contents cap ar 2015.pdfhe began his career with mwe weaving mills sdn bhd in 1971 as a manager and...

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Corporate Profile

Corporate Structure

Corporate Information

Financial Highlights

Directors’ Profile

Chairman’s Statement

Chairman’s Statement (In Bahasa Malaysia)

Chairman’s Statement (In Chinese)

Corporate Social Responsibility Statement

Corporate Governance Statement

Additional Corporate Disclosures

Directors’ Responsibility Statement

Audit Committee Report

Statement On Risk Management And Internal Control

Directors’ Report And Audited Financial Statements

Top 10 List Of Properties

Analysis Of Equity Securities

Notice Of Annual General Meeting

Statement Accompanying The Notice Of Annual General Meeting

Form Of Proxy

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CONTENTS

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MPHB Capital Berhad (“MPHB Capital”), the holding company for the MPHB Capital Group of Companies (“MPHB Capital Group”), was incorporated on 17 July 2012 as a private limited company and subsequently converted into a public limited company and assumed its present name on 23 July 2012. The Company was listed on the Main Market of Bursa Malaysia Securities Berhad on 28 June 2013. The MPHB Capital Group is involved in the businesses of: Insurance

Credit and investments

The MPHB Capital Group is committed towards the key fundamentals stated below:-

achievement of excellence in its business

strive to achieve optimum value for its shareholders

to be a caring and fair employer and

a socially responsible corporate citizen

CORPORATE PROFILE

3CORPORATE STRUCTURE AS AT 31 MARCH 2016

* MPHB CAPITAL BERHAD

Multi-Purpose Capital Holdings

Berhad

MPI Generali Insurans Berhad

Multi-Purpose Credit

Sdn Bhd

Caribbean GatewaySdn Bhd

Kelana Megah Development

Sdn Bhd

Magnum Leisure Sdn Bhd

Queensway Nominees

(Asing)Sdn Bhd

Tibanis Sdn Bhd

Multi-Purpose Development

(PG) Sdn Bhd

Multi-Purpose Shipping

Corporation Berhad

Multi-Purpose Credit Holdings

Sdn Bhd

MP Factors Sdn Bhd

West-JayaSdn Bhd

Jayavest Sdn Bhd

Syarikat Perniagaan

Selangor Sdn Bhd

Leisure Dotcom Sdn Bhd

Magnum.Com Sdn Bhd

Mulpha Kluang Maritime Carriers Sdn Bhd

Tune Insurance

(Labuan) Ltd.

Multi-Purpose Credit Nominees

(Tempatan) Sdn Bhd

Queensway Nominees (Tempatan)

Sdn Bhd

Mimaland Berhad

Flamingo Management

Sdn Bhd

INSU

RA

NCE

& C

RED

ITIN

VEST

MEN

TS

Subsidiary Company Associated Company* Listed on Bursa Malaysia Securities Berhad

4 CORPORATE INFORMATION

DIRECTORS

Tan Sri Dato’ Dr Yahya bin Awang Independent Non-Executive ChairmanTan Sri Dato’ Surin Upatkoon Non-Independent Managing DirectorMs Ivevei Upatkoon Non-Independent Executive DirectorDato’ Lim Tiong Chin Non-Independent Non-Executive DirectorMr Kuah Hun Liang Independent Non-Executive Director

AUDIT COMMITTEE

Mr Kuah Hun Liang (Chairman)

Tan Sri Dato’ Dr Yahya bin Awang Dato’ Lim Tiong Chin REMUNERATION COMMITTEE

Tan Sri Dato’ Dr Yahya bin Awang (Chairman) Tan Sri Dato’ Surin Upatkoon

Mr Kuah Hun Liang

NOMINATION COMMITTEE

Tan Sri Dato’ Dr Yahya bin Awang (Chairman)

Dato’ Lim Tiong Chin Mr Kuah Hun Liang

RISK MANAGEMENT COMMITTEE

Tan Sri Dato’ Dr Yahya bin Awang (Chairman) Dato’ Lim Tiong Chin Mr Kuah Hun Liang

MANAGEMENT

Tan Sri Dato’ Surin Upatkoon (Managing Director)

Ms Ivevei Upatkoon (Executive Director)

Ms Kheoh And Yeng (Chief Operating Officer)

SECRETARY

Ng Sook Yee (MAICSA 7020643)

REGISTERED OFFICE

39th Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTelephone No. : 603-26948333 Fax No. : 603-26946849

SHARE REGISTRAR

Metra Management Sdn Bhd (62169-A)30.02, 30th Floor, Menara Multi-PurposeCapital SquareNo. 8, Jalan Munshi Abdullah50100 Kuala LumpurTelephone No. : 603-26983232 Fax No. : 603-26948571

AUDITORS

Messrs Ernst & Young

PRINCIPAL BANKERS

Malayan Banking BerhadAlliance Bank Malaysia Berhad

STOCK EXCHANGE LISTING

Main Market of Bursa Malaysia Securities Berhad(Listed on 28 June 2013)Stock Name : MPHBCAP Stock Code : 5237ISIN Code : MYL5237OO002

WEBSITE

www.mphbcap.com.my

E-MAIL

[email protected]

5FINANCIAL HIGHLIGHTS

2015 2014 2013 RM’000 RM’000 RM’000 ASSETS Non-current assets Property, plant and equipment 81,570 84,266 87,324 Investment properties 832,125 748,661 744,051Investments 397,479 328,195 362,755Intangible assets 36,420 44,461 54,482

1,347,594 1,205,583 1,248,612Current assets 1,666,482 1,386,577 1,060,976Assets held for sale - - 30,195 TOTAL ASSETS 3,014,076 2,592,160 2,339,783

EQUITY AND LIABILITIES Equity attributable to Owners of the Company Share capital 715,000 715,000 715,000Reserves 867,475 603,839 363,545

Shareholders’ fund 1,582,475 1,318,839 1,078,545Non-controlling interests 198,766 13,620 15,389

Total equity 1,781,241 1,332,459 1,093,934

Non-current liabilities 20,772 39,756 87,800Current liabilities 1,212,063 1,219,945 1,135,443Liabilties directly associated with asset held for sale - - 22,606

Total liabilities 1,232,835 1,259,701 1,245,849

TOTAL EQUITY AND LIABILITIES 3,014,076 2,592,160 2,339,783

FINANCIAL RESULTS Profit before tax 106,183 277,486 57,590Income tax expense (19,629) (33,833) (10,718)

Profit for the year 86,554 243,653 46,872Non-controlling interests (21,988) 1,767 1,377

Profit attributable to Owners of the Company 64,566 245,420 48,249

FINANCIAL RATIOS Basic earnings per share (Sen) 9.0 34.3 8.9 Net assets per share (RM) 2.2 1.8 1.5 Return on equity (%) 4.1 18.6 4.5

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TAN SRI DATO’ DR YAHYA BIN AWANG Independent Non-Executive Chairman

Tan Sri Dato’ Dr Yahya bin Awang, a Malaysian, aged 65, was appointed as an Independent Non-Executive Chairman/Director of MPHB Capital Berhad (“MPHB Capital” or “the Company”) on 1 August 2012. Tan Sri Yahya is also the Chairman of the Nomination Committee, Remuneration Committee and Risk Management Committee, and a member of the Audit Committee of MPHB Capital.

Tan Sri Yahya graduated from Monash University in Australia with a Bachelor of Medicine and Bachelor of Surgery degree in 1974. Tan Sri Yahya became a Fellow of the Royal College of Surgeons and Physicians of Glasgow in 1980.

Moving to London in 1981, Tan Sri Yahya worked as a Surgical Registrar in the Department of Cardiothoracic Surgery at Royal Brompton Hospital before returning to Malaysia to take up the role of Cardiothoracic Surgeon at the General Hospital. From 1992 until 2004, Tan Sri Yahya held the position of Head and Senior Consultant Cardiothoracic Surgeon at the National Heart Institute of Malaysia, and from 1998 to 2002, he was also the Medical Director of the Institute.

Tan Sri Yahya’s many professional achievements include pioneering the establishment of the National Heart Institute of Malaysia in 1992 and performing the first Heart Transplant in Malaysia in 1997. Tan Sri Yahya is the author of many scholarly and professional articles and has made numerous presentations to professional audiences.

Tan Sri Yahya has been a Consultant Cardiothoracic Surgeon at Damansara Heart Centre, Damansara Specialist Hospital since March 2003. He was a council member of the Association of Thoracic and Cardiovascular Surgeons of Asia. He is also a committee member of the Malaysian Board of Cardiothoracic Surgery. In 2011, he was appointed as the Pro-Chancellor of University of Teknologi Malaysia.

Currently, Tan Sri Yahya also sits on the Board of Tokio Marine Life Insurance Malaysia Bhd and several private limited companies in Malaysia. Tan Sri Yahya is also a Trustee of Yayasan Wah Seong. He attended all of the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.

TAN SRI DATO’ SURIN UPATKOONNon-Independent Managing Director

Tan Sri Dato’ Surin Upatkoon, a Thai National, aged 67, was appointed as a Director of the Company on 17 July 2012 and as Managing Director of the Company on 14 May 2013. He is also a member of Remuneration Committee of the Company. He is responsible for developing and implementing the strategic vision for the growth and expansion of MPHB Capital Group, and ensuring effective control of the general management and operations of the MPHB Capital Group

Tan Sri Dato’ Surin completed his secondary education in Han Chiang High School, Penang in 1970. He began his career with MWE Weaving Mills Sdn Bhd in 1971 as a manager and he was appointed as the Managing Director of MWE Spinning Mills Sdn Bhd in 1974. In 1976, he became an Executive Director of MWE Holdings Berhad and subsequently, in 1979, he was appointed as the Managing Director of MWE Weaving Mills Sdn Bhd. In 2000, he was appointed as an Executive Director of Magnum Berhad (“Magnum”) and subsequently in 2002, he was appointed as the Managing Director of Magnum where he played a major role in formulating the business strategies and direction of the Magnum Group and was actively involved in the policy making aspects of the operations of the Magnum Group. He was re-designated as Non-Independent Non-Executive Chairman of Magnum on 26 June 2013.

Tan Sri Dato’ Surin also sits on the Board of MWE Holdings Berhad, Magnum 4D Berhad and several private limited companies in Malaysia. He is also a Trustee of Chang Ming Thien Foundation and Magnum Foundation.

Tan Sri Dato’ Surin attended all of the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.

DIRECTORS’ PROFILE

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IVEVEI UPATKOONNon-Independent Executive Director

Ms Ivevei Upatkoon, a Thai National, aged 39, was appointed as an Executive Director of the Company on 20 February 2014. She does not sit on any Board committee of the Company.

Ms Ivevei obtained a Master in Business Administration from INSEAD in 2004, a Bachelor of Economics and Bachelor of Arts Degree (Honours) majoring in Japanese Studies in 1997, both from the University of Michigan.

Ms Ivevei has more than 7 years working experience in property development strategy, property management and property investment. Prior to being appointed as Executive Director, she was the General Manager, Property of the Company. She joined Magnum Berhad (“Magnum”) as a manager in 2008 and was then promoted as the Assistant General Manager, Property in 2010. Before joining Magnum in 2008, she was employed in companies involved in corporate finance/advisory, systems consulting, e-commerce services and e-business strategy consulting/advisory.

She also sits on the Board of Mimaland Berhad, Multi-Purpose Capital Holdings Berhad and several private limited companies in Malaysia and is a Trustee of Magnum Foundation. Ms Ivevei attended all of the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.

DATO’ LIM TIONG CHINNon-Independent Non-Executive Director

Dato’ Lim Tiong Chin, a Malaysian, aged 63, was appointed as a Non-Independent Non-Executive Director of the Company on 1 August 2012. Dato’ Lim is also a member of the Audit Committee, Nomination Committee and Risk Management Committee of the Company.

Dato’ Lim is a Public Accountant by profession and is a Fellow of the Institute of Chartered Accountants in England and Wales. He is also an Associate Member of the Malaysian Institute of Certified Public Accountants and Malaysian Institute of Accountants.

Dato’ Lim was the Managing Director of A.A. Anthony Securities Sdn. Bhd. from 2001 to February 2013. Prior to joining A.A. Anthony Securities Sdn Bhd, he was a Partner of Kiat & Associates from 1977 to 1983, General Manager of A.A. Anthony & Co. Sdn Bhd from 1983 to 1985, Chairman and Managing Director of A.A. Anthony & Co. Sdn Bhd from 1985 to 3 September 2001.

Dato’ Lim also sits on the Board of The Kedah Transport Company Berhad and several private limited companies in Malaysia.

Dato’ Lim attended all of the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.

DIRECTORS’ PROFILE (cont’d)

8 DIRECTORS’ PROFILE (cont’d)

KUAH HUN LIANGIndependent Non-Executive Director

Mr Kuah Hun Liang, a Malaysian, aged 54, was appointed as an Independent Non-Executive Director of the Company on 4 March 2013. He is also a Chairman of the Audit Committee and a member of Nomination Committee, Remuneration Committee and Risk Management Committee of the Company.

Mr Kuah obtained a Bachelor of Science (Hons) degree in Applied Economics from the University of East London, United Kingdom in 1982. He started his banking career in Public Bank Berhad in 1983. He joined Deutsche Bank AG in 1989 where he served as a treasurer and was then promoted as the head of global markets in 1995. In 2000, he was appointed as an Executive Director of Deutsche Bank (M) Bhd and promoted to be the Chief Executive Officer and Managing Director in 2002 and held the position until September 2006. He was formerly a treasurer and a Director of Malaysian-German Chamber of Commerce and the Chairman of Star Publications (Malaysia) Berhad.

Mr Kuah is currently an independent director of Alliance Bank Malaysia Berhad, Alliance Investment Bank Berhad and Rexit Berhad.

Mr Kuah attended all of the five (5) Board meetings of the Company held during the financial year ended 31 December 2015.

Notes:

1. Family Relationship with Director and/or Major Shareholder

Ms Ivevei Upatkoon is the daughter of Tan Sri Dato’ Surin Upatkoon, the Managing Director and major shareholder of the Company. Saved as disclosed herein, none of the Directors have any family relationship with any director and/or major shareholder of the Company.

2. Conflict of Interest

None of the Directors have any conflict of interest with the Company.

3. Conviction of Offences

None of the Directors have been convicted of any offences in the past ten(10) years.

9CHAIRMAN’S STATEMENT

Dear Shareholders,

I am pleased to present the third Annual Report and Audited Financial Statements of the Group and Company for the financial year ended 31 December 2015.

The exemplary leadership of our Managing Director, Tan Sri Dato’ Surin Upatkoon, the invaluable contribution and participation from our esteemed Board members and diversified talent of the experienced management teams have positioned the group to efficient capital management even in the midst of challenges due to global economic slowdown. Sound policies, core values and clear directions will steer the Group to sustainable growth in the future.

I would like to take this opportunity to express our appreciation to Mr Ng Kok Cheang, our Executive Director, for his past contributions as he has resigned from the Board on 19 August 2015.

The profit for the year posted by the Company and the Group is RM0.2 million and RM86.6 million respectively. This is lower than the previous year’s profit of the Company and the Group of RM179.1 million and RM243.6 million respectively due to a one-off gain from the sale of investment properties recorded in 2014.

The basic earnings per share of the Group registered a drop of 25.3 sen from 34.3 sen per share to 9 sen per share.

CORPORATE DEVELOPMENT

2015 has been a remarkable year.

On 7 May 2015, the Company announced that a wholly-owned subsidiary of the Company, Multi-Purpose Capital Holdings Berhad (“MPCHB”), had completed the divestment of its 49% stake in the insurance subsidiary, Multi-Purpose Insurans Bhd (“MPIB”) to Generali Asia N.V. (“Generali Asia”), a 100% indirect subsidiary of Assicurazioni Generali S.p.A for RM355.8 million.

On 15 July 2015, the name of the insurance subsidiary was changed from MPIB to MPI Generali Insurans Berhad (“MPI Generali”) to reflect the integration with the Generali Group which is one of the largest global insurance providers.

MPCHB also grants call and put options to Generali Asia whereby Generali Asia can exercise:-

I) the call option within 2 years from completion date to acquire 21% of the issued and paid up capital of MPI Generali; and

II) the put option within 5 years from completion date to sell to MPCHB all the shares in MPI Generali if:-

• approval from Bank Negara Malaysia(“BNM”) is deemed not to have been obtained for the exercise of the call option; or

• Generali Asia holds a minority shareholding in MPI Generali upon the approval from BNM for the exercise of the call option.

This strategic partnership marks Generali Group’s entry into the Malaysian general insurance market. With the combination of strong international network, expertise and technical efficiency of Generali Group combined with our home grown strength and expertise, MPI Generali is poised to have stronger foothold in the general insurance industry.

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BUSINESS PERFORMANCE OVERVIEW

Revenue of the Group at RM380.8 million is 2.9% higher compared to revenue of RM370.1 million reported in 2014. The improved performance is due to higher net earned premiums achieved by the Insurance Division of RM339.3 million which contribute towards 89.1% of the total revenue. Credit and Investments Divisions generate revenue of RM41.5 million which is 10.9% of the total revenue.

Operating profit of the Group at RM108.6 million is 61.4% lower than the operating profit of RM281.6 million achieved in 2014. The extraordinary gain from the disposal of investment properties contributed substantially to the favorable result of 2014.

REVIEW OF OPERATIONS

a) Insurance Division

In spite of the uncertain market environment, MPI Generali reported revenue and operating profit of RM339.3 million and RM77.15 million respectively which is 2.5% and 8.8% higher than revenue of RM330.9 million and operating profit of RM70.9 million posted in 2014. This is mainly due to higher earned premium, lower commission and net claims incurred ratios.

Going forward, MPI Generali is expected to benefit from the strategic partnership with Generali and aims to be transformed into one of the key long term players in the local general insurance industry.

b) Credit Division

The Credit Business is primarily limited to selected reputable clientele. Credit Division achieved higher operating profit of RM10.39 million in 2015 as compared to RM1.50 million posted in 2014. Net gain in the fair value of financial assets and higher interest income had contributed to the favourable results.

c) Investment Division

Investment Division is involved in hotel operations, investment properties and joint ventures with well-established property market investors. Revenue generated in 2015 at RM39.3 million is 5.4% higher than revenue of RM37.3 million recorded in 2014. The improved performance of the hotels and higher collections in terms of rental income from the investment properties contributed to the increase in revenue. However, the operating profit in 2015 at RM21.12 million is significantly lower compared to operating profit RM209.23 million posted in 2014 due to an exceptional gain from the sale of investment properties in 2014.

The hotels will continue to maintain good rapport with existing clientele with improved customer services as well as to attract new customers with attractive promotions to improve its revenue. The hotels will strive to maintain its operational costs at optimal level.

The Group will continue to assess and evaluate potential profitable joint ventures with reputable property developers or outright disposal at the right price for the vast land bank held by the Group to maximize shareholders’ value.

11CHAIRMAN’S STATEMENT (cont’d)

MARKET OUTLOOK AND PROSPECTS

While the global economy environment remains uncertain, the Malaysian economic outlook is expected to face an uncertain operating environment in 2016. The growth of Malaysian economy in the fourth quarter of 2015 is recorded at 4.5%. Going forward, growth will continue to be sustained by domestic demand and net exports. The domestic demand expansion is projected to be moderate.

2016 poses continuing uncertainties and challenges, but we are committed to optimizing value for shareholders. The management team will continue to focus on cost optimization and efficient management, as well as to explore opportunities for growth in our operating divisions. The Board members will continue to ensure that good corporate governance are in place and with the integrity and guidance of the board members, the Group will attain better record and earnings in the future.

DIVIDENDS

The Board maintains a conservative dividend policy to ensure adequate funds are retained for long term creation of shareholders’ value whilst acknowledging that a need to reward loyal shareholders.

However, at this juncture, declaration of dividends is to be approved by Bank Negara Malaysia (“BNM”) and we will seek BNM’s approval for future declaration of dividends.

APPRECIATION AND ACKNOWLEDGEMENT

On behalf of the Board, I would like to thank shareholders for their continued support and to extend my thanks to all fellow board members and staff across the Group for their commitment and their invaluable contribution.

I am confident that our Group is poised to deliver strong financial performance in the years ahead with the formulation and execution of clear and consistent strategies within the organisation.

TAN SRI DATO’ DR YAHYA BIN AWANGCHAIRMAN31 March 2016

12 PENYATA PENGERUSI

Para Pemegang Saham,

Saya dengan sukacitanya membentangkan Laporan Tahunan ketiga dan Penyata Kewangan Beraudit Kumpulan dan Syarikat bagi tahun kewangan berakhir 31 Disember 2015.

Kepimpinan teladan Pengarah Urusan kami, Tan Sri Dato’ Surin Upatkoon, sumbangan yang tidak ternilai dan penyertaan daripada ahli Lembaga Pengarah yang dihormati serta kepelbagaian bakat pasukan pengurusan yang berpengalaman telah mempamerkan pengurusan modal yang cekap walaupun di dalam cabaran disebabkan kelembapan ekonomi global. Dasar polisi yang baik, nilai-nilai teras dan arahan yang jelas akan membawa Kumpulan kepada pertumbuhan yang mampan pada masa hadapan.

Saya ingin mengambil kesempatan ini untuk merakamkan penghargaan kepada Encik Ng Kok Cheang, Pengarah Eksekutif kami, atas sumbangan beliau sebelum beliau meletak jawatan daripada Lembaga Pengarah pada 19 Ogos 2015.

Keuntungan bagi tahun yang dicatatkan oleh Syarikat dan Kumpulan adalah masing-masing sebanyak RM0.2 juta dan RM86.6 juta. Ini adalah lebih rendah berbanding keuntungan Syarikat dan Kumpulan bagi tahun sebelumnya iaitu masing-masing sebanyak RM179.1 juta dan RM243.6 juta hasil keuntungan disebabkan daripada penjualan hartanah pelaburan yang dicatatkan pada tahun 2014.

Pendapatan asas sesaham Kumpulan mencatatkan penurunan sebanyak 25.3 sen daripada 34.3 sen sesaham kepada 9 sen sesaham.

PEMBANGUNAN KORPORAT

Tahun 2015 merupakan tahun yang memuaskan.

Pada 7 Mei 2015, Syarikat telah mengumumkan bahawa anak syarikat milik penuh Syarikat, Multi-Purpose Capital Holdings Berhad (“MPCHB”), telah menyempurnakan pelupusan pegangan sebanyak 49% dalam anak syarikat insurans, Multi-Purpose Insurans Bhd (“MPIB”) kepada Generali Asia N.V. ( “Generali Asia”), iaitu 100% subsidiari tidak langsung kepada Assicurazioni Generali S.p.A sebanyak RM355.8 juta.

Pada 15 Julai 2015, nama anak syarikat insurans telah ditukar daripada MPIB kepada MPI Generali Insurans Berhad (“MPI Generali”) untuk menggambarkan integrasi dengan Kumpulan Generali yang merupakan salah satu syarikat pembekal insurans global terbesar.

MPCHB juga telah memberikan opsyen panggilan dan opsyen jualan kepada Generali Asia di mana Generali Asia melaksanakan:-

I) opsyen panggilan dalam tempoh 2 tahun dari tarikh penyempurnaan untuk memperolehi 21% daripada modal terbitan dan berbayar MPI Generali; dan

II) opsyen jualan dalam tempoh 5 tahun dari tarikh penyempurnaan untuk menjual semua saham dalam MPI Generali kepada MPCHB sekiranya:-

• kelulusan daripada Bank Negara Malaysia (“‘BNM”) tidak diperolehi bagi pelaksanaan opsyen panggilan; atau

• Generali Asia memegang pegangan saham minoriti dalam MPI Generali bergantung kepada kelulusan daripada BNM bagi melaksanakan opsyen panggilan.

Perkongsian strategik ini menandakan kemasukan Kumpulan Generali ke dalam pasaran insurans am Malaysia. Dengan gabungan rangkaian antarabangsa yang kukuh, kepakaran dan kecekapan teknikal, Kumpulan Generali digabungkan dengan kekuatan dan kepakaran sedia ada dalam negara, MPI Generali bersedia untuk bertapak lebih kukuh dalam industri insurans am.

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TINJAUAN PRESTASI PERNIAGAAN

Hasil pendapatan Kumpulan pada RM380.8 juta adalah 2.9% lebih tinggi berbanding hasil pendapatan sebanyak RM370.1 juta yang dilaporkan pada tahun 2014. Prestasi yang bertambah baik adalah disebabkan oleh premium bersih yang diperolehi lebih tinggi yang dicapai oleh Bahagian Insurans sebanyak RM339.3 juta yang menyumbang kepada 89.1% daripada jumlah hasil pendapatan. Bahagian Kredit dan Pelaburan telah menjana pendapatan sebanyak RM41.5 juta iaitu 10.9% daripada keseluruhan jumlah hasil pendapatan.

Keuntungan operasi Kumpulan pada RM108.6 juta adalah 61.4% lebih rendah daripada keuntungan operasi yang dicapai pada tahun 2014 iaitu sebanyak RM281.6 juta. Keuntungan luar biasa daripada penjualan hartanah pelaburan telah menyumbang kepada keputusan yang menggalakkan bagi tahun 2014.

TINJAUAN OPERASI

a) Bahagian Insurans

Walaupun dalam keadaan pasaran yang tidak menentu, MPI Generali melaporkan pendapatan dan keuntungan operasi masing-masing sebanyak RM339.3 juta dan RM77.15 juta iaitu 2.5% dan 8.8% lebih tinggi daripada pendapatan sebanyak RM330.9 juta dan keuntungan operasi sebanyak RM70.9 juta yang dicatatkan pada tahun 2014. Ini adalah disebabkan oleh premium yang diperolehi lebih tinggi, komisen yang lebih rendah dan nisbah tuntutan bersih ditanggung.

Melangkah ke hadapan, MPI Generali dijangka mendapat manfaat daripada perkongsian strategik dengan Generali dan bertujuan untuk berubah menjadi salah satu pemain utama jangka panjang dalam industri insurans am tempatan.

b) Bahagian Kredit

Perniagaan Kredit adalah terhad kepada pelanggan terpilih yang mempunyai reputasi yang baik. Bahagian Kredit mencapai peningkatan keuntungan operasi sebanyak RM10.39 juta pada tahun 2015 berbanding dengan RM1.50 juta pada tahun 2014. Keuntungan bersih dalam nilai saksama aset kewangan dan pendapatan faedah yang lebih tinggi telah menyumbang kepada keputusan yang menguntungkan.

c) Bahagian Pelaburan

Bahagian Pelaburan terlibat dalam operasi hotel, pelaburan hartanah dan usaha sama dengan pelabur-pelabur pasaran hartanah yang mantap. Hasil pendapatan yang dijana pada tahun 2015 sebanyak RM39.3 juta adalah 5.4% lebih tinggi daripada hasil pendapatan yang dicatatkan pada tahun 2014 iaitu sebanyak RM37.3 juta. Peningkatan prestasi hotel yang bertambah baik dan kutipan yang lebih tinggi dari segi pendapatan sewa daripada pelaburan hartanah telah menyumbang kepada peningkatan hasil pendapatan. Walau bagaimanapun, keuntungan operasi pada tahun 2015 sebanyak RM21.12 juta adalah jauh lebih rendah berbanding dengan keuntungan operasi sebanyak RM209.23 juta yang dicatatkan pada tahun 2014 disebabkan oleh keuntungan luar biasa daripada penjualan pelaburan hartanah pada tahun 2014.

Hotel-hotel akan terus mengekalkan hubungan yang baik dengan pelanggan sedia ada serta tahap khidmat pelanggan yang lebih baik dan juga untuk menarik pelanggan baru dengan promosi yang menarik untuk meningkatkan hasil pendapatannya. Hotel akan berusaha untuk mengekalkan kos operasi pada tahap optimum.

Kumpulan akan terus menaksir dan menilai potensi usaha sama yang menguntungkan dengan pemaju hartanah yang berwibawa atau pelupusan secara terang-terangan dengan harga yang tepat untuk bank tanah yang luas yang dipegang oleh Kumpulan untuk memaksimumkan nilai pemegang saham.

PENYATA PENGERUSI (sambungan)

14 PENYATA PENGERUSI (sambungan)

TINJAUAN DAN PROSPEK PASARAN

Dengan keadaan ekonomi global yang masih tidak menentu, prospek ekonomi Malaysia dijangka menghadapi persekitaran operasi yang tidak menentu pada tahun 2016. Pertumbuhan ekonomi Malaysia pada suku keempat dalam tahun 2015 direkodkan pada 4.5%. Melangkah ke hadapan, pertumbuhan akan terus dikekalkan dengan adanya permintaan domestik dan eksport bersih. Pengembangan permintaan domestik dijangka menjadi sederhana.

Tahun 2016 menimbulkan ketidakpastian dan cabaran yang berterusan, tetapi kami komited untuk mengoptimumkan nilai pemegang saham. Pihak pengurusan akan terus memberikan tumpuan kepada mengoptimumkan kos dan pengurusan yang cekap, serta meneroka peluang-peluang pertumbuhan dalam bahagian operasi kami. Ahli Lembaga Pengarah akan terus memastikan bahawa tadbir urus korporat yang baik dengan integriti dan kepimpinan ahli Lembaga Pengarah, Kumpulan akan mencipta rekod dan pencapaian yang lebih baik pada masa hadapan.

DIVIDEN

Lembaga Pengarah mengekalkan polisi dividen konservatif untuk memastikan dana yang mencukupi dikekalkan bagi meningkatkan nilai para pemegang saham untuk jangka panjang di samping mengakui bahawa keperluan untuk memberi ganjaran kepada pemegang-pemegang saham yang setia.

Walau bagaimanapun, pada masa ini, pengisytiharan dividen perlu diluluskan oleh Bank Negara Malaysia (“BNM”) dan kami akan mendapatkan kelulusan BNM untuk pengisytiharan dividen pada masa depan.

PENGHARGAAN DAN PENGIKTIRAFAN

Bagi pihak Lembaga Pengarah, saya ingin mengucapkan terima kasih kepada para pemegang saham di atas sokongan yang berterusan dan ucapan terima kasih saya juga kepada semua ahli Lembaga Pengarah dan kakitangan di seluruh Kumpulan di atas komitmen dan sumbangan mereka yang tidak ternilai.

Saya yakin bahawa Kumpulan kami bersedia untuk memberikan prestasi kewangan yang kukuh pada tahun akan datang dengan penggubalan dan pelaksanaan strategi yang jelas dan konsisten dalam organisasi.

TAN SRI DATO’ DR YAHYA BIN AWANGPENGERUSI31 Mac 2016

15主席献词

各位股东，

本人非常荣幸地呈报本集团和公司上市后截至2015年12月31日的第三个年度报告和经审计财务账目。

在董事经理丹斯里拿督刘锦坤卓越的领导下，再配合董事局成员的宝贵贡献和积极参与，加上经验丰富和多元才能的管理团队，促使本集团在全球经济放缓的挑战之下，依然能够建立高效的资本管理。

前执行董事伍国昌先生已于2015年8月19日向董事会请辞执行董事一职，本人也藉此机会衷心感谢伍国昌先生在任时为本集团所作出的贡献。

本公司和集团今年各取得20万令吉及8千6百60万令吉的年度盈利，少于去年的1亿7千9百10万令吉及2亿4千3百60万令吉。去年的盈利主要源自于2014年出售投资物业所记录的一次性收益。本集团的业务每股盈利减少了25.3仙，从34.3仙下跌至9仙。

企业发展

2015年是卓越的一年。

本公司于2015年5月7日宣布属下全资子公司Multi-Purpose Capital Holdings Berhad（MPCHB）完成出售价值3亿5千5百80万令吉的保险子公司， Multi-Purpose Insurans Bhd (MPIB) 的49％股权于Generali Asia NV（Generali Asia），即100% 间接附属于Assicurazioni Generali S.p.A的子公司。

属下保险子公司的名字已于2015年7月15日由MPIB转换成MPI Generali Insurans Berhad (MPI Generali)，以反映子公司与全球最大保险集团之一的Generali集团的整合。

MPCHB也与Generali Asia签署一份买卖选择权协议，准予Generali Asia执行：-

在完成脱售议案2年内的买权，以收购21%MPI Generali所发行的缴足股本；以及在完成脱售议案5年内的卖权，以出售所有MPI Generali的股份于MPCHB，假如：-• 未能获得马来西亚国家银行(国行)的批准，以执行买权或• 获得国行批准买权，但Generali Asia只持有MPI Generali的少数股权。

此策略伙伴关系标志着Generali集团迈入大马普险市场的一大步。以Generali集团强大的国际网络，专业知识和技术效率，结合我们自身的在地实力和专业人才，MPI Generali正准备在大马普险业务蓄势待发。

业务表现概况

集团的总营业额为3亿8千80万令吉，相较于2014年3亿7千10万令吉的总营业额，增长了2.9%。这优越的表现源自于保险业务取得较高的已净赚保费，为3亿3千9百30万令吉，占总营业额的89.1％。信贷与投资业务则取得4千1百50万令吉，占总营业额的10.9％。

集团的业务盈利为1亿8百60万令吉，相较于2014年的2亿8千1百60万令吉，下跌了61.4%。主要基于2014年出售投资物业的特殊收益为业务盈利作出巨大的贡献。

营运回顾

a) 保险业务

尽管市场环境存着许多不明确因素，MPI Generali 依然取得3亿3千9百30万令吉的总营业额以及7千7百15万令吉的业务盈利，相较于2014年3亿3千90万令吉的总营业额以及7千90万令吉的业务盈利，各别增长了2.5%和8.8%。这主要是基于较高的已赚保费，以及较低的佣金和已承付申索净额比率。

在未来的展望下，MPI Generali预期将受惠于与Generali建立的策略伙伴关系，以成为本地普通保险领域里的关键成员。

16 主席献词(延续)

b) 信贷业务

信贷业务主要限于筛选及信誉良好的客户群。信贷业务在2015年取得了1千39万令吉的业务盈利，高于2014年所记录的1百50万令吉。优越的成果源自于金融资产的公允价值净收益以及更高的利息收入。

c) 投资业务

投资业务包括了酒店管理、产业投资以及与完善的房地产市场投资者的联营投资。在2015年，总营业额为3千9百30万令吉，相较于2014年的3千7百30万令吉，增长了5.4%。酒店的性能提升和更高的投资物业租金收入造就了总营业额的提升。然而，2015年2千1百12万令吉的业务盈利显著低于2014年所记录2亿9百23万令吉的业务盈利，因为2014年出售投资物业的特殊收益大大增加了当年的业务盈利。

本酒店将继续以更出色的服务来维持与现有客户的良好关系，并会展开诱人的促销以招揽新的客户群，籍此提高总营业额。同时，本酒店也将努力维持最优化的营运成本。

本集团也将持续评估及寻找信誉良好的房地产开发商，以进行有潜能收益的联营投资，或于合适的价位时机出售，以求回报股东们的投资价值。

市场前景及展望

在全球经济环境依然不明朗的情况下，马来西亚的经济前景在2016年将面临一个充满变数的经营环境。马来西亚在2015年第四季度的经济增长为4.5％。国内需求和净出口会在未来持续支撑经济的增长，国内需求预计趋向放缓。

2016年充满不明确因素和严峻的挑战，但我们仍然会尽力为股东们创造最优质的投资价值。在持续专注成本优化及高效管理的同时，管理团队也将探索增长营运业务的机会。董事会将不遗余力地确保公司治理到位，而在未来的日子里，本集团也将在董事会成员秉持着诚信和用心指引之下，取得更佳的业绩以及更多的盈利。

股息

董事会维持保守的派息政策，以确保有足够的储备基金以创造股东们的长期价值，与此同时，董事会认同有回报忠诚股东们的必要性。

然而，在这个关键时期，股息派发得预先获得国行的批准，我们将会全力争取国行批准放行派发股息计划。

致诚感谢

我谨代表董事会感谢股东们始终如一的支持，以及衷心感激董事会的所有成员和员工们为本集团所作出的宝贵贡献。

我深信，通过组织内部明确和一贯的策略制定与执行，本集团有望在未来几年里展现良好的财务业绩。

主席TAN SRI DATO’DR YAHYA BIN AWANG

2016年3月31日

17CORPORATE SOCIAL RESPONSIBILITY STATEMENT

The Group, as a socially responsible corporate citizen, is committed to continuously develop and implement corporate social responsibility (“CSR”) initiatives as part of its efforts to create business sustainability and enhance the value of shareholders and other stakeholders.

THE COMMUNITY

• Recreational/Sports Programme

Premised on the belief that the cultivation of a healthy and active lifestyle is an important element in creating work-life balance amongst the general public, the Group has continued with its efforts to organise its annual community run event known as the “MPIB Run” at Padang Merbuk, Jalan Parlimen on 11 January 2015 with more than 5,000 runners participating in the event.

In conjunction with the run, the Group had organised the “My First Run Clinic” sessions with activities such as running and talks on health, fitness and running techniques to encourage individuals to take up running as a sustainable healthy recreational activity, to inculcate a healthy work life balance lifestyle and to promote better running techniques amongst the runners.

During the year, the Group had sponsored the sports training programme of Sarawak Sport Council to nurture junior talents in sports. The Group also sponsored the 2015 MPI Saujana Amateur Golf Championship as part of the initiative to nurture young amateur golfers into becoming the next generation of top professional golfers. The Group also made sponsorship contribution to the Monster Dash Run 2015, a Halloween-themed run event in Sarawak, to promote a healthy lifestyle amongst the youths and to provide them with social networking opportunities.

• Social/Community Welfare And Charity Programme

The Group had taken the initiative to encourage its employees to participate in social welfare programmes under the MPI Generali’s Sports Club Go Green Project where the Sports Club had made donations and organised staff visits to the Yayasan Sunbeams Home and Rumah Charis.

As part of its social and welfare initiatives, the Group had organised a recycling project known as “The Project Good Deeds” where clean, wearable and pre-loved sport shoes and tee shirts were collected and donated to the Orang Asli/Indigenous communities.

The Group had also participated in the International Charity Day Carnival organised by Magnum Foundation to help to raise funds for the needy and less fortunate.

THE WORKPLACE

Besides providing its employees with a safe, healthy and conducive working environment, the Group is committed to ensuring that its employees are offered fair remuneration terms and they are given equal opportunities for career progression based on merit. The benefits provided for employees include medical and healthcare insurance coverage, personal accident coverage and housing loan interest subsidy. Sports and interactive activities as well as subsidised overseas trips were organised for employees to foster closer working relationship and teamwork.

As part of its efforts towards employees’ sustainability, the Group placed great emphasis on human resource development. During the year, the Group had provided staff with trainings relating to regulatory and budget updates, Goods and Services Tax and system development audit to improve their work/technical skills and to enable them to keep abreast with the latest development in their respective fields of work. Staff were also enrolled in leadership development programmes such as Executive Development Programme and Young Managers Development Programme to enhance their leadership skills. The Group has also embarked on a programme to sponsor employees to attend the Associateship of the Malaysian Insurance Institute (“AMII”) and Diploma of the Malaysian Insurance Institute (“DMII”) Examinations. Employees in these programmes are provided with benefits such as study leave and examination leave.

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THE ENVIRONMENT

Conscious of the need to conserve resources and preserve the environment, the Group had made efforts to cultivate its staff with the habit of “reduce, reuse and recycle”. These include minimising energy consumption, recycling paper waste, printing double-sided, communicating via e-mails and using environmentally friendly products. THE MARKETPLACE

As part of its relationship-building initiatives, the Group continued to have regular get-together and social events with its business partners to build up a rapport with its business partners. Steps were also taken to provide assistance, technical support, training and to promote ethical business practices to the business partners to ensure that they continue to provide excellent customer service.

CORPORATE SOCIAL RESPONSIBILITY STATEMENT (cont’d)

19CORPORATE GOVERNANCE STATEMENT

The Board of Directors (“the Board”) of MPHB Capital Berhad (“the Company” or “MPHB Capital”) is committed to ensuring that good corporate governance is practised throughout the Group as fundamental part of discharging its responsibilities to protect the interest of all stakeholders, enhance shareholders’ value and for long-term sustainable business growth.

The Board is mindful of the need to regularly review the Group’s corporate governance practices with the view of ensuring that they remain relevant in meeting with the challenges of its business environment.

The Board is pleased to outline below the key aspects of how the Group has applied the principles and recommendations set out in the Malaysian Code on Corporate Governance 2012 (“the Code”).

1. BOARD OF DIRECTORS

1.1 Composition of the Board

The Board currently has five members, comprising a Non-Executive Chairman, a Managing Director, one Executive Director and two Non-Executive Directors, total of whom two are Independent Non-Executive Directors. The number of independent directors, which represents more than one-third of the Board, fulfils the Main Market Listing Requirements of the Bursa Malaysia Securities Berhad (“Listing Requirements”).

The Board’s policy is to ensure that the mix and profiles of the Company’s Board members, in terms of age, ethnicity and gender, provide the necessary range and perspectives, experience and expertise required to achieve effective stewardship and management of the Company’s operations. The Board is satisfied that the current size and composition of the Board are adequate to provide for a diversity of views and the effective stewardship of the Company. The Directors are from diverse backgrounds with expertise and skills in the areas of medicine, business management, property management, project management, corporate affairs, banking, stockbroking, finance, accounting, corporate finance/advisory and system consulting. A brief profile of each Director is set out in this Annual Report.

The current Board with one female Director, which represents 20% of the Board composition, reflects the Board’s efforts towards achieving a more gender diversified Board. The Board will review and consider the appointment of additional woman director in line with the country’s aspirational target of 30% women representation on boards, taking into account the combination of skill, experience and strength in the qualities necessary to strengthen the composition of the Board.

1.2 Roles and Responsibilities

The roles and responsibilities of the Chairman, the Managing Director and the Executive Director are clearly segregated to ensure an appropriate balance of power, authority and accountability at the Board level. The Chairman of the Board provides overall leadership to the Board in decision making and is responsible for the orderly conduct of the Board. The Managing Director and the Executive Director are responsible for the day-to-day management of the Group’s business operations and implementation of decisions of the Board. The Non-Executive Directors play the key supporting role in contributing their knowledge and experience in the decision making process and towards the formulation of the Company’s goals and policies.

The Board has established a Board Charter on 14 November 2013, which sets out the composition,

roles and responsibilities of the Board. The Board Charter also outlines the processes and procedures of the Board and the Board Committees to facilitate their effective functions. The Board Charter is available on the Company’s corporate website at www.mphbcap.com.my. The Board intends to carry out a review of the Board Charter to ensure that it remains consistent with the Board’s objectives in 2016.

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The Board assumes, among others, the following key duties and responsibilities as outlined in the Board Charter:-

(a) Reviewing, approving and monitoring the Group’s overall strategic and financial plans.

(b) Overseeing the Group’s business operations and financial performance to ensure that the businesses are being properly managed.

(c) Identifying principal risks and ensuring the implementation of appropriate internal controls and mitigation measures to manage risks.

(d) Reviewing the adequacy and the integrity of the Group’s internal control systems and management information systems, including systems for compliance with applicable laws, regulations, rules, directives, and guidelines.

(e) Development and implementation of policies and/or programmes for effective communication with shareholders and/or investors.

(f) Considering emerging issues which may be material to the Group’s business and affairs and ensure that the Group has proper succession plan for senior management.

The Board plays an active role in the review and monitoring of the Group’s overall strategic and financial plans. At the beginning of each year, the Management presents to the Board for review and approval of its proposed business plan and budget for the year at a Board Meeting. The Board reviews and monitors the Group’s financial results against the budget at the quarterly Board Meetings.

The Board is also kept informed of the key strategic initiatives and significant operational issues. The Chief Operating Officer and the Head of Finance are in attendance at the Board meetings to support the Managing Director and Executive Director in presenting the updates on the progress of key initiatives, business targets and performance of the Group, and to provide clarifications on the challenges and issues raised by the Board.

The Board is committed to provide shareholders/investors with comprehensive, accurate and quality material information on a timely basis. In line with this commitment and to enhance transparency and accountability, the Board has established an internal Corporate Disclosure Policy to facilitate the proper handling of confidential and/or material information to avoid leakage and improper use of such information. The policy clearly sets out the levels of authority to be accorded to designated persons for approving, verifying and disclosing material information to shareholders and stakeholders to ensure compliance with the Listing Requirements. The Group endeavours its best efforts to ensure that no disclosure of material information is made on a selective basis to any parties unless such information has been previously been disclosed and announced to Bursa Securities.

The Board recognises the importance of ensuring that there is effective and orderly succession planning for the Group’s key management positions. During the year, the Group has taken steps to put in place leadership/staff development programmes for identified candidates within the Group as preparation for internal pipeline of talents to assume critical operational positions in the Group.

The Board has adopted an Authority Chart, which clearly sets out the relevant matters and applicable approving limits, including those reserved for the Board’s approval, and those which the Board have delegated to Managing Director and Senior Management. Key matters reserved for the Board’s approval include the financial results, the budget and business plan, declaration of dividend, acquisition and disposal of material assets/investments.

CORPORATE GOVERNANCE STATEMENT (cont’d)

21CORPORATE GOVERNANCE STATEMENT (cont’d)

1.3 Promoting Ethical Standards

The Board has formally adopted a Code of Business Conduct and Ethics (“Code of Conduct”) for the Directors of the Company. The Code of Conduct stipulates the standard of business conduct and ethical behaviors to be observed/maintained by the Directors in their performance of their duties, business dealings and all aspects of the Group’s business. A copy of the Code of Conduct is available at the Company’s website. The key principles adopted in the Code of Conduct are as follows:

• Avoid conflict of interest;• Avoid misuse of position for personal advantage/benefit/preferential treatment in any way;• Avoid misuse of information for personal gains or for any purpose other than intended by the

Company;• Observe confidentiality;• Protection and proper use of the Company’s assets.

The Directors have the duty to declare immediately to the Board should there be any interest in any transaction to be entered into directly or indirectly with the Company. An interested director is required to abstain from deliberations and making decisions of the Board on the transaction and he or she does not exercise any influence over the Board in respect of the transaction.

As part of the Group’s continuous efforts to ensure good corporate governance practices, the Group has established a Whistle Blowing Policy to provide a clear line of communication and reporting of concerns by employees at all levels. The policy serves as a guide for employees to report or raise any genuine concerns about possible improprieties in matters of financial reporting, unethical behaviour, non-compliance with regulatory requirements and other malpractices.

The Audit Committee is responsible for the implementation of the Whistle Blowing Policy for the Group’s employees. All whistle blowing reports are to be submitted to the Audit Committee Chairman and be investigated promptly with the assistance of the Group Internal Audit, Group Human Resources Department and Group Legal Department. The progress of investigation shall be reported to the Audit Committee not later than the next scheduled meeting of the Audit Committee.

1.4 Strategies Promoting Sustainability

The Group aims to promote sustainable growth in every aspects of the Group’s business through constant review of its business strategies to create greater customer awareness and to provide better and more innovative products and excellent services to sustain its competitive edge. At workplace, the Group is committed to promote staff welfare through the provision of attractive remuneration and fringe benefits, a safe and healthy working environment as well as skill and competency development for staff.

1.5 Access to Information and Advice

The Board receives update from the Management on the Group’s operations and performance and the status of implementation of the strategic plans during the Board Meetings. Prior to the Board Meetings, a formal agenda together with a set of Board papers containing information relevant to the matters to be deliberated at the meeting are forwarded to all directors in sufficient time to enable them to peruse, deliberate, obtain additional information and/or seek further clarification on the matters to be tabled at the meetings.

The Board’s rights to information and access to independent advice are entrenched in the Board Charter. The Board has direct access to the Management, including the advice and services of the Company Secretary and has full and unrestricted access to information in relation to the Group’s business and affairs, whether as a full board or in their individual capacity. The Directors may request to be furnished with additional information or clarification on complex/technical issues. The Directors are at liberty to seek independent professional advice at the Company’s expense, if necessary, after consultation with the Chairman and the rest of the Board members.

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1.6 Company Secretary

The Company Secretary of MPHB Capital Berhad is an Associate member of the Malaysian Institute of Chartered Secretaries and Administrators (“MAICSA”) and is qualified to act as company secretary under Section 139A of the Companies Act, 1965. The Company Secretary provides support to the Board in fulfilling its fiduciary duties and leadership role in shaping the corporate governance practices of the Group. The Board is regularly updated by the Company Secretary on the new statutory/regulatory requirements required to be observed by the Directors and/or the Company. The Company Secretary also serves notice to the Directors and principal officers to notify them of the closed periods for dealing in the Company’s shares pursuant to provisions of the Listing Requirements. The Company Secretary attends and ensures that all Board meetings are properly convened, and that proper records of the proceedings and resolutions passed are maintained in the statutory registers at the registered office of the Company. The Company Secretary facilitates timely communication of decisions made and policies set by the Board at Board meetings, to the Management for action.

The Company Secretary has attended the relevant continuous professional development programmes as required by MAICSA. The Board is satisfied with the performance and support rendered by the Company Secretary to the Board in discharging its function.

1.7 Board Committees

The Board has delegated certain responsibilities to the Board committees, namely, the Nomination Committee, Remuneration Committee, Audit Committee and Risk Management Committee to support and assist the Board in discharging its fiduciary duties and responsibilities.

The Board Committees deliberate in greater details and examine the issues within their terms

of reference and make the necessary recommendations to the Board. The Board remains fully responsible for effective control of the Company.

(a) Nomination Committee

The Nomination Committee comprises the following non-executive directors, the majority of whom are independent directors.

Tan Sri Dato’ Dr Yahya bin Awang - Chairman (Independent Non-Executive Director)

Dato’ Lim Tiong Chin - Member (Non-Independent Non-Executive Director)

Mr Kuah Hun Liang - Member (Independent Non-Executive Director)

The Nomination Committee is primarily responsible for the following:

(i) To consider, evaluate and recommend suitable candidates for appointment to the Board.

(ii) To assess the performance and effectiveness of the Board as a whole, Board Committees, as well as each individual Director, on an annual basis. The assessment includes assessment of independence of the independent directors.

(iii) To oversee the overall composition of the Board in terms of appropriate size, required mix of skills, experience and core competencies as well as the balance between Executive Directors, Non-Executive Directors and Independent Directors.



During the financial year 2015, the Nomination Committee met two(2) times, which were attended by all members.

The Nomination Committee has undertaken the following activities during the year 2015:-

(a) Assessed the Board’s performance and effectiveness as a whole.(b) Assessed the performance of each individual Director.(c) Reviewed the overall composition of the Board in terms of the appropriate size, mix of

skills, experience, core competencies and board balance.(d) Assessed the performance of the Board Committees.(e) Assessed the independence of its independent directors.(f) Assessed the training needs of each director.(g) Assessed the proposed appointments of directors prior to submission for Bank Negara

Malaysia’s approvals.

The criteria for the assessment of the Board’s performance cover specific areas such as board conduct, board processes, board accountability, board governance, succession planning and interaction with management and stakeholders. For individual self-assessment, the assessment criteria include integrity, commitment, leadership, knowledge and communication ability. As for independent directors, the criteria for assessing the independent directors include the relationship between the independent director and the Company and his involvement in any significant transaction with the Company.

As for the Board Committees, the assessment criteria include elements such as:

(i) Whether the committees have the right members’ composition.(ii) Whether the committees are providing useful recommendations in assisting the Board for

better decision making and to be more efficient and effective.(iii) Whether the members of the Committees have the relevant expertise in fulfilling their roles.(iv) Whether the communications by the Board Committees are of sufficient quality. (v) Whether the Board is well informed on a timely basis regarding the Committees’

deliberations.

(b) Audit Committee

The Audit Committee reviews the Group’s financial reporting process, the system of internal control and management of risk, the audit process and the Group’s process for monitoring compliance with laws and regulations, and such other matters which may be delegated by the Board.

Full details of the composition, terms of reference and activities of the Audit Committee during the year are set out in the Audit Committee Report in this Annual Report.

(c) Remuneration Committee

The Remuneration Committee comprises the following directors, the majority of whom are independent non-executive directors:


Tan Sri Dato’ Surin Upatkoon - Member (Non-Independent Managing Director)


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The responsibilities of the Remuneration Committee include the formulation of the remuneration policy such as rewards and benefits and other terms of employment of the Managing Director and Executive Directors as well as for the Senior Management and staff. The Remuneration Committee held one(1) meeting during the year, which were attended by all members.

(d) Risk Management Committee

The Risk Management Committee comprises the following non-executive directors, the majority of whom are independent directors:-


Dato’ Lim Tiong Chin - Member (Non-Independent Non-Executive Director)


The responsibilities of the Risk Management Committee are to review and assess the Group’s

enterprise risk management framework and risk appetite, to assess the adequacy of the Group’s risk management framework implemented and to review any significant risks that exist in the Group and ensuring the steps were taken to mitigate the risk within its risk appetite. The Risk Management Committee held one(1) meeting during the year, which were attended by all members.

1.8 Nomination and Election Process of Board Members

The Company has been designated as an approved Financial Holding Company of its insurance subsidiary, MPI Generali Insurans Berhad (formerly known as Multi-Purpose Insurans Bhd), by Bank Negara Malaysia (“BNM”) with effect from 1 July 2015. Pursuant thereto, the appointment and re-appointment of directors of the Company are subject to BNM’s approval. The appointment, re-appointment and annual assessment of Directors are set out in a formal procedure, the primary responsibilities of which have been delegated to the Nomination Committee. The Company’s procedures for appointment/re-appointment of directors are in line with the Guidelines on Fit and Proper Criteria issued by BNM and the relevant provisions under the Financial Services Act, 2013 (“FSA”). Under the procedures, the Nomination Committee proposes the nominees for appointment/re-appointment to the Board, and recommends to the Board on the appointment and re-appointment of directors, subject to the approval(s) of BNM. The Nomination Committee is to ensure that all directors fulfil the fit and proper criteria as stated in the BNM Guidelines on Fit and Proper Criteria and comply with the relevant provisions under the FSA.

The Nomination Committee has established the following process for selection or nomination of

suitable candidates to be appointed as directors:-

Stage 1 : Identification of candidates Stage 2 : Meeting up with the candidates (where feasible) Stage 3 : Evaluation of suitability of candidates Stage 4 : Final deliberation by the Nomination Committee Stage 5 : Recommendation to the Board



The Nomination Committee considers, among others, the following criteria in making recommendations to the Board on suitable candidates for appointment as Directors:

(a) Whether the candidate have key qualities such as honesty, personal/financial integrity, diligence and professionalism.

(b) Whether the candidate possesses the necessary qualification, training, skills, expertise, practical experience and ability to understand the technical requirements of the business, the inherent risks and the management process required to perform his role as a director of the Company effectively.

(c) Whether the candidate has the commitment to effectively fulfill the role and responsibilities as a director, having regard to his existing directorships and other commitments.

(d) Whether the candidate is likely to work constructively with the existing directors and contribute to the overall effectiveness of the Board.

(e) Whether the candidate complies with the Guidelines on Fit and Proper Criteria issued by BNM,

the relevant provisions under the Financial Services Act, 2013 and the provisions of the Listing Requirements governing the directors of listed issuer.

The Board will decide or approve the appointment of new director to the Board after considering the assessment and recommendations of the Nomination Committee.

1.9 Remuneration of Directors

The objective of the Group’s remuneration policy is to attract, retain and motivate directors of the necessary calibre, expertise and experience to lead and manage the Group effectively. The remuneration of the Managing Director and Executive Director are linked to the corporate and individual performance.

The Board has established a formal and transparent process for approving the remuneration of Non-Executive Directors and the Managing/Executive Directors. The Remuneration Committee is responsible for reviewing and approving the remuneration packages of the Managing/Executive Directors; and also reviewing the directors’ fees of the Non-Executive Directors and making the recommendations on the same to the Board for endorsements. The Directors’ fees for Non-Executive Directors are then tabled for the approval by the shareholders. The quantum of fixed fee takes into consideration of the directors’ increased fiduciary duties and responsibilities, accountability to shareholders, memberships in Board Committees and performance and scope of business of the Group.

The aggregate remuneration of Directors of the Company in respect of the financial year ended 31

December 2015 categorised into appropriate components is as follows:-

Number of Directors 2015 2014 Executive Non-Executive Executive Non-Executive Directors Directors Directors DirectorsRM50,001 to RM100,000 - 1 - 1

RM100,001 to RM150,000 - 2 - 2

RM250,001 to RM300,000 - - 1 -

RM300,001 to RM350,000 1 - - -

RM450,001 to RM500,000 1 - - -

RM600,001 to RM650,000 - - 1 -

RM2,250,001 to RM2,300,000 - - 1 -

RM2,300,001 to RM2,350,000 1 - - -

Directors of the Company

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1.10 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 a nine-year policy for Independent Directors of the Company. The two Independent Directors of the Company had served the Board since 2012, which is less than 9 years.

1.11 Time Commitment and Board Meetings

The Board is satisfied with the level of commitment given by the Directors towards fulfilling their roles and responsibilities as Directors. The directorships held by the Board members in public listed companies do not exceed the number of directorships as prescribed under the Listing Requirements. Directors are required to notify the Board for accepting any new appointment as director in other companies. These would ensure that the Directors’ commitment and time are focused on the affairs of the Group to enable them to discharge their duties effectively.

The details of attendance of the Directors at the Board Meetings held in 2015 are set out below:-

Name of Directors Total Number of Board Meetings Attended in 2015

Tan Sri Dato’ Dr Yahya bin Awang 5/5

Tan Sri Dato’ Surin Upatkoon 5/5

Mr Ng Kok Cheang (Resigned on 19.8.2015) 4/4

Dato’ Lim Tiong Chin 5/5

Mr Kuah Hun Liang 5/5

Ms Ivevei Upatkoon 5/5

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.

1.12 Training

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.



Directors

Tan Sri Dato’ Dr Yahya bin Awang

Tan Sri Dato’ Surin Upatkoon

Dato’ Lim Tiong Chin

Mr Kuah Hun Liang

Ms Ivevei Upatkoon

Title of Training

• Leadership for Sustainable Growth by the Iclif Leadership and Governance Center (“Iclif”)

• International Directors Summit 2015 by Malaysian Directors Academy

• Governance, Directors’ Duties and Regulatory Updates Seminar 2015 by the Malaysian Institute of Corporate Governance

Leadership for Sustainable Growth by Iclif

Leadership for Sustainable Growth by Iclif

• Leadership for Sustainable Growth by Iclif• FIDE Forum : Invitation to Industry Consultation• Capital Market Director’s Programme• FIDE Forum: 5th Distinguished Board Leadership

Series: “Beyond Compliance to Growth – Board’s Strategy in Cultivating Real Growth within a Conductive Governance Environment”

• Rehda Youth July’s Study Tour by Rehda• Leadership for Sustainable Growth by Iclif

During the year 2015, the Nomination Committee has assessed the training requirements of the directors. The details of the training attended by the Directors in 2015 are set out below:-

2. ACCOUNTABILITY, AUDIT AND RISK MANAGEMENT

2.1 Financial Reporting

The Board is committed to provide a balanced, clear and meaningful assessment of the financial performance and prospects of the Group in the interim financial statements and annual financial statements to shareholders.

The Board, assisted by the Audit Committee, oversees the financial reporting process of the Group. The Audit Committee reviews the integrity and reliability of the Group’s interim and annual financial statements as well as ensuring that these financial statements comply with the relevant accounting and regulatory requirements prior to recommending for the Board’s approval. The Audit Committee also reviews the appropriateness of the Group’s accounting policies and the changes to these policies.

2.2 Relationship with External Auditors

The Audit Committee has established a formal and transparent relationship with external auditors. The Audit Committee had met with external auditors once without the presence of the Management to discuss the Group’s audited financial statements for the year ended 31 December 2015 and any matters arising from the audit.

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The services provided by the external auditors include statutory audit and non-audit services. The details of the non-audit services provided by the external auditors are set out in Additional Disclosures section in this Annual Report. The terms of engagement for the services rendered by the external auditors are reviewed by the Audit Committee and approved by the Board. During the year, the Audit Committee had reviewed the proposed fees for audit and non-audit services and subsequently, recommended to the Board for approval. In their review, the Audit Committee ensured that the independence and objectivity of the external auditors are not compromised.

The external auditors are required to rotate the engagement partner responsible for audit of the financial statements of the Company/Group every five years. The current engagement partner for the audit of the financial statements of the Company has been in place since 2013. The external auditors have also given a written assurance to the Audit Committee in relation to the audit of the Group’s audited financial statements that they are independent in accordance with the By-laws of the Malaysian Institute of Accountants.

The Audit Committee has assessed/reviewed the performance and independence of the external auditors of the Company based on the criteria approved by the Board. The assessment process by the Audit Committee is conducted through the completion of a detailed questionnaire covering the factors/criteria as set out below (after obtaining feedbacks from the finance department who regularly interacts with the external auditors):

(a) The engagement partner’s qualification, knowledge and experience to perform his duty as external auditor.

(b) The external auditors’ quality control processes and its process for internal review of accounting judgements.

(c) The number of man days spent by the engagement and concurring partners in the audit of financial statements of the Company/Group after taking into consideration of the size and complexity of the Company’s/Group’s operations.

(d) The level of engagement between the external auditors and the Audit Committee and whether the external auditors have provided independent views in the discussions with the Audit Committee.

(e) Whether the external auditors have updated the Audit Committee on significant issues concerning the Group, new developments (including the applicability of new and significant accounting standards) and the impacts on the Group.

(f) Whether the external auditors have provided any constructive observations and recommendations in areas which required improvements particularly with regard to the internal control system relating to financial reporting of the Group.

(g) Whether the external auditors have met its performance targets in terms of the following:

(i) The adequacy of the external auditors’ scope of audit; (ii) The external auditors’ effectiveness in planning and conduct of their audit of the financial

statements of the Company/Group;(iii) The external auditors’ performance against the agreed duration set by the Company;(iv) The timeliness of the external auditors’ response to the issues raised by the Company.

(h) The external auditors’ level of commitment towards ensuring their staff’s continuity on the audit of the financial statements of the Company and the Group.

(i) Whether the provision of non-audit services by the external auditors has impaired the external auditors’ objectivity, judgement or independence.

(j) Whether the external auditors have shown to be independent and objective in their audit of the financial statements of the Company/Group.

The Audit Committee is satisfied with the performance, technical competence and audit independence of the external auditors. The Audit Committee is of the view that the provision of non-audit services by the external auditors did not impair their objectivity, judgment or independence.



2.3 Risk Management and Internal Controls

The Board has the overall responsibility of establishing a sound system of internal control and in determining the Group’s level of risk tolerance as well as to continuously identify, assess and monitor principal risks faced by the Group to safeguard shareholders’ investments and the Group’s assets.

The Board is assisted by the Audit Committee and the Risk Management Committee to periodically review the effectiveness of the risk management processes and the system of internal controls of the Group. The review covers the financial, operational, compliance, controls and risk assessment including ensuring that adequate infrastructure, resources and systems are in place for effective risk management of the Group.

The Statement of Risk Management and Internal Control, which provides an overview of the state of risk management and internal control within the Group, is set out in the Annual Report.

2.4 Internal Audit Function

The Company has established a Group Internal Audit Department (“GIAD”) to assist the Board in maintaining a sound system of risk management and internal control for purposes of safeguarding the Group’s interest and assets. The GIAD reports independently to the Audit Committee on their audit findings and the steps taken by the Management to resolve/rectify the findings. The GIAD determines the frequency of audit on each business or operational units by the level of risk assessed and greater focus is set for higher risk areas.

The Audit Committee is satisfied that the GIAD has an appropriate standing within the Group to perform its function effectively. The Head of GIAD is an associate member of the Chartered Institute of Management Accountants and Institute of Internal Auditors. The GIAD carries out its audit activities in accordance with the Standards for Professional Practice of Internal Auditing set by the Institute of Internal Auditors Malaysia.

3. INVESTORS RELATION AND SHAREHOLDERS COMMUNICATION

3.1 Annual General Meeting

The Company’s Annual General Meetings remain the principal forum for dialogue and interactions with shareholders. During the Annual General Meetings, shareholders are accorded the opportunity and time to ask questions regarding the resolutions being proposed at the meeting and also on matters relating to the affairs, operations and prospects of the Group. The Board members, Senior Management as well as the Group’s external auditors are available to respond to shareholders’ queries.

In accordance with the recommendation of the Code, the Company has always make preparations for poll voting for substantive resolutions at the general meetings.

3.2 Communication with Shareholders/Investors

The Board recognises the importance of providing investors and shareholders with timely and accurate information on the Group’s major developments through disclosures and/or announcements made to Bursa Malaysia Securities Berhad (“Bursa Securities”). The Group announces its performance to Bursa Securities on a quarterly basis and the Annual Report is issued on an annual basis to provide shareholders and investors with information on the Group’s business review, financial performance and governance framework. The Company has established a website, www.mphbcap.com.my, which the shareholders and members of the public can access for corporate information and new events relating to the Group.

30

3.3 Investors’ Relations

The Company has, from time to time, held meetings and dialogues with investors and research/investment analysts to convey information regarding the Group’s progress, performance and business strategies. Press interviews were also conducted on significant corporate developments to keep the investing community and shareholders updated on the major developments of the business of the Group.

The Board has identified and appointed Tan Sri Dato’ Dr Yahya bin Awang, the Chairman of the Board, to whom shareholders may direct any concerns in respect of the Group.

COMPLIANCE STATEMENT

The Board is satisfied that the Company has complied substantially with the principles and recommendations of the Code.

This Corporate Governance Statement was approved by the Board on 31 March 2016.


31ADDITIONAL CORPORATE DISCLOSURES

1. Utilisation of Proceeds

During the financial year ended 31 December 2015, there were no corporate proposals in which proceeds had been raised.

2. Share Buy-Back

The Company did not undertake any share buy-back during the financial year ended 31 December 2015.

3. Options or Convertible Securities

The Company did not issue any options and convertible securities during the financial year ended 31 December 2015.

4. Depository Receipt Programme

The Company did not sponsor any depository receipt programme during the financial year ended 31 December 2015.

5. Sanctions and/or Penalties Imposed

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors or management by the relevant regulatory authorities during the financial year ended 31 December 2015.

6. Non-Audit Fees

During the financial year ended 31 December 2015, the following non-audit fees were paid to the Group’s external auditors, Messrs Ernst & Young (“EY”):-

Non-Audit Services Rendered By EY Subsidiaries (RM) Company (RM)

(a) Review of Directors’ Statement on Risk Management and Internal Control - 7,250

(b) Review of post Goods and Services Tax (“GST”) Implementation 8,000 -

(c) Validation for Differential Levy System and Returns on Calculation of Premium to Perbadanan Insurans Deposit Malaysia 8,500 -

Total 16,500 7,250

7. Variation in Results There were no variances of 10% or more between the audited results for the financial year ended 31

December 2015 and the unaudited results previously announced.

8. Profit Guarantee

There was no profit guarantee received by the Company during the financial year ended 31 December 2015.

9. Material Contracts Involving Directors’ and Major Shareholders’ Interest

Save as disclosed in the Audited Financial Statements of the Group and the Company for the year ended 31 December 2015, none of the directors and major shareholders of the Company have any material contracts with the Company and/or its subsidiaries.

32 DIRECTORS’ RESPONSIBILITY STATEMENT

The Directors are required by the Company Act 1965 (“CA”) to prepare the financial statements for each financial year which have been drawn up in accordance with the applicable Malaysian Financial Reporting Standards, International Financial Reporting Standards, the requirements of the CA and the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.

The Directors are responsible to ensure that the financial statements give a true and fair view of the state of affairs of the Group and the Company at the end of the financial year, and of the results and cash flows of the Group and the Company for the financial year.

In preparing the financial statements, the Directors have:-

• adopted appropriate and relevant accounting policies and applied consistently;• made judgments and estimates based on reasonableness and prudence; and• prepared the financial statements on a going concern basis.

The Directors are responsible to ensure that the Group and the Company keep accounting records which disclose with reasonable accuracy the financial position of the Group and of the Company which enable them to ensure that the financial statements comply with the CA.

The Directors are responsible for taking reasonable steps to safeguard the assets of the Group and the Company, to detect and prevent fraud and other irregularities.

33AUDIT 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 2015, where a total of five(5) meetings were held, are as follows:-

Name Designation/Directorship Number of meetings attended Mr Kuah Hun Liang Chairman/Independent Non-Executive Director 5/5

Tan Sri Dato’ Dr Yahya bin Awang Member/Independent Non-Executive Director 5/5

Dato’ Lim Tiong Chin Member/Non-Independent Non-Executive Director 5/5

The composition of the Audit Committee complies with Paragraph 15.09 of the Main Market Listing Requirements (“MMLR”) of Bursa Malaysia Securities Berhad (“Bursa Securities”).

The Audit Committee Meetings were appropriately structured through the use of agenda, which were distributed to members prior to the meeting.

The Managing Director, the Chief Operating Officer, the Head of Finance, the Head of Group Internal Audit and the Company Secretary were present by invitation at all the meetings. The representatives of the external auditors, Messrs Ernst & Young, were present as and when invited by the Audit Committee.

TERMS OF REFERENCE

COMPOSITION

(a) The Audit Committee shall be appointed by the Directors from amongst their members (pursuant to a resolution of the Board of Directors) which fulfills the requirements as prescribed under Paragraph 15.09 of the MMLR and paragraph 7.0 of Practice Note 13 of the MMLR.

(b) No alternate director shall be appointed as a member of the Audit Committee.

(c) Any vacancy, which affects the composition, must be filled within three (3) months.

(d) The members of the Audit Committee shall elect a Chairman, from among their members, who shall be an Independent Non-Executive Director.

(e) The Company Secretary of MPHB Capital shall serve as Secretary of the Audit Committee (“Secretary”).

(f) The Board of Directors shall review the term of office and performance of the Audit Committee and each member no less than once in every three (3) years.

34

MEETINGS AND REPORTING PROCEDURES

(a) The Audit Committee shall meet not less than four (4) times a year, with each meeting planned to coincide with key dates in the Company’s financial reporting cycle. The majority of Audit Committee members present must be Independent Directors to form a quorum to the meeting.

(b) The Audit Committee shall meet with the external auditors without the presence of Executive Board members and employees of the Company, whenever deemed necessary.

(c) The Secretary is responsible for :-

(i) drawing up the agenda together with the Chairman, and circulating it, supported by explanatory documentation, to the committee members prior to each meeting;

(ii) recording attendance of all members and invitees;

(iii) recording all proceedings, and preparing and keeping minutes of all meetings; and

(iv) circulation of the minutes to all Board members at each Board Meeting.

AUTHORITY

The Audit Committee shall have the authority to:

(a) investigate any matter within its terms of reference;

(b) have the resources which are required to perform its duties;

(c) have full and unrestricted access to any information pertaining to the Company;

(d) have direct communication channels with the external auditors and person(s) carrying out the internal audit function or activity;

(e) obtain independent professional advice it considers necessary;

(f) convene meetings with the external auditors, the internal auditors or both, excluding the attendance of other Directors and employees of the Company, whenever deemed necessary;

(g) report promptly any breaches of the MMLR, which have not been satisfactorily resolved by the Board, to the Bursa Securities; and

(h) convene a meeting, upon request of the external auditors, to consider any matter the external auditors believe should be brought to the attention of the Directors or shareholders.

FUNCTIONS

The Audit Committee shall undertake the following responsibilities and duties and report to the Board of Directors:

(a) Review the quarterly results and year-end financial statements, prior to the approval of the Board of Directors, focusing particularly on:

(i) changes in or implementation of major accounting policies and practices;

(ii) significant and unusual events;

(iii) going concern assumptions; and

(iv) compliance with accounting standards, regulatory and other legal requirements.

AUDIT COMMITTEE REPORT (cont’d)

35AUDIT COMMITTEE REPORT (cont’d)

(b) Review/recommend the nomination, appointment, re-appointment and performance of external auditors, the audit fee and any question of resignation or dismissal before making recommendations to the Board; and evaluate if there is reason (supported by facts) to believe that the Company’s external auditors are not suitable for re-appointment.

(c) Review/discuss with the external auditors:

(i) the audit scope and plan, and ensure co-ordination where more than one audit firm is involved;

(ii) its evaluations of the system of internal control;

(iii) the results of the interim (if any) and final audits and the Management’s response thereto;

(iv) problems and reservations arising from the interim (if any) and final audits, and any matter the auditors may wish to discuss (in the absence of the management, where necessary);

(v) the assistance given by the employees to the external auditors, and any difficulties encountered in the course of the audit work.

(d) Establish an internal audit function which is independent of the activities it audits and oversee its function as follows:

(i) the Head of Internal Audit shall report directly to the Audit Committee;

(ii) review the adequacy of the internal audit scope, functions, competency and resources of the internal audit functions and that it has the necessary authority to carry out its work;

(iii) review the internal audit department’s progress of audit activities, the results of the internal audit activities or investigation undertaken, and whether or not appropriate action is taken on the recommendations of the internal audit function;

(iv) review any appraisal or assessment of the performance of members of the internal audit function;

(v) approve any appointment, transfer or termination of senior staff members of the internal audit function and take cognizance of resignation and providing the resigning members an opportunity to submit reasons for resigning.

(e) Review any related party transaction and conflict of interest situation that may arise within the Company or Group including any transaction, procedure or course of conduct that raise questions of management integrity.

(f) Direct, and where appropriate, supervise any special projects or investigation considered necessary, and review investigation reports on any major defalcations, frauds and thefts.

(g) Carry out any such other functions as authorised by the Board of Directors.

SUMMARY OF ACTIVITIES OF AUDIT COMMITTEE

During the financial year and up to the date of this report, the Audit Committee had carried out its duties in accordance with its Terms of Reference.

The activities undertaken by the Audit Committee were as follows:

(a) Reviewed the unaudited interim financial statements of the Group before recommending them for approvals by the Board. These reviews take into consideration the accounting principles, policies and practices adopted in the Company’s/Group’s financial statements and the adequacy of their disclosure in the financial statements.

36

(b) Reviewed the annual audited financial statements of the Group with the external auditors to ensure compliance with applicable approved accounting standards before recommending them to the Board for approval. This review takes into consideration the accounting principles, policies and practices adopted in the Company’s/Group’s financial statements, the estimates and judgements of the Management, and whether the relevant items/matters are adequately disclosed in the financial statements.

The accounting issues considered by the Audit Committee in relation to the audited financial statements of the Group include the following:

(i) The accounting treatments in respect of the disposal of 49% equity interest in MPI Generali Insurans Berhad (formerly known as Multi-Purpose Insurans Bhd) (“MPI Generali”), and the valuation of the call and put options granted to Generali Asia N.V. in respect of the shares in MPI Generali.

(ii) The Management’s assessments of any indication of impairment of investment properties, goodwill and intangible assets.

(iii) The Management’s assessments of impairment on financial assets/investments (i.e. Available for Sale and Fair Value Through Profit or Loss) and whether these investments have been recognised appropriately in the financial statements in accordance with Malaysian Financial Reporting Standards

(“MFRS”) 139 and that appropriate disclosures have been made in accordance with MFRS 7.(iv) The claims and premium liabilities estimation of MPI Generali.(v) The adequacy of the provision made by Management in respect of taxation and deferred tax.

(c) Reviewed the Audit Planning Memorandum of the external auditors, in terms of the nature of the audit

procedures and timeline for completion of the audit of the financial statements, significant accounting and auditing issues, impact of new or proposed changes in the accounting standards and regulatory requirements for the financial year 2016.

(d) Reviewed and approved the Group Internal Audit Department’s (“GIAD”) Annual Audit Plan in ensuring that adequate scope and comprehensive coverage on the audit activities and principal risk areas are adequately identified and covered.

(e) Reviewed the adequacy of staff and resources within the GIAD to ensure that the internal audit function of the Group is carried out effectively.

(f) Reviewed the performance of the GIAD. The Audit Committee is satisfied with the performance of the GIAD. The GIAD has carried out and completed the audit assignments in a timely manner. The GIAD has also responded to the issues raised by the Audit Committee in a timely manner and it has provided constructive observations and recommendations in areas which required improvements in the internal control system of the Group. The GIAD has shown to be objective and independent in carrying out the internal audit function of the Group.

(g) Met with the external auditors without the presence of any Executive Board members and Management, to discuss issues arising from the final audits, or any other matters the auditors may wish to discuss, including the level of assistance provided by the Group’s employees to the auditors, and any difficulties encountered in the course of the audit work, including any restrictions on the scope of activities or access to required information. There were no areas of concern raised by the external auditors that needed to be escalated to the Board.

(h) Reviewed the independence, objectivity and effectiveness of the external auditors, having regard to several factors, including the qualification, experience and knowledge of the engagement partner and audit staff, the resources of the audit firm, the external auditors’ quality control processes and the level of non-audit services rendered by external auditors.

The Audit Committee is of the view that the provision of non-audit services by the external auditors did not impair the external auditors’ objectivity, judgment or independence. The external auditors have assured the Audit Committee that they are independent throughout the audit engagement for 2015 in accordance with the By-laws of the Malaysian Institute of Accountants. The Audit Committee is satisfied with the performance, technical competency and audit independence of the external auditors and it has made recommendations to the Board for their re-appointment as external auditors for the financial year ending 31 December 2016.

AUDIT COMMITTEE REPORT (cont’d)

37AUDIT COMMITTEE REPORT (cont’d)

(i) Reviewed and deliberated on the GIAD’s progress of audit activities and the internal audit reports of the Group, which highlighted issues, recommendations and Management’s responses to ensure appropriate actions were taken to improve the system of internal controls based on improvement opportunities identified in the internal audit reports.

(j) Reviewed with the external auditors on the Statement on Risk Management and Internal Control for inclusion in the annual report prior to Board’s approval.

(k) Reviewed the Audit Committee Report for inclusion in the annual report prior to Board’s approval.

SUMMARY OF ACTIVITIES OF INTERNAL AUDIT FUNCTION FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015

During the financial year ended 31 December 2015, the Internal Audit Department carried out the following activities:-

(a) Prepared annual audit plan for the review and approval of the Audit Committee. The annual audit plan was prepared using a risk-based methodology, including input from the Chairman of Audit Committee and Senior Management.

(b) Regularly performed risk based audits, which covered reviews of the internal control system, risk management, accounting and management information system. The reviews evaluated the following:

(i) Adequacy and effectiveness of the system of internal controls;(ii) Adequacy of control and reporting systems and compliance with approved risk management policies

and procedures;(iii) Reliability, integrity, accuracy, completeness and timeliness of financial and operational information;(iv) Adequacy of control to safeguard the Group’s assets; (v) Compliance with policies, standard operating procedures, guidelines, directives and laws;(vi) Level of commitment to Business Continuity Management (“BCM’) and overall preparedness against

the BCM Framework and regulatory requirements as well as adequacy and effectiveness of the Business Continuity Plan and Disaster Recovery Plan testing;

(vii) Effectiveness of the Information System in supporting the business activities and adequacy of the control measures.

(c) Conducted special review requested by Management.

(d) Issued audit reports to the Audit Committee and Management identifying weaknesses and issues as well as highlighting recommendations for improvements and followed up on matters raised.

The costs incurred for the internal audit function of the Group for financial year ended 31 December 2015 was RM0.995 million. (For the financial year ended 31 December 2014, the cost was RM0.453 million)

38 STATEMENT ON RISK MANAGEMENT AND INTERNALCONTROL

Responsibility

The Board of Directors (“Board”) recognises the importance of maintaining a sound internal control system and a robust risk management framework for good corporate governance; with the objective of safeguarding the shareholders’ investment, the interest of customers, regulators, employees and the Group’s assets. The Board affirms its overall responsibility for reviewing the adequacy and the effectiveness of the Group’s risk management and internal control system. This includes reviewing the adequacy and integrity of financial, operational and compliance controls and risk management procedures.

The Management assists the Board in the implementation of the Board’s framework, policies and procedures on risk and control by identifying, assessing, monitoring and reporting risks and internal control; as well as taking proper actions to address the risks.

The Board has received assurance from the Managing Director and Head of Finance & Administration that the Group’s risk management and internal control systems have operated adequately during the year under review, in all material aspects. The assurance has been given based on the internal audit function, management letters provided by external auditors, reviews performed by management and various Board Committees as well as reliance on confirmations by Management.

However, it should be noted that such system, by its nature, manages the Group’s key areas of risk within acceptable risk profile rather than eliminates the risk of failure of achieving the Group’s objectives and therefore can provide only reasonable and not absolute assurance against material misstatement, loss or fraud.

The Board is committed and will continue to take measures to strengthen the risk management and internal control environment of the Group based on the Statement on Risk Management and Internal Control: Guidelines for Directors of Listed Issuers. The Board with the assistance of Management conducts regular review of the current systems in the Company, including the assurance process to strengthen the internal controls and risk management in the Company.

Key Risk Management and Internal Control Processes

1. Risk Management

• Risk management is firmly embedded in the Group’s culture, processes and structure of the Company. • Enterprise Risk Management Framework (“the ERMF”) was established to inculcate the discipline

to manage risks in a formalized and comprehensive manner; where structured risk management process on event identification, risk assessment, risk response, control activities, monitoring and reporting are defined to ensure standardized approach being adopted across the Group on risk management.

• The Board is assisted by the Group Risk Management Committee (“the GRMC”) to oversee the overall risk management of the Group.

• The Chief Executive Officer (“CEO”), Chief Operating Officer (“COO”) and Senior Management of the companies under the Group assist the GRMC in managing the specific risks under each company.

• During the monthly management meetings attended by the Group Managing Director, Senior Management, CEO and COO of the companies under the Group, risks related to strategy, operational, financial and external environment are discussed and dealt with action plans.

• Significant risks affecting the achievement of the Group’s objectives which are discussed in the monthly management meetings are reported to the Board. The risks for financial year 2015 were as follow: - MPI Generali Insurans Berhad (“MPI Generali”), our major subsidiary’s insurance business is

operating in a highly regulated environment. Its continuity is subject to the company maintaining its licence and complying with all regulatory requirements;

- MPI Generali’s ability to compete effectively in the general insurance industry depends on its distribution channels;

39

- The Group is dependent on its key management and key employees for its growth and sustainability;

- The return from our investment in properties is dependent on the performance of the Malaysian property market and our joint venture partners; and

- Our investment properties could be subjected to compulsory acquisition.

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.

• 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 Group Managing Director and attended by Management, are held to discuss the various aspects of the business, financial and operational performance of the Group. Key matters affecting the Group are escalated to the Board.

• The Board holds regular discussions with the Audit Committee and Management and considers their reports on matters relating to internal controls and deliberates on their recommendations for implementation.

• The Group places much emphasis on human capital management and talent management with the objectives of ensuring staff of all levels are adequately trained and competent to carry out their duties and responsibilities towards achieving the Group’s objectives.

• The Management team undertakes site visits to the operating units and communicates with various levels of staff to gauge the effectiveness of the strategies discussed and implemented as well as understand their problems and concerns with regard to daily operations. This is to ensure that a transparent and open channel of communication is maintained and to enable prompt corrective actions taken for any deficiencies noted.

STATEMENT ON RISK MANAGEMENT AND INTERNALCONTROL (cont’d)

40 STATEMENT ON RISK MANAGEMENT AND INTERNALCONTROL (cont’d)

• The Group has in place a Whistle Blowing Policy that is approved by the Board. The policy outlines the Group’s commitment towards enabling the employees to raise concerns in a responsible manner regarding any wrong doings or malpractices without being subject to victimization or discriminatory treatment, and to have such concerns properly investigated. All the disclosures made under the Policy will be handled with strict confidence. The Policy promotes a culture of honesty, openness and transparency within the Group.

Board Assessment

Taking into consideration the assurance from the Managing Director and Head of Finance & Administration and input from the relevant assurance providers, the Board is of the view that the Group’s risk management and internal control systems to safeguard shareholders’ investments and Group’s assets are operating adequately and effectively in all material aspects, during the year under review. There will be continual focus on measures to protect and enhance shareholder value and business sustainability.

Review of this Statement

As required by Para 15.23 of the Main Market Listing Requirements, the external auditors have reviewed the Statement on Risk Management and Internal Control. This review was performed in accordance with Recommended Practice Guide (“RPG”) 5 issued by the Malaysian Institute of Accountants (“MIA”). Based on the review, the external auditors have reported to the Board that nothing has come to their attention that causes them to believe that the statement is inconsistent with their understanding of the processes adopted by the Board in reviewing the adequacy and integrity of the risk management and internal control system within the Group.

RPG 5 does not require the external auditors to consider whether the Statement on Risk Management and Internal Control covers all the risks and controls, or to form an opinion on the adequacy and effectiveness of the Group’s risk management and internal control system including the assessment and opinion by the Board and Management thereon.

This Statement is made in accordance to the resolution of the Board dated 31 March 2016.

41

Directors’ Report

Statement by Directors

Statutory Declaration

Independent Auditors’ Report

Statements of Comprehensive Income

Statements of Financial Position

Statements of Changes in Equity

Statements of Cash Flows

Notes to the Financial Statements

42 - 45

46

46

47 - 48

49 - 50

51 - 52

53 - 54

55 - 57

58 - 152

directors’report and auditedfinancial statements

42 Directors’ report

The Directors have pleasure in presenting their report together with the audited financial statements of the Group and of the Company for the financial year ended 31 December 2015.

Principal activities The principal activities of the Group consist of:

- investment holding and trading;- operation of general insurance business;- provision of leasing, hire purchase and general loan financing services;- operation of hotels; and- property development and property investment

The principal activities of the Company are that of investment holding and provision of management services. There have been no significant changes in the nature of the principal activities during the financial year.

Results Group Company RM’000 RM’000

Profit for the year 86,554 150

Attributable to:Owners of the Company 64,566Non-controlling interests 21,988

86,554

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

In the opinion of the Directors, the results of the operations of the Group and of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature other than the disposal of 49% shareholding in the insurance subsidiary as disclosed in Note 31 to the financial statements.

Dividend

No dividend has been paid or declared by the Company since the end of the previous financial year. The Directors do not recommend the payment of any dividend in respect of the current financial year.

43Directors’ report (cont’d)

Directors

The Directors of the Company in office since the date of the last report and at the date of this report are:

Tan Sri Dato’ Dr Yahya bin AwangTan Sri Dato’ Surin UpatkoonMs Ivevei Upatkoon Dato’ Lim Tiong ChinMr Kuah Hun Liang Mr Ng Kok Cheang (resigned on 19 August 2015)

Directors’ benefits

Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the Directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate.

Since the end of the previous financial year, no Director has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the Directors as shown in Note 6(b) to the financial statements or the fixed salary of a full-time employee of the Company) by reason of a contract made by the Company or a related corporation with any Director or with a firm of which the Director is a member, or with a company in which the Director has a substantial financial interest, except as disclosed in Note 30 to the financial statements.

Directors’ interests

According to the register of Directors’ shareholdings, the interests of Directors in office at the end of the financial year in shares in the Company and its related corporations during the financial year were as follows:

Number of ordinary shares of RM1.00 each As at As at 1.1.2015 Acquired Disposed 31.12.2015

Shares in the Company Direct Interest:Tan Sri Dato’ Dr Yahya bin Awang 101,100 - - 101,100Ms Ivevei Upatkoon 156,200 - - 156,200Dato’ Lim Tiong Chin 508,000 - - 508,000Mr Kuah Hun Liang 241,100 - - 241,100

Indirect/Deemed Interest: Tan Sri Dato’ Surin Upatkoon 261,921,093 (a) - - 261,921,093 (b)

Dato’ Lim Tiong Chin 4,160,000 (c) 4,780,000 - 8,940,000 (d)

44 Directors’ report (cont’d)

Directors’ interests (cont’d)

(a) 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.

(b) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings of more than 15% in Cypress Holdings Limited and Pinjaya Sdn. Bhd. and indirect interest held through his daughters, Ivevei Upatkoon and Maythini Upatkoon.

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.

(c) 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.

(d) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 held through his shareholdings of more than 15% in Keetinsons Sendirian Berhad, T.C. Holdings Sendirian Berhad and Trade Key Investments Limited.

Other statutory information

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

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

(ii) to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise.

(b) At the date of this report, the Directors are not aware of any circumstances which would render:

(i) the amount written off for bad debts or the amount of the provision for doubtful debts in the financial statements of the Group and of the Company inadequate to any substantial extent; and

(ii) the values attributed to the current assets in the financial statements of the Group and of the Company misleading.

(c) At the date of this report, the Directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Group and of the Company misleading or inappropriate.

(d) At the date of this report, the Directors are not aware of any circumstances not otherwise dealt with in this report or financial statements of the Group and of the Company which would render any amounts stated in the financial statements misleading.

45Directors’ report (cont’d)

Other statutory information (cont’d)

(e) As at the date of this report, there does not exist:

(i) any charge on the assets of the Group or of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or

(ii) any contingent liability of the Group or of the Company which has arisen since the end of the financial year.

(f) In the opinion of the Directors:

(i) no contingent or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Group or of the Company to meet their obligations when they fall due. For the purpose of paragraphs (e) (ii) and (f) (i), contingent and other liabilities do not include liabilities arising from contracts of insurance underwritten in the ordinary course of business of the Group’s insurance subsidiary; and

(ii) no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Group or of the Company for the financial year in which this report is made.

(g) Before the statements of financial position and statements of comprehensive income of the Group and the Company were made out, the Directors took reasonable steps to ascertain that there was adequate provision for insurance liabilities in respect of the insurance subsidiary in accordance with the valuation methods specified in the Risk-Based Capital Framework for insurers issued by Bank Negara Malaysia.

Significant events during the financial year

Significant events during the financial year are disclosed in Note 31 to the financial statements.

Auditors

The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the Directors dated 31 March 2016.

Tan Sri Dato’ Surin Upatkoon Tan Sri Dato’ Dr Yahya bin Awang

46 statement by Directorspursuant to section 169(15) of the companies act, 1965

We, Tan Sri Dato’ Surin Upatkoon and Tan Sri Dato’ Dr Yahya bin Awang, being two of the Directors of MPHB Capital Berhad, do hereby state that, in the opinion of the Directors, the accompanying financial statements set out on pages 49 to 152 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia as to give a true and fair view of the financial position of the Group and of the Company as at 31 December 2015 and of their financial performance and cash flows for the year then ended. The information set out in Note 38 on page 152 to the financial statements have been prepared in accordance with the Guidance on Special Matter 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants and directive of Bursa Malaysia Securities Berhad.

Signed on behalf of the Board in accordance with a resolution of the Directors dated 31 March 2016.

Tan Sri Dato’ Surin Upatkoon Tan Sri Dato’ Dr Yahya bin Awang

I, Tan Sri Dato’ Surin Upatkoon, being the Director primarily responsible for the financial management of MPHB Capital Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 49 to 152 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, 1960.

Subscribed and solemnly declared by the abovenamed Tan Sri Dato’ Surin Upatkoonat Kuala Lumpur in the Federal Territoryon 31 March 2016. Tan Sri Dato’ Surin Upatkoon Before me, M. SIVANASON (Licence No. W590)Commissioner for Oaths

statutory Declaration pursuant to section 169(16) of the companies act, 1965

47inDepenDent auDitors’ report to the members of mphb capital berhaD (incorporateD in malaysia)

Report on the financial statements

We have audited the financial statements of MPHB Capital Berhad, which comprise the statements of financial position as at 31 December 2015 of the Group and of the Company, and the statements of comprehensive income, statements of changes in equity and statements of cash flow of the Group and of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 49 to 152.

Directors’ responsibility for the financial statements

The directors of the Company are responsible for the preparation of financial statements so as to give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company’s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of the Group and of the Company as of 31 December 2015 and of their financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia.

48

Report on other legal and regulatory requirements

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

(a) In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and its subsidiaries have been properly kept in accordance with the provisions of the Act.

(b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with the financial statements of the Company are in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactory information and explanations required by us for those purposes.

(c) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and did not include any comment required to be made under Section 174(3) of the Act.

Other reporting responsibilities

The supplementary information set out in Note 38 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No.1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants (“MIA Guidance”) and the directive of Bursa Malaysia Securities Berhad. In our opinion, the supplementary information is prepared, in all material respects, in accordance with the MIA Guidance and the directive of Bursa Malaysia Securities Berhad.

Other matters

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.

Ernst & Young Yeo Beng YeanAF: 0039 No. 3013/10/16(J) Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia31 March 2016

inDepenDent auDitors’ report (cont’d)to the members of mphb capital berhaD (incorporateD in malaysia)

49statements of comprehensive incomefor the year enDeD 31 December 2015

Group Company Note 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Revenue 3 380,787 370,078 43,149 198,787 Cost of sales 4 (235,042) (243,261) - -

Gross profit 145,745 126,817 43,149 198,787 Other income 5 82,625 285,710 1,714 2,804 Administrative expenses (62,430) (55,594) (10,518) (7,578)Other expenses (57,292) (75,299) (33,032) (10,068)

Operating profit 6 108,648 281,634 1,313 183,945 Finance costs 7 (2,441) (4,137) (1,118) (4,768)Share of results of an associate (24) (11) - -

Profit before tax 106,183 277,486 195 179,177 Income tax expense 8 (19,629) (33,833) (45) (72)

Profit for the year 86,554 243,653 150 179,105

Other comprehensive lossItems that are or may be reclassified subsequently to profit or loss

Fair value reserves Net gain/(loss) arising during the year 685 (2,321) - - Net realised gains transferred to profit or loss (2,697) (5,394) - -

(2,012) (7,715) - - Tax effects 466 2,589 - -

Total other comprehensive loss for the year (1,546) (5,126) - -

Total comprehensive income for the year 85,008 238,527 150 179,105

50

Group Note 2015 2014 RM’000 RM’000

Profit attributable to:Owners of the Company 64,566 245,420 Non-controlling interests 21,988 (1,767)

86,554 243,653

Total comprehensive income attributable to: Owners of the Company 63,959 240,294 Non-controlling interests 21,049 (1,767)

85,008 238,527

Earnings per share attributable to owners of the Company (sen per share) Basic, for profit for the year 9 9.0 34.3

statements of comprehensive income (cont’d)for the year enDeD 31 December 2015

The accompanying notes form an integral part of the financial statements.

51statements of financial position as at 31 December 2015


AssetsNon-current assets Property, plant and equipment 10 81,570 84,266 1,104 1,459 Investment properties 11 832,125 748,661 - - Investment in subsidiaries 12 - - 1,231,034 1,197,486 Investment in an associate 13 515 539 - - Investment securities 14 396,964 327,656 - - Intangible assets 15 34,859 43,161 - - Deferred tax assets 25 1,561 1,300 - -

1,347,594 1,205,583 1,232,138 1,198,945

Current assetsInventories 16 269 231 - - Receivables 17 289,783 341,097 111,608 157,269 Reinsurance assets 18 434,278 443,946 - - Tax recoverable 720 5,689 58 - Investment securities 14 409,252 113,900 5,045 67,208 Cash and bank balances 19 532,180 481,714 20,542 3,227

1,666,482 1,386,577 137,253 227,704

Total assets 3,014,076 2,592,160 1,369,391 1,426,649

52


Equity and liabilitiesEquity attributable to owners of the Company Share capital 20 715,000 715,000 715,000 715,000 Share premium 296,091 296,091 296,091 296,091 Other reserves 21 42,104 42,711 - - Merger deficit 22 (28,464) (28,464) - - Retained profits 23 557,744 293,501 216,957 216,807

1,582,475 1,318,839 1,228,048 1,227,898 Non-controlling interests 34 198,766 13,620 - -

Total equity 1,781,241 1,332,459 1,228,048 1,227,898

Non-current liabilitiesBorrowings 24 4,997 26,848 - - Deferred tax liabilities 25 11,625 12,908 - - Derivative financial instruments 31 4,150 - - -

20,772 39,756 - -

Current liabilities Payables 26 253,224 276,883 141,343 198,730 Insurance contract liabilities 18 929,881 897,733 - - Borrowings 24 21,851 36,595 - - Tax payable 7,107 8,734 - 21

1,212,063 1,219,945 141,343 198,751

Total liabilities 1,232,835 1,259,701 141,343 198,751

Total equity and liabilities 3,014,076 2,592,160 1,369,391 1,426,649

statements of financial position (cont’d)as at 31 December 2015


53statements of changes in equityfor the year enDeD 31 December 2015

Attributable to owners of the Company Non-distributable Distributable Share Share Other Merger Retained Non- capital premium reserves deficit profits controlling Total (Note 20) (Note 21) (Note 22) (Note 23) Total interests equity Group RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

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)

Other comprehensive loss 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

At 1 January 2015 715,000 296,091 42,711 (28,464) 293,501 1,318,839 13,620 1,332,459

Other comprehensive loss for the year - - (607) - - (607) (939) (1,546)Profit for the year - - - - 64,566 64,566 21,988 86,554 Total comprehensive income for the year - - (607) - 64,566 63,959 21,049 85,008

Arising from increase in equity interests in subsidiaries - - - - 15,467 15,467 (15,467) -

Arising from partial disposal of equity interests in a subsidiary (Note 31) - - - - 184,210 184,210 179,564 363,774

At 31 December 2015 715,000 296,091 42,104 (28,464) 557,744 1,582,475 198,766 1,781,241

54

Attributable to owners of the Company Non- distributable Distributable Share Share Retained capital premium profits (Note 20) (Note 23) Total Company RM’000 RM’000 RM’000 RM’000 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 At 1 January 2015 715,000 296,091 216,807 1,227,898

Total comprehensive income for the year - - 150 150

At 31 December 2015 715,000 296,091 216,957 1,228,048

statements of changes in equity (cont’d)for the year enDeD 31 December 2015


55statements of cash flowsfor the year enDeD 31 December 2015

Group 2015 2014 RM’000 RM’000 Operating activities

Profit before tax 106,183 277,486 Adjustments for: Depreciation of property, plant and equipment 5,964 6,005 Depreciation of investment properties 1,770 1,770 Interest expense 2,441 4,137 Amortisation of premiums 95 7 Amortisation of intangible assets 816 616 Impairment loss on AFS financial assets 869 130 Bad debts written off 730 649 Property, plant and equipment written off 2 4 Allowance for impairment of receivables 4,731 6,311 Write back of allowance for impairment for loans and advances (20) (23) Write back of allowance for impairment of other receivables (10,134) - Share of results of an associate 24 11 Gain on disposal of: - property, plant and equipment (4) (56) - investment properties (2,497) (437) - asset held for sale - (195,862) Realised (gain)/loss on: - AFS financial assets (2,697) (5,394) - financial assets at FVTPL (2,347) 113 Reversal of impairment on investment properties (13,187) - Interest income (38,537) (33,012) Dividend income on quoted shares and unit trusts (6,033) (4,498) (Gain)/loss arising from fair value change in financial assets at FVTPL, net (443) 218

Operating cash flows before working capital changes 47,726 58,175 Changes in working capital: Inventories (38) (32) Receivables (19,072) (112,664) Reinsurance assets 9,668 (32,418) Insurance contract liabilities 32,148 81,529 Payables (22,016) (34,977)

Cash flows generated from/(used in) operations 48,416 (40,387)Income tax paid (17,365) (23,791)

Net cash flows generated from/(used in) operating activities 31,051 (64,178)

56

Group 2015 2014 RM’000 RM’000

Investing activities

Proceeds from disposals of: - property, plant and equipment 5 280 - investment properties 7,050 1,209 - asset held for sale - 226,057 - investment securities 345,246 238,075 Redemption of fixed income securities 15,399 13,523 Purchase of: - intangible assets (1,717) (893) - property, plant and equipment (3,271) (3,175) - investment properties (5,250) (7,152) - investment securities (722,794) (230,293)Net cash flows arising from partial disposal of equity interests in a subsidiary (Note 31) 374,845 - Proceeds from a derivative financial instrument 4,150 - Acquisition of non-controlling interests - (2)Net dividend received from quoted shares and unit trusts 6,033 4,498 Interest received 38,537 25,868 Interest paid (2,223) (3,597)

Net cash flows generated from investing activities 56,010 264,398

Financing activities Net repayment of borrowings (36,595) (29,928)Net movement in fixed deposits with maturity date of more than 3 months (10) (9)

Net cash flows used in financing activities (36,605) (29,937)

Net increase in cash and cash equivalents 50,456 170,283 Cash and cash equivalents at beginning of year 481,418 311,135

Cash and cash equivalents at end of year (Note 19) 531,874 481,418

statements of cash flows (cont’d)for the year enDeD 31 December 2015

57

Company 2015 2014 RM’000 RM’000

Operating activities

Profit before tax 195 179,177 Adjustments for: Depreciation of property, plant and equipment 414 476 Interest expense 1,118 4,768 Dividend income (40,385) (195,043) Interest income (1,381) (2,769) Realised (gain)/loss on financial assets at FVTPL (24) 41 (Gain)/Loss arising from fair value change in financial assets at FVTPL (309) 213 Impairment on investment in subsidiaries 27,252 4,647 Gain on disposal of property, plant and equipment - (35)

Operating cash flows before working capital changes (13,120) (8,525)Changes in working capital: Receivables 409 193 Payables 1,389 (41,888) Inter-company indebtedness (74,324) (78,709)

Cash flows used in operations (85,646) (128,929)Tax paid (124) (136)

Net cash flows used in operating activities (85,770) (129,065)

Investing activitiesProceeds from disposals of: - property, plant and equipment - 59 - investment securities 65,000 80,000Purchase of: - investment in subsidiaries - (2) - property, plant and equipment (59) (845) - investment securities (2,504) (147,462)Dividends received 40,385 195,043 Interest received 1,381 2,761 Interest expense (1,118) (4,768)

Net cash flows generated from investing activities 103,085 124,786

Net increase/(decrease) in cash and cash equivalents 17,315 (4,279)Cash and cash equivalents at beginning of year 3,227 7,506

Cash and cash equivalents at end of year (Note 19) 20,542 3,227

statements of cash flows (cont’d)for the year enDeD 31 December 2015


58

1. Corporate information

The Company was incorporated on 17 July 2012 as a private limited company under the name of MPHB Capital Sdn. Bhd.. The Company was converted into a public limited company and assume its present name on 23 July 2012. On 28 June 2013, the Company’s entire issued and paid-up share capital was listed on the Main Market of Bursa Malaysia Securities Berhad.

The principal activities of the Company are that of investment holding and provision of management services. The principal activities of the subsidiaries are as disclosed in Note 37. There have been no significant changes in the nature of the principal activities during the financial year.

The registered office and the principal place of business of the Company is located at 39th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur.

These financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the Directors on 31 March 2016.

2. Significant accounting policies

2.1 Basis of preparation

These financial statements of the Group and the Company have been prepared in accordance with Malaysian Financial Reporting Standards (“MFRS”), International Financial Reporting Standards (“IFRS”) and the requirements of the Companies Act, 1965 in Malaysia.

These financial statements have also been prepared on a historical cost basis, except for those financial instruments which have been measured at their fair values and insurance liabilities which have been measured in accordance with the valuation methods specified in the Risk-Based Capital Framework (“RBC Framework”) for insurers issued by Bank Negara Malaysia (“the Framework”).

The accounting policies set out in Note 2.4 have been applied in preparing the financial statements of the Group and the Company for the financial year ended 31 December 2015.

The financial statements are presented in Ringgit Malaysia (“RM”) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2.2 Changes in accounting policies

The accounting policies adopted are consistent with those of the previous financial year except as follows:

On 1 January 2015, the Group and the Company adopted the following new and amendments to MFRSs.

Effective for periods beginning on or after

Amendments to MFRS 119: Defined Benefit Plans: Employee Contributions 1 July 2014 Annual Improvements to MFRSs 2010-2012 Cycle 1 July 2014 Annual Improvements to MFRSs 2011-2013 Cycle 1 July 2014

The adoption of the new and amendments to MFRSs above did not have any material impact on the financial statements of the Group and the Company in the current financial year.

notes to the financial statements31 December 2015

59notes to the financial statements (cont’d)31 December 2015

2. Summary of significant accounting policies (cont’d)

2.3 Standards issued but not yet effective

The standards that are issued but not yet effective up to the date of issuance of the Group’s and the Company’s financial statements are disclosed below. The Group and the Company intend to adopt these standards, if applicable, when they become effective.

Effective for periods beginning on or after

Annual Improvements MFRSs 2012-2014 Cycle 1 January 2016 Amendments to MFRS 116 and MFRS 138: Clarification of Acceptable Methods of Depreciation and Amortisation 1 January 2016 Amendments to MFRS 11: Accounting for Acquisitions of interests in Joint Operations 1 January 2016 Amendments to MFRS 127: Equity Method in Separate Financial Statements 1 January 2016 Amendments to MFRS 101: Disclosure Initiative 1 January 2016 Amendments to MFRS 116 and MFRS 141 : Agriculture : 1 January 2016 Bearer Plants

Amendments to MFRS 10, MFRS 12 and MFRS 128 : Investment Entities: Applying the Consolidation Exception 1 January 2016 MFRS 14: Regulatory Deferral Accounts 1 January 2016 MFRS 15: Revenue from Contracts with Customers 1 January 2018 MFRS 9: Financial Instruments 1 January 2018 Amendments to MFRS 10 and MFRS 128: Sale or contribution of Assets between an Investor and its Associate or Joint Venture Deferred

The Group and the Company plan to adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are expected to have no material impact to the financial statements of the Group and the Company upon their initial application except as described below:

MFRS 15 Revenue from Contracts with Customers

MFRS 15 establishes a new five-step model that will apply to revenue arising from contracts with customers. MFRS 15 will supersede the current revenue recognition guidance including MFRS 118 Revenue, MFRS 111 Construction Contracts and the related interpretations when it becomes effective.

The core principle of MFRS 15 is that an entity should recognise revenue which depicts the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Under MFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e when “control” of the goods or services underlying the particular performance obligation is transferred to the customer.

MFRS 15 is effective for annual periods beginning on or after 1 January 2018 with either a full or modified retrospective application and early adoption is permitted.

60 notes to the financial statements (cont’d)31 December 2015


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.

The Group and the Company are in the process of assessing financial implication for adopting the MFRS 15 and MFRS 9.



2.4 Summary of significant accounting policies

(a) Subsidiaries and basis of consolidation

(i) Subsidiaries

In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses.

(ii) Basis of consolidation

The consolidated financial statements comprise the financial statements of the Company and its subsidiaries as at the reporting date. The financial statements of the subsidiaries used in the preparation of the consolidated financial statements are prepared for the same reporting date as the Company. Consistent accounting policies are applied to like transactions and events in similar circumstances.

The Group controls an investee if and only if the Group has met all the following:

- Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee);

- Exposure, or rights, to variable returns from its investment with the investee; and

- The ability to use its power over the investee to affect its returns.

When the Group has less than a majority of the voting rights of an investee, the Group considers the following in assessing whether or not the Group’s voting rights in an investee are sufficient to give it power over the investee:

- The size of the Group’s holding of voting rights relative to the size and dispersion of holdings of the other vote holders;

- Potential voting rights held by the Group, other vote holders or other parties;

- Rights arising from other contractual arrangements; and

- Any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to direct the relevant activities at the time that decisions need to be made, including voting patterns at previous shareholders’ meetings.

All intra-group balances, income and expenses and unrealised gains and losses resulting from intra-group transactions are eliminated in full.

Business combinations (other than involving entities under common control) are accounted for using the acquisition method. Identifiable assets acquired and liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Acquisition-related costs are recognised as expenses in the periods in which the costs are incurred and the services are received.

The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree.



2.4 Summary of significant accounting policies (cont’d)

(a) Subsidiaries and basis of consolidation (cont’d)

(ii) Basis of consolidation (cont’d)

Acquisition costs incurred are recognised in profit and loss and included in administrative expenses. For each business combination, the Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share of the acquiree’s identifiable net assets.

Any excess of the cost of business combination over the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities is recorded as goodwill. Any excess of the Group’s share in the net fair value of the acquired subsidiary’s identifiable assets, liabilities and contingent liabilities over the cost of business combination is recognised as income in profit or loss on the date of acquisition.

Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date that such control ceases.

Non-controlling interests represent the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the statements of comprehensive income and within equity in the statements of financial position, separately from equity attributable to owners of the Company.

A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. The carrying amounts of the Group’s interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries.

(iii) Business combinations under common control

Business combination involving entities under common control are accounted for by applying the pooling of interest method which involves the following:

- The assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company.

- No adjustments are made to reflect the fair values on the date of combination or recognise any new assets or liabilities.

- No additional goodwill is recognised as a result of the combination. Only existing goodwill relating to either of the combining entities is recognised.

- Any differences between the consideration paid/transferred and the equity ‘acquired’ is reflected within the equity as merger reserve.

The Group has elected to not restate financial information in the consolidated financial statements for the periods prior to the combination of the entities under common control.




(a) Subsidiaries and basis of consolidation (cont’d)

(iv) Transactions with non-controlling interests

Non-controlling interests represent the portion of profit or loss and net assets in subsidiaries not held by the Group and are presented separately in profit or loss of the Group and within equity in the statements of financial position, separately from parent shareholders’ equity. Transactions with non-controlling interests are accounted for using the entity concept method, whereby, transactions with non-controlling interests are accounted for as transactions with owners. On acquisition of non-controlling interests, the difference between the consideration and carrying value of the share of the net assets acquired is recognised directly in equity. Gain or loss on disposal to non-controlling interests is recognised directly in equity.

(b) Associate

An associate is an entity, not being a subsidiary or a joint venture, in which the Group has significant influence. An associate is equity accounted for from the date the Group obtains significant influence until the date the Group ceases to have significant influence over the associate.

The Group’s investment in an associate is accounted for using the equity method. Under the equity method, the investment in an associate is measured in the statements of financial position at cost plus post-acquisition changes in the Group’s share of net assets of the associate.

Goodwill relating to the associate is included in the carrying amount of the investment. Any excess of the Group’s share of the net fair value of the associate’s identifiable assets, liabilities and contingent liabilities over the cost of the investment is excluded from the carrying amount of the investment and is instead included as income in the determination of the Group’s share of the associate’s profit or loss for the period in which the investment is acquired.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associate.

After application of the equity method, the Group determines whether it is necessary to recognise an additional impairment loss on the Group’s investment in its associate. The Group determines at each reporting date whether there is any objective evidence that the investment in the associate is impaired. If this is the case, the Group calculates the amount of impairment as the difference between the recoverable amount of the associate and its carrying value and recognises the amount in profit or loss.

The financial statements of the associates are prepared as of the same reporting date as the Company. Where necessary, adjustments are made to bring the accounting policies in line with those of the Group.

In the Company’s separate financial statements, investments in the associate is stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in profit or loss.




(c) Intangible assets

(i) Goodwill

Goodwill is initially measured at cost. Following initial recognition, goodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired is allocated, from the acquisition date, to each of the Group’s cash-generating units that are expected to benefit from the synergies of the combination.

The cash-generating unit to which goodwill has been allocated is tested for impairment annually or whenever there is an indication that the cash-generating unit may be impaired, by comparing the carrying amount of the cash-generating unit, including the allocated goodwill, with the recoverable amount of the cash-generating unit. Where the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised in the profit or loss. Impairment losses recognised for goodwill are not reversed in subsequent periods.

Where goodwill forms part of a cash-generating unit and part of the operation within that cash-generating unit is disposed off, the goodwill associated with the operation disposed off is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed off in this circumstance is measured based on the relative fair values of the operations disposed off and the portion of the cash-generating unit retained.

(ii) Other intangible assets

Other intangible assets comprise computer application software which were developed or acquired to meet the unique requirements of a subsidiary.

Other intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less accumulated amortisation and any accumulated impairment losses. Internally generated intangible assets are not capitalised and expenditure is reflected in the profit or loss in the period in which the expenditure is incurred.

Other intangible assets with finite lives are amortised over the useful economic lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful lives are reviewed at least once at each financial year-end. Changes in the expected useful lives or the expected pattern of consumption of future economic benefits embodied in the asset is accounted for by changing the amortisation period or method, as appropriate, and are treated as changes in accounting estimates. The amortisation expense on intangible assets with finite lives is recognised in profit or loss.

The acquisition cost of computer application software are amortised over their estimated useful lives of five years.




(c) Intangible assets (cont’d)

(ii) Other intangible assets (cont’d)

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss when the asset is derecognised.

(d) Property, plant and equipment

All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Group and the Company and the cost of the item can be measured reliably.

Subsequent to recognition, property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of property, plant and equipment are required to be replaced in intervals, the Group and the Company recognise such parts as individual assets with specific useful lives and depreciation, respectively. Likewise, when a major inspection is performed, its cost is recognised in the carrying amount of the property, plant and equipment as a replacement if the recognition criteria are satisfied. All other repair and maintenance costs are recognised in profit or loss as incurred.

Freehold land has an unlimited useful life and therefore is not depreciated. Depreciation of other property, plant and equipment is computed on a straight-line basis over the estimated useful lives of the assets at the annual rates as follows:

% Freehold and leasehold buildings 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 any.

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Any gain or loss on derecognition of the asset is included in the profit or loss in the year the asset is derecognised.




(e) Investment properties

Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses.

The depreciation policy for investment properties are in accordance with the depreciation policy for property, plant and equipment.

Investment properties are derecognised when either they have been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its use or disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year in which they arise.

Transfers are made to or from investment properties only when there is a change in use.

(f) Leases

(i) As lessee

Finance leases, which transfer to the Group substantially all the risks and rewards incidental to ownership of the leased item, are capitalised at the inception of the lease at the fair value of the leased asset or, if lower, at the present value of the minimum lease payments. Any initial direct costs are also added to the amount capitalised. Lease payments are apportioned between the finance charges and reduction of the lease liability so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged to profit or loss. Contingent rents, if any, are charged as expenses in the periods in which they are incurred.

Leased assets are depreciated over the estimated useful life of the asset. However, if there is no reasonable certainty that the Group will obtain ownership by the end of the lease term, the asset is depreciated over the shorter of the estimated useful life and the lease term.

Operating lease payments are recognised as an expense in profit or loss on a straight-line basis over the lease term. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis.

(ii) As lessor

Leases where the Group retains substantially all the risks and rewards of ownership of the asset are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same bases as rental income.




(g) Impairment of non-financial assets

The Group and the Company assess at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when an annual impairment assessment for an asset is required, the Group and the Company make an estimate of the asset’s recoverable amount.

An asset’s recoverable amount is the higher of an asset’s fair value less costs to sell and its value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units (“CGU”)).

In assessing value in use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is written down to its recoverable amount. Impairment losses recognised in respect of a CGU or groups of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit or groups of units on a pro-rata basis.

An impairment loss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.

An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case, the carrying amount of the asset is increased to its recoverable amount. That increase cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised previously. Such reversal is recognised in profit or loss unless the asset is measured at revalued amount, in which case the reversal is treated as a revaluation increase. Impairment loss on goodwill is not reversed in a subsequent period.

(h) Inventories

Inventories are stated at the lower of cost and net realisable value.

Cost is determined using the first-in-first-out basis. The cost of inventories comprises costs of purchase.

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

(i) Cash and cash equivalents

Cash and cash equivalents comprise cash at banks and on hand and demand deposits which have a maturity period of three months or less.




(j) Borrowing costs

Borrowing costs are capitalised as part of the cost of a qualifying asset if they are directly attributable to the acquisition, construction or production of that asset. Capitalisation of borrowing costs commences when the activities to prepare the asset for its intended use or sale are in progress and the expenditures and borrowing costs are incurred. Borrowing costs are capitalised until the assets are substantially completed for their intended use or sale.

All borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that incurred in connection with the borrowings of funds.

(k) Income taxes

(i) Current tax

Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date.

Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity.

(ii) Deferred tax

Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred tax liabilities are recognised for all temporary differences, except:

- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.




(k) Income taxes (cont’d)

(ii) Deferred tax (cont’d)

Deferred tax assets are recognised for all deductible temporary differences, unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry forward of unused tax credits and unused tax losses can be utilised except:

- where the deferred tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax assets to be utilised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the reporting date.

Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a business combination is adjusted against goodwill on acquisition.

Deferred tax assets and deferred tax liabilities are offset, if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

(l) Employee benefits

(i) Short term benefits

Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees of the Group and the Company. Short term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences and short term non-accumulating compensated absences such as sick leave are recognised when the absences occur.


2. Significant accounting policies (cont’d)


(l) Employee benefits (cont’d)

(ii) Defined contribution plans

The companies in the Group make contributions to the Employee Provident Fund (“EPF”) in Malaysia, a defined contribution pension scheme. Contributions to EPF are recognised as an expense in the period in which the related service is performed.

(m) Revenue recognition

(i) Dividend income

Dividend from equity securities and distribution income are recognised when the Group’s or the Company’s right to receive payment is established.

(ii) Interest income and investment income

Interest income and investment income are recognised using the effective interest method.

For the subsidiaries operating credit business, income on hire purchase and finance lease transactions are computed on the ‘sum of digits’ method and interest income from housing, mortgage and other loans is recognised on the reducing balance basis.

(iii) Rental income

Rental income is recognised on a straight-line basis over the lease terms.

(iv) Sale of goods

Revenue relating to sale of goods is recognised net of sales taxes and discounts upon the transfer of risks and rewards of ownership to the buyer. Revenue is not recognised to the extent where there are significant uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods.

(v) Revenue from services

Revenue from services rendered is recognised net of service taxes and discounts as and when the services are performed. The revenue from services include hotel services and management fees.

(vi) Realised gains and losses on investments

Realised gains and losses recorded in profit or loss on investment include gains and losses on financial assets and investment properties. Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the carrying amount and are recorded on occurrence of the sale transaction.




(n) Foreign currencies

(i) Functional and presentation currency

The individual financial statements of each entity in the Group are measured using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia (“RM”), which is also the Group’s and the Company’s functional currency.

(ii) Foreign currency transactions

Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at the reporting date are recognised in profit or loss.

(o) Financial assets

Financial assets are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument.

When financial assets are recognised initially, they are measured at fair value, plus, in the case of financial assets not at fair value through profit or loss, directly attributable transaction costs.

The Group and the Company determine the classification of their financial assets at initial recognition, and the categories include financial assets at fair value through profit or loss, loans and receivables and available-for-sale financial assets.

(i) Financial assets at fair value through profit or loss (“FVTPL”)

Financial assets are classified as financial assets at FVTPL if they are held for trading or are designated as such upon initial recognition. Financial assets held for trading are derivatives (including separated embedded derivatives) or financial assets acquired principally for the purpose of selling in the near term.

Subsequent to initial recognition, financial assets at FVTPL are measured at fair value. Any gains or losses arising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at FVTPL do not include exchange differences, interest and dividend income. Exchange differences, interest and dividend income on financial assets at FVTPL are recognised separately in profit or loss as part of other losses or other income.

FVTPL could be presented as current or non-current. Financial assets that are held primarily for trading purposes are presented as current whereas financial assets that are not held primarily for trading purposes are presented as current or non-current based on the settlement date.




(o) Financial assets (cont’d.) (ii) Loans and receivables (“LAR”)

Financial assets with fixed or determinable payments that are not quoted in an active market are classified as LAR.

Subsequent to initial recognition, LAR are measured at amortised cost using the effective interest method, less impairment. Gains and losses are recognised in profit or loss when the LAR are derecognised or impaired.

Effective interest rate is calculated by taking into account any premium or discount on acquisition and includes transaction costs and fees that are integral part of the effective interest rate.

LAR are classified as current assets, except for those having maturity dates later than 12 months after the reporting date which are classified as non-current.

(iii) Available-for-sale financial assets (“AFS”)

AFS are financial assets that are designated as AFS or are not classified in any of the two preceding categories. AFS include equity investments and debt securities.

After initial recognition, AFS are measured at fair value. Any gains or losses from changes in fair value of the financial assets are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and interest calculated using the effective interest method are recognised in profit or loss. The cumulative gain or loss previously recognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised. Interest income calculated using the effective interest method is recognised in profit or loss. Dividends on an AFS equity instrument are recognised in profit or loss when the Group’s and the Company’s right to receive payment is established.

Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss.

AFS are classified as non-current assets unless they are expected to be realised within 12 months after the reporting date.

(iv) Insurance receivables

Insurance receivables are recognised when due and measured at the fair value of the consideration received and receivable.

If there is objective evidence that the insurance receivable is impaired, the Group reduces the carrying amount of the insurance receivable accordingly and recognises that impairment loss in profit or loss. The Group gathers the objective evidence that an insurance receivable is impaired using the same process and method adopted for financial assets carried at amortised cost.




(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.




(p) Financial liabilities (cont’d)

A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(q) Impairment of financial assets

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired.

(i) Unquoted equity securities carried at cost

If there is objective evidence that an impairment loss on financial assets carried at cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for a similar financial asset.

(ii) AFS financial assets

If an AFS financial assets are impaired, the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to profit or loss.

Reversals in respect of equity instruments classified as AFS are not recognised in the income statement. Reversals of impairment losses on debt instruments classified as AFS are reversed through profit or loss if the increase in the fair value of the instruments can be objectively related to an event occurring after the impairment losses were recognised in profit or loss.

(iii) Assets carried at amortised cost

To determine whether there is objective evidence that an impairment loss on financial assets has been incurred, the Group and the Company consider factors such as the probability of insolvency or significant financial difficulties of the debtor and default or significant delay in payments. For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment for a portfolio of receivables could include the Group’s and the Company’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period and observable changes in national or local economic conditions that correlate with default on receivables.

If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss.




(q) Impairment of financial assets (cont’d)

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable becomes uncollectible, it is written off against the allowance account.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

(r) Segment reporting

For management purposes, the Group is organised into operating segments based on their products and services which are independently managed by the respective segment managers responsible for the performance of the respective segments under their charge. The segment managers report directly to the management of the Company who regularly review the segment results in order to allocate resources to the segments and to assess the segment performance. Additional disclosures on each of these segments are shown in Note 36, including the factors used to identify the reportable segments and the measurement basis of segment information.

(s) Share capital and share issuance expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of its liabilities. Ordinary shares are equity instruments. Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs.

Dividends on ordinary shares are recognised as a liability from equity in the period in which all relevant approvals have been obtained.

(t) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimated reliably.

Provision for claims for the insurance segment is made for the estimated cost of all claims together with related expenses less reinsurance recoveries, in respect of claims notified but not settled at the reporting date. Provision is also made for the cost of claims together with related expenses incurred but reported at reporting date, using a mathematical method of estimation.

Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic resources will be required to settle the obligation, the provision is reversed. If the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate, the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.




(u) General insurance underwriting results

The general insurance underwriting results are determined for each class of business after taking into account, inter alia, reinsurances, unearned premium, commissions and claims incurred.

(i) Gross premiums

Gross premiums are recognised in a financial period in respect of risks assumed during that particular financial period.

(ii) Reinsurance premiums

Inwards facultative reinsurance premiums are recognised in the financial period in respect of the facultative risks assumed during that particular financial period, as in the case of direct policies, following the individual risks’ inception dates.

In respect of reinsurance premiums relating to proportional treaties, it is recognised on the basis of periodic advices received from the cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inception dates of these risks and contractually accounted for, as such to reinsurers under the terms of the proportional treaties.

(iii) Premium liabilities

Premium liability is reported at the higher of the aggregate of the unearned premium reserve (“UPR”) for all lines of business and the best estimate value of the insurer’s unexpired risk reserves (“URR”) at the end of the financial year and the provision of risk margin for adverse deviation (“PRAD”) calculated at 75% confidence level at MPI Generali Insurans Berhad (formerly known as Multi-Purpose Insurans Bhd.) (the “insurance subsidiary”) level. The best estimate value is a prospective estimate of the expected future payments arising from future events insured under policies in force at the end of the financial year including allowance for insurer’s expenses.

(a) URR

The URR is the prospective estimate of the expected future payments arising from future events insured under policies in force as at the end of the financial year and also includes allowance for expenses, including overheads and cost of reinsurance, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and expected future premium refunds.

(b) UPR

The UPR represents the portion of net premiums less the related net acquisition costs of insurance policies written that relate to the unexpired periods of the policies at the end of the financial year.




(u) General insurance underwriting results (cont’d)

(iii) Premium liabilities (cont’d)

(b) UPR (cont’d)

In determining the UPR at reporting date, the methods used in calculation of actual unearned premium are as follows:

- 25% method for marine and aviation cargo, and transit business.

- 1/24th method for all other classes of general business in respect of Malaysian policies, with the following deduction rates, or actual commission incurred, whichever is lower:

- Motor and bonds 10% - Fire, engineering, aviation and marine hull 15% - Medical 10 - 15% - Other classes 20%

- 1/8th method for all other classes of overseas inward treaty business, with a deduction of 20% for commission.

- Non-annual policies are time-apportioned over the period of the risks.

(iv) Claim liabilities

Claim liabilities are recognised as the obligation to make future payments in relation to all claims that have been incurred as at the end of the financial year. They are recognised in respect of both direct insurance and inward reinsurance. The value is the best estimate value of claim liability which includes provision for claims reported, claims incurred but not enough reserved (“IBNER”), claims incurred but not reported (“IBNR”) and direct and indirect claim-related expenses as well as PRAD at 75% confidence level calculated at the insurance subsidiary level. These are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern.

(v) Acquisition costs

The costs of acquiring and renewing insurance policies, net of income derived from ceding reinsurance premiums, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

(v) Insurance contract liabilities

General insurance contract liabilities are recognised when contracts are entered into and premiums are charged. These liabilities comprise outstanding claims provision and provision for unearned premiums.




(v) Insurance contract liabilities (cont’d)

Outstanding claims provision are based on the estimated ultimate cost of all claims incurred but not settled at the reporting date, whether reported or not, together with related claims handling costs and reduction for the expected value of salvage and other recoveries. Delays can be experienced in the notification and settlement of certain types of claims, therefore, the ultimate cost of these claims cannot be known with certainty at the reporting date. The liability is calculated at the reporting date using a range of standard actuarial claim projection techniques based on empirical data and current assumptions that may include a margin for adverse deviation. The liability is not discounted for the time value of money. No provision for equalisation or catastrophe reserves is recognised. The liabilities are derecognised when the contract expires, is discharged or is cancelled.

The provision for unearned premiums represents premiums received for risks that have not yet expired. Generally, the reserve is released over the term of the contract and is recognised as premium income.

At each reporting date, the insurance subsidiary reviews its unexpired risks and a liability adequacy test is performed to determine whether there is any overall excess of expected claims and deferred acquisition costs over unearned premiums. This calculation uses current estimates of future contractual cash flows (taking into consideration current loss ratios) after taking into account of the investment return expected to arise on assets relating to the relevant general insurance technical provisions. If these estimates show that the carrying amount of the unearned premiums less related deferred acquisition costs is inadequate, the deficiency is recognised in the income statement by setting up a provision for liability adequacy.

(w) Product classification

The insurance subsidiary issues contracts that transfer insurance risk only.

Financial risk is the risk of a possible future change in one or more of a specified interest rate, financial instrument price, commodity price, foreign exchange rate, index of price or rate, credit rating or credit index or other variable, provided in the case of a non-financial variable that the variable is not specific to a party to the contract. Insurance risk is the risk other than financial risk.

Insurance contracts are those contracts that transfer significant insurance risk. An insurance contract is a contract under which the insurance subsidiary (the insurer) has accepted significant insurance risk from another party (the policyholders) by agreeing to compensate the policyholders if a specified uncertain future event (the insured event) adversely affects the policyholders. As a general guideline, the insurance subsidiary determines whether it has significant insurance risk, by comparing benefits paid with benefits payable if the insured event did not occur.

Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its life-time, even if the insurance risk reduces significantly during this period, unless all rights and obligations are extinguished or expire.




(w) Product classification (cont’d)

Investment contracts can, however, be reclassified as insurance contracts after inception if insurance risk becomes significant.

Insurance and investment contracts are further classified as being either with or without discretionary participation features (“DPF”). DPF is a contractual right to receive, as a supplement to guaranteed benefits, additional benefits.

The insurance subsidiary does not have any investment contracts and the insurance contracts issued do not contain any DPF.

(x) Reinsurance

The insurance subsidiary cedes insurance risk in the normal course of business for all of its insurance businesses. Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer’s policies and are in accordance with the related reinsurance contracts.

Ceded reinsurance arrangements do not relieve the insurance subsidiary from its obligations to policyholders. Premiums and claims are presented on a gross basis for both ceded and assumed reinsurance.

Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting period. Impairment occurs when there is objective evidence as a result of an event that occurred after initial recognition of the reinsurance asset that the insurance subsidiary may not receive all outstanding amounts due under the terms of the contract and the event has a reliably measurable impact on the amounts that the insurance subsidiary will receive from the reinsurer. Impairment loss is recorded in profit or loss.

Gains or losses on buying reinsurance are recognised in profit or loss immediately at the date of purchase and are not amortised.

The insurance subsidiary also assumes reinsurance risk in the normal course of business for general insurance contracts when applicable.

Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract.

Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party.




(y) Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due.

Financial guarantee contract is recognised initially as a liability at fair value, net of transaction costs. Subsequent to initial recognition, financial guarantee contracts are recognised as income in profit or loss over the period of the guarantee. If the debtor fails to make payment relating to financial guarantee contract when it is due and the Group, as the issuer, is required to reimburse the holder for the associated loss, the liability is measured at the higher of the best estimate of the expenditure required to settle the present obligation at the reporting date and the amount initially recognised less cumulative amortisation.

2.5 Significant accounting estimates and judgements

(a) Critical judgements made in applying accounting policies

The following are the judgements made by management in the process of applying the Group’s accounting policies that have the most significant effect on the amounts recognised in the financial statements.

(i) Valuation of investment properties

The Group classifies a property as an investment property in accordance with requirements of MFRS 140 Investment Property. The Group’s investment properties are held to earn rental and for capital appreciation or both.

In estimating fair value of investment properties, the Group uses market observable data to the extent it is available. Where level 1 inputs are not available, the Group engaged third party qualified valuers to perform the valuation in establishing the appropriate valuation techniques and inputs to the model.

Information about the valuation techniques and inputs used in determining the fair value of investment properties are disclosed in Note 11.

(ii) Classification of investment properties

The Group has entered into several Joint Venture Agreements (“JVAs”) with certain third parties to develop land owned by the Group. As the Group does not have joint control and significant influence nor substantive rights over the relevant activity of these JVAs, which is determined to be development of properties on the land, the JVAs do not fall within the scope of MFRS 11 Joint Arrangement. Consequently, the land belonging to the Group are classified as investment properties as disclosed in Note 11.

As at reporting date, the land are not deemed disposed as the risk and rewards of the land have yet to be transferred to third parties.



2.5 Significant accounting estimates and judgements (cont’d)

(a) Critical judgements made in applying accounting policies (cont’d)

(iii) Impairment of non-financial assets

An impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs to sell and its value in use. The fair value less costs to sell calculation is based on available data from binding sales transactions, conducted at arm’s length, for similar assets or observable market prices less incremental costs for disposing of the asset. The value in use calculation is based on a discounted cash flow model. The cash flows are derived from the budget for the next three years and do not include restructuring activities that the Group is not yet committed to or significant future investments that will enhance the asset’s performance of the CGU being tested. The recoverable amount is most sensitive to the discount rate used for the discounted cash flow model as well as the expected future cash-inflows and the growth rate used for extrapolation purposes.

Goodwill is tested for impairment on an annual basis and when circumstances indicate that carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount of each CGU to which the goodwill relates. Further details on the goodwill are as disclosed in Note 15.

(iv) Impairment of AFS financial assets

Significant judgement is required to assess impairment for AFS financial assets. The Group evaluates the duration and extent to which the fair value of an investment is less than its cost; the financial health and near term business outlook for the investee, including but not limited to factors such as industry and sector performance, changes in technology and operational and financial cash flows. The carrying amount of the Group’s AFS financial assets is as disclosed in Note 14.

(v) Impairment of receivables

The Group and the Company assess at each reporting date whether there is any objective evidence that a financial asset is impaired. Factors considered by the Group and the Company are probability of insolvency or significant financial difficulties of the debtors and default or significant delay in payments. In addition, the Group and the Company take into consideration default risk of the industry and credit rating, payment trend and aging of receivables. The carrying amount of the Group’s and the Company’s receivables are as disclosed in Note 17.



2.5 Significant accounting estimates and judgements (cont’d)

(b) Key sources of estimation uncertainty (cont’d)

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

(i) Deferred tax assets

Deferred tax assets are recognised for all unused tax losses and unabsorbed capital allowances to the extent that it is probable that taxable profit will be available against which the losses and capital allowances can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with future tax planning strategies. The carrying amount of recognised and unrecognised deferred tax assets are as disclosed in Note 25.

(ii) Valuation of insurance contract liabilities

For insurance contracts, estimates have to be made for both the expected ultimate cost of claims reported at the reporting date and for the expected ultimate cost of claims incurred but not yet reported (“IBNR”) at the reporting date.

It can take a significant period of time before the ultimate claims costs can be established with certainty and for some type of policies, IBNR claims form the majority of the reporting liability. The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as Chain Ladder and Bornheutter-Ferguson methods.

The main assumption underlying these techniques is that a company’s past claims development experience can be used to project future claims development and hence, ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident years, but can also be further analysed by geographical areas, as well as by significant business lines and claims type. Large claims are usually separately addressed, either by being reserved at the face value of loss adjuster estimates or separately projected in order to reflect their future development. In most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratio. Instead, the assumptions used are those implicit in the historic claims development data on which the projections are based. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (for example, to reflect one-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, level of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes, taking account of all the uncertainties involved.

The movement and carrying amount of insurance contract liabilities are as disclosed in Note 18.


3. Revenue

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Net earned premiums (Note (i)) 339,341 330,957 - -

Interest income on loans and advances 1,028 1,128 - - Investment income in respect of gross dividends from: - subsidiaries - - 40,377 195,043 - quoted investment securities in Malaysia 8 - 8 - - unquoted investment securities in Malaysia 800 460 - - Revenue from rental of properties 6,940 940 - - Hotel services 31,806 35,260 - - Sale of goods - 451 - - Management fees from: - subsidiaries - - 1,900 2,862 - an affiliated company 864 882 864 882

380,787 370,078 43,149 198,787

(i) Net earned premiums comprised:

(a) Gross premium 593,891 604,945 - - Change in premium liabilities (14,873) (16,394) - -

Gross earned premium 579,018 588,551 - -

(b) Gross premium ceded (237,208) (257,152) - - Change in premium liabilities (2,469) (442) - -

Premium ceded (239,677) (257,594) - - Net earned premiums 339,341 330,957 - -


4. Cost of sales

Group 2015 2014 RM’000 RM’000

Cost of insurance business (Note (i)) 221,340 229,270 Cost of hotel services 13,702 13,991

235,042 243,261

(i) Cost of insurance business comprised: Gross claims paid 261,543 245,228 Claims ceded to reinsurers (100,091) (83,260) Gross change in contract liabilities 17,275 65,135 Change in contract liabilities ceded to reinsurers 7,199 (32,859)

Net claims incurred (Note (ii)) 185,926 194,244 Fee and commission income (42,983) (49,648) Fee and commission expenses 78,397 84,674

221,340 229,270

(ii) Net claims incurred comprised: Gross claims paid less salvage 261,543 245,228 Reinsurance recoveries (100,091) (83,260)

Net claims paid 161,452 161,968

Gross change in contract liabilities At 31 December 646,858 629,583 At 1 Jan (629,583) (564,448)

17,275 65,135

Change in contract liabilities ceded to reinsurers At 31 December (329,785) (336,984) At 1 Jan 336,984 304,125

7,199 (32,859)

Net claims incurred 185,926 194,244


5. Other income

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Realised gain/(loss) from financial assets at FVTPL 2,347 (113) 24 - Write back of allowance for impairment for loans and advances (Note 17 (a)) 20 23 - - Interest income (Note (i)) 7,316 7,789 1,381 2,769 Other income of the insurance subsidiary (Note (ii)) 45,630 51,162 - - Share of profits from a completed housing project - 27,973 - - Income from rental of properties 505 513 - - Gain on disposal of: - property, plant and equipment - 35 - 35 - asset held for sale - 195,862 - - - investment properties 2,028 - - - Gain arising from fair value change in financial assets at FVTPL 443 1,421 309 - Reversal of impairment on investment properties (Note 11) 13,187 - - - Write back of allowance for impairment of other receivables (Note 17 (d)) 10,134 - - - Others 1,015 1,045 - -

82,625 285,710 1,714 2,804

(i) Interest income

Interest income on:

- loan to subsidiaries - - 22 19 - short term deposits 771 800 490 288 - investment securities 6,533 4,565 869 2,462 - late payment 12 2,424 - -

7,316 7,789 1,381 2,769


5. Other income (cont’d) (ii) Other income of the insurance subsidiary

Group 2015 2014 RM’000 RM’000

Other income of the insurance subsidiary comprised:

Investment income (Note (a)) 35,458 28,261 Realised gains from AFS financial assets (Note (b)) 2,697 5,394 Other operating income (Note (c)) 7,475 17,507 45,630 51,162

Group 2015 2014 RM’000 RM’000

(a) Investment income comprised: AFS financial assets: Dividend income - Equity securities quoted in Malaysia 2,928 2,892 - Equity securities quoted outside Malaysia 4 35 - Quoted unit trust 2,293 1,111 Interest income 12,770 11,233 LAR interest 17,423 12,862 Rental income from investment properties 135 135 Amortisation of premium (95) (7)

35,458 28,261

(b) Realised gains/(losses) from AFS financial assets comprised: Equity securities quoted in Malaysia 2,610 6,183 Debt securities unquoted outside Malaysia 87 (789)

2,697 5,394

(c) Other operating income comprised: Gain on disposal of property, plant and equipment 4 21 Realised gain on disposal of investment properties 469 437 Impairment loss on AFS financial assets (869) (130) Service income earned from Malaysian Motor Insurance Pool (“MMIP”) 6,724 9,963 Reversal of advertising provision - 4,866 Sundry income 1,147 2,350 7,475 17,507


6. Operating profit

The following amounts have also been included in arriving at operating profit:


Depreciation of property, plant and equipment (Note 10) 5,964 6,005 414 476 Depreciation of investment properties (Note 11) 1,770 1,770 - - Auditors’ remuneration (Note (a)) 455 419 22 17 Key management personnel (Note (b)) 3,392 3,554 3,351 3,443 Amortisation of intangible assets (Note 15) 816 616 - - Impairment on investment in a subsidiary - - 27,252 4,647 Rental expense of land and buildings 3,732 3,606 1,116 1,216 Employee benefits expense (Note (c)) 68,506 61,970 10,518 7,578 Bad debts written off included in management expenses 730 649 - - Property, plant and equipment written off 2 4 - - Fund management charges 898 741 - - Loss arising from fair value change in financial assets at FVTPL - 1,639 - 213 Realised loss from financial assets at FVTPL - - - 41 Allowance for impairment of receivables (Note 17 (b)) 4,731 6,311 - -


(a) Auditors’ remuneration

Auditors of the Company: - statutory audit 421 387 15 10 - assurance related services 24 23 7 7

445 410 22 17

Other auditors - statutory audit 10 9 - -

455 419 22 17


6. Operating profit (cont’d)

(b) Key management personnel

Key management personnel is defined as the Board of Directors of the Company whereby the authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly lies.


Executive directors’ remuneration: - bonus 1,026 1,014 1,026 1,014 - emoluments 2,068 2,169 2,068 2,169 - benefits-in-kind 14 24 14 24

3,108 3,207 3,108 3,207

Non-executive directors’ remuneration: - fees 275 340 240 240 - emoluments 23 31 17 20 - benefits-in-kind 2 7 - -

300 378 257 260

Total directors’ remuneration 3,408 3,585 3,365 3,467 Less: estimated money value of benefits-in-kind (16) (31) (14) (24)

Total directors’ remuneration excluding benefits-in-kind 3,392 3,554 3,351 3,443


6. Operating profit (cont’d)

(b) Key management personnel (cont’d)

The number of directors of the Company whose total remuneration during the financial year fell within the following bands is analysed below:

Number of Directors Directors 2015 2014

Executive Directors: RM250,001 - RM300,000 - 1 RM300,001 - RM350,000 1 - RM450,001 - RM500,000 1 - RM600,001 - RM650,000 - 1 RM2,250,001 - RM2,300,000 - 1 RM2,300,001 - RM2,350,000 1 - Non-executive Directors: RM50,001 - RM100,000 1 1 RM100,001 - RM150,000 2 2

(c) Employee benefits expense


Wages and salaries 56,184 50,757 9,325 6,551 Contributions to a defined contribution plan 7,001 6,496 902 770 Other staff related expenses 5,321 4,717 291 257

68,506 61,970 10,518 7,578


7. Finance costs Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Interest expense on: Term loans and revolving credit 2,441 4,137 - - Amounts due to subsidiaries - - 1,118 4,768

2,441 4,137 1,118 4,768

8. Income tax expense The components of income tax expense comprise the following:


Income tax: Malaysian income tax* 20,977 27,075 117 72 (Over)/under provision of tax expense in prior year (270) 5,042 (72) -

20,707 32,117 45 72

Deferred tax: Relating to origination and reversal of temporary differences (351) 276 - - Reduction of income tax rate (647) - - - (Over)/under provision of deferred tax in prior year (80) 1,440 - -

Deferred income tax (Note 25) (1,078) 1,716 - -

Income tax expense for the year 19,629 33,833 45 72

Domestic income tax is calculated at the Malaysian statutory tax rate of 25% (2014: 25%) of the estimated assessable profit for the year.

* Included in the current year income tax is an amount of RM713,000 relating to Real Property Gains Tax (“RPGT”) arising from the disposal of investment properties during the current financial year.


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:


Profit before tax 106,183 277,486 195 179,177

Taxation at Malaysian statutory tax rate 26,546 69,372 49 44,794 Effect of income not subject to tax (17,666) (50,746) (9,794) (49,381) Effect of decrease of income tax rate (647) - - - Effect of expenses not deductible for tax purposes 13,914 11,366 9,862 4,659 Effect of utilisation of previously unrecognised tax losses (416) (301) - - Additional deduction allowed in respect of cash contributions made to MMIP during the year* (1,752) (2,340) - - (Over)/under provision of income tax expense in prior year (270) 5,042 (72) - (Over)/under provision of deferred tax prior year (80) 1,440 - -

19,629 33,833 45 72

* In accordance with the P.U (A) 419 Income Tax (Deduction for contributions by Licensed Insurers to the Malaysian Motor Insurance Pool) Rules 2012, cash contributions made to MMIP via cash calls is allowed for additional deduction in the year when such cash is paid to the MMIP.

9. Earnings per share Basic earnings per share Basic earnings per share (“EPS”) is calculated by dividing the profit for the year attributable to owners of

the Company by the weighted average number of ordinary shares in issue during the financial year.

Group 2015 2014 RM’000 RM’000 Profit for the year attributable to owners of the Company 64,566 245,420

Number of ordinary shares in issue - weighted average 715,000 715,000

Basic earnings per share (Sen) 9.0 34.3

As there are no potential dilutive shares, the basic EPS is equal to diluted EPS.


10. Property, plant and equipment

Buildings on Freehold Leasehold leasehold and Plant and Computer land* land* freehold land* equipment equipment Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost At 1 January 2015 17,409 3,706 90,317 31,632 7,492 150,556 Additions - - - 911 2,360 3,271 Disposals - - - (18) (132) (150) Written off - - - (17) - (17)

At 31 December 2015 17,409 3,706 90,317 32,508 9,720 153,660

Accumulated depreciation At 1 January 2015 - 312 33,268 25,994 6,716 66,290 Depreciation charge for the year (Note 6) - 44 3,424 1,728 768 5,964 Disposals - - - (18) (131) (149) Written off - - - (15) - (15)

At 31 December 2015 - 356 36,692 27,689 7,353 72,090

Net carrying amount At 31 December 2015 17,409 3,350 53,625 4,819 2,367 81,570

* Estimated fair value 176,850

* The valuation of freehold land, leasehold land and building is based on valuation report by an independent property valuer as disclosed in Note 11.


10. Property, plant and equipment (cont’d)

Buildings on Freehold Leasehold leasehold and Plant and Computer land* land* freehold land* equipment equipment Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000

Group

Cost At 1 January 2014 17,409 3,706 89,160 30,216 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 (Note 6) - 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

* Estimated fair value 176,680


10. Property, plant and equipment (cont’d)

Plant and Computer equipment equipment Total RM’000 RM’000 RM’000

Company

At 31 December 2015 Cost At 1 January 2015 2,028 120 2,148 Additions 28 31 59

At 31 December 2015 2,056 151 2,207 Accumulated depreciation At 1 January 2015 597 92 689 Depreciation charge for the year (Note 6) 393 21 414

At 31 December 2015 990 113 1,103

Net carrying amount At 31 December 2015 1,066 38 1,104

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

Accumulated depreciation At 1 January 2014 186 50 236 Depreciation charge for the year (Note 6) 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


11. Investment properties

Group 2015 2014 RM’000 RM’000 Cost At 1 January 785,573 779,193 Reclassified from other receivables 75,079 - Additions 5,250 7,152 Disposals (8,293) (772)

At 31 December 857,609 785,573

Accumulated depreciation At 1 January 6,980 5,210 Depreciation charge for the year (Note 6) 1,770 1,770 Disposals (11) -

At 31 December 8,739 6,980

Accumulated impairment loss At 1 January 29,932 29,932 Reversal of impairment loss (Note 5) (13,187) -

At 31 December 16,745 29,932

Net carrying amount 832,125 748,661

Estimated fair value 1,310,985 924,194

Investment properties comprise freehold land, leasehold land and buildings. Investment properties and land and buildings in property, plant and equipment are stated at cost. Estimated

fair value is based on valuations performed by an accredited independent valuers with recent experience in the location and category of properties being valued. Fair value is determined using the comparison method of valuation.

Under the comparison method, fair value is estimated by considering the sale of similar or substitute properties and related market data and established a value estimate by adjustments made in factors including location, accessibility, market conditions, size, shape and terrain of land that affect value.

The updated valuations were performed by the valuers in February 2016 for market value of the investment properties and land and buildings of property, plant and equipment as at 31 December 2015. The updated valuations revealed that there have been no significant changes in the method of valuation used as compared with the previous valuation report in 2013.


11. Investment properties (cont’d) Group 2015 2014 RM’000 RM’000

Rental income derived from investment properties 7,075 1,075 Direct operating expenses (713) (439)

Net rental arising from investment properties 6,362 636

Carrying amounts of certain investment properties of the Group amounting to RM186,240,000 (2014:

RM174,921,000) are pledged as security for the Group’s bank borrowings as disclosed in Note 24.

Significant increase/(decrease) in estimated market value in isolation for land and building and investment properties would result in a significant higher/(lower) fair value. An increase/(decrease) by 1% in the market value in isolation would result in an increase/(decrease) in the estimated fair value by RM14,878,000 (2014: RM11,009,000).

The Group has no restrictions on the realisability of its investment properties and no contractual obligations to either purchase, construct or develop investment properties or for repairs, maintenance and enhancements except for certain joint venture agreements which have been undertaken with subsidiaries of Bandar Raya Developments Berhad in respect of investment properties with a total carrying amount of RM246,866,000 (2014: RM394,807,000). Details of the joint venture agreements are as follows:

(i) On 29 April 2011, Magnum.Com Sdn. Bhd. (“MCSB”), a wholly owned subsidiary of the Group, entered into a Joint Venture Agreement (“JVA”) with a subsidiary of Bandar Raya Developments Berhad, Orion Vibrant Sdn. Bhd. (“OVSB”), to undertake development of 20 parcels of land in Pulau Pinang (measuring approximately 80.897 acres) (“PP Land”) legally and/or beneficially owned by MCSB.

In accordance with the JVA, MCSB is to be paid 22% of the cash collected pursuant to billings issued of the proposed development for the PP Land (“the Land Owner’s Entitlement”) by way of completed units or components, or by a combination of cash payment and completed units or components. MCSB has received RM9,000,000 from OVSB as upfront and advance amount towards account of the Land Owner’s entitlement.

(ii) On 13 January 2012, MCSB entered into a supplemental JVA with OVSB, to undertake development of 3 parcels of freehold land in Pulau Pinang measuring 2.07 acres.

In accordance with the supplemental JVA, the payment for the purchase of the 3 parcels of land is to be made jointly through OVSB’s contribution of 74.53% (or not exceeding RM7,900,000) and through MCSB’s contribution of 25.47% (or not exceeding RM2,700,000).

The 3 parcels of land were acquired in 2012 with the land titles registered under MCSB’s name and MCSB accordingly recognised the full cost of acquisition as its investment properties, despite only having a beneficial interest of 25.47% while recognising the balance of 74.53% as payable to OVSB.


11. Investment properties (cont’d)

(iii) On 29 April 2011, Tibanis Sdn. Bhd. (“TSB”), a wholly owned subsidiary of the Group, entered into a separate JVA with a subsidiary of Bandar Raya Developments Berhad, Pinggir Mentari Sdn Bhd (“PMSB”), to undertake development of 2 parcels of land in Gombak (measuring approximately 265.13 acres) (“G2 Land”).

In accordance with the JVA, TSB is to be paid 22% of the cash collected pursuant to billings issued of the proposed development for the G2 Land (“the Land Owner’s Entitlement”) by way of completed units or components, or by a combination of cash payment and completed units or components. TSB has received RM22,000,000 from PMSB as upfront and advance amount towards account of the Land Owner’s entitlement.

(iv) On 29 April 2011, Mimaland Berhad (“MB”), a 98.20% owned subsidiary of the Group, signed a separate JVA with a subsidiary of Bandar Raya Developments Berhad, Magna Senandung Sdn. Bhd. (“MSSB”), to undertake development of 7 parcels of land in Gombak (measuring approximately 324 acres) (“G Land”).

In accordance with the JVA, MB is to be paid 22% of the cash collected pursuant to billings issued of the proposed development for the G Land (“the Land Owner’s Entitlement”) by way of completed units or components, or by a combination of cash payment and completed units or components. MB has received RM34,000,000 from the MSSB as upfront and advance amount towards account of the Land Owner’s entitlement.

On 10 August 2015, the Company has announced that MB had entered into a Deed of Termination with MSSB to mutually terminate the JVA. Accordingly, MB has returned the RM34,000,000 to MSSB on 10 August 2015.

12. Investment in subsidiaries

Company 2015 2014 RM’000 RM’000 Cost of investment 1,202,133 1,202,131 Acquisition of shares in subsidiaries during the year 60,800 2 Less: allowance for impairment for the year (31,899) (4,647)

At 31 December 1,231,034 1,197,486

Further details of the subsidiaries, all of which are incorporated in Malaysia are disclosed in Note 37.

The movement for allowance for impairment:

Company 2015 2014 RM’000 RM’000 At 1 January 4,647 - Impairment for the year (Note 6) 27,252 4,647

At 31 December 31,899 4,647


12. Investment in subsidiaries (cont’d)

Subscription of shares in subsidiaries

Company 2015 RM’000 By way of allotment of shares: Queensway Nominees (Tempatan) Sdn. Bhd. (“Queensway Tempatan”) 5,145 Queensway Nominees (Asing) Sdn. Bhd. (“Queensway Asing”) 55,655

60,800

Queensway Tempatan has alloted 5,145,000 ordinary shares of RM1.00 each to the Company at RM1.00

per ordinary share satisfied by way of capitalising the amount owing to the Company.

Queensway Asing has alloted 55,655,000 ordinary shares of RM1.00 each to the Company at RM1.00 per ordinary share satisfied by way of capitalising the amount owing to the Company.

The acquisition of shares in the subsidiaries did not have any significant effects on the earnings or net assets of the Group for the financial year ended 31 December 2015.

13. Investment in an associate Group 2015 2014 RM’000 RM’000 Unquoted shares in Malaysia, at cost 100 100 Share of post-acquisition reserves 415 439

515 539

The summarised financial information of the associate is as follows:

2015 2014 RM’000 RM’000 Assets 2,593 2,711 Liabilities (17) (14)

Equity 2,576 2,697

Proportion of the Group’s ownership 20% 20% Carrying amount of the investment 515 539

Revenue - 154 Other income 39 20 Cost of sales - (63) Management expenses (160) (166)

Loss before tax (121) (55) Income tax expense - -

Loss for the year (121) (55)

Group’s share of loss for the year (24) (11)

Further details of the associate are disclosed in Note 37.


14. Investment securities

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Current Financial assets at FVTPL Quoted shares in Malaysia 17,501 17,618 1,606 - Unit trusts - quoted 391,751 96,282 3,439 67,208

Total current investment securities 409,252 113,900 5,045 67,208

Non-Current AFS financial assets Quoted shares in Malaysia 66,559 78,486 - - Quoted shares outside Malaysia 4,135 2,682 - - Unquoted shares in Malaysia 1,001 1,001 - - Unquoted debts securities in Malaysia 262,167 201,088 - - Unit trusts - quoted 49,986 41,123 - - Malaysian Government Papers 13,116 3,276 - -

Total non-current investment securities 396,964 327,656 - -

Total investment securities 806,216 441,556 5,045 67,208

The Group’s investment securities are summarised by categories as follows: Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 At fair value 805,215 440,555 5,045 67,208 At cost 1,001 1,001 - - 806,216 441,556 5,045 67,208


15. Intangible assets

Computer Goodwill software Total RM’000 RM’000 RM’000 Group Cost As at 1 January 2015 41,102 6,026 47,128 Additions - 1,717 1,717 Derecognised on disposal of a subsidiary (Note 31) (9,203) - (9,203)

At 31 December 2015 31,899 7,743 39,642 As at 1 January 2014 41,102 5,133 46,235 Additions - 893 893

At 31 December 2014 41,102 6,026 47,128

Accumulated amortisation As at 1 January 2015 - 3,967 3,967 Charge for the year - 816 816

At 31 December 2015 - 4,783 4,783

As at 1 January 2014 - 3,351 3,351 Charge for the year - 616 616

At 31 December 2014 - 3,967 3,967

Net carrying amount At 31 December 2015 31,899 2,960 34,859

At 31 December 2014 41,102 2,059 43,161

Goodwill of the Group which arose from merger and acquisition of subsidiaries has been allocated to the

following CGUs for impairment testing: Group 2015 2014 RM’000 RM’000

Carrying amount Insurance division 9,579 18,782 Credit division 2,503 2,503 Investment division 19,817 19,817

31,899 41,102


15. Intangible assets (cont’d.)

The recoverable amount of the CGUs have been determined based on the value in use calculations using cash flows projections approved by management covering a period of 3 years and based on the following key assumptions:

(i) Growth rates ranging from 2.00% to 319.00% (2014: 3.92% to 24.00%); and

(ii) Pre-tax discount rate of 6.00% (2014: 5.19%) estimated based on the effective average borrowing rate of the Group.

The above key assumptions made by management are based on past operating results and management’s expectations of market development and assessment of future trends derived from both external sources and internal sources. Barring unforeseen circumstances, the management believed that these assumptions are reasonable and achievable.

Management do not expect any reasonable possible changes in the key assumptions would cause the carrying amount of the goodwill on consolidation to exceed its recoverable amount.

16. Inventories

Group 2015 2014 RM’000 RM’000

At cost: Food and beverages 125 120 Hotel supplies and merchandise 43 43 168 163 At net realisable value: Food and beverages 101 68

Total 269 231 The amount of inventories recognised as an expense in cost of sales of the Group was RM38,000 (2014:

RM32,000).


17. Receivables Group Company Note 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Loans and advances (a) 37,588 32,608 - - Less: Allowance for impairment (22,226) (22,246) - -

15,362 10,362 - -

Outstanding premium including agents/ brokers balance (b) 134,127 123,618 - - Less: Allowance for impairment (2,226) (2,226) - -

131,901 121,392 - -

Amounts due from reinsurers/ ceding companies and co-insurers (b) 69,682 37,469 - - Less: Allowance for impairment (15,734) (11,003) - -

53,948 26,466 - -

Trade receivables (c) 1,230 1,175 - -

Other receivables (d) 87,483 191,977 844 1,253 Less: Allowance for impairment (141) (10,275) - -

87,342 181,702 844 1,253

Amounts due from subsidiaries (e) - - 110,764 156,016 Total receivables 289,783 341,097 111,608 157,269

(a) Loans and advances Ageing analysis of loans and advances The ageing analysis of the Group’s gross loans and advances is as follows: Group 2015 2014 RM’000 RM’000

Neither past due nor impaired 15,362 10,362 Impaired 22,226 22,246

37,588 32,608


17. Receivables (cont’d.)

(a) Loans and advances (cont’d.)

Loans and advances that are neither past due nor impaired

Loans and advances that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

Movement in allowance accounts

Group 2015 2014 RM’000 RM’000

At 1 January 22,246 22,269 Write-back of allowance for impairment (Note 5) (20) (23)

At 31 December 22,226 22,246

(b) Outstanding premium including agents/brokers balance and amount due from reinsurers/ceding companies and co-insurers

The ageing analysis of the Group’s gross outstanding premium including agents/brokers balance and amount due from reinsurers/ceding companies and co-insurers are as follows:

Group 2015 2014 RM’000 RM’000

Neither past due nor impaired - - 1 to 30 days past due but not impaired 87,962 91,344 31 to 60 days past due but not impaired 13,747 16,548 61 to 90 days past due but not impaired 21,043 14,953 91 to 120 days past due but not impaired 34,008 14,757 More than 121 days past due but not impaired 29,089 10,256 185,849 147,858 Impaired 17,960 13,229

203,809 161,087

For outstanding balances to be classified as “past due and impaired”, contractual payments must be in arrears for more than six months. No collateral is held as security for any past due or impaired assets. A reconciliation of the allowance for impairment is as follows:


Group 2015 2014 RM’000 RM’000

At 1 January 13,229 6,918 Charge for the year (Note 6) 4,731 6,311

At 31 December 17,960 13,229



(c) Trade receivables

The ageing analysis of the Group’s trade receivables are as follows: Group 2015 2014 RM’000 RM’000

Neither past due nor impaired 989 933 1 to 30 days past due but not impaired 163 92 31 to 60 days past due but not impaired 41 19 61 to 90 days past due but not impaired 1 37 91 to 120 days past due but not impaired 12 - More than 121 days past due but not impaired 24 94 241 242

1,230 1,175

Trade receivables that are neither past due nor impaired

Trade receivables that are neither past due nor impaired are creditworthy debtors with good payment records with the Group.

None of the Group’s trade receivables that are neither past due nor impaired have been renegotiated during the financial year.

(d) Other receivables

Breakdown of other receivables of the Group and the Company are as follows: Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Share of net assets in MMIP 60,923 54,101 - - Deposits 1,244 1,054 435 425 Prepayments 1,633 1,726 114 247 Amount due from third parties for completion of developments 3,299 29,860 - - Deposit received from disposal of shares in a subsidiary deposited in escrow account - 17,998 - - Income due and accrued 11,528 7,144 - 8 Consideration paid for purchase of a land - 75,079 - - Less: allowance for impairment - (10,134) - 64,945 Others 8,856 5,015 295 573 Less: allowance for impairment (141) (141) 8,715 4,874

87,342 181,702 844 1,253



(d) Other receivables (cont’d)


Group 2015 2014 RM’000 RM’000

At 1 January 10,275 10,275 Reversal of impairment loss (Note 5) (10,134) -

At 31 December 141 10,275

(e) Amounts due from subsidiaries

The amounts due from subsidiaries consist of amounts which are unsecured, repayable on demand and non-interest bearing except for an amount of RM1,823,000 (2014: RM67,213,000) which bore interest at 3.00% (2014 : 3.00%-5.47%) per annum.

The Group and the Company has no significant concentration of credit risk that may arise from exposures to a single receivable or to group of receivables and the Group and the Company’s normal trade credit term is 30 to 90 days (2014: 30 to 90 days).

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19. Cash and cash equivalent Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Cash at banks and on hand 75,567 18,567 20,542 127 Short term deposits with licensed banks 456,613 463,147 - 3,100

532,180 481,714 20,542 3,227 Less: Short term deposits with licensed banks with maturity period of more than 3 months (306) (296) - -

Cash and cash equivalents 531,874 481,418 20,542 3,227

Short term deposits of the Group and the Company are placed for periods ranging between 1 day to 365

days (2014: 1 day to 365 days).

The effective interest rates of deposits at the reporting date were: Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000

Short term deposits with licensed banks 2.95%-4.00% 2.90%-3.35% 2.95%-4.00% 2.90%-3.35%

20. Share capital Number of ordinary shares of RM1.00 each Amount 2015 2014 2015 2014 RM RM Authorised share capital At 1 January/ 31 December 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000

Issued and fully paid At 1 January/ 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.


21 Other reserves

Group 2015 2014 RM’000 RM’000

Capital reserve (Note (a)) 41,903 41,903 Fair value reserve (Note (b)) 201 808

42,104 42,711

(a) Capital reserve represents a non-distributable reserve arising from capitalisation of reserve via bonus

issue and a gain on disposal of a freehold land of a subsidiary.

(b) Fair value reserve represents the cumulative fair value changes, net of tax, of AFS financial assets until they are disposed off or impaired.

22. Merger deficit

The merger deficit relating to business combination involving entities under common control, is accounted for by applying the pooling of interest method. The difference between the consideration paid and the share capital and reserves of the subsidiaries acquired is reflected as a merger deficit.

Group 2015 2014 RM’000 RM’000

Cost of investment in subsidiaries under pooling of interest method 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

23. Retained profits

The Company may distribute dividends out of its entire retained earnings as at 31 December 2015 under the single tier system.

24. Borrowings

Group 2015 2014 RM’000 RM’000

Current Secured: Revolving credit 3,000 3,000 Term loans 18,851 33,595

21,851 36,595

Non-current Secured: Revolving credit - 3,000 Term loans 4,997 23,848

4,997 26,848


24. Borrowings (cont’d)

Group 2015 2014 RM’000 RM’000

Total loans and borrowings Revolving credits 3,000 6,000 Term loans 23,848 57,443

26,848 63,443

The remaining maturities of the loans and borrowings are as follows:

Group 2015 2014 RM’000 RM’000

On demand or within one year 21,851 36,595 Later than 1 year and not later than 2 years 4,997 21,851 Later than 2 years and not later than 3 years - 4,997

26,848 63,443

The revolving credit and term loans bear interest at rates ranging between 5.30%-5.51% (2014: 5.10%-

5.35%) and 5.39%-5.59% (2014: 4.96%-5.47%), respectively, per annum during the financial years.

The borrowings are secured by corporate guarantees of the subsidiaries and certain investment properties as disclosed in Note 11.

25. Deferred tax assets/(liabilities) Group 2015 2014 RM’000 RM’000

At 1 January (11,608) (12,481) Recognised in: - other comprehensive income 466 2,589 - income statements (Note 8) 1,078 (1,716)

At 31 December (10,064) (11,608)

Presented in the statements of financial position: Deferred tax assets 1,561 1,300 Deferred tax liabilities (11,625) (12,908)

(10,064) (11,608)

Presented after appropriate offsetting as follows: Deferred tax assets 9,907 9,838 Deferred tax liabilities (19,971) (21,446)

(10,064) (11,608)


25. Deferred tax assets/(liabilities) (cont’d) (a) Deferred tax assets

Unused tax losses and

Allowance unabsorbed Property, for capital plant and impairment allowances equipment Total RM’000 RM’000 RM’000 RM’000 At 1 January 2015 774 7,764 1,300 9,838 Transfer from deferred tax liabilities - - (104) (104) Recognised in income statements 75 (534) 632 173

At 31 December 2015 849 7,230 1,828 9,907

Merger and acquisition of subsidiaries 813 9,677 1,108 11,598 Recognised in income statements (39) (1,913) 192 (1,760)

At 31 December 2014 774 7,764 1,300 9,838

(b) Deferred tax liabilities Investment property,

property, plant and equipment and fair value changes on Unearned investment premium Total RM’000 RM’000 RM’000 At 1 January 2015 21,334 112 21,446 Transfer to deferred tax assets (104) - (104) Recognised in: - other comprehensive income (466) - (466) - income statements (944) 39 (905)

At 31 December 2015 19,820 151 19,971

Merger and acquisition of subsidiaries 23,979 100 24,079 Recognised in: - other comprehensive income (2,589) - (2,589) - income statements (56) 12 (44)

At 31 December 2014 21,334 112 21,446


25. Deferred tax assets/(liabilities) (cont’d)

Unrecognised deferred tax assets

The Group has the following tax losses and capital allowances that are available indefinitely for off-setting against future taxable profits of the entities in which they arose, subject to the requirements of the Income Tax Act, 1967.

Group 2015 2014 RM’000 RM’000

Tax losses 157,270 158,932 Capital allowances 5,300 5,300

162,570 164,232

26. Payables Group Company Note 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Trade payables and

bills payable 1,425 1,353 - - Amount due to reinsurers

and cedants 149,243 109,739 - - Amount due to agents/

broker and insurers 3,715 3,702 - - Other payables and accruals (a) 27,347 26,734 5,306 3,917 Advances received from third parties (b) 31,000 65,000 - - Deposit received for

disposal of shares in a subsidiary - 17,998 - -

Sundry creditors 27,720 39,583 - - Amounts due to subsidiaries (c) - - 136,037 194,813 Amounts due to shareholders

of subsidiaries (d) 12,774 12,774 - -

253,224 276,883 141,343 198,730

(a) The other payables are non-interest bearing and are repayable on demand.

(b) Represent amounts received from joint venture agreements’ partners relating to the development of certain investment properties as disclosed in Note 11.

(c) Amounts due to subsidiaries are unsecured, repayable on demand and non-interest bearing, except for an amount of RM57,914,000 (2014: RM150,462,000) which bore interest at 3.00% (2014: 3.00%-5.00%) per annum.

(d) The amounts due to shareholders of subsidiaries represent amounts funded by shareholders for the acquisitions of investment properties which are unsecured, non-interest bearing and repayable on demand.


27. Operating lease arrangements

(a) The Group as lessor

The Group has entered into operating lease agreements for the rent of certain office premises. These non-cancellable leases have an average life of between 1 to 5 years with certain contracts carrying renewal options in the contracts. These contracts include fixed rentals over the tenure of the lease period.

The future aggregate minimum lease payments receivable under operating lease contracted for as at the reporting date but not recognised as receivables, are as follows:

Group 2015 2014 RM’000 RM’000

Future minimum rental income receivables:

Not later than 1 year 304 435 Later than 1 year and not later than 5 years 349 342

653 777

(b) The Group as lessee

The Group has entered into operating lease agreements for the use of certain office premises. These leases have an average life of between 1 to 5 years with certain contracts carrying renewal options in the contracts.

The future aggregate minimum lease payments under operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows:

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Future minimum rental payments: Not later than 1 year 1,321 2,910 1,116 1,116 Later than 1 year and not later

than 5 years 672 1,898 558 1,675

1,993 4,808 1,674 2,791

28. Capital commitments Group 2015 2014 RM’000 RM’000

Approved and contracted for: Property, plant and equipment and computer software 2,317 1,359


29. Material litigation

(a) Kuala Lumpur High Court Suit No. S1-22-946-2008

On 6 October 2008, Leisure Dotcom Sdn. Bhd. (“Leisure Dotcom”), a subsidiary, commenced a legal proceeding at the High Court of Malaya (“High Court”) at Kuala Lumpur against Globesource Sdn. Bhd. (“GSB”) claiming for among others, specific performance for delivery of a piece of freehold land and 2 leases (“the properties”) in Kuala Lumpur pursuant to a conditional sale and purchase agreement dated 21 June 2007 entered into between Leisure Dotcom and GSB (“SPA”). Pursuant to the SPA, GSB is to sell and Leisure Dotcom is to purchase the properties for a total consideration of RM72,162,000. Upon the execution of the SPA, Leisure Dotcom paid a deposit of RM7,216,000 representing 10.00% of the purchase price. Subsequent to that, Leisure Dotcom paid the balance purchase price but such sum was returned by GSB. As the result, the sale and purchase under the SPA was not completed.

Hence, Leisure Dotcom filed a claim against GSB. In turn, GSB had counterclaimed, among others, that the SPA had been validly terminated.

On 6 July 2012, Leisure Dotcom’s claim was dismissed with costs and GSB’s counterclaim was allowed with costs by the High Court. On 9 July 2012, Leisure Dotcom filed a notice of appeal and subsequently on 24 August 2012, a record of appeal at the Court of Appeal. On 19 September 2012, the High Court granted Leisure Dotcom an Erinford injunction against GSB and a stay of execution of the High Court decision pending the appeal. On 26 November 2012, Leisure Dotcom further filed a supplemental record of appeal at the Court of Appeal to include the grounds of judgment for the High Court case which was received on 8 November 2012. In light of the grounds of judgment of the High Court case, Leisure Dotcom had on 20 December 2012, further filed a second supplemental record of appeal to include an amended memorandum of appeal. Subsequently, Leisure Dotcom had on 22 February 2013 filed an application for leave to amend the memorandum of appeal, which was allowed by the Court of Appeal on 1 April 2013.

On 25 June 2014, the Court of Appeal unanimously allowed the appeal by Leisure Dotcom and set aside the order made by the High Court. The Court of Appeal also granted, among others, an order for specific performance of the SPA in respect of a piece of freehold land and costs of RM200,000.00 as costs of the proceedings in the Court of Appeal and the High Court.

GSB had filed an application for leave to appeal the decision made by the Court of Appeal to the Federal Court (“Leave Application”). On 17 November 2015, the Federal Court unanimously dismissed the Leave Application with costs of RM20,000.

Accordingly, the Group has recognised the RM75,079,000, which was previously recorded as other receivables together with directly attributable professional fees of RM5,250,000, as investment properties as of 31 December 2015.

(b) Shah Alam High Court Civil Suit No. 22NCVC-682-11/2013

On 18 November 2013, Mulpha Kluang Maritime Carriers Sdn. Bhd. (“Mulpha”), a subsidiary, commenced a legal proceedings at the Shah Alam High Court (“Court”) against the partners of Messrs. Mah-Kamariyah & Philip Koh (“MKPK”) claiming for special damages of RM3,316,942 and other damages to be assessed by the court being the losses suffered by Mulpha.

Mulpha claims against MKPK is in their capacity as the conveyancing solicitors for Mulpha whereby

MKPK had failed to exercise professional skill, care and diligence in advising Mulpha and in handling two (2) conditional sale and purchase agreements (“SPAs”), both dated 12 October 2009, for the acquisition of two pieces of land in Kuala Lumpur (“the Land”). Subsequent to the conclusion of the said SPAs, Mulpha had discovered that the total area described in the SPAs therein were incorrect as part of each of the Land had in fact been surrendered to the State Authority in year 1988 and MKPK had failed, neglected and/or omitted to notify and/or advise Mulpha of the same.


29. Material litigation (cont’d) (b) Shah Alam High Court Civil Suit No. 22NCVC-682-11/2013 (cont’d)

The High Court on 21 April 2015 had delivered the decision which held that Mulpha’s claim for the sum of RM3,316,942 against MKPK is allowed with costs.

On 27 April 2015, MKPK had lodged an appeal to the Court of Appeal against the High Court’s decision. The Court of Appeal had fixed the appeal hearing on 11 April 2016.

(c) Johor Bahru High Court Suit No. 21NCVC-20-05/2014

Kelana Megah Development Sdn Bhd (“KMD”), a wholly-owned subsidiary, had on 9 May 2014 filed a civil suit at the High Court of Malaya in Johor Bahru (“High Court”) against the Government of the State of Johor and Petroliam Nasional Berhad (collectively referred to as the “”Defendants””) in connection with the compulsory land acquisition of 7 plots of land owned by KMD in relation to the RAPID Project in Johor.

This civil suit is filed against the Defendants following breaches of the Federal Constitution, the Land Acquisition Act 1960 and the National Land Code 1965.

KMD’s claim which is set out and particularised in the Statement of Claim dated 9 May 2014 seeks “inter alia” the return of the 7 plots of land illegally acquired and damages arising therefrom.

The civil suit will not have any operational impact on the Company and the Group. There are no losses that could arise from these proceedings except for an order for payment of costs if KMD is unsuccessful in this action or if the Defendants include a counterclaim which is allowed by the High Court.

In June 2014, the Defendants filed striking out applications to strike out KMD’s claim in the civil suit.

On 26 November 2014, the Defendants’ striking out applications were allowed with costs. On 8 December 2014, KMD filed its appeals to the Court of Appeal against the High Court’s decision on the Defendants’ striking out applications (“Appeals”).

KMD’s Appeals, which were heard on 8 December 2015, were dismissed by the Court of Appeal with costs of RM25,000 to be paid by KMD to each of the Defendants. On 5 January 2016, KMD filed its Applications for Leave to appeal the decision made by Court of Appeal to the Federal Court (“KMD’s Leave Applications”).

The hearing date for KMD’s Leave Application is not fixed to date.


30. Significant related party transactions

Parties are considered to be related to the Group if the Group has the ability, directly or indirectly, to control the party or exercise significant influence over the party in making financial and operating decisions, or vice versa, or where the Group and the party are subject to common control or common significant influence. Related parties may be individuals or other entities.

Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Subsidiaries: Interest receivable on loans - - 22 19 Investment income in respect of

gross dividends - - 40,377 195,043 Management fee receivables - - 1,900 2,862 Interest payable on loans - - (1,118) (4,768) Affiliated companies: Gross insurance premium receivables 2,222 2,949 - - Management fee receivables 864 882 864 882 Insurance commission payable (51) (556) - - Claims paid (842) (546) - - Professional fee paid (663) (596) (663) (596) Office rental paid - (23) - - IT management fee payable (76) (71) (76) (71)

(i) The above transactions are entered into in the normal course of business based on negotiated and mutually agreed terms.

(ii) Affiliated companies during the financial year refer to the following:

- Ganda Pesona Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director has a substantial financial interest.

- MWE Properties Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director has a substantial financial interest.

- Metra Management Sdn. Bhd., incorporated in Malaysia, which is a company in which a Director 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.


31. Significant events

Disposal of 49% shareholding in MPI Generali Insurans Berhad (“MPI Generali”)

On 18 December 2014, the Company has announced:

(i) Proposed disposal by Multi-Purpose Capital Holdings Berhad (“MPCHB”), a wholly-owned subsidiary of the Company, of 49,000,000 ordinary shares of RM1.00 each, representing 49% of the issued and paid-up share capital of MPI Generali to Generali Asia N.V. (“Generali Asia”), for a disposal consideration of approximately RM356,000,000, subject to adjustments;

(ii) Proposed granting of a call option by MPCHB to Generali Asia for Generali Asia to acquire from MPCHB and to require MPCHB to sell such number of shares which is equivalent to 21% of the issued and paid-up share capital of MPI Generali at the time of exercise of the call option; and

(iii) Proposed granting of a put option by MPCHB to Generali Asia for Generali Asia to sell to MPCHB and to require MPCHB to acquire all of the issued and paid-up share capital of MPI Generali held by Generali Asia at the time of exercise of the put option.

(Collectively to be referred to as “Proposals”)

On 5 November 2014, the Company announced through Maybank Investment Bank Berhad (“Maybank”) that BNM had approved the following:

i. Proposed disposal by MPCHB, of 49,000,000 ordinary shares of RM1.00 each in MPI Generali, representing 49% of the issued and paid-up share capital of MPI Generali to an interested party; and

ii. the grant of options by MPCHB to the interested party to acquire or dispose equity interest in MPI Generali.

On 18 December 2015, the Company has announced through Maybank that MPCHB had entered into a conditional share purchase agreement and a call and put option agreement with Generali Asia in relation to the Proposals. On the same date, MPCHB had also entered into a shareholders’ agreement with Generali Asia and MPI Generali, setting out their mutually agreed rights, duties, liabilities and obligations vis-a-vis each other in relation to the operation of MPI Generali as a joint venture between MPCHB and Generali Asia.

On 25 March 2015, the Company has announced that the Proposals were approved by the shareholders of the Company at the Extraordinary General Meeting held on the same day.

On 7 May 2015, the Company has announced that in relation to the Proposals, it has received consideration amounting to an aggregate of approximately RM356,000,000 via the following:

i. direct cash payment of approximately RM337,800,000 by Generali Asia; and

ii. the release of the Balance Escrow Sum of approximately RM18,200,000 by the escrow agent to MPCHB.

At the same time, MPCHB has also received the call and put option payment from Generali Asia amounting to an aggregate of approximately RM4,150,000.

In this regard, the Proposals were deemed completed on 7 May 2015.


31. Significant events (cont’d)

Disposal of 49% shareholding in MPI Generali Insurans Berhad (“MPI Generali”) (cont’d)

The summarised financial impact arising from the completion of the Proposals are as follows:

Consideration received Group 2015 RM’000 Consideration received prior to the Completion Audit* 359,953 Additional consideration received after the Completion Audit 34,185 394,138 Less: call and put option payment (4,150)

Total consideration received 389,988 Less: the Proposals’ exercise expenses (17,011) Less: net assets disposed (179,564) Less: proportionate goodwill derecognised (9,203)

Gain on disposal 184,210

The gain on disposal is included in the Group’s Statement of Changes in Equity.

* The Completion Audit refers to an audit on the financial statements of MPI Generali as of 30 April 2015.

Net cash inflow Group 2015 RM’000 Total consideration received 389,988 Less: the Proposals’ exercise expenses paid (15,143)

374,845


32. Financial risk management objectives and policies

The Group’s and the Company’s financial risk management policy seeks to ensure that adequate financial resources are available for the development of the Group’s and the Company’s businesses whilst managing its liquidity risk, credit risk, market price risk, interest rate risk and insurance risk. The Group and the Company operate within clearly defined guidelines that are approved by the Board of Directors. As the Group’s result is significantly contributed by MPI Generali, the insurance subsidiary, there are significant financial risks which relate to MPI Generali. Hence, the Group adopts the risk management objectives and policies from MPI Generali.

Risk Management Framework of MPI Generali Framework and responsibility

The Board of Directors of MPI Generali is committed to the development of an effective Risk Management Framework (“RMF”), with the aims of providing a consistent approach to risk and facilitating an accurate perception of acceptable risk by all employees. It forms an integral part of MPI Generali’s business strategic planning, performance agreement and general risk management culture. The RMF is established to provide guiding principles on risk management approach, risk governance structure, roles and responsibilities, methodology used for risk assessment, and risk monitoring and reporting.

Under the RMF, MPI Generali adopts the three lines of defence approach, where to provide an independent oversight to assist the Management in achieving its strategic plans and missions by implementing risk management and compliance activities across the organisation. In this regard, the Business Units act as the “first line of defence” while the risk control units and the Risk Management and Compliance act as the second and third line of defence, respectively.

The Board of MPI Generali entrusts the Risk Management Committee (“RMC”) with the overall responsibility for overseeing the risk management activities of the MPI Generali to ensure appropriate risk management in place and functioning effectively as well as to endorse appropriate risk management policies/frameworks and measurement methodologies across the organisation.

The RMC has a broad mandate to ensure the effective implementation of the objectives outlined in the RMF and compliance with them throughout MPI Generali. The RMC is periodically reporting higher risk exposures to the Board of MPI Generali. The roles and responsibilities as well as the authorities of the RMC are set out in the Board of MPI Generali’s approved Term of Reference (“TOR”) for RMC.

A Strategic Operations Management Committee (“SOMC”) has been established to serve as a medium between the RMC and the Management of MPI Generali. This Committee will oversee the daily risks management activities of MPI Generali to ensure that risks inherent in daily business activities are managed efficiently and effectively and will report regularly to the RMC on its recommendations and/or decisions.

In addition, the Board of MPI Generali delegates to the Chief Executive Officer (“CEO”) of MPI Generali the responsiblity for ensuring effective implementation and maintenance of this RMF and that all personnel adhere to its mandates.

The detailed line accountability for risk management is fully aligned with the MPI Generali Risk Governance structure. Accordingly, the approvals, responsibilities and accountabilities applicable to the identification, evaluation, management and reporting of MPI Generali’s risks are attributed to the CEO of MPI Generali, head of various department and branches.


32. Financial risk management objectives and policies (cont’d)

Objectives and policies of MPI Generali’s Risk Management Framework

The objective of MPI Generali’s risk management policy is to define an ongoing and consistent process for identifying, assessing, monitoring and reporting upon the significant risks faced by the departments and branch offices, and ultimately, MPI Generali.

The implementation of RMF allows the management of MPI Generali to manage risks within defined risk/return parameters, risk tolerances and risk management standards. As such it provides a framework for the effective identification, evaluation, management and reporting of MPI Generali’s risks.

Effective management of risks identified is implemented via establishment of internal controls, systems, policies and procedures. Systems are designed to provide reasonable assurance that assets are safeguarded, insurance risk exposure is within desired limit, reinsurance protection is adequate and counterparties are subject to security assessment. The RMF is reviewed on a periodic basis.

Capital Management Plan of MPI Generali

The objective of the Capital Management Plan (“CMP”) is to optimise the efficient and effective use of resources in order to maximise the return on equity and provide an appropriate level of capital to protect the policyholders taking into account events that can impact directly or indirectly on the operations and financial resilience of MPI Generali whilst complying with rules and regulations issued by the relevant authorities.

MPI Generali’s capital management is driven by the business strategies and taking into consideration the impact of business and regulatory environment in which MPI Generali operates in. To comply with the RBC Framework, MPI Generali has also set an Individual Target Capital Level (“ITCL”) which is above the minimum regulatory requirements.

Stress Test of MPI Generali

The CMP also includes a Stress Test Policy which requires a stress test be conducted twice a year.

Stress testing is a fundamental risk management tool in assessing the financial resilience of MPI Generali under exceptional but adverse possible events.

The stress tests results together with mitigating plans are tabled every half-year for deliberation and recommendation to the Board of MPI Generali for approval prior to submission to Bank Negara Malaysia.

Asset Liability Management (“ALM”)

The primary objective of MPI Generali’s asset/liability management policy is to ensure that adequate liquid assets are held at all times and provide a satisfactory and consistent earnings on these assets.

MPI Generali’s ALM is integrated with the management of the financial risks associated with MPI Generali’s other financial assets and liabilities not directly associated with insurance. MPI Generali’s SOMC and Investment Committee are primarily responsible for the asset/liability management based on guidelines approved by the Board of MPI Generali.


33. Financial instruments

(a) Assets/liabilities by categories Loans and Financial Assets/ receivables/ assets/ AFS liabilities other liabilities financial not in scope liabilities at FVTPL assets of MFRS 139 Total RM’000 RM’000 RM’000 RM’000 RM’000 Group 2015 Assets Property, plant and equipment - - - 81,570 81,570 Investment properties - - - 832,125 832,125 Investment in an associate - - - 515 515 Intangible assets - - - 34,859 34,859 Deferred tax assets - - - 1,561 1,561 Inventories - - - 269 269 Receivables 289,783 - - - 289,783 Reinsurance assets - - - 434,278 434,278 Investment securities - 409,252 396,964 - 806,216 Tax recoverable - - - 720 720 Cash and bank balances 532,180 - - - 532,180

821,963 409,252 396,964 1,385,897 3,014,076

Liabilities Payables 253,224 - - - 253,224 Insurance contract

liabilities - - - 929,881 929,881 Borrowings 26,848 - - - 26,848 Tax payable - - - 7,107 7,107 Deferred tax liabilities - - - 11,625 11,625 Derivative financial

instruments - 4,150 - - 4,150

280,072 4,150 - 948,613 1,232,835


33. Financial instruments (cont’d)

(a) Assets/liabilities by categories (cont’d) Loans and Financial Assets/ receivables/ assets/ AFS liabilities other liabilities financial not in scope liabilities at FVTPL assets of MFRS 139 Total RM’000 RM’000 RM’000 RM’000 RM’000

Group 2014

Assets Property, plant and equipment - - - 84,266 84,266 Investment properties - - - 748,661 748,661 Investment in an

associate - - - 539 539 Intangible assets - - - 43,161 43,161 Deferred tax assets - - - 1,300 1,300 Inventories - - - 231 231 Receivables 341,097 - - - 341,097 Reinsurance assets - - - 443,946 443,946 Investment securities - 113,900 327,656 - 441,556 Tax recoverable - - - 5,689 5,689 Cash and bank balances 481,714 - - - 481,714

822,811 113,900 327,656 1,327,793 2,592,160

Liabilities Payables 276,883 - - - 276,883 Insurance contract

liabilities - - - 897,733 897,733 Borrowings 63,443 - - - 63,443 Tax payable - - - 8,734 8,734 Deferred tax liabilities - - - 12,908 12,908

340,326 - - 919,375 1,259,701



(a) Assets/liabilities by categories (cont’d) Loans and Assets/ receivables/ Financial AFS liabilities other assets financial not in scope liabilities at FVTPL assets of MFRS 139 Total RM’000 RM’000 RM’000 RM’000 RM’000

Company 2015 Assets Property, plant and equipment - - - 1,104 1,104 Investment in subsidiaries - - - 1,231,034 1,231,034 Investment securities - 5,045 - - 5,045 Receivables 111,608 - - - 111,608 Cash and bank balances 20,542 - - - 20,542 Tax recoverable - - - 58 58

132,150 5,045 - 1,232,196 1,369,391

Liabilities Payables 141,343 - - - 141,343

141,343 - - - 141,343

2014 Assets Property, plant and equipment - - - 1,459 1,459 Investment in

subsidiaries - - - 1,197,486 1,197,486 Investment securities - 67,208 - - 67,208 Receivables 157,269 - - - 157,269 Cash and bank balances 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



(b) Liquidity risk

The Group actively manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all refinancing, repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. The Group also apportions its investments in marketable securities and other financial investments by maintaining different maturity profiles. In addition, the Group strives to maintain available banking facilities at a reasonable level to its overall debt position. As far as possible, the Group prudently balances its portfolio with some short term funding so as to achieve overall cost effectiveness.

In respect of the Group’s insurance business, the following policies and procedures are in place to mitigate MPI Generali’s exposure to liquidity risk:

i) A company-wide liquidity risk policy setting out the evaluation and determination of the components of liquidity risk for MPI Generali. Compliance with the policy is monitored and reported monthly and exposures and breaches are reported to MPI Generali’s SOMC as soon as practicable. The policy is regularly reviewed for pertinence and for changes in the risk environment.

ii) MPI Generali has set the guidelines on asset allocations, portfolio limit structures and maturity profiles of assets, in order to ensure sufficient funding is available to meet insurance and investment contracts obligations.

iii) MPI Generali has set up contingency funding plans which specify minimum proportions of funds to meet emergency calls as well as specifying events that would trigger such plans.

iv) MPI Generali’s treaty reinsurance contracts contains clauses permitting MPI Generali to call for funding to meet claim payment should claim events exceed a specify amount.

Analysis of financial instruments by remaining contractual maturities

The table below summarises the maturity profile of the Group’s and the Company’s financial assets and liabilities, reinsurance assets and insurance contract liabilities at the reporting date based on the carrying amount of these financial assets and liabilities.

Up to a More than No maturity year 1-5 years 5 years date Total RM’000 RM’000 RM’000 RM’000 RM’000 Group 2015

Financial assets Receivables 289,783 - - - 289,783 Reinsurance assets -

claim liabilities* 192,032 124,011 13,742 - 329,785 Investment securities 714 986 - 804,516 806,216 Cash and bank balances 456,613 - - 75,567 532,180

939,142 124,997 13,742 880,083 1,957,964

Financial liabilities Payables 253,224 - - - 253,224 Insurance contract liabilities

- claim liabilities* 376,662 243,243 26,953 - 646,858 Borrowings 21,851 4,997 - - 26,848 Derivative financial instrument - 4,150 - - 4,150

651,737 252,390 26,953 - 931,080



(b) Liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

The table below summarises the maturity profile of the Group’s and the Company’s financial assets and liabilities, reinsurance assets and insurance contract liabilities at the reporting date based on the carrying amount of these financial assets and liabilities. (cont’d)

Up to a More than No maturity year 1-5 years 5 years date Total RM’000 RM’000 RM’000 RM’000 RM’000 Group 2014

Financial assets Receivables 341,097 - - - 341,097 Reinsurance assets -

claim liabilities* 142,406 173,114 21,464 - 336,984 Investment securities 4,627 454 62,929 373,546 441,556 Cash and bank balances 463,147 - - 18,567 481,714

951,277 173,568 84,393 392,113 1,601,351

Financial liabilities Payables 276,883 - - - 276,883 Insurance contract liabilities

- claim liabilities* 330,600 268,897 30,086 - 629,583 Borrowings 36,595 26,848 - - 63,443

644,078 295,745 30,086 - 969,909

Company 2015 Financial assets Receivables 111,608 - - - 111,608 Investment securities - - - 5,045 5,045 Cash and bank balances - - - 20,542 20,542

111,608 - - 25,587 137,195

Financial liabilities Payables 141,343 - - - 141,343



(b) Liquidity risk (cont’d)

Analysis of financial instruments by remaining contractual maturities (cont’d)

Up to a More than No maturity year 1-5 years 5 years date Total RM’000 RM’000 RM’000 RM’000 RM’000 Company 2014 Financial assets Receivables 157,269 - - - 157,269 Investment securities - - - 67,208 67,208 Cash and bank balances 3,100 - - 127 3,227

160,369 - - 67,335 227,704

Financial liabilities Payables 198,730 - - - 198,730

* For insurance contracts liabilities and reinsurance assets, maturity profiles are determined

based on estimated timing of net cash outflows from the recognised insurance liabilities. Unearned premiums and the reinsurers’ share of unearned premiums have been excluded from the analysis as they are not contractual obligations.

(c) Credit risk

Credit risk is the risk of financial loss to the Group and the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The major classes of financial assets of the Group are deposits with financial institutions, AFS financial assets (unquoted debt securities and bonds), reinsurance assets, loan receivables, trade receivables and cash and bank balances

Credit risk arises when the Group’s and the Company’s cash assets are placed in interest-bearing instruments, mainly fixed and call deposits with licensed financial institutions. The Group and the Company manage this credit risk by spreading its deposits with a group of financial institutions.

Credit exposure

The table below shows the maximum exposure to credit risk for the components on the statements of financial position.


LAR: Short term deposits with licensed banks 456,613 463,147 - 3,100 Cash and bank balances 75,567 18,567 20,542 127 Receivables 289,783 341,097 111,608 157,269 AFS financial assets: Malaysian Government Papers 13,116 3,276 - - Unquoted debt securities 262,167 201,088 - - Reinsurance assets 434,278 443,946 - -

1,531,524 1,471,121 132,150 160,496



(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 2015 LAR: Short term deposits with licensed banks 432,807 23,806 - 456,613 Cash and bank balances 8,370 67,197 - 75,567 Receivables 5,777 97,916 186,090 289,783 AFS financial assets: Malaysian Government Papers - 13,116 - 13,116 Unquoted debt securities 237,771 24,396 - 262,167 Reinsurance assets 93,308 340,970 - 434,278

778,033 567,401 186,090 1,531,524

2014 LAR: Short term deposits with licensed banks 427,035 36,112 - 463,147 Cash and bank balances 18,470 97 - 18,567 Receivables - 192,997 148,100 341,097 AFS financial assets: Malaysian Government Papers - 3,276 - 3,276 Unquoted debt securities 193,797 7,291 - 201,088 Reinsurance assets 78,595 365,351 - 443,946

717,897 605,124 148,100 1,471,121

Company

2015 LAR: Cash and bank balances 20,524 18 - 20,542 Receivables - 111,608 - 111,608 20,524 111,626 - 132,150

2014 LAR: Short term deposits with licensed banks - 3,100 - 3,100 Cash and bank balances 108 19 - 127 Receivables - 157,269 - 157,269

108 160,388 - 160,496


33. Financial instruments (cont’d) (c) Credit risk (cont’d)

Credit exposure by credit rating (cont’d)

The table below provides information regarding the credit risk exposure of the Group and the Company by classifying assets according to the Rating Agency of Malaysia’s (“RAM”), Malaysian Rating Corporation Berhad (“MARC”), A.M. Best Company (“A.M. Best”) and Standards & Poor’s (“S&P”) credit ratings of counterparties. AAA is the highest possible rating.

AAA AA A Not rated Total Group RM’000 RM’000 RM’000 RM’000 RM’000 2015

LAR: Short-term deposits with licensed banks 183,603 4,517 244,687 23,806 456,613 Cash and bank balances 5,442 639 2,289 67,197 75,567 Receivables - 16 5,761 284,006 289,783 AFS financial assets: Malaysian Government Papers - - - 13,116 13,116 Unquoted debt securities 33,913 170,287 33,571 24,396 262,167 Reinsurance assets - 26,231 67,077 340,970 434,278

222,958 201,690 353,385 753,491 1,531,524

2014 LAR: Short-term deposits with licensed banks 217,543 244 209,248 36,112 463,147 Cash and bank balances 6,138 1,845 10,487 97 18,567 Receivables - - - 341,097 341,097 AFS financial assets: Malaysian Government Papers - - - 3,276 3,276 Unquoted debt securities 26,132 164,646 3,019 7,291 201,088 Reinsurance assets - 6,105 72,490 365,351 443,946

249,813 172,840 295,244 753,224 1,471,121


33. Financial instruments (cont’d) (c) Credit risk (cont’d)

Credit exposure by credit rating (cont’d)

AAA AA A Not rated Total Company RM’000 RM’000 RM’000 RM’000 RM’000 2015 LAR: Cash and bank balances 22 - 20,502 18 20,542 Other receivables - - - 111,608 111,608

22 - 20,502 111,626 132,150

2014 LAR: Short-term deposits with licensed banks - - - 3,100 3,100 Cash and bank balances 7 - 101 19 127 Other receivables - - - 157,269 157,269

7 - 101 160,388 160,496

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), regardless whether those changes are caused by factors specific to the individual financial instruments or its issuer or factors affecting similar financial instruments traded in the market.

The Group’s equity price risk exposure relates to financial assets whose values will fluctuate as a result of changes in market prices.

The Group is exposed to equity price risk arising from investments held by the Group and the Company in quoted shares and unit trusts in Malaysia and outside Malaysia.

The analysis below is performed for reasonably possible movements in equity price with all other variables held constant, showing the impact of statements of comprehensive income and equity.

Changes Impact on equity* in variable 2015 2014 Group % RM’000 RM’000 Market indices: Bursa Malaysia +10% 39,745 17,714 Bursa Malaysia -10% (39,745) (17,714) * Impact on equity reflects adjustments for tax, when applicable. (e) Interest rate risk

Interest rate risk is the risk that the value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates/profit yield.

The Group and the Company are exposed to interest rate risk primarily through its investments in fixed income securities and borrowings. Interest rate risk is managed by the Group and the Company on an ongoing basis.

The Group and the Company have no significant concentration of interest rate/profit yield risk.

The sensitivity analysis of the Group’s and the Company’s fixed income securities and borrowings are as follow:

Sensitivity of changes in Impact to Change in interest bearing debts profit before tax basis points Increase/(decrease) Increase/(decrease)

Group Company Group Company RM’000 RM’000 RM’000 RM’000 2015 Borrowings +25 / -25 97/(97) - 97/(97) - 2014 Borrowings +25 / -25 177/(177) - (177)/177 -



(e) Interest rate risk (cont’d)

Sensitivity of changes in fair value of Impact to Change in interest bearing assets profit before tax basis points Increase/(decrease) Increase/(decrease)

Group Company Group Company RM’000 RM’000 RM’000 RM’000

2015 Malaysian Government Papers +25 / -25 (33)/33 - (33)/33 - Unquoted debt securities +25 / -25 (655)/655 - (655)/655 - Short term deposits with licensed banks +25 / -25 1,233/(1,233) - 1,233/(1,233) -

2014

Malaysian Government Papers +25 / -25 8/(8) - 8/(8) - Unquoted debt securities +25 / -25 503/(503) - 503/(503) - Short term deposits with licensed banks +25 / -25 1,189/(1,189) 25/(25) 1,189/(1,189) 25/(25) (f) Insurance risk

MPI Generali underwrites various general insurance contracts, which are mostly on an annual coverage and annual premium basis, with the exception of short term policies such as Marine Cargo which covers the duration in which the cargo is being transported.

MPI Generali also underwrites some non-annual policies with coverage period more than one year such as Mortgage Reducing Personal Accident, Contractor’s All Risk and Engineering, Bonds and Workmen Compensation. The majority of the insurance businesses written by the Group are Fire and Motor. Other major lines of business include Contractor’s All Risk and Engineering, Workmen Compensation, Liabilities, Personal Accidents and other miscellaneous classes.

MPI Generali’s objectives of managing insurance risks are to enhance the long-term financial

performance of the business to achieve sustainable growth in profitability, strong asset quality and to continually optimise shareholders’ value. MPI Generali seeks to write those risks that it understands and that provide a reasonable opportunity to earn an acceptable profit.

Insurance risk is the inherent uncertainty regarding the occurrence, amount or timing of insurance

liabilities. Insurance contracts transfer risk to MPI Generali by indemnifying the policy holders against adverse effects arising from the occurrence of specified uncertain future events. The principal risk MPI Generali faces under insurance contracts is that the actual claims and benefits payments differ from expectations, the risks arise from the fluctuations in timing, frequency and severity of claims, as well as the adequacy of premiums and reserves.



(f) Insurance risk (cont’d) MPI Generali adopts the following measures to manage the insurance risks:

(i) MPI Generali has in place a claims management and control system to pay claims and control claim wastage or fraud. MPI Generali has claim review policies to assess all new and ongoing claims, review of claims handling procedures and investigation of possible fraudulent claims are put in place to reduce the risk exposure of MPI Generali. MPI Generali further enforces a policy of actively managing and promptly pursuing claims, in order to reduce its exposure to unpredictable future developments that can negatively impact the business. Inflation risk is mitigated by taking expected inflation into account when estimating insurance contract liabilities.

(ii) MPI Generali purchases reinsurance as part of its risks mitigation programme. The objectives for purchasing reinsurance are to provide market-leading capacity for MPI Generali’s customers while protecting the statements of financial position and optimising MPI Generali’s capital efficiency. Reinsurance is ceded on quota share, proportional and non-proportional basis. MPI Generali’s placement of reinsurance is diversified such that it is neither dependent on a single reinsurer nor are the operations of MPI Generali substantially dependent upon any single reinsurance contract.

The table below sets out the concentration of the MPI Generali’s insurance contract liabilities by type of insurance product:

Re-

Gross insurance Net RM’000 RM’000 RM’000

Group

2015

Claim liabilities Motor 220,247 (7,703) 212,544 Fire 125,444 (101,999) 23,445 Marine, Aviation & Transit 89,116 (82,837) 6,279 Miscellaneous 212,051 (137,246) 74,805

646,858 (329,785) 317,073

Premium liabilities Motor 97,493 (13,845) 83,648 Fire 40,506 (23,298) 17,208 Marine, Aviation & Transit 35,026 (32,812) 2,214 Miscellaneous 109,998 (34,538) 75,460

283,023 (104,493) 178,530



(f) Insurance risk (cont’d) Re- Gross insurance 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 Marine, Aviation & Transit 46,704 (44,342) 2,362 Miscellaneous 93,267 (29,217) 64,050

268,150 (106,962) 161,188

Key Assumptions

The principal assumption underlying the liability estimates is that MPI Generali’s future claims development will follow a similar pattern to past claims development experience. This includes assumptions in respect of average claims costs, claims handling cost and claims numbers for each accident year.

Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, change in market factors such as public attitude to claiming, economic conditions, as well as internal factors, such as, portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as, judicial decisions and government legislation affect the estimation.

Other key circumstances affecting the reliability of assumptions include variation in interest rates, delays in settlement and changes in foreign rates.

MPI Generali has based its risk margin for adverse deviation for the provisions for unexpired risks and insurance claims at a minimum 75% of sufficiency, according to the requirement set by Bank Negara Malaysia under the RBC Framework.



(f) Insurance risk (cont’d)

Sensitivities

MPI Generali has appointed independent actuarial firm to evaluate its valuation models on various bases. An analysis of sensitivity around various scenarios provides an indication of the adequacy of MPI Generali’s estimation process in respect of its insurance contracts. The table presented below demonstrates the sensitivity of the insurance contract liabilities estimates to particular movements in assumptions used in the estimation process.

The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross and net liabilities, profit before tax and equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear.

Impact on Impact Impact Change in gross on net on profit Impact on assumption liabilities liabilities before tax equity* RM’000 RM’000 RM’000 RM’000

2015 Average claim

cost +10% 57,773 26,072 (26,072) (19,554) Average number of claims +10% 34,549 23,171 (23,171) (17,378) Average claims

settlement period Increase by 9,317 6,105 (6,105) (4,579) 6 months

2014 Average claim cost +10% 56,654 23,967 (23,967) (17,975) Average number

of claims +10% 36,494 20,252 (20,252) (15,189) Average claims

settlement period Increase by 8,971 5,632 (5,632) (4,224) 6 months

* impact on equity reflects adjustments for tax, when applicable



(f) Insurance risk (cont’d)

Claim Development Table

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at reporting date, together with cumulative payments to-date.

In setting provisions for claims, MPI Generali gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting reserves when there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greater when the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease.

The management of MPI Generali believes that the estimate of total claims outstanding as of 31 December 2015 are adequate. However, due to the inherent uncertainties in the reserving process, it cannot be assured that such balances will ultimately prove to be adequate.

Information in the claims development table below is provided to the extent available as the current actuary was only appointed in 2007.


33.

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33.

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ranc

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tsta

ndin

g lia

bilit

ies

(trea

ty in

war

d)

60,

927

Bes

t est

imat

e of

cla

im li

abili

ties

289

,465

C

laim

han

dlin

g ex

pens

es

6,2

80

Fund

PR

AD

at 7

5% c

onfid

ence

inte

rval

2

1,32

8

Net

gen

eral

insu

ranc

e co

ntra

ct li

abili

ties

per s

tate

men

ts o

f fina

ncia

l pos

ition

(Not

e 18

)

317

,073


33.

Fina

ncia

l ins

trum

ents

(con

t’d)

(f)

In

sura

nce

risk

(con

t’d)

Cla

im D

evel

opm

ent T

able

(con

t’d)

Gro

ss g

ener

al in

sura

nce

cont

ract

liab

ilitie

s 20

14

Gro

up

Pr

ior 2

007

2

008

2

009

2

010

2

011

2

012

2

013

2

014

T

otal

A

ccid

ent y

ear

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

R

M’0

00

RM

’000

A

t end

of a

ccid

ent y

ear

201

,119

2

82,0

98

364

,710

2

73,9

55

221

,090

2

25,9

00

250

,572

3

19,9

27

One

yea

r lat

er

201

,119

2

82,0

98

283

,469

2

97,4

69

196

,534

2

18,4

91

275

,038

Two

year

s la

ter

201

,119

2

32,1

93

276

,209

2

83,8

44

185

,601

2

06,3

08

Thre

e ye

ars

late

r 1

97,0

27

227

,013

2

73,5

41

281

,178

1

77,9

84

Fo

ur y

ears

lat

er

195

,365

2

26,8

50

268

,800

2

58,7

19

Five

yea

rs la

ter

194

,270

2

27,2

55

258

,588

Six

yea

rs la

ter

191

,780

2

21,1

87

Sev

en y

ears

late

r 2

01,4

81

Cur

rent

est

imat

e of

cum

ulat

ive

clai

ms

incu

rred

2

01,4

81

221

,187

2

58,5

88

258

,719

1

77,9

84

206

,308

2

75,0

38

319

,927

At e

nd o

f acc

iden

t yea

r (5

2,27

1)

(63,

026)

(1

10,6

54)

(66,

089)

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6,85

7)

(68,

404)

(7

8,10

3)

(107

,625

)

O

ne y

ear l

ater

(9

8,33

4)

(145

,216

) (1

96,9

34)

(145

,219

) (1

32,0

63)

(140

,189

) (1

57,2

22)

Two

year

s la

ter

(165

,102

) (1

75,2

15)

(225

,951

) (1

64,2

23)

(152

,569

) (1

60,1

86)

Thre

e ye

ars

late

r (1

78,2

72)

(194

,030

) (2

33,7

45)

(182

,266

) (1

59,2

73)

Fo

ur y

ears

late

r (1

80,8

74)

(198

,157

) (2

37,1

11)

(190

,640

)

Fi

ve y

ears

late

r (1

82,0

46)

(200

,310

) (2

40,4

19)

S

ix y

ears

late

r (1

82,4

60)

(206

,969

)

S

even

yea

rs la

ter

(185

,614

)

Cum

ulat

ive

paym

ents

to d

ate

(185

,614

) (2

06,9

69)

(240

,419

) (1

90,6

40)

(159

,273

) (1

60,1

86)

(157

,222

) (1

07,6

25)

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ss g

ener

al in

sura

nce

out

stan

ding

liab

ilitie

s

(

dire

ct a

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tive)

1

5,86

7

14,

218

1

8,16

9

68,

079

1

8,71

1

46,

122

1

17,8

16

212

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5

11,2

84

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e re

serv

es re

conc

iliat

ion

diffe

renc

e be

twee

n S

MC

D a

nd G

For

ms

1

,598

G

ross

gen

eral

insu

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tsta

ndin

g lia

bilit

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(trea

ty in

war

d)

56,

616

Bes

t est

imat

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cla

im li

abili

ties

569

,498

C

laim

han

dlin

g ex

pens

es

3,8

99

Fund

PR

AD

at 7

5% c

onfid

ence

inte

rval

5

6,18

6

Gro

ss g

ener

al in

sura

nce

con

trac

t lia

bilit

ies

per s

tate

men

ts o

f fina

ncia

l pos

ition

(N

ote

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6

29,5

83


33.

Fina

ncia

l ins

trum

ents

(con

t’d)

(f)

In

sura

nce

risk

(con

t’d)

Cla

im D

evel

opm

ent T

able

(con

t’d)

Net

gen

eral

insu

ranc

e co

ntra

ct li

abili

ties

2014

Gro

up

Pr

ior 2

007

2

008

2

009

2

010

2

011

2

012

2

013

2

014

T

otal

A

ccid

ent y

ear

RM

’000

R

M’0

00

RM

’000

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t yea

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8,12

6

115

,506

1

20,4

10

125

,104

1

29,8

88

142

,610

1

57,3

93

184

,690

O

ne y

ear l

ater

9

0,45

4

113

,749

1

18,0

98

122

,605

1

23,3

52

137

,867

1

58,5

87

Tw

o ye

ars

late

r 9

1,98

8

114

,565

1

19,2

18

120

,211

1

21,0

22

129

,143

Th

ree

year

s la

ter

91,

075

1

13,7

94

118

,971

1

17,7

92

117

,274

Four

yea

rs la

ter

90,

489

1

13,1

96

119

,025

1

16,1

54

Five

yea

rs la

ter

90,

095

1

13,0

10

119

,493

Six

yea

rs la

ter

88,

503

1

11,5

21

Sev

en y

ears

late

r 9

0,87

6

Cur

rent

est

imat

e of

c

umul

ativ

e cl

aim

s in

curr

ed

90,

876

1

11,5

21

119

,493

1

16,1

54

117

,274

1

29,1

43

158

,587

1

84,6

90

At e

nd o

f acc

iden

t yea

r (4

1,07

8)

(51,

593)

(4

9,96

2)

(46,

848)

(4

7,30

8)

(55,

488)

(6

3,10

9)

(76,

737)

O

ne y

ear l

ater

(7

1,97

6)

(86,

076)

(8

7,68

8)

(85,

718)

(8

5,41

5)

(98,

085)

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15,4

60)

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o ye

ars

late

r (7

7,33

2)

(96,

674)

(1

00,2

43)

(96,

694)

(9

8,11

4)

(110

,481

)

Th

ree

year

s la

ter

(83,

181)

(1

03,0

78)

(107

,283

) (1

02,4

41)

(102

,597

)

Four

yea

rs la

ter

(84,

819)

(1

04,7

86)

(109

,870

) (1

04,0

87)

Five

yea

rs la

ter

(85,

729)

(1

06,1

11)

(112

,243

)

Six

yea

rs la

ter

(85,

969)

(1

07,1

10)

Sev

en y

ears

late

r (8

6,66

5)

Cum

ulat

ive

paym

ents

to d

ate

(86,

665)

(1

07,1

10)

(112

,243

) (1

04,0

87)

(102

,597

) (1

10,4

81)

(115

,460

) (7

6,73

7)

Net

gen

eral

insu

ranc

e

o

utst

andi

ng li

abili

ties

(dire

ct a

nd fa

culta

tive)

4

,211

4

,411

7

,250

1

2,06

7

14,

677

1

8,66

2

43,

127

1

07,9

53

212

,358

Cas

e re

serv

es re

conc

iliat

ion

diffe

renc

e be

twee

n S

MC

D a

nd G

For

ms

1

,598

N

et g

ener

al in

sura

nce

outs

tand

ing

liabi

litie

s (tr

eaty

inw

ard)

5

6,61

6

Bes

t est

imat

e of

cla

im li

abili

ties

270

,572

C

laim

han

dlin

g ex

pens

es

3,8

99

Fund

PR

AD

at 7

5% c

onfid

ence

inte

rval

1

8,12

8

Net

gen

eral

insu

ranc

e co

ntra

ct li

abili

ties

per s

tate

men

ts o

f fina

ncia

l pos

ition

(Not

e 18

)

292

,599



(g) Fair values

The following methods and assumptions are used to estimate the fair values of the following classes of financial instruments:

(i) Cash and bank balances, receivables, payables and borrowings

The carrying amounts of these financial assets and liabilities are reasonable approximation of fair values, either due to their short-term nature or that they are floating rate instruments that are re-priced to market interest rates on or near the reporting date.

The carrying amounts of the loans and borrowings are reasonable approximations of fair values due to the insignificant impact of discounting.

(ii) Quoted investments

The fair value of quoted investments is determined by reference to stock exchange quoted market bid prices at the close of the business on the reporting date.

(iii) Unquoted investments

The fair value of the unquoted investments of the Group, except for the unquoted shares in Malaysia are determined based on valuations models which uses observable data.

Included in AFS financial assets as of 31 December 2015 was unquoted shares of RM1,001,000 (2014:RM1,001,000) that were carried at cost as their fair value could not be reliably measured. These securities were acquired for long term investment purposes.

(iv) Amount due from/to subsidiaries

The Group and the Company do not anticipate the carrying amounts recorded at the reporting date that would eventually be received or settled to be significantly different from the fair values as the amounts are repayable on demand.

Fair value hierarchy

The table below analyses those financial instruments carried at fair value by their valuation methods and non-financial assets which are carried at cost in the statements of financial position, of which their fair value are disclosed. The different levels have been defined as follows:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: other techniques for which all inputs that have a significant effect on the recorded fair value observable, either directly or indirectly

Level 3 : inputs for the asset or liability that are not based on observable market data (unobservable inputs)



(g) Fair values (cont’d)

As at 31 December 2015, the Group and the Company held the following financial instruments carried at fair value in the statements of financial position:

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 Group

At 31 December 2015 Current Financial assets at FVTPL 409,252 - - 409,252 Non-current AFS financial assets* 120,680 275,283 - 395,963 Total investment 529,932 275,283 - 805,215

At 31 December 2014 Current Financial assets at FVTPL 113,900 - - 113,900 Non-current AFS financial assets* 122,291 204,364 - 326,655 Total investment 236,191 204,364 - 440,555

* excluding unquoted shares that are carried at cost Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000 Company At 31 December 2015 Current Financial assets at FVTPL 5,045 - - 5,045

At 31 December 2014 Current Financial assets at FVTPL 67,208 - - 67,208



(g) Fair values (cont’d)

The Group held the following non-financial assets carried at cost in the statements of financial position but which fair values are disclosed as follows:

Level 1 Level 2 Level 3 Total RM’000 RM’000 RM’000 RM’000

Group At 31 December 2015 Non-current Land and buildings - - 176,850 176,850 Investment properties - - 1,310,985 1,310,985

- - 1,487,835 1,487,835

At 31 December 2014 Non-current Land and buildings - 176,680 - 176,680 Investment properties - 924,194 - 924,194

- 1,100,874 - 1,100,874

Due to changes in management’s assessment on the valuation, the fair value of these non-financial assets were recognised in Level 3 for the first time, as compared to Level 2 in 2014.

There were no transfer between Level 1 and Level 2 during 2015 and 2014.

Movement of Level 3: Group 2015 2014 RM’000 RM’000 As at 1 January - - Reclassified from Level 2 1,100,874 - Fair value increase 386,961 -

As at 31 December 1,487,835 -


34. Non-controlling interests (“NCI”) Group 2015 2014 RM’000 RM’000 At 1 January 13,620 15,389 Share of profit/(loss) for the year 21,049 (1,767) Acquisition of additional interests from NCI (15,467) (2) Arising from partial disposal of equity interest in a subsidiary (Note 31) 179,564 -

At 31 December 198,766 13,620

Financial information of the subsidiaries that have NCI are provided below: (cont’d.) Proportion of equity interest held by NCI: 2015 2014 % %

Direct subsidiaries of the Company: West-Jaya Sdn. Bhd. 30 30 Queensway Nominees (Tempatan) Sdn. Bhd. * 30 Queensway Nominees (Asing) Sdn. Bhd. * 30 Leisure Dotcom Sdn. Bhd. 30 30 Mimaland Berhad 2 2

Subsidiary of Multi-Purpose Capital Holdings Berhad: MPI Generali Insurans Berhad 49 -

Subsidiary of Multi-Purpose Shipping Corporation Berhad: Mulpha Kluang Maritime Carriers Sdn. Bhd. * 30

* Represents less than 0.06% shareholding


34. Non-controlling interests (“NCI”) (cont’d) Financial information of the subsidiaries that have NCI are provided below: (cont’d) Accumulated balances of NCI: 2015 2014 RM’000 RM’000 West-Jaya Sdn. Bhd. 8 24 Queensway Nominees (Tempatan) Sdn. Bhd. 2 1,572 Queensway Nominees (Asing) Sdn. Bhd. 11 15,209 Leisure Dotcom Sdn. Bhd. 39 (4,129) Mimaland Berhad 1,994 2,008 Mulpha Kluang Maritime Carriers Sdn. Bhd. 4 (1,064) MPI Generali Insurans Berhad 196,708 -

198,766 13,620

Summarised statement of comprehensive income: 2015 2014 RM’000 RM’000 Revenue 123,746 297 Other Income 55,867 1,683 Other expenses (90,771) (3,824)

Operating profit/(loss) 88,842 (1,844) Finance costs (465) (3,283)

Profit/(loss) before taxation 88,377 (5,127) Income tax expenses (16,104) (583)

Net profit/(loss) for the year, representing total comprehensive income/(loss) for the year 72,273 (5,710)

Attributable to non-controlling interests 21,049 (1,767)

The profit/(loss) attributable to NCI arise from the following companies: 2015 2014 RM’000 RM’000 West-Jaya Sdn. Bhd. (16) (36) Queensway Nominees (Tempatan) Sdn. Bhd. (13) (54) Queensway Nominees (Asing) Sdn. Bhd. (152) (591) Leisure Dotcom Sdn. Bhd. 4,168 (242) Mimaland Berhad (14) (34) Mulpha Kluang Maritime Carriers Sdn. Bhd. (68) (810) MPI Generali Insurans Berhad 17,144 -

21,049 (1,767)


34. Non-controlling interests (“NCI”) (cont’d) Financial information of the subsidiaries that have NCI are provided below: (cont’d.) Summarised statements of financial position as at 31 December: 2015 2014 RM’000 RM’000 Property, plant and equipment 7,618 - Investment properties 296,586 207,188 Investment securities 395,963 - Deferred tax assets 995 806 Intangible assets 2,960 - Trade receivables 185,850 - Other receivables 82,184 104,281 Reinsurance assets 434,278 - Short term deposits 456,307 - Tax recoverable 8 109 Cash and bank balances 17,989 342 Deferred tax liabilities (15,362) (16,309) Payables (205,379) (229,005) Insurance contract liabilities (929,881) - Tax payable (6,034) (285)

Total equity 724,082 67,127

Equity attributable to: Owners of the Company 525,316 53,507 Non-controlling interests 198,766 13,620

724,082 67,127

Summarised cash flow information for year ended 31 December: 2015 2014 RM’000 RM’000 Operating activities (468,019) (66,923) Financing activities 485,666 67,152

Net increase in cash and cash equivalents 17,647 229


35. Capital management The primary objective of the Group’s capital management is to maintain on optimal capital structure in

order to support its business and maximise shareholder value. The Group manages its capital structure and make adjustments to it, in light of changes in economic condition. To maintain or adjust its capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares.

The Group monitors capital using a gearing ratio, which is the net debt divided by total equity plus net

debt. The Group includes within its net debt, term loan, payables, less cash and bank balances and short term deposits. Capital of the Group represents total equity.

The debt to equity ratio as at 31 December 2015 and 31 December 2014 are as follows: Group Company 2015 2014 2015 2014 RM’000 RM’000 RM’000 RM’000 Payables 253,224 276,883 141,343 198,730 Borrowings 26,848 63,443 - - Less: Cash and bank balances (75,567) (18,567) (20,542) (127) Less: Short term deposits (456,613) (463,147) - (3,100)

(Net surplus of the fund)/net debt (252,108) (141,388) 120,801 195,503

Equity attributable to owners of the Company 1,582,475 1,318,839 1,228,048 1,227,898

Capital and net debt 1,330,367 1,177,451 1,348,849 1,423,401

Gearing ratio N/A N/A 9% 14%

36. Segment information The following segment information has been prepared in accordance with MFRS 8 Operating Segments,

which defines the requirements for the disclosure of financial information of an entity’s operating segments. It is prepared on the basis of the “management approach”, which requires presentation of the segments on the basis of internal reports about the components of the entity which are regularly reviewed by the chief operating decision-maker in order to allocate resources to a segment and to assess its performance. The Group’s businesses are organised into the following three segments based on the types of products and services that it provides:

(i) Insurance - underwriting of all classes of general insurance business;

(ii) Credit - provision of credit and related services; and (iii) Investments - ownership of buildings for rental income and hotel operation. The Directors are of the opinion that all inter-segment transactions have been entered into in the normal

course of business based on negotiated and mutual terms.


36. Segment information (cont’d) Insurance Credit Investments Total Group RM’000 RM’000 RM’000 RM’000 2015 (a) Revenue 339,341 2,156 39,290 380,787

(b) Results Segment results 77,146 10,387 21,115 108,648 Finance costs (2,441) Share of results of an associate (24)

Segment profit before tax 106,183 Income tax expense (19,629)

Profit for the year 86,554

(c) Assets and liabilities Segment assets 1,586,411 508,135 919,015 3,013,561 Investment in an associate 515

Total assets 3,014,076

Segment/total liabilities 1,122,108 6,716 104,011 1,232,835

2014 (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) Share of results of an associate (11)

Segment profit before tax 277,486 Income tax expense (33,833)

Profit for the year 243,653


36. Segment information (cont’d) Insurance Credit Investments Total Group RM’000 RM’000 RM’000 RM’000 2014

(c) Assets and liabilities Segment assets 1,471,209 138,514 981,898 2,591,621 Investment in an associate 539

Total assets 2,592,160

Segment/total liabilities 1,067,517 18,897 173,287 1,259,701

Group 2015 (d) Other information Capital expenditure 4,772 - 216 4,988 Depreciation of property, plant and equipment 2,173 - 3,791 5,964 Depreciation of investment properties 50 - 1,720 1,770 Amortisation of premium and intangible assets 911 - - 911 Allowance for impairment of receivables 4,731 - - 4,731 Write back of allowance for impairment for loans and advances - (20) (10,134) (10,154) Gain arising from fair value change in financial assets at FVTPL, net - (64) (379) (443) Realised gain on AFS financial assets 2,697 - - 2,697 Interest income (27,629) (5,850) (5,058) (38,537)


36. Segment information (cont’d) Insurance Credit Investments Total Group RM’000 RM’000 RM’000 RM’000 2014

(d) Other information Capital expenditure 1,730 - 2,338 4,068 Depreciation of property, plant and equipment 1,225 - 4,780 6,005 Depreciation of investment properties 50 - 1,720 1,770 Amortisation of premium and intangible assets 623 - - 623 Allowance for impairment of receivables 6,311 - - 6,311 Write back of allowance for impairment for loans and advances - (23) - (23) Loss arising from fair value change in financial assets at FVTPL, net - 10 208 218 Realised gain on AFS financial assets (5,394) - - (5,394) Interest income (24,095) (3,183) (5,734) (33,012) Non-cash expenses other than depreciation, amortisation and impairment losses 649 - 4 653

37. Subsidiaries and an associate Subsidiaries Group’s effective Effective interest held by Principal interest held * non-controlling interests* activities Name of subsidiaries (%) (%) (%) (%) 2015 2014 2015 2014

Direct subsidiaries of the Company Multi-Purpose Capital Investment Holdings Berhad 100 100 - - holding

Multi-Purpose Shipping Investment Corporation Berhad 100 100 - - holding and property investment


37. Subsidiaries and an associate (cont’d) Subsidiaries (cont’d) Group’s effective Effective interest held by Principal interest held * non-controlling interests* activities Name of subsidiaries (%) (%) (%) (%) 2015 2014 2015 2014

West-Jaya Sdn. Bhd. 70 70 30 30 Investment holding and property investment Queensway Nominees Property (Tempatan) Sdn. Bhd. 100 70 ** 30 investment Queensway Nominees Property (Asing) Sdn. Bhd. 100 70 ** 30 investment Caribbean Gateway Investment Sdn. Bhd. 100 100 - - holding

Jayavest Sdn. Bhd. 100 100 - - Investment holding

Leisure Dotcom 70 70 30 30 Property Sdn. Bhd. investment

Magnum.Com 100 100 - - Property Sdn. Bhd. investment Magnum Leisure 100 100 - - Operation of a Sdn. Bhd. hotel

Mimaland Berhad 98 98 2 2 Property investment Syarikat Perniagaan 100 100 - - Property Selangor Sdn. Bhd. investment & management and operation of hotel

Tibanis Sdn. Bhd. 100 100 - - Property investment Kelana Megah 100 100 - - Plantation Development and property Sdn. Bhd. holding



Subsidiaries of Multi-Purpose Capital Holdings Berhad (“MPCHB”)

MPI Generali Insurans 51 100 49 - General Berhad insurance

Multi-Purpose Credit 100 100 - - Investment Holdings Sdn. Bhd. holding

A subsidiary of MPI Generali Insurans Berhad Opus Institutional 100 100 - - Wholesale Income Fund 2 fund

United Institutional 100 - - - Wholesale Income Fund 2 fund

Subsidiaries of Multi-Purpose Credit Holdings Sdn. Bhd. Multi-Purpose Credit 100 100 - - Credit and Sdn. Bhd. leasing business, hire purchase and general loans financing

MP Factors Sdn. Bhd. 100 100 - - Business of factoring and property investment

Multi-Purpose Venture - 100 - - Dissolved Partners Sdn. Bhd.***

Multi-Purpose Credit 100 100 - - Nominee Nominees (Tempatan) services Sdn. Bhd.



Subsidiaries of Multi-Purpose Shipping Corporation Berhad

Mulpha Kluang Maritime 100 70 ** 30 Property Carriers Sdn. Bhd. investment Multi-Purpose 100 100 - - Property Development (PG) development Sdn. Bhd.

A subsidiary of Syarikat Perniagaan Selangor Sdn. Bhd. Flamingo Management 100 100 - - Hotel Sdn. Bhd. management

An associate of MPCHB

Group’s effective interest held * Accounting Name of an associate (%) (%) Principal model 2015 2014 activities applied

Tune Insurance (Labuan) Ltd. 20 20 Reinsurance Equity method

* Equals to the proportion of voting rights held

** Interest held by non-controlling interests for Queensway Nominees (Tempatan) Sdn. Bhd., Queensway Nominees (Asing) Sdn. Bhd. and Mulpha Kluang Maritime Carriers Sdn. Bhd. are 0.02%, 0.00001% and 0.05%, respectively.

*** On 24 June 2015, the Company announced that Multi-Purpose Venture Partners Sdn. Bhd., an indirect subsidiary of the Company, has been dissolved pursuant to Section 272(5) of the Companies Act, 1965.


38. Supplementary information The breakdown of the retained profits of the Group and of the Company into realised and unrealised

profits is presented below in accordance with the directive issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and prepared in accordance with Guidance on Special Matter No. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad Listing Requirements, as issued by the Malaysian Institute of Accountants.


Total retained profits - realised 657,187 423,815 - 8 - unrealised (11,251) (11,608) - (8)

Total share of retained profits from an associate - realised 415 439 - -

Less: Consolidation adjustments (88,607) (119,145) - -

Retained profits as per financial statements 557,744 293,501 - -

153

RESIDUAL AGE OF GROUP NET LEASE EXPIRY APPROX BUILDING BOOK VALUE DATE OFLOCATION TENURE (YEARS) DATE AREA DESCRIPTION (YEARS) (RM’000) REVALUATION 1 Lot PT 37379, H.S(D) 73892 , Freehold - - 233.18 acres - Lot PT 43359, H.S(D) 80852 , Lot PT 43360, H.S(D) 80853, Lot PT 43361, H.S(D) 80854, Lot PT 43362, H.S(D) 80855, Lot PT 43363, H.S(D) 80856, Lot PT 43365, H.S(D) 80858, Lot PT 43366, H.S(D) 80859, Lot PT 43367, H.S(D) 80860, Lot PT 43368, H.S(D) 80861, Vacant land 169,966 28.01.2016 Lot PT 43369, H.S(D) 80862, Lot PT 43370, H.S(D) 80863, Lot PT 43371, H.S(D) 80864, Mukim Rawang, District of Gombak, Selangor.

Lot 1048, PM 854, Leasehold 76 2091 2.22 acres - Bandar Kundang , Sg Bakau, District of Gombak, Selangor. 2 Lot 2947, Geran 307402 Freehold - - 124.41 acres - and Lot 3003, Geran 49265, Mukim Setapak, District of Gombak, Selangor. Lot PT B, H.S(D) 40430, Leasehold 54 2069 197.05 acres - Lot PT 7546, H.S(D) 40431, and Lot PT A, H.S(D) 1767, Vacant land 146,745 28.01.2016 Mukim Setapak, District of Gombak, Selangor. Lot PT 5300, H.S(M) 1726 Leasehold 76 2091 2.60 acres - and Lot PT 5301, H.S(M) 1727, Mukim Setapak, District of Gombak, Selangor. 3 Lot 200, Geran 12089, Freehold - - 1.50 acres Vacant land - 130,500 28.01.2016 Section 67, Bandar & Daerah Kuala Lumpur. 4 Lot 1216, Geran 8176, Freehold - - 1.66 acres 4 storey 13 80,329 28.01.2016 Section 67, Bandar & Building Daerah Kuala Lumpur. 5 Lot 296, Geran Mukim 528, Freehold - - 83.16 acres vacant land - 76,900 28.01.2016 Lot 306, Geran Mukim 531, Lot 1675, Geran Mukim 654, Lot 1713, Geran Mukim 672, Lot 1714, Geran Mukim 673, Lot 1465, Geran Mukim 889, Lot 1460, Geran Mukim 909, Lot 1461, Geran Mukim 910, Lot 2343, Geran Mukim 1047, Lot 2346, GRN 47939,

top 10 list of properties owneD by mphb capital groupas at 31 December 2015

154

RESIDUAL AGE OF GROUP NET LEASE EXPIRY APPROX BUILDING BOOK VALUE DATE OFLOCATION TENURE (YEARS) DATE AREA DESCRIPTION (YEARS) (RM’000) REVALUATION Lot 302, Geran Mukim 529, Lot 1677, Geran Mukim 656, Lot 1688, Geran Mukim 659, Lot 1462, Geran Mukim 886, Lot 1463, Geran Mukim 887, Lot 1464, Geran Mukim 888, Lot 1278, Geran Mukim 1008, Lot 1282, Geran Mukim 1010, Lot 1283, Geran Mukim 1011, Lot 1285, Geran Mukim 1013, Lot 1287, Geran Mukim 1014, Lot 1288, Geran Mukim 1015, Lot 14895, Geran Mukim 1443, Lot PT 6581, H.S.(M) 3475, and Lot PT 6582, H.S(M) 3476. Mukim 12, Telok Tempoyak, Daerah Barat Daya, Pulau Pinang 6 Lot 1282, Geran 47410 and Freehold - - 1.36 acres Vacant land - 61,790 28.01.2016 Lot 1283, Geran 42982, Section 67, Bandar & Daerah Kuala Lumpur. 7 Lot 109, GRN 83563, Freehold - - 971.40 acres - Lot 201, GRN 121896, Lot 364, GRN 83581, Lot 437, GRN 456954, Lot 519, GRN 82700, Lot 919, GRN 106049, Lot 980, GRN 121929 and Lot 1104, GRN 84211. Mukim Pengerang, Agriculture 60,549 08.01.2016 District of Kota Tinggi, Johor Lot 992, PN 13368, Leasehold 895 2910 731.12 acres - Lot 993, PN 58271, and Lot 994, PN 58272. Mukim Pengerang, District of Kota Tinggi, Johor. 8 Lot 4071, Geran 60996, Freehold - - 2.33 acres Hotel - 40,093 08.01.2016 Town of Tanjong Bungah, District of North East, Pulau Pinang. 9 Lot 18207, PM 435, Leasehold 76 2091 2.71 acres 4 storey 18 37,531 08.01.2016 Seksyen 2, Bandar Ulu Kelang, commercial Ampang Tasik, complex District of Gombak, Selangor. 10 Lot 13499, PM343, Leasehold 76 2091 12.28 acres Hotel, Lake 18-19 31,541 08.01.2016 Lot 13500, PM344 and & Boat house Lot 13501, PM345, Mukim Ulu Kelang, Ampang Tasik District of Gombak, Selangor.

top 10 list of properties owneD by mphb capital group as at 31 December 2015 (cont’d)

155

Class of Security : Ordinary shares of RM1.00 eachAuthorised Share Capital : RM1,000,000,000Total Issued And Paid-Up Capital : RM 715,000,000Voting Rights : 1 vote per share

No. of Holders % of Holders No. of Shares % of Shares

Largest Shareholders 30 0.21 521,349,497 72.92

Size of Holdings

less than 100 shares 138 0.95 3,723 0.00100 - 1,000 shares 3,783 25.97 2,320,144 0.331,001 -10,000 shares 8,277 56.82 31,559,170 4.4110,001-100,000 shares 2,062 14.16 59,569,391 8.33100,001- less than 5% of issued shares 305 2.09 369,224,393 51.645% and above of issued shares 2 0.01 252,323,179 35.29

Total 14,567 100.0 715,000,000 100.00

THIRTY (30) MAJOR SHAREHOLDERS AS AT 1 APRIL 2016

Name Shareholdings %

1. CIMB GROUP NOMINEES (TEMPATAN) SDN BHD 213,706,793 29.89 Pledged Securities Account For Casi Management Sdn Bhd

2. HSBC NOMINEES (ASING) SDN BHD 38,616,386 5.40 Exempt An For Credit Suisse (SG BR-TST-Asing)

3. UOB KAY HIAN NOMINEES (ASING) SDN BHD 35,654,200 4.99 Pledged Securities Account For Citibase Limited

4. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 30,871,000 4.32 Pledged Securities Account for MWE Holdings Berhad

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

8. UOB KAY HIAN NOMINEES (ASING) SDN BHD 15,145,500 2.12 Pledged Securities Account For Mr Sakarin Uppatthangkul

9. SHAMARA FINANCE LIMITED 14,135,633 1.98

10. HSBC NOMINEES (ASING) SDN BHD 11,187,780 1.56 Exempt An For Coutts & Co. Ltd (Sg.Branch)

11. CHONG YIEW ON 10,457,800 1.46

analysis of equity securities as at 1 april 2016

156

THIRTY (30) MAJOR SHAREHOLDERS AS AT 1 APRIL 2016 (cont’d)

Name Shareholdings %

12. CITIGROUP NOMINEES (ASING) SDN BHD 10,120,855 1.42 Exempt An For UBS AG Singapore (Foreign)

13. UOB KAY HIAN NOMINEES (TEMPATAN) SDN BHD 9,831,200 1.38 Pledged Securities Account For MCC Credit Sdn Bhd

14. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 9,500,750 1.33 Great Eastern Life Assurance (Malaysia) Berhad (Par 1)

15. ALLAMANDA GROWTH LIMITED 8,800,000 1.23

16. CIMSEC NOMINEES (TEMPATAN) SDN BHD 7,700,000 1.08 CIMB Bank For Heng Guan Sendirian Berhad

17. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 4,795,950 0.67 Great Eastern Life Assurance (Malaysia) Berhad (LPF)

18. UOB KAY HIAN NOMINEES (ASING) SDN BHD 4,780,000 0.67 New Kota Credit Sdn Bhd for Trade Key Investments Limited

19. KHOO SU CHIN 4,084,500 0.57

20. UOB KAY HIAN NOMINEES (ASING) SDN BHD 3,856,900 0.54 Pledged Securities Account For Mrs Suthera Uppaputthangkul 21. TAN SHU AYAN 3,655,400 0.51

22. CIMSEC NOMINEES (TEMPATAN) SDN BHD 3,450,000 0.48 CIMB for Lawrence Lim Swee Lin (PB)

23. T C HOLDINGS SENDIRIAN BERHAD 3,145,000 0.44

24. ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHD 3,077,800 0.43 Pledged Securities Account For Chong Yiew On

25. TANAH SUBOR SDN BHD 2,980,055 0.42

26. CITIGROUP NOMINEES (ASING) SDN BHD 2,727,500 0.38 Goldman Sachs International

27. JF APEX NOMINEES (TEMPATAN) SDN BHD 2,607,400 0.36 Pledged Securities Account For Teo Siew Lai (Margin)

28. CHOO SHIOW CHARN 2,226,000 0.31

29. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,166,300 0.30 Great Eastern Life Assurance (Malaysia) Berhad (LEEF)

30. MALAYSIA NOMINEES (TEMPATAN) SENDIRIAN BERHAD 2,150,950 0.30 Great Eastern Life Assurance (Malaysia) Berhad (PAR 3)

TOTAL 521,349,497 72.92

analysis of equity securities as at 1 april 2016 (cont’d)

157analysis of equity securities as at 1 april 2016 (cont’d)

SUBSTANTIAL SHAREHOLDERS AS AT 1 APRIL 2016

Direct Interest Indirect / Deemed InterestName No. of shares % No. of shares %

Casi Management Sdn Bhd (“CMSB”) 230,883,993 32.29 - -Hanton Capital Limited (“HCL”) - - (a) 230,883,993 32.29Cedar Holdings Limited (“CHL”) - - (b) 230,883,993 32.29Kularb Kaew Company Limited (“KKCL”) - - (b)230,883,993 32.29Cypress Holdings Limited (“Cypress”) - - (c) 230,883,993 32.29Tan Sri Dato’ Surin Upatkoon - - (d)261,921,093 36.63

Notes:-(a) Deemed interest by virtue of Section 6A(4) of the Companies Act, 1965 (“Act”) held through its shareholding of more

than 15% in CMSB.(b) Deemed interest by virtue of Section 6A(4) of the Act held through its shareholding of more than 15% in HCL.(c) Deemed interest by virtue of Section 6A(4) of the Act held through its shareholding of more than 15% in CHL and

KKCL.(d) Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in Cypress and

Pinjaya Sdn Bhd; and indirect interest held through his daughters, Ms Ivevei Upatkoon and Ms Maythini Upatkoon.

DIRECTORS’ INTEREST AS SHOWN IN THE REGISTER OF DIRECTORS’ SHAREHOLDINGS AS AT 1 APRIL 2016

(A) Interest In Shares In MPHB Capital Berhad (“MPHB Capital”)

Name Direct Interest Indirect / Deemed Interest No. of shares % No. of shares %

Tan Sri Dato’ Dr Yahya bin Awang 101,100 0.01 - - Tan Sri Dato’ Surin Upatkoon - - #261,921,093 36.63 Ms Ivevei Upatkoon 156,200 0.02 - - Dato’ Lim Tiong Chin 1,000,000 0.14 ^8,940,000 1.25 Mr Kuah Hun Liang 241,100 0.03 - -

Notes:-# Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in

Cypress and Pinjaya Sdn Bhd; and indirect interest held through his daughters, Ms Ivevei Upatkoon and Ms Maythini Upatkoon.

^ Deemed interest by virtue of Section 6A(4) of the Act held through his shareholdings of more than 15% in Keetinsons Sendirian Berhad, T.C. Holdings Sendirian Berhad and Trade Key Investments Limited.

(B) Interest In Shares In Related Corporations

Tan Sri Dato’ Surin Upatkoon by virtue of his interest in the shares of MPHB Capital, is also deemed to have interest in the shares of the subsidiaries of MPHB Capital to the extent that MPHB Capital has an interest.

Save as disclosed above, none of the other Directors of MPHB Capital have any interest in the shares of the subsidiaries of MPHB Capital as at 1 April 2016.

158 notice of annual general meeting

NOTICE IS HEREBY GIVEN that the Fourth Annual General Meeting of MPHB Capital Berhad (“the Company” or “MPHB Capital”) will be held at the Multi-Purpose Hall, 25th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur on Friday, 3 June 2016 at 9.30 a.m.

AGENDA

1. To receive and consider the Report of the Directors and the Audited Financial Statements for the year ended 31 December 2015 together with the Report of the Auditors thereon.

(Please refer to Note A)

2. To approve the payment of Directors’ fees amounting to RM240,000 in respect of the year ended 31 December 2015.

3. To re-elect the following Directors who retire by rotation in accordance with Article 113 of the Company’s Articles of Association:-

(i) Ms Ivevei Upatkoon(ii) Mr Kuah Hun Liang

4. To re-appoint Messrs Ernst & Young as Auditors of the Company and to authorise the Directors to fix the remuneration.

AS SPECIAL BUSINESS

To consider and, if thought fit, pass the following Ordinary Resolutions:-

5. ORDINARY RESOLUTION - Authority To Allot And Issue Shares Pursuant To Section 132D Of The

Companies Act, 1965

“THAT, subject always to the Companies Act, 1965, the Articles of Association of the Company and the approvals of the relevant governmental and/or regulatory authorities, the Directors be and are hereby empowered, pursuant to Section 132D of the Companies Act, 1965, to allot and issue shares in the Company from time to time and upon such terms and conditions and for such purposes as the Directors may deem fit provided that the aggregate number of shares issued pursuant to this resolution does not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company and THAT such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.”

6. ORDINARY RESOLUTION

- Proposed Renewal Of Authority For The Share Buy-Back

“THAT, subject always to the Companies Act, 1965, the Company’s Memorandum and Articles of Association, the Main Market Listing Requirements of Bursa Malaysia Securities Berhad (“Bursa Securities”) and any other relevant governmental and/or regulatory authority, approval be and is hereby given for the renewal of the authority granted by the shareholders of the Company at the Third Annual General Meeting of the Company held on 3 June 2015 for the Company to purchase its own shares from time to time and at any time such amount of ordinary shares of RM1.00 each in the Company as may be determined by the Directors of the Company from time to time through Bursa Securities upon such terms and conditions as the Directors may deem fit and expedient in the best interest of the Company (“Proposed Share Buy-Back”) provided that:-

(Resolution 1)

(Resolution 2)(Resolution 3)

(Resolution 4)

(Resolution 5)

(Resolution 6)

159notice of annual general meeting (cont’d)

(a) The maximum number of shares which may be purchased and/or held as treasury shares by the Company at any point of time pursuant to the Proposed Share Buy-Back shall not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company provided always that in the event that the Company ceases to hold all or any part of such shares as a result of, amongst others, cancellation of shares, sale of shares on the open market of the Bursa Securities or distribution of treasury shares to shareholders as dividend, the Company shall be entitled to further purchase and/or hold such additional number of shares as shall, in aggregate with the shares then still held by the Company, not exceed ten per centum (10%) of the total issued and paid-up share capital of the Company for the time being quoted on the Bursa Securities;

(b) The maximum amount of funds to be allocated by the Company pursuant to the Proposed Share Buy-Back shall not exceed the retained profits and/or the share premium account of the Company;

AND THAT authority be and is hereby given to the Directors to decide in their absolute discretion to deal in any of the following manners the shares purchased by the Company pursuant to the Proposed Share Buy-Back:-

(i) to cancel the shares purchased; and/or(ii) to retain the shares purchased as treasury shares, to be either distributed as

share dividends to the shareholders and/or re-sold on the open market of the Bursa Securities and/or subsequently cancelled; and/or

(iii) a combination of (i) and (ii) above;

AND THAT such authority shall commence immediately upon the passing of this resolution until:

(aa) the conclusion of the next Annual General Meeting of the Company at which time it will lapse unless by ordinary resolution passed at that meeting, the authority renewed, either unconditionally or subject to conditions;

(bb) the expiration of the period within which the next Annual General Meeting is required by law to be held; or

(cc) revoked or varied by ordinary resolution of the shareholders of the Company in a general meeting,

whichever is earlier;

AND THAT the Directors of the Company be and are hereby authorised to take all such steps as are necessary or expedient or to give effect to the Proposed Share Buy-Back.”

7. To transact any other business for which due notice shall have been given in accordance with the Articles of Association of the Company and the Companies Act, 1965.

BY ORDER OF THE BOARD

NG SOOK YEE (MAICSA 7020643)Secretary

Kuala Lumpur29 April 2016

160

NOTES TO THE AGENDA

A. Agenda 1 - Directors’ Report, Audited Financial Statements and Auditors’ Report

Agenda item No. 1 is meant for discussion only. The provisions of Section 169 of the Companies Act, 1965 and the Articles of Association of the Company only require that the Audited Financial Statements and the Reports of the Directors and Auditors thereon be laid before the Company at its Annual General Meeting. Hence, this Agenda item is not a business which requires a resolution to be put to vote by shareholders.

EXPLANATORY NOTES ON SPECIAL BUSINESS

Proposed Resolution 5 (Ordinary) – Authority To Allot And Issue Shares Pursuant To Section 132D Of The Companies Act, 1965

The Proposed Resolution 5 is a renewal of the general mandate to empower Directors to issue and allot shares in the Company up to an amount not exceeding in total ten per centum (10%) of the issued and 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 purposes of funding future investments, acquisitions and/or working capital requirements.

As at the date of this Notice, no new shares in the Company have been issued pursuant to the authority granted to the Directors at the last AGM held on 3 June 2015 and hence, no proceeds were raised therefrom.

Proposed Resolution 6 (Ordinary) –Proposed Renewal Of Authority For The Share Buy-Back

The Proposed Resolution 6, if passed, will empower the Company to purchase its own shares of up to ten per centum (10%) of the issued and paid-up share capital of the Company. This authority, unless renewed, revoked or varied by the Company at a general meeting, will expire at the next AGM.

The details of the proposed renewal of authority for the share buy-back are set out in the Share Buy-Back Statement dated 29 April 2016 despatched together with the 2015 Annual Report.

NOTES RELATING TO REGISTRATION AND PROXY

1. A depositor whose name appears in the Record of Depositors on 26 May 2016 shall be regarded as a member entitled to attend, speak and vote at the meeting or to appoint proxy to attend, speak and vote on its behalf at the meeting.

2. A proxy may but need not be a member of the Company and the provisions of Section 149(1)(b) of the Companies Act, 1965 shall not apply to the Company.

3. A member, other than an authorised nominee or an exempt authorised nominee, shall be entitled to appoint not more than two proxies to attend and vote at the same meeting.

4. A member who is an authorised nominee may appoint one proxy in respect of each securities account it holds with ordinary shares of the Company standing to the credit of the said securities account.

notice of annual general meeting (cont’d)

161notice of annual general meeting (cont’d)

5. Where a member is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one securities account (“omnibus account”), there is no limit to the number of proxies which an exempt authorised nominee may appoint in respect of each omnibus account it holds.

6. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented by each proxy.

7. If the appointor is a corporation, the form of proxy must be executed under its Common Seal or under the hand of its attorney.

8. To be valid the form of proxy duly completed and signed must be deposited at the registered office of the Company at 39th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur not less than 48 hours before the time for holding the meeting. Copies of the duly executed forms of proxy which are faxed or emailed to us are not acceptable.

9. The lodging of a proxy form does not preclude a member from attending and voting in person at the AGM should the member subsequently decides to do so.

PERSONAL DATA PRIVACY

By submitting an instrument appointing proxy(ies) and/or representatives to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company:- (i) consents to the processing of the member’s personal data by the Company (or its agents): (a) for processing and administration of proxies and representatives appointed for the AGM; (b) preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (which includes any adjournments thereto); and (c) for the Company’s (or its agents’) compliance with any applicable laws, listing rules, regulations and/or guidelines (collectively, the Purposes”); (ii) warrants that he or she has obtained such proxy(ies)’ and/or representative(s)’ prior consent for the Company’s (or its agents’) processing of such proxy(ies)’ and/or representative(s)’ personal data for the Purposes; and (iii) agrees that the member will indemnify the Company for any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

Note: The term “processing” and “personal data” shall have the meaning as defined in the Personal Data Protection Act, 2010.

162 statement accompanying the notice of annual general meeting

(Pursuant to Paragraph 8.27(2) of the Main Market Listing Requirements of Bursa Securities)

No individual is seeking for new election as a director at the 4th Annual General Meeting of the Company.

FORM OF PROXY

MPHB CAPITAL BERHAD (1010253-W)(Incorporated in Malaysia)

CDS ACCOUNT NUMBER NO. OF SHARES HELD

I/We 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

RESOLUTIONS *FOR *AGAINST

1. To approve the payment of Directors’ fees of RM240,000

2. To re-elect Ms Ivevei Upatkoon as Director of the Company

3. To re-elect Mr Kuah Hun Liang as Director of the Company

4. To re-appoint Messrs Ernst & Young as Auditors of the Company

5. To authorise Directors to allot and issue shares pursuant to Section 132D of the Companies Act, 1965

6. To authorise the proposed renewal of authority for share buy-back

* or abstain at his/her discretion.

As witness my/our hand(s) this day of 2016

Signature(s) of member/ Common Seal NOTES:-

or failing him/her, THE CHAIRMAN OF THE MEETING as my/our proxy/proxies to vote on my/our behalf at the Fourth Annual General Meeting of the Company to be held at the Multi-Purpose Hall, 25th Floor, Menara Multi-Purpose, Capital Square, No. 8, Jalan Munshi Abdullah, 50100 Kuala Lumpur on Friday, 3 June 2016 at 9.30 a.m. and any adjournment thereof.

1. 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.2. 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. Copies of the duly executed proxy forms which are faxed or emailed to us are not acceptable. 8. The lodging of a proxy form does not preclude a member from attending and voting in person at the Annual General Meeting (”AGM”) should the member subsequently decides to do so. 9. A depositor whose name appears in the Record of Depositors on 26 May 2016 shall be regarded as a member entitled to attend, vote and speak at the meeting or to appoint proxy to attend, vote and

speak on its behalf at the meeting.

PERSONAL DATA PRIVACYBy submitting an instrument appointing proxy(ies) and/or representatives to attend, speak and vote at the AGM and/or any adjournment thereof, a member of the Company:- (i) consents to the processing of the member’s personal data by the Company (or its agents): (a) for processing and administration of proxies and representatives appointed for the AGM; (b) preparation and compilation of the attendance lists, minutes and other documents relating to the AGM (which includes any adjournments thereto); and (c) for the Company’s (or its agents’) compliance with any applicable laws, listing rules, regulations and/or guidelines (collectively, the Purposes”); (ii) warrants that he or she has obtained such proxy(ies)’ and/or representative(s)’ prior consent for the Company’s (or its agents’) processing of such proxy(ies)’ and/or representative(s)’ personal data for the Purposes; and (iii) agrees that the member will indemnify the Company for any penalties, liabilities, claims, demands, losses and damages as a result of the member’s breach of warranty.

Note: The term “processing” and “personal data” shall have the meaning as defined in the Personal Data Protection Act, 2010.

THE COMPANY SECRETARYMPHB CAPITAL BERHAD (1010253-W)

39th Floor, Menara Multi-PurposeCapital Square, No. 8, Jalan Munshi Abdullah

50100 Kuala Lumpur

STAMP

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