Annual Report 2009

Transcription

Annual Report 2009

DRB-HICOM Berhad (203430-W) (Incorporated in Malaysia)
(Incorporated in Malaysia)
Meeting the Challenge
The Tangram’s dissection puzzle, comprising seven flat shapes of a square, five right triangles and
one parallelogram challenges the mind to construct infinite design possibilities using all seven pieces
without overlapping.
Its analogy represent DRB-HICOM Berhad’s ability to reinvent strategies by utilising the values of available
resources with innovative boldness, in meeting the challenge of change.
Annual Report 2009
By being decisive, the Group will emerge as a resilient, dynamic and sustainably diversified
company of choice, in the transition of its services driven operations, with the synergy of
automotive & defence, and property competencies.
Level 5, Wisma DRB-HICOM
No. 2, Jalan Usahawan U1/8
Seksyen U1, 40150 Shah Alam
Selangor Darul Ehsan
Tel : (03) 2052 8000
Fax: (03) 2052 8099
Annual Report 2009
www.drb-hicom.com
services
automotive
Our single mindedness and
synergistic strength in diversity
has been the bedrock of our
ability, in transforming and
generating profitability beyond
services par excellence.
Leveraging on our cohesive
global partnerships will be
decisive in delivering the
choices of our products, to
the levels of demands and
needs of quality discerning
customers.
property & infrastructure
The property market will be
defined by developers who
possess a distinctive reputation
built on outstanding designs,
with a foundation of balance
and exclusivity in finishings.
Annual Report 2009
Definition of the Tangram
Originating from ancient China, and adopted by the west, the Tangram set continues to fascinate the
world of mathematicians, authors, intellectuals and leaders, due to its engaging, innovative and
creative thought provoking puzzle.
Its enduring qualities has made it a timeless icon in the annals of history since the
early seventeenth century, having a dissection of seven pieces, with the potential for
infinite possibilities in constructing geometric forms and shapes.
our vision
To be Number 1 and
continuously excel
in all that we do.
mission statement
To lead in the growth of
the Nation in the areas of
DRB-HICOM’s Core BusinessES.
our shared values
• Excellence
• Decorum
• Teamwork
• Integrity
• Innovation
• Quality
• Transparency
002
DRB-Hicom Berhad (203430-W)
Annual Report 2009
2009
036
annual
report
contents
046
statutory reporting
005 - 009
006 Group’s Five Years Financial Highlights
005 Corporate Profile
008 Notice of Annual General Meeting
Corporate information
012 - 031
014 Financial Calendar 015 Corporate Information
018 Profile of Directors 024 Management Team
028 Group Corporate Structure 030 Group Corporate Structure by Sector
016 Board of Directors
performance review
036 Chairman’s Statement
044 Group Managing Director’s Review of Operations
046 Automotive Sector 056 Services Sector 064 Property & Infrastructure Sector
034 - 071
044
064
076
056
corporate responsibility
076 Corporate Social Responsibility
080 Caring for the Environment 082 Calendar of Events
074 - 091
078 Our People
Corporate governance
095 Statement on Corporate Governance
094 - 114
104 Statement on Internal Control 106 Audit Committee Report 110 Additional Compliance Information
114 Statement of Directors’ Responsibility
financial Statements
115 - 234
Other Information
235 - 241
116 Financial Statements
237 Analysis of Shareholdings
236 Share Movement Chart
240 Material Properties of DRB-HICOM Group • Proxy Form
004
Annual Report 2009
scenes
behind the
“This company was founded on excellence,
teamwork, integrity, innovation and quality
and you will find all these qualities in the
employees here at DRB-HICOM Berhad.”
“ This job has made it possible for
me to balance my family life and
a career that I love.”
Ahmad Syukri Abd. Rahman
Assistant Manager, Human Resource
Mimi Aisyah Chye Abdullah
Senior Manager, Corporate Planning
“ DRB-HICOM has offered me many
opportunities to grow, both personally
and professionally.”
Fauzila Thani
Executive Secretary, Group Chief Financial
Officer’s Office
“Everyone is valued and has the chance
to put their ideas across. DRB-HICOM is a
great company to work for.”
Khairul Anuar bin Yaakob
Despatch Clerk, Corporate Secretarial
“I have never needed to move to a competitor
to better my prospects, without doubt
DRB-HICOM put people first.”
Mohameed Faisal Syed Ibrahim
Assistant Manager, Financial Services
005
”I would not hesitate to recommend
DRB-HICOM to a friend who wants to
make a start in the industry. You get the
best technical and management skills
training here for a long term career.”
“The company has a great ability to
identify people’s strengths when placing
them into roles. There are always
opportunities opening up, and staff are
recognised as assets.”
Fauziah Baba
Executive Secretary, Corporate Communications &
Investor Relations
Ismail Hassan
Senior Clerk, Corporate Secretarial
“Some of the things I appreciate most
are that we have very high standards,
a wonderful team approach and highly
skilled professionals.”
Munirah Osman
Executive Secretary, Corporate Secretarial
corporate
profile
“ I still get excited about coming
to work! I still feel that the Group
has a real personal touch despite
the size and growth.”
“DRB-HICOM is growing rapidly and
breaking into new markets. Keeping
on top of emerging technology is
one of the great challenges.”
Norman Shah
Anuari Abu
Coordinator, Corporate Communications &
Investor Relations
Executive, Treasury
DRB-HICOM BERHAD IS ONE OF MALAYSIA’S LEADING
COMPANIES LISTED ON THE MAIN Market OF BURSA
MALAYSIA SECURITIES BERHAD, PLAYING AN INTEGRAL
ROLE IN THE NATION’S ROAD TO INDUSTRIALISATION.
Services
The rapidly growing service-based industry represents new
opportunities for DRB-HICOM. Our interests amongst others include
environmental management, vehicle inspection, airport ground
handling, insurance and Islamic banking and operations and
maintenance of the Tanjung Bin power plant.
We are diversified yet focused, and have interests in key sectors of the economy mainly:Automotive
The Group’s leadership within this sector is reflected as an integrated automotive
company through niche segmentation and continued strategic alliances with
renowned global names such as Honda, Mitsubishi, Suzuki, Isuzu and Audi.
DRB-HICOM continuously develop new products to penetrate new markets in the
passenger, commercial and defence vehicle sectors and seek new alliances to strengthen
our base further.
Property & Infrastructure
DRB–HICOM is extensively involved in retail, commercial and
residential property development, engineering and infrastructure,
and has made strong inroads in the construction sector.
DRB-HICOM will continue to look for opportunities that
will benefit the Group and the country.
operating
revenue
dividend
per share
6billio
.1
basic ear
nings
per sha
re
15.833
RM
n
47.41
sen
Group’s five years
financial
highlights
sen
2005 2006 2008 2009
RM’000 RM’000 RM’000 RM’000 RM’000
4,506,595 3,522,835 2,905,421 4,012,379 6,101,427
276,702 (196,744)
187,131 376,073 774,943
14.39 (20.72)
9.47 29.02 47.41
3.00 2.00 3.50 5.00 15.833
8,628,345 8,544,283 8,232,218 9,329,041 21,515,128
Operating Revenue
Profit/(Loss) Before Taxation
Earnings/(Loss) Per Share (sen) (Basic)
Dividend Per Share^ (sen)
Total Assets
profit/(loss) before taxation (RM’000)
basic earnings/(loss) per share (sen)
2008
2009
2005
2006
29.02
9.47
14.39
376,073
187,131
276,702
4,012,379
2,905,421
2007
(20.72)
2006
(196,744)
2005
3,522,835
4,506,595
6,101,427
47.41
774,943
operating revenue (RM’000)
2007
2007
2008
2009
2005
2006
2007
2008
2009
007
lders’
shareho
total
assets
RM
billion
6
1
.
4
s
net asrseet
per sha
RM 2.15
21.52
billion
RM
2005 2006 2008 2009
RM’000 RM’000 RM’000 RM’000 RM’000
2,649,215 2,462,190 2,601,396 2,911,368 4,160,744
2.69 2.46 2.58 2.89 2,720,095 2,624,787 2,255,121 2,229,492 1,505,994
1.03 1.07 0.87 0.77 0.36
Shareholders’ Equity
Net Assets Per Share (RM)
Total Borrowings
Gearing Ratio (Times)
equity
2007
2.15*
^ Dividend per share (gross) consists of interim and final dividend declared and proposed for the designated financial year.
* Based on enlarged share capital of 1,933,237,051 ordinary shares.
2008
2006
2007
2.89
2.15*
2.58
2.46
4,160,744
2005
2,911,368
2,649,215
2009
2,601,396
2007
2,462,190
8,232,218
21,515,128
8,544,283
2006
9,329,041
8,628,345
2005
net assets per share (RM)
2.69
shareholders’ equity (RM’000)
total assets (RM’000)
2008
2009
2005
2006
2007
2008
2009
008
Annual Report 2009
notice of
annual general
meeting
NOTICE IS HEREBY GIVEN that the Nineteenth Annual General Meeting of DRB-HICOM Berhad (“the Company”)
will be held at the Glenmarie Ballroom, Holiday Inn Glenmarie Kuala Lumpur, No. 1, Jalan Usahawan U1/8,
Seksyen U1, 40250 Shah Alam, Selangor Darul Ehsan on Thursday, 10 September 2009 at 10.00 a.m.
for the following purposes:ORDINARY BUSINESS
1.To receive and adopt the Audited Financial Statements for
the financial year ended 31 March 2009 together with the
Reports of Directors and Independent Auditors thereon.
(Resolution 1)
2.To approve the declaration of a final gross dividend of
2.5 sen per share, less taxation of 25% for the financial year
ended 31 March 2009.
(Resolution 2)
3.To re-elect the following Directors who retire in accordance
with the Company’s Articles of Association:
Article 79 YBhg Dato’ Ibrahim bin Taib
(Resolution 3)
YBhg Dato’ Noorrizan binti Shafie
(Resolution 4)
Mr Ooi Teik Huat
Article 85 (Resolution 5)
4.To consider and if thought fit, to pass the following Ordinary
Resolution in accordance with Section 129 of the Companies
Act, 1965:
“THAT YBhg Datuk Haji Abdul Rahman bin Mohd Ramli,
retiring pursuant to Section 129 of the Companies Act, 1965,
be and is hereby re-appointed a Director of the Company to
hold office until the next Annual General Meeting.”
(Resolution 6)
5.To re-appoint Messrs PricewaterhouseCoopers as Auditors
of the Company and to authorise the Directors to fix their
remuneration.
(Resolution 7)
(a) the conclusion of the next annual general meeting of
the Company (“AGM”) (following the general meeting at
which the Proposed Mandate is passed), at which time
it shall lapse unless by an ordinary resolution passed at
the forthcoming AGM, the authority is renewed, either
unconditionally or subject to conditions;
(b) the expiration of the period within which the next AGM
is required to be held pursuant to Section 143(1) of
the Companies Act, 1965 (but must not extend to such
extension 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 of the Company in general meeting,
whichever is earlier,
SPECIAL BUSINESS
6.To consider and if thought fit, to pass the following Ordinary
Resolution:
Proposed Shareholders’ Mandate for Recurrent Related
Party Transactions of A Revenue or Trading Nature (“RRPTs”)
“THAT pursuant to Paragraph 10.09 of the Bursa Securities
Main Market Listing Requirements, the Proposed Mandate
be and is hereby granted in respect of the existing and new
RRPTs (all defined terms shall bear the meaning set out in
the Circular to Shareholders of DRB-HICOM Berhad dated 19
August 2009, hereinafter referred to as “the Circular”), namely
to allow the recurrent related party transactions of a revenue
or trading nature, which are necessary for the day-to-day
operations of the DRB-HICOM Group, to be entered into by
relevant companies in the DRB-HICOM Group in the ordinary
course of business, at anytime during the Mandate Period,
provided that such transactions are entered into at arm’s
length basis and on normal commercial terms which are not
more favourable to the related parties than those generally
available to the public, and are not to the detriment of the
minority shareholders of the Company, the particulars of such
RRPTs are set out in Section 2.2 of the Circular AND THAT
the authority conferred by this resolution shall commence
immediately upon the passing of this Ordinary Resolution and
shall continue to be effective and in force until:-
AND THAT the Directors of the Company or any one of them be
authorised to complete and do all such acts, deeds and things
(including without limitation, to execute such documents as
may be required to give effect to the RRPTs) in such manner
as they may deem expedient or necessary in connection with
this Ordinary Resolution.”
(Resolution 8)
NOTICE OF DIVIDEND PAYMENT
NOTICE IS HEREBY GIVEN that the final gross dividend of 2.5 sen
per share, less taxation of 25% in respect of the financial year
ended 31 March 2009, if approved by the shareholders at the
Annual General Meeting, will be paid on 8 October 2009 to the
shareholders whose names appear in the Record of Depositors of
the Company at the close of business on 16 September 2009.
009
A depositor shall qualify for entitlement to the dividend only in respect of:(a)Shares deposited into the depositor’s securities account before 12.30 p.m. on 14 September 2009 in
respect of shares exempted from mandatory deposit;
NOTES:1. Proxy
a.A member entitled to attend the meeting may appoint not more than two (2) proxies who
may but need not be a member of the Company.
(b)Shares transferred into the depositor’s securities account before 4.00 p.m. on 16 September 2009 in
respect of transfers; and
b.The instrument appointing a proxy shall be in writing under the hand of the appointor or
his attorney duly authorised in writing or, if the appointor is a corporation, either under its
common seal or under the hand of an officer or attorney duly authorised in writing.
(c)Shares bought on Bursa Malaysia Securities Berhad on a cum-entitlement basis according to the Rules
of Bursa Malaysia Securities Berhad.
c.The instrument appointing a proxy together with the power of attorney or other authority,
if any, under which it is signed or a certified copy thereof, shall be deposited at the Share
Registrar’s Office, Symphony Share Registrars Sdn Bhd, Level 26, Menara Multi-Purpose,
Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than forty-eight
(48) hours before the time set for holding this meeting.
By Order of the Board
CHAN CHOY LIN (MIA 3930)
Company Secretary
2. Explanatory Note On Special Business:-
Shah Alam, Selangor Darul Ehsan
19 August 2009
The Proposed Resolution 8, if passed will enable the Company and/or its subsidiaries to enter
into Recurrent Related Party Transactions of a revenue or trading nature which are necessary
for the Group’s day-to-day operations. This authority unless revoked or varied at a general
meeting will expire at the next Annual General Meeting.
statement
accompanying
notice of annual
general meeting
roposed Shareholders’ Mandate For Recurrent Related Party Transactions (“RRPTs”)
P
(Resolution 8)
Names of Directors who are standing for re-election/re-appointment:Under Article 79 of the Company’s Articles of Association
YBhg Dato’ Ibrahim bin Taib
YBhg Dato’ Noorrizan binti Shafie
Under Article 85 of the Company’s Articles of Association
Mr Ooi Teik Huat
Under Section 129 of the Companies Act, 1965
YBhg Datuk Haji Abdul Rahman bin Mohd Ramli
T he details of the abovenamed Directors who are standing for re-election/re-appointment are set out in the Directors’ Profile (pages 18 to 23 of the
Annual Report).
010
Annual Report 2009
Creating
potential for
partnerships
Reaching long-term objectives is about staying ahead with
the right partnerships, and having the right determination and
mindset to make it work.
012
Annual Report 2009
Corporate information
013
014 Financial Calendar 015 Corporate Information
018 Profile of Directors 024 Management Team
028 Group Corporate Structure 030 Group Corporate Structure by Sector
016 Board of Directors
014
Annual Report 2009
financial
calendar
FINANCIAL YEAR END
31 March 2009
ANNOUNCEMENT OF RESULTS
First Quarter
29 August 2008
dividend
Second Quarter
10.0 Sen per share
26 November 2008
Third Quarter
26 February 2009
Fourth Quarter
28 May 2009
Interim (Special)
Announcement date:
2 September 2008
entitlement date:
15 September 2008
payment date:
PUBLISHED ANNUAL REPORT
AND FINANCIAL STATEMENTS
19 August 2009
ANNUAL GENERAL MEETING
10 September 2009
26 September 2008
Final
Announcement date:
28 May 2009
entitlement date:
16 September 2009
payment date:
8 October 2009
Directors
015
Dato’ Syed Mohamad bin Syed Murtaza
Chairman/Senior Independent Non-Executive Director
Datuk Haji Mohd Khamil bin Jamil
Group Managing Director
Dato’ Noorrizan binti Shafie
Non-Independent Non-Executive Director
Dato’ Ibrahim bin Taib
REMUNERATION COMMITTEE
REGISTRAR
Chairman
Symphony Share Registrars Sdn Bhd
Level 26, Menara Multi-Purpose
Capital Square
No. 8 Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel : (03) 2721 2222
Fax : (03) 2721 2530/31
E-mail: [email protected]
Members
Datuk Haji Abdul Rahman bin Mohd Ramli
Ong Ie Cheong
NOMINATION COMMITTEE
Independent Non-Executive Director
Chairman
AUDITORS
Ong Ie Cheong
PricewaterhouseCoopers
Chartered Accountants
Level 10, 1 Sentral
KL Sentral, Jalan Travers
50704 Kuala Lumpur
Tel : (03) 2173 1188
Fax : (03) 2173 1288
Tan Sri Marzuki bin Mohd Noor
Members
Ooi Teik Huat
corporate
information
as at 24 July 2009
AUDIT COMMITTEE
Chairman
SECRETARY
Chan Choy Lin (MIA 3930)
Tel : (03) 2052 7695
Fax : (03) 2052 7696
E-mail : [email protected]
REGISTERED OFFICE
Tel : (03) 2052 8000
Fax : (03) 2052 8099
WEBSITE
Members
www.drb-hicom.com
Ong Ie Cheong
Ooi Teik Huat
INVESTOR RELATIONS
Tel : (03) 2052 8000
Fax : (03) 2052 7891
E-mail: [email protected]
PRINCIPAL BANKERS
CIMB Bank Berhad
Malayan Banking Berhad
AmBank Berhad
RHB Bank Berhad
Bank Kerjasama Rakyat Malaysia Berhad
Affin Bank Berhad
PRINCIPAL SOLICITOR
Naqiz & Partners
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
(Listed since 4 September 1992)
Stock Code : 1619
AGM HELPDESK
Tel
Fax
: (03) 2052 8936/7695
: (03) 2052 8099
016
Annual Report 2009
board of
directors
from left:
017
Ong Ie Cheong
Ooi Teik Huat
018
profile
of directors
YBhg Dato’ Syed Mohamad bin Syed Murtaza, a Malaysian,
aged 61, was appointed to the Board on 28 October 2005 and
was subsequently appointed Chairman on 1 July 2009. He is also
Chairman of the Remuneration and Nomination Committees.
Dato’ Syed Mohamad has more than 40 years of vast experience
in the business, corporate and entrepreneurial exposures. After
completing his education at Penang Free School, he then joined
Kah Motors and has since been appointed to several key positions
in various reputable business and non-business organisations both
locally and internationally. He has also served several reputable
multinational companies such as Shell Malaysia and was the
Chairman of Penang Port Commission. He is well experienced
and diversified in various businesses ranging from automotive,
manufacturing, exports, trading, properties and oil and gas.
Currently, Dato’ Syed Mohamad is the Managing Director of Amstrong
Auto Parts Sdn. Bhd. He also heads Penang Tourists Centre Bhd,
MITTAS Bhd, Motorcycle, Scooter Assembly & Distributor Association
of Malaysia and Usains Group of Companies. He is the President
of The Federation of Asian Motorcycle Industries and Steering
Committee of International Motorcycle Manufacturers Association.
Dato’ Syed Mohamad is the Chairman of Master-Pack Group
Berhad (formerly known as Hunza Consolidation Berhad), HICOM
Holdings Berhad, HICOM Berhad and also sits on the boards of
Yayasan Bumiputra Pulau Pinang Bhd, Boon Siew Credit Bhd,
Tourism Entrepreneur Centre Bhd, PBA Holdings Berhad and several
private limited companies. In addition, he has held many other
appointments at state and national levels.
Dato’ Syed Mohamad does not have any family relationship with
any other Director and/or major shareholder of the Company and
has no conflict of interest with the Company. He has had no
convictions for offences within the past ten years.
Dato’ Syed Mohamad attended nine out of ten Board Meetings of
the Company held in the financial year ended 31 March 2009.
YBhg Datuk Haji Mohd Khamil bin Jamil, a Malaysian, aged 53,
was appointed to the Board on 19 July 2005 and became Group
Managing Director on 1 March 2006. He holds a Bachelor of Laws
(Honours) Degree from University of London and is a Barrister-at-Law
at Gray’s Inn, England and was called to the English Bar in 1983.
Datuk Haji Mohd Khamil had his first executive career with Bank
Bumiputra Malaysia Berhad from August 1980 until December 1989.
He was called to the Malaysian Bar in September 1990 and was a
practicing partner of several legal firms before venturing into business
in 2001.
Datuk Haji Mohd Khamil also sits on the boards of Edaran Otomobil
Nasional Berhad, HICOM Holdings Berhad, HICOM Berhad, Horsedale
Development Berhad, Bank Muamalat Malaysia Berhad and several
private limited companies.
Datuk Haji Mohd Khamil is a Director and has a 10% shareholding
in Etika Strategi Sdn. Bhd., being the holding company of
DRB-HICOM Berhad.
Datuk Haji Mohd Khamil does not have any family relationship with
any other Director and/or major shareholder of the Company and has
no conflict of interest with the Company. He has had no convictions
for offences within the past ten years.
Datuk Haji Mohd Khamil attended all ten Board Meetings of the
Company held in the financial year ended 31 March 2009.
020
profile of directors (Continued)
YBhg Dato’ Noorrizan binti Shafie, a Malaysian,
aged 53, was appointed to the Board on 28 November
2006. She is a member of the Audit Committee. She
holds a Bachelor of Economics (Honours) Degree and
Master of Business Administration from the National
University of Malaysia (UKM).
YBhg Dato’ Ibrahim bin Taib, a Malaysian, aged 55,
was appointed to the Board on 18 March 2004. He is
a member of the Nomination Committee. He holds a
Bachelor of Laws (Honours) Degree from the University
of Malaya, Malaysia and a Master of Laws (LLM) from
University of London.
Dato’ Noorrizan is currently the Under Secretary,
Monitoring and Control Division, Treasury, Ministry of
Finance. She started her career in the Civil Service in
1981 and has served in various positions with Economic
Planning Unit, Prime Minister’s Department, Public
Services Department and Ministry of Finance.
Dato’ Ibrahim started his career in Judicial Legal Service
in 1978 as a Magistrate in the Magistrate Court, Jalan
Duta, Kuala Lumpur. Thereafter, he was transferred to
Magistrate Court, Segamat. In 1982, he was a Legal
Advisor with the Road Transport Department. Later in
1986, he was posted to the Ministry of Human Resources
as a Legal Advisor. In October 1989, he was attached
to the Attorney-General Chambers as a Deputy Public
Prosecutor for Selangor. In 1992, he served as a Judge
in the Session Court, Kota Bharu. In July 1992, he was
posted to Employees Provident Fund Board and currently
holds the position of Deputy Chief Executive Officer. He
sat on the Board of Kumpulan Wang Amanah Pencen
until his resignation on 28 February 2007.
Dato’ Noorrizan also sits on the board of HICOM Holdings
Berhad.
Dato’ Noorrizan is a Non-Independent Director nominated
by the Ministry of Finance. She does not have any
family relationship with any other Director and/or major
shareholder of the Company and has no conflict of
interest with the Company. She has had no convictions
Dato’ Ibrahim also sits on the boards of Bandar
Eco-Setia Sdn. Bhd., Hartanah Progresif Sdn. Bhd. and
Iskandar Investment Berhad.
Dato’ Noorrizan attended seven out of ten Board
Meetings of the Company held in the financial year
ended 31 March 2009.
Dato’ Ibrahim is a Non-Independent Director nominated
by the Company’s substantial shareholder, the Employees
Provident Fund Board. He does not have any family
relationship with any other Director and/or major
interest with the Company. He has had no convictions
Dato’ Ibrahim attended nine out of ten Board Meetings
of the Company held in the financial year ended
31 March 2009.
Non-Idependent Non-Executive Director
YBhg Datuk Haji Abdul Rahman bin Mohd Ramli,
a Malaysian, aged 70, was appointed to the Board
on 28 October 2005. He is the Chairman of the Audit
Committee and member of the Remuneration and
Nomination Committees. He is a member of the Institute
of Chartered Accountants in Australia (ACA), the Malaysian
Institute of Certified Public Accountants (MICPA) and the
Malaysian Institute of Accountants (MIA).
Datuk Haji Abdul Rahman was General Manager of
United Asian Bank Berhad, Group Managing Director of
Pernas Sime Darby Sdn. Bhd., Group Chief Executive
of Golden Hope Plantations Berhad and Chairman of
Johore Tenggara Oil Palm Berhad prior to joining the
DRB-HICOM Board.
Datuk Haji Abdul Rahman is the Chairman of Horsedale
Development Berhad and Kenyir Splendour Berhad. He also
sits on the boards of Kuala Lumpur – Kepong Berhad.
Datuk Haji Abdul Rahman does not have any family
relationship with any other Director and/or major
interest with the Company. He has had no convictions
Datuk Haji Abdul Rahman attended seven out of ten
Board Meetings of the Company held in the financial
year ended 31 March 2009.
022
profile of directors (Continued)
Mr Ong Ie Cheong, a Malaysian, aged 68, was appointed
to the Board on 28 October 2005. He is also a member
of the Audit and Remuneration Committees. He holds
a Bachelor of Science Degree from the University of
Malaya, Malaysia.
YBhg Tan Sri Marzuki bin Mohd Noor, a Malaysian,
aged 61, was appointed to the Board on 28 November
2006. He holds a B.A. (Honours) from the University of
Malaya, Malaysia.
Tan Sri Marzuki started his career in the Administrative
and Diplomatic Service of Malaysia in 1972 and retired
from the service in August 2006. From 1972 to 1988,
he has served as Second/First Secretary at the Embassy
of Malaysia in Rome and in Baghdad, Assistant High
Commissioner in Chennai, India, Commissioner in
Hong Kong and later as Minister-Counsellor/Minister in
Brussels, Belgium in 1988.
Mr Ong was the Executive Chairman of PPB Group
Bhd, Managing Director of Central Sugars Refinery Sdn.
Bhd. and a Board member of PPB Oil Palms Berhad
and Tradewinds (M) Berhad prior to joining the
DRB-HICOM Board.
Mr Ong also sits on the boards of HICOM Holdings Berhad,
HICOM Berhad and several private limited companies of
DRB-HICOM Berhad. He has 20,000 ordinary shares
(indirect interest) in the Company.
In 1990, Tan Sri Marzuki was appointed as Deputy
Director General ASEAN I, Ministry of Foreign Affairs
Malaysia and later in 1992 as Ambassador of
Malaysia to Argentina with concurrent accreditation to
Paraguay and Uruguay. In 1996, he was appointed as
High Commissioner of Malaysia to India (concurrently
accredited as Ambassador to Nepal). He was also the
Ambassador of Malaysia to Japan from 1999 to July
2006 before his retirement.
Mr Ong does not have any family relationship with any
other Director and/or major shareholder of the Company
and has no conflict of interest with the Company.
He has had no convictions for offences within the past
ten years.
Mr Ong attended all ten Board Meetings of the Company
held in the financial year ended 31 March 2009.
Tan Sri Marzuki is the Chaiman of Edaran Otomobil
Nasional Berhad and also sits on the boards of Horsedale
Development Berhad, HICOM Holdings Berhad and several
private limited companies.
Tan Sri Marzuki does not have any family relationship
with any other Director and/or major shareholder of
the Company and has no conflict of interest with the
Company. He has had no convictions for offences within
the past ten years.
Tan Sri Marzuki attended all ten Board Meetings of the
Company held in the financial year ended 31 March 2009.
Ong Ie Cheong
Mr Ooi Teik Huat, a Malaysian, aged 49, was appointed
to the Board on 1 November 2008. He is a member of the
Audit Committee. He is a member of Malaysian Institute
of Accountants and CPA Australia and holds a Bachelor of
Economics degree from Monash University, Australia.
Mr Ooi started his career in 1984 with Messrs Hew & Co.
(now known as Messrs Mazars), Chartered Accountants,
before joining Malaysian International Merchant Bankers
Berhad (now known as MIMB Investment Bank Berhad)
in 1989. Between 1993 and 1996, he was the Head of
Corporate Finance at Pengkalen Securities Sdn. Bhd.
(now known as PM Securities Sdn. Bhd.).
Mr Ooi also sits on the boards of Tradewinds Plantations
Berhad, Edaran Otomobil Nasional Berhad, MMC
Corporation Berhad, Johor Port Berhad, Tradewinds
(M) Berhad, Zelan Berhad and several private limited
companies. He is presently a Director of Meridian
Solutions Sdn. Bhd.
Mr Ooi does not have any family relationship with any
other Director and/or major shareholder of the Company
and has no conflict of interest with the Company.
He has had no convictions for offences within the past
ten years.
Mr Ooi attended four out of four Board Meetings
of the Company held in the financial year ended
31 March 2009 following his appointment to the Board on
1 November 2008.
Ooi Teik Huat
024
Annual Report 2009
management
team
025
from left:
Amir Salleh
Group Director, Property & Infrastructure
Datuk William Chong Wei Yoon
Group Director, Assigned Business
Lukman bin Ibrahim
Group Chief Financial Officer
Abdul Malek bin Abdul Majid
Group Director, Human Resource
026
Annual Report 2009
management team (Continued)
027
from left:
Khalid bin Abdol Rahman
Group Director, Corporate & Services
Chan Choy Lin, Carol
Head, Corporate Secretarial
Mohammed Shukor bin Ismail
Head, Internal Audit
Hamdan bin Ahammu
Head, Corporate Communications
& Investor Relations
Nik Hamdam bin Nik Hassan
Group Director, Automotive
Dato’ Haji Salamat bin Wahit
Head, Institutional Liaison and Business
Development
Mohd Aslam bin Farikullah
Head, Automotive Component
and Engineering
Annual Report 2009
028
Group corporate
structure
(Operating Companies) as at 31 March 2009
Bank Muamalat
Malaysia Berhad
E.I. : 70%
PUSPAKOM
Sdn. Bhd.
E.I. : 100%
Puspakom Teknik
Sdn. Bhd.
E.I. : 100%
Muamalat Invest
Sdn. Bhd.
E.I. : 70%
Flora Areana
Sdn. Bhd.
E.I. : 100%
Muamalat Venture
Sdn. Bhd.
E.I. : 70%
Rangkai Positif
Sdn. Bhd.
E.I. : 100%
Multi Automotive Service
and Assist Sdn. Bhd.
E.I. : 55%
Alam
Flora
Sdn. Bhd.
E.I. : 60.53%
KL Airport
Services
Sdn. Bhd.
E.I. : 100%
KLAS Engineering
Services Sdn. Bhd.
E.I. : 100%
HICOM-HONDA
Manufacturing Malaysia
Sdn. Bhd.
E.I. : 48%
DRB-HICOM Auto
Solutions Sdn. Bhd.
E.I. : 100%
Gadek (Malaysia)
Berhad
E.I. : 100%
Uni.Asia Capital
Sdn. Bhd.
E.I. : 51%
Mega Consolidated
Sdn. Bhd.
E.I. : 100%
Uni.Asia Life
Assurance Berhad
E.I. : 51%
HICOM Holdings
Berhad
E.I. : 100%
Ladang Gadek
Development
Sdn. Bhd.
E.I. : 100%
Ladang Kupang
Development
Sdn. Bhd.
E.I. : 100%
Uni.Asia General
Insurance Berhad
E.I. : 34.73%
HICOM
Engineering
Sdn. Bhd.
E.I. : 100%
USF-HICOM
(Malaysia)
Sdn. Bhd.
E.I. : 100%
PHN
Industry
Sdn. Bhd.
E.I. : 62.50%
Scott & English
(Malaysia)
Sdn. Bhd.
E.I. : 70%
HICOM United
Leasing Sdn. Bhd.
E.I. : 70%
HICOM-YAMAHA
Sdn. Bhd.
E.I. : 45%
HICOM
Diecastings
Sdn. Bhd.
E.I. : 100%
HICOM-Teck See
Sdn. Bhd.
E.I. : 51%
Scott & English
Trading (Sarawak) Sdn. Bhd.
E.I. : 35.70%
Suzuki Motorcycle
Malaysia
Sdn. Bhd.
E.I. : 29%
HICOM Automotive
Plastics (Thailand) Ltd.
E.I. : 50.99%
ISUZU HICOM
Malaysia
Sdn. Bhd.
E.I. : 49%
HICOM
Polymers Industry
Sdn. Bhd.
E.I. : 100%
Desa
Puchong
Sdn. Bhd.
E.I. : 100%
Oriental Summit
Industries
Sdn. Bhd.
E.I. : 70%
Automotive Components
Engineering Centre Sdn. Bhd.
E.I. : 70%
Bukit Kledek
Development
Sdn. Bhd.
E.I. : 100%
Proton City
Development
Corporation Sdn. Bhd.
E.I. : 60%
Automotive
Corporation
(Malaysia) Sdn. Bhd.
E.I. : 100%
HICOM Automotive Manufacturers
E.I. : 93%
029
Sectorial
Note
AUTOMOTIVE
PROPERTY & INFRASTRUCTURE
SERVICES
INVESTMENT HOLDING
Honda Malaysia
Sdn. Bhd.
E.I. : 34%
Suzuki Malaysia
Automobile Sdn. Bhd.
E.I. : 40%
JOINTLY CONTROLLED ENTITIES /
ASSOCIATED COMPANIES
Motosikal Dan
Enjin Nasional Sdn. Bhd.
E.I. : 70%
DRB-HICOM Defence
Technologies Sdn. Bhd.
E.I. : 100%
Edaran Modenas
Sdn. Bhd.
E.I. : 70%
Edaran
Otomobil
Nasional Berhad
E.I. : 79.05%
Kindly refer to pages 151 to 161 for the full list of
Group companies
Isuzu Malaysia
Sdn. Bhd.
E.I. : 49%
HICOM-Chevrolet
Sdn. Bhd.
E.I. : 49%
Defence Services
Sdn. Bhd.
E.I. : 100%
Comtrac
Sdn. Bhd.
E.I. : 70%
HICOM
Builders
Sdn. Bhd.
E.I. : 100%
SRT-EON Security
Services Sdn. Bhd.
E.I. : 31.62%
EON Properties
Sdn. Bhd.
E.I. : 79.05%
Euromobil
Sdn. Bhd.
E.I. : 79.05%
Comtrac
Trading Sdn. Bhd.
E.I. : 70%
Johnson Controls
Automotive Holding
(M) Sdn. Bhd.
E.I. : 23.72%
EONMobil
Sdn. Bhd.
E.I. : 79.05%
EON Auto Mart
Sdn. Bhd.
E.I. : 79.05%
Comtrac Builders
Sdn. Bhd.
E.I. : 67.90%
Mitsubishi Motors
Malaysia
Sdn. Bhd.
E.I. : 37.94%
Automotive
Conversion Engineering
Sdn. Bhd.
E.I. : 79.05%
Comtrac
Glenview
Sdn. Bhd.
E.I. : 35.70%
Proton Parts Centre
Sdn. Bhd.
E.I. : 36.62%
E.I. DRB-HICOM Group’s Effective Interest
HICOM
Berhad
E.I. : 100%
Glenmarie Cove
Development
Sdn. Bhd.
E.I. : 89.50%
HICOM Megah
Sdn. Bhd.
E.I. : 92.46%
Corwin Holding
Pte. Ltd.
E.I. : 83.21%
HICOM
Properties
Sdn. Bhd.
E.I. : 100%
Kenyir Splendour
Berhad
E.I. : 100%
HICOM Facility
Management Berhad
E.I. : 100%
HICOM Indungan
Sdn. Bhd.
E.I. : 100%
Midea Scott
& English Electronics
Sdn. Bhd.
E.I. : 40%
ZF Steerings
(Malaysia)
Sdn. Bhd.
E.I. : 30%
TRW Steering and
Suspension
E.I. : 20%
Niro Ceramic (M)
Sdn. Bhd.
E.I. : 23.17%
Rebak Island Marina
Berhad
E.I. : 60%
Horsedale
Development Berhad
E.I. : 70.60%
HICOM-Gamuda
Development Sdn. Bhd.
E.I. : 35.30%
Annual Report 2009
030
Group corporate
structure by
sector
Automotive
(Significant Operating
Companies)
as at 31 March 2009
100.00%
HICOM Diecastings Sdn. Bhd.
49.00% Isuzu Malaysia Sdn. Bhd.
100.00%
USF-HICOM (Malaysia) Sdn. Bhd.
48.00% HICOM-HONDA Manufacturing Malaysia Sdn. Bhd.
100.00%
Automotive Corporation (Malaysia) Sdn. Bhd.
45.00% HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.
100.00%
HICOM Engineering Sdn. Bhd.
37.94% Mitsubishi Motors Malaysia Sdn. Bhd.
100.00%
DRB-HICOM Auto Solutions Sdn. Bhd.
36.62% Proton Parts Centre Sdn. Bhd.
100.00%
DRB-HICOM Defence Technologies Sdn. Bhd.
49.00% ISUZU HICOM Malaysia Sdn. Bhd.
100.00%
Defence Services Sdn. Bhd.
49.00% HICOM-Chevrolet Sdn. Bhd.
100.00%
HICOM Polymers Industry Sdn. Bhd.
40.00% Suzuki Malaysia Automobile Sdn. Bhd.
93.00%HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd.
(formerly known as Automotive Manufacturers (Malaysia) Sdn. Bhd.)
34.00% Honda Malaysia Sdn. Bhd.
30.00% ZF Steerings (Malaysia) Sdn. Bhd.
79.05% Edaran Otomobil Nasional Berhad
29.00% Suzuki Motorcycle Malaysia Sdn. Bhd.
79.05% Euromobil Sdn. Bhd.
23.72% Johnson Controls Automotive Holding (M) Sdn. Bhd.
70.00% Oriental Summit Industries Sdn. Bhd.
20.00% TRW Steering and Suspension (Malaysia) Sdn. Bhd.
70.00% Automotive Components Engineering Centre Sdn. Bhd.
70.00% Motosikal Dan Enjin Nasional Sdn. Bhd.
70.00% Edaran Modenas Sdn. Bhd.
62.50% PHN Industry Sdn. Bhd.
51.00% HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.
50.99% HICOM Automotive Plastics (Thailand) Ltd.
Note
Jointly Controlled Entities
100.00%
PUSPAKOM Sdn. Bhd.
100.00%
Rangkai Positif Sdn. Bhd.
100.00%
KL Airport Services Sdn. Bhd.
100.00%
HICOM Facility Management Berhad
70.00% Bank Muamalat Malaysia Berhad
70.00% Scott & English (Malaysia) Sdn. Bhd.
60.53% Alam Flora Sdn. Bhd.
51.00% Uni.Asia Life Assurance Berhad
34.73% Uni.Asia General Insurance Berhad
40.00%Midea Scott & English Electronics Sdn. Bhd.
(formerly known as Scott & English Electronics Sdn. Bhd.)
31.62% SRT-EON Security Services Sdn. Bhd.
Associated Companies
E.I. DRB-HICOM Group’s Effective Interest
Kindly refer to pages 151 to 161 for the Group companies.
100.00%HICOM Builders Sdn. Bhd.
(formerly known as Imatex Sdn. Bhd.)
Property & Infrastructure
services
Subsidiary Companies
100.00%
HICOM Berhad
100.00%
HICOM Properties Sdn. Bhd.
100.00%
HICOM Indungan Sdn. Bhd.
100.00%
Kenyir Splendour Berhad
100.00%
Bukit Kledek Development Sdn. Bhd.
100.00%
Ladang Kupang Development Sdn. Bhd.
100.00%
Ladang Gadek Development Sdn. Bhd.
100.00%
Desa Puchong Sdn. Bhd.
92.46% HICOM Megah Sdn. Bhd.
89.50% Glenmarie Cove Development Sdn. Bhd.
70.60% Horsedale Development Berhad
70.00% Comtrac Sdn. Bhd.
60.00% Proton City Development Corporation Sdn. Bhd.
60.00% Rebak Island Marina Berhad
35.30% HICOM-Gamuda Development Sdn. Bhd.
23.17% Niro Ceramic (M) Sdn. Bhd.
031
032
Annual Report 2009
Delivering
potential for
balance
A company’s foundation of stability and balance reaffirms its
position in being able to deliver profitability and results that will
keep it buoyant on a steady driven course.
034
Annual Report 2009
performance review
035
036 Chairman’s Statement
044 Group Managing Director’s Review of Operations
046 Automotive Sector 056 Services Sector 064 Property & Infrastructure Sector
037
chairman’s
statement
I am pleased to present to you, on behalf of the Board of Directors, the Annual Report of
DRB-HICOM Berhad for the financial year ended 31 March 2009. The strategic realignment and
holdings rationalisation executed through the mandatory general offer for Edaran
Otomobil Nasional Berhad and the acquisitions of Bank Muamalat Malaysia Berhad and
Rangkai Positif Sdn. Bhd. have increased top-line revenue growth by 52% from RM4.0 billion to
RM6.1 billion. The quantum leap we have achieved in the size of the Group sets a new paradigm
for growth and has opened up a wide panorama with exciting opportunities for our future.
An important part of the structured and objective approach we deploy to assess continued investment choices, is to dispose off non-core businesses: those
subsidiaries in which the Group has not been in a position to set the pace and direction. In that category, has been the strategic disposal of the minority
stake the Group held in EON Capital Berhad. The divestment, at a premium price of RM9.55 per share, on 23rd June 2008, just before the onset of the
global downturn, was voted by The Edge as one of the best corporate deals of the year.
The Group’s recorded profit before taxation of RM774.9 million as compared to RM376.1 million in the previous financial year includes an extraordinary gain
of RM567 million on the disposal of EON Capital Berhad, which has been described as other income in the income statement. An important goal, in the
strategic repositioning we have conducted, to create the foundation for sustainable profit, has been to pare down corporate debt. This action has resulted
in the Group reducing its gearing ratio from 0.77 to 0.36 times and increasing the return on shareholder’s equity from 10% to 16%.
GLOBAL
GROWTH
AVIATION
POTENTIAL
all of us are constantly on the lookout for new
opportunities and new markets. we assess each and
every opportunity carefully
Chairman
Annual Report 2009
038
chairman’s statement (Continued)
OVERVIEW
Malaysia’s economic growth fell to 0.1% in the fourth quarter of 2008 and
worsened in the first quarter of 2009, shrinking by 6.2%. As the country’s
exports slumped amid weak global demand, trading conditions for the Group,
in all business sectors, weakened last year.
Automotive, Services and Property & Infrastructure constitute the three business
sectors of the Group. In a change from last year, we are now reporting our
defence interests, previously reviewed separately, under the Automotive sector,
to reflect the change in the business from short-term commission-based sales
to a long-term sustainable special purpose vehicle business.
The consolidation of Edaran Otomobil Nasional Berhad’s results for the full
year has increased our Automotive revenues by 74%. Our Services sector,
comprising the financial and non-financial services, which we recognised as
a star performer in our last report, felt less of an impact from the recession,
and has been strengthened further by recent acquisitions. Our Property &
Infrastructure business, sensitive to the consequences of the sub-prime loans
prevalent in the United States and the clouded global economic outlook, took
a strategic decision, in advance of the decline in demand, to complete and sell
most of their developments in the last quarter of 2008.
LADIES AND GENTLEMEN,
DRB-HICOM Berhad (DRB-HICOM)’s share of the Malaysian Automotive Total
Industry Volume (TIV) increased from 17% in calendar year 2007 to 19% in
2008. Restrategising their position, Edaran Otomobil Nasional Berhad (EON),
a 79.05% subsidiary of the Group, entered into a Memorandum of Understanding
with Proton Holdings Berhad (Proton), on 2 May 2008, to rationalise the existing
Proton-EON distributorship to further strengthen both entities and the national
automobile sector. In connection with this realignment, EON has entered into a
Master Dealership Agreement with Proton Edar Sdn. Bhd. on 8 May 2009.
Governments around the world are taking a prominent role in shaping their
automotive industries, seeking to rejuvenate their economies while also
encouraging consumers to buy cars that consume less fuel. Contributing to
a clean environment has become part of auto-makers’ strategy. Demand
appears to be partly stimulated by scrap grants, and incentives to purchase
Fixing rear body panels on the sub-assembly line for the Suzuki Swift at HICOM
Automotive Manufacturers (Malaysia) Sdn. Bhd. in Pekan, Pahang.
environmental friendly vehicles. Interest in hybrid cars is rising and owing to incentives introduced by our
Government to encourage usage of green technology vehicles, demand for the Civic Hybrid, distributed by our
associate Honda Malaysia Sdn. Bhd., has been encouraging.
With the expected decline in vehicle production due to the current global economic uncertainties, the component
manufacturing subsidiaries are making an intensive effort to diversify into non-auto segments. Our automotive
assembly plant in Pekan, Pahang holds great potential as the nucleus for an automotive hub for the country, and,
spurred by Government incentives, will create more employment and drive a multiplier effect into the surrounding
economy and further afield. The Government is currently reviewing the National Automotive Policy. We are hopeful
that any changes will help improve the competitiveness of local automotive manufacturing companies.
The Group’s Services sector has proven to be resilient and has made a considerable contribution to operating
profits. PUSPAKOM Sdn. Bhd. has a 71 strong branch network to perform inspections twice a year on all
1 million commercial vehicles in the market and carries out another 600,000 inspections on passenger cars
before ownership is transferred. The Government has extended the agreement, which requires complete
nationwide coverage in both urban and rural areas, for another 15 years.
Alam Flora Sdn. Bhd., since 1998, has been signing yearly contracts with individual local authorities to collect
and dispose solid waste. The quality of service has improved two-fold, as measured by the company’s Floracare
system. The company is currently looking forward to signing the concession agreement with the Federal
Government, in respect of the privatisation of solid waste management in Kuala Lumpur, Putrajaya, Selangor,
Pahang, Kelantan and Terengganu.
039
Scenic landscape at Proton
City in Tanjung Malim, Perak where
Proton City Development Corporation
Sdn. Bhd. is developing an integrated
township on 4,000 acres.
The room interior of Deluxe Villa
bedroom, with a view of the sea, at
the Rebak Island Resort, Langkawi.
The resort is managed by Taj Hotels,
Resorts and Palaces.
During the financial year under review, we made two major acquisitions. Bank Muamalat Malaysia Berhad is
licensed under the Islamic Banking Act 1983, and principally engaged in all aspects of Islamic banking and the
provision of related financial services in accordance with Syariah principles. The subsidiaries of the bank are
involved in venture capital and fund management services. Rangkai Positif Sdn. Bhd., the provider of operation
and maintenance services to the Tanjung Bin power plant, has a 25 year concession commencing from
25 September 2006. The fees are based on a fixed amount plus a variable rate linked to electricity demand by
Tenaga Nasional Berhad.
Through careful planning and stringent execution of strategies, the Property & Infrastructure subsidiaries were
able to complete and sell many property developments before the economic downturn. We have reached the end
of a three-year programme of refurbishment of the Group’s hospitality assets. The three hotels are now showing
significant improvement in year-on-year occupancy rates and the Valley Course of the Glenmarie Golf Club is due
to fully reopen in September 2009. The property market is cyclical, and we plan, at this time in the cycle, to
obtain approvals for proposed projects and explore development opportunities while preparing for the upswing in
the economy. Lower interest rates at the start of the recovery will not only contain the cost of construction but
also incentivise buyers considering financing to get a foot on the property ladder.
ACQUISITIONS AND DISPOSALS
On 23 June 2008 the Group completed the disposal of its entire 20.2% equity interest in EON Capital Berhad to
Primus Pacific Partners 1 L. P. for a cash consideration of approximately RM1.34 billion. Of the sale proceeds,
a major portion was used to repay long-term bank borrowings, including Bithaman Ajil Islamic Debt Securities
(BaIDS), helping to reduce the Group’s debt.
On 22 October 2008, the acquisition of a 70% equity interest in Bank Muamalat Malaysia Berhad (Bank
Muamalat) was completed. By buying the controlling stake in Bank Muamalat, the Group is entering into Islamic
banking. In most countries with significant Islamic communities, financial institutions that cater to this segment
are growing faster than conventional banks because of the strong demand among consumers for products and
services that comply with Syariah, the Islamic legal code.
The Group’s acquisition on 22 October 2008 of a 100% equity interest in
Rangkai Positif Sdn. Bhd. (Rangkai Positif) was satisfied by the issuance of
new DRB-HICOM ordinary shares. Rangkai Positif provides operation and
maintenance services to the Tanjung Bin power plant located in the state
of Johor, for a concession period of 25 years. The plant comprises three
coal-fired generating units with a total capacity of 2,100 megawatts and sells
electricity to Tenaga Nasional Berhad.
Pursuant to the Rights Issue undertaken by Alam Flora Sdn. Bhd. (Alam Flora) the
Group subscribed for a total of 24 million new ordinary shares of RM1.00 each.
The Group’s shareholding in Alam Flora increased from 55% to 60.53% in July
2008. The forthcoming privatisation under the Solid Waste and Public Cleansing
Management Act 2007 will put the concession on a more secure footing.
040
Annual Report 2009
chairman’s statement (Continued)
On 8 September 2008, the Group completed the acquisition of an additional
15% equity interest in Motosikal Dan Enjin Nasional Sdn. Bhd. (MODENAS)
from Khazanah Nasional Berhad for a cash consideration of RM24 million. As
a result, the Group’s shareholding in MODENAS increased from 55% to 70%.
HICOM Properties Sdn. Bhd., a wholly-owned subsidiary of the Group, is
acquiring three parcels of freehold land totalling approximately 1,516 acres in
Tebrau, Johor Bahru. The purchase consideration will also include the disposal
of five plantations, which are not part of our core business, comprising
Connemara Estate, Serendah Estate, Bukit Kledek Estate, Ladang Gadek and
Ladang Kupang to the vendors. The completion of the proposed acquisition
is pending the fulfilment of the conditions precedent stated in the share sale
agreement. Our intention is to develop the land, which lies within the Iskandar
region, into a niche lifestyle mixed zone, which will generate sustainable
cashflow over the mid to long term.
FINANCIAL HIGHLIGHTS
I am pleased to report that DRB-HICOM Berhad’s pre-tax profit increased to
RM774.9 million from RM376.1 million for the financial year ended 31 March
2009, inclusive of the exceptional gain registered from the disposal of EON
Capital Berhad. Earnings per share have increased from 29.02 sen to 47.41
sen. DRB-HICOM is recommending a final gross dividend of 2.5 sen per share
for the financial year under review, which together with the interim (special)
dividend of 13.333 sen, less taxation of 25% paid on 26 September 2008,
makes a total dividend of 15.833 sen for the year.
CORPORATE RESPONSIBILITY
DRB-HICOM is developing a Corporate Responsibility (CR) framework to align our social and environmental
efforts to the Group’s corporate strategy, nature of business and expectations of our key stakeholders. Moving
forward, the Group will be looking into measuring and monitoring our CR initiatives across the four dimensions
of environment, community, workplace and marketplace, as well as increasing stakeholder engagement to more
effectively manage our CR efforts. Our corporate citizenship programmes during the year are mentioned further
on in this report.
CORPORATE GOVERNANCE
The Board of Directors of DRB-HICOM fully supports the recommendations
of the Malaysian Code on Corporate Governance, which sets out the broad
principles and best practices for listed companies, to ensure that good
corporate governance is practised, and the Board effectively discharges
its responsibilities to safeguard shareholders’ investments and enhance
shareholders’ value. These structures and processes include the composition
of the board, procedures for the appointment of new directors, remuneration
for directors, the use of board committees and their mandates and activities.
The Board continuously seeks to improve standards of corporate governance
practised throughout the Group and is committed to ensuring that all
stakeholders’ interests are protected and value is increased.
HUMAN RESOURCE DEVELOPMENT
Our people are our priority. We are committed to the development of our staff to ensure their career success
and to bring about immediate and long-term benefits to the organisation and other stakeholders, and ensure a
sustainable future for the Group. We will treat our people with respect, dignity and fairness and endeavour to
attract, develop and retain qualified, creative and innovative people. DRB-HICOM Leadership Competencies and
talent management goals mandate the structures which will be enhanced to improve the effectiveness of our
employees. These include assessing capabilities, staff redeployment and rotation and retraining of workforce to
enhance their mobility. Respect and compliance with our values continue to dominate at both the professional
and personal level.
041
AWARDS AND RECOGNITION
During the year under review, the Group continued to receive awards and
recognition for manufacturing, brand, governance and outstanding performance
for several of its business activities as well as its employee welfare and
corporate responsibility programmes. These awards and recognition are
detailed in the reports that follow in this annual report. Due credit must be
accorded to all our staff and associates for such accolades.
OUTLOOK & PROSPECTS
Although positive growth is anticipated in the fourth quarter of 2009, Malaysia’s
economy is expected to shrink by four or five percent this year. Projects to
be carried out under the Government’s two economic stimulus packages will
spur growth but the country’s full revival ultimately depends on the recovery
of the world economy which is contingent upon economic growth in the United
States, Europe and China.
The Automotive Distribution sector is expected to remain resilient and prospects
for the Services sector, particularly PUSPAKOM and Alam Flora, remain strong
due to the innovative strategies being implemented, though earnings from the
bank and insurance companies are expected to be affected by the economic
slowdown. The Group and its partners are in a strong position to spearhead
growth at Bank Muamalat which is operating in the Islamic financial sector,
currently a fast growing banking segment. Rangkai Positif, which has a 25year operations and maintenance contract with the Tanjung Bin power plant, a
supplier of electricity to Tenaga Nasional Berhad for the national grid, is expected
to contribute handsomely to Group revenue. The Property & Infrastructure
division aspires to create innovative designs and is building an exciting and
significant pipeline of projects to launch when the economy improves.
Despite the present tough and challenging economic situation, the Group will
continue to look ahead with cautious optimism and will be on the look out for
new businesses. We will be well positioned to perform better when the economic
situation improves. Capital expenditure will be trimmed and controls tightened on
cash flow. The Group will remain vigilant on costs and risk management and will
continue to strive for further improvement in the operating efficiency, resilience
and competitiveness of the Group’s diversified businesses.
ACKNOWLEDGEMENTS
On behalf of the Board, I extend a vote of appreciation to the former Chairman, Y.A.M. Tan Sri Dato’ Seri Syed
Anwar Jamalullail, and former Director, YBhg Dato’ Mohd Redza Shah Abdul Wahid. In addition, I welcome the
new Director, Mr Ooi Teik Huat, to the Board of DRB-HICOM Berhad. I express our gratitude and thanks to our
Management and staff who have worked so hard and so diligently to improve the Group’s performance.
LADIES AND GENTLEMEN
I would also like to take this opportunity to thank our business partners, associates, bankers, friends, Government
authorities and other stakeholders, for their continued understanding, support, and confidence in the Group.
I would like to extend my sincere thanks and appreciation to my fellow Board members for their counsel
and support.
DRB-HICOM operates in a dynamic and challenging business environment. Given our strength and flexibility to
adapt ourselves to the realities of the new marketplace, we are ready to transform challenges into opportunities
for new growth.
Thank you.
DATO’ SYED MOHAMAD SYED MURTAZA
Chairman
042
Annual Report 2009
Strategising
potential for
resilience
In challenging times come crucial moments that matters,
in becoming decisive, staying resilient and weathering the
economic change, to emerge in resurgence.
045
group
managing director’s
review of operations
I am pleased to present a review of operations for the DRB-HICOM Group for the year ended
31 March 2009. HICOM was in the vanguard of the nation’s foray into heavy industry and the
Group has held fast to its original role of nation building. The Group’s principal activities are
in the Automotive, Services and Property & Infrastructure sectors. In an integrated automotive
operation, we manufacture components, and assemble and distribute vehicles, including selling
related spares and after-sale services. Our Services sector provides inspection of vehicles,
solid waste management, insurance and banking. The Property business is in development and
engineering, infrastructure and construction. Operations are carried out mainly in Malaysia.
During the financial year under review, the Automotive Distribution sector has carved out a greater share of the automotive vehicle market. The Services
sector, which operates concessions granted by the Government among other activities, has performed strongly and has been strengthened by the acquisition
of Bank Muamalat Malaysia Berhad, a Syariah compliant bank, and Rangkai Positif Sdn. Bhd. which provides operations and maintenance to the Tanjung
Bin power plant. The Property sector has successfully delivered a number of prestigious projects and is on the verge of securing a substantial land bank
for future development in the Iskandar region in southern Peninsular Malaysia.
VALUE
ENHANCEMENT
GLOBAL
ACCESSIBILITY
YBhg Datuk Haji Mohd Khamil bin Jamil
046
Annual Report 2009
group managing director’s
review of operations (Continued)
automotivesector
The Group’s Automotive sector is involved in the manufacturing of components, and the
assembling and distribution of cars, trucks and motorcycles for the passenger, commercial,
mass transport and defence automotive markets. Automotive revenue accounted for 65% of the
Group’s total revenue.
Automotive Distribution
Total Industry Volume (TIV) increased by 12.5% in 2008 supported by positive consumer sentiment during the first 9 months before an increase in the price of oil made an impact on customers and shifted
consumer preferences from expensive to more reasonably priced cars. DRB-HICOM’s share of the automotive distributor market in Malaysia, cumulatively through our partnerships with various brands, increased,
reaching the No. 2 position, in calendar year 2008. We continue to reinforce our partnerships with principal partners i.e. Honda, Isuzu, Suzuki and General Motors which have each invested in joint ventures
with the Group to enhance their brand presence in Malaysia.
A key performer in the Group is Honda Malaysia Sdn. Bhd. (Honda Malaysia) which sold 32,477 cars in 2008, up 14% compared to 2007. Honda Malaysia is a partnership between Honda Motor Co. Ltd.
of Japan, which owns 51% of the company, and two Malaysian companies, DRB-HICOM Berhad and Oriental Holdings Berhad, which hold 34% and 15% respectively. Honda Malaysia’s manufacturing plant
in Pegoh, Melaka assembles the City, Civic, CR-V and Accord models. The imported models are the Stream, Jazz, Odyssey, Civic Type R and the Civic Hybrid. Honda’s models are mainly small to medium
sized, fuel-efficient and of higher performance, appreciated by customers as good quality but also good value for money. With the recent incentives given by the Government to encourage vehicles with green
engines, competitive pricing on the advanced technology Honda Civic Hybrid 1.3 litre is expected to boost sales significantly.
The Group’s equity interest in Edaran Otomobil Nasional Berhad (EON) is now 79%. EON’s sales of 43,909 units accounted for 30.9% of Proton’s volume, contributed by the introduction of several new
models. At present, EON has 32 nationwide service centres with more than 20 years of experience in servicing mainly Proton cars and Mitsubishi vehicles. EON emphasises its after-sales service performed
by trained and skilled technicians.
048
Annual Report 2009
automotivesector
Besides Proton, EON also distributes other eminent brands of vehicles,
such as Mitsubishi and Audi. Mitsubishi Motors Malaysia Sdn. Bhd.
(MMM), the exclusive distributor for Mitsubishi in Malaysia, introduced
the Mitsubishi Triton Lite 2.5 and Triton 3.2 pick-ups in the market in
June 2008. Through these new variants, Triton sales improved from
2,813 units in 2007 to 5,748 in 2008. Triton models won awards,
the ‘Pick-up Truck of the Year’ in Autocar Asean’s 2008 Car of the
Year Awards (Triton Lite) and the NST-Maybank ‘Car Of The Year
Award 2008’ (Triton 3.2), respectively. In addition to awards for the
pick-up range, MMM also received the ‘Small/Medium MPV of the
Year’ award for its Grandis model. The Mitsubishi Lancer Evolution
10 was introduced in August last year, dedicated to the passionate
supporters of the Mitsubishi Evo range. Market response to these new
models has been encouraging.
Audi, the premium marque in the Group’s Automotive Distribution
sector, is distributed by Euromobil Sdn. Bhd. (Euromobil), a subsidiary
of EON Berhad. The year under review witnessed a new generation
A4 2008 model brought into the market followed by a face-lifted
A6 model in January 2009. Highlighting its premium value, Audi
has proven it’s winning design with the numerous awards received,
such as the ‘Best Executive Car’ (Audi A4), ‘Best Premium Executive
Car’ (Audi A6) and ‘Super Saloon Car’ (Audi A8) in the Asian AutoBosch Fuel Efficiency Awards 2008, as well as being winner of the
‘Small Luxury Hatchback/Coupe Category’ (Audi TT) in the Autocar
Asean Awards 2008. Looking forward to obtaining full distributorship
status from Audi AG, Euromobil intends to establish showrooms in
downtown Kuala Lumpur, Penang and Johor Bahru, and refurbish the
present centre in Glenmarie, in compliance with the latest corporate
design and identity of Audi worldwide. As we build Audi into the
flagship marque for the Group Automotive sector we expect sales to
reach 400 units next year. EON will be further consolidated to focus
on growing its presence in the automobile market through these
franchise brands.
Automotive Corporation (Malaysia) Sdn. Bhd. (ACM) is the sole
distributor of Malaysia’s national truck, the HICOM Perkasa, and Isuzu’s
medium-heavy duty truck. ACM is also a dealer for the Isuzu D’Max
pick-up for Isuzu Malaysia Sdn. Bhd. a major player in the light-duty
truck segment. ACM exceeded the 12% growth in the whole segment
by increasing its sales by 15% to 4,756 units to maintain a 28.5%
market share in 2008. For three months in 2008 HICOM Perkasa
attained the No.1 position in the market overtaking Daihatsu. In the
medium-heavy duty truck segment the Isuzu brand achieved sales of
226 units and captured a 16% share of the market.
As we build Audi into the flagship marque for the Group
Automotive sector we expect sales to reach 400 units
next year. EON will be further consolidated to focus
on growing its presence in the automobile market
through these franchise brands.
049
The main assembly line for Suzuki cars at the HICOM Automotive
Manufacturers (Malaysia) Sdn. Bhd. plant in Pekan, Pahang.
DRB-HICOM’s share of the
automotive distributor
market in Malaysia increased,
reaching the
No.2
position,
in calendar year 2008
050
Annual Report 2009
Suzuki Malaysia Automobile Sdn. Bhd. (Suzuki Malaysia) undertakes
the import, assembly and marketing of completely knocked down
(CKD) and distribution of completely built up (CBU) units of Suzuki
motor vehicles, spare parts and accessories. The tie-up with Suzuki
Motor Corporation is part of the Group’s on-going strategy to partner
with globally renowned automotive brands to further entrench
DRB-HICOM’s position as the country’s single largest integrated
automotive manufacturer and distributor. Suzuki Malaysia also
completed its first year of operations under a new corporate structure.
This strategy has achieved an increase in sales from 2,583 units to
5,024 in calendar year 2008, an advance of 94.5%, from a network
of 26 dealers.
70% of the sales volume was derived from the ever popular Swift
1.5 CKD which has a strong following and is being assembled in the
Group Automotive manufacturing plant in Pekan. Other models sold by
Suzuki Malaysia are the 2.0L Grand Vitara, the Swift 1.6 Sports sedan
and the new SX4 hatch back. In addition to these, the SX4 sedan was
launched in July 2008. The Suzuki models won various awards during
the year reflecting their quality and popularity. The Swift 1.5 CKD
with its stylish sporty looks, dynamic performance and high-quality
features won the ‘Asian Auto Fuel Efficiency Awards 2008’ and the
Suzuki Grand Vitara won in the prestigious AutoCar Asean Awards
2008 under small/mid-size SUV category. Lastly, but not least, the
SX4 hatchback, an eye catching fusion of dynamism and elegance,
won the ‘Stuff Malaysia 2008 Reader’s Choice SUV/MPV’ award.
The trim and final assembly line for the Isuzu D-Max at ISUZU HICOM
Malaysia Sdn. Bhd.
With a network of six 3S (Sales, Service and Spare parts) centres
situated in major cities and towns in Peninsular Malaysia, supported
by another 40 sales dealers and 60 services and parts stockists,
ACM is well poised to support customers` after-sales needs. ACM 3S
centres are well equipped with mobile workshops, supported by a
24-hours call centre to handle emergency breakdowns. In recognition
of ACM`s achievement as a total commercial vehicle distributor, Frost
& Sullivan, an independent international consultant, awarded ACM
with the ‘Asean Automotive Award – Best Practices Award 2008.’
Isuzu Malaysia Sdn. Bhd. registered sales of 5,026 pick-ups,
a growth of 76% over 2007. The Isuzu D-Max has proven its fuel
efficiency, durability and reliability and has a particularly strong
franchise in East Malaysia. The awareness of the superior fuel
efficiency of Isuzu engines was dramatically raised when Asian Auto
Magazine, one of Malaysia’s leading automotive magazines, named
the Isuzu D-Max 3.0L 4x4 as the winner of the first ‘Asian Auto-Bosch
Fuel Efficiency Awards 2008-2009’ in the pick-up category.
Flags flying at HICOM Automotive Manufacturers (Malaysia) Sdn.
Bhd. plant in Pekan, Pahang where the Group assembles Mercedes-Benz
models on contract assembly basis.
051
In the year
2008 Suzuki
Malaysia
increased its
sales by
94.5%
from a network of
26dealers
Motosikal Dan Enjin Nasional Sdn. Bhd. (MODENAS) increased
its volume from the previous year’s 46,978 units to 60,651 units in
2008, recording a growth of 29%, well ahead of the overall market
growth of 12%. Contributing positively towards MODENAS’ volume
and market share were the introduction of new models, the Kriss 120
Sport and a facelift for the Passion. The latest GT128 model, launched
into the market in late March 2009, offers an improved safety feature
and engine efficiency, coupled with a reasonable price. MODENAS has
four service centres in Gurun, Shah Alam, Johor Bharu and Kuantan,
and with its network of 200 dealers nationwide is able to facilitate
the after-sales service needs of its customers. Despite the current
economic climate, MODENAS is looking at a volume of 60,000 units
to capture a 15% share of the market in 2009. MODENAS received a
Gold Medal for ‘Malaysia Manufacturing Excellence Award’ from Frost
Sullivan. MODENAS is now embarking on new strategies to propel
growth which include sponsorship of the Akademi Fantasia television
show and maximising advertising and promotion to build the brand.
The product development programme will ensure a pipeline of new
models of good quality and reasonably priced motorcycles.
Pre-delivery Inspection of cars for Quality Assurance by DRB-HICOM Auto Solutions Sdn Bhd. in Pekan, Pahang.
The latest GT128 model, launched by MODENAS in late March 2009, offers
an improved safety feature and engine efficiency, coupled with a reasonable price.
Into its third year, DRB-HICOM Auto Solutions Sdn. Bhd. (DHAS)
saw significant improvement in its operation as an importer and
service provider for CBU and CKD vehicles. There has been an
increase in Pre-Delivery Inspections (PDI) throughout the year. As a
one-stop automotive solution provider, DHAS facilitates the overall
process of importing vehicles right to final delivery to dealerships.
DHAS has two main centres. The Pekan PDI Centre received its ISO
9001/2000 certification in January 2009 and the Shah Alam PDI
Centre, which is the main centre for CBU cars, is applying for ISO
9001/2008 compliance certification. DHAS is committed towards
establishing itself as a premium service provider with emphasis on
giving customer satisfaction through the implementation of quality
standards recognised by the franchise or brand representation within
DRB-HICOM.
DRB-HICOM’s Defence Technologies Sdn. Bhd. (DEFTECH) is a
contractor of land based military vehicles to the Ministry of Defence.
The company explores all opportunities as a major local defence
player in the industry to secure contracts for the supply, maintenance
and refurbishment of land based military vehicles. To operate
effectively the company is continuing to form strategic alliances with
international manufacturers to enhance DEFTECH’s product range and
to acquire technology for the assembly, system integration, repair,
maintenance, overhaul service, refurbishment and upgrading of
vehicles and other products. DEFTECH is maximising the synergistic
use of all available facilities within the DRB-HICOM Group and the
country for the assembly of vehicles and fabrication of vehicle bodies
and expects to keep its order book full.
052
Annual Report 2009
City buses assembled by DRB-HICOM Defence Technologies Sdn. Bhd. (DEFTECH) in Pekan, Pahang.
automotivesector
Presently, DEFTECH has received confirmed orders for 10-metre Metro City Buses for RapidPenang, an overseas
sales to the Government of Brunei, comprised of Handalan II trucks and a unit of Mobile Field Kitchen, and
Handalan II for the Ministry of Defence. DEFTECH has also participated in a tender for the supply of 12-metre
Metro City Buses for RapidKL. DEFTECH’s testing circuit, built to NATO standards, at the plant in Pekan, is a
proving ground where military vehicles are put through their paces.
DEFTECH has been improving its in-house expertise over the years to create an engineering services division with
in-depth knowledge of defence equipment and specialised and customised vehicles. The company needs now to
build on tools, tooling equipment and machineries to complement the production processes. Continued emphasis
on new production processes have provided DEFTECH the competence to handle additional contracts from other
customers. Attention will also be given to develop recurring income business in spare parts sales, maintenance
repair, overhaul, and refurbishment contracts to effectively leverage our core business.
DEFTECH, which leads the Malaysian Defence Industry Council’s (MDIC) Automotive Working Group (AWG), is
finalising its plan to develop a family of indigenous 8X8 Armoured Wheeled Vehicles. This plan creates an
opportunity for the company to become a partner in the customer support network manufacturing and supplying
components such as electrical equipment, rubber mouldings, metal fabricated parts, heat and surface treatment,
batteries and tyres. Once the plan gets off the ground, it will be the second step undertaken by the Government in
realising its self reliance policy following the local assembly of the ADNAN Armoured Infantry Fighting Vehicle.
Defence Services Sdn. Bhd. (DSSB), DEFTECH’s subsidiary,
received the contract to refurbish the Pendekar PT91M Main
Battle Tank.
053
DEFTECH’s subsidiary, Defence Services Sdn. Bhd. (DSSB), received
new contracts for the supply of small calibre weapons to defence
forces and law enforcement agencies. Two contracts have been
secured for the refurbishment of Scorpion and Stormer Armoured
Vehicles, and for local services and supply to back-up the delivery
of the Pendekar PT91M Main Battle Tank. The refurbishment contract
will be completed and delivery will begin from the third quarter of
2009 and ending in September 2010. The Main Battle Tank deliveries,
which first commenced in August of 2008, are expected to continue
in batches and the last batch is expected to be handed over in
December 2009. DSSB is also expected to maintain and supply
spares for the Pendekar Tank and continues to pursue new contracts
for military vehicles.
Automotive Components & Engineering
The component manufacturers comprise metal stamping, automotive
plastic moulding, and aluminium and iron casting companies. The
assembly companies include the completely knocked down (CKD)
vehicle plants in Pekan and Malacca and the motorcycle engine
assemblers for Honda, Yamaha, MODENAS and Suzuki.
HICOM Diecastings Sdn. Bhd. is a supplier of aluminium diecasting,
HICOM Engineering Sdn. Bhd. operates an iron foundry and machining
works and HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.
is in the automotive plastic injection moulding industry. We have
successfully developed the engineering expertise to manufacture and
supply automotive components to major international customers which
include Toyota, Honda, General Motors, ZF Steerings, TRW, Brose,
Volvo, Ford and Nissan and other Original Equipment Manufacturers
(OEMs), besides the national carmakers Proton and Perodua.
The Group‘s manufacturing and assembly complex for passenger,
commercial and defence vehicles in Pekan, Pahang is the nucleus of
a modern automotive hub, in support of the national strategy to form
automotive centres. The complex, already an assembler for MercedesBenz and Suzuki, has the proven reputation for quality to attract
international manufacturers, with their supply chains and logistical
networks, to achieve the critical mass and momentum needed to
propel Pekan ahead as a serious auto-maker contender for the ASEAN
market. The Group will serve as a catalyst towards advancing the
automobile industry to add significantly to the economy.
PHN Industry Sdn. Bhd. (PHN) produces stamped parts and
sub-assembly of metal-based automotive body components, such
as the front deck assembly, reinforcement pillar as well as body
shell panel. Sales were driven by high demand for the Persona
and new Saga from Proton and the Myvi and Viva models from
Perodua. PHN is not only a Tier-1 vendor for both the leading national
car manufacturers but also Honda Malaysia and Toyota Boshuku
UMW. PHN also manufactures small and medium sized dies for the
automotive industry. During the year, PHN was recognised by Proton
as the Overall Best Vendor and for Best Quality Performance.
054
Annual Report 2009
automotivesector
The trim and final assembly line - fitting of seats, steering,
dashboard and carpet - for the Suzuki Swift at HICOM Automotive
Manufacturers (Malaysia) Sdn. Bhd. in Pekan, Pahang.
HICOM Diecastings Sdn. Bhd. (HDSB), a leading Tier-1 high-pressure
aluminium diecast part manufacturer strengthened its position as a
supplier in the component market to OEMs locally and abroad. HDSB
supplies specialised steering housing components to international
Tier-1 companies such as ZF Malaysia, ZF’s overseas operations in
USA and Germany, TRW Malaysia and Emerson of USA. Diversifying
from its automotive base, HDSB is supplying non-auto pump
housings for the oil and gas industry, components to the building and
construction sectors and for medical equipment, and cylinder blocks
for motorcycles.
HICOM Engineering Sdn. Bhd. (HESB) manufactures machine
precision iron castings and assembles components for automotive
and general engineering purposes. Diversification into non-automotive
markets bodes well with production of cast shoulder fastener for rail
track for Pandrol for the local double tracking projects, which have
now been extended from Ipoh to Padang Besar. This has led to the
exports of rail components to Italy in 2008 and HESB is aggressively
exploring to supply fasteners to other rail track projects overseas.
HICOM-Teck See Manufacturing Malaysia Sdn. Bhd. (HTSM) is a
Tier-1 automotive plastic parts vendor which manufactures bumper
modules, instrument panels and door trim assemblies. HTSM’s main
customers in Malaysia include Proton, Perodua, Johnson Controls,
Honda and Toyota. As a one-stop centre for automotive plastic products,
HTSM provides services that include product design and development,
testing, injection moulding, assembly and painting. HTSM’s wholly
owned subsidiary, HICOM Automotive Plastic (Thailand) Ltd., in
Rayong, Thailand supplies components such as bumpers, trunk
lid handles, instrument panel, door handle and radiator grilles for
General Motors, Brose and Ford. HTSM won the “Most Improved in
Quality” and “Most Improved in Delivery” awards by Proton. Frost &
Sullivan also recognised HTSM as the 2008 Automotive Component
Manufacturer of the Year (Malaysia).
Oriental Summit Industries Sdn. Bhd. (OSI) is involved in stamping,
welding, painting and assembly of metal automotive components,
specialising in chassis components, front lower arm, rear axle
suspension, parking brake lever, seat frames and trim parts. OSI
designs, develops and manufactures components such as the
front and rear suspension modules and seat frame mechanism for
automotive manufacturers. Major customers include Proton, Perodua
and Toyota. OSI also offers services in jigs, tools, dies and product
design with dies and toolings fabrication.
The joint ventures with foreign OEM companies, Continental
Automotive Instruments (Malaysia) Sdn. Bhd., TRW Steering &
Suspension (Malaysia) Sdn. Bhd. and ZF Steerings (Malaysia)
Sdn. Bhd., found the market in Malaysia surprisingly resilient during
the year as consumer and business confidence held up. Though
their export programmes felt the effects of the global slowdown,
prospects have begun to look brighter again in Asia, led by demand
from China.
055
HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd. (HAMM),
formerly known as Automotive Manufacturers (Malaysia) Sdn Bhd,
is located at Peramu Industrial Estate. The plant is equipped with
excellent infrastructure facilities covering 57 hectares of land in
Pekan, Pahang, 45 kilometres south of Kuantan. Operating flexible,
multi-model assembly lines, the assembly operation is an important
operating centre for the Group and is the catalyst for the Group’s
manufacturing operations with world class vehicle assemblers such
as Mercedes and Suzuki. HAMM has assembled and made on a
contract basis the Mercedes-Benz C and E class since 2005, followed
by the S class in 2006, making the Group the first assembler of the
current ‘S’ class model in Asia. The Suzuki Swift, LDV Maxus van, and
Daewoo natural-gas bus chassis, are also assembled, utilising efficient
production standards and exceptional quality control programmes.
ISUZU HICOM Malaysia Sdn. Bhd. (IHM), formerly known as
Malaysian Truck & Bus Sdn. Bhd., assembles the HICOM Perkasa
light duty truck, ISUZU medium and heavy duty truck and the
ISUZU D-Max pick-up. Subsequent to the financial and operational
restructuring exercise in financial year 2007/2008, which involved an
increase in Isuzu’s equity participation, IHM has become more lean
and focused in its operations. IHM achieved a total sales volume of
14,921 units during the year under review, an improvement of 42%
over the previous year.
HICOM-HONDA Manufacturing Malaysia Sdn. Bhd. (HICOM-HONDA)
delivered 225,500 engines and has maintained its No. 1 position in
the market for motorcycles for 6 consecutive years. The company’s
principal activities are machining, assembling and testing motorcycle
engines and components such as crankcase covers, crankcases,
cylinders, cylinder heads, crankshafts and camshafts. HICOMHONDA also exports motorcycle engine components to other Honda
motorcycle assembly plants in Vietnam, Indonesia and Philippines.
During the financial year under review, HICOM-HONDA has invested
quite significantly to cast the first Honda scooter engines ever
to be manufactured in Malaysia. Mass production for the Honda
Scooter, ICON began in January 2009. For future models, new HONDA
technology will be used for the cylinder head and crankcase, utilising
a simplified design leading to higher engine efficiency.
HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd. (HICOMYAMAHA) manufactures motorcycle engines for Yamaha, ranging
from 105 to 135cc. Other activities include machining and painting
of motorcycle engine components, including crankshafts, for Yamaha
and Minarelli of Italy. HICOM-YAMAHA is upgrading its assembly line
to be more flexible and able to accommodate various model line-ups
and will raise capacity to 160,000 units per year while also increasing
local content to generate better margins.
To meet global challenges and competition, the Group places
emphasis on quality, cost and delivery. The component companies
with years of experience are accredited to international standards for
process, environmental protection and safety such as ISO/TS 16949,
ISO 14001 and OHSAS 18001. These standards, consistent with global
requirements, will allow our automotive component manufacturing
companies to make headway into the global components market.
HICOM-HONDA
Sdn. Bhd. (HICOM-HONDA)
delivered 225,500
engines and has
maintained its No. 1
position in the market
for 6 consecutive years.
056
Annual Report 2009
servicessector
The Services sector has been strengthened with the acquisition of Bank Muamalat Malaysia Berhad,
which is the second full-fledged Islamic bank established in the country, and Rangkai Positif
Sdn. Bhd., which provides operations and maintenance services for Tanjung Bin power plant.
The long-term growth prospects for the Group Service subsidiaries in concessions, banking
and insurance are positive and they will be positioned to be ready to exploit the recovery in
the Malaysian economy.
The Services sector posted an increase in revenue, from RM1.4 billion to RM1.9 billion, accounting for 32% of the Group’s revenue, and has an increasingly important role as a reliable earner, generating 53%
of the Group’s profit before tax, excluding exceptional items. Key performance indicators and continuous cost cutting measures, to boost productivity and operational efficiency, have helped these subsidiaries
achieve recognition in their industries.
PUSPAKOM Sdn. Bhd. (PUSPAKOM) is appointed by the Government to provide efficient and accurate computerised vehicle inspection services. Business has grown steadily with inspections breaching the
3 million threshold for the first time, recording a 9% increase over the previous year’s volume of 2.8 million. The number of vehicles inspected during the financial year under review reached a total of
3.1 million. All commercial vehicles, in accordance with the Road Transport Act 1987, are required to undergo a mandatory vehicle inspection every six months in order to ensure roadworthiness. Inspection
prior to transfer of private vehicle ownership, which became mandatory on 1 July 2007, now accounts for 20% of the total volume of vehicles inspected.
058
Annual Report 2009
servicessector
Another 6 new branches were established during the year under
review bringing the total number of PUSPAKOM branches to
71 nationwide, with a capacity to inspect 5.2 million vehicles annually.
PUSPAKOM’s two units of fully computerised mobile inspection
vehicles carry out inspections in remote rural areas or on-site for fleet
operators. Using the new computerised system, a vehicle inspection
takes from 15 to 30 minutes. A secure on-line real-time link transfers
data to the Road Transport Department. To support an expanded
network of branches the number of staff has risen from 886 to 1,096.
The award of a second 15-year concession period, 2009 to 2024,
gives PUSPAKOM the opportunity to fully attain its vision of being a
globally recognised entity in vehicle inspection.
In addition to the mandatory inspections set out under the concession
agreement, PUSPAKOM conducts inspections for finance companies
prior to loan disbursements for the purchase of used vehicles,
checks government vehicles and imported completely built-up (CBU)
vehicles and undertakes inspections prior to auctions and issuance
of insurance coverage. PUSPAKOM also acts as a vehicle valuer
to Amanah Raya Berhad, the trustee company wholly owned by
Minister of Finance (Incorporated). In a go-to-market strategy to reach
end-users and provide them with a convenient service, a door-to-door
service has been rolled out, which has also enabled PUSPAKOM to
capture additional revenue.
Alam Flora Sdn. Bhd. (Alam Flora) is one of the largest private solid
waste management companies in South East Asia. The company
manages solid waste within the federal territories of Kuala Lumpur
and Putrajaya and in the states of Selangor and Pahang, collecting,
transporting and disposing more than 2.1 million tonnes of waste
annually. The subsidiary employs a workforce of 3,529 staff and has
713 vehicles to facilitate its operations. It also manages 14 landfills,
supervises and monitors 750 appointed contractors.
The company is in the 12th year of the interim privatisation period
and is continuously enhancing its service to the public to meet the
stringent demands for sanitation and hygiene. During the year under
review, Alam Flora converted the company’s administrative vehicles
from running on petrol to NGV, attracting a cost saving of 81%,
and invested RM24 million in replacement vehicles to prepare for
impending privatisation. To address global warming from the emission
of CO2, the Fleet Management Department installed an Automatic
Vehicle Location System to track and monitor vehicle movements
in real time in all operational vehicles which will optimise vehicle
movements and minimise the vehicles’ emissions by optimising time
spent on operations.
71
branches nationwide
with a capacity to inspect
5.2milion
vehicles
yearly
PUSPAKOM’s Headquarters in Wangsa Maju, Kuala Lumpur.
059
KLAS handled
8,496 flights,
71,930 tonnes
of cargo and
1.02 million
(1,020,000) meals
for the year
under review.
Drainage cleansing
by Alam Flora crew,
in Putrajaya.
Alam Flora recognises the importance of waste-to-energy as part of
a concerted universal effort for sustainable development. The goal of
Alam Flora’s Research & Development department (R&D) is to add
value and to complement solid waste management and cleansing
operations by the development of new technologies, innovative
ideas and eventually to create business opportunities. New R&D
ideas identified include anaerobic digesters and bio-diesel to be
pursued through strategic alliances, and a collaboration with Universiti
Kebangsaan Malaysia (UKM) to create a model ‘cradle to grave’
concept on the UKM campus which could be duplicated to other
universities in Malaysia.
The Solid Waste and Public Cleansing Management Act 2007
prescribes for all concessionaires to operate under full privatisation.
Alam Flora’s masterplan is drawn up and will be put into action
once the new concession is signed with the Federal Government’s
Solid Waste Management Corporation. The new National Solid Waste
Management Department will set policies, strategies and action plans
and conduct enforcement while the new Solid Waste Management
Corporation will take over the role of local authorities and supervise
the concessionaires.
Waste collection in Putrajaya,
using state-of-the-art compactors.
Moving forward, the company is geared towards expanding the
non-concession businesses locally and internationally. With a
structured and dynamic set of strategies and directions, the company
is confident that it will succeed in its quest to achieve greater
success, and recognition as a first class operator, in the industry.
KL Airport Services Sdn. Bhd. (KLAS), a wholly owned subsidiary,
is a full service provider for airlines at Kuala Lumpur International
Airport (KLIA) offering passenger check-in with baggage, cargo
handling, in-flight catering, ground handling and engineering services.
KLAS also operates at Penang International Airport mainly providing
cargo handling services. For the year under review, KLAS has handled
8,496 flights, 71,930 tonnes of cargo and 1,020,000 meals in Kuala
Lumpur. In addition 4,368 flights and 39,885 tonnes of cargo were
handled in Penang.
The company managed to secure eleven new customers during the
year: Mahan Air (Iran), Sri Wijaya (Indonesia), Silk Air (Singapore), Tiger
Airways (Singapore) at Kota Kinabalu and Kuching, Finnair (Finland),
Air Koryo (North Korea), Neptune Air (Malaysia), Air Bagan (Myanmar),
KingFisher (India), Best Aviation (Bangladesh), and South East Asian
Air (Philippines).
060
Annual Report 2009
servicessector
Conducting Research & Development on in-flight
meals at KL Airport Services’ R&D laboratory at the
headquarters in Sepang.
After a positive first half in 2008, the credit crisis and world economic
recession triggered an accelerating decrease in demand which by
December 2008 registered declines of -4.6% for passengers and
-22.6% for air cargo. Looking ahead, KLAS is planning to expand its
services to Pulau Langkawi, improve capability and enhance services
at Kota Kinabalu and Kuching and introduce a VIP ‘Meet and Greet’
service. We continue to seek new revenue streams, beyond traditional
airline related business, by offering total cargo logistic management,
passenger loading bridge operation, truck flight, institutional catering,
halal logistics and live fish shipments.
The overall outlook and prospects of the aviation sector for 2009 are
drastically lower than 2008 in view of the global credit crisis and world
economic recession. The anticipated reduction is 15% on the number of
flights and a 25% drop in cargo volume. Implementation of the ASEAN
Open Sky Policy in 2009 combined with lower prospects for premium
travel in the aviation industry and further liberalisation of the industry
in the region suggests that low cost airlines will have an opportunity to
expand into new markets and grow their market share.
The Power Division of Scott & English (M) Sdn. Bhd., which is
responsible for the sales and marketing of the Cummins franchise,
recorded a very strong performance due to the high demand for
marine engines during the first three quarters of the financial year.
Sales of generators to the palm oil sector continued to perform
well throughout the year. With lower demand expected for marine
engines next year, emphasis will be placed on the promotion of high
horse power diesel engines (3,000hp and above) as well as the
hi-tech fuel saving Q series generators to maintain the company’s
leadership position in both the marine and land generator sectors.
The performance of the Industrial Division which handles both the
TCM forklifts and Sullair air-compressors franchises has been growing
steadily. To counter the overall slow down for equipment demand
from the traditional marine, palm oil and industrial sectors, the
company has revamped its sales canvassing to the commercial and
construction sectors. They have been boosted by implementation of
the various stimulus packages recently announced by the Government
and have a high demand for both generators and air-compressors.
In August 2008 Scott & English Electronics Sdn. Bhd.’s equity was
re-structured to allow the principal Midea Refrigeration (Hong Kong)
Ltd. a majority 51% interest and the management team a 9% share
with the Group holding the balance in the company. Midea Scott &
English Electronics Sdn. Bhd., as the company is now known, has
just completed its third year of distributorship with Midea, a leading
brand in the white goods market with a range of air-conditioners,
washing machines, freezers and small appliances from China.
As a consequence of the free trade agreement signed with China,
import duty has been progressively reduced from 20% in 2005
to 5% in 2009, and will be lifted entirely by 2010. An advertising
and promotions campaign will be intensified in 2009 to gain brand
recognition and penetrate the market with Midea’s high quality,
affordable products. By 2010 with the Midea brand name established
and enjoying competitive pricing, free of any import duty, sales
volumes are expected to increase significantly.
A selection of
Midea brand household
and electrical appliances
distributed by Midea
Scott & English
Electronics Sdn. Bhd.
061
worldwide coverage for bodily injury, disablement or death caused by
accident. These new products are part of a concerted effort to meet
customer needs with value-for-money propositions.
Despite the challenging global economic condition in 2008, the
Malaysian insurance industry remained resilient supported by robust
motor vehicle sales and strong performance of the non-motor
sectors such as medical and health, liability and personal accident.
In line with the industry’s stronger performance, Uni.Asia General
Insurance Berhad (Uni.Asia General) recorded a 18% growth in gross
premiums to RM410 million for the year under review as compared
to RM350 million in the previous year. Motor insurance remained the
main contributor accounting for 72.2% of the business while nonmotor premiums, which includes fire insurance, accounted for 27.8%.
Overall, the company registered a lower profit before tax of RM6
million compared to RM24.1 million previously, due to higher claims
pay out and low investment returns caused by the deteriorating
performance of the stock market.
As part of our strategic initiative to increase the value proposition to
customers, three innovative products were launched during the year. To
complement the Star Series, a ‘7 benefits in 1’ driver and passengers’
personal accident insurance plan, StarRider was introduced. This plan
protects driver and passengers against accidental death, medical
expenses reimbursement, ambulance fee, dental or corrective
cosmetic surgery and bereavement expenses. Besides this, a highly
affordable Maxi PA Scheme has been tailor-made to maximise value
and protection to customers at the lowest possible rate of RM18
per month. This scheme allows customers to opt for either the Maxi
Rider PA Plan which offers protection against loss of life or permanent
dismemberment while driving, riding, boarding or alighting in an
insured vehicle, or the Maxi Pro PA Plan which provides 24-hour
In 2009, the insurance landscape will continue to be challenging,
against the backdrop of inflationary pressures, a slowdown in
domestic growth rates and global economic uncertainty. The company,
however, is confident about improving its profitability by maintaining
its claims ratio and management expenses within acceptable levels.
We will reduce the third party motor insurance ratio, underwrite
only profitable business segments, and implement stringent claims
and prudent investment practices. In addition, the company will
manage its business within the requirements of a Risk Based Capital
framework (RBC) and focus on its fundamentals – increase operational
efficiency, improve workforce productivity as well as effectively
manage operating costs to drive the company to achieve a better
performance and result.
Uni.Asia Life Assurance Berhad (Uni.Asia Life) continues to make
its presence felt in the industry despite the challenging economic
environment at the closing of the financial year. The company
successfully sustained its performance in regular premium new
business sales with a remarkable 69.6% growth compared to the
industry’s growth of only 5.4%.
The company’s bancassurance arm surged to second place with a
market share of 24% in regular premium new business sales with a
total business volume of RM43 million during the year under review.
Bancassurance sales of regular premium grew 126% from RM19
million during the year. Following the successful implementation
of various strategic initiatives, the agency business recorded a
strong performance by delivering regular premium new business of
RM22 million compared to RM16.5 million in the prior year, registering
a growth of 34%.
062
Annual Report 2009
servicessector
An aerial view of the Tanjung Bin
power plant in Johor for which Rangkai
Positif Sdn. Bhd. provide Operations
& Maintenance services.
The company is implementing the necessary risk processes and
ensuring controls are in place to comply with the RBC framework
initiated by Bank Negara Malaysia, in line with the company’s capital
management objectives. The company’s bancassurance business will
continue to focus on business expansion initiatives while the agency
force will be steered toward higher productivity and the recruitment
of quality agents while maintaining high quality product portfolios.
As a leader in product development, Uni.Asia Life will continue to
be innovative and use asset liability management to assess the
company’s product strategies with the objective of driving growth and
profitability in the coming year.
Rangkai Positif Sdn. Bhd. (Rangkai Positif) was acquired by the
Group in October 2008. Rangkai Positif is contracted to provide
Operations & Maintenance (O&M) services to the Tanjung Bin power
plant for a concession period of 25 years commencing from 28
September 2006. The plant comprises three steam-electric coal-fired
units, each with a net capacity of 700 MW, coal unloading, storage
and handling facilities, a 500/275kV substation and transmission lines
connecting the plant to the grid. Pursuant to the O&M Agreement,
Rangkai Positif will be paid a monthly fixed and variable operating
fee throughout the entire concession period of 25 years commencing
from the commercial operation date of the first generating unit. The
fixed operating fee is based on the fixed manpower fees, general
parts and supplies fees, fixed services fees and management fees.
The variable operating fee is based on the pre-agreed variable
operating rate and the net electrical output.
As the operator of a 2,100 MW power plant generating 10.3%
of Peninsular Malaysia’s total installed capacity, Rangkai Positif
is committed to provide reliable and cost-effective operation and
maintenance services with maximum efficiency in accordance with
best practices.
Bank Muamalat Malaysia Berhad (Bank Muamalat) recorded a
modest performance for the financial year attributable to a higher
allowance for losses on financing in the wholesale banking division.
Bank Muamalat is the second full-fledged Islamic bank to be
established in Malaysia and has a total of 46 branches as well as 6
service centres and employs a total of 1,454 employees. This includes
a Labuan Offshore branch which caters for non-Ringgit financing and
offshore banking requirements.
As a licensed institution under the Islamic Banking Act 1983,
Bank Muamalat ‘s scope and range of businesses are wider than
conventional financial institutions. Bank Muamalat has the ability
to broaden its reach into non-bank based activities such as asset
ownership and to further diversify its earnings via participation as a
business partner in ventures such as real estate business based on
the Musyarakah-based concept. The bank can also operate in the
investment banking industry similar to a universal banking group. In
these respects, Bank Muamalat can leverage on its ability to crosssell a variety of joint offerings to its diverse customers.
063
Bank Muamalat
Headquarters in Jalan
Melaka, Kuala Lumpur.
Bank Muamalat was the second full-fledged Islamic
bank to be established in Malaysia and has a total of
46 branches as well as 6 service centres and employs
a total of 1,454 employees.
Macro-economic conditions deteriorated over the past year causing
a severe disruption in the global markets, especially in the latter
half of 2008 and first quarter of 2009. The sub-prime crisis in the
United States developed into a full-blown financial crisis, with a
breakdown in credit and dislocations in the banking system. This has
taken a severe toll on the real economy, particularly in the developed
world. The year 2008 was an extraordinary period in economic and
financial history as global stock markets, as measured by the Morgan
Stanley Composite Index, fell by almost 50%. Monetary policies
across the globe went into unchartered territory of close to zero
interest rates as governments and regulatory authorities worldwide
attempted to stabilise the markets, and significantly, several major
financial institutions in the developed economies either failed or were
financially rescued by their respective national governments. In 2009,
central banks around the world have kept interest rates low and
governments have pledged to pump more money into their economies
through increased expenditure, tax cuts and grants to jump-start local
consumer and business spending.
Against this grim backdrop, one spark was the sustained development
in the domestic banking system in the past year, in particular in
Islamic banking, where the share of Islamic banking assets in the
total domestic banking sector reached a new high of 17.4% as at end
2008. At the same time, Malaysia remains the world’s largest sukuk
market. With the recent debacle in the US sub-prime market, there is
potential for Islamic banking products to reach a broader market.
On the Islamic finance front, and specifically for Bank Muamalat, the
year ahead will be a consolidation phase, essentially an opportunity
to strengthen and redefine our position in an increasingly uncertain
economic environment. Nevertheless with every challenge, there is
always opportunity.
Bank Muamalat offers great banking facilities for all Malaysians.
064
Annual Report 2009
property&
infrastructuresector
With commendable foresight of the impending credit crisis and recession in the United States,
and a sensitivity towards global economic trends, the Property & Infrastructure subsidiaries
and associates made early preparations and plans to complete and sell a variety of commercial
and residential developments during the year. The division was therefore positioned to optimise
value creation while the economy was still vibrant. The property industry benefited from a host
of government incentives including the repeal of real property gains tax, relaxation of Foreign
Investment Committee guidelines for foreign buyers and a reduction in stamp duty.
Most of the Group’s property development operations have now been consolidated into a leaner single team spearheaded by HICOM Properties Sdn. Bhd. (HICOM Properties) which shares best practices across
the Group. While there is a lull in activity and demand, the Group will take the opportunity to further rationalise and synergise development operations and plans amongst the property company subsidiaries. We will
look at internal opportunities within the Group’s sectors to relocate operations to release prime real estate and build, for example, niche commercial and residential developments.
Glenhill Saujana, the exclusive residential enclave in the neighbourhood of Saujana, consisting of 40 units of bungalow land and 50 units of semi-detached house, on a 27-acre plot of freehold land, was handed
over to buyers and well received. The houses were sold out soon after launch and to date there are only 4 bungalow lots still available.
Vacant possession for Glenpark Phase 1, consisting of 100 fully sold linked residential units were successfully delivered and 34 units of shop office at HICOM Glenmarie Industrial Park were completed in March
2009, two months ahead of schedule.
066
Annual Report 2009
property&
The entrance archway to the Glenmarie Golf & Country Club in
Glenmarie. The club has two 18-hole golf courses – the Garden and
Valley courses.
Inspired by nature, Glenpark Phase 2 homes are link houses with
lot sizes ranging from 20’ x 75’, 22’ x 75’ and 24’ x 75’. Covering
70 acres in TTDI Jaya, Shah Alam, Glenpark Phase 2 consisting of
650 units worth in excess of RM200 million will be launched in phases,
over the next 6 to 8 years. A wide range of facilities and amenities
are provided including schools, community halls, parks, shops and
food courts for the comfort and convenience of the residents. A
myriad of hypermarkets including Giant, Tesco, Tesco Extra and tertiary
institutions found within the vicinity of Glenpark 2 will further improve
the development’s attractiveness and marketability.
HICOM Properties continues to market HICOM Pegoh Park, a freehold
mixed development of about 730 acres comprising industrial,
commercial, retail and residential components. Infrastructure and
utilities have been completed for the first phase of 200 acres. Sales
are expected to gain momentum once the economic outlook improves.
The sales team is exploring attractive real estate campaigns such as
“Build, Lease and Transfer” and “Design and Construct” packages to
provide assistance to prospective buyers to help them weather the
current economic downturn.
A warm and friendly greeting awaits you by personnel of
The Glenmarie Golf & Country Club.
The launch of HICOM Properties’ Glenmarie Gardens has been
deferred to the first quarter of 2010 due to the current sluggish
property market. Glenmarie Gardens builds on the success of
Glenmarie Residences and Glenmarie Court, and will further reinforce
the Glenmarie area’s appeal as an exclusive, spacious and peaceful
residential enclave with first class facilities and infrastructure. Recently
completed developments have experienced strong demand in the
high-end residential sector with bungalows enjoying appreciation of
25 to 30% in the short term. The project comprises of 70 units of
high-end bungalows with attention to aesthetics, functionality and
quality finishes on plots ranging up from 8,000 square feet with builtup areas of more than 5,000 square feet, as well as 28 lifestyled villa
units facing the Glenmarie Golf & Country Club. The concept features
various modern contemporary designs with swimming pools within a
garden-themed, guarded and gated enclave on 32 acres of freehold
land in the increasingly sought after Glenmarie area.
Located on 16 acres of hilly freehold land next to Glenmarie Gardens
is Glenmarie Heights, which will comprise of 38 luxurious high-end
bungalows in a tranquil retreat blending harmoniously with the natural
surroundings. The launch is scheduled after the launch of Glenmarie
Gardens. Both developments are within close proximity to the Holiday
Inn Glenmarie and the Glenmarie Golf & Country Club and these
high-end niche products will be packaged with free golf membership
at the Club.
HICOM Properties has proposed to acquire 1,516 acres of land
earmarked for mixed development at Tebrau, Johor. We will be
developing a master plan before refining the product offerings and
securing the necessary planning approvals. The introduction of a well
crafted development plan, innovative concept and creative branding
will create the preferred address and establish HICOM Properties as
the developer of choice in Johor.
The riverfront bungalow lots at Glenmarie Cove capture the splendour
of the unique lifestyle to be enjoyed in the natural beauty and tranquility
of a low density, gated and guarded riverfront resort, one of the first
of its kind in Malaysia. The exclusively designed bungalows and
semi-detached residences are built around extensively landscaped
broadwalks, parklands and lagoons. The Group is marketing the
remaining phases of development by actively participating in local
and international property and investment exhibitions and by offering
attractive incentives which continue to attract local and a significant
number of foreign purchasers.
The all new upgraded 18-hole Valley Course promises a great golfing experience.
HICOM Properties will continue to explore and develop high-end and mid-range housing projects to cater for both the niche and
broader spectrums of the property market. Our established track record on timely delivery, quality finishing and workmanship will
provide a platform for HICOM Properties to leverage its position as a significant property player in Malaysia.
HICOM Builders Sdn. Bhd. (previously Imatex Sdn. Bhd.) has developed Mutiara Tropicana Phase 1, comprising strategically
located residential and commercial units in the exclusive Tropicana area in Selangor, which was sold out and vacant possession
delivered to buyers with certificates of completion in July 2008. Phase 2 of Mutiara Tropicana is currently being planned and
finalised to complement Phase 1 and the surrounding area, and is scheduled to be launched in December 2009.
HICOM Gamuda Development Sdn. Bhd., a joint venture partnership, has developed Kota Kemuning, since its inception more
than a decade ago, into a renowned and successful township. To serve the needs of the thriving community and a growing
population, on-going phases of 25 bungalows, 40 townhouses and 49 shop offices were launched during the year, with take up
rates of 60%, 100% and 90% respectively.
We build
spacious
bungalows,
offering
8,000
square feet
of land area
068
Annual Report 2009
property&
The second Proton Plant will continue to be the main nucleus of growth
for the development of Proton City. Proton City Development Corporation
Sdn. Bhd., a subsidiary of DRB-HICOM Berhad, has planned Proton
City as a sustainable township on 4,000 acres in Tanjung Malim. The
integrated township of residential, commercial, industrial and recreational
areas, including the main campus of Universiti Pendidikan Sultan Idris
(UPSI) designed to accommodate 25,000 students, is under construction.
Land has been allocated for vendors of car components and the first
phase of 1,537 residential units has been completed and occupied.
The completion of an extensive refurbishment and upgrading exercise
to the Hotel & Resort assets during the year, in a drive for first class
facilities and service which exceed customer expectations, has had the
desired effect of improving occupancy, room rates and returns.
The Holiday Inn Glenmarie has taken the recession, which curtailed
business travel, in its stride, and has exceeded its internal targets and
expectations. Following the completion of a comprehensive RM15 million
makeover, the hotel’s financial performance has strengthened significantly,
generating higher revenue and achieving higher average room rates.
The Holiday Inn Glenmarie is ideally located away from the hustle of
the city centre and closer to the business districts of Shah Alam and
Petaling Jaya. Surrounded by acres of green and the Glenmarie Golf &
Country Club, and coupled with the added advantage of newly renovated
rooms and function rooms, it is the ideal choice for discerning clients for
business travel, corporate retreats and family holidays.
Glenmarie Golf & Country Club has also invested approximately
RM6 million to upgrade and refurbish the club house, its main lobby,
golf centre, restaurants and sports facilities with a modern contemporary
interior design, completed as scheduled in November 2008. The
response from the members and public have been very encouraging.
Over RM11 million has been spent to refurbish and improve the 18-hole
Valley Course to ensure that the standard and quality are consistent
with its premier standing as one of the leading golf clubs in Malaysia.
DRB-HICOM Berhad, has planned Proton City as a sustainable
township on 4,000 acres in Tanjung Malim. The integrated township of
residential, commercial, industrial and recreational areas, including
the main campus of Universiti Pendidikan Sultan Idris (UPSI) designed to
accommodate 25,000 students, is under construction.
Rebak Island Resort, managed by Taj Hotels Resorts and Palaces, India’s
leading and finest luxury hoteliers, has just been awarded five star status
on 20 February 2009 by the Ministry of Tourism. The Group has spent
over RM35 million to transform Rebak Island Resort and Rebak Island
Marina into an exclusive island getaway with 84 luxury air conditioned,
timbered chalets and comprehensive international class marina facilities.
The resort is focusing on increasing the facilities and services at the wet
berths in the marina and also at the yacht hardstand.
Lake Kenyir Resort And Spa, a unique holiday destination in
Terengganu on the shores of Malaysia’s biggest lake, comprises of 135
individual timber chalets of traditional Malay architecture, reflecting the
rich cultural heritage of Terengganu but with all the trimmings of a
modern resort. With the opening of the Ulik Mayang Spa at the resort in
April 2008, guests can enjoy traditional spa treatments and massages.
Lake Kenyir is a secluded and unique destination in one of the world’s
069
oldest and most ecologically diverse rainforests with recreational facilities such as boating and fishing. Visitors
can cruise among 340 small islands in the lake, jungle trek to 14 waterfalls, bird watch its extensive hornbill
population, fish, explore caves and indulge in a wide variety of water sports, or just luxuriate and rejuvenate
in nature’s embrace.
Tekka Mall, the six-storey shopping plaza located on the verge of Little India on the corner of Serangoon and
Sungai roads in Singapore, has been revamped as an Entertainment-Lifestyle mall and rebranded as The Verge
with it’s adjoining block as Chill@The Verge. The RM25 million refurbishment and upgrading works which
started in February 2008 is expected to be completed by the 3rd quarter of 2009 and has been designed to
attract a better mix of tenants to improve occupancy and rentals and drive increased traffic. Progress has been
encouraging despite the economic challenges faced in Singapore.
Global inflationary pressures, which are on the decline as oil and other global commodity prices continue to
ease, are likely to see the Malaysian inflation rate slide back to a 2 to 3% range this year which will contain
construction costs when the economy revives. While interest rates are low, prospective purchasers will feel
encouraged to secure financing for property.
The property market will continue to offer good potential and profitability and the future Gross Development
Value projected by the Property & Infrastructure sector is substantial. We are moving forward with the
necessary development planning and authorities’ approvals and preparing for the recovery so that we can
mobilise quickly to capitalise on our plans. In addition, we are also looking internally at how best to synergise
our expertise with the Group’s real estate requirements, so we emerge leaner, stronger and more focused,
ready to meet tomorrow’s challenges.
070
Annual Report 2009
The Group’s automotive manufacturing
Complex in Pekan, Pahang is a major hub
for the local assembly of international
marques in the South East Asia region.
The complex now assembles
17,000
units of
vehicles annually
for various brands including
Mercedes-Benz, Suzuki and Isuzu.
This complex houses the manufacturing plants of HICOM Automotive Manufactures Malaysia Sdn. Bhd. (HAMM), ISUZU HICOM Malaysia Sdn. Bhd. (IHSMB),
DRB-HICOM Defence Technologies Sdn. Bhd. (DEFTECH), and DRB-HICOM Auto Solutions Sdn. Bhd. (DHAS)
071
Outlook
APPRECIATION
The outlook for the Financial Year 2009/10 is challenging, as the slowdown of
the global economy will no doubt impact the country’s consumer spending on
major items such as cars and properties.
On behalf of the Board of Directors, we would like to take this opportunity to express our
appreciation to all management and personnel within the DRB-HICOM Group who have worked
diligently towards achieving our vision and mission.
Under a 5-year Master Dealership Agreement, signed on 8 May 2009,
DRB-HICOM Berhad (DRB-HICOM)’s subsidiary, Edaran Otomobil Nasional
Berhad (EON)’s sales and service dealers will migrate to Proton Edar Sdn. Bhd.
from 1 July 2009. EON’s 40 strong branch network will be trimmed to 32 by
October 2010 and is targeted to contribute a minimum of 18% of Proton’s
sales, or about 27,000 cars. EON will continue to focus on the substantial
after-sales service market for Proton.
To our valued stakeholders, including shareholders, customers, business associates, partners
and the media, thank you for your confidence and support. We wish to also thank the relevant
Government regulatory bodies and authorities for their advice and assistance in the smooth
running of our operations.
The Group’s automotive manufacturing centre in Pekan, Pahang is a major hub
for the local assembly of international marques in the South East Asia region.
The complex now assembles 17,000 units of vehicles annually for various
brands including Mercedes-Benz, Suzuki and Isuzu.
In these uncertain economic conditions, the Group will be even more vigilant
to contain costs and improve operating efficiencies. We will closely monitor
the global trends and developments in the industries in which we operate.
We will also look for strategic investment opportunities that may arise from
these challenging times that will contribute consistent cash flow and provide
long-term growth and expansion prospects for the Group. Ultimately, these
strategies will strengthen the Group and position us for the eventual economic
recovery when it comes.
VALUES
Values form the foundation for everything that happens in our workplace.
We have invested the time to pro-actively define our values to best serve
the organisation. They are about virtue and high attainment. As a company
we value – Excellence, Decorum, Teamwork, Integrity, Innovation, Quality
and Transparency. They are the ethical foundation for interactions with our
employees, customers, suppliers, investors and the public. They form a
strategic framework for serving our customers which manifests in firmly valuebased daily decision making and they are an integral element of the Group’s
vision and mission.
It is this alignment around corporate values which empowers employees
to drive forward towards the achievement of their goals and assists us in
seizing opportunities to ensure continued growth for the Group ahead of
our competitors in today’s competitive environment. Our positive values thus
contribute to the company’s effective day-to-day functioning, as well as its
reputation and long-term sustainability.
I would like to take this opportunity to thank our distinguished members of the Board, who have
provided valuable insight and guidance to the Group during the year and to whom we will be
turning for their expertise and advice as we chart the way forward.
2008/9 was a year of continued progress for the Group where existing operations were
expanded and enhanced, and new initiatives undertaken. The Group is acutely aware of its
duty to build on these initiatives and progress to continue to improve the Group’s financial and
operational performance so that DRB-HICOM can continue to be both a great company and a
great investment.
As we gear up to meet the challenges in the year ahead we will stay firmly focused on realising
our goals to achieve greater success in all our ventures and create value for our stakeholders.
072
Annual Report 2009
Reengineering
potential for
innovation
Innovation is the cutting edge of a company’s ability to be
pioneering, staying ahead of the competition, and remain
significantly relevant in a globally competitive world.
074
Annual Report 2009
Corporate responsibility
075
076 Corporate Social Responsibility
080 Caring for the Environment 082 Calendar of Events
078 Our People
076
Annual Report 2009
corporate
social responsibility
The Group has a long tradition of fairness, accountability and working
with, and giving back, to the communities it operates within. The key
beneficiaries within the social dimension of the Group’s Corporate
Social Responsibility (CSR) programme are our people, the local
communities and also the general public. Continual contributions
and support to these stakeholders signify the essence of the Group’s
corporate citizenship awareness. The Group places emphasis on
the social, environmental and financial aspects, triple bottom line
accounting, of a service delivery system towards the goal of having a
positive impact on society while achieving business success.
DRB-HICOM is developing a new Corporate Responsibility (CR)
framework to align our social and environmental efforts to the
Group’s corporate strategy, nature of business and expectations of
our key stakeholders. An assessment of current CR initiatives and
practices across the Group is being undertaken to understand the
portfolio of CR initiatives and assess its alignment to the desired CR
framework. Moving forward, the Group will be looking into measuring
and monitoring our CR initiatives across the four CR dimensions of
environment, community, workplace and marketplace, as well as
increasing stakeholder engagement to more effectively manage our
CR efforts.
When urgent needs arise, the Group has offered immediate assistance
and contributions to those in hardship and deprivation. During the
financial year under review, fulfilling its social obligations as a
caring corporation, the Group donated RM 1 million to the National
Humanitarian fund for Gaza, to aid Palestinians affected by the war
in Gaza.
The Holiday Inn Glenmarie Kuala Lumpur recognises the importance
of being involved with the community and makes every effort to
contribute to the needy. In December 2008, the Holiday Inn Glenmarie
Kuala Lumpur, with its sister hotel Crowne Plaza Mutiara Kuala
Lumpur, organised aid and co-opted a volunteer team to help Bukit
Antarabangsa landslide victims and furnished the hotels’ function
rooms with beds to house the homeless. Meal packs for breakfast,
lunch and dinner were supplied to the rescue workers at the landslide
site to fortify them for their arduous labour. Together with the Malaysian
Association of Hotels and the Chef Association of Malaysia, the hotel
held a charity event in aid of the Paediatric Intensive Care Unit (PICU)
of University Malaya Medical Centre, Kuala Lumpur, to raise funds to
take care of critically ill children, especially those from an economically
disadvantaged background. The funds collected were donated to
purchase life saving equipment and subsidise medical costs.
September is the holy month of Ramadhan when Muslims from all
walks of life take the opportunity to extend the spirit of sharing and
giving to the less fortunate. Over 16,200 DRB-HICOM employees
received Ramadhan gifts, including dates from Yayasan Al-Bukhary.
A number of ‘Majlis Berbuka Puasa’, also known as ‘iftar,’ visits to
orphanages, as well as old folks homes, were held in this holy month
including a special iftar for DRB-HICOM Berhad employees and family
members held at the Holiday Inn Glenmarie Kuala Lumpur. More
than 450 employees and family members, together with orphans
from Rumah Kasih Harmoni and Rumah Amal Belaian Kasih enjoyed
the event, with all the children receiving ‘duit raya’. Special guests
from Persatuan Ibu Tunggal WAFIY Kuala Lumpur and Selangor were
presented with ‘duit raya’ as well as hampers, at an iftar especially
organised by DRB-HICOM and held at Muzium Kesenian Islam, Kuala
Lumpur, attended by more than 200 guests from various ministries
and members of the media.
077
A ‘Semesra Jalinan Kasih’ visit to Rumah Ehsan home for critically ill
senior citizens and the abandoned, in Kuala Kubu Bahru, was made
by members of Senior Management, their wives and staff. The home
received a practical supply of water dispenser machines, biscuits,
adult diapers, shirts, blouses, ‘kain batik’ (batik sarong), ‘kain pelikat’
and other daily necessities much needed by the patients.
Towards the end of Ramadhan, a visit to Rumah Siraman Kaseh in
Rawang was held delighting the 46 children with the opportunity
to select a baju kurung and baju melayu from a variety of colours
and designs. Donations and visits were also made by staff from the
subsidiaries across the country to the Rumah Amal Limpahan Kasih,
Puchong, Rumah Kebajikan Yayasan Rahah, Pekan, Rumah Pendidikan
Khas Titian Murni, Pekan, Rumah Anak-Anak Yatim, Sungai Petani,
Rumah Budi Yan and Rumah Tunas Harapan, Telok Ketapang and
Kuala Terengganu orphanages.
DRB-HICOM’s subsidiary company, EON, has worked closely with the
Road Safety Department to support the Road Safety Plan Initiative
2006-2010. An ‘edutainment’ programme, the Kids Street Smart
Safety Programme (KISS), launched by EON in August 2008, raised
children’s awareness of road safety. KISS highlights 3 key messages
on road safety, that is to stay safe on foot, on wheels, and on the
road, with the tagline “Think, Stop, Look, Listen & Live”. EON has
toured schools in the Klang Valley with the KISS programme while
reaching out to kids nationwide through the interactive ‘Bandar EON’
online game on EON’s website.
MODENAS, another subsidiary of DRB-HICOM, has also established a
close relationship with Road Safety Department at the national and
state levels to promote road safety to all Malaysians and during the
year mounted 3 road safety campaigns relating to motorcycle riders to
promote safe, defensive riding. MODENAS continues to offer a training
ground for students from public and private colleges. sixteen students
graduated from the training programme last year. Six programmes
at MODENAS covered the safety belt, front and back, the correct
way of wearing a helmet, the use of a safety vest and Emergency
Response Team training and convoying. PUSPAKOM is a contributor
to the “Sponsor Helmet Save A Life” campaign to reduce fatalities
among motorcyclists in the country and the ‘Galakkan Pemakaian
Topi Keledar di Luar Bandar’ to encourage the use of helmets among
riders in rural areas.
The first Chinese Primary School In Kota Kemuning, SJK (C) Chung
Hua, was opened in a landmark ceremony signifying a milestone for
the maturity and success of the township. A sum of RM5 million was
donated towards the construction and development of the school,
which consisted of two buildings, each of 4-storeys, sufficient to
house 36 classrooms as well as a headmaster’s and teachers’ room.
Providing the Kota Kemuning community the convenience of a school
within their close vicinity to serve the township’s growing population
exemplifies HICOM-Gamuda’s commitment to serve the needs of the
thriving community, ever since the inception of the township more
than a decade ago. Other schools that were given financial assistance
were Sekolah Kebangsaan Sungai Pasir, Sungai Petani for their sports
activities and Sekolah Akademi Islam Haji Abdullah Subuh, Kota Kuala
Muda, Kedah for construction of a surau.
The Group supports the Malaysian Armed Forces by providing
scholarships to the children of armed forces personnel through
its subsidiary DEFTECH. These scholarships, to study automotive,
mechanical, electrical and manufacturing engineering, as well as
accountancy, business management and law, will help the recipients
to gain a good education in these fields, and to help provide skilled
manpower for the country’s needs.
We embrace the responsibility for the impact of our activities on the
environment, consumers, employees, communities, stakeholders and
all other members of the public sphere. Furthermore, our businesses
proactively promote the public interest by encouraging community
growth and development. Essentially, what CSR means to the Group,
is the deliberate inclusion of public interest into our corporate
decision making, and the honouring of a triple bottom line: People,
Planet, Profit.
During the financial
year under review,
fulfilling its social
obligations as a
caring corporation,
the Group donated
RM 1 million to the
National Humanitarian
fund for Gaza, To AID
Palestinians affected
by the war in Gaza.
078
Annual Report 2009
our
people
The financial year under review posed some challenges in managing
the workforce as the global downturn began to impact Malaysia. The
overriding objectives have been to maintain full employment wherever
possible and increase the productivity and efficiency of the entire
organisation while managing costs discerningly.
Economic contingency management planning through dialogue and
discourse with the CEOs and Senior Management, in relation to a variety
of possible business scenarios, provided forward planning so that we
were ready to adapt to the changing economic cycle. The contingency
plans adopted under the proposition of ‘business sustainability under a
compressed environment’ were a prudent approach, consistent with the
Group’s agile response to economic realities.
The acquisition by the Group of Bank Muamalat, an Islamic bank,
and Rangkai Positif, provider of operation and maintenance services
to the Tanjung Bin power plant, introduced further diversity to our
human resource skill sets. The expansion of the Group’s enterprise
entailed the consolidation of strategic needs and the identification of
new challenges impacting talent and resource planning as we sought
to address the different customer and stakeholder bases. Group
headcount now stands 23,000 strong.
We continue to enjoy a cordial working partnership with the unions
and several Collective Agreements were renewed, on mutually
acceptable terms, with both the subsidiaries and unions recognising
the respective interests affecting the parties under the current
economic environment. We will continue to strengthen liaison with
representatives of the various unions so as to achieve the objective
of gaining the maximum amount of co-operation from the employees
in the interests of all stakeholders.
The Group promotes its affirmative stand on discipline and ethical
conduct. Respect and alignment with our values continue to dominate
at both the professional and personal level. The Code of Ethics
& Business Practice and Whistleblowing Policy, together with a
Declaration of Assets provide a governance advantage by managing
risks pre-emptively.
The identification of DRB-HICOM Leadership Competencies has
mandated necessary steps to be taken to train talent to the next level,
and to add buffered resources, so that the agility of the organisation
is minimally affected through changing times. Structures to enhance
the effectiveness of employees include assessing capabilities, staff
redeployment and rotation, and retraining staff to enhance their
mobility. The changes, effected first at Management level, are
being rolled out through the executive ranks to create a succession
framework that blends internal promotions with imported external
talent, and identifies the next generation of business leaders.
The Group promotes its affirmative stand on discipline
and ethical conduct. Respect and alignment with our
values continue to dominate at both the professional
and personal level.
A second batch of Associate Executives (Management Trainees) with
cumulative grade point averages above 3.00 were recruited as part
of a plan, initiated in the prior year, to enrich the talent stream. After
familiarisation training for 5 weeks, these young talents were placed
at both functional areas as well as business units as part of their
rotational development. In addition to developmental assignments,
cross-function work and project management, we continue to rely
on supervisory coaching and external programmes to enhance
professional and personal growth.
079
The compressed environment necessitated a review of our capacity
and capability, not only from a strategic angle, but also with a view
to realising a more prudent yet flexible approach to the manpower
complement. Compensation was reviewed in order to attract, develop
and retain talent. We also recognise that critical positions need to
be strengthened with the right developmental exposure to assure
continuity of management, capital and resource, and indeed, those
key positions are the bulwark of the Group’s productivity.
Key performance indicators continue to measure our operations
management system, accentuate the organisational management
process and realign our sense of purpose. The quantifiable metrics
built-in, also help to increase the engagement of our people on
mission critical tasks and strategies. Our conviction on the philosophy
of performance based rewards though needs to be tempered with the
realities of the economy’s trajectory and market demand.
The Group sees a business prospect in the field of education as a
whole and will explore the potential by building on the reputation and
success of Akademi Saga, our vocational school for auto technicians
and mechanics. Steps will be taken to upgrade the syllabus and
facility to stream qualified intake into the Group’s Automotive sector,
and in the national interest, into the wider automotive industry.
During the financial year under review, processes were reviewed to
ensure the Group’s subsidiaries conformed to relevant Occupational,
Safety, Health & Environmental (OSHE) related legal standards with
competent personnel available at the operational level. It is our
intention to build a strong safety culture amongst the workforce.
As reinforcement to this commitment, continuous OSHE audits,
inspections and training workshops were carried out to identify and
fill gaps. Currently, 11 Group companies have successfully attained
the ISO MS 14001, and/or OHSAS 18001, certifications.
080
Annual Report 2009
caring for
the environment
The way that human beings live and thrive involves interacting
with our environment. We depend on the natural world for our very
survival. We use water from rivers to drink, we grow our food using
the soil, we catch fish in the sea, we use timber from the forests to
build our homes. All human economic activity uses natural resources.
We rely on our natural environment for our standard of living.
Everything we do has some impact on our natural environment. We
therefore have to take care that, we do not cause too much stress
on our environment by our actions and instead make a commitment
to live in harmony with nature.
The Group has instituted an awareness programme for all employees
on how to control wastage and deliver our commitment towards cost
reduction and electricity conservation and has invited feedback and
innovation while monitoring progress. Caring for the environment
is more than an occasional activity. It takes continuous effort and
commitment to conserve the world around us.
The Group is actively
promoting the
protection of the
environment. All
company sites, wherever
they are located, will
be managed in a way
that allows the setting
of clear environmental
targets and the
regular monitoring
of environmental
performance and
measuring the same
against these targets.
DRB-HICOM’s associate company, Honda Malaysia, has raised the
level of environmental consciousness and built understanding on
environmental conservation and extinction through an online game
contest and its Sumatran Rhino roadshows. Targeted at primary
school children and young adults, the ‘Nature Quest’ online game
contest aims to strengthen awareness and create understanding
of the importance of environmental conservation, working towards
realising a dream of a greener world. Honda Malaysia, together with
WWF-Malaysia, has initiated and committed to a five year project
to save the Sumatran rhinos, the nation’s most endangered animal.
Honda Malaysia has pledged a contribution of RM5 million to WWFMalaysia to further strengthen Sumatran rhino conservation efforts.
Talks on the environment and the Sumatran rhino have reached
nearly 6,000 students in 28 schools in Malaysia since 2006. The
rhino school talks have been conducted in Klang Valley, Penang
and Johor Bahru and the next round will be held in Malacca. The
‘Save our Sumatran Rhino’ campaign is entering its fourth year of
project as Honda Malaysia raises awareness and educates future
generations on the importance of preventing extinction by caring for
the environment.
All the subsidiaries have taken a proactive approach in a Group
sponsored ‘Save the Environment’ campaign by adopting a Reduce,
Reuse, Recycle (3R) programme. Paper consumption has been
reduced by utilising recycled paper, printing internal memos and
documents on the reverse blank side of used paper, duplex printing
and segregating waste paper for recycling by having separate bins in
offices. The energy conservation programme reflected in ISO 14001’s
key performance indicators starts by identifying energy consumption
per year and studying methods to reduce electricity such as by
switching off lights and office equipment over lunch and at night.
The industrial operations have reduced the usage of cotton and
leather gloves by imposing a strict control on distribution on an
exchange basis only. All used packaging items (cardboard, carton
boxes, plastic, wooden pallets, metal frames and paper) are collected
and sold to the recycling contractor. Transportation has been optimised
to maximise the number of deliveries per trip per day. The coolant
from machining processes is reused after undergoing treatment,
contributing to the reduction of coolant usage from 0.01 litre per
unit in 2007 to 0.006 litre per unit in 2008. The standard ‘B’ effluent
discharge water from waste coolant treatment units is reused for
cleaning mops and machine parts. Electricity usage too has been
cut by reducing air leaks from machines, changing to energy saving
fluorescent lights, installing transparent roofs and walls to let in light,
a reduction of forklift operating hours and replacing air conditioning
units with ceiling fans in canteens.
PUSPAKOM’s efficient and accurate computerised vehicle inspection
system, available at 60 branches and prepared to inspect 4 million
vehicles annually, is playing an important role in minimising the
amount of pollution from cars, trucks and buses in the country. The
density of particles in diesel engine emissions are gauged through free
acceleration tests and the volume of hydrocarbon and carbon monoxide
gases in petrol engines are measured through an idling test.
DRB-HICOM’s subsidiary Alam Flora, the waste management services
provider, takes a leading role in environmental protection, promoting
the 3R programme. The community is central to all 3R activities.
Children and students are another focus group of the company and
recycling campaigns have been carried out in schools and communities
to inculcate the recycling habit. Awareness programmes have also
been carried out via annual environment themed competitions, essay
writing and colouring contests for both national and vernacular
primary schools. The number of entries for these competitions have
been increasing over the years which goes to show that more
schools are giving special attention to environmental education.
Between 2006 and 2008, Alam Flora has carried out a total of 478
recycling awareness programmes in schools and private institutions.
In year 2008, Alam Flora has collected approximately 7,000 tonnes
081
of recyclable items and waste papers (66%) contributed the highest
percentage as compared to the other recyclable items such as
plastic (18%), scrap metals (15%) and others (1%). A joint venture
project with the Ministry of Housing and Local Government to publish
awareness materials on recycling and solid waste management in the
form of books and VCDs, cost RM1.5 million.
Alam Flora’s Research & Development department is developing
hi-tech environmental products. These projects will innovate and
promote potential waste treatment technologies which are compatible
with local waste characteristics. They will be based on sound scientific
principles which are technically and operationally proven to produce
commercially accepted products.
Organic waste can be converted into compost or to high end,
bio-fertiliser. The wet nature of organic waste in Malaysia is a
challenge. A specific waste treatment technology that can process
organic waste without a complex pre-treatment methodology to
prepare the waste for further processing is preferred. Alam Flora is
currently collaborating with the International Bio-Recovery Corporation
of Canada, through its local agent, to develop an Enhanced Autogenous
Thermophilic Aerobic Digestion (EATAD) plant to process organic
waste into bio-fertiliser. Waste in Malaysia also contains a significant
composition of plastic scraps. As an alternative, and rather than selling
the scrap to recyclers, Alam Flora will collaborate with Alphakat GmBh
of Germany, through its local agent, to develop a Waste-to-Diesel
plant utilising a Catalytic De-Polymerisation Process.
As an environmental management company which is committed to
the enhancement of environment, Alam Flora has actively participated
in landfill rehabilitation and closure projects. To ensure the viability of
the projects, Alam Flora has teamed up with Bionersis SA of France
to provide the technology and expertise in landfill gas extraction and
its potential conversion to energy for commercially viable landfills
in Malaysia. The expertise of Bionersis SA in Clean Development
Mechanisms (CDM) will be tapped to obtain funding and generate
revenue from international carbon trading under the ambit of United
Nations Frameworks for Climate Change (UNFCC) Committee.
Holiday Inn Glenmarie Kuala Lumpur has also successfully attained ‘Benchmarked Bronze’ status
in October 2008 under the globally recognised Green Globe Benchmarking Certification and
Performance Improvement System, which helps international organisations attain sustainability.
The hotel pledges to maintain the highest environmental standards and commits to meet
benchmark expectations in energy and water consumption, waste production and community
relations. The implementation of an integrated environmental sustainability policy is the mark of
a responsible hotel that employs internationally accepted best practices that benefit guests and
are kind to the environment.
The Rebak Island Resort has a very strong view relating to the preservation of the environment.
Throughout 2008 the resort has organised co-operative clean-up campaigns once a month in
the area surrounding the hotel and Port Langkasuka jetty as part of a 3R programme. Under
an energy conservation programme, the hotel has introduced compact fluorescent lights in a
majority of the resort’s function areas and has become a member of the Green Globe. Five hotel
rooms have been converted into green rooms as a way to reduce the use of ozone depleting
gases, which are found mostly in refrigerators. In these rooms we have taken out the mini-bars
and have designed energy saving layouts.
The Group’s strategic positioning on energy saving and environmental protection has set the goal
of providing innovative solutions to the upcoming challenges. This is why the Group is undertaking
to review all processes to reduce waste, promote recycling, manage natural resources, and limit
emissions into the air. The Group is actively promoting the protection of the environment. All
company sites, wherever they are located, will be managed in a way that allows the setting
of clear environmental targets and the regular monitoring of environmental performance and
measuring the same against these targets. The subsidiaries will strive to raise their main
environmental performance standards even if that means going beyond the requirements of local
legislation, so that we can make a positive contribution to a green world.
082
Annual Report 2009
calendar of
events
11 April 2008
DRB-HICOM & MIDEA SIGNING CEREMONY
HICOM Holdings Berhad (HICOM) entered into a partnership with Midea Refrigeration
Ltd. (Midea) to establish Scott & English Electronics Sdn. Bhd. (SEE) with Eastern Trinity
Sdn Bhd.
21 April 2008
DEFENCE SERVICES ASIA EXHIBITION 2008
DEFTECH participated for the sixth time in the Defence Services Asia exhibition, which was
held at Putra World Trade Centre (PWTC), Kuala Lumpur from 21st to 24th April 2008.
06-08 May 2008
EUROPEAN AUTOMOTIVE COMPONENTS EXPO 2008
DRB-HICOM Automotive Components companies set a milestone by being the only Malaysian
exhibitor at the European Automotive Components Expo 2008, in Stuttgart, Germany from
6th to 8th May 2008.
18 May 2008
ALAM FLORA GOTONG-ROYONG BERSAMA YB DATO’ SARAVANAN, KG BARU.
Alam Flora initiated a ‘gotong-royong’ with the residents of Kampung Pindah of Kampung
Baru, Kuala Lumpur. The Kampung Pindah ‘gotong-royong’ was launched by the Deputy
Minister of Federal Territory Datuk M. Saravanan. Also present was DRB-HICOM Berhad
Group Managing Director Datuk Haji Mohd Khamil bin Jamil.
083
26-31 May 2008
MIDEA CHINA FACTORY VISIT
Midea Scott & English Electronics Sdn. Bhd., the Malaysian distributor for Midea, a leading
manufacturer in the white goods market for air-conditioners and home appliances, invited
the Malaysian media on a brand familiarisation tour of a Midea Refridgeration Ltd. factory
in China.
20 june 2008
CEO’S APPRECIATION NIGHT
An appreciation night for the Group’s CEOs was held at the Windows of KL, Crowne Plaza
Kuala Lumpur in a very relaxed atmosphere. “Cowboy Nite” was selected as the theme
for this year’s event and everyone geared up in their best cowboy or cowgirl outfit for an
evening of good entertainment.
20 june 2008
AUDI NEW A4 LAUNCH
DRB-HICOM Berhad’s automotive manufacturing complex in Pekan, Pahang, can be a site
for the local assembly of Audi cars in the Southeast Asian region. The launch of the new
A4 1.8T has rejuvenated Euromobil’s strategy to elevate Audi to the same rank as the two
other leading German marques in the local premium car segment.
26 june 2008
ASEAN AUTOMOTIVE AWARD - HICOM-TECK SEE (M) SDN. BHD.
HICOM-Teck See (M) Sdn. Bhd. was proud to receive the ‘Automotive Component
Manufacturer of the Year 2008’ Frost & Sullivan ASEAN Automotive Award.
084
Annual Report 2009
calendar of events (Continued)
30 june 2008
EON EGM
Edaran Otomobil Nasional Berhad (EON) held an Extraordinary General Meeting (EGM) at
the Glenmarie Ballroom, Holiday Inn Glenmarie Kuala Lumpur, Shah Alam, Selangor to seek
shareholders’ approval on the proposed voluntary withdrawal of EON from the official list of
the Main Board of Bursa Malaysia Securities Berhad (Proposed De-Listing).
20 July 2008
THE 7th PACIFIC INTERNATIONAL ENTREPRENEUR AWARD 08 – ALAM FLORA
Alam Flora was honoured with ‘Excellence Leadership’ and ‘Excellence Service Quality’
awards at the 7th Pacific International Entrepreneur Awards 2008 which was held at the
Palace of Golden Horses, Kuala Lumpur.
24 July 2008
THE OFFICIAL LAUNCH OF SUZUKI SX4
Suzuki Malaysia Automobile Sdn. Bhd. launched their latest model, the Suzuki SX4 Sedan,
which is imported fully built-up from Japan.
01-02 August 2008
MODENAS YUZY PACHI RACING TEAM at BATU KAWAN
The Modenas Yuzy Pachi Racing Team were in the hunt for top honours 2008 at the
PETRONAS Sprinta AAM Malaysian Cub Prix Championship at the Batu Kawan circuit on
1st and 2nd August 2008.
085
11 August 2008
MODENAS LAUNCHes NEW MOTORCYCLE VARIANTS
New variants of the Passion 125 and Kriss 120 motorcycles launched by Motosikal and
Enjin Nasional Sdn. Bhd. (MODENAS), a DRB-HICOM Berhad’s subsidiary, contributed to a
rise in sales to 85,000 units of motorcycles for the year under review.
12 August 2008
KLAS’ AIRLINES APPRECIATION AWARDS DINNER
Kuala Lumpur Airport Services Sdn. Bhd. (KLAS) organised an Airlines Appreciation Awards
Dinner to show its heartfelt appreciation to the airline clients who have supported the
company over the last 10 years. The fun-packed night included an exhilarating performance
from a 3-piece Jazz band and lucky draws with grand prize holiday packages.
21 August 2008
Souq Al-bukhary ‘doa selamat’ ceremony
This Majlis Doa Selamat held at the Commercial Centre, Alor Setar, Kedah was attended
by over 600 people.
12 September 2008
DPM and DRB-Hicom staFF ‘mesra ramadhan’ ceremony, pekan, Pahang
More than 1,300 employees in Pekan, Pahang together with their family members were
gathered at Masjid At-Takwa for an “iftar” organised by DRB-HICOM Berhad. The event was
graced by Y.A.B Dato’ Sri Mohd Najib bin Tun Abdul Razak, the then Deputy Prime Minister of
Malaysia, and Y.Bhg. Datin Sri Rosmah Mansor and also the Management of DRB-HICOM.
086
Annual Report 2009
12 September 2008
Sinar Ramadhan visit, PEKAN
A visit to Pusat Pemulihan Dalam Komuniti (PDK) Titian Murni in Pekan, Pahang was arranged
to meet and get to know the inmates. All the 46 house inmates were presented with hampers
and ‘duit raya’ by YBhg Datin Azian Abdul Talib and Puan Mumtazah Jaafar. The visit was a
follow-up after the delivery of physiotherapy equipment sponsored by DRB-HICOM last year.
15 September 2008
DRB-HICOM breaking of fast with corporate clients
An “iftar” especially organised for DRB-HICOM’s corporate clients was held in Muzium
Kesenian Islam, Kuala Lumpur. More than 200 guests from various Ministries, Corporate
Clients and members of the media were invited.
16 September 2008
semesra jalinan kasih visit, rumah ehsan kkb
A visit to a home for critically ill senior citizens and the abandoned, Rumah Ehsan in Kuala
Kubu Bahru, and a “Semesra Jalinan Kasih” event, were attended by members of the Senior
Management, their wives and staff.
19 September 2008
DRB-HICOM employees breaking of fast with families and orphans
A special “iftar” for DRB-HICOM Berhad’s employees and their families was held at Holiday
Inn Glenmarie Kuala Lumpur. More than 450 employees and family members together with
orphans from Rumah Kasih Harmoni and Rumah Amal Belaian Kasih enjoyed the event
while the children received ‘duit raya’ from the Management.
087
25 September 2008
CHARITY HOME VISIT-SIRAMAN KASEH HOME
Wives of the Senior Management members and staff, in support of the community, visited
Rumah Siraman Kaseh in Rawang bringing with them new outfits, goodie bags and ‘duit
raya’ as gifts for the children.
23 September 2008
DRB-HICOM AGM/EGM
DRB-HICOM Berhad held its 18th AGM and EGM at the Glenmarie Ballroom, Holiday Inn
Glenmarie Kuala Lumpur. In addition to accepting DRB-HICOM Berhad’s audited financial
statements for the year ended 31st March 2008, the AGM also approved a motion to reelect YBhg Datuk Haji Abdul Rahman bin Mohd Ramli, Y.Bgh Dato’ Syed Mohamad bin Syed
Murtaza and Mr Ong Ie Cheong as directors.
17 october 2008
DRB-HICOM “HARI RAYA” OPEN HOUSE
The spirit of the Eid celebration was in the air as more than 1,200 guests, corporate clients
and media friends thronged the ballroom at the Istana Hotel. Joining the festive occasion
were children and single mothers from Asrama Damai in Kuang, who where presented
with ‘duit raya’.
21 october 2008
HAJJ GUIDE BOOK CONTRIBUTION
Joining Tabung Haji’s Corporate Member Programme, the company made a contribution
towards the publication of a special book that serves as a guide for Hajj pilgrims.
088
Annual Report 2009
31 october 2008
PUSPAKOM CUSTOMERS APPRECIATION NITE
Customers’ support and commitment towards ensuring their vehicles safety, in line with
Puspakom’s main business objective, was recognised at a dinner held especially for them.
Also present at the dinner was the then Transport Deputy Minister YB Datuk Seri Panglima
Haji Lajim bin Haji Ukin who presented awards to the deserving recipients.
13 November 2008
INTRADE 08’ EXPO
DRB-HICOM Automotive Components companies and MODENAS collaborated to explore
business opportunities at this tradeshow. Launched by the then International Trade &
Industry Minister, YB Tan Sri Dato’ Muhyiddin bin Mohd Yassin, the exhibition attracted more
than 4,500 visitors.
18 November 2008
AKASHI KIKAI & OSI SEALS AGREEMENT
In line with OSI’s objective of increasing sales and enhancing its status as a quality
manufacturer of lower arms and rear axles, Akashi Kikai of Japan has agreed to be a
Technical Assistant, as a continuation of the D18D Perodua Project.
03-07 december 2008
‘CINTAI MALAYSIA’ 2009 expo
Officiated by the then Prime Minister of Malaysia, Y.A.B. Dato Seri Abdullah Haji Ahmad
Badawi, the company participated in the ‘Cintai Malaysia’ 2009 Expo recognised as the
largest trade and consumer fair, which showcased a variety of newly launched products
and services.
089
18 december 2008
ALAM FLORA & UKM SIGN AGREEMENT
Alam Flora Sdn Bhd. entered into a joint collaboration with Universiti Kebangsaan Malaysia (UKM)
to organise programmes on Research & Development on solid waste management, which will
lead to developing a fully integrated solid waste management eco-campus, by sharing theoretical
and practical information through seminars, training programmes and discussions.
18 december 2008
STAFF CHILDREN EDUCATION VISIT TO PROTON PLANT
The DRB-HICOM Sports Club took 25 staff’s children on an educational visit to the PROTON
Tanjung Malim Plant. There, they were given a first hand look at the process of assembling
cars and manufacturing parts.
15 January 2009
LAUNCH OF UOB CASHAssure
United Overseas Bank (Malaysia) Berhad (UOB), a business partner of Uni.Asia Life recently
launched CASHAssure, an endowment plan that provides a guaranteed annual cash return
of 8% - making it the highest in the market.
16-20 January 2009
‘BUY MALAYSIA’ CAMPAIGN ROADSHOW 2009
HICOM Properties Sdn. Bhd. participated in a 5-day roadshow held from 16th to 20th
January 2009 at Mydin Mall USJ in conjuction with the campaign ‘Buy Malaysia’ which
was officiated by Y.A.B. Prime Minister of Malaysia.
090
Annual Report 2009
31 January 2009
IN THE NAME OF HUMANITY
Fulfilling its social obligations as a caring corporation, the Group donated RM1 million to the
National Humanitarian Fund for Gaza, which will go towards aiding Palestinians affected by
the war in Gaza.
14 February 2009
A MEDIA FRIENDLY BOWLING TOURNAMENT
DRB-HICOM’s inaugural Media Bowling Tournament was held on 14th February 2009 at
Sunway Megalane, Sunway Pyramid as part of the Group’s efforts to strengthen ties with
the media and thanking them for their support.
27 February 2009
FOREIGN VISITorS TO ALAM FLORA
Alam Flora Sdn. Bhd. hosted accomplished environmentalists from Australia, Mr Greg S. J.
Gornall, Managing Partner of MGB Environmental Consultants Pty Ltd and Mr Harry Wilson,
Managing Director, SMS Municipal Services Pty Ltd, on 23rd February 2009 to discuss best
practices on waste management.
28 February 2009
MOU BETWEEN HICOM AUTOMOTIVE MANUFACTURERS (M) Sdn Bhd (HAMM) and
UNIVERSITY OF MALAYSIA PAHANG
An MOU was signed between HICOM Automotive Manufacturers (M) Sdn. Bhd. (HAMM) and
Pahang University of Malaysia (UMP) on 28th February 2009 covering Academic Studies,
Research and Development, Human Capital Development, and other related activities.
091
03 March 2009
EXPLORING NEW HORIZONS with MATRADE
To explore new markets and partnerships, DRB-HICOM Berhad and the Malaysia External
Trade Development (MATRADE) co-organised a presentation on the opportunities within the
Group for selected Ambassadors and Consul Generals from South Asia, East Asia, the Middle
East and Africa on 3rd March 2009, in MATRADE Hall.
04 March 2009
MAIS VISITS DRB-HICOM
Representatives from Majlis Agama Islam Selangor (MAIS) paid a visit to DRB-HICOM on
4th March 2009 and were briefed on the Group’s products and services.
11 March 2009
FLEET KEYS HANDOVER TO RISDA & IWK
HICOM Perkasa national trucks have been well accepted by both individual and fleet
customers. Ceremonies were held to hand over fleet keys to RISDA Fleet Sdn. Bhd. and
Indah Water Konsortium Sdn Bhd.
23 March 2009
LAUNCH OF GT 128 BY MODENAS
Motosikal dan Enjin Nasional (Modenas), a DRB-HICOM unit, launched the 130cc Modenas
GT 128, a sporty, fuel efficient model in four colours, with a host of attractive features,
to the Malaysian market on March 23rd 2009.
092
Annual Report 2009
Pursuing
potential for
growth
Diversity in strength provides the doors that will unlock
opportunities for growth and networks for expansion, which is
paramount to industries that look beyond its shores.
094
Annual Report 2009
CORPORATE GOVERNANCE
095 Statement on Corporate Governance
104 Statement on Internal Control 106 Audit Committee Report 110 Additional Compliance Information
114 Statement of Directors’ Responsibility
095
statement on
corporate
governance
T o ensure the achievement of the Group’s overall strategic direction and Annual
Management Plan, yearly Key Performance Indicators (“KPIs”) have been formulated for
the Group Managing Director and these KPIs are cascaded down to the respective Chief
Executive Officers/Chief Operating Officers and other Management team members of the
Group. The KPIs track the implementation of the Group’s strategic goals approved by the
Board for each financial year.
In addition, to ensure an optimum structure for efficient decision-making, the Boards of the
Company and all Group Companies, approved a framework on Limits of Authority (“LOA”).
Such LOA expressly set out the matters which are reserved for Board approval, as well
as matters which the Board may delegate to Board Committees, the Group Managing
Director and Management. The Management’s responsibilities and authorities are defined
in the LOA. The LOA is reviewed as and when required.
The Directors continue to observe the Company Directors’ Code of Ethics established
by the Companies Commission of Malaysia in carrying out their fiduciary duties and
responsibilities. This would ensure that high ethical standards are upheld, and that the
interests of stakeholders are always taken into consideration. The Directors are required
to declare their direct and indirect interests in the Company and related companies. It is
also the Directors’ responsibility to declare to the Board whether they and any person(s)
connected to them have any potential or actual conflict of interest in any transaction or
in any contract or proposed contract with the Company or any of its related companies.
Any Director who has an interest in any related party transaction shall abstain from Board
deliberation and voting and shall ensure that he and any person(s) connected to him will
also abstain from voting on the resolution before them.
Corporate Governance sets out the
framework and process by which
companies, through their Board of
Directors and Management, regulate
their business activities. It balances
sound and safe business operations
with compliance of the relevant laws
and regulations.
The Board of Directors of DRB-HICOM is committed to ensuring that the highest standards of
Corporate Governance are practised throughout the Group as a fundamental part of its responsibilities
in managing the business and affairs of the Group and protecting and enhancing shareholders’ value
and financial performance.
The Board is pleased to set out below the manner in which the Company has applied the principles
set out in the Malaysian Code on Corporate Governance (“the Code”) and the extent to which the
Company has complied in all material respects with the best practices of the Code during the
financial year ended 31 March 2009.
1.
BOARD OF DIRECTORS
1.1 Duties and Responsibilities of the Board
T he Board has the overall responsibility in leading and determining the Group’s overall
strategic direction as well as development and control of the Group. The Board approves the
Group’s Annual Management Plan and the overall strategic direction on a yearly basis. The
Board retains full and effective control of the Group by reviewing Management’s performance
against the Annual Management Plan periodically and ensures that the necessary financial
and human resources are available to meet the Group’s objectives. The Board is responsible
for succession planning, including appointing and fixing the remuneration of and, where
appropriate, replacing senior management. The Board is also responsible for identifying
principal risks and ensuring the implementation of appropriate systems to manage these
risks; developing and implementing an investor relations programme; and reviewing the
adequacy and integrity of the Group’s system of internal controls.
1.2 Composition and Balance
The current Board has eight (8) members, comprising seven (7) Non-Executive Directors
(including the Chairman) of whom five (5) are independent as defined by the Bursa
Securities Main Market Listing Requirements (“Bursa Securities Listing Requirements”).
There were two (2) Executive Directors, but one resigned on 1 November 2008. Hence,
the Board more than fulfils the prescribed requirements for one-third of the membership
of the Board to be Independent Board Members.
The Nomination Committee, pursuant to its recent annual review, is satisfied that the
size and composition of the Board is appropriate and well balanced to fairly reflect
the interests of major and minority shareholders. The Nomination Committee is also
satisfied that all members of the Board are suitably qualified in view of their respective
qualifications and experience which provide the Board with a good mix of industryspecific knowledge and broad business sense and commercial experience. This balance
enables the Board to provide clear and effective leadership to the Group and bring
information and independent judgement to many aspects of the Group’s strategy and
performance so as to ensure that the highest standards of professionalism, conduct,
transparency and integrity are maintained by the Group.
096
Annual Report 2009
statement on corporate governance (Continued)
The five (5) Independent Directors in effect represent the interest of minority shareholders
of the Company by virtue of their roles and responsibilities as Independent Directors.
They play an important and pivotal role in corporate accountability, which is reflected
by their memberships of and attendances at the various Board Committees. None of
the Independent Directors participate in the daily management of the Group to ensure
that they are free from any relationship which could interfere with the exercise of
independent judgement in the best interests of the Company and of the minority
shareholders.
The Independent Non-Executive Chairman, YBhg Dato’ Syed Mohamad bin Syed Murtaza,
is the Company’s Senior Independent Non-Executive Director responsible for providing
clarifications to the shareholders at the Company’s general meetings.
The Directors are well experienced in their respective fields and together provide an
effective blend of entrepreneurship, business and professional expertise. A brief profile
of each Director is presented on pages 18 to 23. No individual or group of individuals
dominates the Board’s decision-making as the Independent Directors play an important
role in providing independent views and opinions by objectively participating in the
proceedings and decision-making process of the Board. The Board discharges its duties
effectively and takes into account the interests of all stakeholders.
1.3Roles and Responsibilities of the Chairman and the Group Managing Director
The Chairman who was appointed on 1 July 2009, has not held any executive capacity
in the Group. The roles of the Independent Non-Executive Chairman and the Group
Managing Director are distinct and separate so as to ensure that there is a balance
of power and authority. The Chairman is responsible for ensuring Board effectiveness
and conduct. He encourages a healthy debate on issues raised at meetings, and gives
opportunity to Directors who wish to speak on the motions, either for or against them.
The Group Managing Director has overall responsibility for the management of the
operating units, organisational effectiveness and the implementation of Board policies,
decisions and strategies.
1.4 Appointments and Training
There is a formal and transparent procedure for the appointment of new Directors
to the Company and the Group, with the Nomination Committee evaluating and
making recommendations to the Board. Following the appointment of new Directors
to the Board, the Nomination Committee will ensure that an induction programme is
arranged, including visits to the Group’s significant businesses and meetings with senior
management as appropriate, to enable them to get a full understanding of the nature
of the businesses, current issues within the Group and corporate strategies as well as
the structure and management of the Group.
All existing Directors have completed the Mandatory Accreditation Programme and are
also encouraged to attend continuous education programmes and seminars to keep
abreast with latest developments in the marketplace and to further enhance their
business acumen and professionalism in discharging their duties to the Group.
Seminars and conferences attended by Directors during the financial year ended 31
March 2009 include the following:•
New Developments on the Companies (Amendment) Act 2007, Revised Malaysian
Code and Corporate Governance and Revised FRSs
•
The Companies (Amendment) Bill 2007
•
Effective Chairmanship
•
Investor Relations – A necessity, Not a Choice
•
Annual MAICSA Conference 2008
•
2nd International CEOs Conference 2008
•
Management of Anti-Fraud Programmes and Control (Guidance to Prevent and
Deter Fraud)
•
Latest Emerging Issues for Public Companies
•
P ublic Sector Governance & Internal Control of the Board & Investment Panel of
the EPF
•
How Leaders Go Wrong
•
Risk Governance
•
Progressive Business Strategies Conference
•
Food and Energy Security & Stemming the Tide of the Global Financial Crisis
Apart from attending various conferences and seminars organised by external/internal
organisers during the financial year, the Directors also continuously received briefings
and updates on regulatory, industry and legal developments, including information on
the Group’s businesses and operations, risk management activities and other initiatives
undertaken by Management.
The Board, through its delegation to the Nomination Committee, has implemented
the process for an annual effectiveness assessment of the Board of Directors, Board
Committees and the contribution of each Director to the effectiveness of the Board.
The objective is to improve the Board’s effectiveness by identifying gaps, maximising
strengths and addressing weaknesses. The Chairman of the Nomination Committee
oversees the overall evaluation process whereby self-assessment methodologies are
used and issues for assessment are presented in customised questionnaires.
097
1.5 Re-Appointment and Re-Election of Board members
Pursuant to Section 129 (2) of the Companies Act, 1965, Directors who are over the
age of seventy (70) years shall retire at every annual general meeting and may offer
themselves for re-appointment to hold office until the next annual general meeting. In
accordance with the Company’s Articles of Association, any new Director so appointed
should hold office only until the next annual general meeting and should then be eligible
for re-election.
The Articles also provide that all Directors shall retire from office by rotation once every
three years but shall be eligible for re-election.
The Nomination Committee reviews and assesses annually the proposed re-appointment
and re-election of existing Directors who are seeking re-appointment and re-election at
the annual general meeting of the Company. The Nomination Committee will, upon its
review and assessment, submit its recommendation on the proposed re-appointment
and re-election of Directors to the Board for approval, before tabling such proposals to
the shareholders at the annual general meeting.
The re-appointment and re-election of Directors provide shareholders an opportunity to
reassess the composition of the Board.
1.6 Board Meetings and Supply of Information to the Board
To ensure that the Group is managed effectively, the Board meetings for the ensuing
financial year are scheduled in advance before the end of each calendar year so
as to enable Directors to plan ahead and fit the year’s Board meetings into their
own schedules.
The Board meets at least once every quarter and additional meetings are convened
between the scheduled meetings as Special Board Meetings as and when necessary to
consider matters or business issues that require decision by the Board. To assist the
Board in effective control of the Group, the Board meetings are governed by a structured
formal agenda and schedule of matters arising for approval or notation with sufficient
time given for deliberations. The key matters reserved for approval by the Board are
the Group’s strategic and Annual Management Plan, quarterly financial results, audited
financial statements, significant expenditures, significant acquisitions and disposals,
appointment of Directors/Board Committee members, remuneration for Directors
(excluding fees), declaration of interim dividends, related party transactions, major
restructuring and such other relevant matters affecting the Group’s operations. The
Directors are supplied in a timely manner with information in a form and of a quality
as appropriate for their perusal in advance of the date of the Board meeting. In addition
to financial information, other information deemed suitable such as risk management
updates, customer satisfaction, product and service quality, market share and market
trends, manpower and human resource and environmental issues are also provided.
Prior to Board Meetings, all Directors will receive the agenda and a set of Board Papers
containing information relevant to the matters to be deliberated at the meetings.
All Directors, whether independent or otherwise, have direct and unrestricted access
to Management, and the advice and services of the Company Secretary and may
seek professional advice at the Group’s expense, if required. Professional advisers,
consultants, auditors and solicitors appointed by the Company to advise on corporate
proposals to be undertaken by the Company, would be invited to attend Board meetings
to render their advice and opinion, and also to clarify any issues raised by the Directors
relating to any relevant business tabled for the Board’s consideration.
During the financial year ended 31 March 2009, the Board met a total of ten (10) times.
All Directors attended more than half of the meetings held during the financial year/
since appointment in compliance with Bursa Securities Listing Requirements. Details of
the attendances of Directors at the Board Meetings are disclosed below:
Meetings
Attended during
financial year
Dato’ Syed Mohamad bin Syed Murtaza 9/10
10/10
7/10
9/10
7/10
Tan Sri Marzuki bin Mohd Noor 10/10
Ong Ie Cheong 10/10
Ooi Teik Huat (appointed 1.11.2008)
4/4
Annual Report 2009
098
1.7 Board Committees
•
To ensure the effective discharge of its fiduciary duties, the Board has delegated specific
responsibilities to the respective Committees of the Board. The functions and terms of
reference of Board Committees, as well as the levels of authority delegated by the Board
to these Committees, are clearly set out by the Board.
The Nomination Committee meets at least once a year, and is responsible to:a.Evaluate and recommend to the Board, candidates for directorships of
the Company and the Group;
b.Recommend to the Board, Directors to fill the seats on Board
Committees;
The Chairman of the respective Board Committees will report to the Board, the outcome
of Board Committee meetings and the Board also reviews the minutes of the Board
Committee Meetings. The Board retains full responsibility for the direction and control
of the Group.
c.Evaluate the effectiveness of the Board and Board Committees
(including its size and composition) and contribution of their
members;
The Board Committees in the Company are as follows:-
d.Review Management’s recommendations on appointments or
promotions of senior management personnel;
i.
Audit Committee
•
The composition of members and meetings attended, terms of reference
and functions of the Audit Committee are described in the Audit Committee
report set out on pages 106 to 109.
e.Ensure an appropriate succession planning framework and plan for
Board and Management succession for the Group;
•
The Audit Committee meets not less than four (4) times a year.
f.Ensure the interests of the minority shareholders are fairly reflected
on the Board; and
ii. Nomination Committee
•
g.Recommend continuous appropriate training programmes for
Directors.
The composition of the Nomination Committee is as follows:-
During the financial year ended 31 March 2009, a total of three (3)
meetings were held by the Nomination Committee and the members
registered full attendance at all meetings except the Chairman who was
appointed on 1 July 2009.
(Chairman/Senior Independent Non-Executive Director)
(Independent Non-Executive Director)
(Non-Independent Non-Executive Director)
iii.
Remuneration Committee
•
The composition of the Remuneration Committee is as follows:-
(Chairman/Senior Independent Non-Executive Director)
Ong Ie Cheong
099
•
Management have also established a Group Risk Management Committee (“RMC”) to
assist the Board in identifying principal risks affecting the Group and to ensure that
appropriate systems are in place to mitigate such risks so as to safeguard shareholders’
investments and group assets. The RMC is chaired by the Group Managing Director and
comprises representatives from the respective business divisions.
The Committee meets at least once a year, and is responsible to:a.Establish and recommend the remuneration structure and policy for
Executive Directors and senior management; the terms of employment
or contract of employment/service, any benefit, pension or incentive
scheme entitlement; and other bonuses, fees and expenses; and any
compensation payable on the termination of the service contract by
the Company and/or the Group and to review for changes to the
policy, as necessary;
The Board through the RMC oversees the risk management activities of the Group. The
RMC formulates relevant proposals on risk management policies and risk measurement
parameters across the Group and makes the appropriate recommendations to the
Board for its approval. The RMC is responsible for ensuring that the risk management
framework in the Group operates effectively based on the policies approved by the
Board and reports on a regular basis to the Board on the key risks, controls to mitigate
the risk and action plans. Further details on the RMC are set out in the section on “Risk
Management” in the Statement on Internal Control.
b.Ensure that a strong link is maintained between the level of
remuneration and individual performance against agreed KPIs with the
performance-related elements of remuneration forming a significant
proportion of the total remuneration package of Executive Directors
and senior management;
The minutes of the MANCO and RMC meetings are submitted to the Board for notation.
c.Review and recommend the entire individual remuneration packages for
each of the Executive Directors and senior management personnel;
d.Review with the Group Managing Director and the Executive Directors,
their goals and objectives and to assess their performance against these
objectives as well as their contribution to the corporate strategy; and
e.Review and recommend to the Board any employees’ share option
scheme.
During the financial year ended 31 March 2009, a total of two (2) meetings
were held by the Remuneration Committee and the members registered full
attendance at all meetings.
1.8 Other Committees
In relation to matters pertaining to the management and performance of the Group and
its business including the operational aspects and strategic development of the Group,
the Board has delegated certain responsibilities to the Group Managing Director, who is
supported by a Management Committee (“MANCO”). The MANCO, comprising the Group
Managing Director as Chairman, the Group Chief Financial Officer and certain key senior
management members, is responsible for formulating Company and Group policies for
recommendation to the Board for consideration and implementing key policy decisions
of the Board.
1.9 Directors’ Remuneration
The objectives of the Group’s policy on Directors’ remuneration is to ensure that the
Group attracts and retains Directors of the calibre and integrity to run the Group
successfully. In the case of Executive Directors, remunerations are structured so as to
link rewards to corporate and individual KPIs. In the case of Non-Executive Directors,
the level of remuneration reflects the experience and level of responsibilities undertaken
by the particular Non-Executive Director concerned.
The Remuneration Committee is responsible for setting the policy framework and for
making recommendations to the Board on all elements of the remuneration and other
terms of employment of the Executive Directors and senior management.
The Executive Directors abstain from deliberation and voting on decisions in respect of
their own remuneration. The remuneration (excluding fees) of Non-Executive Directors is
to be decided by the Board as a whole.
Annual Report 2009
100
Details of Directors’ remuneration for the financial year ended 31 March 2009,
distinguishing between Executive and Non-Executive Directors in aggregate, with
categorization into appropriate components, and the number of Directors whose
remuneration fell into each successive band of RM50,000, are set out below: 2009
GROUP
2008
Non-Executive Directors:–
Fees –
Attendance, other allowances & benefits
985,475
858,840
1,466,182
1,352,723
5,087,453
6,641,400
7,539,107
8,852,963
Executive Directors:–
Salaries, bonuses, allowances and
other benefits
Total
The disclosure of Directors’ remuneration is made in accordance with Appendix 9C,
Part A, Item 11 of the Bursa Securities Listing Requirements. The Code recommends
disclosure of details of the remuneration of each Director. However, the Board is of the
view that the disclosure of the remuneration of its Directors by bands is sufficient to
meet the objective of the Code.
NonExecutive
Total
RM50,001 – RM100,000
2
2
RM100,001 – RM150,000
2
2
RM300,001 – RM350,000
1
1
RM350,001 – RM400,000
3
3
RM600,001 – RM650,000
1
1
RM1,400,001 – RM1,450,000
1
1
RM3,650,001 – RM3,700,000
1
1
Total
2
9
11**
* Remuneration paid to the Directors of the Company include fees, salaries, other
emoluments including bonus, EPF contributions, attendance & other allowances
and benefits-in-kind.
**Includes one Executive Director who has resigned during the financial year and
two Non-Executive Directors during and after the financial year.
Directors’ Fees
In 2006, the Company obtained a shareholders’ approval via an ordinary resolution
for the payment of Directors’ fees not exceeding RM800,000 for each financial
year effective 31 March 2006 onwards based on the recommendation of the
Board. Hence, yearly payment of fees to the Non-Executive Directors by the
Company does not need shareholders’ approval provided that the amount does
not exceed RM800,000 per annum. All Non-Executive Directors are paid meeting
allowances as determined by the Board to reimburse them for expenses incurred
for attendance at Board/Board Committee meetings and shareholders’ meetings,
which is inclusive of travelling and accommodation.
Directors’ Remuneration*
Executive
a.
b.
Salaries, Bonuses and Allowances
The basic salary inclusive of statutory employer contributions to the Employees
Provident Fund for the Group Managing Director is determined by the Board,
taking into account the performance of the individual, the consumer price index
and information from independent sources on the rates of salary for similar
positions in a selected group of comparable companies. Salary is reviewed
annually by the Remuneration Committee.
The adoption of the KPIs commenced during the financial year ended 31 March
2007, as part of the overall governance to enhance performance management,
financial performance and shareholders’ value of the Company. Following this,
the KPIs were formulated based on two main segments ie. Corporate/Financial
and Priorities. For the Group Managing Director and the Management Team, there
was greater emphasis on sustainability of growth, underpinned by the relevant
financial factors.
The performance based bonuses are strictly tied to the achievement of their KPIs.
The bonus formula is designed to promote additional effort and initiatives beyond
the KPI targets. Performance assessments of these personnel together with the
rewards due were rigorously undertaken at the Management and Remuneration
Committee levels with the Board making the final determination pursuant to the
recommendations of the Committee.
101
c.
Benefits-In-Kind
Besides the usual agenda for the Annual General Meeting, the Board presents a
comprehensive review of the progress and business performance of the Group as
contained in the Annual Report and provides opportunities for shareholders to raise
questions pertaining to the business activities of the Group. The Board of Directors,
Senior Management and relevant advisers are available to provide responses to
questions raised and give clarifications to the shareholders during these meetings.
Other customary benefits, such as use of company car, driver and handphone
expenses/allowance were made available to the Chairman and Group Managing
Director as appropriate.
d.
Terms and Conditions of Employment
The Group Managing Director is employed on terms and conditions as approved by
the Board.
2.
SHAREHOLDERS AND INVESTORS
2.1 Dialogue between the Company and Investors
The Board values dialogue with investors and appreciates the keen interest of shareholders
and investors in the Group’s performance. The Board acknowledges the need for
shareholders to be informed of all material business matters affecting the Group.
The Company communicates with its shareholders and stakeholders on regular basis
through timely release of financial results on a quarterly basis, press releases and
announcements to Bursa Malaysia which provide an overview of the Group’s performance
and operations for investment decision making, through accessible channels. In addition,
the Company initiates dialogues with its shareholders and stakeholders as and when
required. Media coverage on the Group is initiated at regular intervals to provide wider
publicity and improve the understanding of the Group’s business.
2.2 General Meetings
General Meetings are the principal forum for dialogue with shareholders. The Annual
General Meeting and Extraordinary General Meeting(s) provide opportunity for interaction
amongst shareholders, Directors and management. The Company sends out the Notice
of the Annual General Meeting and annual reports to shareholders at least twenty-one
(21) days before the date of the meeting. Items of special business included in the
notice of the meeting are accompanied by an explanatory statement to facilitate full
understanding and evaluation of the issues involved. Circulars to Shareholders together
with the Notices of Extraordinary General Meeting are sent out to shareholders at least
fourteen (14) days before the date of the meeting.
The Group maintains a website at www.drb-hicom.com which can be conveniently
accessed by the shareholders and the general public. The Group’s website is updated
from time to time to provide the latest and comprehensive information about the Group,
including press releases and quarterly announcements of the Group results.
Any queries or concerns regarding the Group may be conveyed to the following persons:
i.
YBhg Dato’ Syed Mohamad bin Syed Murtaza
Telephone number : (03) 2052 8000
Facsimile number : (03) 2052 7696
E-mail
: [email protected]
ii.
YBhg Datuk Haji Mohd Khamil bin Jamil
E-mail
: [email protected]
iii.
Encik Hamdan bin Ahammu
Head, Corporate Communication & Investor Relations
iv.
E-mail
: [email protected]
E-mail
: [email protected]
Ms Chan Choy Lin, Carol
102
Annual Report 2009
3.
ACCOUNTABILITY AND AUDIT
3.1 Financial Reporting
iii. Ms Chan Choy Lin, Carol
Ms Chan is an accountant by profession. She has more than 20 years working
experience in auditing, secretarial and accounting.
The Directors have a responsibility to present a true and fair assessment of the Group’s
position and prospects in the quarterly reports to Bursa Malaysia and the Annual Report
to shareholders.
iv. Cik Noraishah binti Mohd Radzi
Senior Manager, Legal Affairs
Cik Noraishah holds a Master in Comparative Laws and LLB from Universiti Islam
Antarabangsa. She has 14 years working experience in various roles in private
practice, legal adviser, human resource and procurement.
The Board is assisted by the Audit Committee in scrutinizing the financial statements
and information for disclosure to ensure accuracy, adequacy and completeness.
The Statement of Responsibility by Directors in respect of the preparation of the annual
audited financial statements of DRB-HICOM and DRB-HICOM Group is set out on page
114 of this Annual Report.
3.2 Internal Control
The Board has overall responsibility for maintaining a system of internal controls that
provides reasonable assurance of effective and efficient operations, and compliance with
laws and regulations, as well as with internal procedures and guidelines.
The effectiveness of the system of internal controls of the Group is reviewed by the
Audit Committee periodically during its quarterly meetings. The review covers the
Group’s financial, accounting and reporting policies and practices, reports of the internal
and external auditors and the adequacy of the system of internal controls to safeguard
the shareholders’ interests and Group’s assets. The Group Internal Audit Division
monitors compliance with policies and the effectiveness of internal control structures
across the Group, whilst legal and regulatory compliance are the responsibilities of the
Legal Affairs and Corporate Secretarial/Corporate Planning Divisions respectively.
The officers responsible are as follows:-
i.
Encik Mohammed Shukor bin Ismail
Head, Internal Audit
Encik Mohammed Shukor is an accountant by profession. He also holds a Master
Degree in Business Administration and is a Certified Internal Auditor. He has 20
years experience in auditing and accounting.
ii. Encik Khalid bin Abdol Rahman
Group Director, Corporate & Services
Encik Khalid holds a Master Degree in Business Administration and has more than
20 years experience in corporate planning and corporate finance.
The Group’s Statement on Internal Control, which provides an overview of the
state of internal controls within the Group, is set out on pages 104 to 105 of this
Annual Report.
3.3 Related Party Transactions
All related party transactions are reviewed by the Audit Committee to ensure compliance
with Bursa Securities Listing Requirements and the appropriateness of such transactions
before recommending to the Board for its approval. With regard to recurrent related
party transactions (“RRPTs”), the Board has established and adopted the appropriate
procedures to ensure such transactions will be negotiated and agreed at an arm’s length
basis, and on normal commercial terms which are not more favourable to the related
parties than those generally available to the public, and are not to the detriment of the
minority shareholders of the Company.
The Shareholders’ mandate in respect of RRPTs is obtained at the annual general
meeting of the Company on a yearly basis prior to entering of such transactions.
The breakdown of the aggregate value of RRPTs transacted during the financial year
ended 31 March 2009 is disclosed on page 111 of the Annual Report in line with
the disclosure and threshold requirements of Bursa Securities Listing Requirements.
Other significant related party transactions are set out under the Notes to the Financial
Statements on pages 217 to 219 of this Annual Report.
The list of non-recurrent related party transactions completed during the financial
year ended 31 March 2009 pursuant to chapter 10.08 of Bursa Securities Listing
Requirements are as follows:a)
n 7 August 2008, Scott & English Electronics Holdings Sdn Bhd, effectively a
O
70% indirect subsidiary company of the Group, completed the disposal of 9%
equity interest in Scott & English Electronics Sdn Bhd to Eastern Trinity Sdn Bhd
for a total cash consideration of RM1.08 million.
103
of the Company and their fees on annual basis to ensure that the independence of the
external auditors is not compromised.
b)On 8 September 2008, the Company completed the acquisition of an additional
15% equity interest in Motosikal dan Enjin Nasional Sdn Bhd from Khazanah
Nasional Berhad for a total cash consideration of RM24 million.
For the audit of the financial statements of DRB-HICOM and its subsidiaries for the
financial year ended 31 March 2009, PricewaterhouseCoopers have confirmed their
independence in accordance with the firm’s requirements and with the provisions of the
By-Laws on Professional Independence of the Malaysian Institute of Accountants.
c)On 22 October 2008, the Company completed the acquisition of 100% equity interest
in Rangkai Positif Sdn Bhd from Tan Sri Datuk Seri Syed Mokhtar Shah bin Syed Nor
for a total consideration of RM292,146,596 via the issuance of 376,963,350 new
ordinary shares of RM1.00 each at a fair value of RM0.775 per share.
The Board had approved the above statement in accordance with a resolution of the
Board of Directors dated 17 July 2009.
d)On 22 October 2008, the Company completed the acquisition of 70% equity
interest in Bank Muamalat Malaysia Berhad from Bukhary Capital Sdn Bhd for a
total consideration of RM425,216,666 satisfied via the issuance of 548,666,666
new ordinary shares of RM1.00 each at a fair value of RM0.775 per share.
Signed on behalf of the Board of Directors
3.4 Relationship With External Auditors
The Audit Committee meets with the internal and external auditors at least twice a year to
discuss any issues arising from their audits without the presence of the executive Directors
and Management. The Audit Committee also meets with the external auditors whenever it
deems necessary. The external auditors also highlight to the Audit Committee and Board
of Directors on matters that require Board’s attention together with the recommended
corrective actions thereof. The Management is held responsible for ensuring that all these
corrective actions are undertaken within an appropriate time frame.
The role of the Audit Committee in relation to the external auditors may be found in
the Report of the Audit Committee set out at pages 106 to 109. The Group has always
maintained a close and transparent relationship with its external auditors in seeking
professional advice and ensuring compliance with MASB Approved Accounting Standards
in Malaysia for Entities Other than Private Entities.
The Audit Committee also reviews the proposed re-appointment of the external auditors
YBHG DATO’ SYED MOHAMAD BIN SYED MURTAZA
Chairman
104
Annual Report 2009
statement on
Internal Control
Internal Control Processes
The key elements of internal control processes established within the Group are reflected as
follows:-
The Board of Directors (Board) is
committed towards maintaining a
sound system of internal control
and risk management processes within
the Group to ensure good corporate
governance. The Board acknowledges
that the Group’s internal control
system and risk management practices
should be effective and responsive to
be able to support the Group to meet
its objectives and operate in a dynamic
business environment.
The Board confirms that there is a continuous process of reviewing the adequacy and integrity
of the Group’s system of internal control and risk management practices. Notwithstanding the
continuous process of reviewing that have been established, the Board recognises that the Group’s
system of internal control can only provide reasonable but not absolute assurance against material
misstatement or loss and that the Group’s risk management process is designed to manage the
risks within an acceptable level rather than to eliminate the risks.
•
Organisational Structure
There is clear segregation of duties, authority and accountability embedded within the
organizational structure of the Group. The Board, in carrying out its responsibilities, is assisted
by the Board Committees namely the Audit, Nomination and Remuneration Committees, and
the Management Committee and Risk Management Committee.
•
Audit Committee
The Audit Committee (AC) reviews the reports of the internal and external auditors on
adequacy and integrity of the Group’s systems of internal control and the financial results.
All the five members of the AC are Non-Executive Directors, four of whom, including the AC
Chairman, are independent Non-Executive Directors. Please refer to page 106 to 109 on the
summary report on the activities of the AC.
•
Internal Audit Function
The business processes and conducts of the operating entities within the Group are regularly
and systematically reviewed by the Group Internal Audit Division (GIAD) to evaluate the
adequacy and effectiveness of the financial and operational controls. However, this did not
include Group companies (financial institutions) governed by the Banking and Financial
Institutions Act, 1989 or regulated by Bank Negara Malaysia as the reviews are undertaken
by the AC and internal audit function of the respective financial institutions. The GIAD reported
to the Audit Committee and addressed to the Management all the audit observations noted in
the course of their review and followed up and monitored on the status of actions taken by
the operating entities in addressing the audit observations.
•
Policies and Procedures
Policies and procedures encompassing among others the Financial Authority Limits, Human
Resource, Procurement, Risk Management, Management Control and Internal Control
Framework, Code of Ethics and Business Practice, and the Whistleblower and Anti–Fraud
Policies are established to provide sufficient guidance and direction for proper management,
governance and conduct of the business and operation within the Group.
•
Performance Management
In order to nurture the quality and competencies of employees, continuing education, training
and development programs are emphasized to enable employees to discharge their duties
effectively. Progressively, employees’ performances are measured according to the sets of
key performance indicators aligned to their functions as assigned to them in which they are
expected to accomplish.
105
The Management oversees performance of the operating entities, within which business
planning and budgetary exercise are established annually and actual performance are
monitored periodically against set targets.
• Communication and Information
Timely communication of relevant information such as the Group’s achievement and changes
with regard to corporate and organizational structure and policies and procedures enabling
employees to focus on and to perform their responsibilities effectively.
Risk Management
Accountability for Risk Management
Risk Management is regarded by the Board of Directors to be an integral part of the Group’s
business operations. Management is responsible for creating risk awareness and for building the
necessary knowledge for risk management. They also have the responsibility for managing risks
and internal controls associated with the operations and ensuring compliance with applicable laws
and regulations.
The ultimate responsibility for the effective management of risk rests with the Board that controls
and manages risk through the Risk Management Committee. The Risk Management Committee
ensures leadership, direction and coordination of the group-wide application of risk management
that includes identifying the key risks, assessing the potential impact and likelihood of those risks
occurring, control effectiveness and adopting the appropriate action plans to reduce those risks to
the desired level.
The main underlying principles of the Policy are:• Providing a framework and organizational structure for the management of risks that DRBHICOM assumes in its activities;
• Defining risk management roles and responsibilities within the organization and outlining
procedures to mitigate risks;
•
Ensuring consistent and acceptable management of risk throughout the business;
• Defining a reporting framework to ensure the communication of necessary risk management
information to senior management and personnel engaged in risk management activities;
• Remaining flexible to accommodate the changing risk management needs of the organization
while maintaining control of the overall risk position;
•
Detailing the approved methods for risk assessment; and
•
Providing a system to accommodate the central accumulation of risk data.
Risk Reporting
The Group’s risk management framework provides for regular review and reporting. The reports
which include an assessment of the degree of risk, mitigating actions in place and proposed action
plans for further controls are submitted to the RMC and subsequently to the Board for review and
endorsement. The key elements of the process are:•
Presentation of summary key risks to the Board on a half yearly basis.
Risk Management Committee
The Risk Management Committee (RMC) has been established and the Board entrusts the RMC
with the overall responsibility for overseeing the Risk Management Policy (Policy) and the risk
management activities of DRB-HICOM and approving appropriate risk management procedures
and measurement methodologies across the organization. The RMC has a broad mandate to
ensure the effective implementation of the objectives outlined in the Policy and compliance with
them throughout DRB-HICOM Group. The RMC is responsible for periodically reporting higher risk
exposures to the Board.
• Review and reporting of key risks by subsidiaries and corporate divisions to the RMC on a
quarterly basis.
Risk Management Policy
The Board is of the view that the system of internal control for the financial year under review and
risk management processes of the Group is sound and adequate to provide reasonable assurance
to safeguard shareholders’ investments, Group’s assets and other stakeholders’ interests. There was
no major internal control weakness identified that may result in any material loss or uncertainty that
would require disclosure in this annual report.
The Board delegates to the Group Managing Director (GMD) who is also the Chairman of the RMC
the responsibility for ensuring effective implementation and maintenance of the Policy. The detailed
line accountability for risk management is fully aligned with DRB-HICOM’s management structure.
Accordingly, approvals, responsibilities and accountabilities applicable to the identification, evaluation,
management and reporting of DRB-HICOM’s risks are attributed to the GMD and Heads of the
respective subsidiaries and corporate divisions.
• Review and reporting of key risks by Risk Management Committee of the subsidiary
companies to its respective Board of Directors on a quarterly basis.
Conclusion
This statement has been approved by the Board of Directors at its meeting on 17 July 2009.
106
106
Annual Report 2009
audit committee
Report
The quorum for all seven meetings held during FY 2008/09, as highlighted by the attendance
of the AC members in the table above was fulfilled. The Group Managing Director (GMD)
together with the Group Chief Financial Officer (GCFO) and the former Executive Director/Group
Chief Operating Officer were invited to brief the AC on the Group’s financial performance and
relevant corporate matters and to attend to any queries raised by the AC. The Head of Group
Internal Audit Division (GIAD) attended all AC meetings and presented the internal audit reports
to the AC. The External Auditors also attended AC meetings to present the audit scope and
plan, and the auditors’ report on the annual audited financial statements.
The Board of Directors is pleased
to present the Report of the Audit
Committee (AC) for the financial year
(FY) ended 31 March 2009.
The AC convened two meetings with the External Auditors in FY 2008/09, without the presence
of the Senior Management or Head of GIAD. The AC also met with the Head of GIAD without
the presence of the Senior Management.
Issues discussed and deliberated during the AC meetings were recorded and the minutes were
tabled at the subsequent Board Meeting. The AC also conveyed any matters of significant
concern raised by the internal and external auditors to the Board.
1.0 COMPOSITION OF AC MEMBERS AND MEETINGS ATTENDED
In line with the requirements of the Malaysian Code on Corporate Governance (MCCG) all five
members of the AC are Non-Executive Directors, four of whom, including the AC Chairman,
are independent Non-Executive Directors.
The AC Chairman, YBhg Datuk Haji Abdul Rahman Mohd Ramli and Mr Ooi Teik Huat, are
members of the Malaysian Institute of Accountants (MIA) thereby complying with paragraph
15.10(1)(c)(i) of the Listing Requirements.
2.0 TERMS OF REFERENCE OF THE AUDIT COMMITTEE
The AC shall be established to assist the Board in fulfilling its oversight responsibilities.
The AC shall review and ensure that the process of assessing internal controls and
governance, including operational and financial controls, business ethics and compliance are
properly managed and monitored.
The composition of the AC as well as attendance at meetings is set out below:
Director
Status of
Directorship
Attendance
YBhg Datuk Haji Abdul Rahman Mohd Ramli
Chairman of the Committee
Independent
Non-Executive Director
7 out of 7
YBhg Dato’ Noorrizan Shafie
7 out of 7
YBhg Dato’ Syed Mohamad Syed Murtaza
(resigned w.e.f. 17 July 2009)
Independent
7 out of 7
Mr Ong Ie Cheong
Independent
6 out of 7
Mr Ooi Teik Huat (appointed w.e.f. 1 November 2008)
Independent
3 out of 3
2.1 Composition
The following requirements are to be fulfilled by the Board in the appointment of the
AC from among its members:a.the AC must be composed of no fewer than three (3) members, the majority of
whom must be Independent Non-Executive Directors;
b.the Chairman of the AC shall be appointed by the Board from among the Independent
Non-Executive Directors and at least one member of the AC must be a member of
the Malaysian Institute of Accountants or must have at least three (3) years’ working
experience and;
i)must have passed the examinations specified in Part I of the 1st Schedule of
the Accountants Act 1967; or
ii)must be a member of one of the associations of accountants specified in Part
II of the 1st Schedule of the Accountants Act 1967.
107
Alternate Directors shall not be appointed as a member of the AC; and subject to any
regulatory disqualification, members of the AC shall not be removed except by the
Board. In the event of any vacancy in the AC, the Board shall within three (3) months
fill the same so as to comply with all regulatory requirements. In any event the Board
shall review the term of office and performance of the AC and each of its members at
least once every three (3) years.
2.2 Meetings and Attendance
The quorum for all meetings of the AC shall not be less than three (3), a majority of whom
shall be Independent Non-Executive Directors. The Chairman shall chair all meetings and
in his absence, another Independent Non-Executive Director shall chair it.
a.Meetings shall be held not less than four (4) times a year and the GMD, GCFO
and Head of GIAD shall, by invitation, attend the meetings.
b.The external auditors are normally invited to attend meetings as and when
necessary.
2.4 Responsibilities and Duties
The functions of the AC have been expanded to include the matters specified in the
Malaysian Code on Corporate Governance as follows:
a.
b.
c.
a.investigate any activity within the scope of the AC’s duties and its terms of
reference and shall have full and unrestricted access to any information and
document relevant to the AC’s activities;
b.
obtain independent legal or other professional advice as necessary;
c.communicate directly with the external auditors, internal auditors and all
employees of the Group;
iii.to review any appraisal or assessment of the performance of the Head
of GIAD as well as approve the appointment or termination of senior staff
members of the GIAD;
iv.to discuss any issues from the audits, with the Head of GIAD separately
without the presence of management.
d.
External Audit
With regards to external auditors:-
i. to review and consider the appointment, resignation, or termination of
external auditors and their audit fee;
ii. to discuss with the external auditors, prior to the commencement of audit,
the nature and scope of audit and to ensure co-ordination where more than
one audit firm is involved;
d.have adequate resources to perform its duties as set out in its terms of reference;
e.make recommendations for improvements of operating performance and
management control arising from internal and external audit recommendations.
In respect of the internal audit function:-
ii.to review internal audit programme and results of the internal audit process
and where necessary ensure that appropriate action is taken on the
recommendations of the GIAD;
2.3 Authority
The Board has empowered the AC to:-
Internal Audit
i.to review the adequacy of the scope, functions and resources of the GIAD
and to assess whether it has the necessary authority to carry out its
responsibilities with regards to the annual audit plan;
d.The Company Secretary shall be the Secretary of the AC and shall provide the
necessary administrative and secretarial services for the effective functioning of
the AC. The draft minutes shall be circulated to the AC members for comment
and the signed minutes shall be tabled at the subsequent Board Meeting.
Financial Reporting
Review the annual and quarterly financial results of the Group focusing on, among
others, financial disclosures, changes in accounting policies and practices and
compliance with MASB Approved Accounting Standards in Malaysia for Entities
Other than Private Entities.
c.The AC shall meet separately with the internal and external auditors at least twice
a year without the attendance of the management.
Risk Management and Internal Control
Ensure that management has in place an adequate system of risk management and
internal control to safeguard the shareholders’ interests and Company’s assets.
Annual Report 2009
108
audit committee report (Continued)
iii. to review with external auditors, the audit plan, their evaluation of the
systems of internal accounting controls, their audit report and the assistance
given by the Company’s officers to the external auditors;
iv. to review the quarterly and year-end annual financial statements before
submission to the Board and announcements to the Bursa Malaysia
Securities Berhad, focusing particularly on:•
any changes in accounting policies and practices;
•
significant adjustments arising from the audit;
•
the going concern assumption; and
•
compliance with MASB Approved Accounting Standards in Malaysia
for Entities Other than Private Entities and other legal requirements.
v. to convene meeting at least twice a year on any issues from the audits, with
the external auditors separately without the presence of management;
vi.to review the external auditor’s management letter and management’s
response.
Other Responsibilities
e.
i.to instruct the external and internal auditors that the AC expects to be
advised if there are any areas that require their special attention including
major findings of internal investigations and management’s response;
ii.to review any related party transactions that may arise within the company
or Group in complying with the Listing Requirements;
iii.to review any allocation of share options pursuant to the Employees’ Share
Option Scheme (ESOS) granted to employees in the Group;
iv.to consider and examine any other matters as the AC considers appropriate
or as authorised by the Board of Directors.
3.
SUMMARY OF ACTIVITIES
The following activities were carried out by the AC during the FY 2008/09 in accordance to
the terms of reference of the AC:a)the AC reviewed the Audit Plan on 25 November 2008 with the External Auditors
encompassing their audit scope and proposed fees for the statutory audit and the review
of the Statement on Internal Control for FY 2008/09;
b)the AC reviewed and approved the GIAD’s Annual Internal Audit Plan for FY 2009/10 at
the AC meeting on 25 February 2009. The AC also reviewed the internal audit reports
presented by GIAD at each AC meeting with respect to audit resources, activities,
findings and adequacy of management responses and action in handling the audit
issues reported.
c)the AC reviewed the unaudited quarterly financial results of the Group for FY 2008/09
during the financial year. The AC also reviewed the annual audited financial statements
of the Group and company for FY 2008/09 at its meeting on 16 July 2009, before
recommending the same to the Board for approval;
d)the AC reviewed the Statement on Internal Control and Statement on Corporate
Governance prior to inclusion in the Company’s Annual Report;
e)the AC deliberated with the external auditors the results of audit of the Financial
Statements and their Report on Examination and the responses by the management at
its meeting;
f)the AC reviewed related party transactions (RPTs) for compliance with Bursa Securities
Listing Requirements and the appropriateness of such transactions before recommending
to the Board for its approval;
g)the AC reviewed the Group’s procedures in respect of recording recurrent related party
transactions (RRPTs) and the propriety of proposed related party transactions to ensure
that they were not more favorable to the related parties than those generally available
to the public and were not detrimental to minority shareholders;
h)the AC members attended relevant mandatory accreditation and continuing education
programmes during the financial year under review.
109
4.
INTERNAL AUDIT FUNCTION
4.1 The GIAD is primarily responsible to provide reasonable assurance to the AC on the adequacy
and effectiveness of the risk, control and governance framework of the Group by undertaking
regular and systematic reviews of the system of internal control of the companies and
operating units within the Group. However, those Group companies (financial institutions)
governed by the Banking and Financial Institutions Act, 1989 or regulated by Bank Negara
Malaysia are under the purview of the AC and internal audit function of the respective
financial institutions.
The Head of GIAD, who reports directly to the AC, is assisted by 5 internal audit
managers and 15 other internal auditors bringing the staff resources to 21.
4.2During the financial year, GIAD executed a total of 89 audit engagements that comprised
scheduled and ad-hoc audit engagements covering the automotive manufacturing and
distribution, property development and construction, and services sectors.
All findings resulting from the audits were reported to the AC. The management of the
operating units audited were accountable to ensure proper handling of the audit issues
and implementation of their action plans within the time frame specified. Actions taken
by the operating units audited were followed up by GIAD and the status updated in the
subsequent audits.
4.3All of the internal audit activities in the financial year under review were undertaken by the
GIAD. None of the components of the internal audit function were outsourced to external
service providers. The total cost incurred for the internal audit function in FY 2008/09 was
in the region of RM2.1 million covering manpower, travelling and training costs.
4.4ISO 9001:2000 certification is adopted by GIAD as part of its continuous quality
management system. Following the assessment by the independent certification body
in July 2008, the ISO 9001:2000 certification on GIAD was renewed for a second term
expiring on 31 December 2011. Besides the ISO 9001:2000 program, GIAD is also
subject to an external quality assessment review by a qualified independent assessor
once every five years as required by the International Standards for the Professional
Practice of Internal Auditing. In this regard, GIAD conforms to the International Standards
for the Professional Practice of Internal Auditing.
110
110
Annual Report 2009
additional compliance
Information
1.
UTILISATION OF PROCEEDS
The RM1.0 billion Islamic Securities as approved by the Securities Commission vide letter dated 23 June 2005 have been fully redeemed and cancelled in July 2008.
During the financial year, there was no financing raised by the Company which required the approval of Securities Commission.
2.
SHARE BUYBACKS
During the financial year, there were no share buybacks by the Company.
3.
OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
The Company has not issued any options, warrants or convertible securities during the financial year.
4.
AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”)
During the financial year, the Company did not sponsor any ADR or GDR programme.
5.
VARIATION IN RESULTS
The Company did not release or announce any profit estimate, forecast or projection during the financial year under review.
6.
PROFIT GUARANTEE
During the financial year, there was no profit guarantee issued by the Company.
111
7.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
By a Resolution of the Annual General Meeting of the Company held on 23 September 2008, a mandate was granted by the shareholders for recurrent related party transactions of a revenue
or trading nature, to be entered into during the period 24 September 2008 to 10 September 2009 between the Company or its subsidiary companies and related parties, the latter being based
on estimates. As required, below is a listing of the said transactions by a related company that are more than RM42 million as having been actually entered into during the financial year ended
31 March 2009:
Actual Transacted
Values (RM’000)
from 1 April 2008 to
No. Transacting Parties
Interested Parties
Nature of Transaction
31 March 2009
RANGKAI POSITIF SDN. BHD.
1. Tanjung Bin Power Sdn. Bhd.
Major shareholders
– Etika Strategi Sdn. Bhd.
– Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor
Director
– Datuk Haji Mohd Khamil bin Jamil
2.
Teknik Janakuasa Sdn. Bhd.
Major shareholders
– Etika Strategi Sdn. Bhd.
– Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor
Provision of operations and maintenance services
(“O&M”), ash sales and demurrage payment by Rangkai
Positif Sdn. Bhd. to Tanjung Bin Power Sdn. Bhd.
Rangkai Positif Sdn. Bhd. in turn subcontracted the
O&M services to Teknik Janakuasa Sdn. Bhd.
104,888
64,186
Director
– Datuk Haji Mohd Khamil bin Jamil
169,074
Annual Report 2009
112
additional compliance information (Continued)
8. Material Contracts
Save as disclosed below, there are no material contracts entered into by DRB-HICOM Berhad (“DRB-HICOM”) or its subsidiary companies involving Directors’ and Major Shareholders’ interests still
subsisting at the end of the financial year ended on 31 March 2009 or, if not subsisting, entered into since the end of the previous financial year pursuant to Paragraph 21, Part A, Appendix 9C of the
Listing Requirements:
No. Type
Date
Contracting Parties Purchase Consideration and Mode of Satisfaction
1.
Sale and Purchase of 11 October 2007
Shares Agreement
DRB-HICOM and Tan Sri Dato’ Seri Syed Acquisition of two (2) ordinary shares of RM1.00 each representing 100%
Mokhtar Shah bin Syed Nor*equity interest in Rangkai Positif Sdn. Bhd. for a purchase consideration of
RM720,000,000 to be satisfied by the issuance of 376,963,350 new ordinary
shares of RM1.00 each in DRB-HICOM at an issue price of RM1.91 per new
DRB-HICOM share.
2. Sale and Purchase Agreement 24 April 2008
DRB-HICOM and Bukhary Capital Sdn. Bhd.
Acquisition of 70% equity interest in Bank Muamalat Malaysia Berhad
(“Bukhary Capital”)*(“BMMB”) for a purchase consideration of RM1,069,900,000 to be satisfied
by the issuance of 548,666,666 new ordinary shares of RM1.00 each in
DRB-HICOM at an issue price of RM1.95 per new DRB-HICOM share.
3. Share Sale Agreement
5 August 2008
The acquisition was completed on 22 October 2008.
DRB-HICOM and Khazanah Nasional Berhad
Acquisition of an additional 15% equity interest in Motosikal Dan Enjin
(“KNB”)**Nasional Sdn. Bhd. from KNB for a cash consideration of RM24 million.
The acquisition was completed on 22 October 2008.
The acquisition was completed on 8 September 2008.
Relationships between the Directors or Major Shareholders and the Contracting Parties
*
a)
Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor holds indirect equity interest of 55.92% in DRB-HICOM through Etika Strategi Sdn. Bhd. (“Etika”).
b)
Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor holds indirect equity interest of 99% in Bukhary Capital through ALBUKHARY Corporation Sdn. Bhd.
c)Datuk Haji Mohd Khamil bin Jamil is the Group Managing Director of DRB-HICOM. He is also a Director and shareholder of Etika and Bukhary Capital and is a person connected to Tan Sri Dato’ Seri
Syed Mokhtar Shah bin Syed Nor.
KNB holds the remaining 30% equity interest in BMMB. As at 24 July 2009, KNB also holds 5.39% equity interest in DRB-HICOM.
**
113
9.
Sanctions and/or Penalties
There are no significant penalty(ies) imposed by any regulatory authorities on any of the companies
10. STATEMENT ON REVALUATION POLICY
The Group does not have any revaluation policy.
11. NON-AUDIT FEES
The amount of non-audit fees paid/payable to the external auditors and their affiliated companies by the Group for the financial year ended 31 March 2009 are as follows:-
RM’000
PricewaterhouseCoopers
175
PricewaterhouseCoopers Taxation Services Sdn. Bhd.
900
PricewaterhouseCoopers Advisory Services Sdn. Bhd.
144
1,219
114
114
Annual Report 2009
statement of
Directors’
Responsibility
in respect of the preparation of the Financial Statements
for the financial year ended 31 March 2009
The Directors are required by the Companies Act, 1965 (“the Act”) to ensure that the financial statements prepared for each financial year give a true and
fair view of the state of affairs of the Group and the Company as at the end of the financial year and of the results and cash flows of the Group and the
Company for the financial year. As required by the Act and the Listing Requirements of Bursa Malaysia Securities Berhad, the financial statements have been
prepared in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the provisions of the Act, modified
by the accounting policies as set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group.
The Directors consider that in preparing the financial statements for the financial year ended 31 March 2009 set out on pages 116 to 230, the Group has
used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgments and estimates and ensured that all applicable
approved accounting standards have been followed.
The Directors have ensured that the accounting records to be kept by the Group and the Company have been properly kept in accordance with the provisions
of the Act, which disclose with reasonable accuracy the financial position of the Group and of the Company.
This Statement is made in accordance with a resolution of the Board of Directors dated 17 July 2009.
115
financial statements
116 Directors’ Report
122 Income Statements 123 Balance Sheets
125 Statements of Changes in Equity 128 Cash Flow Statements 132 Notes to the Financial Statements
231 Statement by Directors 232 Statutory Declaration 233 Independent Auditors’ Report
116
Annual Report 2009
Directors’ Report
The Directors of DRB-HICOM Berhad have pleasure in submitting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 March 2009.
PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive, services (including banking business), and property and construction segments.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.
There have been no significant changes in these activities during the financial year except for the Group’s acquisitions of Rangkai Positif Sdn. Bhd. and Bank Muamalat Malaysia Berhad, and the disposal
of its equity interest in EON Capital Berhad as disclosed in Note 54 (a), (f) and (g) to the financial statements.
FINANCIAL RESULTS
Group RM’000 Net profit for the financial year
725,381
85,806
Equity holders of the Company
Minority interest
660,507
64,874
85,806
–
725,381
85,806
Dividends paid/payable by the Company since 31 March 2008 were as follows:
RM’000
In respect of the financial year ended 31 March 2008:
Final gross dividend of 3.5 sen per share, less taxation of 25%, paid on 28 October 2008
26,450
Company
RM’000
Attributable to:
DIVIDENDS
Interim (special) gross dividend of 13.333 sen per share, less taxation of 25%, paid on 26 September 2008
100,761
Total dividends paid
127,211
The Directors now recommend the payment of a final gross dividend of 2.5 sen per share, less taxation of 25%, amounting to RM36,248,195 in respect of the financial year ended 31 March 2009,
subject to the approval of shareholders at the forthcoming Annual General Meeting of the Company.
117
ISSUE OF SHARES
On 22 October 2008, the Company’s issued and paid-up share capital increased from RM1,007,607,035 to RM1,719,600,594 by way of issuance of 925,630,016 new ordinary shares of RM1.00 each
at a fair value of RM0.775 per share, pursuant to the acquisitions of Rangkai Positif Sdn. Bhd. and Bank Muamalat Malaysia Berhad. The fair value of the issued shares is measured at the closing
market price of DRB-HICOM Berhad’s shares at the date of issuance of shares. The issuance cost for the shares issued has been deducted from the total fair value of the shares.
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company except that the shares issued for the acquisitions of
Rangkai Positif Sdn. Bhd. and Bank Muamalat Malaysia Berhad did not rank for interim (special) dividend declared in respect of financial year ended 31 March 2009.
RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the financial year are disclosed in the financial statements.
SIGNIFICANT EVENTS
(a)On 23 June 2008, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 20.2% equity interest in EON Capital Berhad to
Primus Pacific Partners 1 L.P. for a cash consideration of approximately RM1.35 billion. As a result, EON Capital Berhad ceased to be an associated company of the Group. The gain arising from
the disposal amounted to approximately RM567 million.
(b)Pursuant to the Rights Issue undertaken by Alam Flora Sdn. Bhd. (“AFSB”), the Group subscribed for a total of 24 million new ordinary shares of RM1.00 each. The Group’s shareholding in AFSB
increased from 55% to 60.53% in July 2008.
(c)
n 7 August 2008, Scott & English Electronics Holdings Sdn. Bhd. (“SEEH”), effectively a 70% indirect subsidiary company of the Group, completed the disposal of its entire 100% equity interest
O
in Scott & English Electronics Sdn. Bhd. (“SEE”) for a total cash consideration of RM6.58 million to the following parties:
–
Midea Refrigeration (Hong Kong) Ltd. – 51%;
–
HICOM Holdings Berhad – 40%; and
–
Eastern Trinity Sdn. Bhd. – 9%.
As a result, SEE ceased to be a 70% indirect subsidiary company of the Group and became a 40% indirect associated company of the Group. On 17 October 2008, SEE changed its name to
Midea Scott & English Electronics Sdn. Bhd.
(d)On 8 September 2008, the Company completed the acquisition of an additional 15% equity interest in Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) from Khazanah Nasional Berhad for
a cash consideration of RM24 million. As a result, the Group’s shareholding in MODENAS increased from 55% to 70%.
(e)On 18 September 2008, HICOM Holdings Berhad acquired an additional 9.03% equity interest in PHN Industry Sdn. Bhd. (“PHN”) from Nagoya Oak Industries Co. Ltd. for a cash consideration
of RM8.13 million. As a result, the Group’s equity interest in PHN increased from 53.47% to 62.5%.
(f)On 22 October 2008, the Company completed the acquisition of the entire equity interest in Rangkai Positif Sdn. Bhd. (“RP”) for RM292,146,596 via the issuance of 376,963,350 new ordinary
shares of RM1.00 each at a fair value of RM0.775 per share. As a result, RP became a wholly-owned subsidiary company of the Group.
(g)On 22 October 2008, the Company acquired a 70% equity interest in Bank Muamalat Malaysia Berhad (“BMMB”) for RM425,216,666 satisfied via the issuance of 548,666,666 new ordinary
shares of RM1.00 each at a fair value of RM0.775 per share. As a result, BMMB became a 70% subsidiary company of the Group.
Annual Report 2009
118
directors’ report (Continued)
SIGNIFICANT EVENTS (Continued)
(h)HICOM Properties Sdn. Bhd. (“HPSB”), a wholly-owned subsidiary company of the Group had, on 30 December 2008, entered into a Share Sale and Purchase Agreement (“SSA”) with Dato’
Haji Ahmad bin Abdullah and Mohd Nazree bin Abu Kassim, collectively known as the “Vendors”, to acquire the entire equity interest of 1,000,000 ordinary shares of RM1.00 each respectively
(“Sale Shares”) in both Benua Kurnia Sdn. Bhd. (“BKSB”) and Neraca Prisma Sdn. Bhd. (“NPSB”) for a total purchase consideration of RM722.463 million (“Proposed Acquisition”). BKSB and
NPSB own three (3) parcels of freehold land encompassing an area of approximately 1,516.598 acres identified as PTD 99396 HS(D) 329948, PTD 68903 HS(D) 290184 and PTD 68905 HS(D)
290186, Mukim of Tebrau, Daerah Johor Bahru, Negeri Johor Darul Ta’zim.
The purchase consideration of the Sale Shares will be satisfied in the following manner:
(i)
Disposal of five (5) DRB-HICOM Group’s plantation lands comprising Connemara Estate, Serendah Estate, Bukit Kledek Estate, Ladang Gadek and Ladang Kupang at RM341.742 million;
(ii)
Issuance of a bank guarantee amounting to RM238.95 million in favour of Danaharta to substitute the existing bank guarantees obtained by BKSB and NPSB; and
(iii)
Cash payment of RM141.771 million.
The Proposed Acquisition is pending the fulfilment of the conditions precedent stated in the SSA.
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
(Chairman, with effect from 1 July 2009)
(Group Managing Director)
Ong Ie Cheong
Ooi Teik Huat
(Appointed on 1 November 2008)
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
(Resigned on 1 July 2009)
Dato’ Haji Mohd Redza Shah bin Abdul Wahid
(Resigned on 31 October 2008)
119
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, particulars of deemed interests of Directors who held office at the end of the financial year in shares of the Company and in its related
corporations were as follows:
Number of ordinary shares of RM1.00 each
As at
1 April 2008
Acquired
Disposed
As at
31 March 2009
The Company
Indirect*
Ong Ie Cheong
–
20,000
–
20,000
Number of ordinary shares of RM1.00 each
As at
22 October 2008**
Acquired
Disposed
As at
31 March 2009
Holding Company
Direct
*
**
30,000
–
–
30,000
Interest of Spouse/ Child of the Director.
The effective date on which Etika Strategi Sdn. Bhd. became the holding company.
Other than as disclosed above, according to the Register of Directors’ Shareholdings, none of the Directors in office at the end of the financial year held any interest in shares in the Company or its
related corporations during the financial year.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire
benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than emoluments disclosed in Note 6 to the financial statements) by reason of a contract
made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest.
120
Annual Report 2009
directors’ report (Continued)
REMUNERATION COMMITTEE
The Remuneration Committee establishes and recommends the remuneration structure and policy for the Directors and Key Management Officers whereupon such recommendations are made to the
Board of Directors for approval.
The Remuneration Committee consists of the following Directors:
Dato’ Syed Mohamad bin Syed Murtaza (Chairman / Independent Non-Executive Director)
Ong Ie Cheong
STATUTORY INFORMATION ON THE financial statements
Before the income statements and balance sheets were made out, the Directors took reasonable steps:
(a)to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and had satisfied themselves that all known bad debts had
been written off and that adequate allowance had been made for doubtful debts; and
(b)to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and of the
Company had been written down to an amount which they might be expected so to realise.
At the date of this report, the Directors are not aware of any circumstances:
(a)which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and of the Company inadequate to any
substantial extent; or
(b)
which would render the values attributed to current assets in the financial statements of the Group and of the Company misleading; or
(c)
which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.
No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors,
will or may substantially affect the ability of the Group or of the Company to meet their obligations as and when they fall due.
At the date of this report, there does not exist:
(a)
any charge on the assets of the Group and of the Company which has arisen since the end of the financial year which secures the liability of any other person; or
(b)
any contingent liability of the Group and of the Company which has arisen since the end of the financial year.
At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial
statements misleading.
121
STATUTORY INFORMATION ON THE financial statements (Continued)
In the opinion of the Directors, other than as disclosed in the financial statements:
(a)the results of the Group’s and of the Company’s operations during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature except
for the gain on disposal of investment in an associated company as disclosed in the income statement; and
(b)there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely to substantially affect
the results of the operations of the Group or of the Company for the financial year in which this report is made.
HOLDING COMPANY
The Directors regard Etika Strategi Sdn. Bhd., a company incorporated in Malaysia, as the holding company with effect from 22 October 2008.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 17 July 2009.
DATO’ SYED MOHAMAD BIN SYED MURTAZA
Chairman
DATUK HAJI MOHD KHAMIL BIN JAMIL
122
Annual Report 2009
INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009
Group
Company
2009
Note
RM’000
2008
Restated
RM’000 2009
2008
RM’000
RM’000
6,101,427
(5,201,320)
4,012,379
(3,367,178)
231,475
–
196,388
–
Gross profit
900,107
645,201
Other income – gain on disposal of investment in associated companies
567,481
13,991
– others
149,553
349,347
Selling and distribution costs
(141,848)
(126,899)
Administrative expenses
(519,111)
(436,980)
Other expenses (219,359)
(104,604)
Finance costs
8
(95,655)
(119,976)
Share of results of jointly controlled entities (net of tax)
18
63,246
43,481
Share of results of associated companies (net of tax)
19
70,529
112,512
231,475
196,388
–
5,870
–
(24,577)
(46,224)
(43,327)
–
–
12,470
35,825
–
(27,854)
(16,761)
(55,678)
–
–
Revenue
Cost of sales
Profit before taxation
Taxation
4
5 (b)
5 (a)
9
Net profit for the financial year
774,943
(49,562)
376,073
(24,344)
123,217
(37,411)
144,390
(19,398)
725,381
351,729
85,806
124,992
Attributable to:
Equity holders of the Company
Minority interest
660,507
64,874
292,395
59,334
725,381
351,729
Gross dividends per share (sen)
10
15.833
5.00
Earnings per share (sen)
– Basic
The notes set out on pages 132 to 230 form an integral part of the financial statements.
11 (a)
47.41
29.02
123
BALANCE SHEETS
AS AT 31 MARCH 2009
Group
2009
Note
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
ASSETS
Non-current assets
Property, plant and equipment
Prepaid lease properties
Investment properties
Biological assets
Land held for property development
Subsidiary companies
– Investments
– Amounts due
Jointly controlled entities
Associated companies
Other investments
Intangible assets
Deferred tax assets
Banking related assets
– Investments: Held-to-maturity
– Investments: Available-for-sale
– Investments: Held-for-trading
– Financing of customers
– Statutory deposits with Bank Negara Malaysia
12
13
14
15
16 (b)
17
18
19
20 (ii) & (iii)
21
22
1,836,061
74,511
585,515
–
249,418
1,713,953
77,025
609,286
19,743
329,304
2,107
–
155,164
–
–
2,830
–
162,752
–
–
–
–
334,083
417,321
879,254
269,674
108,865
–
–
350,695
390,967
790,802
23,036
99,510
4,155,886
946,283
9,800
71,803
–
–
–
3,058,329
1,462,281
9,800
76,863
–
–
–
20 (a)
20 (b)
20 (c)
23
24
28,346
2,638,068
10,228
4,677,422
72,871
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
CURRENT ASSETS
Non-current assets held for sale
25
Inventories
26
Property development costs
16 (a)
Trade and other receivables
27
Tax recoverable
Marketable securities
28
Short term deposits
29
Cash and bank balances
30
– Cash and short-term funds
31
20 (a)
20 (b)
23
TOTAL ASSETS 12,181,637 4,404,321 5,341,043 140,674
681,807
180,185
1,304,033
152,151
462,864
892,119
173,592
803,393
742,351
200,439
1,167,949
55,677
384,197
1,377,079
193,635
–
–
–
92,314
17,435
11,700
38,234
4,016
–
–
–
107,407
11,893
38,781
84,126
3,078
3,569,105
2,545
663,385
1,111,031
–
–
–
–
–
–
–
–
–
–
–
–
4,772,855
9,333,491 4,924,720 163,699 245,285
21,515,128 9,329,041 5,504,742 5,018,140
124
Annual Report 2009
balance sheets
as at 31 March 2009 (Continued)
Group
2009
Note
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
EQUITY AND LIABILITIES
1,719,601
2,441,143
1,007,607
1,903,761
1,719,601
2,942,236
1,007,607
2,983,641
Equity attributable to equity holders of the Company
Minority interest 4,160,744
1,192,016 2,911,368
959,777 4,661,837
–
3,991,248
–
TOTAL EQUITY
5,352,760 3,871,145 4,661,837 3,991,248
33
34
35
36
22
1,252,965
74,940
930,357
830
35,653
1,247,903
74,310
1,488,042
8,421
61,866
–
–
96,000
–
2,370
–
–
813,741
–
702
37
2,323,244
–
–
–
4,617,989 2,880,542 –
433,067
1,527,352
10,005
18,418
350,435
1,416,997
5,749
–
–
589,535
–
–
–
99,449
–
Share capital
32
Reserves
NON-CURRENT LIABILITIES
Life assurance fund
Deferred income
Long term borrowings
Provision for liabilities and charges
Deferred tax liabilities
Banking related liabilities
– Deposits from customers
CURRENT LIABILITIES
98,370 814,443
Liabilities relating to non-current assets held for sale
25
General and life insurance funds
38
Trade and other payables
39
36
Bank borrowings
40
– Bank overdrafts
– Others
Current tax liabilities
37
41
– Deposits and placements of banks and other financial institutions
– Bills and acceptances payables
25,525
588,256
–
25,010
754,584
6,161
–
155,000
–
–
113,000
–
8,295,458
125,815
538,901
–
–
–
–
–
–
–
–
–
11,544,379
2,577,354 744,535
212,449
TOTAL LIABILITIES 16,162,368 5,457,896 842,905
1,026,892
TOTAL EQUITY AND LIABILITIES 21,515,128 9,329,041 5,504,742 5,018,140
125
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
---------------------- Non-distributable -----------------------
Issued and Equity
fully paid Currencyattributable to
ordinaryShare
Merger Translation
Otherequity holders
shares Premium
Reserve
Differences
Reserves
Retainedof the
Note
(Note 32)
(Note 42)
(Note 43)
(Note 44)
(Note 44)
Earnings
Company
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000 RM’000
Minority
Interest
RM’000
Total
RM’000
2009
At 1 April 2008
Prior year adjustments 2.2
1,007,607
–
20,701
–
911,016
–
5,150
–
153,342
–
788,261
25,291
2,886,077
25,291
941,976
17,801
3,828,053
43,092
As restated
1,007,607
20,701
911,016
5,150
153,342
813,552
2,911,368
959,777
3,871,145
–
–
–
–
(475)
–
(475)
–
(475)
–
–
–
–
(4,560)
4,560
–
–
–
–
–
–
–
(113,635)
113,635
–
–
–
–
–
–
1,155
–
(1,165)
(10)
–
(10)
–
–
–
–
1,538
3,033
4,571
3,982
8,553
–
–
–
–
–
–
–
162,035
162,035
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(7,000)
–
–
7,000
–
–
–
(60,350)
171,077
–
(60,350)
171,077
–
–
–
–
1,155
(124,132)
127,063
4,086
276,744
280,830
711,994
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
660,507
–
711,994
660,507
–
–
64,874
(109,379)
711,994
725,381
(109,379)
–
–
–
–
–
(26,450)
(26,450)
–
(26,450)
–
–
–
–
–
(100,761)
(100,761)
–
(100,761)
1,719,601
20,701
911,016
6,305
29,210
1,473,911
4,160,744
1,192,016
5,352,760
Share of an associated company’s
reserves
Transfer of associated companies’
reserves
Release of statutory reserves on
disposal of an associated company
48 (ii) (a)
Currency translation differences of
subsidiary companies
Share of subsidiary companies’
other reserves
Subscription of shares in subsidiary
companies
Acquisition of additional interests in
subsidiary companies
47 (i) (b) & (c)
Acquisition of a subsidiary company
47 (i) (e)
Disposal of a subsidiary company
48 (i) Net gain/(loss) not recognised in
the income statement
Issue of ordinary shares for
acquisitions of subsidiary
companies (net of issuance cost)
32 & 47
Dividends paid to minority interest
Final dividend in respect of financial
year ended 31 March 2008
10
Interim (special) dividend in respect of
financial year ended 31 March 2009
10
At 31 March 2009
126
Annual Report 2009
consolidated statement of changes in equity (Continued)
---------------------- Non-distributable -----------------------
Equity
Issued and attributable
fully paid Currency
to equity
ordinaryShare
Merger Translation
Otherholders
shares Premium
Reserve Differences
Reserves
Retainedof the
Note
(Note 32)
(Note 42)
(Note 43)
(Note 44)
(Note 44)
Earnings
Company
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000 RM’000
Minority
Interest
RM’000
Total
RM’000
2008
At 1 April 2007
Prior year adjustments
2.2
1,007,607
–
20,701
–
911,016
–
4,516
–
119,936
–
537,620
24,682
2,601,396
24,682
737,678
17,026
3,339,074
41,708
As restated
Share of an associated company
reserves
Currency translation differences
of subsidiary companies
Acquisition of additional shares
in a subsidiary company 47 (iii) (a)
Acquisition of a subsidiary company 47 (iii) (b)
Disposal of subsidiary companies
48 (iii) (b), (c)
& (d) 1,007,607
20,701
911,016
4,516
119,936
562,302
2,626,078
754,704
3,380,782
–
–
–
–
12,048
(7,518)
4,530
–
4,530
–
–
–
634
–
3,604
4,238
(1,723)
2,515
–
–
–
–
–
–
–
–
–
13,700
–
–
–
13,700
(9,448)
151,257
(9,448)
164,957
–
–
–
–
–
–
–
34,469
34,469
–
–
–
–
–
–
634
–
25,748
7,658
(3,914)
(7,658)
22,468
–
174,555
–
197,023
–
–
–
–
–
–
–
–
–
–
–
292,395
–
292,395
–
59,334
(28,816)
351,729
(28,816)
10
–
–
–
–
–
(18,389)
(18,389)
–
(18,389)
10
–
–
–
–
–
(11,184)
(11,184)
–
(11,184)
1,007,607
20,701
911,016
5,150
153,342
813,552
2,911,368
959,777
3,871,145
Net gain/(loss) not recognised
in the income statement Transfer to other reserves Net profit for the financial year
(restated)
Final dividend in respect of financial
Interim dividend in respect of financial
At 31 March 2008
127
COMPANY STATEMENT OF CHANGES IN EQUITY
Issued
and
fully paid
ordinary
shares
Note
(Note 32)
RM’000
--------- Non-distributable ----------
Distributable
Share
Premium
(Note 42)
RM’000
Merger
Reserve
(Note 43)
RM’000
Retained
Earnings
(Note 46)
RM’000
Total
RM’000
2009
At 1 April 2008
Issue of ordinary shares for acquisitions of subsidiary
companies (net of issuance cost) 32 & 47
Final dividend in respect of the financial year ended
31 March 2008
10
Interim (special) dividend in respect of the financial year
ended 31 March 2009
10
1,007,607
20,701
2,318,321
644,619
3,991,248
711,994
–
–
–
–
–
–
85,806
711,994
85,806
–
–
–
(26,450)
(26,450)
–
–
–
(100,761)
(100,761)
At 31 March 2009
1,719,601
20,701
2,318,321
603,214
4,661,837
At 1 April 2007
Final dividend in respect of the financial year
ended 31 March 2007
10
Interim dividend in respect of the financial year
ended 31 March 2008
10
1,007,607
–
20,701
–
2,318,321
–
549,200
124,992
3,895,829
124,992
–
–
–
(18,389)
(18,389)
–
–
–
(11,184)
(11,184)
At 31 March 2008
1,007,607
20,701
2,318,321
644,619
3,991,248
2008
128
Annual Report 2009
cash flow statements
For the financial year ended 31 march 2009
Group
2009
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
725,381
351,729
85,806
124,992
47,927
13,286
27,081
–
80
8,934
1,512
135,776
31,351
95,655
107
7,643
1,388
134,757
36,910
119,976
–
–
–
446
4,980
43,327
–
–
–
472
5,194
55,678
CASH FLOWS FROM OPERATING ACTIVITIES
Adjustments for non-cash items:
Allowance for marketable securities and investments (net)
Amortisation of
– biological assets
– intangible assets
– prepaid lease properties
Depreciation of property, plant and equipment
Doubtful debts (net of write backs)
Finance costs
Impairment losses of
– investments
– land held for property development
– non-current assets held for sale
– property, plant and equipment
Intangible assets written off
Inventories written off/down (net of write backs)
Loss/(gain) on disposal/write off of property, plant and equipment
Loss/(gain) on disposal of investments
Loss/(gain) on fair value adjustment of investment properties
Net foreign exchange differences
Prepaid lease properties written off
Project expenditure written off
Provision for/(write back of) liabilities and charges (net)
Taxation
Dividend income (gross)
Excess of fair value of net assets acquired over purchase consideration
Gain on disposal of investment properties
Gain on disposal of shares in:
– subsidiary companies
– a jointly controlled entity
– associated companies
Gain arising from accretion of interest in a subsidiary company
Gain on waiver of payables/borrowings
Interest income
2,139
21,103
5,795
14,678
–
36,557
2,217
9,949
38,200
8,859
1,011
1,377
5,460
49,562
(4,321)
(28,007)
(55)
–
–
–
37,783
1,160
12,324
7,261
(13,559)
(6,060)
(4,411)
–
–
(4,837)
24,344
(8,569)
(173,178)
–
5,198
–
–
–
–
–
(16)
–
7,588
–
–
1,377
–
37,411
(183,538)
–
–
5,000
–
–
–
–
–
(58)
–
5,567
(1,368)
–
–
–
19,398
(145,298)
–
–
(470)
–
(567,481)
(1,965)
(4,142)
(53,961)
(63,246)
(70,529)
(20,369)
(83)
(13,991)
–
(9,879)
(43,285)
(43,481)
(112,512)
–
–
–
–
(4,021)
(37,748)
–
–
(23,852)
–
(12,470)
–
(5,317)
(46,919)
–
–
Cash inflow/(outflow) before working capital changes
449,346
294,454
(12,109)
(18,981)
129
Group
2009
Note
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
(7,276)
(94)
76,549
47,269
(3,633)
(62,749)
(84,351)
133,026
234,300
(1,239,927)
(126,096)
(91,778)
9,000
262,254
(50,048)
(24,850)
(1,488)
(192,741)
315,875
–
–
–
–
–
–
–
4,321
–
–
1,368
12,394
–
–
–
–
–
–
–
(20,329)
–
–
(1,175)
(48,743)
–
–
–
–
–
Net cash (used in)/generated from operations
Interest received
Dividends received
Finance cost paid
Taxation paid, net of refunds
Provision for liabilities and charges paid
(675,414)
57,469
116,972
(117,781)
(60,504)
(8,776)
612,456
78,247
148,931
(125,717)
(5,622)
(10,490)
5,974
20,033
142,254
(40,879)
–
–
(89,228)
29,658
116,338
(54,117)
22,111
–
Net cash (outflow)/inflow from operating activities (688,034)
697,805
127,382
24,762
(531,522)
(32,344)
–
(6,977)
–
–
(14,769)
4,267,713
3,782
1,353,401
(939,623)
(26,096)
(653)
(16,536)
(234)
(1,046)
(523)
75,450
(2,388)
14,074
–
(379,384)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
23,748
14,000
CASH FLOWS FROM OPERATING ACTIVITIES (Continued)
Amounts due (to)/from customers on contracts
General and life insurance funds
Inter-company balances
Inventories
Financing of customers
Statutory deposits with Bank Negara Malaysia
Deposits with customers
Deposits and placements of banks and other financial institutions
Bills and acceptance payables
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of other investments by insurance subsidiary companies
Acquisition of additional shares in subsidiary companies
Additional investment in an associated company
Cost incurred on land held for property development
Expenditure on biological assets
Expenditure on prepaid lease properties
Expenditure on investment properties
Net cash inflow from acquisitions of subsidiary companies
Net cash inflow/(outflow) from disposal of subsidiary companies
Proceeds from disposal of a jointly controlled entity and associated companies
47
48
48
130
Annual Report 2009
cash flow statements for the financial year ended 31 March 2009 (Continued)
Group
2009
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
667,013
–
–
15,735
(125,437)
–
–
–
–
–
35
(337)
(5,370)
–
–
–
–
322
(258)
–
–
4,979,508
(340,264)
(385,056)
37,812
Proceeds from/(repayment of) loans to subsidiary/associated companies (net)
Dividends paid to shareholders
Maturity of fixed deposits held as security/maintained as sinking fund
Proceeds from bank borrowings
Repayment of borrowings
–
(109,379)
(127,211)
(3,861)
975,646
(1,968,815)
–
(28,816)
(36,929)
113,145
1,165,231
(1,191,288)
1,031,404
–
(127,211)
–
102,900
(794,373)
(118,525)
–
(36,929)
112,436
112,063
(75,000)
Net cash (outflow)/inflow from financing activities
(1,233,620)
21,343
212,720
(5,955)
NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS
3,057,854
378,884
(44,954)
56,619
25
228
–
–
CASH AND CASH OF EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR
1,541,334
1,162,222
87,204
30,585
CASH AND CASH OF EQUIVALENTS AT END OF THE FINANCIAL YEAR
4,599,213
1,541,334
42,250
87,204
CASH FLOWS FROM INVESTING ACTIVITIES (Continued)
Proceeds from disposal/maturity of other investments by insurance subsidiary companies
Acquisition of investments by a banking subsidiary company
Proceeds from disposal of investments by a banking subsidiary company
Proceeds from disposal of property, plant and equipment/investment properties
Purchase of property, plant and equipment
Share issue costs paid
Subscription of shares by minority interest in subsidiary companies
Net cash inflow/(outflow) from investing activities
410,615
(734,189)
255,708
4,765
(160,675)
–
164,000
CASH FLOWS FROM FINANCING ACTIVITIES
Effects of foreign currency translation
131
Group
2009
Note
RM’000
(a)
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
892,119
173,592
3,569,105
(25,525)
1,377,079
193,635
–
(25,010)
38,234
4,016
–
–
84,126
3,078
–
–
4,609,291
(10,078)
–
1,545,704
(6,217)
1,847
42,250
–
–
87,204
–
–
4,599,213
1,541,334
42,250
87,204
22,099
22,633
–
–
(ii) Acquisition of an investment property via settlement of a debt
–
–
–
83,000
(iii) Acquisitions of subsidiary companies via issuance of shares
717,364
–
717,364
–
Cash and cash equivalents at end of the financial year comprise the following:
Short term deposits
Cash and short term funds of a banking subsidiary
Bank overdrafts
Less: Fixed deposits held as security/sinking fund Add: Cash and cash equivalents attributable to a disposal group held for sale
29 (b)
(b) Non-cash transactions
The principal non-cash transactions during the financial year comprise the following:
(i) Acquisition of property, plant and equipment by means of hire purchase and
finance lease The notes set out on pages 132 to 230 form an integral part of the financial statements.
12 (b)
132
Annual Report 2009
NOTES TO THE FINANCIAL STATEMENTS
1
31 MARCH 2009
PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive, services (including banking business), and property and construction segments.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.
There have been no significant changes in these activities during the financial year except for the Group’s acquisitions of Rangkai Positif Sdn. Bhd. and Bank Muamalat Malaysia Berhad, and
the disposal of its equity interest in EON Capital Berhad as disclosed in Note 54 (a), (f) and (g) to the financial statements.
The Directors regard Etika Strategi Sdn. Bhd., a company incorporated in Malaysia, as the holding company with effect from 22 October 2008.
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Bursa Malaysia Securities Berhad.
The address of the registered office and principal place of business of the Company is Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1/8, Seksyen U1, 40150 Shah Alam, Selangor Darul
Ehsan, Malaysia.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies, unless otherwise stated below, have been used consistently in dealing with items which are considered material in relation to the financial statements:
2.1 Basis of preparation
The financial statements comply with the provisions of the Companies Act, 1965 and Financial Reporting Standards (“FRSs”), the MASB Approved Accounting Standards in Malaysia for
Entities Other than Private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the
Group. These significant modifications are set out in Notes 2.8 (ii), 2.18, 2.31 and 2.32 to the financial statements.
The financial statements of the Group and of the Company are prepared under the historical cost convention except for those that are disclosed in this summary of significant
accounting policies.
The preparation of financial statements in conformity with the provisions of the Companies Act, 1965 and Financial Reporting Standards, the MASB Approved Accounting Standards in
Malaysia for Entities Other than Private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary, requires
the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements, and the reported amounts of revenues and expenses during the reported period. Actual results could differ from those estimates. There are no areas involving a higher
degree of judgment or complexity, or areas where estimates and assumptions are significant to the financial statements other than as disclosed in Note 53 to the financial statements.
2.2 Changes in accounting policies and effects arising from adoption of revised FRSs
The accounting policies and methods of computation adopted during the financial year are consistent with those adopted for the annual audited financial statements for the financial year
ended 31 March 2008 except for the following new and revised FRSs issued by the MASB that are effective in the current financial year beginning 1 April 2008.
133
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
2.2 Changes in accounting policies and effects arising from adoption of revised FRSs (Continued)
The new accounting standards, amendments to published standards and IC Interpretations to existing standards issued by MASB and effective for the current financial year are as follows:
(i)
(ii)
Applicable and adopted by the Group
FRS 107
Cash Flows Statements
FRS 111
Construction Contracts
FRS 112
Income Taxes
FRS 118
Revenue
Amendment to FRS 121
The Effects of Changes in Foreign Exchange Rates
FRS 134
Interim Financial Reporting
FRS 137
Provisions, Contingent Liabilities and Contingent Assets
Not applicable to the Group
FRS 120
Accounting for Government Grants and Disclosure of Government Assistance
IC Interpretation 1
Changes in Existing Decommissioning, Restoration and Similar Liabilities
IC Interpretation 2
Members’ Shares in Co-operative Entities and Similar Instruments
IC Interpretation 5
Rights to Interests arising from Decommissioning, Restoration and Environmental Rehabilitation Funds
IC Interpretation 6
Liabilities arising from Participating in a Specific Market – Waste Electrical and Electronic Equipment
IC Interpretation 7
Applying the Restatement Approach under FRS1292004 Financial Reporting in Hyperinflationary Economics
IC Interpretation 8
Scope of FRS 2
The adoption of the new and revised FRSs did not have a significant financial impact on the Group and did not result in substantial changes to the Group’s accounting policies other than
the effect of the following FRS as described below:
FRS 112: Income Taxes
The amendment to FRS 112 now allows for the recognition of reinvestment allowances (“RA”), investment tax allowances (“ITA”) and other allowances in excess of capital allowances as
deferred tax assets. The adoption of the revised FRS 112 has resulted in the Group changing its accounting policy to recognise deferred tax assets on available RA and ITA, to the extent
that it is probable that future taxable profit will be available against which the available RA and ITA can be utilised. This change in accounting policy has been accounted for retrospectively
and effects of these changes are shown as prior year adjustments as follows:
Annual Report 2009
134
notes to the financial statements 31 March 2009 (Continued)
2
2.2 Changes in accounting policies and effects arising from adoption of revised FRSs (Continued)
Effect on
adoption of
As previously Amendments to
stated
FRS 112
RM’000
RM’000
As restated
RM’000
Consolidated balance sheet
As at 31 March 2008
Deferred tax assets
Minority interest
Reserves 56,418 941,976 1,878,470 43,092 17,801 25,291 99,510
959,777
1,903,761
25,728 58,559 291,786 (1,384) 775
609 24,344
59,334
292,395
737,678 1,593,789 17,026 24,682 754,704
1,618,471
Consolidated income statement
Financial year ended 31 March 2008
Taxation Minority interest Net profit attributable to equity holders of the Company Consolidated statement of changes in equity
As at 1 April 2007
Minority interest
Reserves 2.3 Impact of new MASB pronouncements
The Group has not adopted the following FRSs that are not mandatory for the current financial year.
(i)
tandards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been
S
early adopted
FRS 139 Financial Instruments: Recognition and Measurement (effective for the Group’s financial year beginning on 1 April 2010).
This new standard establishes principles for recognising and measuring financial assets, financial liabilities and some contracts to buy and sell non-financial items. Hedge accounting
is permitted only under strict circumstances. The Group will apply this standard when effective. The Group has applied the transitional provision in FRS 139 which exempts entities
from disclosing the possible impact arising from the initial application of this standard on the financial statements of the Group.
FRS 8 Operating Segments (effective for Group’s financial year beginning on 1 April 2010).
FRS 8 replaces FRS 1142004 Segment Reporting and it requires an entity to report financial and descriptive information about its operating segments on the same basis as those
reported internally for evaluating operating segment performance and deciding how to allocate resources to operating segments.
135
2
2.3 Impact of new MASB pronouncements (Continued)
(i)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and have not been early adopted
(Continued)
FRS 4 Insurance Contracts (effective for Group’s financial year beginning on 1 April 2010).
This standard allows an entity to address insurance contracts (including reinsurance contracts) that it issues, reinsurance contracts that it holds and financial instruments that it
issues with a discretionary participation feature.
FRS 7 Financial Instruments: Disclosures (effective for Group’s financial year beginning on 1 April 2010).
This new standard requires disclosures of information relating to the significance of financial instruments on an entity’s financial position and performance and the nature and extent
of risks arising from financial instruments to which the entity is exposed during the period and at the reporting date and how the entity manages those risks. The impact of applying
FRS 7 on these financial statements upon its first adoption is not disclosed by virtue of exemption provided under paragraph 44AB of this standard.
FRS 123 Borrowing Costs (effective for Group’s financial year beginning on 1 April 2010).
This standard supersedes FRS 1232004 and requires an entity to capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset (one
that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. The option of immediately expensing those borrowing costs will be removed.
Amendments to FRS 127 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate (effective for Group’s financial
year beginning on 1 April 2010).
The amendment removes the definition of the cost method and replaces it with a requirement to recognise dividends as income in the separate financial statements of the investor
when its right to receive the dividends are established.
IC Interpretation 9 Reassessment of Embedded Derivatives (effective for Group’s financial year beginning on 1 April 2010).
It requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first become
a party to the contract. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would
be required under the contract in which case reassessment is required.
IC Interpretation 10 Interim Financial Reporting and Impairment (effective for Group’s financial year beginning on 1 April 2010).
This new interpretation does not allow an impairment loss recognised in a previous interim period in respect of goodwill or an investment in either an equity instrument or a financial
asset carried at cost to be reversed at a subsequent balance sheet date.
IC Interpretation 13 Customer Loyalty Programmes (effective for Group’s financial year beginning on 1 April 2010).
This new interpretation clarifies that where goods or services are sold together with a customer loyalty incentive, the arrangement is a multiple-element arrangement and the revenue
in respect of the consideration receivable from the customer is allocated between the components of the arrangement using fair values.
IC Interpretation 14 FRS 119 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (effective for Group’s financial year beginning on 1 April 2010).
This new interpretation provides guidance on assessing the limit in FRS 119 on the amount of the surplus that can be recognised as an asset. It also explains how the pension
asset or liability may be affected by a statutory or contractual minimum funding requirement.
Annual Report 2009
136
2
2.3 Impact of new MASB pronouncements (Continued)
(ii)
Standards, amendments to published standards and interpretations to existing standards that are applicable to the Group but not yet effective and are not relevant to the Group
IC Interpretation 11
FRS 2 – Group and Treasury Share Transactions
Amendments to FRS 2
Share-based Payment – Vesting Conditions and Cancellations
Amendments to FRS 1 First-time Adoption of Financial Reporting Standards: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate
2.4 Basis of consolidation
The consolidated financial statements include the financial statements of the Company and its subsidiary companies made up to the end of the financial year.
Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities, generally
accompanying a shareholding of more than one half of the voting rights. The Group’s subsidiary companies are listed in Note 3 to the financial statements.
All the subsidiary companies are consolidated using the purchase method of accounting where the results of subsidiary companies acquired or disposed of during the financial year are
included from the date on which control is transferred to the Group and are no longer consolidated from the date on which the control ceases. At the date of acquisition, the fair values
of the subsidiary companies’ identifiable assets acquired and liabilities and contingent liabilities assumed are determined and these values are reflected in the consolidated financial
statements. The cost of an acquisition is measured as fair value of assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directly
attributable to the acquisition.
The gain or loss on disposal of a subsidiary company is the difference between net disposal proceeds and the Group’s share of its net assets including the cumulative amount of any
currency exchange differences that relate to the subsidiary company and is recognised in the consolidated income statement.
The total assets and liabilities of subsidiary companies are included in the Group’s balance sheet and the interests of minority shareholders in the net assets are stated separately. All
significant inter-company transactions, balances and unrealised gains on transactions are eliminated on consolidation and unrealised losses on transactions are also eliminated unless cost
cannot be recovered.
2.5 Minority interests
Minority interests represent the portion of profit or loss and net assets in subsidiary companies not held by the Group. Minority interests are initially measured at the minorities’ share of
fair values of the identifiable assets and liabilities of the acquiree at the date of acquisition.
The Group applies a policy of treating acquisition/disposal of shares from/to minority interests as transactions with parties external to the Group. Gains and losses resulting from disposal
of shares in subsidiary companies to minority interests are recorded in the income statement. Purchases from minority interests result in goodwill, being the difference between any
consideration paid and the relevant share of the carrying value of net assets of the subsidiary acquired.
2.6 Jointly controlled entities
A jointly controlled entity is an enterprise which is neither a subsidiary company nor an associated company of the Group but over which there is a contractually agreed sharing of control
by the Group with one or more parties over the strategic operating, investing and financial policy decisions. The decisions require the unanimous consent of the parties sharing control.
The Group’s share of results of jointly controlled entities is included in the consolidated income statement using the equity method of accounting. In the consolidated balance sheet, the
Group’s interest in jointly controlled entities is stated at cost plus the Group’s share of post acquisition retained profits and reserves less impairments. Where necessary, adjustments are
made to the financial statements of jointly controlled entities to ensure consistency of accounting policies with those of the Group.
The Group’s jointly controlled entities are listed in Note 3 to the financial statements.
137
2
2.7 Associated companies
An associated company is a company in which the Group is in a position to exercise significant influence in its management but which is does not control and is neither a subsidiary company
nor a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy decisions of the associated company but not control over those policies.
The Group’s share of results of associated companies is included in the consolidated income statement using the equity method of accounting. The share of the results of the associated
company will not be taken into the Group’s income statement when the carrying value of the investment in an associated company reaches zero unless the Group has incurred obligations
or guaranteed obligations in respect of the associated company. In the consolidated balance sheet, the Group’s interest in associated companies is stated at cost plus the Group’s share
of post acquisition retained profits and reserves less impairment. Where necessary, adjustments are made to the financial statements of associated companies to ensure consistency of
accounting policies with those of the Group.
The Group’s associated companies are listed in Note 3 to the financial statements.
2.8 Investments
•
Subsidiary companies, jointly controlled entities and associated companies
Investments in subsidiary companies, jointly controlled entities and associated companies are stated at cost. Where an indication of impairment exists, the carrying amount of the
investment is assessed and written down immediately to its recoverable amount.
•
Marketable securities
Quoted investments are stated at the lower of cost and market value determined on an aggregate portfolio basis by category of investments, except that if diminution in value
of a particular non current investment is not regarded as temporary, a write-down to average median market value is made against the value of that investment. Market value is
determined by reference to the stock exchange closing price at the balance sheet date.
•
Other investments
(i)
Investments held by insurance subsidiary companies
(a)
(b)Unquoted investments are stated at cost and an allowance for diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary
in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in
the income statement in the period in which the decline is identified.
Investments in Malaysian Government Securities, Cagamas Papers and other approved debt securities as specified by Bank Negara Malaysia, are stated at cost, adjusted
for the amortisation of premiums or the accretion of discounts calculated on a constant yield basis over the period from the date of purchase to maturity date except
where there is an indication of impairment, the investment is written-down to its net realisable value. The amortisation of premiums and accretion of discounts are
recognised in the income statement and/or revenue account.
Annual Report 2009
138
2
2.8 Investments (Continued)
•
Other investments (Continued)
(ii)
Investments held by a banking subsidiary company
(a)
Investments held-for-trading
Investments are classified as held-for-trading if they are acquired principally for the purpose of benefiting from actual or expected short-term price movement or to lock
in arbitrage profits. The investments held-for-trading will be stated at fair value and any gain or loss arising from a change in their values and derecognition of these
investments are recognised in the income statements.
(b)
Investments available-for-sale
Investments available-for-sale are financial assets that are not classified as held-for-trading or held-to-maturity. The investments available-for-sale are measured at fair
value or at amortised cost (less impairment losses) if the fair value cannot be reliably measured. Any gain or loss arising from a change in fair value are recognised
directly in equity through the statement of changes in equity, until the financial asset is sold, collected, disposed of or impaired, at which time the cumulative gain or
loss previously recognised in equity will be transferred to the income statement.
(c)
Investments held-to-maturity
Investments held-to-maturity are financial assets with fixed or determinable payments and fixed maturity that the banking subsidiary company have the positive intent
and ability to hold to maturity. The investments held-to-maturity are measured at accreted/amortised cost based on effective yield method. Amortisation of premium,
accretion of discount and impairment as well as gain or loss arising from derecognition of investments held-to-maturity are recognised in the income statement.
The estimated fair values for investments held-for-trading and investments available-for-sale are based on quoted and observable market prices at the balance sheet date.
Where such quoted and observable market prices are not available, fair value is estimated using pricing models or discounted cash flow techniques. Where discounted cash
flow technique is used, the estimated future cash flows are discounted based on current market rates for similar instruments at the balance sheet date.
(iii) Others
Other investments are shown at cost and an allowance for diminution in value is made, where in the opinion of the Directors, there is a decline other than temporary in the
value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the income
statement in the period in which the decline is identified.
On disposal of investments, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.
2.9 Investment properties
Investment properties comprise land and buildings that are held for long term rental yield and/or for capital appreciation and that are not occupied by the companies in the Group. Investment
properties are stated at fair value, representing open-market values determined annually by external valuers. Fair value is based on active market prices, adjusted, if necessary, for any difference
in the nature, location or condition of the specific asset. Gains or losses arising from changes in the fair values of investment properties are recognised in the income statement.
On disposal of an investment property, or when it is permanently withdrawn from use and no future economic benefits are expected from its disposal, it shall be derecognised (eliminated
from the balance sheet). The difference between the net disposal proceeds and the carrying amount is recognised in the income statement in the period of the retirement or disposal.
139
2
2.10 Non-current assets held for sale
Non-current assets are classified as held for sale and stated at the lower of carrying amount and fair value less cost to sell if their carrying amount will be recovered principally through
a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present
condition subject only to terms that are usual and customary.
2.11 Biological assets
Biological assets comprise new planting expenditure incurred up to the point of harvesting. This expenditure is capitalised and is not amortised, unless a different crop is planted on the
existing land area, in which case the amount is written off in the year when the different crop is planted. Where the cost of new planting is incurred on leasehold land which has an
unexercised period shorter than the crop’s economic life, the cost is amortised over the remaining period of the lease on a straight line basis. Replanting expenditure, which represents
cost incurred in replanting old planted areas, is charged to income statement in the year in which it is incurred.
2.12 Property, plant and equipment and depreciation
Freehold land is not depreciated as it has an infinite life. Depreciation on assets under construction commences when the assets are ready for their intended use. All other property, plant
and equipment are stated at cost less accumulated depreciation and impairment losses.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the
item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they are incurred.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are recognised in the income statement.
Where an indication of impairment exists, the carrying amount of the property, plant and equipment is assessed and written down immediately to its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs to sell and value in use. At each balance sheet date, the Group assesses whether there is any indication of impairment.
The estimated useful lives in years are as follows:
Buildings, golf course and improvements
Plant and machinery
Motor vehicles
Office equipment
Furniture and fittings
3
5
3
3
3
–
–
–
–
–
98
30
10
10
20
years
years
years
years
years
Residual values and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.
2.13 Prepaid lease properties
Leasehold land that normally has a finite 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 properties that are amortised over the lease term in accordance with the pattern of benefits provided. Short
term leases are below 50 years and long term leases are above 50 years.
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2.14 Goodwill
Goodwill represents the excess of the cost of acquisition of subsidiary companies, jointly controlled entities and associated companies over the fair value of the Group’s share of the
identifiable net assets at the time of acquisition. Goodwill on acquisitions of subsidiary companies is included in the balance sheet as intangible assets. If the cost of acquisition is less
than the fair value of the net assets of the subsidiary company acquired, the difference is recognised directly in the income statement.
Goodwill arising on the acquisition of subsidiary companies is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are
not reversed. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are
expected to benefit from the synergies of the business combination in which the goodwill arose. The Group allocates goodwill to each business segment in which it operates.
Goodwill on acquisitions of jointly controlled entities and associated companies is included in investment in jointly controlled entities and associated companies respectively. Such goodwill
is tested for impairment as part of the overall balance.
2.15 Intangible assets other than goodwill
(i)
Plant and assembly licenses and expenses incurred for development of products
Plant and assembly licences and expenses incurred for development of products, are considered to have finite useful lives, and are amortised equally over the period of their expected
benefit or charged to income statement in the financial year in which the related plant or product is abandoned or considered to be of no value.
(ii)
Computer software
Costs that are directly associated with identifiable and unique software products which have probable benefits exceeding the cost beyond one year are recognised as intangible
assets. Expenditure which enhances or extends the performance of computer software programmes beyond their original specifications is recognised as a capital movement and
added to the original cost of the software.
Costs associated with maintaining computer software programmes are recognised as an expense when incurred. Costs include employee costs incurred as a result of developing
software and an appropriate portion of relevant overheads.
Computer software costs recognised as intangible assets are carried at cost and are amortised on a straight line basis over their estimated useful lives of 1 – 5 years.
(iii) Concession for the operation and maintenance of a power plant
Concession for the operation and maintenance of a power plant, is recognised as an intangible asset. The concession is carried at cost and amortised on a straight line basis over
the remaining concession period of approximately 23 years.
(iv)
Core deposits of a banking subsidiary company
Core deposits are carried at cost and amortised on a straight line basis over a period of 5 years.
Where an indication of impairment exists, the carrying amount of the intangible assets is assessed and written down immediately to its recoverable amount.
Preliminary and pre-operating expenses are written off to the income statement in the financial year in which they are incurred.
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2.16 Property development activities
(i)
Land held for property development
Land held for property development consist of land on which no significant development work has been undertaken or where development activities are not expected to be completed
within the normal operating cycle. Such land is classified as non-current asset and is stated at cost less accumulated impairment losses.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, conversion fees and other relevant levies. Where an indication
of impairment exists, the carrying amount of the asset is assessed and written down immediately to its recoverable amount.
Land held for property development is transferred to property development costs (within current assets) when development work is to be undertaken and is expected to be completed
within the normal operating cycle.
On disposal of land held for property development, the difference between the net disposal proceeds and its carrying amount is charged or credited to the income statement.
(ii)
Where the outcome of a development can be reliably estimated, property development revenue and expenditure are recognised using the percentage of completion method. The
percentage of completion is measured by reference to the development costs incurred to date in proportion to the estimated total costs for the property development.
Where the outcome of a development activity cannot be reliably estimated, property development revenue is recognised only to the extent of costs incurred that is probable will be
recoverable. Property development costs on development units sold are recognised as an expense when incurred.
Irrespective of whether the outcome of a property development activity can be estimated reliably, when it is probable that total property development costs will exceed total property
development revenue, the expected loss is recognised as an expense immediately.
Property development costs not recognised as an expense is recognised as an asset and are stated at lower of cost and net realisable value. Where revenue recognised in the
income statement exceeds billings to purchasers, the balance is shown as accrued billings under receivables (within current assets). Where billings to purchasers exceed revenue
recognised, the balance is shown as progress billings under payables (within current liabilities).
Revenue and profit from completed properties is recognised in accordance with the terms of the sale and purchase agreements.
2.17 Inventories
Inventories are stated at the lower of cost and net realisable value.
(i)
Raw materials, work-in-progress, finished goods and consumables
Raw materials and consumables are stated at cost. Work-in-progress and finished goods represent raw materials, direct labours, direct charges and allocated process costs, where
necessary. Cost is principally determined on a first-in, first-out basis.
(ii)
Inventories of unsold properties
The cost of unsold properties comprises cost associated with the acquisition of land, direct costs and an appropriate allocation of allocated costs attributable to property
development activities.
Net realisable value is the estimated selling price in the ordinary course of business less the costs of completion and selling expenses.
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2.18 Receivables
Other than financing of customers in relation to a banking subsidiary company as stated below, receivables are carried at anticipated realisable value. An estimate is made for doubtful
receivables based on a review of all outstanding amounts at the financial year end. Bad debts are written off in the financial year in which they are identified.
Financing of customers of a banking subsidiary company are stated after deducting allowance for possible losses. Specific allowances are made for impaired financing, which have been
individually reviewed and specifically identified as substandard, doubtful or bad.
A general allowance based on a percentage of the financing portfolio is also made. These percentages are reviewed annually in light of past experiences and prevailing circumstances and
an adjustment is made to the overall general allowances, if necessary.
Any uncollectible financing or portion of a financing classified as bad is written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the
directors, there is no prospect of recovery.
Specific allowance provided for impaired financing on the following basis which is in compliance with the Bank Negara Malaysia/GP3:
(i)
assigning twenty percent (20%) for non-performing financing which are more than 3 months-in-arrears;
(ii)
assigning fifty percent (50%) for non-performing financing in arrears of 6 months; and
(iii)
assigning a hundred percent (100%) for non-performing financing in arrears of 9 months and above.
Additional allowances for impaired financing are provided when the recoverable amount is lower than the net book value of financing (outstanding amount of financing, net of specific
allowances) and long outstanding non-performing financing on the following basis:
(i)assigning fifty percent (50%) of the force sale value of the properties held as collateral for non-performing financing which are outstanding for more than 5 years but less than
7 years; and
(ii)
no value will be assigned for the collateral of non-performing financing which are outstanding for 7 years and above.
Any allowance made during the year is charged to the income statement.
2.19 Cash and cash equivalents
For the purposes of the cash flow statements, cash and cash equivalents consist of cash in hand, bank balances, demand deposits, bank overdrafts and short term highly liquid investments
that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
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2.20 Income taxes
Income tax on the profit or loss for the financial year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for
the financial year and is measured using the tax rates that have been enacted at the balance sheet date.
Deferred tax is provided for in full, using the liability method on temporary differences at the balance sheet date between the tax bases of assets and liabilities for tax purposes and their
carrying amounts in the financial statements. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is
not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax assets are recognised to the extent that is probable that
taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.
Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or
substantially enacted at the balance sheet date. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in equity, in
which case the deferred tax is also charged or credited directly in equity, or when it arises from a business combination that is an acquisition, in which case the deferred tax is included
in the resulting goodwill.
2.21 Share capital
(i) Classification
Ordinary shares are classified as equity.
(ii)
Share issue costs
Incremental external costs directly attributable to the issue of new shares are shown in equity as a deduction, net of tax, from the proceeds.
(iii)
Dividends to shareholders of the Company
Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. Dividends proposed after the balance sheet date, but before the financial
statements are authorised for issue, is not recognised as a liability at the balance sheet date. Upon the dividend becoming payable, it will be accounted for as a liability.
2.22 Borrowings
(i)
Classification
Borrowings are initially recognised based on the proceeds received, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective
yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.
(ii)
Capitalisation of borrowing cost
Borrowing costs incurred to finance the construction of property, plant and equipment are capitalised as part of the cost of the asset during the period of time that is required to
complete and prepare the asset for its intended use. Borrowing costs incurred to finance property development activities and construction contracts are accounted for in a similar
manner. All other borrowing costs are expensed.
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2.23 Provisions
(i)
Warranty and sales returns
A provision is made for the estimated liability on all products still under warranty and provision for sales returns is made for estimated returns of goods as at the balance sheet
date. These provisions are arrived at based on service and sales returns historical data.
(ii)
Restructuring, mutual separation schemes and voluntary separation scheme costs
Restructuring, mutual separation scheme and voluntary separation scheme provisions mainly comprise employee termination costs and other related costs and are recognised in the
financial year in which the Group becomes legally or constructively committed to payment.
(iii)
Provision for claims in relation to a general insurance subsidiary company
A liability for outstanding claims is recognised in respect of both direct insurance and inward reinsurance. The amount of outstanding claims is the best estimate of the expenditure
required together with related expenses less recoveries to settle the present obligation at the balance sheet date.
Provision is also made for the cost of claims, together with related expenses, incurred but not reported at the balance sheet date, based on an actuarial valuation by an independent
professional actuary.
(iv)
Provision for claims in relation to a life insurance subsidiary company
Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and/or the insurer is notified.
Recoveries on reinsurance claims are accounted for in the same financial year as the original claims are recognised.
Claims and provisions for claims arising on life insurance policies including settlement costs, less reinsurance recoveries, are accounted for using the case basis method and for this
purpose, the benefits payable under a life insurance policy are recognised as follows:
(a)
maturity or other policy benefit payments due on specified dates are treated as claims payable on the due dates; and
(b)
d eath, surrender and other benefits without due dates are treated as claims payable, on the date of receipt of intimation of death of the assured or occurrence of
contingency covered.
The benefits payable under investment-linked businesses are in respect of net cancellation of units and are recognised as surrender.
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2.24 Employee benefits
(i)
Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of
the Group and Company.
(ii)
Defined contribution plan
A defined contribution plan is a pension plan under which the Group and Company pay fixed contributions into a separate entity (a fund) and will have no legal or constructive
obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating to employee service in the current and prior periods.
The Group’s and Company’s contributions to the defined contribution plan are charged to the income statement in the period to which they relate. Once the contributions have been
paid, the Group and Company have no further payment obligations.
(iii) Termination benefits
Termination benefits are payable to an entitled employee whenever the employment has to be terminated before the normal retirement date or when the employee accepts mutual/
voluntary separation in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current
employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy.
2.25 General insurance underwriting results
The general insurance underwriting results are determined for each class of business after taking into account reinsurances, commissions, unearned premiums and claims incurred.
Unearned premium reserves
Unearned premium reserves (“UPR”) represent the portion of the net premiums of insurance policies written that relate to the unexpired periods of the policies at the end of the financial year.
In determining the UPR at the balance sheet date, the method that most accurately reflects the actual unearned premium is used, as follows:
(i)
25% method for marine cargo, aviation cargo and transit;
(ii)1/24th method for all other classes of Malaysian general policies reduced by the percentage of accounted gross direct business commissions to the corresponding premiums, not
exceeding limits specified by Bank Negara Malaysia;
(iii)
1/8th method for all other classes of overseas inward business with a deduction of 20% for acquisition costs; and
(iv)
time appointment method for policies with insurance periods other than 12 months.
Acquisition costs
The cost of acquiring and renewing insurance policies, net of income derived from ceding reinsurance premiums, are recognised as incurred and allocated to the periods in which they
give rise to income.
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2.26 Life insurance underwriting results
The surplus transferable from the life insurance fund to the income statement is based on the surplus determined by an annual actuarial valuation of the long term liabilities to policyholders,
made in accordance with the provisions of the Insurance Act, 1996 and related regulations by the appointed actuary. In the event the actuarial valuation indicates that a transfer is required
from the Shareholders’ fund, the transfer from the income statement to the life insurance fund is made in the financial year of the actuarial valuation.
In the consolidated financial statements, all life insurance underwriting results are reflected through movements in the life assurance fund.
Premium income
Premium income includes premium recognised in the life fund and the investment-linked funds.
Premium income of the life fund is recognised as soon as the amount of the premium can be reliably measured. First premium is recognised from inception date and subsequent premium
is recognised when it is due.
At the end of the financial year, all due premiums are accounted for to the extent that they can be reliably measured.
Outward reinsurance premiums are recognised in the same accounting period as the original policies to which the reinsurance relates.
Premium income of the investment-linked funds is in respect of the net creation of units which represents premiums paid by policyholders as payment for a new contract or subsequent
payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis.
Commission and agency expenses
Commission and agency expenses, which are costs directly incurred in securing premium on insurance policies, net of income derived from reinsurers in the course of ceding of premium
to reinsurers, are charged to the life insurance revenue account in the financial year in which they are incurred.
2.27 Construction contracts
When the outcome of a construction contract can be estimated reliably, contract revenue and contract costs are recognised over the period of the contract as revenue and expenses
respectively. The Group uses the percentage of completion method to determine the appropriate amount of revenue and costs to be recognised in a given period; the percentage of
completion is measured by reference to the proportion of contract costs incurred for work performed to date to the estimated total costs.
When it is probable that the total contract costs will exceed total contract revenue, the expected loss is recognised as an expense immediately.
When the outcome of a construction contract cannot be estimated reliably, contract revenue is recognised only to the extent of contract costs incurred that is probable will be recoverable
and contract costs are recognised as expenses when incurred.
The aggregate of the costs incurred and the profit/loss recognised on each contract is compared against the progress billings periodically. Where costs incurred and recognised profit (less
recognised losses) exceeds progress billings, the balance is shown as amounts due from customers on construction contracts under current assets. Where progress billings exceed costs
incurred plus recognised profit (less recognised losses), the balance is shown as amounts due to customers on construction contracts under current liabilities.
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2.28 Assets under lease arrangements
(i)
Finance leases
Leases of property, plant and equipment where the Group assumes substantially all the benefits and risks of ownership are classified as finance leases. Assets acquired under finance
lease arrangements are included in property, plant and equipment and the capital element of the leasing commitments is shown under borrowings. The lease rentals are treated as
consisting of capital and interest element. The capital element is applied to reduce the outstanding obligations and the interest element is charged to income statement so as to
give a constant periodic rate of interest on the outstanding liability at the end of each accounting period. Assets acquired under finance lease are depreciated over the useful lives
of equivalent owned assets or its lease term, if shorter.
(ii)
Operating leases
Leases of assets where a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases. Lease rental payments on operating
leases are charged to the income statement in the financial year they become payable.
When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the
period in which termination takes place.
2.29 Revenue recognition
Other than revenue recognition policies mentioned elsewhere in the summary of significant accounting policies, set out below are other significant revenue recognition policies used
by the Group:
(i)
Sale of goods
Sales are recognised upon delivery of goods, net of sales tax, returns, discounts and allowances.
(ii)
Rendering of services
(a)
(b)
(c)
(d)
Solid waste management
Revenue from management services, solid waste disposal and tipping fees is recognised upon performance of services less discounts.
Vehicle inspection income
Income from inspection of vehicles is recognised upon the rendering of inspection services.
Ground handling services
Revenue from ground handling, inflight catering and cargo handling is recognised upon performance of services less discounts.
Premium income of a general insurance subsidiary company
P remium income is recognised in a financial year in respect of risks assumed during that particular financial year. Premiums from direct business are recognised during the financial
year upon the issuance of insurance policies. Premiums in respect of risks incepted for which policies have not been issued as of the balance sheet date are accrued at that date.
Inward treaty reinsurance premiums are recognised on the basis of periodic advices received from ceding insurers.
Outward reinsurance premiums are recognised in the same accounting period as the original policy to which the reinsurance relates.
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2.29 Revenue recognition (Continued)
(ii)
Rendering of services (Continued)
(e)
Operation and maintenance of a power plant
Revenue from operation and maintenance is recognised upon performance of services less discounts.
(f) Fee and other income recognition for a banking subsidiary company
Financing arrangement, management and participation fees, underwriting commissions and brokerage fees are recognised as income based on contractual arrangements.
Guarantee fee is recognised as income upon issuance of the guarantee. Fees from advisory and corporate finance activities are recognised net of service taxes and discounts
on completion of each stage of the assignment.
(iii)
Others
(a) Income from financing of a banking subsidiary company
Income from financing of customers is recognised based on the constant rate of return method. Income includes the amortisation of premium and accretion of discount. Income
from investments is recognised on an effective yield basis.
Where a customer’s financing account is classified as non-performing, income is suspended until it is realised on a cash basis. Financing income recognised prior to the
non-performing classification is treated as uncollectible, thus an additional amount of specific allowance is made. Customers’ accounts are classified as non-performing where
repayments are in arrears for more than three months from the first day of default for financing; and three months from the first day of default for trade bills, bankers
acceptances, trust receipts and other instruments of similar nature.
(b) Dividend income
Dividends are recognised when the Group’s right to receive payment is established.
2.30 Foreign currency translation
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the “functional
currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is the Company’s functional and presentation currency.
Transactions in foreign currencies during the financial year are converted into functional currency at the rates of exchange ruling on the transaction dates. Monetary assets and liabilities in foreign
currency are translated into Ringgit Malaysia at rates of exchange approximating those ruling on the balance sheet date. Exchange gains and losses are dealt with in the income statement.
The assets and liabilities of foreign subsidiary companies that have a functional currency other than RM are translated into Ringgit Malaysia at the rate of exchange ruling at the balance
sheet date. Income and expenses are translated at average exchange rates. Exchange differences are recognised in the statement of changes in equity as currency translation reserves.
On disposal of foreign subsidiary companies, such translation differences are recognised in the income statement as part of the gain or loss on disposal.
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2.31 Banking related liabilities
Deposits from customers, deposits and placement of banks and financial institutions are stated at placement values. Bills and acceptances payables represent the banking subsidiary
company’s own bills and acceptances rediscounted and outstanding in the market.
2.32 Financial Instruments
Description
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial asset from another enterprise, a contractual right to exchange financial instruments with
another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or other financial asset to another enterprise, or to exchange financial instruments with another enterprise
under conditions that are potentially unfavourable.
Financial Instruments Recognised on the Balance Sheet
The particular recognition and measurement method for financial instruments recognised on the balance sheet is disclosed in the individual policy statements associated with each item.
All derivatives financial instruments relating to a banking subsidiary company including profit rate and foreign currency swaps are measured at fair value and are carried as assets when
the fair value is positive and as liabilities when the fair value is negative. Any gain or loss arising from a change in the fair value of the derivatives is recognised in the income statement
unless they are part of a hedging relationship which qualifies for hedge accounting where the gain or loss is recognised as follows:
(i)
Fair value hedge
Where a derivative financial instrument hedges the changes in fair value of a recognised asset or liability, any gain or loss on the hedging instrument is recognised in the income
statement. The hedged item is also stated at fair value in respect of the risk being hedged, with any gain or loss being recognised in the income statement.
(ii)
Cash flow hedge
Gains and losses on the hedging instrument, to the extent that the hedge is effective, are deferred in a separate component of equity. The ineffective part of any gain or loss is
recognised in the income statement. The deferred gains and losses are released to the income statement in the periods when the hedged item affects the income statement.
Financial Instruments Not Recognised on the Balance Sheet
Exchange gains and losses arising on forward foreign exchange contracts entered into as hedges of anticipated future transactions are deferred until the date of such transactions, at
which time they are included in the measurement of such transactions.
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2.32 Financial Instruments (Continued)
Fair Value Estimation
The fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date. The fair value of forward foreign exchange contracts is determined using
forward exchange market rates at the balance sheet date.
In assessing the fair value of non-traded financial instruments, the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance
sheet date. Techniques such as estimated discounted value of future cash flows, are used to determine fair value. In particular, the fair value of financial liabilities is estimated by discounting
the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.
The carrying value of financial assets and liabilities of the Group at the balance sheet date approximated their fair value except as disclosed in the relevant notes to the financial statements.
The carrying values for financial assets and liabilities with a maturity of less than one year are assumed to approximate their fair values.
2.33 Segment reporting
Segment reporting is presented for enhanced assessment of the Group’s risks and returns. Business segments provide products or services that are subject to risk and returns that are
different from those of other business segments.
Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities of a segment that are directly attributable to the segment and the relevant portion
that can be allocated on a reasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined before intragroup balances and intragroup transactions are
eliminated as part of the consolidation process, except to the extent that such intragroup balances and transactions are between group enterprises within a single segment.
2.34 Contingent liabilities and contingent assets
The Group does not recognise a contingent liability but disclosed its existence in the financial statements. A contingent liability is a possible obligation that arises from past events
whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow
of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it
cannot be measured reliably.
A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group does not
recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.
In the acquisition of subsidiaries by the Group under a business combination, the contingent liabilities assumed are measured initially at their fair value at the acquisition date.
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COMPANIES IN THE GROUP
The principal activities of the companies in the Group and the effective interest of the Group as at 31 March 2009 therein are shown below:
Effective Equity
Name of Company
Interest
Principal Activities
2009
2008
%
%
Financial
Year End
SUBSIDIARY COMPANIES
Subsidiary companies of DRB-HICOM Berhad:
Gadek (Malaysia) Berhad 100.00 100.00 Investment holding 31 March
HICOM Holdings Berhad 100.00 100.00 Investment holding 31 March
PUSPAKOM Sdn. Bhd. (“PUSPAKOM”)
100.00 100.00 Inspection of commercial vehicles for roadworthiness
31 March
DRB-HICOM Defence Technologies Sdn. Bhd.
100.00 100.00 Manufacture, supply, maintenance marketing, refurbishment or retrofitting
of military and commercial vehicles, equipment and spare parts
31 March
*DRB-HICOM Auto Solutions Sdn. Bhd.
100.00 100.00Vehicle importation, vehicle predelivery inspection and value added services for provision of logistics and related services to vehicles
31 March
$ * Rangkai Positif Sdn. Bhd. 100.00 –
Operations and maintenance services of a power plant
31 March
$ *Bank Muamalat Malaysia Berhad 70.00 –
Islamic banking business and related financial services
31 March
$ Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”)
70.00 55.00 Manufacture, assemble and distribute motorcycles, related spare parts and accessories
31 March
100.00 100.00 Dormant 31 March
Intrakota Komposit Sdn. Bhd.
DRB-HICOM Export Corporation Sdn. Bhd.
(accretion via increase in equity interest held in MODENAS)
* Hicomobil Sdn. Bhd.
Subsidiary company of DRB-HICOM Defence
Technologies Sdn. Bhd.:
Defence Services Sdn. Bhd.
100.00 100.00 Specialised defence engineering works including refurbishment, upgrading and upgrading of armoured vehicles
31 March
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COMPANIES IN THE GROUP (Continued)
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
SUBSIDIARY COMPANIES (Continued)
Subsidiary companies of Gadek (Malaysia) Berhad:
Mega Consolidated Sdn. Bhd.
*Ladang Gadek Development Sdn. Bhd.
100.00 100.00 Investment holding 31 March
100.00 100.00 Cultivation and marketing of oil palm 31 March
*Ladang Kupang Development Sdn. Bhd.
100.00 100.00 Cultivation and marketing of rubber and oil palm 31 March
Uni.Asia Life Assurance Berhad
51.00
51.00 Underwriting of life insurance business including investment-linked business 31 March
Uni.Asia General Insurance Berhad
34.73 34.73 Underwriting of all classes of general insurance business 31 March
Uni.Asia Capital Sdn. Bhd.
Subsidiary companies of Uni.Asia Capital Sdn. Bhd.:
Subsidiary companies of PUSPAKOM:
Puspakom Teknik Sdn. Bhd. 100.00 100.00 Supply and maintenance of automobile associated equipment
31 March
Flora Areana Sdn. Bhd. 100.00 100.00
Investment holding 31 March
Subsidiary company of Flora Areana Sdn. Bhd.:
Multi Automotive Service and Assist Sdn. Bhd.
55.00 55.00 Membership recruitment, providing vehicle assistance and supply of auto related products and services
31 March
70.00 55.00 Distribution of motorcycles, related spare parts and accessories and
servicing of motorcycles
31 March
Subsidiary company of MODENAS:
Edaran Modenas Sdn. Bhd. Subsidiary companies of Bank Muamalat Malaysia Berhad:
$ *Muamalat Venture Sdn. Bhd.
$ *Muamalat Invest Sdn. Bhd. $ * Muamalat Nominees (Tempatan) Sdn. Bhd.
70.00 –
Islamic venture capital 31 March
70.00 –
Provision of fund management services
31 March
70.00 –
Dormant 31 March
$ * Muamalat Nominees (Asing) Sdn. Bhd.
70.00 –
Dormant 31 March
153
3
COMPANIES IN THE GROUP (Continued)
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Subsidiary companies of HICOM Holdings Berhad:
HICOM Berhad 100.00 100.00 Management of projects, rental of properties and investment holding
HICOM Diecastings Sdn. Bhd. 100.00 100.00Manufacturing and supplying diecast parts for motorcycles, automobiles and other applications
31 March
31 March
*HICOM Engineering Sdn. Bhd. 100.00 100.00 Manufacturing casted and machined parts and components
31 March
USF-HICOM Holdings Sdn. Bhd.
100.00 100.00
Automotive Corporation Holdings Sdn. Bhd.
Property investment and development, civil engineering and building
construction
31 March
HICOM Builders Sdn. Bhd.
100.00 100.00 (formerly known as Imatex Sdn. Bhd.)
Desa Puchong Sdn. Bhd.
*NSE Development Sdn. Bhd. 100.00 100.00 Cultivation of oil palm and property development
31 March
100.00 100.00 Cultivation and marketing of oil palm 31 March
* Bukit Kledek Development Sdn. Bhd.
100.00 100.00 Cultivation and marketing of rubber and oil palm 31 March
KL Airport Services Sdn. Bhd. 100.00 100.00 Superintendent of airport’s operation systems and provision of related ground handling, inflight catering, cargo handling and
warehousing space services
31 March
*HICOM Polymers Industry Sdn. Bhd.
100.00 100.00 Distribution of automotive and industrial after-market products
31 March
HICOM Technical and Engineering Services Sdn. Bhd.
HICOM Vertex Sdn. Bhd. 100.00 100.00
Dormant 31 March
HICOM Dewan Development Sdn. Bhd. 100.00 100.00 Dormant 31 March
Marketing of Proton motor vehicles, related spare parts and servicing of vehicles
31 March
Edaran Otomobil Nasional Berhad (“EON”)
79.05 79.05 154
Annual Report 2009
3 COMPANIES IN THE GROUP (Continued)
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Subsidiary companies of HICOM Holdings Berhad:
(Continued)
*Scott & English (Malaysia) Sdn. Bhd. 70.00
70.00
Importation, distribution and servicing of industrial, marine, engineering
products
31 March
*Comtrac Sdn. Bhd. 70.00 70.00 Construction works and the provision of projects and development management services
31 March
*Oriental Summit Industries Sdn. Bhd.
70.00 70.00 Contract manufacturing of motorcycle and automobile parts and components
31 March
*Scott & English Electronics Holdings Sdn. Bhd.
70.00 70.00 $ PHN Industry Sdn. Bhd.
62.50 53.47 Manufacturing stamped metal parts, sub-assembly of automotive components for the motor industry and design and manufacture of dies
31 March
$ Alam Flora Sdn. Bhd. 60.53 55.00 Management of integrated solid waste 31 March
Proton City Development Corporation Sdn. Bhd.
60.00 60.00 Property development, civil and building construction
31 March
HICOM-Teck See Manufacturing Malaysia Sdn. Bhd. 51.00
51.00 Manufacture and sale of thermo plastic and thermo setting products 31 March
HICOM Petro-Pipes Sdn. Bhd. 51.00 51.00 Dormant 31 March
Subsidiary companies of HICOM Berhad:
*HICOM Properties Sdn. Bhd. 100.00
100.00 Investment holding 31 March
*Connemara Development Sdn. Bhd.
*HB Property Development Sdn. Bhd. 100.00 100.00
Property investment 31 March
*HICOM Megah Sdn. Bhd. 92.46 92.46 Investment holding 31 March
*Glenmarie Cove Development Sdn. Bhd.
89.50 89.50 Investment holding and property development 31 March
155
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Subsidiary company of HICOM-Teck See Manufacturing
Malaysia Sdn. Bhd.:
@*HICOM Automotive Plastics (Thailand) Ltd. 50.99 50.99 Manufacture of plastic injected parts and plastic injection moulds for automotive industry
31 March
Subsidiary company of USF-HICOM Holdings Sdn. Bhd.:
100.00 100.00 Sale of motor vehicles and their related spare parts and accessories 31 March
100.00 100.00 Sale of motor vehicles and their related spare parts and accessories 31 March
100.00 100.00 Provision of aircraft maintenance, engineering and custom forwarding agent services
31 March
100.00 100.00 Provision of management services 31 March
*Auto Prominence (M) Sdn. Bhd. 100.00 100.00 Dormant 31 March
*Stagwell Sdn. Bhd. 100.00
100.00
Dormant
31 March
Assembly of motor vehicles and other road transport vehicles
31 March
*USF-HICOM (Malaysia) Sdn. Bhd.
Subsidiary company of Automotive Corporation
Holdings Sdn. Bhd.:
*Automotive Corporation (Malaysia) Sdn. Bhd.
Subsidiary company of USF-HICOM (Malaysia) Sdn. Bhd.:
*HICOM Premier Malaysia Sdn. Bhd.
(formerly known as Directional (Malaysia) Sdn. Bhd.)
Subsidiary company of HICOM Premier Malaysia Sdn. Bhd.:
*Euro Truck & Bus (Malaysia) Sdn. Bhd.
Subsidiary company of KL Airport Services Sdn. Bhd.:
KLAS Engineering Services Sdn. Bhd.
Subsidiary company of HICOM Builders Sdn. Bhd.:
Imatex Management Services Sdn. Bhd. Subsidiary companies of Automotive Corporation
(Malaysia) Sdn. Bhd.:
HICOM Automotive Manufacturers (Malaysia) Sdn. Bhd.
(formerly known as Automotive Manufacturers (Malaysia)
Sdn. Bhd.)
93.00 93.00
156
Annual Report 2009
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
EON Properties Sdn. Bhd.
79.05 79.05 31 March
Automotive Conversion Engineering Sdn. Bhd.
79.05 79.05 Conversion and modification of motor vehicles and distribution of car accessories
31 March
Euromobil Sdn. Bhd. 79.05 79.05 Sale of motor vehicles and related spare parts and servicing of vehicles
31 March
EONMobil Sdn. Bhd.
79.05 79.05 Sale of motor vehicles 31 March
EON Auto Mart Sdn. Bhd. 79.05 79.05
Sale of motor vehicles
31 March
EON Trading Sdn. Bhd. 79.05 79.05
Dormant 31 March
EON Resorts Sdn. Bhd.
79.05
79.05
Dormant 31 March
EON Technologies Sdn. Bhd. 79.05
79.05 Dormant 31 March
Corporate Galaxy Sdn. Bhd.
Liku Nostalgia Sdn. Bhd. 79.05 79.05 Dormant 31 March
79.05 79.05
Dormant 31 March
*HICOM United Leasing Sdn. Bhd. *Scott & English Trading (Sarawak) Sdn. Bhd. 70.00 70.00 Sales, servicing and rental of machinery and equipment 31 March
35.70 35.70Trading of heavy machinery and equipment, spare parts and
electrical appliances
31 March
^ *Myanmar Scott & English Company Limited
+ *Scott & English (Cambodia) Limited (under voluntary liquidation)
Subsidiary companies of EON:
Investment and management of properties
Subsidiary company of EON Trading Sdn. Bhd.:
EON Inovasi Sdn. Bhd.
Subsidiary company of EON Technologies Sdn. Bhd.:
EON Network Systems Sdn. Bhd. Subsidiary companies of
Scott & English (Malaysia) Sdn. Bhd.:
157
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Subsidiary companies of Oriental Summit
Industries Sdn. Bhd.:
*Automotive Components Engineering Centre Sdn. Bhd.
70.00 70.00 Contract design and manufacturing of dies and jigs for automobile industry
31 March
*OSI Manufacturing Sdn. Bhd. 70.00 70.00 Dormant 31 March
*Comtrac Trading Sdn. Bhd. 70.00 70.00 Trading of construction materials 31 March
*Isti-Emas Sdn. Bhd. 70.00 70.00 Dormant 31 March
*Comtrac Premises Sdn. Bhd.
*Comtrac Builders Sdn. Bhd.
70.00 70.00
Dormant
31 March
67.90
67.90Supply, installation and construction of precast building works, manufacturing, supply and installation of precast component and provision of upgrading and
renovation works
31 March
42.00 42.00
Dormant 31 March
35.70 35.70
Construction works and property development
31 March
35.70 35.70 Investment holding and property development
31 March
35.70 35.70 Property management 31 March
100.00 100.00 Property development 31 March
100.00 100.00 Resort management 31 March
100.00 100.00 Provision of facility management services
31 March
Subsidiary companies of Comtrac Sdn. Bhd.:
Comtrac Development Sdn. Bhd.
(formerly known as HICOM-TNB Properties Sdn. Bhd.)
*Comtrac-Sabkar Development Sdn. Bhd.
*Comtrac Glenview Sdn. Bhd. Subsidiary company of Comtrac Glenview Sdn. Bhd.:
*Glenview Management Corporation Sdn. Bhd.
Subsidiary companies of HICOM Properties Sdn. Bhd.:
*HICOM Indungan Sdn. Bhd. *Kenyir Splendour Berhad HICOM Facility Management Berhad
*Jubli Premis Sdn. Bhd.
*Puncak Permai Sdn. Bhd. 158
Annual Report 2009
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Subsidiary company of HICOM Megah Sdn. Bhd.:
83.21 83.21 Owner and operator of shopping mall
31 March
*Rebak Island Marina Berhad 60.00 60.00 Operation of a marina resort and property holding
31 March
*HICOM Tan & Tan Sdn. Bhd. 50.00 50.00 Dormant 31 March
70.60 70.60 Property development, management of hotel and golf resort
31 March
51.00
S.J. Kenderaan Sdn. Bhd. 70.00 70.00 Dormant 31 March
Mega Komposit Auto Sdn. Bhd. 70.00 70.00 Dormant 31 March
Gemilang Komposit Auto Sdn. Bhd.
Syarikat Pengangkutan Malaysia Sendirian Berhad
69.99
Intrakota Consolidated Berhad 47.34 47.34 Dormant 31 March
S.J. Binateknik Sdn. Bhd. 42.00 42.00 Dormant 31 March
Toong Fong Omnibus Company Sendirian Berhad
# *Corwin Holding Pte. Ltd.
Subsidiary companies of HICOM Indungan Sdn. Bhd.:
Subsidiary company of Puncak Permai Sdn. Bhd.:
*Horsedale Development Berhad Subsidiary company of Horsedale Development Berhad:
*Kesturi Hektar Sdn. Bhd. Subsidiary companies of HICOM Technical and
Engineering Services Sdn. Bhd.:
HICOM Ventures Sdn. Bhd. HICOM Environmental Sdn. Bhd.
(under voluntary liquidation)
Subsidiary companies of Intrakota Komposit Sdn. Bhd.:
159
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
49.00 49.00 Importation, assembly and distribution of motor vehicles, components and parts
31 December
* HICOM-HONDA Manufacturing Malaysia Sdn. Bhd.
48.00 48.00 Manufacture and assemble motorcycle engines and components
31 March
£* ∞MBM Alam Flora W.L.L. 48.00 48.00 Provision of waste management clearing services
31 December
* HICOM-YAMAHA Manufacturing Malaysia Sdn. Bhd.
45.00 45.00 Manufacture and assembly of motorcycle engines and parts
31 March
* Mitsubishi Motors Malaysia Sdn. Bhd.
37.94 37.94Distribution of motor vehicles, vehicle components, spare parts and accessories
31 March
Proton Parts Centre Sdn. Bhd. 36.62 36.62 Warehousing and distribution of motor vehicles, spare parts and accessories 31 March
35.30 35.30
Housing and property development and rental of properties
31 March
* Comtrac Businessworld Sdn. Bhd.
35.00 35.00
Dormant 31 March
* Comtrac-Concrete Constructions Sdn. Bhd.
JOINTLY CONTROLLED ENTITIES
Jointly controlled entity of DRB-HICOM Berhad:
* Isuzu Malaysia Sdn. Bhd. Jointly controlled entities of HICOM Holdings Berhad:
Jointly controlled entities of EON:
Jointly controlled entity of Horsedale Development
Berhad:
* HICOM-Gamuda Development Sdn. Bhd.
Jointly controlled entities of Comtrac Sdn. Bhd.:
160
Annual Report 2009
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
Associated companies of DRB-HICOM Berhad:
* HICOM-Chevrolet Sdn. Bhd. 49.00 49.00 Distributor for motor vehicles 31 December
Suzuki Malaysia Automobile Sdn. Bhd.
40.00
40.00 Assembly and sale of motor vehicles, accessories and components
31 March
34.00
34.00 Assembly, manufacture and sale of motor vehicles, accessories and components
31 March
29.99 29.99 31 December
Honda Malaysia Sdn. Bhd.
* Marak Unggul Sdn. Bhd. Dormant Associated companies of HICOM Holdings Berhad:
* ISUZU HICOM Malaysia Sdn. Bhd.
49.00 49.00 Manufacturing, assembly and sale of commercial vehicles
* ∞Continental Automotive Instruments Malaysia Sdn. Bhd.
33.33 33.33 Manufacture and sale of instrument panels/clusters, speedometers,
(disposed on 20 April 2009)sensors, transducers and senders for the transportation industry
31 March
31 December
* ZF Steerings (Malaysia) Sdn. Bhd. 30.00 30.00 Manufacture and assembly of mechanical and power rack and
pinion steering systems
31 December
* Suzuki Motorcycle Malaysia Sdn. Bhd.
29.00 29.00 Investment holding and manufacture, assembly and distribution of motorcycles and parts
31 December
$ * Niro Ceramic (M) Sdn. Bhd.
23.17 24.50 31 December
* TRW Steering & Suspension (Malaysia) Sdn. Bhd.
20.00 20.00 Manufacturing and sale of automobile tierods, tierod ends and
suspension ball joints, stabilizer links, steering linkages and power
steering gear
31 December
$ * Midea Scott & English Electronics Sdn. Bhd.
(formerly known as Scott & English Electronics Sdn. Bhd.)
40.00 70.00
31 December
Manufacturing and trading of ceramic tiles
Trading in consumer electrical and electronics household products
∞EON Capital Berhad
–
20.20 Investment holding company, provision of banking and related
(disposed on 23 June 2008)financial services, stockbroking, nominee and custodian services
31 December
161
Name of Company
Effective Equity
Interest
2009
2008
%
%
Financial
Year End
ASSOCIATED COMPANIES (Continued)
Associated companies of EON:
$Y&Proton Cars (Europe) Limited
(dissolved on 22 December 2008)
*SRT-EON Security Services Sdn. Bhd.
Johnson Controls Automotive Holding (M) Sdn. Bhd.
$
–
31.62 31.62 Provision of security services 30 June
23.72 23.72 Manufacturing of car seats, seat paddings, steering wheels, and other
car interior parts, investment holding and property letting
30 September
The changes in the effective equity interest in these companies in the Group are as disclosed in Notes 47, 48 and 54.
* These companies in the Group are audited by other firms of auditors other than PricewaterhouseCoopers, Malaysia and its member firms of PricewaterhouseCoopers International Limited.
&
T hese companies in the Group are audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from
PricewaterhouseCoopers, Malaysia.
#
The country of incorporation is Singapore.
+
The country of incorporation is Cambodia.
^
The country of incorporation is Myanmar.
@ The country of incorporation is Thailand.
£
The country of incorporation is Bahrain.
Y
The country of incorporation is United Kingdom.
∞ Entities classified as non-current assets held for sale.
All the other companies are incorporated in Malaysia.
Annual Report 2009
162
4
REVENUE
Group
5
2009
RM’000
Company
2008
RM’000 2009
RM’000
2008
RM’000
Sale of goods
Rendering of services
Insurance business
Banking
Construction contracts
Sale of land and development properties
Dividends (gross)
Rental income
Interest income from subsidiary companies 3,991,310
1,225,573
399,447
318,836
16,457
149,804
–
–
–
2,302,674
1,076,643
342,074
–
29,417
261,571
–
–
–
–
–
–
–
–
–
183,538
12,001
35,936
–
–
–
–
–
–
145,298
8,232
42,858
6,101,427
4,012,379
231,475
196,388
PROFIT BEFORE TAXATION
(a) Profit before taxation is arrived at after charging/(crediting) the following:
Group
Allowance for marketable securities and investments (net)
Amortisation of
– biological assets
– intangible assets
– prepaid lease properties
Auditors’ remuneration
– current year
– prior year
Depreciation of property, plant and equipment (Note 12)
Directors’ emoluments (Note 6)
Doubtful debts (net of write backs)
Impairment losses of
– investment in a subsidiary company
– investment in an associated company
– land held for property development
– non-current assets held for sale
– investments: available-for-sale
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
47,927
13,286
27,081
–
80
8,934
1,512
107
7,643
1,388
–
–
–
–
–
–
1,782
10
135,776
7,539
31,351
1,719
(158)
134,757
8,853
36,910
140
–
446
896
4,980
140
5
472
876
5,194
–
–
21,103
5,795
14,678
2,139
–
–
–
–
37,783
–
–
5,198
–
–
–
–
5,000
–
–
–
–
–
163
5
PROFIT BEFORE TAXATION (Continued)
(a) Profit before taxation is arrived at after charging/(crediting) the following: (Continued)
Group
Intangible assets written off Inventories written off/down (net of write backs)
Loss/(gain) on fair value adjustment of investment properties (Note 14)
Loss/(gain) on disposal of investments
Net foreign exchange differences
Property, plant and equipment written off Prepaid lease properties written off
Project expenditure written off Rental of plant and machinery and equipment
Rental of premises
Replanting expenditure for biological assets
Staff costs (Note 7)
Provision for/(write back of) liabilities and charges, net
Dividend income (gross)
– quoted
– unquoted
Excess of fair value of net assets acquired over purchase consideration
Gain on disposal of shares in
– subsidiary companies
– a jointly controlled entity
– associated companies
Gain arising from accretion of interest in a subsidiary company
(Gain)/loss on disposal of
– investment properties
Gain on waiver of payables/borrowings
Interest income on
– short term deposits
– subsidiary companies Rental income of premises
Rental income of plant and machinery and equipment
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
–
36,557
38,200
9,949
8,859
3,173
1,011
1,377
13,083
26,293
930
579,417
5,460
1,160
12,324
(6,060)
(13,559)
(4,411)
6,117
–
–
9,188
15,677
1,286
484,900
(4,837)
–
–
7,588
–
–
–
–
1,377
–
–
–
–
–
–
–
5,567
–
(1,368)
–
–
–
–
–
–
–
–
(2,990)
(1,331)
(28,007)
(2,907)
(5,662)
(173,178)
–
(183,538)
–
–
(145,298)
–
(470)
–
(567,481)
(1,965)
(20,369)
(83)
(13,991)
–
–
–
–
–
(23,852)
–
(12,470)
–
(55)
(956)
(4,142)
–
1,144
(9,879)
–
(16)
(4,021)
–
(58)
(5,317)
(53,961)
–
(20,842)
(830)
(43,285)
–
(14,583)
(815)
(1,812)
(35,936)
(12,001)
–
(4,061)
(42,858)
(8,232)
–
Annual Report 2009
164
5
PROFIT BEFORE TAXATION (Continued)
(b) Cost of sales
Group
Cost
Cost
Cost
Cost
Cost
of
of
of
of
of
3,646,395
962,272
361,379
131,625
99,649
inventories services rendered insurance business banking contract and property development 2008
RM’000
5,201,320
6
2009
RM’000
2,034,710
857,504
294,685
–
180,279
3,367,178
DIRECTORS’ EMOLUMENTS
Group
Non-executive Directors:
– fees – allowances and other benefits Executive Directors:
– salaries, bonuses, allowances and other benefits
– current year
– prior year
– defined contribution plan
– current year
– prior year
2009
RM’000
Company
2008
RM’000 2009
RM’000
2008
RM’000
985
1,466
859
1,353
746
150
709
167
4,576
–
5,083
906
–
–
–
–
512
–
543
109
–
–
–
–
7,539
8,853
896
876
165
7
STAFF COSTS
Group
8
2009
RM’000
2008
RM’000
Salaries, wages, bonuses, allowances and other benefits Defined contribution plan Termination benefits 524,079 53,900 1,438 433,794
48,431
2,675
579,417 484,900
FINANCE COSTS
Group
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Interest expense on borrowings
Hire purchase and finance lease charges
93,125
2,530
118,150
1,826
43,327
–
55,678
–
95,655
119,976
43,327
55,678
9
Company
TAXATION
Group
2009
RM’000
Arising in Malaysia:
Current taxation
Deferred taxation (Note 22)
Outside Malaysia:
Current taxation Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
51,439
8,261
35,039
3,550
36,638
1,668
23,578
(353)
30
39
–
–
59,730
38,628
38,306
23,225
Arising in Malaysia:
Over provision of current taxation in respect of prior financial years
(10,168)
(14,284)
(895)
(3,827)
Total taxation charge
49,562
24,344
37,411
19,398
166
Annual Report 2009
9
TAXATION (Continued)
The explanation of the relationship between taxation charge and profit before taxation is as follows:
Group
2009
RM’000
Company
2008
Restated
RM’000 2009
2008
RM’000
RM’000
Numerical reconciliation of effective tax expense
774,943
376,073
123,217
144,390
Tax calculated at the Malaysian tax rate of 25% (2008: 26%)
Tax effects of:
– share of results of jointly controlled entities
– share of results of associated companies
– expenses not deductible for tax purposes
– income not subject to tax – tax losses not recognised
– differences in tax rates for small and medium enterprises
– different tax rates
– utilisation of previously unrecognised tax losses
– temporary differences not recognised Over provision of current taxation in respect of prior financial years
193,736
97,779
30,804
37,541
(19,417)
(24,038)
63,805
(160,416)
8,377
–
4,580
(1,517)
(5,380)
(10,168)
(6,367)
(30,702)
77,457
(54,379)
9,229
(1,036)
(1,644)
(39,005)
(12,704)
(14,284)
–
–
12,106
(4,604)
–
–
–
–
–
(895)
–
–
4,431
(18,747)
–
–
–
–
–
(3,827)
49,562
24,344
37,411
19,398
Taxation charge
Unabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment allowances of the Group which are available for set-off against future
chargeable income for which the tax effects have not been recognised in the financial statements are shown below:
Group
2009
RM’000
Unabsorbed tax losses Unutilised capital allowances Unutilised investment tax allowances Unutilised reinvestment allowances 1,154,610
250,807
42,287
126,737
2008
Restated
RM’000
1,124,664
240,455
42,287
126,939
167
10
DIVIDENDS
Dividends paid, declared and proposed are as follows:
Group and company
2009
RM’000
2008
RM’000
26,450 18,389
100,761 11,184
Dividend paid
Final gross dividend of 3.5 sen (2007: Final dividend of 2.5 sen) per share, less taxation of 25% (2007: 27%)
Interim (special) gross dividend of 13.333 sen (2008: 1.5 sen) per share, less taxation of 25% (2008: 26%) At the forthcoming Annual General Meeting of the Company, a final gross dividend in respect of the financial year ended 31 March 2009 of 2.5 sen (2008: 3.5 sen) per share less taxation of
25% (2008: 25%), amounting to RM36,248,195 (2008: RM26,449,685) will be proposed for shareholders’ approval. These financial statements do not reflect this final dividend which will be
paid in the financial year ending 31 March 2010 when approved by shareholders.
11
EARNINGS PER SHARE
(a)
Basic
The basic earnings per share is calculated by dividing the Group’s net profit attributable to equity holders of the Company by the weighted average number of shares in issue during the
financial year.
Group
2009
RM’000
2008
RM’000
Net profit attributable to equity holders of the Company (RM’000) 660,507 292,395
Weighted average number of ordinary shares in issue (‘000) 1,393,286 1,007,607
Basic earnings per share (sen) 47.41 29.02
(b)
Fully diluted
The impact of the fully diluted earnings per share in respect of Loan Stocks 2002/2008 is not reflected as it is anti-dilutive.
168
Annual Report 2009
12property, plant and equipment
Buildings,
golf course
Furniture
Capital
Freehold
and
Plant and
Motor
Office
and
work-inGROUP
Notelandimprovementsmachineryvehiclesequipmentfittingsprogress
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Total
RM’000
Net book value at 1 April 2007
Acquisition of subsidiary companies
47
Disposal of subsidiary companies
48
Additions
Disposals
Written off
5
Depreciation charge
5
Impairment losses
5
Reclassification
Reclassification from intangible assets
21
Reclassification of non-current assets held for sale
Transfers to investment properties
14
Transfers to property development activities
on an inter-company disposal
16 (a)
Transfers to land held for property
development on an inter-company disposal
16 (b)
264,733
128,589
–
–
–
–
–
(15,000)
87
(8,610)
–
8,016
(12,015)
995,360
107,680
(561)
11,633
(475)
(1,772)
(30,966)
(3,894)
234
3,933
–
5,649
(121,455)
222,975
22,038
(23,172)
66,903
(2,226)
(1,129)
(61,796)
(18,033)
450
90,800
–
–
–
21,901
–
(2,056)
10,428
(2,211)
(108)
(4,817)
–
–
61
–
(124)
–
97,965
–
(5,008)
21,789
(1,344)
(250)
(28,626)
(855)
10
3,970
–
(96)
–
44,494
–
(376)
8,494
(147)
(1,618)
(8,552)
(1)
1
(15,153)
–
(3)
–
61,656
–
–
43,442
(980)
(1,240)
–
–
–
(75,001)
1,804
–
–
1,709,084
258,307
(31,173)
162,689
(7,383)
(6,117)
(134,757)
(37,783)
782
–
1,804
13,442
(133,470)
(52,777)
(14,223)
–
–
–
–
–
(67,000)
(2,999)
(11,473)
–
–
–
–
–
(14,472)
Net book value at 31 March 2008
Acquisition of subsidiary companies
47
Additions
Disposals
Written off
5
Depreciation charge
5
Impairment losses
5
Reclassification
Reclassification from intangible assets
21
Reclassification of non-current assets held for sale
25
Transfers from investment properties
14
Transfers from property development activities
16 (a)
310,024
30,000
4,788
–
–
–
–
(203)
(840)
–
(45,897)
–
–
939,670
68,043
15,896
(4)
(677)
(29,070)
(13,512)
(538)
(31,179)
–
(510)
11,733
5,998
296,810
–
41,404
(645)
(278)
(63,452)
(1,142)
(1,107)
80,353
–
(135)
–
–
23,074
462
4,103
(2,429)
(108)
(5,422)
–
–
(2)
–
(194)
–
–
87,555
12,499
20,663
(102)
(153)
(27,821)
(13)
(21)
2,512
146
(30)
–
–
27,139
16,026
5,668
(194)
(79)
(10,011)
(11)
(1)
743
–
(22)
–
–
29,681
–
90,338
–
(1,878)
–
–
–
(51,587)
–
–
–
–
1,713,953
127,030
182,860
(3,374)
(3,173)
(135,776)
(14,678)
(1,870)
–
146
(46,788)
11,733
5,998
297,872
965,850
351,808
19,484
95,235
39,258
66,554
1,836,061
169
12property, plant and equipment (Continued)
Buildings,
golf course
Furniture
Capital
Freehold
and
Plant and
Motor
Office
and
work-inGROUPlandimprovementsmachineryvehiclesequipmentfittingsprogress
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
RM’000
Total
RM’000
NET BOOK VALUE AT 31 MARCH 2009
Cost
Accumulated depreciation
Accumulated impairment losses
312,872
–
(15,000)
1,554,312
(441,710)
(146,752)
1,321,521
(958,528)
(11,185)
49,550
(30,066)
–
442,194
(345,357)
(1,602)
199,848
(160,586)
(4)
66,554
–
–
3,946,851
(1,936,247)
(174,543)
Net book value
297,872
965,850
351,808
19,484
95,235
39,258
66,554
1,836,061
Cost
Accumulated impairment losses
325,024
–
(15,000)
1,457,878
(382,725)
(135,483)
1,323,806
(1,003,314)
(23,682)
59,035
(35,961)
–
382,944
(293,656)
(1,733)
115,108
(87,958)
(11)
29,786
–
(105)
3,693,581
(1,803,614)
(176,014)
Net book value
310,024
939,670
296,810
23,074
87,555
27,139
29,681
1,713,953
Furniture
Capital
Plant and
Motor
Office
and work-inCOMPANY Notemachineryvehiclesequipmentfittingsprogress
RM’000 RM’000 RM’000 RM’000 RM’000 Total
RM’000
Net book value at 1 April 2007
Additions
Disposals Depreciation charge
5
7
2,000
–
(207)
684
–
(182)
(110)
221
36
–
(80)
315
–
–
(75)
–
221
–
–
1,227
2,257
(182)
(472)
Additions
Disposals
Transfers to a subsidiary company
Depreciation charge
5
1,800
–
–
–
(200)
392
–
(20)
–
(95)
177
1
–
(38)
(75)
240
1
–
–
(76)
221
335
–
(556)
–
2,830
337
(20)
(594)
(446)
1,600
277
65
165
–
2,107
170
Annual Report 2009
12property, plant and equipment (Continued)
Furniture
Capital
Plant and
Motor
Office
and
work-inCOMPANY machineryvehiclesequipmentfittingsprogress
RM’000 RM’000 RM’000 RM’000 RM’000 Total
RM’000
Cost
12,154
(10,554)
618
(341)
889
(824)
749
(584)
–
–
14,410
(12,303)
Net book value
1,600
277
65
165
–
2,107
Cost
12,154
(10,354)
749
(357)
925
(748)
749
(509)
221
–
14,798
(11,968)
Net book value
1,800
392
177
240
221
2,830
(a)
Certain property, plant and equipment of the Group with a net book value of RM356,131,000 (2008: RM321,431,000) have been charged as security for bank borrowings (Notes 35 and 40).
(b)
The details of motor vehicles, plant and machinery, and office equipment acquired under hire purchase and finance lease agreements of the Group are as follows:
Hire purchase and finance lease
2009
RM’000
2008
RM’000
Additions during the financial year:
– Motor vehicles
– Plant and machinery
– Office equipment
– Capital work-in-progress
–
19,074
–
3,025
490
21,890
253
–
Net book value at financial year end:
– Motor vehicles
– Plant and machinery
– Office equipment
– Capital work-in-progress
1,772
45,248
738
3,025
2,339
40,607
1,497
–
(c)The title deeds to the freehold land of certain subsidiary companies amounting to RM15,355,000 (2008: RM20,673,000) are in the process of being registered in the names of the
subsidiary companies.
171
13
PREPAID LEASE PROPERTIES
Short term
Long term
leaseholdleasehold
landland
RM’000
RM’000 Total
RM’000
Group
Net book value
At 1 April 2007
Acquisition of a subsidiary company (Note 47)
Additions
Amortisation charge
Transfers to investment properties (Note 14)
Transfers from non-current assets held for sale
3,641
5,894
–
(214)
–
215
64,445
6,193
1,046
(1,174)
(3,021)
–
68,086
12,087
1,046
(1,388)
(3,021)
215
At 31 March 2008
Amortisation charge
Written off
Transfers from investment properties (Note 14)
Transfers to non-current assets held for sale (Note 25)
9,536
–
(313)
–
181
(17)
67,489
265
(1,199)
(1,011)
177
(597)
77,025
265
(1,512)
(1,011)
358
(614)
At 31 March 2009
9,387
65,124
74,511
11,237
(1,850)
74,406
(9,282)
85,643
(11,132)
9,387
65,124
74,511
11,069
(1,533)
71,858
(4,369)
82,927
(5,902)
9,536
67,489
77,025
Cost
Accumulated amortisation
Net book value
Cost
Net book value
(a)
Certain prepaid lease properties of the Group with net book value of RM22,985,000 (2008: RM23,343,000) have been charged as security for bank borrowings (Notes 35 and 40).
(b)The title deeds to the leasehold land of certain subsidiary companies amounting to RM13,982,000 (2008: RM14,236,000) are in the process of being registered in the names of the
subsidiary companies.
172
Annual Report 2009
14
INVESTMENT PROPERTIES
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
At 1 April
Additions
Disposals
Transfers (to)/from property, plant and equipment (Note 12)
Transfers (to)/from prepaid lease properties (Note 13)
Transfers to land held for property development on an inter-company
disposal (Note 16 (b))
Transfers from non-current assets held for sale
Changes in fair value during the financial year (Note 5)
609,286
18,193
(380)
–
8,324
(11,733)
(358)
466,827
568
–
4,260
5,325
133,470
3,021
162,752
–
–
–
–
–
–
85,319
83,000
–
–
–
–
–
–
383
(38,200)
(10,245)
–
6,060
–
–
(7,588)
–
–
(5,567)
At 31 March
585,515
609,286
155,164
162,752
The disclosure on income and expenses of investment properties are as below:
Rental income
22,107
20,616
12,001
8,232
Direct operating expenses from investment properties that generated rental income
during the financial year
10,688
9,653
424
303
Direct operating expenses from investment properties that did not generate rental
income during the financial year
1,441
1,117
–
–
(a)The fair value of the properties of the Group and the Company were based on valuations by independent professional qualified valuers. Valuations for the properties were based on current
prices in an active market.
(b)The titles to certain properties included in investment properties with a carrying value of RM33,880,000 (2008: RM32,000,000) are in the process of being transferred to an insurance
subsidiary company.
(c)
Certain investment properties of the Group with carrying value of RM443,971,000 (2008: RM468,129,000) have been charged as security for bank borrowings (Notes 35 and 40).
173
15
BIOLOGICAL ASSETS
Group
2009
RM’000
2008
RM’000
19,743 –
(80) (19,663) 19,616
234
(107)
–
–
19,743
Net book value
At 1 April New planting expenditure Amortisation charge Transfers to non-current assets held for sale (Note 25)
At 31 March 16
PROPERTY DEVELOPMENT ACTIVITIES
(a)
Group
2009
RM’000
2008
RM’000
136,112
659,176
(594,849)
264,062
1,131,421
(1,285,446)
Less: Completed developments in previous years
200,439
110,037
– Land
– Development costs
– Accumulated costs charged to income statement
(9,898)
(63,481)
73,379
(205,263)
(586,443)
791,706
–
–
263
35,295
832
116,437
Transfers from land held for property development (Note 16 (b))
Less: Costs recognised as an expense in income statement during the financial year
Transfers (to)/from property, plant and equipment (Note 12)
Transfers to inventories
35,558
2,442
(31,926)
(5,998)
(20,330)
117,269
23,882
(115,781)
67,000
(1,968)
At 31 March
180,185
200,439
At cost
At 1 April
– Land
Less: Accumulated costs charged to income statement
Add: Costs incurred during the financial year
– Land
Annual Report 2009
174
16
PROPERTY DEVELOPMENT ACTIVITIES (Continued)
(a)
Property development costs (Continued)
Group
2009
RM’000
2008
RM’000
– Land
– Less: Accumulated costs charged to income statement
125,861
628,190
(573,866)
136,112
659,176
(594,849)
180,185 200,439
At end of the financial year
(b) Land held for property development
Group
2009
RM’000
2008
RM’000
196,221
133,083
187,752
124,181
Add: Costs incurred during the financial year
329,304
311,933
6,978
16,536
Transfers to non-current assets held for sale (Note 25)
Transfers from property, plant and equipment (Note 12)
Transfers from investment properties on an inter-company disposal (Note 14)
Transfers to property development costs (Note 16 (a))
Impairment losses (Note 5)
336,282
(63,319)
–
–
(2,442)
(21,103)
328,469
–
14,472
10,245
(23,882)
–
At 31 March
249,418
329,304
– Land
– Development costs Accumulated impairment losses
132,409
138,112
(21,103)
196,221
133,083
–
249,418
329,304
At cost
At 1 April
– Land
At end of the financial year
175
16
PROPERTY DEVELOPMENT ACTIVITIES (Continued)
Included in property development costs and land held for property development is interest on borrowings capitalised for the financial year amounting to RM5,342,000 (2008: RM3,889,000).
Land amounting to RM123,897,000 (2008: RM280,172,000) belonging to subsidiary companies, included in property development costs and land held for property development, have been charged
as security for bank borrowings (Notes 35 and 40).
The title deeds to the freehold land of a subsidiary company amounting to RM NIL (2008: RM68,949,000) are in the process of being registered in the name of the subsidiary company.
17
SUBSIDIARY COMPANIES
Company
2009
RM’000
2008
RM’000
Unquoted shares, at cost
Less: Accumulated impairment losses
4,204,563
(48,677)
3,112,574
(54,245)
4,155,886
3,058,329
Amounts due from subsidiary companies (non-trade)
Less: Allowance for doubtful debts
1,172,251
(225,968)
1,683,466
(221,185)
946,283
1,462,281
The details of the subsidiary companies are listed in Note 3 to the financial statements.
The amounts due from subsidiary companies are unsecured and have no fixed terms of repayment. Interest is charged at 4.00% to 6.40% (2008: 5.86% to 9.00%) per annum on RM731,160,000
(2008: RM605,490,000) of the outstanding amounts.
The fair value of the amounts due from subsidiary companies is RM929,118,000 (2008: RM1,423,215,000).
Annual Report 2009
176
18
JOINTLY CONTROLLED ENTITIES
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Share of net assets
334,083
350,695
–
–
–
–
9,800
9,800
The details of the jointly controlled entities, all of which are unquoted, are listed in Note 3 to the financial statements.
The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities is as follows:
Group
2009
RM’000
2008
RM’000
Non-current assets Current assets Non-current liabilities
Current liabilities 106,135
363,501
(33,745) (101,808) 102,093
399,322
(32,711)
(118,009)
Share of net assets 334,083 350,695
Revenue
Expenses
808,528
(725,865)
394,259
(344,411)
Taxation
82,663
(19,417)
49,848
(6,367)
Net profit 63,246
43,481
(a) Capital commitments for property, plant and equipment
– contracted
– not contracted
337
6,215
3,127
3,773
6,552
6,900
(b) There are no contingencies relating to jointly controlled entities.
177
19
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Share of net assets
417,321
390,967
–
–
–
–
71,803
76,863
The details of the associated companies are listed in Note 3 to the financial statements.
The Group’s share of the assets, liabilities, revenue and expenses of the associated companies is as follows:
Group
2009
RM’000
2008
RM’000
209,065
502,821
(26,421)
(268,144)
202,882
481,561
(28,823)
(264,653)
417,321
390,967
1,675,337
(1,580,770)
1,736,770
(1,593,556)
Taxation
94,567
(24,038)
143,214
(30,702)
Net profit 70,529
112,512
(a)
1,271
16,079
1,262
57,010
17,350
58,272
Non-current assets
Current assets
Non-current liabilities
Current liabilities
Share of net assets
Revenue
Expenses
Capital commitments for property, plant and equipment
– contracted
– not contracted
(b)
There are no contingencies relating to associated companies.
(c)
The accumulated share of losses that have not been recognised by the Group amounted to RM11,859,000 (2008: RM11,859,000).
Annual Report 2009
178
20
OTHER INVESTMENTS
Group
2009
RM’000
2008
RM’000
Corporate bonds, at cost
Accumulated impairment loss
32,952
(2,061)
–
–
Total held-to-maturity investments
30,891
–
Non-current Current
28,346
2,545
–
–
30,891
–
(i)
Held by a banking subsidiary company
(a)
Investments: Held-to-maturity
At amortised cost
(b)
Investments: Available-for-sale
At fair value
Quoted securities:
Malaysian government investment certificates Cagamas bonds
Khazanah bonds
Islamic private debt securities
Sukuk
Negotiable instrument of deposit certificates
857,450
100,507 182,813
1,977,744
172,870
5,964
–
–
–
–
–
–
Unquoted securities:
3,297,348
–
4,105
–
Total available-for-sale investments
3,301,453
–
Non-current
Current
2,638,068
663,385
–
–
3,301,453
–
10,228
–
Shares
(c) Investments: Held-for-trading
At fair value
Malaysian government investment certificates
179
20
OTHER INVESTMENTS (Continued)
(ii)
Group
2009
RM’000
2008
RM’000
Malaysian Government Securities, at cost
Amortisation of premiums
125,126
(517)
123,741
(1,485)
124,609
122,256
Corporate debt securities, at cost
Accretion of discounts net of amortisation of premiums
Less: Allowance for diminution in value
704,107
9,137
(4,765)
611,007
8,901
(2,539)
708,479
617,369
2,374
2,558
(176)
(176)
2,198
2,382
Held by insurance subsidiary companies
(a) Quoted securities:
(b) Unquoted securities:
(c) Unquoted shares, at cost
835,286 742,007
1,688
(985)
1,889
(585)
703
1,304
Subordinated bonds
6,000
6,000
(6,000)
(3,017)
–
2,983
Sub-total (iii) Held by other Group companies
(a) Quoted securities:
Quoted shares in Malaysia, at cost
(b)
180
Annual Report 2009
20
OTHER INVESTMENTS (Continued)
Group
2009
RM’000
2008
RM’000
48,239
(4,974)
49,487
(4,979)
43,265
44,508
Sub-total 43,968
48,795
879,254
790,802
(iii) Held by other Group companies (Continued)
(c) Unquoted securities:
Total (excluding other investments held by a banking subsidiary company)
(a)
The carrying amounts of other investments at balance sheet date approximated their fair values except for the following:
2009
Carrying
amount
RM’000
2008
Fair
value
RM’000 Carrying
amount
RM’000
Fair
value
RM’000
Group
Malaysian Government Securities
Corporate debt securities, unquoted
(b) The carrying amounts of unquoted shares at balance sheet date approximated their fair values.
124,609
708,479
126,612
711,571
122,256
617,369
124,256
619,804
833,088
838,183
739,625
744,060
181
21intangible assets
Operation
Licences/
and
Product
maintenance
Core
Computerdevelopment
Goodwill
concession
deposits
software
expenditure
RM’000 RM’000 RM’000 RM’000 RM’000
Total
RM’000
Group
2009
At 1 April 2008
Acquisition of subsidiary companies (Note 47) Additions
Amortisation charge (Note 5)
Reclassification to property, plant and equipment (Note 12)
21,313
28,110
–
–
–
–
164,932
–
(3,001)
–
–
61,400
–
(5,100)
–
361
–
1,095
(93)
(146)
1,362
–
181
(740)
–
23,036
254,442
1,276
(8,934)
(146)
At 31 March 2009
49,423
161,931
56,300
1,217
803
269,674
Cost
49,423
–
164,932
(3,001)
61,400
(5,100)
1,454
(237)
3,268
(2,465)
280,477
(10,803)
Carrying amount
49,423
161,931
56,300
1,217
803
269,674
182
Annual Report 2009
21intangible assets (Continued)
Licences/
Product
Computerdevelopment
Goodwill
software
expenditure
RM’000 RM’000 RM’000
Total
RM’000
Group
2008
At 1 April 2007
Acquisition of additional investment in a subsidiary company (Note 47)
Additions
Disposal of subsidiary companies (Note 48)
Amortisation charge (Note 5)
Reclassification to property, plant and equipment (Note 12)
Written off (Note 5)
4,665
16,648
–
–
–
–
–
–
–
–
–
910
(623)
(214)
288
–
5,050
–
6,000
3,340
(2,347)
(7,429)
(2,092)
(1,160)
9,715
16,648
6,000
4,250
(2,970)
(7,643)
(1,804)
(1,160)
At 31 March 2008
21,313
361
1,362
23,036
Cost
21,313
–
538
(177)
3,627
(2,265)
25,478
(2,442)
Carrying amount
21,313
361
1,362
23,036
The carrying amount of goodwill was allocated to two of the Group’s cash generating units (CGUs), namely defence services (RM4,665,000), airport ground handling services (RM16,648,000) and
a provisional allocation was made to a banking business (RM28,110,000) as described below. The recoverable amounts of the two CGUs were determined based on value-in-use calculations.
These calculations used pre-tax cash flow projections based on approved financial budgets. Cash flows beyond the budgeted period were extrapolated using estimated terminal growth rates.
Based on this, the recoverable amount of goodwill exceeded its carrying value.
Following the acquisition of 70% equity interest in Bank Muamalat Malaysia Berhad (“BMMB”), which thus became a subsidiary company of DRB-HICOM Group, the initial accounting for BMMB’s
business combination involves identifying and determining the fair values to be assigned to BMMB’s identifiable assets, liabilities and contingent liabilities and the cost of the combination. As the
initial accounting for this business combination can be determined only provisionally as at the end of the current financial year as the fair values to be assigned to BMMB’s identifiable assets,
liabilities and contingent liabilities can be determined only provisionally, the BMMB’s business combination has been accounted for using these provisional values and the initial accounting has
resulted in a goodwill on consolidation amounting to approximately RM28,110,000. The Group shall recognise any adjustments to these provisional values upon completing the initial accounting
within twelve months of the acquisition date.
183
22
DEFERRED TAXATION
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
At 1 April
Prior year adjustments (Note 2.2) (5,448)
43,092
2,630
41,708
(702)
–
(1,055)
–
As restated
Acquisition of subsidiary companies (Note 47) Disposal of subsidiary companies (Note 48)
Movement in life assurance fund
Transfers to income statement (Note 9)
– Investments
– Property, plant and equipment
– Property development expenditure
– Provisions
– Receivables
– Tax losses
– Unearned premium reserve
37,644
50,904
–
(7,075)
44,338
(8,078)
(542)
5,476
(702)
–
–
–
(1,055)
–
–
–
2,572
(13,816)
7,735
1,204
3,035
(9,031)
40
(1,348)
4,837
–
(2,687)
1,573
(5,910)
(15)
–
(1,668)
–
–
–
–
–
–
353
–
–
–
–
–
(8,261)
(3,550)
(1,668)
353
At 31 March
73,212
37,644
(2,370)
(702)
Group
Company
2009
RM’000
2008
RM’000 94,877
15,703
12,208
29,680
35
16,313
Offsetting
Deferred tax assets (after offsetting)
2009
RM’000
2008
RM’000
84,567
7,622
4,498
7,149
–
25,199
3,136
–
–
–
–
–
3,643
–
–
–
–
–
168,816
(59,951)
129,035
(29,525)
3,136
(3,136)
3,643
(3,643)
108,865
99,510
–
–
Subject to income tax
Deferred tax assets (before offsetting)
Investments
Provisions
Receivables
Unearned premium reserve
Tax losses
184
Annual Report 2009
22
DEFERRED TAXATION (Continued)
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Deferred tax liabilities (before offsetting)
Investments
Property development expenditure
Provisions
Receivables
Unearned premium reserve
(92,972)
(918)
–
(1,711)
(3)
–
(78,607)
(2,347)
(7,735)
–
(2,697)
(5)
(5,506)
–
–
–
–
–
(4,345)
–
–
–
–
–
Offsetting
(95,604)
59,951
(91,391)
29,525
(5,506)
3,136
(4,345)
3,643
Deferred tax liabilities (after offsetting)
(35,653)
(61,866)
(2,370)
(702)
Presented after appropriate offsetting as follows:
Deferred tax assets
108,865
(35,653)
99,510
(61,866)
–
(2,370)
–
(702)
73,212
37,644
(2,370)
(702)
Subject to income tax
185
23
FINANCING OF CUSTOMERS
Group
2009
RM’000
2008
RM’000
448,309
–
4,000,029 209,671
1,472,203
140,035
2,374,811
154,593
742,273
97,413
609,742
–
–
–
–
–
–
–
–
–
10,249,079
(3,487,551)
–
–
Less: Financing sold to Cagamas
6,761,528
(397,626)
–
–
Less: Allowance for bad and doubtful financing
– General
– Specific
6,363,902
–
(210,279)
(365,170)
–
–
Total net financing, advances and other financing
5,788,453
–
Non–current
Current
4,677,422
1,111,031
–
–
5,788,453
–
Fair values
6,983,135
–
Cash line Term financing
– Home financing – Syndicated financing
– Hire purchase receivables
– Leasing receivables
– Other term financing
Trust receipts
Claims on customers under acceptance credits
Staff financing
Revolving credits
Less: Unearned income
The fair values of financing of customers are estimated based on expected future cash flows of contractual instalments payments, discounted at applicable and prevailing rates at balance sheet
date offered for similar facilities to new borrowers with similar credit profiles. In respect of non-performing financing, the fair values are deemed to approximate the carrying values, which are
net of specific allowance for bad and doubtful financing.
Annual Report 2009
186
24
STATUTORY DEPOSITS WITH BANK NEGARA MALAYSIA
(a)The statutory deposits are maintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank of Malaysia Act, 1958 (revised 1994), the amounts of which are
determined at set percentages of total eligible liabilities.
(b)
25
The carrying amounts as at balance sheet date approximated their fair values.
NON-CURRENT ASSETS HELD FOR SALE
Group
2009
RM’000
2008
RM’000
Property, plant and equipment (Note 12)
Prepaid lease properties (Note 13)
Biological assets (Note 15)
Land held for property development (Note 16 (b))
Associated company
Assets related to a disposal group held for sale
46,788
614
19,663
63,319
10,290
–
383
–
–
–
785,318
17,692
Liabilities related to a disposal group held for sale
140,674
–
803,393
(18,418)
140,674
784,975
The above is relating to the proposed disposals as disclosed in Notes 54 (h) and 55 (c).
187
26
INVENTORIES
Group
2009
RM’000
2008
RM’000
Raw materials
Work-in-progress
Finished goods
Goods-in-transit
Consumables
Completed units of unsold properties
49,621
68,640
487,648
12,129
28,882
34,887
47,349
50,057
545,637
43,732
37,766
17,810
681,807
742,351
Certain inventories of subsidiary companies amounting to RM10,439,000 (2008: RM12,033,000) have been pledged as security for bank borrowings (Notes 35 and 40).
27
TRADE AND OTHER RECEIVABLES
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Trade receivables
896,607
(103,212)
902,464
(74,541)
62,418
(9,198)
62,418
(9,000)
793,395
827,923
53,220
53,418
Other receivables
285,772
(31,005)
229,426
(29,211)
2,055
(1,936)
3,457
(559)
254,767
200,215
119
2,898
Amounts due from subsidiary companies
–
–
–
–
37,774
(149)
25,464
(149)
–
–
37,625
25,315
188
Annual Report 2009
27
TRADE AND OTHER RECEIVABLES (Continued)
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
402
970
161,883
11,403
9,183
11,623
60,407
1,971
55
23,812
11,311
6,118
7,471
89,073
–
–
305
141
–
4
900
–
–
555
136
–
4
25,081
255,871
139,811
1,350
25,776
1,304,033
1,167,949
92,314
107,407
The currency exposure profile of trade and other receivables is as follows:
– Ringgit Malaysia
– US Dollar
– Thai Baht
– Others
1,286,392
12,734
2,653
2,254
1,136,244
16,382
7,499
7,824
92,314
–
–
–
107,407
–
–
–
1,304,033
1,167,949
92,314
107,407
Accrued billings
Amounts due from
Deposits
Prepayments
Amounts due from
Amounts due from
Amounts due from
customers on contracts (Note 45)
related parties
jointly controlled entities
associated companies
(a)
The Group’s and the Company’s normal trade credit terms range from 30 to 60 days (2008: 30 to 60 days). Other credit terms are assessed and approved on a case by case basis.
(b)
Included in trade receivables of the Group and the Company is an amount of RM53,220,000 (2008: RM53,220,000) owing by the Government in respect of Electrified Double Track Project.
(c)Included in other receivables for the Group is an amount of RM29,835,000 (2008: RM27,680,000) in respect of reimbursement of certain operating expenditure of a subsidiary company
due from the Ministry of Finance.
(d)
Included in deposits is an amount of RM141,771,000 relating to the deposit paid for the proposed acquisitions as disclosed in Note 54 (h).
(e)
All other amounts due from subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have no fixed terms of repayment.
189
28
MARKETABLE SECURITIES
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
Shares, warrants and other instruments quoted
– in Malaysia
– outside Malaysia
413,315
49,549
339,782
44,415
–
11,700
–
38,781
462,864
384,197
11,700
38,781
Lower of cost and market value
29
Short term Deposits
(a)
Short term deposits consist of deposits with licensed banks.
The currency exposure profile of short term deposits is as follows:
(b)
Group
2009
RM’000
– Singapore Dollar
– Thai Baht
892,119
–
–
892,119
Company
2009
RM’000
2008
RM’000
1,372,833
3,787
459
38,234
–
–
84,126
–
–
1,377,079
38,234
84,126
2008
RM’000 Certain deposits with licensed banks of the Group amounting to RM10,078,000 (2008: RM6,217,000) have been pledged as security for banking facilities.
(c)Included in short term deposits is the maintenance reserve account of approximately RM30,886,000 (2008: RM NIL) maintained by a subsidiary company performing operations and
maintenance services to a power plant, pursuant to the Operations and Maintenance Agreement.
Annual Report 2009
190
29
Short term Deposits (Continued)
(d) The weighted average effective annual interest rates of short term deposits at the end of the financial year are as follows:
Group
Company
2009
%
2008
%
2009
%
2008
%
Deposits with bank 2.36 3.45 1.82 3.42
(e) Deposits of the Group and Company have an average maturity period of 132 (2008: 266) and 12 (2008: 15) days respectively.
30
CASH AND BANK BALANCES
(a)
Bank balances are deposits held at call with banks and are non-interest bearing.
(b)
Included in cash and bank balances of the Group are bank accounts maintained pursuant to the Housing Developers (Control & Licensing) Act 1966, amounting to RM13,024,000 (2008:
RM42,124,000).
(c)
The currency exposure profile of cash and bank balances is as follows:
Group
–
–
–
–
Ringgit Malaysia
US Dollar
Singapore Dollar
Others
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
158,584
11,953
1,923
1,132
189,412
186
2,038
1,999
4,016
–
–
–
3,078
–
–
–
173,592
193,635
4,016
3,078
191
31
CASH AND SHORT-TERM FUNDS OF A BANKING SUBSIDIARY COMPANY
Group
2009
RM’000
2008
RM’000
Cash and balances with banks and other financial institutions Money at call and interbank placements with remaining maturities not exceeding one month 128,869 3,440,236 –
–
3,569,105
–
(a)
The currency exposure profile of the cash and short-term funds of a banking subsidiary company is as follows:
–
–
–
–
Ringgit Malaysia
US Dollar
Euro Dollar
Others Group
2009
RM’000
2008
RM’000
3,374,787
115,969
73,871
4,478
–
–
–
–
3,569,105
–
(b)The weighted average effective annual interest rates of cash and short-term funds of a banking subsidiary at the end of the financial year are as follows and the average maturity period
is not exceeding one month:
Group
2009
%
Cash and short-term funds 3.00 2008
%
–
192
Annual Report 2009
32
SHARE CAPITAL
Group and Company
2009
Number of
Shares
’000
2008
Nominal
Value
RM’000 Number of
Shares
’000
Nominal
Value
RM’000
Authorised:
Ordinary shares of RM1.00 each
2,000,000 2,000,000 2,000,000 2,000,000
1,007,607
925,630
1,007,607
711,994
1,007,607
–
1,007,607
–
1,933,237
1,719,601
1,007,607
1,007,607
Issued and fully paid:
Ordinary shares:
At 1 April
Issued (Note 47)
At 31 March
The new ordinary shares issued during the financial year ranked pari passu in all respects with the existing ordinary shares of the Company except that the shares issued for the acquisitions
of Rangkai Positif Sdn. Bhd. and Bank Muamalat Malaysia Berhad did not rank for interim (special) dividend declared in respect of financial year ended 31 March 2009.
33
LIFE ASSURANCE FUND
Based on the actuarial valuation of the Life Assurance Fund made up to 31 March 2009, the actuary was satisfied that the assets available in the Life Assurance Fund are sufficient to meet
its long term liabilities to policyholders.
Group
2009
RM’000
2008
RM’000
At 1 April
Add: – Increase in policy reserves
– Bonus allocated to participating policyholders, including interim bonus from normal surplus
Less: Interim bonus
1,171,774
11,016
20,444
(591)
1,025,081
126,725
20,524
(556)
At 31 March
1,202,643
1,171,774
Actuarial liabilities
193
33
LIFE ASSURANCE FUND (Continued)
Group
2009
RM’000
2008
RM’000
At 1 April
Less/Add: (Deficit)/surplus arising during the financial year
Less: – Bonus allocated to participating policyholders, including interim bonus from normal surplus
– Transfer to income statement
76,129
(2,363)
(20,444)
(3,000)
62,695
38,958
(20,524)
(5,000)
At 31 March
50,322
76,129
Life policyholders’ fund as at end of financial year:
Actuarial liabilities
Unallocated surplus
1,202,643
50,322
1,171,774
76,129
1,252,965 1,247,903
Unallocated surplus
34
DEFERRED INCOME
This represents club membership licence fees received in advance by a subsidiary company, net of amounts recognised as income in the financial statements.
Annual Report 2009
194
35
LONG TERM borrowings
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
37,268
(13,915)
36,544
(10,526)
–
–
–
–
23,353
26,018
–
–
452,215
(63,144)
588,624
(79,933)
–
–
–
–
389,071
508,691
–
–
•
263,843
(34,054)
873,888
(18,699)
96,000
–
813,741
–
229,789
855,189
96,000
813,741
Secured
•
Hire purchase and finance lease liabilities
– Portion repayable within 12 months included under bank borrowings (Note 40) •
Long term loans
– Portion repayable within 12 months included under bank borrowings (Note 40)
Long term loans under Islamic financing
Unsecured
•
250,000
–
–
–
•
Long term loans
60,000
(60,000)
61,923
(1,923)
–
–
–
–
–
60,000
–
–
•
–
–
101,078
(101,078)
–
–
–
–
–
–
–
–
38,144
38,144
–
–
930,357
1,488,042
96,000
813,741
Loan Stocks 2002/2008
•
Deferred liability
195
35
LONG TERM borrowings (Continued)
(a)The hire purchase and finance lease liabilities are secured against the respective assets acquired. The long term loans are secured against certain freehold and leasehold lands under
property, plant and equipment, prepaid lease properties, investment properties and property development costs (Notes 12, 13, 14 and 16).
(b)The long term loans under Islamic financing relates to Subordinated Bonds under the Shariah principle of Bai’ Bithaman Ajil of a banking subsidiary company. The Bonds are under a 10
non-callable 5 basis feature, with a profit rate of 6.25% per annum payable semi-annually. Under the 10 non-callable 5 basis feature, the banking subsidiary company has the option to
redeem the Bonds on the fifth anniversary or any semi-annual date thereafter. Should the banking subsidiary company decide not to exercise its option to redeem the Bonds, the holders
of the Bonds will be entitled to an annual incremental step-up profit rate from the beginning of the 6th year to the final maturity date.
(c)
The weighted average effective annual interest rates at the end of the financial year are as follows:
Group
Long term loans (secured and unsecured)
Loan Stocks 2002/2008
Company
2009
%
2008
%
2009
%
2008
%
3.78
4.13
6.32
–
3.95
4.58
6.84
7.00
–
–
6.15
–
–
–
5.97
–
(d) The currency exposure profile of the long term borrowings is as follows:
Group
2009
RM’000
Company
2008
RM’000 2009
RM’000
2008
RM’000
710,785
219,572
1,269,432
218,610
96,000
–
813,741
–
930,357
1,488,042
96,000
813,741
Annual Report 2009
196
35
(e) Hire purchase and finance lease liabilities
Group
2009
RM’000
2008
RM’000
16,616
11,910
8,196
5,979
456
10
12,097
11,086
8,123
5,820
3,319
745
Future finance charges on hire purchase and finance lease
43,167
(5,899)
41,190
(4,646)
Present value of hire purchase and finance lease liabilities
37,268
36,544
23,353
13,915
26,018
10,526
37,268
36,544
Minimum hire purchase and finance lease payments:
–
–
–
–
–
–
not later than 1 year
later than 1 year and not later than 2 years
later than 2 years and not later than 3 years
later than 5 years
Representing hire purchase and finance lease liabilities:
– non-current
– current (included in Note 40)
(f)On 20 May 2008, Gadek (Malaysia) Berhad, a wholly-owned subsidiary company of the Company made a full cash redemption of the remaining RM76,476,000 nominal value of Redeemable
Exchangeable Unsecured Loan Stock (“REULS”) 2002/2008 and accrued interest thereon amounting to a total of RM101,078,000.
(g)In July 2008, the Group made a full repayment of the outstanding Bai’ Bithaman Ajil Islamic Debt Securities (“BaIDS”) and Murabahah Commercial Papers/Murabahah Medium Term Notes
(“CP/MTN”).
(h)The deferred liability is in respect of amounts owing of RM38,144,000 (2008: RM38,144,000) by a solid waste subsidiary company to local municipalities in relation to the transfer of
certain units of movables assets from these municipalities to the subsidiary company.
197
35
(i)The exposure of long term borrowings, excluding deferred liability, to interest rate risk is as follows:
Maturity profile
Carrying
amount
RM’000
1 – 2 years
RM’000
2 – 3 years
RM’000
3 – 4 years
RM’000
4 – 5 years
RM’000
> 5 years
RM’000
23,353
92,382
479,789
9,690
33,275
46,612
7,670
44,526
48,158
5,594
3,240
52,858
394
3,240
25,119
5
8,101
307,042
595,524
89,577
100,354
61,692
28,753
315,148
296,689
38,584
21,273
15,687
208,245
12,900
892,213
128,161
121,627
77,379
236,998
328,048
26,018
297,650
710,872
9,820
111,606
650,885
7,351
50,392
17,669
5,569
60,583
17,304
3,271
19,960
25,014
7
55,109
–
1,034,540
772,311
75,412
83,456
48,245
55,116
Long term loans (secured and unsecured) Long term loans under Islamic financing
271,041
144,317
24,446
144,317
23,967
–
8,043
–
4,675
–
209,910
–
415,358
168,763
23,967
8,043
4,675
209,910
1,449,898
941,074
99,379
91,499
52,920
265,026
Group
2009
Fixed rate (Fair value risk)
Floating rate (Cash flow risk)
2008
Annual Report 2009
198
35
(i)The exposure of long term borrowings, excluding deferred liability, to interest rate risk is as follows: (Continued)
Maturity profile
Carrying
amount
RM’000
1 – 2 years
RM’000
2 – 3 years
RM’000
3 – 4 years
RM’000
4 – 5 years
RM’000
> 5 years
RM’000
96,000
12,000
12,000
12,000
12,000
48,000
669,424
–
634,324
–
–
35,100
Long term loan under Islamic financing
144,317
144,317
–
–
–
–
813,741
144,317
634,324
–
–
35,100
Company
2009
2008
(j) Fair value
•
Fair values of fixed rate long term borrowings and deferred liability are as follows:
2009
2008
Carrying
Fair
Carrying
Fair
amountvalueamountvalue
RM’000
RM’000 RM’000
RM’000
GROUP
•
Deferred liability
38,144
23,353
92,382
479,789
36,139
31,826
91,760
464,586
38,144
26,018
297,650
710,872
36,801
31,402
301,634
756,548
633,668
624,311
1,072,684
1,126,385
T he fair values of loan term loans under Islamic financing relates to Subordinated Funds under the Shariah principle of Bai’ Bithaman Ajil of a banking subsidiary company and are
estimated by discounting the expected future cash flows using the applicable prevailing interest rates for borrowings with similar risks profiles.
199
36provision for liabilities and charges
Warranty
RM’000
Sales
returns
RM’000
Total
RM’000
Group
2009
At 1 April
Charge
Utilised
Unused amounts reversed
13,651
(19)
10,027
(8,583)
(4,859)
519
–
1,247
(193)
(955)
14,170
(19)
11,274
(8,776)
(5,814)
At 31 March
10,217
618
10,835
Non-current
Current
830
9,387
–
618
830
10,005
10,217
618
10,835
Voluntary
Salesseparation
Warranty
returns
scheme
RM’000
RM’000 RM’000
Total
RM’000
Group
2008
At 1 April
Disposal of a subsidiary company (Note 48)
Charge
Transfer to non-current assets held for sale
Utilised
Unused amounts reversed
23,973
11,951
(6,232)
9
11,369
(428)
(10,080)
(16,911)
506
–
(428)
–
1,686
–
(264)
(981)
146
–
–
–
–
–
(146)
–
24,625
11,951
(6,660)
9
13,055
(428)
(10,490)
(17,892)
At 31 March 13,651
519
–
14,170
Non-current Current
8,421
5,230
–
519
–
–
8,421
5,749
13,651
519
–
14,170
Annual Report 2009
200
37
DEPOSITS FROM CUSTOMERS OF A BANKING SUBSIDIARY COMPANY
Group
2009
RM’000
2008
RM’000
Demand deposits
Saving deposits
Negotiable Islamic debts certificates Others
2,742,645
577,937
1,154,933
21,665
–
–
–
–
4,497,180
–
5,116,846
1,004,676
–
–
6,121,522
–
10,618,702
–
2,323,244
8,295,458
–
–
10,618,702
–
Non-Mudharabah Fund
Mudharabah Fund
General investment deposits
Special general investment deposits
Non-current
Current
(a)The fair value of deposits from customers are estimated to approximate their carrying amounts as the profit rates are determined at the end of their holding periods based on the actual
profits generated from the assets invested.
(b)
The currency exposure profile of the deposits from customers of a banking subsidiary company is as follows:
Group
2009
RM’000
2008
RM’000
– US Dollar
10,122,418
496,284
–
–
10,618,702
–
201
37
DEPOSITS FROM CUSTOMERS OF A BANKING SUBSIDIARY COMPANY (Continued)
(c)
The maturity period of the deposits from customers of a banking subsidiary company is as follows:
– not later than 6 months
– later than 6 months and not later than 1 year
– later than 1 year and not later than 5 years
38
Group
2009
RM’000
2008
RM’000
7,791,999
503,459
2,323,244
–
–
–
10,618,702
–
GENERAL AND LIFE insurance funds
Group
2009
RM’000
2008
RM’000
Outstanding claims:
Provision for outstanding claims
Recoverable from reinsurers
350,308
(74,284)
261,768
(48,753)
Net outstanding claims Unearned premium reserves
276,024
157,043
213,015
137,420
433,067
350,435
Annual Report 2009
202
39trade and other payables
Group
Trade payables
Other payables and accruals
Progress billings
Amounts due to customers on contracts (Note 45)
Amounts due to related parties
Amounts due to subsidiary companies
Amounts due to jointly controlled entities
Amounts due to associated companies
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
613,607
701,848
19,008
2,262
98,315
–
24,275
68,037
829,448
476,242
16,987
6,361
48,093
–
22,314
17,552
73,747
5,963
–
–
–
509,825
–
–
78,597
10,656
–
–
–
10,196
–
–
1,527,352
1,416,997
589,535
99,449
1,445,918
39,187
19,077
6,221
9,250
7,699
1,286,926
33,107
85,930
6,403
3,301
1,330
589,535
–
–
–
–
–
99,449
–
–
–
–
–
1,527,352
1,416,997
589,535
99,449
(a) The currency exposure profile of trade and other payables is as follows:
–
–
–
–
–
–
(b)
Ringgit Malaysia
Singapore Dollar
Japanese Yen
Thai Baht
US Dollar
Others
The Group’s and the Company’s normal trade payables terms range from 30 to 90 days (2008: 30 to 90 days).
(c)Included in amounts due to subsidiary companies are interest bearing loans amounting to RM503,210,000 (2008: RM NIL). Interest is charged at 4.00% (2008: NIL) per annum on the
interest bearing loans. The loans are unsecured and have no fixed terms of repayment.
(d)
All other amounts due to subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and have no fixed terms of repayment.
203
40
BANK BORROWINGS
Group
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
– secured
– unsecured
16,102
9,423
13,802
11,208
–
–
–
–
25,525
25,010
–
–
34,165
3,000
–
13,915
63,144
34,054
27,978
4,000
151,395
10,526
79,933
18,699
–
–
–
–
–
–
–
–
–
–
–
–
Bankers acceptances
Revolving credits
Short term loans
Long term loans – portion repayable within 12 months (Note 35)
Loan Stocks 2002/2008 – portion repayable within 12 months (Note 35)
179,561
196,400
4,017
60,000
–
194,337
157,022
7,693
1,923
101,078
–
155,000
–
–
–
–
113,000
–
–
–
588,256
754,584
155,000
113,000
613,781
779,594
155,000
113,000
(i) Company
Bank overdrafts
(ii) Other bank borrowings
Secured
Bankers acceptances
Revolving credits
Short term loans
Hire purchase and finance lease liabilities – portion repayable within 12 months (Note 35)
Long term loans – portion repayable within 12 months (Note 35)
Long term loans under Islamic financing – portion repayable within 12 months (Note 35)
Unsecured
Annual Report 2009
204
40
BANK BORROWINGS (Continued)
(a)
The currency exposure profile of bank overdrafts and other bank borrowings is as follows:
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
– Thai Baht
604,966
4,017
4,798
769,978
9,616
–
155,000
–
–
113,000
–
–
613,781
779,594
155,000
113,000
(b)The secured bank overdrafts, bankers acceptances, letters of credit, revolving credits, and short term loans are secured by way of fixed and floating charges over certain property, plant
and equipment, prepaid lease properties, investment properties and inventories (Notes 12, 13, 14 and 26).
(c)
The weighted average effective annual interest rates of the bank overdrafts and other bank borrowings at the end of the financial year are as follows:
Group
Bank overdrafts
Bankers acceptances
Revolving credits
Short term loans
Company
2009
%
2008
%
2009
%
2008
%
6.63
3.07
5.55
3.15
8.05
4.19
6.07
5.95
–
–
5.17
–
–
–
6.24
–
205
41
DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS
Group
2009
RM’000
2008
RM’000
16,362
36,503
72,950
–
–
–
125,815
–
Non-Mudharabah
Bank Negara Malaysia
Licensed banks
Licensed Islamic banks
The above are denominated in Ringgit Malaysia and the average maturity period is not exceeding six months.
42
SHARE PREMIUM
Group and COmpany
At 1 April/31 March 2009
RM’000
2008
RM’000
20,701 20,701
43mERGER RESERVE
Group
At 1 April/31 March
Company
2009
RM’000
2008
RM’000 911,016
911,016
2009
RM’000
2008
RM’000
2,318,321
2,318,321
Pursuant to Section 60(4)(a) of the Companies Act, 1965, the premiums on the shares issued by the Company as consideration for the acquisitions of certain subsidiary companies in the financial
year ended 31 March 2001 are not recorded as share premium. The difference between the issue price and the nominal value of shares issued is classified as merger reserve.
206
Annual Report 2009
44cURRENCY TRANSLATION DIFFERENCES AND OTHER RESERVES
Group
2009
RM’000
2008
RM’000
Capital redemption reserve arising from redemption of preference shares
Share of associated companies’ statutory reserve
Share of subsidiary companies’ statutory reserve
Asset revaluation reserve on step up acquisition of subsidiary companies
Capital reserves arising from bonus issue
2,156
4,415
1,538
21,101
6,305
–
2,156
123,085
–
21,101
5,150
7,000
35,515
158,492
Non-distributable
At 1 April
Share of subsidiary company’s statutory reserve
Currency translation differences of subsidiary companies
Share of an associated company’s reserve
Transfer of associated companies’ statutory reserve
Release of statutory reserves on disposal of an associated company
Disposal of a subsidiary company
Asset revaluation reserve on step up acquisition of a subsidiary company
Others
At 31 March
Group
2009
RM’000
2008
RM’000
158,492
1,538
1,155
(475)
(4,560)
(113,635)
(7,000)
–
–
124,452
–
634
548
11,500
–
–
13,700
7,658
35,515
158,492
207
45construction contracts
Group
2009
RM’000
2008
RM’000
Aggregate contract costs incurred
Recognised profits less losses
131,304
19,829
160,883
22,037
Less: Progress billings
151,133
(152,425)
182,920
(189,226)
(1,292)
(6,306)
Amounts due from customers on contracts (Note 27)
Amounts due to customers on contracts (Note 39)
970
(2,262)
55
(6,361)
(1,292)
(6,306)
Analysed as follows:
46retained earnings
As at 31 March 2009, the Company has sufficient Section 108 tax credits (which expires on 31 December 2013) to pay RM298,179,000 (2008: RM425,616,000) of the retained earnings of the
Company as franked dividends. In addition, the Company has tax exempt income of RM153,742,000 (2008: RM135,342,000) as at 31 March 2009, available to frank as tax exempt dividends.
47
SUMMARY OF EFFECTS OF ACQUISITION OF COMPANIES
2009
(i)
(a)Pursuant to the Rights Issue undertaken by Alam Flora Sdn. Bhd. (“AFSB”), the Group subscribed for a total of 24 million new ordinary shares of RM1.00 each in AFSB. As a result,
the Group’s shareholding in AFSB increased from 55% to 60.53% in July 2008.
(b)On 8 September 2008, the Company completed the acquisition of an additional 15% equity interest in Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) from Khazanah Nasional
Berhad for a cash consideration of RM24 million. As a result, the Group’s shareholding in MODENAS increased from 55% to 70%.
(c)On 18 September 2008, HICOM Holdings Berhad acquired an additional 9.03% equity interest in PHN Industry Sdn. Bhd. (“PHN”) from Nagoya Oak Industries Co. Ltd. for a cash
consideration of RM8.13 million. As a result, the Group’s equity interest in PHN increased from 53.47% to 62.5%.
208
Annual Report 2009
47
SUMMARY OF EFFECTS OF ACQUISITION OF COMPANIES (Continued)
2009 (Continued)
(i)
Subsidiary companies (Continued)
(d)On 23 September 2008, the shareholders of the Company approved the proposed acquisition of 100% equity interest in Rangkai Positif Sdn. Bhd. (“RP”) for a purchase consideration
of RM720,000,000 to be satisfied entirely by the issuance of 376,963,350 new ordinary shares of RM1.00 each in DRB-HICOM at an implied value of RM1.91 per share.
On 22 October 2008, the Company completed the acquisition of the entire equity interest in RP for RM292,146,596 via the issuance of 376,963,350 new ordinary shares of RM1.00
each at a fair value of RM0.775 per share. As a result, RP became a wholly-owned subsidiary company of the Group.
The acquisition of RP has been accounted for as a purchase of asset and the excess of fair value of purchase cost over the estimated net assets acquired have been classified as
a concession asset within intangible assets in the consolidated balance sheet.
Details of the operation and maintenance concession arising from the acquisition are as follows:
RM’000
Issue of ordinary shares at fair value (net of issuance cost of RM2,159,000)
Add: expenses directly attributable to the acquisition, paid in cash
289,988
4,616
Purchase consideration
Fair value of net assets acquired 294,604
(129,672)
Intangible assets – operation and maintenance concession recognised
164,932
Carrying
Fair
valuevalue
RM’000
RM’000
Other investments
Tax recoverable
64
29
34,770
83,988
43,944
(33,110)
(13)
64
29
34,770
83,988
43,944
(33,110)
(13)
Net assets acquired
129,672
129,672
209
47
2009 (Continued)
(i)
(d)
Details of cash flow arising from the acquisition are as follows:
RM’000
Purchase consideration, settled in cash Cash and cash equivalents arising from subsidiary company acquired
4,616
(43,944)
Cash inflow on acquisition of subsidiary company (39,328)
(e)On 23 September 2008, the shareholders of the Company approved the proposed acquisition of 70% equity interest in Bank Muamalat Malaysia Berhad (“BMMB”) for a purchase
consideration of RM1,069,900,000 to be satisfied entirely by the issuance of 548,666,666 new ordinary shares of RM1.00 each in DRB-HICOM at an implied value of RM1.95 per share.
On 22 October 2008, the Company completed the acquisition of 70% equity interest in BMMB for RM425,216,666 via the issuance of 548,666,666 new ordinary shares of RM1.00
each at a fair value of RM0.775 per share. As a result, BMMB became a 70% subsidiary company of the Group.
As part of the conditions precedent to the completion of the acquisition of BMMB, Bank Negara Malaysia requires the Company to divest a 30% equity interest in its investment in
BMMB within one year from 22 October 2008. The Company is in the process of identifying the potential strategic partners.
The Group carried out a Purchase Price Allocation exercise upon completion of the acquisition of BMMB, which involves identifying and determining the fair value to be assigned to
the identifiable asset, liabilities and contingent liabilities of the acquired entity.
Details of the goodwill arising from the acquisition are as follows:
RM’000
Issue of ordinary shares at fair value (net of issuance cost of RM3,211,000)
Add: Expenses directly attributable to the acquisition, paid in cash
422,006
5,284
Purchase consideration
Fair value of net assets acquired 427,290
(399,180)
Goodwill
28,110
Annual Report 2009
210
47
2009 (Continued)
(i)
(e)
Details of net assets acquired are as follows:
Carrying
Fair
valuevalue
RM’000
RM’000
Prepaid lease properties Intangible assets
Deferred tax assets
– Investments: Held-for-trading
– Statutory deposits with Bank Negara Malaysia
– Cash and short-term funds
– Deposits and placements of banks and other financial institutions
– Bills and acceptances payables
Bank borrowings
Minority interest
Net assets acquired
43,966
265
1,219
46,917
104,275
126,966
265
61,400
50,917
104,275
30,891
2,891,066
5,062
6,148,110
307,171
4,233,669
(120,316)
30,891
2,828,466
5,062
5,932,710
307,171
4,233,669
(120,316)
(11,858,629)
(251,911)
(630,679)
(250,000)
(210,323)
(11,858,629)
(251,911)
(630,679)
(250,000)
(171,077)
490,753
399,180
RM’000
Details of cash flow arising from the acquisition are as follows:
Purchase consideration, settled in cash Cash and cash equivalents arising from subsidiary company acquired
5,284
(4,233,669)
Cash inflow on acquisition of subsidiary company
(4,228,385)
211
47
2009 (Continued)
(i)
(e)The initial accounting for this business combination has been determined provisionally and will be completed within a period of one year from the date of acquisition as allowed
under FRS 3 “Business Combinations”. The initial accounting for this business combination will be completed upon the finalisation of the following valuations:
(i)
Core deposits;
(ii)
Investments; and
(iii)
Financing of customers.
The provisional goodwill is attributable to the acquired banking license, customer base and economies of scale expected from combining the operations of the Group and BMMB,
which cannot be separately recognised as an intangible asset.
MMB contributed revenue of RM318,836,000 and profit after taxation of RM47,840,000 to the Group for the period from the date of acquisition to 31 March 2009. Had the acquisition
B
taken effect at the beginning of the financial year, the revenue and profit after taxation contributed to the Group would have been RM779,206,000 and RM55,888,000 respectively.
These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary company to reflect the additional depreciation/amortisation
that would have been charged assuming the fair value adjustments had applied from 1 April 2008, together with the consequential tax effects.
The total net cash inflow on acquisitions of subsidiary companies as above (items (d) and (e)) are RM4,267,713,000.
(ii)
Associated company
On 31 December 2008, HICOM Holdings Berhad (“HHB”) converted its Convertible Redeemable Loan Stock of RM163,374 into 127,635 new ordinary shares of RM1.00 each at the
conversion price of RM1.28 in Niro Ceramic (M) Sdn. Bhd. (“Niro Ceramic”). As a result, HHB’s shareholding in Niro Ceramic reduced from 24.50% to 23.17%.
2008
(iii)
(a)On 28 August 2007, HICOM Holdings Berhad, completed the acquisition of the remaining 40% equity stake in KL Airport Services Sdn. Bhd. (“KLAS”) from Mofaz Aerospace Holdings
Sdn. Bhd. for a cash consideration of RM26 million. As a result, KLAS became a wholly-owned subsidiary company of the Group.
The above transaction relates to the increase in equity ownership of an existing subsidiary company, which has reflected through the reduction in minority interests in the consolidated
statement of changes in equity. Goodwill amounting to RM16,648,000 arose from this transaction.
(b)The Group had acquired an additional 123,877,330 Edaran Otomobil Nasional Berhad’s (“EON”) shares of RM1.00 each during the period from November 2007 to January 2008
under various corporate exercises. As a result, the Group increased its equity stake from 29.31% to 79.05%. Consequently, EON ceased to be an associated company and became
a subsidiary company of the Group.
EON contributed revenue of RM664,199,000 and profit after taxation of RM21,429,000 to the Group for the period from the date of acquisition to 31 March 2008. Had the acquisition
taken effect at the beginning of the financial year, the revenue and profit after taxation contributed to the Group would have been RM2,322,322,000 and RM66,305,000 respectively.
These amounts have been calculated using the Group’s accounting policies and by adjusting the results of the subsidiary companies to reflect the additional depreciation/amortisation
that would have been charged assuming the fair value adjustments had applied from 1 April 2007, together with the consequential tax effects.
Annual Report 2009
212
47
2008 (Continued)
(iii)
(b)
Details of the provisional purchase price allocation arising from the acquisition are as follows:
Prepaid lease properties
Investment properties
Intangible assets
Other investments
Deferred tax assets
Inventories
Bank borrowings
Minority interest
Carrying
Fair
valuevalue
RM’000
RM’000
223,331
10,941
4,231
–
100,764
49,756
4,418
6,407
13,469
181,972
133,187
338,118
(216,159)
(11,951)
(553)
(8,517)
(173,762)
258,307
12,087
4,260
6,000
100,764
49,756
5,585
6,407
14,324
190,507
133,188
338,118
(216,159)
(11,951)
(553)
(14,485)
(182,942)
Net assets acquired
655,652
Excess of fair value of net assets over purchase consideration Asset revaluation reserve on step up acquisition Investment in an associated company
Purchase consideration Cash and cash equivalents arising from subsidiary companies acquired
693,213
(173,178)
(13,700)
(243,667)
262,668
(338,118)
Cash inflow on acquisition of subsidiary companies
(75,450)
During the financial year, the purchase price allocation was completed resulting in no significant adjustments to the financial statements of the Group.
213
47
2008 (Continued)
(iv)
Associated company
On 28 August 2007, the Company entered into a Joint Venture and Shareholders Agreement (“JVSA”) with General Motors Asia Pacific Holding Co. L.L.C. (“GMAP”), a wholly-owned subsidiary
of General Motors Corporation (“GMC”), to establish a “NEWCO” to market, distribute and manufacture GMC’s and its affiliates’ automobiles, parts and accessories in Malaysia as well as
to export to other countries. NEWCO was incorporated on 19 October 2007 under the name of HICOM-Chevrolet Sdn. Bhd. (“HICOM-Chevrolet”) and the Company and GMAP shall hold a
49% and 51% equity interest in HICOM-Chevrolet respectively. The approval from Foreign Investment Committee was obtained on 26 November 2007. On 28 March 2008, HICOM-Chevrolet
has allotted and issued 5,199,999 and 4,999,999 new ordinary shares of RM1.00 each to GMAP and DRB-HICOM respectively. As a result, HICOM-Chevrolet became a 49% associated
company of the Group.
48
SUMMARY OF EFFECTS OF DISPOSAL OF COMPANIES
2009
(i)
Subsidiary company
On 7 August 2008, Scott & English Electronics Holdings Sdn. Bhd. (“SEEH”), effectively a 70% indirect subsidiary company of the Group, completed the disposal of its entire 100% equity
interest in Scott & English Electronics Sdn. Bhd. (“SEE”) for a total cash consideration of RM6.58 million to the following parties:
–
–
–
As a result, SEE ceased to be a 70% indirect subsidiary company of the Group and became a 40% indirect associated company of the Group. On 17 October 2008, SEE changed its name
to Midea Scott & English Electronics Sdn. Bhd.
The effect of the disposal of the subsidiary company as above, up to the date of disposal on the results of the Group is shown below:
Revenue
Profit after taxation
RM’000
10,815
(315)
214
Annual Report 2009
48
SUMMARY OF EFFECTS OF DISPOSAL OF COMPANIES (Continued)
2009 (Continued)
(i)
Subsidiary company (Continued)
The effect of the disposals of the subsidiary company on the financial position of the Group is shown below:
Inventories Trade and other receivables
Trade and other payables Provision for liabilities and charges
Bank overdrafts
Bank borrowings
(ii)
RM’000
598
10,399
7,833
667
(973)
(503)
(515)
(11,396)
Net assets disposed Gain on disposal
6,110
470
Total disposal proceeds
Less: Reclassification of the subsidiary company as an associated company Less: Cash and bank balances of the subsidiary company disposed
Add: Bank overdraft of the subsidiary company disposed 6,580
(2,646)
(667)
515
Net cash inflow on disposal
3,782
(a)On 23 June 2008, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 20.2% equity interest in EON Capital
Berhad to Primus Pacific Partners 1 L.P. for a cash consideration of approximately RM1.35 billion. As a result, EON Capital Berhad ceased to be an associated company of the Group.
The gain arising from the disposal amounted to approximately RM567 million.
(b)On 22 December 2008, Proton Cars (Europe) Limited (“PCE”), a 44.4% associated company of Edaran Otomobil Nasional Berhad, was dissolved. As a result, PCE ceased to be an
associated company of the Group.
215
48
2008
(iii)
(a)On 15 August 2007, PT Modenas Putra Motor Indonesia, an indirect subsidiary of DRB-HICOM Berhad, was dissolved. The dissolution of the subsidiary company did not have a
material impact to the Group.
(b)
n 17 October 2007, the Company completed the disposal of a 31% equity stake in ISUZU HICOM Malaysia Sdn. Bhd. (“IHMSB”) (formerly known as Malaysian Truck & Bus Sdn.
O
Bhd.) to Isuzu Motors Asia Limited, Singapore for a cash consideration of RM23,748,000. As a result, IHMSB ceased to be a subsidiary company and became a 49% associated
company of the Group.
(c)On 26 March 2008, Suzuki Motor Corporation (“SMC”) and Itochu Corporation (“Itochu”) subscribed for a total of 14,000,000 and 7,000,000 new ordinary shares of RM1.00 each
respectively in Suzuki Malaysia Automobile Sdn. Bhd. (“SMA”), representing 40% and 20% equity stakes in SMA. As a result, SMA ceased to be a wholly owned subsidiary and
became a 40% associated company of the Group.
(d)On 31 March 2008, the Company and HICOM Holdings Berhad, effectively a wholly-owned subsidiary company of the Group, disposed of DRB-HICOM Information Technologies Sdn.
Bhd., HICOM Communications Sdn. Bhd. and HICOM Network Services Sdn. Bhd. to Synergycentric Sdn. Bhd. for a total cash consideration of RM500,000. As a result, the above
disposed subsidiary companies (including HICOM Teleservices Sdn. Bhd. and PT HICOM BMS) ceased to be wholly-owned subsidiary companies of the Group.
The effect of the disposal of the subsidiary companies under items (b), (c) and (d) above, up to the date of disposal on the results of the Group is shown below:
Revenue
Profit after taxation
RM’000
325,201
20,442
Annual Report 2009
216
48
2008 (Continued)
(iii)
The effect of the disposals of the subsidiary companies on the financial position of the Group is shown below: (Continued)
RM’000
Intangible assets
Deferred tax assets
Inventories Trade and other receivables
Fixed deposits, cash and bank balances
Bank borrowings
Minority interest
31,173
2,970
542
74,133
33,784
26,333
(98,629)
(6,660)
(5,223)
34,469
Net assets disposed
Gain on disposal Carrying values as associated companies
92,892
20,369
(89,013)
Total disposal proceeds Less: Incidental costs of disposal
Less: Fixed deposits, cash and bank balances of subsidiary companies disposed
24,248
(303)
(26,333)
Net cash outflow on disposal
(iv)
(2,388)
(a)On 11 April 2007, Comtrac Businessworld Sdn. Bhd. (in members voluntary winding up), effectively a 35% indirect dormant jointly controlled entity of DRB-HICOM Berhad was placed
under voluntary winding-up.
(b)On 19 April 2007, Comtrac-Concrete Constructions Sdn. Bhd. (in members voluntary winding up), effectively a 34.30% indirect dormant jointly controlled entity of DRB-HICOM Berhad
was placed under voluntary winding-up.
(c)
On 1 July 2007, HICOM Holdings Berhad completed the disposal of its entire 33.33% equity stake in Model Building Maintenance Dallah Alam Flora Waste Management Services
L.L.C. (“MBMD”) for a cash consideration of RM83,000. As a result, MBMD ceased to be a jointly controlled entity of the Group.
The gain arising from the disposal of jointly controlled entities amounted to RM83,000.
217
48
2008 (Continued)
49
(v)
(a)On 26 June 2007, DRB-HICOM Berhad completed the disposal of its entire 20% equity stake in Gerbang Perdana Sdn. Bhd. (“GPSB”) for a cash consideration of RM14 million. As
a result, GPSB ceased to be an associated company of the Group.
(b)
The gain arising from the disposal of associated companies amounted to RM13,991,000.
On 31 March 2008, HICOM Holdings Berhad disposed of its 20% equity stake in Navi & Map Sdn. Bhd. (“Navi & Map”) for a cash consideration of RM1.00. As a result, Navi & Map
ceased to be an associated company of the Group.
SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES
In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related party transactions which were carried out on terms and
conditions attainable in transactions with unrelated parties.
Category of related party
Relationship
Subsidiary companies Jointly controlled entities Associated companies List of group companies in Note 3
List of group companies in Note 3
List of group companies in Note 3
Significant related parties
Companies under a common substantial shareholder
Pelabuhan Tanjung Pelepas Sdn. Bhd.
MMC-Gamuda Joint Venture Sdn. Bhd.
Tradewinds International Insurance Brokers Sdn. Bhd.
Tanjung Bin Power Sdn. Bhd.
Teknik Janakuasa Sdn. Bhd.
Benua Perdana Sdn. Bhd.
Prai Power Sdn. Bhd.
Malakoff Corporation Berhad
Significant related parties
Corporate shareholders of subsidiary companies
Kawasaki Heavy Industries Ltd.
Sojitz Group
TS Lear Automotive (M) Sdn. Bhd.
Teck See Plastic Sdn. Bhd.
Compounding & Colouring Sdn. Bhd.
United Overseas Bank (Malaysia) Bhd
Hebat Abadi Sdn. Bhd.
PJBUMI Waste Management Sdn. Bhd.
Key management Personnel having authority and responsibility for planning, directing and controlling the activities of the entity
218
Annual Report 2009
49
SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
Group
Company
2009
RM’000
2008
RM’000 2009
RM’000
2008
RM’000
33,058
85,904
140,695
19,663
54,592
16,538
–
–
–
–
–
–
408,479
340,612
142,124
13,728
82,583
107,807
–
–
–
–
–
–
–
–
34,989
42,858
–
–
–
–
144,008
39,530
122,178
23,120
–
–
–
–
117,209
149,891
102,280
46,070
23,914
–
23,914
–
–
–
–
–
1,109,807
135,000
–
62,315
19,600
2,482
–
–
–
–
27,648
24,733
–
–
–
–
(a) Sale of goods/services to:
– Jointly controlled entities
– Associated companies
– Related parties
(b) Purchase of goods/services from:
– Jointly controlled entities
– Related parties
(c) Interest income:
– Subsidiary companies
(d) Dividend income:
(e) Inter-company loan to:
Disbursement
Repayment
Repayment
(f) Inter–company loan from:
Proceeds
Repayment
– Related parties
Proceeds
(g) Bankers acceptances:
– Related parties
Proceeds
Repayment 219
49
SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (Continued)
Group
2009
RM’000
Company
2008
RM’000 2009
RM’000
2008
RM’000
(h) Letter of credits:
– Related parties
Proceeds
Repayment
(i) 50,345
40,540
–
–
–
–
6,353
–
5,781
906
–
–
–
–
749
–
641
109
–
–
–
–
125,361
125,000
229,608
58,851
–
–
–
–
–
–
–
–
–
–
–
–
Key management compensation:
– Salaries, bonuses, allowances and other benefits
– current year
– prior year
– Defined contribution plan
– current year
– prior year
(j) –
–
Year end balances with banking facilities:
– Related parties
Revolving credits
Bank guarantee
Bonds
Short term deposits
Apart from the above, the balances outstanding with related parties in respect of the above transactions are disclosed in Notes 17, 27 and 39 to the financial statements.
Annual Report 2009
220
50
CAPITAL AND OTHER COMMITMENTS
(a)
Non-banking
Group
2009
RM’000
2008
RM’000
Authorised capital expenditure not provided for in the financial statements
– contracted for
– not contracted for
72,516
134,535
74,316
101,503
207,051
175,819
207,051 –
175,521
298
207,051
175,819
(ii) Lease commitments:
Commitments under non-cancellable operating leases
– repayable within 1 year
– repayable within 2 to 5 years
13,269
29,067
9,059
14,969
42,336
24,028
75,203
15,458
(i) Analysed as follows:
Property, plant and equipment Intangible assets
(iii) Commitments for forward foreign exchange contracts
221
50
CAPITAL AND OTHER COMMITMENTS (Continued)
(a)
Non-banking (Continued)
The currency exposure profile and the expiry period for the forward foreign exchange contracts is as follows:
Group
2009
Equivalent
amount in
Contractual
Ringgit
amounts
Malaysia
(‘000)
(‘000)
Japanese Yen Thai Baht US Dollar Euro Dollar 728,592 5,718
11,857 959 27,861
609
42,045
4,688
100 ¥ = RM3.824
Baht 100 = RM10.650
USD1 = RM3.546
Euro 1 = RM4.888
Expiry dates
1 April to 24 August
1 April to 25 May
1 April 2009 to 31 January
15 April to 15 July
2009
2009
2010
2009
Group
2008
Equivalent
amount in
Contractual
Ringgit
amounts
Malaysia
(‘000)
(‘000)
Japanese Yen
Thai Baht US Dollar Average contractual rate
356,487
7,116
1,242 10,687 742 4,029
Average contractual rate
100 ¥ = RM2.998 Baht 100 = RM10.427 USD1 = RM3.244 Expiry dates
22 April to 2 May 2008
11 August 2008
14 May 2008
The net unrecognised losses/(gains) on open contracts which hedge anticipated future foreign currency transactions amounted to RM1,997,000 (2008: RM830,000). These are deferred until
the related sales and purchases are transacted, at which time they are included in the measurement of such transactions.
Annual Report 2009
222
50
CAPITAL AND OTHER COMMITMENTS (Continued)
(b)
Banking
(i)The value of contracts of financial instruments of a banking subsidiary company with off-balance sheet risk, traded in the ordinary course of business, classified by remaining year
to maturity or next repricing date (whichever is earlier), are as follows:
Items
Foreign Exchange
– Forwards
– Swaps
Total
Principal
< 1
>1 – 3
>3 – 6
>6 – 12
Amount month months months months
RM’000 RM’000 RM’000 RM’000 RM’000
406,914
688,961
11,402
280,191
28,052
246,585
9,739
–
357,721
162,185
1,095,875
291,593
274,637
9,739
519,906
Foreign exchange related contracts are subject to market risk and credit risk.
(ii)
Risk weighted exposures of a banking subsidiary company are as follows:
As at 31 March 2009
Credit
Risk
Principal
equivalent
weighted
amount amountamount
RM’000 RM’000 RM’000
Direct credit substitutes
Trade-related contingencies
Transaction related contingencies
Obligations under an on-going underwriting agreement
Housing financing sold directly and indirectly to Cagamas with recourse
Credit extension commitment - Maturity exceeding one year
Foreign exchange related contracts
Profit related contracts
Other commitments
7,844
75,271
1,819,475
77,000
397,625
1,156,690
1,904,461
100,000
989,350
7,844
15,054
909,737
38,500
397,625
578,345
28,364
100
–
8,040
10,437
386,888
7,700
79,525
382,557
24,302
20
–
6,527,716
1,975,569
899,469
223
51
CONTINGENT LIABILITIES (UNSECURED)
Except as disclosed below, there are no contingencies as at the balance sheet date.
Group
2009
RM’000
52
2008
RM’000 –
(a) Guarantees given to financial institutions in respect of facilities granted to subsidiary companies (b) Performance bonds and guarantees given to third parties Company
167,800 –
23,053 2009
RM’000
2008
RM’000
163,867
362,751
2,452 2,016
GROUP SEGMENT REPORTING
The Group principally operates in Malaysia in the following main industry segments:
Industry segment
Description
AutomotiveManufacturing, assembly, pre-delivery inspection, distribution and sale of motor vehicles, motorcycles and special
purpose vehicles including sale of related spares and services.
Property and construction
Property holding and development and construction works.
Concession services Vehicle inspection, solid waste management, airport ground handling business and operations and maintenance
services of a power plant.
Insurance services
General and life insurance services.
Other services
Trading in engineering products and facility management services.
Banking
Islamic banking and related financial services.
224
Annual Report 2009
52
GROUP SEGMENT REPORTING (Continued)
(a)
Primary reporting format - business segment
Inter-segment revenue comprises revenue to other business segments carried out on an arm’s length basis.
Segment results represent segment revenue less segment expenses. Unallocated expenses represent corporate operating and administrative expenses.
Segment assets consist primarily of property, plant and equipment, prepaid lease properties, biological assets, investment properties, inventories, receivables, property development costs,
land held for property development, other investments, marketable securities, banking related assets, cash and bank balances and exclude interest bearing short term deposits, taxation
assets and investments in jointly controlled entities and associated companies and non-current assets held for sale. Segment liabilities comprise mainly of payables, banking related
liabilities and exclude items such as interest bearing borrowings, taxation liabilities and liabilities relating to non-current assets held for sale. Unallocated liabilities consist of accruals on
corporate operating and administrative expenses.
Capital expenditure comprises additions to property, plant and equipment, prepaid lease properties, investment properties, biological assets, intangible assets, land held for property
developments and property development activities.
(b)
Secondary reporting format – geographical segment
The Group’s secondary format by geographical location, is not shown as the activities of the Group are predominantly in Malaysia and the overseas segment does not contribute to more
than 10% of the consolidated revenue and assets.
Primary reporting format – business segment
Property & Concession
Automotive Construction
Services
RM’000
RM’000
RM’000
Insurance
Services RM’000
Other
Services
RM’000
Investment
Banking
Holding
RM’000
RM’000
Group
RM’000
Revenue
Total revenue
Inter-segment revenue
4,029,004
(37,694)
180,061
(13,800)
866,790
(2,296)
405,410
(5,963)
366,580
(5,501)
319,234
(398)
24,929
(24,929)
6,192,008
(90,581)
External revenue
3,991,310
166,261
864,494
399,447
361,079
318,836
–
6,101,427
Segment results
(17,217)
(160,671)
79,310
(27,886)
35,212
90,818
143,723
Unallocated expenses
Interest income
Gain on disposal of investments in associated companies
Finance cost
40,607
22,639
–
–
–
–
–
67,106
3,856
–
–
(433)
–
–
143,289
(27,908)
53,961
567,481
(95,655)
63,246
70,529
Taxation 774,943
(49,562)
725,381
225
52
Primary reporting format – business segment (Continued)
Services
RM’000
RM’000
RM’000
Insurance
Services RM’000
Other
Services
RM’000
Investment
Banking
Holding
RM’000
RM’000
Group
RM’000
Other information
Segment assets
2,094,329
1,470,939
767,495
1,528,425
311,638 13,066,835
Interest bearing short term deposits
Taxation assets
185,891
148,192
–
–
–
–
382,243
27,354
–
–
7,724
–
10,363
130,311
–
–
–
–
230,254
–
–
–
19,469,915
892,119
261,016
334,083
417,321
140,674
Total assets
21,515,128
Segment liabilities
707,685
359,821
286,783
1,798,173
81,556 11,367,287
12,665
Interest bearing borrowings
Taxation liabilities
Unallocated liabilities
14,613,970
1,505,994
35,551
6,853
16,162,368
Total liabilities
105,541
36,245
38,731
3,782
4,366
9,640
1,139
199,444
Depreciation and amortisation
82,177
9,231
30,723
5,181
4,917
10,690
3,383
146,302
Impairment loss
19,832
60,631
98
–
–
1,525
–
82,086
Capital expenditure
Annual Report 2009
226
52
Primary reporting format – business segment (Continued)
Services
RM’000
RM’000
RM’000
Insurance
Services RM’000
Other Investment
Services
Holding
RM’000
RM’000
Group
RM’000
Revenue
Total revenue
Inter-segment revenue
2,316,980
(14,306)
302,374
(11,386)
725,923
(524)
347,713
(5,639)
361,657
(10,413)
17,240
(17,240)
4,071,887
(59,508)
External revenue
2,302,674
290,988
725,399
342,074
351,244
–
4,012,379
Segment results
(30,257)
33,247
61,390
6,896
30,035
237,228
Unallocated expenses
Interest income
Finance cost
24,465
19,016
–
–
–
–
66,505
998
–
–
45,009
–
338,539
(41,768)
43,285
(119,976)
43,481
112,512
Taxation
376,073
(24,344)
351,729
Other information
Segment assets
2,157,420
1,721,777
526,948
1,331,873
283,293
230,409
Interest bearing short term deposits
Taxation assets
180,302
170,393
–
–
–
–
366,550
24,417
–
–
–
–
383
–
–
–
803,010
–
6,251,720
1,377,079
155,187
350,695
390,967
803,393
Total assets
9,329,041
Segment liabilities
747,693
360,719
143,303
1,646,496
135,438
101,831
Interest bearing borrowings
Taxation liabilities
Unallocated liabilities
Liabilities relating to non-current assets held for sale
–
–
–
–
18,418
–
3,135,480
2,229,492
68,027
6,479
18,418
Total liabilities
5,457,896
Capital expenditure
87,742
15,917
35,313
2,856
7,464
6,294
155,586
Depreciation and amortisation
87,631
13,090
30,745
5,113
4,921
2,395
143,895
Impairment loss
25,335
12,037
395
–
16
–
37,783
227
53
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Estimates and judgments are continually evaluated by the Directors and are based on historical experience and other factors, including expectations of future events that are believed to be
reasonable under the circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information
content of the estimates, certain key variables that are anticipated to have material impact to the Group’s results and financial position are tested for sensitivity to changes in the underlying
parameters. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are
outlined below.
(i)
Deferred tax assets
Deferred tax assets are recognised for all unabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment allowances to the extent
that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgment is required to determine the
amount of deferred tax assets that can be recognised based on the likely timing and level of future taxable profits together with future tax planning strategies.
(ii)
Estimate of fair value of investment properties
The Group estimates the fair values of its investment properties using current prices in an active market. The principal assumptions underlying these valuations are those relating to rentals,
market yields, maintenance requirements and capitalisation rates and current prices of similar properties or property prices in less active markets adjusted accordingly.
Independent professional valuation is obtained as a basis for these estimates.
(iii)
Provision for product warranties
Certain subsidiary companies make provisions for product warranties based on an assessment of historical experience and industry average for defective productions. The identification of
defect liability requires the use of judgment and estimates. Where the expectation is different from the original estimate, such difference will impact the carrying value of the provision for
product warranties and will be charged to income statement as defective works and product warranty expenses in the period such an estimate has been changed.
The carrying amounts of provision for product warranties of defective works are disclosed in Note 36.
(iv)
Construction contracts and property development activities
The Group recognises revenue based on percentage of completion method. The stage of completion is measured by reference to the costs incurred to date to the estimated total costs.
Judgment is required in determining the stage of completion, the extent of the costs incurred, the estimated total revenue (other than fixed price contracts) and costs, as well as the
recoverability of the receivables. In making the judgment, the Group relied on past experience and work of specialists.
(v)
Impairment of property, plant and equipment
The Group tests property, plant and equipment for impairment if there are any indicators of impairment. The recoverable amounts were determined based on value in use or fair value less
costs to sell, where appropriate. Based on these calculations, an impairment charge of RM14,678,000 (2008: RM37,783,000) was recognised during the financial year.
(vi)
Deferred liability
Deferred liability consists of amount due to municipalities from solid waste management business. The Group has disclosed the amounts due to municipalities of RM38,144,000 (2008:
RM38,144,000) as non-current liabilities in the financial statements. The Concession Agreement and the Supplemental Concession Takeover Agreement have yet to be finalised. The
Concession Agreement is currently being reviewed whilst the Supplemental Concession Takeover Agreement is currently being drafted.
Annual Report 2009
228
53
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS (Continued)
(vii) Fair value estimate of investments of a banking subsidiary company
Where the quoted and observable market prices of certain investments are not available, fair value is estimated using pricing models or discounted cash flow techniques. The usage of
these models and techniques require the banking subsidiary company of the Group to make certain estimates and assumptions, including but not limited to estimated future cash flows
and discount rates.
(viii) Allowance for losses on advances and financing of a banking subsidiary company
Specific allowances are made for doubtful debts which have been individually reviewed and specifically identified as substandard, bad or doubtful. The individual assessment of financing may include
making estimates and judgments about the counterparty’s financial position, fair value of the underlying collaterals and future recoverable cash flows in workout/restructuring arrangements.
54
SIGNIFICANT EVENTS
(a)On 23 June 2008, HICOM Holdings Berhad, effectively a 100% owned subsidiary company of the Group, completed the disposal of its entire 20.2% equity interest in EON Capital Berhad
to Primus Pacific Partners 1 L.P. for a cash consideration of approximately RM1.35 billion. As a result, EON Capital Berhad ceased to be an associated company of the Group. The gain
arising from the disposal amounted to approximately RM567 million.
(b)Pursuant to the Rights Issue undertaken by Alam Flora Sdn. Bhd. (“AFSB”), the Group subscribed for a total of 24 million new ordinary shares of RM1.00 each. The Group’s shareholding
in AFSB increased from 55% to 60.53% in July 2008.
(c)
n 7 August 2008, Scott & English Electronics Holdings Sdn. Bhd. (“SEEH”), effectively a 70% indirect subsidiary company of the Group, completed the disposal of its entire 100% equity
O
interest in Scott & English Electronics Sdn. Bhd. (“SEE”) for a total cash consideration of RM6.58 million to the following parties:
–
–
–
As a result, SEE ceased to be a 70% indirect subsidiary company of the Group and became a 40% indirect associated company of the Group. On 17 October 2008, SEE changed its name
to Midea Scott & English Electronics Sdn. Bhd.
(d)On 8 September 2008, the Company completed the acquisition of an additional 15% equity interest in Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) from Khazanah Nasional Berhad
for a cash consideration of RM24 million. As a result, the Group’s shareholding in MODENAS increased from 55% to 70%.
(e)On 18 September 2008, HICOM Holdings Berhad acquired an additional 9.03% equity interest in PHN Industry Sdn. Bhd. (“PHN”) from Nagoya Oak Industries Co. Ltd. for a cash consideration
of RM8.13 million. As a result, the Group’s equity interest in PHN increased from 53.47% to 62.5%.
(f)On 22 October 2008, the Company completed the acquisition of the entire equity interest in Rangkai Positif Sdn. Bhd. (“RP”) for RM292,146,596 via the issuance of 376,963,350 new
ordinary shares of RM1.00 each at a fair value of RM0.775 per share. As a result, RP became a wholly-owned subsidiary company of the Group.
(g)On 22 October 2008, the Company acquired a 70% equity interest in Bank Muamalat Malaysia Berhad (“BMMB”) for RM425,216,666 satisfied via the issuance of 548,666,666 new ordinary
shares of RM1.00 each at a fair value of RM0.775 per share. As a result, BMMB became a 70% subsidiary company of the Group.
229
54
SIGNIFICANT EVENTS (Continued)
(h)HICOM Properties Sdn. Bhd. (“HPSB”), a wholly-owned subsidiary company of the Group had, on 30 December 2008, entered into a Share Sale and Purchase Agreement (“SSA”) with
Dato’ Haji Ahmad bin Abdullah and Mohd Nazree bin Abu Kassim, collectively known as the “Vendors”, to acquire the entire equity interest of 1,000,000 ordinary shares of RM1.00
each respectively (“Sale Shares”) in both Benua Kurnia Sdn. Bhd. (“BKSB”) and Neraca Prisma Sdn. Bhd. (“NPSB”) for a total purchase consideration of RM722.463 million (“Proposed
Acquisition”). BKSB and NPSB own three (3) parcels of freehold land encompassing an area of approximately 1,516.598 acres identified as PTD 99396 HS(D) 329948, PTD 68903 HS(D)
290184 and PTD 68905 HS(D) 290186, Mukim of Tebrau, Daerah Johor Bahru, Negeri Johor Darul Ta’zim.
The purchase consideration of the Sale Shares will be satisfied in the following manner:
(i)
Disposal of five (5) DRB-HICOM Group’s plantation lands comprising Connemara Estate, Serendah Estate, Bukit Kledek Estate, Ladang Gadek and Ladang Kupang at RM341.742 million;
(ii)
Issuance of a bank guarantee amounting to RM238.95 million in favour of Danaharta to substitute the existing bank guarantees obtained by BKSB and NPSB; and
(iii)
Cash payment of RM141.771 million.
The Proposed Acquisition is pending the fulfilment of the conditions precedent stated in the SSA.
55
SUBSEQUENT EVENTS
(a)On 10 April 2009, Comtrac Sdn. Bhd., effectively a 70% indirect subsidiary company of the Group, has acquired the remaining 40% equity stake in HICOM-TNB Properties Sdn. Bhd.
(“HICOM-TNB”) for a cash consideration of RM1. As a result, HICOM-TNB became a 70% indirect subsidiary company of the Group. On 30 April 2009, HICOM-TNB has changed its name
to Comtrac Development Sdn. Bhd.
(b)On 5 June 2009, Comtrac Sdn. Bhd. has acquired the entire 100% equity stake in Stagwell Sdn. Bhd. (“Stagwell”) from a wholly-owned subsidiary company of the Group, Automotive
Corporation (Malaysia) Sdn. Bhd. via an internal reorganisation for a cash consideration of RM1,500. As a result, the Group’s shareholding in Stagwell diluted from 100% to 70%.
(c)HICOM Holdings Berhad, had on 13 March 2009, signed the Share Sale and Purchase Agreement with Continental Automotive GmbH to dispose of its entire 33.33% equity interest or
3,000,000 ordinary shares of RM1.00 each in Continental Automotive Instruments Malaysia Sdn. Bhd. for a total cash consideration of RM10,290,000. The disposal was completed on 20
April 2009.
56
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders. The Group’s financial risk management policy seeks to ensure that adequate
financial resources are available for the development of the Group’s businesses whilst managing its interest rate, foreign currency exchange, credit, liquidity and cash flow, market, insurance
and pricing, operational and profit rate risks.
(i)
Interest rate risk
The Group’s primary interest rate risk relates to interest-bearing borrowings and investments in marketable securities and other interest-bearing financial instruments. The Group manages
its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowing instruments. The Group’s exposure to risk that the value of a financial instrument will fluctuate
due to changes in market interest rates is provided in the respective notes to financial statement.
(ii)
Foreign currency exchange risk
The Group is exposed to currency risk as a result of the foreign currency transactions entered into in currencies other than its functional currency. Foreign exchange exposures in
transactional currencies other than its functional currency of the operating entities are kept to an acceptable level. Material foreign currencies transaction exposures are hedged, mainly
with forward foreign exchange contracts.
230
Annual Report 2009
56
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (Continued)
(iii)
Credit risk
Credit risk is the potential loss arising from customers or counterparties failing to meet their financial contractual obligations. The Group seeks to control credit risk by ensuring its customers
or counterparties have sound financial standing and credit history.
The Group has no significant concentration of credit risk due to its diverse customer base.
(iv)
Liquidity and cash flow risk
The Group manages its debt maturity profile, operating cash flows and availability of funding so as to ensure that all repayment and funding requirements are met. As part of its overall
prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. Due to the dynamic nature of the
underlying businesses, the Group aims at maintaining flexibility in funding by keeping committed credit lines available.
(v)
Market risk
Market risk is the potential loss which can arise for positions held by the Group due to adverse changes in the level of market prices or price-influencing parameters in the financial
markets. The adverse changes can occur in interest rate, rate of return, foreign exchange and equity markets. The Group regularly reviews these risks and takes proactive measures to
mitigate the potential impact of such risks.
(vi)
Insurance and pricing risks
The principal activity of a life insurance subsidiary company is to provide insurance protection against risks such as mortality, morbidity, disability and personal accidents. The mortality
and morbidity risks are managed through risk assessment before a policy is underwritten. The maximum underwriting exposure is limited through exclusion, cover limits and reinsurance
arrangements. The pricing risk relates to the risk of inadequacy of premium. Re-pricing of product is conducted at regular interval of two (2) years or shorter, if required. Experience studies
are conducted to determine realistic assumptions. Stress tests and bonus reserve valuations are done by the appointed actuary to assess the solvency position.
(vii) Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. The Group manages risks strategically through the
risk committees.
(viii) Profit rate risk
The banking subsidiary company of the Group is exposed to the risk associated with the effects of fluctuations in the prevailing levels of profit rate on the financial position and cash flows
of its portfolio. The fluctuations in profit rate can be influenced by changes in interest rates that affect the value of financial instruments under its portfolio. Profit rate risk is monitored
and managed by the Risk Management Department to protect the income from operations.
57
APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 17 July 2009.
231
STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965
We, Dato’ Syed Mohamad bin Syed Murtaza and Datuk Haji Mohd Khamil bin Jamil, two of the Directors of DRB-HICOM Berhad, state that, in the opinion of the Directors, the financial statements set
out on pages 122 to 230 are drawn up so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 March 2009 and of the results and the cash flows of the
Group and of the Company for the financial year ended on that date in accordance with with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for
Entities Other than Private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group.
In accordance with a resolution of the Board of Directors dated 17 July 2009.
DATO’ SYED MOHAMAD BIN SYED MURTAZA
Chairman
DATUK HAJI MOHD KHAMIL BIN JAMIL
232
Annual Report 2009
STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965
I, Lukman bin Ibrahim, the officer primarily responsible for the financial management of DRB-HICOM Berhad, do solemnly and sincerely declare that the financial statements set out on pages 122
to 230 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
LUKMAN BIN IBRAHIM
Subscribed and solemnly declared by the abovenamed Lukman bin Ibrahim at Shah Alam in Malaysia on 17 July 2009.
Before me,
Commissioner for Oaths
233
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF DRB-HICOM BERHAD (Incorporated in Malaysia) (203430-W)
REPORT ON THE FINANCIAL STATEMENTS
We have audited the financial statements of DRB-HICOM Berhad, which comprise the balance sheets as at 31 March 2009 of the Group and of the Company, and the income statements, statements
of changes in equity and cash flow statements of the Group and of the Company for the financial year then ended, and a summary of significant accounting policies and other explanatory notes, as
set out on pages 122 to 230.
Directors’ Responsibility for the Financial Statements
The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with the provisions of the Companies Act, 1965 and MASB Approved
Accounting Standards in Malaysia for Entities Other than Private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking
subsidiary company of the Group. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are
free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Auditors’ Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards
require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the
assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparation
and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements have been properly drawn up in accordance with the provisions of the Companies Act, 1965 and MASB Approved Accounting Standards in Malaysia for Entities
Other than Private Entities, modified by the accounting policies set out in the Bank Negara Malaysia Guidelines and Shariah principles for a banking subsidiary company of the Group, so as to give a
true and fair view of the financial position of the Group and of the Company as of 31 March 2009 and of their financial performance and cash flows for the financial year then ended.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a)In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly
kept in accordance with the provisions of the Act.
(b)
We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 3 to the financial
statements.
(c)
e are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the
W
purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes.
(d)
The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
234
Annual Report 2009
independent auditors’ report
to the members of DRB-HICOM BERHAD (Incorporated in Malaysia) (203430-W) (Continued)
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume
responsibility to any other person for the content of this report.
PRICEWATERHOUSECOOPERS
(No AF: 1146)
Chartered Accountants Kuala Lumpur
17 July 2009
MOHAMMAD FAIZ BIN MOHAMMAD AZMI
(No.2025/03/10(J))
Chartered Accountant
235
Other Information
236 Share Movement Chart 237 Analysis of Shareholdings
240 Material Properties of DRB-HICOM Group •
Form of Proxy
236
Annual Report 2009
Share Movement Chart
SHARE PRICE FROM APRIL 2008 TO MARCH 2009
Volume (million)
Price (RM)
25.0
2.50
22.5
2.25
20.0
2.00
17.5
1.75
15.0
1.50
12.5
1.25
10.0
1.00
7.5
0.75
5.0
0.50
2.5
0.25
APR
MAY
JUN
JUL
AUG
2008
Volume (million)
High (RM)
Low (RM)
SEP
OCT
NOV
DEC
JAN
FEB
2009
MAR
237
Analysis of Shareholdings
AS AT 24 JULY 2009
Class of Securities : Ordinary shares of RM1.00 each
Authorised Share Capital : RM2,000,000,000.00
Issued and Fully Paid-up Capital: RM1,933,237,051 comprising 1,933,237,051 ordinary shares of RM1.00 each
Voting Rights :Every member of the Company present in person or by proxy shall have one vote on a show of hands, and in the case of poll, shall have one vote for each
share he holds.
Number of Shareholders : 49,241
DISTRIBUTION OF SHAREHOLDERS
Size of Shareholdings
Number of Shareholders % of
Shareholders Total Holdings % Holdings
1 – 99
100 – 1,000
1,001 – 10,000
10,001 – 100,000
100,001 – 96,661,851(**)
96,661,852 and Above(***)
413
23,279
21,696
3,446
403
4
0.84
47.28
44.06
7.00
0.82
0.01
10,267
17,334,948
78,792,329
94,199,965
438,921,814
1,303,977,728
0.00*
0.90
4.08
4.87
22.70
67.45
Total 49,241
100.00
1,933,237,051
100.00
(Without aggregating the securities from different securities accounts belonging to the same Depositor)
Number
Name of Shares
% of Issued
Shares
Remarks: * Less than 0.01%
** Less than 5% of issued shares
*** 5% and above of issued shares
TOP THIRTY SECURITIES ACCOUNT HOLDERS
1.
2.
3.
4.
5.
6.
7.
8.
9.
Etika Strategi Sdn Bhd EB Nominees (Tempatan) Sendirian Berhad
Pledged Securities Account For Etika Strategi Sdn Bhd (KLM)
Employees Provident Fund Board Khazanah Nasional Berhad Amanah Raya Nominees (Tempatan) Sdn Bhd
Skim Amanah Saham Bumiputera
Citigroup Nominees (Tempatan) Sdn Bhd
CMS Trust Management Berhad for Employees Provident Fund
Etika Strategi Sdn Bhd Amsec Nominees (Tempatan) Sdn Bhd
CMS Trust Management Berhad For Tenaga Nasional Berhad Retirement Benefit Trust Fund (RB-TNB-CMS)
Amanah Raya Nominees (Tempatan) Sdn Bhd
Amanah Saham Wawasan 2020
704,098,391 343,913,400 36.42
17.79
151,841,300 104,124,637
59,924,400 7.85
5.39
3.10
35,387,500 1.83
33,049,950 15,577,600 1.71
0.81
11,092,100 0.57
238
Annual Report 2009
analysis of shareholdings as at 24 July 2009 (Continued)
TOP THIRTY SECURITIES ACCOUNT HOLDERS (Continued)
(Without aggregating the securities from different securities accounts belonging to the same Depositor)
Number
Name of Shares
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
HSBC Nominees (Tempatan) Sdn Bhd
HSBC (M) Trustee Bhd For CMS Premier Fund (4959)
Tai Tak Estates Sdn Bhd Permodalan Nasional Berhad Citigroup Nominees (Asing) Sdn Bhd
CBNY For DFA Emerging Markets Fund
Citigroup Nominees (Asing) Sdn Bhd
UBS AG Singapore For Focus Oriented Corporation
Citaria Sdn Bhd M&A Nominee (Asing) Sdn Bhd
Exempt An For UOB Kay Hian Pte Ltd (A/C Clients)
UBS AG Singapore For Lien Chin Hui
HDM Nominees (Asing) Sdn Bhd
Exempt An For UOB Kay Hian (Hong Kong) Limited (Clients)
Lembaga Tabung Angkatan Tentera Amanah Raya Nominees (Tempatan) Sdn Bhd
Public Dividend Select Fund
HSBC Nominees (Asing) Sdn Bhd
Exempt An For Morgan Stanley & Co. International PLC (Client)
Public Growth Fund
M&A Nominee (Asing) Sdn Bhd
UOB Kay Hian Private Limited For Monconcept Investments Pte Ltd
Public Equity Fund
Exempt An For The Bank of New York Mellon (Mellon Acct)
Amanah Saham Malaysia
UBS AG Singapore For Creon Investments Limited
Mayban Nominees (Tempatan) Sdn Bhd
Aberdeen Asset Management Sdn Bhd For Kumpulan Wang Persaraan (Diperbadankan)(FD 2-280306)
HSBC SG For Lee Rubber Company Pte Ltd
Mayban Nominees (Tempatan) Sdn Bhd
Mayban Investment Management Sdn Bhd For Kumpulan Wang Simpanan Pekerja (N14011980810)
% of Issued
Shares
10,964,600 0.57
10,952,653 10,275,000
9,339,500 0.57
0.53
0.48
9,068,900 0.47
8,873,972 7,641,500 0.46
0.40
7,537,900 0.39
7,463,600 0.39
6,137,100 5,727,900 0.32
0.30
4,762,900 0.25
4,576,900 0.24
4,136,100 0.21
4,110,000 0.21
3,540,716 0.18
3,508,100 0.18
3,500,000 0.18
3,106,400 0.16
2,962,747 0.15
2,878,600 0.15
239
SUBSTANTIAL SHAREHOLDERS BASED ON THE REGISTER OF SUBSTANTIAL SHAREHOLDERS
Name
Direct Interest No. of % of
Shares Held
Issued Shares Indirect Interest No. of
% of
Shares Held Issued Shares
Etika Strategi Sdn Bhd
Employees Provident Fund Board Khazanah Nasional Berhad
Tan Sri Dato’ Seri Syed Mokhtar Shah bin Syed Nor
1,081,061,741
192,707,400
104,124,637
–
–
–
–
1,081,061,741a
55.92
9.97
5.39
–
–
–
–
55.92
Total % of
Issued Shares
55.92
9.97
5.39
55.92
Note:a. By virtue of his deemed interest in the shares through Etika Strategi Sdn Bhd in accordance with Section 6A of the Companies Act, 1965.
DIRECTORS’ DIRECT AND INDIRECT INTERESTS IN SHARES IN THE COMPANY AND IN ITS RELATED COMPANIES
The Directors’ direct and indirect interests in shares in the Company and its related companies based on the Register of Directors’ Shareholdings are as follows:
Name
Direct Interest
No. of % of Shares Held Issued Shares
No. of Shares Held
Indirect Interest
% of
Issued Shares
Shares in the Company held by:
Ong Ie Cheong –
–
20,0001
–*2
Shares in Etika Strategi Sdn Bhd held by:
30,000 Notes:1.
2.
Interest of spouse/child of the Director.
Less than 0.01%.
None of the other Directors in office as at 24 July 2009 held any interest in shares in the Company or in its related companies.
10 –
–
240
Annual Report 2009
Material Properties of Drb-hicom Group as at 31 March 2009
Approximate
Description/
age of
Approx.
No Location
existing use
building
Tenure
area
Net book
value as at 31 March 2009
RM’000
1.
Lots 1017T, 1018A
Retail and car park complex
6 yrs
Leasehold
6,341.2
70000P and 70001T
expiring in
sq.m
of Town Subdivision
year 2096
6 Comprised in Certificate
of Title Volume 614 Folio 67
Republic of Singapore
311,883
2.
HS(D) 224498 (PT 464), HS(D) 224499 (PT 465)
Hotel, Golf Course and Club House
15 – 16 yrs
Freehold
1,489,712
HS(D) 224500 (PT 466), HS(D) 224501 (PT 467)
sq.m
HS(D) 224502 (PT 468), HS(D) 224396 (PT 772)
Town of Glenmarie
District of Petaling
190,036
3.
HS(D) 63928 (PT 5689)
Industrial land with office and 13 yrs
Freehold
650,360
HS(D) 63929 (PT 5690)
factory building
sq.m
Mukim Gurun
Daerah Kuala Muda
Kedah Darul Aman
152,814
4.
Lot No. 120–123, P.N. No. 2557 (PT 3254)
Leasehold industrial land with
12 yrs
Leasehold
644,903
Lot No. 126–133, HS(D) 3579 (PT 7695)
office and factory blocks
expiring in
sq.m
Lot No. 134, HS(D) 2233 (PT 7680)
year 2065
Lot No. 140, HS(D) 3421 (PT 9770)
Lot No. 142, HS(D) 2211 (PT 6875)
Kawasan Perindustrian Peramu
Mukim Pekan
Pahang Darul Makmur
143,008
5.
Southern Support Zone
Head Office, Cargo Complex,
11 yrs
Leasehold
55,985
KL International Airport
Workshop and Inflight
expiring in
sq.m
64000 Sepang
Catering
year 2048
128,918
241
Approximate
Description/
age of
Approx.
No Location
existing use
building
Tenure
area
Net book
value as at 31 March 2009
RM’000
6.
Menara Bumiputra
Leasehold land with 35 storey tower
30 yrs
Lot 7 Seksyen 7
blocks
PN 6253, Town of Kuala Lumpur
Wilayah Persekutuan
Leasehold
43,409.85
expiring in
sq.m
year 2072
92,625
7.
GM 1867 Lot 1468
82 units chalet & marina and land 9 – 12 yrs
Freehold and
1,557,144
HS(D) 423–588 (PT 00919–1088)
held for development
Leasehold sq.m
Mukim Kedawang
expiring in
Daerah Langkawi
year 2054
Kedah Darul Aman
87,532
8.
Lot 77170 and individual titles Land held for residential &
–
Freehold
996,053
from master titles
commercial development sq.m
Lot 77174 & Lot 77175
Mukim and District of Klang
70,611
9.
Connemara Estate
Agriculture land –
Freehold
6,264,782
Lots 35, 1252, 1365 and 1463
sq.m
Mukim of Beranang
Daerah Ulu Langat
63,319
10.
HS(D) 305 (PT 1580)
Land with factory and office block
8 – 25 yrs
Leasehold
224,380
HS(M) 1722 (PT 2365)
– assembly plant
expiring in
sq.m
HS(M) 1721 (PT 2366)
years 2043 – 2067
HS(D) 2228 (PT 413)
HS(D) 2227 (PT 1814)
HS(D) 1950 (PT 1490)
HS(D) 3365 (PT 2205)
Mukim of Pekan
Pahang Darul Makmur
56,006
THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK
DRB-Hicom Berhad
(203430-W)
Number of Shares held
FORM OF PROXY NINETEENTH ANNUAL GENERAL MEETING
I/We,
of
(FULL NAME IN BLOCK LETTERS)
CDS Account No.
NRIC/Company No.
(FULL ADDRESS)
being a member/members of DRB-HICOM Berhad, hereby appoint
(FULL NAME IN BLOCK LETTERS)
of
(FULL ADDRESS)
or failing him/her, the Chairman of the Meeting as my/our proxy to attend and vote for me/us on my/our behalf at the Nineteenth Annual General Meeting of the Company to be held at the Glenmarie
Ballroom, Holiday Inn Glenmarie Kuala Lumpur (Tel: 03-78031000), No. 1, Jalan Usahawan U1/8, Seksyen U1, 40250 Shah Alam, Selangor Darul Ehsan on Thursday, 10 September 2009 at 10.00 a.m.
and at any adjournment thereof.
My/our proxy is to vote on the resolutions as indicated by an “X” in the appropriate spaces below. If this form is returned without any indication as to how the proxy shall vote, the proxy shall vote or
abstain as he/she thinks fit.
Ordinary Resolution
Resolution
To receive and adopt the Audited Financial Statements
1
To approve the declaration of a final gross dividend of 2.5 sen per share less taxation of 25%
2
To re-elect Director – YBhg Dato’ Ibrahim bin Taib
3
To re-elect Director – YBhg Dato’ Noorrizan binti Shafie
4
To re-elect Director – Mr Ooi Teik Huat
5
To re-appoint Director – YBhg Datuk Haji Abdul Rahman bin Mohd Ramli 6
To re-appoint Messrs PricewaterhouseCoopers as Auditors
7
To approve the Proposed Shareholders’ Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature
8
Dated this
day of
Against
Abstain
, 2009
Notes:1.
For
Signature(s)/common seal of shareholder
A member entitled to attend the meeting may appoint not more than two (2) proxies who may but need not be a member of the Company.
2.The instrument appointing a proxy shall be in writing under the hand of the appointor or his attorney duly authorised in writing or, if the appointor is a corporation, either under its common seal or under the hand of an officer or attorney
duly authorised in writing.
3.The instrument appointing a proxy together with the power of attorney or other authority, if any, under which it is signed or a certified copy thereof, shall be deposited at the Share Registrar’s Office, Symphony Share Registrars Sdn Bhd,
Level 26, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than forty-eight (48) hours before the time set for holding this meeting.
fold here for sealing
fold here
Symphony Share Registrars Sdn Bhd
Registrar for DRB-HICOM Berhad
Level 26, Menara Multi-Purpose, Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
(378993-D)
Stamp
DRB-HICOM Berhad (203430-W) (Incorporated in Malaysia)
The Tangram’s dissection puzzle, comprising seven flat shapes of a square, five right triangles and
one parallelogram challenges the mind to construct infinite design possibilities using all seven pieces
without overlapping.
Its analogy represent DRB-HICOM Berhad’s ability to reinvent strategies by utilising the values of available
resources with innovative boldness, in meeting the challenge of change.
Annual Report 2009
By being decisive, the Group will emerge as a resilient, dynamic and sustainably diversified
company of choice, in the transition of its services driven operations, with the synergy of
automotive & defence, and property competencies.
Tel : (03) 2052 8000
Fax: (03) 2052 8099
Annual Report 2009
www.drb-hicom.com
services
automotive
Our single mindedness and
synergistic strength in diversity
has been the bedrock of our
ability, in transforming and
generating profitability beyond
services par excellence.
Leveraging on our cohesive
global partnerships will be
decisive in delivering the
choices of our products, to
the levels of demands and
needs of quality discerning
customers.
property & infrastructure
The property market will be
defined by developers who
posess a distinctive reputation
built on oustanding designs,
with a foundation of balance
and exclusivity in finishings.

Annual Report 2009

Transcription

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