The future for Alam Flora Sdn Bhd
is also looking bright, as the newly
approved Solid Waste Management
Bill clears the way for the signing
of a concession agreement with the
Federal Government. Our financial
services sector, represented by EON
Capital Berhad and the Uni.Asia
Group also improved the Group’s
profitability. The Sector accounted for
42.7% of the Group’s total revenue
for the financial year under review.
D R B - H I C O M ’s P r o p e r t y &
Infrastructure sector performed
admirably during the financial year
under review. The Group’s premier
property developments such as
Glenmarie Cove are actively marketed
to foreigners as part of the Malaysia
My Second Home programme and
these properties continue to receive
warm interest from our overseas
neighbours. Glenmarie Residences, a
premier luxury development featuring
exclusive living and excellent facilities
was fully sold out within a very short
time. With tourism development
being one of the key thrusts of the
Ninth Malaysia Plan, the Group
will continue to promote its resort
properties such as the Taj Rebak
Island Resort and Lake Kenyir Resort
& Spa as a destination of choice for
both domestic and overseas tourism,
especially eco-tourism.
DEFTECH maintained its position as
the country’s leading supplier of land
based defence vehicles and produced
the first Made-in-Malaysia armoured
vehicle, the AV4. The company is
marketing the AV4 to selected
markets overseas. DEFTECH also
expanded into the civilian transport
sector and successfully completed
orders for several hundred buses for
Rapid KL and other public transport
companies. The Group is optimistic
that more orders will be forthcoming
as improving urban transportation
under the Ninth Malaysia Plan calls
for an increase in the number of
buses available to the public.
The Group has largely been able
to cope with the changes and
challenges imposed by the shifting
landscape of the nation’s auto
industry due to our strength and
diverse business interests. These
have allowed us to utilise the
existing synergy within the Group
to withstand the adjustment in the
auto industry and emerge stronger
and more competitive than before.
Financial Highlights
In 2006/2007, the Group has been
able to streamline our existing
businesses, divest non-core business
entities and strengthening our core
subsidiary companies. As a result, the
Group achieved a profit before tax of
RM187.1 million for the financial year
ended 31 March 2007, on the back
of RM2.9 billion in revenue. DRBHICOM is recommending a final gross
dividend of 2.5 sen per share for the
financial year under review together
with an initial dividend of 1 sen.
Key Initiatives
The Group continues to strengthen
and consolidate its four core sectors
and implement various operating
efficiency improvements and shared
services and initiatives while
increasing collaboration with our
foreign partners to leverage on their
expertise. Functions such as Group
procurement were centralised to
ensure volume-based savings for the
Group and its subsidiary companies.
Financial services for the Group were
centralised in the Financial Services
and Treasury Division, allowing for
savings in manpower and an increase
in operating efficiency.
To give the staff a stronger feeling
of belonging to the Group, the
DRB-HICOM Sports Carnival 2007
was organised in June 2007. The
three day sports and family carnival,
which was held at the International
Islamic University campus brought
together staff from all of the Group’s
companies and gave them a chance
to interact and compete with one
another in the spirit of friendship
and camaraderie.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
29
Human Resources
Development
Change management pervaded the
financial year. In support of this key
initiative, due emphasis was given
to communication, dialogues and
employees engagement. Having a
feedback survey and suggestion
scheme implemented further
increased the employee value
proposition. In shaping our future,
the Company adopted a different
set of Vision, Mission and Values
that would refocus the organisation
t o w a r d s c l e a r, a c h i e v a b l e a n d
inspiring goals.
Critical to these efforts were the
harmonisation of employment
terms and the imposition of higher
governance values as seen through
a revised set of ethical standards,
business practices and personal
asset transparency.
An emphasis was placed on ensuring
all the Group’s senior personnel
hold an increased accountability and
understanding of their roles. This
was managed by introducing Key
Performance Indicators (KPIs) to their
work functions. In addition, succession
planning and the importance of
pulling the best young talent into
the company was stressed in the
Management Trainee Programme,
where promising young candidates
were brought into the company and
given exposure to key aspects of the
Group’s operations.
Commendable employee relations
culminated in 8 collective agreements
being concluded to full satisfaction.
Environmental management and
safety initiatives were further
given due importance with several
companies obtaining the OSHAS
18000 and ISO 14000 certifications.
Refinements to procedures, policies
and limits of authority further
improved the stewardship function.
Corporate Social
Responsibility
The Group continues to be supportive
of the developmental programmes
that shape the Malaysian youth, as
evidenced by the launch of the DRBHICOM DEFTECH Scholarships on 15
September 2006 and the signing of
a Memorandum of Understanding
between the Group and the
Community College Department of
the Ministry of Higher Education in
February 2007. These programmes
provide opportunities for deserving
students to further their studies in
fields that the Group is involved in.
These programmes are part of our
way of answering the Government’s
call for private companies to play
their part in helping Malaysian
youths become contributors to
the economy. In addition, the
Group has given the opportunity
to a number of fresh university
graduates to experience working
life as management trainees, giving
them valuable working experience
and helping to improve their value
in the job market, in accordance to
the Government’s request to private
companies.
DRB-HICOM was also involved in
relief efforts for the victims of the
floods in Johor in January and
February 2007. The Group sent relief
supplies such as rice, mattresses,
baby formula and other daily needs
to several villages in the state.
The relief programme continued
throughout early 2007.
Outlook and Prospects
DRB-HICOM has successfully
overcome the challenges faced
during the year under review, and
has emerged leaner, stronger and
more efficient than before. The
coming financial years will bring new
challenges, but the Group will stay
focused and will continue its efforts to
reward its shareholders with the best
possible returns for their investments.
With the improvement in the Asian
business climate as evidenced by
the rising indices of almost all of the
region’s major bourses, the Group is
optimistic that the coming year will
bring about significant opportunities
that will improve our position within
the local market.
With some of the restructuring
plans for our subsidiaries set to
accelerate in the coming financial
year, we look forward to having an
even more efficient organisation,
fully committed to pursuing viable
opportunities in the local and global
markets. Over the long term, the
Group is well placed in its core
sectors as it continues to maintain
a stable of products that are both
desirable and marketable. The Group
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
30
is confident of maintaining its client
base and expanding into new market
segments.
The Malaysian Gross Domestic
Product, GDP, is projected to grow
by 6% in 2007, up from 5.9% in 2006,
driven by sustained global growth
and resilient local demand. Growth
will be stronger in the second half
of the year, fuelled in part by early
implementation of Ninth Malaysia
Plan projects. The Average Lending
Rate remained close to historical
lows at 6.57% at the end of 2006,
and continued to support economic
activities. The continuation of this
trend in 2007 will increase consumer
spending and will have a spill-over
effect on the Group’s companies as
well.
T h e G r o u p ’s c o m p a n i e s w i l l
strategically manoeuvre to take
advantage of the opportunities
inherent in an expanding economy.
This positive growth is expected to
fuel strong performances especially
in the Group’s service related
companies in 2007. KLAS was
awarded a 50 year concession with
Malaysia Airports Holdings Berhad,
while the approval of the Solid Waste
Management Bill in early July 2007
will benefit our subsidiary, Alam
Flora Sdn Bhd. PUSPAKOM has been
awarded an extension of its concession
agreement, in addition to which the
Government agreed to a revision of
PUSPAKOM’s rates and increased
its scope of service to include presale inspection of previously owned
private motor vehicles.
Members. The mix of new personnel
and stable membership means that
we have a Board of Directors that is
fully capable of leading the Group
into the future. I fully expect that
their blend of passion, experience,
business acumen and dynamism will
see the Group taking strong strides
in our chosen fields and lead the
Group into a new period of enhanced
prosperity and opportunities.
Ladies and Gentlemen,
Acknowledgements
The Board of DRB-HICOM has
experienced a year of stability after
the changes in the previous financial
year, and I would like to thank the
Management team, led by Datuk Haji
Mohd Khamil bin Jamil for a year that
brought achievements to the Group.
I would also like to acknowledge the
contribution of Dato’ Hajjah Safiah
binti Basrah, who has left us after
rendering many valued services to
the Group.
I would like to also take the
opportunity to welcome aboard Mohd
Redza Shah bin Abdul Wahid, Dato’
Noorizan binti Shafie and Tan Sri
Marzuki bin Mohd Nor as new Board
On behalf of the Board, I would like
to thank the employees of the DRBHICOM Group, as they are the major
core around which all our successes
are built. Their commitment, loyalty
and passion is our driving strength
as we embark on new ventures in
the coming years and with their
united efforts, we will carry the DRBHICOM name to greater heights.
Last, but definitely not least, I would
like to voice my appreciation to our
shareholders, valued customers,
bankers, business associates and the
various Government Authorities for
their continued support and faith in
the Group. Our number one priority
is to see this faith rewarded with the
best returns, the best products, the
best partnerships and a full and total
commitment to seeing the Group
forge ahead in our chosen fields into
the foreseeable future.
Thank you.
Y.A.M. TAN SRI DATO’ SERI SYED ANWAR JAMALULLAIL
Chairman
DRB-HICOM Berhad
(203430-W)
Group Managing Director’s
Review of Operations
We build
quality
“We are driving quality and
productivity even further.”
2007 Annual Report
31
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
32
Overview
This past financial year
has been one of both
successes and challenges
for the DRB-HICOM
Group. I am pleased
to submit to you a
comprehensive overview
of the Group’s operations
for the financial year
ended 31 March 2007.
During the financial year
under review, the Group’s
new Management
continued to strengthen
its position as a leading
business organisation and
to bring new and exciting
business opportunities.
Group Managing Director’s Review of Operations
The introduction of the National Automotive
Policy (NAP) in March 2006 resulted in both
challenges and opportunities for the Group’s
Automotive Division. However, the Services
and Property & Infrastructure Divisions have
played a significant role in cushioning the
effect of the changes in business climate
of the automotive sector on the Group. In
total, the Group recorded a Profit Before
Tax of RM187.1 million on the back of total
revenue of RM2.9 billion.
During the financial year under review,
the Group’s main thrusts were aimed at
consolidating our existing businesses,
streamlining our operations and maximising
staff efficiency through innovative
programmes and training. In addition, we
divested some of our non-core and nonperforming business interests to further
strengthen the Group’s overall financial
standing. The Management was able to
return the Group to profitability after a
incurring a loss due to the one time write
off of certain Group assets and impairment
charges on some non-core properties in the
previous financial year. This was attributed
to the efforts of the Group’s leadership in
strengthening our fundamentals, trimming
excesses and building the platforms required
for future growth. This strengthening of our
human capital is a fundamental requirement
for success, and I am confident that we will
perform to the highest levels.
DRB-HICOM Berhad
(203430-W)
Automotive Sector
In building engineering expertise and excellence, we are building the
future of strategic global growth and partnerships
2007 Annual Report
33
DRB-HICOM Berhad
(203430-W)
| Automotive Sector
2007 Annual Report
34
We build
innovation
Auto Distribution
During the financial year under
review, the Group’s Automotive
Division faced and overcame several
challenges. With the National
Automotive Policy’s promotion of
Completely-Knocked – Down (CKD)
models and the Group’s previous
direction of importing CompletelyBuilt-Up (CBU) vehicles, the
Group’s Management directed the
Automotive Division to minimise the
impact of the softening demand for
CBU vehicles. The overall softening
market for passenger vehicles led to
a 10.9 percent contraction in vehicle
sales during the year.
Sales of Honda passenger vehicles
rose 0.2 percent in the year ended
31 December 2006 as compared to
the previous year. This is indicative of
overall customer faith in the brand,
as well as the launch of the new
Honda Civic sedan, which enjoyed
an increase of 101% in sales volume.
The Honda City remained one of the
market leaders in the non-national
economy sedan segment. The Honda
assembly facility in Pegoh, Melaka,
was instrumental in maintaining the
high volume of sales. The plant, one
of only four Honda Constant Velocity
Joint (CVJ) manufacturing facilities
in the world, continued to export
its products to countries around the
world, including Thailand, Pakistan,
Turkey and the United Kingdom.
The Group remains one of the leading
commercial vehicle distributors with
a 30% market share in the light duty
truck category through our subsidiary,
Automotive Corporation Malaysia
Sdn. Bhd. (ACM), which distributes
Isuzu light, medium and heavy trucks.
The Group’s companies have begun
seizing the opportunities afforded by
the NAP to introduce CKD models
of some of the popular car brands.
Following the popularity of the Suzuki
DRB-HICOM Berhad
| Automotive Sector
(203430-W)
2007 Annual Report
35
Automotive Components
Swift CBU model in the previous
year, the Group decided to initiate a
programme to assemble the Suzuki
Swift locally. During the year under
review, a robotic welding line was
set up at the Group’s automotive
assembly complex in Pekan, Pahang.
This initial CKD project is an indication
of the direction taken by the Group’s
companies to maximise the benefits
under the NAP.
Complementing the move towards
producing more CKD models at the
Group’s assembly facilities is the
increased involvement of its foreign
partners in the Group’s subsidiary
companies. Global automotive leader
General Motors Corporation signed
a Memorandum of Understanding
to form a distribution joint venture
company with DRB-HICOM, where
they will be able to use their
product expertise and market
leading experience to drive the joint
venture company to a higher level of
performance. Isuzu Motor Corporation
of Japan has also become more
directly involved in operations at
the Group’s Malaysian Truck & Bus
Sdn Bhd facility in Pekan, Pahang
by taking majority stake of 51%.
The Group expects to pursue and
seal more strategic alliances with
our foreign partners throughout the
course of this financial year. Obtaining
the long term commitment of our
foreign partners is a key initiative
for the Group, as it will assist the
Group’s companies to compete in a
global market.
While these new developments are
taking place, the Group remains
committed to bringing in a wide
range of segment leading models
for its consumers. These products,
including the well received Mitsubishi
Triton, Isuzu D-Max, Audi A-series
sedans, Chevrolet compact and sedan
cars, Volkswagen vehicles and other
models from the Group’s subsidiary
and associated companies continue
to compete actively for market share
within their respective segments.
In meeting the challenges of the
decline total industry volume (TIV) of
motor vehicles in 2006, the Group’s
automotive component companies
increased their efforts to diversify
their product range, including
expanding the customer base to nonnational cars and foreign Original
Equipment Manufacturers (OEMs)
as well as intensifying research and
development (R&D) efforts to produce
new components for different market
segments local and abroad. Most of
our automotive component companies
are accredited to international
standards for process, environment
and safety, namely ISO/TS 16949,
ISO 14001 and OHSAS 18001 and
this serves as a strong basis for the
automotive component companies to
compete in the global market.
HICOM Diecastings Sdn. Bhd. (HDSB),
a leading Tier-1 high-pressure
aluminum diecast part manufacturer,
had strengthen its position as suppiler
in the global component market.
With its diversified customer base of
auto and non-auto OEMs locally and
abroad, HDSB supplies specialised
steering housing components to
i n t e r n a t i o n a l Ti e r- 1 c o m p a n i e s
such as ZF Malaysia, ZF’s overseas
operations (USA and Germany) and
TRW Malaysia. In the upcoming
year, sales will be expanded with
its new export business to supply
components to Emerson of USA and
ZF-Steering’s overseas operations.
DRB-HICOM Berhad
(203430-W)
| Automotive Sector
2007 Annual Report
36
Apart from being directed to the
global export market, automotive
component companies are also
diversifying into non-auto component
market. HICOM Engineering Sdn.
Bhd. (HESB) for example, had
ventured into the supplying of iron
shoulder casts to a world-renowned
Railway Fastening System supplier,
Pandrol from UK. Through Pandrol,
HESB was entrusted to develop and
supply the cast shoulder component
for Keretapi Tanah Melayu Berhad
(KTMB) for the North – South
double-track railway project where
the first delivery will take place in
September 2007. Moving forward,
HESB is aggressively exploring
avenues to supply this railway track
component to other railway track
projects overseas and export of
automotive crankshaft.
HICOM-Teck See Manufacturing
Malaysia Sdn. Bhd. (HTSM), is
a Tier 1 automotive plastic parts
vendor whose main products include
bumper modules, instrument panel
modules and door trim assembly.
HTSM main customers in Malaysia
include Proton, Perodua, Johnson
Controls, Honda and Toyota. Through
HTSM’s fully-owned subsidiary,
HICOM Automotive Plastic (Thailand)
Ltd in Rayong, Thailand, HTSM has
been supplying components such
as bumpers, trunk lid handles and
radiator grilles for General Motors
and Ford in Thailand. HTSM charted
another milestone in February 2007,
when they started mass production
of door handles for export to Brose,
a Tier 1 company in Germany and
has secured an annual volume of
750,000 sets. This has provided HTSM
with a strong testimonial and a solid
platform to expand their business at
the global level.
Oriental Summit Industries Sdn.
Bhd. (OSI) is a leader in providing
stamping, welding, painting and
assembly of metal components. As
a Tier 1 manufacturer of metal-based
products, OSI’s main customers
include Proton, Perodua, Toyota
and Volvo. Moving forward, OSI
is working closely on a potential
business contract with a Tier 1
company in Germany. It is expected
that OSI’s excellent standards of
manufacturing will pave the way for
new businesses abroad.
DRB-HICOM Berhad
| Automotive Sector
(203430-W)
2007 Annual Report
37
PHN Industry Sdn. Bhd. (PHN),
another Tier-1 manufacturer and
supplier of metal-based components,
has diversified into manufacturing of
stamping dies. PHN’s main customers
include Proton, Perodua, Honda
and Toyota. During the year under
review, PHN had secured new parts
from these companies which include
supply of modular components. In
the forthcoming year, sales will be
augmented with new exports of dies
to overseas market as well as supply
of body parts for the replacement
market (REM).
During the period under review
the motorcycle engine companies
remained favourable where both
Hicom-Honda Manufacturing Malaysia
Sdn. Bhd. (HHMM) and HICOMYamaha Manufacturing Malaysia
Sdn. Bhd. (HYMM) achieved strong
sales on the back of the good sales
performance by Honda and Yamaha
motorcycles in the domestic market.
H icom - H o n d a M a n u f a c t u r i n g
Malaysia Sdn. Bhd. (HHMM), which
manufactures engines for Honda
motorcycles enhanced its positioning
for regional and global growth as a
Tier 1 supplier to Honda motorcycle
assembly companies. HHMM
sustained its exports of engine
components to regional Honda
assemblers in Vietnam, Indonesia
and Philippines.
H I C O M - Ya m a h a M a n u f a c t u r i n g
Malaysia Sdn. Bhd. (HYMM)
experienced encouraging sales due
to the upsurge of Yamaha motorcycle
sales in 2006 and increased exports
of engine components to Motori
Minarelli from Italy. HYMM charted
another milestone when the trial run
of HYMM’s newly developed engine
for the new Yamaha motorcycle
135LC was completed successfully in
January 2007. Mass production of the
new engine started in April 2007 and
this will potentially provide HYMM a
solid platform to move forward.
The performance of other joint
ventures with European companies
Siemens VDO Instruments MY
Sdn Bhd, ZF Steerings (Malaysia)
Sdn Bhd and TRW Steering &
Suspension (Malaysia) Sdn Bhd –
was encouraging as their customer
base expanded internationally to
counter the drop in local automotive
TIV. In addition, exports to parent
companies in Europe increased in
2006, driving growth further and
countering a drop in domestic sales.
Services Sector
By providing solutions to urban needs and demands, we are building
value in the maintenance of public services
|
DRB-HICOM Berhad
Services Sector
(203430-W)
2007 Annual Report
39
The Group’s Services Sector performed
strongly in the financial year under review,
which helped to buffer the downturn in the
Automotive Sector. In general, the Group’s
subsidiaries in the sector showed an
increase in revenues and profits during the
year under review, and the outlook for the
sector remains strong for the foreseeable
future. The sector accounted for 42.7% of
the Group’s revenue and the outlook for the
sector remains strong in this financial year.
The Group remains committed to assisting
Government agencies by providing services
through its subsidiary companies that hold
concession agreements. The privatisation
of motor vehicle inspections to Pusat
Pemeriksaan Kenderaan Berkomputer Sdn
Bhd, PUSPAKOM, also allowed the company
to make a significant contribution to the
Group’s revenue. In the financial year ending
31 March 2007, PUSPAKOM inspected a
total of 2.43 million commercial and private
vehicles nationwide. The continued growth
in the commercial vehicle sector saw the
company’s revenues increase despite the
lower number of private vehicle inspections
during the period under review. PUSPAKOM
maintains its commitment to a high level of
service, with most of its branches already
having received MS ISO9001:2000 certification.
The company added 4 branches during this
financial year, making it a total of 64 branches
nationwide. PUSPAKOM is the recognised
outsource agency for 16 banks and finance
companies to verify vehicle status and
roadworthiness prior to loan disbursement.
The company is also accredited by Amanah
Raya Berhad (ARB) to inspect and conduct
vehicle valuations for ARB. With the new
concession for the mandatory inspection of
second-hand vehicles prior to transfer of
ownership, the company expects the number
of vehicle inspections to increase to 2.7
million in this financial year.
The Group serves over 6 million customers
through its subsidiary, Alam Flora Sdn Bhd,
which is the largest manager of domestic solid
waste in the country. Alam Flora, in its 10th
year of operations in providing solid waste
management services to 24 local authorities
in the Federal Territories of Kuala Lumpur
and Putrajaya, Selangor and Pahang, handles
more than 6,000 tonnes of waste daily, keeping
the environment clean for all Malaysians.
The company’s revenue and profit before tax
registered modest increases in the financial
year under review. The approval of the Solid
Waste Management Bill in early July 2007 is
projected to provide significant improvements
in the company’s cash flow and revenue. With
these improvements, the company will be
able to implement some of its long awaited
service improvements and demonstrate the
Group’s commitment to improving the quality
of life for Malaysians. The company maintains
ISO9001:2000 in nine of its Service Areas,
whereas the ISO14001:2004 certification has
been awarded to two Service Areas. Based
on current restructuring and the merger of
the QA, Safety & Health and Environmental
departments, all related processes will be
integrated and streamlined according to world
class practices in realising the company’s
vision of being the Number 1 Solid Waste
Management Company in the country.
We build
partnership
DRB-HICOM Berhad
(203430-W)
|
Services Sector
2007 Annual Report
40
Both Uni.Asia General Insurance
Berhad and Uni.Asia Life Assurance
Berhad managed to increase
premium contributions due to the
introduction of innovative new
products such as Uni.Asia’s AutoStar
comprehensive motor insurance
policy and investment opportunities
in Asia’s leading capital markets.
Uni.Asia Life recorded an increase in
Regular Premiums of 12.84%, which
was significantly better than the
industry average of 3.08%.
Uni.Asia Life’s investment linked
funds recorded significant growth in
the financial year under review with
its Uni Aggressive Fund recording
a growth of 47.82% and its Uni
Strategic Fund recording a return
of 47.74%, both of which were
significantly higher than the increase
in the KLCI during the same period.
The company expects to enjoy the
same strong showing in this financial
year through the implementation of
several broad strategies that include
multi-bank partnerships, continued
recruitment of new agents and crossselling of products within the Group
of companies.
The Group’s financial services
business, represented by EON Capital
Berhad, opened 4 new branches
in 2006 and 3 new branches in
the first quarter of 2007. With
customer service a top priority, the
bank introduced Electronic Banking
Centres at many of its branches
and launched its Internet Banking
services in 2006. To increase the
scope of services offered, EONCAP
Islamic Bank Berhad and MIMB
Investment Bank (formerly known
as Malaysian International Merchant
Bankers Berhad) were brought into
the Group’s fold, enabling the Group
to increase its standing in the Islamic
and Merchant banking sectors.
Scott & English (Malaysia) Sdn
Bhd’s Power Division continued its
strong performance in the sales
of marine engines and generator
sets, as well as increased sales
of spare parts and after sales
services. A similar strengthening
in the Industrial Division, which
sells mainly TCM Forklift trucks
and Sullair compressors, mirrored
this increase. Both these products
showed an increase in market share
and increased contribution to the
company’s overall revenue.
The Group’s entry into the consumer
electrical product market has seen
the introduction of two of China’s
leading electronic item brands
into the local market. The Group’s
subsidiary, Scott & English Electronics
Sdn Bhd secured distributorship of
two of China’s leading electronics
brands, namely TCL and Midea. TCL
is the world’s largest manufacturer
of Cathode Ray Tube televisions.
Midea’s air conditioners and small
appliances are making steady inroads
into the market, due to a good mix of
awareness building and competitive
pricing. The principal of the Midea
brand has agreed to strengthen
their advertising and promotions
campaign in the coming year, which
will see the brand being increasingly
competitive in the market for the
new financial year.
DRB-HICOM Berhad
(203430-W)
We are building the foundational blueprint of tomorrow’s communal
sanctuary and sowing the seeds of landscape tranquility
2007 Annual Report
41
DRB-HICOM Berhad
(203430-W)
|
2007 Annual Report
42
The Group’s third core sector also performed
well in financial year 2006/2007. The
Group’s property companies were heavily
involved in development projects, with all
our residential and commercial properties
showing excellent sales figures. The Property
Division contributed 13.4% of the Group’s
revenue, up from 4.6% the previous year.
Of particular note, Glenmarie Residences, a
joint development by the Group’s subsidiary
companies HICOM Properties and Horsedale
Development Berhad was completely sold
out during the year under review. The niche
development, which comprises 75 bungalow
lots on a 20 acres site fronting the Holiday
Inn Glenmarie and Glenmarie Golf & Country
Club is the type of prestigious development
that is the hallmark of the Group. Similarly,
Glenhill Saujana, a project offering 50 semidetached homes and 40 bungalow lots
surrounded by two international class golf
courses was also completed in the financial
year under review. A gated community
located in a low density residential enclave
on the border of Glenmarie and Saujana,
Glenhill Saujana represents the epitome of
exclusive and relaxed living.
Another development that embodies this
approach is the prestigious Glenmarie Cove
riverfront development in Klang. A total
of 96 semi-detached houses in Precinct 1
of this development were handed over to
the proud owners in December 2006 while
the remaining 45 units were handed over
to their owners later in the financial year.
This exclusive gated community features
We build
communities
|
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
43
shop offices, recreational facilities,
jetties and a special environment that
emphasises the beauty of its natural
surroundings. Riverfront living offers
access to water sports and other
water related recreational activities
to the residents of this luxurious
development, thereby ensuring market
reception to the property was good.
One of the benefits of developing this
type of property is the possibility of
attracting foreigners, and the Group
is playing its part in the Malaysia,
My Second Home campaign by
marketing these properties overseas
as well as locally. We have received
a healthy response to these efforts,
with citizens of more than 12 nations
buying properties in Glenmarie Cove.
The Group will continue to market its
luxury properties on the international
market in the firm belief that we will
receive strong sales to our foreign
friends and partners.
Although some of our best-selling
developments involve luxury
properties, the Group’s Property
Division is also actively involved
in the development of commercial
and medium cost properties. The
Glenmarie Accentra development
on Persiaran Kerjaya in Shah Alam,
comprising 30 units of 3-storey
shop offices was well received by
the public as all units were sold out
soon after the launch. Apart from
that, Phase I of Glenpark, which
comprises 100 units of link houses
will soon be completed in TTDI Jaya,
and these have already been almost
completely sold out.
The Group’s commitment to providing
its clients with a high standard of
customer satisfaction extends to its
resort properties, where the recently
rebuilt and refurbished Rebak Island
Marina boasts the only fully equipped
marina in Malaysia that facilitates
the maintenance of sailing yachts.
This is complimented by the recently
refurbished Rebak Island Resort, a
Taj Hotel which features 84 luxury air
conditioned, timbered chalets and is
a haven for nature lovers and water
sports enthusiasts alike. It’s unique
sister resort, the Lake Kenyir Resort
and Spa, located on the shores
of Malaysia’s biggest lake, has also
DRB-HICOM Berhad
(203430-W)
|
2007 Annual Report
44
recently completed a refurbishment
programme. This resort is situated in
one of the world’s oldest rain forests
and provides 136 air-conditioned
chalets as well as a host of facilities
and eco-tourism activities for relaxed
holidaymakers, nature lovers and
water sports enthusiasts.
For golf enthusiasts, the Glenmarie
Golf and Country Club, located
next to the Holiday Inn Glenmaries
provides world class golfing and
other recreational facilities, and
continues to attract players from
around the country and the region.
Service standards at this facility
are of the highest level and we
are confident that this course will
remain in demand as one of the
country’s premier golf venues into
the foreseeable future.
Holiday Inn Glenmarie, the Group’s
recently refurbished resort in the
city, offers 260 rooms with stunning
golf course views and modern
amenities for business and leisure
travellers. Together with its upgraded
banqueting facilities and the world
class sporting facilities via the
adjacent Glenmarie Golf and Country
Club, the Holiday Inn Glenmarie
offers the most demanding traveller
a range of relaxing experiences.
With the encouraging response by
consumers towards the Group’s
property developments, the Group
is exploiting opportunities to further
enhance its revenue in this sector.
The Group also holds 2,788.53
hectares of land in its land banks.
This land is divided into five estates,
namely Ladang Kupang and Ladang
Gadek managed by Taiko Plantations
Sdn Bhd. Ladang Bukit Keledek and
Ladang Connemara managed by
Boustead Advisory and Consultancy
Sdn Bhd and Ladang Serendah, which
is directly managed by the Group.
Ladang Connemara has the most
potential for future development,
although the remaining estates
have a potential for development.
The estates are well managed and
the current good commodity prices
have seen the estates generate a
healthy profit. Where advised by
the managing agents, the Group
has arranged for the estates to be
replanted with the latest planting
material, replacing older strains of
oil palm and rubber trees with this
higher yielding alternative.
DRB-HICOM Berhad
(203430-W)
Defence Sector
Building a nation’s armoury is a testament of its ability in building
dependability and confidence to its territorial perimeters
2007 Annual Report
45
DRB-HICOM Berhad
(203430-W)
|
Defence Sector
2007 Annual Report
46
We build
dependability
The fourth core sector for the Group
is its defence sector. DRB-HICOM
Defence Technologies Sdn Bhd,
better known as DEFTECH, completed
delivery of 86 units of HICOM Handalan
trucks to the Fire Department and a
number of specialist vehicles to the
Royal Malaysian Police and other
specialised services. The company
also ventured into the commercial
vehicle assembly field to diversify
its product assembly capability and
increase its portfolio in the local
commercial vehicle segment.
With its expertise in assembling
large military vehicles, the company
was swift to complete a contract to
assemble 100 Volvo buses for Syarikat
Prasarana Negara Bhd (SPNB) for
use by Rapid KL. This first contract
has led to several other contracts
being awarded to the company.
Despite a greater emphasis on the
assembly of commercial vehicle,
DEFTECH continues to be one of
the country’s leading providers of
services relating to land based military
vehicles. The Group expects to
compete actively for the procurement
of defence contracts under the 9th
Malaysia Plan. During the year under
review that DEFTECH unveiled the
first ever Malaysian made armoured
vehicle at the Defence Services Asia
2006 exhibition. This vehicle, the
AV4 was launched by Y.A.B Prime
Minister and opens a new chapter
in DEFTECH’s history. The vehicle is
currently being evaluated by both
local and foreign security forces
with a view to purchase it for their
countries.
DEFTECH also moved to strengthen
its position in the nation’s defence
sector, and continues to be involved
in engineering work such as the
total maintenance refurbishment,
overhaul, upgrading and research
and development work for armoured
vehicles and armaments.The
company will continue to strengthen
its capabilities and assets with a view
to becoming the nation’s pre-eminent
supplier of defence related services.
|
DRB-HICOM Berhad
Defence Sector
(203430-W)
2007 Annual Report
47
CONCLUSION
Overall, the financial year under
review was a successful one for the
Group, with the Group achieving a
PBT of RM187.1 million, as opposed
to the one time loss of RM134
million in the previous year. The
Group’s companies faced increased
competition and opportunities due
to the introduction of the NAP
and have successfully taken steps
to capitalise on the opportunities
offered. The Group’s Services and
Property & Infrastructure Divisions
were successful within their
business sectors, making the year
profitable for both the Group and its
shareholders.
DRB-HICOM Berhad has worked hard
to take advantage of the opportunities
offered by the 9th Malaysia Plan, and
has recently seen advancement in
the fortunes of some of our service
companies with long privatisation
agreements with the Federal
Government. The Services and
Property & Infrastructure Sectors will
remain strong and key contributors
to the Group in the future and
developments in these sectors will
enable the Group to strengthen its
footing in the local business market.
DRB-HICOM Berhad
(203430-W)
|
Defence Sector
2007 Annual Report
48
We h a v e c o n t i n u e d t o b u i l d
partnerships overseas and the
hard work put into building these
relationships has borne fruit,
especially in some of the automotive
companies. We will continue to build
these partnerships to benefit our
shareholders and I am confident
that even better times are ahead for
the Group. We look forward to the
next financial year with confidence
in the strength of our staff and the
continued strategic management
of our assets and the belief that
they will both grow to meet any
challenges that lie ahead.
ACKNOWLEDGEMENTS
On behalf of the Management,
I would like to take this opportunity
to thank all DRB-HICOM staff for
their contributions, dedication and
support, without which none of
our achievements would have been
possible. To all our stakeholders who
have stood by us and maintained
their faith in the Group, I assure
you that your commitment and
perseverance will be rewarded as
we move forward in this current
financial year. I would also like to
extend my thanks to the Members
of the Board for their advice and
guidance. As we move forward and
work to make DRB-HICOM stronger
and better, let us all remember that
we are a family and strive to ensure
that the whole DRB-HICOM family
is able to enjoy the best possible
success, as the success of one of us
is the success of all of us.
Thank you.
DRB-HICOM Berhad
(203430-W)
Corporate Responsiblity
2007 Annual Report
49
50 Corporate Social Responsibilty
51 Human Resource
52 Caring for the Environment
53 Calendar of Events
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
50
As a responsible corporate citizen,
DRB-HICOM believes in giving back
to the community in many ways.
We organise our Corporate Social
Responsibility (CSR) programmes
to both foster goodwill and trust in
the Group, as well as to provide for
the needs of the less fortunate and
those affected by natural disasters. In
addition, the Group, through the DRBHICOM Sports Club, looks after the
welfare of its staff members through
a programme of providing assistance
in case of emergency and distress.
The Group manages both long-term
CSR programmes and short term/
one time donation programmes.
Long-term programmes provide
the Group with a tangible outreach
programme to organisations that
provide critical services to the
needy. Short-term programmes or
one-time donations meet the needs
of individuals and organisations
whose needs are transitory, or are
used for one off events.
During the floods that affected Johor
at the end of 2006 and early 2007,
DRB-HICOM mobilised its team and
sent several lorry loads of basic
necessities such as mattresses,
stoves, shoes, school uniforms,
disposable diapers and foodstuff
to the victims in several villages in
the state. Our team also provided
Corporate Social Responsiblity
transport for medical teams from
Pantai Medical Centre to travel to
the affected villages to deliver free
medical assistance. The Group also
provided mattresses to victims of the
floods in Shah Alam earlier in 2006.
Among our programmes are our
outreach programme to orphanages,
which includes hosting orphans for
dinners during the festive season. The
Group believes that by fostering the
care of the young and less fortunate,
we are making a contribution to
their future and enabling them to
hope for better things. As a further
commitment to Malaysian youth, the
Group also took part in the NST School
Sponsorship Programme, sponsoring
newspapers and dictionaries for
17 schools.
The Group supports the Malaysian
Armed Forces by providing
scholarships to the children of armed
forces personnel through its subsidiary,
DEFTECH. These scholarships, to study
automotive, mechanical, electrical and
manufacturing engineering, as well as
accountancy, business management
and law, will help the recipients gain
a good education in these fields, and
help provide skilled manpower for
the country’s needs.
DRB-HICOM also assisted Lembaga
Tabung Haji in its medical care
programme by providing funds for the
purchase of an ambulance to assist
our pilgrims during the Haj period. In
addition, the Group has cooperative
efforts with several notable charity
foundations, providing funding for
these worthy organisations.
The Group’s management team are
firm believers in the Triple Bottom
Line, where profit is not the only
motivator for our activities. As
responsible corporate citizens, the
Group and its subsidiaries must
continue to play our part in fostering
and nurturing Malaysians who require
our assistace. We will continue to
play our part in safeguarding the
well being of our DRB-HICOM family
members and of those who need us
into the future.
DRB-HICOM Berhad
(203430-W)
Human Resource
In repositioning forward, a new
set of vision, mission and values
was established. This facilitated
the communication of performance
goals and organisational values.
The realisation was made more
complete with the implementation
of key performance indicators for the
senior management personnel, the
communication of a revised Code of
Ethics and Business Practice and the
introduction of greater personal asset
transparency for the managerial staff.
The formulation of these criteria is
primary to the organisational talent
building and succession planning.
The leaner structure that was in place
resulted in a majority of the staff
taking on expanded responsibilities
such that it enhanced on-the-job
development and strengthened their
skills and talents. This augured
well with the formulation of several
leadership competencies to address
the diverse nature and situations of
the Group’s business. The lighter
structure allowed the organisation to
blend in external talents selectively.
To improve personal linkages in the
change effort, direct communication
from Management, briefings with staff
and dialogues with key personnel were
actively practised. This was further
complemented by staff activities,
in-house development programmes
and an employee survey. Many of
the inputs received are considered
relevant and value-adding employee
propositions.
A review of the contracts of service
to harmonise practice and the
outsourcing of several administrative
processes were relevant to the
attainment of greater productivity
and cost efficiency. Policies and
procedures were streamlined to
support the changes implemented.
The organisation responded to the
call of nation building by providing
opportunities to fresh graduates to
be trained and considered for direct
employment. Scholarships were
extended through another Group
company to enable deserving children
of government servants to pursue
tertiary studies at local institutions.
The establishment of the Staff Welfare
Fund is a further endorsement of the
organisation’s caring attitude.
Relationship management with the
unions and the 27,000 staff across the
Group was sustained in an enriching
manner. Several collective agreements
were favourably concluded.
Environment and workplace safety
continued to be a priority pursuit
between the Corporate Office and the
Group companies.
2007 Annual Report
51
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
52
At DRB-HICOM, we believe that the
environment should be taken into
account in all our programmes.
With the impacts of climate change
becoming more noticeable, we
believe that everyone must play their
part in preserving the environment
while going about their daily
lives. We do our best to integrate
environmentally friendly measures in
our Property & Infrastructure, as well
as our Services Sector programmes.
Anyone who walks through our
premier development projects such as
Glenmarie Residences or Glenmarie
Cove will be struck by the amount
of greenery on the sidewalks and in
the gardens of the homes. We have
placed palm trees and quick growing
evergreens along major pathways,
and our developments include parks
and green lungs to keep the air fresh
and clear. In addition, construction
waste from these development
projects is disposed of correctly,
and not dumped anywhere that can
cause damage to the environment.
The Group’s resorts and recreational
facilities echo this green theme,
and were all built to maximise
environmental preservation and to
protect the natural beauty of their
surroundings. The Taj Rebak Island
Resort, which sits on the privately
owned Rebak Island, off Langkawi is
a haven for bird life. Pied and Black
Hornbills can be found in the trees
around the chalets, and the clear
Caring for the Environment
waters of the marina teem with fish
of all kinds. Similarly, the Lake Kenyir
Resort and Spa takes full advantage
of its pristine surroundings, which
include the world’s oldest rain forest,
and is a haven for nature lovers.
Glenmarie Golf and Country Club
also typifies this environmental
philosophy, with the course and
clubhouse shaded by evergreen
trees and flowering shrubs. Small
herons and a variety of other birds
are readily visible on the greens.
The Group’s subsidiaries also operate
a large fleet of heavy vehicles,
particularly companies such as Alam
Flora. Wherever possible, these
companies also t ake steps to minimise
their environmental footprint by
maximising route efficiency to burn
less fuel, by purchasing new vehicles
with EURO 2 or higher specification
engines that produce less pollution
and many other programmes that
minimise pollution. While a certain
level of environmental impact is
inevitable, programmes such as
installing leachate collection tanks
on all compactor trucks to minimise
leachate spillage on roads do help
lower the environmental impact of
operations.
Additionally, vehicle inspections
carried out at PUSPAKOM help
reduce the incidence of pollution from
motor vehicles as the inspections can
detect high levels of engine pollution
and the vehicle owner/operator can
be advised to do something about it.
PUSPAKOM inspections also ensure
that engines and vehicles are in good
shape, thus minimising oil leaks and
other phenomena associated with
poorly maintained vehicle bodies
and engines.
Apart from the operational aspects of
environment protection, the Group,
through Alam Flora, has embarked
on the production of environmental
awareness material, with the
cooperation of the Ministry of Housing
and Local Government. These items,
in the form of educational VCDs for
school children, businesses and the
public, as well as activity books for
kindergarten and primary school
have almost been completed, and
will be distributed during the current
financial year.
Ta k e n t o g e t h e r, t h e G r o u p ’s
contribution to the environment goes
hand in hand with our operations,
and this is something that the
Group’s management is keen to
encourage and maintain.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Calendar of Events
53
6 July 2006
Unveiling of the new
stylish Honda Accord with
enhanced features by
Honda Malaysia Sdn Bhd.
26 April 2006
Launch of DEFTECH AV4 by
Y.A.B. Dato’ Sri Mohd Najib
Tun Razak, Deputy Prime
Minister and Minister of
Defence at DSA Exhibition,
Subang.
1 August 2006
14 July 2006
Official launching of the
“Aduan Sampah? Adulah
Alam Flora” Campaign
by Y.A.B. Dato’ Seri Dr.
M o h a m a d K h i r To y o ,
Menteri Besar Selangor.
Official Signing Ceremony of
SPEKS “Sistem Pendaftaran
Elektronik Kenderaan
BerSepadu” between
HICOM Teleservices and
22 companies for online
new vehicle registration;
witnessed by Y.Bhg Datuk
E m r a n K a d i r, D i r e c t o r
General, Road Transport
Department.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
54
Calendar of Events
15 August 2006
First Roll out of (CKD) SsyangYong Rexton
II from AMM Plant in Pekan, Pahang in the
presence of Y.A.B. Dato’ Sri Mohd Najib Tun
Razak, Deputy Prime Minister of Malaysia.
MODENAS 10 th Anniversary Dinner
together with the launch of MODENAS’
latest motorcycle the MODENAS X-cite
130cc by Y.B. Dato’ Seri Rafidah Aziz,
Minister of International Trade & Industry
of Malaysia.
11 September 2006
15 September 2006
Official launch of DRB-HICOM DEFTECH
Scholarship by Y.A.B. Dato’ Sri Mohd Najib Tun Razak, Deputy Prime Minister of
Malaysia.
18 September 2006
Signing of MoU between General Motors
Corporation & DRB-HICOM Berhad.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
55
21 September 2006
DRB-HICOM Berhad 16 th
Annual General Meeting.
6 October 2006
DRB-HICOM organised a breaking of fast dinner with
orphans at Holiday Inn Glenmarie Hotel. Donations were
handed to PEYAKIN and HALUAN Orphanages.
13 October 2006
P U S PA K O M o r g a n i s e d
“K e m p e n K e s e l a m a t a n
Jalanraya Sempena Hari
Deepavali & Hari Raya
Aidilfitri”. The campaign
w a s l a u n c h e d b y Y. B .
Datuk Douglas Uggah
Embas, Deputy Minister of
Transportation.
17 October 2006
DRB-HICOM organised a breaking of fast dinner with the
Malaysian Armed Forces. Among the guests included
dignitaries from the Ministry of Defence.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
56
Calendar of Events
5–10 November 2006
DRB-HICOM and its subsidiary Scott & English
Electronics Sdn Bhd organised media visit to the
TCL and Midea plants in China which included
11 members of the media and a representative
from SIRIM.
Handing over of Mock Key for 1 unit
Ambulance (worth RM170,000.00)
to Lembaga Tabung Haji
8 November 2006
10 November 2006
DRB-HICOM Sports Club Hari Raya
& Deepavali Open House lunch.
DRB-HICOM Hari Raya & Deepavali
Open House was held at Wisma
DRB-HICOM. Underprivileged
children from PEYAKIN & KUANG
Orphanages were invited to
celebrate together with other
dignitaries and guests.
15 November 2006
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
57
14 December 2006
Official launch of exclusive Glenmarie Cove
Residences at Telok Gong by HRH the
Sultan of Selangor; accompanied by Y.A.B.
Dato’ Seri Mohamad Khir Toyo, Menteri
Besar Selangor.
6 January 2007
DRB-HICOM Berhad contributed packets
of rice, food items, school uniforms and
other essential daily needs to the affected
flood victims in Pagoh, Johor. Receiving
on behalf of the victims is the Royal Parton
for the Southern Red Crescent Society,
Y.A.M. Raja Zarith Sofiah binti Al-Marhum
Sultan Idris Shah.
22 January 2007
Maal Hijrah 1428 celebration.
12 February 2007
Launch of CKD Robotic
Assembly Lines for Suzuki
Swift 1.5L at AMM Plant,
Pekan, Pahang.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
58
Calendar of Events
7 March 2007
DRB-HICOM Berhad
o r g a n i s e d t h e “C h i e f
Executive Officers’
Business
Forum”
officiated by Y.A.M. Tan
Sri Dato’ Seri Syed Anwar
Jamalullail, Chairman of
DRB-HICOM. The forum
was attended by Y.B. Dato’
Sri Mohd Effendi Nawawi
as guest of honour.
DRB-HICOM involved in Emergency
Medicine Conference and Exhibition
2007 that was officiated by Y.B.
Datuk Seri Chua Soi Lek, Minister
of Health at PWTC.
12 March 2007
Visit by Y.A.B. the Menteri
Besar of Pahang and Y.A.B. the
Menteri Besar of Trengganu to
DEFTECH’s plant in Pekan.
19 March 2007
DRB-HICOM Berhad
(203430-W)
Corporate Governance
2007 Annual Report
59
60 Statement on Corporate Governance
67 Statement on Internal Control
69 Audit Committee Report
74 Additional Compliance Information
77 Statement of Directors’ Responsibility
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Statement on Corporate Governance
60
Corporate Governance sets out the framework and process by which
companies, through their Board of Directors and Management,
regulate their business activities. It balances sound and safe business
operations with compliance of the relevant laws and regulations.
The Board of Directors of DRB-HICOM is committed to ensuring
that the highest standards of Corporate Governance are practised
throughout the Group as a fundamental part of its responsibilities in
managing the business and affairs of the Group and to protect and
enhance shareholders’ value and financial performance.
The Board is pleased to set out below the manner in which the
Company has applied the principles set out in the Malaysian Code
on Corporate Governance (“the Code”) and the extent to which the
Company has complied in all material respects with the best practices
of the Code during the financial year ended 31 March 2007.
1.
BOARD OF DIRECTORS
The Board has the overall responsibility for determining the
Group’s overall strategic direction as well as development and
control of the Group. It reviews management performance
and ensures that the necessary financial and human resources
are available to meet the Group’s objectives. The Board is
responsible for succession planning, including appointing and
fixing the remuneration of and, where appropriate, replacing
senior management. The Board is also responsible for identifying
principal risks and ensuring the implementation of appropriate
systems to manage these risks; developing and implementing
an investor relations programme; and reviewing the adequacy
and integrity of the Group’s system of internal controls.
1.1 Composition and Balance
The current Board has ten (10) members, comprising
seven (7) Non-Executive Directors (including the Chairman)
of whom five (5) are independent. There are three (3)
Executive Directors. Hence, the Board fulfils the prescribed
requirements for one-third of the membership of the Board
to be Independent Board Members.
The composition of the Board, including Non-Executive
Directors and Independent Directors, provides the Board
with a good mix of industry-specific knowledge and broad
business sense and commercial experience. This balance
enables the Board to provide clear and effective leadership
to the Group and to bring informed and independent
judgement to many aspects of the Group’s strategies and
performances so as to ensure that the highest standards
of professionalism, conduct, transparency and integrity are
maintained by the Group. The Independent Directors play
a pivotal role in corporate accountability, which is reflected
in their memberships of and attendances at the various
Board Committees. None of the Non-Executive Directors
participate in the daily management of the Group.
The Directors are well experienced in their respective
fields and together provide an effective blend of
entrepreneurship, business and professional expertise. A
brief profile of each Director is presented on pages 12 to
17. No individual or group of individuals dominates the
Board’s decision-making.
The roles of the Chairman and the Group Managing Director
are clearly defined so as to ensure that there is a balance
of power and authority. The Chairman is responsible
for ensuring Board effectiveness and conduct whilst the
Group Managing Director has overall responsibility for
the management of the operating units, organisational
effectiveness and the implementation of Board policies
and decisions. In addition, the Group Managing Director
also functions as the intermediary between the Board and
Management.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
61
1.2Appointments and Training
There is a formal and transparent procedure for the
appointment of new Directors to the Company and the
Group, with the Nomination Committee evaluating and
making recommendations to the Board. Following the
appointment of new Directors to the Board, the Nomination
Committee will ensure that an induction programme
is arranged, including visits to the Group’s significant
businesses and meetings with senior management as
appropriate, to enable them to get a full understanding
of the nature of the businesses, current issues within the
Group and the corporate strategies as well as the structure
and management of the Group.
All Directors have attended the Mandatory Accreditation
Programme prescribed by Bursa Malaysia Securities
Berhad (Bursa Malaysia). All Directors are also encouraged
to attend continuous education programmes and seminars
to keep abreast with developments in the marketplace.
Apart from attending various conferences and seminars
organised by external organisers during the financial
year, the Directors also continuously receive briefings and
updates on regulatory, industry and legal developments,
including information on the Group’s businesses and
operations, risk management activities and other initiatives
undertaken by Management.
The Principal Company Secretary facilitates the annual
effectiveness assessment of the Board of Directors and
Committees. The objective is to improve the Board’s
effectiveness by identifying gaps, maximising strengths
and addressing weaknesses. The Chairman of the Board
oversees the overall evaluation process whereby selfassessment methodologies are used and issues for
assessment are presented in customised questionnaires.
1.3 Re-Election
In accordance with the Company’s Articles of Association,
all Directors who are appointed by the Board are subject
to re-election by shareholders at the first Annual General
Meeting after their appointment.
The Articles also provide that all Directors shall retire from
office once in every three years but shall be eligible for reelection. At each Annual General Meeting one third of the
remaining Directors are to offer themselves for re-election.
1.4 Supply of Information and Board Meetings
All Directors, whether independent or otherwise, have
the same right of access to all information within the
Group and the duty to make further enquiries whenever
deemed necessary in furtherance of their duties. The
Board is supplied in a timely manner with information
in a form and of a quality as appropriate to enable it to
discharge its duties. In addition to financial information,
other information deemed suitable such as customer
satisfaction, product and service quality, market share
and market trends, manpower and human resource and
environmental issues are also provided.
Prior to Board Meetings, all Directors will receive the
agenda and a set of Board Papers containing information
relevant to the matters to be deliberated at the meetings.
All Directors have access to Management, the advice
and services of the Company Secretary and may seek
professional advice at the Group’s expense, if required.
The Board meets at least once every quarter with additional
meetings convened between the scheduled meetings as
Special Board Meetings as and when necessary. During the
year ended 31 March 2007, the Board met a total of eight
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
62
(8) times. During the Board Meetings, the Chairmen of the
various Committees provide summary reports of meetings
including matters requiring the full Board’s deliberation
and approval.
All Directors attended more than half of the meetings held
during the financial year or held after their appointment
in compliance with the Listing Requirements of Bursa
Malaysia. Details of the attendances of Directors at the
board meetings are disclosed in their respective personal
profiles set out on pages 12 to 17.
a.E v a l u a t e a n d r e c o m m e n d t o t h e B o a r d ,
candidates for directorships of the Company and
the Group;
b.Recommend to the Board, directors to fill the
seats on Board Committees;
c.Evaluate the effectiveness of the Board and Board
Committees (including its size and composition)
and of their members;
d.Review Management’s recommendation on
appointments or promotions of senior management
personnel;
e.Ensure an appropriate framework and plan
for Board and Management succession for the
Group;
f.Ensure the interests of the minority shareholders
are fairly reflected on the Board; and
g.Recommend continuous appropriate training
programmes for Directors.
1.5 Board Committees
To ensure the effective discharge of its fiduciary duties,
the Board has delegated specific responsibilities to the
respective Committees of the Board. Board Committees’
members are thus able to deliberate in greater detail and
examine the issues within their terms of reference as set
out by the Board.
The Company has three (3) principal Board Committees:-
i.Audit Committee
The composition and terms of reference of this
Committee together with its Report are presented on
pages 69 to 73.
The Committee meets at least once a year, and is
responsible to:-
ii.
Nomination Committee
The Nomination Committee consists of the following
Non-Executive Directors, the majority of whom are
independent:
(Chairman)
Ibrahim bin Taib
During the financial year ended 31 March 2007, the
Nomination Committee met a total of four (4) times.
iii. Remuneration Committee
The Remuneration Committee consists of the following
Directors, the majority of whom are Independent NonExecutive Directors:-
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
63
Dato’ Syed Mohamad bin Syed Murtaza (Chairman)
Ong Ie Cheong
Datuk Haji Mohd Khamil bin Jamil (ex-officio)
The Committee meets at least once a year, and is
responsible to:
a.Establish and recommend the remuneration
structure and policy for Executive Directors and
senior management; the terms of employment
or contract of employment/service, any benefit,
pension or incentive scheme entitlement;
other bonuses, fees and expenses; and any
compensation payable on the termination of
the service contract by the Company and/or the
Group and to review for changes to the policy, as
necessary;
b.Ensure that a strong link is maintained between
the level of remuneration and individual
performance against agreed targets with the
performance-related elements of remuneration
forming a significant proportion of the total
remuneration package of Executive Directors and
senior management;
c.Review and recommend the entire individual
remuneration packages for each of the Executive
Directors and senior management personnel;
d.Review with the Group Managing Director
and the Executive Directors, their goals and
objectives and to assess their performance
against these objectives as well as their
contribution to the corporate strategy; and
e.Review and recommend to the Board any
employees’ share option scheme.
During the financial year ended 31 March 2007,
the Remuneration Committee met a total of two (2)
times.
1.6 Directors’ Remuneration
The objectives of the Group’s policy on Directors’
remuneration is to ensure that the Group attracts and
retains Directors of the calibre and integrity needed to run
the Group successfully. In the case of Executive Directors,
remunerations are structured so as to link rewards to
corporate and individual performances. In the case of NonExecutive Directors, the level of remuneration reflects the
experience and level of responsibilities undertaken by the
particular Non-Executive Director concerned.
The Remuneration Committee is responsible for setting
the policy framework and for making recommendations to
the Board on all elements of the remuneration and other
terms of employment of the Executive Directors and senior
management.
Executive Directors will abstain from the deliberation and
voting on decisions in respect of their own remuneration.
The remuneration of Non-Executive Directors is to be
decided by the Board as a whole, except for Directors’ fees
which shall be a fixed sum determined by the Company in
general meeting.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
64
Details of Directors’ remuneration for the financial year
ended 31 March 2007, distinguishing between Executive and
Non-Executive Directors in aggregate, with categorization
into appropriate components and the number of Directors
whose remuneration fell into each successive band of
RM50,000, are set out below:
Group
2007 2006
Directors’ NonRemuneration *Executive Executive Total
Less than RM50,000
RM50,001 – RM100,000
RM350,001 – RM400,000
RM500,001 – RM550,000
RM850,001 – RM900,000
RM900,001 – RM950,000
RM1,350,001 – RM1,400,000
_
–
–
–
1
1
1
2
2
3
1
–
–
–
2
2
3
1
1
1
1
Total
3
8
11**
* Remuneration paid to the Directors of the Company
include fees, salary, other emoluments including bonus,
EPF contributions, attendance & other allowances and
benefits-in-kind.
**Included one Non-Excutive Director who has resigned
during the financial year.
Non-Executive Directors:-
– – – Fees
Attendance &
other allowances
Benefits-in-kind
627,920 655,464
1,141,000 80,000 604,146
6,964
Executive Directors:-
– – Salaries, allowances and
other emoluments*
Benefits-in-kind
2,940,931 11,970,384
216,630 361,090
Total
5,006,481 13,598,048
* Included in the Executive Directors’ salaries, allowances
and other emoluments are bonus and employer’s
contribution to retirement benefits of RM889,190 (2006:
RM Nil) and RM218,281 (2006: RM553,378) respectively.
Included in 2006 is retirement benefit of RM7.5 million
paid to a past director.
The disclosure of Directors’ remuneration is made in
accordance with Appendix 9C, Part A, Item 10 of the Listing
Requirements of Bursa Malaysia. The Code recommends
disclosure of details of the remuneration of each Director.
However, the Board is of the view that the disclosure of
the remuneration by bands of its Directors is sufficient to
meet the objective of the Code.
a.
Directors’ Fees
In 2006, the Company obtained a shareholders’
approval via ordinary resolution for the payment of
Directors’ fees not exceeding RM800,000 for each
financial year effective 31 March 2006 onwards based
on the recommendation of the Board. Hence, yearly
payment of fees to the Non-Executive Directors do
not need shareholders’ approval provided that the
amount does not exceed RM800,000 per annum. All
Non-Executive Directors are paid meeting allowances
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
65
as determined by the Board to reimburse them for
expenses incurred for attendance at Board/Board
Committee meetings and shareholders’ meetings,
which is inclusive of travelling and accommodation.
b. Salaries, Bonuses and Allowances
The basic salaries inclusive of statutory employer
contributions to the Employees Provident Fund for the
Group Managing Director and the Executive Directors
are determined by the Board, taking into account the
performance of the individual, the consumer price
index and information from independent sources on
the rates of salary for similar positions in a selected
group of comparable companies. Salaries are reviewed
annually by the Remuneration Committee.
The Board has endorsed the adoption of Key
Performance Indicators (KPIs) as part of the overall
governance to enhance the management of performance
for the Company. Following this, KPIs were formulated
for the Group Managing Director, Executive Director/
Group Chief Operating Officer and other Management
team members. The performance-based bonuses paid
to these personnel are strictly tied to the attainment
of their KPIs and overall achievements. Performance
assessments of these personnel together with the
rewards due were rigorously undertaken at the
Management and Remuneration Committee levels with
the Board making the final determination pursuant to
the recommendations of the Committee.
c.
Benefits-In-Kind
Other customary benefits, such as car, driver,
allowances, etc. were made available to the Chairman,
Group Managing Director and Executive Directors as
appropriate.
d.
Terms and Conditions of Employment
The Group Managing Director and the Executive
Directors are employed on terms and conditions as
approved by the Board.
2.
SHAREHOLDERS AND INVESTORS
2.1 Dialogue between the Company and Investors
The Board values dialogue with investors and appreciates
the keen interest of shareholders and investors in the
Group’s performance. The Board acknowledges the need
for shareholders to be informed of all material business
matters affecting the Group.
The Company communicates with its shareholders
and stakeholders regularly through the timely release
of financial results on a quarterly basis, press releases
and announcements to Bursa Malaysia which provide
shareholders with an overview of the Group’s performance
and operations. In addition, the Company initiates dialogues
with its shareholders as and when required.
2.2 The Annual General Meeting
The Annual General Meeting is the principal forum for
dialogue with shareholders. Notice of the Annual General
Meeting and annual reports are sent out to shareholders
at least twenty-one (21) days before the date of the
meeting.
Besides the usual agenda for the Annual General Meeting,
the Board presents the progress and performance of the
business as contained in the Annual Report and provides
opportunities for shareholders to raise questions pertaining
to the business activities of the Group. All Directors are
available to provide responses to questions from the
shareholders during these meetings.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
66
Items of special business included in the notice of the
meeting are to be accompanied by an explanatory
statement to facilitate full understanding and evaluation of
the issues involved.
The Group maintains a website at www.drb-hicom.com
which can be conveniently accessed by the shareholders
and the general public. The Group’s website is updated
from time to time to provide the latest and comprehensive
information about the Group, including press releases and
quarterly announcements of the Group results.
3.ACCOUNTABILITY AND AUDIT
3.1 Financial Reporting
The Directors have a responsibility to present a true and
fair assessment of the Group’s position and prospects in
the quarterly reports to Bursa Malaysia and the Annual
Report to shareholders. The Audit Committee assists the
Board in scrutinising information for disclosure to ensure
accuracy, adequacy and completeness.
3.2 Internal Control
Any queries or concerns regarding the Group may be
conveyed to the following persons:-
The Group’s Statement on Internal Control furnished
on pages 67 to 68 provides an overview of the state of
internal controls within the Group.
i.Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail,
Chariman/`Senior Independent Non-Executive Director
Telephone number : 603 2052 8000
Facsimile number : 603 2052 8118
ii.Y.Bhg. Datuk Haji Mohd Khamil bin Jamil, Group
Managing Director
Telephone number : 603 2052 8000
Facsimile number : 603 2052 8118
iii.Y.M. Raja Shahrul Azman bin Raja Omar, Head of
Public Affairs & Investor Relations Division, for
investor relations matters
Telephone number :
Facsimile number :
603 2052 8238
603 2052 8196
iv.Ms Chan Choy Lin, Company Secretary, for
shareholders’ enquiries
Telephone number :
Facsimile number :
603 2052 7695
603 2052 7696
3.3 Relationship with the Auditors
The role of the Audit Committee in relation to the External
Auditors may be found in the Report of the Audit Committee
set out on pages 69 to 73. The Group has always maintained
a close and transparent relationship with its auditors in
seeking professional advice and ensuring compliance with
the MASB Approved Accounting Standards in Malaysia for
Entities Other than Private Entities.
This statement is made in accordance with a resolution of
the Board of Directors dated 18 July 2007.
Signed on behalf of the Board of Directors
Chairman
DRB-HICOM Berhad
(203430-W)
Statement on Internal Controll
Responsibility
The Board of Directors of DRB-HICOM Berhad in complying with
paragraph 15.27(b) of the Bursa Listing Requirements and the
Malaysian Code on Corporate Governance acknowledge that a
sound system of internal control needs to be maintained and they
need to continually review its adequacy and integrity. In discharging
their stewardship responsibilities, procedures on internal controls
in accordance with the guidelines for directors, the “Statement on
Internal Control: Guidance for Directors of Public Listed Companies”
have been established. These procedures are intended to provide
an ongoing process for identifying, evaluating and managing the
significant risks encountered by the Group.
The Board Statement on Internal Control in complying with the said
paragraph is as set out below.
Control Structure and Environment
The key processes established by the Directors of the Group within
the control environment are summarized as follows:• Organisation structure
In executing the Board’s responsibilities, a number of Board
committees have been established with clearly defined terms
of reference, details of which are set out in the Statement on
Corporate Governance. These are the Audit, Nomination and
Remuneration Committees.
Management has been delegated the responsibility to implement
the daily business strategies. Segregation of roles and
responsibilities, lines of accountability and levels of authority
are clearly set out in the organisation structure.
• Audit Committee
The Audit Committee, comprising non-executive directors,
the majority of whom are independent, reviews the Group’s
accounting and reporting policies and practices, reports of the
internal and external auditors and the adequacy of the system
of internal control. In addition, the Audit Committee also
monitors and reviews the activities of the Group Internal Audit
Division (“GIAD”).
The activities of the Board Audit Committee are further set out
on pages 69 to 73.
• Internal Audit
The GIAD in accordance with the approved annual audit plan
continues to carry out regular and systematic reviews of the
business processes of the operating entities within the Group.
However, this does not include companies governed by the
Banking and Financial Institutions Act, 1989 or regulated by
Bank Negara Malaysia and a material associated company. The
Group’s interests are served through representations on the
boards of these respective companies. The Audit Committee
and the Board are provided with reasonable assurance that
the system of internal control is adequate and that the Group’s
governance and risk management processes are effective.
At a minimum, in the quarterly meetings, the Audit Committee
deliberates on the findings and recommendations for
improvement by the internal auditors on the state of the
internal control system.
• Code of Ethics and Business Practice
Ethics and values are both essential and central to policies and
performance and therefore, need to be effectively managed.
The Code of Ethics and Business Practice (COEBP), issued by
Group Management, provides guidance for sound governance
and healthy employment lifestyle and the promotion of an
ethical culture.
2007 Annual Report
67
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Statement on Internal Controll
68
• Whistleblower and Anti-Fraud Policies
In line with the Group Management’s emphasis on instilling
positive work values, integrity and transparency, the
Whistleblower and Anti-Fraud Policies were recommended by
the Group Management and approved by the Board.
• Policies and Procedures
Policies and procedures of the Group and Divisional or Operating
Unit such as financial limits of delegated authority and relevant
operational procedures are documented, clearly defined and
reviewed regularly and updated when required.
• Employee Competency
The quality and abilities of employees are emphasized through
continuing education and training and development to ensure
they are competent in discharging their duties effectively.
Risk Management
The Board of Directors recognizes that risk management is an
integral part of the Group’s business operations. Management is
responsible for creating risk awareness and for building the necessary
knowledge for risk management. The ultimate responsibility for the
effective management of risk rests with the Board that controls and
manages risk through the Group Risk Management Committee.
The Group Risk Management Committee ensures leadership, direction
and coordination of the group-wide application of risk management
that includes identifying the key risks, assessing the potential impact
and likelihood of those risks occurring, control effectiveness and
adopting the appropriate action plans to reduce those risks to the
desired level.
The respective Risk Management Committees of the subsidiary
companies, on a quarterly basis, update and report to the board of
directors detailed primary risk registers together with their mitigation
plans. The Group Risk Management Committee which oversees the
overall risk management of the Group and reports to the Board the
respective management action plans to mitigate the key risks faced
by all operating units within the Group is chaired by the Group
Managing Director.
Conclusion
Overall, the Board is satisfied with the adequacy and effectiveness
of the system of internal control and risk management practices of
the Group.
To the best of the Board’s knowledge, none of these control
shortcomings and weaknesses have resulted in any material losses,
contingencies or uncertainties that would require disclosure in the
annual report.
This statement has been approved by the Board of Directors at its
meeting on 18 July 2007.
DRB-HICOM Berhad
(203430-W)
Audit Committee Report
The Board of Directors is pleased to present the Report of the Audit
Committee (“Committee”) for the financial year ended 31 March 2007.
COMPOSITION OF MEMBERS AND MEETINGS ATTENDED
The Committee members and details of their attendance at committee
meetings during the financial year are set out below:Name
Status of Meetings Directorship Attended
Datuk Haji Abdul Rahman bin Mohd Ramli, Chairman of the Committee
Independent
Non-Executive
Director
7 out of 7
Independent
6 out of 7
Mr Ong Ie Cheong
Independent Non-Executive
Director
7 out of 7
Dato’ Hjh Safiah Basrah
(Resigned on 22/9/2006)
Non-Independent
Non-Executive
Director
5 out of 7
Dato’ Noorrizan Shafie
(Appointed on 28/11/2006)
Non-Independent
Non-Executive
Director
2 out of 7
During the financial year under review, the Committee held 7
meetings, with the Group Managing Director, together with the
Executive Director/Group Chief Operating Officer, the Group Chief
Financial Officer, and also the Head of Internal Audit attending, by
invitation, all the convened meetings. On appropriate occasions,
representatives from the external auditors and relevant management
staff also attended the meetings.
The minutes of the Audit Committee Meetings were circulated to all
members of the Audit Committee by the Company Secretary who
acts as the secretary to the Audit Committee and was present at all
Audit Committee Meetings. The Committee’s report was presented
to the Board of Directors at the board meeting and significant issues
were discussed therein.
TERMS OF REFERENCE OF THE COMMITTEE
1.
The Audit Committee shall be established to assist the Board
in fulfilling its oversight responsibilities. The Committee shall
review and ensure that the process of assessing internal
controls and governance, including operational and financial
controls, business ethics and compliance are properly managed
and monitored.
2.
The Chairman is a member of the Malaysia Institute of Accountants
(MIA).
Constitution
Composition
The following requirements are to be fulfilled by the Board
in the appointment of the Audit Committee from among its
members:
a. the Committee must be composed of no fewer than three
(3) members, the majority of whom must be Independent
Non-Executive Directors;
2007 Annual Report
69
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
70
b. the Chairman of the Committee shall be appointed by
the Board from among the Independent Non-Executive
Directors and at least one member of the Committee:-
• must be a member of the Malaysian Institute of
Accountants or must have at least three (3) years’
working experience and;
i. must have passed the examinations specified in
Part I of the 1st Schedule of the Accountants Act
1967; or
ii.must be a member of one of the associations
of accountants specified in Part II of the 1st
Schedule of the Accountants Act 1967.
3.
• Alternate Directors shall not be appointed as a member
of the Committee; and
• subject to any regulatory disqualification, members of
the Committee shall not be removed except by the
Board. In the event of any vacancy in the Committee,
the Board shall within three (3) months fill the same
so as to comply with all regulatory requirements. In
any event the Board shall review the term of office
and performance of the Committee and each of its
members at least once every three (3) years.
Meetings and Attendance
The quorum for all meetings of the Committee shall be not less
than three (3), a majority of whom shall be Independent NonExecutive Directors. The Chairman shall chair all meetings and
in his absence, another Independent Non-Executive Director
shall chair it.
a. Meetings shall be held not less than four (4) times a year
and the Head of Group Internal Audit, Group Managing
Director and Executive Director/Group Chief Operating
Officer shall, by invitation, attend the meetings.
b. The external auditors are normally invited to attend
meetings as and when necessary.
c. The Committee shall meet separately with the internal
and external auditors at least once a year without the
attendance of the management.
d. The Company Secretary shall be the Secretary of the
Committee and shall provide the necessary administrative
and secretarial services for the effective functioning of the
Committee. The draft minutes shall be circulated to the
Committee members for comment and the signed minutes
shall be tabled at the subsequent Board Meeting.
4.Authority
The Board has empowered the Audit Committee to:-
a. investigate any activity within the scope of the Committee’s
duties and its terms of reference and shall have full and
unrestricted access to any information and document
relevant to the Committee’s activities;
b. obtain independent legal or other professional advice as
necessary;
c. communicate directly with the external auditors, internal
auditors and all employees of the Group;
d. have adequate resources to perform its duties as set out
in its terms of reference;
e. make recommendations for improvements of operating
performance and management control arising from internal
and external audit recommendations.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
71
5.
Responsibilities and Duties
b. to review internal audit programme and results of the
internal audit process and where necessary ensure that
appropriate action is taken on the recommendations of
the GIAD;
c. to review any appraisal or assessment of the performance
of the members of the internal audit function; and
d. to approve any appointment or termination of senior staff
members of the GIAD
External Audit
With regards to external auditors:-
a. to consider the appointment, resignation, or termination of
external auditors and their audit fee;
b.to discuss with the external auditors, prior to the
commencement of audit, the nature and scope of audit and
to ensure co-ordination where more than one audit firm is
involved;
c. to review with external auditors, the audit plan, their
evaluation of the systems of internal accounting controls,
their audit report and the assistance given by the Company’s
officers to the external auditors;
d. to review the quarterly and year-end annual financial
statements before submission to the Board and
announcements to the Bursa Malaysia Securities Berhad,
focusing particularly on:-
The functions of the Audit Committee have been expanded
to include the matters specified in the Code of Corporate
Governance as follows:
Risk Management and Internal Control
Ensure that management has in place an adequate system
of risk management and internal control to safeguard the
shareholders’ interests and Company’s assets.
Financial Reporting
Review the annual and quarterly financial results of the Group
focusing on, among others, financial disclosures, changes in
accounting policies and practices and compliance with MASB
Approved Accounting Standards in Malaysia for Entities Other
than Private Entities.
Related Party Transactions
Review any related party transactions that may arise within the
Company or Group for compliance with Bursa Securities Listing
Requirements.
Employee Share Option Scheme
Review the allocation of share options granted to eligible
employees in the Group.
Internal Audit
In respect of the internal audit function:-
a. to review the adequacy of the scope, functions and resources
of the Group Internal Audit Division (“GIAD”) and that it has
the necessary authority to carry out its work;
•
any changes in accounting policies and practices;
•
significant adjustments arising from the audit;
•
the going concern assumption; and
•compliance with MASB Approved Accounting Standards
in Malaysia for Entities Other than Private Entities and
other legal requirements.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
72
e. to discuss at least once a year any issues from the audits,
with internal and the external auditors separately without
the presence of management;
f. to review the external auditor’s management letter and
management’s response;
Other Responsibilities
a. to instruct the external and internal auditors that the
Committee expects to be advised if there are any areas
that require its special attention including major findings
of internal investigations and management’s response;
b. to consider and examine any other matters as the
Committee considers appropriate or as authorised by the
Board of Directors.
SUMMARY OF ACTIVITIES OF THE COMMITTEE
The Committee plays the role of the governance body that is
charged with overseeing the Group’s audit and internal control. The
main responsibility of the Committee therefore is to assist the Board
to implement and support the oversight function for the Group in
accordance with the terms of reference of the Audit Committee.
Listed below is the summary of activities of the committee carried
out during the financial year ended 31 March 2007:Financial Results
•Reviewed the unaudited quarterly financial results of the Group
before recommending to the Board for approval.
•Reviewed the audited annual financial statements of the Group
and Company prior to submission to the Board of Directors for
consideration and approval prior to submitting the results to
Bursa Malaysia Securities Berhad (“Bursa Securities”).
•Ensured Group’s compliance with the Bursa Securities Listing
Requirements, MASB Approved Accounting Standards in
Malaysia for Entities Other than Private Entities, provisions
of the Companies Act 1965 and other legal and regulatory
requirements.
•Reviewed the Audit Committee Report, Statement on Internal
Control and Statement on Corporate Governance prior to
inclusion in the Company’s Annual Report.
External Audit
•Reviewed the Audit Plan with the External Auditors prior to the
commencement of the audit for the financial year.
•Reviewed with the External Auditors their Internal Control
Memorandum and management’s responses.
•Evaluated the performance of the External Auditors and
made recommendations to the Board of Directors on their
reappointment and fees.
•Reviewed the independence and objectivity of the External
Auditors and the services provided, including non-audit
services.
•Met with the External Auditors once during the financial year
without the presence of any executive board member or
management.
Internal Audit
•Reviewed and approved the annual internal audit plan and
programmes for the financial year to ensure the scope of audit
adequately and comprehensively covered the activities of
the Group.
•Reviewed the performance of the GIAD and the competencies
of staff within the internal audit activity to execute the plan as
well as the audit programs used in the effective discharge of
its professional responsibilities.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
73
•Reviewed the adequacy of the scope, functions and resources
of the internal audit function.
•Reviewed audit reports of all assignments carried out for the
financial year and appraised the adequacy and effectiveness of
management responses in resolving the audit issues reported.
•Reviewed the results of ad-hoc special reviews undertaken by
the internal auditors and the actions taken relating to these
assignments.
•Reviewed the adequacy of the terms of reference of the Internal
Audit Charter.
•Met with the Head of Internal Audit once during the financial
year without the presence of any executive board member or
management.
•Recommended to the Board improvement opportunities in
internal control, financial and operational procedures and risk
management.
Related Party Transactions
•Reviewed related party transactions (RPTs) for compliance with
Bursa Securities Listing Requirements and the appropriateness
of such transactions before recommending to the Board for its
approval.
•Reviewed the Group’s procedures in respect of recording
recurrent related party transactions (RRPTs) and propriety of
proposed related party transactions to ensure that they were
not more favorable to the related parties than those generally
available to the public and were not detrimental to minority
shareholders.
INTERNAL AUDIT FUNCTION
The GIAD, being an independent function, is primarily responsible in
undertaking regular and systematic reviews of the system of internal
control of companies within the Group through effective planning,
risk focused audits, progressive reporting and monitoring in order
to provide reasonable assurance to the Committee that the system
is operating effectively. However, those companies governed by the
Banking and Financial Institutions Act, 1989 or regulated by Bank
Negara Malaysia and a material associated company are excluded.
The GIAD aims to add value to the Group by promoting a sound
control environment that is well managed.
The GIAD continues to maintain its quality assurance and
continual improvement program through the ISO 9001:2000 Quality
Management System. During the financial year the GIAD also
engaged the services of an independent third party assessor to
conduct an external quality assessment of its activities.
As required by the Audit Charter, the Head of GIAD reports directly
to the Chairman of the Committee.
During the financial year, the result of work accomplished by GIAD,
including scheduled, follow-up and special assignments covering the
Automotive Manufacturing and Distribution, Property Development
and Construction, Services and Defence segments were reported to
the Committee.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
74
1.
Additional Compliance Information
UTILISATION OF PROCEEDS
Description
Actual
utilisation
Approved as at 31
utilisation March 2007
RM’million
RM’million
Balance
RM’million
Issuance of up to RM850.0 million Islamic Securities as follows:- (i)Bai’ Bithaman Ajil Islamic 680.0
680.0
– Debt Securities (“BaIDS”)
(ii)Underwritten Murabahah 200.0
50.0
150.0
Commercial Papers (“CP”)/
Medium Term Notes (“MTN”)
(iii)Murabahah CP/MTN
120.0
107.0
1,000.0
837.0
2.
SHARE BUYBACKS
During the financial year, there were no share buybacks by the Company.
3.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
Comments
The Securities Commission had, vide their letter dated
23 June 2005 approved the utilisation of proceeds.
The BaIDS and RM50 million from the Underwritten
Murabahah CP/MTN have been utilised to fully redeem
Gadek (Malayisa) Berhad’s loan stocks i.e. Redeemable
Secured Loan Stocks (RSLS) and Redeemable Exchangeable
Secured Loan Stocks (RESLS).
13.0RM107 million has been utilised for working capital
purposes and repayment towards DRB-HICOM Berhad’s
short term banking facilities.
163.0
During the financial year ended 31 March 2007, a total of 3,328,100 ordinary shares were issued by the Company by virtue of the exercise of the options
under the Employees’ Share Option Scheme (“ESOS”) as disclosed in page 81 of the financial statements. The ESOS had expired as of 9 April 2006. Saved
as disclosed above, the Company has not issued any options, warrants or convertible securities during the financial year.
4.AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
During the financial year, the Company did not sponsor any ADR or GDR programme.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
75
5.
VARIATION IN RESULTS
The Company did not release or announce any profit estimate, forecast or projection during the financial year under review.
6.
PROFIT GUARANTEE
During the financial year, there was no profit guarantee issued by the Company.
7.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
By Resolution of the Extraordinary General Meeting of the Company held on 21 September 2006, a mandate was granted by the shareholders for recurrent
related party transactions of a revenue or trading nature, to be entered into during the period 22 September 2006 to 20 September 2007 between the
Company or its subsidiaries and related parties, the latter being based on estimates. As required, below is a listing of the said transactions by related
company that are more than RM26 million as having been actually entered into during the financial year ended 31 March 2007:
Nature of
No. Transacting Parties
Interested Parties
Transaction
Actual Transacted
Values (RM’000)
from 1 April 2006 to
31 March 2007
COMTRAC SDN. BHD
1. Glenmarie Cove Development Sdn. Bhd.
Director and major shareholder
- Ng Tet Min
- Ng Teik Hin
Construction works
Project management cost
31,625
2,354
33,979
MOTOSIKAL DAN ENJIN NASIONAL SDN. BHD.
1. Kawasaki Heavy Industries Ltd.
Major shareholder
Provision of technical support, - Kawasaki Heavy Industries Ltd.technology transfer, supply of
CKD components and payment
of royalties
2. Sojitz Corporation
Major shareholder
- Sojitz Corporation
Purchase of CKD Parts
33,028
2,420
35,448
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
76
Additional Compliance Information
8. Material Contracts
There was no material contract entered into by the Company or its subsidiaries involving Directors’ and Major Shareholders’ interests still subsisting at the
end of the financial year ended 31 March 2007 except for the following (pursuant to Paragraph 21, Part A, Appendix 9C of the Listing Requirements):
Type
Date
Purchase Consideration and Mode of
Contracting Parties Satisfaction
1. Agreement For The 1 June 2006
Surrender of Memberships HICOM Facility Management Berhad and Horsedale Development Berhad
RM 21,180,000.00 by cash
(The transaction has since been completed)
2. Agreement For The 1 June 2006
Surrender of Memberships
Vistamurni Sdn. Bhd. and Horsedale
Development Berhad
RM 8,820,000.00 by cash
(The transaction has since been completed)
Relationships between the Directors or Major Shareholders and the Contracting Parties
Mr. Rin Nan Lun is a Director and Substantial Shareholder in Vistamurni Sdn. Bhd.. He is also a Director and having an effective interest in shareholding
of Horsedale Development Berhad.
9.
Sanctions and/or Penalties
There was no significant penalty/ies imposed by any regulatory authorities on any of the companies in DRB-HICOM Group.
10. STATEMENT ON REVALUATION POLICIY
The Group does not have any revaluation policy.
11. NON-AUDIT FEES
The amount of non-audit fees paid/payable to the external auditors and their affiliated companies by the Group for the financial year ended 31 March 2007
are as follows:
PricewaterhouseCoopers
PricewaterhouseCoopers Taxation Services Sdn. Bhd.
RM’000
160
758
918
DRB-HICOM Berhad
(203430-W)
Statement of� Directors’ Responsibility
in respect of the preparation of the Financial Statements for the
financial year ended 31 March 2007
The Directors are required by the Companies Act, 1965 (“the Act”) to ensure that the financial statements prepared for each financial year
give a true and fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and cash
flows of the Group and the Company for the financial year. As required by the Act and the Listing Requirements of Bursa Malaysia Securities
Berhad, the financial statements have been prepared in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other
than Private Entities and the provisions of the Act.
The Directors consider that in preparing the financial statements for the financial year ended 31 March 2007 set out on pages 79
to 187, the Group has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and
estimates and ensured that all applicable approved accounting standards have been followed.
The Directors have ensured that the accounting records to be kept by the Group and the Company have been properly kept in accordance with
the provisions of the Act, which disclose with reasonable accuracy the financial position of the Group and of the Company.
This Statement is made in accordance with a resolution of the Board of Directors dated 18 July 2007.
2007 Annual Report
77
Financial Statements
79 Directors’ Report
85 Consolidated Income Statements
86 Company Income Statements
87 Balance Sheets
89 Consolidated Statement of Changes in Equity
91 Company Statement of Changes in Equity
92 Cash Flow Statements
96 Notes to the Financial Statements
188 Statement by Directors
189 Statutory Declaration
190 Report of the Auditors
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Directors’ Report
79
The Directors of DRB-HICOM Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company
for the financial year ended 31 March 2007.
PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive (including defence), services and property and construction segments.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.
There has been no significant change in these activities during the financial year.
FINANCIAL RESULTS
Group RM’000 Net profit for the financial year
Company
RM’000
156,531
267,241
95,073
61,458
267,241
–
156,531
267,241
Attributable to:
Equity holders of the Company
Minority interest
DIVIDENDS
Dividends paid/payable by the Company since 31 March 2006 were as follows:
RM’000
In respect of the financial year ended 31 March 2006:
First and final dividend of 2.0 sen gross per share, less taxation of 28% for the financial year
ended 31 March 2006, paid on 18 October 2006:
– in respect of ordinary shares in issue as at 31 March 2006
– in respect of ordinary shares issued after 31 March 2006 but before book closure date of dividend entitlement
14,397
48
14,445
Interim dividend of 1.0 sen gross per share, less taxation of 27%, paid on 13 April 2007.
Total dividends paid/payable
7,356
21,801
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
80
Directors’ Report
DIVIDENDS (Continued)
The Directors recommend the payment of a final gross dividend of 2.5 sen per share, less taxation of 27%, amounting to RM18,388,828 in respect of the financial
year ended 31 March 2007, subject to the approval of shareholders at the forthcoming Annual General Meeting of the Company.
RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the financial year are disclosed in the financial statements.
SIGNIFICANT SUBSEQUENT EVENTS
(a)On 17 April 2007, the Company entered into a Share Sale Agreement with Merong Mahawangsa Sdn. Bhd. for the proposed disposal of its entire 20%
equity interest in Gerbang Perdana Sdn. Bhd. (“Gerbang Perdana”) for a total cash consideration of RM14 million. On 26 June 2007, the proposed disposal
was completed and as a result, Gerbang Perdana ceased to be an associated company of the Group.
(b) On 8 June 2007, HICOM Indungan Sdn. Bhd., effectively a wholly-owned subsidiary of the Company entered into a Sale and Purchase Agreement with
EON Properties Sdn. Bhd., a wholly-owned subsidiary of Edaran Otomobil Nasional Berhad to acquire approximately 26.03 acres of the freehold land held
under title No. HS (D) 224504, Lot No. PT470, Bandar Glenmarie, District of Petaling, Selangor for a total cash consideration of RM67 million. The proposed
transaction is subject to approval from the relevant authorities.
(c) On 19 June 2007, the Company and its effective 100% owned subsidiary, HICOM Holdings Berhad, entered into a Joint Venture Agreement (“JVA”) with
Isuzu Motors Limited, Japan (“Isuzu”) in respect of the parties’ equity participation in Malaysian Truck & Bus Sdn. Bhd. (“MTB”) and to regulate their
relationship in the conduct and affairs of MTB. Currently, the Group and Isuzu hold 80% and 20% equity interest in MTB respectively. Upon restructuring
of the equity holding, MTB’s name will be changed to Isuzu HICOM Malaysia Sdn. Bhd. and the Group and Isuzu will hold 49% and 51% equity interest in
MTB respectively. As a result, MTB will become an associated company of the Group. The proposed JVA, including the disposal of a 31% equity stake by
the Group, is subject to approval from the relevant authorities.
(d) As announced to Bursa Malaysia on 13 July 2007 by the Company, the Board of Directors of the Company has received an offer on the same date from
Motivasi Asia Sdn. Bhd. (“Motivasi Asia”) to sell its entire shareholding in Rangkai Positif Sdn. Bhd. (“Rangkai Positif”) to the Company for RM720 million
to be satisfied by the issuance of new ordinary shares of RM1.00 each in the Company to be issued based on the indicative issue price of RM1.91 per new
ordinary share, subject to the terms and conditions of the Offer. The indicative issue price is based on the five day weighted average as at 12 July 2007
of RM1.91 per new ordinary share.
The principal activity of Rangkai Positif is to provide operation and maintenance services to the Tanjung Bin Power Plant (“Plant”) located in the state of
Johor based on a concession period of 25 years from 28 September 2006. The Plant comprises three coal-fired generating units with a total capacity of
2,100 megawatts and sells electricity to Tenaga Nasional Berhad.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
81
SIGNIFICANT SUBSEQUENT EVENTS (Continued)
The Board of Directors has recommended that the Company accepts the Offer subject to the following:
•
Advice by the relevant advisers of the Company that the Offer will be deemed in the best interest of the Company; and
•The purchase consideration of RM720 million will be deemed fair and appropriate based on the appraisal by an independent valuer to be appointed
by the Company.
Upon satisfaction of the above conditions, the Company will enter into a definitive Share Sale Agreement with Motivasi Asia, which shall be subject to the
approvals of the relevant authorities and shareholders of the Company.
ISSUE OF SHARES
During the financial year, the Company’s issued and paid-up share capital increased from RM999,771,729 to RM1,007,607,035 by way of issue of 7,835,306 new
ordinary shares of RM1.00 each, pursuant to following:
(i) Exercise of 3,328,100 share options under the Employees’ Share Option Scheme (“ESOS”), at option prices ranging from RM1.00 to RM1.69 per share.
(ii) Exchange of RM6,771,750 nominal value of Redeemable Exchangeable Unsecured Loan Stock (“REULS”) plus accrued interest of RM1,521,509 of Gadek
(Malaysia) Berhad, a wholly-owned subsidiary company into 4,507,206 new ordinary shares of the Company, at an issue price of RM1.84 per share.
The new shares rank pari passu in all respects with the existing shares of the Company including entitlement to the final dividend proposed for the financial
EMPLOYEES’ SHARE OPTION SCHEME
The DRB-HICOM Berhad Employees’ Share Option Scheme (“ESOS”) expired on 9 April 2006.
During the financial year ended 31 March 2007, a total of 3,328,100 ordinary shares were issued by virtue of the exercise of the options at prices ranging
from RM1.00 to RM1.69 per share. As at the expiry date of 9 April 2006, there were 26,037,100 options not exercised and have therefore, lapsed.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
82
Directors’ Report
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail (Chairman)
(Group Managing Director)
(Executive Director/Group Chief Operating Officer)
Noorrizan binti Shafie
(Appointed on 28 November 2006)
Ibrahim bin Taib
Ong Ie Cheong
Dato’ Hajjah Safiah bt Basrah (Resigned on 27 September 2006)
DIRECTORS’ INTERESTS
None of the Directors in office at the end of the financial year held any interests in the shares of the Company or its related companies during the financial year.
DIRECTORS’ Benefits
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of
enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than emoluments disclosed in Note 6 to the
financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member,
or with a company in which the Director has a substantial financial interest.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
83
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the income statements and balance sheets were made out, the Directors took reasonable steps:
(a) to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied
themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting
records of the Group and of the Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a)which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and
of the Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c)which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or
inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial
year which, in the opinion of the Directors, will or may substantially affect the ability of the Group or of the Company to meet their obligations as and when
they fall due.
At the date of this report, there does not exist:
(a)any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other
person; or
(b) any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would
render any amount stated in the financial statements misleading.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
84
Directors’ Report
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (Continued)
In the opinion of the Directors, other than as disclosed in the financial statements,:
(a) the results of the Group’s and of the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a
material and unusual nature; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual
nature likely to substantially affect the results of the operations of the Group or of the Company for the financial year in which this report is made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 18 July 2007.
Chairman
DATUK HAJI MOHD KHAMIL BIN JAMIL
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Consolidated Income Statements
for the financial year ended 31 March 2007
85
Note
2007
RM’000
2006
Restated
RM’000
Revenue
4
Cost of sales
2,905,421
(2,347,396)
3,522,835
(3,108,615)
Gross profit
558,025
Other income 346,451
Selling and distribution costs
(92,990)
Administrative expenses
(378,753)
Other expenses (90,222)
Finance cost
8
(143,688)
Share of results of jointly controlled entities (net of tax)
27,844
Associated companies
– share of results (net of tax)
91,464
– impairment loss of investment (131,000)
414,220
153,392
(107,231)
(447,753)
(239,216)
(130,789)
26,547
134,086
–
(39,536)
134,086
Profit/(loss) before taxation
Taxation
187,131
(30,600)
(196,744)
50,170
156,531
(146,574)
5
9
Net profit/(loss) for the financial year
Attributable to:
Equity holders of the Company
Minority interest
95,073
61,458
(204,975)
58,401
156,531
(146,574)
Gross dividends per share (sen)
10
3.50
2.00
– Basic
11 (a)
9.47
(20.72)
– Fully diluted
11 (b)
9.47
(20.69)
Earnings/(loss) per share (sen)
The notes to the accounts on pages 96 to 187 form an integral part of the financial statements.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
86
Company Income Statements
Note
2007
RM’000
2006
RM’000
Revenue
4
Cost of sales
155,822
– 18,922
(15,562)
Gross profit
Other income
Administrative expenses
Other expenses
Finance cost
8
155,822
251,879
(22,821)
(19,183) (58,404)
3,360
33,074
(37,331)
(37,810)
(42,102)
Taxation
307,293
(40,052)
(80,809)
776
267,241
(80,033)
5
9
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Balance Sheets as at 31 March 2007
87
Group Note 2007 2006 Restated
RM’000 RM’000 Company
2007 2006
RM’000 RM’000
ASSETS
NON CURRENT ASSETS
Property, plant and equipment
12 Investment properties
13
Biological assets
14
Land held for property development
15 (b)
Subsidiary companies
16
– Investments
– Amounts due
Jointly controlled entities
17
18
Other investments
19
Intangible assets
20
Deferred tax assets
21
2,069,053
–
21,851
334,237
1,227
85,319
–
–
76,889
–
–
–
– – 228,100 1,339,434 722,331 9,715
71,662 –
–
303,166
1,446,280
739,805
3,341
75,652
3,077,329
1,431,370
9,800
57,803
–
–
–
3,067,329
1,199,014
9,800
59,325
–
–
1,534
4,946,788
4,993,385
6,044 619,669 110,037 890,982 104,501
245,534 1,180,099 128,564 – 733,606 110,215 1,269,233 99,534
170,158 1,061,005 107,147 1,603 – – 151,902 24,796
38,781 141,723 1,298 –
–
–
506,310
32,189
17,255
100,911
2,084
3,285,430
3,550,898
360,103
658,749
TOTAL ASSETS
8,232,218
8,544,283
5,022,951
5,072,640
1,777,170
466,827
19,616
311,933
4,662,848
4,413,891
CURRENT ASSETS
Assets held for sale 22
Inventories 23
Property development costs 15 (a)
Trade and other receivables 24
Tax recoverable
Marketable securities 25
Short term deposits 26
Cash and bank balances 27
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
88
Balance Sheets as at 31 March 2007 (Continued)
2007 2006
RM’000 RM’000
EQUITY AND LIABILITIES
Share capital 28 Reserves
1,007,607
1,593,789 999,772
1,462,418 1,007,607
2,888,222 999,772
2,631,153
Equity attributable to equity holders of the parent 2,601,396
2,462,190
3,895,829
3,630,925
Minority interests
737,678
664,780
TOTAL EQUITY
3,339,074
3,126,970
3,895,829
809,786
75,263
1,896,689
645
57,259
–
–
771,782
–
1,055
2,839,642
772,837
818,832
361,054 1,399,351 48,241 – 247,929 – –
523,883
–
59,811
694,743
14,471
–
–
99,000
–
7,356
–
99,000
–
–
– –
3,630,925
NON CURRENT LIABILITIES
Life assurance fund Deferred income Long term borrowings Sinking fund Deferred tax liabilities 29 30 31 32
21
1,087,947
69,478
1,595,962
947
69,032
2,823,366
–
–
818,832
–
–
CURRENT LIABILITIES
General and life insurance funds 33
Trade and other payables 34
Provision for liabilities and charges 35
Bank borrowings 36
– Bank overdrafts – Others Current tax liabilities Dividend payable 330,938 995,227 24,625 27,079
658,536
26,017
7,356
2,069,778
2,577,671
354,285
622,883
TOTAL LIABILITIES
4,893,144
5,417,313
1,127,122
1,441,715
TOTAL EQUITY AND LIABILITIES
8,232,218
8,544,283
5,022,951
5,072,640
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Consolidated Statement of Changes in Equity
89
Issued
and fully
paid
ordinary
shares
of RM1.00Equity
each
Non-distributable Distributableattributable
Currency to equity
Share
Merger Translation Other
Retained
holders
Nominal Premium Reserve Differences
Reserves Earnings of the Note Value
(Note 37) (Note 38) (Note 39) (Note 39) (Note 41) Company
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Minority
Interests RM’000 Total
RM’000
2007
At 1 April 2006 Prior year adjustments 2.2 (vi)
999,772
– 16,699
– 911,016
– 2,929
6,146
103,641
(6,428)
409,626
18,789
2,443,683
18,507
664,780 3,108,463
– 18,507
As restated
Fair value adjustments on
investment properties
2.2 (v)
Deferred tax in relation to
fair value adjustments
Share of an associated
company’s reserves
Currency translation differences
of subsidiary companies
Share of subsidiary companies’ reserves
Acquisition of additional shares
in a subsidiary company
42
Acquisition of subsidiary companies
42
Disposal of subsidiary companies
43
Dividends paid to minority interests
999,772
16,699
911,016
9,075
97,213
428,415
2,462,190
664,780
3,126,970
5,984
47,586
Net gains not recognised in the
income statement
Transfer to other reserves
39
Issue of ordinary shares 28/37
Net profit for the financial year
Final dividend in respect of financial
year ended 31 March 2006
10
Interim dividend in respect of
financial year ended 31 March 2007
10
At 31 March 2007
– – – – – 41,602
41,602
– – – – – 1,311
1,311
– – – (716)
– – – – – – – – (3,843)
– – 10,998
4,745
– –
–
–
–
–
–
–
–
–
–
–
–
– – 7,835
– – – 4,002
– –
–
–
–
(4,559)
– – – 10,998
11,725
– – – – – – – – – – 1,007,607
20,701
911,016
–
–
–
–
4,516
–
–
–
–
–
–
–
–
902
10,998
–
–
–
–
– 278
93
(716)
1,180
11,091
(9,330)
53,469
(315)
(38,739)
(9,330)
53,469
(315)
(38,739)
4,745
(11,725)
– 95,073
11,184
– 11,837
95,073
5,456
– – 61,458
16,640
–
11,837
156,531
– (14,445)
(14,445)
– (14,445)
– (7,356)
(7,356)
– (7,356)
537,620
(716)
1,311
119,936
– 2,601,396
737,678
3,339,074
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
90
Consolidated Statement of Changes in Equity
for the financial year ended 31 March 2006 (Continued)
Issued
and fully
paid
ordinary
shares
of RM1.00Equity
each
Non-distributable Distributable attributable
Currency to equity
Share
Merger Translation Other
Retained
holders
Nominal Premium Reserve Differences
Reserves Earnings of the Note Value
(Note 37) (Note 38) (Note 39) (Note 39) (Note 41) Company
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Minority
Interests RM’000 Total
RM’000
2006
At 1 April 2005 Prior year adjustments 2.2 (vi)
985,670
– 6,985
– 911,016
– 6,989
– 109,281
– 629,274
19,501
2,649,215
19,501
672,157 3,321,372
– 19,501
As restated
Share of an associated company’s
reserves
of subsidiary companies
Share of subsidiary companies’ reserves
Disposal of a subsidiary company
Redemption of preference shares
held by minority interests
Transfer of capital reserves arising
from the expiry of warrants
Dividend paid to minority interests
985,670
6,985
911,016
6,989
109,281
648,775
2,668,716
672,157
Net losses not recognised in
the income statement
Transfer to other reserves
39
Net loss for the financial year
Final dividend in respect of financial
year ended 31 March 2005
10
At 31 March 2006
– – – (316)
– – (316)
– – – – – – – – – (3,744)
– – – – – – – – (3,744)
– – – – – – – – – – – – – – – – (20,383)
– – – 14,102
– – – 9,714
– (4,060)
6,146
– – – – – – 999,772
16,699
–
–
–
–
911,016
9,075
– 3,340,873
(316)
(6,385)
(1,218) (271)
(10,129)
(1,218)
(271)
– (2,160)
(2,160)
20,383
– – – – (55,744)
–
(55,744)
(20,383)
8,315
– – 20,383
(14,461)
– (204,975)
(4,060)
– 23,816
(204,975)
(65,778)
– – 58,401
(69,838)
–
23,816
(146,574)
– (21,307)
(21,307)
– (21,307)
97,213
428,415
2,462,190
664,780
3,126,970
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Company Statement of Changes in Equity
91
Issued and
fully paid
ordinary
shares of
RM1.00 eachNon-distributable
Nominal Share Merger Note value (Note 37) (Note 38)
RM’000 RM’000 RM’000 Other reserves (Note 39) RM’000 Distributable
Retained
earnings
(Note 41) RM’000 Total
RM’000
2007
At 1 April 2006
Fair value adjustments on investment properties
2.2 (v)
999,772
– 16,699
– 2,318,321
– – – 296,133
7,627
3,630,925
7,627
As restated
Issue of ordinary shares
28/37
Final dividend in respect of the financial year ended 31 March 2006
10
Interim dividend in respect of the financial year ended 31 March 2007 10
999,772
7,835
– – – 16,699
4,002
– – – 2,318,321
– – – – –
– – – – 303,760
– 267,241
(14,445)
(7,356)
3,638,552
11,837
267,241
(14,445)
(7,356)
1,007,607
20,701
2,318,321
– 549,200
3,895,829
At 1 April 2005
Net gain not recognised in income statement:
Transfer of capital reserves arising from the expiry of warrants
Final dividend in respect of the financial year ended 31 March 2005
10
985,670
6,985
2,318,321
377,090
3,708,449
At 31 March 2006
999,772
At 31 March 2007
2006
– 14,102
– – – 9,714
– – 16,699
–
–
–
–
2,318,321
20,383
(20,383)
– – – – 20,383
– (80,033)
(21,307)
296,133
–
23,816
(80,033)
(21,307)
3,630,925
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
92
Cash Flow Statements
Group 2007 2006 Restated
2007 2006
RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments for non-cash items:
Doubtful debts
Amortisation of intangible assets
Biological assets written off
Depreciation of property, plant and equipment
Finance cost Impairment losses of investments and property, plant and equipment
Inventories written off/down (net of write back) Disposal/write off of property, plant and equipment Preliminary project expenses written off
Provision for liabilities and charges (net of write back)
Taxation
Accretion, allowance/(writeback of) marketable securities and other investments Discount on redemption of Loan Stocks 2002/2008
Dividend income (gross)
Gain on disposal of shares in:
– subsidiary companies
– a jointly controlled entity
– associated companies
– other investments
Gain on fair value adjustment of investment properties
Gain on waiver of borrowings
(excludes waiver of bank overdraft amounting to RM13,009,000)
Interest income
Excess of fair value of net assets over purchase consideration
Net unrealised foreign exchange differences
Share of results of associated companies (net of tax)
Cash inflow/(outflow) before working capital changes
Inventories
Property development costs
Trade and other receivables
General and life insurance funds
156,531
(146,574)
267,241
(80,033)
26,769
1,037
2,340
133,544
143,688
169,493
98,753
6,786
– 7,034
30,600
(26,835)
(661)
(7,406)
(6,913)
692
– 182,230
130,789
157,138
20,511
(29,529)
19,202
30,334
(50,170)
2,600
(12,803)
(6,624)
19,183
– – 366
58,404
– – (1,018)
– – 40,052
(21,525)
– (148,112)
2,170
–
–
6,747
42,102
14,568
410
3,199
19,202
–
(776)
3,832
–
(145,005)
(28,786)
(20)
(16,743)
(15,475)
(20,478)
(185)
– (57)
– – (118,374)
(38,846)
(2,749)
(12,367)
(27,844)
(91,464)
– (37,936)
– (21,401)
(26,547)
(134,086)
(93,939)
(48,936)
– – – – –
(32,342)
–
–
–
–
368,527
40,097
19,295
396,779
323,704
70,671
(200,625)
20,697
123,130
231,484
71,716
– – 386,568
– (165,926)
–
–
57,111
–
–
–
–
–
–
–
–
–
–
–
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
93
2007 2006
RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (Continued)
Trade and other payables
Amounts due from/(to) customers on contracts
Intercompany balances
(394,670)
(4,112)
(33,960)
20,073
43,332
3,547
(161,911)
– (154,234)
46,374
35,750
(45,840)
Net cash generated from/(used in) operations
Interest received
Dividends received
Taxation paid, net of refunds
Finance cost paid
715,660
38,028
95,135
(31,906)
(123,219)
312,309
32,331
174,554
(43,135)
(168,976)
142,139
28,110
55,434
– (50,574)
(72,531)
12,278
125,411
–
(13,306)
Net cash inflow from operating activities
693,698
307,083
175,109
51,852
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from redemption of shares of a jointly controlled entity
Net cash inflow from disposal of subsidiary companies
43
Proceeds from disposal of a jointly controlled entity
and associated companies
43
Proceeds from disposal/maturity of other investments by
insurance subsidiary companies
Acquisition of other investments by insurance subsidiary companies
Acquisition of shares in:
– a subsidiary company
– a jointly controlled entity
– an associated company
Proceeds from disposal of property, plant and equipment
Expenditure on biological assets Purchase of property, plant and equipment
Net cash outflow from acquisition of subsidiary companies
42
Cost incurred on land held for property development
Net cash (outflow)/inflow from investing activities
3,000
3,697
– 3,449
– – –
–
23,733
330
– –
–
–
557,420
(707,133)
346,241
(538,290)
– – (7,790)
– – 9,069
(105)
(101,046)
(934)
(13,800)
– (3,485)
(2,000)
56,957
– (122,720)
– (20,417)
(1,000)
– – 1,691
– (2)
– – (233,889)
(279,935) 689
–
(2,450)
–
992
–
(690)
–
–
(2,148)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
94
Cash Flow Statements
2007 2006
RM’000 RM’000
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares
Proceeds from bank borrowings
Advances/(repayment of) loans to/ (from) subsidiary companies
Dividends paid to minority interests
Dividends paid to shareholders
Fixed deposits held as security/ maintained as sinking fund
Redemption of preference shares held by minority interests
Repayment of borrowings
3,544
360,013
– (38,739)
(14,445)
(61,175)
– (596,942)
2,762
1,711,747
– (55,744)
(21,307)
(5,474)
(2,160)
(1,773,953)
3,544
83,735
(58,606)
– (14,445)
(67,100)
– (150,000)
2,762
804,850
(596,201)
–
(21,307)
(6,264)
–
(185,455)
Net cash outflow from financing activities
(347,744)
(144,129)
(202,872)
(1,615)
NET INCREASE/(DECREASE) IN
CASH AND CASH EQUIVALENTS
112,065
(116,981)
(27,074)
48,089
Effects of foreign currency translation 3
(1,949)
– –
CASH AND CASH OF EQUIVALENTS
AT BEGINNING OF THE FINANCIAL YEAR
1,050,154
1,169,084
57,659
9,570
CASH AND CASH EQUIVALENTS
AT END OF THE FINANCIAL YEAR
1,162,222
1,050,154
30,585
57,659
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
95
Note
2007 2006
RM’000 RM’000
(a) Cash and cash equivalents at end of the financial
year comprise the following:
Short term deposits
Cash and bank balances
Bank overdrafts
1,180,099
128,564
(27,079)
1,061,005
107,147
(59,811)
141,723
1,298
– 100,911
2,084
–
Less: Fixed deposits held as security/sinking fund
26 (a) & (b)
1,281,584
(119,362)
1,108,341
(58,187) 143,021
(112,436)
102,995
(45,336)
1,162,222
1,050,154
30,585
57,659
(b) Non-cash transactions
The principal non cash transactions during
the financial year comprise the following:
(i) Acquisition of property, plant and equipment by means
of hire purchase and finance lease
12 (c)
13,126
9,636
– –
(ii) Conversion of REULS plus accrued interest of a wholly-owned
subsidiary company into ordinary shares of the Company
31 (c)
8,293
11,442
– –
43 (ii) (a)
10,150
– –
(iii) Share swap of investment in a former jointly controlled
entity for an investment in an associated company The notes to the accounts on pages 96 to 187 form an integral part of the financial statements.
– DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Notes to the Financial Statements
96
– 31 March 2007
1PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive (including defence), services and property and construction
segments.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.
There has been no significant change in these activities during the financial year.
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Bursa Saham Kuala Lumpur.
The address of the registered office and principal place of business of the Company is Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1/8, Seksyen
U1, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies, unless otherwise stated below, have been used consistently in dealing with items which are considered material in
relation to the financial statements:
2.1 Basis of preparation
The financial statements comply with the provisions of the Companies Act, 1965 and Financial Reporting Standards (“FRSs”), the MASB Approved
Accounting Standards in Malaysia for Entities Other than Private Entities.
The financial statements of the Group and of the Company are prepared under the historical cost convention except for those that are disclosed in
this summary of significant accounting policies.
The preparation of financial statements in conformity with the Financial Reporting Standards requires the use of certain critical accounting estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial
statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates.
The new accounting standards, amendments to published standards and IC Interpretations to existing standards issued by MASB and effective for the
current financial year are as follows:
(i) Applicable and adopted by the Group
FRS
FRS
FRS
FRS
FRS
FRS
FRS
3
5
101
102
108
110
116
Business Combinations
Non-Current Assets Held for Sale and Discontinued Operations
Presentation of Financial Statements
Inventories
Accounting Policies, Changes in Estimates and Errors
Events after the Balance Sheet Date
Property, Plant and Equipment
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
97
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.1 Basis of preparation (Continued)
(i) Applicable and adopted by the Group (Continued)
FRS 121
FRS 127
FRS 128
FRS 131
FRS 132
FRS 133
FRS 136
FRS 138
FRS 140
IC 112
IC 113
IC 115
IC 121
IC 127
IC 129 IC 132
The Effects of Changes in Foreign Exchange Rates
Consolidated and Separate Financial Statements
Investments in Associates
Interests in Joint Ventures
Financial Instruments: Disclosure and Presentation
Earnings Per Share
Impairment of Assets
Intangible Assets
Investment Property
Consolidation – Special Purpose Entities
Jointly Controlled Entities – Non-Monetary Contributions by Venturers
Operating Leases – Incentives
Income Taxes – Recovery of Revalued Non-Depreciable Assets
Evaluating the Substance of Transactions Involving the Legal Form of a Lease
Disclosure – Service Concession Arrangements
Intangible Assets – Web Site Costs
(ii) Not applicable to the Group
FRS 1
First-time Adoption of Financial Reporting Standards
FRS 2
Share-based Payment
Amendments to FRS 1192004 Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures – in relation to the “asset ceiling” test
IC 107 Introduction of the Euro
IC 110 Government Assistance – No Specific Relation to Operating Activities
IC 125 Income Taxes – Changes in the Tax Status of an Entity or its Shareholders
IC 131 Revenue – Barter Transactions Involving Advertising Services
2.2 Changes in accounting policies and effects arising from adoption of new and revised FRSs
The impact of adoption of new and revised FRSs are as follows:
(i)
FRS 3: Business Combinations
The adoption of this new standard has resulted in the Group ceasing the write off of goodwill against reserves. Goodwill will now be carried
at cost less accumulated impairment on the balance sheet and is now tested for impairment on an annual basis or more frequently if events or
changes in circumstances indicate that it might be impaired. Under FRS 3, the excess of fair value of net assets over purchase consideration is
now recognised immediately in the income statement. Prior to 1 April 2006, the excess of fair value of net assets over purchase consideration
was taken to reserves.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
98
– 31 March 2007
2
2.2 Changes in accounting policies and effects arising from adoption of new and revised FRSs (Continued)
(ii) FRS 5: Non-current Assets Held for Sale and Discontinued Operations
The adoption of FRS 5 has affected the reclassification of certain assets which have now been reclassified as “Assets held for sale” upon meeting
certain criterias where the carrying amount will be recovered principally through a sale transaction rather than through continuing use, and which
are stated at the lower of their carrying amount and fair value less costs to sell. The Group has utilised the transitional provision of FRS 5 that
allows the classification of assets held for sale on the balance sheet as at the previous financial year end, 31 March 2006, where the criterias for
recognition have been met.
(iii) FRS 101: Presentation of Financial Statements
The adoption of the revised FRS 101 has affected the presentation of minority interests, share of after-tax results of associated and jointly controlled
entities and other disclosures. In the consolidated balance sheet, minority interests are now presented within total equity. In the consolidated
income statement, minority interests are presented as an allocation of the net profit or loss for the financial year. A similar requirement is also
applicable to the statement of changes in equity. FRS 101 also requires disclosure, on the face of the statement of changes in equity, total
recognised income and expenses for the period, showing separately the amounts attributable to equity holders of the parent and to minority
interests. The share of results in associated companies and jointly controlled entities are now disclosed net of tax and minority interests in the
consolidated income statement. Under FRS 101, plantation development expenditure, previously included within property, plant and equipment, is
now presented as biological assets in a separate asset category on the balance sheet.
(iv) FRS 128: Investments in Associates and FRS 131: Interests in Joint Ventures
The adoption of FRS 128 and FRS 131 has resulted in a change in accounting policy, whereby the share of results of the associated companies
and jointly controlled entities are based on the financial statements as of the same date as the financial statements of the Group. In the prior
years, the share of results were taken from the latest financial statements of the associated companies and jointly controlled entities concerned
made up to the end of their respective financial years.
(v) FRS 140: Investment Property
FRS 140 defines an investment property as a property held for long-term rental yield and/or for capital appreciation and, that is not occupied by
the companies in the Group. The adoption of FRS 140 has resulted in a change in the accounting policy for investment properties, as well as
the reclassification of certain properties previously recognised as property, plant and equipment and other investments to investment properties
within non-current assets.
The Group has adopted the fair value model to measure its investment properties. Gains or losses arising from changes in the fair values of
investment properties are recognised in the income statement.
Where an item is reclassified to investment property upon initial adoption of FRS 140, any difference between the carrying amount of the item
and its fair value arising on the date of initial adoption is recognised as an adjustment to the opening retained earnings without restatement of
comparatives.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
99
2
2.2 Changes in accounting policies and effects arising from adoption of new and revised FRSs (Continued)
(vi) The effect to the Group’s comparative figures on adoption of the above FRSs is as follows:
Effect onEffect onEffect on
As previously
adoption of
adoption of
adoption of
stated
FRS 101
FRS 128
FRS 131As restated
RM’000
RM’000
RM’000
RM’000
RM’000
Balance sheet
As at 31 March 2006
Biological assets
Reserves
2,090,904
– 303,745
1,427,194
1,443,911
(21,851)
21,851
– – – – – – 19,086
19,086
– – (579)
– (579)
2,069,053
21,851
303,166
1,446,280
1,462,418
20,100
(599)
648,775
As at 1 April 2005
Retained earnings
629,274
– Income statement
Financial year ended 31 March 2006
Taxation
Net loss attributable to equity holders of the parent
38,784
184,585
(11,572)
(203,981)
(12,257)
(49,485)
61,742
– – (1,014)
– (1,014)
20
– – 20
26,547
134,086
50,170
(204,975)
(vii) The impact to the Group’s income statement for the financial year ended 31 March 2007 is as follows:
Total
RM’000
Other income
23,227
720
(6,217)
Net profit attributable to equity holders of the Company
17,730
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
100
– 31 March 2007
2
2.3 Impact of new MASB pronouncements
The Group has not adopted the following FRSs that are not mandatory for the current financial year.
(i)Standards, amendments to published standards and interpretations to existing standards that are not yet effective and have not
been early adopted
The new standards that are applicable for the Group’s financial year beginning on or after 1 April 2007 or later years are as follows:
•FRS 117: Leases (effective for accounting periods beginning on or after 1 October 2006). This standard requires the classification of leasehold
land as prepaid lease payments. The Group will apply this standard from financial year beginning 1 April 2007.
•FRS 124: Related Party Disclosures (effective for accounting periods beginning on or after 1 October 2006). This standard requires the
identification of related parties and some other related party disclosures. The Group will apply this standard from financial year beginning 1
April 2007.
•FRS 139: Financial Instruments: Recognition and Measurement (effective date yet to be determined by MASB). This new standard establishes
principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. The
Group will apply this standard when effective.
•Amendments to FRS 112: Income Taxes (effective for accounting periods beginning on or after 1 July 2007). This amendment was issued on
15 June 2007 and now allows for the recognition of reinvestment allowances and investment tax credits as deferred tax assets . The Group’s
unutilised reinvestment allowances and utilised investment tax allowances carried forward as at 31 March 2007 amounted to RM195,703,000
and RM288,467,000 respectively for which no deferred tax effects has been recognised in the financial statements. The Group will be assessing
whether the criteria for recognition has been met, which include the assessment of the nature of these allowances, estimations of future
taxable income and choice of accounting policy. The Group will apply this amendment from the financial year beginning 1 April 2008.
•Amendment to FRS 121: The Effects of Changes in Foreign Exchange Rates – Net Investment in a Foreign Operations (effective for accounting
periods beginning on or after 1 July 2007). This amendment requires exchange differences on monetary items that form part of the net
investment in a foreign operation to be recognised in equity instead of in profit or loss regardless of the currency in which these items are
denominated in. The Group will be assessing the impact of this amendment and will apply this amendment from financial year beginning 1
April 2008.
(ii)Standards, amendments to published standards and interpretations to existing standards that are not relevant for the Group’s
operations
•FRS 6: Exploration for and Evaluation of Mineral Resources (effective for accounting periods beginning on or after 1 January 2007).
•Amendment to FRS 1192004 : Employee Benefits – Actuarial Gains and Losses, Group Plans and Disclosures (effective for accounting periods
beginning on or after 1 January 2007).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
101
2
2.3 Impact of new MASB pronouncements (Continued)
(ii)Standards, amendments to published standards and interpretations to existing standards that are not relevant for the Group’s
operations (Continued)
•IC Interpretation 2: Members’ Shares in Co-operative Entities and Similar Instruments (effective for accounting periods beginning on or after
1 July 2007).
•IC Interpretation 5: Rights to Interests arising from Decommission, Restoration and Environmental Rehabilitation Funds (effective for accounting
periods beginning on or after 1 July 2007).
•IC Interpretation 6: Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment (effective for
accounting periods beginning on or after 1 July 2007).
•IC Interpretation 7: Applying the Restatement Approach under FRS1292004 Financial Reporting in Hyperinflationary Economies (effective for
accounting periods beginning on or after 1 July 2007).
•IC Interpretation 8: Scope of FRS 2 (effective for accounting periods beginning on or after 1 July 2007).
•Amendment to FRS 1072004 : Cash Flow Statements (effective for accounting periods beginning on or after 1 July 2007).
•Amendment to FRS 1112004 : Construction Contracts (effective for accounting periods beginning on or after 1 July 2007).
•Amendment to FRS 1182004 : Revenue (effective for accounting periods beginning on or after 1 July 2007).
•Amendment to FRS 1192004 : Employee Benefits (effective for accounting periods beginning on or after 1 January 2006).
•Amendment to FRS 1202004 : Accounting for Government Grants and Disclosure of Government Assistance (effective for accounting periods
beginning on or after 1 July 2007).
•Amendment to FRS 1262004 : Accounting and Reporting by Retirement Benefit Plans (effective for accounting periods beginning on or after
1 January 2006).
•Amendment to FRS 1292004 : Financial Reporting in Hyperinflationary Economies (effective for accounting periods beginning on or after
1 January 2006).
•Amendment to FRS 1342004 : Interim Financial Reporting (effective for accounting periods beginning on or after 1 July 2007).
•Amendment to FRS 1372004 : Provisions, Contingent Liabilities and Contingent Assets (effective for accounting periods beginning on or after
1 July 2007).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
102
– 31 March 2007
2
2.4 Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiary companies made up to the end of the
financial year.
Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain
benefits from their activities, generally accompanying a shareholding of more than one half of the voting rights. The Group’s subsidiary companies
are listed in Note 3 to the financial statements.
All the subsidiary companies are consolidated using the purchase method of accounting where the results of subsidiary companies acquired or
disposed of during the financial year are included from the date on which control is transferred to the Group and are no longer consolidated from
the date on which the control ceases. At the date of acquisition, the fair values of the subsidiary companies’ identifiable assets acquired and liabilities
and contingent liabilities assumed are determined and these values are reflected in the consolidated financial statements. The cost of an acquisition
is measured as fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition.
The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and the Group’s share of its net assets including the
cumulative amount of any currency exchange differences that relate to the subsidiary is recognised in the consolidated income statement.
The total assets and liabilities of subsidiary companies are included in the Group’s balance sheet and the interests of minority shareholders in the net
assets are stated separately. All significant inter-company transactions, balances and unrealised gains on transactions are eliminated on consolidation
and unrealised losses on transactions are also eliminated unless cost cannot be recovered.
2.5 Minority interests
Minority interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. Minority interests are initially
measured at the minorities’ share of fair values of the identifiable assets and liabilities of the acquiree at the date of acquisition.
The Group applies a policy of treating acquisition/disposal of shares from/to minority interests as transactions with parties external to the Group.
Gains and losses resulting from disposal of shares in subsidiary companies to minority interests are recorded in the income statement. Purchases from
minority interests result in goodwill, being the difference between any consideration paid and the relevant share of the carrying value of net assets
of the subsidiary acquired.
2.6 Jointly controlled entities
A jointly controlled entity is an enterprise which is neither a subsidiary nor an associated company of the Group but over which there is a contractually
agreed sharing of control by the Group with one or more parties over the strategic operating, investing and financial policy decisions. The decisions
require the unanimous consent of the parties sharing control.
The Group’s share of results of jointly controlled entities is included in the consolidated income statement using the equity method of accounting. In the
consolidated balance sheet, the Group’s interest in jointly controlled entities is stated at cost plus the Group’s share of post acquisition retained profits
and reserves less impairments. Where necessary, adjustments are made to the financial statements of jointly controlled entities to ensure consistency
of accounting policies with those of the Group.
The Group’s jointly controlled entities are listed in Note 3 to the financial statements.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
103
2
2.7 Associated companies
An associated company is a company in which the Group is in a position to exercise significant influence in its management but which is does not
control and is neither a subsidiary nor a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy
decisions of the associate but not control over those policies.
The Group’s share of results of associated companies is included in the consolidated income statement using the equity method of accounting. The
share of the results of the associated company will not be taken into the Group’s income statement when the carrying value of the investment in an
associated company reaches zero unless the Group has incurred obligations or guaranteed obligations in respect of the associated company. In the
consolidated balance sheet, the Group’s interest in associated companies is stated at cost plus the Group’s share of post acquisition retained profits
and reserves less impairment. Where necessary, adjustments are made to the financial statements of associated companies to ensure consistency of
accounting policies with those of the Group.
The Group’s associated companies are listed in Note 3 to the financial statements.
2.8 Investments
•
Subsidiary companies, jointly controlled entities and associated companies
Investments in subsidiary companies, jointly controlled entities and associated companies are stated at cost. Where an indication of impairment
exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.
•
Marketable securities
Quoted investments are stated at the lower of cost and market value determined on an aggregate portfolio basis by category of investments,
except that if diminution in value of a particular investment is not regarded as temporary, a write-down to average median market value is made
against the value of that investment. Market value is determined by reference to the stock exchange closing price at the balance sheet date.
•
Other investments
(i)
Investments held by insurance subsidiary companies
(a)Investments in Malaysian Government Securities, Cagamas Papers and other unquoted approved debt securities as specified by
Bank Negara Malaysia, are stated at cost, adjusted for the amortisation of premiums or the accretion of discounts calculated on a
constant yield basis over the period from the date of purchase to maturity date except where there is an indication of impairment,
the investment is written-down to its net realisable value. The amortisation of premiums and accretion of discounts are recognised
in the income statement.
(b)Unquoted investments are stated at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there
is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value
of an investment, such a decline is recognised as an expense in the income statement in the period in which the decline is identified.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
104
– 31 March 2007
2
2.8 Investments (Continued)
•
Other investments (Continued)
(ii) Others
Other investments are shown at cost and an allowance for diminution in value is made, where in the opinion of the Directors, there is a
decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an
investment, such a decline is recognised as an expense in the income statement in the period in which the decline is identified.
n disposal of investments, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income
O
statement.
2.9 Investment Properties
Investment properties comprise land and buildings that are held for long term rental yield and/or for capital appreciation and that are not occupied by
the companies in the Group. Investment properties are stated at fair value, representing open-market value determined annually by external valuers.
Fair value is based on active market prices, adjusted, if necessary, for any difference in the nature, location or condition of the specific asset. Gains
or losses arising from changes in the fair values of investment properties are recognised in the income statement.
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal,
it shall be derecognised (eliminated from the balance sheet). The difference between the net disposal proceeds and the carrying amount is recognised
in the income statement in the period of the retirement or disposal.
2.10 Non-current assets held for sale
Non-current assets are classified as held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount
will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is
highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.
2.11 Biological assets
Biological assets comprise new planting expenditure incurred from land clearing to the point of harvesting. This expenditure is capitalised and is not
amortised, unless a different crop is planted on the existing land area, in which case the amount is written off in the year when the different crop is
planted. Where the cost of new planting is incurred on leasehold land which has an unexercised period shorter than the crop’s economic life, the cost
is amortised over the remaining period of the lease on a straight line basis. Replanting expenditure, which represent cost incurred in replanting old
planted areas, is charged to income statement in the year in which it is incurred.
2.12 Property, plant and equipment and depreciation
Freehold land is not depreciated as it has an infinite life. Depreciation on assets under construction commences when the assets are ready for their
intended use. All other property, plant and equipment are stated at cost less accumulated depreciation and impairment losses.
Interest costs on specific and identifiable borrowings used to finance the acquisition of property, plant and equipment are capitalised and carried
forward as part of property, plant and equipment. Capitalisation of borrowing costs ceases when assets are ready for their intended use.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
105
2
2.12 Property, plant and equipment and depreciation (Continued)
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the income statement.
Where an indication of impairment exists, the carrying amount of the property, plant and equipment is assessed and written down immediately to its
recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. At each balance sheet date, the
Group assesses whether there is any indication of impairment.
Leasehold land is amortised on a straight line basis over the periods of the respective leases which range from 28 to 914 years. Other property, plant
and equipment are depreciated on a straight line basis to write off the cost of the assets to their residual values over their estimated useful lives.
The estimated useful lives in years are as follows:
Buildings, golf course and improvements
Plant and machinery
Motor vehicles
Office equipment
Furniture and fittings
4
5
3
3
3
–
–
–
–
–
98
30
10
10
10
years
years
years
years
years
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date. The Group revised the residual values
and useful lives of certain property, plant and equipment at the balance sheet date. The revision was accounted for as change in accounting estimate
and as a result, the depreciation charge for current and future years will reduce by RM41,063,000.
2.13 Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities and associated companies over the fair value of
the Group’s share of the identifiable net assets at the time of acquisition. Goodwill on acquisitions of subsidiaries is included in the balance sheet as
intangible assets. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly
in the income statement.
Goodwill arising on the acquisition of subsidiary companies is tested annually for impairment and carried at cost less accumulated impairment losses.
Impairment losses on goodwill are not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to
the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups
of cash-generating units that are expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates
goodwill to each business segment in which it operates.
Goodwill on acquisitions of jointly controlled entities and associated companies is included in investment in jointly controlled entities and associated
companies respectively. Such goodwill is tested for impairment as part of the overall balance.
DRB-HICOM Berhad
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– 31 March 2007
2
2.14 Intangible assets other than goodwill
Intangible assets comprise plant and assembly licences and expenses incurred for development of products, are considered to have finite useful lives,
and are amortised equally over the period of their expected benefit or charged to income statement in the financial year in which the related plant or
product is abandoned or considered to be of no value.
Where an indication of impairment exists, the carrying amount of the intangible assets is assessed and written down immediately to its recoverable
amount.
Preliminary and pre-operating expenses are written off to the income statement in the financial year in which they are incurred.
2.15 Property development activities
(i) Land held for property development
Land held for property development consist of land on which no significant development work has been undertaken or where development
activities are not expected to be completed within the normal operating cycle. Such land is classified as non current assets and is stated at cost
less accumulated impairment losses.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, conversion fees and other
relevant levies. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its
recoverable amount.
Land held for property development is transferred to property development costs (within current assets) when development work is to be
undertaken and is expected to be completed within the normal operating cycle.
On disposal of land held for property development, the difference between the net disposal proceeds and its carrying amount is charged or
credited to the income statement.
(ii) Property development costs
Where the outcome of a development can be reliably estimated, property development revenue and expenditure are recognised using the
percentage of completion method. The percentage of completion is measured by reference to the development costs incurred to date in proportion
to the estimated total costs for the property development.
Where the outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of costs
incurred that is probable will be recoverable. Property development costs on development units sold are recognised as an expense when incurred.
Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property
development costs will exceed total property development revenue, the expected loss is recognised as an expense immediately.
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2.15 Property development activities (Continued)
(ii) Property development costs (Continued)
Property development costs not recognised as an expense is recognised as an asset and are stated at lower of cost and net realisable value.
Where revenue recognised in the income statement exceeds billings to purchasers, the balance is shown as accrued billings under receivables
(within current assets). Where billings to purchasers exceed revenue recognised, the balance is shown as progress billings under payables (within
current liabilities).
Revenue and profit from completed properties is recognised in accordance with the terms of the sale and purchase agreements.
Interest on borrowings incurred on property development costs is capitalised. Capitalisation of borrowing costs ceases upon completion of
property development activities.
2.16Inventories
Inventories are stated at the lower of cost and net realisable value.
(i)
Raw materials, work-in-progress, finished goods and consumables
Raw materials and consumables are stated at cost. Work-in-progress and finished goods represent raw materials, direct labours, direct charges
and allocated process costs, where necessary. Cost is principally determined on a first-in, first-out basis.
(ii) Inventories of unsold properties
The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and an appropriate allocation of allocated costs
attributable to property development activities.
Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses.
2.17 Receivables
Receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts at
the financial year end. Bad debts are written off in the financial year in which they are identified.
2.18 Cash and cash equivalents
For the purposes of the cash flow statements, cash and cash equivalents consist of cash in hand, bank balances, demand deposits, bank overdrafts
and short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of
changes in value.
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– 31 March 2007
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2.19 Income taxes
Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable
in respect of the taxable profit for the financial year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for in full, using the liability method on temporary differences at the balance sheet date between the tax bases of assets and
liabilities for tax purposes and their carrying amounts in the financial statements. Deferred tax is not recognised if the temporary difference arises from
the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither
accounting profit nor taxable profit. Deferred tax assets are recognised to the extent that is probable that taxable profit will be available against which
the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is recognised on temporary differences arising on investments in subsidiary companies, jointly controlled entities and associated
companies except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will
not reverse in the foreseeable future.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax
rates that have been enacted or substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it
arises from a transaction which is recognised directly in equity, in which case the deferred tax is also charged or credited directly in equity, or when
it arises from a business combination that is an acquisition, in which case the deferred tax is included in the resulting goodwill.
2.20 Share capital
(i) Classification
Ordinary shares are classified as equity.
(ii) Dividends to shareholders of the Company
Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. A dividend proposed after the balance
sheet date, but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date. Upon the dividend
becoming payable, it will be accounted for as a liability.
2.21Provisions
(i)
Warranty and sales returns
A provision is made for the estimated liability on all products still under warranty and provision for sales returns is made for estimated returns
of goods as at the balance sheet date. These provisions are arrived at based on service and sales returns historical data.
(ii) Restructuring, mutual separation schemes and voluntary separation scheme costs
Restructuring, mutual separation scheme and voluntary separation scheme provisions mainly comprise employee termination costs and other
related costs and are recognised in the financial year in which the Group becomes legally or constructively committed to payment.
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2.22 Employee benefits
(i) Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services
are rendered by employees of the Group and Company.
(ii) Defined contribution plan
A defined contribution plan is a pension plan under which the Group and Company pay fixed contributions into a separate entity (a fund) and
will have no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits
relating to employee service in the current and prior periods.
The Group’s and Company’s contributions to the defined contribution plan are charged to the income statement in the period to which they relate.
Once the contributions have been paid, the Group and Company have no further payment obligations.
(iii) Termination benefits
Termination benefits are payable to an entitled employee whenever the employment has to be terminated before the normal retirement date
or when the employee accepts mutual/voluntary separation in exchange for these benefits. The Group recognises termination benefits when it
is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of
withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
2.23 General insurance underwriting results
The general insurance underwriting results are determined for each class of business after taking into account reinsurances, commissions, unearned
premiums and claims incurred.
Premium income
Premium income is recognised in a financial year in respect of risks assumed during that particular financial year. Premiums from direct business are
recognised during the financial year upon the issuance of insurance policies. Premiums in respect of risks incepted for which policies have not been
issued as of the balance sheet date are accrued at that date.
Inward treaty reinsurance premiums are recognised on the basis of periodic advices received from ceding insurers.
Outward reinsurance premiums are recognised in the same accounting period as the original policy to which the reinsurance relates.
Unearned premium reserves
Unearned premium reserves (“UPR”) represent the portion of the net premiums of insurance policies written that relate to the unexpired periods of
the policies at the end of the financial year.
DRB-HICOM Berhad
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– 31 March 2007
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2.23 General insurance underwriting results (Continued)
Unearned premium reserves (Continued)
In determining the UPR at the balance sheet date, the method that most accurately reflects the actual unearned premium is used, as follows:
(i)
25% method for marine cargo, aviation cargo and transit;
(ii)1/24th method for all other classes of Malaysian general policies reduced by the percentage of accounted gross direct business commissions
to the corresponding premiums, not exceeding limits specified by Bank Negara Malaysia;
(iii)1/8th method for all other classes of overseas inward business with a deduction of 20% for acquisition costs; and
(iv) time appointment method for policies with insurance periods other than 12 months.
Provision for claims
A liability for outstanding claims is recognised in respect of both direct insurance and inward reinsurance. The amount of outstanding claims is the
best estimate of the expenditure required together with related expenses less recoveries to settle the present obligation at the balance sheet date.
Provision is also made for the cost of claims, together with related expenses, incurred but not reported at the balance sheet date, based on an actuarial
valuation by an independent qualified actuary.
Acquisition costs
The cost of acquiring and renewing insurance policies, net of income derived from ceding reinsurance premiums, are recognised as incurred and
allocated to the periods in which they give rise to income.
2.24 Life insurance underwriting results
The surplus transferable from the life insurance fund to the income statement is based on the surplus determined by an annual actuarial valuation of
the long term liabilities to policyholders, made in accordance with the provisions of the Insurance Act, 1996 by the appointed actuary. In the event the
actuarial valuation indicates that a transfer is required from the shareholders’ fund, the transfer from the income statement to the life insurance fund
is made in the year of the actuarial valuation.
In the consolidated financial statements, all life insurance underwriting results are reflected through movements in the life assurance fund.
Premium income
Premium income includes premium recognised in the life fund.
Premium income of the life fund is recognised as soon as the amount of the premium can be reliably measured. First premium is recognised from
inception date and subsequent premium is recognised when it is due.
DRB-HICOM Berhad
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2
2.24 Life insurance underwriting results (Continued)
Premium income (Continued)
At the end of the financial year, all due premiums are accounted for to the extent that they can be reliably measured.
Outward reinsurance premiums are recognised in the same accounting period as the original policies to which the reinsurance relates.
Premium income of the investment-linked funds are in respect of the net creation of units which represents premiums paid by policyholders as
payment for a new contract or subsequent payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis.
Commission and agency expenses
Commission and agency expenses, which are costs directly incurred in securing premium on insurance policies, net of income derived from reinsurers
in the course of ceding of premium to reinsurers, are charged to the life insurance revenue account in the financial year in which they are incurred.
Provision for claims
Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and/or the insurer is notified.
Recoveries on reinsurance claims are accountable for in the same financial year as the original claims are recognised.
Claims and provisions for claims arising on life insurance policies including settlement costs, less reinsurance recoveries, are accounted for using the
case basis method and for this purpose, the benefits payable under a life insurance policy are recognised as follows:
(i)
maturity or other policy benefit payments due on specified dates are treated as claims payable on the due dates; and
(ii)death, surrender and other benefits without due dates are treated as claims payable, on the date of receipt of intimation of death of the assured
or occurrence of contingency covered.
The benefits payable under investment-linked business are in respect of net cancellation of units and are recognised as surrender.
2.25 Construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the
contract as revenue and expenses respectively. The Group uses the percentage of completion method to determine the appropriate amount of revenue
and costs to be recognised in a given period; the percentage of completion is measured by reference to the proportion of contract costs incurred for
work performed to date to the estimated total costs.
When it is probable that the total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
DRB-HICOM Berhad
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– 31 March 2007
2
2.25 Construction contracts (Continued)
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred
that is probable will be recoverable and contract costs are recognised as expenses when incurred.
The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings periodically. Where costs
incurred and recognised profit (less recognised losses) exceeds progress billings, the balance is shown as amounts due from customers on construction
contracts under current assets. Where progress billings exceed costs incurred plus recognised profit (less recognised losses), the balance is shown as
amounts due to customers on construction contracts under current liabilities.
2.26 Assets under lease arrangements
(i) Finance leases
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance
leases. Assets acquired under finance lease arrangements are included in property, plant and equipment and the capital element of the leasing
commitments is shown under borrowings. The lease rentals are treated as consisting of capital and interest element. The capital element is applied
to reduce the outstanding obligations and the interest element is charged to income statement so as to give a constant periodic rate of interest
on the outstanding liability at the end of each accounting period. Assets acquired under finance lease are depreciated over the useful lives of
equivalent owned assets or its lease term, if shorter.
(ii) Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.
Lease rental payments on operating leases are charged to the income statement in the financial year they become payable.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is
recognised as an expense in the period in which termination takes place.
2.27 Revenue recognition
Other than revenue recognition policies mentioned elsewhere in the summary of significant accounting policies, set out below are other significant
revenue recognition policies used by the Group:
(i) Sale of goods
Sales are recognised upon delivery of goods, net of sales tax, returns, discounts and allowances.
(ii) Rendering of services
(a) Club membership fees
Annual licence fees disclosed as deferred income are recognised on a straight line basis over the duration of the membership.
DRB-HICOM Berhad
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2007 Annual Report
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2
2.27 Revenue recognition (Continued)
(ii) Rendering of services (Continued)
(b) Solid waste management
(c) Vehicle inspection income
Revenue from ground handling, inflight catering and cargo handling are recognised upon performance of services less discounts.
(iii) Dividend income
Income from inspection of vehicles are recognised upon the rendering of inspection services.
(d) Ground handling services
Revenue from management services, solid waste disposal and tipping fees are recognised upon performance of services less discounts.
Dividends are recognised when the Group’s right to receive payment is established.
2.28 Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment
in which the entity operates (the “functional currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s
functional and presentation currency.
Transactions in foreign currencies during the financial year are converted into functional currency at the rates of exchange ruling on the transaction
dates. Monetary assets and liabilities in foreign currency are translated into Ringgit Malaysia at rates of exchange approximating those ruling on the
balance sheet date. Exchange gains and losses are dealt with in the income statement.
The assets and liabilities of foreign subsidiary companies that have a functional currency other than RM are translated into Ringgit Malaysia at the rate
of exchange ruling at the balance sheet date. Income and expenses are translated at average exchange rates. Exchange differences are recognised in
the statement of changes in equity as currency translation reserves.
On disposal of foreign subsidiary companies, such translation differences are recognised in the income statement as part of the gain or loss on
disposal.
DRB-HICOM Berhad
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2007 Annual Report
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– 31 March 2007
2
2.29 Financial Instruments
Description
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another
enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial assets from another enterprise, a contractual
right to exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another
enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or other financial asset to another enterprise, or to exchange financial
instruments with another enterprise under conditions that are potentially unfavourable.
Financial Instruments Recognised on the Balance Sheet
The particular recognition and measurement method for financial instruments recognised on the balance sheet is disclosed in the individual policy
statements associated with each item.
Financial Instruments Not Recognised on the Balance Sheet
Exchange gains and losses arising on forward foreign exchange contracts entered into as hedges of anticipated future transactions are deferred until
the date of such transactions, at which time they are included in the measurement of such transactions.
Fair Value Estimation for Disclosure Purposes
The fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date. The fair value of forward foreign
exchange contracts is determined using forward exchange market rates at the balance sheet date.
In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makes assumptions that are based on market
conditions existing at each balance sheet date. Techniques such as estimated discounted value of future cash flows, are used to determine fair value. In
particular, the fair value of financial liabilities is estimated by discounting the future contractual cash flows at the current market interest rate available
to the Group for similar financial instruments.
The carrying value of financial assets and liabilities of the Group at the balance sheet date approximated their fair value except as disclosed in the
relevant notes to the financial statements.
The carrying values for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.
DRB-HICOM Berhad
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2007 Annual Report
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2
2.30 Segment reporting
Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide products or services that are
subject to risk and returns that are different from those of other business segments.
Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable
to the segment and the relevant portion that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities
are determined before intragroup balances and intragroup transactions are eliminated as part of the consolidation process, except to the extent that
such intragroup balances and transactions are between group enterprises within a single segment.
2.31 Contingent liabilities and contingent assets
The Group does not recognise a contingent liability but disclosed its existence in the financial statements. A contingent liability is a possible obligation
that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that
is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in
the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control
of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not
virtually certain.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair
value at the acquisition date.
DRB-HICOM Berhad
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2007 Annual Report
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3
– 31 March 2007
COMPANIES IN THE GROUP
The principal activities of the companies in the Group and the effective interest of the Group as at 31 March 2007 therein are shown below:
Effective Equity
Name of Company
InterestPrincipal Activities
2007
2006
%
%
SUBSIDIARY COMPANIES
Subsidiary companies of DRB-HICOM Berhad:
Gadek (Malaysia) Berhad
HICOM Holdings Berhad
Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd. (“PUSPAKOM”)
Imatex Sdn. Bhd. (formerly known as Imatex Berhad)
100.00
100.00
100.00
100.00
100.00
100.00
Investment holding Investment holding
Inspection of commercial vehicles for roadworthiness
31 March
31 March
31 March
100.00Property investment and development, 31
civil engineering and building construction DRB-HICOM Defence Technologies Sdn. Bhd.
100.00
100.00
Manufacture, supply, maintenance and marketing 31
of military vehicles
*
Hicomobil Sdn. Bhd.
100.00
100.00
Distribution of motor vehicles 31
Suzuki Malaysia Automobile Sdn. Bhd.
100.00
100.00
Distribution of motor vehicles
31
*
DRB-HICOM Information Technologies Sdn. Bhd.
90.00
90.00Research and development, trading of computer
31
hardware and software and provision of related
consultancy services
Malaysian Truck & Bus Sdn. Bhd.
80.00
80.00
Manufacture, assembly and sale of 31
commercial vehicles
DRB-HICOM Export Corporation Sdn. Bhd.
77.25
77.25
Dormant 31
Intrakota Komposit Sdn. Bhd.
70.00
70.00
Dormant 31
Motosikal Dan Enjin Nasional 55.00
55.00
Manufacture, assembly and distribute motorcycles
31
Sdn. Bhd. (“MODENAS”)
and related spare parts and accessories
*
DRB-HICOM Auto Solutions Sdn. Bhd.
100.00
100.00Vehicle importation, vehicle pre-delivery inspection and value added services for provision
31
of logistics and vehicles.
100.00
Financial
Year End
March
March
March
March
March
March
March
March
March
March
Subsidiary company of DRB-HICOM Defence
Technologies Sdn. Bhd.:
Defence Services Sdn. Bhd. 100.00
– Engineering services including total refurbishment,
(formerly known as MMC Defence Sdn. Bhd.)upgrading and research and development work
for armoured vehicles.
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
117
3
COMPANIES IN THE GROUP (Continued)
Effective Equity
Name of Company
2007
2006
%
%
Subsidiary companies of Gadek
(Malaysia) Berhad:
*
*
Mega Consolidated Sdn. Bhd.
Ladang Gadek Development Sdn. Bhd. Ladang Kupang Development Sdn. Bhd. Uni.Asia Capital Sdn. Bhd.
Perspec Prime (Malaysia) Sdn. Bhd.
Financial
Year End
100.00
100.00
100.00
51.00
– 100.00
100.00
100.00
51.00
70.00
Investment holding
Cultivation and marketing of oil palm Cultivation and marketing of rubber and oil palm Investment holding
Construction work and project management
31
31
31
31
31
March
March
March
March
March
– – 70.00
56.28
Construction of infrastructure and housing projects
Production and supply of ready-mixed concrete
31 March
31 March
51.00
34.73
Underwriting of life insurance business
Underwriting of general insurance business
31 March
31 March
34.73
Dormant
31 March
Management of projects, rental of properties and investment holding
Manufacturing and supplying diecast parts for motorcycles, automobiles and other applications
Manufacturing casted and machined parts and components
Supply, installation and management of telecommunications and information technology
products and systems
31 March
(disposed on 15 December 2006)
Subsidiary companies of Perspec Prime
(Malaysia) Sdn. Bhd.:
Spegabina Sdn. Bhd.
The One Mix Sdn. Bhd.
Subsidiary companies of Uni. Asia Capital
Sdn. Bhd.:
Uni.Asia Life Assurance Berhad
Uni.Asia General Insurance Berhad
51.00
34.73
Subsidiary company of Uni. Asia General
Insurance Berhad:
#* Seains Pte. Ltd. (dissolved on 26 August 2006)
– Subsidiary companies of HICOM
Holdings Berhad:
HICOM Berhad
100.00
100.00
HICOM Diecastings Sdn. Bhd.
100.00
100.00
*
HICOM Engineering Sdn. Bhd.
100.00
100.00
HICOM Communications Sdn. Bhd.
100.00
100.00
31 March
31 March
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
118
3
– 31 March 2007
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
Subsidiary companies of HICOM
Holdings Berhad: (Continued)
USF-HICOM Holdings Sdn. Bhd.
100.00
100.00
Investment holding
Automotive Corporation Holdings Sdn. Bhd. 100.00
100.00
Investment holding
Desa Puchong Sdn. Bhd.
100.00
100.00
Cultivation of oil palm HICOM Network Services Sdn. Bhd.
100.00
100.00
Provision of electronic communication, telecommunication and data processing services
HICOM Technical and 100.00 100.00 Dormant Engineering Services Sdn. Bhd.
*
Equality Services Sdn. Bhd.
100.00
100.00
Dormant
HICOM Dewan Development Sdn. Bhd.
100.00
100.00
Dormant
*
NSE Development Sdn. Bhd. 100.00
100.00
Cultivation and marketing of rubber and oil palm
*
Bukit Kledek Development Sdn. Bhd.
100.00
100.00
Cultivation and marketing of rubber and oil palm
HICOM Vertex Sdn. Bhd.
100.00
51.00
Dormant
*
Scott & English Electronics Holdings Sdn. Bhd. 70.00
70.00
Investment holding
*
Scott & English (Malaysia) Sdn. Bhd.
70.00
70.00
Importation, distribution and servicing of industrial,
construction, engineering and automotive products
*
Comtrac Sdn. Bhd.
70.00
70.00Construction works and the provision of projects and development management services
*
Oriental Summit Industries Sdn. Bhd.
70.00
70.00Contract manufacturing of motorcycles and automobile
parts and components
Proton City Development Corporation Sdn. Bhd.
60.00
60.00
Property development, civil and building construction
KL Airport Services Sdn. Bhd.
60.00
60.00Superintendant of airport’s operation systems and provision of related ground handling, inflight catering,
cargo handling and warehousing space services
Alam Flora Sdn. Bhd.
55.00
55.00
Management of integrated solid waste PHN Industry Sdn. Bhd.
53.47
– Manufacturing stamped metal parts, sub-assembly (deemed subsidiary from 31 January 2007)
of automotive components for the motor industry
and design and manufacture of dies
HICOM Petro-Pipes Sdn. Bhd.
51.00
51.00
Dormant
HICOM-Teck See Manufacturing
51.00
51.00
Manufacture and sale of thermo plastic and thermo
Malaysia Sdn. Bhd.
setting products
31
31
31
31
March
March
March
March
31 March
31
31
31
31
31
31
31
March
March
March
March
March
March
March
31 March
31 March
31 March
31 March
31 March
31 March
31 March
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
119
3
Effective Equity
Name of Company
2007
2006
%
%
Subsidiary companies of HICOM Berhad:
*
*
*
*
HICOM Properties Sdn. Bhd.
Connemara Development Sdn. Bhd.
HB Property Development Sdn. Bhd. Glenmarie Cove Development Sdn. Bhd.
HICOM Megah Sdn. Bhd.
HICOM-Selangor Marine Management Sdn. Bhd.
100.00
100.00
100.00
89.50
74.63
– 100.00
100.00
100.00
89.50
74.63
51.00
Investment holding
Dormant
Property holding
Property development
Investment holding
Dormant Financial
Year End
31
31
31
31
31
31
March
March
March
March
March
March
(dissolved on 12 January 2007)
Subsidiary companies of HICOM
Communications Sdn. Bhd.:
HICOM Teleservices Sdn. Bhd. 100.00 100.00
Provision of value-added telecommunication services related to voice, facsimile, data interactive
communications and multimedia and software systems
and application development
/* PT HICOM BMS 70.00
70.00
Dormant 31 March
31 March
Subsidiary company of HICOM-Teck See
Manufacturing Malaysia Sdn. Bhd.:
@* HICOM Automotive Plastic (Thailand) Ltd.
50.99
50.99
Manufacture of plastic injected parts for automotive industry
31 March
Subsidiary company of USF-HICOM
Holdings Sdn. Bhd.:
*
USF-HICOM (Malaysia) Sdn. Bhd.
100.00
100.00Sale of motor vehicles and their related spare parts and accessories
31 March
Subsidiary company of Automotive Corporation
Holdings Sdn. Bhd.:
*
Automotive Corporation (Malaysia) Sdn. Bhd.
100.00
100.00
Sale of motor vehicles and their related spares and accessories
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
120
3
– 31 March 2007
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
Subsidiary company of USF-HICOM (Malaysia)
Sdn. Bhd.:
*
Directional (Malaysia) Sdn. Bhd.
Subsidiary company of Directional (Malaysia)
Sdn. Bhd.:
*
Euro Truck & Bus (Malaysia) Sdn. Bhd.
Subsidiary companies of HICOM Technical and
Engineering Services Sdn. Bhd.:
HICOM Ventures Sdn. Bhd.
HICOM Environmental Sdn. Bhd.
Subsidiary company of Scott &
English Electronics Holdings Sdn. Bhd.:
*
Scott & English Electronics Sdn. Bhd.
70.00
70.00Trading in consumer electronic products and domestic appliances.
*
+*
^*
*
Subsidiary companies of Scott &
English (Malaysia) Sdn. Bhd.:
HICOM United Leasing Sdn. Bhd.
Scott & English (Cambodia) Ltd.
Myanmar Scott & English Company Ltd.
Scott & English Trading (Sarawak) Sdn. Bhd.
70.00
70.00
70.00
35.70
70.00
Sale, servicing and rental of machinery and equipment 31
70.00
Trading in spare parts and heavy equipment
31
70.00
Trading and servicing of machinery
31
35.70Trading of heavy machinery and equipment, spare parts 31
and electrical appliances
Subsidiary companies of Comtrac Sdn. Bhd.:
*
*
*
*
Comtrac Trading Sdn. Bhd.
Isti-Emas Sdn. Bhd.
Comtrac Premises Sdn. Bhd.
Comtrac Builders Sdn. Bhd. *
100.00
100.00Distribution of motor vehicles and their related
spare parts and accessories and workshop servicing
31 March
100.00
100.00Dormant 31 March
100.00
51.00
100.00
51.00
31 March
31 March
Dormant
Dormant
70.00
70.00
Trading of construction materials
70.00
70.00
Dormant
70.00
70.00
Dormant
67.90
67.90Supply, installation and construction of precast (formerly known as Comtrac Precast Sdn. Bhd.)building works, manufacturing, supply and installation
of precast component and provision of upgrading and
renovation works
Ciri-Alam Bina Sdn. Bhd. (disposed on 30 March 2007)
– 56.00
Dormant
31 March
31
31
31
31
March
March
March
March
March
March
March
March
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
121
3
Effective Equity
Name of Company
2007
2006
%
%
Subsidiary companies of Comtrac
Sdn. Bhd.: (Continued)
*
*
HICOM-TNB Properties Sdn. Bhd.
Comtrac-Sabkar Development Sdn. Bhd.
Comtrac Glenview Sdn. Bhd.
Subsidiary company of Comtrac Glenview
Sdn. Bhd.:
*
Glenview Management Corporation Sdn. Bhd.
Subsidiary companies of Oriental Summit
Industries Sdn. Bhd.:
*
*
Automotive Components Engineering
70.00
70.00Design and manufacturing of dies and moulds for Centre Sdn. Bhd. automotive industry
OSI Manufacturing Sdn. Bhd.
70.00
70.00
Dormant
Subsidiary company of KL Airport
Services Sdn. Bhd.:
KLAS Engineering Services Sdn. Bhd.
Subsidiary companies of
HICOM Properties Sdn. Bhd.:
*
*
*
*
HICOM Indungan Sdn. Bhd.
Kenyir Splendour Berhad
HICOM Facility Management Berhad Puncak Permai Sdn. Bhd.
Jubli Premis Sdn. Bhd.
(formerly known as HICOM Menang Properties Sdn. Bhd.)
Financial
Year End
42.00
35.70
35.70
42.00
35.70
35.70
Dormant
Construction works and property development
Investment holding and property development 31 March
31 March
31 March
35.70
35.70
Dormant 31 March
60.00
100.00
100.00
100.00
58.00
100.00
60.00Provision of aircraft maintenance and engineering services
100.00
Property development
100.00
Resort management
100.00Provision of facility management services 58.00
Investment holding
51.00
Dormant 31 March
31 March
31 March
31
31
31
31
31
March
March
March
March
March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
122
3
– 31 March 2007
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
Subsidiary company of
HICOM Megah Sdn. Bhd.:
#& Corwin Holding Pte. Ltd.
67.17
67.17
Owner and operator of shopping mall
31 March
Subsidiary companies of Automotive
Corporation (Malaysia) Sdn. Bhd.:
*
*
Auto Prominence (M) Sdn. Bhd.
Stagwell Sdn. Bhd.
Automotive Manufacturers (Malaysia) Sdn. Bhd.
100.00
100.00
93.00
100.00
Sale of motor vehicles and their related accessories
100.00
Dormant
93.00Assembly of motor vehicles and other road transport vehicles
31 March
31 March
31 March
HICOM Indungan Sdn. Bhd.:
*
*
Rebak Island Marina Berhad
HICOM Tan & Tan Sdn. Bhd.
60.00
50.00
60.00
50.00
Operation of a marina resort and property holding
Dormant
31 March
31 March
70.60
70.60Property development, management of hotel and golf resort
31 March
70.60
70.60
31 March
Puncak Permai Sdn. Bhd.:
*
Horsedale Development Berhad
Horsedale Development Berhad:
*
Kesturi Hektar Sdn. Bhd.
Subsidiary companies of PUSPAKOM:
Puspakom Teknik Sdn. Bhd.
100.00
Flora Areana Sdn. Bhd.
100.00
Dormant
100.00Supply and maintenance of automobile associated equipment
100.00
Investment holding
31 March
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
123
3
Effective Equity
Name of Company
2007
2006
%
%
Subsidiary company of Flora Areana Sdn. Bhd.:
Multi Automotive Service and Assist Sdn. Bhd.
Subsidiary company of Imatex Sdn. Bhd.:
Imatex Management Services Sdn. Bhd.
55.00
100.00
Subsidiary companies of MODENAS:
Edaran Modenas Sdn. Bhd.
55.00
/*
PT Modenas Putra Motor Indonesia
55.00Membership recruitment, providing vehicle assistance and supply of auto related products and services
100.00
Provision of management services
Financial
Year End
31 March
31 March
42.21
55.00Distribution of motorcycles, related spare parts and accessories and servicing of motorcycles
31.90Dormant 31 March
31 March
70.00
70.00
70.00
69.99
47.34
42.00
39.06
70.00
70.00
70.00
69.99
47.34
42.00
39.06
31
31
31
31
31
31
31
49.00
49.00Distribution of motor vehicles, components and parts
Intrakota Komposit Sdn. Bhd.:
S.J. Kenderaan Sdn. Bhd.
Mega Komposit Auto Sdn. Bhd.
Gemilang Komposit Auto Sdn. Bhd.
Syarikat Pengangkutan Malaysia Sendirian Berhad
Intrakota Consolidated Berhad
S.J. Binateknik Sdn. Bhd.
Toong Fong Omnibus Company Sendirian Berhad
JOINTLY CONTROLLED ENTITIES
Jointly controlled entity of DRB-HICOM Berhad:
*
Isuzu Malaysia Sdn. Bhd.
Dormant
Selling of motor vehicles and car accessories
Selling of motor vehicles and car accessories
Dormant Dormant
Dormant
Dormant
March
March
March
March
March
March
March
31 December
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
124
3
– 31 March 2007
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
Jointly controlled entities of
HICOM Holdings Berhad:
*
HICOM-HONDA Manufacturing Malaysia Sdn. Bhd.
48.00
48.00Manufacture and assemble of Honda motorcycle engines and components
√*∞ MBM Alam Flora W.L.L.
48.00
48.00
Provision of waste management clearing services
*
HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.
45.00
45.00
Manufacture and assemble of Yamaha
motorcycle engines and parts
*
HICOM-SUZUKI Manufacturing Malaysia Sdn. Bhd.
–
45.00
Manufacturing and assembling of motorcycle engines 31 March
31 December
31 March
31 December
(swapped for investment in Suzuki Motorcycle Malaysia Sdn. Bhd.)
PHN Industry Sdn. Bhd.
–
42.50Manufacturing stamped metal parts, sub-assembly 31 March
(deemed subsidiary from 31 January 2007)of automotive components and design and
∆*∞ Model Building Maintenance Dallah
Alam Flora Waste Management Services L.L.C.
33.33
33.33
manufacture of dies
Provision of waste management clearing services
31 December
30.00
Management of hotel and service apartments
31 January
Jointly controlled entity of
HICOM Properties Sdn. Bhd.:
Sucasa Sdn. Bhd. (disposed on 28 February 2007)
– Jointly controlled entities of Comtrac Sdn. Bhd.: *
Comtrac Businessworld Sdn. Bhd.
35.00
35.00
Dormant
31 March
34.30
34.30
Dormant
31 March
35.30
35.30Housing and property development and rental of properties
(under voluntary liquidation)
*
Comtrac-Concrete Constructions Sdn. Bhd.
(under voluntary liquidation)
Jointly controlled entity of
Horsedale Development Berhad:
*
HICOM-Gamuda Development Sdn. Bhd.
31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
125
3
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
ASSOCIATED COMPANIES:
Associated companies of DRB-HICOM Berhad: Honda Malaysia Sdn. Bhd.
*
Marak Unggul Sdn. Bhd.
*∞ Gerbang Perdana Sdn. Bhd.
34.00
29.99
20.00
34.00Assembly, manufacture and sale of motor vehicles,
accessories and components
29.99
Dormant
20.00
Civil construction 31 March
31 December
31 December
Associated companies of
HICOM Holdings Berhad:
*
Siemens VDO Instruments MY Sdn. Bhd. 33.33
*
ZF Steerings (Malaysia) Sdn. Bhd.
30.00
Edaran Otomobil Nasional Berhad
29.31
*
*
*
Boustead Heah Joo Seang Sdn. Bhd. *
*
– 33.33Manufacturing and sale of instrument panels/clusters, speedometers, tachometer and aircore movement for
the transportation industry
30.00Manufacturing and assembling of mechanical and power rack and pinion steering systems
29.31Sale of motor vehicles, related spare parts and services of vehicles
25.00
Cultivation and processing of oil palm 30 September
31 December
31 December
31 December
(disposed on 29 March 2007)
Niro Ceramic (M) Sdn. Bhd.
Navi & Map Sdn. Bhd.
24.50
Manufacturing and trading of ceramic tiles
20.00Producing, manufacturing, importing, marketing and selling maps, car navigator system and related
products and services
EON Capital Berhad
20.20
20.20Investment holding company, provision of banking and related financial services, stockbroking, nominee
and custodian services
TRW Steering & Suspension (Malaysia) Sdn. Bhd.
20.00
20.00Manufacturing and sale of automobile tierods, tierod ends and suspension ball joints, stabilizer
links, steering linkages and power steering gear
Suzuki Motorcycle Malaysia Sdn. Bhd.
29.00
– Manufacture, assembly and distribution of (acquired via swap of investment
motorcycles and parts
in HICOM-Suzuki Manufacturing
Malaysia Sdn. Bhd.)
24.50
20.00
31 December
31 March
31 December
31 December
31 December
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
126
– 31 March 2007
3
Effective Equity
Name of Company
2007
2006
%
%
Financial
Year End
Associated company of Comtrac Sdn. Bhd.:
*Comtrac-Concrete Constructions JV Sdn. Bhd.
– 34.30
Dormant
31 March
(dissolved on 28 May 2006)
Associated company of
Intrakota Komposit Sdn. Bhd.:
*
Airport Coach Sdn. Bhd. – 25.56Provision of bus transportation services
31 December
(disposed on 3 April 2006)
*
These companies in the Group are audited by other firms of auditors other than PricewaterhouseCoopers, Malaysia.
&These companies in the Group are audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent
legal entity from PricewaterhouseCoopers, Malaysia.
#
The country of incorporation is Singapore.
+
The country of incorporation is Cambodia.
^
The country of incorporation is Myanmar.
@
The country of incorporation is Thailand.
√
The country of incorporation is Bahrain.
/
The country of incorporation is Indonesia.
∆
The country of incorporation is United Arab Emirates.
∞
Entities classified as assets held for sale.
All the other companies are incorporated in Malaysia.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
127
4
REVENUE
Sale of goods
Rendering of services Construction contracts
Insurance business
Sale of land and development properties
Dividends (gross) Group 2007 2006 RM’000 RM’000 Company
2007 2006
RM’000 RM’000
1,413,178
820,089
75,184
313,914
283,056
– 2,245,066
823,755
(92,685)
350,064
196,635
– – 7,710
– – – 148,112
–
7,860
(133,943)
–
–
145,005
2,905,421
3,522,835
155,822
18,922
The reversal of revenue of the Group and the Company in the previous financial year arose from the re-estimation of contract revenue in respect of the
Electrified Double Track Project.
5PROFIT/(LOSS) before taxation
Group 2007 2006 RM’000 RM’000 Company
2007 2006
RM’000 RM’000
Profit/(loss) before taxation is arrived at after charging/(crediting) the following:
Allowance for/(writeback of) doubtful debts
Amortisation of intangible assets
Auditors’ remuneration
Biological assets written off
Depreciation of property, plant and equipment Directors’ emoluments (Note 6)
Impairment loss of property, plant and equipment
Impairment loss of investments in subsidiary companies
Impairment loss of investment in an associated company
Inventories written off/down (net of write back) Loss/(gain) on disposal of property, plant and equipment
26,769
1,037
1,786
2,340
133,544
4,865
38,493
– 131,000
98,753
2,831
(6,913)
692
1,657
– 182,230
13,572
157,138
– – 20,511
(36,340)
19,183
–
135
– 366
616
– – – – (1,018)
2,170
–
135
–
6,747
789
–
14,568
–
410
(422)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
128
5
– 31 March 2007
PROFIT/(LOSS) before taxation (Continued)
2007 2006
RM’000 RM’000
Management fees paid to a company in which certain past Directors
had a significant financial interest
– 4,559
– Preliminary project expenses written off
– 19,202
– Property, plant and equipment written off
3,955
6,811
– Provision for liabilities and charges (net of writeback)
7,034
30,334
– Rental of plant and machinery and equipment
9,302
6,703
– Rental of premises
10,474
5,844
– Replanting expenditure for biological assets
1,224
798
– Staff costs (Note 7)
479,281
472,075
– Discount on redemption of Loan Stocks 2002/2008
(661)
(12,803)
– Dividend income (gross), quoted in Malaysia
(7,406)
(6,624)
(148,112)
Gain on disposal of shares in subsidiary companies
(28,786)
(185)
– Gain on disposal of shares in a jointly controlled entity
(20)
– – Gain on disposal of shares in associated companies
(16,743)
(57)
– Gain on fair value adjustment of investment properties
(20,478)
– – Gain on waiver of borrowings
(131,383)
– (93,939)
Net foreign exchange differences
(15,981)
(24,459)
– Interest income
– short term deposits
(38,846)
(34,599)
(4,191)
– subsidiary companies
– – (44,745)
– others
– (3,337)
– Interest waiver on redemption of Loan Stocks 2002/2008
(619)
(10,939)
– Excess of fair value of net assets over purchase consideration
(2,749)
– – Accretion, allowance/(writeback of) marketable securities and other investments (26,835)
2,600
(21,525)
–
19,202
3,621
–
–
–
–
6,052
–
(145,005)
–
–
–
–
–
–
(1,901)
(30,441)
–
–
–
3,832
Contract and property development costs of the Group and of the Company recognised as an expense amounted to RM179,099,000 (2006: RM180,326,000)
and RM NIL (2006: RM15,562,000) respectively. Cost of inventories (including inventories written down) and services (including insurance services) of the
Group recognised as an expense amounted to RM2,168,297,000 (2006: RM2,928,289,000).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
129
6
DIRECTORS’ EMOLUMENTS
2007 2006
RM’000 RM’000
Non-executive Directors:
– fees:
– current Directors
– past Directors
– allowances and other benefits (current Directors)
Executive Directors:
628
– 1,141
377
278
604
616
– – 353
278
–
2,878
– 649
11,110
– – –
143
218
– 69
485
– – –
15
– salaries, bonuses, allowances and other benefits:
– past Directors
– defined contribution retirement plan:
– past Directors
4,865
13,572
616
The estimated monetary value of other benefits provided to current Directors of the Company amounted to RM142,000 (2006: RM26,000).
7
STAFF COSTS
Group 2007 2006 RM’000 RM’000 789
Company
2007 2006
RM’000 RM’000
Salaries, wages, bonuses, allowances and other benefits
Defined contribution retirement plan
Termination benefits
430,984
45,124
3,173
408,676
41,399
22,000
– – – 5,426
626
–
479,281
472,075
– 6,052
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
130
8
– 31 March 2007
FINANCE COST
Interest expense on borrowings Hire purchase and finance lease charges
9
2007 2006
RM’000 RM’000
141,804
1,884
130,549
240
58,404
– 42,102
–
143,688
130,789
58,404
42,102
TAXATION
2007 2006
RM’000 RM’000
Arising in Malaysia:
Current taxation
37,158
7,387
40,429
Deferred taxation (Note 21)
(899)
(43,964)
(377)
Outside Malaysia:
Current taxation
26
26
– 36,285
(36,551)
40,052
Arising in Malaysia:
Over provision of current taxation in respect
of prior financial years
(5,685)
(13,619)
– Total taxation charge
30,600
(50,170)
40,052
–
(776)
–
(776)
–
(776)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
131
9
TAXATION (Continued)
The explanation of the relationship between tax expense and profit/(loss) before taxation is as follows:
Numerical reconciliation of effective tax expense
Group 2007 2006 RM’000 RM’000 187,131
(196,744)
Company
2007 2006
RM’000 RM’000
307,293
Tax calculated at the Malaysian tax rate of 27% (2006: 28%)
50,525 (55,088) 82,969
Tax effects of:
– share of results of jointly controlled entities
(8,991)
(12,226)
– – share of results of associated companies
(34,261)
(47,871)
– – expenses not deductible for tax purposes
72,388
183,295
5,546
– income not subject to tax
(72,165)
(83,120)
(38,545)
– tax losses not recognised
20,346
11,395
– – different in tax rates for small and medium enterprises
(646)
(1,544)
– – different tax rates 3,992
4,426
– – utilisation of previously unrecognised tax losses
(10,555)
(30,912)
(9,541)
– temporary differences not recognised
15,652
(4,906)
(377)
Over provision of current taxation in respect of prior financial years
(5,685)
(13,619)
– Tax expense
30,600
(50,170)
40,052
(80,809)
(22,626)
–
–
14,535
(6,315)
–
–
–
–
13,630
–
(776)
nabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment allowances of the Group which are
U
available for set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below:
Unabsorbed tax losses
Unutilised capital allowances
Unutilised investment tax allowances
Unutilised reinvestment allowances
Group
2007 2006
RM’000 RM’000
1,258,566
413,634
288,467
195,703
1,222,303
373,620
291,105
175,124
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
132
– 31 March 2007
10 DIVIDENDS
Dividends paid, declared and proposed are as follows:
Group and Company
2007 2006
RM’000 RM’000
(a) Dividend paid
First and final dividend of 2.0 sen (2005: 3.0 sen) gross per share, less taxation of 28%
(2005: 28%) in respect of the financial year ended 31 March 2006
Adjustment in respect of ordinary shares issued after 31 March but before book closure
date for dividend entitlement
14,397
21,290
48
17
14,445
21,307
7,356
–
(b) Dividend declared
Interim dividend of 1.0 sen (2006: NIL) gross per share, less taxation of 27% (2006: NIL)
At the forthcoming Annual General Meeting of the Company, a final gross dividend in respect of the financial year ended 31 March 2007 of 2.5 sen (2006:
2.0 sen) per share less taxation of 27% (2006: 28%), amounting to RM18,388,828 (2006: RM14,396,713) will be proposed for shareholders’ approval. These
financial statements do not reflect this final dividend which will be accrued as a liability in the financial year ending 31 March 2008 when approved by
shareholders.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
133
11EARNINGS/(LOSS) PER SHARE
(a) Basic
The basic earnings/(loss) per share is calculated by dividing the Group’s net profit/(loss) attributable to shareholders by the weighted average number
of shares in issue during the financial year.
Group
2007 Net profit/(loss) attributable to shareholders (RM’000)
95,073
Weighted average number of ordinary shares in issue (‘000)
1,003,949
Basic earnings/(loss) per share (sen)
9.47
2006
(204,975)
989,143
(20.72)
(b) Fully diluted
For the diluted earnings/(loss) per share calculation, the weighted average number of shares in issue is adjusted for dilutive potential shares in respect
of share options pursuant to ESOS. The ESOS expired on 9 April 2006.
Group
2007 Net profit/(loss) attributable to shareholders (RM’000)
95,073
2006
(204,975)
Weighted average number of ordinary shares in issue (‘000)
Adjustment for share options (‘000)
1,003,949
– 989,143
1,342
1,003,949
990,485
Diluted earnings/(loss) per share (sen)
9.47
The impact of the fully diluted earnings per share in respect of Loan Stocks 2002/2008 is not reflected as it is anti-dilutive.
(20.69)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
134
– 31 March 2007
12PROPERTY, PLANT AND EQUIPMENT
Buildings,
Long Short golf
Furniture
Capital
Freehold leasehold leasehold course andPlant and Motor Office and
work–
Note land land land improvements machinery vehicles equipment fittings in-progress Total
GROUP RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Net book value at
1 April 2005
Additions
Disposals
Written off
Depreciation charge
Impairment losses
Currency translation
differences
Reclassifications
Transfer to land held for
property development 15(b)
Net book value at
31 March 2006
Transfer to investment
properties
Transfer from other
investments
Acquisition of subsidiary
companies
42
Disposal of subsidiary
companies
43
Additions
318,716
1,046
– – – – 38
1,793
(63,200)
321,376
3,665
(7,536)
– (4,320)
(48,007)
146,832
29,499
(673)
(1,909)
(38,527)
(112)
29,307
11,974
(823)
(1,518)
(9,558)
– 60,789 2,370,574
27,382
132,356
(1,818)
(20,617)
(16)
(6,811)
– (182,230)
– (157,138)
(943)
6,422
(16)
48,578
(5)
104
(208)
(6,925)
(13)
104
– (55,087)
(3,881)
–
– – – – – – – – (63,200)
(17,912)
(181,121)
– 238
26,976
12,212
(4,849)
(39)
(10,280)
(17)
– (28)
267,483
24,000
236,714
27,831
(684)
(2,201)
(79,927)
(5,003)
(2,734)
5,039
258,393
5,139
1,414 1,228,450
– 18,747
– (4,234)
– (1,128)
(55)
(39,563)
– (103,999)
– 1,331 1,103,752
– (133,628)
225,292
24,102
127,977
29,473
31,250 2,069,053
(6,644)
– (15,081)
(494)
– – – – – – – 3,761
3,698
– 22,437
34,081
679
– 2,290
– – (25)
10,759
(27)
45,780
(112)
7,165
713
(339)
14,844
22,045
– 2,844
(354,880)
8,900
24,101
131,754
– 35,111
(503)
119,031
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
135
12PROPERTY, PLANT AND EQUIPMENT (Continued)
Buildings,
Long Short golf
Freehold leasehold leasehold course and
Note land land land improvements
GROUP RM’000 RM’000 RM’000 RM’000
Disposals
Written off
Depreciation charge
Impairment losses
Currency translation differences Reclassification
Reclassification of assets
held for sale 22
Transfer to land held for
property development
15(b)
Transfer to other receivables
Net book value at 31 March 2007
Furniture
Capital
Plant and Motor Office and
work–
machinery vehicles equipment fittings in-progress Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
(306)
(252)
– – 201
524
– – (2,425)
– – (524)
– – (55)
– – – (397)
(2,489)
(30,481)
(18,184)
524
13,714
(6,548)
(858)
(57,016)
(19,564)
1,146
7,333
(4,307)
(31)
(5,515)
– (2)
3
(228)
(102)
(29,035)
(639)
(580)
510
(114)
(223)
(9,017)
(1)
(5)
(14)
– – – (105)
– (21,546)
(11,900)
(3,955)
(133,544)
(38,493)
1,284
–
– – – – – (81)
– – – (81)
– – (2,266)
– – – – – – – – – – (75)
– – – (7,155)
(2,266)
(7,230)
270,025
87,135
Cost
Accumulated depreciation
Accumulated impairment losses
270,025
– – 98,931
(11,796)
– Net book value 270,025
87,135
1,276
969,743
222,975
21,901
97,965
44,494
61,656 1,777,170
125,720
(81,225)
(1)
61,761 3,380,148
– (1,445,186)
(105) (157,792)
44,494
61,656 1,777,170
NET BOOK VALUE AT 31 MARCH 2007
2,062 1,438,711 935,236
(786) (336,590) (687,711)
– (132,378) (24,550)
1,276
969,743
222,975
52,943
394,759
(31,042) (296,036)
– (758)
21,901
97,965
Cost
Accumulated depreciation
Accumulated impairment losses
258,393
– – 336,685
(21,195)
(48,007)
2,062 1,577,111 948,296
(731) (359,157) (718,001)
– (114,202)
(5,003)
Net book value
258,393
267,483
1,331 1,103,752
225,292
69,163
(45,044)
(17)
429,493
(301,404)
(112)
108,455
(78,981)
(1)
31,250 3,760,908
– (1,524,513)
– (167,342)
24,102
127,977
29,473
31,250 2,069,053
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
136
– 31 March 2007
Note
COMPANY Long
leasehold
land
RM’000
Buildings
and Plant and improvements machinery RM’000 RM’000
Motor Office Furniture
vehicles equipment and fittings RM’000 RM’000 RM’000 Total
RM’000
Net book value at 1 April 2005 Additions Disposals Written off Depreciation charge 5,983 2,545 – – (107) 69,752 – – (740) (2,707) 1,030 – – – (1,014) 2,926 593 (500) (32) (1,531) 3,079 – – (1,705) (1,072) 1,917 2 (70) (1,144) (316) 84,687
3,140
(570)
(3,621)
(6,747)
Net book value at 31 March 2006 Transfer to investment properties 13 Additions Disposals Depreciation charge Reclassification of assets held for sale 22 8,421 (8,421) – – – – 66,305 (66,305) – – – – 16 – – – (9) – 1,456 – 213
(704) (200) (81)
302 – 2
– (83) -
389 – – – (74) – 76,889
(74,726)
215
(704)
(366)
(81)
7 684 221 315
1,227
963 (279) 889 (668) 749 (434) 12,755
(11,528)
684
221
315
1,227
7,020 (5,564) 887 (585) 749 (360) 109,466
(32,577)
1,456 302 389 76,889
Net book value at 31 March 2007 – – Cost Accumulated depreciation – – – – Net book value –
–
10,154 (10,147) 7
Cost Accumulated depreciation 9,127 (706) 81,529 (15,224) Net book value 8,421 66,305 10,154 (10,138) 16 DRB-HICOM Berhad
(203430-W)
2007 Annual Report
137
(a)Certain property, plant and equipment of the Group with net book value of RM395,011,000 (2006: RM680,983,000) have been charged as security for
bank borrowings (Notes 31 and 36).
(b)Certain freehold and leasehold lands of the Group at a net book value of RM45,755,000 (2006: RM45,884,000) have been lodged by way of private
caveat and memorandum of deposits for long term borrowings (Note 31).
(c)The details of motor vehicles, plant and machinery, and office equipment acquired under hire purchase and finance lease agreements of the Group
are as follows:
Hire Purchase
and Finance Lease
2007 2006
RM’000 RM’000
Additions during the financial year:
– Motor vehicles – Plant and machinery – Office equipment 375 12,751 – 571
6,350
2,715
4,787 20,732 1,750 4,008
10,450
2,256
Net book value at financial year end:
– Motor vehicles – Plant and machinery – Office equipment (d)The title deeds to the freehold and leasehold land of certain subsidiary companies amounting to RM94,448,000 (2006: RM89,377,000) are in the
process of being registered in the names of the subsidiary companies.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
138
– 31 March 2007
13 INVESTMENT PROPERTIES
2007 2006
RM’000 RM’000
Net book value
At 1 April Effects of adoption of FRS 140:
– – – –
354,880 39,151 55,118 – – – 74,726 – 10,593 –
–
–
Transfer to assets held for sale (Note 22)
Changes in fair value during the financial year
449,149 (2,800)
20,478
– – – 85,319
– – –
–
–
At 31 March 466,827
– 85,319
–
13,672
– 7,710
–
6,144
– 382
–
608
– – Transfer from property, plant and equipment (Note 12) – Transfer from other investments – Fair value adjustments on investment properties
The disclosure on income and expenses of investment properties are as below:
Rental income
Direct operating expenses from investment properties that generated
rental income during the financial year
Direct operating expenses from investment properties that did not generate
rental income during the financial year
– –
(a)The fair value of the properties of the Group and the Company were based on valuations by independent professional qualified valuers. Valuations for
the properties were based on current prices in an active market.
(b)The titles to certain properties included in investment properties with a carrying value of RM27,405,000 (2006: RM NIL) are in the process of being
transferred to an insurance subsidiary company.
(c)Certain investment properties of the Group with carrying value of RM321,933,000 (2006: RM NIL) have been charged as security for bank borrowings
(Notes 31 and 36).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
139
14 BIOLOGICAL ASSETS
2007 2006
RM’000 RM’000
Net book value
At 1 April, as restated New planting expenditure
Write off on replanting of new crop
21,851
105
(2,340)
21,851
– – – – – –
–
–
At 31 March
19,616
21,851
– –
Certain freehold and leasehold lands of the Group at a net book value of RM8,793,000 (2006: RM11,028,000) have been lodged by way of private caveat
and memorandum of deposits for long term borrowings (Note 31).
15PROPERTY DEVELOPMENT ACTIVITIES
(a) Property development costs
2007 2006
RM’000 RM’000
At cost
At 1 April – Land
263,542
150,756
– – Development costs
993,467
672,538
– Less: Accumulated costs charged to income statement (1,146,794)
(721,327)
– –
–
–
110,215
101,967
– Add : Costs incurred during the financial year
– Land
60
– – – Development costs
126,303
114,445
– –
Transfer from land held for property development
Less: Costs recognised as expense in income statement during the financial year
Transfer to inventories
–
–
–
–
– –
At 31 March 236,578
38,370
(144,450)
(20,461)
216,412
24,043
(128,454)
(1,786)
110,037
110,215
–
–
–
–
–
–
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
140
– 31 March 2007
15PROPERTY DEVELOPMENT ACTIVITIES (Continued)
(a) Property development costs (Continued)
Company
2007 2006
RM’000 RM’000
At end of the financial year
– Land
– Development costs
Less: Accumulated costs charged to income statement
Group 2007 2006 RM’000 RM’000 264,062
1,131,421
(1,285,446)
110,037
263,542
993,467
(1,146,794)
110,215
– – – –
–
–
– –
(b) Land held for property development
Company
2007 2006
RM’000 RM’000
At 1 April
– Land
Group 2007 2006 RM’000 RM’000 185,485
148,752
125,176
154,179
– – –
–
334,237
279,355
– Add: Costs incurred during the financial year
– Land
– 1,801
– – Development costs
13,800
18,616
– –
Disposal of land
Transfer from property, plant and equipment (Note 12)
Transfer to property development costs
348,037
– 2,266
(38,370)
299,772
(4,692)
63,200
(24,043)
–
–
–
–
–
–
–
–
At 31 March 311,933
334,237
– –
– Land
187,752
124,181
185,485
148,752
– – –
–
311,933
334,237
– –
–
–
At end of the financial year
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
141
15PROPERTY DEVELOPMENT ACTIVITIES (Continued)
Included in property development costs is interest on borrowings capitalised for the financial year amounting to RM4,666,000 (2006: RM4,153,000).
and amounting to RM56,019,000 (2006: RM56,244,000) belonging to subsidiary companies, included in property development costs and land held for
L
property development have been charged as security for bank borrowings (Notes 31 and 36).
ertain freehold land of the Group amounting to RM35,146,000 (2006: RM35,146,000) has been lodged by way of private caveat and memorandum of
C
deposits for long term borrowings (Note 31).
he title deeds to the freehold land of a subsidiary company amounting to RM63,200,000 (2006: RM63,200,000) are in the process of being registered in
T
the name of the subsidiary company.
16 SUBSIDIARY COMPANIES
Company
2007 2006
RM’000 RM’000
Unquoted shares, at cost
Less: Accumulated impairment losses
3,175,574
(98,245)
3,165,574
(98,245)
3,077,329
3,067,329
Amounts due from subsidiary companies (non trade)
Less: Allowance for doubtful debts
1,646,422
(215,052)
1,414,066
(215,052)
1,431,370
1,199,014
The details of the subsidiary companies are listed in Note 3 to the financial statements.
The amounts due from subsidiary companies are unsecured, have no fixed terms of repayment and are not repayable within the next 12 months. Interest
is charged at 5.88% to 9.00% (2006: 6.15% to 9.00%) on RM667,661,000 of the amounts due (2006: RM615,570,000).
The carrying amount of the amount due from subsidiary companies are fair valued at RM1,542,316,000 (2006: RM1,327,762,000).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
142
– 31 March 2007
17 JOINTLY CONTROLLED ENTITIES
Share of net assets
Group 2007 2006 RM’000 RM’000 228,100
303,166
– – Company
2007 2006
RM’000 RM’000
– 9,800
–
9,800
The details of the jointly controlled entities, all of which are unquoted, are listed in Note 3 to the financial statements.
The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities are as follows:
Group
2007 2006
RM’000 RM’000
Non current assets
Current assets
Non current liabilities
Current liabilities
81,480
238,297
(28,139)
(63,538)
151,261
321,128
(54,338)
(114,885)
Share of net assets
228,100
303,166
Group
2007 2006
RM’000 RM’000
Revenue
Expenses
365,573
(328,738)
415,255
(376,482)
Profit before taxation
Taxation
36,835
(8,991)
38,773
(12,226)
Net profit 27,844
26,547
(a) Capital commitments for property, plant and equipment
– contracted
– not contracted
971
2,774
5,174
15,879
3,745
21,053
(b) There are no contingencies relating to jointly controlled entities.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
143
18ASSOCIATED COMPANIES
Share of net assets
Group 2007 2006 RM’000 RM’000 1,339,434
1,446,280
– – Company
2007 2006
RM’000 RM’000
– 57,803
–
59,325
Quoted shares, at cost
1,071,443
1,071,443
– –
Quoted shares, at market value
1,155,515
1,033,884
– –
The details of the associated companies are listed in Note 3 to the financial statements.
The sale proceeds of the quoted shares in associated companies have been assigned in relation to the long term loan under Islamic financing (Note 31).
The Group’s share of the assets, liabilities, revenue and expenses of the associated companies are as follows:
Group
2007 2006
RM’000 RM’000
Non current assets
Current assets
Non current liabilities
Current liabilities
627,938
8,548,722
(13,823)
(7,692,403)
655,616
7,710,402
(23,706)
(6,896,032)
Less: Accumulated impairment losses
1,470,434
(131,000)
1,446,280
–
Share of net assets
1,339,434
1,446,280
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
144
– 31 March 2007
18ASSOCIATED COMPANIES (Continued)
The Group’s share of the assets, liabilities, revenue and expenses of the associated companies are as follows:
Group
2007 2006
RM’000 RM’000
Revenue
Expenses
1,678,666
(1,552,941)
2,069,675
(1,887,718)
Profit before taxation
Taxation
125,725
(34,261)
181,957
(47,871)
Net profit 91,464
134,086
(a) (i)
Capital commitments for property, plant and equipment
– contracted
– not contracted
2,063
23,519
12,901
25,525
25,582
38,426
(ii) Capital commitments for investments
– contracted
– 5,326
(b) There are no contingencies relating to associated companies.
(c)The Group’s share of losses of associated companies that have not been recognised for the current financial year amounted to RM1,876,000 (2006:
RM13,320,000). The accumulated share of losses that have not been recognised amounted to RM20,224,000 (2006: RM18,348,000).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
145
19 OTHER INVESTMENTS
(i)
•
Investment properties:
Freehold land and buildings:
– at cost
Leasehold land and buildings:
– at cost
•
Quoted securities:
Malaysian Government Securities, at cost
Amortisation of premiums
Cagamas papers, at cost
Amortisation of premiums
– 11,178
– –
– 38,681
– –
– 49,859
– –
135,506
(3,955)
110,484
(2,320)
– – –
–
131,551
108,164
– –
– – 5,028
(16)
– – –
–
– 5,012
– –
– – 36,890
– – – –
–
– 36,890
– –
Quoted shares in Malaysia, at cost
Less: Allowance for diminution in value
Quoted shares outside Malaysia, at cost
– 6,002
– –
Corporate debts securities quoted in Malaysia, at cost
Accretion of discounts net of amortisation of premiums
– – 8,365
395
– – –
–
– 8,760
– –
Company
2007 2006
RM’000 RM’000
Held by insurance subsidiary companies
Group 2007 2006 RM’000 RM’000 DRB-HICOM Berhad
(203430-W)
2007 Annual Report
146
– 31 March 2007
19 OTHER INVESTMENTS (Continued)
(i)
Company
2007 2006
RM’000 RM’000
Held by insurance subsidiary companies (Continued)
•
Unquoted securities:
Corporate debt securities, at cost
Accretion of discounts net of amortisation of premiums
532,177
7,053
(2,261)
463,153
4,607
(1,064)
– – – –
–
–
536,969
466,696
– –
2,374
(154)
2,374
(154)
– – –
–
2,220
2,220
– –
670,740
683,603
– –
– 97
– –
– 4,168
– –
– 4,265
– –
2,814
(133)
3,605
(1,847)
– – –
–
2,681
1,758
– –
•
6,201
6,201
– –
Group 2007 2006 RM’000 RM’000 Sub-total
(ii) Held by other Group companies
•
Investment properties:
Freehold land and buildings:
– at cost
Leasehold land and buildings:
– at cost
Quoted shares in Malaysia, at cost
Subordinated bonds
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
147
19 OTHER INVESTMENTS (Continued)
2007 2006
RM’000 RM’000
(ii) Held by other Group companies (Continued)
•
Unquoted securities:
45,888
(3,179)
46,818
(2,840)
– – –
–
42,709
43,978
– –
Sub-total
51,591
56,202
– –
Total
722,331
739,805
– –
(a) The carrying amounts of other investments at balance sheet date approximate their fair values except for the following:
Group 2007
Carrying Fair
amount value RM’000 RM’000 Group
2006
Carrying
amount RM’000 Fair
value
RM’000
Malaysian Government Securities Cagamas papers
Quoted shares
Subordinated bonds
Corporate debt securities, quoted
Corporate debt securities, unquoted
131,551
– 2,681
6,201
– 536,969
133,911
– 8,117
5,763
– 555,768
108,164
5,012
44,650
6,201
8,760
466,696
109,038
5,012
52,998
5,753
10,000
466,507
677,402
703,559
639,483
649,308
(b)It is not practicable to determine the fair value of unquoted shares which have a carrying value of RM44,929,000 (2006: RM46,198,000). However, the
investments are periodically tested for impairment as and when necessary, the carrying amounts are written down accordingly. At balance sheet date,
Group’s share of total net assets was RM76,312,000 (2006: RM77,480,000). Group’s share of total profit after tax for the financial year was RM9,102,000
(2006: RM8,331,000).
(c)The investment properties have been reclassified upon adoption of FRS140: Investment Property or transferred to property, plant and equipment (Notes
12 and 13).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
148
– 31 March 2007
20 INTANGIBLE ASSETS
Product
development
Goodwill expenditure
RM’000 RM’000
Total
RM’000
Group
2007
At 1 April
Acquisition of a subsidiary company (Note 42)
Incurred Amortisation
Written off – 4,665
– – – 3,341
– 2,796
(1,037)
(50)
3,341
4,665
2,796
(1,037)
(50)
At 31 March
4,665
5,050
9,715
Cost
Accumulated amortisation 4,665
– 10,930
(5,880)
15,595
(5,880)
Carrying amount
4,665
5,050
9,715
2006
At 1 April
Incurred Amortisation
– – – 2,504
1,529
(692)
2,504
1,529
(692)
At 31 March
– 3,341
3,341
Cost
Accumulated amortisation – – 8,969
(5,628)
8,969
(5,628)
Carrying amount
– 3,341
3,341
The carrying amount of goodwill was allocated to one of the Group’s cash generating units (“CGUs”), namely defence and related services. The recoverable
amount of a CGU is determined based on value-in-use calculations. These calculations use pre-tax cash flow projections based on approved financial
budgets. Cash flows beyond the budgeted period are extrapolated using the estimated growth rates. Based on this calculation, the recoverable amount of
goodwill exceeded its carrying value.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
149
21 DEFERRED TAXATION
2007 2006
RM’000 RM’000
At 1 April
18,393
(25,571)
1,534
Effects of adoption of FRS 140
(7,532)
– (2,966)
Waiver of deferred tax in respect of Real Property Gain Tax
arising from fair value changes on freehold land
1,311
– – Acquisition of subsidiary companies (Note 42)
(10,441)
– – Transfer to income statement (Note 9)
– Investments
(2,347)
4,540
– – Intangibles
– 350
– – Payables
3
439
– – Property, plant and equipment
(7,740)
27,479
377
– Property development expenditure
– (7,735)
– – Provisions
3,025
(545)
– – Receivables
3,329
– – – Tax losses
5,249
20,516
– – Unearned premium reserve (620)
(1,080)
– 758
–
776
At 31 March
377
–
–
–
–
–
776
–
–
–
–
–
899
43,964
2,630
18,393
(1,055)
1,534
41,969
5,346
6,353
1,225
4,571
41,222
47,699
6,585
9,703
1,311
– 35,973
4,889
– – – – – 4,410
–
–
–
–
–
100,686
(29,024)
101,271
(25,619)
4,889
(4,889)
4,410
(2,876)
71,662
75,652
Subject to income tax
Deferred tax assets (before offsetting)
Investments
Provisions
Payables
Receivables
Tax losses
Offsetting
Deferred tax assets (after offsetting)
– 1,534
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
150
– 31 March 2007
21 DEFERRED TAXATION (Continued)
2007 2006
RM’000 RM’000
Subject to income tax
Deferred tax liabilites (before offsetting)
Investment
Payables
Provisions
Property development expenditure
Receivables
Unearned premium reserve (86,409)
(2,037)
– – (7,735)
(1,242)
(633)
(66,436)
(929)
(89) (325)
(7,735)
– (13)
(5,944)
– – – – – – (2,876)
–
–
–
–
–
–
Offsetting
(98,056)
29,024
(75,527)
25,619
(5,944)
4,889 (2,876)
2,876
Deferred tax liabilities (after offsetting)
(69,032)
(49,908)
(1,055)
–
– (7,351)
– –
71,662
(69,032)
75,652
(57,259)
– (1,055)
1,534
–
2,630
18,393 (1,055)
1,534
Subject to capital gains tax
Deferred tax liabilities
Presented after appropriate offsetting as follows:
Deferred tax assets
Deferred tax liabilities
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
151
22ASSETS HELD FOR SALE
Group 2007 2006 RM’000 RM’000 Property, plant and equipment (Note 12)
Associated company
Other investments
Investment property (Note 13)
81
– 3,163
2,800
–
–
–
–
6,044
– Company
2007 2006
RM’000 RM’000
81
1,522
– – –
–
–
–
1,603
–
Jointly controlled entities and an associated company were classified as assets held for sale as at the end of the financial year (Note 3).
23 INVENTORIES
Raw materials
Work-in-progress
Finished goods
Consumables
Completed units of unsold properties
2007 2006
RM’000 RM’000
75,094
110,438
355,602
57,444
21,091
87,389
186,340
424,709
33,083
2,085
–
–
–
–
–
–
–
–
–
–
619,669
733,606
– –
Certain inventories of subsidiary companies amounting to RM17,452,000 (2006: RM15,452,000) have been pledged as security for bank borrowings (Note 36).
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
152
– 31 March 2007
24 TRADE AND OTHER RECEIVABLES
2007 2006
RM’000 RM’000
Trade receivables Less: Allowance for doubtful debts
698,210
(61,721)
1,089,040
(60,652)
62,710
(9,000)
434,285
–
636,489
1,028,388
53,710
434,285
Other receivables
168,427
(7,647)
178,947
(7,234)
327
(2)
10,020
(10)
160,780
171,713
325
10,010
Amounts due from subsidiary companies
– – – – 97,297
(149)
86,195
(25,145)
– – 97,148
61,050
Accrued billings
Amounts due from customers on contracts (Note 40)
Advances to contractors on contracts (Note 40) Deposits
Prepayments
Amounts due from jointly controlled entities
Amounts due from associated companies
41,874
6,999
– 13,939
13,842
2,005
15,054
16,890
14,184
2,932
15,919
13,350
3,584
2,273
– – – 569
90
56
4
–
–
–
597
123
44
201
93,713
69,132
719
965
890,982
1,269,233
151,902
506,310
The currency exposure profile of trade receivables is as follows:
2007 2006
RM’000 RM’000
– Ringgit Malaysia
– US Dollar
– Others
621,808
7,418
7,263
1,019,348
3,860
5,180
53,710
– – 434,285
–
–
636,489
1,028,388
53,710
434,285
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
153
24 TRADE AND OTHER RECEIVABLES (Continued)
(a)The Group’s and the Company’s normal trade credit terms range from 30 to 60 days (2006: 30 to 60 days). Other credit terms are assessed and
approved on a case by case basis.
(b)Included in trade receivables of the Group and the Company is an amount of RM53,220,000 (2006: RM425,000,000) owing by the Government in respect
of Electrified Double Track Project.
(c)Included in other receivables for the Group is an amount of RM22,000,000 (2006: RM34,000,000) in respect of reimbursement of certain operating
expenditure of a subsidiary company due from the Ministry of Finance.
(d)Included in amounts due from subsidiary companies are interest bearing loans amounting to RM83,107,000 (2006: RM58,063,000). Interest is charged
at 5.00% to 6.84% (2006: 5.00% to 6.11%) per annum on the interest bearing loans. The loans are unsecured and have no fixed terms of repayment.
(e)All other amounts due from subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have
no fixed terms of repayment.
25 MARKETABLE SECURITIES
Lower of cost and market value Group 2007 2006 RM’000 RM’000 Company
2007 2006
RM’000 RM’000
Shares and warrants quoted in Malaysia
Shares quoted outside Malaysia 201,680
43,854
152,903
17,255
– 38,781
–
17,255
245,534
170,158
38,781
17,255
Shares and warrants quoted in Malaysia
Shares quoted outside Malaysia 216,199
44,540
152,903
17,255
– 39,467
–
17,255
260,739
170,158
39,467
17,255
Market value
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
154
– 31 March 2007
26 SHORT TERM DEPOSITS
Group 2007 2006 RM’000 RM’000 Deposits with licensed financial institutions:
Banks
Finance companies
Discount houses
1,116,246
63,853
– 1,180,099
784,789
68,567
207,649
1,061,005
Company
2007 2006
RM’000 RM’000
141,723
– – 46,894
–
54,017
141,723
100,911
(a) Certain deposits with licensed banks of the Group amounting to RM6,926,000 (2006: RM12,851,000) have been pledged as security for banking
facilities.
(b) Included in the deposits of the Group and of the Company is an amount of RM112,436,000 (2006: RM45,336,000) maintained as a sinking fund for the
performance bond in respect of the Electrified Double Track Project. The performance bond expired on 16 June 2007.
(c) The currency exposure profile of short term deposits is as follows:
– Singapore Dollar
– Thai Baht
2007 2006
RM’000 RM’000
1,171,354
8,600
145
1,049,907
11,098
– 141,723
– – 100,911
–
–
1,180,099
1,061,005
141,723
100,911
(d) The weighted average effective annual interest rates of short term deposits at the end of the financial year are as follows:
Group 2007 % 2006 % Company
2007 2006
% %
Deposits with licensed financial institutions:
Banks
3.43
3.06
3.21
Finance companies
3.38
3.09
– Discount houses
– 3.13
– (e) Deposits of the Group and Company have an average maturity period of 268 (2006: 154) and 44 (2006: 46) days respectively.
2.60
–
3.18
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
155
27 CASH AND BANK BALANCES
(a) Bank balances are deposits held at call with banks and are non-interest bearing.
(b)Included in cash and bank balances of the Group are bank accounts maintained pursuant to the Housing Developers (Control & Licensing) Act 1966,
amounting to RM37,527,000 (2006: RM15,467,000).
(c) The currency exposure profile of cash and bank balances are as follows:
– Singapore Dollar
– Others
2007 2006
RM’000 RM’000
125,115
1,779
1,670
103,293
2,159
1,695
1,298
– – 2,084
–
–
128,564
107,147
1,298
2,084
28 SHARE CAPITAL
Group
2007 No. of
Nominal
Shares Value
RM’000 RM’000
and Company
No. of Shares RM’000 2006
Nominal
Value
RM’000
Authorised:
Ordinary shares of RM1.00 each 2,000,000
2,000,000
2,000,000
2,000,000
999,772
7,835
999,772
7,835
985,670
14,102
985,670
14,102
1,007,607
1,007,607
999,772
999,772
Issued and fully paid:
Ordinary shares of RM1.00 each:
At 1 April
Issued At 31 March
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
156
– 31 March 2007
28 SHARE CAPITAL (Continued)
(a)During the financial year, the Company’s issued and paid-up share capital increased from RM999,771,729 to RM1,007,607,035 by way of issue of
7,835,306 new ordinary shares of RM1.00 each, pursuant to following:
(i)Exercise of 3,328,100 share options under the Employees’ Share Option Scheme (“ESOS”), at option prices ranging from RM1.00 to RM1.69 per
share.
(ii)Exchange of RM6,771,750 nominal value of Redeemable Exchangeable Unsecured Loan Stock (“REULS”) plus accrued interest of RM1,521,509 of
Gadek (Malaysia) Berhad, a wholly-owned subsidiary company into 4,507,206 new ordinary shares of the Company, at an issue price of RM1.84
per share.
The new shares rank pari passu in all respects with the existing shares of the Company including entitlement to the final dividend proposed for the
financial year ended 31 March 2007.
(b)The DRB-HICOM Berhad Employees’ Share Option Scheme (“ESOS”) came into effect on 10 April 2001 for a period of 5 years. The ESOS expired
on 9 April 2006. As at the expiry date of 9 April 2006, there were 26,037,100 options not exercised and have therefore, lapsed.
(c) Details relating to share options exercised and conversion of REULS are as follows:
2007
Exercise
Fair valuePrice
Exercise date
RM RM
1.00 – 1.69
1.84
3,328,100
4,507,206
7,835,306
April 2006
1.55 – 1.68
December 2006
Number of ordinary shares issued during
the financial year ended
31 March 2007
Ordinary share capital at par (RM’000)
Share premium (RM’000)
Issue of ordinary shares on conversion of REULS of a subsidiary company (RM’000)
7,835
4,002
11,837
(8,293)
Proceeds received on exercise of share options (RM’000)
3,544
Fair value at exercise date of shares issued (RM’000)
5,355
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
157
28 SHARE CAPITAL (Continued)
(c) Details relating to share options exercised and conversion of REULS are as follows: (Continued)
2006
Exercise
Fair valuePrice
Exercise date
RM RM
April 2005
May 2005
June 2005
July 2005
August 2005
September 2005
October 2005
November 2005
December 2005
January 2006
February 2006
March 2006
1.75
1.42
1.48
1.55
1.59
1.57
1.54
1.52
1.18
–
–
–
–
–
–
–
–
–
1.81
1.86 1.67
1.75
1.79
1.60
1.57
1.58
1.34
1.27
1.28 – 1.46
1.29 – 1.52
1.00
1.00
1.00
1.00
1.00
1.00
1.33
1.00
1.00
–
–
–
–
–
–
–
–
–
1.75
1.62
2.88
1.67
1.44
1.33
1.44
1.33 1.84
1.00 1.00 – 1.07
1.00 – 1.40
Ordinary share capital at par (RM’000)
Share premium (RM’000)
Issue of ordinary shares on conversion of REULS of a subsidiary company (RM’000)
Proceeds received on exercise of share options and warrants (RM’000)
Fair value at exercise date of shares issued (RM’000)
Number of ordinary shares issued during
the financial year ended
31 March 2006
147,000
54,000
27,500
62,000
368,000
47,000
66,000
11,000
11,701,282
100,000
246,000
1,272,000
14,101,782
14,102
9,714
23,816
(21,054)
2,762
19,290
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
158
– 31 March 2007
29 LIFE ASSURANCE FUND
Based on the actuarial valuation of the Life Assurance Fund made up to 31 March 2007, the actuary was satisfied that the assets available in the Life
Assurance Fund are sufficient to meet its long term liabilities to policyholders.
30 DEFERRED INCOME
This represents club membership licence fees received in advance by a subsidiary company, net of amounts recognised as income in the financial
statements.
31 LONG TERM BORROWINGS
Company
2007 2006
RM’000 RM’000
Secured •
Hire purchase and finance lease liabilities
– Portion repayable within 12 months included under borrowings (Note 36)
23,159
(7,419)
25,775
(13,998)
– – –
–
15,740
11,777
– –
633,842
(158,946)
802,136
(174,624)
– – –
–
474,896
627,512
– –
•
849,575
(4,094)
818,832
– 771,782
– 818,832
–
845,481
818,832
771,782
818,832
•
Long term loans
– Portion repayable within 12 months included under borrowings (Note 36)
Long term loan under Islamic financing
– Portion repayable within 12 months (Note 36)
Group 2007 2006 RM’000 RM’000 DRB-HICOM Berhad
(203430-W)
2007 Annual Report
159
31 LONG TERM BORROWINGS (Continued)
2007 2006
RM’000 RM’000
Unsecured
•
Long term loans – Portion repayable within 12 months included under borrowings (Note 36)
•
Loan Stocks 2002/2008 •
Deferred liability
85,810
(1,872) 264,504
(5,171)
– – –
–
83,938
259,333
– –
149,451
152,779
– –
26,456
26,456
– –
1,595,962
1,896,689
771,782
818,832
(a)The hire purchase and finance lease liabilities are secured against the respective assets acquired. The long term loans are secured against certain
freehold land under property, plant and equipment and property development (Notes 12 and 15).
(b) The weighted average effective annual interest rates at the end of the financial year are as follows:
Long term loans (secured and unsecured)
Loan Stocks 2002/2008
Group 2007 % 4.94
5.00
6.07
7.00
2006 % 4.74
4.77
5.87
7.00
Company
2007 2006
% %
– – 5.86
– –
–
5.61
–
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
160
– 31 March 2007
(c)On 20 November 2002, a subsidiary company issued RM871,934,000 Loan Stocks 2002/2008 (“Loan Stocks”) to its lenders, pursuant to the debt
restructuring agreement signed on 9 January 2002. The Loan Stocks carry a coupon rate of 2% per annum with a yield to maturity of 7%. On 30
May 2006, the subsidiary company made a partial cash redemption of RM2,926,000 million nominal value of REULS 2002/2008, net of discount
of RM661,000. On 5 December 2006, certain holders of REULS had exercised their exchange rights as per an Exchange Option and Purchase
Agreement whereby RM6,771,750 nominal value of REULS plus accrued interest amounting to RM1,521,509 had been converted into 4,507,206
ordinary shares of the Company.
The outstanding Loan Stocks are as follows:
Group
2007 2006
RM’000 RM’000
Redeemable exchangeable unsecured loan stocks (REULS)
Accrued finance cost 119,186
30,265
129,544
23,235
149,451
152,779
(d)In the previous financial year, the Company had obtained a long term loan under Islamic financing comprising RM680,000,000 nominal value of
Bai’Bithaman Aji Islamic Debt Securities (“BAIDs”) and RM320,000,000 million nominal value of Murabahah Commercial Papers/Medium Term Notes
(“CP/MTN”) for the redemption of RSLS/RESLS, repayment of borrowings of the Company and for working capital purposes. The long term loan under
Islamic financing has been obtained by way of assignment of sale proceeds of certain of the Group’s land held for property, plant and equipment,
biological assets and property development and quoted shares in associated companies (Notes 12, 14, 15 and 18). The amounts outstanding are as
follows:
(i) BAIDs
(ii) CP/MTN
Group and Company
2007 Nominal
Carrying
value
value
RM’000 RM’000 680,000
157,000
588,990
154,794
Group and Company
2006
Nominal
Carrying
value
value
RM’000 RM’000
680,000
223,000
588,990
215,860
Accrued finance cost
743,784
27,998
804,850
13,982
771,782
818,832
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
161
(e)The deferred liability is in respect of amounts owing of RM26,456,000 (2006: RM26,456,000) by a solid waste subsidiary company to local municipalities
in relation to the transfer of 818 units of movables assets from these municipalities to the subsidiary company.
(f)
The currency exposure profile of the long term borrowings are as follows:
–
–
–
–
Ringgit Malaysia
Singapore Dollar
Japanese Yen
Thai Baht
2007 2006
RM’000 RM’000
1,361,567
210,457
22,067
1,871
1,491,200
210,457
191,528
3,504
771,782
– – – 818,832
–
–
–
1,595,962
1,896,689
771,782
818,832
(g) Hire purchase and finance lease liabilities
2007 2006
RM’000 RM’000
Minimum hire purchase and finance lease payments:
–
–
–
–
–
–
not later than 1 year
later than 1 year and not later than 2 years
later than 2 years and not later than 3 years
later than 5 years
8,810
7,665
5,815
2,911
884
20
14,899
5,566
4,039
2,714
781
126
–
–
–
–
–
–
–
–
–
–
–
–
Future finance charges on hire purchase and finance lease
26,105
(2,946)
28,125
(2,350)
– – –
–
Present value of hire purchase and finance lease liabilities
23,159
25,775
– –
Representing hire purchase and finance lease liabilities:
– current (included in Note 36)
– non current
7,419
15,740
13,998
11,777
– – –
–
23,159
25,775
– –
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
162
– 31 March 2007
(h) The exposure of long term borrowings, excluding deferred liability to interest rate risk is as follows:
Carrying
amount
RM’000
Maturity profile
1 – 2 years 2 – 3 years
RM’000
RM’000
3 – 4 years
RM’000
4 – 5 years
RM’000
> 5 years
RM’000
Group
2007
Fixed rate (Fair value risk)
Long term loan (secured and unsecured)
15,740
60,000
690,212
149,451
6,388
– 8,188
149,451
5,709
60,000
8,188
– 2,758
– 632,891
– 866
– 16,378
– 19
–
24,567
–
915,403
164,027
73,897
635,649
17,244
24,586
498,834
155,269
120,283
155,269
90,872
– 62,592
– 13,380
– 211,707
–
654,103
275,552
90,872
62,592
13,380
211,707
1,569,506
439,579
164,769
698,241
30,624
236,293
Floating rate (Cash flow risk)
2006
11,777
251,528
599,795
152,779
1,015,879
4,838
61,200
– 152,779
3,668
1,200
– – 2,956
1,200
– – 281
1,200
599,795
– 34
186,728
–
–
218,817
4,868
4,156
601,276
186,762
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
163
(h) The exposure of long term borrowings, excluding deferred liability to interest rate risk is as follows: (Continued)
Maturity profile
Carrying
amount
RM’000
1 – 2 years 2 – 3 years
RM’000
RM’000
3 – 4 years
RM’000
4 – 5 years
RM’000
> 5 years
RM’000
Group
2006
Floating rate (Cash flow risk)
635,317
219,037
112,054
219,037
144,941
– 78,301
– 55,138
– 244,883
–
854,354
331,091
144,941
78,301
55,138
244,883
1,870,233
549,908
149,809
82,457
656,414
431,645
Company
2007
Floating rate (Cash flow risk) 616,513
– – 155,269
155,269
– 771,782
155,269
– Fixed rate (Fair value risk) –
– 616,513
– –
– –
Floating rate (Cash flow risk) – Long term loan under Islamic financing
2006
616,513
599,795
– – – 599,795
–
219,037
219,037
– – 818,832
219,037
– – – 599,795
–
–
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
164
– 31 March 2007
(i)
Fair value
•
Fair values of fixed rate long term borrowings, excluding deferred liability, are as follows:
Long term loans (secured and unsecured)
•
Group
2007
Carrying Fair
amount
value
RM’000
RM’000
Group
2006
Carrying
amount RM’000
Fair
value
RM’000
15,740
60,000
690,212
149,451
15,676
61,064
710,133
149,451
11,777
251,528
599,795
152,779
11,769
261,829
620,955
152,779
915,403
936,324
1,015,879
1,047,332
Deferred liability
It is not practicable to determine the fair value of amounts owing to local municipalities by a solid waste subsidiary company as the obligation
to pay for these amounts will only crystallise upon the finalisation of the National Privatisation Concession Agreement. However, the Directors’
are of the opinion that the fair value will not be materially different from the carrying value.
32 SINKING FUND
2007 2006
RM’000 RM’000
At 1 April
Charge Utilised 645
354
(52)
658
357
(370)
– – – –
–
–
At 31 March
947
645
– –
The sinking fund of subsidiary companies were established pursuant to the trust deeds dated 23 March 1993 and 7 September 1999 respectively for the
purpose of covering the cost of periodic major repairs, replacement of the golf course and building maintenance managed by the subsidiary companies.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
165
33 GENERAL AND LIFE INSURANCE FUNDS
Group 2007 2006 RM’000 RM’000 Outstanding claims: Company
2007 2006
RM’000 RM’000
261,464
(52,131)
224,577
(2,016)
– – –
–
Net outstanding claims
Unearned premium reserves
209,333
121,605
222,561
138,493
– – –
–
330,938
361,054
– –
Provision for outstanding claims Recoverable from reinsurers
34 TRADE AND OTHER PAYABLES
Trade payables Other payables and accruals Progress billings
Amounts due to customers on contracts (Note 40)
Amounts due to subsidiary companies
Amounts due to jointly controlled entities
Amounts due to associated companies
620,297
348,138
20,610
4,305
– 350
1,527
1,009,386
310,879
29,992
38,861
– 2,752
7,481
995,227
1,399,351
(a)
Company
2007 2006
RM’000 RM’000
89,714
72,113
– – 86,102
– – 247,929
The currency exposure profile of trade payables is as follows:
537,024
945,360
89,714
– Japanese Yen
70,208
61,095
– – Thai Baht
7,903
251
– – US Dollar
2,993
781
– – Euro
1,674
1,131
– – Singapore Dollar
335
347
– – Others
160
421
– Group 2007 2006 RM’000 RM’000 620,297
1,009,386
89,714
412,179
15,582
–
–
96,122
–
–
523,883
412,179
–
–
–
–
–
–
412,179
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
166
– 31 March 2007
34 TRADE AND OTHER PAYABLES (Continued)
(b) The Group’s and the Company’s normal trade payables terms range from 30 to 90 days (2006: 30 to 90 days).
(c)Included in amounts due to subsidiary companies are interest bearing loans amounting to RM51,682,000 (2006: RM56,355,000) and non-interest bearing
loans amounting to RM7,634,000 (2006: RM7,634,000). Interest is charged at 5.00% to 6.14% (2006: 4.65% to 5.00%) per annum on the interest bearing
loans. The loans are unsecured and have no fixed terms of repayment.
(d)All other amounts due to subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have no
fixed terms of repayment.
35PROVISION FOR LIABILITIES AND CHARGES
Sales
Warranty returns
RM’000
RM’000
Voluntary
separation
scheme RM’000
Total
RM’000
Group
2007
At 1 April
Acquisition of a subsidiary company (Note 42)
Charge Utilised 25,618
694
16
6,357
(8,712)
623
– – 677
(794)
At 31 March
23,973
506
Sales Warranty returns RM’000
RM’000
22,000
– – – (21,854)
146
Voluntary
separation Restructuring
scheme costs RM’000
RM’000
48,241
694
16
7,034
(31,360)
24,625
Total
RM’000
Group
2006
At 1 April
Charge/(writeback) Utilised 24,849
8,805
(8,036)
1,158
(471)
(64)
– 22,000
– At 31 March
25,618
623
22,000
11,444
– (11,444)
– 37,451
30,334
(19,544)
48,241
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
167
36 BANK BORROWINGS
(i)
Bank overdrafts
– secured
– unsecured
2007 2006
RM’000 RM’000
11,612
15,467
11,111
48,700
– – –
–
27,079
59,811
– –
16,184 3,000 1,240 37,408 5,750 3,974 – – – –
–
–
7,419
13,998
– –
158,946
174,624
– –
– (ii) Other bank borrowings
Secured
Bankers acceptances Revolving credit Short term loans Hire purchase and finance lease liabilities
– portion repayable within 12 months (Note 31)
Long term loans
Long term loans under Islamic financing
4,094 – – 187,938 160,578 117,265 247,232 204,300 2,286 – 99,000 – –
99,000
–
1,872 5,171 – –
Unsecured
Bankers acceptances
Revolving credit
Short term loans Long term loans
658,536
694,743
99,000
99,000
685,615
754,554
99,000
99,000
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
168
– 31 March 2007
36 BANK BORROWINGS (Continued)
(a) The currency exposure profile of bank overdrafts and other bank borrowings are as follows:
–
–
–
–
Ringgit Malaysia
Japanese Yen
Singapore Dollar
Others
2007 2006
RM’000 RM’000
613,928
62,626
4,599
4,462
744,753
1,200
4,599
4,002
99,000
– – – 99,000
–
–
–
685,615
754,554
99,000
99,000
(b)The secured bank overdrafts, bankers acceptances, letters of credit, trust receipts, revolving credit, and short term loans are secured by way of fixed
and floating charges over certain property, plant and equipment and certain inventories (Notes 12 and 23).
(c)The weighted average effective annual interest rates of the bank overdrafts and other bank borrowings at the end of the financial year are as follows:
Bank overdrafts
Bankers acceptances
Revolving credit
Short term loans
Group 2007 % 8.12
4.28
6.14
4.12
2006 % 8.61
3.82
5.73
2.19
Company
2007 2006
% %
– – 6.37
– –
–
6.14
–
37 SHARE PREMIUM
Group and Company
2007 2006
RM’000 RM’000
At 1 April
Arising from issue of shares (Note 28)
16,699
4,002
6,985
9,714
At 31 March
20,701
16,699
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
169
38 MERGER RESERVE
At 1 April / 31 March
Group 2007 2006 RM’000 RM’000 911,016
911,016
Company
2007 2006
RM’000 RM’000
2,318,321
2,318,321
Pursuant to Section 60(4)(a) of the Companies Act, 1965, the premiums on the shares issued by the Company as consideration for the acquisitions of
certain subsidiary companies in the financial year ended 31 March 2001 are not recorded as share premium. The difference between the issue price and
the nominal value of shares issued is classified as merger reserve.
39 CURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES
2007 2006
RM’000 RM’000
Non-distributable
Capital reserves arising from bonus issue
Capital redemption reserve arising from redemption of preference shares
Share of associated companies’ statutory reserve Asset revaluation reserve on step up acquisition of a subsidiary company
7,000
2,696
102,839 7,401
4,516
124,452
At 1 April
Share of associated companies’ statutory reserve
Reversal of revaluation reserve of investment properties
Asset revaluation reserve on step up acquisition of a subsidiary company
Transfer of capital reserves arising from the expiry of warrants
Share of an associated company’s reserve
Currency translation differences of subsidiary companies
Others
At 31 March
7,000
2,696
87,517 – 9,075
–
–
–
–
–
–
–
–
–
–
106,288
– –
106,288
11,725
– 7,401
– (716)
(3,843)
3,597
116,270
14,743
(282)
– (20,383)
(316)
(3,744)
– –
–
–
–
–
–
–
–
124,452
106,288
– 20,383
–
–
–
(20,383)
–
–
–
–
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
170
– 31 March 2007
39 CURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES (Continued)
(a)The Group’s share of an associated company’s statutory reserve is maintained in compliance with Section 36 of the Banking and Financial Institutions
Act, 1989.
(b) The warrants represent the proceeds received from the rights issue of 65,751,251 new warrants in the Company at RM0.31 per warrant which was
implemented in the financial year ended 31 March 2001. The warrants expired on 9 July 2005.
40 CONSTRUCTION CONTRACTS
Aggregate contract costs incurred
Recognised profits less losses
Less: Progress billings
Group 2007 2006 RM’000 RM’000 136,236
19,865
156,101
(153,407)
2,694
– – –
–
985,243
(1,009,920)
– – –
–
(24,677)
– –
Group 2007 2006 RM’000 RM’000 Analysed as follows:
Amounts due from customers on contracts (Note 24)
Amounts due to customers on contracts (Note 34)
933,861
51,382
Company
2007 2006
RM’000 RM’000
Company
2007 2006
RM’000 RM’000
6,999
(4,305)
14,184
(38,861)
– – –
–
2,694
(24,677)
– –
Advances to contractors on contracts (Note 24)
– 2,932
– –
Retention on contracts
– 4,199
– –
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
171
41 RETAINED EARNINGS
Subject to the agreement of the Inland Revenue Board, the Company has sufficient tax credit balance under Section 108(6) of the Income Tax Act, 1967
to frank to approximately RM241,288,000 of its retained earnings as at 31 March 2007 if paid out as dividends. The Company also has tax exempt income
amounting to RM101,222,000 available for distribution as tax exempt dividends to shareholders. The extent of retained earnings not covered as at 31 March
2007, which is subject to additional taxation if franked as dividends, amounts to RM206,690,000.
42 SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES
2007
(i)
(a)On 17 April 2006, Motosikal Dan Enjin Nasional Sdn. Bhd., a 55% direct subsidiary of DRB-HICOM Berhad acquired an additional 150 ordinary
shares of Rp1,000,000 each in its subsidiary company, PT Modenas Putra Motor Indonesia and increased its stake from 58% to 76.75%.
(b)On 28 June 2006, HICOM Properties Sdn. Bhd., effectively a wholly-owned subsidiary of DRB-HICOM Berhad completed the acquisition of the
remaining 49% equity stake in HICOM Menang Properties Sdn. Bhd. (“HMPSB”) consisting of 4,900,000 ordinary shares of RM1.00 each from
Menang Properties Sdn. Bhd. for a total consideration of RM7,595,000. As a result, HMPSB became a wholly-owned subsidiary of the Group. On
21 August 2006, HMPSB changed its name to Jubli Premis Sdn. Bhd.
(c) On 19 September 2006, HICOM Holdings Berhad completed the acquisition of the remaining 49% equity stake in HICOM Vertex Sdn. Bhd. (“HVSB”)
consisting of 490 ordinary shares of RM1.00 each for a total cash consideration of RM1.00. As a result, HVSB became a wholly-owned subsidiary
of the Group.
(d)On 12 October 2006, DRB-HICOM Defence Technologies Sdn. Bhd., a wholly-owned subsidiary of the Company completed the acquisition of 70%
equity stake in MMC Defence Sdn. Bhd. (“MMCD”) consisting of 3,218,600 ordinary shares of RM1.00 each from Idaman Kencana Sdn. Bhd.
Subsequently, the acquisition of the remaining 30% equity interest consisting of 1,379,400 ordinary shares of RM1.00 each from MMC Engineering
Group Berhad was completed on 11 January 2007. As a result, MMCD became a wholly-owned subsidiary company of the Group. On 12 January
2007, MMCD changed its name to Defence Services Sdn. Bhd.
(e)On 31 January 2007, HICOM Holdings Berhad acquired an additional 1,645,162 ordinary shares of RM1.00 each representing a 10.97% equity stake
in PHN Industry Sdn. Bhd. (“PHN”), a jointly controlled entity, from Nagoya Oak Industries Co. Ltd. for a total cash consideration of RM9,870,972.
As a result of the acquisition, the Group’s equity interest in PHN has increased from 42.5% to 53.47%, resulting in PHN becoming a subsidiary
company of the Group.
The acquired companies as described in (d) and (e) above contributed revenue of RM21,165,000 and profit after taxation of RM720,000 to the Group for
the period from the date of acquisition to 31 March 2007. Had the acquisition taken effect at the beginning of the financial year, the revenue and loss after
taxation contributed to the Group would have been RM118,160,000 and RM3,110,000 respectively. These amounts have been calculated using the Group’s
accounting policies and by adjusting the results of the subsidiary companies to reflect the additional depreciation that would have been charged assuming
the fair value adjustments had applied from 1 April 2006, together with the consequential tax effects.
Items (a), (b) and (c) relate to the increase in equity ownership of existing subsidiary companies, which are reflected through the movement in minority
interests in the Statement of Changes in Equity. There was no goodwill arising from these acquisition.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
172
– 31 March 2007
42 SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES (Continued)
2007 (Continued)
(i)
Subsidiary companies (Continued)
• Details of net assets acquired, goodwill arising and cash flow of the Group arising from the acquisitions are as follows:
Acquiree’s
carrying
value
RM’000
Other investments
Inventories
Bank borrowings
Deferred liabilities
Minority interests
113,331
68
7,845
26,181
21,865
(36,979)
(24,676)
(8,979)
(53,469)
Fair
value
RM’000
131,754
68
6,849
26,263
21,865
(36,979)
(24,676)
(8,979)
(53,469)
Net assets acquired
45,187
Goodwill on acquisition Excess of fair value of net assets over purchase consideration
Asset revaluation reserve on step up acquisition
Investment in a jointly controlled entity
62,696
4,665
(2,749)
(7,401)
(41,253)
Purchase consideration
Cash and cash equivalents arising from subsidiary companies acquired
15,958
(15,024)
Cash outflow on acquisition of subsidiary companies
934
2006
(i)
A jointly controlled entity
On 27 April 2005, HICOM Holdings Berhad (“HHB”), a wholly-owned subsidiary of the Company, acquired a 33.33% equity interest in Model Building
Maintenance Dallah Alam Flora Waste Management Services L.L.C. (“MBM Dallah Alam Flora LLC”), a company incorporated in United Arab Emirates.
As a result, MBM Dallah Alam Flora LLC became a jointly controlled entity of the Group.
(ii) An associated company
On 14 November 2005, the Company acquired a 20% equity interest in an associated company, Navi & Map Sdn. Bhd. As a result, Navi & Map Sdn.
Bhd. became an associated company of the Group.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
173
43 SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES
2007
(i)
(a)On 26 August 2006, Seains Pte. Ltd., a wholly-owned subsidiary of Uni.Asia General Insurance Berhad which is in turn a 68.09% indirect subsidiary
of DRB-HICOM Berhad, was dissolved pursuant to Section 308 (5) of the Companies Act (Cap 50), Singapore.
(b)On 15 December 2006, Gadek (Malaysia) Berhad, effectively a wholly-owned subsidiary of DRB-HICOM Berhad completed the disposal of its 70%
equity stake comprising 3,500,000 ordinary shares of RM1.00 each in Perspec Prime (Malaysia) Sdn. Bhd. (“PPSB”). As a result, PPSB ceased to
be a subsidiary company of the Group.
(c)On 12 January 2007, HICOM-Selangor Marine Management Sdn. Bhd., 51% subsidiary of HICOM Berhad which is in turn an indirect subsidiary of
DRB-HICOM Berhad, was dissolved pursuant to Section 272 (5) of the Companies Act 1965.
(d)On 30 March 2007, Comtrac Sdn. Bhd., a 70% owned subsidiary of the Group completed the disposal of its entire 80% equity stake comprising
80,000 ordinary shares of RM1.00 each in Ciri-Alam Bina Sdn. Bhd. (“CAB”) for a cash consideration of RM80,000. As a result, CAB ceased to be
a subsidiary company of the Group.
The effect of the disposal of the subsidiary companies under items (b) and (d), up to the date of disposal on the results of the Group is shown below:
Revenue
Loss after taxation
RM’000
9,065
(2,669)
The effect of the disposals of the subsidiary companies on the financial position of the Group is shown below:
RM’000
Inventories Trade and other receivables
Bank borrowings
Minority interests
503
13
2,995
49,392
582
(73,878)
(3,799)
(315)
Net liabilities disposed
Gain on disposal (24,507)
28,786
Total disposal proceeds Less: Cash and bank balances of subsidiary companies disposed
4,279
(582)
Net cash inflow on disposal
3,697
The disposals of the subsidiary companies under items (a) and (c) above did not have a material impact to the Group.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
174
– 31 March 2007
43 SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES (Continued)
2007 (Continued)
(ii) Jointly controlled entities
(a) O
n 22 December 2006, HICOM Holdings Berhad (“HHB”) completed the disposal of its entire 45% equity stake consisting of 5,400,000 ordinary
shares of RM1.00 each in HICOM-Suzuki Manufacturing Malaysia Sdn. Bhd. (“HSMM”), for partial cash consideration of RM3,954,835 and 10,150,000
ordinary shares of RM1.00 each representing 29% equity stake in Suzuki Motorcycle Malaysia Sdn. Bhd. (“SMM”). As a result, HSMM became a
wholly-owned subsidiary of SMM and ceased to be a jointly controlled entity of HHB, while SMM became an associated company of the Group.
(b)On 28 February 2007, HICOM Properties Sdn. Bhd. completed the disposal of its entire 30% equity interest comprising of 6,486,720 ordinary shares
of RM1.00 each in Sucasa Sdn. Bhd. (“Sucasa”) for a cash consideration of RM15.9 million. As a result, Sucasa ceased to be a jointly controlled
entity of the Group.
The gain arising from the disposal of jointly controlled entities amounted to RM20,000.
(iii) Associated companies
(a)On 3 April 2006, Intrakota Komposit Sdn. Bhd. which is a 70% direct subsidiary of DRB-HICOM Berhad completed the disposal of its entire 36.5%
equity stake in Airport Coach Sdn. Bhd. (“ACSB”) to K.R. Travel & Tours Sdn. Bhd. for a total consideration of RM93,075. As a result, ACSB ceased
to be an associated company of the Group.
(b)On 29 March 2007, HICOM Holdings Berhad completed the disposal of its entire 25% equity stake comprising 2,296,000 ordinary shares of RM1.00
each in Boustead Heah Joo Seang Sdn. Bhd. (“BHJS”) for a cash consideration of RM42,500,000. As a result, BHJS ceased to be an associated
company of the Group.
The gain arising from the disposal of associated companies amounted to RM16,743,000.
2006
(i)
A subsidiary company
On 27 January 2006, Gadek (Malaysia) Berhad (“Gadek”), a wholly-owned subsidiary of the Group disposed of its entire 50% equity interest in SKVE
Holdings Sdn. Bhd. (“SKVE Holdings”) (formerly known as Gadek-Perspec Consortium Sdn. Bhd.). Similarly, on the same day, Perspec Prime (Malaysia)
Sdn. Bhd. (“Perspec”) a 70% subsidiary of the Group disposed of a 10% equity interest in SKVE Holdings. On 15 February 2006, Perspec disposed of
its remaining 40% equity interest in SKVE Holdings to a director and substantial shareholder of Perspec. As a result, SKVE Holdings ceased to be a
subsidiary of the Group.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
175
43 SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES (Continued)
2006 (Continued)
(i)
A subsidiary company (Continued)
The effect of the disposal of the subsidiary company on the results of the Group is shown below:
RM’000
Other income
193
Profit after taxation
168
The effect of the disposals of the subsidiary company on the financial position of the Group is shown below:
Minority interests
RM’000
26,504
269
(22,969)
(271)
Net assets disposed
Gain on disposal
3,533
185
Total disposal proceeds
Less: Cash and bank balances of subsidiary company disposed
3,718
(269)
Net cash inflow on disposal
3,449
he above mentioned disposal has no effect on the Company’s financial statements as the disposals were undertaken by the Company’s subsidiary
T
companies.
(ii) An associated company
On 5 October 2005, Uni.Asia General Insurance Berhad which is a 68.09% indirect subsidiary of the Group, disposed of its 30% associated company,
South East Asia Insurance (B) Sdn. Bhd. (“SEAB”) for RM330,000. As a result, SEAB ceased to be an associated company of the Group. The gain
arising from the disposal amounted to RM57,000.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
176
– 31 March 2007
44 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES
In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions which
were carried out on terms and conditions attainable in transactions with unrelated parties.
Related parties
Relationship
Bank Muamalat Malaysia Berhad
Tradewinds International Insurance Brokers Sdn. Bhd.
EON Bank Berhad
Siemens VDO Instruments MY Sdn. Bhd.
Auto Pacific Star Sdn. Bhd.
Global World Trade Sdn. Bhd.
A company with a common substantial shareholder.
A company with a common substantial shareholder.
A wholly-owned subsidiary of an associated company of the Group.
Associated company of the Group.
Jointly controlled entity of the Group.
A company in which a past Director has significant financial interest.
A company in which a past Director has significant financial interest.
Group
2007 2006
RM’000 RM’000
Sale of goods to:
– 14,700
Purchase of goods and services from:
Siemens VDO Instruments MY Sdn. Bhd.
Tradewinds International Insurance Brokers Sdn. Bhd.
Global World Trade Sdn. Bhd.
22,801
10,953
14,116
– – *
24,666
*
262,360
226,840
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
177
44 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
Group
2007 2006
RM’000 RM’000
Banking transactions with:
Bank Muamalat Malaysia Berhad
(i) Documentary credit (Murabahah):
– 19,265
(ii) Bankers acceptance (Al-Murabahah):
– Proceeds
– Repayment
– Amount due
22,500
(19,210)
46,664
(7,249)
3,290
39,415
(iii) Letter of credits:
– Proceeds
– Repayment 15,443
(4,314)
– Amount due
11,129
36,647
(36,647)
–
(iv) Revolving credits:
– Proceeds
– Repayment 41,208
(11,208)
–
–
– Amount due
30,000
–
EON Bank Berhad
(i)
Term Loan:
– Repayment
– Amount due
* (6,041)
20,168
(1,446)
25,211
Transactions are not disclosed as the amounts are not significant
The outstanding year end balances of related party transactions with jointly controlled entity and associated companies of the Group are disclosed in
Notes 24 and 34 to the financial statements.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
178
– 31 March 2007
44 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
The outstanding year end balances for related party transactions with the related parties described above in which a company with a common substantial
shareholder are as below:
Group
2007 2006
RM’000 RM’000
Amounts due to related parties
3,280
161
In the previous financial year, the outstanding year end balances for related party transactions with the related parties in which certain past Directors have
significant financial interests are as below:
Group
2006
RM’000
Amounts due from related parties
20,989
Amounts due to related parties
17,887
45 CAPITAL AND OTHER COMMITMENTS
2007 2006
RM’000 RM’000
(i) Authorised capital expenditure not provided for in the financial statements
– contracted – not contracted for
114,897 115,667 230,564
Analysed as follows:
Property, plant and equipment 162,684
Land held for property development
67,000
Biological assets
880
230,564
28,230 72,060 – – –
–
100,290
– – – – – –
–
–
100,290
– –
100,290
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
179
45 CAPITAL AND OTHER COMMITMENTS (Continued)
2007 2006
RM’000 RM’000
(ii) Lease commitments:
Commitments under non-cancellable operating leases:
– repayable within 1 year
6,762
1,459
– repayable within 2 to 5 years
2,155
2,257
– repayable more than 5 years
– 550
–
–
–
8,917
4,266
– –
37,153
42,155
– –
(iii) Commitments for forward foreign exchange contracts
The currency exposure profile and the expiry period for the forward foreign exchange contracts are as follows:
– – – Group
2007
Equivalent
Contractual
amount inAverage
amounts
Ringgit Malaysia
contractualExpiry dates
(‘000)
(‘000)
rate
Japanese Yen
Thai Baht
US Dollar
1,223,608
6,567
52
36,280
690
183
100 ¥ = RM2.965
Baht 100 = RM10.507
USD1 = RM3.519
2 April 2007 to 25 June 2007
29 June 2007
20 August 2007
Group
2006
Equivalent
Contractual
amount inAverage
amounts
Ringgit Malaysia
contractualExpiry dates
(‘000)
(‘000)
rate
Japanese Yen
1,327,296
42,155
100 ¥ = RM3.176
3 April 2006 to 28 August 2006
The net unrecognised losses on open contracts which hedge anticipated future foreign currency transactions amounted to RM153,000 (2006: RM119,000).
These net exchange gains and losses are deferred until the related sales and purchases are transacted, at which time they are included in the measurement
of such transactions.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
180
– 31 March 2007
46 CONTINGENT LIABILITIES (UNSECURED)
Except as disclosed below, there are no contingencies as at the balance sheet date.
(a) Guarantees given to financial institutions in
respect of facilities granted to subsidiary companies
Group 2007 2006 RM’000 RM’000 – (b) Performance bonds and guarantees given to third parties
8,217
– 8,435
Company
2007 2006
RM’000 RM’000
278,265
351,608
2,016
2,016
47 GROUP SEGMENT REPORTING
The Group principally operates in Malaysia in the following main industry segments:
Industry segment
Description
AutomotiveManufacturing, assembly and sale of motor and military vehicles including sale of
related spares and services.
Property and construction
Property holding and development and construction work.
ServicesVehicle inspection, solid waste management, telecommunication services, banking
and related financial services.
(a) Primary reporting format – business segment
Inter-segment revenue comprises revenue to other business segments carried out on an arm’s length basis.
Segment results represent segment revenue less segment expenses. Unallocated expenses represent corporate operating and administrative expenses.
Segment assets consist primarily of property, plant and equipment, inventories, receivables, property development costs, land held for property
development, short term and other investments and cash and bank balances and exclude interest bearing short term deposits, taxation assets and
investments in jointly controlled entities and associated companies. Segment liabilities comprise mainly of payables and exclude items such as interest
bearing borrowings and taxation. Unallocated liabilities consist of accruals on corporate operating and administrative expenses.
Capital expenditure comprises additions to property, plant and equipment, investment properties, biological assets and land held for property
developments.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
181
47 GROUP SEGMENT REPORTING (Continued)
(b) Secondary reporting format – geographical segments
The Group’s secondary format by geographical location, is not shown as the activities of the Group are predominantly in Malaysia and the overseas
segment does not contribute to more than 10% of the consolidated revenue and assets.
Primary reporting format – business segment
Property & Automotive Construction
Services RM’000 RM’000 RM’000 Investment
Holding
RM’000 Group
RM’000
Revenue
Total revenue
Inter-segment revenue
1,616,082
(338,630)
450,099
(62,030)
1,252,115
(12,215)
External revenue
1,277,452
388,069
1,239,900
Segment results
(152,983)
204,540
94,612
187,643
Unallocated expenses
Interest income
Finance cost
9,309
22,397
(3,862)
– Associated companies
– Share of results (net of tax)
– Allowance for impairment of investment Profit before taxation
Taxation
187,131
(30,600)
156,531
52,433
(131,000)
4,080
– 34,951
– 19,071
(19,071)
– – – 3,337,367
(431,946)
2,905,421
333,812
(30,147)
38,846
(143,688)
27,844
91,464
(131,000)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
182
– 31 March 2007
Primary reporting format – business segment (Continued)
Holding
RM’000 Group
RM’000
Other information
Segment assets
1,785,418
1,500,126
1,817,634
199,200
Interest bearing short term deposits
Taxation assets
62,175
165,925
– – Associated companies
563,988
18,783
756,663
– Assets held for sales
– 2,881
3,163
– 5,302,378
1,180,099
176,163
228,100
1,339,434
6,044
Total assets
8,232,218
Segment liabilities
390,918
271,068
1,723,265
150,896
Interest bearing borrowings
Taxation liabilities
Unallocated liabilities
2,536,147
2,255,121
95,049
6,827
Total liabilities
4,893,144
Capital expenditure
66,226
25,499
23,999
3,307
119,031
Depreciation and amortisation
79,791
12,604
38,136
3,013
133,544
Impairment loss on property, plant and equipment
37,729
– 131,383
– Gain on waiver of borrowings 764
– – 38,493
– 131,383
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
183
Holding
RM’000 Group
RM’000
Revenue
Total revenue
Inter-segment revenue
2,280,875
(226,377)
229,882
(68,210)
1,316,827
(16,637)
40,378
(33,903)
3,867,962
(345,127)
External revenue
2,054,498
161,672
1,300,190
6,475
3,522,835
Segment results
(4,259)
(283,647)
101,667
2,844
Unallocated expenses
Interest income
Finance cost
9,293
20,968
(3,714)
– Share of results of associated companies (net of tax)
71,117
2,194
60,775
– (183,395)
(81,129)
37,936
(130,789)
26,547
134,086
Loss before taxation
Taxation
(196,744)
50,170
(146,574)
Other information
Segment assets
1,772,772
1,823,670
1,813,907
148,297
Interest bearing short term deposits
Taxation assets
122,784
164,943
15,439
– Associated companies
667,887
40,458
737,935
– 5,558,646
1,061,005
175,186
303,166
1,446,280
Total assets
8,544,283
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
184
– 31 March 2007
Holding
RM’000 Group
RM’000
Other information (Continued)
Segment liabilities
443,560
766,048
1,490,236
18,452
Interest bearing borrowings
Taxation liabilities
Unallocated liabilities
2,718,296
2,624,787
71,730
2,500
Total liabilities
5,417,313
Capital expenditure
Depreciation and amortisation
Impairment loss on property, plant and equipment
77,208
13,928
38,381
2,839
132,356
102,868
26,417
47,639
5,306
182,230
5,104
151,998
36
–
157,138
48 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual
results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and
financial position are tested for sensitivity to changes in the underlying parameters. The estimates and assumptions that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year are outlined below.
(i) Deferred tax assets
The Group has recognised deferred tax assets amounting to RM42,822,000 relating to certain subsidiary companies which had incurred losses in either
the current or preceding year and whose utilisation is dependent on future taxable profits. The deferred tax assets were determined by assessing the
future financial performances of these subsidiary companies based on the current and expected operating environment.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
185
48 CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
(ii) Estimate of fair value of investment properties
The Group estimates the fair values of its investment properties using current prices in an active market. The principal assumptions underlying these
valuations are those relating to rentals, market yields, maintenance requirements and capitalisation rates and current prices of similar properties or
property prices in less active markets adjusted accordingly.
Independent professional valuation are obtained as a basis for these estimates.
(iii) Provision for product warranties
Certain subsidiary companies make provisions for product warranties based on an assessment of historical experience and industry average for
defective productions. The identification of defect liability requires the use of judgment and estimates. Where the expectation is different from the
original estimate, such difference will impact the carrying value of the provision for product warranties and will be charged to income statement as
defective works and product warranty expenses in the period such an estimate has been changed.
The carrying amounts of provision for product warranties of defective works are disclosed in Note 35.
(iv) Construction contracts and property development activities
The Group recognises revenue based on percentage of completion method. The stage of completion is measured by reference to the costs incurred
to date to the estimated total costs. Judgment is required in determining the stage of completion, the extent of the costs incurred, the estimated total
revenue (other than fixed price contracts) and costs, as well as the recoverability of the receivables. In making the judgment, the Group relied on past
experience and work of specialists.
(v) Investment in an associated company
The Group tests an associated company for impairment based on certain impairment indicators that were noted. The recoverable amount was
determined based on its value in use using the assumptions of terminal value growth rate, discount factor and dividend per share.
Arising from the above, an impairment loss of RM131 million was recognised in the consolidated income statement. A reduction in 10% of any of the
above assumptions will result in an increase in impairment provision of RM4.8 million, RM14.5 million and RM17 million respectively.
(vi) Impairment of property, plant and equipment
The Group tests property, plant and equipment for impairment if there are any indicators of impairment. The recoverable amounts were determined
based on value in use or fair value less costs to sell, where appropriate. Based on these calculations, an impairment charge of RM38,493,000 was
recognised during the financial year.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
186
– 31 March 2007
49 SIGNIFICANT SUBSEQUENT EVENTS
(a)On 17 April 2007, the Company entered into a Share Sale Agreement with Merong Mahawangsa Sdn. Bhd. for the proposed disposal of its entire 20%
equity interest in Gerbang Perdana Sdn. Bhd. (“Gerbang Perdana”) for a total cash consideration of RM14 million. On 26 June 2007, the proposed
disposal was completed and as a result, Gerbang Perdana ceased to be an associated company of the Group.
(b)On 8 June 2007, HICOM Indungan Sdn. Bhd., effectively a wholly-owned subsidiary of the Company entered into a Sale and Purchase Agreement with
EON Properties Sdn. Bhd., a wholly-owned subsidiary of Edaran Otomobil Nasional Berhad, to acquire approximately 26.03 acres of the freehold land
held under title No. HS (D) 224504, Lot No. PT470, Bandar Glenmarie, District of Petaling, Selangor for a total cash consideration of RM67 million. The
proposed acquisition is subject to approval from the relevant authorities.
(c)On 19 June 2007, the Company and its effective 100% owned subsidiary, HICOM Holdings Berhad, entered into a Joint Venture Agreement (“JVA”)
with Isuzu Motors Limited, Japan (“Isuzu”) in respect of the parties’ equity participation in Malaysian Truck & Bus Sdn. Bhd. (“MTB”) which is an
effectively and to regulate their relationship in the conduct and affairs of MTB. Currently, the Group and Isuzu hold 80% and 20% equity interest in
MTB respectively. Upon restructuring of the equity holding, MTB’s name will be changed to Isuzu HICOM Malaysia Sdn. Bhd. and the Group and Isuzu
will hold 49% and 51% equity interest in MTB respectively. As a result, MTB will become an associated company of the Group. The proposed JVA,
including the disposal of a 31% equity stake by the Group, is subject to approval from the relevant authorities.
(d)As announced to Bursa Malaysia on 13 July 2007 by the Company, the Board of Directors of the Company has received an offer on the same date
from Motivasi Asia Sdn. Bhd. (“Motivasi Asia”) to sell its entire shareholding in Rangkai Positif Sdn. Bhd. (“Rangkai Positif”) to the Company for RM720
million to be satisfied by the issuance of new ordinary shares of RM1.00 each in the Company to be issued based on the indicative issue price of
RM1.91 per new ordinary share, subject to the terms and conditions of the Offer. The indicative issue price is based on the five day weighted average
as at 12 July 2007 of RM1.91 per new ordinary share.
The principal activity of Rangkai Positif is to provide operation and maintenance services to the Tanjung Bin Power Plant (“Plant”) located in the state
of Johor based on a concession period of 25 years from 28 September 2006. The Plant comprises three coal-fired generating units with a total capacity
of 2,100 megawatts and sells electricity to Tenaga Nasional Berhad.
The Board of Directors has recommended that the Company accepts the Offer subject to the following:
•
•The purchase consideration of RM720 million will be deemed fair and appropriate based on the appraisal by an independent valuer to be
appointed by the Company.
Advice by the relevant advisers of the Company that the Offer will be deemed in the best interest of the Company; and
Upon satisfaction of the above conditions, the Company will enter into a definitive Share Sale Agreement with Motivasi Asia, which shall be subject
to the approvals of the relevant authorities and shareholders of the Company.
50 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders. The Group’s financial risk management
policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing its interest rate,
foreign currency exchange, credit, liquidity and cash flow, market, insurance and pricing risks.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
187
50 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(i) Interest rate risk
The Group’s primary interest rate risk relates to interest-bearing borrowings and investments in marketable securities and other interest-bearing
financial instruments. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowing instruments.
The Group’s exposure to risk that the value of a financial instrument will fluctuate due to changes in market interest rates is provided in the respective
notes to financial statement.
(ii) Foreign currency exchange risk
The Group is exposed to currency risk as a result of the foreign currency transactions entered into in currencies other than its functional currency.
Foreign exchange exposures in transactional currencies other than its functional currency of the operating entities are kept to an acceptable level.
Material foreign currencies transaction exposures are hedged, mainly with forward foreign exchange contracts.
(iii) Credit risk
Credit risk is the potential loss arising from customers or counterparties failing to meet their financial contractual obligations. The Group seeks to
control credit risk by ensuring its customers or counterparties have sound financial standing and credit history.
The Group has no significant concentration of credit risk due to its diverse customer base.
(iv) Liquidity and cash flow risk
The Group manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding
requirements are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments
to meet its working capital requirements. Due to the dynamic nature of the underlying businesses, the Group aims at maintaining flexibility in funding
by keeping committed credit lines available.
(v) Market risk
Market risk is the potential loss which can arise for positions held by the Group due to adverse changes in the level of market prices or
price-influencing parameters in the financial markets. The adverse changes can occur in interest rate, foreign exchange and equity markets. The Group
regularly reviews these risks and takes proactive measures to mitigate the potential impact of such risks.
(vi) Insurance and pricing risks
The principal activity of a life insurance subsidiary company is to provide insurance protection against risks such as mortality, morbidity, disability and
personal accidents. The mortality and morbidity risks are managed through risk assessment before a policy is underwritten. The maximum underwriting
exposure is limited through exclusion, cover limits and reinsurance arrangements. The pricing risk relates to the risk of inadequacy of premium.
Re-pricing of product is conducted at regular interval of two (2) years or shorter, if required. Experience studies are conducted to determine realistic
assumptions. Stress tests and bonus reserve valuations are done by the appointed actuary to assess the solvency position.
51APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 18 July 2007.
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
188
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail and Datuk Haji Mohd Khamil bin Jamil, two of the Directors of DRB-HICOM Berhad, state that, in the
opinion of the Directors, the financial statements set out on pages 85 to 187 are drawn up so as to give a true and fair view of the state of affairs of the
Group and of the Company as at 31 March 2007 and of the results and the cash flows of the Group and of the Company for the financial year ended on that
date in accordance with the MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the provisions of the Companies
Act, 1965.
In accordance with a resolution of the Board of Directors dated 18 July 2007.
Chairman
DATUK HAJI MOHD KHAMIL BIN JAMIL
DRB-HICOM Berhad
(203430-W)
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
2007 Annual Report
189
I, Mohd Redza Shah bin Abdul Wahid, the Director primarily responsible for the financial management of DRB-HICOM Berhad, do solemnly and sincerely declare
that the financial statements set out on pages 85 to 187 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to
be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
MOHD REDZA SHAH BIN ABDUL WAHID
Subscribed and solemnly declared by the abovenamed Mohd Redza Shah bin Abdul Wahid at Shah Alam in Malaysia on 18 July 2007.
Before me,
Tengku Mohd Hashim bin Tengku Mohamed
Commissioner for Oaths
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
190
Report of the Auditors
to the Members of Drb-hicom Berhad
We have audited the financial statements set out on pages 85 to 187. These financial statements are the responsibility of the Company’s Directors. It is our
responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as a body, in accordance with
Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume the responsibility to any other person for the content of this report.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the
Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been prepared in accordance with the provisions of the Companies Act 1965 and MASB Approved Accounting Standards in
Malaysia for Entities Other than Private Entities so as to give a true and fair view of:
(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(ii) the state of affairs of the Group and Company as at 31 March 2007, and of the results and cash flows of the Group and Company for the financial
year ended on that date;
and
(b) the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companies of which we have
acted as auditors have been properly kept in accordance with the provisions of the Act.
The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 3 to the financial statements. We have considered the
financial statements of these subsidiary companies and the auditors’ reports thereon.
We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and
content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and
explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made
under subsection 3 of Section 174 of the Act.
PRICEWATERHOUSECOOPERS
MOHD ANWAR BIN YAHYA
(No AF: 1146)
Chartered Accountants [1656/10/08(J/PH)]
Partner of The Firm
KUALA LUMPUR
18 July 2007
Other Information
192Share Movement Chart
193Analysis of Shareholdings
196Material Properties of DRB-HICOM Group
Form of Proxy
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Share Movement Chart
during the financial year ended 31 March 2007
192
Share Prices and Trading Volume on the Bursa Malaysia Securities Berhad
200
2.50
180
2.25
160
2.00
140
1.75
120
1.50
100
1.25
80
1.00
60
0.75
40
0.50
20
0.25
0
Volume
(million)
Apr
2006
May
2006
Jun
2006
Jul
2006
Aug
2006
Sep
2006
Oct
2006
Nov
2006
Dec
2006
Volume (million)
Jan
2007
Feb
2007
High (RM)
Low (RM)
Mac
2007
0.00
Price
(RM)
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
Analysis of Shareholdings
as at 24 July 2007
193
Class of Securities : Ordinary shares of RM1.00 each
Authorised Share Capital : RM2,000,000,000.00
Issued and Fully Paid-up Capital : RM1,007,607,035.00
Voting Rights : Every member of the Company present in person or by proxy shall have one vote on a show of hands, and in the case
of poll, shall have one vote for every share of which he is the holder.
Number of Shareholders
: 50,678
Distribution of Shareholders
Size of Shareholdings
Number of Shareholders % of
Shareholders Total Holdings % Holdings
1 – 99
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 50,380,350(*)
50,380,351 And Above(**)
365
24,925
22,015
3,008
362
3
0.72
49.18
43.44
5.94
0.71
0.01
9,523
18,623,621
75,589,263
82,194,828
442,434,038
388,755,762
0.01
1.85
7.50
8.15
43.91
38.58
Total 50,678
100.00
1,007,607,035
100.00
Number of Shares
% Shares
Remarks : * Less than 5% of issued shares
** 5% and above of issued shares
Thirty Largest Registered Shareholders
Name 1.
Etika Strategi Sdn Bhd 155,431,725
15.43
2.
Employees Provident Fund Board 129,199,400
12.82
3.
Khazanah Nasional Berhad 104,124,637
10.33
4.
Permodalan Nasional Berhad 40,275,000
4.00
5.
Citigroup Nominees (Tempatan) Sdn Bhd CMS Dresdner Asset Management Sdn Bhd for Employees Provident Fund
35,387,500
3.51
6.
Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera
26,464,500
2.63
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
194
Analysis of Shareholdings
as at 24 July 2007
THIRTY LARGEST REGISTERED SHAREHOLDERS (Continued)
Name Number of Shares
% Shares
7.
HSBC Nominees (Tempatan) Sdn Bhd HSBC (M) Trustee Bhd for CMS Premier Fund (4959)
13,000,000
1.29
8.
Cartaban Nominees (Asing) Sdn Bhd State Street Australia Fund UAJB for Unifund (HTSG as Trustee)
1,815,700
1.17
9.
AMMB Nominees (Tempatan) Sdn Bhd CMS Dresdner Asset Management Sdn Bhd for Tenaga Nasional Berhad Retirement Benefit Trust Fund (CMS-TNB)
11,600,000
1.15
10. Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020
11,092,100
1.10
11. Tai Tak Estates Sdn Bhd 10,952,653
1.09
12. Malaysia Nominees (Tempatan) Sendirian Berhad MIDF Amanah Asset Management Berhad for Amanah Millenia Fund Berhad (JM730)
9,011,500
0.89
13. Citaria Sdn Bhd 8,873,972
0.88
14. Cartaban Nominees (Asing) Sdn Bhd Investors Bank and Trust Company for Shares Inc.
8,214,400
0.82
15. Citigroup Nominees (Asing) Sdn Bhd
CBNY for DEA Emerging Markets Fund
7,715,700
0.77
16. M & A Nominee (Asing) Sdn Bhd
Exempt An for UOB Kay Hian Pte Ltd (A/C Clients)
7,641,500
0.76
17. Citigroup Nominees (Asing) Sdn Bhd UBS AG Singapore for Creon Investments Limited
7,500,000
0.74
18. Universal Trustee (Malaysia) Berhad AMB Unit Trust Fund
7,161,200
0.71
19. HSBC Nominees (Asing) Sdn Bhd Exempt An for Morgan Stanley & Co. International PLC
6,878,900
0.68
20. HDM Nominees (Asing) Sdn Bhd UOB Kay Hian Pte Ltd for Zenith Securities Pte Ltd
6,531,700
0.65
21. HDM Nominees (Tempatan) Sdn Bhd
Pledged Securities Account for Lim See Boon (MO9)
6,327,700
0.63
22. Lembaga Tabung Angkatan Tentera 6,137,100
0.61
23. HDM Nominees (Asing) Sdn Bhd
Exempt An for UOB Kay Hian (Hong Kong) Limited (Clients)
5,997,000
0.60
24. Cartaban Nominees (Tempatan) Sdn Bhd
MIDF Amanah Asset Nominees (Tempatan) Sdn Bhd for Employees Provident Fund Board (JF404)
4,723,800
0.47
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
195
THIRTY LARGEST REGISTERED SHAREHOLDERS (Continued)
Name Number of Shares
% Shares
25. HSBC Nominees (Asing) Sdn Bhd
TNTC for Government of Singapore Investment Corporation Pte Ltd
4,593,000
0.46
26. Mayban Nominees (Tempatan) Sdn Bhd Mayban Investment Management Sdn Bhd for Kumpulan Wang Simpanan Pekerja (N14011980810)
4,154,300
0.41
27. M & A Nominee (Asing ) Sdn Bhd UOB Kay Hian Private Limited for Monconcept Investments Pte Ltd
4,136,100
0.41
28. HSBC Nominees (Asing) Sdn Bhd BBH And Co. Boston for Vanguard Emerging Markets Stock Indexfund
4,106,500
0.41
29. Pacific & Orient Insurance Co Berhad 4,000,000
0.40
30. Cartaban Nominees (Tempatan) Sdn Bhd Exempt An for MIDF Amanah Nominees (Tempatan) Sdn Bhd (Account 1)
3,848,700
0.38
SUBSTANTIAL SHAREHOLDERS (HOLDING 5% OR MORE IN THE SHARE CAPITAL (per Register of Substantial Shareholders)
Direct Indirect Total
Percentage
No. of No. of of Issued
Name
Shares Held Percentage Shares Held Percentage Capital
Etika Strategi Sdn Bhd
Employees Provident Fund Board Khazanah Nasional Berhad
Tan Sri Dato’ Syed Mokhtar Shah Syed Nor
155,431,725
176,086,600 104,124,637
–
15.43
17.48
10.33
–
–
–
–
155,431,725 a
–
–
–
15.43
Note:a.
By virtue of his deemed interest in the shares through Etika Strategi Sdn Bhd in accordance with Section 6A of the Companies Act, 1965.
Directors’ Interests in the Company and Related Corporations
None of the Directors in office as at 24 July 2007 held any interest in shares in the Company or in its related corporations.
15.43
17.48
10.33
15.43
DRB-HICOM Berhad
(203430-W)
2007 Annual Report
196
Material Properties of Drb-hicom Group
as at 31 March 2007
Approx. Net book
Description/ age of Approx. value as at
Location existing use building Tenure area 31 March 2007
RM’000
Parcel A & Parcel B, Lots 629pt, 628pt and 974pt
Retail and car park complex
4 years
44-2, 44-1pt, 631pt, 630pt, 633pt, 632pt, 637pt, 636pt, 635pt, 634pt, 639pt, 638pt, 975pt, 22-4pt, 22-3pt
641pt, 640pt, 643pt, 642pt, 645pt, 644pt, 647pt
22-1pt and 18-1pt of TS 16 Republic of Singapore
Leasehold
expiring in year 2096
6,332 sq.m
321,932
HS (D) 18712, PT 5689, HS (D) 18713, PT 5690
Mukim Gurun, Daerah Kuala Muda, Kedah Darul Aman
Industrial land with office and factory building
Freehold
650,360 sq.m
165,733
Southern Support Zone, KL International Airport
64000 Sepang, Selangor Darul Ehsan
Head Office, Cargo Complex,
9 years
Workshop and Inflight Catering
Leasehold 50 years
55,985 sq.m
144,034
PT 464, 465, 467, 468 and 772, Glenmarie Estate
Mukim Damansara, Selangor Darul Ehsan
Golf and Country Club
15 years
Freehold
1,429,633 sq.m
131,591
HS(D) 11366-11701 PT 1734-PT2069, HS(D) 6821 PT 76
HS(D) 6822 PT 77, HS(D) 6823 PT 78, HS(D) 6824 PT 79
Kawasan Perindustrian Pegoh, Mukim Pegoh
Daerah Alor Gajah, Melaka Bandar Bersejarah
Land held for commercial,
residential and industrial
development
_
Freehold
2,606,066 sq.m
94,790
Lot 77170, Lot 77174, Lot 77175
Mukim and District of Klang, Selangor Darul Ehsan
Land held for residential and commercial
development over 2km river view frontage
_
Freehold
996,053 sq.m
88,880
HS (D) 305, PT1580, Mukim of Pekan
Pahang Darul Makmur
Land with factory and office block
23 years
- assembly plant
Leasehold 66 years
106,447 sq.m
84,247
Kawasan Perindustrian, Peramu Jaya
Factory and office building
10 years
P.O. Box 6, 26607 Pekan, Pahang Darul Makmur
Leasehold 66 years
101,582 sq.m
83,000
Connemara Estate, Lots 35, 1252, 1365 and 1463
Mukim of Beranang, Daerah Ulu Langat,
Agriculture land (matured oil palm)
Freehold
6,264,782 sq.m
63,200
Lot 1A, HICOM Glenmarie Industrial Park
Mukim Damansara, Daerah Petaling
Industrial land and HICOM
Corporate Office
Freehold
52,796 sq.m
60,174
11 years
_
12 years
Form of Proxy
Number of Shares held
CDS Account No.
Seventeenth Annual General Meeting
I / We
NRIC / Company No.
(FULL NAME IN BLOCK LETTERS)
of
(FULL address)
being a Member / Members of DRB-HICOM BERHAD, hereby appoint
of
(FULL NAME IN BLOCK LETTERS)
(FULL address)
or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf, at the Seventeenth Annual General Meeting
of the Company, to be held at the Glenmarie Ballroom, Holiday Inn Glenmarie Kuala Lumpur, No. 1, Jalan Usahawan U1/8, Seksyen U1, 40150 Shah Alam,
Selangor Darul Ehsan on Thursday, 20 September 2007 at 10.00 a.m. and at any adjournment thereof, as indicated below:RESOLUTIONS
To receive and adopt the Audited Financial Statements
AGAINST
Resolution 1
To approve the declaration of a final gross dividend
Resolution 2
To re-elect Director – Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Resolution 3
To re-elect Director – Datuk Haji Mohd Khamil bin Jamil
Resolution 4
To re-elect Director – Tan Sri Marzuki bin Mohd Noor
Resolution 5
To re-elect Director – Mohd Redza Shah bin Abdul Wahid Resolution 6
To re-elect Director – Dato’ Noorrizan binti Shafie
Resolution 7
To re-appoint Messrs PricewaterhouseCoopers as Auditors
Resolution 8
To approve the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature Resolution 9
To approve the Proposed Amendments to the Articles of Association of the Company
FOR
Resolution 10
The proxy is to vote in the manner indicated above with an “X” in the appropriate spaces. If no specific direction as to voting is given, the proxy will vote or
abstain from voting at his/her discretion.
Dated this
day of
2007
Notes:-
Signature(s) / Company Seal
1.A member entitled to attend the meeting may appoint a proxy or proxies who may but need not be a member of the Company.
2.The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal
or under the hand of an officer or attorney duly authorised in writing.
3. The instrument appointing a proxy together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof, shall be deposited at the Share Registrar’s
Office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than forty-eight (48) hours before the
time set for holding this meeting.
SYMPHONY SHARE REGISTRARS SDN BHD (378993-D)
Registrar for DRB-HICOM Berhad
Level 26, Menara Multi-Purpose, Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
STAMP
DRB-HICOM Berhad
(203430-W)
www.drb-hicom.com
M
o m
e n t u m
Annu al Report 20 0 7
u
r
DRB-HICOM Berhad (203430-W)
g
B u i l d i n
Annual Report 2007
O

Annual Report 2007

Transcription

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