ANNUAL REPORT 2006
DRB-HICOM
DRB-HICOM Berhad
(203430-W)
S
t
www.drb-hicom.com
DRB-HICOM BERHAD (203430-W)
DRB-HICOM Berhad (203430-W)
Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1/8
Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan
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DRB-HICOM
B e rh a d
(203430-W)
Cover Rationale
In the hands of a craftsman, a fragile two dimensional paper can be conjured into
complex three dimensional geometric or organic shapes and forms.
By careful and precise folding of paper along specific crease lines, bending at
predetermined folds, the potentials of creating artistic figures are bound only by the
limitation of one’s imagination.
The culmination of the completed soaring bird redefines DRB HICOM Berhad’s position
as a diversified company of choice. By determining steps and direction through the
pursuit of strategic planning, the Group is shaping the future of its core competencies
through innovative solutions.
ii
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DRB-HICOM
B e rh a d
(203430-W)
Contents
Group’s Six Years Financial Highlights
2
Corporate Profile
4
Caring for the Environment
51
Notice of Annual General Meeting
5
Calendar of Events
52
Statement Accompanying
Notice of Annual General Meeting
7
Corporate Governance
Corporate Information
Financial Calendar
9
Corporate Information
10
Board of Directors
12
Profile of Board of Directors
14
Management
18
Group Corporate Structure
20
Group Corporate Structure by Sector
22
Performance Review
Chairman’s Statement
25
Group Managing Director’s
Review of Operations
30
•Automotive
31
• Services
39
• Property & Infrastructure
43
• Defence
47
Corporate Responsibility
Statement on Corporate Governance
60
Statement on Internal Control
66
Report of the Audit Committee
69
Additional Compliance Information
76
Statement of Directors’ Responsibility
90
Financial Statements
91
Other Information
Share Movement Chart
202
Analysis of Shareholdings
203
Properties of DRB-HICOM Group
206
Form of Proxy
Borang Proksi
A n n u a l
R e p o r t
2 0 0 6
(203430-W)
Net Assets Per Share
Shareholders’ Equity
2.44
2.69
2.35
2,443,683
2,649,215
2,519,157
2,284,864
(RM)
2,342,215
2,163,242
(RM’000)
2.57
Group’s Six Years
Financial Highlights
2.42
B e rh a d
2.48
DRB-HICOM
01
02
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2 0 0 6
05
01
06
02
03
04
05
06
2006
RM’000
2005
RM’000
2004
RM’000
*2003
RM’000
*2002
RM’000
**2001
RM’000
Share Capital
999,772
985,670
980,673
965,115
919,483
912,395
Retained Earnings
409,626
629,274
515,515
358,877
185,887
31,866
2,443,683
2,649,215
2,519,157
2,342,215
2,284,864
2,163,242
664,780
672,157
668,792
623,612
481,053
399,869
Long Term and
Deferred Liabilities
1,954,593
1,528,838
1,570,175
1,776,567
779,875
819,833
Current Assets
3,550,898
3,662,619
3,894,377
3,617,962
3,421,604
3,434,834
Current Liabilities
2,577,671
3,119,525
3,446,474
3,482,756
4,662,384
4,741,473
Minority Interests
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Shareholders’ Equity
03
(203430-W)
447,903
135,206 (1,240,780) (1,319,777)
Property, Plant
and Equipment
2,090,904
2,392,425
2,451,156
2,644,313
2,691,844
2,795,835
Investments
2,640,902
2,453,050
2,204,705
2,038,373
2,008,411
2,008,432
Total Assets
8,525,776
8,628,345
8,652,375
8,459,356
8,280,727
8,202,519
Operating Revenue
3,522,835
4,506,595
4,500,255
4,898,043
4,329,289
4,968,670
3,522,835
543,094
Operating Revenue
(RM’000)
4,506,595
973,227
(sen)
4,500,255
Net Current
Assets/(Liabilities)
Earnings/(Loss) Per Share
4,898,043
**2001
RM’000
4,329,289
*2002
RM’000
4,968,670
*2003
RM’000
01
02
03
04
(20.62)
2004
RM’000
14.39
2005
RM’000
21.66
2006
RM’000
20.01
19.28
B e rh a d
21.03
DRB-HICOM
05
06
235,758
Profit/(Loss) After
Taxation and Minority
Interests
(203,981)
141,407
194,917
206,784
176,112
156,184
21,307
17,688
14,081
13,866
13,156
–
2.44
2.69
2.57
2.42
2.48
2.35
Debt/Equity Ratio (Times)
0.8
0.8
0.9
1.1
1.1
1.2
Return on
Shareholders’ Equity (%)
(8.3)
5.3
7.7
8.8
7.7
7.2
Net Assets
Per Share (RM)
Earnings/(Loss)
Per Share (sen) (Basic)
(RM’000)
01
(20.62)
14.39
20.01
21.66
19.28
21.03
* Certain figures have been restated to conform with the requirements of new MASB
Standards.
**
Profit/(Loss) Before Taxation
05
06
Total Assets
(RM’000)
8,525,776
227,749
04
8,628,345
268,572
03
8,652,375
247,416
8,280,727
198,259
02
8,459,356
(145,580)
8,202,519
Profit/(Loss)
After Taxation
Dividend
Less Taxation
01
411,536
02
03
04
05
(134,008)
391,108
276,702
457,826
389,905
389,905
457,826
276,702
391,108
(134,008)
411,536
Profit/(Loss)
Before Taxation
01
06
02
03
04
05
06
The figures are as disclosed previously.
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DRB-HICOM
B e rh a d
(203430-W)
Corporate Profile
DRB-HICOM Berhad is one of Malaysia’s leading companies listed on the Main Board
of Bursa Malaysia Securities Berhad, playing an integral role in the nation’s road to
industrialisation.
We are diversified yet focused, and have interests in key sectors of the economy mainly:• Automotive
• Services
• Property & Infrastructure
• Defence
DRB-HICOM will continue to look for opportunities that will benefit the Group and
the country.
Automotive
The Group’s leadership within this sector is reflected through niche segmentation and continued strategic alliances with renowned global names such
as Isuzu, Kawasaki, Honda, General Motors, Mahindra and Suzuki. We continuously develop new business potentials and seek new alliances to strengthen
our base further.
Services
The rapidly growing service-based industry represents new opportunities for DRB–HICOM. Our interests amongst others include Information Technology (IT),
solid waste management, financial services, automotive services and leisure.
Property & Infrastructure
DRB–HICOM is extensively involved in retail, commercial and residential property development, and has made strong inroads in the construction sector.
Defence
DRB–Hicom currently provides a variety of defence related work to the Malaysian Armed Forces as well as pursuing other opportunities.
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DRB-HICOM
B e rh a d
(203430-W)
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Sixteenth 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, 40150 Shah Alam,
Selangor Darul Ehsan on Thursday, 21 September 2006 at 3.00 p.m. to transact the following businesses:AS ORDINARY BUSINESS
1.
To receive and adopt the Audited Financial Statements for the financial year ended 31 March 2006 together with the Directors’ and
Auditors‘ Reports thereon.
Resolution 1
2.To approve the declaration of a first and final gross dividend of 2.0 sen per share less income tax of 28% for the financial year ended
31 March 2006.
Resolution 2
3.To re-elect the following Directors who retire in accordance with the Company’s Articles of Association:Under Article 80
(i)
Resolution 3
Ibrahim bin Taib
Under Article 86
(i)Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Resolution 4
(ii)
Tan Sri Ab. Rahman bin Omar
Resolution 5
(iii)
Datuk Haji Abdul Rahman bin Mohd Ramli
Resolution 6
(iv)
Dato’ Syed Mohamad bin Syed Murtaza
Resolution 7
(v)
Ong Ie Cheong
Resolution 8
4.To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors to fix their remuneration.
Resolution 9
AS SPECIAL BUSINESS
To consider and if thought fit, to pass the following resolution, with or without any modification, as Ordinary Resolution of the Company:5.
Directors‘ Fees
“That the payment of Directors’ Fees not exceeding RM800,000 for each financial year commencing 31 March 2006 be approved.”
A n n u a l
Resolution 10
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DRB-HICOM
B e rh a d
(203430-W)
Notice of Annual General Meeting
NOTICE OF DIVIDEND PAYMENT AND BOOK CLOSURE
NOTICE IS HEREBY GIVEN that a first and final gross dividend of 2.0 sen per share less income tax of 28% in respect of the financial year ended
31 March 2006, if approved by the shareholders at the Annual General Meeting, will be paid on 18 October 2006 to the shareholders whose names appear in
the Record of Depositors and the Register of Members of the Company at the close of business on 22 September 2006.
A depositor shall qualify for entitlement to the dividend only in respect of:(a) Shares transferred into the depositor‘s securities account before 4.00 p.m. on 22 September 2006 in respect of transfers; and
(b)Shares bought on Bursa Malaysia Securities Berhad on a cum-entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.
By Order of the Board
CHAN CHOY LIN (MIA 3930)
Company Secretary
Shah Alam, Selangor Darul Ehsan
29 August 2006
NOTES:1.A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy 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, PFA Registration Services Sdn Bhd, 1301, Level 13, Uptown 1, No. 1, Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours
before the time set for holding this meeting or at any adjournment thereof.
EXPLANATORY NOTES ON SPECIAL BUSINESS:Resolution 10, if passed, will empower the Board to pay Directors’ Fees of not exceeding RM800,000 for each financial year commencing 31 March 2006 pursuant to Article 88 of the Company’s
Articles of Association.
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DRB-HICOM
B e rh a d
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Statement Accompanying Notice of Annual General Meeting
Pursuant To Paragraph 8.28 (2) of Bursa Malaysia Securities Berhad’s Listing Requirements
Names Of Directors Who Are Standing For Re-Election
(A)Director retiring by rotation pursuant to Article 80 of the Company’s Articles of Association:(i)
Ibrahim bin Taib
(B)Directors retiring pursuant to Article 86 of the Company’s Articles of Association:(i)Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
(ii)
Tan Sri Ab. Rahman bin Omar
(iii) Datuk Haji Abdul Rahman bin Mohd Ramli
(iv) Dato’ Syed Mohamad bin Syed Murtaza
(v)
Ong Ie Cheong
The details of the abovenamed Directors who are standing for re-election and their attendances at Board Meetings are set out in the Directors‘
Profiles (pages 14 to 17 of the Annual Report). None of the abovenamed Directors as at 24 July 2006 held any interest in shares in the Company
or in its related corporations.
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DRB-HICOM
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Corporate Information
Financial Calendar
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Corporate Information
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Board of Directors
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Profile of Directors
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Management
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Group Corporate Structure
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Group Corporate Structure by Sector
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DRB-HICOM
B e rh a d
(203430-W)
Financial Calendar
FINANCIAL YEAR END
31 March 2006
ANNOUNCEMENT OF RESULTS
First Quarter 29 August 2005
Second Quarter 28 November 2005
Third Quarter 27 February 2006
Fourth Quarter 30 May 2006
PUBLISHED ANNUAL REPORT AND FINANCIAL STATEMENTS
29 August 2006
ANNUAL GENERAL MEETING
21 September 2006
DIVIDENDS
First and Final
• Announcement Date
30 May 2006
• Record Date
22 September 2006
• Payment Date
18 October 2006
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DRB-HICOM
B e rh a d
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Corporate Information
as at 24 July 2006
directors
audit committee
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Chairman
Datuk Haji Abdul Rahman bin Mohd Ramli
Members
Dato’ Hjh. Safiah bt Basrah
Dato’ Syed Mohamad bin Syed Murtaza
Ong Ie Cheong
Chairman/Independent Non-Executive Director
Datuk Haji Mohd Khamil bin Jamil
Group Managing Director
Tan Sri Ab. Rahman bin Omar
Non-Independent Executive Director/Executive Advisor
Dato’ Hjh. Safiah bt Basrah
Non-Independent Non-Executive Director
Ibrahim bin Taib
Remuneration Committee
Chairman
Dato’ Syed Mohamad bin Syed Murtaza
Members
Datuk Haji Abdul Rahman bin Mohd Ramli
Ong Ie Cheong
Datuk Haji Mohd Khamil bin Jamil (ex-officio)
Non-Independent Non-Executive Director
Datuk Haji Abdul Rahman bin Mohd Ramli
Independent Non-Executive Director
Dato’ Syed Mohamad bin Syed Murtaza
Independent Non-Executive Director
Ong Ie Cheong
Independent Non-Executive Director
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10
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Nomination Committee
Chairman
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Members
Datuk Haji Abdul Rahman bin Mohd Ramli
Ibrahim bin Taib
DRB-HICOM
B e rh a d
(203430-W)
secretary
AUDITORS
Chan Choy Lin (MIA 3930)
PricewaterhouseCoopers
Chartered Accountants
11th Floor, Wisma Sime Darby
Registered office
Jalan Raja Laut
50350 Kuala Lumpur
Level 5, Wisma DRB-HICOM
Tel : (03) 2693 1077
No. 2, Jalan Usahawan U1/8
Fax : (03) 2693 0997
Seksyen U1, 40150 Shah Alam
Selangor Darul Ehsan
Tel : (03) 2052 8000
BANKS
Fax : (03) 2052 8118
Affin Bank Berhad
AmBank Berhad
REGISTRAR
Bumiputra-Commerce Bank Berhad
Malayan Banking Berhad
PFA Registration Services Sdn Bhd
RHB Bank Berhad
1301, Level 13, Uptown 1
No. 1, Jalan SS21/58
Damansara Uptown
STOCK EXCHANGE LISTING
47400 Petaling Jaya
Selangor Darul Ehsan
Main Board of Bursa Malaysia Securities Berhad
Tel : (03) 7725 4888
Fax : (03) 7722 2311
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DRB-HICOM
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Board of Directors
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Chairman/Independent Non-Executive Director
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Datuk Haji Mohd
Khamil bin Jamil
Group Managing Director
Dato' Hjh. Safiah bt Basrah
Non-Independent
Non-Executive Director
Datuk Haji Abdul Rahman
bin Mohd Ramli
Dato’ Syed Mohamad
bin Syed Murtaza
Independent
Non-Executive Director
Independent
Non-Executive Director
Tan Sri Ab. Rahman bin Omar
Non-Independent Executive
Director/Executive Advisor
Ibrahim bin Taib
Non-Independent
Non-Executive Director
Ong Ie Cheong
Independent
Non-Executive Director
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DRB-HICOM
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Profile of Directors
Y.A.M. Tan Sri Dato’ Seri Syed
Anwar Jamalullail
Chairman/
Independent Non-Executive Director
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail,
a Malaysian, aged 53, was appointed Chairman
when he joined the Board on 28 October 2005. He
is also Chairman of the Nomination Committee.
He is a Chartered Accountant and Certified
Practising Accountant. He holds a Bachelor of
Arts (Accounting) Degree from Macquarie University, Sydney, Australia.
Tan Sri Dato’ Seri Syed Anwar started his career as a financial accountant
with Malaysia Airlines System Berhad in 1975, then joined Price Waterhouse
(Australia) as Senior Auditor in 1979. 3 years later he joined D & C Nomura
Merchant Bank Berhad as Manager, Investment. In 1985, he joined Amanah
Merchant Bank Berhad as Manager, Corporate Finance. After pursuing his own
business from 1989 to October 1998, he joined Amanah Capital Partners Berhad
as Group Managing Director, resigning on 1 March 2002. He served as the
Chairman of Malaysian Resources Corporation Berhad and Media Prima Berhad
until his resignation on 12 January 2005 and 12 March 2005 respectively.
Tan Sri Dato’ Seri Syed Anwar is also the Chairman of EON Capital Berhad, HICOM
Holdings Berhad, HICOM Berhad, Uni. Asia Life Assurance Berhad, Uni. Asia General
Insurance Berhad and Cahya Mata Sarawak Berhad, and also sits on the boards of
Nestle (Malaysia) Berhad, Maxis Communications Berhad and several private limited
companies. He is Chairman of the Investment Panel of Lembaga Tabung Haji.
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Datuk Haji Mohd Khamil
bin Jamil
Group Managing Director
Y.Bhg. Datuk Haji Mohd Khamil bin
Jamil, a Malaysian, aged 50, was
appointed to the Board on 19 July
2005 and became Group Managing
Director on 1 March 2006. He is
also a member of the Remuneration
Committee (ex-officio). He holds a
Bachelor of Laws (Honours) Degree from 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 (BBMB) from August 1980 until December 1989. He was
called to the Malaysia Bar in September 1990 and was a practising partner
of several legal firms before venturing into business in 2001.
Datuk Haji Mohd Khamil also sits on the boards of Edaran Otomobil
Nasional Berhad, HICOM Holdings Berhad, HICOM Berhad, Horsedale
Development Berhad and several private limited companies.
Tan Sri Dato’ Seri Syed Anwar does not have any family relationship with any
other Director and/or major shareholder of the Company and has no conflict of
interest with the Company. He has had no convictions for offences within the
past ten years.
Datuk Haji Mohd Khamil is a past major shareholder of the Company by
virtue of his deemed interest through Etika Strategi Sdn Bhd which holds
approximately 15.5% equity interest in the Company. He ceased to be a
substantial shareholder of the Company on 17 March 2006 following the
reduction of his shareholding in Etika Strategi Sdn Bhd to 10%. He does not
have any family relationship with any other Director and/or major shareholder
of the Company and has no conflict of interest with the Company. He has
had no convictions for offences within the past ten years.
Tan Sri Dato’ Seri Syed Anwar attended 5 out of 5 Board Meetings of the Company
held in the financial year ended 31 March 2006 following his appointment to the
Board on 28 October 2005.
Datuk Haji Mohd Khamil attended 6 out of 6 Board Meetings of the Company
held in the financial year ended 31 March 2006 following his appointment to
the Board on 19 July 2005.
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DRB-HICOM
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Dato’ Hjh. Safiah
bt Basrah
Non-Independent
Non-Executive Director
Y.Bhg. Dato’ Hjh. Safiah bt Basrah, a
Malaysian, aged 55, was appointed to
the Board on 18 March 2004. She is
a member of the Audit Committee.
She holds a Bachelor of Economics
(Honours) Degree from the University
of Malaya, Malaysia.
Dato’ Hjh. Safiah is currently the Secretary, Monitoring and Control Division,
Treasury, Ministry of Finance. She started her career in the Civil Service in
1973 and has served in various positions with Public Services Department,
Ministry of Health, Ministry of Agriculture, Economic Planning Unit, Prime
Minister’s Department, Ministry of Defence and Ministry of Finance.
Dato’ Hjh. Safiah also sits on the boards of HICOM Holdings Berhad,
HICOM Berhad, Perbadanan Kemajuan Ekonomi Negeri Perlis (PKENPs)
and Lembaga Kemajuan Terengganu Tengah (KETENGAH).
Ibrahim bin Taib
Non-Independent Non-Executive Director
Encik Ibrahim bin Taib, a Malaysian, aged
51, 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.
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 Senior General Manager
of Legal Department.
Dato’ Hjh. Safiah 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 for offences within
the past ten years.
Ibrahim also sits on the boards of Bandar Eco-Setia Sdn Bhd, Hartanah
Progresif Sdn Bhd and Kumpulan Wang Amanah Pencen.
Dato’ Hjh. Safiah attended all eight Board Meetings of the Company held
in the financial year ended 31 March 2006.
Ibrahim 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.
Ibrahim attended all eight Board Meetings of the Company held in the
financial year ended 31 March 2006.
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DRB-HICOM
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Profile of Directors
Tan Sri Ab. Rahman bin Omar
Non-Independent Executive Director
Y.Bhg. Tan Sri Ab. Rahman bin Omar,
a Malaysian, aged 59, was appointed to
the Board on 16 December 2005. He is
also Executive Advisor to the Automotive
Division. He holds a Bachelor of Economics
(Honours) Degree from the University of
Malaya, Malaysia.
From 1970 to 1973, Tan Sri Ab. Rahman served in the Administration
& Diplomatic Service of the various Government Departments i.e. the
Statistics Department, the Ministry of Commerce & Industry and the
Ministry of Primary Industry before opting out of civil service. He was with
Pineapple Cannery Malaysia Sdn Bhd from December 1973 to April 1980,
and with Perusahaan Sadur Timah Malaysia Berhad from May 1980 to July
1995. He was Managing Director of Perusahaan Otomobil Kedua Sdn Bhd
from 1996 to April 2004.
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Datuk Haji Abdul Rahman
bin Mohd Ramli
Independent Non-Executive Director
Y.Bhg. Datuk Haji Abdul Rahman bin
Mohd Ramli, a Malaysian, aged 67,
was appointed to the Board on 28
October 2005. He is also 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.
Tan Sri Ab. Rahman is the Chairman of Edaran Otomobil Nasional Berhad,
Perusahaan Sadur Timah Malaysia Berhad and Chemical Company of
Malaysia Berhad, and also sits on the boards of Wah Seong Corporation
Berhad, HICOM Holdings Berhad and several private limited companies.
Datuk Haji Abdul Rahman is the Chairman of Horsedale Development
Berhad and Kenyir Splendour Berhad, and also sits on the boards of
Malayan Banking Berhad, Maybank International (L) Ltd., Maybank (PNG)
Ltd, Kuala Lumpur – Kepong Berhad, Malaysia National Insurance Berhad,
Takaful Nasional Sdn Bhd and several other private limited companies.
Tan Sri Ab. Rahman does not have any family relationship with any other
Director and/or major shareholder of the Company and has no conflict of
interest with the Company. He has had no convictions for offences within
the past ten years.
Datuk Haji Abdul Rahman does not have any family relationship with any
other Director and/or major shareholder of the Company and has no conflict
of interest with the Company. He has had no convictions for offences within
the past ten years.
Tan Sri Ab. Rahman attended 4 out of 4 Board Meetings of the Company
held in the financial year ended 31 March 2006 following his appointment
to the Board on 16 December 2005.
Datuk Haji Abdul Rahman attended 5 out 5 Board Meetings of the Company
held in the financial year ended 31 March 2006 following his appointment
to the Board on 28 October 2005.
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DRB-HICOM
B e rh a d
(203430-W)
Dato’ Syed Mohamad
bin Syed Murtaza
Independent Non-Executive Director
Y.Bhg. Dato’ Syed Mohamad bin Syed
Murtaza, a Malaysian, aged 58, was
appointed to the Board on 28 October
2005. He is also Chairman of the
Remuneration Committee and a
member of the Audit Committee.
interest with the Company. He has had no convictions for offences within
the past ten years.
Dato’ Syed Mohamad attended 4 out of 5 Board Meetings of the Company
held in the financial year ended 31 March 2006 following his appointment
to the Board on 28 October 2005.
Ong Ie Cheong
Independent Non-Executive Director
Dato’ Syed Mohamad has over 35 years of vast experience in business
industries. He completed his high school certificate at Penang Free
School. He then joined Kah Motors and has since been appointed to key
positions in various organisations. He has gained wide experience whilst
holding various positions in companies such as Shell Malaysia, Penang
Port Commission, etc.
Mr Ong Ie Cheong, a Malaysian, aged 65,
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.
Currently, Dato’ Syed Mohamad is the Managing Director of Armstrong
Auto Parts Sdn Bhd and Armstrong Cycle Parts (Sdn) Berhad. He also
heads Penang Tourists Centre Bhd, MITTAS Bhd, Motorcycle, Scooter
Assembly & Distributor Association of Malaysia and Usains Group of
Companies. He is the elected president of Malaysia Amateur Athletic
Union and The Federation of Asian Motorcycle Industries.
Ong Ie Cheong was the Executive Chairman
of PPB Group Bhd, Managing Director of Central Sugars Refinery Sdn
Bhd and a Board member of PPB Oil Palms Berhad and Tradewinds (M)
Berhad. He is currently a Director of JP Logistics Sdn Bhd, a subsidiary
of Johor Port Berhad and several private limited companies.
Dato’ Syed Mohamad is the Chairman of Hunza Consolidation Berhad
and sits on the boards of Universiti Sains Malaysia, Yayasan Bumiputra
Pulau Pinang Bhd, MITTAS Bhd, Boon Siew Credit Bhd, Penang Tourist
Centre Bhd, Tourism Entrepreneur Centre Bhd and several private limited
companies. In addition he has held many other appointments at State and
national levels.
Ong Ie Cheong 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.
Ong Ie Cheong attended 5 out of 5 Board Meetings of the Company held
in the financial year ended 31 March 2006 following his appointment to the
Board on 28 October 2005.
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
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17
DRB-HICOM
B e rh a d
(203430-W)
Management
From left to right
Sitting - from left to right
Datuk Haji Mohd
Khamil bin Jamil
Haji Mohd
Redza Shah
bin Abdul Wahid
Group Managing
Director
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Group Chief
Operating Officer
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Back - from left to right
Haji Hasni
bin Harun
Tan Sri Ab.
Rahman bin Omar
Datuk Abu Samah
bin Bachik
Chan Choy
Lin, Carol
Haji Abd Majid
bin Shah Mohd
Abdul Malek
bin Abdul Majid
Group Chief
Financial Officer
Executive Advisor,
Automotive
Senior Group
Director, Services
& Institutional
Relations
Principal Company
Secretary
Head, Internal
Audit - EIP
Group Director,
Human Resource
& Administration
DRB-HICOM
B e rh a d
(203430-W)
Nik Hamdam
bin Nik Hassan
Haji Mohd Paudzi
bin Abdullah
Datuk William
Chong Wei Yoon
Dato’ Ir. Zahari
bin Abd Ghani
Head, Automotive
Distribution
Acting Head,
Automotive
Component &
Engineering
Group Director,
Assigned Business
Head, Infrastructure
& Contract
Amir bin Salleh
Group Director,
Property
Haji Mohd Zuhuri
bin Ahmad
Nik Najihah
binti Nik Wan
Group Director,
Public Affairs &
Investor Relations
Acting Head,
Legal Affairs
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Lim Teck Gam
Head, Group
Procurement
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19
DRB-HICOM
B e rh a d
(203430-W)
Group Corporate Structure
DRB-HICOM
Pusat Pemeriksaan Kenderaan
Berkomputer Sdn. Bhd.
E.I. : 100%
as at 31 March 2006
Motosikal Dan Enjin
Nasional Sdn. Bhd.
E.I. : 55%
Malaysian Truck &
Bus Sdn. Bhd.
E.I. : 80%
Puspakom Teknik
Sdn. Bhd.
E.I. : 100%
Edaran Modenas
Sdn. Bhd.
E.I. : 55%
Flora Areana
Sdn. Bhd.
E.I. : 100%
PT Modenas Putra
Motor Indonesia
E.I. : 31.90%
HICOM Engineering
Sdn. Bhd.
E.I. : 100%
Desa Puchong
Sdn. Bhd.
E.I. : 100%
Scott & English Electronics
Holdings Sdn. Bhd.
E.I. : 70%
HICOM Communications
Sdn. Bhd.
E.I. : 100%
HICOM Network
Services Sdn. Bhd.
E.I. : 100%
HICOM Teck-See
Manufacturing Malaysia Sdn. Bhd.
E.I. : 51%
HICOM Teleservices
Sdn. Bhd.
E.I. : 100%
HICOM Automotive
Plastic (Thailand) Ltd.
E.I. : 50.99%
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Ladang Gadek Development
Sdn. Bhd.
E.I. : 100%
NSE Development
Sdn. Bhd.
E.I. : 100%
Bukit Kledek
Development Sdn. Bhd.
E.I. : 100%
Oriental Summit
Industries Sdn. Bhd.
E.I. : 70%
KLAS Engineering
Services Sdn. Bhd.
E.I. : 60%
Proton City Development
Corporation Sdn. Bhd.
E.I. : 60%
DRB-HICOM Auto
Solutions Sdn. Bhd.
E.I. : 100%
HICOM PetroPipes Sdn. Bhd.
E.I. : 51%
Equality Services
Sdn. Bhd.
E.I. : 100%
HICOM-HONDA
Manufacturing Malaysia Sdn. Bhd.
E.I. : 48%
HICOM-YAMAHA
Manufacturing Malaysia Sdn. Bhd.
E.I. : 45%
HICOM-SUZUKI
Manufacturing Malaysia Sdn. Bhd.
E.I. : 45%
PHN Industry Sdn. Bhd.
Siemens VDO Instruments
MY Sdn. Bhd.
E.I. : 33.33%
ZF Steerings (Malaysia)
Sdn. Bhd.
E.I. : 30%
TRW Steering &
Suspension (Malaysia) Sdn. Bhd.
E.I. : 20%
Boustead Heah Joo
Seang Sdn. Bhd.
E.I. : 25%
Niro Ceramic (M)
Sdn. Bhd.
E.I. : 24.50%
MBM Alam Flora W. L. L.
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HICOM Vertex
Sdn. Bhd.
E.I. : 51%
HICOM Technical and
Engineering Services Sdn. Bhd.
E.I. : 100%
HICOM Ventures
Sdn. Bhd.
E.I. : 100%
HICOM Environmental
Sdn. Bhd.
E.I. : 51%
Automotive Components
Engineering Centre Sdn. Bhd.
E.I. : 70%
E.I. : 20.20%
e
E.I. : 55%
OSI Manufacturing
Sdn. Bhd.
E.I. : 70%
EON Capital Berhad
R
Alam Flora Sdn. Bhd.
HICOM Dewan
Development Sdn. Bhd.
E.I. : 100%
Edaran Otomobil
Nasional Berhad
E.I. : 29.31%
l
Ladang Kupang
Development Sdn. Bhd.
E.I. : 100%
E.I. 100%
KL Airport Services
Sdn. Bhd.
E.I. : 60%
E.I. : 70%
A
E.I. 100%
HICOM Holdings Berhad
The One Mix
Sdn. Bhd.
E.I. : 56.28%
HICOM Diecastings
Sdn. Bhd.
E.I. : 100%
Suzuki Malaysia
Automobile Sdn. Bhd.
E.I. : 100%
Gadek (Malaysia) Berhad
Mega Consolidated
Sdn. Bhd.
E.I. 100%
Spegabina
Sdn. Bhd.
E.I. : 70%
PT HICOM BMS
20
DRB-HICOM Defence
Technologies Sdn. Bhd.
E.I. 100%
Perspec Prime (Malaysia)
Sdn. Bhd.
E.I. : 70%
Multi Automotive Service
and Assist Sdn. Bhd.
E.I. : 55%
Scott & English
Electronics Sdn. Bhd.
E.I. : 70%
DRB-HICOM Information
Technologies Sdn. Bhd.
E.I. : 90%
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E.I. : 42.50%
E.I. : 48%
Model Building Maintenance Dallah
AlamFlora Waste Management Services LLC
E.I. : 33.33%
Navi & Map Sdn. Bhd.
E.I. : 20%
DRB-HICOM
B e rh a d
HICOMOBIL Sdn. Bhd.
E.I. : 100%
(203430-W)
Honda Malaysia Sdn. Bhd.
Isuzu Malaysia Sdn. Bhd.
Gerbang Perdana Sdn. Bhd.
Imatex Berhad
E.I. : 34%
E.I. : 49%
E.I. : 20%
E.I. : 100%
Intrakota Komposit Sdn. Bhd.
Imatex Management
Services Sdn. Bhd.
E.I. : 100%
Uni.Asia Capital
Sdn. Bhd.
E.I. : 51%
Uni.Asia General
Insurance Berhad
E.I. : 34.73%
Mega Komposit Auto
Sdn. Bhd.
E.I. : 70%
Syarikat Pengangkutan
Malaysia Sendirian Berhad
E.I. : 69.99%
Intrakota Consolidated Berhad
S. J. Binateknik Sdn. Bhd.
E.I. : 34.73%
USF-HICOM (Malaysia)
Sdn. Bhd.
E.I. : 100%
Scott & English
(Malaysia) Sdn. Bhd.
E.I. : 70%
Automotive Corporation
(Malaysia) Sdn. Bhd.
E.I. : 100%
Directional (Malaysia)
Sdn. Bhd.
E.I. : 100%
Euro Truck & Bus
(Malaysia) Sdn. Bhd.
E.I. : 100%
Glenmarie Cove
Development Sdn. Bhd.
E.I. : 89.50%
Auto Prominence (M)
Sdn. Bhd.
E.I. : 100%
Scott & English
(Cambodia) Ltd.
E.I. : 70%
Isti-Emas Sdn. Bhd.
Comtrac-Concrete
Constructions Sdn. Bhd.
E.I. : 34.30%
HB Property
Development Sdn. Bhd.
E.I. : 100%
Automotive Manufacturers
(Malaysia) Sdn. Bhd.
E.I. : 93%
Myanmar Scott & English
Company Ltd.
E.I. : 70%
Comtrac Premises
Sdn. Bhd.
E.I. : 70%
Connemara Development
Sdn. Bhd.
E.I. : 100%
Stagwell Sdn. Bhd.
Scott & English Trading
(Sarawak) Sdn. Bhd.
E.I. : 35.70%
Comtrac Precast
Sdn. Bhd.
E.I. : 67.90%
HICOM Megah Sdn. Bhd.
Ciri-Alam Bina Sdn. Bhd.
E.I. : 56%
HICOM-TNB Properties
Sdn. Bhd.
E.I. : 42%
Sectorial
Services
Property & Construction
Investment Holding
Note
Dormant
E.I. DRB - HICOM Group’s Effective Interest
*
Under voluntary liquidation
Toong Fong Omnibus
Company Sendirian Berhad
E.I. : 39.06%
E.I. : 100%
Comtrac Businessworld
Sdn. Bhd.
E.I. : 35%
Automotive
Airport Coach
Sdn. Bhd.
E.I. : 25.56%
HICOM Berhad
Comtrac Trading
Sdn. Bhd.
E.I. : 70%
E.I. : 100%
E.I. : 42%
E.I. : 70%
HICOM United Leasing
Sdn. Bhd.
E.I. : 70%
Comtrac-Sabkar
Development Sdn. Bhd.
E.I. : 35.70%
Comtrac Glenview
Sdn. Bhd.
E.I. : 35.70%
E.I. : 74.63%
Corwin Holding Pte. Ltd.
E.I. : 67.17%
HICOM-Selangor Marine
Management Sdn. Bhd.*
E.I. : 51%
E.I. : 70%
E.I. : 47.34%
Comtrac Sdn. Bhd.
E.I. : 70%
E.I. : 29.99%
S. J. Kenderaan Sdn. Bhd.
Seains Pte. Ltd.*
Automotive Corporation
Holdings Sdn. Bhd.
E.I. : 100%
Marak Unggul Sdn. Bhd.
Gemilang Komposit
Auto Sdn. Bhd.
E.I. : 70%
Uni.Asia Life
Assurance Berhad
E.I. : 51%
USF-HICOM Holdings
Sdn. Bhd.
E.I. : 100%
DRB-HICOM Export
Corporation Sdn. Bhd.
E.I. : 77.25%
E.I. : 70%
HICOM Properties
Sdn. Bhd.
E.I. : 100%
Kenyir Splendour
Berhad
E.I. : 100%
Puncak Permai
Sdn. Bhd.
E.I. : 58%
HICOM Facility
Management Berhad
E.I. : 100%
Sucasa Sdn. Bhd.
E.I. : 30%
Horsedale Development
Berhad
E.I. : 70.60%
HICOM Menang
Properties Sdn. Bhd.
E.I. : 51%
HICOM-Gamuda
Development Sdn. Bhd.
E.I. : 35.30%
HICOM Indungan
Sdn. Bhd.
E.I. : 100%
Kesturi Hektar
Sdn. Bhd.
E.I. : 70.60%
Rebak Island Marina
Berhad
E.I. : 60%
HICOM Tan & Tan
Sdn. Bhd.
E.I. : 50% + 1 share
Glenview Management
Corporation Sdn. Bhd.
E.I. : 35.70%
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21
DRB-HICOM
B e rh a d
(203430-W)
Group Corporate Structure by Sector
(Operating Companies)
as at 31 March 2006
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automotive
Services
100.00%
HICOM Diecastings Sdn. Bhd.
100.00%
Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd.
100.00%
USF – HICOM (Malaysia) Sdn. Bhd.
100.00%
HICOM Communications Sdn. Bhd.
100.00%
Automotive Corporation (Malaysia) Sdn. Bhd.
100.00%
HICOM Teleservices Sdn. Bhd.
100.00%
Directional (Malaysia) Sdn. Bhd.
100.00%
HICOM Network Services Sdn. Bhd.
100.00%
HICOM Engineering Sdn. Bhd.
90.00%
DRB-HICOM Information Technologies Sdn. Bhd.
100.00%
HICOMOBIL Sdn. Bhd.
70.00%
Scott & English (Malaysia) Sdn. Bhd.
100.00%
SUZUKI Malaysia Automobile Sdn. Bhd.
70.00%
Scott & English Electronics Sdn. Bhd.
93.00%
Automotive Manufactures (Malaysia) Sdn. Bhd.
60.00%
KL Airport Services Sdn. Bhd.
80.00%
Malaysian Truck & Bus Sdn. Bhd.
55.00%
Alam Flora Sdn. Bhd.
70.00%
Oriental Summit Industries Sdn. Bhd.
51.00%
Uni. Asia Life Assurance Berhad
55.00%
Motosikal Dan Enjin Nasional Sdn. Bhd.
34.73%
Uni. Asia General Insurance Berhad
55.00%
Edaran Modenas Sdn. Bhd.
48.00%
MBM Alam Flora W.L.L.
Sucasa Sdn. Bhd.
51.00%
HICOM – Teck See Manufacturing Malaysia Sdn. Bhd.
30.00%
50.99%
HICOM Automotive Plastic ( Thailand ) Ltd.
33.33%Model Buiding Maintenance Dallah Alam Flora Waste
Management Services L.L.C.
49.00%
Isuzu Malaysia Sdn. Bhd.
48.00%
HICOM – HONDA Manufacturing Malaysia Sdn. Bhd.
45.00%
HICOM – SUZUKI Manufacturing Malaysia Sdn. Bhd.
45.00%
HICOM – YAMAHA Manufacturing Malaysia Sdn. Bhd.
42.50%
PHN Industry Sdn. Bhd.
34.00%
Honda Malaysia Sdn. Bhd.
33.33%
Siemens VDO Instruments MY Sdn. Bhd.
30.00%
ZF Steerings (Malaysia) Sdn. Bhd.
29.31%
Edaran Otomobil Nasional Sdn. Bhd.
20.00%
TRW Steering and Suspension (Malaysia) Sdn. Bhd.
20.00%
Navi & Map Sdn. Bhd.
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20.20%
EON Capital Berhad
DRB-HICOM
B e rh a d
(203430-W)
Property & Infrastructure
Defence
100.00%
100.00%
Imatex Berhad
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%
NSE Development Sdn. Bhd.
100.00%
Ladang Kupang Development Sdn. Bhd.
100.00%
Ladang Gadek Development Sdn. Bhd.
100.00%
Desa Puchong Sdn. Bhd.
89.50%
Glenmarie Cove Development Sdn. Bhd.
74.63%
HICOM Megah Sdn. Bhd.
70.60%
Horsedale Development Berhad
70.00%
Perspec Prime (Malaysia) Sdn. Bhd.
70.00%
Comtrac Sdn. Bhd.
60.00%
Proton City Development Corporation Sdn. Bhd.
60.00%
Rebak Island Marina Berhad
51.00%
HICOM Menang Properties Sdn. Bhd.
35.30%
HICOM – Gamuda Development Sdn. Bhd.
25.00%
Boustead Heah Joo Seang Sdn. Bhd.
24.50%
Niro Ceramic (M) Sdn. Bhd.
20.00%
Gerbang Perdana Sdn. Bhd.
DRB–HICOM Defence Technologies Sdn. Bhd.
Subsidiary Companies
Jointly Controlled Entities
Associated Companies
Represent Group effective interest in the Companies %
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23
DRB-HICOM
B e rh a d
(203430-W)
Performance Review
24
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Chairman’s Statement
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Group Managing Director’s Review of Operations
30
• Automotive
31
• Services
39
• Property & Infrastructure
43
• Defence
47
DRB-HICOM
B e rh a d
(203430-W)
Chairman’s Statement
Dear Shareholders,
It is my honour to present, on behalf of the Board of Directors, the Annual
Report and the audited financial statements of DRB-HICOM Berhad
for the financial year ended 31 March 2006. It gives me great pleasure
to address you for the first time since my appointment as Chairman
of DRB-HICOM Berhad on 28 October 2005. The financial year under
review marked a period of change for the Group with the entry of a new
controlling shareholder and a new Management team. As we turn a new
chapter in the history of DRB-HICOM, much has already been achieved to
take us into a period of long-term growth and sustainability.
Overview
The theme of change and challenges presently form a common thread
across corporate Malaysia. Today’s operating climate has become fiercely
competitive and globalisation has become a primary imperative for the
survival of most companies. The DRB-HICOM Group is keenly aware of the
industry’s evolving landscape and competitive environment. Strategically,
we are moving with greater agility to provide our list of growing customers
with the widest breadth of products and services. Toward this end,
DRB-HICOM is aggressively broadening its business platform by identifying
and focusing on areas that hold the most promise.
We have successfully enriched our product mix, forged new partnerships
and strengthened existing alliances to build the Group’s presence in the
domestic market.
Ladies and gentlemen,
The year under review was significant for many reasons, in particular the
expansion of our defence business, which has emerged as a new pillar
of growth for the Group. DRB-HICOM Defence Technologies Sdn. Bhd.
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25
DRB-HICOM
B e rh a d
(203430-W)
Chairman’s Statement
(DEFTECH), which is spearheading the Group’s venture in the military
business, has strengthened its position as the country’s leading landbased supplier of defence vehicles. It secured its first overseas contract
to supply 69 units of HICOM Handalan II to the Royal Brunei Armed
Forces, and also 108 units of HICOM Handalan to the Malaysian Army.
DEFTECH is strategically positioned to tap regional markets to boost
its exports and diversify its income base, and is expected to contribute
significantly to DRB-HICOM Berhad’s revenue in the coming years.
The roll-out of the country’s National Automotive Policy (NAP) in March
2006 marked an exciting development for the industry and for DRBHICOM Berhad which is the country’s single largest integrated automotive
company. The NAP offers immense opportunities for both local and
foreign automotive players to enhance and deepen their foothold in
Malaysia, which remains the top passenger car market in Southeast Asia.
Companies under the Group’s automotive sector stand to benefit from
incentives to enhance local capabilities, increase exports and promote
automotive components and parts manufacturing.
The NAP has also earmarked Pekan, Pahang, as one of five automotive
hubs in the country. This will be a strong impetus to attract foreign
investors to assemble their vehicles in Pekan, particularly in the Group’s
plant. Despite a tough marketplace characterised by stiff competition,
the automotive sector remained the Group’s No. 1 revenue earner,
contributing RM2.1 billion for the financial year ended 31 March 2006,
and accounting for 58% of total Group revenue.
During the year, the Group expanded its product line-up and built its
multi-brand business for Honda, Suzuki, India’s Mahindra and Mahindra,
Chevrolet and Isuzu. Its assembly plant in Pekan received a further
boost following the appointment of Malaysian Truck & Bus Sdn. Bhd.
as the first assembler in Asia for the new S-Class Mercedes luxury
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car. DaimlerChrysler also widened its assembly operations in Pekan to
include the Actros trucks and bus chassis. Another subsidiary, Automotive
Manufacturers (Malaysia) Sdn. Bhd., began mass assembly of two new
models for Naza and expects to commence the assembly of the Suzuki
Swift model in 2007. The nation’s largest automotive distributor, Edaran
Otomobil Nasional Berhad (EON), remains committed to its core business,
as Super Dealer for Perusahaan Otomobil Nasional Berhad (PROTON) but
it has widened its reach in an effort to diversify and maximise its earnings
potential. EON began distributing the Mitsubishi marque with the sales
of Colt, Lancer 1.6, Lancer Evo, L200, Grandis and Outlander models
in July 2005, and expects to boost its platform to include the Audi and
Hyundai Inokom brands. Another unit, Honda Malaysia Sdn. Bhd., marked
a bumper year as sales hit a record high in 2005. It launched new models
and expanded exports of its Constant Velocity Joint (CVJ) components to
the United Kingdom and Turkey in September 2005.
The Group’s Services sector also turned in an encouraging performance,
generating RM1.3 billion for the year under review, contributing 37%
to the Group’s total revenue. Companies within this segment expanded
their scope with new branches and products, implemented continuous
cost-cutting measures and leveraged on new technologies to boost
operational efficiency to tide through a difficult operating climate.
Meanwhile, the Group’s Property and Infrastructure sector was resilient
despite a second year of construction slump. The Group repositioned
its hotel in Glenmarie as the “Holiday Inn Glenmarie Kuala Lumpur”
in October 2005 while its Rebak Marina Resort in Langkawi will be
branded as a “Taj Hotel” in November 2006 after refurbishing works
are completed. The Proton City project, the Group’s largest property
development project, expanded rapidly during the year with residential
and commercial development activities and is on track to evolve into a
self-sufficient township.
DRB-HICOM
B e rh a d
(203430-W)
Financial Highlights
where the effects of the global economic pendulum and other external
For the financial year under review, DRB-HICOM has taken proactive
factors have affected us, but we have bounced back with renewed zeal
measures to review its overall operations, assets and investments, with
the aim of realigning its core businesses and to focus on the way forward.
In assessing its long-term business strategy, DRB-HICOM has made
certain adjustments for non-operational items that have impacted the
and enthusiasm and expect to do so again. The losses incurred mainly
reflect an adjustment to values and do not have impact on DRB-HICOM’s
cash-flow position. Hence, DRB-HICOM has recommended a first and final
gross dividend of 2 sen per share for the financial year under review.
Group’s earnings. As a result, DRB-HICOM Group incurred a loss before
tax of RM134 million for the financial year ended 31 March 2006, on the
back of revenue of RM3.5 billion.
Key Initiatives
DRB-HICOM is pleased to reach an amicable settlement with the Government
A significant portion of the losses was due to reversal of profits amounting
on the Electrified Double Track Project variation orders in May 2006.
to RM149.5 million that were previously recognised in respect of the
DRB-HICOM is thankful that the long-drawn episode has obtained the
Electrified Double Track (EDT) Project. The Group has also wrote-off
support and understanding of the Government, the relevant Ministries,
preliminary expenses in respect of others sectors of the EDT Project
authorities and KTMB. We record our appreciation to the consultants and
totalling RM19 million. The Group also took cognisance of asset
sub-contractors for their patience and understanding.
impairment on its non-core property investments namely Rebak Marina
Resort in Langkawi, Kenyir Lakeview Resort in Terengganu and Tekka
DRB-HICOM has also taken aggressive measures to improve its future
Mall in Singapore. The impairment charge of RM157 million arose from
landscape. The Group, through its wholly owned subsidiary DRB-HICOM
differences in existing net book values and the estimated current market
Auto Solutions Sdn. Bhd., has now obtained Approved Permits (AP) to
price of the above properties. In addition, DRB-HICOM had undertaken a
directly import all makes and models of vehicles for the Group’s franchise
Voluntary Separation Scheme (VSS) in March 2006 at the Corporate Office
and distribution. Steps have been taken to manage our operational costs
costing RM22 million as part of efforts in rightsizing its human capital.
and trim excesses to create a leaner and more efficient organisation.
We continue to tap on technological advancements to increase our work
Had these prudent measures and adjustments not been taken, the
competency and boost our yields. We have completed our IT Business
DRB-HICOM Group would have recorded an operational profit before tax
Continuity Planning programme that allows us to handle any disaster
of RM214 million for the financial year under review.
affecting our IT infrastructure and ensuring stability in the Group’s
operations. We also successfully implemented the Corporate Secretarial
Overall, the headline result is not reflective of the Group’s activities and
Information System that will significantly boost efficiency in generating
underlying business improvement that occurred during the year. We see
and retrieving forms, documents and information as well as showing
the overall Group loss as a bump along the road and remain confident
greater transparency.
of overcoming this fairly rapidly. We have had a history of turbulences
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DRB-HICOM
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Chairman’s Statement
Human Resource Development
In March 2006, DRB-HICOM Berhad implemented the Voluntary Separation
Scheme (VSS) exercise for employees at the Corporate Office with the
aim of rightsizing its human capital. With the VSS, we have consolidated
our operational structure to create a more efficient, leaner and dynamic
setup. The Group’s headcount at the end of the financial year under
review stood at 29,834. Our strong foundation and new cohesiveness will
brace us for future challenges.
Safety, health and environment (SHE) remain key features of the Group’s
operation. The Group is proud to have achieved various international
certifications including the ISO 14001 Environment Management System
and OHSAS 18001. The manufacturing arm is further strengthened by
the adoption of quality initiatives, the most prominent being the VDA
6.3 Quality Audit Practise and the TS 16949 Quality Assurance System
that have improved our competitiveness. Regular workplace audits and
SHE-related trainings have become a corporate norm that will further
validate our pursuit of a safe and healthy workplace, and compliance to
regulatory requirements.
Helping the Society
At DRB-HICOM, corporate social responsibility is weaved into our business
ethics and the Group consistently supports social and welfare activities in
the community it operates within. DRB-HICOM is actively involved in a
wide range of activities that encompass various levels of society.
During the financial year under review, DRB-HICOM, through a joint
project with BAKTI, donated 2 Mitsubishi Spacegear vans, which were
converted into mobile clinics to provide medical aid for rural villagers
in Felda settlements. DRB-HICOM also sponsored the Malaysian Medical
Team to assist the Kashmir Earthquake Disaster victims and donated
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basic home facilities for flashflood victims in Shah Alam. On the education
front, DRB-HICOM has participated in the New Straits Times School
Sponsorship Programme as well as The Star F1F4 pullout programme,
which provides Mathematic and Science workbooks for 150 rural schools.
DRB-HICOM and the Group also support other educational projects by
donating in kind to the Institute Al-Quran and various orphanages.
Outlook & Prospects
For the new financial year, we have made good progress in many areas
but there is still a lot to be done. The DRB-HICOM Group is mindful that
significant challenges remain ahead of us but we will stay focused and
committed to creating a strong and sustainable performance structure
that will generate value and drive operational excellence. With the
economy expected to grow at a faster pace of 6% in 2006, compared
to 5.3% in 2005, DRB-HICOM is confident of positive results in the
forthcoming financial year.
The 9th Malaysia Plan is also an advantage to the corporate sector as
it outlines a wide array of economic activities that will facilitate the
country’s growth till the end of the decade. Overall, the Group’s mix of
businesses gives it considerable resilience and we will press ahead to
invest for the future and increase our business focus to deliver premium
returns and growth for our shareholders.
We will seek to enhance our prosperity by making DRB-HICOM a more
integrated group by improving existing operations and forging strategic
linkages. Over the long term, the Group is in an excellent position to
grow. We have the people, the products and services that customers want.
DRB-HICOM looks forward to an exciting and successful new chapter in
the Group’s history as we step closer to our goal of becoming a thriving
conglomerate with the influence to shape markets and deliver superior
and consistent stakeholder returns.
DRB-HICOM
B e rh a d
(203430-W)
Acknowledgements
Ladies and Gentlemen,
The Board of DRB-HICOM Berhad has experienced its fair share of
change during the year under review. I would like to pay a warm tribute
to my predecessor, Tan Sri Dato’ Seri Mohd Saleh Sulong, who retired
after 23 years of service, having helmed and led the Company through
some very turbulent times. My appreciation and gratitude also goes to
Dato’ Hj. Mohamad Nor bin Mohamad, Mr Low Nyap Heng, Mr Lee
Yoon Min, Maj. Gen. Rtd. Dato’ Amir bin Baharudin and Dato’ Syed Md.
Amin bin Syed Jan Aljeffri for their valuable contributions and support
during their tenure as members of the Board until their resignation on
28 October 2005.
On behalf of the Board, I would also like to thank all our employees
across the Group for their commitment, loyalty and perseverance. As we
move into the new financial year, let us stand united and work as a team
to take DRB-HICOM to new heights.
We would also like to welcome Datuk Haji Abdul Rahman bin Mohd
Ramli, Dato’ Syed Mohamad bin Syed Murtaza and Mr Ong Ie Cheong
who joined the Board of DRB-HICOM Berhad on 28 October 2005. Our
appreciation also goes to Dato’ Hajjah Safiah bt Basrah and En Ibrahim
bin Taib, for their continual advice and guidance. Further appreciation and
gratitude also goes to Datuk Haji Mohd Khamil bin Jamil and Tan Sri Ab.
Rahman bin Omar who joined DRB-HICOM Berhad on 19 July 2005 and
16 December 2005 respectively.
Last but not least, our appreciation also goes to our shareholders, valued
customers, bankers, business associates and the various Government
Authorities for their continued confidence and support to DRB-HICOM
Group. Our number one priority is to achieve the improved operational
results we expect to see and ensure solid growth and profits over
the long-term.
Thank you.
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail
Chairman
We have assembled a Board of well-qualified, resourceful, dynamic and
committed professionals, passionately engaged in strengthening the
Group’s strategy and enhancing services to the local community. The new
Management team, headed by Datuk Haji Mohd Khamil bin Jamil, blends
in new strengths and acumen that will help the Group to successfully
complete its business plans as it evolves further.
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DRB-HICOM
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Group Managing Director’s
Review of Operations
Overview
It has been a momentous financial year for DRB-HICOM Berhad and its
Group of companies. I am pleased to submit to you a comprehensive
review of the Group’s operations for the financial year ended 31 March
2006, against a background of change and exciting developments. The
entry of a new major shareholder, has led to a revamp of the Group’s
top Management and to my appointment as Group Managing Director
on 1 March 2006.
During the financial year under review, the DRB-HICOM Group forged
ahead with its transition towards integration and renewed competitiveness.
We added a fourth pillar to the Group’s growth following the development
and expansion of our defence business. We strengthened our internal
processes and achieved new strategic successes in the other three
main segments of our business – Automotive, Services and Property &
Infrastructure – as we enhanced old links and build new platforms to
generate growth for the years ahead.
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Automotive
Driven by the engines of a changing global market, the momentum to stay ahead of the
competition remains on an accelerated course.
DRB-HICOM
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Automotive
Automotive Distribution & Manufacturing
HICOMOBIL Sdn. Bhd. (HICOMOBIL) launched the Chevrolet Optra 5 five-door hatchback model
on 18 April 2005, adding another model for the Optra series which included the Chevrolet Optra
1.6L and Chevrolet Optra 1.8L mid-size sedan. With the latest addition, HICOMOBIL could offer
wider range of products to its customers from the Chevrolet Spark in the mini-segment to the
popular compact Chevrolet Aveo 1.5L.
With several changes to the duty structure that took place for the CBU vehicles during
the year under review, the demand for CBU, which included the Chevrolet range
of vehicles, has begun to soften. HICOMOBIL’s sales reached 3,123 units
with a sales turnover of RM261.8 million. Nevertheless
with several countermeasures and plans that
have been put in place, the company
sees improved prospects especially
with the introduction of several new
models that will enhance further its
brand image and create excitement in
the market place.
During the Kuala Lumpur International Motor Show (KLIMS) in May 2006, HICOMOBIL launched
the sporty family wagon, the Chevrolet Optra Estate 1.6L thus completing the range of Chevrolet
Optra for the Malaysian market. There are now 48 sales and 27 authorised service centres
nationwide to assist HICOMOBIL to garner bigger share of the Malaysian passenger car market.
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DRB-HICOM
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Suzuki Malaysia Automobile Sdn. Bhd. (Suzuki Malaysia) was established
on 27 December 2004 to undertake the marketing, assembly and
distribution of Suzuki four-wheeled vehicles and related component and
parts in Malaysia. Subsequent to this, DRB-HICOM has also signed a
License Agreement with Suzuki Motors Corporation of Japan to undertake
the CKD assembly of the Suzuki Swift in Malaysia. The mini hatchback
Swift was first introduced on 16 May 2005. Adding to its model line was
the 1.6L Suzuki APV, which was launched on 13 July 2005, followed by the
2.0L Suzuki Grand Vitara on 13 August 2005.
Suzuki Malaysia will be introducing the much sought after model, Suzuki
Swift Sport in the third quarter of 2006, followed by the mini-MPV model,
SX4 by the end of 2006. To date, there are 33 dealers in operation, of which
18 dealers provide integrated Sales, Service and Spare-parts (3S), services.
USF-HICOM (Malaysia) Sdn. Bhd. (USF-HICOM) expanded its dealership
in June 2005 to distribute the WALD models, which include SsangYong,
Impul and G-Power products. USF-HICOM is also the exclusive distributor
for India’s top multi-utility vehicle maker Mahindra & Mahindra Limited. In
May 2005, USF-HICOM launched the 7-seater Mahindra Scorpio Petrol 4x2
vehicle and subsequently the Mahindra Diesel 2.5L sports utility vehicle.
With more than two decades of experience in Malaysia’s automotive
business and backed by comprehensive dealers and after-sales network,
USF-HICOM is set to maintain its presence as a key player in the motor
trading industry.
Meanwhile, the nation’s largest automotive distributor and a member
of the DRB-HICOM family, Edaran Otomobil Nasional Berhad (EON),
accelerated its business transformation in 2005 with an increased focus
on its multi-brand dealerships and after sales service. EON began
distributing the Mitsubishi marque with the sales of Colt, Lancer 1.6,
Lancer Evo, L200, Grandis and Outlander models in July 2005. It is also
building up its other multi-brand businesses including the Audi and
Hyundai Inokom brands.
At the same time, EON remains committed to its core business as Super
Dealer for the national car, Proton. It worked closely with Proton Edar Sdn.
Bhd. during the year to implement various marketing strategies to boost
sales. As the result of various innovative activities, EON won the International
Association of Business Communicators (IABC) Silver Quill Awards for
Customer Relations, Customer Service, Employee Relations, Best Workplace
and was declared overall winner of the IABC Silver Quill Awards.
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DRB-HICOM
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Automotive
Going forward, EON will take more aggressive measures to cut cost and
raise productivity to remain competitive in an increasingly challenging
marketplace. Although competition is expected to increase, the NAP will
complement PROTON and other national car manufacturers and prepare
them for imminent market liberalisation. The recent price reductions for
Proton cars as well as its range of fuel efficient cars augur well for sales,
especially in light of higher petrol prices.
Another key performer in the Group is Honda Malaysia Sdn. Bhd. (Honda
Malaysia), which has strengthened its foothold in the automotive industry.
2005 was a record breaking year for Honda Malaysia as it achieved a
record sales of 27,460 units, up 11% compared to 2004. Honda City
remained the best-selling model, making up 42% of total sales while the
Accord obtained No.1 market share in its segment.
During the year, Honda Malaysia launched the new Honda City 1.5
litre 1-DSI and VTEC models in October 2005, followed by the all new
8th generation Civic 1.8-litre and 2-litre i-VTEC cars in March 2006. At
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the same time, Honda expanded export of its Constant Velocity Joint
(CVJ) components or drive shafts to the United Kingdom and Turkey in
September 2005. CVJ production, which began in 2003, has now doubled
to 360,000 car sets a year, with more than 95% exported and the rest
for local consumption. Other export markets are Thailand, Indonesia,
Philippines, India and Pakistan. During the year, Honda spent another
RM47 million in buildings, machines and equipment to upgrade its
CVJ plant in Alor Gajah, Melaka.
As testimony to its strong brand and superior quality, Honda cars won
accolades in the Autocar ASEAN Car of the Year award in May 2005. Its
previous Honda City 1.5 VTEC model, launched in July 2004, took the
Small Sedan of the Year award, Honda Stream was named Mid-size MPV
of the Year while the Honda Odyssey won in the Large MPV of the Year
category. In the New Straits Times-Mastercard Car of the Year Awards in
November 2005, the new Honda City was named Family Car of the Year
while Honda Odyssey once again won the MPV of the Year award.
DRB-HICOM
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Automotive Corporation (Malaysia) Sdn. Bhd. (ACM), a leading commercial
vehicle distributor with a 35% market share in the light duty truck category,
made new strides into the big truck market with the introduction of its
Isuzu heavy-duty truck model Super FTR32R (GVW 18 tons), targeting
the cargo transportation and haulage business segment during the year
under review. The company also re-launched various cargo truck models,
namely the FSR33P (GVW 11 tons), Super FTR33R (GVW 16 tons) and
GVR23 (GVW 26 tons) under the new “FORWARD” series on 3 March 2006.
ACM is targeting to sell about 100 units of the new Super FTR32R truck
to capture a fair share of the market in the current year.
production targeted to commence in 2007. It is also exploring more volume
for contract assembly from new franchises such as General Motors and
SsangYong Motor Company.
Motosikal dan Enjin Nasional Sdn. Bhd. (MODENAS) posted a turnover of
RM363.9 million against that of RM461 million last year. During the financial
year under review, sales of MODENAS motorcycles and scooters fell by
16.9% to 97,080 units, accounting for 19.6 % of the domestic market.
Malaysian Truck & Bus Sdn. Bhd. (MTB), a manufacturer and contract
assembler for passenger cars and commercial vehicles for product
lines of HICOM Perkasa, Isuzu, Mitsubishi FUSO and Mercedes-Benz,
turned in a sales figure of RM226 million during the year under review.
As a sign of confidence in the company’s strength, DaimlerChrysler
Malaysia in May 2005, expanded its assembly models in MTB’s plant in
Pekan to include the Actros trucks and bus chassis, in addition to the
existing line-up of Mercedes-Benz C-Class and E-Class passenger cars.
Subsequently in March 2006, MTB commenced its assembly operations of
the new Mercedes-Benz S-Class luxury car, making the company the first
assembler for such model in Asia. Under Isuzu deals, assembly operations
for Isuzu D-Max pick-up trucks was launched in May 2005 and plans are
also on track for MTB to assemble other Isuzu vehicles from 2007.
Automotive Manufacturers (Malaysia) Sdn. Bhd. (AMM), a contract
assembler for passenger and commercial vehicles, commenced mass
production of two new models during the financial year. The company also
inked agreements with several other parties to contract assemble vehicles
ranging from SUVs and trucks, with work scheduled to begin by the second
half of 2006. AMM has also finalised negotiations with Suzuki Malaysia
Automobile Sdn. Bhd. to assemble the popular Suzuki Swift model, with
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DRB-HICOM
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Automotive
On the export front, sales to Indonesia, Greece, Turkey, Cambodia and
Iran have increased to reach 7,531 units while sales of OEM components
to Thailand and Taiwan have also strengthened MODENAS’ position.
Two new models were launched during the year under review, namely the
Modenas Elit Sports, which was unveiled in August 2005, and the Modenas
Passion in December 2005. The Modenas Elit Sports, powered by a
4-stroke 150cc engine, is designed to deliver more power, higher torque,
better pick-up and acceleration. The 125cc Modenas Passion meanwhile,
will help the national motorcycle and scooter company achieve a greater
share of the domestic scooter market and boost its exports.
Edaran Modenas Sdn. Bhd. (EMOS), the distribution arm of MODENAS
posted a total sales of 89,548 units with a revenue of RM334.4 million.
Some 300 units of Modenas Elit Sports are now sold each month,
capturing 6% of the domestic scooter market. Sales of Modenas Passion
were even more encouraging at 1,000 units a month or 19% of the scooter
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segment. The company has embarked on incentive programmes for both
dealers and end-customers to further augment sales. For the upcoming
year, EMOS plans to introduce three new models in the 4-stroke moped
segment, the first being the 120cc model followed by a 130cc variant.
MODENAS also plans to unveil a new 110cc model in the upcoming
financial year.
Automotive Components & Engineering
In the financial year ended 31 March 2006, most vendor companies under
the Group received international accreditation for process, environment
and safety standards including the ISO/TS 16949, ISO 14001 and OHSAS
18001. During the period, the Group’s component companies intensified
efforts to diversify their customer base to non-national cars and foreign
Original Equipment Manufacturer (OEMs) to cushion the impact in the
reduction of national cars’ market share.
DRB-HICOM
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HICOM-Teck See Manufacturing Malaysia Sdn Bhd, (HICOM-Teck See),
the largest Malaysian automotive plastic parts OEM manufacturer,
secured a contract in 2005 to supply three million door handles and
bracket assembly sets for export to Germany. Production is scheduled
to commence in October 2006, which will provide HICOM-Teck See with
a solid platform to expand its business at a global level. Its fully-owned
manufacturing plant in Rayong, Thailand is churning steady revenue,
supplying bumpers, trunk lid handles, door fuel fillers and garnish
radiator grilles for several OEMs in Thailand since late 2003. In Malaysia,
HICOM-Teck See’s main customers include PROTON, PERODUA, NAZA
and ASSB Toyota.
HICOM Diecastings Sdn. Bhd. (HICOM Diecastings), the high-pressure
aluminum diecast auto part manufacturer, evolved into a Tier-1 vendor to
PROTON and PERODUA when it was awarded the TS16949 and ISO14001
certifications at the end of 2005. HICOM Diecastings also supplies
specialised steering housing components and compressor casing to other
international Tier-1 companies such as Kayaba, TNK, ZF Steerings and
Sanden. In the coming year, sales will be augmented with new export
business to supply to NSK Japan and Ford Philippines.
Oriental Summit Industries Sdn. Bhd. (Oriental Summit), a Tier-I producer
of metal stamping based products and sub-assemblies for domestic
automotive makers and assemblers namely PROTON, PERODUA, ASSB
Toyota and Volvo SMA, recently inked a Technical Assistance Agreement
with Japan’s Akashi Kikai for technical support to develop the lower
arm for new Perodua models which is expected to be launched in early
2007. It is also in negotiation to export components to an international
Tier-1 company in Germany that will pave the way for new potential
businesses abroad.
PHN Industry Sdn. Bhd. (PHN), is involved in producing press and
stamped parts, as well as sub-assemblies of automotive components.
The main customers for the Tier-1 supplier of metal-based components,
which has diversified into making and stamping dies, include PROTON,
PERODUA and Honda Malaysia. The expansion of PHN to include other
car makes beside PROTON has also begun to show positive results.
HICOM-HONDA Manufacturing Malaysia Sdn. Bhd. (HICOM-Honda),
benefited from the strong and popular demand for Honda motorcycles
in the domestic market. In 2005, HICOM-Honda sustained exports of
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DRB-HICOM
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Automotive
engine components to regional Honda assemblers in the Philippines and
Indonesia. It also became the first component company in the Group to
obtain a complete set of international standard accreditation (TS16949,
ISO14001 and OHSAS18001). With its new status, HICOM-Honda stands in
good stead for regional and global growth as a Tier-1 supplier to Honda
motorcycle assembly companies.
HICOM-Yamaha Manufacturing Malaysia Sdn. Bhd. (HICOM-Yamaha),
which manufactures engines for Yamaha motorcycles, achieved a 21%
increase in annual revenue during the year under review, thanks to
strong Yamaha motorcycles sales in the domestic market. In October
2005, HICOM-Yamaha began exporting engine components to Minarelli,
Italy. With continuous technical assistance and support from its principal,
Yamaha Motor Corporation, HICOM-Yamaha is aggressively gearing itself
to supply replacement parts for regional markets.
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The performance of other joint ventures with European companies Siemens VDO Instruments MY Sdn. Bhd., ZF Steerings (Malaysia) Sdn. Bhd.
and TRW Steering & Suspension (Malaysia) Sdn. Bhd. – was encouraging
as its customer base expanded domestically as well as internationally. In
addition, exports to parent companies in Europe surged to higher levels in
2005, driving growth further and countering a drop in local customers.
Services
An underlying conviction towards excellence, relevance and
responsibility is at the heart of our commitment towards the
benchmark of standards, delivery and performance.
DRB-HICOM
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(203430-W)
Services
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The services sector, underpinned by strong private consumption, remained
the second pillar of growth for DRB-HICOM during the year under review.
Companies within the Group were resilient despite uncertainties and new
challenges in the marketplace. Continuous cost-cutting measures and
efforts to boost productivity and operational efficiency through technology
upgrades have helped the subsidiary companies navigate the difficult
terrain and achieve solid results. The services sector posted a turnover
of RM1.3 billion for the year ended 31 March 2006, contributing 37% to
the Group’s total revenue.
During the year, Uni.Asia General launched several exciting products to spur
sales and create brand awareness. This included the AutoStar, a branded
comprehensive motor insurance plan that offers a host of motoring benefits
to customers including complimentary towing, roadside assistance services
and discounts by participating merchants. Other innovative products that
have hit the market were the Zero Interest Installment Plan for Motor
Insurance and the Double Protector Plan. Moving forward, Uni.Asia General
aims to increase its returns to shareholders by continuing to provide
superior products and services to its customers.
Uni.Asia General Insurance Bhd. (Uni.Asia General) consolidated its
position as one of the major general insurance companies in Malaysia
during the year under review. Motor insurance sales contributed 77% to
its revenue, while fire insurance sales accounted for 13%. During the year,
new measures were taken to further develop the bancassurance business.
As a result, premium contribution rose sharply by 37% to RM58 million,
with bancassurance accounting for 16% of its overall earnings. In the main
business stream, the traditional agency channel continued to grow at a
steady rate of 13% to return a premium contribution of RM99 million.
Meanwhile, 2005 has been an exciting and fruitful year for Uni.Asia Life
Assurance Berhad (Uni.Asia Life). The company managed to successfully
turnaround its operation in the just concluded financial year and the
improvement is mainly due to higher sales and better investment returns.
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Its total new business premiums reached RM223 million following the
launch of five investment linked funds, including an offshore fund. The Uni
Aggressive Fund, Uni Strategic Fund, Uni AsiaEquity Fund, Uni Income Fund
and Uni Bond Fund have performed well and achieved targeted returns
DRB-HICOM
B e rh a d
(203430-W)
for customers with the Uni Aggressive and Uni AsiaEquity Funds ranking
consistently among the top three in the recent Bloomberg survey.
Uni.Asia Life also continued to stamp its mark in the life insurance
segment with sales of regular premium surging 53.6% in 2005, way above
the industry’s 8.4% growth, the highest ever recorded in the industry. This
achievement was made possible with strong cooperation from its bank
partners namely UOB Malaysia, EON Bank Berhad and its agency force.
Uni.Asia Life is currently ranked No.9 out of 16 companies in Malaysia.
Going forward, it plans to aggressively expand and enhance its presence to
become a leading insurer in the marketplace.
During the year under review, EON Capital Group (EON Capital), has
expanded its branch network with the opening of five new branches,
namely, Sarikei in Sarawak, Bandar Sri Petaling and Taman Connaught
in Wilayah Persekutuan, Bukit Tinggi in Pahang and Kluang in Johor, to
gain wider customer reach. EON Bank Berhad has been selected, as one
of the four banks, to be the recipient of the 11th CGC Top SMI Supporter
Award 2005. SME financing registered an impressive growth of 25.7% to
RM3.1 billion as at end 2005 and it constituted 14.4% of the EON Capital
Group’s total loan portfolio.
handling about 6,000 tonnes of waste daily for 24 local authorities in
Pahang, Selangor and Kuala Lumpur. Nationwide, the privatisation of solid
waste management is expected to be realised under the 9th Malaysia Plan.
Alam Flora is optimistic of considerable improvements in its operating
revenue and profitability upon full privatisation of solid waste management.
The company is also positioned to enhance shareholders value by gearing
towards long-term sustainability and growth in earnings.
KL Airport Services Sdn. Bhd. (KLAS), the independent ground-handling
provider at the Kuala Lumpur International Airport (KLIA) and Penang
International Airport, achieved a remarkable turnaround despite a volatile
operating environment. During the financial year under review, KLAS
managed to retain a total customer base of 36 airlines despite the highly
competitive business environment and low cargo growth. It added to
its list of customers another five airlines, which helped to offset a
reduction in flights or cessation of services into KLIA. KLAS will continue
to work with its airline customers to establish smart partnerships and
boost its performance.
Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd. (PUSPAKOM),
enjoyed strong growth as a leader in vehicle safety and pollution
EON Capital Group’s merchant banking subsidiary, Malaysian International
Merchant Bankers Berhad (MIMB) received three prestigious international
awards for its role in lead arranging Jimah Energy Ventures’ RM5.1 billion
Structured Islamic Financing Facilities. The awards are the 2005 Malaysia
Best Deal Award from The Asset, the 2005 Asia Pacific Bond Deal of the
Year Award from Project Finance International and the 2005 Asia Project
Bond Deal of the Year Award from Euromoney Project Finance. On the local
front, MIMB was also awarded the 2005 Malaysia Best Corporate Finance
Deal from The Edge.
Alam Flora Sdn. Bhd. (Alam Flora), remains the largest integrated solid
waste management company in Malaysia. It entered the ninth year of
service as the sole waste management concessionaire for the central and
eastern regions of Peninsular Malaysia under an interim arrangement,
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Services
control certification. During the year under review, a total of 2.4 million
commercial and private vehicles nationwide went through the company’s
inspection processes.
A key reason for the company’s success is its commitment to continuously
improve its level of services. PUSPAKOM has aggressively expanded during
the year to grow its network to 60 branches nationwide. Most of its branches
have received the MS ISO9001:2000 certification. PUSPAKOM expects to
increase the number of inspection to 3.7 million this year, especially with
participation from other market segments such as insurance. It has been
recognised as the outsource agency by 16 finance companies to verify
vehicle status and roadworthiness prior to loan disbursement.
Globally, PUSPAKOM has ventured into new markets and has been appointed
as a consultant to companies involved in vehicle inspection projects in
Brazil, Sri Lanka and Brunei. This will open new doors for the company to
expand in the future and widen its revenue stream.
The year under review marked a new phase for Scott & English Electronics
Sdn. Bhd. (SEE). In September 2005, SEE signed an agreement with China’s
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GD Midea Air-conditioning Equipment Co. Ltd. (Midea) to distribute the
Midea brand of air-conditioners and home appliances in Malaysia. Midea
is currently the world’s 2nd largest manufacturer of air-conditioners.
Following that, SEE sealed another agreement in October 2005 with TCL
Electronics (Malaysia) Sdn. Bhd. (TCL), which is a subsidiary of China’s
TCL Overseas Holdings Ltd. - the world’s largest television manufacturer,
as sole distributor for the ‘TCL’ brand of colour televisions, plasma display
panels, LCDs and audio visual products in Malaysia.
High demand for marine engines and generator sets contributed to the
strong sales of Scott and English (Malaysia) Sdn. Bhd. (Scott and English)
during the year under review. The Industrial Division, which sells mainly
the TCM Forklift Trucks and the Sullair Compressors, is expected to
continue performing well. The Automotive division, however continues to
incur losses due to the depressed market condition of the sectors they
are operating in.
The company anticipates both the Power and Industrial divisions to continue
to perform strongly. This, coupled with the implementation of a turnaround
plan for the Automotive division, will greatly enhance the performance of
the company in the new financial year.
Property & Infrastructure
Remaining steadfast to a demanding property
and housing market, quality and locality
becomes key in building the cornerstone of
our success.
DRB-HICOM
B e rh a d
(203430-W)
Property & Infrastructure
The property and Infrastructure sector is the third pillar of growth for
DRB-HICOM, earning RM161.7 million during the year under review.
The Group, through Horsedale Development Berhad (Horsedale), expanded
development at Glenhill Saujana, an exclusive enclave located on a
27-acre plot of freehold land in the Saujana neighbourhood. It launched
50 units of semi-detached houses with 8 design options and built-up area
ranging from 3,800 to 4,000 square feet during the year. To date, 100% of
the units have been sold. Horsedale also launched a commercial project
at Phase 4C known as Glenmarie Accentra, fronting Persiaran Kerjaya in
Glenmarie. Sales of 30 units of 3-storey shop offices, were overwhelming
with all the units snapped up soon after its launch. In the new financial year
2006/2007, Horsedale plans to launch 100 units of link houses located in the
neighbourhood of TTDI Jaya, and focus on sales of bungalow houses and
lots in the niche residential enclaves of Glenmarie Residences and Glenhill
Saujana respectively.
On 19 August 2005, Horsedale entered into a Management Agreement with
the Six Continents Hotels Inc. to manage its hotel in Glenmarie. The hotel
was renamed “Holiday Inn Glenmarie Kuala Lumpur” from 1 October 2005,
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marking the re-entry of this world-renown brand into Malaysia after a long
absence. In order to enhance and promote its products and services in the
coming financial year, Holiday Inn Glenmarie will commence refurbishment
of its guest rooms, restaurants and public area.
Glenmarie Residences, another exclusive gated and guarded residential
joint development project by HICOM Properties Sdn. Bhd. (HICOM
Properties) and Horsedale enjoyed overwhelming sales with about 60%
of the bungalows taken up during the financial year under review. The
project consists of 75 bungalow lots on a 20-acre site where green
tropical landscaping provides a tranquil, cool and secured environment. Its
unique design and concepts, competitive pricing and a host of recreational
and entertainment facilities within easy reach were winning factors that
helped garner strong response for the project. The project, which fronts
the Holiday Inn Glenmarie Resort and the Glenmarie Golf & Country Club,
is expected to be completed by the second quarter of 2007.
The Glenmarie Golf & Country Club (GGCC), has opened its 18-hole
Garden Course fully to golfers following the completion of upgrading
and green renovation works in October 2005. This is expected to bring
in higher income for the golf resort and position the club competitively
against other golf courses in the Klang Valley. The response from
members and the public has been encouraging, and the upgrading and
renovation programme will enable the Glenmarie Golf & Country Club to
retain its position as one of the premier courses in Malaysia.
Meanwhile, proud owners of 96 units of semi-detached houses and 45
bungalow units in Phase 1 of the prestigious Glenmarie Cove riverfront
resort development in Klang are scheduled to receive their keys during
the coming year. The developer, Glenmarie Cove Development Sdn. Bhd.
(Glenmarie Cove), has also launched the remaining riverfront bungalow
lots and 30 units of shop offices under Phase 2. Sales have been
encouraging, with all units in the sub-phases and semi-detached homes
in this exclusive, freehold and gated area expected to be taken up soon.
Glenmarie Cove is optimistic the project will be completed by 2010 as
scheduled, and that this riverfront lifestyle living concept will be well
received by both locals and expatriates seeking the unique lifestyle the
development offers. This is also inline with the Malaysian Government's
effort to promote Malaysia as the second home for foreigners.
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Property & Infrastructure
Comtrac Sdn. Bhd. (Comtrac), which manages Glenmarie Cove, will focus
on firmly establishing the Glenmarie brand name in conjunction with the
other property development units of the Group. It will soon hand over
keys to owners of its maiden development project in Cheras, comprising
675 units of medium-cost apartment and 29 units of shop offices in the
development known as Glenview Villas.
DRB-HICOM’s largest property development project, the 4,000-acre Proton
City in Tanjung Malim, Perak, continued to flourish during the year.
Industries and residential development accelerated to put on track growth
of the country’s first Eco-Friendly Automotive City. A total of 1,200 acres
have been earmarked for PROTON’s second manufacturing plant, which
has a capacity of producing up to a million cars a year upon full completion
and is expected to be the main nucleus of Proton City’s growth. The new
Universiti Pendidikan Sultan Idris is the second largest component, covering
an area of 822.62 acres. Ten blocks of apartments have been constructed
as hostel accommodation for 3,000 students while the main campus is
still in planning stage. A Vendor Park spread over a 300-acre site now
accommodates a total of nine automotive component manufacturers, seven
of which are already operational and supplying their products to PROTON
while another two are still in the construction stage.
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With the rapid expansion of PROTON plant and supporting vendor industry,
Proton City Development Corporation Sdn. Bhd. commenced development
of new residential and commercial parcels that will offer a total of 1,537
residential units upon completion. This includes 133 units of medium cost
single and double-storey link houses, which have all been sold out, as
well as a grand launch in November 2005 for the Cadence bungalows and
Avenca semi-detached homes. All 22 units of double-storey shop offices
and 12 units of single-storey shops have been taken up and the Warisan
Avenue Mall is now 40% occupied. Proton City is on track to evolve into
a self-sufficient township, making the project a key source of income for
DRB-HICOM in the long-term.
Another DRB-HICOM company, Imatex Berhad (Imatex), sold all factories
in its development in Mak Mandin, Penang and handed over keys to
buyers during the year. The property division is also managing the joint
venture development of 9 acres of land in Tropicana, Selangor –“Mutiara
Tropicana”. The project, which comprises residential and commercial
units, was launched in May 2006. Sales have been encouraging due to its
strategic location and competitive pricing structure.
Defence
Poised to be a major growth area with immense potential, the propelling
surge to be a force of greater reckoning is within sight.
DRB-HICOM
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Defence
The defence sector represents a new growth area for DRB-HICOM and is
the fourth pillar of growth in the financial year under review. Its venture
into this highly promising sector is spearheaded by DRB-HICOM Defence
Technologies Sdn. Bhd. (DEFTECH), which successfully diversified into
the commercial sectors during the year. DEFTECH supplied 86 units of
the HICOM Handalan to the Fire Department (BOMBA) and a number
of specialist vehicles for Polis DiRaja Malaysia, Securiforce and other
Government agencies. The company also successfully refurbished 42
buses for Syarikat Prasarana Negara Berhad. (SPNB).
At the same time, DEFTECH strengthened its position as the country’s
leading supplier of defence vehicles. It secured its first overseas
contract to supply 69 units of HICOM Handalan II to the Royal Brunei
Armed Forces, as well as 108 units of the HICOM Handalan to the
Malaysian Army.
The future looks promising for DEFTECH’s businesses. The Group
expects to participate in competitive bidding for procurement of defence
contracts under the 9th Malaysia Plan. At the Defence Services Asia (DSA)
Exhibition recently, DEFTECH signed Memorandum of Agreement (MOA)
and Memorandum of Understanding (MOU) with 5 overseas companies
to secure the supply of field vehicles, weapon systems, spare parts and
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to undertake technology transfer. The companies are MOWAG GmbH of
Switzerland, Ruag Land Systems of Switzerland, Thales Communications
of France, FN-Herstal of Belgium and FNNS Defence System of Turkey.
The collaboration with these companies is set to enhance DEFTECH’s
manufacturing and technology capabilities.
On 6 June 2006, DEFTECH signed a Sale & Purchase (S&P) Agreement
to purchase a 70% equity interest in MMC Defence Sdn. Bhd. (MMCD).
MMCD is principally involved in engineering services that include total
refurbishment, upgrading and, research and development work for
armoured vehicles and armaments. The proposed acquisition is expected
to bring synergistic benefits to DRB-HICOM by strengthening its position
to offer better products and services, enabling it to secure new defence
contracts and contributing to future earnings.
DRB-HICOM
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DEFTECH is emerging as one of the key players in Malaysia’s defence
industry, particularly in the supply of land-based vehicles to the Government
and the refurbishment and maintenance of armoured vehicles. A number of
proposals have been submitted to Ministry of Defence, which will generate
new growth and revenue in the years to come. DEFTECH also plans to explore
opportunities to export its products and further widen its income base.
endeavours under the 9th Malaysia Plan. I am confident that the new
Management is prepared to tackle future challenges and turn them into
opportunities for the Company. There is a lot of hard work ahead but
DRB-HICOM is ready for its next stage of growth and development and
looks forward to a new dynamic phase in its operations.
Conclusion
Acknowledgements
Overall, DRB-HICOM has undergone a challenging phase in its history
and emerged stronger and more resilient than ever. The transition to new
changes within the Group has been smooth, seamless and professionally
executed. The inclusion of Defence sector as the fourth pillar of growth
has brought about a new thrust in the Company, especially since it opens
doors for the Group to secure new defence contracts and opportunities
being offered under the 9th Malaysia Plan. However, we remain focused
as the leading integrated automotive and actively seek new partnerships
to strengthen our forte while strengthening existing alliances. The services
and property sectors will also remain as the Company’s core businesses.
Operations in these sectors will continue to be consolidated to achieve the
optimum yields and improve productivity, and be consistently upgraded to
meet the needs in a demanding operating climate.
On behalf of the Management, I take this opportunity to thank all DRBHICOM staff, for their contributions, dedication and support, without which
our achievements would not have been possible. To all our stakeholders
who have stood by us and remained faithful to our Company, I assure you
that your commitment and perseverance will pay off as we gear towards
even more sustained and measurable growth in the current financial year.
I would also like to express my gratitude to the Members of the Board
of Directors for their wise counsel and guidance. Let us move forward
collectively to meet the challenges in building the DRB-HICOM Group as
a leading conglomerate. At DRB-HICOM, “We Help Make Things Better”.
DRB-HICOM has made strong efforts to ensure accountability to all
our stakeholders and is in a sound position to undertake new business
Thank you.
Datuk Haji Mohd Khamil bin Jamil
Group Managing Director
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Corporate Responsibility
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Caring for the Environment
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Calendar of Events
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DRB-HICOM
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Caring for the Environment
At DRB-HICOM, caring for the environment is a key element of our approach to Corporate Social Responsibility (CSR). We are committed to balancing
successful, effective business practices with maintenance of the environment and contributing to the communities we operate within. Towards this,
we promote a strong environmental ethic as part of our Group-wide corporate culture.
A noble way in which DRB-HICOM has expressed its environmental commitment was by creating an aesthetic and eco-friendly landscape at its corporate
headquarters Wisma DRB-HICOM in Glenmarie, Shah Alam. The Group’s artistic and outstanding landscape design received the country’s highest
recognition when it emerged as champion of the National Landscaping Award 2005, an annual event organised by the Ministry of Housing and Local
Government. It was DRB-HICOM’s second such award since 2002, and was a big accomplishment for the Company considering stiff competition from
previous winners - Petronas Carigali, Kota Kinabalu (2001 champion), Patimas Computer, Bukit Jalil (2003), and Street Mall, Cyberjaya (2004).
A number of factors put DRB-HICOM clearly in the lead. According to the judges, the Group’s landscape design incorporated innovative ideas and
demonstrated a strong design identity. Its symmetrical design optimised the use of space and included motifs of plants and water. At the same
time, the landscaping was inducted as part of a corporate environmental project that educated both the employees and community on eco-friendly
behaviour in line with the Group’s CSR goals. Spotlessly clean premises, adhering to the Group’s OSH (Occupational, Safety and Health) goals of
maintaining best practices in hygiene, also scored points. The maintenance of healthy plants, through fertilisation and proper upkeep, helped create
a pleasing green environment that put the Group heads and shoulders over the competition, thus helping the Company to clinch the top award.
DRB-HICOM takes pride of ownership of our shared environment and believes that preservation is a shared responsibility. We endeavour to achieve
continuous improvement of the environment in which we operate for the community’s wellbeing. Caring for the environment will remain integral to
the Group’s CSR policy.
The aesthetic landscape
stimulates creativity and
innovation.
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Calendar of Events
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18 April 2005
4 May 2005
16 May 2005
13 June 2005
Launch of HICOMOBIL’s Chevrolet
Optra-5.
Launch of Mahindra Scorpio by
Y.B. Dato’ Seri S.Samy Vellu,
Minister of Works.
Launch of the all new Suzuki Swift
by Y.Bhg. Tan Sri Dato’ Seri Mohd
Saleh Sulong, the then Chairman of
DRB-HICOM Berhad and Mr Osamu
Suzuki, President of Suzuki Japan,
Ltd., amidst the created Japanese
environment at the Palace of the
Golden Horses hotel.
Isuzu Malaysia Sdn. Bhd. launched
its Isuzu D-Max pick-up truck, the
first Isuzu vehicle locally assembled
at the Malaysian Truck & Bus Sdn.
Bhd. plant in Pekan, Pahang.
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27 June 2005
1 July 2005
5 July 2005
8 July 2005
Official visit by the Honourable
Prime Minister, Y.A.B. Dato’ Seri
Abdullah Haji Ahmad Badawi to
DRB-HICOM Defence Technologies
Sdn. Bhd. (DEFTECH) plant in
Pekan, Pahang and the handing
over of the first batch of HICOM
Handalan trucks to “Angkatan
Bersenjata DiRaja Brunei”
(RBAF).
Launch of Isuzu D-Max pick-up
truck for the East Malaysia market
by Y.B. Datuk Ewon Ebin, Minister
of Industrial Development Sabah.
Alam Flora Sdn. Bhd. became
the first solid waste management
company in South East Asia to
be awarded the Environmental
Management System ISO
140001: 1996 certificate by Det
Norske Veritas (DNV). The award
was presented by Y.B. Dato’
Seri Rafidah Aziz, Minister of
International Trade and Industry.
Launch of Pusat Pemeriksaan
Kenderaan Berkomputer Sdn.
Bhd. (PUSPAKOM) Centre of
Excellence and Extra Lane at the
Seremban PUSPAKOM centre by
Y.B. Dato’ Sri Chan Kong Choy,
Minister of Transport.
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13 July 2005
5 – 7 August 2005
15 August 2005
26 August 2005
Launch of the new 1.6 litre
Suzuki APV.
DRB-HICOM Berhad’s annual
CEOs’ Conference and Spouse
Programme held at the Mutiara
Beach Resort, Penang.
Launch of the new Suzuki Vitara,
a two-litre sport utility vehicle into
the local market.
In collaboration with the Kelab
Motosikal Jaguh Kuala Lumpur
and Lembah Klang, DRB-HICOM
Berhad and Motosikal dan Enjin
Nasional Sdn. Bhd. (MODENAS)
sponsored a convoy troop from
Wisma DRB-HICOM to the rural
areas in Selangor to distribute
the Jalur Gemilang. The event
was organised in conjunction with
the Merdeka Day Celebration and
the waving of the Jalur Gemilang
campaign,
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27 August 2005
10 September 2005
11 October 2005
21 October 2005
Motosikal dan Enjin Nasional Sdn.
Bhd. (MODENAS), launched its
150 cc Elit Sports scooter.
Alam Flora’s “One Stop Service
Centre” was launched in a ceremony
officiated by Selangor Menteri
Besar, Y.A.B. Dato’ Seri Dr Mohamad
Khir Toyo.
Launch of the new 1.5 litre
Honda City.
Scott & English Electronics
Sdn. Bhd. signed an Agreement
to become the sole Malaysian
distributor of TCL and Midea’s
range of consumer electronic
products.
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27 October 2005
26 – 27 November 2005
27 November 2005
9 December 2005
DRB-HICOM Berhad organised
a breaking of fast dinner with
orphanages. At the ceremony,
the Company hand in donations
to Persatuan Ibu Tunggal Belaian
Kasih, Institut Al-Quran Kuala
Lumpur and Yayasan Qurra’
Malaysia.
Kelab Sukan DRB-HICOM (KSDH),
held its family day with the theme
“Splashing Fun” at the A’Famosa
Waterworld Resort, Melaka, where
over 600 members and their
families attended the event.
Proton City Development Sdn.
Bhd. (Proton City) launched the
exclusive Cadence Waterfront
bungalows and Avenca semidetached villas in Tanjung Malim,
Perak.
DRB-HICOM Berhad organised a
“Media Appreciation Nite” as a
gesture of thanks to the Media
for the support shown to the
Company and its Group.
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11 December 2005
22 December 2005
21 January 2006
28 February 2006
HICOM Honda Manufacturing
Malaysia Sdn. Bhd. (HICOM
Honda) awarded the ISO 14001 :
2004 environmental certification
and the OHSAS 18001 : 1999 in
a ceremony in conjunction with
HICOM Honda’s 20th anniversary
dinner.
Launch of Modenas Passion by
Y.A.B. Dato’ Haji Mahdzir Khalid,
the Menteri Besar of Kedah at
the MODENAS Kriss Complex in
Gurun, Kedah.
Official handing over ceremony
of Alam Flora’s compactors and
lorries to Temerloh Municipal
Council by Y.A.B. Dato’ Sri Adnan
Yaakob, the Menteri Besar of
Pahang.
Appreciation Dinner in honour of
Y.Bhg. Tan Sri Dato’ Seri Mohd
Saleh Sulong, former Group
Managing Director, DRB-HICOM
Berhad.
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9 March 2006
13 March 2006
21 March 2006
22 March 2006
Unveiling of the 8th generation
HONDA Civic.
Visit by Y.A.M. Tan Sri Dato’
Seri Syed Anwar Jamalullail,
Chairman of DRB-HICOM Berhad
to DRB-HICOM Complex in Pekan,
Pahang.
Official visit by HRH Sultan of
Pahang to Mercedes Assembly
Line in Malaysian Truck & Bus
Sdn Bhd (MTB) plant in Pekan,
Pahang.
Launch of DRB-HICOM Safety,
Health & Environmental Campaign
by Y.Bhg. Datuk Haji Mohd Khamil
b i n J a m i l , G ro u p M a n a g i n g
Director, DRB-HICOM Berhad.
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Corporate Governance
Statement on Corporate Governance
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Statement on Internal Control
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Report of the Audit Committee
69
Additional Compliance Information
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Statement of Directors’ Responsibility
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Statement on Corporate Governance
Corporate Governance sets out the framework and process by which
companies, through their Board of Directors and Management, regulate
their business activities. It balances sound and safe business operations
with compliance of the relevant laws and regulations.
The Board of Directors of DRB-HICOM is committed to ensuring that
the highest standards of Corporate Governance are practised throughout
the Group as a fundamental part of its responsibilities in managing
the business and affairs of the Group and to protect and enhance
shareholders’ value and financial performance.
The Board is pleased to set out below the manner in which the Company
has applied the principles set out in the Malaysian Code on Corporate
Governance (“the Code”) and the extent to which the Company has
complied in all material respects with the best practices of the Code
during the financial year ended 31 March 2006.
1.
BOARD OF DIRECTORS
The Board has the overall responsibility for determining the Group’s
overall strategic direction as well as development and control of
the Group. It reviews management performance and ensures that
the necessary financial and human resources are available to meet
the Group’s objectives. The Board is also responsible for succession
planning, including appointing and fixing the remuneration of and,
where appropriate, replacing senior management.
1.1 Composition and Balance
The current Board has eight (8) members, comprising six (6)
Non-Executive Directors (including the Chairman) of which
four (4) are independent and two (2) Executive Directors, hence
fulfilling the prescribed requirements for one-third of the
membership of the Board to be Independent Board Members.
The composition of the Board, including Non-Executive Directors
and Independent Directors, provides the Board with a good
mix of industry-specific knowledge and broad business and
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commercial experience. This balance enabled the Board to
provide clear and effective leadership to the Group and to bring
informed and independent judgement to many aspects of the
Group’s strategy and performance so as to ensure that the
highest standards of professionalism, conduct, transparency
and integrity are maintained by the Group. The Independent
Directors play a pivotal role in corporate accountability, which
is reflected in their membership and attendance of the various
Board Committees.
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 14 to 17. No individual or group
of individuals dominates the Board’s decision-making.
The roles of the Chairman and the Group Managing Director are
clearly defined so as to ensure that there is a balance of power
and authority. The Chairman is responsible for ensuring Board
effectiveness and conduct whilst the Group Managing Director
has overall responsibility for the management of the operating
units, organisational effectiveness and the implementation of
Board policies and decisions.
1.2 Appointments and Training
here is a formal and transparent procedure for the appointment
T
of new Directors to the Company and the Group, with the
Nomination Committee making recommendations to the Board.
Following the appointment of new Directors to the Board, the
Nomination Committee will ensure that an induction programme
is arranged, including visits to the Group’s significant businesses
and meetings with senior management as appropriate, to enable
them to get a full understanding of the nature of the businesses,
current issues within the Group and the corporate strategies as
well as the structure and management of the Group.
All Directors have attended the Mandatory Accreditation
Programme prescribed by Bursa Malaysia Securities Berhad
DRB-HICOM
B e rh a d
(203430-W)
(Bursa Malaysia). All Directors are also encouraged to attend
continuous education programmes and seminars to keep abreast
with developments in the market place.
Apart from attending various conferences and seminars organised
by external organisers during the financial year, the Directors
also continuously receive briefings and updates on regulatory,
industry and legal developments, including information on the
Group’s businesses and operations, risk management activities
and other initiatives undertaken by management.
In accordance with the Company’s Articles of Association,
all Directors who are appointed by the Board are subject to
re-election by shareholders at the first Annual General Meeting
after their appointment.
The Articles also provide that all Directors shall retire from
office once in every three years but shall be eligible for
re-election. At each Annual General Meeting one third of the
remaining Directors are to offer themselves for re-election.
1.3 Supply of Information and Board Meetings
All Directors have the same right of access to all information
within the Group and the duty to make further enquiries
whenever deemed necessary in furtherance of their duties.
The Board is supplied in a timely fashion with information in a
form and of a quality as appropriate to enable it to discharge
its duties. In addition to financial information, other information
deemed suitable such as customer satisfaction, product and
service quality, market share and market trends, manpower and
human resource and environmental issues are also provided.
Prior to the Board Meetings, all Directors will receive the agenda
and a set of Board Papers containing information relevant to the
matters to be deliberated at the meetings.
All Directors have access to the advice and services of the
Company Secretary and of independent professional advice at
the Group’s expense.
The Board meets at least once every quarter with additional
meetings convened between the scheduled meetings as Special
Board Meetings as and when necessary. During the year ended
31 March 2006, the Board met a total of eight (8) times. Details
of the attendances of Directors at the board meetings are disclosed
in their respective personal profiles set out on pages 14 to 17.
1.4 Board Committees
To ensure the effective discharge of its fiduciary duties, the
Board has delegated specific responsibilities to the following
three Board Committees. Board Committees’ members are thus
able to deliberate in greater detail and examine the issues within
their terms of reference as set out by the Board. The Executive
Committee was inactive since December 2005 and subsequently
dissolved on 30 May 2006.
i.
Audit Committee
The composition and terms of reference of this Committee
together with its Report are presented on pages 69 to 75.
ii.Nomination Committee
The Nomination Committee consists of the following NonExecutive Directors, the majority of whom are independent:
Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail (Chairman)
Datuk Haji Abdul Rahman bin Mohd Ramli
Ibrahim bin Taib
The Committee is to meet 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;
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Statement on Corporate Governance
c.Evaluate the effectiveness of the Board and Board
Committees (including its size and composition) and
of their members;
d.Review the Management’s recommendation on
appointments or promotions of senior management
personnel;
e.Ensure an appropriate framework and plan for Board
and Management succession for the Group;
f.Ensure the investments of the minority shareholders
are fairly reflected on the Board; and
g.Recommend continuous appropriate training
programmes for Directors.
During the year ended 31 March 2006, the Nomination
Committee met a total of seven (7) times.
iii.
Dato’ Syed Mohamad bin Syed Murtaza (Chairman)
Datuk Haji Abdul Rahman bin Mohd Ramli
Ong Ie Cheong
Datuk Haji Mohd Khamil bin Jamil (ex-officio)
The Committee is to meet at least once a year and is
responsible to:
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b.Ensure that a strong link is maintained between the
level of remuneration and individual performance
against agreed targets with the performance-related
elements of remuneration forming a significant
proportion of the total remuneration package of
Executive Directors and senior management;
c.Review and recommend the entire individual
remuneration packages for each of the Executive
Directors and senior management personnel;
d.Review with the Group Managing Director and the
Executive Directors, their goals and objectives and to
assess their performance against these objectives as
well as their contribution to the corporate strategy; and
e.Review and recommend to the Board any employees’
share option scheme.
Remuneration Committee
The Remuneration Committee consists of the following
Directors, the majority of whom are Independent NonExecutive Directors:
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;
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
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During the year ended 31 March 2006, the Remuneration
Committee met a total of six (6) times.
1.5 Directors’ Remuneration
The objectives of the Group’s policy on Directors’ remuneration
is to ensure that the Group attracts and retains Directors of the
caliber and integrity needed to run the Group successfully. In
the case of Executive Directors, remunerations are structured so
as to link rewards to corporate and individual performances. In
the case of Non-Executive Directors, the level of remuneration
reflects the experience and level of responsibilities undertaken by
the particular Non-Executive Director concerned.
DRB-HICOM
B e rh a d
(203430-W)
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.
Directors’ NonRemunerationExecutiveExecutiveTotal
Executive Directors will abstain from the deliberations and
voting on decisions in respect of their own remuneration. The
remuneration of Non-Executive Directors is to be decided by the
Board as a whole, save for directors’ fees.
The shareholders at the Annual General Meeting would approve
the aggregate annual directors’ fees for all Directors.
Details of Directors’ remuneration (current and past Directors)
for the financial year ended 31 March 2006, 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
Fees*
—
631,464
631,464
Attendance &
other Allowances**
—
604,146
604,146
Salaries, Bonuses,
Allowances and
other benefits**
12,272,784
—
12,272,784
Benefits-in-kind**
361,090
6,964
368,054
12,633,874
1,242,574
13,876,448
Total
1
7
8
RM100,001 – RM150,000
1
1
2
RM150,001 – RM200,000
1
4
5
RM200,001 – RM250,000
3
—
3
RM250,001 – RM300,000
2
—
2
RM550,001 – RM600,000
1
—
1
RM950,001 – RM1,000,000
1
—
1
RM9,400,001 – RM9,450,000
1
—
1
11
12
23
Total
*
**
To be approved at the forthcoming General Meeting
Determined by Board
a)
Directors’ Fees
of RM50,000, are set out below :NonExecutive ExecutiveTotal
RM
RM
RM
RM50,001 – RM100,000
The shareholders are to approve the aggregate annual
directors’ fees for Non-Executive Directors. All NonExecutive Directors were 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.
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Statement on Corporate Governance
b)
Salaries, Bonuses & Allowances
The basic salaries inclusive of statutory employer
contributions to the Employees Provident Fund for the
Group Managing Director and the Executive Directors
are determined by the Board, taking into account the
performance of the individual, the consumer price index and
information from independent sources on the rates of salary
for similar positions in a selected group of comparable
companies. Salaries are to be reviewed annually by the
Remuneration Committee.
The Group Managing Director and Executive Directors
are paid a discretionary bonus. The criteria for the
discretionary bonus are dependent on various performance
measures of the Company together with an assessment of
their individual performances during the period. Bonuses
for the Group Managing Director and Executive Directors
and senior management personnel, are determined
by the Board pursuant to recommendations of the
Remuneration Committee.
c)
Benefits-In-Kind
Other customary benefits, such as car, driver, allowances,
etc were made available to the Chairman, Group Managing
Director and Executive Directors as appropriate.
d)Terms and Conditions of Employment
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he Group Managing Director and the Executive Directors
T
are employed on terms and conditions as approved by
the Board.
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2.
SHAREHOLDERS AND INVESTORS
2.1 Dialogue between the Company and Investors
The Board values dialogue with investors and appreciates the keen
interest of shareholders and investors in the Group’s performance.
The Board acknowledges the need for shareholders to be informed
of all material business matters affecting the Group.
The Company communicates with its shareholders and
stakeholders regularly through the timely release of financial
results on a quarterly basis, press releases and announcements
to Bursa Malaysia which provide shareholders with an overview of
the Group’s performance and operations. In addition, the Company
initiates dialogues with its shareholders as and when required.
2.2The Annual General Meeting
The Annual General Meeting is the principal forum for dialogue
with shareholders. Notice of the Annual General Meeting and
annual reports are sent out to shareholders at least twenty-one
(21) days before the date of the meeting.
Besides the usual agenda for the Annual General Meeting, the
Board presents the progress and performance of the business
as contained in the Annual Report and provides opportunities for
shareholders to raise questions pertaining to the business activities
of the Group. All Directors are available to provide responses to
questions from the shareholders during these meetings.
For re-election of Directors, the Board ensures that full
information is disclosed through the notice of meetings regarding
Directors who were retiring and willing to serve if re-elected.
Items of special business included in the notice of the meeting
are to be accompanied by an explanatory statement to facilitate
full understanding and evaluation of the issues involved.
DRB-HICOM
B e rh a d
(203430-W)
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.Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail, Senior
Independent Non-Executive Director
Telephone number
:
603 2052 8000
Facsimile number
:
603 2052 8118
ii.Y.Bhg. Datuk Haji Mohd Khamil bin Jamil, Group Managing
Director
Telephone number
:
603 2052 8000
Facsimile number
:
603 2025 8118
iii.Tuan Haji Mohd Zuhuri bin Ahmad, Group Director of Public
Affairs & Investor Relations Division, for investor relations
matters
Telephone number
:
603 2052 8004
Facsimile number
:
603 2052 8196
iv.Chan Choy Lin, Company Secretary, for shareholders’
enquiries
Telephone number
:
603 2052 7695
Facsimile number
:
603 2052 7696
3.
ACCOUNTABILITY AND AUDIT
3.1 Financial Reporting
The Directors have a responsibility to present a true and
fair assessment of the Group’s position and prospects in the
quarterly reports to Bursa Malaysia and the Annual Report
to shareholders. The Audit Committee assists the Board in
scrutinising information for disclosure to ensure accuracy,
adequacy and completeness.
3.2 Internal Control
The Group’s Statement of Internal Control furnished on pages
66 to 68 provides an overview of the state of internal controls
within the Group.
3.3 Relationship with the Auditors
The role of the Audit Committee in relation to the External
Auditors may be found in the Report of the Audit Committee
set out at pages 69 to 75. The Group has always maintained a
close and transparent relationship with its auditors in seeking
professional advice and ensuring compliance with the MASB
approved accounting standards.
This statement is made in accordance with a resolution of the Board of
Directors dated 18 July 2006.
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DRB-HICOM
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Statement on Internal Control
INTRODUCTION
One of the principles in the Malaysian Code on Corporate Governance
states that the Board should maintain a sound system of internal control
to safeguard shareholder’s investment and the company’s assets.
Procedures were established to provide an ongoing process to identify,
evaluate, monitor and manage significant risks faced by the Group that
may materially affect the achievement of its corporate objectives. These
procedures are in place throughout the financial year under review and
are subject to regular review by the Board.
In doing so the Board of Directors of DRB-HICOM Berhad in discharging
their stewardship responsibilities has assumed the following specific
responsibilities:
•
•Identifying principal risks and ensuring the implementation of
appropriate systems to manage these risks;
•Reviewing the adequacy and the integrity of the company’s internal
control systems and management information systems, including
systems for compliance with applicable laws, regulations, rules,
directives and guidelines.
The Board, in compliance with paragraph 15.27(b) of the Bursa Listing
Requirements, includes in this annual report its statement on the state
of internal control of the Group.
THE STATEMENT
The Board acknowledges that the Group’s system of internal control is
a component for a strong foundation for sound corporate governance.
The system of internal controls is designed to safeguard shareholder’s
investments and Group assets and covers not only financial controls but
also operational and compliance controls and risk management.
The primary objective of any system of internal control is to provide
reasonable assurance on the effectiveness of risk management, control
and governance process ensuring at all times that risks are contained
within the accepted risk tolerances.
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Audit Committee
The Group’s accounting and reporting policies and practices, reports
of the internal and external auditors and the adequacy of the system
of internal control are reviewed by the Audit Committee. In addition,
the Audit Committee also monitors and reviews the activities of the
Group Internal Audit Division.
A Board Audit Committee report is provided on pages 69 to 75.
•
Internal Audit Function
The Group Internal Audit Division (GIAD) being independent of the
activities or operations of the Group provides the Audit Committee
and the Board with reasonable assurance on the adequacy and
integrity of the system of internal control and effectiveness of the
Group’s governance and risk management processes.
The GIAD reports directly to the Audit Committee and the Head of
Internal Audit and the Audit Committee Chairman have direct access
to each other.
The principal activity of the GIAD is to undertake regular and
systematic reviews of the internal control systems in the operating
entities within the Group. GIAD however, does not review the internal
control system of companies governed by the Banks and Financial
Institutions Act or regulated by Bank Negara Malaysia and a material
associated company. The Group’s interests are served through
representations on the boards of these respective companies.
DRB-HICOM
B e rh a d
(203430-W)
The GIAD uses an audit risk analysis model in formulating its annual
audit plan to assess the progress and effectiveness of management
actions in their overall management of risks. This model is used to
establish audit priorities in their ongoing enhancement of the system of
internal control.
In accordance with the approved annual audit plan, the GIAD carried out
regular and systematic reviews of the business processes of the operating
entities within the Group including scheduled and routine audits, followup audits and special reviews during the financial year under review.
Discussions are held with the management of the operating entities at the
completion of each assignment culminating in Management Action Plans
prepared by the management. The GIAD monitors the implementation
of the Management Action Plan to ensure all major risks and control
concerns are duly addressed by the management of the operating entities.
To ensure a timely and effective reporting process the action plans are
incorporated in the report and presented at the respective subsidiaries
board of directors meeting.
The Audit Committee holds regular meetings to deliberate on the findings
and recommendations for improvement by the internal auditors on the
state of the internal control system. The minutes of the Audit Committee
meetings are tabled to the Board.
•
Enterprise Risk Management (ERM)
The Board of Directors recognizes the importance of risk management
practices to safeguard the shareholders’ investments and the Group’s
business operations. Management is responsible for creating a
risk awareness culture and for building the necessary knowledge
for risk management. The ultimate responsibility for the effective
management of risk rests with the Board who controls and manages
risk through the Group Risk Management Committee.
The Group reaffirms its on-going process of risk management with
the current set up of a Group Risk Management Committee to ensure
leadership, direction and coordination of the group-wide application
of risk management. The group-wide risk assessment process
includes identifying the key risks, potential impact and likelihood
of those risks occurring, the control effectiveness and adopting the
appropriate action plans to mitigate those risks to the desired level.
Each business unit is expressly responsible for managing risks
associated with its business objectives. Detailed primary risk registers
indicating mitigation plans are updated and reported by the respective
Risk Management Committees of the subsidiary companies for the
board of directors’ approval at the operating entities. The Group Risk
Management Committee, chaired by the Group Managing Director,
oversees the overall risk management of the Group and reports
The GIAD also examined the adequacy and effectiveness of the review
and disclosure procedures for related party transactions, recurrent or
otherwise, in conformance with paragraphs 10.08 and 10.09 of the Bursa
Listing Requirements.
to the Board on an aggregated view of the key risks faced by all
operating units within the Group and their respective management
action plans to mitigate these risks.
Overall, the Board is of the view that the system of internal control
In tandem with the restructuring exercise recently undertaken by the
new management of the Group, the GIAD has organised and prepared its
resources to meet the directions and goals of the new management.
and risk management practices of the Group is satisfactory. The Group
Internal Audit Division carried out a total of 111 assignments during
the financial year under review culminating in 40 audit reports issued
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DRB-HICOM
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Statement on Internal Control
to the Audit Committee. These include consolidated reports of branches
of the respective operating entities for which all control shortcomings
and weaknesses identified have been effectively communicated to and
addressed appropriately by the respective management of the operating
entities. The Group Internal Auditors have ensured and are satisfied that
recommended corrective actions have been efficiently effected and the
respective boards of the operating entities and the Group have been kept
well informed.
To the best of the Board’s knowledge, none of these control shortcomings
and weaknesses have resulted in any significant losses that would require
disclosure in the annual report.
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The Board is confident that with the quality improvement program
embarked upon by the Group Internal Audit Division and the ongoing
strengthening of the risk management culture within the Group, the focus
on internal control will be continually maintained and enhanced.
This statement has been approved by the Board of Directors at its
meeting on 18 July 2006.
DRB-HICOM
B e rh a d
(203430-W)
Report of the Audit Committee
The Board of Directors is pleased to present the Report of the Audit
Committee for the financial year ended 31 March 2006.
From 28 October 2005 the Audit Committee comprised the following:Name
Composition of Members
For the financial year under review, the Audit Committee comprised three
(3) Independent Non-Executive Directors and one (1) Non-Independent
Non-Executive Director. They were as follows:Up to 18 July 2005, the Audit Committee comprised the following:Name
Dato’ Haji Mohamad
Nor bin Mohamad
Status of Directorship
(Chairman)
Independent Non-Executive Director
Status of Directorship
Datuk Haji Abdul Rahman
bin Mohd Ramli
(Chairman)
Independent Non-Executive Director
Dato’ Syed Mohamad
bin Syed Murtaza
Independent Non-Executive Director
Ong Ie Cheong
Independent Non-Executive Director
Dato’ Hjh. Safiah bt Basrah Non-Independent Non-Executive Director
The Chairman is a member of the Malaysia Institute of Accountants
(MIA).
Dato’ Hjh. Safiah bt Basrah Non-Independent Non-Executive Director
Low Nyap Heng
Independent Non-Executive Director
Lee Yoon Ming
Independent Non-Executive Director
From 19 July 2005 to 27 October 2005, the Audit Committee comprised
the following:Name
Status of Directorship
The terms of reference of the Audit Committee are set out on pages 69
to 75.
Six (6) Audit Committee Meetings were held in the financial year and
details of attendance of the Committee members are as follows:1 April 2005 to 18 July 2005
NameNumber of meetings attended
Dato’ Haji Mohamad Nor
bin Mohamad
(Chairman)
Independent Non-Executive Director
Dato’ Syed Md Amin
bin Syed Jan Aljeffri
Independent Non-Executive Director
Low Nyap Heng
Independent Non-Executive Director
Lee Yoon Ming
Independent Non-Executive Director
Dato’ Haji Mohamad Nor bin Mohamad
2 out of 2 meetings
Dato’ Hjh. Safiah bt Basrah
2 out of 2 meetings
Low Nyap Heng
2 out of 2 meetings
Lee Yoon Ming
2 out of 2 meetings
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DRB-HICOM
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Report of the Audit Committee
Summary of Activities of the Audit Committee
19 July 2005 to 27 October 2005
NameNumber of meetings attended
Dato’ Haji Mohamad Nor bin Mohamad
1 out of 1 meeting
Dato’ Syed Md Amin bin Syed Jan Aljeffri
1 out of 1 meeting
Low Nyap Heng
1 out of 1 meeting
Lee Yoon Ming
1 out of 1 meeting
The Audit Committee (Committee) plays the role of the governance body
that is charged with overseeing DRB-HICOM Berhad’s audit and control
function. The main responsibility of the Committee, therefore is to assist
the Board to implement and support the oversight function for DRBHICOM Group of Companies in accordance with the terms of reference set
out in its Audit Committee Charter. The activities of the Committee during
the financial year include the following:With regard to External Audit
•Reviewed the Audit Plan with the External Auditors prior to the
commencement of the audit for the financial year.
28 October 2005 to 31 March 2006
NameNumber of meetings attended
Datuk Haji Abdul Rahman bin Mohd Ramli
3 out of 3 meetings
Dato’ Syed Mohamad bin Syed Murtaza
2 out of 3 meetings
Ong Ie Cheong
3 out of 3 meetings
Dato’ Hjh. Safiah bt Basrah
3 out of 3 meetings
•Reviewed with the External Auditors their Internal Control
memorandum and management’s responses.
•Evaluated the performance of the External Auditors and made
recommendations to the Board of Directors on their reappointment
and fees.
•Reviewed the independence and objectivity of the External Auditors
and the service provided, including non-audit services.
The Group Managing Director, together with the Group Chief Operating
Officer, the Group Chief Financial Officer, and also the Head of Internal
Audit attended, by invitation, all the convened meetings. On appropriate
occasions, representatives from the external auditors and relevant
management staff have also attended meetings by invitation.
The Company Secretary acts as the secretary to the Audit Committee
and was present at all Audit Committee Meetings. The minutes of
the Audit Committee Meetings were circulated to all members of the
Audit Committee. The Chairman of the Audit Committee presented the
Committee’s report to the Board of Directors at the board meeting
immediately following.
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•Met with the External Auditors during the year without the presence
of any executive board member or management.
With regard to Internal Audit
•Reviewed and approved the annual internal audit plan and
programmes for the financial year to ensure the scope of audit
adequately and comprehensively covered the activities of the Group.
•Reviewed the performance of the Group Internal Audit Division (GIAD)
and the competencies of staff within the internal audit activity to
execute the plan as well as the audit programs used in the effective
discharge of its professional responsibilities.
DRB-HICOM
B e rh a d
(203430-W)
•Reviewed the adequacy of the scope, functions and resources of the
internal audit function.
•Reviewed a total of 40 audit reports as a result of 111 audit
assignments carried out for the financial year and appraised the
adequacy and effectiveness of management response in resolving the
audit issues reported.
•Reviewed the results of ad-hoc special reviews undertaken by the
internal auditors and the actions taken relating to those reviews.
•Reviewed the Audit Committee Report, Statement on Internal Control
and Statement on Corporate Governance prior to inclusion in the
Company’s Annual Report.
With regard to Related Party Transaction
•Reviewed related party transactions (RPTs) for compliance with the
Bursa Securities Listing Requirements and the appropriateness of such
transactions before recommending to the Board for its approval.
•Reviewed the extent of the Group’s compliance with the provisions
set out under the Malaysian Code on Corporate Governance for
the purpose of preparing the Corporate Governance Statement and
Statement on Internal Control.
•Reviewed the Group’s procedures in respect of recurrent related
party transactions (RRPTs) and propriety of proposed related party
transactions to ensure that they were not more favorable to the
related parties than those generally available to the public and were
not detrimental to minority shareholders.
•Reviewed the adequacy of the terms of reference of the Committee
and Internal Audit Charter as part of good corporate governance
practice for the Group.
Brief on Internal Audit Activities
•Recommended to the Board improvement opportunities in internal
control, procedures and risk management.
With regard to Financial Statements
•Reviewed the unaudited quarterly financial results of the Group
before recommending to the Board.
•Reviewed the audited annual financial statements of the Company and
Group prior to submission to the Board of Directors for consideration
and approval prior to submitting the results to Bursa Malaysia
Securities Berhad (“Bursa Securities”).
•
nsured Group’s compliance with the Bursa Securities Listing
E
Requirements, MASB approved accounting standards in Malaysia,
provisions of the Companies Act 1965 and other legal and
regulatory requirements.
The Group Internal Audit Division (GIAD) assists the Committee in
the effective discharge of their responsibilities, by providing an audit
assurance service to the companies within the Group. This is achieved
through effective planning, risk focused audits, progressive reporting
and monitoring. Exercising at all times its professionalism, expertise and
trust, the GIAD aims to add value to the Group by promoting a control
environment that is well managed and sound.
The GIAD has developed and maintained a quality assurance and continual
improvement program that covers all aspects of the internal audit activity
and monitors its effectiveness. In December 2005, the GIAD was awarded
the prestigious ISO 9001:2000 certification by URS Certification Sdn Bhd.
In furtherance of this award, the GIAD shall also include in its program
periodic internal and external quality assessments and ongoing internal
monitoring. The GIAD has scheduled an external review to be conducted
by a qualified, independent reviewer by the end of this year.
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Report of the Audit Committee
As required by the Audit Charter, the Head of Group Internal Audit
Division reports independently to the Committee. It adopts a riskbased approach to audit, both at activity and entity-wide levels and its
evaluations are communicated to both management and the Committee
in a timely manner.
All critical activities and operations are reviewed and the implementation
status of audit recommendations is monitored and reported to the
Committee with a view of providing reasonable assurance that key risk
and control concerns are being effectively addressed and managed.
During the financial year, the major areas of work accomplished by the
Division and reported to the Committee and ultimately to the Board were
as follows:•Conducted audits including scheduled, follow-up and special
assignments covering Automotive Manufacturing and Distribution,
Property Development and Construction, and Services;
•Monitored and conducted follow up work on issues raised in previous
audit reports, including those raised by the external auditors in their
Internal Control Memorandum;
In line with the terms of reference of the Committee, the Internal Audit
Division, in the discharge of its duties, focuses on:•Providing an assessment of the adequacy and effectiveness of the
system of internal control in the companies within the Group for the
financial year under review;
•Reporting significant control issues identified, with recommended
action plans for the resolution of such issues, and improvements to
the system of internal control;
•Working with operational management to monitor the implementation
of their action plans, and reporting the status on a quarterly basis.
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AUDIT COMMITTEE
TERMS OF REFERENCE
1.
Constitution
There shall be established an Audit Committee to ensure the
Company’s process of assessing internal controls and governance,
including operational and financial controls, business ethics
and compliances based on risk-based audit are properly managed
and monitored.
2.
Composition
The Audit Committee shall be appointed by the Board from among
its members fulfilling the following requirements:a.the Committee must be composed of no fewer than three (3)
members;
b.a majority of the Committee must be Independent Non-Executive
Directors;
c.the Chairman of the Committee shall be appointed by the Board
from among the Independent Non-Executive Directors;
d.
at least one member of the Committee:-
•must be a member of the Malaysian Institute of Accountants;
or
•if he/she is not a member of the Malaysian Institute of
Accountants, he/she must have at least three (3) years’
working experience; and
•he/she must have passed the examinations specified in
Part I of the 1st Schedule of the Accountants Act 1967; or
DRB-HICOM
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b.The meeting shall normally be attended by Group Internal
Auditor, Group Managing Director and Group Chief Operating
Officer. Other members of senior management will be invited
on a need basis.
•he/she must be a member of one of the associations of
accountants specified in Part II of the 1st Schedule of the
Accountants Act 1967.
e.no Alternate Director shall be appointed as a member of the
Committee; and
c.The external auditors are normally invited to attend meetings as
and when necessary.
f.subject to any regulatory disqualification, members of the
Committee shall not be removed except by the Board. In the
event of any vacancy in the Committee, the Board shall within
three (3) months fill the same so as to comply with all regulatory
requirements. In any event the Board shall review the term
of office and performance of the Committee and each of its
members at least once every three (3) years.
3.
d.However, at least once a year, the Committee shall meet
separately with the internal and external auditors without the
attendance of the management. The external auditors may
request a meeting if they consider it necessary.
e.The Secretary of the Audit Committee shall provide the necessary
administrative and secretarial services for the effective functioning
of the Committee. The draft minutes shall be circulated to the
Committee members for comment and the signed minutes shall
be tabled at the subsequent Board Meeting.
Secretary
The Company Secretary shall be the Secretary of the Committee.
4.
Quorum
The quorum for all meetings of the Committee shall be not less than
three (3), a majority of whom shall be Independent Non-Executive
Directors. All meetings shall be chaired by the Chairman; if the
Chairman is absent at any meeting, it shall be chaired by another
Independent Non-Executive Director.
5.
6.
Duties and Responsibilities
The functions of the Audit Committee have been expanded to
include the matters specified in the Code of Corporate Governance
as follows:-
Meetings and Attendance
a.to consider the appointment, resignation, or termination of
external auditors and the audit fee;
a.Meetings shall be held not less than four (4) times a year.
However, the frequency of meetings would increase depending
on the scope of the audit activities and the number of audit
reports produced.
b.to discuss with the external auditors, prior to the commencement
of audit, the nature and scope of audit and to ensure coordination where more than one audit firm is involved;
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Report of the Audit Committee
c.to review with external auditors, the audit plan, their evaluation
of the systems of internal accounting controls, their audit report
and the assistance given by the Company’s officers to the
external auditors;
i.
d.to review the quarterly and year-end annual financial statements
before submission to the Board and announcements to the
Bursa Malaysia Securities Berhad, focusing particularly on:
•
any changes in accounting policies and practices;
•
significant adjustments arising from the audit;
•
significant and unusual events;
•
the going concern assumption; and
•compliance with accounting standards and other legal
requirements.
e.to discuss problems and reservations arising from the interim
and final audits, and any matter the external auditors may wish
to discuss (in the absence of management, where necessary);
f.to review the external auditors’ management letter and the
management’s response;
g.to propose best practices on disclosure in financial results and
annual reports of the Company in line with the principles set
out in the Malaysian Code of Corporate Governance and other
applicable laws, rules, directives and guidelines;
h.to propose that the management has in place an adequate
system of risk management to safeguard the Company’s assets;
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to do the following in respect of the internal audit function:•review the adequacy of the scope, functions and resources
of the Group Internal Audit Division and that it has the
necessary authority to carry out its work;
•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 Group
Internal Audit Division;
•review any appraisal or assessment of the performance of
the members of the internal audit function; and
•approve any appointment or termination of senior staff
members of the Group Internal Audit Division.
j.to review and consider any related party transactions and
conflict of interest situation that may arise within the Company
or group including any transaction, procedure or course of
conduct that raises questions of management integrity;
k.to instruct the external and internal auditors that the
Committee expects to be advised if there are any areas that
require its special attention including major findings of internal
investigations and management’s response;
l.to report to the Audit Committee the activities for the financial
year; and
m.to consider and examine any other matters as the Committee
considers appropriate or as authorised by the Board of Directors.
DRB-HICOM
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Authority
The Board has empowered the Audit Committee to undertake the
following:a.investigate any activity within the scope of the Committee’s
duties and its terms of reference;
b.obtain independent legal or other professional advice if it
considers it necessary;
c.secure full and unrestricted access to any information and
document relevant to the Committee’s activities;
8.
Internal Audit Function
The Internal Auditors of the Company shall report directly to the
Audit Committee. Its responsibilities, which should be performed
with impartiality, proficiency and due professional care, include the
provision of independent reports to the Audit Committee on the
systems of internal control and risk management practices. The
Internal Auditors also conduct audits on all operating units, which
include a review of the recurrent related party transactions entered
into pursuant to the shareholders’ mandate and submit its findings
to the Committee.
At all times, the Head of Group Internal Audit Division and the
Chairman of Audit Committee have direct access to each other.
d.communicate directly with the external auditors, internal
auditors and all employees of the Group;
e.report promptly to the Bursa Malaysia matters duly reported
by it to the Board which have not been satisfactorily resolved
resulting in a breach of any regulatory requirements; and
f.make recommendations for improvements of operating
performance and management control arising from internal
and external audit recommendations.
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Additional Compliance Information
1.UTILISATION OF PROCEEDS
Approved utilisation of funds by the Securities Commission (“SC”) in the year 2005/2006 is as follows:Description
Approved
utilisation
RM’million
Actual
utilisation
RM’million
Balance
RM’million
Issuance of up to RM1.0 billion Islamic Securities as follows:- Comments
The SC had, vide their letter dated 23 June 2005
approved the utilisation of proceeds.
(i)Bai’ Bithaman Ajil Islamic
680.0
680.0
—
The BaIDS and RM50.0 million from the
Debt Securities (“BaIDS”)
Underwritten Murabahah CP/MTN have been
utilised to fully redeem Gadek’s loan stocks i.e.
Redeemable Secured Loan Stocks (RSLS) and
Redeemable Exchangeable Secured Loan Stocks
(RESLS).
(ii)Underwritten Murabahah
200.0
133.0
67.0
Commercial Papers (“CP”)
/Medium Term Notes (“MTN”)
(iii)Murabahah CP/MTN
2.
120.0
90.0
1,000.0
903.0
RM83.0 million of the Underwritten Murabahah
CP/MTN has been utilised for working capital
requirement for the Electrified Double Track Project.
30.0RM90.0 million has been utilised to repay
DRB-HICOM Berhad’s short term banking facilities.
97.0
SHARE BUYBACKS
During the financial year, there were no share buybacks by the Company.
3.OPTIONS, WARRANTS OR CONVERTIBLE SECURITIES
The DRB-HICOM Berhad Employees’ Share Options Scheme (“ESOS”) came into effect on 10 April 2001. The details of the ESOS exercised are
disclosed in page 94 of the financial statements. The ESOS expired on 9 April 2006.
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DRB-HICOM
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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 year, there was no profit guarantee issued by the Company.
7.
RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE
By Resolution of the Extraordinary General Meeting of the Company held on 22 September 2005 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 23 September 2005 to 21 September
2006 between the Company or its subsidiaries and related parties, the latter being based on estimates. As required, below is a listing of the said
transactions as having been actually entered during the financial year ended 31 March 2006:Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
AUTOMOTIVE CORPORATION (MALAYSIA) SDN BHD
1. Master - Freighters (Malaysia) Sdn Bhd
Past Directors and past major shareholders
Supply of vehicles
- Tan Sri Dato’ Seri Mohd Saleh Sulong
and spare parts
- Ahmad Faez Yahaya
- Ahmad Othman Yahaya (Alternate)
Freight services
2. Automotive Service (Malaysia) Sdn Bhd
3. Master Radiators Sdn Bhd
4. Master-Carriage (Malaysia) Sdn Bhd
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham
Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
5.
Multi Automotive Service and Assist Sdn Bhd
686.00
1,608.00
Quality control & inspection
969.00
Supplier-parts
238.00
Management services
2,200.00
Management services
540.00
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Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
AUTO PROMINENCE (M) SDN BHD
1. Master-Carriage (Malaysia) Sdn Bhd
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Payment of management fees,
inclusive of advisory and
consultancy services
165.00
Payment for joint inspection charges
116.00
Charges for building rental and
recovery of security expenses
155.00
AUTOMOTIVE MANUFACTURERS (MALAYSIA) SDN BHD
1.
Automotive Service (Malaysia) Sdn Bhd
2. Master Radiators Sdn Bhd
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
ALAM FLORA SDN BHD
1. Kumpulan Jetson Berhad
Major shareholders
- Jetson Corporation Sdn Bhd
- PJ Bumi Waste Management Sdn Bhd
2. PJS Environmental Services Sdn Bhd
Rental of machinery
423.89
Private Contractor
Purchase of bins
207.00
10.00
3. Hebat Abadi Sdn Bhd
Private contractor
Rental of machinery
3,352.00
766.00
4. Segar Prima Sdn Bhd
5. PJ Bumi Waste Management Sdn Bhd Purchase of bins
Private contractor
Private contractor
35.00
1,552.00
7,068.62
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No. Transacting Parties
Transacting values
(RM ‘000) Actual
1st April 2005 to
31st March 2006
Interested Parties
Nature of Transaction
Director and major shareholder
- Ng Tet Min
Overhead reimbursement
Construction works
Salary Charges
Services received
33.00
136.00
76.00
307.00
COMTRAC SDN BHD
1.
Comtrac Precast Sdn Bhd
2.
Comtrac Glenview Sdn Bhd
Construction works
Overhead reimbursement
25,303.00
628.00
3.
Glenmarie Cove Development Sdn Bhd
Construction works
Overhead reimbursement
Other reimbursement
35,203.00
2,120.00
3.00
4.
Comtrac Trading Sdn Bhd
Overhead reimbursement
Salary reimbursement
12.00
171.00
Rental services income
660.00
Rental services income
360.00
DRB-HICOM BERHAD
1.
Automotive Service (Malaysia) Sdn Bhd
2.
Master - Builders (Malaysia) Sdn Bhd
Past Directors and past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Dato’ Yatina Yahaya
- Ahmad Othman Yahaya (Alternate)
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham
Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Tik Mustaffa
- Ahmad Faez Yahaya
Past Director
- Mark Aziz Salleh
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Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
DRB-HICOM DEFENCE TECHNOLOGIES SDN BHD
1. Master - Builders (Malaysia) Sdn Bhd Past director and past major shareholder
- Tan Sri Dato’ Seri Mohd Saleh Sulong
2. Master - Freighters (Malaysia) Sdn Bhd
3. Master Radiators Sdn Bhd
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham
Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
4. PRISM Protection Services Sdn Bhd
Major shareholders
- Tan Sri Dato’ Syed Mokhtar Shah Syed Nor
- Etika Strategi Sdn Bhd
Director and past major shareholder
- Datuk Haji Mohd Khamil Jamil
Body assembly of vehicles
4,172.00
Freight services
190.00
Purchase of local parts
677.00
Security expenses
4.00
Auto assist
5.85
Parts and service
6.12
DIRECTIONAL (MALAYSIA) SDN BHD
1. Multi Automotive Service
and Assist Sdn Bhd
2. Master - Builders (Malaysia) Sdn Bhd
80
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Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham
Tan Sri Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
DRB-HICOM
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Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
EDARAN MODENAS SDN BHD
1. Sojitz Corporation
Major shareholder
Purchase of spare parts
- Sojitz Corporation
2. Master - Freighters (Malaysia) Sdn Bhd
Past Directors and past major shareholders
- Ahmad Faez Yahaya
- Ahmad Othman Yahaya (Alternate)
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
582.00
Freight services
2,914.00
EURO TRUCK & BUS (MALAYSIA) SDN BHD
1. Master - Builders (Malaysia) Sdn Bhd
2. Master - Freighters (Malaysia) Sdn Bhd
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Assembly charges
844.00
Freight services
122.00
Past major shareholder
- Citaria Sdn Bhd
Advertising and marketing
related services
GLENMARIE COVE DEVELOPMENT SDN BHD
1. Bozell Worldwide Sdn Bhd
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Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
HICOM BERHAD
1. PRISM Protection Services Sdn Bhd
Major shareholders
- Tan Sri Dato’ Syed Mokhtar Shah Syed Nor
- Etika Strategi Sdn Bhd
Director and past major shareholder
- Datuk Haji Mohd Khamil Jamil
Security expenses
530.42
HICOM DIECASTINGS SDN BHD
1. Master - Freighters (Malaysia) Sdn Bhd
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Freight services
19.00
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Freight services
92.80
HICOM ENGINEERING SDN BHD
1. Master - Freighters (Malaysia) Sdn Bhd
82
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Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
HICOM-TECK SEE MANUFACTURING MALAYSIA SDN BHD
1. Compounding & Colouring Sdn Bhd
2. Lipro Sdn Bhd
Directors
- Dato’ Wong Lum Kong
- Lim How Ghee
Payment of goods and services
12,265.15
Payment of goods and services
3,014.33
3. Teck See Plastic Sdn Bhd
Major shareholders
- Oriental Holdings Berhad
- Teck See Plastic Sdn Bhd
Payment of goods and services
5,538.30
Past director and past major shareholder
- Tan Sri Dato’ Seri Mohd Saleh Sulong
Warranty, free service and incentive
645.05
Office rental
310.90
HICOMOBIL SDN BHD
1. Auto Pacific Star Sdn Bhd
Purchase of completely built up
(“CBU”) vehicles
Sale of spare parts
Sale of completely built up
(“CBU”) vehicles
2. Master - Freighters (Malaysia) Sdn Bhd
Past director and past major shareholder
- Tan Sri Dato’ Seri Mohd Saleh Sulong
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
262,359.89
154.04
14.547.11
Freight services
137.95
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Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
HICOM UNITED LEASING SDN BHD
1. Scott & English Trading (Sarawak)
Sdn Bhd
Directors and major Shareholders
- Ng Kong Chin
- Tang Hon Shan
Supply of air compressors, spare
parts and servicing of equipment
2. Scott & English (Malaysia) Sdn Bhd
Rental of office space from
Scott & English (Malaysia) Sdn Bhd
Purchase of generating set/
air compressor/forklifts
Rental of open yard to
Scott & English (Malaysia) Sdn Bhd
Rental of generating set,
air compressor, forklifts & excavators
218.00
66.00
5,526.00
112.00
2,898.00
KL AIRPORT SERVICES SDN BHD
1. Mofaz Dagang Sdn Bhd
Director and major shareholder
Payment for supply of mineral water
- Tuan Haji Mohamed Fauzy Abdul Hamid
197.00
MEGA KOMPOSIT AUTO SDN BHD
1. Auto Elegance Car Centre Sdn Bhd
84
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Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Purchase of vehicles
1,235.24
DRB-HICOM
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Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
MALAYSIAN TRUCK & BUS SDN BHD
1. Master - Freighters (Malaysia) Sdn Bhd
Past director and past major shareholder
- Tan Sri Dato’ Seri Mohd Saleh Sulong
Freight services
2. Automotive Service (Malaysia) Sdn Bhd
3. Master Radiators Sdn Bhd
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
Vehicle servicing, maintenance,
storage, gassing etc
4. Isuzu Malaysia Sdn Bhd
Major shareholder
- Isuzu Motors Limited
5. Isuzu Motors Limited
1,013.00
394.00
Purchase of local parts
2,961.00
Contract assembly
4,426.00
Purchase of automotive parts
34.00
MOTOSIKAL DAN ENJIN NASIONAL SDN BHD
1. Kawasaki Heavy Industries Ltd
Major shareholder
- Kawasaki Heavy Industries Ltd
Provision of technical support,
technology transfer, supply of CKD
components and payment of royalties
Sale of component parts
2. Sojitz Corporation
Major shareholder
- Sojitz Corporation
Purchase of CKD parts
3. Master - Freighters (Malaysia) Sdn Bhd
Past directors and past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Ahmad Othman Yahaya (Alternate)
- Ahmad Faez Yahaya
Freight services
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
20,381.00
4,496.00
18,743.00
372.00
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Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
PUSAT PEMERIKSAAN KENDERAAN BERKOMPUTER SDN BHD
1. Master - Freighters (Malaysia) Sdn Bhd
Past directors and past major shareholders
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya (Alternate)
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
Freight services
3.00
SCOTT & ENGLISH (MALAYSIA) SDN BHD
1. Master - Builders (Malaysia) Sdn Bhd
2. Master - Freighters (Malaysia) Sdn Bhd
Supply of generating set, air
compressor, forklifts, parts & services
66.00
Freight services
27.00
3. Automotive Service (Malaysia) Sdn Bhd
Supply of generating set, air
compressor, forklifts, parts & services
PDI, custom documentation, road test etc
4.
86
Past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
- Ahmad Othman Yahaya
- Ahmad Faez Yahaya
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Master Radiator Sdn Bhd
RR ee pp oo rr t t
2 2 0 0 0 0 66
Purchase of fuel tanks
5.00
231.00
2.00
DRB-HICOM
B e rh a d
(203430-W)
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
5. Scott & English Trading (Sarawak) Sdn Bhd Directors and major shareholders
- Ng Kong Chin
- Tang Hon Shan
6. Scott & English (Cambodia) Ltd
7.
Scott & English Electronics Sdn Bhd
Supply of generating set, air
compressor, forklifts, parts & services
22,175.00
Purchase of generating set, air
compressor, forklifts, parts & services
Supply of generating set, air
compressor, forklifts, parts & services
1,603.00
216.00
Rental of building space
298.00
Supply of generating set, air compressor,
forklifts, parts & services
Purchase of appliances, forklifts and vehicles
18.00
280.00
SUZUKI MALAYSIA AUTOMOBILE SDN BHD
1. Global World Trade Sdn Bhd
Past director and past major shareholder
- Tan Sri Dato’ Seri Mohd Saleh Sulong
Purchase of CBU vehicles
Past directors and past major shareholders
- Tan Sri Dato’ Seri Mohd Saleh Sulong
- Ahmad Faez Yahaya
- Ahmad Othman Yahaya (Alternate)
Insurance agent
Purchase of vehicles
Quality Control agent
226,840.00
USF-HICOM (MALAYSIA) SDN BHD
1. Auto Elegance Car Centre Sdn Bhd
2. Automotive Service (Malaysia) Sdn Bhd
A
24.00
154.97
17.00
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DRB-HICOM
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(203430-W)
Additional Compliance Information
Transacting values
(RM ‘000) Actual
1st April 2005 to
No.Transacting Parties
Interested PartiesNature of Transaction
31st March 2006
3. Ssangyong Motor (M) Sdn Bhd
4. Master-Carriage (Malaysia) Sdn Bhd
Past major shareholders
- Citaria Sdn Bhd
- Estate of Allahyarham Tan Sri
Dato’ Seri Yahaya Ahmad
- Dato’ Yatina Yahaya
- Dato’ Tik Mustaffa
5. Master - Freighters (Malaysia) Sdn Bhd
Sales of vehicles
1,516.00
Purchase of vehicles
3,506.16
Management service
2,200.00
Freight services
Sales of vehicles, parts & services
2,040.00
43.00
6.
Multi Automotive Service and Assist Sdn Bhd Auto assist
Auto assist
2.49
7.
Ramgate Systems Sdn Bhd
Rental of premises
78.00
Past major shareholder
- Citaria Sdn Bhd
Advertising and marketing related services
11.72
Past major shareholder
- Citaria Sdn Bhd
Advertising and marketing related services
72.55
UNI.ASIA GENERAL INSURANCE BERHAD
1.
Bozell Worldwide Sdn Bhd
UNI.ASIA LIFE ASSURANCE BERHAD
1. Bozell Worldwide Sdn Bhd
88
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DRB-HICOM
8.
B e rh a d
(203430-W)
MATERIAL CONTRACTS
There was no material contract entered into by the Company or its subsidiaries involving directors’ and major shareholders’ interest still subsisting
at the end of the financial year ended 31 March 2006.
9.PENALTY
There was no signification penalty/ies imposed by any regulatory authorities on any of the companies in the DRB-HICOM Group.
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
2006 are as follows:RM’000
PricewaterhouseCoopers
PricewaterhouseCoopers Taxation Services Sdn. Bhd.
185
944
1,129
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DRB-HICOM
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Statement of Directors’ Responsibility
in respect of the preparation of the Financial Statements for the financial year ended 31 March 2006
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 cashflows 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 the applicable approved accounting standards in Malaysia and the provisions of the Act.
The Directors consider that in preparing the financial statements for the financial year ended 31 March 2006 set out on pages 92 to 197, the Group
has used appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates and ensured that
all applicable approved accounting standards have been followed.
The Directors have ensured that the accounting records to be kept by the Group and the Company have been properly kept in accordance with the
provisions of the Act, which disclose with reasonable accuracy the financial position of the Group and of the Company.
This Statement is made in accordance with a resolution of the Board of Directors dated 18 July 2006.
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Financial Statements ‘06
Directors’ Report
92
Consolidated Income Statements
99
Company Income Statements
100
Balance Sheets
101
Consolidated Statement of Changes in Equity
103
Company Statement of Changes in Equity
105
Cash Flow Statements
106
Notes to the Financial Statements
111
Statement by Directors
198
Statutory Declaration
199
Report of the Auditors
200
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DRB-HICOM
B e rh a d
(203430-W)
Directors’ Report
The Directors of DRB-HICOM Berhad hereby submit their report together with the audited financial statements of the Group and of the Company for the
financial year ended 31 March 2006.
PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive, defence, property and construction and services segments. The
Company was previously involved in the design and construction of the Electrified Double Track Project between Rawang and Ipoh.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial
statements.
FINANCIAL RESULTS
Group
RM’000
Company
RM’000
Loss after taxation
(145,580)
(80,033)
Minority interests
(58,401)
—
Net loss attributable to shareholders (203,981)
(80,033)
DIVIDENDS
The dividends paid by the Company since 31 March 2005 were as follows:
RM’000
In respect of the financial year ended 31 March 2005, as shown in the Directors’ report of that year:
First and final dividend of 3.0 sen gross per share, less taxation of 28% for the financial year
ended 31 March 2005, paid on 18 October 2005. 21,290
First and final dividend of 3.0 sen gross per share, less taxation of 28% for the financial year
ended 31 March 2005, paid on 18 October 2005 in respect of ordinary shares issued after
31 March 2005 but before book closure date of dividend entitlement.
17
21,307
The Directors recommend the payment of a first and final gross dividend of 2.0 sen per share, less taxation of 28%, amounting to RM14,396,713 in respect
of the financial year ended 31 March 2006, subject to the approval of shareholders at the forthcoming Annual General Meeting of the Company.
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RESERVES AND PROVISIONS
All material transfers to or from reserves and provisions during the financial year are shown in the financial statements.
SIGNIFICANT SUBSEQUENT EVENTS
(a)On 13 April 2006, the Ministry of International Trade and Industry (“MITI”) approved the granting of Approved Permits (“APs”) to the Group for all the
makes and models of vehicles under the Group’s franchise and distribution namely Chevrolet, Citroen, Honda, Mahindra, Suzuki, Audi and Mitsubishi.
DRB-HICOM Auto Solutions Sdn. Bhd. (“DHAS”) (formerly known as DRB-HICOM IT Solutions Sdn. Bhd.), a wholly-owned subsidiary of the Company
has been designated as the recipient of the APs. The granting of APs by MITI to DHAS is in line with the regulations and guidelines as laid down in
the National Automotive Policy and consistent with the decision of the National Automotive Committee to grant APs directly to the Group without going
through intermediary third party companies.
(b)On 1 June 2006, HICOM Properties Sdn. Bhd. (“HPSB”), which owns a 51% equity interest in HICOM Menang Properties Sdn. Bhd. (“HMP”), entered into
a Share Purchase Agreement with Menang Corporation (M) Bhd. (“MCB”), to acquire the remaining 49% equity interest in HMP, comprising 4,900,000
ordinary shares of RM1.00 each from MCB for a total cash consideration of RM7,595,000. The acquisition was completed on 28 June 2006. As a result,
HMP became a wholly-owned subsidiary of the Group.
(c)On 6 June 2006, DRB-HICOM Defence Technologies Sdn. Bhd. (“DEFTECH”), a wholly-owned subsidiary of the Company, entered into a Sale of
Share Agreement (“SSA”) with Idaman Kencana Sdn. Bhd. to acquire its 70% equity interest in MMC Defence Sdn. Bhd. (“MMCD”) for a total cash
consideration of RM4,230,269. MMCD is principally involved in engineering services that include total refurbishment, upgrading and research and
development (“R&D”) work for armoured vehicles and armaments. On 7 July 2006, DEFTECH entered into a SSA with MMC Engineering Group Berhad
(“MMCEG”) to acquire its 30% equity interest in MMCD for a total cash consideration of RM1,812,973. On the same day, an agreement was entered
into with MMC Corporation Berhad (“MMC”) to procure MMCD to redeem its 3,000,000 Redeemable Convertible Preference Shares of RM1.00 each
from MMC for a cash consideration of RM3,000,000. In addition to the cash consideration paid for the acquisition of 100% equity interest, in the event
that MMCD procures a certain maintenance contract from the Government by 31 December 2006, DEFTECH shall pay an additional RM1,547,028 cash
consideration to MMCEG. The proposed acquisitions are subject to approval from the relevant authorities.
ISSUE OF SHARES
During the financial year, the Company’s issued and paid-up share capital was increased from RM985,669,947 to RM999,771,729 by way of issue of
14,101,782 new ordinary shares of RM1.00 each, pursuant to following:(i)Exercise of 2,659,000 share options under the Employees’ Share Option Scheme (“ESOS”), at option prices ranging from RM1.00 to RM1.75 per share.
(ii)Conversion of 500 warrants at an exercise price of RM2.88 per share.
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DRB-HICOM
B e rh a d
(203430-W)
Directors’ Report
ISSUE OF SHARES (continued)
(iii) C
onversion of RM18,099,250 nominal value of Redeemable Exchangeable Unsecured Loan Stock (“REULS”) plus RM2,954,549 accrued interest of a whollyowned subsidiary company, Gadek (Malaysia) Berhad into 11,442,282 new ordinary shares of the Company at a conversion price of RM1.84 per share.
Subsequent to the financial year end, the Company’s issued and paid-up share capital increased from RM999,771,729 to RM1,003,099,829 by way of issue
of 3,328,100 new ordinary shares of RM1.00 each for cash pursuant to the exercise of 3,328,100 share options under the ESOS, at option prices ranging
from RM1.00 to RM1.69 per share.
The new shares rank pari passu in all respects with the existing shares of the Company including entitlement to the first and final dividend proposed for
the financial year ended 31 March 2006.
EMPLOYEES’ SHARE OPTION SCHEME
The DRB-HICOM Berhad Employees’ Share Option Scheme (“ESOS”) came into effect on 10 April 2001 for a period of 5 years. The ESOS expired on
9 April 2006.
The main features of the ESOS are:
(a)The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed eleven point five per centum (11.5%) of the total
issued and paid-up share capital of the Company at any one time during the existence of the ESOS.
(b)The options granted may be exercised at any time within the option period.
(c)The exercise price at which the employees are offered to take up shares under the ESOS is at a discount of 10% from the weighted average market
price of the shares of the Company as quoted in the Daily Official List issued by Bursa Saham Kuala Lumpur for the five market days preceding the
respective dates of offer of the options or the par value of the shares of the Company of RM1.00, whichever is higher.
(d)The grantees have no right to participate, by virtue of these options, in the ESOS scheme of any other company.
During the financial year ended 31 March 2006, a total of 2,659,000 ordinary shares were issued by virtue of the exercise of the options at prices ranging from
RM1.00 to RM1.75 per share. As at 31 March 2006, there were 29,365,200 unexercised ordinary shares under options granted pursuant to ESOS, at prices
ranging from RM1.00 to RM2.21 per share. As at the expiry date of 9 April 2006, there were 26,037,100 options not exercised and have therefore lapsed.
Details of the movement in share options granted during the financial year are set out in Note 29.
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DRB-HICOM
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(203430-W)
EMPLOYEES’ SHARE OPTION SCHEME (continued)
The Company has been granted exemption by the Companies Commission of Malaysia from having to disclose the list of option holders and their holdings,
except for eligible persons with share options allocated during the financial year of 100,000 shares and above. Save as disclosed below, there were no other
eligible persons allocated share options of 100,000 and above during the financial year.
No. of share options granted
during the financial year
Abd Malek bin Abd Majid (employee)
170,000
Nik Danial bin Nik Mahmood (employee)
170,000
Low Nyap Heng (Non-Executive Director)
100,000
DIRECTORS
The Directors who have held office during the period since the date of the last report are as follows:
YAM Tan Sri Dato’ Seri Syed Zainol Anwar Ibni Syed Putra Jamalullail
(Chairman)
(Appointed on 28 October 2005)
Datuk Mohd Khamil bin Jamil
(Group Managing Director)
(Appointed on 19 July 2005)
Dato’ Hajjah Safiah Basrah
Ibrahim Taib
Y. Bhg. Tan Sri Ab. Rahman bin Omar
(Appointed on 16 December 2005)
Datuk Haji Abdul Rahman bin Mohd Ramli
(Appointed on 28 October 2005)
Dato’ Syed Mohamad bin Syed Murtaza
(Appointed on 28 October 2005)
Ong Ie Cheong
(Appointed on 28 October 2005)
Tan Sri Dato’ Seri Mohd Saleh Sulong
(Resigned on 1 March 2006)
Dato’ Haji Mohamad Nor bin Mohamad
(Resigned on 28 October 2005)
Dato’ Yatina Yahaya
(Resigned on 20 July 2005)
Dato’ Maznah Abdul Jalil
(Resigned on 20 July 2005)
Dato’ Mohd Nor Mohamad
(Resigned on 20 July 2005)
Datuk Haji Faisal @ Ibrahim Siraj
(Resigned on 20 July 2005)
Mark Aziz Salleh
(Resigned on 20 July 2005)
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DRB-HICOM
B e rh a d
(203430-W)
Directors’ Report
DIRECTORS (continued)
Dato’ B. Bhaskaran Pillai
(Resigned on 20 July 2005)
Dato’ Syed Md. Amin Syed Jan Aljeffri
(Resigned on 28 October 2005)
Low Nyap Heng
(Resigned on 28 October 2005)
Lee Yoon Min
(Resigned on 28 October 2005)
Maj. Gen. (Rtd.) Dato’ Amir Baharudin
(Resigned on 28 October 2005)
Ahmad Othman Yahaya (Ceased to be an alternate to Dato Yatina Yahaya)
(Resigned on 20 July 2005)
Datuk Abu Samah Bachik (Ceased to be an alternate to Tan Sri Dato’ Seri Mohd Saleh Sulong)
(Resigned on 1 March 2006)
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests of Directors in office at the end of the financial year in shares in the Company, are as
follows:
No. of ordinary shares of RM1.00 each
As at
date of
appointment
Acquired
Disposed
As at
31.3.2006
In the Company
Indirect
Datuk Mohd Khamil bin Jamil 155,431,725
*
—
155,431,725*
—
Cessation of deemed interest in the shares of DRB-HICOM Berhad pursuant to Section 6A of the Companies Act, 1965.
None of the other Directors in office at the end of the financial year held any interests in the shares or options of in the Company or in its related
companies during the financial year.
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DRB-HICOM
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(203430-W)
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 benefits 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 except for any deemed benefits as stated below that may accrue to certain past
Directors by virtue of the following transactions between the Group and companies in which certain past Directors have significant financial interests:
(a)
Management fees paid to Master-Carriage (Malaysia) Sdn. Bhd. as disclosed in Note 5 to the financial statements; and
(b)
Significant related party transactions as disclosed in Note 39 to the financial statements.
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 value 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 when they fall due.
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DRB-HICOM
B e rh a d
(203430-W)
Directors’ Report
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)
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.
In the opinion of the Directors:
(a)other than as disclosed in the financial statements, the results of the Group’s and of the Company’s operations during the financial year were not
substantially affected by any item, transaction or event of a material and unusual nature; and
(b)
t here 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 affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 18 July 2006.
YAM TAN SRI DATO’ SERI SYED ZAINOL ANWAR IBNI SYED PUTRA JAMALULLAIL
Chairman
DATUK MOHD KHAMIL BIN JAMIL
Group Managing Director
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DRB-HICOM
B e rh a d
(203430-W)
Consolidated Income Statements
for the financial year ended 31 March 2006
Note
Revenue
2006
RM’000
4
Cost of sales
2005
RM’000
3,522,835
4,506,595
(3,108,615)
(3,839,475)
Gross profit
414,220
667,120
Other operating income 153,392
128,561
Selling and distribution expenses
(107,231)
(131,308)
Administrative expenses
(447,753)
(400,992)
Other operating expenses (239,216)
(70,123)
(Loss) / profit from operations
5
(226,588)
193,258
Finance cost
8
(130,789)
(138,440)
Share of results of jointly controlled entities
38,784
40,326
Share of results of associated companies
184,585
181,558
(Loss) / profit from ordinary activities before taxation
(134,008)
276,702
Taxation
- Company and subsidiary companies
50,170
(23,714)
- Share of taxes of jointly controlled entities
(12,257)
(12,965)
- Share of taxes of associated companies
(49,485)
(41,764)
9
(11,572)
(78,443)
(Loss) / profit from ordinary activities after taxation
(145,580)
198,259
Minority interests
(58,401)
(56,852)
Net (loss) / profit attributable to shareholders
(203,981)
141,407
10
2.00
3.00
- Basic
11 (a)
(20.62)
14.39
- Fully diluted
11 (b)
(20.62)
14.32
Gross dividends per share (sen)
(Loss) / earnings per share (sen)
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
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DRB-HICOM
B e rh a d
(203430-W)
Company Income Statements
for the financial year ended 31 March 2006
Note
2006
RM’000
2005
RM’000
18,922
470,505
Cost of sales
(15,562)
(322,527)
Gross profit
3,360
147,978
Other operating income
33,074
7,538
Administrative expenses
(37,331)
(10,495)
Other operating expenses
(37,810)
—
(Loss) / profit from operations
5
(38,707)
145,021
Finance cost
8
(42,102)
(17,206)
(Loss) / profit from ordinary activities before taxation
(80,809)
127,815
Revenue
4
Taxation
9
Net (loss) / profit attributable to shareholders
776
(80,033)
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
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(23,940)
103,875
DRB-HICOM
B e rh a d
(203430-W)
Balance Sheets
as at 31 March 2006
Note
2006
RM’000
CURRENT ASSETS
Inventories
Property development costs
Group
Company
2005
RM’000
2006
RM’000
733,606
110,215
553,492
101,967
—
—
—
—
Trade and other receivables
14
Tax recoverable
Short term investments
15
Short term deposits
16
1,269,233
99,534
170,158
1,061,005
1,451,342
75,331
187,020
1,148,583
506,310
32,189
17,255
100,911
806,748
—
21,087
41,786
Cash and bank balances
17
CURRENT LIABILITIES
107,147
3,550,898
144,884
3,662,619
2,084
658,749
17,576
887,197
361,054
1,399,351
48,241
356,796
1,425,866
37,451
—
523,883
—
—
444,171
—
59,811
694,743
14,471
2,577,671
973,227
71,670
1,197,684
30,058
3,119,525
543,094
—
99,000
—
622,883
35,866
10,720
284,456
2,098
741,445
145,752
2,090,904
334,237
—
303,745
1,427,194
739,805
3,341
75,652
4,974,878
5,948,105
2,392,425
279,355
—
347,431
1,385,095
533,504
2,504
25,412
4,965,726
5,508,820
76,889
—
4,266,343
9,800
59,325
—
—
1,534
4,413,891
4,449,757
84,687
—
3,410,577
7,350
59,325
—
—
758
3,562,697
3,708,449
General and life insurance funds
Trade and other payables
Provision for liabilities and charges
12
13 (a)
18
19
20
Bank borrowings
21
- Bank overdrafts
- Others
Current tax liabilities
NET CURRENT ASSETS
Non current assets
Property, plant and equipment
22
Land held for property development
13 (b)
Subsidiary companies
23
Jointly controlled entities
24
Associated companies
25
Other investments
26
Intangible assets
27
Deferred tax assets
28
A
n
n
u
a
l
R
2005
RM’000
e
p
o
r
t
2
0
0
6
101
DRB-HICOM
B e rh a d
(203430-W)
Balance Sheets
as at 31 March 2006
Group
Note
2006
RM’000
Company
2005
RM’000
2006
RM’000
2005
RM’000
FINANCED BY:
SHARE CAPITAL
29
999,772
985,670
999,772
985,670
RESERVES
1,443,911
1,663,545
2,631,153
2,722,779
SHAREHOLDERS’ equity
2,443,683
2,649,215
3,630,925
3,708,449
MINORITY INTERESTS
664,780
672,157
—
—
LIFE ASSURANCE FUND
30
809,786
582,560
—
—
DEFERRED INCOME
31
75,263
76,050
—
—
LONG TERM AND DEFERRED LIABILITIES
Borrowings
32
1,896,689
1,477,197
818,832
—
Sinking fund
33
645
658
—
—
Deferred tax liabilities
28
57,259
50,983
—
—
1,954,593
1,528,838
818,832
—
5,948,105
5,508,820
4,449,757
3,708,449
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
102
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
Consolidated Statement of Changes in Equity
for the financial year ended 31 March 2006
Issued and
fully paid
ordinary
shares of
RM1.00 eachNon-distributable Currency Other
Nominal
Share
Merger translation
reserves
Note
value
premium
reserve differences
(Note 34)
RM’000
RM’000
RM’000
RM’000
RM’000
Retained
earnings Total
RM’000
RM’000
2006
At beginning of the financial year
985,670
6,985
911,016
6,989
109,281
629,274
Share of an associated company’s reserves
—
—
—
(316)
—
—
(316)
Currency translation differences of
subsidiary companies
—
—
—
(3,744)
—
—
(3,744)
Realisation of capital reserves upon
expiry of Warrants
—
—
—
Net (losses)/gains not recognised in
the income statement —
—
—
Net loss for the financial year
—
—
—
—
—
(203,981)
Transfer to other reserves
34
—
—
—
—
14,743
(14,743)
Dividends in respect of the financial year ended
31 March 2005
10
—
—
—
—
—
(21,307)
Issue of ordinary shares
29
14,102
9,714
—
—
—
—
23,816
At end of the financial year
999,772
16,699
911,016
2,929
103,641
409,626
2,443,683
—
(4,060)
(20,383)
20,383
(20,383)
20,383
2,649,215
—
(4,060)
(203,981)
—
(21,307)
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
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t
2
0
0
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103
DRB-HICOM
B e rh a d
(203430-W)
Consolidated Statement of Changes in Equity
for the financial year ended 31 March 2006
Issued and
fully paid
ordinary
shares of
RM1.00 eachNon-distributable Currency Other
Nominal
Share
Merger translation
reserves
Note
value
premium
reserve differences
(Note 34)
RM’000
RM’000
RM’000
RM’000
RM’000
Retained
earnings Total
RM’000
RM’000
2005
At beginning of the financial year
980,673
5,454
914,434
4,514
98,567
515,515
2,519,157
Share of an associated company’s reserves
—
—
—
1,288
(39,146)
39,900
2,042
Currency translation differences of
subsidiary companies
—
—
—
1,187
—
—
1,187
Net goodwill arising from acquisition of
subsidiary companies
37
—
—
(3,418)
—
—
—
(3,418)
Net (losses) / gains not recognised in
the income statement —
—
(3,418)
2,475
(39,146)
39,900
(189)
Net profit for the financial year
—
—
—
—
—
141,407
141,407
Transfer to other reserves
—
—
—
—
49,860
(49,860)
—
Dividends in respect of the financial year ended
31 March 2004
10
—
—
—
—
—
(17,688)
(17,688)
Issue of ordinary shares
29
4,997
1,531
—
—
—
—
6,528
At end of the financial year
985,670
6,985
911,016
6,989
109,281
629,274
2,649,215
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
104
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
Company Statement of Changes in Equity
for the financial year ended 31 March 2006
Issued and
fully paid
ordinary
shares of
RM1.00 eachNon-distributable
Nominal
Share
Merger
Note
value
premium
reserve
RM’000
RM’000
RM’000
Other
reserves
(Note 34)
RM’000
Retained
earnings
(Note 36) Total
RM’000
RM’000
2006
985,670
6,985
2,318,321
Realisation of capital reserves upon expiry of Warrants
—
—
—
Net loss for the financial year
—
—
—
—
(80,033)
(80,033)
Dividends in respect of the financial year ended
31 March 2005
10
—
—
—
—
(21,307)
(21,307)
Issue of ordinary shares
29
14,102
9,714
—
—
—
23,816
At end of the financial year
999,772
16,699
2,318,321
—
296,133
3,630,925
At beginning of the financial year
980,673
5,454
2,318,321
20,383
290,903
3,615,734
Net profit for the financial year
—
—
—
—
103,875
103,875
Dividends in respect of the financial year ended
31 March 2004
10
—
—
—
—
(17,688)
(17,688)
Issue of ordinary shares
29
4,997
1,531
—
—
—
6,528
At end of the financial year
985,670
6,985
2,318,321
20,383
377,090
3,708,449
At beginning of the financial year 20,383
377,090
3,708,449
(20,383)
20,383
—
Net gain not recognised in income statement:
2005
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.
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
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105
DRB-HICOM
B e rh a d
(203430-W)
Cash Flow Statements
for the financial year ended 31 March 2006
Group
Note
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
(203,981)
141,407
(80,033)
103,875
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss) / profit attributable to shareholders
Adjustments for non-cash items:
Inventories written off
3,734
—
410
—
Impairment losses on investment in subsidiary companies
—
—
14,568
—
Allowance for / (writeback of) short term investments
2,600
15,295
3,832
(865)
Amortisation of intangible assets
692
341
—
—
Depreciation of property, plant and equipment
182,230
171,775
Dividend income (gross)
Finance cost Gain on disposal of shares in a jointly controlled entity
130,789
—
Gain on disposal of property, plant and equipment (36,340)
(6,194)
138,440
(1,531)
(6,663)
Impairment losses on property, plant and equipment
157,138
14,695
Interest income
(37,936)
(34,854)
Inventories written down (net of writeback)
16,777
(Gain) / Loss on disposal of shares in associated companies
Minority interests
106
(6,624)
(57)
58,401
Gain on disposal of shares in a subsidiary company
(185)
6,747
7,271
(145,005)
(172,561)
42,102
17,206
—
—
(422)
—
(32,342)
(3)
—
(4,285)
3,939
—
—
7,344
—
—
56,852
—
—
—
—
—
Discount on redemption of Loan Stocks 2002 / 2008
(12,803)
—
—
—
Property, plant and equipment written off
6,811
6,592
3,621
29
Provision for liabilities and charges (net of writeback)
30,334
13,328
—
—
Share of results of jointly controlled entities
(38,784)
(40,326)
—
—
Share of results of associated companies
(184,585)
(181,558)
—
—
Taxation
11,572
78,443
Unrealised gain on foreign exchange
(21,401)
(3,818)
(Writeback of) / allowance for doubtful debts
(6,913)
(3,106)
2,170
—
Preliminary project expenses written off
19,202
—
19,202
—
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
(776)
—
23,940
—
DRB-HICOM
B e rh a d
(203430-W)
Group
Note
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
Operating profit / (loss) before working capital changes
70,671
370,401
(165,926)
(25,393)
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
Inventories
(200,625)
150,896
—
2,232
Property development costs
20,697
23,550
—
—
Trade and other receivables
123,130
205,914
57,111
6,635
General and life insurance funds
231,484
194,851
—
—
Trade and other payables
20,072
(130,833)
46,374
(150,686)
Amounts due from customers on contracts
32,311
44,894
35,750
46,072
Amounts due to customers on contracts
11,021
5,146
Balances with subsidiary companies
—
—
—
Balances with jointly controlled entities
2,157
(2,644)
68
(35)
Balances with associated companies
1,390
4,178
(247)
(209)
(104,441)
—
(45,661)
16,943
Net cash generated from / (used in) operations
312,308
866,353
(72,531)
Interest received
32,331
32,750
12,278
2,361
Dividends received from subsidiary companies
—
—
111,886
42,221
Dividends received from jointly controlled entities
75,758
22,300
—
—
Dividends received from associated companies
92,839
37,395
13,525
6,545
Dividends received from other investments
5,957
6,103
—
—
Taxation paid, net of refunds
(43,135)
(49,773)
Finance cost paid
(168,976)
(80,730)
(13,306)
—
(15,342)
Net cash inflow / (outflow) from operating activities
307,082
834,398
51,852
(59,164)
9,492
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from disposal of a jointly controlled entity
38
—
8,640
—
—
Proceeds from disposal of associated companies
38
330
79,375
—
—
Proceeds from disposal / maturity of other investments
346,241
239,259
—
—
Proceeds from disposal of property, plant and equipment
56,957
23,988
992
11
A
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p
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107
DRB-HICOM
B e rh a d
(203430-W)
Cash Flow Statements
for the financial year ended 31 March 2006
Group
Note
2006
RM’000
Company
2005
RM’000
2006
RM’000
2005
RM’000
CASH FLOWS FROM INVESTING ACTIVITIES (continued)
Net cash inflow from disposal of a subsidiary company
38
Purchase of property, plant and equipment
Net cash outflow from acquisition of subsidiary companies
37
3,449
(122,720)
—
—
(136,346)
—
(690)
—
(317)
(1,090)
—
—
Acquisition of land held for property development
(20,417)
(57,654)
—
—
Acquisition of other investments
(538,290)
(418,518)
—
—
—
—
(5,000)
Acquisition of shares in:
- subsidiary companies
—
- a jointly controlled entity
(3,485)
(7,350)
- an associated company
(2,000)
(47,334)
Net cash outflow from investing activities
(279,935)
(317,030)
(2,450)
—
(7,350)
—
(2,148)
(12,656)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of ordinary shares
2,762
6,528
2,762
6,528
Proceeds from bank borrowings
1,711,747
491,253
804,850
—
Subscription for shares in subsidiary companies by minority interests
2,339
(5,474)
(21,832)
Redemption of preference shares held by minority interests
(2,160)
(8,350)
—
(6,264)
—
(185,455)
—
(13,707)
—
Repayment of bank borrowings
(1,756,412)
(600,941)
Repayment of hire purchase and finance leases
(17,541)
(138,694)
—
—
Dividends paid to minority interests
(55,743)
(46,828)
—
—
Dividends paid to shareholders
(21,307)
(17,688)
(27,991)
(21,307)
(17,688)
Proceeds from loans from a subsidiary company
—
—
109,369
85,379
Repayment of loan to a subsidiary company
—
—
(74,740)
(403)
Loans granted to subsidiary companies
—
—
(678,843)
(25,877)
Repayment of loans by subsidiary companies
—
—
48,013
15,009
(1,615)
21,250
Net cash (outflow) / inflow from financing activities
108
—
Fixed deposits held as security / maintained as sinking fund
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
(144,128)
(334,213)
DRB-HICOM
B e rh a d
(203430-W)
Group
Note
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS
(116,981)
183,155
48,089
(50,570)
Effects of foreign currency translation (1,949)
388
—
—
CASH AND CASH OF EQUIVALENTS AT BEGINNING OF
THE FINANCIAL YEAR
1,169,084
985,541
9,570
60,140
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR
1,050,154
1,169,084
57,659
9,570
Short term deposits 1,061,005
1,148,583
100,911
41,786
Cash and bank balances 107,147
144,884
2,084
17,576
Bank overdrafts
(59,811)
(71,670)
—
(10,720)
1,221,797
102,995
48,642
(45,336)
(39,072)
(a)
Cash and cash equivalents at end of the financial year
comprise the following:
Less: Fixed deposits held as security / sinking fund
16 (a) & (b)
(b)
1,108,341
(58,187)
(52,713)
1,050,154
1,169,084
57,659
9,570
9,636
9,037
—
—
10,939
—
—
—
12,803
—
—
—
Non cash transactions
The principal non cash transactions during the financial
year comprise the following:
(i)
(ii)
Acquisition of property, plant and equipment by means
of hire purchase and finance lease
22 (c)
Interest waiver on redemption of Loan Stocks 2002 / 2008
(iii) Discount on redemption of Loan Stocks 2002 / 2008
32
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DRB-HICOM
B e rh a d
(203430-W)
Cash Flow Statements
for the financial year ended 31 March 2006
Group
Note
(b)
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
32
11,442
—
—
—
Dividend in specie and capital repayment by an indirect
associated company
—
169,846
—
—
(vi) Investment in an indirect associated company via share
swap of short term investment
—
113,964
—
—
(vii) Acquisition of a subsidiary company via conversion of debt
—
404
—
—
—
—
—
72,077
Non cash transactions (continued)
(iv) Conversion of REULS plus accrued interest of a
wholly-owned subsidiary company
(v)
37 (f)
(viii) Dividend received from a subsidiary company off-set against
the amount due to the subsidiary company
The accounting policies on pages 111 to 124 and the notes on pages 125 to 197 form an integral part of these financial statements.
110
A n n
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RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
1PRINCIPAL ACTIVITIES
The Company is an investment holding company with investments in the automotive, defence, property and construction and services segments.
The Company was previously involved in the design and construction of the Electrified Double Track Project between Rawang and Ipoh.
The principal activities of the subsidiary companies, jointly controlled entities and associated companies are described in Note 3 to the financial statements.
The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Bursa Saham Kuala Lumpur.
The address of the registered office and principal place of business of the Company is Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1 / 8,
Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan, Malaysia.
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements:
(a)
Basis of preparation
The financial statements of the Group and of the Company are prepared under the historical cost convention except as disclosed in this summary
of significant accounting policies.
The financial statements comply with the Malaysian Accounting Standards Board (“MASB”) approved accounting standards in Malaysia and the
provisions of the Companies Act, 1965. New accounting standards that are effective for the financial year are adopted and applied by the Group
and Company retrospectively or prospectively as allowed by the respective accounting standards.
The preparation of the financial statements in conformity with the MASB approved accounting standards in Malaysia and the provisions of the
Companies Act, 1965 requires the Directors to make estimates and assumptions that may affect the reported amount 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 financial year. Actual results could differ from those estimates.
(b)
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. The Group’s subsidiary companies are listed in Note 3 to the financial statements.
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DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(b)
Basis of consolidation (continued)
The total profits and losses of subsidiary companies are included in the Group’s income statement; the proportion of the profit or loss applicable
to minority interests is deducted in arriving at the profit attributable to the shareholders of the Company.
All the subsidiary companies are consolidated using the acquisition 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’ net assets are determined and
these values are reflected in the consolidated financial statements. The profit or loss on disposal of a subsidiary is the difference between net
disposal proceeds and the Group’s share of its net assets.
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 employed 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. Where necessary, adjustments are
made to the financial statements of subsidiary companies to ensure consistency of accounting policies with those of the Group.
Minority interests are measured at the minorities’ share of post acquisition fair values of the identifiable assets and liabilities of the acquiree.
Separate disclosure is made of minority interests.
(c)
(d)
Goodwill
oodwill arising on consolidation represents the excess of fair value of the purchase consideration over the fair value of the Group’s share
G
of the separable net assets of the companies acquired, at the date of acquisition. Goodwill is written off against reserves in the financial
year of acquisition.
Jointly controlled entities
A jointly controlled entity is an enterprise which is neither a subsidiary nor an associated company of the Group but over which there is a contractually
agreed sharing of control by the Group with one or more parties over the strategic operating, investing and financial policy decisions.
The Group’s share of results of jointly controlled entities is included in the consolidated income statements 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.
112
A n n
n uu aa ll
The Group’s jointly controlled entities are listed in Note 3 to the financial statements.
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
2
B e rh a d
(203430-W)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(e)
Associated companies
An associated company is a company in which the Group is in a position to exercise significant influence in its management and which is neither a
subsidiary nor a jointly controlled entity. Significant influence is the power to participate in the financial and operating policy decisions of the associate
but not control over those policies.
The Group’s share of results of associated companies is included in the consolidated income statement using the equity method of accounting. The
share of the results of the associated company will not be taken into the Group’s income statement when the carrying value of the investment in an
associated company reaches zero unless the Group has incurred obligations or guaranteed obligations in respect of the associated company. In the
consolidated balance sheet, the Group’s interest in associated companies is stated at cost plus the Group’s share of post acquisition retained profits
and reserves less impairments. These amounts are taken from the latest audited financial statements or management financial statements of the
associated companies concerned made up to the end of their respective financial years.
The Group’s associated companies are listed in Note 3 to the financial statements.
(f) 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.
•
Short term investments
Short term investments are stated at the lower of cost and market value.
•Other investments
(a)
I nvestment properties, principally comprising office buildings, are held for long term rental yields and are not substantially occupied by
the Group. Investment properties are stated at cost. No depreciation is provided on investment properties as it is the Group’s practice to
maintain these properties in such conditions that the residual value is so high that depreciation would be insignificant.
(b)Malaysian Government Securities, Cagamas papers and quoted / unquoted corporate debt securities are stated at cost adjusted for the
amortisation of premiums or accretion of discounts calculated on a constant yield basis over the period from the date of purchase to
maturity date. The amortisation of premiums and accretion of discounts are recognised in the income statement.
(c)
ther 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
O
other than temporary in the value of such investments. On disposal of other investment, the difference between the net disposal proceeds and its
carrying amount is charged or credited to the income statement; any amount in revaluation reserve is transferred to retained earnings.
Quoted and unquoted shares are stated at cost.
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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(g)
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 process costs, where necessary. Cost is 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 selling expenses.
(h)Property development activities
(i)Land held for property development
Land held for property development consist of land on which no significant development work has been undertaken or where development
activities are not expected to be completed within the normal operating cycle. Such land is classified as non current assets and is stated at
cost less accumulated impairment losses.
Cost associated with the acquisition of land includes the purchase price of the land, professional fees, stamp duties, conversion fees and
other relevant levies. Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately
to its recoverable amount.
Land held for property development is transferred to property development costs (within current assets) when development work is to be
undertaken and is expected to be completed within the normal operating cycle.
On disposal of land held for property development, the difference between the net disposal proceeds and its carrying amount is charged or
credited to the income statement.
(ii)Property development costs
Where the outcome of a development can be reliably estimated, property development revenue and expenditure are recognised using the
percentage of completion method. The percentage of completion is measured by reference to the development costs incurred to date in
proportion to the estimated total costs for the property development.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(h)Property development activities (continued)
(ii)Property development costs (continued)
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. The 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 is stated at lower of cost and net realisable value. Where revenue recognised in the income statement exceed
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).
Interest on borrowings incurred on property development costs are capitalised. Capitalisation of borrowing costs ceases upon completion of
property development activities.
(i)
Receivables
Receivables are carried at anticipated realisable value. An estimate is made for doubtful receivables based on a review of all outstanding amounts
at the financial year end. Bad debts are written off in the financial year in which they are identified.
(j)
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.
(k)
Intangible assets
Intangible assets comprise plant and assembly licences and expenses incurred for development of products which 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.
here an indication of impairment exists, the carrying amount of the intangible assets is assessed and written down immediately to its
W
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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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(l)Property, plant and equipment and depreciation
Freehold land and capital work-in-progress are stated at cost. All other property, plant and equipment are stated at cost less accumulated
depreciation and impairment losses.
Interest costs on specific and identifiable borrowings used to finance the acquisition of property, plant and equipment are capitalised and carried
forward as part of property, plant and equipment. Capitalisation of borrowing costs ceases when assets are ready for their intended use.
Gains and losses on disposals are determined by comparing proceeds with carrying amounts and are included in profit / (loss) from operations.
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.
No depreciation is provided on freehold land as it has an infinite useful life and depreciation on capital work-in-progress commences when the
assets are ready for their intended use. Leasehold land is amortised on a straight line basis over the periods of the respective leases which range
from 28 to 914 years. Other property, plant and equipment are depreciated on a straight line basis to write off the cost of these assets over their
estimated useful lives.
The estimated useful lives in years are as follows:
Buildings, golf course and improvements
Plant and machinery
Motor vehicles
Office equipment
Furniture and fittings
4
5
3
3
3
-
50
15
8
10
10
years
years
years
years
years
(m) Deferred taxation
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 goodwill or negative goodwill or 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.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Deferred taxation (continued)
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 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 or negative goodwill.
(n) Foreign currency translation
Transactions in foreign currencies during the financial year are converted into Ringgit Malaysia at the rates of exchange ruling on the transaction
dates unless hedged by forward foreign exchange contracts, in which case the rates specified in such forward contracts are used. Monetary assets
and liabilities in foreign currency at the balance sheet date are translated into Ringgit Malaysia at rates of exchange approximating those ruling
on that date. Non-monetary assets and liabilities in foreign currency at the balance sheet date are translated into Ringgit Malaysia at rates of
exchange approximating those ruling on that date of the transactions. Exchange gains and losses are dealt with in the income statement.
The financial statements of non-integral foreign subsidiary companies are translated into Ringgit Malaysia at the rate of exchange ruling at the balance
sheet date. Exchange differences on the translation of the net assets of foreign subsidiary companies are dealt with through 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.
The principal closing rates used in translation of foreign currency amounts were as follows:
Financial year end rates
2006
2005
RM
RM
1 Australian Dollar
2.671
2.961
1 Brunei Dollar
2.300
2.329
1 Euro
4.524
4.966
100 Hungarian Forint
1.690
1.989
100 Indonesia Rupiah
0.043
0.043
100 Japanese Yen
3.169
3.576
1 Singapore Dollar
2.300
2.329
1 Sterling Pound
6.493
7.216
100 Thai Baht
10.010
9.880
1 US Dollar
3.715
3.825
1 Swiss Franc
2.867
—
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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(o)
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:
(i)
Electrified Double Track Project
the completion of physical proportion of the contract work.
Other contracts
(ii)
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.
(p)
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.
(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.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(q)
Revenue recognition
Other than revenue recognition policies mentioned elsewhere in the summary of significant accounting policies, set out below are the significant
revenue recognition policies used by the Group:
(i)
Income from sale of goods and services
Sales are recognised upon delivery of goods and upon services rendered, net of sales tax, returns, discounts and allowances.
(ii)
Club membership fees
Annual licence fees disclosed as deferred income are recognised on a straight line basis over the duration of the membership.
(iii) Solid waste management
Revenue from management services, solid waste disposal and tipping fees are recognised upon performance of services less discounts.
(iv) Development properties
Revenue from development projects are recognised at the point of signing of sale and purchase agreements in respect of units sold and is
based on the percentage of completion method in cases where the outcome of the contract can be reliably estimated. Where foreseeable
losses on development projects are anticipated, full allowance for losses is made in the financial statements.
(v)
Income from inspection of vehicles are recognised upon the rendering of inspection services.
(vi) Dividend Income
(r)
Vehicle inspection income
Dividends are recognised when the Group’s right to receive payment is established.
General insurance underwriting results
The general insurance underwriting results are determined for each class of business after taking into account reinsurances, commissions,
unearned premiums and claims incurred.
Premium income
Premium income is recognised in a financial year in respect of risks assumed during that particular financial year. Premiums from direct business
are recognised during the financial year upon the issuance of insurance policies. Premiums in respect of risks incepted for which policies have
not been issued as of the balance sheet date are accrued at that date.
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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(r)
General insurance underwriting results (continued)
Premium income (continued)
Inward treaty reinsurance premiums are recognised on the basis of periodic advices received from ceding insurers.
Outward reinsurance premiums are recognised in the same accounting period as the original policy to which the reinsurance relates.
Unearned premium reserves
Unearned premium reserves (“UPR”) represent the portion of the net premiums of insurance policies written that relate to the unexpired periods
of the policies at the end of the financial year.
In determining the UPR at the balance sheet date, the method that most accurately reflects the actual unearned premium is used, as follows:
-
25% method for marine cargo, aviation cargo and transit;
-
1
/24th
-
1
/8 th
-
time appointment method for policies with insurance periods other than 12 months.
Provision for claims
A liability for outstanding claims is recognised in respect of both direct insurance and inward reinsurance. The amount of outstanding claims is the
best estimate of the expenditure required together with related expenses less recoveries to settle the present obligation at the balance sheet date.
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;
method for all other classes of overseas inward business with a deduction of 20% for acquisition costs; and
Provision is also made for the cost of claims, together with related expenses, incurred but not reported at the balance sheet date, based on an
actuarial valuation by an independent qualified actuary.
Acquisition costs
The costs 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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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(s)Life insurance underwriting results
The surplus transferable from the life insurance fund to the income statement is based on the surplus determined by an annual actuarial
valuation of the long term liabilities to policyholders, made in accordance with the provisions of the Insurance Act, 1996 by the appointed actuary.
In the event the actuarial valuation indicates that a transfer is required from the shareholders’ fund, the transfer from the income statement to
the life insurance fund is made in the year of the actuarial valuation.
Premium income
Premium income includes premium recognised in the life fund.
Premium income of the Life fund is recognised as soon as the amount of the premium can be reliably measured. First premium is recognised
from inception date and subsequent premium is recognised when it is due.
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.
remium income of the Investment-linked funds are in respect of the net creation of units which represents premiums paid by policyholders as
P
payment for a new contract or subsequent payments to increase the amount of that contract. Net creation of units is recognised on a receipt basis.
Commission and agency expenses
Commission and agency expenses, which are costs directly incurred in securing premium on insurance policies, net of income derived from reinsurers
in the course of ceding of premium to reinsurers, are charged to the life insurance revenue account in the financial year in which they are incurred.
Provision for claims
Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and / or the insurer is notified.
Recoveries on reinsurance claims are accountable for in the same financial year as the original claims are recognised.
Claims and provisions for claims arising on life insurance policies including settlement costs, less reinsurance recoveries, are accounted for using
the case basis method and for this purpose, the benefits payable under a life insurance policy are recognised as follows:
(i)
maturity or other policy benefit payments due on specified dates are treated as claims payable on the due dates; and
(ii)death, surrender and other benefits without due dates are treated as claims payable, on the date of receipt of intimation of death of the
assured or occurrence of contingency covered.
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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(t)Provisions
(i)
Warranty and sales returns
Provision is made for estimated liability on all products still under warranty and provision for sales returns is made for estimated returns
of goods at balance sheet date. These provisions are arrived at based on service and sales returns histories.
(ii)
Restructuring and voluntary separation scheme costs
Restructuring 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.
(u)
Financial Instruments
Description
A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of
another enterprise.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial assets from another enterprise, a contractual right to
exchange financial instruments with another enterprise under conditions that are potentially favourable, or an equity instrument of another enterprise.
A financial liability is any liability that is a contractual obligation to deliver cash or other financial asset to another enterprise, or to exchange
financial instruments with another enterprise under conditions that are potentially unfavourable.
Financial Instruments Recognised on the Balance Sheet
The particular recognition and measurement method for financial instruments recognised on the balance sheet is disclosed in the individual policy
statements associated with each item.
Financial Instruments Not Recognised on the Balance Sheet
Financial derivative hedging instruments are used in the Group’s risk management of foreign currency exposures of its financial liabilities. Hedge
accounting principles are applied for the accounting of the underlying exposures and their hedge instruments.
Exchange gains and losses arising on 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. Exchange gains and losses relating to hedge instruments
are recognised in the income statement in the same period as the exchange differences on the underlying hedged items. No amounts are
recognised in respect of future periods.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(u)
Financial Instruments (continued)
Fair Value Estimation for Disclosure Purposes
The fair value of publicly traded financial instruments is based on quoted market prices at the balance sheet date.
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.
(v)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 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 obligation.
(iii) Equity compensation benefits
Details of the Employees’ Share Option Scheme are set out in Note 29 (d) to the financial statements. The Group and Company do not make
a charge to the income statement in connection with share options granted. When the share options are exercised, the proceeds received,
net of any transaction cost, are credited to share capital and share premium.
(iv) 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 voluntary separation in exchange for these benefits.
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Notes to the Financial Statements – 31 March 2006
2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Share Capital
(i)
Classification
Ordinary shares are classified as equity.
Dividends to shareholders of the Company
(ii)
Dividends on ordinary shares are recognised as liabilities when declared before the balance sheet date. A dividend proposed after the balance
sheet date, but before the financial statements are authorised for issue, is not recognised as a liability at the balance sheet date. Upon the
dividend becoming payable, it will be accounted for as a liability.
(x)
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.
(y)
Contingent liabilities and contingent assets
he Group does not recognise a contingent liability but disclosed its existence in the financial statements. A contingent liability is a possible
T
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.
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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 2006 therein are shown below:
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
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
Pusat Pemeriksaan Kenderaan
Berkomputer Sdn. Bhd. (“PUSPAKOM”)
100.00
100.00
Inspection of commercial vehicles for roadworthiness
31 March
Imatex Berhad
100.00
100.00Property investment and development,
31 March
civil engineering and building construction DRB-HICOM Defence Technologies Sdn. Bhd.
100.00
100.00
*
*
Manufacture, supply, maintenance and marketing
of military vehicles
31 March
Hicomobil Sdn. Bhd.
100.00
100.00
Distribution of motor vehicles
31 March
Suzuki Malaysia Automobile Sdn. Bhd.
100.00
100.00
Distribution of motor vehicles
31 March
DRB-HICOM Information Technologies Sdn. Bhd.
90.00
90.00Research and development, trading of computer
hardware and software and provision of related
consultancy services
Malaysian Truck & Bus Sdn. Bhd.
80.00
80.00
31 March
Manufacture, assembly and sale of
commercial vehicles
31 March
DRB-HICOM Export Corporation Sdn. Bhd.
77.25
77.25
Dormant
31 March
Intrakota Komposit Sdn. Bhd.
70.00
70.00
Investment holding
31 March
Motosikal Dan Enjin Nasional
Sdn. Bhd. (“MODENAS”)
55.00
55.00
Manufacture, assembly and distribute motorcycles
and related spare parts and accessories
31 March
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Notes to the Financial Statements – 31 March 2006
3
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary companies of Gadek (Malaysia) Berhad:
Mega Consolidated Sdn. Bhd.
100.00
100.00
Investment holding
31 March
*
Ladang Gadek Development Sdn. Bhd.
100.00
100.00
Cultivation of oil palm
31 March
*
Ladang Kupang Development Sdn. Bhd.
100.00
100.00
Cultivation of rubber and oil palm
31 March
—
85.00
Construction work and project management
of highway projects
31 March
SKVE Holdings Sdn. Bhd.
(formerly known as Gadek-Perspec Consortium Sdn. Bhd.)
Perspec Prime (Malaysia) Sdn. Bhd.
70.00
70.00
Construction work and project management
31 March
Uni.Asia Capital Sdn. Bhd.
51.00
51.00
Investment holding
31 March
Subsidiary companies of Perspec Prime (Malaysia) Sdn. Bhd.:
Spegabina Sdn. Bhd.
70.00
70.00
Construction of infrastructure and housing projects
31 March
The One Mix Sdn. Bhd.
56.28
56.28
Production and supply of ready-mixed concrete
31 March
Subsidiary companies of Uni. Asia Capital Sdn. Bhd.:
Uni.Asia Life Assurance Berhad
51.00
51.00
Underwriting of life insurance business
31 March
Uni.Asia General Insurance Berhad
34.73
34.73
Underwriting of general insurance business
31 March
—
34.73
Dormant
31 March
34.73
34.73
Dormant
31 March
Dormant
31 March
Subsidiary companies of Uni. Asia General Insurance Berhad:
*
South East Asia Management Services Sdn. Bhd.
(dissolved on 14 January 2006)
#*
Seains Pte. Ltd.
(under voluntary liquidation)
Subsidiary company of South East Asia Management Services Sdn. Bhd.:
*
Chattel Credit & Leasing Sdn. Bhd.
(dissolved on 14 January 2006)
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—
34.73
DRB-HICOM
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COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary companies of HICOM Holdings Berhad:
HICOM Berhad
100.00
100.00
Management of projects, rental of properties
and investment holding
31 March
HICOM Diecastings Sdn. Bhd.
100.00
100.00
Manufacturing and supplying diecast parts for
motorcycles, automobiles and other applications
31 March
*
HICOM Engineering Sdn. Bhd.
100.00
100.00
Manufacturing casted and machined parts
and components
31 March
HICOM Communications Sdn. Bhd.
100.00
100.00
Supply, installation and management of
telecommunications and information technology
products and systems
31 March
USF-HICOM Holdings Sdn. Bhd.
100.00
100.00
Investment holding
31 March
Automotive Corporation Holdings Sdn. Bhd.
100.00
100.00
Investment holding
31 March
Desa Puchong Sdn. Bhd.
100.00
100.00
Property development and cultivation of oil palm
31 March
HICOM Network Services Sdn. Bhd.
100.00
100.00
Provision of electronic communication,
telecommunication and data processing services
31 March
HICOM Technical and Engineering Services Sdn. Bhd.
100.00
100.00
Dormant
31 March
DRB-HICOM Auto Solutions Sdn. Bhd.
100.00
100.00
Dormant
31 March
Equality Services Sdn. Bhd.
100.00
100.00
Dormant
31 March
HICOM Dewan Development Sdn. Bhd.
100.00
100.00
Dormant
31 March
*
NSE Development Sdn. Bhd.
100.00
100.00
Cultivation and marketing of rubber and oil palm
31 March
*
Bukit Kledek Development Sdn. Bhd.
100.00
100.00
Cultivation and marketing of rubber and oil palm
31 March
*
Scott & English Electronics Holdings Sdn. Bhd.
70.00
70.00
Investment holding
31 March
*
(formerly known as DRB-HICOM IT Solutions Sdn. Bhd.)
*
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
127
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
3
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
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,
construction, engineering and automotive products
31 March
*
Comtrac Sdn. Bhd.
70.00
70.00Construction works and the provision of
projects and development management services
31 March
*
Oriental Summit Industries Sdn. Bhd.
70.00
70.00Contract manufacturing and trading of motorcycles
and automobile parts and components
31 March
Proton City Development Corporation Sdn. Bhd.
60.00
60.00
31 March
KL Airport Services Sdn. Bhd.
60.00
60.00Superintendant of airport operation systems and
provision of related ground handling services and
warehousing space
31 March
Alam Flora Sdn. Bhd.
55.00
55.00
Management of integrated solid waste
31 March
HICOM Petro-Pipes Sdn. Bhd.
51.00
51.00
Dormant
31 March
HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.
51.00
51.00Manufacturing and sale of thermo plastic and
thermo setting products
31 March
HICOM Vertex Sdn. Bhd.
51.00
51.00
Dormant
31 March
Property development, civil and building construction
Subsidiary companies of HICOM Berhad:
*
HICOM Properties Sdn. Bhd.
100.00
100.00
Investment holding
31 March
*
Connemara Development Sdn. Bhd.
100.00
100.00
Dormant
31 March
*
HB Property Development Sdn. Bhd.
100.00
100.00
Dormant
31 March
*
Glenmarie Cove Development Sdn. Bhd.
89.50
89.50
Investment holding and property development
31 March
HICOM Megah Sdn. Bhd.
74.63
74.63
Property development and investment holding
31 March
HICOM-Selangor Marine Management Sdn. Bhd.
51.00
51.00
Dormant
31 March
(under voluntary liquidation)
128
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
3
B e rh a d
(203430-W)
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary companies of HICOM Communications Sdn. Bhd.:
HICOM Teleservices Sdn. Bhd.
/*
100.00
100.00
Provision of value-added telecommunication services
31 March
70.00
70.00
Providing managed services and system integration
31 March
Manufacture of plastic injected parts for
automotive industry
31 March
PT HICOM BMS
Subsidiary company of HICOM-Teck See Manufacturing Malaysia Sdn. Bhd.:
@* HICOM Automotive Plastic (Thailand) Ltd.
50.99
50.99
Subsidiary company of USF-HICOM Holdings Sdn. Bhd.:
*
USF-HICOM (Malaysia) Sdn. Bhd.
100.00
100.00Sale of motor vehicles and their related spare
parts and accessories
31 March
Subsidiary company of Automotive Corporation Holdings Sdn. Bhd.:
*
Automotive Corporation (Malaysia) Sdn. Bhd.
100.00
100.00
Sale of motor vehicles and their related spares
and accessories
31 March
Subsidiary company of USF-HICOM (Malaysia) Sdn. Bhd.:
*
Directional (Malaysia) Sdn. Bhd.
100.00
100.00Importation and distribution of motor vehicles
and their related spare parts and accessories and
workshop servicing
31 March
100.00Sale of commercial and other vehicles, related parts
and accessories, repair and maintenance
31 March
Subsidiary company of Directional (Malaysia) Sdn. Bhd.:
*
Euro Truck & Bus (Malaysia) Sdn. Bhd.
100.00
Subsidiary companies of HICOM Technical and Engineering Services Sdn. Bhd.:
HICOM Ventures Sdn. Bhd.
HICOM Environmental Sdn. Bhd.
100.00
100.00
Dormant
31 March
51.00
51.00
Dormant
31 March
Subsidiary company of Scott & English Electronics Holdings Sdn. Bhd.:
*
Scott & English Electronics Sdn. Bhd.
70.00
70.00Trading in consumer electronic products and
domestic appliances.
A
n
n
u
a
l
31 March
R
e
p
o
r
t
2
0
0
6
129
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
3
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary companies of Scott & English (Malaysia) Sdn. Bhd.:
*
HICOM United Leasing Sdn. Bhd.
70.00
70.00
Sale, servicing and rental of machinery and equipment
31 March
+*
Scott & English (Cambodia) Ltd.
70.00
70.00
Trading in spare parts and heavy equipment
31 March
^*
Myanmar Scott & English Company Ltd.
70.00
70.00
Trading and servicing of machinery
31 March
*
Scott & English Trading (Sarawak) Sdn. Bhd.
35.70
35.70Trading of heavy machinery & equipment, spare parts
and electrical appliances
31 March
Subsidiary companies of Comtrac Sdn. Bhd.:
*
Comtrac Trading Sdn. Bhd.
70.00
*
Isti-Emas Sdn. Bhd.
70.00
70.00
Dormant
31 March
—
70.00
Dormant
31 March
70.00
70.00
*Glenmarie Management Corporation Sdn. Bhd.
70.00
Trading of construction materials
31 March
(formerly known as Comtrac Properties Sdn. Bhd.)
(transfered on 30 December 2005)
*
Comtrac Premises Sdn. Bhd.
*
Comtrac Precast Sdn. Bhd.
67.90
67.90
Dormant
31 March
Supply, installation and construction of precast
building works
31 March
Ciri-Alam Bina Sdn. Bhd.
56.00
56.00Construction and property development, rental
of properties and maintenance services
31 March
HICOM-TNB Properties Sdn. Bhd.
42.00
42.00
Dormant
31 March
*
Comtrac-Sabkar Development Sdn. Bhd.
35.70
35.70
Construction works and property development
31 March
*
Comtrac Glenview Sdn. Bhd.
35.70
35.70
Property development
31 March
*
Glenmarie Management Corporation Sdn. Bhd.
35.70
—
Dormant
31 March
*
Subsidiary company of Comtrac Glenview Sdn. Bhd.:
(formerly known as Comtrac Properties Sdn. Bhd.)
Subsidiary companies of Oriental Summit Industries Sdn. Bhd.:
130
*
Automotive Components Engineering Centre Sdn. Bhd.
70.00
70.00Design and manufacturing of die and mould for
automotive industry
31 March
*
OSI Manufacturing Sdn. Bhd.
70.00
70.00
31 March
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
Dormant
DRB-HICOM
3
B e rh a d
(203430-W)
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary company of KL Airport Services Sdn. Bhd.:
KLAS Engineering Services Sdn. Bhd.
60.00
60.00Provision of aircraft maintenance and
engineering services
31 March
Subsidiary companies of HICOM Properties Sdn. Bhd.:
*
HICOM Indungan Sdn. Bhd.
100.00
100.00
Property development
31 March
*
Kenyir Splendour Berhad
100.00
100.00
Property development and resort management
31 March
HICOM Facility Management Berhad
100.00
100.00Provision of facility management services and
resale and leasing of leisure club memberships
31 March
*
Puncak Permai Sdn. Bhd.
58.00
58.00
Investment holding
31 March
*
HICOM Menang Properties Sdn. Bhd.
51.00
51.00
Property development
31 March
67.17
67.17
Rental of commercial building
31 March
Subsidiary company of HICOM Megah Sdn. Bhd.:
#& Corwin Holding Pte. Ltd.
Subsidiary companies of Automotive Corporation (Malaysia) Sdn. Bhd.:
*
Auto Prominence (M) Sdn. Bhd.
100.00
100.00
Sale of motor vehicles and their related accessories
31 March
*
Stagwell Sdn. Bhd.
100.00
100.00
Dormant
31 March
Automotive Manufacturers (Malaysia) Sdn. Bhd.
93.00
93.00Assembly of motor vehicles and other road
transport vehicles
31 March
Subsidiary companies of HICOM Indungan Sdn. Bhd.:
*
Rebak Island Marina Berhad
60.00
60.00
Operation of a marina resort and property development
31 March
*
HICOM Tan & Tan Sdn. Bhd.
50.00
50.00
Dormant
31 March
70.60
70.60Property development, management of hotel and
golf resort
Subsidiary company of Puncak Permai Sdn. Bhd.:
*
Horsedale Development Berhad
A
n
n
u
a
l
31 March
R
e
p
o
r
t
2
0
0
6
131
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
3
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Subsidiary company of Horsedale Development Berhad:
*
Kesturi Hektar Sdn. Bhd.
70.60
70.60
Dormant
31 March
Subsidiary companies of PUSPAKOM:
Puspakom Teknik Sdn. Bhd.
100.00
100.00Supply and maintenance of automobile
associated equipment
31 March
Flora Areana Sdn. Bhd.
100.00
100.00
31 March
Investment holding
Subsidiary company of Flora Areana Sdn. Bhd.:
Multi Automotive Service and Assist Sdn. Bhd.
55.00
55.00Membership recruitment, providing vehicle assistance
and supply of auto related products and services
31 March
Subsidiary company of Imatex Berhad:
Imatex Management Services Sdn. Bhd.
100.00
100.00
Provision of management services
31 March
Subsidiary companies of MODENAS:
/*
Edaran Modenas Sdn. Bhd.
55.00
55.00Distribution of motorcycles, related spare parts
and accessories and servicing of motorcycles
31 March
PT Modenas Putra Motor Indonesia
31.90
31.90Distribution of motorcycles, servicing and maintenance
of motorcycles
31 March
S.J. Kenderaan Sdn. Bhd.
70.00
70.00
Dormant
31 March
Mega Komposit Auto Sdn. Bhd.
70.00
70.00
Selling of motor vehicles and car accessories
31 March
Gemilang Komposit Auto Sdn. Bhd.
70.00
70.00
Selling of motor vehicles and car accessories
31 March
Syarikat Pengangkutan Malaysia Sendirian Berhad
69.99
69.99
Dormant
31 March
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
39.06
39.06
Dormant
31 March
Subsidiary companies of Intrakota Komposit Sdn. Bhd.:
132
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
3
B e rh a d
(203430-W)
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
JOINTLY CONTROLLED ENTITIES
Jointly controlled entity of DRB-HICOM Berhad:
*
Isuzu Malaysia Sdn. Bhd.
49.00
49.00Distribution of motor vehicles, components
and parts
31 December
Jointly controlled entities of HICOM Holdings Berhad:
*
HICOM-HONDA Manufacturing Malaysia Sdn. Bhd.
48.00
48.00Manufacturing and assembling of
motorcycle engines and parts
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
Manufacturing and assembling of motorcycle engines 31 March
*
HICOM-SUZUKI Manufacturing Malaysia Sdn. Bhd.
45.00
45.00
Manufacturing and assembling of motorcycle engines 31 December
PHN Industry Sdn. Bhd.
42.50
42.50Manufacturing stamped metal parts, sub-assembly
of automotive components and design and
manufacture of dies
Model Building Maintenance Dallah
Alam Flora Waste Management ervices L.L.C.
33.33
—
30.00
30.00
∆*
31 March
Provision of waste management clearing services
31 December
Management of hotel and service apartments
31 January
Jointly controlled entity of HICOM Properties Sdn. Bhd.:
Sucasa Sdn. Bhd.
Jointly controlled entities of Comtrac Sdn. Bhd.: *
Comtrac Businessworld Sdn. Bhd.
35.00
35.00
*
Comtrac-Concrete Constructions Sdn. Bhd.
34.30
34.30Construction works and the provision of
project and development management services
31 March
35.30Housing and property development and rental
of properties
31 March
Dormant
31 March
Jointly controlled entity of Horsedale Development Berhad:
*
HICOM-Gamuda Development Sdn. Bhd.
35.30
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
133
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
3
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
ASSOCIATED COMPANIES:
Associated companies of DRB-HICOM Berhad: Honda Malaysia Sdn. Bhd.
34.00
34.00Assembly, manufacture and sale of motor vehicles,
accessories and components
31 March
*
Marak Unggul Sdn. Bhd.
29.99
29.99
*
Gerbang Perdana Sdn. Bhd.
20.00
20.00Design and construction of Gerbang Selatan
Bersepadu project
Dormant
31 December
31 December
Associated company of Gadek (Malaysia) Berhad:
Clestra Hauserman (Malaysia) Sdn. Bhd.
—
50.00
Dormant
31 December
(dissolved on 6 June 2005)
Associated company of Uni.Asia General Insurance Berhad:
—
10.42
General insurance underwriter
31 December
South Klang Valley Expressway Sdn. Bhd.
—
42.50
Dormant
31 March
Central Eastern Link Expressway Sdn. Bhd.
—
42.50
Dormant
31 March
~& South East Asia Insurance (B) Sdn. Bhd.
Associated companies of SKVE Holdings Sdn. Bhd.:
Associated companies of HICOM Holdings Berhad:
134
*
Siemens VDO Instruments MY Sdn. Bhd.
33.33
33.33Manufacturing and sale of instrument panels /
clusters, speedometers, tachometer and aircore
movement for the transportation industry
30 September
*
ZF Steerings (Malaysia) Sdn. Bhd.
30.00
30.00Manufacturing and assembling of mechanical
and power rack and pinion steering systems
31 December
Edaran Otomobil Nasional Berhad
29.31
29.31Sale of motor vehicles, related spare parts and
services of vehicles
31 December
*
Boustead Heah Joo Seang Sdn. Bhd.
25.00
25.00
Cultivation and processing of oil palm
31 December
*
Niro Ceramic (M) Sdn. Bhd.
24.50
24.50
Manufacturing and trading of ceramic tiles
31 December
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
3
B e rh a d
(203430-W)
COMPANIES IN THE GROUP (continued)
Effective Equity
Name of Company
InterestPrincipal Activities
2006
2005
%
%
Financial
Year End
Associated companies of HICOM Holdings Berhad: (continued)
*
*
Navi & Map Sdn. Bhd.
20.00
EON Capital Berhad
20.20
20.20Investment holding company, banking and related
financial services, stockbroking, nominee and
custodian services
31 December
TRW Steering & Suspension (Malaysia) Sdn. Bhd.
20.00
20.00Manufacturing and sale of automobile tierods,
tierod ends and suspension ball joints, stabilizer
links, steering linkages and power steering gear
31 December
34.30
34.30
31 March
—Producing, manufacturing, importing, marketing
31 March
and selling maps, car navigator system and related
products and services
Associated company of Comtrac Sdn. Bhd.:
*Comtrac-Concrete Constructions JV Sdn. Bhd.
Dormant
(dissolved on 28 May 2006)
Associated company of Intrakota Komposit Sdn. Bhd.:
*
Airport Coach Sdn. Bhd.
25.56
25.56Provision of bus transportation services
31 December
*
These companies in the Group are audited by other firms of auditors other than PricewaterhouseCoopers, Malaysia.
&These companies in the Group are audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and
independent legal entity from PricewaterhouseCoopers, Malaysia.
#
The country of incorporation is Singapore.
+
The country of incorporation is Cambodia.
^
The country of incorporation is Myanmar.
~
The country of incorporation is Brunei.
@ The country of incorporation is Thailand.
√
The country of incorporation is Bahrain.
/
The country of incorporation is Indonesia.
∆
The country of incorporation is United Arab Emirates.
All the other companies are incorporated in Malaysia.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
135
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
4
REVENUE
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
Sale of goods
2,245,066
2,857,590
—
1,453
Rendering of services
823,755
871,578
7,860
Construction contracts
(92,685)*
303,660
(133,943)*
Insurance business
350,064
311,188
—
—
Sale of land and development properties
196,635
162,579
—
—
—
—
145,005
172,561
3,522,835
4,506,595
18,922
470,505
Dividends (gross)
7,860
288,631
*The reversal of revenue of the Group and the Company arose from the re-estimation of contract revenue in respect of the Electrified Double
Track Project.
5
(LOSS) / PROFIT FROM OPERATIONS
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
2,600
15,295
3,832
(865)
692
341
—
—
1,657
1,614
135
125
18
46
—
10
(Loss) / profit from operations is arrived at after charging / (crediting) the following:
Allowance for / (writeback of) short term investments
Amortisation of intangible assets
Auditors’ remuneration
- current year
- underprovision in previous years
Directors’ emoluments (Note 6)
Depreciation of property, plant and equipment
(Gain) / loss on disposal of shares in associated companies
Impairment losses on property, plant and equipment
136
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
13,658
9,800
789
1,103
182,230
171,775
6,747
7,271
7,344
—
—
14,695
—
—
(57)
157,138
DRB-HICOM
5
B e rh a d
(203430-W)
(LOSS) / PROFIT FROM OPERATIONS (continued)
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
—
—
14,568
—
3,734
—
410
—
16,777
3,939
—
—
878
2,799
—
—
Management fees paid to a company in which certain past Directors have
significant financial interest
4,559
4,980
—
—
Property, plant and equipment written off
6,811
6,592
3,621
29
30,334
13,328
—
—
Rental of plant and machinery and equipment
6,703
5,585
—
—
Rental of premises
5,844
17,887
—
—
798
1,298
—
—
19,202
—
19,202
—
Staff costs (Note 7)
472,075
444,705
6,052
12,185
Discount on redemption of Loan Stocks 2002 / 2008
(12,803)
—
—
—
Impairment losses on investment in subsidiary companies
Inventories written off
Inventories written down (net of writeback)
Realised loss on foreign exchange
Provision for liabilities and charges (net of writeback)
Replanting expenditure
Preliminary project expenses written off
Dividend income (gross)
- subsidiary companies, unquoted
—
—
(131,480)
(166,016)
- associated company, unquoted
—
—
(13,525)
(6,545)
- other investments, unquoted
—
(1,345)
—
—
(2,380)
—
—
(2,469)
—
—
- other investments, quoted
- in Malaysia
- outside Malaysia
Gain on disposal of property, plant and equipment
Gain on disposal of shares in a subsidiary company
(6,624)
—
(36,340)
(6,663)
(185)
—
A
(422)
(3)
—
n
n
u
a
l
R
—
e
p
o
r
t
2
0
0
6
137
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
5
(LOSS) / PROFIT FROM OPERATIONS (continued)
Group
Gain on disposal of shares in a jointly controlled entity
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
—
(1,531)
—
—
Gain on foreign exchange
- unrealised
(21,401)
(3,818)
—
—
- realised
(3,936)
(3,462)
—
(101)
Interest income
(34,599)
- short term deposits
- subsidiary companies
- others
Interest waiver on redemption of Loan Stocks 2002 / 2008
Lease rental income
(Writeback of) / allowance for doubtful debts
—
(24,043)
(1,901)
(1,328)
—
(30,441)
(2,957)
(3,337)
(10,811)
—
—
(10,939)
—
—
—
(128)
(160)
—
—
(6,913)
(3,106)
2,170
—
Contract costs of the Group and of the Company recognised as an expense amounted to RM498,372,000 (2005: RM332,663,000) and RM15,562,000 (2005:
RM320,295,000) respectively. Cost of inventories (including inventories written down) and services of the Group and of the Company recognised as an
expense amounted to RM2,610,243,000 (2005: RM3,506,812,000) and RM NIL (2005: RM2,232,000) respectively.
138
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
6
B e rh a d
(203430-W)
DIRECTORS’ EMOLUMENTS
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
- current Directors
377
405
353
365
- past Directors
278
—
278
—
513
—
—
—
—
250
—
120
920
8,024
—
556
10,984
—
143
—
- current Directors
101
1,121
—
62
- past Directors
485
—
15
—
13,658
9,800
789
1,103
Non-executive Directors:
- fees:
- allowances (current Directors)
Executive Directors:
- fees (past Directors)
- salaries, bonuses, allowances and other benefits:
- current Directors
- past Directors
- defined contribution retirement plan:
The current Directors represent Directors who held office as at the end of the financial year.
The estimated monetary value of other benefits provided to current and past Executive Directors of the Company amounted to RM19,000
(2005: RM NIL) and RM125,000 (2005: RM278,000) respectively.
No Executive Directors were granted share options under the Employees’ Shares Option Scheme during the financial year.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
139
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
6
DIRECTORS’ EMOLUMENTS (continued)
In the previous financial year, certain Executive Directors of the Company who have been granted share options under the Employees’ Shares Option
Scheme on the same terms and conditions as those offered to other employees of the Group (Note 29 (d)) are as follows:
2005Number of share options
Exercise
Price
Balance as at
Grant date
RM
1.4.2004
GrantedExercised
Balance as at
31.3.2005
2 July 2001
1.00
850,000
—
(398,000)
452,000
2 October 2003
2.11
56,000
—
—
56,000
2 July 2004
1.44
—
170,000
—
170,000
906,000
170,000
(398,000)
678,000
Group and Company
2005
RM’000
7
Ordinary share capital at par
398
Proceeds received on exercise of share options
398
Fair value at exercise date of shares issued
818
STAFF COSTS
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
Salaries, wages, bonuses, allowances and other benefits
408,676
403,903
5,426
11,180
Defined contribution retirement plan
41,399
40,802
626
1,005
Voluntary separation scheme 22,000
—
—
—
472,075
444,705
6,052
12,185
The number of employees at the end of the financial year totalled 14,457 (2005: 14,689) employees in the Group and 44 (2005: 139) employees
in the Company.
140
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
8
B e rh a d
(203430-W)
FINANCE COST
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
130,549
137,120
42,102
17,206
240
1,320
—
—
130,789
138,440
42,102
17,206
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
7,387
43,095
—
34,644
(43,964)
(1,417)
Taxation on share of results of jointly controlled entities
12,257
12,357
—
—
Taxation on share of results of associated companies
49,485
51,253
—
—
Current taxation
26
24
—
—
25,191
105,312
(13,619)
(17,988)
—
(8,922)
Interest expense on borrowings
Hire purchase and finance lease charges
9TAXATION
Group
Company
Arising in Malaysia:
Current taxation
Deferred taxation (Note 28)
(776)
(1,782)
Outside Malaysia:
(776)
32,862
Arising in Malaysia:
(Over) / under provision of taxation in respect of prior financial years
- company and subsidiary companies
- jointly controlled entities
—
608
—
—
- associated companies
—
(9,489)
—
—
(13,619)
(26,869)
—
(8,922)
11,572
78,443
Total taxation charge
A
(776)
n
n
u
a
l
R
23,940
e
p
o
r
t
2
0
0
6
141
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
9TAXATION (continued)
The explanation of the relationship between tax expense and (loss) / profit from ordinary activities before taxation is as follows:
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
(134,008)
276,702
(80,809)
127,815
(37,522)
77,477
(22,626)
35,788
- expenses not deductible for tax purposes
173,070
48,182
14,535
4,208
- income not subject to tax
(83,365)
(14,214)
(6,315)
(5,252)
- tax losses not recognised
11,878
12,051
—
—
2,890
692
—
—
(30,920)
(2,557)
—
—
- temporary differences not recognised
(4,699)
4,400
13,630
(1,882)
- tax incentives
(6,141)
(20,719)
—
—
(13,619)
(17,988)
—
(8,922)
Numerical reconciliation of effective tax expense
(Loss) / profit from ordinary activities before taxation
Tax calculated at the Malaysian tax rate of 28% (2005: 28%)
Tax effects of:
- different tax rates
- previously unrecognised tax losses
(Over) / under provision of taxation in respect of prior financial years
- company and subsidiary companies
- jointly controlled entities
—
608
—
—
- associated companies
—
(9,489)
—
—
11,572
78,443
Tax expense
142
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
(776)
23,940
DRB-HICOM
B e rh a d
(203430-W)
9TAXATION (continued)
nabsorbed tax losses, unutilised capital allowances, unutilised investment tax allowances and unutilised reinvestment allowances of the Group which are
U
available for set-off against future chargeable income for which the tax effects have not been recognised in the financial statements are shown below:
2006
RM’000
Unabsorbed tax losses
1,163,057
1,231,064
Unutilised capital allowances
330,064
346,846
Unutilised investment tax allowances
291,258
319,141
Unutilised reinvestment allowances
173,049
167,098
10
Group
2005
RM’000
DIVIDENDS
Dividends paid and proposed are as follows:
(a)
Group and Company
2006
2005
RM’000
RM’000
Dividend paid
First and final dividend of 3.0 sen (2005: 2.5 sen) gross per share, less taxation of 28%
Adjustment in respect of ordinary shares issued after 31 March but before book closure date for dividend entitlement
(b)
21,290
17,652
17
36
21,307
17,688
14,397
21,290
Dividend proposed
First and final dividend of 2.0 sen (2005: 3.0 sen) gross per share, less taxation of 28%
At the forthcoming Annual General Meeting of the Company, a first and final gross dividend in respect of the financial year ended 31 March 2006 of
2.0 sen (2005: 3.0 sen) per share less taxation of 28%, amounting to RM14,396,713 (2005: RM21,290,471) will be proposed for shareholders’ approval.
These financial statements do not reflect this first and final dividend which will be accrued as a liability in the financial year ending 31 March 2007
when approved by shareholders.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
143
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
11
(LOSS) / EARNINGS PER SHARE
(a)
Basic
The basic (loss) / earnings per share is calculated by dividing the Group’s net (loss) / profit attributable to shareholders by the weighted average
number of shares in issue during the financial year.
Group
2005
Net (loss) / profit attributable to shareholders (RM’000)
(203,981)
141,407
Weighted average number of ordinary shares in issue (‘000)
989,143
982,702
Basic (loss) / earnings per share (sen)
(b)
(20.62)
14.39
Fully diluted
(i)For the diluted (loss) / earnings per share calculation, the weighted average number of shares in issue is adjusted to assume conversion of all
dilutive potential shares. The Company has two categories of dilutive potential ordinary shares: share options granted to employees pursuant
to the ESOS and Loan Stocks 2002 / 2008 in respect of a subsidiary company.
(ii)For the fully diluted (loss) / earnings per share calculation in respect of share options granted to employees, a calculation was performed
to determine the number of shares that could have been acquired at market price (determined as the average annual share price of the
Company’s shares) based on the monetary value of the subscription rights attached to outstanding share options. This calculation serves to
determine the ‘bonus’ element to the ordinary shares outstanding for the purpose of computing the dilution.
2006
Group
2005
Net (loss) / profit attributable to shareholders (RM’000)
(203,981)
141,407
Weighted average number of ordinary shares in issue (‘000)
989,143
982,702
Adjustment for share options (‘000)
—
4,998
Adjusted weighted average number of ordinary shares (‘000)
989,143
987,700
Diluted (loss) / earnings per share (sen)
144
2006
A n n
n uu aa ll
(20.62)
14.32
(iii)The impact to fully diluted (loss) / earnings per share in respect of the share options and Loan Stocks 2002 / 2008 for the financial year ended
31 March 2006 are not presented as it is anti-dilutive.
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
12
B e rh a d
(203430-W)
INVENTORIES
Group
Company
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
87,389
90,280
—
—
Work-in-progress
186,199
36,633
—
—
Finished goods
316,802
258,921
—
—
14,683
48,295
—
—
1,785
5,067
—
—
606,858
439,196
—
—
—
10,958
—
—
141
69
—
—
107,907
99,376
—
—
18,400
3,593
—
—
300
300
—
—
126,748
114,296
—
—
Total
733,606
553,492
—
—
At cost:
Raw materials
Consumables
Completed units of unsold properties
At net realisable value:
Raw materials
Work-in-progress
Finished goods
Consumables
Completed units of unsold properties
Certain inventories of subsidiary companies amounting to RM15,452,000 (2005: RM14,635,000) have been pledged as security for bank borrowings
(Note 21).
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
145
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
13PROPERTY DEVELOPMENT ACTIVITIES
(a)
Property development costs
2006
RM’000
2005
RM’000
2006
RM’000
Company
2005
RM’000
At cost:
At beginning of the financial year
- Land
150,756
139,293
—
—
- Development costs
672,538
577,218
—
—
Less: Accumulated costs charged to income statement
(721,327)
(677,056)
—
—
101,967
39,455
—
—
—
8
—
—
114,445
86,379
—
—
216,412
125,842
—
—
24,043
83,571
—
—
(128,454)
(106,222)
—
—
(1,224)
—
—
—
—
—
110,215
101,967
—
—
Add : Costs incurred during the financial year
- Land
- Development costs
Transfer from land held for property development
Less: Costs recognised as expense in income statement during the financial year
Transfer to property, plant and equipment
Transfer to inventories
—
(1,786)
At end of the financial year
- Land
263,542
150,756
—
—
- Development costs
993,467
672,538
—
—
- Less : Accumulated costs charged to income statement
(721,327)
—
—
101,967
—
—
A n n
n uu aa ll
RR ee pp oo rr t t
(1,146,794)
110,215
146
Group
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
13PROPERTY DEVELOPMENT ACTIVITIES (continued)
(b)
Land held for property development
2006
RM’000
Group
2005
RM’000
2006
RM’000
158,743
—
Company
2005
RM’000
At beginning of the financial year
- Land
- Development costs
125,176
—
154,179
146,529
—
—
279,355
305,272
—
—
1,988
8,674
—
—
Add : Costs incurred during the financial year
- Land
- Development costs
18,429
48,980
—
—
299,772
362,926
—
—
Disposal of land
(4,692)
—
—
—
Transfer from property, plant and equipment
63,200
—
—
—
Transfer to property development costs
(24,043)
(83,571)
—
—
334,237
279,355
—
—
At end of the financial year
- Land
169,377
125,176
—
—
- Development costs
164,860
154,179
—
—
334,237
279,355
—
—
Included in property development costs is interest on borrowings capitalised for the financial year amounting to RM4,153,000 (2005: RM3,684,000).
Land amounting to RM56,244,000 (2005: RM148,683,000) belonging to subsidiary companies, included in property development costs and land held
for property development have been charged as security for bank borrowings (Note 32).
Certain freehold land of the Group amounting to RM35,146,000 (2005: RM NIL) has been lodged by way of private caveat and memorandum of
deposits for borrowings (Note 32).
The title deeds to the freehold land of a subsidiary company amounting to RM63,200,000 (2005: RM NIL) are in the process of being registered
in the name of the subsidiary company.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
147
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
14TRADE AND OTHER RECEIVABLES
2006
RM’000
Less: Allowance for doubtful debts
Other receivables
Less: Allowance for doubtful debts
Company
2005
RM’000
2006
RM’000
1,171,685
434,285
483,734
(61,822)
—
—
1,028,388
1,109,863
434,285
483,734
178,947
240,473
10,020
31,404
1,089,040
Trade receivables
Group
(60,652)
(7,234)
(8,259)
(10)
2005
RM’000
(10)
171,713
232,214
10,010
31,394
Amounts due from subsidiary companies
—
—
86,195
272,746
Less: Allowance for doubtful debts
—
—
(25,145)
(25,281)
—
—
61,050
247,465
Accrued billings
16,890
14,116
—
—
Amounts due from customers on contracts (Note 35)
14,184
46,495
—
35,750
2,932
9,085
—
6,789
Deposits
15,919
21,307
597
613
Prepayments
13,350
12,187
123
137
Amounts due from jointly controlled entities
3,584
3,583
44
112
Amounts due from associated companies
2,273
2,492
201
754
69,132
109,265
965
44,155
Total
1,269,233
1,451,342
506,310
806,748
1,019,348
1,101,951
434,285
483,734
- US Dollar
3,860
2,277
—
—
- Others
5,180
5,635
—
—
1,028,388
1,109,863
434,285
483,734
Advances to contractors on contracts (Note 35)
The currency exposure profile of trade receivables is as follows:
- Ringgit Malaysia
148
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
14TRADE AND OTHER RECEIVABLES (continued)
(a)The Group’s and the Company’s normal trade credit terms range from 30 to 60 days (2005: 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 RM425,000,000 (2005: RM475,416,000) owing by the Government in
respect of Electrified Double Track Project as shown below:
2006
RM’000
2005
RM’000
Receivables based on billings
729,606
640,991
Less: Direct payment to sub-contractors made by the Government
(304,606)
(165,575)
425,000
475,416
(c)Included in other receivables for the Group is an amount of RM34,000,000 (2005: RM42,054,000) in respect of reimbursement of certain operating
expenditure of a subsidiary company due from the Ministry of Finance.
(d)Included in amounts due from subsidiary companies are interest bearing loans amounting to RM58,063,000 (2005: RM10,680,000) and non-interest
bearing loans amounting to RM NIL (2005: RM 144,334,000). Interest is charged at 5.00% to 6.11% (2005: 4.65%) per annum on the interest bearing
loans. The loans are unsecured and have no fixed terms of repayment.
(e)All other amounts due from subsidiary companies, jointly controlled entities and associated companies are non-interest bearing, unsecured and
have no fixed terms of repayment.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
149
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
15
SHORT TERM INVESTMENTS
2006
RM’000
2005
RM’000
2006
RM’000
Company
2005
RM’000
Shares and warrants quoted in Malaysia, at cost
169,304
183,566
—
—
Allowance due to change in market value
(16,401)
(17,633)
—
—
Shares and warrants quoted in Malaysia, at market value
152,903
165,933
—
—
38,781
38,781
38,781
38,781
(21,526)
(17,694)
(21,526)
(17,694)
17,255
21,087
17,255
21,087
170,158
187,020
17,255
21,087
2005
RM’000
2006
RM’000
Shares quoted outside Malaysia, at cost
Allowance due to change in market value
Shares and warrants quoted outside Malaysia, at market value
Total
16
Group
SHORT TERM DEPOSITS
2006
RM’000
Group
Company
2005
RM’000
Deposits with licensed financial institutions:
Banks
784,789
886,343
46,894
39,586
Discount houses
68,567
190,568
54,017
2,200
207,649
71,672
—
—
1,061,005
1,148,583
100,911
41,786
Finance companies
(a)Certain deposits with licensed banks of the Group amounting to RM12,851,000 (2005: RM13,641,000) have been pledged as security for banking
facilities.
(b)Included in the deposits of the Group and of the Company is an amount of RM45,336,000 (2005: RM39,072,000) maintained as a sinking fund for
the performance bond in respect of the Electrified Double Track Project.
(c)Included in the deposits of the Group is an amount of RM NIL (2005: RM12,915,000) in relation to a subsidiary company which was held in trust
for certain specific purposes.
150
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
16
B e rh a d
(203430-W)
SHORT TERM DEPOSITS (continued)
(d)
The currency exposure profile of short term deposits is as follows:
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
- Ringgit Malaysia
1,049,907
1,134,525
100,911
41,786
- Singapore Dollar
11,098
14,058
—
—
1,061,005
1,148,583
100,911
41,786
(e)
The weighted average effective annual interest rates of short term deposits at the end of the financial year are as follows:
Group
Company
2006
2005
2006
%
%
%
2005
%
Deposits with licensed financial institutions:
Banks
3.06
2.72
2.64
2.63
Discount houses
3.13
2.64
3.19
2.66
Finance companies
3.09
2.93
—
—
(f)
17
Deposits of the Group and Company have an average maturity period of 154 (2005: 106) and 85 (2005: 80) days respectively.
CASH AND BANK BALANCES
(a)
Bank balances are deposits held at call with banks.
(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 RM15,467,000 (2005: RM14,895,000).
(c)
The currency exposure profile of cash and bank balances are as follows:
2006
RM’000
- Ringgit Malaysia
Group
Company
2005
RM’000
2006
RM’000
103,293
138,046
2,084
17,576
- Singapore Dollar
2,159
5,775
—
—
- Others
1,695
1,063
—
—
107,147
144,884
2,084
17,576
A
n
n
u
a
l
R
2005
RM’000
e
p
o
r
t
2
0
0
6
151
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
18
GENERAL AND LIFE INSURANCE FUNDS
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
315,947
—
—
(86,629)
—
—
Outstanding claims:
Provision for outstanding claims
Recoverable from reinsurers
224,577
(2,016)
Net outstanding claims
222,561
229,318
—
—
Unearned premium reserves
138,493
127,478
—
—
Total
361,054
356,796
—
—
2005
RM’000
2006
RM’000
19TRADE AND OTHER PAYABLES
Company
2006
RM’000
Trade payables
1,009,386
907,221
412,179
358,772
Other payables
215,964
294,972
8,425
6,949
Progress billings
29,992
34,483
—
—
Accruals
94,915
167,974
7,157
1,486
Amounts due to customers on contracts (Note 35)
38,861
14,312
—
—
—
—
96,122
76,964
Amounts due to jointly controlled entities
2,752
594
—
—
Amounts due to associated companies
7,481
6,310
—
—
1,399,351
1,425,866
523,883
444,171
Amounts due to subsidiary companies
152
Group
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
2005
RM’000
DRB-HICOM
B e rh a d
(203430-W)
19TRADE AND OTHER PAYABLES (continued)
(a)
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
945,360
802,786
412,179
358,772
61,095
78,669
—
—
The currency exposure profile of trade payables is as follows:
- Ringgit Malaysia
- Japanese Yen
- Singapore Dollar
347
13,991
—
—
- US Dollar
781
4,695
—
—
- Euro
1,131
108
—
—
- Others
672
6,972
—
—
1,009,386
907,221
412,179
358,772
(b)
The Group’s and the Company’s normal trade payables terms range from 30 to 90 days (2005: 30 to 90 days).
(c)Included in amounts due to subsidiary companies are interest bearing loans amounting to RM56,355,000 (2005: RM14,830,000) and non-interest
bearing loans amounting to RM7,634,000 (2005: RM6,957,000). Interest is charged at 4.65% to 5.00% (2005: 3.37% to 4.80%) 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.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
153
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
20PROVISION FOR LIABILITIES AND CHARGES
Sales
Warranty
returns
RM’000
RM’000
Voluntary
separation
scheme
RM’000
Restructuring
costs Total
RM’000
RM’000
Group
2006
At beginning of the financial year
24,849
1,158
—
11,444
37,451
—
30,334
8,805
(471)
22,000
Utilised during the financial year
(8,036)
(64)
—
At end of the financial year
25,618
623
22,000
Warranty
RM’000
Sales
returns
RM’000
Charge / (writeback) during the financial year
(11,444)
(19,544)
—
48,241
Restructuring
costsTotal
RM’000
RM’000
Group
2005
21
At beginning of the financial year
13,688
1,204
11,444
26,336
Charge during the financial year
12,909
419
—
13,328
Utilised during the financial year
(1,748)
(465)
—
(2,213)
At end of the financial year
24,849
1,158
11,444
37,451
2005
RM’000
2006
RM’000
BANK BORROWINGS
(i)
154
2006
RM’000
Group
Company
2005
RM’000
Bank overdrafts
- secured
11,111
9,543
—
—
- unsecured
48,700
62,127
—
10,720
Sub-total
59,811
71,670
—
10,720
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
21
B e rh a d
(203430-W)
BANK BORROWINGS (continued)
(ii)
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Other bank borrowings
Secured
Bankers acceptances
35,154
29,587
—
—
Letters of credit
2,254
4,359
—
—
Trust receipts —
15,831
—
—
Revolving credit
5,750
23,674
—
—
Short term loans
3,974
4,921
—
—
Hire purchase and finance lease liabilities
– portion repayable within 12 months (Note 32)
13,998
16,239
—
—
Long term loans
– portion repayable within 12 months (Note 32)
174,624
85,787
—
—
Loan Stocks 2002 / 2008
- portion repayable within 12 months (Note 32)
—
406,689
—
—
Unsecured
Bankers acceptances
247,232
165,911
—
—
Revolving credit
204,300
397,660
99,000
281,101
Short term loans 2,286
13,595
—
3,355
Long term loans
– portion repayable within 12 months (Note 32)
5,171
33,431
—
—
Sub-total
694,743
1,197,684
99,000
284,456
Total
754,554
1,269,354
99,000
295,176
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
155
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
21
BANK BORROWINGS (continued)
(a)
The currency exposure profile of bank overdrafts and other bank borrowings are as follows:
2006
RM’000
- Ringgit Malaysia
Group
Company
2005
RM’000
2006
RM’000
744,753
1,045,150
99,000
295,176
- US Dollar
—
221,918
—
—
- Japanese Yen
1,200
1,200
—
—
- Singapore Dollar
4,599
—
—
—
- Others
4,002
1,086
—
—
754,554
1,269,354
99,000
295,176
2005
RM’000
(b)The secured bank overdrafts, bankers acceptances, letters of credit, trust receipts, revolving credit, and short term loans are secured by way of
fixed and floating charges over inventories and certain property, plant and equipment (Notes 12 and 22).
(c)
The interest on short term borrowings is charged at annual rates ranging from 3.11% to 9.75% (2005: 2.62% to 8.75%) per annum.
(d)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:
156
2006
%
Bank overdrafts
Group
Company
2005
%
2006
%
8.61
7.95
—
7.75
Bankers acceptances
3.82
3.20
—
—
Trust receipts
—
7.50
—
—
Revolving credit
5.73
5.55
5.00
5.82
Short term loans
2.19
3.79
—
8.00
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
2005
%
DRB-HICOM
B e rh a d
(203430-W)
22PROPERTY, PLANT AND EQUIPMENT
Buildings,
Long
Short golf course
Freehold
leasehold
leasehold
andPlant and
land
land
land improvements machinery
GROUP
RM’000
RM’000
RM’000
RM’000
RM’000
MotorOffice
Furniture Capital workvehicles equipment and fittings in- progress Total
RM’000
RM’000
RM’000
RM’000
RM’000
338,885
323,058
1,414
1,228,450
236,714
26,976
146,832
29,307
60,789
2,392,425
Additions
1,046
3,665
—
18,747
27,831
12,212
29,499
11,974
27,382
132,356
Disposals
—
(7,536)
—
(4,234)
(684)
(4,849)
(673)
(823)
(1,818)
(20,617)
Write off
—
—
(1,128)
(2,201)
(39)
(1,909)
(1,518)
(16)
(6,811)
Depreciation charge
—
(4,320)
(55)
(39,563)
(79,927)
(10,280)
(38,527)
(9,558)
—
(182,230)
Impairment losses
—
(48,007)
—
(103,999)
(5,003)
(17)
(112)
—
—
(157,138)
Currency translation differences
38
(2,734)
—
(943)
(16)
(5)
(208)
(13)
—
(3,881)
5,039
(28)
Net book value at 1 April 2005
Reclassifications
1,793
Transfer to Land held for
property development
(63,200)
Net book value at 31 March 2006
278,562
NET BOOK VALUE AT 31 MARCH 2006
Cost
—
6,422
48,578
104
(6,925)
104
(55,087)
—
—
—
—
—
—
—
—
—
(63,200)
269,165
1,331
1,103,752
225,292
24,102
127,977
29,473
31,250
2,090,904
31,250
3,782,759
278,562
338,367
2,062
1,577,111
948,296
69,163
429,493
108,455
Accumulated depreciation
—
(21,195)
(731)
(359,157)
(718,001)
(45,044)
(301,404)
(78,981)
—
(1,524,513)
Accumulated impairment losses
—
(48,007)
—
(114,202)
(5,003)
(17)
(112)
(1)
—
(167,342)
Net book value 278,562
NET BOOK VALUE AT 31 MARCH 2005
Cost
269,165
1,331
1,103,752
225,292
24,102
127,977
29,473
31,250
2,090,904
338,885
344,023
2,108
1,563,713
833,717
75,225
476,472
100,144
60,789
3,795,076
Accumulated depreciation
—
(13,762)
(694)
(325,059)
(597,003)
(48,249)
(325,149)
(70,837)
—
(1,380,753)
Accumulated impairment losses
—
(7,203)
—
(10,204)
—
—
(4,491)
—
—
(21,898)
338,885
323,058
1,414
1,228,450
236,714
26,976
146,832
29,307
60,789
2,392,425
Net book value
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
157
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
22PROPERTY, PLANT AND EQUIPMENT (continued)
Long
leasehold
land
Company
RM’000
Buildings
andPlant and
improvements
machinery
RM’000
RM’000
MotorOffice
vehicles
equipment
RM’000
RM’000
Furniture
and fittingsTotal
RM’000
RM’000
Net book value at 1 April 2005
5,983
69,752
1,030
2,926
3,079
1,917
84,687
Additions
2,545
—
—
593
—
2
3,140
Disposals
—
—
—
(500)
—
(70)
(570)
Write off
—
—
(32)
(1,705)
(1,144)
(3,621)
(1,531)
(1,072)
(316)
(6,747)
389
76,889
(107)
Depreciation charge
Net book value at 31 March 2006
8,421
(740)
(2,707)
66,305
(1,014)
16
1,456
302
NET BOOK VALUE AT 31 MARCH 2006
9,127
Cost
Accumulated depreciation
(706)
8,421
Net book value
81,529
10,154
7,020
887
749
109,466
(15,224)
(10,138)
(5,564)
(585)
(360)
(32,577)
1,456
302
389
76,889
66,305
16
NET BOOK VALUE AT 31 MARCH 2005
Cost
Accumulated depreciation
Net book value
6,584
87,357
10,154
9,955
6,935
3,164
124,149
(601)
(17,605)
(9,124)
(7,029)
(3,856)
(1,247)
(39,462)
5,983
69,752
1,030
2,926
3,079
1,917
84,687
(a)Certain property, plant and equipment of the Group with net book value of RM680,983,000 (2005: RM846,387,000) have been charged as security
for borrowings (Notes 21 and 32).
(b)Certain freehold and leasehold lands of the Group at a net book value of RM102,059,000 (2005: RM NIL) have been lodged by way of private caveat
and memorandum of deposits for borrowings (Note 32).
158
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
22PROPERTY, PLANT AND EQUIPMENT (continued)
(c)The details of motor vehicles, plant and machinery, and office equipment acquired under hire purchase and finance lease agreements of the Group
are as follows:
Hire Purchase and
Finance Lease
2006
2005
RM’000
RM’000
Additions during the financial year:
- Motor vehicles
571
2,643
- Plant and machinery
6,350
6,394
- Office equipment
2,715
—
Net book value at financial year end:
- Motor vehicles
4,008
5,401
- Plant and machinery 10,450
18,210
- Office equipment
2,256
—
(d)Included in property, plant and equipment is interest on borrowings capitalised for the financial year amounting to RM284,000
(2005: RM459,000).
(e)The title deeds to the freehold and leasehold land of certain subsidiary companies amounting to RM159,062,000 (2005: RM68,251,000) are in the
process of being registered in the names of the subsidiary companies.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
159
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
23
SUBSIDIARY COMPANIES
2006
RM’000
Unquoted shares, at cost
3,165,574
Less: Allowance for impairment in value
Company
2005
RM’000
3,165,574
(98,245)
(83,677)
3,067,329
3,081,897
Amounts due from subsidiary companies (non trade)
1,414,066
543,732
Less : Allowance for doubtful debts
(215,052)
(215,052)
1,199,014
328,680
4,266,343
3,410,577
The details of the subsidiary companies are listed in Note 3 to the financial statements.
The amounts due from subsidiary companies are unsecured, have no fixed terms of repayment and are not repayable within the next 12 months.
Interest is charged at 6.15% to 9.00% (2005: 9.00%) on RM615,570,000 of the amounts due (2005: RM26,580,000).
24
JOINTLY CONTROLLED ENTITIES
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Unquoted shares in Malaysia, at cost
159,405
155,921
9,800
7,350
Share of post acquisition reserves
144,340
191,510
—
—
303,745
347,431
9,800
7,350
The details of the jointly controlled entities are listed in Note 3 to the financial statements.
Certain unquoted shares of a jointly controlled entity are pledged as security for bank borrowing facilities obtained by the jointly controlled entity.
160
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
24
B e rh a d
(203430-W)
JOINTLY CONTROLLED ENTITIES (continued)
The Group’s share of the assets, liabilities, revenue and expenses of the jointly controlled entities are as follows:
2006
RM’000
Current assets
321,707
337,811
Non current assets
151,261
148,529
Current liabilities
(114,885)
(99,649)
Non current liabilities
(54,338)
(39,260)
Net assets
303,745
347,431
Revenue
415,255
376,590
Expenses
(376,471)
(336,264)
Profit from ordinary activities before taxation
38,784
40,326
Taxation
(12,257)
(12,965)
Net profit attributable to shareholders
26,527
27,361
(a)
Group
2005
RM’000
Capital commitments for property, plant and equipment
- contracted
5,174
1,738
- not contracted
15,879
21,436
21,053
23,174
(b)
There are no contingencies relating to jointly controlled entities.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
161
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
25
ASSOCIATED COMPANIES
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
1,071,475
1,071,465
—
—
126,766
125,599
59,325
59,325
1,198,241
1,197,064
59,325
59,325
Share of post acquisition results
115,073
87,063
—
—
Share of post acquisition capital reserves
113,880
100,968
—
—
1,427,194
1,385,095
59,325
59,325
1,427,194
1,385,095
1,033,884
1,163,196
Quoted shares in Malaysia, at cost
Unquoted shares in Malaysia, at cost
2005
RM’000
The total interest is represented by:
Share of net assets of associated companies
Market value of quoted shares
The details of the associated companies are listed in Note 3 to the financial statements.
The sale proceeds of the quoted shares in associated companies have been assigned in relation to the long term loan under Islamic financing (Note 32).
(a)
(i)
Group
2005
RM’000
Capital commitments for property, plant and equipment
- contracted
12,901
30,069
- not contracted
25,525
43,362
38,426
73,431
5,326
—
(ii)
(b)
162
2006
RM’000
A n n
n uu aa ll
Capital commitments for investments
- contracted
There are no contingencies relating to associated companies.
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
26OTHER INVESTMENTS
Group
Company
2005
RM’000
2006
RM’000
11,275
13,701
—
—
- at cost
42,849
32,324
—
—
54,124
46,025
—
—
110,484
74,669
—
—
(1,234)
—
—
108,164
73,435
—
—
5,028
30,077
—
—
(28)
—
—
5,012
30,049
—
—
(i)
(ii)
2006
RM’000
2005
RM’000
Investment properties:
Freehold land and buildings:
- at cost
Leasehold land and buildings:
Quoted securities:
Malaysian Government Securities, at cost
Amortisation of premiums
Cagamas papers, at cost
Amortisation of premiums
(2,320)
(16)
Quoted shares in Malaysia, at cost
40,495
3,610
—
—
Less: Allowance for diminution in value
(1,847)
(1,841)
—
—
38,648
1,769
—
—
Quoted shares outside Malaysia, at cost
6,002
—
—
—
Corporate debts securities quoted in Malaysia, at cost
8,365
8,365
—
—
Accretion of discounts net of amortisation of premiums
395
79
—
—
8,760
8,444
—
—
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
163
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
26OTHER INVESTMENTS (continued)
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
463,153
323,446
—
—
4,607
3,990
—
—
—
—
—
466,696
327,436
—
—
(iii) Unquoted securities:
Corporate debt securities, at cost
Accretion of discounts net of amortisation of premiums
Less: Allowance for diminution in value
(1,064)
Unquoted shares, at cost
55,393
50,683
—
—
Less: Allowance for diminution in value
(2,994)
(4,337)
—
—
52,399
46,346
—
—
739,805
533,504
—
—
(a)
Total
The carrying amounts of other investments at balance sheet date approximate their fair value except for the following:
Carrying
amount
RM’000
Malaysian Government Securities
Cagamas papers
Quoted shares
Corporate debt securities, quoted
Corporate debt securities, unquoted
Group
2006
Group
2005
Fair
value
RM’000
Carrying
amount
RM’000
Fair
value
RM’000
108,164
109,038
73,435
72,619
5,012
5,012
30,049
30,227
44,650
52,998
1,769
4,338
8,760
10,000
8,444
10,300
466,696
466,507
327,436
331,742
633,282
643,555
441,133
449,226
(b)The titles to certain properties included in investment properties at carrying value of RM25,545,000 (2005: RM28,232,000) are in the process of
being transferred to an insurance subsidiary company.
164
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
27
B e rh a d
(203430-W)
INTANGIBLE ASSETS
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Cost:
At beginning of the financial year
7,440
7,759
—
—
Incurred during the year
1,529
8
—
—
Write off during the year
—
(327)
—
—
8,969
7,440
—
—
4,936
4,922
—
—
692
341
—
—
—
(327)
—
—
5,628
4,936
—
—
3,341
2,504
—
—
2005
RM’000
2006
RM’000
(25,571)
(26,988)
758
(1,024)
Transfer to / (from) income statement (Note 9)
43,964
1,417
776
1,782
At end of the financial year
18,393
(25,571)
1,534
758
At end of the financial year
Accumulated amortisation:
At beginning of the financial year
Amortisation during the financial year
Write off during the year
At end of the financial year
Net book value
28
DEFERRED TAXATION
At beginning of the financial year
2006
RM’000
Group
A
n
n
u
a
l
R
Company
2005
RM’000
e
p
o
r
t
2
0
0
6
165
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
28
DEFERRED TAXATION (continued)
Subject to income tax
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
6,230
17,413
4,410
5,341
41,469
—
—
—
Provisions
9,703
9,923
—
—
Payables
1,311
1,197
—
—
Tax losses
35,973
15,457
—
—
Investments
6,585
7,381
—
—
—
1,067
—
—
101,271
52,438
4,410
5,341
(25,619)
(27,026)
(2,876)
(4,583)
75,652
25,412
1,534
(66,436)
(63,629)
(2,876)
Provisions
(325)
—
—
—
Payables (89)
(414)
—
—
Investment
(929)
(6,265)
—
—
(350)
—
—
(13)
—
—
—
(7,735)
—
—
—
(75,527)
(70,658)
(2,876)
(4,583)
25,619
27,026
2,876
4,583
(49,908)
(43,632)
—
—
Deferred tax assets (before offsetting)
Property, plant and equipment
Capital allowance
Unearned premium reserve
Offsetting
Deferred tax assets (after offsetting)
758
Deferred tax liabilities (before offsetting)
Property, plant and equipment
—
Intangibles
Unearned premium reserve
Property development expenditure
Offsetting
Deferred tax liabilities (after offsetting)
166
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
(4,583)
DRB-HICOM
28
B e rh a d
(203430-W)
DEFERRED TAXATION (continued)
Subject to capital gains tax
2006
RM’000
Group
Company
2005
RM’000
2006
RM’000
2005
RM’000
(7,351)
(7,351)
—
—
75,652
25,412
1,534
758
(57,259)
(50,983)
—
—
18,393
(25,571)
1,534
758
Deferred tax liabilities
Property, plant and equipment
Presented after appropriate offsetting as follows:
Deferred tax assets
Deferred tax liabilities
29
SHARE CAPITAL
Group and Company
2006
2005
No. ofNominalNo. ofNominal
Shares
Value
Shares
Value
’000
RM’000
’000
RM’000
Authorised:
Ordinary shares of RM1.00 each
2,000,000
2,000,000
2,000,000
2,000,000
985,670
985,670
980,673
980,673
14,102
14,102
4,997
4,997
999,772
999,772
985,670
985,670
Issued and fully paid:
Ordinary shares of RM1.00 each:
At beginning of the financial year
Issued during the financial year
At end of the financial year
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
167
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
29
SHARE CAPITAL (continued)
(a)During the financial year, the Company’s issued and paid-up share capital was increased from RM985,669,947 to RM999,771,729 by way of issue
of 14,101,782 new ordinary shares of RM1.00 each pursuant to following:-
(i)Exercise of 2,659,000 share options under the Employees’ Share Option Scheme (“ESOS”), at option prices ranging from RM1.00 to RM1.75
per share.
(ii)
(iii)Conversion of RM18,099,250 nominal value of Redeemable Exchangeable Unsecured Loan Stock (“REULS”) plus RM2,954,549 accrued interest
of a wholly-owned subsidiary company, Gadek (Malaysia) Berhad into 11,442,282 new ordinary shares of the Company at a conversion price
of RM1.84 per share.
Conversion of 500 warrants at an exercise price of RM2.88 per share.
(b)Subsequent to the financial year end, the Company’s issued and paid-up share capital increased from RM999,771,729 to RM1,003,099,829 by way
of issue of 3,328,100 new ordinary shares of RM1.00 each for cash pursuant to the exercise of 3,328,100 share options under the ESOS, at option
prices ranging from RM1.00 to RM1.69 per share.
The new shares rank pari passu in all respects with the existing shares of the Company including entitlement to the first and final dividend
proposed for the financial year ended 31 March 2006.
(c)
The outstanding Warrants 2000 / 2005 totalling 122,599,520 (2005: 122,600,020) lapsed upon its expiration on 9 July 2005.
The details of the Warrants are as follows:-
The Warrants were constituted under a Deed Poll dated 7 July 2000 and each Warrant entitles its registered holder to subscribe for one (1) new
ordinary share of RM1.00 each in the Company at the exercise price of RM2.88 payable in cash. The exercise price is subject to adjustment in
accordance with the basis set out in the Deed Poll. The Warrants may be exercised at any time commencing on the date of issue of Warrants
and up on 9 July 2005. Any Warrants which have not been exercised at date of expiry will lapse and cease to be valid for any purpose.
The new ordinary shares allotted and issued upon exercise of the Warrants shall be fully paid-up and shall rank pari passu in all respects
with the then existing ordinary shares of the Company except that they shall not be entitled to any dividends, rights, entitlements and / or other
distributions, the record date which is prior to the relevant subscription date (record date means, in relation to any dividends, rights, allotments
or other distributions, the date on which the shareholders of the Company must be registered in order to participate in such dividends, rights,
allotments or other distributions).
168
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
29
B e rh a d
(203430-W)
SHARE CAPITAL (continued)
(d)The DRB-HICOM Berhad Employees’ Share Option Scheme (“ESOS”) came into effect on 10 April 2001 for a period of 5 years. The ESOS expired
on 9 April 2006.
The main features of the ESOS are:
(i)The total number of ordinary shares to be issued by the Company under the ESOS shall not exceed eleven point five per centum (11.5%) of
the total issued and paid-up share capital of the Company at any one time during the existence of the ESOS.
(ii)The options granted may be exercised at any time within the option period.
(iii)The exercise price at which the employees are offered to take up shares under the ESOS is at a discount of 10% from the weighted average
market price of the shares of the Company as quoted in the Daily Official List issued by Bursa Saham Kuala Lumpur for the five market
days preceding the respective dates of offer of the options or the par value of the shares of the Company of RM1.00, whichever is higher.
(iv)The grantees have no right to participate, by virtue of these options, in the ESOS scheme of any other company.
(v)
Set out below are details of options over the ordinary shares of the Company granted under the ESOS.
2006Number of share options
Exercise
Price
Balance at
Grant date
RM
1.4.2005
GrantedExercisedLapsed *
Balance at
31.3.2006
2 July 2001
1.00
6,953,700
—
(1,827,000)
(247,000)
4,879,700
2 October 2001
1.00
530,000
—
(231,000)
—
299,000
18 October 2001
1.04
162,000
—
(162,000)
—
—
2 January 2002
1.21
280,000
—
(15,000)
(6,000)
259,000
2 April 2002
1.81
1,075,000
—
—
(28,000)
1,047,000
2 July 2002
2.06
1,406,000
—
—
(164,000)
1,242,000
2 October 2002
1.67
1,058,000
—
(17,000)
(25,000)
1,016,000
2 January 2003
1.75
1,707,800
—
(4,000)
(114,000)
1,589,800
2 April 2003
1.61
568,500
—
—
(28,000)
540,500
2 July 2003
2.21
1,655,000
—
—
(71,000)
1,584,000
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
169
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
29
SHARE CAPITAL (continued)
(v)
Set out below are details of options over the ordinary shares of the Company granted under the ESOS. (continued)
2006Number of share options
Exercise
Price
Balance at
Grant date
RM
1.4.2005
GrantedExercisedLapsed *
2 October 2003
2.11
2,160,000
—
—
(232,000)
1,928,000
2 January 2004
1.87
1,832,500
—
—
(187,500)
1,645,000
2 April 2004
1.84
1,572,000
—
—
(113,000)
1,459,000
2 July 2004
1.44
768,200
—
(22,000)
(180,000)
566,200
4 October 2004
1.88
1,795,000
—
—
(72,000)
1,723,000
3 January 2005
1.98
2,419,000
—
—
(131,000)
2,288,000
4 April 2005
1.69
—
1,648,000
—
(335,000)
1,313,000
12 April 2005
1.62
—
280,000
(3,000)
—
277,000
4 July 2005
1.33
—
1,918,000
(145,000)
(84,000)
1,689,000
3 October 2005
1.40
—
2,043,000
(4,000)
(33,000)
2,006,000
3 January 2006
1.07
—
1,264,000
(224,000)
—
1,040,000
1 March 2006
1.29
—
979,000
(5,000)
—
974,000
25,942,700
8,132,000
(2,659,000)
(2,050,500)
29,365,200
2005Number of share options
Exercise
Price
Balance at
Grant date
RM
1.4.2004
GrantedExercisedLapsed *
Balance at
31.3.2005
2 July 2001
1.00
9,395,000
—
(2,341,300)
(100,000)
6,953,700
2 October 2001
1.00
667,000
—
(128,000)
(9,000)
530,000
18 October 2001
1.04
162,000
—
—
—
162,000
2 January 2002
1.21
555,000
—
(269,000)
(6,000)
280,000
2 April 2002
1.81
1,172,000
—
(84,000)
(13,000)
1,075,000
2 July 2002
2.06
1,554,000
—
(13,000)
(135,000)
1,406,000
170
Balance at
31.3.2006
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
29
B e rh a d
(203430-W)
SHARE CAPITAL (continued)
(v)
Set out below are details of options over the ordinary shares of the Company granted under the ESOS. (continued)
2005 Number of share options
Exercise
Price
Balance at
Grant date
RM
1.4.2004
GrantedExercisedLapsed *
Balance at
31.3.2005
2 October 2002
1.67
1,246,000
—
(164,000)
(24,000)
1,058,000
2 January 2003
1.75
2,317,000
—
(400,200)
(209,000)
1,707,800
2 April 2003
1.61
798,500
—
(144,000)
(86,000)
568,500
2 July 2003
2.21
1,837,000
—
—
(182,000)
1,655,000
2 October 2003
2.11
2,434,000
—
—
(274,000)
2,160,000
2 January 2004
1.87
2,265,500
—
(298,000)
(135,000)
1,832,500
2 April 2004
1.84
—
1,915,000
(203,000)
(140,000)
1,572,000
2 July 2004
1.44
—
1,666,000
(850,800)
(47,000)
768,200
4 October 2004
1.88
—
1,916,000
(93,000)
(28,000)
1,795,000
3 January 2005
1.98
—
2,441,000
(9,000)
(13,000)
2,419,000
24,403,000
7,938,000
(4,997,300)
(1,401,000)
25,942,700
*
Options lapsed due to resignations.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
171
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
29
SHARE CAPITAL (continued)
Details relating to share options and warrants exercised and conversion of REULS during the financial year are as follows:
2006
ExerciseNumber of ordinary shares issued
Fair valuePrice
during the financial year ended
Exercise date
RM
RM
31 March 2006
172
April 2005
1.75 - 1.81
1.00 - 1.75
147,000
May 2005
1.42 - 1.86
1.00 - 1.62
54,000
June 2005
1.48 - 1.67
1.00 - 2.88
27,500
July 2005
1.55 - 1.75
1.00 - 1.67
62,000
August 2005
1.59 - 1.79
1.00 - 1.44
368,000
September 2005
1.57 - 1.60
1.00 - 1.33
47,000
October 2005
1.54 - 1.57
1.33 - 1.44
66,000
November 2005
1.52 - 1.58
1.00 - 1.33 11,000
December 2005
1.18 - 1.34
1.00 - 1.84
January 2006
1.27
1.00 100,000
February 2006
1.28 - 1.46
1.00 - 1.07
246,000
March 2006
1.29 - 1.52
1.00 - 1.40
1,272,000
14,101,782
11,701,282
Ordinary share capital at par (RM’000)
14,102
Share premium (RM’000)
9,714
23,816
Issue of ordinary shares on conversion of REULS of a subsidiary company (RM’000)
(21,054)
Proceeds received on exercise of share options and warrants (RM’000)
2,762
Fair value at exercise date of shares issued (RM’000)
19,290
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
29
B e rh a d
(203430-W)
SHARE CAPITAL (continued)
Details relating to share options and warrants exercised and conversion of REULS during the financial year are as follows: (continued)
2005
ExerciseNumber of ordinary shares issued
Fair valuePrice
during the financial year ended
Exercise date
RM
RM
31 March 2005
April 2004
2.02 - 2.08
1.00 - 1.87
346,000
May 2004
1.72 - 1.93
1.00 - 1.81
97,000
June 2004
1.67 - 1.86
1.00 44,000
July 2004
1.58 - 2.03
1.00 - 1.75
352,000
August 2004
1.89 - 1.94
1.00 - 1.75
332,400
September 2004
2.14 - 2.22
1.00 - 2.06
846,000
October 2004
2.10 - 2.19
1.00 - 2.06
591,300
November 2004
2.13 - 2.29
1.00 - 2.06
639,300
December 2004
2.14 - 2.24
1.00 - 1.88
816,100
January 2005
2.13 - 2.21
1.00 - 1.88
333,200
February 2005
2.08 - 2.14
1.00 - 2.06
335,000
March 2005
1.88 - 2.11
1.00 - 1.88
265,000
4,997,300
Ordinary share capital at par (RM’000)
4,997
Share premium (RM’000)
1,531
Proceeds received on exercise of share options (RM’000)
6,528
Fair value at exercise date of shares issued (RM’000)
10,535
(e)
ursuant to the issuance of REULS by a subsidiary company during the financial year ended 31 March 2003, the holders of the REULS have the right
P
to exchange the remaining REULS into ordinary shares of RM1.00 each of the Company, at an exercise price of RM1.84 per share (Note 32(c)).
30LIFE ASSURANCE FUND
Based on the actuarial valuation of the Life Assurance Fund made up to 31 March 2006, the actuary was satisfied that the assets available in the
Life Assurance Fund are sufficient to meet its long term liabilities to policyholders.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
173
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
31
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.
32LONG TERM BORROWINGS
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Secured
•
Hire purchase and finance lease liabilities
25,775
25,476
—
—
- Portion repayable within 12 months included under borrowings (Note 21)
(13,998)
(16,239)
—
—
11,777
9,237
—
—
•
Long term loans
802,136
824,772
—
—
- Portion repayable within 12 months included under borrowings (Note 21)
(174,624)
(85,787)
—
—
627,512
738,985
—
—
818,832
—
818,832
—
•
Long term loan under Islamic financing
•
Loan Stocks 2002 / 2008
Secured
—
640,405
—
—
- Portion repayable within 12 months included under borrowings (Note 21)
—
(406,689)
—
—
—
233,716
—
—
Unsecured
152,779
199,838
—
—
152,779
433,554
—
—
264,504
302,396
—
—
Unsecured
•
Long term loans
- Portion repayable within 12 months included under borrowings (Note 21)
(33,431)
—
—
259,333
268,965
—
—
Deferred liability
26,456
26,456
—
—
1,896,689
1,477,197
818,832
—
•
174
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
(5,171)
DRB-HICOM
B e rh a d
(203430-W)
32LONG TERM BORROWINGS (continued)
(a)
he secured hire purchase and finance lease liabilities and long term loans are secured against certain freehold land under development and certain
T
property, plant and equipment (Notes 13 and 22). Interest rates is charged at annual rates ranging from 2.79% to 10.50% (2005: 1.88% to 10.66%).
(b)
The weighted average effective annual interest rates at the end of the financial year are as follows:
Group
Company
2006
%
2005
%
2006
%
2005
%
Long term loan under Islamic financing
5.61
—
5.61
—
Hire purchase and finance lease liabilities
4.74
7.09
—
—
Long term loans 5.04
4.73
—
—
(c)On 20 November 2002, a subsidiary company issued RM871,934,000 Loan Stocks 2002 / 2008 (“Loan Stocks”) to its lenders, pursuant to the debt
restructuring agreement signed on 9 January 2002. The Loan Stocks carry a coupon rate of 2% per annum with a yield to maturity of 7%. On 15
April 2005, the subsidiary company made partial cash redemption of RM42,477,000 nominal value of Redeemable Secured Loan Stock (“RSLS”)
and Redeemable Exchangeable Secured Loan Stock (“RESLS”) 2002 / 2008, net of discount of RM10,619,000. On 26 July 2005, the outstanding
balance of RSLS / RESLS amounting to RM517,445,000 was redeemed via the proceeds from the long term loan under Islamic financing. Further,
on 6 December 2005, certain holders of REULS had exercised their exchange rights as per an option agreement whereby RM18,099,000 nominal
value of REULS plus accrued interest had been converted into ordinary shares of the Company. Finally, on 3 March 2006, the subsidiary company
further redeemed RM28,212,000 nominal value of REULS, net of discount of RM2,184,000.
The outstanding Loan Stocks are as follows:
2006
RM’000
Group
2005
RM’000
(i)
Redeemable secured loan stocks (RSLS)
—
362,374
(ii)
Redeemable exchangeable secured loan stocks (RESLS)
—
208,167
(iii) Redeemable exchangeable unsecured loan stocks (REULS)
129,544
178,039
129,544
748,580
Accrued finance cost 23,235
91,663
152,779
840,243
—
(406,689)
152,779
433,554
Portion repayable within 12 months
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
175
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
32LONG TERM BORROWINGS (continued)
(d)During the financial year ended 31 March 2006, the Company had obtained a long term loan under Islamic financing comprising RM680,000,000
nominal value of Bai’Bithaman Aji Islamic Debt Securities (“BAIDs”) and RM320,000,000 million nominal value of Murabahah Commercial Papers /
Medium Term Notes (“CP / MTN”) for the redemption of RSLS / RESLS as stated in item (c) as above, repayment of borrowings of the Company and
for working capital purposes. The long term loan under Islamic financing has been obtained by way of assignment of sale proceeds of certain
of the Group’s land held for property development, property, plant and equipment and quoted shares in associated companies (Notes 13, 22 and
25). The amounts outstanding are as follows:
Group and Company
2006
Nominal
Carrying
value
value
RM’000
RM’000
(i)
BAIDs
680,000
588,990
(ii)
CP / MTN
223,000
215,860
804,850
Accrued finance cost
13,982
818,832
(e)The deferred liability is in respect of amounts owing of RM26,456,000 (2005: RM26,456,000) by a solid waste subsidiary company to local
municipalities in relation to the transfer of 818 units of movables assets from these municipalities to the subsidiary company.
(f)
The currency exposure profile of the long term borrowings are as follows:
176
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
- Ringgit Malaysia
1,491,200
908,380
818,832
—
- Singapore Dollar
210,457
222,425
—
—
- Japanese Yen
191,528
217,562
—
—
- US Dollar
—
123,643
—
—
- Thai Baht
3,504
5,187
—
—
1,896,689
1,477,197
818,832
—
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
32LONG TERM BORROWINGS (continued)
(g)
Hire purchase and finance lease liabilities
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Minimum hire purchase and finance lease payments:
- not later than 1 year
14,899
17,242
—
—
- later than 1 year and not later than 2 years
5,623
3,842
—
—
- later than 2 years and not later than 5 years
6,704
6,169
—
—
- later than 5 years
899
524
—
—
28,125
27,777
—
—
Future finance charges on hire purchase and finance lease
(2,350)
(2,301)
—
—
Present value of hire purchase and finance lease liabilities
25,775
25,476
—
—
Representing hire purchase and finance lease liabilities:
- current (included in Note 21)
13,998
16,239
—
—
- non current
11,777
9,237
—
—
25,775
25,476
—
—
Present value of hire purchase and finance lease liabilities:
- not later than 1 year
13,998
16,239
—
—
- later than 1 year and not later than 2 years
4,911
3,318
—
—
- later than 2 years and not later than 5 years
6,320
5,793
—
—
- later than 5 years
546
126
—
—
25,775
25,476
—
—
A
n
n
u
a
l
R
e
p
o
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t
2
0
0
6
177
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
32LONG TERM BORROWINGS (continued)
(h)
The maturity structure of the long term borrowings (excluding hire purchase and finance lease liabilities and deferred liability) are as follows:
2006
RM’000
- later than 1 year and not later than 2 years
Group
Company
2005
RM’000
2006
RM’000
325,726
247,688
—
—
- later than 2 years and not later than 5 years
1,241,416
941,878
818,832
—
- later than 5 years
291,314
251,938
—
—
1,858,456
1,441,504
818,832
—
(i)
2005
RM’000
Fair value
•
The carrying value of the long term borrowings (excluding deferred liability) approximate their fair values.
The fair value information for long term loans under Islamic Principles have been excluded as they do not fall within the scope of FRS 132
(Financial Instruments: Disclosure and Presentation).
•
Deferred liability
It is not practicable to determine the fair value of amounts owing to local municipalities by a solid waste subsidiary company as the
obligation to pay for these amounts will only crystallise upon the finalisation of the National Privatisation Concession Agreement. However,
the Directors’ are of the opinion that the fair value will not be materially different from the carrying value.
33
SINKING FUND
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
At beginning of the financial year
658
329
—
—
Charge during the financial year
357
354
—
—
Utilised during the financial year
(370)
(25)
—
—
At end of the financial year
645
658
—
—
The sinking fund of subsidiary companies were established pursuant to the trust deeds dated 23 March 1993 and 7 September 1999 respectively for the
purpose of covering the cost of periodic major repairs, replacement of the golf course and building maintenance managed by the subsidiary companies.
178
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
34OTHER RESERVES
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Non-distributable
Capital reserves arising from issuance of Warrants
—
20,383
—
20,383
Capital reserves arising from bonus issue
7,000
7,000
—
—
Capital redemption reserve arising from redemption of preference shares
2,696
2,696
—
—
Revaluation reserve of investment properties
282
282
—
—
Share of associated companies’ statutory reserve 93,663
78,920
—
—
103,641
109,281
—
20,383
2006
RM’000
2005
RM’000
2006
RM’000
Group
Company
2005
RM’000
At beginning of the financial year
109,281
98,567
20,383
20,383
Group’s share of subsidiary companies retained earnings transferred to capital
redemption reserve and capitalisation for bonus issue
—
1,044
—
—
Share of associated companies’ statutory reserve
14,743
48,816
—
—
Realisation of an associated company’s reserve —
(39,146)
—
—
Realisation of capital reserves upon expiry of Warrants
(20,383)
At end of the financial year
103,641
(20,383)
—
—
—
109,281
20,383
(a)The Warrants represent the proceeds received from the rights issue of 65,751,251 new Warrants in the Company at RM0.31 per Warrant which
was implemented in the financial year ended 31 March 2001. The Warrants expired on 9 July 2005.
(b)The Group’s share of an associated company’s statutory reserve is maintained in compliance with Section 36 of the Banking and Financial
Institutions Act, 1989.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
179
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
35
CONSTRUCTION CONTRACTS
(a)The amounts disclosed for the financial year ended 31 March 2006 is in respect of construction contracts undertaken by the subsidiary companies,
whereas for the previous financial year ended 31 March 2005, it includes the EDTP contract undertaken by the Company.
Group
Company
2006
2005
2006
2005
RM’000
RM’000
RM’000
RM’000
Aggregate contract costs incurred
933,861
3,134,987
—
2,681,934
Recognised profits less losses
51,382
205,542
—
164,624
985,243
3,340,529
—
2,846,558
Less: Progress billings
(1,009,920)
(3,308,346)
—
(2,810,808)
(24,677)
32,183
—
35,750
Analysed as follows:
Amounts due from customers on contracts (Note 14)
14,184
46,495
—
35,750
Amounts due to customers on contracts (Note 19)
(38,861)
(14,312)
—
—
(24,677)
32,183
—
35,750
Advances to contractors on contracts (Note 14)
2,932
9,085
—
6,789
Retention on contracts
4,199
6,031
—
—
(b)
Electrified Double Track Project (“EDTP”)
On 2 June 2005, pursuant to a letter of understanding executed between the Government and the Company on 26 May 2005, both parties agreed
to a mutual termination of the EDTP. Following this, the Company had on 1 June 2005 handed over site possession to the Government.
In May 2006, the Government and the Company amicably resolved the variation orders claims in relation to additional works performed on
the EDTP for an amount of RM425,000,000. Following the re-estimation of EDTP financials, a reversal of construction profits of approximately
RM149,505,000, which was recognised previously, was charged to the income statement for the financial year ended 31 March 2006.
The Company continues to negotiate with the Government in respect of liquidated ascertained damages and release of performance bond. The
Directors are of the opinion that no material liability will arise from the outcome of the negotiations.
180
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
36
B e rh a d
(203430-W)
RETAINED EARNINGS
Subject to the agreement of the Inland Revenue Board, the Company has sufficient tax credit balance under Section 108(6) of the Income Tax Act,
1967 to frank to approximately RM255,560,000 of its retained profits as at 31 March 2006 if paid out as dividends. The Company also has tax exempt
income amounting to RM74,945,000 available for distribution as tax exempt dividends to shareholders.
37
SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES
2006
A jointly controlled entity
On 27 April 2005, HICOM Holdings Berhad (“HHB”), a wholly-owned subsidiary of the Company, acquired a 33.33% equity interest in Model Building
Maintenance Dallah Alam Flora Waste Management Services L.L.C. (“MBM Dallah Alam Flora LLC”), a company incorporated in United Arab Emirates.
As a result, MBM Dallah Alam Flora LLC became a jointly controlled entity of the Group.
An associated company
On 14 November 2005, the Company acquired a 20% equity interest in an associated company, Navi & Map Sdn. Bhd.. As a result, Navi & Map Sdn.
Bhd. became an associated company of the Group.
2005
Subsidiary companies
(a)On 26 May 2004, Gadek (Malaysia) Berhad acquired the entire equity interest comprising two ordinary shares of RM1.00 each in Ladang Kupang
Development Sdn. Bhd. (formerly known as Astra Delight Sdn. Bhd.). As a result, Ladang Kupang Development Sdn. Bhd. became a wholly-owned
subsidiary company of the Group.
(b)On 26 May 2004, HICOM Holdings Berhad acquired the entire equity interest comprising two ordinary shares of RM1.00 each in NSE Development
Sdn. Bhd. (formerly known as March Midas Sdn. Bhd.) and Bukit Kledek Development Sdn. Bhd. (formerly known as Spring Stream Sdn. Bhd.)
respectively. As a result, these companies became wholly-owned subsidiary companies of the Group.
(c)On 26 May 2004, HICOM Berhad acquired the entire equity interest comprising two ordinary shares of RM1.00 each in HB Property Development
Sdn. Bhd. (formerly known as Elegant Blooms Sdn. Bhd.). As a result, HB Property Development Sdn. Bhd. became a wholly-owned subsidiary
company of the Group.
(d)On 16 and 27 September 2004, HICOM Holdings Berhad acquired an additional 40% equity interest in HICOM Network Services Sdn. Bhd. (“HNS”).
As a result, HNS became a wholly-owned subsidiary company of the Group.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
181
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
37
SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES (continued)
Subsidiary companies (continued)
(e)In September 2004, Oriental Summit Industries Sdn. Bhd. acquired the entire equity interest comprising two ordinary shares of RM1.00 each in OSI
Manufacturing Sdn. Bhd. (“OSIM”) and Automotive Components Engineering Centre Sdn. Bhd. (“ACEC”) respectively. As a result, these companies
became subsidiary companies of the Group.
(f)On 18 October 2004, Motosikal Dan Enjin Nasional Sdn. Bhd. (“MODENAS”) acquired 40% equity interest in P.T. Modenas Putra Motor Indonesia
(“PT MODENAS”). Subsequently, MODENAS increased its equity interest from 40% to 58%. As a result, PT Modenas became a subsidiary company
of the Group.
(g)On 24 December 2004, HICOM Communications Sdn. Bhd. acquired 70% equity interest in PT HICOM BMS (formerly known as PT Bina Mitra Serasi
Haluan Lenggeng). As a result, PT HICOM BMS became a subsidiary company of the Group.
(h)On 3 March 2005, the Company acquired the entire equity interest comprising two ordinary shares of RM1.00 each in Suzuki Malaysia Automobile
Sdn. Bhd. (“SMA”). As a result, SMA became a wholly-owned subsidiary company of the Group.
In respect of items (d), (f) and (g)
•
The effect of the acquisitions in respect of the above items on the financial results of the Group is shown below:
182
2005
RM’000
Revenue
765
Cost of sales
(757)
Gross profit
8
Other operating income
1
Selling and distribution expenses
Administrative expenses
(927)
Loss from ordinary activities before taxation
(941)
Taxation
Loss from ordinary activities after taxation
(941)
Minority interests
294
Decrease in Group’s net profits
(647)
A n n
n uu aa ll
RR ee pp oo rr t t
(23)
—
2 2 0 0 0 0 66
DRB-HICOM
37
B e rh a d
(203430-W)
SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES (continued)
In respect of items (d), (f) and (g) (continued)
•
The effect of these acquisitions on the financial position of the Group as at 31 March 2005 is as follows:
2005
RM’000
Inventories
979
Trade and other receivables
3,669
Cash and bank balances
Trade and other payables
Property, plant and equipment
2,887
Minority interests
2,558
Decrease in Group’s net assets
78
(10,236)
(65)
•
Details of net liabilities assumed, goodwill and cash flow of the Group arising from the acquisitions are as follows:
At date of acquisition
RM’000
Inventories
1,395
Trade and other receivables
3,441
Cash and bank balances
Trade and other payables
Property, plant and equipment
2,983
Minority interests
2,589
Net liabilities assumed
(1,464)
Goodwill on acquisitions
3,418
Purchase consideration
1,954
Purchase consideration discharged by conversion of debt
Purchase consideration discharged by cash
Cash and cash equivalents arising from acquisitions of subsidiary companies
Cash outflow on acquisitions
460
(12,332)
(404)
1,550
(460)
1,090
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
183
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
37
SUMMARY OF EFFECT OF ACQUISITION OF COMPANIES (continued)
In respect of items (a),(b),(c),(e) and (h)
The acquisitions in respect of the above items do not have any material effect on the financial position and results of the Group and Company.
A jointly controlled entity
The Company acquired a 49% equity interest in a jointly controlled entity, Isuzu Malaysia Sdn. Bhd..
An associated company
As at 31 March 2005, the Group’s shareholding in EON Capital Berhad (“ECB”) was 140,010,526 ordinary shares (“ECB shares”), representing 20.20%
direct equity interest in ECB, which was obtained from the following transactions:
•Edaran Otomobil Nasional Berhad’s (“EON”), an associated company of the Group, distributed its entire shareholding in ECB to the shareholders
of EON by way of dividend in specie and capital repayment amounting to 20,504,007 ECB shares and 81,359,319 ECB shares respectively.
•Share swap of the Group’s existing short term investment in Jardine Cycle & Carriage Ltd (“JCCL”) (formerly known as Cycle & Carriage Ltd) of
9,266,914 JCCL shares for 29,722,000 ECB shares held by Jardine Strategic Malaysian Investments Pte. Ltd..
•
Acquisition of additional 8,425,200 ECB shares from the open market for a total purchase consideration of approximately RM47,334,000.
As a result, ECB became an associated company of the Group.
38
SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES
2006
An associated company
On 5 October 2005, Uni.Asia General Insurance Berhad which is a 68.09% indirect subsidiary of the Group, disposed of its 30% associated company,
South East Asia Insurance (B) Sdn. Bhd. (“SEAB”) for RM330,000. As a result, SEAB ceased to be an associate company of the Group. The gain arising
from the disposal amounted to RM57,000.
Subsidiary company
On 27 January 2006, Gadek (Malaysia) Berhad (“Gadek”), a wholly-owned subsidiary of the Group disposed of its entire 50% equity interest in SKVE
Holdings Sdn. Bhd. (“SKVE Holdings”) (formerly known as Gadek-Perspec Consortium Sdn. Bhd.). Similarly, on the same day, Perspec Prime (Malaysia)
Sdn. Bhd. (“Perspec”) a 70% subsidiary of the Group disposed of a 10% equity interest in SKVE Holdings. On 15 February 2006, Perspec disposed of
its remaining 40% equity interest in SKVE Holdings to a director and substantial shareholder of Perspec. As a result, SKVE Holdings ceased to be a
subsidiary of the Group.
184
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
38
B e rh a d
(203430-W)
SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES (continued)
Subsidiary company (continued)
The effect of the disposal of the subsidiary company on the results of the Group is shown below:
RM’000
Other operating income
193
Administrative expenses
(24)
Profit from operations
169
(1)
Finance cost
168
Profit from ordinary activities before taxation
—
Taxation
168
Profit from ordinary activities after taxation
The effect of the disposals of the subsidiary company on the financial position of the Group is shown below:
RM’000
26,504
Trade and other receivables
269
Cash and bank balances
(22,969)
Trade and other payables
(271)
Minority Interest
3,533
Net assets disposed
185
Gain on disposal
3,718
Total disposal proceeds
(269)
Less: Cash and bank balances of subsidiary disposed
3,449
Net cash inflow on disposal
The above mentioned disposal has no effect on the Company’s financial statements as the disposals were undertaken by the Company’s
subsidiary companies.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
185
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
38
SUMMARY OF EFFECT OF DISPOSAL OF COMPANIES (continued)
2005
Associated companies
(a)On 6 May 2004, HICOM Holdings Berhad disposed of its 29.86% equity interest in Petro-Pipe Industries (M) Sdn. Bhd. (“PPI”). As a result, PPI
ceased to be an associated company of the Group.
(b)On 6 May 2004 and 13 August 2004, HICOM Holdings Berhad disposed of its 20.29% equity interest in PPSC Industrial Holdings Sdn. Bhd.
(“PPSCIH”). As a result, PPSCIH ceased to be an associated company of the Group.
A jointly controlled entity
On 16 June 2004, HICOM Holdings Berhad disposed of its 40% equity interest in Aluminium Alloy Castings Sdn. Bhd. (“AAC”). As a result, AAC ceased
to be a jointly controlled entity of the Group.
The proceeds and net loss arising from the above disposals amounted to approximately RM88,000,000 and RM5,800,000 respectively.
The above mentioned disposals of equity interests have no effect on the Company’s financial statements as the disposals were undertaken by the
Company’s subsidiary companies.
39
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.
186
Related parties
Relationship
Bank Muamalat Malaysia Berhad
A company with a common substantial shareholder.
EON Bank Berhad
A wholly-owned subsidiary of an associated company of the Group.
Siemens VDO Instruments MY Sdn. Bhd.
Associated company of the Group.
Edaran Otomobil Nasional Berhad
Associated company of the Group.
ZF Steerings (Malaysia) Sdn. Bhd.
Associated company of the Group.
Master-Freighters (Malaysia) Sdn. Bhd.
A company in which certain past Directors have significant financial interests.
Auto Pacific Star Sdn. Bhd.
A company in which a past Director has significant financial interest.
Global World Trade Sdn. Bhd.
A company in which a past Director has significant financial interest.
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
39 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (continued)
2006
RM’000
Group
2005
RM’000
Sales of goods to:
14,700
26,764
Global World Trade Sdn. Bhd.
226,840
—
Auto Pacific Star Sdn. Bhd.
262,360
426,988
24,666
15,266
Edaran Otomobil Nasional Berhad
*
15,911
ZF Steerings (Malaysia) Sdn. Bhd.
*
11,077
Master-Freighters (Malaysia) Sdn. Bhd.
*
10,940
19,265
—
- Proceeds
46,664
—
- Repayment
(7,249)
—
- Amount due
39,415
—
- Proceeds
36,647
—
- Repayment (36,647)
—
Auto Pacific Star Sdn. Bhd.
Purchase of goods and services from:
Siemens VDO Instruments MY Sdn. Bhd.
Banking transactions with:
Bank Muamalat Malaysia Berhad
Documentary credit (Murabahah):
Bankers acceptance (Al-Murabahah):
Letter of credits:
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
187
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
39 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES (continued)
2006
RM’000
Group
2005
RM’000
Banking transactions with: (continued)
EON Bank Berhad
3,000
Revolving credit:
3,000
Term Loan:
- Repayment
(1,446)
- Amount due
25,211
(343)
26,657
* Transactions are not disclosed as the amounts are not significant.
The outstanding year end balances of related party transactions with the associated companies of the Group are disclosed in Notes 14 and 19 to the
financial statements.
The outstanding year end balances for related party transactions with the related parties in which certain past Directors have significant financial
interests are as below:
Group
2006
2005
RM’000
RM’000
188
Amounts due from related parties
20,989
22,245
Amounts due to related parties
17,887
15,966
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
40
B e rh a d
(203430-W)
CAPITAL AND OTHER COMMITMENTS
(i)
2006
RM’000
Group
2005
RM’000
2006
RM’000
Company
2005
RM’000
Authorised capital expenditure not provided for in the financial statements
- contracted 28,230
33,295
—
—
- not contracted for
72,060
63,350
—
2,450
100,290
96,645
—
2,450
Analysed as follows:
Property, plant and equipment
100,290
93,695
—
—
Additional investment in jointly controlled entities
—
2,950
—
2,450
100,290
96,645
—
2,450
(ii)
Lease commitments:
Commitments under non-cancellable operating leases:
- repayable within 1 year
1,459
1,417
—
—
- repayable within 2 to 5 years
2,257
4,439
—
—
- repayable more than 5 years
550
—
—
—
4,266
5,856
—
—
(iii) Commitments for forward foreign exchange contracts
85,973
66,945
—
—
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
189
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
41
CONTINGENT LIABILITIES (UNSECURED)
The currency exposure profile and the expiry period for the forward foreign exchange contracts are as follows:
Group 2006
Equivalent
amount
Contract
in Ringgit
amounts
Malaysia
(‘000)
(‘000)
Japanese Yen 2,706,574
85,973
100 ¥ = RM3.176
2006
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.
42
Average
contractual
rateExpiry dates
Group
3 April 2006 to 10 October 2006
Company
2005
RM’000
2006
RM’000
2005
RM’000
—
—
351,608
393,270
8,435
7,816
2,016
1,344
GROUP SEGMENT REPORTING
The Group principally operates in Malaysia in the following main industry segments:
Industry segment
Description
Automotive
Manufacturing, assembly and sale of motor and military vehicles including sale of related spares and services.
Property and construction
Property holding and development and construction work.
ServicesAirport ground handling services, solid waste management services, vehicle inspection, telecommunication services,
underwriting of general and life insurance, banking and related financial services, trading in electrical and engineering
products and hotel and resort management services.
190
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
42
B e rh a d
(203430-W)
GROUP SEGMENT REPORTING (continued)
(a)
Primary reporting format - business segment
Inter-segment revenue comprise revenue to other business segments carried out on an arm’s length basis.
Segment results represent segment revenue less segment expenses. Unallocated expenses represent corporate operating and administrative expenses.
Segment assets consist primarily of property, plant and equipment, inventories, receivables, property development costs, land held for property
development, short term and other investments and cash and bank balances and exclude interest bearing short term deposits, taxation assets
and investments in jointly controlled entities and associated companies. Segment liabilities comprise mainly of general and life insurance funds,
payables and exclude items such as interest bearing borrowings and taxation. Unallocated liabilities consist of accruals on corporate operating
and administrative expenses.
Capital expenditure comprise additions to property, plant and equipment.
(b)
Secondary reporting format - geographical segments
The Group’s secondary format by geographical location, is not shown as the activities of the Group are predominantly in Malaysia and the overseas
segment does not contribute to more than 10% of the consolidated revenue and assets.
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
191
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
42
GROUP SEGMENT REPORTING (continued)
Primary reporting format - business segment
Property &
Automotive
Construction
Services
RM’000
RM’000
RM’000
Investment
Holding
RM’000
Group
RM’000
40,378
3,867,962
Financial year ended 31 March 2006
Revenue
2,280,875
Total revenue
(226,377)
Inter-segment revenue
2,054,498
229,882
(68,210)
(16,637)
(33,903)
6,475
101,667
2,844
(183,395)
Unallocated expenses
(81,129)
Interest income
37,936
Finance cost
(130,789)
(4,259)
Segment results
Share of results of jointly controlled entities
Share of results of associated companies
(283,647)
3,522,835
12,919
29,799
(3,934)
—
38,784
102,261
1,606
80,718
—
184,585
Loss from ordinary activities before taxation
(134,008)
Taxation
(11,572)
Loss from ordinary activities after taxation
192
(345,127)
1,300,190
External revenue
161,672
1,316,827
(145,580)
Minority interests
(58,401)
Net loss attributable to shareholders
(203,981)
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
42
B e rh a d
(203430-W)
GROUP SEGMENT REPORTING (continued)
Primary reporting format - business segment (continued)
Property &
Automotive
Construction
Services
RM’000
RM’000
RM’000
Investment
Holding
RM’000
Group
RM’000
148,297
5,558,646
Interest bearing short term deposits
1,061,005
Taxation assets
175,186
Financial year ended 31 March 2006
Other information
Segment assets
1,772,772
1,823,670
1,813,907
Jointly controlled entities
123,023
164,943
15,779
—
303,745
Associated companies
664,974
39,566
722,654
—
1,427,194
8,525,776
Total assets
Segment liabilities
443,560
766,048
1,490,236
18,452
2,718,296
2,624,787
Interest bearing borrowings
71,730
Taxation liabilities
Unallocated liabilities
2,500
Total liabilities
5,417,313
Capital expenditure
Depreciation
Impairment loss on property, plant and equipment
77,208
13,928
38,381
2,839
132,356
102,868
26,417
47,639
5,306
182,230
5,104
151,998
36
—
157,138
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
193
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
42
GROUP SEGMENT REPORTING (continued)
Primary reporting format - business segment (continued)
Property &
Automotive
Construction
Services
RM’000
RM’000
RM’000
Investment
Holding
RM’000
Group
RM’000
Financial year ended 31 March 2005
Revenue
Total revenue
2,458,282
552,291
1,523,557
31,788
4,565,918
(5,181)
(16,270)
(18,846)
(19,026)
(59,323)
External revenue
2,453,101
536,021
1,504,711
12,762
4,506,595
Segment results
145,793
(24,574)
69,180
17,511
207,910
Unallocated expenses
(49,506)
Interest income
34,854
Finance cost
(138,440)
Inter-segment revenue
Share of results of jointly controlled entities
12,779
26,332
1,215
—
40,326
135,737
3,749
42,072
—
181,558
Profit from ordinary activities before taxation
276,702
Taxation
(78,443)
Profit from ordinary activities after taxation
198,259
Minority interests
(56,852)
Net profit attributable to shareholders
141,407
Share of results of associated companies
194
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
42
B e rh a d
(203430-W)
GROUP SEGMENT REPORTING (continued)
Primary reporting format - business segment (continued)
Property &
Automotive
Construction
Services
RM’000
RM’000
RM’000
Investment
Holding
RM’000
Group
RM’000
323,535
5,646,493
Interest bearing short term deposits
1,148,583
Taxation assets
100,743
Jointly controlled entities
119,186
209,559
18,686
—
347,431
Associated companies
669,475
41,642
673,978
—
1,385,095
Financial year ended 31 March 2005
Other information
Segment assets
1,747,298
1,932,355
1,643,305
Total assets
Segment liabilities
419,011
718,865
8,628,345
1,337,040
26,816
2,501,732
Interest bearing borrowings
2,720,095
Taxation liabilities
81,041
Unallocated liabilities
4,105
Total liabilities
5,306,973
Capital expenditure
Depreciation
Impairment loss on property, plant and equipment
106,216
9,248
25,853
2,628
143,945
91,237
29,024
46,067
5,447
171,775
—
10,204
4,491
—
14,695
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
195
DRB-HICOM
B e rh a d
(203430-W)
Notes to the Financial Statements – 31 March 2006
43
SIGNIFICANT SUBSEQUENT EVENTS
(a)On 13 April 2006, the Ministry of International Trade and Industry (“MITI”) approved the granting of Approved Permits (“APs”) to the Group for
all the makes and models of vehicles under the Group’s franchise and distribution namely Chevrolet, Citroen, Honda, Mahindra, Suzuki, Audi and
Mitsubishi. DRB-HICOM Auto Solutions Sdn. Bhd. (“DHAS”) (formerly known as DRB-HICOM IT Solutions Sdn. Bhd.), a wholly-owned subsidiary of
the Company has been designated as the recipient of the APs. The granting of APs by MITI to DHAS is in line with the regulations and guidelines
as laid down in the National Automotive Policy and consistent with the decision of the National Automotive Committee to grant APs directly to
the Group without going through intermediary third party companies.
(b)On 1 June 2006, HICOM Properties Sdn. Bhd. (“HPSB”), which in turn owns a 51% equity interest in HICOM Menang Properties Sdn. Bhd. (“HMP”),
entered into a Share Purchase Agreement with Menang Corporation (M) Bhd. (“MCB”), to acquire the remaining 49% equity interest in HMP,
comprising 4,900,000 ordinary shares of RM1.00 each from MCB for a total cash consideration of RM7,595,000. The acquisition was completed on
28 June 2006. As a result, HMP became a wholly-owned subsidiary of the Group.
(c) On 6 June 2006, DRB-HICOM Defence Technologies Sdn. Bhd. (“DEFTECH”), a wholly-owned subsidiary of the Company, entered into a Sale of
Share Agreement (“SSA”) with Idaman Kencana Sdn. Bhd. to acquire its 70% equity interest in MMC Defence Sdn. Bhd. (“MMCD”) for a total cash
consideration of RM4,230,269. MMCD is principally involved in engineering services that include total refurbishment, upgrading and research and
development (“R&D”) work for armoured vehicles and armaments. On 7 July 2006, DEFTECH entered into a SSA with MMC Engineering Group
Berhad (“MMCEG”) to acquire its 30% equity interest in MMCD for a total cash consideration of RM1,812,973. On the same day, an agreement
was entered into with MMC Corporation Berhad (“MMC”) to procure MMCD to redeem its 3,000,000 Redeemable Convertible Preference Shares
of RM1.00 each from MMC for a cash consideration of RM3,000,000. In addition to the cash consideration paid for the acquisition of 100% equity
interest, in the event that MMCD procures a certain maintenance contract from the Government by 31 December 2006, DEFTECH shall pay an
additional RM1,547,028 cash consideration to MMCEG. The proposed acquisitions are subject to approval from the relevant authorities as at the
date of this financial statements.
44
FINANCIAL INSTRUMENTS
Financial risk management objectives and policies
The Group’s overall financial risk management objective is to ensure that the Group creates value for its shareholders. The Group’s financial risk
management policy seeks to ensure that adequate financial resources are available for the development of the Group’s businesses whilst managing
its interest rate, foreign currency exchange, credit, liquidity and cash flow, market, insurance and pricing risks.
(i)
Interest rate risk
The Group’s primary interest rate risk relates to interest-bearing borrowings and investments in marketable securities and other interestbearing financial instruments. The Group manages its interest rate exposure by maintaining a prudent mix of fixed and floating rate borrowing
instruments
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B e rh a d
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FINANCIAL INSTRUMENTS (continued)
(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 the functional
currency. Foreign exchange exposures in transactional currencies other than functional currency of the operating entities are kept to an acceptable
level. Material foreign currencies transaction exposures are hedged, mainly with forward foreign exchange contracts.
(iii) Credit risk
Credit risk is the potential loss arising from customers or counterparties failing to meet their financial contractual obligations. The Group seeks
to control credit risk by ensuring its customers or counterparties have sound financial standing and credit history.
The Group has no significant concentration of credit risk due to its diverse customer base and minimal credit risk is expected in respect of
amounts due from the Government as disclosed in Note 14(b) to the financial statements.
(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 priceinfluencing parameters in the financial markets. The adverse changes can occur in interest rate, foreign exchange and equity markets. The Group
regularly reviews these risks and takes proactive measures to mitigate the potential impact of such risks.
(vi) Insurance and pricing risks
The principal activity of a life insurance subsidiary company is to provide insurance protection against risks such as mortality, morbidity, disability
and personal accidents. The mortality and morbidity risks are managed through risk assessment before a policy is underwritten. The maximum
underwriting exposure is limited through exclusion, cover limits and reinsurance arrangements. The pricing risk relates to the risk of inadequacy
of premium. Re-pricing of product is conducted at regular interval of two (2) years or shorter, if required. Experience studies are conducted to
determine realistic assumptions. Stress tests and bonus reserve valuations are done by the appointed actuary to assess the solvency position.
45
APPROVAL OF FINANCIAL STATEMENTS
The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 18 July 2006.
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Statement by Directors
Pursuant to Section 169 (15) of the Companies Act, 1965
We, YAM Tan Sri Dato’ Seri Syed Zainol Anwar Ibni Syed Putra Jamalullail and Datuk 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 99 to 197 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 2006 and of the results and the cash flows of the Group and of the Company for the financial
year ended on that date in accordance with the MASB approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
In accordance with a resolution of the Board of Directors dated 18 July 2006.
YAM TAN SRI DATO’ SERI SYED ZAINOL ANWAR IBNI SYED PUTRA JAMALULLAIL
Chairman
DATUK MOHD KHAMIL BIN JAMIL
Group Managing Director
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Statutory Declaration
Pursuant to Section 169 (16) of the Companies Act, 1965
I, Mohd Redza Shah bin Abdul Wahid, 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 99 to 197 are, in my opinion, correct and I make this solemn declaration conscientiously believing
the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.
MOHD REDZA SHAH BIN ABDUL WAHID
Subscribed and solemnly declared by the abovenamed Mohd Redza Shah bin Abdul Wahid at Shah Alam in Malaysia on 18 July 2006.
Before me,
Tengku Mohd Hashim bin Tengku Mohamed
Commissioner for Oaths
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DRB-HICOM
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Report of the Auditors
to the Members Of Drb-hicom Berhad
We have audited the financial statements set out on pages 99 to 197. These financial statements are the responsibility of the Company’s Directors. It is our
responsibility to form an independent opinion, based on our audit, on these financial statements and to report our opinion to you, as a body, in accordance with
Section 174 of the Companies Act, 1965 and for no other purpose. We do not assume the responsibility to any other person for the content of this report.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the
Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion :
(a)the financial statements have been prepared in accordance with the provisions of the Companies Act 1965 and applicable MASB approved accounting
standards in Malaysia so as to give a true and fair view of:
(i)
(ii)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
the state of affairs of the Group and Company as at 31 March 2006, and of the results and cash flows of the Group and Company for the financial
year ended on that date;
and
(b)the accounting and other records and the registers required by the Act to be kept by the Company and by the subsidiary companies of which we have
acted as auditors have been properly kept in accordance with the provisions of the Act.
The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 3 to the financial statements. We have considered
the financial statements of these subsidiary companies and the auditors’ reports thereon.
We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in
form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory
information and explanations required by us for those purposes.
The auditors’ reports on the financial statements of the subsidiary companies were not subject to any qualification and did not include any comment made
under subsection 3 of Section 174 of the Act.
PRICEWATERHOUSECOOPERS
(No AF : 1146) Chartered Accountants
KUALA LUMPUR
18 July 2006
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DATO’ AHMAD JOHAN BIN MOHAMMAD RASLAN
(1867 / 09 / 06(J))
PARTNER oF the Firm
DRB-HICOM
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Other Information
Share Movement Chart
202
Analysis of Shareholdings
203
Properties of DRB-HICOM Group
206
Form of Proxy
Borang Proksi
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DRB-HICOM
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Share Movement Chart
Share Prices and Trading Volume on the Bursa Malaysia Securities Berhad
40,000
2.00
35,000
1.75
30,000
1.50
25,000
1.25
20,000
1.00
15,000
0.75
10,000
0.50
5,000
0.25
0
Apr
May
VOLUME
Jun
Jul
Aug
Sep
Oct
Nov
2005
RR ee pp oo rr t t
Feb
Mar
0
Price
(RM)
Volume
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Jan
2006
(’000)
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Dec
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High (RM)
Low (RM)
DRB-HICOM
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Analysis of Shareholdings
Class of Securities
:
as at 24 July 2006
Ordinary shares of RM1.00 each
Authorised Share Capital
:
RM2,000,000,000.00
Issued and Fully Paid-up Capital
:
RM1,003,099,829.00
Voting Rights :
Shareholders
Every member of the Company present in person or by proxy shall have one vote on a show of hands, and in
the case of poll, shall have one vote for every share of which he is the holder.
Number of Shareholders
:
55,858
ANALYSIS OF SHAREHOLDINGS
Holdings No. of Holders Percentage No. of Shares Percentage
1 – 99 352
0.63
8,799
0.01
100 – 1,000 27,723
49.63
20,745,321
2.06
1,001 – 10,000 24,484
43.83
82,255,739
8.20
10,001 – 100,000 2,985
5.34
76,634,348
7.64
310
0.56
349,380,060
34.83
4
0.01
474,075,562
47.26
55,858
100.00
1,003,099,829
100.00
100,001 – 50,154,990(*)
50,154,991 and above(**)
Total
Remarks: * Less than 5% of issued shares
** 5% and above of issued shares
THIRTY LARGEST REGISTERED SHAREHOLDERS
Name No. of Shares Held Percentage
1.
Bumiputra-Commerce Nominees (Tempatan) Sdn Bhd Pledged Securities Account for Etika Strategi Sdn Bhd (26940 JTRK)
155,431,725
15.50
2.
Employees Provident Fund Board 125,619,200
12.52
3.
Khazanah Nasional Berhad 104,124,637
10.38
4.
Amanah Raya Nominees (Tempatan) Sdn Bhd Skim Amanah Saham Bumiputera
88,900,000
8.86
5.
Kumpulan Wang Amanah Pencen 15,948,900
1.59
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Analysis of Shareholdings
as at 24 July 2006
THIRTY LARGEST REGISTERED SHAREHOLDERS (continued)
Name No. of Shares Held Percentage
6.
Malaysia Nominees (Tempatan) Sendirian Berhad Great Eastern Life Assurance (Malaysia) Berhad (PAR 1)
13,057,700
1.30
7.
Citigroup Nominees (Asing) Sdn Bhd UBS AG Singapore for Creon Investments Limited
11,612,526
1.16
8.Amanah Raya Nominees (Tempatan) Sdn Bhd Amanah Saham Wawasan 2020
11,092,100
1.10
9.
Tai Tak Estates Sdn Bhd
10,952,653
1.09
10.Alliancegroup Nominees (Tempatan) Sdn Bhd PHEIM Asset Management Sdn Bhd for Employees Provident Fund
10,485,800
1.05
9,011,500
0.90
11.
204
Malaysia Nominees (Tempatan) Sendirian Berhad
Amanah SSCM Asset Management Berhad For Amanah Millenia Fund Berhad (JM730)
12.
Citaria Sdn Bhd 8,973,972
0.90
13.
Universal Trustee (Malaysia) Berhad Mayban Unit Trust Fund
7,717,600
0.77
14.HSBC Nominees (Tempatan) Sdn Bhd Nomura Asset Mgmt Sg for Employees Provident Fund
6,560,900
0.65
15.
6,501,100
0.65
Cartaban Nominees (Tempatan) Sdn Bhd
Exempt An For Amanah SSCM Nominees (Tempatan) Sdn Bhd (Account 1)
16.
Lembaga Tabung Angkatan Tentera 6,137,100
0.61
17.
Citicorp Nominees (Asing) Sdn Bhd CBNY for DFA Emerging Markets Fund
6,126,600
0.61
18.
Pertubuhan Keselamatan Sosial 5,998,000
0.60
19. Mayban Nominees (Tempatan) Sdn Bhd
Mayban Investment Management Sdn Bhd for Kumpulan Wang Simpanan Pekerja (N14011980810)
5,154,300
0.51
20.
Cartaban Nominees (Asing) Sdn Bhd
Investors Bank and Trust Company for Ishares, Inc.
4,777,500
0.48
21. AM Nominees (Tempatan) Sdn Bhd Pertubuhan Keselamatan Sosial
4,746,166
0.47
22.
Mayban Nominees (Tempatan) Sdn Bhd
Avenue Invest Berhad for Kumpulan Wang Amanah Pencen (E00170-220136)
4,631,000
0.46
23.
Cartaban Nominees (Tempatan) Sdn Bhd
Amanah SSCM Nominees (Tempatan) Sdn Bhd for Employees Provident Fund Board (JF404)
4,447,600
0.44
24.
HDM Nominees (Asing) Sdn Bhd
UOB Kay Hian Pte Ltd for Zenith Securities Pte Ltd
4,398,800
0.44
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THIRTY LARGEST REGISTERED SHAREHOLDERS (continued)
Name No. of Shares Held Percentage
25AMMB Nominees (Tempatan) Sdn Bhd
Amtrustee Berhad For HLG Dividend Fund (HLGDF)
4,230,000
0.42
26. CIMSEC Nominees (Tempatan) Sdn Bhd
Pengurusan Danaharta Nasional Berhad
4,153,689
0.41
27.
sia Life (M) Berhad A
As Beneficial Owner (PF)
4,070,729
0.41
28.Citigroup Nominees (Asing) Sdn Bhd CBHK for Kuwait Investment Authority (Fund 202)
4,052,000
0.40
29. HSBC Nominees (Asing) Sdn Bhd PICTET and CIE for Djursholm Investments
3,776,000
0.38
30.RHB Nominees (Tempatan) Sdn Bhd RHB Asset Management Sdn Bhd for Kumpulan Wang Simpanan Pekerja
3,691,400
0.37
SUBSTANTIAL SHAREHOLDERS (HOLDING 5% OR MORE IN THE SHARE CAPITAL) (per Register of Substantial Shareholders)
Direct
Indirect Total
Percentage
No. of No. of of Issued
Name
Shares Held Percentage
Shares Held Percentage
Capital
Etika Strategi Sdn Bhd
155,431,725
15.50
—
—
15.50
Employees Provident Fund Board
163,506,700
16.30
—
—
16.30
Khazanah Nasional Berhad
104,124,637
10.38
—
—
10.38
Amanah Raya Nominees (Tempatan) Sdn Bhd
– Skim Amanah Saham Bumiputera
Tan Sri Dato’ Syed Mokhtar Shah Syed Nor
88,900,000a
—
8.86
—
—
155,431,725b
—
8.86
15.50
15.50
Notes:
a Shares are held in trust for Skim Amanah Saham Bumiputera, a unit trust scheme.
b By virtue of his deemed interest in the shares through Etika Strategi Sdn Bhd in accordance with Section 6A of the Companies Act, 1965.
DIRECTORS’ INTERESTS IN THE COMPANY AND RELATED CORPORATIONS
None of the Directors in office as at 24 July 2006 held any interest in shares in the Company or in its related corporations.
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Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
206
Lot No. 120-123, P.N. No. 2557, Kawasan Perindustrian Peramu
Mukim of Pekan, Pahang Darul Makmur
Leasehold industrial land
9 yrs
with office and factory blocks Leasehold 66 years
expiring in year 2052
68,700 sq.m
12,384
Lot No. 126-133, H.S.(D) No. 3579, Kawasan Perindustrian Peramu
Mukim of Pekan, Pahang Darul Makmur
Leasehold industrial land
9 yrs
with office and factory blocks
Leasehold 66 years
expiring in year 2065
60,784 sq.m
22,341
Lot No. 134, H.S.(D) No. 2233, Kawasan Perindustrian Peramu
Mukim of Pekan, Pahang Darul Makmur
Leasehold industrial land
9 yrs
with office and factory blocks Leasehold 66 years
expiring in year 2061
31,970 sq.m
14,055
Lot No. 142, H.S.(D) No. 2211, Kawasan Perindustrian Peramu
Mukim of Pekan, Pahang Darul Makmur
Leasehold industrial land
9 yrs
with office and factory blocks Leasehold 66 years
expiring in year 2060
60,784 sq.m
20,535
Lot 140, H.S.(D) No. 3421, Kawasan Perindustrian Peramu
Mukim of Pekan, Pahang Darul Makmur
Leasehold industrial land
9 yrs
Leasehold 66 years
expiring in year 2062
420,873 sq.m
2,882
H.S.(D) 115082, PT No. 36417, Mukim Sungai Buloh
Leasehold industrial land
1 yr
Daerah Petaling, Selangor Darul Ehsan
Leasehold 99 years
expiring in year 2096
15,506 sq.m
2,529
Lot No.032033-032137, Pekan Desa Puchong
Daerah Petaling, Selangor Darul Ehsan
Properties for development into
—
residential and commercial buildings
Leasehold 99 years
expiring in year 2097
61,188 sq.m
5,630
Connemare Estate, Lots 35, 1252, 1365 and 1463
Mukim of Beranang, Daerah Ulu Langat, Selangor Darul Ehsan
Agriculture land (matured oil palm)
Freehold
6,264,782 sq.m
202,300
—
Petak F7, (KPT 11), Kawasan Perusahaan
Industrial land with inspection centre 10 yrs
Pengkalan Chepa, Kota Bahru, Kelantan Darul Naim
Leasehold 66 years
28,547 sq.m
3,450
Lot No 219, Kawasan Perusahaan Tebrau III
Mukim Tebrau, Johor Bahru, Johor Darul Takzim
Industrial land with inspection centre
9 yrs
Leasehold 60 years
16,643 sq.m
7,405
Lot 17B, PT No 296, Mukim Sungai Petani, Alor Gajah, Melaka
Industrial land with inspection centre
9 yrs
Freehold
13,530 sq.m
3,414
MG 43, Lot No 3587, Mukim Parit Bakar
Muar, Johor Darul Takzim
Industrial land with inspection centre 10 yrs
Freehold
17,199 sq.m
3,699
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Approx. Net book
Description/
age of Approx.
value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot No CL 1053, 1528, 5 1/2 Mile, Jalan Apas, Tawau, Sabah
Industrial land with inspection centre
Freehold
19,992 sq.m
2,968
Lot 70 & 71, Lambir Land, Daerah Miri, Sarawak
Industrial land with inspection centre
9 yrs
Leasehold 60 years
expiring in year 2025
10,684 sq.m
3,386
EMR 1833 Lot 1193, Mukim Kluang, Johor Darul Takzim
Industrial land with inspection centre
10 yrs
Freehold
17,805 sq.m
3,749
HS(M) 4328, PT 3969, Teluk Datuk, Mukim
Tanjung Duabelas Banting, Selangor Darul Ehsan
Industrial land with inspection centre
10 yrs
Freehold
8,100 sq.m
2,744
HS(D) 92322, PT 387, Senawang, Negeri Sembilan
Industrial land with inspection centre
9 yrs
Freehold
15,459 sq.m
4,489
GM 68 & 69 Lot No 979 & 981
Mukim 9 South West, Pulau Pinang
Industrial land with inspection centre
9 yrs
Freehold
8,174 sq.m
4,082
KRM 485, Lot 583, Mukim Kijal
Daerah Kemaman, Terengganu Darul Iman
Industrial land with inspection centre
10 yrs
Freehold
13,330 sq.m
611
Lot 74, Surat Putus 4502, Mukim Mergong
Kota Setar, Kedah Darul Aman
Industrial land with inspection centre
10 yrs
Leasehold
6,269 sq.m
2,899
Lot 9661, Seksyen 64, Pending Industrial Estate
Building used as inspection centre
9 yrs
Jalan Dato Merican Salleh, Kuching, Sarawak
Leasehold
15 years
39,822 sq.m
2,140
Lot 4, Jalan Limau Manis, Off jalan Lintas, Inanam
Kota Kinabalu, Sabah
Leasehold 15 years
39,822 sq.m
2,018
Lorong Mak Mandin 3, Kawasan Perindustrian
Industrial land with inspection centre
11 yrs
Mak Mandin, Butterworth, Pulau Pinang
Leasehold 99 years
expiring in year 2089
19,281 sq.m
11,092
Lot 3016, Kampung Kubang Ikan, Mukim Chendering
Kuala Terengganu, Terengganu Darul Iman
Leasehold 60 years
33,661 sq.m
4,784
Building used as inspection centre
Industrial land with inspection centre
9 yrs
10 yrs
11 yrs
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Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot 3904/A, Mukim Chenor, Daerah Batu Mengkebang
Kuala Krai, Kelantan Darul Naim
Building used as inspection centre
10 yrs
Government Land
28,547 sq.m
215
Lot 1, Jalan Sungai Rasah
Padang Jawa, Shah Alam, Selangor Darul Ehsan
Building used as inspection centre
12 yrs
Government Land
12,141 sq.m
4,445
Wangsa Maju, Jalan Genting Kelang
Setapak, Kuala Lumpur, Wilayah Persekutuan
Building used as inspection centre
11 yrs
Government Land
17,959 sq.m
2,986
Lot 18477, Jalan Kuala Ketil, Daerah Kuala Muda
Sungai Petani, Kedah Darul Aman
Building used as inspection centre
11 yrs
Government Land
12,343 sq.m
2,283
Lot 1717, Jalan Jajawi, Permatang Arau
Perlis Indera Kayangan
Building used as inspection centre
11 yrs
Government Land
16,147 sq.m
2,216
Sektor 1, Bandar Indera Mahkota
25200 Kuantan, Pahang Darul Makmur
Industrial land with inspection centre
11 yrs
Leasehold 66 years
19,425 sq.m
5,532
Lot No 46 & 47, Gopeng Industrial
Park Phase II, Gopeng, Perak Darul Ridzuan
Industrial land with inspection centre
10 yrs
Leasehold 60 years
21,042 sq.m
4,677
Lot 1, 12113, Batu 8, Jalan Labuk, Sandakan Sabah
Industrial land with inspection centre
10 yrs
999 years expiring
in year 2892
14,083 sq.m
2,726
Lot 14253, Mukim Durian Sebatang, Daerah Hilir Perak
Batu 5, Jalan Maharajalela, Teluk Intan, Perak Darul Ridzuan
Building used as inspection centre
10 yrs
Government Land
39,822 sq.m
1,381
Mukim Asam Kumbang, Jalan Kampung Dewa
Simpang Taiping, Perak Darul Ridzuan
Building used as inspection centre
10 yrs
Government Land
66,370 sq.m
1,351
Leasehold 66 years
12,000 sq.m
284
PT 12734, Kaw. Perindustrian Batu 7,
Mukim Sura, Dungun
208
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RR ee pp oo rr t t
2 2 0 0 0 0 66
Vacant land
—
DRB-HICOM
B e rh a d
(203430-W)
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot PT 5690 & 5689, Mukim Gurun
Daerah Kuala Muda, Kedah Darul Aman
Industrial land with office
and factory building
10 yrs
Freehold
650,360 sq.m
168,445
HSD 110103 Mukim Sg Buloh, Service Center Shah Alam
No. 62, Jln AY U5/AY, Seksyen 4, Shah Alam
Land with a building erected
3 mths
Freehold
324 sq.m
2,808
Serendah Estate comprising forty-four (44) parcels of land
Mukim of Serendah, District of Ulu Selangor
Selangor Darul Ehsan
Agricultural land and staff quarters rubber and oil palm cultivation
—
Freehold
244 hectares
65,755
Bukit Kledek Estate Lots 563, 564, 893 and 1025 (part)
Mukim of Air Kuning, District of Tampin
Negeri Sembilan Darul Khusus
Agricultural land and staff quarters rubber and oil palm cultivation
—
Freehold
621 hectares
32,474
Bukit Kledek Estate, Lot 1025 (part)
Mukim of Air Kuning, District of Tampin
Negeri Sembilan Darul Khusus
Agricultural land and staff quarters —
rubber and oil palm cultivation
Leasehold
expiring in 2022
245 hectares
3,855
Rubber and oil palm estate with
21 - 49 yrs
bungalow and staff quarters
Freehold and
499 hectares
leasehold 67 years
expiring on 21.05.2033
29,996
Ladang Kupang, Baling, Kedah
Rubber and coffee estate with
bungalow and staff quarters
Freehold
575 hectares
29,100
No.1008, Menara Uni.Asia, Jalan Sultan Ismail
50250 Kuala Lumpur
Ground, mezzanine, 6th to 10th floor
7 yrs
used as Uni. Asia General Insurance
Corporate Head Office, 13th to 13thA
floors under Guaranteed Rental and
11th - 13th A floors currently vacant
Leasehold 99 years
expiring on 06.02.2078
11,975 sq.m
53,997
Leasehold 82 years
expiring on 15.08.2083
256 sq.m
0
Ladang Gadek, Alor Gajah, Melaka
7 - 78 yrs
Adjacent land (Plot A) Menara Uni.Asia
Vacant land
—
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
209
DRB-HICOM
B e rh a d
(203430-W)
Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
210
122 & 122A, Jalan Raja, Musa Aziz, Ipoh
Perak Darul Ridzuan
2 units of 3 storey shophouse
24 yrs
used as branch office Leasehold 999 years
expiring on 21.09.2894
866 sq.m
917
16, Jalan Pejabat Pos, Batu Gajah, Perak Darul Ridzuan
3 storey shophouse
used as branch office
23 yrs
Freehold
358 sq.m
306
120, Jalan Kota, Taiping, Perak
Double storey shophouse used
as branch office
22 yrs
Freehold
276 sq.m
335
17 & 18, Jalan Tebrau, Johor Bahru, Johor Darul Takzim
Ground, 1st & 2nd floors of
Lot 17 & 18 used as branch
office and Reginal office
23 yrs
Freehold
691 sq.m
1,646
688-C, Jalan Bukit Ubi, Kuantan, Pahang Darul Makmur
3 storey shophouse used
as branch office
24 yrs
Freehold
403 sq.m
363
Lot 7651 & 7658, Taman Desa Jaya, Sg.Petani, Kedah
Lot 7658 is detached with single
storey house - used as store
by Sg. Petani Baranch and
Lot 7651 is a vacant land
24 yrs
Freehold
895 sq.m
201
9B Condominium Type A, Frasers Hill, Raub
Condominium for staff use
20 yrs
Pahang Darul Makmur
Leasehold 99 years
expiring on 23.05.2082
166 sq.m
306
38, Jalan Tingkat Siakap 4, Taman Mutiara
Port Dickson, Negeri Sembilan Darul Khusus
Bungalow for staff use
22 yrs
Freehold
623 sq.m
143
Lot 951(471) & 801, Mukim 11 Barat Daya, Penang
Vacant land
—
Freehold
8,551 sq.m
1,860
Suite 3.1, 3.2 & 3.3, Menara Penang Garden, Penang
Branch office for suite 3.1, 3.2 and
suite 3.3 are used as branch office
12 yrs
Freehold
574 sq.m
1,497
360, Taman Melaka Raya, Melaka
3 storey shophouse used as
13 yrs
branch office
Leasehold 99 years
expiring on 04.10.2082
368 sq.m
349
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot 329 & 330, Central Road East, Kuching, Sarawak
1st floor of Lot 329 is rented
11 yrs
out, 2nd floor is vacant and others are used as branch office.
Leasehold 999 years
expiring on 03.05.2781
687 sq.m
998
Lot 5453, A-4, Jalan Kg Baru
Sg.Petani, Kedah
4 storey shophouse
used as branch office
11 yrs
Freehold
433 sq.m
640
No 361, Taman Bukit Emas, Jalan Tampin, Seremban
Negeri Sembilan
3 storey shophouse
25 yrs
Freehold
470 sq.m
388
13, Jalan Melur 8, Taman Suria Jaya
Cheras, Kuala Lumpur
4 storey terrace shophouse
23 yrs
being used as store
Leasehold 99 years
expiring on 23.01.2085
544 sq.m
306
9th-12th floor, Menara Safuan, Kuala Lumpur
9th & 10th floor are rented out in
April 2004, 11th & 12th floor used
as Central KL branch
23 yrs
Freehold
1,785 sq.m
6,708
Lot 1A, HICOM Glenmarie, Industrial Park
Mukim Damansara, Daerah Petaling, Selangor Darul Ehsan
Industrial land and
HICOM Corporate Office
11 yrs
Freehold
5.62 hectares
61,583
HS(D) 2078, P.T. No 215/95, Mukim of Bentong
Pahang Darul Makmur
Holiday Condominium
for staff - 1 unit
20 yrs
Freehold
117 sq.m
326
HS(D) 65, No. L.O. 50, Mukim Si-Rusa
District of Port Dickson, Negeri Sembilan Darul Khusus
Holiday Apartments
18 yrs
for staff - 2 units
Leasehold
expiring in 2084
242 sq.m
375
Lot No. 386, Seksyen 87A, Bandar Kuala Lumpur
Daerah Wilayah Persekutuan
Land with 3 blocks of double
49 yrs
storey building
Leasehold
expiring in 2083
1.22 hectares
2,921
66,152 sq.m
16,792
PT 5143, HS(D) 80124, Mukim Damansara, Daerah Petaling Land with office and factory buildings
(Lot 1229, Jalan Jijan 28/35, Persiaran Kuala Langat
Seksyen 28, Shah Alam, Selangor Darul Ehsan)
8 yrs and
16 yrs
Freehold
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
211
DRB-HICOM
B e rh a d
(203430-W)
Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
212
PT 616, HS(D) 63616, Mukim Damansara, Daerah Petaling
Selangor Darul Ehsan, (Taman Bunga Negara
HICOM Sector B, Seksyen 26/27, Shah Alam
Selangor Darul Ehsan)
28 units of flats for staff residential
8 yrs
Freehold
1,561 sq.m
610
PT 5011 & 5012, Jalan Pendamar 27/90
Seksyen 27, Shah Alam, Selangor Darul Ehsan
Land with office and factory buildings
15 yrs
Freehold
7,967 sq.m
5,795
PT 710, Mukim Damansara, Daerah Petaling
Selangor Darul Ehsan
Land with office and factory buildings
11 yrs
Freehold
20,236 sq.m
16,868
Blok 35, Jalan Selayang 1, Taman Bunga Negara
Seksyen 27, 40400 Shah Alam, Selangor Darul Ehsan
34 units of flats used as staff hostel
8 yrs
Freehold
1,882 sq.m
717
HS(D) 11366-11701 PT 1734-PT2069,
HS(D) 6821 PT 76, HS(D) 6822 PT 77
HS(D) 6823 PT 78, HS(D) 6824 PT 79
Kawasan Perindustrian Peguh, Mukim of Peguh
Daerah Alor Gajah, Melaka Bandar Bersejarah
Land held for commercial, residential
and industrial development
—
Freehold
2,639,337 sq.m
96,357
Lot 1, HICOM Glenmarie, Industrial Park
Mukim of Damansara, Daerah Petaling
Selangor Darul Ehsan
Land held for residential
development
—
Freehold
60,020 sq.m
24,822
GRN 52496 Lot 14813 , GRN 52494 Lot 40325
GRN 52495 Lot 40326, Mukim Damansara
Daerah Petaling, Selangor Darul Ehsan
Land held for commercial/residential
and industrial development
—
Freehold
205,947 sq.m
36,458
1,347,561 sq.m
19,311
190,555 sq.m
50,832
19,026 sq.m
453
HS(D) 5/94 PT 623, Mukim Kedawang
- Land held for development
—
Daerah Langkawi, Kedah Darul Aman
- Marina and resorts with hardstands
6 - 9 yrs
} Leasehold
} expiring in
} 2054
SPK 4821 PT 1468, Mukim Kedawang
Daerah Langkawi, Kedah Darul Aman
Freehold
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
Development of marina resort
7 - 9 yrs
DRB-HICOM
B e rh a d
(203430-W)
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
HS(D) 734 PT 0125 Mainland, Tasik Kenyir
Resort
10 yrs
Mukim of Hulu Terengganu, Daerah Hulu Terengganu
Leasehold
expiring in 2056
269,692 sq.m
42,243
PT 0126, Pulau Merbau, Mukim of Hulu Terengganu
Land held for development
—
Daerah Hulu Terengganu
Leasehold
expiring in 2057
14,605 sq.m
2
PT 0136, Pulau Gawi, Mukim of Hulu Terengganu
Land held for development
—
Daerah Hulu Terengganu
Leasehold
expiring in 2057
1,793,313 sq.m
209
HS(D) 735 PT 0137, Pulau Pupi
Mukim of Hulu Terengganu, Daerah Hulu Terengganu
Golf course and corporate
10 yrs
bungalow under development
Leasehold
expiring in 2056
2,068,207 sq.m
244
Lot No. 95, Mukim of Ulu Telom
Land held for development
—
Cameran Highlands, Pahang Darul Makmur
Leasehold
expiring in 2039
3,970 sq.m
280
16, Jalan Chan Sow Lin, Kuala Lumpur
Wilayah Persekutuan
Land with three storey
43 yrs
industrial building, Leasehold
expiring in 2058
4,502 sq.m
2,774
Lot 1351 (Sub-lots 1450 & 1451)
Piasau Industrial Estate, Miri, Sarawak
Land with double storey
14 yrs
semi-detached industrial building
Leasehold
expiring in 2047
986 sq.m
476
Plot 498, Taman Nagasari, Lot No. 2901, 2950
Phase 2, Prai, Pulau Pinang
Land with covered area
for workshop
Freehold
2,393 sq.m
580
Lot 1D, BDC Industrial Estate, Jalan Kolombong
Off Mile 5 1/2, Jalan Tuaran, Kota Kinabalu, Sabah
Land with double storey detached
16 yrs
industrial building
Leasehold
expiring in 2034
1,452 sq.m
656
Lot No. B27, SEDCO Light Industrial Area
Off 3rd Mile, Jalan Apas, Tawau, Sabah
Land with single storey
15 yrs
detached industrial building
Leasehold
expiring in 2042
1,264 sq.m
293
No. 12, Jalan Pemaju U1/15, Seksyen U1
HICOM Glenmarie Industrial Park
40150 Shah Alam, Selangor Darul Ehsan
Land with three storey
industrial building
Freehold
22,998 sq.m
24,766
—
10 yrs
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
213
DRB-HICOM
B e rh a d
(203430-W)
Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
214
Lot Nos. 178 & 179, SEDCO Industrial Estate
Land held for development
—
Phase IIA, Mile 3, North Road, Sandakan, Sabah
Leasehold
expiring in 2037
3,993 sq.m
316
Plot 98, Bukit Minyak, Industrial Park, Prai, Pulau Pinang
Land held for development
—
Leasehold
expiring in 2059
24,281 sq.m
3,298
Lot No. PLO 255, Mukim of Tebrau, Johor Bahru
Johor Darul Takzim
Land with three storey detached
8 yrs
industrial building
Leasehold
expiring in 2056
10,101 sq.m
7,080
Part of Lot PT 61712, Glenmarie Estate
Mukim Damansara, Selangor Darul Ehsan
Hotel Resort
12 yrs
Freehold
23,957 sq.m
44,598
Part of Lot PT 61712 & 61713, Glenmarie Estate
Mukim Damansara, Selangor Darul Ehsan
Golf and Country Club
14 yrs
Freehold
1,429,633 sq.m
132,752
Part of Lot PT 1, 61712, 61713 & 61714, Glenmarie Estate
Mukim Damansara, Selangor Darul Ehsan
Land for development
—
Freehold
226,188 sq.m
56,370
Lot PT 9259 & PT 3587, Glenmarie Estate
Mukim Damansara, Selangor Darul Ehsan
Land for development
—
Freehold
10,608 sq.m
4,726
Lot No 81, Phase 2A, HICOM Glenmarie Industrial Park
40000 Shah Alam, Selangor Darul Ehsan
Used as a lorry storage yard
—
Freehold
5,600 sq.m
4,393
PT 18945 HS(D) 166/92, Mukim Sg.Petani, Lot 250
Jalan PKNK 3, Fasa 2, Kaw. Perindustrian Sungai Petani
08000 Sungai Petani, Kedah Darul Aman
Land with office and
factory buildings
11 yrs
Freehold
80,840 sq.m
17,086
PT Nos 23246 & 23247, Title Nos. H.S.(M) 23286 & 23287
Mukim of Ampang, District of Ulu Langat,
Selangor Darul Ehsan
Two 4 1/2 storey shophouses
15 yrs
currently being rented out as
showroom and office
306 sq.m
1,307
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
Leasehold 99 years
expiring in 2088
DRB-HICOM
B e rh a d
(203430-W)
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot Nos. 4189 and 3972, Title Nos. G 25096 & G 9442
Mukim of Batu, Wilayah Persekutuan
Building used as a centre
for parts and service and
government sales department
various
Title No. H.S.(D) 78383, Section 68, City of Kuala Lumpur
Wilayah Persekutuan, (No.30, Jalan Ampang, K.Lumpur)
Wisma USF, 6 1/2 storey
31 yrs
commercial building currently
used as showroom and office
P.T. Nos 6167 and 6168, Title Nos. H.S.(M) 6943 and
HS(M) 6944, Mukim of Kuala Kuantan, District of Kuantan
Pahang Darul Makmur, (Shophouse Nos. B 1570 and
B 1572, Jalan Beserah Taman LKNP, Kuantan)
Two double strorey shophouses
used as showroom and office
26 yrs
Freehold
3.88 hectares
11,148
Leasehold 99 years
expiring in 2067
182 sq.m
2,219
Freehold
282 sq.m
491
Lot 678 & 679, Town Area II (2)
Vacant land
—
Freehold
22,843 sq.m
District of Central Malacca, Melaka Bandar Bersejarah
Lot 354 (formerly 136), Town Area XXXI
Vacant land
—
Freehold
18,837 sq.m
District of Central Malacca, Melaka Bandar Bersejarah
}
}
}
}
}
15,000
Lot No.3, Jalan Perusahaan 2, Kaw. Perindustrian Batu Caves
Mukim of Batu District, Selangor Darul Ehsan
Industrial land with office block,
1-29 yrs
2 factories and 2 workshop
buildings - ACM Complex
Leasehold 99 years
expiring in 2074
26,272 sq.m
20,422
HS(D) 305, PT 1580, Mukim of Pekan, Pahang Darul Makmur
Land with factory and office block
22 yrs
- assembly plant
Leasehold 66 years
expiring in 2043
106,447 sq.m
108,355
Lot No.31D HS(D)3365 PT 2205, Mukim of Pekan
Pahang Darul Makmur
Land with factory and office block
21 yrs
- store building
Leasehold 66 years
expiring in 2063
18,211 sq.m
1,213
PTP 2-2-9632 & 2-2-9633, Mukim of Pekan
Pahang Darul Makmur
Land with industrial storage and
10 yrs
CKD unboxing building
Leasehold 66 years
expiring in 2063
59,010 sq.m
4,006
Leasehold
expiring in 2061
16,309 sq.m
2,918
Lot No. 31A, PTP 2-2-4455, Mukim of Langgar
Land with industrial office building
10 yrs
Pekan, Pahang Darul Makmur
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
215
DRB-HICOM
B e rh a d
(203430-W)
Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
216
Lot No. 31B, PT 1814, HSD 2227, Mukim of Langgar
Land with industrial office building
12 yrs
Pekan, Pahang Darul Makmur
Leasehold
expiring in 2061
7,487 sq.m
508
Lot No. 31C, PT 1490, HSD 1950, Mukim of Langgar
Land with industrial office building
12 yrs
Pekan, Pahang Darul Makmur
Leasehold
expiring in 2057
16,916 sq.m
1,121
PTG PK 251/6-88 (D), Mukim Ulu Bernam Timur
Land held for development
—
Daerah Batang Padang, Perak Darul Ridzuan
Leasehold
7,716,900 sq.m
expiring in 2095 4,377
Parcel A & Parcel B, Lots 629pt, 628pt and 974pt
Retail and car park complex
3 yrs
44-2, 44-1pt, 631pt, 630pt, 633pt, 632pt, 637pt, 636pt
635pt, 634pt, 639pt, 638pt, 975pt, 22-4pt, 22-3pt, 641pt
640pt, 643pt, 642pt, 645pt, 644pt, 647pt, 22-1pt and 18-1pt
of TS 16 Republic of Singapore
Leasehold
expiring in 2096
PT 6108, H.S.(D) 51058, Mukim Sungai Buloh, Daerah Petaling
(74, Jalan SS21/39, Damansara Utama, Petaling Jaya)
Land with 3 1/2 storey shop
office building. Presently
occupied by Comtrac Sdn Bhd
26 yrs
GM 939 (EMR 2887), Lot 1272, GM 937 (EMR 2722), Lot 215,
GM 938 (EMR 2738), Lot 961, GM 940 (EMR 2888), Lot 1273,
GRN 6035 (CT 3033), Lot 1602, GRN 6036 (CT 3034), Lot 1791,
GM 216 (EMR 1481), Lot 2619, MG 22 (EMR 1483), Lot 2622
Mukim of Bentong, Pahang
Land held for development
Blok 40, Taman Bunga Negara, (HICOM Sector B)
Seksyen 26/27, Shah Alam, Selangor Darul Ehsan
6,332 sq.m
294,966
Freehold
153 sq.m
1,279
—
Freehold
21.12 hectares
6,491
21 units of low cost flats
for staff hostel
12 yrs
Freehold
1,163 sq.m
525
Seri Hijauan Condominium, A-17-01 and C-4-12
Jalan Bukit Hijau 26/24, Seri Hijauan No. 1, Seksyen 26
40400 Shah Alam, Selangor Darul Ehsan
Condominium
12 yrs
Freehold
199 sq.m
356
HS(D) 29654 & 29655, Lot 5032 and 5033
Jalan Teluk Datuk 28/40, Seksyen 28
40000 Shah Alam, Selangor Darul Ehsan
Land with factory and
office building
11-18 yrs
Freehold
20,080 sq.m
14,055
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
DRB-HICOM
B e rh a d
(203430-W)
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
Lot No. 1 - 4 HS(D) 6976 & 6977, PT No. 10191 & 10192
Land with factory and
3 yrs
Mukim of Ulu, Bernam Timur, District of Batang Padang, Perak office building
Freehold
40,807 sq.m
10,312
Head Office, Jalan KLIA S6, Southern Support Zone
KL International Airport, 64000 Sepang, Selangor Darul Ehsan
Office, Cargo Complex,
8 yrs
Workshop and Inflight Catering
Leasehold 50 years
expiring in 2048
55,985 sq.m
144,034
PT 714 HS(D) 63709, Mukim Damansara, Daerah Petaling
Lot 75A & 76, Jalan Sementa 27/91, Seksyen 27
40000 Shah Alam, Selangor Darul Ehsan
Land with office, factory
and warehouse building
10 - 14 yrs
Freehold
39,841 sq.m
19,873
Block 35, Phase 5, Taman Bunga Negara, (HICOM Sector B)
Seksyen 27, Shah Alam, Selangor Darul Ehsan
35 units of low cost flats
for staff hostel
11 yrs
Freehold
1,938 sq.m
597
PT 713 HS(D) 63708, Mukim Damansara, Daerah Petaling
Land with R & D building
4 yrs
Freehold
12,140 sq.m
7,423
64/30 Moo 4, Eastern Seaboard Industrial Estate,
T. Pluakdaeng, A.Pluakdaeng, Rayong 21140, Thailand
Land with buildings comprising
office factory, warehouse &
painting line
3 yrs
Freehold
22,384 sq.m
10,678
HS(D) 6976 PT No. 10191 & HS(D) 6977 PT No. 10192
Tanjung Malim, Perak Darul Ridzuan
Vacant land
—
Freehold
52,162 sq.m
6,738
Lot 53A, Kawasan Perindustrian Berat Gurun
Mukim Gurun, Kedah Darul Aman
Land with office building and
factory
Leasehold expiry 2066
37,919 sq.m
4,513
Kawasan Perindustrian, Peramu Jaya
Factory and office building
9 yrs
P.O.Box 6, 26000 Pekan, Pahang
Leasehold 66 years
expiring in year 2062
101,582 sq.m
102,313
Lot 1888, Geran Mukim 253, Mukim Pasir Panjang,
Port Dickson, Negeri Sembilan
Vacant land
Freehold land
23,674 sq.m
2,550
16, Jalan Tan Siew Sin, 50050 Kuala Lumpur
Eleven storey office building
487 sq.m
8,500
2 yrs
—
45 yrs
Freehold
A
n
n
u
a
l
R
e
p
o
r
t
2
0
0
6
217
DRB-HICOM
B e rh a d
(203430-W)
Properties of DRB-HICOM Group
for the financial year ended 31 March 2006
Approx. Net book
Description/
age of Approx. value as at
Location
existing use
building Tenure
area
31/03/06
RM’000
218
1, Jalan Segunting, 88000 Kota Kinabalu, Sabah
Six storey office building
40 yrs
Leasehold
949 sq.m
9,000
42, Jalan Merdeka, Taman Melaka Raya, 75000 Melaka
Three storey office building
10 yrs
Leasehold
143 sq.m
400
97, Jalan SS21/1A, Damansara Utama, 47400 Petaling Jaya
Three and half storey midterrace
shop office building
16 yrs
Freehold
153 sq.m
1,470
Level 17 & 18, Menara Uni.Asia, Jalan Sultan Ismail
Kuala Lumpur
Office building
10
Leasehold
1,869 sq.m
7,480
Geran No. 43549, Lot 77170, Geran No. 43552, Lot 77174
Geran No. 31576, Lot 77175, Mukim and District of Klang,
Selangor Darul Ehsan.
Land held for residential
development over 2km
river view frontage
—
Freehold
996,053 sq.m
74,231
7,386 sq.m
6,142
372 sq.m
120
1,090.000 sq.m
3,500
PT37, Bandar Shah Alam, Daerah Petaling
Land with single storey detached
22 yrs
Selangor Darul Ehsan
factory with 3 storey factory
Leasehold 99 years
expiring 5 September
2083
H.S.(M) 27801, PT27436, Lot 444, Kg. Cheras Baru
Mukim of Ampang, District of Ulu Langat
Selangor Darul Ehsan
Land held for the proposed
—
development of apartments,
shops, shop offices known
as ‘Glenview Villa’
Leasehold 99 years
expiring 10 October
2090
HS(D) 97678, PT No. 45869
Mukim Kapar, Daerah Klang
Selangor Darul Ehsan
Leasehold agricultural
—
land
Leasehold 99 years
expiring in year 2103
A n n
n uu aa ll
RR ee pp oo rr t t
2 2 0 0 0 0 66
Number of Shares held
Form of Proxy
CDS Account No.
Sixteenth Annual General Meeting
NRIC / Company No.
I / We
of
(FULL address)
(FULL NAME IN BLOCK LETTERS)
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 SIXTEENTH ANNUAL GENERAL MEETING of the
Company to be held at the Glenmarie Ballroom, Holiday Inn Glenmarie Kuala Lumpur, No. 1, Jalan Usahawan U1/8, Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan
on Thursday, 21 September 2006 at 3.00 p.m. and at any adjournment thereof. The proxy is to vote in the manner indicated below with an “X” in the appropriate spaces. If
no specific direction as to voting is given, the proxy will vote or abstain from voting at his / her discretion.
NO. RESOLUTIONS
1
FOR
AGAINST
Receipt and adoption of the Audited Financial Statements for the financial year ended 31 March 2006.
2Approval for the declaration of a first and final gross dividend of 2.0 sen per share less income tax of 28% for the financial year ended
31 March 2006.
3
Re-election of Ibrahim bin Taib, a Director retiring under Article 80 of the Company’s Articles of Association.
4Re-election of Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail, a Director retiring under Article 86 of the Company’s Articles of Association.
5
Re-election of Tan Sri Ab. Rahman bin Omar, a Director retiring under Article 86 of the Company’s Articles of Association.
6
Re-election of Datuk Haji Abdul Rahman bin Mohd Ramli, a Director retiring under Article 86 of the Company’s Articles of Association.
7
Re-election of Dato’ Syed Mohamad bin Syed Murtaza, a Director retiring under Article 86 of the Company’s Articles of Association.
8
Re-election of Ong Ie Cheong, a Director retiring under Article 86 of the Company’s Articles of Association.
9
Re-appointment of Messrs PricewaterhouseCoopers as Auditors of the Company and authorising the Directors to fix their remuneration.
10
Approval for the payment of Directors’ fees not exceeding RM800,000 for each financial year commencing 31 March 2006.
Dated this
Notes and Instructions:-
day of
2006
Signature(s) / Company Seal
1. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or proxies to attend and vote in his stead. A proxy 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, PFA
Registration Services Sdn Bhd, 1301, Level 13, Uptown 1, No. 1, Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan not less than forty-eight (48) hours before the time set for
holding this meeting or at any adjournment thereof.
PFA Registration Services Sdn Bhd
(192340-W)
Registrar for DRB-HICOM Berhad
1301, Level 13, Uptown 1
No. 1, Jalan SS21 / 58, Damansara Uptown
47400 Petaling Jaya
Selangor Darul Ehsan, Malaysia
Stamp
Borang Proksi
Bilangan Saham
No. Akaun CDS
Mesyuarat Agung Tahunan Yang Keenambelas
Saya / Kami
No. K/P / Syarikat
dari
(alamat penuh)
(nama penuh dengan huruf besar)
sebagai ahli / ahli-ahli DRB-HICOM BERHAD, dengan ini melantik
dari
(nama penuh dengan huruf besar)
(alamat penuh)
atau sekiranya beliau tidak dapat hadir, melantik Pengerusi Mesyuarat sebagai proksi saya / kami untuk mengundi bagi pihak saya / kami di MESYUARAT AGUNG TAHUNAN
YANG KEENAMBELAS Syarikat yang akan diadakan di Glenmarie Ballroom, Holiday Inn Glenmarie Kuala Lumpur, No. 1, Jalan Usahawan U1/8, Seksyen U1, 40150 Shah
Alam, Selangor Darul Ehsan pada hari Khamis, 21 September 2006 jam 3.00 petang dan pada sebarang penangguhannya. Proksi hendaklah mengundi mengikut cara yang
dinyatakan di bawah, dengan menandakan “X” dalam ruang yang ditetapkan. Jika tiada sebarang arahan khusus diberikan mengenai pengundian, proksi akan mengundi
atau berkecuali mengikut budi bicaranya.
NO. RESOLUsi-resolusi
1
menyokongmenentang
Penerimaan Penyata Kewangan yang telah diaudit bagi tahun kewangan berakhir 31 Mac 2006.
2Kelulusan bagi pengumuman dividen kasar pertama dan akhir sebanyak 2.0 sen sesaham ditolak cukai pendapatan sebanyak 28% bagi tahun
kewangan berakhir 31 Mac 2006.
3
Pemilihan semula Ibrahim bin Taib, Pengarah yang bersara menurut Artikel 80, Tataurusan Syarikat.
4Pemilihan semula Y.A.M. Tan Sri Dato’ Seri Syed Anwar Jamalullail, Pengarah yang bersara menurut Artikel 86, Tataurusan Syarikat.
5
Pemilihan semula Tan Sri Ab. Rahman bin Omar, Pengarah yang bersara menurut Artikel 86, Tataurusan Syarikat.
6
Pemilihan semula Datuk Haji Abdul Rahman bin Mohd Ramli, Pengarah yang bersara menurut Artikel 86, Tataurusan Syarikat.
7
Pemilihan semula Dato’ Syed Mohamad bin Syed Murtaza, Pengarah yang bersara menurut Artikel 86, Tataurusan Syarikat.
8
Pemilihan semula Ong Ie Cheong, Pengarah yang bersara menurut Artikel 86, Tataurusan Syarikat.
9Perlantikan semula Tetuan PricewaterhouseCoopers sebagai Juruaudit Syarikat dan pemberian kuasa kepada Para Pengarah untuk menetapkan
ganjaran mereka.
10
Kelulusan bagi bayaran ganjaran Para Pengarah yang tidak melebihi RM800,000 bagi setiap tahun kewangan bermula 31 Mac 2006.
Bertarikh
haribulan
2006
Tandatangan / Meterai
Nota-nota:1. Seseorang ahli Syarikat yang berhak menghadiri dan mengundi di mesyuarat ini, berhak melantik seorang proksi atau proksi-proksi untuk menghadiri dan mengundi bagi pihaknya. Seseorang proksi tidak
semestinya ahli Syarikat.
2.Suratcara perlantikan proksi hendaklah secara bertulis dan ditandatangani oleh pelantik atau wakil beliau yang diberi kuasa secara bertulis, atau sekiranya pelantik itu adalah sebuah perbadanan sama ada menurut meterai
rasminya atau atas arahan pegawai atau wakil yang diberi kuasa secara bertulis.
3.Suratcara perlantikan proksi berserta surat kuasa wakil atau pihak berkuasa lain, sekiranya ada, yang ditandatangani atau merupakan salinan yang disahkan, perlu dihantar ke Pejabat Pendaftar Saham, PFA Registration
Services Sdn Bhd, 1301, Aras 13, Uptown 1, No. 1, Jalan SS21/58, Damansara Uptown, 47400 Petaling Jaya, Selangor Darul Ehsan, tidak lewat daripada empat puluh lapan (48) jam sebelum waktu yang dijadualkan untuk
mesyuarat berlangsung atau pada sebarang penangguhannya.
PFA Registration Services Sdn Bhd
(192340-W)
Pendaftar kepada DRB-HICOM Berhad
1301, Aras 13, Uptown 1
No. 1, Jalan SS21 / 58, Damansara Uptown
47400 Petaling Jaya
Selangor Darul Ehsan, Malaysia
SETEM
ANNUAL REPORT 2006
DRB-HICOM
DRB-HICOM Berhad
(203430-W)
S
t
www.drb-hicom.com
DRB-HICOM BERHAD (203430-W)
DRB-HICOM Berhad (203430-W)
Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1/8
Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan
A n n u a l
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