DRB-HICOM Berhad DRB-HICOM DRB-HICOM Berhad (203430-W) (203430-W) Annual Report 2005 DRB-HICOM Berhad (203430-W) www.drb-hicom.com Level 5, Wisma DRB-HICOM, No. 2, Jalan Usahawan U1/8 Strategically Positioned Seksyen U1, 40150 Shah Alam, Selangor Darul Ehsan Strategically Positioned

Annual Report 2005 Strategically Positioned

DRB-HICOM BERHAD (203430-W) 2005 ANNUAL REPORT

VALUES VISION

Excellence • Teamwork • Innovation To be a leading regional conglomerate • Integrity through the provision of competitive world-class products and services.

MISSION

• We are committed to the creation of • We are committed to being socially and brand name recognition by adding value environmentally responsible corporate and exceeding customers’ expectation. citizens, improving the lives of the community we live in. • We are committed to the development of a knowledgeable, dynamic and motivated • We are committed to continue to lead the workforce. growth of Malaysia’s industrialisation.

• We are committed to the creation and application of innovative technology through strategic alliances. COVER RATIONALE In every evolving business environment, it is important to understand the terrain and to adapt to its unwavering demands. The challenges faced are opportunities waiting to be realised if we are able to identify its value. Being proactive in our pursuit to be strategically positioned is our primary focus to succeed at the highest level.

The image of the blue marble featured on the cover design is a conceptual representation of our confidence to be placed in a competitive environment and succeed whilst staying steadfast to our intrinsic value of consistently re-innovating and re-engineering our products and services to meet the demands of our customers.

CONTENTS

Group’s Six Years Financial Highlights 2 Corporate Governance Statement on Corporate Governance 76 Corporate Profile 4 Statement on Internal Control 87 Quality Achievements 6 Report of the Audit Committee 90 Brief on Enterprise-wide Opportunity Financial Calendar 8 & Risk Management (EORM) 98 Corporate Information 10 Additional Compliance Information 100 Statement of Directors’ Responsibility 114 Board of Directors 12 Financial Statements 115 Profile of Board of Directors 14 Other Information Management Team 22 Share Movement Chart 222 Corporate Structure 24 Analysis of Shareholdings 223 Properties of DRB-HICOM Group 227 Performance Review Notice of Annual General Meeting 242 Chairman’s Statement 28 Statement Accompanying 244 Operations Review Notice of Annual General Meeting Automotive Manufacturing & Distribution 38 Form of Proxy / Borang Proksi Property Development & Construction 48 Services 54

Corporate Responsibility We Help Make Things Better 62 Human Resource Development 64 Information Technology 66 Calendar of Events 67 Group’s Six Years Financial Highlights

Shareholders’ Equity Net Tangible Assets Earnings/(Loss) 2 Per Share Per Share (Basic) (RM’000) (RM) (Sen) 0.34 2.35 2.48 2.42 2.57 2.69 21.03 19.28 21.66 20.01 14.39 89,298 (156.94) 2,163,242 2,284,864 2,342,215 2,519,157 2,649,215 20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) ’00 ’01 ’02 ’03 ’04 ’05 ’00 ’01 ’02 ’03 ’04 ’05 ’00 ’01 ’02 ’03 ’04 ’05

2005 2004 *2003 *2002 **2001 **2000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Share Capital 985,670 980,673 965,115 919,483 912,395 263,005 Retained Earnings/ (Accumulated Losses) 629,274 515,515 358,877 185,887 31,866 (100,348) Shareholders’ Equity 2,649,215 2,519,157 2,342,215 2,284,864 2,163,242 89,298 Minority Interests 672,157 668,792 623,612 481,053 399,869 249,093 Long Term and Deferred Liabilities 1,477,197 1,570,175 1,776,567 779,875 819,833 260,589 Current Assets 3,662,619 3,894,377 3,617,962 3,421,604 3,434,834 906,824 Current Liabilities 3,119,525 3,446,474 3,482,756 4,662,384 4,741,473 1,436,893 Net Current Assets/(Liabilities) 543,094 447,903 135,206 (1,240,780) (1,319,777) (530,069) Property, Plant and Equipment 2,392,425 2,451,156 2,644,313 2,691,844 2,795,835 1,014,913 Investments 2,453,050 2,204,705 2,038,373 2,008,411 2,008,432 152,214 Total Assets 8,628,345 8,652,375 8,459,356 8,280,727 8,202,519 2,035,873 Operating Revenue Profit/(Loss) Total Assets 3 Before Taxation (RM’000) (RM’000) (RM’000) 411,536 391,108 457,826 389,905 276,702 (277,648) 2,611,499 4,968,670 4,329,289 4,898,043 4,500,255 4,506,595 2,035,873 8,202,519 8,280,727 8,459,356 8,652,375 8,628,345 20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) ’00 ’01 ’02 ’03 ’04 ’05 ’00 ’01 ’02 ’03 ’04 ’05 ’00 ’01 ’02 ’03 ’04 ’05

2005 2004 *2003 *2002 **2001 **2000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Operating Revenue 4,506,595 4,500,255 4,898,043 4,329,289 4,968,670 2,611,499 Profit/(Loss) Before Taxation 276,702 389,905 457,826 391,108 411,536 (277,648) Profit/(Loss) After Taxation 198,259 247,416 268,572 227,749 235,758 (327,691) Profit/(Loss) After Taxation and Minority Interests 141,407 194,917 206,784 176,112 156,184 (412,750) Dividend Less Taxation 17,688 14,081 13,866 13,156 — — Net Tangible Assets Per Share (RM) 2.69 2.57 2.42 2.48 2.35 0.34 Debt/Equity Ratio 0.8 0.9 1.1 1.1 1.2 3.0 Return on Shareholders’ Equity (%) 5.3 7.7 8.8 7.7 7.2 (462.2) Earnings/(Loss) Per Share (sen) (Basic) 14.39 20.01 21.66 19.28 21.03 (156.94)

* Certain figures have been restated to conform with the requirements of new MASB Standards. ** The figures are as disclosed previously. Corporate Profile

4

DRB-HICOM Berhad is one of Malaysia’s leading automotive groups, playing an integral role in the nation’s road to industrialisation.

20 We are diversified yet focused, and have interests in key sectors of the 05 economy mainly:-

■ Automotive Manufacturing & Distribution 2005 ANNUAL REPORT DRB-HICOM BERHAD ■ Property Development & Construction ■ Services

DRB-HICOM will continue to look for opportunities that will benefit the Group and the country. (203430-W) AUTOMOTIVE MANUFACTURING PROPERTY DEVELOPMENT & SERVICES & DISTRIBUTION CONSTRUCTION The rapidly growing service- The Group’s leadership within DRB-HICOM is extensively based industry represents new this sector is reflected through involved in retail, commercial opportunities for DRB-HICOM. niche segmentation via new and residential property Our interests include IT, solid technology development and development, and has made waste management, financial continued strategic alliances strong inroads in the services, automotive services, with renowned global names construction sector. tourism and transportation. such as Mitsubishi, Isuzu, Citroen, Kawasaki, Tata, Honda, General Motors, Mahindra and Suzuki. We continuously seek new alliances to strengthen our base further and develop new business potential that will strengthen both DRB-HICOM and our partners.

5

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) Quality Achievements

DRB-HICOM companies awarded with the ISO/QS certification as at 25 May 2004

ALAM FLORA SDN. BHD.

18 August 1999 ISO 9001:1994 Project Management of Solid HICOM PROPERTIES Waste Management System SDN. BHD. 22 December 1999 26 August 2003 ISO 9002:1994 ISO 9001:2000 Operation Management of solid HICOM-TECK SEE waste, collection, cleansing, MANUFACTURING disposal and similar activities MALAYSIA SDN. BHD. 6 SCOTT & ENGLISH 19 May 2003 (MALAYSIA) SDN. BHD. 24 February 1995 ISO 9001:2000 ISO 9002 Operation Management of solid 15 August 2002 waste, collection, cleansing, 16 February 2001 ISO 9001 (2000) disposal and similar activities 20 QS 9000 18 February 2004 05 May 2005 ISO 14001:1996 ISO/TS 16949:2002 2005 ANNUAL REPORT DRB-HICOM BERHAD

HICOM-YAMAHA MOTOSIKAL DAN ENJIN KL AIRPORT SERVICES MANUFACTURING MALAYSIA NASIONAL SDN. BHD. SDN. BHD. SDN. BHD. 11 January 2002 October 1999 December 1997 ISO 9002:9004 Ground Handling

(203430-W) ISO 9002 ISO 9002

October 2003 August 2000 Recertified and converted to HICOM-HONDA Cargo ISO 9001:2000 MANUFACTURING ISO 9002 MALAYSIA SDN. BHD. May 2001 November 2002 In Flight Catering ISO 9002 “ISO Lloyd Register ORIENTAL SUMMIT Det Norske Veritas (DNV) Assurance” INDUSTRIES SDN. BHD. January 2003 7 December 1998 Recertified and converted ISO 9002 HICOM ENGINEERING to ISO 9001:2000 21 November 2002 SDN. BHD. QS 9000 January 1997 ISO 9002 1 March 2005 HICOM COMMUNICATIONS ISO/TS 16949:2002 July 2001 SDN. BHD. QS 9000 20 August 2004 14 October 2004 ISO 9001:2000 ISO/TS 16949:2002 Operation and Maintenance of Computer Equipment and Server for Data Management PUSAT PEMERIKSAAN KENDERAAN AUTOMOTIVE BERKOMPUTER SDN. BHD. MANUFACTURERS (PUSPAKOM) CENTRES (MALAYSIA) SDN. BHD.

WANGSA MAJU December 1997 TRW STEERING & SUSPENSION August 1999 ISO 9002 (M) SDN. BHD. ISO 9002:1994 January 1998 February 1999 PADANG JAWA “Vehicles Certification ISO 9002 JOHOR BAHRU Authority, United Kingdom (VCA)” IPOH February 2002 KUANTAN QS 9000 February 2001 7 ISO 9002:1994 February 2002 MALAYSIAN TRUCK & BUS TS 16949 February 2004 SDN. BHD. Recertified and converted to December 2002 ISO 9001:2000 4 August 2000 ISO 14001 ISO 9002 20 SEREMBAN 05 ALOR SETAR 4 August 2000 KOTA BHARU UKAS TAMAN BUKIT MALURI ZF STEERINGS (MALAYSIA) 2005 ANNUAL REPORT DRB-HICOM BERHAD February 2002 SDN. BHD. ISO 9002:1994 PHN INDUSTRY SDN. BHD. October 1995 February 2004 ISO 9002 Recertified and converted to March 1999 5 October 1999 ISO 9001:2000 MS ISO 9002:1994

QS 9000 (203430-W) HEAD OFFICE January 2003 8 February 2002 ALOR GAJAH MS IS0 9001:2000 ISO 14001 MAK MANDIN January 2003 KUALA TERENGGANU QS 9000:1998 February 2003 ISO 9002:1994 SIEMENS VDO INSTRUMENTS MY SDN. BHD. February 2004 HICOM DIECASTINGS Recertified and converted to 23 July 1993 SDN. BHD. ISO 9001:2000 ISO 9001:1994 March 1993 CHERAS 3 February 1998 ISO 9002 KOTA KINABALU QS 9000 February 2004 January 2002 ISO 9001:2000 23 November 1999 QS 9000 ISO 14001 Financial Calendar

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FINANCIAL YEAR END 31 March 2005

20 ANNOUNCEMENT OF RESULTS 05 First Quarter 26 August 2004

Second Quarter 29 November 2004 2005 ANNUAL REPORT DRB-HICOM BERHAD

Third Quarter 24 February 2005

Fourth Quarter 30 May 2005

PUBLISHED ANNUAL REPORT AND FINANCIAL STATEMENTS 30 August 2005

(203430-W) ANNUAL GENERAL MEETING 22 September 2005

DIVIDENDS First and Final • Announcement Date 30 May 2005 • Record Date 23 September 2005 • Payment Date 18 October 2005 9

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) Corporate Information

as at 25 July 2005

DIRECTORS 10 Tan Sri Dato’ Seri Mohd Saleh Sulong Low Nyap Heng Group Chairman Independent Non-Executive Director

20 Datuk Mohd Khamil Jamil Lee Yoon Min 05 Deputy Group Chairman Independent Non-Executive Director

2005 ANNUAL REPORT DRB-HICOM BERHAD Dato’ Haji Mohamad Nor Mohamad Maj. Gen. (Rtd.) Dato’ Amir Baharudin Independent Non-Executive Director Independent Non-Executive Director

Datin Hjh. Safiah Basrah Datuk Abu Samah Bachik Non-Independent Non-Executive Director (Alternate to Tan Sri Dato’

(203430-W) Seri Mohd Saleh Sulong) Ibrahim Taib Senior Group Director, Operations Non-Independent Non-Executive Director

Dato’ Syed Md. Amin Syed Jan Aljeffri Independent Non-Executive Director AUDIT COMMITTEE SECRETARIES AUDITORS 11 Chairman Choo Chock Fah (LS 04409) PricewaterhouseCoopers Dato’ Haji Mohamad Nor Mohamad Chartered Accountants Chang Pie Hoon (MAICSA 7000388) 11th Floor, Wisma Sime Darby Members Jalan Raja Laut Low Nyap Heng 50350 Kuala Lumpur REGISTERED OFFICE 20 Tel:(03) 2693 1077 Lee Yoon Min 05 Level 5, Wisma DRB-HICOM Fax : (03) 2693 0997 Dato’ Syed Md. Amin Syed Jan Aljeffri No. 2, Jalan Usahawan U1/8 2005 ANNUAL REPORT DRB-HICOM BERHAD Seksyen U1, 40150 Shah Alam Selangor Darul Ehsan BANKS Tel:(03) 2052 8000 REMUNERATION COMMITTEE RHB Bank Berhad Fax : (03) 2052 8118 Chairman Bumiputra-Commerce Low Nyap Heng Bank Berhad (203430-W) REGISTRAR Members OCBC Bank (Malaysia) Berhad Tan Sri Dato’ Seri Mohd Saleh Sulong PFA Registration Services Sdn. Bhd. Affin Bank Berhad 1301, Level 13, Uptown 1 Maj. Gen. (Rtd.) Dato’ Amir Baharudin No. 1, Jalan SS21/58 Malayan Banking Berhad Lee Yoon Min Damansara Uptown AmBank Berhad 47400 Petaling Jaya Selangor Darul Ehsan NOMINATION COMMITTEE Tel:(03) 7725 4888 STOCK EXCHANGE LISTING Fax : (03) 7722 2311 Chairman Main Board of Dato’ Syed Md. Amin Syed Jan Aljeffri Bursa Malaysia Securities Berhad

Members Dato’ Haji Mohamad Nor Mohamad

Datin Hjh. Safiah Basrah

Maj. Gen. (Rtd.) Dato’ Amir Baharudin Board of Directors

03 Datin Hjh. Safiah Basrah 04 Ibrahim Taib Non-Independent Non-Executive Director Non-Independent Non-Executive Director

05 Dato’ Haji Mohamad Nor Mohamad 06 Low Nyap Heng Independent Non-Executive Director Independent Non-Executive Director

12

03 04 20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD

(203430-W) 05 06

01

Tan Sri Dato’ Seri Mohd Saleh Sulong Group Chairman 07 Lee Yoon Min 08 Dato’ Syed Md. Amin Syed Jan Aljeffri Independent Non-Executive Director Independent Non-Executive Director

09 Maj. Gen (Rtd.) Dato’ Amir Baharudin 10 Datuk Abu Samah Bachik Independent Non-Executive Director Alternate Director to Tan Sri Dato’ Seri Mohd Saleh Sulong

13

07 08 20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD

09 10 (203430-W)

02

Datuk Mohd Khamil Jamil Deputy Group Chairman Profile of Board of Directors

TAN SRI DATO’ SERI Malaysian, aged 54, MOHD SALEH SULONG Group Chairman

14 TAN SRI DATO’ SERI MOHD SALEH SULONG, a Malaysian, aged 54, is Group Chairman of DRB-HICOM Berhad. He was appointed to the Board on 26 June 1992. Before assuming his current position as Group Chairman on 5 March 1997, he was the Group Managing Director. He is Chairman 20 of the Board Executive Committee and a member of the Board 05 Remuneration Committee. Tan Sri Dato’ Seri Mohd Saleh is a member of the Chartered Institute of

2005 ANNUAL REPORT DRB-HICOM BERHAD Management Accountants, United Kingdom. He served as an Accountant of Cycle & Carriage Bintang Berhad, Cycle & Carriage (Malaysia) Sdn. Bhd. and United Cycle Sdn. Bhd. for 10 years before his appointment as Executive Director of the Master-Carriage Group of Companies in 1984. Besides being involved in the motor industry for more than 30 years, he has acquired vast experience in other business activities, which include financial services,

(203430-W) public utility services, insurance, property development and construction.

Tan Sri Dato’ Seri Mohd Saleh is Chairman of HICOM Holdings Berhad, Gadek (Malaysia) Berhad, Edaran Otomobil Nasional Berhad, EON Capital Berhad, Horsedale Development Berhad and several private limited companies under DRB-HICOM. He also serves on the Board of Directors of Perbadanan Usahawan Nasional Berhad. Besides, he is also Chairman of Kolej Universiti Teknikal Kebangsaan Malaysia, Chairman of the Board of Trustees of Yayasan Budiman Universiti Teknologi Mara, Trustee of Yayasan Kebajikan Negara and Advisor/Fellow Council Member for Malay Chamber of Commerce Malaysia, City of Kuala Lumpur.

Tan Sri Dato’ Seri Mohd Saleh does not have any family relationship with any other Director and/or other major shareholder of the Company and has no conflict of interest with the Company. He has had no convictions for offences within the past ten years.

Tan Sri Dato’ Seri Mohd Saleh attended all six Board Meetings of the Company held in the financial year ended 31 March 2005. Malaysian, aged 49, DATUK MOHD KHAMIL JAMIL Deputy Group Chairman

DATUK MOHD KHAMIL JAMIL, a Malaysian, aged 49, is Deputy Group 15 Chairman of DRB-HICOM Berhad. He was appointed to the Board on 19 July 2005 and is a member of the Board Executive Committee. He holds a Bachelor of Laws (Honours) Degree from University of London and is a Barrister-at-Law at Gray’s Inn, England and was called to the English Bar in 1983. 20 Datuk Mohd Khamil had his first executive career with Bank Bumiputra 05 Malaysia Berhad (BBMB) from August 1980 until November 1989. He was called to the Malaysia Bar in September 1990 and was a practising partner 2005 ANNUAL REPORT DRB-HICOM BERHAD of several legal firms before venturing into business in 2001.

Datuk Mohd Khamil is also a Director of Tradewinds Corporation Berhad, UMLand Berhad and several other private limited companies.

Datuk Mohd Khamil is a major shareholder of the company by virtue of his (203430-W) deemed interest through Etika Strategi Sdn. Bhd. which holds approximately 15.8% equity stake in DRB-HICOM Berhad. He does not have any family relationship with any other Director and/or major shareholder of the Company and has no conflict of interest with the Company. He has no convictions for offences within the past ten years.

Datuk Mohd Khamil did not attend any Board Meeting of the Company held in the financial year ended 31 March 2005 as he was appointed to the Board on 19 July 2005. Profile of Board of Directors

16 DATO’ HAJI MOHAMAD NOR MOHAMAD

Malaysian, aged 73, 20 Independent 05 Non-Executive Director

2005 ANNUAL REPORT DRB-HICOM BERHAD DATO’ HAJI MOHAMAD NOR MOHAMAD, a In the public sector, Dato’ Haji Mohamad Nor was a Malaysian, aged 73, is an Independent Non-Executive former Senator. He is also a council member (since Director of DRB-HICOM Berhad. He was appointed to 1983) of Malaysian Industrial Development Authority the Board on 26 December 2001. He is Chairman of (MIDA). He served as a steering committee member the Board Audit Committee and a member of the (1977 to 1978) to set up Permodalan Nasional Berhad Board Nomination Committee. Being a senior (PNB) and Amanah Saham Nasional (ASN). He was the (203430-W) Independent Non-Executive Director, he is the Referral Chairman of National Rice Board (LPN) (1985 to 1991). Director to whom investor concerns may be conveyed. He also sat on the Boards of SEDC Terengganu (1971 to 1976) and SEDC Sarawak (1984 to 1999). He also Dato’ Haji Mohamad Nor is a Chartered Accountant served as Chairman of the Boards of Bank Utama (England & Wales). He was a council member, (Malaysia) Berhad (1994 to 1996) and Utama Banking Malaysian Institute of Accountants (1977 to 1987); Group Berhad (1995 to 1997). He is a Trustee and Deputy President, Malaysian Association of Certified Board Member of Malaysian University of Science & Public Accountants (1969 to 1972); a council member, Technology (MUST) since inception. ASEAN Federation of Accountants (1978 to 1980) and a member of the Institute of Certified Public Dato’ Haji Mohamad Nor also sits on the Boards of Accountants, Singapore (since 1966). MK Land Holdings Berhad, HICOM Berhad and several other private limited companies. Dato’ Haji Mohamad Nor started his career as the Treasury Accountant and Chief Accountant of RIDA Dato’ Haji Mohamad Nor does not have any family (now known as MARA) from 1959 to 1964. He is a relationship with any other Director and/or major founder partner of Hanafiah Raslan & Mohamad shareholder of the Company and has no conflict of (“HRM”), a public accounting firm established in 1964. interest with the Company. He has had no convictions From 1964 to 1994, he assumed key positions in HRM for offences within the past ten years. and its merged entities. Prior to his retirement from practice in 1994, he was the Chairman of Arthur Dato’ Haji Mohamad Nor attended all six Board Andersen & Co, Malaysia (1990 to 1994). Meetings of the Company held in the financial year ended 31 March 2005. 17

DATIN HJH. SAFIAH BASRAH IBRAHIM TAIB

Malaysian, aged 54, Malaysian, aged 50, Non-Independent Non-Independent 20 Non-Executive Director Non-Executive Director 05

DATIN HJH. SAFIAH BASRAH, a Malaysian, aged 54, IBRAHIM TAIB, a Malaysian, aged 50, is a Non- 2005 ANNUAL REPORT DRB-HICOM BERHAD is a Non-Independent Non-Executive Director of Independent Non-Executive Director of DRB-HICOM DRB-HICOM Berhad. She was appointed to the Board Berhad. He was appointed to the Board on 18 March on 18 March 2004. She is a member of the Board 2004. He holds a Bachelor of Laws (Hons) from Nomination Committee. She holds a Bachelor of University of Malaya, Malaysia and a Master of Laws Economics (Hons) from University of Malaya, Malaysia. (LLM) from University of London. (203430-W) Datin Hjh. Safiah is currently the Secretary, Monitoring Ibrahim started his career in Judicial Legal Service in and Control Division, Treasury, Ministry of Finance. 1978 as a Magistrate in the Magistrate Court, Jalan She started her career in the Civil Service in 1973 and Duta, Kuala Lumpur. Thereafter, he was transferred to has served in various positions with Public Services Magistrate Court, Segamat. In 1982, he was a Legal Department, Ministry of Health, Ministry of Agriculture, Advisor with the Road Transport Department. Economic Planning Unit, Prime Minister’s Department, Later in 1986, he was posted to the Ministry of Ministry of Defence and Ministry of Finance. Human Resources as a Legal Advisor. In October 1989, he was attached to the Attorney-General Chambers as Datin Hjh. Safiah also sits on the Board of HICOM a Deputy Public Prosecutor for Selangor. In 1992, he Holdings Berhad, HICOM Berhad, Perbadanan served as a Judge in the Session Court, Kota Bahru. Kemajuan Ekonomi Negeri Perlis (PKENPs) and In July 1992, he was posted to Employees Provident Lembaga Kemajuan Terengganu Tengah (KETENGAH). Fund Board and currently holds the position of Senior General Manager of Legal Department. Ibrahim also Datin Hjh. Safiah does not have any family sits on the Board of Projek Bandar Samariang Sdn relationship with any other Director and/or major Bhd and Bandar Eco-Setia Sdn Bhd. shareholder of the Company and has no conflict of interest with the Company. She has had no Ibrahim does not have any family relationship with convictions for offences within the past ten years. any other Director and/or major shareholder of the Company and has no conflict of interest with the Of the six Board Meetings of the Company held in Company. He has had no convictions for offences the financial year ended 31 March 2005, Datin Hjh. within the past ten years. Safiah attended all except for one for which she had extended her apology. Ibrahim attended all six Board Meetings of the Company held in the financial year ended 31 March 2005. Profile of Board of Directors

18 DATO’ SYED MD. AMIN SYED JAN ALJEFFRI

Malaysian, aged 57, 20 Independent 05 Non-Executive Director

2005 ANNUAL REPORT DRB-HICOM BERHAD DATO’ SYED MD. AMIN SYED JAN ALJEFFRI, a Dato’ Syed sits on the Boards of Bina Darulaman Malaysian, aged 57, is an Independent Non-Executive Berhad, LBI Capital Berhad (formerly known as Director of DRB-HICOM Berhad. He was appointed to Rumpun Hijau Capital Berhad), Kulim Technology Park the Board on 1 August 2002. He is Chairman of the Corporation Berhad, Seloga Holdings Berhad, Tien Wah Board Nomination Committee and a member of the Press Holdings Berhad, Pembangunan Sumber Manusia Board Audit Committee. Berhad, Mines City Hotel Berhad and several other (203430-W) private limited companies. He is the President of the Dato’ Syed holds a Bachelor of Economics (Hons) Degree Malay Chamber of Commerce, Kuala Lumpur and from University of Malaya, Malaysia. He is a Chartered Chairman of the ASEAN Business Advisory Council. Accountant by profession. He is a Fellow Member of He also serves as a Council Member of Malaysia-China the Malaysian Institute of Taxation, a Member of the Business Council and East Asia Business Council. Malaysian Institute of Accountants, and a Member of He is also a Director of the Islamic University College the Canadian Institute of Chartered Accountants, of Malaysia and the Small and Medium Industries Malaysian Institute of Certified Public Accountants, Development Corporation (SMIDEC). He is also the Institute of Certified Public Accountants of Singapore Malaysian Honorary Council for the Federal and Financial Planning Association of Malaysia. Democratic Republic of Ethiopia.

Dato’ Syed started his career as a Financial Analyst in Dato’ Syed does not have any family relationship with Esso Malaysia Berhad (1971 to 1973). He was a any other Director and/or major shareholder of the Chartered Accountant for Touche Ross & Co., British Company and has no conflict of interest with the Columbia, Canada (1973 to 1976); Senior Accountant Company. He has had no convictions for offences of Esso Malaysia Berhad (1977 to 1979); Staff Financial within the past ten years. Analyst of Esso Eastern Inc. Texas, United States of America (1979 to 1980) and Operations Accounting Of the six Board Meetings of the Company held in Manager of Esso Production Malaysia Inc. in 1981. the financial year ended 31 March 2005, Dato’ Syed He is currently Chairman of his own firm, Aljeffri attended all except for two for which he had Dean, Chartered Accountants (M). extended his apologies. 19

LOW NYAP HENG LEE YOON MIN

Malaysian, aged 54, Malaysian, aged 67, Independent Independent 20 Non-Executive Director Non-Executive Director 05

LOW NYAP HENG, a Malaysian, aged 54, is an LEE YOON MIN, a Malaysian, aged 67, is an 2005 ANNUAL REPORT DRB-HICOM BERHAD Independent Non-Executive Director of DRB-HICOM Independent Non-Executive Director of DRB-HICOM Berhad. He was appointed to the Board on 15 June Berhad. He was appointed to the Board on 1999. He is Chairman of the Board Remuneration 26 December 2001. He is a member of the Board Committee and a member of the Board Audit Audit Committee and Remuneration Committee. Committee.

Lee Yoon Min is a Chartered Accountant by profession. (203430-W) Low Nyap Heng is an Associate member of the He is a Fellow member of the Institute of Chartered Institute of Chartered Secretaries and Administrators, Accountants in Australia and an Associate member of United Kingdom. He is currently Executive Director of CPA Australia. He is also a member of the Malaysian Bukit Melita Sdn. Bhd. and Jackin International Institute of Certified Public Accountants and Malaysian Holdings Ltd. Prior to that, he was Chief Executive Institute of Accountants. Officer of Ayer Hitam Tin Dredging (Malaysia) Berhad from 1991 to 1993. He had also served as Executive Lee Yoon Min began his career with Turquand Director of Kampung Lanjut Tin Dredging Berhad and Youngs & Co in Kuala Lumpur and Hanafiah Raslan & Director of Roxy Industries Malaysia Berhad and Mohamad, and is currently a Chartered Accountant Projects for Asia (Management) Sdn. Bhd. He does not of his own firm. He does not have any other have any other directorships in other public companies. directorships in other public companies.

Low Nyap Heng does not have any family relationship Lee Yoon Min does not have any family relationship with any other Director and/or major shareholder of with any other Director and/or major shareholder of the Company and has no conflict of interest with the the Company and has no conflict of interest with the Company. He has had no convictions for offences Company. He has had no convictions for offences within the past ten years. within the past ten years.

Of the six Board Meetings of the Company held in Lee Yoon Min attended all six Board Meetings the financial year ended 31 March 2005, Low Nyap of the Company held in the financial year ended Heng attended all except for one for which he had 31 March 2005. extended his apology. Profile of Board of Directors

20 MAJ. GEN. (RTD.) DATO’ AMIR BAHARUDIN

Malaysian, aged 59, 20 Independent 05 Non-Executive Director

2005 ANNUAL REPORT DRB-HICOM BERHAD MAJ. GEN. (RTD.) DATO’ AMIR BAHARUDIN, a Malaysian, were the Armed Forces Headquarters Deputy Chief of aged 59, is an Independent Non-Executive Director of Human Resource (1993 to 1996), the Army Headquarters DRB-HICOM Berhad. He was appointed to the Board Inspector General (1997-1998) and the Army’s Director on 30 June 2003. He is a member of the Board General of Training Management (1998-2001). He was Remuneration Committee and Nomination Committee. also involved in many special projects in the Armed Forces especially related to training and HRD and (203430-W) Dato’ Amir is an Old Putera of the Royal Military organisation building. He was directly responsible, College, Sungai Besi and is a graduate of the amongst others, in the forming up of the Malaysian internationally renowned and prestigious British Royal Army Parachute Brigade and the Malaysian Armed Military Academy, Sandhurst, England. He was Forces Academy (ATMA). commissioned into the Royal Malay Regiment of the Malaysian Army in December 1965. He attended many Dato’ Amir is Chairman of Style At Work Sdn Bhd. military courses overseas namely in the United States He also sits on the Board of Usahasama SPNB-LTAT of America, Indonesia and Australia, besides attending Sdn. Bhd. He was the Head of the Centre of Defence courses locally. He also holds a Master of Science and Security Programmes, Open University Malaysia, a Degree in Training and Human Resource Management position he held from February 2001 to October 2003. from the University of Leicester, England. Dato’ Amir does not have any family relationship with Dato’ Amir served the country for 37 years and any other Director and/or major shareholder of the retired from military service in January 2001. During Company and has no conflict of interest with the that service he saw action during the Indonesian Company. He has had no convictions for offences Confrontation and the Emergency against Communist within the past ten years. insurgency. He held various command and staff positions in the Armed Forces both at the operational Dato’ Amir attended all of the six Board Meetings and strategic levels, including a stint as a diplomat in of the Company held in the financial year ended Australia from 1989 to 1992. Amongst the more 31 March 2005. significant senior and strategic appointments he held 21

DATUK ABU SAMAH BACHIK

Malaysian, aged 58, Alternate Director to Tan Sri 20 Dato’ Seri Mohd Saleh Sulong 05

DATUK ABU SAMAH BACHIK, a Malaysian, aged 58, In 1995, Datuk Abu Samah joined Master-Carriage 2005 ANNUAL REPORT DRB-HICOM BERHAD was appointed to the Board of DRB-HICOM Berhad (Malaysia) Sdn. Bhd. as Group Director, Special as Alternate Director to Tan Sri Dato’ Seri Mohd Saleh Functions. Later, he was appointed as Group Director, Sulong on 15 July 1997. He currently holds the position Public and Corporate Affairs, DRB-HICOM. Prior to of Senior Group Director, Operations of DRB-HICOM. assuming the present position on 1 August 2002,

He is a member of the Board Executive Committee. he was Group Director, Operations (Services) of (203430-W) DRB-HICOM. He holds a Bachelor of Arts Degree in Economics from University of Malaya, Malaysia; Diploma in Datuk Abu Samah is Chairman of Imatex Berhad. Management Science from National Institute of He also sits on the Boards of HICOM Holdings Berhad, Administration (INTAN), Malaysia; and a Master in Horsedale Development Berhad, Intrakota Consolidated Business Administration from University of Oregon, Berhad, Rebak Island Marina Berhad, Kenyir Splendour United States of America. Berhad and several private limited companies under DRB-HICOM. Datuk Abu Samah started his career in the Civil Service in 1973 as Assistant Secretary in the Ministry Datuk Abu Samah does not have any family of Work and Energy. He was Assistant Director, relationship with any other Director and/or major Public Services Department from 1978 to 1979; shareholder of the Company and has no conflict of Special Officer to the Prime Minister from 1982 to interest with the Company. He has had no convictions 1989 and Deputy Principal Private Secretary to the for offences within the past ten years. Prime Minister from 1990 to 1995. Management Team

BACK ROW from left to right MIDDLE ROW from left to right DATUK WILLIAM CHONG Group Director, Automotive DATO’ MOHD NOR MOHAMAD Senior Group Director, Distribution, DATO’ B. BHASKARAN PILLAI Group Legal Affairs & Corporate Governance, DATO’ YATINA Director, Special Projects, DATUK ABD. RASHID ABD. YAHAYA Senior Group Director, Management Support RAHIM Group Director Services, HAJI ABBAS MEHAD & Group Synergy, DATUK HAJI FAISAL SIRAJ Senior Group Director, Automotive Production & Engineering. Group Director, Financial Services & Treasury.

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20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W)

TAN SRI DATO’ SERI MOHD SALEH SULONG Group Chairman BACK ROW from left to right MIDDLE ROW from left to right LOW ENG TIK Group Director, Internal Audit, DATUK ABU SAMAH BACHIK Senior Group Director, PHILIP AMIR SALLEH Group Director, Property Operations, DATO’ MAZNAH ABDUL JALIL Senior Development & Construction, ABD MALEK ABD MAJID Group Director, Corporate Finance & Advisory, Group Director, Human Resource & Administration, MARK AZIZ SALLEH Senior Group Director, Technology. CHANG PIE HOON Company Secretary. NOT IN the picture: AHMAD OTHMAN YAHAYA Group Director, Group Chairman’s Office

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20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W)

DATUK MOHD KHAMIL JAMIL Deputy Group Chairman DRB-HICOM

E.I. : 100% E.I. : 55% E.I. : 80% E.I. : 90% E.I. : 100% E.I. : 100% E.I. : 100%

Pusat Pemeriksaan Motosikal Dan Enjin Malaysian Truck & DRB-HICOM DRB-HICOM Defence Gadek (Malaysia) Suzuki Malaysia Kenderaan Nasional Sdn. Bhd. Bus Sdn. Bhd. Information Technologies Berhad Automobile Berkomputer Sdn. Bhd. Technologies Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.

E.I. : 100% E.I. : 55% E.I. : 70% E.I. : 85% E.I. : 100% E.I. : 100%

Puspakom Edaran Modenas Perspec Prime Gadek-Perspec Mega Consolidated Ladang Gadek Teknik Sdn. Bhd. Sdn. Bhd. (Malaysia) Sdn. Bhd. Consortium Sdn. Bhd. Development Sdn. Bhd. Sdn. Bhd.

E.I. : 100% E.I. : 31.90% E.I. : 70% E.I. : 42.50% E.I. : 100%

Flora Areana PT Modenas Spegabina South Klang HICOM Sdn. Bhd. Putra Motor Sdn. Bhd. Valley Expressway Holdings Berhad Indonesia Sdn. Bhd.

E.I. : 55% E.I. : 56.28% E.I. : 42.50%

Multi Automotive The One Mix Central Eastern Service and Assist Sdn. Bhd. Link Expressway Sdn. Bhd. Sdn. Bhd.

24

E.I. : 100% E.I. : 100% E.I. : 100% E.I. : 100% E.I. : 100% E.I. : 100%

HICOM HICOM Desa Puchong HICOM Network NSE Development Bukit Kledek Diecastings Engineering Sdn. Bhd. Services Sdn. Bhd. Sdn. Bhd. Development 20 Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.

05 E.I. : 70% E.I. : 100% E.I. : 51% E.I. : 60%

Scott & English HICOM HICOM Teck-See KL Airport 2005 ANNUAL REPORT DRB-HICOM BERHAD Electronics Holdings Communications Manufacturing Services Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. Malaysia Sdn. Bhd.

E.I. : 70% E.I. : 100% E.I. : 70% E.I. : 50.99% E.I. : 60%

Scott & English HICOM Teleservices PT HICOM HICOM KLAS Engineering Electronics Sdn. Bhd. Sdn. Bhd. BMS Automotive Plastic Services Sdn. Bhd. (Thailand) Ltd. (203430-W) E.I. : 100% E.I. : 100% E.I. : 70%

USF-HICOM Automotive Scott & English Holdings Corporation (Malaysia) Sdn. Bhd. Sdn. Bhd. Holdings Sdn. Bhd.

E.I. : 100% E.I. : 100% E.I. : 70% E.I. : 70%

USF-HICOM Automotive HICOM United Scott & English (Malaysia) Corporation Leasing Sdn. Bhd. (Cambodia) Ltd. Sdn. Bhd. (Malaysia) Sdn. Bhd.

E.I. : 100% E.I. : 100% E.I. : 93% E.I. : 100% E.I. : 70% E.I. : 35.70%

Directional Auto Automotive Stagwell Sdn. Bhd. Myanmar Scott & English (Malaysia) Prominence Manufacturers Scott & English Trading (Sarawak) Sdn. Bhd. (M) Sdn. Bhd. (Malaysia) Sdn. Bhd. Company Ltd. Sdn. Bhd.

E.I. : 100% Euro Truck & Bus (Malaysia) Sdn. Bhd.

E.I. : 29.31% E.I. : 20.20% E.I. : 48% E.I. : 45% E.I. : 45% E.I. : 42.50%

Edaran Otomobil EON Capital HICOM-HONDA HICOM-YAMAHA HICOM-SUZUKI PHN Industry Nasional Berhad Berhad Manufacturing Manufacturing Manufacturing Sdn. Bhd. Malaysia Sdn. Bhd. Malaysia Sdn. Bhd. Malaysia Sdn. Bhd.

E.I. : 33.33% E.I. : 30% E.I. : 20% E.I. : 25% E.I. : 24.50% E.I. : 48%

Siemens VDO ZF Steerings TRW Steering Boustead Niro Ceramic MBM Alam Instruments (Malaysia) Sdn. Bhd. and Suspension Heah Joo Seang (M) Sdn. Bhd. Flora W.L.L. MY Sdn. Bhd. (Malaysia) Sdn. Bhd. Sdn. Bhd. Berhad(As at 31 March 2005)

E.I. : 100% E.I. : 34% E.I. : 49% E.I. : 20% E.I. : 100% E.I. : 70% E.I. : 77.25% E.I. : 29.99%

HICOMOBIL Honda Malaysia Isuzu Malaysia Gerbang Perdana Imatex Intrakota Komposit DRB-HICOM Export Marak Unggul Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. Berhad Sdn. Bhd. Corporation Sdn. Bhd. Sdn. Bhd.

E.I. : 100% E.I. : 51% E.I. : 100% E.I. : 70% E.I. : 70%

Ladang Kupang Uni.Asia Imatex Gemilang Komposit Mega Komposit Development Capital Management Auto Sdn. Bhd. Auto Sdn. Bhd. Sdn. Bhd Sdn. Bhd. Services Sdn. Bhd.

E.I. : 51% E.I. : 34.73% E.I. : 47.34% E.I. : 25.56%

Uni.Asia Life Uni.Asia General Intrakota Airport Coach Assurance Insurance Consolidated Sdn. Bhd. Berhad Berhad Sdn. Bhd.

E.I. : 34.73% E.I. : 10.42% E.I. : 34.73% E.I. : 70% E.I. : 69.99%

Seains Pte. Ltd. South East Asia South East S. J. Kenderaan Syarikat Insurance (B) Management Sdn. Bhd. Pengangkutan Sdn. Bhd. Sdn. Bhd. Malaysia Sdn. Bhd.

E.I. : 34.73% E.I. : 42% E.I. : 39.06%

Chattel S. J. Binateknik Toong Fong Credit & Leasing Sdn. Bhd. Omnibus Company Sdn. Bhd. Sdn. Bhd. 25

E.I. : 60% E.I. : 51% E.I. : 55% E.I. : 51% E.I. : 100% Proton City HICOM HICOM Technical Development Alam Flora HICOM Vertex Petro-Pipes Sdn. Bhd. Sdn. Bhd. and Engineering Corporation Sdn. Bhd. Services Sdn. Bhd. Sdn. Bhd. 20

E.I. : 70% E.I. : 100% E.I. : 100% E.I. : 100% E.I. : 100% E.I. : 51% 05

Oriental Summit DRB- HICOM Equality Services HICOM Dewan HICOM Ventures HICOM Industries Sdn. Bhd. IT Solutions Sdn. Bhd. Development Sdn. Bhd. Environmental 2005 ANNUAL REPORT DRB-HICOM BERHAD Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.

E.I. : 70% E.I. : 70% Automotive OSI Manufacturing Components Sdn. Bhd. Engineering Centre Sdn. Bhd. (203430-W) E.I. : 70% E.I. : 100% Comtrac HICOM Sdn. Bhd. Berhad

E.I. : 70% E.I. : 70% E.I. : 70% E.I. : 89.50% E.I. : 100% Comtrac Trading Isti-Emas Comtrac Glenmarie Cove HICOM Sdn. Bhd. Properties Sdn. Bhd. Development Properties Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.

E.I. : 70% E.I. : 67.90% E.I. : 56% E.I. :100% E.I. : 100% E.I. : 58% E.I. : 30% HB Property Comtrac Comtrac Ciri- Alam Bina Kenyir Puncak Permai Sucasa Sdn. Bhd. Development Splendour Berhad Sdn. Bhd. Premises Sdn. Bhd. Precast Sdn. Bhd. Sdn. Bhd. Sdn. Bhd.

E.I. : 42% E.I. : 35.70% E.I. : 35.70% E.I. : 100% E.I. : 100% E.I. : 70.60% E.I. : 70.60% Comtrac-Sabkar Connemara HICOM Facility Horsedale Kesturi Hektar HICOM-TNB Comtrac Glenview Development Properties Sdn. Bhd. Development Sdn. Bhd. Management Berhad Development Berhad Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. E.I. : 74.63% E.I. : 51% E.I. : 35.30% E.I. : 35% E.I. : 34.30% E.I. : 34.30% HICOM-Gamuda Comtrac Comtrac-Concrete Comtrac-Concrete HICOM Megah HICOM Menang Sdn. Bhd. Properties Sdn. Bhd. Development Businessworld Constructions Constructions Sdn. Bhd. Sdn. Bhd. Sdn. Bhd. JV Sdn. Bhd. E.I. : 67.17% E.I. : 100% E.I. : 60% NOTE: Corwin Holdings HICOM Indungan Rebak Island E.I. DRB-HICOM Group’s Effective Interest Pte. Ltd. Sdn. Bhd. Marina Berhad Automotive Services E.I. : 51% E.I. : 50% + 1 share Property Development Investment Holding & Construction HICOM-Selangor HICOM Tan & Tan Sdn. Bhd. Marine Management Dormant Sdn. Bhd. PERFORMANCE review 26

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2005 ANNUAL REPORT DRB-HICOM BERHAD CHAIRMAN’S STATEMENT

36 OPERATIONS REVIEW (203430-W) 27

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) Chairman’s Statement

28 It gives me great pleasure to present, on behalf

20 of the Board of Directors, the financial results and 05 operations of DRB-HICOM Berhad (DRB-HICOM/Company) 2005 ANNUAL REPORT DRB-HICOM BERHAD and its Group of Companies (Group) for the financial year ended 31 March 2005. (203430-W) 29

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W)

TAN SRI DATO’ SERI MOHD SALEH SULONG Group Chairman

OVERVIEW A few years ago, DRB-HICOM began a determined journey towards renewed competitiveness and profitability. We drew important lessons from our past, focused on key areas of expertise, strengthened our base in our core business, namely automotive manufacturing and distribution, and laid out the critical building blocks that were to drive and sustain long-term growth for the Company. Chairman’s Statement

I am pleased to say that we have been making solid FINANCIAL PERFORMANCE 30 progress as we forged ahead on our chosen track. This In 2004, the Malaysian economy experienced spectacular is reflected in a growing number of successful alliances growth, surpassing market expectations by recording and partnerships that have opened doors to new 7.1% growth. The country’s strong economic business prospects and undertakings that are set to fundamentals were a boon for Corporate Malaysia and enhance DRB-HICOM’s presence in the domestic market 20 companies, large and small, have benefited in some and propel the Group into the global arena. 05 form or other.

Our success lies in our firm commitment to deliver 2005 ANNUAL REPORT DRB-HICOM BERHAD Backed by a strong management team and sound superior shareholder returns in the most transparent fundamentals, DRB-HICOM performed well during the manner possible. We have strengthened our presence in financial year under review. The only set-back was the all key business pillars, and have achieved many notable outcome of the Electrified Double Track project firsts that have further enhanced the DRB-HICOM brand between Rawang and Ipoh. After a series of in Malaysia and globally. The fact that we are the negotiations between DRB-HICOM and the Government,

(203430-W) country’s single largest integrated automotive company it was mutually agreed to terminate the contract. is undisputed, and it is this standing that enables us to However, due to the Group’s strong overall continue attracting global brand names to partner with performance for a large part of the year, we managed us on a long-term basis. The confidence of such renown to post strong gains on a full year basis. partners in DRB-HICOM speaks volumes for us.

I am pleased to announce that DRB-HICOM posted a What I can say with absolute certainty is that the DRB- total turnover of RM4.51 billion for the financial year HICOM of today is much stronger and focused than it ended 31 March 2005. Riding on a sharp recovery in had been in prior years. Our strategies are clearly motor vehicle sales, the Group’s automotive business yielding results – in terms of an improved competitive chalked up RM2.45 billion in sales. The services sector position, an enhanced capacity to innovate and a also generated strong sales of RM1.5 billion, buoyed by greater ability to deliver results to all our stakeholders. new business endeavors. However, a lethargic market Our strong financial results bear testimony of our environment dealt a minor setback to the Group’s achievements. Despite occasional hitches along the way, property development and construction arm, which the Group has manifested its strength and resilience to turned in lower turnover of RM536 million. withstand any adverse cycle, economic or otherwise. The Group however recorded a lower profit before tax The year under review will no doubt go down in history of RM276.7 million for the period under review, against as the year that DRB-HICOM grabbed headline news as 31 RM389.9 million in the previous financial year. The 15.8% of the Company’s equity was offered for sale by attrition in profits is mainly due to the effect of change the single largest shareholder, resulting in several parties in profit estimate in respect of the Electrified Double vying for the stake. We were subjected to many market Track project and the impairment/write-down of the speculations and I daresay that we would not have been 20 carrying value of certain fixed assets involving the as appealing to the various interested parties had we 05 Kenyir Golf Course in Terengganu and the Rebak been in one poor shape. It is our very essence and Marina Resort in Langkawi. strong track record that made DRB-HICOM enticing to 2005 ANNUAL REPORT DRB-HICOM BERHAD investors and the entire exercise merely affirmed what Analysing it deeper, the profit before tax for the we all knew – that DRB-HICOM is a formidable force to financial year under review is comparable to the be reckoned with. amount of the previous financial year. Results for the previous financial year (ended 31 March 2004) had been We are pleased that the outcome has been acceptable enhanced by a non-operational net gain of RM95.2 to all parties involved and we look forward to a new (203430-W) million arising from debt restructuring/loss on disposal chapter for DRB-HICOM as we pursue new strategies of assets of bus-related companies. Excluding this one- and avenues for growth. We are confident that the off gain, the Group’s profit before tax in the previous Group’s main structure and direction will remain year would have been RM294.7 million instead of unchanged, as this has been a proven formula that has RM389.9 million. On this basis, the Group’s results of consistently churned stellar growth and profits. We RM276.7 million for the financial year ended 31 March believe this new phase in our corporation will bring 2005 are comparable against RM294.7 million in the about positive changes that will further boost our previous financial year. financial standing and performance, enabling us to continue delivering superior shareholder returns. Overall, it has been a respectable year for the Group. We are aware that there are clearly still many areas for Developments in the automotive sector were the main improvement but as long as we march on our growth contributing factor towards the Group’s overall path, I am confident we will vault ahead to seize impressive performance. Despite strong competition and opportunities as they unfold. an onslaught of new vehicles in various price categories, we managed to pull ahead from the competition and made a strong impact in the automotive sector. Chairman’s Statement

INVESTOR RELATIONS KEY INITIATIVES 32 Continuous efforts by the Group to promote and As we build our competitive edge, the Group believes market DRB-HICOM have yielded positive results as seen the deployment of information technology is critical to in sustained foreign investor interest and strong help us stay one step ahead in this rapidly evolving and institutional following in the Group. Although the share dynamic market place. Several new ICT initiatives were 20 price has retreated from the previous year’s levels, the implemented during the period under review. The 05 Group is seeing renewed support from major funds as a Electronic Document Management program gives users result of periodic meetings with the investment simultaneous access to digital documents, while the

2005 ANNUAL REPORT DRB-HICOM BERHAD community to promote the DRB-HICOM brand. The Enterprise Resource Planning System helps cut weekly sessions have helped to facilitate relations with operational costs for automotive component the investing community, giving them a deeper insight manufacturers by providing them access to a shared into DRB-HICOM’s position on various key issues and central system. Work has also commenced on a new updating them on new developments and strategic initiative to map out a set of standard operating alliances on the corporate front. These efforts will be procedures to ensure the continuity of critical business (203430-W) intensified in the current financial year. We expect DRB- operations in the event of a disaster. To further HICOM to gain more prominence among investors, improve corporate efficiency, a new workflow system which will eventually enhance its share value. was implemented to eliminate the need to move forms around the workplace and reduce the long waiting time to get the forms endorsed.

The Enterprise Improvement Programme is well under way, and has yielded positive results. In terms of business operations oversight, corporate governance and internal control processes have been improved and enhanced while in regard to risk management, the regime under our Enterprise-Wide Opportunity and Risk Management infrastructure has been established and accordingly all business and commercial undertakings are now risk-recognised and managed with the necessary key performance indicators and enhancement plans set and targeted. HUMAN RESOURCE FUTURE CHALLENGES 33 To raise corporate efficiency and strengthen our base In the coming years, DRB-HICOM is committed to further, we have further consolidated our business strengthening its relationships with its peers, business operations to better cope with new market challenges. associates, industry and with the Government. Building A stable revenue growth, combined with reduced on this progress, we are convinced the Group will grow manpower, successfully led to higher productivity and create long-term value for shareholders. 20 per capita. The Group headcount at year-end stood 05 at 29,099. We pledge to stay aggressive in the marketplace and

take serious steps to increase our cost competitiveness. 2005 ANNUAL REPORT DRB-HICOM BERHAD As a demonstration of our commitment towards our We attest firmly to the principle that great products national agenda, we continue to participate in national- and services alone are insufficient in the new business level gatherings and Hadhari programmes. We strive to environment we operate within. Hence, it is essential that ensure a harmonious working environment, with we also maintain a sound business structure and processes programmes to upgrade workers’ skills and keep them that maximise operational quality and efficiency. At the (203430-W) inspired and motivated. Our relationship with the in- start of our rationalisation exercise in the year 2000, we house trade unions is strong, with no outstanding had strived to ensure that all our short and long-term disputes; a testament of our commitment to our strategies bring far-reaching improvement in all these workforce. In addition, a special fund has also been areas, and I am proud to say that we have been seeing established to help employees or their close dependents solid results from our vigilant efforts. stricken with critical illnesses or any other misfortunes. Financial assistance has also been given to employees and other communities affected by the tsunami catastrophe that wrecked havoc in the region last December.

Safety, health and environment remain key features of the Group’s operation. We have implemented and complied with a broad array of regulatory and statutory requirements, and regularly conduct workplace audits and training to this effect. Chairman’s Statement

The DRB-HICOM Group is clear about what it wants to We are very conscious of the fact that competition in 34 do and where it wants to go. We will not hesitate to the automotive industry is heating up, with more execute bold strategies that will put the Group on the market segments and new products. At the same time, springboard to prosperity, yet at the same time, new technology is driving rapid changes in products pragmatic and prudent to ensure that we spread and and processes. Leadership in operational excellence is a 20 manage all risks. One of our key strengths is our ability moving target as we continue to improve in all areas. 05 to listen and respond to all our stakeholders and as we hold on to this creed, we believe it will give us an But we have an edge over our competitors as we have edge in the marketplace to deliver unparallel customer built a strong portfolio of globally renowned brands, a 2005 ANNUAL REPORT DRB-HICOM BERHAD and stakeholder experience. Across the company, we reputable heritage and a track-record that will push us have created new, efficient feedback and response into higher gear. Coupled with our experienced and systems to bring us closer to all our stakeholders. dedicated management team, and a truly committed family of employees, partners, suppliers and dealers, For the future, we will step up efforts to broaden our we believe we have what it takes to become an even

(203430-W) earning base and to secure additional franchises and greater company. assembly contracts, while pursuing various cost cutting measures across the Group to become more Our motivation comes from the aspirations of the competitive. entire workforce, who firmly stand together in pursuit of operational excellence and greater productivity. As the country’s single largest integrated automotive We are confident that we will remain an industry company, DRB-HICOM has remained true to its leader as we tackle challenges head-on in the most commitment to deliver the highest quality and most positive way possible. competitively priced products and services. This has clearly paid off as attested by the performance of the companies in the sector, and will continue to be our driving force as we chart new territories. ACKNOWLEDGEMENTS To all our other stakeholders who have remained true to us, I assure you that your commitment and 35 I would like to take this opportunity to record my perseverance will pay off as we are headed towards appreciation and gratitude to Y.Bhg. Dato’ Yatina even more sustained and measurable growth in the Yahaya, Y.Bhg. Dato’ Maznah Abdul Jalil, Y.Bhg. Dato’ current financial year. At DRB-HICOM, we hold firm to Mohd Nor Mohamad, Y.Bhg. Datuk Haji Faisal Siraj, our belief and trust that we help make things better. Encik Mark Aziz Salleh and Y.Bhg. Dato’ B. Bhaskaran 20 Pillai for their valuable contribution and continuous 05 support during their tenure as members of the Board of DRB-HICOM Berhad until their resignation on 19 July 2005 ANNUAL REPORT DRB-HICOM BERHAD 2005. Needless to say, I am sure that they will continue to give their invaluable service and unstinting loyalty and dedication to the Group as members of the top management of DRB-HICOM Berhad, and will attend all Board Meetings as such. At the same time, I would also (203430-W) like to welcome Y.Bhg. Datuk Mohd Khamil Jamil who TAN SRI DATO’ SERI MOHD SALEH SULONG has been appointed as the Deputy Group Chairman Group Chairman effective from 19 July 2005.

I would like to put on record my sincere appreciation to the management and the employees of DRB-HICOM, who have stood firmly behind the Company as it underwent a short period of uncertainty late last year. Our aspirational goals and uncompromising integrity set us apart from our competitors. Let us continue to cultivate and nurture our strengths to help us gain even greater momentum. I am proud of the vision and determination of the management and the employees. You are a truly inspired and global team; customer- focused and shareholder-driven; I look forward to another good year with a truly great team. OPERATIONS review 36

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2005 ANNUAL REPORT DRB-HICOM BERHAD AUTOMOTIVE MANUFACTURING & DISTRIBUTION

48 PROPERTY DEVELOPMENT & CONSTRUCTION (203430-W)

54 SERVICES 37

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD (203430-W) AUTOMOTIVE MANUFACTURING & DISTRIBUTION The last of the world’s borders are opening up Automotive Manufacturing & Distribution

OPERATIONS REVIEW

40

The Malaysian automotive industry staged a strong New milestones were achieved as the Group forged new recovery in 2004, with the Total Industry Volume (TIV) alliances, expanded its automobile stable and set higher for motor vehicles rising 20% from a year earlier to a benchmarks for growth through its activities and 20 new record high of 487,605 units. The country’s robust investments in the manufacturing, assembly and 05 economic growth, the introduction of a flurry of new distribution of trucks, buses, 4-wheel-drives, passenger exciting models, low interest rates and attractive cars, motorcycles, defence equipment and land transport

2005 ANNUAL REPORT DRB-HICOM BERHAD financing offers combined to spur sales in all vehicle vehicles. With sales volume of 110,118 units, the Group’s segments, overcoming the hurdle of higher excise duties market share as at the financial year remains at 23%. under a new auto tariff structure implemented in January 2004. HICOMOBIL Sdn. Bhd. added the compact 800cc fuel- saving Chevrolet Spark to its current line-up comprising National carmakers Perusahaan Otomobil Nasional the Chevrolet Nabira, Chevrolet Aveo and Chevrolet

(203430-W) Berhad (PROTON) and Perusahaan Otomobil Nasional Optra models. This pushed sales for the year under Kedua (PERODUA) maintained their pole positions in review to 6,730 units, surpassing an earlier target of the passenger car segment last year but it was clear 6,000 units, to generate a profit before tax of RM76 that foreign carmakers from Japan, South Korea and million. The confidence in Chevrolet cars is bolstered by Europe, adopting aggressive pricing strategies, have a wide network of 50 sales dealers and 23 service strengthened their foothold in Malaysia, which remains centers nationwide. HICOMOBIL plans to increase the Southeast Asia’s top passenger car market. Competition dealerships to 60 and expects to bring in several new is expected to heat up in the coming years as foreign models by the next financial year. auto giants race to secure their position ahead of the Malaysian auto market’s liberalisation under AFTA.

As the country’s single largest integrated automotive player, the Group has reaped the benefits of the industry’s upswing and is well-positioned to capture growth in all vehicle sectors. The automotive business remained the Group’s top earner, generating RM2.45 billion during the year under review and accounting for 55% of total Group revenue. 41

A number of new alliances were formed during the year that will significantly enhance the Group’s bottom- line in the coming years. During the fourth quarter of the year under review, the Group entered into a joint 20 venture with Isuzu Motors Asia Limited, Singapore and 05 Isuzu Operations (Thailand) Co. Limited. The parties

agreed to set up Isuzu Malaysia Sdn. Bhd. (IMSB) to 2005 ANNUAL REPORT DRB-HICOM BERHAD undertake the importation, assembly and distribution of Isuzu light commercial vehicles, components and parts in Malaysia. IMSB will introduce the Isuzu D-MAX range of pick-up trucks, which will be assembled at Malaysian Trucks & Bus Sdn. Bhd.’s (MTB) plant in Pekan, Pahang. (203430-W)

MTB meanwhile, clinched another assembly deal from DaimlerChrysler Malaysia through a Memorandum of Understanding signed in October 2004. Work began in January 2005 to assemble the Mercedes Benz E-class and C-class luxury cars at MTB’s plant in Pekan, and the first unit rolled out the following month. The new contract will bolster MTB’s competitiveness, and further enhance its sales which reached RM271 million during the period under review.

In a sign of confidence in the Group, DaimlerChrysler Malaysia also appointed the Group’s subsidiary, USF- HICOM (Malaysia) Sdn. Bhd., as the main dealer of all Mitsubishi Fuso vehicles from January 2005. Automotive Manufacturing & Distribution

OPERATIONS REVIEW

42

USF-HICOM also scored another coup when it secured EON has adapted extremely well to its status as a the exclusive distributorship with India’s top sport utility Super Dealer for the national car manufacturer and the vehicles (SUV) maker, Mahindra & Mahindra Limited, new opportunities arising from it have allowed for even 20 for its popular range of Scorpio vehicles. The Scorpio more effective long term planning and enabled the 05 2.0 petrol 4x2, Scorpio 2.6 diesel 4x4 and the much company to leverage on its experience and expertise in awaited for 2.5 diesel double cab will lend strength to selling cars by becoming a distributor to some of the

2005 ANNUAL REPORT DRB-HICOM BERHAD USF-HICOM as a leader in the SUV segment. USF-HICOM world’s best known marques. has also been appointed the principle dealer for HICOMOBIL’s Chevrolet vehicles in Sabah effective Despite the competitive market, supply scenario and 1 April 2005. internal provisions, EON sustained an impressive profit before tax of RM300.5 million at the back of a revenue The deals have opened up new prospects for of RM3.9 billion.

(203430-W) USF-HICOM following the cessation of its contract with Japan’s Mitsubishi Corporation to distribute Mitsubishi The transformation into a multi-brand distributor has 4x4 and commercial vehicles. It will augment the resulted in a dynamic new business model for EON that company’s revenue and put the company on a strong caters to a broader range of consumer tastes, buying footing to tackle stiff competition and a margin power and increasing demands for choice, while squeeze due to higher auto duties. The company’s total preparing itself for a more diversified and liberal vehicle sales in 2004 fell 30.2% to 4,689 units. market in the near future. USF-HICOM is also on the lookout for new business opportunities such as selling reconditioned vehicles and Innovations introduced during the period under review securing franchise rights for other vehicle makes. such as the Audi Hangar, increasing number of Hyundai and Inokom branches, and appointment as the exclusive Meanwhile, the nation’s largest automotive distributor distributor for Mitsubishi vehicles in Malaysia essentially and a member of the DRB-HICOM family, Edaran means that consumers now have a wider choice and Otomobil Nasional Berhad (EON), has successfully more convenient purchasing options, while firmly revamped its business model to cut costs and gear up entrenching EON in the minds of Malaysians as the first for greater competition under AFTA. EON is establishing option when looking for reliability and after sales service. itself as an automotive supermarket through multi- brand dealerships and taking initiatives to better understand and connect with its customers. 43

Despite its diversification into non-national models, EON continues its commitment to the nation’s development by opening the door to business opportunities for Malaysians through its franchise service 20 dealer network, which has previously earned the company 05 the title of "Homegrown Franchisor of the Year", and

creating more opportunities for the automotive 2005 ANNUAL REPORT DRB-HICOM BERHAD component industry. EON now has 201 Franchise Service Dealers, which complements the nationwide network of 39 service branches and 78 parts dealers.

Meanwhile another stellar performer, Honda Malaysia

Sdn. Bhd. continues to strengthen its position in the (203430-W) automotive industry. During the financial year under review, Honda Malaysia sold 24,917 units of vehicles as compared to 20,663 units registered in the last financial year. This represents a 20.5% increased in Honda sales. Among the various models distributed by Honda Malaysia, the Honda City is the most sellable model, representing 38% out of the total units sold, followed by Accord at 25%, Jazz at 14% and Civic at 12%.

The plant in HICOM Pegoh, Malacca which currently produces the Honda City, Honda Civic, Honda Accord and Honda CR-V has a capacity to produce up to 20,000 units per year. The Constant Velocity Joint (CVJ) plant has been expanded to produce 400,000 car sets per year from 200,000 car sets a year ago. The CVJ components which are exported to Thailand, India, Pakistan, Indonesia and the Philippines will include the European market in September 2005. Automotive Manufacturing & Distribution

OPERATIONS REVIEW

44

As a testament to its client, Honda Malaysia during the On the export front, sales overseas mainly to Indonesia, year under review was ranked highest in customer Greece, Turkey, Cambodia and Iran reached 5,911 units. satisfaction with authorised dealer after-sales service in MODENAS also exported OEM components to Thailand 20 Malaysia for the second consecutive year by JD Power and Taiwan, with a value of about RM6.9 million. 05 Customer Satisfaction Index (CSI) Study. The company also captured three prestigious titles under News Straits Times Two new models were launched during the year under

2005 ANNUAL REPORT DRB-HICOM BERHAD – MasterCard Car of the Year Award 2004 for Honda Jazz review, namely the Kriss 100 which was unveiled in (Sub-Compact category), Honda City 1.5 VTEC (Family August 2004 and the Kristar in October 2004. Kriss 100 is Sedan category) and Honda Odyssey (MPV category). the fourth variant in the hugely popular Kriss series, and uses a 100 cc engine, a collaborative effort with Sangyang In March 2005, Honda Malaysia introduced the new Motor Industry, the biggest motorcycle manufacturer in facelift Honda CR-V to the Malaysian market. The Taiwan. The Moped Kristar is a brand new design and is

(203430-W) facelift model adds value to the already popular the result of extensive research and development by CR-V with its unique and refreshing features. Honda MODENAS engineers over the past 18 months. Malaysia will continue to “spice up” the market with new models, keeping to its promise of providing the The product line-up will be diversified further in the best for the consumers, not only products but also its coming year, with plans to introduce a new variant of after-sales services. the Kristar, a sporty scooter and other exciting new models by the second and third quarter of the year. A notable growth was also seen in the motorcycle market with an impressive TIV of 398,862 units being Another company under the DRB-HICOM umbrella – sold. Motosikal dan Enjin Nasional Sdn. Bhd. DRB-HICOM Defence Technologies Sdn. Bhd. (DEFTECH) (MODENAS), another key performer of the Group – also made strong inroads during the period under posted a turnover of RM461 million with a profit review. Established in 1996, the company has built a before tax of RM54 million. Sales of MODENAS strong presence in the defence industry in the areas of motorcycles and scooters surged 16% to 103,391 units, marketing and sale of military vehicles, associated accounting for 26% of the domestic market; making equipment and repair parts in the domestic market. MODENAS the number two best-selling brand in It also provides effective and efficient logistics support Malaysia, trailing behind Honda. services in repair, refurbishment and upgrading of military vehicles. 45

After the successful delivery of 211 units of the Automotive Manufacturers (Malaysia) Sdn. Bhd. (AMM), Armoured Combat Vehicle (ACV 300), 58 units of the a contract assembler of the Kia Spectra, Pregio and Duro 6x6 High Mobility Troop Carriers and 28 units of K2700 models, posted a total revenue of RM37 million the IVECO HICOM Tank Transporter to the Malaysian during the year under review. The company is currently 20 Armed Forces, to diversify its portfolio, DEFTECH has preparing to assemble various models for EON Berhad, 05 ventured into the aviation sector. Recently the company USF-HICOM and Tata.

had tied-up with the leading Italian helicopter 2005 ANNUAL REPORT DRB-HICOM BERHAD manufacturer AgustaWestland, where it will be the Despite the challenges of market liberalisation, the official sales and marketing agent for Agusta DRB-HICOM Group has built a solid foundation to be helicopters in Malaysia and the region. DEFTECH will the nation’s leading automotive entity and key player establish a regional helicopter maintenance and service even under full AFTA market conditions. The country’s centre at Kepala Batas, Penang for this purpose. In Total Industry Volume (TIV) for motor vehicles is addition, it has also established a dedicated plant for expected to grow 2.5% in the year 2005 to reach (203430-W) commercial automotive work including fabricating 500,000 units, and DRB-HICOM is firmly entrenched to specialist vehicles bodies and structures. The future capture a significant share of the growing pie. looks bright for DEFTECH as it has placed itself strategically to supply parts for specialist vehicles and The introduction of new franchises namely Suzuki other military products to the Malaysian Armed Forces motor vehicles, Isuzu pick-up trucks and India’s popular and other military bodies in the region. Mahindra Scorpio SUVs, coupled with new alliances in its assembly business and improved sales of Chevrolet Automotive Corporation (Malaysia) Sdn. Bhd. (ACM), cars are expected to increase our market share in the which distributes Isuzu and HICOM Perkasa range of next financial year. trucks, registered an improved profit before tax of RM6 million, compared to RM3.8 million recorded in the The strength and reputation of the Group is now one previous year. With ACM appointed as the key dealer of its greatest assets, giving consumers the confidence for the new range of Isuzu light commercial and 4x4 to purchase a vehicle, knowing that it is backed by vehicles by IMSB, sales are expected to strengthen in the stability and quality. coming year. ACM has also embarked on a campaign to improve its product branding and corporate identity. The company has invested in 5 service centres and other branches throughout the country, backed up by over 60 authorised stockists and service dealers, and extended service hours in the Klang Valley. Automotive Manufacturing & Distribution

OPERATIONS REVIEW

46 AUTOMOTIVE COMPONENTS & PARTS Among top achievers during the year is plastic parts vendor HICOM-Teck See Manufacturing Malaysia Sdn. The vendor companies within DRB-HICOM are Bhd., which posted sales of RM196 million. The company independent of the Group’s vehicle assembly operations. 20 has expanded its operations to Rayong in Thailand, These companies are mostly Tier-1 vendors that had supplying components from bumpers, trunk lid handlers 05 successfully nurtured the engineering expertise to and radiator grilles to General Motors. The Thailand manufacture and supply automotive components to

2005 ANNUAL REPORT DRB-HICOM BERHAD foray, coupled with existing domestic business with local national carmakers, other local and foreign auto and foreign carmakers including Proton, Honda, Tan assemblers, as well as to domestic and regional Chong and Naza, has put the company in good stead motorcycle manufacturers, and non-automotive sectors. for growth.

Initiatives have been taken to expand the component Oriental Summit Industries Sdn. Bhd., which produces

(203430-W) business beyond the traditional markets, through new metal stamping components, hit a turnover of RM175 alliances with Tier-1 suppliers in Europe. Strategies to million during the year. Operations have vastly expanded venture abroad included streamlining product portfolio, to cater to the new Proton Gen2 cars being produced achieving cost and world class manufacturing standards, at the Tanjung Malim plant in Proton City. Oriental and strengthening core capabilities in upstream Summit also won new businesses for Perodua’s range of activities. The companies have also redoubled efforts to 2005 models and was awarded ISO/TS16949 diversify their customer base to non-national cars and Certification. foreign automotive manufacturers, and enhance customer relations. PHN Industry Sdn. Bhd. recorded total sales of RM113 million, after it diversified from supplying metal-based With the motorcycle industry emerging as an important components into making and stamping dies. It is now growth sector, vendor companies were quick to penetrate supplying to PERODUA and Honda Malaysia, apart from this segment and are now supplying motorcycle engine PROTON. components to regional Honda, Suzuki and Yamaha facilities. Last year, motorcycle sales in the country rose HICOM Diecastings Sdn. Bhd., meanwhile, achieved a 43% to reach 364,781 units, dominated by Honda, 29% surge in total turnover to RM67 million. It supplies national maker Modenas and Yamaha. On the Group’s to PROTON and PERODUA, as well as other international drawing board are plans to develop a centralised Tier-1 vendors including Kayaba, Sanden and ZF Steerings company focusing on product development and tool (Malaysia) Sdn. Bhd. making to enhance engineering capability. 47

HICOM Engineering Sdn. Bhd. posted a revenue of The performance of joint ventures with European RM41 million during the year. The cast-iron auto part companies – Siemens VDO Instruments MY Sdn. Bhd., producer was awarded ISO/TS16949 certification in 2004. ZF Steerings (Malaysia) Sdn. Bhd. and TRW Steering & The company is also in the midst of negotiating a Suspension (Malaysia) Sdn. Bhd – remained 20 contract to supply brake discs to the global market. commendable with a wide customer base, locally as 05 well as internationally. Export to parent companies in

In the motorcycle sector, the manufacturer of Yamaha Europe increased sufficiently in 2004 for the companies 2005 ANNUAL REPORT DRB-HICOM BERHAD motorcycle 110 cc engine, HICOM-YAMAHA to maintain growth despite the drop in local demand. Manufacturing Malaysia Sdn. Bhd. registered a 28% hike in turnover to RM74 million as Yamaha motorcycle sales rose to 48,803 units.

Revenue for HICOM-HONDA Manufacturing Malaysia (203430-W) Sdn. Bhd., which manufactures motorcycle engines and components for Honda, jumped 27% to RM190 million. In 2004, the company continued to export engine components to regional Honda assemblers in the Philippines and Indonesia.

HICOM-SUZUKI Manufacturing Malaysia Sdn. Bhd., which supplies to Suzuki motorcycle assemblers in Malaysia and Indonesia posted a 13% jump in sales to RM93 million during the year following the exports of the Suzuki RU120 engines. PROPERTY DEVELOPMENT & CONSTRUCTION Our standpoint gives us a clear view Property Development & Construction

OPERATIONS REVIEW

50

The construction sector remained the weak link in the DRB-HICOM has also launched, through Horsedale country's economy, with overall growth curtailed by a Development, another up-market gated and guarded slowdown in civil engineering works following the residential project within the Glenmarie estate known 20 completion of many large infrastructure projects and as Glenhill. 05 lower public spending on infrastructure projects. However, the residential sector has experienced strong Glenhill, located on a 27-acre plot of freehold land in 2005 ANNUAL REPORT DRB-HICOM BERHAD demand and growth. the neighbourhood of Saujana, is designed to be an exclusive enclave of bungalows and semi-detached The DRB-HICOM Group has embarked on the houses along the lines of Glenmarie Court. Development development of another exclusive gated and guarded of Glenhill was carried out in two stages. Stage 1 residential development called Glenmarie Residences. consists of 40 bungalow lots, of which 31 lots have

(203430-W) A joint development of HICOM Properties Sdn. Bhd. been launched with sizes ranging from 5,000 to 12,000 and Horsedale Development Berhad, the project fronts sq. ft, and sales have been promising. Stage 2 consists the Pan Pacific Glenmarie Resort, with a host of of 50 units of semi-detached houses with 8 design recreational, entertainment and dining facilities within options on the eastern portion. The sales launch for easy reach. It consists of a total of 75 bungalow lots on Stage 2 was held in May 2005 after obtaining approval a 20-acre site, where lush tropical landscaping provides for a developer’s license and sale permit from relevant a tranquil, cool and secured environment. Unique Government authorities. design concepts, high quality finishes and competitive pricing were winning factors that helped garner strong In addition to these residential properties, Horsedale interest in this development, with Phase 1 being fully Development also has plans in the pipeline to launch a sold and very encouraging sales trends evident in the commercial development project comprising 30 units of remaining two phases. 3-storey shop offices fronting Jalan Kerjaya, Glenmarie, in the financial year ending March 2006. 51

Another subsidiary of DRB-HICOM, Comtrac Sdn. Bhd., In addition, the company is close to completing the which manages the prestigious Glenmarie Cove riverfront construction of Glenview Villa, a development in Cheras residential resort development in Klang, is fast emerging under its subsidiary, Comtrac Glenview Sdn. Bhd. The as another strong industry player. Precinct 1 of the project comprises two blocks of 16-storey apartments 20 development, launched in the previous financial year totaling 586 units, a 60-unit block of walk-up apartments 05 comprising 96 units of semi-detached villas, 44 units of and 29 shop-cum-office units. All the shop-cum-office bungalows and 47 units of double-storey shop offices, units have been sold out, and the apartments are almost 2005 ANNUAL REPORT DRB-HICOM BERHAD has been successfully sold by Glenmarie Cove fully taken up. Construction is expected to be completed Development Sdn. Bhd. and is expected to be handed within the targeted delivery date of end 2005. over by the end of 2006. DRB-HICOM’s largest property development project,

During the period under review, four sub-phases in the 4,000-acre Proton City in Tanjung Malim, Perak, (203430-W) Precinct 2 comprising 28 units of semi-detached villas and has reached an advanced stage. The blueprint for this 41 units of bungalow lots were launched. The response intelligent automotive hub undertaken by Proton City was overwhelming and the company is optimistic that Development Corporation Sdn. Bhd. (PCDC) comprises sales for this exclusive freehold gated and guarded PROTON's second manufacturing plant covering 1,200 community project will accelerate, with plans to launch acres, the new Universiti Pendidikan Sultan Idris’ (UPSI) another sub-phase in Precinct 2 in the 2006 financial year. main campus sitting on 800 acres of land and a Vendor Park over a 300 acre-site, as well as several residential and commercial parcels. Property Development & Construction

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The first of four phases of the Proton Plant are already For the year under review, PCDC recorded an improved fully operational. Almost 100 acres in Phase 1 of the turnover of RM44.8 million. With Proton City gradually Vendor Park have been developed and sold to PROTON’s evolving into a self-sufficient township over the years, 20 Tier-1 vendors such as Oriental Summit Industries Sdn. this project will be a major source of income for DRB- 05 Bhd. and HICOM-Teck See Manufacturing Sdn. Bhd. HICOM and put the Group at the forefront of the Earthworks for the UPSI Main Campus have also been property and infrastructure sector in the coming years. 2005 ANNUAL REPORT DRB-HICOM BERHAD completed, and construction work will begin pending There have been promising developments in DRB- approval from the Education Ministry. HICOM’s leisure and hospitality activities, with the Glenmarie Golf and Country Club (GGCC) completing The residential parcels 19 and 20 – launched during 75% of its upgrading and green renovation at the the previous financial year – have seen the completion 18-hole Garden Course. Opened to golfers in stages,

(203430-W) of the first phase of 133 units of the Calliandra single the upgrading exercise will position GGCC favourably storey and Coirama double storey terrace houses, against other golf courses in the Klang Valley, with the together with 248 units of the Damiana Apartments. club projected to generate stronger growth in the next These properties received excellent response, and are financial year. almost fully sold. In the third quarter of the financial year, the second phase of the single and double storey terrace houses – Corallita and Revanea – as well as the waterfront Cadence bungalows and Avenca twin villas were opened for sale. Meanwhile, Warisan Avenue, a commercial centre-cum-shop office mall comprising 40 units of shop lots, is set to open its door for business in the 2006 financial year to capitalise on a rapidly growing market. 53

Meanwhile, The Pan Pacific Glenmarie Resort (PPGR) has The Kota Kemuning township developed by HICOM added a new spa and duplex service apartments at Gamuda Development Sdn. Bhd., continued its strong Block A. The spa, operated by Andana Spa, commenced performance with a turnover of RM281 million. During operations in January 2005 and has added a new the year under review HICOM Gamuda launched the 20 dimension to the resort’s attractions. DRB-HICOM is Lakeside Terraces and Parkland Apartments, which 05 planning a renovation and upgrading program during recorded strong sales, while the Lakeside the next financial year in order to enhance the hotel’s Condominiums, are scheduled for completion by the 2005 ANNUAL REPORT DRB-HICOM BERHAD performance, and this may entail the engagement of a end of 2005. new operator to re-brand the resort. A joint venture between DRB-HICOM Berhad and The marina facilities at Rebak Marina Resort, which was Gamuda Bhd., HICOM Gamuda Development Sdn. Bhd. damaged by the tsunami catastrophe in December 2004, launched the Kota Kemuning township in 1996, and is (203430-W) are currently being reinstated. This is being done in targeted for completion by 2006 with a total gross conjunction with an upgrading and refurbishment development value of RM3 billion. Having built a programme for the resort that is expected to be strong reputation for innovative and quality completed in 2006. Coupled with the engagement of developments, HICOM Gamuda added to its list of an international operator to support these programs, awards with the following achievements:- Rebak Marina Resort is projected to achieve higher – Corporate Social & Environmental Responsibility occupational and average room rate once work is Award 2004 completed in 2006. – Bahrain Malaysia International Trade & Investment Bureau 2004 SERVICES In a network connectivity is key 56 Services

20 OPERATIONS REVIEW 05 2005 ANNUAL REPORT DRB-HICOM BERHAD The services sector remained resilient, expanding last During the year under review, Uni.Asia General year to become the Group’s second growth area. launched a unique motor insurance plan known as the Porsche Priority Plan. Specially tailored to meet the Companies within the Group had a banner year during needs of Porsche automobile owners, it offers the financial year under review, reaping benefits from a comprehensive insurance coverage for Porsche vehicles (203430-W) strong economy to accelerate growth and boost their up to 20 years of age and an array of benefits revenues. The services sector contributed RM1.5 billion, including free motorist personal accident worth or one-third of the Group's total turnover, up from RM50,000.00, guaranteed 48-hour claim approval and RM1.35 billion in the previous year. Several companies discounts on Porsche lifestyle accessories. This was clinched new business deals while others launched into followed by the Chevy Auto Insurance Programme for an aggressive expansion mode that will fuel future Chevrolet vehicle owners. These innovative plans have growth amid an increasingly challenging business since contributed more than RM2 million worth in environment. Among top achievers were Uni.Asia motor premiums to the company. General Insurance Berhad and EON Capital Berhad. On the bancassurance side, Uni.Asia General augmented Uni.Asia General Insurance Berhad registered a profit its business with new products such as Homesafe, before tax of RM59 million on the back of a turnover of BizInsure and EMV Personal Accident Plan. During the RM326 million, of which 72% was derived from the year under review, revenue contribution from this motor insurance business. Uni.Asia General consolidated stream grew more than 50% to churn in RM42 million its position in the local motor insurance industry and is in premium contributions. now the country’s 3rd largest motor insurance company with a 6% market share in the motor insurance business. 57

20 05 2005 ANNUAL REPORT DRB-HICOM BERHAD Another company that achieved great results was EON Going forward, Uni.Asia Life is confident of improving Capital Berhad (ECB). DRB-HICOM in July 2004 held its growth and profitability through innovative products, 20.2% of ECB by way of dividend in specie and capital aggressive sales strategy and deepening alliances with its repayment from EON Berhad, share swap of existing business partners. The company aims to double the investment in Jardine Cycle & Carriage Ltd., and open number of its agents nationwide to 1,500 by the end of (203430-W) market acquisition. For the year under review, the financial year 2006, from 809 currently. It has set up an financial services company registered a profit before in-house investment team to ensure maximum returns tax of RM209 million on the back of a turnover of and taken steps to enhance underwriting profit by RM469 million. improving its product mix.

Meanwhile, Uni.Asia Life experienced growth in its Alam Flora Sdn. Bhd., the largest integrated solid waste Mortgage Reducing Term Assurance (MRTA) business as management company in Malaysia and one of the sales exceeded targets by 15% and grew by 90% largest in Asia with more than five million customers, compared to the previous year. The company is also recorded an improved profit before tax as a result stepping up efforts to improve its product packaging of enhanced business and service performance. and plans to introduce a unique medical health card, the Uni Medical Rider. However, provision for diminution of equity investment as a result of a more subdued stock market during the year has also affected the company's overall performance. 58

After obtaining company-wide ISO 9000 and ISO 9001 During the year, Alam Flora also accelerated its 20 certifications and the ISO 14001 certification for its expansion in the Gulf region, securing contracts in 05 headquarters and operations in Putrajaya and Bahrain and Abu Dhabi through its parent company. Cyberjaya, Alam Flora once again demonstrated its This foothold into the Middle East has created 2005 ANNUAL REPORT DRB-HICOM BERHAD commitment towards the environment by earning the opportunities for Alam Flora to further market its ACCA Mesra Award 2004, awarded for Credible brand name in its quest to become a global player. Environmental Reporting. During the same period, Alam Flora was also honoured with the Crystal Award KL Airport Services Sdn. Bhd. (KLAS), the second ground 2004 from the Institute of Public Relations Malaysia, handling provider at the Kuala Lumpur International

(203430-W) for the best public affairs campaign. It also won the Airport (KLIA), fared well during the financial year prestigious International Association of Business under review despite a tough business environment Communicators Malaysia's Silver Quill award, for the due to the effects of rising fuel cost on the aviation Best Employee/Member Communication for its industry. Apart from intense pressure from airlines to Customers' Choice Awards for Waste Management lower handling charges, the company has to also Workers 2004. The award was conferred in recognition cope with rising operating costs due to fuel-related of the company's efforts in building better rapport costs and supplies. between the public and waste management workers. The implementation of various improvement and cost Such accolades have proven that by observing its three reduction exercises has helped KLAS to shrink its losses core values – customer intimacy, product excellence and to RM6.5 million, from RM20 million in the previous service excellence, Alam Flora has been able to achieve financial year. KLAS also improved its revenue, which the desired results of profits, environmental protection rose 20% to RM76.4 million, largely due to the and corporate social responsibility. Government's effort to promote KLIA as a regional hub, thereby spurring higher traffic and robust growth in cargo volume at the KLIA and the Penang International Airport. The company won over new customers during the year including United Parcel Service, Air Hong Kong, Star Air and Jatayu Airlines, and increased its total customer base to 36 airlines. 59

Pusat Pemeriksaan Kenderaan Berkomputer Sdn. Bhd. Scott & English (Malaysia) Sdn. Bhd. during the year (PUSPAKOM), another company under DRB-HICOM's under review recorded an increase in turnover of 20 services stable, showed solid results as it gears itself to approximately 14% from RM158 million in the previous 05 be the leader in vehicle safety certification. During the financial year to RM179.4 million. year under review, a total of 2.2 million commercial 2005 ANNUAL REPORT DRB-HICOM BERHAD and private vehicles nationwide went through the During the period under review, Scott & English company's inspection processes, bolstering revenue to Malaysia had signed a Memorandum of Understanding RM73.7 million compared to RM60.6 million previously. with EON to set up a joint venture company to distribute TATA commercial and passenger vehicles.

Inspired by its mission to protect motorists safety, The subsequent implementation of the joint venture (203430-W) PUSPAKOM has secured new deals and extended its project will greatly enhance the performance of the services to a total of 15 leading finance companies to company in the long term. make it mandatory for vehicle inspection prior to loan approval of used cars. This contributed positively to its Continued strong demand for generators and marine profit before tax, which surged 67% to RM9.1 million. engines contributed RM111 million to the company’s turnover. Improvement in investor sentiments towards For the years ahead, PUSPAKOM is confident that the industrial sector, the stable and high crude palm oil through its commitment to ensure only safe vehicles prices and continued demand for the marine engines travel on Malaysian roads, more market segments and will ensure significant contribution to the company by industries will benefit from its services. As part of its the Power Division. expansion, PUSPAKOM has invested more than RM10 million to add more lanes at its inspection centre and In the meantime, the Industrial Division of the company establish two new branches to further its reach. also saw an improvement with total sales of RM27.3 million, representing a 27% growth in turnover as compared to the previous financial year. The main products of the Division, the TCM Forklift Trucks and the Sullair Compressors are expected to increase their market to 10% and 15% respectively.