Corporate Information

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4 2 MBM RESOURCES BERHAD Contents 03 Corporate Information 04 Corporate Profile 05 Corporate Structure 06 Group Financial Performance: Five-Year Summary 07 MBMR in Numbers 08 Joint Letter to Shareholders 20 Social Responsibility 22 The Year at a Glance 24 Board of Directors Profiles 28 Management Team 29 Statement on Corporate Governance 37 Statement on Risk Management and Internal Control 40 Report on Audit and Risk Management Committee 46 Other Information Required by the Listing Requirements of Bursa Malaysia Securities Berhad 47 Directors Responsibilities Statements in Relation to the Financial Statements 48 List of Properties 53 Analysis of Shareholdings 57 Analysis of Warrant Holdings 61 Report of the Directors and Financial Statements 168 Notice of Twentieth (20th) Annual General Meeting 171 Proxy Form

5 Annual Report Corporate Information Board of Directors Y. Bhg. Dato Abdul Rahim Abdul Halim Chairman, Non-Independent Non-Executive Director Mr. Looi Kok Loon Group Managing Director Ms. Wong Fay Lee Executive Director Encik Mustapha Mohamed Independent Non-Executive Director Encik Aqil Ahmad Azizuddin Non-Independent Non-Executive Director Mr. Low Hin Choong Non-Independent Non-Executive Director Encik Iskander Ismail Mohamed Ali Senior Independent Non-Executive Director Corporate Office No 1-6, The Boulevard, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia T: (603) F: (603) Company Secretaries Wong Peir Chyun (MAICSA ) Wong Wai Foong (MAICSA ) Stock Exchange Listing Main Market Bursa Malaysia Securities Berhad Stock Code: 5983 Warrant Code: 5983WA Auditors Deloitte (formerly known as Deloitte KassimChan) (AF: 0080) Chartered Accountants Registered Office Level 18, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia T : (603) F : (603) Share Registrar Tricor Investor Services Sdn. Bhd. Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, Kuala Lumpur, Malaysia T: (603) F: (603) Principal Bankers Ambank (M) Berhad CIMB Bank Berhad Hong Leong Bank Berhad HSBC Malaysia Berhad Malayan Banking Berhad Public Bank Berhad United Overseas Bank (Malaysia) Berhad Financial Calendar 19th Annual General Meeting: 20 June Results Announcement Quarter 1: 29 May 2013 Quarter 2: 22 August 2013 Quarter 3: 20 November 2013 Quarter 4: 20 February 2014 Dividend Payments: First Interim for 2013: 23 September 2013 Second Interim for 2013: 28 March 2014

6 4 MBM RESOURCES BERHAD Corporate Profile MBM RESOURCES BERHAD (MBMR) is an automotive group with diverse investments in distributorship and dealership of major international vehicle brands and automotive parts manufacturing in Malaysia. The Group is well represented in all segments of the market from light trucks to medium and heavy duty trucks and buses in the commercial vehicle market, and from compact entry level cars to luxury cars in the passenger vehicle market. Its automotive parts manufacturing division, consisting of wheels, airbags, seat belts, steering wheels and noise, vibration and harshness (NVH) products, is a significant supplier to all the major car brands in Malaysia. OUR BRAND PARTNERS

7 Annual Report Corporate Structure (as at 23 May 2014) THE COMPLETE AUTOMOTIVE GROUP Manufacturing Hirotako Holdings Berhad (HHB) Oriental Metal Industries (M) Sdn. Bhd. (OMI) Hino Motors Manufacturing (Malaysia) Sdn. Bhd. (HMMM) Property Autoliv Hirotako Sdn. Bhd. (AHSB) Hirotako Acoustics Sdn. Bhd. OMI Alloy (M) Sdn. Bhd. MBMR Properties Sdn. Bhd. 100% 51% 100% 78% 100% 42% Inai Benua Sdn. Bhd. 70% 100% Distribution Daihatsu (Malaysia) Sdn. Bhd. (DMSB) DMM Sales Sdn. Bhd. (DMMS) Federal Auto Holdings Berhad (FAHB) Federal Auto Cars Sdn. Bhd. F.A.Wagen Sdn. Bhd. F.A. Automobiles (Ipoh) Sdn. Bhd. FAST Sdn. Bhd. Hino Motors Sales (Malaysia) Sdn. Bhd. (HMSM) Perusahaan Otomobil Kedua Sdn. Bhd. (Perodua) 51.5% 100% 100% 100% 100% 100% 100% 42% 20% SUBSIDIARY ASSOCIATE Note: A detailed list of the companies under the Group are shown in notes 48 and 49 of the Report of the Directors and Financial Statements.

8 6 MBM RESOURCES BERHAD Group Financial Performance: Five-Year Summary Year ended 31 December RESULTS (RM MILLION) Revenue Earnings Before Interest and Tax (EBIT) Associates results Profit before tax Profit attributable to equity holders Basic earnings per share (sen) 1, , , , , BALANCE SHEETS (RM MILLION) Share capital Shareholders equity Total assets Net assets per share (RM) , , , , , , , , , Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) per share (sen) FINANCIAL RATIOS (%) Operating profit on revenue Return on equity Return on total assets VEHICLE SALES (UNITS) DMSB Daihatsu/Hino/Perodua FAHB Volvo/ Volkswagen/ Mitsubishi Total Group 17, ,816 20,813 2,026 22,839 20,129 3,107 23,236 21,233 4,339 25,572 22,863 3,723 26,586 EQUITY INDICES Closing year-end share price (RM) Price-earnings ratio (times)

9 Annual Report MBMR in Numbers Number of sales/ service branches 46 giving us the widest reach to our customers Number of vehicles serviced at our service centres 166,963 Approximately 700 vehicles per day are serviced at our service centres nationwide Number of cars produced during the year fitted with our wheels 390, 65% of vehicles produced in Malaysia are fitted with wheels produced by OMI Number of cars produced during the year fitted with our seatbelts 410,000 Airbag sales grew 13% 68% of vehicles produced in Malaysia are fitted with seat belts from Autoliv Hirotako beating TIV growth of 4.5%; higher airbag fitment rates Wearing seat belt reduces the risk of serious injury or death by 50% Airbags will reduce the risk of serious injury or death by an additional 30% Our safety products help save lives and prevent severe injuries

10 8 MBM RESOURCES BERHAD Joint Letter to Shareholders Our Future in Motion

Annual Report 2013 9 Dear Shareholders, MBM Resources Berhad (MBMR) maintained its record revenues achieved in 2012 with a marginal decline in profit before tax.

11 Annual Report Dear Shareholders, MBM Resources Berhad (MBMR) maintained its record revenues achieved in 2012 with a marginal decline in profit before tax. It had been a challenging year, faced with uncertainties, intense competition and cost pressures. However, the Group had set in motion the execution of the investments which we highlighted in our previous Letter in charting MBMR s future growth. We have the pleasure of sharing with you here an update of the progress of our development.

12 10 MBM RESOURCES BERHAD Joint Letter to Shareholders Financial Highlights Revenues were flat at RM2.2 billion in Total vehicle sales by the Group gained by 4.0%, slightly below the industry growth of 4.5%, largely driven by Perodua vehicles, compensating for the weaker sales of the continental brands. Operating profits from the subsidiaries declined, as startup losses from the new alloy wheel plant were accounted for as production at a limited scale commenced in the second half of the year. This was compounded by operating in a very challenging environment for vehicle retailing, as new models were launched by competing brands and new entrants took to build their market shares. Additionally, sales slowed in the second quarter as the uncertainties of the outcome of the May General Election and anticipation of reduced car prices, in particular for the non-national car segment, resulted in consumers holding back their purchases. Associate contributions, largely from Perusahaan Otomobil Kedua Sdn Bhd (Perodua) and Hino Motors Sales (Malaysia) Sdn Bhd (HMSM), improved sufficiently to offset the decline in operating profits to help the Group achieve similar profit before tax to previous year. Revenues and profits were maintained - Revenues RM2,234.3 million Operating Profit RM54.9 million -1.5% -23.8% Group Profit Before Tax RM194.2 million Associate Contribution RM139.3 million -1.6% +11.1%

13 Annual Report MOTOR TRADING Our Motor Trading Division in Numbers TOTAL VEHICLES SOLD TOTAL BRANCHES TOTAL VEHICLES SERVICED 1,391 VEHICLES SOLD 11,354 VEHICLES SERVICED 7 BRANCHES 635 VEHICLES SOLD 5,624 VEHICLES SERVICED 6 BRANCHES 995 VEHICLES SOLD 9,940 VEHICLES SERVICED 4 BRANCHES 20,837 VEHICLES SOLD 100,351 VEHICLES SERVICED 18 BRANCHES 2,270 VEHICLES SOLD 25,785 VEHICLES SERVICED 5 BRANCHES 458 VEHICLES SOLD 13,909 VEHICLES SERVICED 6 BRANCHES

12 MBM RESOURCES BERHAD Joint Letter to Shareholders Volkswagen 3S Centre in Glenmarie Extending Our Reach to Our Customers One of the main thrusts of our investments in our network is to add

14 12 MBM RESOURCES BERHAD Joint Letter to Shareholders Volkswagen 3S Centre in Glenmarie Extending Our Reach to Our Customers One of the main thrusts of our investments in our network is to add capacity to our aftersales business. With the rapid growth in vehicle sales in recent years, this is a natural extension of the business which needs to keep pace with the number of vehicles that are on the road. It is our objective to grow the aftersales and spare parts businesses as they provide sustained growth and high margin opportunities and are defensive by nature in riding out the cycles of the economy. We have experienced tremendous growth in service intakes in the past few years since we embarked on our major expansion plan. During the year the Group serviced a combined total of 166,963 vehicles, a growth of 12% from the previous year. This growth would have been higher if not for the temporary disruptions to operations that occurred during the major upgrading works, namely to the Volkswagen service centres in Petaling Jaya and Glenmarie, and Daihatsu (Malaysia) Sdn Bhd (DMSB)/DMM Sales Sdn Bhd (DMMS) service centres in Kota Kinabalu and Shah Alam. We will see the full contribution of these expanded operations in Growth in Aftersales service INtAKEs 166, , ,162 The Group s network grew by an additional three outlets - one Mitsubishi 3S centre in Shah Alam, Selangor, one Volkswagen 2S centre in Sungai Petani, Kedah and a purpose built service and spare parts centre for Perodua vehicles in Jalan Chan Sow Lin in Kuala Lumpur. With most of the investments already made to the extension of our network and added capacity to our servicing capabilities, we believe we are now in a strong position to reap the benefits of these new opportunities.

Annual Report 2013 13 Auto PARTS Manufacturing Our Manufacturing Division In Numbers ORIENTAL METAL INDUSTRIES (M) SDN BHD REVENUE RM114,700,000 STAFF 309 HIROTAKO HOLDINGS BERHAD REVENUE

15 Annual Report Auto PARTS Manufacturing Our Manufacturing Division In Numbers ORIENTAL METAL INDUSTRIES (M) SDN BHD REVENUE RM114,700,000 STAFF 309 HIROTAKO HOLDINGS BERHAD REVENUE RM296,700,000 STAFF 483 ALLOY WHEEL VOLUME 6,000 STEERING WHEELS VOLUME STEEL WHEELS 374,600 VOLUME 907,000 AIRBAGS VOLUME 874,700 SEAT BELTS VOLUME 2,031,300 MAIN CUSTOMERS HINO HONDA PERODUA PROTON TOYOTA MAIN CUSTOMERS HONDA INOKOM NAZA NISSAN PERODUA PROTON TOYOTA

16 14 MBM RESOURCES BERHAD Joint Letter to Shareholders Oriental Metal Industries (M) Sdn Bhd (OMI) entered a new phase in realising its aspiration to becoming a fully integrated wheel company with the commissioning of its advanced alloy wheel manufacturing facility in Sungai Choh, Selangor. OMI now offers its original equipment manufacturer (OEM) customers the supply of quality steel and alloy wheel options, complemented by its tyre assembly services. The New Alloy Wheel Plant OMI fills a gap in the supply of OEM-quality standard alloy wheels in Malaysia and is positioned to capture the growing shift in market trends in preference for alloy wheels. We have invested RM95 million for phases 1 and 2 for a capacity of 500,000 wheels per annum. Designed with the highest specifications for meeting international standards of quality and requirements of OEMs, we aim to supply for both domestic and export markets. As a greenfield project, the new plant will require a gestation period before it reaches an optimum production level. It started exports to the replacement market (REM) in small quantities in 2013 and is actively engaging potential customers, who are currently assessing the plant and discussing potential supply in the future. OMI started supply of alloy wheels to Perodua in March As a startup, initial costs such as employment and training, trial production, finance costs and depreciation were incurred whilst there were no significant sales as the new plant was being assessed by potential customers during the year. As a result we recorded pre-operating losses from the alloy wheel operations. The losses were, however, partially offset by the improvement in the steel wheel and tyre assembly businesses. The steel wheel volumes staged a recovery as the supply to certain major models stopped at the end of 2012 were replaced by the introduction of new model variants by our customers with steel wheels options. The success of these model variants helped lift volumes of steel wheels by 20% compared with New Record Revenues for Hirotako Holdings Berhad Hirotako Holdings Berhad achieved new record revenues of RM296.7 million in Its subsidiary, Autoliv Hirotako Sdn Bhd (AHSB), grew its airbag volumes substantially as the fitment rates of airbags continued to increase as a result of new safety standards and growing awareness of safety by consumers. AHSB is a manufacturer of safety products, seat belts and airbags with full testing facilities at its Balakong, Selangor plant. Our engineering capabilities put us in a strong position Development Stages of the OMI Alloy Wheel Plant 2011 STAGE STAGE STAGE 3 Market & Investment Study Plant construction; equipment installation; recruitment and training; trial production Plant commissioning (Phase 1 250,000 pieces per annum); initial exports to Europe

Annual Report 2013 15 to support our customers in a timely manner and help them achieve high scores in the New Car Assessment Programme (NCAP) ratings.

17 Annual Report to support our customers in a timely manner and help them achieve high scores in the New Car Assessment Programme (NCAP) ratings. Hirotako Acoustics Sdn Bhd recorded better performance as it secured supply to major models of its main customers, supply of which took off in the second half of the year. The utilisation rate of its new felt line increased, helping to bring down internal material costs with opportunities for external sales. Our Focus on Cost Management During the year, we experienced erosion in our margins due to intense competition and unavoidable additional costs as a result of the minimum wage legislation coming into force. We have intensified our own cost reduction exercises. Our continued cost containment coupled with the higher revenue and productivity growth will help offset some of the squeeze in margins moving forward. We aim to lower our direct material costs through rationalising our supply sources, hence our ability to leverage on greater volumes over less number of suppliers. Similarly, we have through our engineering and design capabilities, look to standardising our products and components so as to help our Airbag production 2014 STAGE 4 FUTURE STAGE 5 Plant audit by potential customers; supply to OEM customers; phase 2 additional 250,000 pieces per annum capacity...up to additional 500,000 pieces per annum capacity

18 16 MBM RESOURCES BERHAD Joint Letter to Shareholders suppliers lower their costs, and consequently our costs too. For example, through the design of our wheels, we are able to explore reduced material use, which typically accounts for about 60% of costs. In addition to reducing our product costs, we also help reduce the weight of the wheels which benefits our customers who are constantly looking at ways of improving the weight of their vehicles in achieving greater fuel efficiency. We also conduct Value Analysis/Value Engineering (VAVE) activities throughout the year to help us minimise wasted material, production time and the resulting product cost to our customers. We inculcate a culture of continuous improvement. We run regular workshops throughout the year to identify areas for improvement and engage our employees in these activities. During the year, OMI was recognised by its customers for its support to their respective businesses. Honda Malaysia awarded OMI as the Best Cost Vendor while Perodua presented the company with the Excellent Contribution and Partnership award. Associates Perodua recorded yet another new high in sales with 196,071 registrations, a growth of 3.7% from the previous year. It captured a market share of 30% of the total vehicle market in The S Series, Perodua s 20th Anniversary value-for-money variants, launched in March 2013, was well received by the market. Additionally Perodua also introduced a three-year free service package for all its models. At the Frost & Sullivan Excellence Awards, the Myvi won the Best Model of the Year Award and the Viva, the Value-for-Money Car of the Year Award. The construction of Perodua s new plant was completed at the end of the year and the installation of equipment is running on schedule with production expected to commence by the middle of This new plant is expected to raise production quality standards further with improved systems, new technology and greater automation. HMSM enjoyed an 8.8% growth in new registrations to 7,002 units, reinforcing it as the leader in the commercial segment in Malaysia with a 37% market share of the total trucks and bus market. As a result Alloy wheel production - spray painting

Annual Report 2013 17 The new Hino manufacturing plant line-off ceremony of the increased Hino vehicles on the road in recent years, the service intake has continued to climb to improve by 16% from

19 Annual Report The new Hino manufacturing plant line-off ceremony of the increased Hino vehicles on the road in recent years, the service intake has continued to climb to improve by 16% from the previous year. This has been helped by the three free service programme introduced to encourage customers to return for regular maintenance of their vehicles. The new Hino manufacturing plant in Sendayan, Negeri Sembilan was completed on schedule and production commenced in March The new plant will play an important role in supporting the sales of Hino vehicles in Malaysia in ensuring the quality and responsiveness to meet the growing market demands. Dividends MBMR paid its first interim dividend of 3 sen per share on 23rd September 2013 and a second interim dividend of 3 sen per share on 28th March Outlook The Government announced its new National Automotive Policy in January 2014, with the main thrust on promoting Malaysia as a hub for the manufacturing of Energy Efficient Vehicles (EEV). The further liberalisation of the automotive market will increase the competitive landscape. The policy sets the framework for the future growth of the industry. We believe MBMR is well positioned to tap on this future growth as the investments we have made will strengthen our competitiveness in the segments we are represented. Perodua s new plant is designed in line with the new NAP and will have its first roll-out of EEV compliant model targeted for the later part of this year. For the immediate term, we expect 2014 to remain challenging. Despite a generally stable economy, the concerns of rising cost of living have had an impact on consumption spending. The startup costs of our major investments will also have an impact on our profitability. Despite our cautious outlook for the year, we believe the initiatives we have taken and the investments we have made have set Our Future in Motion.

20 18 MBM RESOURCES BERHAD

Annual Report 2013 19 Appreciation On behalf of the Board we wish to thank all our employees for their untiring efforts and commitment.

21 Annual Report Appreciation On behalf of the Board we wish to thank all our employees for their untiring efforts and commitment. We are also grateful to our customers, business partners, bankers, auditors and shareholders for their continued trust and support. To our fellow Board members, we thank them for their guidance and advice during the year. Following almost twelve years of service, Mr. Wong Wei Khin has decided to retire from the Board on 1st January 2014 to pursue his business interests. We thank him for his contributions and guidance to the Board and wish him every success in his future endeavors. We extend a warm welcome to Ms. Wong Fay Lee who joined the Board as an Executive Director on 1st January She heads the Group Legal, Risk and Compliance division. She brings with her extensive legal and commercial experience. Dato Abdul Rahim Abdul Halim Chairman Looi Kok Loon Group Managing Director 23 May 2014

MBM Resources Berhad. 17 th Annual General Meeting 14 June 2011 The Learning Academy, Federal Auto Holdings Berhad, Glenmarie

MBM Resources Berhad. 17 th Annual General Meeting 14 June 2011 The Learning Academy, Federal Auto Holdings Berhad, Glenmarie MBM Resources Berhad 17 th Annual General Meeting 14 June 2011 The Learning Academy, Federal Auto Holdings Berhad, Glenmarie 1 Agenda 1) Corporate Structure 2) 2010 Performance 3) Group Corporate Developments