cover rationale

ii | MBM RESOURCES BERHAD

2010 was a year of significant milestones for MBM Resources

Berhad (MBMR). The numbers on the cover of this annual report

symbolise each milestone achieved, beginning with the number

‘30’ signifying Daihatsu (Malaysia) Sdn Bhd’s 30th Anniversary,

‘50’ in celebration of Federal Auto Holdings Berhad’s 50th

Anniversary, followed by ‘15’ to mark MBMR’s 15th year as a

listed company on Bursa Malaysia Securities Berhad and finally

‘25’ in commemoration of Oriental Metal Industries (M) Sdn Bhd’s

25th Anniversary.

The lights in the background represent automotive headlights

illuminating the many milestones achieved. These lights also show

a lighted path, symbolising MBMR’s vision and growth forward.

COVER RATIONALE

2010 – A Year of Milestones:

02 MBM Resources Berhad – 15 Years of Growth

06 Federal Auto Holdings Berhad – 50 Years of Staying Ahead

08 Daihatsu (Malaysia) Sdn Bhd – 30 Years at the Forefront

10 Oriental Metal Industries (M) Sdn Bhd – 25 Years of Excellence

12 Corporate Information

14 Corporate Profile

15 Corporate Structure

16 5 Years Group Financial Performance

17 Financial Highlights

19 Chairman’s Statement

28 Managing Director’s Strategic Statement

36 The Year at a Glance

38 Profile of Directors

41 Management Team

43 Statement on Corporate Governance

49 Other Information Required by the Listing Requirements of Bursa Malaysia Securities Berhad

50 Statement on Internal Control

51 Report on Audit Committee

54 Statement of Directors’ Responsibilities in Relation to the Financial Statements

55 List of Properties

58 Analysis of Shareholdings

59 List of Top 30 Shareholders

61 Financial Statements

162 Notice of 17th Annual General Meeting

163 Form of Proxy

CONTENTS

MBM Resources Berhad (MBMR) was incorporated

as an investment holding company in a restructuring

scheme to consolidate its investments to include

three main companies:

• Motor vehicle business

Daihatsu (Malaysia) Sdn Bhd (DMSB), the exclusive

distributor of Daihatsu motor vehicles in Malaysia

• Manufacturing activities

Precision Press Industries Sdn Bhd (PPI),

manufacturer of precision metal stamped

parts and components and the design and

fabrication of tool and die for the metal stamping

industry, and

• Tekun Asas Sdn Bhd (Tekun Asas), manufacturer of

loud speaker grilles and hard board panellings.

MBMR was successfully listed on the Kuala Lumpur

Stock Exchange (now Bursa Malaysia Securities

Berhad) on 9 February 1995, at an issue price of

RM2.00 per share.

Building on its strength as an automotive group,

MBMR has expanded over the years into two core

areas – automotive distribution and retailing and

automotive parts manufacturing.

MBMR’s growth has been largely through

acquisitions. A restructuring of its parent’s businesses

resulted in the MBM Group’s

automotive businesses

consolidated under the

listed entity, with the sale

of the 20% stake in Perodua

in 2000 and 42% interest in

Hino Motors (Malaysia) Sdn Bhd (HMMSB) in 2006

from the parent holding company to MBMR.

The acquisition of Federal Auto Holdings Berhad

(FAHB), the established Volvo cars distributor and

subsequently a leading dealer, marked a significant

milestone for the MBMR Group to pursue a multi-

brand strategy, now as a top dealer for international

reputable brands not only for Volvo but including

Volkswagen and Mitsubishi.

MBMR also expanded into automotive parts

manufacturing which today comprises of Oriental

Metal Industries (M) Sdn Bhd (OMI), the leading wheel

manufacturer and Summit Vehicles Body Works

Sdn Bhd (SVBW), the body building business which

complements the commercial vehicle sales division.

The Group crossed the RM1 billion revenue mark

in 2006 and is now poised to reach new heights

with its new growth strategy. The Group is in a new

expansion phase, investing heavily in expanding

its distribution network and upgrading of its

facilities. MBMR aspires to be a complete

automotive group.

02 | MBM RESOURCES BERHAD

M B M R E S O u R C E S B E R H A D - 1 5 Y E A R S O F G R O w T H

Revenues (RM Mil)

1995 695

2000

2005

2010

Yea

r

538

945

1,528

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Year

HighLow

Close

MBMRShare Prices (1995-2010)

RM

ANNUAL REPORT 2010 | 03

1995 • Listing on the Main Board of the

Kuala Lumpur Stock Exchange

(now known as Bursa Malaysia

Securities Berhad)

1997 • Acquired 24.88% in Colonial

Motors Company Ltd

(CMC), largest Ford

dealer in New Zealand

1998 • MBMR reported a pre-tax loss of

RM25.8m as the financial crisis

hits auto sales

2000 • MBMR acquired 20% stake in

Perodua from Med-Bumikar

Mara for RM160m via issuance

of 64m new MBMR shares at

RM2.50/share. Senior directors

retire. New directors elected to

the Board

2003 • Acquired 90% of SVBW;

disposed stake in CMC

2002 • A Bonus issue of 2 for 3 was

completed, increasing MBMR’s

paid-up share capital to

RM231.7m

2005 • Increased stake in FAHB by

37.6% to 69.6%

2001 • Restructuring of Perodua

completed with greater

participation by Daihatsu

Motor Company Ltd (DMC)

in Perodua’s manufacturing

operations. A special gross

dividend of 20 sen per share

was paid

2004 • Acquired Galaxy Waves which

owns 20% of OMI and 32% of

FAHB; acquired additional 58%

in OMI; Acquired 50.98% in WSA

Capital Corporation Sdn Bhd (WCC)


M B M R E S O u R C E S B E R H A D - 1 5 Y E A R S O F G R O w T H

2006 • Acquired 42% in HMMSB for

RM25.8m

• Acquired remaining 10% in

SVBW making it a wholly-

owned subsidiary of MBMR

• MBMR revenue crossed

RM1 billion, highest ever

achieved

2007• Increased stake in FAHB by

16.4% to 86% at additional cost

of RM9.3m

2008• Disposed MBM Industries

Sdn. Bhd.

• Additional acquisition of 21.52%

stake in WCC increasing total

equity interest in WCC to

73.32%

2009• Additional dealership locations

obtained for the Group’s

Volkswagen and Mitsubishi

dealerships

2010• Obtained distributorship for

Heico Sportiv products and ABT

Sportsline products under FAHB

• Obtained Hino dealership

under DMSB

• Disposed entire 73.32% equity

interest in WCC

2011 and Beyond• We aspire to be a complete

automotive group.


FEDERAL AuTO HOLDINGS BERHAD – 50 YEARS OF STAYING AHEAD

Federal Auto Holdings Berhad (FAHB) was incorporated in

1960 under the name of Federal Auto Company Limited and was converted to a public company in 1968 under the name of Federal Auto Company Berhad. In 1970, it changed its name to Volvo Malaysia Berhad and subsequently assumed its present name in 1975.

FAHB is an investment holding company with main investments in its subsidiaries holding car dealerships, namely Volvo, Volkswagen (VW) and Mitsubishi. It also distributes the Heico Sportiv and ABT Sportsline products under its sports tuning division, FAST Sdn. Bhd.

VolvoFAHB started as a distributor of Volvo vehicles in Malaysia and remains as a dealer for Volvo passenger vehicles through its subsidiary, Federal Auto Cars Sdn. Bhd. since the year 2000 when Volvo Cars Malaysia Sdn. Bhd. assumed the responsibility as the principal in Malaysia.

It has now within its network a total of six branches – Kuala Lumpur, Shah Alam (Glenmarie), Penang, Ipoh, Melaka and Johor Bahru and all are 3S (sales, service and spare parts) centres. FAHB is the main dealer for Volvo, holding about 80% market share of total Volvo passenger vehicle sales in Malaysia.

VolkswagenFAHB’s wholly-owned subsidiary, F.A. Wagen Sdn. Bhd. was appointed a VW dealer in 2009

with dealerships and 3S centres located in Petaling Jaya, Shah Alam (Glenmarie) and Johor Bahru. As of Dec 2010, FAHB’s market share of total VW sales in Malaysia was 27%.

MitsubishiFAHB’s wholly-owned subsidiary, F.A. Automobiles (Ipoh) Sdn. Bhd. (FAAI) was appointed a Mitsubishi dealer in 2007 for the state of Perak. In 2009, FAAI extended its network to include Petaling Jaya. FAHB holds approximately 7% of the total Mitsubishi sales in Malaysia.

FASTBoth distributorships for Heico Sportiv and ABT Sportsline in Malaysia were obtained in 2010. These additional sports tuning brands provides an opportunity for FAHB to serve customers who wish to customise their cars to define their own individuality.


Driven

Long Service Staff Speaks about FAHB

‘Federal Auto provides career opportunities for us to grow.’

FARIdAh bINTI dARusAdmin Assistant, Joined in 1975

‘We have strong teamwork, supportive of each other in a caring working environment.’

TEOh TEONg ghEEAftersales Manager,

Joined in 1974

‘Federal Auto is driven by passionate people I come to accept as my family.’

ANgIE Ng WAI MuNReceptionist, Joined in 1972

‘It is a company that cares for its employees.’

JEFFREy MOEy KuM ChIEWsales Consultant, Joined in 1962

Federal AutoCarsVolvo outlets

F.A WagenVolkswagenoutlets

F.A. Automobiles(Ipoh)Mitsubishioutlets

OURNETWORK

Tota

l ve

hic

le s

ale

s un

it

FAHBVehicle sales chart

1,12

4

970

1,17

6 2,42

3

1,86

9

2,30

1

1,95

0

1,55

2

648

2,02

6

19701966 1995 2000 2005 2010

Year

1990198519801975


DAIHATSu (MALAYSIA) SDN BHD – 30 YEARS AT THE FOREFRONT

Daihatsu (Malaysia) Sdn. Bhd.

(DMSB) was incorporated in

1980 and holds the distributorship

of Daihatsu vehicles in Malaysia.

With the formation of the

Second National Car company,

Perusahaan Otomobil Kedua

Sdn. Bhd. (Perodua) in 1993, a

joint venture between Malaysian

partners and Daihatsu Motor

Company Ltd, Japan, DMSB was

appointed an authorised dealer

for Perodua vehicles a year later.

DMSB is also a 5% shareholder

of Perodua. Since then, DMSB

concentrates on the distribution

of commercial vehicles and DMM

Sales Sdn. Bhd. (DMMS), a wholly-

owned subsidiary, on the retailing

of Perodua vehicles. In the year

2010, DMSB was appointed a

dealer by Hino Motors (Malaysia)

Sdn. Bhd. to market the full range

of Hino commercial vehicles in

Malaysia.

DMSBDMSB’s Daihatsu commercial

vehicle range comprises the Gran

Max series and the Delta series.

The Daihatsu Delta series has

dominated the light truck market

(trucks with Gross Vehicle Weight

(GVW) up to 4,000kg for the V58

and GVW up to 7,000kg for the

V116) with a leading average of

approximately 34%-39% market

share. In 2009, DMSB introduced

the Gran Max pick-ups and in 2010

launched the Gran Max panel van

models. With a Hino dealership in

hand, DMSB is now also marketing

the Hino range of commercial

products. DMSB has in total nine

branches (Shah Alam, Serdang,

Kepong, Puchong, Butterworth,

Ipoh, Batu Pahat, Johor and Kota

Kinabalu) for Daihatsu products

and six branches (Shah Alam,

Puchong, Butterworth, Ipoh, Johor

Bahru and Kota Kinabalu) for the

Hino dealership.

DMMSDMMS is the largest

independent Perodua dealer,

holding approximately 10% of the

total Perodua sales in Malaysia.

DMMS has in total seventeen

branches (Shah Alam, Sungai

Besi, Sungai Buloh, Salak Tinggi,

Sri Permaisuri, Petaling Jaya, Kota

Kinabalu, Kuching, Butterworth,

Ipoh, Melaka, Batu Pahat, Johor

Bahru, Mid Valley, Selayang,

Ampang and Sri Kembangan).


‘I have gained a lot of

experience and opportunities

at DMSB.’

hAzIMAh bINTI MOhd sIdIKsection Manager,

Joined in 1980

‘The Company provides training to help improve

my skills and I have had the

opportunity to visit Japan and Indonesia for technical

product training.’

ROsALIE bIN Ab. KARIMsection Manager,

Joined in 1980

‘I like the conduciveworking

environment.’

NORAzIEN bINTI RAMLIsection Manager,

Joined in 1980

‘The management is supportive and

encouraging to its staff.’

LAI KWAI PINgsection Manager,

Joined in 1980

DMSB sales branches

DMSB service branches

DMMS sales branches

DMMS service branches

Dealers

DMSB

DMMS

OURNETWORK

Long Service Staff Speaks about DMSB

DMSB GroupVehicle sales chart

7,13

5

4,24

6 7,18

2

8,01

5

18,5

49

6,48

9

14,4

84 17,3

61

17,9

44 20,8

13

Tota

l ve

hic

le s

ale

s u

nit

Year

1995 1998 2001 2004 2007 20101992198919861983


ORIENTAL METAL INDuSTRIES (M) SDN BHD – 25 YEARS OF ExCELLENCE

Oriental Metal industries (M)

Sdn Bhd (OMI) started as

a SME vendor that commenced

operations in 1985 with the

assistance of Central Motor Wheel

Company Ltd., a subsidiary of

Toyota Motor Corporation. Today,

OMI is fully run by competent locals

as a Large Scale Industry (LSI)

vendor that serves about 85% of

the Malaysian Automotive Industry.

In 1996, OMI implemented a

full manufacturing facility for

steel wheel and at the same

time, an opportunity was given

for it to venture into wheel

assembly module business. In

2005, our sequential delivery

strategy for module business

did well despite keen market

competition. Introduction of

modern automated production

facilities coupled with Good

Management Practice (GMP) and

Toyota Production Systems in both


steel wheel and wheel assembly

module operations was key for

achieving good quality, cost and

delivery performance.

We have also equipped ourselves

with TS-16949, ISO14001 and

OHSAS18001 which are Quality

Management Systems required

by our customers covering

manufacturing, environment

and safety. Human resource

development programmes include

training, job enhancement

and job rotation were helpful in

meeting staff career development

expectations and retention of

skills and know-how within the

company.

In 2010, backed by recognition

from valued Original Equipment

(OE) customers, OMI won

the following awards and

nominations: Best Kaizen Projects

award, 1st runner up for Quality

Control Circles (QCC) activities,

Top 5 Best Vendor award,

Excellence Delivery Vendor Award,

Excellence Quality Vendor nominee

and Excellence Performance

Vendor (LSI) nominee.

As a responsible corporation,

OMI contributes back to society

yearly in the form of providing

internship for university students,

conducting safety talks and

practical workshops for boys-

homes, Gotong-royong activities

and donations for the needy and

disaster relief funds.

Through our vision of being

the preferred regional Tier-1

Comprehensive Wheel Module

Supplier and driven by our core

values: Integrity, Excellence,

Teamwork, Innovation & Customer

Orientation, the management

team continues to further enhance

our total supply value chain for

Original Equipment Manufacturers

(OEM) with more value-added new

products and export programmes.

Long Serving Staff Speaks about OMI

‘OMI is a harmonious organization with plenty of

opportunities to learn and progress.’RAJA zAINAL RAJA sOIA

senior supervisor, Joined in 1988

‘At OMI, we work as a team and as a family.’zuLKIFLy bIN Abd ghANI

Tech support staff, Joined in 1985

‘The management is supportive of my personal

growth and they trust in my abilities.’OsMAN bIN MOhAMEd RAMLI

supervisor, Joined in 1986

‘OMI rewards its employees well and provide

opportunities for promotion and personal

advancement.’sAWIAh bINTI ROhAIMI

Warehouse Executive, Joined in 1985



Corporate Information

MBM Resources Berhad (284496-V)

CORPORATE OFFICENo. 1-6, The Boulevard

Mid Valley City

Lingkaran Syed Putra

59200 Kuala Lumpur, Malaysia

T (603) 2287 6803

F (603) 2287 6805

w www.mbmr.com.my

COMPANY SECRETARIESPuan Shahrizat bt Othman

(MAICSA 0764744)

Puan Zaharah bt Ibrahim

(MAICSA 7012004)

PRINCIPAL BANkERSHSBC Bank (Malaysia) Bhd

Citibank Berhad

Hong Leong Bank Berhad

CIMB Bank Berhad

STOCk ExCHANGE LISTINGMain Market

Bursa Malaysia Securities Berhad

Stock Code : 5983

REGISTERED OFFICESuite C-5-4, Wisma Goshen,

Plaza Pantai, Jalan Pantai Baharu


T (603) 2283 4007

F (603) 2287 7006

SHARE REGISTRARAAJ Registration Services Sdn Bhd

Suite C-5-4, Wisma Goshen

Plaza Pantai, Jalan Pantai Baharu


T (603) 2283 4007

F (603) 2287 7006

AuDITORSDeloitte KassimChan (AF: 0080)

Chartered Accountants

FINANCIAL CALENDAR17th Annual General Meeting

14 June 2011

2010 Results Announcement

Quarter One : 24 May 2010

Quarter Two : 17 August 2010

Quarter Three : 11 November 2010

Quarter Four : 17 February 2011

Dividend Payments

Second interim for 2009: 18 March 2010

First interim for 2010: 22 September 2010

Second interim for 2010: 23 March 2011

ANNuAL REPORT 2010 | 13


Corporate Profile

MBM RESOuRCES BERHAD (MBMR) is an automotive Group with

diverse investments in distributorship and dealership of major

international brands of vehicles in Malaysia. It is well represented in

all segments of the market from light trucks to medium and heavy

duty trucks and buses in the commercial vehicle market and, from

compact entry level cars to luxury cars in the passenger vehicle

market. Its auto parts manufacturing division supplies to all the major

brands in Malaysia.

Our brand partners are:

We are leaders in the segments we represent.


subsIdIARy AssOCIATE

AuTOMOTIVE

daihatsu (Malaysia) sdn bhd 71.5% DMM Sales Sdn Bhd 100%

Federal Auto holdings berhad 86% Federal Auto Cars Sdn Bhd 100% F.A.Wagen Sdn Bhd 100% F.A. Automobiles (Ipoh) Sdn Bhd 100% FAST Sdn Bhd 100%

hino Motors (Malaysia) sdn bhd 42%

Perusahaan Otomobil Kedua sdn bhd 20%

MANuFACTuRING

Oriental Metal Industries (M) sdn bhd 78%

summit Vehicles body Works sdn bhd 100%

PROPERTY

Inai benua sdn bhd 70%

Corporate Structure

(and 5% held through Daihatsu (Malaysia) Sdn Bhd)

Note: Detailed list of the companies under the Group are shown

in Notes 49 and 50 of the Audited Financial Statements

Year ended December 31 2006 2007 2008 2009* 2010

Results (RM Million) Revenue

Operating profit before interest and tax

Associates’ results

Profit before tax

Profit attributable to equity holders

Basic earnings per share (sen)

Balance Sheets (RM Million) Share capital

Shareholders’ equity

Total assets

Net assets per share (RM)

Operating cashflow per share (sen)

Financial Ratios (%) Operating profit on revenue

Return on equity

Return on total assets

Sales (units) DMSB Daihatsu/Hino trucks

DMMS Perodua

FAHB Volvo / Volkswagen / Mitsubishi

Equity Indices Closing year end share price (RM)

Price-earnings ratio (times)

*Certain figures have been restated to exclude discontinued operations’ financials

1,185.5

53.0

72.9

121.9

92.1

38.9

238.5

661.1

954.6

2.8

26.6

4.5

13.9

9.6

5,279

13,876

530

2.93

7.5

1,131.0

54.8

86.8

140.5

110.5

45.9

242.0

765.9

1,001.3

3.2

29.9

4.8

14.4

11.0

4,935

13,009

503

3.20

7.0

1,203.0

70.1

79.4

149.9

117.1

48.4

242.1

849.1

1,077.1

3.5

15.2

5.8

13.8

10.9

5,327

12,775

575

2.28

4.7

1,528.5

51.5

119.0

172.4

142.1

58.6

242.7

1,018.2

1,346.7

4.2

(5.4)

3.4

13.9

10.6

3,167

17,646

2,026

3.34

5.7

5 Years Group Financial Performance

1,101.6

30.5

54.1

85.3

66.5

27.5

242.1

894.3

1,155.5

3.7

22.6

2.8

7.4

5.8

4,020

13,127

642

2.59

9.4

16 | MbM REsOuRCEs bERhAd

‘06

‘07

‘08

‘09

‘10

REVENUE RM MILLION

RM1.53 bil

1,185.5

1,131.0

1,203.0

1,101.6

1,528.5

‘06

‘07

‘08

‘09

‘10

NET ASSETS PER SHARE RM

RM4.2

2.8

3.2

3.5

3.7

4.2

‘06

‘07

‘08

‘09

‘10

NET CASH RM MILLION

RM144.1 mil

30.9

65.6

91.9

120.3

144.1

‘06

‘07

‘08

‘09

‘10

PROFIT BEFORE TAX RM MILLION

RM172.4 mil

121.9

140.5

149.9

85.3

172.4

‘06

‘07

‘08

‘09

‘10

EARNINGS PER SHARE SEN

58.6 sen

38.9

45.9

48.4

27.5

58.6

‘06

‘07

‘08

‘09

‘10

PER SHARE SEN

-5.4 sen

26.6

29.9

15.2

22.6

-5.4

‘06

‘07

‘08

‘09

‘10

VEHICLE SALES UNITS

DMSB Daihatsu /Hino Trucks

5,279

4,935

5,327

4,020

3,167

‘06

‘07

‘08

‘09

‘10

VEHICLE SALES UNITS

DMMS Perodua

13,876

13,009

12,775

13,127

17,646

‘06

‘07

‘08

‘09

‘10

VEHICLE SALES UNITS

FAHB Volvo /Volkswagen / Mitsubishi

530

503

575

642

2,026

OPERATING CASH FLOW

Jan

-06

Ma

r-06

Ma

y-06

Jul-0

6

Sep

-06

No

v-06

No

v-06

Jan

-07

Ma

r-07

Ma

y-07

Jul-0

7

Sep

-07

No

v-07

Jan

-08

Ma

r-08

Ma

y-08

Jul-0

8

Sep

-08

No

v-08

Jan

-09

Ma

r-09

Ma

y-09

Jul-0

9

Sep

-09

No

v-09

Jan

-10

Ma

r-10

Ma

y-10

Jul-1

0

Sep

-10

No

v-10

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

MBMR SHARE PRICES FROM 2006 - 2010

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

2006 2007 2008 2009 2010

RM

Pe

rce

nta

ge

(%

)

Year Year

GROUP VEHICLES SALES MARKET SHARE

Financial Highlights

ANNuAL REPORT 2010 | 17


Chairman’s Statement

TO ThE shAREhOLdERs OF MbM REsOuRCEs bERhAd:

I am pleased to report that

MBM Resources Berhad’s performance exceeded our expectations, achieving record profitability for the financial year 2010.

Last year, I had expressed my optimism that the momentum for an

economic recovery was gathering pace and was likely to be sustained

into 2010. Not only did the economy continue to expand, the growth

was above even our most optimistic forecasts. The Gross Domestic

Product (GDP) grew by 7.2% in 2010 after contracting 1.7% in the

previous year.

The economic growth coupled with the low interest rates environment

provided the impetus for motor vehicle sales. Notably, Malaysian Total

Industry Volume (TIV) climbed to a record high of 605,200 units, a growth

of 13% over the previous year.

ECONOMY AND THE AuTOMOTIVE INDuSTRY


• Revenues + 39% to RM1,528 million

• Total group vehicle sales + 28% to 22,839 units

• Total group vehicle sales including associates +15% to 215,474 units

• Profit Before Tax +102% to 172 million

• Net Profit to Shareholders +114% to RM142 million

• Dividend per share +117% to 13 sen per share

Revenues grew 39% to RM1,528

million and profit before tax more

than doubled to RM172 million.

All operating entities showed

considerable improvement in

contributions.

2010PERFORMANCEHIGHLIGHTS



DMSB is undergoing significant change in its business. The highly

successful Delta light commercial vehicle (LCV) will be phased out

with the remaining units expected to be marketed until the middle of

this year. DMSB will then concentrate on the Gran Max pick-up trucks

and vans, which have shown promising acceptance in the market

since their launch in 2010 and this year respectively. In 2010 DMSB

secured the dealership for Hino products. The Hino commercial vehicle

product range is extensive which includes LCVs, medium and heavy

duty trucks and buses. This provides the opportunity for DMSB to utilise

its extensive experience to market the commercial vehicles that Hino

offers. DMSB commenced its Hino dealership in the second half of 2010.

Major investments are planned for the construction of 3S (sales, service

and spare parts) centres for the business which will be completed

progressively over the next 12 months.

The Perodua dealership under 100%-owned DMM Sales Sdn Bhd

(DMMS) recorded significant jump in sales of 34%. This resulted in its

market share of nationwide Perodua sales to improve to 9.4% from

7.9% in the preceding year. We have also embarked on upgrading our

outlets in phases, with particular focus on increasing the capacity for

the aftersales business, tapping on the opportunities that come with

the rising units on the road.

Daihatsu (Malaysia) Sdn Bhd (DMSB)

FY2010 FY2009 % change RM mil RM mil

Revenue 1,066 867 +23

Profit before Tax 35 20 +75

Truck sales (units) 3,167 4,020 -21

Perodua (units) 17,646 13,127 +34

Federal Auto Holdings Berhad (FAHB)

FY2010 FY2009 % change RM mil RM mil

Revenue 385 165 +134


Total Vehicle sales 2,026 642 +216

(Volvo, Volkswagen and Mitsubishi)

The multi-brand strategy we adopted for FAHB has given it the

springboard for its renewed growth.

Volvo car sales grew for the second consecutive year. The Volvo dealership

had its first full year’s contribution from our new Glenmarie branch. We

invested in upgrading the Penang branch during the year. Next in line are

investments for the Kuala Lumpur and Johor Bahru branches.

The Volkswagen dealership achieved a quantum leap in sales. This is

due to a combination of factors. We had the first full year’s contribution

after the re-launch of our dealership, with a new location in Petaling

Jaya at the end of 2009 and additional outlets in Danga Bay, Johor

Bahru and Glenmarie, Shah Alam during the year. The product launches

from Volkswagen have generally been well received, particularly the

Polo 1.2 and Golf and Scirocco 1.4 in the latter part of 2010.

The Mitsubishi dealership had the first full year’s contribution from its

new Petaling Jaya branch, in addition to our existing branch in Ipoh.

The volume sales for this brand also recorded a sharp increase. During

the year, the model lineup for Mitsubishi vehicles extended to include

the all new compact crossover, ASX, the premium SUV, Pajero and the

Lancer Sportback.

During the year we commenced the marketing of ABT Sportsline and

Heico tuning/accessories products. The distributorships of these brands

for the Volkswagen and Volvo vehicles respectively, will enhance our

marketing strength in providing additional product enhancements to

our customers.




Summit Vehicles Body works Sdn Bhd (SVBw)

SVBW’s losses narrowed

substantially as further

consolidation of its business

were carried out. Volumes

increased in 2010, but

were insufficient to cover

its costs as competition

remains intense. A review

of the types of bodies it

offers to its customers were

undertaken to focus on

more specialised products.

Production processes were

also reviewed to improve on

productivity and efficiency.

OMI supplies steel wheels to all major automotive companies in

Malaysia. The buoyant vehicle sales recorded in 2010 translated into

strong wheel deliveries. The reorganisation of the tyre assembly lines

in Shah Alam at the end of 2009 under the Toyota Production System

project and the full year production of the tyre module plant in

Serendah played a major role in contributing to the significant increase

in volumes and efficiency gains for 2010.

OMI has continued to invest in its plant and training of its employees to

ensure that production and delivery to our customers meet the highest

standards. During the year OMI was recognised by its major customers

as a quality vendor. In 2010 Proton acknowledged OMI as the “Best

Kaizen Vendor” and Perodua presented us with the “Best Delivery

Vendor” award.

Oriental Metal Industries (M) Sdn Bhd (OMI)

FY2010 FY2009 % RM mil RM mil change

Revenue 67 60 +12


Wheel deliveries (‘000) 988 882 +12

Tyres assembled (‘000) 2,335 1,968 +19

ASSOCIATESPerusahaan Otomobil kedua Sdn Bhd (Perodua)

Perodua retained its market leadership for the fifth consecutive year, driven by sales of its three core models, Alza, Myvi and the Viva. Sales by registration rose by 13% to 188,600, a record achievement and total market share was stable at 31.2%.

During the year Perodua added to its lineup the Myvi LE and Viva Elite Exclusive Edition variants. For the third consecutive year in 2010 the Perodua Viva won the “Best Passenger Car Value for Money” award from Frost & Sullivan. Perodua also participated in the Kuala Lumpur International Motorshow where it featured the Bezza, the next generation prototype model inspired entirely by Malaysian designers.

Perodua contributes significantly to the Malaysian economy and the automotive industry. It employs directly over 10,000 employees, and this figure increases to 56,000 when combined with dealers and vendors. It also sources parts from local vendors of an approximately RM4 billion in value in 2010. A total of about RM3 billion has been invested in the plant and models development and the plant rated capacity is currently 250,000 units per annum. Significant milestones have been achieved together with the assistance from Perodua’s Japanese partner, Daihatsu Motor Company, in lifting its engineering and manufacturing capabilities.

Hino Motors (Malaysia) Sdn Bhd (HMMSB)

HMMSB made major progress in 2010. Its total sales by registration

reached an all time high of 4,590 units (+52% from 2009 sales of

3,014), securing it the No.1 position for the Commercial Vehicle

(trucks and buses) category. It has gained market share in all segments

with an overall market share of 27.8% compared with 19.9% in 2009.

Hino has been able to fill the gaps in the market with its wide product

range. It has embarked on extensive strengthening of the sales

and service network support through major dealer development

programmes.


OuTLOOkWe entered 2011 with optimism.

Economic conditions remain

encouraging and our order

taking remains healthy.

However, the recent political

uncertainties in the Middle East

and the resulting increase in oil

prices have dampened the

immediate market outlook.

The earthquake in Japan has

also impacted on the supply

chain to the automotive

industry, extent of which is still

being assessed. So although

we believe that MBMR is

well positioned for its growth

strategy, the external events

are causing us to be more

cautious.

Nevertheless in 2011, the

major investment in the Hino

dealership undertaken by

DMSB will be in full swing. The

biggest of which will be the

RM6 million 3S centre in Shah

Alam. Under FAHB, the new

Volkswagen Glenmarie 3S

centre is expected to be fully

completed. The main Volvo

branch in Kuala Lumpur where

FAHB’s current headquarters

is located (Lot 15) will be

demolished in May to make

way for the redevelopment

of the property which will

eventually house Volvo’s

showroom and a 26 storey

office block, consisting of MBMR

and FAHB’s new headquarters.

Whilst this redevelopment



takes place, FAHB will temporarily relocate its headquarters to its six

storey office block in Glenmarie and the Volvo 3S centre will be housed

in a temporary centre adjacent to Lot 15.

During the year, the development of DMMS’ new Perodua 3S centre in

Kuala Lumpur and FAHB’s redevelopment of its Johor Bahru property

to accommodate the Volvo and Volkswagen dealerships are also

expected to be undertaken.

CORPORATE DEVELOPMENTSMBMR successfully completed the sale of its entire equity interest in

WSA Capital Corporation Sdn Bhd on 30th June 2010.

On 14th October 2010 MBMR announced its proposed acquisition

of 100% in Lion Motor Sdn Bhd (LMSB) and 70.01% in Kinabalu Motor

Assembly Sdn Bhd (KMASB) for a combined purchase consideration

and debt settlement consideration of Ringgit Malaysia Sixteen Million

(RM16,000,000).

KMASB holds a manufacturing licence for the assembly of motor

vehicles issued by the Ministry of International Trade and Industry.

KMASB has distributor agreement with Anhui Jianghuai Automobile

Co. Ltd. and LMSB has licence agreement with Dong Feng Automobile

Co. Ltd., both for the distribution of commercial vehicles in Malaysia.

The Proposed Acquisitions will provide the opportunity for the MBMR

Group to expand its automotive business.

The acquisition of LMSB was completed on 28th February 2011.

FAHB, an 86%-owned subsidiary, is undertaking a selective capital

reduction scheme (SCR) which will result in it being a 100%-owned

subsidiary of MBMR. The SCR which encompasses the reduction of all

shares held by minority shareholders together with a portion of shares

held by MBMR’s wholly owned subsidiary, Galaxy Waves Sdn Bhd, will

result in a cash capital repayment of RM4.20 per share to minority

shareholders of FAHB. The SCR received unanimous approval from

shareholders of FAHB at the Extraordinary General Meeting held on 7th

January 2011. The SCR is expected to be completed by May 2011.

DIVIDENDSFor the financial year ended 31st December 2010, MBMR declared and paid two interim dividends and one

special dividend for a combined dividend payment of 13 sen per share. The first interim dividend of 5 sen per

share was paid on 22nd of September 2010. The second interim of 5 sen per share plus a special dividend of

3 sen per share were paid on the 23rd of March 2011.

SOCIAL RESPONSIBILITIESOur Social Responsibilities Programme encompasses our responsibilities

to our employees and to the communities we operate in.

The MBMR Group contributes to various charities in Malaysia. In 2010,

we participated in the Relay for Life organised by the National Cancer

Association. It is an annual fund raising event for cancer research

and to also create greater awareness of cancer and to celebrate

the lives of survivors.

Our internship programmes which have been running for many years

now provide students with working experience at our operations.

These students will find these practical experiences useful for their

employability when they join the job market in the future.

We continue to emphasise on investing in our employees in raising their level of skills. Training programmes

were conducted during the year for the employees at various levels. Safety campaigns were also carried

out to reiterate the importance of safety awareness at the workplace.

APPRECIATIONOn behalf of the Board I wish to congratulate the management and staff for achieving a commendable performance for the year. I thank them for their dedication and commitment. I wish to also extend my appreciation to our customers, principals, suppliers, bankers, business partners and shareholders for their support.

THE ANNuAL GENERAL MEETING (AGM)We will be breaking from our past of holding our AGMs in leading hotels in Kuala Lumpur. This year’s AGM will be held on Tuesday, 14th of June 2011 at 10 A.M. at the Learning Academy at FAHB’s new headquarters in Glenmarie. We felt as shareholders, you should experience some of the investments that we have made and also see some of the most exciting products that we offer at our Volvo and Volkswagen dealerships. The Board and I look forward to your attendance.

DATO’ ABDuL RAHIM ABDuL HALIMChairman


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