Redefining Strategies Driven by Determination to Be the Nation’S Leading Automative Retailer, EON Berhad Is Delivering Marques That Command Regional Market Appeals
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S ATEGIE R REDEFINING ST REDEFINING annual annual report 2006 EDARAN OTOMOBIL NASIONAL BERHAD (119767-X) Annual Report 2006 03-7803 0009 0009 03-7803 03-7711 2211 2211 03-7711 : : Fax Tel Selangor Darul Ehsan Darul Selangor Seksyen U1, 40150 Shah Alam Shah 40150 U1, Seksyen Taman Perindustrian Glenmarie Perindustrian Taman No.2, Persiaran Kerjaya Persiaran No.2, EON Head Office Complex Office Head EON ii Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 1 Cover Rationale REDEFINING STRATEGIES Driven by determination to be the nation’s leading automative retailer, EON Berhad is delivering marques that command regional market appeals. In reinforcing EON’s customer-centric focus, the direction Contents is embodied by the group’s eminent five star service excellence, and the values of performance, quality, innovation, 1 Financial Calendar distribution and diversification that is redefining the strategies of the group 2 EON Corporate Profile to stay relevant and competitive, in a 3 Awards challenging era. 4 Vehicles Distributed by EON 6 Notice of Annual General Meeting 8 Statement Accompanying Notice of Annual General Meeting 12 Financial Highlights 13 Five Year Group Financial Summary 16 Share Prices and Trading Volume on Bursa Malaysia for 2006 CORPORATE INFORMATION FINANCIAL STATEMENTS 20 Corporate Information 75 Financial Statements 22 Corporate Structure 23 Organisation Structure OTHER INFORMATION 24 Board of Directors’ Profile 113 Analysis of Shareholding 30 Top and Senior Management 114 List of Thirty (30) Largest Shareholders PERFORMANCE REVIEW 115 Properties Owned by EON Group 34 Chairman’s Statement 120 EON – Branches 40 Managing Director’s Review of Operations 122 EONMOBIL – Branches 123 EON Auto Mart – Branches CORPORATE GOVERNANCE 124 Euromobil – Branches and Dealers 50 Statements on Corporate Governance 125 EON – Bumiputra Sales Dealers 62 Statement on Internal Control by State 64 Risk Management 127 EON – Non-Bumiputra Sales 65 Report of the Board Audit Committee Dealers by State 70 Additional Compliance Infomation 128 EON – Franchise Service Dealers 71 Statement of Directors’ Responsibility (FSD) by State for Preparing the Financial Statements 136 Corporate Directory 72 Year 2006 Events Proxy Form ii Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 1 FINANCIAL CALENDAR ended 31 December 2006 DIVIDENDS 22 JUNE 2006 Payment of final dividend of 18 sen per share less income tax at 28% in respect of the year ended 31 December 2005. QUARTERLY ANNOUNCEMENT OF RESULTS 25 MAY 2006 1st Quarter for the three months ended 31 March 2006 EDARAN OTOMOBIL NASIONAL BERHAD (EON) 23 AUG 2006 IS ONE OF MALAYSIA’s LEADING COMPANIES IN 2nd Quarter for the six months ended 30 June 2006 MOTOR VEHICLES DISTRIBUTION AND RETAILING. 22 NOV 2006 FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 3rd Quarter for the nine months 2006, THE GROUP RECORDED A REVENUE OF RM1.83 ended 30 September 2006 BILLION WITH PRE-TAX PROFIT OF RM4.5 MILLION 23 FEB 2007 4th Quarter for the year ended 31 December 2006 GENERAL MEETINGS 25 MAY 2006 22nd Annual General Meeting 7 MAY 2007 Notice of 23rd Annual General Meeting 29 MAY 2007 23rd Annual General Meeting 2 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 3 Corporate Profile Vision TO BE THE LEADING AND THE MOST INNOVATIVE DRB-HICOM GROUP CORPORATE PROFILE AUTOMOTIVE RETAILER DRB-HICOM Berhad (“DRB-HICOM”) is one of Malaysia’s leading companies, listed on the Main Board of Bursa Malaysia Securities Berhad, playing an integral role in the nation’s road to industrialisation. DRB-HICOM are diversified yet focused, Mission and have interests in key sectors of the economy mainly: • Automotive TO PROVIDE EXCELLENT • Services • Property & Infrastructure CUSTOMER SERVICE • Defence DRB-HICOM will continue to look for opportunities that will benefit the Group and the country. Core Values AUTOMOTIVE I - Integrity The Group’s leadership within this sector is reflected through Carry out one’s roles and responsibilities in niche segmentation and continued strategic alliances with an honest and sincere manner renowned global names such as Isuzu, Kawasaki, Honda, General Motors, Mahindra and Suzuki. DRB-HICOM continuously seek new alliances to strengthen their base further. C - Customer Focused Create a positive experience for internal and SERVICES external customers at all times The rapidly growing service-based industry represents new opportunities for DRB-HICOM. DRB-HICOM’s interests include L - Learning Organisation Information Technology (IT), financial services, solid waste management, automotive services, and leisure. Encourage continuous learning and promote the exchange of knowledge within EON PROPERTY & INFRASTRUCTURE DRB-HICOM is extensively involved in retail, commercial I - Innovation and residential property development, and has made strong Pursue new ideas to improve the quality of inroads in the construction sector. products and services offered DEFENCE P - Pride DRB-HICOM currently provides a variety of defence related Possess a sense of belonging and work to the Malaysian Armed Forces as well as pursuing achievement of being part of the EON family other opportunities. 2 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 3 Awards Grand Champion of the Silver Quill Awards by International Association of Business Communicators (IABC) Malaysia 2006 4 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 5 Vehicles EON 4 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 5 6 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 7 Notice of Annual General Meeting noTice IS HERebY GIVen THAT THE TWenTY-THIRD AnnUAL GeneRAL MeeTinG (AGM) OF THE coMPANY WILL be HELD AT GLenMARie BALLRooM A, HOLidAY inn GLenMARie KUALA LUMPUR HOTEL, no.1, JALAN USAHAWAN U1/8, SEKSYen U1, 40250 SHAH ALAM, SELANGOR DARUL EHSAN on TUESDAY, 29 MAY 2007 AT 9.30 A.M. FOR THE FOLLOWinG PURPOSES: 1. To receive and adopt the Reports of the Directors and Auditors and the Audited Financial Statements for the year ended 31 December 2006. (Resolution 1) 2. To declare a special dividend of 137 sen per share less 27% Malaysian Income Tax for the financial year ended 31 December 2006. (Resolution 2) 3. To re-elect the following Directors who retire in accordance with the Company’s Articles of Association: Under Article 103 i. Mr. Rin Nan Lun (Resolution 3) ii. Y Bhg. Datuk Aziyah binti Bahauddin (Resolution 4) iii. Y Bhg. Datuk Ir (Dr) Ahmad Zaidee bin Laidin (Resolution 5) Under Article 129 iv. Y Bhg. Tan Sri Saw Huat Lye (Resolution 6) 4. To approve the Directors’ fees amounting to RM569,035 for the year ended 31 December 2006. (Resolution 7) 5. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company and to authorise the Directors to fix their remuneration. (Resolution 8) 6. To transact any other ordinary business for which due notice has been given. 7. As Special Business: To consider and, if thought fit, to pass the following resolutions as Ordinary Resolution and Special Resolution: Ordinary Resolution: “THAT subject always to the provisions of the Companies Act, 1965 (“Act”), the Memorandum & Articles of Association of the Company, the Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Malaysia”), the regulations, guidelines and practice notes issued from time to time by Bursa Malaysia or any other regulatory authorities, the mandate approved for renewal by the shareholders of the Company on 25 May 2006 pursuant to paragraph 10.09 of the Listing Requirements of Bursa Malaysia, authorising the Company and its subsidiaries (“EON Group”) to enter into the recurrent related party transactions of a revenue or trading nature (“Recurrent Transactions”) as set out in Section 2.1.1 of the Circular to Shareholders dated 7 May 2007 (“Circular”) with the related parties mentioned therein which are necessary for the EON Group’s day-to-day operations, be and is hereby renewed AND THAT the scope of such renewed mandate be and is hereby extended to the Recurrent Transactions with new related parties as set out in Section 2.1.2 of the Circular (“Proposal”); 6 Edaran Otomobil Nasional Berhad | 2006 Annual Report Edaran Otomobil Nasional Berhad | 2006 Annual Report 7 AND THAT the EON Group is hereby authorized to enter into the Recurrent Transactions with the related parties therein provided that: (a) the transactions are in the ordinary course of business on an arm’s length basis and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not detrimental to the minority shareholders of the Company; and (b) disclosure of the aggregate value of the transactions conducted during a financial year will be disclosed in the Annual Report for the said financial year with particulars of the types of the Recurrent Transactions made and the names of the related parties involved in each type of the Recurrent Transactions made and their relationship with the Company, AND THAT the authority conferred by such renewed mandate shall continue to be in force until: (a) the conclusion of the next AGM of the Company following the forthcoming AGM at which the Proposal is approved, at which time it will