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Operations Review

PROTONs MPV, the Exora, goes into production.

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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.

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State-of-the-art equipment at our manufacturing facilities in Shah Alam.

PROTON Shah Alam


The main plant and the MVF are located in Shah Alam, with the combined total installed
capacity for both being 200,000 units per year. The casting, engine and transmission plant
is also in Shah Alam and has the capacity to produce 180,000 units of CamPro engines
annually.
The main plant has been producing 6,000 units of the Saga each month. The Perdana,
Waja, Wira and Arena are also produced here but in a much smaller volume. The current
production of the Wira is exclusively for the taxi market but the Wira will be discontinued
by around July 2009.
Thereafter, the taxi market will be supplied with the new PROTON Saga NGV which is a
1.6 litre engine installed with a specially designed NGV kit. Preparations are also underway
for a minor cosmetic enhancement to the new Saga for a special edition to be introduced
in the market by August 2009. In the same month, the Group will also start producing the
Saga for the Australian market.

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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.

PROTON Tanjung Malim


PROTON Tanjung Malim is the largest manufacturing and assembly plant within the Group.
The plant complex, which sits on 1,500 acres of land in the state of Perak, facilitates the
processes of engine machining, stamping, body assembly, painting and final assembly.
The plant has a capacity of 150,000 units per year and can operate on a two-shift basis.
However, due to the global economic crisis, since December 2008, the plant has been
running on one shift. By switching to one shift, PROTON was able to relocate excess
manpower to the MVF in preparation for the production of the Exora. As such, this enabled
the Company to minimise cost and retain skilled personnel.

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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.

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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.

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Operations Review

Production of the Exora is expected to


receive a further boost once launched
into the Indonesian market.

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.

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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

first mid-engine 2+2 supercar had its formal press


launch in Scotland in May 2009 resulting in the
Evora dominating the global media headlines.

sterling denominated costs. Conversely, however,


the volatile movement of the sterling against world
currencies also resulted in substantial unrealised
foreign exchange losses which together with
provisions for bad debts, pension protection levy
and asset impairment contributed adversely to the
net loss posted.

The Evora, which was launched in 2008, was Lotus first new model in
13 years.

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Operations Review

Evoras successful press launch is a clear reflection


of the niche vehicle product engineering capability
of Lotus Cars which attracted hundreds of orders and
a substantial number of road test requests and firm
enquiries from prospective buyers even before the
planned sales launch.
It took a clean sheet of paper and a little over 27
months to design, develop and validate the Evora
and put it into production. This supercar, remains
true to Lotus heritage and core philosophies of being

Lotus Evora was unveiled at the British Motorshow.

Visually Stunning, Exhilarating, Agile and Responsive.

investments in outsourced projects towards the end

Production of the Evora began early 2009 with first

of 2008.

deliveries to customers commencing in June.


The growth follows years of proactive market-driven
In anticipation of the Evora sales launch and to lay the

policies to expand and market clear core product

foundation for future new models, Lotus continued

offerings and improve the global sales and delivery

to focus on strengthening its global distribution

process. An example of new high technology domains

and dealer networks. Markets now include Saudi

acquired as a result of this policy are EV (electrical

Arabia, Indonesia and Taiwan, bringing the current

vehicle), bio fuels and hybrid technologies which are

total dealer-distributor network to 162 across 42

moving towards becoming leading world ecological

countries.

products.

In addition, Lotus, through its high technology

Lotus

engineering consultancy division, continued to

development of its well-publicised EV sports car for

provide worldwide year-on-year incremental third

a western OEM which has been showcased in various

party business with turnover from the division

auto shows. Lotus is also proud to have successfully

increasing by 23%. This is a significant achievement

carried out mutual engineering, development and

given that OEMs and other engineering clients have

showing in China of its EVs based on the Saga and

scaled back their product plans and deferred some

Persona platforms with parent company, PROTON.

Engineering

successfully

completed

PROTON 2009 ANNUAL REPORT

the

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Operations Review

Lotus

continues

its

Engineering was the proud recipient of the prestigious

pursue

and historic 2008 Dewar Trophy from the Royal

engineering opportunities and expand its business

Automotive Club in recognition of its outstanding

into emerging economies in which demand for high

technical excellence in pioneering the Versatile

technology engineering is rapidly growing. Lotus

Vehicle Architecture chassis technology.

competencies

to

and

take

brand

advantage
heritage

to

of

Engineering plans to explore establishing subsidiary


companies in emerging economies, including India.

The fiscal year also saw Lotus complete the

It currently has a presence in six countries: United

strategic

Kingdom, United States, Malaysia, China, Germany

Structures Limited (now known as Lotus Light Weight

and Japan.

Structures Limited) which produces the unique

acquisition

of

Holden

Light

Weight

aluminum platforms of Lotus and other leading OEM


By leveraging on the global business recognition of

products. This acquisition allows access to critical

being at the forefront of green technology, Lotus

intellectual property in the area of light weight

Engineering secured matched funding from the

technology which is becoming increasingly important

Technology

in the improvement of vehicle performance and

Strategic

Board

(TSB)

and

other

governmental bodies for R&D on new green and

efficiency in the transportation industry.

revolutionary technologies. In March 2009 Lotus

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.

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Operations Review

A Lotus showroom in Europe.

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.

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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

the rally-call for quality excellence, which was

improvement framework was developed with a

encapsulated in the slogan PROTON stays committed

view to ensure that all quality concerns were

to quality improvements. The campaign involved

communicated to the relevant levels within the

subsequent

organisation. In addition, the framework also put in

implementation of initiatives that were aimed at

place a proper gate-keeping process to make certain

enhancing quality excellence throughout the entire

that quality concerns are solved in a correct and

process chain of the Group. Ultimately, the goal is

timely manner.

comprehensive

evaluation

and

to push the PROTON brand forward as a world-class


manufacturer.

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the

slogan

into

action,

quality

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On the same score, the Quality Improvement Circle

In addition to problem-solving, the Group also

(QIC), which is a committee introduced in the 2008

encourages creative innovations that can enhance

financial year to manage and resolve quality issues

quality excellence. Hence, we have continued to

Group-wide on a timely basis, was further augmented

support the pre-existing Innovative and Creative

with sub-QIC teams during the last financial year to

Circle (ICC) and Kaizen Suggestion Scheme, which

bolster efficiencies and effectiveness.

are

programmes

tasked

to

undertake

quality

improvement initiatives at our production facilities.


Stemming from QIC and sub-QIC, the Quality

In the year under review, our plants in Shah Alam

Improvement Team (QIT) was formed at the

and Tanjung Malim successfully completed a total

operational level to address specific quality concerns

of 250 ICC projects, while a total of 18,000 process

impacting the Groups processes. At the end of the

improvements

2009 financial year, we registered a total of 136 QITs

Suggestion Scheme, marking a more than 70%

that were involved in the successful resolution of

expansion in projects carried out for both these

more than 70 quality concerns.

programmes.

were

made

under

the

Kaizen

Achieving quality excellence continued


to be a top priority for the Group.

Quality in Design & Development


When it comes to delivering quality products, leading automakers all over the world
embrace the philosophy of getting it right the first time.

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Operations Review

At PROTON, we clearly understand the importance of building in the elements of quality


from the earliest stage of our processes: during the design and development stage. This
philosophy was incorporated in a comprehensive and tangible manner in the development
of PROTONs very first multi-purpose vehicle (MPV), the Exora.
In order to build quality into the various stages of the Exora, PROTON installed a structured
quality planning system and carried out systematic quality assurance initiatives throughout
each stage of the creation process of the model. Some of these initiatives included stricter
New Product Introduction (NPI) gateway control, structured supplier Advance Product
Quality Planning (APQP) and consolidated Quality Residence Engineer (QRE) activities,
which were all aimed to make the Exora the highest quality PROTON vehicle to date.
Clearly, based on the latest customer feedback and response to date for the Exora, our
diligent efforts and investments are paying off handsomely.

Quality in Supply
The PROTON Groups supply chain represents one

All in all, 10 of our suppliers who have been working

of the most important elements in ensuring quality

closely with our QITs in the past year recorded an

excellence. We cannot afford any weakened links

impressive 20% improvement in terms of overall

that may negatively impact our brand.

quality standards, which will in turn benefit the


overall

During the financial year, we continued to be

production

chain,

the

customer,

and

ultimately PROTONs business.

highly stringent in our surveillance and monitoring


processes to ensure that the components we
received from our suppliers met our requirements.
Technical indicators such as incoming quality checks,
as well as the number of warranty claims and audit
ratings provided us with clear indications on the
performance of our suppliers. For those who fail
to meet our specifications, they are made to work
closely with our QITs to improve.
Quality inspection of the Exora in progress.

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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.

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Operations Review

Quality excellence touches all aspects of PROTONs business, including customer


experience.

Quality in the Market


Quality excellence does not end with the passing of keys to our customers. It is important
for PROTON to ensure that when our customers come into contact with the brand, may it
be test driving our cars for the very first time or an after-sales interaction, their experience
is a positive one.
The Groups unrelenting goal to fortify quality customer service continues to bear results
given that our brand recorded an improvement in JD Powers Customer Satisfaction Index
for 2008. Internally, the Group also recorded a 3% improvement in terms of satisfied
customers and a reduction of 2% for less satisfied customers.
While the trend is positive and we have progressed, there still remain gaps to be narrowed
or closed in our journey to attain world-class standards of quality. Changing perceptions of
quality is a long-term process, and as such PROTON will remain committed to engaging our
customers and catering effectively to their needs by continuously strengthening our quality
standards in all areas in the coming years.

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Sales & Distribution


Domestic Market

In 2008, primarily as a result of heightened sales activity by the


industry players on the back of a strong economic growth of 5%
and positive consumer sentiment during the first three quarters of
the year, Total Industry Volume (TIV) surpassed the 500,000 mark to
hit 548,115 units. The half a million mark had only been breached
once before in previous years (2005). Volatile fuel prices and the
weakening domestic economic climate, however, had negatively
impacted the fourth quarter of the year and we expect the full
impact of the on-going global financial downturn to further impact
auto industries worldwide in 2009.

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.

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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.

The Delivery Centre at PROTONs Centre of Excellence.

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The first truly Malaysian MPV takes centre-stage.

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.

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Operations Review

Performance and Operations


The year under review saw PROTON strengthening the Export Division with the
appointment of a new Director of Export whose primary responsibility is to enhance
sales and brand performance in overseas markets. The role also includes overseeing the
development of international subsidiaries, distributors and dealers which is aligned with
the Groups Asian Multi-Local OEM (AMLO) marketing strategy.
Additionally, in terms of market expansion, we took steps to increase PROTONs visibility
in Egypt, Syria and Thailand. The Group also made rapid progress with business operations
in China, where three plants commenced the assembly operations for the Gen.2 and
Persona models. This is expected to contribute positively towards our volume growth for
the next financial year.
PROTON also took the opportunity to launch new models in select markets: Persona and
Saga in Indonesia, Persona CNG in Thailand, and Persona left-hand-drive in the Middle East
and Gulf countries.

The Persona and Saga are set to make waves abroad.

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Operations Review

5-Year Export Volume and 2009/10 Forecast

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.

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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.

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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.

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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.

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Operations Review

An agreement was signed with Zagross Khodro for the supply of automotive parts to assemble the Gen.2 in Iran.

PROTON 2009 ANNUAL REPORT

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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.

The Saga landed in Singapore in mid 2008.

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Operations Review

Thailand
Performance and Operations
The global financial crisis saw Thailands automotive

Given the growing appeal of the Persona CNG as a

TIV dropping by 2.5% in the year under review. Fear

result of escalating fuel prices in Thailand, the model

of recession, a weakening Thai Baht against the US

has turned out to be a viable alternative to the Savvy

Dollar, risk-averse financial institutions and a rise in

to drive volume.

fuel prices, collectively impacted the industry here as


they did in many other parts of the world.

PROTON subsequently launched the full Persona


range in November 2008 at the Thai Motor Expo 2008

In spite of this backdrop, PROTON registered sales

to enthusiastic response. The Persona, which had also

of 3,279 units and achieved the No. 8 ranking in

been hailed as one of the Top 10 most exciting new

Thailands Passenger Car Segment in the first year

cars to enter the market in 2009 by the Bangkok Post,

of its entry into this market.

was also well-received at the Bangkok Motorshow


in March 2009 and contributed to almost 49% of

Two products mainly drove sales: the Savvy and

PROTON sales derived here.

Persona. Voted among Thailands Top 10 cars for


2008 by local publication, The Nation, the Savvy

By the end of the financial year, Proton Motors

currently dominates the small car segment here

(Thailand) Co Ltd had successfully started its operations

but price competition could erode profitability.

in March 2009 with importation of PROTON cars into


Thailand for wholesale to the distributor, Phranakorn

The Savvys success was followed by the launch

Auto Sales Co Ltd, who had also established a network

of the eco-friendly Persona CNG in October 2008.

of 30 showrooms across Thailand during this period.

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.

PROTON 2009 ANNUAL REPORT

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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.

PROTON sponsors the Wests Tigers Rugby team in Australia.

Performance and Operations


During the year, Proton Cars Australia embarked

accolades received by the Jumbuck was Australias

on an ambitious campaign to rationalise the dealer

Greenest Utility Vehicle due to its low emissions. It

network in preparation for the launch of the new

was also awarded the lowest cost vehicle to own

Saga. While this campaign resulted in lower sales

and run, in its class, by the National Road Motorists

for the year, the operational aspects of the business

Association.

were reviewed in preparation for the introduction of


a long-term volume growth strategy.

PROTON in Australia also continued our association


with Safe Drive Training, an organisation responsible

The challenging trading environment combined

for training over 5,000 school age drivers from 113

with the lack of readily-available vehicle financing

schools across New South Wales and Queensland

compounded the effects of the dealer rationalisation

annually.

programme. Sales fell by 20% compared with the


16% increase in the previous year. With reductions

Furthermore, we continued with our sponsorship of

made in marketing expenditure and overall cost

the Wests Tigers Rugby League Football team. An

containment, we managed to lessen the effect on the

estimated 400,000 people attended the Wests Tigers

bottom line.

matches during the season with an additional 14.2


million watching them on television which gave

The Jumbuck continued to be the highest selling

PROTON an opportunity to maintain a visible brand

model, followed by Savvy and Persona. Among the

presence.

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The Persona is launched Down Under.

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.

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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.

Performance and Operations


Challenging economic conditions saw PROTON sales decrease significantly by 38% during
the year under review. Despite the circumstances, Proton Cars (UK) Ltd achieved several
operational goals which helped offset the downturn.
A number of initiatives were introduced to improve operational performance and cost base.
These included a company-wide resource re-organisation, a cost reduction programme,
the amalgamation of all departments into one cost efficient central office, the setting
up of a new in-house vehicle storage and preparation centre, centralised training, new
dealer support systems and improved IT operations. The new in-house storage and PDI
(pre delivery inspection) centre in particular saved cost while reducing delivery speed and
improving quality.

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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.

The Gen.2 in the UK.

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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

Top: The Centre of Excellence in Subang Jaya.


Bottom: PROTONs Sports Complex is one of Tanjung Malims best sports facilities.

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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.

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Operations Review

Corporate Social Responsibility


PROTON is fully aware that the attention to a companys
profitability must correspond to a similar focus on human
resource development and the environment it operates in.

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.

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PROTON Malaysia Open 2009, an annual event anticipated by badminton fans worldwide.

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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

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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.

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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.

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Operations Review

PROTON conducts numerous training


programmes for staff in different
divisions.

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.

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To facilitate the development of non-executive employees, PROTON is also in discussions


with BATC to develop an Executive Diploma in Manufacturing Systems Engineering. The
first intake is expected to take place by September 2009.
PROTON has also embarked on a major initiative of institutionalising Knowledge
Management (KM) practices which is key to our on-going growth and building a knowledgebased human capital. In support of this initiative, we launched our first KM portal ASPIRE
(Advanced Strategic Proton Information Repository Engine) in April 2009. We are optimistic
that with the presence of good equipment, techniques and practices, PROTON can ASPIRE
to be a leading player in the automotive industry both domestically and in the region.
After years of prioritising health and safety, PROTON has accumulated a wealth of
knowledge and experience in health and safety management, education, maintenance, and
the environment. As such, a wide range of occupational health and safety measures have
been implemented throughout the Groups premises and related businesses nationwide.
To further complement this, the Group organised numerous health talks, carnivals,
exhibitions and programmes throughout the year to create awareness amongst employees
on the importance of adopting safe and healthy lifestyles. Steering and working committees
were established to allow for more effective monitoring of health and safety related issues
throughout the PROTON Group of companies.

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.

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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.

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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.

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Operations Review

As part of our commitment to nation-building, we aim to enhance national unity amongst


Malaysians and promote economic development. A major initiative under this platform
is PROTONs involvement in the Pintar Programme which is spearheaded by Khazanah
Nasional Berhad and involves other Government-Linked Companies. Our main objective
is to assist children from low-income families improve their academic performance and
develop positive characteristics while young. The adoption, which involves a commitment
of RM0.5 million, is for three years and began in the 2007/2008 financial year, with
structured activities to be implemented throughout the duration.
In the year under review PROTONs Pintar Programme adopted four schools with a total
number of 3,006 students. Collectively, 36 activities were held including motivational
programmes, weekly tuition classes, coaching for exam year students, English classes as
well as recreational activities such as football and badminton clinics in collaboration with
the Badminton Association of Malaysia (BAM) and PROTON Football Club. PROTON also
provided necessities such as water coolers and library books as well as incentives to the
poorer and high achieving students in the form of cash and bicycles.
The four schools are Sekolah Rendah Kebangsaan Bagan Tuan Kechil in Butterworth, Penang;
Sekolah Menengah Paya Keladi in Kepala Batas, Penang; Sekolah Rendah Kebangsaan,
Tanjung Malim, Perak; and Sekolah Rendah Kebangsaan Pintu Gang, Paloh, Kelantan.
In sports, PROTON continued to build talent at the grassroot level through development
programmes particularly for badminton and football enthusiasts. Going beyond this
objective, our initiatives under this platform also serve to promote Malaysia as a preferred
destination for sports tourism.
We continued our role as the major sponsor of badminton through BAM, with an allocation
of RM3.5 million (including promotions) for the sport during the year under review. The
year 2008 was a successful one for BAM as its players performed well in various international
outings particularly in the Beijing 2008 Olympics where top national player Lee Chong Wei
bagged the countrys only medal in the games.

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A convoy of PROTON sponsored vehicles at the Le Tour de Langkawi.

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.

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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.

PROTONs football team is in the


National Football League.

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Environment, Health & Safety Report


As Malaysias largest manufacturer of automobiles, PROTON
is committed towards protecting the environment by
conforming to the Environmental Quality Act, 1974, OSHA
(Occupational Safety and Health Administration) guidelines
as well as other rules and regulations as part of our corporate
responsibility.

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.

ISO14001 Environment Management System


Reducing the carbon footprint as part of PROTONs environmental initiatives continued to
be a core focus for the Group. In 2007, we had embarked on an ambitious journey in order
to achieve international standards in managing our environment. During the year under
review, PROTON passed the pre-assessment audit on ISO14001 Environmental Management
System carried out jointly by Vehicle Certification Agency (VCA) and SIRIM Malaysia, and
accredited by the United Kingdom Accreditation Service (UKAS).
Considered a means to building greater trust in the marketplace, this internationally
recognised evaluation gives the assurance that PROTON is systematically managing the
environment by benchmarking itself against international standards. Strong customer
confidence in PROTONs products and services is a must; as such we take pride in these
certifications as they do create a favourable impression especially on export markets such
as the UK and Australia, where environmental concerns are of paramount importance.

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Operations Review

Amongst PROTONs environmentally-friendly measures at all its plants include the


installation of green equipment, machinery, robots and automation systems. As these
utilise less energy and emit less waste into the atmosphere, such installations have
contributed towards improving efficiency levels at PROTON.

Waste Water Recycling


PROTON utilises water resources in a responsible manner. Wastewater from the domestic and
industrial sources are chemically and biologically treated within PROTONs manufacturing
facilities.
Currently, the recycled wastewater is used as incinerator coolant at the rate of 25,000 litres
per hour to cool down and maintain proper operating temperature. The recycled water is
also used to water plants, as well as clean roads and drains within PROTONs facilities.

Toxic Waste Treatment


During the year, PROTONs industrial wastewater effluence discharged after treatment was
well below the legal limit under the Environmental Quality Act, 1974:

COD Chemical Oxygen Demands standard is 100 mg/l; PROTONs actual discharge

was less than 50 mg/l.

BOD Biological Oxygen Demands standard is 50 mg/l; PROTONs actual discharge

was less than 10 mg/l.

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.

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Operations Review

End of Life Vehicles


The quality of the cars manufactured can also impact the environment. In view of this,
PROTON continues to ensure that all automobiles produced by the Group for the UK
and European markets comply with the End of Life Vehicle (ELV) directive issued by the
European Union. By maintaining exacting standards in our product line, we have taken
further steps to ensure PROTON vehicles do not cause harm to the environment and people
upon their end of life disposal.

PROTON X-Change Programme


In a bid to remove old cars from Malaysian roads and curb pollution, PROTON had in the
previous year embarked on the X-Change Programme where cars that were more than 10
years old can be exchanged for a rebate of RM5,000 to be used towards the down-payment
of a brand new PROTON car. Cars that are traded in are usually used as scrap metal.
The programme, which is a part of the Governments second stimulus package, will come
to an end in December 2009. Owners of aging cars with low resale value have been taking
advantage of this programme that has already seen close to 11,900 rebate vouchers being
issued by PROTON as of July 2009.

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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.

Health and Safety


Management Commitment
With the formalisation of the Environment, Health and Safety policy, the Group ensured
that its implementation was supported with adequate manpower and funds. As a result
of top-down commitment, the Company was able to sustain employees interest in various
programmes which helped to reduce, and in some cases eliminate, occupational injuries
and illnesses.
Numerous Occupational Safety and Health (OSH) programmes and activities were developed
to ensure the safety, health & welfare of persons at the workplace and to protect external
parties against possible hazards.
A key activity is PROTONs ergonomics improvement programme which aims to maintain
human-friendly working conditions and reduce work load at the assembly line. Ergonomics
covers all aspects of the job from the physical stress it places on joints, muscles, nerves,
tendons, bones and the like, to environmental factors which can affect hearing, vision and
general health.
Through this programme, PROTON had during the year abolished the following:

134

The practise of carrying heavy items that are more than 10 kg in weight such as

window glass, seats, instrument panels, exhaust pipes and tires.

Heavy physical work such as high torque wrench corresponding to more than 10 kg-m

for the tightening of suspension, tire bolts and drive shafts.

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,

NIOSH and other agencies.

Defensive riding courses for employees by in-house skilled trainers.

Motorcycle convoy skills to foster correct motorcycle riding, which included

programmes such as convoys to Teluk Batik and Ilham Resort, Port Dickson, with in-

house union members.

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

number of road accidents and fatalities.

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.

PROTON 2009 ANNUAL REPORT

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.

PROTON 2009 ANNUAL REPORT

139

Statement on Corporate Governance

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

Statement on Corporate Governance

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%

Dato Mohd Nadzmi


Bin Mohd Salleh

Dato Haji Syed Zainal Managing Director


Abidin B Syed
Mohamed Tahir

1 January 2006

N/A

8/9

89%

Tuan Haji Abdul Jabbar Independent Non-


Bin Abdul Majid
Executive Director

12 April 2004

N/A

8/9

89%

Tuan Haji Abdul Kadir Independent Non-


Bin Md Kassim
Executive Director

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%

Datuk Zalekha Binti


Hassan

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

1 January 2009 8/8

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.

PROTON 2009 ANNUAL REPORT

141

Statement on Corporate Governance

Board Composition and Balance


The Board consists of seven (7) members with the Chairman being a Non-Independent NonExecutive Director, one (1) Non-Independent Non-Executive Director, four (4) Independent
Non-Executive Directors and one (1) Executive Director who is the Managing Director.
Tuan Haji Abdul Jabbar Bin Abdul Majid and Tuan Haji Abdul Kadir Bin Md Kassim are the
Companys Senior Independent Directors to whom concerns pertaining to the Group may
be conveyed by the shareholders and the public.
Apart for the Managing Director, all the Non-Executive Directors are independent of
management and free from any business or other relationship, which could materially
interfere with the exercise of independent judgment.

Independence and Conflict of Interest


The Directors are required to make written declarations and it is their responsibility to
declare whether they have a potential or actual conflict of interest in any transaction.
Where issues involve conflict of interest, the interested Directors abstain from discussing or
voting on the matter.

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

Statement on Corporate Governance

Policy on Appointment of Directors


The Board Nomination & Remuneration Committee reviews all new appointments by taking
into consideration the skill sets required by the Company and the Group.
Board Members are appointed through a formal and transparent selection process that is
consistent with the Articles of Association of the Company and the Companys Selection
Policy for Directors.
New directors are required to undergo familiarisation programmes, plant visits and briefings
to get a better understanding of the PROTON Group, its operations and the automotive
industry.
The Board Nomination & Remuneration Committee, apart from carrying out annual reviews
on the mix of skills and experience of the Directors to ensure that the Board has the right
balance and effectiveness also ensures an effective process of selection of all key posts within
the PROTON Group and this includes all members of the senior management committee
and similar level executives including direct reports to the respective chief executive officer
both at holding company level and throughout the PROTON Group.

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)


Pursuant to Article 104


Dato Michael Lim Heen Peok
Tuan Haji Abdul Kadir Bin Md Kassim
Tuan Haji Abdul Jabbar Bin Abdul Majid

Note: Tuan Haji Abdul Jabbar Bin Abdul Majid although eligible, does not seek re-election.
(ii)

Pursuant to Article 111


Dato Mohd Nadzmi Bin Mohd Salleh
Encik Oh Kim Sun

None of the Directors are subject to retirement pursuant to Section 129 of the Companies
Act, 1965 at the forthcoming Annual General Meeting.

PROTON 2009 ANNUAL REPORT

143

Statement on Corporate Governance

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.

Board Audit Committee


The Board Audit Committee (BAC) met eight (8) times during the course of the financial year. The composition
of the BAC and their respective attendance record of meetings for the financial year ended 31 March 2009
are as follows:

No Name of Director
Designation

Date of
Appointment

Date of
Resignation

Meeting
Attendance

Tuan Haji Abdul Jabbar Bin Chairman Independent


Abdul Majid Chairman*
Non-Executive Director

10 March 2005

N/A

8/8

Tuan Haji Abdul Kadir Bin


Md Kassim

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

Statement on Corporate Governance

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.

Functions and Duties

The functions and duties of the Board Audit Committee shall be to:(a) Review and report to the Board of Directors on the following:
with the External Auditors, 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.

PROTON 2009 ANNUAL REPORT

145

Statement on Corporate Governance

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.

Internal Audit Function


The Group uses the services of the Group Internal Audit Division to accomplish its internal
audit requirements. The Group Internal Audit Division reports to the Board Audit Committee
on matters concerning the Group and assists the Board of Directors in monitoring and
managing risks and internal controls.
The Group Internal Audit Division reviews internal controls related to all key activities of
the Group and recommends improvements in controls and procedures. The Group Internal
Audit Division is independent of the activities it audits and performs with impartiality and
due professional care. The findings of the Group Internal Audit Division are reported to the
Board Audit Committee.
The Board Audit Committee approves the internal audit plan of the Group Internal Audit
Division each year. The scope of the internal audit covers the audits of all units and operations,
including subsidiaries.

146

Statement on Corporate Governance

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.

Board Nomination & Remuneration Committee

The objectives of the Board Nomination & Remuneration Committee (NRC) are in accordance with the Terms
of Reference as approved by the Board of Directors of PROTON on 26 July 2006.
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

Encik Ahmad Tajuddin


Bin Abdul Carrim

Member Independent

29 August 2005

N/A

8/8

Encik Md Ali Bin


Md Dewal

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

1 January 2009 6/6

5
Dato Mohammed Azlan Chairman

Bin Hashim
Non-Independent

Non-Executive Director

PROTON 2009 ANNUAL REPORT

147

Statement on Corporate Governance

Board Risk Management Committee


The Board Risk Management Committee (BRMC) assists the Board to oversee the overall management of all
risks faced by the Groups business. Further details of the activities of the Board Risk Management Committee
are spelt out in the Statement of Internal Control.
The BRMC is made up entirely of Non-Executive Directors and third party members (not being directors of the
Company) who are appointed by the Board from time to time as follows:

No Name of Director
Designation

Date of
Appointment

Date of
Resignation

Meeting
Attendance

Tuan Haji Abdul Kadir


Bin Md Kassim

Chairman Independent
Non-Executive Director

29 September 2005

N/A

4/4

Datuk Tan Kim Leong

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

Statement on Corporate Governance

Board Disciplinary Committee (BDC)


The BDC is a platform for the PROTON Group to deal primarily with disciplinary issues. The BDC is part of the
structural mechanism for the handling of cases that may arise from the introduction of the Whistleblower and
Assets Declaration Policies. The BDC has the power to initiate investigations, consider and take appropriate
action on any case referred to it by any party either received orally or in writing.
The BDC comprises members all of whom are non executive directors as follows:

No Name of Director
Designation

Date of
Appointment

Date of
Resignation

Meeting
Attendance

Dato Mohd Nadzmi


Bin Mohd Salleh

Chairman Non-Independent 1 January 2009


Non-Executive Director

N/A

N/A

Tuan Haji Abdul Kadir


Bin Md Kassim

Member Independent
Non-Executive Director

7 May 2006

N/A

2/2

Tuan Haji Abdul Jabbar


Bin Abdul Majid

Member Independent
Non-Executive Director

7 May 2006

N/A

2/2

Tuan Haji Yusof


Bin Ahmad

Member Independent
Non-Executive Director

21 February 2008

N/A

2/2

Dato Mohammed Azlan Chairman Non-Independent 7 May 2006


Bin Hashim
Non-Executive Director

1 January 2009

2/2

PROTON Board Executive Committee


The objectives of the Board Executive Committee (Board EXCO) is to assist the Management in addressing
issues relating to implementation and monitoring of several key projects, including but not limited to PROTON
Strategic Business Plan, Annual Management Plan, PROTON Business Turnaround Plan and also to address
issues relating to identifying suitable candidates to fill in several key positions for PROTON. It is to be noted
that the functions of the Board EXCO shall not overlap that of other Board Committees, such as the Board
Nomination & Remuneration Committee.
Subject to the resolutions of the Board of Directors of PROTON from time to time, the provisions contained in
the Terms Of Reference and the Memorandum and Articles of Association of the Company, the Board EXCO
may exercise any of the powers, authorities and discretions for the time being vested in the Board of Directors
with regard to the affairs and business of the Company.

PROTON 2009 ANNUAL REPORT

149

Statement on Corporate Governance

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

Dato Mohd Nadzmi


Bin Mohd Salleh

Dato Haji Syed Zainal


Managing Director
Abidin B Syed Mohamed
Tahir

17 April 2007

N/A

15/18

Dato Michael
Lim Heen Peok

Independent Non-Executive
Director

17 April 2007

N/A

18/18

Director of Finance and


Corporate Affairs

16 June 2008

N/A

12/12

1 January 2009

15/15

4
Vimala Menon

5

Chairman / Non-Independent 1 January 2009


Non-Executive

Date of
Resignation

Dato Mohammed Azlan Chairman / Non-Independent 17 April 2007


Bin Hashim
Non-Executive Director

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

Statement on Corporate Governance

Directors Remuneration
The NRC is responsible for reviewing the performance of the Executive Directors and recommending to the
Board the remuneration package and reward structure. 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

Basic Salaries, Bonus and


Other Employee Benefits

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

PROTON 2009 ANNUAL REPORT

151

Statement on Corporate Governance

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.

Directors Responsibility Statement


The Board is required by the Companies Act, 1965, to ensure that financial statements
prepared for each financial year have been made out in accordance with the applicable
approved accounting standards and give a true and fair view of the state of affairs of the
Company and the Group at the end of the financial year and of the results and cash flow of
the Company and the Group for the financial year.
The Board is responsible for ensuring that the Company keeps accounting records which
disclose with reasonable accuracy, the financial position of the Company and the Group
and that the financial statements comply with the Companies Act, 1965.
In preparing the financial statements the Board has:





selected suitable accounting policies and applied them consistently;


made judgements and estimates that are reasonable and prudent;
ensured that all applicable accounting standards have been followed; and
prepared financial statements on the going concern basis as the Directors have
a reasonable expectation, having made enquiries, that the Group has adequate
resources to continue in operations for the foreseeable future.

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

Statement on Corporate Governance

Relationship with Auditors


The Board Audit Committee maintains an appropriate transparent relationship with both the
Group external auditors and internal auditors. The external auditors are invited to attend
Board Audit Committee meetings and present their audit findings when the Companys annual
financial results are considered. The Board Audit Committee meets with the external auditors at
least once a year without the presence of the Executive Director and management.

Dialogue Between The Company and Shareholders / Investors


The Board recognises the importance of transparency and accountability to its shareholders
and investors. Different channels of communication are optimised to provide shareholders and
investors with a balanced and complete view of the Group performance and the issues faced by
its businesses in the competitive environment amidst a changing landscape.
The issue of the Annual Report is an important medium of information for the shareholders
and investors whereas the Annual General Meeting of the Company is the main forum for
communication and dialogue with the shareholders. Shareholders are encouraged to actively
participate and interact with the Board and members of the Senior Management pertaining to
the items on the agenda during the general meeting.
In addition, the Chairman briefs the shareholders on the Companys operations for the financial
year. Senior management and the external auditors are present to respond to questions and
queries to ensure a high level of accountability and transparency of the business goals, strategy
and operations.
The Board strives to maintain a good dialogue with shareholders and regular meetings
are held with institutional shareholders throughout the year to discuss the progress of
the Group, future growth prospects and strategy. In the course of the year the Board and
Management have engaged in dialogue sessions with the Major Shareholders of PROTON
and the representatives from the Malaysian Institute of Corporate Governance and Minority
Shareholder Watchdog Group. Other channels of communication include Company
presentations, seminars, press releases, and interim and annual reports. There is a Company
website, www.proton.com, which provides information on the Company for all shareholders
and the general public.
Besides the Annual Report, the Board ensures timely announcements are made to Bursa
Malaysia Securities Berhad and disseminates clear, accurate, and sufficient information to enable
the shareholders and investors to make informed decisions. The Investor Relations Unit also
proactively disseminates appropriate and relevant information to the investor community and
attends to whatever queries they may have.

Code of Conduct and Discipline


PROTON has in place a Code of Conduct and Discipline. Every employee is required to comply
with this said code and as may be determined by the Board, from time to time. This code
consists of matters, prohibitions, duties or procedures relating to his / her employment.

PROTON 2009 ANNUAL REPORT

153

Statement on Corporate Governance

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

Statement on Corporate Governance

PROTON 2009 ANNUAL REPORT

155

Additional Compliance Information

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.

Utilisation of Proceeds Raised from Corporate


Proposals

Imposition of Sanctions / Penalties

There were no proceeds raised from corporate

imposed on the Company and its subsidiaries,

proposals during the financial year.

Directors or Management by relevant regulatory

There were no public sanctions and / or penalties

bodies during the financial year.

Share Buy-back
There was no proposal by the Company to carry out a

Variation in Results

share buy-back during the financial year.

There were no profit estimations, forecasts or


projections made or released by the Company during

Options, Warrants or Convertible Securities


The Company did not issue any warrants or convertible
securities during the financial year.

the financial year.

Profit Guarantee
There was no profit guarantee for the financial year.

American Depository Receipt (ADR) or


Global
Depository
Receipt
(GDR)
Programme
The Company did not sponsor any ADR or GDR
Programme during the financial year.

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

Additional Compliance Information

Revaluation Policy on Landed Properties

The Employees Provident Fund Board (EPF) which

The Significant accounting policies on property, plant

currently holds approximately 15.896% of the issued

and equipment are disclosed in Note 3(e) of the

and paid up capital of PROTON is not deemed a

Summary of Significant Accounting Policies.

related party by virtue of the fact that EPF and / or


person(s) connected with EPF:

Recurrent Related Party Transactions


On 8 June 2007, PROTON obtained exemption from

a.

is / are not the largest shareholder of the

Bursa Malaysia Securities Berhad (Bursa) from

Company

disclosing Recurrent Related Party Transactions with

b.

is / are not a party to any transaction, initiator,

Khazanah Nasional Berhads investee companies. As

agent or involved in any manner in any

a result, PROTON is not required to seek shareholders

transaction with the PROTON Group; and

mandate for such transactions at the forthcoming

c.

does not have any representative in an executive

Annual General Meeting of the Company.

capacity on the Board of Directors of PROTON or

any of the subsidiaries.

Further, Bursa had on 14 December 2006 amended


the Listing Requirements pertaining to related party

The third largest major shareholder, Petroliam

transactions whereby the threshold for a major

Nasional Berhad, holds 7.851% equity interest in

shareholder was increased from 5% to 10% of the

PROTON.

aggregate nominal amount of voting shares in a


company, provided that the said shareholder is not
the largest shareholder of the company.

PROTON 2009 ANNUAL REPORT

157

Additional Compliance Information

Below is a list of Recurrent Related Party Transactions entered during the period for the financial year ended
31 March 2009.

Transacting Related Party

Nature of Transaction

Company within

Actual

the PROTON Group

01/04/08 -

31/03/09

1 Lub Dagangan Sdn Bhd

Purchase of lubricants

PONSB

2,709,289

2 Petronas Dagangan Sdn Bhd

Purchase of lubricants

PONSB

3,794,840

3 Petronas Dagangan Sdn Bhd

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

6 Johnson Controls Auto Holding Purchase of goods

PPCSB

496,344

7 Johnson Controls Auto Seating

Purchase of goods

PONSB

96,628,802

8 Johnson Controls Auto Interior

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

Additional Compliance Information

Transacting Related Party

Nature of Transaction

Company within

Actual

the PROTON Group

01/04/08 -

31/03/09

16 PPCSB

Purchase of parts

PEI

1,946,237

17 Hicom Teck See

Purchase of parts

PONSB

201,301,804

18 Hicom Teck See

Purchase of parts

PPCSB

3,087,740

19 Tenaga Nasional Berhad

Sale of goods

PESB

869,236

20 Oriental Summit Industries

Purchase of parts

PONSB

63,304,332

21 Oriental Summit Industries

Purchase of parts

PPCSB

1,463,932

22 PHN Industry Sdn Bhd

Purchase of goods

PONSB

123,622,655

Definition:
PONSB

Perusahaan Otomobil Nasional Sdn Bhd

PESB

Proton Edar Sdn Bhd

PPCSB

Proton Parts Centre Sdn Bhd

PCUKL

Proton Cars (UK) Ltd

PCA

Proton Cars Australia Pty Limited

PSpore

Proton Singapore Pte Ltd

PROTON 2009 ANNUAL REPORT

159

Statement on Internal Control


The Malaysian Code on Corporate Governance requires listed
companies to maintain a sound system of internal control
to safeguard shareholders investments and the Groups
assets. Directors of listed companies are required to make
disclosures in their annual reports on the state of internal
control in accordance with the Listing Requirements of
Bursa Malaysia Securities Berhad (Bursa Malaysia). Bursa
Malaysias Statement on Internal Control: Guidance for
Directors of Public Listed Companies (Guidance) provides
guidance for compliance with these requirements. The
Boards Internal Control Statement, which has been prepared
in accordance with the Guidance, is set out below.

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.

PROTON 2009 ANNUAL REPORT

161

Statement on Internal Control

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

Nomination and Remuneration Committee

Risk Management Committee (BRMC)

Disciplinary Committee

PROTON Board Executive Committee (EXCO)

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

Statement on Internal Control

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.

PROTON 2009 ANNUAL REPORT

163

Statement on Internal Control

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.

Other Key Elements of Internal Control


The other key elements of the Groups internal control systems are described below:

Defined delegation of responsibilities to committees and management of head

office and operating units, including authorisation levels for various aspects of the

business, which are set out in the Limits of Authority;

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

PROTON and major subsidiaries within the Group;

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

resolve operational, financial and key management issues;

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

and operational issues and provides direction to Management;

Statement on Internal Control

Regular visits to operating units by Senior Management;


Various improvement programmes were established in PROTON and its subsidiaries to

enhance its business operations;

Continuous training efforts to enhance the leadership quality and competency of the

workforce;

Regular employee perception surveys were conducted to obtain feedback from


employees to promote continuous improvements; and

Formal employee appraisal system for effective coaching and evaluation of employee

performance using established Key Performance Indicators (KPIs).

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.

PROTON 2009 ANNUAL REPORT

165

Risk Management
Embracing Challenges

PROTON is exposed to a multitude of risks, either residual or inherent in


the course of its daily operations. Ensuring that these risks are effectively
managed and capitalised is imperative in order to ensure maximisation
of shareholders value.

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.

Risk Management Framework


PROTONs risk management framework was implemented to provide a complete cycle of
managing risks. It consists of Risk Policy and Strategy, Risk Governance and Structure, Risk
Measurement and Risk Operations and Systems.
Risk Policy and Strategy
The PROTON Risk Management policy was revised in 2007 to act as a guiding mechanism
in implementing a standardised and robust risk management practice throughout the
organisation. Effective management and monitoring systems are combined into uniform
risk management programmes, to meet the best practice requirements and for business
value enhancement.
With the use of the risk management requirement and business concerns, risks involving
the various divisions were identified. The risks registered were further prioritised into
Corporate Risk Profile and Major risk profile. This prioritisation will ensure that efforts are
focused on high concern areas on an informed basis.

166

Risk Governance and Structure

Board of Directors

Annual Review and Approval of Risk Management Policy

Board Risk Management


Committee (BRMC)

Advises the BOD on significant changes to the Risk Management


Policy.

Group Risk Management


Committee (GRMC)

Identifies and evaluates principal risks and assesses the practicality of


the proposed risk mitigation actions.

Group Risk Management


Units (GRMU)

Serves as the secretariat to GRMC & assist GRMC in ensuring effective


implementation of Risk Management Framework in the PROTON
Group.

Risk Champions of Business


Units

Responsible for ensuring that risk assessments are conducted in


relations to their business units activities.

Risk Management Units of


Subsidaries

Prepares risk reports regularly.

PROTON 2009 ANNUAL REPORT

167

Risk Management

Board Risk Management Committee (BRMC)


The Board Risk Management Committee (BRMC) was
established to give assurance that an appropriate risk
management policy is in place. The BRMC provides
overall risk strategy and clear direction to the Group
Risk Management Committee (GRMC) and Group
Risk Management Unit (GRMU) in implementing the
risk management policy.

Risk Measurement, Operations and System


Effective risk management is performed through
formalised and centralised operations and system.
The year in review saw major enhancements in the
risk registration format, whereby items such as Key
Risk Indicators and Risk Appetite were incorporated.
This is to cultivate more proactive risk detection within
the Group and promote uniformity in identifying,
rating and monitoring all types of risks.

The BRMC presided four (4) times within the period


under review.

Major Initiatives

Group Risk Management Committee (GRMC)


The Group Risk Management Committee (GRMC)
comprising Senior Management was set up to discuss
risks that could have significant impact on the Groups
strategic business and operating objectives and
to ensure that these risks are effectively managed.
The GRMC assesses the practicality of the mitigation
action and escalates risks that require the Boards
attention to the BRMC on a quarterly basis.

Risk Assessments for Business Planning


This year in review, risk assessments were performed
in conjunction with the yearly business planning. All
divisions within the Group, including subsidiaries,
have submitted their risk registrations during this
exercise. The risks collated were then prioritised into
three risk profiles, Corporate Risk Profiles (CRP), Major
Risk Profiles (MRP) and Business Units Risk Profiles
(BRP). CRP and MRP were tracked and monitored in
the GRMC and BRMC meetings.

Group Risk Management Unit (GRMU)


The Group Risk Management unit (GRMU) provides
specialised resources for developing risk framework,
policies, methodologies, tools and appropriate
training for Management to ensure that risk
management processes are carried out effectively and
consistently throughout the Group. Every quarter,
the GRMU will collate group-wide risk mitigation
updates and escalate the reports to the GRMC and
BRMC respectively.
Risk Champions / Risk Management Unit
The business and operations units form the first line
of defense in managing risks. They are responsible
for describing their principal risks and identifying
possible mitigations to address these risks. The risk
champions, via their risk team members, ensure that
risks are continually assessed and monitored.

168

Risk Assessment for New Product Introduction


During the year under review, risk assessments were
done for the introduction of two new models. Risks
related to costs, market and product acceptance were
identified and mitigations were monitored.
Risk Awareness and Profiling Sessions
The year in review saw several risk awareness sessions
conducted. The objective of these sessions is to further
inculcate the risk management culture within the
Group. It also provides opportunities for GRMU and
the risk owners to ensure that the risk registration is
aligned with the overall business objectives.

Risk Factors
Country Risk
PROTON conducts its businesses across regions. For
this reason, it is exposed to risks related to pandemic,

Risk Management

war, terrorism, politics, natural disasters and other


events that are beyond its control. This may disrupt
and delay PROTONs local supply and operations and
consequently impact the Groups ultimate objective.
Risk assessments were carried out in tandem with
country risks and were monitored regularly.
Regulatory and Intellectual Property
Policies regarding vehicle emission, the environment
and fuel economy are extensive and subject to
frequent changes and scrutiny. Complying with
this regulation requires extensive cost and effort.
Therefore, in order to proactively anticipate any
changes in regulatory requirements, domestic and
abroad, the Group monitors this development to
anticipate foreseeable requirements for future
product development.
As the Group progresses towards international
exposure, the Group is faced with many risks relating
to disclosure of intellectual property especially in
connection to licensing of IPR in strategic projects.
Appropriate measures are currently being taken
in managing all aspects of IPR by establishing an
IPR policy and issuing manuals for identification,
protection and commercialisation of IPR. This effort
will significantly bring maximum benefit to the
organisation by return on investments and profits in

the form of payment for licensing and royalties


and at the same time the IPRs are duly protected.
Credit Risk
Credit risk is inherent in any business, resulting from
default payment by customers and related parties.
Management of this risk is mainly undertaken by
the Finance Division via credit policy, export credit
insurance and interest charges.
Market Risk
The third quarter of the year witnessed a global
financial crisis, which threatened the performance
of the automotive industry. With the world
economy becoming substantially less dynamic,
the domestic and overseas automotive markets
have slid even lower. Credit crunch has resulted
in financial institutions being more stringent with
loan approvals, which consequently affected car
sales. Dwindling price gaps between competitors
and PROTON has caused intense struggle in the
industry. FOREX volatility, increase in raw material
prices and customers uncertainty all added to the
considerable economic risks which the Group has
faced in the year under review. Measures, such as
extensive hedging activities and active marketing
initiatives were taken to minimise the impact of
these risks.

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.

PROTON 2009 ANNUAL REPORT

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

Former Prime Minister, Tun Abdullah Haji


Ahmad Badawi officiates the launch of the three millionth
car during PROTON Technology Week 2008.

Aug 2008 PROTON Technology Week saw more than


60,000 visitors visiting our facilities to understand PROTONs
capabilities in automotive technology, innovation and R&D.

Aug 2008 PROTONs 5th Annual General Meeting.

Aug 2008

Aug 2008

Aug 2008 Staff and their families visit Rumah Anak-Anak


Yatim Darul Aitam Temoh, Perak, one of PROTONs adopted
orphanages.

Team PROTON R3 is launched for participation


in the Merdeka Millennium 12 hours endurance race I (MME)
with Satria Neo and Waja in Class B (1601 cc and 1900 cc) and
Gen.2 in Class C (below 1600 cc).

172

Visit by H E Dr Mahmoud Mohieddin, Minister


of Investment, Egypt, with 15-member delegation.

Aug 2008

PROTON gives away bicycles to deserving


students in Program Pintar.

Sept 2008 Buka Puasa with staff and children from local
orphanages is a yearly activity during the month of
Ramadhan.

Sept 2008

PROTON launches the Workplace and Road


Safety & Health Campaign in conjunction with the festive
season holidays.

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

More than nine months after its launch, the


Saga wins the Autocar Asean Award 2008.

PROTON participates in the 5th China-ASEAN


Expo organised by MATRADE.

PROTON 2009 ANNUAL REPORT

173

Calendar of Events

Nov 2008

The 2nd International Trade Malaysia 2008


Exhibition (INTRADE Malaysia 2008) held at PWTC.

Nov 2008

Nov 2008 The Saga is awarded Car of the Year 2008


(Entry Level) by NST.

Nov 2008

Nov 2008

Dec 2008 Persona wins 1st place as the Most Fuel Efficient

Yayasan PROTON and young scholars at the


certificate Presentation Ceremony.

174

PROTON strengthens its Middle Eastern


presence with simultaneous launchings of the Persona
first in Riyadh, Saudi Arabia, then in Cairo, Egypt, and later
Oman, Qatar, Bahrain and Syria.

PROTON Managing Director is named


Automotive Man of the Year at the Car of the Year
Awards by NST.

Family Car at the Asian Auto-Bosch Fuel Efficiency Awards


2008.

Dec 2008

BWF Super Series Masters Final 2008 in Kota


Kinabalu, Sabah.

Dec 2008

Jan 2009 The official unveiling of the Satria Neo Super


2000 at the Autosport Show UK 2009, for participation in
the intercontinental rally in Belgium.

Jan 2009 PROTON sponsors the PROTON Malaysia Open


2009 Badminton Tournament.

Feb 2009 Media preview of the refreshed Satrio Neo CPS.

Feb 2009 PROTON Chairman and Managing Director at


the event to announce Exora as the name for Malaysias first
home-grown MPV.

PROTON signs an agreement with Zagross


Khodro for the supply of automotive parts to Iran.

PROTON 2009 ANNUAL REPORT

175

Calendar of Events

Mar 2009 The

PROTON Showcase at the UMNO General


Assembly Expo attracts many visitors.

Mar 2009 Detroit Electric Holdings Ltd and Perusahaan


Otomobil Nasional Sdn Bhd agree to collaborate.

Apr 2009

Prime Minister YAB Dato Sri Mohd Najib Bin


Tun Abdul Razak officially launches the much-anticipated
Exora.

Apr 2009 The Exora is delivered to the first ten customers.

May 2009 A new Master Dealership Agreement is signed

May 2009 PROTON once again takes home the Gold


Award in Readers Digest Trusted Brand Awards.

by PROTON Edar Sdn Bhd and Edaran Otomobil Nasional


Berhad.

176

May 2009

Dato Mustapa Bin Mohamed, Minister of


International Trade and Industry, visits the Shah Alam plant
with a 12-member delegation.

The 18th Malaysian Skills (Automobile Sector)


Competition is organised for the 7th year, along with the 3rd
PROTON Competition.

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

PROTON together with Badminton Association


of Malaysia flags off a convoy in conjunction with Malaysias
participation in the Singapore Open Super Series 2009.

May 2009

PROTON R3 Racing Team finishes 2nd in class


2 and 5th overall in the inaugural Sepang 1000KM Race.

Director of Export Markets Division speaks at


PROTONs International Distributor Conference in Phuket.

PROTON 2009 ANNUAL REPORT

177

Moving Ahead

Moving Ahead
Being

committed

meticulous
bringing

to

care

and

value

to

shareholders will propel


PROTON forward.

Innovation in Motion

Statutory Financial Statements


Contents

180

181

Directors Report

185

Income Statements

186

Balance Sheets

188

Consolidated Statement of Changes in Equity

189

Company Statement of Changes in Equity

190

Cash Flow Statements

193

Notes to the Financial Statements

280

Statement by Directors

280

Statutory Declaration

281

Independent Auditors Report

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

Net (loss)/profit for the financial year

(301,806)

367,170

DIVIDENDS
Dividends on ordinary shares paid or declared by the Company since 31 March 2008 are as follows:

RM000

In respect of the financial year ended 31 March 2009:


Interim dividend of 5 sen per share less tax at 25%,
paid on 14 January 2009

20,595

The Directors do not recommend the payment of a final dividend for the financial year ended 31 March 2009.

RESERVES AND PROVISIONS


There were no material transfers to or from reserves and provisions during the financial year except as
disclosed in the financial statements.

PROTON 2009 ANNUAL REPORT

181

DIRECTORS REPORT (CONTINUED)

DIRECTORS
The Directors who have held office during the period since the date of the last report are:
Dato Mohd Nadzmi bin Mohd Salleh
Dato Syed Zainal Abidin B Syed Mohamed Tahir
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.

DIRECTORS INTEREST IN SHARES AND DEBENTURES


According to the register of Directors shareholdings, no Director in office at the end of the financial year
held any interest in shares or debentures in the Company or its related corporations.

182

DIRECTORS REPORT (CONTINUED)

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS


Before the income statements and balance sheets of the Group and Company were made out, the Directors
took reasonable steps:
(a)

to ascertain that proper action had been taken in relation to the writing off of bad debts and the
making of allowance for doubtful debts and satisfied themselves that all known bad debts had been
written off and that adequate allowance had been made for doubtful debts; 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.

PROTON 2009 ANNUAL REPORT

183

DIRECTORS REPORT (CONTINUED)

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED)


At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in
this report or the financial statements which would render any amount stated in the financial statements
misleading.
In the opinion of the Directors:
(a)

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.

DATO MOHD NADZMI BIN MOHD SALLEH


CHAIRMAN

184

DATO SYED ZAINAL ABIDIN B SYED


MOHAMED TAHIR
MANAGING DIRECTOR

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

Other operating income


- Research and development grant
- Others
Distribution costs
Administrative expenses
Other operating expenses
- Impairment of property, plant
and equipment and capitalised
development cost
13
- Others

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)

-
-

(Loss)/profit before finance cost

(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

Share of results of jointly


controlled entities

19

14,594

7,837

(Loss)/profit before taxation

(319,201)

144,316

368,349

40,898

10

17,395

40,235

(1,179)

(10,517)

(Loss)/profit for the financial year

(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

(Loss)/earnings per share (sen)


- basic
- diluted

11
11

The notes on pages 193 to 279 form part of these financial statements.

PROTON 2009 ANNUAL REPORT

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
-

Total Non-Current Assets

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

Total Current Assets

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

Non-current assets held for sale

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

Equity attributable to equity


holders of the Company

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

-
-

Total Non-Current Liabilities

113,759

232,912

Trade and other payables


33
Provisions
34
Amounts due to subsidiary
companies
35
Amounts due to associated
companies
36
Amounts due to jointly
controlled entities
37
Taxation
Short term borrowings
38

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
-

Total Current Liabilities

1,883,599

1,639,180

761

8,511

TOTAL LIABILITIES

1,997,358

1,872,092

761

8,511

TOTAL EQUITY AND LIABILITIES

7,098,898

7,293,348

2,175,153

1,836,328

Net assets per share attributable


to equity holders of the Company (RM)

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.

PROTON 2009 ANNUAL REPORT

187

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY


FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009



Share
Capital

capital
reserve

Note
RM000
RM000

Attributable to equity holders of the Company


Asset
Foreign
revaluation
exchange
Retained
reserve
reserve
earnings
Total
RM000
RM000
RM000
RM000

At 1 April 2008

549,213

475,617

2,362

(82,197)

4,476,261

5,421,256

Net income recognised


directly in equity
- Foreign exchange
differences on translation
of foreign operations
Loss for the financial year

-
-

-
-

-
-

2,685
-

-
(301,806)

2,685
(301,806)

Total recognised income


and expense for the
financial year

2,685

(301,806)

(299,121)

Interim dividend for


the financial year ended
31 March 2009

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

Total recognised income


and expense for the
financial year

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

Net income recognised


directly in equity
- Foreign exchange
differences on translation
of foreign operations
Arising from business
combination
Profit for the financial year

The notes on pages 193 to 279 form part of these financial statements.

188

COMPANY STATEMENT OF CHANGES IN EQUITY


FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009

Issued and fully

p
aid ordinary shares

Nominal

Number
value of

of shares
RM1 each

Note
000
RM000

Distributable
Retained
earnings
RM000

Total
RM000

At 1 April 2008

549,213

549,213

1,278,604

1,827,817

Profit for the financial year


Interim dividend for the financial
year ended 31 March 2009
12

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

Profit for the financial year

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.

PROTON 2009 ANNUAL REPORT

189

CASH FLOW STATEMENTS


FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009

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)
-

CASH FLOWS FROM OPERATING ACTIVITIES


(Loss)/profit for the financial year
Adjustments for:
Taxation
Property, plant and equipment:
- depreciation
- written off
- impairment
- reversal of impairment
- loss/(gain) on disposal
Prepaid land lease payments:
- amortisation
- gain on disposal
Impairment of goodwill
Write down/(write back) of inventories
Impairment of investment in an
associated company
Intangible assets:
- amortisation
- impairment
Interest expense
Interest income
Share of results of associated companies
Share of results of jointly
controlled entities
Current investments:
- loss/(gain) on disposal
- write down in market value
Reversal of allowance for doubtful debts
Allowance for doubtful debts
Gain on unrealised foreign exchange

(14,594)

(7,837)

44
1,084
(63,315)
45,616
(8,284)

(1,678)
-
(19,708)
7,737
(10,230)

-
-
-
-
-

Operating profit before working


capital changes (carried forward)

548,939

492,830

363,731

40,597

190

CASH FLOW STATEMENTS


FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009 (CONTINUED)

Group

Company

2009

2008

2009

2008

RM000

RM000

RM000

RM000

Operating profit before working


capital changes (brought forward)

548,939

492,830

363,731

40,597

Provision for warranties


Provision for onerous contract
Research and development grant
(Reversal)/provision for retirement benefits
Amortisation of capital grant
Dividend income

62,862
4,426
(80,656)
(8,042)
(21,646)
(1,260)

45,526
-
(193,782)
14,616
-
(2,896)

-
-
-
-
-
(362,357)

(41,203)

Operating profit/(loss) before working


capital changes

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)

Cash generated from/(used in) operations

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
-

Net cash flow generated from/


(used in) operating activities

221,640

843,611

4,435

(241)

CASH FLOWS FROM OPERATING


ACTIVITIES (CONTINUED)

Changes in working capital:


Inventories
Receivables
- trade and other receivables
- subsidiary companies
- associated companies and
jointly controlled entities
Payables
- trade and other payables
- provisions
- subsidiary companies
- associated companies and
jointly controlled entities

PROTON 2009 ANNUAL REPORT

191

CASH FLOW STATEMENTS


FOR THE FINANCIAL YEAR ENDED 31 MARCH 2009 (CONTINUED)


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

CASH FLOWS FROM


INVESTING ACTIVITIES
Purchase of property, plant
and equipment
Proceeds from acquisition of
a subsidiary company
17(a)
Additional investment in
a subsidiary company
17(b)
Purchase of intangible assets
Purchase of current investments
Proceeds from disposal of
current investments
Proceeds from disposal of property,
plant and equipment
Proceeds from disposal of prepaid
land lease payments
Dividends received
Net cash flow (used in)/generated
from investing activities
CASH FLOWS FROM
FINANCING ACTIVITIES
Dividend paid
12
Proceeds from borrowings
Advances to a subsidiary company
Lease and hire purchase creditors
installments paid
Repayment of borrowings
Release of restricted ADF

(20,595)
356,506
-

-
421,598
-

(20,595)
-
(177,870)

(890)
(195,421)
31,557

(1,293)
(132,080)
6,260

-
-
-

Net cash flows generated from/


(used in) financing activities

171,157

294,485

(198,465)

NET (DECREASE)/INCREASE IN
CASH AND CASH EQUIVALENTS

(249,574)

704,294

183,127

15,686

EFFECTS OF EXCHANGE DIFFERENCES

(24,982)

(1,819)

CASH AND CASH


EQUIVALENTS AT THE BEGINNING
OF THE FINANCIAL YEAR

1,173,939

471,464

26,296

10,610

899,383

1,173,939

209,423

26,296

CASH AND CASH


EQUIVALENTS AT THE END
OF THE FINANCIAL YEAR

44

The notes on pages 193 to 279 form part of these financial statements.

192

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009

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.

Going concern assumption


The Directors are of the opinion that the use of the going concern assumption in the preparation of the
financial statements is appropriate based on the approved Group business plan and available financing
arrangements. This includes efforts to control cash flows and the introduction of a new model in a segment
which is different from those the Group is currently in.
The Directors expect the Group to continue to operate as a going concern and accordingly, the assets and
liabilities of the Group and Company are recorded on the basis that the Group and Company will be able
to realise its assets and discharge its liabilities in the normal course of business.

Estimates and judgements


The preparation of financial statements requires the Directors to make estimates and judgements that
affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the
financial year. It also requires the Directors to exercise their judgements in the process of applying the
Groups and the Companys accounting policies. Although these estimates and judgements are based on
the Directors best knowledge of current events and actions, actual results may differ.

PROTON 2009 ANNUAL REPORT

193

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

2 BASIS OF PREPARATION (CONTINUED)


Estimates and judgements (continued)
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates
are significant to the Groups financial statements are disclosed in Note 4 to the financial statements.

Financial Reporting Standards


The financial statements of the Group and of the Company have been prepared in accordance with
the provisions of the Companies Act, 1965 and comply with the Financial Reporting Standards (FRSs),
Malaysian Accounting Standard Board (MASB) Approved Accounting Standards in Malaysia for Entities
Other than Private Entities.
The financial statements of the Group and Company have been prepared under the historical cost
convention (as modified by the revaluation of certain freehold land), unless otherwise indicated in the
summary of significant accounting policies.

(a) Standards, amendments to published standards and Issues Committee (IC)



interpretations that are effective and applicable to the Group

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

Cash Flow Statements


Construction Contracts
Income Taxes
Revenue
Accounting for Government Grants and Disclosure of
Government Assistance
Interim Financial Reporting
Provisions, Contingent Liabilities and Contingent Assets
The Effect of Changes in Foreign Exchange Rates
Net Investment in a Foreign Operation
Changes in Existing Decommissioning, Restoration and Similar
Liabilities
Members Share in Co-operative Entities and Similar Instruments
Rights to Interests arising from Decommission, Restoration and
Environmental Rehabilitation Funds
Liabilities arising from Participating in a Specific Market
Waste Electrical and Electronic Equipment
Applying the Restatement Approach under FRS1292004
Financial Reporting in Hyperinflationary Economies
Scope of FRS 2

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.

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

2 BASIS OF PREPARATION (CONTINUED)


(b) Standards, amendments to published standards and IC interpretations that are not

yet effective and have not been early adopted

The new standards and interpretations that are applicable to the Group and the Company, but which
the Group and the Company have not early adopted:

FRS 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.

PROTON 2009 ANNUAL REPORT

195

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

2 BASIS OF PREPARATION (CONTINUED)


(b) Standards, amendments to published standards and IC interpretations that are not

yet effective and have not been early adopted (continued)








IC Interpretation 9 Reassessment of Embedded Derivatives (effective for annual


periods beginning 1 January 2010). IC Interpretation 9 requires an entity to assess whether
an embedded derivative is required to be separated from the host contract and accounted
for as a derivative when the entity first becomes a party to the contract. Subsequent reassessment
is prohibited unless there is a change in the terms of the contract that significantly modifies the
cash flows that otherwise would be required under the contract, in which case reassessment is
required.

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.

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


The following accounting policies have been used consistently in dealing with items which are considered
material in relation to the financial statements.

(a) Subsidiary companies






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.

Inter-company balances, inter-company transactions and unrealised gains on transactions between


Group companies are eliminated in full. Unrealised losses are also eliminated in full unless the assets
transferred are impaired.

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.

PROTON 2009 ANNUAL REPORT

197

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(a) Subsidiary companies (continued)




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.

(b) Associated companies





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.

(c) Jointly controlled entities







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).

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(c) Jointly controlled entities (continued)


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.

PROTON 2009 ANNUAL REPORT

199

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(e) Property, plant and equipment

Property, plant and equipment are tangible items that:


I.

are held for use in the production or supply of goods or services, or for administrative
purposes; and

II.

are expected to be used during more than one period.

(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.

The principal estimated useful lives of depreciation used are as follows:

Buildings
Plant and machinery
Office equipment, furniture, fittings and vehicles

200

15-50 years
5-15 years
2-8 years

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(e) Property, plant and equipment (continued)

(ii) Depreciation (continued)

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

(iv) Gains or losses on disposals

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.

(v) Repairs and maintenance

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.

PROTON 2009 ANNUAL REPORT

201

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(f)

Intangible assets (continued)

(i)

Goodwill (continued)
Goodwill on acquisition of associated companies and jointly controlled entities are included in
the carrying value of the investment in associated companies and jointly controlled entities
respectively. Such goodwill are tested for impairment as part of the overall balance.

(ii) Computer software

Acquired computer software licenses are capitalised on the basis of the costs incurred to acquire
and bring to use the specific computer software. These costs are amortised over their
estimated useful lives of 3 to 5 years.

Costs associated with developing or maintaining computer software programmes are


recognised as an expense when incurred. Costs that are directly associated with identifiable
and unique software products controlled by the Group, and that will probably generate
economic benefits exceeding costs beyond one year, are recognised as intangible assets. Costs
include employee costs incurred as a result of developing software and an appropriate portion
of relevant overheads. Computer software development costs recognised as assets are amortised
using the straight line method over their estimated useful lives, not exceeding a period of
3 years.

(iii) Capitalised development cost

Research expenditure is recognised as an expense when incurred. Costs incurred on


development projects (relating to the design and testing of new or improved products) are
recognised as intangible assets when the criteria for recognition in FRS 138 are fulfilled.

Development costs previously recognised as an expense are not recognised as an asset in a


subsequent period. Development expenses capitalised include costs incurred in the
development from the date it first meets the recognition criteria and up to the completion of
the development project and commencement of commercial production. Capitalised
development cost is stated at cost less accumulated amortisation and accumulated impairment
losses, if any. Amortisation is based on the expected production volume over its total useful
life, which does not exceed 7 years for vehicles and 10 years for mechanical parts.

202

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(g) Leases

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.

In the case of work-in-progress and finished vehicles, an appropriate proportion of production


overheads is included in the costs.

(i)

Trade and other receivables

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 classified as assets held for sale



Non-current assets are classified as assets held for sale when the carrying amount is to be recovered

principally through a sale transaction. 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.

PROTON 2009 ANNUAL REPORT

203

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(k) Government grants

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.

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(l)

Provisions (continued)

(ii) Onerous contracts

The Group recognises a provision for onerous contracts when the expected benefits to
be derived from a contract are less than the unavoidable costs of meeting the obligations
under the contract or estimated costs of exiting the contract.

(m) Employee benefits


(i)

Short term employee benefits


Salaries, wages, paid annual leave and sick leave, bonuses and non-monetary benefits are
accrued in the period in which the associated services are rendered by employees of the
Group.

(ii) Post employment benefits

The Group has various post employment benefit schemes in accordance with the local
conditions and practices in the countries in which it operates. The Group has both defined
contribution and defined benefit plans.

Defined contribution 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.

Defined benefit plan

The liability in respect of a defined benefit plan is the present value of the defined benefit
obligation at the balance sheet date minus the fair value of plan assets, 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.

PROTON 2009 ANNUAL REPORT

205

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(m) Employee benefits (continued)

(ii) Post employment benefits (continued)

Defined benefit plan (continued)

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.

(iii) Termination benefits

Termination benefits are payable whenever an employees employment is terminated


before the normal retirement date or whenever an employee accepts voluntary redundancy
in exchange for these benefits. The Group recognises termination benefits when it
is demonstrably committed to either terminate the employment of current employees
according to a detailed formal plan without possibility of withdrawal or to provide
termination benefits as a result of an offer made to encourage voluntary redundancy.
Benefits falling due more than 12 months after balance sheet date are discounted to
present value.

(n) Income taxes




Current tax expense is determined according to the tax laws of each jurisdiction in which the Group
operates and include all taxes based upon the taxable profits, 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.

Deferred tax is recognised on temporary differences arising on investments in subsidiary companies,


associated companies and jointly controlled entities except where the timing of the reversal of the
temporary difference can be controlled and it is probable that the temporary difference will not
reverse in the foreseeable future.

206

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(n) Income taxes (continued)

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.

(o) Foreign currency transactions and translation


(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.

(ii) Transactions and balances

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.

(iii) Group companies

The results and financial position of all the Group companies (none of which has the currency
of a hyperinflationary economy) that have a functional currency different from the presentation
currency are translated into the presentation currency as follows:

assets and liabilities for each balance sheet presented are translated at the closing rate at
the date of that balance sheet;

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

all resulting exchange differences are recognised as a separate component of equity.

PROTON 2009 ANNUAL REPORT

207

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(o) Foreign currency transactions and translation (continued)

(iii) Group companies (continued)

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

(p) Cash and cash equivalents





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.

(q) Income recognition




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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(q) Income recognition (continued)






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.

(ii) Financial instruments recognised on the balance sheet

The particular recognition method adopted for financial instruments recognised on the Balance
Sheet is disclosed in the individual policy statements associated with each item.

(iii) Financial instruments not recognised on the balance sheet

The Group enters into foreign currency forward contracts to protect the Group from movements
in exchange rates by establishing the rate at which a foreign currency asset or liability will be
settled.

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.

PROTON 2009 ANNUAL REPORT

209

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(r)

Financial instruments (continued)

(iv) Fair value estimation for disclosure purposes

The fair value of publicly traded derivatives and securities is based on quoted market prices at
the balance sheet date.

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(u) Contingent liabilities and contingent assets






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.

(v) Impairment of assets











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.

PROTON 2009 ANNUAL REPORT

211

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

3 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


(v) Impairment of assets (continued)

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.

4 KEY ESTIMATES AND JUDGEMENTS


Estimates and judgements are continually evaluated and are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances.
The Group makes estimates and assumptions concerning the future. The resulting accounting
estimates will, by definition, rarely equal the related actual results. To enhance the information
content of the estimates, certain key variables that are anticipated to have a material impact on the
Groups results and financial position are tested for sensitivity to changes in the underlying
parameters. The estimates and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial year are
mentioned below.
(i)

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

4 KEY ESTIMATES AND JUDGEMENTS (CONTINUED)


(ii)

Estimated useful lives of dies and jigs and capitalised development cost

The Group reviews annually the estimated 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

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)

Estimation of income taxes payable and recoverable

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)

Provisions for warranty

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.

PROTON 2009 ANNUAL REPORT

213

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

4 KEY ESTIMATES AND JUDGEMENTS (CONTINUED)


(vi)

Allowance for inventory write down

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.

(vii) Allowance for receivables









The allowance is established when there is objective evidence that the Group will not be able
to collect all amounts due according to the original terms of receivables. 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.

(viii) Impairment of goodwill





The Group tests goodwill for impairment at least annually in accordance with its accounting
policy or whenever events or changes in circumstances indicate that this is necessary. The
assumptions used, results and conclusion of the impairment assessment are stated in Note 15
to the financial statements.

5 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR


During the financial year,
(a)

As reported in the prior financial year,


(i)


CIMB Investment Bank Berhad on behalf of Directors announced on 31 March 2008, a


proposal to strike-off and liquidate eight dormant companies with the intention to reduce
cost, streamline and align business operations within the Group. The proposal was
completed during the financial year.


(ii)


The internal reorganisation exercise to rationalise the operations of Marco Acquisition


Corporation, USA (Marco), a wholly owned subsidiary company of the Company held through
Proton Engineering Research Technology Sdn. Bhd. had been completed on 12 September
2008 following the merger and dissolution of Marco into Lotus Holdings Inc., USA.

(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.

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

5 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (CONTINUED)


(c)


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

Sale of vehicles, spare parts


and accessories
Rendering of engineering services
Others
Gross dividend income

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).

PROTON 2009 ANNUAL REPORT

215

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

7 (LOSS)/PROFIT BEFORE FINANCE COST




2009

RM000

Group
2008
2009
RM000
RM000

Company
2008
RM000

The following items have been charged/


(credited) in arriving at (loss)/profit
before finance cost:
Gross dividends receivable from:
- subsidiary company, unquoted
- associated companies, unquoted
- others, quoted
- others, unquoted
Research and development grant
Property, plant and equipment:
- depreciation
- write off
- impairment
- reversal of impairment
- loss/(gain) on disposal
Prepaid land lease payments:
- amortisation
- gain on disposal
Impairment of goodwill
Impairment of investment
in an associated company
Intangible assets:
- amortisation
- impairment
Write down/(write back) of inventories**
Current investment:
- loss/(gain) on disposal
- write down in market value
Research and development expenditure
Provision for warranties (Note 34)
Reversal of allowance for doubtful debts
Allowance for doubtful debts
Statutory audit fees to:
PricewaterhouseCoopers Malaysia:
- current year
- under/(over) provision in prior year
Other member firms of
PricewaterhouseCoopers International
Limited*:
- current year
- under provision in prior year

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
-

-
-

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

7 (LOSS)/PROFIT BEFORE FINANCE COST (CONTINUED)


Group

Company

2009

2008

2009

2008

RM000

RM000

RM000

RM000

505

560

902

1,234

Audit related fees to PricewaterhouseCoopers


- Malaysia
Non-audit fees to PricewaterhouseCoopers:
- Malaysia
- Other member firms of PricewaterhouseCoopers
International Limited*
Provision for onerous contract
Rental of plant, machinery and equipment
Rental of land and buildings
Foreign exchange loss/(gain):
- transactions
- translation
Rental income on land and buildings
Interest income
Automotive Development Fund
- amortisation of capital grant

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)
-

PricewaterhouseCoopers Malaysia and other member firms of PricewaterhouseCoopers


International Limited are separate and independent legal entities.

**

Cost of sales includes inventories written down amounting to RM114,950,000 of which


RM81,841,000 relates to the vehicle models which were impacted by contraction in sales volume
as disclosed in Note 13 to the financial statements (2008: write back of RM25,053,000).

PROTON 2009 ANNUAL REPORT

217

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

8 STAFF COST

Group

2009
RM000

2008
RM000

Wages, salaries and bonuses


Pension cost
- defined contribution plan
- defined benefit plan (Note 32(e))
Other employee benefits
Termination benefits

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

9 FINANCE COST

Group

2009

2008

RM000

RM000

Interest expense on:


Long term loans
Short term borrowings
Others

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

Taxation outside Malaysia


Current taxation:
- charge for the financial year
- over accrual in respect of prior
financial years

801

885

(844)

(1,527)

(43)

(642)

(1,409)

(754)

5,486

4,077

(754)

(17,395)

(40,235)

1,179

10,517

Deferred taxation (Note 22)


Origination and reversal of
temporary differences
Tax benefits arising from previously
unrecognised temporary differences

PROTON 2009 ANNUAL REPORT

219

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

-
-
-

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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.

11 (LOSS)/EARNINGS PER SHARE


Basic (loss)/earnings per share is calculated by dividing the net (loss)/profit attributable to equity holders of
the Company by the weighted average number of ordinary shares in issue during the financial year.


2009
Net (loss)/profit attributable to equity holders
of the Company (RM000)
Weighted average number of ordinary shares in issue (000)
Basic (loss)/earnings per share (sen)

(301,806)
549,213
(55)

Group
2008

184,551
549,213
34

Diluted (loss)/earnings per share equals to basic (loss)/earnings per share.

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.

PROTON 2009 ANNUAL REPORT

221

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT



Office
equipment,

furniture,

Freehold
Plant and fittings and

land
Buildings machinery
vehicles
Group
Note
RM000
RM000
RM000
RM000

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)



Office
equipment,

furniture,

Freehold
Plant and fittings and

land
Buildings machinery
vehicles
Group
Note
RM000
RM000
RM000
RM000

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

Net book value


At 31 March 2009

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

PROTON 2009 ANNUAL REPORT

223

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)



Office
equipment,

furniture,

Freehold
Plant and fittings and

land
Buildings machinery
vehicles
Group
Note
RM000
RM000
RM000
RM000

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)



Office
equipment,

furniture,

Freehold
Plant and fittings and

land
Buildings machinery
vehicles
Group
Note
RM000
RM000
RM000
RM000

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

Net book value


At 31 March 2008

222,826

825,349

1,736,914

337,499

27,858

3,150,446

PROTON 2009 ANNUAL REPORT

225

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


A piece of a subsidiary companys freehold land was revalued on 5 September 1983 based on an independent
professional valuation. The surplus of RM36,882,000 arising from the revaluation was credited to the
capital reserves and subsequently utilised. Had this freehold land been carried at historical cost, the net
book value of freehold land that would have been included in the financial statements at the end of the
financial year would be RM22,448,000 (2008: RM22,448,000).
Property, plant and equipment of a wholly owned subsidiary company with a net book value of
RM111,777,000 (2008: RM61,857,000) was charged to a licensed bank as security for borrowings as disclosed
in Note 32(b) to the financial statements.
The net book value of the office equipment acquired under finance lease at the balance sheet date was
RM3,959,000 (2008: RM5,480,000).
The land title for a freehold land with net book value of RM20,600,000 (2008: RM20,600,000) has not yet
been transferred to the Group pending subdivision of the master title.
Impairment test for property, plant and equipment and capitalised development cost
The carrying value of property, plant and equipment of a subsidiary company at balance sheet date is
RM2,458,078,000 (2008: RM2,773,719,000).
The softening of the automotive industry in the second half of the financial year has resulted in a
contraction in sales volume. Arising from this, a subsidiary company undertook a test for impairment of its
property, plant and equipment and capitalised development cost.
The projections used for the impairment assessment of property, plant and equipment and capitalised
development cost reflect the Groups expectation of the usage, revenue growth, operating costs and
margins for each production plant based on past experience and current assessment of market share,
expectation of market and industry growth. The impairment assessment indicated that the carrying values
of property, plant and equipment and capitalised development cost relating to certain vehicle models
impacted by volume contraction may not be recoverable.
As a result, the following impairment of property, plant and equipment and capitalised development cost
were recognised during the financial year:


Group
2009
RM000

Property, plant and equipment


Capitalised development cost (Note 16)

257,674
20,802

278,476

226

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

13 PROPERTY, PLANT AND EQUIPMENT (CONTINUED)


The property, plant and equipment were allocated to the cash-generating units which are identified
according to production plants and vehicle models. An impairment assessment was performed due to
certain vehicle models being impacted by a contraction in sales volume.
(a)

Key assumptions used in the value-in-use calculations

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)

Impact of possible changes in key assumptions

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.

PROTON 2009 ANNUAL REPORT

227

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

14 PREPAID LAND LEASE PAYMENTS




2009

RM000

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

Net book value


At 31 March

24,031

Accumulated amortisation

228

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

Less: Accumulated impairment loss

(6,741)

(6,741)

At 31 March

29,008

29,008

Impairment test for goodwill


The Group undertook an annual test for impairment of goodwill. The carrying amount of goodwill is
allocated to the cash-generating unit that the goodwill relates to, i.e. distribution business in Malaysia.
The recoverable amount of the cash-generating unit including goodwill in this test is determined based
on the value-in-use calculation. This value-in-use calculation applies a discounted cash flow model using
cash flow projections covering a five-year period for the distribution business in Malaysia. The projections
reflect the Groups expectations of revenue growth, operating costs and margins based on past experience
and current assessment of market share, expectations of market growth and industry growth.
For purposes of the value-in-use calculation, a discount rate of 8% has been applied. The discount rate
reflects the prevailing independent market rate applicable to the Group in Malaysia.
The sales volumes used in the projections indicate an increase from current levels through the introduction
of a new model in a segment for which the Group is not currently in and where capital expenditure has
been incurred to date, over the projection periods. However, the projected sales volume does not include
future new models for which capital expenditure has not been incurred. A nil terminal value has been
assumed.
Sensitivity analysis shows that no impairment loss is required for the carrying amount of goodwill, including
where realistic variations are applied to key assumptions.

PROTON 2009 ANNUAL REPORT

229

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

Accumulated impairment loss


At 1 April 2008
Charge for the financial year (Note 13)

-
20,802

-
-

20,802

At 31 March 2009

20,802

20,802

Net book value


At 31 March 2009

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

Net book value


At 31 March 2008

248,065

27,127

275,192

The remaining amortisation period for intangible assets ranges from 3 to 7 years.

230

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

The details of the subsidiary companies are as follows:



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Perusahaan Otomobil
Nasional Sdn. Bhd.^

Manufacture, assembly
and sales of motor vehicles
and related products

Malaysia

100

100

Proton Tanjung Malim


Sdn. Bhd.^

Assembly of motor vehicles


and related products

Malaysia

100

100

Proton Marketing Sdn. Bhd. Investment holding

Malaysia

100

100

Lotus Advance
Technologies Sdn. Bhd.

Investment holding

Malaysia

100

100

Proton Hartanah Sdn. Bhd.

Investment holding

Malaysia

100

100

Proton Capital Sdn. Bhd.


In Members Voluntary
Liquidation

Malaysia

100

100

PT Proton Cikarang
Ceased operations
Indonesia

Proton Automobiles
Dormant
(China) Ltd. ^

Indonesia

100

100

British Virgin Islands

100

100

Subsidiariy companies of
Perusahaan Otomobil
Nasional Sdn. Bhd.

PROTON 2009 ANNUAL REPORT

231

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Subsidiary companies of
Proton Marketing Sdn. Bhd.
Proton Corporation
Sdn. Bhd. ^

Liquidated during the


financial year

Malaysia

100

Proton Cars (UK) Ltd.*^




Importation and
distribution of motor
vehicles and related
products

England

100

100

Proton Cars Australia


Pty. Ltd.*^

Importation and
distribution of motor
vehicles and related
products

Australia

100

100

Proton Cars Benelux


NV. SA*^

In Members Voluntary
Liquidation

Belgium

100

100

Lotus Cars Asia Pacific


Sdn. Bhd.^

Liquidated during the


financial year

Malaysia

100

Auto Compound and


Distribution Centre
Sdn. Bhd.^

Liquidated during the


financial year

Malaysia

100

Proton Edar Sdn. Bhd.^



Sales of motor vehicles,


related spare parts
and accessories

Malaysia

100

100

Proton Motors (Thailand)


Co. Ltd.*

Importation and wholesale


of motor vehicles and
related products

Thailand

100

100

Proton Engineering
Research Technology
Sdn. Bhd.^

Dormant

Malaysia

100

100

Lotus Group International


Ltd.*^

Investment holding

England

100

100

Subsidiary companies of
Lotus Advance
Technologies Sdn. Bhd.

232

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Subsidiary company of
Proton Hartanah Sdn. Bhd.
Proton Properties
Sdn. Bhd.^

Property development
and management

Malaysia

100

100

Smith & Sons Motors


Ltd.*^

Liquidated during the


financial year

England

100

Proton Direct Ltd.*^




Proton Cars
(Imports) Ltd.*^

Proton Cars Direct
Limited*

Liquidated during the


financial year

England

100

Liquidated during the


financial year

England

100

Liquidated during the


financial year

England

100

Lotus Cars Australia


Pty. Ltd.*^


Subsidiary companies of
Proton Edar Sdn. Bhd.

Importation and distribution


of motor vehicles and related
products

Australia

100

100

Proton Singapore
Pte. Ltd.*^

Importation and distribution


of motor vehicles and related
products

Singapore

100

100

Proton Edar Resources


Sdn. Bhd.^

In Members Voluntary
Liquidation

Malaysia

100

100

Proton Edar Ventures


Sdn. Bhd.^

In Members Voluntary
Liquidation

Malaysia

100

100

PT Proton Edar
Indonesia*

Importation and distribution


of motor vehicles and related
products

Indonesia

95

95

Subsidiary companies of
Proton Cars (UK) Ltd.

Subsidiary company of
Proton Cars Australia Pty. Ltd.

PROTON 2009 ANNUAL REPORT

233

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Subsidiary company
of Lotus Group
International Ltd.
Group Lotus Plc.*^

Investment holding

England

100

100

Lotus Cars Ltd.*^



Manufacture of motor
vehicles and engineering
consultancy services

England

100

100

Lotus Body
Engineering Ltd.*^

Investment holding

England

100

100

Lotus Motorsports Ltd.*^

Dormant

England

100

100

Lotus Holdings Inc.*^


Investment holding

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Subsidiary company of Lotus
Lightweight Structures
Holdings Ltd. (formerly
known as Holden
Lightweight Structures Ltd.)
Lotus Lightweight
Manufacture of
Structures Ltd.
automotive components
(formerly known as Holden
Aluminium Worcester Ltd.)*

England

100

Engineering consultancy
services

Malaysia

100

100

Lotus Engineering Inc.*^


Engineering consultancy
services

United States
of America

100

100

Lotus Cars USA Inc.*^



Sales of motor vehicles


and related spare parts
and accessories

United States
of America

100

100

Subsidiary company of
Lotus Engineering Ltd.
Lotus Engineering
(Malaysia) Sdn. Bhd.^
Subsidiary companies of
Lotus Holdings Inc.

* Audited by a member firm of PricewaterhouseCoopers International Limited which is a separate and


independent legal entity from PricewaterhouseCoopers, Malaysia
^ Consolidated by merger method of accounting prior to 1 April 2006

PROTON 2009 ANNUAL REPORT

235

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)


(a)


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)

Loss before tax

(11,753)

Tax expense

Loss for the financial year

(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

Property, plant and equipment (Note 13)


Inventories
Receivables, deposits and prepayments
Deposits, bank and cash balances
Payables and other liabilities

Cash inflow to the Group on acquisition of subsidiary company

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

17 SUBSIDIARY COMPANIES (CONTINUED)


(b) In the prior year, Perusahaan Otomobil Nasional Sdn. Bhd. (PONSB), a wholly owned subsidiary company of

the Company completed the acquisition of the remaining 49% equity interest in PT Proton Cikarang

Indonesia. As a result, PT Proton Cikarang Indonesia, a jointly controlled entity, became a wholly owned

subsidiary company of PONSB.

RM000


Purchase consideration:
- cash consideration
- settlement of amount due from Tracoma Holdings Berhad




Fair value of net assets acquired

Goodwill (Note 15)

33,750
1,356
35,106
(28,365)
6,741

Acquirees
carrying value Fair value
RM000
RM000

Property, plant and equipment (Note 13)


Prepaid land lease payment (Note 14)
Receivables, deposits and prepayments
Deposits, bank and cash balances
Payables and other liabilities
Deferred tax (Note 22)

41,951
16,476
3,045
1,134
(9,348)
-

40,389
25,108
4,356
1,134
(11,096)
(2,439)

Net assets acquired

53,258

57,452

Less: Amount previously accounted for as a jointly controlled entity

(29,087)

Fair value of net assets acquired

28,365

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

33,750
(1,134)

Cash outflow of the Group on acquisition of subsidiary company

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.

PROTON 2009 ANNUAL REPORT

237

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

18 ASSOCIATED COMPANIES


2009

RM000

Group
2008
2009
RM000
RM000

Company
2008
RM000

Unquoted shares at cost


Share of post-acquisition reserves

59,252
131,993

59,252
132,391

13,600
-

13,600
-

191,245

191,643

13,600

13,600

Less: Impairment loss

(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)

Profit before taxation

13,707

15,305

Taxation

6,513

(2,171)

Profit for the financial year

20,220

13,134

238

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

18 ASSOCIATED COMPANIES (CONTINUED)


The details of the associated companies are as follows:

Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
PHN Industry Sdn. Bhd.


Manufacture and sales of


stamped parts and
sub-assembly of automotive
metal components

Malaysia

35

35

Marutech Elastomer
Industries Sdn. Bhd.


Manufacture and production


of moulded products,
extruded and rubber hoses
for motor vehicles, motorcycle
and other related products

Malaysia

25

25

Exedy (Malaysia) Sdn. Bhd.



Manufacture and assembly


of manual clutch and
automatic transmission parts

Malaysia

45

45

Socialist
Republic of
Vietnam

25

25

Property developer and


project management

Malaysia

40

40

Provision of dealer and


customer financing

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.

PROTON 2009 ANNUAL REPORT

239

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

18 ASSOCIATED COMPANIES (CONTINUED)



Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Associated company
of Proton Edar Sdn. Bhd.
Netstar Advance Systems
Sdn. Bhd.


Associated company
of Proton Automobile
(China) Ltd.

Manufacture, assembly and Malaysia


sales of vehicle tracking
devices

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

19 JOINTLY CONTROLLED ENTITIES




2009

RM000

Group
2008
RM000

Unquoted shares at cost



At 1 April 2008
Reclassified to investment in subsidiary company
Liquidated

136,648
-
(1,114)

179,303
(42,655)
-

At 31 March 2009

135,534

136,648

Accumulated impairment loss



At 1 April 2008
Liquidated

1,114
(1,114)

1,114
-

At 31 March 2009

1,114

Share of post-acquisition reserves

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)

Profit before taxation

19,673

11,104

Taxation

(5,079)

(3,267)

Profit for the financial year

14,594

7,837

PROTON 2009 ANNUAL REPORT

241

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

19 JOINTLY CONTROLLED ENTITIES (CONTINUED)


The details of the jointly controlled entities are as follows:

Country of
Groups
Name
Principal activities
incorporation
effective interest

2009
2008
%
%
Jointly controlled entities of
Proton Marketing Sdn. Bhd.
Proton Parts Centre
Sdn. Bhd.*

Trading in motor vehicle


components, spare parts
and accessories

Malaysia

55

55

Proton Cars (Europe) Ltd.


Liquidated during the


financial year

England

56

Provision of motor
vehicles financing

England

49.9

49.9

Provision of motor
vehicles financing

Malaysia

50

50

Jointly controlled entity


of Group Lotus Plc.
Lotus Finance Ltd.

Jointly controlled entity
of Proton Edar Sdn. Bhd.
Proton Commerce
Sdn. Bhd.
*

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

20 AMOUNTS DUE FROM SUBSIDIARY COMPANIES




Less than More than
Less than More than

1 year
1 year
Total
1 year
1 year

2009
2009
2009
2008
2008

RM000
RM000
RM000
RM000
RM000

Company
Total
2008
RM000

Amounts due from subsidiary


companies
58,912
Advances to a subsidiary company
-

-
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

Unquoted investments in Malaysia:

PROTON 2009 ANNUAL REPORT

243

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

Subject to income tax:


Deferred tax assets
Deferred tax liabilities

5,727
(12,243)

(2,439)

(6,516)

(2,439)

Movement of deferred tax


At start of financial year
Credited/(charged) to income
statement (Note 10)
- property, plant and equipment
- capitalised development cost
- allowances and provisions
- others

(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)

At end of financial year

(6,516)

(2,439)

Deferred tax assets (before offsetting)


- property, plant and equipment
- allowances and provisions
- others

17
86,074
561

36,450
-

86,652

36,450

Offset of deferred tax liabilities

(80,925)

(36,450)

Deferred tax assets (after offsetting)

5,727

244

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

22 DEFERRED TAXATION (CONTINUED)




2009

RM000

Group
2008
RM000

Deferred tax liabilities (before offsetting)


- capitalised development cost
- property, plant and equipment
- others

(78,364)
(12,819)
(1,985)

(34,928)
(3,961)
-

(93,168)

(38,889)

Offset against deferred tax assets

80,925

36,450

Deferred tax liabilities (after offsetting)

(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

Temporary differences of which


no deferred tax asset is recognised
Unrecognised tax losses
Unabsorbed capital allowances
Unrecognised reinvestment allowances
Other temporary differences

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).

PROTON 2009 ANNUAL REPORT

245

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

24 TRADE AND OTHER RECEIVABLES


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

Government grant receivable


Warranty claims reimbursable (Note 34)
Prepayments
Deposits

80,656
111,451
20,368
14,393

-
112,258
18,316
15,031

-
-
-
-

890,095

969,344

145

14

246

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

24 TRADE AND OTHER RECEIVABLES (CONTINUED)


The currency exposure profile of trade and other receivables are as follows:


Ringgit
Pound
Malaysia
Sterling
RM000
RM000

Currency exposure profile as at 31.3.2009


US
Dollar
Euro
Others
Total
RM000
RM000
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

Currency exposure profile as at 31.3.2008


US
Dollar
Euro
Others
Total
RM000
RM000
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

PROTON 2009 ANNUAL REPORT

247

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

24 TRADE AND OTHER RECEIVABLES (CONTINUED)


Credit terms of trade receivables for the Group ranges from 14 to 360 days (2008: 14 to 360 days). However, the
majority of the Groups trade receivables have a credit term between 14 to 90 days (2008: 14 to 90 days).
Group sales are concentrated in Malaysia with one major third party customer in Malaysia making up 27.5%
(2008: 25%) of total Group revenue.
The Group has no significant concentrations of credit risk except for an amount of RM81,138,000 (2008:
RM205,057,000) due from a single customer. The Directors are of the view that the credit risk is minimal in view
of the stability and historical settlement of the receivables from this customer.

25 AMOUNTS DUE FROM ASSOCIATED COMPANIES


The amounts due from associated companies arose from normal trade transactions. These amounts have credit
terms ranging from 30 to 60 days (2008: 30 to 60 days).
The currency exposure profile of amounts due from associated companies are 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

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

26 AMOUNTS DUE FROM JOINTLY CONTROLLED ENTITIES


The amounts due from jointly controlled entities arose from normal trade transactions. These amounts have
credit terms ranging from 30 to 45 days (2008: 30 to 45 days).
The currency exposure profile of amounts due from jointly controlled entities are 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

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

PROTON 2009 ANNUAL REPORT

4,430

249

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

27 CURRENT INVESTMENTS


2009

RM000

Group
2008
RM000

Lower of cost and market value:


Commercial papers and corporate debt

- quoted investments in Malaysia
- unquoted investments in Malaysia

584
14,729

526
20,296

15,313

20,822

Market value of quoted investments:


Commercial papers and corporate debt

724

806

28 DEPOSITS, BANK AND CASH BALANCES




2009

RM000

Group
2008
RM000


2009
RM000

Company
2008
RM000

Short term funds deposited with


licensed banks
Bank and cash balances

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

The maturity profile of short term funds


are as follows:

250

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

28 DEPOSITS, BANK AND CASH BALANCES (CONTINUED)


Bank balances are deposits held at call with banks.


Ringgit
Pound
Malaysia
Sterling
RM000
RM000

Currency exposure profile as at 31.3.2009


US
Dollar
Euro
Others
Total
RM000
RM000
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

Currency exposure profile as at 31.3.2008


US
Dollar
Euro
Others
Total
RM000
RM000
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.

PROTON 2009 ANNUAL REPORT

251

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

29 NON-CURRENT ASSETS HELD FOR SALE




2009

RM000

Group
2008
RM000

Non-current assets classified as held for sale:


- property, plant and equipment (Note 13)
- prepaid land lease payments (Note 14)

13,728
22,684

36,412

30 SHARE CAPITAL


Group and Company


2009
2008
RM000
RM000

Authorised:
Ordinary shares of RM1.00 each
At start/end of financial year

1,000,000

1,000,000

Issued and fully paid:


Ordinary shares of RM1.00 each
At start/end of financial year

549,213

549,213

252

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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.

(b) Capital reserve







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.

(c) Asset revaluation reserve




The asset revaluation reserve arose as a result of a fair value adjustment of the 51% equity interest
previously held in PT Proton Cikarang Indonesia as a jointly controlled entity upon the acquisition of the
remaining 49% equity interest on 10 August 2007.

PROTON 2009 ANNUAL REPORT

253

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES




2009

RM000

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

Lease and hire purchase creditors (Note 32(c))


Less: Portion repayable within twelve months (Note 33)

3,395
(858)

5,124
(973)

2,537

4,151

Automotive Development Fund (Note 32(d))


Employee retirement benefits (Note 32(e))

21,686
25,068

45,343
50,095

101,516

230,473

The currency exposure profile of the long term liabilities 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

21,686
-

-
79,830

21,686
79,830

21,686

79,830

101,516

254

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)



Currency exposure profile as at 31.3.2008

Ringgit
Pound

Malaysia
Sterling
Total

RM000
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling

93,221
-

-
137,252

93,221
137,252

93,221

137,252

230,473

(a) Long term loan - unsecured




2009

RM000

Group
2008
RM000

The long term loan is repayable as follows:


Within one year
Between one and two years

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.

PROTON 2009 ANNUAL REPORT

255

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(b) Long term loan - secured


2009

RM000

Group
2008
RM000

The long term loan is repayable as follows:


Within one year
Between one and two years
More than two years

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.

(c) Lease and hire purchase creditors - secured



The lease and hire purchase arrangements obtained by subsidiary companies are secured against the related
assets of the respective subsidiary companies.



2009

RM000

Group
2008
RM000

The lease and hire purchase creditors are repayable as follows:


Within one year
Between one and two years
Between two and five years

1,084
1,084
1,714

1,325
1,325
3,421



Less: Future finance charges

3,882

6,071

(487)

(947)

Present value of lease and hire purchase creditors

3,395

5,124

Current (Note 33)


Non-current

858
2,537

973
4,151

Present value of lease and hire purchase creditors

3,395

5,124

The lease and hire purchase creditors bears an interest rate of 7.5% (2008: 7.5%) per annum.

256

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(d)




Automotive Development Fund

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

The ADF comprises:


(i) ADF liabilities
(ii) Capital grant

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

(i) ADF liabilities



At 31 March (Note 44)

PROTON 2009 ANNUAL REPORT

257

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(d) Automotive Development Fund (continued)


2009

RM000

Group
2008
RM000

(ii) Capital grant




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).

(e) Employee retirement benefits


The employee retirement benefits represents the scheme operated by a subsidiary company.

(i) Defined contribution plan

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.

(ii) Defined benefit plan

Lotus Group Scheme - defined benefit scheme

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(e) Employee retirement benefits (continued)

(ii) Defined benefit plan (continued)

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

Present value of obligation


Fair value of plan assets

234,156
(224,494)

316,128
(341,917)

Shortfall/(excess) of funded plan

9,662

(25,789)

Unrecognised actuarial gain

15,406

75,884

Liability on balance sheet

25,068

50,095

PROTON 2009 ANNUAL REPORT

259

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(e) Employee retirement benefits (continued)

(ii) Defined benefit plan (continued)

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(e) Employee retirement benefits (continued)

(ii) Defined benefit plan (continued)

The mortality assumptions used were as follows:



2009

RM000





Longevity at age 65 for current pensioners:


- Male
- Female
Longevity at age 65 for future pensioners:
- Male
- Female

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

Current service cost


Interest cost
Expected return on plan assets
Net actuarial gain recognised in financial year
Amortisation of transitional liability

4,266
18,926
(21,162)
(10,072)
-

4,768
21,066
(26,219)
15,001

Total, included in staff costs within


administrative expenses (Note 8)

(8,042)

14,616

Actual return on plan assets

(63,543)

(12,509)

PROTON 2009 ANNUAL REPORT

261

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

32 LONG TERM LIABILITIES (CONTINUED)


(e) Employee retirement benefits (continued)

(ii) Defined benefit plan (continued)

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.

33 TRADE AND OTHER PAYABLES




2009

RM000

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

33 TRADE AND OTHER PAYABLES (CONTINUED)


The currency exposure profile of trade and other payables are as follows:


Ringgit
Pound

Malaysia
Sterling

RM000
RM000

Currency exposure profile as at 31.3.2009


US
Dollar
Euro
Others
Total
RM000
RM000
RM000
RM000

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

Currency exposure profile as at 31.3.2008


US
Dollar
Euro
Others
Total
RM000
RM000
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.

PROTON 2009 ANNUAL REPORT

263

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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)

Charge to income statement (Note 7)


Warranties reimbursable

62,862
43,054

4,426
-

67,288
43,054

Provision for the financial year


Utilised during the financial year

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)

Charged to income statement (Note 7)


Warranties reimbursable

Provision for the financial year
Utilised during the financial year

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

35 AMOUNTS DUE TO SUBSIDIARY COMPANIES


Amounts due to subsidiary companies were fully repaid during the financial year.

36 AMOUNTS DUE TO ASSOCIATED COMPANIES


Amounts due to associated companies arose from normal trade transactions, are denominated in Ringgit
Malaysia and payable within 30 to 60 days (2008: 30 to 60 days).

37 AMOUNTS DUE TO JOINTLY CONTROLLED ENTITIES


Amounts due to jointly controlled entities arose from normal trade transactions, and are due between 30 to 45
days (2008: 30 to 45 days).
The currency exposure profile of the amounts due to jointly controlled entities is as follows:



Currency exposure profile as at 31.3.2009


Pound
US
Ringgit
Sterling
Dollar
Malaysia
Total
RM000
RM000
RM000
RM000

Group
Functional currency
Ringgit Malaysia

Pound Sterling
Australian Dollar

-
307
-

-
-
266

14,622
-
-

14,622
307
266

307

266

14,622

15,195

Currency exposure profile as at 31.3.2008


Pound
US
Ringgit
Sterling
Dollar
Malaysia
Total
RM000
RM000
RM000
RM000

Group
Functional currency
Ringgit Malaysia
Pound Sterling
Australian Dollar

-
290
-

-
-
321

16,347
-
-

16,347
290
321

290

321

16,347

16,958

PROTON 2009 ANNUAL REPORT

265

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

38 SHORT TERM BORROWINGS






Unsecured:
Long term loan
- current portion (Note 32)
Bridging loan
Bankers acceptance
Revolving credit
Bank overdrafts

Effective interest rate


d
uring the financial year
2009
2008
2009
%
%
RM000

-
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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

38 SHORT TERM BORROWINGS (CONTINUED)



Currency exposure profile as at 31.3.2008

Ringgit
Pound

Malaysia
Sterling
Total

RM000
RM000
RM000
Group
Functional currency
Ringgit Malaysia
Pound Sterling

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

PROTON 2009 ANNUAL REPORT

267

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

39 SEGMENTAL INFORMATION (CONTINUED)


Malaysia
Other countries Elimination
Total

2009
2008
2009
2008
2009
2008
2009
2008

RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion RMmillion
Other information
-

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

Assets written off

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

39 SEGMENTAL INFORMATION (CONTINUED)


Secondary reporting format
The primary reporting format is based on geographical locations of the assets. The industry segmentation is
considered unnecessary as the Group is principally engaged in the automobile industry. Therefore, only sales to
external customers based on the location of the customer are presented below:
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
Total revenue

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

40 CAPITAL AND OTHER COMMITMENTS




2009

RM000

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

PROTON 2009 ANNUAL REPORT

269

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

42 SIGNIFICANT RELATED PARTY TRANSACTIONS DISCLOSURES


In the normal course of business, the Group and Company undertake a variety of transactions at mutually agreed
terms with subsidiary companies, associated companies, jointly controlled entities and other related parties.
The related parties with whom the Group and Company transact with, include the following companies:
Related parties

Relationship

Lotus Group International Ltd. Subsidiary company


Miyazu (Malaysia) Sdn. Bhd.
Associated company
PHN Industry Sdn. Bhd.
Associated company
Marutech Elastomer Industries Sdn. Bhd.
Associated company
Exedy (Malaysia) Sdn. Bhd.
Associated company
Proton City Development Corporation Sdn. Bhd. Associated company
Netstar Advance Systems Sdn. Bhd.
Associated company
Proton Finance Ltd.
Associated company
Lotus Finance Ltd.
Jointly controlled entity
Proton Parts Centre Sdn. Bhd.
Jointly controlled entity
PEPS-JV (M) Sdn. Bhd.
Equity investment
Technomeiji Rubber Industries Sdn. Bhd.
Equity investment
Aluminium Alloy Industries Sdn. Bhd.
Equity investment
Ara Borgstena Sdn. Bhd.
Equity investment
In addition to related party disclosures mentioned elsewhere in the financial statements, set out below are
other significant related party transactions. The related party transactions described below were carried out on
terms and conditions obtainable in transactions with unrelated parties unless otherwise stated.
(a) Interest income from advances to a subsidiary company


2009

RM000
Subsidiary company
- Lotus Group International Ltd.
5,680

Company
2008
RM000
301

(b) Sales of goods and services




2009

RM000
Jointly controlled entities
- Proton Parts Centre Sdn. Bhd.
25,566
- Lotus Finance Ltd.*
45,988

Associated company
- Proton Finance Ltd.*
30,787
*

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..

PROTON 2009 ANNUAL REPORT

271

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

42 SIGNIFICANT RELATED PARTY TRANSACTIONS DISCLOSURES (CONTINUED)


(c) Purchases of goods and services from:


2009

RM000

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.

Jointly controlled entity


- Proton Parts Centre Sdn. Bhd.

Equity investment companies
- PEPS-JV (M) Sdn. Bhd.
- Technomeiji Rubber Industries Sdn. Bhd.
- Aluminium Alloy Industries Sdn. Bhd.
- Ara Borgstena Sdn. Bhd.

(d) Interest expense


Associated company
- Proton Finance Ltd.

(e)




Key management personnel compensation


Key management is defined as those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, directly or indirectly, including Executive and Non-Executive
directors. The key management compensation disclosed below excludes the Executive and Non-Executive
Directors compensation as disclosed in Note 8 to the financial statements:



2009

RM000
Salaries and other short-term employee benefits
Defined contribution retirement plan

272

10,822
1,243

Group
2008
RM000
8,054
811

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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)




A distributor instituted arbitration proceedings against a subsidiary company as a result of the


termination of its distributorship, for which the distributor had claimed USD9.9 million (RM36.2
million) plus general damages and interest. The arbitration award was handed down on 30 October
2006 wherein the distributors claim against the subsidiary company was dismissed. The distributor
has filed an action in court to set aside the arbitration award. The subsidiary company has obtained
legal advice that it is probable that such an action will not be successful.

(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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

43 CONTINGENT LIABILITIES (CONTINUED)


(d)




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.

44 CASH AND CASH EQUIVALENTS




2009

RM000

Group
2008
RM000

2009
RM000

Company
2008
RM000

Short term funds deposited with


licensed banks
Bank and cash balances

717,221
196,629

1,062,834
163,176

208,955
468

25,920
376

Deposits, bank and cash balances

913,850

1,226,010

209,423

26,296

Bank overdrafts (Note 38)


Bank balance in respect
of ADF (Note 32(d))

(6,728)

(14,467)

(45,343)

899,383

1,173,939

209,423

26,296

45 FINANCIAL INSTRUMENTS
(a)

Financial risk management objectives and policies

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

Foreign currency exchange risk


The Group is exposed to currency risk as a result of the foreign currency transactions entered
into by the Company and subsidiary companies in currencies other than their functional
currency. The Group enters into forward foreign currency exchange contracts to limit the
exposure on foreign currency receivables and payables, and on cash flows arising from
anticipated transactions denominated in foreign currencies.

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

45 FINANCIAL INSTRUMENTS (CONTINUED)


(a)

Financial risk management objectives and policies (continued)

(ii) Interest rate risk

(iii) Market risk

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.

(iv) Credit risk

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.

(v) Liquidity and cash flow risk

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

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.

PROTON 2009 ANNUAL REPORT

275

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

45 FINANCIAL INSTRUMENTS (CONTINUED)


(b)

Forward foreign exchange contracts (continued)

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

Less than 6 months


Between 6 months and 1 year

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

45 FINANCIAL INSTRUMENTS (CONTINUED)


(c)

Fair values

The carrying amounts of financial assets and liabilities of the Group and Company at the balance
sheet date approximated their fair values except as set out below:


Group

Carrying

amount
Fair value

Note
RM000
RM000

Company
Carrying
amount
RM000

2009
Recognised on the
balance sheet

Amounts due from


subsidiary companies
20
-
-
177,870
Investments - unquoted
21
10,397
17,618
6,475
Current investments:
- quoted
27
584
724
-
- unquoted
27
14,729
14,729
-
Lease and hire purchase
creditor - long term portion
32
(2,537)
(2,256)
-
ADF liability
32(d)
(14,467)
(14,203)
-
Long term loan
32
(52,225)
(46,053)
-

Off balance sheet

Forward foreign exchange


contracts

45(b)

38,343

38,218

Fair value
RM000

PROTON 2009 ANNUAL REPORT

138,284
17,618
-

277

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

45 FINANCIAL INSTRUMENTS (CONTINUED)


(c)

Fair values (continued)


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

Off balance sheet

Forward foreign exchange


contracts

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

NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2009 (CONTINUED)

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

(ii) Service Operations Agreement



(b)


Sales Operations Agreement

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.

47 APPROVAL OF FINANCIAL STATEMENTS


The financial statements have been approved for issue in accordance with a resolution of the Board
of Directors on 22 July 2009.

PROTON 2009 ANNUAL REPORT

279

STATEMENT BY DIRECTORS PURSUANT TO


SECTION 169(15) OF THE COMPANIES ACT, 1965

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.

DATO MOHD NADZMI BIN MOHD SALLEH


CHAIRMAN

DATO SYED ZAINAL ABIDIN B SYED MOHAMED TAHIR


MANAGING DIRECTOR

STATUTORY DECLARATION PURSUANT TO


SECTION 169(16) OF THE COMPANIES ACT, 1965

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.

VIMALA A/P V.R. MENON

Subscribed and solemnly declared by the abovenamed Vimala a/p V.R. Menon at Shah Alam in Malaysia
on 22 July 2009, before me.

COMMISSIONER FOR OATHS

280

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF


PROTON HOLDINGS BERHAD
(Incorporated in Malaysia) (Company No. 623177-A)

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.

PROTON 2009 ANNUAL REPORT

281

INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF


PROTON HOLDINGS BERHAD (CONTINUED)
(Incorporated in Malaysia) (Company No. 623177-A)

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS


In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the
following:
(a)

In our opinion, the accounting and other records and the registers required by the Act to be kept
by the Company and its subsidiaries of which we have acted as auditors have been properly
kept in accordance with the provisions of the Act.

(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

THAYAPARAN A/L S. SANGARAPILLAI


(No. 2085/09/10 (J))
Chartered Accountant

SHAREHOLDING STATISTICS AS AT 30 JUNE 2009

Analysis of Shareholdings
Share Capital
Authorised Share Capital Issued and Fully Paid Up Capital
Issued and Fully Paid Up Capital
Class of Shares
Voting Rights

RM1,000,000,000/RM549,213,002/Ordinary Shares of RM1/- each


One (1) Voting Right for one (1) Ordinary Share

Analysis of Shareholdings by Range Groups




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

Khazanah Nasional Berhad

234,734,693

42.7402

226-001-004488797

Employees Provident Fund Board

87,303,000

15.8960

Cartaban Nominees (Tempatan) Sdn Bhd


Petroliam Nasional Berhad (Strategic Inv)

43,120,680

7.8514

3 209-001-044650448

PROTON 2009 ANNUAL REPORT

283

SHAREHOLDING STATISTICS AS AT 30 JUNE 2009 (CONTINUED)

Thirty Largest Shareholders


NO. CDS ACCOUNT NO NAME
IC/ID NO.

NORMAL
HOLDINGS

HOLDINGS
PERCENTAGE

087-001-014418354

KHAZANAH NASIONAL BERHAD

275505K

234,734,693

42.7402

226-001-004488797

EMPLOYEES PROVIDENT FUND BOARD

EPFACT1991

87,303,000

15.8960

3
209-001-044650448

CARTABAN NOMINEES (TEMPATAN) SDN BHD


PETROLIAM NASIONAL BERHAD (STRATEGIC INV)

263368K

43,120,680

7.8514

LEMBAGA TABUNG HAJI

ACT5351995

16,820,427

3.0626

5
245-001-019638741

AMANAH RAYA NOMINEES (TEMPATAN)


SDN BHD SKIM AMANAH SAHAM BUMIPUTERA

434217U

16,270,400

2.9625

6
201-001-008776270

MAYBAN NOMINEES (TEMPATAN) SDN BHD


MAYBAN TRUSTEES BERHAD FOR PUBLIC
REGULAR SAVINGS FUND (N14011940100 )

258939H

11,894,400

2.1657

7
206-001-048735070

HSBC NOMINEES (ASING) SDN BHD


EXEMPT AN FOR THE BANK OF
NEW YORK MELLON (MELLON ACCT)

4381U

11,757,710

2.1408

VALUECAP SDN BHD

595989V

10,150,000

1.8481

258-001-037482247

257-001-037151271

9
206-001-037379120

HSBC NOMINEES (ASING) SDN BHD


TNTC FOR BRANDES INSTITUTIONAL EQUITY TRUST 4381U

3,823,100 0.6961

10 207-001-034438135

CITIGROUP NOMINEES (ASING) SDN BHD


CBNY FOR DFA EMERGING MARKETS FUND

263875D

3,581,500 0.6521

11 206-001-043591320

HSBC NOMINEES (ASING) SDN BHD


EXEMPT ANFOR JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION (U.S.A.)

4381U

2,855,375 0.5199

12 201-001-008776213

MAYBAN NOMINEES (TEMPATAN) SDN BHD


MAYBAN TRUSTEES BERHAD FOR PUBLIC
AGGRESSIVE GROWTH FUND (N14011940110)

258939H

2,828,000 0.5149

13 206-001-039929690

HSBC NOMINEES (ASING) SDN BHD


BNY BRUSSELS FOR QUEENSLAND INVESTMENT
CORPORATION

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

AMANAH RAYA NOMINEES


(TEMPATAN) SDN BHD
AMANAH SAHAM MALAYSIA

434217U

2,449,300 0.4460

16 245-001-046775391

AMANAH RAYA NOMINEES


(TEMPATAN) SDN BHD
PUBLIC SECTOR SELECT FUND

434217U

2,349,400 0.4278

284

SHAREHOLDING STATISTICS AS AT 30 JUNE 2009 (CONTINUED)

Thirty Largest Shareholders (continued)


NO. CDS ACCOUNT NO NAME
IC/ID NO.

NORMAL HOLDINGS
HOLDINGS PERCENTAGE

17 201-001-008776312

MAYBAN NOMINEES (TEMPATAN) SDN BHD


MAYBAN TRUSTEES BERHAD FOR PUBLIC BALANCED
FUND (N14011950210 )
258939H

2,265,000 0.4124

18 245-001-032020729

AMANAH RAYA NOMINEES


(TEMPATAN) SDN BHD
PUBLIC SMALLCAP FUND

434217U

2,069,700 0.3768

19

076-001-032786725

BANK SIMPANAN NASIONAL

BSNACT1461974

1,933,000 0.3520

20

098-001-035241124

BANK SIMPANAN NASIONAL

BSNACT1461974

1,889,000 0.3439

21

065-001-042567479

BANK SIMPANAN NASIONAL

BSNACT1461974

1,861,600 0.3390

22

086-001-001732320

BANK SIMPANAN NASIONAL

BSNACT1461974

1,812,000 0.3299

23 209-001-021330287


CARTABAN NOMINEES (ASING) SDN BHD


GOVERNMENT OF SINGAPORE INVESTMENT
CORPORATION PTE LTD FOR GOVERNMENT
OF SINGAPORE (C)

263367W

1,756,800 0.3199

24 206-001-022024434

HSBC NOMINEES (TEMPATAN) SDN BHD


NOMURA ASSET MGMT MALAYSIA FOR
EMPLOYEES PROVIDENT FUND

258854D

1,695,000 0.3086

25

KUMPULAN WANG SIMPANAN PEKERJA

ACT425

1,500,000 0.2731

26 206-001-043881986

HSBC NOMINEES (ASING) SDN BHD


EXEMPT AN FOR BGL (OPCVM A/C)

4381U

1,435,775 0.2614

27 206-001-043590827

HSBC NOMINEES (ASING) SDN BHD


EXEMPT AN FOR JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION (AUSTRALIA)

4381U

1,386,600 0.2525

28 206-001-040893414

HSBC NOMINEES (ASING) SDN BHD


TNTC FOR UTAH STATE RETIREMENT SYSTEMS

4381U

1,327,976 0.2418

29 053-001-046800884

KAF TRUSTEE BERHAD KAF FUND


MANAGEMENT SDN BHD FOR KAF SEAGROATT
& CAMPBELL BERHAD

648477U

1,200,000 0.2185

30 245-001-019638832

AMANAH RAYA NOMINEES


(TEMPATAN) SDN BHD
PUBLIC GROWTH FUND

434217U

1,179,000 0.2147

087-001-002671394

TOTAL

478,595,336 87.14

PROTON 2009 ANNUAL REPORT

285

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009

Properties Owned by Perusahaan Otomobil Sdn Bhd (PONSB)


Location
Description
Tenure

Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation

2008

2009

2008

2009

No. H.S. (D)71311,


No. P.T.82 Mukim of
Damansara, District
of Petaling, Selangor
Darul Ehsan. (Formerly,
HICOM Industrial Estate
encompassing part of
Lots 563, 564, 568, 570
and Lot 15, Mukim of
Damansara, District of
Petaling, Selangor Darul
Ehsan).

Land with an area of


6,231,080 sq. ft. with
main office, main
factory, engine factory,
medium volume factory,
canteen buildings,
sports facilities, car park
for production cars
and additional R&D
laboratories building.
Total built-up area is
2,594,603 sq. ft.

Freehold 05.09.1983

23 Years

24 Years

Land
Buildings

68.4
129.8

68.4
113.0

HICOM Industrial Estate


encompassing Lot 572,
Mukim of Damansara,
District of Petaling,
Selangor Darul Ehsan.

3 units of flats currently


rented out.

Freehold 09.04.1986

23 Years

24 Years

Flats

0.04

0.04

No. H.S. (D) 71309,


No. P.T. 80, Mukim of
Damansara, District
of Petaling, Selangor
Darul Ehsan. (Formerly,
HICOM Industrial
Estate encompassing
Lot 568 Grant No.
5941,H.S.(D) 22208 No.
P.T. 5115,H.S.(D) 22207,
No. P.T.5116, Mukim of
Damansara, District of
Petaling, Selangor Darul
Ehsan).

Land with an area of


158,107 sq. ft. used as
the car park for staff.

Freehold 19.11.1993

Land

2.6

2.6

286

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009 (CONTINUED)

Properties Owned by Perusahaan Otomobil Sdn Bhd (PONSB) (continued)


Location
Description
Tenure

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.

Land with an area of


1,036,728 sq. ft. with
office, factory and
canteen buildings and
sports facilities used for
the Casting Plant. Total
built-up area is 194,579
sq. ft.

Freehold 30.12.1992

14 Years

15 Years

Land
Buildings

20.5
39.8

21.2
36.8

No. H.S. (D) 86554, No.


P.T. 257 encompassing
Lot 54, 60 and 62, Sime
UEP Industrial Park,
Mukim of Damansara,
District of Petaling,
Selangor Darul Ehsan.

Land with an area


Freehold 18.04.1994
of 2,396,727 sq. ft.
adjoining the Companys
northern boundary
housing the semihigh speed test track
and control building.
Total built-up area is
2,102,731 sq. ft.

14 Years

15 Years

Land
Track &
Buildings

54.9
20.3

54.9
13.0

No. H.S. (D) B.P.5653 and


5654 Bil P.T. 16162 and
10163, District of Batang
Padang, Mukim of Ulu
Bernam Timur, Perak
Darul Ridzwan.

Land with an area of


Freehold 03.02.1999
55,440,519 sq. ft. for the
construction of a second
automobile plant,
administrative building
and sports complex
facilities. Total built-up
area is 3,374,577 sq.ft.

5 Years

6 Years

Land
Building

1.0
454.3

1.0
436.1

PROTON 2009 ANNUAL REPORT

287

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009 (CONTINUED)

Properties Owned by Proton Edar Sdn Bhd (PESB)


Location
Description
Tenure

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.

Vehicle Preparation Freehold


Centre and stock
control building with
total built-up area of
101,956 sq. ft.

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.

Land with area of


Freehold
465,185 sq. ft. and
Administration &
Operation Office
and Pre-Delivery &
Inspection Centre
with total built-up
area of 422,943 sq. ft.

01.03.2001

7 Years

8 Years

Land
Building

35.7
127.4

35.7
120.6

No. 2, Lrg. Samarinda


3 storey shop units
Freehold
6A, Off Jalan Kebun, H.S which approximately
(D) 60042, P.T.No. 64566 2,475.7 sq. ft.
Mukim, Klang, Selangor
Darul Ehsan.

10.05.2002

5 Years

6 Years

Building

0.6

0.6

Lot 859, Block 16


Kuching Central Land
District, Stampin 4 1/2
Mile, Penrissen Road,
Kuching, Sarawak.

Land with an area of Freehold


50,570 sq. ft. to be
used for sales outlet
and service centre.

29.04.2002
27.11.2007

6 Years
-

7 Years
1 Year

Land
Building

2.8
-

2.8
6.9

H.S. (D) 351587,


PTD 173042, Mukim
Plentong, Daerah Johor
Bahru, Johor.

Land with an area of Freehold


87,120 sq. ft. to be
used for sales outlet
and service centre.

29.04.2002

6 Years

7 Years

Land
Building

8.4
6.4

8.1
6.1

288

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009 (CONTINUED)

Properties Owned by Proton Edar Sdn Bhd (PESB)(continued)


Location
Description
Tenure

Date of
Age of Age of Net Book Value (RMMil)
Acquisition Building Building
/Revaluation

2008

2009

2008

H.S. (D) 63313, P.T.No.


9671 Mukim of
Ampangan, District
of Seremban, Negeri
Sembilan.

Land with an area


Freehold
of 79,949 sq. ft. used
for sales outlet and
service centre is 7,175
sq. ft.

19.07.2002
29.09.2003

5 Years
3 Years

6 Years
4 Years

Land
Building

3.1
2.7

3.1
2.5

H.S. (D) 318392, PTD


81816, Mukim of Pulai,
District of Johor Bahru.

Land with an area of


57,267 sq. ft. to be
used for sales outlet
and service centre.

Freehold

06.08.2002

5 Years

6 Years

Land

5.1

5.1

H.S. (M) 212, PT 4352,


Mukim Kuah, District of
Langkawi, Kedah.

Land with an area of


51,979 sq. ft. to be
used for sales outlet
and service centre.

Freehold

13.09.2002

5 Years

6 Years

Land

1.4

1.4

H.S. (D) 144330, PT


40019 Mukim of Sungai
Buloh, District of
Petaling, Selangor Darul
Ehsan.

Land with an area of


61,524 sq. ft. to be
used for sales outlet
and service centre.

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

No H.S. (D) 86599, PT


No. 302, TP 5 Road, Sime
UEP Industrial Park,
47600 Subang Jaya,
Selangor Darul Ehsan.

Land with an area


of 123,853 sq. ft. to
be used for
stockyard area.

Freehold

05.12.2005

2 Years

3 Years

Land

5.8

5.8

Freehold

31.07.2007

1 Year

Building

4.7

L&D Tanjung Malim,


Administration &
Proton Edar Sdn Bhd, c/o Operation Office.
Proton Tanjung Malim
Sdn Bhd, Proton City,
35900 Tanjung Malim,
Perak.

PROTON 2009 ANNUAL REPORT

2009

289

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009 (CONTINUED)

Properties Owned by Proton Cars (UK) Ltd (PCUK)


Location
Description
Tenure

Date of
Age of Age of
Acquisition Building Building
/Revaluation

2008

Ref. AV 915, Units


1-3, Crawley Way,
Avonmouth, Bristol
Avon BS11 9YR, England

Freehold 31.03.1994

32 Years

33 Years

Freehold 01.03.2000

9 Years

41 Years

Land with an area of


162,479 sq. ft. with
a parts warehouse
building.

Net Book Value (RMMil)

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

Properties Owned by Group Lotus Plc


Potash Lane, Hethel,
Norwich, Norfolk NR14
8EZ, England.

R&D building rented to


group companies. Total
built-up area is 86,600
sq.ft.

Properties Owned by Lotus Cars Ltd


Land adjacent to
Potash Lane, Hethel,
Norwich, Norfolk
NR 14 8EZ, England
and
Land north of Browic.

290

Two parcels of land


Freehold 26.09.1968
with a total area of
6,286,550 sq. ft. with
the factory, engineering
facilities, offices and test
track of Lotus Group
International Ltd. Total
built-up area is 515,500
sq. ft.

PROPERTIES OWNED BY PROTON GROUP AS AT 31 MARCH 2009 (CONTINUED)

Properties Owned by PT Proton Cikarang Indonesia (PCI)


Location
Description
Tenure

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.

Combined land area


of 136,610 sq. meters
was erected with
factories, office,
canteen, warehouse,
utility and security
facilities.

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

Properties Owned by Lotus Holdings Inc


1254 North Main St, Ann Land with an area of
Freehold 24.02.2000
Arbor, Michigan, USA.
approximately 165,528
sq. ft. with office and
workshop. Total built-up
area is 73,000 sq. ft.

Office:
88 Years

Office:
89 Years

Land
Building

Workshop: Workshop:
42 Years
43 Years

PROTON 2009 ANNUAL REPORT

291

Share Price and Volume Traded

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

Notice of Annual General Meeting


NOTICE IS HEREBY GIVEN that the Sixth (6th) Annual General Meeting
of the Company will be held at the Auditorium, 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
for the following purposes:
1.


2.

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

To re-appoint Messrs PricewaterhouseCoopers as Auditors of the


Company and to authorise the Directors to fix their
remuneration.

Ordinary Resolution 6

To transact any other ordinary business for which due notice has
been given.

Ordinary Resolution 7

By Order of the Board

MOHD NIZAMUDDIN BIN MOKHTAR (LS NO. 006128)


Company Secretary
Subang Jaya, Selangor Darul Ehsan
30 July 2009

To elect the following Directors who retire in accordance with the Companys Articles of Association:-

Ordinary Resolution 1
Ordinary Resolution 2
-

PROTON 2009 ANNUAL REPORT

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

Statement Accompanying the Notice of


Sixth (6th) Annual General Meeting
Pursuant to Paragraph 8.28(2) of the Listing Requirements of Bursa
Malaysia Securities Berhad, appended hereunder are:
DIRECTORS STANDING FOR RE-ELECTION
Directors who are standing for re-election at the Sixth (6th) Annual General Meeting of the Company which
will be held at The Auditorium, 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 pursuant to the
Companys Articles of Association.
Article 104

(i) Tuan Haji Abdul Kadir Bin Md Kassim

(ii) Dato Michael Lim Heen Peok

(iii) Tuan Haji Abdul Jabbar Bin Abdul Majid*

Refer to page 32 of the Annual Report


Refer to page 33 of the Annual Report
Refer to page 31 of the Annual Report

*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

Refer to page 28 of the Annual Report


Refer to page 35 of the Annual Report

PROTON 2009 ANNUAL REPORT

295

This page is intentionally left blank.

PROTON ANNUAL REPORT 2009


Success. Challenges. Responsibility.
PROTON Holdings Berhad (Company No.623177-A)

FORM OF PROXY

No. of Shares Held


CDS Account No. of Authorised Nominee

I/We

(name of shareholder, in capital letters)

NRIC No.

(new)

(old) ID No./Company No.

of

(full address) being a member of PROTON Holdings

Berhad, hereby appoint

(name of proxy as per NRIC, in capital letters)

NRIC No.

(new)

(old) or failing him/her

(name of proxy as per NRIC, in capital letters) NRIC No.

(new)

(old) or failing him/her, the

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
-

(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

Ordinary Resolution 3
Ordinary Resolution 4

(ii) Encik Oh Kim Sun


3. To approve the Directors fees for the year ended 31 March 2009.

Ordinary Resolution 5

4. To re-appoint Messrs PricewaterhouseCoopers as Auditors of the


Company and to authorise the Directors to fix their remuneration.

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.

For appointment of more than one proxy, state number of shares


and percentage of shareholdings to be represented by the proxies:No. of Shares
Percentage
Proxy 1

Proxy 2

Signature/Common Seal of Appointer


P.T.O

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

59200 Kuala Lumpur

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