MPHB CAP AR 2014 - MPHB Capital Berhad

Transcription

Corporate Profile
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Corporate Structure
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Corporate Information
• 0 0 4
Financial Highlights
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Directors’s Profile
• 0 0 6 – 008
Chairman’s Statement
• 0 0 9 – 0 11
Chairman’s Statement (In Bahasa Malaysia)
• 0 1 2 – 014
Chairman’s Statement (In Chinese)
• 0 1 5 – 016
Corporate Social Responsibility Statement
• 0 1 7 – 018
Corporate Governance Statement
• 0 1 9 – 027
Additional Corporate Disclosures
• 0 2 8
Directors’ Responsibilities Statement
• 0 2 9
Audit Committee Report
• 0 3 0 – 034
Statement On Risk Management And Internal Control
• 0 3 5 – 037
Directors’ Report And Audited Financial Statement
• 0 3 8 – 145
List Of Top 10 Properties
• 1 4 6 – 147
Analysis Of Equity Securities
• 1 4 8 – 150
Notice Of Annual General Meeting
• 1 5 1 – 154
Statement Accompanying The Notice Of Annual General Meeting
Form Of Proxy
• 1 5 5
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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
MPHb CAPITAL BERHAD (1010253-W)
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CORPORATE STRUCTURE AS AT 21 APRIL 2015
INSURANCE & CREDIT
Multi-Purpose Capital
Holdings Berhad
INVESTMENTS
MPHB
CAPITAL
BERHAD
Multi-Purpose
Insurans Bhd
Multi-Purpose
Credit Sdn Bhd
Multi-Purpose Credit
Holdings Sdn Bhd
MP Factors
Sdn Bhd
Tune Insurance
(Labuan) Ltd.
Multi-Purpose
Venture Partners
Sdn Bhd #
Multi-Purpose
Credit Nominees
(Tempatan)
Sdn Bhd
Caribbean
Gateway
Sdn Bhd
West-Jaya
Sdn Bhd
Queensway
Nominees
(Tempatan)
Sdn Bhd
Queensway
Nominees
(Asing)
Sdn Bhd
Leisure
Dotcom
Sdn Bhd
Kelana
Megah
Development
Sdn Bhd
Jayavest
Sdn Bhd
Mimaland
Berhad
Tibanis
Sdn Bhd
Magnum.Com
Sdn Bhd
Magnum
Leisure
Sdn Bhd
Syarikat
Perniagaan
Selangor
Sdn Bhd
Flamingo
Management
Sdn Bhd
Multi-Purpose
Shipping
Corporation
Berhad
Multi-Purpose
Development
(PG)
Sdn Bhd
Mulpha Kluang
Maritime
Carriers
Sdn Bhd
Subsidiary Company
Associated Company
Listed on Bursa Malaysia Securities Berhad
In Members’ Voluntary Winding-Up
ANNUAL REPORT 2014
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CORPORATE information
DIRECTORS
Tan Sri Dato’ Dr Yahya bin Awang Tan Sri Dato’ Surin Upatkoon
Mr Ng Kok Cheang
Ms Ivevei Upatkoon Dato’ Lim Tiong Chin
Mr Kuah Hun Liang
Independent Non-Executive Chairman
Non-Independent Managing Director
Non-Independent Executive Director
Non-Independent Non-Executive Director
Independent Non-Executive Director
AUDIT COMMITTEE
SECRETARY
Mr Kuah Hun Liang (Chairman)
Ng Sook Yee (MAICSA 7020643)
Tan Sri Dato’ Dr Yahya bin Awang
REGISTERED OFFICE
Dato’ Lim Tiong Chin
39th Floor, Menara Multi-Purpose
Capital Square
No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur
Telephone No. :603-26948333
Fax No.
:603-26946849
REMUNERATION COMMITTEE
Tan Sri Dato’ Dr Yahya bin Awang (Chairman)
Tan Sri Dato’ Surin Upatkoon
Mr Kuah Hun Liang
NOMINATION COMMITTEE
Mr Kuah Hun Liang
risk management COMMITTEE
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
Mr Kuah Hun Liang
Malayan Banking Berhad
Alliance Bank Malaysia Berhad
MANAGEMENT
STOCK EXCHANGE LISTING
(Managing Director)
Main Market of Bursa Malaysia Securities Berhad
(Listed on 28 June 2013)
Stock Name: MPHBCAP
Stock Code: 5237
ISIN Code: MYL5237OO002
Mr Ng Kok Cheang
(Executive Director)
Ms Ivevei Upatkoon
(Executive Director)
Ms Kheoh And Yeng
(Chief Operating Officer)
WEBSITE
www.mphbcap.com.my
E-MAIL
[email protected]
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FINANCIAL HIGHLIGHTS
20142013
RM’000
RM’000
ASSETS
Non-current assets
Property, plant and equipment
84,266
87,324 Investment properties
748,661 744,051 Investments
328,195 362,755 Intangible assets
52,999 54,482
1,214,121 1,248,612 Current assets
1,386,577 1,060,976
Asset held for sale
- 30,195 TOTAL ASSETS
2,600,698 2,339,783 EQUITY AND LIABILITIES
Equity attributable to owners of the Company
Share capital
715,000 715,000 Reserves
603,839 363,545
Shareholders’ fund
1,318,839 1,078,545 Non-controlling interests
13,620 15,389
Total equity
1,332,459 1,093,934 Non-current liabilities
48,294 87,800 Current liabilities
1,219,945 1,135,443 Liability directly associated with asset held for sale
- 22,606
Total liabilities
1,268,239 1,245,849 TOTAL EQUITY AND LIABILITIES
2,600,698 2,339,783 FINANCIAL RESULTS
Profit before tax
277,486 57,590 Income tax expense
(33,833)
(10,718)
Profit for the year
243,653 46,872 Non-controlling interests
1,767 1,377
Profit attributable to owners of the Company
245,420 48,249
FINANCIAL RATIOS Basic earnings per share (Sen)
34.3
8.9 Net assets per share (RM)
1.8 1.5 Return on equity (%)
18.6 4.5
ANNUAL REPORT 2014
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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
64, 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 Multi-Purpose Insurans Bhd, Tokio Marine Life
Insurance Malaysia Bhd, KPJ Healthcare Berhad and
several private limited companies in Malaysia. Tan Sri
Yahya is also a Trustee of Yayasan Wah Seong.
He attended all of the six (6) Board meetings of the
Company held during the financial year ended 31
December 2014.
TAN SRI DATO’ SURIN UPATKOON
Non-Independent Managing Director
Tan Sri Dato’ Surin Upatkoon, a Thai National, aged
66, 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 re-designated as NonIndependent Non-Executive Chairman of Magnum on
26 June 2013.
Tan Sri Dato’ Surin also sits on the Board of MWE
Holdings Berhad, Multi-Purpose Capital Holdings
Berhad, Magnum 4D Berhad, Mimaland 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 six (6) Board
meetings of the Company held during the financial
year ended 31 December 2014.
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DIRECTORS’ PROFILE (cont’d)
NG KOK CHEANG
Mr Ng Kok Cheang, a Malaysian, aged 58, was
appointed as a Director of the Company on 17 July
2012 and as an Executive Director of the Company
on 14 May 2013. He does not sit on any Board
committee of the Company.
Mr Ng obtained his higher school certificate from
Technical Institute, Penang in 1977. He has vast
working experience in property valuation, property
management and property development. He
commenced his career in the Property Valuation/
General Practice Surveying profession in 1979 with an
established Chartered Valuation Firm as a valuation
assistant. In 1981, he was promoted to a manager
and was a consultant in various property development
companies. In 1996, he joined Penas Realty Sdn Bhd
as a planning manager, where he was responsible
for the sourcing of land bank, planning and project
feasibility/marketing of development projects. He
was also involved in the development of residential
and mixed developments which include shopping
malls, condominiums and shophouses. In 2002, he
was appointed as an Executive Director of Magnum
Berhad (“Magnum”) and subsequently ceased to be
an Executive Director of Magnum in May 2013.
Mr Ng currently also sits on the Board of several
private limited companies.
He attended five(5) out of six(6) Board meetings of
the Company held during the financial year ended 31
December 2014.
IVEVEI UPATKOON
Ms Ivevei Upatkoon, a Thai National, aged 38, 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 6 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 and
several private limited companies in Malaysia and is
a Trustee of Magnum Foundation.
Ms Ivevei attended all of the six (6) Board meetings
of the Company held during the financial year ended
31 December 2014.
ANNUAL REPORT 2014
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DIRECTORS’ PROFILE (cont’d)
DATO’ LIM TIONG CHIN
Non-Independent Non-Executive Director
Dato’ Lim Tiong Chin, a Malaysian, aged 62, 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.
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 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 also sits on the Board of Multi-Purpose
Insurans Bhd, The Kedah Transport Company Berhad
and several private limited companies in Malaysia.
Dato’ Lim was the Managing Director of A.A. Anthony
Securities Sdn. Bhd. from 2001 to February 2013.
Dato’ Lim attended all of the six (6) Board meetings
of the Company held during the financial year ended
31 December 2014.
KUAH HUN LIANG
Independent Non-Executive Director
Mr Kuah Hun Liang, a Malaysian, aged 53, 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 also held the position as
a treasurer and a Director of Malaysian-German
Chamber of Commerce and the Chairman of Star
Publications (Malaysia) Berhad. He was formerly a
member of the Quality Assurance Committee for
Financial Sector Talent Enrichment Programme
(FSTEP), part of Institut Bank-Bank Malaysia.
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 six(6) Board meetings of
the Company held during the financial year ended 31
December 2014.
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 has any family relationship with
any director and/or major shareholder of the Company.
2.
Conflict of Interest
None of the Directors has any conflict of interest with the Company.
3.
Conviction of Offences
None of the Directors has been convicted of any offences in the past ten(10) years.
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chairman’s statement
Dear Shareholders,
On behalf of the Board of Directors, it gives me great pleasure to present the second Annual Report and Audited
Financial Statements of the Group and Company for the financial year ended 31 December 2014.
The capable leadership of our Managing Director, Tan Sri Dato’ Surin Upatkoon, and the valued advice, commitment
and contributions from our esteemed Board members and competent management teams, strategic plans and
decisions steered our Group to better performance and improved results.
I am pleased to report that the profit for the year achieved by the Company and the Group is RM179.11 million and
RM243.65 million respectively which is a tremendous improvement of RM141.24 million and RM196.78 million over
the previous year’s results for the Group and the Company.
In tandem with the significant increase, the basic earnings per share rose 25.4 sen to 34.3 sen.
CORPORATE DEVELOPMENT
Multi-Purpose Capital Holdings Berhad (“MPCHB”), a wholly-owned subsidiary of the Company, had entered into a
conditional share purchase agreement and a call and put option agreement with Generali Asia N.V. (“Generali Asia”),
a 100% indirect subsidiary of Assicurazioni Generali S.p.A which is one of the largest global insurance providers. The
agreements are pertaining to the divestment by MPCHB of its divestment of its 49% stake in Multi-Purpose Insurans
Bhd (“MPIB”) for a disposal consideration of RM355,803,000.
MPCHB has also granted the call and put options to Generali Asia upon which is exercisable by Generali Asia within
two years from the completion of the disposal. It entails an option for Generali Asia to acquire up to 21% stake in
MPIB. The put option entails an option for the disposal of all MPIB shares held by Generali Asia five years from
completion of the Disposal in the event that:
i) approval from Bank Negara Malaysia (“BNM”) is not obtained for the exercise of the call option or
ii) Generali Asia holds a minority shareholding in MPIB following the approval from BNM for the exercise of the call
option.
The exercise of the call and put options will be subject to the approval of the Minister of Finance (via BNM) or BNM,
as the case may be, pursuant to the Financial Services Act, 2013.
The multinational expertise, excellent global footprint and extensive network of Generali Asia and the in-depth
domestic knowledge of our experienced management team in the Insurance Division will impact and grow our
insurance business to greater height. I am confident that our Group will reap the benefits of this strategic partnership
in the years ahead with the continued support and trust of the existing partners and future valued customers.
The disposal consideration and payments received by MPCHB on the grant of the call and put options amounting
to an aggregate of RM359.95 million represents a price-to-book multiple of approximately 2.45 times based on the
proportionate audited consolidated net asset of MPIB as at 31 December 2013.
The Disposal is expected to result in a net increase in MPHB Capital’s owners’ equity of approximately RM191.0
million.
ANNUAL REPORT 2014
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chairman’s statement (cont’d)
BUSINESS PERFORMANCE OVERVIEW
Our Group reported revenue of RM370.08 million and operating profit of RM281.63 million for the year ended 31
December 2014 compared to revenue and operating profit of RM245.97 million and RM61.32 million respectively in
2013.
The Insurance business contributed the bulk of the revenue at RM330.96 million which is 89.40% of the total revenue
whilst Credit and Investment businesses make up the remaining 10.60% of the revenue.
Although the insurance business contributed largely to the revenue, the increase in the operating profit is mainly due
to the gain on sale of properties posted in the Investment segment.
REVIEW OF OPERATIONS
a) Insurance Division
It is encouraging to note that, despite challenging and competitive business environment, the Insurance business
continues to gain momentum as it registered revenue of RM330.96 million and operating profit of RM70.91
million in 2014 which is 89.42% and 25.18% of the Group’s revenue and operating profit respectively.
The Division is to be commended as it constantly reviews and is agile to adapt to changing marketplace
developments to strategise and focus on achieving optimum organic growth in the existing distribution channels
to maintain continuous growth. In line with the de-tariff market environment in 2016, the focus will be on the
expansion of Motor and Personal Line products. Emphasis will also be placed on the development of the new
business through a new multi-pronged business strategy to tap on the wide and diverse market segment.
The entry of the Generali Asia, a strong partner with its 188-year-old legacy of stability, solidity and global
connections will boost MPIB’s growth amid increasingly competitive landscape. MPIB will have the advantage
to leverage on world-class strength, expertise and technical efficiency to enhance insurance solutions for
commercial, institutional and retail customers.
b) Credit and Investment businesses
Hotel operations, investment properties and joint ventures are part of our investment business. In 2014, it
contributed RM37.30 million and RM209.23 million to the revenue and operating profit of the Group. Extraordinary
gain from the sale of properties contributed significantly to the improved results.
Our hotels aim to enhance revenue through various strategies to assess the demands of existing and potential
clientele and be receptive to changes in order to attract prospective new clients and to retain existing clientele by
maintaining good rapport, customer service and relationship.
As for the land bank held in the Group, we will continue to explore profitable joint ventures with reputable property
developers or outright disposal at the right price to create value for the shareholders.
The Credit business is limited to selected clientele.
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chairman’s statement (cont’d)
MARKET OUTLOOK AND PROSPECTS
The Malaysian economy expects a growth path of 4.5 to 5.5% in 2015, which is mainly supported by sustained
expansion in domestic demand amid strong domestic fundamentals driven by private sector spending and a resilient
export sector.
We will continue to focus on efficient management of our existing resources and to explore opportunities for growth
in our various operating divisions. Steps will be taken to ensure that good corporate governance are in place and with
the integrity and leadership of our Board and management, the Group will be able to create a proven track record of
achievements in the future.
DIVIDENDS
Whilst the Board ensures that funds are retained for future business opportunities to enhance shareholders’ value,
the Board is aware of a need to provide a return to shareholders.
However, any declaration of dividends has to be approved by BNM. We will endeavor at an appropriate time to seek
BNM’s approval for future declaration of dividends.
APPRECIATION AND ACKNOWLEDGEMENT
I would like to thank my fellow Board members for their contributions and participation to strengthen the Group,
the management for their hard work, talents and co-operation and to all our shareholders, customers, bankers and
business associates for their continued support.
CHAIRMAN
21 April 2015
ANNUAL REPORT 2014
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penyata pengerusi
Para Pemegang Saham,
Bagi pihak Lembaga Pengarah, saya dengan rasa berbesar hati ingin membentangkan Laporan Tahunan Kedua dan
Penyata Kewangan Beraudit Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Disember 2014.
Kebolehan kepimpinan Pengarah Urusan kami, Tan Sri Dato’ Surin Upatkoon, dan nasihat yang bernilai, komitmen
dan sumbangan daripada ahli Lembaga Pengarah yang dihormati serta kumpulan pengurusan yang kompeten,
pelan strategik dan keputusan yang mantap, telah mengemudi Kumpulan kami untuk prestasi yang lebih baik.
Saya dengan sukacitanya melaporkan bahawa keuntungan bagi tahun yang telah dicapai oleh Syarikat dan Kumpulan
adalah RM179.11 juta dan RM243.65 juta masing-masing merupakan peningkatan besar daripada RM141.24 juta
dan RM196.78 juta berbanding dengan keputusan bagi tahun sebelumnya untuk Kumpulan dan Syarikat.
Selaras dengan peningkatan yang ketara, pendapatan asas sesaham meningkat 25.4 sen kepada 34.3 sen.
PEMBANGUNAN KORPORAT
Multi-Purpose Capital Holdings Berhad (“MPCHB”), anak syarikat milik penuh Syarikat, telah memeterai perjanjian
pembelian saham bersyarat dengan meletakkan opsyen panggilan dan opsyen jualan dengan Generali Asia NV
(“Generali Asia”), iaitu 100% subsidiari tidak langsung kepada Assicurazioni Generali S.p.A yang merupakan salah
satu pembekal insurans global terbesar. Perjanjian yang berkaitan dengan penjualan oleh MPCHB bagi pelepasannya
daripada kepentingan 49% dalam Multi-Purpose Insurans Bhd (“MPIB”) untuk pertimbangan pelupusan sebanyak
RM355,803,000.
MPCHB juga telah memberikan opsyen panggilan dan opsyen jualan kepada Generali Asia untuk dilaksanakan oleh
Generali Asia dalam tempoh dua tahun dari penyempurnaan pelupusan. Ia memerlukan satu pilihan untuk Generali
Asia bagi memperoleh sehingga 21% kepentingan dalam MPIB. Perletakan opsyen jualan melibatkan satu opsyen
bagi pelupusan semua saham MPIB yang dipegang oleh Generali Asia lima tahun dari penyempurnaan pelupusan
sekiranya:
i)
bahawa kelulusan daripada Bank Negara Malaysia (“BNM”) tidak diperolehi bagi pelaksanaan opsyen panggilan
atau
ii)
Generali Asia memegang pegangan saham minoriti dalam MPIB berikutan kelulusan daripada BNM bagi
melaksanakan opsyen panggilan.
Perlaksanaan opsyen panggilan dan opsyen jualan akan tertakluk kepada kelulusan Menteri Kewangan (melalui
BNM) atau BNM, mengikut mana-mana yang berkenaan, di bawah Akta Perkhidmatan Kewangan, 2013.
Kepakaran multinasional, jejak global yang sangat baik dan rangkaian luas oleh Generali Asia dan pengetahuan
mendalam oleh pihak pengurusan yang berpengalaman di Bahagian Insurans akan memberi impak dan
mengembangkan perniagaan insurans kami untuk kejayaan yang lebih cemerlang. Saya yakin bahawa Kumpulan
akan mendapat manfaat daripada perkongsian strategik ini di masa hadapan dengan adanya sokongan berterusan
dan kepercayaan dari rakan-rakan yang sedia ada serta bakal pelanggan yang dihargai.
Pertimbangan pelupusan dan bayaran yang diterima oleh MPCHB atas pemberian opsyen panggilan dan opsyen
jualan berjumlah agregat sebanyak RM359.95 juta mewakili gandaan harga-buku kira-kira 2.45 kali berdasarkan
kadar gabungan aset bersih oleh MPIB yang diaudit pada 31 Disember 2013.
Pelupusan itu dijangka akan menyebabkan peningkatan bersih dalam ekuiti pemilik MPHB Capital beranggaran
RM191.0 juta.
13
penyata pengerusi (sambungan)
TINJAUAN PRESTASI PERNIAGAAN
Kumpulan kami telah melaporkan penyata pendapatan sebanyak RM370.08 juta dan keuntungan operasi sebanyak
RM281.63 juta bagi tahun berakhir 31 Disember 2014 berbanding dengan pendapatan dan keuntungan operasi
masing-masing mencatatkan sebanyak RM245.97 juta dan RM61.32 juta pada tahun 2013.
Sebahagian besar daripada perolehan perniagaan insuran telah menyumbang sebanyak RM330.96 juta iaitu
89.40% jumlah keseluruhan perolehan manakala perniagaan-perniagaan Kredit dan Pelaburan pula membentuk
baki perolehan sebanyak 10.60%.
Walaupun perniagaan insurans telah menyumbang sebahagian besar kepada pendapatan, peningkatan keuntungan
operasi adalah disebabkan oleh keuntungan daripada penjualan hartanah yang dicatatkan dalam segmen pelaburan.
TINJAUAN OPERASI
a)
Bahagian Insurans
Adalah penting untuk ditekankan, walaupun persekitaran perniagaan yang mencabar dan kompetitif, perniagaan
insurans yang terus mendapat momentum mencatatkan perolehan sebanyak RM330.96 juta dan keuntungan
operasi sebanyak RM70.91 juta pada tahun 2014 yang merupakan 89.42% dan 25.18% jumlah perolehan
Kumpulan dan keuntungan operasi masing-masing.
Bahagian ini harus dipuji kerana ia sentiasa mengkaji dan tangkas untuk menyesuaikan diri dengan perubahan
perkembangan pasaran untuk merangka strategi dan tumpuan kepada pembangunan organik optimum
dalam saluran pengedaran yang sedia ada bagi mengekalkan pertumbuhan yang berterusan. Sejajar dengan
persekitaran pasaran de-tarif pada tahun 2016, tumpuan akan diberikan kepada perkembangan produk-produk
Motor dan Talian Peribadi. Penekanan juga akan diberi kepada pembangunan perniagaan baru melalui strategi
perniagaan pelbagai cabang baru untuk memanfaatkan segmen pasaran yang luas dan pelbagai.
Kemasukan Generali Asia, rakan kongsi yang teguh dengan warisan berusia 188 tahun yang berkestabilan,
kukuh serta sambungan global akan meningkatkan pertumbuhan MPIB di tengah-tengah landskap yang
semakin kompetitif. MPIB akan mempunyai kelebihan untuk memanfaatkan kekuatan bertaraf dunia, kepakaran
dan kecekapan teknikal untuk meningkatkan penyelesaian insurans bagi para pelanggan komersial, institusi
dan runcit.
b) Kredit dan Pelaburan Perniagaan
Operasi hotel, hartanah pelaburan dan usaha sama adalah sebahagian daripada perniagaan pelaburan kami.
Pada tahun 2014, ia menyumbang sebanyak RM37.30 juta dan RM209.23 juta kepada keuntungan perolehan
dan operasi Kumpulan. Keuntungan luar biasa daripada penjualan hartanah menyumbang dengan ketara
kepada keputusan yang lebih baik.
Hotel kami berhasrat untuk meningkatkan pendapatan melalui pelbagai strategi bagi permintaan pelanggan
sedia ada dan bersikap terbuka kepada perubahan dalam usaha untuk menarik pelanggan baru dan bakal
mengekalkan pelanggan yang sedia ada dengan mengekalkan hubungan baik, perkhidmatan pelanggan dan
hubungan.
Bagi bank tanah yang dipegang di dalam Kumpulan, kami akan terus meneroka usaha sama yang
menguntungkan dengan pemaju hartanah yang bereputasi atau pelupusan secara terang-terangan dengan
harga yang tepat untuk mewujudkan nilai bagi pemegang saham.
Perniagaan Kredit adalah terhad kepada pelanggan terpilih.
ANNUAL REPORT 2014
14
penyata pengerusi (sambungan)
TINJAUAN DAN PROSPEK PASARAN
Ekonomi Malaysia menjangkakan pertumbuhan sebanyak 4.5 kepada 5.5% pada tahun 2015, yang disokong
terutamanya oleh pengembangan yang berterusan dalam permintaan dalam negeri di tengah-tengah asas domestik
bagi menggalakkan perbelanjaan sektor swasta dan sektor eksport yang berdaya tahan.
Kami akan terus memberi tumpuan kepada pengurusan sumber yang cekap dan sedia ada bagi meneroka peluangpeluang untuk pertumbuhan dalam pelbagai bahagian operasi kami. Langkah akan diambil untuk memastikan bahawa
tadbir urus korporat yang berkeadaan baik dengan integriti dan kepimpinan Lembaga Pengarah dan pengurusan
kami, Kumpulan dapat mencipta rekod prestasi yang terbukti dengan pencapaian pada masa hadapan.
DIVIDEN
Walaupun Lembaga Pengarah memastikan bahawa dana dikekalkan untuk peluang perniagaan masa hadapan
untuk meningkatkan nilai pemegang saham, Lembaga Pengarah sedar akan keperluan untuk memberi pulangan
kepada pemegang saham.
Walau bagaimanapun, sebarang pengisytiharan dividen perlu diluluskan oleh BNM. Kami akan berusaha pada masa
yang sesuai untuk mendapatkan kelulusan BNM bagi pengisytiharan dividen-dividen pada masa hadapan.
PENGHARGAAN DAN PENGIKTIRAFAN
Saya ingin mengucapkan terima kasih kepada ahli-ahli Lembaga Pengarah di atas sumbangan dan penyertaan
mereka untuk mengukuhkan Kumpulan, pihak pengurusan untuk kerja keras, bakat serta kerjasama mereka
dan kepada semua para pemegang saham, para pelanggan, bank-bank dan rakan perniagaan di atas sokongan
berterusan mereka.
PENGERUSI
21 April 2015
15
主席献词
各位股东，
在此本人非常荣兴地代表公司呈报本集团和公司上市后截至2014年12月31日为止的第二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的英明领导下，配合董事局成员及管理层的支持及奉献，为集团做出的战略性的计划及
决定，使集团成绩和表现都更趋进步。
本人在此非常高兴的向大家报告，公司和集团今年各取得1亿7千9百11万令吉及2亿4千3百65万令吉的年度盈利。
公司和集团今年的盈利比去年有着很大的增长幅度，分别比去年增加了1亿4千1百24万令吉和1亿9千6百78万令
吉。
由于业务盈利的显著增长，本集团今年的业务每股增长了25.4仙至34.3仙。
企业发展
本公司的子公司Multi-Purpose Capital Holdings Berhad（MPCHB），与Generali Asia NV（Generali Asia），
签署一份有条件股票收购协议和一份买卖选择权协议。Generali Asia是100％间接附属于全球最大保险集团之一
Assicurazioni Generali S.p.A.。马化控股根据协议，以3亿5千5百80万3千令吉代价，出售马化保险有限公司（马
化保险）的49％股权。
MPCHB也将与Generali Asia签署一份买卖选择权协议，让Generali Asia可以在完成脱售议案的2年内，执行买权和
卖权。Generali Asia可通过执行买权，收购马化保险高达21％股权。但在以下两个情况下，Generali Asia可选择在完
成脱售后的5年内执行卖权：
i）马来西亚国家银行（国行）不批准执行买权或
ii）国行批准买权，但Generali Asia只能持有马化保险的少数股权。
这项买卖选择权协议须获得财政部（通过国行）或国行，根据2013年金融服务法批准。
Generali Asia拥有跨国专才、涉足全球市场和网络，加上本集团保险业管理团队在国内的丰富经验，相信将让本集团
的保险业务走向另一个成长阶段。本人对于彼此的合作关系充满信心，也相信接下来仍会得到现有的合作伙伴和未来
顾客的支持和信赖。
MPCHB脱售马化保险，所得的总值近3亿5千9百95万令吉，相等于2.45倍的价格对马化保险截至2013年12月31日
的经审计净资产账面价值。
这项业务脱售预计将让马化资本增加了近1亿9千100万令吉所有者收益。
业务表现概况
截至2014年12月31日为止，集团取得了3亿7千8万令吉的总营业额，和2亿8千1百63万令吉的业务盈利。相较于
2013年，本集团只取得2亿4千5百97万令吉总营业额和6千1百32万令吉的业务盈利。
保险业务为本集团取得的3亿3千96万令吉占了总营业额的89.40％，而信贷与投资业务则占局了10.60％。
虽然保险业务贡献了最大份的总营业额，但是投资业务上的产业脱售才是最主要的业务盈利来源。
营运回顾
a) 保险业务
在充满挑战和竞争的业务环境下，保险业务持续上扬是令人鼓舞的。2014年的总营业额为3亿3千96万令吉，
而业务盈利为7千91万令吉，是集团总营业额的89.42％和业务盈利的25.18％。
ANNUAL REPORT 2014
16
主席献词 (延续)
保险部门将采取积极方案来提高营运效率及扩大市场分额。而在2016年的开放收费制市场环境下，业务将专注
于扩展车险及个人保险线上。此外，有关部门将推出全新的保险产品和改良现有保险产品，扩大客户来源和市
场，以便在保险业中建立稳固地位。
对于拥有188年历史的Generali Asia加入，其稳健、涉足全球市场和网络的强大背景，将有助于推动马化保险
在市场上的竞争力。而且还能充分利用他们的世界级实力、专才和技术，提升公司对商业、机构和零售客户的
保险解决方案。
b)信贷与投资业务
投资业务包括了酒店管理、产业投资和联营投资。
2014年，投资业务取得3千7百30万令吉的营业额和2亿9百23万令吉业务盈余，主要归公于产业脱售所取得的
收益。
酒店管理将以更良好的客户服务，维持彼此的良好关系为主要目标，以获得现有客户的长期支持并同时招揽新
的客户群。
而关于集团所拥有的土库，产业部将在适当时机与值得信赖的土地发展商联营伙伴发展产业或进行脱集产业来
兑现股东们的投资价值。
而信贷业务仅限于选择性的客户群。
市场前景及展望
国内需求增长、强劲的私人界消费能力和弹性的出口条例都是经济成长的驱动力，而2015年的国内生产总值成长率
预测为4.5至5.5巴仙。
本集团将把重心放在主要业务上，并开发更多业务成长的可能性。本集团也将采取措施确保公司管理稳健运作，加上
管理团队的出色领导，集团业绩将能稳定增长。
股息
董事局将会保留盈利做为未来业务发展和提升肌东价值用途。
董事局明白有必要回报股东们，但任何股息派发都得预先获得国行批准，所以本集团将会努力争取国行批准放行股息
计划。
致诚感谢
对于董事局、管理团队及员工所付出的贡献与合作，所体现的专业及团队精神，我感到非常感动。在此由衷的感谢大
家，因为你们的奉献、专业和辛劳，让公司业绩获得稳定成长。最后，本人特别对于尊贵的股东、客户、银行及商业
伙伴们所给予的信任和支持，致以崇高的谢意。
主席
TAN SRI DATO’DR YAHYA BIN AWANG
21 April 2015
17
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
The Group had continued its efforts to cultivate a healthy and active lifestyle amongst the general public through its
community run event known as the “MPIB Run” held in January 2014 with more than 5,000 runners and their family
members participating the event.
In conjunction with the MPIB Run, the Group had organised the “My First Run Clinics” to encourage individuals to
take up running as a sustainable healthy recreational activity and to inculcate a healthy work life balance lifestyle.
A total of 12 run clinics with activities such as running and talks on health, fitness and running techniques were
organised to prepare new and seasoned runners for the run.
As part of its social and welfare initiatives in 2014, the Group had undertaken “The Project Good Deeds” where a total
of 207 clean, wearable and pre-loved sports shoes and 1,282 tee shirts were collected and donated to the Orang Asli/
Indigenous communities in Pahang and Selangor.
During the year, the Group had sponsored the sports training programme of Sarawak Sport Council and Saujana
Amateur Golf Tournament to promote the development of sports.
THE WORKPLACE
As part of its efforts towards employees’ sustainability, 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,
housing loan interest subsidy and staff retirement scheme. Sports/interactive activities as well as subsidised overseas
trips and annual dinner were organised for employees to foster closer working relationship and teamwork.
The Group endeavours to provide staff with a safe, healthy and conducive working environment. Occupational safety
and awareness programme as well as first aid trainings were conducted for employees to promote good work safety
practices amongst employees.
The Group values its employees and places great emphasis on human resource development. Trainings, seminars,
workshops and leadership development programmes such as Executive Development Programme and Young
Managers Development Programme were provided for staff to enhance their technical skill and competency.
To create and retain caliber and qualified employees, the Group had embarked on a programme to sponsor employees
to enrol in 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.
ANNUAL REPORT 2014
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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
The Group continued to have regular get-together and social events with its business partners as part of its relationshipbuilding initiatives. 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.
19
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 six members, comprising a Non-Executive Chairman, a Managing Director, two
Executive Directors and two Non-Executive Directors, total of whom two are Independent Non-Executive
Directors. The Board is satisfied that the number of independent directors, which represents one-third of
the Board, fulfils the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad (“Listing
Requirements”).
The 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 development, property management, project
management, corporate affairs, banking, stockbroking, finance, accounting, corporate finance/advisory
and system consulting. The current composition of the Board with one female Director reflects the
Board’s efforts towards achieving a more gender diversified Board. A brief profile of each Director is set
out in this Annual Report.
1.2 Roles and Responsibilities
The Board has established a Board Charter 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 will periodically review the Board Charter to
ensure that it remains consistent with the Board’s objectives.
The Board assumes, among others, the following 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. This includes ensuring the solvency of the Group and the ability of the
Group to meet its contractual obligations and to safeguard its assets.
(c) Establishing the Group’s corporate values, vision and mission, including governance systems and
processes in line with the principles of good corporate governance.
(d) Identifying principal risks and ensuring the implementation of appropriate internal controls and
mitigation measures to manage risks.
ANNUAL REPORT 2014
20
corporate governance statement (cont’d)
(e) 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.
(f) Overseeing the development and implementation of policies and/or programmes for effective
communication with shareholders and/or investors.
(g) 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 roles and responsibilities of the Chairman, the Managing Director and the Executive Directors 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 Directors
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 a formal schedule of matters reserved specifically for its decision (as set out in the Authority
Chart) which includes the approval of corporate plans and budgets, acquisitions and disposals of assets
that are material to the Group, major investments, changes to management and control structure of the
Group. The Authority Chart spells out the authority delegated by the Board to the Management who is
responsible for the implementation of the Board’s policies and decisions.
1.3 Promoting Ethical Standards
The Board has formally adopted a Code of Business Conduct and Ethics for the Directors of the Company.
The Code of Business 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.
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, noncompliance with regulatory requirements and other malpractices.
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.
21
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.
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 attends all Board
Meetings and ensures that records of the proceedings of the Board meetings are properly kept. The
Company 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.
1.6 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.
(Independent Non-Executive Director)
-
Dato’ Lim Tiong Chin -
(Non-Independent Non-Executive Director)
Member
Mr Kuah Hun Liang
Member
-
Chairman
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.
ANNUAL REPORT 2014
22
(iii) To oversee the overall composition of the Board in terms of appropriate size, required mix of
skills, experience and core competencies.
During the financial year under review, the Nomination Committee met three(3) times, which were
attended by all members.
The Nomination Committee has undertaken the following activities during the year 2014:-
(aa) Assessed and reviewed the appointment of new Executive Director of the Company prior to
making a recommendation to the Board for approval.
(bb) Assessed the training needs of each director.
(cc) Assessed the Board’s performance and effectiveness as a whole.
(dd) Assessed the performance of each individual Director.
(ee) Reviewed the overall composition of the Board in terms of the appropriate size, mix of skills,
experience, core competencies and board balance.
(ff) Assessed the independence of its independent directors.
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.
(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
(Non-Independent Managing Director) -
Member
Mr Kuah Hun Liang
-
Member
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 two (2) meetings during the year, which were attended by all members.
23
(d) Risk Management Committee
During the year, the Board had established a Risk Management Committee comprising the following
non-executive directors, the majority of whom are independent directors:-
-
Dato’ Lim Tiong Chin -
(Non-Independent Non-Executive Director)
Chairman
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.
1.7 Appointment of Directors
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 :
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.
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
(e) Whether the candidate complies with 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.
ANNUAL REPORT 2014
24
1.8 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 Directors are linked to the corporate and individual performance.
The directors’ fees payable to directors are endorsed by the Board based on the recommendation of
the Remuneration Committee and are tabled for the approval of shareholders at the annual general
meeting of the Company. 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 2014 categorised into appropriate components is as follows:-
Number of Directors
Directors of the Company
2014
Executive
Directors
2013
Non-Executive Executive
Directors
Directors
Non-Executive
Directors
RM0 to RM50,000
–
–
–
1
RM50,001 to RM100,000
–
1
–
2
RM100,001 to RM150,000
–
2
–
–
RM250,001 to RM300,000
1
–
–
–
RM350,001 to RM400,000
–
–
1
–
RM600,001 to RM650,000
1
–
–
–
RM800,001 to RM850,000
–
–
1
–
RM2,250,001 to RM2,300,000
1
–
–
–
1.9 Independent 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 the Code’s recommendation that the tenure of service of an independent director
of the Company shall not exceed a cumulative term of nine (9) years.
1.10 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
25
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 2014 are set out below:
Name of Directors
Total Number of Board Meetings Attended in 2014
6/6
6/6
Mr Ng Kok Cheang
5/6
6/6
Mr Kuah Hun Liang
6/6
Ms Ivevei Upatkoon
6/6
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.
1.11Training
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.
Details of the training attended by the Directors in 2014 are set out below:Directors
Title of Training
Tan Sri Dato’ Dr Yahya bin Awang New Companies Bill vis-à-vis Malaysian Companies Law
New Companies Bill vis-à-vis Malaysian Companies Law
New Companies Bill vis-à-vis Malaysian Companies Law
Mr Ng Kok Cheang
• Advocacy Session on Corporate Disclosure for Director
• New Companies Bill vis-à-vis Malaysian Companies Law
• Bank Negara Malaysia – Financial Institutions Directors’ Education
Forum Dialogue with the Governor: “Economic & Financial
Services Sector : Trends & Challenges Moving Forward”
Mr Kuah Hun Liang
•
Board Briefing by Messrs PricewaterhouseCoopers:(1) Living Will – Recovery and Resolution Planning
(2) Cyber Criminal in the Financial Services Industry
(3) International Financial Reporting Standard 9
(4) Foreign Account Tax Compliance Act
Ms Ivevei Upatkoon
• Mandatory Accreditation Programme
• Advocacy Session on Corporate Disclosure for Director
ANNUAL REPORT 2014
26
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 2014 and any matters arising
from the audit. 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 were independent in accordance
with the By-laws of the Malaysian Institute of Accountants.
The Audit Committee had assessed the performance and independence of the external auditors of the
Company based on criteria approved by the Board and the Audit Committee is satisfied with Messrs Ernst
& Young’s performance, technical competence and audit 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
27
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.
3.3 Corporate Disclosure Policy
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.
3.4 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 21 April 2015.
ANNUAL REPORT 2014
28
additional corporate disclosures
1. Utilisation of Proceeds
During the financial year ended 31 December 2014, there were no corporate proposals in which proceeds had
been raised.
2. Share Buy-Back
The Company did not propose/undertake any share buy-back during the financial year ended 31 December
2014.
3. Options or Convertible Securities
The Company did not issue any options and convertible securities during the financial year ended 31 December
2014.
4. Depository Receipt Programme
The Company did not sponsor any Depository Receipt programme during the financial year ended 31 December
2014.
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 2014.
6. Non-Audit Fees
During the financial year ended 31 December 2014, the following non-audit fees were paid to the Group’s
external auditors, Messrs Ernst & Young (“EY”):
Non-audit services rendered by EY
Subsidiaries (RM) Company (RM)
(a)
Review of Directors’ Statement on Risk Management and Internal
Control
–
6,890
(b)
Professional fees rendered in relation to the training on Malaysian
Financial Reporting Standards
–
2,700
(c)
Validation for Differential Levy System and Returns on Calculation
of Premium to Perbadanan Insurans Deposit Malaysia
9,510
–
Total
9,510
9,590
7. Variation in Results
There were no variances of 10% or more between the audited results for the financial year ended 31 December
2014 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 2014.
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 2014, none of the Directors and Major Shareholders of the Company have any material contracts with
the Company and/or its subsidiaries.
29
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.
ANNUAL REPORT 2014
30
audit committee report
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 2014, where a total of five(5) meetings were held, are as follows:-
Name
Mr Kuah Hun Liang
Designation/Directorship
Number of meetings
attended
Chairman/Independent Non-Executive Director
5/5
Tan Sri Dato’ Dr Yahya bin Awang Member/Independent Non-Executive Director
5/5
5/5
Member/Non-Independent Non-Executive Director
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.
31
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.
(d) The Head of Finance and the Head of Group Internal Audit should normally attend meetings upon invitation of
the Audit Committee. Other Directors, employees and representatives of the external auditors shall attend any
particular Audit Committee meeting only at the Audit Committee’s invitation, specific to the relevant 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.
ANNUAL REPORT 2014
32
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) determine the remit of the internal audit function;
(v) review any appraisal or assessment of the performance of members of the internal audit function;
(vi) 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.
33
(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 quarterly financial results of the Group before recommending to the Board for their
approval and subsequent release of the results to Bursa Securities.
(b) Reviewed with the external auditors on the annual audited financial statements of the Group to ensure that
compliance with applicable approved accounting standards and that legal requirements were met before
recommending to the Board for their approval. Deliberated significant audit findings and accounting issues at
the Audit Committee Meetings.
(c) Reviewed the Audit Planning Memorandum of the external auditors, in terms of the nature of the audit procedures,
significant accounting and auditing issues, impact of new or proposed changes in the accounting standards and
regulatory requirements for the financial year 2014.
(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 satisfactory performance of GIAD.
(f) 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.
(g) Reviewed the independence, objectivity, effectiveness and terms of engagement of the external auditors.
(h) Reviewed 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.
(i)
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.
(j)
Reviewed the Audit Committee Report for inclusion in the annual report prior to Board’s approval.
ANNUAL REPORT 2014
34
SUMMARY OF ACTIVITIES OF INTERNAL AUDIT FUNCTION FOR THE FINANCIAL YEAR ENDED 31
DECEMBER 2014
During the financial year ended 31 December 2014, the Internal Audit Department carried out the following activities:(a)
Prepared the 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 the Senior
Management.
(b)
Regularly performed risk based audits, which covered reviews of the internal control system, risk management,
accounting and management information system.
(c)
Conducted special review requested by the Management.
(d)
Issued audit reports to the Audit Committee and the Management identifying weaknesses and issues as well
as highlighting recommendations for improvements.
The costs incurred for the internal audit function of the Group for financial year ended 31 December 2014 was
RM453,410.
35
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.
• The Group has in place an ongoing review process for identifying, evaluating, monitoring and managing the
significant risks affecting the achievement of its business objectives. This review process is conducted by
the Company’s management team and Group Internal Audit Department.
• The Group will continue to foster a risk-aware culture in all decision-making and to commit in managing all
risks in a proactive and effective manner. This is to enable the Group to respond effectively to the changing
business and competitive environment which is critical for the Group’s sustainability and the enhancement
of shareholders’ value.
2.
Independent Assurance Mechanism
• 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.
ANNUAL REPORT 2014
36
control (cont’d)
• 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.
3.
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 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.
• 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.
37
control (cont’d)
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 are operating adequately and effectively in all material aspects, during the year under review.
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 21 April 2015.
ANNUAL REPORT 2014
directors’ report
and audited financial statements
Directors’ Report
039 - 042
Statement by Directors
043
Statutory Declaration
043
Independent Auditors’ Report
044 - 045
Statements of Comprehensive Income 046 - 047
Statements of Financial Position 048 - 049
Statements of Changes in Equity
050 - 051
Statements of Cash Flows
052 - 054
Notes to the Financial Statements
055 - 144
Supplementary Information 145
39
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 2014.
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
GroupCompany
RM’000RM’000 Profit for the year
243,653
179,105
Attributable to:
Owners of the Company
245,420
Non-controlling interests
(1,767)
243,653
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.
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 The Directors of the Company in office since the date of the last report and at the date of this report are:
Mr Ng Kok Cheang
Mr Kuah Hun Liang Ms Ivevei Upatkoon ANNUAL REPORT 2014
40
directors’ report (cont’d)
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 31
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:
Number of ordinary shares of RM1.00 each
As at 01.01.2014/ Date of
As at
Appointment AcquiredDisposed 31.12.2014
Shares in the Company
Direct Interest:
51,100
50,000
-
101,100
Mr Ng Kok Cheang
263,900
100,000
-
363,900
508,000
-
-
508,000
Mr Kuah Hun Liang
241,100
-
-
241,100
Ms Ivevei Upatkoon @
156,200
-
-
156,200
Indirect/Deemed Interest: Tan Sri Dato’ Surin Upatkoon #
252,303,493
13,617,600
4,000,000
261,921,093
Dato’ Lim Tiong Chin ^^
4,160,000
-
-
4,160,000
@ Appointed as Executive Director on 20 February 2014.
# 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.
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.
MPHB CAPITAL BERHAD (1010253-W)
41
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.
(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.
ANNUAL REPORT 2014
42
Other statutory information (cont’d)
(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 its insurance liabilities 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 32 to the financial statements. Subsequent events
Details of subsequent events are disclosed in Note 33 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 21 April 2015.
Ng Kok Cheang
43
statement by directors
Pursuant to Section 169(15) of the Companies Act, 1965
We, Tan Sri Dato’ Surin Upatkoon and Ng Kok Cheang, 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 46 to
144 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 2014 and of their financial performance and cash flows
for the year then ended.
The information set out in Note 40 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 21 April 2015
Ng Kok Cheang
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 46
to 144 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 21 April 2015
Before me,
M. SIVANASON (Licence No. W590)
Commissioner for Oaths
ANNUAL REPORT 2014
44
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 2014 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 46 to 144.
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 2014 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.
45
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 40 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 & Young
Yeo Beng Yean
AF: 0039
No. 3013/10/16(J)
Chartered Accountants
Chartered Accountant
Kuala Lumpur, Malaysia
21 April 2015
ANNUAL REPORT 2014
46
statements of comprehensive income
for the year ended 31 december 2014
Group Note
2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
Revenue
Cost of sales
3
4
Gross profit
Other income
Administrative expenses
Other expenses
Operating profit
Finance costs
Share of results of an associate
Profit before tax
Income tax expense
Profit for the year
5
6
7
8
370,078
(243,261)
245,973
(164,592)
198,787
-
46,905
-
126,817
285,710
(55,594)
(75,299)
81,381 50,802
(36,636)
(34,223)
198,787
2,804
(7,578)
(10,068)
46,905
412
(3,798)
(2,777)
281,634
(4,137)
(11)
61,324
(3,835)
101
183,945
(4,768)
-
40,742
-
277,486
(33,833)
57,590
(10,718)
179,177
(72)
40,742
(2,872)
243,653
46,872
179,105
37,870
Other comprehensive loss
Items that are or may be reclassified
subsequently to profit or loss
Fair value reserves
Net loss arising during the year
(2,321)
(4,349)
-
Net realised gains transferred to
profit or loss
(5,394)
(6,170)
-
Tax effects
(7,715)
2,589
(10,519)
314
-
-
-
Total other comprehensive loss for the year
(5,126)
(10,205)
-
-
Total comprehensive income for the year 238,527
36,667
179,105
37,870
47
statements of comprehensive income (cont’d)
Group
Note 20142013
RM’000
RM’000
Profit attributable to:
245,420
48,249
(1,767)
(1,377)
243,653 46,872
Total comprehensive income attributable to:
240,294
38,044
(1,767)
(1,377)
238,527
36,667
Earnings per share attributable to owners of the Company
(sen per share) Basic, for profit for the year
9
34.3
8.9
The accompanying notes form an integral part of the financial statements.
ANNUAL REPORT 2014
48
statements of financial position
as at 31 december 2014
GROUP COMPANY
Note
2014 201320142013
RM’000
RM’000 RM’000
RM’000
Assets
Non-current assets
10
84,266
87,324
1,459
1,114
Investment properties
11
748,661
744,051
-
Investment in subsidiaries
12
-
- 1,197,486 1,202,131
Investment in an associate
13
539
550
-
Investment securities
14
327,656
362,205
-
Intangible assets
15
43,161
42,884
-
Deferred tax assets
26
9,838
11,598
-
1,214,121
1,248,612 1,198,945
1,203,245
Current assets
Inventories
16
231
199
-
Receivables
17
341,097
228,356
157,269
14,876
Reinsurance assets
18
443,946 411,528
-
Tax recoverable
5,689
6,156
-
14
113,900
103,315
67,208
Cash and bank balances
19
481,714
311,422
3,227
7,506
1,386,577
1,060,976
227,704
22,382
20
-
30,195
-
-
Total assets
2,600,698
2,339,783 1,426,649
1,225,627
Asset held for sale
49
statements of financial position (cont’d)
GROUP COMPANY
Note
2014 201320142013
RM’000
RM’000 RM’000
RM’000
Equity and liabilities
Equity attributable to owners
of the Company
Share capital
21
715,000
715,000
715,000
715,000
Share premium
21
296,091
296,091
296,091
296,091
Other reserves
22
42,711
47,837
-
Merger deficit
23
(28,464)
(28,464)
-
Retained profits
24
293,501
48,081
216,807
37,702
1,318,839 1,078,545 1,227,898 1,048,793
36
13,620 15,389
-
Total equity
1,332,459 1,093,934 1,227,898 1,048,793
Non-current liabilities
Borrowings
25
26,848 63,721 -
Deferred tax liabilities
26
21,446 24,079 -
48,294
87,800 -
Current liabilities
Payables
27
276,883 288,714 198,730 176,749
Insurance contract liabilities 18
897,733 816,204 -
Borrowings
25
36,595 29,650 -
Tax payable
8,734 875 21 85
1,219,945 1,135,443 198,751 176,834
Liability directly associated with asset held for sale
20
-
22,606 -
Total liabilities
1,268,239 1,245,849 198,751
176,834
Total equity and liabilities
2,600,698 2,339,783 1,426,649 1,225,627
ANNUAL REPORT 2014
50
statements of changes in equity
Group
Attributable to owners of the Company
Non-distributable
Distributable
Share
Share
Other
Merger Retained
Non- capital premium reserves deficit profits controlling
Total
(Note 21) (Note 21) (Note 22) (Note 23) (Note 24) Total interests
equity
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
RM’000 RM’000
At 1 January 2013
#
-
-
-
(168)
(168)
-
(168)
Issuance of ordinary
shares in connection
with the merger and
acquisition of
subsidiaries 715,000 296,091 58,042 (28,464)
- 1,040,669 16,766 1,057,435
for the year
-
- (10,205)
-
-
(10,205)
- (10,205)
Profit for the year
-
-
-
-
48,249 48,249 (1,377)
46,872
Total comprehensive
income for the year
-
- (10,205)
-
48,249
38,044 (1,377)
36,667
At 31 December 2013
715,000 296,091
47,837 (28,464)
48,081 1,078,545
15,389 1,093,934
At 1 January 2014
715,000 296,091
47,837
(28,464)
48,081 1,078,545 15,389 1,093,934
Acquisition of
non-controlling interests
-
-
-
-
-
-
(2)
(2)
for the year
-
-
(5,126)
-
-
(5,126)
-
(5,126)
Profit for the year
-
-
-
- 245,420 245,420 (1,767) 243,653
Total comprehensive
income for the year
-
-
(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
51
statements of changes in equity (cont’d)
Attributable to owners of the Company
Non-distributable
Distributable
(Accumulated
losses)/
Share Share Other Merger
Retained capital premium
reserves
deficit
profits
(Note 21) (Note 21) (Note 22) (Note 23) (Note 24) Total
Company
RM’000RM’000 RM’000RM’000 RM’000
RM’000
At 17 July 2013
#
-
-
-
(168)
(168)
Issuance of ordinary shares
715,000
296,091
-
-
- 1,011,091
Total comprehensive income for the year
-
-
-
-
37,870 37,870
At 31 December 2013
715,000
296,091 -
-
37,702
1,048,793
At 1 January 2014
715,000
296,091 -
-
37,702
1,048,793
Total comprehensive income for the year
-
-
-
-
179,105 179,105
At 31 December 2014
715,000
296,091 -
-
216,807
1,227,898
# - represents RM2.00
ANNUAL REPORT 2014
52
statements of cash flows
Group
2014
2013
RM’000
RM’000
Operating activities
Profit before tax
277,486
57,590
Adjustments for:
Depreciation of property, plant and equipment
6,005
5,218
Depreciation of investment properties
1,770 1,326
Interest expense
4,137
3,835
Amortisation of premiums
7
5
Amortisation of intangible assets 616 387
Impairment loss on AFS financial assets
-
280
Bad debts written off
649
4
Property, plant and equipment written off
4
2,211
Allowance for impairment of receivables 6,311
3,152
Write back of allowance for impairment for loans and advances
(23)
(139)
11 (101)
Gain on disposal of:
- property, plant and equipment
(56)
(5)
- investment properties
(437)
- asset held for sale
(195,862)
Realised (gain)/loss on:
- AFS financial assets
(5,394)
(6,170)
- financial assets at FVTPL
113 (79)
Interest income
(33,012)
(22,479)
Dividend income on quoted shares and unit trusts
(4,038)
(2,551)
Loss/(gain) arising from fair value change in financial assets at FVTPL
218 (821)
Operating cash flows before working capital changes
58,505
41,663
Changes in working capital:
Inventories
(32)
27
Receivables
(112,534)
(35,203)
Reinsurance assets
(32,418)
(39,078)
Insurance contract liabilities 81,529 86,874
Payables
(34,977)
183,444
Cash flows (used in)/generated from operations
(39,927)
237,727
Income tax paid
(23,791)
(19,750)
Net cash flows (used in)/generated from operating activities
(63,718)
217,977
53
statements of cash flows (cont’d)
Group
2014
2013
RM’000
RM’000
Investing activities
Proceeds from disposals of:
280
5
1,209 - asset held for sale
226,057
- investment securities 238,075
237,768
Redemption of fixed income securities
13,523
75,627
Purchase of:
- intangible assets
(893)
(583)
(3,175)
(2,707)
(7,152)
- investment securities (230,293)
(402,845)
Acquisition of non-controlling interests
(2)
Net dividend received from quoted shares and unit trusts
4,038
2,551
Interest received
25,868
11,956
Interest paid
(3,597)
(3,078)
Cash and cash equivalents of the subsidiaries acquired -
192,465
Net cash flows generated from investing activities
263,938
111,159
Financing activities
Net repayment of borrowings
(29,928)
(17,714)
Net movement in fixed deposits with licensed bank
(9)
(287)
Net cash flows used in financing activities
(29,937)
(18,001)
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
170,283
311,135
311,135
-
Cash and cash equivalents at end of year (Note 19)
481,418
311,135
ANNUAL REPORT 2014
54
statements of cash flows (cont’d)
Company
2014
2013
RM’000
RM’000
Profit before tax
179,177
40,742
Adjustments for: Depreciation of property, plant and equipment
476
236
Interest expense
4,768
Dividend income
(195,043)
(45,641)
Interest income
(2,769)
(412)
Realised loss on financial assets at FVTPL
41
Loss arising from fair value change in financial assets at FVTPL 213
Impairment on investment in a subsidiary
4,647
Gain on disposal of property, plant and equipment
(35)
Operating cash flows before working capital changes
(8,525)
(5,075)
Changes in working capital:
Receivables
193
(1,427)
Payables
(41,888)
(66,988)
Inter-company indebtedness
(78,709)
39,764
Cash flows used in operations
(128,929)
(33,726)
Tax paid
(136)
(2,787)
Net cash flows used in operating activities
(129,065)
(36,513)
Investing activities
Proceeds from disposals of:
59
- investment securities 80,000
Purchase of:
- investment in subsidiaries
(2)
(845)
(1,350)
- investment securities (147,462)
Dividends received
195,043
45,641
Interest received
2,761
401
Interest expense
(4,768)
Shares issuance expenses
-
(676)
Net cash flows generated from investing activities
124,786
44,016
Net (decrease)/increase in cash and cash equivalents
(4,279)
7,503
Cash and cash equivalents at beginning of year
7,506
3
Cash and cash equivalents at end of year (Note 19)
3,227
7,506
55
notes to the financial statements
31 december 2014
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 is as disclosed in Note 39. 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 MultiPurpose, 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 21 April 2015.
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 2014.
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 follow:
On 1 January 2014, the Group and the Company adopted the following new and amendments to MFRSs
and IC Interpretations mandatory for annual financial periods beginning on or after 1 January 2014.
Effective for
periods
beginning on
or after
Amendments to MFRS 10, MFRS 12 and MFRS 127 Investment
Entities
1 January 2014
Amendments to MFRS 132 Financial Instruments: Presentation - Offsetting Financial Assets and Financial Liabilities
1 January 2014
Amendments to MFRS 136 Recoverable Amount Disclosures
for Non-Financial Assets
1 January 2014
ANNUAL REPORT 2014
56
notes to the financial statements (cont’d)
2.
Significant accounting policies (cont’d)
2.2 Changes in accounting policies (cont’d)
Effective for
periods
beginning on
or after
Amendments to MFRS 139 Financial Instruments : Recognition
and Measurement - Novation of Derivatives and Continuation
of Hedge Accounting
1 January 2014
IC Interpretation 21 Levies
1 January 2014
The adoption of the MFRSs, and amendments to MFRSs and IC Interpretations above did not have any
material impact on the financial statements of the Group and the Company in the current financial year.
2.3 Standards issued but not yet effective
The standards and interpretations that are issued but not yet effective up to the date of issuance of the
Group’s and the Company’s financial statements as 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
Amendments to MFRS 119: Defined Benefit Plans: Employee
Contributions
1 July 2014
Annual Improvements to MFRSs 2010-2012 Cycle
1 July 2014
Annual Improvements to MFRSs 2011-2013 Cycle
1 July 2014
Annual Improvements MFRSs 2012-2014 Cycle
1 January 2016
Amendments to MFRS 10 and MFRS 128: Sale or Contribution
of Assets between an Investor and its Associate or Joint Venture
1 January 2016
Amendments to MFRS 10, MFRS 12 and MFRS 128 : Investment
Entities: Applying the Consolidation Exception
1 January 2016
Amendments to MFRS 11: Accounting for Acquisitions of Interests in Joint Operations
1 January 2016
MFRS 14: Regulatory Deferral Accounts
1 January 2016
Amendments to MFRS 101: Disclosure Initiative
1 January 2016
Amendments to MFRS 116 and MFRS 138: Clarification of
Acceptable Methods of Depreciation and Amortisation
1 January 2016
Amendments to MFRS 116 and MFRS 141: Agriculture: Bearer Plants
1 January 2016
Amendments to MFRS 127: Equity Method in Separate Financial Statements
1 January 2016
MFRS 15: Revenue from Contracts with Customers
1 January 2017
MFRS 9 Financial Instruments (IFRS 9 as issued by IASB
in July 2014)
1 January 2018
These pronouncements are expected to have no significant impact to the financial statements of the
Company upon their initial application except as described below:
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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, probability-weighted 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.
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.
ANNUAL REPORT 2014
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2.
2.4 Summary of significant accounting policies (cont’d)
(a) Subsidiaries and basis of consolidation (cont’d)
(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 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;
– 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.
– Rights arising from other contractual arrangements; and
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.
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(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.
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 no restatement of financial information in the consolidated financial
statements for the periods prior to the combination of the entities under common control.
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 non-controlling
interests are adjusted to reflect the changes in their relative interests in the subsidiaries.
ANNUAL REPORT 2014
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2.
(iii) 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 investments 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.
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(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 cashgenerating 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 cashgenerating 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.
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.
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(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
2.0 - 2.8
Leasehold land 0.1 - 1.7
Plant and equipment
10.0 - 33.3
Computer equipment 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 appropriate.
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.
(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.
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(e) Investment properties (cont’d)
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.
(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”)).
ANNUAL REPORT 2014
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(g) Impairment of non-financial assets
(cont’d)
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 raw materials 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 bank and on hand and demand deposits which have
a maturity period of three months or less.
Borrowing costs
(j)
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.
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2.
(j)
Borrowing costs (cont’d)
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.
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.
ANNUAL REPORT 2014
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(k) Income taxes (cont’d)
(ii) Deferred tax (cont’d)
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.
(ii) Defined contribution plans
The companies in the Group make contributions to the Employee Provident Fund in Malaysia,
a defined contribution pension scheme. Contributions to defined contribution pension schemes
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.
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(m) Revenue recognition (cont’d)
(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.
(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 Company’s
functional currency.
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(n) Foreign currencies (cont’d)
(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 is held primarily for
trading purposes are presented as current whereas financial assets that is not held primarily for
trading purposes are presented as current or non-current based on the settlement date.
(ii) Loans and receivables (“LAR”)
Financial assets with fixed or determinable payments that are not quoted in an active market are
classified as LAR.
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(o) Financial assets
(cont’d)
(ii) Loans and receivables (“LAR”)
(cont’d)
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 adopted for financial assets carried at amortised cost. The impairment
loss is calculated under the same method used for financial assets. These processes are
described in Note 2.4(q).
Insurance receivables are derecognised when the derecognition criteria for financial assets
have been met.
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31 december 2014
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 2014
2.
(p) Financial liabilities (cont’d)
(ii) Other 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.
Increase in fair value, if any, subsequent to impairment loss is recognised as other comprehensive
income in AFS reserve.
(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.
ANNUAL REPORT 2014
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2.
(q) Impairment of financial assets (cont’d)
(iii) Assets carried at amortised cost (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 38, 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 in equity in the period in which they are declared.
(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 2014
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 the overall Multi-Purpose Insurans
Bhd. (“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) Unexpired risk reserves
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) Unearned premium reserves
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.
ANNUAL REPORT 2014
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2.
(u)General insurance underwriting results (cont’d)
(iii) Premium liabilities (cont’d)
(b) Unearned premium reserves (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
Fire, engineering, aviation and marine hull
Medical
Other classes
10%
15%
10 - 15%
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 overall 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 2014
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
Multi-Purpose Insurans Bhd (“MPIB” or “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.
Investment contracts can, however, be reclassified as insurance contracts after inception if insurance
risk becomes significant.
ANNUAL REPORT 2014
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31 december 2014
2.
(w) Product classification (cont’d)
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.
(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.
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31 december 2014
2.
(y) Financial guarantee contracts
(cont’d)
Financial guarantee contracts are 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 activities 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.
ANNUAL REPORT 2014
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31 december 2014
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 five 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. When the recoverable amount
of the CGU is less than its carrying amount, impairment is recognised. Impairment relating to
goodwill cannot be reversed in future years. Futher details on the goodwill are as disclosed in
Note 15.
(iv) Impairment of AFS financial assets
Significant judgment 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 it’s 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 are 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.
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31 december 2014
2.5 Significant accounting estimates and judgements (cont’d)
(b)Key sources of estimation uncertainty
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 and
unrecognised deferred tax assets are as disclosed in Note 26.
(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.
ANNUAL REPORT 2014
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31 december 2014
3.Revenue
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
Net earned premiums (Note (i))
330,957
215,774 -
Interest income on loans and advances
1,128
661 -
Investment income in respect of
gross dividends from:
- subsidiaries
-
-
195,043
- unquoted investment securities
in Malaysia 460
380
-
Revenue from rental of properties
940 341 -
Hotel services
35,260 28,331 -
Sale of goods
451 486 -
Management fees from:
- subsidiaries
-
-
2,862 - an affiliated company
882
-
882 45,641
1,264
-
370,078 245,973 198,787
46,905
(a) Gross premium
Change in premium liabilities
604,945
(16,394)
436,179 (65,407)
-
-
-
Gross earned premium
588,551
370,772 -
-
(i) Net earned premiums comprised:
(b) Gross premium ceded
(257,152)
(196,455)
-
Change in premium liabilities
(442)
41,457 -
Premium ceded
Net earned premiums
-
(257,594)
(154,998)
-
-
330,957 215,774 -
-
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31 december 2014
4.
Cost of sales
Group
2014
2013
RM’000
RM’000
Cost of insurance business (Note (i))
229,270
153,690
Cost of hotel services
13,991 10,902
243,261
164,592
(i) Cost of insurance business comprised:
Gross claims paid 245,228 154,946
Claims ceded to reinsurers (83,260)
(50,319)
Gross change in contract liabilities
65,135
21,468
Change in contract liabilities ceded to reinsurers
(32,859)
2,379
Net claims incurred (Note (ii))
194,244
128,474
Fee and commission income (49,648)
(36,994)
Fee and commission expenses
84,674
62,210
229,270 153,690
(ii) Net claims incurred comprised:
Gross claims paid less salvage
245,228
154,946
Reinsurance recoveries
(83,260)
(50,319)
Net claims paid
161,968
104,627
Gross change in contract liabilities
At 31 December
629,583
564,448
At 1 Jan/April
(564,448)
(542,980)
65,135
21,468
Change in contract liabilities ceded to reinsurers
At 31 December
(336,984)
(304,125)
At 1 Jan/April
304,125
306,504
(32,859)
2,379
Net claims incurred
194,244
128,474
ANNUAL REPORT 2014
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31 december 2014
5.
Other income
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
Realised gain from financial assets at FVTPL -
79
-
Write back of allowance for impairment for loan and advances
23 139 -
Interest income (Note (i))
7,789 4,770 2,769 412
Other income of an insurance subsidiary (Note (ii))
51,162 34,187 -
Share of profits from a completed housing project
27,973 7,897 -
Income from rental of properties
513 401 -
Gain on disposal of:
35 -
35 - asset held for sale
195,862 -
-
Gain arising from fair value change in
financial assets at FVTPL 1,421 821 -
Others
932 2,508 -
285,710 50,802 2,804 412
(i) Interest income
Interest income on:
- loan to subsidiaries
-
-
19 111
- short term deposits
800
2,847
288
301
- investment securities
4,565 1,923
2,462
- late payment
2,424 -
-
7,789
4,770
2,769 412
(ii)Other income of an insurance subsidiary
Group
20142013
RM’000RM’000
Other income of an insurance subsidiary comprised:
Investment income (Note (a))
28,261
19,710
Realised gains from AFS financial assets (Note (b))
5,394
6,170
Other operating income (Note (c))
17,507
8,307
51,162
34,187
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31 december 2014
5.
Other income (cont’d)
(ii) Other income of an insurance subsidiary (cont’d)
Group
2014
2013
RM’000 RM’000
(a) Investment income comprised:
AFS financial assets:
Dividend income - Equity securities quoted in Malaysia
2,892
2,548
- Equity securities quoted outside Malaysia
35
3
- Quoted unit trust
1,111 Interest income
11,233 12,386
LAR interest
12,862 4,662
Rental income from investment properties
135 116
Amortisation of premium
(7)
(5)
28,261 19,710
(b) Realised gains/(losses) from AFS financial assets comprised:
Equity securities quoted in Malaysia
6,183
4,520
Equity securities quoted outside Malaysia
-
1,050
Debt securities unquoted outside Malaysia
(789)
600
5,394 6,170
(c) Other operating income comprised:
Gain on disposal of property, plant and equipment
21 5
Realised gain on disposal of investment properties
437 Property, plant and equipment written off
-
(2,204)
-
(280)
Service income earned from Malaysian Motor Insurance Pool (“MMIP”)
9,963 9,531
Reversal of advertising provision
4,866 Sundry income
2,220 1,255
17,507 8,307
ANNUAL REPORT 2014
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31 december 2014
6. Operating profit
The following amounts have also been included in arriving at operating profit:
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
6,005 5,218 476 236
1,770 1,326 -
Auditors’ remuneration (Note (a))
419 312
17 15
Key management personnel (Note (b))
3,554 1,384 3,443
1,270
Amortisation of intangible assets 616 387 -
Impairment on investment in a subsidiary
-
4,647 Rental expense of land and buildings
3,606 2,477 1,216 690
Employee benefits expense (Note (c))
61,970 41,702 7,578 3,798
Bad debts written off included in management expenses
649 4
-
written off
4
7
-
Fund management charges
741 655 -
Loss arising from fair value change in financial assets at FVTPL 1,639 -
213
Realised loss from financial assets at FVTPL 113 -
41 Allowance for impairment of
receivables 6,311 3,152 -
(a) Auditors’ remuneration
Auditors of the Company:
- statutory audit
387 273 10
8
- assurance related services
23 31 7
7
410 304 17 15
Other auditors
- statutory audit
9
8
-
419 312 17 15
(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.
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31 december 2014
6.
Operating profit (cont’d)
(b)Key management personnel (cont’d)
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
Executive directors’ remuneration:
- bonus
1,014 462 1,014 462
- emoluments
2,169 715 2,169 715
- benefits-in-kind
24 15 24 15
3,207 1,192 3,207 1,192
Non-executive directors’ remuneration:
- fees
340 190 240 90
- emoluments
31 17 20 3
- benefits-in-kind
7
7
-
378 214 260 93
Total directors’ remuneration
3,585
1,406
3,467 1,285
Less: estimated money value of benefits-in-kind
(31)
(22)
(24)
(15)
Total directors’ remuneration excluding benefits-in-kind
3,554 1,384 3,443 1,270
The number of directors of the Company whose total remuneration during the financial year fell
within the following bands is analysed below:
Number of
Directors Directors
2014
2013
Executive Directors:
RM250,001 - RM300,000
1
RM350,001 - RM400,000
-
1
RM600,001 - RM650,000
1
RM800,001 - RM850,000
-
1
RM2,250,001 - RM2,300,000
1
-
Non-executive Directors:
RM0 - RM50,000
-
1
RM50,001 - RM100,000
1
2
RM100,001 - RM150,000
2
-
ANNUAL REPORT 2014
86
31 december 2014
6.
Operating profit (cont’d)
(c) Employee benefits expense
Wages and salaries
Contributions to a defined contribution plan
Other staff related expenses
7.
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
50,757 6,496 4,717 33,697 4,318 3,687 6,551 770 257 3,246
418
134
61,970 41,702 7,578 3,798
Finance costs
Group Company
2014 201320142013
RM’000
RM’000 RM’000
RM’000
Interest expense on: Term loans and revolving credit 4,137 3,835 -
Amounts due to subsidiaries
-
-
4,768 4,137 3,835 4,768 8.
Income tax expense
The components of income tax expense comprise the following:
Group Company
2014201320142013
RM’000
RM’000 RM’000
RM’000
Income tax:
Malaysian income tax
27,075
10,597
72
2,872
Under/(over) provision of tax expense in prior year
5,042 (145)
-
32,117 10,452 72 2,872
Deferred tax:
Relating to origination and reversal of temporary differences
276
(275)
-
Under provision of deferred tax in prior year
1,440 541 -
Deferred income tax (Note 26)
1,716 266
-
Income tax expense for the year
33,833 10,718 72 2,872
Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2013: 25%) of the estimated
assessable profit for the year.
87
31 december 2014
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
Company
2014
2013
2014
2013
RM’000
RM’000 RM’000
RM’000
Profit before tax
277,486
57,590
179,177 40,742
* 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
Taxation at Malaysian statutory tax rate 69,372 14,398
44,794 10,186
Effect of income not subject to tax
(50,746)
(9,750)
(49,381)
(8,958)
Effect of expenses not deductible for tax purposes
11,366
10,437
4,659 1,644
Effect of utilisation of previously unrecognised tax losses (301)
(266)
-
Additional deduction allowed in respect of cash
contributions made to MMIP during the year*
(2,340)
(4,497)
-
Under/(over) provision of income tax expense in prior year
5,042 (145)
-
Under provision of deferred tax in prior year
1,440 541 -
33,833
10,718
72 2,872
Basic earnings per share Basic earnings per share 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.
2014 2013
RM’000 RM’000
Profit for the year attributable to owners of the Company 245,420 48,249
Number of ordinary shares in issue - weighted average
715,000 542,616
Basic earnings per share (Sen)
34.3 8.9
ANNUAL REPORT 2014
88
31 december 2014
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 2014
17,409 3,706 89,160 30,216 7,377 147,868
Additions
-
-
1,157 1,757 261 3,175
Disposals
-
-
-
(327)
(146)
(473)
Written off
-
-
-
(14)
-
(14)
At 31 December 2014
17,409 3,706 90,317
31,632 7,492 150,556
Accumulated depreciation
At 1 January 2014
-
268 29,844 24,205 6,227 60,544
Depreciation charge for
the year
-
44 3,424 1,903 634 6,005
Disposals
-
-
-
(104)
(145)
(249)
Written off
-
-
-
(10)
-
(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
89
31 december 2014
10. Property, plant and equipment (cont’d)
Buildings on
Freehold Leasehold leasehold and Plant and Computer Work-in-
land land freehold land equipment equipment progress
Total
RM’000 RM’000 RM’000
RM’000
RM’000
RM’000
RM’000
Group
Cost
Merger and acquisition
of subsidiaries
17,409 3,706 89,170 27,770 7,980 1,444 147,479
Additions
-
-
-
2,454 253 -
2,707
Disposals
-
-
-
-
(43)
-
(43)
Transfer to intangible
assets -
-
-
-
(39)
-
(39)
Reclassification
-
-
-
-
(760)
760 Written off
-
-
(10)
(8)
(14)
(2,204)
(2,236)
At 31 December 2013
17,409 3,706 89,160 30,216 7,377 -
147,868
Accumulated
depreciation
Merger and acquisition
of subsidiaries
-
234 27,367 22,183 5,610 -
55,394
Depreciation charge
for the year
-
34 2,481 2,029 674 -
5,218
Disposals
-
-
-
-
(43)
-
(43)
Written off
-
-
(4)
(7)
(14)
-
(25)
At 31 December 2013
-
268 29,844 24,205 6,227 -
60,544
Net carrying amount
At 31 December 2013
17,409 3,438 59,316 6,011 1,150 -
87,324
The fair value of land and buildings are RM176,680,000 (2013: RM170,453,000) and is estimated based on valuations
performed by accredited independent valuers. Information about the valuation techniques and inputs used in determine
the fair value of lands and buildings are as disclosed in Note 11.
ANNUAL REPORT 2014
90
31 december 2014
10. Property, plant and equipment (cont’d)
Plant and Computer equipment equipment
Total
RM’000 RM’000 RM’000
Company
At 31 December 2014
Cost
At 1 January 2014
1,262
88
1,350
Additions
813 32 845
Disposals
(47)
-
(47)
At 31 December 2014
2,028 120 2,148
At 1 January 2014
186 50 236
Depreciation charge for the year 434 42 476
Disposals
(23)
-
(23)
At 31 December 2014
597 92 689
Net carrying amount
At 31 December 2014
1,431 28 1,459
At 31 December 2013
Cost
At 1 January 2013
-
-
Additions
1,262 88 1,350
At 31 December 2013
1,262 88
1,350
At 1 January 2013
- -
Depreciation charge for the year 186 50 236
At 31 December 2013
186 50 236
Net carrying amount
At 31 December 2013
1,076 38 1,114
91
31 december 2014
11. Investment properties
Group
20142013
RM’000RM’000
Cost
At 1 January/Merger and acquisition of subsidiaries 749,261 779,456
Reclassified to asset held for sale (Note 20)
-
(30,195)
Additions
7,152 Disposals
(772)
At 31 December
755,641 749,261
Accumulated depreciation At 1 January /Merger and acquisition of subsidiaries 5,210
3,884
Depreciation charge for the year
1,770
1,326
At 31 December
6,980
5,210
Net carrying amount Estimated fair value
748,661
744,051
924,194 825,541
Investment properties comprise freehold lands, leasehold lands and buildings.
Investment properties and lands 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 valuations were performed by the valuers in January 2015 for market value of investment properties
and land and buildings of property, plant and equipment as at 31 December 2014.
ANNUAL REPORT 2014
92
31 december 2014
11. Investment properties (cont’d)
Group
20142013
RM’000RM’000
Rental income derived from investment properties
Direct operating expenses (including repairs and maintenance)
generating rental income Net rental arising from investment properties 1,075 (439)
457
(246)
636
211
Carrying amounts of certain investment properties of the Group amounting to RM174,921,000 (2013:
RM174,831,000) are pledged as security for the Group’s bank borrowings as disclosed in Note 25.
Significant increase/(decrease) in estimated market value in isolation would result in a significant higher/
(lower) fair value. Increase/(decrease) by 1% in market value in isolation would result in increase/
(decrease) in fair value by RM9,242,000 (2013: RM8,255,000).
The Group has no restrictions on the realisability of its investment properties and no contractual
obligations to either purchase, construct or development investment properties or for repairs,
maintenance and enhancements except for certain joint ventures have been undertaken with Bandar
Raya Developments Berhad in respect of investment properties with carrying amounts of RM394,807,000
(2013: RM396,003,000). Details of the joint ventures 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.
93
31 december 2014
11. Investment properties (cont’d)
(iii)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 seven parcels of land in Gombak (measuring approximately
324 acres) (“G Land”).
(iv)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, 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.
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.
12. Investment in subsidiaries
Company
20142013
RM’000RM’000
At 1 January
Acquisition of shares in subsidiaries
Less: allowance for impairment
At 31 December
1,202,131 2 1,202,131
(4,647)
1,197,486
1,202,131
Further details of the subsidiaries, all of which are incorporated in Malaysia are disclosed in Note 39.
Disposal of shares in a subsidiary
On 27 October 2014, the Company had disposed 1 ordinary share of RM1.00 each in Leisure Dotcom
Sdn Bhd, a wholly-owned subsidiary to Jayavest Sdn Bhd, another wholly-owned subsidiary for a cash
consideration of RM1.00.
Acquisition of shares in a subsidiary
On 20 October 2014, the Company had acquired 1,000 ordinary shares of RM1.00 each in MB, a 98.20%
owned subsidiary for a cash consideration of RM2,150.
ANNUAL REPORT 2014
94
31 december 2014
12. Investment in subsidiaries (cont’d)
The following table summarize the consideration paid for acquisition of shares in MB.
Company
2014
RM’000
Total purchase consideration, satisfied by cash
2
The disposal and acquisition of shares in the subsidiaries did not have any significant effects on the
earnings or net asets of the Group for the financial year ended 31 December 2014.
The acquisition of shares in subsidiaries in the previous financial year relates to the merger and acquisition
of subsidiaries through a combination of cash and issuance of new ordinary shares.
13. Investment in an associate
Unquoted shares in Malaysia, at cost
Share of post-acquisition reserves
Group
20142013
RM’000RM’000
100
439
100
450
539 550
The summarised financial information of the associate is as follows:
Assets
Liabilities
Equity Proportion of the Group’s ownership
Carrying amount of the investment
20142013
RM’000RM’000
2,711
(14)
3,085
(333)
2,697 2,752
20%
539
20%
550
Revenue
154
105
Other income
20
1,245
Cost of sales
(63)
(515)
Management expenses
(166)
(214)
(Loss)/profit before tax
(55)
621
Income tax expense
-
(50)
(Loss)/profit for the year
(55)
571
Profit for the year/period (55)
505
Group’s share of (loss)/profit for the year/period
(11)
101
Further details of the associate are disclosed in Note 39.
95
31 december 2014
14. Investment securities
Group Company
20142013 20142013
RM’000
RM’000 RM’000
RM’000
Current Financial asset at FVTPL
Quoted shares in Malaysia
17,618 16,276 -
Unit trusts - quoted
96,282 87,039 67,208 Total current investment securities 113,900 103,315 67,208 Non-Current AFS financial assets
Quoted shares in Malaysia 78,486
69,619 -
Quoted shares outside Malaysia 2,682 2,879 -
Unquoted shares in Malaysia 1,001 1,001 -
Unquoted debts securities in Malaysia
201,088 239,663 -
Commercial papers
-
2,478 -
Unit trusts - quoted 41,123 40,997 -
Malaysian Government Papers
3,276 5,568 -
Total non-current investment securities
327,656 362,205 -
Total investment securities 441,556 465,520 67,208 The Group’s investment securities are summarised by categories as follows:
Group Company
20142013 20142013
RM’000
RM’000 RM’000
RM’000
At fair value
At cost 440,555 1,001 464,519 1,001 67,208
-
-
441,556 465,520 67,208 -
ANNUAL REPORT 2014
96
31 december 2014
15. Intangible assets
Computer Goodwill software
Total
RM’000 RM’000 RM’000
Group
Cost
As at 1 January 2014
41,102 5,133 46,235
Additions
-
893 893
At 31 December 2014
41,102 6,026 47,128
Merger and acquisition of subsidiaries
41,102 4,511 45,613
Transfer from property, plant and equipment
-
39 39
Additions
-
583 583
At 31 December 2013
41,102 5,133
46,235
Accumulated amortisation
As at 1 January 2014
-
3,351 3,351
Charge for the year
-
616 616
At 31 December 2014
-
3,967
3,967
-
2,964 2,964
Charge for the year
-
387 387
At 31 December 2013
-
3,351 3,351
Net carrying amount
At 31 December 2014
41,102 2,059 43,161
At 31 December 2013
41,102 1,782 42,884
Goodwill of the Group which arose from merger and acquisition of subsidiaries has been allocated to the
following CGUs for impairment testing:
Group
20142013
RM’000RM’000
Carrying amount
Insurance division
Credit division
Investment division
18,782 2,503 19,817 18,782
2,503
19,817
41,102 41,102
97
31 december 2014
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 3.92% to 24.00% (2013: 4.90% to 5.70%); and
(ii) Pre-tax discount of 5.19% (2013: 5.00%) 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
Group
20142013
RM’000RM’000
At cost:
Food and beverages
120 106
Hotel supplies and merchandise
43
37
163 143
At net realisable value:
Food and beverages
68 56
Total
231 199
The amount of inventories recognised as an expense in cost of sales of the Group was RM32,000 (2013:
RM27,000).
ANNUAL REPORT 2014
98
31 december 2014
17.Receivables
Group Company
Note 2014 201320142013
RM’000
RM’000 RM’000
RM’000
Loans and advances
(a)
32,608
32,619
-
Less: Allowance for impairment
(22,246)
(22,269)
-
10,362
10,350 -
Outstanding premium including agents/ brokers balance
(b)
123,618 107,976 -
(2,226)
(2,328)
-
121,392 105,648 -
Amounts due from reinsurers/
ceding companies and co-insurers
(b)
37,469 36,585 -
(11,003)
(4,590)
-
26,466 31,995 -
Trade receivables
(c)
1,175 4,971 -
Other receivables
(d)
191,977
85,667
1,253
(10,275)
(10,275)
-
181,702 75,392 1,253 Amounts due from subsidiaries
(e)
-
-
156,016 Total receivables
341,097 228,356 157,269 1,438
1,438
13,438
14,876
(a)Loan and advances
Ageing analysis of loan and advances
The ageing analysis of the Group’s loan and advances is as follows: Group
20142013
RM’000RM’000
Neither past due nor impaired
Past due but not impaired
10,362 -
10,350
-
10,362 10,350
99
31 december 2014
17.Receivables (cont’d)
(a)Loan and advances (cont’d)
Loan and advances that are neither past due nor impaired
Loan and advances that are neither past due nor impaired are creditworthy debtors with good payment
records with the Group.
Movement in allowance accounts
At 1 January/Merger and acquisition of subsidiaries Write-back of allowance for impairment
At 31 December
Group
2014
2013
RM’000 RM’000
22,269 (23)
22,408
(139)
22,246 22,269
(b)Outstanding premium including agents/brokers balance and amount due from reinsurers/ceding
companies and co-insurers
Age analysis of outstanding premium including agents/brokers balance
and amount due from reinsurers/ceding companies and co-insurers
The ageing analysis of the Group’s outstanding premium including agents/brokers balance and
amount due from reinsurers/ceding companies and co-insurers are as follows:
Group
20142013
RM’000RM’000
-
1 to 30 days past due but not impaired 91,344 86,295
31 to 60 days past due but not impaired
16,548 23,815
14,953 16,047
14,757 8,983
More than 121 days past due but not impaired
10,256 2,503
147,858 137,643
147,858 137,643
For outstanding balances to be classified as “pass due and impaired”, contractual payments must
be in arrears for more than six months. No collateral is help as security for any past due or impaired
assets. A reconciliation of the allowance for impairment is as follows:
Movement in allowance accounts
Group
20142013
RM’000RM’000
At 1 January/Merger and acquisition of subsidiaries Charge for the year At 31 December
6,918 6,311 3,766
3,152
13,229 6,918
ANNUAL REPORT 2014
100
31 december 2014
(c) Trade receivables
Ageing analysis of trade receivables
The ageing analysis of the Group’s trade receivables are as follows: Group
20142013
RM’000RM’000
1 to 30 days past due but not impaired 31 to 60 days past due but not impaired
More than 121 days past due but not impaired
933 92
19
37
-
94
242
1,290
217
109
105
55
3,195
3,681
1,175
4,971
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
2014201320142013
RM’000
RM’000 RM’000
RM’000
Share of net assets in MMIP
54,101
42,380 -
Deposits 1,054 1,894 425 472
Prepayments
1,726 6,527 247 294
Amount due from third parties for
completion of developments
29,860 8,553 -
Consideration paid for purchase of a land
75,079 10,133 -
Deposit received from disposal of shares
in a subsidiary deposited in escrow account
17,998 -
-
Income due and accrued
7,144 10,534 8
11
Others
5,015 5,646 573 661
191,977 85,667 1,253 1,438
101
31 december 2014
(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 RM67,213,000 (2013: RM10,996,000), which bore
interest from 3.00% - 5.47% (2013 : 5.00%) 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 normal
trade credit term is 30 to 90 days (2013: 30 to 90 days).
18. Reinsurance assets and insurance contract liabilities
2014 Gross Reinsurance
Net
RM’000 RM’000 RM’000
Group
General insurance
897,733 (443,946)
453,787
The balances are further analysed as follow: Provision for claims reported by policy holders
495,514 (278,775)
216,739
Provision for IBNR
134,069 (58,209)
75,860
Provision for outstanding claims (Note (a))
629,583 (336,984)
292,599
Provision for unearned premium (Note (b)) 268,150 (106,962)
161,188
897,733 (443,946)
453,787
(a)Provision for outstanding claims
Net
RM’000 RM’000 RM’000
At 1 January
564,448 (304,125)
260,323
Claims incurred in current accident year
152,408 (82,652)
69,756
Claims incurred in prior accident year
27,381 (16,612)
10,769
Movement in provision of risk margin for adverse deviation of claim liabilities at
75% confidence level
5,899 (4,090)
1,809
Movement in claims handling expenses
309 -
309
Adjustment in IBNR
22,810 (8,620)
14,190
Other movement in claims incurred during the year
101,556 (4,145)
97,411
Claims paid during the period
(245,228)
83,260 (161,968)
At 31 December
629,583 (336,984)
292,599
ANNUAL REPORT 2014
102
31 december 2014
18. Reinsurance assets and insurance contract liabilities (cont’d)
(b)Provision for unearned premiums
Net
RM’000
RM’000
RM’000 At 1 January
251,756 (107,403)
144,353
Premiums written in the period
604,945 (257,152)
347,793
Premiums earned during the period
(588,551)
257,593 (330,958)
At 31 December
268,150 (106,962)
161,188
Net
RM’000 RM’000 RM’000
Group
General insurance 816,204 (411,528)
404,676
The balances are further analysed as follow:
Provision for claims reported by policy holders
453,189 (254,536)
198,653
Provision for IBNR
111,259 (49,589)
61,670
Provision for outstanding claims (Note (a))
564,448 (304,125)
260,323
Provision for unearned premium (Note (b)) 251,756 (107,403)
144,353
816,204 (411,528)
404,676
(a)Provision for outstanding claims
At 1 January
-
-
542,980 (306,504)
236,476
Claims incurred in current accident year
134,347 (65,937)
68,410
Claims incurred in prior accident year
16,496 (9,080)
7,416
Movement in provision of risk margin for adverse deviation of claim liabilities at
75% confidence level
2,578 (385)
2,193
Movement in claims handling expenses
770 -
770
Adjustment in IBNR
(3,312)
12,085 8,773
Other movement in claims incurred during the year
90,580 (10,326)
80,254
Claims paid during the period
(154,946)
50,319 (104,627)
Others
(65,045)
25,703 (39,342)
At 31 December
564,448 (304,125)
260,323
103
31 december 2014
18. Reinsurance assets and insurance contract liabilities (cont’d)
(b)Provision for unearned premiums
Net
RM’000 RM’000 RM’000 At 1 January
-
-
186,349 (65,946)
120,403
Premiums written in the period
436,179 (196,455)
239,724
Premiums earned during the period
(370,772)
154,998 (215,774)
At 31 December
251,756 (107,403)
144,353
19. Cash and bank balances
Group Company
201420132014 2013
RM’000
RM’000 RM’000
RM’000
Cash at banks and on hand
Short term deposits with
licensed banks
Less: Short term deposits with licensed
banks with maturity period
of more than 3 months
Cash and cash equivalents
18,567 12,339 127 306
463,147 299,083 3,100 7,200
481,714 311,422 3,227
7,506
(296)
(287)
-
-
481,418 311,135 3,227 7,506
Short term deposits of the Group and the Company are placed for periods ranging between 1 day to 365
days (2013: 1 day to 365 days).
The effective interest rates of deposits at the reporting date were:
Group Company
2014201320142013
Short term deposits with
licensed banks
2.90%-3.35% 2.90%-3.20% 2.90%-3.35% 2.90%-3.20%
20. Asset held for sale and liability directly associated with asset held for sale
As disclosed in the previous year financial statements, Multi-Purpose Shipping Corporation Berhad
(“MPSC”), a subsidiary of the Company, had entered into a Sale and Purchase Agreement (“SPA”) with
Twin Universal Sdn. Bhd. (“Original Purchaser”) on 21 August 2013 to dispose off 7 parcels of land located
at Mukim B, Daerah Barat Daya, Pulau Pinang measuring approximately 9,042,280 square feet for a
total cash consideration of RM226,057,004. MPSC has received a forfeitable deposit of RM22,605,700
towards part payment of the sales consideration upon execution of the SPA.
ANNUAL REPORT 2014
104
31 december 2014
20. Asset held for sale and liability directly associated with asset held for sale (cont’d)
As at 31 December 2013, the above mentioned investment property and the forfeitable deposit are
presented separately in the Statements of Financial Position as “Asset held for sale” and “Liability directly
associated with asset held for sale” respectively.
The SPA was completed on 9 April 2014 when MPSC received the balance of the sale consideration from
the purchaser.
Statements of Financial Position
The asset classified as held for sale and liability directly associated with asset held for sale are as follow:
Deposit received
21. Share capital
Group
20142013
RM’000RM’000
-
-
30,195
(22,606)
Number of ordinary shares of RM1.00 each
Amount
2014 20132014 2013
RM RM
Authorised share capital
At 1 January/31 December Issued and fully paid
1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000
At 1 January
715,000,000 2 715,000,000 2
Ordinary shares issued
during the year
- 714,999,998
-
714,999,998
At 31 December 715,000,000 715,000,000 715,000,000 715,000,000
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.
105
31 december 2014
22. Other reserves
Group
20142013
RM’000RM’000
Capital reserve (Note (a))
41,903 41,903
Fair value reserve (Note (b))
808
5,934
42,711 47,837
(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.
23. 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
20142013
RM’000RM’000
Cost of investment in subsidiaries under pooling of interests
874,688 874,688
Less: Net assets of subsidiaries representing the share capital and reserves of subsidiaries acquired (846,224)
(846,224)
Merger deficit
28,464 28,464
24. Retained profits
The Company may distribute dividends out of its entire retained earnings as at 31 December 2014 under
the single tier system.
25.Borrowings
Group
20142013
RM’000RM’000
Current
Secured:
Revolving credits
3,000 3,000
Term loans
33,595 26,650
36,595 29,650
ANNUAL REPORT 2014
106
31 december 2014
25.Borrowings (cont’d)
Group
20142013
RM’000RM’000
Non-current
Secured:
Revolving credits
3,000 6,000
Term loans 23,848 57,721
26,848
63,721
Total loans and borrowings
Revolving credits
6,000
9,000
Term loans
57,443
84,371
63,443 93,371
The remaining maturities of the loans and borrowings are as follows:
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
Later than 3 years
Group
20142013
RM’000RM’000
36,595 21,851 4,997 -
29,650
36,038
21,295
6,388
63,443 93,371
The revolving credits and term loan bear interest at rates ranging between 5.10%-5.35% (2013: 5.09%5.13%) and 4.96%-5.47% (2013: 4.99%-5.02%), 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.
26. Deferred tax assets/(liabilities)
Group
20142013
RM’000RM’000
At 1 January
(12,481)
Merger and acquisition of subsidiaries -
(12,529)
Recognised in:
- other comprehensive income
2,589 314
- income statements (Note 8)
(1,716)
(266)
At 31 December
(11,608)
(12,481)
Presented after appropriate offsetting as follows:
Deferred tax assets (Note (a))
9,838
11,598
Deferred tax liabilities (Note (b))
(21,446)
(24,079)
(11,608)
(12,481)
107
31 december 2014
26. Deferred tax assets/(liabilities) (cont’d)
(a)Deferred tax assets
Unused
tax losses
and
Allowance unabsorbed
Property
for
capital
plant and
impairment allowances equipment
RM’000
RM’000 RM’000
Total
RM’000
At 1 January 2014
Recognised in income statements
At 31 December 2014
813 (39)
9,677 (1,913)
1,108 192
11,598
(1,760)
774 7,764 1,300
9,838
Recognised in income statements
At 31 December 2013
678 135 10,298 (621)
1,173 (65)
12,149
(551)
813 9,677 1,108 11,598
(b)Deferred tax liabilities
Investment
property,
property, plant
equipment and fair value Unearned
changes on
investmentpremium
Total
RM’000
RM’000 RM’000
At 1 January 2014
Recognised in:
- other comprehensive income
- income statements
23,979 100 24,079
(2,589)
(56)
-
12 (2,589)
(44)
At 31 December 2014
21,334 112
21,446
24,644
34 24,678
Recognised in: - other comprehensive income (314)
-
(314)
- income statements
(351)
66
(285)
At 31 December 2013
23,979 100 24,079
ANNUAL REPORT 2014
108
31 december 2014
26. 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 where they arose, subject to the requirements of the Income
Tax Act, 1967.
Group
20142013
RM’000RM’000
Tax losses
Capital allowances
27.Payables
159,039 160,243
5,300 5,300
164,339
165,543
Group Company
Note
2014201320142013
RM’000 RM’000 RM’000 RM’000
Trade payables and bills payable
111,092 107,353 -
Amount due to agents/broker
and insurers
3,702
5,374 -
Other payables and accruals (a)
26,734
26,023 3,917
3,201
Advance received from third parties (b)
65,000
65,000 -
Deposit received from disposal of shares in a subsidiary (c)
17,998 -
-
Sundry creditors
39,583
29,746 -
An affiliated company - former ultimate holding company
(d)
- 42,604 - 42,604
Amounts due to subsidiaries
(d)
-
- 194,813 130,944
Amounts due to shareholders of subsidiaries
(e)
12,774
12,614 -
276,883 288,714 198,730 176,749
(a)The other payables are non-interest bearing and are repayable on demand.
(b)Represent amounts received from third parties relating to the development of investment properties
as disclosed in Note 11.
(c) Deposit received from third party relating to the disposal of a subsidiary as disclosed in Note 32.
(d)Amounts due to an affiliate and subsidiaries are unsecured, non-interest bearing and repayable on
demand except for an amount of RM150,462,000 (2013: RM Nil) which bore interest from 3.00% 5.00% (2013: Nil%).
(e)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.
109
31 december 2014
28. Operating lease arrangements
(a)The Group as lessor
The Group has entered into operating lease agreements for the use 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
20142013
RM’000RM’000
Future minimum rental income receivables:
Not later than 1 year
435 467
Later than 1 year and not later than 5 years
342 444
777 911
(b)The Group as lessee
The Group has entered into operating lease agreements for the use 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.
Operating lease payments represent rental payables by the Group for use of building. Leases have
an average life of 3 years with no renewal or purchase option included 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
2014 2013 20142013
RM’000
RM’000 RM’000
RM’000
Future minimum rental payments:
Not later than 1 year
2,910 2,800 1,116 Later than 1 year and not later
than 5 years
1,898 1,955 1,675 4,808 4,755 2,791 ANNUAL REPORT 2014
564
564
110
31 december 2014
29. Capital commitments
Group
20142013
RM’000RM’000
Approved and contracted for:
1,359 Investment properties
-
1,359 30. Material litigation
2,018
4,009
6,027
(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 has filed an application for leave to appeal the decision made by the Court of Appeal to the
Federal Court (“Leave Application”). The hearing of the Leave Application on 3 December 2014 has
been postponed. The Federal Court has fixed 23 April 2015 for further case management pending the
grounds of judgment.
111
31 december 2014
30. Material litigation (cont’d)
(b)Kuala Lumpur High Court Suit No. S22-100-2010
Mulpha Kluang Maritime Carriers Sdn. Bhd. (“Mulpha”), a subsidiary, had on 27 June 2013 filed a
Notice of Appeal and subsequently on 21 August 2013, a Record of Appeal at the Court of Appeal in
respect of the decision of the High Court on 6 June 2013 which dismissed Mulpha’s claim with costs
under a legal suit commenced against the personal representatives and executors of the estate of
Liew Yee Tiam (“Madam Liew”) who passed away on 30 October 2010 (after the High Court suit had
commenced), namely Chai Hon Keong @ Chye How Keong and Chai Hon Min (as the First and
Second Defendants), Thong Honn (Housing Development) Sdn. Bhd. (“Thong Honn”) as the Third
Defendant and Messrs. Chin & Co (“Messrs. Chin & Co”) as the Fourth Defendant in its capacity as
the conveyancing solicitors and stakeholders for Madam Liew and Thong Honn.
The High Court suit was filed on 8 February 2010 to claim for the overpayment of RM3,316,942
pursuant to two (2) conditional sale and purchase agreements (“SPAs”), both dated 12 October 2009,
which were entered into between Mulpha with Madam Liew and Thong Honn respectively for the
acquisition of two pieces of lands in Kuala Lumpur (“Lands”) on discovery that the total area described
in the SPAs and warranties therein were incorrect as part of each of the Lands had in fact been
surrendered to the State Authority previously.
On 11 August 2014, the Court of Appeal unanimously dismissed the appeal by Mulpha with cost of
RM15,000.00 to the First and Second Respondents and Thong Honn and RM10,000.00 to Messrs.
Chin & Co.
(c) Shah Alam High Court Civil Suit No. 22NCVC-682-11/2013
On 18 November 2013, Mulpha (as defined in (b) above) 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
the SPAs (as defined in (b) above). 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
Lands (as defined in (b) above) 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.
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.
(d)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.
ANNUAL REPORT 2014
112
31 december 2014
30. Material litigation (cont’d)
(d)Johor Bahru High Court Suit No. 21NCvC-20-05/2014 (cont’d)
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 ( the “Appeals”).
The Court of Appeal has fixed 7 May 2015 for the hearing of the Appeals.
31. 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
2014 2013 20142013
RM’000
RM’000 RM’000
RM’000
Subsidiaries:
Interest receivable on loans
-
-
19 111
Investment income in respect of gross dividends
-
-
195,043 45,641
Management fees receivables
-
-
2,862
1,264
Interest payable on loans
-
-
(4,768)
An associate:
Premium ceded to reinsurers
-
(2)
-
Claims ceded to insurers
-
(218)
-
Affiliated companies:
Gross insurance premium receivables
2,949
2,455 -
Management fees receivables
882 -
882 Insurance commission payable
(556)
(480)
-
Claim paid
(546)
(551)
-
Professional fees paid
(596)
(197)
(596)
(194)
Office rental paid
(23)
(6)
-
IT management fees payable
(71)
(254)
(71)
(38)
(i) The above transactions are entered into in the normal course of business based on negotiated and
mutually agreed terms.
113
31 december 2014
31. Significant related party transactions (cont’d)
(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
has a substantial financial interest.
- 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 has
a substantial financial interest.
32. Significant event
Proposed disposal of 49% stake in MPIB
(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 MPIB 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 MPIB held by Generali Asia
at the time of exercise of the put option.
(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 MPIB to Generali Asia N.V. (“Generali Asia”), for a disposal consideration of
RM355,803,000, subject to adjustments;
(Collectively to be referred to as “Proposals”)
On 22 January 2014, the Company announced that Bank Negara Malaysia (“BNM”) had no objection in
principle for the Company to commence preliminary negotiations with an interested party in relation to the
strategic alliance with MPIB, which may result in the disposal of a minority interest in MPIB.
On 15 May 2014, the Company announced that BNM has no objection in principle for the Company to
commence negotiations to grant the said interested party a call option to acquire additional equity interest
in MPIB (“Call Option”), which after taking into consideration of the potential disposal and in the event
that the interested party exercises the Call Option, may result in a possible disposal of a majority equity
interest in MPIB.
On 8 August 2014, the Company announced through Maybank Investment Bank Berhad (“Maybank”)
that the Company and MPCHB, have jointly submitted an application to BNM to seek the approval of the
Minister of Finance pursuant to Section 89 of the Financial Services Act, 2013 for the proposed disposal
of 49% equity interest in MPIB, the grant of options to dispose/acquire equity interest in MPIB and the
entry into definitive agreements with an interested party.
ANNUAL REPORT 2014
114
31 december 2014
32. Significant event (cont’d)
Proposed disposal of 49% stake in MPIB (cont’d)
(i) Proposed disposal by MPCHB, of 49,000,000 ordinary shares of RM1.00 each in MPIB, representing
49% of the issued and paid-up share capital of MPIB to an interested party; and
(ii) the grant of options by MPCHB to the interested party to acquire or dispose equity interest in MPIB.
The interested party and MPCHB have to submit new applications to BNM prior to exercising the call
option or put option pursuant to the Financial Services Act, 2013.
The aforementioned transactions are subject to, among others, the acceptance of certain conditions
imposed by BNM as well as the execution of the definitive agreements.
On 18 December 2014, the Company 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 even date, MPCHB had also entered into a shareholders’ agreement with Generali
Asia and MPIB, setting out their mutually agreed rights, duties, liabilities and obligations vis-a-vis each
other in relation to the operation of MPIB as a joint venture between MPCHB and Generali Asia.
On 25 March 2015, the Company announced that the Proposals were approved by the shareholders of
the Company at the Extraordinary General Meeting held on the same day.
On 5 November 2014, the Company announced through Maybank that BNM had approved the following:
33. Subsequent event
Members’ Voluntary Winding-Up of Multi-Purpose Venture Partners Sdn Bhd (“MPVP”)
On 18 October 2013, the Company had announced that MPVP, an indirect subsidiary of the Company,
has commenced members’ voluntary winding-up pursuant to Section 254(1)(b) of the Companies Act,
1965 (“Members’ Voluntary Winding-Up”). MPVP is a wholly-owned subsidiary of Multi-Purpose Credit
Holdings Sdn Bhd, which in turn is a wholly-owned subsidiary of MPCHB.
On 9 March 2015, the Company had announced that the final meeting for members’ voluntary winding-up
of MPVP was duly held on 5 March 2015. The liquidators had lodged the Returns by Liquidator relating
to the Final Meeting (“Form 69”) with the Companies Commission of Malaysia and the Official Receiver
on 9 March 2015. Pursuant to Section 272(5) of the Companies Act, 1965, MPVP will be dissolved on the
expiration of 3 months after 9 March 2015.
The Members’ Voluntary Winding-Up is not expected to have any material impact on the Group’s earnings
and net assets for the financial year ending 31 December 2015.
115
31 december 2014
34. 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 MPIB, the insurance subsidiary, there are
significant financial risks which relates to MPIB. Hence, the Group adopt the risk management objectives
and policies from MPIB as follow:
Risk Management Framework of MPIB
The Board of MPIB, with the assistance of the Management of MPIB, had implemented the risk
management processes that sets out the overall business strategies and the general risk management
philosophy. The major areas of risk that the activities of MPIB are exposed to are operational risk, financial
risk and general risk.
The Strategic Operations Management Committee (“SOMC”), headed by Chief Executive Officer of MPIB
was established with the responsibility to identify on critical risks in terms of likelihood exposures and
impact on MPIB’s business and the management action plans to manage these risks regularly.
The independent risk management and control functions under the Internal Audit Department provides
the necessary support to the committee, and SOMC is responsible to ascertain that the risk policies are
implemented and complied with.
The Business Units are responsible for identifying, mitigating and managing risks within their lines of
business and ensure that their day-to-day business activities are carried out in accordance with the
established risk policies, procedures and limits.
The role of the Audit Committee, supported by the Internal Audit Department, is to provide an independent
assessment of the adequacy and reliability of the risk management processes and system of internal
controls and compliance with risk policies, laws, internal and regulatory guidelines.
The risk management policies are regularly review to ensure that they remain applicable and effective in
managing the associated risks due to changes in the market and regulatory environments.
Capital Management Plan of MPIB
Pursuant to the RBC Framework for Insurers issued by Bank Negara Malaysia, the Board had approved
and adopted a Capital Management Plan (“CMP”) for MPIB in line with the requirements set out in the
RBC Framework with effect from 1 January 2009. The objective of the 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 MPIB whilst complying with rules and regulations issued by the
relevant authorities.
MPIB has met the minimum capital requirements as prescribed by the RBC Framework as at the end of
the reporting date.
ANNUAL REPORT 2014
116
31 december 2014
34. Financial risk management objectives and policies (cont’d)
Capital Management Plan of MPIB (cont’d)
The management of capital is guided by the CMP which is driven by MPIB’s business strategies and
organisational requisites which take into account the business and regulatory environment in which MPIB
operates. In this respect, MPIB sets capital targets for both Tier 1 and Tier 2 as defined under the RBC
Framework that is above the minimum regulatory requirements.
The management committee responsible for the oversight of MPIB’s capital management is the SOMC.
All proposals on any deviation from capital targets or capital raising exercise must be addressed to and
approved by the SOMC prior to recommendation to the Board of MPIB for approval and implementation.
Stress test of MPIB
The CMP also include a Stress Policy which requires a stress test be conducted twice a year to
systematically evaluate the extent by which the MPIB’s capital could withstand market shocks and by
which capital will be eroded by the principal risks identified due to exceptional but adverse plausible
events and to determine the impact on the performance and financial conditions.
The stress tests results together with the counter measures are tabled to the Risk Management Committee
for deliberation and recommendation to MPIB’s Board for approval prior to the submission to Bank Negara
Malaysia.
Asset/Liability Management (“ALM”) of MPIB
The primary objective of MPIB’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.
MPIB’s ALM is integrated with the management of the financial risks associated with MPIB’s other financial
assets and liabilities not directly associated with insurance. MPIB’s SOMC and Investment Committee
are primarily responsible for the asset/liability management based on guidelines approved by the Board
of MPIB.
117
31 december 2014
35. Financial instruments
(a)Assets/Liabilities by category
Loans and
Assets/ receivables Financial AFS
liabilities
/other assets at financial not in scope liabilities
FVTPL
assets of MFRS 139
Total
RM’000 RM’000 RM’000
RM’000
RM’000
Group
2014
Assets
-
-
-
84,266
84,266
-
-
-
748,661 748,661
-
-
-
539 539
Intangible assets
-
-
-
43,161 43,161
Deferred tax assets
-
-
-
9,838 9,838
Inventories
-
-
-
231 231
Receivables
341,097 -
-
- 341,097
Reinsurance assets -
-
-
443,946 443,946
-
113,900 327,656 - 441,556
Tax recoverable
-
-
-
5,689 5,689
481,714 -
-
- 481,714
822,811 113,900 327,656 1,336,331 2,600,698
Liabilities
Payables 276,883 -
-
- 276,883
Insurance contract liabilities -
-
-
897,733 897,733
Borrowings 63,443 -
-
- 63,443
Tax payable
-
-
-
8,734 8,734
-
-
-
21,446 21,446
340,326 -
- 927,913 1,268,239
2013
Assets
-
-
-
87,324 87,324
-
-
-
744,051 744,051
-
-
-
550 550
Intangible assets
-
-
- 42,884 42,884
Deferred tax assets
-
-
-
11,598 11,598
Inventories
-
-
-
199 199
Asset held for sale
-
-
-
30,195 30,195
Receivables
228,356 -
-
- 228,356
Reinsurance assets -
-
-
411,528 411,528
-
103,315 362,205 - 465,520
Tax recoverable
-
-
-
6,156 6,156
311,422 -
-
- 311,422
539,778 103,315 362,205 1,334,485 2,339,783
ANNUAL REPORT 2014
118
31 december 2014
35. Financial instruments (cont’d)
(a)Assets/Liabilities by category (cont’d)
Loans and
Assets/ receivables Financial AFS
liabilities
/other assets at financial not in scope liabilities
FVTPL
assets of MFRS 139
Total
RM’000 RM’000 RM’000
RM’000
RM’000
Group
2013
Liabilities
Payables 288,714 -
-
- 288,714
Insurance contract liabilities -
-
-
816,204 816,204
Borrowings 93,371 -
-
-
93,371
Tax payable
-
-
-
875 875
-
-
-
24,079 24,079
Liability directly associated with asset held for sale
-
-
-
22,606 22,606
382,085 -
-
863,764 1,245,849
Company
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 67,208 -
1,198,945 1,426,649
Liabilities
Payables
198,730 -
-
- 198,730
Tax Payables
-
-
-
21 21
198,730 -
-
21 198,751
2013
Assets
-
-
-
1,114 1,114
Investment in subsidiaries -
-
-
1,202,131 1,202,131
Receivables
14,876 -
-
-
14,876
7,506 -
-
-
7,506
22,382 -
-
1,203,245 1,225,627
Liabilities
Payables
176,749 -
-
- 176,749
Tax Payables
-
-
-
85 85
176,749 -
-
85 176,834
119
31 december 2014
(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 MPIB’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 MPIB. Compliance with the policy is monitored and reported monthly and
exposures and breaches are reported to MPIB’s SOMC as soon as practicable. The policy is
regularly reviewed for pertinence and for changes in the risk environment.
(ii) MPIB 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) MPIB 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) MPIB’s treaty reinsurance contracts contains clauses permitting MPIB 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 the financial assets and liabilities.
Up to a More than No maturity
year
1-5 years
5 years
date
Total
RM’000 RM’000 RM’000
RM’000
RM’000
Group
2014
Financial Assets
Receivables
341,097 -
-
-
341,097
Reinsurance assets *
142,406 173,114 21,464 -
336,984
4,627 454 62,929 373,546 441,556
-
-
-
481,714 481,714
488,130 173,568 84,393 855,260 1,601,351
Financial liabilities
Payables 276,883 -
-
-
276,883
Insurance contract liabilities *
330,600 268,897 30,086 -
629,583
Borrowings 36,595 26,848
- - 63,443
644,078 295,745 30,086 -
969,909
ANNUAL REPORT 2014
120
31 december 2014
(b)Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
Group
Up to a More than No maturity
year 1-5 years
5 years
date
RM’000 RM’000 RM’000
RM’000
Total
RM’000
2013
Financial Assets
Receivables
228,356 -
-
- 228,356
Reinsurance assets *
152,126 133,104 18,895 - 304,125
-
188,854 58,855 217,811 465,520
-
-
-
311,422 311,422
380,482 321,958 77,750 529,233 1,309,423
Payables 288,714 -
-
- 288,714
Insurance contract liabilities *
282,342 247,038 35,068 - 564,448
Borrowings 29,650 63,721 -
-
93,371
600,706 310,759 35,068 - 946,533
Company
2014
Financial Assets
Receivables
157,269 -
-
- 157,269
-
-
-
67,208 67,208
3,227 -
-
-
3,227
160,496 -
-
67,208
227,704
Payables 198,730 -
-
- 198,730
2013
Financial Assets
Receivables
14,876 -
-
-
14,876
7,506 -
-
-
7,506
22,382 -
-
-
22,382
Payables 176,749 -
-
- 176,749
121
31 december 2014
(b)Liquidity risk (cont’d)
Analysis of financial instruments by remaining contractual maturities (cont’d)
* 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, available-for-sale securities (unit trusts and bonds),
loan receivables and trade receivables.
Credit risk arises when the Group’s and the Company’s cash assets are placed in interest-bearing
instruments, mainly fixed and call deposits and repurchase agreements with licensed financial
institutions. The Group and the Company manage this credit risk by spreading its deposits with a
large 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
2014201320142013
RM’000
RM’000 RM’000
RM’000
LAR
Short term deposits with licensed banks
463,147 299,083 3,100 7,200
AFS financial assets
3,276 5,568 -
Debt securities
201,088 239,663 -
Commercial Papers -
2,478 -
Reinsurance assets
443,946 411,528 -
Receivables
341,097 228,356 157,269 14,876
18,567 12,339 127
306
1,471,121 1,199,015 160,496 22,382
ANNUAL REPORT 2014
122
31 december 2014
(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.
Neither past-due nor impaired
Past-due
Investment
but not
grade
Not Rated
impaired
Total
RM’000 RM’000 RM’000 RM’000
Group
2014
LAR
427,035 36,112 -
463,147
-
3,276 -
3,276
Debt securities
193,797 7,291 -
201,088
Reinsurance assets
78,595 365,351 -
443,946
Receivables
-
192,997 148,100 341,097
18,470 97 -
18,567
717,897 605,124 148,100 1,471,121
2013
LAR
248,560 50,523 -
299,083
-
5,568 -
5,568
Debt securities
234,406 5,257 -
239,663
Commercial Papers
-
2,478 -
2,478
Reinsurance assets
188,644 222,884 -
411,528
Receivables
-
87,032 141,324 228,356
12,200 139 -
12,339
683,810 373,881 141,324 1,199,015
Company
2014
LAR
Fixed and call deposits
-
3,100 -
3,100
Receivables
-
157,269 -
157,269
108 19 -
127
108 160,388 -
160,496
123
31 december 2014
(c)Credit risk
(cont’d)
Credit exposure by credit rating (cont’d)
Company
Neither past-due nor impaired
Investment
grade
Not Rated
RM’000 RM’000 Past-due
but not
impaired
Total
RM’000 RM’000
2013
LAR
Fixed and call deposits
-
7,200 -
7,200
Receivables
-
14,876 -
14,876
286 20 -
306
286 22,096 -
22,382
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.
Group
AAA RM’000 AA RM’000 A
RM’000 BBB Not rated RM’000 RM’000 Total
RM’000
2014
LAR
Short-term deposits with licensed banks
217,543 244 209,248 -
36,112 463,147
-
-
-
-
3,276 3,276
Debt securities
26,132 164,646 3,019 -
7,291 201,088
Reinsurance assets
-
6,105 72,490 - 365,351 443,946
Receivables
-
-
-
- 341,097 341,097
6,138 1,845 10,487 -
97 18,567
249,813 172,840 295,244 - 753,224 1,471,121
2013
LAR
84,610 12,577 151,373 -
50,523 299,083
-
-
-
-
5,568 5,568
Debt securities
22,179 199,514 12,713 -
5,257 239,663
Commercial Papers
-
-
-
-
2,478 2,478
Reinsurance assets
-
8,933 171,918 7,793 222,884 411,528
Receivables
-
516 3,791 888 223,161 228,356
4,609 957 6,634 -
139 12,339
111,398 222,497 346,429 8,681 510,010 1,199,015
ANNUAL REPORT 2014
124
31 december 2014
(c)Credit risk
(cont’d)
Credit exposure by credit rating (cont’d)
AAA AA A
BBB Not rated Total
Company
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
2014
LAR
-
-
-
-
3,100 3,100
Other receivables
-
-
-
- 157,269 157,269
7
-
101 -
19 127
7
-
101 - 160,388 160,496
2013
LAR
-
-
-
-
7,200 7,200
Other receivables
-
-
-
-
14,876 14,876
29 -
257 -
20 306
29 -
257 -
22,096 22,382
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.
(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), irregardless 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.
125
31 december 2014
(d)Market price risk
(cont’d)
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
2014 2013
Group
%
RM’000 RM’000
Market indices:
Bursa Malaysia
+10%
17,714 16,261
Bursa Malaysia
-10%
(17,714)
(16,261)
* 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 deposits placements. 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
Impact to
Change in
in interest bearing debts
profit before tax
basis points
Increase/(decrease)
Increase/(decrease)
GroupCompanyGroup Company
RM’000
RM’000 RM’000
RM’000
2014
Borrowings
+25 / -25
177/(177)
- (177)/177
-
2013
Borrowings
+25 / -25
231/(231)
- (231)/231
-
ANNUAL REPORT 2014
126
31 december 2014
(e)Interest rate risk
(cont’d)
Sensitivity of changes
Impact to
Change in
in interest bearing debts
profit before tax
basis points
Increase/(decrease)
Increase/(decrease)
GroupCompanyGroup Company
RM’000
RM’000 RM’000
RM’000
2014
+25 / -25 8/(8) -
8/(8) 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)
2013
+25 / -25 14/(14) -
14/(14) Debt securities
+25 / -25 599/(599) - 599/(599) Commercial Papers
+25 / -25 6/(6) -
6/(6) Short term deposits with licensed banks
+25 / -25 801/(801) 25/(25) 801/(801) 25/(25)
(f) Insurance risk
MPIB, a subsidiary which 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.
MPIB 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.
MPIB’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. MPIB 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 MPIB by indemnifying the policy holders against adverse
effects arising from the occurrence of specified uncertain future events. The principal risk MPIB 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.
127
31 december 2014
(f) Insurance risk
(cont’d)
MPIB adopts the following measures to manage the insurance risk:
(i) MPIB has in place a claims management and control system to pay claims and control claim
wastage or fraud. MPIB 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 MPIB. MPIB 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) MPIB purchases reinsurance as part of its risks mitigation programme. The objectives for purchasing
reinsurance are to provide market-leading capacity for MPIB’s customers while protecting the
statement of financial position and optimising MPIB’s capital efficiency. Reinsurance is ceded
on quota share, proportional and non-proportional basis. MPIB’s placement of reinsurance is
diversified such that it is neither dependent on a single reinsurer nor are the operations of MPIB
substantially dependent upon any single reinsurance contract.
The table below sets out the concentration of the MPIB’s insurance contract liabilities by type of
insurance product:
GrossReinsurance
Net
RM’000 RM’000 RM’000
Group
2014
Claim liabilities
Motor
206,869 (7,761)
199,108
Fire
111,706 (87,240)
24,466
Marine, Aviation & Transit
149,430 (141,091)
8,339
Miscellaneous
161,578 (100,892)
60,686
629,583 (336,984)
292,599
Premium Liabilities
Motor
95,573 (13,416)
82,157
Fire
32,606 (19,987)
12,619
46,704 (44,342)
2,362
Miscellaneous
93,267 (29,217)
64,050
268,150 (106,962)
161,188
2013
Claim liabilities
Motor
176,880 (5,806)
171,074
Fire
83,023 (62,834)
20,189
144,427 (135,332)
9,095
Miscellaneous
160,118 (100,153)
59,965
564,448 (304,125)
260,323
ANNUAL REPORT 2014
128
31 december 2014
(f) Insurance risk
(cont’d)
GrossReinsurance
Net
RM’000
RM’000 RM’000
2013
Premium Liabilities
Motor
86,780 (10,068) 76,712
Fire
17,105 (6,709) 10,396
52,380 (49,988)
2,392
Miscellaneous
95,491 (40,638) 54,853
251,756 (107,403) 144,353
Key Assumptions
The principal assumption underlying the liability estimates is that MPIB’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.
MPIB 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.
Sensitivities
MPIB 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 MPIB’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 nonlinear.
129
31 december 2014
(f) Insurance risk
(cont’d)
Sensitivities (cont’d)
Impact on Impact on
Impact on
Change in
gross
net
profit Impact on
assumption
liabilities liabilities
before tax
equity*
RM’000 RM’000 RM’000
RM’000
RM’000
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
2013
Average claim cost
+10%
51,439 21,981 (21,981)
(16,486)
Average number of claims
+10%
41,302 19,555 (19,555)
(14,666)
Average claims settlement period
Increase by
7,913 4,922 (4,922)
(3,692)
6 months
* impact on equity reflects adjustments for tax, when applicable
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, MPIB 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 MPIB believes that the estimate of total claims outstanding as of 31 December
2014 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.
ANNUAL REPORT 2014
(f) Insurance risk
(cont’d)
Case reserves reconciliation difference between SMCD and G Forms
1,598
Gross general insurance outstanding liabilities (treaty inward) 56,616
Best estimate of claim liabilities 569,498
Claim handling expenses
3,899
Fund PRAD at 75% confidence interval 56,186
Gross general insurance contract liabilities per statements of financial position (Note 18)
629,583
Cumulative payments to date (185,614) (206,969) (240,419) (190,640) (159,273)(160,186) (157,222) (107,625)
Gross general insurance
outstanding liabilities
(direct and facultative)
15,867 14,218 18,169 68,079 18,711 46,122 117,816 212,302 511,284
Gross General Insurance Contract Liabilities 2014
Group
Prior 2007 2008 2009 2010 2011 2012 2013 2014 Total
Accident year
RM’000 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 Current estimate of cumulative
claims incurred
201,481 221,187 258,588 258,719 177,984 206,308 275,038 319,927
(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)
Table
(cont’d)
Claim Development
130
31 december 2014
(f) Insurance risk
(cont’d)
1,598
Net general insurance outstanding liabilities (treaty inward) 56,616
3,899
Net general insurance contract liabilities per statements of financial position (Note 18)
292,599
Net General Insurance Contract Liabilities 2014
Group
Prior 2007 2008 2009 2010 2011 2012 2013 2014 Total
Accident year
88,126 115,506 120,410 125,104 129,888 142,610 157,393 184,690 One year later
90,454 113,749 118,098 122,605 123,352 137,867 158,587 Two years later
91,075 113,794 118,971 117,792 117,274
Four years later
90,489 113,196 119,025 116,154 Five years later
90,095 113,010 119,493 Six years later
90,876
Current estimate of cumulative
claims incurred
90,876 111,521 119,493 116,154 117,274 129,143 158,587 184,690
(41,078) (51,593) (49,962) (46,848) (47,308) (55,488) (63,109) (76,737)
One year later
(71,976) (86,076) (87,688) (85,718) (85,415) (98,085) (115,460)
Two years later
(77,332) (96,674) (100,243) (96,694) (98,114)(110,481)
Three years later
(83,181) (103,078) (107,283) (102,441) (102,597)
Four years later
(84,819) (104,786) (109,870) (104,087)
Five years later
(85,729) (106,111) (112,243)
Six years later
(85,969) (107,110)
Seven years later
(86,665)
Cumulative payments to date
(86,665) (107,110) (112,243) (104,087) (102,597)(110,481) (115,460) (76,737)
Net general insurance
4,211 4,411 7,250 12,067 14,677 18,662 43,127 107,953 212,358
Table
(cont’d)
Claim Development
131
31 december 2014
ANNUAL REPORT 2014
(f) Insurance risk
(cont’d)
623
Gross general insurance outstanding liabilities (treaty inward) 45,131
3,589
Gross general insurance contract liabilities per statements of financial position (Note 18)
564,448
Gross General Insurance Contract Liabilities 2013
Group
Prior 2006 2007 2008 2009 2010 2011 2012 2013 Total
Accident year
158,168 201,119 282,098 364,710 273,955 221,090 225,900 250,572 One year later
158,168 201,119 282,098 283,469 297,469 196,534 218,491 Two years later
158,168 197,027 227,013 273,541 281,178
Four years later
160,274 195,365 226,850 268,800 Five years later
155,270 194,270 227,255 Six years later
161,547
claims incurred
161,547 191,780 227,255 268,800 281,178 185,601 218,491 250,572
(42,845) (52,271) (63,026) (110,654) (66,089) (66,857) (68,404) (78,103)
One year later
(85,871) (98,334) (145,216) (196,934) (145,219)(132,063) (140,189)
Two years later
(97,434) (165,102) (175,215) (225,951) (164,223)(152,569)
Three years later
(137,545) (178,272) (194,030) (233,745) (182,266)
Four years later
(146,123) (180,874) (198,157) (237,111)
Five years later
(148,695) (182,046) (200,310)
Six years later
(149,743) (182,460)
Seven years later
(149,168)
Cumulative payments to date (149,168) (182,460) (200,310) (237,111) (182,266)(152,569) (140,189) (78,103)
Gross general insurance
12,379 9,320 26,945 31,689 98,912 33,032 78,302 172,469 463,048
Table
(cont’d)
Claim Development
132
31 december 2014
(f) Insurance risk
(cont’d)
623
Net general insurance outstanding liabilities (treaty inward) 45,131
3,589
Net general insurance contract liabilities per statements of financial position (Note 18)
260,323
Net General Insurance Contract Liabilities 2013
Group
Prior 2006 2007 2008 2009 2010 2011 2012 2013 Total
Accident year
75,960 88,126 115,506 120,410 125,104 129,888 142,610 157,393 One year later
78,383 90,454 113,749 118,098 122,605 123,352 137,867 Two years later
79,334 91,075 113,794 118,971 117,792 Four years later
79,511 90,489 113,196 119,025 Five years later
78,925 90,095 113,010 Six years later
79,526
claims incurred
79,526 88,503 113,010 119,025 117,792 121,022 137,867 157,393
(35,745) (41,078) (51,593) (49,962) (46,848) (47,308) (55,488) (63,109)
One year later
(63,467) (71,976) (86,076) (87,688) (85,718) (85,415) (98,085)
Two years later
(68,782) (77,332) (96,674) (100,243) (96,694) (98,114)
Three years later
(71,356) (83,181) (103,078) (107,283) (102,441)
Four years later
(73,940) (84,819) (104,786) (109,870)
Five years later
(75,169) (85,729) (106,111)
Six years later
(75,750) (85,969)
Seven years later
(76,321)
Cumulative payments to date
(76,321) (85,969) (106,111) (109,870) (102,441) (98,114) (98,085) (63,109)
Net general insurance
3,205 2,534 6,899 9,155 15,351 22,908 39,782 94,284 194,118
Table
(cont’d)
Claim Development
133
31 december 2014
ANNUAL REPORT 2014
134
31 december 2014
(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 cash equivalents, 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
(iii) Unquoted investments
The fair value of the unquoted investments of the Group, except for the unquoted shares in
Malaysia are determined based on quoted market price at the reporting date or valued using
valuations models which uses observable data.
(iv) Amount due from/to subsidiaries
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.
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)
135
31 december 2014
(g) Fair values (cont’d)
As at 31 December 2014, the Group and the Company held the following financial instruments carried
at fair value in the statements of financial position:
Level 1
RM’000
Level 2
RM’000 Level 3
RM’000
Total
RM’000
Group
At 31 December 2014
Current
Financial assets at FVTPL
113,900 -
- 113,900
Non-current
122,291 204,364 - 326,655
Total investment
236,191 204,364 - 440,555
At 31 December 2013
Current
103,315 -
- 103,315
Non-current
113,495 247,709 - 361,204
Total investment
216,810 247,709 - 464,519
Company At 31 December 2014
Current
67,208 -
- 67,208
ANNUAL REPORT 2014
136
31 december 2014
(g) Fair values (cont’d)
The Group
held the following financial assets carried at cost in the statements of financial position
and their 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 2014
Non-current
Land and buildings
- 176,680 - 176,680
- 924,194 - 924,194
- 1,100,874 - 1,100,874 At 31 December 2013
Non-current
Land and buildings
- 170,453 - 170,453
- 825,541 - 825,541
- 995,994 - 995,994
36. Non-controlling interests
GROUP
20142013
RM’000RM’000
At 1 January/Merger and acquisition of subsidiaries
15,389 16,766
Share of loss for the year
(1,767)
(1,377)
Acquisition of additional interests from non-controlling interests
(2)
At 31 December
13,620 15,389
137
31 december 2014
36. Non-controlling interests (cont’d)
Financial information of the subsidiaries that have material non-controlling interests are provided below:
Proportion of equity interest held by non-controlling interests:
20142013
%%
Direct subsidiaries of the Company
West-Jaya Sdn. Bhd.
Queensway Nominees (Tempatan) Sdn. Bhd.
Queensway Nominees (Asing) Sdn. Bhd.
Leisure Dotcom Sdn. Bhd.
Mimaland Berhad
Subsidiary of Multi-Purpose Shipping Corporation Berhad
30
30 30 30 2
30
30
30
30
2
Mulpha Kluang Maritime Carriers Sdn. Bhd.
30 30
Accumulated balances of non-controlling interests:
West-Jaya Sdn. Bhd.
Mimaland Berhad
Loss allocated to non-controlling interests:
West-Jaya Sdn. Bhd.
Mimaland Berhad
20142013
RM’000RM’000
24 1,572 15,209 (4,129)
2,008 (1,064)
13,620 60
1,626
15,800
(3,887)
2,044
(254)
15,389
20142013
RM’000RM’000
36 54 591 242
34
810
1,767 ANNUAL REPORT 2014
45
61
726
261
30
254
1,377
138
31 december 2014
36. Non-controlling interests (cont’d)
Summarised statements of comprehensive income:
Revenue
Other Income
Other expenses
Operating loss
Finance costs
Loss before taxation
Income tax expenses
Net loss for the year, representing
total comprehensive loss for the year
Attributable to non-controlling interests
20142013
RM’000RM’000
297 1,683 (3,824)
228
106
(2,717)
(1,844)
(3,283)
(2,383)
(4,204)
(5,127)
(583)
(6,587)
435
(5,710)
(6,152)
1,767 1,377
Summarised statements of financial position as at 31 December:
20142013
RM’000RM’000
207,188 208,372
Deferred tax assets
806 1,104
Receivables
104,281 39,424
Tax recoverable
109 108
342 113
(16,309)
(16,309)
Payables
(229,005) (159,975)
Tax payable
(285)
Total equity
67,127 72,837
Equity attributable to: Owners of the Company
53,507 57,448
13,620 15,389
67,127 72,837
Summarised cash flow information for year ended 31 December:
Financing activities
Net increase/(decrease) in cash and cash equivalents
20142013
RM’000RM’000
(66,923)
67,152 (1,699)
1,654
229 (45)
139
31 december 2014
37. 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 2014 and 31 December 2013 are as follows:
Group Company
201420132014
2013
RM’000
RM’000 RM’000
RM’000
Payables 276,883 288,714
198,730
176,749
Borrowings
63,443 93,371 -
Less: Cash and bank balances
(18,567)
(12,339)
(127)
(306)
Less: Short term deposits (463,147)
(299,083) (3,100)
(7,200)
(Net surplus of the fund)/net debt
(141,388)
70,663 195,503 169,243
Equity attributable to owners
of the Company
1,318,839 1,078,545 1,227,898 1,048,793
Capital and net debt 1,177,451 1,149,208 1,423,401 1,218,036
Gearing ratio
N/A
6%
14%
14%
38. 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.
ANNUAL REPORT 2014
140
31 december 2014
38. Segment information (cont’d)
Group
2014 Asset/Liability directly
associated with Insurance Credit Investments held for sale
Total
RM’000 RM’000 RM’000 RM’000 RM’000
(a)Revenue
330,957 1,820 37,301 -
370,078
(b)Results
Segment results 70,910 1,499 209,225 -
281,634
Finance costs
(4,137)
(11)
Segment profit before tax
277,486
Income tax expense
(33,833)
Profit for the year
243,653
(c) Assets and liabilities
Segment assets
1,471,209 138,514
990,436
- 2,600,159
539
Total assets 2,600,698
Segment/total liabilities
1,067,517 18,897
181,825
- 1,268,239
2013
(a)Revenue
215,774 1,137 29,062 -
245,973
(b)Results
Segment results 44,922 6,342 10,060 -
61,324
Finance costs
(3,835)
101
Segment profit before tax
57,590
Income tax expense
(10,718)
Profit for the year
46,872
(c) Assets and liabilities
Segment assets
1,270,974 173,684
864,380
30,195 2,339,233
550
Total assets 2,339,783
Segment/total liabilities
968,909
718
253,616
22,606 1,245,849
141
31 december 2014
38. Segment information (cont’d)
Group
2014
Insurance
Credit Investments
Total
RM’000 RM’000
RM’000 RM’000
(d) Other information
Capital expenditure
Amortisation of premium and intangible assets
Allowance for impairment of receivables Write back of allowance for impairment for loans
and advances
Loss arising from fair value change in financial
assets at FVTPL Realised gain on AFS financial assets
Interest income
Non-cash expenses other than depreciation,
amortisation and impairment losses
1,730 1,225 50 623 6,311 -
-
-
-
-
2,338 4,780 1,720 -
-
-
(23)
-
(23)
-
(5,394)
(24,095)
10 -
(3,183)
208 -
(5,734)
218
(5,394)
(33,012)
649 -
4
653
Credit Investments
RM’000
RM’000 Total
RM’000
Capital expenditure
1,380 -
1,910 Depreciation of property, plant and equipment
814 -
4,404 Depreciation of investment properties
37 -
1,289 Amortisation of premium and intangible assets
392 -
-
280 -
-
Allowance for impairment of receivables 3,152 -
-
Write back of allowance for impairment for loans
and advances
-
(139)
-
Gain arising from fair value change in financial
assets at FVTPL -
(259)
(562)
Realised gain on AFS financial assets
(6,170)
-
-
Interest income
(17,048)
(4,093)
(1,338)
Non-cash expenses other than depreciation, amortisation and impairment losses
2,208 -
7
3,290
5,218
1,326
392
280
3,152
2013
Insurance
RM’000 (d) Other information
ANNUAL REPORT 2014
4,068
6,005
1,770
623
6,311
(139)
(821)
(6,170)
(22,479)
2,215
142
31 december 2014
39. Subsidiaries and an associate
Subsidiaries
Effective interest
Group’s effective
held by
interest held *
non-controlling
interests*Principal
Name of subsidiaries
%
%
%
%
activities
2014 2013 20142013
Direct subsidiaries of
the Company
Holdings Berhad
100
100
-
-
Investment holding
Multi-Purpose Shipping
Corporation Berhad
100
100
-
-
Investment holding
and property
investment
West-Jaya Sdn. Bhd.
70
70
30
30
Investment holding
and property
investment
Queensway Nominees
(Tempatan) Sdn. Bhd.
70
70
30
30
Property
investment
Queensway Nominees
(Asing) Sdn. Bhd.
70
70
30
30
Property
investment
Caribbean Gateway
Sdn. Bhd.
100
100
-
-
Investment holding
Jayavest Sdn. Bhd.
100
100
-
-
Investment holding
70
70
30
30
Property
investment
Magnum.Com
Sdn. Bhd.
100
100
-
-
Property
investment
Magnum Leisure
Sdn. Bhd.
100
100
-
-
Operation of a hotel
98
98
2
2
Property
investment
Syarikat Perniagaan
Selangor Sdn. Bhd.
100
100
-
-
Property investment
& management and
operation of hotel
Tibanis Sdn. Bhd.
100
100
-
-
Property
investment
Kelana Megah
Development Sdn. Bhd.
100
100
-
-
Plantation and
Property holding
Leisure Dotcom
Sdn. Bhd.
Mimaland Berhad
143
31 december 2014
39. Subsidiaries and an associate (cont’d)
Subsidiaries (cont’d)
Effective interest
Group’s effective
held by
interest held *
non-controlling
interests*Principal
%
%
%
%
activities
2014201320142013
Subsidiaries of
Holdings Berhad
(“MPCHB”)
Multi-Purpose
Insurans Bhd.
100
100
-
-
General insurance
Holdings Sdn. Bhd.
100
100
-
-
Investment holding
100
100
-
-
Fund management
Sdn. Bhd.
100
100
-
-
Credit and leasing
business, hire
purchase and
general loans and
financing
MP Factors Sdn. Bhd.
100
100
-
-
Business of
factoring and
property investment
Multi-Purpose Venture
Partners Sdn. Bhd.
(in Members’ Voluntary
Winding-Up)
100
100
-
-
Dormant
Nominees (Tempatan)
Sdn. Bhd.
100
100
-
-
Nominee services
A subsidiary of MultiPurpose Insurans Bhd.
Opus Institutiona
Income Fund 2
Subsidiaries of MultiPurpose Credit
Holdings Sdn. Bhd.
ANNUAL REPORT 2014
144
31 december 2014
39. Subsidiaries and an associate (cont’d)
Subsidiaries (cont’d)
Effective interest
Group’s effective
held by
interest held *
non-controlling
interests*Principal
%
%
%
%
activities
2014 2013 20142013
Subsidiaries of MultiPurpose Shipping
Corporation Berhad
Mulpha Kluang Maritime
Carriers Sdn. Bhd.
Multi-Purpose Development
(PG) Sdn. Bhd.
70
70
30
30
Property
investment
100
100
-
-
Property
development
100
100
-
-
Hotel management
A subsidiary of Syarikat
Perniagaan Selangor
Sdn. Bhd.
Flamingo Management Sdn. Bhd.
* Equals to the proportion of voting rights held An associate of MPCHB
Group’s effective
Accounting
interest held %
Principal
model
Name an associate
2014
2013
activities
applied
Tune Insurance (Labuan) Ltd.
20 20 Reinsurance MPHb CAPITAL BERHAD (1010253-W)
Equity
method
145
31 december 2014
40. 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.
Group 2014
2013
RM’000
RM’000 Company
2014
2013
RM’000
RM’000
Total retained profits
- realised 423,815 226,159 216,815 37,702
- unrealised (11,608) (12,481)
(8)
Total share of retained profits from an associate
- realised 439 450 -
Less: Consolidation adjustments
(119,145) (166,047)
-
Retained profits as per financial statements
293,501 48,081 216,807 37,702
ANNUAL REPORT 2014
146
LIST OF TOP 10 PROPERTIES owned by mphb
capital group
group
net
TENURE RESIDUAL
AGE OF
book
LEASEEXPIRY APPROX BUILDING value
date of
location
(YEARS) DATE
AREA DESCRIPTION (YEARS)(RM’000) REVALUATION
1
Lot PT 37379, H.S(D) 73892 , Freehold
-
- 240.67 acres
Lot PT 43359, H.S(D) 80852 ,
Lot PT 43360, H.S(D) 80853, Lot PT 43361, H.S(D) 80854,
Lot PT 43368, H.S(D) 80861, Vacant land
-
169,979 Lot PT 43369, H.S(D) 80862,
Lot PT 43372, H.S(D) 80865,
Mukim Rawang,
District of Gombak, Selangor.
Lot 1048, PM 854,
Leasehold
77
2091
2.22 acres
Bandar Kundang , Sg Bakau,
District of Gombak, Selangor.
2 Lot 2947, Geran 307402 and
Freehold
-
- 124.41 acres
-
Lot 3003, Geran 49265,
Mukim Setapak, District of
Gombak, Selangor
Lot PT B, H.S(D) 40430,
Leasehold
55
2069 197.05 acres
Vacant land
-
147,928 Lot PT 7546, H.S(D) 40431,
and Lot PT A, H.S(D) 1767,
Gombak, Selangor
Lot PT 5300, H.S(M) 1726
Leasehold
77
2091
2.60 acres
- and Lot PT 5301, H.S(M) 1727,
Gombak, Selangor
3 Lot 200, Geran 12089, Freehold
-
-
1.50 acres
Vacant land
-
130,500
Section 67, Bandar &
Daerah Kuala Lumpur
4
28.01.2015
28.01.2015
28.01.2015
Lot 296, Geran Mukim 528, Freehold
-
-
83.16 acres
Vacant land
-
76,900 Lot 306, Geran Mukim 531,
Lot 1675, Geran Mukim 654,
Lot 2346, GRN 47939,
28.01.2015
147
LIST OF TOP 10 PROPERTIES owned by mphb
capital group (cont’d)
net
TENURE RESIDUAL
AGE OF
book
LEASEEXPIRY APPROX BUILDING value
date of
location
(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
5 Lot 109, GRN 83563, Freehold
-
- 1,033.79 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, District of Kota Tinggi, Johor
Agriculture
-
64,169 Lot 992, PN 13368, Leasehold
896
2910 769.41 acres
Lot 993, PN 58271, and
Lot 994, PN 58272.
Mukim Pengerang,
District of Kota Tinggi, Johor.
28.01.2015
6
Lot 1282, Geran 47410 and Freehold
-
-
1.36 acres
Vacant land
-
61,790 Lot 1283, Geran 42982, Section 67, Bandar &
Daerah Kuala Lumpur
7 Lot 4071, Geran 60996,
Freehold
-
-
2.33 acres
Hotel -
42,218 Town of Tanjong Bungah,
District of North East,
Pulau Pinang
8 Lot 18207, PM 435, Leasehold
77
2091
2.71 acres
4 storey 17
38,025 Seksyen 2, commercial
Bandar Ulu Kelang,
complex
Ampang Tasik,
District of Gombak, Selangor
9 Lot 13499, PM343, Leasehold
77
2091
12.28 acres
Hotel, lake 17-18
32,820 Lot 13500, PM344 and & boat house
Lot 13501, PM345,
Mukim Ulu Kelang, Ampang Tasik
District of Gombak, Selangor
10 Lot 643, Geran 28274, and
Freehold
-
-
0.26 acres
Single storey
-
8,990 Lot 644, Geran 28275, detached house
Seksyen 67, Bandar &
Daerah Kuala Lumpur
ANNUAL REPORT 2014
28.01.2015
28.01.2015
28.01.2015
28.01.2015
28.01.2015
148
analysis of equity securities
AS AT 16 APRIL 2015
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
Largest Shareholders
30
0.20
No. of Shares
% of Shares
517,873,597
72.43
Size of Holdings
less than 100 shares
127
0.86
3,651 0.00
100 - 1,000 shares
3,927 26.52
2,427,825
0.34
1,001 -10,000 shares
8,442
57.01
31,739,758
4.44
10,001-100,000 shares
2,007 13.55
56,541,847
7.91
100,001- less than 5% of issued shares
303 2.05
372,829,840
52.14
5% and above of issued shares
2
0.01
251,457,079
35.17
Total
14,808
100.00
715,000,000
100.00
THIRTY (30) MAJOR SHAREHOLDERS AS AT 16 APRIL 2015
Name
1. CIMB GROUP NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For Casi Management Sdn Bhd
Shareholdings%
213,706,793
29.89
2. HSBC NOMINEES (ASING) SDN BHD
Exempt An For Credit Suisse (SG BR-TST-Asing)
37,750,286
5.28
3. UOB KAY HIAN NOMINEES (ASING) SDN BHD
Pledged Securities Account For Citibase Limited
35,654,200
4.99
4.
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
Exempt An For Coutts & Co. Ltd (Sg.Branch)
11,187,780
1.56
11. CITIGROUP NOMINEES (ASING) SDN BHD
Exempt An For UBS AG Singapore (Foreign)
10,553,855
1.48
12. CHONG YIEW ON
10,457,800
1.46
MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Pledged Securities Account for MWE Holdings Berhad
149
analysis of equity securities (cont’d)
AS AT 16 APRIL 2015
THIRTY (30) MAJOR SHAREHOLDERS AS AT 16 APRIL 2015
Name
Shareholdings%
13. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Great Eastern Life Assurance (Malaysia) Berhad (Par 1)
9,500,750
1.33
14. ALLAMANDA GROWTH LIMITED 8,800,000
1.23
15. CIMSEC NOMINEES (TEMPATAN) SDN BHD CIMB Bank For Heng Guan Sendirian Berhad
7,544,100
1.05
16. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Great Eastern Life Assurance (Malaysia) Berhad (LGF)
5,663,250
0.79
17
MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD
Great Eastern Life Assurance (Malaysia) Berhad (LPF)
5,365,950
0.75
New Kota Credit Sdn Bhd for Trade Key Investments Limited
4,650,000
0.65
19. KHOO SU CHIN
3,632,000
0.51
20. AMANAHRAYA TRUSTEES BERHAD
Public Strategic Smallcap Fund
3,588,400
0.50
Exempt An For JPMorgan Chase Bank, National Association (U.S.A.)
3,559,800
0.50
22. CIMSEC NOMINEES (TEMPATAN) SDN BHD
CIMB for Lawrence Lim Swee Lin
3,450,000
0.48
23. UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD
Pledged Securities Account For MCC Credit Sdn Bhd
3,294,000
0.46
24. TAN SHU AYAN 3,175,400
0.44
25. T C HOLDINGS SENDIRIAN BERHAD
3,145,000
0.44
Pledged Securities Account For Mrs Suthera Uppaputthangkul
3,136,700
0.44
27. TANAH SUBOR SDN BHD
2,980,055
0.42
28. HONG LEONG ASSURANCE BERHAD
As Beneficial Owner (Unitlinked GF)
2,516,100
0.35
29. CITIGROUP NOMINEES (ASING) SDN BHD
Exempt An For Citibank New York (Norges Bank 12)
2,265,400
0.32
30. CHOO SHIOW CHARN
2,226,000
0.31
TOTAL
517,873,59772.43
ANNUAL REPORT 2014
150
analysis of equity securities as at 16 april 2015
SUBSTANTIAL SHAREHOLDERS AS AT 16 APRIL 2015
As at 16 April 2015
Name
Direct
Indirect
No. of shares
%
No. of shares
%
230,883,993
32.29
-
-
Hanton Capital Limited (“HCL”)
-
-
(a)
230,883,993
32.29
Cedar Holdings Limited (“CHL”)
-
-
(b)
230,883,993
32.29
Kularb Kaew Company Limited (“KKCL”)
-
-
(b)
230,883,993
32.29
Cypress Holdings Limited (“Cypress”)
-
-
(c)
230,883,993
32.29
-
-
(d)
261,921,093
36.63
Casi Management Sdn Bhd (“CMSB”)
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 16 APRIL 2015
(A) Interest In Shares In MPHB Capital Berhad (“MPHB Capital”)
Name
%
No. of shares
%
101,100
0.01
-
-
-
-
#261,921,093
36.63
Mr Ng Kok Cheang
363,900
0.05
-
-
Ms Ivevei Upatkoon
156,200
0.02
-
-
508,000
0.07
^8,810,000
1.23
Mr Kuah Hun Liang
241,100
0.03
-
-
Indirect/Deemed Interest
Direct Interest
No. of shares
As at 16 April 2015
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 tand 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 16 April 2015.
151
Notice of Annual General Meeting
NOTICE IS HEREBY GIVEN that the Third 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 Wednesday, 3 June 2015 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 2014 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
year ended 31 December 2014, an increase of RM150,000 from the half-year’s fees of
RM90,000 in 2013.
3. To re-elect the following Directors who retire by rotation in accordance with Article 113 of
the Company’s Articles of Association:
(i) Tan Sri Dato’ Dr Yahya bin Awang
(ii) Dato’ Lim Tiong Chin 4.
To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the
Directors to fix the remuneration.
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
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
Companies Act, 1965
6.
(Resolution 5)
“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.”
ORDINARY RESOLUTION
-
Proposed Renewal Of Authority For The Share Buy-Back
(Resolution 6)
“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 Second Annual General Meeting
of the Company held on 18 June 2014 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
ANNUAL REPORT 2014
152
Notice of Annual General Meeting (cont’d)
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:
(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 BuyBack 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 BuyBack.”
153
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
12 May 2015
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.
NOTES RELATING TO REGISTRATION AND PROXY
1.
A depositor whose name appears in the Record of Depositors on 26 May 2015 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.
ANNUAL REPORT 2014
154
8.
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.
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 paid-up 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
purpose 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 18 June 2014 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 12 May 2015 despatched together with the Annual Report.
155
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 3rd Annual General Meeting of the Company.
ANNUAL REPORT 2014
156
This page is intentionally left blank
FORM OF PROXY
CDS ACCOUNT NUMBER
(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 Third 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 Wednesday, 3 June 2015 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 Tan Sri Dato’ Dr Yahya bin Awang as Director of the Company
3.
To re-elect Dato’ Lim Tiong Chin 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 the share buy-back
*AGAINST
* Please indicate with an “X” how you wish your votes to be cast. If no specific direction as to voting is given, the proxy will vote
or abstain at his/her discretion.
As witness my/our hand(s) this
Signature(s) of member/
Common Seal
day of
2015
NOTES:1.
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.
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.
3. 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.
4. 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.
5. 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.
6. If the appointor is a corporation, the form of proxy must be executed under its Common Seal or under the hand of its attorney.
7. 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.
8. A depositor whose name appears in the Record of Depositors on 26 May 2015 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.
stamp
THE COMPANY SECRETARY
39th Floor, Menara Multi-Purpose
Capital Square, No. 8, Jalan Munshi Abdullah
50100 Kuala Lumpur

MPHB CAP AR 2014 - MPHB Capital Berhad

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