25558_JUSCO AR06_10R_yin.indd
Transcription
25558_JUSCO AR06_10R_yin.indd
A NEW STAR A NEW STAR ATTRACTION ATTRACTION OPENS OPENS IN SERIKEMBANGAN KEMBANGAN IN SERI Located in Seri Kembangan, just minutes away from Puchong, USJ and Putrajaya, AEON Taman Equine Shopping Centre had its soft opening on 15 June 2006. It has fast become a focal Shoppers are impressed by the clean, bright and spacious environment. point for the residents of Seri Kembangan and the surrounding communities. The grand opening of AEON Taman Equine Shopping Centre was held on 21 July 2006, marking AEON CO. (M) BHD.’s 12th shopping centre and 14th JUSCO store in Malaysia. This event was officiated by Y.A.B. Dato’ Seri Dr. Hj. Mohamad Khir bin Toyo, the Menteri Besar of Selangor. The two-storey shopping centre stands on 11.81 acres of land at the doorway to Taman Equine. It has an approximate net lettable space of 235,000 square feet with over 78 shops, 13 eateries, recreation facilities and 1,100 car park bays, as well as the main attraction, the JUSCO General Merchandise Store and Supermarket. In conjunction with the grand opening of AEON Taman Equine Shopping Centre, the “With All Our Hearts” Malaysian JUSCO Foundation donated educational books worth RM5,000 each to the libraries of five schools (totalling RM25,000), namely SK Taman Universiti, SK Sri Kembangan, SJK (C) Serdang Baru 1, SJK (C) Serdang Baru 2 and SMK Seri Kembangan. 4 04 AEON ANNUAL REPORT 2006 The “ With All Our Hearts” Malaysian JUSCO Foundation donated RM5,000 each to five school libraries. THE SECOND JUSCO STORE OPENS IN THE NORTH THE SECOND JUSCO STORE OPENS IN THE NORTH The soft opening on 1 December 2006 of the new JUSCO Queensbay Store, the anchor tenant of Penang’s Queensbay Mall, saw visitors from all over the island and the northern states coming in throngs. The Queensbay Mall is located along Persiaran Bayan Indah, in Sungai Nibong, Bayan Lepas. JUSCO Queensbay, AEON’s first store in Penang, was officially opened at a Grand Opening Ceremony by Y.A.B. Tan Sri Koh Tsu Koon, the Chief Minister of Penang on 9 December 2006, marking AEON CO. (M) BHD.’s 15th JUSCO store in Malaysia. Covering 255,000 square feet, the JUSCO Queensbay Store has a product mix specifically tailored to meet the needs of the community. With four levels, Penangites are spoilt for choice and now have access to top-notch quality merchandise and JUSCO in-house brands. The JUSCO Supermarket is located on the Lower Ground Floor, along with the popular ARENA Restaurant and La Boheme bakery. The JUSCO General Merchandise Store starts on the Ground Floor with the cosmetics department and ladies’ department. On the 1st Floor are the men’s, men’s shoes & luggage, kids’ & babies’, sports and stationery departments, as well as Smart Wonder World, the fun-themed amusement centre for the family. The JUSCO Home Centre and kitchen, dining and home appliances departments are located on the 2nd Floor. Y.A.B. Tan Sri Koh Tsu Koon officially opens the JUSCO Queensbay Store. Penangites now have greater variety to choose from. 505 AEON ANNUAL REPORT 2006 THE AEON SHOPPING THE AEON SHOPPING EXPERIENCE EXPERIENCE COMES TO COMES TO CHERAS SELATAN CHERAS SELATAN One-stop shopping convenience and entertainment came closer to home for residents of Cheras Selatan, with the soft opening of the AEON Cheras Selatan Shopping Centre on 6 The attractive new JUSCO Cheras Selatan Supermarket received overwhelming response from the local residence. December 2006, marking AEON CO. (M) BHD.’s 13th shopping centre and 16th JUSCO store in Malaysia. At approximately 383,000 square feet in net lettable space, the AEON Cheras Selatan Shopping Centre offers two levels of shopping space that include the JUSCO General Merchandise Store and Supermarket, JUSCO Home Centre, over 90 shops, eateries and entertainment centres, and 1,500 parking bays. There are 17 food outlets located along a “Restaurant Street” on the Ground Floor, while the entertainment zone, including a TGV cineplex and family karaoke centre, is on the first floor. Y.B. Datuk Hj. Mohd. Shafie bin Hj. Adpal, Minister of Domestic Trade and Consumer Affairs officiated the grand opening of AEON Cheras Selatan Shopping Centre on 28 December 2006. The highlight of the ceremony was the presentation of school uniforms to a group of underprivileged children, in line with the “With All Our Hearts” Malaysian JUSCO Foundation’s mission. 6 06 AEON ANNUAL REPORT 2006 Customers enjoy a clean, bright, comfortable shopping environment at the AEON Cheras Selatan Shopping Centre. JUSCO TAMAN UNIVERSITIUNIVERSITI GETS A JUSCO TAMAN BRAND NEW LOOK A BRAND NEW LOOK GETS In line with AEON CO. (M) BHD.’s constant interior refurbishment of stores, to project a comtemporary image and to place greater focus on commodity items, JUSCO Taman Universiti underwent a major face-lift. Starting from 21 July 2006, improvements were carried out in stages to minimise inconvenience to customers and disruptions to the store’s operations. The delicatessen and sushi sections now feature a new assortment of mouth-watering delicacies, while fish, meat and green leafy vegetable sections were enhanced to accommodate the new ‘fresh from the farm’ concept. A new concept of health & beauty care section was added, along with a new Baby World section (a one-stop centre for babies’ needs), a new men’s and ladies’ section for branded products, as well as new items with attractive designs and colours at the bedding & interior section. The entire renovation process was completed on 26 September 2006, bringing enhanced shopping and the best local store to the customers in Taman Universiti and its surrounding communities. The newly renovated JUSCO Taman Universiti reflects AEON’s new store concept. BETTER LOOKING & BETTER VARIETY BETTER LOOKING & BETTER AT AT JUSCO MID VALLEY JUSCO MID VALLEY VARIETY Refurbishments were also carried out in stages at the JUSCO Mid Valley store in 2006, to enhance customers’ shopping convenience and comfort. Some of the Supermarket sections that were improved included the grocery, non-food, dairy & daily and meat sections. A new delica island was added, and the non-halal section is now in the wine & liquor section. The new JUSCO Mid Valley Supermarket re-opened on 6 October 2006. The General Merchandise Store section has three new cosmetics counters, a new facial room and new sections for in-house labels such as Arcadia, Crème and Cleef. The Smart Wonder World amusement park and the J CARD service area have been increased in size, and a greater variety of labels and brands were added to the audio visual, home appliance, toys, kitchen and dining sections. In addition, the furniture, sports, travel goods, men’s and men’s shoes departments and the Jeans Studio were also renovated and re-opened on 20 October 2006. Bigger, brighter and better... JUSCO Mid Valley’s enhanced shopping experience. 707 AEON ANNUAL REPORT 2006 D’HATI (formerly known as J-One) D’HATI (formerly known as J-One) OPENS IN PEARL SHOPPING MALL OPENS IN PEARL POINTPOINT SHOPPING MALL Following the success of the first PASAR RAYA D’HATI (formerly known as J-One) supermarket in Damansara Damai, AEON CO. (M) BHD. opened a second PASAR RAYA D’HATI supermarket outlet in Pearl Point Shopping Mall on 7 July 2006. The PASAR RAYA D’HATI Pearl Point supermarket covers almost 3,000 square metres and is the anchor tenant of the Pearl Point Shopping Mall in Jalan Kelang Lama, Kuala Lumpur. It provides residents of the surrounding communities a convenient shopping destination for their daily needs, with a refreshing, impressive assortment of merchandise to choose from. Customers have a choice of affordable, quality goods, including fresh meats, vegetables, toiletries, household goods and stationery, and the comfort to shop in a bright, hygienic environment. The Managing Director and Chairman of AEON give the fresh vegetables their thumbs up. The shelves are brimming with a wide variety of quality products at reasonable prices. D’HATI - A NEW NAME FOR D’HATI NEW NAME FOR THE FUTURE THE- AFUTURE To further strengthen and build a long-term relationship with its valued customers, the Company invited its customers to participate in suggesting a new name for J One Supermarket. Of all the contest entries received, D’HATI, a meaningful new name conceived by one of its customers, won the hearts of the judges unanimously. On 26 January 2007, the name Pasar Raya JUSCO J-One was officially changed to PASAR RAYA D’HATI to mark the Company’s business direction of making our new concept supermarket more localised and to be the best local supermarket. The new name proudly displayed at the main entrance of PASAR RAYA D’HATI. Datuk Tan Aik Hong (M.D. of Aik Bee Resources Bhd.), Dato’ Abdullah (Chairman of AEON CO.(M) BHD.) and Mr. Nagahisa Oyama (Managing Director of AEON CO. (M) BHD.) at the official launch of the new D’HATI name. The new D’HATI sign welcomes customers to the Pearl Point Shopping Mall. The new PASAR RAYA D’HATI supermarkat is a prominent presence in Damansara Damai. 08 8 AEON ANNUAL REPORT 2006 GREATER CHOICE, QUALITY AND VALUE-FOR-MONEY GREATER CHOICE, QUALITY AND VALUE-FOR-MONEY One of the ways that AEON contributes to Malaysia is the development of in-house brands using locally-sourced merchandise, such as JUSCO SELECTION, which offers quality and value-for-money products. Over the past year, the label has expanded to include essential products in 3 major categories. 1. JUSCO SELECTION Quality and Value focuses on daily needs such as household staples, groceries and frequent-purchase items, like rice, flour, sweetened creamer and toilet paper. These are items in which branding is less important than price, assortment and quality. 2. JUSCO SELECTION Organic Vegetables cater to the increasingly health-conscious public. These organic products are grown and processed without using chemicals and pesticides. 3. JUSCO SELECTION Premium covers Home Fashion and Premium Food products. Home Fashion merchandise focuses on contemporary living products, including bedding and home furnishing. The food items include frozen pizzas, gourmet sausages, pastas, 100% fruit juices and concentrates, and are of higher quality in terms of ingredients, taste, originality and packaging. The top ten most popular JUSCO SELECTION products, in terms of sales, are the basic commodities such as food and non-food items. JUSCO SELECTION Super Local Rice 15% is the best selling rice JUSCO SELECTION Concentrates are concentrated fruit juices brand, thanks to the price factor and consistent high quality. which are popular for both formal and informal occasions. They have natural, rich fruity flavours and are simple to make. JUSCO SELECTION Premium Pizza, Jumbo Chicken Cocktail Sausages and German Sausages offer a “ready meal solution” JUSCO SELECTION Sweetened Creamer is a basic ingredient for busy customers, an idea inspired by ÆON’s TopValu brand of “teh tarik”, a popular malaysian beverage. from Japan. They have become some of the best sellers in the frozen food category. JUSCO SELECTION food items appeal especially to health-conscious shoppers as they contain no MSG, no added sugar, artificial preservatives or colouring. JUSCO SELECTION Mineral/Distilled Water is produced from an underground water source in Taiping, Perak, and undergoes a stringent process of distillation and filtration. JUSCO SELECTION Fabric Softeners are the first in the market to have anti-bacterial properties. The 2 fragrances available are floral and ocean breeze, and the anti-bacterial function prevents clothes which are soaked overnight from unwanted odours. Rounding off the top ten is the JUSCO SELECTION Toilet Rolls. The material used has been upgraded from recycled paper to 100% pulp, which offers better quality and distinguishable softness. 909 AEON ANNUAL REPORT 2006 GREENING THE ENVIRONMENT: GREENING THE ENVIRONMENT: AN AEON INITIATIVE AN AEON INITIATIVE Tree planting ceremonies have traditionally been carried out by AEON CO. (M) BHD. as an official ceremony to mark the opening of each AEON Shopping Centre in Malaysia. These efforts are partly sponsored by the AEON Environment Foundation and the “AEON 1% Club” as part of ÆON Co. Ltd. of Japan’s global reforestation programme. In 2006, AEON commemorated the openings of its 12th and 13th Shopping Centres in Taman Equine and Cheras Selatan respectively by carrying out Tree Planting Ceremonies. The AEON Taman Equine Shopping Centre’s tree planting species. The event was officiated by YB Dato’ Hajah Azizah bt ceremony on 27 June 2006 saw 4000 saplings being Datuk S.P. Haji Mohd Dun, the Deputy Minister of Housing planted by 800 participants from local authorities, students and Local Government. from nearby schools, residents associations, NGOs such The purpose of AEON’s tree planting programme is to raise as The Organisation for Industrial, Spiritual and Cultural awareness amongst the community towards AEON’s mission Advancement - International (OISCA) and Malaysia Landscape of greening the environment for future generations and to Industry Association (SILARA), JUSCO’s suppliers and tenants, assert the importance of preserving and protecting nature. J CARD Members and JUSCO staff members. The guest of honour was YB Dato’ Ramli bin Mahmud, State Secretary of With the public’s participation, the younger generation will Selangor. be better exposed to such environmental issues, and these activities will help to foster better relationships between JUSCO For AEON Cheras Selatan Shopping Centre’s tree planting and local residents, who are our current and future customers. ceremony, around 1,000 enthusiastic nature lovers turned up on 4 November 2006 to help plant 4,000 saplings of various Dato’ Abdullah and YB Dato’ Ramli bin Mahmud lead the greening of AEON Taman Equine Shopping Centre. YB Dato’ Hajah Azizah, Dato’ Abdullah and AEON Management planting trees around AEON Cheras Selatan Shopping Centre. 10 AEON ANNUAL REPORT 2006 AEON WOODLAND AT PAYA INDAH AEON WOODLAND AT PAYA INDAHTO WETLANDS WETLANDSCONTINUES THRIVE 20TH ANNIVERSARY TREE PLANTING PROGRESS CONTINUES TO THRIVE On 15 September 2004, AEON CO. (M) BHD. held a special tree planting ceremony at the Paya Indah Wetlands in Dengkil, Selangor, to commemorate AEON’s 20 years in Malaysia. The volunteers included AEON staffs, invited customers, business associates and 1000 volunteers from Japan. This event was sponsored by the AEON Environment Foundation of Japan, which has sponsored the planting of over 5 million trees around the world. Representatives of the Foundation have paid regular visits to this site, called the Malaysia-Japan Friendship Forest, AEON Woodland to review the progress of the area. It is now a beautiful tract of thriving greenery. Year 2004 Year 2007 11 AEON ANNUAL REPORT 2006 THE “WITH ALL OUR HEARTS” THE “WITH ALL OUR HEARTS” CHARITY CHARITY GALA DINNER 2006 GALA DINNER 2006 The annual Charity Gala Dinner is the highlight and major fund-raising activity for the ‘With All Our Hearts’ Malaysian JUSCO Foundation. It is supported by generous donations from AEON’s numerous suppliers and business associates, who attended the dinner. This year’s event, which was held at the Grand Ballroom of the prestigious Sunway Lagoon Resort Hotel on 23 November 2006, was billed “a night of stars”. Indeed, the night’s entertainment began with a special parody of international ‘celebrities’, such as Elvis, Madonna and Michael Jackson. The guest of honour was Dato’ Abdullah bin Mohd Yusof, the Chairman of AEON CO. (M) BHD. Malaysia’s pop princess and ambassador of the Malaysian JUSCO Foundation, Datuk Siti Nurhaliza, entertained guests with some of her latest hits. Lending strong support were Singapore’s “king of comedy” Moe Alkaff and local entertainer Leonard Tan. Proceeds from the evening went towards the purchase of a new Toyota Hiace 2.7 High Roof Window Van for Rumah K.I.D.S. (Rumah Kanak-kanak Ini Disayangi) to replace the old one, which had been destroyed in a fire. A spectacular night of stars, for a worthy cause. DATUK SITI NURHALIZA SINGS FOR DATUK SITI NURHALIZA SINGS FOR THE THE UNDERPRIVILEGED UNDERPRIVILEGED Fortunate shoppers and tenants were entertained to a special presentation by Datuk Siti Nurhaliza at the AEON Taman Equine Shopping Centre on 17 April 2006 and at the Alpha Angle Shopping Centre, JUSCO Wangsa Maju, on 9 July 2006. Appearing in her capacity as the ambassador of the “With All Our Hearts” Malaysian JUSCO Foundation, Datuk Siti Nurhaliza sang some of her popular hits for the excited crowd. In the meantime, she appealed to the audience to donate generously to the various charities and needy individuals supported by the Foundation. Datuk Siti Nurhaliza also made a similar appearance at the JUSCO Bukit Raja Shopping Centre on 25 June 2006 for an official handover of donations worth a total of RM18,226.14 to various charities. ...and at JUSCO Wangsa Maju. Datuk Siti Nurhaliza at JUSCO Bukit Raja... ...at JUSCO Taman Equine... 12 AEON ANNUAL REPORT 2006 CONTRIBUTIONS THE COMMUNITY CONTRIBUTIONS TO THETO COMMUNITY ‘GOTONG-ROYONG ‘GOTONG-ROYONG BERSAMA MASYARAKAT’ BERSAMA MASYARAKAT’ HELPING HAND FOR AAHELPING HAND FOR THE FLOOD VICTIMSVICTIMS THE FLOOD During the year 2006, staff members from each JUSCO store AEON CO. (M) BHD. donated more than RM50,000 worth of throughout Malaysia put aside some personal time to carry food to help the victims of the recent devastating floods in out ‘gotong-royong’ activities at orphanages, schools and Johor and Melaka. Between 21 and 23 December 2006, AEON religious organisations near their respective store. These distributed 1,400 packs of (10kg) rice, 4,224 tins of sardines, activities included painting and cleaning up the compound, 2,820 packets of crackers and 4,260 bottles of mineral water repairing electrical wiring and lights, as well as donations of to evacuees in Batu Pahat and Pontian Kecil. much-needed necessities. AEON CO. (M) BHD.’s Corporate Affairs Department organised these “Gotong-Royong Bersama Masyarakat Tempatan (Community Service with Local Communities)” activities in line with the Company’s About 75 AEON CO. (M) BHD. staff members who were affected by the flood were given unrecorded and compassionate leave and food aid was provided to them and their families as well. efforts to reach out to the surrounding communities. On 24 January 2007, 250 volunteers from AEON CO. (M) BHD. came together to help in a big 2-day clean-up effort in Tebrau, Johor Bahru. JUSCO Store staff members giving their best to reach out to the local communities. AID FOR EARTHQUAKE Delivering the much-needed food and water to the flood victims. ORPHANS GIVEN A HEAD AID FOR EARTHQUAKE VICTIMS YOGYAKARTA VICTIMS IN IN YOGYAKARTA ORPHANS GIVEN A HEAD START SCHOOL START ATAT SCHOOL On Saturday, 27 May 2006, a damaging earthquake of AEON, through the Malaysian JUSCO Foundation, launched magnitude 5.8 on the Richter Scale hit Yogyakarta in Central an Java, Indonesia. In response, AEON CO. (M) BHD. collected Sambil Menderma” (Donate as you Buy). JUSCO customers a total of RM36,425 through a donation drive from 2 – 25 who purchased school uniforms at the “Back To School” June 2006. The “With All Our Hearts” Malaysian JUSCO promotion (from 1 to 21 December 2006) were asked to Foundation added another RM36,425, which were presented place the price tags into special boxes provided. The Malaysian to the Embassy of Indonesia on 29 June 2006. JUSCO Foundation then donated 1% of the total sales to 16 innovative outreach programme called “Membeli orphanages around the country, to help them buy school uniforms for the 2007 school year. Presenting the cheque to the Indonesian ambassador for the earthquake victims. Every child deserves the opportunity to get a good education. 13 AEON ANNUAL REPORT 2006 HUMAN RESOURCE MANAGEMENT HUMAN RESOURCE MANAGEMENT IMPROVING QUALITY OFSTAFF OURWITH STAFF WITH OUM IMPROVING THETHE QUALITY OF OUR OUM On 4 August 2006, AEON CO. (M) BHD. signed a Memorandum of Understanding with OUM (Open University Malaysia) for the Executive Diploma (in Trade Management, Human Resource Management and Retailing) Programme. AEON was represented by the Managing Director, Mr. Nagahisa Oyama and OUM was represented by Prof. Tan Sri Dato’ Anuwar Ali. A welcome ceremony was also held for the first batch of 69 students. On 18 December 2006, 31 AEON staff members were awarded their Diploma in Management (Retailing) at OUM’s 3rd Convocation ceremony, held at the PWTC’s Dewan Merdeka. The 24 apprentice and 7 international staff members received their Diplomas from the Pro Chancellor, Tan Sri Dato’ Azman Hashim. Graduates of the 3rd OUM Convocation with their well-earned diplomas. JAPAN TRAINEE JAPAN TRAINEE PROGRAMME PROGRAMME The 5th batch of trainees who successfully completed the Japan Trainee Programme returned to Malaysia on 17 January 2007. They are now all holding positions as leaders in their respective stores nationwide. The Japan Trainee Programme is designed to help selected leaders prepare for the ever-changing retail environment, by exposing them to overseas working conditions. One of the vital ways to enhance their knowledge and skills in retailing is by giving them some experience in ÆON Japan. This programme also teaches them to be independent, in preparation for their future roles as leaders in the Company. THE JUSCO BUSINESS THE JUSCO BUSINESS SCHOOL SCHOOL The JUSCO Business School is an intensive course for the benefit of merchandisers, store managers and deputy store managers organised by AEON. To celebrate the successful completion of the course, a special closing ceremony was held on 22 September 2006. Participants of the 2006 JUSCO Business School. AIDLEADER FOR EARTHQUAKE NEW DEVELOPMENT VICTIMS IN YOGYAKARTA PROGRAMME ORPHANS GIVEN A HEAD TEAM BUILDING FOR THE START AT SCHOOL FUTURE To train and develop new leaders from within the Company, AEON CO. (M) BHD. has created a New Leader Development Programme (NLDP). The graduation ceremony for the 2nd batch of participants was held on 12 December 2006, attended by AEON CO. (M) BHD. Executive Director, Mr. Masato Yokoyama. Participants were asked to present a project that applied all the skills and knowledge they gained during the one-year course. AEON CO. (M) BHD. organised a number of team-building activities throughout the year to develop attitudes, motivation and unity within the Company. Some of the programmes organised were the Teaming Up Ceremony for JUSCO Taman Equine staff on 24 May 2006, and a “Teaming Up Camp” for D’HATI (formerly known as J-One) Pearl Point staff from 1 – 3 June 2006, followed by a “Teaming Up Ceremony” on 13 June 2006. Team-building Programmes were also held for Blue Wave supervisors and assistant supervisors at Kem Bina Semangat Yayasan Selangor from 24 – 26 July 2006 and for Blue Wave team members at Fraser’s Hill from 1 – 3 August 2006. The programme has already showed some success as 30 out of the 50 participants have already been promoted to higher positions in the Company. AEON is committed towards developing leaders from within the company. 14 AEON ANNUAL REPORT 2006 Teamwork is all about harmony and attitudes. Our Principle ANAN INTRODUCTION INTRODUCTION TOTO ÆON ÆON AEON CO. (M) BHD. is a leading retailer in Malaysia with a total revenue of RM1.94 billion (10 months) in the financial period under review. The Company was incorporated on 15 September 1984. AEON CO. (M) BHD. was set up in response to the Malaysian Government’s invitation to ÆON Japan to help modernise the retailing industry in Malaysia. The ‘JUSCO’ name today is well established among Malaysians as well as foreigners, especially due to its association with the international ÆON group of companies. AEON has established itself as a leading chain of General Merchandise Stores. AEON’s constant interior refurbishment of stores to project an image designed to satisfy the ever changing needs and desires of consumers is clear evidence of this. The Company’s performance has been further enhanced by the management’s acute understanding of target market needs and the provision of a correct product-mix. AEON’s stores are mostly situated in suburban residential areas, catering to the vast middle income group. The ÆON group of companies consists of ÆON Co., Ltd., and more than 150 consolidated subsidiaries and affiliated companies. In addition to its core General Merchandise Stores (GMS) plus its supermarket and convenience store operations, ÆON is also active in specialty store operations and shopping centre development, operations, credit card business and services. The ÆON group of companies is an integrated Japanese retailer and is active not only in Japan but also in Southeast Asia, China and North America. regardless of how times may have changed, we strive to serve the ‘Customer First’. We are always mindful of the three keywords which make up the essence and character of the retail industry and must be considered in any development: ‘peace’, ‘people’ and ‘community’. Ours is a person-to-person business and our existence is deeply intertwined with the people of the regions and societies in which we serve. These precepts remain the same wherever we do business, where we act as a contributing member of the local community. Our Strategy is to establish a solid competitive position and achieve continuous growth. Two key components underlying this strategy are: • Accelerating Shopping Centre Development. We are channeling our resources towards developing attractive, integrated commercial facilities which our customers can fully enjoy, such as regional shopping centres and community shopping centres. This segment also involves leasing shopping space and facilities to tenants. • Aggressive Pursuit of GMS Stores and Supermarkets. Our General Merchandise Stores (GMS), which combine supermarkets and departmental stores under one roof, operate as full-line retailers. Products offered range from food and other daily necessities, apparel and household goods. As for our supermarkets, we strive to offer our customers a refreshing “shop with convenience and comfort” atmosphere. Our Goal is to operate as an “international-scale retailing group”, recognised for excellence not only in Japan, but also in other nations. The international recognition we are working to achieve is not one which can be measured merely in quantifiable terms of size, growth and profitability. We hope to be competitive at the global level in intangible aspects such as customer satisfaction and corporate citizenship. We are dedicated to the idea of “quality management” to further enhance our capabilities. At all times, in every market, ÆON’s activities are guided by the unchanging ‘Customer First’ philosophy. Its aim is to surpass expectations by combining excellent products with unique personal services that enhance the shopping experience to make customers smile every time they shop. A healthy environment is key to our success in a community. Our “Customer First” policy begins with our retail staff. 15 AEON ANNUAL REPORT 2006 CORPORATE INFORMATION AND CORPORATE INFORMATION AND DIRECTORY DIRECTORY Board of Directors • Dato’ Abdullah bin Mohd Yusof (Chairman) • Mr. Toshiji Tokiwa • Mr. Tatsuichi Yamaguchi • Mr. Nagahisa Oyama • Mr. Masato Yokoyama • Datuk Ramli bin Ibrahim • Brig. Jen. (B) Dato’ Mohd Idris bin Saman • Datuk Zawawi bin Mahmuddin • Dato’ Chew Kong Seng Secretaries • Tai Yit Chan (MAICSA 7009143) • Saw Bee Lean (MAICSA 0793472) Registered Office and Head Office 3rd Floor, JUSCO Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100, Kuala Lumpur. Tel: 03-9207 2005 Fax: 03-9207 2006 / 2007 Auditors KPMG Desa Megat & Co. (AF0759) Chartered Accountants, Wisma KPMG, Jalan Dungun, Damansara Heights, 50490 Kuala Lumpur. Registrars Tenaga Koperat Sdn. Bhd. (118401-V) 20th Floor, Plaza Permata, Jalan Kampar, Off Jalan Tun Razak, 50400 Kuala Lumpur. Tel: 03-4041 6522 Fax: 03-4042 6352 16 AEON ANNUAL REPORT 2006 Stock Exchange Listing The Company is a public listed company, incorporated and domiciled in Malaysia and listed on the Main Board of the Bursa Malaysia Securities Berhad. Homepage http://www.jusco.com.my Principal Bankers • Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad (302316-U) • Malayan Banking Berhad (3813-K) • CIMB Bank Berhad (13491-P) (formerly known as Bumiputra Commerce Bank Berhad) CORPORATE CORPORATE CALENDAR CALENDAR Notice of Annual General Meeting 31 May 2006 Annual General Meeting 22 June 2006 Payment of Dividend Book Closure – 4 July 2006 Payment – 20 July 2006 Quarterly Results Announcement 1st Quarter – 21 April 2006 Quarterly Results Announcement 2nd Quarter – 10 August 2006 Quarterly Results Announcement 3rd Quarter – 7 November 2006 Quarterly Results Announcement 4th Quarter – 15 February 2007 6.00 1,500 - 0.00 02/03 Mar Apr 2,000 03/04 04/05 05/06 Financial Year May Jun 1,962.4 1,941.4 1,000 (10 months) 2006 Jul Aug Sept - .......................................................... .......................................................... ................... ................... ................................ ................................ .................................................. .................................................. ..................... ..................... ..................................................... 7.00 Oct 60.5 02/03 63.6 03/04 Nov 04/05 ............................... ............................... ................................................................................................................................. . ................................................................................................................................. . Stock Code: 6599 ..................................................... ................................ ................................ .............................. .............................. SHARE PRICE Stock Name: AEON 2006 Mar Apr May Jun Jul Aug Sep Oct Nov Dec High (RM) 6.20 6.15 6.10 6.05 5.95 5.90 5.85 6.00 7.15 7.20 Low (RM) 6.00 5.90 5.65 5.70 5.55 5.75 5.75 5.65 6.05 6.95 Volume (‘000) 1562 1654 1232 485 2587 1604 5320 2589 1869 2103 RM Vol ('000) 8.00 6000 5000 5.00 4000 4.00 3000 3.00 2000 2.00 1.00 1000 Dec 0 REVENUE PROFIT ATTRIBUTABLE TO SHAREHOLDERS RM million RM million 120 1,784.6 103.2 100 1,523.8 1,368.3 80 64.2 73.2 60 40 500 20 Financial Year 05/06 (10 months) 2006 AEON ANNUAL REPORT 2006 17 FIVE YEARS FINANCIAL FIVE YEARS FINANCIAL HIGHLIGHTS HIGHLIGHTS INCOME STATEMENT Revenue Retailing Property Management Services Profit before tax Profit after tax Net dividend BALANCE SHEET Assets Property, plant and equipment Prepaid lease payments Investment Current assets Total assets Equity Share capital Revaluation reserve Share Premium Retained earnings Total equity attributable to shareholder of the Company Liabilities Deferred tax liabilities Current liabilities Total equity and liabilities STATISTICS Net earnings/(loss) per share (sen) Gross dividend per share (%) Net assets per share (RM) 31.12.2006 RM'000 28.2.2006 RM'000 28.2.2005 RM'000 29.2.2004 RM'000 28.2.2003 RM'000 1,941,431 1,962,445 1,784,564 1,523,781 1,368,268 1,763,283 1,807,753 1,648,475 1,406,242 1,262,851 178,148 154,692 136,089 117,539 105,417 140,741 112,198 99,010 96,288 90,833 103,246 73,204 64,247 63,588 60,545 20,498 18,954 15,163 12,636 12,636 942,252 845,248 628,950 575,673 488,123 125,808 124,573 125,950 110,406 71,884 1,075 1,075 175 175 175 369,238 240,596 259,771 266,115 226,703 1,438,373 1,211,492 1,014,846 952,369 786,885 175,500 175,500 175,500 87,750 87,750 33,217 33,648 34,165 34,682 35,199 20,609 476,817 20,609 392,094 20,609 333,536 108,488 281,408 108,488 229,939 706,143 621,851 563,810 512,328 461,376 29,113 29,281 24,429 24,322 20,523 703,117 560,360 426,607 415,719 304,986 1,438,373 1,211,492 1,014,846 952,369 786,885 58.8 41.7 36.6 *36.2 *34.5 16 15 12 20 20 4.02 3.54 3.21 5.84 5.25 Note: The leasehold land has been reclassified from property, plant and equipment to prepaid lease payments during the financial period is accordance with FRS 117, Leases. Comparative figures have been restated accordingly. * Earnings per share has been calculated based on the number of ordinary shares of 175,500,000. Comparative earnings per share information has been restated after adjusting for the bonus issue undertaken by the Company. 18 AEON ANNUAL REPORT 2006 BOARD OF DIRECTORS BOARD OF DIRECTORS (Seated from left to right) (Standing from left to right) Mr. Nagahisa Oyama Managing Director Mr. Masato Yokoyama Executive Director Dato’ Abdullah bin Mohd Yusof Non-Independent Non-Executive Chairman Brig. Jen. (B) Dato’ Mohd Idris bin Saman Independent Non-Executive Director Mr. Toshiji Tokiwa Non-Independent Non-Executive Vice Chairman Datuk Ramli bin Ibrahim Non-Independent Non-Executive Director Dato’ Chew Kong Seng Independent Non-Executive Director Datuk Zawawi bin Mahmuddin Independent Non-Executive Director Mr. Tatsuichi Yamaguchi Non-Independent Non-Executive Director 19 AEON ANNUAL REPORT 2006 DIRECTORS’ PROFILES DIRECTORS’ PROFILES Dato’ Abdullah bin Mohd Yusof (67), (Malaysian) Non-Independent Non-Executive Chairman Dato’ Abdullah bin Mohd Yusof was appointed the Chairman of AEON CO. (M) BHD. on 26 October 1984. He holds a Bachelor of Law (Honours) from University of Singapore, which he obtained in 1968. He has more than thirty (30) years of experience as an Advocate & Solicitor. He started his career with Skrine & Co., as a Legal Assistant in 1968 before starting his own partnership under the name of Tunku Zuhri Manan & Abdullah, Advocates & Solicitors in 1969 and subsequently renamed the law firm to Abdullah & Zainuddin, Advocates and Solicitors. He sits on the Board of Directors of MMC Corporation Berhad, Zelan Berhad (formerly known as Tronoh Consolidated Malaysia Berhad) and Tradewinds Corporation Berhad, all of which are companies listed on Bursa Malaysia Securities Berhad. He also sits on the Board of Directors of several private limited companies. He is a member of the Remuneration & Nomination Committee of the Board. Dato’ Abdullah bin Mohd Yusof has attended all the four (4) Board meetings held in the financial period. He holds 268,000 ordinary shares directly in the Company and 1,411,000 ordinary shares indirectly in the Company. Mr. Toshiji Tokiwa (67), (Japanese) Non-Independent Non-Executive Vice Chairman Mr. Toshiji Tokiwa was appointed the Non-Executive Vice Chairman of AEON CO. (M) BHD. on 16 June 2000. He holds a Bachelor of Law Degree from Keio University, Japan, which he obtained in 1963. He joined the Dai-Ichi Kangyo Bank Ltd. (formerly known as Dai-Ichi Bank Ltd.), Japan in 1963 as a Management Trainee. In 1992, he was promoted to the position of Director and General Manager of the International Treasury Division of the Dai-Ichi Kangyo Bank Ltd. (formerly known as Dai-Ichi Bank Ltd.), and in 1994 seconded to assume the same position at the New York Branch of Dai-Ichi Kangyo Bank Ltd. (formerly known as Dai-Ichi Bank Ltd.), New York, USA. Subsequently, he was the Senior Managing Director of Dai-Ichi Kangyo Bank Ltd. (formerly known as Dai-Ichi Bank Ltd.), from 1995 to 1996. He joined Chuo Real Estate Co., Ltd., a company principally involved in the leasing and management of office buildings, as the President in 1996 and in 1997 he joined Hibiya Co., Ltd. , as the President. He was also a Non-Executive Corporate Auditor of Fujitsu General Co. Ltd. from 1997 to 2000. In 2000, he joined ÆON Co., Ltd., as Chairman and in 2003 he was appointed Director and Chairman of the Board of Directors of ÆON Co., Ltd. In 2006 he was appointed and presently holds the position of Corporate Advisor of ÆON Co., Ltd. Mr. Toshiji Tokiwa has attended all the four (4) Board meetings held in the financial period. He does not hold any shares in the Company. Mr. Tatsuichi Yamaguchi (61), (Japanese) Non-Independent Non-Executive Director Mr. Tatsuichi Yamaguchi was appointed Non-Executive Director of AEON CO. (M) BHD. on 23 July 2003. He holds a Degree in Management from Meiji University, Japan, which he obtained in 1969. He joined ÆON Co., Ltd., in 1969 and was promoted as the Store Manager of Toyohashi Store, Japan, in 1980. In 1986 he was seconded to Kornhill Store of JUSCO Stores (Hong Kong) Co., Ltd., where he was appointed as the Deputy Store Manager, and subsequently appointed as the Director and the Managing Director of JUSCO Stores (Hong Kong) Co., Ltd., in 1988 and 1990 respectively. He was appointed as the Director of ÆON Co., Ltd., in 1996, and the Director & General Manager (Apparel) Merchandising Division in 1997. In 2000, he assumed the position of Director & General Manager, Chubu Regional Company, and the Senior Vice President, Asia Operations, ÆON Co., Ltd. in 2003. In 2005 he assumed the position of Executive Vice President, Asia Operations, and currently holds the position of Corporate Advisor of ÆON Co., Ltd since 2006. Mr. Tatsuichi Yamaguchi is also the Chairman of the Nomination and Remuneration Committees of the Board. Mr. Tatsuichi Yamaguchi has attended all four (4) Board meetings held in the financial period. He does not hold any shares in the Company. Note: Save as disclosed in this annual report, all the Directors mentioned on pages 20 to 22 have no conflicts of interest with AEON CO. (M) BHD. or any family relationship with any Director and/or substantial shareholder nor have they any convictions for offences within the past 10 years, except for traffic summons, if any. 20 AEON ANNUAL REPORT 2006 Mr. Nagahisa Oyama (52), (Japanese) Managing Director Mr. Nagahisa Oyama was appointed the Managing Director of AEON CO. (M) BHD. on 22 June 2005. He holds a Bachelor's Degree in Business Management from Kinki University, Japan, which he obtained in 1977. He joined ÆON Co., Ltd. in 1977 as a Management Trainee and was promoted to be Softline Merchandiser in 1980. He was seconded to Siam Jusco, Thailand to set up the GMS Merchandising Division. Following his appointment at Siam Jusco, Thailand, from 1989 to 1991, he was promoted to become the General Manager of Tonami Regional Shopping Centre in 1991. Mr. Oyama was next appointed as the General Manager of Kaga Regional Shopping Centre in 1996. He served as General Manager of Kochi Regional Shopping Centre from 2000 to 2002. In 2002, he was promoted to become the Regional General Manager of Higashi Mikawa and Shizuoka Prefecture, Japan, where he was in-charge of the overall planning, opening and operations of three (3) new Regional Shopping Centres and the operations of seven (7) existing Regional Shopping Centres in the Shizuoka Prefecture. Mr. Nagahisa Oyama has attended all the four (4) Board meetings held in the financial period. He does not hold any shares in the Company. Mr. Masato Yokoyama (54), (Japanese) Executive Director Mr. Masato Yokoyama was appointed Executive Director of AEON CO. (M) BHD. on 26 October 2001. He holds a Bachelor of Arts in Commerce from Waseda University in Japan, which he obtained in 1976. He joined ÆON Co., Ltd. in 1976 and was the Store Manager of Ishioka Store prior to his secondment to AEON CO. (M) BHD. in 1993. Mr. Yokoyama held the position of Store Manager of JUSCO Taman Maluri from 1993 to 1998. He was promoted to become the Senior Softline Merchandising Manager from 1998 to 1999 and the Senior Operations Manager from 1999 to 2000. Currently, Mr. Masato Yokoyama is the Executive Director in charge of the overall Operations of the Company. Mr. Masato Yokoyama has attended all the four (4) Board meetings held in the financial period. He holds 30,000 ordinary shares directly in the Company. Datuk Ramli bin Ibrahim (66), (Malaysian) Non-Independent Non-Executive Director Datuk Ramli bin Ibrahim was appointed Non-Executive Director of AEON CO. (M) BHD. on 20 August 1996. He is a member of the Malaysian Institute of Accountants and a Fellow of the Australian Institute of Chartered Accoutants. He was attached to KPMG Peat Marwick (“KPMG”) (now know as KPMG) in Australia, United Kingdom and Malaysia from 1959 to 1995. He was appointed a Partner of KPMG Malaysia in 1971. In 1989, he was made the first bumiputera Senior Partner of KPMG Malaysia. He also served on the Boards of KPMG International and KPMG Asia Pacific from 1990 to 1995. He retired from KPMG Malaysia in 1995. From December 1995 to December 2000, he served as the Executive Chairman of Kuala Lumpur Options & Financial Futures Exchange Berhad. Currently, he sits on the Board of Directors of Ranhill Berhad, Measat Global Berhad, BCT Technology Berhad and several other unlisted public and private limited companies including HSBC Bank Malaysia Berhad and Yayasan Tuanku Syed Sirajuddin. He is also a member of the Audit and Remuneration Committees of the Board. Datuk Ramli bin Ibrahim has attended all the four (4) Board meetings held in the financial period. He holds 280,000 ordinary shares indirectly in the Company. 21 AEON ANNUAL REPORT 2006 Brig. Jen. (B) Dato’ Mohd Idris bin Saman (62), (Malaysian) Independent Non-Executive Director Brig. Jen. (B) Dato’ Mohd Idris bin Saman was appointed Non-Executive Director of AEON CO. (M) BHD. on 16 June 2000. He holds a Post Graduate Diploma in Management Studies from the Slough College, United Kingdom which he obtained in 1980. He was a graduate of the Air Command & Staff College, Maxwell, USA and the Armed Forces Defence College, Kuala Lumpur. He joined the Royal Malaysian Air Force as a Pilot Officer and served the Royal Malaysian Air Force for thirty-five (35) years, in various executive positions within its Logistic Branch. He retired from the Royal Malaysian Air Force in 2000 as Assistant Chief of the Air Force (Material). He is a Director of Affin Fund Management Sdn. Bhd. He is also a Fellow of the Malaysian Institute of Logistics. Dato’ Mohd Idris bin Saman is a member of the Audit and Nomination Committees of the Board. Dato’ Mohd Idris bin Saman has attended all the four (4) Board meetings held in the financial period. He does not hold any shares in the Company. Datuk Zawawi bin Mahmuddin (61), (Malaysian) Independent Non-Executive Director Datuk Zawawi bin Mahmuddin was appointed Non-Executive Director of AEON CO. (M) BHD. on 23 July 2001. He holds a Bachelor of Arts (Honours) Degree from the University of Malaya, which he obtained in 1968. Datuk Zawawi joined the Administrative and Diplomatic Service and began his career as an Administrative Officer in the Ministry of Transport in 1968. From 1970 to 1975 he served as private secretary to the Deputy Prime Minister and thereafter held various positions in the Cabinet Secretariat of the Prime Minister’s Department from 1975 to 1990. His subsequent appointments were as follows:- Federal Secretary in Sarawak (1990 – 1992), Deputy Secretary General 1, Ministry of Home Affairs (1992 – 1994), Secretary General, Ministry of Information (1994 – 2000). Datuk Zawawi was formerly on the Board of Syarikat Explosive Malaysia Sdn. Bhd. (SME), National Film Development Corporation (FINAS), Governing Council, Bernama and Sukom Ninety Eight Bhd. Besides being Chairman of Northport Distripark Sdn. Bhd., he also sits on the Board of a few private limited companies. He is also a member of the Nomination Committee of the Board. Datuk Zawawi bin Mahmuddin has attended all the four (4) Board meetings held in the financial period. He does not hold any shares in the Company. Dato’ Chew Kong Seng (69), (Malaysian) Independent Non-Executive Director Dato’ Chew Kong Seng was appointed Non Executive Director of AEON CO. (M) BHD. on 23 July 2001. He is a Fellow of the Institute of Chartered Accountants in England and Wales, a Member of the Malaysian Institute of Accountants and the Malaysian Institute of Certified Public Accountants. He was a tax officer in the Inland Revenue Department in the United Kingdom and then joined Stoy Hayward & Co. in the United Kingdom from 1964 to 1970. He returned to Malaysia and joined Turquand Young & Co. (now known as Ernst & Young) and was subsequently transferred to Sarawak office as Manager in-charge and later as Partner in-charge. He was appointed as the Managing Partner of Ernst & Young from 1990 to 1996. Currently, Dato’ Chew Kong Seng is a Director and Audit Committee Chairman of Petronas Dagangan Berhad, Industrial Concrete Products Bhd, PBA Holdings Berhad and Bank of America Malaysia Berhad, as well as a Director and a member of the Audit Committee of Petronas Gas Berhad and GuocoLand (Malaysia) Berhad (formerly known as Hong Leong Properties Berhad). He is also a Director of Encorp Berhad and Great Wall Plastic Industries Berhad. Dato’ Chew Kong Seng is the Chairman of the Audit Committee and a member of the Nomination Committee of the Board. Dato’ Chew Kong Seng has attended all the four (4) Board meetings held in the financial period. He does not hold any shares in the Company. 22 AEON ANNUAL REPORT 2006 SENIOR MANAGEMENT SENIOR MANAGEMENT (Seated from left to right) (Standing from left to right) Mr. Nagahisa Oyama Managing Director Mr. Poh Ying Loo General Manager Finance Ms. Chong Swee Ying General Manager Store & Shopping Centre Operations Mr. Kenji Fujita General Manager SC Development Puan Nur Qamarina Chew General Manager New Business Development Ms. Audrey Lim Suan Imm Assistant General Manager Marketing Puan Noryahwati Mohd. Noh General Manager Human Resource, Administration and Security, Safety & Health Mr. Tomio Yokoyama Assistant General Manager SC Development Mr. Yoshihisa Tanizawa Assistant General Manager GMS Merchandising Lt. Col (R) Yaacob bin Mahmud General Manager Logistics & Loss Control Mr. Mitsuru Nakata Assistant General Manager SSM Merchandising Mr. Masato Yokoyama Executive Director Encik A. Rashid bin Adam General Manager Corporate Affairs 23 AEON ANNUAL REPORT 2006 CHAIRMAN’S STATEMENT CHAIRMAN’S STATEMENT To Our Shareholders On behalf of the Board of Directors, I am pleased to present to you the Annual Report and Audited Financial Statements of AEON CO. (M) BHD. (AEON) for the 10-month period ended 31 December 2006 following the change of AEON’s financial year-end from 28 February to 31 December 2006 onwards. Strong Financial Performance For the ten months ended 31 December 2006, AEON continued to achieve strong revenue and earnings growth. Revenue was RM1.94 billion for the period under review which, comparing on a same period basis from March 2005 to December 2005, represented a 22.9% increase. Equally, AEON registered a strong Profit before Tax (PBT) of RM140.7 million and a Profit after Tax (PAT) of RM103.2 million for the period under review. The earnings however included a gain of RM33.9 million from the disposal of its JUSCO Kinta City Shopping Centre in Ipoh, in a sales and leaseback transaction which was completed in the period under review. If this is excluded, PAT from our operations still registered an impressive level of a very healthy RM69.3 million for the ten-month period, indicating the strength and sustainability of the earnings from AEON’s core businesses. The proceeds from the sales and leaseback transaction had been utilised for development of AEON’s new outlets, refurbishment of its existing stores and for working capital purposes. Earnings per share for the period under review was 58.8 sen per share inclusive of the gain on disposal, or 39.5 sen excluding the gain. AEON’s balance sheet remains healthy as at 31 December 2006 with a net cash position and a net asset value per share of RM4.02. Building our Operations across Malaysia Despite the continuous challenging and competitive environment of Malaysia’s retail industry, 2006 was a good year for AEON’s core businesses of retail and property management services. AEON’s focus on providing a wide assortment of quality merchandise at reasonable prices to its customers, supported by its loyalty programme and excellent customer service standards, have continuously proven to be a successful formula. Retail sales contributed RM1.76 billion for the ten months ended 31 December 2006, a growth of 21.0% over the same period last year. The growth is driven both by contributions from new stores and also better overall performance of its existing stores. In the period under review, the JUSCO Seremban 2 Store and JUSCO Tebrau City Store operated for the full period compared to the previous year and new stores in Taman Equine, Queensbay Mall and Cheras Selatan opened for business. Same store growth registered a marginal increase due to major renovations to the JUSCO Mid Valley Store and JUSCO Taman Universiti Store in the period under review. Excluding the JUSCO 24 AEON ANNUAL REPORT 2006 same store sales registered a commendable growth of Opportunities were also taken during these ceremonies to 2.7%. As for AEON’s supermarket business, which had a make donations to selected schools to enable the school name change from “J-One” to “PASAR RAYA D’HATI” as children to have more books and computer facilities. part of AEON’s strategy to have a more local flavour, its contribution was still marginal in the period under review, though AEON added a new outlet in the Pearl Point Through the “With All Our Hearts” Malaysian JUSCO Foundation, AEON continues to raise funds to provide better life for the young and underprivileged children, through Shopping Mall, Kuala Lumpur. various activities such as the “Shop and Donate” event at its AEON’s vast experience in property management and services stores and the Charity Gala Dinner event. continued to place AEON in a strong position to attract and retain tenants, which is reflected in AEON’S excellent revenue from property management services of RM178.1 million for the ten months ended 31 December 2006, representing a 46.0% increase over the same period in the previous year. Though comparatively, the increase in revenue was mainly due to the full ten months’ operations of its In the period under review, through the “Shop and Donate” event, funds were raised to buy books and school uniforms for children of sixteen orphanage homes. And through the Charity Gala Dinner event, funds were raised to purchase a van for RUMAH K.I.D.S. (Rumah Kanak-kanak Ini Disayangi) orphanage home. shopping centres in Tebrau City and Seremban 2, and also the On 13 April 2006, the Malaysian JUSCO Foundation also new revenue generated from additional lettable space in the officially handed over the orphanage home, “Rumah Tunas period under review from its new shopping centres in Taman Harapan Sepenuh Hati”, which it sponsored, to the Malaysian Equine and Cheras Selatan, it also reflects AEON’s ability, Social Welfare Department for their administration. through its well designed shopping centres and commitment to timely refurbishment and upkeep, to enjoy high occupancy. During the Yogyakarta earthquake tragedy, AEON organised At the end of 2006, the occupancy rate of AEON’s shopping a donation drive at its stores and, together with equal centres continued achieving an impressive level of 98.0%. contributions from the Malaysian JUSCO Foundation, a total of RM72,850 in aid was channelled to assist the victims. AEON -- Corporate Social Responsibilities We would like to thank all our customers and staff for their generosity in this charitable act. Even as AEON concentrates on its business growth, it is AEON’s aim to be a friend to the many communities of During the recent floods in Johor, to ease the hardship of Malaysians. AEON continues to give priority to preserving the the affected residents, AEON organised a mega “Gotong- surrounding environment in which it operates, as is reflected Royong” together with the local council, to clean up affected in its core mission of “Planting the Seeds of Growth to Serve areas and homes at Kampung Kangkar Tebrau, Johor, one Our Community”. of the unfortunate villages hit by the flood. Approximately RM50,000 worth of food, drinks and other necessities, which To this end, in the period under review, as in previous new included many contributions from AEON’s business associates store openings, AEON carried out tree planting ceremonies and AEON’s staff, were further provided to the affected together with the local communities and school children in residents. the latest AEON Taman Equine and AEON Cheras Selatan shopping centres before they opened for business. AEON continues to look forward to increase its corporate social responsibility (CSR) activities with the local communities of each of its stores and shopping centres. 25 AEON ANNUAL REPORT 2006 Looking to the Year Ahead The Malaysian economy grew 5.9 per cent in 2006 and economic growth is expected to remain favorable in 2007. Private consumptions and increased investment activities are expected to provide support to sustain the favorable business Dividend The Board of Directors is recommending a first and final dividend of 16 per cent less 27 per cent income tax for the 10 months ended 31 December 2006, for your approval at the forthcoming Annual General Meeting. environment. To conclude These positive economic indicators augur well for AEON as it will allow the Company to continue to strategise and Finally, I would like to take this opportunity to say some words of recognition and thanks. leverage on the momentum of its current retail business and property management services, amid strong challenges from Firstly, on behalf of the Board, I would like to thank the competitors and constantly changing consumer behaviours. management and staff for their untiring efforts and hard While expanding its business and outlets, AEON needs to work put in through the year, which has enabled the ensure that its existing outlets and core business operations Company to achieve such excellent results. will continue to provide a wide range of quality merchandise and, at the same time, maintain a continuous high level of customer service. I also want to thank our business partners and associates for their continuous support and, finally, I would like to thank you, our valued shareholder for your support through AEON also believes that its revenue and earnings will the year. continue to be better supported by new stores and also planned expansion in the coming year, in which AEON is looking at the opening of at least two more stores. It will lease and manage the shopping centre in Bukit Tinggi, Klang and will be an anchor tenant in the Sunway Pyramid Shopping Centre, Bandar Sunway. .................................................................. DATO’ ABDULLAH BIN MOHD YUSOF Chairman Regarding its supermarket business, while the contribution is not significant at the moment, AEON will continue to steadily develop its chain of supermarkets by sourcing for the right locations and matching them with the right size to further establish itself in this area of business. For the coming year, AEON has identified some potential locations, which will be announced in due course. 26 AEON ANNUAL REPORT 2006 REVIEW OF OPERATIONS REVIEW OF OPERATIONS Performance Overview AEON registered a marginal increase in same-stores growth Malaysia recorded a GDP growth of 5.9% in 2006 which for the ten months ended 31 December 2006. Excluding was slightly better compared to the 5.3% recorded for the renovations in JUSCO Taman Universiti and JUSCO Mid 2005. Overall, inflation remained moderate and economic Valley, the same-stores growth registered a commendable activities were supported by domestic demand from both increase of 2.7%. private and public spending. The services sector continued to be the main contributor towards sustaining our economic momentum and the retail industry growth reflected the sustainability of consumer spending in 2006. Most of AEON’s stores registered growth over the same period except for the two stores mentioned above which underwent renovations, and also JUSCO Permas Jaya whose business was impacted by the opening of AEON Tebrau City Against such backdrops and amid the challenges that it faces, Shopping Centre. However, for JUSCO Permas Jaya and AEON CO. (M) BHD. (AEON) continued to enjoy expansion JUSCO Tebrau City, the consolidated retail sales performance and growth in its retailing and property management services of both stores indicated that AEON continued to maintain businesses, registering revenue of RM1.94 billion for the ten its market share in this region. JUSCO Taman Universiti and months ended 31 December 2006, representing a growth of JUSCO Mid Valley did not operate fully during the reporting 22.9% over the previous corresponding period. Its retail sales period due to the renovations and, as such, their businesses recorded RM1.76 billion for the period under review and its dropped by 2.0% to 3.5%. property management services recorded RM178.1 million during the same period. As for AEON’s other stores, growth ranged from 1.5% to 7.1% in the period under review. For the record, in 2006, AEON changed its accounting year end to December, from February previously. JUSCO Taman Maluri, JUSCO Melaka and JUSCO Wangsa Maju, JUSCO Bandar Baru Klang, JUSCO Bandar Puchong Retail Sales recorded growth of between 1.5% to 3.7% in the period Overall, AEON’s retail sales performance of RM1.76 under review, while JUSCO Bandar Utama, JUSCO Ipoh and billion in the ten months ended 31 December 2006 was JUSCO Metro Prima achieved a growth of between 4.3% to commendable. It represented an increase of 21.0% 7.1% for the same period. over the previous corresponding period of March to December 2005. The performances of new JUSCO stores in the AEON Taman Equine Shopping Centre, Queensbay Mall, Penang and AEON The performance was driven both by organic growth from Cheras Selatan Shopping Centre were encouraging and up existing stores and by contributions from new stores which to expectations. opened for business in previous financial year and operated for a full ten months in the period under review, such as JUSCO Seremban 2 and JUSCO Tebrau City, as well as contribution from new stores at JUSCO Taman Equine, JUSCO Queensbay and JUSCO Cheras Selatan, which opened for business during the period under review. In the period under review, retail sales growth was also contributed to by sales from AEON’s J-One supermarket business. In January 2007, “J-One Supermarkets” was rebranded as “PASAR RAYA D’HATI”. The new name “D’HATI “, which means “At Heart” in the Malay language, 27 AEON ANNUAL REPORT 2006 was chosen by customers, and is in line with AEON’s aims of projecting a Malaysian identity and to be the best local store. In July 2006 the second D’HATI Supermarket opened for business in Pearl Point Shopping Mall, Kuala Lumpur. AEON’s first D’HATI Supermarket outlet in Damansara Damai, which opened in October 2005, has also registered improvement in its sales turnover. Shopping centre and store openings were carried out at a faster pace in 2006. AEON Taman Equine Shopping Centre opened its doors in June 2006. This two-floor shopping centre with a net lettable area of about 235,000 square feet, consists of approximately seventy eight shops and restaurants, together with the JUSCO General Merchandise Store and Supermarket as anchor tenants. In July 2006, AEON’s PASAR RAYA D’HATI supermarket, with an approximate selling area of 25,000 square feet, opened in Pearl Point Shopping Mall, Kuala Lumpur. In December 2006, two more JUSCO stores started operations in Queensbay Mall, Penang and in Cheras Selatan, Selangor. JUSCO Queensbay is the Company’s first store in Penang and it covers approximately 255,000 square feet of space over four floors. The lower ground floor has a supermarket as well as a restaurant and food centre. The AEON Cheras Selatan Shopping Centre covers approximately 383,000 square feet of net lettable space. There are the JUSCO General Merchandise Store and Supermarket, entertainment facilites and “Restaurant Street” which features a variety of food outlets from snacks to fine dining. AEON is able to assort each store’s product offerings to match customers’ profiles and consumption patterns of the communities they are located in. AEON positions itself in the minds of its customers through its JUSCO brand as well as through in-house brands of merchandise targeted at different age-groups and with different price points. Its in-house merchandise brands such as Orange Sorbet, a line of apparel and accessories for pre-teens, was successfully 28 AEON ANNUAL REPORT 2006 spin out from the General Merchandise Store into specialty Customer service is of paramount importance in the retail tenant shops. JUSCO Selection, a value-for-money line industry and to this end, AEON has continuously placed of groceries and household consumables, and Crème, a emphasis on the customer service in its stores. Through its line of stylish, premium clothing for ladies, are also doing annual cashier contest, in which customers get to nominate well and contribute steadily to revenue. At the same time, and compliment the cashiers for their services, AEON is able AEON’s Smart Wonder World amusement centre business to inculcate into its staff, especially cashiers, a culture on the also expanded in the period under review, with new centres importance of customer service on their end and ensuring being set up in our new and existing stores. In 2006, customers leave the stores with a good impression of customers in Wangsa Maju, Tebrau City, Melaka, Taman their services. Equine and Queensbay have been able to enjoy a fun-filled time at Smart Wonder World. New games were added to provide more choices for customers’ enjoyment. AEON also continued its efforts to make shopping more convenient and to build customer loyalty. The J CARD is one of the key items in its programme to achieve this. AEON continues to value feedback and ideas from AEON organised successful J CARD shopping days at all its customers and staff and through its organised AEON 21 stores during which members enjoyed special discounts and campaign which is already in its sixth year and in which promotional gifts. many innovative ideas from customers and staff are implemented to benefit shoppers, fulfiling AEON’s objective in enhancing the retailer-customer relationship and providing better customer service. AEON 21’s 2006 campaign theme “Let’s Make Our Customer’s Smile Bloom” attracted overwhelming response from staffs and customers and the winners were rewarded with their prizes in a prize giving ceremony on 23 November 2006. AEON registered growth in the number of J CARD principal members with the total now standing at more than 600,000 principal members at the end of the reporting period. These members contributed about 60 per cent of AEON’s monthly retail sales. The JUSCO Credit Card, which was launched last year in collaboration with its related company AEON Credit Service (M) Berhad, allows J CARD members who use the co-branded JUSCO Credit Card to enjoy more incentives through extra J CARD bonus points from purchases at all JUSCO stores. 29 AEON ANNUAL REPORT 2006 Property Management Services AEON’s property management services business achieved revenues of RM178.1 million for the ten months ended 31 December 2006, representing an increase of 46.0% over the same period last year. The main factors that boosted our revenue in this core business for this reporting period were the contributions from the operations of the new JUSCO Seremban 2 Shopping Centre and AEON Tebrau City Shopping Centre which opened in September 2005 and January 2006 respectively, as well as new income from additional lettable space of further new shopping centres which opened in 2006, such as AEON Taman Equine Shopping Centre and AEON Cheras Selatan Shopping Centre. On a same shopping centres basis, there was also a growth in revenue of 6.7% in the period under review. Revenues and earnings from AEON’s property management services operations are expected to be steady and consistent. AEON’s well designed and managed shopping centres as well as its continued emphasis on ensuring that its shopping centres are always well maintained has proven to be a successful formula in attracting shoppers and tenants alike. For these reasons, the occupancy rate at its shopping centres is at 98%, much higher than the national average. Given the demand for space at AEON-managed shopping centres, AEON is able to create an optimal tenant mix to give each shopping centre a “character” that will suit the community in which it is located. Such a complementary mix of tenants is in the end beneficial to all – to the tenants, as well as to the customers who regularly patronise these shopping centres. 30 AEON ANNUAL REPORT 2006 Prospects and Challenges AEON remains positive in its outlook towards the economy In the coming year, AEON will also enjoy full-year revenue and the retail industry. The economy is expected to be contributions from its stores and shopping centres that favourable, with resilience against external pressures, and opened in the 10 months to December 2006 – Taman Equine, increased investment activities especially from those under Queensbay, Cheras Selatan and Pearl Point. the Ninth Malaysian Plan. AEON maintains its commitments in ensuring all its shopping AEON also expects the competitive conditions experienced centres are always well maintained for their customers. in 2006 to continue throughout the coming year. AEON To this end, the Company has set up a department to remains committed to its objective of being a top retailer in specifically focus on managing the maintenance facilities the country. To this end, in the coming year, focus will be of the Company. on creating a brilliant selling floor that offers merchandise assortment and customer service of the highest quality. With regards to its expansion plans, AEON will be opening Merchandising plans include creating more private brands at least two new stores in 2007 where by it will be an and identifying core categories which will be developed to anchor tenant in the Sunway Pyramid Shopping Centre, match customers’ lifestyles. Bandar Sunway and it will manage and operate the AEON Bukit Tinggi Shopping Centre, currently under construction. 31 AEON ANNUAL REPORT 2006 In Bandar Sunway, the Company will undertake a lease as an anchor tenant in the new wing of the Sunway Pyramid Shopping Centre, occupying approximately 255,000 square feet of net lettable area, with the expected opening in the third quarter of 2007. The AEON Bukit Tinggi Shopping Centre in Klang will be the biggest shopping centre that AEON will manage. The shopping centre will have a built up area of approximately 2.1 million square feet, with approximately 750,000 square feet of net lettable space. AEON will manage the whole shopping centre, which will comprise of four levels with an estimated three hundred tenants, and is expected to open for business by the fourth quarter of 2007. Other major expansions are currently being planned to further establish the Company’s dominance in the retail and property management services businesses. With regards to its supermarket business, AEON has plans to expand this area of business and, in the coming year, the Company will be opening new PASAR RAYA D’HATI supermarkets in identified locations in the Klang Valley and Selangor. AEON will also continue to develop and promote its own in-house brands and will be looking to continue to open new tenant shops for its Jeans Studio, ti:zed and Orange Sorbet brands of apparel, as well as Smart Wonder World amusement centres in new shopping centres that AEON will operate in the coming year. 32 AEON ANNUAL REPORT 2006 Information Technology AEON’s Business Systems and Solutions department, which is b. Automatic Ordering System: This system automatically responsible for implementing the Information Technology tracks the stock level of items, especially those in the (IT) framework for the Company, continued to provide “fast moving consumer goods” category. It automatically information technology for operational needs in the period starts a reordering process when stock levels fall below under review. a pre-set point. Through the IT-triggered automatic reordering process, the stores can hold lower inventories Among the IT related initiatives implemented during the of items which allows cost and space efficiency. period were: c. Price Alteration System: This Price Change Suggestion/ a. Itemised Stock & Logistics Management System: Implemented within AEON’s Itemised Control System, which is designed to manage purchasing, goods transfers, returns, price alterations and related documentation at store operation levels. The enhanced Itemised Control System allows better inventory and trade payable management by AEON. Price Alteration System allows AEON to capture price change data and helps reduce human errors when making price change decisions. This allows AEON to respond quickly to market changes, competitive activity and changing demand factors without losing customers. IT will increasingly be a tool to drive AEON’s productivity and profitability in the future. It also allows AEON to improve the efficiency of its stores and merchandising operations with better price management and faster goods transfer processing. 33 AEON ANNUAL REPORT 2006 STATEMENT ON CORPORATE STATEMENT ON CORPORATE GOVERNANCE GOVERNANCE Board Responsibilities A) Directors Board Meetings The Board of Directors, in recognising Board Balance the importance of corporate governance, The Board of Directors consists of is committed to ensuring that the nine (9) members; comprising one Company’s business and operations (1) Non-Executive Chairman, one (1) are in line with the principles and best Non-Executive Vice Chairman, two (2) practices advocated in the Malaysian Executive Directors and five (5) Non- Code of Corporate Governance. Executive Directors. Of the five (5) Non-Executive Directors, three (3) are The Board of Directors assumes Independent Directors. and has established various processes Dato’ Chew Kong Seng is the Senior and committees to assist the Board in Independent Non-Executive Director to discharging of these responsibilities. whom concerns on matters relating to Among others, the Company’s strategies corporate governance of the Company and could be conveyed to. shareholders and intervals during the financial period ended 31 December 2006. The details of attendance of each Director at the Board meetings held during the financial period are as the table below. Supply of Information The Company Secretary ensures that responsibilities in corporate governance directions, The Board met four (4) times at regular all Board meetings are furnished with proper agendas. Board papers and reports providing updates on financial, operational and corporate developments including matters such as the Company’s corporate social responsibilities program investors’ relationship, annual budget, The Directors bring a wide range of and staff welfare matters are circulated expertise and experience in various prior to the meetings to all Directors for fields such as economics, public services, them to discharge their duties effectively. accounting and finance, legal, human The Directors have full access to the advice resource, banking, marketing, taxation, and services of the Company Secretary. general management, retail management In addition, the Directors, if necessary, The following paragraphs set out the and property management services. may also seek professional advice, at the Company’s application of the principles All Board members participated and Company’s expense. The Directors may and best practices of the Malaysian Code deliberated on the issues and matters also consult the Chairman and other on Corporate Governance. affecting the Company. Board members prior to seeking any major capital expenditure, significant financial matters, and the adequacy and integrity of internal controls including risk assessment are within the responsibilities of the Board of Directors. independent professional advice. The profile of each Director is presented on page 20 to page 22 of the Annual Report. No Name of Directors Number of meetings attended/held during the Director’s term in office 1 Dato’ Abdullah bin Mohd Yusof 4/4 2 Mr. Toshiji Tokiwa 4/4 3 Mr. Tatsuichi Yamaguchi 4/4 4 Mr. Nagahisa Oyama 4/4 5 Mr. Masato Yokoyama 4/4 6 Datuk Ramli bin Ibrahim 4/4 7 Brig. Jen. (B) Dato’ Mohd Idris bin Saman 4/4 8 Datuk Zawawi bin Mahmuddin 4/4 9 Dato’ Chew Kong Seng 4/4 34 AEON ANNUAL REPORT 2006 Directors’ Training The duties and responsibilities of the In the financial period under review All the Directors have attended the Committee, to the committee met to determine the Directors’ Accreditation recommend to the Board, candidates remuneration packages of all Directors, continuing for directorship, directors to fill seats including the Non-Executive Chairman Education Programme organised by the on Board Committees and to review and Non-Executive Vice Chairman and Bursa Malaysia Securities Berhad and annually the required mix of skills and the determination of the remuneration are also provided with updates from experience of the Board including the packages is a matter for the Board as a time to time on relevant new laws and effectiveness of the Board as a whole whole to approve. Individual Directors regulations affecting their directorship. and the contribution from each Director. concerned do not participate in the Directors also from time to time visited The Board, through the Nomination existing stores and/or new sites to Committee, have a thorough understanding of the assessment of the Directors’ performance The Board is also assisted by the Audit Company’s operational matters. and contribution, and reviewed the Committee whose members, terms of required mix of skills and experience of reference and activities for the financial the Board to function competently and period under review are stated on page efficiently as a whole. 38 to 40 of the Annual Report. The Remuneration Committee Re-election The Committees are the Nomination The Remuneration Committee is made In accordance with the Company’s Committee, the Remuneration Committee up of Non-Executive Directors whose Articles of Association, all Directors retire and the Audit Committee members are Mr. Tatsuichi Yamaguchi every year. Programme Mandatory and the among others, are discussion on their own remuneration. Board Committees The Board of Directors is assisted by its conducted the annual The Audit Committee Committees, which have been established under defined terms of reference. (Chairman), Dato’ Abdullah bin Mohd The Nomination Committee The Nomination Committee members are Mr. Tatsuichi Yamaguchi (Chairman), Dato’ Abdullah bin Mohd Yusof, Dato’ Chew Kong Seng, Brig. Jen. (B) Dato’ Mohd Idris bin Saman and Datuk Zawawi bin Mahmuddin. Yusof and Datuk Ramli bin Ibrahim. The duties of the committee shall be to recommend to the Board the remuneration of all Directors in all its forms. Executive Directors play no part in decision-making or determining their own remuneration. Shareholders vote on a resolution after a lively discussion. The AEON Board of Directors convene the 21st AGM. 35 AEON ANNUAL REPORT 2006 B) Directors Remuneration The breakdown of the remuneration of the Directors during the financial period under review is as follows: - 1) Aggregate remuneration of the Directors categorised into appropriate components: Fees Salaries Benefits-in-kind Other emoluments Executive Directors RM Non Executive Directors RM Total RM 238,000 570,456 39,500 176,088 721,000 17,550 - 959,000 570,456 57,050 176,088 1,024,044 738,550 1,762,594 2) The number of Directors whose total remuneration fall within the following bands: Number of Directors Range of Remuneration Executive Non-Executive Total RM50,001 to RM100,000 - 5 5 RM100,001 to RM150,000 - - - RM150,001 to RM200,000 - 2 2 RM200,001 to RM250,000 - - - RM250,001 to RM300,000 - - - RM300,001 to RM350,000 - - - RM350,001 to RM400,000 - - - RM400,001 to RM450,000 - - - RM450,001 to RM500,000 - - - RM500,001 to RM550,000 2 - 2 RM550,001 to RM600,000 - - - RM600,001 to RM650,000 - - - 2 7 9 C) Shareholders disseminated Investors and Shareholders investors via announcements of its Communication quarterly performance, annual report, It has always been the Company’s corporate practice to maintain good relationship Malaysia Securities Berhad and press with its shareholders. Major corporate conferences. Further update of the developments and happenings in the Company’s activities and operations Company have always been duly and are also disseminated to shareholders promptly announced to all shareholders, and investors through dialogue with in line with Bursa Malaysia Securities analysts, fund managers, investors and Berhad’s the media. objectives transparency and of ensuring good corporate shareholders announcements to and Bursa highlighting retail business The Company’s financial performance, website (www.jusco.com.my) provides major and an update of the Company’s latest other relevant information are promptly performance released to Bursa Malaysia developments 36 AEON ANNUAL REPORT 2006 corporate information to the public. During the Annual General Meeting, shareholders are presentation on usually the given a Company’s performance and major activities that were carried out by the Company for the period under review. During the meeting, shareholders have the opportunities to enquire and comment on the Company’s promotional activities, the Company’s corporate Securities Berhad as well as other performance and operations. Besides governance practices. to D) Accountability And Audit bodies. Financial Reporting statements, the Board of Directors has Auditors In its financial reporting via quarterly ascertained that accounting policies The Board of Directors with the assistance announcements and judgement of the Audit Committee maintains a financial statements and annual report and estimates have been consistently formal and transparent relationship with presentation including the Chairman’s applied. the Company’s External Auditors through of results, annual In preparing reasonable the prudent financial Statement and Review of Operations, the Board of Directors always provides a comprehensive assessment of the Company’s performance and prospects for the benefits of shareholders, investors and interested parties. The Audit Committee also assists the Board in overseeing the Company’s financial the Audit Committee, Board and formal The Directors are responsible for keeping with reasonable accuracy at any time the The relationship between the Board and financial position of the Company and to the External Auditors is also formalised enable them to ensure that the financial through the Audit Committee’s terms of statements comply with the Companies reference. Act, 1965. The Directors have a general reasonably open to them to safeguard Directors’ Responsibility Statement In Respect Of The Preparation Of The Audited Financial Statements The Board of Directors is responsible for the preparation of the financial statements for each financial year of the Company, which gives a true and fair view of the state of affairs of the Company and its results and cash flow meetings whereby issues are discussed. proper accounting records, which disclose responsibility for taking such steps as is reporting processes. Relationship With The External the assets of the Company, to prevent and detect fraud and other irregularities. Compliance With Malaysian Code On Corporate Governance The Board of Directors is pleased to state that the Company was in compliance with all the principles and best practices Going Concern as advocated in the Malaysian Code The Board of Directors confirmed that on Corporate Governance during the the Company has adequate resources to financial period under review, except for continue its business in the foreseeable disclosure of each individual Director’s future. For this reason, they continue remuneration. to adopt the going concern basis for preparing the financial statements. for the financial period ended. The Board of Directors has ensured that the financial statements have been prepared in accordance with applicable approved accounting Malaysia, the standards requirements of in the Statement Of Internal Control The Statement on Internal Control set out on page 41 of the Annual Report provides an overview of the state of internal controls within the Company. Companies Act, 1965, Bursa Malaysia Securities Berhad and other regulatory Mr. Oyama answering a pertinent question from the floor. The Board of Directors always provides a comprehensive assessment of the Company’s performance and prospects during the AGM. 37 AEON ANNUAL REPORT 2006 TERMS OF REFERENCE OF TERMS REFERENCE OF THE AUDIT COMMITTEE THEOFAUDIT COMMITTEE No Audit Committee Designation 1 Dato’ Chew Kong Seng Chairman (Independent Non-Executive Director) 2 Datuk Ramli bin Ibrahim Member (Non-Independent Non-Executive Director) 3 Brig. Jen. (B) Dato’ Mohd Idris bin Saman Member (Independent Non-Executive Director) Constitution members as may be required to make up be circulated to the committee members The Board hereby resolves to establish a the minimum number of three members. prior to each meeting. The Board shall review the terms of office The secretary shall be responsible for of Committee members no less than recording attendance of all members every three years. and invitees, keeping the minutes of the Committee of the Board to be known as the Audit Committee with the following terms of reference. meeting of the Committee, circulating Composition Of Audit Committee The Committee shall be appointed by the Board from among its members and shall consist of not less than 3 members of whom a majority shall be Independent Directors. Meetings them to committee members and to The Committee shall meet at least four times a year. In addition, the chairperson shall convene a meeting of the Committee if requested to do so by any member, the the other members of the Board of Directors and for ensuring compliance with Bursa Malaysia Securities Berhad’s requirements. management or the internal or external The Committee shall include at least auditors to consider any matter within Reporting Procedures one person who is a member of the the scope and responsibilities of the The Committee shall prepare an annual Malaysian Institute of Accountants (MIA) Committee. report to the Board that provides a summary of the activities of the or alternatively a person who must have at least 3 years’ working experience and have passed the examinations specified in Part I of the 1st. Schedule of the Accountants Act 1967 or is a member of one of the associations specified in Part II of the said Schedule or fulfils such other requirements as prescribed by Bursa Malaysia Securities Berhad. No alternate director shall be appointed as a member of the Committee. The Committee shall elect a chairperson from amongst its members who is not an Executive Director or employee of the company or any related corporation. In the event that a member of the audit committee resigns, dies or for any other reason ceases to be a member, with the result that the number of members is reduced to below three, the Board of Directors shall, within three months of that event, appoint such number of new 38 AEON ANNUAL REPORT 2006 Attendance At Meetings Committee for inclusion in the Company’s The General Manager of Finance, the annual report. Head of Internal Audit, the Company Secretary, the Senior Finance Manager, The Committee shall assist the Board in the preparing the following for publication in Compliance Officer and a representative of the External Auditors the Company’s annual report: shall normally attend meetings. However, the Committee may invite any person to be in attendance to assist it in its deliberations. - Statement of the Company’s application of the principles set out in Part I of the Malaysian Code on Corporate Governance. Non-member directors shall not attend unless specifically invited to by the Committee. - Statement on the extent of compliance with the Best Practices in Corporate Governance set out in Part II of Secretary To Audit Committee the Malaysian Code on Corporate The Company Secretary shall be the Governance, specifying reasons for any secretary of the committee and shall be areas of non-compliance (if any) and responsible for drawing up the agenda the alternatives adopted in such areas. in consultation with the chairperson. The agenda together with the relevant explanatory papers and documents shall - Statement on the Board’s responsibilities for preparing the annual financial statements, and audited - Statement on the state of Internal Control of the Company. Duties And Responsibilities The duties and responsibilities of the - To review the internal audit plan, Committee shall be: consider the major findings of Internal Where the Committee is of the view that a matter reported by it to the Board - To review the Terms of Reference at Audit, fraud investigations and actions of Directors has not been satisfactorily least annually or as conditions dictate. and steps taken by management in response to audit findings. resolved resulting in a breach of the Listing Requirements of Bursa Malaysia - To review any financial information for Securities Berhad, the Committee shall publication, including quarterly and - To review the adequacy and relevance promptly report such matter to Bursa annual financial statements before of the scope, functions and resources Malaysia Securities Berhad. submission to the Board. of Internal Audit and the necessary Quorum The review shall focus on: authority to carry out its work. A quorum shall consist of a majority of committee members present at the meeting who are independent directors. - To review any related party transactions • Any changes in accounting policies and practices. Major judgmental The Committee is authorised by the - To consider the appointment of the External Auditors, the terms of • The going concern assumption. reference of its appointment and any Board to: • Compliance - Investigate any activity within its terms may arise within the Company. areas. Significant audit adjustments from the External Auditors. Authority and conflict of interest situations that with accounting question of resignation and dismissal before making a recommendation to standards. the Board. of reference. • Compliance with stock exchange - Have resources, which are reasonably - To undertake such other responsibilities and legal requirements. as may be agreed to by the Committee required to enable it to perform its duties. - To review with the External Auditors and the Board. their audit plan, scope and nature of - Have free access to all information and - To report to the Board its activities, audit for the Company. significant results and findings. documents it requires for the purpose of discharging its functions and responsibilities. - To review and discuss the External Auditors’ audit report, areas of concern arising from the audit and any other - Have direct communication channels with the external auditors and person(s) carrying out the internal audit function matters the external auditors may wish to discuss (in the absence of The Committee shall oversee all Internal Audit functions and is authorised conducted by Internal Audit as it deems and fit. The Internal Auditor shall report effectiveness of the system of internal directly to the Committee and shall have controls direct access to the Chairman of the - To outside legal or other independent professional advice and secure the attendance of outsiders with relevant experience and expertise if it considers this necessary. Auditors, excluding the attendance of the executive members of the whenever assess the and procedures of adequacy accounting the control Company by deemed Committee. reviewing the External and/or Internal Auditors’ management letters and - Convene meetings with the External committee, Function to commission investigations to be management if necessary). or activity. - Obtain Overseeing The Internal Audit management responses. All proposals by management regarding the appointment, transfer or dismissal of the Internal Auditor shall require the prior - To discuss problems and reservations approval of the Committee. arising from the audits and any matters the auditors may wish to discuss. necessary. 39 AEON ANNUAL REPORT 2006 Audit Committee Datuk Ramli bin Ibrahim Brig. Jen. (B) Dato’ Mohd. Idris bin Saman Dato’ Chew Kong Seng Member (Independent Non-Executive Director) Chairman (Independent Non-Executive Director) Member (Non-Independent Non-Executive Director) THE AUDIT COMMITTEE THE AUDIT COMMITTEE Terms Of Reference Of The Audit Committee During the financial period under review, there were no changes to the terms of reference of the Audit Committee. Meetings During the financial period under review, the Audit Committee convened three (3) meetings, which was one (1) meeting less than the minimum requirement stipulated in the Terms of Reference of the Audit Committee. This was due to the change in financial year end and have resulted in only 10 months in the financial period under review. The attendance records of the member of the Audit Committee are as follows: Number of meetings attended/held during the Director’s term in office No Name of Directors 1 Dato’ Chew Kong Seng 3/3 2 Datuk Ramli bin Ibrahim 3/3 3 Brig. Jen. (B) Dato’ Mohd Idris bin Saman 3/3 The meetings were structured through the use of agendas, which were distributed to members with sufficient notification. The Company Secretary was present in all the meetings. A representative of the External Auditors, Messrs KPMG Desa Megat & Co., the General Manager of Finance, the Head of Internal Audit, the Senior Finance Manager, the Compliance Officer, attended the meetings and related management personnel attended the meetings upon invitation. Summary of the Audit Committee’s Activities during the Period Under Review During the period under review, the Audit Committee carried out its duties in accordance with its terms of reference as follows: a. Reviewed the quarterly unaudited financial results and annual audited financial statements before submission to the Board for consideration and approval. b. Reviewed the External Auditors’ scope of work and audit plan for the period. c. Reviewed and discussed the External Auditors’ audit report and areas of concern. d. Considered the appointment of the External Auditors and the terms of reference of their appointment. e. Reviewed the internal audit plan, considered the major findings of Internal Audit, fraud investigations and actions taken by management in response to the audit findings. f. Assessed the effectiveness of internal controls control procedures 40 AEON ANNUAL REPORT 2006 adequacy and the system of and accounting of the Company by reviewing the External and Internal Auditors’ management letters and management responses. g. Reviewed the adequacy and relevance of scope, functions and resources of Internal Audit and that it has the necessary authority to carry out its work. h. Reviewed related party transactions. i. Reported to the Board on its activities and significant findings and results of the External and Internal Audits. The Audit Committee held one meeting with the External Auditor without the presence of the management, to allow the auditor to discuss any issues arising from the audit exercise or any other matters, which the External Auditor wished to raise. During the period under review, the Internal Audit Department carried out the following activities: a. Presented and obtained approval from Audit Committee, the annual internal audit plan, which supplemented the approved 3-year internal audit plan, its audit strategy and audit scope of work. b. Reviewed and analysed certain key business processes identified in the annual audit plan, reported ineffective and inadequate controls, and made recommendations to improve their effectiveness. c. Monitored and ensured management implemented corrective action plans. d. Monitored compliance with policies and procedures. e. Reviewed the adequacy and effectiveness of the internal control structures of the Company. f. Assisted the Board of Directors and Management on compliance matters required by the Malaysian Code on Corporate Governance. g. Assisted the Board of Directors and Management by reviewing the risk policy and control strategies in the organisation. h. Carried out investigative assignments. i. Continued inculcating good risk management practices throughout the Company. STATEMENT ON INTERNAL STATEMENT ON INTERNAL CONTROL CONTROL Board’s Responsibilities on the basis of a three-year internal - The Audit Committee is responsible The Board of Directors recognises its audit plan that was presented and for reviewing the statutory annual responsibilities Company’s approved by the Audit Committee. The financial statements and the quarterly system of internal controls, covering all internal audit function adopts a risk- announcements to Bursa Malaysia its financial and operating activities to based approach and prepares its audit Securities Berhad and recommends safeguard shareholders’ investment and strategy and plan based on the risk to the Board for approval prior to the Company’s assets. profiles of the major business units of submission to Bursa Malaysia Securities the Company. Berhad; over the The Board has an established on-going process for identifying, evaluating System Of Internal Controls - The Internal Audit Department and managing the significant risks The Board of Directors is responsible for periodically monitors the effectiveness encountered by the Company. The Board managing the key business risks of the and evaluates the proper functioning through its Audit Committee regularly Company and implementing appropriate of the internal control system on an reviews this process. internal control system to manage those ongoing basis to ascertain compliance risks. The Board reviewed the adequacy with the control procedures and policies and integrity of the system of internal of the Company. The Head of Internal controls as it operated during the period. Audit reports to Audit Committee on The following are the key elements of the the status of internal control system on Company’s system of internal controls: a quarterly basis; In view of the limitations inherent in any system of internal controls, the system is designed to manage, rather than to eliminate the risk of failure to achieve the Company’s corporate objectives. - The management structure of the The Audit Committee assists the Board to review the adequacy and integrity of the system of internal controls in the Company and to ensure that an appropriate mix of techniques is used to obtain the level of assurance required by the Board. The Audit Committee presents its findings to the Board. Company of formally responsibility defines and lines delegation and business unit’s managers submit and present performance their reviews operational as well as and Management Meetings; Department independently reviews to meet the requirements of the Company. The Audit Committee, assisted by the of internal controls. The Internal Audit issues Company’s affairs. Senior management in regularly held Executive Committee the adequacy and integrity of the system operational business objectives and operational Internal Audit Function Board with the assurance it requires on to time to address business and of authority for all aspect of the business plans and strategic measures Internal Audit Department, provides the - Project teams are set up from time All the above-mentioned processes have been in place and provide reasonable assurance on the effectiveness of the internal control system. Conclusion - The Board approves the annual budget and reviews key business variables and monitors the achievements of the Company’s performance on a quarterly basis ; The Board of Directors reviewed the adequacy and integrity of the system of internal controls that provides reasonable assurance to the Company in achieving its business objectives. As the development of sound system of internal the risk identification procedures and - The authorisation limits and approvals controls is an on-going process, the authority threshold of the Company Board and the management maintain encompasses reviewing critical areas that encompasses an on-going commitment and continue the Company faces, and reports to the procedures. Audit Committee on a quarterly basis. subject to review by the management strengthen to incorporate changing business risks environment of the Company. control processes implemented by the management, conducts audits that The Internal Audit Department also internal These control procedures are to take appropriate the measures internal to control and operational efficiency; carried out internal control reviews on key activities of the Company’s business 41 AEON ANNUAL REPORT 2006 OTHER INFORMATION OTHER INFORMATION Material Contracts involving Directors and Substantial Shareholders. Masato Yokoyama, a Director of AEON The purchase of the transaction CO. (M) BHD. is also a shareholder receipts will be net of the credit Material contracts entered into by the of AEON Credit Service (M) Berhad card commission payable and upon Company which involve Directors’ and ÆON Co., Ltd. has an indirect interest terms and conditions as stated in the major Shareholders’ interests and still in AEON Credit Service (M) Berhad merchant agreement. The total value subsisting at the end of the financial through AEON Credit Service Co. Ltd. of the transaction receipts purchased period ended 31 December 2006, or c) On 23 June 2005, the Company by AEON Credit Service (M) Berhad in entered into since the end of the previous entered into a JUSCO Credit Card the period under review was RM35.47 financial year, comprise the following: Agreement with AEON Credit Service million and the total commission a) On 12 October 2000 and through (M) Berhad to set out the terms and payable is RM515 thousand. Dato’ a supplementary agreement on 1 conditions for the issuance of a credit Abdullah bin Mohd Yusof and Datuk January 2006, the Company entered card called JUSCO Credit Card by AEON Ramli bin Ibrahim, both Directors into a Technical Service Agreement Credit Service (M) Berhad, in affiliation of AEON CO. (M) BHD. are also with ÆON Co., Ltd. whereby the or association with the Company, to Directors and shareholders in AEON Company is granted the exclusive further promote and enhance AEON Credit Service (M) Berhad Mr. Masato right by ÆON Co., Ltd. to use their Credit Service (M) Berhad credit card Yokoyama, a Director of AEON CO. trademark in relation to goods and business and the Company’s retailing (M) BHD. is also a shareholder of AEON services. The Company is also granted business. permits Credit Service (M) Berhad ÆON Co., the non-exclusive right to use the AEON Credit Service (M) Berhad Ltd. has an indirect interest in AEON information and know-how, employed to promote JUSCO Credit Card to Credit Service (M) Berhad through or developed by ÆON Co., Ltd. for the consumers in return for allowing the AEON Credit Service Co. Ltd. management and operation of retail consumers to use JUSCO Credit Card stores, wholesale business and related for the purchase of goods and services Non Audit Fees supporting activities. The total cash offered by the Company. JUSCO The amount of non-statutory audit fees consideration payable by the Company Credit Card holders who are also paid to External Auditor and its affiliates to ÆON Co., Ltd. for the period under J CARD members will enjoy additional during the period under review is RM review amounted to RM11.18 million. J CARD loyalty points provided by 90,350 comprising of mainly advisory, ÆON Co., Ltd. is the holding company AEON Credit Service (M) Berhad review and tax services. of AEON CO. (M) BHD. through purchase of the additional The Company b) On 1 July 1997, the Company entered J CARD points from the Company. into a Factoring Agreement with a During the period under review, Revaluation properties related company, AEON Credit Service the total additional J CARD points There is no revaluation policy on (M) Berhad whereby the Company’s purchased by AEON Credit Service (M) the Company’s landed properties. The goods sold on credit under its easy Berhad was RM378 thousand. The Company adopted the transitional payment scheme are factored to Company further agreed to appoint provisions AEON Credit Service (M) Berhad. The AEON Credit Service (M) Berhad as the Accounting Standards Board (MASB) to debts sold to AEON Credit Service (M) sole acquirer of the card transaction retain the carrying amount on the basis Berhad are at full value of the goods transacted using AEON Credit Service of their previous revaluation as stated in and upon the terms and conditions as (M) Berhad issued cards. page 58 of this Annual Report. stated in the factoring agreement. The d) On 29 December 2005, the Company total value of the debts sold to AEON entered into a credit card merchant Credit Service (M) Berhad in the period agreement with AEON Credit Service under review amounted to RM4.21 (M) Berhad whereby the Company’s million. Dato’ Abdullah bin Mohd goods sold on credit through credit Yusof and Datuk Ramli bin Ibrahim, cards issued by AEON Credit Service both Directors of AEON CO. (M) BHD. (M) Berhad, AEON Credit Service are also Directors and shareholders in (M) Berhad will purchase from the AEON Credit Service (M) Berhad Mr. Company all such transaction receipts. 42 AEON ANNUAL REPORT 2006 policy issued on by landed Malaysian DIRECTORS’ REPORT for the period ended 31 December 2006 The Directors have pleasure in submitting their report and the audited financial statements of the Company for the period ended 31 December 2006. Principal activities The Company is principally engaged in the operations of a chain of superstores selling a broad range of goods ranging from clothing, food, household goods, other merchandise and shopping centre operation. There has been no significant change in the nature of these activities during the financial period. Change of financial year end The Company changed its financial year end from 28 February to 31 December to be in line with AEON Group’s reporting. The comparatives for the Income Statement, Statement of Changes in Equity and Cash Flow Statement as well as the comparatives in the notes to the financial statements relating to the Income Statement are for the previous twelve months ended 28 February 2006 and hence, are not comparable to that for the current ten months ended 31 December 2006. Results RM’000 Profit for the period 103,246 Reserves and provisions There were no material transfers to or from reserves and provisions during the period under review except as disclosed in the financial statements. Dividend Since the end of the previous financial year, the Company paid a first and final dividend of 15% less tax of 28%, totalling RM18,954,000 in respect of the year ended 28 February 2006 on 20 July 2006. The first and final dividend recommended by the Directors in respect of the period ended 31 December 2006 is 16% less tax of 27%, amounting to RM20,498,400 which is subject to the approval of members at the forthcoming Annual General Meeting of the Company. Directors of the Company Directors who served since the date of the last report are: Dato’ Abdullah bin Mohd Yusof Toshiji Tokiwa Nagahisa Oyama Masato Yokoyama Tatsuichi Yamaguchi Datuk Ramli bin Ibrahim Brig. Jen. (B) Dato’ Mohd Idris bin Saman Datuk Zawawi bin Mahmuddin Dato’ Chew Kong Seng @ Chew Kong Huat 44 AEON ANNUAL REPORT 2006 Directors’ interests The holdings and deemed holdings in the ordinary shares of the Company and of its related corporations of those who were Directors at period end as recorded in the Register of Directors’ Shareholdings are as follows: Number of ordinary shares At 1.3.2006 Acquired Sold At 31.12.2006 Shareholdings in which Directors have direct interests Interest of Dato’ Abdullah bin Mohd Yusof in: AEON CO. (M) BHD. 308,000 - (40,000) 268,000 Interest of Toshiji Tokiwa in: AEON Co., Ltd. AEON Credit Management Co., Ltd. AEON Credit Service (M) Berhad AEON Thana Sinsap (Thailand) Plc. Maxvalu Tokiu Co., Ltd. Zwei Co., Ltd. 17,700 10 20,000 500,000 7,500 1,000 - - 17,700 10 20,000 500,000 7,500 1,000 Interest of Masato Yokoyama in: AEON CO. (M) BHD. 30,000 - - 30,000 Interest of Tatsuichi Yamaguchi in: AEON Co., Ltd. AEON Stores (Hong Kong) Co., Ltd. 24,000 22,000 - - 24,000 22,000 4,030,000 - (2,529,000) 1,501,000 280,000 - - 280,000 Shareholdings in which Directors have deemed interests Interest of Dato’ Abdullah bin Mohd Yusof in: AEON CO. (M) BHD. Interest of Datuk Ramli bin Ibrahim in: AEON CO. (M) BHD. None of the other Directors holding office at 31 December 2006 had any interest in the ordinary shares of the Company or of its related corporations during the financial period. 45 AEON ANNUAL REPORT 2006 Directors’ benefits Since the end of the previous financial year, no Director of the Company has received nor become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by Directors as shown in 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, except for certain Directors who may be deemed to derive a benefit by virtue of those transactions, advisory services and tenancy between the Company and corporations in which the Directors are deemed to have interest. There were no arrangements during and at the end of the financial period which had the object 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. Issue of shares and debentures There were no changes in the authorised, issued and paid-up capital of the Company during the financial period. Options granted over unissued shares No options were granted to any person to take up unissued shares of the Company during the financial period. Other statutory information Before the financial statements of the Company were made out, the Directors took reasonable steps to ascertain that: i) all known bad debts have been written off and adequate provision made for doubtful debts, and ii) all current assets have been stated at the lower of cost and net realisable value. At the date of this report, the Directors are not aware of any circumstances: i) that would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the financial statements of the Company inadequate to any substantial extent, or ii) that would render the value attributed to the current assets in the financial statements of the Company misleading, or iii) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate, or iv) not otherwise dealt with in this report or the financial statements, that would render any amount stated in the financial statements of the Company misleading. At the date of this report, there does not exist: i) any charge on the assets of the Company that has arisen since the end of the financial period and which secures the liabilities of any other person, or ii) any contingent liability in respect of the Company that has arisen since the end of the financial period. No contingent liability or other liability of the Company has become enforceable, or is likely to become enforceable within the period of twelve months after the end of the financial period which, in the opinion of the Directors, will or may substantially affect the ability of the Company to meet its obligations as and when they fall due. In the opinion of the Directors, except as disclosed below, the results of the operations of the Company for the financial period ended 31 December 2006 have not been substantially affected by any item, transaction or event of a material and unusual nature nor has any such item, transaction or event occurred in the interval between the end of that financial period and the date of this report. 46 AEON ANNUAL REPORT 2006 Significant event during the financial period On 29 September 2006, the transaction for the conditional Sale and Leaseback Agreement entered into by the Company with Equity Nirvana Sdn. Bhd. in the previous financial year has been completed. This transaction was in respect of the sale of a property known as Kinta City Shopping Centre, comprising a freehold land located in the Mukim of Hulu Kinta, District of Kinta, Perak and a three (3) storey shopping mall constructed thereon together with specified plant and machinery. The Company derived a gain of RM33.9 million from the disposal for a total cash consideration of RM121.0 million. The leaseback of the same property from Equity Nirvana Sdn. Bhd. commenced on 29 September 2006 for an initial period of nine (9) years with options for renewals upon completion of the initial lease. Auditors The auditors, Messrs KPMG Desa Megat & Co., have indicated their willingness to accept re-appointment. Signed in accordance with a resolution of the Directors: ................................................................. Nagahisa Oyama .................................................................. Dato’ Abdullah bin Mohd Yusof Kuala Lumpur, Date: 15 February 2007 47 AEON ANNUAL REPORT 2006 BALANCE SHEET at 31 December 2006 Note 31.12.2006 RM’000 28.2.2006 RM’000 restated Assets Property, plant and equipment 3 942,252 845,248 Prepaid lease payments 4 125,808 124,573 Investments 5 1,075 1,075 1,069,135 970,896 Total non-current assets Inventories 6 214,183 159,061 Prepaid lease payments 4 1,461 1,435 Receivables, deposits and prepayments 7 45,669 26,695 Cash and cash equivalents 8 107,925 53,405 369,238 240,596 1,438,373 1,211,492 175,500 175,500 53,826 54,257 476,817 392,094 9 706,143 621,851 10 29,113 29,281 29,113 29,281 677,930 547,152 Total current assets Total assets Equity Share capital Reserves Retained earnings Total equity attributable to shareholders of the Company Liabilities Deferred tax liabilities Total non-current liabilities Payables and accruals 11 Borrowings (unsecured) 12 - 625 25,187 12,583 Total current liabilities 703,117 560,360 Total liabilities 732,230 589,641 1,438,373 1,211,492 Taxation Total equity and liabilities The notes on pages 52 to 67 are an integral part of these financial statements. 48 AEON ANNUAL REPORT 2006 INCOME STATEMENT for the period ended 31 December 2006 Note 1.3.2006 to 31.12.2006 RM’000 1.3.2005 to 28.2.2006 RM’000 restated Continuing operations Revenue 1,941,431 1,962,445 Other operating income 35,594 1,067 Changes in inventories 55,122 19,765 (1,425,525) (1,433,814) (108,808) (111,708) (69,086) (57,850) (286,567) (267,457) Net purchases Staff costs Depreciation 3 Operating expenses Operating profit 13 142,161 112,448 Interest expense 15 (1,962) (595) 542 345 140,741 112,198 (37,495) (38,994) 103,246 73,204 58.8 41.7 Interest income Profit before tax Tax expense 16 Profit for the period/year attributable to shareholders of the Company Basic earnings per ordinary share (sen) 17 The notes on pages 52 to 67 are an integral part of these financial statements. 49 AEON ANNUAL REPORT 2006 STATEMENT OF CHANGES IN EQUITY for the period ended 31 December 2006 Note At 1 March 2005 Profit for the year Share capital RM’000 Non-distributable Distributable Share Revaluation Retained premium reserve profits RM’000 RM’000 RM’000 Total RM’000 175,500 20,609 34,165 333,536 563,810 - - - 73,204 73,204 - - (517) 517 - - - (517) 73,721 73,204 - - - (15,163) (15,163) 175,500 20,609 33,648 392,094 621,851 - - - 103,246 103,246 - - (431) 431 - - - (431) 103,677 103,246 - - - (18,954) (18,954) 175,500 20,609 33,217 476,817 706,143 Transfer from revaluation reserve to retained profits Total recognised income and expense for the year Dividend - 2005 final 18 At 28 February 2006/ 1 March 2006 Profit for the period Transfer from revaluation reserve to retained profits Total recognised income and expense for the period Dividend - 2006 final in respect of year ended 28 February 2006 At 31 December 2006 18 The notes on pages 52 to 67 are an integral part of these financial statements. 50 AEON ANNUAL REPORT 2006 CASH FLOW STATEMENT for the period ended 31 December 2006 Note 1.3.2006 to 31.12.2006 RM’000 1.3.2005 to 28.2.2006 RM’000 restated Cash flows from operating activities Profit before tax Adjustments for: Depreciation Amortisation of prepaid lease payments Interest expense Interest income (Gain)/loss on disposal of property, plant and equipment Property, plant and equipment written off 140,741 112,198 69,086 1,202 1,962 (542) 57,850 1,377 595 (345) (34,073) 1,387 83 824 Operating profit before changes in working capital Changes in working capital: Inventories Trade and other receivables Trade and other payables 179,763 172,582 (55,122) (12,924) 130,778 (19,765) (18) 133,603 Cash generated from operations Tax paid 242,495 (25,059) 286,402 (34,310) Net cash from operating activities 217,436 252,092 3 (252,862) (275,375) 4 113,408 542 (2,463) 320 (900) 345 - (141,375) (275,610) Dividend paid to shareholders of the Company Interest paid (18,954) (1,962) (15,163) (595) Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of period/year Cash and cash equivalents at end of period/year (20,916) (15,758) 3 4 Cash flows from investing activities Acquisition of property, plant and equipment Proceeds from disposal of property, plant and equipment Purchase of unquoted shares Interest received Payment of lease liabilities Net cash used in investing activities Cash flows from financing activities 55,145 (39,276) 52,780 92,056 107,925 52,780 Cash and cash equivalents Cash and cash equivalents included in the cash flow statements comprise the following balance sheet amounts: Note 31.12.2006 RM’000 28.2.2006 RM’000 restated Cash and bank balances Deposits with licensed financial institutions Bank overdrafts 8 8 12 107,925 - 27,105 26,300 (625) 107,925 52,780 The notes on pages 52 to 67 are an integral part of these financial statements. 51 AEON ANNUAL REPORT 2006 NOTES TO THE FINANCIAL STATEMENTS AEON CO. (M) BHD. is a public limited liability company, incorporated and domiciled in Malaysia and is listed on the Main Board of the Bursa Malaysia Securities Berhad. The address of its registered office and principal place of business is as follow: Registered office and Principal place of business 3rd Floor Jusco Taman Maluri Shopping Centre Jalan Jejaka, Taman Maluri Cheras 55100 Kuala Lumpur The Company is principally engaged in the operations of a chain of superstores selling a broad range of goods ranging from clothing, food, household goods, other merchandise and shopping centre operation. On 24 April 2006, the Company became a subsidiary of ÆON Co., Ltd., a company incorporated in Japan. 1. Basis of preparation (a) Statement of compliance The financial statements of the Company has been prepared in accordance with applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board (MASB), accounting principles generally accepted in Malaysia and the provisions of the Companies Act, 1965. These financial statements also comply with the applicable disclosure provisions of the Listing Requirements of the Bursa Malaysia Securities Berhad. The MASB has issued a number of new and revised Financial Reporting Standards (FRSs) that are effective for accounting periods beginning after 1 January 2006 or available for early adoption. In this set of financial statements, the Company has chosen to early adopt FRS 117, Leases and FRS 124, Related Party Disclosures which are effective for annual periods beginning on or after 1 October 2006. The MASB has also issued FRS 139, Financial Instruments: Recognition and Measurement but for which the MASB has yet to announce the effective date of this standard. The Company has not adopted FRS 139 and by virtue of the exemption in paragraph 103AB of FRS 139, the impact of applying FRS 139 on its financial statements upon first adoption of this standard as required by paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors is not disclosed. There is no effect of adopting the new/revised FRSs in 2006. The financial statements were approved by the Board of Directors on 15 February 2007. (b) Basis of measurement The financial statements have been prepared on the historical cost basis except as disclosed in the notes to the financial statements. (c) Functional and presentation currency These financial statements are presented in Ringgit Malaysia (RM), which is the Company’s functional currency. All financial information presented in RM has been rounded to the nearest thousand, unless otherwise stated. (d) Use of estimates and judgements The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. 2. Significant accounting policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements, unless otherwise stated. Certain comparative amounts have been reclassified to conform to the current year’s presentation (see note 3 and note 4). (a) Foreign currency Foreign currency transactions Transactions in foreign currencies are translated to the respective functional currencies at exchange rates at the dates of the transaction. 52 AEON ANNUAL REPORT 2006 2. Significant accounting policies (continued) (a) Foreign currency (continued) Foreign currency transactions (continued) Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the exchange rate at that date. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Foreign currency differences arising on retranslation are recognised in the income statement. (b) Property, plant and equipment (i) Recognition and measurement Property, plant and equipment except for freehold land and construction work-in-progress are stated at cost/ valuation less accumulated depreciation and accumulated impairment losses, if any. The Company has availed itself to the transitional provision when the MASB adopted International Accounting Standard No.16 (Revised), Property, Plant and Equipment. Certain leasehold land and buildings were revalued in February 1995 and no later valuation has been recorded for these property, plant and equipment. During the year, leasehold land has been reclassified to prepaid lease payments (see Note 2(c)). Cost includes expenditures that are directly attributable to the acquisition of the asset. The cost of self-constructed assets includes the cost of materials and direct labour, any other costs directly attributable to bringing the asset to working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When significant parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment. (ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred. (iii) Depreciation Depreciation is recognised in the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Leased assets are depreciated over the shorter of the lease term and their useful lives. Freehold land is not depreciated. Property, plant and equipment under construction are not depreciated until the assets are ready for their intended use. The estimate useful lives for the current and comparative period are as follows: Buildings Structures Office equipment Machinery and equipment Furniture, fixtures and fittings Motor vehicles IT equipment 2% - 5% 10% 10% 10% - 33.3% 20% 20% 20% The depreciable amount is determined after deducting the residual value. Depreciation methods, useful lives and residual values are reassessed at the reporting date. (c) Leased assets Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Other leases are operating leases and are not recognised on the Company’s balance sheet. Accounting policy note on Leasehold land/Prepaid lease payments Leasehold land that normally has an indefinite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. The payment made on entering into or acquiring a leasehold land is accounted as prepaid lease payments that are amortised over the lease term in accordance with the pattern of benefits provided. The Company had previously classified lease of land as finance lease and had recognised the amount of prepaid lease payments as property within its property, plant and equipment. These leasehold land are stated at Directors’ valuation and the Company has availed itself to the transitional provision when MASB adopted International Accounting Standard No. 16 (Revised), “Property, Plant and Equipment”, the valuation of these assets has not been updated and they continue to be stated at their existing carrying amounts less accumulated depreciation. 53 AEON ANNUAL REPORT 2006 2. Significant accounting policies (continued) (c) Leased assets (continued) Accounting policy note on Leasehold land/Prepaid lease payments (continued) On early adoption of FRS 117, Leases, the Company treats such a lease as an operating lease, with the unamortised carrying amount classified as prepaid lease payments in accordance with the transitional provisions in FRS 117.67A. (d) Investments in equity securities Investments in equity securities are recognised initially at fair value plus attributable transaction costs. Subsequent to initial recognition: • Investments in non-current equity securities, are stated at cost less allowance for diminution in value, • All current investments are carried at the lower of cost and market value, determined on an individual investment basis by category of investments. Where in the opinion of the Directors, there is a decline other than temporary in the value of non-current equity securities, the allowance for diminution in value is recognised as an expense in the financial year in which the decline is identified. On disposal of an investment, the difference between net disposal proceeds and its carrying amount is recognised in the income statement. All investments in equity securities are accounted for using settlement date accounting. Settlement date accounting refers to: a) the recognition of an asset on the day it is received by the entity, and b) the derecognition on an asset and recognition of any gain or loss on disposal on the date it is delivered. (e) Inventories Inventories are measured at the lower of cost and net realisable value with weighted average cost being the main basis for cost. Cost comprises the weighted average cost of merchandise derived at by using the Retail Inventory Method. Weighted average cost includes related charges incurred in purchasing such merchandise. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. (f) Receivables Trade and other receivables are initially recognised at their cost when the contractual right to receive cash or another financial asset from another entity is established. Subsequent to initial recognition, receivables are stated at cost less allowance for doubtful debts. Receivables are not held for the purpose of trading. (g) Cash and cash equivalents Cash and cash equivalents consist of cash on hand, balances and deposits with banks and highly liquid investments which have an insignificant risk of changes in value. For the purpose of the cash flow statements, cash and cash equivalents are presented net of bank overdrafts. (h) Impairment of assets The carrying amounts of assets except for inventories and financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists then the asset’s recoverable amount is estimated. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount unless the asset is carried at a revalued amount, in which case the impairment loss is recognised directly against any revaluation surplus for the asset to the extent that the impairment loss does not exceed the amount in the revaluation surplus for that same asset. A cash-generating unit is the smallest identifiable asset group that generates cash flows that largely are independent from other assets and groups. Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the units and then to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised, unless it reverses an impairment loss on a revalued asset, in which case it is credited directly to revaluation surplus. Where an impairment loss on the same revalued asset was previously recognised in the income statement, a reversal of that impairment loss is also recognised in the income statement. 54 AEON ANNUAL REPORT 2006 2. Significant accounting policies (continued) (i) Employee benefits Short term employee benefits Short-term employee benefit obligations in respect of salaries, annual bonuses, paid annual leave and sick leave are measured on an undiscounted basis and are expensed as the related service is provided. A provision is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The Company’s contribution to the Employee’s Provident Fund is charged to the income statements in the year to which they relate. Once the contributions have been paid, the Company has no further payment obligations. (j) Payables Payables are measured initially and subsequently at cost. Payables are recognised when there is a contractual obligation to deliver cash or another financial asset to another entity. (k) Revenue Goods sold and services rendered Revenue from the sale of goods represents gross trading sales, including concessionaire sales which the Company is able to exercise control, less returns and discounts. Revenue is recognised in the income statement when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. Property management services from shopping centre operation which include rental income, service charge, sales commission and distribution centre charges earned are recognised on an accrual basis. (l) Interest income and borrowing costs Interest income is recognised as it accrues, using the effective interest method. All borrowing costs are recognised in the income statement using the effective interest method, in the period in which they are incurred. (m) Lease payments Payments made under operating leases are recognised in the income statement on a straight-line basis over the term of the lease. (n) Tax expense Tax expense comprises current and deferred tax. Tax expense is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax expense is the expected tax payable on the taxable income for the period, using tax rates enacted or substantially enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years. Deferred tax is recognised using the balance sheet method, providing for temporary differences between the carrying amounts of assets and liabilities for reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognised for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets or liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit (tax loss). Deferred tax is measured at the tax rates that are expected to be applied to the temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the balance sheet date. Deferred tax liability is recognised for all taxable temporary differences. A deferred tax asset is recognised to the extent that it is probable that future taxable profits will be available against which temporary difference can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised. Additional taxes that arise from the distribution of dividends are recognised at the same time as the liability to pay the related dividend is recognised. (o) Earnings per share The Company presents basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. (p) Segment reporting A segment is a distinguishable component of the Company that is engaged either in providing products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. 55 AEON ANNUAL REPORT 2006 56 AEON ANNUAL REPORT 2006 - 66,795 At 31 December 2006 - - Transfer in/(out) - - - (20,871) Disposals - - - - Written off - Additions 1 March 2006 87,666 - Transfer in/(out) At 28 February 2006/ - Disposals - - 87,666 - (60,761) 60,761 - 87,666 Additions At 1 March 2005, restated FRS 117 - Effect of adopting - As previously reported At 1 March 2005 Cost/Valuation Freehold Leasehold land land (at (at cost) valuation) RM’000 RM’000 3. Property, plant and equipment 126,003 - - - - 126,003 - - - 126,003 - 126,003 Buildings (at valuation) RM’000 - - - - - - - - - - (75,607) 75,607 Leasehold land (at cost) RM’000 392,447 28,337 - (74,728) 69,243 369,595 3,150 - 121,247 245,198 - 245,198 Buildings (at cost) RM’000 123,467 207 (996) (2,234) 25,806 100,684 4,132 (461) 14,135 82,878 - 82,878 Structures RM’000 9,783 - (278) (36) 2,434 7,663 - (758) 1,870 6,551 - 6,551 343,773 2 (1,597) (4,952) 92,723 257,597 2,014 (1,809) 84,046 173,346 - 173,346 Machinery Office and equipment equipment RM’000 RM’000 217,574 - (6,748) (1,018) 51,491 173,849 255 (517) 32,803 141,308 - 141,308 Furniture, fixtures & fittings RM’000 5,803 - (1) (63) 936 4,931 - (550) 1,095 4,386 - 4,386 Motor vehicles RM’000 412 - - - 104 308 - - 48 260 - 260 IT equipment RM’000 11,152 (28,546) - - 10,125 29,573 (9,551) - 20,131 18,993 - 18,993 Construction work in progress RM’000 1,297,209 - (9,620) (103,902) 252,862 1,157,869 - (4,095) 275,375 886,589 (136,368) 1,022,957 Total RM’000 AEON ANNUAL REPORT 2006 57 - - - - - - - - - Disposals At 28 February 2006/ 1 March 2006 Depreciation for the period Disposals Written off At 31 December 2006 87,666 87,666 66,795 At 1 March 2005, restated At 28 February 2006/ 1 March 2006, restated At 31 December 2006 Carrying amounts - - Depreciation for the year - - - - - - - - At 1 March 2005, restated 6,540 (6,540) - - FRS 117 - Effect of adopting - As previously reported At 1 March 2005 Depreciation 95,934 96,552 99,072 30,069 - - 618 29,451 - 2,520 26,931 - 26,931 - - - - - - - - - - - (2,443) 2,443 351,649 323,838 205,281 40,798 - (12,803) 7,844 45,757 - 5,840 39,917 - 39,917 82,288 66,873 57,510 41,179 (452) (1,003) 8,823 33,811 (198) 8,641 25,368 - 25,368 6,055 4,209 2,937 3,728 (234) (25) 533 3,454 (696) 536 3,614 - 3,614 233,672 175,148 111,492 110,101 (1,375) (3,697) 32,724 82,449 (1,123) 21,718 61,854 - 61,854 92,414 59,543 44,476 125,160 (6,171) (927) 17,952 114,306 (469) 17,943 96,832 - 96,832 2,138 1,775 1,485 3,665 (1) (62) 572 3,156 (382) 637 2,901 - 2,901 155 71 38 257 - - 20 237 - 15 222 - 222 11,152 29,573 18,993 - - - - - - - - - - 942,252 845,248 628,950 354,957 (8,233) (18,517) 69,086 312,621 (2,868) 57,850 257,639 (8,983) 266,622 Freehold Leasehold Buildings Leasehold Machinery Furniture, Construction land land (at (at land (at Buildings Office and fixtures & Motor IT work in (at cost) valuation) valuation) cost) (at cost) Structures equipment equipment fittings vehicles equipment progress Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 3. Property, plant and equipment (continued) 3. Property, plant and equipment (continued) One of the buildings of the Company is situated on land belonging to a third party. The buildings stated at Directors’ valuation are based on professional valuation carried out by an independent firm of valuers in February 1995 using the open market value and on an existing use basis. In accordance with the transitional provisions issued by Malaysian Accounting Standards Board (“MASB”) upon adoption of International Accounting Standard No. 16 (Revised), “Property, Plant and Equipment”, the valuation of these assets has not been updated, and they continue to be stated at their existing carrying amounts less accumulated depreciation. Had the buildings been carried at historical cost less accumulated depreciation, the carrying amount of the revalued assets that would have been included in the financial statements at the end of the period would be as follows: Buildings 31.12.2006 RM’000 28.2.2006 RM’000 59,125 60,538 The leasehold land has been reclassified as prepaid lease payments during the financial year in accordance with FRS 117. 4. Prepaid lease payments Note Unexpired period more than 50 years RM’000 Cost At 1 March 2005 Effect of adopting FRS 117 136,368 At 1 March 2005, restated/28 February 2006/1 March 2006 Additions 136,368 2,463 At 31 December 2006 138,831 Amortisation At 1 March 2005 Effect of adopting FRS 117 8,983 At 1 March 2005, restated Amortisation for the year 13 8,983 1,377 At 28 February 2006/1 March 2006 Amortisation for the period 13 10,360 1,202 11,562 At 31 December 2006 Carrying amounts At 1 March 2005, restated - Current - Non-current 1,435 125,950 127,385 At 28 February 2006/1 March 2006 - Current - Non-current 1,435 124,573 126,008 At 31 December 2006 - Current - Non-current 1,461 125,808 127,269 58 AEON ANNUAL REPORT 2006 5. Investments 31.12.2006 RM’000 28.2.2006 RM’000 Non-current Unquoted shares, at cost Golf membership Equity investment 45 1,030 45 1,030 1,075 1,075 6. Inventories At cost: Retail merchandise Food and others 31.12.2006 RM’000 28.2.2006 RM’000 132,555 81,628 113,430 45,631 214,183 159,061 During the financial period, inventories recognised as cost of sales amounted to RM1,370,402,706 (28.2.2006 RM1,414,049,468). 7. Receivables, deposits and prepayments Note 31.12.2006 RM’000 28.2.2006 RM’000 restated Current Trade Trade receivables Less: Allowance for doubtful debts a 22,850 (722) 9,957 (1,286) 22,128 8,671 9,261 14,280 4,545 13,479 45,669 26,695 Non-trade Other receivables and prepayments Rental and utility deposits b Note a Included in trade receivables is an amount of RM816,180 (28.2.2006 - RM470,006) due from companies with common Directors. During the period, trade receivables of RM563,629 were written off against allowance for doubtful debts. Note b Included in other receivables and prepayments is an amount of RM6,050,000 with the Company’s lawyer as stakeholder which represents the balance of the purchase consideration for the disposal of Kinta City Shopping Centre. 8. Cash and cash equivalents 31.12.2006 RM’000 Cash and bank balances Deposits with licensed financial institutions 28.2.2006 RM’000 107,925 - 27,105 26,300 107,925 53,405 59 AEON ANNUAL REPORT 2006 9. Capital and reserves 31.12.2006 RM’000 28.2.2006 RM’000 500,000 500,000 175,500 175,500 Share capital Ordinary shares of RM1.00 each: Authorised Issued and fully paid Share premium Share premium relates to the amount that shareholders have paid for the shares in excess of the nominal value. Revaluation reserve The revaluation reserve relates to the revaluation of property, plant and equipment in prior years. Section 108 tax credit Subject to agreement of the Inland Revenue Board, the Company has sufficient Section 108 tax credit and tax exempt income to frank all of its retained profits at 31 December 2006 if paid out as dividends. 10. Deferred tax liabilities Deferred tax assets and liabilities are attributable to the following: Assets 31.12.2006 28.2.2006 RM’000 RM’000 Liabilities 31.12.2006 28.2.2006 RM’000 RM’000 Net 31.12.2006 28.2.2006 RM’000 RM’000 restated Property, plant and equipment - capital allowance - revaluation Provisions 1,666 1,666 (17,863) (12,916) - (17,863) (13,084) - (17,863) (12,916) 1,666 (17,863) (13,084) 1,666 Net tax assets/ (liabilities) 1,666 1,666 (30,779) (30,947) (29,113) (29,281) Recognised in income statement RM’000 At 28.2.2006/ 1.3.2006 RM’000 Movement in temporary differences during the year/period: At 1.3.2005 RM’000 Recognised in income At statement 31.12.2006 RM’000 RM’000 Deferred tax liabilities Property, plant and equipment - capital allowance - revaluation 11,888 13,286 5,975 (202) 17,863 13,084 (168) 17,863 12,916 25,174 5,773 30,947 (168) 30,779 (745) (921) (1,666) - (1,666) 24,429 4,852 29,281 (168) 29,113 Note 16 29,113 Deferred tax assets Provisions Note 16 60 AEON ANNUAL REPORT 2006 11. Payables and accruals Note 31.12.2006 RM’000 28.2.2006 RM’000 389,394 324,716 167,188 42,220 78,705 423 - 133,918 19,766 67,308 1,444 677,930 547,152 Trade Trade payables Non-trade Other payables and accrued expenses Progress claim from contractors Rental and utility deposits Holding company Affiliated company a b Note a ÆON Co., Ltd., a company incorporated in Japan was an affiliated company of the Company in the previous year and became the holding company during the period. The amount due to holding company is unsecured, interest free and repayable on demand. Note b In the previous year, the amount due to affiliated company was unsecured, interest free and repayable on demand. 12. Borrowings (unsecured) 31.12.2006 RM’000 28.2.2006 RM’000 Current Bank overdrafts - 625 In the previous year, the bank overdrafts of the Company were subject to interest at 0.5% above the lender’s base lending rates. 13. Operating profit Operating profit is arrived at after crediting: Gain on disposal of property, plant and equipment Rental income on shopping centre operation and after charging: Auditors’ remuneration - Audit services - Auditors of the Company - Other services by auditors of the Company Amortisation of prepaid lease payment Depreciation Loss on disposal of property, plant and equipment Personnel expenses - Contributions to Employee Provident Fund - Wages, salaries and others Property, plant and equipment written off Rental expense - land - buildings - equipment - fixtures and fittings - hostel Royalty 1.3.2006 to 31.12.2006 RM’000 1.3.2005 to 28.2.2006 RM’000 34,073 150,285 128,574 130 25 1,202 69,086 - 120 1,377 57,850 83 11,143 97,665 1,387 11,136 100,572 824 941 45,236 475 222 7 1,132 42,995 249 362 203 11,181 10,835 61 AEON ANNUAL REPORT 2006 14. Key management personnel compensation The key management personnel compensations are as follows: 1.3.2006 to 31.12.2006 RM’000 Directors - Fees - Remuneration - Other short term employee benefits (including estimated monetary value of benefits-in-kind) 1.3.2005 to 28.2.2006 RM’000 959 747 1,048 1,021 57 59 1,763 2,128 15. Interest expense 1.3.2006 to 31.12.2006 RM’000 Bank overdrafts Other borrowings 1.3.2005 to 28.2.2006 RM’000 41 1,921 37 558 1,962 595 16. Tax expense 1.3.2006 to 31.12.2006 RM’000 1.3.2005 to 28.2.2006 RM’000 Current tax expense Deferred tax expense (Note 10) - origination and reversal of temporary differences 37,663 34,142 (168) 4,852 Total tax expense 37,495 38,994 140,741 112,198 Tax calculated using Malaysian tax rate of 27% (28.2.2006 - 28%) Income not subject to tax Non-deductible expenses Reversal of deferred tax liabilities on crystallisation of revaluation reserves of property, plant and equipment 38,000 (9,170) 8,833 31,415 7,781 (168) (202) Tax expense 37,495 38,994 Reconciliation of effective tax expense Profit before taxation In the Malaysia Budget 2007, it was announced that for the year of assessment 2007, the rate will be reduced from 28% to 27% and for the year of assessment 2008, the rate will be reduced to 26%. Due to the change of its financial year end from 28 February to 31 December, the Company’s basis period for the year of assessment 2007 is from 1 March 2006 to 31 December 2007. As a result, the statutory tax rate in this financial period is 27%. 17. Basic earnings per ordinary share Basic earnings per share is calculated by dividing the profit attributable to ordinary shareholders of RM103,246,050 (28.2.2006 - RM73,204,059) by the number of ordinary shares outstanding of 175,500,000 during the period. 62 AEON ANNUAL REPORT 2006 18. Dividend Dividend recognised in the current year by the company is: 1.3.2006 to 31.12.2006 Final 28.2.2006 ordinary less 28% tax 1.3.2005 to 28.2.2006 Final 2005 ordinary less 28% tax Sen per share Total amount RM’000 Date of payment 10.8 18,954 20 July 2006 8.6 15,163 20 July 2005 After the balance sheet date the following dividend was proposed by the Directors. This dividend will be recognised in subsequent financial reports upon approval by the shareholders. Sen per share Total amount RM’000 11.7 20,498 Final ordinary less 27% tax 19. Segmental reporting Segment information is presented in respect of the Company’s business segment. The primary format, business segments, is based on the Company’s management and internal reporting structure. There is no segmental analysis by geographical location as the Company’s operations are principally located in Malaysia. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items mainly comprise interest-earning assets and revenue and income taxes. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one period. Business segments The Company comprises the following main business segments: Retailing The operations of a chain of superstores selling clothing, food, household goods and other merchandise. Property management services Shopping centre operation and distribution centre charges earned. Retailing 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 RM’000 RM’000 Property management services Total 1.3.2006 to 1.3.2005 to 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 31.12.2006 28.2.2006 RM’000 RM’000 RM’000 RM’000 Business segments Revenue from external customers 1,763,283 1,807,753 178,148 154,692 1,941,431 1,962,445 Total revenue 1,763,283 1,807,753 178,148 154,692 1,941,431 1,962,445 61,832 72,629 46,366 39,819 108,198 112,448 - - 33,963 - 33,963 - 142,161 112,448 (1,962) 542 (595) 345 Profit before taxation Tax expense 140,741 (37,495) 112,198 (38,994) Profit for the period/year 103,246 73,204 Operating profit before disposal of Kinta City Shopping Centre Gain on disposal of Kinta City Shopping Centre Operating profit after disposal of Kinta City Shopping Centre Interest expense Interest income 63 AEON ANNUAL REPORT 2006 19. Segmental reporting (continued) Retailing 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 RM’000 RM’000 Segment assets Unallocated assets 1,438,373 - 1,185,192 26,300 Total assets 1,438,373 1,211,492 Unallocated liabilities (677,930) (54,300) (547,777) (41,864) Total liabilities (732,230) (589,641) Segment liabilities Capital expenditure Depreciation Amortisation of prepaid lease payment Non-cash expenses other than depreciation 601,218 (525,739) 386,606 Property management services Total 1.3.2006 to 1.3.2005 to 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 31.12.2006 28.2.2006 RM’000 RM’000 RM’000 RM’000 (438,778) 837,155 (152,191) 798,586 (108,999) 108,603 41,279 - 62,535 38,738 - 144,259 27,807 1,202 212,840 19,112 1,377 252,862 69,086 1,202 275,375 57,850 1,377 1,371 299 16 525 1,387 824 20. Operating leases Leases as lessee Total future minimum lease payments under non-cancellable operating leases are as follows: Less than one year Between one and five years More than five years 31.12.2006 RM’000 28.2.2006 RM’000 64,276 409,324 471,111 44,369 262,459 325,806 944,711 632,634 The Company leases a number of land and buildings under operating leases. The leases have initial periods ranging from 3 to 25 years, with an option to renew the respective leases for another 3 to 15 years. 21. Capital commitments 31.12.2006 RM’000 Property, plant and equipment Contracted but not provided for and payable: Within one year 30,622 28.2.2006 RM’000 64,013 22. Related parties Identity of related parties For the purposes of these financial statements, parties are considered to be related to the Company if the Company has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Company and the party are subject to common control or common significant influence. Related parties may be individuals or other entities. The Company has a related party relationship with its Directors, its holding company and the holding company’s subsidiaries. In the previous year, the Company had a related party relationship with its affiliated company and the affiliated company’s subsidiaries. Transactions with key management personnel (i) Key management personnel compensation Key management personnel compensation is disclosed in note 14. (ii) Transactions with key management personnel other than compensation A number of key management personnel, of their related parties, hold positions in other entities that result in them having control or significant influence over the financial or operating policies of these entities. 64 AEON ANNUAL REPORT 2006 22. Related parties (continued) Note Transaction value Balance outstanding 1.3.2006 to 1.3.2005 to 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 31.12.2006 28.2.2006 RM’000 RM’000 RM’000 RM’000 Director With companies in which Dato’ Abdullah bin Mohd Yusof and Datuk Ramli bin Ibrahim have interests: Laura Ashley (Malaysia) Sdn. Bhd. Management fee receivable Rental income receivable With companies in which Dato’ Abdullah bin Mohd Yusof has interest: Abdullah & Zainudin Legal fees payable a b 43 332 58 436 5 - 3 - c (24) (21) - - d e f g h 4,211 765 35,466 378 (515) 4,467 44 5,908 15 (83) 816 653 - 470 4 (456) - With companies in which Dato’ Abdullah bin Mohd Yusof, Toshiji Tokiwa, Masato Yokoyama and Datuk Ramli bin Ibrahim have interests: AEON Credit Service (M) Berhad (a related Company) Sales through easy payment scheme financing Rental income Sales through AEON credit card Convertible J CARD point income Credit card sales commission expenses Note a Management fee on administrative services rendered by the Company to Laura Ashley (Malaysia) Sdn. Bhd. Amounts were billed based on normal market rates for such services and were due and receivable under normal payment terms. Note b Rental of premises to Laura Ashley (Malaysia) Sdn. Bhd. for the usage as shoplot in a shopping centre at 1, Leboh Bandar Utama, Bandar Utama, 47800 Petaling Jaya, Selangor Darul Ehsan. Amounts were billed based on normal market rates, and amounts were due and receivable under normal payment terms. Note c Professional fees payable to Abdullah & Zainudin for professional legal services rendered. Amounts were billed based on normal market rates for such services and were due and payable under normal payment terms. Note d Sales through easy payment instalment scheme factored to AEON Credit Service (M) Berhad. Note e Rental of premises to AEON Credit Service (M) Berhad for the usage of a shoplot in a shopping centre at Jusco Seremban 2 Shopping Centre, Seremban and AEON Tebrau City Shopping Centre, Johor Bahru. Amounts were billed based on normal market rates, and amounts were due and receivable under normal payment terms. Note f Sales through credit card issued by AEON Credit Service (M) Berhad. Note g Convertible J CARD points purchased by AEON Credit Service (M) Berhad for J CARD gift redemption given to cardholders who are also J CARD members of the Company. Note h Credit card commission payable to AEON Credit Service (M) Berhad for the sales through credit cards. 65 AEON ANNUAL REPORT 2006 22. Related parties (continued) Other related party transactions Transaction value Balance outstanding 1.3.2006 to 1.3.2005 to 1.3.2006 to 1.3.2005 to 31.12.2006 28.2.2006 31.12.2006 28.2.2006 RM’000 RM’000 RM’000 RM’000 Holding company Royalty expenses 11,181 - 11,181 - - 10,835 - 10,835 1,118 300 - 125 52 - - 1,568 171 - 202 26 Affiliated company Royalty expenses Holding company’s subsidiaries Purchase of merchandise Consultation fees Affiliated company’s subsidiaries Purchase of merchandise Consultation fees All outstanding balances with these related parties are priced on an arm’s length basis and are to be settled in cash. None of the balances is secured. 23. Financial instruments Exposure to credit risk, interest rate risk, foreign currency risk and liquidity risk arises in the normal course of the Company’s business. The Company’s policies for managing each of these risks are summarised below. Credit risk The Company has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on shopping centre tenants and the Company requires all tenants to place adequate security deposits as stipulated under the tenancy agreement. At balance sheet date, the Company does not have any major concentration of credit risk on its shopping centre tenants. The maximum exposure to credit risk for the Company was represented by the carrying amount of each financial asset. Foreign currency risk The Company does not have any significant exposure to foreign currency risk as its transactions and balances are substantially denominated in Ringgit Malaysia. Liquidity risk The Company monitors and maintains a level of cash and cash equivalents deemed adequate by management to finance the Company’s operations and to mitigate the effects of fluctuations in cash flows. Interest rate risk The Company’s exposure to interest rate risk relates only to its short term borrowings such as overdraft and trade financing facilities. Interest-earning financial assets are mainly deposits placed with financial institutions that generate interest income for the Company. The management monitors the prevailing interest rates at regular intervals, and maintains an appropriate level of cash and cash equivalents to finance the working capital requirements and mitigate the effects of fluctuation in cash flow and liquidity positions of the Company. In view of the competitive rates that are available from the prevailing banking facilities granted to the Company to finance its working capital requirements and the prevailing low interest rate scenario, the interest rate risk is not expected to have a material impact on the Company. Effective interest rates and repricing analysis In respect of interest-earning financial assets and interest-bearing financial liabilities, the following table indicates their effective interest rate at the balance sheet date and the periods in which they reprice or mature, whichever is earlier: 31.12.2006 Effective interest rate per annum % Total RM’000 28.2.2006 Within 1 period RM’000 Effective interest rate per annum % Total RM’000 Within 1 period RM’000 Financial assets Deposits placed with licensed financial institutions - - - 2.85 26,300 26,300 - - - 7.00 625 625 Financial liabilities Bank overdrafts 66 AEON ANNUAL REPORT 2006 23. Financial instruments(continued) Fair values In respect of cash and cash equivalents, trade and other receivables, trade and other payables and short term borrowings, the carrying amounts approximate fair value due to the relatively short term nature of these financial instruments. The aggregate fair values of other financial assets carried on the balance sheet are shown below: 31.12.2006 Carrying Fair amount value RM’000 RM’000 Financial assets Long-term investments for which it is: Practical to estimate fair value Not practical to estimate fair value 45 1,030 42 - 28.2.2006 Carrying Fair amount value RM’000 RM’000 45 1,030 36 - It was not practicable to estimate the fair value of an investment in an unquoted company due to the lack of compensation quoted market prices and the inability to estimated fair value without incurring excessive costs. That investment is carried at its original cost of RM1,030,000 (28.2.2006 - RM1,030,000) in the balance sheet. At period end, the share of the net tangible assets in this unquoted company is RM2,647,302 (28.2.2006 - RM2,260,224). 24. Change of financial year end The Company changed its financial year end from 28 February to 31 December to be in line with AEON Group’s reporting. The comparatives for the Income Statement, Statement of Changes in Equity and Cash Flow Statement as well as the comparatives in the notes to the financial statements relating to the Income Statement are for the previous twelve months ended 28 February 2006 and hence, are not comparable to that for the current ten months ended 31 December 2006. 25. Comparative figures Certain comparative figures have been reclassified. As restated RM’000 As previously stated RM’000 845,248 124,573 971,256 - 1,435 - 971,256 971,256 (57,850) (267,457) (59,227) (266,080) 57,850 1,377 59,227 - Balance sheet Non-current assets Property, plant and equipment Prepaid lease payments Current assets Prepaid lease payments Income statement Depreciation Operating expenses Cash flow statement Depreciation Amortisation of prepaid lease payments Leasehold land amounting to RM126,008,000 as of 28 February 2006 was reclassified from property, plant and equipment to prepaid lease payments to comply with the requirements of FRS 117, Leases. Accordingly, the depreciation is also classified as amortisation of prepaid lease payments. 67 AEON ANNUAL REPORT 2006 STATEMENT BY DIRECTORS pursuant to Section 169(15) of the Companies Act, 1965 In the opinion of the Directors, the financial statements set out on pages 48 to 67 are drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as to give a true and fair view of the state of affairs of the Company at 31 December 2006 and of the results of its operations and cash flows for the period ended on that date. Signed in accordance with a resolution of the Directors: .................................................................. Dato’ Abdullah bin Mohd Yusof .................................................................. Nagahisa Oyama Kuala Lumpur, Date: 15 February 2007 STATUTORY DECLARATION pursuant to Section 169(16) of the Companies Act, 1965 I, Poh Ying Loo, the officer primarily responsible for the financial management of AEON CO. (M) BHD., do solemnly and sincerely declare that the financial statements set out on pages 48 to 67 are, to the best of my knowledge and belief, 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. Subscribed and solemnly declared by the abovenamed in Kuala Lumpur on 15 February 2007. …………………………………………….. Poh Ying Loo Before me: 68 AEON ANNUAL REPORT 2006 REPORT OF THE AUDITORS to the members of AEON CO. (M) BHD. We have audited the financial statements set out on pages 48 to 67. The preparation of the financial statements is the responsibility of the Company’s Directors. It is our responsibility to form an independent opinion, based on our audit, on the 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 responsibility to any other person for the contents of this report. We conducted our audit in accordance with approved Standards on Auditing 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 statements presentation. We believe our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards for entities other than private entities issued by the Malaysian Accounting Standards Board so as to give a true and fair view of: (i) the state of affairs of the Company at 31 December 2006 and of the results of its operations and cash flows for the period ended on that date; and (ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements of the Company; and (b) the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the Company have been properly kept in accordance with the provisions of the said Act. ................................................................. KPMG Desa Megat & Co. Firm Number: AF 0759 Chartered Accountants .................................................................. Abdullah Abu Samah Partner Approval Number: 2013/06/08(J) Kuala Lumpur, Date: 15 February 2007 69 AEON ANNUAL REPORT 2006 ANALYSIS OF SHAREHOLDINGS as at 28 February 2007 Authorised Share Capital Paid-up Share Capital Class of Shares Voting Rights : : : : Size of Shareholdings RM500,000,000 RM175,500,000 Ordinary Share of RM1 each 1 vote per Ordinary Share No. of Shareholders/ Depositors 1 - 99 % of Shareholders/ Depositors No. of Shares Held % of Issued Capital 91 7.06 1,390 0.00 100 - 1,000 306 23.74 235,410 0.13 1,001 - 10,000 715 55.47 2,608,600 1.49 10,001 - 100,000 116 9.00 3,395,800 1.93 100,001 - 8,774,999 60 4.65 79,753,800 45.44 8,775,000 and above 1 0.08 89,505,000 51.00 1289 100.00 175,500,000 100.00 Total Substantial Shareholders as per Register of Substantial Shareholders No. Name No. of Shares Direct Interest % Indirect Interest % 1. AEON Co., Ltd. 89,505,000 51.0000 - - 2. Aberdeen Asset Management PLC 12,991,200 7.4024 - - Directors’ Interests No. Name 1. Dato’ Abdullah bin Mohd Yusof 2. Masato Yokoyama 3. Datuk Ramli bin Ibrahim 70 AEON ANNUAL REPORT 2006 No. of Shares Direct Interest % Indirect Interest % 268,000 0.1527 1,411,000 0.8040 30,000 0.0171 - - - - 280,000 0.1595 LIST OF 30 LARGEST SHAREHOLDERS as at 28 FEBRUARY 2007 No. Name of Shareholders No. of Shares % of Share held 1 AEON Co., Ltd. 89,505,000 51.00 2 HSBC Nominees (Asing) Sdn Bhd 8,278,200 4.71 7,000,000 3.99 6,079,300 3.46 5,383,000 3.07 4,907,500 2.80 3,272,600 1.86 3,106,700 1.77 2,416,300 1.38 2,179,100 1.24 BBH (Lux) SCA for Genesis Smaller Companies 3 Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera 4 Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020 5 HSBC Nominees (Asing) Sdn Bhd Exempt An for BNP Paribas Securities Services (Convert in USD) 6 Cartaban Nominees (Asing) Sdn Bhd SSBT Fund D26J for Emerging Markets Global Small Capitalization Fund (TEMMUF) 7 HSBC Nominees (Asing) Sdn Bhd Exempt An for JPMorgan Chase Bank, National Association (Nordea Bank S.A) 8 Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (Par 1) 9 HSBC Nominees (Asing) Sdn Bhd HSBC-FS for Aberdeen Malaysia Equity Fund 10 Cartaban Nominees (Asing) Sdn Bhd State Street London Fund XCB9 for Aberdeen Asian Smaller Companies Investment Trust PLC 11 Employees Provident Fund Board 2,162,400 1.23 12 HSBC Nominees (Asing) Sdn Bhd 2,130,000 1.21 1,893,300 1.08 HSBC-FS I for Apollo Asia Fund Ltd 13 Cartaban Nominees (Asing) Sdn Bhd Government of Singapore Investment Corporation Pte Ltd for Government of Singapore (C) 14 Syarikat Maluri Sdn Bhd 1,865,000 1.06 15 HSBC Nominees (Asing) Sdn Bhd 1,733,500 0.99 Exempt An for JPMorgan Chase Bank, National Association (JERSEY) 71 AEON ANNUAL REPORT 2006 No. Name of Shareholders No. of Shares % of Share held 16 Permodalan Nasional Berhad 1,616,200 0.92 17 Mayban Nominees (Tempatan) Sdn Bhd 1,515,000 0.86 1,309,900 0.75 1,290,000 0.74 Aberdeen Asset Management Sdn Bhd for The Employees’ Provident Fund Board (250416) 18 HSBC Nominees (Asing) Sdn Bhd BBH and Co Boston for Smaller Companies Portfolio (GEMOFL) 19 HSBC Nominees (Tempatan) Sdn Bhd Nomura Asset Mgmt SG for Employees Provident Fund 20 Takuya Okada 1,200,000 0.68 21 Rozilawati binti Haji Basir 1,155,000 0.66 22 Rozana Zeti binti Basir 1,155,000 0.66 23 Roshayati binti Basir 1,155,000 0.66 24 HSBC Nominees (Asing) Sdn Bhd 1,100,000 0.63 1,075,700 0.61 Exempt An for JPMorgan Chase Bank, National Association (Norges Bank) 25 CIMSEC Nominees (Tempatan) Sdn Bhd CIMB-Principal Asset Management Berhad for Employees Provident Fund Board 26 Status Resources Sdn Bhd 911,000 0.52 27 Cartaban Nominees (Asing) Sdn Bhd 899,300 0.51 858,800 0.49 Government of Singapore Investment Corporation Pte Ltd for Monetary Authority of Singapore (H) 28 HSBC Nominees (Asing) Sdn Bhd Exempt An for JPMorgan Chase Bank, National Association (U.K.) 29 MCIS Zurich Insurance Berhad 730,200 0.42 30 CIMSEC Nominees (Tempatan) Sdn Bhd 730,000 0.42 158,613,000 90.38 CIMB-Principal Asset Management Berhad for Pensions Trust Fund Council Total 72 AEON ANNUAL REPORT 2006 PARTICULARS OF PROPERTIES Location Description/ Existing use Land/ Built-up area (sq ft) Date of Acquisition (A)/ Completion (C)/ Revaluation (R) Approx. Tenure age of (Year of building expiry for (year) leasehold) Net book value as at 31/12/2006 (RM’000) Details of AEON’s properties as at 31 December 2006 are set out below: Lot 7041, Mukim of Bukit Baru, District of Melaka Tengah, Melaka. Existing two-storey shopping centre Extention/Renovation 200,316 February 1995 (R) - 44,598 Lot 23551, Mukim of Setapak, District and State of Wilayah Persekutuan. Two-storey shopping centre and three-storey car park 666,694 February 1995 (R) 141/2 - 48,797 Lot PT 21441, Mukim of Kapar, District of Klang, Selangor. Two-storey shopping centre and two-storey car park 691,414 October 1995 (C) 11 - 50,169 Lot 49045, Mukim of Pulai, District of Johor Bahru, Johor. Freehold land/ Two-storey shopping centre including covered car park 377,490/ 483,299 April 2002 (A)/ August 2002 (C) 41/2 Freehold 28,679 Lot 4086, Kawasan A, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Two-storey shopping centre and two-storey car park 906,497 January 2004 (C) 3 - 50,020 Lot PTD 114179, Mukim of Tebrau, District of Johor Bahru, Johor. Freehold land/ Three-storey shopping centre and one-storey car park 1,308,035/ 1,468,693 March 2004 (A) January 2006 (C) 1 Freehold 163,862 Lot 3144, Mukim of Cheras, District of Ulu Langat, Selangor. Freehold land/ Two-storey shopping centre and two-storey car park 113,451/ 893,819 April 2004 (A) December 2006 (C) - Freehold 69,751 179,989 15 81/2 Details of AEON’s prepaid lease payments as at 31 December 2006 are set out below: Lot 7041, Mukim of Bukit Baru, District of Melaka Tengah, Melaka. Leasehold land 436,036 February 1995 (R) - 99 years expiring on 19/12/2089 13,402 Lot 23551, Mukim of Setapak, District and State of Wilayah Persekutuan. Leasehold land 368,516 February 1995 (R) - 95 years expiring on 28/3/2085 39,467 Lot PT 21441, Mukim of Kapar, District of Klang, Selangor. Leasehold land 643,753 June 1994 (A) - 99 years expiring on 9/5/2093 16,742 Lot 4086, Kawasan A, Mukim Batu, Daerah Kuala Lumpur, Wilayah Persekutuan. Leasehold land 410,815 January 2004 (C) - 99 years expiring on April 2101 41,219 Lot PT 41977, Mukim of Cheras, District of Ulu Langat, Selangor. Leasehold land 550,910 April 2004 (A) - 99 years expiring on 12/4/2103 16,439 Note: Leasehold land as at 31 December 2006 was reclassified from property, plant and equipment to prepaid lease payments to comply with the requirements of FRS 117, Leases. AEON ANNUAL REPORT 2006 73 JUSCO STORES & JUSCO STORES & SHOPPING CENTRES SHOPPING CENTERS Directory PULAU PINANG IPOH KUANTAN NORTHERN JUSCO IPOH No.2, Jalan Teh Lean Swee, Off Jalan Sultan Azlan Shah Utara, 31400 Ipoh, Perak Darul Ridzuan. Tel: 05-549 9633 KINTA CITY SHOPPING CENTRE Tel: 05-548 4668 KUALA LUMPUR MELAKA JOHOR BAHRU PULAU PINANG IPOH KUANTAN JUSCO TAMAN MALURI SHOPPING CENTRE Tel: 03-9200 1004 KUALA LUMPUR CENTRAL JUSCO TAMAN MALURI Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur. Tel: 03-9285 5222 MELAKA JOHOR BAHRU JUSCO BANDAR BARU KLANG Persiaran Bukit Raja 2, Bandar Baru Klang, 41150 Klang, Selangor Darul Ehsan. Tel: 03-3343 9366 BUKIT RAJA SHOPPING CENTRE Tel: 03-3343 2166 JUSCO MID VALLEY AT3 Mid Valley Megamall, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala Lumpur. Tel:03-2284 4800 JUSCO TAMAN EQUINE No. 2, Jalan Equine, Taman Equine, Bandar Putra Permai, 43300 Seri Kembangan, Selangor Darul Ehsan. Tel: 03-8941 3700 JUSCO CHERAS SELATAN Aras Mezzanine, Lebuh Tun Hussien Onn, 43200 Balakong, Selangor Darul Ehsan. Tel: 03-9080 3018 AEON TAMAN EQUINE SHOPPING CENTRE Tel: 03-7545 2700 AEON CHERAS SELATAN SHOPPING CENTRE Tel: 03-9080 3498 PULAU PINANG IPOH KUANTAN JUSCO MELAKA Leboh Ayer Keroh, 75450 Melaka. Tel: 06-232 4899 JUSCO MELAKA SHOPPING CENTRE Tel: 06-233 2988 KUALA LUMPUR MELAKA JOHOR BAHRU JUSCO SEREMBAN 2 112, Persiaran S2 B1, Seremban 2, 70300 Seremban, Negeri Sembilan Darul Khusus. Tel: 06-601 5633 SOUTHERN 74 AEON ANNUAL REPORT 2006 JUSCO SEREMBAN 2 SHOPPING CENTRE Tel: 06-601 5618 JUSCO QUEENSBAY 1F-01 Persiaran Bayan Indah, Sungai Nibong, 11900 Bayan Lepas, Penang. Tel: 04-641 3822 JUSCO WANGSA MAJU Jalan R1, Seksyen 1, Bandar Baru Wangsa Maju, 53300 Kuala Lumpur. Tel: 03-4149 7666 ALPHA ANGLE SHOPPING CENTRE Tel: 03-4149 5288 JUSCO BANDAR UTAMA No. 1, Leboh Bandar Utama, Bandar Utama, Damansara, 47800 Petaling Jaya, Selangor Darul Ehsan. Tel: 03-7726 6266 1 UTAMA SHOPPING CENTRE Tel: 03-7726 6033 JUSCO BANDAR PUCHONG Lot G40, IOI Mall, Batu 9, Jalan Puchong, Bandar Puchong Jaya, 47100 Puchong, Selangor Darul Ehsan. Tel: 03-8070 1200 JUSCO METRO PRIMA No. 1, Jalan Metro Prima, 52100 Kepong, Kuala Lumpur Tel: 03-6257 2121 PASAR RAYA D’HATI DAMANSARA DAMAI, PASAR RAYA D’HATI PEARL POINT, (formerly known as J-One Damansara Damai) JUSCO METRO PRIMA SHOPPING CENTRE Tel: 03-6259 1122 (formerly known as J-One Pearl Point) C-1-05, Park Avenue, Jalan PJU 10/1, PJU 10, Damansara Damai, 47830 Petaling Jaya, Selangor Darul Ehsan. Tel: 03-6157 1432 Lot 1.0.49, Ground Floor, Pearl Point Shopping Mall, Jalan Klang Lama, 58000 Kuala Lumpur. Tel: 03-7982 0422 JUSCO TAMAN UNIVERSITI No. 4, Jalan Pendidikan, Taman Universiti, 81300 Skudai, Johor Darul Takzim. Tel: 07-521 8000 JUSCO PERMAS JAYA No. 1, Jalan Permas Utara, Bandar Baru Permas Jaya, 81750 Johor Bahru, Johor Darul Takzim. Tel: 07-386 8900 JUSCO TAMAN UNIVERSITI SHOPPING CENTRE Tel: 07-520 8700 JUSCO PERMAS JAYA SHOPPING CENTRE Tel: 07-386 0600 JUSCO TEBRAU CITY No 1, Jalan Desa Tebrau, Taman Desa Tebrau, 81100 Johor Bahru, Johor Darul Takzim. Tel: 07-3511 110 AEON TEBRAU CITY SHOPPING CENTRE Tel: 07-3522 220 75 AEON ANNUAL REPORT 2006 MILESTONES MILESTONES 1984 SEPTEMBER – JAYA JUSCO STORES SDN BHD established, in response to a request from Prime Minister Y.A.B. Datuk Seri Dr Mahathir bin Mohamad, to help modernise the retailing industry in Malaysia. 1985 JUNE – The first pilot store, JAYA JUSCO Dayabumi, opened. DECEMBER – The second pilot store, JAYA JUSCO Taman Tun, opened. JUNE – JAYA JUSCO Dayabumi closed. OCTOBER – The first Superstore, JAYA JUSCO Taman Maluri, opened. JUNE – “Japan Management Training Programme” begun. NOVEMBER – 28 Malaysian students invited to Japan as “Ambassadors” through the ÆON “1% Club” Programme. 1991 OCTOBER – JUSCO Melaka was opened and fully operated by Malaysian staff. – The ÆON Group’s “Hometown Forest” programme was launched simultaneously at the inauguration of JUSCO Melaka. 1992 APRIL – JUSCO Wangsa Maju (Alpha Angle Shopping Centre), our first Shopping Centre, opened. 1994 AUGUST – Our Distribution Centre begun operations. OCTOBER – Japanese Trainee Programme begun. JUNE – JAYA JUSCO Taman Tun Dr. Ismail closed. AUGUST – JUSCO Bandar Utama (1 Utama Shopping Centre) opened. OCTOBER – JUSCO Bandar Baru Klang (Bukit Raja Shopping Centre) opened. 1996 DECEMBER – JAYA JUSCO STORES BHD was listed on the Main Board of the KLSE. 1997 AUGUST – JUSCO Ipoh (Kinta City Shopping Centre) opened. 1998 DECEMBER – JUSCO Melaka Superstore was upgraded to a Shopping Centre. 1999 DECEMBER – JUSCO Mid Valley opened. 2000 DECEMBER – JUSCO Taman Maluri Superstore was upgraded to a Shopping Centre. – JUSCO Bandar Puchong opened. 2001 OCTOBER – Launch of WAOH Charity Fund / JUSCO Fest / JUSCO’s 17th Anniversary. NOVEMBER – 22 Malaysian students and 2 former participants from the 1990 batch were invited to Japan as ‘Ambassadors’ through the ÆON “1% Club” Programme. APRIL – Establishment of JUSCO-OUM Retail Centre in Alpha Angle Shopping Centre, at Wangsa Maju. JULY – JUSCO Taman Universiti opened, Japan Management Training Programme reactivated. JULY – WAOH Charity Bazaar. 1989 1990 1995 2002 2003 76 AEON ANNUAL REPORT 2006 MILESTONES MILESTONES 2003 2004 2005 2006 2007 AUGUST – Smart Wonder World opened in JUSCO Taman Maluri. OCTOBER – JUSCO Home Centre opened in 1 Utama Shopping Centre. DECEMBER – 3,000 seedlings were planted in the vicinity of the JUSCO Permas Jaya store as part of ÆON’s environmental campaign, ‘Planting Seeds of Growth’. – JUSCO Permas Jaya Shopping Centre opened. JANUARY – JUSCO Metro Prima Tree Planting Ceremony was held. 2,000 seedlings were planted. – JUSCO Metro Prima Shopping Centre opened. JUNE – WAOH Charity Fund officially registered as the “WAOH” Malaysian JUSCO Foundation. SEPTEMBER – – – – AUGUST – Company authorised share capital increased from RM100,000,000 to RM500,000,000. OCTOBER – Completed Bonus Issue (1:1) for 87,750,000 new Ordinary Shares. MARCH – AEON CO. (M) BHD. received a certificate of appreciation from the Prime Minister for its tree planting activities. JULY – Charity Gala Dinner was held. AUGUST – The management of AEON CO. (M) BHD. met with the Menteri Besar of Negeri Sembilan, Y.A.B. Datuk Seri Utama Hj Mohamad bin Hj Hasan. SEPTEMBER – JUSCO Seremban 2 Tree Planting ceremony was held. 3,300 seedlings were planted. – JUSCO Seremban 2 Shopping Centre opened. OCTOBER – The 1st PASAR RAYA D’HATI (formerly known as J-One) supermarket in Damansara Damai opened. DECEMBER – AEON Tebrau City Tree Planting ceremony was held. 6,000 seedlings were planted. JANUARY – AEON Tebrau City Shopping Centre opened. APRIL – Change of financial year end. JUNE – AEON Taman Equine Tree Planting Ceremony held. 4,000 seedlings were planted. JULY – AEON Taman Equine Shopping Centre opened. – PASAR RAYA D’HATI (formerly known as J-One) supermarket in Pearl Point opened. NOVEMBER – AEON Cheras Selatan Tree Planting Ceremony held. 4,000 seedlings were planted. – WAOH Charity Gala Dinner held. DECEMBER – JUSCO Queensbay Store opened. – AEON Cheras Selatan Shopping Centre opened. JANUARY – PASAR RAYA D’HATI name change ceremony held at Pearl Point Shopping Mall. JAYA JUSCO STORES BHD. officially changed name to AEON CO. (M) BHD. JUSCO celebrated 20th Anniversary in Malaysia with Gala Dinner. Official launch of “WAOH” Malaysian JUSCO Foundation. 30,000 seedlings planted in the Malaysia-Japan Friendship Forest, AEON Woodland, Paya Indah Wetlands. 77 AEON ANNUAL REPORT 2006 NOTICE OF ANNUAL GENERAL NOTICE OF ANNUAL GENERAL MEETING MEETING NOTICE IS HEREBY GIVEN that the Twenty-Second Annual General Meeting of AEON CO. (M) BHD. will be held at Ballroom 1, Level 2, Hotel Nikko, 165 Jalan Ampang, 50450 Kuala Lumpur on Tuesday, 24 April 2007 at 10.30 a.m. for the following purposes:- AGENDA As Ordinary Business 1. To receive and adopt the Audited Financial Statements for the financial period ended 31 December 2006 together with the Reports of the Directors and Auditors thereon. Ordinary Resolution 1 2. To declare a First and Final Dividend of 16 sen per share less 27% income tax for the financial period ended 31 December 2006. Ordinary Resolution 2 3. To approve the payment of Directors’ Fees for the financial period ended 31 December 2006. Ordinary Resolution 3 4. To re-elect the following Directors retiring under Article 74 of the Articles of Association of the Company:i) Dato’ Abdullah bin Mohd Yusof Ordinary Resolution 4 ii) Mr. Toshiji Tokiwa Ordinary Resolution 5 iii) Mr. Tatsuichi Yamaguchi Ordinary Resolution 6 iv) Mr. Nagahisa Oyama Ordinary Resolution 7 v) Mr. Masato Yokoyama Ordinary Resolution 8 vi) Datuk Ramli bin Ibrahim Ordinary Resolution 9 vii) Brig. Jen. (B) Dato’ Mohd Idris bin Saman Ordinary Resolution 10 viii) Datuk Zawawi bin Mahmuddin Ordinary Resolution 11 ix) Dato’ Chew Kong Seng Ordinary Resolution 12 5. To re-appoint Messrs KPMG Desa Megat & Co. as Auditors of the Company and to authorise the Directors to fix their remuneration. As Special Business To consider and, if thought fit, to pass the following ordinary resolution :6. PROPOSED RENEWAL OF EXISTING SHAREHOLDERS’ MANDATE FOR THE RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (“PROPOSED RENEWAL OF SHAREHOLDERS’ MANDATE”) “THAT approval be and is hereby given to the Company, to enter and give effect to the recurrent related party transactions of a revenue or trading nature (hereinafter to be referred to as “Recurrent Transactions”) with the related parties as stated in Section 2.2 of the Circular to Shareholders dated 2 April 2007 which are necessary for the Company’s day-to-day operations subject further to the following:- 78 AEON ANNUAL REPORT 2006 Ordinary Resolution 13 (i) the Recurrent Transactions contemplated are in the ordinary course of business and on terms which are not more favourable to related parties than those generally available to the public, and are not to the detriment of the minority shareholders; (ii) the approval is subject to annual renewal and shall only continue to be in force until:(a) the conclusion of the next Annual General Meeting of the Company following the forthcoming Annual General Meeting of the Company at which the Proposed Renewal of Shareholders’ Mandate is approved, at which time it will lapse unless by a resolution passed at the Annual General Meeting the mandate is again renewed; (b) the expiration of the period within which the next Annual General Meeting of the Company after the date it is required to be held pursuant to Section 143(1) of the Companies Act, 1965 (but shall not extend to such extensions as may be allowed pursuant to Section 143(2) of the Companies Act, 1965); or (c) revoked or varied by resolution passed by the shareholders in general meeting, whichever is the earlier; and (iii) the disclosure of the breakdown of the aggregate value of the Recurrent Transactions conducted pursuant to the Proposed Renewal of Shareholders’ Mandate in the Annual Report of the Company based on the following information:(a) the type of Recurrent Transactions entered into; and (b) the names of the related parties involved in each type of the Recurrent Transactions entered into and their relationship with the Company. AND THAT the Directors of the Company be and are hereby authorised to do all acts and things to give full effect to the Recurrent Transactions contemplated and/or authorised by this resolution, as the Directors of the Company, in their absolute discretion, deem fit.” Ordinary Resolution 14 7. PROPOSED AMENDMENTS TO THE ARTICLES OF ASSOCIATION “THAT the deletions, alterations, modifications, variations and additions to the Articles of Association of the Company as set out in Appendix I attached with the Annual Report for financial period ended 31 December 2006 be and are hereby approved.” Special Resolution 1 79 AEON ANNUAL REPORT 2006 NOTICE OF DIVIDEND NOTICE OF DIVIDEND PAYMENT PAYMENT NOTICE IS HEREBY GIVEN THAT, subject to the approval of shareholders at the Twenty-Second Annual General Meeting, a first and final dividend of 16 sen per share less 27% income tax in respect of the financial period ended 31 December 2006 will be paid to shareholders on 24 May 2007. The entitlement date for the said dividend shall be 4 May 2007. A Depositor shall qualify for entitlement to the Dividend only in respect of :(a) Shares transferred to the Depositor’s securities account before 4.00 p.m. on 4 May 2007 in respect of transfers. (b) Shares bought on Bursa Malaysia Securities Berhad on cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. BY ORDER OF THE BOARD …………………………………………….. SAW BEE LEAN (MAICSA 0793472) Secretary Kuala Lumpur Date: 2 April 2007 NOTES : 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply. 2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Act are complied with. 3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 3rd Floor, JUSCO Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur not less than 48 hours before the time set for holding the meeting. 5. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney. 6. Explanatory Note on the Special Business Ordinary Resolution 14 on the Proposed Renewal of Shareholders’ Mandate The Ordinary Resolution 14 proposed, if passed, will empower the Directors from the date of the Twenty-Second Annual General Meeting, to deal with the related party transactions involving recurrent transactions of a revenue or trading nature which are necessary for the Company’s day-to-day operations. These recurrent related party transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders. This authority unless revoked or varied at a general meeting, will expire at the next Annual General Meeting of the Company and subject always to provision (ii) of the resolution. The details of the recurrent related party transactions are set out in the Circular to the Shareholders dated 2 April 2007, which is despatched together with this Annual Report. Special Resolution 1 on the Proposed Amendments to the Articles of Association The Special Resolution 1 proposed, if passed, will render the Articles of Association of the Company to be consistent with the new requirements under Chapter 7 of the Listing Requirements of Bursa Malaysia Securities Berhad pursuant to the letter dated 14 December 2006 from Bursa Malaysia Berhad and any prevailing laws, rules, regulations, orders, guidelines and requirements of the relevant authorities. 80 AEON ANNUAL REPORT 2006 STATEMENT ACCOMPANYING NOTICE STATEMENT ACCOMPANYING NOTICE OF TWENTY-SECOND OF TWENTY-SECOND ANNUAL ANNUAL GENERAL MEETING GENERAL MEETING Pursuant to the Paragraph 8.28(2) of the Bursa Securities Listing Requirements appended hereunder are:a. Further details of Directors standing for re-election Details of Directors’ standing for re-election are set out in Directors’ Profiles appearing on pages 20-22 of the Annual Report for the financial period ended 31 December 2006. The remaining part of this page was intentionally left blank. 81 AEON ANNUAL REPORT 2006 PROPOSED AMENDMENTS TO PROPOSED AMENDMENTS TO THE ARTICLES ARTICLES OF ASSOCIATION OFTHE ASSOCIATION APPENDIX I The Articles of Association of the Company are proposed to be amended in the following manner:- 1. Article 2 To delete the following interpretations in the existing Article 2 and substituted as follows:- Existing New “Central Depository - Malaysian Central Depository Sdn. Bhd.” “Depository - Bursa Malaysia Depository Sdn Bhd” “Company - Jaya Jusco Stores Bhd.” “Company - AEON CO. (M) BHD.” “Exchange - Kuala Lumpur Stock Exchange” “Exchange - Bursa Malaysia Securities Berhad” All reference to the abovementioned interpretations throughout the whole Articles of Association be changed accordingly. 2. Article 4 (i) To delete the existing 1st paragraph of Article 4 in its entirety and to adopt the following new paragraph:- Existing 1st paragraph of Article 4 “Subject to the Act, any preference shares may, with the sanction of an ordinary resolution, be issued on the terms that they are, or at the option of the Company are liable, to be redeemed but the total nominal value of the issued preference shares shall not exceed the total nominal value of the issued ordinary shares at any time and the Company shall not issue preference shares ranking in priority above preference shares already issued, but may issue preference shares ranking equally therewith. Preference shareholders shall have the same rights as ordinary shareholders as regards receiving notices, reports and audited accounts, and attending general meetings of the Company;” New 1st paragraph of Article 4 “Subject to the Act, any preference shares may, with the sanction of an ordinary resolution, be issued on the terms that they are, or at the option of the Company are liable, to be redeemed and the Company shall not issue preference shares ranking in priority above preference shares already issued, but may issue preference shares ranking equally therewith. Preference shareholders shall have the same rights as ordinary shareholders as regards receiving notices, reports and audited accounts, and attending general meetings of the Company;” (ii) To delete the existing last paragraph of Article 4 which reads as follows in its entirety:- Existing last paragraph of Article 4 “The holder of a preference share must be entitled to a return of capital in preference to holders of ordinary shares when the Company is wound up.” 82 AEON ANNUAL REPORT 2006 3. Article 50 (2) To delete the existing Article 50 (2) in its entirety and to adopt the following new Article 50 (2):Existing Article 50 (2) “The Company shall request the Central Depository in accordance with the Rules to issue a Record of Depositors as at a date not less than three (3) market days before the general meeting (hereinafter referred to as “the General Meeting Depositors”).” N New Article 50 (2) “The Company shall request the Central Depository in accordance with the Rules to issue a Record of Depositors as at the latest date which is reasonably practicable which shall in any event be not less than three (3) market days before the general meeting (hereinafter referred to as “the General Meeting Depositors”).” 4. Article 62 To delete the existing Article 62 in its entirety and to adopt the following new Article 62:- Existing Article 62 “Subject to any special rights or restrictions for the time being attached to any classes of shares at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or by attorney or by duly authorised representative and on a show of hands every person who is a member or proxy or attorney or representative of a member shall have one vote, and on a poll every member present in person or by proxy or attorney or representative shall have one vote for each share he holds.” N New Article 62 “Subject to any special rights or restrictions for the time being attached to any classes of shares at meetings of members or classes of members, each member entitled to vote may vote in person or by proxy or by attorney or by duly authorised representative and on a resolution to be decided on a show of hands, a holder of ordinary shares or preference shares who is personally present and entitled to vote or by proxy or by attorney or by duly authorised representative shall be entitled to one vote and on a poll a holder of ordinary shares or preference shares who is personally present and entitled to vote or by proxy or by attorney or by duly authorised representative shall be entitled to one vote for each share he holds.” 5. Article 73 To delete the existing Article 73 in its entirety and to adopt the following new Article 73:- Existing Article 73 “All the Directors of the Company shall be natural persons and until otherwise determined by general meeting the number of Directors shall not be less than five (5) or more than thirteen (13). The Board must have a minimum of two (2) Directors or one-third in number, whichever is the higher who are independent directors as defined in the Listing Requirements and if the number of Directors of the Company is not 3 or a multiple of 3, then the number nearest one-third shall be used.” N New Article 73 “Until otherwise determined by general meeting the number of Directors shall not be less than five (5) or more than thirteen (13). The Board must have a minimum of two (2) Directors or one-third in number, whichever is the higher who are independent directors as defined in the Listing Requirements and if the number of Directors of the Company is not 3 or a multiple of 3, then the number nearest one-third shall be used.” 83 AEON ANNUAL REPORT 2006 6. New Article 75A To insert a new Article 75A as follows:“The cost of serving the notice to propose the election of a Director where the nomination is made by a member, shall be borne by the member making the nomination.” 7. Article 84 (a) To delete the existing Article 84 (a) in its entirety and to adopt the following new Article 84 (a):- Existing Article 84 (a) “The office of Director shall become vacant if the Director:becomes bankrupt or makes any arrangement or composition with his creditors generally;” N New Article 84 (a) “The office of Director shall become vacant if the Director:becomes bankrupt or makes any arrangement or composition with his creditors generally during his term of office;” 8. Article 84 (d) To delete the existing Article 84 (d) in its entirety and to adopt the following new Article 84 (d):- Existing Article 84 (d) “The office of Director shall become vacant if the Director:becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental disorder;” N New Article 84 (d) “The office of Director shall become vacant if the Director:becomes of unsound mind or a person whose person or estate is liable to be dealt with in any way under the law relating to mental disorder during his term of office;” 84 AEON ANNUAL REPORT 2006 PROXY FORM No. of Shares AEON CO. (M) BHD. (126926-H) CDS account No. (Incorporated in Malaysia) I/We, .................................................................................................................(name of shareholder as per NRIC, in capital letters) IC No./ID No./Company No............................................................................. (new) .................................................................. (old) of......................................................................................................................................................................................(full address) being a member(s) of the abovenamed Company, hereby appoint..................................................................................................... (name of proxy as per NRIC, in capital letters) IC No. ....................................................... (new)............................................... (old) of .....................................................................................................................................................................................(full address) or failing him/her ....................................................................................................... (name of proxy as per NRIC, in capital letters) IC No. ........................................................................ (new) ............................................................. (old) of ..................................... ........................................................................................................................................................................................ (full address) as my/our proxy to vote for me/us on my/our behalf at the Twenty-Second Annual General Meeting of the Company to be held at Ballroom 1, Level 2, Hotel Nikko 165 Jalan Ampang, 50450 Kuala Lumpur on Tuesday, 24 April 2007 at 10.30 a.m and at any adjournment thereat. My/our proxy is to vote as indicated below : NO. RESOLUTION FOR Ordinary Resolution 1 Adoption of Audited Financial Statements and Reports for the financial period ended 31 December 2006 Ordinary Resolution 2 Declaration of a first and final dividend of 16 per share less 27% income tax for the financial period ended 31 December 2006. Ordinary Resolution 3 Approval of Directors’ Fees Ordinary Resolution 4 Re-election of Dato’ Abdullah bin Mohd Yusof Ordinary Resolution 5 Re-election of Mr. Toshiji Tokiwa Ordinary Resolution 6 Re-election of Mr. Tatsuichi Yamaguchi Ordinary Resolution 7 Re-election of Mr. Nagahisa Oyama Ordinary Resolution 8 Re-election of Mr. Masato Yokoyama Ordinary Resolution 9 Re-election of Datuk Ramli bin Ibrahim Ordinary Resolution 10 Re-election of Brig. Jen (B) Dato’ Mohd Idris bin Saman Ordinary Resolution 11 Re-election of Datuk Zawawi bin Mahmuddin Ordinary Resolution 12 Re-election of Dato’ Chew Kong Seng Ordinary Resolution 13 Re-appointment of Messrs KPMG Desa Megat & Co. Ordinary Resolution 14 Proposed Renewal of Existing Shareholders’ Mandate for the Recurrent Related Party Transactions of a Revenue or Trading Nature Special Resolution 1 Proposed Amendments to the Articles of Association AGAINST ORDINARY BUSINESS SPECIAL BUSINESS [Please indicate with an “X” in the spaces provided whether you wish your votes to be cast for or against the resolutions. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit.] For appointment of two proxies, percentage of shareholdings to be represented by the proxies: ........................................................................................... Signature: Shareholder or Common Seal Dated this............................day of..............................2007 No. of shares Percentage % Proxy 1 ................................................................................. Proxy 2 % Total 100% NOTE : 1. A member entitled to attend and vote at the meeting is entitled to appoint one or more proxies to attend and vote in his stead. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply. 2. A member shall be entitled to appoint more than one (1) proxy to attend and vote at the same meeting, provided that the provisions of Section 149(1)(c) of the Act are complied with. 3. Where a member appoints more than one (1) proxy, the appointment shall be invalid unless he specifies the proportions of his shareholdings to be represented by each proxy. 4. The instrument appointing a proxy must be deposited at the Registered Office of the Company at 3rd Floor, JUSCO Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur not less than 48 hours before the time set for holding the meeting. 5. If the appointor is a corporation, the instrument appointing a proxy must be executed under its Common Seal or under the hand of its attorney. Place Stamp Here The Company Secretary: AEON CO. (M) BHD. (Company No. 126926-H) 3rd Floor, JUSCO Taman Maluri Shopping Centre, Jalan Jejaka, Taman Maluri, Cheras, 55100 Kuala Lumpur.
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