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ii | MBM RESOURCES BERHAD
2010 was a year of significant milestones for MBM Resources
Berhad (MBMR). The numbers on the cover of this annual report
symbolise each milestone achieved, beginning with the number
‘30’ signifying Daihatsu (Malaysia) Sdn Bhd’s 30th Anniversary,
‘50’ in celebration of Federal Auto Holdings Berhad’s 50th
Anniversary, followed by ‘15’ to mark MBMR’s 15th year as a
listed company on Bursa Malaysia Securities Berhad and finally
‘25’ in commemoration of Oriental Metal Industries (M) Sdn Bhd’s
25th Anniversary.
The lights in the background represent automotive headlights
illuminating the many milestones achieved. These lights also show
a lighted path, symbolising MBMR’s vision and growth forward.
COVER RATIONALE
2010 – A Year of Milestones:
02 MBM Resources Berhad – 15 Years of Growth
06 Federal Auto Holdings Berhad – 50 Years of Staying Ahead
08 Daihatsu (Malaysia) Sdn Bhd – 30 Years at the Forefront
10 Oriental Metal Industries (M) Sdn Bhd – 25 Years of Excellence
12 Corporate Information
14 Corporate Profile
15 Corporate Structure
16 5 Years Group Financial Performance
17 Financial Highlights
19 Chairman’s Statement
28 Managing Director’s Strategic Statement
36 The Year at a Glance
38 Profile of Directors
41 Management Team
43 Statement on Corporate Governance
49 Other Information Required by the Listing Requirements of Bursa Malaysia Securities Berhad
50 Statement on Internal Control
51 Report on Audit Committee
54 Statement of Directors’ Responsibilities in Relation to the Financial Statements
55 List of Properties
58 Analysis of Shareholdings
59 List of Top 30 Shareholders
61 Financial Statements
162 Notice of 17th Annual General Meeting
163 Form of Proxy
CONTENTS
MBM Resources Berhad (MBMR) was incorporated
as an investment holding company in a restructuring
scheme to consolidate its investments to include
three main companies:
• Motor vehicle business
Daihatsu (Malaysia) Sdn Bhd (DMSB), the exclusive
distributor of Daihatsu motor vehicles in Malaysia
• Manufacturing activities
Precision Press Industries Sdn Bhd (PPI),
manufacturer of precision metal stamped
parts and components and the design and
fabrication of tool and die for the metal stamping
industry, and
• Tekun Asas Sdn Bhd (Tekun Asas), manufacturer of
loud speaker grilles and hard board panellings.
MBMR was successfully listed on the Kuala Lumpur
Stock Exchange (now Bursa Malaysia Securities
Berhad) on 9 February 1995, at an issue price of
RM2.00 per share.
Building on its strength as an automotive group,
MBMR has expanded over the years into two core
areas – automotive distribution and retailing and
automotive parts manufacturing.
MBMR’s growth has been largely through
acquisitions. A restructuring of its parent’s businesses
resulted in the MBM Group’s
automotive businesses
consolidated under the
listed entity, with the sale
of the 20% stake in Perodua
in 2000 and 42% interest in
Hino Motors (Malaysia) Sdn Bhd (HMMSB) in 2006
from the parent holding company to MBMR.
The acquisition of Federal Auto Holdings Berhad
(FAHB), the established Volvo cars distributor and
subsequently a leading dealer, marked a significant
milestone for the MBMR Group to pursue a multi-
brand strategy, now as a top dealer for international
reputable brands not only for Volvo but including
Volkswagen and Mitsubishi.
MBMR also expanded into automotive parts
manufacturing which today comprises of Oriental
Metal Industries (M) Sdn Bhd (OMI), the leading wheel
manufacturer and Summit Vehicles Body Works
Sdn Bhd (SVBW), the body building business which
complements the commercial vehicle sales division.
The Group crossed the RM1 billion revenue mark
in 2006 and is now poised to reach new heights
with its new growth strategy. The Group is in a new
expansion phase, investing heavily in expanding
its distribution network and upgrading of its
facilities. MBMR aspires to be a complete
automotive group.
02 | MBM RESOURCES BERHAD
M B M R E S O u R C E S B E R H A D - 1 5 Y E A R S O F G R O w T H
Revenues (RM Mil)
1995 695
2000
2005
2010
Yea
r
538
945
1,528
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
4.50
5.00
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Year
HighLow
Close
MBMRShare Prices (1995-2010)
RM
ANNUAL REPORT 2010 | 03
1995 • Listing on the Main Board of the
Kuala Lumpur Stock Exchange
(now known as Bursa Malaysia
Securities Berhad)
1997 • Acquired 24.88% in Colonial
Motors Company Ltd
(CMC), largest Ford
dealer in New Zealand
1998 • MBMR reported a pre-tax loss of
RM25.8m as the financial crisis
hits auto sales
2000 • MBMR acquired 20% stake in
Perodua from Med-Bumikar
Mara for RM160m via issuance
of 64m new MBMR shares at
RM2.50/share. Senior directors
retire. New directors elected to
the Board
2003 • Acquired 90% of SVBW;
disposed stake in CMC
2002 • A Bonus issue of 2 for 3 was
completed, increasing MBMR’s
paid-up share capital to
RM231.7m
2005 • Increased stake in FAHB by
37.6% to 69.6%
2001 • Restructuring of Perodua
completed with greater
participation by Daihatsu
Motor Company Ltd (DMC)
in Perodua’s manufacturing
operations. A special gross
dividend of 20 sen per share
was paid
2004 • Acquired Galaxy Waves which
owns 20% of OMI and 32% of
FAHB; acquired additional 58%
in OMI; Acquired 50.98% in WSA
Capital Corporation Sdn Bhd (WCC)
04 | MBM RESOURCES BERHAD
M B M R E S O u R C E S B E R H A D - 1 5 Y E A R S O F G R O w T H
2006 • Acquired 42% in HMMSB for
RM25.8m
• Acquired remaining 10% in
SVBW making it a wholly-
owned subsidiary of MBMR
• MBMR revenue crossed
RM1 billion, highest ever
achieved
2007• Increased stake in FAHB by
16.4% to 86% at additional cost
of RM9.3m
2008• Disposed MBM Industries
Sdn. Bhd.
• Additional acquisition of 21.52%
stake in WCC increasing total
equity interest in WCC to
73.32%
2009• Additional dealership locations
obtained for the Group’s
Volkswagen and Mitsubishi
dealerships
2010• Obtained distributorship for
Heico Sportiv products and ABT
Sportsline products under FAHB
• Obtained Hino dealership
under DMSB
• Disposed entire 73.32% equity
interest in WCC
2011 and Beyond• We aspire to be a complete
automotive group.
ANNUAL REPORT 2010 | 05
FEDERAL AuTO HOLDINGS BERHAD – 50 YEARS OF STAYING AHEAD
Federal Auto Holdings Berhad (FAHB) was incorporated in
1960 under the name of Federal Auto Company Limited and was converted to a public company in 1968 under the name of Federal Auto Company Berhad. In 1970, it changed its name to Volvo Malaysia Berhad and subsequently assumed its present name in 1975.
FAHB is an investment holding company with main investments in its subsidiaries holding car dealerships, namely Volvo, Volkswagen (VW) and Mitsubishi. It also distributes the Heico Sportiv and ABT Sportsline products under its sports tuning division, FAST Sdn. Bhd.
VolvoFAHB started as a distributor of Volvo vehicles in Malaysia and remains as a dealer for Volvo passenger vehicles through its subsidiary, Federal Auto Cars Sdn. Bhd. since the year 2000 when Volvo Cars Malaysia Sdn. Bhd. assumed the responsibility as the principal in Malaysia.
It has now within its network a total of six branches – Kuala Lumpur, Shah Alam (Glenmarie), Penang, Ipoh, Melaka and Johor Bahru and all are 3S (sales, service and spare parts) centres. FAHB is the main dealer for Volvo, holding about 80% market share of total Volvo passenger vehicle sales in Malaysia.
VolkswagenFAHB’s wholly-owned subsidiary, F.A. Wagen Sdn. Bhd. was appointed a VW dealer in 2009
with dealerships and 3S centres located in Petaling Jaya, Shah Alam (Glenmarie) and Johor Bahru. As of Dec 2010, FAHB’s market share of total VW sales in Malaysia was 27%.
MitsubishiFAHB’s wholly-owned subsidiary, F.A. Automobiles (Ipoh) Sdn. Bhd. (FAAI) was appointed a Mitsubishi dealer in 2007 for the state of Perak. In 2009, FAAI extended its network to include Petaling Jaya. FAHB holds approximately 7% of the total Mitsubishi sales in Malaysia.
FASTBoth distributorships for Heico Sportiv and ABT Sportsline in Malaysia were obtained in 2010. These additional sports tuning brands provides an opportunity for FAHB to serve customers who wish to customise their cars to define their own individuality.
06 | MBM RESOURCES BERHAD
Driven
Long Service Staff Speaks about FAHB
‘Federal Auto provides career opportunities for us to grow.’
FARIdAh bINTI dARusAdmin Assistant, Joined in 1975
‘We have strong teamwork, supportive of each other in a caring working environment.’
TEOh TEONg ghEEAftersales Manager,
Joined in 1974
‘Federal Auto is driven by passionate people I come to accept as my family.’
ANgIE Ng WAI MuNReceptionist, Joined in 1972
‘It is a company that cares for its employees.’
JEFFREy MOEy KuM ChIEWsales Consultant, Joined in 1962
Federal AutoCarsVolvo outlets
F.A WagenVolkswagenoutlets
F.A. Automobiles(Ipoh)Mitsubishioutlets
OURNETWORK
Tota
l ve
hic
le s
ale
s un
it
FAHBVehicle sales chart
1,12
4
970
1,17
6 2,42
3
1,86
9
2,30
1
1,95
0
1,55
2
648
2,02
6
19701966 1995 2000 2005 2010
Year
1990198519801975
ANNUAL REPORT 2010 | 07
DAIHATSu (MALAYSIA) SDN BHD – 30 YEARS AT THE FOREFRONT
Daihatsu (Malaysia) Sdn. Bhd.
(DMSB) was incorporated in
1980 and holds the distributorship
of Daihatsu vehicles in Malaysia.
With the formation of the
Second National Car company,
Perusahaan Otomobil Kedua
Sdn. Bhd. (Perodua) in 1993, a
joint venture between Malaysian
partners and Daihatsu Motor
Company Ltd, Japan, DMSB was
appointed an authorised dealer
for Perodua vehicles a year later.
DMSB is also a 5% shareholder
of Perodua. Since then, DMSB
concentrates on the distribution
of commercial vehicles and DMM
Sales Sdn. Bhd. (DMMS), a wholly-
owned subsidiary, on the retailing
of Perodua vehicles. In the year
2010, DMSB was appointed a
dealer by Hino Motors (Malaysia)
Sdn. Bhd. to market the full range
of Hino commercial vehicles in
Malaysia.
DMSBDMSB’s Daihatsu commercial
vehicle range comprises the Gran
Max series and the Delta series.
The Daihatsu Delta series has
dominated the light truck market
(trucks with Gross Vehicle Weight
(GVW) up to 4,000kg for the V58
and GVW up to 7,000kg for the
V116) with a leading average of
approximately 34%-39% market
share. In 2009, DMSB introduced
the Gran Max pick-ups and in 2010
launched the Gran Max panel van
models. With a Hino dealership in
hand, DMSB is now also marketing
the Hino range of commercial
products. DMSB has in total nine
branches (Shah Alam, Serdang,
Kepong, Puchong, Butterworth,
Ipoh, Batu Pahat, Johor and Kota
Kinabalu) for Daihatsu products
and six branches (Shah Alam,
Puchong, Butterworth, Ipoh, Johor
Bahru and Kota Kinabalu) for the
Hino dealership.
DMMSDMMS is the largest
independent Perodua dealer,
holding approximately 10% of the
total Perodua sales in Malaysia.
DMMS has in total seventeen
branches (Shah Alam, Sungai
Besi, Sungai Buloh, Salak Tinggi,
Sri Permaisuri, Petaling Jaya, Kota
Kinabalu, Kuching, Butterworth,
Ipoh, Melaka, Batu Pahat, Johor
Bahru, Mid Valley, Selayang,
Ampang and Sri Kembangan).
08 | MBM RESOURCES BERHAD
‘I have gained a lot of
experience and opportunities
at DMSB.’
hAzIMAh bINTI MOhd sIdIKsection Manager,
Joined in 1980
‘The Company provides training to help improve
my skills and I have had the
opportunity to visit Japan and Indonesia for technical
product training.’
ROsALIE bIN Ab. KARIMsection Manager,
Joined in 1980
‘I like the conduciveworking
environment.’
NORAzIEN bINTI RAMLIsection Manager,
Joined in 1980
‘The management is supportive and
encouraging to its staff.’
LAI KWAI PINgsection Manager,
Joined in 1980
DMSB sales branches
DMSB service branches
DMMS sales branches
DMMS service branches
Dealers
DMSB
DMMS
OURNETWORK
Long Service Staff Speaks about DMSB
DMSB GroupVehicle sales chart
7,13
5
4,24
6 7,18
2
8,01
5
18,5
49
6,48
9
14,4
84 17,3
61
17,9
44 20,8
13
Tota
l ve
hic
le s
ale
s u
nit
Year
1995 1998 2001 2004 2007 20101992198919861983
ANNUAL REPORT 2010 | 09
ORIENTAL METAL INDuSTRIES (M) SDN BHD – 25 YEARS OF ExCELLENCE
Oriental Metal industries (M)
Sdn Bhd (OMI) started as
a SME vendor that commenced
operations in 1985 with the
assistance of Central Motor Wheel
Company Ltd., a subsidiary of
Toyota Motor Corporation. Today,
OMI is fully run by competent locals
as a Large Scale Industry (LSI)
vendor that serves about 85% of
the Malaysian Automotive Industry.
In 1996, OMI implemented a
full manufacturing facility for
steel wheel and at the same
time, an opportunity was given
for it to venture into wheel
assembly module business. In
2005, our sequential delivery
strategy for module business
did well despite keen market
competition. Introduction of
modern automated production
facilities coupled with Good
Management Practice (GMP) and
Toyota Production Systems in both
10 | MBM RESOURCES BERHAD
steel wheel and wheel assembly
module operations was key for
achieving good quality, cost and
delivery performance.
We have also equipped ourselves
with TS-16949, ISO14001 and
OHSAS18001 which are Quality
Management Systems required
by our customers covering
manufacturing, environment
and safety. Human resource
development programmes include
training, job enhancement
and job rotation were helpful in
meeting staff career development
expectations and retention of
skills and know-how within the
company.
In 2010, backed by recognition
from valued Original Equipment
(OE) customers, OMI won
the following awards and
nominations: Best Kaizen Projects
award, 1st runner up for Quality
Control Circles (QCC) activities,
Top 5 Best Vendor award,
Excellence Delivery Vendor Award,
Excellence Quality Vendor nominee
and Excellence Performance
Vendor (LSI) nominee.
As a responsible corporation,
OMI contributes back to society
yearly in the form of providing
internship for university students,
conducting safety talks and
practical workshops for boys-
homes, Gotong-royong activities
and donations for the needy and
disaster relief funds.
Through our vision of being
the preferred regional Tier-1
Comprehensive Wheel Module
Supplier and driven by our core
values: Integrity, Excellence,
Teamwork, Innovation & Customer
Orientation, the management
team continues to further enhance
our total supply value chain for
Original Equipment Manufacturers
(OEM) with more value-added new
products and export programmes.
Long Serving Staff Speaks about OMI
‘OMI is a harmonious organization with plenty of
opportunities to learn and progress.’RAJA zAINAL RAJA sOIA
senior supervisor, Joined in 1988
‘At OMI, we work as a team and as a family.’zuLKIFLy bIN Abd ghANI
Tech support staff, Joined in 1985
‘The management is supportive of my personal
growth and they trust in my abilities.’OsMAN bIN MOhAMEd RAMLI
supervisor, Joined in 1986
‘OMI rewards its employees well and provide
opportunities for promotion and personal
advancement.’sAWIAh bINTI ROhAIMI
Warehouse Executive, Joined in 1985
ANNUAL REPORT 2010 | 11
12 | MBM RESOURCES BERHAD
Corporate Information
MBM Resources Berhad (284496-V)
CORPORATE OFFICENo. 1-6, The Boulevard
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur, Malaysia
T (603) 2287 6803
F (603) 2287 6805
w www.mbmr.com.my
COMPANY SECRETARIESPuan Shahrizat bt Othman
(MAICSA 0764744)
Puan Zaharah bt Ibrahim
(MAICSA 7012004)
PRINCIPAL BANkERSHSBC Bank (Malaysia) Bhd
Citibank Berhad
Hong Leong Bank Berhad
CIMB Bank Berhad
STOCk ExCHANGE LISTINGMain Market
Bursa Malaysia Securities Berhad
Stock Code : 5983
REGISTERED OFFICESuite C-5-4, Wisma Goshen,
Plaza Pantai, Jalan Pantai Baharu
59200 Kuala Lumpur, Malaysia
T (603) 2283 4007
F (603) 2287 7006
SHARE REGISTRARAAJ Registration Services Sdn Bhd
Suite C-5-4, Wisma Goshen
Plaza Pantai, Jalan Pantai Baharu
59200 Kuala Lumpur, Malaysia
T (603) 2283 4007
F (603) 2287 7006
AuDITORSDeloitte KassimChan (AF: 0080)
Chartered Accountants
FINANCIAL CALENDAR17th Annual General Meeting
14 June 2011
2010 Results Announcement
Quarter One : 24 May 2010
Quarter Two : 17 August 2010
Quarter Three : 11 November 2010
Quarter Four : 17 February 2011
Dividend Payments
Second interim for 2009: 18 March 2010
First interim for 2010: 22 September 2010
Second interim for 2010: 23 March 2011
ANNuAL REPORT 2010 | 13
14 | MBM RESOURCES BERHAD
Corporate Profile
MBM RESOuRCES BERHAD (MBMR) is an automotive Group with
diverse investments in distributorship and dealership of major
international brands of vehicles in Malaysia. It is well represented in
all segments of the market from light trucks to medium and heavy
duty trucks and buses in the commercial vehicle market and, from
compact entry level cars to luxury cars in the passenger vehicle
market. Its auto parts manufacturing division supplies to all the major
brands in Malaysia.
Our brand partners are:
We are leaders in the segments we represent.
ANNUAL REPORT 2010 | 15
subsIdIARy AssOCIATE
AuTOMOTIVE
daihatsu (Malaysia) sdn bhd 71.5% DMM Sales Sdn Bhd 100%
Federal Auto holdings berhad 86% Federal Auto Cars Sdn Bhd 100% F.A.Wagen Sdn Bhd 100% F.A. Automobiles (Ipoh) Sdn Bhd 100% FAST Sdn Bhd 100%
hino Motors (Malaysia) sdn bhd 42%
Perusahaan Otomobil Kedua sdn bhd 20%
MANuFACTuRING
Oriental Metal Industries (M) sdn bhd 78%
summit Vehicles body Works sdn bhd 100%
PROPERTY
Inai benua sdn bhd 70%
Corporate Structure
(and 5% held through Daihatsu (Malaysia) Sdn Bhd)
Note: Detailed list of the companies under the Group are shown
in Notes 49 and 50 of the Audited Financial Statements
Year ended December 31 2006 2007 2008 2009* 2010
Results (RM Million) Revenue
Operating profit before interest and tax
Associates’ results
Profit before tax
Profit attributable to equity holders
Basic earnings per share (sen)
Balance Sheets (RM Million) Share capital
Shareholders’ equity
Total assets
Net assets per share (RM)
Operating cashflow per share (sen)
Financial Ratios (%) Operating profit on revenue
Return on equity
Return on total assets
Sales (units) DMSB Daihatsu/Hino trucks
DMMS Perodua
FAHB Volvo / Volkswagen / Mitsubishi
Equity Indices Closing year end share price (RM)
Price-earnings ratio (times)
*Certain figures have been restated to exclude discontinued operations’ financials
1,185.5
53.0
72.9
121.9
92.1
38.9
238.5
661.1
954.6
2.8
26.6
4.5
13.9
9.6
5,279
13,876
530
2.93
7.5
1,131.0
54.8
86.8
140.5
110.5
45.9
242.0
765.9
1,001.3
3.2
29.9
4.8
14.4
11.0
4,935
13,009
503
3.20
7.0
1,203.0
70.1
79.4
149.9
117.1
48.4
242.1
849.1
1,077.1
3.5
15.2
5.8
13.8
10.9
5,327
12,775
575
2.28
4.7
1,528.5
51.5
119.0
172.4
142.1
58.6
242.7
1,018.2
1,346.7
4.2
(5.4)
3.4
13.9
10.6
3,167
17,646
2,026
3.34
5.7
5 Years Group Financial Performance
1,101.6
30.5
54.1
85.3
66.5
27.5
242.1
894.3
1,155.5
3.7
22.6
2.8
7.4
5.8
4,020
13,127
642
2.59
9.4
16 | MbM REsOuRCEs bERhAd
‘06
‘07
‘08
‘09
‘10
REVENUE RM MILLION
RM1.53 bil
1,185.5
1,131.0
1,203.0
1,101.6
1,528.5
‘06
‘07
‘08
‘09
‘10
NET ASSETS PER SHARE RM
RM4.2
2.8
3.2
3.5
3.7
4.2
‘06
‘07
‘08
‘09
‘10
NET CASH RM MILLION
RM144.1 mil
30.9
65.6
91.9
120.3
144.1
‘06
‘07
‘08
‘09
‘10
PROFIT BEFORE TAX RM MILLION
RM172.4 mil
121.9
140.5
149.9
85.3
172.4
‘06
‘07
‘08
‘09
‘10
EARNINGS PER SHARE SEN
58.6 sen
38.9
45.9
48.4
27.5
58.6
‘06
‘07
‘08
‘09
‘10
PER SHARE SEN
-5.4 sen
26.6
29.9
15.2
22.6
-5.4
‘06
‘07
‘08
‘09
‘10
VEHICLE SALES UNITS
DMSB Daihatsu /Hino Trucks
5,279
4,935
5,327
4,020
3,167
‘06
‘07
‘08
‘09
‘10
VEHICLE SALES UNITS
DMMS Perodua
13,876
13,009
12,775
13,127
17,646
‘06
‘07
‘08
‘09
‘10
VEHICLE SALES UNITS
FAHB Volvo /Volkswagen / Mitsubishi
530
503
575
642
2,026
OPERATING CASH FLOW
Jan
-06
Ma
r-06
Ma
y-06
Jul-0
6
Sep
-06
No
v-06
No
v-06
Jan
-07
Ma
r-07
Ma
y-07
Jul-0
7
Sep
-07
No
v-07
Jan
-08
Ma
r-08
Ma
y-08
Jul-0
8
Sep
-08
No
v-08
Jan
-09
Ma
r-09
Ma
y-09
Jul-0
9
Sep
-09
No
v-09
Jan
-10
Ma
r-10
Ma
y-10
Jul-1
0
Sep
-10
No
v-10
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
MBMR SHARE PRICES FROM 2006 - 2010
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
2006 2007 2008 2009 2010
RM
Pe
rce
nta
ge
(%
)
Year Year
GROUP VEHICLES SALES MARKET SHARE
Financial Highlights
ANNuAL REPORT 2010 | 17
18 | MbM REsOuRCEs bERhAd
ANNUAL REPORT 2010 | 19
Chairman’s Statement
TO ThE shAREhOLdERs OF MbM REsOuRCEs bERhAd:
I am pleased to report that
MBM Resources Berhad’s performance exceeded our expectations, achieving record profitability for the financial year 2010.
Last year, I had expressed my optimism that the momentum for an
economic recovery was gathering pace and was likely to be sustained
into 2010. Not only did the economy continue to expand, the growth
was above even our most optimistic forecasts. The Gross Domestic
Product (GDP) grew by 7.2% in 2010 after contracting 1.7% in the
previous year.
The economic growth coupled with the low interest rates environment
provided the impetus for motor vehicle sales. Notably, Malaysian Total
Industry Volume (TIV) climbed to a record high of 605,200 units, a growth
of 13% over the previous year.
ECONOMY AND THE AuTOMOTIVE INDuSTRY
20 | MBM RESOURCES BERHAD
• Revenues + 39% to RM1,528 million
• Total group vehicle sales + 28% to 22,839 units
• Total group vehicle sales including associates +15% to 215,474 units
• Profit Before Tax +102% to 172 million
• Net Profit to Shareholders +114% to RM142 million
• Dividend per share +117% to 13 sen per share
Revenues grew 39% to RM1,528
million and profit before tax more
than doubled to RM172 million.
All operating entities showed
considerable improvement in
contributions.
2010PERFORMANCEHIGHLIGHTS
Chairman’s Statement
ANNUAL REPORT 2010 | 21
DMSB is undergoing significant change in its business. The highly
successful Delta light commercial vehicle (LCV) will be phased out
with the remaining units expected to be marketed until the middle of
this year. DMSB will then concentrate on the Gran Max pick-up trucks
and vans, which have shown promising acceptance in the market
since their launch in 2010 and this year respectively. In 2010 DMSB
secured the dealership for Hino products. The Hino commercial vehicle
product range is extensive which includes LCVs, medium and heavy
duty trucks and buses. This provides the opportunity for DMSB to utilise
its extensive experience to market the commercial vehicles that Hino
offers. DMSB commenced its Hino dealership in the second half of 2010.
Major investments are planned for the construction of 3S (sales, service
and spare parts) centres for the business which will be completed
progressively over the next 12 months.
The Perodua dealership under 100%-owned DMM Sales Sdn Bhd
(DMMS) recorded significant jump in sales of 34%. This resulted in its
market share of nationwide Perodua sales to improve to 9.4% from
7.9% in the preceding year. We have also embarked on upgrading our
outlets in phases, with particular focus on increasing the capacity for
the aftersales business, tapping on the opportunities that come with
the rising units on the road.
Daihatsu (Malaysia) Sdn Bhd (DMSB)
FY2010 FY2009 % change RM mil RM mil
Revenue 1,066 867 +23
Profit before Tax 35 20 +75
Truck sales (units) 3,167 4,020 -21
Perodua (units) 17,646 13,127 +34
Federal Auto Holdings Berhad (FAHB)
FY2010 FY2009 % change RM mil RM mil
Revenue 385 165 +134
Profit before Tax 11 7 +55
Total Vehicle sales 2,026 642 +216
(Volvo, Volkswagen and Mitsubishi)
The multi-brand strategy we adopted for FAHB has given it the
springboard for its renewed growth.
Volvo car sales grew for the second consecutive year. The Volvo dealership
had its first full year’s contribution from our new Glenmarie branch. We
invested in upgrading the Penang branch during the year. Next in line are
investments for the Kuala Lumpur and Johor Bahru branches.
The Volkswagen dealership achieved a quantum leap in sales. This is
due to a combination of factors. We had the first full year’s contribution
after the re-launch of our dealership, with a new location in Petaling
Jaya at the end of 2009 and additional outlets in Danga Bay, Johor
Bahru and Glenmarie, Shah Alam during the year. The product launches
from Volkswagen have generally been well received, particularly the
Polo 1.2 and Golf and Scirocco 1.4 in the latter part of 2010.
The Mitsubishi dealership had the first full year’s contribution from its
new Petaling Jaya branch, in addition to our existing branch in Ipoh.
The volume sales for this brand also recorded a sharp increase. During
the year, the model lineup for Mitsubishi vehicles extended to include
the all new compact crossover, ASX, the premium SUV, Pajero and the
Lancer Sportback.
During the year we commenced the marketing of ABT Sportsline and
Heico tuning/accessories products. The distributorships of these brands
for the Volkswagen and Volvo vehicles respectively, will enhance our
marketing strength in providing additional product enhancements to
our customers.
22 | MbM REsOuRCEs bERhAd
Chairman’s Statement
ANNUAL REPORT 2010 | 23
Summit Vehicles Body works Sdn Bhd (SVBw)
SVBW’s losses narrowed
substantially as further
consolidation of its business
were carried out. Volumes
increased in 2010, but
were insufficient to cover
its costs as competition
remains intense. A review
of the types of bodies it
offers to its customers were
undertaken to focus on
more specialised products.
Production processes were
also reviewed to improve on
productivity and efficiency.
OMI supplies steel wheels to all major automotive companies in
Malaysia. The buoyant vehicle sales recorded in 2010 translated into
strong wheel deliveries. The reorganisation of the tyre assembly lines
in Shah Alam at the end of 2009 under the Toyota Production System
project and the full year production of the tyre module plant in
Serendah played a major role in contributing to the significant increase
in volumes and efficiency gains for 2010.
OMI has continued to invest in its plant and training of its employees to
ensure that production and delivery to our customers meet the highest
standards. During the year OMI was recognised by its major customers
as a quality vendor. In 2010 Proton acknowledged OMI as the “Best
Kaizen Vendor” and Perodua presented us with the “Best Delivery
Vendor” award.
Oriental Metal Industries (M) Sdn Bhd (OMI)
FY2010 FY2009 % RM mil RM mil change
Revenue 67 60 +12
Profit before Tax 17 14 +21
Wheel deliveries (‘000) 988 882 +12
Tyres assembled (‘000) 2,335 1,968 +19
ASSOCIATESPerusahaan Otomobil kedua Sdn Bhd (Perodua)
Perodua retained its market leadership for the fifth consecutive year, driven by sales of its three core models, Alza, Myvi and the Viva. Sales by registration rose by 13% to 188,600, a record achievement and total market share was stable at 31.2%.
During the year Perodua added to its lineup the Myvi LE and Viva Elite Exclusive Edition variants. For the third consecutive year in 2010 the Perodua Viva won the “Best Passenger Car Value for Money” award from Frost & Sullivan. Perodua also participated in the Kuala Lumpur International Motorshow where it featured the Bezza, the next generation prototype model inspired entirely by Malaysian designers.
Perodua contributes significantly to the Malaysian economy and the automotive industry. It employs directly over 10,000 employees, and this figure increases to 56,000 when combined with dealers and vendors. It also sources parts from local vendors of an approximately RM4 billion in value in 2010. A total of about RM3 billion has been invested in the plant and models development and the plant rated capacity is currently 250,000 units per annum. Significant milestones have been achieved together with the assistance from Perodua’s Japanese partner, Daihatsu Motor Company, in lifting its engineering and manufacturing capabilities.
Hino Motors (Malaysia) Sdn Bhd (HMMSB)
HMMSB made major progress in 2010. Its total sales by registration
reached an all time high of 4,590 units (+52% from 2009 sales of
3,014), securing it the No.1 position for the Commercial Vehicle
(trucks and buses) category. It has gained market share in all segments
with an overall market share of 27.8% compared with 19.9% in 2009.
Hino has been able to fill the gaps in the market with its wide product
range. It has embarked on extensive strengthening of the sales
and service network support through major dealer development
programmes.
24 | MBM RESOURCES BERHAD
OuTLOOkWe entered 2011 with optimism.
Economic conditions remain
encouraging and our order
taking remains healthy.
However, the recent political
uncertainties in the Middle East
and the resulting increase in oil
prices have dampened the
immediate market outlook.
The earthquake in Japan has
also impacted on the supply
chain to the automotive
industry, extent of which is still
being assessed. So although
we believe that MBMR is
well positioned for its growth
strategy, the external events
are causing us to be more
cautious.
Nevertheless in 2011, the
major investment in the Hino
dealership undertaken by
DMSB will be in full swing. The
biggest of which will be the
RM6 million 3S centre in Shah
Alam. Under FAHB, the new
Volkswagen Glenmarie 3S
centre is expected to be fully
completed. The main Volvo
branch in Kuala Lumpur where
FAHB’s current headquarters
is located (Lot 15) will be
demolished in May to make
way for the redevelopment
of the property which will
eventually house Volvo’s
showroom and a 26 storey
office block, consisting of MBMR
and FAHB’s new headquarters.
Whilst this redevelopment
Chairman’s Statement
ANNUAL REPORT 2010 | 25
takes place, FAHB will temporarily relocate its headquarters to its six
storey office block in Glenmarie and the Volvo 3S centre will be housed
in a temporary centre adjacent to Lot 15.
During the year, the development of DMMS’ new Perodua 3S centre in
Kuala Lumpur and FAHB’s redevelopment of its Johor Bahru property
to accommodate the Volvo and Volkswagen dealerships are also
expected to be undertaken.
CORPORATE DEVELOPMENTSMBMR successfully completed the sale of its entire equity interest in
WSA Capital Corporation Sdn Bhd on 30th June 2010.
On 14th October 2010 MBMR announced its proposed acquisition
of 100% in Lion Motor Sdn Bhd (LMSB) and 70.01% in Kinabalu Motor
Assembly Sdn Bhd (KMASB) for a combined purchase consideration
and debt settlement consideration of Ringgit Malaysia Sixteen Million
(RM16,000,000).
KMASB holds a manufacturing licence for the assembly of motor
vehicles issued by the Ministry of International Trade and Industry.
KMASB has distributor agreement with Anhui Jianghuai Automobile
Co. Ltd. and LMSB has licence agreement with Dong Feng Automobile
Co. Ltd., both for the distribution of commercial vehicles in Malaysia.
The Proposed Acquisitions will provide the opportunity for the MBMR
Group to expand its automotive business.
The acquisition of LMSB was completed on 28th February 2011.
FAHB, an 86%-owned subsidiary, is undertaking a selective capital
reduction scheme (SCR) which will result in it being a 100%-owned
subsidiary of MBMR. The SCR which encompasses the reduction of all
shares held by minority shareholders together with a portion of shares
held by MBMR’s wholly owned subsidiary, Galaxy Waves Sdn Bhd, will
result in a cash capital repayment of RM4.20 per share to minority
shareholders of FAHB. The SCR received unanimous approval from
shareholders of FAHB at the Extraordinary General Meeting held on 7th
January 2011. The SCR is expected to be completed by May 2011.
DIVIDENDSFor the financial year ended 31st December 2010, MBMR declared and paid two interim dividends and one
special dividend for a combined dividend payment of 13 sen per share. The first interim dividend of 5 sen per
share was paid on 22nd of September 2010. The second interim of 5 sen per share plus a special dividend of
3 sen per share were paid on the 23rd of March 2011.
SOCIAL RESPONSIBILITIESOur Social Responsibilities Programme encompasses our responsibilities
to our employees and to the communities we operate in.
The MBMR Group contributes to various charities in Malaysia. In 2010,
we participated in the Relay for Life organised by the National Cancer
Association. It is an annual fund raising event for cancer research
and to also create greater awareness of cancer and to celebrate
the lives of survivors.
Our internship programmes which have been running for many years
now provide students with working experience at our operations.
These students will find these practical experiences useful for their
employability when they join the job market in the future.
We continue to emphasise on investing in our employees in raising their level of skills. Training programmes
were conducted during the year for the employees at various levels. Safety campaigns were also carried
out to reiterate the importance of safety awareness at the workplace.
APPRECIATIONOn behalf of the Board I wish to congratulate the management and staff for achieving a commendable performance for the year. I thank them for their dedication and commitment. I wish to also extend my appreciation to our customers, principals, suppliers, bankers, business partners and shareholders for their support.
THE ANNuAL GENERAL MEETING (AGM)We will be breaking from our past of holding our AGMs in leading hotels in Kuala Lumpur. This year’s AGM will be held on Tuesday, 14th of June 2011 at 10 A.M. at the Learning Academy at FAHB’s new headquarters in Glenmarie. We felt as shareholders, you should experience some of the investments that we have made and also see some of the most exciting products that we offer at our Volvo and Volkswagen dealerships. The Board and I look forward to your attendance.
DATO’ ABDuL RAHIM ABDuL HALIMChairman
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ANNUAL REPORT 2010 | 27