Full Annual Report - MPHB Capital Berhad

Transcription

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CONTENTS
2 Corporate Profile
3 Corporate Structure
4 Corporate Information
5 Financial Highlights
6 Directors’ Profile
9 Chairman’s Statement
12 Chairman’s Statement (In Bahasa Malaysia)
15 Chairman’s Statement (In Chinese)
17 Corporate Social Responsibility Statement
19 Corporate Governance Statement
31 Additional Corporate Disclosures
32 Directors’ Responsibility Statement
33 Audit Committee Report
38 Statement On Risk Management And Internal Control
41 Directors’ Report And Audited Financial Statements
153 Top 10 List Of Properties
155 Analysis Of Equity Securities
158 Notice Of Annual General Meeting
162 Statement Accompanying The Notice Of Annual General Meeting
Form Of Proxy
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CORPORATE PROFILE
MPHB Capital Berhad (“MPHB Capital”), the holding company for the MPHB Capital Group of Companies
(“MPHB Capital Group”), was incorporated on 17 July 2012 as a private limited company and subsequently
converted into a public limited company and assumed its present name on 23 July 2012. The Company was
listed on the Main Market of Bursa Malaysia Securities Berhad on 28 June 2013. The MPHB Capital Group is
involved in the businesses of:
Insurance
Credit and investments
The MPHB Capital Group is committed towards the key fundamentals stated below:-
achievement of excellence in its business
strive to achieve optimum value for its shareholders
to be a caring and fair employer and
a socially responsible corporate citizen
CORPORATE STRUCTURE AS AT 31 MARCH 2016
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INSURANCE & CREDIT
Multi-Purpose
Capital Holdings
Berhad
MPI Generali
Insurans
Berhad
Multi-Purpose
Credit Holdings
Sdn Bhd
Multi-Purpose
Credit
Sdn Bhd
MP Factors
Sdn Bhd
Tune
Insurance
(Labuan) Ltd.
Multi-Purpose
Credit Nominees
(Tempatan)
Sdn Bhd
INVESTMENTS
* MPHB
CAPITAL
BERHAD
Caribbean
Gateway
Sdn Bhd
West-Jaya
Sdn Bhd
Kelana Megah
Development
Sdn Bhd
Jayavest
Sdn Bhd
Magnum
Leisure
Sdn Bhd
Queensway
Nominees
(Tempatan)
Sdn Bhd
Queensway
Nominees
(Asing)
Sdn Bhd
Leisure
Dotcom
Sdn Bhd
Mimaland
Berhad
Tibanis
Sdn Bhd
Magnum.Com
Sdn Bhd
Syarikat
Perniagaan
Selangor
Sdn Bhd
Multi-Purpose
Shipping
Corporation
Berhad
Multi-Purpose
Development
(PG)
Sdn Bhd
Flamingo
Management
Sdn Bhd
*
Mulpha Kluang
Maritime
Carriers
Sdn Bhd
Subsidiary Company
Associated Company
Listed on Bursa Malaysia Securities Berhad
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CORPORATE INFORMATION
DIRECTORS
Tan Sri Dato’ Dr Yahya bin Awang Independent Non-Executive Chairman
Tan Sri Dato’ Surin Upatkoon
Non-Independent Managing Director
Ms Ivevei Upatkoon Non-Independent Executive Director
Dato’ Lim Tiong ChinNon-Independent Non-Executive Director
Mr Kuah Hun LiangIndependent Non-Executive Director
AUDIT COMMITTEE
REGISTERED OFFICE
Mr Kuah Hun Liang (Chairman)
39th Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Telephone No.
: 603-26948333
Fax No.
: 603-26946849
Tan Sri Dato’ Dr Yahya bin Awang Dato’ Lim Tiong Chin
REMUNERATION COMMITTEE
Tan Sri Dato’ Dr Yahya bin Awang (Chairman)
Mr Kuah Hun Liang
NOMINATION COMMITTEE
Dato’ Lim Tiong Chin
Mr Kuah Hun Liang
SHARE REGISTRAR
Metra Management Sdn Bhd (62169-A)
30.02, 30th Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Telephone No.
: 603-26983232 Fax No.
: 603-26948571
AUDITORS
Messrs Ernst & Young
PRINCIPAL BANKERS
RISK MANAGEMENT COMMITTEE
Mr Kuah Hun Liang
MANAGEMENT
(Managing Director)
Ms Ivevei Upatkoon
(Executive Director)
Ms Kheoh And Yeng
(Chief Operating Officer)
SECRETARY
Ng Sook Yee (MAICSA 7020643)
Malayan Banking Berhad
Alliance Bank Malaysia Berhad
STOCK EXCHANGE LISTING
Main Market of Bursa Malaysia Securities Berhad
(Listed on 28 June 2013)
Stock Name
: MPHBCAP
Stock Code
: 5237
ISIN Code
: MYL5237OO002
WEBSITE
www.mphbcap.com.my
E-MAIL
[email protected]
FINANCIAL HIGHLIGHTS
ASSETS
Non-current assets
Property, plant and equipment
Investment properties
Investments
Intangible assets 5
2015
RM’000 2014
RM’000 2013
RM’000
81,570 832,125 397,479 36,420 84,266 748,661 328,195 44,461 87,324
744,051
362,755
54,482
1,347,594 1,205,583 1,248,612
Current assets
1,666,482 1,386,577 1,060,976
Assets held for sale
- - 30,195
TOTAL ASSETS
3,014,076 2,592,160 2,339,783
EQUITY AND LIABILITIES
Equity attributable to Owners of the Company
Share capital 715,000 Reserves
867,475 715,000 603,839 715,000
363,545
Shareholders’ fund
Non-controlling interests
1,582,475 198,766 1,318,839 13,620 1,078,545
15,389
Total equity
1,781,241 1,332,459 1,093,934
Non-current liabilities
Current liabilities
Liabilties directly associated with asset held for sale
20,772 1,212,063 - 39,756 1,219,945 - 87,800
1,135,443
22,606
Total liabilities
1,232,835 1,259,701 1,245,849
TOTAL EQUITY AND LIABILITIES
3,014,076 2,592,160 2,339,783
FINANCIAL RESULTS
Profit before tax Income tax expense
106,183 (19,629) 277,486 (33,833)
57,590
(10,718)
Profit for the year
86,554 (21,988)
243,653 1,767
46,872
1,377
Profit attributable to Owners of the Company
64,566 245,420
48,249
9.0 34.3 8.9
2.2 1.8 1.5
4.1 18.6
4.5
FINANCIAL RATIOS
Basic earnings per share (Sen)
Net assets per share (RM)
Return on equity (%)
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DIRECTORS’ PROFILE
TAN SRI DATO’ DR YAHYA BIN AWANG
Independent Non-Executive Chairman
Tan Sri Dato’ Dr Yahya bin Awang, a Malaysian, aged 65, was appointed as an Independent Non-Executive
Chairman/Director of MPHB Capital Berhad (“MPHB Capital” or “the Company”) on 1 August 2012. Tan Sri
Yahya is also the Chairman of the Nomination Committee, Remuneration Committee and Risk Management
Committee, and a member of the Audit Committee of MPHB Capital.
Tan Sri Yahya graduated from Monash University in Australia with a Bachelor of Medicine and Bachelor of
Surgery degree in 1974. Tan Sri Yahya became a Fellow of the Royal College of Surgeons and Physicians
of Glasgow in 1980.
Moving to London in 1981, Tan Sri Yahya worked as a Surgical Registrar in the Department of Cardiothoracic
Surgery at Royal Brompton Hospital before returning to Malaysia to take up the role of Cardiothoracic
Surgeon at the General Hospital. From 1992 until 2004, Tan Sri Yahya held the position of Head and Senior
Consultant Cardiothoracic Surgeon at the National Heart Institute of Malaysia, and from 1998 to 2002, he
was also the Medical Director of the Institute.
Tan Sri Yahya’s many professional achievements include pioneering the establishment of the National
Heart Institute of Malaysia in 1992 and performing the first Heart Transplant in Malaysia in 1997. Tan Sri
Yahya is the author of many scholarly and professional articles and has made numerous presentations to
professional audiences.
Tan Sri Yahya has been a Consultant Cardiothoracic Surgeon at Damansara Heart Centre, Damansara
Specialist Hospital since March 2003. He was a council member of the Association of Thoracic and
Cardiovascular Surgeons of Asia. He is also a committee member of the Malaysian Board of Cardiothoracic
Surgery. In 2011, he was appointed as the Pro-Chancellor of University of Teknologi Malaysia.
Currently, Tan Sri Yahya also sits on the Board of Tokio Marine Life Insurance Malaysia Bhd and several
private limited companies in Malaysia. Tan Sri Yahya is also a Trustee of Yayasan Wah Seong.
He attended all of the five (5) Board meetings of the Company held during the financial year ended 31
December 2015.
TAN SRI DATO’ SURIN UPATKOON
Non-Independent Managing Director
Tan Sri Dato’ Surin Upatkoon, a Thai National, aged 67, was appointed as a Director of the Company on 17
July 2012 and as Managing Director of the Company on 14 May 2013. He is also a member of Remuneration
Committee of the Company. He is responsible for developing and implementing the strategic vision for the
growth and expansion of MPHB Capital Group, and ensuring effective control of the general management
and operations of the MPHB Capital Group
Tan Sri Dato’ Surin completed his secondary education in Han Chiang High School, Penang in 1970.
He began his career with MWE Weaving Mills Sdn Bhd in 1971 as a manager and he was appointed
as the Managing Director of MWE Spinning Mills Sdn Bhd in 1974. In 1976, he became an Executive
Director of MWE Holdings Berhad and subsequently, in 1979, he was appointed as the Managing Director
of MWE Weaving Mills Sdn Bhd. In 2000, he was appointed as an Executive Director of Magnum Berhad
(“Magnum”) and subsequently in 2002, he was appointed as the Managing Director of Magnum where
he played a major role in formulating the business strategies and direction of the Magnum Group and
was actively involved in the policy making aspects of the operations of the Magnum Group. He was redesignated as Non-Independent Non-Executive Chairman of Magnum on 26 June 2013.
Tan Sri Dato’ Surin also sits on the Board of MWE Holdings Berhad, Magnum 4D Berhad and several private
limited companies in Malaysia. He is also a Trustee of Chang Ming Thien Foundation and Magnum Foundation.
Tan Sri Dato’ Surin attended all of the five (5) Board meetings of the Company held during the financial year
ended 31 December 2015.
DIRECTORS’ PROFILE (cont’d)
IVEVEI UPATKOON
Non-Independent Executive Director
Ms Ivevei Upatkoon, a Thai National, aged 39, was appointed as an Executive Director of the Company on
20 February 2014. She does not sit on any Board committee of the Company.
Ms Ivevei obtained a Master in Business Administration from INSEAD in 2004, a Bachelor of Economics
and Bachelor of Arts Degree (Honours) majoring in Japanese Studies in 1997, both from the University of
Michigan.
Ms Ivevei has more than 7 years working experience in property development strategy, property management
and property investment. Prior to being appointed as Executive Director, she was the General Manager,
Property of the Company. She joined Magnum Berhad (“Magnum”) as a manager in 2008 and was then
promoted as the Assistant General Manager, Property in 2010. Before joining Magnum in 2008, she was
employed in companies involved in corporate finance/advisory, systems consulting, e-commerce services
and e-business strategy consulting/advisory.
She also sits on the Board of Mimaland Berhad, Multi-Purpose Capital Holdings Berhad and several private
limited companies in Malaysia and is a Trustee of Magnum Foundation.
Ms Ivevei attended all of the five (5) Board meetings of the Company held during the financial year ended
31 December 2015.
DATO’ LIM TIONG CHIN
Non-Independent Non-Executive Director
Dato’ Lim Tiong Chin, a Malaysian, aged 63, was appointed as a Non-Independent Non-Executive Director
of the Company on 1 August 2012. Dato’ Lim is also a member of the Audit Committee, Nomination
Committee and Risk Management Committee of the Company.
Dato’ Lim is a Public Accountant by profession and is a Fellow of the Institute of Chartered Accountants
in England and Wales. He is also an Associate Member of the Malaysian Institute of Certified Public
Accountants and Malaysian Institute of Accountants.
Dato’ Lim was the Managing Director of A.A. Anthony Securities Sdn. Bhd. from 2001 to February 2013.
Prior to joining A.A. Anthony Securities Sdn Bhd, he was a Partner of Kiat & Associates from 1977 to 1983,
General Manager of A.A. Anthony & Co. Sdn Bhd from 1983 to 1985, Chairman and Managing Director of
A.A. Anthony & Co. Sdn Bhd from 1985 to 3 September 2001.
Dato’ Lim also sits on the Board of The Kedah Transport Company Berhad and several private limited
companies in Malaysia.
Dato’ Lim attended all of the five (5) Board meetings of the Company held during the financial year ended
31 December 2015.
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DIRECTORS’ PROFILE (cont’d)
KUAH HUN LIANG
Independent Non-Executive Director
Mr Kuah Hun Liang, a Malaysian, aged 54, was appointed as an Independent Non-Executive Director
of the Company on 4 March 2013. He is also a Chairman of the Audit Committee and a member of
Nomination Committee, Remuneration Committee and Risk Management Committee of the Company.
Mr Kuah obtained a Bachelor of Science (Hons) degree in Applied Economics from the University of East
London, United Kingdom in 1982. He started his banking career in Public Bank Berhad in 1983. He
joined Deutsche Bank AG in 1989 where he served as a treasurer and was then promoted as the head
of global markets in 1995. In 2000, he was appointed as an Executive Director of Deutsche Bank (M)
Bhd and promoted to be the Chief Executive Officer and Managing Director in 2002 and held the position
until September 2006. He was formerly a treasurer and a Director of Malaysian-German Chamber of
Commerce and the Chairman of Star Publications (Malaysia) Berhad.
Mr Kuah is currently an independent director of Alliance Bank Malaysia Berhad, Alliance Investment Bank
Berhad and Rexit Berhad.
Mr Kuah attended all of the five (5) Board meetings of the Company held during the financial year ended
31 December 2015.
Notes:
1.
Family Relationship with Director and/or Major Shareholder
Ms Ivevei Upatkoon is the daughter of Tan Sri Dato’ Surin Upatkoon, the Managing Director and
major shareholder of the Company. Saved as disclosed herein, none of the Directors have any
family relationship with any director and/or major shareholder of the Company.
2.
Conflict of Interest
None of the Directors have any conflict of interest with the Company.
3.
Conviction of Offences
None of the Directors have been convicted of any offences in the past ten(10) years.
CHAIRMAN’S STATEMENT
Dear Shareholders,
I am pleased to present the third Annual Report and Audited Financial Statements of the Group and Company
for the financial year ended 31 December 2015.
The exemplary leadership of our Managing Director, Tan Sri Dato’ Surin Upatkoon, the invaluable contribution
and participation from our esteemed Board members and diversified talent of the experienced management
teams have positioned the group to efficient capital management even in the midst of challenges due to global
economic slowdown. Sound policies, core values and clear directions will steer the Group to sustainable
growth in the future.
I would like to take this opportunity to express our appreciation to Mr Ng Kok Cheang, our Executive Director,
for his past contributions as he has resigned from the Board on 19 August 2015.
The profit for the year posted by the Company and the Group is RM0.2 million and RM86.6 million respectively.
This is lower than the previous year’s profit of the Company and the Group of RM179.1 million and RM243.6
million respectively due to a one-off gain from the sale of investment properties recorded in 2014.
The basic earnings per share of the Group registered a drop of 25.3 sen from 34.3 sen per share to 9 sen per
share.
CORPORATE DEVELOPMENT
2015 has been a remarkable year.
On 7 May 2015, the Company announced that a wholly-owned subsidiary of the Company, Multi-Purpose
Capital Holdings Berhad (“MPCHB”), had completed the divestment of its 49% stake in the insurance subsidiary,
Multi-Purpose Insurans Bhd (“MPIB”) to Generali Asia N.V. (“Generali Asia”), a 100% indirect subsidiary of
Assicurazioni Generali S.p.A for RM355.8 million.
On 15 July 2015, the name of the insurance subsidiary was changed from MPIB to MPI Generali Insurans
Berhad (“MPI Generali”) to reflect the integration with the Generali Group which is one of the largest global
insurance providers.
MPCHB also grants call and put options to Generali Asia whereby Generali Asia can exercise:I)
the call option within 2 years from completion date to acquire 21% of the issued and paid up capital of
MPI Generali; and
II) the put option within 5 years from completion date to sell to MPCHB all the shares in MPI Generali if:•
•
approval from Bank Negara Malaysia(“BNM”) is deemed not to have been obtained for the exercise
of the call option; or
Generali Asia holds a minority shareholding in MPI Generali upon the approval from BNM for the
exercise of the call option.
This strategic partnership marks Generali Group’s entry into the Malaysian general insurance market. With the
combination of strong international network, expertise and technical efficiency of Generali Group combined
with our home grown strength and expertise, MPI Generali is poised to have stronger foothold in the general
insurance industry.
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CHAIRMAN’S STATEMENT (cont’d)
BUSINESS PERFORMANCE OVERVIEW
Revenue of the Group at RM380.8 million is 2.9% higher compared to revenue of RM370.1 million reported in
2014. The improved performance is due to higher net earned premiums achieved by the Insurance Division
of RM339.3 million which contribute towards 89.1% of the total revenue. Credit and Investments Divisions
generate revenue of RM41.5 million which is 10.9% of the total revenue.
Operating profit of the Group at RM108.6 million is 61.4% lower than the operating profit of RM281.6 million
achieved in 2014. The extraordinary gain from the disposal of investment properties contributed substantially
to the favorable result of 2014.
REVIEW OF OPERATIONS
a) Insurance Division
In spite of the uncertain market environment, MPI Generali reported revenue and operating profit of
RM339.3 million and RM77.15 million respectively which is 2.5% and 8.8% higher than revenue of
RM330.9 million and operating profit of RM70.9 million posted in 2014. This is mainly due to higher
earned premium, lower commission and net claims incurred ratios.
Going forward, MPI Generali is expected to benefit from the strategic partnership with Generali and aims
to be transformed into one of the key long term players in the local general insurance industry.
b) Credit Division
The Credit Business is primarily limited to selected reputable clientele. Credit Division achieved higher
operating profit of RM10.39 million in 2015 as compared to RM1.50 million posted in 2014. Net gain in the
fair value of financial assets and higher interest income had contributed to the favourable results.
c) Investment Division
Investment Division is involved in hotel operations, investment properties and joint ventures with wellestablished property market investors. Revenue generated in 2015 at RM39.3 million is 5.4% higher
than revenue of RM37.3 million recorded in 2014. The improved performance of the hotels and higher
collections in terms of rental income from the investment properties contributed to the increase in revenue.
However, the operating profit in 2015 at RM21.12 million is significantly lower compared to operating profit
RM209.23 million posted in 2014 due to an exceptional gain from the sale of investment properties in
2014.
The hotels will continue to maintain good rapport with existing clientele with improved customer services
as well as to attract new customers with attractive promotions to improve its revenue. The hotels will strive
to maintain its operational costs at optimal level.
The Group will continue to assess and evaluate potential profitable joint ventures with reputable property
developers or outright disposal at the right price for the vast land bank held by the Group to maximize
shareholders’ value.
CHAIRMAN’S STATEMENT (cont’d)
MARKET OUTLOOK AND PROSPECTS
While the global economy environment remains uncertain, the Malaysian economic outlook is expected to face
an uncertain operating environment in 2016. The growth of Malaysian economy in the fourth quarter of 2015 is
recorded at 4.5%. Going forward, growth will continue to be sustained by domestic demand and net exports.
The domestic demand expansion is projected to be moderate.
2016 poses continuing uncertainties and challenges, but we are committed to optimizing value for shareholders.
The management team will continue to focus on cost optimization and efficient management, as well as to
explore opportunities for growth in our operating divisions. The Board members will continue to ensure that
good corporate governance are in place and with the integrity and guidance of the board members, the Group
will attain better record and earnings in the future.
DIVIDENDS
The Board maintains a conservative dividend policy to ensure adequate funds are retained for long term
creation of shareholders’ value whilst acknowledging that a need to reward loyal shareholders.
However, at this juncture, declaration of dividends is to be approved by Bank Negara Malaysia (“BNM”) and
we will seek BNM’s approval for future declaration of dividends.
APPRECIATION AND ACKNOWLEDGEMENT
On behalf of the Board, I would like to thank shareholders for their continued support and to extend my thanks
to all fellow board members and staff across the Group for their commitment and their invaluable contribution.
I am confident that our Group is poised to deliver strong financial performance in the years ahead with the
formulation and execution of clear and consistent strategies within the organisation.
CHAIRMAN
31 March 2016
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PENYATA PENGERUSI
Para Pemegang Saham,
Saya dengan sukacitanya membentangkan Laporan Tahunan ketiga dan Penyata Kewangan Beraudit
Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Disember 2015.
Kepimpinan teladan Pengarah Urusan kami, Tan Sri Dato’ Surin Upatkoon, sumbangan yang tidak ternilai dan
penyertaan daripada ahli Lembaga Pengarah yang dihormati serta kepelbagaian bakat pasukan pengurusan
yang berpengalaman telah mempamerkan pengurusan modal yang cekap walaupun di dalam cabaran
disebabkan kelembapan ekonomi global. Dasar polisi yang baik, nilai-nilai teras dan arahan yang jelas akan
membawa Kumpulan kepada pertumbuhan yang mampan pada masa hadapan.
Saya ingin mengambil kesempatan ini untuk merakamkan penghargaan kepada Encik Ng Kok Cheang,
Pengarah Eksekutif kami, atas sumbangan beliau sebelum beliau meletak jawatan daripada Lembaga
Pengarah pada 19 Ogos 2015.
Keuntungan bagi tahun yang dicatatkan oleh Syarikat dan Kumpulan adalah masing-masing sebanyak RM0.2
juta dan RM86.6 juta. Ini adalah lebih rendah berbanding keuntungan Syarikat dan Kumpulan bagi tahun
sebelumnya iaitu masing-masing sebanyak RM179.1 juta dan RM243.6 juta hasil keuntungan disebabkan
daripada penjualan hartanah pelaburan yang dicatatkan pada tahun 2014.
Pendapatan asas sesaham Kumpulan mencatatkan penurunan sebanyak 25.3 sen daripada 34.3 sen sesaham
kepada 9 sen sesaham.
PEMBANGUNAN KORPORAT
Tahun 2015 merupakan tahun yang memuaskan.
Pada 7 Mei 2015, Syarikat telah mengumumkan bahawa anak syarikat milik penuh Syarikat, Multi-Purpose
Capital Holdings Berhad (“MPCHB”), telah menyempurnakan pelupusan pegangan sebanyak 49% dalam
anak syarikat insurans, Multi-Purpose Insurans Bhd (“MPIB”) kepada Generali Asia N.V. ( “Generali Asia”),
iaitu 100% subsidiari tidak langsung kepada Assicurazioni Generali S.p.A sebanyak RM355.8 juta.
Pada 15 Julai 2015, nama anak syarikat insurans telah ditukar daripada MPIB kepada MPI Generali Insurans
Berhad (“MPI Generali”) untuk menggambarkan integrasi dengan Kumpulan Generali yang merupakan salah
satu syarikat pembekal insurans global terbesar.
MPCHB juga telah memberikan opsyen panggilan dan opsyen jualan kepada Generali Asia di mana Generali
Asia melaksanakan:I)
opsyen panggilan dalam tempoh 2 tahun dari tarikh penyempurnaan untuk memperolehi 21% daripada
modal terbitan dan berbayar MPI Generali; dan
II)
opsyen jualan dalam tempoh 5 tahun dari tarikh penyempurnaan untuk menjual semua saham dalam MPI
Generali kepada MPCHB sekiranya:•
•
kelulusan daripada Bank Negara Malaysia (“‘BNM”) tidak diperolehi bagi pelaksanaan opsyen
panggilan; atau
Generali Asia memegang pegangan saham minoriti dalam MPI Generali bergantung kepada
kelulusan daripada BNM bagi melaksanakan opsyen panggilan.
Perkongsian strategik ini menandakan kemasukan Kumpulan Generali ke dalam pasaran insurans am
Malaysia. Dengan gabungan rangkaian antarabangsa yang kukuh, kepakaran dan kecekapan teknikal,
Kumpulan Generali digabungkan dengan kekuatan dan kepakaran sedia ada dalam negara, MPI Generali
bersedia untuk bertapak lebih kukuh dalam industri insurans am.
PENYATA PENGERUSI (sambungan)
TINJAUAN PRESTASI PERNIAGAAN
Hasil pendapatan Kumpulan pada RM380.8 juta adalah 2.9% lebih tinggi berbanding hasil pendapatan
sebanyak RM370.1 juta yang dilaporkan pada tahun 2014. Prestasi yang bertambah baik adalah disebabkan
oleh premium bersih yang diperolehi lebih tinggi yang dicapai oleh Bahagian Insurans sebanyak RM339.3 juta
yang menyumbang kepada 89.1% daripada jumlah hasil pendapatan. Bahagian Kredit dan Pelaburan telah
menjana pendapatan sebanyak RM41.5 juta iaitu 10.9% daripada keseluruhan jumlah hasil pendapatan.
Keuntungan operasi Kumpulan pada RM108.6 juta adalah 61.4% lebih rendah daripada keuntungan operasi
yang dicapai pada tahun 2014 iaitu sebanyak RM281.6 juta. Keuntungan luar biasa daripada penjualan
hartanah pelaburan telah menyumbang kepada keputusan yang menggalakkan bagi tahun 2014.
TINJAUAN OPERASI
a) Bahagian Insurans
Walaupun dalam keadaan pasaran yang tidak menentu, MPI Generali melaporkan pendapatan dan
keuntungan operasi masing-masing sebanyak RM339.3 juta dan RM77.15 juta iaitu 2.5% dan 8.8% lebih
tinggi daripada pendapatan sebanyak RM330.9 juta dan keuntungan operasi sebanyak RM70.9 juta yang
dicatatkan pada tahun 2014. Ini adalah disebabkan oleh premium yang diperolehi lebih tinggi, komisen
yang lebih rendah dan nisbah tuntutan bersih ditanggung.
Melangkah ke hadapan, MPI Generali dijangka mendapat manfaat daripada perkongsian strategik
dengan Generali dan bertujuan untuk berubah menjadi salah satu pemain utama jangka panjang dalam
industri insurans am tempatan.
b) Bahagian Kredit
Perniagaan Kredit adalah terhad kepada pelanggan terpilih yang mempunyai reputasi yang baik. Bahagian
Kredit mencapai peningkatan keuntungan operasi sebanyak RM10.39 juta pada tahun 2015 berbanding
dengan RM1.50 juta pada tahun 2014. Keuntungan bersih dalam nilai saksama aset kewangan dan
pendapatan faedah yang lebih tinggi telah menyumbang kepada keputusan yang menguntungkan.
c) Bahagian Pelaburan
Bahagian Pelaburan terlibat dalam operasi hotel, pelaburan hartanah dan usaha sama dengan pelaburpelabur pasaran hartanah yang mantap. Hasil pendapatan yang dijana pada tahun 2015 sebanyak
RM39.3 juta adalah 5.4% lebih tinggi daripada hasil pendapatan yang dicatatkan pada tahun 2014 iaitu
sebanyak RM37.3 juta. Peningkatan prestasi hotel yang bertambah baik dan kutipan yang lebih tinggi
dari segi pendapatan sewa daripada pelaburan hartanah telah menyumbang kepada peningkatan hasil
pendapatan. Walau bagaimanapun, keuntungan operasi pada tahun 2015 sebanyak RM21.12 juta adalah
jauh lebih rendah berbanding dengan keuntungan operasi sebanyak RM209.23 juta yang dicatatkan
pada tahun 2014 disebabkan oleh keuntungan luar biasa daripada penjualan pelaburan hartanah pada
tahun 2014.
Hotel-hotel akan terus mengekalkan hubungan yang baik dengan pelanggan sedia ada serta tahap
khidmat pelanggan yang lebih baik dan juga untuk menarik pelanggan baru dengan promosi yang menarik
untuk meningkatkan hasil pendapatannya. Hotel akan berusaha untuk mengekalkan kos operasi pada
tahap optimum.
Kumpulan akan terus menaksir dan menilai potensi usaha sama yang menguntungkan dengan pemaju
hartanah yang berwibawa atau pelupusan secara terang-terangan dengan harga yang tepat untuk bank
tanah yang luas yang dipegang oleh Kumpulan untuk memaksimumkan nilai pemegang saham.
13
14
PENYATA PENGERUSI (sambungan)
TINJAUAN DAN PROSPEK PASARAN
Dengan keadaan ekonomi global yang masih tidak menentu, prospek ekonomi Malaysia dijangka menghadapi
persekitaran operasi yang tidak menentu pada tahun 2016. Pertumbuhan ekonomi Malaysia pada suku
keempat dalam tahun 2015 direkodkan pada 4.5%. Melangkah ke hadapan, pertumbuhan akan terus
dikekalkan dengan adanya permintaan domestik dan eksport bersih. Pengembangan permintaan domestik
dijangka menjadi sederhana.
Tahun 2016 menimbulkan ketidakpastian dan cabaran yang berterusan, tetapi kami komited untuk
mengoptimumkan nilai pemegang saham. Pihak pengurusan akan terus memberikan tumpuan kepada
mengoptimumkan kos dan pengurusan yang cekap, serta meneroka peluang-peluang pertumbuhan dalam
bahagian operasi kami. Ahli Lembaga Pengarah akan terus memastikan bahawa tadbir urus korporat yang
baik dengan integriti dan kepimpinan ahli Lembaga Pengarah, Kumpulan akan mencipta rekod dan pencapaian
yang lebih baik pada masa hadapan.
DIVIDEN
Lembaga Pengarah mengekalkan polisi dividen konservatif untuk memastikan dana yang mencukupi
dikekalkan bagi meningkatkan nilai para pemegang saham untuk jangka panjang di samping mengakui
bahawa keperluan untuk memberi ganjaran kepada pemegang-pemegang saham yang setia.
Walau bagaimanapun, pada masa ini, pengisytiharan dividen perlu diluluskan oleh Bank Negara Malaysia
(“BNM”) dan kami akan mendapatkan kelulusan BNM untuk pengisytiharan dividen pada masa depan.
PENGHARGAAN DAN PENGIKTIRAFAN
Bagi pihak Lembaga Pengarah, saya ingin mengucapkan terima kasih kepada para pemegang saham di atas
sokongan yang berterusan dan ucapan terima kasih saya juga kepada semua ahli Lembaga Pengarah dan
kakitangan di seluruh Kumpulan di atas komitmen dan sumbangan mereka yang tidak ternilai.
Saya yakin bahawa Kumpulan kami bersedia untuk memberikan prestasi kewangan yang kukuh pada tahun
akan datang dengan penggubalan dan pelaksanaan strategi yang jelas dan konsisten dalam organisasi.
PENGERUSI
31 Mac 2016
主席献词
各位股东，
本人非常荣幸地呈报本集团和公司上市后截至2015年12月31日的第三个年度报告和经审计财务账目。
在董事经理丹斯里拿督刘锦坤卓越的领导下，再配合董事局成员的宝贵贡献和积极参与，加上经验丰富和多元
才能的管理团队，促使本集团在全球经济放缓的挑战之下，依然能够建立高效的资本管理。
前执行董事伍国昌先生已于2015年8月19日向董事会请辞执行董事一职，本人也藉此机会衷心感谢伍国昌先
生在任时为本集团所作出的贡献。
本公司和集团今年各取得20万令吉及8千6百60万令吉的年度盈利，少于去年的1亿7千9百10万令吉及2亿4千
3百60万令吉。去年的盈利主要源自于2014年出售投资物业所记录的一次性收益。本集团的业务每股盈利减
少了25.3仙，从34.3仙下跌至9仙。
企业发展
2015年是卓越的一年。
本公司于2015年5月7日宣布属下全资子公司Multi-Purpose Capital Holdings Berhad（MPCHB）完成出售
价值3亿5千5百80万令吉的保险子公司， Multi-Purpose Insurans Bhd (MPIB) 的49％股权于Generali Asia
NV（Generali Asia），即100% 间接附属于Assicurazioni Generali S.p.A的子公司。
属下保险子公司的名字已于2015年7月15日由MPIB转换成MPI Generali Insurans Berhad (MPI Generali)，以
反映子公司与全球最大保险集团之一的Generali集团的整合。
MPCHB也与Generali Asia签署一份买卖选择权协议，准予Generali Asia执行：在完成脱售议案2年内的买权，以收购21%MPI Generali所发行的缴足股本；以及
在完成脱售议案5年内的卖权，以出售所有MPI Generali的股份于MPCHB，假如：• 未能获得马来西亚国家银行(国行)的批准，以执行买权或
• 获得国行批准买权，但Generali Asia只持有MPI Generali的少数股权。
此策略伙伴关系标志着Generali集团迈入大马普险市场的一大步。以Generali集团强大的国际网络，专业知识
和技术效率，结合我们自身的在地实力和专业人才，MPI Generali正准备在大马普险业务蓄势待发。
业务表现概况
集团的总营业额为3亿8千80万令吉，相较于2014年3亿7千10万令吉的总营业额，增长了2.9%。这优越的表
现源自于保险业务取得较高的已净赚保费，为3亿3千9百30万令吉，占总营业额的89.1％。信贷与投资业务则
取得4千1百50万令吉，占总营业额的10.9％。
集团的业务盈利为1亿8百60万令吉，相较于2014年的2亿8千1百60万令吉，下跌了61.4%。主要基于2014
年出售投资物业的特殊收益为业务盈利作出巨大的贡献。
营运回顾
a)
保险业务
尽管市场环境存着许多不明确因素，MPI Generali 依然取得3亿3千9百30万令吉的总营业额以及7千7百
15万令吉的业务盈利，相较于2014年3亿3千90万令吉的总营业额以及7千90万令吉的业务盈利，各别增
长了2.5%和8.8%。这主要是基于较高的已赚保费，以及较低的佣金和已承付申索净额比率。
在未来的展望下，MPI Generali预期将受惠于与Generali建立的策略伙伴关系，以成为本地普通保险领域
里的关键成员。
15
16
主席献词(延续)
b) 信贷业务
信贷业务主要限于筛选及信誉良好的客户群。信贷业务在2015年取得了1千39万令吉的业务盈利，高于
2014年所记录的1百50万令吉。优越的成果源自于金融资产的公允价值净收益以及更高的利息收入。
c)
投资业务
投资业务包括了酒店管理、产业投资以及与完善的房地产市场投资者的联营投资。在2015年，总营业额
为3千9百30万令吉，相较于2014年的3千7百30万令吉，增长了5.4%。酒店的性能提升和更高的投资物
业租金收入造就了总营业额的提升。然而，2015年2千1百12万令吉的业务盈利显著低于2014年所记录2
亿9百23万令吉的业务盈利，因为2014年出售投资物业的特殊收益大大增加了当年的业务盈利。
本酒店将继续以更出色的服务来维持与现有客户的良好关系，并会展开诱人的促销以招揽新的客户群，
籍此提高总营业额。同时，本酒店也将努力维持最优化的营运成本。
本集团也将持续评估及寻找信誉良好的房地产开发商，以进行有潜能收益的联营投资，或于合适的价位
时机出售，以求回报股东们的投资价值。
市场前景及展望
在全球经济环境依然不明朗的情况下，马来西亚的经济前景在2016年将面临一个充满变数的经营环境。马来
西亚在2015年第四季度的经济增长为4.5％。国内需求和净出口会在未来持续支撑经济的增长，国内需求预计
趋向放缓。
2016年充满不明确因素和严峻的挑战，但我们仍然会尽力为股东们创造最优质的投资价值。在持续专注成本
优化及高效管理的同时，管理团队也将探索增长营运业务的机会。董事会将不遗余力地确保公司治理到位，而
在未来的日子里，本集团也将在董事会成员秉持着诚信和用心指引之下，取得更佳的业绩以及更多的盈利。
股息
董事会维持保守的派息政策，以确保有足够的储备基金以创造股东们的长期价值，与此同时，董事会认同有回
报忠诚股东们的必要性。
然而，在这个关键时期，股息派发得预先获得国行的批准，我们将会全力争取国行批准放行派发股息计划。
致诚感谢
我谨代表董事会感谢股东们始终如一的支持，以及衷心感激董事会的所有成员和员工们为本集团所作出的宝贵
贡献。
我深信，通过组织内部明确和一贯的策略制定与执行，本集团有望在未来几年里展现良好的财务业绩。
主席
TAN SRI DATO’DR YAHYA BIN AWANG
2016年3月31日
CORPORATE SOCIAL RESPONSIBILITY STATEMENT
The Group, as a socially responsible corporate citizen, is committed to continuously develop and implement
corporate social responsibility (“CSR”) initiatives as part of its efforts to create business sustainability and
enhance the value of shareholders and other stakeholders.
THE COMMUNITY
•
Recreational/Sports Programme
Premised on the belief that the cultivation of a healthy and active lifestyle is an important element in
creating work-life balance amongst the general public, the Group has continued with its efforts to organise
its annual community run event known as the “MPIB Run” at Padang Merbuk, Jalan Parlimen on 11
January 2015 with more than 5,000 runners participating in the event.
In conjunction with the run, the Group had organised the “My First Run Clinic” sessions with activities
such as running and talks on health, fitness and running techniques to encourage individuals to take up
running as a sustainable healthy recreational activity, to inculcate a healthy work life balance lifestyle and
to promote better running techniques amongst the runners.
During the year, the Group had sponsored the sports training programme of Sarawak Sport Council
to nurture junior talents in sports. The Group also sponsored the 2015 MPI Saujana Amateur Golf
Championship as part of the initiative to nurture young amateur golfers into becoming the next generation
of top professional golfers. The Group also made sponsorship contribution to the Monster Dash Run
2015, a Halloween-themed run event in Sarawak, to promote a healthy lifestyle amongst the youths and
to provide them with social networking opportunities.
•
Social/Community Welfare And Charity Programme
The Group had taken the initiative to encourage its employees to participate in social welfare programmes
under the MPI Generali’s Sports Club Go Green Project where the Sports Club had made donations and
organised staff visits to the Yayasan Sunbeams Home and Rumah Charis.
As part of its social and welfare initiatives, the Group had organised a recycling project known as “The
Project Good Deeds” where clean, wearable and pre-loved sport shoes and tee shirts were collected and
donated to the Orang Asli/Indigenous communities.
The Group had also participated in the International Charity Day Carnival organised by Magnum
Foundation to help to raise funds for the needy and less fortunate.
THE WORKPLACE
Besides providing its employees with a safe, healthy and conducive working environment, the Group
is committed to ensuring that its employees are offered fair remuneration terms and they are given equal
opportunities for career progression based on merit. The benefits provided for employees include medical
and healthcare insurance coverage, personal accident coverage and housing loan interest subsidy. Sports
and interactive activities as well as subsidised overseas trips were organised for employees to foster closer
working relationship and teamwork.
As part of its efforts towards employees’ sustainability, the Group placed great emphasis on human resource
development. During the year, the Group had provided staff with trainings relating to regulatory and budget
updates, Goods and Services Tax and system development audit to improve their work/technical skills and
to enable them to keep abreast with the latest development in their respective fields of work. Staff were also
enrolled in leadership development programmes such as Executive Development Programme and Young
Managers Development Programme to enhance their leadership skills. The Group has also embarked on a
programme to sponsor employees to attend the Associateship of the Malaysian Insurance Institute (“AMII”)
and Diploma of the Malaysian Insurance Institute (“DMII”) Examinations. Employees in these programmes are
provided with benefits such as study leave and examination leave.
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CORPORATE SOCIAL RESPONSIBILITY STATEMENT (cont’d)
THE ENVIRONMENT
Conscious of the need to conserve resources and preserve the environment, the Group had made efforts to
cultivate its staff with the habit of “reduce, reuse and recycle”. These include minimising energy consumption,
recycling paper waste, printing double-sided, communicating via e-mails and using environmentally friendly
products.
THE MARKETPLACE
As part of its relationship-building initiatives, the Group continued to have regular get-together and social
events with its business partners to build up a rapport with its business partners. Steps were also taken
to provide assistance, technical support, training and to promote ethical business practices to the business
partners to ensure that they continue to provide excellent customer service.
CORPORATE GOVERNANCE STATEMENT
The Board of Directors (“the Board”) of MPHB Capital Berhad (“the Company” or “MPHB Capital”) is committed
to ensuring that good corporate governance is practised throughout the Group as fundamental part of
discharging its responsibilities to protect the interest of all stakeholders, enhance shareholders’ value and for
long-term sustainable business growth.
The Board is mindful of the need to regularly review the Group’s corporate governance practices with the view
of ensuring that they remain relevant in meeting with the challenges of its business environment.
The Board is pleased to outline below the key aspects of how the Group has applied the principles and
recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code”).
1.
BOARD OF DIRECTORS
1.1 Composition of the Board
The Board currently has five members, comprising a Non-Executive Chairman, a Managing Director,
one Executive Director and two Non-Executive Directors, total of whom two are Independent NonExecutive Directors. The number of independent directors, which represents more than one-third
of the Board, fulfils the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad
(“Listing Requirements”).
The Board’s policy is to ensure that the mix and profiles of the Company’s Board members, in
terms of age, ethnicity and gender, provide the necessary range and perspectives, experience and
expertise required to achieve effective stewardship and management of the Company’s operations.
The Board is satisfied that the current size and composition of the Board are adequate to provide for
a diversity of views and the effective stewardship of the Company. The Directors are from diverse
backgrounds with expertise and skills in the areas of medicine, business management, property
management, project management, corporate affairs, banking, stockbroking, finance, accounting,
corporate finance/advisory and system consulting. A brief profile of each Director is set out in this
Annual Report.
The current Board with one female Director, which represents 20% of the Board composition, reflects
the Board’s efforts towards achieving a more gender diversified Board. The Board will review and
consider the appointment of additional woman director in line with the country’s aspirational target of
30% women representation on boards, taking into account the combination of skill, experience and
strength in the qualities necessary to strengthen the composition of the Board.
1.2 Roles and Responsibilities
The roles and responsibilities of the Chairman, the Managing Director and the Executive Director
are clearly segregated to ensure an appropriate balance of power, authority and accountability at the
Board level. The Chairman of the Board provides overall leadership to the Board in decision making
and is responsible for the orderly conduct of the Board. The Managing Director and the Executive
Director are responsible for the day-to-day management of the Group’s business operations and
implementation of decisions of the Board. The Non-Executive Directors play the key supporting
role in contributing their knowledge and experience in the decision making process and towards the
formulation of the Company’s goals and policies.
The Board has established a Board Charter on 14 November 2013, which sets out the composition,
roles and responsibilities of the Board. The Board Charter also outlines the processes and procedures
of the Board and the Board Committees to facilitate their effective functions. The Board Charter is
available on the Company’s corporate website at www.mphbcap.com.my. The Board intends to carry
out a review of the Board Charter to ensure that it remains consistent with the Board’s objectives in
2016.
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20
CORPORATE GOVERNANCE STATEMENT (cont’d)
The Board assumes, among others, the following key duties and responsibilities as outlined in the
Board Charter:(a) Reviewing, approving and monitoring the Group’s overall strategic and financial plans.
(b) Overseeing the Group’s business operations and financial performance to ensure that the
businesses are being properly managed.
(c) Identifying principal risks and ensuring the implementation of appropriate internal controls and
mitigation measures to manage risks.
(d) Reviewing the adequacy and the integrity of the Group’s internal control systems and management
information systems, including systems for compliance with applicable laws, regulations, rules,
directives, and guidelines.
(e) Development and implementation of policies and/or programmes for effective communication
with shareholders and/or investors.
(f) Considering emerging issues which may be material to the Group’s business and affairs and
ensure that the Group has proper succession plan for senior management.
The Board plays an active role in the review and monitoring of the Group’s overall strategic and
financial plans. At the beginning of each year, the Management presents to the Board for review
and approval of its proposed business plan and budget for the year at a Board Meeting. The Board
reviews and monitors the Group’s financial results against the budget at the quarterly Board Meetings.
The Board is also kept informed of the key strategic initiatives and significant operational issues.
The Chief Operating Officer and the Head of Finance are in attendance at the Board meetings to
support the Managing Director and Executive Director in presenting the updates on the progress of
key initiatives, business targets and performance of the Group, and to provide clarifications on the
challenges and issues raised by the Board.
The Board is committed to provide shareholders/investors with comprehensive, accurate and quality
material information on a timely basis. In line with this commitment and to enhance transparency
and accountability, the Board has established an internal Corporate Disclosure Policy to facilitate the
proper handling of confidential and/or material information to avoid leakage and improper use of such
information. The policy clearly sets out the levels of authority to be accorded to designated persons
for approving, verifying and disclosing material information to shareholders and stakeholders to
ensure compliance with the Listing Requirements. The Group endeavours its best efforts to ensure
that no disclosure of material information is made on a selective basis to any parties unless such
information has been previously been disclosed and announced to Bursa Securities.
The Board recognises the importance of ensuring that there is effective and orderly succession
planning for the Group’s key management positions. During the year, the Group has taken steps to
put in place leadership/staff development programmes for identified candidates within the Group as
preparation for internal pipeline of talents to assume critical operational positions in the Group.
The Board has adopted an Authority Chart, which clearly sets out the relevant matters and applicable
approving limits, including those reserved for the Board’s approval, and those which the Board have
delegated to Managing Director and Senior Management. Key matters reserved for the Board’s
approval include the financial results, the budget and business plan, declaration of dividend,
acquisition and disposal of material assets/investments.
1.3 Promoting Ethical Standards
The Board has formally adopted a Code of Business Conduct and Ethics (“Code of Conduct”) for the
Directors of the Company. The Code of Conduct stipulates the standard of business conduct and
ethical behaviors to be observed/maintained by the Directors in their performance of their duties,
business dealings and all aspects of the Group’s business. A copy of the Code of Conduct is available
at the Company’s website. The key principles adopted in the Code of Conduct are as follows:
•
•
•
•
•
Avoid conflict of interest;
Avoid misuse of position for personal advantage/benefit/preferential treatment in any way;
Avoid misuse of information for personal gains or for any purpose other than intended by the
Company;
Observe confidentiality;
Protection and proper use of the Company’s assets.
The Directors have the duty to declare immediately to the Board should there be any interest in
any transaction to be entered into directly or indirectly with the Company. An interested director is
required to abstain from deliberations and making decisions of the Board on the transaction and he
or she does not exercise any influence over the Board in respect of the transaction.
As part of the Group’s continuous efforts to ensure good corporate governance practices, the Group
has established a Whistle Blowing Policy to provide a clear line of communication and reporting
of concerns by employees at all levels. The policy serves as a guide for employees to report or
raise any genuine concerns about possible improprieties in matters of financial reporting, unethical
behaviour, non-compliance with regulatory requirements and other malpractices.
The Audit Committee is responsible for the implementation of the Whistle Blowing Policy for the
Group’s employees. All whistle blowing reports are to be submitted to the Audit Committee Chairman
and be investigated promptly with the assistance of the Group Internal Audit, Group Human Resources
Department and Group Legal Department. The progress of investigation shall be reported to the
Audit Committee not later than the next scheduled meeting of the Audit Committee.
1.4 Strategies Promoting Sustainability
The Group aims to promote sustainable growth in every aspects of the Group’s business through
constant review of its business strategies to create greater customer awareness and to provide better
and more innovative products and excellent services to sustain its competitive edge. At workplace,
the Group is committed to promote staff welfare through the provision of attractive remuneration and
fringe benefits, a safe and healthy working environment as well as skill and competency development
for staff.
1.5 Access to Information and Advice
The Board receives update from the Management on the Group’s operations and performance and
the status of implementation of the strategic plans during the Board Meetings. Prior to the Board
Meetings, a formal agenda together with a set of Board papers containing information relevant to the
matters to be deliberated at the meeting are forwarded to all directors in sufficient time to enable them
to peruse, deliberate, obtain additional information and/or seek further clarification on the matters to
be tabled at the meetings.
The Board’s rights to information and access to independent advice are entrenched in the Board
Charter. The Board has direct access to the Management, including the advice and services of the
Company Secretary and has full and unrestricted access to information in relation to the Group’s
business and affairs, whether as a full board or in their individual capacity. The Directors may request
to be furnished with additional information or clarification on complex/technical issues. The Directors
are at liberty to seek independent professional advice at the Company’s expense, if necessary, after
consultation with the Chairman and the rest of the Board members.
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22
1.6 Company Secretary
The Company Secretary of MPHB Capital Berhad is an Associate member of the Malaysian Institute
of Chartered Secretaries and Administrators (“MAICSA”) and is qualified to act as company secretary
under Section 139A of the Companies Act, 1965. The Company Secretary provides support to
the Board in fulfilling its fiduciary duties and leadership role in shaping the corporate governance
practices of the Group. The Board is regularly updated by the Company Secretary on the new
statutory/regulatory requirements required to be observed by the Directors and/or the Company.
The Company Secretary also serves notice to the Directors and principal officers to notify them
of the closed periods for dealing in the Company’s shares pursuant to provisions of the Listing
Requirements. The Company Secretary attends and ensures that all Board meetings are properly
convened, and that proper records of the proceedings and resolutions passed are maintained in
the statutory registers at the registered office of the Company. The Company Secretary facilitates
timely communication of decisions made and policies set by the Board at Board meetings, to the
Management for action.
The Company Secretary has attended the relevant continuous professional development programmes
as required by MAICSA. The Board is satisfied with the performance and support rendered by the
Company Secretary to the Board in discharging its function.
1.7 Board Committees
The Board has delegated certain responsibilities to the Board committees, namely, the Nomination
Committee, Remuneration Committee, Audit Committee and Risk Management Committee to
support and assist the Board in discharging its fiduciary duties and responsibilities.
The Board Committees deliberate in greater details and examine the issues within their terms
of reference and make the necessary recommendations to the Board. The Board remains fully
responsible for effective control of the Company.
(a) Nomination Committee
The Nomination Committee comprises the following non-executive directors, the majority of
whom are independent directors.
Tan Sri Dato’ Dr Yahya bin Awang -
(Independent Non-Executive Director)
Chairman
Dato’ Lim Tiong Chin -
(Non-Independent Non-Executive Director)
Member
Mr Kuah Hun Liang -
Member
The Nomination Committee is primarily responsible for the following:
(i) To consider, evaluate and recommend suitable candidates for appointment to the Board.
(ii) To assess the performance and effectiveness of the Board as a whole, Board Committees,
as well as each individual Director, on an annual basis. The assessment includes
assessment of independence of the independent directors.
(iii) To oversee the overall composition of the Board in terms of appropriate size, required mix
of skills, experience and core competencies as well as the balance between Executive
Directors, Non-Executive Directors and Independent Directors.
During the financial year 2015, the Nomination Committee met two(2) times, which were
attended by all members.
The Nomination Committee has undertaken the following activities during the year 2015:(a) Assessed the Board’s performance and effectiveness as a whole.
(b) Assessed the performance of each individual Director.
(c) Reviewed the overall composition of the Board in terms of the appropriate size, mix of
skills, experience, core competencies and board balance.
(d) Assessed the performance of the Board Committees.
(e) Assessed the independence of its independent directors.
(f) Assessed the training needs of each director.
(g) Assessed the proposed appointments of directors prior to submission for Bank Negara
Malaysia’s approvals.
The criteria for the assessment of the Board’s performance cover specific areas such as board
conduct, board processes, board accountability, board governance, succession planning and
interaction with management and stakeholders. For individual self-assessment, the assessment
criteria include integrity, commitment, leadership, knowledge and communication ability. As
for independent directors, the criteria for assessing the independent directors include the
relationship between the independent director and the Company and his involvement in any
significant transaction with the Company.
As for the Board Committees, the assessment criteria include elements such as:
(i) Whether the committees have the right members’ composition.
(ii) Whether the committees are providing useful recommendations in assisting the Board for
better decision making and to be more efficient and effective.
(iii) Whether the members of the Committees have the relevant expertise in fulfilling their roles.
(iv) Whether the communications by the Board Committees are of sufficient quality.
(v) Whether the Board is well informed on a timely basis regarding the Committees’
deliberations.
(b) Audit Committee
The Audit Committee reviews the Group’s financial reporting process, the system of internal
control and management of risk, the audit process and the Group’s process for monitoring
compliance with laws and regulations, and such other matters which may be delegated by the
Board.
Full details of the composition, terms of reference and activities of the Audit Committee during
the year are set out in the Audit Committee Report in this Annual Report.
(c) Remuneration Committee
The Remuneration Committee comprises the following directors, the majority of whom are
independent non-executive directors:
Chairman
Tan Sri Dato’ Surin Upatkoon -
(Non-Independent Managing Director) Member
Mr Kuah Hun Liang -
Member
23
24
(d) Risk Management Committee
The responsibilities of the Remuneration Committee include the formulation of the remuneration
policy such as rewards and benefits and other terms of employment of the Managing Director
and Executive Directors as well as for the Senior Management and staff. The Remuneration
Committee held one(1) meeting during the year, which were attended by all members.
The Risk Management Committee comprises the following non-executive directors, the majority
of whom are independent directors:-
Chairman
Dato’ Lim Tiong Chin -
(Non-Independent Non-Executive Director)
Member
Mr Kuah Hun Liang -
Member
The responsibilities of the Risk Management Committee are to review and assess the Group’s
enterprise risk management framework and risk appetite, to assess the adequacy of the
Group’s risk management framework implemented and to review any significant risks that exist
in the Group and ensuring the steps were taken to mitigate the risk within its risk appetite. The
Risk Management Committee held one(1) meeting during the year, which were attended by all
members.
1.8 Nomination and Election Process of Board Members
The Company has been designated as an approved Financial Holding Company of its insurance
subsidiary, MPI Generali Insurans Berhad (formerly known as Multi-Purpose Insurans Bhd), by
Bank Negara Malaysia (“BNM”) with effect from 1 July 2015. Pursuant thereto, the appointment
and re-appointment of directors of the Company are subject to BNM’s approval. The appointment,
re-appointment and annual assessment of Directors are set out in a formal procedure, the primary
responsibilities of which have been delegated to the Nomination Committee. The Company’s
procedures for appointment/re-appointment of directors are in line with the Guidelines on Fit and
Proper Criteria issued by BNM and the relevant provisions under the Financial Services Act, 2013
(“FSA”). Under the procedures, the Nomination Committee proposes the nominees for appointment/
re-appointment to the Board, and recommends to the Board on the appointment and re-appointment
of directors, subject to the approval(s) of BNM. The Nomination Committee is to ensure that all
directors fulfil the fit and proper criteria as stated in the BNM Guidelines on Fit and Proper Criteria
and comply with the relevant provisions under the FSA.
The Nomination Committee has established the following process for selection or nomination of
suitable candidates to be appointed as directors:
Stage 1
Stage 2
Stage 3
Stage 4
Stage 5
:
:
:
:
:
Identification of candidates
Meeting up with the candidates (where feasible)
Evaluation of suitability of candidates
Final deliberation by the Nomination Committee
Recommendation to the Board
25
The Nomination Committee considers, among others, the following criteria in making recommendations
to the Board on suitable candidates for appointment as Directors:
(a) Whether the candidate have key qualities such as honesty, personal/financial integrity, diligence
and professionalism.
(b) Whether the candidate possesses the necessary qualification, training, skills, expertise, practical
experience and ability to understand the technical requirements of the business, the inherent
risks and the management process required to perform his role as a director of the Company
effectively.
(c) Whether the candidate has the commitment to effectively fulfill the role and responsibilities as a
director, having regard to his existing directorships and other commitments.
(d) Whether the candidate is likely to work constructively with the existing directors and contribute
to the overall effectiveness of the Board.
(e) Whether the candidate complies with the Guidelines on Fit and Proper Criteria issued by BNM,
the relevant provisions under the Financial Services Act, 2013 and the provisions of the Listing
Requirements governing the directors of listed issuer.
The Board will decide or approve the appointment of new director to the Board after considering the
assessment and recommendations of the Nomination Committee.
1.9 Remuneration of Directors
The objective of the Group’s remuneration policy is to attract, retain and motivate directors of
the necessary calibre, expertise and experience to lead and manage the Group effectively. The
remuneration of the Managing Director and Executive Director are linked to the corporate and
individual performance.
The Board has established a formal and transparent process for approving the remuneration of
Non-Executive Directors and the Managing/Executive Directors. The Remuneration Committee is
responsible for reviewing and approving the remuneration packages of the Managing/Executive
Directors; and also reviewing the directors’ fees of the Non-Executive Directors and making the
recommendations on the same to the Board for endorsements. The Directors’ fees for Non-Executive
Directors are then tabled for the approval by the shareholders. The quantum of fixed fee takes
into consideration of the directors’ increased fiduciary duties and responsibilities, accountability to
shareholders, memberships in Board Committees and performance and scope of business of the
Group.
The aggregate remuneration of Directors of the Company in respect of the financial year ended 31
December 2015 categorised into appropriate components is as follows:
Number of Directors
Directors of the Company
20152014
Executive
Directors Non-Executive
Directors
Executive
Directors
Non-Executive
Directors
RM50,001 to RM100,000
-
1
-
1
RM100,001 to RM150,000
-
2
-
2
RM250,001 to RM300,000
-
-
1
-
RM300,001 to RM350,000
1
-
-
-
RM450,001 to RM500,000
1
-
-
-
RM600,001 to RM650,000
-
-
1
-
RM2,250,001 to RM2,300,000
-
-
1
-
RM2,300,001 to RM2,350,000
1
-
-
-
26
1.10Independent Directors
The presence of Independent Directors on the Board brings unbiased and independent views, advice
and judgement to the decision making of the Board as well as safeguarding the interest of minority
shareholders. For the financial year under review, the two(2) Independent Directors of the Company,
namely Tan Sri Dato’ Dr Yahya bin Awang and Mr Kuah Hun Liang have affirmed their independence
based on the criteria of Independent Directors as prescribed under the Listing Requirements.
The Nomination Committee has assessed and concluded that the two(2) Independent Directors
of the Company have continued to be independent, and they have demonstrated that they have
exercised unbiased and independent judgements in the discharge of their duties as Independent
Directors. None of the independent directors had any business or other relationship which could
materially interfere with their exercise of independent judgement, objectivity or the ability to act in the
best interest of the Company.
The Board has adopted a nine-year policy for Independent Directors of the Company. The two
Independent Directors of the Company had served the Board since 2012, which is less than 9 years.
1.11 Time Commitment and Board Meetings
The Board is satisfied with the level of commitment given by the Directors towards fulfilling their
roles and responsibilities as Directors. The directorships held by the Board members in public listed
companies do not exceed the number of directorships as prescribed under the Listing Requirements.
Directors are required to notify the Board for accepting any new appointment as director in other
companies. These would ensure that the Directors’ commitment and time are focused on the affairs
of the Group to enable them to discharge their duties effectively.
The details of attendance of the Directors at the Board Meetings held in 2015 are set out below:-
Name of Directors
Tan Sri Dato’ Dr Yahya bin Awang
5/5
Tan Sri Dato’ Surin Upatkoon 5/5
Mr Ng Kok Cheang
(Resigned on 19.8.2015)4/4
5/5
Mr Kuah Hun Liang
5/5
Ms Ivevei Upatkoon 5/5
Total Number of Board Meetings Attended in 2015
The Board meetings’ dates of the Company are planned ahead of schedule and a commitment is
obtained from the Directors on their availability to attend the Board Meetings.
1.12Training
All the Directors had completed the Mandatory Accreditation Programme. During the financial year,
the Directors have attended training programmes or seminars to keep abreast with the changes
in the regulatory and business environment. The Directors will continue to undergo other relevant
training programmes to upgrade themselves to effectively discharge their duties as Directors.
During the year 2015, the Nomination Committee has assessed the training requirements of the
directors. The details of the training attended by the Directors in 2015 are set out below:Directors
Title of Training
• Leadership for Sustainable Growth by the Iclif
Leadership and Governance Center (“Iclif”)
• International Directors Summit 2015 by Malaysian
Directors Academy
•
Governance, Directors’ Duties and Regulatory Updates
Seminar 2015 by the Malaysian Institute of Corporate
Governance
Leadership for Sustainable Growth by Iclif
Mr Kuah Hun Liang
•
•
•
•
FIDE Forum : Invitation to Industry Consultation
Capital Market Director’s Programme
FIDE Forum: 5th Distinguished Board Leadership
Series: “Beyond Compliance to Growth – Board’s
Strategy in Cultivating Real Growth within a Conductive
Governance Environment”
Ms Ivevei Upatkoon
•
•
Rehda Youth July’s Study Tour by Rehda
2.
ACCOUNTABILITY, AUDIT AND RISK MANAGEMENT
2.1 Financial Reporting
The Board is committed to provide a balanced, clear and meaningful assessment of the financial
performance and prospects of the Group in the interim financial statements and annual financial
statements to shareholders.
The Board, assisted by the Audit Committee, oversees the financial reporting process of the Group.
The Audit Committee reviews the integrity and reliability of the Group’s interim and annual financial
statements as well as ensuring that these financial statements comply with the relevant accounting
and regulatory requirements prior to recommending for the Board’s approval. The Audit Committee
also reviews the appropriateness of the Group’s accounting policies and the changes to these
policies.
2.2 Relationship with External Auditors
The Audit Committee has established a formal and transparent relationship with external auditors.
The Audit Committee had met with external auditors once without the presence of the Management
to discuss the Group’s audited financial statements for the year ended 31 December 2015 and any
matters arising from the audit.
27
28
The services provided by the external auditors include statutory audit and non-audit services.
The details of the non-audit services provided by the external auditors are set out in Additional
Disclosures section in this Annual Report. The terms of engagement for the services rendered by
the external auditors are reviewed by the Audit Committee and approved by the Board. During the
year, the Audit Committee had reviewed the proposed fees for audit and non-audit services and
subsequently, recommended to the Board for approval. In their review, the Audit Committee ensured
that the independence and objectivity of the external auditors are not compromised.
The external auditors are required to rotate the engagement partner responsible for audit of the
financial statements of the Company/Group every five years. The current engagement partner for
the audit of the financial statements of the Company has been in place since 2013. The external
auditors have also given a written assurance to the Audit Committee in relation to the audit of the
Group’s audited financial statements that they are independent in accordance with the By-laws of the
Malaysian Institute of Accountants.
The Audit Committee has assessed/reviewed the performance and independence of the external
auditors of the Company based on the criteria approved by the Board. The assessment process by
the Audit Committee is conducted through the completion of a detailed questionnaire covering the
factors/criteria as set out below (after obtaining feedbacks from the finance department who regularly
interacts with the external auditors):
(a) The engagement partner’s qualification, knowledge and experience to perform his duty as
external auditor.
(b) The external auditors’ quality control processes and its process for internal review of accounting
judgements.
(c) The number of man days spent by the engagement and concurring partners in the audit of
financial statements of the Company/Group after taking into consideration of the size and
complexity of the Company’s/Group’s operations.
(d) The level of engagement between the external auditors and the Audit Committee and whether the
external auditors have provided independent views in the discussions with the Audit Committee.
(e) Whether the external auditors have updated the Audit Committee on significant issues concerning
the Group, new developments (including the applicability of new and significant accounting
standards) and the impacts on the Group.
(f) Whether the external auditors have provided any constructive observations and recommendations
in areas which required improvements particularly with regard to the internal control system
relating to financial reporting of the Group.
(g) Whether the external auditors have met its performance targets in terms of the following:
(i) The adequacy of the external auditors’ scope of audit;
(ii) The external auditors’ effectiveness in planning and conduct of their audit of the financial
statements of the Company/Group;
(iii) The external auditors’ performance against the agreed duration set by the Company;
(iv) The timeliness of the external auditors’ response to the issues raised by the Company.
(h) The external auditors’ level of commitment towards ensuring their staff’s continuity on the audit
of the financial statements of the Company and the Group.
(i) Whether the provision of non-audit services by the external auditors has impaired the external
auditors’ objectivity, judgement or independence.
(j) Whether the external auditors have shown to be independent and objective in their audit of the
financial statements of the Company/Group.
The Audit Committee is satisfied with the performance, technical competence and audit independence
of the external auditors. The Audit Committee is of the view that the provision of non-audit services
by the external auditors did not impair their objectivity, judgment or independence.
2.3 Risk Management and Internal Controls
The Board has the overall responsibility of establishing a sound system of internal control and in
determining the Group’s level of risk tolerance as well as to continuously identify, assess and monitor
principal risks faced by the Group to safeguard shareholders’ investments and the Group’s assets.
The Board is assisted by the Audit Committee and the Risk Management Committee to periodically
review the effectiveness of the risk management processes and the system of internal controls of
the Group. The review covers the financial, operational, compliance, controls and risk assessment
including ensuring that adequate infrastructure, resources and systems are in place for effective risk
management of the Group.
The Statement of Risk Management and Internal Control, which provides an overview of the state of
risk management and internal control within the Group, is set out in the Annual Report.
2.4 Internal Audit Function
The Company has established a Group Internal Audit Department (“GIAD”) to assist the Board in
maintaining a sound system of risk management and internal control for purposes of safeguarding
the Group’s interest and assets. The GIAD reports independently to the Audit Committee on their
audit findings and the steps taken by the Management to resolve/rectify the findings. The GIAD
determines the frequency of audit on each business or operational units by the level of risk assessed
and greater focus is set for higher risk areas.
The Audit Committee is satisfied that the GIAD has an appropriate standing within the Group to
perform its function effectively. The Head of GIAD is an associate member of the Chartered Institute
of Management Accountants and Institute of Internal Auditors. The GIAD carries out its audit activities
in accordance with the Standards for Professional Practice of Internal Auditing set by the Institute of
Internal Auditors Malaysia.
3.
INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION
3.1 Annual General Meeting
The Company’s Annual General Meetings remain the principal forum for dialogue and interactions
with shareholders. During the Annual General Meetings, shareholders are accorded the opportunity
and time to ask questions regarding the resolutions being proposed at the meeting and also on
matters relating to the affairs, operations and prospects of the Group. The Board members, Senior
Management as well as the Group’s external auditors are available to respond to shareholders’
queries.
In accordance with the recommendation of the Code, the Company has always make preparations
for poll voting for substantive resolutions at the general meetings.
3.2 Communication with Shareholders/Investors
The Board recognises the importance of providing investors and shareholders with timely and accurate
information on the Group’s major developments through disclosures and/or announcements made
to Bursa Malaysia Securities Berhad (“Bursa Securities”). The Group announces its performance to
Bursa Securities on a quarterly basis and the Annual Report is issued on an annual basis to provide
shareholders and investors with information on the Group’s business review, financial performance
and governance framework. The Company has established a website, www.mphbcap.com.my, which
the shareholders and members of the public can access for corporate information and new events
relating to the Group.
29
30
3.3 Investors’ Relations
The Company has, from time to time, held meetings and dialogues with investors and research/investment
analysts to convey information regarding the Group’s progress, performance and business strategies.
Press interviews were also conducted on significant corporate developments to keep the investing
community and shareholders updated on the major developments of the business of the Group.
The Board has identified and appointed Tan Sri Dato’ Dr Yahya bin Awang, the Chairman of the Board, to
whom shareholders may direct any concerns in respect of the Group.
COMPLIANCE STATEMENT
The Board is satisfied that the Company has complied substantially with the principles and recommendations
of the Code.
This Corporate Governance Statement was approved by the Board on 31 March 2016.
ADDITIONAL CORPORATE DISCLOSURES
31
1.
Utilisation of Proceeds
During the financial year ended 31 December 2015, there were no corporate proposals in which proceeds
had been raised.
2.
Share Buy-Back
The Company did not undertake any share buy-back during the financial year ended 31 December 2015.
3.
Options or Convertible Securities
The Company did not issue any options and convertible securities during the financial year ended 31
December 2015.
4.
Depository Receipt Programme
The Company did not sponsor any depository receipt programme during the financial year ended 31
December 2015.
5.
Sanctions and/or Penalties Imposed
There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or
management by the relevant regulatory authorities during the financial year ended 31 December 2015.
6.
Non-Audit Fees
During the financial year ended 31 December 2015, the following non-audit fees were paid to the Group’s
external auditors, Messrs Ernst & Young (“EY”):
Non-Audit Services Rendered By EY
(a)
Review of Directors’ Statement on Risk Management
and Internal Control
(b) Review of post Goods and Services Tax (“GST”)
Implementation
(c) Validation for Differential Levy System and Returns
on Calculation of Premium to Perbadanan Insurans
Deposit Malaysia
Total
Subsidiaries (RM)
Company (RM)
-
7,250
8,000
-
8,500
-
16,500
7,250
7.
Variation in Results
There were no variances of 10% or more between the audited results for the financial year ended 31
December 2015 and the unaudited results previously announced.
8.
Profit Guarantee
There was no profit guarantee received by the Company during the financial year ended 31 December 2015.
9.
Material Contracts Involving Directors’ and Major Shareholders’ Interest
Save as disclosed in the Audited Financial Statements of the Group and the Company for the year ended
31 December 2015, none of the directors and major shareholders of the Company have any material
contracts with the Company and/or its subsidiaries.
32
DIRECTORS’ RESPONSIBILITY STATEMENT
The Directors are required by the Company Act 1965 (“CA”) to prepare the financial statements for each
financial year which have been drawn up in accordance with the applicable Malaysian Financial Reporting
Standards, International Financial Reporting Standards, the requirements of the CA and the Main Market
Listing Requirements of Bursa Malaysia Securities Berhad.
The Directors are responsible to ensure that the financial statements give a true and fair view of the state of
affairs of the Group and the Company at the end of the financial year, and of the results and cash flows of the
Group and the Company for the financial year.
In preparing the financial statements, the Directors have:•
•
•
adopted appropriate and relevant accounting policies and applied consistently;
made judgments and estimates based on reasonableness and prudence; and
prepared the financial statements on a going concern basis.
The Directors are responsible to ensure that the Group and the Company keep accounting records which
disclose with reasonable accuracy the financial position of the Group and of the Company which enable them
to ensure that the financial statements comply with the CA.
The Directors are responsible for taking reasonable steps to safeguard the assets of the Group and the
Company, to detect and prevent fraud and other irregularities.
AUDIT COMMITTEE REPORT
33
CONSTITUTION
The Audit Committee was established by the Board on 1 August 2012.
MEMBERSHIP
The composition of the Audit Committee and the attendance of the Audit Committee members during the
financial year ended 31 December 2015, where a total of five(5) meetings were held, are as follows:Name
Designation/Directorship
Mr Kuah Hun Liang
Chairman/Independent Non-Executive Director
Tan Sri Dato’ Dr Yahya bin Awang Member/Independent Non-Executive Director
Member/Non-Independent Non-Executive Director
Number of
meetings attended
5/5
5/5
5/5
The composition of the Audit Committee complies with Paragraph 15.09 of the Main Market Listing Requirements
(“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).
The Audit Committee Meetings were appropriately structured through the use of agenda, which were distributed
to members prior to the meeting.
The Managing Director, the Chief Operating Officer, the Head of Finance, the Head of Group Internal Audit
and the Company Secretary were present by invitation at all the meetings. The representatives of the external
auditors, Messrs Ernst & Young, were present as and when invited by the Audit Committee.
TERMS OF REFERENCE
COMPOSITION
(a) The Audit Committee shall be appointed by the Directors from amongst their members (pursuant to a
resolution of the Board of Directors) which fulfills the requirements as prescribed under Paragraph 15.09
of the MMLR and paragraph 7.0 of Practice Note 13 of the MMLR.
(b) No alternate director shall be appointed as a member of the Audit Committee.
(c) Any vacancy, which affects the composition, must be filled within three (3) months.
(d) The members of the Audit Committee shall elect a Chairman, from among their members, who shall be
an Independent Non-Executive Director.
(e) The Company Secretary of MPHB Capital shall serve as Secretary of the Audit Committee (“Secretary”).
(f) The Board of Directors shall review the term of office and performance of the Audit Committee and each
member no less than once in every three (3) years.
34
AUDIT COMMITTEE REPORT (cont’d)
MEETINGS AND REPORTING PROCEDURES
(a) The Audit Committee shall meet not less than four (4) times a year, with each meeting planned to coincide
with key dates in the Company’s financial reporting cycle. The majority of Audit Committee members
present must be Independent Directors to form a quorum to the meeting.
(b) The Audit Committee shall meet with the external auditors without the presence of Executive Board
members and employees of the Company, whenever deemed necessary.
(c) The Secretary is responsible for :(i) drawing up the agenda together with the Chairman, and circulating it, supported by explanatory
documentation, to the committee members prior to each meeting;
(ii) recording attendance of all members and invitees;
(iii) recording all proceedings, and preparing and keeping minutes of all meetings; and
(iv) circulation of the minutes to all Board members at each Board Meeting.
AUTHORITY
The Audit Committee shall have the authority to:
(a) investigate any matter within its terms of reference;
(b) have the resources which are required to perform its duties;
(c) have full and unrestricted access to any information pertaining to the Company;
(d) have direct communication channels with the external auditors and person(s) carrying out the internal
audit function or activity;
(e) obtain independent professional advice it considers necessary;
(f) convene meetings with the external auditors, the internal auditors or both, excluding the attendance of
other Directors and employees of the Company, whenever deemed necessary;
(g) report promptly any breaches of the MMLR, which have not been satisfactorily resolved by the Board, to
the Bursa Securities; and
(h) convene a meeting, upon request of the external auditors, to consider any matter the external auditors
believe should be brought to the attention of the Directors or shareholders.
FUNCTIONS
The Audit Committee shall undertake the following responsibilities and duties and report to the Board of
Directors:
(a) Review the quarterly results and year-end financial statements, prior to the approval of the Board of
Directors, focusing particularly on:
(i) changes in or implementation of major accounting policies and practices;
(ii) significant and unusual events;
(iii) going concern assumptions; and
(iv) compliance with accounting standards, regulatory and other legal requirements.
(b) Review/recommend the nomination, appointment, re-appointment and performance of external auditors,
the audit fee and any question of resignation or dismissal before making recommendations to the Board;
and evaluate if there is reason (supported by facts) to believe that the Company’s external auditors are
not suitable for re-appointment.
(c) Review/discuss with the external auditors:
(i) the audit scope and plan, and ensure co-ordination where more than one audit firm is involved;
(ii) its evaluations of the system of internal control;
(iii) the results of the interim (if any) and final audits and the Management’s response thereto;
(iv) problems and reservations arising from the interim (if any) and final audits, and any matter the
auditors may wish to discuss (in the absence of the management, where necessary);
(v) the assistance given by the employees to the external auditors, and any difficulties encountered in
the course of the audit work.
(d) Establish an internal audit function which is independent of the activities it audits and oversee its function
as follows:
(i) the Head of Internal Audit shall report directly to the Audit Committee;
(ii) review the adequacy of the internal audit scope, functions, competency and resources of the internal
audit functions and that it has the necessary authority to carry out its work;
(iii) review the internal audit department’s progress of audit activities, the results of the internal audit
activities or investigation undertaken, and whether or not appropriate action is taken on the
recommendations of the internal audit function;
(iv) review any appraisal or assessment of the performance of members of the internal audit function;
(v) approve any appointment, transfer or termination of senior staff members of the internal audit function
and take cognizance of resignation and providing the resigning members an opportunity to submit
reasons for resigning.
(e) Review any related party transaction and conflict of interest situation that may arise within the Company
or Group including any transaction, procedure or course of conduct that raise questions of management
integrity.
(f) Direct, and where appropriate, supervise any special projects or investigation considered necessary, and
review investigation reports on any major defalcations, frauds and thefts.
(g) Carry out any such other functions as authorised by the Board of Directors.
SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE
During the financial year and up to the date of this report, the Audit Committee had carried out its duties in
accordance with its Terms of Reference.
The activities undertaken by the Audit Committee were as follows:
(a) Reviewed the unaudited interim financial statements of the Group before recommending them for
approvals by the Board. These reviews take into consideration the accounting principles, policies and
practices adopted in the Company’s/Group’s financial statements and the adequacy of their disclosure in
the financial statements.
35
36
(b) Reviewed the annual audited financial statements of the Group with the external auditors to ensure
compliance with applicable approved accounting standards before recommending them to the Board for
approval. This review takes into consideration the accounting principles, policies and practices adopted
in the Company’s/Group’s financial statements, the estimates and judgements of the Management, and
whether the relevant items/matters are adequately disclosed in the financial statements.
The accounting issues considered by the Audit Committee in relation to the audited financial statements
of the Group include the following:
(i) The accounting treatments in respect of the disposal of 49% equity interest in MPI Generali Insurans
Berhad (formerly known as Multi-Purpose Insurans Bhd) (“MPI Generali”), and the valuation of the
call and put options granted to Generali Asia N.V. in respect of the shares in MPI Generali.
(ii) The Management’s assessments of any indication of impairment of investment properties, goodwill
and intangible assets.
(iii) The Management’s assessments of impairment on financial assets/investments (i.e. Available for
Sale and Fair Value Through Profit or Loss) and whether these investments have been recognised
appropriately in the financial statements in accordance with Malaysian Financial Reporting Standards
(“MFRS”) 139 and that appropriate disclosures have been made in accordance with MFRS 7.
(iv) The claims and premium liabilities estimation of MPI Generali.
(v) The adequacy of the provision made by Management in respect of taxation and deferred tax.
(c) Reviewed the Audit Planning Memorandum of the external auditors, in terms of the nature of the audit
procedures and timeline for completion of the audit of the financial statements, significant accounting
and auditing issues, impact of new or proposed changes in the accounting standards and regulatory
requirements for the financial year 2016.
(d) Reviewed and approved the Group Internal Audit Department’s (“GIAD”) Annual Audit Plan in ensuring
that adequate scope and comprehensive coverage on the audit activities and principal risk areas are
adequately identified and covered.
(e) Reviewed the adequacy of staff and resources within the GIAD to ensure that the internal audit function
of the Group is carried out effectively.
(f) Reviewed the performance of the GIAD. The Audit Committee is satisfied with the performance of the
GIAD. The GIAD has carried out and completed the audit assignments in a timely manner. The GIAD
has also responded to the issues raised by the Audit Committee in a timely manner and it has provided
constructive observations and recommendations in areas which required improvements in the internal
control system of the Group. The GIAD has shown to be objective and independent in carrying out the
internal audit function of the Group.
(g) Met with the external auditors without the presence of any Executive Board members and Management,
to discuss issues arising from the final audits, or any other matters the auditors may wish to discuss,
including the level of assistance provided by the Group’s employees to the auditors, and any difficulties
encountered in the course of the audit work, including any restrictions on the scope of activities or access
to required information. There were no areas of concern raised by the external auditors that needed to be
escalated to the Board.
(h) Reviewed the independence, objectivity and effectiveness of the external auditors, having regard to
several factors, including the qualification, experience and knowledge of the engagement partner and
audit staff, the resources of the audit firm, the external auditors’ quality control processes and the level of
non-audit services rendered by external auditors.
The Audit Committee is of the view that the provision of non-audit services by the external auditors did not
impair the external auditors’ objectivity, judgment or independence. The external auditors have assured
the Audit Committee that they are independent throughout the audit engagement for 2015 in accordance
with the By-laws of the Malaysian Institute of Accountants. The Audit Committee is satisfied with the
performance, technical competency and audit independence of the external auditors and it has made
recommendations to the Board for their re-appointment as external auditors for the financial year ending
31 December 2016.
(i) Reviewed and deliberated on the GIAD’s progress of audit activities and the internal audit reports of the
Group, which highlighted issues, recommendations and Management’s responses to ensure appropriate
actions were taken to improve the system of internal controls based on improvement opportunities
identified in the internal audit reports.
(j) Reviewed with the external auditors on the Statement on Risk Management and Internal Control for
inclusion in the annual report prior to Board’s approval.
(k) Reviewed the Audit Committee Report for inclusion in the annual report prior to Board’s approval.
SUMMARY OF ACTIVITIES OF INTERNAL AUDIT FUNCTION FOR THE FINANCIAL YEAR ENDED 31
DECEMBER 2015
During the financial year ended 31 December 2015, the Internal Audit Department carried out the following
activities:(a) Prepared annual audit plan for the review and approval of the Audit Committee. The annual audit plan
was prepared using a risk-based methodology, including input from the Chairman of Audit Committee and
Senior Management.
(b) Regularly performed risk based audits, which covered reviews of the internal control system, risk
management, accounting and management information system. The reviews evaluated the following:
(i) Adequacy and effectiveness of the system of internal controls;
(ii) Adequacy of control and reporting systems and compliance with approved risk management policies
and procedures;
(iii) Reliability, integrity, accuracy, completeness and timeliness of financial and operational information;
(iv) Adequacy of control to safeguard the Group’s assets;
(v) Compliance with policies, standard operating procedures, guidelines, directives and laws;
(vi) Level of commitment to Business Continuity Management (“BCM’) and overall preparedness against
the BCM Framework and regulatory requirements as well as adequacy and effectiveness of the
Business Continuity Plan and Disaster Recovery Plan testing;
(vii) Effectiveness of the Information System in supporting the business activities and adequacy of the
control measures.
(c) Conducted special review requested by Management.
(d) Issued audit reports to the Audit Committee and Management identifying weaknesses and issues as well
as highlighting recommendations for improvements and followed up on matters raised.
The costs incurred for the internal audit function of the Group for financial year ended 31 December 2015 was
RM0.995 million. (For the financial year ended 31 December 2014, the cost was RM0.453 million)
37
38
STATEMENT ON RISK MANAGEMENT AND INTERNAL
CONTROL
Responsibility
The Board of Directors (“Board”) recognises the importance of maintaining a sound internal control system
and a robust risk management framework for good corporate governance; with the objective of safeguarding
the shareholders’ investment, the interest of customers, regulators, employees and the Group’s assets. The
Board affirms its overall responsibility for reviewing the adequacy and the effectiveness of the Group’s risk
management and internal control system. This includes reviewing the adequacy and integrity of financial,
operational and compliance controls and risk management procedures.
The Management assists the Board in the implementation of the Board’s framework, policies and procedures
on risk and control by identifying, assessing, monitoring and reporting risks and internal control; as well as
taking proper actions to address the risks.
The Board has received assurance from the Managing Director and Head of Finance & Administration that the
Group’s risk management and internal control systems have operated adequately during the year under review,
in all material aspects. The assurance has been given based on the internal audit function, management letters
provided by external auditors, reviews performed by management and various Board Committees as well as
reliance on confirmations by Management.
However, it should be noted that such system, by its nature, manages the Group’s key areas of risk within
acceptable risk profile rather than eliminates the risk of failure of achieving the Group’s objectives and therefore
can provide only reasonable and not absolute assurance against material misstatement, loss or fraud.
The Board is committed and will continue to take measures to strengthen the risk management and internal
control environment of the Group based on the Statement on Risk Management and Internal Control: Guidelines
for Directors of Listed Issuers. The Board with the assistance of Management conducts regular review of the
current systems in the Company, including the assurance process to strengthen the internal controls and risk
management in the Company.
Key Risk Management and Internal Control Processes
1.
Risk Management
•
•
•
•
•
•
Risk management is firmly embedded in the Group’s culture, processes and structure of the Company.
Enterprise Risk Management Framework (“the ERMF”) was established to inculcate the discipline
to manage risks in a formalized and comprehensive manner; where structured risk management
process on event identification, risk assessment, risk response, control activities, monitoring and
reporting are defined to ensure standardized approach being adopted across the Group on risk
management.
The Board is assisted by the Group Risk Management Committee (“the GRMC”) to oversee the
overall risk management of the Group.
The Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Senior Management of the
companies under the Group assist the GRMC in managing the specific risks under each company.
During the monthly management meetings attended by the Group Managing Director, Senior
Management, CEO and COO of the companies under the Group, risks related to strategy, operational,
financial and external environment are discussed and dealt with action plans.
Significant risks affecting the achievement of the Group’s objectives which are discussed in the
monthly management meetings are reported to the Board. The risks for financial year 2015 were as
follow:
- MPI Generali Insurans Berhad (“MPI Generali”), our major subsidiary’s insurance business is
operating in a highly regulated environment. Its continuity is subject to the company maintaining
its licence and complying with all regulatory requirements;
- MPI Generali’s ability to compete effectively in the general insurance industry depends on its
distribution channels;
CONTROL (cont’d)
-
-
-
2.
Independent Assurance Mechanism
•
•
•
•
•
3.
The Group is dependent on its key management and key employees for its growth and
sustainability;
The return from our investment in properties is dependent on the performance of the Malaysian
property market and our joint venture partners; and
Our investment properties could be subjected to compulsory acquisition.
The Group has a Group Internal Audit Department (“GIAD”) which carries out its functions
independently and provides the Audit Committee and the Board with the assurance on the adequacy
and integrity of the system of internal controls.
Risk-based internal audits are carried out by the GIAD focusing on key risk areas. It provides a
systematic and disciplined approach to evaluate and improve the effectiveness of the Group’s risk
management, internal control and governance processes.
The findings of the internal audits are discussed with Management and affirmative action agreed
in response to the audit recommendations are duly documented in the audit report and tabled at
the Audit Committee meetings. Follow ups will be carried out by GIAD should there be unresolved
findings and the status of actions taken by Management will be reported to the Audit Committee.
The Audit Committee reviews and approves the Annual Internal Audit Plan. It also reviews the internal
audit function and quality of internal audits.
In addition to this internal mechanism, the Audit Committee also reviews the detailed audit reports
and management letter from the external auditors.
Other Key Elements of Internal Control Systems
•
•
•
•
•
•
•
•
The Group has clear and formally defined approving authority limits and authorization procedures,
which is the primary instrument that governs and manages the business decision making process
within the Group. It also ensures that a system of internal control and checks and balances are
incorporated therein.
An annual budget is reviewed and approved by the Board. The actual performance is assessed
against the approved budget where explanations, clarifications and corrective actions taken are
regularly reported by the Management for significant variances to the Board. The Board also approves
any changes or amendments to the Group’s policies.
Management has introduced well-established standard operating procedures that cover the key
aspects of the Group’s various business processes. The procedures are subject to regular reviews
to cater for process changes, changing risks or further improvements.
Aside from the standard operating procedures, changes in internal control procedures are also
communicated via circulars and internal memos. Such circulars and memos are properly authorised
by the relevant members of senior management.
Monthly meetings led by the Group Managing Director and attended by Management, are held to
discuss the various aspects of the business, financial and operational performance of the Group. Key
matters affecting the Group are escalated to the Board.
The Board holds regular discussions with the Audit Committee and Management and considers
their reports on matters relating to internal controls and deliberates on their recommendations for
implementation.
The Group places much emphasis on human capital management and talent management with the
objectives of ensuring staff of all levels are adequately trained and competent to carry out their duties
and responsibilities towards achieving the Group’s objectives.
The Management team undertakes site visits to the operating units and communicates with various
levels of staff to gauge the effectiveness of the strategies discussed and implemented as well as
understand their problems and concerns with regard to daily operations. This is to ensure that a
transparent and open channel of communication is maintained and to enable prompt corrective
actions taken for any deficiencies noted.
39
40
CONTROL (cont’d)
•
The Group has in place a Whistle Blowing Policy that is approved by the Board. The policy outlines
the Group’s commitment towards enabling the employees to raise concerns in a responsible manner
regarding any wrong doings or malpractices without being subject to victimization or discriminatory
treatment, and to have such concerns properly investigated. All the disclosures made under the
Policy will be handled with strict confidence. The Policy promotes a culture of honesty, openness and
transparency within the Group.
Board Assessment
Taking into consideration the assurance from the Managing Director and Head of Finance & Administration and
input from the relevant assurance providers, the Board is of the view that the Group’s risk management and
internal control systems to safeguard shareholders’ investments and Group’s assets are operating adequately
and effectively in all material aspects, during the year under review. There will be continual focus on measures
to protect and enhance shareholder value and business sustainability.
Review of this Statement
As required by Para 15.23 of the Main Market Listing Requirements, the external auditors have reviewed
the Statement on Risk Management and Internal Control. This review was performed in accordance with
Recommended Practice Guide (“RPG”) 5 issued by the Malaysian Institute of Accountants (“MIA”). Based
on the review, the external auditors have reported to the Board that nothing has come to their attention that
causes them to believe that the statement is inconsistent with their understanding of the processes adopted by
the Board in reviewing the adequacy and integrity of the risk management and internal control system within
the Group.
RPG 5 does not require the external auditors to consider whether the Statement on Risk Management and
Internal Control covers all the risks and controls, or to form an opinion on the adequacy and effectiveness of
the Group’s risk management and internal control system including the assessment and opinion by the Board
and Management thereon.
This Statement is made in accordance to the resolution of the Board dated 31 March 2016.
41
directors’
report and audited
financial statementS
42 - 45 Directors’ Report
46 Statement by Directors
46 Statutory Declaration
47 - 48 Independent Auditors’ Report
49 - 50 Statements of Comprehensive Income
51 - 52 Statements of Financial Position
53 - 54 Statements of Changes in Equity
55 - 57 Statements of Cash Flows
58 - 152 Notes to the Financial Statements
42
Directors’ report
The Directors have pleasure in presenting their report together with the audited financial statements of the
Group and of the Company for the financial year ended 31 December 2015.
Principal activities
The principal activities of the Group consist of:
-
-
-
-
-
investment holding and trading;
operation of general insurance business;
provision of leasing, hire purchase and general loan financing services;
operation of hotels; and
property development and property investment
The principal activities of the Company are that of investment holding and provision of management services.
There have been no significant changes in the nature of the principal activities during the financial year.
Results
Group RM’000 Company
RM’000
Profit for the year
86,554
150
Attributable to:
Owners of the Company
64,566
21,988
86,554
There were no material transfers to or from reserves or provisions during the financial year other than as
disclosed in the financial statements.
In the opinion of the Directors, the results of the operations of the Group and of the Company during the
financial year were not substantially affected by any item, transaction or event of a material and unusual nature
other than the disposal of 49% shareholding in the insurance subsidiary as disclosed in Note 31 to the financial
statements.
Dividend
No dividend has been paid or declared by the Company since the end of the previous financial year. The
Directors do not recommend the payment of any dividend in respect of the current financial year.
Directors’ report (cont’d)
43
Directors
The Directors of the Company in office since the date of the last report and at the date of this report are:
Ms Ivevei Upatkoon
Mr Kuah Hun Liang
Mr Ng Kok Cheang (resigned on 19 August 2015)
Directors’ benefits
Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to
which the Company was a party, whereby the Directors might 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 included in the aggregate amount of emoluments received or due and receivable by the
Directors as shown in Note 6(b) to the financial statements or the fixed salary of a full-time employee of the
Company) by reason of a contract made by the Company or a related corporation with any 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, except as disclosed in Note 30 to the financial statements.
Directors’ interests
According to the register of Directors’ shareholdings, the interests of Directors in office at the end of the
financial year in shares in the Company and its related corporations during the financial year were as follows:
N
umber of ordinary shares of RM1.00 each
As at As at
1.1.2015 Acquired Disposed 31.12.2015
Shares in the Company
Direct Interest:
101,100 Ms Ivevei Upatkoon
156,200 Dato’ Lim Tiong Chin
508,000 Mr Kuah Hun Liang
241,100 Indirect/Deemed Interest:
261,921,093 (a) 4,160,000 (c) -
-
-
-
-
4,780,000 -
-
-
-
101,100
156,200
508,000
241,100
- 261,921,093 (b)
- 8,940,000 (d)
44
Directors’ interests (cont’d)
Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings
in Casi Management Sdn. Bhd. and Pinjaya Sdn. Bhd. and indirect interest held through his daughters,
Ivevei Upatkoon and Maythini Upatkoon.
(a)
(b)
Tan Sri Dato’ Surin Upatkoon by virtue of his interest of not less than 15% in the voting shares in MPHB
Capital Berhad (“MPHB Capital”), is deemed to have an indirect interest in the shares of all subsidiaries
of MPHB Capital to the extent of MPHB Capital’s interest in these subsidiaries.
Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings of
more than 15% in Keetinsons Sendirian Berhad and T.C. Holdings Sendirian Berhad.
(c)
(d)
Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings of
more than 15% in Cypress Holdings Limited and Pinjaya Sdn. Bhd. and indirect interest held through his
daughters, Ivevei Upatkoon and Maythini Upatkoon.
Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings
of more than 15% in Keetinsons Sendirian Berhad, T.C. Holdings Sendirian Berhad and Trade Key
Investments Limited.
Other statutory information
(a) Before the statements of comprehensive income and statements of financial position of the Group and of
the Company were made out, the Directors took reasonable steps:
(i) to ascertain that proper action had been taken in relation to the writing off of bad debts and the
making of provision for doubtful debts and satisfied themselves that all known bad debts had been
written off and that adequate provision had been made for doubtful debts; and
(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting
records in the ordinary course of business had been written down to an amount which they might be
expected so to realise.
(b) At the date of this report, the Directors are not aware of any circumstances which would render:
(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial
statements of the Group and of the Company inadequate to any substantial extent; and
(ii) the values attributed to the current assets in the financial statements of the Group and of the Company
misleading.
(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which
would render adherence to the existing method of valuation of assets or liabilities of the Group and of the
Company misleading or inappropriate.
(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this
report or financial statements of the Group and of the Company which would render any amounts stated
in the financial statements misleading.
Other statutory information (cont’d)
(e) As at the date of this report, there does not exist:
(i) any charge on the assets of the Group or of the Company which has arisen since the end of the
financial year which secures the liabilities of any other person; or
(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial
year.
(f) In the opinion of the Directors:
(i) 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 will or may affect the ability of the
Group or of the Company to meet their obligations when they fall due. For the purpose of paragraphs
(e) (ii) and (f) (i), contingent and other liabilities do not include liabilities arising from contracts of
insurance underwritten in the ordinary course of business of the Group’s insurance subsidiary; and
(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the
end of the financial year and the date of this report which is likely to affect substantially the results of
the operations of the Group or of the Company for the financial year in which this report is made.
(g) Before the statements of financial position and statements of comprehensive income of the Group and
the Company were made out, the Directors took reasonable steps to ascertain that there was adequate
provision for insurance liabilities in respect of the insurance subsidiary in accordance with the valuation
methods specified in the Risk-Based Capital Framework for insurers issued by Bank Negara Malaysia.
Significant events during the financial year
Significant events during the financial year are disclosed in Note 31 to the financial statements.
Auditors
The auditors, Ernst & Young, have expressed their willingness to continue in office.
Signed on behalf of the Board in accordance with a resolution of the Directors dated 31 March 2016.
Tan Sri Dato’ Surin UpatkoonTan Sri Dato’ Dr Yahya bin Awang
45
46
Statement by directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Dato’ Surin Upatkoon and Tan Sri Dato’ Dr Yahya bin Awang, being two of the Directors of MPHB
Capital Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements set
out on pages 49 to 152 are drawn up in accordance with Malaysian Financial Reporting Standards, International
Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia as to give a true
and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their
financial performance and cash flows for the year then ended.
The information set out in Note 38 on page 152 to the financial statements have been prepared in accordance
with the Guidance on Special Matter 1, Determination of Realised and Unrealised Profits or Losses in the
Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the
Malaysian Institute of Accountants and directive of Bursa Malaysia Securities Berhad.
Signed on behalf of the Board in accordance with a resolution of the Directors dated 31 March 2016.
Tan Sri Dato’ Surin UpatkoonTan Sri Dato’ Dr Yahya bin Awang
Statutory declaration
Pursuant to Section 169(16) of the Companies Act, 1965
I, Tan Sri Dato’ Surin Upatkoon, being the Director primarily responsible for the financial management of MPHB
Capital Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on
pages 49 to 152 are in my opinion correct, and I make this solemn declaration conscientiously believing the
same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.
Subscribed and solemnly declared by the
abovenamed Tan Sri Dato’ Surin Upatkoon
at Kuala Lumpur in the Federal Territory
on 31 March 2016.Tan Sri Dato’ Surin Upatkoon
Before me,
M. SIVANASON (Licence No. W590)
Commissioner for Oaths
Independent auditors’ report
to the members of MPHB Capital Berhad (Incorporated in Malaysia)
Report on the financial statements
We have audited the financial statements of MPHB Capital Berhad, which comprise the statements of financial
position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive
income, statements of changes in equity and statements of cash flow of the Group and of the Company for the
year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on
pages 49 to 152.
Directors’ responsibility for the financial statements
The directors of the Company are responsible for the preparation of financial statements so as to give a true
and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting
Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for
such internal control as the directors determine is necessary to enable the preparation of financial statements
that are free from material misstatement, whether due to fraud or error.
Auditors’ responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our
audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply
with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial statements. The procedures selected depend on our judgement, including the assessment of
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, we consider internal control relevant to the Company’s preparation of the financial statements
that give a true and fair view in order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An
audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial
statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the
Company as of 31 December 2015 and of their financial performance and cash flows for the year then ended
in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and
the requirements of the Companies Act, 1965 in Malaysia.
47
48
Independent auditors’ report (cont’d)
to the members of MPHB Capital Berhad (Incorporated in Malaysia)
Report on other legal and regulatory requirements
In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:
(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the
Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.
(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the
financial statements of the Company 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.
(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification
and did not include any comment required to be made under Section 174(3) of the Act.
Other reporting responsibilities
The supplementary information set out in Note 38 is disclosed to meet the requirement of Bursa Malaysia
Securities Berhad. The directors are responsible for the preparation of the supplementary information in
accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses
in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued
by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities
Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with
the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.
Other matters
This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the
Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other
person for the content of this report.
Ernst & YoungYeo Beng Yean
AF: 0039
No. 3013/10/16(J)
Chartered AccountantsChartered Accountant
Kuala Lumpur, Malaysia
31 March 2016
Statements of comprehensive income
49
For the year ended 31 December 2015
Note
Revenue
Cost of sales
Group
2015 2014 RM’000 RM’000 Company
2015 2014
RM’000 RM’000
3
4
380,787 (235,042)
370,078 (243,261)
43,149 -
198,787
-
Gross profit
Other income
5
Administrative expenses
Other expenses
145,745 82,625 (62,430)
(57,292)
126,817 285,710 (55,594)
(75,299)
43,149 1,714 (10,518)
(33,032)
198,787
2,804
(7,578)
(10,068)
Operating profit
6
Finance costs
7
Share of results of an associate
108,648 (2,441)
(24)
281,634 (4,137)
(11)
1,313 (1,118)
-
183,945
(4,768)
-
Profit before tax Income tax expense
8
106,183 (19,629)
277,486 (33,833)
195 (45)
179,177
(72)
Profit for the year 86,554 243,653 150 179,105
Other comprehensive loss
Items that are or may be
reclassified subsequently
to profit or loss
Fair value reserves
Net gain/(loss) arising
during the year
Net realised gains transferred to
profit or loss
685 (2,321)
-
-
(2,697)
(5,394)
-
-
Tax effects (2,012)
466 (7,715)
2,589 -
-
-
Total other comprehensive loss
for the year
(1,546)
(5,126)
-
-
Total comprehensive income
for the year 85,008 238,527 150 179,105
50
Statements of comprehensive income (cont’d)
Note
Group
2015 2014
RM’000 RM’000
Profit attributable to:
64,566 21,988 245,420
(1,767)
86,554 243,653
Total comprehensive income attributable to:
63,959 240,294
21,049 (1,767)
85,008 238,527
Earnings per share attributable to owners
of the Company (sen per share) Basic, for profit for the year
9
9.0 34.3
The accompanying notes form an integral part of the financial statements.
Statements of financial position
51
as at 31 December 2015
Note
Assets
Non-current assets
Investment in subsidiaries Investment in an associate
Investment securities Intangible assets
Deferred tax assets
Group
2015 2014 RM’000 RM’000 Company
2015 2014
RM’000 RM’000
10
81,570 84,266 1,104 1,459
11
832,125 748,661 -
12
-
-
1,231,034 1,197,486
13
515 539 -
14
396,964 327,656 -
15
34,859 43,161 -
25
1,561 1,300 -
-
1,347,594 1,205,583 1,232,138 1,198,945
269 289,783 434,278 720 409,252 532,180 231 341,097 443,946 5,689 113,900 481,714 -
111,608 -
58 5,045 20,542 157,269
67,208
3,227
1,666,482 1,386,577 137,253 227,704
Total assets
3,014,076 2,592,160 1,369,391 1,426,649
Current assets
Inventories
16
Receivables
17
Reinsurance assets
18
Tax recoverable
Investment securities 14
Cash and bank balances
19
52
Statements of financial position (cont’d)
as at 31 December 2015
Note
Group
2015 2014 RM’000 RM’000 Company
2015 2014
RM’000 RM’000
Equity and liabilities
Equity attributable to owners
of the Company
Share capital
20
715,000 715,000 715,000 715,000
Share premium
296,091 296,091 296,091 296,091
Other reserves
21
42,104 42,711 -
Merger deficit
22
(28,464)
(28,464)
-
Retained profits
23
557,744 293,501 216,957 216,807
34
1,582,475 198,766 1,318,839 13,620 1,228,048 -
1,227,898
-
Total equity
1,781,241 1,332,459 1,228,048 1,227,898
4,997 11,625 4,150 26,848 12,908 -
-
-
-
-
20,772 39,756 -
-
Current liabilities
Payables
26
Insurance contract liabilities 18
Borrowings
24
Tax payable
253,224 929,881 21,851 7,107 276,883 897,733 36,595 8,734 141,343 -
-
-
198,730
21
1,212,063 1,219,945 141,343 198,751
Total liabilities
1,232,835 1,259,701 141,343 198,751
Total equity and liabilities
3,014,076 2,592,160 1,369,391 1,426,649
Non-current liabilities
Borrowings
Deferred tax liabilities
Derivative financial instruments
24
25
31
Statements of changes in equity
53
Attributable to owners of the Company
Non-distributable Distributable Share Share Other Merger Retained Non- capital premium reserves deficit profits controlling
(Note 20) (Note 21) (Note 22) (Note 23) Total interests Group
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At 1 January 2014
Acquisition of
non-controlling
interests
Other comprehensive
loss for the year
Profit for the year
Total comprehensive
income for the year 715,000 296,091 47,837 (28,464)
-
48,081 1,078,545 -
-
Total
equity
RM’000
15,389 1,093,934
-
-
-
(2)
(2)
-
-
-
-
(5,126)
-
-
- (5,126)
- 245,420 245,420 -
(5,126)
(1,767) 243,653
-
-
(5,126)
- 245,420 240,294 (1,767) 238,527
At 31 December 2014 715,000 296,091 42,711 (28,464) 293,501 1,318,839 13,620 1,332,459
At 1 January 2015
42,711 (28,464) 293,501 1,318,839 13,620 1,332,459
715,000 296,091 Other comprehensive
loss for the year
Profit for the year
Total comprehensive
income for the year -
-
-
-
(607)
-
-
-
-
64,566 (607)
64,566 (939)
21,988 (1,546)
86,554
-
-
(607)
-
64,566 63,959 21,049 85,008
Arising from increase
in equity interests in
subsidiaries
-
-
-
-
15,467 15,467 (15,467)
-
Arising from partial
disposal of equity
interests
in a subsidiary
(Note 31)
-
-
-
- 184,210 184,210 At 31 December 2015 715,000 296,091 179,564 363,774
42,104 (28,464) 557,744 1,582,475 198,766 1,781,241
54
Statements of changes in equity (cont’d)
Attributable to owners of the Company
Non
distributable Distributable
Share Share Retained
capital premium profits
(Note 20) (Note 23) Company
RM’000 RM’000 RM’000 At 1 January 2014
715,000 296,091 37,702 Total comprehensive income for the year
-
-
179,105 At 31 December 2014
715,000 296,091 216,807 At 1 January 2015
715,000 296,091 216,807 Total
RM’000
1,048,793
179,105
1,227,898
1,227,898
Total comprehensive income for the year
-
-
150 150
At 31 December 2015
715,000 296,091 216,957 1,228,048
Statements of cash flows
55
Operating activities
Group
2015
2014
RM’000
RM’000
Profit before tax
106,183 277,486
Adjustments for:
Depreciation of property, plant and equipment
5,964 6,005
Depreciation of investment properties
1,770 1,770
Interest expense
2,441 4,137
Amortisation of premiums
95 7
Amortisation of intangible assets 816 616
Impairment loss on AFS financial assets
869 130
Bad debts written off
730 649
Property, plant and equipment written off
2
4
Allowance for impairment of receivables 4,731 6,311
Write back of allowance for impairment for loans and advances
(20)
(23)
Write back of allowance for impairment of other receivables
(10,134)
24 11
Gain on disposal of:
- property, plant and equipment
(4)
(56)
- investment properties
(2,497)
(437)
- asset held for sale
-
(195,862)
Realised (gain)/loss on:
- AFS financial assets
(2,697)
(5,394)
- financial assets at FVTPL
(2,347)
113
Reversal of impairment on investment properties
(13,187)
Interest income
(38,537)
(33,012)
Dividend income on quoted shares and unit trusts
(6,033)
(4,498)
(Gain)/loss arising from fair value change in financial assets at FVTPL, net
(443)
218
Operating cash flows before working capital changes
47,726 58,175
Changes in working capital:
Inventories
(38)
(32)
Receivables
(19,072)
(112,664)
Reinsurance assets
9,668 (32,418)
Insurance contract liabilities 32,148 81,529
Payables
(22,016)
(34,977)
Cash flows generated from/(used in) operations
Income tax paid
48,416 (17,365)
(40,387)
(23,791)
Net cash flows generated from/(used in) operating activities
31,051 (64,178)
56
Statements of cash flows (cont’d)
Group
2015
2014
RM’000
RM’000
Investing activities
Proceeds from disposals of:
5
280
7,050 1,209
-
226,057
- investment securities 345,246 238,075
Redemption of fixed income securities
15,399 13,523
Purchase of:
- intangible assets
(1,717)
(893)
(3,271)
(3,175)
(5,250)
(7,152)
- investment securities (722,794)
(230,293)
Net cash flows arising from partial disposal of equity interests in
a subsidiary (Note 31)
374,845 Proceeds from a derivative financial instrument
4,150 Acquisition of non-controlling interests
-
(2)
Net dividend received from quoted shares and unit trusts
6,033 4,498
Interest received
38,537 25,868
Interest paid
(2,223)
(3,597)
Net cash flows generated from investing activities
56,010 264,398
Financing activities
Net repayment of borrowings
(36,595)
Net movement in fixed deposits with maturity date of
more than 3 months
(10)
(29,928)
Net cash flows used in financing activities
(36,605)
(29,937)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
50,456 481,418 170,283
311,135
Cash and cash equivalents at end of year (Note 19)
531,874 481,418
(9)
Statements of cash flows (cont’d)
57
Company
2015
2014
RM’000
RM’000
Profit before tax
195 Adjustments for:
414 Interest expense
1,118 Dividend income
(40,385)
Interest income
(1,381)
Realised (gain)/loss on financial assets at FVTPL
(24)
(Gain)/Loss arising from fair value change in financial assets
at FVTPL
(309)
Impairment on investment in subsidiaries
27,252 Gain on disposal of property, plant and equipment
-
179,177
476
4,768
(195,043)
(2,769)
41
213
4,647
(35)
Operating cash flows before working capital changes
Changes in working capital:
Receivables
Payables
Inter-company indebtedness
(13,120)
(8,525)
409 1,389 (74,324)
193
(41,888)
(78,709)
Cash flows used in operations
Tax paid
(85,646)
(124)
(128,929)
(136)
Net cash flows used in operating activities
(85,770)
(129,065)
Investing activities
Proceeds from disposals of:
-
- investment securities 65,000 Purchase of:
- investment in subsidiaries
-
(59)
- investment securities (2,504)
Dividends received
40,385 Interest received
1,381 Interest expense
(1,118)
59
80,000
(2)
(845)
(147,462)
195,043
2,761
(4,768)
Net cash flows generated from investing activities
103,085 Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of year
17,315 3,227 (4,279)
7,506
Cash and cash equivalents at end of year (Note 19)
20,542 3,227
124,786
58
Notes to the financial statements
31 December 2015
1.
Corporate information
The Company was incorporated on 17 July 2012 as a private limited company under the name of MPHB
Capital Sdn. Bhd.. The Company was converted into a public limited company and assume its present
name on 23 July 2012. On 28 June 2013, the Company’s entire issued and paid-up share capital was
listed on the Main Market of Bursa Malaysia Securities Berhad.
The principal activities of the Company are that of investment holding and provision of management
services. The principal activities of the subsidiaries are as disclosed in Note 37. There have been no
significant changes in the nature of the principal activities during the financial year.
The registered office and the principal place of business of the Company is located at 39th Floor, Menara
Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur.
These financial statements were authorised for issue by the Board of Directors in accordance with a
resolution of the Directors on 31 March 2016.
2.
Significant accounting policies
2.1 Basis of preparation
These financial statements of the Group and the Company have been prepared in accordance with
Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards
(“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.
These financial statements have also been prepared on a historical cost basis, except for those
financial instruments which have been measured at their fair values and insurance liabilities which
have been measured in accordance with the valuation methods specified in the Risk-Based Capital
Framework (“RBC Framework”) for insurers issued by Bank Negara Malaysia (“the Framework”).
The accounting policies set out in Note 2.4 have been applied in preparing the financial statements
of the Group and the Company for the financial year ended 31 December 2015.
The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the
nearest thousand (RM’000) except when otherwise indicated.
2.2 Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year except as
follows:
On 1 January 2015, the Group and the Company adopted the following new and amendments to
MFRSs.
Effective for
periods
beginning on
or after
Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions Annual Improvements to MFRSs 2010-2012 Cycle
Annual Improvements to MFRSs 2011-2013 Cycle
1 July 2014
1 July 2014
1 July 2014
The adoption of the new and amendments to MFRSs above did not have any material impact on the
financial statements of the Group and the Company in the current financial year.
Notes to the financial statements (cont’d)
31 December 2015
2.
Summary of significant accounting policies (cont’d)
2.3 Standards issued but not yet effective
The standards that are issued but not yet effective up to the date of issuance of the Group’s and the
Company’s financial statements are disclosed below. The Group and the Company intend to adopt
these standards, if applicable, when they become effective.
Effective for
periods
beginning on
or after
Annual Improvements MFRSs 2012-2014 Cycle
1 January 2016
Amendments to MFRS 116 and MFRS 138: Clarification of
Acceptable Methods of Depreciation and Amortisation1 January 2016
Amendments to MFRS 11: Accounting for Acquisitions of
interests in Joint Operations1 January 2016
Amendments to MFRS 127: Equity Method in Separate
Financial Statements1 January 2016
Amendments to MFRS 101: Disclosure Initiative
1 January 2016
Amendments to MFRS 116 and MFRS 141 : Agriculture : 1 January 2016
Bearer Plants
Amendments to MFRS 10, MFRS 12 and MFRS 128 : Investment
Entities: Applying the Consolidation Exception1 January 2016
MFRS 14: Regulatory Deferral Accounts1 January 2016
MFRS 15: Revenue from Contracts with Customers1 January 2018
MFRS 9: Financial Instruments1 January 2018
Amendments to MFRS 10 and MFRS 128: Sale or contribution
of Assets between an Investor and its Associate or Joint Venture
Deferred
The Group and the Company plan to adopt the above pronouncements when they become effective
in the respective financial periods. These pronouncements are expected to have no material impact
to the financial statements of the Group and the Company upon their initial application except as
described below:
MFRS 15 Revenue from Contracts with Customers
MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with
customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS
118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes
effective.
The core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer
of promised goods or services to customers in an amount that reflects the consideration to which the
entity expects to be entitled in exchange for those goods or services.
Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e
when “control” of the goods or services underlying the particular performance obligation is transferred
to the customer.
MFRS 15 is effective for annual periods beginning on or after 1 January 2018 with either a full or
modified retrospective application and early adoption is permitted.
59
60
31 December 2015
2.
2.3 Standards issued but not yet effective (cont’d)
MFRS 9 Financial Instruments
In November 2014, MASB issued the final version of MFRS 9 Financial Instruments which reflects
all phases of the financial instruments project and replaces MFRS 139 Financial Instruments:
Recognition and Measurement and all previous versions of MFRS 9. MFRS 9 is effective for annual
periods beginning on or after 1 January 2018, with early application permitted. Retrospective
application is required, but comparative information is not compulsory.
The standard introduces new requirements for classification and measurement of financial assets
and liabilities, impairment of financial assets and hedge accounting.
MFRS 9 Financial instruments : Classification and measurement
MFRS 9 has three measurement categories - amortised cost, fair value through other comprehensive
income and fair value through profit or loss. The basis of classification depends on the entity’s
business model and the contractual cash flow characteristics of the financial asset. Investment in
equity instruments are required to be measured at fair value through profit or loss with the irrevocable
option at inception to present changes in fair value in other comprehensive income. All equity
instruments are measured at fair value. A debt instrument is measured at amortised cost only if the
entity is holding it to collect contractual cash flows and the cash flows represent principal and interest.
For financial liabilities, the standard retains most of the MFRS 139 requirements. These include
amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The
main change is that, in cases where the fair value option is taken for financial liabilities, the fair value
change due to an entity’s own credit risk is recorded in other comprehensive income rather than the
statement of profit or loss, unless this creates an accounting mismatch.
MFRS 9 Financial Instruments: Impairment
The impairment requirements apply to financial assets measured at amortised cost and fair value
through other comprehensive income and certain loan commitments as well as financial guarantee
contracts. At initial recognition, allowance for impairment is required for expected credit losses
(‘ECL’). In the event of a significant increase in credit risk, allowance for impairment is required for
ECL resulting from all possible default events over the expected life of the financial instrument. The
assessment of credit risk, as well as the estimation of ECL, are required to be unbiased, probabilityweighted and should incorporate all available information which is relevant to the assessment,
including information about past events, current conditions and reasonable and supportable forecasts
of future events and economic conditions at the reporting date.
The Group and the Company are in the process of assessing financial implication for adopting the
MFRS 15 and MFRS 9.
31 December 2015
2.
2.4 Summary of significant accounting policies
(a) Subsidiaries and basis of consolidation
(i) Subsidiaries
In the Company’s separate financial statements, investments in subsidiaries are stated at
cost less impairment losses.
(ii) Basis of consolidation
The consolidated financial statements comprise the financial statements of the Company
and its subsidiaries as at the reporting date. The financial statements of the subsidiaries
used in the preparation of the consolidated financial statements are prepared for the
same reporting date as the Company. Consistent accounting policies are applied to like
transactions and events in similar circumstances.
The Group controls an investee if and only if the Group has met all the following:
-
Power over the investee (i.e. existing rights that give it the current ability to direct the
relevant activities of the investee);
-
Exposure, or rights, to variable returns from its investment with the investee; and
-
The ability to use its power over the investee to affect its returns.
When the Group has less than a majority of the voting rights of an investee, the Group
considers the following in assessing whether or not the Group’s voting rights in an investee
are sufficient to give it power over the investee:
-
The size of the Group’s holding of voting rights relative to the size and dispersion of
holdings of the other vote holders;
-
Potential voting rights held by the Group, other vote holders or other parties;
-
Rights arising from other contractual arrangements; and
-
Any additional facts and circumstances that indicate that the Company has, or does
not have, the current ability to direct the relevant activities at the time that decisions
need to be made, including voting patterns at previous shareholders’ meetings.
All intra-group balances, income and expenses and unrealised gains and losses resulting
from intra-group transactions are eliminated in full.
Business combinations (other than involving entities under common control) are accounted
for using the acquisition method. Identifiable assets acquired and liabilities assumed in
a business combination are measured initially at their fair values at the acquisition date.
Acquisition-related costs are recognised as expenses in the periods in which the costs are
incurred and the services are received.
The cost of an acquisition is measured as the aggregate of the consideration transferred,
measured at acquisition date fair value and the amount of any non-controlling interests in
the acquiree.
61
62
31 December 2015
2.
2.4 Summary of significant accounting policies (cont’d)
(a) Subsidiaries and basis of consolidation (cont’d)
(ii) Basis of consolidation (cont’d)
Acquisition costs incurred are recognised in profit and loss and included in administrative
expenses. For each business combination, the Group elects whether it measures the noncontrolling interests in the acquiree either at fair value or at the proportionate share of the
acquiree’s identifiable net assets.
Any excess of the cost of business combination over the Group’s share in the net fair
value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is
recorded as goodwill. Any excess of the Group’s share in the net fair value of the acquired
subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business
combination is recognised as income in profit or loss on the date of acquisition.
Subsidiaries are consolidated from the date of acquisition, being the date on which the
Group obtains control, and continue to be consolidated until the date that such control
ceases.
Non-controlling interests represent the equity in subsidiaries not attributable, directly or
indirectly, to owners of the Company, and are presented separately in the statements of
comprehensive income and within equity in the statements of financial position, separately
from equity attributable to owners of the Company.
A change in the ownership interest of a subsidiary, without a loss of control, is accounted
for as an equity transaction. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the
subsidiaries.
(iii) Business combinations under common control
Business combination involving entities under common control are accounted for by
applying the pooling of interest method which involves the following:
-
The assets and liabilities of the combining entities are reflected at their carrying
amounts reported in the consolidated financial statements of the controlling holding
company.
-
No adjustments are made to reflect the fair values on the date of combination or
recognise any new assets or liabilities.
-
No additional goodwill is recognised as a result of the combination. Only existing
goodwill relating to either of the combining entities is recognised.
-
Any differences between the consideration paid/transferred and the equity ‘acquired’
is reflected within the equity as merger reserve.
The Group has elected to not restate financial information in the consolidated financial
statements for the periods prior to the combination of the entities under common control.
31 December 2015
2.
(a) Subsidiaries and basis of consolidation (cont’d)
(iv) Transactions with non-controlling interests
Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries
not held by the Group and are presented separately in profit or loss of the Group and
within equity in the statements of financial position, separately from parent shareholders’
equity. Transactions with non-controlling interests are accounted for using the entity
concept method, whereby, transactions with non-controlling interests are accounted for as
transactions with owners. On acquisition of non-controlling interests, the difference between
the consideration and carrying value of the share of the net assets acquired is recognised
directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly
in equity.
(b) Associate
An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant
influence. An associate is equity accounted for from the date the Group obtains significant
influence until the date the Group ceases to have significant influence over the associate.
The Group’s investment in an associate is accounted for using the equity method. Under the
equity method, the investment in an associate is measured in the statements of financial position
at cost plus post-acquisition changes in the Group’s share of net assets of the associate.
Goodwill relating to the associate is included in the carrying amount of the investment. Any
excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities
and contingent liabilities over the cost of the investment is excluded from the carrying amount of
the investment and is instead included as income in the determination of the Group’s share of
the associate’s profit or loss for the period in which the investment is acquired.
When the Group’s share of losses in an associate equals or exceeds its interest in the associate,
the Group does not recognise further losses, unless it has incurred obligations or made payments
on behalf of the associate. After application of the equity method, the Group determines whether it is necessary to
recognise an additional impairment loss on the Group’s investment in its associate. The Group
determines at each reporting date whether there is any objective evidence that the investment
in the associate is impaired. If this is the case, the Group calculates the amount of impairment
as the difference between the recoverable amount of the associate and its carrying value and
recognises the amount in profit or loss.
The financial statements of the associates are prepared as of the same reporting date as the
Company. Where necessary, adjustments are made to bring the accounting policies in line with
those of the Group.
In the Company’s separate financial statements, investments in the associate is stated at cost
less impairment losses. On disposal of such investments, the difference between net disposal
proceeds and their carrying amounts is included in profit or loss.
63
64
31 December 2015
2.
(c) Intangible assets
(i) Goodwill
Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at
cost less accumulated impairment losses.
For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition
date, to each of the Group’s cash-generating units that are expected to benefit from the
synergies of the combination.
The cash-generating unit to which goodwill has been allocated is tested for impairment
annually or whenever there is an indication that the cash-generating unit may be impaired,
by comparing the carrying amount of the cash-generating unit, including the allocated
goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable
amount of the cash-generating unit is less than the carrying amount, an impairment loss is
recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed
in subsequent periods.
Where goodwill forms part of a cash-generating unit and part of the operation within that
cash-generating unit is disposed off, the goodwill associated with the operation disposed
off is included in the carrying amount of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed off in this circumstance is measured based on
the relative fair values of the operations disposed off and the portion of the cash-generating
unit retained.
(ii) Other intangible assets
Other intangible assets comprise computer application software which were developed or
acquired to meet the unique requirements of a subsidiary.
Other intangible assets acquired separately are measured on initial recognition at cost.
Following initial recognition, intangible assets are carried at cost less accumulated
amortisation and any accumulated impairment losses. Internally generated intangible
assets are not capitalised and expenditure is reflected in the profit or loss in the period in
which the expenditure is incurred.
Other intangible assets with finite lives are amortised over the useful economic lives and
assessed for impairment whenever there is an indication that the intangible asset may be
impaired. The amortisation period and the amortisation method for an intangible asset with
a finite useful lives are reviewed at least once at each financial year-end. Changes in the
expected useful lives or the expected pattern of consumption of future economic benefits
embodied in the asset is accounted for by changing the amortisation period or method,
as appropriate, and are treated as changes in accounting estimates. The amortisation
expense on intangible assets with finite lives is recognised in profit or loss.
The acquisition cost of computer application software are amortised over their estimated
useful lives of five years.
65
31 December 2015
2.
(c) Intangible assets (cont’d)
(ii) Other intangible assets (cont’d)
Gains or losses arising from derecognition of an intangible asset are measured as the
difference between the net disposal proceeds and the carrying amount of the asset and are
recognised in profit or loss when the asset is derecognised.
(d) Property, plant and equipment
All items of property, plant and equipment are initially recorded at cost. The cost of an item of
property, plant and equipment is recognised as an asset if, and only if, it is probable that future
economic benefits associated with the item will flow to the Group and the Company and the cost
of the item can be measured reliably.
Subsequent to recognition, property, plant and equipment are measured at cost less accumulated
depreciation and accumulated impairment losses. When significant parts of property, plant and
equipment are required to be replaced in intervals, the Group and the Company recognise such
parts as individual assets with specific useful lives and depreciation, respectively. Likewise,
when a major inspection is performed, its cost is recognised in the carrying amount of the
property, plant and equipment as a replacement if the recognition criteria are satisfied. All other
repair and maintenance costs are recognised in profit or loss as incurred.
Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other
property, plant and equipment is computed on a straight-line basis over the estimated useful
lives of the assets at the annual rates as follows:
Freehold and leasehold buildings
Leasehold land Plant and equipment
Computer equipment
%
2.0 - 2.8
0.1 - 1.7
10.0 - 33.3
12.5 - 33.3
Work-in-progress are not depreciated as these assets are not yet available for use.
The carrying values of property, plant and equipment are reviewed for impairment when events
or changes in circumstances indicate that the carrying value may not be recoverable.
The residual value, useful life and depreciation method are reviewed at each financial year-end,
and adjusted prospectively, if any.
An item of property, plant and equipment is derecognised upon disposal or when no future
economic benefits are expected from its use or disposal. Any gain or loss on derecognition of
the asset is included in the profit or loss in the year the asset is derecognised.
66
31 December 2015
2.
(e) Investment properties
Investment properties are measured initially at cost, including transaction costs. Subsequent to
initial recognition, investment properties are stated at cost less accumulated depreciation and
any accumulated impairment losses.
The depreciation policy for investment properties are in accordance with the depreciation policy
for property, plant and equipment.
Investment properties are derecognised when either they have been disposed off or when
the investment property is permanently withdrawn from use and no future economic benefit
is expected from its use or disposal. Any gains or losses on the retirement or disposal of an
investment property are recognised in profit or loss in the year in which they arise.
Transfers are made to or from investment properties only when there is a change in use.
(f) Leases
(i) As lessee
Finance leases, which transfer to the Group substantially all the risks and rewards incidental to
ownership of the leased item, are capitalised at the inception of the lease at the fair value of the
leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct
costs are also added to the amount capitalised. Lease payments are apportioned between
the finance charges and reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges are charged to profit or loss.
Contingent rents, if any, are charged as expenses in the periods in which they are incurred.
Leased assets are depreciated over the estimated useful life of the asset. However, if there
is no reasonable certainty that the Group will obtain ownership by the end of the lease term,
the asset is depreciated over the shorter of the estimated useful life and the lease term.
Operating lease payments are recognised as an expense in profit or loss on a straight-line
basis over the lease term. The aggregate benefit of incentives provided by the lessor is
recognised as a reduction of rental expense over the lease term on a straight-line basis.
(ii) As lessor
Leases where the Group retains substantially all the risks and rewards of ownership of
the asset are classified as operating leases. Initial direct costs incurred in negotiating an
operating lease are added to the carrying amount of the leased asset and recognised over
the lease term on the same bases as rental income.
31 December 2015
2.
(g) Impairment of non-financial assets
The Group and the Company assess at each reporting date whether there is an indication
that an asset may be impaired. If any such indication exists, or when an annual impairment
assessment for an asset is required, the Group and the Company make an estimate of the
asset’s recoverable amount.
An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its
value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash flows (cash-generating units (“CGU”)).
In assessing value in use, the estimated future cash flows expected to be generated by the
asset are discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. Where the
carrying amount of an asset exceeds its recoverable amount, the asset is written down to its
recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are
allocated first to reduce the carrying amount of any goodwill allocated to those units or groups
of units and then, to reduce the carrying amount of the other assets in the unit or groups of units
on a pro-rata basis.
An impairment loss is recognised in profit or loss in the period in which it arises, unless the
asset is carried at a revalued amount, in which case the impairment loss is accounted for as a
revaluation decrease to the extent that the impairment loss does not exceed the amount held in
the asset revaluation reserve for the same asset.
An assessment is made at each reporting date as to whether there is any indication that previously
recognised impairment losses may no longer exist or may have decreased. A previously
recognised impairment loss is reversed only if there has been a change in the estimates used
to determine the asset’s recoverable amount since the last impairment loss was recognised.
If that is the case, the carrying amount of the asset is increased to its recoverable amount.
That increase cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised previously. Such reversal is recognised
in profit or loss unless the asset is measured at revalued amount, in which case the reversal is
treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent
period.
(h) Inventories
Inventories are stated at the lower of cost and net realisable value.
Cost is determined using the first-in-first-out basis. The cost of inventories comprises costs of
purchase.
Net realisable value is the estimated selling price in the ordinary course of business less the
estimated costs of completion and the estimated costs necessary to make the sale.
(i) Cash and cash equivalents
Cash and cash equivalents comprise cash at banks and on hand and demand deposits
which have a maturity period of three months or less. 67
68
31 December 2015
2.
(j) Borrowing costs
Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly
attributable to the acquisition, construction or production of that asset. Capitalisation of
borrowing costs commences when the activities to prepare the asset for its intended use or sale
are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are
capitalised until the assets are substantially completed for their intended use or sale.
All borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing
costs consist of interest and other costs that incurred in connection with the borrowings of funds.
(k) Income taxes
(i) Current tax
Current tax assets and liabilities are measured at the amount expected to be recovered
from or paid to the taxation authorities. The tax rates and tax laws used to compute the
amount are those that are enacted or substantively enacted by the reporting date.
Current taxes are recognised in profit or loss except to the extent that the tax relates to
items recognised outside profit or loss, either in other comprehensive income or directly in
equity.
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting
date between the tax bases of assets and liabilities and their carrying amounts for financial
reporting purposes.
Deferred tax liabilities are recognised for all temporary differences, except:
-
where the deferred tax liability arises from the initial recognition of goodwill or of an
asset or liability in a transaction that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor taxable profit or loss; and
-
in respect of taxable temporary differences associated with investments in subsidiaries,
associates and interests in joint ventures, where the timing of the reversal of the
temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
31 December 2015
2.
(k) Income taxes (cont’d)
(ii) Deferred tax (cont’d)
Deferred tax assets are recognised for all deductible temporary differences, unused tax
credits and unused tax losses, to the extent that it is probable that taxable profit will be
available against which the deductible temporary differences, and the carry forward of
unused tax credits and unused tax losses can be utilised except:
-
where the deferred tax asset relating to the deductible temporary difference arises
from the initial recognition of an asset or liability in a transaction that is not a business
combination and, at the time of the transaction, affects neither the accounting profit
nor taxable profit or loss; and
-
in respect of deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred tax assets are
recognised only to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which the
temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow all or
part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed
at each reporting date and are recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax assets to be utilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to
the year when the asset is realised or the liability is settled, based on tax rates and tax laws that
have been enacted or substantively enacted at the reporting date.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or
loss. Deferred tax items are recognised in correlation to the underlying transaction either in
other comprehensive income or directly in equity and deferred tax arising from a business
combination is adjusted against goodwill on acquisition.
Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to
set off current tax assets against current tax liabilities and the deferred taxes relate to the same
taxable entity and the same taxation authority.
(l) Employee benefits
(i) Short term benefits
Wages, salaries, bonuses and social security contributions are recognised as an expense
in the year in which the associated services are rendered by employees of the Group and
the Company. Short term accumulating compensated absences such as paid annual leave
are recognised when services are rendered by employees that increase their entitlement to
future compensated absences and short term non-accumulating compensated absences
such as sick leave are recognised when the absences occur.
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31 December 2015
2.
Significant accounting policies (cont’d)
(l) Employee benefits (cont’d)
(ii) Defined contribution plans
The companies in the Group make contributions to the Employee Provident Fund (“EPF”)
in Malaysia, a defined contribution pension scheme. Contributions to EPF are recognised
as an expense in the period in which the related service is performed.
(m) Revenue recognition
(i) Dividend income
Dividend from equity securities and distribution income are recognised when the Group’s
or the Company’s right to receive payment is established.
(ii) Interest income and investment income
Interest income and investment income are recognised using the effective interest method.
For the subsidiaries operating credit business, income on hire purchase and finance lease
transactions are computed on the ‘sum of digits’ method and interest income from housing,
mortgage and other loans is recognised on the reducing balance basis.
(iii) Rental income
Rental income is recognised on a straight-line basis over the lease terms.
(iv) Sale of goods
Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the
transfer of risks and rewards of ownership to the buyer. Revenue is not recognised to the
extent where there are significant uncertainties regarding recovery of the consideration
due, associated costs or the possible return of goods.
(v) Revenue from services
Revenue from services rendered is recognised net of service taxes and discounts as and
when the services are performed. The revenue from services include hotel services and
management fees.
(vi) Realised gains and losses on investments
Realised gains and losses recorded in profit or loss on investment include gains and losses
on financial assets and investment properties. Gains and losses on the sale of investments
are calculated as the difference between net sales proceeds and the carrying amount and
are recorded on occurrence of the sale transaction.
31 December 2015
2.
(n) Foreign currencies
(i) Functional and presentation currency
The individual financial statements of each entity in the Group are measured using the
currency of the primary economic environment in which the entity operates (“the functional
currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is
also the Group’s and the Company’s functional currency.
(ii) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of
the Company and its subsidiaries and are recorded on initial recognition in the functional
currencies at exchange rates approximating those ruling at the transaction dates. Monetary
assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the reporting date. Non-monetary items denominated in foreign currencies that
are measured at historical cost are translated using the exchange rates as at the dates of
the initial transactions. Non-monetary items denominated in foreign currencies measured
at fair value are translated using the exchange rates at the date when the fair value was
determined.
Exchange differences arising on the settlement of monetary items or on translating
monetary items at the reporting date are recognised in profit or loss.
(o) Financial assets
Financial assets are recognised in the statements of financial position when, and only when, the
Group and the Company become a party to the contractual provisions of the financial instrument.
When financial assets are recognised initially, they are measured at fair value, plus, in the case
of financial assets not at fair value through profit or loss, directly attributable transaction costs.
The Group and the Company determine the classification of their financial assets at initial
recognition, and the categories include financial assets at fair value through profit or loss, loans
and receivables and available-for-sale financial assets.
(i) Financial assets at fair value through profit or loss (“FVTPL”)
Financial assets are classified as financial assets at FVTPL if they are held for trading or are
designated as such upon initial recognition. Financial assets held for trading are derivatives
(including separated embedded derivatives) or financial assets acquired principally for the
purpose of selling in the near term.
Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Any
gains or losses arising from changes in fair value are recognised in profit or loss. Net gains
or net losses on financial assets at FVTPL do not include exchange differences, interest and
dividend income. Exchange differences, interest and dividend income on financial assets at
FVTPL are recognised separately in profit or loss as part of other losses or other income.
FVTPL could be presented as current or non-current. Financial assets that are held
primarily for trading purposes are presented as current whereas financial assets that are
not held primarily for trading purposes are presented as current or non-current based on
the settlement date. 71
72
31 December 2015
2.
(o) Financial assets (cont’d.)
(ii) Loans and receivables (“LAR”)
Financial assets with fixed or determinable payments that are not quoted in an active
market are classified as LAR.
Subsequent to initial recognition, LAR are measured at amortised cost using the effective
interest method, less impairment. Gains and losses are recognised in profit or loss when
the LAR are derecognised or impaired.
Effective interest rate is calculated by taking into account any premium or discount on
acquisition and includes transaction costs and fees that are integral part of the effective
interest rate.
LAR are classified as current assets, except for those having maturity dates later than 12
months after the reporting date which are classified as non-current.
(iii) Available-for-sale financial assets (“AFS”)
AFS are financial assets that are designated as AFS or are not classified in any of the two
preceding categories. AFS include equity investments and debt securities.
After initial recognition, AFS are measured at fair value. Any gains or losses from changes
in fair value of the financial assets are recognised in other comprehensive income, except
that impairment losses, foreign exchange gains and losses on monetary instruments and
interest calculated using the effective interest method are recognised in profit or loss. The
cumulative gain or loss previously recognised in other comprehensive income is reclassified
from equity to profit or loss as a reclassification adjustment when the financial asset is
derecognised. Interest income calculated using the effective interest method is recognised
in profit or loss. Dividends on an AFS equity instrument are recognised in profit or loss
when the Group’s and the Company’s right to receive payment is established.
Investments in equity instruments whose fair value cannot be reliably measured are
measured at cost less impairment loss. AFS are classified as non-current assets unless they are expected to be realised within 12
months after the reporting date.
(iv) Insurance receivables
Insurance receivables are recognised when due and measured at the fair value of the
consideration received and receivable.
If there is objective evidence that the insurance receivable is impaired, the Group reduces
the carrying amount of the insurance receivable accordingly and recognises that impairment
loss in profit or loss. The Group gathers the objective evidence that an insurance receivable
is impaired using the same process and method adopted for financial assets carried at
amortised cost.
31 December 2015
2.
(o) Financial assets (cont’d.)
A financial asset is derecognised when the contractual right to receive cash flows from the asset
has expired. On derecognition of a financial asset in its entirety, the difference between the
carrying amount and the sum of the consideration received and any cumulative gain or loss that
had been recognised in other comprehensive income is recognised in profit or loss.
Regular way purchases or sales are purchases or sales of financial assets that require
delivery of assets within the period generally established by regulation or convention in the
marketplace concerned. All regular way purchases and sales of financial assets are recognised
or derecognised on the trade date i.e., the date that the Group and the Company commit to
purchase or sell the asset. (p) Financial liabilities
Financial liabilities are classified according to the substance of the contractual arrangements
entered into and the definitions of a financial liability.
Financial liabilities, within the scope of MFRS 139, are recognised in the statements of financial
position when, and only when, the Group and the Company become a party to the contractual
provisions of the financial instrument. Financial liabilities are classified as either financial
liabilities at fair value through profit or loss or other financial liabilities.
(i) Financial liabilities at FVTPL
Financial liabilities at FVTPL include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at FVTPL.
Financial liabilities held for trading include derivatives entered into by the Group that do not
meet the hedge accounting criteria.
(ii) Other financial liabilities
Other financial liabilities are recognised initially at fair value plus directly attributable
transaction costs and subsequently measured at amortised cost using the effective interest
method.
The Group’s and the Company’s other financial liabilities include payables and borrowings.
Borrowings are recognised initially at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest method. Borrowings
are classified as current liabilities unless the Group has an unconditional right to defer
settlement of the liability for at least 12 months after the reporting date.
For other financial liabilities, gains and losses are recognised in profit or loss when the
liabilities are derecognised, and through the amortisation process.
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31 December 2015
2.
(p) Financial liabilities (cont’d)
A financial liability is derecognised when the obligation under the liability is extinguished. When
an existing financial liability is replaced by another from the same lender on substantially
different terms, or the terms of an existing liability are substantially modified, such an exchange
or modification is treated as a derecognition of the original liability and the recognition of a new
liability, and the difference in the respective carrying amounts is recognised in profit or loss.
(q) Impairment of financial assets
The Group and the Company assess at each reporting date whether there is any objective
evidence that a financial asset is impaired.
(i) Unquoted equity securities carried at cost
If there is objective evidence that an impairment loss on financial assets carried
at cost has been incurred, the amount of the loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash
flows discounted at the current market rate of return for a similar financial asset.
(ii) AFS financial assets
If an AFS financial assets are impaired, the difference between its cost (net of any principal
payment and amortisation) and its current fair value, less any impairment loss previously
recognised in profit or loss, is transferred from equity to profit or loss.
Reversals in respect of equity instruments classified as AFS are not recognised in the
income statement. Reversals of impairment losses on debt instruments classified as AFS
are reversed through profit or loss if the increase in the fair value of the instruments can
be objectively related to an event occurring after the impairment losses were recognised in
profit or loss.
(iii) Assets carried at amortised cost
To determine whether there is objective evidence that an impairment loss on financial assets
has been incurred, the Group and the Company consider factors such as the probability of
insolvency or significant financial difficulties of the debtor and default or significant delay in
payments. For certain categories of financial assets, such as trade receivables, assets that
are assessed not to be impaired individually are subsequently assessed for impairment on
a collective basis based on similar risk characteristics. Objective evidence of impairment
for a portfolio of receivables could include the Group’s and the Company’s past experience
of collecting payments, an increase in the number of delayed payments in the portfolio past
the average credit period and observable changes in national or local economic conditions
that correlate with default on receivables.
If any such evidence exists, the amount of impairment loss is measured as the difference
between the asset’s carrying amount and the present value of estimated future cash flows
discounted at the financial asset’s original effective interest rate. The impairment loss is
recognised in profit or loss.
31 December 2015
2.
(q) Impairment of financial assets (cont’d)
The carrying amount of the financial asset is reduced by the impairment loss directly for all
financial assets with the exception of trade receivables, where the carrying amount is reduced
through the use of an allowance account. When a trade receivable becomes uncollectible, it is
written off against the allowance account.
If in a subsequent period, the amount of the impairment loss decreases and the decrease can
be related objectively to an event occurring after the impairment was recognised, the previously
recognised impairment loss is reversed to the extent that the carrying amount of the asset does
not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit
or loss.
(r) Segment reporting
For management purposes, the Group is organised into operating segments based on their
products and services which are independently managed by the respective segment managers
responsible for the performance of the respective segments under their charge. The segment
managers report directly to the management of the Company who regularly review the segment
results in order to allocate resources to the segments and to assess the segment performance.
Additional disclosures on each of these segments are shown in Note 36, including the factors
used to identify the reportable segments and the measurement basis of segment information.
(s) Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group
and the Company after deducting all of its liabilities. Ordinary shares are equity instruments.
Ordinary shares are recorded at the proceeds received, net of directly attributable incremental
transaction costs.
Dividends on ordinary shares are recognised as a liability from equity in the period in which all
relevant approvals have been obtained.
(t) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as
a result of a past event, it is probable that an outflow of economic resources will be required to
settle the obligation and the amount of the obligation can be estimated reliably.
Provision for claims for the insurance segment is made for the estimated cost of all claims
together with related expenses less reinsurance recoveries, in respect of claims notified but not
settled at the reporting date. Provision is also made for the cost of claims together with related
expenses incurred but reported at reporting date, using a mathematical method of estimation.
Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
If it is no longer probable that an outflow of economic resources will be required to settle the
obligation, the provision is reversed. If the effect of the time value of money is material, provisions
are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to
the liability. When discounting is used, the increase in the provision due to the passage of time
is recognised as finance cost.
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31 December 2015
2.
(u) General insurance underwriting results
The general insurance underwriting results are determined for each class of business after taking
into account, inter alia, reinsurances, unearned premium, commissions and claims incurred.
(i) Gross premiums
Gross premiums are recognised in a financial period in respect of risks assumed during
that particular financial period.
(ii) Reinsurance premiums
Inwards facultative reinsurance premiums are recognised in the financial period in respect
of the facultative risks assumed during that particular financial period, as in the case of
direct policies, following the individual risks’ inception dates.
In respect of reinsurance premiums relating to proportional treaties, it is recognised on the
basis of periodic advices received from the cedants given that the periodic advices reflect
the individual underlying risks being incepted and reinsured at various inception dates of
these risks and contractually accounted for, as such to reinsurers under the terms of the
proportional treaties.
(iii) Premium liabilities
Premium liability is reported at the higher of the aggregate of the unearned premium reserve
(“UPR”) for all lines of business and the best estimate value of the insurer’s unexpired
risk reserves (“URR”) at the end of the financial year and the provision of risk margin for
adverse deviation (“PRAD”) calculated at 75% confidence level at MPI Generali Insurans
Berhad (formerly known as Multi-Purpose Insurans Bhd.) (the “insurance subsidiary”) level.
The best estimate value is a prospective estimate of the expected future payments arising
from future events insured under policies in force at the end of the financial year including
allowance for insurer’s expenses.
(a) URR
The URR is the prospective estimate of the expected future payments arising from
future events insured under policies in force as at the end of the financial year and
also includes allowance for expenses, including overheads and cost of reinsurance,
expected to be incurred during the unexpired period in administering these policies
and settling the relevant claims, and expected future premium refunds.
(b) UPR
The UPR represents the portion of net premiums less the related net acquisition costs
of insurance policies written that relate to the unexpired periods of the policies at the
end of the financial year.
31 December 2015
2.
(u) General insurance underwriting results (cont’d)
(iii) Premium liabilities (cont’d)
(b) UPR (cont’d)
In determining the UPR at reporting date, the methods used in calculation of actual
unearned premium are as follows:
-
25% method for marine and aviation cargo, and transit business.
-
1/24th method for all other classes of general business in respect of Malaysian
policies, with the following deduction rates, or actual commission incurred,
whichever is lower:
- Motor and bonds
10%
- Fire, engineering, aviation and marine hull
15%
- Medical
10 - 15%
- Other classes
20%
- 1/8th method for all other classes of overseas inward treaty business, with a
deduction of 20% for commission.
-
Non-annual policies are time-apportioned over the period of the risks.
(iv) Claim liabilities
Claim liabilities are recognised as the obligation to make future payments in relation to all
claims that have been incurred as at the end of the financial year. They are recognised in
respect of both direct insurance and inward reinsurance. The value is the best estimate
value of claim liability which includes provision for claims reported, claims incurred but
not enough reserved (“IBNER”), claims incurred but not reported (“IBNR”) and direct and
indirect claim-related expenses as well as PRAD at 75% confidence level calculated at
the insurance subsidiary level. These are based on an actuarial valuation by a qualified
actuary, using a mathematical method of estimation based on, among others, actual claims
development pattern.
(v) Acquisition costs
The costs of acquiring and renewing insurance policies, net of income derived from ceding
reinsurance premiums, are recognised as incurred and properly allocated to the periods in
which it is probable they give rise to income.
(v) Insurance contract liabilities
General insurance contract liabilities are recognised when contracts are entered into and
premiums are charged. These liabilities comprise outstanding claims provision and provision for
unearned premiums.
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31 December 2015
2.
(v) Insurance contract liabilities (cont’d)
Outstanding claims provision are based on the estimated ultimate cost of all claims incurred but
not settled at the reporting date, whether reported or not, together with related claims handling
costs and reduction for the expected value of salvage and other recoveries. Delays can be
experienced in the notification and settlement of certain types of claims, therefore, the ultimate
cost of these claims cannot be known with certainty at the reporting date. The liability is calculated
at the reporting date using a range of standard actuarial claim projection techniques based
on empirical data and current assumptions that may include a margin for adverse deviation.
The liability is not discounted for the time value of money. No provision for equalisation or
catastrophe reserves is recognised. The liabilities are derecognised when the contract expires,
is discharged or is cancelled.
The provision for unearned premiums represents premiums received for risks that have not yet
expired. Generally, the reserve is released over the term of the contract and is recognised as
premium income.
At each reporting date, the insurance subsidiary reviews its unexpired risks and a liability
adequacy test is performed to determine whether there is any overall excess of expected
claims and deferred acquisition costs over unearned premiums. This calculation uses current
estimates of future contractual cash flows (taking into consideration current loss ratios) after
taking into account of the investment return expected to arise on assets relating to the relevant
general insurance technical provisions. If these estimates show that the carrying amount of
the unearned premiums less related deferred acquisition costs is inadequate, the deficiency is
recognised in the income statement by setting up a provision for liability adequacy.
(w) Product classification
The insurance subsidiary issues contracts that transfer insurance risk only.
Financial risk is the risk of a possible future change in one or more of a specified interest rate,
financial instrument price, commodity price, foreign exchange rate, index of price or rate, credit
rating or credit index or other variable, provided in the case of a non-financial variable that the
variable is not specific to a party to the contract. Insurance risk is the risk other than financial
risk.
Insurance contracts are those contracts that transfer significant insurance risk. An insurance
contract is a contract under which the insurance subsidiary (the insurer) has accepted significant
insurance risk from another party (the policyholders) by agreeing to compensate the policyholders
if a specified uncertain future event (the insured event) adversely affects the policyholders. As a
general guideline, the insurance subsidiary determines whether it has significant insurance risk,
by comparing benefits paid with benefits payable if the insured event did not occur.
Once a contract has been classified as an insurance contract, it remains an insurance contract
for the remainder of its life-time, even if the insurance risk reduces significantly during this
period, unless all rights and obligations are extinguished or expire.
31 December 2015
2.
(w) Product classification (cont’d)
Investment contracts can, however, be reclassified as insurance contracts after inception if
insurance risk becomes significant.
Insurance and investment contracts are further classified as being either with or without
discretionary participation features (“DPF”). DPF is a contractual right to receive, as a supplement
to guaranteed benefits, additional benefits.
The insurance subsidiary does not have any investment contracts and the insurance contracts
issued do not contain any DPF.
(x) Reinsurance
The insurance subsidiary cedes insurance risk in the normal course of business for all of its
insurance businesses. Reinsurance assets represent balances due from reinsurance companies.
Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding
claims provision or settled claims associated with the reinsurer’s policies and are in accordance
with the related reinsurance contracts.
Ceded reinsurance arrangements do not relieve the insurance subsidiary from its obligations
to policyholders. Premiums and claims are presented on a gross basis for both ceded and
assumed reinsurance.
Reinsurance assets are reviewed for impairment at each reporting date or more frequently
when an indication of impairment arises during the reporting period. Impairment occurs when
there is objective evidence as a result of an event that occurred after initial recognition of the
reinsurance asset that the insurance subsidiary may not receive all outstanding amounts due
under the terms of the contract and the event has a reliably measurable impact on the amounts
that the insurance subsidiary will receive from the reinsurer. Impairment loss is recorded in profit
or loss.
Gains or losses on buying reinsurance are recognised in profit or loss immediately at the date
of purchase and are not amortised.
The insurance subsidiary also assumes reinsurance risk in the normal course of business for
general insurance contracts when applicable.
Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the
same manner as they would be if the reinsurance were considered direct business, taking into
account the product classification of the reinsured business. Reinsurance liabilities represent
balances due to reinsurance companies. Amounts payable are estimated in a manner consistent
with the related reinsurance contract.
Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished
or expire or when the contract is transferred to another party.
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31 December 2015
2.
(y) Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments
to reimburse the holder for a loss it incurs because a specified debtor fails to make payment
when due.
Financial guarantee contract is recognised initially as a liability at fair value, net of transaction
costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income
in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to
financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse
the holder for the associated loss, the liability is measured at the higher of the best estimate of
the expenditure required to settle the present obligation at the reporting date and the amount
initially recognised less cumulative amortisation.
2.5 Significant accounting estimates and judgements
(a) Critical judgements made in applying accounting policies
The following are the judgements made by management in the process of applying the Group’s
accounting policies that have the most significant effect on the amounts recognised in the
financial statements.
(i) Valuation of investment properties
The Group classifies a property as an investment property in accordance with requirements
of MFRS 140 Investment Property. The Group’s investment properties are held to earn
rental and for capital appreciation or both.
In estimating fair value of investment properties, the Group uses market observable data
to the extent it is available. Where level 1 inputs are not available, the Group engaged third
party qualified valuers to perform the valuation in establishing the appropriate valuation
techniques and inputs to the model.
Information about the valuation techniques and inputs used in determining the fair value of
investment properties are disclosed in Note 11.
(ii) Classification of investment properties
The Group has entered into several Joint Venture Agreements (“JVAs”) with certain third
parties to develop land owned by the Group. As the Group does not have joint control and
significant influence nor substantive rights over the relevant activity of these JVAs, which
is determined to be development of properties on the land, the JVAs do not fall within the
scope of MFRS 11 Joint Arrangement. Consequently, the land belonging to the Group are
classified as investment properties as disclosed in Note 11.
As at reporting date, the land are not deemed disposed as the risk and rewards of the land
have yet to be transferred to third parties.
31 December 2015
2.
2.5 Significant accounting estimates and judgements (cont’d)
(a) Critical judgements made in applying accounting policies (cont’d)
(iii) Impairment of non-financial assets
An impairment exists when the carrying value of an asset or cash generating unit exceeds
its recoverable amount, which is the higher of its fair value less costs to sell and its value
in use. The fair value less costs to sell calculation is based on available data from binding
sales transactions, conducted at arm’s length, for similar assets or observable market
prices less incremental costs for disposing of the asset. The value in use calculation is
based on a discounted cash flow model. The cash flows are derived from the budget for
the next three years and do not include restructuring activities that the Group is not yet
committed to or significant future investments that will enhance the asset’s performance of
the CGU being tested. The recoverable amount is most sensitive to the discount rate used
for the discounted cash flow model as well as the expected future cash-inflows and the
growth rate used for extrapolation purposes.
Goodwill is tested for impairment on an annual basis and when circumstances indicate
that carrying value may be impaired. Impairment is determined for goodwill by assessing
the recoverable amount of each CGU to which the goodwill relates. Further details on the
goodwill are as disclosed in Note 15.
(iv) Impairment of AFS financial assets
Significant judgement is required to assess impairment for AFS financial assets. The Group
evaluates the duration and extent to which the fair value of an investment is less than its
cost; the financial health and near term business outlook for the investee, including but
not limited to factors such as industry and sector performance, changes in technology and
operational and financial cash flows. The carrying amount of the Group’s AFS financial
assets is as disclosed in Note 14.
(v) Impairment of receivables
The Group and the Company assess at each reporting date whether there is any objective
evidence that a financial asset is impaired. Factors considered by the Group and the
Company are probability of insolvency or significant financial difficulties of the debtors and
default or significant delay in payments. In addition, the Group and the Company take into
consideration default risk of the industry and credit rating, payment trend and aging of
receivables. The carrying amount of the Group’s and the Company’s receivables are as
disclosed in Note 17.
81
82
31 December 2015
2.
2.5 Significant accounting estimates and judgements (cont’d)
(b) Key sources of estimation uncertainty (cont’d)
The key assumptions concerning the future and other key sources of estimation uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year are discussed below:
(i) Deferred tax assets Deferred tax assets are recognised for all unused tax losses and unabsorbed capital
allowances to the extent that it is probable that taxable profit will be available against which
the losses and capital allowances can be utilised. Significant management judgement is
required to determine the amount of deferred tax assets that can be recognised, based
upon the likely timing and level of future taxable profits together with future tax planning
strategies. The carrying amount of recognised and unrecognised deferred tax assets are
as disclosed in Note 25.
(ii) Valuation of insurance contract liabilities
For insurance contracts, estimates have to be made for both the expected ultimate cost of
claims reported at the reporting date and for the expected ultimate cost of claims incurred
but not yet reported (“IBNR”) at the reporting date.
It can take a significant period of time before the ultimate claims costs can be established
with certainty and for some type of policies, IBNR claims form the majority of the reporting
liability. The ultimate cost of outstanding claims is estimated by using a range of standard
actuarial claims projection techniques, such as Chain Ladder and Bornheutter-Ferguson
methods.
The main assumption underlying these techniques is that a company’s past claims
development experience can be used to project future claims development and hence,
ultimate claims costs. As such, these methods extrapolate the development of paid and
incurred losses, average costs per claim and claim numbers based on the observed
development of earlier years and expected loss ratios. Historical claims development
is mainly analysed by accident years, but can also be further analysed by geographical
areas, as well as by significant business lines and claims type. Large claims are usually
separately addressed, either by being reserved at the face value of loss adjuster estimates
or separately projected in order to reflect their future development. In most cases, no explicit
assumptions are made regarding future rates of claims inflation or loss ratio. Instead, the
assumptions used are those implicit in the historic claims development data on which the
projections are based. Additional qualitative judgement is used to assess the extent to which
past trends may not apply in future, (for example, to reflect one-off occurrences, changes
in external or market factors such as public attitudes to claiming, economic conditions,
level of claims inflation, judicial decisions and legislation, as well as internal factors such
as portfolio mix, policy features and claims handling procedures) in order to arrive at the
estimated ultimate cost of claims that present the likely outcome from the range of possible
outcomes, taking account of all the uncertainties involved.
The movement and carrying amount of insurance contract liabilities are as disclosed in
Note 18.
83
31 December 2015
3.
Revenue
Group
2015
2014
RM’000
RM’000
Net earned premiums (Note (i))
339,341 330,957 -
-
Interest income on loans and advances
Investment income in respect of
gross dividends from:
- subsidiaries
- quoted investment securities in Malaysia
- unquoted investment securities
in Malaysia
Revenue from rental of properties
Hotel services
Sale of goods
Management fees from:
- subsidiaries
- an affiliated company
1,028 1,128 -
-
-
-
40,377 195,043
8
-
8
-
800 6,940 31,806 -
460 940 35,260 451 -
-
-
-
-
-
864 -
882 1,900 864 2,862
882
380,787 370,078 43,149 198,787
604,945 (16,394)
-
-
-
Gross earned premium
579,018 588,551 -
-
(b) Gross premium ceded
(237,208)
(257,152)
-
Change in premium
liabilities
(2,469)
(442)
-
-
Premium ceded
(239,677)
(257,594)
Net earned premiums
339,341 330,957 -
-
-
-
Company
2015
2014
RM’000
RM’000
(i) Net earned premiums comprised:
(a) Gross premium
Change in premium liabilities
593,891 (14,873)
-
84
31 December 2015
4.
Cost of sales
Group
2015 2014
RM’000 RM’000
Cost of insurance business (Note (i))
Cost of hotel services
221,340 13,702 229,270
13,991
235,042 243,261
(i)
Cost of insurance business comprised:
Gross claims paid Claims ceded to reinsurers Gross change in contract liabilities
Change in contract liabilities ceded to reinsurers
261,543 (100,091)
17,275 7,199 245,228
(83,260)
65,135
(32,859)
Net claims incurred (Note (ii))
Fee and commission income Fee and commission expenses
185,926 (42,983)
78,397 194,244
(49,648)
84,674
221,340 229,270
(ii) Net claims incurred comprised:
Gross claims paid less salvage
261,543 Reinsurance recoveries
(100,091)
245,228
(83,260)
Net claims paid
161,968
Gross change in contract liabilities
At 31 December
646,858 629,583
At 1 Jan
(629,583)
(564,448)
161,452 17,275 65,135
Change in contract liabilities ceded to reinsurers
At 31 December
At 1 Jan
(329,785)
336,984 (336,984)
304,125
7,199 (32,859)
Net claims incurred
185,926 194,244
85
31 December 2015
5.
Other income
Realised gain/(loss) from financial assets at FVTPL Write back of allowance for
impairment for loans and advances (Note 17 (a))
Interest income (Note (i))
Other income of the insurance subsidiary (Note (ii))
Share of profits from a completed housing project
Income from rental of properties
Gain on disposal of:
Gain arising from fair value change
in financial assets at FVTPL Reversal of impairment on
investment properties (Note 11)
Write back of allowance for
impairment of other
receivables (Note 17 (d))
Others
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
2,347 (113)
24 -
20 7,316 23 7,789 -
1,381 2,769
45,630 51,162 -
-
-
505 27,973 513 -
-
-
-
-
2,028 35 195,862 -
-
-
-
35
-
443 1,421 309 -
13,187 -
-
-
10,134 1,015 -
1,045 -
-
-
82,625 285,710 1,714 2,804
- loan to subsidiaries
- short term deposits
- investment securities
- late payment
-
771 6,533 12 -
800 4,565 2,424 22 490 869 -
19
288
2,462
-
7,316 7,789 1,381 2,769
(i) Interest income
Interest income on:
86
31 December 2015
5. Other income (cont’d)
(ii) Other income of the insurance subsidiary
Group
2015 2014
RM’000 RM’000
Other income of the insurance subsidiary comprised:
Investment income (Note (a))
Realised gains from AFS financial assets (Note (b))
Other operating income (Note (c))
35,458 2,697 7,475 28,261
5,394
17,507
45,630 51,162
(a) Group
2015 2014
RM’000 RM’000
Investment income comprised:
AFS financial assets:
Dividend income - Equity securities quoted in Malaysia
2,928 - Equity securities quoted outside Malaysia 4
- Quoted unit trust
2,293 Interest income
12,770 LAR interest
17,423 Rental income from investment properties
135 Amortisation of premium
(95)
2,892
35
1,111
11,233
12,862
135
(7)
35,458 28,261
(b) Realised gains/(losses) from AFS financial assets comprised:
Equity securities quoted in Malaysia
Debt securities unquoted outside Malaysia
2,610 87 6,183
(789)
2,697 5,394
(c) Other operating income comprised:
Gain on disposal of property, plant and equipment
Realised gain on disposal of investment properties
Impairment loss on AFS financial assets
Service income earned from Malaysian Motor
Insurance Pool (“MMIP”)
Reversal of advertising provision
Sundry income
6,724 -
1,147 9,963
4,866
2,350
7,475 17,507
4
469 (869)
21
437
(130)
87
31 December 2015
6.
Operating profit
The following amounts have also been included in arriving at operating profit:
Depreciation of property, plant and equipment (Note 10)
Depreciation of investment
properties (Note 11)
Auditors’ remuneration (Note (a))
Key management personnel (Note (b))
Amortisation of intangible assets (Note 15)
Impairment on investment in
a subsidiary
Rental expense of land and buildings
Employee benefits expense (Note (c))
Bad debts written off included in
management expenses
Property, plant and equipment written off
Fund management charges
Loss arising from fair value
change in financial assets at FVTPL Realised loss from financial
assets at FVTPL Allowance for impairment of
receivables (Note 17 (b))
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
5,964 6,005 414 476
1,770 455 3,392 816 1,770 419 3,554 616 -
22 3,351 -
17
3,443
-
-
3,732 68,506 -
3,606 61,970 27,252 1,116 10,518 4,647
1,216
7,578
730 2
898 649 4
741 -
-
-
-
-
1,639 -
213
-
-
-
41
4,731 6,311 -
-
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
(a) Auditors’ remuneration
Auditors of the Company:
- statutory audit
- assurance related services
421 24 387 23 15 7
10
7
445 410 22 17
Other auditors
- statutory audit
10 9
-
-
455 419 22 17
88
31 December 2015
6.
Operating profit (cont’d)
(b) Key management personnel
Key management personnel is defined as the Board of Directors of the Company whereby the
authority and responsibility for planning, directing and controlling the activities of the Company,
directly or indirectly lies.
Executive directors’ remuneration:
- bonus
- emoluments
- benefits-in-kind
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
1,026 2,068 14 1,014 2,169 24 1,026 2,068 14 1,014
2,169
24
3,108 3,207 3,108 3,207
Non-executive directors’ remuneration:
- fees
275 340 - emoluments
23 31 - benefits-in-kind
2
7
240 17 -
240
20
-
300 378 257 260
Total directors’ remuneration
Less: estimated money value
of benefits-in-kind
3,408 3,585 3,365 3,467
(16)
(31)
(14)
3,392 3,554 3,351 Total directors’ remuneration excluding benefits-in-kind
(24)
3,443
89
31 December 2015
6.
Operating profit (cont’d)
(b) Key management personnel (cont’d)
The number of directors of the Company whose total remuneration during the financial year fell within
the following bands is analysed below:
Executive Directors:
RM250,001 - RM300,000
RM300,001 - RM350,000
RM450,001 - RM500,000
RM600,001 - RM650,000
RM2,250,001 - RM2,300,000
RM2,300,001 - RM2,350,000
Non-executive Directors:
RM50,001 - RM100,000
RM100,001 - RM150,000
Number of
Directors Directors
2015 2014
-
1
1
-
-
1
1
1
1
-
1
2
1
2
(c) Employee benefits expense
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
Wages and salaries
Contributions to a defined
contribution plan
Other staff related expenses
56,184 50,757 9,325 6,551
7,001 5,321 6,496 4,717 902 291 770
257
68,506 61,970 10,518 7,578
90
31 December 2015
7. Finance costs
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
Interest expense on: Term loans and revolving credit Amounts due to subsidiaries
2,441 -
4,137 -
-
1,118 4,768
2,441 4,137 1,118 4,768
8. Income tax expense
The components of income tax expense comprise the following:
Group
2015
2014
RM’000
RM’000
Income tax:
Malaysian income tax*
20,977 27,075 (Over)/under provision of tax expense in prior year
(270)
5,042 Company
2015
2014
RM’000
RM’000
117 72
(72)
-
20,707 32,117 45 72
Deferred tax:
Relating to origination and
reversal of temporary differences
Reduction of income tax rate
(Over)/under provision of deferred tax
in prior year
(351)
(647)
276
-
-
-
-
(80)
1,440 -
-
Deferred income tax (Note 25)
(1,078)
1,716 -
-
Income tax expense for the year
19,629 33,833 45 72
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated
assessable profit for the year.
*
Included in the current year income tax is an amount of RM713,000 relating to Real Property Gains
Tax (“RPGT”) arising from the disposal of investment properties during the current financial year.
91
31 December 2015
8.
Income tax expense (cont’d)
The reconciliation between tax expense and the product of accounting profit multiplied by the applicable
corporate tax rate are as follows:
Group
2015
2014
RM’000
RM’000
Company
2015
2014
RM’000
RM’000
Profit before tax
106,183 277,486 Taxation at Malaysian statutory tax rate Effect of income not subject to tax
Effect of decrease of income tax rate
Effect of expenses not deductible
for tax purposes
Effect of utilisation of previously
unrecognised tax losses Additional deduction allowed
in respect of cash contributions made to MMIP during the year*
(Over)/under provision of income
tax expense in prior year
(Over)/under provision of deferred tax
prior year
*
195 179,177
26,546 (17,666)
(647)
69,372 (50,746)
-
49 (9,794)
-
44,794
(49,381)
-
13,914 11,366 9,862 4,659
(416)
(301)
-
-
(1,752)
(2,340)
-
-
(270)
5,042 (72)
-
(80)
1,440 -
-
19,629 33,833 45 72
In accordance with the P.U (A) 419 Income Tax (Deduction for contributions by Licensed Insurers to
the Malaysian Motor Insurance Pool) Rules 2012, cash contributions made to MMIP via cash calls is
allowed for additional deduction in the year when such cash is paid to the MMIP.
9. Earnings per share
Basic earnings per share
Basic earnings per share (“EPS”) is calculated by dividing the profit for the year attributable to owners of
the Company by the weighted average number of ordinary shares in issue during the financial year.
Profit for the year attributable to owners of the Company Group
2015 2014
RM’000 RM’000
64,566 245,420
Number of ordinary shares in issue - weighted average
715,000 715,000
9.0 34.3
Basic earnings per share (Sen)
As there are no potential dilutive shares, the basic EPS is equal to diluted EPS.
92
31 December 2015
10. Property, plant and equipment
Buildings on Freehold Leasehold leasehold and Plant and Computer land* land* freehold land* equipment equipment Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
At 1 January 2015
17,409 3,706 90,317 31,632 Additions
-
-
-
911 Disposals
-
-
-
(18)
Written off
-
-
-
(17)
7,492 150,556
2,360 3,271
(132)
(150)
-
(17)
At 31 December 2015
Accumulated depreciation
At 1 January 2015
Depreciation charge for
the year (Note 6)
Disposals
Written off
17,409 3,706 90,317 32,508 9,720 153,660
-
312 33,268 25,994 6,716 66,290
-
-
-
44 -
-
3,424 -
-
1,728 (18)
(15)
At 31 December 2015
-
356 36,692 27,689 7,353 72,090
Net carrying amount
At 31 December 2015
17,409 3,350 53,625 4,819 2,367 81,570
* Estimated fair value
*
768 (131)
-
5,964
(149)
(15)
176,850
The valuation of freehold land, leasehold land and building is based on valuation report by an
independent property valuer as disclosed in Note 11.
93
31 December 2015
10. Property, plant and equipment (cont’d)
Buildings on Freehold Leasehold leasehold and Plant and Computer land* land* freehold land* equipment equipment Total
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
Cost
At 1 January 2014
17,409 3,706 89,160 30,216 Additions
-
-
1,157 1,757 Disposals
-
-
-
(327)
Written off
-
-
-
(14)
7,377 147,868
261 3,175
(146)
(473)
-
(14)
At 31 December 2014
At 1 January 2014
Depreciation charge for
the year (Note 6)
Disposals
Written off
17,409 3,706 90,317 31,632 7,492 150,556
-
268 29,844 24,205 6,227 60,544
-
-
-
44 -
-
3,424 -
-
1,903 (104)
(10)
At 31 December 2014
-
312 33,268 25,994 6,716 66,290
Net carrying amount
At 31 December 2014
17,409 3,394 57,049 5,638 776 84,266
* Estimated fair value
176,680
634 (145)
-
6,005
(249)
(10)
94
31 December 2015
10. Property, plant and equipment (cont’d)
Computer equipment RM’000 Total
RM’000
At 31 December 2015
Cost
At 1 January 2015
2,028 120 Additions
28 31 2,148
59
Plant and equipment RM’000 Company
At 31 December 2015
2,056 151 2,207
At 1 January 2015
597 Depreciation charge for the year (Note 6)
393 92 21 689
414
113 1,103
38 1,104
At 31 December 2015
990 Net carrying amount
At 31 December 2015
1,066 At 31 December 2014
Cost
At 1 January 2014
1,262 88 Additions
813 32 Disposals
(47)
-
At 31 December 2014
2,028 120 1,350
845
(47)
2,148
At 1 January 2014
Depreciation charge for the year (Note 6)
Disposals
186 434 (23)
50 42 -
236
476
(23)
At 31 December 2014
597 92 689
Net carrying amount
At 31 December 2014
1,431 28 1,459
95
31 December 2015
11. Investment properties
Group
2015 2014
RM’000 RM’000
Cost
At 1 January
785,573 779,193
Reclassified from other receivables
75,079 Additions
5,250 7,152
Disposals
(8,293)
(772)
At 31 December
857,609 785,573
Accumulated depreciation At 1 January
6,980 Depreciation charge for the year (Note 6)
1,770 Disposals
(11)
5,210
1,770
-
8,739 6,980
Accumulated impairment loss
At 1 January
29,932 Reversal of impairment loss (Note 5)
(13,187)
29,932
-
At 31 December
At 31 December
16,745 29,932
Net carrying amount 832,125 748,661
Estimated fair value
1,310,985 924,194
Investment properties comprise freehold land, leasehold land and buildings. Investment properties and land and buildings in property, plant and equipment are stated at cost. Estimated
fair value is based on valuations performed by an accredited independent valuers with recent experience
in the location and category of properties being valued. Fair value is determined using the comparison
method of valuation.
Under the comparison method, fair value is estimated by considering the sale of similar or substitute
properties and related market data and established a value estimate by adjustments made in factors
including location, accessibility, market conditions, size, shape and terrain of land that affect value.
The updated valuations were performed by the valuers in February 2016 for market value of the investment
properties and land and buildings of property, plant and equipment as at 31 December 2015. The updated
valuations revealed that there have been no significant changes in the method of valuation used as
compared with the previous valuation report in 2013.
96
31 December 2015
11. Investment properties (cont’d)
Group
2015 2014
RM’000 RM’000
Rental income derived from investment properties
Direct operating expenses
7,075 (713)
1,075
(439)
Net rental arising from investment properties 6,362 636
Carrying amounts of certain investment properties of the Group amounting to RM186,240,000 (2014:
RM174,921,000) are pledged as security for the Group’s bank borrowings as disclosed in Note 24.
Significant increase/(decrease) in estimated market value in isolation for land and building and investment
properties would result in a significant higher/(lower) fair value. An increase/(decrease) by 1% in the market
value in isolation would result in an increase/(decrease) in the estimated fair value by RM14,878,000
(2014: RM11,009,000).
The Group has no restrictions on the realisability of its investment properties and no contractual
obligations to either purchase, construct or develop investment properties or for repairs, maintenance and
enhancements except for certain joint venture agreements which have been undertaken with subsidiaries
of Bandar Raya Developments Berhad in respect of investment properties with a total carrying amount of
RM246,866,000 (2014: RM394,807,000). Details of the joint venture agreements are as follows:
(i) On 29 April 2011, Magnum.Com Sdn. Bhd. (“MCSB”), a wholly owned subsidiary of the Group,
entered into a Joint Venture Agreement (“JVA”) with a subsidiary of Bandar Raya Developments
Berhad, Orion Vibrant Sdn. Bhd. (“OVSB”), to undertake development of 20 parcels of land in Pulau
Pinang (measuring approximately 80.897 acres) (“PP Land”) legally and/or beneficially owned by
MCSB.
In accordance with the JVA, MCSB is to be paid 22% of the cash collected pursuant to billings issued
of the proposed development for the PP Land (“the Land Owner’s Entitlement”) by way of completed
units or components, or by a combination of cash payment and completed units or components.
MCSB has received RM9,000,000 from OVSB as upfront and advance amount towards account of
the Land Owner’s entitlement.
(ii) On 13 January 2012, MCSB entered into a supplemental JVA with OVSB, to undertake development
of 3 parcels of freehold land in Pulau Pinang measuring 2.07 acres.
In accordance with the supplemental JVA, the payment for the purchase of the 3 parcels of land is to
be made jointly through OVSB’s contribution of 74.53% (or not exceeding RM7,900,000) and through
MCSB’s contribution of 25.47% (or not exceeding RM2,700,000).
The 3 parcels of land were acquired in 2012 with the land titles registered under MCSB’s name and
MCSB accordingly recognised the full cost of acquisition as its investment properties, despite only
having a beneficial interest of 25.47% while recognising the balance of 74.53% as payable to OVSB.
97
31 December 2015
11. Investment properties (cont’d)
(iii) On 29 April 2011, Tibanis Sdn. Bhd. (“TSB”), a wholly owned subsidiary of the Group, entered into
a separate JVA with a subsidiary of Bandar Raya Developments Berhad, Pinggir Mentari Sdn Bhd
(“PMSB”), to undertake development of 2 parcels of land in Gombak (measuring approximately
265.13 acres) (“G2 Land”).
In accordance with the JVA, TSB is to be paid 22% of the cash collected pursuant to billings issued
of the proposed development for the G2 Land (“the Land Owner’s Entitlement”) by way of completed
units or components, or by a combination of cash payment and completed units or components. TSB
has received RM22,000,000 from PMSB as upfront and advance amount towards account of the
Land Owner’s entitlement.
(iv) On 29 April 2011, Mimaland Berhad (“MB”), a 98.20% owned subsidiary of the Group, signed a
separate JVA with a subsidiary of Bandar Raya Developments Berhad, Magna Senandung Sdn. Bhd.
(“MSSB”), to undertake development of 7 parcels of land in Gombak (measuring approximately 324
acres) (“G Land”).
In accordance with the JVA, MB is to be paid 22% of the cash collected pursuant to billings issued
of the proposed development for the G Land (“the Land Owner’s Entitlement”) by way of completed
units or components, or by a combination of cash payment and completed units or components. MB
has received RM34,000,000 from the MSSB as upfront and advance amount towards account of the
Land Owner’s entitlement.
On 10 August 2015, the Company has announced that MB had entered into a Deed of Termination
with MSSB to mutually terminate the JVA. Accordingly, MB has returned the RM34,000,000 to MSSB
on 10 August 2015.
12. Investment in subsidiaries
Cost of investment
Acquisition of shares in subsidiaries during the year
Less: allowance for impairment for the year
1,202,133 60,800 (31,899)
1,202,131
2
(4,647)
1,231,034 1,197,486
At 31 December
Company
2015 2014
RM’000 RM’000
Further details of the subsidiaries, all of which are incorporated in Malaysia are disclosed in Note 37.
The movement for allowance for impairment:
At 1 January
Impairment for the year (Note 6)
At 31 December
Company
2015 2014
RM’000 RM’000
4,647 27,252 4,647
31,899 4,647
98
31 December 2015
12. Investment in subsidiaries (cont’d)
Subscription of shares in subsidiaries
By way of allotment of shares:
Queensway Nominees (Tempatan) Sdn. Bhd. (“Queensway Tempatan”)
Queensway Nominees (Asing) Sdn. Bhd. (“Queensway Asing”)
Company
2015
RM’000
60,800
5,145
55,655
Queensway Tempatan has alloted 5,145,000 ordinary shares of RM1.00 each to the Company at RM1.00
per ordinary share satisfied by way of capitalising the amount owing to the Company.
Queensway Asing has alloted 55,655,000 ordinary shares of RM1.00 each to the Company at RM1.00 per
ordinary share satisfied by way of capitalising the amount owing to the Company.
The acquisition of shares in the subsidiaries did not have any significant effects on the earnings or net
assets of the Group for the financial year ended 31 December 2015.
13. Investment in an associate
Unquoted shares in Malaysia, at cost
Share of post-acquisition reserves
Group
2015 2014
RM’000 RM’000
100 415 100
439
515 539
2015 RM’000 2014
RM’000
The summarised financial information of the associate is as follows:
Assets
Liabilities
2,593 (17)
2,711
(14)
Equity 2,576 2,697
Proportion of the Group’s ownership
Carrying amount of the investment
20%
515 20%
539
Revenue
Other income
Cost of sales
Management expenses
-
39 -
(160)
154
20
(63)
(166)
Loss before tax
Income tax expense
(121)
-
(55)
-
Loss for the year
(121)
(55)
Group’s share of loss for the year
(24)
(11)
Further details of the associate are disclosed in Note 37.
99
31 December 2015
14. Investment securities
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Current
Financial assets at FVTPL
Quoted shares in Malaysia
17,501 17,618 1,606 Unit trusts - quoted
391,751 96,282 3,439 67,208
Total current investment securities 409,252 113,900 5,045 67,208
Non-Current AFS financial assets
Quoted shares in Malaysia 66,559 78,486 -
Quoted shares outside Malaysia 4,135 2,682 -
Unquoted shares in Malaysia 1,001 1,001 -
Unquoted debts securities in Malaysia 262,167 201,088 -
Unit trusts - quoted 49,986 41,123 -
Malaysian Government Papers
13,116 3,276 -
-
Total non-current investment securities
396,964 327,656 -
-
Total investment securities 806,216 441,556 5,045 67,208
The Group’s investment securities are summarised by categories as follows:
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
At fair value
805,215 440,555 5,045 67,208
At cost
1,001 1,001 -
806,216 441,556 5,045 67,208
100
31 December 2015
15. Intangible assets
Goodwill RM’000 Group
Cost
As at 1 January 2015
41,102 Additions
-
Derecognised on disposal of a subsidiary (Note 31)
(9,203)
Computer software RM’000 Total
RM’000
6,026 1,717 -
47,128
1,717
(9,203)
At 31 December 2015
Additions
31,899 7,743 39,642
41,102 -
5,133 893 46,235
893
41,102 6,026 47,128
Accumulated amortisation
-
3,967 Charge for the year
-
816 3,967
816
At 31 December 2014
At 31 December 2015
-
4,783 4,783
Charge for the year
-
-
3,351 616 3,351
616
-
3,967 3,967
Net carrying amount
At 31 December 2015
31,899 2,960 34,859
At 31 December 2014
43,161
At 31 December 2014
41,102 2,059 Goodwill of the Group which arose from merger and acquisition of subsidiaries has been allocated to the
following CGUs for impairment testing:
Group
2015 2014
RM’000 RM’000
Carrying amount
Insurance division
9,579 18,782
Credit division
2,503 2,503
Investment division
19,817 19,817
31,899 41,102
101
31 December 2015
15. Intangible assets (cont’d.)
The recoverable amount of the CGUs have been determined based on the value in use calculations using
cash flows projections approved by management covering a period of 3 years and based on the following
key assumptions:
(i) Growth rates ranging from 2.00% to 319.00% (2014: 3.92% to 24.00%); and
(ii) Pre-tax discount rate of 6.00% (2014: 5.19%) estimated based on the effective average borrowing
rate of the Group.
The above key assumptions made by management are based on past operating results and management’s
expectations of market development and assessment of future trends derived from both external
sources and internal sources. Barring unforeseen circumstances, the management believed that these
assumptions are reasonable and achievable.
Management do not expect any reasonable possible changes in the key assumptions would cause the
carrying amount of the goodwill on consolidation to exceed its recoverable amount.
16. Inventories
At cost:
Food and beverages
Hotel supplies and merchandise
Group
2015 2014
RM’000 RM’000
125 43 120
43
168 At net realisable value:
Food and beverages
101 163
231
Total
269 68
The amount of inventories recognised as an expense in cost of sales of the Group was RM38,000 (2014:
RM32,000).
102
31 December 2015
17. Receivables
Note
Loans and advances
(a)
Less: Allowance for impairment
Group 2015 2014 RM’000 RM’000 Company
2015 2014
RM’000 RM’000
37,588 (22,226)
32,608 (22,246)
-
-
-
15,362 10,362 -
-
Outstanding premium
including agents/
brokers balance
(b)
134,127 Less: Allowance for impairment
(2,226)
123,618 (2,226)
-
-
-
121,392 -
-
131,901 Amounts due from reinsurers/
ceding companies and
co-insurers
(b)
69,682 37,469 -
(15,734)
(11,003)
-
53,948 26,466 -
-
(c)
1,230 1,175 -
-
Other receivables
(d)
87,483 (141)
191,977 (10,275)
844 -
1,253
-
87,342 181,702 844 1,253
-
-
110,764 156,016
289,783 341,097 111,608 157,269
Trade receivables
Amounts due from subsidiaries
(e)
Total receivables (a) Loans and advances
Ageing analysis of loans and advances
The ageing analysis of the Group’s gross loans and advances is as follows: Group
2015 2014
RM’000 RM’000
Neither past due nor impaired
Impaired
15,362 22,226 10,362
22,246
37,588 32,608
103
31 December 2015
17. Receivables (cont’d.)
(a) Loans and advances (cont’d.)
Loans and advances that are neither past due nor impaired
Loans and advances that are neither past due nor impaired are creditworthy debtors with good
payment records with the Group.
Movement in allowance accounts
Group
2015 2014
RM’000 RM’000
At 1 January
Write-back of allowance for impairment (Note 5)
22,246 (20)
22,269
(23)
At 31 December
22,226 22,246
(b) Outstanding premium including agents/brokers balance and amount due from reinsurers/ceding
companies and co-insurers
The ageing analysis of the Group’s gross outstanding premium including agents/brokers balance
and amount due from reinsurers/ceding companies and co-insurers are as follows:
Group
2015 2014
RM’000 RM’000
1 to 30 days past due but not impaired 31 to 60 days past due but not impaired
61 to 90 days past due but not impaired
More than 121 days past due but not impaired
Impaired
-
87,962 13,747 21,043 34,008 29,089 185,849 17,960 91,344
16,548
14,953
14,757
10,256
147,858
13,229
203,809 161,087
For outstanding balances to be classified as “past due and impaired”, contractual payments must
be in arrears for more than six months. No collateral is held as security for any past due or impaired
assets. A reconciliation of the allowance for impairment is as follows:
Group
2015 2014
RM’000 RM’000
At 1 January
Charge for the year (Note 6)
13,229 4,731 6,918
6,311
At 31 December
17,960 13,229
104
31 December 2015
(c) Trade receivables
The ageing analysis of the Group’s trade receivables are as follows:
Group
2015 2014
RM’000 RM’000
More than 121 days past due but not impaired
989 163 41 1
12 24 241 933
92
19
37
94
242
1,230 1,175
Trade receivables that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment
records with the Group.
None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated
during the financial year.
(d) Other receivables
Breakdown of other receivables of the Group and the Company are as follows:
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Share of net assets in MMIP
60,923 54,101 -
Deposits 1,244 1,054 435 425
Prepayments
1,633 1,726 114 247
Amount due from third parties for
completion of developments
3,299 29,860 -
Deposit received from disposal of
shares in a subsidiary deposited in escrow account
-
17,998 -
Income due and accrued
11,528 7,144 -
8
Consideration paid for purchase
of a land
-
75,079 -
Less: allowance for impairment
-
(10,134)
Others
Less: allowance for impairment
-
8,856 (141)
8,715 87,342 64,945 5,015 295 (141)
4,874 181,702 844 573
1,253
105
31 December 2015
(d) Other receivables (cont’d)
Group
2015 2014
RM’000 RM’000
At 1 January
Reversal of impairment loss (Note 5)
10,275 (10,134)
10,275
-
At 31 December
141 10,275
(e) Amounts due from subsidiaries
The amounts due from subsidiaries consist of amounts which are unsecured, repayable on demand
and non-interest bearing except for an amount of RM1,823,000 (2014: RM67,213,000) which bore
interest at 3.00% (2014 : 3.00%-5.47%) per annum.
The Group and the Company has no significant concentration of credit risk that may arise from exposures
to a single receivable or to group of receivables and the Group and the Company’s normal trade credit
term is 30 to 90 days (2014: 30 to 90 days).
268,150 593,891 (579,018)
283,023 At 1 January
Premiums written in the year
Premiums earned during the year
At 31 December
(329,785)
317,073 (104,493)
(106,962)
(237,208)
239,677 178,530 161,188 356,683 (339,341)
Premium Liabilities
(ii)
646,858 268,150 251,756 604,945 (588,551)
629,583 (106,962)
(107,404)
(257,152)
257,594 (336,984)
161,188
144,352
347,793
(330,957)
1,809
309
14,190
260,323
69,756
10,769
453,787
292,599
(443,946)
292,599
161,188
At 31 December
897,733 (336,984)
(106,962)
495,603 629,583 268,150 97,411
(161,968)
(434,278)
317,073 178,530 At 1 January
629,583 (336,984)
292,599 564,448 (304,125)
Claims incurred in current accident year
198,305 (112,125)
86,180 152,408 (82,652)
Claims incurred in prior accident year
42,797 (32,884)
9,913 27,381 (16,612)
Movement in PRAD of claim liabilities at
75% confidence level
(486)
3,686 3,200 5,899 (4,090)
Movement in claims handling expenses
2,382 -
2,382 309 -
Adjustment in IBNR
(3,991)
11,592 7,601 22,810 (8,620)
Other movements in claims incurred during the year
39,811 36,839 76,650 101,556 (4,145)
Claims paid during the year
(261,543)
100,091 (161,452)
(245,228)
83,260 929,881 (329,785)
(104,493)
Claim Liabilities
Insurance contract liabilities
646,858 283,023 (i)
Claim liabilities (Note (i))
Premium liabilities (Note (ii))
18. Reinsurance assets and insurance contract liabilities 2015 2014 Group
Gross Reinsurance Net Gross Reinsurance Net
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Provision for claims reported by policyholders
516,779 (283,168)
233,611 495,514 (278,775)
216,739
Provision for IBNR
130,079 (46,617)
83,462 134,069 (58,209)
75,860
106
31 December 2015
107
31 December 2015
19. Cash and cash equivalent
Cash at banks and on hand
Short term deposits with licensed banks
Group 2015 2014 RM’000 RM’000 75,567 456,613 18,567 463,147 Company
2015 2014
RM’000 RM’000
20,542 -
127
3,100
532,180 481,714 20,542 3,227
Less: Short term deposits with licensed banks with maturity period of more than 3 months
(306)
(296)
-
Cash and cash equivalents
531,874 481,418 20,542 3,227
Short term deposits of the Group and the Company are placed for periods ranging between 1 day to 365
days (2014: 1 day to 365 days).
The effective interest rates of deposits at the reporting date were:
2015 2014
RM’000 RM’000
Short term deposits with licensed banks 2.95%-4.00% 2.90%-3.35% 2.95%-4.00% 2.90%-3.35%
20. Share capital Number of ordinary shares of RM1.00 each
Amount
2015 2014 2015 2014
RM RM
Authorised share capital
At 1 January/ 31 December 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
Issued and fully paid
The holders of ordinary shares are entitled to receive dividends as and when declared by the Company.
All ordinary shares carry one vote per share without restrictions and rank equally with regard to the
Company residual assets.
At 1 January/ 31 December 715,000,000 715,000,000 715,000,000 715,000,000
108
31 December 2015
21 Other reserves
Group
2015 2014
RM’000 RM’000
Capital reserve (Note (a))
Fair value reserve (Note (b))
41,903 201 41,903
808
42,104 42,711
(a) Capital reserve represents a non-distributable reserve arising from capitalisation of reserve via bonus
issue and a gain on disposal of a freehold land of a subsidiary.
(b) Fair value reserve represents the cumulative fair value changes, net of tax, of AFS financial assets
until they are disposed off or impaired.
22. Merger deficit
The merger deficit relating to business combination involving entities under common control, is accounted
for by applying the pooling of interest method. The difference between the consideration paid and the
share capital and reserves of the subsidiaries acquired is reflected as a merger deficit.
Group
2015 2014
RM’000 RM’000
Cost of investment in subsidiaries under pooling of interest method
Less: Net assets of subsidiaries’ representing the share capital and
reserves of subsidiaries acquired 874,688 874,688
(846,224)
(846,224)
Merger deficit
28,464 28,464
23. Retained profits
The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 under
the single tier system.
24. Borrowings
Current Secured:
Revolving credit
3,000 Term loans
18,851 Group
2015 2014
RM’000 RM’000
3,000
33,595
21,851 36,595
Non-current
Secured:
Revolving credit
-
Term loans
4,997 3,000
23,848
4,997 26,848
109
31 December 2015
24. Borrowings (cont’d)
Group
2015 2014
RM’000 RM’000
Total loans and borrowings
Revolving credits
3,000 Term loans
23,848 26,848 6,000
57,443
63,443
The remaining maturities of the loans and borrowings are as follows:
Group
2015 2014
RM’000 RM’000
On demand or within one year
Later than 1 year and not later than 2 years
Later than 2 years and not later than 3 years
21,851 4,997 -
36,595
21,851
4,997
26,848 63,443
The revolving credit and term loans bear interest at rates ranging between 5.30%-5.51% (2014: 5.10%5.35%) and 5.39%-5.59% (2014: 4.96%-5.47%), respectively, per annum during the financial years.
The borrowings are secured by corporate guarantees of the subsidiaries and certain investment properties
as disclosed in Note 11.
25. Deferred tax assets/(liabilities)
Group
2015 2014
RM’000 RM’000
At 1 January
(11,608)
Recognised in:
- other comprehensive income
466 - income statements (Note 8)
1,078 (12,481)
At 31 December
(10,064)
(11,608)
Presented in the statements of financial position:
Deferred tax assets
1,561 Deferred tax liabilities
(11,625)
1,300
(12,908)
(10,064)
(11,608)
Presented after appropriate offsetting as follows:
Deferred tax assets
9,907 Deferred tax liabilities
(19,971)
9,838
(21,446)
(10,064)
2,589
(1,716)
(11,608)
110
31 December 2015
25. Deferred tax assets/(liabilities) (cont’d)
(a) Deferred tax assets
Unused tax losses and Allowance unabsorbed Property, for capital plant and impairment allowances equipment Total
RM’000 RM’000 RM’000 RM’000
At 1 January 2015
774 7,764 1,300 9,838
Transfer from deferred tax liabilities
-
-
(104)
(104)
Recognised in income statements
75 (534)
632 173
At 31 December 2015
849 7,230 1,828 9,907
Merger and acquisition of
subsidiaries
Recognised in income statements
813 (39)
9,677 (1,913)
1,108 192 11,598
(1,760)
At 31 December 2014
774 7,764 1,300 9,838
(b) Deferred tax liabilities
Investment property, property, plant and equipment and fair value changes on Unearned
investment premium Total
RM’000 RM’000 RM’000
At 1 January 2015
21,334 112 21,446
Transfer to deferred tax assets
(104)
-
(104)
Recognised in: - other comprehensive income (466)
-
(466)
- income statements
(944)
39 (905)
At 31 December 2015
19,820 151 Merger and acquisition of subsidiaries
23,979 100 Recognised in: - other comprehensive income (2,589)
-
- income statements
(56)
12 At 31 December 2014
21,334 112 19,971
24,079
(2,589)
(44)
21,446
111
31 December 2015
25. Deferred tax assets/(liabilities) (cont’d)
Unrecognised deferred tax assets
The Group has the following tax losses and capital allowances that are available indefinitely for off-setting
against future taxable profits of the entities in which they arose, subject to the requirements of the Income
Tax Act, 1967.
Group
2015 2014
RM’000 RM’000
Tax losses
Capital allowances
157,270 5,300 158,932
5,300
162,570 164,232
26. Payables
Group Company
Note
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Trade payables and bills payable
1,425 1,353 -
Amount due to reinsurers and cedants
149,243 109,739 -
Amount due to agents/
broker and insurers
3,715 3,702 -
Other payables and accruals
(a)
27,347 26,734 5,306 3,917
Advances received from
third parties
(b)
31,000 65,000 -
Deposit received for
disposal of shares in
a subsidiary -
17,998 -
Sundry creditors
27,720 39,583 -
Amounts due to subsidiaries
(c)
-
-
136,037 194,813
Amounts due to shareholders of subsidiaries
(d)
12,774 12,774 -
253,224 276,883 141,343 198,730
(a) The other payables are non-interest bearing and are repayable on demand.
(b) Represent amounts received from joint venture agreements’ partners relating to the development of
certain investment properties as disclosed in Note 11.
(c) Amounts due to subsidiaries are unsecured, repayable on demand and non-interest bearing, except
for an amount of RM57,914,000 (2014: RM150,462,000) which bore interest at 3.00% (2014: 3.00%5.00%) per annum.
(d) The amounts due to shareholders of subsidiaries represent amounts funded by shareholders for the
acquisitions of investment properties which are unsecured, non-interest bearing and repayable on
demand.
112
31 December 2015
27. Operating lease arrangements
(a) The Group as lessor
The Group has entered into operating lease agreements for the rent of certain office premises. These
non-cancellable leases have an average life of between 1 to 5 years with certain contracts carrying
renewal options in the contracts. These contracts include fixed rentals over the tenure of the lease
period.
The future aggregate minimum lease payments receivable under operating lease contracted for as
at the reporting date but not recognised as receivables, are as follows:
Group
2015 2014
RM’000 RM’000
Future minimum rental income receivables:
Not later than 1 year
304 435
349 342
653 777
(b) The Group as lessee
The Group has entered into operating lease agreements for the use of certain office premises. These
leases have an average life of between 1 to 5 years with certain contracts carrying renewal options
in the contracts.
The future aggregate minimum lease payments under operating leases contracted for as at the
reporting date but not recognised as liabilities, are as follows:
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Future minimum rental payments:
Not later than 1 year
1,321 2,910 1,116 1,116
672 1,898 558 1,675
1,993 4,808 28. Capital commitments
1,674 2,791
Group
2015 2014
RM’000 RM’000
Approved and contracted for:
Property, plant and equipment and computer software
2,317 1,359
31 December 2015
29. Material litigation
(a) Kuala Lumpur High Court Suit No. S1-22-946-2008
On 6 October 2008, Leisure Dotcom Sdn. Bhd. (“Leisure Dotcom”), a subsidiary, commenced a legal
proceeding at the High Court of Malaya (“High Court”) at Kuala Lumpur against Globesource Sdn.
Bhd. (“GSB”) claiming for among others, specific performance for delivery of a piece of freehold
land and 2 leases (“the properties”) in Kuala Lumpur pursuant to a conditional sale and purchase
agreement dated 21 June 2007 entered into between Leisure Dotcom and GSB (“SPA”). Pursuant
to the SPA, GSB is to sell and Leisure Dotcom is to purchase the properties for a total consideration
of RM72,162,000. Upon the execution of the SPA, Leisure Dotcom paid a deposit of RM7,216,000
representing 10.00% of the purchase price. Subsequent to that, Leisure Dotcom paid the balance
purchase price but such sum was returned by GSB. As the result, the sale and purchase under the
SPA was not completed.
Hence, Leisure Dotcom filed a claim against GSB. In turn, GSB had counterclaimed, among others,
that the SPA had been validly terminated.
On 6 July 2012, Leisure Dotcom’s claim was dismissed with costs and GSB’s counterclaim was
allowed with costs by the High Court. On 9 July 2012, Leisure Dotcom filed a notice of appeal and
subsequently on 24 August 2012, a record of appeal at the Court of Appeal. On 19 September 2012,
the High Court granted Leisure Dotcom an Erinford injunction against GSB and a stay of execution
of the High Court decision pending the appeal. On 26 November 2012, Leisure Dotcom further filed
a supplemental record of appeal at the Court of Appeal to include the grounds of judgment for the
High Court case which was received on 8 November 2012. In light of the grounds of judgment of the
High Court case, Leisure Dotcom had on 20 December 2012, further filed a second supplemental
record of appeal to include an amended memorandum of appeal. Subsequently, Leisure Dotcom had
on 22 February 2013 filed an application for leave to amend the memorandum of appeal, which was
allowed by the Court of Appeal on 1 April 2013.
On 25 June 2014, the Court of Appeal unanimously allowed the appeal by Leisure Dotcom and set
aside the order made by the High Court. The Court of Appeal also granted, among others, an order
for specific performance of the SPA in respect of a piece of freehold land and costs of RM200,000.00
as costs of the proceedings in the Court of Appeal and the High Court.
GSB had filed an application for leave to appeal the decision made by the Court of Appeal to
the Federal Court (“Leave Application”). On 17 November 2015, the Federal Court unanimously
dismissed the Leave Application with costs of RM20,000.
Accordingly, the Group has recognised the RM75,079,000, which was previously recorded as other
receivables together with directly attributable professional fees of RM5,250,000, as investment
properties as of 31 December 2015.
(b) Shah Alam High Court Civil Suit No. 22NCVC-682-11/2013
On 18 November 2013, Mulpha Kluang Maritime Carriers Sdn. Bhd. (“Mulpha”), a subsidiary,
commenced a legal proceedings at the Shah Alam High Court (“Court”) against the partners of
Messrs. Mah-Kamariyah & Philip Koh (“MKPK”) claiming for special damages of RM3,316,942 and
other damages to be assessed by the court being the losses suffered by Mulpha.
Mulpha claims against MKPK is in their capacity as the conveyancing solicitors for Mulpha whereby
MKPK had failed to exercise professional skill, care and diligence in advising Mulpha and in handling
two (2) conditional sale and purchase agreements (“SPAs”), both dated 12 October 2009, for the
acquisition of two pieces of land in Kuala Lumpur (“the Land”). Subsequent to the conclusion of the
said SPAs, Mulpha had discovered that the total area described in the SPAs therein were incorrect as
part of each of the Land had in fact been surrendered to the State Authority in year 1988 and MKPK
had failed, neglected and/or omitted to notify and/or advise Mulpha of the same.
113
114
31 December 2015
29. Material litigation (cont’d)
(b) Shah Alam High Court Civil Suit No. 22NCVC-682-11/2013 (cont’d)
The High Court on 21 April 2015 had delivered the decision which held that Mulpha’s claim for the
sum of RM3,316,942 against MKPK is allowed with costs.
On 27 April 2015, MKPK had lodged an appeal to the Court of Appeal against the High Court’s
decision. The Court of Appeal had fixed the appeal hearing on 11 April 2016.
(c) Johor Bahru High Court Suit No. 21NCVC-20-05/2014
Kelana Megah Development Sdn Bhd (“KMD”), a wholly-owned subsidiary, had on 9 May 2014 filed
a civil suit at the High Court of Malaya in Johor Bahru (“High Court”) against the Government of
the State of Johor and Petroliam Nasional Berhad (collectively referred to as the “”Defendants””) in
connection with the compulsory land acquisition of 7 plots of land owned by KMD in relation to the
RAPID Project in Johor.
This civil suit is filed against the Defendants following breaches of the Federal Constitution, the Land
Acquisition Act 1960 and the National Land Code 1965.
KMD’s claim which is set out and particularised in the Statement of Claim dated 9 May 2014 seeks
“inter alia” the return of the 7 plots of land illegally acquired and damages arising therefrom.
The civil suit will not have any operational impact on the Company and the Group. There are no
losses that could arise from these proceedings except for an order for payment of costs if KMD is
unsuccessful in this action or if the Defendants include a counterclaim which is allowed by the High
Court.
In June 2014, the Defendants filed striking out applications to strike out KMD’s claim in the civil suit.
On 26 November 2014, the Defendants’ striking out applications were allowed with costs. On 8
December 2014, KMD filed its appeals to the Court of Appeal against the High Court’s decision on
the Defendants’ striking out applications (“Appeals”).
KMD’s Appeals, which were heard on 8 December 2015, were dismissed by the Court of Appeal with
costs of RM25,000 to be paid by KMD to each of the Defendants. On 5 January 2016, KMD filed its
Applications for Leave to appeal the decision made by Court of Appeal to the Federal Court (“KMD’s
Leave Applications”).
The hearing date for KMD’s Leave Application is not fixed to date.
31 December 2015
30. Significant related party transactions
Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control
the party or exercise significant influence over the party in making financial and operating decisions, or
vice versa, or where the Group and the party are subject to common control or common significant
influence. Related parties may be individuals or other entities.
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Subsidiaries:
Interest receivable on loans
-
-
22 19
Investment income in respect of gross dividends
-
-
40,377 195,043
Management fee receivables
-
-
1,900 2,862
Interest payable on loans
-
-
(1,118)
(4,768)
Affiliated companies:
Gross insurance premium receivables
2,222 2,949 -
Management fee receivables
864 882 864 882
Insurance commission payable
(51)
(556)
-
Claims paid
(842)
(546)
-
Professional fee paid
(663)
(596)
(663)
(596)
Office rental paid
-
(23)
-
IT management fee payable
(76)
(71)
(76)
(71)
(i) The above transactions are entered into in the normal course of business based on negotiated and
mutually agreed terms.
(ii) Affiliated companies during the financial year refer to the following:
-
Ganda Pesona Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director has
a substantial financial interest.
-
MWE Properties Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director
has a substantial financial interest.
-
Metra Management Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director
-
Magnum Berhad, incorporated in Malaysia, which is a company in which a Director has a
substantial financial interest.
-
Ace Management Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director
115
116
31 December 2015
31. Significant events
Disposal of 49% shareholding in MPI Generali Insurans Berhad (“MPI Generali”)
On 18 December 2014, the Company has announced:
(i) Proposed disposal by Multi-Purpose Capital Holdings Berhad (“MPCHB”), a wholly-owned subsidiary
of the Company, of 49,000,000 ordinary shares of RM1.00 each, representing 49% of the issued
and paid-up share capital of MPI Generali to Generali Asia N.V. (“Generali Asia”), for a disposal
consideration of approximately RM356,000,000, subject to adjustments;
(ii) Proposed granting of a call option by MPCHB to Generali Asia for Generali Asia to acquire from
MPCHB and to require MPCHB to sell such number of shares which is equivalent to 21% of the
issued and paid-up share capital of MPI Generali at the time of exercise of the call option; and
(iii) Proposed granting of a put option by MPCHB to Generali Asia for Generali Asia to sell to MPCHB
and to require MPCHB to acquire all of the issued and paid-up share capital of MPI Generali held by
Generali Asia at the time of exercise of the put option.
(Collectively to be referred to as “Proposals”)
On 5 November 2014, the Company announced through Maybank Investment Bank Berhad (“Maybank”)
that BNM had approved the following:
i.
Proposed disposal by MPCHB, of 49,000,000 ordinary shares of RM1.00 each in MPI Generali,
representing 49% of the issued and paid-up share capital of MPI Generali to an interested party; and
ii.
the grant of options by MPCHB to the interested party to acquire or dispose equity interest in MPI
Generali.
On 18 December 2015, the Company has announced through Maybank that MPCHB had entered into a
conditional share purchase agreement and a call and put option agreement with Generali Asia in relation
to the Proposals. On the same date, MPCHB had also entered into a shareholders’ agreement with
Generali Asia and MPI Generali, setting out their mutually agreed rights, duties, liabilities and obligations
vis-a-vis each other in relation to the operation of MPI Generali as a joint venture between MPCHB and
Generali Asia.
On 25 March 2015, the Company has announced that the Proposals were approved by the shareholders
of the Company at the Extraordinary General Meeting held on the same day.
On 7 May 2015, the Company has announced that in relation to the Proposals, it has received consideration
amounting to an aggregate of approximately RM356,000,000 via the following:
i.
direct cash payment of approximately RM337,800,000 by Generali Asia; and
ii.
the release of the Balance Escrow Sum of approximately RM18,200,000 by the escrow agent to
MPCHB.
At the same time, MPCHB has also received the call and put option payment from Generali Asia amounting
to an aggregate of approximately RM4,150,000.
In this regard, the Proposals were deemed completed on 7 May 2015.
117
31 December 2015
31. Significant events (cont’d)
Disposal of 49% shareholding in MPI Generali Insurans Berhad (“MPI Generali”) (cont’d)
The summarised financial impact arising from the completion of the Proposals are as follows:
Consideration received
Consideration received prior to the Completion Audit*
Additional consideration received after the Completion Audit
359,953
34,185
Less: call and put option payment
394,138
(4,150)
Group
2015
RM’000
Total consideration received
Less: the Proposals’ exercise expenses
Less: net assets disposed
Less: proportionate goodwill derecognised
389,988
(17,011)
(179,564)
(9,203)
Gain on disposal
184,210
The gain on disposal is included in the Group’s Statement of Changes in Equity.
* The Completion Audit refers to an audit on the financial statements of MPI Generali as of 30 April
2015.
Net cash inflow
Total consideration received
Less: the Proposals’ exercise expenses paid
389,988
(15,143)
374,845
Group
2015
RM’000
118
31 December 2015
32. Financial risk management objectives and policies
The Group’s and the Company’s financial risk management policy seeks to ensure that adequate financial
resources are available for the development of the Group’s and the Company’s businesses whilst
managing its liquidity risk, credit risk, market price risk, interest rate risk and insurance risk. The Group
and the Company operate within clearly defined guidelines that are approved by the Board of Directors.
As the Group’s result is significantly contributed by MPI Generali, the insurance subsidiary, there are
significant financial risks which relate to MPI Generali. Hence, the Group adopts the risk management
objectives and policies from MPI Generali.
Risk Management Framework of MPI Generali
Framework and responsibility
The Board of Directors of MPI Generali is committed to the development of an effective Risk Management
Framework (“RMF”), with the aims of providing a consistent approach to risk and facilitating an accurate
perception of acceptable risk by all employees. It forms an integral part of MPI Generali’s business strategic
planning, performance agreement and general risk management culture. The RMF is established to provide
guiding principles on risk management approach, risk governance structure, roles and responsibilities,
methodology used for risk assessment, and risk monitoring and reporting.
Under the RMF, MPI Generali adopts the three lines of defence approach, where to provide an independent
oversight to assist the Management in achieving its strategic plans and missions by implementing risk
management and compliance activities across the organisation. In this regard, the Business Units act as
the “first line of defence” while the risk control units and the Risk Management and Compliance act as the
second and third line of defence, respectively.
The Board of MPI Generali entrusts the Risk Management Committee (“RMC”) with the overall
responsibility for overseeing the risk management activities of the MPI Generali to ensure appropriate
risk management in place and functioning effectively as well as to endorse appropriate risk management
policies/frameworks and measurement methodologies across the organisation.
The RMC has a broad mandate to ensure the effective implementation of the objectives outlined in the
RMF and compliance with them throughout MPI Generali. The RMC is periodically reporting higher risk
exposures to the Board of MPI Generali. The roles and responsibilities as well as the authorities of the
RMC are set out in the Board of MPI Generali’s approved Term of Reference (“TOR”) for RMC.
A Strategic Operations Management Committee (“SOMC”) has been established to serve as a medium
between the RMC and the Management of MPI Generali. This Committee will oversee the daily risks
management activities of MPI Generali to ensure that risks inherent in daily business activities are
managed efficiently and effectively and will report regularly to the RMC on its recommendations and/or
decisions.
In addition, the Board of MPI Generali delegates to the Chief Executive Officer (“CEO”) of MPI Generali
the responsiblity for ensuring effective implementation and maintenance of this RMF and that all personnel
adhere to its mandates.
The detailed line accountability for risk management is fully aligned with the MPI Generali Risk Governance
structure. Accordingly, the approvals, responsibilities and accountabilities applicable to the identification,
evaluation, management and reporting of MPI Generali’s risks are attributed to the CEO of MPI Generali,
head of various department and branches.
31 December 2015
32. Financial risk management objectives and policies (cont’d)
Objectives and policies of MPI Generali’s Risk Management Framework
The objective of MPI Generali’s risk management policy is to define an ongoing and consistent process for
identifying, assessing, monitoring and reporting upon the significant risks faced by the departments and
branch offices, and ultimately, MPI Generali.
The implementation of RMF allows the management of MPI Generali to manage risks within defined risk/
return parameters, risk tolerances and risk management standards. As such it provides a framework for
the effective identification, evaluation, management and reporting of MPI Generali’s risks.
Effective management of risks identified is implemented via establishment of internal controls, systems,
policies and procedures. Systems are designed to provide reasonable assurance that assets are
safeguarded, insurance risk exposure is within desired limit, reinsurance protection is adequate and
counterparties are subject to security assessment. The RMF is reviewed on a periodic basis.
Capital Management Plan of MPI Generali
The objective of the Capital Management Plan (“CMP”) is to optimise the efficient and effective use of
resources in order to maximise the return on equity and provide an appropriate level of capital to protect
the policyholders taking into account events that can impact directly or indirectly on the operations and
financial resilience of MPI Generali whilst complying with rules and regulations issued by the relevant
authorities.
MPI Generali’s capital management is driven by the business strategies and taking into consideration the
impact of business and regulatory environment in which MPI Generali operates in. To comply with the
RBC Framework, MPI Generali has also set an Individual Target Capital Level (“ITCL”) which is above the
minimum regulatory requirements.
Stress Test of MPI Generali
The CMP also includes a Stress Test Policy which requires a stress test be conducted twice a year.
Stress testing is a fundamental risk management tool in assessing the financial resilience of MPI Generali
under exceptional but adverse possible events.
The stress tests results together with mitigating plans are tabled every half-year for deliberation and
recommendation to the Board of MPI Generali for approval prior to submission to Bank Negara Malaysia.
Asset Liability Management (“ALM”)
The primary objective of MPI Generali’s asset/liability management policy is to ensure that adequate liquid
assets are held at all times and provide a satisfactory and consistent earnings on these assets.
MPI Generali’s ALM is integrated with the management of the financial risks associated with MPI Generali’s
other financial assets and liabilities not directly associated with insurance. MPI Generali’s SOMC and
Investment Committee are primarily responsible for the asset/liability management based on guidelines
approved by the Board of MPI Generali.
119
120
31 December 2015
33. Financial instruments
(a) Assets/liabilities by categories
Loans and Financial Assets/ receivables/ assets/ AFS liabilities other liabilities financial not in scope liabilities at FVTPL assets of MFRS 139 RM’000 RM’000 RM’000 RM’000 Group
2015
Assets
-
-
-
81,570 Investment properties
-
-
-
832,125 Investment in an associate
-
-
-
515 Intangible assets
-
-
-
34,859 Deferred tax assets
-
-
-
1,561 Inventories
-
-
-
269 Receivables
289,783 -
-
-
Reinsurance assets -
-
-
434,278 Investment securities
-
409,252 396,964 -
Tax recoverable
-
-
-
720 Cash and bank balances
532,180 -
-
-
821,963 409,252 396,964 1,385,897 Total
RM’000
81,570
832,125
515
34,859
1,561
269
289,783
434,278
806,216
720
532,180
3,014,076
Liabilities
Payables 253,224 -
-
-
253,224
Insurance contract liabilities -
-
-
929,881 929,881
Borrowings 26,848 -
-
-
26,848
Tax payable
-
-
-
7,107 7,107
-
-
-
11,625 11,625
Derivative financial instruments
-
4,150 -
-
4,150
280,072 4,150 -
948,613 1,232,835
121
31 December 2015
33. Financial instruments (cont’d)
(a) Assets/liabilities by categories (cont’d)
Loans and Financial Assets/ receivables/ assets/ AFS liabilities other liabilities financial not in scope liabilities at FVTPL assets of MFRS 139 RM’000 RM’000 RM’000 RM’000 Total
RM’000
Group
2014
Assets
-
-
-
84,266 84,266
-
-
-
748,661 748,661
Investment in an associate
-
-
-
539 539
Intangible assets
-
-
-
43,161 43,161
Deferred tax assets
-
-
-
1,300 1,300
Inventories
-
-
-
231 231
Receivables
341,097 -
-
-
341,097
Reinsurance assets -
-
-
443,946 443,946
Investment securities
-
113,900 327,656 -
441,556
Tax recoverable
-
-
-
5,689 5,689
481,714 -
-
-
481,714
822,811 113,900 327,656 1,327,793 2,592,160
Liabilities
Payables 276,883 -
-
-
276,883
Insurance contract liabilities -
-
-
897,733 897,733
Borrowings 63,443 -
-
-
63,443
Tax payable
-
-
-
8,734 8,734
-
-
-
12,908 12,908
340,326 -
-
919,375 1,259,701
122
31 December 2015
(a) Assets/liabilities by categories (cont’d)
Loans and Assets/ receivables/ Financial AFS liabilities other assets financial not in scope liabilities at FVTPL assets of MFRS 139 RM’000 RM’000 RM’000 RM’000 Total
RM’000
Company
2015
Assets
-
-
-
1,104 Investment in
subsidiaries -
-
-
1,231,034 Investment securities -
5,045 -
-
Receivables
111,608 -
-
-
20,542 -
-
-
Tax recoverable
-
-
-
58 1,231,034
5,045
111,608
20,542
58
-
1,232,196 1,369,391
Liabilities
Payables 141,343 -
-
-
141,343
-
141,343
132,150 141,343 5,045 1,104
-
-
2014
Assets
-
-
-
1,459 1,459
Investment in subsidiaries -
-
-
1,197,486 1,197,486
Investment securities -
67,208 -
-
67,208
Receivables
157,269 -
-
-
157,269
3,227 -
-
-
3,227
160,496 1,198,945 1,426,649
198,730 -
-
-
-
-
-
21 198,730
21
198,730 198,751
Liabilities
Payables Tax Payables
67,208 -
-
-
21 Notes to the financial statements (cont’d)
123
31 December 2015
(b) Liquidity risk
The Group actively manages its debt maturity profile, operating cash flows and the availability of
funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its
overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible
investments to meet its working capital requirements. The Group also apportions its investments in
marketable securities and other financial investments by maintaining different maturity profiles. In
addition, the Group strives to maintain available banking facilities at a reasonable level to its overall
debt position. As far as possible, the Group prudently balances its portfolio with some short term
funding so as to achieve overall cost effectiveness.
In respect of the Group’s insurance business, the following policies and procedures are in place to
mitigate MPI Generali’s exposure to liquidity risk:
i)
A company-wide liquidity risk policy setting out the evaluation and determination of the
components of liquidity risk for MPI Generali. Compliance with the policy is monitored and
reported monthly and exposures and breaches are reported to MPI Generali’s SOMC as soon
as practicable. The policy is regularly reviewed for pertinence and for changes in the risk
environment.
ii)
MPI Generali has set the guidelines on asset allocations, portfolio limit structures and maturity
profiles of assets, in order to ensure sufficient funding is available to meet insurance and
investment contracts obligations.
iii) MPI Generali has set up contingency funding plans which specify minimum proportions of funds
to meet emergency calls as well as specifying events that would trigger such plans.
iv) MPI Generali’s treaty reinsurance contracts contains clauses permitting MPI Generali to call for
funding to meet claim payment should claim events exceed a specify amount.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s financial assets
and liabilities, reinsurance assets and insurance contract liabilities at the reporting date based on the
carrying amount of these financial assets and liabilities.
Up to a More than No maturity
year 1-5 years 5 years date RM’000 RM’000 RM’000 RM’000 Group
2015
Financial assets
Receivables
289,783 -
-
-
289,783
Reinsurance assets - claim liabilities*
192,032 124,011 13,742 -
329,785
714 986 -
804,516 806,216
456,613 -
-
75,567 532,180
Total
RM’000
939,142 124,997 13,742 880,083 1,957,964
Financial liabilities
Payables 253,224 -
-
-
253,224
- claim liabilities*
376,662 243,243 26,953 -
646,858
Borrowings 21,851 4,997 -
-
26,848
Derivative financial
instrument
-
4,150 -
-
4,150
651,737 252,390 26,953 -
931,080
124
31 December 2015
(b) Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
The table below summarises the maturity profile of the Group’s and the Company’s financial assets
and liabilities, reinsurance assets and insurance contract liabilities at the reporting date based on the
carrying amount of these financial assets and liabilities. (cont’d)
Up to a More than No maturity year 1-5 years 5 years date RM’000 RM’000 RM’000 RM’000 Group
2014
Financial assets
Receivables
341,097 -
-
-
341,097
Reinsurance assets - claim liabilities*
142,406 173,114 21,464 -
336,984
4,627 454 62,929 373,546 441,556
463,147 -
-
18,567 481,714
Total
RM’000
951,277 173,568 84,393 392,113 1,601,351
Payables 276,883 -
-
- 276,883
- claim liabilities*
330,600 268,897 30,086 -
629,583
Borrowings 36,595 26,848 -
-
63,443
-
969,909
Company
2015
Financial assets
Receivables
111,608 -
-
-
-
-
-
5,045 Cash and bank balances
-
-
-
20,542 111,608
5,045
20,542
25,587 137,195
Payables
141,343 -
-
-
141,343
644,078 111,608 295,745 -
30,086 -
125
31 December 2015
(b) Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
Up to a More than No maturity year 1-5 years 5 years date RM’000 RM’000 RM’000 RM’000 Company
2014
Financial assets
Receivables
157,269 -
-
-
-
-
-
67,208 Cash and bank balances
3,100 -
-
127 157,269
67,208
3,227
67,335 227,704
Payables
198,730 -
-
-
198,730
160,369 -
-
Total
RM’000
* For insurance contracts liabilities and reinsurance assets, maturity profiles are determined
based on estimated timing of net cash outflows from the recognised insurance liabilities.
Unearned premiums and the reinsurers’ share of unearned premiums have been excluded from
the analysis as they are not contractual obligations.
(c) Credit risk Credit risk is the risk of financial loss to the Group and the Company if a customer or counterparty to
a financial instrument fails to meet its contractual obligations. The major classes of financial assets
of the Group are deposits with financial institutions, AFS financial assets (unquoted debt securities
and bonds), reinsurance assets, loan receivables, trade receivables and cash and bank balances
Credit risk arises when the Group’s and the Company’s cash assets are placed in interest-bearing
instruments, mainly fixed and call deposits with licensed financial institutions. The Group and the
Company manage this credit risk by spreading its deposits with a group of financial institutions.
Credit exposure
The table below shows the maximum exposure to credit risk for the components on the statements
of financial position.
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
LAR:
456,613 463,147 -
3,100
75,567 18,567 20,542 127
Receivables
289,783 341,097 111,608 157,269
13,116 3,276 -
Unquoted debt securities
262,167 201,088 -
Reinsurance assets
434,278 443,946 -
1,531,524 1,471,121 132,150 160,496
126
31 December 2015
(c) Credit risk (cont’d)
Credit exposure by credit rating
The table below provides information regarding the credit risk exposure of the Group and the Company
by classifying assets according to the Group’s and the Company’s credit ratings of counterparties.
N
either past-due nor impaired
Past-due
Investment but not
grade Not Rated impaired RM’000 RM’000 RM’000 Group
2015
LAR:
432,807 23,806 -
8,370 67,197 -
Receivables
5,777 97,916 186,090 AFS financial assets:
-
13,116 -
237,771 24,396 -
Reinsurance assets
93,308 340,970 -
778,033 567,401 186,090 Total
RM’000
456,613
75,567
289,783
13,116
262,167
434,278
1,531,524
2014
LAR:
427,035 36,112 -
463,147
18,470 97 -
18,567
Receivables
-
192,997 148,100 341,097
-
3,276 -
3,276
193,797 7,291 -
201,088
Reinsurance assets
78,595 365,351 -
443,946
148,100 1,471,121
Company
2015
LAR:
20,524 18 -
Receivables
-
111,608 -
20,542
111,608
717,897 20,524 605,124 111,626 -
132,150
2014
LAR:
-
3,100 -
3,100
108 19 -
127
Receivables
-
157,269 -
157,269
108 160,388 -
160,496
127
31 December 2015
Credit exposure by credit rating (cont’d)
The table below provides information regarding the credit risk exposure of the Group and the
Company by classifying assets according to the Rating Agency of Malaysia’s (“RAM”), Malaysian
Rating Corporation Berhad (“MARC”), A.M. Best Company (“A.M. Best”) and Standards & Poor’s
(“S&P”) credit ratings of counterparties. AAA is the highest possible rating.
AAA AA A
Not rated Group
RM’000 RM’000 RM’000 RM’000 2015
LAR:
Short-term deposits with licensed banks 183,603 4,517 244,687 23,806 Cash and bank
balances
5,442 639 2,289 67,197 Receivables
-
16 5,761 284,006 AFS financial assets:
-
-
-
13,116 Unquoted debt
securities
33,913 170,287 33,571 24,396 Reinsurance assets
-
26,231 67,077 340,970 222,958 201,690 353,385 753,491 2014
LAR:
Short-term deposits with licensed banks 217,543 244 209,248 36,112 Cash and bank
balances
6,138 1,845 10,487 97 Receivables
-
-
-
341,097 AFS financial assets:
-
-
-
3,276 Unquoted debt
securities
26,132 164,646 3,019 7,291 Reinsurance assets
-
6,105 72,490 365,351 249,813 172,840 295,244 753,224 Total
RM’000
456,613
75,567
289,783
13,116
262,167
434,278
1,531,524
463,147
18,567
341,097
3,276
201,088
443,946
1,471,121
128
31 December 2015
Credit exposure by credit rating (cont’d)
AAA AA A
Not rated Company
RM’000 RM’000 RM’000 RM’000 2015
LAR:
Cash and bank
balances
22 -
20,502 18 Other receivables
-
-
-
111,608 Total
RM’000
132,150
22 -
20,502 111,626 20,542
111,608
2014
LAR:
Short-term deposits with licensed
banks
-
-
-
3,100 Cash and bank
balances
7
-
101 19 Other receivables
-
-
-
157,269 127
157,269
160,496
7
-
101 160,388 3,100
It is the Group’s and the Company’s policy to maintain accurate and consistent risk ratings across
its credit portfolio. This enables Management to focus on the applicable risks and the comparison
of credit exposures across all lines of business and products. The rating system is supported by a
variety of financial analytics combined with processed market information to provide the main inputs
for the measurement of counterparty risk. All internal risk ratings are tailored to the various categories
and are derived in accordance with the Group’s and the Company’s rating policy. The attributable risk
ratings are assessed and updated regularly.
During the year, no credit limits were exceeded.
The Group actively manages its product mix to ensure that there is no significant concentration of
credit risk.
31 December 2015
(d) Market price risk
Equity price risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate
because of changes in market prices (other than those arising from interest rate/profit yield risk or
currency risk), regardless whether those changes are caused by factors specific to the individual
financial instruments or its issuer or factors affecting similar financial instruments traded in the market.
The Group’s equity price risk exposure relates to financial assets whose values will fluctuate as a
result of changes in market prices.
The Group is exposed to equity price risk arising from investments held by the Group and the
Company in quoted shares and unit trusts in Malaysia and outside Malaysia.
The analysis below is performed for reasonably possible movements in equity price with all other
variables held constant, showing the impact of statements of comprehensive income and equity.
Changes Impact on equity*
in variable 2015 2014
Group %
RM’000 RM’000
Market indices:
Bursa Malaysia
+10% 39,745 17,714
Bursa Malaysia
-10% (39,745)
(17,714)
* Impact on equity reflects adjustments for tax, when applicable.
(e) Interest rate risk
Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate
because of changes in market interest rates/profit yield.
The Group and the Company are exposed to interest rate risk primarily through its investments in
fixed income securities and borrowings. Interest rate risk is managed by the Group and the Company
on an ongoing basis.
The Group and the Company have no significant concentration of interest rate/profit yield risk.
The sensitivity analysis of the Group’s and the Company’s fixed income securities and borrowings
are as follow:
Sensitivity of changes in
Impact to
Change in interest bearing debts
profit before tax
basis points Increase/(decrease)
Increase/(decrease)
Group Company Group Company
RM’000 RM’000 RM’000 RM’000
2015
Borrowings
+25 / -25 97/(97)
-
97/(97)
2014
Borrowings
+25 / -25 177/(177)
-
(177)/177
-
129
130
31 December 2015
(e) Interest rate risk (cont’d)
Sensitivity of changes
in fair value of
Change in interest bearing assets
basis points Increase/(decrease)
Group Company RM’000 RM’000 Impact to
profit before tax
Increase/(decrease)
Group Company
RM’000 RM’000
2015
Malaysian Government
Papers
+25 / -25 (33)/33
-
(33)/33
Unquoted debt
securities
+25 / -25 (655)/655 -
(655)/655
Short term deposits
with licensed banks
+25 / -25 1,233/(1,233)
- 1,233/(1,233)
2014
Malaysian Government
Papers
+25 / -25 8/(8)
-
8/(8)
Unquoted debt
securities
+25 / -25 503/(503)
-
503/(503)
Short term deposits
with licensed banks
+25 / -25 1,189/(1,189)
25/(25) 1,189/(1,189)
25/(25)
(f) Insurance risk
MPI Generali underwrites various general insurance contracts, which are mostly on an annual
coverage and annual premium basis, with the exception of short term policies such as Marine Cargo
which covers the duration in which the cargo is being transported.
MPI Generali also underwrites some non-annual policies with coverage period more than one year
such as Mortgage Reducing Personal Accident, Contractor’s All Risk and Engineering, Bonds and
Workmen Compensation. The majority of the insurance businesses written by the Group are Fire
and Motor. Other major lines of business include Contractor’s All Risk and Engineering, Workmen
Compensation, Liabilities, Personal Accidents and other miscellaneous classes.
MPI Generali’s objectives of managing insurance risks are to enhance the long-term financial
performance of the business to achieve sustainable growth in profitability, strong asset quality and to
continually optimise shareholders’ value. MPI Generali seeks to write those risks that it understands
and that provide a reasonable opportunity to earn an acceptable profit.
Insurance risk is the inherent uncertainty regarding the occurrence, amount or timing of insurance
liabilities. Insurance contracts transfer risk to MPI Generali by indemnifying the policy holders against
adverse effects arising from the occurrence of specified uncertain future events. The principal risk
MPI Generali faces under insurance contracts is that the actual claims and benefits payments differ
from expectations, the risks arise from the fluctuations in timing, frequency and severity of claims, as
well as the adequacy of premiums and reserves. Notes to the financial statements (cont’d)
131
31 December 2015
(f) Insurance risk (cont’d)
MPI Generali adopts the following measures to manage the insurance risks:
(i) MPI Generali has in place a claims management and control system to pay claims and control
claim wastage or fraud. MPI Generali has claim review policies to assess all new and ongoing
claims, review of claims handling procedures and investigation of possible fraudulent claims
are put in place to reduce the risk exposure of MPI Generali. MPI Generali further enforces
a policy of actively managing and promptly pursuing claims, in order to reduce its exposure
to unpredictable future developments that can negatively impact the business. Inflation risk is
mitigated by taking expected inflation into account when estimating insurance contract liabilities.
(ii) MPI Generali purchases reinsurance as part of its risks mitigation programme. The objectives
for purchasing reinsurance are to provide market-leading capacity for MPI Generali’s customers
while protecting the statements of financial position and optimising MPI Generali’s capital
efficiency. Reinsurance is ceded on quota share, proportional and non-proportional basis.
MPI Generali’s placement of reinsurance is diversified such that it is neither dependent on a
single reinsurer nor are the operations of MPI Generali substantially dependent upon any single
reinsurance contract.
The table below sets out the concentration of the MPI Generali’s insurance contract liabilities by type
of insurance product:
Re
Gross insurance Net
RM’000 RM’000 RM’000
Group
2015
Claim liabilities
Motor
Fire
Marine, Aviation & Transit
Miscellaneous
220,247 125,444 89,116 212,051 (7,703)
(101,999)
(82,837)
(137,246)
212,544
23,445
6,279
74,805
646,858 (329,785)
317,073
Premium liabilities
Motor
Fire
Miscellaneous
97,493 40,506 35,026 109,998 (13,845)
(23,298)
(32,812)
(34,538)
83,648
17,208
2,214
75,460
283,023 (104,493)
178,530
132
31 December 2015
Gross RM’000 Reinsurance RM’000 Net
RM’000
Group
2014
Claim liabilities
Motor
Fire
Miscellaneous
206,869 111,706 149,430 161,578 (7,761)
(87,240)
(141,091)
(100,892)
199,108
24,466
8,339
60,686
629,583 (336,984)
292,599
Premium liabilities
Motor
Fire
Miscellaneous
95,573 32,606 46,704 93,267 (13,416)
(19,987)
(44,342)
(29,217)
82,157
12,619
2,362
64,050
268,150 (106,962)
161,188
Key Assumptions
The principal assumption underlying the liability estimates is that MPI Generali’s future claims
development will follow a similar pattern to past claims development experience. This includes
assumptions in respect of average claims costs, claims handling cost and claims numbers for each
accident year.
Additional qualitative judgements are used to assess the extent to which past trends may not apply
in the future, for example, isolated occurrence, change in market factors such as public attitude to
claiming, economic conditions, as well as internal factors, such as, portfolio mix, policy conditions
and claims handling procedures. Judgement is further used to assess the extent to which external
factors, such as, judicial decisions and government legislation affect the estimation.
Other key circumstances affecting the reliability of assumptions include variation in interest rates,
delays in settlement and changes in foreign rates.
MPI Generali has based its risk margin for adverse deviation for the provisions for unexpired risks
and insurance claims at a minimum 75% of sufficiency, according to the requirement set by Bank
Negara Malaysia under the RBC Framework.
133
31 December 2015
Sensitivities
MPI Generali has appointed independent actuarial firm to evaluate its valuation models on various
bases. An analysis of sensitivity around various scenarios provides an indication of the adequacy of
MPI Generali’s estimation process in respect of its insurance contracts. The table presented below
demonstrates the sensitivity of the insurance contract liabilities estimates to particular movements in
assumptions used in the estimation process.
The analysis below is performed for reasonably possible movements in key assumptions with all
other assumptions held constant, showing the impact on gross and net liabilities, profit before tax
and equity. The correlation of assumptions will have a significant effect in determining the ultimate
claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had
to be changed on an individual basis. It should be noted that movements in these assumptions are
non-linear.
Change in assumption Impact on gross liabilities RM’000 Impact on net liabilities RM’000 Impact
on profit before tax RM’000 Impact on
equity*
RM’000
2015
Average claim
cost
+10%
57,773 26,072 (26,072)
(19,554)
Average number
of claims
+10%
34,549 23,171 (23,171)
(17,378)
Average claims settlement period Increase by
9,317 6,105 (6,105)
(4,579)
6 months
2014
Average claim
cost
+10%
56,654 23,967 (23,967)
(17,975)
Average number of claims
+10%
36,494 20,252 (20,252)
(15,189)
Average claims settlement period Increase by
8,971 5,632 (5,632)
(4,224)
6 months
*
impact on equity reflects adjustments for tax, when applicable
134
31 December 2015
Claim Development Table
The following tables show the estimate of cumulative incurred claims, including both claims notified
and IBNR for each successive accident year at reporting date, together with cumulative payments
to-date.
In setting provisions for claims, MPI Generali gives consideration to the probability and magnitude
of future experience being more adverse than assumed and exercises a degree of caution in setting
reserves when there is considerable uncertainty. In general, the uncertainty associated with the
ultimate claims experience in an accident year is greater when the accident year is at an early
stage of development and the margin necessary to provide the necessary confidence in adequacy of
provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more
certain, the relative level of margin maintained should decrease.
The management of MPI Generali believes that the estimate of total claims outstanding as of 31
December 2015 are adequate. However, due to the inherent uncertainties in the reserving process,
it cannot be assured that such balances will ultimately prove to be adequate.
Information in the claims development table below is provided to the extent available as the current
actuary was only appointed in 2007.
At end of accident year One year later
Two years later Three years later
Four years later Five years later
Six years later Seven years later
Current estimate of
cumulative claims incurred
At end of accident year
One year later
Two years later Three years later
Four years later Five years later
Six years later
Seven years later Cumulative payments to date
2013 RM’000 2014 RM’000 2015 RM’000
246,172 174,818 201,209 268,229 298,233 337,467
249,899 (87,568)
89,504 (208,729)
Gross general insurance contract liabilities per statements of financial position (Note 18)
83,211 (185,018)
24,448 (176,761)
Best estimate of claim liabilities
Claim handling expenses
Fund PRAD at 75% confidence interval
13,762 (161,056)
44,812 (201,360)
Case reserves reconciliation difference between SMCD and G Forms
Gross general insurance outstanding liabilities (treaty inward)
12,600 (241,136)
(110,654) (66,089) (66,857) (68,404) (78,103) (107,625) (87,568)
(196,934) (145,219) (132,063) (140,189) (157,222) (208,729)
(225,951) (164,223) (152,569) (160,186) (185,018)
(233,745) (182,266) (159,273) (176,761)
(237,111) (190,640) (161,056)
(240,419) (201,360)
(241,136)
253,736 4,921 2012 RM’000 364,710 273,955 221,090 225,900 250,572 319,927
337,467
283,469 297,469 196,534 218,491 275,038 298,233 276,209 283,844 185,601 206,308 268,229 273,541 281,178 177,984 201,209 268,800 258,719 174,818 258,588 246,172 253,736 2011 RM’000 Gross general insurance
outstanding liabilities
(direct and facultative) (212,614)
(63,026)
(145,216)
(175,215)
(194,030)
(198,157)
(200,310)
(206,969)
(212,614)
217,535 282,098 282,098 232,193 227,013 226,850 227,255 221,187 217,535
2010 RM’000 Group
Accident year
2009 RM’000 Gross general insurance contract liabilities 2015
Prior 2008 RM’000 Claim Development Table (cont’d)
646,858
584,878
6,280
55,700
794
60,927
523,157
Total
RM’000
31 December 2015
135
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Cumulative payments to date
Net general insurance
(direct and facultative)
Net general insurance outstanding liabilities (treaty inward)
Net general insurance contract liabilities per statements of financial position (Note 18)
2015 RM’000
2014 RM’000 Current estimate of
2013 RM’000 2012 RM’000 At end of accident year One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
2011 RM’000 2010 RM’000 Group
Accident year
117,135 113,704 114,584 126,578 152,216 176,157 198,958
1,242 (107,702)
4,391 9,113 10,673 (112,744) (104,591) (103,911)
9,648 23,894 45,843 (116,930) (128,322) (130,314)
122,940 (76,018)
(51,593) (49,962) (46,848) (47,308) (55,488) (63,109) (76,737) (76,018)
(86,076) (87,688) (85,718) (85,415) (98,085) (115,460) (130,314)
(96,674) (100,243) (96,694) (98,114) (110,481) (128,322)
(103,078) (107,283) (102,441) (102,597) (116,930)
(104,786) (109,870) (104,087) (103,911)
(106,111) (112,243) (104,591)
(107,110) (112,744)
(107,702)
108,944 115,506 120,410 125,104 129,888 142,610 157,393 184,690 198,958 113,749 118,098 122,605 123,352 137,867 158,587 176,157 114,565 119,218 120,211 121,022 129,143 152,216 113,794 118,971 117,792 117,274 126,578 113,196 119,025 116,154 114,584 113,010 119,493 113,704 111,521 117,135 108,944 2009 RM’000 Net general insurance contract liabilities 2015
Prior 2008 RM’000 Claim Development Table (cont’d)
317,073
289,465
6,280
21,328
794
60,927
227,744
Total
RM’000
136
31 December 2015
Gross general insurance contract liabilities 2014
Current estimate of
201,481 221,187 258,588 258,719 177,984 206,308 275,038 319,927
117,816 212,302 Gross general insurance contract liabilities per statements of financial position (Note 18)
46,122 (107,625)
18,711 (157,222)
68,079 (160,186)
18,169 (159,273)
Gross general insurance outstanding liabilities (treaty inward)
14,218 (190,640)
15,867 (240,419)
Gross general insurance
(206,969)
(185,614)
(52,271) (63,026) (110,654) (66,089) (66,857) (68,404) (78,103) (107,625)
One year later
(98,334) (145,216) (196,934) (145,219) (132,063) (140,189) (157,222)
Two years later
(165,102) (175,215) (225,951) (164,223) (152,569) (160,186)
Three years later
(178,272) (194,030) (233,745) (182,266) (159,273)
Four years later
(180,874) (198,157) (237,111) (190,640)
Five years later
(182,046) (200,310) (240,419)
Six years later
(182,460) (206,969)
Seven years later
(185,614)
Group
Prior 2007 2008 2009 2010 2011 2012 2013 2014 Accident year
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 At end of accident year
201,119 282,098 364,710 273,955 221,090 225,900 250,572 319,927 One year later
201,119 282,098 283,469 297,469 196,534 218,491 275,038 Two years later
201,119 232,193 276,209 283,844 185,601 206,308 Three years later
197,027 227,013 273,541 281,178 177,984 Four years later
195,365 226,850 268,800 258,719 Five years later
194,270 227,255 258,588 Six years later
191,780 221,187 Seven years later
201,481 Claim Development Table (cont’d)
629,583
569,498
3,899
56,186
1,598
56,616
511,284
Total
RM’000
31 December 2015
137
(41,078) (51,593) (49,962) (46,848) (47,308) (55,488) (63,109) (76,737)
(71,976) (86,076) (87,688) (85,718) (85,415) (98,085) (115,460)
(77,332) (96,674) (100,243) (96,694) (98,114) (110,481)
(83,181) (103,078) (107,283) (102,441) (102,597)
(84,819) (104,786) (109,870) (104,087)
(85,729) (106,111) (112,243)
(85,969) (107,110)
(86,665)
(86,665)
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
Net general insurance
Net general insurance outstanding liabilities (treaty inward)
Net general insurance contract liabilities per statements of financial position (Note 18)
2014 RM’000 2013 RM’000 Current estimate of
2012 RM’000 2011 RM’000 At end of accident year
One year later
Two years later
Three years later
Four years later
Five years later
Six years later
Seven years later
2010 RM’000 2009 RM’000 Group
Accident year
2008 RM’000 Net general insurance contract liabilities 2014
4,211 90,876 119,493 116,154 117,274 129,143 158,587 4,411 7,250 12,067 14,677 18,662 43,127 (107,110) (112,243) (104,087) (102,597) (110,481) (115,460)
111,521 107,953 (76,737)
184,690 88,126 115,506 120,410 125,104 129,888 142,610 157,393 184,690 90,454 113,749 118,098 122,605 123,352 137,867 158,587 91,988 114,565 119,218 120,211 121,022 129,143 91,075 113,794 118,971 117,792 117,274 90,489 113,196 119,025 116,154 90,095 113,010 119,493 88,503 111,521 90,876 Prior 2007 RM’000 Claim Development Table (cont’d)
292,599
270,572
3,899
18,128
1,598
56,616
212,358
Total
RM’000
138
31 December 2015
31 December 2015
(g) Fair values
The following methods and assumptions are used to estimate the fair values of the following classes
of financial instruments:
(i) Cash and bank balances, receivables, payables and borrowings
The carrying amounts of these financial assets and liabilities are reasonable approximation of
fair values, either due to their short-term nature or that they are floating rate instruments that are
re-priced to market interest rates on or near the reporting date.
The carrying amounts of the loans and borrowings are reasonable approximations of fair values
due to the insignificant impact of discounting.
(ii) Quoted investments
The fair value of quoted investments is determined by reference to stock exchange quoted
market bid prices at the close of the business on the reporting date.
(iii) Unquoted investments
The fair value of the unquoted investments of the Group, except for the unquoted shares in
Malaysia are determined based on valuations models which uses observable data.
Included in AFS financial assets as of 31 December 2015 was unquoted shares of RM1,001,000
(2014:RM1,001,000) that were carried at cost as their fair value could not be reliably measured.
These securities were acquired for long term investment purposes.
(iv) Amount due from/to subsidiaries
The Group and the Company do not anticipate the carrying amounts recorded at the reporting
date that would eventually be received or settled to be significantly different from the fair values
as the amounts are repayable on demand.
Fair value hierarchy
The table below analyses those financial instruments carried at fair value by their valuation methods
and non-financial assets which are carried at cost in the statements of financial position, of which
their fair value are disclosed. The different levels have been defined as follows:
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities
Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value
observable, either directly or indirectly
Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable
inputs)
139
140
31 December 2015
(g) Fair values (cont’d)
As at 31 December 2015, the Group and the Company held the following financial instruments
carried at fair value in the statements of financial position:
Level 1 Level 2 Level 3 RM’000 RM’000 RM’000 Group
At 31 December 2015
Current Financial assets at FVTPL
409,252 -
-
Non-current
AFS financial assets*
120,680 275,283 -
Total investment
529,932 275,283 -
At 31 December 2014
Current
Financial assets at FVTPL
113,900 -
-
Non-current
AFS financial assets*
122,291 204,364 -
Total investment
236,191 204,364 -
Total
RM’000
409,252
395,963
805,215
113,900
326,655
440,555
* excluding unquoted shares that are carried at cost
Level 1 Level 2 Level 3 Total
RM’000 RM’000 RM’000 RM’000
Company At 31 December 2015
5,045 -
-
5,045
At 31 December 2014
67,208 -
-
67,208
141
31 December 2015
(g) Fair values (cont’d)
The Group held the following non-financial assets carried at cost in the statements of financial
position but which fair values are disclosed as follows:
Level 1 RM’000 Level 2 RM’000 Level 3 RM’000 Total
RM’000
Group
At 31 December 2015
Non-current
Land and buildings
-
-
176,850 176,850
-
-
1,310,985 1,310,985
-
-
1,487,835 1,487,835
At 31 December 2014
Non-current
Land and buildings
-
-
176,680 924,194 -
-
176,680
924,194
-
1,100,874 -
1,100,874
Due to changes in management’s assessment on the valuation, the fair value of these non-financial
assets were recognised in Level 3 for the first time, as compared to Level 2 in 2014.
There were no transfer between Level 1 and Level 2 during 2015 and 2014.
Movement of Level 3:
Group
2015 2014
RM’000 RM’000
As at 1 January
-
Reclassified from Level 2
1,100,874 Fair value increase
386,961 As at 31 December
1,487,835 -
142
31 December 2015
34. Non-controlling interests (“NCI”)
Group
2015 2014
RM’000 RM’000
At 1 January
13,620 15,389
Share of profit/(loss) for the year
21,049 (1,767)
Acquisition of additional interests from NCI
(15,467)
(2)
Arising from partial disposal of equity interest in
a subsidiary (Note 31)
179,564 At 31 December
198,766 13,620
Financial information of the subsidiaries that have NCI are provided below: (cont’d.)
Proportion of equity interest held by NCI:
2015 2014
%
%
Direct subsidiaries of the Company:
Subsidiary of Multi-Purpose Capital Holdings Berhad:
Subsidiary of Multi-Purpose Shipping Corporation Berhad:
*
West-Jaya Sdn. Bhd.
Queensway Nominees (Tempatan) Sdn. Bhd.
Queensway Nominees (Asing) Sdn. Bhd.
Leisure Dotcom Sdn. Bhd.
Mimaland Berhad
MPI Generali Insurans Berhad
Mulpha Kluang Maritime Carriers Sdn. Bhd.
30 *
*
30 2
49 *
Represents less than 0.06% shareholding
30
30
30
30
2
-
30
143
31 December 2015
34. Non-controlling interests (“NCI”) (cont’d)
Financial information of the subsidiaries that have NCI are provided below: (cont’d)
Accumulated balances of NCI:
2015 2014
RM’000 RM’000
West-Jaya Sdn. Bhd.
8
24
2
1,572
11 15,209
39 (4,129)
Mimaland Berhad
1,994 2,008
4
(1,064)
196,708 198,766 13,620
Summarised statement of comprehensive income:
2015 2014
RM’000 RM’000
Revenue
123,746 297
Other Income
55,867 1,683
Other expenses
(90,771)
(3,824)
Operating profit/(loss)
Finance costs
88,842 (465)
(1,844)
(3,283)
Profit/(loss) before taxation
Income tax expenses
88,377 (16,104)
(5,127)
(583)
Net profit/(loss) for the year, representing
total comprehensive income/(loss) for the year
72,273 (5,710)
Attributable to non-controlling interests
(1,767)
21,049 The profit/(loss) attributable to NCI arise from the following companies:
2015 2014
RM’000 RM’000
West-Jaya Sdn. Bhd.
(16)
(36)
(13)
(54)
(152)
(591)
4,168 (242)
Mimaland Berhad
(14)
(34)
(68)
(810)
17,144 21,049 (1,767)
144
31 December 2015
34. Non-controlling interests (“NCI”) (cont’d)
Financial information of the subsidiaries that have NCI are provided below: (cont’d.)
Summarised statements of financial position as at 31 December:
2015 2014
RM’000 RM’000
7,618 Investment properties
296,586 207,188
395,963 Deferred tax assets
995 806
Intangible assets
2,960 Trade receivables
185,850 Other receivables
82,184 104,281
Reinsurance assets
434,278 Short term deposits
456,307 Tax recoverable
8
109
17,989 342
(15,362)
(16,309)
Payables
(205,379)
(229,005)
(929,881)
Tax payable
(6,034)
(285)
Total equity
Equity attributable to: Owners of the Company
525,316 53,507
198,766 13,620
724,082 724,082 67,127
67,127
Summarised cash flow information for year ended 31 December:
2015 2014
RM’000 RM’000
(468,019)
(66,923)
Financing activities
485,666 67,152
Net increase in cash and cash equivalents
17,647 229
145
31 December 2015
35. Capital management The primary objective of the Group’s capital management is to maintain on optimal capital structure in
order to support its business and maximise shareholder value. The Group manages its capital structure
and make adjustments to it, in light of changes in economic condition. To maintain or adjust its capital
structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares.
The Group monitors capital using a gearing ratio, which is the net debt divided by total equity plus net
debt. The Group includes within its net debt, term loan, payables, less cash and bank balances and short
term deposits. Capital of the Group represents total equity.
The debt to equity ratio as at 31 December 2015 and 31 December 2014 are as follows:
Group Company
2015 2014 2015 2014
RM’000 RM’000 RM’000 RM’000
Payables 253,224 276,883 141,343 198,730
Borrowings
26,848 63,443 -
Less: Cash and bank balances (75,567)
(18,567)
(20,542)
(127)
Less: Short term deposits (456,613)
(463,147)
-
(3,100)
(Net surplus of the fund)/net debt
(252,108)
(141,388)
120,801 195,503
Equity attributable to owners
of the Company
1,582,475 1,318,839 1,228,048 1,227,898
Capital and net debt 1,330,367 1,177,451 1,348,849 1,423,401
Gearing ratio
N/A
N/A
9%
14%
36. Segment information
The following segment information has been prepared in accordance with MFRS 8 Operating Segments,
which defines the requirements for the disclosure of financial information of an entity’s operating segments.
It is prepared on the basis of the “management approach”, which requires presentation of the segments
on the basis of internal reports about the components of the entity which are regularly reviewed by the
chief operating decision-maker in order to allocate resources to a segment and to assess its performance.
The Group’s businesses are organised into the following three segments based on the types of products
and services that it provides:
(i) Insurance - underwriting of all classes of general insurance business;
(ii) Credit - provision of credit and related services; and
(iii) Investments - ownership of buildings for rental income and hotel operation.
The Directors are of the opinion that all inter-segment transactions have been entered into in the normal
course of business based on negotiated and mutual terms.
146
31 December 2015
36. Segment information (cont’d)
Insurance Credit Investments Total
Group
RM’000 RM’000 RM’000 RM’000
2015
(a) Revenue
339,341 2,156 39,290 380,787
(b)
Results
Segment results 77,146 10,387 21,115 Finance costs
108,648
(2,441)
(24)
Segment profit before tax
Income tax expense
106,183
(19,629)
Profit for the year
86,554
(c) Assets and liabilities
Segment assets
1,586,411 508,135 919,015 3,013,561
515
Total assets
3,014,076
Segment/total liabilities
1,232,835
1,122,108 6,716 104,011 2014
(a) Revenue
330,957 1,820 37,301 370,078
(b)
Results
Segment results 70,910 1,499 209,225 Finance costs
281,634
(4,137)
(11)
Segment profit before tax
Income tax expense
277,486
(33,833)
Profit for the year
243,653
147
31 December 2015
Group
RM’000 RM’000 RM’000 RM’000
2014
(c) Assets and liabilities
Segment assets
1,471,209 138,514 981,898 2,591,621
539
Total assets
2,592,160
Segment/total liabilities
1,259,701
1,067,517 18,897 173,287 Group
2015
(d) Other information
Capital expenditure
4,772 -
216 4,988
Depreciation of property,
plant and equipment
2,173 -
3,791 5,964
Depreciation of investment
properties
50 -
1,720 1,770
Amortisation of premium
and intangible assets
911 -
-
911
Allowance for impairment of receivables 4,731 -
-
4,731
Write back of allowance for
impairment for loans and advances
-
(20)
(10,134)
(10,154)
Gain arising from fair value
change in financial assets
at FVTPL, net
-
(64)
(379)
(443)
Realised gain on AFS
financial assets
2,697 -
-
2,697
Interest income
(27,629)
(5,850)
(5,058)
(38,537)
148
31 December 2015
Group
RM’000 RM’000 RM’000 RM’000
2014
(d)
Other information
Capital expenditure
1,730 -
2,338 4,068
1,225 -
4,780 6,005
Depreciation of investment properties
50 -
1,720 1,770
Amortisation of premium and intangible assets
623 -
-
623
Allowance for impairment of receivables 6,311 -
-
6,311
Write back of allowance for impairment for loans and advances
-
(23)
-
(23)
Loss arising from fair value
change in financial assets
at FVTPL, net
-
10 208 218
Realised gain on AFS financial assets
(5,394)
-
-
(5,394)
Interest income
(24,095)
(3,183)
(5,734)
(33,012)
Non-cash expenses other
than depreciation,
amortisation and
impairment losses
649 -
4
653
37. Subsidiaries and an associate
Subsidiaries
Group’s effective
Effective interest held by Principal
interest held *
n
on-controlling interests* activities
Name of subsidiaries
(%)
(%)
(%)
(%)
2015
2014
2015
2014
Direct subsidiaries of
the Company
Multi-Purpose Capital Investment
Holdings Berhad
100 100 -
- holding
Multi-Purpose Shipping
Corporation Berhad
100 100 -
-
Investment
holding and
property
investment
149
31 December 2015
37. Subsidiaries and an associate (cont’d)
Subsidiaries (cont’d)
Group’s effective
interest held *
n
(%)
(%)
(%)
(%)
2015
2014
2015
2014
West-Jaya Sdn. Bhd.
70 70 30 30 Queensway Nominees
(Tempatan) Sdn. Bhd.
100 70 ** 30 Queensway Nominees (Asing) Sdn. Bhd.
100 70 ** 30 Caribbean Gateway
Sdn. Bhd.
100 100 -
-
Investment
holding and
property
investment
Property
investment
Property
investment
Investment
holding
Jayavest Sdn. Bhd.
100 100 -
- Investment
holding
Leisure Dotcom 70 Sdn. Bhd.
70 30 30 Property
investment
Magnum.Com
100 100 -
-
Sdn. Bhd.
Magnum Leisure
100 100 -
-
Sdn. Bhd.
Property
investment
Mimaland Berhad
98 98 2
2
Syarikat Perniagaan 100 100 -
-
Selangor Sdn. Bhd.
Property
investment
Tibanis Sdn. Bhd.
100 100 -
-
Kelana Megah 100 100 -
-
Development Sdn. Bhd.
Property
investment
Operation of a
hotel
Property
investment &
management
and operation
of hotel
Plantation
and property
holding
150
31 December 2015
Group’s effective
interest held *
n
(%)
(%)
(%)
(%)
2015
2014
2015
2014
Subsidiaries of Multi-Purpose Capital
Holdings Berhad
(“MPCHB”)
MPI Generali Insurans
51 100 49 - General
Berhad insurance
Multi-Purpose Credit Holdings Sdn. Bhd.
100 100 -
- Investment holding
A subsidiary of MPI Generali Insurans
Berhad
Opus Institutional 100 100 -
- Wholesale
Income Fund 2 fund
United Institutional
100 -
Income Fund 2
-
- Wholesale
fund
Subsidiaries of
Multi-Purpose
Credit Holdings Sdn. Bhd.
Multi-Purpose Credit 100 100 -
- Credit and
Sdn. Bhd. leasing
business, hire
purchase and
general loans
financing
MP Factors Sdn. Bhd.
100 100 -
-
Business of
factoring and
property
investment
Multi-Purpose Venture -
100 -
- Dissolved
Partners Sdn. Bhd.***
Multi-Purpose Credit 100 100 -
- Nominee
Nominees (Tempatan) services
Sdn. Bhd.
151
31 December 2015
Group’s effective
interest held *
n
(%)
(%)
(%)
(%)
2015
2014
2015
2014
Subsidiaries of Multi-Purpose Shipping Corporation Berhad
Mulpha Kluang Maritime
100 70 ** 30
Carriers Sdn. Bhd.
Multi-Purpose 100 100 -
-
Development (PG)
Sdn. Bhd. Property
investment
Property
development
A subsidiary
of Syarikat Perniagaan Selangor
Sdn. Bhd.
Flamingo Management 100 100 -
- Hotel
Sdn. Bhd. management
An associate of MPCHB
Name of an associate
Group’s effective
interest held *
(%)
(%)
Principal
2015
2014
activities
Accounting
model
applied
Tune Insurance (Labuan) Ltd.
20 20 Reinsurance Equity method
* Equals to the proportion of voting rights held ** Interest held by non-controlling interests for Queensway Nominees (Tempatan) Sdn. Bhd., Queensway
Nominees (Asing) Sdn. Bhd. and Mulpha Kluang Maritime Carriers Sdn. Bhd. are 0.02%, 0.00001%
and 0.05%, respectively.
*** On 24 June 2015, the Company announced that Multi-Purpose Venture Partners Sdn. Bhd., an
indirect subsidiary of the Company, has been dissolved pursuant to Section 272(5) of the Companies
Act, 1965.
152
31 December 2015
38. Supplementary information The breakdown of the retained profits of the Group and of the Company into realised and unrealised
profits is presented below in accordance with the directive issued by Bursa Malaysia Securities Berhad
dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination
of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia
Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.
2015 2014
RM’000 RM’000
Total retained profits
- realised - unrealised 657,187 (11,251)
423,815 (11,608)
-
-
8
(8)
Total share of retained profits from
an associate
- realised 415 439 -
-
Less: Consolidation adjustments
(88,607)
(119,145)
-
-
Retained profits as per financial
statements
557,744 293,501 -
-
TOP 10 LIST OF PROPERTIES OWNED BY MPHB CAPITAL GROUP
As at 31 December 2015
RESIDUAL AGE OF GROUP NET
LEASE EXPIRY APPROX
BUILDING BOOK VALUE DATE OF
LOCATION
TENURE (YEARS) DATE
AREA
DESCRIPTION (YEARS)
(RM’000) REVALUATION
1
Lot PT 37379, H.S(D) 73892 , Freehold
-
- 233.18 acres
-
Lot PT 43359, H.S(D) 80852 , Lot PT 43360, H.S(D) 80853, Lot PT 43361, H.S(D) 80854, Lot PT 43362, H.S(D) 80855,
Lot PT 43363, H.S(D) 80856,
Lot PT 43365, H.S(D) 80858,
Lot PT 43366, H.S(D) 80859,
Lot PT 43367, H.S(D) 80860,
Lot PT 43368, H.S(D) 80861, Vacant land
169,966 28.01.2016
Lot PT 43369, H.S(D) 80862,
Lot PT 43370, H.S(D) 80863,
Lot PT 43371, H.S(D) 80864,
Mukim Rawang,
District of Gombak, Selangor.
Lot 1048, PM 854,
Leasehold 76
2091 2.22 acres
-
Bandar Kundang , Sg Bakau,
2
Lot 2947, Geran 307402
Freehold
-
- 124.41 acres
and Lot 3003, Geran 49265,
Mukim Setapak,
Lot PT B, H.S(D) 40430, Leasehold 54
2069 197.05 acres
-
Lot PT 7546, H.S(D) 40431,
and Lot PT A, H.S(D) 1767,
Vacant land
146,745 28.01.2016
Mukim Setapak,
Lot PT 5300, H.S(M) 1726 Leasehold 76
2091 2.60 acres
-
and Lot PT 5301, H.S(M) 1727,
Mukim Setapak,
3 Lot 200, Geran 12089, Freehold
-
-
1.50 acres Vacant land
-
130,500 28.01.2016
Section 67, Bandar & Daerah
Kuala Lumpur.
4 Lot 1216, Geran 8176, Freehold
-
-
1.66 acres
4 storey
13
80,329 28.01.2016
Section 67, Bandar & Building
Daerah Kuala Lumpur.
5 Lot 296, Geran Mukim 528,
Freehold
-
-
-
76,900 28.01.2016
Lot 306, Geran Mukim 531, Lot 1675, Geran Mukim 654,
Lot 1713, Geran Mukim 672,
Lot 2346, GRN 47939,
153
154
TOP 10 LIST OF PROPERTIES OWNED BY MPHB CAPITAL GROUP
As at 31 December 2015 (cont’d)
RESIDUAL AGE OF GROUP NET
LEASE EXPIRY APPROX
BUILDING BOOK VALUE DATE OF
LOCATION
TENURE (YEARS) DATE
AREA
DESCRIPTION (YEARS) (RM’000) REVALUATION
Lot PT 6581, H.S.(M) 3475,
and Lot PT 6582, H.S(M) 3476.
Mukim 12, Telok Tempoyak,
Daerah Barat Daya, Pulau Pinang
6
Lot 1282, Geran 47410 and Freehold
-
-
-
61,790 28.01.2016
Lot 1283, Geran 42982, Section 67, Bandar &
Daerah Kuala Lumpur.
7
Lot 109, GRN 83563, Freehold
-
- 971.40 acres
Lot 201, GRN 121896,
Lot 364, GRN 83581,
Lot 437, GRN 456954,
Lot 519, GRN 82700,
Lot 919, GRN 106049,
Lot 980, GRN 121929 and
Lot 1104, GRN 84211.
Mukim Pengerang, Agriculture
District of Kota Tinggi, Johor
Lot 992, PN 13368, Lot 993, PN 58271,
and Lot 994, PN 58272.
Mukim Pengerang,
District of Kota Tinggi, Johor.
8
Lot 4071, Geran 60996,
Freehold
-
-
2.33 acres
Hotel -
40,093 08.01.2016
Town of Tanjong Bungah,
District of North East,
Pulau Pinang.
9
Lot 18207, PM 435, Leasehold 76
2091 2.71 acres
4 storey 18
37,531 08.01.2016
Seksyen 2, Bandar Ulu Kelang, commercial
Ampang Tasik,
complex
Leasehold 895
2910 731.12 acres
60,549 08.01.2016
-
10Lot 13499, PM343, Leasehold 76
2091 12.28 acres Hotel, Lake 18-19
31,541 08.01.2016
Lot 13500, PM344 and & Boat house
Lot 13501, PM345,
Mukim Ulu Kelang, Ampang Tasik
ANALYSIS OF EQUITY SECURITIES
155
AS AT 1 APRIL 2016
Class of Security
Authorised Share Capital
Total Issued And Paid-Up Capital
Voting Rights
:
:
:
:
Ordinary shares of RM1.00 each
RM1,000,000,000
RM 715,000,000
1 vote per share
No. of Holders % of Holders No. of Shares
Largest Shareholders
30 0.21 521,349,497
% of Shares
72.92
Size of Holdings
less than 100 shares
100 - 1,000 shares
1,001 -10,000 shares
10,001-100,000 shares
100,001- less than 5% of issued shares
5% and above of issued shares
138
3,783 8,277
2,062 305
2
0.95
25.97
56.82
14.16
2.09
0.01
3,723
2,320,144
31,559,170
59,569,391
369,224,393
252,323,179
0.00
0.33
4.41
8.33
51.64
35.29
14,567
100.0
715,000,000
100.00
NameShareholdings
%
Total
THIRTY (30) MAJOR SHAREHOLDERS AS AT 1 APRIL 2016
1.
CIMB GROUP NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For Casi Management Sdn Bhd
213,706,793
29.89
2. HSBC NOMINEES (ASING) SDN BHD
Exempt An For Credit Suisse (SG BR-TST-Asing)
38,616,386
5.40
3. UOB KAY HIAN NOMINEES (ASING) SDN BHD
Pledged Securities Account For Citibase Limited
35,654,200
4.99
4.
MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Pledged Securities Account for MWE Holdings Berhad
30,871,000
4.32
5. SHAN HIJAUAN SDN BHD
27,540,645
3.85
6. CASI MANAGEMENT SDN BHD
17,177,200
2.40
7. HENG GUAN SENDIRIAN BERHAD
15,200,000
2.13
Pledged Securities Account For Mr Sakarin Uppatthangkul
15,145,500
2.12
9. SHAMARA FINANCE LIMITED
14,135,633
1.98
10. HSBC NOMINEES (ASING) SDN BHD
Exempt An For Coutts & Co. Ltd (Sg.Branch)
11,187,780
1.56
11. CHONG YIEW ON
10,457,800
1.46
156
AS AT 1 APRIL 2016 (cont’d)
THIRTY (30) MAJOR SHAREHOLDERS AS AT 1 APRIL 2016 (cont’d)
NameShareholdings
%
12. CITIGROUP NOMINEES (ASING) SDN BHD
Exempt An For UBS AG Singapore (Foreign)
10,120,855
1.42
13. UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For MCC Credit Sdn Bhd
9,831,200
1.38
14. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
9,500,750
1.33
15. ALLAMANDA GROWTH LIMITED 8,800,000
1.23
16. CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB Bank For Heng Guan Sendirian Berhad
7,700,000
1.08
Great Eastern Life Assurance (Malaysia) Berhad (LPF)
4,795,950
0.67
New Kota Credit Sdn Bhd for Trade Key Investments Limited
4,780,000
0.67
19. KHOO SU CHIN
4,084,500
0.57
Pledged Securities Account For Mrs Suthera Uppaputthangkul
3,856,900
0.54
21. TAN SHU AYAN
3,655,400
0.51
22. CIMSEC NOMINEES (TEMPATAN) SDN BHD
CIMB for Lawrence Lim Swee Lin (PB)
3,450,000
0.48
23. T C HOLDINGS SENDIRIAN BERHAD
3,145,000
0.44
24. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For Chong Yiew On
3,077,800
0.43
25. TANAH SUBOR SDN BHD
2,980,055
0.42
26. CITIGROUP NOMINEES (ASING) SDN BHD
Goldman Sachs International
2,727,500
0.38
27. JF APEX NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For Teo Siew Lai (Margin)
2,607,400
0.36
28. CHOO SHIOW CHARN
2,226,000
0.31
Great Eastern Life Assurance (Malaysia) Berhad (LEEF)
2,166,300
0.30
Great Eastern Life Assurance (Malaysia) Berhad (PAR 3)
2,150,950
0.30
TOTAL 521,349,497
72.92
157
AS AT 1 APRIL 2016 (cont’d)
SUBSTANTIAL SHAREHOLDERS AS AT 1 APRIL 2016
Name
Direct Interest
No. of shares
%
Casi Management Sdn Bhd (“CMSB”) 230,883,993
Hanton Capital Limited (“HCL”)
-
Cedar Holdings Limited (“CHL”)
-
Kularb Kaew Company Limited (“KKCL”)
-
Cypress Holdings Limited (“Cypress”)
-
-
Indirect / Deemed Interest
No. of shares
%
32.29
-
-
-
-
-
-
230,883,993
(b)
230,883,993
(b)
230,883,993
(c)
230,883,993
(d)
261,921,093
(a)
32.29
32.29
32.29
32.29
36.63
Notes:(a) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 (“Act”) held through its shareholding of more
than 15% in CMSB.
(b) Deemed interest by virtue of Section 6A(4) of the Act held through its shareholding of more than 15% in HCL.
(c) Deemed interest by virtue of Section 6A(4) of the Act held through its shareholding of more than 15% in CHL and
KKCL.
(d) Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in Cypress and
Pinjaya Sdn Bhd; and indirect interest held through his daughters, Ms Ivevei Upatkoon and Ms Maythini Upatkoon.
DIRECTORS’ INTEREST AS SHOWN IN THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT
1 APRIL 2016
(A) Interest In Shares In MPHB Capital Berhad (“MPHB Capital”)
Name
Ms Ivevei Upatkoon
Mr Kuah Hun Liang
Direct Interest
No. of shares
%
101,100
-
156,200
1,000,000
241,100
0.01
-
0.02
0.14
0.03
Indirect / Deemed Interest
No. of shares
%
-
#261,921,093
-
^8,940,000
-
36.63
1.25
-
Notes:# Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in
Cypress and Pinjaya Sdn Bhd; and indirect interest held through his daughters, Ms Ivevei Upatkoon and Ms
Maythini Upatkoon.
^ Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in
Keetinsons Sendirian Berhad, T.C. Holdings Sendirian Berhad and Trade Key Investments Limited.
(B) Interest In Shares In Related Corporations
Tan Sri Dato’ Surin Upatkoon by virtue of his interest in the shares of MPHB Capital, is also deemed to
have interest in the shares of the subsidiaries of MPHB Capital to the extent that MPHB Capital has an
interest.
Save as disclosed above, none of the other Directors of MPHB Capital have any interest in the shares of
the subsidiaries of MPHB Capital as at 1 April 2016.
158
nOTICE OF AnnUAL GEnERAL mEETInG
NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of MPHB Capital Berhad (“the Company”
or “MPHB Capital”) will be held at the Multi-Purpose Hall, 25th Floor, Menara Multi-Purpose, Capital Square,
No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur on Friday, 3 June 2016 at 9.30 a.m.
AGENDA
1.
To receive and consider the Report of the Directors and the Audited Financial
Statements for the year ended 31 December 2015 together with the Report of the
Auditors thereon.
(Please refer to Note A)
2.
To approve the payment of Directors’ fees amounting to RM240,000 in respect of the (Resolution 1)
year ended 31 December 2015.
3.
To re-elect the following Directors who retire by rotation in accordance with Article
113 of the Company’s Articles of Association:-
4.
(i) Ms Ivevei Upatkoon
(ii) Mr Kuah Hun Liang (Resolution 2)
(Resolution 3)
To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the (Resolution 4)
Directors to fix the remuneration.
AS SPECIAL BUSINESS
To consider and, if thought fit, pass the following Ordinary Resolutions:5.
ORDINARY RESOLUTION
-
Authority To Allot And Issue Shares Pursuant To Section 132D Of The (Resolution 5)
Companies Act, 1965
“THAT, subject always to the Companies Act, 1965, the Articles of Association of
the Company and the approvals of the relevant governmental and/or regulatory
authorities, the Directors be and are hereby empowered, pursuant to Section 132D
of the Companies Act, 1965, to allot and issue shares in the Company from time to
time and upon such terms and conditions and for such purposes as the Directors
may deem fit provided that the aggregate number of shares issued pursuant to this
resolution does not exceed ten per centum (10%) of the total issued and paid-up
share capital of the Company and THAT such authority shall continue in force until
the conclusion of the next Annual General Meeting of the Company.”
6.
ORDINARY RESOLUTION
-
Proposed Renewal Of Authority For The Share Buy-Back
“THAT, subject always to the Companies Act, 1965, the Company’s Memorandum
and Articles of Association, the Main Market Listing Requirements of Bursa Malaysia
Securities Berhad (“Bursa Securities”) and any other relevant governmental and/or
regulatory authority, approval be and is hereby given for the renewal of the authority
granted by the shareholders of the Company at the Third Annual General Meeting of
the Company held on 3 June 2015 for the Company to purchase its own shares from
time to time and at any time such amount of ordinary shares of RM1.00 each in the
Company as may be determined by the Directors of the Company from time to time
through Bursa Securities upon such terms and conditions as the Directors may deem
fit and expedient in the best interest of the Company (“Proposed Share Buy-Back”)
provided that:-
(Resolution 6)
nOTICE OF AnnUAL GEnERAL mEETInG (cont’d)
(a) The maximum number of shares which may be purchased and/or held as
treasury shares by the Company at any point of time pursuant to the Proposed
Share Buy-Back shall not exceed ten per centum (10%) of the total issued
and paid-up share capital of the Company provided always that in the event
that the Company ceases to hold all or any part of such shares as a result of,
amongst others, cancellation of shares, sale of shares on the open market of the
Bursa Securities or distribution of treasury shares to shareholders as dividend,
the Company shall be entitled to further purchase and/or hold such additional
number of shares as shall, in aggregate with the shares then still held by the
Company, not exceed ten per centum (10%) of the total issued and paid-up
share capital of the Company for the time being quoted on the Bursa Securities;
(b) The maximum amount of funds to be allocated by the Company pursuant to the
Proposed Share Buy-Back shall not exceed the retained profits and/or the share
premium account of the Company;
AND THAT authority be and is hereby given to the Directors to decide in their
absolute discretion to deal in any of the following manners the shares purchased by
the Company pursuant to the Proposed Share Buy-Back:(i) to cancel the shares purchased; and/or
(ii) to retain the shares purchased as treasury shares, to be either distributed as
share dividends to the shareholders and/or re-sold on the open market of the
Bursa Securities and/or subsequently cancelled; and/or
(iii) a combination of (i) and (ii) above;
AND THAT such authority shall commence immediately upon the passing of this
resolution until:
(aa)the conclusion of the next Annual General Meeting of the Company at which time
it will lapse unless by ordinary resolution passed at that meeting, the authority
renewed, either unconditionally or subject to conditions;
(bb)the expiration of the period within which the next Annual General Meeting is
required by law to be held; or
(cc) revoked or varied by ordinary resolution of the shareholders of the Company in
a general meeting,
whichever is earlier;
AND THAT the Directors of the Company be and are hereby authorised to take all
such steps as are necessary or expedient or to give effect to the Proposed Share
Buy-Back.”
7.
To transact any other business for which due notice shall have been given in
accordance with the Articles of Association of the Company and the Companies Act,
1965.
BY ORDER OF THE BOARD
NG SOOK YEE (MAICSA 7020643)
Secretary
Kuala Lumpur
29 April 2016
159
160
NOTES TO THE AGENDA
A. Agenda 1 - Directors’ Report, Audited Financial Statements and Auditors’ Report
Agenda item No. 1 is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965
and the Articles of Association of the Company only require that the Audited Financial Statements and the
Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting.
Hence, this Agenda item is not a business which requires a resolution to be put to vote by shareholders.
EXPLANATORY NOTES ON SPECIAL BUSINESS
Proposed Resolution 5 (Ordinary) – Authority To Allot And Issue Shares Pursuant To Section 132D Of
The Companies Act, 1965
The Proposed Resolution 5 is a renewal of the general mandate to empower Directors to issue and allot
shares in the Company up to an amount not exceeding in total ten per centum (10%) of the issued and paidup share capital of the Company for such purposes as they consider would be in the interest of the Company.
This authority, unless revoked or varied at a general meeting, will expire at the next Annual General Meeting
(“AGM”).
The renewal of the general mandate is to provide flexibility to the Company of any possible fund raising
exercise, including but not limited to further placement of shares, without the need to convene a separate
general meeting to avoid any delays and incurring additional cost. The proceeds raised from the general
mandate will be utilised for the purposes of funding future investments, acquisitions and/or working capital
requirements.
As at the date of this Notice, no new shares in the Company have been issued pursuant to the authority
granted to the Directors at the last AGM held on 3 June 2015 and hence, no proceeds were raised therefrom.
Proposed Resolution 6 (Ordinary) –Proposed Renewal Of Authority For The Share Buy-Back
The Proposed Resolution 6, if passed, will empower the Company to purchase its own shares of up to ten
per centum (10%) of the issued and paid-up share capital of the Company. This authority, unless renewed,
revoked or varied by the Company at a general meeting, will expire at the next AGM.
The details of the proposed renewal of authority for the share buy-back are set out in the Share Buy-Back
Statement dated 29 April 2016 despatched together with the 2015 Annual Report.
NOTES RELATING TO REGISTRATION AND PROXY
1.
A depositor whose name appears in the Record of Depositors on 26 May 2016 shall be regarded as a
member entitled to attend, speak and vote at the meeting or to appoint proxy to attend, speak and vote on
its behalf at the meeting.
2.
A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the
Companies Act, 1965 shall not apply to the Company.
3.
A member, other than an authorised nominee or an exempt authorised nominee, shall be entitled to
appoint not more than two proxies to attend and vote at the same meeting.
4.
A member who is an authorised nominee may appoint one proxy in respect of each securities account it
holds with ordinary shares of the Company standing to the credit of the said securities account.
5.
Where a member is an exempt authorised nominee which holds ordinary shares in the Company for
multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number
of proxies which an exempt authorised nominee may appoint in respect of each omnibus account it holds.
6.
Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the
proportions of his holdings to be represented by each proxy.
7.
If the appointor is a corporation, the form of proxy must be executed under its Common Seal or under the
hand of its attorney.
8.
To be valid the form of proxy duly completed and signed must be deposited at the registered office of the
Company at 39th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100
Kuala Lumpur not less than 48 hours before the time for holding the meeting. Copies of the duly executed
forms of proxy which are faxed or emailed to us are not acceptable.
9.
The lodging of a proxy form does not preclude a member from attending and voting in person at the AGM
should the member subsequently decides to do so.
PERSONAL DATA PRIVACY
By submitting an instrument appointing proxy(ies) and/or representatives to attend, speak and vote at the
AGM and/or any adjournment thereof, a member of the Company:- (i) consents to the processing of the
member’s personal data by the Company (or its agents): (a) for processing and administration of proxies and
representatives appointed for the AGM; (b) preparation and compilation of the attendance lists, minutes and
other documents relating to the AGM (which includes any adjournments thereto); and (c) for the Company’s
(or its agents’) compliance with any applicable laws, listing rules, regulations and/or guidelines (collectively, the
Purposes”); (ii) warrants that he or she has obtained such proxy(ies)’ and/or representative(s)’ prior consent
for the Company’s (or its agents’) processing of such proxy(ies)’ and/or representative(s)’ personal data for
the Purposes; and (iii) agrees that the member will indemnify the Company for any penalties, liabilities, claims,
demands, losses and damages as a result of the member’s breach of warranty.
Note: The term “processing” and “personal data” shall have the meaning as defined in the Personal Data
Protection Act, 2010.
161
162
Statement Accompanying The Notice of Annual General Meeting
(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Securities)
No individual is seeking for new election as a director at the 4th Annual General Meeting of the Company.
FORM OF PROXY
CDS ACCOUNT NUMBER
MPHB CAPITAL BERHAD (1010253-W)
(Incorporated in Malaysia)
I/We
NO. OF SHARES HELD
Tel.No.
(FULL NAME IN BLOCK CAPITALS)
I.C. No.
(old)
(new)/ Co. No.
of
(ADDRESS)
being a member/members of MPHB CAPITAL BERHAD, hereby appoint:Name
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
Address
or failing him/her,
Name
NRIC/Passport No.
Proportion of Shareholdings
No. of Shares
%
Address
or failing him/her, THE CHAIRMAN OF THE MEETING as my/our proxy/proxies to vote on my/our behalf at the Fourth Annual
General Meeting of the Company to be held at the Multi-Purpose Hall, 25th Floor, Menara Multi-Purpose, Capital Square, No.
8, Jalan Munshi Abdullah, 50100 Kuala Lumpur on Friday, 3 June 2016 at 9.30 a.m. and any adjournment thereof.
RESOLUTIONS
*FOR
1.
To approve the payment of Directors’ fees of RM240,000
2.
To re-elect Ms Ivevei Upatkoon as Director of the Company
3.
To re-elect Mr Kuah Hun Liang as Director of the Company
4.
To re-appoint Messrs Ernst & Young as Auditors of the Company
5.
To authorise Directors to allot and issue shares pursuant to Section 132D
of the Companies Act, 1965
6.
To authorise the proposed renewal of authority for share buy-back
*
*AGAINST
or abstain at his/her discretion.
As witness my/our hand(s) this
day of
2016
Signature(s) of member/
Common Seal
NOTES:1.
2.
3.
4.
5.
6.
7.
8.
9.
A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.
A member, other than an authorised nominee or an exempt authorised nominee, shall be entitled to appoint not more than two proxies to attend and vote at the same meeting.
A member who is an authorised nominee may appoint one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.
Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the
number of proxies which an exempt authorised nominee may appoint in respect of each omnibus account it holds.
Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.
If the appointor is a corporation, the form of proxy must be executed under its Common Seal or under the hand of its attorney.
To be valid the form of proxy duly completed, must be deposited at the registered office of the Company at 39th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala
Lumpur not less than 48 hours before the time for holding the meeting. Copies of the duly executed proxy forms which are faxed or emailed to us are not acceptable.
The lodging of a proxy form does not preclude a member from attending and voting in person at the Annual General Meeting (”AGM”) should the member subsequently decides to do so.
A depositor whose name appears in the Record of Depositors on 26 May 2016 shall be regarded as a member entitled to attend, vote and speak at the meeting or to appoint proxy to attend, vote and
speak on its behalf at the meeting.
PERSONAL DATA PRIVACY
By submitting an instrument appointing proxy(ies) and/or representatives to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company:- (i) consents to the processing of the member’s
personal data by the Company (or its agents): (a) for processing and administration of proxies and representatives appointed for the AGM; (b) preparation and compilation of the attendance lists, minutes and other documents
relating to the AGM (which includes any adjournments thereto); and (c) for the Company’s (or its agents’) compliance with any applicable laws, listing rules, regulations and/or guidelines (collectively, the Purposes”); (ii) warrants
that he or she has obtained such proxy(ies)’ and/or representative(s)’ prior consent for the Company’s (or its agents’) processing of such proxy(ies)’ and/or representative(s)’ personal data for the Purposes; and (iii) agrees that
the member will indemnify the Company for any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.
Note: The term “processing” and “personal data” shall have the meaning as defined in the Personal Data Protection Act, 2010.
STAMP
THE COMPANY SECRETARY
MPHB CAPITAL BERHAD (1010253-W)
39th Floor, Menara Multi-Purpose
Capital Square, No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur

Full Annual Report - MPHB Capital Berhad

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