PANASONIC MANUFACTURING MALAYSIA BERHAD (6100-K)
ANNUAL REPORT 2006
Panasonic Manufacturing Malaysia Berhad (6100-K)
[formerly known as Matsushita Electric Company (Malaysia) Berhad]
No. 3 Jalan Sesiku 15/2, Section 15, Shah Alam Industrial Site,
40200 Shah Alam, Selangor Darul Ehsan
Tel : 03 - 5891 5000 Fax : 03 - 5891 5102
Website : pmma.panasonic.com.my
Contents
2
Corporate Information
36
Balance Sheet
3
Chairman’s Statement
37
Statement of Changes in Equity
7
Financial Highlights
38
Cash Flow Statement
39
Notes to the Financial Statements
7 Financial Calendar
8
The Company’s Growth
61
Statement by Directors
9
Five-Year Financial Summary
61
Statutory Declaration
10
Share Performance
62
Report of the Auditors
11
Board of Directors’ Profile
63
Changes in Share Capital
16
Statement on Corporate Governance
64
History of Dividend Payment
22
Audit Committee Report
65
Statistics on Shareholdings
27
Statement on Internal Control
67
List of Properties Owned by the Company
30
Additional Compliance Information
68
Notice of 41st Annual General Meeting
31
Directors’ Report
69
Notice of Dividend Entitlement
35
Income Statement
70
Statement Accompanying Notice of
41st Annual General Meeting
Form of Proxy
Corporate Information
BOARD OF DIRECTORS
COMPANY SECRETARIES
Tan Sri Datuk Asmat bin Kamaludin (Chairman)
Yuichi Shimizu (Managing Director)
Tan Sri Dato’ Zaki bin Tun Azmi
Raja Dato’ Seri Abdul Aziz bin Raja Salim
Osamu Takao
Ramanaidu a/l Semenchalam
Soh Beng Kuan
Chen Ah Huat
Hiroshi Fukutomi
Razman Hafidz bin Abu Zarim
Hiroshi Nakamura
Chu Kum Yoon
Pang Chia Tyng
Soh Beng Kuan
SOLICITORS
Shook Lin & Bok
Ramadass & Associates
REGISTRAR
Symphony Share Registrars Sdn. Bhd.
Level 26 Menara Multi-Purpose
Capital Square
No. 8 Jalan Munshi Abdullah
50100 Kuala Lumpur
Tel : 03 - 2721 2222
Fax : 03 - 2721 2530 / 2721 2531
AUDIT COMMITTEE
Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
Yuichi Shimizu
(Managing Director)
PRINCIPAL BANKERS
Raja Dato’ Seri Abdul Aziz bin Raja Salim
(Independent Non-Executive Director)
Bank of Tokyo-Mitsubishi UFJ (Malaysia) Berhad
Malayan Banking Berhad
Razman Hafidz bin Abu Zarim
(Independent Non-Executive Director)
AUDITORS
REMUNERATION COMMITTEE
Jaffar Hussein & Co.
Chartered Accountants
Kuala Lumpur
Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
REGISTERED OFFICE
Hiroshi Fukutomi
(Executive Director)
No. 3 Jalan Sesiku 15/2
Section 15
Shah Alam Industrial Site
40200 Shah Alam
Selangor Darul Ehsan
Tel : 03 - 5891 5000
Fax : 03 - 5891 5102
Razman Hafidz bin Abu Zarim
(Independent Non-Executive Director)
NOMINATION COMMITTEE
Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
STOCK EXCHANGE
Razman Hafidz bin Abu Zarim
(Independent Non-Executive Director)
Main Board of Bursa Malaysia Securities Berhad
Sector
: Consumer Products
Stock Code : PANAMY 3719
Hiroshi Nakamura
(Non-Independent Non-Executive Director)
Panasonic Manufacturing Malaysia Berhad (6100-K)
2
Chairman’s Statement
“To Our Shareholders’’
On behalf of the Board of Directors,
I am pleased to present the Annual
Report and Annual Audited
Financial Statements of the
Company for the financial year
ended 31 March 2006.
TAN SRI DATUK ASMAT BIN KAMALUDIN
(Chairman)
OVERVIEW
The current financial year under review marked a significant milestone in efforts taken by the Company to further enhance its manufacturing
capability and to improve its cost efficiency. The Company will continue to focus on initiatives to attain product excellence by responding
speedily to changes in the business environment.
FINANCIAL REVIEW
For the financial year ended 31 March 2006, the Company’s revenue was RM644.9 million, which was 8.2% or RM57.3 million lower
than the previous year’s revenue of RM702.2 million. This was mainly attributed to lower sales of washing machine and refrigerator
following the discontinuation of its Bangi Plant operations with effect from 1 October 2005. However, excluding the sales for
washing machine and refrigerator of RM108.4 million, the Company’s total revenue of RM536.5 million for other existing products
was RM25.2 million or 4.9% higher than the RM511.3 million recorded in the previous year.
The Company’s pre-tax profit of RM47.0 million for the financial year ended 31 March 2006 improved by RM89.7 million from
the pre-tax loss of RM42.7 million registered in the previous financial year. The improvement in profit over the previous
financial year was mainly due to the recognition of provisions and expenses related to the Company’s restructuring exercise
carried out in the previous financial year ended 31 March 2005 and after taking into consideration the net gains on disposal of
its Bangi Plant’s machineries and equipment in the current financial year under review.
The Company’s profit after taxation for the financial year ended 31 March 2006 was RM33.1 million compared with the loss after
taxation of RM4.9 million registered in the previous financial year.
3
Annual Report 2006
Chairman’s Statement
OPERATIONS REVIEW
Since its establishment in 1965, the Company has manufactured a competitive range of electrical home appliances and channeled its
sales worldwide. During the financial year ended 31 March 2006, the Company had successfully developed certain new product models
with enhanced features such as new trendy design remote control ceiling fan, new slim design stand fan, new compact home shower,
new vacuum cleaner and new blender with safety locking feature whereby industrial design, research and development, manufacturing
and sales efforts were integrated into our products that complement the lifestyle of our consumers.
Throughout the financial year ended 31 March 2006, the Company had reinforced its pursuit towards attaining total improvement in its
operational efficiency through the strengthening of various innovation activities. At the same time, significant improvements were made
in terms of its product quality management and engineering design capability. The various innovation initiatives undertaken by the
Company clearly reflect the Company’s commitment towards making it a stronger manufacturing company.
Flexibility of production system is an important factor to quickly respond to the changing market demands. With this in mind, the
Company has introduced and implemented shorter and more flexible assembly units, namely a new cell production system for both its
manufacturing plants at Shah Alam, in order to streamline the entire assembly lines and improve man productivity and total area
productivity.
This year, the Company will further enhance its manufacturing activity by introducing and promoting the single-floor manufacturing
concept called “one floor, one way flow” production system by completely eliminating waste in process and transportation in the
traditional long overhead conveyor system. This new “one floor, one way flow” concept will further streamline and shorten process
distance, thereby improving visual management and space reduction and it will also eliminate environmental wastes for certain process
due to delivery of parts from different production floors. The Company has embarked on this new concept and targets to complete by end
of 2006.
In order to realise better cost competitiveness as a manufacturer, the Company has successfully reduced unnecessary fixed expenses in
its daily operations and this has motivated the Management to continue pursuing its cost busters activity and intensify the activities
company-wide, on an on-going basis based on the cost innovation ideas contributed by all departments from time to time.
The Company has always been fully committed to perform its corporate duty under the Occupational Safety and Health Act, 1994 and
all other relevant legislation, so far as practicable, to provide a safe and healthy working place and system of work for all its employees.
The safety and health committee and fire fighting committee have carried out various safety and health activities such as safety and
health campaign, establishment of safe forklift driving handbook, annual audiometric testing program, intensive fire crews training and
fire evacuation exercises, so as to achieve the ultimate goals of “zero fire” and “zero accidents” at all work places. In this respect, all
employees have been educated and trained not to compromise safety at the workplace at all times.
The new environment standards and environment protection regulations implemented and enforced by the European Union focuses
particularly on Restriction of Hazardous Substances (“RoHS”). This Directive has taken effect from 1 July 2006. The Company has
taken earlier countermeasures to adopt and comply with the environmental standards by conducting environmental quality assurance
audit on local suppliers from time to time and provide guidance to all suppliers to participate in the Green Procurement (“GP”)
initiatives, whereby all parts and materials information are to be logged into the GP web system to enable us to monitor the parts quality
and compliance.
CORPORATE DEVELOPMENT
On 31 December 2005, the Company had completed the retrenchment scheme with a total compensation package of RM19.4 million
to 352 employees. The Company had also concluded the disposal of all machineries and equipment of Bangi Plant with a net sales
amount of RM14.4 million. The Management is following up closely on the disposal of the Bangi Plant’s land and building and is
expected to complete the whole exercise by end of financial year 2006. Following this, the Company is able to concentrate on the
production of other existing profitable product lines as well as to take more concrete strategies in the implementation of manufacturing
and human resource innovation plans.
Acknowledging the contribution of human capital in attaining the Company’s vision and mission, it is rational for the Company to change
its current human resource system so as to crystallise the formation of a flat and flexible management structure to nurture young and
dynamic corporate working culture through the introduction and implementation of a new dynamic and competitive Human Resource
System.
Panasonic Manufacturing Malaysia Berhad (6100-K)
4
Chairman’s Statement
During the financial year ended 31 March 2006, PMMA had also reinforced its information security measures in line with
Matsushita Electric Industrial Co., Ltd. (“MEI”) Global Information Security Management (“ISM”) Policy that aims to effectively
manage and control confidential corporate and private individual information and to promote compliance across the MEI Group’s
global network. The ISM Working Committee which was set up by the Company in June 2005 had, with the support and
cooperation of employees at all levels, implemented various ISM activities during the financial year, so as to safeguard the
confidentiality, integrity and availability of the Company’s strictly confidential and confidential information against internal and
external threats.
CORPORATE BRANDING AND ACHIEVEMENTS
In promoting Panasonic brand worldwide, the Panasonic Group of Companies has been pursuing consistent strategy in selecting the right
publicity and publicity medium as well as participating in various branding activities.
We believe that branding through manufacturing and delivering innovative and creative products of the highest quality will assist the
Company to command a price premium for our products in the global markets and in parallel, enhancing consumers’ trust and confidence
when using Panasonic products.
We are pleased to inform that the Company’s newly developed vacuum cleaner model had won the Good Design Award 2005 awarded by
Japan Industrial Design Promotion Organisation and Panasonic Design Center. Apart from that, the Company had also received the
Malaysia Good Design Mark Award 2005 from the Ministry of Science, Technology and Environment for our Ceiling Fan. The Company
had also been awarded the Reader’s Digest’s Trusted Brands Awards and Platinum Awards for 6 consecutive years since 2001 for various
product categories. These awards are testimonials of the consumers’ trust, confidence and recognition in our Panasonic products.
ASSOCIATED COMPANY
The Associated Company, Panasonic Malaysia Sdn. Bhd. had recorded a consolidated revenue of RM1.2 billion for the financial year
ended 31 March 2006. This was 9.1% better than the previous year’s consolidated revenue of RM1.1 billion. The pre-tax profit from its
group operations was RM16.6 million. The Company’s share of profit before taxation was RM6.7 million.
INDUSTRY OUTLOOK
The Malaysian economy has expanded with Gross Domestic Product (“GDP”) growth of 5.2% in 2005 compared with 7.1% in 2004.
As living standards rise across the nations, the industry players will no longer count on low-cost labour as a comparative advantage.
Indeed, the time has come for most manufacturers to pursue quality over quantity. This is envisaged by notable trend amongst
multinational corporations in the electrical and electronics industry in Malaysia in their investments in research and development
activities, product development centre and process improvement facilities, to cater for their global operations and to stay ahead of the
competition.
The electrical home appliances industry is expected to remain highly competitive, with strong competition from both overseas and
domestic manufacturers.
PROSPECTS FOR 2006
Due to the material price hike which perhaps, is the single factor affecting business in general and private consumption activity,
inflation has increased but remained at manageable levels. In addition, higher oil prices will have an indirect industrial impact in the
form of higher air freight, shipping and logistics charges, which will raise the cost of production.
Under these circumstances, the Company is continuously making efforts to implement various innovation plans to improve its sales,
product quality, purchasing, productivity, cost efficiency and human resource system. The Company will continue to focus on the
development and strengthening of its core competence for long-term sustainability.
5
Annual Report 2006
Chairman’s Statement
DIVIDENDS
In reward and appreciation of our shareholders’ loyalty and continued support, the Board of Directors is pleased to recommend a final
tax-exempt dividend of 35 sen per ordinary share of RM1.00 and a special tax-exempt dividend of 65 sen per ordinary share of RM1.00
payable on 20 September 2006. An interim dividend of 15 sen, less 28% income tax was paid on 27 January 2006. This brings to a
total gross dividends of 115 sen per ordinary share of RM1.00 in respect of financial year ended 31 March 2006.
DIRECTORATE
We note with regret the resignation of Mr Hor Yeow Choy, who has retired as Executive Director of the Company and Director of the
Associated Company, Panasonic Malaysia Sdn. Bhd. on 15 January 2006, after having served the Company for the past 39 years. The
Board and the Management wishes to put on record our sincere thanks and appreciation to Mr Hor for his invaluable contributions to
both the Company and Panasonic Malaysia Sdn. Bhd.
APPRECIATION
I take this opportunity to thank the Board of Directors, the Management and all employees of the Company for their dedication and
support towards the continued progress of the Company. My sincere appreciation also goes to our esteemed shareholders, customers,
business associates, related government and regulatory authorities, the media and the bankers for the past and continuous support and
confidence in the Company.
Tan Sri Datuk Asmat bin Kamaludin
Chairman
Panasonic Manufacturing Malaysia Berhad (6100-K)
6
Financial Highlights
Financial Data
Turnover
Profit/(Loss) before taxation
Profit/(Loss) after taxation
Percentage of turnover
Return on shareholders’ funds
Earnings per share
Dividend rate
Dividend cover
Shareholders’ funds
Net assets per share
Total assets
Capital expenditure
RM’000
RM’000
RM’000
%
%
sen
%
times
RM’000
RM
RM’000
RM’000
Year Ended
31 March 2006
Year Ended
31 March 2005
644,872
47,021
33,093
5.1
6.2
54
115
0.5
537,226
8.84
667,327
11,276
702,208
(42,657)
(4,874)
(0.7)
(0.8)
(8)
200
(0.1)
591,605
9.74
741,291
7,347
Financial Calendar
Financial Year Ended
31 March 2006
Announcement of Results
- First Quarter
- Second Quarter
- Third Quarter
- Fourth Quarter / Annual
24 August 2005
18 November 2005
22 February 2006
22 May 2006
Issue of 2006 Annual Report and Financial Statements
31 July 2006
41st Annual General Meeting
23 August 2006
Interim Dividend
- Notice of Dividend Entitlement
- Entitlement Date
- Payment Date
18 November 2005
12 January 2006
27 January 2006
Final and Special Dividends
- Notice of Dividend Entitlement
- Entitlement Date
- Proposed Payment Date
31 July 2006
6 September 2006
20 September 2006
7
Annual Report 2006
The Company’s Growth
Panasonic Manufacturing Malaysia Berhad (6100-K)
8
Five-Year Financial Summary
2006
2005
2004
2003
2002
RM'000
RM'000
RM'000
RM'000
644,872
47,021
33,093
67,306
702,208
(42,657)
(4,874)
87,473
768,148
63,109
53,609
26,243
809,893
73,477
64,177
21,869
806,374
27,601
34,599
12,864
RM'000
RM'000
RM'000
667,327
60,746
537,226
741,291
60,746
591,605
734,701
60,746
622,722
733,964
60,746
593,169
693,089
60,746
539,706
%
sen
RM
%
times
6.2
54
8.84
115
0.5
8.6
88
10.25
60
2.0
10.8
106
9.76
50
2.9
6.4
57
8.88
50
2.7
INCOME STATEMENT
Turnover
Profit/(Loss) before taxation
Profit/(Loss) after taxation
Dividends declared/proposed
1
1,2
BALANCE SHEET
Total assets
Share capital
Shareholders' funds
3
1,2
FINANCIAL RATIOS
Return on shareholders' funds
Earnings per share
Net assets per share
Dividend rate
Dividend cover
3
(0.8)
(8)
9.74
200
(0.1)
Notes:
(1) In accordance with MASB 29 "Employee Benefits", unutilised annual leave is recognised in the financial statements as part of
staff costs.
(2) In accordance with MASB 25 "Income Taxes", deferred tax is recognised on temporary differences arising between the amounts
attributable to assets and liabilities for tax purposes and their carrying values in financial statements.
(3) In accordance with MASB 13 "Earnings Per Share", the issue of bonus shares is treated as if it had occurred prior to the beginning
of the earliest financial year reported.
9
Annual Report 2006
Share Performance
14
12
10
8
6
4
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
Jan
2005
Feb
2006
2005
Apr
High (RM)
May
10.20 10.60
Mar
Jun
Jul
Aug
11.00
12.50
2006
Sep
Oct
Nov
Dec
Jan
Feb
Mar
12.20
12.10
9.70
8.90
9.70
9.65 10.50
9.95
Low (RM)
9.70
9.85
10.20
10.80
11.80
9.60
8.60
8.35
8.80
9.40
9.60
9.35
Closing Share Price (RM)
9.85 10.40
10.90
12.00
12.00
9.70
8.70
8.85
9.70
9.55
9.95
9.40
Lots Traded (100 Shares)
1,154 4,162
4,640 11,913 16,963 10,063 3,798 2,106 1,789 1,094 3,791 2,161
Panasonic Manufacturing Malaysia Berhad (6100-K)
10
Board of Directors’ Profile
TAN SRI DATUK ASMAT BIN KAMALUDIN
Aged 62. Malaysian. Tan Sri Asmat is an Independent Non-Executive Director and Chairman of the Board since 29 August 2001.
Tan Sri Asmat obtained a Bachelor of Economics (Hons) Degree from the University of Malaya in 1966 and subsequently obtained a
Diploma in European Economic Integration Programme from the University of Amsterdam. Tan Sri Asmat has had a distinguished career
in the Ministry of International Trade and Industry, Malaysia (“MITI”) for 35 years until his retirement as Secretary-General in January
2001. Tan Sri Asmat had wide exposure in both domestic and international trade sectors at MITI, worked with international bodies such
as ASEAN, WTO and APEC and actively involved in national organisations such as Johor Corporation, SMIDEC and MATRADE.
Currently, Tan Sri Asmat is the Group Chairman of UMW Holdings Berhad, SCOMI Group Berhad, Symphony House Berhad,
Salwan Corporation Berhad, Trans-Asia Shipping Corporation Berhad and Compugates Holdings Berhad and is a
Non-Executive Vice-Chairman of YTL Cement Berhad. Tan Sri Asmat is also the Independent Non-Executive Director of
Malaysian Pacific Industries Berhad, Carlsberg Brewery Malaysia Berhad, Lion Industries Corporation Berhad,
Bumiputra-Commerce Holdings Berhad [formerly known as Commerce Asset-Holding Berhad] and Permodalan Nasional Berhad.
Tan Sri Asmat also sits on the Board of several private companies including Panasonic/Matsushita Group of Companies in Malaysia and
is a Governor (Director) of JACTIM Foundation, a non-profit organisation.
Tan Sri Asmat has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Tan Sri Asmat attended all the 4 Board Meetings
held during the financial year and has had no convictions for any offences within the past 10 years.
YUICHI SHIMIZU
Aged 48. Japanese. Mr Shimizu was appointed the Managing Director of the Company and Member of the Audit Committee on
15 January 2004. Mr Shimizu graduated with a Bachelor Degree in Engineering from Gifu University, Japan in March 1980.
He joined Matsushita Electric Industrial Co., Ltd. (“MEI”), Japan in April 1980 and has held various senior positions in
Vacuum Cleaner Division, MEI from January 1981 to July 1995.
Mr Shimizu was posted to the United States of America (“USA’’) in July 1995 and was assigned as the General Manager in charge of
engineering in MEI’s subsidiary, Matsushita Home Appliances and Housing Electronics Company of America. Thereafter in July 2002,
Mr Shimizu joined the Engineering Group, Ecology & Cleaning Products Division as Group Manager/Councilor. Prior to joining the
Company in January 2004, Mr Shimizu was the Councilor of Corporate Strategy Group of Matsushita Home Appliances Company, MEI
Japan. Whilst serving Matsushita in Japan and USA, Mr Shimizu brings vast wide experience in product engineering, product development,
management and strategic planning. Currently, Mr Shimizu is also a Director of the Associated Company, Panasonic Malaysia Sdn. Bhd.
Mr Shimizu has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Mr Shimizu attended all the 4 Board Meetings
held during the financial year and has had no convictions for any offences within the past 10 years.
11
Annual Report 2006
Board of Directors’ Profile
TAN SRI DATO’ ZAKI BIN TUN AZMI
Aged 61. Malaysian. Tan Sri Dato’ Zaki is an Independent Non-Executive Director of the Company since 1 September 2000. He is also
the Chairman of the Audit Committee, Nomination Committee and Remuneration Committee.
Upon obtaining his Barrister-at-Law from Lincoln’s Inn, United Kingdom in 1969, Tan Sri Dato’ Zaki served in the Malaysian Government’s
Judicial and Legal Service from 1969 to 1985. During this period, he held various positions, amongst others, the post of Senior
Federal Counsel at the Ministry of Home Affairs from 1976 to 1984 prior to joining as a partner of a legal firm in 1985. Currently,
Tan Sri Dato’ Zaki is the Chairman of Kumpulan Fima Berhad, a Director of Petroliam Nasional Berhad, HLG Capital Berhad,
Bina Darulaman Berhad, S P Setia Berhad, Narra Industries Berhad and a Trustee to S. P. Setia Foundation. Tan Sri Dato’ Zaki also sits
on the Board of several private companies and Assunta Hospital (a non-profit organisation).
Tan Sri Dato’ Zaki is the Chairman of Emrail Sdn. Bhd. In addition, he is also a Member of the Abandoned Housing Project Scheme
Committee and Rating Committee of Rating Agency Malaysia Berhad, Adviser to Suruhanjaya Komunikasi dan Multimedia Malaysia and
the Sports Advisory Panel, Member of Suruhanjaya Khas Penambahbaikan Perjalanan dan Pengurusan Polis DiRaja Malaysia and
Arbitrator for the Kuala Lumpur Commodity Exchange as well as for the Kuala Lumpur & Selangor Chinese Chamber of Commerce and
Industry.
Tan Sri Dato’ Zaki has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Tan Sri Dato’ Zaki attended all the 4 Board
Meetings held during the financial year and has had no convictions for any offences within the past 10 years.
RAJA DATO’ SERI ABDUL AZIZ BIN RAJA SALIM
Aged 68. Malaysian. Raja Dato’ Seri Abdul Aziz is an Independent Non-Executive Director of the Company since 1 April 2002.
Raja Dato’ Seri is also a Member of the Audit Committee. Raja Dato’ Seri had served with the Malaysian Government as an Accountant
since 1965. Thereafter, Raja Dato’ Seri was appointed the Deputy Accountant-General of Malaysia from 1974 to 1979 and subsequently
served as Director-General of Inland Revenue Board of Malaysia for a period of over 10 years. Raja Dato’ Seri was the Accountant-General
of Malaysia since 1990 before he retired from the Government service in 1994.
Raja Dato’ Seri Abdul Aziz is a Chartered Accountant. He is also an Honorary Fellow Member of the Malaysian Institute of Taxation,
Fellow Member of the Chartered Association of Certified Accountants, Fellow Member of the Chartered Institute of Management Accountants
and Fellow Member of the Malaysian Institute of Accountants.
Raja Dato’ Seri Abdul Aziz currently holds directorships in Jerneh Asia Berhad, Camerlin Group Berhad, K & N Kenanga Holdings
Berhad, Gamuda Berhad, PPB Oil Palms Berhad, PPB Group Berhad, Tasek Corporation Berhad, Southern Steel Berhad, Amanah Saham
Mara Berhad, Jerneh Insurance Berhad, Kenanga Unit Trust Berhad and K & N Kenanga Berhad. Raja Dato’ Seri Abdul Aziz also serves
on the Board of several private companies.
Raja Dato’ Seri Abdul Aziz has no shareholdings in the Company and its associated company. He also has no family relationship with any
Director and/or major shareholder of the Company nor any conflict of interest with the Company. Raja Dato’ Seri attended 3 out of 4
Board Meetings held during the financial year and has had no convictions for any offences within the past 10 years.
Panasonic Manufacturing Malaysia Berhad (6100-K)
12
Board of Directors’ Profile
OSAMU TAKAO
Aged 57. Japanese. Mr Takao was appointed the Executive Director of the Company on 1 April 2003. Mr Takao graduated with a Bachelor
of Economics Degree from Kwansei-Gakuin University, Japan in 1973. Since joining MEI, Japan in April 1973, he has gained over
30 years experience in sales, marketing and management in the Television (“TV”) business with Matsushita, Japan, USA and other
countries. He was the General Manager of Overseas Sales Operation Department of TV and Network Systems Division from 1998 to
2000. During the period from 1974 to 2001, he has had more than 10 years working experience in USA, being posted 4 times to
assume marketing and management assignments in Matsushita TV Company in USA.
Prior to joining the Company in November 2001, he was the Vice President of Matsushita Television & Network Systems Company in
USA. Currently, Mr Takao is in charge of Marketing, Export and Domestic Sales, Logistics, Corporate Planning, Product Design and
Product Planning/Research functions of the Company.
Mr Takao has direct interest in 1,000 shares in the Company. However, he has no family relationship with any Director and/or major
shareholder of the Company nor any conflict of interest with the Company. Mr Takao attended all the 4 Board Meetings held during the
financial year and has had no convictions for any offences within the past 10 years.
RAMANAIDU A/L SEMENCHALAM
Aged 55. Malaysian. Mr Naidu was appointed the Executive Director of the Company on 5 April 2004. He obtained his Bachelor of Laws
(LLB) from Wolverhampton University in 1994. He joined the Company in 1973 and has more than 30 years experience in the Human
Resource and Industrial Relations functions of the Company. Mr Naidu is also a Council Member of Selangor Human Resource Development
Centre (SHRDC), Federation of Malaysian Manufacturers (FMM) and Electrical Industry Employers’ Group (EIEG). Currently, Mr Naidu is
responsible for the Human Resource and Corporate Affairs functions of the Company. He is also responsible for Risk Management and
Information Security Management functions of the Company.
Mr Naidu has direct interest in 500 shares in the Company. However, he has no family relationship with any Director and/or major
shareholder of the Company nor any conflict of interest with the Company. Mr Naidu attended all the 4 Board Meetings held during the
financial year and has had no convictions for any offences within the past 10 years.
SOH BENG KUAN
Aged 48. Malaysian. Ms Soh was appointed the Executive Director of the Company on 5 April 2004. Ms Soh is an Associate Member of
the Malaysian Institute of Chartered Secretaries and Administrators since May 1994. She is also a Certified Member of the Financial
Planning Association of Malaysia since August 2003. Ms Soh joined the Company in February 1978 and has more than 25 years
experience in Finance and Accounting functions of the Company. She was appointed the Company Secretary on 8 May 2002. Currently,
she is responsible for the Finance and Company Secretarial functions of the Company.
Ms Soh has direct interest in 504 shares in the Company. However, Ms Soh has no family relationship with any Director and/or major
shareholder of the Company nor any conflict of interest with the Company. Ms Soh attended all the 4 Board Meetings held during the
financial year and has had no convictions for any offences within the past 10 years.
CHEN AH HUAT
Aged 46. Malaysian. Mr Chen was appointed the Executive Director of the Company on 5 April 2004. Mr Chen holds a Certificate in
Mechanical Engineering from Polytechnic Kuantan in 1981. He joined the Company in 1981 and has 25 years experience in the
operations of various home appliances products. Currently, he is responsible for the factory operation management and procurement
functions for the Company’s 2 manufacturing plants at Shah Alam. Mr Chen is also responsible for the Internal Audit functions of the
Company.
Mr Chen has indirect interest in the Company by virtue of his spouse holding 2,000 shares in the Company. However, Mr Chen has no
family relationship with any Director and/or major shareholder of the Company nor any conflict of interest with the Company. Mr Chen
attended all the 4 Board Meetings held during the financial year and has had no convictions for any offences within the past 10 years.
13
Annual Report 2006
Board of Directors’ Profile
HIROSHI FUKUTOMI
Aged 49. Japanese. Mr Fukutomi was appointed the Executive Director of the Company and a Member of Remuneration Committee on
26 May 2004. Mr Fukutomi graduated with a Bachelor Degree in Commerce from Doshisha University, Japan in March 1980. He joined
MEI, Japan in April 1980 and had since held various positions in the Accounting Department of the Microwave Oven Division,
Matsushita Housing Products Co., Ltd. (“MHP”), a subsidiary of MEI from January 1981 to September 1992.
Mr Fukutomi was posted to MHP’s American subsidiary, Matsushita Microwave Oven Company of America in Illinois, USA in September
1992 as the Accounting General Manager. Upon his return to Japan in December 1997, he was assigned as Assistant Councilor of the
Overseas Team of Audit Department in MEI Headquarter. In July 2001, Mr Fukutomi joined the Accounting Systems Team of Corporate
Accounting Group, MEI and was promoted to Councilor/Team Leader prior to joining the Company in April 2003. Mr Fukutomi has more
than 25 years experience in the accounting and auditing functions. Currently, he is responsible for the Finance, Information Systems and
Administrative functions of the Company, including overseeing the Risk Management and Internal Audit functions.
Mr Fukutomi has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Mr Fukutomi attended all the 4 Board
Meetings held during the financial year and has had no convictions for any offences within the past 10 years.
RAZMAN HAFIDZ BIN ABU ZARIM
Aged 51. Malaysian. Encik Razman was appointed an Independent Non-Executive Director of the Company on 21 June 2004.
Encik Razman is also a Member of the Audit Committee, Nomination Committee and Remuneration Committee. Encik Razman graduated
with a joint-honours degree in Economics and Accounting, BSc (Econ) from University College, Cardiff, University of Wales. He has more
than 28 years experience in the fields of auditing, mergers and acquisitions, corporate finance and management consulting. He has
worked with Chartered Accountancy firms in the United Kingdom and Malaysia and was the Partner-in-Charge of the Management
Consulting Practice of Price Waterhouse Malaysia (now known as PricewaterhouseCoopers). In 1994, he established Norush Sdn. Bhd.,
an investment holding and business advisory firm where he remains as Chairman.
Encik Razman is a Chartered Accountant. He is a Fellow Member of the Institute of Chartered Accountants in England and Wales and a
Member of the Malaysian Institute of Accountants. He currently holds independent directorships in several public listed companies,
which include Malaysian Oxygen Berhad, Courts Mammoth Berhad, Toyochem Corporation Berhad, Mithril Berhad, eBworx Berhad and
Yeo Hiap Seng (Malaysia) Berhad. He is also an independent director of J.P. Morgan Chase Bank Berhad and sits on the Board of several
private companies.
Encik Razman has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Encik Razman attended all the 4 Board Meetings
held during the financial year and has had no convictions for any offences within the past 10 years.
HIROSHI NAKAMURA
Aged 50. Japanese. Mr Nakamura was appointed the Non-Independent Non-Executive Director of the Company and a Member of the
Nomination Committee on 1 April 2005. He graduated with a Bachelor in Law from Kyoto University, Japan in March 1981 and
subsequently obtained a Master in Business Administration from Wharton School of the University of Pennsylvania, USA in June 1989.
He joined MEI, Japan in April 1981 and had since gained wide experience in corporate planning, export sales, business development
and corporate overseas planning. He has more than 20 years experience in the overseas planning and management functions.
Mr Nakamura was the Manager of Headquarter Executive Office of MEI in 1993 and promoted to General Manager in April 2000.
In 2004, he was appointed as General Manager of Corporate Overseas Planning Group, MEI, prior to joining the associated company,
Panasonic Malaysia Sdn. Bhd. on 1 April 2005 as the Managing Director.
Mr Nakamura has no shareholdings in the Company and its associated company. He also has no family relationship with any Director
and/or major shareholder of the Company nor any conflict of interest with the Company. Mr Nakamura attended all the 4 Board Meetings
held during the financial year and has had no convictions for any offences within the past 10 years.
Panasonic Manufacturing Malaysia Berhad (6100-K)
14
Corporate and
Financial Statements
16
Statement on Corporate Governance
22
Audit Committee Report
27
Statement on Internal Control
30
Additional Compliance Information
31
Directors’ Report
35
Income Statement
36
Balance Sheet
37
Statement of Changes in Equity
38
Cash Flow Statement
39
Notes to the Financial Statements
61
Statement by Directors
61
Statutory Declaration
62
Report of the Auditors
Statement on Corporate Governance
COMPLIANCE WITH THE CODE
The Board of Directors of the Company (“Board”) recognises the importance of the principles and best practices set out in the Malaysian
Code on Corporate Governance (“the Code”) as a key factor towards achieving an optimal governance framework and process in terms of
transparency, accountability and integrity of the conducts of the business and operational activities of the Company.
Measures and efforts have always been taken to ensure as far as practicable, the adoption and implementation of the Code’s Best
Practices and the compliance with Bursa Malaysia Securities Berhad (“Bursa Securities”) Listing Requirements throughout the Company.
It is recognised that the adoption of a high standard of corporate governance is imperative for the enhancement of shareholders’ values
and the financial performance of the Company.
The Board is pleased to present the statement on the application of principles and extent of compliance with the best practices as set out
in the Code for the financial year ended 31 March 2006.
THE BOARD OF DIRECTORS
The composition of the Board has continuously been reviewed to ensure an effective and experienced Board steers the Company towards
better prospects and growth. The diverse professional expertise of the Directors, spanning various areas including legal, engineering,
business, finance, human resource and operations, provide the Board with the requisite depth and quality in its deliberation and
decision-making process, in order to successfully direct and manage the Company’s business as a going concern.
There were 4 Board Meetings held during the financial year ended 31 March 2006 and all Directors have complied with the minimum
50% attendance requirement in respect of the Board Meetings as stipulated by the Bursa Securities. The attendance of the individual
Directors was recorded in the Statement Accompanying Notice of 41st Annual General Meeting (“AGM”) on page 70. All proceedings,
matters arising and conclusions of the Board Meetings were properly recorded in the minutes and signed by the Chairman of the Meeting.
Composition of the Board / Board Balance
The Board, as at the date of this statement, consists of 11 members, comprising 5 Non-Executive Directors (including the Chairman)
and 6 Executive Directors. 4 out of 5 Non-Executive Directors are Independent Directors, representing at least 1/3 of the Board which
is in compliance with Paragraph 15.02 of the Bursa Securities Listing Requirements.
Upon review by the Nomination Committee, the Board agreed that the current set of Directors with their wide experience in both the
public and private sectors and academic background provides a collective range of skills, expertise and experience. The Independent
Non-Executive Directors fulfil the pivotal role in corporate accountability by providing their independent judgement and participating in
the decision-making process to take into account the long-term interests of all shareholders, employees, customers and business
associates of the Company.
The profile of each Director is summarised on pages 11 to 14 of the Annual Report.
The roles of the Independent Non-Executive Chairman, Tan Sri Datuk Asmat bin Kamaludin and the Managing Director, Yuichi Shimizu
are separated with their responsibilities clearly defined to ensure a balance of power and authority such that no one individual has
unfettered power of decision. The Chairman is responsible in ensuring the integrity and effectiveness of the Board and ensures that all
Directors receive financial and non-financial information to enable them to participate actively in the Board decisions. The Managing
Director is responsible for the day-to-day management of the Company in accordance with the corporate objectives and strategies
approved by the Board.
The Executive Directors are responsible for implementing the policies and decisions of the Board, overseeing the operations as well as
co-ordinating the development and implementation of business and corporate strategies. The Non-Executive Directors contribute
considerably to the decision-making through their knowledge and experience.
The Chairman of the Board, Tan Sri Datuk Asmat bin Kamaludin is the Senior Independent Non-Executive Director to whom concerns
from shareholders may be conveyed.
Panasonic Manufacturing Malaysia Berhad (6100-K)
16
Statement on Corporate Governance
Supply of Information
The Board recognises that the decision making process is highly dependent on the quality of information furnished. The Board and its
Board Committees are supplied with the Agenda and a set of Board papers containing relevant up-to-date information to be deliberated
at least 7 days prior to each meeting to enable the Directors to make better-informed decisions. The Management is responsible to
provide the Board with all information of which it is aware.
During the current financial year under review, the Board had reviewed the quarterly operation results and performance which
included comprehensive reviews and analysis of business, financial and operational issues. The Board had also reviewed and approved
strategic corporate plans, annual budget, financial decisions and changes to the management and control structure within the
Company. All Non-Executive Directors had also been guided with a factory tour to one of the manufacturing plants to gain a better
insight on the operational activities and manufacturing innovation plans implemented by the Company.
In furtherance of their duties, all Directors have full access to all necessary information within the Company and services of the Company
Secretaries. The Directors are regularly updated on the new statutory and regulatory requirements relating to the duties and responsibilities
of the Directors. In addition, the Directors have sought independent professional advice at the Company’s expenses, prior to implementation
of any corporate exercise and corporate decisions.
BOARD COMMITTEES
The Board has delegated specific responsibilities to the Board Committees, namely Audit Committee, Nomination Committee and
Remuneration Committee which operate within their respective clearly defined terms of reference. The Board receives the minutes or
notes of their proceedings and deliberations, reported by the Chairman of the respective Board Committees whereby their recommendations
would be highlighted and communicated to the Board for approval.
Audit Committee
The Audit Committee was appointed by the Board to assist its duty of maintaining a sound system of internal control to safeguard
shareholders’ interest and the Company’s assets. A full Audit Committee Report enumerating its membership, summary of activities and
terms of reference is set out on pages 24 to 26 of the Annual Report.
Nomination Committee
The Nomination Committee comprised the following members, the majority of whom are Independent Directors:
(1) Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
(2) Razman Hafidz bin Abu Zarim (Member)
(Independent Non-Executive Director)
(3) Hiroshi Nakamura (Member)
(Non-Independent Non-Executive Director)
The Nomination Committee is empowered by the Board to recommend suitable nominees for appointment as Directors and is responsible
for assessing the effectiveness of the Board as a whole on an on-going basis.
Pursuant to the terms of reference of the Nomination Committee, the key responsibilities of the Nomination Committee include:
•
•
Reviewing the Board composition and recommending new nominees to the Board as well as Board Committees for the Boards’
consideration; and
Assessing and reviewing the required mix of skills, experience and other requisite qualities, including core competencies, which the
Non-Executive Directors should bring to the Board.
17
Annual Report 2006
Statement on Corporate Governance
At a meeting held on 13 May 2005, the Nomination Committee had reviewed the relevant mix of skills and experience of the Board and
was of the view that there is a balance of Executive Directors and Non-Executive Directors and that the current composition of the Board
is effective in leading and controlling the Company given the present scope of work and nature of the Company’s business operations.
The minutes of the Nomination Committee Meeting was tabled to the Board for information.
Re-election
In accordance with the Company’s Articles of Association, all Directors appointed by the Board are subject to re-election by shareholders
at the first opportunity after their appointment. The Articles of Association also provides that at least 1/3 of the remaining Directors
including the Managing Director, are subject to retirement by rotation at each AGM and they are eligible for re-election. All Directors
shall retire from office at least once in every 3 years, but shall be eligible for re-election.
Upon the recommendation of the Nomination Committee, Yuichi Shimizu, Ramanaidu a/l Semenchalam, Soh Beng Kuan and
Chen Ah Huat shall retire pursuant to the Articles of Association of the Company at the forthcoming AGM scheduled to be held
on 23 August 2006 and being eligible, offered themselves for re-election. With the re-election of Directors process, shareholders
are ensured of a regular opportunity to re-assess the composition of the Board.
Directors’ Training
All Directors have attended and completed the Mandatory Accreditation Programme (“MAP”) prescribed by Bursa Securities and continued
to benefit from attending programmes and seminars accredited under the Bursa Securities’ Continuing Education Programme (“CEP”).
All Directors who were previously required by the Bursa Securities to accumulate the total of 48 or 72 CEP points, whichever is
applicable, have complied with the training requirements as at 31 December 2005.
The Board acknowledges the amendments to the Bursa Securities Listing Requirements via a circular dated 28 September 2004, that
effective 1 January 2005 the Board of listed companies will assume the onus of determining and overseeing the training needs of its
Directors from time to time.
During the current financial year under review, all Directors were encouraged to participate in the accredited seminars and conference to
keep abreast with the state of economy, regulatory updates and corporate management strategies which will assist them to discharge
their statutory and fiduciary duties.
Descriptions of the type of seminars, workshops and training programmes attended by each Board Member during the financial year
ended 31 March 2006 were as follows:
Tan Sri Datuk Asmat bin Kamaludin
• From Good Governance to Great Branding
• An Overview of Goods and Services Tax - GST for Directors
• Integrated Corporate and Business Planning
• Ten Steps from Strategy to Action
Yuichi Shimizu, Osamu Takao and Hiroshi Nakamura
• Managing Going Global Strategies
Tan Sri Dato’ Zaki bin Tun Azmi
• Corporate Financial Strategy in the Global Market
Panasonic Manufacturing Malaysia Berhad (6100-K)
18
Date
Attended
No. of
Days
20.07.2005
25.07.2005
20.10.2005
25.10.2005
1.0
1.0
1.0
0.5
01.12.2005
02.12.2005
2.0
22.11.2005
0.5
Statement on Corporate Governance
Date
Attended
No. of
Days
Raja Dato’ Seri Abdul Aziz bin Raja Salim
• Finance for Non-Finance Directors
• Overview of the ASEAN Free Trade Area
• Credit Rating and Corporate Governance
• Detection and Prevention of Fraud
27.07.2005
27.07.2005
20.09.2005
20.09.2005
0.5
0.5
0.5
0.5
Soh Beng Kuan
• Self Assessment, Tax and You
• Financial Reporting Standards (“FRS”) Improvements Project
• Strategic Corporate Planning for Company Directors & Senior Management
• Goods and Services Tax
25.05.2005
15.09.2005
28.10.2005
13.12.2005
1.0
1.0
1.0
0.5
Hiroshi Fukutomi, Ramanaidu a/l Semenchalam and Chen Ah Huat
• Strategic Corporate Planning for Company Directors & Senior Management
28.10.2005
1.0
22.08.2005
23.08.2005
2.0
Razman Hafidz bin Abu Zarim
• Managing Corporate Turnaround and Change Management
Remuneration Committee
The Remuneration Committee comprised the following members, the majority of whom are Independent Directors:
(1) Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
(2) Hiroshi Fukutomi (Member)
(Executive Director)
(3) Razman Hafidz bin Abu Zarim (Member)
(Independent Non-Executive Director)
At a meeting held on 13 May 2005, the Remuneration Committee had reviewed certain benefits-in-kind for the Executive Directors of
the Company. In addition, the Remuneration Committee had also reviewed and recommended that the payment for the Directors’ fees
based on a provisional fixed fees in respect of the financial year ended 31 March 2006, be made payable quarterly in arrears to the
concerned Directors, replacing the annual payment system, subject to shareholders’ approval. The new mode of payment, upon the
recommendation of the Board, was approved by the shareholders at the 40th AGM held on 24 August 2005.
Directors’ Remuneration
The details of the remuneration of the Directors of the Company for the financial year ended 31 March 2006 were as follows:
Description
Fees
Salary and other remuneration
Benefits-in-kind
Executive
Director
RM
Non-Executive
Director
RM
-
155,000
155,000
4,002,493
13,500
4,015,993
288,329
-
Total
RM
288,329
Total
4,290,822
168,500
4,459,322
Total (excluding benefits-in-kind)
4,002,493
168,500
4,170,993
19
Annual Report 2006
Statement on Corporate Governance
The number of Directors whose total remuneration for the financial year ended 31 March 2006, in successive bands of RM50,000
bands was tabulated as follows:
Executive
Directors
Non-Executive
Directors
Total
RM0 to RM50,000
-
5
5
RM300,001 to RM350,000
3
-
3
RM350,001 to RM400,000
1
-
1
RM900,001 to RM950,000
2
-
2
RM1,050,001 to RM1,100,000
1
-
1
Range of Remuneration
RELATIONSHIP WITH SHAREHOLDERS AND INVESTORS
The Company has maintained an active and constructive communication policy to provide shareholders and institutional investors with
an overview of the Company’s major development, performance and operation results to enable them to make better-informed investment
decisions.
During the current financial year under review, the Executive Directors had proactively responded to numerous requests for discussions
with various institutional investors, investment analysts and fund managers to enable them to gain a better understanding of the
Company’s strategies, operational activities and financial performance.
Good rapport is maintained with them through the briefing, corporate visit, small group meeting and telephone interview to ensure
accurate and timely dissemination of information. Nevertheless, due care has been taken to ensure that no market sensitive information
is released to any party without first making an official announcement to Bursa Securities for public release.
ANNUAL GENERAL MEETING
The AGM remains the principal avenue for shareholders to communicate and engage in dialogue with the Board. Notices and Agenda of
AGM are sent in accordance with the Company’s Articles of Association. There has always been a reasonable turnout at the Company’s
AGM whereby healthy dialogue and interaction with shareholders is greatly encouraged. The Chairman and other Board Members are
available to respond to the shareholders’ queries during the AGM.
The Managing Director has been delegated with the authority to speak on behalf of the Company. In addition, shareholders, investors
and members of public can also access to the Company’s website at pmma.panasonic.com.my and Bursa Securities’ website at
www.bursamalaysia.com for the relevant announcements, corporate, financial and market information on the Company.
FINANCIAL REPORTING
The Board always ensures that the presentation to shareholders of the quarterly, half-yearly and annual financial statements and
announcement of the Company’s financial results as well as the Chairman’s Statement and review of operations in the Annual Report,
reflect a balanced, clear and comprehensive assessment of the Company’s position and prospects to its shareholders, investors and
regulatory authorities. The Board is assisted by the Audit Committee to review the Company’s financial information to be disclosed,
to ensure completeness, accuracy and adequacy.
Panasonic Manufacturing Malaysia Berhad (6100-K)
20
Statement on Corporate Governance
DIRECTORS’ RESPONSIBILITY STATEMENT
The Board is required by the Companies Act, 1965 to prepare the financial statements of the Company for each financial year which have
been made out in accordance with the applicable approved Accounting Standards in Malaysia, the provisions of the Companies Act, 1965
and the Bursa Securities Listing Requirements to give a true and fair view of the state of affairs of the Company as at the end of the financial
year and of the results and cash flows of the Company for the financial year.
The Directors have general responsibilities for taking such due care and steps as are reasonably open to them to safeguard the assets of
the Company, and hence, for taking reasonable steps for the prevention and detection of fraud and other irregularities.
In preparing the financial statements set out on pages 35 to 60 of the Annual Report, the Directors have applied appropriate accounting
policies on a consistent basis and made judgments and estimates that are reasonable and prudent.
The financial statements are prepared on a going concern basis and the Directors have ensured that proper accounting records are kept
which enable the preparation of the financial statements with reasonable accuracy.
Upon review by the Audit Committee, the Board approves all statutory financial statements before release to Bursa Securities and
Securities Commission.
INTERNAL CONTROL
The Board has overall responsibility for maintaining a sound system of internal control that covers financial controls, effective and
efficient operations, compliance with the relevant laws and regulations as well as risk management. The Board has the role to safeguard
shareholders’ investment and the Company’s assets, and to provide reasonable assurance on the reliability of the financial statements.
A Statement on Internal Control is set out on pages 27 to 29 of the Annual Report.
RELATIONSHIP WITH THE AUDITORS
The Board via the Audit Committee, maintains a formal and transparent professional relationship with the Company’s Auditors, both
internal and external. The Audit Committee has been explicitly accorded the power to communicate directly with them.
The External Auditors, Messrs. Jaffar Hussein & Co. have on annual basis reported their findings which are included as part of the
Company’s financial reports in respect of each year’s audit on the statutory financial statements. From time to time, the External and
Internal Auditors highlight to the Audit Committee and Board of Directors on matters that require the Board’s attention.
The role of the Audit Committee in relation to the Auditors is described on pages 22 to 26 of the Annual Report.
AUDITORS’ REMUNERATION
For the current financial year under review, non-audit fees incurred by the Company to the External Auditors amounted to RM385,838.
The Statement is made in accordance with the resolution of the Board of Directors dated 22 May 2006.
21
Annual Report 2006
Audit Committee Report
The Board of Directors of the Company (“Board”) is pleased to present the Audit Committee Report for the financial year ended
31 March 2006.
MEMBERSHIP & MEETINGS
The Audit Committee Members shall be appointed by the Board of Directors based on candidates recommended by the Nomination
Committee. The Audit Committee shall consist of not less than 3 Members with the majority being Independent Non-Executive Directors.
The Chairman of the Audit Committee shall be an Independent Non-Executive Director.
The Members of the Audit Committee during the financial year ended 31 March 2006 were as follows:
1. Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
(Independent Non-Executive Director)
2. Raja Dato’ Seri Abdul Aziz bin Raja Salim (Member)
(Independent Non-Executive Director)
3. Yuichi Shimizu (Member)
(Managing Director)
4. Razman Hafidz bin Abu Zarim (Member)
(Independent Non-Executive Director)
Raja Dato’ Seri Abdul Aziz bin Raja Salim and Razman Hafidz bin Abu Zarim are qualified Accountants as specified in Part II of the First
Schedule of the Accountants Act 1967.
The composition of the Audit Committee as described above is in compliance with paragraph 15.10(1) of the Bursa Malaysia Securities
Berhad (“Bursa Securities”) Listing Requirements and Practice Note 13/2002.
There were 4 Audit Committee Meetings held during the financial year ended 31 March 2006. The Finance Executive Director,
representatives of the Internal Auditors and/or External Auditors attended these meetings upon the invitation by the Chairman of the
Audit Committee for the purpose of briefing their respective areas of responsibilities and to make known their views on any matters under
consideration by the Audit Committee, or which in their opinion, should be brought to the attention of the Audit Committee.
The records of attendance of the Audit Committee Members for the financial year ended 31 March 2006 were as follows:
Audit Committee Members
Number of Meetings Attended
1. Tan Sri Dato’ Zaki bin Tun Azmi (Chairman)
4/4
2. Raja Dato’ Seri Abdul Aziz bin Raja Salim
4/4
3. Yuichi Shimizu
4/4
4. Razman Hafidz bin Abu Zarim
4/4
The minutes of each meeting were tabled to and noted by the Board. The Chairman of Audit Committee shall report on each Audit
Committee Meeting to the Board.
Panasonic Manufacturing Malaysia Berhad (6100-K)
22
Audit Committee Report
SUMMARY OF ACTIVITIES
During the financial year under review, among the areas discussed by the Audit Committee were as follows:
1.
Ascertained and reviewed the state of internal control and extent of compliance with the established policies, procedures and
statutory requirements;
2.
Reviewed and discussed the additional disclosure requirements in accordance with the new approved accounting standards and
Bursa Securities Listing Requirements;
3.
Reviewed the unaudited quarterly results prior to the submission to the Board for their consideration and approval for release to
Bursa Securities and Securities Commission;
4.
Reviewed the draft Circular to Shareholders dated 29 July 2005 in relation to the Company’s proposed change of name;
5.
Reviewed and discussed the draft Circular to Shareholders dated 29 July 2005 in relation to recurrent related party transactions of
a revenue or trading nature to satisfy itself that the procedures were sufficient to ensure that the recurrent related party transactions
were not more favourable to the related parties than those generally available to the public and not detrimental to the minority
shareholders and to ensure compliance with the relevant regulatory requirements;
6.
Reviewed the proposed related party transaction and conflict of interest situation that has arisen within the Company. The Audit
Committee is required to ensure that the Directors report such transaction if so entered into, to shareholders via announcement to
Bursa Securities;
7.
Reviewed the draft announcements to Bursa Securities in relation to the corporate decisions and new recurrent related party
transactions, in compliance with Bursa Securities Listing Requirements and the Corporate Disclosure Policy;
8.
Reviewed the Board’s statements on Statement on Corporate Governance, Statement on Internal Control and Audit Committee
Report prior to the submission to the Board for their consideration and approval for inclusion in the Company’s Annual Report 2005;
9.
Reviewed 3 Risk Management Reports and Risk Management Plan 2006 and discussed the risk profiles of the relevant business
processes/units with highlights on key business risks, their causes and management action plans as well as the status of
implementations;
10. Reviewed with the Internal Auditors, the Internal Audit Plan 2006 for the financial year ended 31 March 2006 to ensure the
adequacy of scope and coverage of audit;
11. Reviewed 4 Internal Audit Reports with recommendations by the Internal Auditors, Management’s response and follow-up actions
taken by the Management on the audit findings as highlighted by the Internal Auditors;
12. Reviewed the External Auditors’ Audit Committee Report for the financial year ended 31 March 2005 and Annual Audit Plan for the
financial year ended 31 March 2006 to ensure the adequacy of scope and coverage of audit including statutory audit requirements,
audit procedures, significant issues arising from the audit, taxation and accounting; and received updates of new developments on
the proposed adoption of new Financial Reporting Standards issued by the Malaysian Accounting Standards Board and regulatory
requirements and discussed the impact of the changes;
13. Reviewed with the External Auditors, the draft Statutory Financial Statements of the Company for the financial year ended
31 March 2005 prior to the submission to the Board for their consideration and approval. The review would entail due
compliance in accordance with the provisions of the Companies Act, 1965, the Bursa Securities Listing Requirements,
applicable accounting standards in Malaysia as well as other legal and regulatory requirements;
14. Made recommendations to the Board on re-appointment of the External Auditors and their scope of work; and
15. Reviewed the proposals on engagement of the External Auditors on performing the non-statutory audits and assessed the types of
services to be rendered, proposed fee structure and independence of the External Auditors to perform such audits, prior to making
recommendation to the Board for approval.
23
Annual Report 2006
Audit Committee Report
INTERNAL AUDIT FUNCTIONS
The independent consulting firm, MustaphaRaj Sdn. Bhd. has continually been discharged with duties and responsibilities to undertake
the internal audit functions of the Company and to support the Audit Committee in reviewing the Company’s system of risk management,
internal control and governance process so as to provide assurance that such systems continue to operate satisfactorily and effectively.
The internal audit function is an independent and objective appraisal as well as advisory function of the Company. The Internal Auditor
will be responsible to the Audit Committee for policy matters and to the Managing Director for planning and administrative matters.
The Internal Auditor has no line responsibility or authority over any operational or administrative functions and will not be responsible for
the detailed development and/or implementation of new systems, but shall be consulted during system and development processes.
The scope of internal audit functions encompasses the examination and evaluation of the adequacy and effectiveness of the Company’s
system of internal accounting, administrative and organisational controls, efficiency of operations and quality of performance in carrying
out the assigned responsibilities. The Internal Audit Plan is reviewed annually by the Audit Committee prior to the submission to the
Board for their consideration and approval.
The Internal Auditors had adopted a risk-based approach towards the planning and conduct of audits that are consistent with the
Company’s established framework in designing, implementing and monitoring its control systems. The Audit Committee also deliberated
the status reports on these risks together with the recommendations. All recommendations for improvement to the existing systems are
discussed at the Audit Committee Meetings and subsequently reported to the Board.
TERMS OF REFERENCE
A.
Composition of Audit Committee
The Audit Committee shall be appointed by the Directors from among its Members which fulfils the following requirements:
1.
2.
3.
4.
5.
The Audit Committee must be composed of not less than 3 Members;
A majority of the Audit Committee Members must be Independent Directors;
At least 1 Member of the Audit Committee:
• must be a Member of the Malaysian Institute of Accountants (“MIA”); or
• must have at least 3 years’ working experience and have passed the examinations specified in Part I of the First Schedule
of the Accountants Act 1967, or must be a Member of one of the associations of accountants specified in Part II of the First
Schedule of the Accountant Act 1967; or
• must have a degree/master/doctorate in accounting or finance with at least 3 years’ post qualification experience in accounting
or finance; or
• must have at least 7 years’ experience being a Chief Financial Officer of a corporation or having the function of being
primarily responsible for the management of the financial affairs of a corporation.
The Audit Committee shall elect a chairman from among its Members who shall be an Independent Director; and
Alternate Director is not allowed to become a Member of the Audit Committee.
In the event of any vacancy in the Audit Committee resulting in non-compliance of Bursa Securities Listing Requirements, the
Board shall fill the vacancy within 3 months from the date of vacancy to make up the minimum of 3 Members.
In accordance with Part C, Paragraph 15.21 of Bursa Securities Listing Requirements, the Board shall review, at least once every
3 years, the term of office and performance of the Audit Committee and each of its Members to determine whether the Audit
Committee and its Members have carried out their duties in accordance with their terms of reference.
B.
Quorum
A quorum shall be 2 Members present and a majority must be Independent Directors.
Panasonic Manufacturing Malaysia Berhad (6100-K)
24
Audit Committee Report
C.
Meetings
The Audit Committee shall meet at least 4 times a year. The Chairman at his discretion may convene additional Meeting of the Audit
Committee if so requested by any Member, Internal Auditors or External Auditors to consider any matter within the scope and
responsibilities of the Audit Committee.
Minutes of each Meeting shall be kept and distributed to each Member of the Audit Committee and also to the Members of the
Board. The Chairman of Audit Committee shall report on the outcome of each Meeting to the Board.
D.
Secretary to Audit Committee
The Secretary to the Audit Committee shall be the Company Secretary.
E.
Authority
The Audit Committee is authorised by the Board to investigate any activity within its terms of reference. The Members of the Audit
Committee shall have full and unrestricted access to any information pertaining to the Company and all employees shall be directed
to co-operate as required by Members of the Audit Committee. The Audit Committee shall be empowered to retain persons having
special competencies as necessary to assist the Audit Committee in fulfilling its responsibilities.
F.
Duties and Responsibilities
In fulfilling its primary objectives, the Audit Committee shall undertake the following duties and responsibilities to review and
appraise the following, prior to the report and approval of the Board of Directors:
1.
To review the quarterly, half-yearly and annual financial statements of the Company to Bursa Securities, focusing
particularly on:
(a)
(b)
(c)
(d)
any significant changes in or implementation of accounting policies and practices;
significant adjustments and unusual issues arising from the audits;
compliance with Accounting Standards and other legal requirements; and
the going concern assumption.
2.
To monitor and review any related party transaction and conflict of interest situation that may arise within the Company,
including any transaction, procedure or course of conduct that raises question of management integrity. They are also required
to ensure that the Directors report such transaction annually to shareholders via the Annual Report;
3.
To consider annually the Business Risk Management Framework adopted by the Company and be satisfied that the methodology
employed allows the identification, analysis, assessment, monitoring and communication of risks in a regular manner that will
allow the Company to minimise losses and maximise opportunities;
4.
To ensure that the system of internal control is soundly in place, effectively administered and regularly monitored;
5.
To review the extent of compliance with the Company’s established internal policies, standards, plans and procedures;
6.
To review the Internal Audit Plans and to be satisfied as to their consistency with the Business Risk Management Framework
used, adequacy of coverage and audit methodologies employed;
7.
To be satisfied that the internal audit functions within the Company have the proper resources and standing to enable them to
complete their mandates and approved audit plans;
8.
To review status reports from internal audit and to ensure that appropriate actions are taken on the recommendations of the
internal audit functions;
9.
To review any appraisal or assessment of the performance of the members of the internal audit functions, approve any appointment
or termination of members of the internal audit functions and inform itself of any resignations of internal audit staff members
and reasons thereof;
25
Annual Report 2006
Audit Committee Report
10. To ensure that the Company has adequate administrative, operational and internal control and that the Company is operating
in accordance with its prescribed procedures, codes of conduct and applicable legal and regulatory requirements;
11. To review and discuss with the External Auditors, prior to the commencement of audit, the audit plan which states the nature
and scope of the audit;
12. To review any matters concerning the appointment and re-appointment, audit fees and any questions of resignation or dismissal
of the External Auditors;
13. To review and evaluate factors related to the independence of the External Auditors and assist them in preserving their
independence;
14. To be advised of significant use of the External Auditors in performing non-audit services within the Company, considering both
the types of services rendered and the fees, such as their position as the External Auditors is not deemed to be compromised;
15. To review the External Auditors’ findings arising from audits, particularly any comments and responses in the management
letters as well as the assistance given by the employees of the Company in order to be satisfied that appropriate action is being
taken;
16. To discuss on problems and reservations arising from the interim and final external audits, the audit report and any matters the
External Auditors may wish to discuss;
17. To recommend to the Board steps to improve the system of internal control derived from the findings of the Internal and
External Auditors and from the consultations from the Audit Committee itself;
18. To review with the External Auditors the Statement on Internal Control of the Company for inclusion in the Annual Report;
19. To prepare the annual Audit Committee Report to the Board which includes the composition of the Audit Committee, its terms
of reference, number of meetings held, a summary of its activities, existence of an internal audit function and summary of
activities of that function for inclusion in the Annual Report;
20. To review the Board’s statement on the compliance with the Malaysian Code of Corporate Governance for inclusion in the
Annual Report;
21. To review all financial information provided to the regulators and/or the public; and
22. To carry out such other functions as may be directed by the Board.
Panasonic Manufacturing Malaysia Berhad (6100-K)
26
Statement on Internal Control
INTRODUCTION
The Malaysian Code on Corporate Governance requires the Board of Directors of the Company (“Board”) to maintain a sound system of
internal control to safeguard shareholders’ investment, customers’ interests and the Company’s assets. In addition, Bursa Malaysia
Securities Berhad (“Bursa Securities”) Listing Requirements require Directors of listed companies to include a statement in their annual
reports on the state of their internal controls.
The Board recognises the importance of sound internal control and risk management practices in the Company as an important and
continuous process and not just a matter to be published for compliance purposes in the Annual Report. Accordingly, the Board is
pleased to provide hereinafter the annual update and disclosure statement in respect of the state of the internal control of the Company.
DIRECTORS’ RESPONSIBILITY
The Board recognises and affirms its overall responsibility for the Company’s system of internal control which includes the establishment
of an appropriate control environment and framework as well as reviewing its effectiveness, adequacy and integrity. However, the Board
recognises that this system is designed to manage, rather than eliminate the risk of non-achievement of the Company’s objectives.
It therefore provides reasonable and not absolute assurance against material misstatement or loss.
The commitment on internal controls and risk management is driven by the Board, which in turn has been communicated to and
implemented by the Senior Management of the Company. The role of the Senior Management is to assist the Board on the implementation
of the Board’s policies and procedures, rules and controls by identifying and assessing the risks faced, and in the design, operation and
monitoring of suitable controls to mitigate and manage the risks.
RISK MANAGEMENT FRAMEWORK
The Board views the Strategic Risk Management Framework (“Framework”) as the logical step in the pursuit of its corporate governance
agenda and the fulfillment of its long-term corporate objectives towards protecting shareholders’ investment and safeguarding the
Company’s assets.
Key principles of the Framework include:
(i)
maintaining the dynamic role of each business unit in managing risks identified;
(ii)
enhancing consistency on company-wide risk management approaches, through periodic risk management dialogue.
As part of the on-going processes of identifying new potential risks, evaluating and managing the existing or new significant risks faced
by the Company, the Senior Management with the assistance of the Independent Consultants, MustaphaRaj Sdn. Bhd. ensures the
smooth implementation and development of current phase of the risk management system during the current financial year under
review, which broadly encompassed the following:
(i)
Briefed risk management methodology to the Department Chiefs i.e. Risk Officers;
(ii)
Liaised with the Department Chiefs to facilitate completion of self-assessed departmental operational risk and control identification
worksheets, including performing several desktop reviews;
(iii) Utilising key risk indicators (“KRI”) which were identified earlier to enhance the identification and management of risk and
followed up on the status of implementation of the proposed actions.
27
Annual Report 2006
Statement on Internal Control
The risk profile was compiled and updated from time to time with the refinement of the risk management methodology and key actions
implemented under the current phase of the Risk Management Framework were summarised below:
(i)
Risk Officers of each department identified and measured the risks, documented the same into the risk profile, with regular
coordination, implementation and follow-up on the relevant control measures;
(ii)
Quarterly tracking, monitoring and reporting procedures were introduced to establish a structured system for risk management with
agreed deadlines throughout all departments, with training provided to the Risk Officers on risk management methodology;
(iii) All Department Chiefs presented their risk register in the quarterly management meeting with the Vice Chairman of the Risk
Management Committee;
(iv) Quantifiable ratings for the assessment criteria of impact and likelihood to arrive at the risk rating were used as a standard platform
of risk assessment for all departments. This is a refinement to the Risk Management Methodology which will be reviewed before
finalising the ratings and subsequent reporting to the Audit Committee.
COMPLIANCE WITH THE SARBANES-OXLEY ACT 2002
Matsushita Electric Industrial Co. Ltd. (“MEI”) as the registrant of the U.S. Securities and Exchange Commission is, on a group basis,
required to continually observe and comply with the provisions of the Sarbanes-Oxley Act 2002 (“SOX”), with a significant focus on
internal controls, in particular, Section 302 which concerns certification of Internal Control and Procedures Disclosure, and Section 404
on management assessment of internal controls and disclosure in the annual report on internal controls. In addition, MEI’s Auditors are
required to issue an attestation report on MEI’s effectiveness of the control systems. In this respect, all companies under MEI Group are
working cooperatively towards SOX compliance worldwide.
The Company reviews on the effectiveness of the internal control activities via self-assessment checksheets and reports the status of
compliance with the internal control requirements to Panasonic Asia Pacific Pte. Ltd. (“PA”), the regional office set up to monitor MEI’s
overseas subsidiaries in the Asia Pacific region at a regular interval. In January 2006, PA representative had conducted an education
session on the audit methodology on SOX compliance and reviewed the business cycles with the relevant Department Chiefs.
Following this, a team of MEI Corporate Auditors had performed the SOX compliance field audit on the Company in February 2006,
focussing on the selected significant business cycles namely sales, costing, treasury, annual settlement, raw materials purchase and
fixed assets. The MEI Corporate Auditors had verified the controls that were self-assessed by the Management, through the checking on
each documentation for the business cycles in a thorough and selective manner.
Upon completion of the audit, a summary of audit findings with proposed remediation plans was recommended for internal control
improvements. The MEI Corporate Auditors concluded that the Company’s internal control functions were satisfactory with no serious
deficiency on overall system of internal control. The Company has followed up on the remediation plans to ensure that appropriate
actions and counter-measures have been implemented in order to maintain an effective system of internal control.
INTERNAL CONTROL SYSTEM
The key elements that have been established by the Board to review the adequacy and integrity of the Company’s system of internal
control are as follows:
•
•
•
•
•
All major issues that require approval of the Board are reviewed by the Management Council Members, which comprises the
Executive Directors, Plant Chiefs and Senior Management of various functions. Issues with strategic, financial, legal and operational
implications are discussed in details before tabling to the Audit Committee and subsequently to the Board for deliberation.
The annual Business Plan and performance targets for each factory unit are reviewed and approved by the Managing Director in
line with the Company’s business plan policy and guidelines. Structured review of all material capital and investment acquisitions
are also reviewed by the Management prior to approval by the Board.
Delegation of responsibilities to the Board Committees such as Audit Committee, Nomination Committee and Remuneration
Committee, is clearly defined through their respective terms of reference.
An organisational structure with clearly defined lines of responsibility and accountability aligned to the restructured business
operations has been drawn up.
Operational and performance issues for each product are reported and discussed at the Monthly Operation Meetings, Factory
Management Review Meetings and Quality Assurance Review Meetings attended by the Top Management and Senior Management
of the Company.
Panasonic Manufacturing Malaysia Berhad (6100-K)
28
Statement on Internal Control
•
•
•
•
•
•
Comprehensive management accounts and reports are prepared monthly for effective monitoring and decision-making. The monitoring
of performance variances are followed up and management actions are taken to rectify any deviations on a timely and effective
manner.
All business processes are properly documented in the Company’s Policies and Procedures Manuals which incorporated control
procedures, and the same will be reviewed and updated at regular intervals. The Company’s updated rules, regulations and
manuals are maintained in the Company’s in-house database accessible by all authorised users.
The Environmental Protection Promotion Committee meets bi-monthly to ensure compliance with the relevant environmental
requirements and ISO standards.
The Company has reinforced its security measures in accordance with the MEI Global Information Security Management Policy
that aims to protect information based on a global standard so as to safeguard the confidentiality, integrity and availability of the
Company’s strictly confidential and confidential information against internal and external threats.
Adequate insurance of major assets i.e. buildings and machineries has been in place to ensure that assets are sufficiently covered
against any mishap that may result in material losses to the Company.
Emphasis is placed on enhancing the quality and ability of employees through continuous training and development. Through the
Human Resource Innovation Plan, employees’ competencies are being properly addressed and suitable training programmes or
schemes will be identified from time to time to expand the level of competencies of employees.
INDEPENDENT REVIEWS ON INTERNAL CONTROL SYSTEM
The Internal Auditors, MustaphaRaj Sdn. Bhd., reports to the Audit Committee by focusing on areas of priority as identified by risk
analysis and in accordance with the audit plans approved by the Audit Committee. Reviews on the adequacy, integrity and effectiveness
of the Company’s overall system of internal control and governance for assurance, were conducted throughout the financial year and
reported to the Audit Committee, with recommendations for improvements to the Management.
The main areas reviewed by the Internal Auditors during the financial year ended 31 March 2006 were as follows:
•
Reviewed controls over fixed assets acquisitions, dispositions, maintenance and effectiveness of computerised system in the
management of fixed assets in March 2005;
•
Reviewed Recurrent Related Party Transactions to ensure completeness and accuracy of information extracted from the financial
and accounting system in April and May 2005;
•
Reviewed controls over information security at Shah Alam Plant I in August and September 2005; and
•
Reviewed production downtime at Home Shower Department covering identification of major reasons and evaluation on
management action plan to reduce downtime, analysis on production efficiency and impact of downtime on direct labour cost
and overall Shah Alam Plant I in September and October 2005.
An independent review on the status of implementation of the Risk Management Report as at 31 August 2005, 31 December 2005 and
31 March 2006 respectively, including updating the key business risks, their causes and management action plans had also been
undertaken by the Internal Auditors and reported to the Audit Committee and subsequently to the Board.
OVERALL CONTROL ENVIRONMENT
The control environment forms the foundation for the internal control system by providing the fundamental discipline and structure.
The Board does not review the internal control system of its associated company, Panasonic Malaysia Sdn. Bhd. (“PM”), as the Board
does not have direct control over their operations. Notwithstanding the above, the Company’s interest is served through representation on
the Board of PM and receipt and review of management accounts, reports and enquiries thereon. At the same time, the Managing
Director of PM, who sits on the Board of the Company, reports on a quarterly basis, the key performance indicators of PM and the general
market environment. Such initiatives provide the Board with information on the activities of PM.
The system of internal control, comprising the risk management framework, management processes, monitoring and review processes
described in this statement are considered appropriate for the Company’s business operations. The risks taken are at an acceptable level
within the context of the business environment throughout the Company. The Board is of the view that the current system of internal
control is satisfactory and has not resulted in any material losses, contingencies or uncertainties that would require disclosure in the
Company’s Annual Report.
This statement has been approved by the Board of Directors on 22 May 2006 and reviewed by the External Auditors on 23 May 2006.
29
Annual Report 2006
Additional Compliance Information
The following information is presented in compliance with the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”):
(1) Utilisation of Proceeds raised from Corporate Proposal
There were no proceeds raised during the current financial year under review pursuant to any corporate proposal;
(2) Share Buybacks
There were no share buybacks or cancellation or resale of treasury shares during the current financial year under review;
(3) Options, Warrants or Convertible Securities
There were no options, warrants or convertible securities exercised during the current financial year under review;
(4) American Depository Receipt (“ADR”) or Global Depository Receipt (“GDR”)
The Company did not sponsor any ADR or GDR programme during the current financial year under review;
(5) Sanctions and/or Penalties Imposed
There were no sanctions and/or penalties imposed on the Company and its Associated Company, Directors or Management by the
relevant regulatory authorities during the current financial year under review;
(6) Non-Audit Fees
For the current financial year under review, non-audit fees incurred by the Company to the External Auditors, Messrs. Jaffar Hussein & Co.
were RM385,838;
(7) Variation in Results
There were no variances between the audited results for the financial year ended 31 March 2006 and the unaudited results
announced to Bursa Securities on 22 May 2006. The Company did not make any release on the profit estimate, forecast and
projection for the current financial year under review;
(8) Profit Guarantee
There were no profit guarantee given by the Company or its Associated Company during the current financial year under review;
(9) Material Contracts
There were no material contracts of the Company and its Associated Company, involving Directors’ and major shareholders’
interests, entered into since the end of the previous financial year or still subsisting at the end of the current financial year
ended 31 March 2006; and
(10) Revaluation of Landed Properties
The Company did not adopt any policy on regular revaluation of its landed properties nor revalue its landed properties during the
current financial year under review.
Panasonic Manufacturing Malaysia Berhad (6100-K)
30
Directors’ Report
The Directors have pleasure in submitting their report together with the audited financial statements of the Company for the financial
year ended 31 March 2006.
PRINCIPAL ACTIVITIES
The principal activities of the Company consist of the manufacture and sales of electrical home appliances, batteries and related
components. There have been no significant changes in the nature of these activities except that the Company had discontinued the
manufacture and sales of washing machine and refrigerator during the financial year.
CHANGE OF COMPANY NAME
The name of the Company has been changed from Matsushita Electric Company (Malaysia) Berhad to Panasonic Manufacturing Malaysia
Berhad with effect from 3 October 2005.
FINANCIAL RESULTS
RM’000
Net profit after taxation
33,093
DIVIDENDS
The amount of dividends paid by the Company since 31 March 2005 were as follows:
RM’000
(a) In respect of the financial year ended 31 March 2005 as shown in the Directors’ report of that financial year:
A final dividend of 35 sen gross per ordinary share, less income tax of 28%, paid on 20 September 2005
15,307
A special dividend of 150 sen gross per ordinary share, less income tax of 28%, paid on 20 September 2005
65,605
(b) In respect of the financial year ended 31 March 2006:
An interim dividend of 15 sen gross per ordinary share, less income tax of 28%, paid on 27 January 2006
6,560
87,472
The Directors now recommend the payment of a final tax-exempt dividend of 35 sen per ordinary share, amounting to RM21,261,023
and a special tax-exempt dividend of 65 sen per ordinary share, amounting to RM39,484,757 which, subject to the approval of
members at the forthcoming Annual General Meeting of the Company, will be paid on 20 September 2006 to shareholders registered in
the Record of Depositors as at 6 September 2006.
RESERVES AND PROVISIONS
There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial
statements.
31
Annual Report 2006
Directors’ Report
DIRECTORS
The Directors in office since the date of the last report are:
Tan Sri Datuk Asmat bin Kamaludin
Yuichi Shimizu
Tan Sri Dato’ Zaki bin Tun Azmi
Raja Dato’ Seri Abdul Aziz bin Raja Salim
Osamu Takao
Ramanaidu a/l Semenchalam
Soh Beng Kuan
Chen Ah Huat
Hiroshi Fukutomi
Razman Hafidz bin Abu Zarim
Hiroshi Nakamura
Hor Yeow Choy
(resigned on 15 January 2006)
Pursuant to Article 97 of the Articles of Association, Yuichi Shimizu, Ramanaidu a/l Semenchalam, Soh Beng Kuan and Chen Ah Huat
retire by rotation at the forthcoming Annual General Meeting, and being eligible, offer themselves for re-election.
DIRECTORS’ BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party, 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 Directors’
remuneration as disclosed in Note 8 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 he is a member, or with a company in which he has a substantial financial interest.
DIRECTORS’ INTERESTS
According to the Register of Directors’ Shareholdings, the interests of Directors who held office at the end of the financial year in shares
of the Company are as follows:
Number of ordinary shares of RM1 each
At
1.4.2005
Acquired
1,000
2,000*
6,504
500
-
Disposed
At
31.3.2006
(6,000)
-
1,000
2,000
504
500
Shareholdings in the name of the Director
Osamu Takao
Chen Ah Huat
Soh Beng Kuan
Ramanaidu a/l Semenchalam
* Indirect interest (shares held by the spouse of the Director)
The other Directors in office at the end of the financial year did not hold any interest in shares in the Company and its related
corporations.
Panasonic Manufacturing Malaysia Berhad (6100-K)
32
Directors’ Report
STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS
Before the income statement and balance sheet were made out, the Directors took reasonable steps:
(a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful
debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for
doubtful debts; and
(b) to ensure that any current assets, other than debts, which were unlikely to realise in the ordinary course of business their values as
shown in the accounting records of the 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 Company inadequate to any substantial extent; or
(b) which would render the values attributed to current assets in the financial statements of the Company misleading; or
(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities 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 Company to meet its
obligations when they fall due.
At the date of this report, there does not exist:
(a) any charge on the assets 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 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) the results of the Company’s operations during the financial year were not substantially affected by any item, transaction or event
of a material and unusual nature except for the significant events during the financial year as disclosed in Note 24 to the financial
statements; and
(b) there has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event
of a material and unusual nature likely to affect substantially the results of the operations of the Company for the financial year in
which this report is made.
SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Consequent to the decision to discontinue the manufacture and sales of washing machine and refrigerator of Bangi Plant, the Company
had on 31 December 2005 completed the retrenchment scheme with a total compensation package of RM19,412,654 to 352 of its
employees. This payment was made against the RM19,623,696 provisions made in the previous financial year ended 31 March 2005.
The Company had also concluded the disposal of Bangi Plant’s machinery and equipment as at 31 December 2005. The net gain arising
from the sales of machinery and equipment of RM14,358,517 was recognised in the income statement in the current financial year.
33
Annual Report 2006
Directors’ Report
CORPORATE INFORMATION
The Company is a public limited liability company, incorporated and domiciled in Malaysia and listed on the Main Board of the Bursa
Malaysia Securities Berhad.
The address of the registered office and principal place of business of the Company is as follows:
No. 3 Jalan Sesiku 15/2
Section 15
Shah Alam Industrial Site
40200 Shah Alam
Selangor Darul Ehsan
The number of persons employed by the Company at the end of the financial year was 1,107 (2005: 1,482).
ULTIMATE HOLDING COMPANY
The Directors regard Matsushita Electric Industrial Co. Ltd, a company incorporated in Japan, as the Company’s ultimate holding company.
AUDITORS
The auditors, Messrs. Jaffar Hussein & Co., have expressed their willingness to continue in office.
In accordance with a resolution of the Board of Directors dated 22 May 2006.
TAN SRI DATUK ASMAT BIN KAMALUDIN
DIRECTOR
Panasonic Manufacturing Malaysia Berhad (6100-K)
YUICHI SHIMIZU
DIRECTOR
34
Income Statement
for the financial year ended 31 March 2006
Note
2006
RM’000
2005
RM’000
Revenue
Other operating income
Raw materials consumed
Changes in inventories of work-in-progress and finished goods
Staff costs
Selling expenses
Provision for liabilities and charges
Technical assistance fees
Research expenses
Utilities and fuel
Communication, travelling and entertainment expenses
Upkeep of office
Upkeep, repair and maintenance of assets
Insurance and duties
Depreciation of property, plant and equipment
Impairment of property, plant and equipment
Rental of land and buildings
Other operating expenses
5
644,872
40,102
(456,910)
3,650
(72,033)
(11,873)
(15,696)
(18,405)
(6,493)
(6,455)
(3,085)
(4,839)
(23,490)
(3,180)
(14,565)
0
(647)
(3,932)
702,208
28,245
(490,771)
1,713
(106,462)
(8,960)
(47,934)
(19,975)
(10,389)
(7,636)
(6,035)
(3,932)
(11,913)
(2,593)
(38,724)
(16,108)
(641)
(2,750)
Profit/(loss) from operations
7
47,021
(42,657)
Taxation
9
(13,928)
37,783
33,093
(4,874)
(8)
6
Net profit/(loss) attributable to shareholders
Earnings/(loss) per share (sen) - basic
10
54
Dividends per share (sen)
11
115
200
The notes on pages 39 to 60 form an integral part of these financial statements.
35
Annual Report 2006
Balance Sheet
as at 31 March 2006
Note
2006
RM’000
2005
RM’000
12
13
60,746
476,480
60,746
530,859
537,226
591,605
15,253
2,519
552,479
594,124
66,856
2,000
2,251
19,072
70,930
2,000
3,359
22,700
90,179
98,989
18,980
42,677
0
514,387
725
379
33,743
56,674
8,376
541,869
894
746
577,148
642,302
75,307
35,407
4,134
90,850
56,317
0
114,848
147,167
462,300
495,135
552,479
594,124
CAPITAL AND RESERVES
Share capital
Retained earnings
Shareholders’ funds
NON CURRENT LIABILITY
Provision for liabilities and charges
14
NON CURRENT ASSETS
Property, plant and equipment
Interest in associated company
Other investments
Deferred taxation
15
16
17
18
CURRENT ASSETS
Inventories
Trade and other receivables
Tax recoverable
Placement of funds with a related company
Deposits with a licensed bank
Cash and bank balances
19
20
21
21
21
LESS: CURRENT LIABILITIES
Trade and other payables
Provision for liabilities and charges
Taxation
22
14
NET CURRENT ASSETS
The notes on pages 39 to 60 form an integral part of these financial statements.
Panasonic Manufacturing Malaysia Berhad (6100-K)
36
Statement of Changes in Equity
for the financial year ended 31 March 2006
Issued and fully paid
ordinary shares
of RM1 each
Distributable
Number
of shares
‘000
Nominal
value
RM’000
Retained
earnings
RM’000
Total
RM’000
60,746
60,746
561,976
622,722
0
0
(4,874)
(4,874)
11
0
0
(15,308)
(15,308)
11
0
0
(4,374)
(4,374)
11
0
0
(6,561)
(6,561)
At 31 March 2005
60,746
60,746
530,859
591,605
At 1 April 2005
60,746
60,746
530,859
591,605
0
0
33,093
33,093
11
0
0
(15,307)
(15,307)
11
0
0
(65,605)
(65,605)
11
0
0
(6,560)
(6,560)
60,746
60,746
476,480
537,226
Note
At 1 April 2004
Net loss attributable to shareholders
Dividends:
- Final dividend for the financial
year ended 31 March 2004
- Special dividend for the financial
year ended 31 March 2004
- Interim dividend for the financial
year ended 31 March 2005
Net profit attributable to shareholders
Dividends:
- Final dividend for the financial
year ended 31 March 2005
- Special dividend for the financial
year ended 31 March 2005
- Interim dividend for the financial
year ended 31 March 2006
At 31 March 2006
The notes on pages 39 to 60 form an integral part of these financial statements.
37
Annual Report 2006
Cash Flow Statement
for the financial year ended 31 March 2006
Note
2006
RM’000
2005
RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Net profit/(loss) attributable to shareholders
33,093
(4,874)
14,565
0
293
(14,753)
15,696
(142)
(3,185)
(15,298)
13,928
38,724
16,108
116
(4,579)
47,934
(1,097)
(3,185)
(15,701)
(37,783)
44,197
35,663
Decrease in inventories
Decrease in trade and other receivables
(Decrease)/increase in trade and other payables
14,905
14,048
(15,543)
8,867
496
6,740
Cash from operations
57,607
51,766
Taxation paid
Tax refund
Restructuring expenses paid
Rework cost paid
Warranty paid
Retirement gratuity paid
(5,483)
8,585
(20,623)
(109)
(3,095)
(45)
(4,203)
1,642
0
0
(4,723)
(84)
Net cash flow from operating activities
36,837
44,398
Purchase of property, plant and equipment
Proceeds from disposal of property, plant and equipment
Interest received
Dividends received (net)
Proceeds from other investments
(11,276)
15,245
15,247
2,293
1,108
(7,347)
5,745
14,006
2,293
0
Net cash flow from investing activities
22,617
14,697
Dividends paid
(87,472)
(26,243)
Net cash flow from financing activity
(87,472)
(26,243)
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR
(28,018)
543,509
32,852
510,657
515,491
543,509
Adjustments:
Property, plant and equipment
- depreciation
- impairment losses
- write off
- gain on disposal
Provision for liabilities and charges
Reversal of part of prior year inventory writedown
Dividend income (gross)
Interest income
Taxation
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITY
CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR
21
The notes on pages 39 to 60 form an integral part of these financial statements.
Panasonic Manufacturing Malaysia Berhad (6100-K)
38
Notes to the Financial Statements
for the financial year ended 31 March 2006
1.
GENERAL INFORMATION
The principal activities of the Company consist of the manufacture and sales of electrical home appliances, batteries and related
components.
2.
BASIS OF PREPARATION
The financial statements of the Company have been prepared under the historical cost convention except as disclosed in the
summary of significant accounting policies. The financial statements comply with Malaysian Accounting Standards Board (“MASB”)
approved accounting standards in Malaysia and the provisions of the Companies Act, 1965.
The preparation of financial statements in conformity with MASB approved accounting standards in Malaysia and the provisions of
the Companies Act, 1965 requires the Directors to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reported financial year. Actual results could differ from those estimates.
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The following notes summarise the Company’s accounting policies for dealing with items which are considered significant in
determining the results for the financial year and in stating the Company’s financial position.
(a) Associated company
An associated company is an enterprise in which the Company exercises significant influence. Significant influence is the
power to participate in the financial and operating policy decisions of the associated company but not control over those
policies.
The results of the associated company are included in the income statement of the Company to the extent of dividends
received from the associated company. The results of the Company, had equity accounting method been adopted based on the
audited financial statements of the associated company, are disclosed in Note 16 to the financial statements.
(b) Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation and impairment loss.
Long leasehold land is amortised over the period of the lease of 99 years on a straight line basis.
Property, plant and equipment under construction are not depreciated.
All other property, plant and equipment assets are depreciated on a straight line basis to write off the cost of assets to their
residual values over their estimated useful lives at the following annual rates:
Buildings
Plant and machinery
Furniture, fittings and equipment
Motor vehicles
2 1/2% - 5%
10% - 50%
5% - 20%
25%
At each balance sheet date, the Company assesses whether there is any indication of impairment. If such indications exist,
analysis is performed to assess whether the carrying amount of the asset is fully recoverable. A write down is made if the
carrying amount exceeds the recoverable amount. See accounting policy Note 3 (e) on impairment of assets.
Where an indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to its
recoverable amount.
39
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(b) Property, plant and equipment (cont’d)
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are included in profit from
operations.
Repairs and maintenance are charged to the income statement during the financial year in which they are incurred. The cost
of major renovations is included in the carrying amount of the asset when it is probable that future economic benefits in excess
of the originally assessed standard of performance of the existing asset will flow to the Company. Major renovations are
depreciated over the remaining useful life of the related asset.
(c) Investments
Investments in associated companies are stated at cost. Where an indication of impairment exists, the carrying amount of the
investments are assessed and written down immediately to its recoverable amount. See accounting policy Note 3 (e) on
impairment of assets.
Investment in other non-current investments are shown at cost and an allowance for diminution in value is made where, in the
opinion of the Directors, there is a decline other than temporary in the value of such investment. Where there has been a
decline other than temporary in the value of an investment, such a decline is recognised as an expense in the period in which
the decline is identified.
(d) Inventories
Inventories comprising raw materials, work-in-progress, finished goods and consumable stores are stated at the lower of cost
and net realisable value.
Cost is determined using the weighted average method. The cost of finished goods and work-in-progress comprise raw materials,
direct labour, other direct costs and an appropriate proportion of production overheads.
Net realisable value is the estimated selling price in the ordinary course of business, less the costs of completion and selling
expenses.
(e) Impairment of assets
Property, plant and equipment and investment in associated company are reviewed for impairment losses whenever events or
changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the
amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is higher of an
asset’s net selling price and value on use. For the purposes of assessing impairment, assets are grouped at the lowest level for
which there is separately identifiable cash flows.
(f) Trade receivables
Trade receivables are carried at anticipated realisable value. Bad debts are written off in the financial year in which they are
identified. An estimate is made for doubtful debts based on a review of all outstanding amounts at the financial year end.
(g) Foreign currencies
Foreign currency transactions are accounted for at exchange rates ruling at the transaction dates, unless hedged by foreign
currency forward contracts, in which case the rates specified in such forward contracts are used. Foreign currency monetary
assets and liabilities are translated at exchange rates ruling at the balance sheet date, unless hedged by foreign currency
forward contracts, in which case the rates specified in such forward contracts are used. Exchange differences arising from the
settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are
included in the income statement.
Panasonic Manufacturing Malaysia Berhad (6100-K)
40
Notes to the Financial Statements
for the financial year ended 31 March 2006
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(g) Foreign currencies (cont’d)
The principal closing rates used in translation of foreign currency amounts are as follows:
31.3.2006
RM
Foreign currency
1 US Dollar
100 Japanese Yen
1 Singapore Dollar
1 Euro
3.685
3.139
2.275
4.483
31.3.2005
RM
3.800
3.514
2.291
4.889
(h) Research and development
Research and development expenditure is recognised as an expense except that costs incurred on development projects are
recognised as development assets to the extent that such expenditure is expected to generate future economic benefits.
Development costs initially recognised as an expense are not recognised as an asset in a subsequent financial year.
(i) Revenue recognition
(i)
Sales of goods
Sales are recognised upon delivery of products and customer acceptance, if any, net of sales taxes and discounts.
(ii) Dividend income
Dividend income from the associated company is recognised when the Company’s right to receive payment is established.
(iii) Interest income
Interest income is recognised on an accrual basis.
(j) Dividends
Interim dividends on ordinary shares are recognised as liabilities when declared by Directors before the balance sheet date.
Final dividends on ordinary shares are recognised as liabilities after approval by shareholders at the Annual General Meeting.
(k) Cash and cash equivalents
For the purpose of the cash flow statement, cash and cash equivalents comprise cash in hand, bank balances, placement of
funds with a related company and demand deposits.
41
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(l) Provisions
Provision for restructuring
The Company recognises provision for restructuring for the direct expenditure arising from the restructuring, where the expenditure
are those that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the Company.
Provision for rework cost
The Company recognises the estimated liability on all expenditure for the rework cost at the balance sheet date. This provision
is calculated based on management’s best estimate of the expenditure to be incurred.
Provision for warranty
The Company recognises the estimated liability on all products still under warranty at the balance sheet date. This provision
is calculated based on actual sales. For products which have exceeded the warranty period, the Company will undertake to
inspect, repair or replace the parts at an appropriate cost.
Provision for retirement gratuity
Provision for retirement gratuity for employees is made in accordance with a defined contribution plan and contributions are
charged to the income statement in the financial year to which they relate.
Provision for Employees Welfare Scheme (EWS)
A provision has been recognised at the end of the financial year for expected welfare benefits based on the number of
employees eligible for this welfare scheme. These benefits are payable whenever such employees leave employment before the
retirement date in exchange for these benefits as a compensation.
(m) Financial instruments
(i)
Financial instruments recognised on the balance sheet
The particular recognition method adopted for financial instruments recognised on the balance sheet is disclosed in the
individual policy statements associated with each item.
(ii) Financial instruments not recognised on the balance sheet
The Company is a party to financial instruments which comprise foreign currency forward contracts. This instrument is
not recognised in the financial statements on inception.
Foreign currency forward contracts
The Company enters into foreign currency forward contracts to protect the Company from movements in exchange rates by
establishing the rate at which a foreign currency asset or liability will be settled.
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.
All other exchange gains and losses relating to hedged instruments are recognised in the income statement in the same
financial year as the exchange differences on the underlying hedged items. Gains and losses on contracts which are no
longer designated as hedges are included in the income statement.
Panasonic Manufacturing Malaysia Berhad (6100-K)
42
Notes to the Financial Statements
for the financial year ended 31 March 2006
3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT’D)
(m) Financial instruments (cont’d)
(iii) Fair value estimation for disclosure purposes
The fair value of foreign currency forward contracts is determined by using forward exchange market rates at the balance
sheet date.
The face values, less any estimated credit adjustments, for financial assets and liabilities with a maturity of less than one
year are assumed to approximate their fair values.
(n) Deferred tax
Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amounts attributed
to assets and liabilities for tax purposes and their carrying amounts in the financial statements.
Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the
deductible temporary differences or unused tax losses can be utilised.
(o) Employee benefits
(i)
Short term employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the financial year
in which the associated services are rendered by employees of the Company.
(ii) Post-employment benefit obligations
Defined contribution plan
The Company contributes to the Employees Provident Fund, the national defined contribution plan.
A defined contribution plan is a pension plan under which the Company pays a fixed contribution 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 employee benefits relating to employee service in the current and prior periods.
The Company’s contributions to the defined contribution plan are charged to the income statement in the financial year to
which they relate. Once the contribution has been paid, the Company has no further payment obligations.
4.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
An effective risk management system is vital for the Company to achieve continued profitability and sustainable growth. Continuous
enhancements of the structure and capabilities within the integrated risk management framework are carried out to support the
Company’s role in improving its operation and performance.
It is the Company’s policy not to engage in speculative transactions. As and when the Company undertakes significant transactions
with risk exposure, the Company evaluates its exposure and the necessity to hedge such exposures taking into consideration the
availability and cost of such hedging instruments.
43
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
4.
FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
The guidelines and policies adopted by the Company to manage the following risks that arise in the conduct of business activities
are as follows:
(a) Market risk
Market risk is the risk of loss arising from adverse movement in the level of market prices or rates. The Company has in place
policies to manage the Company’s exposure to fluctuation in the prices of key raw materials used in the operations through
close monitoring and buying ahead in anticipation of significant price increase, where necessary.
Sales prices are determined based on the market pricing analysis mechanism using selected benchmarking models to ensure
our competitiveness. In the unexpected event whereby changes in the raw material component prices are beyond a certain
range, such increases are then passed on to the customers.
(b) Foreign currency exchange risk
The Company enters into foreign currency forward contracts to protect the Company from movements in exchange rates by
establishing the rate at which foreign currency assets and liabilities will be settled. Further, the Company maintains a natural
hedge; export sales collections mainly denominated in United States Dollars (“USD”) and Japanese Yen (“JPY”) are utilised for
the payment of purchases and expenditure in the same currency.
Foreign currency exposures are kept to an acceptable level and short-term imbalances are addressed by buying or selling
foreign currencies at spot rates.
(c) Interest rates risk
As interest rates changes over time, the Company may be exposed to the volatility in net interest income as a result of changes
in the level of interest rates which are mainly dependent on the financial institution’s basic lending rate and market cost of
funds.
(d) Liquidity and cash flow risks
The Company exercises prudent liquidity risk management to maintain sufficient liquid assets, short term investments and the
availability of funds deemed adequate to meet its financial obligations and any potential strategic investments.
The Company endeavours to maintain a healthy cash level to meet its working capital requirements. The ultimate holding
company advocates a worldwide corporate policy emphasising the implementation of cash flow management.
(e) Credit risk
Credit risk is the potential loss of revenue as a result of defaults in payments by its customers upon due date.
The Company controls its credit risk by exercising strict monitoring procedures on its collections from all its customers as and
when they fall due. Credit evaluation is performed on all customers and strictly limiting the Company’s association to business
partners with good credit assessment. Trade receivables are monitored on an ongoing basis.
5.
REVENUE
Sales of goods
Panasonic Manufacturing Malaysia Berhad (6100-K)
44
2006
RM’000
2005
RM’000
644,872
702,208
Notes to the Financial Statements
for the financial year ended 31 March 2006
6.
STAFF COSTS
2006
RM’000
Wages, salaries and bonus
Defined contribution retirement plan
Termination benefits
Other employee benefits
2005
RM’000
64,698
5,532
0
1,803
65,494
5,866
29,825
5,277
72,033
106,462
2006
RM’000
2005
RM’000
Staff costs include remuneration of Executive Directors.
7.
PROFIT/(LOSS) FROM OPERATIONS
The following items have been charged/(credited) in arriving at profit/(loss) from operations:
Auditors’ remuneration
Directors’ remuneration (Note 8)
Property, plant and equipment
- write off
- gain on disposal
Reversal of part of prior year inventory write down
Foreign exchange - net realised loss/(gain)
- net unrealised loss
Interest income
Dividend income from associated company (gross)
8.
100
4,171
100
4,217
293
(14,753)
(142)
637
1,450
(15,298)
(3,185)
116
(4,579)
(1,097)
(105)
229
(15,701)
(3,185)
DIRECTORS’ REMUNERATION
The aggregate amount of emoluments receivable by Directors of the Company during the financial year were as follows:
2006
RM’000
Non-Executive Directors:
- fees
- others
Executive Directors:
- salaries, bonus and other remuneration
- defined contribution retirement plan
2005
RM’000
155
13
147
13
3,862
141
3,880
177
4,171
4,217
The estimated monetary value of benefits provided to full time service Directors during the financial year amounted to RM288,329
(2005: RM305,336).
45
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
9.
TAXATION
2006
RM’000
Current taxation:
- current financial year
- overaccrual in prior years
Deferred taxation (Note 18)
- current financial year
- underaccrual in prior years
2005
RM’000
(10,300)
0
(5,300)
22,383
(10,300)
17,083
(1,244)
(2,384)
20,700
0
(3,628)
20,700
(13,928)
37,783
The explanation of the relationship between tax expense and profit/(loss) from operations is as follows:
2006
RM’000
2005
RM’000
Numerical reconciliation between tax expense and the product
of accounting profit multiplied by the Malaysian tax rate
Profit/(loss) from operations
47,021
(42,657)
Tax calculated at the Malaysian tax rate of 28%
Tax effects of:
- expenses not deductible for tax purposes
- income not subject to tax
- tax incentives (double deduction of expenses)
13,166
(11,944)
359
(100)
(1,881)
281
(375)
(3,362)
11,544
(15,400)
0
2,384
(22,383)
0
13,928
(37,783)
Overaccrual in prior years
- current tax
- deferred tax
10. EARNINGS/(LOSS) PER SHARE
Basic earnings/(loss) per share of the Company is calculated by dividing the net profit/(loss) attributable to shareholders by the
weighted average number of ordinary shares in issue during the financial year.
Net profit/(loss) attributable to shareholders (RM’000)
Weighted average number of ordinary shares in issue during the financial year (‘000)
Basic earnings/(loss) per share (sen)
Panasonic Manufacturing Malaysia Berhad (6100-K)
46
2006
2005
33,093
60,746
54
(4,874)
60,746
(8)
Notes to the Financial Statements
for the financial year ended 31 March 2006
11. DIVIDENDS
Dividends declared or proposed in respect of the financial year ended 31 March 2006 are as follows:
2006
Gross
per share
Sen
Interim dividend paid
Final dividend proposed
Special dividend proposed
2005
Amount
of dividend
Gross
net of tax per share
RM’000
Sen
Amount
of dividend
net of tax
RM’000
15
35
65
6,560
21,261
39,485
15
35
150
6,561
15,307
65,605
115
67,306
200
87,473
At the forthcoming Annual General Meeting on 23 August 2006, a final tax-exempt dividend in respect of the financial year ended
31 March 2006 of 35 sen per share (2005: 35 sen per share, less income tax of 28%) amounting to RM21,261,023 (2005:
RM15,307,937) and a special tax-exempt dividend of 65 sen per share (2005: 150 sen per share, less income tax of 28%)
amounting to RM39,484,757 (2005: RM65,605,442) will be proposed for shareholders’ approval. These financial statements do
not reflect the final and special dividends which will be accounted for in the financial year ending 31 March 2007 when approved
by shareholders.
12. SHARE CAPITAL
2006
RM’000
2005
RM’000
100,000
100,000
60,746
60,746
Authorised:
100,000,000 ordinary shares of RM1 each
Issued and fully paid-up:
60,745,780 ordinary shares of RM1 each
13. RETAINED EARNINGS
The Company has sufficient tax credits under Section 108(6) of the Malaysian Income Tax Act, 1967 to frank approximately
RM371,831,500 (2005: RM445,206,500) of its retained earnings as at 31 March 2006, if paid out as dividends. The extent of
the retained earnings not covered at that date amounted to approximately RM104,648,500 (2005: RM85,652,500).
In addition, the Company has tax-exempt accounts available to frank tax-exempt dividends amounting to approximately
RM264,205,700 (2005: RM264,205,700).
47
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
14. PROVISION FOR LIABILITIES AND CHARGES
Employees
welfare
scheme
RM’000
Warranty
RM’000
0
0
13,187
2,522
0
15,709
0
27,650
0
0
0
0
17,765
0
0
0
410
14,910
(4,723)
(11,722)
(299)
2,516
2,994
(84)
(4,954)
(1,336)
0
0
0
0
0
2,926
63,319
(4,807)
(16,676)
(1,635)
27,650
17,765
11,763
1,658
0
58,836
0
0
(20,623)
(2,911)
0
0
0
(109)
(932)
(2,079)
299
16,402
(3,095)
(9,392)
(451)
1,336
439
(45)
(2,949)
(183)
0
16,117
0
0
0
1,635
32,958
(23,872)
(16,184)
(2,713)
At 31 March 2006
4,116
14,645
15,526
256
16,117
50,660
At 31 March 2006
Current
Non-current
4,116
0
2,310
12,335
12,847
2,679
17
239
16,117
0
35,407
15,253
4,116
14,645
15,526
256
16,117
50,660
27,650
0
17,765
0
10,854
909
48
1,610
0
0
56,317
2,519
27,650
17,765
11,763
1,658
0
58,836
Restructuring
RM’000
At 31 March 2004
Reversal of prior year
present value adjustment
Charged to income statement
Utilised during the financial year
Unused amounts reversed
Present value adjustments
At 31 March 2005
Reversal of prior year
present value adjustment
Charged to income statement
Utilised during the financial year
Unused amounts reversed
Present value adjustments
At 31 March 2005
Current
Non-current
(a)
Retirement
gratuity
scheme
RM’000
Rework
cost
RM’000
Total
RM’000
Restructuring
On 23 February 2005, the Directors approved and announced the discontinuation of the manufacture and sales of washing
machines and refrigerators with effect from 1 October 2005. A provision has been recognised in the previous financial year ended
31 March 2005 for the expected expenditure to be incurred in the restructuring exercise based on the compensation scheme and
suppliers’ quotations.
The balance of the provision at the end of the current financial year encompasses the remaining post closure expenditure expected
to be incurred.
(b) Rework cost
As part of its quality control initiative, the Company has made a provision for rework cost for a certain product and undertakes to
inspect, repair or replace items that are found not performing up to the Company’s quality standards, if any. A provision has been
recognised at the financial year end based on management’s best estimate of the expenditure to be incurred.
Panasonic Manufacturing Malaysia Berhad (6100-K)
48
Notes to the Financial Statements
for the financial year ended 31 March 2006
14. PROVISION FOR LIABILITIES AND CHARGES (CONT’D)
(c) Warranty
The Company recognises the estimated liability on all products still under warranty at the balance sheet date. This provision is
calculated based on actual sales. For products which have exceeded the warranty period, the Company will undertake to inspect,
repair or replace the parts at an appropriate cost.
(d) Retirement gratuity scheme
The Company provides retirement gratuity for employees who have been in employment for a certain number of years. Upon official
retirement, the employee shall receive a lump sum payment as recognition of their service contribution to the Company. A provision
has been recognised at the financial year end for expected gratuity payments based on the number of staff eligible for their scheme.
(e) Employees welfare scheme (EWS)
A provision has been recognised at the end of the financial year for expected welfare benefits based on the number of employees
eligible for this welfare scheme. These benefits are payable whenever such employees leave employment before the retirement
date in exchange for these benefits as a compensation.
15. PROPERTY, PLANT AND EQUIPMENT
Balance
as at
1.4.2005
RM’000
Depreciation
charge
RM’000
Balance
as at
31.3.2006
RM’000
Additions
RM’000
Disposals
RM’000
Write off
RM’000
11,098
38,334
14,805
4,934
1,503
256
0
244
9,608
1,500
180
(256)
0
0
(73)
0
(419)
0
0
0
(162)
(131)
0
0
(128)
(2,878)
(8,654)
(2,309)
(596)
0
10,970
35,700
15,524
3,994
668
0
70,930
11,276
(492)
(293)
(14,565)
66,856
Accumulated
depreciation
RM’000
Accumulated
impairment
losses
RM’000
Net book value
Long leasehold land
Buildings
Plant and machinery
Furniture, fittings and equipment
Motor vehicles
Construction in progress
Cost
RM’000
Net book
value
RM’000
At 31 March 2006
Long leasehold land
Buildings
Plant and machinery
Furniture, fittings and equipment
Motor vehicles
Construction in progress
49
12,830
81,866
227,523
42,544
5,063
0
(1,860)
(46,166)
(211,999)
(38,550)
(4,395)
0
0
0
0
0
0
0
10,970
35,700
15,524
3,994
668
0
369,826
(302,970)
0
66,856
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
15. PROPERTY, PLANT AND EQUIPMENT (CONT’D)
Accumulated
impairment
losses
RM’000
Cost
RM’000
Accumulated
depreciation
RM’000
Net book
value
RM’000
12,830
81,621
348,891
57,126
6,872
256
(1,732)
(43,287)
(320,489)
(49,704)
(5,346)
0
0
0
(13,597)
(2,488)
(23)
0
11,098
38,334
14,805
4,934
1,503
256
507,596
(420,558)
(16,108)
70,930
At 31 March 2005
Long leasehold land
Buildings
Plant and machinery
Furniture, fittings and equipment
Motor vehicles
Construction in progress
16. INTEREST IN ASSOCIATED COMPANY
2006
RM’000
Unquoted shares, at cost
2,000
2005
RM’000
2,000
The Company holds a 40% (2005: 40%) equity interest in its associated company, Panasonic Malaysia Sdn. Bhd., a company
incorporated in Malaysia. The principal activities of the associated company consist of the sales of consumer electronic products,
home appliances, batteries, office automation, project systems and room air-conditioners under the brand name Panasonic.
Had equity accounting method been adopted for this associated company, the income statement of the Company and carrying value
of investment in associated company in the balance sheet would be as follows:
2006
RM’000
2005
RM’000
(i) Income statement
Profit/(loss) from operations of the Company
Less: Dividend income from associated company
47,021
(3,185)
(42,657)
(3,185)
Share of profit of the associated company
43,836
6,658
(45,842)
3,400
Profit/(loss) from operations
50,494
(42,442)
Taxation
- Company
- Associated company
(13,036)
(1,904)
38,675
1,011
Profit/(loss) after taxation
35,554
(2,756)
Panasonic Manufacturing Malaysia Berhad (6100-K)
50
Notes to the Financial Statements
for the financial year ended 31 March 2006
16. INTEREST IN ASSOCIATED COMPANY (CONT’D)
2006
RM’000
2005
RM’000
2,000
108,203
2,000
105,742
110,203
107,742
110,203
0
107,742
0
110,203
107,742
264
221
2006
RM’000
2005
RM’000
1,892
359
3,000
359
2,251
3,359
(ii) Balance sheet
Interest in associated company
Investment at cost
Share of post acquisition distributable and non-distributable reserves
Represented by:
Share of net assets
Goodwill on acquisition
(iii) Capital commitments
Company’s share of capital commitments of the associated company
for property, plant and equipment
17. OTHER INVESTMENTS
Investments at cost:
Matsushita Sports Centre
Others
The investments represent the Company’s share of capital contribution in the Matsushita Sports Centre and another related body.
It was not practicable to estimate the fair value of the unquoted investments. At the financial year end, the Company’s share of the
net tangible assets reported by the unquoted investments was RM2,251,174 (2005: RM3,359,000).
51
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
18. DEFERRED TAXATION
Deferred tax asset and liability are offset when there is a legally enforceable right to set off current tax asset against current tax
liability and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriate off
setting, are shown in the balance sheet:
2006
RM’000
2005
RM’000
Deferred tax asset
19,072
22,700
At start of financial year
(Charged)/credited to income statement (Note 9):
- property, plant and equipment
- provisions
- others
22,700
2,000
(3,731)
23
80
9,203
11,446
51
(3,628)
20,700
19,072
22,700
Deferred tax assets (before offsetting)
- property, plant and equipment
- provisions
- others
1,353
16,770
949
5,084
16,747
882
Offsetting
19,072
0
22,713
(13)
Deferred tax assets (after offsetting)
19,072
22,700
Deferred tax liabilities (before offsetting)
- others
Offsetting
0
0
(13)
13
Deferred tax liabilities (after offsetting)
0
0
2006
RM’000
2005
RM’000
9,483
1,536
7,687
48
20,596
3,379
5,953
634
18,754
30,562
Deferred tax asset
At end of financial year
Subject to income tax
19. INVENTORIES
At cost
Raw materials
Work-in-progress
Finished goods
Consumable stores
Panasonic Manufacturing Malaysia Berhad (6100-K)
52
Notes to the Financial Statements
for the financial year ended 31 March 2006
19. INVENTORIES (CONT’D)
2006
RM’000
2005
RM’000
226
3,181
18,980
33,743
At net realisable value
Finished goods
The Company reversed RM142,000 (2005: RM1,096,960) in respect of part of an inventory writedown made in prior years that
was subsequently not required as the Company was able to sell these inventories at above their carrying amount.
20. TRADE AND OTHER RECEIVABLES
Trade receivables
Less: Allowance for doubtful debts
2006
RM’000
2005
RM’000
6,575
(197)
6,752
(211)
Amount due from associated company
Amount due from related companies
6,378
7,927
19,278
6,541
15,035
26,163
Other receivables
Deposits
Prepayments
33,583
6,634
1,131
1,329
47,739
7,088
1,222
625
42,677
56,674
2006
RM’000
2005
RM’000
18,045
19,703
3,598
2
30,358
22,157
3,534
0
41,348
56,049
The currency exposure profile of trade and other receivables (excluding prepayments) is as follows:
- Ringgit Malaysia
- US Dollar
- Japanese Yen
- Others
Credit terms given to trade receivables ranged from 30 to 60 days (2005: 30 to 60 days).
The balances due from associated company and related companies are in respect of trading transactions and are subject to the
Company’s normal commercial repayment terms. The repayments are prompt and within the Company’s repayment terms.
53
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
21. PLACEMENT OF FUNDS, DEPOSITS, CASH AND BANK BALANCES
Placement of funds with a related company
Deposits with a licensed bank
Cash and bank balances
2006
RM’000
2005
RM’000
514,387
725
379
541,869
894
746
515,491
543,509
496,464
2,968
16,059
536,957
2,344
4,208
515,491
543,509
The currency exposure profile of placement of funds, deposits,
cash and bank balances is as follows:
- Ringgit Malaysia
- Japanese Yen
- US Dollar
(a) Placement of funds with a related company
The weighted average interest rates of placement of funds with a related company, Panasonic Financial Centre (Malaysia)
Sdn. Bhd. that were effective at the financial year end were as follows:
2006
%
- Ringgit Malaysia
- Japanese Yen
- US Dollar
3.12
0.05
3.87
2005
%
2.88
0.05
2.50
The average maturity days of placement of funds with a related company are as follows:
- Ringgit Malaysia
- Japanese Yen
- US Dollar
2006
2005
275 days
7 days
30 days
271 days
7 days
30 days
(b) Deposits with a licensed bank and cash and bank balances
The weighted average interest rate of deposits with a licensed bank that was effective at the financial year end was as follows:
2006
%
Deposits with a licensed bank
- US Dollar
2.79
Deposits with a licensed bank have an average maturity of 1 day (2005: 1 day).
Bank balances are deposits held on call with banks.
Panasonic Manufacturing Malaysia Berhad (6100-K)
54
2005
%
2.20
Notes to the Financial Statements
for the financial year ended 31 March 2006
22. TRADE AND OTHER PAYABLES
Trade payables
Trade accruals
Other payables
Amount due to ultimate holding company
Amount due to related companies
2006
RM’000
2005
RM’000
25,938
42,315
2,238
2,759
2,057
41,445
37,781
2,211
1,823
7,590
75,307
90,850
2006
RM’000
2005
RM’000
62,044
9,505
449
0
3,307
2
69,076
17,107
206
880
3,581
0
75,307
90,850
The currency exposure profile of trade and other payables is as follows:
- Ringgit Malaysia
- US Dollar
- Singapore Dollar
- Euro
- Japanese Yen
- Others
Credit terms of trade payables given to the Company vary from 30 to 60 days. (2005: 30 to 60 days)
The balances due to ultimate holding company and related companies are in respect of trading transactions and are subject to the
Company’s normal commercial repayment terms.
23. SEGMENTAL INFORMATION
No information is provided on the Company’s operations (the primary segment) as the Company is principally involved in one
segment which is the manufacture and sales of electrical home appliances, batteries and related components.
The Company operates in the following geographical areas:
Revenue
Malaysia
Japan
Asia /Middle East
Others
Total assets
Capital expenditure
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
2006
RM’000
2005
RM’000
322,493
49,044
256,330
17,005
342,883
56,712
284,979
17,634
667,327
0
0
0
741,291
0
0
0
11,276
0
0
0
7,347
0
0
0
644,872
702,208
667,327
741,291
11,276
7,347
55
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
24. SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR
Consequent to the decision to discontinue the manufacture and sales of washing machine and refrigerator of Bangi Plant, the
Company had on 31 December 2005 completed the retrenchment scheme with a total compensation package of RM19,412,654
to 352 of its employees. This payment was made against the RM19,623,696 provisions made in the previous financial year ended
31 March 2005.
The Company had also concluded the disposal of Bangi Plant’s machinery and equipment as at 31 December 2005. The net gain
arising from the sales of machinery and equipment of RM14,358,517 was recognised in the income statement in the current
financial year.
25. DISCONTINUING OPERATIONS
In the previous financial year, the Directors approved and announced the discontinuation of the manufacture and sales of washing
machine and refrigerator with effect from 1 October 2005. The results attributable to the discontinuing operations were as follows:
Revenue
Expenses
Profit/(loss) before tax
2006
RM’000
2005
RM’000
108,350
(102,278)
190,929
(250,790)
6,072
(59,861)
The assets and liabilities attributable to the discontinuing operations were as follows:
2006
RM’000
2005
RM’000
Property, plant and equipment
Inventories
Receivables
18,039
0
199
24,553
10,537
9,680
Total assets
18,238
44,770
Payables
3,962
61,111
Total liabilities
3,962
61,111
14,276
(16,341)
Net assets/(liabilities)
The cash flows attributable to the discontinuing operations during the year were as follows:
2006
RM’000
2005
RM’000
Operating activities
Investing activities
15,776
14,385
(20,649)
355
Total cash flows
30,161
(20,294)
Panasonic Manufacturing Malaysia Berhad (6100-K)
56
Notes to the Financial Statements
for the financial year ended 31 March 2006
26. SIGNIFICANT RELATED PARTY DISCLOSURES
In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are other significant related
party transactions and balances. The related party transactions described below were carried out on terms and conditions agreed
between the related parties.
The Directors regard Matsushita Electric Industrial Co. Ltd., a company incorporated in Japan, as the Company’s ultimate
holding company.
2006
RM’000
2005
RM’000
265,618
286,473
524
364
38,124
872
1,160
5,791
34,514
141,680
87,251
839
56,581
3,748
695
549
46,685
1,053
1,156
5,838
31,901
156,474
102,232
1,006
51,796
2,965
2,841
2,912
1,269
1,737
(a) Sales of products, batteries and related components to:
Associated company
Panasonic Malaysia Sdn. Bhd.
Related companies
Panasonic AVC Networks KL Malaysia Sdn. Bhd.
JVC Electronics Malaysia Sdn. Bhd.
Panasonic Asia Pacific Pte. Ltd.
Panasonic AVC Networks Johor Malaysia Sdn. Bhd.
Panasonic AVC Networks Singapore Pte. Ltd.
Panasonic Industrial Company (M) Sdn. Bhd.
Panasonic Ecology Systems Hong Kong Co. Limited
Panasonic Trading (S) Pte. Ltd.
Panasonic Trading Malaysia Sdn. Bhd.
JVC Asia Pte. Ltd.
KDK Fans (M) Sdn. Bhd.
PT Panasonic Manufacturing Indonesia
(b) Sales of service parts to:
Associated company
Panasonic Malaysia Sdn. Bhd.
Related company
Panasonic Trading (S) Pte. Ltd.
57
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
26. SIGNIFICANT RELATED PARTY DISCLOSURES (CONT’D)
2006
RM’000
2005
RM’000
9,837
12,805
8,676
3,237
0
3,711
538
1,751
9,297
3,833
977
5,966
439
1,980
519
0
4,219
60,220
1,117
363
2,407
227
664
0
0
989
568
2,107
2,471
23,795
2,811
727
1,805
376
516
604
985
0
15,778
19,975
2,627
0
0
1,199
8,554
0
(c) Purchase of parts, components and raw materials from:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Related companies
Panasonic Asia Pacific Pte. Ltd.
Panasonic Ecology Systems Hong Kong Co. Limited
Panasonic Refrigeration Devices (Thailand) Co. Ltd.
Panasonic Refrigeration Devices Malaysia Sdn. Bhd.
Panasonic Electronic Devices Malaysia Sdn. Bhd.
Panasonic Semiconductor Asia Pte. Ltd.
Panasonic Electronic Devices Singapore Pte. Ltd.
(formerly known as Matsushita Electronics Components (S) Pte. Ltd.)
Panasonic Taiwan Co. Ltd.
Panasonic Electronic Devices (Thailand) Co. Ltd.
Panasonic Trading Malaysia Sdn. Bhd.
Panasonic Industrial Asia Pte. Ltd.
Matsushita Precision Capacitor (M) Sdn. Bhd.
Matsushita Home Appliance (Thailand) Co. Ltd.
Matsushita Electronic Devices (M) Sdn. Bhd.
Matsushita Electric Works (Asia Pacific) Pte. Ltd.
Panasonic Communications (Thailand) Co. Ltd.
Panasonic HA Air-Conditioning (M) Sdn. Bhd.
Panasonic Battery Taiwan Co. Ltd.
(d) Technical assistance fee paid and payable to:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Related company
Matsushita Ecology Systems Co. Ltd.
(e) Sales of property, plant and equipment to:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Related company
Panasonic Trading Malaysia Sdn. Bhd.
Panasonic Manufacturing Malaysia Berhad (6100-K)
58
Notes to the Financial Statements
for the financial year ended 31 March 2006
26. SIGNIFICANT RELATED PARTY DISCLOSURES (CONT’D)
2006
RM’000
2005
RM’000
232
602
0
1,064
168
334
15,274
15,677
1,931
1,706
1,292
676
953
0
3,077
10,021
4,897
3,227
764
352
598
323
(f) Purchase of property, plant and equipment from:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Related companies
Matsushita Technology (S) Pte. Ltd.
Panasonic Trading Malaysia Sdn. Bhd.
(g) Interest income received from a related company:
Panasonic Financial Centre (Malaysia) Sdn. Bhd.
(h) Sales promotion, warranty claims and/or service expenses paid and payable to:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Associated companies
Panasonic Malaysia Sdn. Bhd.
Panasonic A.P. Sales (Thailand) Co. Ltd.
(i) Research and development expenditure paid and payable to a related company:
Matsushita Home Appliance R & D Centre (M) Sdn. Bhd.
(j) Brand license fee paid and payable to:
Ultimate holding company
Matsushita Electric Industrial Co. Ltd.
Related company
Matsushita Ecology Systems Co. Ltd.
(k) Service fee paid and payable to a related company:
Panasonic Asia Pacific Pte. Ltd.
59
Annual Report 2006
Notes to the Financial Statements
for the financial year ended 31 March 2006
27. FINANCIAL INSTRUMENTS
Foreign currency forward contracts
Foreign currency forward contracts are entered into by the Company in currencies other than Ringgit Malaysia to manage exposure
to fluctuations in foreign currency exchange rates on specific transactions. In general, the Company’s policy is to enter into foreign
currency forward contracts of approximately 80% of such foreign currency receipts and payments anticipated for the next three
months.
At 31 March 2006, the settlement dates on open forward contracts ranged between one and three months. The foreign currency
amounts to be received/paid and contractual exchange rates of the Company’s outstanding contracts are as follows:
Hedge item
Currency to
be received/paid
RM’000
equivalent
Contractual
rate
Ringgit Malaysia
14,850
1 USD = RM3.7125
Ringgit Malaysia
Ringgit Malaysia
137
198
1 SGD = RM2.2280
1 Euro = RM4.4638
Ringgit Malaysia
1,440
1 SGD = RM2.2850
Net future sales of goods over the next 3 months:
USD 4,000,000
Net payables:
SGD 61,334
Euro 44,357
Net future purchases over the next 3 months:
SGD 630,000
The fair value of net unrecognised outstanding forward contracts of the Company at the balance sheet date was a favourable net
position of RM205,948 (2005: favourable net provision of RM142,474).
28. COMMITMENTS FOR CAPITAL EXPENDITURE
2006
RM’000
2005
RM’000
4,941
473
1,667
1,093
5,414
2,760
5,414
2,760
Approved by the Board but not provided for in the financial statements:
Contracted
Not contracted
Analysed as follows:
- Property, plant and equipment
Panasonic Manufacturing Malaysia Berhad (6100-K)
60
Statement by Directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Datuk Asmat bin Kamaludin and Yuichi Shimizu, two of the Directors of Panasonic Manufacturing Malaysia Berhad [formerly
known as Matsushita Electric Company (Malaysia) Berhad], state that, in the opinion of the Directors, the financial statements set out on
pages 35 to 60 are drawn up so as to give a true and fair view of the state of affairs of the Company as at 31 March 2006 and of the
results and cash flows of the Company for the financial year ended on that date in accordance with 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 22 May 2006.
TAN SRI DATUK ASMAT BIN KAMALUDIN
DIRECTOR
YUICHI SHIMIZU
DIRECTOR
Statutory Declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Hiroshi Fukutomi, the Director primarily responsible for the financial management of Panasonic Manufacturing Malaysia Berhad
[formerly known as Matsushita Electric Company (Malaysia) Berhad], do solemnly and sincerely declare that the financial statements set
out on pages 35 to 60 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.
HIROSHI FUKUTOMI
Subscribed and solemnly declared by the abovenamed Hiroshi Fukutomi at Shah Alam in Malaysia on 22 May 2006.
Before me,
TENGKU MOHD HASHIM BIN TENGKU MOHAMED
NO. B 026
COMMISSIONER FOR OATHS
61
Annual Report 2006
Report of the Auditors
to the members of Panasonic Manufacturing Malaysia Berhad
[formerly known as Matsushita Electric Company (Malaysia) Berhad] (Company No. 6100-K)
We have audited the financial statements set out on pages 35 to 60. 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
responsibility to any other person for the content of this report.
We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by the Directors, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion:
(a) the financial statements have been prepared in accordance with the provisions of the Companies Act, 1965 and MASB approved
accounting standards in Malaysia so as to give a true and fair view of:
(i)
the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financial statements; and
(ii) the state of affairs of the Company as at 31 March 2006 and of the results and cash flows of the 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 have been properly kept in
accordance with the provisions of the Act.
JAFFAR HUSSEIN & CO.
(No. AF-0056)
Chartered Accountants
LEE YOKE KHAI
(No. 1589/08/07 (J))
Partner of the firm
Kuala Lumpur
22 May 2006
Panasonic Manufacturing Malaysia Berhad (6100-K)
62
Changes in Share Capital
AUTHORISED SHARE CAPITAL
The present authorised share capital of the Company is RM100,000,000 divided into 100,000,000 ordinary shares of RM1.00 each.
Details of changes in the authorised share capital of the Company since incorporation are as follows:
Year
Increase in Authorised
Share Capital (RM)
Total Authorised
Share Capital (RM)
1966
20,000,000
1986
30,000,000
50,000,000
2002
50,000,000
100,000,000
PAID-UP SHARE CAPITAL
As at 31 March 2006, the issued and paid-up capital of the Company is RM60,745,780 divided into 60,745,780 ordinary shares of
RM1.00 each. Details of changes in the issued and paid-up share capital of the Company since incorporation are as follows:
Development of Investment in the Company’s Shares:
Year
Number of
shares alloted
1965
1,500,000
Subscribers’ Shares and Public Issue
1,500,000
1966
1,500,000
Public Issue
3,000,000
1975
6,000,000
Bonus Issue of 2 for 1 @ RM1.00
9,000,000
1,050,000
Rights Issue (35:100) @ RM1.00
10,050,000
Private Placement to Bumiputera Investors under
New Economic Policy
10,500,000
450,000
Descriptions
Total issued and
paid-up capital (RM)
1980
2,625,000
Bonus Issue of 1 for 4 @ RM1.00
13,125,000
1982
6,562,500
Bonus Issue of 1 for 2 @ RM1.00
19,687,500
1986
1,968,750
Bonus Issue of 1 for 10 @ RM1.00
21,656,250
1992
10,828,125
Bonus Issue of 1 for 2 @ RM1.00
32,484,375
1997
3,248,437
Bonus Issue of 1 for 10 @ RM1.00
35,732,812
2002
25,012,968
Bonus Issue of 7 for 10 @ RM1.00
60,745,780
63
Annual Report 2006
History of Dividend Payment
Financial
Year
Ended
Paid-Up
Capital
(RM)
Gross Cash
Dividend
(RM)
Cash Dividend Rate
Stock
Total
Interim Final Special Dividend Dividend
3/2006
60,745,780
15%
35%
3/2005
60,745,780
15%
3/2004
60,745,780
15%
3/2003
60,745,780
3/2002
35,732,812
65%
Tax Rate
Interim Final Special
28%
T/E
T/E
Taxation
(RM)
Net Cash
Dividend
(RM)
-
115%
69,857,647
2,551,323 67,306,324
35% 150%
-
200%
121,491,560
28%
28%
28%
34,017,637 87,473,923
35%
10%
-
60%
36,447,468
28%
28%
28%
10,205,291 26,242,177
10%
40%
-
-
50%
30,372,890
28%
28%
-
8,504,409 21,868,481
15%
35%
-
70%
120%
17,866,406
28%
28%
-
5,002,593 12,863,813
3,501,815 14,364,591
3/2001
35,732,812
15%
35%
-
-
50%
17,866,406
T/E
28%
-
3/2000
35,732,812
15%
35%
-
-
50%
17,866,406
T/E
T/E
-
3/1999
35,732,812
15%
35%
-
-
50%
17,866,406
28%
T/E
-
1,500,778 16,365,628
3/1998
35,732,812
15%
35%
-
-
50%
17,866,406
28%
28%
-
5,002,593 12,863,813
T/E
17,866,406
3/1997
32,484,375
10%
40%
20%
10%
80%
22,739,063
30%
30%
30%
6,821,719 15,917,344
3/1996
32,484,375
10%
40%
-
-
50%
16,242,188
30%
30%
-
4,872,656 11,369,532
3/1995
32,484,375
10%
30%
-
-
40%
12,993,750
30%
30%
-
3,898,125
9,095,625
3/1994
32,484,375
10%
30%
-
-
40%
12,993,750
32%
32%
-
4,158,000
8,835,750
3/1993
32,484,375
10%
30%
-
-
40%
12,993,750
34%
34%
-
4,417,875
8,575,875
3/1992
21,656,250
-
40%
-
50%
90%
8,662,500
-
35%
-
3,031,875
5,630,625
3/1991
21,656,250
-
40%
-
-
40%
8,662,500
-
35%
-
3,031,875
5,630,625
3/1990
21,656,250
-
35%
-
-
35%
7,579,688
-
35%
-
2,652,891
4,926,797
3/1989
21,656,250
-
25%
-
-
25%
5,414,063
-
40%
-
2,165,625
3,248,438
3/1988
21,656,250
-
25%
-
-
25%
5,414,063
-
40%
-
2,165,625
3,248,438
3/1987
21,656,250
-
25%
-
-
25%
5,414,063
-
40%
-
2,165,625
3,248,438
12/1985
19,687,500
-
25%
-
10%
35%
4,921,875
-
40%
-
1,968,750
2,953,125
12/1984
19,687,500
-
35%
-
-
35%
6,890,625
-
40%
-
2,756,250
4,134,375
12/1983
19,687,500
-
35%
-
-
35%
6,890,625
-
40%
-
2,756,250
4,134,375
12/1982
19,687,500
-
20%
-
-
20%
3,937,500
-
40%
-
1,575,000
2,362,500
12/1981
13,125,000
-
20%
-
50%
70%
2,625,000
-
40%
-
1,050,000
1,575,000
12/1980
13,125,000
-
20%
-
-
20%
2,625,000
-
40%
-
1,050,000
1,575,000
12/1979
10,500,000
-
20%
-
25%
45%
2,100,000
-
40%
-
840,000
1,260,000
12/1978
10,500,000
-
20%
-
-
20%
2,100,000
-
40%
-
840,000
1,260,000
12/1977
10,500,000
-
20%
-
-
20%
2,100,000
-
40%
-
840,000
1,260,000
12/1976
10,500,000
-
15%
5%
-
20%
2,100,000
-
40%
-
840,000
1,260,000
12/1975
10,500,000
-
15%
-
-
15%
1,575,000
-
40%
-
630,000
945,000
12/1974
3,000,000
-
15%
-
200%
215%
450,000
-
40%
-
180,000
270,000
12/1973
3,000,000
-
15%
-
-
15%
450,000
-
40%
-
180,000
270,000
12/1972
3,000,000
-
12%
5%
-
17%
510,000
-
T/E
-
60,000
450,000
12/1971
3,000,000
-
12%
-
-
12%
360,000
-
T/E
-
T/E
360,000
12/1970
3,000,000
-
12%
-
-
12%
360,000
-
T/E
-
T/E
360,000
12/1969
3,000,000
-
10%
-
-
10%
300,000
-
T/E
-
T/E
300,000
12/1968
3,000,000
-
0%
-
-
0%
-
-
-
-
-
-
12/1967
3,000,000
-
0%
-
-
0%
-
-
-
-
-
-
12/1966
3,000,000
-
0%
-
-
0%
-
-
-
-
-
-
12/1965
1,500,000
-
0%
-
-
0%
-
-
-
-
-
-
Total (Since Date of Incorporation)
506,906,598
T/E - Tax-exempt
Panasonic Manufacturing Malaysia Berhad (6100-K)
64
125,234,580 381,672,018
Statistics on Shareholdings
as at 30 June 2006
SHARE CAPITAL
Authorised Capital
Issued and Fully Paid-up
Class of Shares
Voting Rights
:
:
:
:
RM100,000,000.00
RM60,745,780.00
Ordinary Shares of RM1.00 each
1 vote per ordinary share
ANALYSIS OF SHAREHOLDINGS
No. of
Shareholders
% of
Shareholders
Less than 100
100 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 3,037,288 (less than 5% of issued shares)
3,037,289 and above (5% and above of issued shares)
492
1,777
1,714
252
48
2
11.48
41.47
40.00
5.88
1.12
0.05
15,488
1,024,169
5,423,616
6,751,013
18,265,177
29,266,317
0.03
1.68
8.93
11.11
30.07
48.18
Total
4,285
100.00
60,745,780
100.00
Size of Shareholdings
No. of
Shares
% of Issued
Share Capital
DIRECTORS’ SHAREHOLDINGS
No. of Shares
No.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
Name of Directors
Tan Sri Datuk Asmat bin Kamaludin
Yuichi Shimizu
Tan Sri Dato’ Zaki bin Tun Azmi
Raja Dato’ Seri Abdul Aziz bin Raja Salim
Osamu Takao
Ramanaidu a/l Semenchalam
Soh Beng Kuan
Chen Ah Huat
Hiroshi Fukutomi
Razman Hafidz bin Abu Zarim
Hiroshi Nakamura
Direct
Interest
%
Deemed
Interest
%
1,000
500
504
-
0.002
0.001
0.001
-
2,000*
-
0.003
-
* Deemed interest by virtue of spouse’s direct interest.
SUBSTANTIAL SHAREHOLDERS
No.
Name of Substantial Shareholders
No. of Shares
%
1.
2.
Panasonic Management Malaysia Sdn. Bhd.
Employees Provident Fund Board
- 3,102,246 shares held in its own name
- 338,800 shares held through Mayban Nominees (Tempatan) Sdn. Bhd.
26,164,071
3,441,046
43.07
5.66
65
Annual Report 2006
Statistics on Shareholdings
as at 30 June 2006
30 LARGEST SHAREHOLDERS
No.
Name of Shareholders
No. of Shares
%
1.
Panasonic Management Malaysia Sdn. Bhd.
26,164,071
43.07
2.
Employees Provident Fund Board
3,102,246
5.11
3.
Lembaga Tabung Haji
2,634,254
4.34
4.
Valuecap Sdn. Bhd.
1,944,600
3.28
5.
ChinChoo Investment Sdn. Berhad
1,259,748
2.07
6.
Malaysia National Insurance Berhad
904,824
1.49
7.
Affin Nominees (Asing) Sdn. Bhd.
(UOB Kay Hian Pte. Ltd. for Cheng Good Hiang)
757,350
1.25
8.
HSBC Nominees (Asing) Sdn. Bhd.
(Exempt AN for BNP Paribas Securities Services (Convert in USD))
700,000
1.15
9.
Tan Kah Boh Robert @ Tan Kah Boo
590,000
0.97
10.
Amsec Nominees (Asing) Sdn. Bhd.
(Fraser Securities Pte. Ltd. for Yeo Realty & Investments Pte. Ltd.)
578,530
0.95
11.
Tan Kah Lay
490,600
0.81
12.
HDM Nominees (Asing) Sdn. Bhd.
(UOB Kay Hian Pte. Ltd. for Mong Man Wai William)
488,252
0.80
13.
Citigroup Nominees (Asing) Sdn. Bhd.
(CB Spore GW for Bukit Sembawang Estates Limited)
387,614
0.64
14.
Malaysia Nominees (Tempatan) Sendirian Berhad
(Oversea-Chinese Bank Nominees Pte. Ltd. for Chong Shee Jan)
370,260
0.61
15.
Mayban Nominees (Tempatan) Sdn. Bhd.
(Aberdeen Asset Management Sdn. Bhd. for The Employees Provident Fund Board)
338,800
0.56
16.
Asia Life (M) Berhad
(As Beneficial Owner (PF))
325,765
0.54
17.
MCIS Zurich Insurance Berhad
313,520
0.52
18.
HSBC Nominees (Asing) Sdn. Bhd.
(HSBC-FS for Aberdeen Malaysia Equity Fund)
300,000
0.49
19.
Citigroup Nominees (Asing) Sdn. Bhd.
(CBNY for DFA Emerging Markets Fund)
294,980
0.49
20.
Mayban Nominees (Asing) Sdn. Bhd.
(DBS Bank for Mrs Theresa Foo Nee Cheng Theresa)
287,513
0.47
21.
Takaful Nasional Sdn. Berhad
275,600
0.45
22.
Alliancegroup Nominees (Tempatan) Sdn. Bhd.
(Pledged Securities Account for Shen & Sons Sdn. Bhd.)
272,000
0.45
23.
Mayoon Sdn. Bhd.
260,000
0.43
24.
Goh Hian Tim
250,067
0.41
25.
Amsec Nominees (Asing) Sdn. Bhd.
(Fraser Securities Pte. Ltd. for Yeo Geok Choo)
238,738
0.39
26.
MCIS Zurich Insurance Berhad
215,620
0.35
27.
Amsec Nominees (Asing) Sdn. Bhd.
(Fraser Securities Pte. Ltd. for Tai Tak Securities Pte. Ltd.)
209,000
0.34
28.
Tan Kah Ghie Mary @ Tan Kah Ghee Mary
204,800
0.34
29.
Lim Swee Ying @ Lim Choy Ying
202,572
0.33
30.
MCIS Zurich Insurance Berhad
200,000
0.33
44,561,324
73.43
Total
Panasonic Manufacturing Malaysia Berhad (6100-K)
66
List of Properties Owned by the Company
Location
No. 3 Jalan Sesiku 15/2
Section 15
Shah Alam Industrial Site
40200 Shah Alam
Selangor Darul Ehsan
Description
Land
Land Area
(Acres)
Tenure
Date of
Acquisition
14.4
Leasehold,
99 years
(Expires in
the year
2065)
7-Jul-1966
27-Jul-1973
29-Sep-1981
Factory and
administrative
office
No. 7 Jalan P/2A
Bandar Baru Bangi
Bangi Industrial Site
43650 Kajang
Selangor Darul Ehsan
Land
15.6
Leasehold,
99 years
(Expires in
the year
2086)
Land
7-Dec-1987
Leasehold,
99 years
(Expires in
the year
2090)
Factory and
administrative
office
11-Apr-1991
13,926
6,350
7 - 15
67
9,270
4,113
10 - 23
17.1
Net Book
Value
(RM’000)
183
56
268
6 - 40
Factory and
administrative
office
No. 9 Jalan Pelabur 23/1
Section 23
40300 Shah Alam
Selangor Darul Ehsan
Approximate
Age of
Buildings
(Years)
12,505
Annual Report 2006
Notice of 41st Annual General Meeting
NOTICE IS HEREBY GIVEN that the 41st Annual General Meeting of the Company will be held at No. 3 Jalan Sesiku 15/2, Section 15,
Shah Alam Industrial Site, 40200 Shah Alam, Selangor Darul Ehsan on Wednesday, 23 August 2006 at 10.00 a.m. to transact the
following business:
AGENDA
As Ordinary Business:
1.
To receive and adopt the Statutory Financial Statements for the financial year ended 31 March 2006 together with
the Reports of the Directors and Auditors thereon.
(Resolution 1)
2.
To declare a final tax-exempt dividend of 35 sen per ordinary share of RM1.00 and a special tax-exempt dividend
of 65 sen per ordinary share of RM1.00 for the financial year ended 31 March 2006.
(Resolution 2)
3.
To re-elect the following Directors who are retiring in accordance with the Company’s Articles of Association:
a.
b.
c.
d.
Yuichi Shimizu;
Ramanaidu a/l Semenchalam;
Soh Beng Kuan; and
Chen Ah Huat.
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
(Article 97)
(Article 97)
(Article 97)
(Article 97)
4.
To approve the payment of Directors’ fees not exceeding RM160,000/- in respect of the financial year
ending 31 March 2007, to be payable quarterly in arrears.
(Resolution 7)
5.
To re-appoint Messrs Jaffar Hussein & Co. as the Company’s Auditors and to authorise the Directors to fix their
remuneration.
(Resolution 8)
As Special Business:
6.
To consider and if thought fit, to pass the following resolutions as Ordinary Resolutions:
Proposed Renewal of Existing Shareholders’ Mandate and Proposed New Shareholders’ Mandate for Recurrent
Related Party Transactions of a Revenue or Trading Nature
“THAT subject always to the Listing Requirements of Bursa Malaysia Securities Berhad, approval be and is hereby
given to the Company to renew the existing shareholders’ mandate and to grant new shareholders’ mandate for
recurrent related party transactions of a revenue or trading nature (“the Proposed Shareholders’ Mandate”) to
enter into and to give effect to the existing and additional recurrent related party transactions of a revenue or
trading nature as follows:
(i)
Sales of products, purchase of parts, components and raw materials, sales and purchase of plant and equipment,
technical assistance and promotion expenses, warranty claims and service expenses with those related parties
as specified in Sections 2.2(a)(i) to 2.2(a)(iv) and 2.2(c)(i) to 2.2(c)(iv) of the Circular to Shareholders dated
31 July 2006.
(Resolution 9)
(ii) Payment of fees to those related parties as specified in Sections 2.2(a)(v) and 2.2(c)(v) of the Circular to (Resolution 10)
Shareholders dated 31 July 2006.
(iii) Placement of cash deposits with Panasonic Financial Centre (Malaysia) Sdn. Bhd. as specified in Section (Resolution 11)
2.2(b)(i) of the Circular to Shareholders dated 31 July 2006.
Panasonic Manufacturing Malaysia Berhad (6100-K)
68
Notice of 41st Annual General Meeting
AND THAT the Proposed Shareholders’ Mandate is subject to the following:
(a) the transactions are in the ordinary course of business and are on terms not more favourable to the related parties than those
generally available to the public;
(b) disclosure is made in the Annual Report of the aggregate value of transactions conducted pursuant to the Proposed Shareholders’
Mandate during the financial year where:
(i) the consideration, value of the assets, capital outlay or cost of the aggregated transaction is equal to or exceeds
RM1 million; or
(ii) any one of the percentage ratios of such aggregated transactions is equal to or exceeds 1%,
whichever is the lower;
(c) the Proposed Shareholders’ Mandate is subject to annual renewal and such approval shall, unless revoked or varied by the
Company in a general meeting, continue in force until the conclusion of the next Annual General Meeting of the Company,
PROVIDED THAT such transactions are made on an arm’s length basis and on normal commercial terms; and
(d) the Directors be and are hereby authorised to complete and execute all such acts and things (including such documents as may
be required) to give effect to the transactions contemplated and/or authorised by these Ordinary Resolutions.”
Notice of Dividend Entitlement
NOTICE IS HEREBY GIVEN that a final tax-exempt dividend of 35 sen per ordinary share of RM1.00 and a special tax-exempt dividend
of 65 sen per ordinary share of RM1.00 for the financial year ended 31 March 2006, will be paid on 20 September 2006 to depositors
registered in the Record of Depositors at the close of business on 6 September 2006.
A Depositor shall qualify for entitlement to the dividend only in respect of:
(a) Shares deposited into the Depositor’s Securities Account before 12.30 p.m. on 4 September 2006 in respect of securities exempt
from mandatory deposit.
(b) Shares transferred to the Depositor’s Securities Account before 4.00 p.m. on 6 September 2006 in respect of transfers.
(c) 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
Chu Kum Yoon
Pang Chia Tyng
Soh Beng Kuan
Company Secretaries
Shah Alam
31 July 2006
Notes:
1. A Member entitled to attend and vote at the meeting may appoint a proxy or proxies to attend and vote on his/her behalf. A proxy may but need not
be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. The instrument appointing a proxy in the case of an individual shall be signed by the appointer or by his attorney and in the case of a corporation,
the instrument appointing a proxy or proxies must be under Common Seal or under the hand of the officer or attorney duly authorised.
3. The instrument appointing a proxy or proxies must be deposited at Corporatehouse Services Sdn. Bhd., 22nd Floor, Menara EON Bank, 288 Jalan
Raja Laut, 50350 Kuala Lumpur not less than 48 hours before the holding of the meeting or any adjournment thereof.
Explanatory Note to Special Business:
4. The ordinary resolutions to approve the Proposed Shareholders’ Mandate under Agenda 6, if passed, will empower the Company to conduct recurrent
transactions of a revenue or trading nature which are necessary for the Company’s day-to-day operations and are in the ordinary course of business.
Please refer to the Circular to Shareholders dated 31 July 2006 for further information.
69
Annual Report 2006
Statement Accompanying Notice of
41st Annual General Meeting
1.
Directors who are standing for re-election at the 41st Annual General Meeting (“AGM”) of the Company are as follows:
(a)
(b)
(c)
(d)
Yuichi Shimizu;
Ramanaidu a/l Semenchalam;
Soh Beng Kuan; and
Chen Ah Huat.
The details of the Directors seeking for re-election are set out in their respective profiles on pages 11 and 13 of the Annual Report.
2.
Board of Directors’ Meetings
There were 4 Board of Directors’ Meetings held during the financial year ended 31 March 2006. The summary of attendance at the
Board of Directors’ Meetings held during the financial year ended 31 March 2006 was as follows:
Date of Meeting
Name of Directors
Total
18/5/2005
24/8/2005
18/11/2005
22/2/2006
Tan Sri Datuk Asmat bin Kamaludin
1
1
1
1
4/4
Yuichi Shimizu
1
1
1
1
4/4
Tan Sri Dato’ Zaki bin Tun Azmi
1
1
1
1
4/4
Raja Dato’ Seri Abdul Aziz bin Raja Salim
0
1
1
1
3/4
Osamu Takao
1
1
1
1
4/4
Ramanaidu a/l Semenchalam
1
1
1
1
4/4
Soh Beng Kuan
1
1
1
1
4/4
Chen Ah Huat
1
1
1
1
4/4
Hiroshi Fukutomi
1
1
1
1
4/4
Razman Hafidz bin Abu Zarim
1
1
1
1
4/4
Hiroshi Nakamura
1
1
1
1
4/4
Hor Yeow Choy (Resigned on 15 January 2006)
1
1
1
N/A
3/3
* N/A – Not Applicable
3.
Date, Time and Venue of the 41st AGM
Date
:
Wednesday, 23 August 2006
Time
:
10.00 a.m.
Venue
:
No. 3 Jalan Sesiku 15/2
Section 15
Shah Alam Industrial Site
40200 Shah Alam
Selangor Darul Ehsan
Panasonic Manufacturing Malaysia Berhad (6100-K)
70
PANASONIC MANUFACTURING MALAYSIA BERHAD (6100-K)
[formerly known as Matsushita Electric Company (Malaysia) Berhad]
(Incorporated in Malaysia)
No. of Shares Held
Form of Proxy
I/We,
*NRIC No./Company No.
of
being a Member of
Panasonic Manufacturing Malaysia Berhad [formerly known as Matsushita Electric Company (Malaysia) Berhad] (6100-K) hereby appoint
of
*and/or failing him/her
of
or failing him/her * the Chairman
of the Meeting as my/our proxy to vote on my/our behalf at the 41st Annual General Meeting of the Company to be held at No. 3 Jalan
Sesiku 15/2, Section 15, Shah Alam Industrial Site, 40200 Shah Alam, Selangor Darul Ehsan on Wednesday, 23 August 2006 at
10.00 a.m. and at any adjournment thereof. My/our proxy is to vote as indicated below:
Ordinary
Resolutions
Ordinary Business
For
1.
Adoption of the Statutory Financial Statements.
2.
Declaration of a final tax-exempt dividend of 35 sen per ordinary share and a special
tax-exempt dividend of 65 sen per ordinary share.
3.
Re-election of Yuichi Shimizu as Director.
4.
Re-election of Ramanaidu a/l Semenchalam as Director.
5.
Re-election of Soh Beng Kuan as Director.
6.
Re-election of Chen Ah Huat as Director.
7.
Approval of the payment of Directors’ fees.
8.
Re-appointment of Messrs Jaffar Hussein & Co. as Auditors.
Against
Special Business
9.
Approval of Recurrent Related Party Transactions (“RRPT”) - Sales, purchase, technical
assistance, promotion expenses, warranty claims and service expenses.
10.
Approval of RRPT - Payment of fees.
11.
Approval of RRPT - Placement of cash deposits.
(Please indicate with an “X” in the appropriate box against the resolutions on how you wish your proxy to vote. If no instruction is given,
this form will be taken to authorise the proxy to vote at his/her discretion.)
The proportion of my/our shareholding to be represented by my/our proxy/proxies is as follows:
First named proxy
Second named proxy
%
%
100%
In case of a vote taken by show of hands, the first named proxy shall vote on my/our behalf.
Signed this
day of
2006
Signature / Common Seal of Shareholder
Notes:
1. A Member entitled to attend and vote at the meeting may appoint a proxy or proxies to attend and vote on his/her behalf. A proxy may but need not
be a Member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
2. The instrument appointing a proxy in the case of an individual shall be signed by the appointer or by his attorney and in the case of a corporation,
the instrument appointing a proxy or proxies must be under Common Seal or under the hand of the officer or attorney duly authorised.
3. The instrument appointing a proxy or proxies must be deposited at Corporatehouse Services Sdn. Bhd., 22nd Floor, Menara EON Bank, 288 Jalan
Raja Laut, 50350 Kuala Lumpur not less than 48 hours before the holding of the meeting or any adjournment thereof.
* Strike out whichever not applicable.
1st fold here
AFFIX
STAMP
The Company Secretary
Panasonic Manufacturing Malaysia Berhad
c/o Corporatehouse Services Sdn. Bhd.
22nd Floor, Menara EON Bank
288, Jalan Raja Laut
50350 Kuala Lumpur
Then fold here