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PROTON 2010 ANNUAL REPORT CONTENTS PROTON ANNUAL REPOR PROTON Holdings Berhad (623 02 04 08 09 10 14 18 20 Corporate Mantra & Core Values PROTON’s Policies Financial Calendar Key Financial Indicators Summary of Financial Highlights for Five Years Corporate Profile Corporate Information Group Operations .
Chairman’s Statement 24 26 34 36 40 48 54 140 158 162 40 Managing Director’s Review 48 166 170 180 287 290 295 296 299 Operations Review Risk Management 54 Board of Directors Profile of Directors PROTON Group Management Committee Members Heads of International Subsidiaries Chairman’s Statement Managing Director’s Review Operations Review Statement on Corporate Governance Additional Compliance Information Statement on Internal Control Calendar of Events 2009 – 2010 Statutory Financial Statements Shareholding Statistics Properties Owned by PROTON Group Share Price and Volume Traded Notice of 7th Annual General Meeting Statement Accompanying the Notice of 7th Annual General Meeting Form of Proxy .
EVERY PROTON EMPLOYEE SHALL OPERATE UNDER THE GROUP’S SHARED VALUES AND RELY ON THESE VALUES TO GUIDE THEIR BEHAVIOUR WITH EACH OTHER AND THE CUSTOMERS. . THESE VALUES FORM THE FOUNDATION OF HOW WE WORK AND CONDUCT BUSINESS.Corporate Mantra & Core Values PROTON 2010 Annual Report 2 25 STERLING YEARS THE PROTON WAY PROTON EMPLOYEES ARE DEDICATED TO THE GROUP’S LONG-TERM SUCCESS.
Core Values Quality We make products that work the first time. Caring As a responsible corporate citizen. always seeking new and better ways of doing things. Purpose We are a passionate group of people working together.Corporate Mantra & Core Values Core Ideology Audacious Goal Driving Malaysia’s transformation into a leader in technology and quality. We have an inherent sense of urgency in everything we do. We view change as opportunity. Speed We have a “can-do” attitude and will not rest until the problem is solved. we invest in safety. innovation and leading technology. 25 STERLING YEARS Vivid Description We deliver innovative and superior quality products and services. Teamwork We trust. Customer Focus Customers are the source of our income. Our brands inspire confidence and pride. creating exhilarating products and services for global markets. health and the environment. PROTON 2010 Annual Report 3 . Innovation We challenge convention. every time. We deliver on our promises to our customers’ satisfaction. synonymous with great styling. respect and share knowledge to foster teamwork at the workplace.
it is our policy to:• Take responsibility for the safety and health of our employees. • Take all action necessary to remedy any noncompliance. 4 25 STERLING YEARS Environment. IT IS NECESSARY TO PROMOTE AND PROTECT THE HEALTH AND SAFETY OF PROTON EMPLOYEES AND ENSURE THAT THE ENVIRONMENT IS UNHARMED. The Group is committed to providing a conducive. HEALTH AND SAFETY POLICY THE COMPANY’S MISSION IS TO STRIVE TOWARDS EXCELLENCE IN ALL ASPECTS OF PROTON’S OPERATIONS. • Provide the appropriate resources. QUALITY POLICY TO ACHIEVE OUR COMMITMENT TO QUALITY. health and safety are our priority. • Monitor and maintain high standards in environmental protection as well as health and safety measures. safe and healthy working environment for our employees and to ensure this.PROTON’s Policies PROTON 2010 Annual Report ENVIRONMENTAL. IN ACHIEVING OUR GOAL. PROTON WILL:- .
• Actively participate in all the Environmental. • Provide a culture and environment of continuous learning. Health and Safety (EHS) programmes. • Provide adequate information and assistance to our employees and our neighbours to avoid unacceptable effects on the environment. we shall work together and towards this end. where reasonably practicable:• Comply with all rules and regulations concerning the environment. This is our objective and it is our intention to put this EHS Policy into action and to make it our way of life. facilities and To assist the Company in achieving our goals. we shall. safe and healthy working environment in which people like to work and prosper. employees shall:• Abide by all rules and regulations concerning the workplace. • Actively promote programmes for the employees to instill awareness for the safety and health of the employees. improvement and innovation towards total quality excellence. • Maintain good work practices. • Ensure quality as the Number One work ethics in all operations. • Provide adequate skills and knowledge to all levels of personnel through systematic and structured training programmes.PROTON’s Policies In implementing the Company’s policy. 25 STERLING YEARS PROTON 2010 Annual Report 5 . • Provide all the necessary equipment for the employees. • Utilise all the facilities provided by the management in a safe and proper manner. health and safety. • Provide a conducive. our business associates and the public. • Establish an effective and efficient Quality System based on the requirements of ISO 9001:2008 standards.
We are now in full gear optimising operations to accelerate improved levels of expertise. PROTON has come a long way by riding on creative strategies and partnering the world’s best.In the areas of technology. design. We are a global automotive player. quality and marketing. A New Dawn in Expertise .
Financial Calendar PROTON 2010 Annual Report 2009 JUL 30 1st QUARTER Financial Results for period ended 30 June 2009 8 25 STERLING YEARS AUG 21 6 Annual General Meeting th NOV 23 2nd QUARTER Financial Results for period ended 30 September 2009 2010 FEB 19 3rd QUARTER Financial Results for period ended 31 December 2009 MAY 26 4th QUARTER Financial Results for period ended 31 March 2010 JUL 30 Audited Financial Statement for Financial Year ended 31 March 2010 JUL 30 Declaration of proposed First & Final Dividend of 20 sen per share (less 25% tax) for Financial Year ended 31 March 2010 AUG 30 Notice of 7th Annual General Meeting SEP 23 7th Annual General Meeting SEP 30 Entitlement Date for First & Final Dividend of 20 sen (less 25% tax) OCT 22 Payment of First & Final Dividend of 20 sen (less 25% tax) .
153.2 4.908.7 4.7 9.7 06 07 08 09 10 06 07 08 09 10 Dividend Paid (RM’ million) 54.9 27.7 4.5 20.3 9.9 4.9 Net Assets Per Share (RM) 10.372.9) 39.6 - Retained Earnings Carried Forward (RM’ million) 4.Key Financial Indicators Basic Earnings/(loss) Per Share (Sen) 8.5 (107.6 (54.5 9.291.9 9.476.3) 33.8 06 07 08 09 10 06 07 08 09 10 25 STERLING YEARS PROTON 2010 Annual Report 9 .
827.586.080.6 15.8 223.847.587.302.389.1 1.9 1.0 3.3 1.4 24.150.4 245.1 3. bank and cash balances Non-current assets held for sale TOTAL ASSETS 1.227.4 29.0 1.0 169.4 192.4 105.7 10.100.192.6 36.9 10.4 626.0 4.9 7.293.431. plant and equipment Prepaid land lease payments Goodwill Intangibles assets Associated companies Jointly controlled entities Investments Deferred tax assets 2.1 29.395.0 431.6 1.8 2.0 20.3 1.505.7 3.0 564.Summary of Financial Highlights for Five Years PROTON 2010 Annual Report BALANCE SHEETS AS AT 31 MARCH RM’ million NON-CURRENT ASSETS Property.4 195.4 3.1 29.0 8.0 275.881.312.2 991.0 18.7 1.7 158.0 152.3 15.8 1.098.0 160.244.1 7.1 1.099.0 1.446.8 2010 2009 2008 2007 2006 10 25 STERLING YEARS .781.4 3.6 10.3 10.5 3.8 3.624.3 3.0 73.657.6 36.2 165.652.4 7.6 9.404.8 1.0 29.6 10.946.273.1 169.3 913.165.5 9.9 29.6 202.226.6 CURRENT ASSETS Inventories Receivables Current investments Deposits.880.9 3.5 6.2 3.0 212.0 3.9 3.169.4 5.
2 549.6 2.6 1.372.2 549.1 7.7 5.2 8.101.7 5.872.7 4.6 5.8 5.2 1.230.6 5.2 5.639.072.883.6 5.2 549.6 25 STERLING YEARS 549.3 6.060.531.421.8 182.7 TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES 2.505.2 549.870.333.442.6 1.101.5 4.9 1.230.7 4.1 7.2 6.6 12.341.2 88.4 100.908.0 398.2 5.4 232.1 1.8 99.9 5.716.0 5.2 16.8 2.333.421.1 2.6 1.6 395.8 4.8 PROTON 2010 Annual Report .312.5 12.6 0.291.9 2.6 10.870.8 1.3 0.1 CURRENT LIABILITIES Payables Taxation 2.3 7.9 181.637.2 1.153.4 101.3 1.877.2 389.8 101.533.Summary of Financial Highlights for Five Years RM’ million CAPITAL AND RESERVES Share capital Other reserves Retained earnings Equity attributable to equity holders of the Company Minority interest TOTAL EQUITY NON-CURRENT LIABILITIES Long term liabilities Deferred tax liabilities 2010 2009 2008 2007 2006 11 411.2 113.098.6 412.324.0 4.3 1.476.5 2.1 2.172.946.7 230.997.293.
9 218.9 9.71 549.2 4.372.1) (589.963.9 2008 5.6 4.476.796.7 2006 7.5 10.291.0 9.2 2007 4.319.9 260.372.2) (301.Summary of Financial Highlights for Five Years PROTON 2010 Annual Report INCOME STATEMENT FOR THE YEAR ENDED 31 MARCH RM’ million Revenue 2010 8.9 18.5 (20.3) 5.5) 126.96.36.199 33.213 8 .9) 5.0 9.518.3 (618.8 4.0 10.87 549.213 .2 (27.7 (319.3 184.0 46.476.153.7 4.69 549.687.213 (107.6) 4.6 144.908.29 549.8) 4.621.9) 4.8 2009 6.52 549.213 (54.9 4.5) 4.6 9.6 (54.7 12 25 STERLING YEARS Profit/(loss) before taxation Profit/(loss) after taxation Retained earnings attributable to shareholders Dividend paid Retained earnings carried forward SHARE INFORMATION Per share Basic earnings/(loss) (sen) Dividend paid (sen) Net assets (RM) Issued share capital (‘000) 39.
Corporate Profile .
at the right price and at the right time’. The Group is also involved in financial services and property management as supporting activities.Corporate Profile SINCE INCORPORATION ON 7 MAY 1983. • To acquire/upgrade technology and industrial skills within the automotive manufacturing industry. PROTON REMAINS AMONG ALL NATIONAL CAR COMPANIES. sales and after-sales services. research and development. PROTON 2010 Annual Report . and • To strengthen the international competitiveness of Malaysia’s industrial capability 15 25 STERLING YEARS With substantial capital investment over the last 25 years and the corporate philosophy that success can be achieved by having ‘the right car for the right market. manufacturing. PROTON commands a substantial share of the domestic market for passenger cars and through the years. THE LARGEST CONTRIBUTOR TOWARDS THE THREE PRIMARY NATIONAL POLICY OBJECTIVES: • To spearhead the automotive industrialisation process and manufacturing industries. distribution. has expanded its international footprint in the following regions: • • • • ASEAN China Indian Subcontinent Middle East – North Africa • United Kingdom – Western Europe • Australia • South Africa PROTON’s main business activities encompass vehicle engineering.
the reliable family-sedan. diverse customer needs and the abilility to translate them into products that customers want. to suit a range of customer demands and preferences. . Agile and Responsive. with models such as Elise.2. 16 25 STERLING YEARS In 2009. These awards recognise PROTON’s commitment to continuously offer products that are customer-centric in terms of specifications and pricing. which was named Best Model of the Year for two consecutive years 2009 and 2010. is the world-renowned Lotus sportscar brand.Corporate Profile PROTON 2010 Annual Report The foundation of the Group’s growth over the last 25 years is due to the understanding of the economic development stimulus. the stylish and ergonomic Gen. and • Asian Auto-VCA Auto Industry Awards 2009 for Best Local Assembly Sports Car for Satria Neo CPS. which marked PROTON’s entry into the MPV market – a market that is growing domestically and regionally. Other awards for the year include: • Asian Auto-VCA Auto Industry Awards 2009 for Best Local Assembly MPV for Exora. and • Best Automotive Debut Model of the Year for the Proton Exora. Exige. the latest supercar that remains true to Lotus’ heritage and core philosophies of being Visually Stunning. Also in the Group’s portfolio. winner of the 2008 ASEAN Automotive Award for Best Model of the Year. The current portfolio of PROTON models includes the Saga. through research and development. Exhilarating. the Exora. PROTON clinched two awards by Frost & Sullivan: • Best Passenger Car Model of the Year for the Proton Saga. Waja. the Persona. the desirable sporty Satria Neo. elegant Perdana and Malaysia’s first home-grown multipurpose vehicle (MPV). the fun-todrive Savvy. Europa and the Evora.
thereby enhancing profitability. whilst Lotus Engineering provides engineering solutions for automotive manufacturers and suppliers. Through Lotus. testing. We aim to maintain market leadership by continuing to develop innovative products and satisfying our customers. high-performance sports cars. development. including reducing materials costs. • Quality in the way things are done (doing it right the first time). casting. • Quality in spending. design. including after-sales support. To boost the quality of its products. 17 25 STERLING YEARS At present. PROTON has introduced a Company-wide quality improvement programme and quality-conscious work culture that assures: • Quality in everything (products and individuals). distribution. and • Quality services to customers. after-sales services. machining and assembly to marketing. • High-quality products (end products must be of the right technology and designed to meet market expectations). PROTON 2010 Annual Report . Strong customer orientation and competitively priced products drive our business and are essential to our success.000 employees who are involved in the whole value chain of the business from research. Group Lotus is organised into two business divisions. Lotus Cars focuses on sales of world-class.Corporate Profile The Group conducts research in its centres in Malaysia and the United Kingdom on new technologies to create cars that are unique in both design and driving performance. the Group has close to 12. Today. prestigious. the Group provides comprehensive and versatile consultancy services to many of the world’s OEMs and Tier 1 suppliers. as well as corporate services. stamping.
Oh Kim Sun 18 25 STERLING YEARS COMMITTEES BOARD EXECUTIVE COMMITTEE (“EXCO”) (The Board Executive Committee was subsequently disbanded w.f. 27 May 2010) BOARD RISK MANAGEMENT COMMITTEE (The Board Risk Management Committee was subsequently disbanded w.e. 27 May 2010) • Tan Sri Rainer Althoff (Appointed w. 27 May 2010) • Mr. 1 Aug 2010) • Datuk Tan Kim Leong • Dato’ Zainuddin Bin Che Din • Tuan Haji Abdul Kadir Bin Md. Ali Bin Md.e. Oh Kim Sun (Resigned w. Kassim (Resigned w. 31 August 2009) BOARD AUDIT COMMITTEE • Encik Abdul Rahim Bin Abdul Hamid – Chairman (Appointed w.f.e. Kassim (Resigned w.Corporate Information BOARD OF DIRECTORS PROTON 2010 Annual Report Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir Dato’ Michael Lim Heen Peok Dato’ Zalekha Binti Hassan Mr.e.e. 27 May 2010) • Encik Md.e.e. 1 Aug 2010) • Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman • Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir • Dato’ Michael Lim Heen Peok • Encik Azhar Bin Othman (Appointed w.f. Dewal (Resigned w. 21 August 2009) • Mr.e.f.f. 20 July 2010) • Dato’ Michael Lim Heen Peok • Dato’ Zalekha Binti Hassan (Appointed w. 27 May 2010) BOARD DISCIPLINARY COMMITTEE (The Board Disciplinary Committee was subsequently disbanded w. 20 July 2010) . 1 August 2010) • Encik Md.e.f.e. 1 Aug 2010) • Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman • Tuan Haji Yusof Bin Ahmad • Tuan Haji Abdul Kadir Bin Md.f.e. Behara Venkata Rama Subbu Tan Sri Rainer Althoff Encik Abdul Rahim Bin Abdul Hamid Tuan Haji Abdul Jabbar Bin Abdul Majid Tuan Haji Abdul Kadir Bin Md Kassim Mr. 27 May 2010) • Tuan Haji Abdul Kadir Bin Md.f.e. Dewal (Resigned w.f.f. 22 July 2009) BOARD NOMINATION & REMUNERATION COMMITTEE • Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman • Encik Ahmad Tajuddin Bin Abdul Carrim • Dato’ Michael Lim Heen Peok • Dato’ Zalekha Binti Hassan (Appointed w.f.e.f. Kassim (Resigned w. 27 May 2010) • Ms Vimala Menon (Resigned w.f.e.f. 20 July 2010) • Encik Abdul Jabbar Bin Abdul Majid (Resigned w.e.e.f.e. Behara Venkata Rama Subbu (Resigned w.f. Ali Bin Md.f.
27 May 2010) (Resigned w.) Level 17. Bhd. 21 August 2009) (Resigned w. The Gardens. BHD. PO Box 10192 50706 Kuala Lumpur.2264 3883 Fax : 03 . Malaysia Tel : 03 .e.2173 1188 Fax : 03 . Midvalley City. 1 Sentral.f.2282 1886 STOCK EXCHANGE LISTING Main Market of Bursa Malaysia Securities Berhad COMPANY SECRETARY Encik Mohd Nizamuddin Bin Mokhtar (LS 006128) INVESTOR RELATIONS Encik Izwan Bin Zainuddin Tel : 03 .f.8026 9744 MAIN BANKERS Malayan Banking Berhad CIMB Bank Berhad RHB Bank Bhd REGISTRAR TRICOR INVESTOR SERVICES SDN. 27 May 2010) PROTON 2010 Annual Report 1 January 2009 19 25 STERLING YEARS AUDITORS PRICEWATERHOUSECOOPERS (Chartered Accountants) Level 10. (formerly known as Tenaga Koperat Sdn.8026 9094 .Corporate Information DATE OF APPOINTMENT 1 January 2006 15 September 2006 11 February 2008 1 March 2010 22 June 2010 20 July 2010 12 April 2004 10 March 2005 13 May 2009 (Resigned w.f.e.e. Selangor Darul Ehsan Tel : 03 .2173 1288 REGISTERED OFFICE PROTON CENTRE OF EXCELLENCE KM 33. Westbound Shah Alam Expressway 47600 Subang Jaya. Jalan Travers Kuala Lumpur Sentral. Lingkaran Syed Putra 59200 Kuala Lumpur Tel : 03 . North Tower.8.8026 9741 Fax : 03 .
100% Proton Tanjung Malim Sdn. Bhd. Bhd. 100% Proton Engineering Research Technology Sdn. Bhd. Bhd. 100% Lotus Group International Limited (UK) 100% Group Lotus Plc (UK) 100% Lotus Engineering Ltd (UK) 100% Lotus Engineering (Shanghai) Co Ltd (China) 100% Lotus Engineering (M) Sdn. Bhd. Bhd. Goldstar Proton Automobiles Co Ltd (China) Engineering Services 100% Lotus Advance Technologies Sdn. 100% Lotus Body Engineering Ltd (UK) 100% Lotus Motorsport Ltd (UK) 100% Lotus Holdings Inc (USA) 100% Lotus Engineering Inc (USA) . 100% PT Proton Cikarang Motors (Indonesia) 100% Proton Automobiles China Ltd (BVI) 100% Lotus Cars Ltd (UK) 100% Lotus Lightweight Structures Holdings Limited (UK) 100% Lotus Lightweight Structures Limited (UK) 51% 49% Miyazu (Malaysia) Sdn.Group Operations PROTON 2010 Annual Report PROTON ANNUAL REPORT 2010 PROTON Holdings Berhad (623177-A) PROTON Holdings Berhad 20 25 STERLING YEARS Manufacturing 100% Perusahaan Otomobil Nasional Sdn.
Peps-JV Sdn. 21 25 STERLING YEARS Property 100% Proton Hartanah Sdn. Bhd. 100% Proton Properties Sdn. 49. Bhd. Netstar Advanced Systems Sdn. Bhd. Bhd. 100% Proton Cars (UK) Ltd 100% Proton Cars Australia Pty Limited 100% Proton Motors (Thailand) Limited 100% Proton Singapore Pte Ltd 100% PT Proton Edar Indonesia 100% Lotus Cars Australia Pty Limited 100% Lotus Cars USA Inc 55% Proton Parts Centre Sdn. Bhd. 40% Proton City Development Corporation Sdn. Bhd. PHN Industry Sdn. Marutech Elastomer Industries Sdn. Bhd.2% Exedy (Malaysia) Sdn.9% Lotus Finance Ltd (UK) 49.9% Proton Finance Ltd (UK) PROTON 2010 Annual Report . Bhd. Bhd. 100% Proton Edar Sdn. Bhd.7% 4. Bhd.Group Operations Sales & Distribution 100% Proton Marketing Sdn. Vina Star Motors (Vietnam) Corporation Aluminium Alloy Industries Sdn. Others Yayasan Proton Lotus Pension Trustees Ltd (UK) Lotus Cars Foundation (UK) Financial Services 50% Proton Commerce Sdn. Bhd. Investee & Associate Companies 45% 40% 35% 25% 25% 16% 15% 6. Bhd. Bhd. Technomeiji Rubber Sdn. Ara Borgstena Sdn. Bhd.
We are highly customer oriented. we are now working towards the development of an efficient hybrid electric vehicle. A New Dawn in Service . As green trends emerge. at the Right Price and at the Right Time”.Despite the current challenges faced by the automotive industry PROTON continues to grow by delivering “The Right Car for the Right Market.
BOARD OF DIRECTORS PROTON 2010 Annual Report 24 25 STERLING YEARS Sitting Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir Standing (left to right) Dato’ Michael Lim Heen Peok Dato’ Zalekha Binti Hassan .
25 25 STERLING YEARS Sitting Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Standing (left to right) Mr. Behara Venkata Rama Subbu Tan Sri Rainer Althoff Encik Abdul Rahim Bin Abdul Hamid PROTON 2010 Annual Report .
26 PROTON 2010 Annual Report 25 STERLING YEARS Profile of Directors .
In 1993 Dato’ Sri Nadzmi was appointed Managing Director of Perusahaan Otomobil Nasional Berhad. USA. Bhd.T. He has had no conviction for any offences within the past ten (10) years. Konsortium Transnasional Berhad and Transocean Berhad as well as several private limited companies. He is also the President of the Badminton Association of Malaysia. and later assumed the positions of Executive Director and Chief Executive Officer. and Express Rail Link Sdn. International Berhad. He then left to join Edaran Otomobil Nasional Berhad as Manager in the Marketing Services Department in 1984. a post he held until 1996. Dato’ Sri Mohd Nadzmi graduated with a Bachelor of Arts in Economics from Ohio University. Bhd. United States of America..Profile of Directors 27 Chairman | Aged 56. Thereafter he held various executive positions in Petroleum Nasional Berhad and Heavy Industries Corporation Malaysia Berhad. He subsequently obtained a Masters of Arts in Economics and Statistics from Miami University. V. and also holds a Bachelor of Science in Chemistry and Mathematics from the same university. He has no conflict of interest with the Company and does not have any family relationships with any Director and/or major shareholder of the Company. Malaysian 25 STERLING YEARS DATO’ SRI MOHD NADZMI MOHD SALLEH Dato’ Sri Mohd Nadzmi Mohd Salleh was appointed Chairman of PROTON on 1 January 2009 and is also the Chairman of the Boards of various subsidiaries within the PROTON Group of Companies. PROTON 2010 Annual Report .S. Dato’ Sri Mohd Nadzmi began his career as a lecturer in the Faculty of Economic Resources and Agriculture in Universiti Pertanian Malaysia. He also sits on the Boards of. Dato’ Sri Mohd Nadzmi is also currently the Executive Chairman of Nadicorp Holdings Sdn. Dato’ Sri Mohd Nadzmi has attended all Board of Directors’ Meetings held during the Financial Year. J. Industry Berhad.
In November 2008. . prior to joining Petroliam Nasional Berhad in 1992 as the Senior Executive of Corporate Planning & International Business Development. He has no conflict of interest with the Company and does not have any family relationships with any Director and/or major shareholder of the Company.Profile of Directors PROTON 2010 Annual Report DATO’ SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR Managing Director | Aged 48. He has had no conviction for any offences within the past ten (10) years. where he assumed various senior positions in the company. in 2002. and the Masterclass Bumiputra CEO of the Year Award at the 2nd Malaysia Business Leadership Awards 2010. Dato’ Haji Syed Zainal Abidin was appointed as Senior General Manager of PERODUA in 1999. Bhd. Most recently. Bhd. He also sits on the Boards of various subsidiaries within the PROTON Group of companies. He then left to join HICOM Holdings Berhad in 1995. Dato’ Haji Syed Zainal Abidin received the International Business Leader in Automotive Sector Award at the 2010 Middle East Business Leadership Summit Awards. Dato’ Haji Syed Zainal Abidin graduated with a Bachelor of Science in Engineering from the University of Maryland. Dato’ Haji Syed Zainal Abidin was named the “Automotive Man of the Year” by the New Straits Times/Maybank Car of the Year 2008 Awards for his strong management and leadership qualities in steering PROTON by strengthening its position in the domestic market while making significant breakthrough in the international markets. and in October 2005. in 1987. he was appointed Executive Director of PERODUA Auto Corporation Sdn. Subsequently. promoted to Deputy Managing Director. Malaysian 28 25 STERLING YEARS Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir was appointed Managing Director of PROTON on 1 January 2006. USA and began his career as a Project Engineer with Petronas Gas Sdn. Dato’ Haji Syed Zainal Abidin has attended all Board of Directors’ Meetings held during the Financial Year.
Dato’ Michael Lim has attended all the Board of Directors’ meetings held during the Financial Year. He has no conflict of interest with the Company and has no family relationships with any other Director and/or major shareholder of the Company. Dato’ Michael Lim who holds a First Class Honours Degree in Engineering from the University of Strathclyde. In 1986 Dato’ Michael Lim was appointed Managing Director/ Chief Executive Officer of UMW Toyota Motor Sdn. PROTON 2010 Annual Report .Profile of Directors DATO’ MICHAEL LIM HEEN PEOK Independent Non-Executive Director | Aged 62. Currently. an export oriented manufacturing company with plants in Malaysia and Vietnam. Dato’ Michael Lim retired in 2004 having led the company for 18 years. He has had no conviction for any offences within the past ten (10) years. a joint venture company between UMW and Toyota Motor Corporation of Japan. began his career with the UMW Group in 1975 and held various senior managerial positions. Malaysian 29 25 STERLING YEARS Dato’ Michael Lim was appointed a Director of PROTON on 15 September 2006 and is also a Member of the Board Audit Committee and Board Nomination & Remuneration Committee. Bhd. Dato’ Michael Lim is the Chairman of Furniweb Industrial Products Bhd.. Dato’ Michael Lim also sits on the Boards of various companies within the PROTON Group. in the United Kingdom.
Dato’ Zalekha sits on the Board of Governors of Yayasan PROTON as well. Dato’ Zalekha who is currently the Deputy Secretary General of Management at the Ministry of Finance. Malaysian 30 25 STERLING YEARS Dato’ Zalekha. She has no conflict of interest with the Company and has no family relationships with any other Director and/or major shareholder of the Company. Dato’ Zalekha was previously with Tenaga Nasional Berhad. Dato’ Zalekha has attended all Board Meetings held during the Financial Year. She has had no conviction for any offences within the past ten (10) years. is also a Member of PROTON’s Board Audit Committee and Board Nomination & Remuneration Committee. and Perbadanan Kemajuan Negeri Selangor (“PKNS”).Profile of Directors PROTON 2010 Annual Report DATO’ ZALEKHA BINTI HASSAN Non-Independent Non-Executive Director | Aged 57. who was appointed a Director of PROTON on 11 February 2008. holds a Bachelor of Arts (Hons) Degree from University of Malaya. . Putrajaya Holdings and Multimedia Development Corporation (“MDEC”) Dato’ Zalekha sits on the Board of Directors of Telekom Malaysia Berhad.
In 1997. Mr. Subbu moved to Hyundai Motor. He is also promoter of various companies including Pan India Motors. Sales. Subbu was appointed a Director of PROTON on 1 March 2010. a position he held until 2006.R. Indian National Mr. 31 25 STERLING YEARS PROTON 2010 Annual Report . Mr. He has had no conviction for any offences within the past ten (10) years. He has no conflict of interest with the Company and has no family relationships with any other Director and/ or major shareholder of the Company.V. India as Director of Marketing & Sales and thereafter promoted to President in 2002. Service. Subbu is currently the Director of NMC Automotive Infrastructure Pvt. Mr. Spare Parts and Sales Finance between 1978 and 1996. a company engaged in establishing a CV manufacturing project in India. No Board Meetings were held from the time Mr. B. Ltd. Subbu was appointed as Director of PROTON up until the end of the financial year. New Delhi. He began his career with the Tata Administrative Service and was deputed to Tata Motors where he held a variety of senior line and staff responsibilities in the areas of CV Marketing. Subbu holds a Masters in Economics from the Jawaharlal Nehru University. BEHARA VENKATA RAMA SUBBU Independent Non-Executive Director | Aged 56.Profile of Directors MR. Altius Autoworld and Altius Advanced Technologies. India.
German National Tan Sri Rainer Althoff who was appointed Director of PROTON on 22 June 2010. He has never been convicted for any offence within the past ten (10) years. He has no conflict of interest with the Company and has no family relationships with any other Director and/or major shareholder of the Company. Singapore. Bhd. is also a Member of the Board Audit Committee. and also the Siemens spokesperson for all Siemens operations and affiliate companies in Malaysia from 1 January 1999 until 30 November 2009. Tan Sri Rainer was the President and Chief Executive Officer of Siemens Malaysia Sdn. and sits on the boards of various companies within the PROTON Group. Bhd. Tan Sri Rainer is currently the Non-Executive Chairman of Nokia Siemens Networks Sdn. Germany in 1969 and has spent a majority of his working life with Siemens AG. He is also a Member of the International Advisory Panel to the board of directors of CIMB Bank. . Tan Sri Rainer was appointed in June 2010 and therefore has not attended any Board meetings held during the Financial Year ended 31 March 2010. Trustee of Jeffrey Chia Foundation Malaysia and Managing Director of Jatro AG.Profile of Directors 32 25 STERLING YEARS PROTON 2010 Annual Report TAN SRI RAINER ALTHOFF Independent Non-Executive Director | Aged 64. Tan Sri Rainer holds a Masters in Electronics and Electrical Engineering from Bergische University Wuppertal.
PROTON 2010 Annual Report . Encik Abdul Rahim is currently the President of the Malaysian Institute of Accountants as well as the ASEAN Federation of Accountants. In 1998. Encik Abdul Rahim was appointed in July 2010 and therefore has not attended any Board meetings held during the Financial Year ended 31 March 2010. he assumed the position of Deputy Executive Chairman of PricewaterhouseCoopers until his retirement in 2004. Encik Abdul Rahim is a director of Chemical Company of Malaysia Berhad. He has never been convicted for any offence within the past ten (10) years. He has no conflict of interest with the Company and has no family relationships with any other Director and/or major shareholder of the Company. He represents the Ministry of Finance on the board of MIMOS Berhad. He was also appointed Chairman of the Board Audit Committee effective the same date. MIDF Amanah Asset Management Berhad and Petra Energy Berhad. Encik Abdul Rahim who is a Qualified Certified Accountant began his career in Coopers & Lybrand in 1971 and became the Managing Partner/Chief Executive of the firm in 1993. Malaysian 33 25 STERLING YEARS Encik Abdul Rahim Bin Abdul Hamid was appointed Independent Non-Executive Director of PROTON on 20 July 2010.Profile of Directors ENCIK ABDUL RAHIM BIN ABDUL HAMID Independent Non-Executive Director | Aged 60.
Manufacturing Tajul Zahari Bin Abu Bakar Director. Liske Azmi Bin Idris Muhammad Aris Bin Anuar General Manager. Group Quality Chief Financial Officer 34 25 STERLING YEARS . Group Procurement Director.PROTON GROUP MANAGEMENT COMMITTEE MEMBERS PROTON 2010 Annual Report (left to right) Klaus E. Engineering Michele Kythe Lim Beng Sze Chief Legal Counsel Azhar Bin Othman Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir Managing Director Director.
Claudius Meynert Dr. Badrulhisham Bin Mohd Ghazali General Manager. Proton Edar Sdn. Corporate Planning Director.Dr. Bhd. Wolfgang Karl Epple Senior Director. Export 35 25 STERLING YEARS PROTON 2010 Annual Report . Group Operations Mohd Nizamuddin Bin Mokhtar Group Company Secretary & Compliance Yohani Binti Mohd Yusof Director. Group Marketing & After Sales Mohamad Shukor Bin Ibrahim Chief Executive Officer.
Proton Cars Australia Pty Limited 5 Dany Taner Bahar Chief Executive Officer. Proton Singapore Pte Ltd Philipe Cheng Operations Manager. Proton Cars (UK) Ltd 4 John Startari Managing Director. . Proton Motors (Thailand) Co. Group Lotus Plc 6 Ricky Too Heng Keong President Director. PT Proton Edar Indonesia Gunther Scherz Acting Managing Director.36 25 STERLING YEARS PROTON 2010 Annual Report HEADS OF INTERNATIONAL SUBSIDIARIES 1 4 1 2 3 Brian Collier Managing Director. Ltd.
5 6 25 STERLING YEARS 2 3 Heads of International Subsidiaries 37 PROTON 2010 Annual Report .
PROTON’s entry into F1 marks the growth of our repute as a leader in the global automotive industry. A New Dawn in Performance . We now perform on the world arena. we are working to develop enhanced racing engine technology. Leveraging on our established R&D capabilities with LOTUS.
PROTON 2010 Annual Report
IT HAS BEEN A GOOD FINANCIAL YEAR AND MORE IMPORTANTLY, AS WE CELEBRATE OUR SILVER JUBILEE, IT HAS BEEN A THOROUGHLY CHALLENGING, HUMBLING AND EXHILARATING 25 YEARS FOR PROTON AND IN MY PERSONAL OPINION, DESPITE THE PEAKS AND TROUGHS, WE ARE NOW IN A BETTER POSITION THAN EVER TO FORTIFY OUR POSITION AS A TRUE AUTOMOTIVE ORIGINAL EQUIPMENT MANUFACTURER (OEM) WITH CLEAR AND REALISTIC ASPIRATIONS. ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY, I AM PLEASED TO PRESENT THE ANNUAL REPORT AND AUDITED FINANCIAL STATEMENTS OF THE PROTON GROUP FOR THE FINANCIAL YEAR 2009/10 (FY09/10).
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The aftermath of the global economic crisis continued to batter the global automotive industry, especially in the United States, where we saw several iconic brands reduced to mere chapters in the annals of automobile history. Although not as dramatic, the Malaysian automotive industry suffered a worryingly lacklustre start to 2009. Thanks to the immediate and proactive action by the Government of Malaysia, the Second Stimulus Plan, which was announced by the Prime Minister YAB Dato’ Sri Mohd Najib Tun Razak in March 2009, ignited the resuscitative spark. By July 2009, the monthly Total Industry Volume (TIV) was already showing very positive signs of recovery and the industry performance in the last quarter of 2009 outperformed the corresponding period in 2008 by a whopping 18%, closing the year with an annual TIV of 536,905 units, just 2% shy of the 2008 TIV but surpassing even Malaysian Automotive Association’s (MAA) revised forecast of 500,000 units by a commanding 7%. The momentum from the last quarter of 2009 continued in 2010 and the numbers thus far have simply been record breaking. The recorded TIV for the months of January to March 2010 are, 33%, 9% and 25% higher respectively than they were in the corresponding months of the previous year and an encouragingly superior 22% compared to the same quarter last year. Nevertheless, despite a marginal shrink of 2% in the TIV (all vehicles and passenger vehicles), PROTON recorded a commendable increase in market share in both categories; from 25.9% in 2008 to 27.6% in 2009 (TIV all vehicles) and 28.5% in 2008 to 30.4% in 2009 (TIV passenger vehicles).
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Dato’ Sri Mohd Nadzmi Bin Mohd Salleh
Chairman/Non-Independent Non-Executive Director
PROTON 2010 Annual Report
PROTON 2010 Annual Report
25 STERLING YEARS
The 2010 Frost & Sullivan Malaysia Excellence Awards: Best Passenger Car Model of the Year recipient – the Saga – led the way for PROTON, with more than 70,000 units sold in 2009. The Persona, our “Pride and Joy” which started the revival of the Company, continues to be a favourite by breaching the 40,000 mark. Another noteworthy achievement is the Exora, PROTON’s first multi-purpose vehicle (MPV) and recipient of the 2010 Frost & Sullivan Malaysia Excellence Award for Best Automotive Debut Model of the Year, which recorded unit sales of more than 18,000. This not only contributed to the increase in PROTON’s unit sales but also added to the increase in the TIV (multi-purpose vehicles category) which bucked the declining trend. Moving forward, MAA has revised its initial 2010 TIV forecast of 550,000 by an additional 20,000. This is primarily driven by the bumper first half of 2010 and if the 570,000 target is achieved, the benchmark set in 2005 of 552,316 units will be surpassed. This improved outlook is based on better consumer sentiment, enhanced business confidence, global economic recovery and stable interest rates. Cautiously optimistic, PROTON remains committed to developing the right car for the right market, at the right price and at the right time – a simple yet burgeoning aspiration for the Company. Growing consumer confidence in the brand has been a great motivation for PROTON not only to intensify but also expedite efforts to introduce even better quality, more appealing and competitive models aimed at both strengthening our position in the domestic market and continuing with our efforts for an even greater acceptance in the international market. Export wise, PROTON also recorded a jump in sales of more than 35% as compared to the previous financial year and this is largely attributable to the much improved performances in China (with our business partner, Youngman), Thailand, Indonesia, Australia and Taiwan. Moving forward, the Asian Multi-Local OEM (AMLO) strategy remains the key driving factor with regard to our international programme. Thailand and China remain our most successful export markets and with our Completely Knocked-Down (CKD) programme with Youngman steadily progressing, we are very confident that China will be a very successful international venture for the Company.
Proton Exora being given the thumbs up during the launch in Indonesia.
For FY09/10, PROTON Holdings Berhad posted a consolidated profit before tax of RM261 million, which is a marked improvement compared to the loss before tax of RM319 million in the last financial year. Despite a contraction in the TIV, revenue for the year ended 31 March 2010 grew by 26% to RM8.23 billion compared to RM6.52 billion posted in the last financial year. This performance was the result of encouraging sales recorded by three core models – the Saga, Persona and Exora. The marked improvement in performance is also a result of cumulative initiatives launched by the Management over the last few years, which included amongst others, enhancing product portfolio, tightening cost management, ensuring manufacturing efficiency, improving quality and strengthening the automotive ecosystem through dealer and vendor consolidation initiatives. Additionally, PROTON’s cash and cash equivalents recorded an increase of 79%, up to RM1.6 billion and this augurs well for the Group as cash resources are required for continued investments in the development of newer, better and greener products.
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On the back of a significantly improved FY09/10, the Board of Directors of PROTON recommends the payment of a First and Final dividend of 20 sen per ordinary share of RM1.00 each less tax at 25% on 549,213,002 ordinary shares amounting to RM82,381,950 in respect of the financial year ended 31 March 2010, subject to the approval of our Shareholders at the Company’s forthcoming Annual General Meeting.
PROTON 2010 Annual Report
PROTON 2010 Annual Report
TOWARDS A NEW DAWN
It must be appreciated that as the world moves more and more towards globalisation, rationalisation and liberalisation, companies and industries which are not lean and streamlined will be mired by its uncompetitiveness, suffering almost certain degradation and ultimately, limply bandied about in a highly charged industry until it is rendered obsolete and irrelevant. The future is upon us and, with a score and five years under our belt, we have taken stock of our strengths and weaknesses and the Board has accordingly instructed Management to proceed with the internal restructuring of the Company with the aim of making each and every core division in the Company leaner, globally competitive and potentially less dependant on PROTON’s captive businesses. As a company is defined by its product, the more than encouraging market acceptance of our Persona, Saga and Exora exemplifies PROTON’s commitment towards excellence. Moving forward, newer and more exciting products are in the pipeline and we believe that these will not only cement our presence in the global automotive industry but will also expand our market and customer base.
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His Majesty DYMM Seri Paduka Baginda Yang di-Pertuan Agong Al-Wathiqu Billah Tuanku Mizan Zainal Abidin Ibni Al-Marhum Sultan Mahmud Al-Muktafi Billah Shah taking a closer look at the Evora during his visit to Lotus in the UK.
PROTON’s Advisor, Chairman and Managing Director at the unveiling of the EMAS at the Geneva Motorshow.
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By the end of 2010, one new product will be launched in collaboration with Mitsubishi and a facelift of an existing model will be produced to ensure the continuous growth and development of our product range and line-up. Thereon, PROTON will be focusing on a very exciting 2011 with the introduction of our turbo engine, two facelifts and another brand new product which will signal PROTON’s transformation in terms of design and styling. Beyond 2012, the EMAS (Eco-Mobility Advanced Solution), which was unveiled at the recent Geneva Motor Show, is merely, for the lack of a better expression, the tip of the primordial iceberg. The EMAS is not merely a concept car but it is the physical embodiment of the pride, passion and progress that has charged the Company through all these years and it is also a snippet of our dreams and aspirations, in terms of concept, styling, design, technology and elements of these will be incorporated in all our future products and technological offerings. In terms of technology, since 2008, greater emphasis has been placed on electric and hybrid technology and today, we can see breakthroughs being made. Although it may be some time before mass production takes place, if all goes according to plan, units will be made ready in the very near future for market testing. Additionally, as a direct consequence of our investment in these new technologies, there is a clear up-skilling of human capital which translates to the development of our engineers and technicians and it is already foreseeable that this select group of people will be the pioneers of the future PROTON. With regards to Lotus, I am also very happy to announce that with the successful launch of the Evora, Lotus has, to a certain extent, regained some of its former glory. The Evora has won many accolades and garnered rave reviews all around the world. Nonetheless, to ensure that Lotus lives up to its iconic brand, the recent appointment of Mr Dany Bahar, as Chief Executive Officer, who was formerly of Ferrari, and with the injection of key personnel from established OEMs and engineering companies into the current management of Lotus, we strongly believe that there will be stronger cooperation and understanding between PROTON and Lotus. What needs to be done now is the turnaround of a legendary car company and with more aggressive and business minded management teams on both sides of the world, I believe the equation will be one of success.
PROTON 2010 Annual Report
its growth in the past 25 years. is a clear message to the rest of the world that PROTON is more than just a car company. we have continued to be the champion of the industry – and we intend to remain as the only one and true champion of the national automotive industry. on behalf of the Board of Directors. PROTON is the realisation of the dream and the dogged determination of a leader leading its nation from an agrarian-based economy towards industrialisation. as we celebrate our 25th Anniversary. passion and progress of tens of thousands of PROTONians. Although individually. We are the personification of the collective pride of the nation. a quarter of a century might seem pedestrian. In addition.PROTON’s 25 year story”. collectively. a very special Thank You also goes out to the 651 employees who have served the Company for 25 years or more. PROTON is positively charged at the core by its people and throughout the quarter of the century. I extend a sincerely humble heartfelt Thank You for your generous contributions to the development of this national car project. In spite of all the cynical criticisms. To each and every one of you who was and those of you who are still with PROTON. doubts and scepticisms. . powerfully driven by passion. was launched by Prime Minister Dato’ Sri Mohd Najib Tun Razak during PROTON’s 25th Anniversary Gala Celebration.Chairman’s Statement 46 25 STERLING YEARS PROTON 2010 Annual Report PROTON’s 25th Anniversary commemorative book. and perseveringly focused on progress. “A Saga . Although many have left. ACKNOWLEDGEMENT PROTON’s improvement in FY09/10 and more so. we have been blessed with the pride. many more still remain and I am certain we will welcome many more in the years to come. you are an automotive treasure trove of a staggering 16 millennia. Like its scientific namesake.
sales/service dealers and vendors and business partners domestically and internationally – goes our sincerest appreciation for your continued perseverance and dedication through the years. for their vision and commitment to guide PROTON in achieving our strategic objectives. Our sincerest gratitude also goes to our Prime Minister YAB Dato’ Sri Mohd Najib Tun Razak. Rest assured. Many more exciting products are in the pipeline and we have committed to double our efforts in ensuring uncompromising customer satisfaction. the former President of Hyundai Motor India. namely Tuan Haji Abdul Jabbar Abdul Majid. for their continued support and guidance of PROTON and the Malaysian automotive industry. our adviser YABhg Tun Dr Mahathir Mohamed.Chairman’s Statement I would also like to take this opportunity to thank the members of the Board who have recently resigned. Tuan Haji Abdul Kadir Md Kassim and Mr Oh Kim Sun for their invaluable contribution and guidance during their years of service with the Group. the current President of Malaysian Institute of Accountants. to our ever increasing customers around the globe. I would like to welcome Mr Behara Venkata Rama Subbu. I am very certain that your collective and illustrious experiences in a mosaic of industries will be a boon to the Group as we continue our journey towards excellence. I would also like to record my gratitude to the remaining members of the Board of Directors and the Management Team. our progress and the growth of the industry in the past 25 years would have been greatly reduced and immaterial. To the next 25 years of Pride Passion and Progress – I am Positively PROTON. Finally. and the Malaysian Government under the leadership of three Prime Ministers. without which. the former President and CEO of Siemens Malaysia and En Abdul Rahim Hamid. we are committed to an exciting future and we hope that you will be with us every step of the way. At the same time. Our promise is simple – it will be an even better and greater 25 years. YBhg Tan Sri Rainer Althoff. ably led by YBhg Dato’ Syed Zainal Abidin Syed Mohamed Tahir. 47 25 STERLING YEARS Thank you Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Chairman PROTON 2010 Annual Report . To the extended PROTON family – our shareholders. onto the Board of Directors of PROTON. thank you for your renewed confidence and continued support.
WE HAVE ACQUIRED NOT ONLY THE KNOWLEDGE BUT ALSO THE RIGHT SKILLS AND EXPERTISE TO BUILD GOOD. the then Prime Minister of Malaysia. PROTON was incorporated on 7th of May 1983 with the aim of building a national car company that will act as a key driver of national development to accelerate the nation’s auto manufacturing capabilities through technology transfer with strategic partnerships and technical collaborations.Managing Director’s Review PROTON 2010 Annual Report 48 25 STERLING YEARS “IN THE 25 YEARS OF OUR OPERATIONS. COMPETITIVE CARS.” CELEBRATING OUR PAST. PRESENT AND FUTURE Originally conceived by Yang Amat Berbahagia Tun Dr. the only full-fledged OEM car manufacturer in SouthEast Asia with international engineering expertise as a result of our 100% stake in Lotus Group. Mahathir Mohamad. PROTON stands on a foundation of sterling strength as Malaysia’s largest auto manufacturer. Twenty-five years on. . from a mere car assembler to a full-fledged car manufacturer and weathering the best and worst of times. AND NOW WE ARE STRENGTHENING OUR FUTURE STRATEGIES TO SUCCESSFULLY COMPETE IN THE GLOBAL MARKET.
Our global workforce totals over 11.MANAGING DIRECTOR’S REVIEW Today. To succeed in providing competitively priced and high quality vehicles to all our customers has also been truly motivating. China. 49 25 STERLING YEARS DATO’ HAJI SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR Managing Director PROTON 2010 Annual Report . two-door hatchbacks for the youngat-heart. spacious and affordable multi-purpose vehicles to the world-renowned sports cars from Lotus. marketing. We have also achieved a stable of well-proven and well-received products that enables the brand to seize market share at home as well as abroad – ranging from versatile and reliable four-door family vehicles. It is truly inspiring to be able to see our efforts and achievements over the years coming to fruition and how PROTON has managed to rise above the various challenges and hurdles throughout the years. manufacturing. Malaysia. Australia and the United Kingdom. stylish executive sedans. We have a team of Lotus engineers permanently based at the design and development centre in Shah Alam. R&D.789 personnel working in all areas of vehicle design. sales & distribution and corporate services. our operations have extended across South-East Asia to the Middle East.
With the EMAS project. EMAS. innovation in design and creative engineering methods. Moving forward. Building a brand globally requires PROTON to energise. marks the commencement of our global small car feasibility study which is part of PROTON’s plan to enhance its product line-up. PROTON has stepped up to meet global trends by committing to deliver a world class and eco-friendly vehicle that is spacious and stylish. transform and raise the brand consciousness among a greater diversity of consumers. This vehicle is not only a show vehicle but also illustrates PROTON’s innovative thinking into the future of small cars. As mentioned last year. CELEBRATING OUR BRAND Having achieved our initial goals. to focus on its customers’ needs and wants. Persona Elegance and the Satria Neo Lotus Racing Edition. we have always believed that the value of the PROTON Brand is a result of many factors including products and services. year after year. processes and quality to drive and strengthen the company further. customer experiences and marketing. we have also embarked on hybrid and electric vehicle projects in which our test fleet vehicles are expected to roll out by 2012. . we unveiled the EMAS concept cars at the prestigious Geneva Motorshow. In March 2010. These models were well-accepted by the market. the launch of PROTON’s first multi-purpose vehicle. PROTON keeps enhancing its operations. we aim to be the driver for green initiatives in Malaysia through close collaboration with the Malaysian Government. The global small car will be a major product drive for PROTON in all our targeted markets. Proton Exora. in April 2009 was followed by the introduction of several refreshers such as the Saga SE. we are now in the position to go further and strengthen our global presence. it is with this sense of maturity that the PROTON Brand is evolving. CELEBRATING RESEARCH & DEVELOPMENT PROTON’s Research and Development facility has contributed a most critical activity to the Company. with consistent orders received. As promised. after 25 years. stylish and attractively priced cars. We have outlined a strategic plan in relation to this field and are expecting to proceed with the implementation soon. Consumers can now expect PROTON to deliver more unique.Managing Director’s Review 50 25 STERLING YEARS PROTON 2010 Annual Report During the year under review. which stands for Eco Mobility Advance Solution. Thus. At the same time.
market share.51 25 STERLING YEARS PROTON’s Managing Director. The Saga and Exora were evaluated on a variety of market performance indicators including revenue growth. Chairman and Advisor look on as Prime Minister YAB Dato’ Sri Mohd Najib Tun Razak unveils the EMAS concept car during PROTON’s 25th Anniversary Gala Celebration. and Best Automotive Debut Model of the Year. marketing strategy and business development strategy. PROTON had previously received the Frost & Sullivan award in 2008. These awards endorse the success of PROTON and are true indications of how the Company has progressed and stamped its mark in the industry. when the Persona was named Best Model of The Year. for the Proton Exora. PROTON’s achievements have also been acknowledged by several other awards for its cars. These were the awards for the Best Passenger Model Car of the Year for the Proton Saga. Best Local Assembly Sports Car for the Satria Neo CPS and the Best Local Assembly MPV for the Exora by the Asian-Auto VCA Auto Industry Awards 2009. PROTON 2010 Annual Report . PROTON received two distinguished awards for the Proton Saga and Proton Exora at the 2010 Frost & Sullivan Malaysia Excellence Awards. namely. leadership in product innovation. the Best Model of the Year for the Saga by the 2009 Asia Pacific Frost & Sullivan Automotive Award. Recently. and the Car of the Year Award for the Small/ Medium MPV for the Exora by the Autocar Asean Awards 2009. CELEBRATING QUALITY Our quest to deliver quality has been recognised through numerous awards bestowed upon the Group throughout the years.
the Tanjung Malim plant is five times larger than the existing facility in Shah Alam and incorporates the latest manufacturing systems and technology designed for better efficiency. The factory has the capacity to produce 240. Mostly automated.Managing Director’s Review 52 25 STERLING YEARS PROTON 2010 Annual Report CELEBRATING EXCELLENCE In May 2009 we signed a new Master Dealership Agreement with Edaran Otomobil Nasional Berhad (EON) in a move to rationalise the sales and services network of Proton vehicles. is located at Shah Alam near Kuala Lumpur in central Malaysia. covering 99. 2 assembly plants. Proton vehicles. PROTON’s original factory plant. productivity and quality. . In our effort to further rationalise operational processes and costs. The site houses an engine and transmission factory. With the signing of the new agreement.000 units vehicles per annum. R&D centre and a semi-high speed test track. be it sales or after-sales for. EON no longer had any sub-dealers. In 2005. The supplier base was restructured using a Tiering System based on vehicle modules as well as vendor specialisations.400 sqm. we had also initiated a Vendor Rationalisation Programme. The Rationalisation Programme was implemented to establish the right number of dealers according to the needs of PROTON. all EON sales and service dealers underwent a migration process into the EDAR sales and service network and subsequently. PROTON’s second production facility in Tanjung Malim was inaugurated to cater to the projected increase from both the domestic and export markets.
each production line in Tanjung Malim is capable of assembling vehicles on three different platforms and producing up to nine different models at any one time. I am optimistic that PROTON will stand the test of time. Nothing is impossible. UNITY AND COMMITMENT As we celebrate our 25th Anniversary. Thank you DATO’ HAJI SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR Managing Director 25 STERLING YEARS Designed to be flexible. I am pleased to present you our Operations Review that highlights the key developments and initiatives of the Group. the new plant has recorded a reduction in operational costs by 20 per cent. I am confident that PROTON will one day conquer the world market and stand tall on the world map of the automotive industry. I take the opportunity to thank all PROTON staff members for their dedication and contribution to the Company.CELEBRATING PASSION. The production line at Tanjung Malim also benefits from an Automated Line Control (ALC) or error-proof system integrated to maintain higher efficiency and higher quality of cars. and with everyone’s continuous determination and hard work. which is a clear reflection of our achievements to date. by being progressive and dynamic. With hard work and determination from the workforce. The hard work and loyalty of the PROTON family paved our journey and we shall continue the quest to take this Company to greater heights. Operating with an 85 per cent pass ratio compared to the existing 65 per cent pass ratio at Shah Alam. 53 PROTON 2010 Annual Report . despite the challenges that will come our way. On this note. without whom our growth and success for the past 25 years would not have been possible.
STYLING & TECHNOLOGY DEVELOPMENT AND RESEARCH. GERMINATED AND HATCHED. style and technology development which was evidently on display at the launch of the EMAS Concept cars at the Geneva Motorshow in March 2010. MAKE THIS DIVISION THE CORE WITHIN WHICH POSSIBILITIES ARE CONCEIVED. The Division achieved a series of outstanding successes in engineering. the Division continued upgrading features and performance with the release of new and enhanced models. 54 25 STERLING YEARS . To keep pace with our global aspirations. and Product Lifecycle Management (PLM) to cut down on time and costs in delivering new models to the market. THE VITAL HUBS OF VEHICLE DEVELOPMENT. INCUBATED. the Division is also focused on ensuring optimum engineering support to overseas partners. During the year under review. PROTON also achieved local and regional recognition for several research and development works on various aspects of automotive engineering. PROTON’s Engineering Division continues to collaborate with local institutions of higher learning and corporations. THE ENGINEERING DIVISION EMPOWERS PROTON’S EMERGENCE INTO A NEW DAWN. A new milestone was reached in 2010 with PROTON’s maiden success in developing new age hybrid and electric cars.Operations Review PROTON 2010 Annual Report ENGINEERING SERVICES AS THE ENGINE POWERS ACCELERATION. ENGINE DEVELOPMENT. Powering the development of home-grown talent. While breaking new ground in our design and engineering capabilities. as well as support the advancement of automotive engineering as a course of study at university levels.
Becoming the No. 1 Choice A New Dawn for Engineering Services .
design and Noise. and the legendary Lotus Ride & Handling – a standard feature in every Proton. It has achieved class-leading sales figures. as well as luxurious leather seats for a more sophisticated image. Anti-Lock Braking System (ABS) with Elecronic Braking Distribution (EBD). specification. These include an MP3 Radio with USB. the Elegance was conceived to offer ever more discerning customers an enhanced and attractive sedan.Operations Review PROTON 2010 Annual Report PRODUCT DEVELOPMENT Proton Persona Elegance As the next evolution in the Persona lifecycle. Vibration & Harshness (NVH) levels are now part of every unit rolled off the production line. a Collapsible Steering Column. finish. Improved fit. as nothing has been spared in the pursuit of quality. LED Side Turn Signals and Rear Combination Lamps. Occupants’ safety remains a priority as the Elegance continues to offer active and passive safety systems. Side-Impact Protection Beams. proving that the unveiling of the Elegance in March 2010 came at the right time for a mid-cycle facelift. The numerous upgrades for the Elegance are beyond skin-deep. by elevating its value proposition to an even higher level. The Persona has attained the accolade of being Malaysia’s most popular mid-size sedan for over 2 years running since its launch in August 2007. The Elegance also comes equipped with new upmarket features. 56 25 STERLING YEARS . such as Dual Airbags.
the SE has truly banished all conventional notions. 57 25 STERLING YEARS PROTON 2010 Annual Report .Operations Review Proton Saga Special Edition (SE) The Saga Special Edition (SE) was launched in July 2009 as a premium variant of the highly successful Saga.3L Campro IAFM engine. comfortable leather seats. be it in the city or in extra-urban settings. Even with its inexpensive price tag. cup holders. convenience. Continuing with the proven and reliable 1. the SE offers enough power-on-demand for a spirited drive. in addition to many other safety features. Versatility and practicality come bundled with the 413-litre boot. as the SE has a tough and rigid body construction. safety is not compromised. Some of the refinements come in the form of sporty alloy wheels. and door pockets. purposeful body kit. and delivers all its promises in a neat package. It embodies all the qualities one would desire in a car – style. In this regard. and various other tasteful appointments. All these epitomize PROTON’s quest to offer Malaysians a car that is engineered with them in mind. storage compartments. attractive color schemes. providing the masses with a car that is affordable yet hip and stylish. safety and affordability.
testing and safety assessment. Such is the nature of Design where the maturity of a particular direction can only be judged when it has achieved critical mass within every product in the organisation. It is worth mentioning also that the joint development with ItalDesign-Giugiaro has yielded a fresh and far stronger corporate image for PROTON’s cars.Operations Review PROTON 2010 Annual Report STYLING & TECHNOLOGY DEVELOPMENT Global Styling – EMAS Concept Car The EMAS concept car project is a joint development initiative with ItalDesign-Giugiaro of Italy where PROTON has harnessed the wealth of experience available from the Maestro in designing & engineering cars for the masses. Moving forward. the Hybrid can lead the SoutheastAsian region in the rapidly emerging market for alternative green vehicles with low carbon emission and fuel consumption. 58 25 STERLING YEARS Hybrid Vehicle Looking to adhere to the Malaysian Government’s low carbon and green growth agenda. engineering consultants and academic institutions to lead and manage a hybrid fleet test vehicle (FTV) programme to encourage the development of supporting infrastructure. green legislation schemes and public acceptance towards a greener future. . PROTON is forming strategic partnerships with Government agencies. By adjusting to the environmental standards in the global vehicle market. The project was initiated in September 2009 and the prototypes are being subjected to performance evaluation. This new image is what will propel the new Global Styling Initiative. PROTON has started initiatives in the development of hybrid electric vehicles. The halo effect of this collaboration is immense and can best be valued over time.
UK. whilst the SAGA was developed as a basic city driving demonstrator to meet urban city driving needs. These 2 additional EVs are now going through the testing and evaluation phase. The PROTON Persona was developed as a performance EV demonstrator with longer range. The car is also built with intelligent motor controllers for optimum electric usage. As a benchmarking exercise.Operations Review 59 25 STERLING YEARS Powertrain/Drivetrain and Energy Storage Electric Vehicle (EV) PROTON entered into the development of electric vehicles as a long-term strategy towards acquiring and commercialising the technology as indicated in the PROTON Technology Roadmap. PROTON also jointly developed two additional units of Proton SAGA using a different technology provider. 2 units of EV vehicles were developed with Lotus Engineering. faster acceleration and higher maximum speed. The electric power is usually derived from battery packs which are at high rechargeable rates. Earlier. This is also part of the initiative to support the National Green Technology Policy that was implemented to chart the nation’s development in green technology as the new driver of economic growth. PROTON 2010 Annual Report . Electric vehicle is a type of alternative fuel car that utilises electric power to run motors instead of an internal combustion engine.
60 PROTON 2010 Annual Report 25 STERLING YEARS Operations Review .
China. Powertrain Analysis. The project team also works with leading global suppliers from Europe. Japan. Thirty six PROTON engineers and technicians have been integrated with the Lotus Engineering project team in Hethel. emissions and quality standards to support PROTON’s future product introductions. India and ASEAN. UK.Operations Review ENGINE DEVELOPMENT Higher Performance Engine (HPE) Engine technology moves rapidly with the global demand for high performance yet lower emissions. 25 STERLING YEARS His Majesty DYMM Seri Paduka Baginda Yang di-Pertuan Agong Al-Wathiqu Billah Tuanku Mizan Zainal Abidin Ibni Al-Marhum Sultan Mahmud Al-Muktafi Billah Shah being briefed on the High Performance Engine during a visit to Lotus in the UK. PROTON responds with the introduction of the higher performance engine (HPE) plan for production in 2011. Engine Development and Engine Calibration. The program is in collaboration with Lotus Engineering. The main program is the design and development of an engine equivalent in performances to a 2.0L naturally aspirated engine. The key objectives are enhanced performance. His Majesty Duli Yang Maha Mulia Seri Paduka Baginda Yang di-Pertuan Agong Al-Wathiqu Billah Tuanku Mizan Zainal Abidin Ibni Al-Marhum Sultan Mahmud Al-Muktafi Billah Shah officiated the first ‘key-on’ ceremony for the HPE on 2nd October 2009 during His Royal visit to Lotus in Hethel. Powertrain Design. working together in all areas from Project Management. United Kingdom. South Korea. 61 PROTON 2010 Annual Report .
styling (art & design). Expected outcomes from the alliance are industry-university knowledge sharing. The MOU covers the exchange of staff. conferences and workshops of relevant projects as part of PROTON’s Technology Roadmap activity. Some of the areas identified for further study include photo-voltaic powered auto ventilation. thermal management of car cabin. and human capital development. (b) Universiti Teknologi MARA (UiTM) PROTON and Universiti Teknologi MARA (UiTM) signed a Memorandum of Understanding (MOU). and creating a pool of experts towards achieving excellence in R&D and consultancy. cost savings and competent graduates in automotive industries – in terms of technical. Some of the research areas that have been identified for further studies include noise level reduction in the cabin of a vehicle. A PROTON Professorship Program had been established with the assignment of one lecturer to PROTON for two years to carry-out the work as stated within the objectives of the MOU. journals. The Agreement is for a three-year collaboration involving automotive technology. acquiring intellectual property rights. sharing of facilities. which took place on 13th January 2010. This could potentially reduce financial investment and speed up R&D processes required to bring the product into the market place. 62 25 STERLING YEARS . cultivating joint research. The collaboration effort is expected to benefit both parties by maximising each others’ resources. sharing of facilities. It is also part of PROTON’s corporate responsibility and continuous efforts to be proactive in making improvements to its product quality. technology development.Operations Review PROTON 2010 Annual Report COLLABORATION Research Collaboration With Universities (a) Universiti Teknologi Malaysia (UTM) PROTON and Universiti Teknologi Malaysia (UTM) signed a Memorandum of Understanding (MOU) in February 2009 with the objectives of promoting the exchange of technical expertise. cabin odour control and super-activated carbon for butane canister. business and relevant soft skills. and the development of a new transmission concept. cabin climate control design. publications. analysis of a door side mirror using wind tunnel and vibration test.
Four project proposals have been developed by TUC namely: Project 1 – Air cond Accelerator Project 2 – Lock Status Indicator Project 3 – Parking Mirror Project 4 – Mini Head Up Display (HUD) The project study was completed in December 2009. TECHNOLOGY COLLABORATION (a) Vehicle Advanced Telematics System (VATS) PROTON. This is now undergoing Feasibility Study and Market Research. Yusoff Sulaiman at the Putra World Trade Centre (PWTC). Maximus Ongkili witnessing the exchange of the MOU between PROTON Managing Director Dato’ Haji Syed Zainal Abidin Syed Mohamed Tahir and CEO of MiGHT Encik Mohd.C (Proof Of Concept). MIGHTPROTON-Azanor will also expand this program to the local small and medium industries in an effort to improve the capability of local automotive telematics technology comparable to international standards.Kuala Lumpur. Azanor Exim Sdn. GPS. Technology and Innovation Malaysia (MOSTI) and MiGHT. GIS and a variety of sensors. low orbit satellite communications. VATS is a national project under the Telematics Industry Development Program that is aimed at providing a conducive infrastructure for the development of the telematics industry for the automotive sector in this country. Through this joint venture. PROTON 2010 Annual Report . The technology will incorporate among others. the auto-electronics.Operations Review (c) Taylor’s University College (TUC) A Non-Disclosure Agreement (NDA) and Collaboration Agreement (CA) were signed between PROTON and TUC for ideas generation and development and evaluation of projects. Bhd. The VATS project includes a build up of a full demo vehicle on the P. This collaboration stems from TechnoMart Malaysia™. GSM communications. have signed a Memorandum of Understanding (MOU) for the implementation of the ”Vehicle Advanced Telematics System” (VATS) Program in October 2009. and the Malaysian Industry-Government Group for High Technology (MiGHT). a technology trading platform under the initiative of the Ministry of Science.O. 63 25 STERLING YEARS Dato’ Sri Mohd Najib Tun Razak with Dr.
Other than that. Euro 5 and Euro 6 emission standards. recyclability and recoverability depending on the specific market. This includes the mandatory fitment of brake assist system (BAS). CO2 emission. . benchmarking against regulatory requirements of each designated market at the earliest time possible. mobile air-conditioning system and reusability. The implementation of new legislations between year 2009 to year 2018 in PROTON existing markets. gear shift indicator (GSI) and daytime running lamp (DRL). may require PROTON to revise its development strategy so as to meet those regulatory requirements.Operations Review PROTON 2010 Annual Report MARKET SUPPORT (EXPORT) • China The Engineering Division provides product & technical information support to our Chinese business partner especially for localisation activities. 64 25 STERLING YEARS AUTOMOTIVE LEGISLATION UPDATES PROTON carries out a thorough study on product compliance. vehicles must also be able to comply with the requirements of pedestrian protection. as well as to establish the engineering system and data management. Other Markets Continuous engineering support in the areas of vehicle. tyre pressure monitoring system (TPMS). electronic stability control (ESC). powertrain and testing is being provided for these markets. • ASEAN.
The program is being carried out together with the support of Hewlett-Packard (HP) and Siemens PLM. Therefore. PLM solution links not only the entire product lifecycle processes but also the whole team that is involved in it. The advantages of PLM solution include: • Improvement of the end-to-end development timeline which accelerates introduction of new models to the market. we continue to employ innovative technology which will help us to accelerate the development of our products in a more timely. • Collaboration and networking within internal and external engineering partners to allow seamless work integration and knowledge sharing to improve product quality. collaboration. to manage the entire product lifecycle processes right from conceptual design through to after sales support. and costeffective manner. integration and information sharing could easily happen. Product Lifecycle Management (PLM) solution is an initiative that PROTON has adopted.Operations Review PRODUCT LIFECYCLE MANAGEMENT (PLM) As PROTON grows beyond the local market. 65 PROTON 2010 Annual Report . 25 STERLING YEARS PROTON Managing Director Dato’ Haji Syed Zainal Abidin Syed Mohamed Tahir (second from left) exchanges documents with HewlettPackard Enterprise Services Asia-Pacific & Japan Senior Vice President Kevin Jones (second from right) while PROTON Engineering Division Director Tajul Zahari Abu Bakar (left) and Siemens PLM software experteam Asia Pacific Vice President Gavin Spier look on. • Management of cost throughout the product lifecycle to ensure cost effectiveness with possible cost reduction.
Asia Pasific Innovation Award at MSC ASEAN Users’ Conference In August 2009. won the 1st prize under poster category (paper without presentation) at the 5th India/ASEAN HyperWorks Technology Conference 2009 held in Bangalore. but also the intellectual property gained from the established knowhow. The distinctive feature of the analysis method as contained in the technical paper is the establishment of a Reliability Engineering framework on top of the existing traditional Finite Element approach. Durability & Reliability Group. the work presented by PROTON had received the Asia Pacific Innovation Award 2009 from MSC Software Corporation. Malaysia. The full technical paper was also published in the journal of the 3rd International Conference on Energy and Environment (ICEE) 2009. had won an award for the best technical paper at South East Asia ABAQUS Users’ Conference entitled ‘Analysis of Gearshift Mechanism using Flexible Body Approach for Structural Durability Assessment’ which was held in Penang. Best Conference Paper at South East Asia ABAQUS Users’ Conference Additionally the CAE. . under the sustainable energy category. which was awarded by Tun Dr Mahathir during PROTON’s Family Day 2010. and Third prize winner: Mid-engine Saga. Second prize winner: Sport shoe inspired convertible. Crash & Safety Group. The poster was entitled ‘Application of Plackett-Burman Experimental Design through Altair Hyperstudy in Frontal Crash Performance’. Based on those merits. a technical paper entitled ‘Probabilistic Analysis in Virtual Development’ was presented by the CAE Section at the Annual MSC ASEAN Users’ Conference in Sunway. It is an extension of the integration between statistics and numerical analysis that put extra emphasis on Quality Engineering and Design-to cost orientation.Operations Review PROTON 2010 Annual Report 66 25 STERLING YEARS (from left to right) Winner: Super carrier business concept. The presented paper was not only hinged on the innovative numerical approach in integrating the physics of multi-body-dynamics with flexible Finite Element modeling in one simulation environment. The conference was attended by over 800 CAE engineering professionals from all over India and South Asia. India. The analysis concept was quoted by MSC as the ‘New CAE Simulation Approach of the 21st Century’. RECOGNITION IN R&D First Prize (Poster) at 5th India/ASEAN Hyperworks Technology Conference The Computer Aided Engineering (CAE).
PROTON 2010 Annual Report . The competition was held for 3 months from June 2009 until August 2009. The objectives of this competition are to generate new ideas and interest among the staff in creating next generation cars and also for employees to feel appreciated for their contributions to the Company. Bhd. styling and originality by internal and external judges from UiTM.Operations Review 67 25 STERLING YEARS PROTON Innovation & Invention Competition A competition named PROTON Innovation and Invention was organised for all staff of PROTON at Shah Alam.. The top 20 cars were paraded around the factory vicinity during PROTON’s Family Day in January 2010 for the staff and family members to view and appreciate. creativity. during PROTON’s Family Day 2010. Tanjung Malim and those of Proton Edar Sdn. The winners were decided based on the cost of build. UTM & MOSTI. Tun Dr Mahathir awarding the Asia Pacific Innovation Award 2009 from MSC Software Corporation.
The successful launch and introduction of the Exora. Although it is new. the performance for the year under review is an indication of positive things to come in the future as we saw increased demand for Proton vehicles even amidst a generally bleak industry scenario. THOUGH WE CONTINUOUSLY FOCUS ON BUILDING CAPACITY AND PRODUCTION POTENTIAL. the Exora alone has contributed to 20% of the total volume in its first year of production.001 UNITS TO A RECORD HIGH OF 173.643 units to 173.057 UNITS LAST YEAR. the first truly Malaysian MPV in 2009. a testament of its high demand.Operations Review PROTON 2010 Annual Report MANUFACTURING WITHIN 25 YEARS. ACTUAL VOLUME IS TAILORED FOR OPTIMUM PERFORMANCE TO RESPOND TO INDUSTRY DEMAND. THIS 918% GROWTH AVERAGES AN ANNUAL INCREASE OF 11% PER ANNUM. .057 units. 68 25 STERLING YEARS After a slower phase of growth in 2008. helped to improve the total production volume from 157. THE DIVISION HAS STRINGENT PROCEDURES IN PLACE TO REAP THE BENEFITS OF COST SAVINGS VIA REALISING OPTIMAL PRODUCTION VOLUME AND STREAMLINING STORAGE AND HOLDING COSTS. PROTON’S MANUFACTURING CAPABILITIES HAVE ACCELERATED FROM AN INITIAL CAPACITY OF 17.
Optimising Operational Capacity A New Dawn for Manufacturing .
These combined with an enhanced stylish body kit. The Elegance is equipped with better specifications including a 32bit ECU which means increased functionality.Operations Review PROTON 2010 Annual Report 70 25 STERLING YEARS In July 2010. due to its impressive selling points of consistent quality. In fact in the last financial year. The Saga will also be upgraded by having a two phase facelift. better engine performance and increased diagnostic capabilities. value for money and reliability. This facelift is planned despite its continuing streak of high bookings. alloy rims and interior trim leather makes the Elegance a much sought after car in its class. The launch of the Persona ‘Elegance’ in March 2010 is another example of PROTON’s commitment to continuously improve its products. We expect the Elegance to continue its reign as one of the top revenue generating models in our stable. the first facelift targeted in November 2010 with minor appearance modification and a second involving an engine upgrade in 2011. the Saga was a best seller several times for the Malaysian automobile market. . the new Exora Special edition was launched and continued to capture the MPV segment with its enhanced styling and product specification.
and established new model lines so that ‘yokoten’ (a Japanese term which means copying) activities can be implemented. During the year under review the Manufacturing Division also focused on workforce training to upgrade skills and capabilities.Operations Review 71 25 STERLING YEARS Efforts to improve productivity and quality remain a core focus within the Manufacturing Division. we have set monthly benchmarks. PROTON 2010 Annual Report . and see our efforts come to fruition. We are putting plans into place to involve the vendor community in our efforts to raise manufacturing standards in the near future. upgraded the shopfloor working environment and sent key employees for external training in a renowned Japanese institute. and with the increase in production volume. we are also taking steps to raise our productivity index. This is crucial as minor disruptions in their operations can severely affect the performance of our production lines. Quality levels improved in 2009. Towards this end. We hope to reap the benefits of all these training programmes in the near future.
Jinhua Youngman Automobile Group.Operations Review PROTON 2010 Annual Report PROTON SHAH ALAM The PROTON Shah Alam manufacturing complex includes the original Main Plant and the smaller Multi Vehicle Factory (MVF).600 units a month.000 cylinder blocks.000 units to accommodate the good demand especially from the domestic market. This is not only due to the increase in demand but also in order to supply to our Chinese business partner. A separate Engine machining and assembly building is also contained within the complex where cylinder blocks. There are plans to increase this capacity to 250. crankshafts and bearing caps. in the intermediate term. Waja and Arena models. crankshaft and camshafts for the Campro engine are machined and subsequently assembled. The Main Plant’s capacity is 150. The capacity of the Saga has also been reviewed from 72.000 giving a total capacity of 200. The Casting plant is able to produce up to 180. 72 25 STERLING YEARS .000 units while the MVF’s capacity is 50. The Main plant currently produces the Saga.000 units per year.000 units per year.000 units to 96. The Saga model is the highest volume model produced. averaging about 6. There is also a Casting plant which is situated in the nearby Glenmarie industrial area.
676 units since the start of production. The stylish body kit. sporty alloy rims and the new interior look of tempest gray are designed to attract younger drivers who appreciate aesthetic detailing. The Wira production has reached a volume of more than 1. In ensuring the EXORA continues to capture the MPV segment. 73 25 STERLING YEARS PROTON 2010 Annual Report . up to March 2010.300 units.Operations Review For the record. This plant is also currently being modified to produce the new replacement car for the Waja which is targetted for the production line by November 2010. reached the end of production for domestic market back in June 2009. the production volume for the Waja and Arena are 3. This step is necessary in view of the need for PROTON to refocus its critical resources on current core models and new model development.09 million units while the Perdana recorded a volume of more than 77. MVF has produced 33. The MVF plant solely produced the 1st Malaysian MPV namely.352 units and 835 units respectively. a cosmetic change has been planned and targeted for launch in July 2010. The Arena is anticipated to stop production as planned in August 2010.689 units of Exora up till March 2010. the Exora. Since its introduction in April 2009. By contrast. The Wira and Perdana which were produced at the Main Plant. the Saga production reached a cumulative volume of 162.
all equipped with an Automatic Line Control or error proof system to assist workers to enhance built up quality on line and to achieve better production efficiencies. The plant comprises 5 main buildings namely Engine & Transmission (ETM). allowing man and machine to interact more efficiently.000 units (involving 2 shifts) with a 60 per cent automation level. Body Assembly. Stamping. . Painting and Trim and Final Assembly. productively and safely.Operations Review 74 25 STERLING YEARS PROTON 2010 Annual Report PROTON TANJUNG MALIM PLANT PROTON’s Tanjung Malim plant in Perak has an annual capacity of 150.
000 units. our main CKD importer is Jinhua Youngman Automobile Group (Youngman) which is assembling a rebadged version of the Gen. TIV growth and export volume expansion. the minor Gen. Persona and Exora make up more than 75% of the total FY10/11 volume plan. in view of the launch of cosmetic changes for the current models and the new replacement model for Waja.045 units of Persona.2. cosmetic changes or face lifts have been planned. the largest stamping equipment and the biggest of its kind in the Southeast Asian region. Youngman is also requesting PROTON to support their production of new models based on the PROTON platform. The volume for this year has been set based on the projected domestic economic recovery. In addition. Further upside in the volume is also envisaged due to the positive development in the Iraq and China markets. The Stamping shop is equipped with a 4.Operations Review To allow for greater flexibility in production. The sudden increase in volume is forcing PROTON to rethink its strategy to optimise plant utilisation and if possible minimise additional required investment. the plant is capable of producing multi-model products on a common line. PROTON’s Tanjung Malim plant produces the Persona. where good ergonomics. PROTON Tanjung Malim set new standards for a more conducive. For the next financial year.2 and Persona. Worker friendly features include a high roof concept and natural aspirated ventilations that channel a cooling effect within the complex.2 cosmetic change. As part of the activities to continuously refresh these models. Currently. 3. Each line can assemble vehicles on three different platforms and produce up to nine different models at any one time. The Persona Elegance. Currently. PROTON has dispatched the first group of engineers to provide technical assistance to Youngman to improve shopfloor management in Manufacturing. 75 25 STERLING YEARS Prospects Total production volume for FY10/11 is forecasted to increase by 20% compared to FY09/10’s actual production volume of 173. We believe the technical assistance support to Youngman will be continued in the future.579 units of Satria Neo.431 units of Gen. and we view this technical assistance as a preparation for our future prospects in overseas plants operation – namely in Iran and India. PROTON is also currently evaluating the possibilities of supplying complete engines and some anciliary loose components to enable Youngman to develop their own products. we are certain of an imminent increase in the production volumes. Savvy and Satria Neo models with Persona being the highest model produced on a monthly basis. This is to maximise the reduction of the overall manufacturing cost per unit. 4. brightly coloured floors and well lit interiors facilitate energetic and dynamic performance. Presently the Saga. PROTON 2010 Annual Report .057 units.600 tonne transfer press. Certified by ISO 9001 and ISO 14001. Furthermore. a very challenging scenario indeed.513 units of Savvy. comfortable and safe working environment. During the year under review. Gen. The CKD volume set for the next financial year for Youngman is 330% higher than the previous year. which means plant utilisation can now reach up to 60%. and 4. the plant produced 45. we plan to deliver 208.2. the Exora cosmetic change and the much anticipated Saga facelift are examples of such endeavours. Plant improvements have been planned to cater for the potential expansion of the CKD volume.
Lotus Cars was the main driver behind the increase with revenues increasing by 28% to £98.Operations Review 76 Lotus Evora production line. This growth results from sustained market driven policies. focusing on clear service offerings centred on its core competencies to retain and enlarge its client base.3m for the fiscal year.2m following the initial contribution from Lotus Evora sales during the year. Financially. Rising operating costs exacerbated by unrealised forex losses on non-pound sterling denominated loans and asset impairment adversely contributed to the financial results of the Group.2m incurred in the preceding financial year. the Group recorded a consolidated turnover of £139. growth of the Group was restricted by the continuing weak trading environment. the loss for the financial year was 23% lower when compared to the loss of £14. building on the foundations he inherited. Though there was great demand and appeal generated for the stunning Lotus Evora. Lotus Engineering’s third party consultancy business continued to record year-on-year growth with revenues increasing by 21% during the financial year to £44. Nevertheless. an increase of 26% when compared to the consolidated turnover of £110. 25 STERLING YEARS PROTON 2010 Annual Report LOTUS It was an exciting yet challenging year for the Group. market conditions. On the corporate front. However.9m in the previous corresponding period. .2m. Meanwhile. the Group registered a consolidated loss of £11. Dany Bahar was appointed as Chief Executive Officer of Group Lotus. a new 5-year strategic business plan has been formulated. Under Dany Bahar’s leadership. fragile consumer confidence. cost pressures that led to increased operational expenses and the volatility of the pound sterling.2m during the financial year. succeeding Michael Kimberley who retired during July 2009 due to ill-health. despite the increase in gross profit on the back of increased turnover and improved gross profit margins. increased competition. Underlying the new strategic business plan is a radical transformation to reposition both Lotus Cars and Lotus Engineering with the ultimate aim of delivering positive and sustainable financial returns to all Group Lotus’ stakeholders.
This was mostly driven by demand for the Lotus Evora.. fast and handles like a dream. with exceptional poise and feel.715 units across 32 countries. deft like an Elise. This has resulted in the Evora winning a number of high profile and important awards and accolades.” Evo Magazine – Car of the Year 2009 “It’s a magical thing across the ground.” Autocar – Britain’s best Driver’s Car 2009 “The best here. delicate and forgiving. The stunning Lotus Evora was unveiled to the worlds press in April 2009 to great acclaim with the media continuing to praise the car throughout the year. Nimble. Even better on the road. more grown up platform. quintessentially British. getting into it after any of the other finalists.” iMotor – Most Rated Car of 2008 “It’s [Lotus Evora] ‘rated’ score of 95 per cent is truly impressive and enough to see it beat brilliant machines such as the Lamborghini Gallardo LP560-4 and Nissan GT-R.” PROTON 2010 Annual Report . What was telling for me was that. super cars that don’t turn in so crisply. A winner on every conceivable level. Brilliant on the track. and surely no car on the planet steers like this. The total number of awards so far bestowed upon the Lotus Evora is 8 and some citations from these awards are as follows: 77 25 STERLING YEARS Car Magazine – Performance Car of the Year 2009 “There are executive saloons that don’t ride this well. more refined. It’s a beguiling car. a bit quicker and even sweeter dynamically.Operations Review Operations During the course of the fiscal year the total number of Lotus vehicles increased by 19% or 435 units to 2. it was even better than I remembered: a bit smoother.. It couldn’t really be much better to drive – the Evora is nigh-on perfect. Evora takes Lotus to a new place in terms of quality but more importantly delivers a sports car rush that puts other marques to shame. Lotus has managed to transfer everything that we love about the Elise to a bigger. too.” Top Gear – Sports car of the Year 2009 “Its pretty. … A quite brilliant car and worthy winner.
Lotus returned to IndyCar racing with a collaboration with experienced Indy Racing League Team. the company is fully supportive of 1MRT’s F1 entry. to licence the use of Lotus Racing in F1. Lotus’ return to the highest profile racing series in North America after a 40 year absence. the two latter vehicles debuting at the Geneva motorshow in March 2010. It is recognised that Group Lotus PLC will also benefit from the association with Lotus Racing with F1 being both true to Lotus’ racing heritage and the pinnacle of motorsport competition with a global following. driving the 2010 Lotus IndyCar. As part of the Group’s ambition to generate worldwide brand awareness. Lotus donated eight special edition ‘Naomi for Haiti’ Fashion for ReliefTM Lotus Evoras which were auctioned to achieve in excess of 1. KV Racing. Lotus unveiled the Lotus Evora Cup Racecar which underwent development over the winter. Whilst there is no financial support from Group Lotus.Operations Review PROTON 2010 Annual Report The first customers took delivery of their new Lotus Evoras on 1st September 2009 and shortly afterwards. the Lotus Range Extender engine for Series Hybrids was unveiled at the Frankfurt Motorshow. begun with a flourish with Japan’s most successful automobile racing driver. Group Lotus PLC entered into a licence agreement with 1Malaysia Racing Team (1MRT). As part of Lotus Engineering’s drive to continue to be world leaders in hybrid and electric vehicle technology. This engine has already been installed in three high profile research vehicles: the “Limo Green” project. at the Frankfurt motorshow in mid September 2009. the Proton Emas concept and the Lotus 414E Hybrid. March 2010 also saw the return of the Lotus name to F1. Part of the development process included a demanding development testing activity at a snowy Snetterton Cricuit in Norfolk by Lotus Racing’s F1 driver Jarno Trulli. Takuma Sato. 78 25 STERLING YEARS . At the end of the financial year.4m for the high profile charity. to great acclaim from the rest of the motor industry.
efficient performance and electrical and electronics integration. Over the period of the business plan. after-sales and manufacturing capability which will be further supplemented by investment in a robust and integrated IT system to increase overall organisational efficiency and effectiveness. These individuals bring with them the necessary capabilities and skills as well as strong track records of delivering change. if not more importantly. These four core competencies represent key disciplines which have a high growth and portability potential. it readies itself for another challenging yet exciting time ahead. the primary focus is to ensure that the business continues to grow using the resources available while introducing additional measures to control operational cost. Lotus Cars will invest heavily in new products across key luxury sportscar segments. Equally. An example is the new model year 2010 Elise which sports a new facelift. At the centre of Lotus Engineering’s business plan will be the investment identified to further strengthen and build its core competencies in the areas of lightweight architectures. Looking ahead to the new financial year. leveraging on its core competencies and partnering with other engineering service providers. Lotus Cars will also focus on maximising sales of its current Evora. is for the Group to ensure that the implementation of the strategies gains traction in line with the business plan as this will also provide the Group with immediate benefits. Meanwhile. to elevate the brand to the premium segments whilst ensuring that the core brand strength and values are maintained.Operations Review 79 As Lotus embarks on its strategic journey to transform and reposition the Group. Exige and Elise offerings which will be further enhanced by future variants to broaden and refresh the range and to meet a multitude of new legislative requirements. thus creating value for all its stakeholders. driving dynamics. Lotus Engineering will continue with its ongoing efforts to improve operational and organisational excellence. the Group will be on much stronger footing operationally and financially. Acknowledging that the transformation of Group Lotus will be a significant undertaking. In parallel. Lotus Engineering will continue the expansion and growth of its third party consultancy business by generating new opportunities. The new product positioning requires a shift in brand position. sales. the management team of Group Lotus has been strengthened with the recruitment of industry heavyweights from premium sportscar manufacturers and premier global engineering service providers. is equipped with a new powertrain and boasts the lowest carbon emissions for a vehicle in its class at 149g/km. Substantial investment is needed to implement the strategies but once the transformation has taken shape. 25 STERLING YEARS Prospects PROTON 2010 Annual Report . Achieving this requires significant investment in marketing. Lotus Cars transformation will be underpinned by a clear strategy to differentiate its core offerings.
NO LONGER EFFECTIVE AND RELEVANT. IT IS ALL ABOUT UNDERSTANDING OUR CUSTOMERS AND TAKING ACTION TO FULFILL CUSTOMER EXPECTATIONS. cultivating quality culture. WE TAKE OUR COMMITMENT BEYOND THE TRADITIONAL APPROACH OF QUALITY – THAT IS TO MERELY FOCUS ON QUALITY INSPECTION AND QUALITY CONTROL. embedding further quality ownership by strengthening the crossfunctional organisation. AS PROTON IS FULLY COMMITTED TO SATISFYING OUR CUSTOMERS. 80 25 STERLING YEARS During the year under review. . PROTON continued its journey towards quality excellence by embracing the principles of Total Quality Management (TQM): transforming all aspects of quality in all areas of business.Operations Review PROTON 2010 Annual Report QUALITY MANAGEMENT QUALITY IS THE DISCERNIBLE DIFFERENCE THAT SETS APART THE BEST FROM THE REST. emphasising more on process quality and instilling quality core values deeper across the business value chain to deliver the intended quality results. THIS TRADITIONAL APPROACH OFTEN OVERLOOKS THE FACT THAT QUALITY MUST BE BUILT-IN INTO THE PROCESS AND CONTROLLED AT THE SOURCE TO PREVENT DEFECTS FROM OCCURRING.
Surpassing Standards A New Dawn for Quality Management .
comprising members of the senior management.Operations Review 82 25 STERLING YEARS PROTON 2010 Annual Report Quality Improvement As customer focus and speed are our core values. . In ensuring effective and timely resolutions of quality issues. the Quality Improvement Committee (QIC). meets on a weekly basis meant to provide direction and decision on matters pertaining to quality. PROTON is committed to an effective quality improvement framework.
More than 250 ICC teams voluntarily registered in the last financial year to undertake various projects to improve productivity. Dr Wolfgang Karl Epple. a single channel for the problem solving process was also established during the year under review to streamline communication and coordinate problem-solving efforts.Operations Review The next step is to systematically and effectively implement these quality initiatives throughout the organisation. The Kaizen Suggestion Scheme.4 million. The development of quality ownership and quality culture in PROTON is further strengthened by the implementation of the Innovative and Creative Circle (ICC). The introduction of QIT has accelerated problem-solving and enhanced customer confidence. Warranty defects have also shown improved trends for all models implying all quality initiatives implemented so far via the QIT have started to bear results. attending the Company-wide quality campaign at the Shah Alam Main Plant. is a continuous incremental improvement and structured feedback system within PROTON especially in the manufacturing environment. and Senior Director of Group Operations.2 million. 97% of the registered teams have completed their projects and these have recorded cost savings of up to RM26. It encourages action by empowering individuals or groups to act to improve processes and work conditions. analyse. As a result. warranty trends now register a 4% improvement as there is a lower percentage of warranty claims over sales revenue. During the year under review. now all undergo a stringent 8 stage problem solving process to ensure that the problems are resolved permanently. A dynamic work culture is created when individuals take charge and are empowered to make a difference. which is a group composed of PROTON employees who are trained to identify. PROTON 2010 Annual Report . Internal quality issues and more importantly. quality and cost. To this end PROTON has established a company-wide cross-functional Quality Improvement Team (QIT) in the last financial year to positively address product quality problems. 83 25 STERLING YEARS PROTON’s Managing Director. the submission rate for suggestions improved by 70% for both PROTON plants and 25% of the submitted suggestions have been implemented successfully resulting in cost savings of RM12. Dato’ Haji Syed Zainal Abidin. Beyond this. one of the many initiatives to drive quality ownership and quality culture. customer complaints. solve or enrich work-related concerns based on the Plan-Do-CheckAction (PDCA) cycle.
there have been noticeable and meaningful improvements in the initial quality of PROTON vehicles as evidenced by the reduction in customer complaints. are some of the defect prevention initiatives carried out. especially customer complaints. are channeled back to the design and development team so that they can act to prevent recurrence and also leverage on these new findings to emerge improvements and countermeasures in the design of new models and facelifts. The Exora. 84 25 STERLING YEARS How this works is that all market feedback. 1 in Functional Quality by 2012”. . more concerted efforts and structured activities are being carried out to implement built-in quality upstream at the early stage of a vehicle’s design and development. Initiatives like benchmarking and simultaneous engineering. All new models will be then subjected to various stages of comprehensive and systematic quality gate reviews to track compliance against the set quality targets and deliverables. With all these pro-active initiatives done during the design and development stage. The design and development process deliverables are also monitored to ensure strict adherence to PROTON’s New Product Introduction requirements. has registered 68% improvement in concerns per car for the first three months from the start of production. for example.Operations Review PROTON 2010 Annual Report Quality in Design & Development In translating PROTON’s quality vision of “No. This achievement clearly shows that the various initiatives PROTON have put in place and our emphasis on prevention rather than detection has started to bear fruits.
and special quality audits were carried-out with direct involvement of PROTON’s top management. all newly developed components had to undergo and fulfill more than 15 requirements of the production part approval process before being approved for supply to our factories and fitted into PROTON vehicles. our suppliers are required to implement various quality initiatives in order to ensure good quality components are being produced and fitted into PROTON’s vehicles. all PROTON suppliers are subjected to stringent year-round quality audits. PROTON 2010 Annual Report .Operations Review 85 25 STERLING YEARS Quality in Supply Chain As one of our critical success factors. With all these initiatives in place. Moving forward. All components are also rigorously inspected and tested at various points on a continuous and periodical basis during the mass production stages so as to reflect PROTON’s endless commitment towards quality. the supplier quality level registered an improvement of more than 50% during the period. To ensure our supplier’s quality system and manufacturing processes are in controlled environments and in compliance with the global quality automotive standard. In addition. During the year under review we established quality improvement action plans focusing on selected critical suppliers. more efforts in supplier’s capability building and enhancement of the integrated supplier quality management programme have been identified as the next key areas of improvement as we continue to adopt global best practices and put more focus in developing a quality culture throughout the supply chain.
efforts are being made to change our quality approach from judgement control to source control by implementing initiative like Zero Quality Control to eliminate defects by fixing the root cause and controlling the processes at source. is always the main focus of our quality improvement initiatives. . This fulfills one of PROTON’s TQM emphasis on people quality. By implementing the Zero Defect program. With various initiatives like QIT and Zero Defect program carried-out at the production shopfloors. the quality level of vehicles have continued registering impressive improvement of more than 50% in all plants.Operations Review 86 25 STERLING YEARS PROTON 2010 Annual Report Quality in Manufacturing Manufacturing.The year-long continuous quality campaign strategy via the implementation of the Zero Defect program has indeed helped improve the quality level tremendously. Towards building-in quality into the manufacturing processes. PROTON has ingrained a mindset shift of ‘Nothing is Impossible’ and embedded a commitment towards defect prevention into our work culture. being one of the most important elements of quality.
Operations Review 87 25 STERLING YEARS Quality in Market PROTON’s never-ending commitment towards customer satisfaction is strongly reflected by the JD Power Initial Quality Study 2009 (IQS) results. In addition. Towards a future of unrelenting progress. PROTON remains committed to exceed expectations and continuously embark on various quality improvement initiatives so as to attain and maintain a world class standard of quality. During the year under review. to keep our customers satisfied. PROTON 2010 Annual Report . The strong results clearly imply that PROTON is listening to our customers seriously and more importantly. PROTON’s improvement rate surpassed the industry average which only registered 14% improvement. big and small. The achievement is indeed significant because no other OEM companies have ever achieved such results. In the IQS 2009. PROTON models continued to gain market recognition via various established international awards which are testament to the improved quality of PROTON models. various actions are being implemented to relentlessly address all customers’ concerns. PROTON recorded a 30% improvement rate in comparison to the IQS 2008 result.
PROTON 2010 Annual Report
SALES & DISTRIBUTION
DOMESTIC MARKETS THE FINANCIAL YEAR 2009/2010 HAS BEEN A CHALLENGING YET EXCITING YEAR FOR PROTON. WE STARTED CAUTIOUSLY IN THE WAKE OF THE DRASTIC MARKET SLOWDOWN DUE TO THE AFTERMATH OF THE 2008 GLOBAL ECONOMIC CRISIS. THIS HAD SEVERELY AFFECTED THE AUTOMOTIVE INDUSTRY BOTH DOMESTICALLY AND GLOBALLY. MARKET ANALYSTS HAD ORIGINALLY FORECASTED A 11% DECLINE IN TOTAL INDUSTRY VOLUME (TIV) GROWTH IN 2009 AS COMPARED TO 2008 DUE TO THE EFFECT OF THE ECONOMIC DOWNTURN.
To combat the adverse market situation, we put together a series of aggressive initiatives to overcome the challenges, and leveraged on opportunities provided by the Government economic stimulus package. As the market gradually recovered, buoyed by the increase in consumer confidence and positive economic health, we continued to heighten our collective efforts to drive higher sales. The results were encouraging. With strong support from our network, PROTON not only managed to surge in performance but also proudly secured the market leader position for 2 consecutive months in June and July 2009 respectively. Group synergy and our employees passionate commitment to our goals continued to steer us towards steady growth over the following months, and to our great delight, we surpassed the target for the 2009/2010 financial year. At the closure of the financial year under review, as at 31st March 2010, we posted a total of 157,170 unit registrations, 4% higher than the target and representing a 13% improvement over the previous year’s performance of 139,394 units. Over the calendar year performance, while TIV posted a decline of 2% (536,905 in 2009 against 548,115 in 2008), PROTON outgrew the industry’s rate by increasing 4% (148,027) compared to 2008’s volume of 142,971.
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Making a Stronger Impact
A New Dawn for Sales & Distribution
PROTON 2010 Annual Report
Effectively, PROTON gained an additional 2% market share, increasing to 28% from 26% in the previous year. This marked improvement of 13% increase in overall performance was primarily driven by the popularity of four core models namely the Saga, Persona, Exora and Satria Neo. These made up 94% of the total registration. The Saga continued to be the lead model amongst the top four PROTON models and had managed to become the best selling model in Malaysia for 3 consecutive months from January 2010 to March 2010. With better systems and improved processes in place, the overall monthly average of unregistered stock against registered ratio remained healthy at below 1 month, resulting in better cash flow.
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The PROTON XChange Program, a scrapping scheme that was introduced in 2008 with the support of the Malaysian Government to aid the automotive industry through its economic stimulus package, came to a closure in the third quarter of the financial year under review, with more than 29,000 units scrapped, in contrast to the original target of 5,000 units. Service business performance posted a total revenue of RM259 million, an increase of 43% over the previous year’s achievement of RM181 million. This represented a RM32 million increase above the target and, at the same time, reflected an improvement in our Customer Service Index (CSI) score from 70 points in the previous year, to 74 points during the period under review.
In the second quarter of the 2009/2010 financial year, Proton Edar Sdn. Bhd., a wholly-owned subsidiary, and Edaran Otomobil Nasional Berhad (EON) jointly signed a Master Dealership Agreement in which both parties are in consensus to re-align the Sales and Service dealer networks nationwide. This network rationalisation programme sets to re-map the Dealer Networks to solidify and strengthen PROTON’s position in the market. As at the end March 2010, the total number of outlets was reduced to 255 for sales and 339 for service respectively.
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Center for Logistic Allocation Storage and Services in Sijangkang.
We have also embarked on our Phase 1 Centralized Pre-Delivery and Logistics Hub Project for the Shah Alam plant through an outsourced partner located at Sijangkang, Kelang, Selangor. This integrates vehicles storage, Pre-Delivery Inspection (PDI), minor repair works and distribution preparation at a 1-stop centre with an aim to reduce the handling points and achieve better stock management in order to improve the delivery process to the end customers. This mega project supports both the Domestic and Export markets and Phase 2 is in the pipeline for vehicle production rolling out from the Tanjung Malim plant. In terms of new product enhancements, the introduction of the Saga Special Edition in July 2009; with its new special features and accessories, coupled with a sporty yet elegant look; helped to further boost the popularity of the new Saga. In the MPV segment, the popular Exora received an additional new variant with Exora Basic making its presence in November 2009 to offer customers a more affordable choice for the lower end market. To date, the Exora has garnered an excess of 43,000 in total bookings and more than 32,000 units have been sold since its introduction in April 2009.
PROTON 2010 Annual Report
PROTON 2010 Annual Report
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PROTON’s Managing Director, Dato’ Haji Syed Zainal Abidin, and CEO of Proton Edar Sdn. Bhd., Mohamad Shukor, at the launch of the Persona Elegance.
Persona meanwhile was given a refreshed styling and enhanced look with the introduction of the Persona Elegance in March 2010. The new design has accelerated market excitement as evidenced by improved bookings with registrations averaging 4,500 units three months after its launch. During the financial year under review, PROTON models continued to gather a number of awards, among them: • The prestigious Best Brand in the Brand Laureate SMEs Masters Awards for the automotive category. • The Exora, within the first 9 months of its market entry garnered 3 awards: Best Local Assembly MPV (Asian Auto – VCA Auto Industry Awards 2009); Winner of Car of the Year 2009 Award for small/mid-size MPV (Autocar Asean); and Car of the Year 2009 for midi MPV (NST/Maybank). • The Persona and Savvy took 2nd Placing for the Most Fuel Efficient Car Award 2009 (Asian Auto Mudah. com) under the category of Small Family Car and Compact City Car respectively • The Satria Neo was voted the Best Local Assembly Sports Car by Asian Auto-VCA Auto Industry Awards 2009. • The hot Saga meanwhile, continued its fine run with its fourth award, winning the Best Model of The Year 2009 (Frost & Sullivan Asia Pacific). • As an overall brand, PROTON was awarded the Reader Digest “Most Trusted Brand Gold Award 2009” for the 6th consecutive time since 2003.
Moving up the next level
Proton Edar believes that customer satisfaction is one of the key growth drivers for Proton vehicles in terms of sales and after sales volumes. To move up our ranks in the customer satisfaction index, we have embarked on an aggressive drive throughout the entire network for both sales and service outlets to strive for speedier improvements. Proton Edar is targeting to be number 5 within the next 3 years and to be number 3 within the next 5 years in the overall customer satisfaction index. As we move into an era where customer expectations of new vehicles are higher, Proton Edar is actively raising up our ante in order to satisfy our customers’ demands. To continue attracting interest and realise improved sales of Proton cars, we increased our segment focus to enable offers of improved packages, enhance customers experience at all touch points and strengthen our integrated marketing approach between car sales and after-sales service. In addition, improved efforts are pursued to expand revenue growth and margin significantly from the aftersales and spare parts business specifically while running continuous programs and scheme to increase the network overall effectiveness. Beyond this, Proton Edar is spearheading a corporate image enhancement exercise for all the Sales and Service Outlets to improve the display and appearance of our showrooms and facilities. Our passion and dedication towards maintaining outstanding performance even amidst a global slowdown is fueled by our successful performance during the period under review. As we look ahead towards a new financial year, Proton Edar is ready and geared up to deliver a new dawn for the domestic market. Notwithstanding the challenges ahead, we aim for improved performances in every operational and business segment as we continue to put strong emphasis on customer satisfaction as our yardstick for further growth and success.
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PROTON 2010 Annual Report
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PROTON 2010 Annual Report
EXPORT MARKETS THE IMPACT OF THE GLOBAL ECONOMIC SLOWDOWN CHALLENGED THE GLOBAL AUTOMOTIVE MARKET TO BECOME STRONGER AND TOUGHER. INTENSE COMPETITION CONTINUED TO BE A BIG HURDLE FOR PROTON’S DISTRIBUTORS, PARTICULARLY IN THE UNITED KINGDOM, AUSTRALIA AND THE MIDDLE-EAST REGION. NOTWITHSTANDING THIS, CHINA CONTINUED TO RECORD SIGNIFICANT GROWTH FROM THE PREVIOUS YEARS AND THE FISCAL YEAR SAW THE COUNTRY TAKING THE LEAD AS THE WORLD’S BIGGEST AUTOMOTIVE MARKET. IN ASEAN, CUSTOMERS WERE SPOILT FOR CHOICE WITH THE OVERWHELMING INTRODUCTION OF NEW MODELS.
Performance and Operations
The year under review saw PROTON strengthening its export foundation, picking up the pace of sales and registering improved performance, both in terms of export volume and financials. Aligning to the Group’s strategy, our export goals were to implement country-specific business concepts, develop products based on key market requirements, strengthen the PROTON brand, position PROTON competitively and provide support to the international supply-chain establishment. The commencement of Completely Knocked Down (CKD) Production of the Gen.2 and Persona in China is evidence of the revived implementation of PROTON exports. Through a strong collaboration with Youngman Automobile Group, in capitalising the tax benefits of local productions, PROTON is on track in its efforts to leverage on competitive component sourcing in China. To-date, three Youngman plants are in operation whilst PROTON’s Hangzhou Representative Office has been established with operations commencing in December 2009. The introduction of the Exora in ASEAN, resulted in an overwhelming response, especially during the initial launch periods at the Indonesia International Motor Show 2009 and Bangkok Auto Expo 2009 respectively. During these launch periods, PROTON recorded higher sales bookings compared to other established brands. Down under, Proton Cars Australia had initiated the Sales Growth Program to expand network coverage and capitalise on price-sensitive markets. This programme was spearheaded with the introduction of the the Saga 1.6 (marketed as S16), recruitment of new dealers and brand-engagement programs with the Wests Tigers Rugby League Football team, Miss Universe Australia pageant and Safe Drive Training program for school students. The fiscal year also saw PROTON entering the Yemen market, as well as conducting a series of one-off fleet sales to Eastern Europe and Africa. These reflect our efforts in optimising the increased sales potential in existing regions e.g. The Middle East and Gulf Countries; as well as capturing new markets for future introductions. 5-year Export Volume and 2010/11 Forecast
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• The major contributors to the increased exports for FY2009/10 were China, Thailand, Indonesia, Australia and Egypt. • The volume growth projection in FY2010/11 relies on incremental CKD Operations in China.
0 ‘05/06 ‘06/07 ‘07/08 ‘08/09 ‘09/10 AMP10/11
PROTON 2010 Annual Report
PROTON 2010 Annual Report
Moving forward, in order to achieve the Group’s growing focus on overseas markets, the Export Division has prioritised the following key areas. Volume and financials: Improving the Product and Market Mix, strengthening the Completely Knocked Down (CKD) business in China and pursuing an effective control mechanism on operating expenditure. Markets: Stabilising Completely Built Up (CBU) sales in existing markets; meanwhile for the CKD markets, Export Division is to support and further strengthen the CKD Operations in China, review the business model implementation in Iran and finalise the entry strategy into India. Marketing, product and price: To initiate a strategic concept for global benchmarking and implement brand improvement initiatives. Dealer network: Emphasise on “Delivery to Customer” through customer satisfaction improvement (CSI) and customer relationship management (CRM) programs, as well as focus on dealer management training and after-sales service operations. Organisation: Continue to enhance our personnel skills and dealer workforce through coaching and customised training programs. Whilst the focus on key export regions remain, Export Division will continue to pursue the Global Benchmarking exercise that will eventually enrich the PROTON brand values and improve profitability to the Group and respective stakeholders. The initial phase will focus on Product positioning realignment, after-sales service, dealer development and management, marketing and effective organisation. The success of these initiatives shall push export operations closer to the long-term Group objectives.
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In 2009 China surpassed the United States as the world’s largest automotive market with 13.6 million vehicles sold. The growth was mainly powered by favorable government incentives and China’s stimulus package to boost the economy amidst the global financial crisis in 2009.
During the year under review, PROTON’s business arrangement with China-based Jinhua Youngman Automobile Group (“Youngman”) has developed from CBU into CKD to capitalise on the tax savings for locally manufactured vehicles and leveraging on China lower cost base for manufacturing and components sourcing. Youngman’s plants in Anshun, Jinan and Tai An have been operational since 2009 with Hangzhou plant scheduled for completion end 2010. To accelerate PROTON’s strategy into China and serve the market better, PROTON has set up a Representative Office in Hangzhou, Zhejiang Province which has been in operations since Dec 2009. Currently, PROTON cars are being sold under the Europestar brand through 100 appointed dealers throughout China.
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PROTON Managing Director Dato’ Haji Syed Zainal Abidin Syed Mohamed Tahir visits Youngman’s car assembly plant in Tai-an.
PROTON 2010 Annual Report
Despite this turbulent background. including the promotion of biofuels. we have a dealer network of 36 3S outlets throughout Thailand that offer 6 attractive models targetting different consumers. . PROTON continued to make headway in the Thai market with a package of practical designs at affordable prices.7% when compared to 2008 due to the global economic crunch and domestic political instability.2. Thaksin Shinawatra’s frozen funds which sparked off a burning trail of aggressive protests. Thailand’s 6 months long deflationary episode ended in October 2009 and inflationary pressures are set to accelerate slightly during 2010. Prior to the political crisis. Currently. Phranakorn Auto Sales (PAS). This will likely improve the overall TIV in Thailand. For the automotive industry.Operations Review PROTON 2010 Annual Report THAILAND Overview Thailand’s automotive industry in 2009 showed a significant drop of 10. Under this “Thai Khem Khang” or “Stronger Thai 2012” project. With this. which hopefully could fuel an increase in new vehicle sales. Persona and Exora. effective Jan 2010 onwards. However. This indicates an increase in CBU imports from ASEAN countries. The recovery in the automotive industry for 2010 was also spurred by the reduction in Common Effective Preferential Tariff (CEPT) rates from the current 5% to 0% for CBU imports from ASEAN countries. Neo CPS. this positive growth projection is still being reviewed due to the domestic political crisis. Politically. through PAS. However. Neo. was a popular new introduction and helped boost PROTON sales for the fiscal year. the Thai government introduced a number of measures to encourage both the production and the domestic sales of more environmentally friendly vehicles. the Thai government has implemented 2 stimulus programmes to boost economic growth. The eco car project was on stream with the 1st CKD eco car officially launched by Nissan during the March 2010 Motor Show. The models comprise Savvy. The Proton Exora offered through our exclusive distributor. the government hopes to improve Thailand’s economy by 3% from 2010 onwards. Gen. post crisis. Thailand’s Automotive Industry was forecasted to recover in 2010 with the improvement in the economy and availability of newer models slated to be launched in 2010 by many brands. many non-ASEAN brands will also be considering setting up assembly outfits or partnerships in ASEAN countries to capitalise on the 0% CEPT concessions between Malaysia-IndonesiaThailand. the Thai automotive market will also see some vibrancy and more competitive selling by various brands to capture sales as well as to defend market share. 98 25 STERLING YEARS Prospects To combat the negative climate. especially in the commercial segment. the ruling government made the headlines again with a court ruling to seize a sizeable part of ousted former Prime Minister.
In December 2009. The Exora received 825 units booking which is equivalent to almost 10% of the share of the MPV segment. During the 13 days event. PROTON introduced the Exora during the 26th Thailand International Motor Expo 2009. PROTON has established itself as one of the top 10 players in the passenger cars segment capturing the 8th and 10th position in terms of overall TIV in the Thailand automotive market for 2009.008 units achieved in 2007 when we first entered the market. In terms of retail sales. with an achievement of 1.9 million.091 units.913 units. PROTON achieved a remarkable result with 4.6 million. for the financial year ended 31 March 2010. PROTON 2010 Annual Report . Overall. 99 25 STERLING YEARS Operations and Performance Within a short span of 2 years. PROTON surpassed the bookings record of 1.493 units exported to Thailand which exceeded the target of 3. Total sales revenue improved correspondingly with RM 208.Operations Review Launch of Proton Exora in Thailand.388 units and was positioned 6th in the overall Motor Expo booking. PROTON sold 4. surpassing Honda Freed in bookings. a 68% increase against the target of RM 123.108 units representing a 41% increase against the target of 2.
557 units. a staggering increase of 134% in comparison to the previous fiscal year’s sales volume of 1. launched in July 2007. which received 2 Awards for Best City Car from Majalah Mobil Motor and Auto Bild Indonesia. Despite that.7 Billion to IDR 281.4% for the same year. PT PEI had appointed 18 sales outlets and 32 after sales service centres/ authorised workshops throughout Indonesia.7 Billion. The year in review saw the launch of the Gen. with the more sporty and stylish outlook within the hatchback categories. As such. just below Mazda. as part of PROTON’s Brand expansion and Asian Multi-Local OEM (AMLO) strategies to spread out its presence intensely and dynamically. till the end of 2009 offered the Indonesian market 7 attractive models. the PROTON Exora gathered the most accolades. PT PEI.2 facelift and the first ever PROTON MPV. Total sales revenue also improved correspondingly from IDR104.2% to 0. On the dealer network aspect. PROTON had managed to sell 2. the Exora. 2002 but commenced full operations on 16 March 2007. and • the Saga (launched in March 2009). to target the different segments. as per fiscal year ended 31 March 2010. With 972 units and 534 units sold respectively for the year.Operations Review PROTON 2010 Annual Report INDONESIA Overview PT Proton Edar Indonesia (PT PEI) was established on 16 August. 100 25 STERLING YEARS Performance PROTON has established itself as the 15th top brand in the Indonesian automotive market. these two products have become PT PEI’s core products. Furthermore. while most automotive brands suffered significant decrease in their sales volume in comparison to 2008. PROTON has emerged as one of the automotive brands in Indonesia with the biggest positive growth rate in 2009. The Association of Indonesian Automotive Industries (Gaikindo) estimated for the year 2009 that the Indonesian automotive market would have fallen by 20% of the total industry volume (TIV). • the Persona. • the Gen. 2009. Chevrolet and Hyundai.092 units.2 and Neo (also launched in 2007). The Exora and Persona turned out to be the two biggest volume contributors to the 2009 sales volumes. This model has become the biggest sales contributor to PT PEI since its launch and debut at the 17th Indonesian International MotorShow on 24th July. PROTON’s sharp increase in sales growth has increased PROTON’s market share from 0. . In a country where there is a large preference for MPVs. The models are: • the Savvy. and Waja (launched in July 2007) which are highly comfortable and functional mini sedans.
PROTON 2010 Annual Report .Operations Review 101 25 STERLING YEARS Prospects Indonesia had last year sustained its economic status from the early 2009 global economic crisis and its stable economic condition is expected to continue in the new calendar year. Growing market confidence in PROTON has enabled PT PEI to garner strong support and cooperation from several leading finance and banking institutions. This confidence has also greatly stimulated interest from the car rental and public transport sectors throughout Indonesia which in turn assists in increasing PROTON’s resale value to the market. PT PEI is taking advantage of the situation and is embarking aggressively on expanding its network as well as prospecting intensively on corporate and fleet sales. With the current outlook & barring any unforeseen circumstances. PT PEI is expected to perform better in the new fiscal year.
However.23% which was mainly due to the new Proton Exora. The difficult economic situation also drove sales of smaller A and B segment cars which both gained market share while all other segments shrunk.2 petrol engines and sub 1.000 sales. had it not been for the introduction of a Government backed scrappage scheme for cars 10 years and older.Operations Review PROTON 2010 Annual Report SINGAPORE Performance and Operations Registration of new passenger cars in Singapore in 2009 dropped by 28. which added 300. In response.486 units or 29. The market also saw a definite trend towards smaller cars that were well equipped and economical to run. but still had larger car characteristics and comfort levels. Proton Singapore managed to outperform the market with a reduction in sales of only 13. the reduction would have been far worse. This in turn led to unpredicted levels of retail incentives with manufacturer’s subsidised finance being the most effective tool as consumers found normal credit difficult to obtain. Proton Singapore has already trimmed the size of its operations and is now focusing on the implementation of an aggressive marketing and sales plan with an eye on improving productivity at all levels to ensure Proton Singapore is primed and ready when the market improves. total industry volume (TIV) eventually ended at 1. 102 25 STERLING YEARS Prospects Market conditions in 2010 continue to be very difficult as the COE quota is expected to be further reduced by around 39%.6% as compared to that in 2008 which was a direct result of a reduction in supply of COEs (Certificate of Entitlement).995. Further. lowering average CO2 emissions by 5% over the previous year.6 diesel engines. operations such as Administration and PDI have been relocated and consolidated as part of Proton Singapore’s overall re-structuring and cost saving measures. UNITED KINGDOM Overview As expected 2009 was a very difficult year for the UK Automotive Industry with manufacturers having to fight for every sale. In this adverse condition. To maximise cost effectiveness. .000 vehicles which was down 7% from 2008. This in turn led to increased sales of sub 1. new marketing strategies have been implemented and partnerships with reputable local companies have been developed to enhance the awareness and image of PROTON in Singapore. After a very bad start to the year.
Operations Review 103 25 STERLING YEARS Performance & Operations Foreseeing a difficult year in 2009. Proton Cars (UK) Ltd plans to continue the strategic initiatives and measures introduced in 2009 to deliver continued improvements. reorganised resource and resource levels. Sales volume and financial targets for 2009 were set at realistic levels to reflect the expected tough market conditions and minimise risk levels given the volatile economical scenario. On a brighter note. the general economic conditions for 2010 are set to improve with strengthening currency and a much stronger new car market predicted towards the end of the year and into 2011. Therefore we are pleased to report that we managed to successfully achieve all our initiatives and cost saving measures.000 units.800. Proton Cars (UK) Ltd’s management put in place a number of initiatives including significant cost savings. whilst maintaining high levels of support and customer satisfaction for which PROTON is known for in the UK. PROTON 2010 Annual Report . with the new car market expected to record only about 1. the introduction of improved operational efficiencies and other effective measures. We surpassed our 2009 sales volume targets by about 20% and this resulted in better financial performance for Proton Cars (UK) Ltd. Prospects Another difficult year is forecast in 2010.
with over 400. PROTON in Australia was in the process of a dealer rationalisation program during this period and as such was adversely affected by the availability of credit facilities in the area of dealer financing. The Safe Drive Training program also continued to enjoy our support and is responsible for the training of school students throughout New South Wales and Queensland. The outlook is for prices to hold at current levels as market conditions improve.000 people attending matches live during the season and an estimated 14.4% compared to 2008.2 million watching games on television. was severely affected by the global financial crisis. through efficiencies implemented in the supply chain process. However this figure was mitigated by government stimulus measures introduced earlier in the year. Our constant drive towards overhead reduction. resulting in an increase in the overall industry volume. 104 25 STERLING YEARS Operations The early part of 2009 involved the induction of new dealers as the business prepared for the launch of several new models spearheaded by the S16. Rachael Finch. continue to yield financial benefits as volume continues to grow. acted as ambassador for the S16 and was featured in all its advertising and promotions. Proton Australia continued with its sponsorship of the Wests Tigers Rugby League Football team. the launch of S16 in December resulted in an increase of 118% for the November 2009 to March 2010 sales period. known as S16 in Australia.954 units – an increase of 17% over the last financial year.Operations Review PROTON 2010 Annual Report AUSTRALIA Overview In 2009 the Australian automotive industry. Total industry volume was down 7. The newly-crowned Miss Universe Australia. our sales result improved despite lower volumes in the first two quarters. . The introduction of Chinese and Indian manufactured vehicles had also increased competition and the drop in customs duty from 1 January 2010 has seen prices in the market fall slightly. In the early months. Total retail sales volume for the year was 1. Proton Cars Australia was able to recruit nine new dealers across the country in preparation for the launch and expected growth associated with the launch of the Saga. Despite this. prior to the stimulus assistance. like other markets around the world. Performance for the Financial Year Overall. Proton Australia also continued its association with the Miss Universe Australia pageant. the rate of decline was greater than 17%. Although PROTON’s volume was down 25% in the period between April to October 2009. Overall volume was up 17% for the full 2009/10 financial year.
unveiling the S16 together with PROTON Cars Australia Pty Ltd’s Managing Director. John Startari. With our dealer rationalisation programme and cost efficient initiatives in place. the platform has now been laid for future profitable growth that will ensure Proton Australia remains a viable operation in the years ahead.Operations Review 105 25 STERLING YEARS Ms. Prospects Proton Australia is bullish in its outlook for the coming financial year. during the Australian National Dealer Conference in Kuala Lumpur. Our current dealer network is expected to grow to 45 dealers nationally by the end of 2010 providing sufficient representation to service the forecast growth in unit sales. Volume is forecast to continue growing on the back of continued success of the S16 and the introduction of new models in the fourth quarter. Rachel Finch. Universe Australia. PROTON 2010 Annual Report .
Rally. Indonesia.Operations Review PROTON 2010 Annual Report PROTON AND MOTORSPORTS MOTORSPORTS IS PROTON’S KEY STRATEGY FOR A DYNAMIC SHOWCASE FOR PROTON’S BRAND. Czech Republic and Scotland. PROTON’s motorsports division. 106 25 STERLING YEARS R3. The term R3 stands for Race. China. Japan. Australia. PROTON’s involvement in motorsports is largely through participation of the PROTON R3 Malaysia Rally Team in the Asia Pacific Rally Championship (APRC) and Intercontinental Rally Challenge (IRC) spanning Asia Pacific and Europe in countries such as Malaysia. PROTON’s performance parts and special edition high performance PROTON vehicles that are inspired by Motorsports participation and technology. IT SUPPORTS PROTON’S AMBITION IN ESTABLISHING THE BRAND GLOBALLY THROUGH A GROWING BASE OF FANS WORLDWIDE. New Zealand. development and production of race cars. PRODUCTS AND TECHNOLOGY. pioneers the research. Belgium. . a car that is the result of a combination of innovative engineering designs as approved by FIA under the S2000 regulations. Research. PROTON features the Satria Neo S2000 in these rallies. Its wealth of technical advances and design has resulted in a combination of performance and reliability.
Gaining Global Renown A New Dawn for Motorsports .
PROTON has had a colourful journey into rally motorsports worldwide. Subaru and Mitsubishi. participating in more than 80 World Rally Championship (WRC) events while Chris Atkinson is a hugely popular rally driver with notable achievements as a World Rally Car driver. Fiat. finishing consistently in the top 10 positions in six rounds of the championship against more established manufacturer teams the likes of Peugeot. and enjoyed a commendable season. Skoda. The Satria Neo S2000 made its debut in the IRC in 2009. The team’s best finish was a second placing at the Rally of Scotland and finishing fourth in the Rally of Russia. PROTON had also participated in three rounds of the coveted APRC in 2009. 108 25 STERLING YEARS .Operations Review PROTON 2010 Annual Report Carrying the Malaysian flag in international rallying are world renowned drivers. Alister McRae and Chris Atkinson. The PROTON R3 Malaysia Rally Team is the only Malaysian team represented in the IRC and PROTON is also proud to represent Malaysia once again in the APRC. Alister McRae has been involved in motorsports for the past 16 years.
it has been proven that motorsports is indeed a powerful brand building platform for PROTON. The Company believes that every victory or milestone achieved on the track is the foundation of redefining the limits of true racing performance. Participation in motorsports is beneficial to the Company in terms of research. PROTON’s Motorsports division also embarked into sponsorship with the Lotus Racing team to further expand global branding activities. Not limited to the above. data and experience gained from the track is analysed and implemented into the development of PROTON’s road cars and performance parts. development and technology transfer.Operations Review 109 25 STERLING YEARS In 2010. Formula One. After every race. PROTON currently participates in the elite single-seater motor racing. PROTON 2010 Annual Report .
. has been involved in developing Proton City in Tanjung Malim. these features have become key attractions to buyers of residential units in Proton City. PROTON CONTINUED TO SUCCESSFULLY DISPOSE NON-CORE ASSETS. Bhd. On the development front. As testament to the quality and good condition of the building. PROTON’s properties were also made available for rental and in July 2009. a 40% owned associate company. During the year under review. make up the Group’s main manufacturing assets todate. Due to the global economic slowdown. it took the opportunity to carry out further studies and assessment of past projects in order to enhance its current plans and prepare for future projects and launches. in the last fiscal year. Other assets comprise the PROTON Centre of Excellence in Subang Jaya and numerous 3S centres nationwide. PCDC has not launched any phase for development. Bhd. Universiti Pendidikan Sultan Idris (UPSI) started utilising Level 1 of the new administrative building in Tanjong Malim as their lecture rooms and classes.Operations Review PROTON 2010 Annual Report PROPERTIES THOUGH THE PROPERTY MARKET WAS WEAKENED BY THE GLOBAL ECONOMIC SLOWDOWN IN THE FINANCIAL YEAR. 110 25 STERLING YEARS Sixteen medium cost apartments and two 3-storey shop/offices in Taman Seri Proton.5 hectares of land. UPSI had in March 2010 confirmed leasing additional floor space from July 2010 onwards. in Selangor and Tanjong Malim in Perak. Proton City Development Corporation Sdn. recreational parks and rich landscaping. However. PROTON’s manufacturing plants in Shah Alam and Glenmarie. Planned with modern infrastructures. most of the Group’s 3S Centres underwent a corporate identity improvement exercise – an investment that continues into the current financial year. Klang were sold during the year under review by Proton Properties Sdn. These are built on a total area of 602. (PCDC).
Streamlining our Focus A New Dawn for Properties .
AND CIMB BANK BERHAD. AND EDARAN OTOMOBIL NASIONAL BERHAD SALES NETWORKS NATIONWIDE.9% equity stake in Lotus Finance Limited. BHD. the PROTON Group is committed to delivering competitive hire purchase packages that prioritises providing fast. while being recognised as a competitive and capable player in the local automotive financing industry. Proton Finance Limited provides a range of hire purchase and finance lease options in connection with the financing of Proton cars. it is our aim to become the preferred automotive finance provider for the purchase of new PROTON vehicles. both of which are companies incorporated in the United Kingdom. BHD. PROTON also holds a 49.Operations Review PROTON 2010 Annual Report FINANCIAL SERVICES PROTON COMMERCE SDN. 112 25 STERLING YEARS Customers not only enjoy better deals for car financing but also value-added packages that offer a combination of other financial products. At the same time. (PCSB) IS A JOINT VENTURE COMPANY BETWEEN PROTON EDAR SDN. WHICH ENABLES PROTON TO PROVIDE QUALITY FINANCING SERVICES TO OUR CUSTOMERS. whilst Lotus Finance Limited provides the same facilities for new and used Lotus vehicles. BHD. .99% stake in Proton Finance Limited. Backed by the expertise and reliability of two established parent companies. efficient and friendly service to our car buyers. PCSB OFFERS COMPETITIVE HIRE PURCHASE LOAN FINANCING PACKAGES TO NEW PROTON CAR PURCHASERS THROUGH THE PROTON EDAR SDN. By doing this. and a 49.
Enhancing Efficiency and Value A New Dawn in Financial Services .
PROTON BELIEVES THAT COMMITMENT AND CARE MUST BE INVESTED IN CREATING A SUSTAINABLE BUSINESS THAT BENEFITS OUR PEOPLE. At PROTON. community and environment. AND SOCIETY AT LARGE. WORKPLACE.Operations Review PROTON 2010 Annual Report CORPORATE SOCIAL RESPONSIBILITY BEYOND THE PROFITABILITY OF OUR BUSINESS VENTURES. . THE ENVIRONMENT. It is also important that we advocate a corporate culture that appreciates the value of social service and understands its impact on stakeholders as a whole. COMMUNITY AND ENVIRONMENT BY PLAYING A DEDICATED ROLE AS A SOCIALLY RESPONSIBLE CORPORATION. workplace. we divide our CSR initiatives into four main segments: marketplace. 114 25 STERLING YEARS In carrying out our corporate social responsibility (CSR) initiatives. ethical corporate values and responsible corporate citizenry. the Group aims to achieve several broad objectives which will meet the expectations of good corporate governance. THE GROUP HAS MADE CONTINUOUS STRIDES TO POSITIVELY IMPACT THE MARKETPLACE.
Creating a Positive Difference A New Dawn in Corporate Social Responsibility .
This can be seen in our 2009 JD Power Initial Quality Study (IQS). which recorded a 30 percent improvement rate in comparison to the previous year’s results. Maintaining customer satisfaction is at the forefront of our business management. This improvement rate surpassed the industry’s average. attention to product safety. the Group has made numerous efforts to improve the quality of our products to much success.Operations Review PROTON 2010 Annual Report MARKETPLACE Our Marketplace CSR initiative is defined as all business activities related to the commercial or business interaction between PROTON and its stakeholders. customer or supplier. be it the shareholder. and to address this. quality management. 116 25 STERLING YEARS . A major concern among PROTON stakeholders is quality. among others. adherence to ethical business practices. and we are continuously improving our efforts in cultivating a good and strong relationship with our customers to improve their satisfaction levels. It involves. which only registered a 14 percent improvement. compliance to regulations and vendor development.
PROTON i-Care. Staff members of i-Care are trained to ensure that customers who make contact via the Call Centre experience a smooth procedure.Operations Review To enhance our after-sales service. On an internal level. 117 25 STERLING YEARS PROTON 2010 Annual Report . with emphasis on the importance of creating the best value for our customers. and to better understand customers’ needs. from receiving technical advice to those requesting assistance for a car breakdown. We continue to elevate the standards of our customer service system. customer surveys specifically tailored to PROTON’s business operations are regularly conducted to monitor customer satisfaction. PROTON employees are also regularly encouraged to evaluate this process via surveys in an effort to improve the quality and speed of our response to customers. Information obtained from the surveys are analysed and incorporated into our product and service developments. and customer care activities to ensure that the customers’ experience with PROTON is always a positive one. sales.
Control and Educate (ICE) initiative to emphasise sustainability of supply capacity and training.6 million has been disbursed. and mobilise the respective divisions to provide an immediate response. As such. To date. suggests improvements and provides guidance. To ensure that compliance is met across the board. 118 25 STERLING YEARS Last but not least.Operations Review PROTON 2010 Annual Report At PROTON. we take controlled measures to ensure that goods and services procured conform to the Group’s policies. and this is closely monitored via extensive reviews and follow-up visits. we would assess the scope of damage and conduct a thorough investigation on the cause of the incident. all our safety requirements are 20 to 30 percent more stringent than benchmarked figures. In critical cases where customer safety has been compromised. PROTON constantly monitors the performance of suppliers with on-going quality audits – and if need be.and medium-sized suppliers to enable them to gain access to the Automotive Development Fund which was established by the Government. management systems and the state of their operations. taking into consideration the suppliers’ manufacturing sites. In the case of product malfunction. Additionally. . we continuously strive to build solid and productive partnerships with our suppliers through means of fair trading. in compliance with procurement-related policies. laws and regulations. PROTON acts promptly to minimise any adverse effects to its customers. All of our suppliers’ efficiency and productivity levels are also supported through the Improve. we align ourselves with global safety standards – most prominently the European Safety Standard as well as the Australian Design Rule (ADR) and Saudi Arabian Standards Organisation (SASO)/ Gulf Standards – and we are committed to the continual improvement of these standards. PROTON also provides technical support for small. approximately RM81.
Our Workplace CSR not only intends to provide our employees with optimum working conditions. a similar approach is applied. and retain critical skills and talents. we also ensure that their skills and talents are nurtured as this cohesively. develop. training exercises and other benefits to safeguard each one’s welfare. our Talent Management Programme has enhanced PROTON’s ability to identify. that is via the Technical & Functional Competency Model. For those who are keen to advance along the technical career track. this must also go hand in hand with the development and retention of qualified leaders. we recognise that a talented. as evidenced by the Group’s safety and health policies. 119 25 STERLING YEARS While it is important to ensure that we are able to grow as one seamless entity. PROTON 2010 Annual Report . Through the Group’s Human Capital initiatives. this will further enhance PROTON’s competitive advantage in the industry. we developed key members of our workforce by using PROTON’s Core and Leadership Competency Model. productive human capital represents the backbone of our on-going development and progress. especially for positions that play a critical role in delivering business and strategic growth.Operations Review WORKPLACE At PROTON. By using these competency models.
including a select group of non-executives. PROTON’s plans for the future is to build key communities of practices.000 knowledge assets and is growing by 500 assets a week. where platforms of knowledge collaboration and sharing will be provided for the general staff to expand and build on niche knowledge areas that are key in making PROTON a competitive player in the ever challenging global market. PROTON has implemented a range of initiatives specifically designed to encourage such communication. . PROTON has proactively embarked and expanded on its Knowledge Management activities. representing all divisions. Initiatives include disclosing key performance indices. so that there are no communication barriers in order for employees to achieve their full potential and progress within the group. For instance. is further supported by the identification of approximately 20 staff members as Knowledge Officers. The involvement from the respective business units across the group. in meeting with the Government’s major push in the areas of human capital development. The use of internal channels such as PROTONCOM to disseminate information updates and policies is another effort to foster constant engagement and encourage internal communication. we conducted several ‘teh tarik sessions’ or informal get-togethers as well as engagement sessions with representatives from various divisions/departments. personnel system reforms and streamlining the scheme of service throughout the Group. This is testament to the interest and widespread acceptance of PROTON staff towards the new knowledge economy. A full fledged Knowledge Management portal dubbed “ASPIRE” is now available across the organisation containing a total of 100.Operations Review PROTON 2010 Annual Report 120 25 STERLING YEARS Maintaining open communications between employees and management is also vital. shared assessments. Apart from that.
To further complement this. PROTON 2010 Annual Report . By 2012. The ‘SIFU’ (meaning mentor. with minimal dependency on external training providers. team leaders and new executives being trained to become a ‘SIFU’ to the others. Centre of Knowledge Excellence. A task force consisting of representatives from various divisions has been identified and given the responsibility to carry out the related tasks. From April 2009 to March 2010. The Learning and Development department has also embarked on several collaborative projects with selected higher educational institutions and ministries such as the Ministry of Higher Education and Ministry of Rural and Regional Development. Under the PROTON Trainers Development Programme – in collaboration with the Malaysian Institute of Management (MIM). there are 197 in-house trainers who are Subject Matter Experts registered with the Learning & Development Department. we implemented the PROTON Development Framework which includes the Centre of Manufacturing Excellence. our Learning & Development department has provided training to a total of 6. In essence. exhibitions and programmes throughout the year to create awareness amongst employees on adopting a safe and healthy lifestyle.836 participants via 294 courses. it is our aspiration that PROTON will be self sufficient in terms of trainer resources for all the training needs of the organisation. PROTON had identified 11 qualified staff members as MIM-Certified Professional Trainers whom had completed their Level 3 competency. counsellor or teacher) Programme sees 13 of our supervisors. Initiatives and plans are also actively being carried out to realise the setting up of the PROTON Corporate University. the Group organised numerous health talks. carnivals. and Centre of Human Capital Excellence. Currently.Operations Review 121 25 STERLING YEARS To further strengthen PROTON’s learning capability. this initiative promotes a strong knowledge culture by encouraging continuous learning through various training programmes. Steering and working committees were established to allow for more effective monitoring of health and safety related issues throughout PROTON’s Group of companies.
Operations Review PROTON 2010 Annual Report To strengthen the relationship between the Group Human Resources (GHR) Division and internal customers. GHR had organised activities such the HR Week. The HR Week itself attracted more than 1300 employees attending the 3-day event organised in July 2009. Turun Padang Sehati Sepakat (engagement sessions between Group Human Resource Director and selected executives from the Manufacturing Division). In supporting Khazanah Nasional Berhad – as part of The Orange Book initiative in Strengthening Leadership Development – PROTON also participated in programmes such as the Cross Assignment between Government Linked Companies (GLCs). initiated by Bank Negara Malaysia. Cross Fertilization between GLCs and Government Offices/Ministries as well as the Accelerated Development Program (ADP) which includes Mentoring 122 25 STERLING YEARS Visitors throng PROTON’s Career Day. initiated by Khazanah Nasional Berhad and also the Graduate Program 500 (GP500). whereas 25% were sourced via the Graduate Employability Scheme (GEMS). career planning workshops and HR Talks/Briefings. Active participation in Career Days held at various universities and locations also resulted in the hiring of at least 75% of the new Executive population. .
require financial support for educational activities in the form of tuition classes and motivational seminars. At the same event. and focuses on philanthropic activities and donations to orphanages.000 towards the Tabung Pendidikan PROTON. The three-year programme is spearheaded by Khazanah Nasional Berhad and involves an allocation of RM250. A major initiative under this platform is PROTON’s involvement in the “Pintar Programme” which began in 2007.Operations Review Participants of Yayasan PROTON teambuilding event at Awana Resort. 10 scholars from universities around the country received scholarships from YAYASAN PROTON at the Scholarship Award Ceremony. In the same month. NGOs and various other special interest groups. representatives from YAYASAN PROTON’s “Adopted School Programme” were also presented with cheques for the financial assistance pledged. the young. The event was held concurrently with the 21st Board of Governors meeting. PROTON is committed to promoting the nation’s socio-economic development. where the scholars were given the opportunity to engage in discussion with the Board of Governors. among others. located in Shah Alam and Tanjung Malim. PROTON 2010 Annual Report . YAYASAN PROTON scholars also participated in the Annual Teambuilding and get-together activity held in April 2010 at the Awana Resort in Genting Highlands. Genting Highlands.000 from PROTON. YAYASAN PROTON contributed RM30. the Managing Director and several management team members. These ‘Adopted’ schools. 123 25 STERLING YEARS COMMUNITY Community CSR is an integral part of the Group’s interaction with the general public. and involves other Government-Linked Companies. In December 2009. YAYASAN PROTON had carried out several educational initiatives during the year.
Kelantan.Operations Review 124 25 STERLING YEARS PROTON 2010 Annual Report PROTON adopted four schools – three primary schools and one secondary school with a total number of 3. Sekolah Menengah Kebangsaan Paya Keladi in Kepala Batas. and Sekolah Rendah Kebangsaan Pintu Gang in Paloh. Pulau Pinang. Perak. Throughout the duration. The four schools are Sekolah Rendah Kebangsaan Bagan Tuan Kechil in Butterworth. a host of structured activities were held to assist students from these schools. Sekolah Rendah Kebangsaan Tanjung Malim.200 students . to improve their academic performance and develop positive characteristics. many of whom were from low-income families. Pulau Pinang. .under the “Pintar Programme”.
125 25 STERLING YEARS Flag off for the Merdeka Convoy. 1 with Malaysia’. The children were also presented with duit raya in time for the Aidil Fitri celebration. English language camps. leadership camps and coaching for students sitting for major examinations. motivational forums and camps. In February 2010. PROTON also presented incentives to impoverished. The year also saw PROTON finalising an Advanced Diploma program in Automotive Design and Manufacturing Engineering with the Ministry of Higher Education. breaking of fast and tarawih prayers. A new project that PROTON embarked on with other GLCs is the Program Sejahtera. and master scientific and technological concepts through hands-on investigation and exploration as a team. 32 activities were held involving these schools. high-achieving students in the form of cash and kind. colouring competitions.Operations Review In the year under review. the PROTON Merdeka Convoy with the theme of ‘1 Journey. various activities were conducted at the schools and orphanages. During the month of Ramadhan. PROTON held a Creativity and Innovation competition for these Pintar students in an effort to help them enhance their creativity level. Selangor and Kelantan. Pahang. whereby a convoy travelled in various Proton models to visit the four “Pintar” schools and six orphanages in four states (Penang. The activities included weekly tuition classes. PROTON 2010 Annual Report . an “Adopt a Community” project at Kampung Teluk Melati in Maran. gotong royong. Perak. Other recreational activities held for these students included football and badminton clinics held in collaboration with the Badminton Association of Malaysia (BAM).) During this journey. including essay-writing competitions. and the PROTON Football Club. Additionally. This is parallel to the Group’s bid to educate students with ambitions of becoming automotive vehicle mechanics by providing deserving underprivileged candidates with scholarships and work-based learning opportunities at PROTON Service Centres.
Additionally. In addition to this. books. made up of eight members. PROTON has been the main sponsor for the Malaysian Skills Competition (the automobile sector) organised by the Ministry of Works since 2003. PROTON allocated a budget of RM30. Y. Yayasan Harapan Kanak-Kanak. The Group has taken its own initiative to help the needy by introducing the Bridging Community Programme. In this programme. the Rumah Anak Yatim Siraman Kasih Rawang and Rumah Anak Yatim Sekendi Sabak Bernam in Selangor. The annual grant includes sending Malaysian representatives to the ASEAN and World Competitions.000 to help build five units out of 50 houses needed for the rehabilitation program for the vulnerable members of the society in Maran. Pertubuhan Kebajikan Anak Yatim & Miskin Darul Aitam Temoh in Perak. the Group held an Invention and Innovation Competition for PROTON staff.Operations Review PROTON 2010 Annual Report Program Sejahtera was launched by the Prime Minister.000 to upgrade and provide basic facilities. orphanages and shelter homes for the handicapped and needy families. computers and tuition to the children at three adopted orphanages. 126 25 STERLING YEARS Winner of the Malaysian Skills Competition (the autombile sector) . Under this programme. PROTON has continued to support various national bodies and organisations like MERCY Malaysia. below the age of 22. with the objective of nurturing young local talents. PROTON has committed to contribute RM175. Yayasan Orang Kurang Upaya Kelantan.B. Each team. as well as visits to children suffering from terminal illnesses in local hospitals.A. The objective of the competition was to encourage PROTON staff to contribute innovative and creative ideas on how future generation Proton models should look and feel like. The year also saw PROTON carrying out various charity activities such as visits to old folks’ homes. The competition attracted 20 groups in total. namely. Dato’ Sri Mohd Najib Tun Razak on the 4th of September 2009. and their mission was to create a new concept car based on their creativity. the Paediatric Ward of Hospital Tengku Ampuan Rahimah Klang. and PEMADAM with sponsorships in the form of cars. in this sector and developing world-class human capital. and is a nationwide CSR programme championed by Khazanah with the aim of eradicating poverty in Malaysia. were provided with a scrap car.
and the Group continued its role as the major sponsor of badminton. Malaysia GP Gold 2009. For the 2009 Singapore Open Super Series. As a result. 127 25 STERLING YEARS PROTON 2010 Annual Report . PROTON. PROTON became the official car sponsor to selected tournaments like the Malaysia Open Grand Prix Gold 2009 and Super Series Masters Finals 2009. The year 2010 marks PROTON’s 15 years of support towards the development of badminton in Malaysia. As the corporate custodian of badminton in the country. the year saw Malaysian national players performing well in various international outings. For the year under review.Operations Review In sports. PROTON was title sponsor for the Pahang Open 2009. Most notably.5 million (including promotional activities) for the sport. On a national level. PROTON was the title sponsor for the PROTON Malaysia Super Series Badminton Tournament organised by BAM. through its partnership with the Badminton Association of Malaysia (BAM). Terengganu Open 2009. particularly in badminton and football. PROTON continued to support the local scene by helping to identify and build talent at the grassroots level through development programmes. world number one Datuk Lee Chong Wei won his very first coveted All-England title in March 2010. together with BAM. organised a convoy to Johor in conjunction with Malaysia’s participation. Additionally. Malaysia International Challenge Finals 2009 and PROTON GP Finals 2009. PROTON allocated RM3. comprising of national players and coaches.
Royal Selangor Club Football Tournament (U-8 team). and Arsenal Soccer School Inter-continental Football Tournament (U-8. In football. PROTON FC Football Community Challenge and the PROTON Soccer Cross-Straits Invitation. PROTON FC’s Under-12 team is also currently competing in the National Junior Community League. including the 1Malaysia Football Tournament (U-15 team). U-10 and U-15 teams).Operations Review 128 25 STERLING YEARS PROTON 2010 Annual Report PROTON FC emerged as the Champion in the Selangor Super League 2010 after defeating Permodalan Negeri Selangor Bhd (PNSB). PROTON’s football team withdrew from the Liga Perdana to compete in the Selangor Super League which they went on to win recently. . The team had also taken the initiative to organise various invitational football tournaments like the 1PROTON World Cup Fiesta. PROTON FC also participated in a list of other activities throughout the year. as well as organising a Soccer Kids program for children of PROTON Group employees.
PROTON 2010 Annual Report . an ATP World Tour tournament. PROTON became an official partner of the Lotus Racing team and provided marshal cars for the Malaysian F1 Grand Prix race held at the Sepang International Circuit. the year under review saw the PROTON R3 Malaysia Rally Team making its competition debut in the Intercontinental Rally Challenge (IRC) under the World Rally Super 2000 category with the Satria Neo S2000. PROTON firmly believes that the event not only helped place Malaysia on the world sporting map. consistently finishing in the top 10 positions in six rounds of the Championship. where PROTON became title sponsor for the inaugural Malaysian Open. PROTON also continued in its support of the prestigious Le Tour de Langkawi international cycling event – an event the Group has long been associated with. In Formula One. A budget of RM3. The team ended the season with commendable results. but spurred the development of home-grown cycling talents to compete at the international level. PROTON supplied 150 cars of varying models for the use of officials and the media.000 (inclusive of promotional activities) was spent for this event. A new addition to PROTON’s sporting line-up in the year under review was tennis.Operations Review 129 25 STERLING YEARS In the world of motorsports. despite being in the company of more established manufacturer teams. The PROTON R3 Malaysia Rally Team also participated in three rounds of the Asia Pacific Rally Championship (APRC) in 2009.000. As the official car provider.
HEALTH AND SAFETY ASPECT OF OUR OPERATIONS. PROTON passed the ISO14001 Environmental Management System (ISO14001 EMS) assessment audit by the Vehicle Certification Agency (VCA) – part of the requirements of both the UK Department for Transport and SIRIM Malaysia and accredited by the United Kingdom Accreditation Service (UKAS). AND IN ENSURING THAT WORKING CONDITIONS ARE SAFE AND ENVIRONMENTALLY RESPONSIBLE. 130 25 STERLING YEARS ISO14001 Environmental Management System PROTON has achieved international standards in environmental management in line with the ISO14001 Environmental Management System. HEALTH & SAFETY THE PROTON GROUP IS THE BIGGEST AUTOMOTIVE MANUFACTURER IN MALAYSIA COMPRISING SUBSIDIARIES THAT SPAN ACROSS A WIDE INDUSTRIAL SPECTRUM – YET EVERY PROTON FACILITY IS UNITED IN OUR COMMITMENT TO RESPONSIBLE MANUFACTURING. In August 2009. .Operations Review PROTON 2010 Annual Report ENVIRONMENT. OUR AFFIRMATION IN THIS AREA IS INGRAINED WITHIN THE ENVIRONMENT. HEALTH AND SAFETY POLICY PLACED WITHIN THE PROTON GROUP OF COMPANIES TO MANAGE THE ENVIRONMENT.
Health & Safety .Delivering Beyond Expections A New Dawn in Environment.
. Our vendors. This international recognition is an assurance that PROTON’s environmental management is systematic and benchmarked against international standards. suppliers and dealers are collectively encouraged to adopt the same standards.Operations Review PROTON 2010 Annual Report 132 25 STERLING YEARS This phase was successfully accomplished following an aggressive pursuit to achieve these standards since the project was first initiated in 2007. The certification will especially make a favourable impression on export markets such as the UK and Australia where environmental concerns are of paramount importance.
robots and automation systems have been installed. As the leading automotive manufacturer in this region. PROTON stands steadfast in our commitment to design green products. such as Chlorofluorocarbons (CFC). machinery. Paint and thinner consumption have been also reduced by approximately 30 percent. and glass in our products to the paper and ink in our offices. the manual spraying process has been completely replaced with electrostatic type robots. and emit less wastes and toxic emissions into the atmosphere. The Group-wide practice of sound environmental management has aided in reducing operational costs. PROTON has also introduced technology which has reduced the usage of paper and ink in our offices. 133 PROTON 2010 Annual Report . One of our core focus in this area is the phasing out of ozone depleting substances within our Manufacturing process. An electrical charge is induced into the paint mixture to polarise the molecules so that they are electro statically attracted to the car body with the opposite charge. Toxic substance removal In the last decade. This includes considering the environmental impact of the materials used. These facilities improve the efficiency level.Operations Review In other areas like the Paint Shop. 25 STERLING YEARS At the manufacturing site. while creating a harmonious and healthier environment for all. utilise less energy. Through the years we have consistently and systematically phased out the usage of ozone depleting substances. there has been a growing global awareness of environmental issues and an increased focus on sustainability. From the metal. to the best of our ability. plastic. our goal is to continue leading the industry in reducing or eliminating environmentally harmful substances. environmentally-friendly equipment. while waste and pollution are correspondingly reduced. Alternative ozone friendly substances and technologies have been adopted at PROTON’s production operations. PROTON has since consciously implemented relevant sustainable practices within our operations to ensure that resources are utilised efficiently.
Physical stress may arise when workstations. These are driven by a legal requirement under the OSH Act 1994 & Factories and Machinery Act 1967. and general comfort and health. Health risk assessments and analysis 4. These include: 1. PROTON actively encourages subsidiary companies to provide strong management commitment to sustain the interest of all employees with regards to Environment. Health and Safety (EHS) policy. or because workers are required to assume awkward postures over a period of time. Fire safety evacuations 7. . in order to reduce and eliminate occupational injuries and illnesses. These stress factors can cause long-term damage to muscles. OSH and Road Safety campaigns 6. and joints. temperature. Safety training 5. relevant meetings and activities have been structured into the work schedule and are rigorously carried out within the PROTON Group. Most illnesses due to ergonomic causes occur because of forceful or repetitive work activities. or tools do not fit the worker well. nerves. Supplementing the EHS policy. equipment. nerves. Cross safety audits among the subsidiaries 134 25 STERLING YEARS People-friendly working conditions Another important item on the agenda is the ergonomic improvement programme aimed at emerging peoplefriendly working conditions and reducing workload at the assembly line. tendons. This policy guides the EHS management of every subsidiary.Operations Review PROTON 2010 Annual Report HEALTH AND SAFETY Management Commitment PROTON’s commitment to ensuring a safe. Quarterly OSH committee management meetings 2. healthy and conducive working environment is formalised within the Group’s Environment. Occupational Safety and Health (OSH) programme and activities were developed throughout the course of the year. vision. budgets and conduct regular meetings to ensure that the policy and plan are seriously implemented. Contractor safety and monitoring surveys 8. lighting. The objective of the programme is to secure the safety. to environmental factors which can affect hearing. Monthly Safety and Health audits in plants 3. mechanical stress. The management has been entrusted to provide adequate manpower. bones and the like. Ergonomics covers all aspects of the job from the physical stresses it places on joints. health and welfare of persons at work and to protect all visitors and employees at the workplace from safety hazards. muscles. Health and Safety programs. To this end.
exhaust pipe and tire. we have implemented a door-less car for easier access. 2. tire bolts and drive shafts.Operations Review 135 25 STERLING YEARS PROTON’s Emergency Centre located at the PROTON Centre of Excellence. PROTON also seeks to make the workplace a vibrant and stimulating environment for our workers by ensuring good lighting and ventilation. PROTON 2010 Annual Report . seat. Elimination of heavy lifting at assembly line to reduce backaches problem and practice rotation system. To eliminate any unnecessary stress on our operators’ spines due to work posture. 3. 4. The following are initiatives that have been successfully implemented: 1. Abolition of carrying heavy items that are more than 10kg in weight such as the carrying of window glass. and improved working height levels to reduce bending. Abolition of untidy work and other operating dislikes such as urethane application and fluid charging. instrument panel. Abolition of heavy physical work such as high torque wrench corresponding more than 10kg-m for the tightening of suspension. implementing friendly work ethics and ensuring adequate people-friendly features such as water coolers and pantries where possible. Small improvements in work infrastructure can also make a big difference in creating a more conducive work environment.
Organising safety and defensive driving programmes for employees and selected customers to teach safe and defensive driving techniques.Bhg Dato’ Hj Syed Zainal Abidin B Syed Mohamed Tahir. 4. With stringent safety practices in place. 3. National Institute of Occupational Safety & Health (NIOSH) and other agencies. the Managing Director on 11 September 2009. 11 and 14 respectively. 2. An annual road safety and industrial safety campaign in collaboration with Department of Occupational Safety and Health (DOSH). This is in response to the Government’s call to make the roads safer and to bring down the alarming number of road accidents and fatalities. Such convoys usually travel interstate between 150km to 250km and includes motivational programmes. Regular motorcycle convoys among riders to foster correct techniques of motorcycle riding. 136 25 STERLING YEARS . PROTON’s management has implemented several major programs and campaigns to instill sound commuting practices. This programme was successfully launched by Y. industrial accidents recorded in 2007. 2008 and 2009 were 18. including car driving and motorcycle riding are among PROTON’s top priorities.Operations Review PROTON 2010 Annual Report Commuting safety Commuting safety. Jabatan Keselamatan Jalan Raya (JKJR). Police. Among these were: 1. PROTON is on a continuous quest to reduce these numbers. are carried out by our internal trainers. Monthly MDRT (motorcycle defensive riding) courses targetting high risk riders and youngsters’.
NIOSH and PROTON are working to establish an Occupational Safety and Health – NIOSH Safety Passport for PROTON (OSH – NSPP). 137 25 STERLING YEARS Fire evacuation and emergency drill Fire evacuation procedures and emergency drills are conducted on a regular basis. NIOSH and PROTON collaboration to safety induction The National Institute of Occupational Safety Health Malaysia (NIOSH). and PROTON HOLDINGS BERHAD have organised a framework of Safety and Health Induction to promote the safety and health culture among contractors together with workers. a unit under the Ministry of Human Resource. all noted deficiencies have been addressed through the post-audit corrective action together with the local authority fire department. Audit activities in the last fiscal year revealed that most of our working places were in compliance with a majority of the standards and regulations that PROTON constantly endeavours to adhere to. regular EHS audits are held throughout the Group. This joint arrangement will include training and assessment activities which will lead to PROTON Contractor’s Workers (PCW) being awarded the NIOSH Safety Passport for PROTON (NSPP).Operations Review Environment. Together. As a follow-up. Health and Safety Audit There is a need for a check and balance system to ensure that our EHS vision becomes a reality. To ensure that management and employees are committed to creating safe and healthy working conditions and to protecting the quality of the environment around them. PROTON 2010 Annual Report .
We mantain a commitment to good governance . PROTON has laid a foundation of integrity. in all we do.PROTON’s focus on constantly enhancing the design and features of our car models is replicated in the way we conduct our corporate affairs... A New Dawn In Responsibility . transparency and responsibility to ensure good corporate governance is practiced throughout the Group.
and internal controls and risk management processes. The Board is also committed to abiding by the Guidelines to Enhance Board Effectiveness as set by the Putrajaya Committee on GLC High Performance (PCG). capital expenditure. This statement describes how the Principles of Good Governance and provisions of the Code. the Group’s overall strategy. review of financial and operational performance. are applied by the Group. To this end. . striving to maintain a high level of corporate governance within the PROTON Group by ensuring that the highest standards of corporate culture are practiced throughout. implementation and control remain of primary importance to the Board. the Board has full control of and is responsible for. The Group’s overall strategic direction. The Board continues to enhance its role in improving governance practices effectively to safeguard the interests of the shareholders as well as stakeholders. Set out below is a statement on how the Group has applied the principles and adopted the best practices as laid down in the Code.Statement on Corporate Governance PROTON 2010 Annual Report 140 25 STERLING YEARS THE BOARD OF PROTON IS COMMITTED TO APPLYING THE RECOMMENDATIONS OF THE MALAYSIAN CODE ON CORPORATE GOVERNANCE (REVISED 2007) (“THE CODE”) AND THE PRINCIPLES OF BEST PRACTICES RECOMMENDED IN THE CODE TO ENSURE THAT GOOD CORPORATE GOVERNANCE IS PRACTICED THROUGHOUT THE GROUP TO EFFECTIVELY DISCHARGE ITS RESPONSIBILITIES TO PROTECT AND ENHANCE SHAREHOLDER VALUE. annual budget. Good corporate governance is the foundation of the culture and business practices of the PROTON Group. development. BOARD OF DIRECTORS The Board is committed to establishing and enhancing shareholder value in the long-term and is pleased to report that the Group has to its best efforts and knowledge complied with the Principles and Best Practises of the Code throughout the financial year under review. acquisition and divestment policies. and at the same time.
141 Dato Sri’ Mohd Nadzmi Bin Mohd Salleh who was previously the Managing Director of Perusahaan Otomobil Nasional Berhad (the then listed entity on the Kuala Lumpur Stock Exchange) from 29 June 1993 until 1 April 1996. There is therefore a natural separation of management and governance leading to a balance of responsibility and authority. 25 STERLING YEARS PROTON 2010 Annual Report . subject to the Limits of Authority and Group Policy and Procedures. The Board has delegated matters pertaining to the day to day management. to the Managing Director who is supported by a competent Management Team. The Non-Executive Directors are independent of management and are free from any business relationship which could materially interfere with the exercise of their independent judgment. made a return to PROTON when he was appointed as Non-Executive Chairman of PROTON on 1 January 2009. He conducts Board meetings and ensures that meetings proceed in an orderly manner. The Managing Director (“MD”) on the other hand is responsible for making and ensuring the implementation of broad policies as approved by the Board and reports to and discusses material matters including regulatory developments and strategic projects with the Board. The Chairman ensures the integrity and effectiveness of the Board as a whole. operations and strategic development of the Group. The roles and responsibilities of the Non-Executive Chairman and the Managing Director are clearly defined.
Behara Venkata Rama Subbu Tan Sri Rainer Althoff Encik Abdul Rahim Bin Abdul Hamid Tuan Haji Abdul Jabbar Bin Abdul Majid Tuan Haji Abdul Kadir Bin Md Kassim Mr. Oh Kim Sun Designation Non-Independent Non-Executive Chairman Managing Director Date of Appointment 1 January 2009 Date of Resignation N/A Meeting Percentage Attendance 10/10 100% 142 25 STERLING YEARS 1 January 2006 N/A 10/10 100% Independent 15 September 2006 N/A Non-Executive Director Non-Independent 11 February 2008 Non-Executive Director Independent 1 March 2010 Non-Executive Director Independent 22 June 2010 Non-Executive Director Independent 20 July 2010 Non-Executive Director Independent 12 April 2004 Non-Executive Director Independent 10 March 2005 Non-Executive Director Independent 13 May 2009 Non-Executive Director N/A N/A N/A N/A 10/10 10/10 N/A N/A N/A 100% 100% N/A N/A N/A 100% 90% 90% 21 August 2009 5/5 27 May 2010 27 May 2010 9/10 9/10 The profiles of the directors are set out on pages 26 to 33 of the Annual Report. the Board of PROTON Holdings Berhad (PHB) met ten (10) times details of which are as shown below: Name of Director Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir Dato’ Michael Lim Heen Peok Dato’ Zalekha Binti Hassan Mr.Statement on Corporate Governance PROTON 2010 Annual Report In the financial year ended 31 March 2010. Board meetings for the Company and its subsidiaries are scheduled in advance before the start of each calendar year and the meetings calendar is circulated to all Board Members at the beginning of each year. . Additional meetings or Special Board meetings are convened whenever necessary when there are urgent and important decisions to be made. This would enable the Directors to plan ahead and ensure attendance at Board Meetings.
governance and other regulatory requirements. POLICY ON APPOINTMENT OF DIRECTORS The Board Nomination & Remuneration Committee reviews all new appointments by taking into consideration the skill sets required by the Company and the Group. all the Non-Executive Directors are independent of management and free from any business or other relationships. The agenda for every meeting permits the Board members to review the contents of meetings and enable the Chairman to better and more efficiently conduct the proceedings at Board meetings. which could materially interfere with the exercise of independent judgment. Apart from the Managing Director. The Company has drawn up a list of transactions that would require the prior approval of the Board. New Directors are required to undergo familiarisation programmes. the Board may from time to time request for information pertaining to the Group’s business affairs to enable the Board to discharge its responsibilities effectively. board papers and minutes of previous meetings of the Board and Board Committees including minutes of board meetings of subsidiary companies are circulated in advance to the Board. The Board is. At the same time. four (4) Independent Non-Executive Directors and one (1) Executive Director (who is the Managing Director). SUPPLY OF INFORMATION The Board has full access to the Company Secretary who is available to provide the Directors with the appropriate advice and services and also to ensure that the relevant procedures are followed and rules and regulations are complied with. plant visits and briefings to get a better understanding of the PROTON Group. Senior Management as well as professional and external advisors are from time to time invited to attend Board meetings to deliberate and clarify issues on the subject matter concerned.Statement on Corporate Governance BOARD COMPOSITION AND BALANCE The Board currently consists of seven (7) members with the Chairman being a Non-Independent NonExecutive Director. The same is reflected in PROTON’s Group Policy and Procedures and Limits of Authority. from time to time. 143 25 STERLING YEARS INDEPENDENCE AND CONFLICT OF INTEREST The Directors are required to make written declarations and it is their responsibility to declare whether they have a potential or actual conflict of interest in any transaction. updated on changes in the law. Board Members are appointed through a formal and transparent selection process that is consistent with the Articles of Association of the Company and the Company’s Selection Policy for Directors. Where issues involve conflict of interest. the interested Directors shall abstain from discussing or voting on the matter. In general. PROTON 2010 Annual Report . one (1) Non-Independent Non-Executive Director. the agenda. before meetings. its operations and the automotive industry.
PROVIDED ALWAYS that all Directors shall retire from office once at least in each three (3) years but shall be eligible for re-election. namely the Board Audit Committee. the following Directors will retire and are eligible for re-election: (i) Pursuant to Article 104 • Dato’ Zalekha Binti Hassan (ii) Pursuant to Article 111 • Mr. the Board Nomination & Remuneration Committee also identifies. unless the Director is re-appointed by way of special resolution in accordance with Section 129 (6) of the Companies Act. In accordance with Article 104 of the Articles of Association of the Company and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. 1965. direct reports to the Managing Director. At the forthcoming Annual General Meeting of the Company.Statement on Corporate Governance PROTON 2010 Annual Report Apart from carrying out annual reviews on the mix of skills and experience of the Directors. None of the Directors of the Company are subject to retirement pursuant to Section 129 of the Companies Act. The responsibility of decisions on all matters ultimately lies with the Board as a whole. 1965 at the forthcoming Annual General Meeting. Board Risk Management Committee. Board Disciplinary Committee and Board Executive Committee. 144 25 STERLING YEARS RE-ELECTION OF DIRECTORS All Directors including the Executive Director are subject to retirement by rotation at least once in every three years and are eligible for re-election. . positions having significant impact to PROTON as well as Managing Directors of subsidiary companies. assesses and recommends all key positions within the PROTON Group including that of all members of the senior management committee. The abovementioned Board Committees were authorised to examine specific issues and report to the Board with their recommendations. Behara Venkata Rama Subbu • Tan Sri Rainer Althoff • Encik Abdul Rahim Bin Abdul Hamid BOARD COMMITTEES The Board had established five Board Committees. Board Nomination & Remuneration Committee. any new Director appointed to fill a casual vacancy or as an addition to the existing Directors shall only hold office until the next Annual General Meeting of the Company and shall then be eligible for re-election as stipulated under Article 111. the primary functions of which were to assist the Board in overseeing the affairs of the Group and these Committees had been entrusted with specific responsibilities and authority. Directors who are over seventy (70) years of age are required to submit themselves for retirement annually at the Annual General Meeting. at least 1/3 of the Directors shall retire from office at each Annual General Meeting. Further.
The composition of the BAC and their respective attendance record at meetings for the financial year ended 31 March 2010 are as follows: No 1 2 3 4 5 6 7 8 Name Of Director Dato’ Michael Lim Heen Peok Dato’ Zalekha Binti Hassan Tan Sri Rainer Athoff Encik Abdul Rahim Bin Abdul Hamid Tuan Haji Abdul Jabbar Bin Abdul Majid* Tuan Haji Abdul Kadir Bin Md Kassim Mr. following review of functions and for better efficiency. Tuan Haji Abdul Jabbar continued as a Member of the Board Audit Committee until his resignation as Director and Member of the Board Audit Committee of PROTON on 21 August 2009. PROTON has the following Board Committees: (i) Board Audit Committee (which apart from the functions stated herein. Oh Kim Sun* Mr. PROTON 2010 Annual Report . Behara Venkata Rama Subbu Designation Member Independent Non-Executive Director Member Non-Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Chairman Independent Non-Executive Director Member Independent Non-Executive Director Date of Appointment 29 November 2006 27 May 2010 20 July 2010 20 July 2010 10 March 2005 10 March 2005 13 May 2009 27 May 2010 Date of Resignation N/A N/A N/A N/A 21 August 2009 27 May 2010 27 May 2010 20 July 2010 Meeting Attendance 8/8 N/A N/A N/A 2/2 7/8 6/6 N/A Note (*): Tuan Haji Abdul Jabbar was the Chairman of the Board Audit Committee up to 13 May 2009. shall also assume the role of overseeing the overall management of all risks of the Group’s businesses). on 27 July 2010. wherein Mr.Statement on Corporate Governance However. 145 25 STERLING YEARS (A) BOARD AUDIT COMMITTEE The Board Audit Committee (“BAC”) met eight (8) times during the course of the financial year. the Board of PROTON has. clarity. resolved the rationalisation of these Board Committees and with effect from 1 August 2010. shall also oversee the disciplinary matters affecting senior officers of the Group. transparency and coordination. and (ii) Board Nomination and Remuneration Committee (which apart from the functions stated herein. complaints lodged through the Whistle Blower Policy and all matters relating to the Code of Conduct and Ethics). Oh Kim Sun took over the Chairmanship till 27 May 2010.
Compositions The Committee shall be appointed from amongst the Board and shall:(i) comprise of no fewer than three members. the BAC of PROTON Holdings Berhad undertook the following activities: (a) Assisted the Board in discharging its statutory duties and responsibilities relating to accounting and reporting practices of the Company and the Group in accordance with Generally Accepted Accounting Practices. No alternate director may be appointed as a member of the Board Audit Committee. (e) Reviewed major findings on internal audit reports and management response. (b) Reviewed the external audit terms of engagement.09 (1) of Bursa Malaysia Securities Berhad’s Main Market Listing Requirements. then he must be a person who complies with Para. the audit strategy. functions and resources. 146 25 STERLING YEARS (ii) all the members must be non-executive directors. (d) Reviewed the internal audit plan.Statement on Corporate Governance PROTON 2010 Annual Report During the financial year. the proposed audit fee and the achievement of the agreed upon reporting timeframes for the audit of the financial statements. The Salient Terms of Reference of the Board Audit Committee is set out below. 15. The Board will review the terms of office and the performance of the Board Audit Committee and its members at least once every three years. . and (iii at least one member must be a member of the Malaysian Institute of Accountants or if he is not. (c) Reviewed the external audit reports and discussed any problems and reservations arising thereon. methodology.
the internal audit programme. • any related party and conflict of interest situation that may arise within the listed issuer or group including any transaction. the adequacy of the scope. procedure or course of conduct that raises questions of management integrity. submit to the Board a Report on the summary of activities of the Board Audit Committee in the discharge of its functions and responsibilities in respect of each financial year. 147 25 STERLING YEARS • • (ii) significant and unusual events. (iii) compliance with accounting standards and other legal requirements. the audit plan. the results of the internal audit programme. PROTON 2010 Annual Report . with the External Auditors. the External Auditor’s evaluation of the system of internal controls. processes. • • (b) Consider the appointment of the external auditor. focusing particularly on:(i) changes in or implementation of major accounting policy. prior to the approval by the Board of Directors. promptly report to Bursa Malaysia Securities Berhad on any matter reported by it to the Board of the Company which has not been satisfactorily resolved resulting in a breach of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad. the External Auditor’s audit report. and the performance of the members of the internal audit function. and (iv) accuracy and adequacy of the disclosure of information essential to a fair and full presentation of the financial affairs of the Group.Statement on Corporate Governance Functions And Duties The functions and duties of the Board Audit Committee shall be to:(a) Review and report to the Board of Directors on the following:• • • • • with the External Auditors. functions and resources of the internal audit functions and that it has the necessary authority to carry out its work. the audit fee and any questions of resignation and dismissal. the assistance given by the Company’s employees to the External Auditors. the quarterly results and year-end financial statements. with the External Auditors. or investigation undertaken and whether or not appropriate action is taken by the management on the recommendations of the internal audit function.
• upon the request of any member of the Committee or the External Auditors. by the Chairman of the Committee. These meetings will usually be:• prior to the current year’s audit. The Group Internal Audit Division reviews internal controls related to all key activities of the Group and recommends improvements in controls and procedures. The findings of the Group Internal Audit Division are reported to the Board Audit Committee. The Group Internal Audit Division reports to the Board Audit Committee on matters concerning internal audit and assists the Board of Directors in monitoring and managing risks and internal controls. The Group Internal Audit Division is independent of the activities it audits and performs with impartiality and due professional care. including subsidiaries. • at least once a year.Statement on Corporate Governance PROTON 2010 Annual Report Meetings The Committee shall hold meetings on at least four occasions each year although additional meetings may be called as and when necessary. The Chairman may request that any Board members. the majority of members must be present throughout the meeting. the Committee shall meet with the External Auditors without any Executive Directors present. Internal Audit The Group uses the services of the Group Internal Audit Division to accomplish its internal audit requirements. 148 25 STERLING YEARS . • prior to the announcement of the quarterly results. • upon completion of the External Auditor’s interim examination. Minutes of each meeting shall be prepared and entered into the books provided for the purpose and sent to the Committee members and will be made available to all Board members. The scope of the internal audit covers the audits of all units and operations. Attendance In order to form a quorum in respect of a meeting of the Audit Committee. the Internal Auditors and / or representatives of the External Auditors be present at meetings of the Committee. The Minutes shall be signed by the Chairman of the Committee. The Board Audit Committee approves the internal audit plan of the Group Internal Audit Division each year. and members of the management. Secretary & Records The Company Secretary shall be the Secretary to the Committee and shall be present at all meetings to record minutes. the Chairman of the Committee shall convene a meeting of the Committee to consider the matters brought to its attention. • prior to the meeting of the full board to approve the financial statements.
before making recommendations to the Board. the Group Internal Audit Division serves to ensure internal control measures are adequate and effective in mitigating key risks and that they are monitored. The Composition of the NRC is as follows: Name of Director Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Encik Ahmad Tajuddin Bin Abdul Carrim Dato’ Michael Lim Heen Peok Designation Chairman Member Independent Member Independent Non-Executive Director Member Non-Independent Non-Executive director Member Independent Date of Appointment 1 January 2009 29 August 2005 13 November 2006 Date of Resignation N/A N/A N/A Meeting Attendance 4/4 4/4 4/4 149 25 STERLING YEARS Dato’ Zalekha Binti Hassan 1 August 2010 N/A N/A Encik Md Ali Bin Md Dewal 29 August 2005 27 May 2010 4/4 PROTON 2010 Annual Report . which includes subsidiaries and relevant associates and other investee companies. Appointments to the Committee shall be for a period of three (3) years. for recommendation to the Board. The monitoring process will form the basis for continually improving the risk management process in the context of the Group’s overall goals. The NRC met 4 times during the financial year. The NRC is made up entirely of Non-Executive Directors. The authority and scope of coverage of the NRC is over the PROTON Group. The Committee is empowered to conduct periodic reviews on the overall remuneration policy and package of the Executive and Non-Executive Directors and Senior Level Mission Critical Positions of the Group. with the majority consisting of Independent NonExecutive Directors. The NRC reviews appointments of new directors of the Group and the balance and effectiveness of the boards of directors. which may be extended provided that the majority of the Committee members remain independent.Statement on Corporate Governance During the year. (B) BOARD NOMINATION & REMUNERATION COMMITTEE The objectives of the Board Nomination & Remuneration Committee (“NRC”) are in accordance with the Terms of Reference as approved by the Board of Directors of PROTON on 26 July 2006. taking into account the required mix of skills and experience and other qualities.
the Board Risk Management Committee was disbanded and the functions were assumed by the Board Audit Committee) The Board Risk Management Committee (“BRMC”) assisted the Board to oversee the overall management of all risks faced by the Group’s business. The Group Risk Management Committee (“GRMC”) is entrusted with the responsibility for ensuring that an appropriate risk management framework exists within the Group and effectively implemented to manage the key risks of the organisation on an on-going basis.Statement on Corporate Governance PROTON 2010 Annual Report (C) BOARD RISK MANAGEMENT COMMITTEE (With effect from 1 August 2010. Further details of the activities of the Board Risk Management Committee are spelt out in the Statement of Internal Control. regular updating of the Group’s risk profiles and improving the implementation of methodology for risk management. The GRMC. is responsible for overseeing risk management implementation. . The BRMC was made up entirely of Non-Executive Directors and third party members (not being directors of the Company) who were appointed by the Board from time to time as follows: Name Datuk Tan Kim Leong Dato’ Zainuddin Bin Che Din Tuan Haji Abdul Kadir Bin Md Kassim Designation Member Independent Member Independent Chairman Independent Non-Executive Director Date of Appointment 29 August 2005 1 October 2008 Date of Resignation N/A N/A Meeting Attendance 3/4 4/4 4/4 150 25 STERLING YEARS 29 September 2005 27 May 2010 The composition of the BRMC was reviewed annually by the Board of Directors based on the recommendation of the NRC. The GRMC deliberates and determines the Group’s major risks to be escalated now to the attention of the BAC. which comprises of Senior Management.
Subject to the resolutions of the Board of Directors of PROTON that was passed from time to time. the PROTON Board Executive Committee was disbanded) The objective of the Board Executive Committee (“Board EXCO”) was to assist Management in addressing issues relating to implementation and monitoring of several key projects. The BDC had the power to initiate investigations. the provisions contained in the Terms Of Reference and the Memorandum and Articles of Association of the Company.Statement on Corporate Governance (D) BOARD DISCIPLINARY COMMITTEE (“BDC”) (With effect from 1 August 2010. such as the Board Nomination & Remuneration Committee. Annual Management Plan. The BDC comprised members all of whom are Non-Executive Directors as follows: Name Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Tuan Haji Yusof Bin Ahmad Encik Ahmad Tajuddin Bin Abdul Carrim Tuan Haji Abdul Jabbar Bin Abdul Majid Tuan Haji Abdul Kadir Bin Md Kassim Designation Chairman/ Non-Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Member Independent Non-Executive Director Date of Appointment 1 January 2009 Date of Resignation N/A Meeting Attendance N/A 151 25 STERLING YEARS 21 February 2008 1 March 2010 7 May 2006 7 May 2006 N/A N/A 2/2 N/A 21 August 2009 2/2 27 May 2010 2/2 (E) PROTON BOARD EXECUTIVE COMMITTEE (With effect from 1 August 2010. The BDC was a platform for the PROTON Group that primarily dealt with disciplinary issues. the Board Disciplinary Committee was disbanded and the roles and functions were assumed by the Board Nomination & Remuneration Committee). authorities and discretions vested in the Board of Directors with regard to the affairs and business of the Company. consider and take appropriate action on any case referred to it by any party either received orally or in writing. PROTON 2010 Annual Report . PROTON Business Turnaround Plan and also to address issues relating to identifying suitable candidates to fill in several key positions for PROTON. The BDC was part of the structural mechanism for the handling of cases that arose from the introduction of the Whistleblower Policy and Asset Declaration Policy. including but not limited to PROTON Strategic Business Plan. It is to be noted that the functions of the Board EXCO did not at any time overlap that of other Board Committees. the Board EXCO exercised powers.
The goal of this engagement is to deliver continuous learning to PROTON through interactive sessions supported by market analysis. The automotive consultant has during the course of the year conducted workshops and luncheon training programmes for both the Directors and Management of PROTON Group. FRS 139 (Financial Instruments: Recognition and Measurement).Finance and Corporate Affairs 152 25 STERLING YEARS 17 April 2007 17 April 2007 22 July 2009 16 June 2008 N/A N/A N/A 1/1 1/1 0/0 31 August 2009 1/1 DIRECTORS’ TRAINING All Directors have successfully completed the Mandatory Accreditation Programme (“MAP”) conducted by Bursatra Sdn. Vimala Menon Designation Chairman/ Non-Independent Non-Executive Director Managing Director Independent Non-Executive Director Chief Financial Officer Director . Notwithstanding that Bursa Malaysia Securities Berhad’s Continuing Education Programme was repealed with effect from 1 January 2005. the Company. including briefings on new international financial reporting standards. in particular. Bhd. which were attended by both the members of the Board and Senior Management. economic and policy impact analysis from across the region. . regional and global markets updates (and its impact to PROTON). and as imposed by Bursa Malaysia Securities Berhad. technology trends. PROTON has engaged the services of a global growth consulting company to share global and regional automotive knowledge with the Board Members and Management through various types of workshops. generally. and the Directors specifically continue to identify and attend appropriate seminars and courses to keep abreast of changes in legislation and regulations affecting the Group.Statement on Corporate Governance PROTON 2010 Annual Report PROTON’s Board EXCO comprised two (2) representatives from amongst the PHB Board Members and two (2) Senior Management representatives as follows: Date of Appointment 1 January 2009 Date of Resignation N/A Meeting Attendance 1/1 Name of Director Dato’ Sri Mohd Nadzmi Bin Mohd Salleh Dato’ Haji Syed Zainal Abidin B Syed Mohamed Tahir Dato’ Michael Lim Heen Peok Encik Azhar Bin Othman Ms. Full day knowledge sharing workshops and half day sessions on the global automotive outlook for 2009 and 2010 were also conducted in the course of the year. The Company has arranged various in house training programmes and luncheon talks on topics relevant to the Group. best practices.
This is necessary in order to attract and retain professionals with the qualities needed to manage the Group successfully. The Board as a whole determines the remuneration of the Non-Executive Directors. In the case of the Executive Director.000 RM550.423 1. including provision of a fully maintained company car.844 Fees and Allowances (RM) 1.001 – RM550.423 Number of Directors Executive 1 1 Non-Executive 1 3 1 1 1 7 Benefits in Kind (RM) 127.607 109.000 TOTAL Total 1 3 1 1 1 1 8 PROTON 2010 Annual Report . which is competitive and consistent with the corporate objectives.451 1.844 1.064 236.671 Total (RM) 1.000 RM500.389. Executive Directors as well as for Senior Management.800.001 – RM1.001 – RM600. petrol card and full coverage under the Directors and Officers Insurance Scheme.750.001 – RM100. Directors do not participate in any discussions or decisions concerning each individual’s remuneration. The level of remuneration of the Non-Executive Directors reflects the experience and level of responsibilities undertaken by the Director concerned.000 RM50.389.Statement on Corporate Governance DIRECTORS’ REMUNERATION The NRC is responsible for reviewing the performance of the Executive Directors and recommending to the Board the remuneration package and reward structure.000 RM1. The Non-Executive Directors are paid annual fees and attendance allowances (in accordance with the number of meetings attended). the remuneration is structured to link rewards to corporate and individual performance through key performance indicators comprising fixed and performance-based rewards.001 – RM50. the Non-Executive Directors are also provided with Benefits-In-Kind.631. Non–Executive Directors fees are paid upon shareholders approval at each Annual General Meeting.001 – RM250.938 153 25 STERLING YEARS Range of Total Remuneration RM1. Details of the total remuneration of the Directors of PROTON Holdings Berhad for the financial year ended 31 March 2010 are as follows: Director Executive Directors Non-Executive Directors TOTAL Basic Salaries/Bonus and Others Employee Benefits (RM) 1.000 RM200.759. The NRC carries out reviews when appropriate and refers to remuneration surveys and consultants to assist in determining the appropriate level of reward. In addition.631.257.498.487 3.
The Board Audit Committee assists the Board to oversee the financial reporting processes and the quality of its financial reporting. To enhance quality of the Group’s financial reporting. clear and meaningful assessment of the financial performance and prospects of the Group to shareholders. to ensure that financial statements prepared for each financial year have been made out in accordance with the applicable approved accounting standards and give a true and fair view of the state of affairs of the Company and the Group at the end of the financial year and of the results and cash flow of the Company and the Group for the financial year. • made judgments and estimates that are reasonable and prudent. . the investor community and the regulatory authorities. Quarterly financial results and annual financial statements are reviewed by the Board Audit Committee to ensure adequacy and completeness of information prior to the Board’s approval. 1965. having made enquiries that the Group has adequate resources to continue in operations for the foreseeable future. the external auditors conduct quarterly reviews of the Group’s quarterly results in addition to the year-end audit 154 25 STERLING YEARS DIRECTORS RESPONSIBILITY STATEMENT The Board is required by the Companies Act. 1965. Shareholders and other stakeholders are kept abreast of the Group’s performance through the timely announcement of the quarterly financial results and accompanying press releases. and • prepared financial statements on the going concern basis as the Directors have a reasonable expectation. the financial position of the Company and the Group and that the financial statements comply with the Companies Act. In preparing the financial statements the Board has:• selected suitable accounting policies and applied them consistently. The Board is responsible for ensuring that the Company and the Group keeps accounting records which disclose with reasonable accuracy. • ensured that all applicable accounting standards have been followed.Statement on Corporate Governance PROTON 2010 Annual Report FINANCIAL REPORTING The Board is committed to providing a balanced.
155 25 STERLING YEARS PROTON 2010 Annual Report . the Chairman briefs the shareholders on the Group’s operations for the financial year. The size and complexity of the operations may give rise to risks of unanticipated or unavoidable losses. The issue of the Annual Report is an important medium of information for the shareholders and investors whereas the Annual General Meeting of the Company is the main forum for communication and dialogue with the shareholders. Senior management and the external auditors are always present to respond to questions and queries to ensure a high level of accountability and transparency of the business goals. during the general meeting. strategy and operations. Shareholders are also given the opportunity and time to raise questions on the future growth prospects and strategies of the PROTON Group. operational and compliance controls. The system of internal controls is designed to provide reasonable but not absolute assurance against the risk of material errors. The Board Audit Committee reviews the effectiveness of the system of internal controls. which covers financial. Relationship with Auditors The Board Audit Committee maintains an appropriate transparent relationship with both the Group external auditors and internal auditors. and also risk management. Different channels of communication are optimised to provide shareholders and investors with a balanced and complete view of the Group’s performance and the issues faced by its businesses in the competitive environment amidst a changing landscape. The Board Audit Committee meets with the external auditors at least once a year without the presence of the Executive Director and Management. frauds or losses occurring. The external auditors are invited to attend Board Audit Committee meetings and present their audit findings when the Company’s quarter and annual financial results are considered. Dialogue Between The Company And Shareholders / Investors The Board recognises the importance of transparency and accountability to its shareholders and investors. Shareholders are encouraged to actively participate and interact with the Board and members of the senior management pertaining to the items on the agenda.Statement on Corporate Governance Internal Controls The Board acknowledges its overall responsibility for maintaining a system of internal controls that provides assurance of effective and efficient operations and compliance with laws and regulations and also its internal procedures and guidelines. In addition.
It is PROTON’s policy and Management’s responsibility to apply these rules fairly and equitably to all employees. Besides the Annual Report. suspension without pay and separation from the Company / Group. accurate. . future growth prospects and strategy. the Board ensures timely announcements are made to Bursa Malaysia Securities Berhad and disseminates clear. There is a company website www.proton.Statement on Corporate Governance PROTON 2010 Annual Report The Board strives to maintain open and effective dialogue with shareholders and regular meetings are held with institutional shareholders throughout the year to discuss the progress of the group. and sufficient information to enable the shareholders and investors to make informed decisions. Infringement of these rules may lead to disciplinary action such as verbal or written warnings. Such code may be modified. The Investor Relations Unit also proactively disseminates appropriate and relevant information to the investor community and attends to whatever queries they may have.com which provides information on the Company for all shareholders and the general public. loyalty. The Directors and employees of PROTON Group are expected to obey all laws in conducting business and to always act with honesty. 156 25 STERLING YEARS CODE OF CONDUCT AND DISCIPLINE The PROTON Group has put in place the Code of Conduct and Discipline. press releases and interim and annual reports. In the course of the year the Board and Management have engaged in dialogue sessions with the Major Shareholders of PROTON and the representatives from the Malaysian Institute of Corporate Governance and Minority Shareholder Watchdog Group. substituted for or otherwise amended from time to time as the Board deems fit. added to. Code of Ethics The PROTON Group has established specific rules and regulations to govern the conduct of its employees. seminars. which every employee is required to adhere to. Other channels of communication include company presentations. trustworthiness. fairness and responsibility. An employee is also required to comply with the penal code of the country. integrity.
controlling and monitoring business operations in order to achieve Group objectives. In this manner. The policy gives directors and employees guidance in identifying business situations which have the potential to create legal and ethical problems and to provide directions in handling those potential and actual situations. the employees can help the PROTON Group to monitor and keep track of such illegal. The policy encourages employees or representatives of PROTON to disclose genuine concerns about illegal. The Group has an appropriate organisation structure for planning. financial distress and loss of investor confidence. Whistleblower Policy PROTON had on 27 July 2006 implemented a Whistleblower Policy. 157 25 STERLING YEARS BUSINESS CONDUCT The Group is committed to the highest standards of business conduct and seeks to maintain these standards across all of its operations throughout the world. The respective codes are made available to the Directors and employees. such as loss of Company image or reputation. which otherwise.Statement on Corporate Governance Purpose of Policy This purpose of this policy is to provide a framework for the proper conduct of directors and employees while on the job. executing. Lines of responsibility and delegations of authority are documented. may not be easily detected through normal process or transaction. unethical or improper business conduct within the Group. The Group has in place group finance policies and employee procedures. PROTON 2010 Annual Report . The objective of the policy is to provide a mechanism for preventive and corrective action within the Group without the negative effects that come with public disclosure. unethical or improper business conduct within.
impairment of plant and machinery (RM6.3 million.5 million).0 million). Directors or Management by relevant regulatory bodies during the financial year.0 million and other favourable adjustments amounting to RM1.45%) between the Audited and Unaudited Profit After Tax for the said financial year and this was due to. development cost written off (RM4.9 million for the financial year ended 31 March 2010.0 million). . However. additional provision for bonus (RM15. OPTIONS.1 million.Additional Compliance Information PROTON 2010 Annual Report Additional Compliance Information in accordance with Appendix 9C of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad: UTILISATION OF PROCEEDS RAISED FROM CORPORATE PROPOSALS There were no proceeds raised from corporate proposals during the financial year. IMPOSITION OF SANCTIONS/PENALTIES There were no public sanctions and/or penalties imposed on the Company and its subsidiaries. adjustment for tax credit of RM4. This represented a variation (of RM20. the Unaudited Financial Statement of PROTON for the same period (as announced to Bursa Malaysia Securities Berhad on 26 May 2010). VARIATION IN RESULTS PROTON recorded an Audited Profit After Tax of RM218.2 million or 8. recorded and Unaudited Profit After Tax of RM239. 158 25 STERLING YEARS SHARE BUY-BACK There was no proposal by the Company to carry out a share buy-back during the financial year. AMERICAN DEPOSITORY RECEIPT (“ADR”) OR GLOBAL DEPOSITORY RECEIPT (“GDR”) PROGRAMME The Company did not sponsor any ADR or GDR Programme during the financial year. The variation was announced to Bursa Malaysia Securities Berhad on 30 July 2010 together with the Audited Financial Statement of PROTON for the financial year ended 31 March 2010. WARRANTS OR CONVERTIBLE SECURITIES The Company did not issue any warrants or convertible securities during the financial year.
either still subsisting at the end of the financial year ended 31 March 2010 or entered into since the end of the previous financial year. the amount of non-audit fees paid and payable to the external auditors by the Group are as follows: 2010 External Auditors PricewaterhouseCoopers Malaysia Member firm of PricewaterhouseCoopers International Limited (a separate and independent legal entity from PricewaterhouseCoopers Malaysia) Total RM’000 232 592 2009 RM’000 902 959 824 1. NON AUDIT FEES During the financial year.Additional Compliance Information PROFIT GUARANTEE There was no profit guarantee for the financial year. MATERIAL CONTRACTS There was no material contract entered into by the PROTON Group involving the interest of Directors and major shareholders.861 PROTON 2010 Annual Report . plant and equipment are disclosed in Note 3(c) of the Summary of Significant Accounting Policies. 159 25 STERLING YEARS REVALUATION POLICY ON LANDED PROPERTIES The significant accounting policies on property.
Bursa had on 14 December 2006 amended the Listing Requirements pertaining to related party transactions whereby the threshold for a major shareholder was increased from 5% to 10% of the aggregate nominal amount of voting shares in a company. PROVIDED that the said shareholder is not the largest shareholder of the company. is/are not a party to any transaction. 160 25 STERLING YEARS . PROTON obtained exemption from Bursa Malaysia Securities Berhad (“Bursa”) from disclosing Recurrent Related Party Transactions with Khazanah Nasional Berhad’s investee companies.851% equity interest in PROTON. does not have any representative in an executive capacity on the Board of Directors of PROTON or any of the subsidiaries. and c. As a result. Further. is/are not the largest shareholder of the Company b. initiator. The Employees Provident Fund Board (“EPF”) which currently holds approximately 10. PROTON is not required to seek shareholders mandate for such transactions at the forthcoming Annual General Meeting of the Company.Additional Compliance Information PROTON 2010 Annual Report RECURRENT RELATED PARTY TRANSACTIONS On 8 June 2007. agent or involved in any manner in any transaction with the PROTON Group. The other major shareholder. Petroliam Nasional Berhad holds 7.720% of the issued and paid up capital of PROTON is not deemed a related party by virtue of the fact that EPF and/or person(s) connected with the EPF: a.
Bhd.122 164.376 451. Proton Parts Centre Sdn. Bhd.187.165.540.426.677.700 20. Bhd.978 122.343 1.363.144. Proton Cars (UK) Limited Proton Cars Australia Pty.894. EON EON Johnson Controls Auto Holding Johnson Controls Auto Seating Johnson Controls Auto Interior PPCSB PPCSB PPCSB PPCSB PPCSB PPCSB PPCSB PPCSB Hicom Teck See Hicom Teck See Tenaga Nasional Berhad Oriental Summit Industries Oriental Summit Industries PHN Industry Sdn.634 1.Additional Compliance Information Below is a list of Recurrent Related Party Transactions entered during the financial year ended 31 March 2010.662 Transacting Related Party 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Lub Dagangan Sdn. Limited PT Proton Edar Indonesia PROTON 2010 Annual Report .445 3.571.936 1.158 931.000 88.800 62.872 91.661 2.768.870 3. Bhd.289.314. Proton Edar Sdn.429 152.114 35.396 2. Bhd.744.085 1.022 2.273 20.157.261 208.167.428.260. Nature of Transaction Purchase of lubricants Purchase of lubricants Purchase of lubricants Sale of goods Sale of goods Purchase of goods Purchase of goods Purchase of goods Purchase of goods Sale of goods Purchase of parts Sale of goods Purchase of parts Purchase of parts Purchase of parts Purchase of parts Purchase of parts Purchase of parts Sale of goods Purchase of parts Purchase of parts Purchase of goods 161 25 STERLING YEARS Definition: PONSB PESB PPCSB PCUKL PCA PSPL PEI Perusahaan Otomobil Nasional Sdn.432. Limited Proton Singapore Pte. Petronas Dagangan Sdn.975. Bhd. Company within the PROTON Group PONSB PONSB PESB PESB PPCSB PPCSB PONSB PONSB PONSB PONSB PESB PCUKL PCUKL PCA PSPL PEI PONSB PPCSB PESB PONSB PPCSB PONSB Actual 01/04/09 -31/03/10 RM 5. Petronas Dagangan Sdn. Bhd.
BOARD RESPONSIBILITY The Board of Directors (“The Board”) recognises the importance of sound internal controls and risk management practices to good corporate governance. can only provide reasonable but not absolute assurance against any material misstatement or loss occurrence. is set out below. The Group’s system of internal controls is designed to manage the principal business risks that may impede the Group from achieving its business objectives. which has been prepared in accordance with the Guidance. DIRECTORS OF LISTED COMPANIES ARE REQUIRED TO MAKE DISCLOSURES IN THEIR ANNUAL REPORTS ON THE STATE OF INTERNAL CONTROL IN ACCORDANCE WITH THE LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD (“BURSA MALAYSIA”). The system. The Board’s Internal Control Statement.Statement on Internal Control PROTON 2010 Annual Report 162 25 STERLING YEARS THE MALAYSIAN CODE ON CORPORATE GOVERNANCE REQUIRES LISTED COMPANIES TO MAINTAIN A SOUND SYSTEM OF INTERNAL CONTROL TO SAFEGUARD SHAREHOLDERS’ INVESTMENTS AND THE GROUP’S ASSETS. assess. A formal risk management framework and policy was approved by the Board for the Group to identify. report and monitor. treat. The effectiveness of the risk mitigation actions are reviewed quarterly by the Group Risk Management Committee (GRMC) and Board Risk Management Committee (BRMC) respectively. key risks faced by the Group. . RISK MANAGEMENT Risk management is regarded by the Board to be an integral part of the Group’s operations with the objective of maintaining a sound internal control system and ensuring its continuing adequacy and integrity. The Group Risk Management Division (GRMD) is entrusted with the responsibility of ensuring that an appropriate risk management framework exists within the Group and is effectively implemented to manage the key risks of the organisation on an on-going basis. Bursa Malaysia’s Statement on Internal Control: Guidance for Directors of Public Listed Companies (“Guidance”) provides guidance for compliance with these requirements. by its nature. as well as reviewing its adequacy and integrity. The Board has an overall responsibility for the Group’s system of internal controls and its effectiveness.
evaluating and managing significant risks faced by the Group. These processes include updating the system of internal controls when there are changes to the business environment or regulatory guidelines. the Board and Management have established other processes for identifying. They continue to strive in enhancing and implementing the internal control system to manage those risks that could affect the Group’s growth and financial viability. The responsibilities and authority of the Committees are governed by specific terms of reference and these Committees are accountable to the Board. regular updating of the Group’s risk profiles and improving the implementation methodology for risk management. The key elements of the Group’s control environment include: Board Committees Board Committees were established by the Board to assist the Board in the execution of its responsibilities to provide oversight on the effectiveness of the Group’s operations.Statement on Internal Control The GRMC. which comprises of Senior Management. is responsible for overseeing risk management implementation. The BRMC was established to deliberate major risks highlighted by the management and assist the Board in reviewing the Group’s risk policies and strategies. the GRMC and BRMC have held quarterly meetings in accordance with their respective terms of reference. For the financial year ended 31 March 2010. The Committee deliberates and determines the Group’s major risks to be escalated to the attention of the BRMC. PROTON 2010 Annual Report . 163 25 STERLING YEARS ASSURANCE MECHANISM Apart from risk management activities. The • • • • • Board Committees are: Board Audit Committee Board Nomination and Remuneration Committee Board Risk Management Committee (“BRMC”) Board Disciplinary Committee (“BDC”) Board Executive Committee (“EXCO”) The details of the abovementioned Board Committees are set out and explained in the Statement on Corporate Governance.
Group Internal Audit Division (GIAD) GIAD continues to independently monitor compliance with internal policies and procedures. is in place to assist in implementing the Group’s strategies and day-to-day business activities. Internal controls of associated companies and jointly controlled entities are reviewed upon any ad-hoc request by the BAC. GIAD regularly reviews the approved annual audit plan to ensure significant risk areas are given adequate audit focus. accountability and levels of authority. audit report. Further information relating to the activities of GIAD is set out in the Statement on Corporate Governance. the BAC was updated on the developments of Malaysian Financial Reporting Standards. effectiveness of the internal control systems and highlights significant findings for corrective actions by line management and reports directly to the BAC.Statement on Internal Control PROTON 2010 Annual Report Board Audit Committee The Board has delegated the duty of reviewing and monitoring the effectiveness of the Group’s system of internal controls to the Board Audit Committee (BAC). The BAC assumes the overall duties of reviewing with the external auditors their audit plan. as well as their findings and recommendations on internal controls highlighted annually in the Internal Control Memorandum. Throughout the financial year. Organisation Structure and Management Committees An organisation structure. It also reviews the effectiveness of the internal audit function with particular emphasis on the scope and quality of audits. which is aligned to the business and operational requirements and led by Heads of Division with clearly defined lines of responsibility. A quarterly work status update is given by the GIAD to the BAC. The interests of PROTON in associated companies and jointly controlled entities are primarily served through representation on the board of directors of the respective companies. is reviewed and approved by the BAC annually. GIAD updates the BAC on the status of corrective actions taken by line management arising from the audit findings highlighted by both GIAD and the external auditors. On a quarterly basis. 164 25 STERLING YEARS . as well as legal and regulatory requirements. resources as well as the independence of the Group Internal Audit Division (GIAD). The BAC continues to meet regularly and has full and unimpeded access to the internal and external auditors and all employees of the Group. The annual audit plan which covers PROTON and its subsidiary companies and which was established primarily on a risk-based approach. Various functional committees were set up at the management level to ensure the Group’s actions and operations are properly aligned towards achieving the organisation’s goals and objectives. Further information relating to the activities of the BAC is set out in the Statement on Corporate Governance.
and Improvement to the formal employee appraisal system for effective coaching and evaluation of employee performance using established Key Performance Indicators (KPIs). discuss and resolve operational. Management Committee meetings are held on a regular basis to identify. Documented internal policies and procedures as set out in the Group Policies and Procedures. and Proton Casting Plant have been officially certified and successfully upgraded to ISO 9001:2008 from ISO 9001:2000 by Vehicle Certification Agency (VCA) and SIRIM on the Quality System Procedures for PROTON. A comprehensive budgeting process where the annual budgets are approved by the Board. consideration and approval. Regular visits to operating units by Senior Management. Continuous training efforts to enhance the leadership quality and competency of the workforce. Nevertheless. the Board is satisfied that there were no material losses as a result of weaknesses in the system of internal controls. a wholly owned subsidiary. • 165 25 STERLING YEARS • • • • • • • • • CONCLUSION For the financial year under review.Statement on Internal Control OTHER KEY ELEMENTS OF INTERNAL CONTROL The other key elements of the Group’s internal control systems are described below:• Defined delegation of responsibilities to committees and management of head office and operating units. some weaknesses in internal control were detected. The Board receives and reviews monthly reports from Management on key strategic and operational issues and provides direction to Management. Regular employee perception surveys were conducted to obtain feedback from employees to promote continuous improvements. which subsequently presents them to the Board for their review. which are clearly set out in the revised Limits of Authority approved by the Board on 29th May 2009. Quarterly financial statements and the Group’s performance are deliberated by the BAC. including authorisation levels for various aspects of the business.. PROTON 2010 Annual Report . However. after due and careful inquiry and based on the information and assurance provided. Bhd. financial and key management issues. Various improvement programs were established in PROTON and its subsidiaries to enhance its business operations. Perusahaan Otomobil Nasional Sdn. The resolution rate of internal audit findings is also included in the Division KPIs to ensure gaps in the internal controls system are effectively and timely addressed. identified areas of concern are accorded closer attention and more regular monitoring to ensure key internal controls are adequate and effective to continually safeguard shareholders’ investment and the Group’s assets.
RISK MANAGEMENT FRAMEWORK Proton’s risk management framework is designed to provide the foundation for organisational arrangements. . formulated in 2003 has been continuously enhanced in line with the ISO31000:2009 as the latest international risk management standard of reference. OVERVIEW The Group recognizes the importance of an effective risk management system throughout the organisation to provide reasonable assurance to the shareholders that the risks the Group is exposed to.Risk Management PROTON 2010 Annual Report 166 25 STERLING YEARS THE INCREASING DYNAMICS AND CHALLENGES IN THE BUSINESS ENVIRONMENT CALLS FOR A PROACTIVE RISK MANAGEMENT OPERATION. implementation. THE YEAR UNDER REVIEW SAW A MORE STRUCTURED AND HOLISTIC APPROACH TO THE ENTERPRISE RISK MANAGEMENT OPERATION TO ENSURE THE GROUP REMAINS COMPETITIVE IN THE GLOBAL AUTOMOTIVE MARKET. Proton Risk Management Framework. and monitoring. reviewing and managing key risks throughout the organisation. As part of the Group’s improvement program. controlled and capitalised. are properly managed.
Sets the company risk parameters Overall corporate risks are measured & thresholds are controlled within predetermined limits. Understands and manages major risk exposures Provide sufficient internal controls. remains essential in integrating risk management into key activities and business processes of the Group.Risk Management Risk Policy and Strategy The Group Risk Management policy revised in 2007. As recommended in Khazanah’s Green Book. This is essential for the Group to respond effectively to the fast changing business environment as well as to protect and enhance stakeholders’ interest. 167 25 STERLING YEARS Communication & Cascading Strategy Reporting Platform Group risk monitoring platform (BRMC) SUPPORT SERVICES Strategy Finance Human Resource ICT Compliance Group Functional risk monitoring platform (Risk Champions) Divisional risk monitoring platform (GRMC) Group Risk Management Division PROTON GROUP RISK (CRP/ORP) ENGINEERING & MANUFACTURING Product Planning Engineering Procurement Quality Manufacturing MARKETING & SALES Communication Marketing Export Domestic Parts PROTON 2010 Annual Report . Considers the risk factors in all major decisions Culture of identifying & managing risks exists throughout the organisation. clear accountabilities and mitigation plans. factors on risk management were continuously incorporated to that of PROTON’s ERM strategy.
the Group has developed Proton Risk Management Communication Platform to cascade down the risk management strategy into various key divisions. Group Marketing and Sales. Group Information. 168 25 STERLING YEARS MAJOR INITIATIVES Business Planning Risk Assessments Group wide risk registrations were conducted in conjunction with the business planning initiatives and escalated to GRMC and BRMC respectively. Communication and Technology (ICT). monitored through Board Risk Management Committee (BRMC). . Group Engineering and Operations and also the Board and Senior Management. This includes Group Risk Monitoring platform. Safety and Health (EHS) Department was established particularly to review and advise the Group in managing the emerging risks and related business exposures. Environment. tools and appropriate training for Managers to ensure the risk management practices is effectively integrated into business initiatives. Group Support Services.e. HINI pandemic and travel to high risk countries. Operational Risk Profiles (ORP) and Business Units Risk Profiles (BURP). Group Security. monitored through Group Risk Management Committee (GRMC) and Functional Risk Monitoring platform monitored by Business Units Risk Team/Risk Champion.Risk Management PROTON 2010 Annual Report In ensuring that the Strategic and Operational Risks were effectively communicated and monitored at all levels. policies. Group Risk Management Division (GRMD) provides specialized resources for developing risk framework. specifically i. Risk Management Brainstorming and Profiling Sessions A series of risk awareness and profiling workshops were conducted throughout the year involving Export Market Division. The objective of these sessions was to obtain risks views across the business value chain and inculcate a more positive approach to risk management practices. including subsidiaries have submitted their risk profiles during this exercise. methodologies. The risks collated were then prioritized and categorized into Corporate Risk Profiles (CRP). The taskforce comprising. Group Human Resources Division. Global Emerging Risk Assessments Several risk assessments pertaining to global issues were conducted during the year in review. Divisional Risk Monitoring platform. All divisions within the Group.
the risk management function will continue to move forward in enhancing the appreciation of risk management and strive for a stronger and more resilient risk management culture within the Group. This was performed via product development. The Board is responsible in ensuring that the corporate risks of the Group are identified proactively. Updates on mitigation plan were reported to the GRMC and BRMC respectively on a quarterly basis. vendor capacity and capability in achieving business objectives. Business Environment Risk Business environment risk is inherent in all businesses. Various risk assessments were performed in the year in review specifically for our operations in China. The strengthening global call for reduction in greenhouse gas emissions is now widely acknowledged in both developed and developing nations and is a catalyst for the “Green Vehicle” concept to be promoted. As the Group progresses towards operational excellence. 169 25 STERLING YEARS CONCLUSION Providing assurance that risks are effectively managed requires commitment and discipline from all divisions. Operational risk is defined as the risk of loss resulting from inadequacy or failure of internal processes. With the support of the BRMC. Middle East and Asean. Enhancement on ERM framework and competency will remain the top priority of the Group to cultivate a more proactive risk management operation. quality improvement and process improvement programs. the Group has deliberated the challenges and opportunities in the green technology and ways to catapult this idea into a feasible end state. Appropriate measures were undertaken to ensure that controls are in place to avoid any disruption of operations. it is imperative that efforts are taken to ensure that a risk faced by the organisation is effectively managed. Managing key risks and identifying emerging risks especially in export markets will also be the Group’s focus to catapult the Company into being a major international player. infringement of Intellectual Property Rights (IPR) and stiff market competition which may impact the Group’s ultimate objectives. As the Group’s future lies in expanding into the export markets. This exposed the Group to risks such as changes in market regulation. In view of this challenge.Risk Management RISK FACTORS Corporate and Operational Risks Corporate risks are primarily risks caused by external events that have potential impact on the strategic decision or activities of the Group. Export Market Risks Proton conducts its businesses across regions. people and system. PROTON 2010 Annual Report . Concerted efforts on all fronts are crucial to maintain the commitment of all divisions towards embedding risk management practices as an integral part of the day-to-day decision making process in the organisation. the Group faces a multitude risks relating to financial risks.
Mahathir Mohamad joins PROTON’s Buka Puasa function with staff and orphans at PROTON’s main plant in Shah Alam. Perak and Selangor. 5 . SEP 09 3 PROTON Adviser Tun Dr. DYMM Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin visits Lotus headquarters in Norwich. UK. PROTON holds its 2009 AGM at the PROTON Centre of Excellence. Selangor. Kelantan. 2 OCT 09 4 Miss Australia unveils the Proton S16 (Saga) at the Australian National Dealers Conference held in Kuala Lumpur.170 25 STERLING YEARS 1 2 PROTON 2010 Annual Report CALENDAR OF EVENTS 3 4 5 AUG 09 1 Flag off for the PROTON Merdeka Convoy to various charity homes in Pulau Pinang.
PROTON’s entry in the Rally of China. Nikolay Davydenko in action during the inaugural PROTON Malaysian Open Kuala Lumpur 2009 (Tennis Tournament). PROTON Chairman. Deputy Minister of Works YB Dato’ Yong Khoon Seng launches the 18th Malaysian Skills Competition co-organised by PROTON. Minister of Youth and Sports visits Lotus UK.Calendar of Events 171 25 STERLING YEARS 6 7 8 9 10 11 OCT 09 6 DYMM Yang di-Pertuan Agong Tuanku Mizan Zainal Abidin unveils the new Proton Higher Performance Engine at Lotus UK. NOV 09 10 11 YB Dato’ Ahmad Shabery Cheek. 7 8 9 PROTON 2010 Annual Report . Dato’ Sri Mohd Nadzmi handing out “Duit Raya” during the Hari Raya Aidilfitri gathering with business associates and children from local orphanages.
PROTON signs MOU with the Manpower Department of the Ministry of Human Resources.Calendar of Events 172 25 STERLING YEARS 12 13 PROTON 2010 Annual Report 14 15 16 NOV 09 12 PROTON goes a step further in soccer by launching the PROTON FC Soccer Kids programme. DEC 09 15 Proton Exora named as the Midi MPV of the Year 2009 by the New Straits Times/ Maybank Car of the Year Awards 2009. Announcement of Official Proton Car Clubs as brand ambassadors at the inaugural PROTON and Car Clubs Collaboration Briefing. 13 16 14 . Proton Exora wins the 2009 Car of The Year Award for Small/Medium MPV at the Autocar Asean Awards 2009. pledging support to develop an Automotive Skills Programme.
A friendly shooting competition with the Selangor contingent of the Royal Malaysian Police. Jobseekers throng PROTON’s Career Day which was held at the Shah Alam office. PROTON continues its support for national badminton by sponsoring the PROTON Malaysia Open 2010. 21 18 22 19 PROTON 2010 Annual Report . Deputy Minister of Human Resources visits Taska PROTON (a day care centre for children of PROTON staff). 20 YB Dato’ Maznah Mazlan. Mahathir Mohamad with the winners of the PROTON Invention and Innovation competition during the 2010 PROTON Family Day. The 2010 Family Day held at the Shah Alam plant saw the presence of more than 10.Calendar of Events 173 25 STERLING YEARS 17 18 19 20 21 22 JAN 10 17 Tun Dr.000 staff including family members from PROTON’s central region.
Norwich. 26 PROTON Adviser. Mahathir Mohamad receives a full business and technology briefing from Dany Bahar.Calendar of Events 174 25 STERLING YEARS 23 24 25 PROTON 2010 Annual Report 26 27 28 FEB 10 23 The Grand Prize winner of the Proton Drive for Holidays campaign wins RM7. Tun Dr. Chief Executive Officer of Lotus Group. PROTON supports the National Level PINTAR Creativity and Innovation Competition held at the Sekolah Kebangsaan Permatang Buloh. Kepala Batas.000 in cash and a 3 days 2 nights hotel package. Launch of the Persona Elegance. 24 25 MAR 10 27 The unveiling of the EMAS concept global cars at the prestigious 80th International Geneva Motor Show. at the plant in Hethel. United Kingdom. a better value for money mid-sized sedan. PROTON continues its support for the Le Tour de Langkawi with its convoy of cars. 28 . Penang.
32 PROTON’s Adviser Tun Dr. Winner of PROTON’s 25th Anniversary logo designing competition receives her prize from the Managing Director during the launch of PROTON’s 25th Anniversary celebration. 33 34 31 PROTON 2010 Annual Report . Quality remains a top priority with the launch of the annual Company-wide Quality Campaign which was officiated by PROTON’s Managing Director. YAB Dato’ Ahmad Shabery Cheek Minister of Youth and Sports hands the Jalur Gemilang to the PROTON R3 Malaysia Rally Team. Mahathir Mohamad visits the R&D facilities and plant in Shah Alam.Calendar of Events 175 25 STERLING YEARS 29 30 31 32 33 34 29 The launch of the Proton Satria Neo R3 Lotus Racing Edition in conjunction with PROTON’s involvement in Formula One. APR 10 30 The Lotus Racing team roars its engine at the Formula 1 World Championship race in Sepang.
receiving his gift from the Chairman of PROTON. JUN 10 38 Grand Prize Winner at PROTON’s Media Night in conjunction with PROTON’s 25th Year Anniversary. The launch of the much-anticipated all-new Lotus Evora sports car in Malaysia. 39 40 37 . Proton Edar Service Conference held in Port Dickson. President Mohamed Nasheed of the Republic of Maldives visits the PROTON booth at the 6th World Islamic Economic Forum held in Kuala Lumpur. PROTON showcased the Exora at the Automotive Engineering Exposition (AEE) 2010 in Yokohama.Calendar of Events 176 25 STERLING YEARS 35 36 37 PROTON 2010 Annual Report 38 39 40 MAY 10 35 36 PROTON participated in the SMIDEX 2010 exhibition at the KL Convention Centre. Negeri Sembilan was attended by 700 participants. Japan’s largest automotive exhibition and technology showcase.
PROTON’s 25 year story”.Calendar of Events 177 25 STERLING YEARS 41 42 43 JUL 10 41 The EMAS concept global car was unveiled in Malaysia by the Prime Minister. Prime Minister Dato’ Sri Mohd Najib Tun Razak launched PROTON’s 25th Anniversary commemorative book. 42 43 PROTON 2010 Annual Report . The launch of the stunning and newly improved Proton Exora. YAB Dato’ Sri Mohd Najib Tun Razak during PROTON’s 25th Anniversarry Gala Dinner. “A Saga .
We now train our sights on global possibilities and are creating vehicles that meet international standards first. We deliver better results everyday. Roaring Towards A New Dawn .Foresight. so as to expand our export earnings. partnership and commitment have kept PROTON cruising through different economic terrains. Our focus on the future ensures we remain on track and elevate our passion to enhance our performance and repute.
STATUTORY FINANCIAL STATEMENTS .
182 185 186 188 189 190 193 284 284 285 Directors’ Report Income Statements Balance Sheets Consolidated Statement Of Changes In Equity Company Statement Of Changes In Equity Cash Flow Statements Notes To The Financial Statements Statement by Directors Statutory Declaration Independent Auditors Report .
950 in respect of the financial year ended 31 March 2010. RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the financial year except as disclosed in the financial statements. The principal activities of the subsidiary companies. subject to the approval of members at the forthcoming Annual General Meeting.932 Company RM’000 98.715 DIVIDENDS No dividends on ordinary shares were paid or declared by the Company since 31 March 2009. PRINCIPAL ACTIVITIES The Company is principally involved in investment holding activities.002 ordinary shares amounting to RM82.381. The Directors recommend the payment of a final dividend of 20 sen per ordinary share less tax at 25% on 549.Directors’ Report PROTON 2010 Annual Report THE DIRECTORS HAVE PLEASURE IN SUBMITTING THEIR REPORT TOGETHER WITH THE AUDITED FINANCIAL STATEMENTS OF THE GROUP AND COMPANY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2010. . 182 25 STERLING YEARS FINANCIAL RESULTS Group RM’000 Net profit for the financial year 218. There have been no significant changes in the activities of the Group and Company during the financial year. associated companies and jointly controlled entities are set out in Notes 17 to 19 of the financial statements.213.
7. the Company or any other body corporate. and (b) to ensure that any current assets.2010) (resigned on 27. offers herself for re-election.2010) (appointed on 22.Directors’ Report (continued) DIRECTORS The Directors who have held office during the period since the date of the last report are: Dato’ Mohd Nadzmi bin Mohd Salleh Dato’ Syed Zainal Abidin B Syed Mohamed Tahir Dato’ Lim Heen Peok Dato’ Zalekha binti Hassan Behara Venkata Rama Subbu Tan Sri Rainer Althoff Abdul Rahim bin Abdul Hamid Haji Abdul Kadir bin Md Kassim Oh Kim Sun Haji Abdul Jabbar bin Abdul Majid In accordance with Article 104 of the Company’s Articles of Association. no Director has received or become entitled to receive a benefit (other than benefits disclosed as Directors’ remuneration in Note 8 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member. being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in. Behara Venkata Rama Subbu.5. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets of the Group and Company were made out. Dato’ Zalekha binti Hassan retires at the forthcoming Annual General Meeting and. DIRECTORS’ BENEFITS During and at the end of the financial year.8.2009) 183 PROTON 2010 Annual Report .3. no arrangements subsisted to which the Company is a party. no Director in office at the end of the financial year held any interest in shares or debentures in the Company or its related corporations. or debentures of. being eligible. offer themselves for election.2010) (retired on 21. or with a company in which the Director has a substantial financial interest. DIRECTORS’ INTEREST IN SHARES AND DEBENTURES According to the register of Directors` shareholdings.2010) (resigned on 27. other than debts. Since the end of the previous financial year. which were unlikely to realise in the ordinary course of business their values as shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to realise. the Directors took reasonable steps: (a) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts. Tan Sri Rainer Althoff and Abdul Rahim bin Abdul Hamid retire at the forthcoming Annual General Meeting and.2010) (appointed on 20. 25 STERLING YEARS (appointed on 1. being eligible.5.6. In accordance with Article 111 of the Company’s Articles of Association.
there does not exist: (a) any charge on the assets of the Group or the Company which has arisen since the end of the financial year which secures the liability of any other person.Directors’ Report (continued) PROTON 2010 Annual Report STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued) At the date of this report. will or may substantially affect the ability of the Group and Company to meet their obligations when they fall due. DATO’ MOHD NADZMI BIN MOHD SALLEH CHAIRMAN DATO’ SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR MANAGING DIRECTOR . and (b) there has not arisen in the interval between the end of the financial year and the date of this report any item. transaction or event of a material and unusual nature except as disclosed in Notes 5. At the date of this report. have expressed their willingness to continue in office. transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this report is made. or (b) which would render the values attributed to current assets in the financial statements of the Group and Company misleading. 7 and 13 to the financial statements. PricewaterhouseCoopers. 184 25 STERLING YEARS AUDITORS The auditors. In the opinion of the Directors: (a) the results of the Group’s and Company’s operations during the financial year were not substantially affected by any item. in the opinion of the Directors. No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which. or (c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of the Group and Company misleading or inappropriate. the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. Signed on behalf of the Board of Directors in accordance with their resolution dated 27 July 2010. At the date of this report. the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the amount of the allowance for doubtful debts in the financial statements of the Group and Company inadequate to any substantial extent. or (b) any contingent liability of the Group or the Company which has arisen since the end of the financial year.
329) Revenue 6 8.000) (257.674) .145.053) (14.859 6.final dividend proposed 11 11 218.235 14.408) Share of results of associated companies 18 5.diluted Dividend per share (sen) .535 20. PROTON 2010 Annual Report .004) Company 2009 RM’000 362.616.interim dividend paid .220 Share of results of jointly controlled entities 19 13. plant and equipment 13(b) 53.170 218.278 99.321 (1.349 368.656 .401) Profit/(loss) before finance cost 7 254.932 (301.For The Financial Year Ended 31 March 2010 Income Statements Note 2010 RM’000 Group 2009 RM’000 2010 RM’000 101.328) Gross profit 610.616 .454 (1.732) (6.806) 185 25 STERLING YEARS (4.179) 367.594 Profit/(loss) before taxation 260.357 362.Research and development grant 143.395 Profit/(loss) for the financial year Attributable to: Equity holders of the Company Earnings/(loss) per share (sen) .136) (47.Others 181.127 373.426 Other operating income .715 368.170 12 12 20 5 - The notes on pages 193 to 283 form part of these financial statements.203 3.754 Cost of sales 7 (7.893 (319.375) 99.Others (49.886) Other operating expenses .Write back of impairment of property.176 (339.584) (516. plant and equipment 13 (6.715 367.806) (55) (55) 98.203 101.Impairment of capitalised development cost 16 (20.932 40 40 (301.961) 17.226.711 Distribution costs (132.349 (1.518.607) Finance cost 9 (12.688 80.802) .357 7.basic .278 (563) 98.598) (118.201) Taxation 10 (41.447 1.253) Administrative expenses (546.Impairment of property.232 165.
614 36.545 15.586 36.600 177.898 749 59.600 248.624.651 13.081 890.870 6.622 10.313 913.708.412 7. bank and cash balances Non-current assets held for sale TOTAL ASSETS 23 24 20 25 26 10 27 28 29 1.676 1.152 1.607 2.033 3.089 3.652.880.008 563.353 160.557 2.321 25.668 158.197 1.008 431.423 268.098.642 145 58.827.651 13.418 29.505.615 11.587.100 2.Balance Sheets As At 31 March 2010 PROTON 2010 Annual Report Note NON-CURRENT ASSETS Property.095 18.475 1.912 77 209.906.931 7.900 1.404.397 5.301 9.708.640 202.376 316.596 CURRENT ASSETS Inventories Trade and other receivables Amounts due from subsidiary companies Amounts due from associated companies Amounts due from jointly controlled entities Tax recoverable Current investments Dividends receivable Deposits.963 152.395.850 3.367 195.978 350 292 6.212 920. plant and equipment Prepaid land lease payments Goodwill Intangible assets Subsidiary companies Associated companies Jointly controlled entities Amounts due from subsidiary companies Investments Deferred tax assets 13 14 15 16 17 18 19 20 21 22 2010 RM’000 Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 186 25 STERLING YEARS 2.657.955.345 2.153 .400 34.273.284 11.227.600 232.727 3.175.610 15.946 1.111 29.
273.175.327 5.243 113.642 482 279 761 761 2.29 535 535 535 2.195 6.779 88.997.404 79.163 7.213 4.099 142.540 5.213 4.783.236 2.505.277.As At 31 March 2010 (continued) Balance Sheets Note CAPITAL AND RESERVES Share capital Reserves Equity attributable to equity holders of the Company TOTAL EQUITY NON-CURRENT LIABILITIES Long term liabilities Deferred tax liabilities 32 22 30 31 2010 RM’000 Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 549.101.71 1.989 5.101.039 1.516 12.759 - - CURRENT LIABILITIES Trade and other payables Provisions Amounts due to associated companies Amounts due to jointly controlled entities Taxation Short term borrowings TOTAL LIABILITIES TOTAL EQUITY AND LIABILITIES Net assets per share attributable to equity holders of the Company (RM) 33 34 35 36 37 1.392 187 25 STERLING YEARS 88.273.723.098.392 2.776 5.630.898 9.174.650 10.072.213 1.152 9.107 2.107 549.273.179 2.740 99.552.730 23.658 189.174.773 2.213 1.332.332.599 1.358 7.390 101.364 184.989 549.540 549.322 306.153 The notes on pages 193 to 283 form part of these financial statements.172.625.940 12.606 15.894 2. PROTON 2010 Annual Report .883.
617 2.372.Foreign exchange differences on translation of foreign operations Profit for the financial year Total recognised income and expense for the financial year At 31 March 2010 At 1 April 2008 Net income recognised directly in equity .421.995) 4.989 (82.806) - - - 2.476.685 (301.617 475.932 231.932 549.101.617 2.540 188 25 STERLING YEARS - - - 12.540 The notes on pages 193 to 283 form part of these financial statements.Foreign exchange differences on translation of foreign operations Loss for the financial year Total recognised income and expense for the financial year Interim dividend for the financial year ended 31 March 2009 At 31 March 2009 Share capital RM’000 549.261 5.517 218.449 (66.197) 4.153.517 218.213 549.213 Attributable to equity holders of the Company Asset Foreign Capital revaluation exchange Retained reserve reserve reserve earnings Total RM’000 RM’000 RM’000 RM’000 RM’000 475.256 - - - 2.860 5. .595) (20.362 2.Consolidated Statement Of Changes In Equity For The Financial Year Ended 31 March 2010 PROTON 2010 Annual Report Note At 1 April 2009 Net income recognised directly in equity .213 475.121) 12 549.101.362 (79.595) (79.932 12.213 475.617 2.860 5.685 - (301.332.685 (301.362 - (20.792 5.362 12.153.806) 2.512) 4.517 - 218.806) (299.512) 4.
827.723.625.213 1.213 549.213 549.715 2.213 549. PROTON 2010 Annual Report .107 1.174.213 549.392 189 25 STERLING YEARS 12 549.595) 1.170 (20.604 367.894 1.817 367.392 98.213 549.273.715 1.625.213 549.213 The notes on pages 193 to 283 form part of these financial statements.Company Statement Of Changes In Equity For The Financial Year Ended 31 March 2010 Note At 1 April 2009 Profit for the financial year At 31 March 2010 At 1 April 2008 Profit for the financial year Interim dividend for the financial year ended 31 March 2009 At 31 March 2009 Issued and fully paid ordinary shares Distributable Nominal Number value of Retained of shares RM1 each earnings ‘000 RM’000 RM’000 549.174.595) 2.179 98.170 (20.179 Total RM’000 2.278.
provision for diminution in value Intangible assets: .688 55.806 6.315) 45.100) 6.417 114.053 (28.802 14.715 563 (2.128 (2.645) 80.534) 19.reversal of impairment .535) (13.616 (8.216 367.814 12.Cash Flow Statements For The Financial Year Ended 31 March 2010 PROTON 2010 Annual Report Note CASH FLOWS FROM OPERATING ACTIVITIES Profit/(loss) for the financial year Adjustments for: Taxation Property.546) (5.(gain)/loss on disposal Write down of inventories Impairment of investment in an associated company Investment: .written off .170 1.000 (53.806) (17.618) 363.reversal of impairment . plant and equipment: .961 432.493 20.932 41.235) 19 282 (23.100) 10.provision for diminution in value Reversal of allowance for doubtful debts Bad debts written off Allowance for doubtful debts Loss/(gain) on unrealised foreign exchange Cash from operations (carried forward) 2010 RM’000 Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 218.written off Interest expense Interest income Share of results of associated companies Share of results of jointly controlled entities Current investments: .809 (301.950 6.617 907.674 (1.284) 548.397 81.475 (3.impairment .089) (20.179 (4.616) 19.939 98.437) 100.amortisation .731 190 25 STERLING YEARS .346 38.183 26.395) 450.depreciation .408 (42.084 (63.220) (14.447) (2.loss on disposal .359 27.594) 44 1.612 23.678 48.impairment .746 257.
For The Financial Year Ended 31 March 2010 (continued)
Cash Flow Statements
Note CASH FLOWS FROM OPERATING ACTIVITIES (continued) Cash from operations (brought forward) Provision for warranties Provision for onerous contract Research and development grant Provision/(reversal) for retirement benefits Amortisation of capital grant Dividend income Cash from/(used in) operations before working capital changes Changes in working capital: Inventories Receivables - trade and other receivables - subsidiary companies - associated companies and jointly controlled entities Payables - trade and other payables - provisions - subsidiary companies - associated companies and jointly controlled entities Cash generated from/ (used in) operations Tax paid Tax refund Interest received Interest paid Retirement benefits paid Net cash flow generated from/ (used in) operating activities
Group 2009 RM’000
Company 2009 RM’000
907,809 45,968 (143,688) 4,970 (31,255) (915) 782,889 95,382 66,773 (16,928) 313,480 (49,651) (170) 1,191,775 (38,389) 126,444 27,282 (8,009) (9,013) 1,290,090
548,939 45,149 22,139 (80,656) (8,042) (21,646) (1,260) 504,623 (445,982) 161,578 (14,688) 139,693 (102,257) 6,606 249,573 (31,550) 9,717 47,047 (12,394) (9,369) 253,024
100,216 (101,203) (987) (62,742) (350) 53 (64,026) (1,057) 2,833 (62,250)
363,731 (362,357) 1,374 (131) 7,307 (93) (7,936) 521 (704) 4,618 4,435
25 STERLING YEARS
PROTON 2010 Annual Report
Cash Flow Statements
For The Financial Year Ended 31 March 2010 (continued)
PROTON 2010 Annual Report
Note CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment Proceeds from acquisition of a subsidiary company Purchase of intangible assets Purchase of current investments Proceeds from disposal of current investments Proceeds from disposal of property, plant and equipment Dividends received Net cash flow (used in)/generated from investing activities CASH FLOWS FROM FINANCING ACTIVITIES Dividend paid Proceeds from borrowings Advances to a subsidiary company Lease and hire purchase creditors installments paid Repayment of borrowings Receipt of restricted ADF Release of restricted ADF Net cash flows (used in)/generated from financing activities NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS EFFECTS OF EXCHANGE DIFFERENCES CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE FINANCIAL YEAR CASH AND CASH EQUIVALENTS AT THE END OF THE FINANCIAL YEAR 43 12
Group 2009 RM’000
Company 2009 RM’000
25 STERLING YEARS
(145,330) 17 (271,707) 5,336 6,469 12,959 (392,273)
(426,509) 3,998 (237,632) (58) 4,439 29,073 20,590 (606,099)
211,358 (4,368) (386,739) 60,777 (54,732) (173,704) 724,113 (17,387)
(20,595) 356,506 (6,113) (195,421) 681 (31,557) 103,501 (249,574) (24,982)
(20,595) (177,870) (198,465) 183,127 -
The notes on pages 193 to 283 form part of these financial statements.
Notes To The Financial Statements
31 March 2010
The Company is principally involved in investment holding activities. The principal activities of the subsidiary companies, associated companies and jointly controlled entities are set out in Notes 17 to 19 to the financial statements. There have been no significant changes in the activities of the Group and Company during the financial year. The Company is a public limited liability company incorporated, and domiciled in Malaysia, and listed on the Main Market of Bursa Malaysia Securities Berhad. The address of the registered office and the principal place of business of the Company is: Centre of Excellence KM 33.8, Westbound Shah Alam Expressway 47600 Subang Jaya Selangor Darul Ehsan Malaysia
25 STERLING YEARS
BASIS OF PREPARATION
During the financial year, the Group recorded a net profit of RM219 million (2009: net loss for the financial year of RM302 million) which was substantially due to the introduction of more saleable models with better profit margins, and to a lesser extent, write-back of impairment of property, plant and equipment no longer required. The loss in the previous financial year arose largely from the inclusion of impairment of property, plant and equipment and intangible assets amounting to RM278 million and inventories writedown of RM82 million relating to certain vehicle models which were impacted by contraction in sales volume. Going concern assumption The Directors are of the opinion that the use of the going concern assumption in the preparation of the financial statements is appropriate based on the approved Group business plans and available financing arrangements. This includes efforts to control cash flows and the introduction of a new model as replacement for aged models, as well as refreshers during the current financial year. The Directors expect the Group to continue to operate as a going concern and accordingly, the assets and liabilities of the Group and Company are recorded on the basis that the Group and Company will be able to realise its assets and discharge its liabilities in the normal course of business.
PROTON 2010 Annual Report
Notes To The Financial Statements
31 March 2010 (continued)
PROTON 2010 Annual Report
BASIS OF PREPARATION (continued)
Estimates and judgements The preparation of financial statements requires the Directors to make estimates and judgements that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. It also requires the Directors to exercise their judgements in the process of applying the Group’s and the Company’s accounting policies. Although these estimates and judgements are based on the Directors’ best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the Group’s financial statements are disclosed in Note 4 to the financial statements. Financial Reporting Standards The financial statements of the Group and of the Company have been prepared in accordance with the provisions of the Companies Act, 1965 and comply with the Financial Reporting Standards (‘FRSs’), Malaysian Accounting Standard Board (‘MASB’) Approved Accounting Standards in Malaysia for Entities Other than Private Entities. The financial statements of the Group and Company have been prepared under the historical cost convention (as modified by the revaluation of certain freehold land), unless otherwise indicated in the summary of significant accounting policies. (a) Standards, amendments to published standards and Issues Committee (‘IC’) interpretations that are effective and applicable to the Group There are no new accounting standards, amendments to published standards and interpretations to existing standards effective for the financial year beginning 1 April 2009. (b) Standards, amendments to published standards and IC interpretations that are not yet effective and have not been early adopted The new standards and interpretations that are applicable to the Group and the Company, but which the Group and the Company have not early adopted: • FRS 3 “Business Combinations” (effective prospectively from 1 July 2010). The revised standard continues to apply the acquisition method to business combinations, with some significant changes. That is, all payments to purchase a business are to be recorded at fair value at the acquisition date, with contingent payments classified as debt subsequently re-measured through the income statement. There is a choice on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. All acquisition-related costs should be expensed. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements since the application is prospective.
25 STERLING YEARS
Notes To The Financial Statements
31 March 2010 (continued)
BASIS OF PREPARATION (continued)
(b) Standards, amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • FRS 5 “Non-current Assets Held for Sale and Discontinued Operations” Improvement (effective from 1 January 2010) clarifies that FRS 5 disclosures apply to non-current assets or disposal groups that are classified as held for sale and discontinued operations. Improvement (effective from 1 July 2010) clarifies that all of a subsidiary’s assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. Relevant disclosure should be made for this subsidiary if the definition of a discontinued operation is met.
25 STERLING YEARS
The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. • Amendments to FRS 7 “Financial Instruments: Disclosure” and FRS 1 “First-time adoption of financial reporting standards” (effective from 1 January 2011) requires enhanced disclosures of fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a fair value measurement hierarchy. FRS 7 “Financial Instruments: Disclosures” (effective from 1 January 2010) provides information to users of financial statements about an entity’s exposure to risks and how the entity manages those risks. The improvement to FRS 7 clarifies that entities must not present total interest income and expense as a net amount within finance costs on the face of the income statement. The Group and the Company have applied the transitional provision in FRS 7, Amendments and Improvement to FRS 7 which exempts entities from disclosing the possible impact arising from the initial application of this standard on the financial statements. • FRS 8 “Operating Segments” replaces FRS 1142004 Segment Reporting (effective from 1 July 2009). The new standard requires a ‘management approach’, under which segment information is presented on the same basis as that used for internal reporting purposes. The improvement to FRS 8 (effective from 1 January 2010) clarifies that entities that do not provide information about segment assets to the chief operating decision-maker will no longer need to report this information. Prior year comparatives must be restated. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements.
PROTON 2010 Annual Report
Notes To The Financial Statements
31 March 2010 (continued)
PROTON 2010 Annual Report
BASIS OF PREPARATION (continued)
(b) Standards, amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • FRS 101 “Presentation of Financial Statements” (effective from 1 January 2010) prohibits the presentation of items of income and expenses (that is, ‘non-owner changes in equity’) in the statement of changes in equity. ‘Non-owner changes in equity’ are to be presented separately from owner changes in equity. All ‘non-owner changes in equity’ will be required to be shown in a performance statement, but entities can choose whether to present one performance statement (the statement of comprehensive income) or two statements (the income statement and statement of comprehensive income). Where entities restate or reclassify comparative information, they will be required to present a restated balance sheet as at the beginning comparative period in addition to the current requirement to present balance sheets at the end of the current period and comparative period. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. • FRS 107 “Statement of Cash Flows” (effective from 1 January 2010) clarifies that only expenditure resulting in a recognised asset can be categorised as a cash flow from investing activities. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. FRS 108 “Accounting Policies, Changes in Accounting Estimates and Errors” (effective from 1 January 2010) clarifies the use of implementation guidance in the standard. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. FRS 110 “Events after the Balance Sheet date” (effective from 1 January 2010) reinforces existing guidance that a dividend declared after the reporting date is not a liability of an entity at that date given that there is no obligation at that time. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. FRS 117 “Leases” (effective from 1 January 2010) clarifies that the default classification of the land element in a land and building lease is no longer an operating lease. As a result, leases of land should be classified as either finance or operating, using the general principles of FRS 117. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. FRS 118 “Revenue” (effective from 1 January 2010) provides more guidance when determining whether an entity is acting as a ‘principal’ or as an ‘agent’. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements.
25 STERLING YEARS
The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. Amendment (effective prospectively from 1 July 2010) requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control and these transactions will no longer result in goodwill or gains and losses. Any remaining interest in the entity is re-measured to fair value. Under the new rules. FRS 139 would continue to be applied. The option of immediately expensing those borrowing costs is removed. Amendment (effective from 1 January 2010) clarifies that where an investment in a subsidiary that is accounted for under FRS 139 is classified as held for sale under FRS 5. amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • FRS 119 “Employee Benefits” (effective from 1 January 2010) clarifies that a plan amendment that results in a change in the extent to which benefit promises are affected by future salary increases is a curtailment. construction or production of a qualifying asset (one that takes a substantial period of time to get ready for use or sale) as part of the cost of that asset. FRS 123 “Borrowing Costs” which replaces FRS 1232004 (effective from 1 January 2010) requires an entity to capitalise borrowing costs directly attributable to the acquisition. FRS 127 removes the requirement for a parent entity to recognise dividends only to the extent that it represents distributions from profits of the investee arising after acquisition. The improvement to FRS 123 clarifies that the definition of borrowing costs includes interest expense calculated using the effective interest method defined in FRS 139. The standard also specifies the accounting when control is lost. FRS 127 “Consolidated and Separate Financial Statements” Amendment (effective from 1 January 2010) deals with situations where a parent reorganises its group by establishing a new entity as its parent. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. PROTON 2010 Annual Report . with any excess dividends recognised as a reduction of the loss of investments.Notes To The Financial Statements 31 March 2010 (continued) 2 BASIS OF PREPARATION (continued) (b) Standards. the new parent measures the cost of its investment in the original parent at the carrying amount of its share of the equity items shown in the separate financial statements of the original parent at the reorganisation date. 197 25 STERLING YEARS • • • - - The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. FRS 120 “Accounting for Government Grants” (effective from 1 January 2010) clarifies that the benefit of a below market rate government loan is accounted for in accordance with FRS 120. The definition of return on plan assets has been amended to state that plan administration costs are deducted in the calculation of return on plan assets only to the extent that such costs have been excluded from measurement of the defined benefit obligation. and a gain or loss is recognised in the income statements. while an amendment that changes benefits attributable to past service gives rise to a negative past service cost if it results in a reduction in the present value of the defined benefit obligation.
• FRS 134 “Interim Financial Reporting” (effective from 1 January 2010) clarifies that basic and diluted earnings per share (‘EPS’) must be presented in an interim report only in the case when the entity is required to disclose EPS in its annual report. Amendment (effective from 1 March 2010) on classification of rights issues addresses accounting for rights issues that are denominated in a currency other than the functional currency of the issuer. entities are required to classify the compound financial instruments into its liability and equity elements. rather than all disclosure requirements in FRS 128 or FRS 131 need to be made in addition to disclosures required by FRS 132 and FRS 7. only certain. The adoption of this standard is not expected to have a material impact on the Group’s financial statements. - Amendment to FRS 128 “Investments in Associates” and FRS 131 “Interests in joint ventures” (consequential amendments to FRS 132 “Financial instruments: Presentation” and FRS 7 “Financial instruments: Disclosure”) (effective from 1 January 2010) clarify that where an investment in associate or joint venture is accounted for in accordance with FRS 139. The improvement also clarifies that where fair value less costs to sell is calculated on the basis of discounted cash flows. The adoption of this standard is not expected to have a material impact on the Group’s and Company’s financial statements. • FRS 132 “Financial instruments: Presentation” Amendment (effective from 1 January 2010) removes the transitional provision that exempted entities from applying the component part classification for a compound instrument issued before 1 January 2003. FRS 136 “Impairment of Assets” (effective from 1 January 2010) clarifies that the largest cash-generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment before the aggregation of segments with similar economic characteristics. regardless of the currency in which the exercise price is denominated. disclosures equivalent to those for value in use should be made. Upon adoption of FRS 139. 198 25 STERLING YEARS The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • FRS 128 “Investments in Associates” Amendment (effective from 1 January 2010) clarifies that an investment in an associated company is treated as a single asset for impairment testing purposes. • .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 2 BASIS OF PREPARATION (continued) (b) Standards. Provided certain conditions are met. Reversals of impairment are recorded as an adjustment to the carrying amount of the investment to the extent that the recoverable amount of the associated company increases. such rights are now classified as equity instruments instead of as derivative liabilities. The adoption of this standard is not expected to have a material impact on the Group’s and Company’s financial statements.
or contain. The impact of the adoption of this standard is currently being quantified by management and cannot be reasonably estimated at this point in time. • IC Interpretation 4 “Determining whether an Arrangement contains a Lease” (effective from 1 January 2011) requires the Group to idenfity any arrangement that does not take the legal form of a lease. leases. the requirements of FRS 117. The interpretion provides guidance for determining whether such arrangements are. This new standard established principles for recognising and measuring financial assets.Notes To The Financial Statements 31 March 2010 (continued) 2 BASIS OF PREPARATION (continued) (b) Standards. but conveys a right to use an asset in return for a payment or series of payments. 199 25 STERLING YEARS The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. The improvement to FRS 139 clarifies that the scope exemption in FRS 139 only applies to forward contracts but not options for business combinations that are firmly committed to being completed within a reasonable timeframe. PROTON 2010 Annual Report . Improvement (effective from 1 July 2010) clarifies that a group of complementary intangible assets acquired in a business combination is recognised as a single asset if the individual asset has similar useful lives. On the designation of a one-sided risk in a hedged item. The Group and the Company have applied the transitional provision in FRS 139 which exempts entities from disclosing the possible impact arising from the initial application of this standard on the financial statements. financial liabilities and some contracts to buy and sell non-financial items. Hedge accounting is permitted only under strict circumstances. the amendment concludes that a purchased option designated in its entirety as the hedging instrument of a one-sided risk will not be perfectly effective. The assessment is based on the substance of the arrangement and requires assessment of whether the fulfillment of the arrangement is dependent on the use of a specific asset and the arrangement conveys a right to use the asset. amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • FRS 138 “Intangible Assets” Improvement (effective from 1 January 2010) clarifies that a prepayment may only be recognised in the event that payment has been made in advance of obtaining right of access to goods or receipt of services. The amendments to FRS 139 provide further guidance on eligible hedged items. The amendment provides guidance for two situations. • FRS 139 “Financial Instruments: Recognition and Measurement” (effective from 1 January 2010). It confirms that the unit of production method of amortisation is allowed. If the arrangement contains a lease. The designation of inflation as a hedged risk or portion is not permitted unless in particular situations. “Leases” should be applied to the lease element of the arrangement.
The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. Minimum Funding Requirements and their Interactions” (effective from 1 January 2010) addresses how entities should determine the limit placed on the amount of a surplus in a pension plan they can recognise as an asset. “Customer Loyalty Programmes” (effective from 1 January 2010) explains how entities that grant loyalty award points to its customers should account for their obligation to provide free or discounted goods or services if and when the customers redeem the points. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. The improvement to IC Interpretation 9 (effective from 1 July 2010) clarifies that this interpretation does not apply to embedded derivatives in contracts acquired in a business combination. 200 25 STERLING YEARS • • .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 2 BASIS OF PREPARATION (continued) (b) Standards. in which case reassessment is required. FRS 119: “The Limit on a Defined Benefit Asset. businesses under common control or the formation of a joint venture. amendments to published standards and IC interpretations that are not yet effective and have not been early adopted (continued) • IC Interpretation 9 “Reassessment of Embedded Derivatives” (effective from 1 January 2010) requires an entity to assess whether an embedded derivative is required to be separated from the host contract and accounted for as a derivative when the entity first becomes a party to the contract. The adoption of this standard is not expected to have a material impact on the Group’s and the Company’s financial statements. IC Interpretation 13. IC Interpretation 14. The Group and the Company have applied the transitional provision in IC Interpretation 9 which exempts entities from disclosing the possible impact arising from the initial application of this standard on the financial statements. • IC Interpretation 10 “Interim Financial Reporting and Impairment” (effective from 1 January 2010) prohibits the impairment losses recognised in an interim period on goodwill and investments in equity instruments and in financial assets carried at cost to be reversed at a subsequent balance sheet date. it addresses how a minimum funding requirement affects that limit and when a minimum funding requirement creates an onerous obligation that should be recognised as a liability in addition to that otherwise recognised under FRS 119. Subsequent reassessment is prohibited unless there is a change in the terms of the contract that significantly modifies the cash flows that otherwise would be required under the contract. Also.
Plant and Equipment” (consequential amendment to FRS 107 “Statement of Cash Flows”) and a consequential amendment to FRS 107 (effective from 1 January 2010) FRS 129 “Financial Reporting in Hyperinflationary Economies” (effective from 1 January 2010) FRS 132 “Financial Instruments: Presentation” (effective from 1 March 2010) and FRS 101 (revised) “Presentation of Financial Statements” - “Puttable Financial Instruments and Obligations Arising on Liquidation” (effective from 1 January 2010) FRS 140 “Investment Property” (effective from 1 January 2010) IC Interpretation 11. Jointly controlled entity or Associate” (effective from 1 January 2010) The amendment to FRS 1: “Additional Exemptions for the First time Adopters” (effective from 1 January 2011) FRS 2 “Share Based Payment” (Amendment) (effective from 1 January 2010) and the improvement to FRS 2 (effective from 1 July 2010) The amendment to FRS 2: “Group Cash-settled Share Based Payment Transactions“ (effective from 1 January 2011) FRS 4 “Insurance Contracts” (effective from 1 January 2010) FRS 116 “Property.Notes To The Financial Statements 31 March 2010 (continued) 2 BASIS OF PREPARATION (continued) (c) Standards. FRS 2: “Group and Treasury Share Transactions” (effective from 1 January 2010) IC Interpretation 12 “Service Concession Arrangements” (effective from 1 July 2010) IC Interpretation 15 “Agreements for Construction of Real Estates” (effective from 1 July 2010) IC Interpretation 16 “Hedges of a Net Investment in a Foreign Operation” (effective from 1 July 2010) IC Interpretation 17 “Distribution of Non-cash Assets to Owners” (effective from 1 July 2010) IC Interpretation 18 “Transfers of Assets from Customers” (effective from 1 January 2011) • • • • • • • 201 25 STERLING YEARS • • • • • • • PROTON 2010 Annual Report . amendments to published standards and interpretations that are not yet effective and not relevant to the Group’s operations • The amendment to FRS 1 “First-time adoption of Financial Reporting Standards” and FRS 127 “Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary.
the carrying amount of the investment is assessed and written down immediately to its recoverable amount. Subsidiary companies are consolidated from the date on which control is transferred to the Group. plus costs directly attributable to the acquisition. (a) Economic entities in the Group (i) Subsidiary companies Subsidiary companies are those corporations. The accounting policy on goodwill is set out in Note 3(d)(i). partnerships or other entities in which the Group has the power to exercise control over the financial and operating policies so as to obtain benefits from their activities. inter-company transactions and unrealised gains on transactions between Group companies are eliminated in full. They are de-consolidated from the date that control ceases. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the Group controls another entity. equity instruments issued and liabilities incurred or assumed at the date of exchange. Unrealised losses are also eliminated in full unless the assets transferred are impaired. 202 25 STERLING YEARS . Inter-company balances. the Group applied both the purchase method and the merger method to account for Business Combinations in accordance with prior financial reporting standards. Investments in subsidiary companies are stated at cost less accumulated impairment losses. generally accompanying a shareholding of more than one half of the voting rights. only the purchase method of accounting is used to account for Business Combinations in accordance with FRS 3. The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date irrespective of the interest of any minority interest. The financial statements of all companies within the Group used in the preparation of the Consolidated Financial Statements are prepared as of the same reporting date. The accounting policy on Impairment of Assets is set out in Note 3(u). If the cost of acquisition is less than the fair value of the net assets of the subsidiary company acquired.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements. Where an indication of impairment exists. The cost of an acquisition is measured as the fair value of the assets given. Uniform accounting policies for like transactions and other events in similar circumstances are used by all companies in the Group in preparing the Consolidated Financial Statements. With effect from 1 January 2006. the difference is recognised as a gain in the Consolidated Income Statements. Prior to 1 January 2006.
including the cumulative amount of any exchange differences that relate to that subsidiary company which were previously recognised in equity. For purchase of equity shares from minority interests for cash consideration and at fair value. The gain or loss is the difference between the Group’s share of net assets immediately before and after the disposal and the purchase consideration received or paid. The gain or loss on disposal of a subsidiary company is the difference between the net disposal proceeds and the Group’s share of the subsidiary company’s net assets as of the date of disposal. and is recognised in the Consolidated Income Statements. partnerships or other entities in which the Group exercises significant influence. the accretion of the Group’s interest in the subsidiary company is treated as purchase of equity interest under acquisition method of accounting.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Economic entities in the Group (continued) (i) Subsidiary companies (continued) Minority interests represent that portion of the profit or loss and net assets of a subsidiary company attributable to equity interests that are not owned. but which it does not control. (iii) Associated companies Associated companies are those corporations. the accretion or dilution of the Group’s interests is treated as equity transactions between the subsidiary company and its shareholders. (ii) Transactions with minority interests Disposal of equity shares to minority interests for cash consideration and at fair value resulting in gain or loss for the Group is recorded in the Consolidated Income Statements. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but not the power to exercise control over those policies. directly or indirectly through the subsidiary companies by the parent. The gain or loss is the difference between the Group’s share of net assets immediately before and after the disposal and a portion of goodwill is realised. The identifiable assets and liabilities acquired are adjusted to their fair values and the difference is recognised as goodwill. The gain or loss is recorded in the Group’s reserves. 203 25 STERLING YEARS PROTON 2010 Annual Report . It is measured at the minorities’ share of the fair values of the subsidiary companies’ identifiable assets and liabilities at the acquisition date and the minorities’ share of changes in the subsidiary companies’ equity since that date. For purchases or disposals from or to minority interest other than for cash and not at fair value.
the Group has ensured that uniform accounting policies for like transactions and other events in similar circumstances of the associated companies are used. Investments in jointly controlled entities are stated at cost. the carrying amount of the investment is assessed and written down immediately to its recoverable amount. The cumulative post-acquisition movements are adjusted to the carrying amount of the investment. as disclosed in Note 3(a)(iii). Where an indication of impairment exists. Unrealised losses are also eliminated unless the assets transferred are impaired. The Group’s interests in jointly controlled entities are accounted for in the Consolidated Financial Statements by the equity method of accounting.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Economic entities in the Group (continued) (iii) Associated companies (continued) Investments in associated companies are stated at cost. 204 25 STERLING YEARS . In applying the equity method. investments in associated companies are accounted for using the equity method. Under the equity method. The accounting policy on Impairment of Assets is set out in Note 3(u). the carrying amount of the investment is assessed and written down immediately to its recoverable amount. (iv) Jointly controlled entities Jointly controlled entities are corporations. The cumulative post-acquisition movements are adjusted to the carrying amount of the investment. unless it has incurred legal or constructive obligations to make payments on behalf of the associated company. Unrealised gains on transactions between the Group and its associated companies are eliminated to the extent of the Group’s interest in the associated companies. Where an indication of impairment exists. The accounting policy on Impairment of Assets is set out in Note 3(u). The equity method is applied based on the latest financial statements made up to the financial year end of the Group. When the Group’s share of losses in an associated company equals or exceeds its cost of investment in the associated company including any other unsecured receivables. partnerships or other entities over which there is contractually agreed sharing of control by the Group with one or more parties where the strategic financial and operating policy decisions relating to the entity requires unanimous consent of the parties sharing control. and its share of post-acquisition movements in reserves is recognised in reserves. The Consolidated Income Statements include the Group’s share of results of the jointly controlled entities based on the financial statements made up to the financial year end of the Group. the Group discontinues its share of further losses. the Group’s share of its associated companies’ post-acquisition results is recognised in the Consolidated Income Statements. In the Consolidated Financial Statements.
Unrealised losses are also eliminated unless the assets transferred are impaired. Non-current investments are shown at cost and an allowance for diminution in value is made where. Increases/decreases in the carrying amount of current investments are credited/charged to the Consolidated Income Statements. are held for use in the production or supply of goods or services.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (a) Economic entities in the Group (continued) (iv) Jointly controlled entities (continued) Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated to the extent of the Group’s interest in the jointly controlled entities. the Group has ensured that uniform accounting policies of jointly controlled entities for like transactions and other events in similar circumstances are used. (b) Investments The Group uses its judgement to determine the classification of its investments into current and non-current. On disposal of an investment. or for administrative purposes. there is a decline other than temporary in the value of such investments. and are expected to be used during more than one period. in the opinion of the Directors. Where there has been a decline other than temporary in the value of an investment. (c) Property. 205 25 STERLING YEARS PROTON 2010 Annual Report . plant and equipment are tangible items that: I. An investment is classified as current if it is readily realisable and it is held for trading or intended to be realised within 12 months after the balance sheet date. All other investments are classified as non-current. plant and equipment Property. In applying the equity method. The equity method is applied based on the latest financial statements made up to the financial year end of the Group. II. such a decline is recognised as an expense in the period in which the decline is identified. Quoted and unquoted current investments are carried at the lower of cost and market value. Cost is derived at on the weighted average basis whilst market value is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet date. determined on an aggregate portfolio basis by category of investments. the difference between net disposal proceeds and its carrying amount is credited/charged to the Consolidated Income Statements.
. The Group allocates the initial cost of an item of property. All other land held by the Group is stated at cost. as appropriate. only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. A piece of freehold land held by the Group is stated at the Directors’ valuation based on a 1983 independent professional valuation of the open market value of the land on an existing use basis. The revision in the basis of depreciation is to better reflect the respective assets product life cycle. useful lives and depreciation method are reviewed annually and revised if appropriate. plant and equipment is provided for on a straight line basis to write off the cost or valuation of each asset to its residual value over its estimated useful life. plant and equipment to its significant component parts. The carrying amount of the replaced part is derecognised. The Group has adopted the transitional provision of FRS 116 which allows the freehold land to be stated at the amount revalued on 5 September 1983.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Property. an additional depreciation charge of RM15. fittings and vehicles 15-50 years 5-20 years 2-10 years 206 25 STERLING YEARS During the financial year. Depreciation of other property. All other repairs and maintenance are charged to the Consolidated Income Statements during the financial period in which they are incurred. The assets’ residual values. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset. As a result. plant and equipment are initially stated at cost. Cost includes expenditure that is directly attributable to the acquisition of the items and bringing them to the location and condition so as to render them operational in the manner intended by the Group. plant and equipment (continued) (i) Cost Property. which are included under plant and machinery has been revised to the straight line basis from unit of production basis. (ii) Depreciation Freehold land is not depreciated as it has an infinite life. the depreciation method of dies and jigs. The surplus arising on revaluation was credited directly to capital reserves and subsequently utilised.8 million has been recognised in the Consolidated Income Statements during the year. The principal estimated useful lives of depreciation used are as follows: Buildings Plant and machinery Office equipment. furniture.
(iv) Gains or losses on disposals Gains or losses on disposals are determined by comparing proceeds with their related carrying amounts and are included in profit/(loss) from operations. the related costs will be transferred to the respective categories of assets. plant and equipment (continued) (ii) Depreciation (continued) Work-in-progress is not depreciated. (v) Repairs and maintenance Repairs and maintenance are charged to the Consolidated Income Statements during the period in which they are incurred. (d) Intangible assets (i) Goodwill Goodwill is carried at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units for the purpose of impairment testing. Impairment losses on goodwill are not reversed. (iii) Impairment Where an indication of impairment exists. Gains or losses on the disposal of an entity includes the carrying amount of goodwill relating to the entity disposed. Each cashgenerating unit or a group of cash-generating units represents the lowest level within the Group at which goodwill is monitored for internal management purposes and which are expected to benefit from the synergies of the combination. The cost of major renovations are included in the carrying amount of the asset when it is probable that future economic benefits in excess of the originally assessed standard of performance of the existing asset will flow to the Group. Upon completion. Major renovations are depreciated over the remaining useful life of the related assets. Goodwill is tested for impairment at least annually. the carrying amount of the assets is assessed and written down immediately to its recoverable amount if the carrying amount exceeds the recoverable amount. Impairment of goodwill is charged to the Consolidated Income Statements as and when it arises. Depreciation on work-in-progress commences when the assets are ready for their intended use. The accounting policy on Impairment of Assets is set out in Note 3(u).Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (c) Property. or when events or circumstances occur indicating that an impairment may exist. The Group allocates goodwill to each business segment in each country in which it operates. 207 25 STERLING YEARS PROTON 2010 Annual Report .
Costs that are directly associated with identifiable and unique software products controlled by the Group. and (vi) The expenditure attributable to the intangible asset during its development can be reliably measured. Computer software development costs recognised as assets are amortised using the straight line method over their estimated useful lives. and that will probably generate economic benefits exceeding costs beyond one year. Such goodwill is tested for impairment as part of the overall balance. (iii) Research and development cost Expenditure in connection with research activities (research expenditure) is recognised as an expense when incurred. Costs include employee costs incurred as a result of developing software and an appropriate portion of relevant overheads. financial and other resources to complete the development and to use or sell the intangible asset are available. (v) Adequate technical. (iv) It can be demonstrated that the intangible asset will generate probable future economic benefits. (ii) Management’s intention to complete the intangible asset for use or sale. 208 25 STERLING YEARS . are recognised as intangible assets. These costs are amortised over their estimated useful lives of 3 to 5 years.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Intangible assets (continued) (i) Goodwill (continued) Goodwill on acquisition of associated companies and jointly controlled entities are included in the carrying value of the investment in associated companies and jointly controlled entities respectively. Costs associated with developing or maintaining computer software programmes are recognised as an expense when incurred. Costs incurred on development projects (relating to the design and testing of new or improved products) are recognised as intangible assets when the following criteria for recognition are fulfilled: (i) It is technically feasible to complete the intangible asset so that it will be available for use or sale. (ii) Computer software Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire and bring to use the specific computer software. not exceeding a period of 3 years. (iii) There is an ability to use or sell the intangible asset.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leased property. are included in borrowings. During the financial year the amortisation of research and development cost has been revised to the straight line basis over its useful life. Property. The interest element of the finance charge is charged to the Consolidated Income Statements over the lease period. plant and equipment and intangible assets and are depreciated in accordance with Note 3(c)(ii) and Note 3(d)(ii) above respectively. Similar to the depreciation of dies and jigs in Note 3(c)(ii). plant and equipment and intangible assets where the Group assumes substantially all the benefits and risks or ownership are classified as finance leases. plant and equipment and intangible assets acquired under finance leases are included in tangible property. (f) Prepaid land lease payment Leasehold land that normally has a finite economic life and title is not expected to pass to the lessee by the end of the lease term is treated as an operating lease. (e) Leases Leases of property.1 million has been recognised in the Consolidated Income Statements during the year. which does not exceed 7 years for vehicles and 10 years for mechanical parts. The payment made on entering into or acquiring a leasehold land is accounted as prepaid land lease payment that is amortised over the lease term in accordance with the pattern of benefits provided. amortisation was based on the unit of production basis. arising from the change an additional amortisation charge of RM11. 209 25 STERLING YEARS PROTON 2010 Annual Report . Capitalised development cost is stated at cost less accumulated amortisation and accumulated impairment losses. if any. and the present value of the minimum lease payments. net of finance charges. The revision in the amortisation method was applied to better reflect the respective assets product life cycle. plant and equipment and intangible assets. Previously. The corresponding obligations. Development expenses capitalised include costs incurred in the development from the date it first meets the recognition criteria and up to the completion of the development project and commencement of commercial production. the amortisation method has been revised.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (d) Intangible assets (continued) (iii) Research and development cost (continued) Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Each lease payment is allocated between the liability and finance charges so as to achieve a periodic constant rate of interest on the balance outstanding.
Capital grants Government grants relating to capital expenditure are deferred and recognised in the Consolidated Income Statements over the period necessary to match them with the costs they are intended to compensate. and is determined either on the first-in first-out basis and weighted average basis depending on the nature of inventory. Grants from government are recognised at their fair values where there are reasonable assurances that the grants will be received and the Group will comply with all attached conditions. (h) Trade and other receivables Trade and other receivables are carried at anticipated net realisable value. selling and distribution. (j) Government grants Government grants are recognised in the Consolidated Income Statements on a systematic basis over the periods in which the Group recognises as expenses the related cost for which the grants are intended to compensate. Income grants Income grants are grants other than capital grants and recognised in the Consolidated Income Statements where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. They are stated at the lower of carrying amount and fair value less costs to sell if the carrying amount is to be recovered principally through a sale transaction rather than through continuing use. an appropriate proportion of production overheads is included in the costs based on normal operating capacity and is determined on a weighted average basis.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (g) Inventories Inventories are stated at the lower of cost and net realisable value. Bad debts are written off to the Consolidated Income Statements during the financial period in which they are identified. 210 25 STERLING YEARS . In the case of work-in-progress and finished vehicles. In arriving at net realisable value. Allowances are made for doubtful debts based on specific reviews of outstanding balances at the balance sheet date. slow moving or defective inventories. Net realisable value represents the estimated selling price less all estimated costs to completion and costs to be incurred in marketing. General allowances are made to cover possible losses. which are not specifically identified. Cost of parts and accessories is determined on a weighted average basis. Cost includes the actual cost of materials and incidentals in bringing the inventories to their present location and condition. Government grants relating to the purchase of plant and equipment are included in non-current liabilities as deferred income and are credited to the Consolidated Income Statements on a straight line basis over the expected lives of the related assets. Cost of vehicles for sales are determined on a specific identification basis. due allowance is made for obsolete. (i) Non-current assets classified as assets held for sale Non-current assets are classified as assets held for sale when the carrying amount is to be recovered principally through a sale transaction.
(iii) Free services Provisions for free services are recognised based on expected levels of claims arising during the period when the free services are provided. Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. Warranties are provided for a period of between one to three years for vehicles sold.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (k) Provisions Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events. When the Group expects warranties to be reimbursed from suppliers. (ii) Onerous contracts The Group recognises a provision for onerous contracts when the expected benefits to be derived from a contract are less than the unavoidable costs of meeting the obligations under the contract or estimated costs of exiting the contract. the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The provision is based on experienced levels of claims arising during the period of warranty. the amount of provision is the present value of the expenditure expected to be required to settle the obligation. paid annual leave and sick leave. (l) Employee benefits (i) Short term employee benefits Salaries. when it is probable that an outflow of resources will be required to settle the obligation. the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. Once the contributions have been paid. and when a reliable estimate of the amount can be made. The Group has both defined contribution and defined benefit plans. (ii) Post employment benefits The Group has various post employment benefit schemes in accordance with the local conditions and practices in the countries in which it operates. When the effect of the time value of money is material. Provisions are not recognised for future operating losses. wages. the Group has no further payment obligations. Where the Group expects a provision to be reimbursed. bonuses and non-monetary benefits are accrued in the period in which the associated services are rendered by employees of the Group. Defined contribution plans The Group’s contributions to defined contribution plans are charged to the Consolidated Income Statements in the period to which they relate. (i) Warranties Provision is recognised for the estimated liability on all products under warranty in addition to claims already received and verified. 211 25 STERLING YEARS PROTON 2010 Annual Report .
Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (l) Employee benefits (continued) (ii) Post employment benefits (continued) Defined benefit plan The liability in respect of a defined benefit plan is the present value of the defined benefit obligation at the balance sheet date minus the fair value of plan assets. 212 25 STERLING YEARS . annual salary increases and annual increases in pension payments. The amount of net actuarial gains and losses recognised in the Consolidated Income Statements is determined by the corridor method in accordance with FRS 119 and is charged or credited to the Consolidated Income Statements over the average remaining service lives of the related employees participating in the defined benefit plan. calculated using the projected unit credit method. Assumptions were made in relation to the annual investment returns. together with adjustments for actuarial gains/losses and past service cost. The defined benefit obligation. Actuarial gains and losses arise from experience adjustments and changes in actuarial assumptions. The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the balance sheet date. (iii) Termination benefits Termination benefits are payable whenever an employee’s employment is terminated before the normal retirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminate the employment of current employees according to a detailed formal plan without possibility of withdrawal or to provide termination benefits as a result of an offer made to encourage voluntary redundancy. Plan assets in excess of the defined benefit obligation are subject to the asset limitation test specified in FRS 119. Benefits falling due more than 12 months after balance sheet date are discounted to present value. is determined by independent actuaries on the basis of full triennial valuations and updated annually.
which is the currency of the primary economic environment in which the entity operates (‘the functional currency’). Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available against which the deductible temporary differences or unused tax losses can be utilised. affects neither accounting profit nor taxable profit. associated companies and jointly controlled entities except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Income Statements. Deferred tax is recognised in full. Deferred tax is recognised on temporary differences arising on investments in subsidiary companies. Deferred tax assets and liabilities are not recognised on temporary differences arising from: (i) goodwill. (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. The Consolidated Financial Statements are presented in Ringgit Malaysia. PROTON 2010 Annual Report . or 213 25 STERLING YEARS (ii) from the initial recognition of an asset or liability in a transaction which is not a business combination and at time of the transaction. including withholding taxes payable by a foreign subsidiary company on distributions of retained earnings. (n) Foreign currency transactions and translation (i) Functional and presentation currency Items included in the financial statements of each of the Group’s entities are measured using its functional currency. Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. on temporary differences arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements. which is the Group’s functional and presentation currency. using the liability method.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (m) Income taxes Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operates and include all taxes based upon the taxable profits.
0313 2. bank overdrafts and pledged deposits.6595 5. and all resulting exchange differences are recognised as a separate component of equity. exchange differences arising from the translation of the net investment in foreign operations are taken to shareholders’ equity. When a foreign operation is disposed of or sold.2225 0. cash and cash equivalents comprise cash and bank balances. income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (n) Foreign currency transactions and translation (continued) (iii) Group companies The results and financial position of all the Group companies (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet.3940 31 March 2009 3. which includes advances that are assessed as long term in nature. Bank overdrafts are included within borrowings in current liabilities on the Balance Sheet.8270 .0358 2.3388 0.9415 0. such exchange differences that were recorded in equity are recognised in the Consolidated Income Statements as part of the gain or loss on disposal.0120 4. deposits held at call with banks. other short term.4935 4. 31 March 2010 3.1012 3. (iv) Closing rates The principal closing rates (units of Malaysian Ringgit per foreign currency) used in translating significant balances at financial year end are as follows: Foreign currency US Dollar Sterling Pound Indonesian Rupiah (100) Singapore Dollar Thai Baht Australian Dollar Euro (o) Cash and cash equivalents For the purpose of the cash flow statement. Net investment in foreign operations is defined as the amount of the reporting entity’s interest in the net assets of that operation.4048 0.1029 2. highly liquid investments with original maturities of not more than twelve months. 214 25 STERLING YEARS - On consolidation.2725 4. in which case income and expenses are translated at the dates of the transactions).
a contractual right to exchange financial instruments with another enterprise under conditions that are potentially favourable. spare parts and accessories are recognised when significant risks and rewards have been transferred to buyers. where the contractual outcome can be assessed with reasonable certainty.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (p) Income recognition Revenue from sales of vehicles. 215 25 STERLING YEARS PROTON 2010 Annual Report . a contractual right to receive cash or another financial asset from another enterprise. Significant risks and benefits are generally deemed to have been transferred upon delivery or acceptance of the goods. Sale of rights for the use of intellectual property rights are recognised on an accrual basis in accordance with the substance of the relevant agreements. or an equity instrument of another enterprise. A financial liability is any liability that is a contractual obligation to deliver cash or another financial asset to another enterprise. which are recognised on an accrual basis. (ii) Financial instruments not recognised on the balance sheet The Group enters into foreign currency forward contracts to protect the Group from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled. (q) Financial instruments (i) Description A financial instrument is any contract that gives rise to both a financial asset of one enterprise and a financial liability or equity instrument of another enterprise. Scrap sales and gains on disposal of investments are recognised on an accrual basis. Interest income is recognised on proportionate basis that reflects the effective yield on the asset. significant risks and rewards of ownership have been transferred to the buyer and the recovery of the consideration is probable. Revenue from sale of completed apartments is recognised when the Sale and Purchase Agreements are signed. A financial asset is any asset that is cash. Amounts are included within receivables and payables to recognise timing differences arising between amounts invoiced and amounts recognised in the Consolidated Income Statements on individual engineering contracts. Other revenue comprises mainly revenue from rental and royalties. Revenue from rendering of engineering services on long term engineering contracts is recognised on the basis of the stage of completion of such contracts at the financial year end. Dividends are recognised when the Company’s right to receive payment is established. Exchange gains and losses arising on contracts entered into as hedges of anticipated future transactions are deferred until the settlement of the related forward contracts. or to exchange financial instruments with another enterprise under conditions that are potentially unfavourable. Full provision is made for all foreseeable losses on contracts entered into or commenced prior to the financial year end.
is not recognised as a liability at the balance sheet date. (r) Borrowings Borrowings are initially recognised based on the proceeds received. (s) Share capital Ordinary shares are classified as equity. External costs directly attributable to the issue of new shares are expensed off in the Consolidated Income Statements. the Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Dividends on ordinary shares are recognised as liabilities when proposed or declared before the balance sheet date. Unquoted investments are valued based on quoted investments with similar features. The fair value of forward foreign exchange contracts is determined using forward foreign exchange market rates at the balance sheet date. A dividend proposed or declared after the balance sheet date. net of transaction costs incurred. Borrowings are classified as current liabilities unless the Group has the unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. Upon the dividend becoming payable. In assessing the fair value of non-traded derivatives and financial instruments. Subsequently. less any estimated credit adjustments. for financial assets and liabilities classified as current are assumed to approximate their fair values. The face values. The fair value of financial liabilities with a maturity of more than one year is estimated by discounting the future contractual cash flows at the current market interest rate available to the Group for similar financial instruments.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (q) Financial instruments (continued) (iii) Fair value estimation for disclosure purposes The fair value of publicly traded derivatives and securities is based on quoted market prices at the balance sheet date. 216 25 STERLING YEARS . it will be accounted for as liability. borrowings are stated at amortised cost using the effective yield method. any difference between proceeds (net of transaction costs) and the redemption value is recognised in the Consolidated Income Statements over the period of the borrowings. but before the financial statements are authorised for issue. Borrowing costs are charged to the Consolidated Income Statements as an expense in the period in which they have accrued.
the contingent liabilities assumed are measured initially at their fair values at the acquisition date. when appropriate. general market. plant and equipment and other non-current assets. but not virtually certain. including intangible assets. The value-in-use is the net present value of the projected future cash flows derived from that asset discounted at the appropriate discount rate. the Group measures the contingent liabilities that are recognised separately at the date of acquisition at the higher of the amount that would be recognised in accordance with the provisions of FRS 137 and the amount initially recognised less. are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. economic conditions and other available information. In the acquisition of subsidiary companies by the Group under a business combination. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group recognises separately the contingent liabilities of the acquirees as part of allocating the cost of a business combination where their fair values can be measured reliably. cumulative amortisation recognised in accordance with FRS 118. the resulting effect will be reflected in the goodwill arising from the acquisition. industry trend. Subsequent to the initial recognition. assets are grouped at the lowest level for which there is separately identifiable cash flows. or whenever events or circumstances occur indicating that an impairment may exist. For the purposes of assessing impairment. The recoverable amount is measured at the higher of the fair value less cost to sell of an asset and its value-in-use. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable. irrespective of the extent of any minority interests. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. Where the fair values cannot be measured reliably. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. Property. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. Assets other than goodwill that suffered an impairment are reviewed for possible reversal at each reporting date. The projected cash flows are based on the Group’s estimates calculated based on historical.Notes To The Financial Statements 31 March 2010 (continued) 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (t) Contingent liabilities and contingent assets The Group and Company do not recognise a contingent liability but disclose its existence in the financial statements. (u) Impairment of assets Assets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment. 217 25 STERLING YEARS PROTON 2010 Annual Report .
However. by definition. Different intangible assets may be tested for impairment at different times. Projected future cash flows are based on the Group’s estimates calculated based on the cash generating unit’s operating results. expected market growth and industry growth as well as future economic conditions and other data. approved business plans. (i) Carrying value of property. rarely equal the related actual results. including expectations of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. plant and equipment and capitalised development cost whenever the events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable i. The resulting accounting estimates will. results and conclusion of the impairment assessment are stated in Note 13 to the financial statements. it is performed at the same time every year. that intangible asset shall be tested for impairment before the end of the current annual period. Irrespective of whether there is any indication of impairment.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) (u) Impairment of assets (continued) The impairment loss is charged to the Consolidated Income Statements. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are mentioned below. The value-in-use is the net present value of the projected future cash flows derived from the asset discounted at an appropriate discount rate. the carrying amount of the asset is more than the recoverable amount.e. 218 25 STERLING YEARS 4 KEY ESTIMATES AND JUDGEMENTS Estimates and judgements are continually evaluated and are based on historical experience and other factors. Any subsequent increase in recoverable amount is recognised in the Consolidated Income Statements. To enhance the information content of the estimates. the Group shall test an intangible asset with an indefinite useful life or an intangible asset not yet available for use for impairment annually by comparing its carrying amount with its recoverable amount. This impairment test may be performed at any time during an annual period. certain key variables that are anticipated to have a material impact on the Group’s results and financial position are tested for sensitivity to changes in the underlying parameters. The assumptions used. . Recoverable amount is measured at the higher of the fair value less cost to sell for that asset and its value-in-use. plant and equipment and capitalised development cost The Group assesses the carrying amount of property. if such an intangible asset was initially recognised during the current annual period.
This involves significant judgements regarding the future financial performance of the Group. such differences will impact the income tax provisions in the period in which such determination is made. Significant judgement is required in determining the capital allowances and deductibility of certain expenses during the estimation of the provision for income taxes. the expected product life cycle as well as technological developments. the likely timing and level of future taxable profits together with future tax planning strategies to support the basis of recognition of deferred tax assets. (iii) Deferred tax assets Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available against which the temporary differences can be utilised. An analysis of the deferred tax balance is set out in Note 22 to the financial statements. The Directors have considered the ability of the Group to generate sufficient taxable income to utilise the deferred tax assets and have concluded that no deferred tax asset should be recognised for certain subsidiary companies as at 31 March 2010 (Note 22).Notes To The Financial Statements 31 March 2010 (continued) 4 KEY ESTIMATES AND JUDGEMENTS (continued) (ii) Estimated useful lives of dies and jigs and capitalised development cost The Group reviews annually the estimated useful lives of dies and jigs and capitalised development cost based on product life cycle. Future results of operations could be materially affected by changes in these estimates brought about by changes in the factors mentioned. 219 25 STERLING YEARS PROTON 2010 Annual Report . Where the final tax outcome of these matters is different from the amounts that were initially recognised. The status of the income tax position of the Group is stated in Note 10 to the financial statements. A reduction in the estimated useful lives used for assessing the carrying values of dies and jigs and capitalised development cost would increase the recorded depreciation and amortisation respectively. The product life cycle is assessed based on business plans and strategies such as. (iv) Estimation of income taxes payable and recoverable Income taxes are estimated based on the rules governed under the Income Tax Acts of the respective countries. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business.
(viii) Impairment of goodwill The Group tests goodwill for impairment at least annually in accordance with its accounting policy or whenever events or changes in circumstances indicate that this is necessary. collection patterns. The assumptions used. useful lives of vehicle models and expected cost to sell. credit quality and credit losses incurred. (vii) Allowance for receivables The allowance is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. the Group records an asset for the amount expected to be recoverable from its vendors based on similar actual reimbursement experienced by the Group. . (vi) Allowance for inventory write down 220 25 STERLING YEARS Allowance for inventory write down is made based on an analysis of the ageing profile and expected sales patterns of individual items held in inventory. credit quality and credit losses can have an impact on the allowance recorded. results and conclusion of the impairment assessment are stated in Note 15 to the financial statements. Any changes to the ageing profile. expected collection patterns of individual receivable balances. This is determined based on the ageing profile. Changes in the inventory ageing and expected usage profiles can have an impact on the allowance recorded. An analysis of the utilisation of the provision is stated in Note 34 to the financial statements. This requires an analysis of inventory usage based on expected future sales transactions taking into account current market prices.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 4 KEY ESTIMATES AND JUDGEMENTS (continued) (v) Provisions for warranty Provision is made for the estimated liability on all products under warranty in addition to claims already received. In addition. Management carefully monitors the credit quality of receivable balances and makes estimates about the amount of credit losses that have been incurred at each financial statements reporting date. The accrual recorded is based on the actual claims experienced by the Group arising during the period of warranty over a number of years which provides a basis for calculating expected warranty claims.
203 Included in others is sale of rights for the use of intellectual property rights to an export market amounting to RM1. a wholly owned subsidiary company of the Company was liquidated during the financial year.. and Proton Edar Resources Sdn.357 362. Bhd. discounts and commission paid to dealers. Benelux had not commenced operations since its incorporation. wholly owned subsidiary companies of Proton Edar Sdn.859 2010 RM’000 101.. (c) Proton Capital Sdn.518. Revenue comprises: Group 2009 RM’000 6.203 101. (‘PMSB’) on 2 February 2009 has not been completed.Notes To The Financial Statements 31 March 2010 (continued) 5 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR During the financial year and as reported in the prior financial year.619 195.612.183 8. Bhd.000). (b) Proton Edar Ventures Sdn. Bhd. spare parts and accessories Rendering of engineering services Gross dividend income Others 7.000 (2009: RM19.872 235. 221 25 STERLING YEARS 6 REVENUE Revenue at the Group represents the invoiced value of goods sold and engineering services provided and is presented net of taxes. Bhd.215 6. PROTON 2010 Annual Report . which in turn a wholly owned subsidiary of PMSB were liquidated during the financial year.226.357 2010 RM’000 Sale of vehicles. a 99% owned subsidiary company of Proton Marketing Sdn.220.742.667 62. Revenue at the Company represents income from shares held in subsidiary companies and associated companies.754 Company 2009 RM’000 362. (a) The Members’ Voluntary Liquidation of Proton Cars Benelux Limited (‘Benelux’).057 38. Bhd.993.
678 48.impairment Write down of inventories** Current investments: .provision for diminution in value Research and development expenditure*** Provision for warranties (net of expected reimbursement) (Note 34) Reversal of allowance for doubtful debts Allowance for doubtful debts Bad debts written off Statutory audit fees to PricewaterhouseCoopers Malaysia: .417 6.612 23. unquoted .(gain)/loss on disposal Impairment of investment in an associated company Investment: .loss on disposal .reversal of impairment .688) 432.written off .359 (1. plant and equipment: .814 80.475 (359.357) Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 222 25 STERLING YEARS 620 (67) 599 114 88 27 88 60 .746 19.current year .000) (3.397 81.128 19 282 68. unquoted .provision for diminution in value Intangible assets: .depreciation .802 114.100) 10.616 (96.others.656) 450.534) 27.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 7 PROFIT/(LOSS) BEFORE FINANCE COST 2010 RM’000 The following items have been charged/(credited) in arriving at profit /(loss) before finance cost: Gross dividends received/receivable from: .149 (63.688 55.written off .600) (4.183 19. quoted Research and development grant* Property.100) 6.603) (2.associated companies.968 (23.(over)/under provision in prior year (915) (143.315) 45.subsidiary company.645) (2.950 44 1.346 38.127 45.806 (2.618 45.260) (80.493 20.amortisation .084 45.
During the financial year.under provision in prior year Audit related fees to PricewaterhouseCoopers: .Malaysia .translation Rental income on land and buildings Interest income Automotive Development Fund .989 26. PONSB has recognised R&D grant income amounting to RM143.546) (31.492. PROTON 2010 Annual Report .000) had been charged to cost of sales.617 (514) (28. One of the objectives of the NAP is to provide support and incentives to enhance competitiveness and capability of the automotive industry through the development of the latest and more sophisticated technology.585. and matched against R&D grant.amortisation of capital grant * Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 1. *** R&D expenditure including general R&D expenditure of a subsidiary company amounting to RM32.841.plant.000 (2009: RM30. machinery and equipment .000 (2009: RM80. ** Cost of sales includes write-down of inventories amounting to RM80.Notes To The Financial Statements 31 March 2010 (continued) 7 PROFIT/(LOSS) BEFORE FINANCE COST (continued) 2010 RM’000 Other member firms of PricewaterhouseCoopers International Limited:**** .925) (42.284) (1.228 7.139 1.128. PONSB. (‘PONSB’).656.000) based on R&D expenditure that did not meet the capitalisation criteria. as set out in the Group’s accounting policy (Note 3(d)(iii)).646) 48 (3.437) - (4. being a full fledged automotive manufacturer has complied with the requirements and had been allocated funds in the form of a R&D grant.481) (8.255) 1.000 (2009: RM114.688.502 24 486 232 592 2.transactions .Malaysia Non-audit fees to PricewaterhouseCoopers: . Bhd. **** PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers International Limited are separate and independent legal entities.000 relates to certain vehicle models which were impacted by contraction in sales volume as disclosed in Note 13(a) to the financial statements). as part of the Second Stimulus Package under the Ninth Malaysia Plan had within the ambit of the National Automotive Policy (‘NAP’) granted in 2009 a Research and Development (‘R&D’) grant to Perusahaan Otomobil Nasional Sdn. a wholly owned subsidiary company.536 12.000 of which RM81.380 206 505 902 959 22.725 (7.618) - 223 25 STERLING YEARS The Government of Malaysia.current year .950.765 16.Other member firms of PricewaterhouseCoopers International Limited**** Provision for onerous contract Rental: .land and buildings Foreign exchange loss/(gain): .089) (21.
477 Company 2009 RM’000 424 217 59 705 109 81 42 16 1.estimated monetary value of benefits-in-kind Executive Director:* .996 Directors’ remuneration The aggregate amount of emoluments received/receivable by the Directors of the Group and Company during the financial year was as follows: Group 2009 RM’000 584 939 59 705 109 81 2.salaries and bonuses .estimated monetary value of benefits-in-kind .293 752.390 55.436 4.allowances 695 695 109 1.259 * 2010 RM’000 524 223 109 1.fees .297 50.fees .842 708.970 53.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 8 STAFF COST 2010 RM’000 Wages.228 (8. .defined benefit plan (Note 32(e)) Other employee benefits 644.042) 62.418 224 25 STERLING YEARS 2010 RM’000 Non-executive Directors: .653 Group 2009 RM’000 598.allowances .384 248 128 42 11 2.384 248 128 3. salaries and bonuses Pension cost .defined contribution plan .669 The Executive Director’s remuneration in the Company is fully recharged to a subsidiary company.defined contribution plan .
197 (3.429) 607 (44) 563 1.957 6.240) (31.408 225 25 STERLING YEARS 10 TAXATION 2010 RM’000 Taxation in Malaysia Current taxation: .961 15.charge for the financial year .179 1.717 801 (844) (43) 41.027 (18.341 14.216) (21.179 Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 PROTON 2010 Annual Report .892 4.077 (17.write back of accrual in respect of disputes .179 14.110 1.053 Group 2009 RM’000 6.821) (8.448 269 14.988) (10.charge for the financial year .267) 4.over accrual in respect of prior financial years Taxation outside Malaysia Current taxation: .395) 563 1.under/(over) accrual in respect of prior financial years Deferred taxation (Note 22) Origination and reversal of temporary differences Tax benefits arising from previously unrecognised tax losses Tax expense/(credit) (1.092 12.144) 38.344 (11.053 28.809) 41.Notes To The Financial Statements 31 March 2010 (continued) 9 FINANCE COST 2010 RM’000 Interest expense on: Long term loans Short term borrowings Others 5.069 2.
over accrual in respect of prior years .254 566.732 19.988 1.current year tax losses not recognised .recognition of previously unrecognised deductible temporary differences .060.390 2.267 1.640 5.363 - - .double deduction and incentive on qualifying expenditure .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 10 TAXATION (continued) A numerical reconciliation between the average effective tax rate and the statutory tax rate effect is as follows: Group 2009 % (25) Company 2009 % 25 2010 % Malaysian statutory tax rate Tax effects of: .045 35.recognition of previously unrecognised tax losses .993.043 666.932 1.068 11.181 4.current year deductible temporary differences not recognised .different tax rates in subsidiary companies outside Malaysia Average effective tax rate 25 2010 % 25 226 25 STERLING YEARS (17) 3 (18) 4 26 (1) (2) (3) (1) 16 2010 RM’000 (3) 1 (11) 6 50 (16) (2) (4) (1) (5) 2009 RM’000 1 (25) 1 2010 RM’000 (25) 2009 RM’000 Previously unrecognised temporary differences utilised during the financial year Tax savings arising from temporary differences Previously unrecognised tax losses utilised during the financial year Tax savings arising from such tax losses Unabsorbed capital allowances carried forward Unutilised tax losses carried forward Unutilised reinvestment allowances 16.953 8.expenses not deductible for tax purposes .income not subject to tax .879.486 45.964.
Notes To The Financial Statements 31 March 2010 (continued) 10 TAXATION (continued) The effective tax rate is lower than the statutory tax rate due to double deduction for R&D expenditure.002 ordinary shares amounting to RM82. The basis of agreed claims was subsequently applied for YA 1999 to 2002.240. 227 25 STERLING YEARS 11 EARNINGS/(LOSS) PER SHARE Basic earnings/(loss) per share is calculated by dividing the net profit/(loss) attributable to equity holders of the Company by the weighted average number of ordinary shares in issue during the financial year.213. PROTON 2010 Annual Report .381.000) relates to overpayment of tax liabilities. Group 2009 (301.650.213 40 12 DIVIDENDS Dividends declared in respect of the financial year ended 31 March 2010 are as follows: Group 2009 RM’000 20.000) relates to settlement of tax disputes for YA 1999 to 2002 (2009: YA 1989 to 2002) whilst the balance of RM7.950 in respect of the financial year ended 31 March 2010.806) 549.213 (55) 2010 Net profit/(loss) attributable to equity holders of the Company (RM’000) Weighted average number of ordinary shares in issue (‘000) Basic earnings/(loss) per share (sen) Diluted earnings/(loss) per share equals to basic earnings/(loss) per share.000 (2009: RM140. 218.000 (2009: RM19. subject to the approval of members at the forthcoming Annual General Meeting.061. recognition of non-taxable income and recognition of previously unrecognised tax losses and capital allowances. The tax recoverable amount of RM18. The tax write back in the previous financial year arose following an agreement with the Inland Revenue Board (‘IRB’) to settle tax disputes in respect of a subsidiary company’s treatment of certain items in the tax submissions for Years of Assessment (‘YA’)1989 to 1998.932 549.595 2010 RM’000 Interim dividend of 5 sen per ordinary share less tax at 25% - The Directors recommend the payment of a final dividend of 20 sen per ordinary share less tax at 25% on 549.960.
597 12.000 (1.710) (160) (43.373.575) 203.614) 226.624.805 7.714 (10.313 4.829 (15.977) 115.546) 209 38.019 52.078.757 3.015 56.144) 438 - 467.256) (6.171 (29.239) 6.252 557.764 5.793.357) (53.416 (639) (6.811) 87.790) (73.418 .916) (6.020 (5.092) (6.435 (6) 1.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 13 PROPERTY.364 108.726) (19.144 37.034 4.143 (10.137.671 - 112.890 226.155) 34. PLANT AND EQUIPMENT Office equipment.761 (3.596.170.000 (168.301.662) 28.233 764.884 337.343 292.589 (34.481) 280.805 2.555 (15.783) (6) 7.725 (2.482 4.064) (253) (66.966) (49.979 - 477.241 (10.468.872 1.521 9.308 317.252.569 735.243 43.253 1.438) (9.273) 432.025 833.083 - 4. furniture.313) 1.503) 265.757) 6. Plant and fittings and machinery vehicles RM’000 RM’000 Note Group 2010 Cost/valuation At 1 April 2009 Currency translation differences Additions Disposals Written off Reclassification of completed work-in-progress Reclassification Reclassification to intangible assets 16 At 31 March 2010 Accumulated depreciation At 1 April 2009 Currency translation differences Charge for the financial year Disposals Written off Adjustment in respect of reversal of impairment loss At 31 March 2010 Accumulated impairment losses At 1 April 2009 Currency translation differences Charge for the financial year Reclassification Reversal of impairment loss At 31 March 2010 Net book value At 31 March 2010 Freehold land RM’000 Buildings RM’000 Work-inprogress RM’000 Total RM’000 228 25 STERLING YEARS 226.840 (1.834) 15.952) (10.370) 52.804 (70.676 2.455) (1.232) (80.610 (24.828 1.007.363) 43.352.233 407 (9.579.580 57.612 (25.027) 2.962 (27.336.
597) 4.711) 9.946) 85.966 (113.931) 462.647 1.407) 4.778) 1.004) 91.781 (82.849) 52.004) 682.858 (88) 351.560) (19.725 - (2.794 (3.962 - 434.346 (33.256 - 4.182) 3.629 (43.840 735.007.680 - 1.482 (4.240 (71.848) 26 (10.965) - (2.457 2.579.416 5.676 (28) 2.375. PLANT AND EQUIPMENT (continued) Office equipment.364 (16.638) - 1.168 (50.352.675.Notes To The Financial Statements 31 March 2010 (continued) 13 PROPERTY.325) 7.362 (2.212) (353.124 7.558.298 - 2.396. Plant and fittings and machinery vehicles RM’000 RM’000 Note Group 2009 Cost/valuation At 1 April 2008 Currency translation differences Additions Disposals Acquisition through business combination 17 Written off Reclassification of completed work-in-progress Reclassification from inventory Reclassification to non-current assets held for sale 29 At 31 March 2009 Accumulated depreciation At 1 April 2008 Currency translation differences Charge for the financial year Disposals Acquisition through business combination 17 Written off Reclassification to non-current assets held for sale 29 At 31 March 2009 Freehold land RM’000 Buildings RM’000 Work-inprogress RM’000 Total RM’000 236.624 (14.192) 2.828 1.685 (20.592) 306.094) 22.571) 102 (23.858 (28.074. furniture.426 (32.692) 1.611) 759 (7.918) 1.863 (35.136) 420 (38.793.075 (19.161 (14.961) - 3.124 229 25 STERLING YEARS 226.479 (30.073 - 27.668) 312.009) 9.149 (7.569) 477.872 (11.301.445) 450.404 (45.053) 39.137.121) 26 (9.251 (10.110.241 PROTON 2010 Annual Report .
000). Had this freehold land been carried at historical cost.777.536 (13. plant and equipment Less: Amount financed by hire purchase arrangements Less: Amount acquired via ADF (Note 32(d)(ii)) Net cash outflow on acquisition of property.588) 145.471) (328) 37.448.872 761.632 (18.227 364.882.223) (31.674 (786) 317.819 (17.000 (2009: RM3. The net cash outflow for the acquisition of property.171 (7. plant and equipment 203.468.448.000) was charged to a licensed bank as security for borrowings as disclosed in Note 32(b) to the financial statements.253) (50. the net book value of freehold land that would have been included in the financial statements at the end of the financial year would be RM22.616) 467.364 2.800) 257.759) 257.330 .674 (1.000 (2009: RM22.829 79. plant and equipment of a wholly owned subsidiary company with a net book value of RM169.020 - 285.000 (2009: RM111. furniture.761 54.536) - 137.671 5.034) (502) 112. PLANT AND EQUIPMENT (continued) Office equipment. Property.781 (5.416.959.610 226.827.352 (73.049) 426. plant and equipment during the financial year is: Group 2009 RM’000 462. The surplus of RM36. The net book value of the office equipment acquired under finance lease at the balance sheet date was RM10.000 arising from the revaluation was credited to the capital reserves and subsequently utilised.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 13 PROPERTY.365 (24.000).229. Plant and fitting and machinery vehicles RM’000 RM’000 Note Group Accumulated impairment losses At 1 April 2008 Currency translation differences Charge for the financial year Reversal of impairment loss At 31 March 2009 Net book value At 31 March 2009 Freehold land RM’000 Buildings RM’000 Work-inprogress RM’000 Total RM’000 230 25 STERLING YEARS 13.977 1.111 A piece of a subsidiary company’s freehold land was revalued on 5 September 1983 based on an independent professional valuation.509 2010 RM’000 Total acquisition of property.
000 in respect of plant and machinery for a slow moving model.802.000. expected market and industry growth rates. as well as. The business plan reflects the cash generating unit’s expectation of capacity utilisation. plant and equipment and capitalised development cost. future economic conditions and other data. PLANT AND EQUIPMENT (continued) Impairment test for property. plant and equipment and capitalised development cost. included within intangible assets. Most of these factors used in assessing the fair values are outside the control of management. These assumptions are used to drive the planning assumptions for sales volume and mix.757. In the previous financial year.000 recognised as an impairment loss under other operating expenses. the recoverable amounts are determined based on value-in-use calculations. while the balance of RM20. current assessment of market share. The projections over these periods were based on an approved business plan. 231 25 STERLING YEARS PROTON 2010 Annual Report . The impairment assessment performed in the current financial year resulted in an impairment loss of RM6. approved business plans. (i) Assumptions and approach used The value-in-use calculations apply a discounted cash flow model using cash flow projections covering a five year period. Where market prices are not available. The cash generating unit also makes assumptions about cost levels. (a) Malaysian operations The carrying values of property. The following are the key assumptions used in the cash flow projections: • Business projections – The cash generating unit makes assumptions about the demand for its products in the market place.575.000. and assuming a zero growth rate for subsequent periods up to fourteen years. the softening of the automotive industry in the second half of the financial year had resulted in a contraction in sales volume.Notes To The Financial Statements 31 March 2010 (continued) 13 PROPERTY. included within intangible assets of a subsidiary company totalling RM2.000 in respect of plant and machinery. The property. revenue growth. an amount of RM270.000 was related to capitalised development cost. As a result. plant and equipment and capitalised development cost relating to certain vehicles models impacted by volume contraction. Arising from this. operating costs and margins based on past experience.198. included within intangible assets Assumptions and approach used – Group The fair value of a cash generating unit or an asset group is measured based on market prices when available.000 were tested for impairment in the current financial year. Embedded in the development of the cash flow projections are assumptions and estimates derived from a review of the cash generating unit’s operating results. a subsidiary company undertook a test for impairment of its property. expectations of market growth and industry growth. comprised RM249. hence these assumptions and estimates may change in future periods. plant and equipment were allocated to the cash generating units which are identified according to production plants and vehicle models.
39% and 21. hence. The discount rate reflects the prevailing independent market rate applicable to the Group. Other macro-economic assumptions. the overall sales volume used in the projections indicates an increase from current levels due to the expected growth in sales of completely-knocked-down (CKD) packs to the export markets and planned introduction of new models for which the product development capital expenditure has been approved. Terminal values of production plants – Terminal values of the production plants in year fourteen are assumed to be derived from the fair market values by an internal registered valuer arising from the disposal of the land and buildings on which the three specific plants are located. the projections for the remaining three years indicate a reduction. being the major contributor to the Group’s margins indicates an increase in sales volume from current levels for the first two years through planned introduction of new models for which capital expenditure on project development has been approved. commodities prices. 232 25 STERLING YEARS • • (ii) Impact of possible changes in key assumptions The sensitivity tests indicated that no further impairment loss is required where other realistic variations are applied to key assumptions.8% was used to discount the terminal value which reflects the prevailing term loan borrowing cost. discount rates of 13. The Malaysian market. Thereafter. plant and equipment and capitalised development cost.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 13 PROPERTY. inflation rates. PLANT AND EQUIPMENT (continued) Impairment test for property. A discount factor of 6. a zero growth rate is assumed. interest rates and foreign currency exchange rates have also been considered. Discount rates – In measuring the recoverable amounts based on the value-in-use calculation. • • Long-term growth rate – From the sixth year and onwards. . such as. the projected sales volume did not include future models for which capital expenditure on project development has not been approved.39% have been applied to domestic and export sales respectively. Separate assessment is made for the Malaysian and the export markets. Economic projections – Assumptions regarding the general economic conditions are applied in arriving at the industry sales volume. included within intangible assets (continued) (a) Malaysian operations (continued) (i) Assumptions and approach used (continued) The following are the key assumptions used in the cash flow projections (continued): • Business analysis – In line with the improved global economy.
the sales volumes used in the value-in-use calculation is based on sales projections of existing models taking into consideration the projected lifecycle of the models in line with the short range and long range product plans. • Terminal values – An estimated residual value based on the carrying values of the land and buildings is used. The following are the key assumptions used in the cash flow projections: • Business analysis – For cars. operating costs and margins based on past experience and current assessment of market demand. The balance of impairment provision amounting to RM53.588.447. the third party sales projections are based on existing projects-inhand and include a forecast of new work to be won with emphasis on the 4-core competencies and key service offerings.000 were tested for impairment in the current financial year. 233 25 STERLING YEARS PROTON 2010 Annual Report . revenue growth. included within intangible assets totalling RM344. included within intangible assets were allocated to the cash generating units which are identified according to production facilities relating to cars and engineering businesses of the overseas subsidiary. fresh funds would be invested to develop new and better products to penetrate into the premium sports car segment. plant and equipment and capitalised development cost.034. (i) Assumptions and approach used The recoverable amounts are determined based on value-in-use calculations. The review indicated that no impairment losses were required for the current financial year ended 31 March 2010 (2009: RM8. The review also indicated that the impairment of property. PLANT AND EQUIPMENT (continued) Impairment test for property.000 in relation to plant and machinery) as their recoverable amounts were in excess of their carrying values. included within intangible assets (continued) (b) Overseas operations The carrying values of property.000 less depreciation of RM115. plant and equipment and capitalised development cost.000 in Note 13) has been reversed to the Consolidated Income Statements. plant and equipment previously provided at the Group level is no longer required as the balance of impairment related mainly to buildings. The projections over these periods were based on an approved business plan and reflect the subsidiary group’s expectation of plant utilisation. The property.476.Notes To The Financial Statements 31 March 2010 (continued) 13 PROPERTY.000 (being accumulated impairment of RM168.481. This is largely attributable to a change in management whereby. For engineering services. The value-in-use calculations apply a discounted cash flow model using cash flow projections covering a five-year period. plant and equipment and capitalised development cost.
as well as other macro-economic assumptions relating to the automotive industry. 14 PREPAID LAND LEASE PAYMENTS 2010 RM’000 Cost/Net book value: At 1 April Currency translation differences Reclassification to non-current assets held for sale (Note 29) At 31 March Group 2009 RM’000 24.031 (1. a discount rate of 10% has been applied. PLANT AND EQUIPMENT (continued) Impairment test for property. 234 25 STERLING YEARS • (ii) Impact of possible changes in key assumptions The sensitivity test indicated that no further impairment loss is required where other realistic variations are applied to key assumptions. plant and equipment and capitalised development cost. Economic projections – In arriving at the industry sales volume. assumptions are made regarding the general economic conditions in its key markets. included within intangible assets (continued) (b) Overseas operations (continued) (i) Assumptions and approach used (continued) The following are the key assumptions used in the cash flow projections (continued): • Discount rates – For purposes of the value-in-use calculation.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 13 PROPERTY.684) - .347) (22. This is based on the subsidiary group’s weighted average cost of capital and is reflective of the prevailing market rate applicable to the subsidiary group and segment in which the Group operates in.
The projections reflect the Group’s expectations of revenue growth. This value-in-use calculation applies a discounted cash flow model using cash flow projections covering a five-year period for the distribution business in Malaysia.008 Group 2009 RM’000 35. the projections for the remaining three years indicate a reduction. The discount rate reflects the prevailing independent market rate applicable to the Group in Malaysia. PROTON 2010 Annual Report .Notes To The Financial Statements 31 March 2010 (continued) 15 GOODWILL 2010 RM’000 At 1 April Less: Accumulated impairment loss At 31 March Impairment test for goodwill The Group undertook an annual test for impairment of goodwill. 35. The carrying amount of goodwill is allocated to the cash generating unit that the goodwill relates to. which is the distribution business in Malaysia. the projected sales volume did not include future models for which capital expenditure on project development has not been approved.749 (6.741) 29. Business analysis – The sales volume used in the projections indicates an increase from current levels for the first two years through planned introduction of new models for which capital expenditure on project development has been approved.39% has been applied. Economic projections – Assumptions regarding the general economic conditions are considered in arriving at the estimated sales volume and prices for the vehicles.008 235 25 STERLING YEARS • • (ii) Sensitivity impact of possible changes in key assumptions Sensitivity analysis shows that no impairment loss is required for the carrying amount of goodwill. Thereafter.749 (6. (i) Assumptions and approach used The recoverable amount of the cash generating unit including goodwill in this test is determined based on the value-in-use calculation.741) 29. including where realistic variations are applied to key assumptions. operating costs and margins based on past experience and current assessment of market share. hence. The following are the key assumptions used in the cash flow projections: • • Business projections – The cash generating unit makes assumptions about the demand for its products in the market place and are used to project the sales volume and mix. expectations of market growth and industry growth. a discount rate of 13. Discount rates – For purposes of the value-in-use calculation.
762) 81.265 6.956 71.775 20.688 190.923 (2.849 20.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 16 INTANGIBLE ASSETS Capitalised development cost RM’000 Group 2010 Cost At 1 April 2009 Currency translation differences Additions Written off Reclassification from property.802 553.387 6 77.361 66.963 .802 563.595) 268.814) 697.327 123.237 (55.393 (7.522 14.188 10.658 564.966 52.401 (2.595) 274.814) 6 775. plant equipment (Note 13) At 31 March 2010 Amortisation At 1 April 2009 Currency translation differences Charge for the financial year At 31 March 2010 Accumulated impairment loss At 1 April 2009/31 March 2010 Net book value At 31 March 2010 Computer software RM’000 Total RM’000 236 25 STERLING YEARS 493.128 (7.883 111.624 (55.614 59.762) 67.
000) of which RM2.387. During the financial year.880.265 340.804 (14. a subsidiary company acquired computer software with an aggregate cost of RM6.Notes To The Financial Statements 31 March 2010 (continued) 16 INTANGIBLE ASSETS (continued) Capitalised development cost RM’000 Group 2009 Cost At 1 April 2008 Currency translation differences Additions Written off Disposal At 31 March 2009 Amortisation At 1 April 2008 Currency translation differences Charge for the financial year Written off Disposal At 31 March 2009 Accumulated impairment loss At 1 April 2008 Charge for the financial year (Note 13) At 31 March 2009 Net book value At 31 March 2009 Computer software RM’000 Total RM’000 237 25 STERLING YEARS 275.393 27.164 (16) (16) 71.739 (2.468 493.917.283) 48. PROTON 2010 Annual Report .923 20.283) 33.000 (2009: RM6.000 (2009: Nil).006 14.802 20.945 59.522 65.493 (16) (16) 111.802 20.164. The net book value of the computer software acquired under finance lease at the balance sheet date was RM2.401 38.133 6.128 65.743 431.925 18.548 (16) (16) 52.632 (16) (16) 564.802 412.000 (2009: Nil) was acquired by means of finance lease (Note 32(c)).937 (14.802 - 20. plant and equipment as explained in Note 13 to the Financial Statements. Impairment test for capitalised development cost has been performed together with the related property.668 The amortisation period for intangible assets ranges from 3 to 10 years (2009: 3 to 10 years).745 (2.144) 231.144) 237.
Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 17 SUBSIDIARY COMPANIES 2010 RM’000 Unquoted shares at cost: At 1 April Less: Impairment loss At 31 March The details of the subsidiary companies are as follows: Country of incorporation Group’s effective interest 2010 2009 % % 100 100 2. Bhd. Assembly of motor vehicles Malaysia and related products Investment holding Investment holding Malaysia Malaysia Malaysia Malaysia 100 100 100 100 - 100 100 100 100 100 Proton Hartanah Sdn. Investment holding Proton Capital Sdn. Lotus Advance Technologies Sdn.652) 1.708. Bhd. PT Proton Cikarang Indonesia Proton Automobiles (China) Limited^ Ceased operations Dormant Indonesia British Virgin Islands 100 100 100 100 .708. Bhd. Bhd. Liquidated during the financial year Subsidiary companies of Perusahaan Otomobil Nasional Sdn.^ Manufacture. Bhd.036. assembly and sales of motor vehicles and related products Malaysia Proton Tanjung Malim Sdn. Bhd.651 238 25 STERLING YEARS Name Principal activities Perusahaan Otomobil Nasional Sdn.303 (327.303 (327.652) 1.036.651 Company 2009 RM’000 2.^ Proton Marketing Sdn. Bhd.
Bhd. Bhd.Notes To The Financial Statements 31 March 2010 (continued) 17 SUBSIDIARY COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % Subsidiary companies of Proton Marketing Sdn. Bhd. Proton Engineering Research Technology Sdn.^ Thailand 100 100 Belgium 100 100 Dormant Malaysia 100 100 Investment holding England 100 100 Property development and management Malaysia 100 100 PROTON 2010 Annual Report . Limited* Proton Cars Benelux NV.^ Lotus Group International Limited*^ Subsidiary company of Proton Hartanah Sdn. Limited*^ Australia 100 100 Proton Edar Sdn. Bhd. related spare parts and accessories Importation and wholesale of motor vehicles and related products In Members’ Voluntary Liquidation England 100 100 239 25 STERLING YEARS Proton Cars Australia Pty. Bhd. Bhd. SA*^ Subsidiary companies of Lotus Advance Technologies Sdn. Proton Properties Sdn.^ Malaysia 100 100 Proton Motors (Thailand) Co. Proton Cars (UK) Limited*^ Importation and distribution of motor vehicles and related products Importation and distribution of motor vehicles and related products Sales of motor vehicles.
^ Proton Edar Ventures Sdn. Bhd. Bhd. Bhd. Limited*^ Importation and distribution of motor vehicles and related products Importation and wholesale of motor vehicles and related products Liquidated during the financial year Liquidated during the financial year Singapore 100 100 PT Proton Edar Indonesia* Proton Edar Resources Sdn. Limited Lotus Cars Australia Pty. Limited*^ Importation and distribution of motor vehicles and related products Australia 100 100 Subsidiary companies of Proton Edar Sdn.^ Subsidiary company of Lotus Group International Limited Group Lotus Plc*^ Indonesia 95 95 Malaysia Malaysia - 100 100 Investment holding England 100 100 .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 17 SUBSIDIARY COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % 240 25 STERLING YEARS Subsidiary company of Proton Cars Australia Pty. Proton Singapore Pte.
*^ Subsidiary companies of Lotus Cars Limited Lotus Engineering Limited*^ Lotus Engineering Company Limited (Shanghai)* Subsidiary company of Lotus Body Engineering Limited Lotus Lightweight Structures Holdings Limited* England England United States of America 100 100 100 100 100 100 Engineering consultancy services Engineering consultancy services England People’s Republic of China 100 100 100 100 Investment holding England 100 100 PROTON 2010 Annual Report .Notes To The Financial Statements 31 March 2010 (continued) 17 SUBSIDIARY COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % Subsidiary companies of Group Lotus Plc Lotus Cars Limited*^ Manufacture of motor vehicles and engineering consultancy services Investment holding Dormant Investment holding England 100 100 241 25 STERLING YEARS Lotus Body Engineering Limited*^ Lotus Motorsports Limited*^ Lotus Holdings Inc.
Lotus Engineering Inc.^ Subsidiary companies of Lotus Holdings Inc. .*^ Lotus Cars USA Inc. Consolidated by merger method of accounting prior to 1 April 2006. Malaysia.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 17 SUBSIDIARY COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % 242 25 STERLING YEARS Subsidiary company of Lotus Lightweight Structures Holdings Limited Lotus Lightweight Structures Limited* Subsidiary company of Lotus Engineering Limited Lotus Engineering (Malaysia) Sdn.*^ Engineering consultancy services Sales of motor vehicles and related spare parts and accessories United States of America United States of America 100 100 100 100 Engineering consultancy services Malaysia 100 100 Manufacture of automotive components England 100 100 * ^ Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and independent legal entity from PricewaterhouseCoopers. Bhd.
355) 7.753) 243 25 STERLING YEARS The details of net assets acquired and cash flows arising from the acquisition of the subsidiary company during the last financial year are as follows: Acquiree’s carrying value RM’000 Property. The effects of the acquisition on the financial results of the Group during the last financial year are as follows: 2009 RM’000 Revenue Operating costs Loss before tax Tax expense Loss for the financial year 46.173 7.160.512 4.957) (11.Notes To The Financial Statements 31 March 2010 (continued) 17 SUBSIDIARY COMPANIES (continued) In the prior year.520 (14.845 Fair value RM’000 1. PROTON 2010 Annual Report .814 5.204 (57.497) 522 Had the acquisition taken effect at the beginning of the previous financial year.995 5. bank and cash balances Payables and other liabilities Net assets/Fair value of net assets acquired Details of cash flow arising from the acquisition are as follows: Purchase consideration settled in cash Less: Cash and cash equivalents of subsidiary company acquired Cash inflow to the Group on acquisition of subsidiary company 522 (4.520) 3. deposits and prepayments Deposits.512 4. a wholly owned subsidiary company of Lotus Group International Limited. the contributed revenue and loss to the Group would have been RM55. plant and equipment (Note 13) Inventories Receivables. Lotus Body Engineering Limited.193.998 4.000 and RM13.173 7.753) (11.000 respectively. which in turn is a wholly owned subsidiary company of the Company acquired the entire issued and paid up share capital of Lotus Lightweight Structures Holdings Limited.520 (18.
422 (91.600 13.252 131.703 161.245 (32.535 Name Principal activities Group’s effective interest 2010 2009 % % 35 35 PHN Industry Sdn.252 126.365) (8.804) (9.560 145.532) 158. revenue and expenses of the associated companies are as follows: Group 2009 RM’000 112.351) 13.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 18 ASSOCIATED COMPANIES 2010 RM’000 Unquoted shares at cost Share of post-acquisition reserves Less: Impairment loss 59.707 6.977) 152.640 227.220 2010 RM’000 Non-current assets Current assets Current liabilities Non-current liabilities Net assets Revenue Expenses (excluding tax) Profit before taxation Taxation Profit for the financial year The details of the associated companies are as follows: Country of incorporation 107.640 Group 2009 RM’000 59. liabilities.600 Company 2009 RM’000 13.513 20.878) 152. Manufacture and sales of stamped parts and sub-assembly of automotive metal components Malaysia .266 185.058 (222.993 191.976 (222.367 236.518 (32.600 244 25 STERLING YEARS The Group’s share of the assets.019) 5.600 13.600 13.367 2010 RM’000 13. Bhd.000 (105.878) 158.957 (422) 5.600 13.
99 Property developer and project management Malaysia 40 40 Associated company of Proton Edar Sdn.99 49. extruded and rubber hoses for motor vehicles. Netstar Advance Systems Sdn. Bhd. Vina Star Motors Corporation Import. Bhd. Bhd. assembly and sales of vehicle tracking devices Malaysia 40 40 25 STERLING YEARS Manufacture and production of moulded products.Notes To The Financial Statements 31 March 2010 (continued) 18 ASSOCIATED COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % 25 25 Marutech Elastomer Industries Sdn. Manufacture. Manufacture and assembly of manual clutch and automatic transmission parts Associated company of Perusahaan Otomobil Nasional Sdn. Exedy (Malaysia) Sdn. Bhd. Proton City Development Corporation Sdn. Associated company of Proton Cars (UK) Limited Proton Finance Limited Provision of dealer and customer financing England 49. Bhd. assembly and distribution of motor vehicles Malaysia 45 45 Socialist Republic of Vietnam 25 25 Associated company of Proton Hartanah Sdn. motorcycle and other related products Malaysia 245 PROTON 2010 Annual Report . Bhd. Bhd.
159 233 1. Miyazu (Malaysia) Sdn. Bhd.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 18 ASSOCIATED COMPANIES (continued) Name Principal activities Country of incorporation Group’s effective interest 2010 2009 % % 246 25 STERLING YEARS Associated company of Proton Automobile (China) Limited Goldstar Proton Dormant Automobiles Co. although the Group exercises significant influence.736 . moulds and jigs 51 51 People’s Republic of China 49 49 * The Group has resolved to dissolve the associated company via an arbitration process (Note 42(c)). Bhd. However.** Malaysia Development. ** Company in which the Group owns more than 50%. plant and equipment approved but not provided for in the financial statements: Contracted for Not contracted for 468 5. marketing and sale of products and provision of services relating to dies. it does not have control over its financial and operating policies. Limited* Associated company of Lotus Advance Technologies Sdn. The share of capital commitments relating to the associated companies is as follows: Group 2009 RM’000 2010 RM’000 Capital commitments Capital expenditure for property.
480) 20.673 (5.926 (82. revenue and expenses of the jointly controlled entities are as follows: Group 2009 RM’000 290.114) 60.534 Group 2009 RM’000 136.545 190.574 (170.534 247 25 STERLING YEARS 67.622 175. liabilities.235 PROTON 2010 Annual Report .079) 14.168 151.088 195.594 2010 RM’000 Non-current assets Current assets Current liabilities Non-current liabilities Net assets Revenue Expenses (excluding tax) Profit before taxation Taxation Profit for the financial year 236.898) 202.673 (156.622 The Group’s share of the assets.913) 195.534 135.Notes To The Financial Statements 31 March 2010 (continued) 19 JOINTLY CONTROLLED ENTITIES 2010 RM’000 Unquoted shares at cost At 1 April 2009 Liquidated At 31 March 2010 Accumulated impairment loss At 1 April 2009 Liquidated At 31 March 2010 Share of post-acquisition reserves 135.151 (93.559) (163.114) 135.648 (1.011 202.545 1.094 (6.858 199.566) (139.000) 19.114 (1.859) 13.
Bhd.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 19 JOINTLY CONTROLLED ENTITIES (continued) The details of the jointly controlled entities are as follows: Country of incorporation Group’s effective interest 2010 2009 % % Name Principal activities 248 25 STERLING YEARS Jointly controlled entity of Proton Marketing Sdn. * Provision of motor vehicles financing Malaysia 50 50 Company in which the Group owns more than half of the voting powers.9 Jointly controlled entity of Proton Edar Sdn. Bhd. The share of capital commitments relating to the jointly controlled entities is as follows: Group 2009 RM’000 2010 RM’000 Capital commitments Capital expenditure for property. Proton Parts Centre Sdn. Bhd. this investment is treated as a jointly controlled entity. as the Group only has joint control over its financial and operating policies. plant and equipment approved but not provided for in the financial statements: Not contracted for 1.* Trading in motor vehicle components. Proton Commerce Sdn.062 . spare parts and accessories Malaysia 55 55 Jointly controlled entity of Group Lotus Plc Lotus Finance Limited Provision of motor vehicles financing England 49. However.438 1. Bhd.9 49.
347 (2.978 More than 1 year RM’000 232.100) Company 2009 RM’000 8.946 292.5% per annum.912 58.397 10. interest free and repayable on demand.912 177.946 Total RM’000 59.Notes To The Financial Statements 31 March 2010 (continued) 20 AMOUNTS DUE FROM SUBSIDIARY COMPANIES 2010 Less than 1 year RM’000 Amounts due from subsidiary companies Advances to a subsidiary company 59.100) 6.475 PROTON 2010 Annual Report .870 177.782 249 25 STERLING YEARS The amounts due from subsidiary companies are denominated in Ringgit Malaysia.924 Less than 1 year RM’000 58.950) 10.247) 2.397 2010 RM’000 8.912 More than 1 year RM’000 177. repayable after 6 years and bears interest at 3.575 (2.347 (11.870 236.100 (2.475) 2.100 (2.475 6.870 Company 2009 Total RM’000 58.978 59.978 232.100) Group 2009 RM’000 13. Advances to a subsidiary company are denominated in Ringgit Malaysia.946 232.575 (6. 21 INVESTMENTS 2010 RM’000 Unquoted investments in Malaysia: At cost Allowance for diminution in value Reclassification to non-current assets held for sale (Note 29) 13.
985) (93.allowances and provisions . are shown in the Consolidated Balance Sheets: Group 2009 RM’000 5.424) (4.property.others Offset of deferred tax liabilities Deferred tax assets (after offsetting) Deferred tax liabilities (before offsetting) .720 (968) 8.674 (10.property.740) 4.082) (90.436) 49.210 497 94.727 (79.727 (12.841) (43. plant and equipment .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 22 DEFERRED TAXATION Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.others At end of financial year Deferred tax assets (before offsetting) .136 1.414) 79.516) 94.allowances and provisions .516) 250 25 STERLING YEARS 2010 RM’000 Subject to income tax: Deferred tax assets Deferred tax liabilities 15.243) .capitalised development cost .077) (6. determined after appropriate offsetting.809 4.925 (12.516) 1.439) (8.707 (79.921 10.293 (2.364) (12.capitalised development cost .332) (11.674) 15.168) 80.property.652 (80. plant and equipment .033 17 86.819) (1.033 (10.293 Movement of deferred tax At start of financial year Credited/(charged) to income statement (Note 10) .243) (6. The following amounts.740) (78.925) 5.others Offset against deferred tax assets Deferred tax liabilities (after offsetting) (6. plant and equipment .074 561 86.624 (1.
others Parts.475 515.888 164.227.646 498.049 11.049 8. are as analysed below: Group 2009 RM’000 2010 RM’000 Temporary differences of which no deferred tax assets are recognised Unrecognised tax losses Unabsorbed capital allowances Unrecognised reinvestment allowances Other temporary differences 183.completely knocked-down packs of vehicles .311 1.081 PROTON 2010 Annual Report .639 251 25 STERLING YEARS 158.395. associated companies and joint controlled entities for the recognition of deferred tax liabilities (2009: Nil).458 581.341 79.221 10. there are no temporary differences associated with unremitted earnings of subsidiary companies. accessories and general stores Work-in-progress Finished vehicles Goods-in-transit Land held for development Properties for sale 112.945 35.449 125.673 1.569 47.183 84.212 Group 2009 RM’000 244.263 497.723 10.250 476.188 640.862 219.115 68.Notes To The Financial Statements 31 March 2010 (continued) 22 DEFERRED TAXATION (continued) The tax effect of temporary differences (which have no expiry dates) for which no deferred tax assets are recognised in the balance sheet of certain subsidiary companies of the Group as at 31 March 2010. 23 INVENTORIES 2010 RM’000 Raw materials: .883 66.910 274.082 As at 31 March 2010.
509 76.087 920.177 (54.209 38.393 890.527 84.2010 US Dollar Euro Others Total RM’000 RM’000 RM’000 RM’000 Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Thai Baht Indonesian Rupiah Others 581.680 21.954) 102.329 4.911 Company Functional currency Ringgit Malaysia 749 Thai Baht RM’000 84.891) 123.921 648.188 3.429) 566.758 20.957 14.329 4.400 - - - - 749 .451 20.400 Group 2009 RM’000 611.657 103.368 14.3.700 40.583) 560.506 Government grant receivable Warranty claims reimbursable (Note 34) Prepayments Deposits 99.820 (22.656 111.911 581.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 24 TRADE AND OTHER RECEIVABLES 2010 RM’000 Trade receivables Allowance for doubtful debts 621.158 144.700 38.874 30.716 11.295 177 33.361 125.397 (25.095 2010 RM’000 749 749 749 Company 2009 RM’000 145 145 145 252 25 STERLING YEARS The currency exposure profile of trade and other receivables is as follows: Currency exposure profile as at 31.344 95.686 920.944 (51.023 143.700 84.748 Other receivables Allowance for doubtful debts 149.866 80.
5%) of total Group revenue.000 (2009: RM81.520.686 51.611 2.942 78.764 37.Notes To The Financial Statements 31 March 2010 (continued) 24 TRADE AND OTHER RECEIVABLES (continued) The currency exposure profile of trade and other receivables is as follows (continued): Currency exposure profile as at 31. PROTON 2010 Annual Report .044 6. Group sales are concentrated in Malaysia with one major third party customer in Malaysia making up 17.497 530. The Directors are of the view that the credit risk is minimal in view of the stability and historical settlement of the receivables from this customer.095 - - - - 145 Credit terms of trade receivables for the Group range from 14 to 180 days (2009: 14 to 360 days).497 Company Functional currency Ringgit Malaysia 145 Pound Sterling RM’000 253 25 STERLING YEARS 31. However.164 137.3.000) due from a single customer.914 31.410 31.178 68.840 714.044 6.775 91.823 161.4% (2009: 27.2009 US Dollar Euro Others Total RM’000 RM’000 RM’000 RM’000 Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Indonesian Rupiah Others 530. the majority of the Group’s trade receivables have a credit term between 14 to 90 days (2009: 14 to 90 days).130 21.973 890.503 198 37. The Group has no significant concentration of credit risk except for an amount of RM73.985 15.138.307 82.
219 18. These amounts have credit terms ranging from 30 to 60 days (2009: 30 to 60 days).235 49 18.3.284 .3.2010 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 34. The currency exposure profile of amounts due from associated companies is as follows: Currency exposure profile as at 31. The functional currency of the Company is Ringgit Malaysia and the amounts due from associated companies as at 31 March 2010 are denominated in Ringgit Malaysia.599 16 34.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 25 AMOUNTS DUE FROM ASSOCIATED COMPANIES The amounts due from associated companies arose from normal trade transactions.219 16 49 65 18.615 254 25 STERLING YEARS Currency exposure profile as at 31.2009 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 18.
353 PROTON 2010 Annual Report .611 8.611 15 2.710 8.894 16 2.2009 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 8.3.443 11. These amounts have credit terms ranging from 30 to 45 days (2009: 30 to 45 days).Notes To The Financial Statements 31 March 2010 (continued) 26 AMOUNTS DUE FROM JOINTLY CONTROLLED ENTITIES The amounts due from jointly controlled entities arose from normal trade transactions.626 2.3.321 255 25 STERLING YEARS Currency exposure profile as at 31.695 2.459 8.894 8.2010 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 8.443 2. The currency exposure profile of amounts due from jointly controlled entities is as follows: Currency exposure profile as at 31.910 2.695 11.
955 Bank balances are deposits held at call with banks.1 month 2 .272 388.813 16.629 913.6 months 6 .12 months More than 1 year Group 2009 RM’000 717.366) 9.088 106.397 (1.084) 15.052 59.119 257 248.159 157.385.796 208.677 248.313 Group 2009 RM’000 256 25 STERLING YEARS 654 724 28 DEPOSITS.376 Company 2009 RM’000 208.385.173 25.676 Market value of quoted investments: Commercial papers and corporate debt 584 15.044 224.102 10.393 717.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 27 CURRENT INVESTMENTS 2010 RM’000 Lower of cost and market value: Commercial papers and corporate debt .089 The maturity profile of short term funds is as follows: 0 .unquoted investments in Malaysia Provision for diminution in value 584 10.206 68.458 11.221 196.119 51.quoted investments in Malaysia .3 months 4 .221 83.252 48.000 1.850 2010 RM’000 248. .652.703 486. BANK AND CASH BALANCES 2010 RM’000 Short term funds deposited with licensed banks Bank and cash balances 1.386 1.703 266.042 (1.423 845.955 468 209.784 6.
850 Deposits.7 million) as at 31 March 2010.445 21.573 15.2010 US Australian Dollar Dollar Others Total RM’000 RM’000 RM’000 RM’000 257 25 STERLING YEARS Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Australian Dollar Others 717.089 Pound Sterling RM’000 Currency exposure profile as at 31. BANK AND CASH BALANCES (continued) The currency exposure profile of deposits. The Group has unutilised banking facilities amounting to RM777.841 5.012 25.138 772.053 53.919 1.59%) per annum for the Group and 2.652.Notes To The Financial Statements 31 March 2010 (continued) 28 DEPOSITS.194 24.686 99.3 million (2009: RM623.549 72.194 10.579 913.165 1.440.90%) per annum for the Company.330 1.209 50.440.086 16. The weighted average effective interest rates of deposits at the balance sheet date were 2.24% (2009: 1.012 26.079 5.662 27.3.554 15.34% (2009: 2.727 1.015 14.501 21. PROTON 2010 Annual Report .3.899 Pound Sterling RM’000 Currency exposure profile as at 31.527 23.2009 US Dollar Euro Others Total RM’000 RM’000 RM’000 RM’000 4.254 72 77.536 16.543.629 33. bank and cash balances is as follows: Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Australian Dollar Others 1.330 10.139 33. bank and cash balances of the Company as at 31 March 2010 and 31 March 2009 are denominated in Ringgit Malaysia.305 39.748 12.629 54.211 54.978 67.643 9.014 21.493 67.899 717.988 33.
000 549.0 million (2009: RM1.599 23.000.377.100 Group 2009 RM’000 2010 RM’000 Company 2009 RM’000 258 25 STERLING YEARS 30 SHARE CAPITAL Group and Company 2010 2009 RM’000 RM’000 Authorised: Ordinary shares of RM1.931 13.000.000 1. 1967 for dividend payment purposes. As at 31 March 2010.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 29 NON-CURRENT ASSETS HELD FOR SALE 2010 RM’000 Non-current assets classified as held for sale: .728 22. In addition.100 36.00 each At start/end of financial year Issued and fully paid: Ordinary shares of RM1.213 31 RESERVES (a) Retained earnings Under the single-tier tax system which came into effect from the year of assessment 2008. Companies with Section 108 credits as at 31 December 2007 may continue to pay franked dividends until the Section 108 credits are exhausted or 31 December 2013 whichever is earlier unless they opt to disregard the Section 108 credits to pay single-tier dividends under the special transitional provisions of the Finance Act.investments (Note 21) 11. the Company has sufficient Section 108 tax credits to frank approximately RM1. 2007. plant and equipment (Note 13) .00 each At start/end of financial year 1.213 549.100 2. companies are not required to have tax credits under Section 108 of the Income Tax Act.684 36. the Company has tax exempt income as at 31 March 2010 amounting to approximately RM331.prepaid land lease payments (Note 14) .232 2.1 million (2009: RM326. .0 million) of its retained earnings if paid out as dividends.5 million) available for distribution of tax exempt dividends to its shareholders.property.377. Dividends paid under this system are tax exempt in the hands of shareholders.412 2.
000 new ordinary shares of RM1.068 101. (‘PONSB’) exchanged all their ordinary shares of RM1.213.000 ordinary shares in PONSB for 549.288 19. the Company has no share premium.893 (15.668) 52.00 each comprising 549.650 Group 2009 RM’000 47.565 37. 259 25 STERLING YEARS 32 LONG TERM LIABILITIES 2010 RM’000 Unsecured: Long term loan (Note 32(a)) Portion repayable within twelve months (Note 37) Secured: Long term loan (Note 32(b)) Portion repayable within twelve months (Note 37) Lease and hire purchase creditors (Note 32(c)) Less: Portion repayable within twelve months (Note 33) Automotive Development Fund (Note 32(d)) Employee retirement benefits (Note 32(e)) 49. Following the share for share exchange. Bhd.649 9.395 (858) 2.415 (19.879) 67.686 25.766) 29. Accordingly.213.546) 2.537 21.225 3.111 (6. the amount of share premium previously recognised on consolidation has been re-designated as capital reserve.Notes To The Financial Statements 31 March 2010 (continued) 31 RESERVES (continued) (b) Capital reserve The capital reserve arose as a result of a Group reorganisation exercise whereby all existing shareholders of Perusahaan Otomobil Nasional Sdn. (c) Asset revaluation reserve The asset revaluation reserve arose as a result of a fair value adjustment of the 51% equity interest previously held in PT Proton Cikarang Indonesia as a jointly controlled entity upon the acquisition of the remaining 49% equity interest on 10 August 2007.00 each in the Company in a one-for-one share exchange on 5 April 2004.879 (47.148 88.516 PROTON 2010 Annual Report .
830 101.686 21.686 79. which was interest free had been reclassified to short term loan and subsequently repaid during the financial year.516 .327 50.650 260 25 STERLING YEARS Currency exposure profile as at 31.830 79.323 50.3.686 (a) Long term loan – unsecured The long term loan balance of RM47.327 50.3.9 million. 79.830 21.327 38.323 88.2010 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 38.323 38.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 32 LONG TERM LIABILITIES (continued) The currency exposure profile of the long term liabilities is as follows: Currency exposure profile as at 31.2009 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 21.
766 9.5% (2009: 7.882 (487) 3.32%) per annum.Notes To The Financial Statements 31 March 2010 (continued) 32 LONG TERM LIABILITIES (continued) (b) Long term loan – secured 2010 RM’000 The long term loan is repayable as follows: Within one year Between one and two years More than two years 19. Group 2009 RM’000 2010 RM’000 The lease and hire purchase creditors are repayable as follows: Within one year Between one and two years Between two and five years Less: Future finance charges 7.395 The lease and hire purchase creditors bear an interest rate of 7.084 1.766 19.883 49.111 1.537 3.075 1.5% (2009: 7.814 927 9.668 20.714 3.415 15.395 858 2. PROTON 2010 Annual Report .546 2.111 Current (Note 33) Non-current 6. (c) Lease and hire purchase creditors – secured The lease and hire purchase arrangements obtained by subsidiary companies are secured against the related assets of the respective subsidiary companies.4.084 1.893 Group 2009 RM’000 261 25 STERLING YEARS The long term loan is secured over a subsidiary company’s fixed and floating assets as disclosed in Note 13 and bears interest rates of 3.816 (705) 9.5%) per annum.5% .565 9.890 31.335 67.
.736 49. the Government of Malaysia had disbursed a total of RM110 million to the Group to be utilised for payments to external parties for the purpose of developing and promoting a competitive and viable domestic automotive sector as a means to achieve the objective of the ADF.244 (54.467 60. As at 31 March 2010.288 14. Group 2009 RM’000 262 25 STERLING YEARS 2010 RM’000 The ADF comprises: (i) ADF liabilities (ii) Capital grant Less: Current portion of capital grant Non-current (i) ADF liabilities At 1 April Add: Additional ADF grant received during the financial year Interest earned during the financial year Less: Utilised during the financial year At 31 March (Note 43) (ii) Capital grant At 1 April Add: Received during the financial year (Note 13) Less: Amortisation 31 March Current Non-current 20.000 777 75.776 28. quality and the application of automation for the Malaysian automotive industry.219 9.467 9.403 50.255) 28.184) 21.557) 14.588 (31.248 (11.512 45.960 16.736 31.184 7.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 32 LONG TERM LIABILITIES (continued) (d) Automotive Development Fund The Government of Malaysia approved the setting up of an Automotive Development Fund (‘ADF’) under the Ninth Malaysia Plan with the objective of modernising and automating the manufacturing processes.024 (31.403 23.686 14.870 (2. productivity.512 28.736 11.403 The current portion of the capital grant is presented within other payables (Note 33).343 681 46.646) 9.467 9.049 (21.960) 37.403 2. improving efficiency.732) 20.
Contributions to the scheme are charged to the income statement so as to spread the cost of pensions over employees’ working lives with the Lotus Group.148 PROTON 2010 Annual Report . An actuarial valuation of the plan was carried out for the period from 1 April 2009 to 31 March 2010.013) 19.877) 4.095 (7.068 263 25 STERLING YEARS 2010 RM’000 At 1 April Currency translation differences Charged/(credited) to income statement (Note 8) Contributions paid At 31 March 25.042) (9.616) (8.369) 25. The assets are held in separate trustee administered funds. (i) Defined contribution plans The Group pays contributions to publicly or privately administered pension plans on either a mandatory. In addition. The contributions are recognised as employee benefit expense when they are due. The contributions are determined by a qualified actuary. operate a defined benefit scheme. the Lotus Pension Plan. contractual or voluntary basis depending on the nature of the defined contribution plans.Notes To The Financial Statements 31 March 2010 (continued) 32 LONG TERM LIABILITIES (continued) (e) Employee retirement benefits The employee retirement benefits represents the scheme operated by a subsidiary company.970 (9. The Group has no further payment obligations once the contributions have been paid.068 (1. it provides life assurance cover for all employees. The movements during the financial year in the Consolidated Balance Sheets are as follows: Group 2009 RM’000 50. (ii) Defined benefit plan Lotus Group Scheme – defined benefit scheme Lotus Group International Limited and its subsidiary companies (‘Lotus Group’). Prepaid contributions are recognised as an asset to the extent that a cash refund or reduction in the future payments is available.
410) 8.495) (41.926 4.057) 19.266 3.156 (224.022 2.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 32 LONG TERM LIABILITIES (continued) (e) Employee retirement benefits (continued) (ii) Defined benefit plan (continued) The amounts recognised in the Consolidated Balance Sheets are analysed as follows: 2010 RM’000 Present value of obligation Fair value of plan assets Shortfall of funded plan Unrecognised actuarial (loss)/gain Liability on balance sheet 358.205 (26.662 (8.156 .343 (313.138) 45.494) 9.603) 17.952 3.233 358.068 264 25 STERLING YEARS The movements in the defined benefit obligation during the financial year are as follows: 2010 RM’000 At 1 April Currency translation differences Interest cost Current service cost Employee contributions Benefits paid Actuarial loss/(gain) on obligation Effect of changes in assumptions At 31 March 234.662 15.148 Group 2009 RM’000 234.343 Group 2009 RM’000 316.588) 18.817 (11.898) 234.128 (55.156 (15.331 116.406 25.
909 313.494 2010 RM’000 At 1 April Currency translation differences Expected return on plan assets Employer contributions Employee contributions Benefits paid Actuarial gain/(loss) on plan assets At 31 March The mortality assumptions used were as follows: 2010 Age Longevity at age 65 for current pensioners: .369 3.571) 21.138 265 25 STERLING YEARS Group 2009 Age 84.Notes To The Financial Statements 31 March 2010 (continued) 32 LONG TERM LIABILITIES (continued) (e) Employee retirement benefits (continued) (ii) Defined benefit plan (continued) The movements in the fair value of plan assets during the financial year are as follows: Group 2009 RM’000 341.0 89.9 88.013 3.9 86.Male .1 89.3 224.004 9.Female 85.410) 92.917 (55.9 87.705) 224.662 (8.495) (84.Male .534) 15.817 (11.1 PROTON 2010 Annual Report .Female Longevity at age 65 for future pensioners: .3 87.162 9.494 (23.
913 Group 2009 RM’000 4.004) 4.90 7.543) 266 25 STERLING YEARS The principal actuarial assumptions used in respect of the Group’s defined benefit plan were as follows: 2010 % Discount rates Expected return on plan assets: . included in staff costs within administrative expenses (Note 8) Actual return/(loss) on plan assets 2.equity .50 4.00 3.00 The expected return on the average value of the assets over the period is calculated using the long-term average rate of return expected over the remaining term of the Lotus Pension Plan’s liabilities.50 4.162) (10.00 4.50 3.70 Group 2009 % 6.25 4.75 4.00 4.022 (15.952 17.266 18.072) (8.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 32 LONG TERM LIABILITIES (continued) (e) Employee retirement benefits (continued) (ii) Defined benefit plan (continued) The expenses recognised in the Consolidated Income Statements are analysed as follows: 2010 RM’000 Current service cost Interest cost Expected return on plan assets Net actuarial gain recognised in financial year Total.others Expected rate of salary increase Expected rate of pension payment increase Inflation 5.00 3.70 3.60 6.926 (21.bonds .970 107.042) (63. .
364 - - - - 535 PROTON 2010 Annual Report .229 76.658 2010 RM’000 535 535 Company 2009 RM’000 482 482 267 25 STERLING YEARS The currency exposure profile of trade and other payables is as follows: Currency exposure profile as at 31.094 86.630.224 1.779 6.565 91.743 20.012 28.930 147.240.630.292 77.2010 US Dollar Euro Others Total RM’000 RM’000 RM’000 RM’000 Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Others 1.249 858 1.843 80.597 487.725 95.997 10.current portion (Note 32(c)) 853.787 23.546 1.224 Company Functional currency Ringgit Malaysia 535 Pound Sterling RM’000 3.364 Group 2009 RM’000 617.069 39.400.381 28.164 151.334 201.372 97.893 1.904 611.Notes To The Financial Statements 31 March 2010 (continued) 33 TRADE AND OTHER PAYABLES 2010 RM’000 Trade payables Other payables Accruals Payments received in advance for engineering contracts Lease and hire purchase creditors .240.608 1.142 184 50.277.369 29.3.
599 155.779 .288 43.867 30.288 (73.742 128.288 (61.344 Onerous contract RM’000 22.2009 Ringgit Malaysia RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Others 959.815) 174.862) 67.265 115.968 24.162 1.640 22.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 33 TRADE AND OTHER PAYABLES (continued) The currency exposure profile of trade and other payables is as follows (continued): Currency exposure as at 31.139 (12.584 203 29.677 3.054 88.968 24.114.821 1.862) 45.556 (4.203 (102.320 70.769) 45.704 7.277.945 40.149 43.779 (1.769) 45.009 1.139 22.054 110.456 7.640 (1.257) 189. 34 PROVISIONS Group Provision for warranty RM’000 2010 At 1 April Currency translation differences Charge to income statement (Note 7) Warranties reimbursable Provision for the financial year Utilised during the financial year At 31 March 2009 At 1 April Currency translation differences Charge to income statement (Note 7) Warranties reimbursable Provision for the financial year Utilised during the financial year At 31 March 167.342 (102.3.139 22.080 22.742 7.257) 167.894) 184.139 186.079) 10.404 186.908 959.060 Total RM’000 189.320 70.908 Company Functional currency Ringgit Malaysia 482 482 523 127.556 (4.658 Pound Sterling RM’000 US Dollar RM’000 Euro RM’000 Others RM’000 Total RM’000 268 25 STERLING YEARS Terms of trade payables granted to the Group and Company vary up to 60 days (2009: up to 60 days) credit.779 119.
451.000) as disclosed in Note 24 to the financial statements.622 307 266 15. The currency exposure profile of the amounts due to jointly controlled entities is as follows: Currency exposure profile as at 31.3.000 (2009: RM111.934 22.934 323 127 556 23.2010 Pound US Ringgit Sterling Dollar Malaysia Total RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Australian Dollar Indonesia Rupiah 323 323 127 556 683 22.758.622 14.2009 Pound US Ringgit Sterling Dollar Malaysia Total RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling Australian Dollar 307 307 266 266 14.3.622 14.195 PROTON 2010 Annual Report .940 Currency exposure profile as at 31. unsecured.934 22.Notes To The Financial Statements 31 March 2010 (continued) 34 PROVISIONS (continued) The Group expects to be reimbursed by suppliers in respect of warranties amounting to RM95. are denominated in Ringgit Malaysia. 269 25 STERLING YEARS 36 AMOUNTS DUE TO JOINTLY CONTROLLED ENTITIES Amounts due to jointly controlled entities arose from normal trade transactions and are due between 30 to 60 days (2009: 30 to 60 days). 35 AMOUNTS DUE TO ASSOCIATED COMPANIES Amounts due to associated companies arose from normal trade transactions. interest free and payable within 30 to 60 days (2009: 30 to 60 days).
32 4.317 30.696 61.00 – 6.110 47.724 2.595 141.50 – 6.767 49.879 36.00 – 10.668 33.00 – 6.current portion (Note 32(a)) Bridging loan Bankers’ acceptance/Bills of exchange Revolving credit Secured: Long term loan .00 19.00 2.84 5.00 3.126 142. .766 61.50 7.80 – 4.00 32.690 25.236 15.435 306.50 – 4.88 – 4.current portion (Note 32(b)) Revolving credit Group 2009 RM’000 2010 RM’000 270 25 STERLING YEARS 5.82 3.039 The revolving credit is secured over a subsidiary company’s fixed and floating assets.813 256.50 2.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 37 SHORT TERM BORROWINGS Effective interest rate during the financial year 2010 2009 % % Per annum Per annum Unsecured: Long term loan .360 81.604 3.50 1.
3.843 189.843 306.690 2.196 189.843 116.039 PROTON 2010 Annual Report .196 116.196 116.546 2.Notes To The Financial Statements 31 March 2010 (continued) 37 SHORT TERM BORROWINGS (continued) The currency exposure profile of the short term borrowings is as follows: Currency exposure profile as at 31.236 271 25 STERLING YEARS Currency exposure profile as at 31.2010 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 2.2009 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia Pound Sterling 189.3.546 142.690 139.690 139.546 139.
1 1.6 1.3 2. plant and equipment .8 257.property.071.7) 45. plant and equipment 365.721.8 7.8 (80.4 (301.8 5.921.8) 5.226.2 18.4 473.4 498.2 844.6 6.098.5 6.078.4 4.2 138.7) 14.8 38.8 (80.1 462.8 121.4 (53.8 272 25 STERLING YEARS 142.9 112.4 700.8 Malaysia 2009 RM’million 5.0 25.9) 1.505.8 (42.5 66.2 249.6 108.1 (2.997.8 17.0 866.0 (143.992.8 12.2 477.252.9 575. Analyses of the Group’s revenue.7 (3.8) (168.2 1.843.1) 28.1) 10. no segmental information is considered necessary for analysis by industry segment.4) 562.0) 218.281.8 423. parts and engineering services to Group companies in different geographical locations. trading and provision of engineering and other services in respect of motor vehicles and related products.9 13.0 251. manufacturing.4 (273.2 20.8) 2010 RM’million 8.4) 6.8 6.7 51.054.9 8.8 514.4 Other countries 2010 2009 RM’million RM’million 1.6 5.0 9.2 80.5 (382.9 5.518.9 34.287.2 7.2 261.4 34.7) (12.7 20.5 1.0 - .2 820.9 1.0 10.5 286.0 80.0 (143.0 1.9 Total 2009 RM’million 6.1) 10.7) 45.2 2.6 7.523.226.6 115.5 - - 7.5) 0. assembling.3 (14. Accordingly.518.7) 27.703.capitalised development cost Research and development grant Allowance for doubtful debts Write down of inventories Reversal of impairment of investment Provision for diminution in value of investment Reversal of impairment of property.4) 233.0 47.3 79.6) (307.172. Inter-segment sales comprise sales of motor vehicles.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 38 SEGMENTAL INFORMATION The Group is principally engaged in the automobile industry namely.7 46.0 7.9 20.3 (106. results and other information by geographical locations are as follows: 2010 RM’million Revenue External sales Inter-segment sales Total revenue Results Segment operating profit/(loss) Unallocated (expense)/income Interest expense Interest income Share of net results of associated companies and jointly controlled entities Taxation Profit/(loss) after taxation Other information Segment assets Unallocated assets Total assets Segment liabilities Unallocated liabilities Total liabilities Capital expenditure Depreciation and amortisation Assets written off Impairment: .4) 42.206.7 6.4 (53.4 1.6) Elimination 2009 RM’million (168.3 5.573.2 2010 RM’million (307.1 (2.6 8.0) 90.7 797.020.0 434.4 (7.
1 1.8) (168. Therefore.6 261. Segment liabilities comprise operating liabilities and exclude items such as taxation.3 47. goodwill and taxation. gain/(loss) on disposal of current investments and write down/(write back) of provision for diminution in value of current investments. plant and equipment and intangible assets approved by the Board but not provided for in the financial statements: Contracted for Not contracted for 345.569.404. Segment assets consist primarily of property.226. receivables and operating cash. plant and equipment.526.421. intangible assets.703.0 1.114. Capital expenditure mainly comprises additions to property.6 6.518.8 6. inventories.745 2.331 184.226.Notes To The Financial Statements 31 March 2010 (continued) 38 SEGMENTAL INFORMATION (continued) Unallocated income includes dividend from other investments. only sales to external customers based on the location of the customer are presented below: Malaysia Other countries Elimination Total 2010 2009 2010 2009 2010 2009 2010 2009 RM’million RM’million RM’million RM’million RM’million RM’million RM’million RM’million Revenue External sales Inter-segment sales Total revenue 273 25 STERLING YEARS 6.161. jointly controlled entities.965.2 1. borrowings and employee retirement benefits.523.6 5.6) (168. current investments.6) (307.5 121. Industry segmentation is considered unnecessary as the Group is principally engaged in the automobile industry.085 Group 2009 RM’000 PROTON 2010 Annual Report .9 6.3 1.2 5.518.546 2. and excludes investments in associated companies. investments.8) 8.5 (307.3 46.883. Secondary reporting format The primary reporting format is based on geographical locations of the assets. plant and equipment and intangible assets (Notes 13 and 16 to the financial statements).8 39 CAPITAL AND OTHER COMMITMENTS 2010 RM’000 Capital commitments Capital expenditure for property.9 8.
231 2.426 .637 956 1.485 13.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 40 OPERATING LEASES As at 31 March 2010.248 1.696 Group Land and buildings RM’000 2009 Within one year Between one and five years After five years 11.280 73.254 1.280 12 2.405 32.278 1.598 2.261 52 3.213 1. the Group was committed to making the following payments in respect of operating leases expiring: Group Land and buildings RM’000 2010 Office Plant and equipment machinery and vehicles RM’000 RM’000 274 25 STERLING YEARS Total RM’000 Within one year Between one and five years After five years 23.292 78.663 Office Plant and equipment machinery and vehicles RM’000 RM’000 Total RM’000 965 2.933 1.353 26.633 17.896 1.388 1.414 13.302 49.055 1.811 25.471 51.
Bhd. Bhd. set out below are other significant related party transactions. The related parties with whom the Group and Company transact with. (a) Interest income from advances to a subsidiary company 2010 RM’000 Subsidiary company . Bhd.Notes To The Financial Statements 31 March 2010 (continued) 41 SIGNIFICANT RELATED PARTY TRANSACTIONS DISCLOSURES In the normal course of business. PHN Industry Sdn. jointly controlled entities and other related parties. Aluminium Alloy Industries Sdn. Netstar Advance Systems Sdn. Bhd. Ara Borgstena Sdn. include the following companies: Related parties Lotus Group International Limited Miyazu (Malaysia) Sdn. Proton Finance Limited Lotus Finance Limited Proton Parts Centre Sdn.680 PROTON 2010 Annual Report . The related party transactions described below were carried out on terms and conditions obtainable in transactions with unrelated parties unless otherwise stated. Relationship Subsidiary company Associated company Associated company Associated company Associated company Associated company Associated company Jointly controlled entity Jointly controlled entity Equity investment Equity investment Equity investment Equity investment 275 25 STERLING YEARS In addition to related party disclosures mentioned elsewhere in the financial statements. Bhd. Bhd. Exedy (Malaysia) Sdn. PEPS-JV (M) Sdn. Bhd. associated companies. Marutech Elastomer Industries Sdn. Bhd.Lotus Group International Limited Company 2009 RM’000 5. Bhd. Bhd. Technomeiji Rubber Industries Sdn. the Group and Company undertake a variety of transactions at mutually agreed terms with subsidiary companies.
164. Group 2009 RM’000 123.Netstar Advance Systems Sdn.Aluminium Alloy Industries Sdn.589 44.641 Group 2009 RM’000 25.Marutech Elastomer Industries Sdn.PEPS-JV (M) Sdn. . .100 30.Miyazu (Malaysia) Sdn. Bhd. Bhd. .566 45.487 136.Lotus Finance Limited* Associated company .Proton Finance Limited* * 20.706 566 .429 188. Bhd.048 8.619 6.524 98.057 133. Bhd. Bhd.697 3. .PHN Industry Sdn. Bhd. Equity investment companies . Bhd. Bhd. . . Jointly controlled entity .Proton Parts Centre Sdn.301 3.063 38.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 41 SIGNIFICANT RELATED PARTY TRANSACTIONS DISCLOSURES (continued) (b) Sales of goods and services 2010 RM’000 Jointly controlled entities . .Ara Borgstena Sdn.Proton Parts Centre Sdn. Vehicles under financing arrangements are sold through Lotus Finance Limited and Proton Finance Limited. Lotus Finance Limited and Proton Finance Limited provide financing services to dealers and customers of the Group to acquire vehicles. .261 1.988 276 25 STERLING YEARS 29. Bhd.623 1.Technomeiji Rubber Industries Sdn.365 8. Bhd.712 30 (c) Purchases of goods and services from: 2010 RM’000 Associated companies .186 5.179 191.780 74.787 Under the terms of financing agreements. Bhd.489 44.Exedy (Malaysia) Sdn.
The key management compensation disclosed below excludes the Executive and Non-executive Directors’ compensation as disclosed in Note 8 to the financial statements: Group 2010 2009 RM’000 RM’000 Salaries and other short-term employee benefits Defined contribution retirement plan 15. including Executive and Non-executive Directors. that the claims have no merits and are unlikely to succeed. directly or indirectly.067 1. The subsidiary company had obtained legal opinion that the claims are without basis and action has been taken to set aside the judgment.Notes To The Financial Statements 31 March 2010 (continued) 41 SIGNIFICANT RELATED PARTY TRANSACTIONS DISCLOSURES (continued) (d) Interest expense 2010 RM’000 Associated company . based on legal advice.503 Group 2009 RM’000 14.5 million after failing to reach a formal agreement.243 371 Group 2009 RM’000 694 277 25 STERLING YEARS 42 CONTINGENT LIABILITIES 2010 RM’000 Disputed claims 27.Proton Finance Limited (e) Key management personnel compensation Key management is defined as those persons having authority and responsibility for planning.531 (a) In a prior financial year. directing and controlling the activities of the Group. a supplier had obtained a judgment in default against a subsidiary company for RM12. PROTON 2010 Annual Report . The Directors are of the opinion.184 10.822 1.
Both parties are in the midst of exchanging points of claims and defences which will be followed by the exchange of documents in support of such claims and defences. The subsidiary company is currently in the midst of enforcing the arbitral award and initiating the winding-up process in China. The claim against one subsidiary company amounts to RM19.9 million (RM32. (d) A vendor has commenced arbitration proceedings against two subsidiary companies. The subsidiary company has accordingly filed its objection to the action in China on the basis that the Chinese court has no jurisdiction to hear any matters in relation to the JV. The arbitration tribunal stated that it has jurisdiction to hear the matter challenging its jurisdiction and this will be by way of a full hearing involving witnesses and evidence.056 (RM1. This is supported by the tribunal awards on jurisdiction and on the valid termination of the JV. The subsidiary company’s joint venture partner is disputing the termination. According to the Joint Venture Contract (‘JV Contract’). On 24 May 2010. The amount claimed cannot be quantified due to the nature of damages being claimed which can only be ascertained from evidence produced during the arbitration process. The subsidiary company maintains that the Memorandum is a forgery. the arbitration tribunal ordered the Respondent to pay the subsidiary company all its legal and arbitration costs totalling Singapore Dollar 655. The parties are also appointing a new arbitrator in light of the previous arbitrator being appointed as Judicial Commissioner to the High Court.045). On 2 February 2010.532.4 million) plus general damages and interest. The distributor has filed an action in court to set aside the arbitration award.3 million and against the other subsidiary company is for RM8. for which the distributor had claimed USD9. The objection is pending examination by the Chinese court. the arbitration tribunal issued a final award stating that the JV Contract was validly terminated. The subsidiary company has obtained legal advice that it is probable that such an action will not be successful. The Respondent had on 11 June 2008 filed an action in China seeking damages for the unlawful termination of the JV Contract by the subsidiary company.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 42 CONTINGENT LIABILITIES (continued) (b) A distributor instituted arbitration proceedings against a subsidiary company as a result of the termination of its distributorship. based on legal advice. that the claims have no merits and are unlikely to succeed. 278 25 STERLING YEARS . The Directors are of the opinion. (c) A subsidiary company had issued a notice of termination of an associated company on 11 July 2006 to the subsidiary company’s joint venture partner (‘Respondent’). The subsidiary company filed the Statement of Case with the Singapore International Arbitration Centre on 31 January 2008. The arbitration award was handed down on 30 October 2006 wherein the distributor’s claim against the subsidiary company was dismissed. The Respondent subsequently produced a Memorandum allegedly signed by the subsidiary company and the Respondent dated the same date as the JV Contract which allegedly states that the forum for settling of disputes should be the Chinese courts and not arbitration.2 million. disputes must be referred to arbitration.
The Board regularly reviews these risks and approves the treasury policies.467) 899. where appropriate.606. Financial risk management is carried out through risks reviews.376 Company 2009 RM’000 208. (i) Foreign currency exchange risk The Group is exposed to currency risk as a result of the foreign currency transactions entered into by the Company and subsidiary companies in currencies other than their functional currencies. PROTON 2010 Annual Report .119 257 248.703 266.Notes To The Financial Statements 31 March 2010 (continued) 43 CASH AND CASH EQUIVALENTS 2010 RM’000 Short term funds deposited with licensed banks Bank and cash balances Deposits. interest rate risk. market risk. Derivative financial instruments are used.850 (14. liquidity and cash flow risk. It does not trade in financial instruments.383 2010 RM’000 248.652.955 468 209. including foreign currency exchange risk. a comprehensive insurance programme and adherence to Group financial risk management policies.376 248. (ii) Interest rate risk The Group’s income and operating cash flows are not substantially affected by changes in market interest rates except for interest from bank deposits.423 279 25 STERLING YEARS 44 FINANCIAL INSTRUMENTS (a) Financial risk management objectives and policies The Group’s activities are exposed to a variety of financial risks. The Group enters into forward foreign currency exchange contracts to limit the exposure on foreign currency receivables and payables.468) (20.385.109 Group 2009 RM’000 717.512) 1. bank and cash balances Deposit pledge with financial institution as security for banking facilities Bank balance in respect of ADF liabilities (Note 32(d)) 1.089 (25. The Group uses derivative financial instruments such as foreign exchange contracts and interest rate instruments to hedge certain exposures. credit risk. which cover the management of these risks. to generate the desired interest rate profile.221 196.423 209.629 913. The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. and on cash flows arising from anticipated transactions denominated in foreign currencies. internal control systems.386 1.
(iv) Credit risk The Group seeks to invest cash assets safely and profitably. there are no outstanding forward foreign exchange contracts.343 280 25 STERLING YEARS . As at 31 March 2009. the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. (v) Liquidity and cash flow risk Prudent liquidity risk management implies maintaining sufficient cash. (b) Forward foreign exchange contracts Forward foreign exchange contracts are entered into by the Group in currencies other than the functional currency to manage exposure to fluctuations in foreign currency exchange rates on specific transactions. The Group seeks to control customers credit risk by ensuring that significant sales of vehicles and provision of services are made to customers with an appropriate credit history. The Group considers the risk of material loss in the event of non-performance by a financial institution to be unlikely in view of the financial strength of those counter-parties. As at 31 March 2010.Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 44 FINANCIAL INSTRUMENTS (continued) (a) Financial risk management objectives and policies (continued) (iii) Market risk The Group does not face significant exposure from the risk from changes in debt and equity prices. the outstanding notional principal amounts of the Group foreign exchange contracts are as follows: Group 2010 2009 RM’000 RM’000 Maturity Less than 6 months 38.
907 21.1746 The net position based on fair values of the outstanding forward foreign exchange contracts was NIL (2009: unfavorable by RM125.480 38.000).6567 1 EURO = GBP 1.705 1 USD = GBP 1.956 14.343 1 RM = JPY 26. PROTON 2010 Annual Report .the following 6 months Currency to be paid RM’000 equivalent 281 25 STERLING YEARS JPY GBP GBP RM USD EURO 1.Notes To The Financial Statements 31 March 2010 (continued) 44 FINANCIAL INSTRUMENTS (continued) (b) Forward foreign exchange contracts (continued) The foreign currency amounts to be received and the contractual exchange rates of the Group‘s outstanding contracts are as follows: Currency to be received Average contracted rate Hedged item 2009 Group Forecasted receivables .
100 205.quoted .quoted .565) (37.646) (2.649) (2.027) 232.729 (46.537) (21.long term portion ADF liabilities 20 21 27 27 32(b) 32(c) 32(d) 10.investments Long term loan Lease and hire purchase creditor .Notes To The Financial Statements 31 March 2010 (continued) PROTON 2010 Annual Report 44 FINANCIAL INSTRUMENTS (continued) (c) Fair values The carrying amounts of financial assets and liabilities of the Group and Company at the balance sheet date approximated their fair values except as set out below: Group Note 2010 Recognised on the balance sheet Amounts due from subsidiary companies Current investments: .256) (21.478) (36.long term portion ADF liabilities 2009 Recognised on the balance sheet Amounts due from subsidiary companies Investments .475 138.unquoted Current investments: .825 Carrying amount RM’000 Fair value RM’000 Carrying amount RM’000 Company Fair value RM’000 282 25 STERLING YEARS .420 13.397 584 14.225) (2.870 6.092 2.100 (29.946 2.618 20 27 27 29 32(b) 32(c) 32(d) 584 9.092 13.288) 654 9.284 17.825 (28.729 (52.053) (2.422) 177.686) 17.unquoted Long term loan Lease and hire purchase creditor .618 724 14.unquoted Non-current assets held for sale: .
570 (6. PROTON 2010 Annual Report .145.895 (187.253) 283 25 STERLING YEARS 46 APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue in accordance with a resolution of the Board of Directors on 27 July 2010.668) Reclassification RM’000 32.184) 69.415 Restated RM’000 6.518.075.328) 165.486.Notes To The Financial Statements 31 March 2010 (continued) 45 COMPARATIVES The following comparative figures have been reclassified to conform with the current year’s presentation: Group As previously reported RM’000 Revenue Cost of sales Other operating income Distribution costs 6.754 (6.711 (118.913) 197.184 (69.415) (32.
Azhar bin Othman. 284 25 STERLING YEARS DATO’ MOHD NADZMI BIN MOHD SALLEH CHAIRMAN DATO’ SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR MANAGING DIRECTOR Statutory Declaration Pursuant To Section 169(16) Of The Companies Act. before me. 1965 PROTON 2010 Annual Report We. the financial statements set out on pages 185 to 283 are drawn up so as to give a true and fair view of the state of affairs of the Group and Company as at 31 March 2010 and of the results and cash flows of the Group and Company for the financial year ended on that date in accordance with the provisions of the Companies Act. AZHAR BIN OTHMAN Subscribed and solemnly declared by the abovenamed Azhar bin Othman at Shah Alam in Malaysia on 27 July 2010. 1960. do solemnly and sincerely declare that the financial statements set out on pages 185 to 283 are. two of the Directors of Proton Holdings Berhad. in the opinion of the Directors. Dato’ Mohd Nadzmi bin Mohd Salleh and Dato’ Syed Zainal Abidin B Syed Mohamed Tahir. 1965 I. 1965 and MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities. COMMISSIONER FOR OATHS .Statement By Directors Pursuant To Section 169(15) Of The Companies Act. in my opinion. and by virtue of the provisions of the Statutory Declarations Act. Signed on behalf of the Board of Directors in accordance with their resolution dated 27 July 2010. correct and I make this solemn declaration conscientiously believing the same to be true. state that. the officer primarily responsible for the financial management of Proton Holdings Berhad.
implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement. (Incorporated in Malaysia) (Company No. as set out on pages 185 to 283. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors. we consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances. statements of changes in equity and cash flow statements of the Group and Company for the year then ended. and making accounting estimates that are reasonable in the circumstances. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. whether due to fraud or error. including the assessment of risks of material misstatement of the financial statements. as well as evaluating the overall presentation of the financial statements. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. which comprise the balance sheets as at 31 March 2010 of the Group and Company. The procedures selected depend on our judgment. Opinion In our opinion. but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. 1965 so as to give a true and fair view of the financial position of the Group and Company as of 31 March 2010 and of their financial performance and cash flows for the year then ended. the financial statements have been properly drawn up in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act.Independent Auditors’ Report To The Members Of Proton Holdings Berhad We have audited the financial statements of Proton Holdings Berhad. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. selecting and applying appropriate accounting policies. 623177-A) PROTON 2010 Annual Report 285 25 STERLING YEARS . 1965. whether due to fraud or error. and a summary of significant accounting policies and other explanatory notes. Directors’ Responsibility for the Financial Statements The Directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities and the Companies Act. Auditors’ Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. and the income statements. In making those risk assessments. This responsibility includes: designing.
in accordance with Section 174 of the Companies Act. (c) We are satisfied that the financial statements of the subsidiary companies that have been consolidated with the Company’s financial statements are in form and content appropriate and proper for the purposes of the preparation of the financial statements of the Group and we have received satisfactory information and explanations required by us for those purposes. 286 25 STERLING YEARS OTHER MATTERS This report is made solely to the members of the Company. as a body.Independent Auditors’ Report To The Members Of Proton Holdings Berhad (continued) (Incorporated in Malaysia) (Company No. PRICEWATERHOUSECOOPERS (No. (b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors. SANGARAPILLAI (No. 2085/09/10 (J)) Chartered Accountant Kuala Lumpur 27 July 2010 . 623177-A) PROTON 2010 Annual Report REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In accordance with the requirements of the Companies Act. we also report the following: (a) In our opinion. the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act. We do not assume responsibility to any other person for the content of this report. which are indicated in Note 17 to the financial statements. 1965 in Malaysia and for no other purpose. 1965 in Malaysia. AF: 1146) Chartered Accountants THAYAPARAN A/L S. (d) The audit reports on the financial statements of the subsidiary companies did not contain any qualification or any adverse comment made under Section 174(3) of the Act.
002 25 STERLING YEARS Size Of Holdings 1 .036.938 184.000 0.000 0.903.27.650 and above Total Malaysian No.100.000 100.107 37.649 (*) 27.99 100 .223 61.480.312 100.000.001 to 10.1.each One (1) Voting Right for One (1) Ordinary Share ANALYSIS OF SHAREHOLDINGS BY RANGE GROUPS No.112 0.247 0.441 10.604 Size of shareholdings 1 to 99 100 to 1.001 to 27.807 2 51 89 79 92 0 313 1. of % Shareholders/ of Shareholders/ Depositors Depositors 105 3.610 364 68 3 6.007 PROTON 2010 Annual Report . of shares % of Shares Held Foreign Malaysian Foreign 44 48.447 51.473 549.659 2.460.Shareholding Statistics as at 30 July 2010 ANALYSIS OF SHAREHOLDINGS Share Capital Authorised Share Capital Issued and Fully Paid Up Capital Issued and Fully Paid Up Capital Class of Shares Voting Rights RM1.460.000 1.658 5.593 33.000 0.000 336.250 9.574 0 54.001 .073 0.222 2.619 1.000/RM549.300 1.962.741 1.042 100.439 0.716 3.756 0.638 51.444.002/Ordinary Shares of RM1/.447.066 1.227 0.732.590 61.955 0.396 494.993 10.460.483 3.398.800 3.700 404.246 89.000 0.460.000 10.649 27.558 9.650 and above (**) Total DISTRIBUTIONS OF SHAREHOLDINGS No. of % of Shareholders/ Shareholders/ Depositors Depositors Malaysian Foreign Malaysian Foreign 103 3.001 .804 2.028 1.213.312 0.110 11.178.000 10.001 to 100.009 0.866 14.877 2.000 100.000 1.390 36.732.120 1.292 133.213.699 443 160 3 7.242.475 52.000 287 No.000 % of Shares held 0.10.801 336.035 24.250.907 6.042 95. of Shares 1.710 2.064.628 1.473 4.307.367 0.001 .000.
731 5 6 7 8 9 16.734.800 10. BHD.536 1.600 % 42.100 43. EXEMPT AN FOR THE BANK OF NEW YORK MELLON (MELLON ACCT) AMANAHRAYA TRUSTEES BERHAD PUBLIC GROWTH FUND No.786.493. Petroliam Nasional Berhad (Strategic Inv) Shareholdings 234. MAYBAN TRUSTEES BERHAD FOR PUBLIC AGGRESSIVE GROWTH FUND (N14011940110) .120.000 3.720 7.165.100 43.400 3.900 4. BHD.900 4.926. BHD.000 5.966 1.000 3.693 58.600 5.554 1.063 2.782 0.820.720 7. PETROLIAM NASIONAL BERHAD (STRATEGIC INV) MAYBAN NOMINEES (TEMPATAN) SDN.872 0.793.951 0.540.680 % 42. CBNY FOR DIMENSIONAL EMERGING MARKETS VALUE FUND 17 MAYBAN NOMINEES (TEMPATAN) SDN.877.295. NOMURA ASSET MGMT MALAYSIA FOR EMPLOYEES PROVIDENT FUND HSBC NOMINEES (ASING) SDN.693 58.226.851 288 25 STERLING YEARS THIRTY LARGEST SHAREHOLDERS No. of Shares 234.453.877. Bhd.766.098 0.740 10.300 4.500 6.035.232 1.700 8.837 0.210 6.740 10. BHD.Shareholding Statistics as at 30 July 2010 (continued) PROTON 2010 Annual Report SUBSTANTIAL SHAREHOLDERS No. MAYBAN TRUSTEES BERHAD FOR PUBLIC REGULAR SAVINGS FUND (N14011940100) LEMBAGA TABUNG HAJI KUMPULAN WANG PERSARAAN (DIPERBADANKAN) HSBC NOMINEES (TEMPATAN) SDN.628 10 VALUECAP SDN.427 13.940 0. BHD.851 3. Name 1 2 3 4 KHAZANAH NASIONAL BERHAD EMPLOYEES PROVIDENT FUND BOARD CARTABAN NOMINEES (TEMPATAN) SDN.797. 11 AMANAHRAYA TRUSTEES BERHAD PUBLIC EQUITY FUND 12 AMANAHRAYA TRUSTEES BERHAD AS 1MALAYSIA 13 AMANAHRAYA TRUSTEES BERHAD SKIM AMANAH SAHAM BUMIPUTERA 14 PERMODALAN NASIONAL BERHAD 15 AMANAHRAYA TRUSTEES BERHAD PUBLIC SECTOR SELECT FUND 16 CITIGROUP NOMINEES (ASING) SDN.734. BHD.599. BHD.120. Name 1 2 3 Khazanah Nasional Berhad Employees Provident Fund Board Cartaban Nominees (Tempatan) Sdn.680 20.689 0.
489.Shareholding Statistics as at 30 July 2010 (continued) THIRTY LARGEST SHAREHOLDERS (continued) No.385.302.502 0. GOVERNMENT OF SINGAPORE INVESTMENT CORPORATION PTE LTD FOR GOVERNMENT OF SINGAPORE (C) 24 CARTABAN NOMINEES (ASING) SDN. MAYBAN TRUSTEES BERHAD FOR PUBLIC BALANCED FUND (N14011950210) 21 HSBC NOMINEES (ASING) SDN.429 0. NATIONAL ASSOCIATION (U.358.000 2.485.226.255 0.900 % 0. BHD. BHD.470. BHD.223 86.829 DIRECTORS SHAREHOLDINGS None of the Directors hold any shares in the Company.367 1. BHD.453 289 25 STERLING YEARS 2. KUMPULAN WANG PERSARAAN (DIPERBADANKAN) TOTAL No.376.800 476.600 0.200 2.432 0.000 0. BHD. BHD. CIMB BANK BERHAD (ETP) 23 CARTABAN NOMINEES (ASING) SDN.900 1.600 0.678.488. EXEMPT AN FOR JPMORGAN CHASE BANK.487 2. Name 18 AMANAHRAYA TRUSTEES BERHAD PUBLIC INDEX FUND 19 HSBC NOMINEES (ASING) SDN. BHD.267 0.800 0. BHD.881.410 0.252 0.500 2.600 1.404. of Shares 2. CBNY FOR DFA EMERGING MARKETS SMALL CAP SERIES 29 PERTUBUHAN KESELAMATAN SOSIAL 30 SBB NOMINEES (TEMPATAN) SDN.270 0. SSBT FUND ITTE FOR COMMONFUND EMERGING MARKETS INVESTORS COMPANY 25 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN.020.419 2.) 20 MAYBAN NOMINEES (TEMPATAN) SDN.700 1. PROTON 2010 Annual Report .271 1. ALLIANCE INVESTMENT MANAGEMENT BERHAD FOR EMPLOYEES PROVIDENT FUND 26 AMANAHRAYA TRUSTEES BERHAD AMANAH SAHAM MALAYSIA 27 EMPLOYEES PROVIDENT FUND BOARD 28 CITIGROUP NOMINEES (ASING) SDN.761.000 1. TNTC FOR BRANDES INSTITUTIONAL EQUITY TRUST 22 CIMSEC NOMINEES (TEMPATAN) SDN.S.A. BHD.
Lot 61812 Bandar Glenmarie. main factory.1993 - - Land 2.1992 15 Years 16 Years Land Buildings 21. Land with an area of 1.T. Land with an area of 6.40 113. Selangor Darul Ehsan.727 sq.339 sq.50 2. with office.444. Selangor Darul Ehsan HSD 86554.00 417.231. engine factory.administrative building ans sports complex facilities.1983 24 Years Age of Building 2010 25 Years Land Buildings Location Description Tenure Net Book Value (RM 'Mil) 2009 68.00 436. ft. H.90 13. Selangor Darul Ehsan.603 sq Freehold 05.ft.1994 15 Years 16 Years Land Track & Buildings 54.027.116 sq.00 54.T 82 Mukim of Damansara. (D) B.041 Freehold 19.S.T. P. as the car park for staff. District of Petaling. No. ft. Perak Darul Riduan. Mukim of Ulu Bernam Timur.731 sq.374. adjoining the Company's northern boundary housing the semi-high speed test track and control building.10 1.Properties Owned by Proton Group as at 31 March 2010 PROTON 2010 Annual Report PROPERTIES OWNED BY PERUSAHAAN OTOMOBIL SDN.20 36.04. Geran 215214. car park for production cars and additional R&D laboratories building.12.50 Freehold 30. ft.40 290 25 STERLING YEARS HICOM Industrial 3 units of flats Estate encompassing currently rented out. District of Petaling.80 21. Selangor Darul Ehsan.594. factory and canteen buildings and sports facilities used for the Casting Plant. (PONSB) Date of Acquisition/ Revaluation Age of Building 2009 No.90 6. ft.1986 24 Years 25 Years Flats 0.102.041 0. Land with an area of 55. No. for the construction of a second automobile plant. canteen buildings. Total built-up area is 3. Size of Test Track is 2. 80. 03.40 100.90 . District of Petaling.09. ft.02. District of Petaling. BHD.5653 and 5654 Bil P.396. PT 257.(D) 71309. (D)71311. ft.080 sq. Selangor Darul Ehsan.S. Land having an area of 158.11. Total built -up area is 2.1999 6 Years 7 Years Land Building 1.S. H. H. Mukim of Damansara.107 sq.04. Freehold 09. Mukim of Damansara.P. medium volume factory. 16162 and 10163. District of Batang Padang.70 Land with an area Freehold of 2. Lot 572. Mukim of Damansara. used No. Freehold 18. District of Petaling. with main office. sports facilities.20 33.90 No.577 sq. P.00 2010 68.
553 sq.12.90 Three (3) storey corner terraced shopoffice unit with a land area of approximately 2. (D) 86555. Centre of Excellence (COE) & Pre-Delivery and Inspection Centre (PDI) No H.10 5. Lrg.S.80 PROTON 2010 Annual Report . 47600 Subang Jaya.11. 300.2000 7 Years Age of Building 2010 8 Years Building Location Description Tenure Net Book Value (RM 'Mil) 2009 4.2002 27.90 291 25 STERLING YEARS Administration & Operation Office and Pre-Delivery & Inspection Centre with total land area of 465.03. TP 5 Road. Land with an area of 50. Stampin 41/2 Mile.S (D) 60042. 258 and H. 47600 Subang Jaya No.90 2. 299 and H. BHD. Penrissen Road Kuching.120 sq.Properties Owned by Proton Group as at 31 March 2010 (continued) PROPERTIES OWNED BY PROTON EDAR SDN.2002 7 Years 8 Years Land Building 8. Daerah Johor Bahru. Mukim Plentong. ft. TP 5 Road. Sarawak No.No.70 120. P. (total built-up area is 101. ft.2007 7 Years 1 Year 8 Years 2 Years Land Building 2. (PESB) Date of Acquisition/ Revaluation Age of Building 2009 Vehicel Preparation Centre (VPC) No H. (D) 86597.20 2010 3.260. to be used for sales outlet and service centre Freehold 10.07.05. PT No.55 Freehold 12.S.) Freehold 01. PT No. ft. Johor Vehicle Preparation Centre and stock control building with a land area of 315.70 113. PT No. Sime UEP Industrial Park.80 6.2001 8 Years 9 Years Land Building 35.80 6. ft.58 0.570 sq. PT No. ft. Land with an area of 87. 64566 Mukim Klang Selangor Lot 859.10 6. Selangor Darul Ehsan. 218089. 2.476 sq. Block 16 Kuching Central Land District.2002 6 Years 7 Years Building 0.T. ft. used for sales outlet and service centre with a built-up area of approximately 37.04.956 sq.70 Freehold 29. ft.60 35.S.049 sq.S. (D) 86557.10 8. Sime UEP Industrial Park.184 sq. (D) 86596. Freehold 01. Samarinda 6A Off Jalan Kebun H.
ft.2005 3¼ Years 4¼ Years Land 5. District of Petaling. Bhd.524 sq.90 9. Sime UEP Industrial Park. (PESB) Date of Acquisition/ Revaluation Age of Building 2009 H.40 Freehold 02.ft. Negeri Sembilan HSD 318392.2002 6½ Years 7½ Years 01.10 Freehold 13. PTD 81816. Mukim of Sungai Buloh.10 2. P. Perak. Lot 67320.60 5. Selangor Darul Ehsan. Proton City.853 sq. Selangor Darul Ehsan Land with an area of 79.2007 1 Year 2 Years Building 4. Administration & Proton Edar Sdn.09. BHD. PT No. to be used for sales outlet and service centre Land with an area of 51. TP 5 Road. ft.No.08. District of Johor Bahru. Land with an area of 57. Mukim Kuah District of Langkawi Kedah Geran 111857. Johor Darul Takzim Lot PT 4352. to be used for sales outlet and service centre Freehold Age of Building 2010 Land Building Location Description Tenure Net Book Value (RM 'Mil) 2009 3.40 19.175 sq.949 sq.2004 4 Years 5 Years Land Building 9.03. 47600 Subang Jaya.979 sq. Mukim of Pulai.09. Operation Office c/o Proton Tanjung Malim Sdn. Tanjung Malim.2002 6½ Years 7½ Years Land 5. to be used for stockyard area Freehold 05. 302.ft.12. (D) 86596.. used for sales outlet and service centre is 7.10 2. Freehold 31.07.60 5.2003 4 Years 5 Years 292 25 STERLING YEARS Freehold 06.80 L&D Tanjung Malim. ft.S.09. 9671 Mukim of Ampangan District of Seremban.40 1.80 5.07.267 sq.2002 6½ Years 7½ Years 29.50 2010 3. No H. 35900.Properties Owned by Proton Group as at 31 March 2010 (continued) PROTON 2010 Annual Report PROPERTIES OWNED BY PROTON EDAR SDN.70 4. to be used for sales outlet and service centre Land with an area of 61.10 5.T. Bhd.40 .50 Land with an area of 123.2002 6½ Years 7½ Years Land 1. ft..S(D) 63313.
Norwich. Ann Arbor.528 sq. with office and workshop. Hethel. Total built up area is 73. with the factory.07 Land adjacent to Potash Lane. Michigan USA Land with an area of approximately 165.96 2010 4. ft.30 1. R&D building rented to group companies. PROTON 2010 Annual Report .000 sq.2000 9 Years 10 Years Building 9.550 sq. Freehold 01. Norfolk NR14 8EZ.49 293 Date of Acquisition/ Revaluation Location Description Tenure Age of Building 2009 Age of Building 2010 42 Years Net Book Value (RM 'Mil) 2009 Land Building 5. AV 915. Freehold 26. offices and test track of Lotus Group International Ltd. England.82 5. Hethel.600 sq.01 1.09. England and Land north of Browic Two parcels of land with a total area of 6.72 2010 0.479 sq.Properties Owned by Proton Group as at 31 March 2010 (continued) PROPERTY OWNED BY PROTON CARS (UK) LTD (PCUK) Date of Acquisition/ Revaluation Age of Building 2009 Ref.ft. England Land with an area of 162.84 Office: Office: 89 Years 90 Years Workshop: Workshop: 43 Years 44 Years 25 STERLING YEARS PROPERTIES OWNED BY LOTUS CARS LTD. with a parts warehouse building Freehold 31. engineering facilities.87 52. ft.500 sq. Total built up area is 515.1994 32 Years Age of Building 2010 33 Years Land Building Location Description Tenure Net Book Value (RM 'Mil) 2009 5.286.1968 41 Years Potash Lane. ft.02. Crowley Way.73 8. Avonmouth.03. Norfolk NR 14 8EZ.89 PROPERTY OWNED BY LOTUS HOLDINGS INC Date of Acquisition/ Revaluation Age of Building 2009 1254 North Main St. Total built up area is 86. ft.61 2010 5.15 58. Bristol Avon BS11 9YR.2000 Age of Building 2010 Land Building Location Description Tenure Net Book Value (RM 'Mil) 2009 0.66 6. Units 1-3. Norwich.03. ft. Freehold 24.
Kecamatan Lemahabang. Desa Sukaresmi. West Java. West Java.610 sq. canteen. warehouse.2 11. meters were erected with factories. 597. Indonesia Combined land area of 136.Properties Owned by Proton Group as at 31 March 2010 (continued) PROTON 2010 Annual Report PROPERTIES OWNED BY PT PROTON CIKARANG INDONESIA (PCI) Date of Acquisition/ Revaluation Age of Building 2009 Hak Guna Bangunan No. 596. West Java. 353. Desa Sukaresmi. Kecamatan Lemahabang.6 294 25 STERLING YEARS Leasehold (Expiry: 24/09/ 2021) Leasehold (Expiry: 19/06/ 2023) .9 2010 23. Kabupaten Bekasi. utility & security facilities Leasehold 21/09/2004 (Expiry: 24/09/ 2025) 13 Years Age of Building 2010 14 Years Lands Building Location Description Tenure Net Book Value (RM 'Mil) 2009 22.7 9. Kabupaten Bekasi. Kabupaten Bekasi. Indonesia Hak Guna Bangunan No. Indonesia Hak Guna Bangunan No. office. Desa Sukaresmi. Kecamatan Lemahabang.
000 10.000 295 25 STERLING YEARS 6 5 4 3 2 1 0 Apr 09 May Jun Jul Aug Sep Oct Nov Dec Jan 10 Feb Mar 35.000 0 Share Price Volume PROTON 2010 Annual Report .000 30.000 45.000 15.000 5.000 40.000 20.Share Price and Volume Traded Share Price (RM) Volume 50.000 25.
Ordinary Resolution 3 To re-elect Tan Sri Rainer Althoff who shall retire in accordance with Article 111 of the Company’s Articles of Association and being eligible. Ordinary Resolution 2 To re-elect Mr Behara Venkata Rama Subbu who shall retire in accordance with Article 111 of the Company’s Articles of Association and being eligible. WESTBOUND SHAH ALAM EXPRESSWAY. the Board is recommending that the shareholders approve the payment of Directors fees for the financial year ended 31 March 2010 as disclosed in Page 153 of the Annual Report 2010 Explanatory Note: Article 104 states that in every Annual General Meeting. at least one third of the Directors for the time being shall retire from office.8. either to fill a casual vacancy or as an addition to the existing Directors shall hold office only until the following Annual General Meeting.Notice of Annual General Meeting PROTON 2010 Annual Report NOTICE IS HEREBY GIVEN THAT THE SEVENTH (7TH) ANNUAL GENERAL MEETING OF THE COMPANY WILL BE HELD AT THE AUDITORIUM. PROTON CENTRE OF EXCELLENCE. MALAYSIA ON THURSDAY. 47600 SUBANG JAYA. The retiring Directors shall be eligible to seek re-election. . FOR THE FOLLOWING PURPOSES: 1. Explanatory Note: In accordance with Article 112 of the Company’s Articles of Association.00 A. offers herself for re-election. The retiring Directors shall be eligible to seek re-election. offers himself for re-election. Explanatory Note for Resolutions 2 to 4: Article 111 states that any Director(s) appointed. Ordinary Resolution 5 To approve the payment of Directors’ Fees for the financial year ended 31 March 2010. offers himself for re-election. Ordinary Resolution 4 To re-elect Encik Abdul Rahim Bin Abdul Hamid who shall retire in accordance with Article 111 of the Company’s Articles of Association and being eligible. 3. 296 25 STERLING YEARS 2.M. To lay the Reports of the Directors and Auditors and the Audited Statement of Accounts for the year ended 31 March 2010. 23 SEPTEMBER 2010 AT 10. SELANGOR DARUL EHSAN. KM 33. offers himself for re-election. To elect the following Directors who retire in accordance with the Company’s Articles of Association:Ordinary Resolution 1 To re-elect Dato’ Zalekha Binti Hassan who shall retire in accordance with Article 104 of the Company’s Articles of Association and being eligible.
1965. a company shall on the requisition in writing of such number of members and at the expense of the requisitionists give to the members of the company entitled to receive notice of the next Annual General Meeting. Ordinary Resolution 7 To re-appoint Messrs PricewaterhouseCoopers as Auditors of the Company for the ensuing year and to authorise the Directors to fix their remuneration. on 30 September 2010 in respect of transfer. the Board is recommending that the shareholders approve the payment of a first and final dividend of 20 sen per share less 25% income tax. authorise the Directors to determine their remuneration thereof. shareholders shall approve the re-appointment of Auditors who shall hold office until the conclusion of the next Annual General Meeting. Explanatory Note: In accordance with Article 157 of the Company’s Articles of Association. 006128) Company Secretary Shah Alam 30 August 2010 PROTON 2010 Annual Report .m. Explanatory Note: In accordance with Section 151 of the Companies Act. 1965. Messrs PricewaterhouseCoopers have indicated their willingness to continue to hold office for the ensuing year. (b) Shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad. The present Auditors. Explanatory Note: Pursuant to Section 172 (2) of the Companies Act. 4. By Order of the Board MOHD NIZAMUDDIN BIN MOKHTAR (LS NO. 297 25 STERLING YEARS 5. if approved at the Seventh (7th) Annual General Meeting will be paid on 22 October 2010 to shareholders whose names appear in the Register of Members and/or the Record of Depositors on 30 September 2010.Notice of Annual General Meeting (continued) Ordinary Resolution 6 To declare and approve the payment of a first and final dividend of 20 sen per share less 25% income tax in respect of the financial year ended 31 March 2010 as recommended by the Directors. NOTICE OF BOOKS CLOSURE AND DIVIDEND PAYMENT NOTICE IS HEREBY GIVEN THAT the first and final dividend of 20 sen per share less 25% income tax in respect of the financial year ended 31 March 2010. 1965. A Depositor shall qualify for entitlement to the first and final dividend only in respect of:(a) Shares transferred into the Depositors’ Securities Account before 4.00p. To transact any other ordinary business for which due notice has been given in accordance with Section 151 of the Companies Act. and further. notice of any resolution which may be properly moved and is intended to be moved at that meeting.
Every appointment submitted by an authorised nominee as defined under the Securities Industry (Central Depositories) Act. 1991 to issue a General Meeting Record of Depositors as at 15 September 2010. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead.. Only a depositor whose name appears on the General Meeting Record of Depositors as at 15 September 2010 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote in his stead. in accordance with Article 67(b) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act. A copy of the Authorisation Document or the Power of Attorney. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991. . Mid Valley City. it should be accompanied by a statement reading “signed under Power of Attorney which is still in force. the Company shall be requesting Bursa Malaysia Depository Sdn. under its common seal or that of an officer or attorney duly authorised. Level 17. Bhd. 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for the meeting. if such appointer is a corporation. 6. the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act. which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised. must specify the CDS Account Number. should be enclosed. 298 25 STERLING YEARS 3.Notice of Annual General Meeting (continued) PROTON 2010 Annual Report NOTES: 1. Lingkaran Syed Putra. If the Form of Proxy is signed under the attorney duly authorised. The instrument appointing the proxy must be deposited at the office of the Registrar. 2. it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Tricor Investor Services Sdn. 4. For the purpose of determining a member who shall be entitled to attend the Meeting. The Gardens North Tower. The maximum number of proxies that may be appointed is two. Bhd. no notice of revocation having been received”. Where a member appoints more than one proxy. If the Form of Proxy is signed under the hand of an officer duly authorised. Bhd. 1965 shall not apply. The instrument appointing a proxy must be in writing under the hands of the appointer or his attorney duly authorised in writing or. it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force. no notice of revocation having been received”.). (formerly known as Tenaga Koperat Sdn. 5. 1991.
47600 Subang Jaya. Encik Abdul Rahim Bin Abdul Hamid Refer to page 31 of the Annual Report Refer to page 32 of the Annual Report Refer to page 33 of the Annual Report . Malaysia.m. Westbound Shah Alam Expressway. 23 September 2010 at 10. pursuant to the Company’s Articles of association are: Article 4 i.8. Behara Venkata Rama Subbu ii. on Thursday.00 a.Selangor Darul Ehsan. PROTON Centre of Excellence. Tan Sri Rainer Althoff iii. Dato’ Zalekha Binti Hassan Refer to page 30 of the Annual Report 299 25 STERLING YEARS Article 111 i.27(2) OF THE MAIN MARKET LISTING REQUIREMENTS OF BURSA MALAYSIA SECURITIES BERHAD. Mr.Statement Accompanying The Notice of Seventh (7th) Annual General Meeting PURSUANT TO PARAGRAPH 8. KM33. APPENDED HEREUNDER ARE: PROTON 2010 Annual Report DIRECTORS STANDING FOR RE-ELECTION Directors who are standing for re-election at the Seventh (7th.) Annual General Meeting of the Company which will be held at The Auditorium.
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in capital letters) (old) ID No.8.PROTON ANNUAL REPORT 2010 PROTON Holdings Berhad (623177-A) No. of Shares Proxy 1 Percentage % % Signature/Common Seal of Appointer (If the appointor is an attorney or a corporation please see Note 2 below) Proxy 2 Contact No: . For appointment of more than one proxy. Malaysia at 10. state number of shares and percentage of shareholdings to be represented by the proxies:No. this form will be taken to authorise the proxy to vote at his / her discretion) FOR Ordinary Resolution 1 Ordinary Resolution 2 Ordinary Resolution 3 Ordinary Resolution 4 Ordinary Resolution 5 AGAINST Ordinary Resolution 6 Ordinary Resolution 7 Dated this day of 2010. (new) (new) (new) Form of Proxy (name of shareholder. on Thursday. (Please indicate with an “X” in the appropriate box against each resolution. how you wish your proxy to vote. hereby appoint (name of proxy as per NRIC. Selangor Darul Ehsan. 23 September 2010 or at any adjournement thereof. (full address) (old) (old) or failing him/her. My/Our proxy/proxies is/are to vote as indicated below: ORDINARY RESOLUTIONS Re-election of Dato’ Zalekha Binti Hassan pursuant to Article 104 Re-election of Mr Behara Venata Rama Subbu Pursuant to Article 111 Re-election of Tan Sri Rainer Althoff Pursuant to Article 111 Re-election of Encik Abdul Rahim Bin Abdul Hamid Pursuant to Article 111 To approve the payment of Directors’ Fees for the financial Year ended 31 March 2010 To declare and approve the payment of a First and Final Dividend of 20 sen per share less 25% income tax for the Financial Year ended 31 March 2010 To re-appoint Messrs PricewaterhouseCoopers as Auditors Of the Company and to authorise the Directors to fix their Remuneration To transact any other ordinary business for which due notice has been given. If no instruction is given. the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/our behalf at the Seventh (7th) Annual General Meeting of the Company to be held at The Auditorium. of being a member of PROTON Holdings Berhad. (name of proxy as per NRIC. in capital letters) NRIC No. Westbound Shah Alam Expressway. or failing him/her. 47600 Subang Jaya. KM33. of Authorised Nominee I/We NRIC No. Level 1 PROTON Centre of Excellence. in capital letters) NRIC No.00 a./Company No. of Shares Held CDS Account No.m.
6. 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for the meeting. Fold Here Fold Here THE SHARE REGISTRAR OF PROTON HOLDINGS BERHAD (Company No. Tricor Investor Services Sdn. which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised. 5. The instrument appointing a proxy must be in writing under the hands of the appointer or his attorney duly authorised in writing or. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act 1991. A proxy may but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint one or more proxies to attend and vote in his stead. The maximum number of proxies that may be appointed is two. 3. (formerly known as Tenaga Koperat Sdn. 1991. Mid Valley City. Bhd. Malaysia Fold Here . Bhd.) AFFIX STAMP Level 17. Bhd. under its common seal or that of an officer or attorney duly authorised. should be enclosed.. The instrument appointing the proxy must be deposited at the office of the Registrar. Mid Valley City. Where a member appoints more than one proxy. if such appointer is a corporation. If the Form of Proxy is signed under the hand of an officer duly authorised. Bhd.623177-A) Tricor Investor Services Sdn. 1991 to issue a General Meeting Record of Depositors as at 15 September 2010. 59200 Kuala Lumpur. Every appointment submitted by an authorised nominee as defined under the Securities Industry (Central Depositories) Act. Bhd. it should be accompanied by a statement reading “signed under Power of Attorney which is still in force. no notice of revocation having been received”. The Gardens. The Gardens North Tower. For the purpose of determining a member who shall be entitled to attend the Meeting. 4. it may appoint at least one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account. Only a depositor whose name appears on the General Meeting Record of Depositors as at 15 September 2010 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote in his stead.). in accordance with Article 67(b) of the Company’s Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act. A copy of the Authorisation Document or the Power of Attorney. Level 17. Lingkaran Syed Putra. 1965 shall not apply. (formerly known as Tenaga Koperat Sdn. the appointment shall be invalid unless he specifies the proportion of his shareholdings to be represented by each proxy. North Tower. If the Form of Proxy is signed under the attorney duly authorised. it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force. the Company shall be requesting Bursa Malaysia Depository Sdn. no notice of revocation having been received”. 2.NOTES: 1. Lingkaran Syed Putra. must specify the CDS Account Number.
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