MBM Resources Berhad (284496-V)
CORPORATE OFFICE
No. 1-6, The Boulevard, Mid Valley City, Lingkaran Syed Putra
59200 Kuala Lumpur, Malaysia
t (603) 2287 6803 f (603) 2287 6805
www.mbmr.com.my
MBM RESOURCES
BERHAD
ANNUAL REP
ORT 20
11
annual repor t2011annual report 2011M
BM R
esources Berhad (284496-V
)
02
Contents
Corporate Information
Corporate Profile
Corporate Structure
5 Years Group Financial Performance
Financial Highlights
Joint Letter to Shareholders
Corporate Social Responsibility
Year at a Glance
Profile of Directors and Management Team
0405060708212224
39 Other Information Required
by the Listing Requirements of
Bursa Malaysia Securities Bhd
Statement of Internal Control
Report on Audit Committee
Statement of Directors’ Responsibilities
in Relation to the Financial Statements
List of Properties
Analysis of Shareholdings
List of Top 30 Shareholders
Financial Statements
Notice of 18th Annual General Meeting
Form of Proxy
404145
46485157
170
171
Statement of Corporate Governance
29
Cover rationale"Shapes" is a dedication to our subsidiaries and associates. These shapes and colours represent their diversity and vibrancy, coming together as the formation of MBMR as a Complete Automotive Group takes shape.
As one of the few automobile players to have grown despite a testing year for the automotive industry, the diagonal design elements used throughout the report is a testament of our growth, goals and aspirations.
02
Contents
Corporate Information
Corporate Profile
Corporate Structure
5 Years Group Financial Performance
Financial Highlights
Joint Letter to Shareholders
Corporate Social Responsibility
Year at a Glance
Profile of Directors and Management Team
0405060708212224
39 Other Information Required
by the Listing Requirements of
Bursa Malaysia Securities Bhd
Statement of Internal Control
Report on Audit Committee
Statement of Directors’ Responsibilities
in Relation to the Financial Statements
List of Properties
Analysis of Shareholdings
List of Top 30 Shareholders
Financial Statements
Notice of 18th Annual General Meeting
Form of Proxy
404145
46485157
170
171
Statement of Corporate Governance
29
Cover rationale"Shapes" is a dedication to our subsidiaries and associates. These shapes and colours represent their diversity and vibrancy, coming together as the formation of MBMR as a Complete Automotive Group takes shape.
As one of the few automobile players to have grown despite a testing year for the automotive industry, the diagonal design elements used throughout the report is a testament of our growth, goals and aspirations.
MBM Resources Berhad(284496-V)
COMPANY SECRETARIES
Puan Shahrizat bt Othman(MAICSA 0764744)
Puan Zaharah bt Ibrahim(MAICSA 7012004)
PRINCIPAL BANKERS
Ambank (M) Berhad
CIMB Bank Berhad
Hong Leong Bank Berhad
Malayan Banking Berhad
Public Bank Berhad
United Overseas Bank (Malaysia) Berhad
STOCK EXCHANGE LISTING
Main Market
Bursa Malaysia Securities Berhad
Stock Code : 5983
REGISTERED OFFICE
Suite C-5-4, Wisma Goshen,
Plaza Pantai, Jalan Pantai Baharu
59200 Kuala Lumpur, Malaysia
t (603) 2283 4007
f (603) 2287 7006
FINANCIAL CALENDAR
17TH ANNUAL GENERAL MEETING
14 June 2011
2011 RESULTS ANNOUNCEMENT
Quarter One : 24 May 2011
Quarter Two : 11 August 2011
Quarter Three : 10 November 2011
Quarter Four : 24 February 2012
DIVIDEND PAYMENTS
Second interim for 2010:
21 March 2011
First Interim for 2011:
15 September 2011
SHARE REGISTRAR
AAJ 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
AUDITORS
Deloitte KassimChan (AF: 0080)
Chartered Accountants
CORPORATE OFFICE
No. 1-6, The Boulevard
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia
t (603) 2287 6803
f (603) 2287 6805
www.mbmr.com.my
MBM ResouRces BeRHAD2
Corporate Information
AnnuAl RepoRt 2011 3
MBM Resources Berhad(284496-V)
COMPANY SECRETARIES
Puan Shahrizat bt Othman(MAICSA 0764744)
Puan Zaharah bt Ibrahim(MAICSA 7012004)
PRINCIPAL BANKERS
Ambank (M) Berhad
CIMB Bank Berhad
Hong Leong Bank Berhad
Malayan Banking Berhad
Public Bank Berhad
United Overseas Bank (Malaysia) Berhad
STOCK EXCHANGE LISTING
Main Market
Bursa Malaysia Securities Berhad
Stock Code : 5983
REGISTERED OFFICE
Suite C-5-4, Wisma Goshen,
Plaza Pantai, Jalan Pantai Baharu
59200 Kuala Lumpur, Malaysia
t (603) 2283 4007
f (603) 2287 7006
FINANCIAL CALENDAR
17TH ANNUAL GENERAL MEETING
14 June 2011
2011 RESULTS ANNOUNCEMENT
Quarter One : 24 May 2011
Quarter Two : 11 August 2011
Quarter Three : 10 November 2011
Quarter Four : 24 February 2012
DIVIDEND PAYMENTS
Second interim for 2010:
21 March 2011
First Interim for 2011:
15 September 2011
SHARE REGISTRAR
AAJ 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
AUDITORS
Deloitte KassimChan (AF: 0080)
Chartered Accountants
CORPORATE OFFICE
No. 1-6, The Boulevard
Mid Valley City
Lingkaran Syed Putra
59200 Kuala Lumpur
Malaysia
t (603) 2287 6803
f (603) 2287 6805
www.mbmr.com.my
MBM RESOURCES BERHAD (MBMR)
is an automotive Group with diverse
investments in distributorship and
dealership of major international
brands of vehicles in Malaysia.
ASSOC
IATE
SUBSIDIARY
Daihatsu (Malaysia) Sdn Bhd 71.5% DMM Sales Sdn Bhd 100%
Federal Auto Holdings Berhad 100% 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%
Motor
Hirotako Holdings Berhad 100%
Manufacturing
Inai Benua Sdn Bhd 70%
Property
The Group 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.
MBMR’s brand partners are:
Oriental Metal Industries (M) Sdn Bhd 78%
100%Summit Vehicles Body Works Sdn Bhd
MBM ResouRces BeRHAD4
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.
ASSOC
IATE
SUBSIDIARY
Daihatsu (Malaysia) Sdn Bhd 71.5% DMM Sales Sdn Bhd 100%
Federal Auto Holdings Berhad 100% 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%
Motor
Hirotako Holdings Berhad 100%
Manufacturing
Inai Benua Sdn Bhd 70%
Property
The Group 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.
MBMR’s brand partners are:
Oriental Metal Industries (M) Sdn Bhd 78%
100%Summit Vehicles Body Works Sdn Bhd
AnnuAl RepoRt 2011 5
Corporate Structure
Note: Detailed list of the companies under the Group are shown in notes 50 and 51 of the Audited Financial Statements
MBM ResouRces BeRHAD6
Year ended December 31 2007 2008 2009 2010 2011
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)
Total Group
DMSB Daihatsu/Hino Trucks/Perodua
FAHB Volvo/ Volkswagen/ Mitsubishi
EQUITY INDICES
Closing year end share price (RM)
Price-earnings ratio (times)
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
18,447
17,944
503
3.20
7.0
1,203
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
18,677
18,102
575
2.28
4.7
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 10.6
17,816
17,174
642
2.59
9.4
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
22,839
20,813
2,026
3.34
5.7
1705.6
42.0
107.9
150.6
121.2
49.9
242.9
1,107.9
2,019.0
4.6
(3.9)
2.5
10.9
6.0
23,236
20,129
3,107
3.18
6.4
MBMR Share Prices from April 2007 - April 2012Group vehiclesales market share
4.00
4.50
3.50
3.00
Pe
rce
nta
ge
(%
)
2.50
2.00
1.50
1.00
0.50
0.00
2007 2008 2009 2010 2011
1,203
1,131
1,101.61,528.51,705.6
Revenue
RM1,705.6mil
MILLION
UNITSVehicle sales
Total Group
Vehicle salesDMSB Daihatsu/
Hino Trucks/Perodua
Vehicle salesFAHB Volvo/Volkswagen/
Mitsubishi
Operatingcashflowper share
-3.9sen
SEN
UNITS
18,102
17,944
17,17420,81320,129
2011
2010
2009
2008
2007
UNITS
18,677
18,477
17,81622,83923,236
2011
2010
2009
2008
2007
575
503
6422,0263,107
2011
2010
2009
2008
2007
2011
2010
2009
2008
2007
2011
2010
2009
2008
2007
149.9
140.5
85.3172.4150.6
Profitbefore tax
RM150.6mil
MILLION2011
2010
2009
2008
2007
48.4
45.9
27.558.649.9
Basic earningsper share
49.9sen
SEN2011
2010
2009
2008
2007
3.5
3.2
3.74.24.6
Net assetsper share
RM4.6
RM2011
2010
2009
2008
2007
70.1
54.8
30.551.542.0
Operating profit before interest
and taxRM42.0mil
MILLION2011
2010
2009
2008
2007
15.2
2 9 .9
22.61,528.5
-5.4-3.9
5.00
4.50
4.00
RM
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
30/4
/07
31/8
/07
31/1
2/07
30/4
/08
31/8
/08
31/1
2/08
30/4
/09
31/8
/09
31/1
2/09
30/4
/10
31/8
/10
31/1
2/10
30/4
/11
31/8
/11
31/1
2/11
30/4
/12
5 Years Group Financial Performance
AnnuAl RepoRt 2011 7
Year ended December 31 2007 2008 2009 2010 2011
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)
Total Group
DMSB Daihatsu/Hino Trucks/Perodua
FAHB Volvo/ Volkswagen/ Mitsubishi
EQUITY INDICES
Closing year end share price (RM)
Price-earnings ratio (times)
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
18,447
17,944
503
3.20
7.0
1,203
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
18,677
18,102
575
2.28
4.7
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 10.6
17,816
17,174
642
2.59
9.4
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
22,839
20,813
2,026
3.34
5.7
1705.6
42.0
107.9
150.6
121.2
49.9
242.9
1,107.9
2,019.0
4.6
(3.9)
2.5
10.9
6.0
23,236
20,129
3,107
3.18
6.4
MBMR Share Prices from April 2007 - April 2012Group vehiclesales market share
4.00
4.50
3.50
3.00
Pe
rce
nta
ge
(%
)
2.50
2.00
1.50
1.00
0.50
0.00
2007 2008 2009 2010 2011
1,203
1,131
1,101.61,528.51,705.6
Revenue
RM1,705.6mil
MILLION
UNITSVehicle sales
Total Group
Vehicle salesDMSB Daihatsu/
Hino Trucks/Perodua
Vehicle salesFAHB Volvo/Volkswagen/
Mitsubishi
Operatingcashflowper share
-3.9sen
SEN
UNITS
18,102
17,944
17,17420,81320,129
2011
2010
2009
2008
2007
UNITS
18,677
18,477
17,81622,83923,236
2011
2010
2009
2008
2007
575
503
6422,0263,107
2011
2010
2009
2008
2007
2011
2010
2009
2008
2007
2011
2010
2009
2008
2007
149.9
140.5
85.3172.4150.6
Profitbefore tax
RM150.6mil
MILLION2011
2010
2009
2008
2007
48.4
45.9
27.558.649.9
Basic earningsper share
49.9sen
SEN2011
2010
2009
2008
2007
3.5
3.2
3.74.24.6
Net assetsper share
RM4.6
RM2011
2010
2009
2008
2007
70.1
54.8
30.551.542.0
Operating profit before interest
and taxRM42.0mil
MILLION2011
2010
2009
2008
2007
15.2
2 9 .9
22.61,528.5
-5.4-3.9
5.00
4.50
4.00
RM
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
30/4
/07
31/8
/07
31/1
2/07
30/4
/08
31/8
/08
31/1
2/08
30/4
/09
31/8
/09
31/1
2/09
30/4
/10
31/8
/10
31/1
2/10
30/4
/11
31/8
/11
31/1
2/11
30/4
/12
Financial Highlights
Dear Shareholders,The year 2011 marked another year of
significant achievements. We made major progress in realising our aspiration in becoming a Complete Automotive
Group with additional investments in existing businesses and the completion of
the acquisitions of Lion Motor Sdn Bhd (LMSB), Kinabalu Motor Assembly
Sdn Bhd (KMA) and Hirotako Holdings Berhad (Hirotako). Our businesses
recorded another credible performance in the face of a challenging operating
environment, achieving a new high in revenues.
"Shapes" is a dedication to our subsidiaries and associates. These shapes and colours represent
their diversity and vibrancy, coming together as the formation of MBMR as a Complete Automotive
Group takes shape.
MAN
UFAC
TURI
NG
Parts &
Accessories
MBM ResouRces BeRHAD8
Joint Letter to Shareholders
Dear Shareholders,The year 2011 marked another year of
significant achievements. We made major progress in realising our aspiration in becoming a Complete Automotive
Group with additional investments in existing businesses and the completion of
the acquisitions of Lion Motor Sdn Bhd (LMSB), Kinabalu Motor Assembly
Sdn Bhd (KMA) and Hirotako Holdings Berhad (Hirotako). Our businesses
recorded another credible performance in the face of a challenging operating
environment, achieving a new high in revenues.
"Shapes" is a dedication to our subsidiaries and associates. These shapes and colours represent
their diversity and vibrancy, coming together as the formation of MBMR as a Complete Automotive
Group takes shape.
MAN
UFAC
TURI
NG
Parts &
Accessories
AnnuAl RepoRt 2011 9
MBM ResouRces BeRHAD10
Joint Letter to Shareholders
Economy and the Automotive Industry
Although the Malaysian economy remained
stable in 2011, with the GDP growing by 5.2%, the
automotive industry faced some short term challenges.
The earthquake in Japan and the floods in Thailand severely
disrupted global supply chains, as the areas devastated are
home to major automotive parts manufacturers.
The new Hire Purchase Act introduced in the middle of the year resulted in
a temporary slowdown in the processing of hire-purchase loans.
Consequently, the Malaysian Total Industry Volume (TIV) for vehicle sales slipped to
599,877 units in 2011, declining 0.9% from 2010’s record high of 605,166 units.
In spite of the challenges, we are pleased to report that we have outperformed our 2010
revenues and increased total Group vehicle sales by 2%.
AnnuAl RepoRt 2011 11
2011 Performance Highlights:
Revenue for 2011 increased 12% to RM1,706 million due to higher
sales from all brands under Federal Auto Holdings Berhad (FAHB)
as well as additional tyre assembly business for Oriental
Metal Industries (M) Sdn Bhd (OMI).
Profits, however, were lower due in part to the strong
Yen, disruption in parts supply caused by the
Japan earthquake and floods in Thailand,
and the one-off costs incurred for the
acquisition of Hirotako.
REVENUE: +12% to RM 1,706 million
TOTAL GROUP VEHICLE SALES: +2% to 23,236 units
PROFIT BEFORE TAX: -13% to RM151 million
NET PROFIT TO SHAREHOLDERS: -15% to RM121 million
NTA PER SHARE: +8.6% to RM4.56
DIVIDEND PER SHARE: -54% to 6 sen
MBM ResouRces BeRHAD12
Joint Letter to Shareholders
We currently represent seven brands and two tuning brands. As
leaders of the brands we represent, we have continued our multi-
brand strategy to cover different segments of the market, and to
widen our coverage by increasing our nationwide presence. The
Group now has a combined total of 47 branches.
We have focused on building a strong and comprehensive business
model that caters to the customer’s needs at all levels; from
selling the vehicle to upgrading vehicles with tuning and body
kits, aftersales and body and paint services. Investments in our
distribution network focuses not only on geographical presence,
but also in the upgrading of existing facilities and aftersales
capacity, which undoubtedly strengthens our business, delivering
both growth and a sustainable revenue stream.
Our priorities in customer service are reinforced by our
commitment to consistently train our employees.
We strongly believe investing in our employees
compliments the pivotal role they play in
communicating with our customers and in
providing a high level of service. This sets
us apart from our competitors. In 2011,
FA Wagen, a subsidiary of FAHB, won
first place in the service advisor
competition in Asia Pacific region
for the Volkswagen brand, an
important recognition of
our high service quality.
Distribution
AnnuAl RepoRt 2011 13
DMSB recorded lower revenues and vehicle sales in 2011 due to
the stock shortages for Hino and Perodua vehicles and the final
phase-out of the Daihatsu Delta trucks from the middle of the year.
Sales did, however, recover by year end.
Variants of pick-up, panel and semi panel vans were added to
the Gran Max series line up in 2011. This year also saw the first full
year of contribution from Gran Max with a total of 1,518 units sold
compared to 445 units in 2010.
The new Hino service centre in Shah Alam was launched in
November and officiated by Mr Yoshio Shirai, the President of
Hino Motors Ltd, Japan. The new service centre is one of the
largest in the country and is equipped with the latest facilities and
standards. This will further enhance DMSB’s presence and boost its
capacity to handle increased customer traffic.
Our Perodua dealership - DMM Sales Sdn Bhd (DMMS) - recorded
a slight decline in sales, reflecting the overall industry performance
of Perodua this year. The lower sales were due to the disruption
in supply caused by the Japan earthquake. Nevertheless, DMMS
remained the largest independent dealer for Perodua vehicles,
accounting for 9.6% of total Perodua vehicles sold in Malaysia.
Daihatsu (Malaysia) Sdn Bhd (DMSB)
REVENUE 1,020 1,066 -4
PROFIT BEFORE TAX 36 35 +3
TRUCK SALES (UNITS) 2,916 3,167 -8
PERODUA (UNITS) 17,213 17,646 -3
FY2011 RM MIL
FY2010RM MIL
%CHANGE
MBM ResouRces BeRHAD14
Joint Letter to Shareholders
FAHB continued to achieve another record
breaking year in sales, posting a 53% increase
from the previous year. All three brands under the
group contributed to this stellar performance.
Profits, however, declined as a result of higher
depreciation and interest costs incurred from its
new investments. Additionally, the losses from LMSB
and KMA were also consolidated into FAHB upon
completion of the acquisition of both companies.
Volvo had several new model launches in 2011.
The S60 was introduced in April followed by the
locally assembled XC60 T5 in May. The Volvo S80 T5,
S60 local assembled T4 and T5 were added to the
line up in the second half of the year. Overall the
sale of Volvo cars under FAHB increased from 481
units in 2010 to 579 units in 2011.
Meanwhile, our sale of Volkswagen vehicles
continued to be robust with 1,702 cars sold in
2011 compared to 750 units in the previous year.
New models were introduced into the market with
the launching of the Passat, Jetta and Touran in
October. We commissioned our service centre
in Glenmarie during the year, with throughputs
exceeding our expectations. We are currently
planning the next phase of expansion of our
capacity to meet the expected growth in service
of Volkswagen vehicles to support our strong
sales over the past two years. We completed the
construction of our Johor Bahru branch at the
end of the year. Johor is a market we believe has
great potential for the Volkswagen brand, with a
vibrant local economy and being a key market
for passenger cars.
We also saw a steady increase in Mitsubishi
vehicle sales with the launch of the Pajero Sport
VGT along with a couple of limited edition
models – the Lancer Sportback RA Edition
and the ASX Special Edition. The sales,
however, were held back because of
stock supply constraints. We added
a new 3S centre in Sitiawan, Perak,
during the year, in addition to
the two existing dealerships in
Petaling Jaya and Ipoh.
Federal Auto Holdings Berhad (FAHB)
REVENUE 579 385 +50
PROFIT BEFORE TAX 10.9 11.3
TOTAL VEHICLE SALES (UNITS) 3,107 2,026 +53(Volvo, Volkswagen & Mitsubishi)
FY2011 RM MIL
FY2010RM MIL
%CHANGE
-4
Hino Motors (Malaysia) Sdn Bhd (HMMSB)
Although faced with a shortage of supplies, HMMSB
saw a big increase in sales in 2011, with total unit sales
(invoiced) reaching 6,034 units, up 18.4% compared
to 2010 sales of 5,095 units.
Hino’s wide product range and its strategy of
strengthening sales and service network support
through dealer development programmes have
paid off. This year, Hino achieved number one
in market share in all commercial vehicle
categories of light, medium and heavy duty.
AnnuAl RepoRt 2011 15
Associates
Perusahaan Otomobil Kedua Sdn Bhd (Perodua)
Perodua held on to its position as the leader in the passenger vehicle market for the
sixth consecutive year. Despite a dip in sales, Perodua still managed to achieve a
market share of 33.6%. Invoiced vehicle sales dropped from 192,795 units in 2010 to
181,847 units in 2011 mainly due to the shortage of supply parts from Japan. The high
Japanese Yen also had a negative impact on margins.
Despite the challenges of the parts supply shortages, Perodua successfully
launched the new Myvi 1.3 in June and the 1.5 variant in September. The new
Myvi made up 29.2% of Perodua sales in 2011. It won the Asian Auto award
for the “Best Local Assembly Compact Car” category, 2011. Additionally,
Perodua also won two other awards for its cars at the annual Frost &
Sullivan Malaysia Excellence Award. Perodua’s compact multipurpose
vehicle, Alza, won the “Best Model of The Year” while the Viva was
awarded as the “Value-for-Money Car of the Year (1.3L and below).”
MBM ResouRces BeRHAD16
Joint Letter to Shareholders
We continuously look for opportunities to expand our manufacturing
arm as part of our plans to become a Complete Automotive Group.
MBMR has positioned itself to be a competitive supplier – in terms of
product quality and cost - to the automotive industry. Strong partnerships
such as OMI with Central Motor Wheel Company Ltd (a subsidiary of Toyota
Motor Corporation) and Hirotako with Autoliv (global leader in automotive
safety products) provide the platforms for us to develop into a major automotive
parts player.
OMI recorded an increase in revenues mainly from the additional tyre assembly
business it secured from its customers. However, the delivery of its steel wheels
suffered a decline of 3% as its main customers’ production were affected by the parts
shortage problem.
We have witnessed in recent years the automotive industry’s move from use of steel wheels
to alloy wheels. During the year, OMI carried out intensive detailed studies on the alloy wheel
market, together with its partner, Central Motor Wheel Company Ltd, Japan. The demand for
alloy wheels is growing and there is a gap in supply of high quality OEM wheels in Malaysia.
In January 2012, we officially launched and announced that OMI will be investing in a RM103
million alloy wheel plant in Rawang with an annual capacity of one million wheels for both the
domestic and export markets. The plant is expected to be commissioned at the end of the year.
Oriental Metal Industries (M) Sdn Bhd (OMI)
Manufacturing
Summit Vehicles Body Works Sdn Bhd (SVBW)
SVBW recorded substantial increase in revenues. However, profitability continues to be
affected by intense competition in this sector. We remain focused on increasing our
efficiency, reducing our costs and to exploring new business opportunities that will
help improve our margins and return the Company to profitability.
REVENUE 91 67 +36
PROFIT BEFORE TAX 15 17 -12
WHEEL DELIVERIES (‘000) 959 988 -3
TYRES ASSEMBLIES (‘000) 2,118 2,335 -9
FY2011 RM MIL
FY2010RM MIL
%CHANGE
AnnuAl RepoRt 2011 17
OutlookEconomic conditions remain uncertain due to several
external factors. The global economy remains weak,
in particular in the Eurozone. Bank Negara Malaysia’s
move to tighten lending guidelines has affected
vehicle loan approval rates, particularly for the lower
income segment. The automotive industry is also
awaiting the details of the revision of the National
Automotive Policy (NAP), which is expected to be
announced soon. Notwithstanding these factors,
MBMR has positioned itself with a diverse portfolio
of brand representation across all the segments of
the market. Our initiatives to expand the group’s
businesses will continue as we build on MBMR’s core
strengths of business diversity, strong financials, deep
knowledge in the industry and experience.
We envisage 2012 to be another exciting year for
MBMR. We believe the momentum we have built
with our investments and acquisitions will continue to
drive our growth.
Under DMSB, the construction of Hino 3S dealerships
will continue with four more locations which are
compliant with the latest standards of facilities to
better serve our customers. As we build our Hino
dealership network, we expect to tap on the growing
sales of the Hino brand. We are also investing in
upgrading our Perodua dealerships in phases, with
particular emphasis on aftersales. Construction of our
new Perodua 3S centre in Jalan Chan Sow Lin, Kuala
Lumpur, has commenced and is expected to be
completed in 2013.
FAHB is poised for another strong year. An additional
new Volkswagen 3S dealership in Alor Setar was
opened in January this year. We are looking at
expanding our existing Glenmarie and Petaling
Jaya Volkswagen dealerships in response to the
anticipated growth in service intakes.
The Mitsubishi dealership has also grown and we
have moved our Petaling Jaya dealership in March
this year to a new location that is larger to support
our increased service throughputs.
Construction of the new MBMR Headquarters is
progressing well according to plan. The 24-storey
tower will start to take shape in the latter part of this
year as the piling and construction of the six-storey
basement is completed.
Construction of OMI’s new alloy wheel
manufacturing plant has commenced and the
equipment is being fabricated by the machine
makers. We expect to commission the plant in
December 2012.
Hirotako will be fully consolidated into the
Group for the first time in 2012. It is expected
to capitalise on the increased local
sourcing of parts by the car manufacturers/
assemblers. Additionally, compulsory front
airbags for new cars from this year is
expected to benefit the Group.
Our investments and expansion plans
give a solid base for sustainable growth
in the future. However, there will be an
immediate cost impact on our profits
as a result of these investments before
we fully realise the potential of
what we have invested in. We will
continue to exercise prudence in
our capital management and
seek the most efficient funding
means for our investments. We
believe we are well on track
to achieving our desire to be a
Complete Automotive Group.
MBM ResouRces BeRHAD18
DividendsMBMR paid its first interim dividend of 6 sen per share on 15th
September 2011. Normally a second interim dividend would
be declared at the announcement of the Group’s full year
financial results. However, in view of the proposed capital
issues, the Board decided not to declare a second
interim dividend this time.
Corporate DevelopmentsIt was a busy year of corporate developments.
On 6th May 2011, the selective capital reduction and repayment
scheme (SCR) undertaken by FAHB was completed, thus making
FAHB a 100%-owned subsidiary of MBMR.
The acquisitions of LMSB and KMA were completed on 28th
February and 3rd June 2011 respectively. The acquisitions added
the distribution of Dong Feng light commercial vehicle range to
our portfolio of brands we represent and secured for the Group a
manufacturing licence for the assembly of motor vehicles.
MBMR proposed the sale of a 20% stake in DMSB to Mitsui & Co.,
Ltd. (Mitsui) on 21st October 2011, which is pending completion.
The sale allows MBMR to partially realise its investment in DMSB
and to have Mitsui’s greater participation in the business.
A takeover offer for Hirotako was made on 27th October 2011.
Hirotako’s subsidiaries are mainly involved in the manufacture and
sale of automotive components which includes seat belts, airbag
modules, steering wheels, noise and heat reduction materials as
well as insulator parts. The offer closed on 3rd January 2012 with
acceptances of 95.99% of ordinary shares and 53.47% of warrants.
Hirotako will be consolidated into MBMR’s income in 2012. The
compulsory acquisition of the remaining ordinary shares of
Hirotako was completed on 27th February 2012.
MBMR’s Board has also proposed capital issues of bonus,
rights and warrants on 24th February 2012 to fund the
Group’s future expansion, reward shareholders
and reduce its borrowings. Shareholders’
approval was received on 2nd
May 2012 and the capital
issues are expected to be
completed by June 2012.
Joint Letter to Shareholders
AnnuAl RepoRt 2011 19
Shareholder valueWe aspire to be a Complete Automotive Group. We have built
valuable franchises and assets, valuations of which, as a listed
entity, are important for both the Company and its shareholders.
Until recently, MBMR’s shares have attracted little investor interest
because of the size of its market capitalisation and liquidity of its
shares.
We, the Board and Management of the Company, should not
only grow the operations of the Group, but also consider how
best to enhance the value of MBMR. In recent months we have
witnessed a marked increase in interest in MBMR accompanied
by the appreciation of its share price and trading volume of the
shares. The market capitalisation of MBMR has now exceeded
the RM1 billion mark, the highest since its listing in 1995.
We have focused on three key areas to help enhance the value
of our shares:
1. Transformation of MBMR’s Earnings Profile i) Growing the Core Profits
The earnings profile of the Group shows a heavy
dependence on associate contributions (Perodua and
HMMSB), accounting for 72% of pre-tax profit in 2011. The
new investments and acquisitions we have made in recent
years will significantly alter this balance. We anticipate that
in 2012, core operating profit will account for 50% of total
pre-tax profit, from 28% last year. Additionally, we will see
a substantial improvement in the Group’s operating cash
flow.
ii) Superior Growth
The revenues of the Group is also more diverse today,
exposed to high growth brands, which enables us to
outperform the increasingly competitive market. As
significant players of the brands that we represent,
we have built a deep and close relationship with our
principals which have positioned us as choice partners for
expansion opportunities. Our commitment, resources and
entrepreneurial spirit have gained us the advantage as
business partners with the principals.
iii) Parts Manufacturing Advantage
In a crowded market of automotive parts manufacturers,
we have been extremely vigorous in our selection of
investments in the sector. Our parts manufacturing division
is geared towards higher valued parts, with significant
technological input and efficient manufacturing processes.
Our
technology
partners are also
shareholders in the
respective companies. This
allows for strong collaboration and
ensures that our operations are not only
competitive domestically, but benchmarked
against the highest international standards. This will
eventually open vast new export markets for our products.
2. Sharing Our Vision We have consistently adopted a transparent approach to
our investor relations efforts. We hold regular analyst briefings
which are well attended by the investing community. Our
vision has been communicated to the media via various
press interviews and press releases. The Managing Director
gives short presentations of the Group’s performance and
elaborates on our future business direction at the Annual
General Meetings (AGMs). We believe in maintaining good
communications with the investment community to ensure
better understanding of our performance and future strategy.
Our approach encourages long term investor coverage of
MBMR, building confidence and consistent following of our
progress.
3. Capital Structure In our Statement to shareholders in last year’s annual report,
we elaborated that we needed to review our capital structure
to better reflect our expansion plans and also the size the
business has grown to. We have proposed a bonus issue to
reward shareholders, and a rights issue and warrants, to help
fund our present and future expansion. The larger capital base
will help improve the liquidity of MBMR shares and also enable
greater participation of investors in our future.
MBM ResouRces BeRHAD20
AppreciationOur achievements we highlighted in this letter were contributed by all our stakeholders. We
wish to thank the employees of MBMR Group for their dedication and contribution to a
commendable performance this year and for rising to the challenges with the right spirit
and commitment. We also extend our appreciation to our customers, business partners,
bankers, auditors, lawyers and suppliers for the support extended during the year. We
look forward to a lasting relationship and growing together for our mutual benefit.
We thank the members of the Board for their guidance and to shareholders for
their confidence in us.
Dato’ Abdul Rahim Abdul Halim Looi Kok LoonChairman Managing Director
23 May 2012
Joint Letter to Shareholders
Education Assistance Programme
Safety CampaignVisit to Orphanage - Rumah Limpahan Kasih
Relay for Life
Corporate Social Responsibility
Visit to Pusat Penjagaan Kanak-Kanak Cacat
AnnuAl RepoRt 2011 21
We at
MBMR are
mindful of our
responsibilities to
our employees and
the communities in
which we operate.
Throughout 2011 we
continued to uphold our
responsibilities by organising and
participating in various corporate
social responsibilities programmes.
We again participated in the Relay
for Life event organised by the National
Cancer Association Malaysia which raises
funds for cancer research, creates awareness
of cancer and celebrates the lives of survivors.
This year we were one of the main sponsors for this
event.
In 2011, our employees brought cheer to the children
of ‘Pusat Penjagaan Kanak-kanak Cacat Taman Megah’
and ‘Rumah Amal Limpahan Kasih’. They spent time with
the children, organised lunch and activities and presented
donations from the Group to these homes.
The MBMR Group recognises that our employees are our most
valuable assets. We have invested in our human capital by
conducting various training programmes that empower them and remain
linked to our broader strategy for company expansion and growth. Our
employees’ safety at the workplace is also of great importance and this is
reflected by the safety campaigns we conducted throughout the year to raise
awareness of workplace safety.
MBM ResouRces BeRHAD22
Year at a Glance
New Additions to Our Product Line-up
October 2011 - Mitsubishi ASX Special Edition
September 2011– Perodua Myvi 1.5
October 2011 – Volvo S80 T5, S60 (CKD) T4 and T5
October 2011– Volkswagen Passat, Jetta and Touran
September 2011 - Mitsubishi Pajero Sport VGT
April 2011– Volvo S60
July 2011 - Mitsubishi Lancer Sportback RA Edition
May 2011 – Volvo XC60 T5 June 2011– New Perodua Myvi 1.3
AnnuAl RepoRt 2011 23
Corporate Events
April 2011 – Daihatsu (Malaysia) Sdn Bhd annual dinner at Holiday Villa, Subang Jaya.
November 2011 – The launch of the new Hino/Daihatsu Service Centre in Shah Alam.
September 2011 - New Mitsubishi showroom opens in Sitiawan, Perak.
May 2011 - Federal Auto Holdings Berhad’s company trip to Pulau Pangkor.
July 2011– Ground breaking ceremony of Menara MBMR.
November 2011 – Soft launch of the new Volkswagen showroom in Skudai, Johor.
MBM ResouRces BeRHAD24
Profile Of Directors
Y. Bhg. Dato’ Abdul Rahim was MBM Resources Berhad’s
(MBMR) Managing Director until 28 February 2006. He is
currently the Chairman of MBMR. Prior to his appointment to
MBMR’s Board on 17 December 1993, he was the chairman
of Daihatsu (Malaysia) Sdn. Bhd. Dato’ Abdul Rahim has
extensive experience in the motor vehicle industry and is
presently on the Boards of Rubberex Corporation (M) Berhad
and Ewein Berhad as well as several other private companies.
He is the Chairman of the Boards of the following companies
– Oriental Metal Industries (M) Sdn. Bhd. (OMI) and Hino
Motors (Malaysia) Sdn. Bhd. (HMMSB), and a Board member
of Perusahaan Otomobil Kedua Sdn. Bhd. (Perodua). He
holds a Bachelor of Economics (Honours) degree from the
University of Malaya.
Y. Bhg. Dato’ Abdul Rahim Abdul HalimAged 63, Malaysian
Chairman
Non Independent Non-Executive Director
AnnuAl RepoRt 2011 25
Mr. Looi Kok LoonAged 45, Malaysian
Managing Director
Mr. Looi Kok Loon was appointed to the Board
of MBMR on 18 May 2001 and subsequently
Managing Director since 1 March 2006. He had
previously worked for a foreign investment bank.
Mr. Looi holds a Bachelor’s degree in Government
and Economics from Brunel University and a
Master’s degree in Management from the
University of Kent, United Kingdom. He represents
MBMR on the Boards of the following companies
– Perodua, HMMSB, DMSB, Federal Auto Holdings
Berhad (FAHB), Hirotako Holdings Berhad (HHB)
and OMI.
Profile Of Directors
Y. Bhg. Tan Sri Lee Lam Thye JPAged 66, MalaysianIndependent Non-Executive Director
Y. Bhg. Tan Sri Lee Lam Thye JP was appointed
to the Board on 28 February 1994 and is a
member of the Company’s Audit, Nomination
and Remuneration Committees. Before retiring
from politics in 1990, he was the elected State
Legislative Assemblyman for Bukit Nenas,
Selangor from 1969 to 1974 and served as
a Member of Parliament for Bandar Kuala
Lumpur from 1974 to 1990.
He is presently the Chairman of the National
Institute of Occupational Safety & Health
and Vice-Chairman of the Malaysian Crime
Prevention Foundation. He is also a Member of
the Board of the Employees Provident Fund.
In the private sector, Y. Bhg Tan Sri Lee serves as
a director of several public-listed companies,
namely AMCORP Properties Berhad, Media
Prima Berhad and SP Setia Berhad.
Encik Iskander Ismail Mohamed AliAged 62, Malaysian
Independent Non-Executive Director
Encik Iskander was appointed to the Board
of MBMR on 8 May 2009 and is currently
Chairman of MBMR’s Audit Committee and a
member of the Nomination and Remuneration
Committees. A member of the Malaysian Institute
of Accountants and fellow member of the
Association of Chartered Certified Accountants,
Encik Iskander was formerly the Executive
Director and Chief Executive Officer of Kenanga
Fund Management Berhad.
Having worked in the fund management industry
since 1982, he had previously held various senior
management roles in the fund management
division/ subsidiary of Bumiputra Merchant
Bankers Berhad and MIDF Berhad, where he
was also a director of several MIDF subsidiary
companies.
He was the first (and for a few years thereafter)
chairman of the Malaysian Association of
Asset Managers, which he helped establish in
November 1996. He also served on the Capital
Market Advisory Council and was a member
of the Bursa Malaysia Berhad Listing
Committee and
of the Institutional
Shareholders’ Pro Tem
Committee under the
Minority Shareholder
Watchdog Group.
He also sits on the
Board of Trustees of
a local educational
foundation.
Encik Aqil Ahmad AzizuddinAged 53, MalaysianNon-Independent Non-Executive Director
Encik Aqil began his career with DMSB where
he held various senior management positions
prior to his appointment to the Board on
18 May 2001. He is currently a member of
MBMR’s Audit Committee and the Chairman
of DMSB and FAHB. He is also a director on
the Board of Perodua and HHB.
He holds a Bachelor of Science degree
in Business Economics and an Associate
Degree in Commercial Graphics from
Southern Illinois University, USA.
MBM ResouRces BeRHAD26
Mr. Wong Wei Khin Aged 44, Malaysian
Non-Independent Non-Executive Director
Mr. Wong Wei Khin previously served MBMR as a
corporate manager and was nominated to the
Board on 23 May 2002. He is currently a member
of the Nomination Committee. He graduated
from the University of Sydney with a Bachelor of
Economics and Bachelor of Laws degrees. He is
also a director on the Board of DMSB.
Mr. Low Hin ChoongAged 51, Malaysian
Non-Independent Non-Executive Director
Mr. Low Hin Choong joined the Board on
18 May 2001 and is currently a member of
the Remuneration Committee and heads
the Information Systems & Information
Technology Committee. He has more than
20 years experience in the IT industry, having
worked as a systems analyst and software
manager. He graduated from Queen’s
University of Belfast, United Kingdom with a
Bachelor of Science (Honours) degree in
Business Administration & Computer Science
and is currently managing his own successful
software applications business. He is also a
director on the Board of HHB.
Notes:
• NoneoftheDirectorshasanyfamilyrelationship
withanyDirectorand/ormajorshareholderofthe
Company.
•NoneoftheDirectorshasanyconflictofinterest
withtheCompany.
• NoneoftheDirectorshasbeenconvictedofany
offencesotherthantrafficoffenceswithinthe
past10years.
MANAGEMENT TEAM
MBM RESOURCES BERHADNo.1-6, The Boulevard,
Mid Valley City, Lingkaran Syed Putra,
59200 Kuala Lumpur.
Tel: (603) 2287 6803
Mr. Looi Kok LoonManaging Director
Mr. Poh Chee KwanGeneral Manager
Mr. Kong Kam SeongFinancial Controller
Mr. Cheng Seng FookDirector, Automotive Division
Mr. Tan Khay BoonGeneral Manager, Manufacturing Division
Ms. Wong Fay LeeGeneral Counsel
AnnuAl RepoRt 2011 27