Professional Documents
Culture Documents
81
Operations Review
The Group also anticipates strong local demand for the Persona and Saga, while export
volume is expected to increase especially for the Exora with plans already in place to
introduce this vehicle to the ASEAN market in the second half of 2009. Furthermore, with
the expansion of the Overseas Manufacturing Plants in China and Iran, the export business
on completelyknockeddown (CKD) vehicles is expected to increase as well.
New robots and more sophisticated handling equipment were installed successfully with
minimal line disruptions. Previous PROTON production systems and Total Productive
Maintenance (TPM) activities have already resulted in the main plant having one of the
lowest downtimes in history and similar activities were implemented successfully in the
Casting and Engine Transmission Department. Much effort was taken to maintain this.
An increasing number of model lines or equipment was established through yokoten,
a Japanese term which essentially means duplicating. The next stage in these intensive
improvement activities will be the implementation of Kobetsu Kaizen (which means
Focus Improvement) and the usage of Overall Equipment Efficiency (OEE) as the de facto
parameter to measure equipment efficiency.
In view of PROTONs commitment to improvement, the Manufacturing Division has
started implementing the world-renowned practice of Genba Kanri, another Japanese
term this time referring to Shopfloor Control. This is to reflect how the division is
continuously improving itself by benchmarking PROTON against world-class industry
players. We shall aim to reach level 4 (which means sustainable world-class level in
shop control) in Genba Kanri by the year 2011.
82
Operations Review
83
Operations Review
The MVF was also given the task of producing the Exora. Produced in 18 months, this was
deemed an outstanding feat in the automotive world. Since the plant had previously been
manufacturing the Waja, all facilities had to be either modified or newly installed with
equipment to manufacture the MPV.
Daily meetings attended by top Management were held to ensure that the manufacturing
decisions were made quickly and in a decisive manner. Comprehensive online training and
quality improvement teams were formed using the PROTON Production System (PPS) as the
main driver. All cars had to also undergo tests to ensure that there was no rattling or other
noise defects.
Featuring an automatic transmission when it was first introduced, PROTON has in July
introduced a manual version of the Exora to cater especially for the Indonesian market.
The monthly production volume is targeted at 3,000 units per month and is expected to
increase when export to Indonesia begins. Following its introduction in Indonesia in July
2009, the Exora will be launched in Singapore, Brunei and Thailand.
84
Operations Review
To boost sales in the wake of economic uncertainty in the domestic market, two up-graded
versions of existing models were introduced. The first was the Persona SE, which features
a more sporty style and was introduced in September 2008. Current production of the
Persona SE is estimated at 500 units per month.
The second upgrade was the Satria Neo High Line version which is equipped with a
CamPro CPS (Cam Profile Switching) engine. The improved, now trendier Satria Neo CPS
comes with a stylish new front and rear bumper, as well as a new leather interior. As it is
exclusively targeted for a limited market, the production volume is only at 60 units per
month currently.
Plans for the Persona NGV and Persona cosmetic change productions are already on the
drawing board and mass productions are expected to begin by the end of 2009.
PROTONs plant in Tanjung Malim is the largest of the Groups manufacturing facilities.
85
Operations Review
Improving plant operational efficiencies will be a key focus in the next financial year.
Prospects
Total production volume for the next financial year is forecasted to increase by 3% to
162,000 units. The single digit increase is a result of the cautious tone adopted by the
market due to the global economic crisis, which has undoubtedly impacted the world car
market.
As the overseas market has been severely affected, approximately 90% of the volume is
being allocated for the domestic market, with the remaining 10% reserved for export.
Production volume is expected to utilise less than 50% of PROTONs installed plant capacity
and all plants are expected to operate on a one-shift basis in the new financial year.
86
Operations Review
The loss of volume has motivated the Group to further improve operational efficiencies
and to enhance cost reduction activities. PROTON is confident that all the proposed cost
reduction initiatives will be carried out accordingly.
On the other hand, demand for the Saga is expected to stablise in the domestic market,
while an increase in production volume is anticipated when exports to Australia and the
Gulf Community Countries (GCC) begin. The cosmetic change and special edition models
also provide a positive outlook for the Saga.
The Group also forsees that the high number of bookings for the Exora would result in
high volumes in excess of 3,000 units a month. Export to the Indonesian market slated for
July 2009 will further boost production volume. The plan for the new financial year is to
produce 35,000 units and we expect this target to be achieved, if not, exceeded.
While demand for the Exora is on the rise and demand for the Persona and Saga is stabilising,
the corresponding requirement for the CamPro engines is as per the last financial year.
The CamPro engine component machine and assembly capacity expansion plans are also
constantly being reviewed and we anticipate that the current capacity of 180,000 units will
be sufficient to cater for the coming year.
87
Operations Review
LOTUS
Against the backdrop of profitability in the previous
financial year, Lotus was confident of further
improving its performance in 2009 in line with its
Strategic Business Plan before the turn of events
in September 2008 which culminated in the global
financial and economic crisis.
Nevertheless, for the fiscal year ended 31 March 2009,
Lotus increased its turnover to 110m or RM574.8m
compared to 108m or RM564.3m in the year before.
This was underpinned by the diversity of the Lotus
business driven by the growth in third party high
technology engineering consultancy revenue, the
ability of the Cars Division to act swiftly to negate the
impact of the global downturn and the contribution
of Lotus Light Weight Structures.
As a net exporter of its products and services, a
weakening sterling at the time had benefited Lotus
and acted as a self-hedging mechanism for non-
Operations
During the course of the fiscal year, Lotus produced
2,202 vehicles compared to 2,649 units in the previous
year. This included the production of 388 Tesla allelectric roadsters.
In order to improve sales, Lotus introduced new
derivatives to refresh its current model line-up which
include the Europa SE, Exige 260, 2-Eleven 190 as well
as the restyled 2010 model year Exige launched at the
March 2009 Geneva Motorshow. As a result, Lotus
saw better global market penetration compared to
its competitors in most territories.
In July 2008 Lotus first new model in 13 years, the
Evora, was unveiled at the British International
Motorshow to international acclaim.
The worlds
The Evora, which was launched in 2008, was Lotus first new model in
13 years.
88
Operations Review
of 2008.
countries.
products.
Lotus
Engineering
successfully
completed
the
89
Operations Review
Lotus
continues
its
pursue
competencies
to
and
take
brand
advantage
heritage
to
of
strategic
and Japan.
acquisition
of
Holden
Light
Weight
Technology
Strategic
Board
(TSB)
and
other
Prospects
The year ahead will see Lotus, like other companies in the automotive industry, being faced
with ever-changing industry dynamics as companies emerge from the current global crisis.
The primary focus is to ensure that the business continues to grow and remains relevant to
our stakeholders.
Lotus Cars will continue to capitalise on the current success of the Evora, strengthening
and building its global dealer network and expanding market coverage to include China
and India. The Evora will be launched in North America in early 2010, with an automatic
variant (6 speed torque converter type) to be unveiled in 2011. In tandem, the small
platform vehicles (Elise and Exige) will be developed to meet a multitude of new legislative
requirements for all markets.
90
Operations Review
Lotus also has an on-going contract to produce Tesla all-electric roadsters, while there
are several potential opportunities to further expand Lotus third party manufacturing
business.
The focus for Lotus Engineering will be to continue to expand and grow by generating
new opportunities that leverage on its high technology know-how which include driving
dynamics, niche vehicles, efficient performance as well as EV and HEV (hybrid electrical
vehicle).
Likewise, Lotus Light Weight Structures Limited will continue to provide expertise in light
weight technologies by leveraging on Lotus Engineerings network and capabilities.
Lotus believes that it is now on a sound footing and ready to embark on the next phase of
an 8-Year Strategic Business Plan thanks to the tremendous support from parent company
PROTON, employees, customers and suppliers. There is no doubt that the coming year
will continue to be challenging given the prevailing weak consumer sentiments and
market conditions. Nevertheless, Lotus is cautiously optimistic of an improved financial
performance in the next financial year spurred by the sales of Evora.
91
Operations Review
Quality Management
It is unwise for any organisation to believe that quality
only means producing products that are reliable and meet
customers expectations.
Quality excellence must transcend all aspects of a business as well as corporate culture
in order for an organisation to achieve long-term success, and in turn add value to
shareholders.
In the past year, PROTON spared no effort to sustain the quest to embed the culture
of quality excellence throughout the organisation and business value chain. The strategic
focus has always been to enforce quality improvements in all areas; entrench quality
excellence into the processes of design, supply, manufacturing and marketing; as well as to
increase the overall competency level of quality management.
Quality Improvements
During the year under review, the Group re-ignited
Translating
subsequent
timely manner.
comprehensive
evaluation
and
92
the
slogan
into
action,
quality
93
Operations Review
are
programmes
tasked
to
undertake
quality
improvements
programmes.
were
made
under
the
Kaizen
94
Operations Review
Quality in Supply
The PROTON Groups supply chain represents one
production
chain,
the
customer,
and
95
Operations Review
PROTONs manufacturing process saw the introduction of the Zero Defect Initiative to raise quality levels.
Quality in Manufacturing
During the year under review, the Company implemented a bold, yet crucial quality
excellence initiative into our product manufacturing process. Aptly called the Zero Defect
Initiative, this programme aims to ultimately manufacture cars with zero defect by making
certain that quality is consistently on our mind, while simultaneously driving home the
problem-solving culture Group-wide.
The Zero Defect Initiative includes the setting up of PROTONs Quality View Center, which
is a platform to track results and achievements of this Initiative; daily meetings to discuss
quality measures and solve minor concerns; as well as the organising of talks to effectively
communicate the importance of doing work right first time, every time to all employees.
Since the implementation of the Zero Defect Initiative, PROTON significantly improved the
number of defects per unit and the direct pass rate by more than 50% todate.
96
Operations Review
97
Operations Review
Performance
In response to the daunting economic conditions, the Malaysian Government had introduced
a scrapping scheme as part of the RM60 billion stimulus package to support the automotive
industry and boost domestic consumer spending. This scheme essentially enables owners
to trade in cars manufactured more than 10 years ago for a RM5,000 discount to purchase
a new national car. Since the introduction of this scheme, also known as PROTON Xchange
Program, we have received an average of 1,500 submissions as compared to 300 submissions
per month. At the close of the financial year, PROTON had cumulatively issued 4,500
redemption vouchers.
The Group also remained cognisant of our philosophy of introducing the right car, for the
right market, at the right price and at the right time. In line with this, the Group launched
several new economical models to meet the discerning needs of the Malaysian market.
98
99
Operations Review
One significant milestone for both PROTON and the industry was the launch of Malaysias
first home-grown MPV, the Exora. With its excellent product features, the Exora has
garnered a highly favourable response from customers with bookings having reached
14,400 units as of end June 2009.
Todate, the revamped Saga remains the Companys best-seller, as evidenced by bookings of
more than 120,000 units since its launch in January 2008. The introductions of the refreshed
Satria Neo, now sportier and with a CamPro CPS engine to boost, and the Persona SE, which
has a more elegant and distinctive design, were also well-received among the niche market
segments.
As part of the plans to strategically right-size and re-map the dealer network to solidify
our position in the market, we are on course with the rationalisation of PROTON Edar
Sdn Bhd and the Edaran Otomobil Nasional Berhad (EON) sales and distribution network.
The primary objective of this programme is to position PROTON as the sole brand with
a stronger and unified distribution network as well as marketing arm. Additionally, we
aim to leverage on best practices from both entities while carrying out focused, cohesive
marketing initiatives across networks.
The year also saw PROTON being bestowed with several awards. The Saga received three
awards: Winner in Small Sedan Category (Autocar Award 2008); Entry Level Car of the Year
2008 (NST/Maybank); and Best Peoples Car (Asian Auto VCA Auto Industry Awards 2008).
The Persona too, received the Best Model of the Year 2008 award from Frost & Sullivan.
100
Operations Review
Prospects
Undoubtedly the economy will continue to remain challenging in the next financial year.
However, PROTON is optimistic and prepared with numerous comprehensive marketing
and sales plans which include introduction of soon-to-be-launched new variants for the
Saga and Exora in order to expand the market segment further as well as to meet the
increasingly high expectations of customers. We are also on course to streamline our
market positioning and offerings to the market with our sound after-sales service. This will
provide a more integrated approach to improving business volume in the after-sales and
auto parts segments.
With this in mind, PROTON will continue with efforts in emphasising quality, attractive
products and focused marketing strategies to win the hearts of Malaysian car buyers.
Export Markets
Economic challenges ravaged automotive industries worldwide and PROTON did not escape
unscathed. Intense competition coupled with the credit crunch faced by our subsidiaries
and distributors particularly in the Australian and United Kingdom markets as well as an
escalation in fuel prices were among the key factors that contributed to the weakened
export environment.
In order to survive this turbulent period, car companies across Asia, Europe and North
America were forced to implement more creative marketing strategies to increase
consumers appetite.
Despite these challenges, which we will continue to overcome in the new financial year,
PROTON remained true to the core goal of fortifying our international presence in various
export markets by being steadfast in our commitment to further enhance the Groups
operational efficiencies as well as quality of our products and services.
101
Operations Review
102
Operations Review
25,000
20,925
20,595
18,428
20,000
17,337
17,243
15,000
12,526
10,000
5,000
0
2004/05
2005/06
2006/07
2007/08
2008/09
2009/10
Forecast
Prospects
PROTON is deeply committed towards moving beyond the local market by also building a
strong presence in other parts of Asia in the new financial year, with a key focus being the
companys first-ever MPV, Exora, which is expected to stimulate as much interest in regional
markets as it has locally given its competitive pricing and value-for-money proposition.
Indonesia, where 60% of car consumers fall into the MPV segment, and Thailand, have
been earmarked as the first two countries for the export of the Exora targeted for July
2009.
Moving forward, the Group will also focus on high-growth regional markets in ASEAN for
the completely-built-up (CBU) market, as well as China, India and Iran for the completelyknocked-down (CKD) market. Additionally, we plan to leverage on the existing trade and
cultural linkages to make further in-roads into other Middle-Eastern countries such as Egypt
and Syria for the CBU market, and to penetrate into Eastern European countries.
103
Operations Review
Asia
China
Performance and Operations
China is poised to be a world leader in the automotive industry. In 2009 Chinas total vehicle
sales is forecasted to surpass that of the United States of America due to relatively stable
economic growth and favourable government policies.
During the year under review, PROTONs business arrangement with China-based Jinhua
Youngman Group saw us forming a strategic business collaboration which covered four
major areas. This included the export of completely-built-up (CBU) Gen.2 and Persona for
sale through Youngmans network in China, with the first batch of CBU being delivered in
early 2008. The collaboration also entails the supply of completely-knocked-down (CKD)
Gen.2 and Persona which commenced in April 2009.
In addition, PROTON can take advantage of Chinas economies of scale and possible vendor
collaboration by localising components and engines. The business arrangement also
comprises technology transfer and technical support whereby PROTON provides technical
support for Chinas localisation programme and manufacturing start-up.
Currently, PROTON cars are being sold through 80 appointed dealers throughout China
under the Europestar brand.
Prospects
Moving forward, PROTON plans to set up a
representative office in China in the second half of
2009.
Youngman plans to operate four plants in China,
namely at Anshun, Jinan, Tai An and Hangzhou. In
Hangzhou, there will be an engine plant for the
production of CamPro engines, to be operational in
October 2010.
PROTONs operations begin in China.
104
Operations Review
Indonesia
Performance and Operations
The Indonesian automotive market, like several others in the region, faced a highly volatile
economic climate due to the hike in fuel prices and interest rates, while escalating nonperforming loans and high risk of defaults caused financial institutions to be more cautious
in approving loans.
The year under review saw the launch of the Gen.2, Persona and Saga in the Indonesian
market. These new product offerings combined with the opening of additional sales outlets
resulted in PT Proton Edar Indonesia registering an increase in retail sales by 49%.
However, sales of PROTON taxis dipped by 57% as finance companies became more
stringent in approving loan applications from taxi operators. Nonetheless, PROTON
maintained the top 3 position in total taxi sales.
There were also significant corporate developments for PROTON in the fiscal year. For one,
PROTON secured a competitive financing affiliate from BCA Finance for its retail sales.
Additionally, changes in the automotive policy which resulted in a lower CKD import duty
for MFN (Most Favourable Nation) countries lowered competitors costs. As a result of the
reduction in CKD import duty to a flat 15%, the import duty gap was narrowed between
PROTON and auto competitors that enjoy an AFTA CEPT rate of 5%.
PROTON has also strengthened its presence in Indonesia by appointing senior officers to
helm the Company.
Prospects
The year ahead is expected to be a difficult one due to on-going economic challenges and
recent price hikes by car brands. Despite these conditions, the Company will continue to
strengthen the sales network, while maintaining operational efficiency.
105
Operations Review
Iran
Performance and Operations
PROTONs presence in Iran began in 2001 with the appointment of Zagross Khodro (ZK)
first as a distributor and subsequently, assembler of PROTON vehicles in the country. ZK
started with the CBU import initially and seeing its potential, invested extensively in the
sales and after-sales network throughout the country.
Due to the companys strong commitment and trust in the PROTON brand, ZK took a bold
step by establishing a CKD assembly plant in the Borujerd province, approximately 400km
south of Tehran, with production capacity up to 25,000 units a year.
The plant started with the assembly of the Wira in 2002 and thereafter began producing the
Gen.2 in May 2009. The targeted volume for the Gen.2 production will be approximately
3,000 units in the new financial year and we expect this to double in fiscal year 2011.
In addition to the partnership with ZK, PROTON also entered into a strategic collaboration
agreement with the SAIPA Group, one of the biggest automotive manufacturers in Iran.
The collaboration enables PROTON to explore opportunities in other areas such as research
and development.
Prospects
The new financial year will see PROTONs market presence being further strengthened in
Iran with CKD operations to include the production of the Persona. With Total Industry
Volume (TIV) of more than 1.2 million vehicles annually, Iran has the potential to become
one of the major export markets for PROTON in the coming years.
106
Operations Review
An agreement was signed with Zagross Khodro for the supply of automotive parts to assemble the Gen.2 in Iran.
107
Operations Review
Singapore
Performance and Operations
The slowdown in the global economy saw Singapores GDP contracting significantly to a
growth of 1.1% compared to 7.8% a year ago. The weaker than expected growth impacted
many sectors, especially retail.
Sales for PROTON Singapore in the year under review saw a decline of 29% as fewer
customers invested in big ticket items such as vehicles or property. This was primarily due
to the hike in fuel prices and tightening of credit. As a result of firmer credit control, 20%
of PROTON bookings were cancelled as customers could not obtain the necessary loans. In
addition, the Certificate of Entitlement quota which controls the total new car population
in Singapore was reduced by 11.9% from the previous year.
However, the launch of the Saga in July 2008 generated positive response from first-time
and price sensitive buyers.
Despite the challenging conditions faced, PROTON Singapore managed to record a modest
profit owing to the successful implementation of marketing strategies and aggressive
re-structuring and cost cutting measures.
Prospects
Moving forward, PROTON Singapore expects to
further intensify marketing efforts in 2010 as the
green shoots of a recovering economy begin
to emerge, while we continue to enhance cost
management.
108
Operations Review
Thailand
Performance and Operations
The global financial crisis saw Thailands automotive
to drive volume.
Prospects
In the coming year, while economic challenges will still prevail, PROTON is cautiously
optimistic about strengthening our presence in Thailand especially in the small car segment,
while enhancing our operational efficiency.
109
Operations Review
Australia
Overview
On the back of record sales in 2007, the Australian
automotive industry was on track for another record
year in early 2008 with a 3.5% increase in sales in
June. However, the effects of the global crisis resulted
in an overall decline of 3.7% in sales for the year
under review, with the slowdown most evident in the
last three months of 2008. This was compounded by
the withdrawal of two leading finance providers who
were previously responsible for over 50% of retail
automotive financing.
Association.
annually.
bottom line.
presence.
110
Operations Review
Prospects
The year ahead is expected to be the most prosperous since the introduction of the brand
in Australia. This is despite the 2009 forecast of a decline in overall industry volume which
has been set lower again with estimates indicating a drop of up to 10%.
Proton Cars Australia will be rolling out an ambitious volume growth plan which includes
expansion of the current dealer network from 25 to 51 dealers nationally. The enhanced
exposure coupled with an increase in marketing efforts and product diversity is expected
to boost rapid growth.
This will result in both an increase in sales as well as profitability, thereby putting in place
the foundation for years of profitable growth moving forward.
111
Operations Review
United Kingdom
Overview
The overall UK new car market total industry volume (TIV) decreased by over 11% in 2008
compared with a year ago. The last quarter saw an even sharper decline in sales of over
27% with total sales decreasing from 2.404 million units in 2007 to 2.132 million units in
2008.
While the fleet and business sales sectors generally fared better, the private buyer sector
was the worst hit with a 15% sales dip in the year.
Green cars, however, continued to see a rise in demand. There was an increase in sales of
diesel engine vehicles, particularly the 1.6 size diesel engines which saw a 26% increase,
and petrol engines producing low levels of CO2. This was due primarily to high fuel prices
and new car tax based on CO2 levels. Sales of petrol vehicles reduced by 17%.
Demand for all body types and segments was reduced with the exception of Superminis
which saw significant increase in sales as consumers looked for more economical but wellequipped and roomy vehicles. The successful introduction of new replacement models by
the two market leaders further strengthened their stronghold.
112
Operations Review
Prospects
The year 2009 is expected to be a difficult one for the automotive industry with little
improvement in the UK forecast before next year. Competition will continue to increase as
manufacturers strive to gain volume share and offset falling demand.
Against this backdrop, Proton Cars (UK) Ltd is adopting prudent measures to counter the
effects of market conditions, currency devaluation and the publics lack of confidence
and credit availability to buy new cars. These measures are expected to provide on-going
cost savings whilst ensuring targets are met and class leading service levels continue to be
maintained.
113
Operations Review
Properties
The year under review saw PROTON focusing on the disposal
of non-core assets, which were mostly residential units
and a few parcels of vacant land held by wholly-owned
subsidiaries.
PROTON Groups main manufacturing-based assets are located in Shah Alam and Glenmarie
in Selangor, and Tanjung Malim in Perak. Other assets comprise our primary administrative
building known as the Centre of Excellence in Subang Jaya as well as the numerous 3S
centres nationwide.
In recognition of the PROTON Sports Complex being one of Tanjung Malims most wellequipped sports facilities, it was selected by the Football Association of Malaysia as the
home stadium for Proton FC for its Presidents Cup League 2008. It is our intention to carry
on improving and upgrading these facilities in order to become Southern Peraks leading
hub for sports and social activities.
Additionally, Proton City Development Corporation Sdn Bhd, a 40% owned associate
company, continued to enhance visibility for Proton City in Tanjung Malim. Proton City
was planned with modern infrastructures, recreational park and rich landscaping which
have all contributed towards making it a viable investment option for buyers of residential
units in the area.
While the year ahead poses its challenges given the downturn in the economy, to ensure
the marketability of Proton City, we will focus on re-planning selected products to better
cater to discerning home buyers. The undeveloped land bank in Proton City remained at
2,720 acres at the end of the fiscal year.
114
115
Operations Review
Financial Services
Proton Commerce Sdn Bhd (PCSB) is a joint venture company
between Proton Edar Sdn Bhd and CIMB Bank Berhad, which
enables PROTON to provide quality financing services to our
customers.
PCSB offers competitive hire purchase loan financing
packages to new PROTON car purchasers through the PESB
and EON sales network nationwide.
Customers will not only enjoy better deals for car financing but also speedier application
and approval processes as well as value-added packages that offer a combination of other
financial products.
Backed by the expertise and reliability of two established parent companies, the PROTON
Group is committed to delivering competitive hire purchase packages that prioritises
providing fast, efficient and friendly service to our car buyers. By doing this, it is our aim
to become the preferred automotive finance provider for the purchase of new PROTON
vehicles, while being recognised as a competitive and capable player in the local automotive
financing industry.
116
117
Operations Review
With this in mind, the Group is committed to making positive strides and worthwhile
contributions towards creating a sustainable business that benefits our people and society
at large.
In carrying out our corporate social responsibility (CSR) initiatives, the Group aims to
achieve several broad objectives which will meet the expectations of good corporate
governance, ethical corporate values and responsible corporate citizenry. It is also vital
that we advocate a corporate culture that appreciates the value of social service and how
it impacts stakeholders as a whole.
At PROTON, we divide our CSR initiatives into four main segments: marketplace, workplace,
community and environment.
118
PROTON Malaysia Open 2009, an annual event anticipated by badminton fans worldwide.
119
Operations Review
PROTON i-CARE plays a key part in enhancing value for our customers.
Marketplace
CSR initiatives in this area are essentially related to the Groups objective of maintaining
sound business practices at all times, be it with the shareholder, customer or supplier. We
take utmost care to ensure that all businesses are not only conducted in an ethical and
professional manner, but are also in compliance with regulatory requirements.
Maintaining customer satisfaction is one of the foremost pillars of PROTONs business
management and much effort is taken to cultivate strong relationships with our customers
in order to improve their satisfaction levels. A primary tool to enhance customer satisfaction
is our customer survey which is specifically tailored to PROTONs business operations. The
valuable information gleaned is analysed and then incorporated into product and service
developments, sales as well as customer care activities so we can ensure that the customers
experience with PROTON is constantly being enhanced.
The year saw the Group continuing to elevate the standards of PROTON i-CARE by
emphasising the importance of creating the best value for our customers. From the
moment the customers make a call to the Call Centre, they should have a smooth, seamless
120
Operations Review
experience and this includes receiving free technical advice and assistance at our highly
competent technical centres.
PROTON employees are also encouraged to evaluate this process periodically in order to
better understand a customers needs and thereby improve the quality and speed of our
response to customers.
If a product experiences a malfunction, the Company acts promptly to minimise adverse
effects to customers and mobilises all divisions affected to provide a rapid response. In
critical cases, particularly where customer safety is involved, we assess the scope of damages
and thoroughly investigate the cause of the incident.
In accordance with best practises of major OEMs, PROTON would recall a product that has
possible defects. As part of corporate responsibility and good governance, PROTON makes
public announcements either through newspaper advertisements or the website to ensure
customers are immediately informed.
Additionally, PROTON strives to build sound partnerships with our suppliers through
fair trading in compliance with procurement-related policies, laws and regulations. We
continuously monitor the performance of suppliers with on-going quality audits and
where necessary, request for improvements and provide guidance. For new procurement
transactions, we not only ensure that goods and services procured conform to the Groups
policies but also take into consideration the suppliers manufacturing sites, management
systems and the state of their operations. Suppliers efficiency and productivity are also
supported through the Improve, Control and Educate (ICE) initiative whereby sustainability
of supply capacity and training are greatly emphasised. PROTON closely monitors the
progress through extensive reviews and follow-up visits.
For small and medium sized suppliers, PROTON provides technical support that enables
them to have access to the Automotive Development Fund which was established by the
Government to ease financial difficulties resulting from the current economic crisis. To
date, approximately RM35 million has been disbursed.
121
Operations Review
Workplace
At PROTON, we recognise that a talented, productive human capital represents the
backbone of our development and progress.
Our workplace CSR does not only provide our employees with optimum working conditions,
as evidenced by the Groups safety and health policies, training exercises and other benefits
to safeguard each ones welfare. We also ensure that their skills and talents are nurtured.
By harnessing this cohesively, we can further enhance PROTONs competitive advantage in
the industry.
As important as it is to grow as one seamless entity, we must also develop and retain
qualified leaders. Through the Groups management initiatives, we develop key members
of our workforce by using PROTONs Core and Leadership Competency Model. A similar
approach is applied for those who are keen to advance along the technical career track
via the Technical & Functional Competency Model. By using these competency models, our
Talent Management Programme has enhanced PROTONs ability to identify, develop, and
retain critical skills and talents, especially for positions that play a critical role in delivering
business and strategic growth.
Maintaining open communications between employees and Management is also vital.
PROTON has implemented a range of initiatives specifically designed to encourage such
communication so employees can achieve their full potential and progress within the
company. Initiatives include disclosing key performance indices, shared assessments,
personnel system reforms and streamlining the scheme of service throughout the Group.
To further strengthen PROTONs learning capability, we implemented the PROTON
Development Framework which includes the Centre of Manufacturing Excellence, Centre of
Knowledge Excellence, and Centre of Human Capital Excellence. In essence, this initiative
promotes a strong knowledge culture by encouraging continuous learning through various
training programmes.
122
Operations Review
In 2008 PROTON trained a total of 6,348 staff comprising executives and non-executives.
The Group also kicked off a 5-year Competency Based In-house Trainers Development
Programme to help drive knowledge-building initiatives. These initiatives were further
strengthened by collaborating with established training and higher learning institutions.
A Memorandum of Understanding was signed between GIAT MARA Malaysia in June 2008
to collaborate on Work Based Learning (WBL) for students from the institute. The first
batch of 155 students completed their 4-month WBL at the Tanjung Malim plant, following
which, 50 trainees were offered full-time employment with PROTON. PROTON is also
collaborating with community colleges to provide WBL for specialised & technical work
such as maintenance & machining in the manufacturing plants.
123
Operations Review
Community
Community CSR is another important segment for the Group and encompasses philanthropic
activities and donations mainly revolving around local communities, youth programmes,
NGOs and various other special interest groups.
On an annual basis, PROTON disburses approximately RM200,000 in the form of scholarships
to deserving students so they can pursue their higher education ambitions at recognised
local institutions of higher learning.
124
Operations Review
Additionally, Yayasan PROTON carried out several educational initiatives during the year. In
November 2008, 16 scholars from universities around the country received scholarships from
the Group at a ceremony, which also witnessed representatives from Yayasan PROTONs
Adopted School Programme being presented with mock cheques. These adopted
schools, located in Shah Alam and Tanjung Malim, require financial support for educational
activities such as PMR and SPM tuition classes and motivational seminars, among others.
Yayasan PROTON awards students with scholarships to pursue their higher education.
During the year under review, Yayasan PROTON through its Adopted School Programme
contributed funds in support of educational activities for four schools: Sekolah Menengah
Kebangsaan Agama Slim River, Sekolah Menengah Teknik Shah Alam, Sekolah Menengah
Kebangsaan Dato Khir Johari and Sekolah Kebangsaan Behrang.
125
Operations Review
A badminton clinic for Pintar Programme school children in Penang being conducted by national coach
and ex-national player Tuan Haji Misbun Sidek.
Yayasan PROTON scholars also participated in the Groups annual team-building activity in
February 2009 at Kelana Resort, Seremban, where scholars were exposed to the companys
core values and took part in outdoor activities aimed to develop team spirit and build
confidence.
In the same month, RM40,000 was contributed by Yayasan PROTON towards PROTONs
Tabung Pendidikan, while the Majlis Anugerah Kecemerlangan Akademik PMR and SPM
was held to reward children of staff who had achieved excellent results.
126
Operations Review
127
Operations Review
The year also saw PROTONs football team qualifying for the Liga Perdana in the National
Football League, while we once again sponsored the countrys A1 team to promote the
growth of the motorsports industry in the country as well as the PROTON brand in the
international arena.
The Le Tour de Langkawi international cycling event, which PROTON has long been
associated with, also continued to receive sponsorship and organisational assistance. The
event has not only helped place the nation on the world map, but more importantly, it has
spurred the development of homegrown cycling talents to compete at international level.
128
Operations Review
Under Bridging Community Programme, PROTON lends its hand to the less fortunate
members of society by building and repairing homes. The year saw PROTON carrying out
various repair works for Rumah Anak Yatim Siraman Kasih in Rawang and Rumah Anak
Yatim Sekendi in Sabak Bernam. PROTON also built a hostel for 60 inmates at Rumah AnakAnak Yatim & Miskin Darul Aitam, Tepoh, Perak.
In addition, PROTON annually supports various national bodies and organisations such
as MERCY, Yayasan Harapan Kanak-Kanak, Pediatric Ward of Hospital Tengku Ampuan
Rahimah, Yayasan Orang Kurang Upaya Kelantan, and PEMADAM with the sponsorship
of cars.
PROTON also has an on-going programme involving automotive technical education
through the contribution of used/scrap engines, components and body parts to national
technical institutions such as GIAT Mara, Institut Latihan Perindustrian under the Ministry
of Human Resources, Akademi Latihan Bomba and Institut Kejuruteraan Tentera Darat, as
well as various community colleges. PROTON has been the main sponsor for the Malaysian
Skills Competition (the automobile technology sector) organised by the Ministry of Works
for the past seven years. The annual Grant includes sending Malaysian representatives to
the ASEAN and World Competitions, with the objective of nurturing young local talents in
this sector and building world-class human capital.
129
Operations Review
PROTONs Environmental, Health and Safety Policy together with Quality Policy ensures that
the Group is conscientious about its operations impact on the surroundings and protecting
the health and safety of PROTONs greatest assets, its people, and the community at
large.
130
131
Operations Review
COD Chemical Oxygen Demands standard is 100 mg/l; PROTONs actual discharge
Scheduled waste is defined as any toxic waste falling within the categories of waste listed
in the First Schedule, Environment Quality (Scheduled Waste) Regulations, 2005. While
PROTON manages the treating of scheduled waste within the plant premises, the final dry
sludge from the scheduled waste is transferred to Kulaiti Alam Sdn Bhd, the sole national
schedule waste management centre located in Negeri Sembilan.
During the manufacturing process, several types of scheduled wastes are generated. These
are mainly the result of the overspray dust that occurs during the painting process and
are known as paint sludge, which is treated by an incineration process that requires a
temperature of more than 1,000 Celsius.
PROTONs volume of scheduled waste generated as a by-product from the manufacturing
process during the year was once again on a downward trend in keeping with previous
years.
132
Operations Review
133
Operations Review
Green Cars
Growing concerns with protecting the environment, managing carbon footprint, as well as
volatile petrol prices, have resulted in an increasing interest in green vehicles worldwide.
During the year under review, PROTONs vision of creating an automobile that is powered
by natural gas became a reality with the Saga NGV (natural gas vehicle). PROTON is currently
also focusing its R&D efforts on another alternative fuel vehicle, the electric vehicle.
134
The practise of carrying heavy items that are more than 10 kg in weight such as
Heavy physical work such as high torque wrench corresponding to more than 10 kg-m
Untidy work and other dislikes by operators such as urethane application and fluid
charging.
Operations Review
Instilling sound commuting practices that revolve around safety at all times is an on-going
priority for PROTON. The following campaigns were carried out during the year:
Road safety campaigns during festive seasons in collaboration with DOSH, Police,
programmes such as convoys to Teluk Batik and Ilham Resort, Port Dickson, with in-
Defensive driving training programmes for the public and customers to educate and
teach PROTON car owners safety and defensive driving techniques. This was in line
with the Governments aim to make roads safer and bring down the alarming
As a result of stringent safety practices on site, the number of industrial accidents recorded
in years 2006, 2007 and 2008 were 27, 18 and 11 respectively. The rate is consistent with the
downward trend in the past few years and PROTON will continue in its efforts in this area.
Staff who ride motorcycles to work receive helmets and reflective vests from the Managing Director.
135
Shouldering Responsibility
Shouldering
Responsibility
PROTONs evolution as
a national automaker
lies in maintaining
integrity, transparency
and commitment to the
Companys values as it
upholds the interests of
stakeholders.
Innovation in Motion
Statement on Corporate
Governance
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 practised throughout the
Group to effectively discharge its responsibilities to protect
and enhance shareholder value.
138
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), and at the same time,
striving to maintain a high level of corporate governance within the PROTON Group
by ensuring that the highest standards of corporate culture are practised throughout.
Good corporate governance is the foundation of the culture and business practices of
the PROTON Group.
Set out herein is a statement on how the Group has applied the principles and adopted
the best practices as laid down in the Code. This statement describes how the Principles of
Good Governance and provisions of the Code are applied by the Group.
139
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 Practices of the Code throughout the financial year under review.
The Board continues to enhance its role in improving governance practices effectively
to safeguard the interests of the shareholders as well as stakeholders. To this end, the
Board has full control of and is responsible for the Groups overall strategy, acquisition
and divestment policies, capital expenditures, annual budget, review of financial and
operational performance, and internal controls and risk management processes. The
Groups overall strategic direction, development, implementation and control remain of
primary importance to the Board.
Dato Mohammed Bin Azlan Hashim resigned as Non-Executive Chairman of PROTON on
1 January 2009. Dato 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 was appointed as the new
Non-Executive Chairman of PROTON on 1 January 2009.
The roles and responsibilities of the Non-Executive Chairman and the Managing Director
are clearly defined. The Chairman ensures the integrity and effectiveness of the Board as a
whole. He conducts Board meetings and ensures that it proceeds in an orderly manner.
The Managing Director (MD) on the other hand is responsible for making, and ensures
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. There is therefore a natural separation of management and governance leading
to a balance of power and authority.
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.
The Board has delegated matters pertaining to the day to day management, operations and
strategic development of the Group subject to the Limits of Authorities and Group Policies
and Procedures to the Managing Director who is supported by a competent Management
Team.
140
In the financial year ended 31 March 2009, the Board of PROTON Holdings Berhad (PHB) met nine (9) times
details of which are as shown below:
No Name of Director
Designation
Date of
Appointment
Non-Independent/
1 January 2009
Non-Executive Chairman
Date of
Resignation
Meeting
Percentage
Attendance
N/A
1/1
100%
1 January 2006
N/A
8/9
89%
12 April 2004
N/A
8/9
89%
10 March 2005
N/A
9/9
100%
Dato Michael
Lim Heen Peok
Independent Non-
Executive Director
15 September 2006
N/A
8/9
89%
Non-Independent
Non-Executive Director
11 February 2008
N/A
6/9
67%
Dato Mohammed
Azlan Bin Hashim
Non-Independent/
17 December 2004
Non-Executive Chairman
100%
Note: On 13 May 2009, Encik Oh Kim Sun was appointed Independent Non-Executive Director of PROTON.
The profiles of the directors are set out on (pages 28 to 35) of the Annual Report.
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. This would
enable the Directors to plan ahead and ensure attendance at Board Meetings. Additional meetings or Special
Board meetings are convened whenever necessary when there are urgent and important decisions to be
made.
141
Supply of Information
The Board has full access to all information pertaining to the Groups business affairs to
enable the Board to discharge its responsibilities effectively.
In general, the agenda, 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 before meetings. The agenda for every meeting permits
the Board members to review the contents of meetings and enables the Chairman to better
and more efficiently conduct the proceedings at the Board meetings.
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. The Board is, from time to time,
updated, with any changes in the law, governance and other regulatory requirements.
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.
The Company has drawn up a list of transactions that would require the prior approval of
the Board. The same is reflected in PROTONs Group Policy and Procedures and Limits of
Authority.
142
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. In accordance with the Articles of
Association and the Listing Requirements of Bursa Malaysia Securities Berhad, at least 1/3 of
the Directors shall retire from office at each Annual General Meeting. Any new appointed
director shall hold office only until the next Annual General Meeting of the Company and
shall be eligible for re-election under Article 111. Directors who are over seventy (70) years
of age are required to submit themselves for retirement annually at the Annual General
Meeting, unless the Director is re-appointed by way of special resolution in accordance with
Section 129 (6) of the Companies Act, 1965.
At the forthcoming Annual General Meeting of PROTON Holdings Berhad the following
Directors will retire and are eligible for re-election:
(i)
Note: Tuan Haji Abdul Jabbar Bin Abdul Majid although eligible, does not seek re-election.
(ii)
None of the Directors are subject to retirement pursuant to Section 129 of the Companies
Act, 1965 at the forthcoming Annual General Meeting.
143
Board Committees
The Board has delegated specific responsibilities to five (5) sub-committees, namely the Board Executive
Committee, Board Audit Committee, Board Nomination & Remuneration Committee, Board Risk Management
Committee and Board Disciplinary Committee, which assist the Board in overseeing the affairs of the
Group and have been entrusted with specific responsibilities and authority and report to the Board with
recommendation.
The abovementioned Board Committees have the authority to examine specific issues and report to the Board
with their recommendations. The responsibility of decisions on all matters ultimately lies with the Board as a
whole.
No Name of Director
Designation
Date of
Appointment
Date of
Resignation
Meeting
Attendance
10 March 2005
N/A
8/8
Member Independent
Non-Executive Director
10 March 2005
N/A
7/8
Dato Michael
Lim Heen Peok
Member Independent
Non-Executive Director
29 November 2006
N/A
8/8
*Note:
Encik Oh Kim Sun was appointed as Member and Chairman of the Board Audit Committee on 1
June 2009. Tuan Haji Abdul Jabbar Bin Abdul Majid was on the same date re-designated as
Member of the Board Audit Committee.
During the financial year, the BAC of PROTON Holdings Berhad undertook the following activities:
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.
Reviewed the external audit terms of engagement, the audit strategy, the proposed audit fee and the
achievement of the agreed upon reporting timeframes for the audit of the financial statements.
Reviewed the external audit reports and discussed any problems and reservations arising thereon.
Reviewed the internal audit plan, methodology, functions and resources.
Reviewed major findings on internal audit reports and management response.
144
The Terms of Reference of the Board Audit Committee are set out below.
Composition
The Committee shall be appointed from amongst the Board and shall: comprise no fewer than three members;
all the members must be independent directors; and
at least one member must be a member of the Malaysian Institute of Accountants
or if he is not, then he must be a person who complies with Para. 15.10 of Bursa
Malaysia Securities Berhads Listing Requirements.
No alternate director may be appointed as a member of the Board Audit Committee.
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.
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, the audit plan;
with the External Auditors, the External Auditors evaluation of the system of
internal controls;
with the External Auditors, the External Auditors audit report;
the assistance given by the Companys employees to the External Auditors;
the adequacy of the scope, functions and resources of the internal audit
functions and that it has the necessary authority to carry out its work, and the
performance of the members of the internal audit function;
the internal audit programme, processes, the results of the internal audit
programme, or investigation undertaken and whether or not appropriate action is
taken by the management on the recommendations of the internal audit function;
the quarterly results and year-end financial statements, prior to the approval by
the Board of Directors, focusing particularly on: changes in or implementation of major accounting policy;
significant and unusual events;
compliance with accounting standards and other legal requirements; and
accuracy and adequacy of the disclosure of information essential to a fair
and full presentation of the financial affairs of the Group;
any related party and conflict of interest situation that may arise within the
listed issuer or group including any transaction, procedure or course of conduct
that raises questions of management integrity;
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 Listing Requirements of Bursa Malaysia Securities Berhad;
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.
(b)
Consider the appointment of the external auditor, the audit fee and any questions
of resignation and dismissal.
145
Meetings
The Committee shall hold meetings on at least four occasions each year, although additional
meetings may be called, as and when necessary, by the Chairman of the Committee. These
meetings will usually be: prior to the current years audit;
upon completion of the External Auditors interim examination;
prior to the meeting of the full board to approve the financial statements;
prior to the announcement of the quarterly results;
upon the request of any member of the Committee or the External Auditors, the
Chairman of the Committee shall convene a meeting of the Committee to consider
the matters brought to its attention;
at least once a year, the Committee shall meet with the External Auditors without
any Executive Directors present.
Attendance
In order to form a quorum in respect of a meeting of an audit committee, the majority
of members must be present throughout the meeting. The Chairman may request that
directors and members of the management, the Internal Auditors and representatives of
the External Auditors be present at meetings of the Committee.
Minutes
The Company Secretary shall be the Secretary to the Committee and shall be present at all
meetings to record minutes.
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 minutes shall be signed by the Chairman of the Committee.
146
During the year, 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 monitoring process will form the basis
for continually improving the risk management process in the context of the Groups overall goals.
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.
The NRC reviews new director appointments of the Group and the balance and effectiveness of the boards
of directors, taking into account the required mix of skills and experience and other qualities, before making
recommendations to the Board.
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 for
recommendation to the Board.
The authority and scope of coverage of the NRC is over the PROTON Group, which includes subsidiaries and
relevant associate and other investee companies.
The NRC is made up entirely of Non-Executive Directors, with the majority consisting of Independent
Non-Executive Directors.
Appointments to the Committee shall be for a period of three (3) years, which may be extended provided that
the majority of the Committee members remain independent.
The NRC met eight (8) times during the financial year.
The Composition of the NRC is as follows:
No Name of Director
Designation
Date of
Appointment
Date of
Resignation
Meeting
Attendance
1
Dato Mohd Nadzmi
Bin Mohd Salleh
Chairman
Non-Independent
Non-Executive Director
1 January 2009
N/A
2/2
Member Independent
29 August 2005
N/A
8/8
Member Independent
29 August 2005
N/A
8/8
Dato Michael
Lim Heen Peok
Member Independent
Non-Executive Director
13 November 2006
N/A
8/8
10 March 2005
5
Dato Mohammed Azlan Chairman
Bin Hashim
Non-Independent
Non-Executive Director
147
No Name of Director
Designation
Date of
Appointment
Date of
Resignation
Meeting
Attendance
Chairman Independent
Non-Executive Director
29 September 2005
N/A
4/4
Member Independent
29 August 2005
N/A
3/4
Dato Zainuddin
Bin Che Din
Member Independent
1 October 2008
N/A
3/3
The composition of the BRMC is reviewed annually by the Board of Directors based on the recommendation
of the NRC.
The Group Risk Management Unit (GRMU) is entrusted with the responsibility for ensuring that an appropriate
risk management framework exists within the Group and is effectively implemented to manage the key risks
of the organization on an on-going basis.
The GRMC, which comprises of Senior Management, is responsible for overseeing risk management
implementation, regular updating of the Groups risk profiles and improving the implementation of
methodology for risk management. The Committee deliberates and determines the Groups major risks
to be escalated to the attention of the BRMC.
148
No Name of Director
Designation
Date of
Appointment
Date of
Resignation
Meeting
Attendance
N/A
N/A
Member Independent
Non-Executive Director
7 May 2006
N/A
2/2
Member Independent
Non-Executive Director
7 May 2006
N/A
2/2
Member Independent
Non-Executive Director
21 February 2008
N/A
2/2
1 January 2009
2/2
149
PROTONs Board EXCO comprises two (2) representatives from amongst the PROTON Board Members and two
(2) Senior Management representatives as follows:
No Name of Director
Designation
Date of
Appointment
Meeting
Attendance
N/A
3/3
17 April 2007
N/A
15/18
Dato Michael
Lim Heen Peok
Independent Non-Executive
Director
17 April 2007
N/A
18/18
16 June 2008
N/A
12/12
1 January 2009
15/15
4
Vimala Menon
5
Date of
Resignation
Directors Training
All Directors have successfully completed the Mandatory Accreditation Programme conducted by the Research
Institute of Investment Analysts Malaysia as imposed by Bursa Malaysia Securities Berhad.
Despite repeal of Bursa Malaysia Securities Berhads Continuing Education Programme with effect from 1
January 2005, the Directors continue to identify and attend appropriate seminars and courses to keep abreast
of changes in legislation and regulations affecting the Group.
The Company has arranged various in-house training programmes and luncheon talks on topics relevant to
the Company, which were attended by both the members of the Board and Senior Management. 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. The goal of
this engagement is to deliver continuous learning to PROTON through interactive sessions supported by
market analysis, technology trends, best practices, economic and policy impact analysis from across the region.
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.
The Directors have also in the course of the year attended programmes for building high performance directors,
the Chairmans Forum, workshops, conferences and talks including those organised by the Malaysian Directors
Academy, better known as MINDA, an initiative under the GLC Transformation Programme.
150
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. The Board as a whole determines the remuneration
of the Executive and Non-Executive Directors. Directors do not participate in any discussions or decisions
concerning each individuals remuneration.
In the case of the Executive Director, the remuneration is structured to link rewards to corporate and individual
performance through key performance indicators comprising fixed and performance-based rewards.
The level of remuneration of the Non-Executive Directors reflects the experience and level of responsibilities
undertaken by the Director concerned. The Non-Executive Directors are paid annual fees and attendance
allowances in accordance with the number of meetings attended. In addition, the Non-Executive Directors are
each provided with the use of a car.
Non-Executive Directors fees are paid upon shareholders approval at each Annual General Meeting.
The NRC carries out reviews when appropriate and refers to remuneration surveys and consultants to assist
in determining the appropriate level of reward, which is competitive and consistent with the corporate
objectives. This is necessary in order to attract and retain professionals with the qualities needed to manage
the Group successfully.
Details of the total remuneration of the Directors of PROTON Holdings Berhad for the financial year ended 31
March 2009 are as follows:
Directors
Fees and
Allowances
Benefits
in Kind
Total
Executive Directors
Non-Executive Directors
814,464
-
-
1,522,454
81,126
59,276
895,590
1,581,730
TOTAL
814,464
1,522,454
140,402
2,477,320
Remuneration
Range of Total Remuneration
Executive
Number of Directors
Non-Executive
Total
Below RM50,000
RM50,001 RM100,000
RM100,001 RM500,000
RM500,001 RM1,000,000
-
-
-
1
-
2
2
2
2
2
3
TOTAL
151
Financial Reporting
The Board is committed to providing a balanced, clear and meaningful assessment of the
financial performance and prospects of the Group to shareholders, the investor community
and the regulatory authorities. Shareholders and other stakeholders are kept abreast of the
Groups performance through the timely announcement of the quarterly financial results
and accompanying press releases.
The Board Audit Committee assists the Board to oversee the financial reporting processes
and the quality of its financial reporting. Quarterly financial results and annual financial
statements are reviewed by the Board Audit Committee to ensure adequacy and
completeness of information prior to the Boards approval. To enhance quality of the
Groups financial reporting, the external auditors will be conducting quarterly reviews of
the Groups quarterly results in addition to the year-end audit.
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. The size and complexity of the
operations may give rise to risks of unanticipated or unavoidable losses.
The system of internal controls is designed to provide reasonable but not absolute assurance
against the risk of material errors, frauds or losses occurring. The Board Audit Committee
reviews the effectiveness of the system of internal controls, which cover financial, operational
and compliance controls, and also risk management.
152
153
Such code may be modified, added to, substituted for or otherwise amended from time to
time as the Board deems fit. An employee is also required to comply with the penal code
of the country.
Code of Ethics
The PROTON Group has established specific rules and regulations to govern the conduct of its
employees. The Directors and employees of PROTON Group are expected to obey all laws in
conducting business and to always act with honesty, integrity, loyalty, trustworthiness, fairness
and responsibility.
It is PROTONs policy and Managements responsibility to apply these rules fairly and equitably
to all employees.
Infringement of these rules may lead to disciplinary action such as verbal or written warnings,
suspension without pay and separation from the Company/Group.
Purpose of Policy
The purpose of this policy is to provide a framework for the proper conduct of directors and
employees while on the job. 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 respective codes are made available to the Directors and employees.
Whistleblower Policy
PROTON had on 27 July 2006 implemented a Whistleblower Policy. 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, such as loss of Company image or reputation,
financial distress and loss of investor confidence.
The policy encourages employees or representatives of PROTON to disclose genuine concerns
about illegal, unethical or improper business conduct within the Group. In this manner, the
employees can help the PROTON Group to monitor and keep track of such illegal, unethical or
improper business conduct within, which otherwise, may not be easily detected through normal
process or transaction.
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 Group
has in place group finance policies and employee procedures.
The Group has an appropriate organisational structure for planning, executing, controlling
and monitoring business operations in order to achieve group objectives. Lines of
responsibility and delegations of authority are documented.
154
155
Non-Audit Fees
During the financial year, the amount of non-audit fees paid and payable to the external auditors by the
Group are as follows:
External Auditors
2009
2008
RM000
RM000
PricewaterhouseCoopers Malaysia
2,120
1,234
Member firm of PricewaterhouseCoopers International Limited
2,545
1,961
(a separate and independent legal entity from
PricewaterhouseCoopers Malaysia)
Total
4,665
3,195
Additional compliance information in accordance with Appendix 9C of the Listing Requirements of Bursa
Malaysia Securities Berhad.
Share Buy-back
There was no proposal by the Company to carry out a
Variation in Results
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, either still subsisting at the end
of the financial year ended 31 March 2009 or entered
into since the end of the previous financial year.
156
a.
Company
b.
c.
PROTON.
157
Below is a list of Recurrent Related Party Transactions entered during the period for the financial year ended
31 March 2009.
Nature of Transaction
Company within
Actual
01/04/08 -
31/03/09
Purchase of lubricants
PONSB
2,709,289
Purchase of lubricants
PONSB
3,794,840
Purchase of lubricants
PESB
10,995,796
4 EON
Sale of goods
PESB
1,868,300,918
5 EON
Sale of goods
PPCSB
113,925,867
PPCSB
496,344
Purchase of goods
PONSB
96,628,802
Purchase of goods
PONSB
4,808,244
9 PPCSB
Purchase of goods
PONSB
2,454,309
10 PPCSB
Sale of goods
PONSB
25,558,760
11 PPCSB
Purchase of parts
PESB
87,132,079
12 PPCSB
Sale of goods
PCUK
7,021
13 PPCSB
Purchase of parts
PCUK
3,180,114
14 PPCSB
Purchase of parts
PCA
2,862,809
15 PPCSB
Purchase of parts
PSPL
603,777
158
Nature of Transaction
Company within
Actual
01/04/08 -
31/03/09
16 PPCSB
Purchase of parts
PEI
1,946,237
Purchase of parts
PONSB
201,301,804
Purchase of parts
PPCSB
3,087,740
Sale of goods
PESB
869,236
Purchase of parts
PONSB
63,304,332
Purchase of parts
PPCSB
1,463,932
Purchase of goods
PONSB
123,622,655
Definition:
PONSB
PESB
PPCSB
PCUKL
PCA
PSpore
159
Board Responsibility
The Board of Directors (Board) recognises the importance of sound internal controls
and risk management practices to good corporate governance. The Board has an overall
responsibility for the Groups system of internal controls and its effectiveness, as well as
reviewing its adequacy and integrity. The Groups system of internal controls is designed
to manage the principal business risks that may impede the Group from achieving its
business objectives. The system, by its nature, can only provide reasonable but not absolute
assurance against any material misstatement or loss occurrence.
160
Risk Management
Risk management is regarded by the Board to be an integral part of the Groups operations
with the objective of maintaining a sound internal control system and ensuring its continuing
adequacy and integrity. A formal risk management framework and policy was approved
by the Board for the Group to identify, assess, treat, report and monitor, key risks faced
by the Group. The effectiveness of the risk mitigation actions are reviewed quarterly by
the Group Risk Management Committee (GRMC) and Board Risk Management Committee
(BRMC) respectively.
The Group Risk Management Unit (GRMU) 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.
The GRMC, which comprises Senior Management, is responsible for overseeing risk
management implementation, regular updating of the Groups risk profiles and improving
the implementation of methodology for risk management. The Committee deliberates and
determines the Groups major risks to be escalated to the attention of the BRMC.
161
The BRMC was established to deliberate major risks highlighted by the management and
assist the Board in reviewing Groups risk policies and strategies.
For the financial year ended 31 March 2009, the GRMC and BRMC have held quarterly
meetings in accordance with their respective terms of reference.
Assurance Mechanism
Apart from risk management activities, the Board and Management have established
other processes for identifying, evaluating and managing significant risks faced by the
Group. They continue to strive in enhancing and implementing the internal control system
to manage those risks that could affect the Groups growth and financial viability. These
processes include updating the system of internal controls when there are changes to the
business environment or regulatory guidelines. The key elements of the Groups 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 Groups operations.
The responsibilities and authority of the Committees are governed by specific terms of
reference and these Committees are accountable to the Board.
The Board Committees are:
Audit Committee
Disciplinary Committee
The details of the abovementioned Board Committees are set out in the Statement of
Corporate Governance.
Board Audit Committee
The Board has delegated the duty of reviewing and monitoring the effectiveness of the
Groups system of internal controls to the Board Audit Committee (BAC).
162
The BAC assumes the overall duties of reviewing with the external auditors their audit
plan, audit report, as well as their findings and recommendations on internal controls
highlighted annually in the Internal Control Memorandum. Throughout the financial year,
the BAC was updated on the developments of Malaysian Financial Reporting Standards, as
well as legal and regulatory requirements. It also reviews the effectiveness of the internal
audit function with particular emphasis on the scope and quality of audits, 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.
Further information relating to the activities of the BAC is set out in the Statement of
Corporate Governance.
Organisation Structure and Management Committees
An organisation structure, which is aligned to the business and operational requirements
and led by Heads of Division with clearly defined lines of responsibility, accountability and
levels of authority, is in place to assist in implementing the Groups strategies and day-today business activities.
Various functional committees were set up at the Management level to ensure the Groups
actions and operations are properly aligned towards achieving the organisations goals and
objectives.
Group Internal Audit Division (GIAD)
GIAD continues to independently monitor compliance with internal policies and procedures,
effectiveness of the internal control systems and highlights significant findings for corrective
actions by line management and reports directly to the BAC.
The annual audit plan which covers PROTON and its subsidiary companies and which was
established primarily on a risk-based approach, is reviewed and approved by the BAC
annually. A quarterly work status update is given by the GIAD to the BAC. GIAD regularly
reviews the approved annual audit plan to ensure significant risk areas are given adequate
audit focus.
163
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.
Internal controls of associated companies and jointly controlled entities are reviewed upon
any ad-hoc request by the BAC.
On a quarterly basis, 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.
Further information relating to the activities of GIAD is set out in the Statement of Corporate
Governance.
office and operating units, including authorisation levels for various aspects of the
Documented internal policies and procedures as set out in the Group Policies and
Procedures and ISO 9001:2000 certification of the Quality System Procedures for
Quarterly financial statements and the Groups performance are deliberated by the
BAC, which subsequently presents them to the Board for their review, consideration
and approval;
Management Committee meetings are held on a regular basis to identify, discuss and
A comprehensive budgeting process where the annual budgets are approved by the
Board;
The Board receives and reviews monthly reports from Management on key strategic
164
Continuous training efforts to enhance the leadership quality and competency of the
workforce;
Formal employee appraisal system for effective coaching and evaluation of employee
For the financial year under review, after due and careful inquiry and based on the
information and assurance provided, the Board was satisfied that the key elements of
internal controls are in place. Nevertheless, identified areas of concern are being accorded
closer attention and more regular monitoring to ensure key internal controls are adequate
and effective to continually safeguard shareholders investment and the Groups assets.
165
Risk Management
Embracing Challenges
Overview
The Group recognises the importance of a sound risk management system throughout the
organsation to provide reasonable assurance to the shareholders that the risks the Group
is exposed to be are being effectively managed, controlled and capitalised. PROTONs
risk management framework, formulated in 2003, ensures a consistent application of risk
management across the Group, through a standardised risk registration and reporting
system. Through this effort, Management and the Board are able to deliberate risk issues
on a uniformed and scheduled basis.
166
Board of Directors
167
Risk Management
Major Initiatives
168
Risk Factors
Country Risk
PROTON conducts its businesses across regions. For
this reason, it is exposed to risks related to pandemic,
Risk Management
Conclusion
Providing assurance that the risks are effectively managed requires effort and commitment
from all divisions. Risk management awareness will continue to be given top priority to
provide reasonable assurance to the shareholders that risks are effectively managed within
the Group. With support and direction from the BRMC, 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 in the Company.
169
Bright Outlook
Bright Outlook
Despite challenges, there
are highlights to keep
PROTON moving towards
its vision of being a
leading
national
and
regional automaker.
Innovation in Motion
Calendar of Events
Aug 2008
Aug 2008
Aug 2008
172
Aug 2008
Sept 2008 Buka Puasa with staff and children from local
orphanages is a yearly activity during the month of
Ramadhan.
Sept 2008
Oct 2008 PROTON presents the Saga Taxi, with the new
vibrant red body and yellow top. Public Cab Sdn Bhd, KCM
Fleet Sdn Bhd, Avenue Drive (M) Sdn Bhd and Perniagaan
Lima Sejati Sdn Bhd were the first to take delivery.
Oct 2008
Oct 2008
173
Calendar of Events
Nov 2008
Nov 2008
Nov 2008
Nov 2008
Dec 2008 Persona wins 1st place as the Most Fuel Efficient
174
Dec 2008
Dec 2008
175
Calendar of Events
Apr 2009
176
May 2009
Jun 2009 Deputy Prime Minister, YAB Tan Sri Dato Haji
Muhyiddin Bin Mohd Yassin visiting the PROTON booth at
the 12th annual SMIDEX Exhibition.
Jun 2009
Jun 2009
July 2009
May 2009
177
Moving Ahead
Moving Ahead
Being
committed
meticulous
bringing
to
care
and
value
to
Innovation in Motion
180
181
Directors Report
185
Income Statements
186
Balance Sheets
188
189
190
193
280
Statement by Directors
280
Statutory Declaration
281
DIRECTORS REPORT
The Directors hereby submit their report together with the audited financial statements of the Group and
Company for the financial year ended 31 March 2009.
PRINCIPAL ACTIVITIES
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 of the financial statements. There have been no significant changes in the
activities of the Group and Company during the financial year.
FINANCIAL RESULTS
Group
Company
RM000
RM000
(301,806)
367,170
DIVIDENDS
Dividends on ordinary shares paid or declared by the Company since 31 March 2008 are as follows:
RM000
20,595
The Directors do not recommend the payment of a final dividend for the financial year ended 31 March 2009.
181
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
Haji Abdul Jabbar bin Abdul Majid
Haji Abdul Kadir bin Md Kassim
Dato Lim Heen Peok
Datuk Zalekha binti Hassan
Encik Oh Kim Sun
Dato Mohammed Azlan bin Hashim
(appointed on 1.01.2009)
(appointed on 13.05.2009)
(resigned on 1.01.2009)
In accordance with Article 104 of the Companys Articles of Association, Haji Abdul Kadir bin Md Kassim
and Dato Lim Heen Peok retire at the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-election.
Haji Abdul Jabbar bin Abdul Majid who is retiring in accordance with Article 104 of the Companys Articles
of Association at the forthcoming Annual General Meeting does not wish to seek re-election as a Director
of the Company. Accordingly, he will retire at the conclusion of the Annual General Meeting of the
Company.
In accordance with Article 111 of the Companys Articles of Association, Dato Mohd Nadzmi bin Mohd
Salleh and Encik Oh Kim Sun retire at the forthcoming Annual General Meeting and, being eligible, offer
themselves for re-election.
DIRECTORS BENEFITS
During and at the end of the financial year, no arrangements subsisted to which the Company is a party,
being arrangements with the object or objects of enabling Directors of the Company to acquire benefits
by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.
Since the end of the previous financial year, 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, or with a company in which the Director has a substantial financial
interest.
182
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; and
(b)
to ensure that any current assets, other than debts, 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.
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)
which would render the values attributed to current assets in the financial statements of the Group and
Company misleading; 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.
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, in the opinion of the Directors, will or may substantially
affect the ability of the Group and Company to meet their obligations when they fall due.
At the date of this report, 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; or
(b)
any contingent liability of the Group or the Company which has arisen since the end of the financial
year.
183
the results of the Groups and Companys operations during the financial year were not substantially
affected by any item, transaction or event of a material and unusual nature except as disclosed in Notes
5 and 13 to the financial statements; 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 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.
AUDITORS
The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.
Signed on behalf of the Board of Directors in accordance with their resolution dated 22 July 2009.
184
INCOME STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009
2009
Note
RM000
Revenue
Cost of sales
Group
2008
RM000
2009
RM000
Company
2008
RM000
6
7
6,486,570
(6,075,913)
5,621,594
(5,056,854)
362,357
-
41,203
-
Gross profit
410,657
564,740
362,357
41,203
80,656
197,895
(187,668)
(515,270)
193,782
134,889
(201,095)
(504,184)
-
7,321
-
(1,329)
302
(607)
(278,476)
(47,401)
-
(46,851)
-
-
(339,607)
141,281
368,349
40,898
Finance cost
Share of results of associated
companies
(14,408)
(17,936)
18
20,220
13,134
19
14,594
7,837
(319,201)
144,316
368,349
40,898
10
17,395
40,235
(1,179)
(10,517)
(301,806)
184,551
367,170
30,381
Attributable to:
Equity holders of the Company
(301,806)
184,551
367,170
30,381
(55)
(55)
34
34
Taxation
11
11
The notes on pages 193 to 279 form part of these financial statements.
185
BALANCE SHEETS
AS AT 31 MARCH 2009
Group
Company
2009
2008
2009
2008
Note
RM000
RM000
RM000
RM000
13
14
15
16
17
18
19
2,827,111
-
29,008
431,668
-
158,367
195,622
3,150,446
24,031
29,008
275,192
-
165,443
192,747
-
-
-
-
1,708,651
13,600
-
1,708,651
13,600
-
20
21
22
-
10,397
5,727
-
10,397
-
177,870
6,475
-
6,475
-
3,657,900
3,847,264
1,906,596
1,728,726
Inventories
23
Trade and other receivables
24
Amounts due from subsidiary
companies
20
Amounts due from associated
companies
25
Amounts due from jointly
controlled entities
26
Tax recoverable
10
Current investments
27
Dividends receivable
Deposits, bank and
cash balances
28
1,395,081
890,095
1,100,286
969,344
-
145
14
58,912
66,219
18,284
10,713
11,353
160,610
15,313
-
4,430
114,479
20,822
-
-
77
-
-
273
14,800
913,850
1,226,010
209,423
26,296
3,404,586
3,446,084
268,557
107,602
29
36,412
TOTAL ASSETS
7,098,898
7,293,348
2,175,153
1,836,328
NON-CURRENT ASSETS
Property, 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
CURRENT ASSETS
186
BALANCE SHEETS
AS AT 31 MARCH 2009 (CONTINUED)
Group
Company
2009
2008
2009
2008
Note
RM000
RM000
RM000
RM000
30
31
549,213
4,552,327
549,213
4,872,043
549,213
1,625,179
549,213
1,278,604
5,101,540
5,421,256
2,174,392
1,827,817
TOTAL EQUITY
5,101,540
5,421,256
2,174,392
1,827,817
32
22
101,516
12,243
230,473
2,439
-
-
113,759
232,912
1,277,658
189,779
1,235,520
186,556
482
-
575
-
7,936
88,606
84,984
15,195
6,322
306,039
16,958
1,556
113,606
-
279
-
1,883,599
1,639,180
761
8,511
TOTAL LIABILITIES
1,997,358
1,872,092
761
8,511
7,098,898
7,293,348
2,175,153
1,836,328
9.29
9.87
EQUITY AND LIABILITIES
Share capital
Reserves
NON-CURRENT LIABILITIES
Long term liabilities
Deferred tax liabilities
CURRENT LIABILITIES
The notes on pages 193 to 279 form part of these financial statements.
187
At 1 April 2008
549,213
475,617
2,362
(82,197)
4,476,261
5,421,256
-
-
-
-
-
-
2,685
-
-
(301,806)
2,685
(301,806)
2,685
(301,806)
(299,121)
12
(20,595)
(20,595)
At 31 March 2009
549,213
475,617
2,362
(79,512)
4,153,860
5,101,540
At 1 April 2007
549,213
475,617
(85,952)
4,291,710
5,230,588
3,755
3,755
-
-
-
-
2,362
-
-
-
-
184,551
2,362
184,551
2,362
3,755
184,551
190,668
At 31 March 2008
549,213
475,617
2,362
(82,197)
4,476,261
5,421,256
The notes on pages 193 to 279 form part of these financial statements.
188
Distributable
Retained
earnings
RM000
Total
RM000
At 1 April 2008
549,213
549,213
1,278,604
1,827,817
367,170
367,170
(20,595)
(20,595)
At 31 March 2009
549,213
549,213
1,625,179
2,174,392
At 1 April 2007
549,213
549,213
1,248,223
1,797,436
30,381
30,381
At 31 March 2008
549,213
549,213
1,278,604
1,827,817
The notes on pages 193 to 279 form part of these financial statements.
189
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
(301,806)
184,551
367,170
30,381
(17,395)
(40,235)
1,179
10,517
450,346
38,746
257,674
(1,616)
19,417
382,556
18,557
-
(800)
(12,546)
-
-
-
-
-
-
-
-
114,950
89
(990)
6,741
(25,053)
-
-
-
-
6,678
4,200
48,493
20,802
14,408
(42,089)
(20,220)
34,817
-
17,936
(32,143)
(13,134)
-
-
-
(4,618)
-
(301)
-
(14,594)
(7,837)
44
1,084
(63,315)
45,616
(8,284)
(1,678)
-
(19,708)
7,737
(10,230)
-
-
-
-
-
548,939
492,830
363,731
40,597
190
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
548,939
492,830
363,731
40,597
62,862
4,426
(80,656)
(8,042)
(21,646)
(1,260)
45,526
-
(193,782)
14,616
-
(2,896)
-
-
-
-
-
(362,357)
(41,203)
504,623
356,294
1,374
(606)
(445,982)
217,044
161,578
-
73,075
-
(131)
7,307
(9)
-
(14,688)
19,789
108,309
(102,257)
-
196,067
(99,301)
-
(93)
-
(7,936)
(215)
288
6,606
(22,793)
218,189
740,175
521
(542)
Tax paid
Tax refund
Interest received
Interest paid
Retirement benefits paid
(31,550)
9,717
47,047
(12,394)
(9,369)
(8,571)
108,955
32,143
(17,936)
(11,155)
(704)
-
4,618
-
-
301
-
221,640
843,611
4,435
(241)
191
Note
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
(462,781)
(391,997)
3,998
-
(237,632)
(58)
(32,616)
(141,217)
-
-
-
-
4,439
54,304
29,073
50,722
-
20,590
1,304
25,698
-
377,157
15,927
(642,371)
(433,802)
377,157
15,927
(20,595)
356,506
-
-
421,598
-
(20,595)
-
(177,870)
(890)
(195,421)
31,557
(1,293)
(132,080)
6,260
-
-
-
171,157
294,485
(198,465)
NET (DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS
(249,574)
704,294
183,127
15,686
(24,982)
(1,819)
1,173,939
471,464
26,296
10,610
899,383
1,173,939
209,423
26,296
44
The notes on pages 193 to 279 form part of these financial statements.
192
1 GENERAL INFORMATION
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 limited liability company incorporated, and domiciled in Malaysia, and listed on the
Main Board 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
2 BASIS OF PREPARATION
During the financial year, the Group incurred a net loss of RM301.8 million (2008: net profit for the
financial year of RM184.6 million) which was substantially due to impairment of certain property, plant
and equipment and capitalised development cost totaling RM278.5 million as well as, inventory writedown of RM81.8 million relating to certain vehicle models impacted by sales volume contraction.
193
The new accounting standards, amendments to published standards and interpretations to existing
standards effective for the financial year beginning 1 April 2008 are as follows:
FRS 107
FRS 111
FRS 112
FRS 118
FRS 120
FRS 134
FRS 137
Amendment to FRS 121
IC Interpretation 1
IC Interpretation 2
IC Interpretation 5
IC Interpretation 6
IC Interpretation 7
IC Interpretation 8
194
IC Interpretation 1, 2, 5, 6, 7 and 8 are not relevant to the Group and the Company. The adoption
of FRS 107, 111, 112, 118, 120, 121, 134 and 137 did not result in any substantial changes to
the accounting policies of the Group and the Company nor have any significant financial impact
on the financial statements of the Group and the Company.
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 7 Financial Instruments: Disclosures (effective for annual periods beginning 1 January
2010). The Group and the Company have applied the transitional provision in 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 (effective for annual periods beginning 1 July 2009) replaces
FRS 1142004 Segment Reporting. The new standard requires a management approach, under
which segment information is presented on the same basis as that used for internal reporting
purposes.
FRS 139 Financial Instruments: Recognition and Measurement (effective for annual periods
beginning 1 January 2010). This new standard established principles for recognising and
measuring financial assets, financial liabilities and some contracts to buy and sell non-financial
items. Hedge accounting is permitted only under strict circumstances. 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.
FRS 123 Borrowing costs (effective for annual periods beginning 1 January 2010) which
replaces FRS 1232004, removes the option of immediately recognising as an expense borrowing
costs that are directly attributable to the acquisition, construction or production of a qualifying
asset.
FRS 2 Share Based Payment (Amendment) (effective for annual periods beginning 1 January
2010). This new amendment clarifies that vesting conditions are service conditions and
performance conditions only and do not include other features of a share based payment.
FRS 127 Consolidated and Separate Financial Statements (Amendment) (effective for annual
periods beginning 1 January 2010). This amendment deals with situations where a parent
reorganises its group by establishing a new entity as its parent. Under the new rules, 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.
195
IC Interpretation 10 Interim Financial Reporting and Impairment (effective for annual periods
beginning 1 January 2010). IC Interpretation 10 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.
IC Interpretation 13, Customer Loyalty Programs (effective for annual periods beginning 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.
IC Interpretation 14, FRS 119: The Limit on a Defined Benefit Asset, Minimum Funding
Requirement and their Interactions (effective for annual periods beginning 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. Also, 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.
IC Interpretation 11, FRS 2: Group and Treasury Share Transactions (effective for annual periods
beginning 1 January 2010) clarifies how share based payment transactions involving its own or
another entitys instruments in the same group are to be treated and that cancellations by
parties other than the entity are to be treated in the same way as cancellations by the entity.
(c) Standards, amendments to published standards and interpretations that are not yet
effective and not relevant to the Groups operations
196
FRS 4 Insurance Contracts is effective for annual periods beginning 1 January 2010. This new
standard exempts entities from disclosing information required under paragraph 30(b) of FRS
108 Accounting Policies, Changes in Accounting Estimates and Errors.
Subsidiary companies are those corporations, 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, generally accompanying a shareholding of more than one half of the voting
rights. The existence and effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls another entity.
Investments in subsidiary companies are stated at cost less accumulated impairment losses. Where
an indication of impairment exists, the carrying amount of the investment is assessed and written
down immediately to its recoverable amount. The accounting policy on Impairment of Assets is set
out in Note 3(v).
Prior to 1 January 2006, the Group applied both the purchase method and the merger method to
account for Business Combinations in accordance with prior financial reporting standards. With
effect from 1 January 2006, only the purchase method of accounting is used to account for Business
Combinations in accordance with FRS 3.
The cost of an acquisition is measured as the fair value of the assets given, equity instruments
issued and liabilities incurred or assumed at the date of exchange, plus costs directly attributable to
the acquisition. 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 excess of the cost of acquisition over the fair value of
the Groups share of the identifiable net assets acquired is recorded as goodwill. The accounting
policy on goodwill is set out in Note 3(f)(i). If the cost of acquisition is less than the fair value of the
net assets of the subsidiary company acquired, the difference is recognised as a gain in the
Consolidated Income Statements.
Subsidiary companies are consolidated from the date on which control is transferred to the Group.
They are de-consolidated from the date that control ceases.
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. 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.
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, directly or indirectly through the subsidiary
companies by the parent. 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.
197
The gain or loss on disposal of a subsidiary company is the difference between the net disposal
proceeds and the Groups share of the subsidiary companys net assets as of the date of disposal,
including the cumulative amount of any exchange differences that relate to that subsidiary company
which were previously recognised in equity, and is recognised in the Consolidated Income
Statements.
Associated companies are those corporations, partnerships or other entities in which the Group
exercises significant influence, but which it does not control. 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.
Investments in associated companies are stated at cost. Where an indication of impairment exists,
the carrying amount of the investment is assessed and written down immediately to its recoverable
amount. The accounting policy on Impairment of Assets is set out in Note 3(v).
In the Consolidated Financial Statements, investments in associated companies are accounted for
using the equity method. Under the equity method, the Groups share of its associated companies
post-acquisition results is recognised in the income statement, and its share of postacquisition movements in reserves is recognised in reserves. The cumulative post-acquisition
movements are adjusted to the carrying amount of the investment. When the Groups share of losses
in an associated company equals or exceeds its cost of investment in the associated company
including any other unsecured receivables, the Group discontinues its share of further losses, 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 Groups interest in the associated companies. Unrealised losses are also eliminated
unless the assets transferred are impaired.
In applying the equity method, the Group has ensured that uniform accounting policies for like
transactions and other events in similar circumstances of the associated companies are used. The
equity method is applied based on the latest financial statements made up to the financial year end
of the Group.
198
Jointly controlled entities are corporations, 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. The Groups interests in jointly controlled entities are accounted for in
the Consolidated Financial Statements by the equity method of accounting, as disclosed in Note
3(b).
Investments in jointly controlled entities are stated at cost. Where an indication of impairment
exists, the carrying amount of the investment is assessed and written down immediately to its
recoverable amount. The accounting policy on Impairment of Assets is set out in Note 3(v).
The Consolidated Income Statements include the Groups share of results of the jointly controlled
entities based on the financial statements made up to the financial year end of the Group. The
cumulative post-acquisition movements are adjusted to the carrying amount of the investment.
Unrealised gains on transactions between the Group and its jointly controlled entities are eliminated
to the extent of the Groups interest in the jointly controlled entities. Unrealised losses are also
eliminated unless the assets transferred are impaired.
In applying the equity method, the Group has ensured that uniform accounting policies of jointly
controlled entities for like transactions and other events in similar circumstances are used. The
equity method is applied based on the latest financial statements made up to the financial year end
of the Group.
(d) Investments
The Group uses its judgement to determine the classification of its investments into current and
non-current. 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.
Non-current investments are shown at cost and an allowance for diminution in value is made where,
in the opinion of the Directors, there is a decline other than temporary in the value of such
investments. Where there has been a decline other than temporary in the value of an investment,
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,
determined on an aggregate portfolio basis by category of investments. 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. Increases/decreases in the carrying
amount of current investments are credited/charged to the Consolidated Income Statements.
On disposal of an investment, the difference between net disposal proceeds and its carrying amount
is credited/charged to the income statement.
199
I.
are held for use in the production or supply of goods or services, or for administrative
purposes; and
II.
(i)
Cost
Property, 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. The Group
allocates the initial cost of an item of property, plant and equipment to its significant
component parts.
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 surplus arising on revaluation was credited directly to capital reserves and
subsequently utilised.
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. All other land held by the Group is
stated at cost.
Subsequent costs are included in the assets carrying amount or recognised as a separate asset,
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. The carrying
amount of the replaced part is derecognised. All other repairs and maintenance are charged to
the income statement during the financial period in which they are incurred.
(ii) Depreciation
Freehold land is not depreciated as it has an infinite life. Depreciation of other property, 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 their estimated useful lives. The assets residual values, useful
lives and depreciation method are reviewed annually and revised if appropriate.
Buildings
Plant and machinery
Office equipment, furniture, fittings and vehicles
200
15-50 years
5-15 years
2-8 years
Dies and jigs, which are included under plant and machinery, are depreciated based on the unit
of production basis.
Work-in-progress is not depreciated. Upon completion, the related costs will be transferred
to the respective categories of assets. Depreciation on work-in-progress commences when the
assets are ready for their intended use.
(iii) Impairment
Where an indication of impairment exists, the carrying amount of the assets is assessed and
written down immediately to its recoverable amount. The accounting policy on Impairment of
Assets is set out in Note 3(v).
Gains or losses on disposals are determined by comparing proceeds with their related carrying
amounts and are included in profit/(loss) from operations.
Repairs and maintenance are charged to the Consolidated Income Statements during the
period in which they are incurred. 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. Major renovations
are depreciated over the remaining useful life of the related asset.
(f)
Intangible assets
(i)
Goodwill
Goodwill is carried at cost less accumulated impairment losses. Goodwill is tested for
impairment at least annually, or when events or circumstances occur indicating that an
impairment may exist. Impairment of goodwill is charged to the Consolidated Income
Statements as and when it arises. Impairment losses on goodwill are not reversed. Gains or
losses on the disposal of an entity includes the carrying amount of goodwill relating to the
entity disposed.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. Each
cash-generating 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 Group allocates goodwill to
each business segment in each country in which it operates.
201
(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. Such goodwill are tested for impairment as part of the overall balance.
Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire
and bring to use the specific computer software. These costs are amortised over their
estimated useful lives of 3 to 5 years.
202
Leases of property, plant and equipment where the Group assume substantially all the benefits and
risks or ownership are classified as finance leases.
Finance leases are capitalised at the inception of the lease at the lower of the fair value of the
leased property, plant and equipment and the present value of the minimum lease payments. 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. The corresponding obligations, net of
finance charges, are included in borrowings. The interest element of the finance charge is charged
to the Consolidated Income Statements over the lease period.
Property, plant and equipment acquired under finance leases are included in tangible property,
plant and equipment and are depreciated in accordance with the Note 3(e) above.
(h) Inventories
Inventories are stated at the lower of cost and net realisable value. Cost includes the actual cost
of materials and incidentals in bringing the inventories to their present location and condition, and
is determined either on the first-in first-out basis and weighted average basis depending on the
nature of inventory. Net realisable value represents the estimated selling price less all estimated
costs to completion and costs to be incurred in marketing, selling and distribution. In arriving at net
realisable value, due allowance is made for obsolete, slow moving or defective inventories.
(i)
Trade and other receivables are carried at anticipated net realisable value. Allowances are made for
doubtful debts based on specific reviews of outstanding balances at the balance sheet date. General
allowances are made to cover possible losses, which are not specifically identified. Bad debts
are written off to the Consolidated Income Statements during the financial period in which
they are identified.
(j)
Non-current assets are classified as assets held for sale when the carrying amount is to be recovered
principally through a sale transaction. They are stated at the lower of their 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.
203
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.
Capital grants
Government grants relating to capital expenditure are deferred and recognised in the income
statement over the period necessary to match them with the costs they are intended to
compensate.
Government grants relating to the purchase of plant and equipment are included in non-current
liabilities as capital grant and are credited to the income statement on a straight line basis
over the expected lives of the related assets.
Income grants
Income grants are grants other than capital grants and recognised in the income statement where
there is a reasonable assurance that the grant will be received and the Group will comply with all
attached conditions.
(l)
Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result
of past events, when it is probable that an outflow of resources will be required to settle the
obligation, and when a reliable estimate of the amount can be made. Where the Group expects
a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when
the reimbursement is virtually certain. Provisions are reviewed at each balance sheet date and
adjusted to reflect the current best estimate. When the effect of the time value of money is material,
the amount of provision is the present value of the expenditure expected to be required to settle
the obligation. Provisions are not recognised for future operating losses.
(i)
204
Warranties
Provision is recognised for the estimated liability on all products under warranty in addition to
claims already received and verified. Warranties are provided for a period of between one
to three years for vehicles sold. The provision is based on experienced levels of claims arising
during the period of warranty. When the Group expects warranties to be reimbursed from
suppliers, the reimbursement is recognised as a separate asset but only when the
reimbursement is virtually certain.
Provisions (continued)
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.
(i)
The Group has various post employment benefit schemes in accordance with the local
conditions and practices in the countries in which it operates. The Group has both defined
contribution and defined benefit plans.
The Groups contributions to defined contribution plans are charged to the Consolidated
Income Statements in the period to which they relate. Once the contributions have been
paid, the Group has no further payment obligations.
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, together with
adjustments for actuarial gains/losses and past service cost. 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.
The defined benefit obligation, calculated using the projected unit credit method, is
determined by independent actuaries on the basis of full triennial valuations and updated
annually. Assumptions were made in relation to the annual investment returns, annual
salary increases and annual increases in pension payments.
Plan assets in excess of the defined benefit obligation are subject to the asset limitation
test specified in FRS 119.
205
Actuarial gains and losses arise from experience adjustments and changes in actuarial
assumptions. 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 Consolidated Income Statements over the average remaining
service lives of the related employees participating in the defined benefit plan.
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, including withholding taxes payable
by a foreign subsidiary company on distributions of retained earnings.
Deferred tax is recognised in full, using the liability method, on temporary differences arising
between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts
in the financial statements.
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.
206
Deferred tax assets and liabilities are not recognised on temporary differences arising from:
(i)
goodwill; or
(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, affects neither accounting profit nor taxable
profit.
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.
(i)
Items included in the financial statements of each of the Groups entities are measured using
its functional currency, which is the currency of the primary economic environment in which
the entity operates (the functional currency). The Consolidated Financial Statements are
presented in Ringgit Malaysia, which is the Groups functional and presentation currency.
Foreign currency transactions are translated into the functional currency using the exchange
rates prevailing at the dates of the transactions. 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.
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;
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, in which case income and expenses are translated
at the dates of the transactions); and
207
On consolidation, exchange differences arising from the translation of the net investment in
foreign operations are taken to shareholders equity. Net investment in foreign operations is
defined as the amount of the reporting entitys interest in the net assets of that operation,
which includes advances that are assessed as long term in nature. When a foreign operation
is disposed of or sold, such exchange differences that were recorded in equity are recognised
in the Consolidated Income Statements as part of the gain or loss on disposal.
(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
31 March 2009
US Dollar
Sterling Pound
Indonesian Rupiah (100)
Singapore Dollar
Thai Baht
Australian Dollar
31 March 2008
3.6595
5.2225
0.0313
2.4048
0.1029
2.4935
3.1985
6.3850
0.0343
2.3147
0.1017
2.9270
For the purpose of the cash flow statement, cash and cash equivalents comprise cash on hand,
deposits held at call with banks, other short term, highly liquid investments with original maturities
of not more than twelve months and bank overdrafts. Bank overdrafts are included within
borrowings in current liabilities on the balance sheet.
Revenue from sales of vehicles, spare parts and accessories are recognised when significant risks and
rewards have been transferred to buyers. Significant risks and benefits are generally deemed to
have been transferred upon delivery or acceptance of the goods.
Revenue from sale of completed apartments is recognised when the Sale and Purchase Agreements
are signed.
208
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, where the
contractual outcome can be assessed with reasonable certainty. Full provision is made for all
foreseeable losses on contracts entered into or commenced prior to the financial year end.
Amounts are included within receivables and payables to recognise timing differences arising
between amounts invoiced and amounts recognised in the income statement on individual
engineering contracts.
Other revenue comprises mainly revenue from rental and royalties, which are recognised on an
accrual basis. Interest income is recognised on proportionate basis that reflects the effective yield
on the asset. Scrap sales and gains on disposal of investments are recognised on an accrual basis.
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.
Dividends are recognised when the Companys right to receive payment is established.
(r)
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.
A financial asset is any asset that is cash, a contractual right to receive cash or another financial
asset from another enterprise, a contractual right to exchange financial instruments with
another enterprise under conditions that are potentially favourable, 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, or to exchange financial instruments with another
enterprise under conditions that are potentially unfavourable.
The particular recognition method adopted for financial instruments recognised on the Balance
Sheet is disclosed in the individual policy statements associated with each item.
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.
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.
209
The fair value of publicly traded derivatives and securities is based on quoted market prices at
the balance sheet date.
The fair value of forward foreign exchange contracts is determined using forward foreign
exchange market rates at the balance sheet date.
In assessing the fair value of non-traded derivatives and financial instruments, the Group uses
a variety of methods and makes assumptions that are based on market conditions existing at
each balance sheet date. Unquoted investments are valued based on quoted investments
with similar features.
The fair value of financial liabilities with a maturity of more than one year is estimated by
discounting the future contractual cash flows at this current market interest rate available to
the Group for similar financial instruments.
The face values, less any estimated credit adjustments, for financial assets and liabilities
classified as current are assumed to approximate their fair values.
(s)
Borrowings
Borrowings are initially recognised based on the proceeds received, net of transaction costs
incurred. Subsequently, 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 income statement over the period of the borrowings.
Borrowing costs are charged to the Consolidated Income Statements as an expense in the period in
which they have accrued.
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.
(t)
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.
Dividends on ordinary shares are recognised as liabilities when proposed or declared before the
balance sheet date. A dividend proposed or declared after the balance sheet date, but before the
financial statements are authorised for issue, is not recognised as a liability at the balance sheet
date. Upon the dividend becoming payable, it will be accounted for as liability.
210
The Group and Company do not recognise a contingent liability but discloses its existence in the
financial statements. 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. 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.
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 does not
recognise contingent assets but discloses its existence where inflows of economic benefits are
probable, but not virtually certain.
In the acquisition of subsidiary companies by the Group under a business combination, the
contingent liabilities assumed are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interests.
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. Where the fair
values cannot be measured reliably, the resulting effect will be reflected in the goodwill arising
from the acquisition.
Subsequent to the initial recognition, 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,
when appropriate, cumulative amortisation recognised in accordance with FRS 118.
Assets that have an indefinite useful life are not subject to amortisation and are tested annually
for impairment, or whenever events or circumstances occur indicating that an impairment may exist.
Property, plant and equipment and other non-current assets, including intangible assets, are
reviewed for impairment losses whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Impairment loss is recognised for the amount by which
the carrying amount of the asset exceeds its recoverable amount. 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 valuein-use is the net present value of the projected future cash flows derived from that asset discounted
at the appropriate discount rate. 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 Groups estimates calculated based on historical, industry
trend, general market, economic conditions and other available information. For the purposes of
assessing impairment, assets are grouped at the lowest level for which there is separately identifiable
cash flows.
211
The impairment loss is charged to the Consolidated Income Statements. Any subsequent increase
in recoverable amount is recognised in the Consolidated Income Statements.
Irrespective of whether there is any indication of impairment, 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; it is performed at the same time every year.
Different intangible assets may be tested for impairment at different times. However, if such an
intangible asset was initially recognised during the current annual period, that intangible asset
shall be tested for impairment before the end of the current annual period.
Carrying value of property, plant and equipment and capitalised development cost
The Group assesses the carrying amount of property, 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.e. the carrying amount of the asset is more than
the recoverable amount. Recoverable amount is measured at the higher of the fair value less
cost to sell for that asset and its value-in-use. 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.
Projected future cash flows are based on the Groups estimates calculated based on historical,
sector and industry trends, general and Malaysian market and economic conditions, changes
in technology and other available information regarding the automotive sector.
The assumptions used, results and conclusion of the impairment assessment are stated in Note
13 to the financial statements.
212
Estimated useful lives of dies and jigs and capitalised development cost
The Group reviews annually the estimated production units used for assessing the estimated useful
lives of dies and jigs and capitalised development cost based on factors incorporated in business plans
and strategies such as the expected level of demand and usage and future technological
developments.
Future results of operations could be materially affected by changes in these estimates brought
about by changes in the factors mentioned. A reduction in the estimated production units for
assessing the carrying values of dies and jigs and capitalised development cost would increase the
recorded depreciation and amortisation respectively.
(iii)
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. This involves significant
judgements regarding the future financial performance of the Group, 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. 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 2009.
(iv)
Income taxes are estimated based on the rules governed under the Income Tax Act, 1967.
Significant judgement is required in determining the capital allowances and deductibility of
certain expenses during the estimation of the provision for income taxes. There are many
transactions and calculations for which the ultimate tax determination is uncertain during the
ordinary course of business.
Where the final tax outcome of these matters is different from the amounts that were
initially recognised, such differences will impact the income tax provisions in the period in
which such determination is made. The status of the income tax position of the Group is stated
in Note 10 to the financial statements.
(v)
Provision is made for the estimated liability on all products under warranty in addition to claims
already received. 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. In addition, the Group records an asset for the amount
expected to be recoverable from its vendors based on similar actual reimbursement experienced
by the Group.
An analysis of the utilisation of the provision is stated in Note 34 to the financial statements.
213
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. This requires an analysis of
inventory usage based on expected future sales transactions taking into account current market
prices, useful lives of vehicle models and expected cost to sell. Changes in the inventory ageing
and expected usage profiles can have an impact on the allowance recorded.
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. This is determined
based on the ageing profile, expected collection patterns of individual receivable balances,
credit quality and credit losses incurred. 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 statement reporting date. Any changes to the ageing profile,
collection patterns, credit quality and credit losses can have an impact on the allowance
recorded.
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. The
assumptions used, results and conclusion of the impairment assessment are stated in Note 15
to the financial statements.
(i)
(ii)
(b)
214
Proton Cars Benelux Limited (Benelux), a 99% owned subsidiary company of Proton Marketing
Sdn. Bhd. (PMSB) was placed under Members Voluntary Liquidation on 2 February 2009.
Benelux had not commenced operations since incorporation.
Proton Edar Ventures Sdn. Bhd. and Proton Edar Resources Sdn. Bhd., wholly owned subsidiary
companies of Proton Edar Sdn. Bhd. which is in turn a wholly owned subsidiary of PMSB and
Proton Capital Sdn. Bhd., a wholly owned subsidiary company of the Company were placed under
Members Voluntary Liquidation on 6 March 2009.
6 REVENUE
Revenue at the Group represents the invoiced value of goods sold and engineering services provided and
is presented net of taxes, discounts and commission paid to dealers.
Revenue at the Company represents income from shares held in subsidiary companies and associated
companies.
Revenue comprises:
2009
RM000
Group
2008
2009
RM000
RM000
Company
2008
RM000
6,220,872
5,361,826
235,667
30,031
-
219,386
40,382
-
-
-
362,357
41,203
6,486,570
5,621,594
362,357
41,203
Included in others is sale of rights for the use of intellectual property rights to an export market amounting
to RM19,612,000 (2008: RM33,515,000).
215
Group
2008
2009
RM000
RM000
Company
2008
RM000
216
-
-
(1,260)
-
(80,656)
-
-
(2,479)
(417)
(193,782)
(359,000)
(3,357)
-
-
-
(40,000)
(786)
(417)
-
450,346
38,746
257,674
(1,616)
19,417
382,556
18,557
-
(800)
(12,546)
-
-
-
-
-
-
-
-
89
(990)
6,741
-
-
-
6,678
4,200
48,493
20,802
114,950
34,817
-
(25,053)
-
-
-
44
1,084
45,127
62,862
(63,315)
45,616
(1,678)
-
37,447
45,526
(19,708)
7,737
-
-
-
-
-
-
599
114
569
(57)
88
60
84
60
1,380
206
1,394
-
-
-
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
505
560
902
1,234
959
4,426
1,765
16,725
(7,481)
(8,284)
(1,925)
(42,089)
(21,646)
1,961
-
-
-
50
-
14,789
-
7,276
-
(10,230)
-
(3,891)
-
(32,143)
(4,618)
(301)
-
**
217
8 STAFF COST
Group
2009
RM000
2008
RM000
598,390
527,185
55,228
(8,042)
62,842
-
49,762
14,616
43,099
22
708,418
634,684
Directors remuneration
he aggregate amount of emoluments receivable by the Directors of the Group and Company during the
T
financial year was as follows:
Group
Company
2009
2008
2009
2008
Non-Executive Directors:
- allowances
- fees
- estimated monetary value
of benefits-in-kind
RM000
RM000
RM000
RM000
584
939
505
948
424
217
389
291
59
39
59
39
705
109
540
86
705
109
540
86
81
-
-
65
-
-
81
42
16
65
42
12
2,477
2,183
1,653
1,464
Executive Director*:
- salaries and bonuses
- defined contribution plan
- estimated monetary value
of benefits-in-kind
- fees
- allowances
* The Executive Directors remuneration in the Company is fully recharged to a subsidiary company.
218
9 FINANCE COST
Group
2009
2008
RM000
RM000
6,957
6,110
1,341
7,750
9,405
781
14,408
17,936
10 TAXATION
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
Taxation in Malaysia
Current taxation:
- charge for the financial year
- over accrual in respect
of prior financial years
28,027
7,020
1,179
10,517
(49,456)
(45,859)
(21,429)
(38,839)
1,179
10,517
801
885
(844)
(1,527)
(43)
(642)
(1,409)
(754)
5,486
4,077
(754)
(17,395)
(40,235)
1,179
10,517
219
10 TAXATION (CONTINUED)
A numerical reconciliation between the average effective tax rate and the statutory tax rate effect is as
follows:
2009
%
Malaysian statutory tax rate
Tax effects of:
- double deduction and
incentive on qualifying expenditure
- expenses not deductible for tax purposes
- income not subject to tax
- current year tax losses not recognised
- current year deductible temporary
differences not recognised
- over accrual in respect
of prior years
- recognition of previously unrecognised
deductible temporary differences
- recognition of previously unrecognised
tax losses
- different tax rates in subsidiary
companies outside Malaysia
Average effective tax rate
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
220
Group
2008
%
2009
%
Company
2008
%
(25)
26
25
26
(3)
1
(11)
6
(1)
15
(51)
4
-
-
(25)
-
50
22
(16)
(32)
(2)
(8)
(4)
(1)
(3)
(5)
(28)
26
2009
RM000
2008
RM000
2009
RM000
2008
RM000
19,640
5,486
-
-
-
-
45,068
11,267
5,369
1,396
-
-
1,964,254
566,932
1,993,363
1,553,523
601,584
1,790,117
-
-
-
10 TAXATION (CONTINUED)
The tax write back during the financial year arose following an agreement with the Inland Revenue
Board (IRB) to settle tax disputes in respect of a subsidiary companys treatment of certain items in the
tax submissions for Years of Assessment (YA) 1989 to 1998. The basis of agreed claims was subsequently
applied for YA 1999 to 2002.
The tax write back in the previous financial year relates mainly to the settlement of disputes of a subsidiary
company with the IRB in relation to Section 127 relief on the differences in the interpretation of the
qualifying period for investment tax credit. The relief was claimed for YA 1992.
The tax recoverable amount of RM140,960,000 (2008: RM82,452,000) relates to settlement of tax disputes
for YA 1989 to 2002 while the amount of RM19,650,000 (2008: RM32,027,000) relates to overpayment of
tax liabilities for YA 2007 and 2008.
(301,806)
549,213
(55)
Group
2008
184,551
549,213
34
12 DIVIDENDS
Dividends declared in respect of the financial year ended 31 March 2009 are as follows:
2009
RM000
Interim dividend of 5.0 sen per ordinary share less tax at 25%
Group
2008
RM000
20,595
The Directors do not recommend the payment of a final dividend for the financial year ended 31 March
2009.
221
Work-inprogress
RM000
Total
RM000
2009
Cost/valuation
At 1 April 2008
Currency translation
differences
Additions
Disposals
Acquisition through
business combination 17(a)
Written off
Reclassification
of completed
work-in-progress
Reclassification from
inventory
Reclassification to
non-current assets
held for sale
29
236,362
1,396,863
4,375,404
1,074,479
27,858
7,110,966
(2,611)
759
(7,638)
(35,192)
2,457
-
(45,094)
22,629
(43,136)
(30,946)
85,685
(20,848)
(88)
351,251
(10,560)
(113,931)
462,781
(82,182)
-
-
2,794
(3,778)
420
(38,668)
26
(10,053)
-
(19,212)
3,240
(71,711)
1,256
312,680
39,073
(353,009)
9,124
9,124
(11,918)
(4,407)
(16,325)
At 31 March 2009
226,872
1,352,482
4,579,828
1,137,416
5,364
7,301,962
222
Work-inprogress
RM000
Total
RM000
2009
Accumulated depreciation
At 1 April 2008
Currency translation
differences
Charge for the
financial year
Disposals
Acquisition through
business combination 17(a)
Written off
Reclassification to
non-current assets
held for sale
29
434,149
2,558,858
682,161
3,675,168
(7,849)
(28,592)
(14,004)
(50,445)
-
-
52,647
-
306,075
(19,571)
91,624
(14,121)
-
-
450,346
(33,692)
-
-
1,298
-
102
(23,004)
26
(9,961)
-
-
1,426
(32,965)
(2,569)
(28)
(2,597)
At 31 March 2009
477,676
2,793,840
735,725
4,007,241
13,536
137,365
79,632
54,819
285,352
(13,536)
-
(24,034)
-
(18,759)
257,674
(17,471)
-
-
-
(73,800)
257,674
(502)
(786)
(328)
(1,616)
At 31 March 2009
112,829
317,761
37,020
467,610
226,872
761,977
1,468,227
364,671
5,364
2,827,111
2009
Accumulated
impairment losses
At 1 April 2008
Currency translation
differences
Charge for the
financial year
Reversal of
impairment loss
223
Work-inprogress
RM000
Total
RM000
2008
Cost/valuation
At 1 April 2007
Currency translation
differences
Additions
Disposals
Acquisition through
business combination 17(b)
Written off
Reclassification
of completed
work-in-progress
Reclassification to inventory
At 31 March 2008
224
262,072
1,331,521
4,141,014
1,090,675
188,524
7,013,806
(1,118)
261
(24,853)
(12,189)
1,011
(583)
(17,329)
18,802
(16,768)
(9,719)
46,073
(24,899)
(54)
325,850
(6,230)
(40,409)
391,997
(73,333)
-
-
12,756
(376)
36,493
(105,598)
60
(97,748)
-
(17,558)
49,309
(221,280)
-
-
64,723
-
318,790
-
70,037
-
(453,550)
(9,124)
(9,124)
236,362
1,396,863
4,375,404
1,074,479
27,858
7,110,966
Work-inprogress
RM000
Total
RM000
2008
Accumulated depreciation
At 1 April 2007
Currency translation
differences
Charge for the
financial year
Disposals
Acquisition through
business combination 17(b)
Written off
At 31 March 2008
385,327
2,443,469
711,283
3,540,079
(4,566)
(10,286)
(3,655)
(18,507)
-
-
52,728
(387)
239,917
(16,768)
89,911
(18,002)
-
-
382,556
(35,157)
-
-
1,423
(376)
7,449
(104,923)
48
(97,424)
-
-
8,920
(202,723)
434,149
2,558,858
682,161
3,675,168
2008
Accumulated
impairment losses
At 1 April 2007
Currency translation
differences
Reversal of
impairment loss
14,591
146,017
84,586
59,038
304,232
(1,055)
(8,652)
(4,954)
(3,419)
(18,080)
(800)
(800)
At 31 March 2008
13,536
137,365
79,632
54,819
285,352
222,826
825,349
1,736,914
337,499
27,858
3,150,446
225
Group
2009
RM000
257,674
20,802
278,476
226
The recoverable amounts are determined based on value-in-use calculations. This value-in-use
calculations apply a discounted cash flow model using cash flow projections covering a five year
period, and assuming a zero growth rate for subsequent periods up to fifteen years. The projections
over these periods were based on an approved business plan and reflect the subsidiary companys
expectation of usage, revenue growth, operating costs and margins based on past experience and
current assessment of market share, expectations of market growth and industry growth.
The sales volumes for the Malaysian market indicate a reduction from current levels as the Group
does not include future new models for which capital expenditure has not been incurred. However,
the total overall cash flow arising from sales volume indicates a significant increase arising from
growth in sales of completely-knocked-down packs to the export markets.
Based on past trends, cashflows arising from government grants are included in the value-in-use
calculations, estimated based on a percentage of projected investment level.
Terminal values of the production plants in year fifteen 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. A discount factor of 6.5% was used to discount the
terminal value which reflects the prevailing borrowing cost for land and buildings.
Terminal values of platforms relating to certain vehicle models incorporate the estimated net
realisable value from the disposal of the model platform.
For purposes of the value-in-use calculation, discount rates of 8% and 16% have been applied
to domestic and export sales respectively. The discount rate of 8% reflects the prevailing independent
market rate applicable to the Group.
(b)
The sensitivity test indicated that a plant owned by a subsidiary company may require further
impairment should the projected sales volume drop by 6% over the projection period. No further
impairment loss is required where other realistic variations are applied to key assumptions.
227
Group
2008
RM000
Cost
At 1 April
Currency translation differences
Acquisition through business combination (Note 17(b))
Disposal
Reclassification to inventory (Note 23)
Reclassification to non-current assets held for sale (Note 29)
24,031
(1,347)
-
-
-
(22,684)
10,989
(1,077)
25,108
(394)
(10,595)
-
At 31 March
24,031
At 1 April
Amortisation
Disposal
Reclassification to inventory (Note 23)
-
-
-
-
1,045
89
(80)
(1,054)
At 31 March
24,031
Accumulated amortisation
228
15 GOODWILL
2009
RM000
Group
2008
RM000
At 1 April
Acquisition through business combination (Note 17(b))
35,749
-
29,008
6,741
35,749
35,749
(6,741)
(6,741)
At 31 March
29,008
29,008
229
16 INTANGIBLE ASSETS
Group
Capitalised
development
cost
RM000
Computer
software
RM000
Total
RM000
2009
Cost
At 1 April 2008
Currency translation differences
Additions
Written off
Disposal
275,804
(14,144)
231,468
-
-
65,133
-
6,164
(16)
(16)
340,937
(14,144)
237,632
(16)
(16)
At 31 March 2009
493,128
71,265
564,393
Amortisation
At 1 April 2008
Currency translation differences
Charge for the financial year
Written off
Disposal
27,739
(2,283)
33,945
-
-
38,006
-
14,548
(16)
(16)
65,745
(2,283)
48,493
(16)
(16)
At 31 March 2009
59,401
52,522
111,923
-
20,802
-
-
20,802
At 31 March 2009
20,802
20,802
412,925
18,743
431,668
2008
Cost
At 1 April 2007
Currency translation differences
Additions
Written off
142,975
(730)
133,559
-
57,797
(180)
7,658
(142)
200,772
(910)
141,217
(142)
At 31 March 2008
275,804
65,133
340,937
Amortisation
At 1 April 2007
Currency translation differences
Charge for the financial year
Written off
11,611
(593)
16,721
-
20,086
(34)
18,096
(142)
31,697
(627)
34,817
(142)
At 31 March 2008
27,739
38,006
65,745
248,065
27,127
275,192
The remaining amortisation period for intangible assets ranges from 3 to 7 years.
230
17 SUBSIDIARY COMPANIES
Company
2009
2008
RM000
RM000
Unquoted shares at cost:
At 1 April 2,036,303 2,036,303
Less: Impairment loss (327,652) (327,652)
At 31 March 1,708,651 1,708,651
Manufacture, assembly
and sales of motor vehicles
and related products
Malaysia
100
100
Malaysia
100
100
Malaysia
100
100
Lotus Advance
Technologies Sdn. Bhd.
Investment holding
Malaysia
100
100
Investment holding
Malaysia
100
100
In Members Voluntary
Liquidation
Malaysia
100
100
PT Proton Cikarang
Ceased operations
Indonesia
Proton Automobiles
Dormant
(China) Ltd. ^
Indonesia
100
100
100
100
Subsidiariy companies of
Perusahaan Otomobil
Nasional Sdn. Bhd.
231
Malaysia
100
Importation and
distribution of motor
vehicles and related
products
England
100
100
Importation and
distribution of motor
vehicles and related
products
Australia
100
100
In Members Voluntary
Liquidation
Belgium
100
100
Malaysia
100
Malaysia
100
Malaysia
100
100
Thailand
100
100
Proton Engineering
Research Technology
Sdn. Bhd.^
Dormant
Malaysia
100
100
Investment holding
England
100
100
Subsidiary companies of
Lotus Advance
Technologies Sdn. Bhd.
232
Property development
and management
Malaysia
100
100
England
100
England
100
England
100
England
100
Australia
100
100
Proton Singapore
Pte. Ltd.*^
Singapore
100
100
In Members Voluntary
Liquidation
Malaysia
100
100
In Members Voluntary
Liquidation
Malaysia
100
100
PT Proton Edar
Indonesia*
Indonesia
95
95
Subsidiary companies of
Proton Cars (UK) Ltd.
Subsidiary company of
Proton Cars Australia Pty. Ltd.
233
Investment holding
England
100
100
Manufacture of motor
vehicles and engineering
consultancy services
England
100
100
Lotus Body
Engineering Ltd.*^
Investment holding
England
100
100
Dormant
England
100
100
United States
of America
100
100
Marco Acquisition
Corporation*^
United States
of America
100
Subsidiary companies of
Group Lotus Plc.
Liquidated during
the financial year
Subsidiary companies of
Lotus Cars Ltd.
Lotus Engineering Ltd.*^
Engineering consultancy
services
Lotus Engineering
Engineering consultancy
Co. Ltd. (Shanghai)*
services
Subsidiary company of
Lotus Body Engineering Ltd.
England
100
100
Peoples Republic
of China
100
100
Lotus Lightweight
Structures Holdings Ltd.
(formerly known as
Holden Lightweight
Structures Ltd.)*
England
100
234
Investment holding
England
100
Engineering consultancy
services
Malaysia
100
100
Engineering consultancy
services
United States
of America
100
100
United States
of America
100
100
Subsidiary company of
Lotus Engineering Ltd.
Lotus Engineering
(Malaysia) Sdn. Bhd.^
Subsidiary companies of
Lotus Holdings Inc.
235
On 15 May 2008, Lotus Body Engineering Ltd., a wholly owned subsidiary company of Lotus Group
International Ltd. 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 Ltd. (formerly
known as Holden Lightweight Structures Ltd.).
The effects of the acquisition on the financial results of the Group during the financial year are as
follows:
2009
RM000
Revenue
Operating costs
46,204
(57,957)
(11,753)
Tax expense
(11,753)
The details of net assets acquired and cash flows arising from the acquisition of the subsidiary company
during the financial year are as follows:
Acquirees
carrying value Fair value
RM000
RM000
4,995
5,173
7,512
4,520
(14,355)
1,814
5,173
7,512
4,520
(18,497)
Net assets/ Fair value of net assets acquired
7,845
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
522
522
(4,520)
3,998
Cash inflow to the Group on acquisition of subsidiary company
3,998
Had the acquisition taken effect at the beginning of the financial year, the contributed revenue and loss to the
Group would have been RM55,193,000 and RM13,160,000 respectively.
236
Purchase consideration:
- cash consideration
- settlement of amount due from Tracoma Holdings Berhad
Fair value of net assets acquired
33,750
1,356
35,106
(28,365)
6,741
Acquirees
carrying value Fair value
RM000
RM000
41,951
16,476
3,045
1,134
(9,348)
-
40,389
25,108
4,356
1,134
(11,096)
(2,439)
53,258
57,452
(29,087)
28,365
33,750
(1,134)
32,616
The acquired business contributed revenue of RM849,000 and loss of RM2,795,000 to the Group for
the period from 10 August 2007 to 31 March 2008. Had the acquisition taken effect at the beginning
of the financial year, the contributed revenue and loss to the Group would have been RM1,100,000 and
RM5,297,000 respectively.
237
18 ASSOCIATED COMPANIES
2009
RM000
Group
2008
2009
RM000
RM000
Company
2008
RM000
59,252
131,993
59,252
132,391
13,600
-
13,600
-
191,245
191,643
13,600
13,600
(32,878)
(26,200)
158,367
165,443
13,600
13,600
The Groups share of the assets, liabilities, revenue and expenses of the associated companies are as follows:
2009
RM000
Group
2008
RM000
Non-current assets
Current assets
Current liabilities
Non-current liabilities
112,703
161,000
(105,804)
(9,532)
81,652
204,383
(110,902)
(9,690)
Net assets
158,367
165,443
Revenue
Expenses (excluding tax)
236,058
(222,351)
260,507
(245,202)
13,707
15,305
Taxation
6,513
(2,171)
20,220
13,134
238
Malaysia
35
35
Marutech Elastomer
Industries Sdn. Bhd.
Malaysia
25
25
Malaysia
45
45
Socialist
Republic of
Vietnam
25
25
Malaysia
40
40
England
49.99
49.99
Associated company of
Perusahaan Otomobil
Nasional Sdn. Bhd.
Vina Star Motors
Import, assembly and
Corporation
distribution of motor vehicles
Associated company of
Proton Hartanah Sdn. Bhd.
Proton City Development
Corporation Sdn. Bhd.
Associated company
of Proton Cars (UK) Ltd.
Proton Finance Ltd.
239
Goldstar Proton
Dormant
Automobiles Co. Ltd. *
40
40
Peoples Republic
of China
49
49
Malaysia
51
51
Associated company of
Lotus Advance Technology
Sdn. Bhd.
Miyazu (Malaysia)
Sdn. Bhd.**
*
Development, marketing
and sale of products and
provision of services relating
to dies, moulds and jigs
The Group has initiated proceeding to dissolve the associated company via an arbitration process
(Note 43(c)).
** Company in which the Group owns more than 50% and exercises significant influence. However, it does not
have control over its financial and operating policies.
The share of capital commitments relating to the associated companies are as follows:
2009
RM000
Group
2008
RM000
Capital commitments
Capital expenditure for property, plant and equipment
approved but not provided for in the financial
statements:
Contracted for
Not contracted for
240
233
1,736
745
8,990
Group
2008
RM000
136,648
-
(1,114)
179,303
(42,655)
-
At 31 March 2009
135,534
136,648
1,114
(1,114)
1,114
-
At 31 March 2009
1,114
60,088
57,213
195,622
192,747
The Groups share of the assets, liabilities, revenue and expenses of the jointly controlled entities are as
follows:
2009
RM000
Group
2008
RM000
Non-current assets
Current assets
Current liabilities
Non-current liabilities
290,168
151,926
(82,559)
(163,913)
319,710
153,300
(53,198)
(227,065)
Net assets
195,622
192,747
Revenue
Expenses (excluding tax)
175,673
(156,000)
168,746
(157,642)
19,673
11,104
Taxation
(5,079)
(3,267)
14,594
7,837
241
Malaysia
55
55
England
56
Provision of motor
vehicles financing
England
49.9
49.9
Provision of motor
vehicles financing
Malaysia
50
50
Company in which the Group owns more than half of the voting powers. However, as the Group only
has joint control over its financial and operating policies, this investment is treated as a jointly
controlled entity.
The share of capital commitments relating to the jointly controlled entities is as follows:
2009
RM000
Group
2008
RM000
Capital commitments
Capital expenditure for property, plant and equipment
approved but not provided for in the financial
statements:
Not contracted for
242
1,062
1,288
Company
Total
2008
RM000
-
177,870
58,912
177,870
66,219
-
-
-
66,219
-
177,870
236,782
66,219
66,219
58,912
The amounts due from subsidiary companies are denominated in Ringgit Malaysia, interest free and repayable
on demand.
Advances to a subsidiary company are denominated in Ringgit Malaysia, repayable between 1 to 3 years and
bears interest at 3.5% per annum.
21 INVESTMENTS
Group
Company
2009
2008
2009
2008
RM000
RM000
RM000
RM000
At cost
Allowance for diminution in value
13,347
(2,950)
13,347
(2,950)
8,575
(2,100)
8,575
(2,100)
10,397
10,397
6,475
6,475
243
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. The following
amounts, determined after appropriate offsetting, are shown in the balance sheet:
2009
RM000
Group
2008
RM000
5,727
(12,243)
(2,439)
(6,516)
(2,439)
(2,439)
(754)
(8,841)
(43,436)
49,624
(1,424)
5,519
(1,865)
(8,115)
5,215
Acquired through business combination (Note 17(b))
(4,077)
-
754
(2,439)
(6,516)
(2,439)
17
86,074
561
36,450
-
86,652
36,450
(80,925)
(36,450)
5,727
244
Group
2008
RM000
(78,364)
(12,819)
(1,985)
(34,928)
(3,961)
-
(93,168)
(38,889)
80,925
36,450
(12,243)
(2,439)
The tax effect of temporary differences (which have no expiry dates) for which no deferred tax asset is
recognised in the balance sheet are as analysed below:
2009
RM000
Group
2008
RM000
158,263
497,646
498,341
79,082
174,516
413,507
465,431
34,768
As at 31 March 2009, there are no temporary differences associated with unremitted earnings of subsidiary
companies, associated companies and joint controlled entities for the recognition of deferred tax liabilities
(2008: Nil).
245
23 INVENTORIES
2009
RM000
Group
2008
RM000
Raw materials:
- completely knocked-down packs of vehicles
- others
Parts, accessories and general stores
Work-in-progress
Finished vehicles
Goods-in-transit
Land held for development
Properties for sale
244,888
164,115
68,862
219,188
640,945
35,723
9,552
11,808
193,514
89,290
73,995
188,779
511,065
21,520
9,541
12,582
1,395,081
1,100,286
Company
Group
2009
2008
2009
2008
RM000
RM000
RM000
RM000
Trade receivables
Allowance for doubtful debts
611,944
(51,583)
707,039
(19,277)
-
-
560,361
687,762
Other receivables
Allowance for doubtful debts
125,820
(22,954)
213,099
(77,122)
145
-
14
-
102,866
135,977
145
14
80,656
111,451
20,368
14,393
-
112,258
18,316
15,031
-
-
-
-
890,095
969,344
145
14
246
Ringgit
Pound
Malaysia
Sterling
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Others
530,497
-
-
31,764
37,178
-
78,307
82,823
-
21,985
15,503
198
51,611
2,410
37,819
714,164
137,914
38,017
530,497
68,942
161,130
37,686
91,840
890,095
145
145
Company
Functional currency
Ringgit Malaysia
Ringgit
Pound
Malaysia
Sterling
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Others
625,197
-
-
24,660
46,943
-
63,254
46,864
-
34,508
18,382
207
92,134
6,916
10,279
839,753
119,105
10,486
625,197
71,603
110,118
53,097
109,329
969,344
14
14
Company
Functional currency
Ringgit Malaysia
247
18,219
-
16
49
18,235
49
18,219
65
18,284
Currency exposure profile as at 31.3.2008
Ringgit
Pound
Malaysia
Sterling
Total
RM000
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
9,645
-
-
1,068
9,645
1,068
9,645
1,068
10,713
248
8,894
-
16
2,443
8,910
2,443
8,894
2,459
11,353
Currency exposure profile as at 31.3.2008
Ringgit
Pound
Malaysia
Sterling
Total
RM000
RM000
RM000
Group
Functional currency
Ringgit Malaysia
4,430
4,430
249
27 CURRENT INVESTMENTS
2009
RM000
Group
2008
RM000
584
14,729
526
20,296
15,313
20,822
724
806
Group
2008
RM000
2009
RM000
Company
2008
RM000
717,221
196,629
1,062,834
163,176
208,955
468
25,920
376
913,850
1,226,010
209,423
26,296
0 - 1 month
2 - 3 months
4 - 6 months
6 - 12 months
486,044
224,784
-
6,393
279,583
773,899
1,800
7,552
51,159
157,796
-
-
19,800
6,120
-
717,221
1,062,834
208,955
25,920
250
Ringgit
Pound
Malaysia
Sterling
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Australian Dollar
Others
717,899
-
-
-
4,978
67,549
-
-
23,536
16,305
-
-
5,194
10,165
-
1,086
21,079
5,554
15,012
25,493
772,686
99,573
15,012
26,579
717,899
72,527
39,841
16,445
67,138
913,850
Ringgit
Pound
Malaysia
Sterling
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Australian Dollar
Others
1,107,976
-
-
-
2,501
33,496
-
-
2,726
19,243
-
-
4,960
5,454
-
1,136
7,354
2,713
38,451
-
1,125,517
60,906
38,451
1,136
1,107,976
35,997
21,969
11,550
48,518
1,226,010
Deposits, bank and cash balances in the Company as at 31 March 2009 and 2008 are denominated in Ringgit
Malaysia.
The weighted average effective interest rates of deposits at the balance sheet date were 2.59% (2008: 3.52%)
per annum for the Group and 1.90% (2008: 3.20%) per annum for the Company.
The Group has unutilised banking facilities amounting to RM623.7 million (2008: RM783.0 million) as at
31 March 2009.
251
Group
2008
RM000
13,728
22,684
36,412
30 SHARE CAPITAL
Authorised:
Ordinary shares of RM1.00 each
At start/end of financial year
1,000,000
1,000,000
549,213
549,213
252
31 RESERVES
(a) Retained earnings
Under the single-tier tax system which came into effect from the year of assessment 2008, companies are
not required to have tax credits under Section 108 of the Income Tax Act, 1967 for dividend payment
purposes. Dividends paid under this system are tax exempt in the hands of shareholders.
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, 2007.
As at 31 March 2009, the Company has sufficient Section 108 tax credits to frank approximately RM1,377.0
million (2008: RM1,325.8 million) of its retained earnings as at 31 March 2009 if paid out as dividends.
In addition, the Company has tax exempt income as at 31 March 2009 amounting to approximately RM324.8
million (2008: RM321.5 million) available for distribution of tax exempt dividends to its shareholders.
The capital reserve arose as a result of a Group reorganisation exercise whereby all existing shareholders
of Perusahaan Otomobil Nasional Sdn. Bhd. (PONSB) exchanged all their ordinary shares of RM1.00 each
comprising 549,213,000 ordinary shares in PONSB for 549,213,000 new ordinary shares of RM1.00 each in the
Company in a one-for-one share exchange on 5 April 2004. Following the share for share exchange,
the Company has no share premium. Accordingly, the amount of share premium previously recognised on
consolidation has been re-designated as capital 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.
253
Group
2008
RM000
Unsecured:
Long term loan (Note 32(a))
Portion repayable within twelve months (Note 38)
47,879
(47,879)
47,879
-
47,879
Secured:
Long term loan (Note 32(b))
Portion repayable within twelve months (Note 38)
67,893
(15,668)
83,005
-
52,225
83,005
3,395
(858)
5,124
(973)
2,537
4,151
21,686
25,068
45,343
50,095
101,516
230,473
21,686
-
-
79,830
21,686
79,830
21,686
79,830
101,516
254
93,221
-
-
137,252
93,221
137,252
93,221
137,252
230,473
Group
2008
RM000
47,879
-
47,879
47,879
47,879
The loan balance of RM47.9 million (2008: RM47.9 million) which is due on 30 September 2009, is interest
free and denominated in Ringgit Malaysia.
255
Group
2008
RM000
15,668
20,890
31,335
44,695
38,310
67,893
83,005
The long term loan is secured over a subsidiary companys fixed and floating assets as disclosed in Note 13
and bears an interest rate of 7.32% (2008: 8.44%) per annum.
The lease and hire purchase arrangements obtained by subsidiary companies are secured against the related
assets of the respective subsidiary companies.
2009
RM000
Group
2008
RM000
1,084
1,084
1,714
1,325
1,325
3,421
Less: Future finance charges
3,882
6,071
(487)
(947)
3,395
5,124
858
2,537
973
4,151
3,395
5,124
The lease and hire purchase creditors bears an interest rate of 7.5% (2008: 7.5%) per annum.
256
The Government of Malaysia had as at 31 March 2008, disbursed a total of RM50 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 mean to achieve the objective of the ADF.
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,
improving efficiency, productivity, quality and the application of automation for the Malaysian automotive
industry.
2009
RM000
Group
2008
RM000
14,467
9,403
45,343
-
Less: Current portion of capital grant
23,870
45,343
(2,184)
Non-current
21,686
45,343
At 1 April
Interest earned during the financial year
45,343
681
50,201
1,402
Less: Utilised during the financial year
46,024
51,603
(31,557)
(6,260)
14,467
45,343
257
Group
2008
RM000
At 1 April
Add: Received during the financial year
Less: Amortisation
-
31,049
(21,646)
At 31 March
9,403
Current
Non-current
2,184
7,219
9,403
The current portion of the capital grant is presented within other payables (Note 33).
The employee retirement benefits represents the scheme operated by a subsidiary company.
The Group pays contributions to publicly or privately administered pension plans on either a
mandatory, contractual or voluntary basis depending on the nature of the defined contribution
plans. The Group has no further payment obligations once the contributions have been paid. The
contributions are recognised as employee benefit expense when they are due. Prepaid contributions
are recognised as an asset to the extent that a cash refund or reduction in the future payments is
available.
Lotus Group International Ltd. and its subsidiary companies (Lotus Group), operate a defined benefit
pension scheme, the Lotus Pension Plan. The assets are held in separate trustee administered funds. In
addition, it provides life assurance cover for all employees.
258
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. The contributions are determined by a qualified
actuary. An actuarial update of the plan was carried out for the period from 1 April 2008 to 31 March
2009.
The movements during the financial year in the Consolidated Balance Sheet are as follows:
2009
RM000
Group
2008
RM000
At 1 April
Currency translation differences
(Credited)/charged to income statement (Note 8)
Contributions paid
50,095
(7,616)
(8,042)
(9,369)
49,842
(3,208)
14,616
(11,155)
At 31 March
25,068
50,095
The amounts recognised in the Consolidated Balance Sheet are analysed as follows:
2009
RM000
Group
2008
RM000
234,156
(224,494)
316,128
(341,917)
9,662
(25,789)
15,406
75,884
25,068
50,095
259
The movements in the defined benefit obligation during the financial year are as follows:
2009
RM000
Group
2008
RM000
At 1 April
Currency translation differences
Interest cost
Current service cost
Employee contributions
Benefits paid
Actuarial gain on obligation
316,128
(55,588)
18,926
4,266
3,817
(11,495)
(41,898)
392,068
(20,000)
21,066
4,768
4,509
(9,941)
(76,342)
At 31 March
234,156
316,128
The movements in the fair value of plan assets during the financial year are as follows:
2009
RM000
Group
2008
RM000
At 1 April
Currency translation differences
Expected return on plan assets
Employer contributions
Employee contributions
Benefits paid
Actuarial loss on plan assets
341,917
(55,571)
21,162
9,369
3,817
(11,495)
(84,705)
369,469
(20,766)
26,219
11,155
4,509
(9,941)
(38,728)
At 31 March
224,494
341,917
260
2009
RM000
The expenses recognised in the Consolidated Income Statements are analysed as follows:
Group
2008
RM000
84.9
87.9
84.7
87.8
86.1
89.1
86.0
89.0
2009
RM000
Group
2008
RM000
4,266
18,926
(21,162)
(10,072)
-
4,768
21,066
(26,219)
15,001
(8,042)
14,616
(63,543)
(12,509)
261
The principal actuarial assumptions used in respect of the Groups defined benefit plan were as follows:
2009
%
Group
2008
%
Discount rates
Expected return on plan assets
- equity
- bonds
- others
Expected rate of salary increase
Expected rate of pension payment increase
Inflation
6.90
6.60
7.25
4.50
4.50
4.00
3.00
3.00
7.25
4.50
4.50
4.40
3.30
3.40
The expected return on the average value of the assets over the period i s calculated using the long-term
average rate of return expected over the remaining term of the Lotus Pension Plans liabilities.
Group
2008
RM000
2009
RM000
Company
2008
RM000
Trade payables
Other payables
Accruals
Payments received in advance for
engineering contracts
Lease and hire purchase creditors
- current portion (Note 32)
287,158
95,597
817,796
313,546
126,189
738,601
-
482
-
575
-
76,249
56,211
858
973
1,277,658
1,235,520
482
575
262
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Others
959,908
-
-
523
127,742
-
39,428
80,028
-
7,080
22,584
203
30,821
1,599
7,742
1,037,760
231,953
7,945
959,908
128,265
119,456
29,867
40,162
1,277,658
482
482
Company
Functional currency
Ringgit Malaysia
Ringgit
Pound
Malaysia
Sterling
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Others
924,780
-
-
1,897
131,948
-
48,680
42,092
-
12,762
21,357
-
47,403
779
3,822
1,035,522
196,176
3,822
924,780
133,845
90,772
34,119
52,004
1,235,520
575
575
Company
Functional currency
Ringgit Malaysia
Terms of trade payables granted to the Group and Company varies between no credit to 60 days (2008: no credit
to 60 days) credit.
263
34 PROVISIONS
Provision
Onerous
for warranty
contract
RM000
RM000
Group
Total
RM000
2009
At 1 April
Currency translation differences
186,556
(4,862)
-
-
186,556
(4,862)
62,862
43,054
4,426
-
67,288
43,054
105,916
(102,257)
4,426
-
110,342
(102,257)
At 31 March
185,353
4,426
189,779
Provision
Onerous
for warranty
contract
RM000
RM000
Group
Total
RM000
2008
At 1 April
Currency translation differences
196,067
(1,308)
-
-
196,067
(1,308)
45,526
45,572
-
-
45,526
45,572
91,098
(99,301)
-
-
91,098
(99,301)
At 31 March
186,556
186,556
The Group expects to be reimbursed by suppliers in respect of warranties amounting to RM111,451,000 (2008:
RM112,258,000) as disclosed in Note 24 to the financial statements.
264
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Australian Dollar
-
307
-
-
-
266
14,622
-
-
14,622
307
266
307
266
14,622
15,195
Group
Functional currency
Ringgit Malaysia
Pound Sterling
Australian Dollar
-
290
-
-
-
321
16,347
-
-
16,347
290
321
290
321
16,347
16,958
265
-
5.00 6.00
4.20
4.00 6.00
7.51 7.59
47,879
36,595
141,317
30,813
-
31,985
964
38,310
6,728
256,604
77,987
-
7.00 10.00
15,668
33,767
35,619
49,435
35,619
306,039
113,606
Secured:
Long term loan
- current portion (Note 32)
Revolving credit
-
5.00 6.00
2.88 4.82
3.50 6.00
-
Group
2008
RM000
7.32
4.00 10.00
The revolving credit is secured over a subsidiary companys fixed and floating assets.
The currency exposure profile of the short term borrowings is as follows:
Currency exposure profile as at 31.3.2009
Ringgit
Pound
Malaysia
Sterling
Total
RM000
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling
189,196
-
-
116,843
189,196
116,843
189,196
116,843
306,039
266
964
-
-
112,642
964
112,642
964
112,642
113,606
39 SEGMENTAL INFORMATION
The Group is principally engaged in the automobile industry namely, manufacturing, assembling, trading and
provision of engineering and other services in respect of motor vehicles and related products. Accordingly, no
segmental information is considered necessary for analysis by industry segment.
Inter-segment sales comprise sales of motor vehicles, parts and engineering services to Group companies in
different geographical locations.
Analysis of the Groups revenue, results and other information by geographical locations are as follows:
Malaysia
Other countries Elimination
Total
2009
2008
2009
2008
2009
2008
2009
2008
RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion
Revenue
External sales
Inter-segment sales
5,689.6
121.6
4,617.4
117.4
797.0
47.2
1,004.2
30.6
-
(168.8)
-
(148.0)
6,486.6
-
5,621.6
-
Total revenue
5,811.2
4,734.8
844.2
1,034.8
(168.8)
(148.0)
6,486.6
5,621.6
(382.9)
1.3
(14.4)
42.0
104.5
4.7
(17.9)
32.1
34.8
17.4
21.0
40.2
(301.8)
184.6
Results
Segment operating
(loss)/profit
(273.0)
163.7
(106.5)
(18.4)
(3.4)
(40.8)
Unallocated income
Interest expense
Interest income
Share of net results of
associated companies
and jointly controlled
entities
20.3
14.5
5.3
12.8
9.2
(6.3)
Taxation
(Loss)/profit after taxation
267
6,523.9
6,760.4
Unallocated assets
Segment assets
5,703.4
575.0
532.9
Total assets
7,098.9
7,293.3
Segment liabilities
1,287.0
6,096.9
1,324.1
820.5
284.3
663.5
199.9
1,571.3
1,524.0
Unallocated liabilities
426.1
348.1
Total liabilities
1,997.4
1,872.1
700.4
533.2
Capital expenditure
562.4
440.7
138.0
92.5
Depreciation and
amortisation
473.4
368.7
25.4
48.7
498.8
417.4
34.2
18.3
4.6
0.2
38.8
18.5
Impairment:
- property, plant and
equipment
257.7
257.7
- capitalised
development cost
20.8
20.8
(80.7)
(193.8)
(80.7)
(193.8)
45.6
7.7
45.6
7.7
108.8
(27.2)
6.1
2.1
114.9
(25.1)
Research and
development grant
Allowance for
doubtful debts
Write down/(write back)
of inventories
Unallocated income includes dividend from other investments, gain/(loss) on disposal of current investments
and write down/(write back) of provision for diminution in value of current investments. Segment assets consist
primarily of property, plant and equipment, intangible assets, inventories, receivables and operating cash, and
excludes investments in associated companies, jointly controlled entities, investments, current investments,
goodwill and taxation. Segment liabilities comprise operating liabilities and exclude items such as taxation,
borrowings and employee retirement benefits.
Capital expenditure mainly comprises additions to property, plant and equipment and intangible assets (Notes
13 and 16 to the financial statements).
268
5,372.3
4,165.4
1,114.3
1,456.2
6,486.6
5,621.6
121.6
117.4
47.2
30.6
(168.8)
(148.0)
5,493.9
4,282.8
1,161.5
1,486.8
(168.8)
(148.0)
6,486.6
5,621.6
Group
2008
RM000
Capital commitments
Capital expenditure for property, plant and equipment
and intangible assets approved by the Board but not provided
for in the financial statements:
Contracted for
Not contracted for
184,745
2,421,085
276,748
2,017,329
269
41 OPERATING LEASES
As at 31 March 2009, the Group was committed to making the following payments in respect of operating leases
expiring:
Office
Land and
Plant and
equipment
buildings
machinery
and vehicles
RM000
RM000
RM000
Group
Total
RM000
2009
Within one year
Between one and five years
After five years
11,414
13,896
1,353
965
2,261
52
1,254
1,231
-
13,633
17,388
1,405
26,663
3,278
2,485
32,426
Office
Land and
Plant and
equipment
buildings
machinery
and vehicles
RM000
RM000
RM000
Group
Total
RM000
2008
Within one year
Between one and five years
12,597
14,931
1,164
955
514
659
14,275
16,545
27,528
2,119
1,173
30,820
270
Relationship
Company
2008
RM000
301
Group
2008
RM000
17,925
88,590
61,892
Under the terms of financing agreements, Lotus Finance Ltd. and Proton Finance Ltd. provide financing
services to dealers and customers of the Group to acquire vehicles. Vehicles under financing arrangements
are sold through Lotus Finance Ltd. and Proton Finance Ltd..
271
Group
2008
RM000
123,623
1,048
8,619
34
6,487
136,524
70,338
1,302
11,089
111
14,407
185,398
98,179
86,838
191,301
3,589
44,712
30
189,054
7,410
17,583
1,247
694
465
Associated companies
- PHN Industry Sdn. Bhd.
- Marutech Elastomer Industries Sdn. Bhd.
- Exedy (Malaysia) Sdn. Bhd.
- Proton City Development Corporation Sdn. Bhd.
- Netstar Advance Systems Sdn. Bhd.
- Miyazu (Malaysia) Sdn. Bhd.
(e)
2009
RM000
Salaries and other short-term employee benefits
Defined contribution retirement plan
272
10,822
1,243
Group
2008
RM000
8,054
811
43 CONTINGENT LIABILITIES
(a)
In a prior financial year, a supplier had obtained a judgment in default against a subsidiary
company for RM12.2 million after failing to reach a formal agreement. The subsidiary company
had obtained legal opinion that the claims are without basis and action has been taken to set aside
the judgment. The Directors are of the opinion, based on legal advice, that the claims have no merits
and are unlikely to succeed.
(b)
(c)
A subsidiary company had issued a notice of termination of an associated company on 11 July 2006
to the subsidiary companys joint venture partner (Respondent). The subsidiary companys joint
venture partner is disputing the termination. 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. According to the Joint Venture Contract (JV Contract), disputes must be
referred to arbitration. The subsidiary company filed the Statement of Case with the Singapore
International Arbitration Centre on 31 January 2008. 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. The subsidiary company maintains that the Memorandum is
a forgery. The arbitration tribunal has 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.
On 5 May 2009, the subsidiary company had obtained an injunction to stop the Respondent
from continuing proceedings at the Chinese courts and submit itself to arbitration. The arbitration
tribunal has ordered that:
(i)
(ii)
it has jurisdiction to hear and decide the Respondents challenge over the arbitration and the
claim that a Chinese court should have jurisdiction over the arbitration and/or the matter raised
is rejected; and
it has jurisdiction over this arbitration and all matters submitted under the dispute resolution
provision stated in the JV Contract, which includes but is not limited to the subsidiary companys
claims under the notice of arbitration, and therefore the Respondents claim that this arbitration
should be terminated or suspended is rejected.
On 9 June 2009, the arbitration tribunal has further ordered that the Respondent shall pay the
subsidiary company all its legal costs relating to the jurisdiction proceedings, amounting to
Singapore Dollar 424,058 (RM1,020,000).
On 25 June 2009, the subsidiary companys counsel in China has also entered a conditional
appearance and filed its objection with the Dongguan Court in China.
The arbitration tribunal will now proceed with the substantive hearing to decide on the termination
of the JV Contract.
PROTON 2009 ANNUAL REPORT
273
A vendor has commenced arbitration proceedings against two subsidiary companies. The claim
against one subsidiary company amounts to RM19.3 million and against the other subsidiary
company is for RM14.2 million. 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 Directors are of the opinion, based on legal advice, that the claims have no merits and
are unlikely to succeed.
Group
2008
RM000
2009
RM000
Company
2008
RM000
717,221
196,629
1,062,834
163,176
208,955
468
25,920
376
913,850
1,226,010
209,423
26,296
(6,728)
(14,467)
(45,343)
899,383
1,173,939
209,423
26,296
45 FINANCIAL INSTRUMENTS
(a)
The Groups activities are exposed to a variety of financial risks, including foreign currency exchange
risk, interest rate risk, market risk, credit risk, liquidity and cash flow risk. The Group focuses on
the unpredictability of financial markets and seeks to minimise potential adverse effects on the
financial performance of the Group. Financial risk management is carried out through risks reviews,
internal control systems, a comprehensive insurance programme and adherence to Group financial
risk management policies. The Board regularly reviews these risks and approves the treasury policies,
which covers the management of these risks.
The Group uses derivative financial instruments such as foreign exchange contracts and interest
rate instruments to hedge certain exposures. It does not trade in financial instruments.
(i)
274
The Groups income and operating cash flows are not substantially affected by changes in
market interest rates except for interest from bank deposits. Derivative financial instruments
are used, where appropriate, to generate the desired interest rate profile.
The Group does not face significant exposure from the risk from changes in debt and equity
prices.
The Group seeks to invest cash assets safely and profitably. 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.
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.
Prudent liquidity risk management implies maintaining sufficient cash, the availability of
funding through an adequate amount of committed credit facilities and the ability to close out
market positions.
(b)
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.
275
As at 31 March 2009, the outstanding notional principal amounts of the Group foreign exchange
contracts are as follows:
2009
RM000
Group
2008
RM000
Maturity
38,343
-
47,793
8,820
38,343
56,613
The foreign currency amounts to be received and the contractual exchange rates of the Groups
outstanding contracts are as follows:
Hedged item
2009
Group
Currency
to be
received
Currency
to be
RM000
paid
equivalent
Forecasted receivables
- the following 6 months
JPY
RM
GBP
USD
GBP
EURO
2008
Group
Forecasted receivables
- the following 6 months
- 6 to 12 months
GBP
GBP
USD
USD
276
Average
contracted
rate
1,907 1 RM
= JPY 26.705
21,956 1 USD
= GBP 1.6567
14,480 1 EURO = GBP 1.1746
38,343
47,793 1 USD
8,820 1 USD
56,613
= GBP 1.9448
= GBP 1.9344
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
Carrying
amount
Fair value
Note
RM000
RM000
Company
Carrying
amount
RM000
2009
Recognised on the
balance sheet
45(b)
38,343
38,218
Fair value
RM000
138,284
17,618
-
277
Group
Carrying
amount
Fair value
Note
RM000
RM000
2008
Recognised on the
balance sheet
Investments - unquoted
21
Current investments:
- quoted
27
- unquoted
27
Advance - Government
loan facility
32
Lease and hire purchase
creditor - long term portion
32
ADF liability
32(d)
Long term loan
32
278
45(b)
Company
Carrying
amount
RM000
Fair value
RM000
10,397
15,067
6,475
15,067
526
20,296
806
20,296
-
-
(47,879)
(47,879)
(4,151)
(45,343)
(83,005)
(3,860)
(43,683)
(68,647)
-
-
-
56,613
57,078
46 SUBSEQUENT EVENTS
(a)
On 8 May 2009, the Company announced that its wholly owned subsidiary, Proton Edar Sdn. Bhd.
(PESB) had signed a Master Dealership Agreement with Edaran Otomobil Nasional Berhad (EON)
(the Agreement), for the purpose of rationalising the sales and distribution network between
PESB and EON with the objective of improving, developing and strengthening the Distribution and
Service Dealer Network as well as, allowing parties to rationalise and achieve the cost reduction
objectives (Proposed Rationalisation).
Under the terms of the Agreement, PESB agreed to appoint EON as a sales and service dealer for
PESB on a non-exclusive basis pursuant to the terms and conditions of the Agreement and of other
related agreements to be entered in by parties.
The execution of a Sales Operations Agreement and a Service Operations Agreement shall be
finalised and executed on or before 30 June 2009 or such other extended period to be agreed upon
by parties, failing which the Agreement shall lapse and be of no further effect.
The Company announced on 1 July 2009 that the following agreements have been signed:
(i)
PESB has appointed EON to undertake the promotion and sale of the Company vehicles and
products on a non-exclusive basis within Malaysia for a period of 5 years beginning 1 July
2009, and
(b)
PESB has appointed EON to undertake the service and sales of parts/spare parts to customers
on a non-exclusive basis within Malaysia for a period of 5 years beginning 1 July 2009.
On 29 May 2009, the Liquidator of Proton Capital Sdn. Bhd. (Proton Capital) had convened and
lodged a return relating to final meeting with the Companies Commission of Malaysia and the
Official Receiver. On the expiration of three months from 29 May 2009, Proton Capital will be
dissolved.
279
We, Dato Mohd Nadzmi bin Mohd Salleh and Dato Syed Zainal Abidin B Syed Mohamed Tahir, two of the
Directors of Proton Holdings Berhad, state that, in the opinion of the Directors, the financial statements
set out on pages 185 to 279 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 2009 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, 1965 and
MASB Approved Accounting Standards in Malaysia for Entities Other Than Private Entities.
Signed on behalf of the Board of Directors in accordance with their resolution dated 22 July 2009.
I, Vimala a/p V.R. Menon, the officer primarily responsible for the financial management of Proton Holdings
Berhad, do solemnly and sincerely declare that the financial statements set out on pages 185 to 279 are, in
my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and
by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the abovenamed Vimala a/p V.R. Menon at Shah Alam in Malaysia
on 22 July 2009, before me.
280
We have audited the financial statements of Proton Holdings Berhad, which comprise the balance sheets
as at 31 March 2009 of the Group and Company, and the income statements, statements of changes in
equity and cash flow statements of the Group and Company for the year then ended, and a summary of
significant accounting policies and other explanatory notes, as set out on pages 185 to 279.
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, 1965. This responsibility includes: designing, implementing and
maintaining internal control relevant to the preparation and fair presentation of financial statements that
are free from material misstatement, whether due to fraud or error; selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable in the circumstances.
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. 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.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on our judgement, including the assessment of
risks of material misstatement of the financial statements, whether due to fraud or error. In making those
risk assessments, we consider internal control relevant to the entitys preparation and fair presentation
of the financial statements in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the entitys internal control. An
audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of
accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Opinion
In our opinion, 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, 1965 so
as to give a true and fair view of the financial position of the Group and Company as of 31 March 2009
and of their financial performance and cash flows for the year then ended.
281
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.
(b)
We have considered the financial statements and the auditors reports of all the subsidiaries
of which we have not acted as auditors, which are indicated in Note 17 to the financial statements.
(c)
We are satisfied that the financial statements of the subsidiaries that have been consolidated
with the Companys 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.
(d)
The audit reports on the financial statements of the subsidiaries did not contain any qualification
or any adverse comment made under Section 174(3) of the Act.
OTHER MATTERS
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of
the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any
other person for the content of this report.
PRICEWATERHOUSECOOPERS
(No. AF: 1146)
Chartered Accountants
Kuala Lumpur
22 July 2009
282
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
No. of
No. of
Shareholders/ Shareholders/
Depositors
Depositors
No.of
Shares/
Securities
% of
Issued
Capital
1 - 99
100 - 1,000
1,001 - 10,000
10,001 - 100,000
100,001 - 27,460,649
27,460,650 and above
95
4,195
3,534
578
127
3
1.1135
49.1678
41.4205
6.7745
1.4885
0.0352
1,362
3,896,064
13,748,546
17,489,120
148,919,537
365,158,373
0.0002
0.7094
2.5033
3.1844
27.1151
66.4876
Total
8,532
100.0000
549,213,002
100.0000
Distributions of Shareholdings
Malaysian
Malaysian
No. of
% of
Shareholders/ Shareholders/
Depositors
Depositors
Size of Holdings
Malaysian Malaysian
Foreign
Foreign
No. of
% of
No. of
% of
Shares
Issued Shareholders/ Shareholders/
Held
Capital
Depositors
Depositors
Foreign Foreign
No. of
% of
Shares Issued
Held Capital
1 - 99
92
100 - 1,000
4,148
1,001 - 10,000
3,459
10,001 - 100,000
525
100,001 - 27,460,649
84
27,460,650 and above
2
1.0783
48.6170
40.5415
6.1533
0.9845
0.0234
1,298
3,852,264
13,461,946
15,586,621
107,117,101
322,037,693
0.0002
0.7014
2.4511
2.8380
19.5037
58.6362
3
47
75
53
43
1
0.0352
0.5509
0.8790
0.6212
0.5040
0.0117
64
43,800
286,600
1,902,499
41,802,436
43,120,680
Total
97.3980 462,056,923
84.1307
222
2.6020
87,156,079 15.8693
8,310
0.0000
0.0080
0.0522
0.3464
7.6113
7.8514
Substantial Shareholders
No. CDS Account No Name
Normal
Holdings
Holdings
Percentage
087-001-014418354
234,734,693
42.7402
226-001-004488797
87,303,000
15.8960
43,120,680
7.8514
3 209-001-044650448
283
NORMAL
HOLDINGS
HOLDINGS
PERCENTAGE
087-001-014418354
275505K
234,734,693
42.7402
226-001-004488797
EPFACT1991
87,303,000
15.8960
3
209-001-044650448
263368K
43,120,680
7.8514
ACT5351995
16,820,427
3.0626
5
245-001-019638741
434217U
16,270,400
2.9625
6
201-001-008776270
258939H
11,894,400
2.1657
7
206-001-048735070
4381U
11,757,710
2.1408
595989V
10,150,000
1.8481
258-001-037482247
257-001-037151271
9
206-001-037379120
3,823,100 0.6961
10 207-001-034438135
263875D
3,581,500 0.6521
11 206-001-043591320
4381U
2,855,375 0.5199
12 201-001-008776213
258939H
2,828,000 0.5149
13 206-001-039929690
4381U
2,800,000 0.5098
14 222-001-040942609
ALLIANCEGROUP NOMINEES
(TEMPATAN) SDN BHD
ALLIANCE INVESTMENT MANAGEMENT BERHAD
FOR EMPLOYEES PROVIDENT FUND
42234H
2,545,900 0.4636
15 245-001-031302672
434217U
2,449,300 0.4460
16 245-001-046775391
434217U
2,349,400 0.4278
284
NORMAL HOLDINGS
HOLDINGS PERCENTAGE
17 201-001-008776312
2,265,000 0.4124
18 245-001-032020729
434217U
2,069,700 0.3768
19
076-001-032786725
BSNACT1461974
1,933,000 0.3520
20
098-001-035241124
BSNACT1461974
1,889,000 0.3439
21
065-001-042567479
BSNACT1461974
1,861,600 0.3390
22
086-001-001732320
BSNACT1461974
1,812,000 0.3299
23 209-001-021330287
263367W
1,756,800 0.3199
24 206-001-022024434
258854D
1,695,000 0.3086
25
ACT425
1,500,000 0.2731
26 206-001-043881986
4381U
1,435,775 0.2614
27 206-001-043590827
4381U
1,386,600 0.2525
28 206-001-040893414
4381U
1,327,976 0.2418
29 053-001-046800884
648477U
1,200,000 0.2185
30 245-001-019638832
434217U
1,179,000 0.2147
087-001-002671394
TOTAL
478,595,336 87.14
285
Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation
2008
2009
2008
2009
Freehold 05.09.1983
23 Years
24 Years
Land
Buildings
68.4
129.8
68.4
113.0
Freehold 09.04.1986
23 Years
24 Years
Flats
0.04
0.04
Freehold 19.11.1993
Land
2.6
2.6
286
Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation
2008
2009
2008
2009
Geran 215214,
Lot 61821, HICOM
Glenmarie Industrial
Park, Mukim of
Damansara, District of
Petaling, Selangor Darul
Ehsan.
Freehold 30.12.1992
14 Years
15 Years
Land
Buildings
20.5
39.8
21.2
36.8
14 Years
15 Years
Land
Track &
Buildings
54.9
20.3
54.9
13.0
5 Years
6 Years
Land
Building
1.0
454.3
1.0
436.1
287
Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation
2008
2009
2008
2009
7 Years
Building
4.5
4.2
Vehicle Preparation
Centre (VPC) No H.S.
(D) 86555, PT No. 258
and H.S. (D) 86557,
PT No.260, TP 5 Road,
Sime UEP Industrial
Park, 47600 Subang
Jaya,Selangor Darul
Ehsan.
01.12.2000
6 Years
Centre of Excellence
(COE) & Pre-Delivery and
Inspection Centre (PDI)
No H.S. (D) 86596, PT No.
299 and H.S. (D) 86597,
PT No. 300, TP 5 Road,
Sime UEP Industrial Park,
47600 Subang Jaya,
Selangor Darul Ehsan.
01.03.2001
7 Years
8 Years
Land
Building
35.7
127.4
35.7
120.6
10.05.2002
5 Years
6 Years
Building
0.6
0.6
29.04.2002
27.11.2007
6 Years
-
7 Years
1 Year
Land
Building
2.8
-
2.8
6.9
29.04.2002
6 Years
7 Years
Land
Building
8.4
6.4
8.1
6.1
288
Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation
2008
2009
2008
19.07.2002
29.09.2003
5 Years
3 Years
6 Years
4 Years
Land
Building
3.1
2.7
3.1
2.5
Freehold
06.08.2002
5 Years
6 Years
Land
5.1
5.1
Freehold
13.09.2002
5 Years
6 Years
Land
1.4
1.4
Freehold
02.09.2002
01.03.2004
5 Years
3 Years
6 Years
4 Years
Land
Building
9.6
6.2
9.6
5.9
Freehold
05.12.2005
2 Years
3 Years
Land
5.8
5.8
Freehold
31.07.2007
1 Year
Building
4.7
2009
289
Date of
Age of Age of
Acquisition Building Building
/Revaluation
2008
Freehold 31.03.1994
32 Years
33 Years
Freehold 01.03.2000
9 Years
41 Years
2009
2008
2009
Land
Buildings
6.5
1.9
5.3
1.6
10 Years
Building
12.3
9.7
42 Years
Land
Building
6.1
74.5
5.2
59.0
290
Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation
Hak Guna Bangunan
No. 353, 596, 597, Desa
Sukaresmi, Kecamatan
Lemahabang,
Kabupaten Bekasi, West
Java, Indonesia.
Leasehold
(Expiry:
24.09.2025,
2021 and
2023)
21.09.2004
2008
2009
2008
2009
13 Years
14 Years
15.6
11.7
14.1
9.9
0.8
8.7
0.7
6.7
Land
Building
Office:
88 Years
Office:
89 Years
Land
Building
Workshop: Workshop:
42 Years
43 Years
291
Share
Price (RM)
Volume
4.50
8,000,000
4.00
7,000,000
3.50
6,000,000
3.00
5,000,000
2.50
4,000,000
2.00
3,000,000
1.50
2,000,000
1.00
1,000,000
0.50
0.00
0
Apr 08
May
Share Price
292
Jun
Jul
Aug
Volume
Sep
Oct
Nov
Dec
Jan 09
Feb
Mar
To lay the Report of the Directors and Auditors and the Audited Statement of Accounts for the year
ended 31 March 2009.
Article 104
(i) Tuan Haji Abdul Kadir Bin Md Kassim
(ii) Dato Michael Lim Heen Peok
(iii) Tuan Haji Abdul Jabbar Bin Abdul Majid*
*Note: Tuan Haji Abdul Jabbar Bin Abdul Majid, although eligible, does not seek re-election.
Article 111
(i) Dato Mohd Nadzmi Bin Mohd Salleh
(ii) Encik Oh Kim Sun
Ordinary Resolution 3
Ordinary Resolution 4
3.
4.
5.
To approve the Directors fees for the year ended 31 March 2009.
Ordinary Resolution 5
Ordinary Resolution 6
To transact any other ordinary business for which due notice has
been given.
Ordinary Resolution 7
To elect the following Directors who retire in accordance with the Companys Articles of Association:-
Ordinary Resolution 1
Ordinary Resolution 2
-
293
NOTES
1.
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. A proxy may but need not be a member of the Company
and the provision of Section 149(1)(b) of the Companies Act, 1965, shall not apply.
2.
The instrument appointing a proxy must be in writing under the hands of the appointer or his
attorney duly authorised in writing or, if such appointer is a corporation, under its common seal or
the hand of an officer or attorney duly authorised. If the Form of Proxy is signed under the hand of
an officer duly authorised, 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. If the Form of Proxy is signed under the attorney duly authorised, 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. A copy of the Authorisation Document or the Power of Attorney,
which should be valid in accordance with the laws of the jurisdiction in which it was created and is
exercised, should be enclosed.
3.
The maximum number of proxies that may be appointed is two. Where a member appoints more than
one proxy, the appointment shall be invalid unless he specifies the proportion of his shareholdings to
be represented by each proxy.
4.
Where a member of the Company is an authorised nominee as defined under the Securities Industry
(Central Depositories) Act, 1991, 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.
Every appointment submitted by an authorised nominee as defined under the Securities Industry
(Central Depositories) Act, 1991, must specify the CDS Account Number.
5.
The instrument appointing the proxy must be deposited at the office of the Registrar, Tenaga Koperat
Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley City, Lingkaran Syed Putra, 59200 Kuala
Lumpur not less than forty eight (48) hours before the time appointed for the meeting.
6.
For the purpose of determining a member who shall be entitled to attend the Meeting, the Company
shall be requesting Bursa Malaysia Depository Sdn Bhd, in accordance with Article 67(b) of the
Companys Articles of Association and Section 34(1) of the Securities Industry (Central Depositories)
Act, 1991, to issue a General Meeting Record of Depositors as at 13 August 2009. Only a depositor
whose name appears on the General Meeting Record of Depositors as at 13 August 2009 shall be
entitled to attend the said meeting or appoint proxies to attend and/or vote in his stead.
294
*Note: Tuan Haji Abdul Jabbar Bin Abdul Majid, although eligible, does not seek re-election.
Article 111
(i) Dato Mohd Nadzmi Bin Mohd Salleh
(ii) Encik Oh Kim Sun
295
FORM OF PROXY
I/We
NRIC No.
(new)
of
NRIC No.
(new)
(new)
CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the Sixth (6th) Annual General Meeting of the Company
to be held at The Auditorium, Level 1, PROTON Centre of Excellence, KM 33.8, Westbound Shah Alam Expressway, 47600 Subang Jaya,
Selangor Darul Ehsan, Malaysia, on Friday, 21 August 2009 at 3.00pm and at any adjournment thereof.
My/Our proxy is to vote as indicated below:-
ORDINARY RESOLUTIONS
FOR
AGAINST
1. To lay the Report of the Directors and Auditors and the Audited Statement of Accounts for the year
ended 31 March 2009.
2. To elect the following Directors who retire in accordance with the Companys Articles of Association:Article 104
(i) Tuan Haji Abdul Kadir Bin Md Kassim
Ordinary Resolution 1
Ordinary Resolution 2
-
Ordinary Resolution 3
Ordinary Resolution 4
Ordinary Resolution 5
Ordinary Resolution 6
5. To transact any other ordinary business for which due notice has been
given.
Ordinary Resolution 7
(Please indicate with an X in the spaces provided how you wish your vote to be cast. If you do not do so, the proxy will vote or
abstain from voting at his/her discretion.)
Dated this
day of
2009.
Proxy 2
NOTES:
1. 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. A proxy may
but need not be a member of the Company and the provision of Section 149(1)(b) of the Companies Act, 1965, shall not apply.
2. The instrument appointing a proxy must be in writing under the hands of the appointer or his attorney duly authorised in writing or, if such appointer is a
corporation, under its common seal or the hand of an officer or attorney duly authorised. If the Form of Proxy is signed under the hand of an officer duly
authorised, 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. If the Form of Proxy is signed under the attorney duly authorised, 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. A copy of the Authorisation Document or the Power of
Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed.
3. The maximum number of proxies that may be appointed is two. Where a member appoints more than one proxy, the appointment shall be invalid unless he
specifies the proportion of his shareholdings to be represented by each proxy.
4. Where a member of the Company is an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, 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.
Every appointment submitted by an authorised nominee as defined under the Securities Industry (Central Depositories) Act, 1991, must specify the CDS
Account Number.
5. The instrument appointing the proxy must be deposited at the office of the Registrar, Tenaga Koperat Sdn Bhd, Level 17, The Gardens North Tower, Mid Valley
City, Lingkaran Syed Putra, 59200 Kuala Lumpur not less than forty eight (48) hours before the time appointed for the meeting.
6. For the purpose of determining a member who shall be entitled to attend the Meeting, the Company shall be requesting Bursa Malaysia Depository Sdn Bhd,
in accordance with Article 67(b) of the Companys Articles of Association and Section 34(1) of the Securities Industry (Central Depositories) Act, 1991, to issue
a General Meeting Record of Depositors as at 13 August 2009. Only a depositor whose name appears on the General Meeting Record of Depositors as at 13
August 2009 shall be entitled to attend the said meeting or appoint proxies to attend and/or vote in his stead.
Fold Here
STAMP
The Registrar
Tenaga Koperat Sdn Bhd
Level 17, The Gardens North Tower
Mid Valley City, Lingkaran Syed Putra
Fold Here