with pride, passion and unrelenting progress · 23 September 7th Annual General Meeting 30 September Entitlement date for the First and Final Dividend of 20 sen (less 25% tax) declared

PRO

TON

Holdings B

erhad (623177-A)annual report 2011

PROTON Centre of ExcellenceKM33.8 Westbound Shah Alam Expressway47600 Subang Jaya Selangor Darul Ehsan

Tel: +603 8026 9741 Fax: +603 8026 9744

www.proton.com

ww

w.proton.com

PROTON Holdings Berhad (623177-A)

Annual Report 2011

PR

OTO

N H

oldings Berhad (6

23

17

7-A

)A

nnual Report 2

01

1


Tel: +603 8026 9741 Fax: +603 8026 9744

www.proton.com

ww

w.proton.com

Unlocking our Potential

...with pride, passion and unrelenting progress

PRO

TON

Holdings B

erhad (623177-A)annual report 2011


Tel: +603 8026 9741 Fax: +603 8026 9744

www.proton.com

ww

w.proton.com

PROTON Holdings Berhad (623177-A)

Annual Report 2011

PR

OTO

N H

oldings Berhad (6

23

17

7-A

)A

nnual Report 2

01

1


Tel: +603 8026 9741 Fax: +603 8026 9744

www.proton.com

ww

w.proton.com

Unlocking our Potential

...with pride, passion and unrelenting progress

The Proton Saga EV is a full battery operated electric vehicle designed towards zero CO2 tailpipe emission. The vehicle is driven by two compact and highly efficient permanent magnet AC synchronous motors. With maximum power capacity of 52kw, it can deliver almost 197Nm of torque.

We move ahead with pride, passion and progress by delving deeper to achieve

Breakthroughs in Tech nology and Innovation.

The heart of the vehicle is monitored by the intelligent electronic traction master that communicates with other electronic control units.

The vehicle’s energy comes from the 16kwh lithium-ion battery cells designed using German technology. When fully charged, the battery enables the vehicle to travel a distance of up to 120km, making it ideal for city driving.

We move ahead with pride, passion and progress by delving deeper to achieve

Breakthroughs in Tech nology and Innovation.

ConTenTs

2 Corporate Mantra & Core Values

4 PROTON’s Policies

8 Financial Calendar

9 Key Financial Indicators

10 Summary of Financial Highlights

14 Corporate Profile

17 Awards

18 Corporate Information

20 Group Operations

24 Board of Directors

26 Profile of Directors

36 PROTON Group Management Committee Members

40 Heads of International Subsidiaries

44 Chairman’s Statement

50 Group Managing Director’s Review

56 Operations Review

118 Statement on Corporate Governance

133 Additional Compliance Information

135 Statement on Internal Control

138 Risk Management

142 Calendar of Events

156 Statutory Financial Statements

274 Shareholding Statistics

277 Properties Owned by PROTON Group

281 Share Price and Volume Traded

282 Notice of 8th Annual General Meeting

285 Statement Accompanying the Notice of 8th Annual General Meeting

286 Explanatory Notes on the Proposed Amendmentsto the Company’s Articles of Association

Form of Proxy

> The Auditorium, Level 1PROTON Centre of Excellence

KM 33.8, Westbound Shah Alam Expressway 47600 Subang Jaya

Selangor Darul Ehsan, Malaysia

> Thursday, 15 September 2011 at 10.00 a.m.

th Annual General Meeting of PRoTon will be held at:

The

8

PROTON 2011 Annual Report

CoRPoRATe MAnTRA & CoRe VALUes

2 PRoTon 2011 ANNUAL REPORT

Core IdeologyAudacious GoalDriving Malaysia’s transformation into a leader in technology and quality.

Vivid DescriptionWe deliver innovative and superior quality products and services. Our brands inspire confidence and pride.

PurposeWe are a passionate group of people working together, creating exhilarating products and services for global markets, synonymous with great styling, innovation and leading technology.

Core ValuesQualityWe make products that work the first time, every time.

Customer FocusCustomers are the source of our income. We deliver on our promises to our customers’ satisfaction.

InnovationWe challenge convention, always seeking new and better ways of doing things. We view change as opportunity.

TeamworkWe trust, respect and share knowledge to foster teamwork at the workplace.

speedWe have a “can-do” attitude and will not rest until the problem is solved. We have an inherent sense of urgency in everything we do.

CaringAs a responsible corporate citizen, we invest in safety, health and the environment.

HonestyWe nurture ethically-minded organisations through personal discipline, values, self-control and policies that reinforce ethical behavior.

THE PRoTon WAYPROTON EMPLOYEES ARE DEDICATED TO THE GROUP’S

LONG-TERM SUCCESS. EVERY PROTON EMPLOYEE

SHALL OPERATE UNDER THE GROUP’S SHARED

VALUES AND RELY ON THESE VALUES TO GUIDE THEIR

BEHAVIOUR WITH EACH OTHER AND THE CUSTOMERS.

THESE VALUES FORM THE FOUNDATION OF HOW WE

WORK AND CONDUCT BUSINESS.

PRoTon 2011 ANNUAL REPORT 3

PRoTon’s PoLICIes

THE COMPANY’S MISSION IS TO

STRIVE TOWARDS EXCELLENCE

IN ALL ASPECTS OF PROTON’S

OPERATIONS. IN ACHIEVING

OUR GOAL, IT IS NECESSARY TO

PROMOTE AND PROTECT THE

HEALTH AND SAFETY OF PROTON

EMPLOYEES AND ENSURE THAT

THE ENVIRONMENT IS UNHARMED.

The Group is committed to providing a conducive, safe and healthy working environment for our employees and to ensure this, it is our policy to:-

• Take responsibility for the safety and health of our employees;

• Provide the appropriate resources;

• Take all action necessary to remedy any noncompliance;

• Monitor and maintain high standards in environmental protection as well as health and safety measures.

In implementing the Company’s policy, we shall, where reasonably practicable:

• Comply with all rules and regulations concerning the environment, health and safety;

• Provide all the necessary facilities and equipment for the employees;

• Actively promote programmes for the employees to instill awareness for the safety and health of the employees, our business associates and the public;

• Provide adequate information and assistance to our employees and our neighbours to avoid unacceptable effects on the environment.


To assist the Company in achieving our goals, we shall work together and towards this end, employees shall:

• Abidebyallrulesandregulationsconcerningtheworkplace;

• Utilise all the facilities provided by themanagement in a safe and proper manner;

• Maintaingoodworkpractices;

• Actively participate in all the Environmental,Health and Safety (EHS) programmes.

This is our objective and it is our intention to put this EHS Policy into action and to make it our way of life.

Quality PolicyTO ACHIEVE OUR COMMITMENT TO QUALITY, PROTON WILL:

• EnsurequalityastheNumberOneworkethicsinall operations;

• EstablishaneffectiveandefficientQualitySystembased on the requirements of ISO 9001:2008 standards;

• Provide adequate skills and knowledge to alllevels of personnel through systematic and structured training programmes;

• Provideacultureandenvironmentofcontinuouslearning, improvement and innovation towards total quality excellence;

• Provide a conducive, safe and healthy workingenvironment in which people like to work and prosper.


PROTON was established in 1983 as part of an ambitious national industrialisation plan. The national car company drove automobile ownership among Malaysians and pioneered Malaysia’s capabilities in automobile engineering, research, development and manufacturing, and is today a symbol of national PRIDE.

201023 August 1st Quarter

Financial results for the period ended 30 June 2010

30 August Notice of 7th Annual General Meeting

23 September 7th Annual General Meeting

30 September Entitlement date for the First and Final Dividend of 20 sen (less 25% tax) declared for the Financial Year ended 31 March 2010

22 October Payment of the First and Final Dividend of 20 sen (less tax)

25 November 2nd QuarterFinancial results for the period ended 30 September 2010

201125 February 3rd Quarter

Financial results for the period ended 31 December 2010

25 May 4th QuarterFinancial results for the period ended 31 March 2011

26 July Audited accounts for the Financial Year ended 31 March 2011

26 July Declaration of First & Final Dividend of 10 sen per ordinary share of RM1.00 each (less 25% tax) for the Financial Year ended 31 March 2011

24 August Notice of 8th Annual General Meeting

15 september 8th Annual General Meeting

23 September Entitlement Date for the First and Final Dividend of 10 sen (less 25% income tax)

20 October Payment Date for the First and Final Dividend of 10 sen (less 25% income tax)

FInAnCIAL CALenDAR


KeY FInAnCIAL InDICAToRs

07

08

09

10

11

07

08

09

10

11

(107.3)

33.6

(54.9)

39.9

28.3

9.5

9.9

9.3

9.7

9.8

07

08

09

10

11

07

08

09

10

11

27.5

–

20.6

–

82.4

4,291.7

4,476.2

4,153.9

4,372.8

4,444.0

Basic earnings/(loss) Per share (sen) net Assets Per share (RM)

07

08

09

10

11

07

08

09

10

11

(107.3)

33.6

(54.9)

39.9

28.3

9.5

9.9

9.3

9.7

9.8

07

08

09

10

11

07

08

09

10

11

27.5

–

20.6

–

82.4

4,291.7

4,476.2

4,153.9

4,372.8

4,444.0

Retained earnings Carried Forward (RM’ million) Dividend Paid (RM’ million)


Statements of Financial Position as at 31 March

RM’ Million 2011 2010 2009 2008 2007

non-CURRenT AsseTs

Property, plant and equipment 2,529.9 2,624.4 2,827.1 3,174.5 3,179.4

Goodwill 29.0 29.0 29.0 29.0 29.0

Intangible assets 877.4 564.0 431.7 275.2 169.1

Associated companies 151.3 152.6 158.4 165.4 169.8

Jointly controlled entities 215.5 202.6 195.6 192.7 223.6

Investments – – 10.4 10.4 10.4

Deferred tax assets 16.7 15.0 5.7 – –

TOTAL NON-CURRENT ASSETS 3,819.8 3,587.6 3,657.9 3,847.2 3,781.3

CURRenT AsseTs

Inventories 1,207.1 1,227.2 1,395.1 1,100.3 1,273.6

Receivables 1,329.5 991.6 1,080.3 1,099.0 1,192.0

Available-for-sale financial assets 4.5 – – – –

Current investments – 9.7 15.3 20.8 73.4

Deposits, bank and cash balances 1,293.0 1,652.1 913.9 1,226.0 626.5

TOTAL CURRENT ASSETS 3,834.1 3,880.6 3,404.6 3,446.1 3,165.5

Non-current assets held for sale – 36.9 36.4 – –

ToTAL AsseTs 7,653.9 7,505.1 7,098.9 7,293.3 6,946.8

sUMMARY oF FInAnCIAL HIGHLIGHTs


RM’ Million 2011 2010 2009 2008 2007

eQUITY

Share capital 549.2 549.2 549.2 549.2 549.2

Other reserves 413.5 411.0 398.5 395.8 389.7

Retained profits 4,444.0 4,372.8 4,153.9 4,476.2 4,291.7

Equity attributable to equity holders of the Company 5,406.7 5,333.0 5,101.6 5,421.2 5,230.6

Minority interest – – – – –

TOTAL EQUITY 5,406.7 5,333.0 5,101.6 5,421.2 5,230.6

non-CURRenT LIABILITIes

Long term liabilities 28.2 59.1 49.3 99.7 105.4

Long term borrowings 9.8 29.6 52.2 130.8 76.2

Deferred tax liabilities 8.2 10.7 12.2 2.4 0.8

TOTAL NON-CURRENT LIABILITIES 46.2 99.4 113.7 232.9 182.4

CURRenT LIABILITIes

Payables 1,826.6 1,918.4 1,571.3 1,524.0 1,367.2

Short term borrowings 361.5 142.2 306.0 113.6 164.4

Taxation 12.9 12.1 6.3 1.6 2.2

TOTAL CURRENT LIABILITIES 2,201.0 2,072.7 1,883.6 1,639.2 1,533.8

TOTAL LIABILITIES 2,247.2 2,172.1 1,997.3 1,872.1 1,716.2

ToTAL eQUITY AnD LIABILITIes 7,653.9 7,505.1 7,098.9 7,293.3 6,946.8


Statements of Comprehensive Income for the financial year ended 31 March

RM’ Million 2011 2010 2009 2008 2007

Revenue 8,969.9 8,226.9 6,486.6 5,621.6 4,687.3

Profit/(Loss) before taxation 214.4 260.9 (319.2) 144.3 (618.1)

Profit/(Loss) after taxation 155.6 218.9 (301.8) 184.6 (589.5)

Retained earnings attributable to shareholders 4,526.4 4,372.8 4,174.5 4,476.2 4,319.2

Dividend paid (82.4) – (20.6) – (27.5)

Retained earnings carried forward 4,444.0 4,372.8 4,153.9 4,476.2 4,291.7

share Information Per share

Basic earnings/(loss) (sen) 28.3 39.9 (54.9) 33.6 (107.3)

Dividend paid (sen) 20.0 – 5.0 – 5.0

Net assets (RM) 9.8 9.7 9.3 9.9 9.5

Issued share capital (‘000) 549,213 549,213 549,213 549,213 549,213

sUMMARY oF FInAnCIAL HIGHLIGHTs (ConT’D)



CoRPoRATe PRoFILe

INCORPORATED ON 7 MAY 1983, PROTON PIONEERED MALAYSIA’S

VENTURE INTO THE HEAVY INDUSTRIES AND ITS MAIN OBJECTIVES ARE:• To spearhead the automotive industrialisation process and manufacturing industries;

• To acquire/upgrade technology and industrial skills within the automotive manufacturing industry; and

• To strengthen the international competitiveness of Malaysia’s industrial capability

With substantial capital investment over the last quarter of a century and the corporate philosophy that success can be achieved by having ‘the right car for the right market, at the right price and at the right time’, PROTON commands a substantial share of the domestic market for passenger cars and through the years, has expanded its international footprint.

PROTON’s business activities span throughout the whole automotive value chain encompassing vehicle engineering, research and development, manufacturing, distribution, sales, after-sales services as well as financing.

The foundation of the Group’s growth is due to the understanding of the economic development stimulus, diverse customer needs and the ability to translate them into products that customers want, through research and development.

The current portfolio of PROTON models includes the Saga, which was named Best Model of the Year for two consecutive years 2009 and 2010; the Persona, winner of the 2008 ASEAN Automotive Award for Best Model of the Year; the stylish Gen.2; the fun-to drive Savvy; the desirably sporty Satria Neo; Malaysia’s first home-grown multipurpose vehicle (MPV), the Exora; as well as the Inspira.


Also in the Group’s portfolio, is the world-renowned Lotus sportscar brand, with models such as Elise, Exige, Europa and the Evora, the latest supercar that remains true to Lotus’ heritage and core philosophies of being Visually Stunning, Exhilarating, Agile and Responsive, to suit a range of customer demands and preferences.

With the Group’s spirit of achievement, the industry has recognised the Company’s efforts and bestowed these awards on PROTON in 2010/2011:

• Frost&SullivanMalaysiaExcellenceAwards2010 – Best Passenger Car Model of the Year for Proton Saga

• Frost&SullivanMalaysiaExcellenceAwards2010 – Best Automotive Debut Model of the Year for Exora

• CIMBAutoworldCaroftheYearAwards2010 – Best MPV - Overall Value-for-Money for Exora

• Labour Day Achievement Award for the category Competitive Employer Award (Big Corporations) in conjunction with 2010 Workers’ Day Celebrations

• MITIIndustryExcellenceAwardforthecategoryQualityManagementExcellenceAward

• Reader’sDigestTrustedBrand2011GoldAwardforCarCategory

• Frost&SullivanMalaysiaExcellenceAwards2011 – Value-for-Money Car of the Year (1.3L and above) for the Proton Persona

• IndonesianOtomotifAwards – “Best Budget MPV in Indonesia” for the Exora

• AsianAuto–AutoIndustryAwards2011 – “Best People’s Car” for the Saga FL – “Best Value-for-Money Family Car” for the Inspira


As a global automotive challenger, the Group conducts research in its centres throughout the world, on new technologies to create cars that are unique in both design and driving performance. Through Lotus, the Group provides comprehensive and versatile consultancy services to many of the world’s OEMs and Tier 1 suppliers. Today, Group Lotus is organised into two business divisions. Lotus Cars focuses on sales of world-class, prestigious, high-performance sports cars, whilst Lotus Engineering provides engineering solutions for automotive manufacturers and suppliers.

To boost the quality of its products, PROTON performs a continuous Company-wide quality improvement programme and quality-conscious work culture that assures:

• Quality in everything (products and individuals);

• Quality in the way things are done (doing it right the first time);

• Quality in spending, including reducingmaterials costs;

• High-quality products (end products must be of the right technology and designed to meet market expectations); and

• Quality services to customers, including after-sales support.

With staff strength close to 12,000 employees worldwide, we ensure that each individual is aligned to our core values, thereby ensuring strong customer orientation in order to produce competitive products that drive our business forward.

CoRPoRATe PRoFILe (ConT’D)


AWARDs

1. Proton Exora Best MPV – Overall Value-for-Money CIMB Autoworld Car of the Year Awards 2010

2. Proton Inspira Best Value-for-Money Family Car Asian Auto – Auto Industry Awards 2011

3. Quality Management Excellence Award MITI Industry Excellence Award

4. Proton Saga Best People’s Car Asian Auto – Auto Industry Awards 2011

5. Gold Award for Car Category Reader’s Digest Trusted Brand 2011

6. Proton Persona Value-for-Money Car of the Year (1.3L and above) Frost & Sullivan Malaysia Excellence Awards 2011

7. Masterclass Bumiputra CEO of the Year, Malaysia Business Leadership Awards

1

5 76

2 3 4


CoRPoRATe InFoRMATIon

Board Audit Committee

Encik Abdul Rahim Bin Abdul Hamid – Chairman

Dato’ Michael Lim Heen Peok

Tan Sri Rainer Althoff

Datuk Johar Bin Che Mat

Datuk Zalekha Binti Hassan(Resigned w.e.f. 15 October 2010)

Behara Venkata Rama Subbu(Resigned w.e.f. 20 July 2010)

Oh Kim Sun (Resigned as Chairman and Member w.e.f. 27 May 2010)

Abdul Kadir Bin Md. Kassim(Resigned w.e.f. 27 May 2010)

Board nomination & Remuneration Committee

Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman

Ahmad Tajuddin Bin Abdul Carrim


Datuk Nozirah Binti Bahari

Datuk Zalekha Binti Hassan(Resigned w.e.f. 6 July 2011)

Md. Ali Bin Md. Dewal(Resigned w.e.f. 27 May 2010)

BoARD oF DIReCToRs

Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – ChairmanAppointed on 1 January 2009

Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed TahirAppointed on 1 January 2006

Dato’ Michael Lim Heen PeokAppointed on 15 September 2006

Behara Venkata Rama SubbuAppointed on 1 March 2010

Tan Sri Rainer AlthoffAppointed on 22 June 2010

Abdul Rahim Bin Abdul HamidAppointed on 20 July 2010

Datuk Johar Bin Che MatAppointed on 15 October 2010

Datuk Nozirah Binti BahariAppointed on 6 July 2011

Datuk Zalekha Binti HassanAppointed on 11 February 2008 (Resigned w.e.f. 6 July 2011)

Haji Abdul Kadir Bin Md KassimAppointed on 10 March 2005 (Resigned w.e.f. 27 May 2010)

Oh Kim SunAppointed on 13 May 2009 (Resigned w.e.f. 27 May 2010)


Board Risk Management Committee

Abdul Rahim Bin Abdul Hamid – Chairman


Tan Sri Rainer Althoff


Tan Kim Leong(Resigned w.e.f. 1 August 2010)

Dato’ Zainuddin Che Din(Resigned w.e.f. 1 August 2010)

Abdul Kadir Md. Kassim(Resigned w.e.f. 27 May 2010)

Board Disciplinary Committee

Dato’ Sri Mohd Nadzmi Bin Mohd Salleh – Chairman

Ahmad Tajuddin Bin Abdul Carrim


Tuan Haji Yusoff Ahmad


Datuk Zalekha Binti Hassan(Resigned w.e.f. 6 July 2011)

Tuan Haji Abdul Kadir Bin Md. Kassim(Resigned w.e.f. 27 May 2010)

Md. Ali Bin Md. Dewal(Resigned w.e.f. 27 May 2010)

Auditors

PricewaterhouseCoopers(Chartered Accountants)Level 10, 1 Sentral, Jalan TraversKuala Kumpur SentralPO Box 1019250706 Kuala Lumpur, MalaysiaTel : 03-2173 1188Fax : 03-2173 1288

Registered office

PRoTon Centre of excellenceKM 33.8, Westbound Shah Alam Expressway47600 Subang Jaya Selangor Darul EhsanTel : 03-8026 9741Fax : 03-8026 9744

Registrar

Tricor Investor services sdn. Bhd. Level 17, The Gardens, North TowerMidvalley City, Lingkaran Syed Putra59200 Kuala LumpurTel : 03-2264 3883Fax : 03-2282 1886

stock exchange Listing

Main Market of Bursa Malaysia Securities Berhad

Company secretary

Suhla Binti Al Asri (MAICSA 7025570)

Investor Relations

Izwan Bin ZainuddinTel : 03-8026 9094

Zulazlan Bin Zainal AbidinTel : 03-8026 9041


GRoUP oPeRATIons

MAnUFACTURInG

100% Perusahaan Otomobil Nasional Sdn. Bhd.

100% Proton Tanjung Malim Sdn. Bhd.

100% PT Proton Cikarang Motors (Indonesia)

100% Proton Automobiles (China) Ltd. (BVI)

100% Lotus Cars Limited (UK)

100% Lotus Lightweight Structures Holdings Limited (UK)

100% Lotus Lightweight Structures Limited (UK)

51% Miyazu (Malaysia) Sdn. Bhd.

49% Goldstar Proton Automobiles Co. Ltd. (China)

PRoTon Holdings Berhad

enGIneeRInG seRVICes

100% Lotus Advance Technologies Sdn. Bhd.

100% Proton Engineering Research Technology Sdn. Bhd.

100% Lotus Group International Limited (UK)

100% Group Lotus plc (UK)

100% Lotus Engineering Limited (UK)

100% Lotus Engineering (Shanghai) Co. Ltd. (China)

100% Lotus Engineering Malaysia Sdn. Bhd.

100% Lotus Body Engineering Limited (UK)

100% Lotus Motorsport Limited (UK)

100% Lotus Holdings Inc. (USA)

100% Lotus Engineering Inc. (USA)


sALes & DIsTRIBUTIon

100% Proton Marketing Sdn. Bhd.

100% Proton Edar Sdn. Bhd.

100% Proton Cars (UK) Limited

100% Proton Cars Australia Pty. Ltd.

100% Proton Motors (Thailand) Co. Ltd.

100% Proton Singapore Pte. Ltd.

100% PT Proton Edar Indonesia

100% Lotus Cars Australia Pty. Ltd.

100% Lotus Cars USA Inc.

55% Proton Parts Centre Sdn. Bhd.

oTHeRs

Yayasan Proton

Lotus Pension Trustees Limited (UK)

Lotus Cars Foundation (UK)

InVesTee & AssoCIATe CoMPAnIes

45% Exedy (Malaysia) Sdn. Bhd.

40% Netstar Advanced Systems Sdn. Bhd.

35% PHN Industry Sdn. Bhd.

25% Marutech Elastomer Industries Sdn. Bhd.

25% Vina Star Motors Corporation (Vietnam)

16% Aluminium Alloy Industries Sdn. Bhd.

6.7% Ara Borgstena Sdn. Bhd.

PRoPeRTY

100% Proton Hartanah Sdn. Bhd.

100% Proton Properties Sdn. Bhd.

40% Proton City Development Corporation Sdn. Bhd.

FInAnCIAL seRVICes

50% Proton Commerce Sdn. Bhd.

49.9% Lotus Finance Limited (UK)

49.9% Proton Finance Limited (UK)


Through the years the PROTON Group has collectively realised over 24 various models, and received numerous awards and recognition. From processes, to brands, to the excellence of our cars, every achievement is a testament of our relentless PROGRESS towards excellence.

Board of Directors


Behara Venkata Rama Subbu

Tan Sri Rainer Althoff Abdul Rahim Bin Abdul Hamid



Dato’ sri Haji syed Zainal Abidin B syed Mohamed Tahir (Group Managing Director)


Dato’ sri Mohd nadzmi Bin Mohd salleh (Chairman)


DATo’ sRI MoHD nADZMI BIn MoHD sALLeH

Chairman Aged 57, Malaysian

Dato’ Sri Mohd Nadzmi Mohd Salleh was appointed Chairman of PROTON on 1 January 2009 and is also the Chairman of the Boards of various subsidiaries within the PROTON Group of Companies.

Dato’ Sri Mohd Nadzmi obtained his M.A. in Economics & Statistics from the Miami University, USA in 1980; in Chemistry & Mathematics in 1978; and B.A. in Economics in 1978 from the Ohio University respectively.

Dato’ Sri Mohd Nadzmi’s colourful career also includes serving as the Managing Director of PROTON (1993-1996); Deputy Managing Director of PROTON (1992-1993); Executive Director & CEO of Edaran Otomobil Nasional Berhad (1990-1992), General Manager Marketing Division of EON Berhad (1986-1990); Manager of Marketing Services Department, EON Berhad (1984-1986); Assistant Manager of the Project Division, Heavy Industries Corporation (M) Berhad (1982-1984); Marketing Executive of the International Marketing Division, PETRONAS (1981-1982); and Lecturer, Faculty of Economic Resource & Agribusiness, UPM (1980-1981).

He has also been awarded with numerous professional honours and awards including “Lifetime Achievement Award 2011” from the Kuala Lumpur Malay Chamber of Commerce, “Anugerah Usahawan Cemerlang” from Bank Pembangunan & Infrastruktur Malaysia Berhad (2005), “2004 Malaysian Entrepreneur of the Year and 2004 Master Entrepreneur of the Year” by Ernst & Young Entrepreneur of The Year Malaysia; “Achiever of The Year 2003” by The Chartered Institute of Logistics & Transport in Malaysia, “The Outstanding Young Malaysian” in the Category of Business & Economics Innovation from the Junior Chamber of Malaysia in 1993 and “Man of The Year” by the Malaysian Business Magazine in 1986 for his key role in the Malaysian National Car Project Team.

In 1994, Dato’ Sri Mohd Nadzmi was elected into the prestigious and exclusive membership of “Global Leaders for Tomorrow” by The World Economic Forum at Davos, Switzerland.

His professional affiliations include being Member of the National Economic Action Council; President of the Badminton Association of Malaysia; Board Member of the Malaysia Institute of Road Safety; Advisory Board Member of University of Malaya; Adjunct Professor of LimKokWing University of Creative Technology, to name a few.

Dato’ Sri Mohd Nadzmi has attended all Board meetings held in the Financial Year ended 31 March 2011. Dato’ Sri Mohd Nadzmi has no conflict of interest with the Company and does not have any family relationships with any other Director and/or Major Shareholder of the Company. Dato’ Sri Mohd Nadzmi has never been convicted for any offence within the past ten (10) years.



PRoFILe oF DIReCToRs

DATo’ sRI HAJI sYeD ZAInAL ABIDIn B sYeD MoHAMeD TAHIR

Group Managing Director Aged 49, Malaysian

Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir was appointed PROTON’s Group Managing Director on 1 January 2006. Dato’ Sri Haji Syed Zainal also sits on the Boards of various subsidiaries within the PROTON Group of companies.

After graduating with a Bachelor of Science in Engineering from the University of Maryland, USA, Dato’ Sri Haji Syed Zainal Abidin began his career as a Project Engineer with Petronas Gas Sdn Bhd in 1987. Thereafter he joined Petroliam Nasional Berhad in 1992 as the Senior Executive of Corporate Planning & International Business Development. Dato’ Sri Syed Zainal then left to join HICOM Holdings Berhad in 1995, where he assumed various senior positions in the company.

In 1999, Dato’ Sri Haji Syed Zainal Abidin was appointed Senior General Manager of PERODUA. In 2002 he was appointed Executive Director of PERODUA Auto Corporation Sdn Bhd and subsequently promoted to Deputy Managing Director in October 2005.

In April 2010, Dato’ Sri Haji Syed Zainal Abidin was named “International Business Leader in the Automotive Sector” at the Middle-East Business Leadership Summit Awards in Dubai for his strong leadership qualities in steering PROTON to becoming a leading regional and global brand with an increasing presence in the Middle East. Shortly after in May 2010, Dato’ Sri Syed Zainal Abidin received the “Masterclass Bumiputra CEO of the Year” award at the 2nd Malaysia Business Leadership Awards in recognition of his outstanding contribution to the development of a pool of entrepreneurs, engineers and skilled workers in Malaysia.

More recently, in July 2011, Dato’ Sri Haji Syed Zainal Abidin clinched the prestigious “Global Leadership Award in Automotive Sector” at the Global Leadership Awards 2011. The award was granted to Dato’ Sri Haji Syed Zainal Abidin by Leaders International, a high profile business magazine as a token of his relentless efforts to ready PROTON for a new regional and global chapter, from both a product and strategic perspective.

Dato’ Sri Haji Syed Zainal Abidin has attended all Board of Directors’ Meetings held during the Financial Year. He has no conflict of interest with the Company and does not have any family relationships with any other Director and/or Major Shareholder of the Company. Dato’ Sri Haji Syed Zainal Abidin has never been convicted for any offence within the past ten (10) years.



BeHARA VenKATA RAMA sUBBU

Independent Non-Executive Director Aged 57, Indian National

Mr. B.V.R. Subbu who was appointed a Director of PROTON on 1 March 2010, is also a Director of PROTON’s wholly owned subsidiaries, Lotus Group International Limited and Group Lotus plc.

Mr. Subbu holds a Masters in Economics from the Jawaharlal Nehru University, New Delhi, India. He began his career with the Tata Administrative Service and was deputed to Tata Motors where he held a variety of senior line and staff responsibilities in the areas of CV Marketing, Sales, Service, Spare Parts and Sales Finance between 1978 and 1996.

In 1997, Mr. Subbu moved to Hyundai Motor, India as Director of Marketing & Sales and thereafter promoted to President in 2002, a position he held until 2006.

Mr. Subbu is the Founder Director of NMC Automotive Infrastructure Pvt. Ltd. an investment company with interests in the entire automotive value chain from diesel engine manufacture to CV distribution in India. Mr. Subbu serves on the Boards of technology focused Indian companies including Larsen & Toubro’s MIPC subsidiary.

Having been previously awarded with the CNBC Commendation for Five years of Business Leadership for Displaying Extraordinary Corporate Leadership and Entrepreneurial Spirit, Mr Subbu was also named among “India’s 100 most powerful CEOs” by the Economic Times in 2005.

Mr. Subbu has attended all but one of the 14 Board meetings held during the Financial Year Ended 31 March 2011. He has no conflict of interest with the Company and has no family relationships with any other Director and/or Major Shareholder of the Company. Mr. Subbu has not been convicted of any offence for the past ten (10) years.

DATo’ MICHAeL LIM Heen PeoK

Independent Non-Executive Director Aged 63, Malaysian

Dato’ Michael Lim has been a Director of PROTON since 15 September 2006 and is also a Member of PROTON’s Board Audit Committee, Board Disciplinary Committee and Board Nomination & Remuneration Committee. Dato’ Michael also sits on the Boards of various subsidiaries within the PROTON Group of companies.

Dato’ Michael began his career with the UMW Group in 1975 and held various senior managerial positions after graduating with an Honours Degree in Engineering from the University of Strathclyde, in the United Kingdom.

In 1986 Dato’ Michael was appointed Managing Director/Chief Executive Officer of UMW Toyota Motor Sdn. Bhd., a joint venture company between UMW and Toyota Motor Corporation of Japan. Dato’ Michael retired in 2004.

Dato’ Michael is currently the Chairman of Furniweb Industrial Products Bhd., and lends his expertise to the export oriented manufacturing company with plants in Malaysia, Vietnam and Thailand.

Dato’ Michael has attended 12 out of the 14 Board of Directors’ Meetings held during the Financial Year Ended 31 March 2011. He has no conflict of interest with the Company and has no family relationships with any other Director and/or Major Shareholder of the Company. He has never been convicted for any offence within the past ten (10) years.

PRoFILe oF DIReCToRs (ConT’D)



TAn sRI RAIneR ALTHoFF

Independent Non-Executive DirectorAged 65, German National

Tan Sri Rainer Althoff was appointed as Director of PROTON on 22 June 2010, as well as Member of the Company’s Board Audit Committee and Risk Management Committee.

Tan Sri Rainer holds a Masters Degree in Electronics and Electrical Engineering from Bergische University Wuppertal, Germany since 1969 and has spent a majority of his working life with Siemens AG. Since 1999 Tan Sri Rainer was the President and Chief Executive Officer of Siemens Malaysia Sdn Bhd and also the Siemens spokesperson for all Siemens operations and affiliated companies in Malaysia from 1 January 1999 until 30 November 2009.

Tan Sri Rainer is the non executive Chairman of Nokia Siemens Networks Sdn. Bhd. Malaysia, since his appointment in December 2009. He is also a Member of the International Advisory Panel to the board of directors of CIMB Bank, Trustee of Jeffrey Chia Foundation Malaysia and Managing Director of Jatro Pte. Ltd., Singapore.

Tan Sri Rainer has attended all Board meetings held since the date of his appointment to the Board. He has no conflict of interest with the Company and has no family relationships with any other Director and/or Major Shareholder of the Company. Tan Sri Rainer has never been convicted for any offence within the past ten (10 ) years.

ABDUL RAHIM BIn ABDUL HAMID

Independent Non-Executive DirectorAged 61, Malaysian

Encik Abdul Rahim Bin Abdul Hamid was appointed Independent Non Executive Director of PROTON and Chairman of PROTON’s Board Audit Committee on 20 July 2010.

Encik Abdul Rahim who is a Qualified Certified Accountant began his career in Coopers & Lybrand in 1971 and became the Managing Partner/Chief Executive of the firm in 1993. In 1998, he assumed the position of Deputy Executive Chairman of PricewaterhouseCoopers until his retirement in 2004.

Encik Abdul Rahim is currently the Vice President of the Malaysian Institute of Accountants as well as the President of the ASEAN Federation of Accountants.

Encik Abdul Rahim is a director of MIDF Amanah Asset Management Berhad and Petra Energy Berhad. He represents the Ministry of Finance on the boards of MIMOS Berhad and Malaysian Debt Ventures Berhad.

Encik Abdul Rahim has attended all Board meetings held during the Financial Year Ended 31 March 2011 since his appointment. He has no conflict of interest with the Company and neither does he have any family relationships with any other Director and/or Major Shareholder of the Company. Encik Rahim has never been convicted for any offence within the past ten (10) years.




DATUK JoHAR BIn CHe MAT

Independent Non-Executive DirectorAge 59, Malaysian

Datuk Johar Bin Che Mat was appointed Director of PROTON on 15 October 2010 and also a Member of PROTON’s Board Audit Committee. Datuk Johar is also a Director of various subsidiaries within the PROTON Group

Datuk Johar obtained his Bachelor of Economics Degree from the University of Malaya in 1975 and began his career with Maybank in the same year.

During the course of his employment with Maybank, Datuk Johar held various posts including Head, Malaysian Business, Corporate Banking Division (1993); Regional Manager of Selangor/Negeri Sembilan (1993 – 1995); General Manager, Commercial Banking Division (1996); Head, Enterprise Banking Division (2002); and his next appointment was as the Head, Retail Financial Services.

Datuk Johar was appointed as Chief Operations Officer of Maybank Group in 2006 and held the position until his retirement in June 2010. He has 34 years of vast experience in the banking industry and was a Board Member of AseamBankers, Aseamlease Berhad, ASEAM Credit Sdn. Bhd., Mayban Trustee Berhad, Maybank Islamic Berhad, Mayban Life Assurance Berhad, Maybank Takaful Berhad, Myfin Berhad (Mayban Finance Bhd), and Mayban Allied Credit & Leasing Bhd.

Datuk Johar is currently a director of AGRO Bank and Amanah Raya Bhd.

Datuk Johar has attended all Board meetings held in the Financial Year Ended 31 March 2011 since his appointment to the Board on 15 October 2010. Datuk Johar has no conflict of interest with the Company and does not have any family relationships with any other Director and/or Major Shareholder of the Company. Datuk Johar has never been convicted for any offence within the past ten (10) years.

DATUK noZIRAH BInTI BAHARI

Non-Independent Non-Executive Director Age 55, Malaysian

Datuk Nozirah Binti Bahari was appointed Director of PROTON on 6 July 2011. Datuk Nozirah sits on the Board Nomination and Remuneration Committee as well the Board Disciplinary Committee. Datuk Nozirah is also a member of the Board of Governors of Yayasan PROTON.

Datuk Nozirah is currently the Deputy Secretary General (Management) in the Ministry of Finance. Prior to this she was the Director of the Budget Management Division in the Ministry of Finance.

Datuk Nozirah obtained her Bachelor’s Degree in Social Science (Urban Studies) from the University of Science Malaysia. Datuk Nozirah has also attended several Senior Management Courses such as Global Leadership Development Programme organised by the International Centre for Leadership in Finance and Advanced Management Training in Harvard Business School. She started off her career in the Ministry of Finance (Finance Division) holding the portfolio of Assistant Secretary. Over the years Datuk Nozirah has served in various other Ministries including the Ministry of Health, Ministry of Agriculture as well as Director of MAMPU Sabah and Deputy Finance Officer of Treasury Sabah.

Datuk Nozirah is currently a Board Member of Bank Simpanan Nasional and Tenaga Nasional Berhad. Datuk Nozirah is also a Member of the Investment Panel of Retirement Fund Incorporated (KWAP).

Datuk Nozirah was appointed in July 2011 and therefore has not attended any Board meetings held in the Financial Year Ended 31 March 2011. She has no conflict of interest with the Company and further has no family relationships with any other Director and/or Major Shareholder of the Company. Datuk Nozirah has not been convicted for any offence within the past ten (10) years.




PRoTon GRoUP MAnAGeMenT CoMMITTee MeMBeRs

Dato’ sri Haji syed Zainal Abidin B syed Mohamed Tahir

Group Managing Director

Azhar Bin othman

Chief Financial Officer

Dr. Wolfgang Karl epple

Senior Director, Group Operations

Mohamad shukor Bin Ibrahim

Chief Executive Officer, Proton Edar Sdn Bhd


Klaus e. Liske

Director, Group Procurement

Tajul Zahari Bin Abu Bakar

Director, Engineering

Claudius Meynert

Director, Export

Azmi Bin Idris

Director, Group Quality


John D. Chacko

Director, Group Marketing & Branding

Inderjith Madireddi

Director, Group Manufacturing

Michele Kythe Lim Beng sze

Chief Legal Counsel

PRoTon GRoUP MAnAGeMenT CoMMITTee MeMBeRs (ConT’D)

suhaimi Bin sulong

Director, Group Human Resource

Note: Yohani Binti Mohd Yusof has resigned as Director, Group Marketing & After Sales effective 31 August 2011.


Muhammad Aris Bin Anuar

General Manager, Manufacturing

Dr. Badrulhisham Bin Mohd Ghazali

General Manager, Corporate Planning

Zahari Bin Husin

General Manager, Product Strategy

Hazrin Fazail Bin Haroon

General Manager, Product Planning


HeADs oF InTeRnATIonAL sUBsIDIARIes

Danny Taner Bahar

Chief Executive Officer, Group Lotus Plc

Brian Collier

Managing Director, Proton Cars (UK) Ltd

John startari

Managing Director, Proton Cars Australia Pty Ltd

Gunther scherz

President Director, PT Proton Edar Indonesia


samson Chua

Managing Director, Proton Singapore Pte Ltd

Lee Weng Yew

Acting Managing Director, Proton Motors (Thailand) Co Ltd


We measure our success not only by profitability but based on the impact we make at the marketplace and workplace, in the communities we serve and on the environment. Growing our repute not just as a global automaker, we are also passionate about evolving as a socially responsible entity that delivers benefits in more ways than one.

CHAIRMAn’s sTATeMenT

PRIDe. PAssIon. PRoGRess.

This phrase was coined a couple of years ago to ignite and drive the PRoTon Group of Companies (PRoTon) as we ventured forth into the second decade of the 21st century. As a result, numerous achievements were recorded but for our shareholders, the Malaysian public and the country, PRoTon surpassed the RM8 billion revenue and RM200 million profit before tax (PBT) milestones for both Financial Year (FY) 09/10 and 10/11, numbers which were last achieved a handful of years ago.


As we leave the year of our Silver Jubilee, let us reflect on the 365 days that were FY 10/11 and peek into what is in store for us for the upcoming year. On behalf of the Board of Directors of the Company, I am pleased to present the Annual Report together with the Audited Financial Statements of PROTON for FY 10/11.

InDUsTRY oVeRVIeW

Picking up from where we left off, the recorded Total Industry Volume (TIV) for the months of January to March 2010 were 33%, 9% and 25% higher, respectively, than they were in the corresponding months of the previous year and an encouragingly superior 22% compared to the same calendar quarter last year.

From April to June 2010, the second calendar quarter of 2010 continued to outperform 2009’s corresponding quarter by a commanding 17%. On the strength of this, the Malaysian Automotive Association (MAA) revised its 2010 TIV forecast from 550,000 units to 570,000 units; conservative by any account but truly justified as despite the bumper first half numbers, the second half is traditionally slower based on historical data.

Be that as it may, the TIV defied all expectations and at the closing of the 2010 calendar year, an all-time high figure of 605,156 was posted. For the first time in Malaysian history, the 600,000 mark was breached. The passenger vehicle TIV also recorded a first by breaking the 500,000 mark, ending the year at 543,594 units. All in all, the TIV was 13% higher than the preceding year, with the passenger vehicle TIV recording a 12% increase.

From products to technology to people, PRoTon continues to innovate towards excellence. Assuredly, our future is exciting and with pride, passion and progress, the future is ours to determine.

”“


In 2009, a lagging automotive industry was resuscitated thanks to immediate and proactive action by the Government of Malaysia through the Second Stimulus Plan. The Government played its part again in 2010, with record breaking TIV numbers attributable to a strong economy which registered a 7.2% growth, and confidence boosting investment friendly initiatives undertaken such as the Economic and Government Transformation programmes, the New Economic Model and the 10th Malaysia Plan. Coupled with these, the introduction of new and exciting models together with attractive loan packages drove the TIV to never before attainable heights.

In tandem with the industry, PROTON’s sales also increased by 6%, contributing more than 157,000 units to the TIV. The ubiquitous multi-award winning Saga continued to impose its presence once again by breaching the 70,000 units mark in 2010. The seemingly timeless Persona continued to garner accolades and confounded critics by clocking in more than 40,000 units in terms of sales, convincingly outpacing its performance in 2009, whilst the Exora continued its fine form, with more than 26,000 units registered, averaging a monthly figure of 2,200 units. FY 10/11 also saw the launch of the Inspira with the 1.8 litre and 2.0 litre variants; our latest offering is contributing 6% towards PROTON’s monthly sales as we tap into a wider market segment.

It is very encouraging to note that PROTON’s three top-selling models surpassed its 2009 sales numbers, entrenching the Saga, Persona and Exora firmly amongst the Top 10 Models of 2010. It could be surmised that the growing support from our customers is a clear reflection of our erstwhile and continuous efforts to re-establish the brand, which essentially translates to better sales volume.

Moving forward, MAA has revised its initial 2011 TIV forecast of 618,000 by shedding 10,000 units. This is primarily due to the slowing down of global economies and the uncertainties that currently prevail, especially in Europe, Japan and the USA. Be that as it may, flowing into the 2011 calendar year, the TIV for the first calendar quarter was still unrelentingly bullish, posting a 4% growth over the previous quarter and a 7% growth as compared to the preceding year’s corresponding quarter.

On the international front, PROTON recorded an increase of 12.3% in terms of shipment against the same period last financial year, largely attributable to an increase in demand in China from our Complete Knock-Down (CKD) programme. In spite of this, our recorded growth was stifled by the challenges faced in our Complete Build-Up (CBU) markets. Be that as it may, we continue to make inroads in Thailand and Indonesia, where the Exora was voted as one of the best passenger car models for 2010 by the Bangkok Post, and PROTON was recognised among the Top 12 brands in Indonesia.

Dato’ Sri Mohd Nadzmi Bin Mohd Salleh briefing analysts following the announcement of PROTON’s fourth quarterly results. Also present were Group Managing Director Dato’ Sri Haji Syed Zainal Abidin B SyedMohamed Tahir (left), and Chief Financial Officer Azhar Bin Othman (right).


As always, PROTON remains very sensitive to market needs and wants. We will maintain our doggedness to ensure that our customers’ loyalty and trust are not wantonly forsaken. Our ever-growing customer base is a result of an ultra critical self-assessment after a painful lesson in humility. We are encouraged but we are not satisfied – we understand that we can be better and we will be better – if only to serve our customers, both external as well as internal.

FInAnCIAL PeRFoRMAnCe

For FY 10/11, PROTON Holdings Berhad posted a consolidated PBT of RM214 million, which is a slight decrease compared to the PBT of RM261 million in the last financial year.

This is largely attributed to higher branding costs and restructuring expenses incurred by Lotus Group International Limited, which is currently undergoing a business transformation exercise. Nevertheless, these efforts are showing positive early signs with the successful global unveiling of five new Lotus sports cars that are due to go on sale as early as 2013.

Revenue for the year ended 31 March 2011 grew by 10% to RM9 billion compared to RM8.2 billion posted in the last financial year. This performance was the result of encouraging sales recorded by the three core models – the Saga, Persona and Exora.

His Majesty DYMM Seri Paduka Baginda Yang di-Pertuan Agong Al-Wathiqu Billah, Tuanku Mizan Zainal Abidin Ibni Almarhum Sultan Mahmud Al Mukhtafi Billah Shah with PROTON’s Chairman and Group Managing Director during His Majesty’s visit to Lotus in the UK.

Additionally, PROTON’s cash and cash equivalents are maintained above the RM1 billion mark and this augurs well for the Group as cash resources are required for continued investments in the development of more exciting and better offerings.

Despite a shrinking of the PBT, what is important to note is that PROTON is on a positive trajectory as we re-establish our revenue growth and profitability. From 2007 to 2011, PROTON recorded a revenue growth of 91% and a PBT growth of 133%. Operationally, we have also registered an improving trend from 1.0 to 0.6 defects per unit. In terms of market share, we have also arrested the decline at 24% and gradually increased the same to just below 30%.

Essentially, as we rise to reclaim the number one position in Malaysia and strive to achieve greater acceptance internationally, it is imperative for our esteemed shareholders and key stakeholders to appreciate that we have gone through a laborious phase where legacy issues have been properly addressed and, of equal importance, improved on key processes to ensure greater efficiency.

DIVIDenDs

On the back of a profitable FY 10/11, the Board of Directors of PROTON recommend the payment of a First and Final dividend of 10 sen per ordinary share of RM1.00 each less tax at 25% on 549,213,002 ordinary shares amounting to RM41,190,975 in respect of the financial year ended 31 March 2011, subject to the approval of our Shareholders at the Company’s forthcoming Annual General Meeting.

ToWARDs eXCeLLenCe

Following my statement in the previous annual report, PROTON has met its projected product milestones by launching the Inspira and the Saga FL. Thereon, for FY 11/12, the eagerly awaited introduction of our turbo engine, facelift of our best selling model and the launch of a brand new product are in the pipeline.


Our Global Small Car programme is also progressing according to schedule and barring any unforeseen circumstances, 2013 will be another defining year for PROTON as we venture further into the global arena. Based on the EMAS (Eco-Mobility Advanced Solution), the Global Small Car promises to be an exciting product proposition not only for PROTON but for Lotus as well, and this would be the first time such an arrangement is entered into by both companies.

Beyond that, the Malaysian public was given a sneak preview of what PROTON is innovating at the Kuala Lumpur International Motorshow 2010. The “Pahlawan” series is a clear statement of our aspirations, in terms of concept, styling, design, technology and elements of it will be incorporated in all our future product and technological offerings.

With regard to technology, our focus on electric and hybrid technologies is already bearing fruit with the success at the Brighton to London Future Car Challenge on 6 November 2010. Organised by the Royal Automobile Club, this race is a new motoring challenge for electric, hybrid and low-emission internal combustion engine vehicles that use the least amount of energy on a 60 mile route from Brighton to London.

PROTON was among the 40 entrants in the race, entering our Saga Electric Vehicle and the Exora Range Extender Electric Vehicle (REEV). Amongst more illustrious and renowned competition, not only did our entries finish the race, the Exora was awarded the Best Range Extender Electric Vehicle, a feat which relegated the celebrated Vauxhall Ampera to the runner-up position. I am indeed happy to state that we are on track with our Exora REEV and as such, our Fleet Test programme will kick start by the end of the year, if not sooner.

For Lotus, FY 10/11 announced the “Dawn of a New Era” for Lotus Group of Companies. With the transformation programme in place, Lotus is in full turnaround mode. Initiatives are in place to ensure a positive change in culture and to attain operational improvements, whilst preserving the Lotus heritage and pedigree. Early signs are good with an 8% increase in revenue and 3% increase in sales.

However, the most telling sign of improvement and innovation surely must have been Lotus’ unveiling of six brand new concept cars – from the effervescent Elan to the enigmatic Esprit, which was voted by critics to be one of the stars of the show at the 2010 Paris Motorshow.

Prime Minister Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak taking a closer look at Lotus technology during his visit to Lotus facilities in the UK. With him are PROTON’s Chairman Dato’ Sri Mohd Nadzmi Bin Mohd Salleh and CEO of Group Lotus, Dany Taner Bahar (extreme right).


It was also heartening to note that the Lotus booth was one of the most visited booths at the show, a true sign that Lotus is on the correct path. To further ensure that Lotus is moving in the right direction, an Advisory Council consisting of leading experts such as Mr Bob Lutz and Mr Tom Purves, was established.

From products to technology to people, PROTON continues to innovate towards excellence. Assuredly, our future is exciting and with pride, passion and progress, the future is ours to determine.

ACKnoWLeDGeMenT

PROTON’s strength comes from the core and at the very heart of this organisation, more than 11,000 people inject in this company their pride, passion and progress as a daily ritual. As such, to each and every one of you, on behalf of the Board of Directors, I extend a heartfelt Thank You for your contributions to PROTON for the financial year under review.

I would like to thank Datuk Zalekha Binti Hassan who has recently resigned from the Board for her invaluable contributions during her years of service with PROTON.

I would also like to take this opportunity to thank the members of the Board for their invaluable contribution and guidance and, at the same time, I would like to thank YBhg Datuk Zalekha Hassan, who recently resigned, for her years of service on the Board. Your role in the development of PROTON will be forever appreciated. Additionally, PROTON welcomes YBhg Datuk Johar Che Mat, the former Chief Operating Officer of Maybank Berhad, and YBhg Datuk Nozirah Bahari, the current Deputy Secretary General, Ministry of Finance, onto the Board. I am very certain that your combined experience in the banking and financial sector will be a boon to PROTON as we continue our journey towards excellence.

To our shareholders, sales/service dealers and vendors and business partners domestically and internationally, our sincerest appreciation for your continued support and commitment. However, on a sombre note, our commiseration goes out to our

Dato’ sri Mohd nadzmi Bin Mohd sallehChairman

PROTON’s Chairman and Group Managing Director at PROTON’s Aidilfitri celebration.

Japanese business partners, in particular Mitsubishi Motors Corporation, who were impacted by the 2011 TÕhoku earthquake and tsunami, which struck the nation on Friday, 11 March 2011.

I would also like to record my thanks to the Management Team, ably led by YBhg Dato’ Sri Syed Zainal Abidin Syed B Mohamed Tahir, for another good financial year.

On behalf of the PROTON family, we extend our sincerest gratitude to our Prime Minister YAB Dato’ Sri Mohd Najib Tun Abdul Razak; our advisor YABhg Tun Dr Mahathir Mohamed; and all the Ministries and agencies for your generous support, guidance and unwavering assistance.

Finally, to the growing number of PROTON supporters globally – our sincerest, humblest and biggest Thank You. As always, it is our hope that you remain positively PROTON.

I take this opportunity to wish all of you Selamat Hari Raya and Happy Merdeka!


FRoM HUMBLe BeGInnInGs

Initially incorporated in 1983 as a humble car assembler in a country then vastly dependant on agriculture, PRoTon is now a full-fledged car manufacturer based in a nation now coined as a “newly industrialised country”: this is our story; not only PRoTon’s, but Malaysia’s as well. PRoTon, now Malaysia’s largest auto manufacturer, is the only home-grown and indigenous oeM car manufacturer in southeast Asia. Clearly, since PRoTon’s inception, the journey can be best summed up as one of pride, passion and progress.

GRoUP MAnAGInG DIReCToR’s ReVIeW


Today, PROTON’s operations reach across South-East Asia, the Middle East, China, Australia and the United Kingdom. With a workforce exceeding 12,000 to date, the PROTON family works across the whole spectrum of the automotive industry including vehicle design, R&D, manufacturing, marketing, sales & distribution and corporate services.

We are especially proud today because PROTON now boasts a range of well-proven and well-received products that enables the brand to seize market share at home where the gap between PROTON and the competition is closing, as well as abroad. Furthermore, through our subsidiary, high-performance car marque Lotus, the Group has all the assets it needs to build a stronger brand globally.

Our efforts and achievements over the past years have enabled PROTON to weather various challenges. Ranging from the financial meltdown of 2008 to the

devastating Tsunami that hit Japan in March 2011 and the recent financial market instability due to debt downgrades in the United States, PROTON has managed to record solid and encouraging growth by providing high quality and appealing vehicles to a growing customer base coupled with competitive pricing.

During the period under review, the launch of the PROTON Inspira was a testament of PROTON’s pledge to always offer unmatched quality and performance at a competitive price. This was shortly followed by the introduction of significant refreshers such as the Saga FL and FLX, the latter using a Continuously Variable Transmission (CVT) paired to the proven CamPro engine - a first in PROTON’s history. These models are well-accepted by the market and have contributed significantly to PROTON’s earnings and growth.

PRoTon continues to strengthen its position domestically and globally through the introduction of new models and variants and pursuing opportunities in new markets. These efforts also focus on establishing better integration and cohesiveness within the Group’s entire operations.

”“


Dato’ Sri Mohd Nadzmi Bin Mohd Salleh with PROTON’s Advisor Tun Dr Mahathir Mohamad, Dato Sri Mustapa Bin Mohamed, Minister for International Trade and Industry and Group Managing Director Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir at the launch of Proton Inspira.

oPeRATIonAL eXCeLLenCe

2010 has been a landmark year in terms of strengthening PROTON’s operational sustainability practices.

First of all, the construction of the centralised logistics hub project initiated in 2009 in Sijangkang, Selangor as PROTON’s centralised Centre for Logistics Allocation Storage and Services (CLASS) was completed in March 2010 and went operational on 1 April 2010. Meanwhile, the second hub in PROTON Tanjung Malim built by PROTON Edar Sdn Bhd also came online in November 2010. Both hubs have managed to reduce PROTON Edar’s warranty cost by 78%. Furthermore, feedback from customers show that the quality at delivery point has improved by 18% since the start of centralised operations at the hub.

Secondly, the Process and Operational Excellence (PROPEX) project is already one and a half years in its journey. One of PROPEX’s initiatives under Complexity Management includes a Vehicle Cost Reduction Programme (VCR) involving a team of fully trained engineers responsible for generating and analysing cost saving strategies to achieve PROPEX’s goals. Ultimately, PROPEX will increase PROTON’s profit margin without sacrificing customer satisfaction and of course avoid increment of On the Road (OTR) price despite material cost increases, amongst others.

Committed to the journey of technological innovation and progress, PROTON has entered the Electric chapter head-on. With a PROTON Digital Range Extender Electric (D-REE) vehicle slated to be unveiled within the next three years, PROTON is striving to become one of the linchpins in environmental protection and green transportation, propelling Malaysia forward as a hub of green technology. Most importantly, at the heart of PROTON’s green projects is the will to develop an affordable electric car which will lessen the burden of volatile energy price to the consumer as well as the nation.

Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir and PROTON’s Advisor Tun Dr Mahathir Mohamad takinga closer look at a vehicle during the launch of the logistics hub in Sijangkang.


PROTON’s foremost pledge is to deliver quality cars at an affordable price. In order for us to continuously fulfill this vow, PROTON is invested in a two tiered approach: in-house improvement and working with its vendor base.

In-house, PROTON has launched a Zero Defect Campaign, Innovative Creative Circle (ICC) and KAIZEN programmes to enhance upstream supply operations. These initiatives have improved supply quality performance by 50%. Furthermore, with the Zero Defect Campaign, the Complete Build-Up (CBU) outgoing quality level for both Shah Alam and Tanjung Malim plants improved by 30%.

Creation of a reliable and competitive supplier base is key to sustained competitiveness; as is the need to ensure that core vendor efficiencies, competencies and standards meet global market requirements. Hence, in anticipation of meeting these critical objectives, PROTON has taken proactive steps to initiate a dedicated Vendor Development Programme known as the “Improvement, Control and Education Initiative”.

It is hoped that through this initiative, PROTON can help its vendors to continuously improve supply

network, product quality, cost competitiveness, delivery performance, engineering capability, financial stability, management competencies and innovation.

PAssIon

Having achieved our initial goals, PROTON has reached the critical point where it must strengthen its global presence as we are now able to manufacture cars that have a global appeal.

We believe that the value of the PROTON brand is a result of many factors including products and services, customers’ experiences and marketing strategies.

PROTON’s increased global brand equity and presence is garnering tremendous appeal through Motorsports with the Satria Neo S2000 achievements such as taking pole positions in the third round of the FIA-Asia Pacific Rally Championship (APRC) in New Caledonia. Chris Atkinson won the rally while his team mate Alister McRae took third spot in June 2011. It was Atkinson’s second victory and he is now at the top of the driver’s standing in APRC.

YB Dato’ Sri Ahmad Shabery Cheek, Minister of Youth and Sports, officiated the launch of the PROTON Motorsports Rally Team for the 2011 season.


And of course, through Formula One, the young Lotus-Renault GP team has yielded promising results with its driver Vitaly Petrov scoring his first podium in the opening race in Melbourne in March 2011 and later, his team mate Nick Heidfeld giving the team a second podium finish when he came out third in the Petronas Malaysian Formula One Grand Prix at Sepang in April 2011. This is a significant milestone indeed: every lesson learnt on the track will ultimately translate into technologies PROTON can use on its road cars.

It is through such constant efforts that PROTON has managed to deliver quality cars and receive a flurry of awards throughout the years. Domestically, the Proton Saga won the “Best Passenger Car Model of the Year (Malaysia) 2010” and the Proton Exora “Best Automotive Debut Model of the Year (Malaysia) 2010.

However, 2011 was a dramatic turning point for PROTON as it achieved a phenomenal milestone internationally by having its own Exora win the 2011 Indonesian Otomotif award for “Best Budget MPV in Indonesia” and the Saga FL win the “Best People’s Car of 2011” by Asian Auto. Frost & Sullivan Malaysia 2011 Automotive Awards also recognised the Proton Persona as “Best Value-for-Money Car” for 1.6L and above.

THe FUTURe

PROTON is committed to the development of its green technology in line with the government’s initiative to make Malaysia a regional hub for hybrid, electric and environment-friendly vehicles.

We will be conducting a Fleet Test Vehicle Program for our Range Extender Electric Vehicle (REEV) in collaboration with the Malaysian Government in the the second half of 2011.

PROTON’s decision to be involved in the hybrid and Electric Vehicle (EV) powertrains is strategic in nature. Indeed, in comparison to global OEMs, PROTON is a relatively smaller company which has not committed as much investments into internal combustion engine (ICE) powertrain technologies, thus allowing us to quickly and efficiently switch to alternative powertrain technologies such as battery storage powertrain (used in hybrids and EVs). We believe that with the new PROTON hybrids, we will be able to compete with global OEMs who have already launched their hybrid cars in the market.

The EMAS project was the trigger for PROTON’s efforts to meet global trends and to deliver a new family of world-class and eco-friendly vehicles, and a message to the public that PROTON will not compromise on space, quality and performance through the electrification process.

A group picture taken during the Prime Minister’s visit to Lotus facilities in the UK.


True to its origins and original aspirations, PROTON aims to be at the core of Malaysia’s green initiatives and establish the nation as a premier green-tech innovation centre.

PROTON’s future is also in exports. Indeed, PROTON has been able to implement the Group’s long-term Asian Multi-Local OEM (AMLO) strategy and in general, PROTON recorded increasing Complete Knock Down (CKD) sales to China while sustaining CBU exports from Malaysia. Our total shipment to overseas markets increased 12.3% compared to the same period the previous year. We believe that with increased global brand presence, ever-improving products and better appeal, PROTON’s current international growth is only set to continue and improve even further.

DATo’ sRI HAJI sYeD ZAInAL ABIDIn B sYeD MoHAMeD TAHIRGroup Managing Director

Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir launching PROTON’s Zero Defect Programme.

Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir receiving the MITI Industry Excellence Award from Prime Minister Dato’ Sri Mohd Najib Tun Abdul Razak.

PRoGRess AnD VIsIon

Looking at the dramatic turnaround PROTON has undergone in the past six years, I take this opportunity to thank all PROTON staff for their unrelenting efforts, passion and hard work without which PROTON would not be where it is today: at the doorstep of a new regional and global chapter.

While many see new daunting challenges and risks ahead in this new venture of ours to become a global Malaysian brand, I remain confident as the PROTON family has displayed exceptional loyalty and dedication to the Company in good and more turbulent times. PROTON will one day stand strong and proud on the global automotive map. We are already seeing the beginning of a success story that saw an automotive company start from humble beginnings to a competitive and global automotive manufacturer uplifting with it, along the process, a pool of creative engineers and skilled workers.

On this note, I am pleased to present to you our Operations Review that highlights the key developments and initiatives of the Group, which is a clear reflection of our achievements to date.


ENGINEERING SERVICES

TEChNoloGy aNd INNoVaTIoN aRE ThE dRIVING foRCES bEhINd PRoToN’S ENGINEERING SERVICES dIVISIoN aS ThE GRouP CoNTINuES To PRoGRESS wITh PRIdE aNd PaSSIoN IN PRoduCT dEVEloPmENT, STylING aNd TEChNoloGy dEVEloPmENT, CollaboRaTIoNS, PEoPlE dEVEloPmENT aNd PRoCESS ImPRoVEmENTS.

OPERATIONS REVIEW

56 PROTON 2011 aNNual REPoRT

PRODUCT & DEVELOPMENT

PROTON Inspira

launched in November 2010, the Inspira is a trendy 4-door sedan that provides a sporty ride at an affordable price. Encompassing the bold and aggressive styling, the Inspira transpires its excellent performance in terms of PRoToN’s renowned ride and handling characteristics and advanced powertrain. The transmission premiers PRoToN’s first smooth-shifting Continuously Variable Transmission (CVT) that comes with INVECS III and the advanced fuzzy logic based transmission that optimizes gearing for the benefit of both performance and fuel economy.

Not only does the best-in-class ride and handling (R&h) quality offer the fun-to-drive factor, it also inspires confidence during hard driving and provides added safety during emergency situations. four-wheel anti-lock braking system (abS) and electronic brake distribution (Ebd) ensures that the driver can control the car in unlikely events. automatic air-conditioning system allows the driver to set his desired temperature as the system automatically adjusts to maintain optimum comfort. meanwhile, the driver can enjoy the mP3-equipped arkamys surround system that ensures a rich and high quality sound. a bonus aspect is the ‘‘welcome and coming home’ feature that ensures the lights stay illuminated until the driver safely enters the house.

PROTON Saga Face Lift

after three years into what has been an extremely successful run, the Saga just got even better. PRoToN has introduced the new Saga fl which offers customers not only a wide array of enhancements but injects more dynamic styling and design into the popular introductory family sedan. befitting its popularity especially amongst the younger generation of car buyers, the Saga fl has undergone exterior restyling to take on a more spirited, young, sporty and trendy appearance.

The Saga fl features an all-new fender design, hood, headlamps, front grille, as well as front and rear bumpers. also new is the introduction of side mirrors incorporating lEd turn signals, a rear combi with lEd, rear reflector and muffler cutter. for improved driver and passenger safety, the Executive model features additional passenger side airbag, an audio head unit with mP3, uSb, and auX ports, and steering wheel with audio switches.

PROTON Inspira

PROTON 2011 aNNual REPoRT 57

The Saga fl represents the new way of doing things at PRoToN. Instead of relying on the popularity and success of the existing Saga, the overwhelming public acceptance motivated us even more to make an already good model even better. It’s again a manifestation of PRoToN’s commitment to provide malaysians with exceptional value for money mobility in terms of affordability in ownership, practicality, style, level of features, and safety.

STYLING & TECHNOLOGY DEVELOPMENT

Global Styling – Pahlawan Series Show Car

KLIMS 2010

The Kuala lumpur International motor Show 2010 was a grand affair for PRoToN as it coincided with our 25th anniversary celebrations. a coming-of- age of sorts, the event provided a perfect platform

to showcase our product offerings, technology showcases and design activities. one of the main highlights of the event was the unveiling of the Pahlawan series of show cars that illustrated how PRoToN capitalised on design to elevate the value of our products over that of competitors. It was a significant success that garnered positive response from visitors to the booth as well as in on-line/off-line mediums. another high traffic area was the installation of the interactive Styling Studio that enabled visitors to have firsthand experience in exploring digital sketching, renderings, colour and trim selection, personalised car configuration and taking a virtual drive in the PRoToN Tuah show car. all of this illustrates PRoToN’s commitment to share its pride and passion in building high quality cars for malaysians as well as its export markets.

The Pahlawan Series


Tuah – The name Tuah pays tribute to hang Tuah, the legendary malay warrior from malacca. as the name implies this concept was the star of KlImS 2010. It has been designed as the precursor to what is in store for the future new sedan. The Tuah has all the qualities of a winning design. Throughout the design one can see the use of PRoToN design’s as a new Global design language.

Jebat – a surefire surprise during the event was the Jebat. based on the Inspira it personifies maximum aggression and future style by applying major changes on the sheet metal and plastic parts. dark coloured roof and prominent rear spoiler entail the strong character and more importantly, distances itself securely from the donor vehicle.

Kasturi – To commemorate the launch of the refreshed Saga fl this show car was designed as an aspirational vehicle. The Kasturi takes sportiness to the next level. overall the Kasturi has a slight boy-racer look to it, one that exudes aggressiveness with a touch of modern hues.

Lekir – The lekir is a realision of how lotus and PRoToN can collaborate in creating an exciting product.


Lekiu – The lekiu was born to heed the public’s call of a national SuV.

Technology Development

Globalisation has challenged PRoToN to be even greater than before. In order to survive in the complex and volatile global market PRoToN consistently requires new updated directions and insight into the philosophy of new automotive business trends. business innovation through globalisation, green technology, alternative fuel and sustainable technology are some of the current driving factors for continual existence.

with the appointment of the PRoToN Technology advisory Council (PTaC), PRoToN will enhance its current strategy for timely preparation and risk mitigation of technology acquisition based on the information given by the panels. The purpose of PTaC is to advise and provide recommendation to PRoToN on current, future technologies and global automotive directions.

PROTON Technology Roadmap

The PRoToN Technology roadmap (PTR) serves as a blueprint for the Company in shaping PRoToN’s car of the future. It forms an integral part of the decision making process of the technologies that should be acquired so as to remain competitive and profitable in the domestic and global market within a ten

year time frame. The PTR enables this by aligning business objectives with in-house capabilities and resources. our pillar of PTR is largely based on body, Chassis, Safety, Electrical, Electronic, Powertrain and alternative Powertrain. The foundation of six technology clusters contributes to realising the ‘Ride and handling’ differentiator. To ensure that technology visions are constantly met, if not exceeded, PRoToN is relentless in its lookout for cutting edge technology which will catapult the PRoToN brand into the forefront of automotive excellence.

Technology Transfer

The Government of Saudi arabia recently initiated a cluster programme to develop and provide support to a range of new industries whereby the mission is to grow and diversify the Saudi arabian economy by developing targeted industrial clusters that leverage the Kingdom’s resources. PRoToN has worked on a feasibility study programme with King abdulaziz City for Science and Technology (KaCST), an independent scientific organisation in Saudi arabia, to develop the plan to achieve full automotive development and manufacturing capability in the Kingdom of Saudi arabia.

KaCST Technology Transfer Programme has two main deliverables which are:

• Knowledge transfer through tutoring-on-the-jobalongside PRoToN’s engineers

• Knowledgetransferonprototypetechnical-know-how through prototype car build up.

The key accomplishments that PRoToN managed to achieve to date are:

• All the 11 engineers returned to KACST withbasic technical knowledge of car development related to their modules.

• Theprototypecarwassuccessfullycompletedby22 october 2010 and was showcased during the Riyadh motor Show from 4 – 9 december 2010.

OPERATIONS REVIEW (CONT’D)


Electric Vehicle

Exora REEV was developed to reduce Co2 emissions in conjunction with the Government’s green growth agenda and to provide consumers with the best fuel economy solution and improved vehicle performance. It is realised by integrating leading edge powertrain electrification and engine-generator systems through serial hybridisation.

The PRoToN REEV innovation was proven on the global stage when Exora REEV won the best E-REV category in the brighton to london future Car Challenge in November 2010. This serves as a testament to PRoToN’s engineering prowess and technological advancement.

Exora REEV will be subjected to a fleet Test Vehicle (fTV) programme. The fTV programme will facilitate the growth of charging station infrastructure, regulatory standards, EV related supporting sectors and also proliferate the paradigm shifts in consumer acceptance for new automotive technology. PRoToN REEV system will be the sustainable solution in ensuring PRoToN’s competitiveness globally as we enter the next wave of automotive revolution.

PROTON was among the 40 entrants in the RAC Brighton to London Future Car Challenge 2010, entering our Saga Electric Vehicle and the Exora Range Extender Electric Vehicle (REEV).

The Exora Range Extender Electric Vehicle (REEV) was awarded the Best Range Extender Electric Vehicle.


COLLABORATION

Research Collaboration with Universities & Research Institutes

The PRoToN Critical mass Scheme serves as a platform to establish the critical mass within PRoToN employees as a whole and the Engineering division particularly by increasing the ratio of Phd and master holders. This programme is one of the mou components under the PRoToN-university Technology malaysia (uTm) collaboration initiative. To date, 36 PRoToN staff have successfully registered under PCmS at uTm International Campus – 24 under the Industrial Phd Programme and 12 for the master’s Programme. about 70% of these employees are from the Engineering division.

PEOPLE & RECOGNITION

Skills Development and Training

The focus on staff development within the Engineering division is to enhance skills and capability. from october till december 2010 over 47 new engineers have successfully equipped themselves with basic skills and knowledge which have enabled them to carry out their responsibilities in their current tasks, while 26 engineers were deployed overseas for on the job training to upgrade their skills and capability in engine development at lotus in uK, Germany, and automotive development skills in Italy, Spain and Japan.

The exposure has enhanced their skills in their areas of specialisation which gives PRoToN an edge in the product development process for the Inspira, Saga facelift and also in engine development. The Engineering division has also established a PRoToN Professorship programme to spearhead the collaboration works between PRoToN and uTm. The activities comprise an automotive research programme and engineering capability development.


Signing ceremony for the PROTON-UTM Professorship Programme

International and Technical Participation

In November 2010, PRoToN participated in the International Conference of Reliability and Structural Safety which was held in Venice. PRoToN engineers teamed up with representatives from local universities to present a Technical Paper titled “application of Pearson Parametric distribution model in fatigue life Reliability Evaluation”.

PRoToN was also a main sponsor of the International Conference on the Sustainable mobility (ICSm) which was held between 1 – 3 december 2010. The main agenda of the ICSm was to provide an avenue to present ideas and studies related to the aspect of sustainable technology and also to share knowledge among universities, industries and government bodies towards achieving excellence in automotive engineering.

during this prestigious event one of the senior engineers from the Engineering division gave a talk on “Time frequency analysis and Jury Testing for door Closing Sound development”. These active participations in international and technical programmes are proof that PRoToN continues to successfully inculcate a culture of innovation among its people.


Proton Innovation & Invention Competition 2010

The PRoToN Invention and Innovation Competition (PICC) which was established in 2009 is an annual event which enables PRoToN staff to generate new ideas and interest in creating next generation cars and also for employees to feel that their ideas and contributions are valued by the Company.

PICC 2010’s theme was “Going Green”. This theme was choosen in line with the Company’s corporate responsibility agenda to reduce carbon emission as part of its efforts in combating global warming and also to support Government Initiatives towards realizing a greener and safer environment.

The competition began in april 2010 and was completed in october 2010 when each team presented their final creation to the judges. The winners were decided based on the green concept, creativity, innovation, design and styling, originality, practicality and building cost – all of which were evaluated by external judges from the ministry of Science, Technology and Innovation, university malaya, university Technology malaysia and Kementerian Tenaga, Teknologi hijau dan air malaysia. all the 20 concept cars were displayed in a parade during PRoToN’s family day in November 2010.

PROCESS IMPROVEMENTS

Product Lifecycle Management

Phase 1 of Product lifecycle management (Plm) which was implemented since 2010, is an aggressive process improvement initiative that PRoToN has embraced.

Phase 1 solution involved upstream activities in managing product development, and sought to:

• Enablemoretimeefficientcollaborativeprocessesacross the functional teams as changes could be adopted quickly.

• Allowdifferent teams to trackchangesateverystage in the development cycle and hence keep the strategic focus aligned.

• Share data within and outside of the productteam, avoiding duplication and wastage in the development. This will streamline the product development process and allow leveraging of data and knowledge from experienced engineers.

• Manage a single source of engineering masterdata (bill of material) with seamless integration to other systems and functions enterprise wide.

These combinations provide a platform for collaboration and integration of business processes which help PRoToN improve operational efficiency, refine product management and eliminate redundant processes.

Vehicle Cost Reduction

The Process and operational Excellence (PRoPEX) project is already in its one and a half years journey and is gaining momentum. many initiatives across PRoPEX are now in the implementation mode. one of the initiatives is known as Complexity management. The Vehicle Cost Reduction (VCR) team is a group of fully trained engineers that are responsible for generating and analysing cost saving ideas to accomplish PRoPEX goals. besides this, the team also plays an important role to make sure all feasible ideas are being implemented. The team was established on 1 february 2010 and currently there are full time PRoToN engineers to run the whole streamline. The Company’s main VCR objectives are to:

• Minimiseeffectofmaterialcostincreasetothecar price.

• Consider cost improving activities even atdesigning stage.


maNufaCTuRING

ThE NEXT fIVE yEaRS wIll bE ThE moST CRITICal yEaRS IN ThE hISToRy of maNufaCTuRING IN PRoToN bECauSE of ThE ImPENdING maRKET lIbERalISaTIoN duE To TaKE EffECT IN 2016. wITh ITS RElaTIVEly ‘low’ VolumE, ThE CoST of maKING CaRS IS ThE maNufaCTuRING dIVISIoN’S fIRST PRIoRITy. ThE STRaTEGy IS To uSE QualITy ImPRoVEmENT aS a CoST REduCTIoN STRaTEGy.



The notion of reducing cost by lowering expectations or standards is something that PRoToN will never settle for. To meet higher customer expectations, we consider each customer’s complaint as a golden opportunity to improve quality either in our products or in the quality of our assembled work.

The period under review has been relatively good despite small setbacks in the Complete Knock-down (CKd) exports. Good sales of core models especially the Saga was boosted with the introduction of the Inspira. The Inspira which is adopted from the award winning model from mitsubishi proved to be a popular choice among malaysians. It also paved the way for new manufacturing processes through the introduction of the latest car technologies and the new CVT transmission.

The successful launch and introduction of the Inspira, helped to increase total production volume from 166,308 to 171,659 Complete build-up (Cbu) units in fy 2010/2011. The Saga also increased in production from 69,961 units (fy 2009/2010) to 76,536 units (fy 2010/2011) proving that its value for money and continuous quality improvements have inspired confidence and trust among many proud malaysian owners.

The Saga underwent a major facelift where the whole front view was completely redesigned. The new hood with sporty headlamps and front grille and new fender gave the car a younger and more contemporary look. In addition, the front and rear bumpers and the rear lamps were also given a fresher image in tune with the times. Coupled with this, the interior was also refurbished with passenger airbag, rear passenger central lock, six switch-on steering wheel audio control, leather gear shift knob, single disk player, uSb and mP3. So it was not surprising when the demand for the Saga kept increasing.

The Saga underwent another minor facelift in august 2011. This included a change in the powertrain where a new improved engine and transmission were introduced.

In November 2011, the new Exora Turbo will be produced. The new engine that is being developed by both PRoToN and lotus Engineers, comes with a powerful 138bhp to a maximum of 151bhp. The exterior will also be improved with sport rims, smoke lenses, rear combi lamp, chrome front radiator grille with black ribs and deep titanium finishing lamp.


lastly, we will introduce our first locally produced global car to be manufactured at the Tanjung malim plant. The new car is now being tested for production optimisation and production is expected to commence by early february 2012. The new car will not only possess the latest trend in looks and style but it also comes with several new technology features and enhancements.

for example, 14 parts of the body in white are composed of a very hard metal derived through a process called hot Press forming (hPf). This new high technology process is a first in malaysia and South East asia. with this process, the parts can withstand a force of 1,500 mega Pascal. hence with the addition of these parts, it is possible for PRoToN to have a five star ncap rating car. another new production technology is the rolled hemming process. by this process each area can be finely tuned to give optimum pressure and hence higher quality. These production technologies are a cost reduced investment and are expected in the future, to reap benefits for PRoToN and decrease costs further.

all these means that continuous upgrades in the skills of our employees are a must. our employees, from the assemblers to the engineers, are committed to improve the quality and reliability of our cars. Various teams have been set up and daily audits are conducted at the workplace.

These efforts have led to increased numbers of suggestions received as part of our KaIZEN scheme. a total of 26,214 suggestions were received during the period under review, with total cost reduction recorded at Rm42.84 million.

Efforts to improve productivity and quality remains a core focus within the manufacturing division. Quality levels improved in 2010, and with the increase in production volume, we are also taking steps to raise our productivity index. we are putting plans in place to involve the vendor community in our efforts to raise manufacturing standards in the near future. This is crucial as minor disruptions in their operations can severely affect the performance of our production lines.


Plant operations at PROTON Shah Alam


In line with our target of quality improvement as a cost reduction strategy, the division has identified areas for improvement. In this respect not only is product quality being emphasised, we find it necessary to encompass the quality culture in our workplace to improve and sustain the quality levels of our products.

our employees are being continuously educated through on the job training and a problem solving culture is being built by having “GENba audits” daily. These early morning audits have proven effective in improving working conditions and many KaIZENs have been made as a result of these GENba observations.

further observations and daily improvement meetings to solve on-line quality problems have resulted in our team members gaining experience and confidence in problem solving.

This resulted in better numbers in our quality index and less rejection for our process.

PROTON Shah Alam

The PRoToN Shah alam manufacturing complex includes the original main Plant and the smaller multi Vehicle factory (mVf). a separate Engine machining and assembly building is also contained within the complex where cylinder blocks, crankshaft and camshafts for the Campro engine are machined and subsequently assembled.

There is also a Casting plant which is situated in the nearby Glenmarie industrial area. The casting plant is able to produce up to 180,000 cylinder blocks, crankshafts and bearing caps. There are plans to increase this capacity to 250,000 units per year. This year we are going to start the in-house cylinder head aluminum casting due to Start of Production (SoP) in december 2011.

This is our first time casting aluminum products. Nevertheless, with proper planning and training we are confident of acquiring this technology and delivering the results. Currently our cylinder head casting comes from Perodua and dung Jeo Korea.

The main plant’s capacity is 150,000 units while the mVf’s capacity is 50,000 giving a total capacity of 200,000 units per year.

The main plant currently produces the Saga, waja and arena models. The Saga is the highest volume model produced, averaging about 6,378 units a month during the period under review, and is expected to increase to 7,300 units a month for the next financial year. Production of the waja has ceased as planned since June 2011.

for the record, up to march 2011, production of the Saga reached a cumulative volume of 239,212 units since the start of production. by contrast, the production volume for the waja and arena were 4,772 units and 472 units respectively.

The medium Volume factory (mVf) solely produces the first malaysian mPV namely, the Exora. Since its introduction in april 2009, mVf has produced 58,795 units of Exora up till march 2011. In ensuring the EXoRa continues to capture the mPV segment, production of Exora fl has been planned and targeted for launch in November 2011. The stylish body kit, sporty alloy rims and the new interior look of tempest gray are designed to attract younger drivers who appreciate aesthetic touches.

This plant is also currently producing the Inspira – the designated replacement car for the waja. Production started in November 2010 and the volume produced for the Inspira in fy 2010/2011 is 7,035 units. The rise in interest shown has resulted in the increase of volume in the coming months. In order to cater to market demand, we have embarked on ongoing preparations to increase production capacity, such as adding a new automated spray line by September 2011 to increase the capacity of the Painting shop.


PROTON Tanjung Malim

PRoToN’s Tanjung malim plant in Perak has an annual capacity of 150,000 units (involving two shifts) with a 60% automation level, allowing man and machine to interact more efficiently, productively and safely. The plant comprises five main buildings namely Engine & Transmission (ETm), Stamping, body assembly, Painting and Trim and final assembly; all equipped with an automatic line Control or error-proof system to assist workers to enhance built up quality on-line and to achieve better production efficiencies.

To allow for greater flexibility in production, the plant is capable of producing multi-model products on a common line. Each line can assemble vehicles on three different platforms and produce up to nine different models at any one time. The Stamping shop is equipped with a 4,600 tonne transfer press, the largest stamping equipment and the biggest of its kind in the Southeast asian region.

Certified by ISo 9001 and ISo 14001, PRoToN Tanjung malim has set new standards for a more conducive, comfortable and safe working environment. worker friendly features include a high roof concept and natural aspirated ventilations that channel a cooling effect within the complex, where good ergonomics, brightly coloured floors and well lit interiors facilitate energetic and dynamic performance.

Currently, PRoToN’s Tanjung malim plant produces the Persona, Gen.2, Savvy and Satria Neo models with Persona being the highest volume model produced on a monthly basis. during the year under review, the plant produced 47,849 units of Persona; 3,090 units of Gen.2; 2,225 units of Savvy; and 4,574 units of Satria Neo.

for the next fiscal year, the production of Gen.2, Savvy and Satria Neo will cease. This is to make way for the production of our new first global car, the replacement for the Persona. although the current Persona model still commands a respectable volume, the company has formulated new replacement models as a refreshed effort not only to improve product but also as a means to increase the capabilities of our people.

Preparation is currently underway to validate production processes and various equipment are being installed in order to meet the scheduled start of production by early 2012. with new manufacturing technologies, there is a critical need to train our employees. Preparatory work such as early training and identification of problems is currently being carried out to ensure all aspects of our operations will be enhanced in time.

Automated plant operations at PROTON Tanjung Malim


Prospects

The total production volume for PRoToN cars in fy 2011/2012 is forecasted to increase by 2% compared to fy 2010/2011’s actual production volume of 186,769 units. The volume for this fiscal year has been set based on the projected domestic economic recovery, growth in Total Industrial Volume (TIV) and export volume expansion.

The small increase in volume is forcing PRoToN to rethink its strategy to optimise plant utilisation and if possible minimise additional required investment. This is to maximise the reduction of the overall manufacturing cost per unit.

manufacturing is committed to improve product quality and deliver new products on time. we are confident that we can achieve the required volume, but more importantly, we want our products to have enhanced quality at optimum cost.

for the next financial year, we plan to deliver 189,900 units, which means plant utilisation can now reach up to 91%. further upside in the volume is also envisaged due to positive developments in the Iran and middle East markets. furthermore, in view of the launch of cosmetic changes for the current models and the new replacement model for the waja, we are certain of an imminent increase in the production volumes, which is a very challenging scenario indeed.

Presently the Saga, Persona and Exora make up more than 55% of the total fy 2011/2012 volume forecast. as part of the activities to continuously refresh these models, cosmetic changes or face lifts have been planned. In addition, with the new full model change to replace the Persona, we anticipate renewed interest to result in an increase in production volume.

PRoToN is continuously improving its people capabilities in facing future challenges. In order to meet customer expections for better quality and services, we are putting together new plans to train our people and counter potential talent deficits. future endeavors such as the venture for CKd operations in Iran and India in addition to our current operations in China will require personnel with higher capabilities and greater experience.

apart from internal training, on-the-job training and GENba KaNRI (shop floor/control management), the manufacturing division has also introduced simulation training facilities, or the IEd simulation training centre. This has enabled us to train our employees on the concept of the Toyota Production system or lEaN manufacturing methods and simulate them off-line. New employees and management personnel have undergone this training to synergize their understanding of these concepts.

we are also currently in negotiation for possible collaboration with our vendors to realise cross training programmes for our executives to enhance their experience and expand their industry network. Several vendors have indicated their interest to be involved in this win-win partnership to improve performance. Such collaborations will remain a permanent agenda in our future plans.


QualITy maNaGEmENT

PRofESSoR dR. EdwaRdS dEmING, REfERREd To aS ThE faThER of QualITy EVoluTIoN, ofTEN REfERREd To STaTISTICS aS “Two PERCENT of ThE woRK... aNd ThE oThER 98 PERCENT IS abouT PEoPlE”. GENERally QualITy IS alwayS PERCEIVEd aS ThE ElEmENT of PRoduCT, whERE SomEThING wRoNG lIES wITh ThE PRoduCT wE buy oR uSE EIThER duE To SuPERfICIal oR fuNCTIoNal faIluRE. bEhINd ThE obVIouS ThouGh, ThE RooT of ThE PRoblEm uSually lIES wITh PEoPlE.



we can engineer the RIGhT product with the RIGhT system but without having the RIGhT aTTITudE or RIGhT CulTuRE in PEoPlE, we cannot succeed in producing QualITy products.

developing the ‘RIGhT CulTuRE & RIGhT aTTITudE in PEoPlE’ is PRoToN’s focal point for improvement. during the period under review, Group Quality division activities continue to build on people-centric quality improvement initiatives and programmes.

Customer Focus: Quality Improvement Team

within PRoToN, Quality Improvement Teams (QITs) – a cross functional team with representatives from various divisions namely Quality, manufacturing, Engineering & Procurement – are tasked to contionously improve Proton cars.

In fy 2010/2011, more than 300 improvement items have been implemented by the QIT as to reflect PRoToN committment towards customer satisfaction. with a total number of 530 staff working across the division to resolve customer concerns, the list of concerns collected throughout the years are recorded in the ‘lesson learnt’ database which are used by the Engineers as point of reference and guidelines in order to improve the future PRoToN models.

Towards Quality Culture: Quality Improvement Committee

The highest platform in PRoToN to discuss, recommend and resolve issues related to Quality, is through the Quality Improvement Committee (QIC). The weekly QIC meetings are attended by all operational units (ie Engineering, Group Procurement, manufacturing, Quality and after Sales division) and is chaired by the director of Group Quality. The QIC continues to be the platform for PRoToN’s seven core values, namely Quality, Customer focus, Innovation, Teamwork, Speed, Caring and honesty.

all improvement initiatives are discussed and resolved during the weekly QIC meetings under the four main areas of Engineering design, Suppliers, manufacturing and after Sales.

PROTON representatives posing with the MPC Chairman Award received during the Malaysia ICC National Convention 2010.


Innovative-Driven Quality: All Innovation Matters (AIM)

Improvement – whether related to work, family, financial or life – is the driving force that evolves human lifestyles. Through time, changing technologies are discovered and new human needs evolve driven by the human desire for improvement. Take for example, communication. we have now evolved from sending a letter across the world that would usually take weeks to arrive to writing e-mails which reach recipients instantaneously.

at PRoToN, the 7 PRoToN CoRE ValuES establish the basis for all innovation activities, be it on a small scale through ideas mooted by individuals (via aIm Suggestion Scheme) or on a big scale mode (via ICC)involving a group of six to eight people within the same department who are trained to identify, analyse, resolve or enrich work-related concerns guided by the Plan-do-Check-action (PdCa) cycle.

during the 2010/2011 financial year (fy 2010/2011), aIm Suggestion Scheme recorded 57,789 suggestions which resulted in cost avoidance amounting to Rm30.8 million; an improvement of more than 30% compared to fy 2009/2010. Through group innovation activities such as ICC, the period under review saw 415 groups registering cost avoidance valued at Rm49.8 million as a result of the projects implemented.

The industry recognised PRoToN’s ICC Group’s achievements with a Gold award during the International ICC Convention 2010 in India and mPC Chairman award during the malaysia ICC National Convention 2010.

believing that Quality Culture development should not be confined to the manufacturing plant but also nurtured and stimulated among the communities, PRoToN collaborated with TV3, SIRIm and the ministry of Science, Technology and Innovation (moSTI) to organise a Reality TV contest called ‘malaysian Inventors Challenge (IdEa)’ which aired on TV3 every Saturday at 7 pm from September till November 2010. The programme, developed as part of PRoToN’s Corporate Social Responsibility (CSR), was hosted by well-known artistes daphne Iking and malaysia’s astronaut mejar dr. faiz Khaled.

Total Quality Ownership (TQO)

PRoToN’s quality culture related activities are also extended to the suppliers. In fy 2010/2011, PRoToN’s Group Quality division in collaboration with PRoToN’s Group Procurement division, rigorously promoted Quality activities among the suppliers.

PROTON’s ICC Group celebrating after receiving the Gold Award at the International ICC Convention 2010 in Hyderabad, India.


a Zero defect campaign, ICC and KaIZEN programmes make up some of the activities introduced to enhance upstream supply operations.In fy2010/2011, more than 80 ICC were implemented by suppliers and selected suppliers were also involved in the Zero defect program. These initiatives have improved supplier quality PPm performance by 50%.

PRoToN’s quest for Quality perfection continues within both our Shah alam and Tanjung malim plants. with the Zero defect and Zero Quality control initiatives, the Cbu outgoing quality level for both plants improved by 30%.

Business Excellence: Quality Management Excellence Award (QMEA)

Comparing and measuring quality performance within our own turf is limiting. The only way for PRoToN to understand where it stands within the industry is to compare itself with other manufacturers of similar business size and highly accredited by reputable organisations or government bodies.

with that in mind, PRoToN eagerly accepted an invitation from the malaysia Productivity Corporation (mPC) and ministry of International Trade and Industry (mITI) to participate in the highly competitive Quality management Excellence award (QmEa) 2010.

PRoToN was selected by mPC as a participant to compete with other Government linked Companies (GlCs) and Global Companies that operated in malaysia under Category IV (annual sales turnover exceeding Rm100 million).

after a three-month evaluation (inclusive of an onsite visit) of PRoToN’s performance records from 2007 – 2009, mITI awarded PRoToN the prestigious QmEa during the malaysia Industry Excellence award (IEa) 2010 presentation ceremony in Kuala lumpur Convention Centre.

The selection criteria for PRoToN in winning the QmEa were based on excellence shown in:

• TopManagementLeadershipandManagementofQuality;

• Use of Quality Data and Information in theorganisation;

• HumanResourceManagement;

• CustomerFocus;

• QualityAssuranceofExternalSuppliers;

• ProcessManagement;and

• QualityandOperational/BusinessResults.

PRoToN’s Group managing director, dato’ Sri haji Syed Zainal abidin b Syed mohamed Tahir, received the award from Prime minister, dato’ Sri mohd Najib Tun abdul Razak and the minister of International Trade and Industry malaysia, dato’ Sri mustapa mohamed. PRoToN’s Chairman dato’ Sri mohd Nadzmi mohd Salleh and the Senior management of PRoToN were also in attendance to celebrate this proud achievement.



SalES & dISTRIbuTIoN

DOMESTIC MARKETThE fINaNCIal yEaR of 2010/2011 (fy 10/11) haS bEEN a SmooThER RIdE ComPaREd To ThE PREVIouS PERIod uNdER REVIEw. alThouGh wE aRE STIll faCING ThE Global ECoNomIC TuRmoIl, ThE ToTal INduSTRy VolumE (TIV) RECoRdEd a hISToRICal 605,156 uNITS, a 12% INCREmENT fRom ThE 536,905 uNITS RECoRdEd IN 2009. IN faCT, IT haS alSo SuRPaSSEd ThE oRIGINal TaRGET SET by malaySIaN auTomoTIVE aSSoCIaTIoN of 570,000 uNITS. ThE GRowTh IS SuPPoRTEd by Good PuRChaSE SENTImENT, fRIENdly fINaNCE faCIlITIES aS wEll aS maSSIVE PRoduCT lauNChES by auTomoTIVE PlayERS.

Campaign ambassadors DJ Lin (Suria FM), Jack Lim (MY FM) and Aanatha (THR Raaga) with Abdul Sidik Abdul Hamid, GM of Marketing, Proton Edar Sdn Bhd (second from right) at the launch of the ‘Persona Undoubtedly Campaign’.


PRoToN ranked second in terms of market share at 26%. with proper sales and marketing strategy combined with product launches of the Exora mC, Saga fl and Inspira, the performance in fy 10/11 was 3% higher at 162,012 units compared to 157,170 units in fy09/10.

The launch of the latest addition, Proton Inspira, to the family, has allowed us to capture more customers from different segments. The new sporty sedan contributed 6% to our monthly sales, the fourth largest contributor after the Saga, Persona and Neo. Saga remained the strongest contributor making up 45% of sales, continuing this multi award winning car’s reign as the most preferred amongst PRoToN models especially after the introduction of the Saga fl. The introduction of Exora mC has also enabled us to maintain our mPV sales performance while offering our customers a fresher look and feel.

To reach out to a wider consumer segment, PRoToN embarked on aggressive marketing initiatives during the period under review. There were more on ground activities, product demos as well as comprehensive advertisement campaigns via print ads, radio and outdoor media (billboard, overhead bridge, etc) to reach out to customers. The activities included the Exora VIP Test drive, Peace of mind campaign, roadshows, ‘Saga Snap & win’ contest, ‘Proton 4 you’ day and many more.

as part of our efforts to appeal to the Chinese market, we have appointed Jack lim as the Persona ambassador. Since then there has been vast improvement in terms of acceptance of the PRoToN brand.

In terms of Service marketing, more intense activities are being carried out to capture the “after warranty” customers in order to promote their visits to Proton Edar Sdn bhd (PESb) service centres. better value for money packages have been introduced to boost the said segment. In addition, tactical campaigns are also implemented every quarter to induce the element of surprise and enhance a ‘feel good’ sentiment among our customers.

Saga FL



during the Kuala lumpur International motorshow (KlIm) 2010, PRoToN showcased its five latest concept cars named after the five warriors i.e. Tuah, Jebat, lekir, Kasturi and lekiu. The response from the public was positive with the PRoToN booth enjoying high traffic visitation, positive feedback and immense enquires pertaining to the line-up.

awards achieved in 2010/11:

Model Awards

Saga Readers Digest Trusted Brand 2010 Gold Malaysia Voted by ConsumersFrost & Sullivan 2010 best Practices awards

Exora Readers Digest Trusted Brand 2010 Gold Malaysia Voted by ConsumersFrost & Sullivan 2010 best Practices awardsCar of The Year Awards 2010 CImb bank auto.Ride

Persona Readers Digest Trusted Brand 2010 Gold Malaysia Voted by ConsumersFrost & Sullivan 2011 best Practices awards

The PROTON booth at The Kuala Lumpur International Motorshow 2010


EXPORT MARKETThE PRoToN EXPoRT buSINESS waS EXPECTEd To GRow EXPoNENTIally ThRouGhouT ThE fISCal yEaR GIVEN a SERIES of PoSITIVE ouTComE RECoRdEd IN ThE SamE PERIod of ThE PREVIouS yEaR. howEVER, dESPITE ThE NoRmal aNTICIPaTIoN baSEd oN ThE GRowTh of dEmaNd foR PRoToN CaRS, SomE uNEXPECTEd ChallENGES aRoSE aNd RESulTEd IN REVISIoNS oN ImPlEmENTaTIoN aPPRoaChES IN SomE maRKETS, SuCh aS ChINa, auSTRalIa aNd ThE mIddlE EaST REGIoN.



Nonetheless, PRoToN continued to sustain business operations in existing markets and concurrently assessed strategic permutations to execute the Group’s long-term aspirations of the asian multi-local oEms (amlo). Essentially, major pre-requisites towards realising the amlo Strategy were being aligned in order to ensure market-driven products and an equitable business model will be delivered in a timely manner, with ‘customer-satisfaction’ being of top priority.

Performance and Operation

The period under review continued to emphasise the efforts to strengthen PRoToN’s export foundation, especially in terms of attaining sustainable sales and improving the overall business implementation, in terms of financial performance and customer management.

In general, PRoToN recorded an achievement in increasing Complete Knock-down (CKd) sales to China and sustaining Complete build-up (Cbu) exports from malaysia to existing markets, in line with the amlo implementation plan. The total shipment to overseas markets increased 12.3% compared to the same period of the previous year. This was mainly contributed by the incremental CKd and Cam Profile Switching (CPS) engine to China by 2.5 times more compared to the previous year. however, despite challenges faced in key markets such as australia and the middle-East region, Cbu exports were able to achieve a shipment of within 10% compared to the previous year, in which the five top performing markets were Thailand, australia, Indonesia, Egypt and Syria.

In Thailand, Proton models were gaining higher acceptance gauging from various feedback from the customers, dealers, motorshows and mass media. The Exora received accolades as one of the Top Ten Passenger Cars 2010 in the bangkok Post. The introduction of Saga fl and improvement initiatives at dealer network will be a hopeful stream for PRoToN to achieve greater success.

In Indonesia, PRoToN has established itself as the 12th top brand in the market and managed to increase volume by 23% in 2010, in which the Exora has again been the best selling model and has remained the core product for PRoToN Indonesia. with the current outlook and barring any unforeseen circumstances, PT PEI is expected to perform better in the new fiscal year.

besides the sales drive, PRoToN has also implemented several initiatives as attempts to enhance the overall export-related operations:

• Implementation of the PROMISE system hasenabled PRoToN to improve inventory control and develop a more reliable sales plan by having better visibility in terms of tracking of stock, delivery-to-Customers and shipment.

• Amorestructuredengagementwithdistributorsand dealers has ascertained business requirements in the respective markets abroad, resulting in a more reliable marketing plan and timely execution.

• Constant,directandamorestructuredfeedbackfrom distributors have enabled PRoToN to carry out detailed product analysis for future model development.

• As part of the Group’s efforts to enhance PRoToN’s global brand recognition, promotional activities in relevant key markets were conducted to leverage on motorsports programmes e.g. lotus-Renault Grand Prix in formula-1 and Team Proton motorsports S2000 in the world Rally Championship. Eventually, the association will promote ‘ride and handling’ as the unique selling proposition of Proton cars.

• Dealerdevelopmentisnowcentrallycoordinatedto ensure compliance with Corporate Identity implementation, consistent 4m standards and focus on CSI/SSI improvements.


• On after-sales parts operations, the orderfulfillment rate has been improved to 90%, progressively mitigating concern areas in three categories – fast-moving (serviceable items), medium-moving (wear and tear items) and slow-moving (body parts and crash-repair items).

Through feedback from all importers, PRoToN now has a clear price and product positioning when compared against key competitors by segment, in respective markets. The information has enabled PRoToN to strengthen the long-term product strategy, business model and brand-building programmes in realising the amlo aspirations.

Prospects

moving forward, in order to achieve the Group’s aspirations towards realising the amlo Strategy, business requirements in key markets abroad will need to be ascertained in great detail. Phased implementation plans have been laid out in order to ensure focused programmes are effectively executed.

acknowledging the immediate focus on major pre-requisites, PRoToN will place emphasis on activities in key related areas:

• Productstrategiestoensuremarketrequirementsare fulfilled in the new models throughout their lifecycle. detailed analysis on positioning, price-volume sensitivity and commercial viability shall enable development programmes to be precisely coordinated, from conceptual stage to manufacturing preparation activities.

• Operationalstandardsaretobeestablishedwitha concerted intent towards attaining customer satisfaction and confidence towards the PRoToN brand. These cover after-sale services, dealer development, marketing and communication.

• Aviablebusinesscaseneedstobedevelopedinorder to conclude an equitable business model with our business partners in the respective markets, especially in amlo markets. To date, dedicated cross-functional teams have been tasked to explore strategic opportunities respectively in China, India and Iran, with the intention of leveraging on each others’ strength in the core value chain, such as product engineering, manufacturing, vendor base and local market experience. Eventually, the desirable package covering product portfolio, market presence and operational approach will determine an executable collaboration structure and eventually deliver benefits to both the Group’s and PRoToN’s export businesses.

whilst the focus on current export operations remain, PRoToN will continue to pursue the benchmarking exercise that will eventually enrich the brand value and improve profitability to the Group and respective stakeholders. The focus on product portfolio and positioning, marketing, distribution and customer experience such as quality and after-sales services will chart the pathway towards successful businesses abroad for PRoToN.

Participants of the PROTON International Distributor Conference 2011



CHINA

Overview

In 2010 China continued to record robust growth with 18.1 million vehicles sold which represent a 33% increase over 2009. The growth was mainly powered by favorable government incentives, urban economic development and China’s stimulus package to boost the economy. we expect China’s long-term growth to remain intact and continue in the next few years due to the current low motorisation rate and buoyant economy. Caam (China association of automotive manufacturers) expects China’s TIV to reach 20 million units in 2011.

Operations

during the period under review, PRoToN’s business arrangement with China-based Jinhua’s youngman automobile Group has developed from Cbu into CKd to capitalise on tax savings for locally manufactured vehicles and leveraging on China’s lower cost base for manufacturing and components sourcing.

youngman plants in anshun, Jinan and Tai an have been operational since 2009 and the hangzhou plant has been operational since early 2011. The hangzhou plant produces the youngman l5 model which utilises the modified Gen.2 platform and Campro CPS engine.

To accelerate PRoToN’s strategy into China and serve the market better, PRoToN will upgrade the current Representative office in hangzhou, Zhejiang Province to a wholly owned foreign Entity (wofE) in Shanghai which will be operational by end 2011. The wofE will allow PRoToN to conduct business and pursue new opportunities in China. The Satria Neo, artiga Concept Car and lotus Europa were displayed during the Shanghai motor Show in april 2011 to enable PRoToN to gauge market acceptance and pursue future opportunities for these products.

Currently, PRoToN cars are being sold under the youngman brand through 100 appointed dealers throughout China.

Thailand Motor Show

THAILAND

Overview

Thailand’s automotive industry in 2010 showed a significant increase of 46% against 2009 despite domestic political instability. The remarkable growth in the Thai automotive industry is due in part to the reduction in excise duties for small passenger cars. This reduced the prices of cars and the added advantage of credit availability was instrumental in increasing demand. The rise in petroleum prices did little to dampen the automotive market growth in Thailand.

PRoToN continues to make headway in the Thai market with our strategy of practical designs at affordable prices. The Proton Exora which was introduced in dec 2009 was voted as a Top 10 model by bangkok Post for the year 2010. In 2010 we also saw the introduction of Saga fl in the market, competing heads on with Eco cars. Currently, through our Thailand distributor, Phranakorn auto Sales Co., ltd (PaS), PRoToN has a network of 40 dealers (all 3S outlets) throughout Thailand. The current in service models consist of Savvy, Saga fl, Neo, Neo CPS, Gen.2, Persona and Exora.


Prospects

To combat the negative climate and retain the “detroit of asia” title, the Thai government has set up industrial estates which offer tax incentives, lower import duties, one-stop visa and work permit advantages. also, multinational investors are not required to have a local partner which is an advantageous proposition compared to most other Southeast asian countries.

for the automotive industry, the Thai government introduced a number of measures to encourage both the production and the domestic sales of more environmentally friendly vehicles, including the promotion of bio-fuels. The eco car project was on stream with the 1st CKd eco car officially launched by Nissan during the march 2010 motor Show.

The recovery in the automotive industry is expected to continue in 2011 with a forecast target reaching 880,000 units despite sluggish business in the 2nd quarter stemming from Japan’s devastating earthquake and tsunami which disrupted production and demand. Nonetheless, stable interest rates and new launches in the small and mid-size car segment will spur demand from consumers. a factor which should be closely monitored is the increase in fuel price which will drive the demand for cars that are capable of utilising alternative fuels like E20 and CNG as well as fuel efficient ECo cars or hybrids.

Operations and Performance

within a short span of three years, PRoToN has established itself as one of the top ten players in the Thai automotive market, with No. 8 position in the passenger car segment and No. 10 in terms of overall TIV in Thailand.

overall, as per financial year ended 31 march 2010, PRoToN achieved a remarkable result for fy 2010/11 with 5,615 units exported to Thailand surpassing the target of 4,060 units. In terms of retail sales, the PRoToN brand achieved 5,080 units

or a 46% increase against the target of 3,488 units. Total sales revenue improved correspondingly and was recorded at Rm259.9 million, a 43% increase against the target of Rm181.36 million.

INDONESIA

Overview

PT Proton Edar Indonesia (PT PEI) was established on 16 august 2002 but commenced full operations on 16 march 2007, as part of PRoToN’s brand expansion and amlo strategies to spread out its presence intensely and dynamically.

PT PEI till end 2010 offered the Indonesian market seven attractive models to target the different segments. The models are Savvy, launched in July 2007, that received 2 awards for best City Car from majalah mobil motor and auto bild Indonesia; the Gen.2 and Neo (also launched in 2007), with the more sporty and stylish outlook within the hatchback categories; and not forgetting the highly comfortable and functional mini sedan class, the Gen.2 Persona, and waja (launched July 2007) and the Saga (launched march 2009). Saga has won the “2009 best budget Sedan”, awarded by Indonesia otomotif awards.

In a country where there is a large preference for mPVs, the Proton Exora gathered the most accolades. This model has become the biggest sales contributor to PT PEI since its launch and debut at the Indonesian International motor Show in 2009. Exora has been awarded by Indonesia otomotif awards the “2011 best budget mPV”.

on the dealer network aspect, as of 31 march 2011, PT PEI has appointed 17 sales outlets and 30 after-sales service centres/authorised workshops throughout Indonesia and PT. PEI is looking at expanding its sales coverage to 25 outlets in fy 11/12.



Performance

PRoToN has established itself as the 12th top brand in the Indonesian automotive market; just below Chevrolet and hyundai.

Total Industry Sales increased by 57% to 764,710 in 2010 vs. 2009 while the Passenger Segment increased by almost 55% to 447,336 units. while PRoToN’s growth was not as spectacular, it still managed to increase the volume by 23.45% to 2,060 units in 2010. The Exora has again been the best selling model and achieved a growth of 57% as opposed to that of 2009 and has remained the core product for Proton Indonesia with 1,038 units in 2010. In fy 11/12, PT PEI aims to improve sales by 50% leveraging on the positive response for the Exora.

Prospects

while Indonesia’s economy is expected to grow, there were some question marks on the sustainability of last year’s growth in the automotive sector. firstly, possible increases in tax for second and third cars in a household will likely dampen growth. further, a decrease of fuel subsidies will also challenge the growth of the automotive industry in 2011. In this prespective, PT PEI has charted short term and long term implementation plans to sustain the favorable response towards PRoToN, by capitalising on the positive response for the Exora.

Growing market confidence in PRoToN has enabled PT PEI to garner support and cooperation from several leading finance and banking institutions. This confidence has also stimulated interest from the car rental and public transport sectors throughout Indonesia which in turn can assist in increasing PRoToN’s resale value. with the current outlook amd barring any unforeseen circumstances, PT PEI is expected to perform even better in the new fiscal year.

SINGAPORE

Performance and Operations

The new car market in Singapore is regulated by the Certificate of Entitlement quota (CoE) which is issue by the land Transport authority (lTa). TIV has consistently outgrown the road space development which leads the lTa to introduce a drastic change in the formulation of quota supply. This new measure has created a drastic decline of quota supply and as a result, the quota premium (Category a for 1.6l and below) witnessed a jump of 157% (from S$18,502 to S$47,604) within the year 2010 which is a ten year record high.

due to the high CoE prices, Singapore’s 2010 TIV contracted over 39% compared to 2009; with Category a in particular shrinking over 51%. a few China makes have thus withdrawn from the local market due to this high CoE. PRoToN’s sales also suffered a 38% drop in this tough environment. however, the premium segment has gained the opportunity of this CoE price and the robust Singapore economy to increase its market share.

besides continuing to be more cost efficient and productive, Proton Singapore is planning to restructure its operations so as to obtain a better balance of economies of scale. moving forward, a long-term plan is being formulated to ensure sustainability and continuity to enhance PRoToN’s network and presence.

Prospects

outlook for the next two years will be tough as the CoE quota supply will continue to reduce and increase competition in Category a from premium brands. The TIV in 2011 is forecasted to be hovering around 25,000 units, due to the CoE regularisation process.

PRoToN Singapore’s team has a clear focus on the future; and with the new business structure and attractive model lineup, Proton Singapore is confident of growing stronger once the local market recovers.


AUSTRALIA

Overview

over this period the australian industry volume increased by 10.5% compared to the previous year. Improved economic conditions and heavy promotion by industry competitors lead to an overall volume of 1.035 million sales. The sales result was the second highest annual volume recorded in the australian market.

Proton Cars australia recorded a 16.1% increase in sales on the back of the improved trading environment. The main sales increase came from the successful launch of the S16 (Saga) which was overwhelmingly accepted by the australian public.

The introduction of Chinese and Indian manufactured vehicles continues to place pricing pressure on the wider market. The outlook is for prices to fall slightly with an increasing number of players however the strong australian dollar will result in an increase in gross margins.

Operations

The 2010/11 financial year was one of rationalisation and consolidation. The improved economic conditions attracted many new entrants to the market hoping to capitalize on the increasing sales. The induction of new dealers kept overall representation stable as the consolidation and rationalisation of the network continued.

Proton australia continued with its sponsorship of the west Tigers Rugby league football team, who qualified for the finals series for the first time in the five year sponsorship. an estimated 420,000 people attended matches live during the season enhancing the PRoToN profile in australia.

Proton australia also continued the miss universe australia pageant association where the winner acts as PRoToN’s ambassador in australia. This year Jesinta Campbell was the successful contestant who subsequently went on to represent australia in the miss universe Pageant in las Vegas where she finished second runner up. Proton australia has also continued with its support of the Safe drive Training programme which trains school students throughout New South wales and Queensland.

Performance for The Financial Year

on the back of an increase in sales volume, Proton Cars australia is committed to overhead cost reduction via innovative supply chain improvement. The combined effects of these activities will yield improvements in the financial results.

Prospects

Proton australia continues to grow and is bullish in its outlook for the coming financial year. despite a forecast decline in total industry volume, Proton Cars australia is expected to continue to improve unit sales and the overall financial result. The launch of the Exora and S16 toward the end of the financial year will assist in leveraging new dealer representation and set a footing for continued growth over the next decade.

Jesinta Campbell, winner of Miss Universe Australia, takes on her role as PROTON’s ambassador in Australia.



UNITED KINGDOM

Overview

The uK car market in 2010 was certainly a game of two halves. In total the TIV grew by nearly 2% over 2009 but the increase was entirely due to the strong performance of the fleet/business buyer segment which accounts for over 50% of uK sales. The retail buyer segment saw a 7% decrease in sales and this would have been significantly lower had it not been supported by the government scrappage scheme which ended in the first half of 2010.

high fuel prices and economic factors drove demand for smaller more fuel efficient cars, with “b” segment (Supermini) vehicles accounting for 37% market share and diesel vehicles increasing market share to over 46%.

The uK government’s commitment to lowering emission levels was spearhead by changes to annual car tax costs which saw higher Co2 cars paying more tax while lower emission cars saw reductions or even zero tax rates on some models. This along with other initiatives such as exemption from london congestion charges and free parking for lowest emission vehicles increased consumer demand for these models.

Performance & Operations

Continued reduced demand in the retail segment where PRoToN Cars (uK) ltd mainly operates and competitive pressure saw PRoToN sales fall by 20% over 2009 although first half sales were over target.

In such tough market conditions it was important that the company continued to drive cost cutting and efficiency programmes while maintaining industry leading service levels. Towards this end significant overhead cost reductions were achieved while service was maintained as evidenced by a uK wide survey of new car dealers where Proton Cars (uK) ltd was awarded six first place positions for various categories of support to its dealer network.

Prospects

The uK Vehicle market is forecast to improve from this year and expected to return towards the record 2.4 million annual sales levels of previous years in the short to medium-term.

Strong growth is forecast in the supermini, mPV and Crossover vehicle segments while demand for alternative fuel vehicles which took a 1% market share in 2010 is sure to grow thereby supporting PRoToN’s plans in these areas.

84

The LOTUS Story

Unveiling the New Lotus Vision

To say that the financial year ended 31 march 2011 was an exciting one in lotus’ history would be an understatement. Excitement aside, it was a year of extreme importance to the development of the lotus Group as on the back of a new five year business plan, lotus embarked on a bold transformation plan – a plan that set a new benchmark within the industry.

at the beginning of the financial year, the management team set aggressive corporate objectives in line with the approved business plan. These objectives could be broadly summarised as follows:

Existing Operations

• Changetheworkcultureandstrengthenmanagement;

• Improveoperationalexcellenceandincreaseworkforceproductivity;

• Sustainsalesofcurrentproductrangevianewproductintroduction and improvement and focused marketing campaigns;

• Reshape Lotus Engineering organisation and growthird party engineering business;

loTuS



during the course of the fiscal year, the revenue from sales of vehicles and parts amounted to £98 million and the total units of lotus products sold increased by approximately 3% to 1,985 units. This was driven by demand for the lotus Elise closely followed by the lotus Evora. lotus products were sold globally across 31 countries. In addition to lotus products, lotus continued to contract manufacture the Tesla electric roadsters, with a total of 690 units manufactured during the fiscal year.

The management team continued to employ prudent policies to control and stem the rise in operational costs. There was an increase in operational cost compared to the preceding financial year driven by higher marketing and promotional costs. These arose from activities aimed to radically shift and reposition the lotus brand and investment of this kind is critical to support future lotus products, the first of which will be the lotus Esprit which is slated to be commercialised by end of 2013.

overall, the financial performance of the lotus Group was in line with that projected in the business turnaround plan.

Future Investment

• UnveilthenewLotusvisionandfutureLotusproductrangetoaglobalaudienceatthe Paris motor Show;

• Commenceandacceleratethedevelopmentoffuturemodels;

• Consolidateandoptimisethedealernetwork;and

• RevitaliseandrebuildHetheltocaterforfuturebusinessrequirements.

above all, the management team set out to achieve the financial targets and in this, they succeeded. for the financial year ended 31 march 2011, the consolidated revenue of the lotus Group increased by 8% to approximately £150 million compared to the preceding financial year. This can be primarily attributed to the increase in revenues of the Engineering division as well as the wholly-owned subsidiary lotus lightweight Structures ltd, which provides aluminium fabrication services to automotive clients.


Organisational Development and Employee Relations

with the formulation of the new five year business plan, it was crucial that lotus had the right people with the right skill sets and experience to deliver the new vision. a world class management team was assembled, with individuals from leading premium brands such as ferrari, mercedes amG, Porsche and aston martin recruited. The strengthening of the management team did not stop at the senior management level, the mid-management level was also substantially strengthened covering all areas of the business including production, operations, engineering, sales and marketing as well as support services. This initiative is part of lotus’ long term strategy to build, develop and nurture its human capital.

Realising such an ambitious business plan is no small undertaking and to assist with this an advisory Council was established comprising leading industry experts including bob lutz, Tom Purves, dr Prof burkhard Göschel and frank Tuch. between them they possess more than 150 years of accumulative automotive experience covering engineering, technology, product marketing, sales and distribution, production and quality.

The advisory Council met three times during the fiscal year and played an important role in providing lotus management with valuable guidance and advice on the various aspects relating to the delivery of the transformation plan.

In addition, the management recognised the importance of cascading the vision, mission and core values within the organisation. In this respect, the management frequently engaged with staff representatives as well as the general workforce with quarterly briefings and events taking place to keep them abreast of the latest corporate developments. a new employee handbook setting out lotus’ corporate aspirations and values was introduced to promote work culture changes, increase morale and re-motivate the workforce with a new sense of pride, purpose and a feeling of belonging.


Operational Improvements

of the various corporate objectives set for the financial year, one of the top priorities was to improve the operational excellence and the quality of lotus’ products and services by employing industry best practices and processes. To begin this process, the factory and workforce standards were raised in line with brand aspirations and business requirements. The concept of lean organisation was reiterated with the re-organisation of top line managers and supervisors across the business and the introduction of flexible working patterns in the factory to cater for the seasonal requirements of the car business.

The setup of the lotus production lines were re-evaluated and eventually changed from two separate lines to a multi-line format to improve line optimisation and flow. New processes such as kitting were introduced to improve material flow and reduce missing parts and general obsolescence and the supply Chain management System was further improved to reduce stock levels.

as a result of these efficiency processes and various other initiatives, operational efficiency and workforce productivity improved. for example, Evora assembly hours were reduced by 16% and wastage and scrapage were reduced by a 57%.


Lotus Engineering

lotus Engineering continues to play a crucial role within the lotus Group, not just because of the revenue generated but also because of the innovation and technology prowess that it brings to both lotus and the PRoToN Group.

lotus Engineering continues to gain recognition for engineering and technological excellence for its ability to create innovative and advanced technological solutions. In december 2010 lotus Engineering scooped two trophies at the Engineer awards for Project omnivore and the fuel Cell hybrid Taxi. In addition to these awards, lotus Engineering won recognition as The New Economy’s Smart mobility & Networks Company of the year 2010.

during the year, lotus Engineering underwent a re-organisation process to realign its business strategy and strengthen its foundations in order to further grow its third party business. The breadth and depth of lotus Engineering was significantly improved focusing on the four core competencies;

• LightweightArchitectures

• DrivingDynamics

• EfficientPerformance

• ElectricandElectronicIntegration

a competence gap analysis and improvement strategy was undertaken resulting in strategic partnerships with other leading engineering service provider to fill the gaps and jointly exploit business opportunities.

lotus Engineering has been awarded numerous contracts by major oEms to design and engineer various green ecological vehicle demonstrators utilising fuel cells and electric and hybrid electric with range extender capabilities. These demonstrators were showcased at various international motor shows and engineering exhibitions which further reaffirmed lotus Engineering credentials.

Fuel Cell Hybrid Taxi

Omnivore engine


New Product Introduction and Improvement

lotus products have historically been and will continue to be at the centre of all activities undertaken by lotus. It is lotus’ mission to offer its customers best-in-class products focusing on key attributes of premium sportscars. during the year, lotus undertook various development programmes to enhance its product offerings by launching new variants of the current product range therefore broadening and refreshing the range of products available to customers. In addition, numerous quality improvements initiatives were undertaken and introduced throughout lotus products.

New model variants successfully launched during the fiscal year included:

Evora S and Evora IPS (Intelligent Precision Shift)

The Evora S and Evora IPS option were evolutions of the multi-award winning Evora. These new model variants were unveiled at the Paris motor Show in September 2010 to international acclaim.

The Evora S was developed with performance in mind as it boasts a power upgrade of 70 PS to 350 PS. In addition, the Evora S comes with quality improvements and a visual differentiation when compared to the base Evora.

The Evora IPS on the other hand sees the Evora fitted with an 6-speed automatic gearbox with lotus developed transmission control assuring a superior automatic driving experience. The IPS version of the Evora allows the driver to easily switch between manual paddle shift and automatic drive modes.

The Evora IPS broadens the appeal of the Evora and reaches out to slightly different markets, such as asia, the middle East and america where automatic vehicles are more widely established.

Elise Club Racer

True to the lotus ethos of performance through lightweight, the Elise Club Racer was unveiled at the Geneva motor Show in march 2011. This variant reaffirmed the iconic Elise’s status as the lightest of

lotus’ modern cars shedding a further 24kg of the weight to 876kg. Thanks to intelligent engineering, the Elise Club Racer also boasts the lowest Co2/km of any gasoline sportscar at a mere 149g/km.

Sales and Marketing Activities

In order to support the sales of existing products and services as well as to ensure continuous excitement is generated for the lotus brand in accordance with the brand repositioning aspirations and core values, more than 250 marketing activities were undertaken during the fiscal year. This included an exciting motorsport programme, national advertisements and direct marketing campaigns, product placement and presentations as well as tactical “city storm” campaigns and track day events.

furthermore, lotus worked closely with the dealer network to support local marketing activities. New marketing collateral was developed including product brochures in multiple languages with new corporate identity, sensational product videos, an innovative and dynamic new website with product configurator features, dealer toolkit with guidelines on marketing activities, standardised collaterals production, training material and many more.

Participation and the manner in which a premium sportscar manufacturer appears at international motor shows are of great importance as these events are used as a showcase to the industry as well as the public. In this respect, lotus completely revamped its corporate identity which included the realignment of the lotus brand dNa and the introduction of new corporate identity guidelines.



on the back of the revamped corporate identify, lotus invested in new motor show stands and fixtures to provide a premium experience and a standardised look and feel for participation at any motor show or event. The adoption of this revamped corporate identity was first rolled out when lotus participated at the Goodwood festival of Speed, uK in June 2010 and was subsequently used in the various other motor shows and events that lotus attended including:

• PebbleBeachConcoursed’Elegance,America

• ParisMotorShow,France

• LosAngelesAutoShow,America

• NewYorkMotorShow,America

• GenevaMotorShow,Switzerland;and

• KualaLumpurInternationalMotorShow,Malaysia

Re-launch of the Lotus Brand and the “Dawn of a New Era”

The Paris motor Show at the end of September 2010 was undoubtedly the most significant milestone made by lotus during the year. lotus’ “dawn of a New Era” campaign will go down in history as one of, if not the most remarkable debut event of any car manufacturer at a major international motor show. lotus was deemed the star of the show, clearly meeting the primary objective to unveil the new lotus vision and intent.

It was at the Paris motor Show that lotus showed the new corporate identity at what was the largest ever lotus motor show stand displaying a total of ten lotus products as well as a dedicated display area for lotus Engineering and lotus originals – the new merchandising range.

lotus revealed six brand new concept cars and in doing so brought back historical iconic models: the Elan, the Elite, and the star of the show, the Esprit. These product intent prototypes provided the industry and the public with an insight into the new lotus product range and gave people an idea as to what to expect in terms of styling, versatility, quality and performance, essentially showcasing the new dNa. The response received was highly encouraging clearly demonstrating that lotus was back and on the right track.

The lotus press conference at the Paris motor Show was broadcast live to a global audience via a web stream from the new website and news from the launch was picked up by more than 250 media outlets around the world. from Paris onwards, lotus has featured in various regional, nation and international media outlets (print, on-line and broadcast) which has helped create awareness of the lotus brand, the new vision, products of the future and crucially, the existing product offerings.

while the Paris motor Show was important to lotus from a marketing and brand promotion perspective, it was equally important for lotus to use the opportunity to capture industry feedback. This gave lotus tremendous market intelligence relating to the appeal factors of lotus product offerings, both existing products and future concepts which were fed back into the organisation and changes have or will be made where necessary to address any shortcomings.

Motorsport Activities

The past financial year also marked the re-entry of lotus in professional motorsports activities. This is a long-term project which is of extreme importance to lotus given its roots and rich history derived from motorsports. as a natural consequence motorsports will be the primary marketing and brand experience platform for lotus moving forward.


In december 2010, lotus became the title sponsor of the Renault formula one Team a top team within formula one™ resulting in the newly named lotus Renault GP. lotus Renault GP, which races in the famous black and gold livery, started the season in spectacular style with podium finishes at the australian and malaysian Grand Prix.

lotus’ association with lotus Renault GP has brought a magnitude of commercial benefits. In particular, lotus’ brand awareness has increased significantly especially in key growth markets such as asia, middle East and latin america, markets of which lotus plans to grow. In addition, lotus also benefits from technology transfers and sharing of facilities. lotus Renault GP has been instrumental in assisting lotus in developing products for its client racing activities, a good example of this is the formula one™ inspired customer race car, the lotus T125.

other professional racing activities that lotus has ventured into include IndyCar in america, GP2 and GP3 which are feeder series to formula one™ as well as GTE and GT4 endurance racing.

lotus’ involvement in professional racing activities is already starting to bear fruit as the lotus branded teams become more competitive and begin to win races. This is boosted by an increase in media coverage which in turn results in more followers around the world. Today, the lotus brand awareness is much higher than it was a year ago, raising the desirability of lotus’ product offerings amongst existing lotus owners and first time buyers alike.

In addition to professional racing activities, lotus had increased its focus on client racing activities developing new motorsports products for the motorsports fraternity. This not only brings an additional revenue stream to lotus but also provides a halo effect to the lotus roadcar products. Key programmes developed during the year include the Evora GT4 and Enduro both of which are derived from the road going Evora, reinforcing the superior handling and performance of the latter.

for the ultimate driving experience, lotus created the T125, a limited edition formula one™ inspired car that combines formula one™ technology with expert one-to-one advice from former formula one™ drivers such as Group lotus ambassador Jean alesi and professional trainers from the sport. The experience allows owners the unique opportunity to refine their driving skills and challenge themselves at the pinnacle of motorsport.

Not wanting to neglect the current race enthusiast lotus owners, lotus has undertaken an exercise to standardise and consolidate the various lotus Clubs in Europe, asia and america which together represent the second largest single manufacturer club series in the world. Together with the creation of the lotus driving academy, these client racing activities help to promote greater affinity and brand loyalty of both experienced and amateur racers.

Lotus Dealer Network

as part of lotus’ transformation plan and to ready the sales channels for the future products offerings, lotus has also undertaken a complete review of its dealer network and development strategy.

In august 2010, lotus began a strategic dealer rationalisation exercise initially covering the uK and Europe and later extended the activities to other regions including america and asia. New dealer standards were developed in line with the relaunch at the Paris motor Show. These new dealer standards were created to realign and uplift the brand with the objective of providing a best-in-class sales and after sales experience to lotus customers. It is lotus’ aim that the more premium standards will be introduce gradually over the next few years in preparation for the sales launch of the Esprit in 2013. meanwhile, lotus has developed interim dealer standards to provide a fresh look to lotus existing dealers.



during the year, lotus appointed new dealers and distributors to strengthen presence and coverage in existing and new markets. In respect of the latter, lotus appointed a distributor in China, a move which marked the official entry of lotus into the largest automotive market in the world.

Infrastructure Improvements at Hethel, Norwich

a considerable amount of investment has been earmarked for the expansion and modernisation on the infrastructure at lotus’ head quarters in hethel. This is to meet future business requirements as the cars, motorsports and engineering activities grow while at the same time transform hethel into the epicentre for the lotus brand.

during the year, lotus completed the refurbishment of the Corporate office building which also houses the lotus Engineering offices. work commenced to upgrade one of the factories that will provide lotus with further flexibility around production processes and cater for increase production volumes. The lotus test track, a key asset to lotus was upgraded to meet strict fIa standards, this was complete and relaunched in true lotus style on 21 June 2011.

Future Prospects

with the tremendous commitment and support from the various stakeholders, lotus has now entered into the second year of transformation armed with the necessary elements to execute the business plan. whilst there are still vast amounts of work to do and many challenges ahead, lotus believes that it has the conviction and determination to move forward with the plan for the future success of lotus and the PRoToN Group.

PROTON’s Group Managing Director Dato’ Sri Haji Syed Zainal Abidin B Syed Mohamed Tahir with the team at Lotus.

Lotus headquarters at Hethal



PRoToN aNd moToRSPoRTS

moToRSPoRTS IS PRoToN’S KEy STRaTEGy foR a dyNamIC ShowCaSE foR PRoToN’S bRaNd, PRoduCTS aNd TEChNoloGy. IT SuPPoRTS PRoToN’S ambITIoN IN ESTablIShING ThE bRaNd Globally ThRouGh a GRowING faN baSE woRldwIdE.

PROTON Motorsports Team celebrating after an impressive win at the Asia Pacific Rally Championships Malaysia 2011.


PRoToN’s involvement in motorsport is spearheaded by PRoToN’s motorsports division which pioneers the research, development and production of race and rally cars, Proton’s performance parts and special edition vehicles that are inspired by motorsports participation. In malaysia, PRoToN’s motorsports division is synonymous with the “R3” brand. The term “R3” stands for “Race, Rally and Research”.

Proton motorsports participated in the fIa asia Pacific Rally Championship (aPRC) and the Intercontinental Rally Challenge (IRC) spanning asia Pacific and European countries such as malaysia, Japan, New Zealand, New Caledonia, australia, China, monte Carlo, Spain, ukraine, belgium, Czech Republic, hungary, Italy and Scotland. PRoToN features the Satria Neo Super 2000 in these rallies, a car that is the result of a combination of innovative road car engineering designs and motorsports technology as stipulated under the fIa S2000 regulations.

PRoToN will also feature in the malaysian National Circuit Championship otherwise known as the malaysian Super Series (mSS). The team will feature a production class Satria Neo and Gen.2 in this highly competitive event. Competing against some of the largest teams and manufacturers in the world continues to push the boundaries of technical advances and design which has resulted in a combination of greater performance and reliability.

Operations Review

Carrying the malaysian flag in international rallying are world renowned drivers, alister mcRae, Chris atkinson, Giandomenico basso and PG andersson. These drivers have proven to be some of the sports most exciting drivers at the world Championship level having competed with some of the top manufacturers in the world such as mitsubishi, Subaru, hyundai, fiat and Suzuki.


PRoToN has had a colourful journey into global rallying. The Satria Neo S2000 made its debut in the IRC and aPRC in 2009. Since then, the team has proven to be one of the most popular with those “little yellow cars” and our drivers getting plenty of attention from both the spectators and media. The team has also been a consistent Top 10 finisher in the IRC against the likes of Peugeot, Skoda, fiat abarth, Subaru and mitsubishi. for the aPRC season ending 2010, the team finished on a high with a 1st

and 2nd placing in Rally China 2010, securing 2nd place in the manufacturers Championship. for the 2011 aPRC season, the team got off to a winning start by finishing 1st and 3rd in aPRC malaysia 2011. on the domestic front, the team has recently competed in the 1st round of the National circuit championship for production cars in support of the malaysian formula 1 Grand Prix and coming away with an outright victory.

Participation in motorsports is beneficial to the Company as the fast-paced world of motorsports provides invaluable returns in terms of research, development and technology. after every race, data and experience gained from the track is analysed and implemented into the development of Proton’s road cars and performance parts. Inspired by this, PRoToN’s motorsports division has launched two limited edition models for sale to the public last year, starting with 25 units of the Satria Neo lotus Racing edition and the 160 units run R3 Satria Neo. These cars actually contain some of the same exact performance parts as found on the Satria Neo production class circuit race car.


PROTON participated in the historic 100th Monte Carlo Rally.


motorsports also creates loyalty for a car manufacturer unlike any other activity. It is this loyalty that will also create a demand for Proton motorsports merchandise which is today available at all race venues that PRoToN is present in and soon to be available globally through the internet.

motorsports participation has also brought direct commercial benefits to PRoToN which culminated in the sales of standard Proton cars to Japan for the first time. Carrosser Co. ltd of Japan (Carrosser), a world renowned race team and manufacturer of performance parts entered into an agreement with PRoToN to distribute and market the Proton Satria Neo in Japan. In a technical collaboration with PRoToN, the fIa-homologated Group N Satria Neo rally car was developed by Carrosser into competition vehicles for Junior class Rallying in Japan and in the aPRC. The Satria Neo Group N rally car is now a regular competitor in the aPRC as well as the all Japan Rally Championship for 2011.

Not limited to the above, it has been proven that motorsports is indeed a powerful brand building platform for PRoToN. PRoToN has gained awareness in many new countries through motorsports which could help pave the way for the building of future new markets. Every victory or milestone achieved is the foundation for redefining limits for PRoToN and the race goes on to challenge the best.


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 PRoToN EdaR SdN bhd aNd EdaRaN oTomobIl NaSIoNal bERhad SalES NETwoRKS NaTIoNwIdE.



Customers not only enjoy better deals for car financing but also 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.

at the same time, PRoToN also holds a 49.9% equity stake in lotus finance limited, and a 49.99% stake in Proton finance limited, both of which are companies incorporated in the united Kingdom. Proton finance limited provides a range of hire purchase and finance lease options in connection with the financing of Proton cars, whilst lotus finance limited provides the same facilities for new and used lotus vehicles.


CoRPoRaTE SoCIal RESPoNSIbIlITy

PRoToN bElIEVES ThaT a ComPaNy’S PRofITabIlITy muST CoRRESPoNd To ITS humaN RESouRCE dEVEloPmENT aNd ThE ENVIRoNmENT IT oPERaTES IN. IT IS alSo ImPoRTaNT To adVoCaTE a CoRPoRaTE CulTuRE ThaT aPPRECIaTES ThE ValuE of SoCIal SERVICE aNd uNdERSTaNd ITS ImPaCT oN STaKEholdERS aS a wholE.



with this in mind, the Group is committed to making positive strides and worthwhile contributions towards creating a sustainable business that benefits our people, the environment, and society at large.

as we carry out our corporate social responsibility (CSR) initiatives, the Group focuses on several objectives to meet the expectations of good corporate governance, ethical corporate values and responsible corporate citizenry.

PRoToN’s CSR initiatives are divided into four main segments: marketplace, workplace, community and environment.

MARKETPLACE

PRoToN’s CSR initiatives in this area are essentially related to the Group’s objective of maintaining sound business practices at all times with our shareholders, customers and suppliers. The Group does its best to ensure that all businesses are not only conducted in an ethical and professional manner, but also in compliance with regulations and vendor development.

maintaining customer satisfaction is one of the foremost pillars of PRoToN’s business management, and we continue to improve our business processes in order to cultivate strong relationships with our customers and improve their satisfaction levels. Through regular customer surveys conducted by the contact center, we are able to gather and analyse feedback and incorporate them into product and service developments, as well as sales and customer care activities to continuously ensure that the customers’ experience with PRoToN is always positive and of high-quality.

PRoToN i.Care remains as the customers’ main channel in getting information, resolving issues and giving feedback to the Company. The unit is completely focused on ensuring that customers get their queries and concerns addressed and taken care of immediately. In addition to this, the Proton i.Care 24 hour assist Service continues to attend to customers with car breakdowns, as well as provide technical advice when required.

PRoToN employees are also encouraged to evaluate this process periodically in order to better understand a customer’s needs and thereby improve the quality and speed of our response to customers.


To meet the needs of our customers outside of PRoToN service outlets, we have held i.Care mobile Pitstops under our Care outreach programs at selected locations throughout malaysia such as Putatan in Sabah, Pasir Puteh in Kelantan and Jengka in Pahang where we offered technical assistance, information and free inspection on Proton cars.

In-line with our efforts to be an internationally recognised automotive manufacturer, our products meet global safety standards – most prominently the European Safety Standard as well as the australian design Rule (adR) and Saudi arabian Standards organisation (SaSo)/Gulf Standards – and we are committed to the continual improvement of these standards. and to ensure that compliance is met across the board, all our safety requirements are 20% to 30% more stringent than benchmarked figures.

our products now also meet China regulations (CCC), and we are currently planning for compliance with India Standards (IS) and Russia Standards for future products.

To ensure the level of quality of our products, we continue to strengthen our business relationships with our suppliers with 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. In addition, we conduct a rigorous vendor selection and performance evaluation to ensure that vendors supply only quality parts.

all PRoToN cars are manufactured under stringent controlled conditions that places emphasis on quality assurance through the Zero defect programme and auditing programmes in addition to thorough quality inspections before being released to customers. during production stage, all components are subjected to various inspections and testing at the vendors premises before they are supplied to PRoToN. Completed cars are also subjected to a thorough final quality check before being released to customers.


PROTON’s Group Managing Director engaging in conversation with staff during a safety campaign.

New procurement transactions not only need to conform to the Group’s policies, but we 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.

WORKPLACE

at PRoToN, we recognise that a talented, productive human capital represents the backbone of our on-going development and progress.

our workplace CSR provides our employees with optimum working conditions, as evidenced by the Group’s safety and health policies, training exercises and other benefits to safeguard each one’s welfare, and ensure that their skills and talents are also nurtured. This further enhances PRoToN’s competitive advantage in the industry.

while it is important to ensure that we are able to grow as one seamless entity, this must also go hand in hand with the development and retention of qualified leaders. Through the Group’s human Capital initiatives, we develop key members of our workforce by using PRoToN’s Core and leadership Competency model. for those who are keen to advance along the


technical career track, a similar approach is applied, that is via the Technical & functional Competency model. by using these competency models, our Talent management Programme has enhanced PRoToN’s 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 that there are no communication barriers in order for employees to achieve their full potential and progress within the Group. Initiatives include disclosing key performance indices, shared assessments, personnel system reforms and streamlining the scheme of service throughout the Group. The use of internal channels such as PRoToNCom to disseminate information updates and policies is another effort to foster constant engagement and encourage internal communication.

PRoToN has embarked on many projects to continually improve the way we do things. Improving efficiency and effectiveness is necessary in order to compete in the challenging global automotive industry. The focus on making “right information available to the masses right now”, has resulted in the expansion of our Knowledge management programme, “aSPIRE” to the masses through the web, and equipping our multi-site facilities with the latest electronic bulletin boards.

This provides all PRoToNians access to information even if their work does not involve using a PC. we have also embarked on a programme to equip and educate and provide computer access to our general workers by setting up computer kiosks at strategic locations on the factory floor. we believe, an informed and knowledgeable worker is a more engaged worker.

another such programme under the PRoPEX initiatives is the myofIS or my official Information System, that aims to enable staff to access, update and “self serve” on certain human resource (hR) transactions that were not previously available. This ambitious 5-year programme will revolutionise the way we work and set the stage for us to compete in the Global arena via the amlo programme.

To further strengthen PRoToN’s 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. from april 2010 to march 2011, our learning & development department has trained a total of 6,836 participants in 361 courses with average cost per head of Rm714 and average training hours per participant of 17 hours.

Staff participating at PROTON’s ICT Technology Day 2010.


during the period under review, the learning and development department embarked on several collaborative projects with selected higher educational institutions and ministries. for instance, the collaboration with the ministry of higher Education for advanced diploma in automotive design & manufacturing Engineering and with university Teknologi malaysia (uTm) for two programmes i.e. business & advanced Technology Centre (baTC) and PRoToN Critical mass Scheme.

Initiatives and plans are also being actively carried out to realise the establishment of the PRoToN Corporate university. a task force consisting of representatives from various divisions was identified and given the responsibility to carry out the related tasks. under the PRoToN Trainers development Programme – in collaboration with the malaysian Institute of management (mIm), PRoToN had identified 11 qualified staff members as mIm-Certified Professional Trainers who had completed their level 3

competency. The ‘SIfu’ (meaning mentor, counselor or teacher) Programme sees 13 of our supervisors, team leaders and new executives being trained to become a ‘SIfu’ to the others. Currently, there are 197 in-house trainers who are Subject matter Experts registered with the learning & development department. by 2012, it is our aspiration that PRoToN will achieve self sufficiency in trainer resources for all the organisation’s training needs and have minimal dependency on external training providers.

To further complement this, the Group organised numerous health talks, carnivals, exhibitions and programmes throughout the year to create awareness amongst employees on adopting a safe and healthy lifestyle. Steering and working committees were established to allow for more effective monitoring of health and safety related issues throughout the PRoToN Group.


PROTON staff at the Tanjung Malim plant take a breather to share moments with Group Lotus Ambassador, Jean Alesi when he visited the plant.


In order to strengthen the relationship and enhance good understanding and harmonious relationships between Group human Resource division (GhR) and the unions of Perusahaan otomobil Nasional Sdn bhd (PoNSb) and Proton Tanjung malim Sdn bhd (PTmSb), various activities were carried out throughout the financial year. a trip to China was organised to build synergy towards the Company’s mission and aspirations and exposure to amlo initiatives in line with the annual management Plan (amP) for 2010/2011. union members were invited to visit PRoToN’s Rep office in hangzhou and plant facilities of youngman automobile Group to understand PRoToN’s business establishment and our future goals in China.

Throughout the period under review, many other events and activities were carried out. GhR had organised other related activities such as the majlis Sambutan maal hijrah, buka Puasa and Solat Tarawih with our adviser – Tun dr mahathir, majlis berbuka Puasa with ybhg dato’ Sri mustapha mohamad the minister of International Trade and Industry, a programme in Vietnam in conjunction with the hari Raya aidil adha and an event to celebrate with employees who were leaving to perform the hajj as well as engagement sessions with the GhR director.

PRoToN continued to actively participate in Career days held at various universities and locations. This resulted in the hiring of at least 75% of the new Executive population. another 25% were sourced via the Graduate Employability Scheme (GEmS) initiated by Khazanah Nasional berhad, and also the Graduate Programme 200 (GP200) initiated by bank Negara malaysia.

In supporting Khazanah Nasional berhad – as part of The orange book initiative in Strengthening leadership development – PRoToN also participated in programmes such as the Cross assignment between Government linked Companies (GlCs) and Cross fertilization between GlCs and Government offices/ministries.

as part of the group-wide Change management initiative, the Change management Project management office (CmPmo) has been in existence since august 2010, after the completion of the denison organisational Culture Survey which was carried out in march 2010. This team has been conceptualised to take ownership and implement activities under the TØ initiatives. TØ has been regarded as the enabler stream of work and activities to support, integrate and amplify the need of other work streams (T1-T13). TØ, originated with the focus on mindset and behavioral transformation, has stipulated “maKING PRoToN a hIGh PERfoRmaNCE organisation” as its core objective with five specific initiatives as follows:

Change Starts With Me

Taking off as a two day one night awareness-cum-training intervention, the programme was then reconfigured into a half-day awareness talk for greater efficiency and return on investment (RoI); via a series of aggressive road-shows. It will be officially launched in the next financial year and almost 1,200 PRoToNians are targeted.

Turun Padang Initiatives (TPI)

Initially designed with seven specific activities involving all management Committee members (mCm) and few Key Personnel, TPIs were conceptualised as touch-base cum on-boarding activities for the leadership level. The first round of TPI rolled-out in august 2010. based on the feedback and lessons learnt, TPIs were revisited and reformulated to allow a bigger pool of participation among the next layer of leadership. hence 40 General managers were selected to undertake the second round of TPIs; namely TPI-2nd wave. The same will be continued with the inclusion of more Senior managers in the next immediate rounds, which will be stretched out till the end of amP11/12.


Core Value Realisation (CVR)

CVR has always been regarded as the heart of TØ with the challenge for PRoToNians to live the core-values of PRoToN in their everyday work transactions. The whole focus of CVR was to revitalise PRoToN’s Seven Core-Values and provide some supporting definitions on organisational cultural excellence. after consolidated efforts of the respective teams, PRoToN’s Seven Core Values were revised (with new definitions, new taglines, new dos & doNTs statements) both in bahasa malaysia & English. with the revised Core-Values, the same teams are now working on definite stages to translate the statements into behavioral descriptors which will then be embedded into the PRoPEX’s workstreams.

Leadership Alignment

This sub-workstream is objectively framed to realise high Performing mCms in order to create a high Performing organisation with a high Performance Culture. among others, the initiative which is relatively new, has these new-age programmes lined up for the leaders:

• GenerateRelationshipAwareness

• ConflictResolution(BasedonComplexityTheory;Chaotic Issues to Simple Resolutions)

• DisciplineofTeams

• Self-Deception

• BuildingALeadershipBrand

Communication Management (COM-MGMT)

This segment of TØ is the latest addition to the entire workstream with focus on internal and inter-departmental aligment (i.e. Group Communications, Group after Sales & marketing) communication plans, strategies and desired outcomes of communication excellence. Quarterly Group management Communication Sessions will be conducted actively throughout the next financial year.

To promote healthy living, PRoToN also held recreational activities throughout the year for its staff, their family members as well as the surrounding community. Some of the programmes held during the period under review included:

• a Mystery Drive from Shah Alam to Alor Setar,with the participation of over 600 employees;

• an ‘Adventure Hunt’ to Genting Highlands – aprogramme inspired by ‘The amazing Race’ reality show – involving about 100 employees;

• aLadies-only‘KenyalangWalk-Hunt’toKuching,Sarawak involving 100 female PRoToN staff;

• a‘CuttlefishSpearing’activityinMarang;

• aFishingCompetitioninShahAlam;and

• an inaugural Paintball Competition, whichattracted about 100 participants.

apart from these activities, The Group also held programmes for the family members of its staff, which included motivational classes and majlis berkhatan.

COMMUNITY

Corporate social responsibility (CSR) is high on PRoToN’s agenda and the Group is committed to its CSR initiatives. PRoToN constantly looks for appropriate ways to contribute to the social wellbeing of the community. The Group encourages its staff to participate in various CSR initiatives, charitable work and educational programmes under yayasan Proton as well as socio-economic programmes such as Pintar (an adopted school programmE) and Program Sejahtera (a community project) to assist poor students to improve their living standards.

The Group also provides support in the development of programmes to assist the poor and needy including orphans, the handicapped, single mothers, old folks and victims of natural disasters.



apart from that, the Group contributes to welfare programmes and extends sponsorships and donations towards orphanages, the handicapped, charitable organisations, places of worship, educational, cultural and community development initiatives.

during the period under review, PRoToN established a charity fund where it pledged Rm25 for every Proton car sold between 22 april and 30 June 2010. a total of 25 organisations received donations of Rm25,000 each from this fund. Three organisations – yayasan Pembangunan anak yatim/miskin, Persatuan Thalassemia malaysia and Persatuan orang-orang Cacat anggota malaysia were presented with mock cheques during PRoToN’s 25th anniversary Gala dinner in July 2010.

In may 2010, PRoToN sponsored 54 schoolchildren, aged between 10 and 12 years, from SK Taman alam megah and SK alam megah dua to watch and support the malaysian badminton team in action during the ‘PRoToN-bwf Thomas & uber Cup finals 2010’ held at Stadium Putra, bukit Jalil. The sponsorship was part of PRoToN’s effort to create interest in the sport among young talents and nurture young talents to play badminton with the right technique.

PRoToN also donated an Exora mPV to the National heart Institute (IJN) foundation in July 2010 in support of the foundation’s efforts to help the underprivileged to receive heart treatment at the institute. PRoToN’s Group managing director dato’ Sri haji Syed Zainal abidin Syed mohamed Tahir handed over the mPV to the foundation’s trustee dato’ Zainal abidin Putih. The mPV was meant to be used by the foundation as its official car to carry out related programmes and activities including ferrying poor patients from their homes to the institute and visiting patients funded by the foundation at their homes. The Group managing director and his wife, datin azizan hashim along with PRoToN’s Senior management Committee members also visited children at the paediatric ward to bring them cheer, and at the same time hand over donations as well.

Group Managing Director Dato’ Sri Haji Syed Zainal AbidinB Syed Mohamed Tahir and Datin Azizan Hashim celebrating with orphans at the Festival PROTON 1Malaysia Grand Finale Carnival.

during the month of Ramadhan in august, PRoToN carried out various community development and outreach programmes involving poor families and orphanages including breaking of fast and performing Tarawih prayers. The Group also carried out activities and presented donations to various orphanages as part of its annual PRoToN hari Raya programme.

The Group managing director and Senior management members took time off to break fast with poor families in bukit lanchong as well as orphanages including Pertubuhan Kebajikan yayasan anak yatim Piatu darul aitam (busarah), Temoh, Perak and Rumah amal Kasih besteri on 23 august, 26 august and1 September, 2010 respectively.

datin azizan hashim hosted ‘CSR Ramadan’ – an outreach programme which is aimed at bringing cheer and sharing the joy of the festivities with the underprivileged – at Rumah Nur Salam in Chow Kit Road, Kuala lumpur and presented duit raya and goodies to residents of the shelter. Rumah Nur Salam is the home for poor and underpriviledged children under the age of 18 from areas around Chow Kit Road.

Contributions to widows of deceased staff took place during a majlis berbuka Puasa with yabhg Tun dr mahathir mohamad and yabhg Tun dr Siti hasmah mohd ali on 1 September 2010. Tun dr Siti hasmah together with datin azizan hashim presented cash to seventeen recipients.


In october 2010, PRoToN sponsored ‘Tun dr mahathir: The musical’ held at Istana budaya, Kuala lumpur and sponsored 30 orphans from Rumah anak-anak yatim limpahan Kasih, Puchong to watch the show.

The following month, eighty orphans from Pertubuhan Kebajikan Nur Syaheera, Cheras, Kuala lumpur and Pertubuhan Kebajikan Ehsan Shakur (Pekeas) Tasik Putri, Rawang were given a rare treat when PRoToN took them on a visit to the Kuala lumpur International motorshow (KlImS) where PRoToN showcased its line-up of five concept vehicles and showcase cars called the Pahlawan series – Tuah, Jebat, Kasturi, lekir and lekiu.

when floods hit several parts of the country, PRoToN was actively involved in relief efforts to help ease the burden of flood victims. In November 2010, Proton Edar Sdn bhd and Proton Parts Centre Sdn bhd extended financial aid amounting to Rm50,000 each to flood victims in Kedah.

during the year under review, PRoToN carried out activities and gave out donations to various orphanages throughout the ‘festival PRoToN 1 malaysia Carnival’, which was part of the national car company’s 25th anniversary celebration.


PBB volunteers cleaning up the surrounding areas of a Muslim cemetery damaged by the flood in Johor.

on 31 december 2010, during the festival PRoToN 1 malaysia Grand Carnival finale, PRoToN presented orphans from selected orphanages with cash contributions and “back to School” goodies to prepare them for the new school year as well as cash donations to selected handicapped individuals at each venue in ten states during the festival’s road show.

during the event, the Group managing director presented cash donations to representatives from three orphanages, Rumah Kebajikan Nur Zaharah in bentong, Rumah Kebajikan anbu Illam in ulu Klang and Rumah anak-anak yatim Nasuha in Gombak as well as selected handicapped individuals from the Projek Perumahan Rakyat Termiskin in bukit lanchong.

In January 2011, PRoToN sponsered 40 orphans from Pertubuhan Kebajikan yayasan anak yatim Piatu darul aitam (busarah), Temoh, Perak and 200 schoolchildren from adopted school, SK Tanjung malim, Perak and several other schools in the vicinity to watch and cheer datuk lee Chong wei who was in action at the malaysia open badminton Championships held at Stadium Putra, bukit Jalil.

In february 2011, PRoToN established Pbb PRoToN (Pasukan bantuan bencana PRoToN), which is a platform to enable PRoToN staff to be involved in community service. The aim is to have a pool of volunteers ready to go down to the ground to assist and extend support to victims of natural disasters in the country at any time. with Pbb PRoToN, which has over 300 PRoToN staff across the nation registered as members, the Company’s CSR initiatives can now reach out to wider target groups. Pbb PRoToN volunteers’ involvement in CSR programmes and activities go beyond assisting victims of natural disasters to include outreach programmes to help the poor, handicapped and orphans, old folks and single mothers so that they will be able to lead a better life.


between 16 february and 19 february, 2011, Pbb PRoToN carried out relief efforts for flood victims in Seri medan, Pagoh and Segamat in Johor by organising a “gotong royong” to help clean up mosques and suraus in affected areas and handing out contributions of essential items amounting to Rm200,000, funded by the Group and PRoToN vendors.

when a landslide hit an orphanage, Rumah anak yatim hidayah, madrasah al-Takwa in hulu langat in may, a group of Pbb PRoToN volunteers helped distribute food to firemen and relief workers who helped in the rescue efforts of victims of the natural disaster.

during the financial year 2010/2011, yayaSaN PRoToN carried out several educational initiatives.

on 11 february 2011, PRoToN advisor Tun dr mahathir mohamad presented scholarships to 13 scholars from several local universities at a scholarship awards ceremony. PRoToN Chairman dato’ Sri mohd Nadzmi mohd Salleh and yayaSaN PRoToN Chairman dato’ Jaffar Indot and all board of Governors were present for the event.

The event also witnessed representatives from yayaSaN PRoToN’s adopted schools being presented with mock cheques with pledges of financial assistance. These ‘adopted’ schools, located in Shah alam and Tanjung malim, require financial support for educational activities, among others, PmR and SPm tuition classes and motivational seminars.

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.

on 8 april 2011, PRoToN enabled 120 orphans and school children to participate in an educational visit to the Sepang International Circuit (SIC), which was part of PRoToN’s CSR initiative during the Petronas malaysian Grand Prix formula one race. The CSR initiative was meant to create excitement and interest in formula one and better awareness of the sport among the children as well as provide a different educational exposure and experience for them.

Representatives from PROTON’s Adopted Schools with the pledges of financial assistance from PROTON, posing with PROTON’s Advisor and Chairman.

PROTON’s scholarship recipients engaging in conversation with PROTON’s Advisor, Tun Dr Mahathir Mohamad.


The orphans, from Pertubuhan Kebajikan yayasan anak yatim Piatu darul aitam (busarah) in Temoh, Perak and Rumah bakti Nur Syaheera in Cheras, Kuala lumpur as well as school children from Sekolah Sultan alam Shah, Putrajaya and SK Tanjung malim Perak, were able to enjoy the f1 experiences as they witnessed the practice sessions from the Grandstand. The children, aged between eight and 17, also had the opportunity to meet the lotus Renault GP team drivers Vitaly Petrov and Nick heidfeld as well as the reserve driver bruno Senna during a meet-and-greet session at the pit walk.

The children further participated in fun-filled activities at the PRoToN booth at the f1 Village and visited the National automobile museum and explored the SIC mall area apart from taking part in an enjoyable quiz session organised for them.

In the same month, PRoToN sponsored the malaysian Skills competition for the automobile Sector, a programme initiated by the works ministry since 1990 and now, organised by the department of Skills development under the human Resource ministry. The competition which was held between 14 april and 17 april 2011, was open to students from technical and training institutions aged below 22. It was one of PRoToN’s efforts to develop human capital especially within the automotive industry via technical cooperation between the industry and various vocational institutions.

PRoToN is an avid supporter of the local sporting scene, particularly in badminton and football.

The Group’s involvement in badminton continues into its 16th year, as PRoToN strengthens its role as the major sponsor of malaysian badminton though its partnership with the badminton association of malaysia (bam). for the period under review, a total of Rm6.3 million (including promotional activities) was allocated for the sport.

as the corporate custodian of badminton in the country, PRoToN was the title sponsor of the prestigious PRoToN-bwf Thomas and uber Cup finals 2010 which was held in Stadium Juara in bukit Jalil, Kuala lumpur.

PRoToN also strengthened its brand through title sponsorships of local tournaments, namely the PRoToN malaysia open Superseries 2010 and PRoToN malaysia International Challenge finals 2010. PRoToN was also the title sponsor for the national circuit, with tournaments like the Kejohanan badminton Sirkit Kebangsaan PRoToN Terbuka Kedah (Stage 1) 2010, and Kejohanan badminton Sirkit Kebangsaan PRoToN Terbuka Perak (Stage 2), as well as the PRoToN National Circuit Grand Prix finals 2010 in Terengganu. PRoToN was also the official car sponsor to the malaysia open Grand Prix Gold 2010.


Prize presentation ceremony for the PROTON Malaysia Open Badminton Tournement.


The Group’s support is not just directed to the sport, but also in supporting budding talents and appreciating those who have succeeded in the game, such as world number one datuk lee Chong wei, who made history again when he won the coveted all-England title for the second time in a row. datuk lee also won his seventh consecutive PRoToN malaysia open title in January 2011 and is currently the record holder for the PRoToN National Circuit title for nine consecutive years since 2002.

In recognition of his years of accomplishments in the international badminton arena, national car manufacturer PRoToN presented datuk lee with the keys to a brand new, metallic black two-litre CVT Proton Inspira.

In tennis, PRoToN continued its involvement as the title sponsor for the malaysian open, an aTP world Tour tournament. a budget of Rm2.5 million (inclusive of promotional activities) was spent for this event.

In cycling, PRoToN has long been associated with the prestigious le Tour de langkawi international cycling event. Not only has le Tour placed malaysia firmly on the world cycling map, but it is a sporting event that has undoubtedly spurred the development of home-grown cycling talents into international names. for the year under review, PRoToN continued its support as the official car provider by supplying 150 cars of varying models for the use of officials and the media covering the cycling championship.

Prize presentation ceremony for the annual Inter-Division Sports Competition.

In the period under review, PRoToN was also actively involved in various local football competitions and regularly organised sporting activities for its employees under the administration of the sports clubs of respective PRoToN subsidiaries.

Kelab Proton (Shah alam) organised the annual Inter-division Sports Competition among the employees of PoNSb Shah alam, while PRoToN Edar held a Nationwide Inter-Region Sports Carnival for its employees.

In football, after being crowned champion of the Selangor Super league 2010, Team Proton fC began their preparations to defend the title for the 2011 season with an international friendly match between Proton fC and mitsubishi Corporation fC (Tokyo Japan). In this match, the winner was decided through a penalty shoot-out.

PRoToN’s Soccer Kids 2011 programme presented a list of exciting activities that attracted over 150 participants during the period under review. Selected participants were given the chance to usher the State football team in every home match of the malaysia Super league held at Stadium Shah alam, and were also given the golden opportunity to meet several players from the national squad to receive tips on how to succeed in football.

Datuk Lee Chong Wei receives the key to a brand new Inspira.


ENVIRoNmENT, hEalTh aNd SafETy

PRoToN GRouP, ThE laRGEST auTomoTIVE maNufaCTuRER IN malaySIa, IS CommITTEd TowaRdS maNaGING ThE hEalTh aNd SafETy of ouR EmPloyEES, CoNTRaCToRS, VENdoRS, SuPPlIERS aNd VISIToRS IN lINE wITh ThE NaTIoN’S oCCuPaTIoNal SafETy aNd hEalTh aCT 1994. uNdER ThE uNITEd NaTIoN’S fRamEwoRK CoNVENTIoN oN ClImaTE ChaNGE 1992 (uNfCCC) aNd ENVIRoNmENT QualITy aCT 1974, PRoToN IS alSo CommITTEd To CoNSERVE ThE ENVIRoNmENT ThRouGh SuSTaINablE oPERaTIoNS. ouR dEEP SEaTEd CommITmENT To ThESE aCTS IS affIRmEd wIThIN ouR ENVIRoNmENT, hEalTh aNd SafETy PolICy.



ISO 14001 Environmental Management Systems

In august 2009 PRoToN achieved the ISo 14001 Environmental management System international standards in environmental management, audited by the Vehicle Certification agency (VCa) and SIRIm malaysia which is accredited by the united Kingdom accreditation Service (uKaS). Since then we have continuously implemented international requirements and enhanced management practices to ensure compliance with the standard. The Group also encourages its other subsidiaries and suppliers towards acquiring ISo 14001 Environmental management System certification.

for several years now PRoToN has gradually reduced emission levels of greenhouse gasses in our business activities by increasing the utilisation of robot, machinery, automation systems and environmental friendly equipment in all our manufacturing processes. The painting process in our Paint Shop has also been converted to utilise electrostatic equipment to reduce paint consumption and waste. we have also retooled our powertrain manufacturing facilities with energy efficient equipment and process changes including flexible machining and minimum quantity lubricant. These facilities improve efficiency, utilise low energy and eliminate toxic emissions.

at the same time we strive to conserve the environment and improve energy efficiency within our non-manufacturing based activities by reducing consumption of electricity and paper at all offices, centres and buildings. To this end we have switched to energy efficient lighting at various locations and actively promote the use of electronic media technology such as e-mails and digitalised data memory to lessen the use of paper.

Health and Safety

PRoToN’s commitment towards ensuring a safe, healthy and conducive working environment is encapsulated within the Group’s Environment, health and Safety policy which falls under the purview of the top management.

PROTON’s Group Managing Director officiating the launch of PROTON’s safety campaign.


This comprehensive policy and programme was implemented to comply with the occupational Safety and health act 1994 (oSha 1994) and factories and machinery act 1967 (fma 1967). working in synergy with the National Institute of Safety and health (NIoSh) the Group’s oSh management division regularly conducts baseline assessment via ohSaS 18001, the occupational health and Safety assessment series, to ensure that our safety achievements are on par with international standards.

The policy’s objective is to secure the safety, health and welfare of persons at work and to protect all visitors and employees at the workplace from safety hazards. management is responsible for providing adequate resources and budget to ensure all meetings and planned programmes are implemented successfully.

These include:• Monthlysafety,healthandenvironmentaudits• Annualsafetyandhealthcampaigns• Safetyandhealthinformationdissemination• Safety,healthandfireinductiontraining• Motorcycledefensiveridingtraining• Forkliftsafetytraining• Firepreventionandtraining• Safetyanddefensivedrivingtraining• Hearingconservationtraining• Industrialsafetytraining• Evacuationexercises• PROTON-NIOSHSafetyPassportTraining• Drug-freeworkplaceprogramme


PROTON’s Group Managing Director officiating PROTON’s Health campaign.

People-Friendly Working Environment

Ergonomics improvement is a key driver towards creating a more conducive workplace and reducing workload. Ergonomics is applicable to all aspects of the work process from physical movement to mental stress. This includes awkward postures, overexertion and noisy, poorly lit, congested and dusty work environments. most ergonomic problems occur because of poorly designed workstations, inadequate training, repetitive movement, monotonous movement and heavy lifting over a period of time.

The following initiatives have been implemented to reduce ergonomic problems:

1. Elimination of heavy lifting by installing robots and manipulators;

2. Reduction of repetitive and monotonous movements of employees by redesigning workstations and rearranging job sequence;

3. Ensuring cool comfort by improving airflow at affected areas and increasing industrial installations;

4. Creation of more spacious work stations by redesigning and rearranging the work stations;

5. Improved communication between management and employees through regular safety audits and briefings.

These simple but effective measures add up to create a big impact for a better workplace, which in turn has led to increased productivity, cost savings and harmonious relationships. by implementing the above initiatives, PRoToN has succeeded in reducing the risk of backache problems and the high cost of related medical expenses to both employee and Company.


Commuting Safety

Commuting safely is not just a Company problem but it is also a National problem. Therefore PRoToN continues to focus on the following programmes for its employees:

1. annual road safety campaigns in cooperation with various government agencies such as department of occupational Safety & health (doSh), National Institute of occupational Safety & health (NIoSh), Jabatan Keselamatan Jalan Raya (JKJR) and Police;

2. monthly motorcycle defensive riding training for high risk riders and refresher courses;

3. Regular motorcycle safety audits.

Through our focus on practicing defensive riding and road safety awareness campaigns, PRoToN has achieved positive results in reducing motor vehicle accidents (mVa) amongst our staff.

Health and Safety Audit

our work to eliminate safety hazards, maintain plant cleanliness and reduce injuries is spurred by monthly audits. PRoToN implements monthly and quarterly safety audits to realise the planned programmes in order to achieve our targets and goals. all related safety and health committees from shop floor to top management conduct monthly and quarterly safety and health audits as part of their job scope.

Evacuation and Fire Drill

annual evacuation and fire drills are conducted at high risk areas and encompass the following activities and procedures:

1. full programme meeting and briefing;

2. Evacuation from the building;

3. head count and confirmation of total employees evacuated;

PROTON’s Director of Group Human Resource awarding certificates during the launch of PROTON’s safety campaign.

4. fire fighting demonstration by in-house fire squad;

5. fire fighting demonstration by bomba;

6. fire rescue by bomba;

7. medical assistance by in-house clinic;

8. Situation control;

9. dispersal;

10. Postmortem meeting and countermeasures.

all levels of employees including management and shop floor employees, are involved in the briefings and demonstrations. Regular education and practice in evacuation and drills heighten fire safety awareness and ensure that every individual in PRoToN knows how to act in case of an emergency.


Documents

with pride, passion and unrelenting progress · 23 September 7th Annual General Meeting 30 September Entitlement date for the First and Final Dividend of 20 sen (less 25% tax) declared