perusahaan otomobil nasional sdn - …ir.chartnexus.com/proton/website_html/attachments/...company...

Company No. 100995 U

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) STATUTORY FINANCIAL STATEMENTS 31 MARCH 2004 1586A4/maz


1

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) DIRECTORS' REPORT The Directors have pleasure in submitting their annual report to the members together with the audited financial statements of the Group and Company for the financial year ended 31 March 2004. PRINCIPAL ACTIVITIES The Company is principally involved in manufacturing, assembling and selling motor vehicles and related products. The principal activities of the subsidiary and associated companies are set out in Notes 23 and 24 to the financial statements. There was no significant changes in the activities of the Group during the financial year. FINANCIAL RESULTS Group Company RM’000 RM’000 Profit after taxation 521,076 321,836 Minority interests (11,005) 0 ──────── ──────── Net profit attributable to shareholders 510,071 321,836 ════════ ════════ DIVIDENDS The amount of dividends paid or declared by the Company since 31 March 2003 were as follows: In respect of the financial year ended 31 March 2003 as shown in the Directors' report of that year: RM’000 Final tax exempt dividend of 12.0 sen per ordinary share, paid on 28 October 2003 65,906 ═══════ In respect of the financial year ended 31 March 2004: Interim tax exempt dividend of 5.0 sen per ordinary share, paid on 16 January 2004 27,461 ═══════ The Directors now recommend the payment of a final tax exempt dividend of 10.0 sen per ordinary share on 549,213,000 ordinary shares amounting to RM54,921,300 for the financial year ended 31 March 2004 to be paid to its parent company, Proton Holdings Berhad.


2

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) RESERVES AND PROVISIONS There were no material transfers to or from reserves and provisions during the financial year except as disclosed in the financial statements. DIRECTORS The Directors who have held office during the period since the date of the last report are: Alternate director Y. Bhg. Datuk Abu Hassan bin Kendut Y. Bhg. Datuk Anwar bin Haji @ Aji (Resigned on 25 May 2004) (Resigned on 25 May 2004) Y. M. Tengku Tan Sri Dr. Mahaleel bin Tengku Ariff (Resigned on 25 May 2004) Y. Bhg. Datuk Kisai bin Rahmat (Resigned on 25 May 2004) Y. Bhg. Dato’ Haji Abdul Majid bin Haji Hussein (Resigned on 25 May 2004) Mr Hisayoshi Kumai Mr Akihiko Mizumoto (Resigned on 25 May 2004) (Resigned on 25 May 2004) Y. Bhg. Tan Sri A. Razak bin Ramli (Resigned on 25 May 2004) Encik Badrul Feisal bin Abdul Rahim (Resigned on 25 May 2004) Y. Bhg. Dato’ Mohd Ghazali @ Fauzi bin Yacub (Resigned on 25 May 2004) Encik Abdul Jabbar bin Abdul Majid (Resigned on 25 May 2004) Y. Bhg. Lt Gen (R) Dato’ Seri Mohamed Daud bin Abu Bakar (Resigned on 25 May 2004) Y. Bhg. Datuk Dr. Soh Chai Hock (Resigned on 25 May 2004) Y. Bhg. Tan Sri Ahmad Fuzi bin Haji Abdul Razak (Resigned on 25 May 2004) Encik Md Ali bin Md Dewal (Resigned on 25 May 2004) Mr Masaharu Iwata (Resigned on 19 November 2003) Mr Fumihiko Minami (Appointed on 19 November 2003/Resigned on 25 May 2004) Y. Bhg. Datuk Kisai bin Rahmat (Appointed on 25 May 2004) Mr Tan Seng Lee (Appointed on 25 May 2004) Puan Fadilat binti Ismail (Appointed on 25 May 2004) Ms Savita Saigal (Appointed on 25 May 2004)


3

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) DIRECTORS (CONTINUED) Pursuant to Article 103 of the Company’s Articles of Association, Y. Bhg. Datuk Kisai bin Rahmat, Mr Tan Seng Lee, Puan Fadilat binti Ismail and Ms Savita Saigal retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election. DIRECTORS' BENEFITS During and at the end of the financial year, no arrangements subsisted to which the Company is a party, being arrangements with the object or objects of enabling Directors of the Company to acquire benefits by means of the acquisition of shares in, or debentures of, the Company or any other body corporate. Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits disclosed as Directors' remuneration in Note 6 to the financial statements) by reason of a contract made by the Company or a related corporation with the Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest. DIRECTORS’ INTEREST IN SHARES AND DEBENTURES At the end of the financial year, Y. Bhg. Datuk Abu Hassan bin Kendut is deemed to have an indirect interest in shares of the Company through 4,000 ordinary shares of RM1 each held by his spouse. No other Director in office at the end of the financial year held any interest in shares in the Company and its related corporations. STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS Before the income statements and balance sheets of the Group and Company were made out, the Directors took reasonable steps: (a) to ascertain that action had been taken in relation to the writing off of bad debts and the

making of allowance for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made for doubtful debts; and

(b) to ensure that any current assets, other than debts, which were unlikely to realise in the

ordinary course of business their values as shown in the accounting records of the Group and Company had been written down to an amount which they might be expected so to realise.


4

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (CONTINUED) At the date of this report, the Directors are not aware of any circumstances: (a) which would render the amounts written off for bad debts or the amount of the allowance

for doubtful debts in the financial statements of the Group and Company inadequate to any substantial extent; or

(b) which would render the values attributed to current assets in the financial statements of

the Group and Company misleading; or (c) which have arisen which render adherence to the existing method of valuation of assets or

liabilities of the Group and Company misleading or inappropriate. No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which, in the opinion of the Directors, will or may substantially affect the ability of the Group and Company to meet their obligations when they fall due. At the date of this report, there does not exist: (a) any charge on the assets of the Group or the Company which has arisen since the end of

the financial year which secures the liability of any other person; or (b) any contingent liability of the Group or the Company which has arisen since the end of the

financial year. OTHER STATUTORY INFORMATION At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements which would render any amount stated in the financial statements misleading. In the opinion of the Directors: (a) the results of the Group's and Company's operations during the financial year were not

substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in Note 41 to the financial statements; and

(b) there has not arisen in the interval between the end of the financial year and the date of

this report any item, transaction or event of a material and unusual nature likely to affect substantially the results of the operations of the Group or the Company for the financial year in which this report is made except as disclosed in Note 40 to the financial statements.


5

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) DIRECTORS' REPORT (CONTINUED) ULTIMATE HOLDING COMPANY The holding and ultimate holding company subsequent to 5 April 2004, is Proton Holdings Berhad, a company incorporated in Malaysia. AUDITORS The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office. Signed on behalf of the Board of Directors in accordance with their resolution dated 16 July 2004. FADILAT BINTI ISMAIL TAN SENG LEE DIRECTOR DIRECTOR


6

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) INCOME STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 Revenue 4 6,470,347 9,267,996 5,259,781 7,674,265 Cost of sales (5,414,073) (7,397,530) (4,825,658) (6,466,738) ──────── ──────── ──────── ──────── Gross profit 1,056,274 1,870,466 434,123 1,207,527 Other operating income 233,931 215,672 156,500 172,977 Distribution costs (166,503) (256,762) (21,375) (48,635) Administrative expenses (466,545) (387,009) (214,339) (372,281) Other operating expenses (73,422) (91,279) (10,735) (12,990) ──────── ──────── ──────── ──────── Profit from operations 5 583,735 1,351,088 344,174 946,598 Finance cost 7 (37,127) (38,378) (14,604) (12,565) Share of results of associated companies 43,292 45,838 0 0 Share of results of jointly controlled entities 25 2,093 1,430 0 0 ──────── ──────── ──────── ──────── Profit before taxation 591,993 1,359,978 329,570 934,033 Taxation - Company (7,734) (161,747) (7,734) (161,747) - Subsidiary companies (48,243) (73,159) 0 0 - Share of taxation in associated companies (14,305) (6,795) 0 0 - Share of taxation in jointly controlled entities (635) (520) 0 0 8 (70,917) (242,221) (7,734) (161,747) ─────── ─────── ─────── ─────── Profit after taxation 521,076 1,117,757 321,836 772,286 Minority interest (11,005) (10,233) 0 0 ──────── ──────── ──────── ──────── Net profit attributable to shareholders 510,071 1,107,524 321,836 772,286 ════════ ════════ ════════ ════════ Earnings per share - basic 9 92.9 sen 201.9 sen - diluted 9 N/A N/A ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


7

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) BALANCE SHEETS AS AT 31 MARCH 2004 Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 CURRENT ASSETS Inventories 11 821,925 835,486 374,149 372,458 Trade and other receivables 12 897,741 830,082 252,581 455,479 Amounts due from subsidiary companies 13 0 0 557,158 352,065 Amounts due from associated companies 14 1,023 3,363 145 530 Tax recoverable 45,790 19,053 0 0 Short term investments 15 181,980 166,435 181,980 166,435 Deposits, bank and cash balances 16 2,989,220 3,793,257 2,136,190 3,005,638 ──────── ──────── ──────── ──────── 4,937,679 5,647,676 3,502,203 4,352,605 ──────── ──────── ──────── ──────── CURRENT LIABILITIES Trade and other payables 17 1,506,179 1,663,729 971,710 1,189,045 Provisions 18 240,230 264,838 209,043 240,832 Amounts due to subsidiary companies 19 0 0 144,649 78,875 Amounts due to associated companies 20 15,817 28,512 15,817 28,463 Taxation 143,383 206,453 139,286 207,486 Short term borrowings 21 173,134 507,376 52,570 163,441 ──────── ──────── ──────── ──────── 2,078,743 2,670,908 1,533,075 1,908,142 ──────── ──────── ──────── ──────── NET CURRENT ASSETS 2,858,936 2,976,768 1,969,128 2,444,463 NON CURRENT ASSETS Property, plant and equipment 22 2,940,315 2,256,884 2,613,601 2,019,238 Subsidiary companies 23 0 0 425,165 426,755 Amounts due from subsidiary companies 13 0 0 58,492 17,944 Associated companies 24 170,075 146,855 32,026 32,026 Jointly controlled entities 25 28,150 2,835 0 0 Other long term investments 26 6,276 6,276 2,475 2,475 Deferred tax assets 28 47,252 27,404 34,514 14,812 ──────── ──────── ──────── ──────── 3,192,068 2,440,254 3,166,273 2,513,250 ──────── ──────── ──────── ────────


8

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) BALANCE SHEETS AS AT 31 MARCH 2004 (CONTINUED) Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 NON CURRENT LIABILITIES Long term liabilities 27 447,430 222,268 169,926 222,268 Deferred tax liabilities 28 1,023 1,023 0 0 ──────── ──────── ──────── ──────── 448,453 223,291 169,926 222,268 ──────── ──────── ──────── ──────── 5,602,551 5,193,731 4,965,475 4,735,445 ════════ ════════ ════════ ════════ FINANCED BY: Share capital 29 549,213 549,213 549,213 549,213 Reserves 30 4,988,774 4,587,908 4,416,262 4,186,232 ──────── ──────── ──────── ──────── Shareholders' funds 5,537,987 5,137,121 4,965,475 4,735,445 MINORITY INTERESTS 64,564 56,610 0 0 ──────── ──────── ──────── ──────── 5,602,551 5,193,731 4,965,475 4,735,445 ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


9

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 Issued and fully paid ordinary shares Non-distributable Distributable Nominal Foreign Number value of Share exchange Retained Note of shares RM1 each premium Goodwill translation earnings Total '000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2002 543,144 543,144 432,409 (337,998) 27,175 3,431,847 4,096,577 (as previously reported) Prior year adjustment 41 0 0 0 0 0 74,180 74,180 ──────── ──────── ──────── ──────── ──────── ──────── ──────── As restated 543,144 543,144 432,409 (337,998) 27,175 3,506,027 4,170,757 Issued under Perusahaan Otomobil Nasional Berhad Employees’ Share Option Scheme 6,069 6,069 0 0 0 0 6,069 Premium on shares issued 0 0 43,208 0 0 0 43,208 Currency translation differences 0 0 0 0 (80,967) 0 (80,967) Goodwill written-off 0 0 0 (21,599) 0 0 (21,599) Net profit attributable to shareholders 0 0 0 0 0 1,107,524 1,107,524 Dividends for the year ended 31 March 2002 - final 0 0 0 0 0 (43,935) (43,935) 31 March 2003 - interim 0 0 0 0 0 (43,936) (43,936) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 549,213 549,213 475,617 (359,597) (53,792) 4,525,680 5,137,121 ════════ ════════ ════════ ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


10

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 Issued and fully paid ordinary shares Non-distributable Distributable Nominal Foreign Number value of Share exchange Retained Note of shares RM1 each premium Goodwill translation earnings Total '000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2003 549,213 549,213 475,617 (359,597) (53,792) 4,482,969 5,094,410 (as previously reported) Prior year adjustment 41 0 0 0 0 0 42,711 42,711 ──────── ──────── ──────── ──────── ──────── ──────── ──────── As restated 549,213 549,213 475,617 (359,597) (53,792) 4,525,680 5,137,121 Currency translation differences 0 0 0 0 (15,839) 0 (15,839) Net profit attributable to shareholders 0 0 0 0 0 510,071 510,071 Dividends for the year ended 31 March 2003 - final 0 0 0 0 0 (65,905) (65,905) 31 March 2004 - interim 0 0 0 0 0 (27,461) (27,461) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 549,213 549,213 475,617 (359,597) (69,631) 4,942,385 5,537,987 ════════ ════════ ════════ ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


11

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 Issued and fully paid Non- ordinary shares distributable Distributable Nominal Foreign Number value of Share Exchange Retained Note of shares RM1 each premium Translation earnings Total '000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2002 543,144 543,144 432,409 0 2,957,745 3,933,298 (as previously reported) Prior year adjustment 41 0 0 0 0 68,455 68,455 ──────── ──────── ──────── ──────── ──────── ──────── As restated 543,144 543,144 432,409 0 3,026,200 4,001,753 Issued under Perusahaan Otomobil Nasional Berhad Employees’ Share Option Scheme 6,069 6,069 0 0 0 6,069 Premium on shares issued 0 0 43,208 0 0 43,208 Net profit attributable to shareholders 0 0 0 0 772,286 772,286 Dividends for the year ended 31 March 2002 - final 0 0 0 0 (43,935) (43,935) 31 March 2003 - interim 0 0 0 0 (43,936) (43,936) ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 549,213 549,213 475,617 0 3,710,615 4,735,445 ════════ ════════ ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


12

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONTINUED) Issued and fully paid Non- ordinary shares distributable Distributable Nominal Foreign Number value of Share Exchange Retained Note of shares RM1 each premium Translation earnings Total '000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 April 2003 549,213 549,213 475,617 0 3,678,758 4,703,588 (as previously reported) Prior year adjustment 41 0 0 0 0 31,857 31,857 ──────── ──────── ──────── ──────── ──────── ──────── As restated 549,213 549,213 475,617 0 3,710,615 4,735,445 Currency translation differences 0 0 0 1,560 0 1,560 Net profit attributable to shareholders 0 0 0 0 321,836 321,836 Dividends for the year ended 31 March 2003 - final 0 0 0 0 (65,905) (65,905) 31 March 2004 - interim 0 0 0 0 (27,461) (27,461) ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 549,213 549,213 475,617 1,560 3,939,085 4,965,475 ════════ ════════ ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


13

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 CASH FLOWS FROM OPERATING ACTIVITIES Profit after taxation 521,076 1,117,757 321,836 772,286 Adjustments for: Taxation 70,917 242,221 7,734 161,747 Property, plant and equipment written off 41,072 86,477 40,487 75,733 Impairment of property, plant and equipment 0 1,000 0 0 Allowance for inventories write down 7,957 3,663 (11,165) 3,663 Inventories written off 0 12,977 0 12,977 Depreciation of property, plant and equipment 329,383 402,929 302,456 383,334 Interest expense 37,127 38,378 14,604 12,565 Interest income (107,542) (117,028) (92,800) (99,693) (Gain)/loss on disposal of property, plant and equipment (46,592) (6,521) (333) (3,976) Share of results of associated companies (43,292) (45,838) 0 0 Share of results of jointly controlled entities (2,093) (1,430) 0 0 Allowance for diminution in value of investment in subsidiary companies 0 0 0 231,649 Write back of diminution in value of investment in associated companies 0 0 0 (4,200) Allowance for/(write back of) diminution in value of short term investments (17,791) 8,985 (17,791) 8,985 Loss/(gain) on disposal of short term investments (12,388) 1,694 (12,388) 1,694 Allowance/(write back of) for doubtful debts (1,566) 5,440 (9,049) (23,231) Unrealised foreign exchange gain 6,098 (63,687) 1,752 (64,710) Provision for warranties (net of expected reimbursement) 48,860 53,858 21,463 46,925 Dividend income (8,218) (2,520) (22,689) (8,857) ──────── ──────── ──────── ──────── Operating profit before working capital changes 823,008 1,738,355 544,117 1,506,891


14

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONTINUED) Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 Changes in working capital: Inventories 35,635 (107,552) 9,474 (156,601) Receivables - Trade and other receivables (36,431) 277,274 203,985 275,365 - Subsidiary companies 0 0 (240,458) (63,776) - Associated companies 2,340 1,479 521 (127) Payables - Trade and other payables (203,142) (211,852) (216,247) (286,861) - Provisions for liabilities and charges (90,294) (144,976) (53,252) (130,086) - Subsidiary companies 0 0 65,774 47,598 - Associated companies (12,695) (4,634) (12,646) (4,336) ──────── ──────── ──────── ──────── Cash generated from operations 518,421 1,548,094 301,268 1,188,067 Taxation paid (163,952) (356,534) (92,500) (234,950) Interest received 113,168 116,340 97,019 93,973 Interest paid (42,152) (41,991) (15,692) (13,363) ──────── ──────── ──────── ──────── Net cash flow from operating activities 425,485 1,265,909 290,095 1,033,727 ──────── ──────── ──────── ──────── CASH FLOWS FROM INVESTING ACTIVITIES Purchase of property, plant and equipment (1,059,011) (1,017,953) (938,125) (916,617) Additional investment in a subsidiary company 0 (21,599) (1,785) (253,649) Additional investment in an associated company 0 (21,998) 0 0 Additional investment in a jointly controlled entity (25,000) 0 0 0 Repayment of advances from subsidiary companies 0 0 (1,632) 67,042 Purchase of short term investments (122,955) (104,968) (122,955) (104,968) Disposal of short term investments 137,589 112,841 137,589 112,841 Proceeds from disposal of property, plant and equipment 56,175 11,742 1,152 36,549 Dividends received 18,291 7,360 19,417 8,857 Return of capital from a liquidated subsidiary company 0 0 3,375 0 ──────── ──────── ──────── ──────── Net cash flow used in investing activities (994,911) (1,034,575) (902,964) (1,049,945) ──────── ──────── ──────── ────────


15

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) CASH FLOW STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 MARCH 2004 (CONTINUED) Group Company Note 2004 2003 2004 2003 RM’000 RM’000 RM’000 RM’000 CASH FLOWS FROM FINANCING ACTIVITIES Dividends paid (93,366) (87,871) (93,366) (87,871) Proceeds from issuance of share capital 0 49,277 0 49,277 Cash contribution by minority interest 1,715 0 0 0 Proceeds from short term borrowings 846,927 113,112 846,927 113,112 Proceeds from new term loan 277,500 0 0 0 Repayment of term loans (357,304) (69,054) (50,329) (17,816) Finance lease and hire purchase instalments paid (146) (656) 0 0 Repayment of short term borrowings (965,541) (127,400) (959,811) 0 Fixed deposits pledged as securities 38 (308,880) 0 (308,880) 0 ──────── ──────── ──────── ──────── Net cash flow (used in)/from financing activities (599,095) (122,592) (565,459) 56,702 ──────── ──────── ──────── ──────── NET INCREASE IN CASH AND CASH EQUIVALENTS (1,168,521) 108,742 (1,178,328) 40,484 EXCHANGE RATE EFFECTS 8,684 1,844 0 0 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 3,719,613 3,609,027 3,005,638 2,965,154 ──────── ──────── ──────── ──────── CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 38 2,559,776 3,719,613 1,827,310 3,005,638 ════════ ════════ ════════ ════════ The notes on pages 16 to 83 form part of these financial statements.


16

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2004

1 CORPORATE INFORMATION The Company is principally involved in manufacturing, assembling and selling motor vehicles and

related products. The principal activities of the subsidiary and associated companies are set out in Notes 23 and 24

to the financial statements. There have been no significant changes in the activities of the Group during the financial year.

Subsequent to 31 March 2004, the company completed a Group Reorganisation exercise. As at 31

March 2004, the Company was a public limited liability company, incorporated and domiciled in Malaysia and, until 16 March 2004, was listed on the Main Board of the Bursa Malaysia Berhad (“BMB”). On 5 April 2004, Proton Holdings Berhad became the holding company of the Company. The listing status of the Company on the main board of Bursa Malaysia Berhad was assumed by Proton Holdings Berhad on 16 April 2004.

The holding and ultimate holding company subsequent to 5 April 2004, is Proton Holdings Berhad,

a company incorporated in Malaysia. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of accounting

The financial statements of the Group and Company have been prepared under the historical cost convention (as modified by the revaluation of certain freehold land), unless otherwise indicated in the summary of significant accounting policies.

The financial statements comply with the applicable approved accounting standards in

Malaysia and the provisions of the Companies Act, 1965. The new applicable approved accounting standards adopted in these financial statements are as follows:

MASB Standard 25 “Income Taxes” MASB Standard 27 “Borrowing Costs” MASB Standard 28 “Discontinuing Operations” MASB Standard 29 “Employee Benefits”

With the exception of MASB Standard 25 and MASB Standard 29, there are no changes in accounting policies that affect net profit or shareholders’ equity for the financial year as a result of the adoption of the above standards in these financial statements as the Group was already following the recognition and measurement principles in those standards. The effects of adopting MASB 25 and MASB 29 are summarised in Note 41 to the financial statements.

The preparation of financial statements in conformity with the applicable approved

accounting standards in Malaysia and the provisions of the Companies Act, 1965 require the Directors to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial year. Actual results could differ from those estimates.


17

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) NOTES TO THE FINANCIAL STATEMENTS - 31 MARCH 2004 (CONTINUED)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Basis of consolidation The consolidated financial statements include the financial statements of the Company

and its subsidiary companies made up to the end of the financial year. All subsidiary companies’ financial statements are consolidated based on the acquisition method of accounting. The consolidated income statement includes the results of subsidiary companies acquired or disposed during the financial year from the date of their acquisition or up to the date of their disposal, respectively.

(i) Subsidiary companies

Subsidiary companies are those companies in which the Group has power to exercise control over the financial and operating policies so as to obtain benefits from their activities.

Minority interest is measured at the minorities’ share of the post acquisition fair

values of the identifiable assets and liabilities of the acquiree. Separate disclosure is made of minority interest.

Investments in subsidiaries are stated at cost. Where an indication of impairment

exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.

(ii) Associated companies

Associated companies are companies in which the Group exercises significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the associated companies but not control over those policies. Investment in associated companies are accounted for in the consolidated financial statements by the equity method of accounting.

The consolidated income statement includes the Group's share of results of the

associated companies based on its latest audited financial statements or management financial statements of the companies concerned.

Investments in associates are stated at cost. Where an indication of impairment exists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount.

In the consolidated balance sheet, the Group's interest in the associated

companies is stated at cost plus the Group's share of post acquisition results and reserves.

(iii) Jointly controlled entities

Jointly controlled entities are corporations, partnerships or other entities over which there is contractually agreed sharing of control by the Group with one or more parties. The Group’s interest in jointly controlled entities are accounted for in the consolidated financial statements by the equity method of accounting.


18


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (c) Investments Investments in other non-current investments are shown at cost and an allowance for

diminution in value is made where, in the opinion of the Directors, there is a decline other than temporary in the value of such investments. Where there has been a decline other than temporary in the value of an investment, such a decline is recognised as an expense in the financial year in which the decline is identified. See accounting policy Note 2 (u) on impairment of assets.

Short term investments are carried at the lower of cost and market value, determined on

an aggregate portfolio basis by category of investments. Market value is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet date. Increases/decreases in the carrying amount of short term investments are credited/charged to the income statement.

On disposal of an investment, the difference between net disposal proceeds and its

carrying amount is charged/credited to the income statement. (d) Goodwill Goodwill arising on consolidation represents the excess of the purchase price over the fair

value of the net assets of subsidiary companies at the date of acquisition and is written off and set-off against reserves in the year of acquisition.

(e) Property, plant and equipment A piece of freehold land held by the Company is stated at Directors' valuation based on a

1983 independent professional valuation of the open market value of the land on existing use basis. The surplus arising on revaluation was credited directly to capital reserves and subsequently utilised. This valuation has not been updated.

All other land held by the Group and Company are stated at cost. Freehold land and work

in progress are not amortised. All long leasehold land are amortised over the period of their lease term.

All other property, plant and equipment except for dies and jigs included under plant and

machinery, held by the Group and Company are stated at cost less accumulated depreciation and impairment losses. Depreciation is charged on a straight line basis to write off the costs of the assets over the term of their estimated useful lives. Where an indication of impairment exists, the carrying amount of the assets is assessed and written down immediately to its recoverable amount.

The principal annual rates of depreciation used are as follows: Long leasehold land Over period of lease term of 98 years Buildings 2% - 5% Plant and machinery 10% - 50% Office equipment, furniture, fittings and vehicles 10% - 50%


19


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (e) Property, plant and equipment (Continued) Dies and jigs, included under plant and machinery are depreciated based on the unit of

production basis to write off the cost of the assets over the term of their estimated useful lives which range from 5 to 6 years.

Work in progress is not depreciated. Upon completion, the related costs will be transferred to the respective category of assets. Depreciation on work in progress commences when the assets are ready for their intended use.

(f) Land and development expenditure Land and development expenditure consists of land held for development and related

development costs common to projects. Developed land is stated at the lower of cost and net realisable value.

All expenditure incurred on uncompleted projects are capitalised and are included in the

balance sheet as development expenditure. Upon completion of the projects, land and related development cost are reclassified as

apartments for sale. (g) Leases Finance leases are leases of property, plant and equipment where the Group assumes

substantially all the benefits and risks of ownership. Property, plant and equipment acquired under finance leases are included in tangible

property, plant and equipment and are amortised in accordance with Note 2(g) above. Obligations under such agreements are treated as a liability and finance charges are allocated to the income statement over the lease periods to give a constant periodic rate of interest on the remaining lease liabilities.

Operating leases are leases of assets under which a significant portion of the risks and

benefits of ownership are effectively retained by the lessor. Payments made under operating leases are charged to the income statement on a straight line basis over the lease period.

(h) Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined on

a first-in, first-out basis except for parts and accessories held for resale by certain subsidiaries which is determined on a weighted average basis.

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

production overheads are included in the costs.


20


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Trade and other receivables Trade and other receivables are carried at anticipated net realisable value. Allowances

are made for doubtful debts based on specific review of outstanding balances at balance sheet date. General allowances are made to cover possible losses which are not specifically identified. Bad debts are written off to the income statement during the financial year in which they are identified.

(j) Research and development expenditure Research and development expenditure is generally recognised as an expense. Costs

incurred on development projects are capitalised to the extent that such expenditure is reasonably certain to generate future economic benefits. Expenditures capitalised are depreciated over the useful lives of the project. Development costs initially recognised as an expense are not recognised as an asset in a subsequent period.

(k) Provision Provisions are recognised when the Group has a present legal or constructive obligation

as a result of past events, when it is probable that an outflow of resources will be required to settle the obligation, and when a reliable estimate of the amount can be made. Where the Group expects a provision to be reimbursed, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

Provision for warranties Provision is made for the estimated liability on all products under warranty in addition to

claims already received. Warranties are provided for a period of between one to three years for vehicles sold. The provision is based on experienced levels of claims arising during the period of warranty. When the Group expects warranties to be reimbursed from suppliers, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain.

(l) Employee benefits (i) Short term employee benefits Salaries, wages, paid annual leave and sick leave, bonuses and non-monetary

benefits are accrued in the period in which the associated services are rendered by employees of the Group.


21


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Employee benefits (Continued) (ii) Post employment benefits

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

Defined contribution plans The Group’s contributions to defined contribution plans are charged to the income

statement in the period to which they relate. Once the contributions have been paid, the Group has no further payment obligations.

Defined benefit plans The liability in respect of a defined benefit plan is the present value of the defined

benefit obligation at the balance sheet date minus the fair value of plan assets, together with adjustments for actuarial gains/losses and past service cost. The Group determines the present value of the defined benefit obligation and the fair value of any plan assets with sufficient regularity such that the amounts recognised in the financial statements do not differ materially from the amounts that would be determined at the balance sheet date.

The defined benefit obligation, calculated using the projected unit credit method, is

determined by independent actuaries on the basis of triennial valuations. Assumptions were made in relation to the annual investment returns, annual salary increases and annual increases in pension payments.

Plan assets in excess of the defined benefit obligation are subject to the asset

limitation specified in MASB 29. Actuarial gains and losses arise from experience adjustments and changes in

actuarial assumptions. The amount of net actuarial gains and losses recognised in the income statement is determined by the corridor method in accordance with MASB 29 and is charged or credited to income over the average remaining service lives of the related employees participating in the defined benefit plan.

Upon initial adoption of MASB 29 effective on 1 April 2003, the increase in defined

benefit liability is recognised as an expense on a straight line basis over 5 years in accordance with the transitional provision of the Standard.


22


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Employee benefits (Continued) (iii) Termination benefits Termination benefits are payable whenever an employee’s employment is

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

(m) Income taxes Current tax expense is determined according to the tax laws of each jurisdiction in which

the Group operates and include all taxes based upon the taxable profits, including withholding taxes payable by a foreign subsidiary company on distributions of retained earnings to companies in the Group.

Deferred tax is recognised in full, using the liability method, on temporary differences

arising between the amounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will

be available against which the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences arising on investments in

subsidiaries, associates and joint ventures except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

Tax rates enacted or substantively enacted by the balance sheet date are used to

determine deferred tax.


23


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(n) Foreign currency transactions and translation Transactions in foreign currencies during the financial year are translated into Ringgit

Malaysia at exchange rates ruling at the transaction dates. Foreign currency monetary assets and liabilities at the balance sheet date are translated into Ringgit Malaysia at the exchange rates ruling at that date. Exchange differences arising from the settlement of foreign currency transactions and from the translation of foreign currency monetary assets and liabilities are included in the income statement.

Results of foreign subsidiary and associated companies are translated into Ringgit

Malaysia at average rates of exchange for the financial year. Assets and liabilities are translated into Ringgit Malaysia, at the rates of exchange ruling at the balance sheet date. Exchange differences arising from the translation of the results for the year at average rates and assets and liabilities at year end rates and the restatement at year end rates of the opening net investments in foreign subsidiary and associated companies are taken to a foreign exchange translation account as a component of shareholders’ funds.

The principal closing rates used in translation of foreign currency amounts were as follows: Foreign currency 31.3.2004 31.3.2003 RM RM 1 USD 3.80 3.80 1 GBP 6.94 5.98 1 AUD 2.87 2.29 1 EURO 4.63 4.11 100 JPY 3.59 3.17 (o) Cash and cash equivalents Cash and cash equivalents comprise cash in hand, bank balances, bank deposits, bank

overdrafts and short term, highly liquid investments that are readily convertible to known amounts of cash which are subject to insignificant risk of changes in value.


24



(p) Revenue recognition Sales which includes vehicles, spare parts and accessories are recognised upon delivery. Revenue from sale of completed apartments is recognised when the Sale and Purchase

Agreements are signed. Revenue for rendering of services on long term engineering contracts is recognised on the

basis of the stage of completion of such contracts at the financial year end, where the contract outcome can be assessed with reasonable certainty. Full provision is made for all foreseeable losses on contracts entered into or commenced prior to the financial year end. Amounts are included within receivables and prepayments to recognise timing differences arising between amounts invoiced and amounts recognised in the income statement on individual engineering contracts.

Other revenue comprises mainly revenue from rental, royalty and interest income, which

are recognised on an accrual basis. (q) Financial instruments (i) Financial instruments recognised on the balance sheet The particular recognition method adopted for financial instruments recognised on

the balance sheet is disclosed in the individual policy statements associated with each item.

(ii) Financial instruments not recognised on the balance sheet The Group is a party to financial instruments which comprise foreign currency

forward contracts and interest rate cap and floor contract. These instruments are not recognised in the financial statements on inception.

Foreign currency forward contracts The Group enters into foreign currency forward contracts to protect the Group

from movements in exchange rates by establishing the rate at which a foreign currency asset or liability will be settled.

Exchange gains and losses arising on contracts entered into as hedges of

anticipated future transactions are deferred until the date of such transaction, at which time they are included in the measurement of such transactions.

All other exchange gains and losses relating to hedge instruments are recognised

in the income statement in the same period as the exchange differences on the underlying hedged items. Gains and losses on contracts which are no longer designated as hedges are included in the income statement.


25



(q) Financial instruments (Continued) (iii) Fair value estimation for disclosure purposes

The fair value of publicly traded derivatives and securities is based on quoted

market prices at the balance sheet date.

The fair value of interest rate cap and floor contract is determined by the differences between the interest payable at the contracted rate and the market rate. The fair value of forward foreign exchange contracts is determined using forward exchange market rates at the balance sheet date.

In assessing the fair value of non-traded derivatives and financial instruments, the

Group uses a variety of methods and makes assumptions that are based on market conditions existing at each balance sheet date. Quoted market prices or dealer quotations for the specific or similar instruments are used for long term debt. Unquoted long term investments are valued based on quoted investments with similar features.

The face values, less any estimated credit adjustments, for financial assets and

liabilities classified as current are assumed to approximate their fair values.

(r) Borrowings Classification Borrowings are initially recognised based on the proceeds received, net of transaction

costs incurred. Subsequently, borrowings are stated at amortised cost using the effective yield method; any difference between proceeds (net of transaction costs) and the redemption value is recognised in the income statement over the period of the borrowings.

Interest, dividends, losses and gains relating to a financial instrument, or a component

part, classified as a liability is reported within finance cost in the income statement. Capitalisation of borrowings cost Borrowings cost incurred on specific and identifiable borrowings used to finance property

development and construction contract is capitalised until the properties are ready for their intended use.


26


2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (s) Share capital Ordinary shares are classified as equity. External cost directly attributable to the issue of

new shares are expensed off in the income statement. Final dividends payable on ordinary shares are recognised as liabilities when formally

approved.

(t) Contingent liabilities and contingent assets

The Group does not recognise a contingent liability but discloses its existence in the financial statements. A contingent liability is a possible obligation that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group or a present obligation that is not recognised because it is not probable that an outflow of resources will be required to settle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability that cannot be recognised because it cannot be measured reliably. A contingent asset is a possible asset that arises from past events whose existence will be confirmed by uncertain future events beyond the control of the Group. The Group does not recognise contingent assets but discloses its existence where inflows of economic benefits are probable, but not virtually certain.

(u) Impairment of assets

Property, plant and equipment and other non-current assets, including intangible assets, are reviewed for impairment losses whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by which the carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of an asset’s net selling price and value in use. For the purposes of assessing impairment, assets are grouped at the lowest level for which there is separately identifiable cash flows. The impairment loss is charged to the income statement unless it reverses a previous revaluation in which case it is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in the income statement unless it reverses an impairment loss on a revalued asset in which case it is taken to revaluation surplus.


27


3 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s activities exposes it to a variety of financial risks, including foreign currency exchange

risk, interest rate risk, market risk, credit risk, liquidity and cash flow risk. The Group focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group. Financial risk management is carried out through risks reviews, internal control systems, a global insurance programme and adherence to Group financial risk management policies. The Board regularly reviews these risks and approves the treasury policies, which covers the management of these risks.

The Group uses derivative financial instruments such as foreign exchange contracts and interest

rate instruments to hedge certain exposures. It does not trade in financial instruments. (a) Foreign currency exchange risk The Group is exposed to currency risk as a result of the foreign currency transactions

entered into by the Company and subsidiaries in currencies other than their functional currency. The Group enters into forward foreign currency exchange contracts to limit the exposure on foreign currency receivables and payables, and on cash flows generated from anticipated transactions denominated in foreign currencies.

(b) Interest rate risk The Group’s income and operating cash flows arising from bank deposits are substantially

affected by changes in market interest rates. Derivative financial instruments are used, where appropriate, to generate the desired interest rate profile.

(c) Market risk The Group does not face significant exposure from the risk from changes in debt and

equity prices. (d) Credit risk

The Group seeks to invest cash assets safely and profitably. The Group considers the risk of material loss in the event of non-performance by a financial counterparty to be unlikely in view of their respective financial strength.

The Group seeks to control customers credit risk by ensuring that significant sales of

product and services are made to customers with an appropriate credit history. (e) Liquidity and cash flow risk Prudent liquidity risk management implies maintaining sufficient cash and marketable

securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions.


28


4 REVENUE Revenue represents the invoiced value of goods sold and services provided and is net of

commission paid to dealers and related taxes. Revenue comprises: Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Sale of vehicles, spare parts and accessories 6,260,640 9,155,614 5,254,156 7,668,748 Sale of apartments 3,094 2,975 0 0 Rendering of services 206,613 104,194 815 482 Others 0 5,213 4,810 5,035 ──────── ──────── ──────── ──────── 6,470,347 9,267,996 5,259,781 7,674,265 ════════ ════════ ════════ ════════

5 PROFIT FROM OPERATIONS The following items have been charged/ (credited) in arriving at profit from operations: Gross dividends receivable from: - subsidiary company, unquoted 0 0 (5,280) (1,760) - associated companies, unquoted 0 0 (9,191) (4,577) - others, quoted (6,668) (1,770) (6,668) (1,770) - others, unquoted (1,550) (750) (1,550) (750) Property, plant and equipment: - depreciation 329,383 402,929 302,456 383,334 - written off 41,072 86,477 40,487 75,733 - impairment 0 1,000 0 0 Research and development expenditure 542,881 412,955 525,883 390,645 Provision for warranties (net of expected reimbursement) 48,860 53,858 21,463 46,925 Allowance for/(write back of) doubtful debts (1,566) 5,440 (9,049) (23,231) Allowance for diminution in value of investment in subsidiary companies 0 0 0 231,649 Write back of diminution in value of investment in associated companies 0 0 0 (4,200) Allowance for diminution/(write back of) in value of short term investments (17,791) 8,985 (17,791) 8,985 Loss/(gain) on disposal of short term investments (12,388) 1,694 (12,388) 1,694


29


5 PROFIT FROM OPERATIONS (CONTINUED) Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Group audit fees to PricewaterhouseCoopers - Malaysia 358 268 200 150 - firms of worldwide organisation 1,294 1,198 0 0 Non-audit service fees to PricewaterhouseCoopers - Malaysia 412 100 0 37 - firms of worldwide organisation 936 1,084 332 0 Operating lease rental 5,676 11,632 0 0 Hire of plant, machinery and equipment 604 217 0 0 Rental of premises 21,562 16,124 0 0 Foreign exchange loss/(gain): - realised 1,569 2,113 2,740 (2,175) - unrealised 6,098 (63,687) 1,752 (64,710) (Gain)/loss on disposal of property, plant and equipment (46,592) (6,521) (333) (3,976) Rental income on land and buildings (381) (773) (38) (99) Interest income from: - subsidiary companies 0 0 (1,374) (4,512) - others (107,542) (117,028) (91,426) (95,181) Inventories written off 0 12,977 0 12,977 Allowance for inventories write down 7,957 3,663 (11,165) 3,663 ════════ ════════ ════════ ════════ 6 STAFF COST Wages, salaries and bonus 517,042 496,148 158,181 182,634 Termination benefits 1,180 2,475 0 0 Pension cost

- defined contribution plan 23,697 21,567 20,254 19,971 - defined benefit plan 24,940 13,102 0 0

Other employee benefits 46,499 34,831 26,969 17,787 ──────── ──────── ──────── ──────── 613,358 568,123 205,404 220,392

════════ ════════ ════════ ════════ The number of staff (including executive Directors) as at financial year end amounted to 8,956 (2003: 9,466) in the Group and 5,379 (2003: 5,976) persons in the Company.


30


6 STAFF COST (CONTINUED) Directors’ remuneration The aggregate amount of emoluments receivable by Directors of the Company during the year was as follows:

Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Non-executive Directors: - fees 547 553 523 540 - estimated money value of benefits-in-kind 56 34 56 34 Executive Directors: - salaries and bonus 968 1,348 968 1,348 - estimated money value of benefits-in-kind 71 66 71 66 - defined contribution retirement plan 70 86 70 86 - other employee benefits 143 146 143 146 ──────── ──────── ──────── ──────── 1,855 2,233 1,831 2,220

════════ ════════ ════════ ════════ Details of the defined contribution and defined benefit plans of the Group and Company are set out in Note 31.

7 FINANCE COST Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Interest expense on: Long term loans 25,956 30,245 9,816 11,544 Short term borrowings 9,462 6,722 4,788 1,021 Finance leases and hire purchase 0 715 0 0 Others 1,709 696 0 0 ──────── ──────── ──────── ──────── 37,127 38,378 14,604 12,565 ════════ ════════ ════════ ════════


31


8 TAXATION Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Taxation in Malaysia Current taxation: - Charge for the year 75,295 271,594 27,436 192,234 - Under provision in respect of prior years 0 182 0 0 Taxation on share of profits of associated company 7,870 3,630 0 0 Taxation outside Malaysia Current taxation: - Charge for the year 3 116 0 0 - (Over)/under provision in respect of

prior years (341) (596) 0 0 - Benefit from previously unrecognised tax loss 868 0 0 0

Taxation on share of profits of associated companies 6,435 3,165 0 0

Taxation on share of profits of joint venture entities 635 520 0 0 Deferred taxation Origination and reversal of temporary differences (10,087) (36,390) (19,702) (30,487) Previously unrecognised tax benefits (9,761) 0 0 0 ──────── ──────── ──────── ──────── 70,917 242,221 7,734 161,747 ════════ ════════ ════════ ════════ Total taxation for company and subsidiaries 55,977 234,906 7,734 161,747 Share of taxation in associated companies 14,305 6,795 0 0 Share of taxation in joint venture entities 635 520 0 0 ──────── ──────── ──────── ──────── 70,917 242,221 7,734 161,747 ════════ ════════ ════════ ════════


32


8 TAXATION (CONTINUED) Numerical reconciliation between the average effective tax rate and the Malaysian tax rate. Group Company 2004 2003 2004 2003 % % % % Malaysian tax rate 28 28 28 28 Tax effects of:

- double deduction and allowance incentive on qualified expenditure (18) (7) (29) (12)

- expenses not deductible for tax purposes 3 1 5 1 - income not subject to tax (2) (1) (2) 0

- current year’s tax loss not recognised 3 0 0 0 - others (2) (3) 0 0

──────── ──────── ──────── ──────── Average effective tax rate 12 18 2 17 ════════ ════════ ════════ ════════ Disclosure Items: Current year tax losses utilised during the year 1,736 21,456 0 0 Tax savings arising from such tax losses 512 6,434 0 0 ════════ ════════ ════════ ════════ Previously unrecognised tax losses utilised during the year 2,897 0 0 0 Tax savings arising from such tax losses 868 0 0 0 ════════ ════════ ════════ ════════ Unutilised tax losses carried forward 640,767 615,027 0 0 Unutilised reinvestment allowance 898,400 0 898,400 0 ════════ ════════ ════════ ════════


33


9 EARNINGS PER SHARE Basic earnings per share is calculated by dividing the net profit attributable to shareholders by the

weighted average number of ordinary shares in issue during the financial year. Group 2004 2003 RM’000 RM’000 Net profit attributable to shareholders (RM’000) 510,071 1,107,524 Weighted average number of ordinary shares in issue (‘000) 549,213 548,547 Basic earnings per share (sen) 92.9 201.9 ════════ ════════ The Employee Share Option Scheme which is the only option that may have a potential dilution

effect expired on 11 March 2003. Therefore, there is no dilutive impact on EPS. 10 DIVIDENDS Dividends declared or proposed in respect of the financial year ended 31 March 2004 are as

follows: Company 2004 2003 RM’000 RM’000 Final dividend proposed for the financial year 2004: Tax exempt dividend of 10.0 sen (2003: 12.0 sen) per share 54,921 65,906 Interim dividend paid for the financial year 2004: Tax exempt dividend of 5.0 sen (2003: 8.0 sen) per share 27,461 43,936 ─────── ─────── 82,382 109,842 ═══════ ═══════


34


11 INVENTORIES Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 At cost Raw materials: Completely knocked-down packs of vehicles 135,764 100,166 135,764 100,166 Others 84,015 65,505 52,408 41,392 Parts, accessories and general stores 108,804 86,756 22,528 15,681 Work-in-progress 102,658 57,007 98,898 51,346 Finished vehicles 283,646 316,720 37,986 96,572 Goods-in-transit 20,129 34,629 12,851 34,629 ─────── ─────── ─────── ─────── 735,016 660,783 360,435 339,786 Apartments for sale 9,984 10,828 0 0 ─────── ─────── ─────── ─────── 745,000 671,611 360,435 339,786 ─────── ─────── ─────── ─────── At net realisable value Raw materials: Completely knocked-down packs of vehicles 726 0 726 0 Others 0 233 0 0 Parts, accessories and general stores 6,310 5,304 0 0 Finished vehicles 56,069 142,546 12,988 32,672 ─────── ─────── ─────── ─────── 63,105 148,083 13,714 32,672 Apartments for sale 13,820 15,792 0 0 ─────── ─────── ─────── ─────── 76,925 163,875 13,714 32,672 ─────── ─────── ─────── ─────── 821,925 835,486 374,149 372,458 ═══════ ═══════ ═══════ ═══════


35


12 TRADE AND OTHER RECEIVABLES Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Trade receivables 626,273 546,986 15,028 201,148 Allowance for doubtful debts (9,857) (7,259) (646) (448) ─────── ─────── ─────── ─────── 616,416 539,727 14,382 200,700 Amount due from a related party 43 7,173 43 62 Reimbursement of warranty claims (Note 18) 143,677 165,819 141,774 165,819 Other receivables 114,219 112,157 86,228 88,092 Prepayments 12,030 9,955 2,946 1,873 Deposits 12,588 5,520 7,956 7,165 Allowance for doubtful debts (1,232) (10,269) (748) (8,232) ─────── ─────── ─────── ─────── 897,741 830,082 252,581 455,479 ═══════ ═══════ ═══════ ═══════ The currency exposure profile of trade and other receivables are as follows: Currency exposure at 31.3.2004 Ringgit Pound US Malaysia Sterling Dollar Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 707,155 7,499 16,701 9,859 741,214 Pound Sterling 0 82,841 25,502 38,298 146,641 Others 0 0 111 9,775 9,886 ─────── ─────── ─────── ─────── ─────── 707,155 90,340 42,314 57,932 897,741 ═══════ ═══════ ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 225,083 7,499 16,155 3,844 252,581 ═══════ ═══════ ═══════ ═══════ ═══════


36


12 TRADE AND OTHER RECEIVABLES (CONTINUED) Currency exposure at 31.3.2003 Ringgit Pound US Malaysia Sterling Dollar Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 640,148 0 15,842 7,710 663,700 Pound Sterling 0 127,199 10,292 21,261 158,752 Others 0 0 259 7,371 7,630 ─────── ─────── ─────── ─────── ─────── 640,148 127,199 26,393 36,342 830,082 ═══════ ═══════ ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 431,927 0 15,842 7,710 455,479 ═══════ ═══════ ═══════ ═══════ ═══════ Credit terms of trade receivable for Group and Company range from payment in advance to 180

days. However, the majority of the Company’s trade receivables have a credit term between 14 days to 60 days (2003: 14 days to 60 days).

Following the formalisation of a Memorandum of Agreement (MOA) between Proton Edar Sdn.

Bhd., a subsidiary company and a selected Super Dealer, the Company’s sales are now concentrated within the Proton Group of companies. The directors believe that no additional credit risk beyond the amount provided for collection losses is inherent to the Company’s trade receivables.

Group sales are concentrated in Malaysia and highly dependant on sales of Proton Edar Sdn.

Bhd., the distribution Company of the Group in Malaysia. Group sales are also concentrated on one major third party customer in Malaysia making up 34% (2003: 38%) of total Group revenue. Historical experience and the financial strength of this customer indicates that no additional credit risk beyond amount provided for collection losses as inherent to the Group trade receivables.


37


13 AMOUNTS DUE FROM SUBSIDIARY COMPANIES Company Less than More than Less than More than 1 year 1 year Total year 1 year Total 2004 2004 2004 2003 2003 2003 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Amount due from subsidiary companies 558,832 604,136 1,162,968 826,830 0 826,830 Advances to subsidiary companies 2 59,754 59,756 32,587 30,790 63,377 Allowance for doubtful debts (1,676) (605,398) (607,074) (507,352) (12,846) (520,198) ─────── ─────── ─────── ─────── ─────── ─────── 557,158 58,492 615,650 352,065 17,944 370,009 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ The amounts due from subsidiary companies have the following credit terms and currency profile: Company Amount Amount Advances due from Total Advances due from Total 2004 2004 2004 2003 2003 2003 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Credit terms less than 1 year 14 days 0 529,783 529,783 0 268,171 268,171 30 days 0 3,962 3,962 0 4,425 4,425 60 days 0 3,028 3,028 0 0 0 120 days 0 9,863 9,863 0 38,800 38,800 Repayable on demand 2 10,520 10,522 32,587 8,082 40,669 ─────── ─────── ─────── ─────── ─────── ─────── 2 557,156 557,158 32,587 319,478 352,065 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ There is no fixed repayment terms for amount due more than 1 year


38


13 AMOUNTS DUE FROM SUBSIDIARY COMPANIES (CONTINUED) Currency exposure at 31.3.2004 Ringgit Pound Malaysia Sterling Others Total RM’000 RM’000 RM’000 RM’000 Company Functional currency Advances 45,278 0 0 45,278 Amount due from 544,263 23,067 3,042 570,372 ─────── ─────── ─────── ─────── 589,541 23,067 3,042 615,650 ═══════ ═══════ ═══════ ═══════ Currency exposure at 31.3.2003 Ringgit Pound Malaysia Sterling Others Total RM’000 RM’000 RM’000 RM’000 Company Functional currency Advances 50,531 0 0 50,531 Amount due from 279,524 39,205 749 319,478 ─────── ─────── ─────── ─────── 330,055 39,205 749 370,009 ═══════ ═══════ ═══════ ═══════ Interest charged on the advances range from 0% to 8% per annum (2003: 0% to 8%). Effective

from 1 November 2003, no interest were charged on the advances in accordance with Moneylenders (Amendment) Act 2003.

Concentration of credit risk in respect of the amounts due from subsidiary companies are subject

to the performance of the subsidiary companies itself. The Company’s past experience indicates that the receivable amounts falls within the recorded allowances. Therefore, the Directors believe that no additional credit risk beyond the amounts provided for collection losses is inherent to the Company.


39


14 AMOUNTS DUE FROM ASSOCIATED COMPANIES The amounts due from associated companies arose from normal trade transactions. The amounts

due from associated companies have credit terms ranging from 30 to 60 days (2003: 30 to 60 days).

Currency exposure at 31.3.2004 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 145 0 145 Pound Sterling 0 878 878 ─────── ─────── ─────── 145 878 1,023 ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 145 0 145 ═══════ ═══════ ═══════ Currency exposure at 31.3.2003 Ringgit Pound Malaysia Sterling Total RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 1,467 0 1,467 Pound Sterling 0 1,896 1,896 ─────── ─────── ─────── 1,467 1,896 3,363 ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 530 0 530 ═══════ ═══════ ═══════


40


15 SHORT TERM INVESTMENTS Group and Company 2004 2003 RM'000 RM'000 Quoted investments in Malaysia: Cost: Shares 97,116 104,457 Commercial papers and corporate debt 168 168 ────── ────── 97,284 104,625 Unquoted investments in Malaysia: Cost: Commercial papers and corporate debt 84,696 79,601 ────── ────── 181,980 184,226 Allowance for diminution in value 0 (17,791) ────── ────── 181,980 166,435 ══════ ══════ Market value of investments: Shares 107,880 86,664 Commercial papers and corporate debt 88,195 82,546 ────── ────── 196,075 169,210 ══════ ══════ The market value, at the balance sheet date, of quoted investments approximate their fair value.

The fair value of unquoted investment is based on its carrying value at the financial year end. 16 DEPOSITS, BANK AND CASH BALANCES Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Short term funds deposited with: Licensed banks 2,653,713 2,988,731 1,919,624 2,342,558 Discount houses 36,990 73,109 36,990 73,109 Other financial institutions 162,651 588,503 162,651 536,503 ──────── ──────── ──────── ──────── 2,853,354 3,650,343 2,119,265 2,952,170 Bank and cash balances 135,866 142,914 16,925 53,468 ──────── ──────── ──────── ──────── 2,989,220 3,793,257 2,136,190 3,005,638 ════════ ════════ ════════ ════════


41


16 DEPOSITS, BANK AND CASH BALANCES (CONTINUED)

The deposits have the following maturity profiles: Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 0-1 month 1,049,644 834,425 372,322 245,433 2-3 months 161,255 172,838 114,488 166,808 4-6 months 89,264 166,567 89,264 138,577 6-12 months 1,553,191 2,475,490 1,543,191 2,401,352 More than 12 months 0 1,023 0 0 ──────── ──────── ──────── ──────── 2,853,354 3,650,343 2,119,265 2,952,170 ════════ ════════ ════════ ════════ Bank balances are deposits held at call with banks. The currency exposure profile of deposits, bank and cash balances are as follows: Currency exposure at 31.3.2004 Ringgit Pound US Malaysia Sterling Dollar Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 2,676,072 59,770 53,238 98,578 2,887,658 Pound Sterling 0 67,815 10,535 9,000 87,350 Others 0 0 0 14,212 14,212 ──────── ──────── ──────── ──────── ──────── 2,676,072 127,585 63,773 121,790 2,989,220 ════════ ════════ ════════ ════════ ════════ Company Functional currency Ringgit Malaysia 1,930,825 59,770 52,984 92,611 2,136,190 ════════ ════════ ════════ ════════ ════════


42


16 DEPOSITS, BANK AND CASH BALANCES (CONTINUED)

Currency exposure at 31.3.2003 Ringgit Pound US Malaysia Sterling Dollar Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 3,672,357 36,564 123 27,184 3,736,228 Pound Sterling 0 37,086 4,415 4,639 46,140 Others 0 0 387 10,502 10,889 ──────── ──────── ──────── ──────── ──────── 3,672,357 73,650 4,925 42,325 3,793,257 ════════ ════════ ════════ ════════ ════════ Company Functional currency Ringgit Malaysia 2,941,890 36,564 0 27,184 3,005,638 ════════ ════════ ════════ ════════ ════════ The weighted average effective interest rates of deposits at the balance sheet date were 3.00%

(2003: 3.11%) and 3.13% (2003: 3.14%) for the Group and the Company respectively. 17 TRADE AND OTHER PAYABLES Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Trade payables 402,200 241,346 238,620 117,063 Other payables 278,408 173,771 68,842 3,322 Accruals 816,092 1,219,097 654,779 1,039,726 Amounts due to related parties 9,469 29,389 9,469 28,934 Leasing and hire purchase creditors - current portion (Note 27) 10 126 0 0 ──────── ──────── ──────── ──────── 1,506,179 1,663,729 971,710 1,189,045 ════════ ════════ ════════ ════════


43


17 TRADE AND OTHER PAYABLES (CONTINUED) The currency exposure profile of the trade and other payables are as follows: Currency exposure at 31.3.2004 Ringgit Pound Japanese Malaysia Sterling Yen Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 1,108,963 334 66,062 86,601 1,261,960 Pound Sterling 0 219,459 28 18,946 238,433 Others 0 0 0 5,786 5,786 ──────── ──────── ──────── ──────── ──────── 1,108,963 219,793 66,090 111,333 1,506,179 ════════ ════════ ════════ ════════ ════════ Company Functional currency Ringgit Malaysia 837,068 334 52,281 82,027 971,710 ════════ ════════ ════════ ════════ ════════ Currency exposure at 31.3.2003 Ringgit Pound Japanese Malaysia Sterling Yen Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 1,360,404 20,602 44,573 31,531 1,457,110 Pound Sterling 0 185,591 179 17,690 203,460 Others 0 0 0 3,159 3,159 ──────── ──────── ──────── ──────── ──────── 1,360,404 206,193 44,752 52,380 1,663,729 ════════ ════════ ════════ ════════ ════════ Company Functional currency Ringgit Malaysia 1,092,794 20,602 44,573 31,076 1,189,045 ════════ ════════ ════════ ════════ ════════ Terms of trade payables granted to the Group and Company vary from no credit to 180 credit days

(2003: 0-60 credit days) and no credit to 60 credit days (2003: 0-60 credit days) respectively.


44


18 PROVISIONS Group Company Warranties Warranties RM'000 RM'000 At 1 April 2003 264,838 240,832 Exchange differences 5,490 0 Charged to income statement 48,860 21,463 Expected reimbursement of warranties 14,699 12,796 Additional provision for the year 63,559 34,259 Utilised during the financial year (93,657) (66,048) ────── ────── At 31 March 2004 240,230 209,043 ══════ ══════ As at 31 March 2004, the Group and the Company expect to receive reimbursement from

suppliers in respect of warranties amounting to RM143,677,000 (2003 : RM165,819,000) and RM141,774,000 (2003: RM165,819,000) respectively as disclosed in Note 12.

19 AMOUNTS DUE TO SUBSIDIARY COMPANIES Amounts due to subsidiary companies are unsecured, interest free and have no fixed repayment

terms. The currency exposure profile of the amounts due to subsidiary companies are as follows: Currency exposure at 31.3.2004 Ringgit Pound Australian Singapore Malaysia Sterling Dollar Dollar Total RM’000 RM’000 RM’000 RM’000 RM’000 Company Functional currency Ringgit Malaysia 18,502 119,036 7,077 34 144,649 ═══════ ═══════ ═══════ ═══════ ═══════ Currency exposure at 31.3.2003 Ringgit Pound Australian Singapore Malaysia Sterling Dollar Dollar Total RM’000 RM’000 RM’000 RM’000 RM’000 Company Functional currency Ringgit Malaysia 10,946 58,612 9,317 0 78,875 ═══════ ═══════ ═══════ ═══════ ═══════


45


20 AMOUNTS DUE TO ASSOCIATED COMPANIES Amounts due to associated companies arises from normal trade transactions and is denominated

in Ringgit Malaysia. 21 SHORT TERM BORROWINGS Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Unsecured: Long term loans - current portion (Note 27) 52,342 50,329 52,342 50,329 Short term loans 0 113,112 0 113,112 Bankers acceptances 228 0 228 0 Bank overdrafts 120,564 73,644 0 0 ─────── ─────── ─────── ─────── 173,134 237,085 52,570 163,441 Secured: Long term loans - current portion (Note 27) 0 265,718 0 0 Short term loans 0 4,573 0 0 ─────── ─────── ─────── ─────── 173,134 507,376 52,570 163,441 ═══════ ═══════ ═══════ ═══════ The interest rate charged for bank overdrafts during the year ranged from 5.40% to 5.75% (2003:

4.25% to 6.31%). The interest rates charged on the unsecured short term loan during the last financial year was fixed at 1.8%. The loan was drawn down in USD and was fully repaid in the current financial year.

The bankers acceptance was drawn in Ringgit Malaysia and payable within 60 days. No interest

was charged to the amount drawn. The secured short term loans are secured by guarantees of the Company. Subordination

agreements have been entered into by a subsidiary company, the Company and the subsidiary company’s bankers whereby the repayment of amount due to the Company have been subordinated to the repayment of the short term loans. The loan was drawn down in Australian Dollar and was fully repaid in the current year.

Interest on the secured short term loans in the last financial year was fixed at 4.81%.


46


21 SHORT TERM BORROWINGS (CONTINUED) The currency exposure profile of the short term borrowings are as follows: Currency exposure at 31.3.2004 Ringgit Pound Malaysia Sterling Euro Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 52,570 0 0 0 52,570 Pound Sterling 0 98,170 15,415 6,979 120,564 ─────── ─────── ─────── ─────── ─────── 52,570 98,170 15,415 6,979 173,134 ═══════ ═══════ ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 52,570 0 0 0 52,570 ═══════ ═══════ ═══════ ═══════ ═══════ Currency exposure at 31.3.2003 Ringgit Pound Malaysia Sterling Euro Others Total RM’000 RM’000 RM’000 RM’000 RM’000 Group Functional currency Ringgit Malaysia 50,329 0 0 113,112 163,441 Pound Sterling 0 331,463 0 0 331,463 Others 0 0 0 12,472 12,472 ─────── ─────── ─────── ─────── ─────── 50,329 331,463 0 125,584 507,376 ═══════ ═══════ ═══════ ═══════ ═══════ Company Functional currency Ringgit Malaysia 50,329 0 0 113,112 163,441 ═══════ ═══════ ═══════ ═══════ ═══════


47


22 PROPERTY, PLANT AND EQUIPMENT Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2004

Cost/valuation At 1 April 2003 250,165 24,934 786,308 2,464,263 704,274 820,830 5,050,774 Currency translation differences 1,993 2,232 31,622 33,581 29,367 23 98,818 Additions 1 0 3,733 8,611 96,118 950,548 1,059,011 Disposals 0 (15,151) (27,087) (1,130) (74,807) 0 (118,175) Written off 0 0 0 (7,102) (2,382) (40,481) (49,965) Reclassifications 0 0 419,356 895,502 111,211 (1,426,069) 0 ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 252,159 12,015 1,213,932 3,393,725 863,781 304,851 6,040,463 ──────── ──────── ──────── ──────── ──────── ──────── ────────


48


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2004 Accumulated depreciation At 1 April 2003 0 604 229,113 1,776,179 481,819 0 2,487,715 Currency translation differences 0 0 6,722 21,480 20,466 0 48,668 Charge for the year 0 118 89,877 173,568 65,820 0 329,383 Disposals 0 0 (5,237) (1,096) (69,056) 0 (75,389) Written off 0 0 0 (6,299) (2,583) 0 (8,882) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 0 722 320,475 1,963,832 496,466 0 2,781,495 ──────── ──────── ──────── ──────── ──────── ──────── ────────


49


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2004 Accumulated impairment losses At 1 April 2003 12,455 13,945 153,327 73,441 53,007 0 306,175 Currency translation differences 1,993 2,231 24,536 11,752 8,406 0 48,918 Disposals 0 (15,151) (21,278) 0 0 0 (36,429) Written off 0 0 0 (7) (4) 0 (11) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 14,448 1,025 156,585 85,186 61,409 0 318,653 ──────── ──────── ──────── ──────── ──────── ──────── ──────── Net book value at 31 March 2004 237,711 10,268 736,872 1,344,707 305,906 304,851 2,940,315 ════════ ════════ ════════ ════════ ════════ ════════ ════════


50


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2003

Cost/valuation At 1 April 2002 197,707 23,624 730,810 2,321,076 667,403 183,697 4,124,317 Currency translation differences 600 1,310 18,925 19,407 21,258 0 61,500 Additions 45,790 0 6,393 20,997 63,626 881,147 1,017,953 Transfer 0 0 (3,726) 0 0 0 (3,726) Disposals 0 0 (23) (2,308) (56,909) 0 (59,240) Written off 0 0 0 0 (3,603) (86,427) (90,030) Reclassifications 6,068 0 33,929 105,091 12,499 (157,587) 0 ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 250,165 24,934 786,308 2,464,263 704,274 820,830 5,050,774 ──────── ──────── ──────── ──────── ──────── ──────── ────────


51


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2003 Accumulated depreciation At 1 April 2002 0 486 136,863 1,506,628 458,292 0 2,102,269 Currency translation differences 0 0 3,945 12,521 15,551 0 32,017 Transfer 0 0 (379) 0 0 0 (379) Charge for the year 0 118 88,684 259,143 54,984 0 402,929 Disposals 0 0 0 (2,113) (43,567) 0 (45,680) Written off 0 0 0 0 (3,441) 0 (3,441) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 0 604 229,113 1,776,179 481,819 0 2,487,715 ──────── ──────── ──────── ──────── ──────── ──────── ────────


52


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 2003 Accumulated impairment losses At 1 April 2002 5,787 12,635 144,432 66,455 54,905 0 284,214 Currency translation differences 600 1,310 14,980 6,893 5,719 0 29,502 Impairment losses 0 0 0 0 1,000 0 1,000 Disposals 0 0 (17) (25) (8,387) 0 (8,429) Written off 0 0 0 0 (112) 0 (112) Reclassifications 6,068 0 (6,068) 118 (118) 0 0 ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 12,455 13,945 153,327 73,441 53,007 0 306,175 ──────── ──────── ──────── ──────── ──────── ──────── ──────── Net book value at 31 March 2003 237,710 10,385 403,868 614,643 169,448 820,830 2,256,884 ════════ ════════ ════════ ════════ ════════ ════════ ════════


53


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Company 2004 Cost/valuation At 1 April 2003 147,444 0 529,670 2,171,007 410,681 820,686 4,079,488 Additions 0 0 3,053 2,836 22,553 909,683 938,125 Disposals 0 0 0 0 (1,968) 0 (1,968) Written off 0 0 0 0 (738) (40,481) (41,219) Reclassifications 0 0 378,885 895,509 137,837 (1,412,231) 0 ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 147,444 0 911,608 3,069,352 568,365 277,657 4,974,426 ──────── ──────── ──────── ──────── ──────── ──────── ────────


54


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Company 2004 Accumulated depreciation At 1 April 2003 0 0 179,070 1,578,983 302,197 0 2,060,250 Charge for the year 0 0 89,074 166,136 47,246 0 302,456 Disposals 0 0 0 0 (1,149) 0 (1,149) Written off 0 0 0 0 (732) 0 (732) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2004 0 0 268,144 1,745,119 347,562 0 2,360,825 ──────── ──────── ──────── ──────── ──────── ──────── ──────── Net book value At 31 March 2004 147,444 0 643,464 1,324,233 220,803 277,657 2,613,601 ════════ ════════ ════════ ════════ ════════ ════════ ════════


55


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Company 2003 Cost/valuation At 1 April 2002 178,674 0 488,014 2,055,148 381,670 173,000 3,276,506 Additions 0 0 1,659 14,135 19,819 881,004 916,617 Disposals (31,230) 0 0 0 (4,878) 0 (36,108) Written off 0 0 0 0 (1,796) (75,731) (77,527) Reclassifications 0 0 39,997 101,724 15,866 (157,587) 0 ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 147,444 0 529,670 2,171,007 410,681 820,686 4,079,488 ──────── ──────── ──────── ──────── ──────── ──────── ────────


56


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) Office equipment, Land Plant furniture, Long term and fittings and Work-in- Freehold leasehold Buildings machinery vehicles progress Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Company 2003 Accumulated depreciation At 1 April 2002 0 0 92,998 1,323,998 265,249 0 1,682,245 Charge for the year 0 0 86,072 254,985 42,277 0 383,334 Disposals 0 0 0 0 (3,535) 0 (3,535) Written off 0 0 0 0 (1,794) 0 (1,794) ──────── ──────── ──────── ──────── ──────── ──────── ──────── At 31 March 2003 0 0 179,070 1,578,983 302,197 0 2,060,250 ──────── ──────── ──────── ──────── ──────── ──────── ──────── Net book value At 31 March 2003 147,444 0 350,600 592,024 108,484 820,686 2,019,238 ════════ ════════ ════════ ════════ ════════ ════════ ════════


57


22 PROPERTY, PLANT AND EQUIPMENT (CONTINUED) The Directors revalued a piece of the Company's freehold land on 5 September 1983 based on an

independent professional valuation. The surplus of RM36,881,980 arising on the revaluation was credited to the capital reserves and subsequently utilised.

Had the freehold land been carried at historical cost, the net book value of freehold land that would

have been included in the financial statements at the end of the financial year is as follows: Group and Company 2004 2003 RM'000 RM'000 Freehold land 22,448 22,448 ══════ ══════ The long term leasehold land comprise 2 parcels of land held by certain subsidiary companies

which have unexpired leases of 138 and 93 years respectively as at 31 March 2004 (2003: 139 and 94 years respectively).

The title deed to the land of the Group and Company amounting to net book value of

RM41,316,000 (2003: RM41,429,000) and RM20,600,000 (2003: RM20,600,000) respectively has not been transferred pending subdivision of the master title.

Net book value of property, plant and equipment for the Group includes an amount of

approximately RM20,000 (2003: RM1,477,000) purchased under finance leases. In the last financial year, the Company has accelerated the depreciation of plant and machinery in

the current factory located in Shah Alam. As a result, an additional depreciation of RM105,340,000 (2003: RM105,340,000) was charged to the income statement during the year. The estimated useful life of the assets has been reduced to 2 years ended 31 March 2004.

23 SUBSIDIARY COMPANIES Company 2004 2003 RM'000 RM'000 Unquoted shares at cost: At 1 April 995,725 742,076 Increase in investment in subsidiary companies 1,785 253,649 Decrease in investment in subsidiary companies (3,375) 0 ─────── ─────── At 31 March 994,135 995,725 Allowance for diminution in value (568,970) (568,970) ─────── ─────── 425,165 426,755 ═══════ ═══════

The additional investment in the current financial year relates to the investment in Miyazu (Malaysia) Sdn. Bhd. The decrease in investment relates to the liquidation of Proton MC Metal Sdn. Bhd. during the financial year. There is no significant impact of the liquidation to the Group financial statements.


58


23 SUBSIDIARY COMPANIES (CONTINUED) The details of the subsidiary companies are as follows: Country of Group’s effective Name Principal activities incorporation interest 2004 2003 Proton Corporation Dormant Malaysia 100% 100% Sdn. Bhd. Proton Properties Property development Malaysia 100% 100% Sdn. Bhd. Proton Cars (UK) Ltd.* Distributor of Proton England 100% 100% vehicles in United Kingdom Proton MC Metal Trading in steel and Malaysia 0% 75% Sdn. Bhd.φ related products Proton Cars (Europe) Dormant England 56% 56% Ltd.* Proton Parts Centre Warehousing, trading of Malaysia 55% 55% Sdn. Bhd. motor vehicle components, spare parts and accessories Proton Engineering Engine and technologies Malaysia 100% 100% Research Technology research and development Sdn. Bhd. of automotive related technologies Lotus Group International Investment holding England 100% 100% Ltd.* Proton Cars Australia Importation and Australia 100% 100% Pty. Ltd.* distribution of motor vehicles and related spare parts Proton Cars Benelux Dormant Belgium 100% 100% NV. SA* Lotus Cars Asia Pacific Dormant Malaysia 100% 100% Sdn. Bhd. Auto Compound and Dormant Malaysia 100% 100% Distribution Centre Sdn. Bhd.


59


23 SUBSIDIARY COMPANIES (CONTINUED) Country of Group’s effective Name Principal activities incorporation interest 2004 2003 Proton Automobiles Investment holding British Virgin 100% 100% (China) Ltd.+ (Dormant) Islands Miyazu (Malaysia) Development, marketing and Malaysia 51% 0% Sdn. Bhd. # sale of products and services relating to the design of dies and jigs, maintenance services of dies, die manufacturing and engineering consultancy services for automotive body- in-white integration with procurement and supply of toolings Proton Tanjung Malim Dormant Malaysia 100% 0% Sdn.Bhd.# Proton Edar Sdn. Bhd. Sale of motor vehicles, Malaysia 100% 100% related spare parts and accessories Subsidiary of Proton Edar Sdn. Bhd. Proton Singapore Sale of motor vehicles, Singapore 100% 0% Pte. Ltd.*# related spare parts and accessories Proton Edar Resources Repair and maintenance Malaysia 100% 100% Sdn. Bhd. of motor vehicles (previously dormant) Proton Edar Ventures Dormant Malaysia 100% 100% Sdn. Bhd. Subsidiary of Proton Engineering Research Technology Sdn. Bhd. Marco Acquisition Investment United States of 100% 100% Corporation* holding company America Subsidiary of Proton Cars (UK) Ltd. Smith & Sons Motors Ltd.* Dormant England 100% 100%


60


23 SUBSIDIARY COMPANIES (CONTINUED) Country of Group’s effective Name Principal activities incorporation interest 2004 2003 Subsidiary of Proton Cars (UK) Ltd. Proton Direct Ltd.+ Motor dealership England 100% 100% Proton Cars (Imports) Ltd.* Dormant England 100% 100% Proton Cars Direct Limited* Dormant England 100% 100% Subsidiary of Lotus Group International Ltd. Group Lotus plc* Holds intellectual property England 100% 100% Subsidiaries of Group Lotus plc Lotus Cars Ltd.* Car manufacture and England 100% 100% engineering consultancy Lotus Body Dormant England 100% 100% Engineering Ltd.* Lotus Motorsports Ltd.* Dormant England 100% 100% Lotus Holdings Inc.* Holding company for United States of 100% 100% operations in America North America Subsidiary of Lotus Cars Ltd. Lotus Engineering Ltd.* Carries out specific England 100% 100% engineering contracts Lotus Engineering Engineering consultancy Malaysia 100% 100% (Malaysia) Sdn. Bhd. Subsidiary of Lotus Holdings Inc. Lotus Engineering Inc.* Engineering consultancy United States of 100% 100% in North America America Lotus Cars USA Inc.* Car sales and servicing United States of 100% 100% America


61


23 SUBSIDIARY COMPANIES (CONTINUED) * Audited by overseas firms associated with PricewaterhouseCoopers, Malaysia + Not audited by PricewaterhouseCoopers

# Acquired during the financial year φ Liquidated during the financial year

24 ASSOCIATED COMPANIES Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Unquoted shares at cost: At 1 April 64,087 42,087 37,825 37,825 Increase in investment 0 22,000 0 0 ────── ────── ────── ────── At 31 March 64,087 64,087 37,825 37,825 Allowance for diminution in value (5,799) (5,799) (5,799) (5,799) ────── ────── ────── ────── 58,288 58,288 32,026 32,026 Share of post acquisition reserves 111,787 88,567 0 0 ────── ────── ────── ────── 170,075 146,855 32,026 32,026 ══════ ══════ ══════ ══════ Group 2004 2003 RM'000 RM'000 Interest in associated companies are represented by: Group’s share of net tangible assets 164,964 141,327 Group’s share of intangible assets 5,111 5,528 ────── ────── 170,075 146,855 ══════ ══════ The details of the associated companies are as follows: Country of Group’s effective Name Principal activities incorporation interest 2004 2003 PHN Industry Sdn. Bhd. Manufacture and sales Malaysia 35% 35% of stamped parts and sub-assembly of automotive metal components


62


24 ASSOCIATED COMPANIES (CONTINUED) Country of Group’s effective Name Principal activities incorporation interest 2004 2003 Aluminium Alloy Castings Development, Malaysia 25% 25% Sdn. Bhd. manufacture and sale of aluminium alloy casting products Marutech Elastomer Manufacture and Malaysia 25% 25% Industries Sdn. Bhd. production of moulded products, extruded and rubber hoses for motor vehicles, motorcycle and other related products Vina Star Motors Import, assembly and Socialist 25% 25% Corporation distribution of vehicles Republic of in Vietnam Vietnam Exedy (Malaysia) Sdn. Bhd. Manufacture and Malaysia 45% 45% assembly of manual clutch and automatic transmission parts Proton City Development Property developer and Malaysia 40% 40% Corporation Sdn. Bhd. project management Associated company of Proton Cars (UK) Ltd. Proton Finance Ltd. Provide dealer and England 49.99% 49.99% customer finance Associated company of Proton Edar Sdn. Bhd. Netstar Advance Systems Engaged in the Malaysia 40% 40% Sdn. Bhd. manufacturing, assembly and sale of vehicle tracking devices

Associated company of Proton Automobile China Ltd. Goldstar Proton Production of automobile China 49% 49% Automobiles Co. Ltd. tools and manufacture key automobile spare parts


63


25 JOINTLY CONTROLLED ENTITIES Group 2004 2003 RM'000 RM'000 Unquoted shares at cost: At 1 April 2,835 1,734 Increase in investment 25,000 0 ────── ────── 27,835 1,734 Retained earnings for the financial year 315 1,101 ────── ────── At 31 March 28,150 2,835 ══════ ══════ The following amounts represent the Group’s share of the assets, liabilities, revenue and expenses

of the jointly controlled entities: Group 2004 2003 RM'000 RM'000 Current assets 102,194 67,376 Current liabilities (74,044) (64,541) ────── ────── Share of net assets 28,150 2,835 ══════ ══════ Revenue 6,092 5,960 ══════ ══════ Profit from ordinary activities before taxation 2,093 1,430 Taxation (Note 8) (635) (520) ────── ────── Profit after taxation 1,458 910 ══════ ══════ The details of the jointly controlled entities are as follows: Country of Group’s effective Name Principal activities incorporation interest 2004 2003 Advanced Engine Engine research and Malaysia 50% 50% Research Sdn. Bhd. development of fuels, lubricant and advanced engine materials Jointly controlled entity of Group Lotus plc Lotus Finance Ltd. Joint venture company for financing vehicle England 49.9% 49.9% purchases


64


25 JOINTLY CONTROLLED ENTITIES (CONTINUED) Country of Group’s effective Name Principal activities incorporation interest Jointly controlled entity of Proton Edar Sdn Bhd Proton Commerce Motor vehicles finances Malaysia 50% 0% Sdn. Bhd. #

# Acquired during the financial year.

26 OTHER LONG TERM INVESTMENTS Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Unquoted investments in Malaysia: At cost 9,226 9,226 5,425 5,425

Allowance for diminution in value (2,950) (2,950) (2,950) (2,950) ────── ────── ────── ────── At 31 March 6,276 6,276 2,475 2,475 ══════ ══════ ══════ ══════ 27 LONG TERM LIABILITIES Unsecured: Long term loans 222,268 272,597 222,268 272,597 Portion repayable within twelve months (Note 21) (52,342) (50,329) (52,342) (50,329) ────── ────── ────── ────── 169,926 222,268 169,926 222,268 ────── ────── ────── ────── Secured: Long term loans 277,500 265,718 0 0 Portion repayable within twelve months (Note 21) 0 (265,718) 0 0 ────── ────── ────── ────── 277,500 0 0 0 ────── ────── ────── ──────


65


27 LONG TERM LIABILITIES (CONTINUED) Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Finance lease and hire purchase creditors - secured 14 126 0 0 Portion repayable within twelve months (Note 17) (10) (126) 0 0 ────── ────── ────── ────── 4 0 0 0 ────── ────── ────── ────── 447,430 222,268 169,926 222,268 ══════ ══════ ══════ ══════ Group and Company 2004 2003 RM'000 RM'000 (a) Long term loans - unsecured The long term loans are repayable as follows: Within one year 52,342 50,329 Between one and two years 54,435 52,342 Between two and five years 115,491 169,926

────── ────── 222,268 272,597 ══════ ══════ On 29 July 2002, the unsecured long term loan from HICOM Holdings Berhad was

novated to the Government of Malaysia through a novation agreement. The term loans are repayable by 5 annual instalments over a 5 year period. The loan balance comprises of RM41.5 million (2003: RM50.8 million) and another loan of RM180.7 million (2003: RM221.7 million). The final payment of the first tranche of the loan is due on 22 June 2007 and the second tranche is due on 30 September 2007. Both tranches of the loan bears a fixed interest rate of 4% per annum and is repayable in Ringgit Malaysia.

(b) Long term loans - secured The secured long term loans obtained by certain subsidiary companies are: (i) The secured long term loan as at 31 March 2004 comprise a loan of £40 million

obtained by a subsidiary company. Interest is payable at a fixed rate of 4.94% and the loan is repayable in full in October 2006. The loan is secured against the Company’s cash deposit in a bank in Malaysia (Note 38).


66


27 LONG TERM LIABILITIES (CONTINUED) (b) Long term loans - secured (Continued)

(ii) A term loan drawn against a facility to fund a specific long-term engineering

contract. The loan is repayable in twenty-eight monthly instalments, comprising twenty-

seven payments of £609,750 commencing in April 2001 and a final payment of £786,750 in July 2003. The loan was drawn in pounds sterling and incurred an interest rate of between 4.50% and 4.75% per annum in the last financial year.

The loan is secured by a deed of assignment on the contract receivables against

which the funding was advanced.

The loan was fully repaid in the financial year.

(iii) Guaranteed floating rate notes listed on the London Stock Exchange. The listed debt represents £40 million guaranteed floating rate notes in

denominations of £100,000 each, issued in October 2000 and repayable in October 2003. The debt is guaranteed by the Company (Note 36). Interest is payable semi annually in arrears due in April and October. Interest charged in the last financial year was fixed at 6.3% per annum. The loan was fully repaid in the financial year.

(iv) A note payable of USD5 million granted by a financial institution in the United

States of America which is due in monthly instalments of USD101,741 from March 2000 through to February 2005. The balance of the loan was reclassified as current in the last financial year due to certain covenants including minimum tangible net worth and debt service coverage ratio that was not met by the subsidiary company. The loan was fully repaid in the financial year.

These secured term loans bear interest rates of between 3.65% to 4.14% per

annum in the last financial year. (c) Leasing and hire purchase creditors The leasing and hire purchase arrangements obtained by subsidiary companies are

secured against the assets of the respective subsidiary companies. Analysis of finance lease and hire purchase commitments: Group 2004 2003 RM'000 RM'000 Payable within one year 10 126 Payable between one and five years 4 0 ────── ────── 14 126 Less: Finance charges 0 0 ────── ────── 14 126 ══════ ══════


67


28 DEFERRED TAXATION Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off

current tax assets against current tax liabilities and when the deferred taxes relate of the same tax authority. The following amounts, determined after appropriate offsetting, are shown in the balance sheet:

Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Subject to income tax:

Deferred tax assets 47,252 27,404 34,514 14,812 Deferred tax liabilities (1,023) (1,023) 0 0 ────── ────── ────── ────── 46,229 26,381 34,514 14,812 ══════ ══════ ══════ ══════

Movement of deferred tax At start of year 26,381 (10,009) 14,812 (15,675) (Charged)/credited to income statement

- property, plant and equipment 27,571 40,636 32,160 41,871 - inventories (11,840) 13,750 0 0 - tax losses 0 647 0 0 - allowances and provisions 3,626 (804) (12,949) 6,455 - receivables 491 (17,839) 491 (17,839)

────── ────── ────── ────── 46,229 26,381 34,514 14,812 ══════ ══════ ══════ ══════ Deferred tax assets (before offsetting) - property, plant and equipment 48,802 66,613 48,802 66,613 - inventories 12,153 23,993 0 0

- tax losses 647 647 0 0 - allowances and provisions 50,842 47,216 45,668 58,617 - receivables 491 0 491 0 ────── ────── ────── ──────

112,935 138,469 94,961 125,230 Offsetting (65,683) (111,065) (60,447) (110,418) ────── ────── ────── ────── Deferred tax assets (after offsetting) 47,252 27,404 34,514 14,812 ══════ ══════ ══════ ══════


68


28 DEFERRED TAXATION (CONTINUED) Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Deferred tax liability (before offsetting) - property, plant and equipment (48,587) (93,969) (42,328) (92,299)

- receivables (18,119) (18,119) (18,119) (18,119) ────── ────── ────── ────── (66,706) (112,088) (60,447) (110,418) Offsetting 65,683 111,065 60,447 110,418 ────── ────── ────── ────── Deferred tax liabilities (after offsetting) (1,023) (1,023) 0 0 ══════ ══════ ══════ ══════ The amount of deductible temporary differences and unused tax losses (both of which have no

expiry date) for which no deferred tax asset is recognised in the balance sheet are as follows: Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Deductible temporary differences of which no deferred tax assets is recognised Unrecognised tax losses 205,112 174,590 0 0 Unabsorbed capital allowances 27,299 32,061 0 0 Unrecognised reinvestment allowances 251,552 0 251,552 0 Other temporary differences 9,366 9,431 0 0 ══════ ══════ ══════ ══════ Deductible temporary differences of which no deferred tax liabilities is recognised Surplus from land revaluation 12,488 10,765 0 0 ══════ ══════ ══════ ══════ As at 31 March 2003, there is no temporary differences associated with unremitted earnings of

subsidiaries for the recognition of deferred tax liabilities (2003: Nil). 29 SHARE CAPITAL Company 2004 2003 RM’000 RM’000 Authorised share capital: 1,000,000,000 ordinary shares of RM1 each 1,000,000 1,000,000 ═══════ ═══════


69


30 RESERVES The Company has sufficient Section 108(6) tax credits to frank approximately RM2,881.7 million

(2003: RM2,753.9 million) of its retained profits as at 31 March 2004 if paid out as dividends. In addition, the Company has tax exempt income as at 31 March 2004 amounting to approximately

RM1,137.3 million (2003: RM1,216.9 million) available for distribution as tax exempt dividends to shareholders. This tax exempt income is subject to the agreement by the Inland Revenue Board.

31 EMPLOYEE RETIREMENT BENEFITS (a) Defined contribution plan Group companies incorporated in Malaysia contribute to the Employees Provident Fund,

the national defined contribution plan. Once the contributions are paid, the Group has no further payment obligations.

(b) Defined benefit plan Lotus Group Scheme - defined benefit scheme Lotus Group International Ltd. and its subsidiaries ('Lotus Group'), operate a defined

benefit pension scheme, the Lotus Pension Plan. The assets are held in separate trustee administered funds. In addition, it provides life assurance cover for all employees.

Contributions to the scheme are charged to the income statement so as to spread the cost

of pensions over employees’ working lives with the Lotus Group. The contributions are determined by a qualified actuary on the basis of triennial valuations. The latest actuarial valuation of the plan was carried out on 31 December 2002, using the Projected Unit method, updated to 31 March 2004.

The movements during the financial year in the amount recognised in the consolidated

balance sheet is as follows: Group 2004 2003 RM'000 RM'000 At 1 April 1,507 1,598 Charged to income statements 24,940 13,102 Currency translation differences 2,001 329 Contributions and benefits paid (17,691) (13,522) ─────── ─────── At 31 March 10,757 1,507 ═══════ ═══════


70


31 EMPLOYEE RETIREMENT BENEFITS (CONTINUED) The amounts recognised in the consolidated balance sheet is analysed as follows: Group 2004 2003 RM'000 RM'000 Present value of funded obligation 270,729 189,606 Fair value of plan assets (198,170) (122,774) ─────── ─────── Shortfall of funded plan 72,559 66,832

Unrecognised actuarial losses (47,877) (50,320) Unrecognised transitional liability (13,925) (15,005)

─────── ─────── Liability in balance sheet 10,757 1,507 ═══════ ═══════

The expense recognised in the consolidated income statement is analysed as follows:

Group 2004 2003 RM'000 RM'000 Current service cost 17,497 12,304 Interest cost 11,937 9,286 Expected return on plan assets (9,481) (9,386) Actuarial losses recognised 1,618 0 Past service cost 117 898 Amortisation of transitional liability 3,252 0 ────── ────── Total, included in staff costs within administrative expenses (Note 6) 24,940 13,102 ══════ ══════ Actual return on plan assets 30,076 (45,353) ══════ ══════ The principal actuarial assumptions used in respect of the Group’s defined benefit plan were as

follows: Group 2004 2003 % %

Discount rates 5.50 5.50 Expected return on plan assets

- Equities 7.50 7.50 - Bond 5.00 5.00 - Others 4.00 4.00

Expected rate of salary increase 4.25 4.00 Expected rate of pension payment increase 2.75 2.50 Inflation 2.75 2.50 ────── ──────


71


32 SEGMENTAL INFORMATION The Group is principally engaged in the automobile industry namely manufacturing, assembling, trading and provision of engineering and other services in

respect of motor vehicles and related products. Accordingly, no segmental information is considered necessary for analysis by industry segments. Intersegment sales comprise of sales of cars, parts and engineering services to companies in different geographical locations. Analysis of the Group’s revenue, results and other information by geographical locations of the assets are as follows: Malaysia Other countries Elimination Total 2004 2003 2004 2003 2004 2003 2004 2003 RM million RM million RM million RM million RM million RM million RM million RM million Revenue

External sales 5,664.1 8,491.0 806.2 777.0 0 0 6,470.3 9,268.0 Inter-segment sales 154.7 97.1 372.2 297.5 (526.9) (394.6) 0 0 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Total Revenue 5,818.8 8,588.1 1,178.4 1,074.5 (526.9) (394.6) 6,470.3 9,268.0 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ Result

Segment operating profit/ (loss) 367.8 1,074.4 30.1 5.3 39.9 162.6 437.8 1,242.3 Unallocated expenses 0 (10.7) Unallocated income 38.5 2.5 Interest expense (37.1) (38.4) Interest income 107.5 117.0 Share of net profit of associated companies and jointly controlled entities 4.2 26.2 26.2 13.8 0 0 30.4 40.0 Taxation (56.0) (234.9) ─────── ─────── Net profit after taxation 521.1 1,117.8 ═══════ ═══════


72


32 SEGMENTAL INFORMATION (CONTINUED) Malaysia Other countries Elimination Total 2004 2003 2004 2003 2004 2003 2004 2003 RM million RM million RM million RM million RM million RM million RM million RM million Other Information Segment asset 7,087.7 7,189.8 608.3 536.8 0 0 7,696.0 7,726.6 Unallocated assets 433.7 349.8 ─────── ─────── Total assets 8,129.7 8,076.4 ═══════ ═══════ Segment liabilities 1,361.8 1,609.4 400.4 347.6 0 0 1,762.2 1,957.0 Unallocated liabilities 765.0 925.5 ─────── ─────── Total liabilities 2,527.2 2,882.5 ═══════ ═══════ Capital expenditure 1,024.4 1,005.5 34.6 12.5 0 0 1,059.0 1,018.0 Depreciation and amortisation 319.1 398.4 10.3 4.5 0 0 329.4 402.9 Assets written off 40.5 86.5 0.6 0 0 0 41.1 86.5 Impairment 0 1.0 0 0 0 0 0 1.0 Other non-cash items 41.7 41.4 7.9 13.0 (40.9) 15.0 8.7 69.4


73


32 SEGMENTAL INFORMATION (CONTINUED) Unallocated income includes dividend from other investments, gain on disposal of short term investments and writeback of provision for diminution in value

of short term investments. Unallocated costs represent losses on short term investments, both realised and unrealised. Segment assets consist primarily of property , plant and equipment, inventories, receivables and operating cash, and exclude investments in associates, joint venture, long term investments, short term investments and deferred tax assets. Segment liabilities comprise operating liabilities and exclude items such as taxation and borrowings.

Capital expenditure mainly comprises additions to property, plant and equipment (Note 22). Prior year’s segment data that has been presented for comparative purposes has been restated to meet the requirements of MASB 25 and MASB 29

(Note 41). Secondary reporting format The primary reporting format is based on geographical locations of the assets. The industry segmentation is considered unnecessary as the Group is

principally engaged in automobile industry as explained above. Therefore, only sales to external customer based on customer location is presented. Malaysia Other countries Elimination Total 2004 2003 2004 2003 2004 2003 2004 2003 RM million RM million RM million RM million RM million RM million RM million RM million Revenue External sales 5,598.1 8,364.3 872.2 903.7 0 0 6,470.3 9,268.0 Inter segment sales 154.7 97.1 372.2 297.5 (526.9) (394.6) 0 0 ─────── ─────── ─────── ─────── ─────── ─────── ─────── ─────── Total revenue 5,752.8 8,461.4 1,244.4 1,201.2 (526.9) (394.6) 6,470.3 9,268.0 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════ ═══════


74


33 CAPITAL AND OTHER COMMITMENTS Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Capital commitments Capital expenditure for property, plant and equipment approved by the Board not provided for in the financial statements: Contracted for 664,435 974,022 593,908 857,752 Not contracted for 4,901,319 3,593,917 4,728,815 3,478,905 ──────── ──────── ──────── ──────── 5,565,754 4,567,939 5,322,723 4,336,657 ════════ ════════ ════════ ════════ Additional investment in a jointly controlled entity approved by the Board not provided for in the financial statements: Contracted for 100,000 0 0 0 ════════ ════════ ════════ ════════ 34 OPERATING LEASES At 31 March 2004, the Group was committed to making the following payments in respect of

operating leases expiring:

Group Land and Plant and Land and Plant and buildings machinery Total buildings machinery Total 2004 2004 2004 2003 2003 2003 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 Within one year 722 4,436 5,158 549 5,119 5,668 Between one and five years 190 2,618 2,808 686 3,987 4,673 After five years 0 26 26 323 0 323 ─────── ─────── ─────── ─────── ─────── ─────── 912 7,080 7,992 1,558 9,106 10,664 ═══════ ═══════ ═══════ ═══════ ═══════ ═══════


75


35 SIGNIFICANT RELATED PARTIES DISCLOSURES In the normal course of business, the Company undertakes a variety of transactions at mutually

agreed terms with its subsidiary and associated companies, other companies deemed related parties by virtue of being members of the KHAZANAH group of companies and other related parties. The related parties with whom the Group and Company transact with, include the following companies:

Related parties Relationship Mitsubishi Motors Corporation, Japan (“MMC”) Corporate shareholder Mitsubishi Corporation, Japan Shareholder of MMC Petroliam Nasional Berhad ('PETRONAS') Corporate shareholder PEPS-JV (M) Sdn Bhd Equity investments Technomeiji Rubber Industries Sdn Bhd Equity investments In addition to related parties disclosures mentioned elsewhere in the financial statements, set out

below are other significant related party transactions. The related party transactions described below were carried out on terms and conditions obtainable in transactions with unrelated parties unless otherwise stated. Transactions with the utilities providers, Tenaga Nasional Berhad and Telekom Malaysia Berhad, the associated companies of KHAZANAH are not disclosed.

(a) Sales of goods and services Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Sales of goods to: - Vina Star Motors Corporation 20 38 0 0 - PHN Industry Sdn. Bhd. 0 5,331 0 0 - PEPS-JV (M) Sdn. Bhd. 0 14,400 0 0 - Mitsubishi Motors Corporation 92 125 92 125 ═══════ ═══════ ═══════ ═══════ (b) Purchases of goods and services Purchases of goods from: - Mitsubishi Motors Corporation, Japan 25,039 31,347 5,333 8,977 - Mitsubishi Corporation, Japan 963,246 1,215,585 963,246 1,191,892

- Associated companies 125,448 173,532 124,483 170,690 - Technomeiji Rubber Industries Sdn Bhd 13,991 20,763 13,991 20,744 - PEPS-JV (M) Sdn Bhd 55,319 58,804 55,319 58,804 Purchases of services from: - Mitsubishi Motors Corporation, Japan 16,411 66,806 16,411 66,806 - Mitsubishi Corporation, Japan 0 1,828 0 1,828 ═══════ ═══════ ═══════ ═══════


76


36 CONTINGENT LIABILITIES (UNSECURED) Company 2004 2003 RM'000 RM'000 Guarantees given to bankers for facilities granted to subsidiary and associated companies 520,115 686,631 ═══════ ═══════ Unhedged guarantees denominated in foreign currencies are as follows: USD1,750,000 (2003: USD1,750,000) 6,650 6,650 AUD10,200,000 (2003: AUD10,200,000) 29,228 23,322 GBP69,800,000 (2003: GBP69,800,000) 484,237 417,439 Floating rate notes GBP40,000,000 0 239,220 ─────── ─────── 520,115 686,631 ═══════ ═══════ 37 SIGNIFICANT EVENTS On 6 May 2003, a wholly owned subsidiary company, Proton Tanjung Malim Sdn. Bhd. was

incorporated. The Company became operational on 1 April 2004. On 3 July 2003, Proton Edar Sdn. Bhd., a wholly owned subsidiary of the Company incorporated a

company in Singapore, Proton Singapore Pte Ltd. On 5 August 2003, the Company subscribed for 51% of shares in Miyazu Malaysia Sdn. Bhd. The

Company commenced its operations in August 2004. On 22 October 2003, Proton Edar Sdn. Bhd. entered into a joint venture agreement with

Bumiputra-Commerce Finance. The joint venture entity, Proton Commerce Sdn. Bhd. commenced its operations in March 2004. The results of Proton Commerce Sdn. Bhd. are insignificant and are not consolidated in the current financial year.


77


38 CASH AND CASH EQUIVALENTS Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Licensed banks 2,653,713 2,988,731 1,919,624 2,342,558 Discount houses 36,990 73,109 36,990 73,109 Other licensed financial institutions 162,651 588,503 162,651 536,503 ──────── ──────── ──────── ──────── 2,853,354 3,650,343 2,119,265 2,952,170 Bank and cash balances 135,866 142,914 16,925 53,468 Bank overdrafts (120,564) (73,644) 0 0 Fixed deposit pledged as securities (Note 27) (308,880) 0 (308,880) 0 ──────── ──────── ──────── ──────── 2,559,776 3,719,613 1,827,310 3,005,638 ════════ ════════ ════════ ════════ Included in cash and cash equivalents of the Group as at 31 March 2004 are monies held under the

Housing Development Accounts pursuant to Section 7A of the Housing Developers (Control and Licensing) Act 1966 (Act 118) amounting to approximately RM649,000 (2003: RM2,685,000).

39 FINANCIAL INSTRUMENTS (a) Forward foreign exchange contracts Forward foreign exchange contracts are entered into by the Group in currencies other than

the functional currency to manage exposure to fluctuations in foreign currency exchange rates on specific transactions.

As at 31 March 2004, the outstanding notional principal amount of the Group and

Company foreign exchange contracts are as follows: Group Company 2004 2003 2004 2003 RM'000 RM'000 RM'000 RM'000 Maturity Less than 6 months 453,966 458,421 427,218 433,200 Between 6 months to 1 year 6,154 27,719 0 0 More than 1 year 0 6,980 0 0 ──────── ──────── ──────── ──────── 460,120 493,120 427,218 433,200 ════════ ════════ ════════ ════════ The foreign currency amounts to be received and the contractual exchange rates of the

Group and Company’s outstanding contracts are as follows:


78


39 FINANCIAL INSTRUMENTS (CONTINUED (a) Forward foreign exchange contracts (Continued) 2004

Currency Currency Average to be to be RM’000 contracted Hedged item received paid equivalent rate Group Future purchase of raw materials over the following 6 months JPY USD 427,218 1 USD=JPY108.16 Forecasted receivables - the following 6 months GBP USD 6,564 1 USD= GBP 0.6640 - 6 to 12 months GBP USD 1,636 1 USD= GBP 0.6688 - the following 6 months GBP CHF 4,392 1 CHF= GBP 0.4351 - 6 to 12 months GBP CHF 300 1 CHF= GBP 0.4418 - the following 6 months GBP EURO 968 1 EURO= GBP 0.6872 Forecasted payables - the following 6 months JPY GBP 14,824 1 GBP = JPY 190.00 - 6 to 12 months JPY GBP 4,218 1 GBP = JPY 190.83 ────── 460,120 ══════ Company Future purchase of raw materials over the following 6 months JPY USD 427,218 1 USD =JPY108.16 ══════


79


39 FINANCIAL INSTRUMENTS (CONTINUED) (a) Forward foreign exchange contracts (Continued) 2003

Currency Currency Average to be to be RM’000 contracted Hedged item received paid equivalent rate Group Future purchase of raw materials over the following 6 months JPY USD 433,200 1 USD=JPY119.74 Forecasted receivables - the following 6 months GBP USD 16,282 1 USD= GBP 0.6717 - 6 to 12 months GBP USD 27,719 1 USD= GBP 0.6627 - more than 12 months GBP USD 6,980 1 USD= GBP 0.6659 - the following 6 months GBP CHF 3,362 1 CHF= GBP 0.4460 - the following 6 months GBP EURO 172 1 EURO= GBP 0.6831 Forecasted payables - the following 6 months EURO GBP 5,405 1 GBP = EURO 1.5429 ────── 493,120 ══════ Company Future purchase of raw materials over the following 6 months JPY USD 433,200 1 USD =JPY119.74 ══════

The fair value of outstanding foreign exchange contracts of the Group and Company at the balance sheet date was a net favourable position of RM22,451,000 and RM21,081,000 respectively (2003: RM5,758,000 and RM6,241,000).

(b) Interest rate cap and floor contract A subsidiary has entered into a cap and floor contract to manage its interest rate

exposure. The notional principle amount of the contract at the end of last financial year is RM239,220,000, the floor rate is 5.1% per annum and the cap rate is 6.95% per annum. The agreement expired on 20 October 2003.

The fair value of the contract at the balance sheet date of the last financial year was an

unfavourable position of RM1,498,000.


80


39 FINANCIAL INSTRUMENTS (CONTINUED) (c) Credit risk The Group and Company has no significant credit risks other than as set out below. Company The majority of its deposits are placed with major financial institutions which are

creditworthy in Malaysia. The majority of the trade receivables arises from transactions with its own subsidiaries. A substantial amount of these receivables have been received since the financial year end.

Group The majority of its deposits are placed with major financial institutions which are

creditworthy in Malaysia. (d) Fair values The carrying amounts of financial assets and liabilities of the Group and Company at the

balance sheet date approximated their fair values except as set out below: 2004 Group Company Carrying Carrying Note amount Fair value amount Fair value RM’000 RM’000 RM’000 RM’000 Recognised on the balance sheet Short term investments 15 181,980 196,075 181,980 196,075 Long term investments 26 6,276 * 2,475 * Long term loans - unsecured 27 (222,268) (220,965) (222,268) (220,965) - secured 27 (277,500) (273,920) 0 0 subsidiary companies (more than 1 year) 13 0 0 58,492 ** ══════ ══════ ══════ ══════ Not recognised on the balance sheet Foreign exchange hedge instruments 0 22,451 0 21,081 ══════ ══════ ══════ ══════


81


39 FINANCIAL INSTRUMENTS (CONTINUED) (d) Fair values (Continued) 2003 Group Company Carrying Carrying Note amount Fair value amount Fair value RM’000 RM’000 RM’000 RM’000 Recognised on the balance sheet Short term investments 15 166,435 169,210 166,435 169,210 Long term investments 26 6,276 * 2,475 * Long term loans - unsecured 27 (272,597) (270,694) (272,597) (270,694) Amounts due from subsidiary companies (more than 1 year) 13 0 0 17,944 ** ══════ ══════ ══════ ══════ Not recognised on the balance sheet Foreign exchange hedge instruments 0 5,758 0 6,241 Interest rate cap and floor contract 0 (1,498) 0 0 ══════ ══════ ══════ ══════ * It was not practicable within the constraints of timeliness and cost to estimate the fair

values of the unquoted shares reliably. The Group and Company share of the net tangible worth of the investments at the balance sheet date is RM8,528,000. (2003: RM 7,729,000)

** It was not practicable to estimate the fair value of advances to subsidiary companies as

the advances has no fixed repayment terms.

40 SUBSEQUENT EVENTS

(a) Subsequent to the Corporate reorganisation announced by the Company on 27 May 2003, the following has been completed as at the date of signing of this report.

(i) All the existing shareholders of Perusahaan Otomobil Nasional Berhad have

exchanged all their ordinary shares of RM1.00 each in Perusahaan Otomobil Nasional Berhad for new ordinary shares of RM1.00 each in Proton Holdings Berhad on 5 April 2004.

(ii) The listing status of Perusahaan Otomobil Nasional Berhad in the official list of Bursa

Malaysia Securities Berhad was transferred to Proton Holdings Berhad on 16 April 2004. Perusahaan Otomobil Nasional Berhad was subsequently delisted.


82


40 SUBSEQUENT EVENTS (CONTINUED)

(b) On 5 July 2004, the Company executed a joint venture agreement with Tracoma Holdings Berhad in connection with the establishment and incorporation of a joint venture company in Indonesia having the name PT Proton Tracoma Motors (“JVC”). The incorporation of JVC is subject to relevant approval from the government authorities in Indonesia. The JVC is established to undertake contract assembly of motor vehicles in Indonesia.

41 PRIOR YEAR ADJUSTMENT During the year, the Group changed its accounting policy with respect to the adoption of MASB 25

“Income Taxes” and MASB 29 “Employee Benefits”. Under MASB 25, deferred tax liabilities are recognised for all taxable temporary differences and

deferred tax assets are recognised for all deductible temporary differences when it is probable that the Group has sufficient taxable profit to be utilised. The changes in accounting policies have been applied retrospectively and comparatives have been restated.

The adoption of MASB 29 resulted in prior year adjustments in respect of amounts payable for

short term employees benefits in the form of accumulated compensated absences. This obligation was not provided for prior to the adoption of MASB 29. The changes in accounting policies have been applied retrospectively and comparatives have been restated for the financial year ended 31 March 2003.

The effects of changes in accounting policies are as follows: Balance Sheet and Statement of Changes in Equity Group Trade Deferred Deferred and other Retained Minority Tax assets tax liabilities payables profits interest RM’000 RM'000 RM’000 RM’000 RM’000 At 1 April 2002, as previously reported 0 84,565 1,797,079 3,431,847 46,472

Effects of adopting MASB 25 0 (74,556) 0 74,180 376 ──────── ──────── ──────── ──────── ─────── As restated 0 10,009 1,797,079 3,506,027 46,848 ════════ ════════ ════════ ════════ ═══════ At 1 April 2003, as previously reported 0 18,894 1,661,766 4,482,969 56,009 Effects of adopting MASB 29 0 0 1,963 (1,918) (45) Effects of adopting MASB 25 27,404 (17,871) 0 44,629 646 ──────── ──────── ──────── ──────── ─────── As restated 27,404 1,023 1,663,729 4,525,680 56,610 ════════ ════════ ════════ ════════ ═══════


83


41 PRIOR YEAR ADJUSTMENT (CONTINUED)

Company Trade Deferred Deferred and other Retained Tax assets tax liabilities Payables profits RM'000 RM'000 RM'000 RM’000 At 1 April 2002, as previously reported 0 84,130 1,476,704 2,957,745 Effects of adopting MASB 25 0 (68,455) 0 68,455 ──────── ──────── ──────── ─────── As restated 0 15,675 1,476,704 3,026,200 ════════ ════════ ════════ ═══════ At 1 April 2003, as previously reported 0 17,871 1,188,219 3,678,758 Effects of adopting MASB 29 0 0 826 (826) Effects of adopting MASB 25 14,812 (17,871) 0 32,683 ──────── ──────── ──────── ─────── As restated 14,812 0 1,189,045 3,710,615 ════════ ════════ ════════ ═══════

Income Statement Year ended 31 March 2003 Group Company RM'000 RM'000 Profit after tax as previously reported 1,149,001 808,884 Effects of adopting MASB 29 (1,963) (826) Effects of adopting MASB 25 (29,281) (35,772) ──────── ─────── As restated 1,117,757 772,286 ════════ ═══════ 42 APPROVAL OF FINANCIAL STATEMENTS The financial statements have been approved for issue in accordance with a resolution of the

Board of Directors on 16 July 2004.


84

PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (formerly known as Perusahaan Otomobil Nasional Berhad) (Incorporated in Malaysia) STATEMENT BY DIRECTORS PURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965 We, Fadilat binti Ismail and Tan Seng Lee, two of the Directors of Perusahaan Otomobil Nasional Sdn. Bhd., state that, in the opinion of the Directors, the financial statements set out on pages 6 to 83 are drawn up so as to give a true and fair view of the state of affairs of the Group and the Company as at 31 March 2004 and of the results of the Group and the Company and cash flows of the Group and the Company for the financial year ended on that date in accordance with the applicable approved accounting standards in Malaysia and the provisions of the Companies Act, 1965. Signed on behalf of the Board of Directors in accordance with their resolution dated 16 July 2004. FADILAT BINTI ISMAIL TAN SENG LEE DIRECTOR DIRECTOR STATUTORY DECLARATION PURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965 I, Tan Seng Lee, the Director primarily responsible for the financial management of Perusahaan Otomobil Nasional Sdn. Bhd., do solemnly and sincerely declare that the financial statements set out on pages 6 to 83 are, in my opinion, correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960. TAN SENG LEE Subscribed and solemnly declared by the abovenamed Tan Seng Lee at Shah Alam in Malaysia on 16 July 2004, before me. COMMISSIONER FOR OATHS

85

REPORT OF THE AUDITORS TO THE MEMBERS OF PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (Company No. 100995 U) We have audited the financial statements set out on pages 6 to 83. These financial statements are the responsibility of the Company’s Directors. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved auditing standards in Malaysia. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by Directors, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion: (a) the financial statements have been prepared in accordance with the provisions of the Companies

Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of:

(i) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the

financial statements; and (ii) the state of affairs of the Group and of the Company as at 31 March 2004 and of the

results and cash flows of the Group and Company for the financial year ended on that date;

and (b) the accounting and other records and the registers required by the Act to be kept by the

Company and by the subsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.

The names of the subsidiary companies of which we have not acted as auditors are indicated in Note 23 to the financial statements. We have considered the financial statements of these subsidiaries and the auditors’ reports thereon.

86

REPORT OF THE AUDITORS TO THE MEMBERS OF PERUSAHAAN OTOMOBIL NASIONAL SDN. BHD. (CONTINUED) (Company No. 100995 U) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company's financial statements are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes. The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment made under subsection (3) of section 174 of the Act. PRICEWATERHOUSECOOPERS DATO’ AHMAD JOHAN BIN MOHAMMAD RASLAN (No. AF: 1146) (No. 1867/09/04(J)) Chartered Accountants Partner of the firm Kuala Lumpur 16 July 2004

perusahaan otomobil nasional sdn - …ir.chartnexus.com/proton/website_html/attachments/...company...

Documents