Financial Statements - MNRB profit for the year 112,665 24,532 ... financial statements for the...

Financial Statements124 Directors’ Report

128 Statement by Directors

128 Statutory Declaration

129 Independent Auditors’ Report

131 Income Statements

132 Statements of Comprehensive Income

133 Statements of Financial Position

134 Statements of Changes in Equity

135 Statements of Cash Flows

137 Notes to the Financial Statements

124 annual report 2013

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 March 2013.

prInCIpal aCtIVItIeS

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

reSultS

Group Company rM’000 rM’000

Net profit for the year 112,665 24,532

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 effects arising from the first-time adoption of Malaysian Financial Reporting Standards (“MFRS”) and changes in accounting policies as disclosed in Note 4 to the financial statements.

DIVIDenDS

The amount of dividends paid by the Company since the end of the previous financial year was as follows:

rM’000

In respect of the financial year ended 31 March 2012:First and final dividend of 17% (less 25% tax), paid on 26 October 2012 27,166

At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 March 2013 of 32% less 25% tax based on the issued and paid-up share capital of 213,069,500 ordinary shares at the date of this report, amounting to a total dividend of RM51,136,000, will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in the shareholders’ equity as an appropriation of retained profits in the next financial year ending 31 March 2014.

DIRECTOR’S REPORT

125MnrB HolDInGS BerHaD

DIreCtorS

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

Sharkawi bin AlisMohd Din bin MericanP. RaveenderenDato’ Syed Ariff Fadzillah bin Syed AwalluddinYusoff bin YaacobDatuk Mohd Khalil bin Dato’ Mohd NoorMegat Dziauddin bin Megat MahmudPaisol bin Ahmad

In accordance with Article 86 of the Articles of Association of the Company, Megat Dziauddin bin Megat Mahmud and Paisol bin Ahmad retire by rotation at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Datuk Mohd Khalil bin Dato’ Mohd Noor retires pursuant to Section 129 of the Companies Act, 1965 and a resolution is being proposed for his re-appointment as director under the provision of Section 129(2) of the said Act to hold office until the next Annual General Meeting of the Company.

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 acquisition of shares in 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 Notes 10, 11 and 34 to the financial statements as well as the fixed salary and benefits receivable as a full-time employee of the Company) by reason of a contract made by the Company 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.

DIreCtorS’ IntereStS

According to the register of directors’ shareholdings, the interest of directors in office at the end of the financial year in shares of the Company during the financial year were as follows:

number of ordinary shares of rM1.00 each 1 april 31 March 2012 acquired Sold 2013

Direct Interest:P. Raveenderen 10,000 – – 10,000Datuk Mohd Khalil bin Dato’ Mohd Noor 5,000 – – 5,000

Other than as stated above, none of the directors in office at the end of the financial year had any interest in shares in the Company or in its related corporations during the financial year.


SIGnIFICant anD SuBSeQuent eVentS

The significant events during the financial year are as disclosed in Note 41 to the financial statements. There were no subsequent events after the end of the financial year.

otHer StatutorY InForMatIon

(a) Before the income statements 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 had 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 as 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 in the financial statements of the Group and of the Company which would render any amount stated in the financial statements misleading.

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

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

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

DIRECTOR’S REPORT (cont’d)


(f) In the opinion of the directors:

(i) no contingent liability 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 its obligations when they fall due; 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.

For the purpose of paragraphs (e)(ii) and (f)(i) above, contingent or other liabilities do not include liabilities arising from reinsurance, takaful and retakaful contracts underwritten in the ordinary course of business of the reinsurance, takaful and retakaful subsidiaries and associate companies.

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 27 June 2013.

Sharkawi bin alis Mohd Din bin Merican

Kuala Lumpur, Malaysia


We, Sharkawi bin Alis and Mohd Din bin Merican, being two of the directors of MNRB Holdings Berhad, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 131 to 279 are drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia, so as to give a true and fair view of the financial position of the Group and of the Company as at 31 March 2013 and of the results and the cash flows of the Group and of the Company for the year then ended.

Signed on behalf of the Board in accordance with a resolution of the directors dated 27 June 2013.

Sharkawi bin alis Mohd Din bin Merican

Kuala Lumpur, Malaysia

STATUTORY DECLARATIONPursuant to Section 169(15) of the Companies Act, 1965

I, Norazman bin Hashim, being the officer primarily responsible for the financial management of MNRB Holdings Berhad, do solemnly and sincerely declare that the accompanying financial statements set out on pages 131 to 279 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 Norazman bin Hashim )at Kuala Lumpur in Wilayah Persekutuan )on 27 June 2013 ) norazman bin Hashim

Before me,

STATEMENT BY DIRECTORSPursuant to Section 169(15) of the Companies Act, 1965


report on the financial statements

We have audited the financial statements of MNRB Holdings Berhad, which comprise the statements of financial position as at 31 March 2013 of the Group and of the Company, the income statements, the statements of comprehensive income, the statements of changes in equity and the statements of cash flows of the Group and of the Company for the year thenended, and a summary of significant accounting policies and other explanatory information, as set out on pages 131 to 278.

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 entity’s preparation of 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 entity’s internal control. An audit also includes evaluating the appropriateness of 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 at 31 March 2013 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.

INDEPENDENT AUDITORS’ REPORTto the members of MNRB Holdings Berhad


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

(b) We have considered the financial statements and the auditors’ reports of all the subsidiaries of which we have not acted as auditors, which are indicated in Note 18 to the financial statements, being financial statements that have been included in the consolidated financial statements.

(c) 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.

(d) The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualification and in respect of the subsidiaries incorporated in Malaysia, 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 43 on page 279 is disclosed to meet the requirement of Bursa Malaysia Securities Berhad and is not part of the financial statements. The directors are responsible for the preparation of the supplementary information in accordance with Guidance on Special Matter No. 1, Determination of Realised and UnrealisedProfits 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 thedirective 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 Gloria Goh Ewe GimAF: 0039 No. 1685/04/15(J)Chartered Accountants Chartered Accountant

Kuala Lumpur, Malaysia27 June 2013

INDEPENDENT AUDITORS’ REPORT (cont’d)to the members of MnrB Holdings Berhad


Group Company note 2013 2012 2013 2012 rM’000 rM’000 rM’000 rM’000

Gross earned premiums/contributions 5(a) 2,090,350 1,954,522 – –Premiums/contributions ceded to reinsurers/retakaful 5(b) (251,477) (275,147) – –

net earned premiums/contributions 1,838,873 1,679,375 – –

Investment income 6 151,922 138,366 48,184 51,086Realised gains and losses 7 30,458 22,203 (394) ( 7)Fair value gains and losses 8 4,514 1,205 2,745 (356)Fee and commission income 9 25,076 24,473 27,715 29,213Other operating revenue 5,968 4,704 64 237

other revenue 217,938 190,951 78,314 80,173

Gross claims and benefits paid (1,088,643) (919,269) – –Claims ceded to reinsurers/retakaful 243,339 137,587 – –Gross change in contract liabilities (244,293) (526,930) – –Change in contract liabilities ceded to reinsurers/retakaful (67,536) 216,987 – –

net claims and benefits (1,157,133) (1,091,625) – –

Fee and commission expense 9 (445,853) (385,601) – –Management expenses 10 (172,813) (149,022) (31,093) (24,605)Finance cost (14,422) (12,169) (16,063) (14,544)Other operating expenses 12 (21,282) (7,219) (15) (4)Change in expense liabilities (3,709) 400 – –

other expenses (658,079) (553,611) (47,171) (39,153)

Share of results of associates 1,308 (30,110) – –

operating profit before surplus transfer, zakat and tax 242,907 194,980 31,143 41,020Zakat (400) (400) – –Tax expense 13 (58,346) (48,476) (6,611) (10,432)

net profit before surplus transfer 184,161 146,104 24,532 30,588Surplus atttributable to takaful participants (71,496) (56,735) – –

net profit for the year attributableto equity holders of the Company 112,665 89,369 24,532 30,588

Basic earnings per share attributable to equity holders of the Company (sen): 31 52.9 41.9

The accompanying accounting policies and explanatory notes form an integral part of the financial statements.

INCOME STATEMENTSfor the year ended 31 March 2013


Group Company 2013 2012 2013 2012 rM’000 rM’000 rM’000 rM’000

net profit for the year 112,665 89,369 24,532 30,588

Other comprehensive (loss)/income:

Effects of post acquisition foreign exchange translation reserve on investment in associate 765 1,049 – –

Effects of foreign exchange translationreserve on investment in subsidiary (463) 269 – –

Revaluation of land and buildings 5,284 11,914 – –Deferred tax relating to revaluation of land and buildings (423) (1,439)

Net (loss)/gain on Available-for-sale (“AFS”) financial assets:(Loss)/gain on fair value changes (3,082) 37,656 (574) 186Realised (gains)/loss transferred to income statement (19,699) (20,961) 395 –Deferred tax relating to net loss/(gain) on AFS financial assets 2,919 (2,471) 45 (47)

Other comprehensive loss/(income) attributable to participants 2,656 (5,111) – –

total comprehensive income for the year 100,622 110,275 24,398 30,727


STATEMENTS OF COMPREHENSIVE INCOMEfor the year ended 31 March 2013


Group Company

note 31.3.2013 31.3.2012 1.4.2011 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assets

Property, plant and equipment 14 237,965 237,927 229,450 2,206 1,558 1,469Investment properties 15 6,200 5,600 28,600 – – – Intangible assets 16 13,189 13,970 12,970 2,239 2,074 1,231Deferred tax assets 17 10,955 11,636 12,535 1,469 1,844 3,098Investment in subsidiaries 18 – – – 904,501 904,501 794,501Investment in associates 19 88,456 86,383 117,542 1,957 1,957 1,957Financial assets:

Financial assets at fair valuethrough profit or loss (FVTPL”) 20(a) 129,167 137,463 104,904 – – –

Held-to-maturity (“HTM”) investments 20(b)(i) 786,653 432,223 406,353 – 5,059 6,967AFS financial assets 20(c) 1,789,502 1,757,978 1,368,059 494 1,173 2,602Loans and receivables (“LAR”) 20(d) 1,698,605 1,448,076 1,304,234 16,464 23,127 10,759

Reinsurance/retakaful assets 21 387,976 432,881 215,829 – – – Insurance/takaful receivables 22 404,059 331,663 288,482 – – – Tax recoverable 15,923 15,477 11,438 9,623 11,679 8,379Cash and bank balances 74,728 80,571 122,944 2,932 11 75Non-current assets held for sale 23 – 56,601 34,173 – – –

total assets 5,643,378 5,048,449 4,257,513 941,885 952,983 831,038

liabilities and participants’ funds

Participants’ funds 24 234,155 170,536 108,690 – – – Borrowings 25 320,000 270,000 150,000 320,000 320,000 200,000Insurance/takaful contract liabilities 21 3,592,961 3,226,745 2,767,973 – – – Insurance/takaful payables 26 211,724 178,101 112,989 – – – Other payables 27 116,975 110,574 122,289 8,774 17,104 13,926Deferred tax liabilities 17 12,579 14,231 12,494 – – – Provision for taxation 22,525 19,384 2,332 – – – Provision for zakat 515 390 573 – – –

total liabilities and participants’ funds 4,511,434 3,989,961 3,277,340 328,774 337,104 213,926

equity

Share capital 28 213,070 213,070 213,070 213,070 213,070 213,070Reserves 918,874 845,418 767,103 400,041 402,809 404,042

total equity attributable toequity holders of the Company 1,131,944 1,058,488 980,173 613,111 615,879 617,112

total liabilities, participants’ funds and equity 5,643,378 5,048,449 4,257,513 941,885 952,983 831,038


STATEMENTS OF FINANCIAL POSITIONAs At 31 March 2013


attributable to equity holders of the company

reserves

non–distributable Distributable

Foreign exchange avalaible- Share Share translation for-sale revaluation retained capital premium reserve reserve reserve profits totalGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

at 1 april 2011 213,070 105,051 15,108 11,704 23,369 611,871 980,173Total comprehensive income

for the year – – 1,318 9,113 10,475 89,369 110,275Dividend paid during

the year (Note 30) – – – – – (31,960) (31,960)

at 31 March 2012 213,070 105,051 16,426 20,817 33,844 669,280 1,058,488Total comprehensive

(loss)/income for the year – – 302 (12,345) – 112,665 100,622Dividend paid during

the year (Note 30) – – – – – (27,166) (27,166)Transferred to retained profits

upon disposal of assets held for sale (Note 23) – – – – (3,184) 3,184 –

at 31 March 2013 213,070 105,051 16,728 8,472 30,660 757,963 1,131,944

Company

at 1 april 2011 213,070 105,051 – – – 298,991 617,112Total comprehensive income

for the year – – – 139 – 30,588 30,727Dividend paid during

the year (Note 30) – – – – – (31,960) (31,960)

at 31 March 2012 213,070 105,051 – 139 – 297,619 615,879Total comprehensive

(loss)/income for the year – – – (134) – 24,532 24,398Dividend paid during

the year (Note 30) – – – – – (27,166) (27,166)

at 31 March 2013 213,070 105,051 – 5 – 294,985 613,111


STATEMENTS OF CHANGES IN EQUITYfor the year ended 31 March 2013



Cash flows from operating activities

Profit before surplus transfer, zakat and tax 242,907 194,980 31,143 41,020Adjustments for:Net fair value gains on financial assets at FVTPL (4,702) (1,408) – –Impairment loss/(reversal of impairment loss) on AFS financial assets 819 469 (2,745) 356Reversal of impairment loss on HTM investments (31) (266) – –(Reversal of impairment loss)/impairment loss on property (300) 1,465 – –Impairment loss on/(reversal of impairment

loss) on insurance/takaful receivables 14,068 (2,525) – –Depreciation of property, plant and equipment 9,850 10,012 784 812Amortisation of intangible assets 3,045 2,904 350 189Property, plant and equipment written off – 60 – 11Gain on fair value adjustments of investment properties (600) – – –(Gain)/loss on disposal of property, plant and equipment (83) (62) (1) 7Increase/(decrease) in net premium and contribution liabilities 35,590 (49,067) – –Interest/profit income (142,078) (122,311) (3,168) (751)Dividend income (6,504) (9,949) (45,018) (50,337)Rental income (7,398) (7,788) – –Finance cost 14,422 12,169 16,063 14,544Gain/(loss) on disposal of investments (26,293) (22,141) 395 –Gain on disposal of non-current assets held for sale (4,082) – – –Net amortisation of premiums/(accretion of discounts) on investments 1,169 (357) – –

Balance carried forward 129,799 6,185 (2,197) 5,851

Balance brought forward 129,799 6,185 (2,197) 5,851Share of (profits)/losses of associates (1,308) 30,110 – –Net surplus attributable to takaful participants 71,496 56,735 – –

Profit/(loss) from operations before changes in operating assets and liabilities 199,987 93,030 (2,197) 5,851

(Increase)/decrease in placements with licensed financial institutions, Islamic investment accounts and marketable securities (230,478) (135,808) 11,111 (11,691)

Net (purchase of)/proceeds from disposal of investments (160,358) (237,774) 7,909 3,165Decrease in staff loans 2,001 1,391 430 –Increase in insurance/takaful receivables (85,252) (40,656) – –Decrease in other receivables (12,513) (2,955) (1,606) (244)Net change in balances with subsidiaries – – (10,639) 6,921Increase in net claims liabilities 132,376 67,526 – –Increase/(decrease) in expense liabilities 3,709 (401) – –Increase in insurance/takaful payables 33,623 65,112 – –Increase/(decrease) in other payables 6,401 (11,715) 506 (3,821)

(110,504) (202,250) 5,514 181Taxes and zakat paid (54,401) (37,320) (4,135) (23)Interest/profit received 96,855 86,790 3,217 716Dividend received 41,788 38,570 45,337 37,517Rental received 7,798 8,218 – –

Net cash (used in)/generated from operating activities (18,464) (105,992) 49,933 38,391

STATEMENTS OF CASH FLOWSfor the year ended 31 March 2013



Cash flows from investing activities

Subscription of shares in subsidiaries – – – (110,000)Purchase of property, plant and equipment (4,314) (8,665) (1,432) (1,391)Purchase of intangible assets (2,264) (3,904) (515) (1,032)Purchase of investment properties – (310) – –Proceeds from disposal of non-current assets held for sale 60,683 – – –Proceeds from disposal of property, plant and equipment 104 627 1 472

Net cash generated from/(used in) investing activities 54,209 (12,252) (1,946) (111,951)

Cash flow from financing activities

Proceeds from borrowings 320,000 120,000 320,000 120,000Repayment of borrowings (320,000) – (320,000) –Interest paid (14,422) (12,169) (17,900) (14,544)Dividends paid (27,166) (31,960) (27,166) (31,960)

Net cash (used in)/ generated from financing activities (41,588) 75,871 (45,066) 73,496

Cash and bank balances

Net (decrease)/increase during the year (5,843) (42,373) 2,921 (64)At beginning of year 80,571 122,944 11 75

At end of year 74,728 80,571 2,932 11


STATEMENTS OF CASH FLOWS (cont’d)for the year ended 31 March 2013


1. Corporate InForMatIon

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and is listed on the Main Market of Bursa Malaysia Securities Berhad. The registered office of the Company is located at 12th Floor, Bangunan Malaysian Re, No. 17, Lorong Dungun, Damansara Heights, 50490 Kuala Lumpur, Malaysia.

The principal activities of the Company are investment holding and provision of management services to its subsidiaries.

The principal activities of the subsidiaries have been disclosed in Note 18 to the financial statements. There have been no significant changes in the nature of the principal activities of the Group and of the Company during the financial year.

The number of employees in the Group and in the Company at the end of the financial year were 814 and 191 (2012: 814 and 189) respectively.

The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 27 June 2013.

2. SIGnIFICant aCCountInG polICIeS

2.1 Basis of preparation

The financial statements of the Group and of 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 are the Group’s and the Company’s first annual financial statements prepared in accordance with MFRS and MFRS 1 First-Time Adoption of Malaysian Financial Reporting Standards (“MFRS 1”) has been applied.

In previous financial years, the financial statements of the Group and of the Company were prepared in accordance with Financial Reporting Standards (“FRSs”) in Malaysia. The financial impact arising from transition to MFRS is disclosed in Note 4.

The financial statements of the Group and of the Company have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. 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 accounting period

For the general reinsurance business, the Group adopts quarterly accounting periods ending on 31 March, 30 June, 30 September and 31 December, insofar as the underwriting income and outgo for Market Cessions business is concerned. This is to correspond with the ceding companies’ accounting periods.

Underwriting income and outgo in respect of other business classes and all other income and expenditure are for the 12 months ended 31 March 2013.

NOTES TO THE FINANCIAL STATEMENTS- 31 March 2013


NOTES TO THE FINANCIAL STATEMENTS (cont’d)- 31 March 2013

2. SIGnIFICant aCCountInG polICIeS (Cont’D)

2.3 Subsidiaries, associates and basis of consolidation

(i) Subsidiaries

Subsidiaries are entities over which the Group has the ability to control the financial and operating policies so as to obtain benefits from their activities. In the Company’s separate financial statements, investments in subsidiaries are stated at cost less impairment losses. On disposal of such investments, the difference between net disposal proceeds and their carrying amounts is included in the income statement.

(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.

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. In preparing the consolidated financial statements, intragroup balances, transactions and unrealised gains or losses resulting from intragroup transactions are eliminated in full. Uniform accounting policies are adopted in the consolidated financial statements for like transactions and events in similar circumstances.

Acquisitions of subsidiaries are accounted for using the purchase method. The purchase method of accounting involves allocating the cost of the acquisition to the fair value of the assets acquired and liabilities and contingent liabilities assumed at the date of acquisition. The cost of an acquisition is measured as the aggregate of the fair values, at the date of exchange, of the assets given, liabilities incurred or assumed, and equity instruments issued, plus any costs directly attributable to the acquisition.

Any excess of the cost of the acquisition over the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities over the cost of acquisition is recognised immediately in the income statement.

(iii) takaful and retakaful operations and funds

Under the concept of takaful/retakaful, individuals/cedants make contributions to a pool which is managed by a third party with the overall aim of using the monies to aid fellow participants in times of need. Accordingly, the takaful and retakaful subsidiaries of the Company manage the general and family takaful and retakaful funds in line with the principles of Wakalah (agency), which is the main business model used by the takaful and retakaful subsidiaries. Under the Wakalah model, the takaful/retakaful operator is not a participant in the fund but manages the funds (including the relevant assets and liabilities) towards the purpose outlined above.

In accordance with the Takaful Act 1984, the assets and liabilities of the takaful and retakaful funds are segregated from those of the takaful and retakaful subsidiaries: a concept known as segregation of funds. Accordingly, in prior years, the aggregated assets, liabilities and participants’ funds of the takaful and retakaful operations were presented separately in the Group’s statement of financial position as line items and whilst the income statement and statement of comprehensive income of the Group did not include the income and expenses of the takaful and retakaful funds. This was intended to clearly segregate the assets,liabilities, income and expenses of the Group from those of the takaful and retakaful funds which the Group manages but does not own.

Effective this year, the assets, liabilities, income and expenses of the takaful and retakaful funds are consolidated with those of the takaful and retakaful subsidiaries to represent the control possessed by the operator over the financial and operating policies of the respective funds.



2.3 Subsidiaries, associates and basis of consolidation (cont’d)

(iii) takaful and retakaful operations and funds (cont’d)

In preparing the Group financial statements, the balances and transactions of the shareholders’ funds of the takaful and retakaful subsidiaries were amalgamated and combined with those of the takaful and retakaful funds respectively. Interfund balances, transactions and unrealised gains or losses are eliminated in full during amalgamation and consolidation.

The takaful and retakaful funds of the takaful and retakaful subsidiaries are consolidated and amalgamated from the date of control and continue to be consolidated until the date such control ceases which will occur when the takaful and retakaful subsidiaries’ licences to manage takaful and retakaful businesses respectively are withdrawn or surrendered.

(iv) associates

Associates are entities in which the Group has significant influence and that is neither a subsidiary nor an interest in a joint venture. Significant influence is the power to participate in the financial and operating policy decisions of the investee but not in control or joint control over those policies.

Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting. Under the equity method, the investment in associate is carried in the consolidated statement of financial position at cost adjusted for post-acquisition changes in the Group’s share of net assets of the associate. The Group’s share of the net profit or loss of the associate is recognised in the consolidated income statement. Where there has been a change recognised directly in the equity of the associate, the Group recognises its share of such changes.

In applying the equity method, unrealised gains and losses on transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate. After application of the equity method, the Group determines whether it is necessary to recognise any additional impairment loss with respect to the Group’s net investment in the associate. The 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 associates.

Goodwill relating to an associate is included in the carrying amount of the investment and is not amortised. 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 investmentand is instead included as income in the determination of the Group’s share of the associate’s profit or loss in the period in which the investment is acquired.

When the Group’s share of losses in associates equals or exceeds its interest in the associate, including any long-term interests that, in substance, form part of the Group’s net investment in the associates, the Group does not recognise further losses, unless it has incurred obligations or made payments on behalf of the associates.

The most recent available audited financial statements of the associates are used by the Group in applying the equity method. Where the dates of the audited financial statements used are not coterminous with those of the Group, the share of results is derived from the last audited financial statements available and management financial statements to the end of the accounting period. Uniform accounting polices are adopted for like transactions and events in similar circumstances.

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

On disposal of such investments, the difference between net disposal proceeds and the carrying amount is included in the income statement.




2.4 General reinsurance underwriting results

The general reinsurance underwriting results are determined for each class of business after taking into account premiums, movements in premium liabilities and claims liabilities and acquisition costs.

(i) premium recognition

Gross premiums are recognised in a financial period in respect of risks assumed during the particular financial period. Gross premium income include premium income in relation to inwards facultative business, inwards proportional treaty reinsurance and inwards non-proportional treaty reinsurance.

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

Inwards proportional treaty reinsurance premiums are recognised on the basis of periodic advices received from 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 under the terms of the proportional reinsurance treaty.

Premium income on inward non-proportional treaties, which cover losses occurring during a specified treaty period, are recognised based on the contractual premiums already established at the start of the treaty period under the terms and conditions of each contract.

(ii) premium liabilities

Premium liabilities represent the reinsurance subsidiary’s future obligations on insurance contracts as represented by premiums received for risks that have not yet expired. The movement in premium liabilities is released over the term of the insurance contracts and is recognised as premium income.

Premium liabilities are reported at the higher of the aggregate of the unearned premium reserves (“UPR”) for all lines of business or the best estimate value of the reinsurance subsidiary’s unexpired risk reserves (“URR”) and a provision of risk margin for adverse deviation (“PRAD”) calculated at 75% confidence level atthe end of the financial year.

(a) unexpired risk reserves

The URR is a 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.

URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to incurred but not reported claims (“IBNR”).



2.4 General reinsurance underwriting results (cont’d)

(ii) premium liabilities (cont’d)

(b) unearned premium reserves

The UPR represent the portion of the net premiums of reinsurance policies written that relate to the unexpired periods of the policies at the end of the financial year. The methods of computation of UPR are as follows:

– For inward proportional treaty business, UPR is computed on the 1/8th method commencing from the quarter corresponding to the reporting quarter of the treaty statement;

– For inward non proportional treaty business, UPR is computed at 1/2 of the last quarter Minimum Deposit Premiums received; and

– For inward facultative policies, UPR is computed on the 1/8th method commencing from the date of inception.

(iii) Claims liabilities

The amount of outstanding claims is the best estimate value of claim liabilities, which include provision for claims reported, claims incurred but not enough reserved (“IBNER”), claims incurred but not reported (“IBNR”) together with related expenses less recoveries to settle the present obligation as well as a PRAD calculated at 75% confidence level at the end of the financial year. Liabilities for outstanding claims are recognised as advised by the ceding companies. IBNER and IBNR claims are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, amongst others, actual claims development pattern.

(iv) liability adequacy test

At each reporting date, the Group reviews all insurance contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to insurance contracts issued. In performing this review, the Group compares all contractual cash flows against the carrying value of insurance contract liabilities. Any deficiency is recognised in the income statement.

(v) acquisition cost

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




2.5 General takaful fund

The general takaful fund is maintained in accordance with the Takaful Act 1984 and consists of AFS reserves and the accumulated surplus/deficit in the fund. Underwriting deficit will be made good by the shareholder’s fund via a loan or Qard.

Surplus distributable to the participants is determined after deducting retakaful costs, commissions, changes in takaful contract liabilities, wakalah fees, expenses and taxation. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts.

General takaful revenue consists of gross takaful contributions and investment income. Revenue is accounted for on an accrual basis as approved by the takaful subsidiary’s Shariah Committee. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.

(i) takaful contribution income

Contribution from direct and facultative inwards are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah. Contributions are recognised in a financial period in respect of risks assumed during that particular financial period. Inward treaty retakaful contributions are recognised on the basis of periodic advices received from ceding takaful operators.

(ii) takaful contribution liabilities

Contribution liabilities represent the general takaful fund’s future obligations on takaful contracts as represented by contributions received for risks that have not yet expired. The movement in contribution liabilities is released over the terms of the takaful contracts and recognised as contribution.

Contribution liabilities are reported at the higher of the aggregate of the unearned contribution reserves (“UCR”) for all lines of business or the best estimate value of the takaful fund’s unexpired risk reserves (“URR”) and a provision of risk margin for adverse deviation (“PRAD”) calculated at 75% confidence level at the end of the financial year.

(a) unearned contribution reserves

The Unearned Contribution Reserves (“UCR”) represent the portion of net contribution income of takaful contracts written that relate to the unexpired periods of the contracts at the end of the reporting period. The UCR is calculated on net contribution income with a further deduction for Wakalah fee expenses to reflect the Wakalah business principle. In determining the UCR at the end of the financial year, the method that most accurately reflects the actual unearned contribution is used as follows:

– Time apportionment method for all classes of general takaful business within Malaysia except Marine and Aviation Cargo; and

– 25% method for Marine and Aviation Cargo.



2.5 General takaful fund (cont’d)

(ii) takaful contribution liabilities (cont’d)

(b) unexpired risk reserves

URR is a prospective estimate of the expected future payments arising from future events expected to be incurred as at the end of the financial year and also includes cost of retakaful, expected to be incurred during the unexpired period in administering these certificates and settling the relevant claims, and expected future return contributions.

In estimating the best estimate URR, the resulting loss ratio based on best estimate claims incurred but not reported is applied to the corresponding UCR as the prospective assessment of the amount that needs to be set aside in order to provide for claims and allocated claim costs that will result out of unexpired future periods of cover.

(iii) Claims liabilities

Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and/or the takaful subsidiary is notified. The amount of outstanding claims is the best estimate of the expenditure required together with related expenses less recoveries to settle the obligation at the end of the financial year.

Claims liabilities are valued at the best estimate which include provision for claims reported, claims incurred but not enough reserved (“IBNER”) and claims incurred but not reported together with related claims handling costs and reduction for the expected value of salvage and other recoveries and a PRAD which is calculated at 75% confidence level.

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 end of the financial year.

The liability is calculated by a qualified actuary at the end of the financial year 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 certificates expires, are discharged or are cancelled.


At each reporting date, the Group reviews all general takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to general takaful contract issued. In performing this review, the Group compares allcontractual cash flows against the carrying value of general takaful contract liabilities. Any deficiency is recognised in the income statement.

(v) Commission earned

Commission earned net of expense paid from retakaful in the course of ceding / accepting contributions to / from retakaful operators are recognised in the income statement, as incurred and properly allocated to the periods in which it is probable they give rise to income. This is in accordance with the principles of Wakalah as approved by the Shariah Committee and as agreed between the participants and the takaful subsidiary.




2.6 Family takaful fund

The family takaful fund is maintained in accordance with the requirements of the Takaful Act, 1984 and includes the amount attributable to participants.

The family takaful fund surplus / deficit is determined by an annual actuarial valuation of the family takaful fund. Any actuarial deficit in the family takaful fund will be made good by the shareholder’s fund via a loan or Qard. Surplus distributable to the participants is determined after deducting benefits paid and payable, retakaful, provisions, reserves, wakalah fees, taxation and surplus administration charges transferred to the shareholder’s fund. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions prescribed by the Shariah Committee of the takaful subsidiary.

Family takaful revenue consists of gross takaful contributions and investment income. Revenue is accounted for on an accrual basis and as approved by the takaful subsidiary’s Shariah Committee. Unrealised income is deferred and receipts in advance are treated as liabilities on the statement of financial position.

(i) takaful contribution income

Takaful contribution is recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah. First year contribution is recognised on assumption of risks and subsequent takaful contributions are recognised on due dates. Takaful contributions outstanding at the reporting date is recognised as income for the period provided they are within the grace period allowed for payment and there are sufficient funds available in the participants’ accounts to cover such contributions due.

(ii) provision for outstanding claims

Claims and settlement costs that are incurred during the financial year are recognised when a claimable event occurs and/or the takaful subsidiary is notified.

Claims and provisions for claims arising on family takaful contracts, including settlement costs, are accounted for using the case basis method, and for this purpose, the benefits payable under a takaful certificate are recognised as follows:

(a) maturity or other certificate benefit payments due on specified dates are treated as claims payable on due dates; and

(b) death, surrender and other benefits without due dates are treated as claims payable on receipt of intimation of death of the certificate holder or occurrence of contingency covered.

(iii) Creation/cancellation of units

Amounts received for units created represent contributions paid by participants or unitholders as payment for new contracts or subsequent payments to increase the amount of the contracts. Creation/cancellation of units are recognised in the financial statements at the next valuation date, after the request to purchase/sellunits are received from the unitholders.



2.6 Family takaful fund (cont’d)

(iv) Investments of the investment-linked funds

All investments of the investment-linked funds are stated at bid prices or indicative market prices as at financial year end.

Any increase or decrease in value of investments is taken into the investment linked funds income statement.

(v) Family takaful contract liabilities

Family takaful contract liabilities are recognised when contracts are in-force and contributions are charged.

For a one year family certificate or a one year extension to a family certificate covering contingencies other than life or survival, the liability for such family takaful certificates comprises contribution and claim liabilities with an appropriate allowance for PRAD from the expected experience.

The family takaful certificates liabilities are derecognised when the certificates expire, are discharged or are cancelled. At each reporting date, an assessment is made of whether the recognised family takaful certificates liabilities are adequate by performing a liability adequacy test as disclosed in Note 2.6(vi).

Liabilities of family takaful business are determined in accordance with valuation guidelines for takaful operators issued by Bank Negara Malaysia (“BNM”). All family takaful liabilities have been valued using a prospective actuarial valuation based on the sum of the present value of future benefits and expenses less future gross considerations arising from the certificates, discounted at the appropriate risk discount rate. This method is known as the gross contribution valuation method.

In respect of the family takaful risk fund, the expected future cash flows of benefits are determined using best estimate assumptions with an appropriate allowance for PRAD from expected experience such that an overall level of sufficiency of certificate reserves at a 75% confidence level is secured. In the case of investment-linked business, the fund value (or the net asset value attributable to unitholders) is treated as a liability.

Surplus arising from the difference between the value of the family fund and the liabilities, including accumulated surplus, will be distributed to the participants after deduction for surplus administration charges, as appropriate.

If the difference between the value of the family fund and the liabilities results in a deficit, the deficit is made good via a Qard from the takaful subsidiary which will be repaid when the fund returns to a surplus position.

(vi) liability adequacy test

At each reporting date, the Group reviews all family takaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to family takaful contracts issued. In performing this review, the Group compares allcontractual cash flows against the carrying value of family takaful contract liabilities. Any deficiency is recognised in the income statement.




2.7 Shareholder’s fund of takaful subsidiary

(i) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on takaful contracts, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income. Commission expenses are borne by the shareholder’s fund in the shareholder’s fund income statement at an agreed percentage for each certificate underwritten. This is in accordance with the principles of Wakalah as approved by the Shariah Committee and as agreed between the participants and the takaful subsidiary.

(ii) expense liabilities

The expense liabilities of the shareholder’s fund consist of expense liabilities of the general takaful fund and the family takaful fund which are based on estimations performed by a qualified actuary. The movement in expense liabilities is released over the term of the takaful contracts and recognised as wakalah fees.

(a) expense liabilities of general takaful fund

The expense liabilities of the general takaful fund are reported at the higher of the aggregate of the reserve for unearned wakalah fees (“UWF”) or the best estimate value of the provision for unexpired expense reserve (“UER”) at the end of the financial year.

reserve for unearned wakalah fees

The UWF represents the portion of wakalah fee income allocated for management expenses of general takaful contracts that relate to the unexpired periods of contracts at the end of the reporting period. The method used in computing UWF is consistent with the calculation of UCR under Note 2.5(ii)(a).

unexpired expense reserve

The UER is determined based on the expected future expenses payable by the shareholder’s fund in managing the general takaful fund for the full contractual obligation of the takaful contracts as at the end of the financial year, less any expected cash flows from future wakalah fee income, and any other income due to the shareholder’s fund that can be determined with reasonable certainty, calculated at 75% confidence level. The method used to value the UER is consistent with the method used in estimating the URR as disclosed in Note 2.5(ii)(b).

(b) expense liabilities of family takaful fund

The UER is determined based on the expected future expenses payable by the shareholder’s fund in managing the family takaful fund for the full contractual obligation of the takaful contracts as at the end of the financial year, less any expected cash flows from future wakalah fee income, and any other income due to the shareholder’s fund that can be determined with reasonable certainty. The method used to value expense liabilities is consistent with the method used to value takaful liabilities of the corresponding family takaful contracts as disclosed in Note 2.6(v).

(c) liability adequacy test

At each reporting date, the takaful subsidiary reviews the expense liabilities to ensure that the carrying amount is sufficient or adequate to cover the obligations of the shareholder’s fund for all managed takaful contracts. In performing this review, the takaful subsidiary considers all contractual cash flows and compares this against the carrying value of expense liabilities. Any deficiency is recognised in the income statement.



2.8 General retakaful fund

The general retakaful fund is maintained in accordance with the Takaful Act 1984 and consists of AFS reserves and the accumulated surplus/deficit in the fund. Any underwriting deficit will be made good by the shareholder’s fund via a loan or Qard.

Surplus distributable to the participants is determined after deducting retrotakaful costs, commissions, contribution liabilities, net claims incurred, wakalah fees, expenses and taxation. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts.

Revenue of the general retakaful fund consists of gross retakaful contributions and investment income. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.

(i) retakaful contribution income

Contributions are recognised in respect of risks assumed during a particular financial period. Inward treaty retakaful contributions are recognised on the basis of statements received from ceding companies.

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

Inwards proportional treaty retakaful contributions are recognised on the basis of periodic advices received from 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 under the terms of the proportional retakaful treaty.

Contribution income on inward non-proportional treaties, which cover losses occurring during a specified treaty period, are recognised based on the contractual contributions already established at the start of the treaty period under the terms and conditions of each contract.

(ii) Contribution liabilities

Contribution liabilities represent the general retakaful fund’s future obligations on takaful contracts as represented by contributions received for risks that have not yet expired. The movement in contribution liabilities is released over the term of the takaful contracts and recognised as contribution. Contribution liabilities are reported at the higher of the aggregate of the unearned contribution reserves (“UCR”) for all lines of business or the best estimate value of the retakaful fund’s unexpired risk reserves (“URR”) and a PRAD at 75% confidence level at the end of the financial year.

(a) unexpired risk reserves

The URR is a prospective estimate of the expected future payments arising from future events insured under contracts in force as at the end of the reporting period and also includes allowance for expenses, including overheads and costs of retakaful, expected to be incurred during the unexpired period in administering these contracts and settling the relevant claims, and expected future contribution refunds. The URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to IBNR claims.

(b) unearned contribution reserves

The UCR represent the portion of the net contribution of retakaful business written that relate to the unexpired periods of the contracts at the end of the reporting period. In determining the UCR as at the reporting date, the method that most accurately reflects the actual liability is used. The UCR is computed using the 1/8th method, applied to contributions with a deduction for actual wakalah fees.




2.8 General retakaful fund (cont’d)

(iii) Claim liabilities

The amount of outstanding claims is the best estimate value of claim liabilities, which include provision for claims reported, IBNER claims and IBNR claims. The estimation includes a provision of risk margin for adverse deviation (“PRAD”) at a 75% confidence level.

Liabilities for outstanding claims are recognised as advised by ceding companies. The amount of outstanding claims is the best estimate of the expenditure required together with related expenses less recoveries to settle the obligation at the end of the financial year.

IBNR claims are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, amongst others, actual claims development patterns.


At each reporting date, the retakaful subsidiary reviews all general retakaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the fund, contractual or otherwise, with respect to general retakaful contracts issued. In performing this review, the retakaful subsidiary compares all contractual cash flows against the carrying value of general retakaful contract liabilities. Any deficiency is recognised in the income statement.

(v) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on retakaful business, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

Commission expenses are borne by the general retakaful fund in the general retakaful income statement at an agreed percentage of the gross contribution.

2.9 Family retakaful fund

The family retakaful fund is maintained in accordance with the requirements of the Takaful Act 1984 and consists of AFS reserves and the accumulated surplus/deficit in the fund.

The family retakaful fund surplus/deficit is determined by an annual actuarial valuation of the family retakaful fund. Any actuarial deficit in the family retakaful fund will be made good by the shareholder’s fund via a loan or Qard. Surplus distributable to the participants is determined after deducting benefits paid and payable, retrotakaful, provisions, reserves, commissions, wakalah fee, taxation and any surplus administration charges transferred to the shareholder’s fund. The surplus may be distributed to the shareholder and participants in accordance with the terms and conditions of the respective contracts.

Revenue of the family retakaful fund consists of gross retakaful contributions and investment income. Unrealised income is deferred and receipts in advance are treated as liabilities in the statement of financial position.



2.9 Family retakaful fund (cont’d)

(i) retakaful contribution income

Contributions are recognised in respect of risks assumed during a particular financial period. Inward treaty retakaful contributions are recognised on the basis of statements received from ceding companies.

(ii) Benefits payable and actuarial liabilities

Liabilities for benefits payable are recognised as advised by ceding companies. The actuarial liabilities of the family retakaful fund is the best estimate of the expenditure required together with related expenses less recoveries to settle the obligation at the end of the financial year. The estimation includes a PRAD at a 75% confidence level. The valuation of the actuarial liabilities is performed by a qualified actuary using a mathematical method of estimation based on, amongst others, actual claims development patterns.

(iii) liability adequacy test

At each reporting date, the retakaful subsidiary reviews all family retakaful contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the fund, contractual or otherwise, with respect to family retakaful contracts issued. In performing this review, the retakaful subsidiary compares all contractual cash flows against the carrying value of family retakaful contract liabilities. Any deficiency is recognised in the income statement.

(iv) Commission expenses

Commission expenses, which are costs directly incurred in securing contributions on retakaful business, are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

Commission expenses are borne by the family retakaful fund in the family retakaful income statement at an agreed percentage of the gross contribution.

2.10 Shareholder’s fund of retakaful subsidiary

expense liabilities

The expense liabilities of the shareholder’s fund consists of expense liabilities of the general retakaful fund and the family retakaful fund which are based on estimations performed by a qualified actuary. The movement in expense liabilities is released over the term of the retakaful contracts and recognised as wakalah fees.

(i) expense liabilities of general retakaful fund

The expense liabilities of the general retakaful fund are reported at the higher of the aggregate of the reserve for unearned wakalah fees (“UWF”) or the best estimate value of the provision for unexpired expense reserves (“UER”) and a PRAD at a 75% confidence level at the end of the financial year.




2.10 Shareholder’s fund of retakaful subsidiary (cont’d)

expense liabilities (cont’d)

(i) expense liabilities of general retakaful fund (cont’d)

(a) reserve for unearned wakalah fees

The UWF represents the portion of wakalah fee income allocated for expenses expected to be incurred in managing general retakaful contracts that relate to the unexpired periods of the contracts at the end of the reporting period. In determining the UWF, the method used is consistent with the methods used in the calculation of the UCR of the general retakaful fund as disclosed in Note 2.8(ii)(b).

(b) unexpired expense risk

The UER is determined based on the expected future expenses payable by the shareholder’s fund in managing the general retakaful fund for the full contractual obligation of unexpired retakaful contracts as at the end of the reporting period. The method used to value the UER is consistent with the method used in estimating the URR as disclosed in Note 2.8(ii)(a).

(ii) expense liabilities of family retakaful fund

The valuation of expense liabilities in relation to contracts of the family retakaful fund is conducted separately by the Appointed Actuary in the shareholder’s fund. The method used to value expense liabilities is consistent with the method used to value retakaful liabilities of the corresponding family retakaful contracts. In valuing the expense liabilities, the present value of expected future expenses payable by the shareholder’s fund in managing the retakaful fund for the full contractual obligation of the retakaful contracts less any expected cash flows from future wakalah fee income, and any other income due to the shareholder’s fund that can be determined with reasonable certainty, are taken into consideration. The estimation includes a PRAD at a 75% confidence level.

(iii) liability adequacy test

At each reporting date, the retakaful subsidiary reviews the expense liabilities to ensure that the carrying amount is sufficient or adequate to cover the obligations of the shareholder’s fund for all managed retakaful contracts. In performing this review, the retakaful subsidiary considers all contractual cash flows and compares this against the carrying value of expense liabilities. Any deficiency is recognised in the income statement.



2.11 product classification

Financial risk is the risk of a possible future change in one or more of a specified interest/profit 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/underwriting risk is the risk other than financial risk.

An insurance/takaful contract is a contract under which the reinsurance, takaful and retakaful subsidiaries have accepted significant insurance/underwriting risk from another party by agreeing to compensate the party if a specified uncertain future event adversely affects the party. As a general guideline, the reinsurance, takaful and retakaful subsidiaries determine whether significant insurance/underwriting risk has been accepted by comparing claims/benefits paid on the occurrence of an insured event with claims/benefits payable if the event had not occurred.

Conversely, investment contracts are those contracts that transfer financial risk with no significant insurance/underwriting risk.

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

Based on the definition above and the product classification review performed by the Group, all contracts issued during the year fall under the classification of insurance/takaful contracts as at the reporting date.

2.12 reinsurance/retakaful

The reinsurance, takaful and retakaful subsidiaries cede insurance/underwriting risk in the normal course of business. Ceded reinsurance/retakaful arrangements do not relieve the reinsurance, takaful and retakaful subsidiaries from their obligations to cedants/participants. For both ceded and assumed reinsurance/retakaful, premiums/contributions and claims/benefits are presented on a gross basis.

Reinsurance/retakaful arrangements entered into by the reinsurance, takaful and retakaful subsidiaries that meet the classification requirements of insurance/takaful contracts as described in Note 2.11 are accounted for as noted below. Arrangements that do not meet these classification requirements are accounted for as financial assets. As at the reporting date, all reinsurance/retakaful arrangements entered into by the reinsurance, takaful and retakaful subsidiaries during the year met the classification requirements of insurance/takaful contracts.

Reinsurance/retakaful assets represent amounts recoverable from reinsurers/retakaful operators for insurance/takaful contract liabilities which have yet to be settled at the reporting date. Amounts recoverable from reinsurers/retakaful operators are measured consistently with the amounts associated with the underlying insurance/takaful contracts and the terms of the relevant reinsurance/retakaful arrangement.

At each reporting date, the reinsurance, takaful and retakaful subsidiaries assess whether objective evidence exists that reinsurance/retakaful assets are impaired. Objective evidence of impairment for reinsurance/retakaful assets are similar to those noted for insurance/takaful receivables. If any such evidence exists, the amount of the 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 the income statement. Reinsurance/retakaful assets are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party.




2.13 property, plant and equipment and depreciation

(i) recognition and measurement

All items of property, plant and equipment are initially recorded at cost. Subsequent to recognition, plant and equipment are stated at cost less accumulated depreciation and impairment losses, whilst properties are stated at revalued amount less subsequent accumulated depreciation and subsequent impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset. On disposal of property, plant and equipment, the difference between net proceeds and the carrying amount is recognised in the income statement and the unutilised portion of the revaluation surplus on that item is taken directly to retained profits.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the Group and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in the income statement as incurred.

(iii) Depreciation

Freehold land has an unlimited useful life and therefore is not depreciated. Leased properties are depreciated over the shorter of the lease term and their useful lives.

Work in progress are also not depreciated as these assets are not available for use. When work in progress is completed and the asset is available for use, it is reclassified to the relevant category of property, plant and equipment and depreciation of the asset begins. During the period in which the asset is not yet in use, it is tested for impairment annually.

Depreciation of other property, plant and equipment is provided for on a straightline basis to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rates:

Buildings 2% to 4% Computer equipment 20% to 33.3% Office equipment 5% to 15% Furniture and fittings 3.3% to 15% Motor vehicles 20% Significant parts of buildings 5% to 20%

The residual values, useful life and depreciation method are reviewed at the end of each reporting period to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property, plant and equipment.



2.14 Investment properties

Investment properties are properties which are held either to earn rental income or for capital appreciation or for both. Such properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value.

Fair value is arrived at by reference to market evidence of transaction prices for similar properties and is performed by registered independent valuers having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued.

Gains and losses arising from changes in the fair values of investment properties are recognised in the income statement in the year in which they arise.

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

Transfers are made to or from investment property only when there is a change in use. For a transfer from owner-occupied property to investment property, any excess of the property’s carrying value over its fair value is accounted for as a revaluation surplus which is recognised in other comprehensive income. Any deficit between the property’s carrying value and its fair value is recognised as an impairment loss in income statement. Subsequent to the date of change in use, the property is measured similar to other investment properties. Any revaluation surplus previously recognised in other comprehensive income is transferred to the income statement only upon disposal of the property.

2.15 Intangible assets

All intangible assets are initially recorded at cost. Subsequent to recognition, intangible assets are stated at cost less accumulated amortisation and impairment losses. Cost includes expenditures that are directly attributable to the acquisition of the asset.

On disposal of intangible assets, the difference between net proceeds and the carrying amount is recognised in the income statement.

The useful lives of intangible assets are assessed to be either finite or indefinite. Intangible assets with finite lives are amortised on a straight line basis over the estimated economic useful 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 life are reviewed annually at the end of each reporting period.

Amortisation is charged to the income statement.

Intangible assets with indefinite useful lives are not amortised but tested for impairment annually or more frequently if events or changes in circumstances indicate that the carrying value may be impaired either individually or at the cash-generating unit level. The useful life of an intangible asset with an indefinite life is also reviewed annually to determine whether the useful life assessment continues to be supportable.




2.15 Intangible assets (cont’d)

(i) Software development in progress

Software development in progress are tested for impairment annually and represent development expenditure on software. Following the initial recognition of the development expenditure, the cost model is applied requiring the asset to be carried at cost less any accumulated impairment losses. Amortisation of the asset begins when development is complete and the asset is available for use. It is amortised over the period of expected future use. During the period in which the asset is not yet in use, it is tested for impairment annually.

(ii) Computer software and licences

The useful lives of computer software and licences are considered to be finite because computer software and licences are susceptible to technological obsolescence.

The acquired computer software and licences are amortised using the straight line method over their estimated useful lives not exceeding 6 years. Impairment is assessed whenever there is indication of impairment and the amortisation period and method are also reviewed annually at the end of each reporting period.

2.16 Financial assets

(i) Initial recognition and measurement

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

A financial asset is recognised initially, at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset.

An embedded derivative is recognised separately from the host contract and accounted for as a derivative if, and only if, it is not closely related to the economic characteristics and risks of the host contract and the host contract is not categorised at fair value through profit or loss. The host contract, in the event an embedded derivative is recognised separately, is accounted for in accordance with the policy applicable to the nature of the host contract.

(ii) Classification and subsequent measurement

The Group and the Company determine the classification of its financial assets at initial recognition and this depends on the purpose for which the investments were acquired or originated. The following classifications are used by the Group and the Company in categorising its financial assets:

(a) Financial assets at 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 the income statement. Net gains or net losses on FVTPL do not include exchange differences, interest and dividend income. Interest and dividend income on financial assets at FVTPL are recognised in the income statement as part of investment income.



2.16 Financial assets

(ii) Classification and subsequent measurement

(b) HtM investments

Financial assets with fixed or determinable payments and fixed maturity are classified as HTM when the Group and the Company have the positive intention and ability to hold the investments to maturity.

Subsequent to initial recognition, HTM investments are measured at amortised cost using the effective interest / yield method. Gains and losses are recognised in the income statement when the HTM investments are derecognised or impaired, and through the amortisation process.

(c) loans and receivables

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

Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest / yield method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process.

(d) aFS financial assets

AFS financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories.

After initial recognition, AFS financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset 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 / yield method are recognised in the income statement. The cumulative gain or loss previously recognised is reclassified from other comprehensive income to the income statement as a reclassification adjustment when the financial asset is derecognised. Interest / profit income calculated using the effective interest / yield method is recognised in the income statement.

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

(iii) Derecognition

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 the income statement.




2.17 Fair value of financial instruments

The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets and offer prices for liabilities, at the close of business at the end of each reporting period.

The fair value of investments in unit and real estate investment trusts is determined by reference to published bid prices.

For financial assets where an active market may not exist, the fair value is determined by using valuation techniques. Such techniques include using recent arm’s length transactions, reference to the current market value of another asset which is substantially the same, discounted cash flow analysis and / or option pricing models making maximum use of market inputs and relying as little as possible on entity-specific inputs. For discounted cash flow techniques, estimated future cash flows are based on management’s best estimates and the discount rate used is a market related rate for a similar asset. Certain financial assets are valued using pricing models that consider, among other factors, contractual and market prices, co-relation, time value of money, credit risk, yield curve volatility factors and / or prepayment rates of the underlying positions. The use of different pricing models and assumptions could produce materially different estimates of fair values.

The fair value of floating rate and over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit/placement and accrued interest/profit. The fair value of fixed interest/profit/yield-bearing deposits is estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates for similar instruments at the reporting date.

If the fair value of a financial asset cannot be measured reliably, the asset is measured at cost, being the fair value of the consideration paid for the acquisition of the asset. All transaction costs directly attributable to the acquisition are also included in the cost of the financial asset.

2.18 Impairment of assets

(i) Financial assets

The Group and the Company assesses at the end of each reporting period whether there is any objective evidence that a financial asset or a group of financial assets is impaired.

(a) Financial assets carried at amortised cost

The Group and the Company first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The impairment assessment is performed at the end of each reporting period.

If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate / yield. The carrying amount of the asset is reduced and the loss is recorded in the income statement.



2.18 Impairment of assets (cont’d)

(i) Financial assets (cont’d) (a) Financial assets carried at amortised cost (cont’d)

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. Any subsequent reversal of an impairment loss is recognised in the income statement, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(b) aFS financial assets

Significant or prolonged decline in fair value below cost, significant financial difficulties of the issuer or obligor, and the disappearance of an active trading market are considerations to determine whether there is objective evidence that investment securities classified as AFS financial assets are impaired.

If an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principal payment and amortisation) and its current fair value, less any impairment loss previously recognised in the income statement, is transferred from other comprehensive income to the income statement.

Impairment losses on AFS equity investments are not reversed in the income statement in subsequent periods. An increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For AFS debt investments, impairment losses are subsequently reversed in the income statement if an increase in the fair value of the investment can be objectively related to an event occurring after the recognition of the impairment loss in the income statement.

(ii) non-financial assets

The carrying amounts of assets are reviewed at the end of each reporting period to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. For the purpose of impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the “cash-generating unit”). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units that are expected to benefit from the synergies of the combination.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated future cash flows 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. An impairment loss is recognised if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

Impairment losses are recognised in the income statement. Impairment losses recognised in respect of cash generating units are allocated first to reduce the carrying amount of the other assets in the unit (groups of units) on a pro rata basis.




2.18 Impairment of assets (cont’d)

(ii) non-financial assets (cont’d)

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at the end of each reporting period for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount since the last impairment loss was recognised. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. Reversals of impairment losses are credited to the income statement in the year in which the reversals are recognised.

2.19 non-current assets held for sale

Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset is available for immediate sale in its present condition subject only to terms that are usual and customary.

Immediately before classification as held for sale, the non-current assets are measuredin accordance with applicable MFRSs. On initial classification as held for sale, noncurrent assets are then measured at the lower of its carrying amount and fair value less costs to sell. Any difference is included in the income statement. Non-current assets classified as held for sale are not depreciated.

2.20 Measurement and impairment of Qard

Any deficits arising in the takaful / retakaful funds are made good via a loan, or Qard, granted by the shareholder’s funds to the takaful / retakaful funds. The Qard is stated at cost less any impairment losses at the shareholder’s funds. In the takaful / retakaful funds, the Qard is stated at cost.

The Qard shall be repaid from future surpluses of the takaful/retakaful funds.

The Qard is tested for impairment on an annual basis via an assessment of the estimated surpluses or cash flows from the takaful / retakaful funds to determine whether there is objective evidence of impairment. If the Qard is impaired, an amount comprising the difference between its cost and its recoverable amount, less any impairment loss previously recognised, is recognised in the income statement.

Impairment losses are subsequently reversed in the income statement if objective evidence exists that the Qard is no longer impaired.

2.21 Share capital and dividend expenses

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of its liabilities.

Ordinary shares are recorded at the proceeds received, net of directly attributable incremental transaction costs. Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in equity in the period in which they are declared.



2.22 Cash and cash equivalents

Cash and cash equivalents include cash in hand and at banks, excluding fixed and call deposits with licensed financial institutions, which have an insignificant risk of changes in value. The statement of cash flows has been prepared using the indirect method.

2.23 Insurance and takaful receivables

Insurance/takaful receivables are amounts receivable under the contractual terms of an insurance/takaful contract. On initial recognition, insurance/takaful receivables are measured at fair value based on the consideration receivable. Subsequent to initial recognition, insurance/takaful receivables are measured at amortised cost, using the effective yield method.

Insurance/takaful receivables are assessed at each reporting date for objective evidence of impairment. 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 insurance/takaful receivable’s original effective yield rate. The impairment loss is recognised in the income statement. The basis for recognition of such impairment loss is as described in Note 2.18(i)(a).

Insurance/takaful receivables are derecognised when the rights to receive cash flows from them have expired or when they have been transferred and the Group has also transferred substantially all risks and rewards of ownership.

2.24 Islamic medium terms notes (“IMtn”)

The IMTN are recognised at the amount of proceeds received less directly attributable transaction costs. The IMTN are classified as financial liabilities in the statement of financial position and the profits payable are recognised as finance costs in the income statement in the period in which they are incurred.

2.25 leases

(i) Classification

A lease is recognised as a finance lease if it transfers substantially to the Group all the risks and rewards incidental to ownership. Leases of land and buildings are classified as operating or finance leases in the same way as leases of other assets. The land and buildings elements of a lease of land and buildings are considered separately for the purposes of lease classification. All leases that do not transfer substantially all the risks and rewards are classified as operating leases, with the following exceptions:

(a) Property held under operating leases that would otherwise meet the definition of an investment property is classified as an investment property on a case-by-case basis and, if classified as investment property, is accounted for as if held under a finance lease, as disclosed in Note 2.14; and

(b) Land held for own use under an operating lease, the fair value of which cannot be measured separately from the fair value of a building situated thereon at the inception of the lease, is accounted for as being held under a finance lease, unless the building is also clearly held under an operating lease.




2.25 leases (cont’d)

(ii) Finance leases - the group as lessee

Assets acquired by way of hire purchase or finance leases are stated at an amount equal to the lower of their fair values and the present value of the minimum lease payments at the inception of the leases, less accumulated depreciation and impairment losses. The corresponding liability is included in the statement of financial position as borrowings. In calculating the present value of the minimum lease payments, the discount factor used is the interest rate implicit in the lease, when it is practicable to determine; otherwise, the Group and the Company’s incremental borrowing rate is used. Any initial direct costs are also added to the carrying amount of such assets.

Lease payments are apportioned between the finance costs and the reduction of the outstanding liability. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are recognised in the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

The depreciation policy for leased assets is in accordance with that for depreciable property, plant and equipment as described in Note 2.13(iii).

(iii) operating leases - the group as lessee

Operating lease payments are recognised as an expense on a straight-line basis over the term of the relevant lease. 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.

In the case of a lease of land and buildings, the minimum lease payments or the up-front payments made

are allocated, whenever necessary, between the land and the buildings elements in proportion to the relative fair values of leasehold interests in the land element and buildings element of the lease at the inception of the lease. The up-front payment represents prepaid lease payments and are amortised on a straight-line basis over the lease term.

(iv) operating leases - the group as lessor

Assets leased out under operating leases are presented on the statement of financial position according to the nature of the assets. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease, as disclosed in Note 2.31(ii). Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.



2.26 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 Financial Instruments: Recognition and Measurement, are recognised in the statement 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 FVTPL 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 and the Company that do not meet the hedge accounting criteria. Derivative liabilities are initially measured at fair value and subsequently stated at fair value, with any resultant gains or losses recognised in the income statement. Net gains or losses on derivatives include exchange differences.

The Group and the Company have not designated any financial liabilities as at FVTPL nor were there any financial liabilities held for trading.

(ii) other financial liabilities

The Group and the Company’s other financial liabilities include insurance/takaful payables and other payables.

Insurance/takaful and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest/yield method.

For other financial liabilities, gains and losses are recognised in the income statement when the liabilities are derecognised, and through the amortisation process.

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 the income statement.

2.27 provisions

Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount can be made. Provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, the amount of provision is the present value of the expenditure expected to be required to settle the obligation.




2.28 Income tax

Income tax on profit or loss for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit for the year and is measured using the tax rates that have been enacted at the end of the reporting period.

Deferred tax is provided for, using the liability method, on temporary differences at the end of the reporting period between the tax bases of assets and liabilities and their carrying amounts in the financial statements. In principle, deferred tax liabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit.

Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the end of the financial year. Deferred tax is recognised in the income statement, except when it arises from a transaction which is recognised directly in other comprehensive income, in which case the deferred tax is also charged or credited directly in other comprehensive income.

2.29 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. 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 balances. Short-term nonaccumulating compensated absences such as sick leave are recognised when the absences occur.

(ii) Defined contribution plan

As required by law, the Group makes contributions to the national pension scheme, the Employees Provident Fund (“EPF”). The Group also makes additional contributions to the EPF for eligible employees by reference to their length of service and earnings. Such contributions are recognised as an expense in the income statement as incurred.

(iii) employees’ terminal benefits

As required by law in the United Arab Emirates, the Group makes provision for terminal benefits for employees of its Dubai subsidiary, based on the employees’ salaries and number of years of service. The terminal benefits are paid to the employees on termination or completion of their terms of employment.



2.30 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 consolidated financial statements are presented in Ringgit Malaysia (RM), which is also the Company’s functional currency.

(ii) Foreign currency transactions

In preparing the financial statements, transactions in currencies other than the functional currency (“foreign currencies”) are recorded in the functional currency using the exchange rates prevailing at the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising from the settlement of monetary items, and on the retranslation of monetary items, are included in the income statement for the period except for exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, where that monetary item is denominated in either the functional currency of the reporting entity or the foreign operation, are initially taken directly to the foreign currency translation reserve within equity until the disposal of the foreign operations, at which time they are recognised in the income statement. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, where that monetary item is denominated in a currency other than the functional currency of the Company or the foreign operation, are recognised in the income statement for the period. Exchange differences arising on monetary items that form part of the Company’s net investment in foreign operations, regardless of the currency of the monetary item, are recognised in the income statement.

Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in the income statement for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in other comprehensive income. Exchange differences arising from such non-monetary items are also recognised directly in other comprehensive income.




2.30 Foreign currencies (cont’d)

(iii) Foreign operations

The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidated financial statements are translated into RM as follows:

(a) Assets and liabilities for each statement of financial position presented are translated at the closing rate prevailing at the reporting date;

(b) Income and expenses for each income statement are translated at average exchange rates for the year, which approximates the exchange rates at the dates of the transactions;

(c) All resulting exchange differences are taken to the foreign currency translation reserve within equity; and

(d) The results of an associate, Labuan Reinsurance (L) Limited, are translated at the closing rate prevailing at the reporting date with respect to the carrying amount of investments in associate, and at the exchange rate at the date of the transactions with respect to the share of profits or losses. All resulting translation differences are included in the foreign exchange translation reserve in shareholders’ equity.

2.31 other revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits flow to the Group and the Company and the revenue can be reliably measured. Revenue is measured at the fair value of consideration received or receivable.

(i) Interest and profit income are recognised using the effective interest/yield method.

(ii) Rental income is accounted for on a straight-line basis over the lease terms. The aggregate costs of incentives provided to lessees are recognised as a reduction of rental income over the lease term on a straight-line basis.

(iii) Dividend income is recognised when the right to receive payment is established.

(iv) Management fees are recognised when services are rendered.

(v) Wakalah fees are recognised as soon as the amount of contribution can be reliably measured in accordance with the principles of Shariah.

2.32 Zakat

Zakat represents an obligatory amount payable by the takaful and retakaful subsidiaries to comply with the principles of Shariah. Zakat for the takaful subsidiary is computed using the “net-asset” method, whilst zakat for the retakaful subsidiary is computed based on 2.5% of profit before tax, as approved by the respective Shariah Committee. Only the zakat that is attributable to the individual Muslim shareholders of the holding company was provided for in the financial statements. The zakat computation is reviewed by the Shariah Committee. The Board has the discretion to pay additional zakat above the obligatory amount payable.



2.33 transition to MFrS and the application of MFrS 1

These are the Group’s and the Company’s first annual financial statements prepared in accordance with MFRS. In previous financial years, the financial statements of the Company were prepared in accordance with FRS in Malaysia.

The accounting policies set out in Notes 2.1 to 2.32 have been applied in preparing the financial statements of the Group and the Company for the financial year ended 31 March 2013, the comparative information presented in these financial statements for the financial year ended 31 March 2012 and in the preparation of the opening statement of financial position at 1 April 2011 (which is also the Group’s and the Company’s date of transition). The impact arising from the application of MFRS 1 is disclosed below:

(i) redesignation of previously recognised financial instruments

MFRS 1 allows first-time adopters to designate a previously recognised financial asset as a financial asset at FVTPL or AFS. The Group had elected to utilise this exemption and certain HTM investments were designated as AFS financial assets. This redesignation was applied retrospectively from the date of transition to MFRS and the impact arising from the redesignation is disclosed in Note 4.

(ii) Consistent application of revaluation model for self-occupied properties

In the prior financial year, in its financial statements prepared in accordance with FRS in Malaysia, the Group had changed from the cost model to the revaluation model in respect of its self-occupied properties. Under FRS, this change had been accounted for prospectively and the impact adjusted against the carrying value of self-occupied properties and the asset revaluation reserve.

MFRS 1 requires entities to apply the same accounting policies in its opening MFRS statement of financial position and throughout all periods presented in its first MFRS annual financial statements. Accordingly, upon adoption of MFRS, the carrying amount of the Group’s self-occupied properties on the date of transition were revalued in accordance with the requirements of MFRS 116 Property, Plant and Equipment. The impact arising from the revaluation is disclosed in Note 4.

2.34 Guidelines on valuation of liabilities of family takaful business issued by Bank negara Malaysia

BNM/RH/GL-004-20 Guidelines on Valuation Basis for Liabilities of Family Takaful Business, issued by BNM in December 2010 and effective for financial periods beginning on or after 1 July 2011, stipulates the valuation bases for liabilities of family takaful business. Amongst its requirements is the need for the valuation of the family takaful contract liabilities based on the gross contribution valuation method as further discussed in Note 2.6(v). The requirements of this Guideline was effective for the Group beginning 1 April 2012.

In line with the requirements of MFRS 1 for entities to apply the same accounting policies in its opening MFRS statement of financial position and throughout all periods presented in its first MFRS annual financial statements, the carrying amount of the Group’s family takaful contract liabilities on the date of transition were revalued in accordance with the requirements of the Guideline. The impact arising from the revaluation is disclosed in Note 4.




2.35 Standards issued but not yet effective

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

effective for annual periods beginning on or after 1 July 2012

MFRS 101 Presentation of Items of Other Comprehensive Income (Amendments to MFRS 101)

effective for annual periods beginning on or after 1 January 2013

Amendments to MFRS 101 Presentation of Financial Statements (Annual Improvements 2009 - 2011 Cycle) MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) MFRS 10 Consolidated Financial Statements MFRS 11 Joint Arrangements MFRS 12 Disclosure of interests in Other Entities MFRS 13 Fair Value Measurement MFRS 119 Employee Benefits MFRS 127 Separate Financial Statements MFRS 128 Investment in Associate and Joint Ventures MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) Amendment to IC Interpretation 2 Members’ Shares in Co-operative Entities and Similar Instruments

(Annual Improvements 2009 - 2011 Cycle) IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine Amendments to MFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards - Government Loans Amendments to MFRS 1: First-time Adoption of Malaysian Financial Reporting Standards -

Annual Improvements 2009 - 2011 Cycle) Amendments to MFRS 116 Property, Plant and Equipment (Annual Improvements 2009 - 2011 Cycle) Amendments to MFRS 132 Financial Instruments: Presentation (Annual Improvements 2009 - 2011 Cycle) Amendments to MFRS134 Interim Financial Reporting (Annual Improvements 2009 - 2011 Cycle) Amendments to MFRS 10 Consolidated Financial Statements: Transition Guidance Amendments to MFRS 11 Joint Arrangements: Transition Guidance Amendments to MFRS 12 Disclosure of Interests in Other Entities: Transition Guidance Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities


Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities Amendments to MFRS 10, MFRS 12 and MFRS 127 Investment Entities


MFRS 9 Financial Instruments



2.35 Standards issued but not yet effective (cont’d) The Directors expect that the adoption of the above standards and interpretations will have no material impact

on the financial statements in the period of initial application except as discussed below:

(i) MFrS 9 Financial Instruments (“MFrS 9”)

MFRS 9 reflects the first phase of the work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement and applies to classification and measurement of financial assets and financial liabilities as defined in MFRS 139 Financial Instruments: Recognition and Measurement. The adoption of the first phase of MFRS 9 will have an effect on the classification and measurement of the Group’s and the Company’s financial assets. The Group and the Company will quantify the effect in conjunction with the other phases, when the final standard including all phases is issued.

(ii) MFrS 10 Consolidated Financial Statements (“MFrS 10”)

MFRS 10 replaces part of MFRS 127 Consolidated and Separate Financial Statements that deals with consolidated financial statements and IC Interpretation 112 Consolidation - Special Purpose Entities.

Under MFRS 10, an investor controls an investee when (a) the investor has power over an investee, (b) the investor has exposure, or rights, to variable returns from its involvement with the investee, and (c) the investor has ability to use its power over the investee to affect the amount of the investor’s returns. Under MFRS 127 Consolidated and Separate Financial Statements, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities.

MFRS 10 includes detailed guidance to explain when an investor has control over the investee. MFRS 10 requires the investor to take into account all relevant facts and circumstances. The Group and the Company is currently assessing the impact that this Standard will have on the financial statements of the Group and the Company but based on preliminary analyses performed, no material impact is expected.

(iii) MFrS 12 Disclosure of Interests in other entities (“MFrS 12”)

MFRS 12 includes all disclosure requirements for interests in subsidiaries, joint arrangements, associates and structured entities. A number of new disclosures are required. This standard affects disclosures only and is expected to have no significant impact on the Group’s and the Company’s financial position or performance.

(iv) MFrS 13 Fair Value Measurement (“MFrS 13”)

MFRS 13 establishes a single source of guidance under MFRS for all fair value measurements. MFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under MFRS when fair value is required or permitted. The Group and the Company is currently assessing the impact that this Standard will have on the financial statements of the Company but based on preliminary analyses performed, no material impact is expected.



3. SIGnIFICant aCCountInG eStIMateS anD JuDGeMentS

The preparation of the Group and the Company’s financial statements requires management to make judgements, estimates and assumptions that affect the reported amount of revenues, expenses, assets and liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

3.1 Critical judgement made in applying accounting policies

The following is the judgement 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. Judgements are continually evaluated and are based on historical experiences and other factors, including expectations of futureevents that are believed to be reasonable under the circumstances.

Classification between investment properties and property, plant and equipment

The Group has developed certain criteria based on MFRS 140 in making judgement whether a property qualifies as an investment property. Investment property is a property held to earn rentals or for capital appreciation or both. Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes. If these portions could be sold separately (or leased out separately under a finance lease), the Group would account for the portions separately. If the portions could not be sold separately, the property is an investment property onlyif an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes. Judgement is made on an individual property basis to determine whether ancillary services are so significant that a property does not qualify as investment property.

3.2 Key sources of estimation uncertainty

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

(a) Depreciation and amortisation

Depreciation and amortisation is based on management’s estimates of the future estimated average useful lives and residual values of property, plant and equipment and intangible assets. Estimates may change due to technological developments, expected level of usage, competition, market conditions and other factors, and could impact the estimated average useful lives and the residual values of these assets.

This may result in future changes in the estimated useful lives and in the depreciation or amortisation expenses. Accordingly, at the end of each reporting period, the residual values and estimated useful lives of property, plant and equipment and intangible assets are assessed to determine that they continue to be consistent as disclosed in Notes 2.13(iii) and 2.15, respectively.

As at the reporting date, management has determined that the estimated useful lives of property, plant and equipment and intangible assets of the Group and of the Company remain consistent and there are no residual values.


3. SIGnIFICant aCCountInG eStIMateS anD JuDGeMentS (Cont’D)

3.2 Key sources of estimation uncertainty (cont’d)

(b) General reinsurance business

The principal uncertainty in the general reinsurance business arises from the technical provisions which include the provisions of premium and claim liabilities. Premium liabilities are recorded as the higher of UPR or URR while claim liabilities mainly comprise of provision for claims reported, IBNER and IBNR.

Generally, claim liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that actual future premium and claim liabilities will not exactly develop as projected and may vary from the reinsurance subsidiary’s projection.

The estimates of premium and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of premium and claim liabilities may vary from the initial estimates.

At each reporting date, the estimates of premium and claim liabilities are reassessed for adequacy by an appointed actuary and changes will be reflected as adjustments to these liabilities. The appointment of the actuary is approved by BNM.

(c) General takaful and retakaful business

The principal uncertainty in the general takaful and retakaful businesses arises from the technical provisions which include the contribution liabilities and claims liabilities.

There may be significant reporting lags between the occurrence of an insured event and the actual time of event. Following the identification and notification of an insured loss, there may still be uncertainty as to the magnitude of the claim.

Generally, claim liabilities on reported claims or case reserves are estimated based upon historical claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience of similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that final claim liabilities may vary from current projection. The uncertainty is also inherent in the projected contribution liabilities as it is correlated to the projected claim liabilities.

The estimates of contribution and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of contribution and claim liabilities may vary from the initial estimates. At the end of each reporting period, the estimates are re-assessed for adequacy by an appointed actuary and changes will be reflected as adjustments to these liabilities. The appointment of the actuary is approved by BNM.





(d) Family takaful and retakaful business

The estimation of the ultimate liability arising from claims made under the family takaful and retakaful businesses is a critical accounting estimate. There are several sources of uncertainty that need to be considered in the estimation of the liabilities that the family takaful and retakaful funds will ultimately be required topay as claims.

For family takaful and retakaful contracts, estimates are made for future deaths, disabilities, maturities, investment returns, voluntary terminations and expenses in accordance with contractual and regulatory requirements. The Family takaful and retakaful funds base the estimate of expected number of deaths on statutory mortality tables, adjusted where appropriate to reflect the funds’ unique risk exposures. The estimated number of deaths determines the value of possible future benefits to be paid out, which will be factored into ensuring sufficient cover by reserves, which in return is monitored against current and future contributions.

For those contracts that cover risks related to disability, estimates are made based on recent past experience and emerging trends. However, epidemics as well as wide ranging changes to life style, could result in significant changes to the expected future exposures.

All of these will give rise to estimation uncertainties of projected ultimate liability of the family takaful and retakaful funds.

At each reporting date, these estimates are reassessed for adequacy and changes will be reflected as adjustments to the liability.

(e) Impairment of non-financial assets

Assets are tested for impairment when indications of potential impairment exist. Indicators of impairment which could trigger an impairment review include evidence of obsolescence or physical damage, significant fall in market values, significant underperformance relative to historical or projected future operating results, significant changes in the use of assets or the strategy of the business, significant adverse industry or economic changes. Recoverable amounts of assets are based on management’s estimates and assumptions of the net realisable value, cash flows arising from the future operating performance and revenue generating capacity of the assets and CGUs, and future market conditions. Changes in circumstances may lead to changes in estimates and assumptions, and result in changes to the recoverable amounts of assets and impairment losses needed.

It is also recognised that an initial decline in fair value of investments in new startup investee companies, which is deemed temporary, may arise due to development and operational losses in the initial years. Based on an assessment performed at the reporting date, the Board of Directors and Management of the Company are of the opinion that there is no further indication of impairment in the Company’s investment in unquoted corporations at this juncture.




(f) Impairment of unquoted equity investments

The Group and the Company follows the guidance of the applicable MFRS in determining whether there is a decline other than temporary in the fair value of its investment in unquoted corporations. This determination requires significant judgement. In making this judgement, the Group and the Company evaluates the quantitative and qualitative factors affecting the market position of the investee including the regulatory support it receives and its longer term business outlook and financial standing. Appropriate considerations are given to the investee’s financial gestation period, financial projections, business prospects and the proprietary technology involved.

(g) Impairment of insurance/takaful receivables and reinsurance/retakaful assets

The Group reviews its insurance and takaful receivables on a regular basis to assess whether an allowance for impairment should be recorded in the income statement. In particular, judgement by management is required in the estimation of the amount and timing of future cash flows when determining the level of impairment required. Such estimates are necessarily based on assumptions about the probability of default and probable losses in the event of default, the value of the underlying security, and realisation costs.

These estimates are revisited by management on a frequent basis, at least once a year, to determine if certain assumptions continue to be reasonable. As at the reporting date, the impairment losses recognised on insurance/takaful receivables and reinsurance/retakaful assets reflect the expected recoverable values of these assets.

(h) Deferred tax

Deferred tax liabilities are recognised for all taxable temporary differences.

Deferred tax assets are recognised for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based on the likely timing and level of future taxable profits together with future tax planning strategies.

Assumptions about generation of future taxable profits depend on management’s estimates of future cash flows. These depend on estimates of future production and sales volume, operating costs, capital expenditure, dividends and other capital management transactions. Judgement is also required about application of income tax legislation. These judgements and assumptions are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognised in the statement of financial position and the amount of unrecognised tax losses and unrecognised temporary differences.

The judgements and assumptions used in the estimates of deferred tax liabilities / assets are reassessed at least once a year to determine that they continue to be appropriate.

The total carrying value of recognised temporary differences of the Group and unrecognised temporary deductible differences of the retakaful subsidiary are disclosed in Note 17 to the financial statements.

Management is of the view that recognised deferred tax assets represent a fair estimate of the Group’s deductible temporary differences.



4. FInanCIal eFFeCtS arISInG FroM aDoptIon oF MFrS FraMeWorK, CHanGeS In aCCountInG polICIeS anD ConSolIDatIon oF taKaFul anD retaKaFul FunDS

Statement of Financial position

The following is the reconciliation of the statement of financial position of the Group as at 31 March 2012 from FRS in Malaysia to MFRS:

Consolidation of takaful FrS as at note note note and retakaful MFrS as at 31.3.2012 2.33 (i) 2.33 (ii) 2 .34 funds 31.3.2012 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

assetsProperty, plant and equipment 135,989 – 207 – 101,731 237,927Investment properties 5,600 – – – – 5,600Intangible assets 13,970 – – – – 13,970Deferred tax 5,109 – – – 6,527 11,636Investment in associates 86,383 – – – – 86,383Financial assets:

Financial assets at FVTPL 17,953 – – – 119,510 137,463HTM investment 337,597 (230,134) – – 324,760 432,223AFS financial assets 951,979 234,014 – – 571,985 1,757,978LAR 1,016,498 – – – 431,578 1,448,076

Reinsurance/retakaful assets 357,636 – – – 75,245 432,881Insurance/takaful receivables 150,100 – – – 181,563 331,663Tax recoverable 3,508 – – – 11,969 15,477Cash and bank balances 2,760 – – – 77,811 80,571Non-current asset held for sale 56,601 – – – – 56,601

total general insurance businessand shareholders’ fund assets 3,141,683 3,880 207 – 1,902,679 5,048,449

General takaful fund assets 345,285 – – – (345,285) –Family takaful fund assets 1,606,924 – – – (1,606,924) –General retakaful fund assets 89,302 – – – (89,302) –Family retakaful fund assets 12,873 – – – (12,873) –

total assets 5,196,067 3,880 207 – (151,705) 5,048,449


4. FInanCIal eFFeCtS arISInG FroM aDoptIon oF MFrS FraMeWorK, CHanGeS In aCCountInG polICIeS anD ConSolIDatIon oF taKaFul anD retaKaFul FunDS (Cont’D)

Statement of Financial position (cont’d)


liabilities and participants’ fundsParticipants’ funds – 2,166 – 29,423 138,947 170,536Borrowings 270,000 – – – – 270,000Insurance/takaful contract liabilities 1,638,443 – – (29,423) 1,617,725 3,226,745Insurance/takaful payables 88,110 – – – 89,991 178,101Other payables 48,356 – – – 62,218 110,574Deferred tax liabilities – 668 5,296 – 8,267 14,231Provision for taxation – – – – 19,384 19,384Provision for zakat 390 – – – – 390

total liabilities and participants’ funds 2,045,299 2,834 5,296 – 1,936,532 3,989,961General takaful fund liabilities 336,189 – – – (336,189) –Family takaful fund liabilities 1,359,775 – – – (1,359,775) –General retakaful fund liabilities 89,302 – – – (89,302) –Family retakaful fund liabilities 11,571 – – – (11,571) –

total liabilities 3,842,136 2,834 5,296 – 139,695 3,989,961

eQuItYShare capital 213,070 – – – – 213,070Reserves 883,314 1,046 (5,089) – (33,853) 845,418

total equity attributable toequity holders of the Company 1,096,384 1,046 (5,089) – (33,853) 1,058,488

participants’ funds 257,547 – – – (257,547) –

total liabilities, participants’ funds and equity 5,196,067 3,880 207 – (151,705) 5,048,449





The following is the reconciliation of the statement of financial position of the Group as at 1 April 2011 from FRS in Malaysia to MFRS:


assetsProperty, plant and equipment 101,887 – 24,042 – 103,521 229,450Investment properties 28,600 – – – – 28,600Intangible assets 12,970 – – – – 12,970Deferred tax 5,474 – – – 7,061 12,535Investment in associates 117,542 – – – – 117,542Financial assets:

Financial assets at FVTPL 14,912 – – – 89,992 104,904HTM investment 329,758 (212,767) – – 289,362 406,353AFS financial assets 736,632 214,659 – – 416,768 1,368,059LAR 1,034,574 – – – 269,660 1,304,234

Reinsurance/retakaful assets 146,597 – – – 69,232 215,829Insurance/takaful receivables 138,173 – – – 150,309 288,482Tax recoverable 11,476 – – – (38) 11,438Cash and bank balances 9,483 – – – 113,461 122,944Non-current asset held for sale 34,173 – – – – 34,173

total general insurance businessand shareholders’ fund assets 2,722,251 1,892 24,042 – 1,509,328 4,257,513

General takaful fund assets 350,198 – – – (350,198) –Family takaful fund assets 1,301,690 – – – (1,301,690) –General retakaful fund assets 76,853 – – – (76,853) –Family retakaful fund assets 16,976 – – – (16,976) –

total assets 4,467,968 1,892 24,042 – (236,389) 4,257,513





liabilities and participants’ fundsParticipants’ funds – 1,019 – 2,768 104,903 108,690Borrowings 150,000 – – – – 150,000Insurance/takaful contract liabilities 1,412,707 – – (2,768) 1,358,034 2,767,973Insurance/takaful payables 65,394 – – – 47,595 112,989Other payables 94,862 – – – 27,427 122,289Deferred tax liabilities – 328 3,857 – 8,309 12,494Provision for taxation – – – – 2,332 2,332Provision for zakat 573 – – – – 573

total liabilities and participant’s fund 1,723,536 1,347 3 ,857 – 1,548,600 3,277,340General takaful fund liabilities 339,706 – – – (339,706) –Family takaful fund liabilities 1,109,886 – – – (1,109,886) –General retakaful fund liabilities 76,783 – – – (76,783) –Family retakaful fund liabilities 15,630 – – – (15,630) –

total liabilities 3,265,541 1,347 3,857 – 6,595 3,277,340

eQuItYShare capital 213,070 – – – – 213,070Reserves 785,645 545 20,185 – (39,272) 767,103

total equity attributable toequity holders of the Company 998,715 545 20,185 – (39,272) 980,173

participants’ funds 203,712 – – – (203,712) –

total liabilities, participants’ funds and equity 4,467,968 1,892 24,042 – (236,389) 4,257,513




Income Statement

The following is the reconciliation of the income statement of the Group for the year ended 31 March 2012 from FRS in Malaysia to MFRS:

Consolidation FrS for the of takaful MFrS for the year ended note and retakaful year ended 31.3.2012 2.33 (ii) funds 31.3.2012 rM’000 rM’000 rM’000 rM’000

Gross earned premiums/contributions 1,178,499 – 776,023 1,954,522Premium/contributions ceded to reinsurers/retakaful (206,053) – (69,094) (275,147)

net earned premiums and contributions 972,446 – 706,929 1,679,375

Investment income 88,176 – 50,190 138,366Realised gains and losses 9,951 – 12,252 22,203Fair value gains and losses (1,301) – 2,506 1,205Fee and commission income 225,193 – (200,720) 24,473Other operating revenue 4,900 – (196) 4,704

other revenue 326,919 – (135,968) 190,951

Gross claims and benefits paid (610,705) – (308,564) (919,269)Claims ceded to reinsurers/retakaful 39,547 – 98,040 137,587Gross change in contract liabilities (258,221) – (268,709) (526,930)Change in contract liabilities ceded to reinsurers/retakaful 227,893 – (10,906) 216,987

net claims and benefits (601,486) – (490,139) (1,091,625)

Fee and commission expense (371,760) – (13,841) (385,601)Management expenses (153,807) (83) 4,868 (149,022)Finance cost (12,169) – – (12,169)Other operating expenses (6,223) – (996) (7,219)Change in expense liabilities 2,404 – (2,004) 400

other expenses (541,555) (83) (11,973) (553,611)

Share of results of associates (30,110) – – (30,110)

operating profit before surplus transfer, zakat and tax 126,214 (83) 68,849 194,980Zakat (400) – – (400)Tax expense (41,799) – (6,677) (48,476)

net profit before surplus transfer 84,015 (83) 62,172 146,104Surplus attributable to takaful participants – – (56,735) (56,735)

net profit for the year attributable to equity holders of the Company 84,015 (83) 5,437 89,369



Statement of Comprehensive Income

The following is the reconciliation of the statement of comprehensive income of the Group for the year ended 31 March 2012 from FRS in Malaysia to MFRS:

Consolidation FrS for the of takaful MFrS for the year ended note note and retakaful year ended 31.3.2012 2.33 (i) 2.33 (ii) funds 31.3.2012 rM’000 rM’000 rM’000 rM’000 rM’000

net profit for the year 84,015 – (83) 5,437 89,369

Other comprehensive income:

Effects of post acquisition foreign exchange translation reserve on investment in associate 1,263 – – (214) 1,049

Effects of foreign exchange translation reserve on investment in subsidiary 27 – – 242 269

Revaluation of land and building 35,666 – (23,752) – 11,914Deferred tax relating to revaluation

of land and buildings – – (1,439) – (1,439)

Net gain on Available-for-sale (“AFS”) financial assets:

Gain on fair value changes 19,820 501 – 17,335 37,656Realised gains transferred to income statement (9,395) – – (11,566) (20,961)Deferred tax relating to net gain

on AFS financial assets (1,767) – – (704) (2,471)

Other comprehensive income attributable to participants – – – (5,111) (5,111)

total comprehensive income for the year 129,629 501 (25,274) 5,419 110,275



5. net earneD preMIuMS/ContrIButIonS

Group 2013 2012 rM’000 rM’000

(a) Gross earned premiums/contributions

Insurance and takaful contracts 2,137,247 1,905,520Change in premium/contribution liabilities (46,897) 49,002

2,090,350 1,954,522

(b) premiums/contributions ceded to reinsurers and retakaful operators

Insurance and takaful contracts (262,784) (275,212)Change in premium/contribution liabilities 11,307 65

(251,477) (275,147)

net earned premiums/contributions 1,838,873 1,679,375

6. InVeStMent InCoMe


Financial assets at FVtplProfit income – 149 – –Dividend income:

- quoted shares in Malaysia 599 453 – –- unit and property trusts 246 191 – –

HtM investmentsInterest / profit income 31,850 24,737 2,546 122

aFS financial assetsInterest / profit income 66,491 51,970 – –Dividend income:

- quoted shares in Malaysia 3,358 7,010 18 17- unquoted shares in Malaysia 123 410 – –- unit trusts in Malaysia 842 610 – –

loans and receivablesInterest / profit income 43,737 45,455 622 629Dividend income on institutional trusts 1,336 1,275 – –

Dividend income from subsidiaries – – 45,000 50,000Dividend income from associate – – – 320Rental income 7,398 7,788 – –Net (amortisation of premiums)/accretion

of discounts on investments (1,169) 357 – –Investment expenses (2,889) (2,039) (2) (2)

151,922 138,366 48,184 51,086


7. realISeD GaInS anD loSSeS


property, plant and equipmentRealised gains 83 69 1 –Realised losses – (7) – (7)

Financial assets at FVtplRealised gains on quoted shares in Malaysia 1,385 118 – –Unquoted Islamic private debt securities – 55 – –Shariah approved unit trust funds 4,422 1,008 – –

HtM investmentsRealised gains/(losses) 787 (1) – –

aFS financial assetsRealised gains / (losses):

Quoted shares in Malaysia 11,885 13,911 – –Unquoted shares in Malaysia (395) – (395) –Unquoted corporate debt securities 3,373 1,807 – –Shariah approved unit trust funds (183) (355) – –Unquoted Islamic private debt securities 5,019 5,598 – –

assets held for saleRealised gains 4,082 – – –

30,458 22,203 (394) (7)

8. FaIr Value GaInS anD loSSeS


Fair value gains on investment properties (Note 15) 600 – – –Financial assets at FVTPL 4,702 1,408 – –Reversal of impairment loss on HTM investments 31 266 – –(Impairment loss)/reversal of impairment loss on AFS financial assets (819) (469) 2,745 (356)

4,514 1,205 2,745 (356)



9. Fee anD CoMMISSIon


Group

Fee and commission incomeManagement fees 4,213 3,275 27,715 29,213Commission income 20,863 21,198 – –

25,076 24,473 27,715 29,213

Fee and commission expenseCommission expense (443,299) (383,989)Brokerage (2,554) (1,612)

(445,853) (385,601)

10. ManaGeMent eXpenSeS


Staff costs:Salaries, bonus and other related costs 77,031 63,999 18,764 13,248Directors’ remuneration (Note 11) 7,752 6,990 3,436 2,082Pension costs - EPF 9,928 8,120 2,465 1,579Social security costs 437 427 109 100Retirement benefits 420 361 82 151Short term accumulating compensated absences (47) (252) 17 13

95,521 79,645 24,873 17,173Auditors’ remuneration:

- statutory audit 640 440 65 39- audit-related 42 27 3 3- other services 50 59 6 6

Depreciation of property, plant and equipment 9,850 10,012 784 812Amortisation of intangible assets 3,045 2,904 350 189Property, plant and equipment written off – 60 – 11Insurance / takaful levies and taxes 3,464 2,532 – –Share of acquisition costs on quota share retakaful 1,970 2,877 – –Agency expenses 6,340 5,531 – –Marketing and promotional costs 10,741 11,105 803 461Electronic data processing costs 6,252 4,104 – –Office rental 4,095 4,021 1,193 1,149Professional and legal fees 5,110 6,990 167 847Contributions and donations 2,842 2,143 1 4Other management expenses 22,851 16,572 2,848 3,911

172,813 149,022 31,093 24,605


11. DIreCtorS’ reMuneratIon


non-executive directors:

Fees 2,370 2,168 700 696Allowances 629 526 139 160Benefits-in-kind 31 31 31 31

3,030 2,725 870 887

executive directors:

Salaries and bonus 3,255 2,848 1,376 151Pension costs - EPF 511 399 234 26Social security costs 1 – 1 –Allowances 15 – 15 –Benefits-in-kind 150 183 26 –

3,932 3,430 1,652 177

Director of a subsidiary:*

Salaries and bonus 732 795 732 795Pension costs - EPF 119 129 119 129Social security costs 1 1 1 1Allowances 119 124 119 124Benefits-in-kind 10 49 10 49

981 1,098 981 1,098

Total directors’ remuneration 7,943 7,253 3,503 2,162

Total directors’ remuneration excluding benefits-in-kind 7,752 6,990 3,436 2,082

* The director of a subsidiary refers to management personnel who is employed by the holding company. In the previous year, there were two such directors.

12. otHer operatInG eXpenSeS


Gain on foreign exchange 5,970 2,848 15 4(Reversal of)/impairment loss on self-occupied properties (300) 1,465 – –Impairment losses on/(reversal of impairment losses)

on insurance/ takaful receivables 14,068 (2,525) – –Sundry expenses 1,544 5,431 – –

21,282 7,219 15 4



13. taXatIon


Income tax:Malaysian income tax 56,426 46,041 6,124 9,225Under provision in prior years 395 3,709 67 –

56,821 49,750 6,191 9,225

Deferred tax:Relating to origination and reversal of temporary differences 1,525 (1,274) 420 1,207

58,346 48,476 6,611 10,432

Domestic income tax for general business and shareholders’ fund is calculated at the Malaysian statutory tax rate of 25% (2012: 25%) of the estimated assessable profit for the year. Income tax on the Group’s family takaful business is calculated at a preferential tax rate of 8% (2012: 8%). Income tax on the Group’s offshore insurance / takaful business is calculated at a tax rate of 5% (2012: 5%) of the estimated assessable profit on the Group’s offshore insurance / takaful business for the year. A reconciliation of income tax expenses applicable to profit before zakat and tax at the statutory income tax rate to income tax expense at the effective income tax rate of the Group and of the Company is as follows:


Profit before zakat and tax 242,907 194,980 31,143 41,020

Taxation at Malaysian statutory tax rate of 25% 60,727 48,745 7,786 10,255Effects of different tax rate in respect of family takaful business (10,722) (9,458) – –Effects of different tax rate in respect of offshore insurance (2,839) (3,887) – –Income not subject to tax (140,378) (119,667) (1,895) (1,030)Expenses not deductible for tax purposes 146,588 122,693 233 –Transfer from deferred taxation 1,525 (1,274) 420 1,207Current year losses for which no deferred tax asset was recognised 3,418 274 – –Utilisation of brought forward unabsorbed business loss – (391) – –Deferred tax asset not recognised (41) 204 – –Under provision of tax expense in prior years 395 3,709 67 –Share of results of associates (327) 7,528 – –

Tax expense for the year 58,346 48,476 6,611 10,432


14. propertY, plant anD eQuIpMent

Furniture, fittings Capital Freehold Computer and office Motor work-in land Buildings equipment equipment vehicles progress totalGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Cost

At 1 April 2011 24,500 186,170 10,902 32,534 3,730 1,128 258,964Additions – 3,745 1,395 2,054 763 708 8,665Disposals – – – – (1,141) – (1,141)Reclassification – – – 120 – (120) –Revaluation surplus 6,160 5,754 – – – – 11,914Elimination of accumulated

depreciation on revaluation – (2,474) – – – – (2,474)Written off – – (3) (58) – – (61)

At 31 March 2012 30,660 193,195 12,294 34,650 3,352 1,716 275,867Additions – 1,183 506 1,463 840 322 4,314Disposals – – (245) (48) (984) – (1,277)Reclassification – 1,550 – – – (1,550) –Revaluation surplus – 5,285 – – – – 5,285Elimination of accumulated

depreciation on revaluation – (4,242) – – – – (4,242)

at 31 March 2013 30,660 196,971 12,555 36,065 3,208 488 279,947

accumulated depreciationand impairment loss

At 1 April 2011 – 530 8,756 18,307 1,921 – 29,514Depreciation charge for the year – 4,669 1,698 3,092 553 – – 10,012Disposals – – – – (576) – (576)Elimination of accumulated

depreciation on revaluation – (2,474) – – – – (2,474)Written off – – (1) – – – (1)Impairment loss for the year – 1,465 – – – – 1,465At 31 March 2012 – 4,190 10,453 21,399 1,898 – 37,940Depreciation charge for the year – 4,673 1,345 3,110 722 – 9,850Disposals – – (245) (48) (963) – (1,256)Elimination of accumulated

depreciation on revaluation – (4,242) – – – – (4,242)Reversal of impairment losses

during the year – (310) – – – – (310)

at 31 March 2013 – 4,311 11,553 24,461 1,657 – 41,982

net Carrying amount

at 31 March 2013 30,660 192,660 1,002 11,604 1,551 488 237,965

At 31 March 2012 30,660 189,005 1,841 13,251 1,454 1,716 237,927

At 31 March 2011 24,500 185,640 2,146 14,227 1,809 1,128 229,450



14. propertY, plant anD eQuIpMent (Cont’D)

revaluation of freehold land and buildings

Freehold land and buildings have been revalued based on valuations performed by an accredited independent valuer having an appropriate recognised professional qualification. The valuations are based on the investment and comparison method.

The investment method entails the determination of the probable gross annual rental the property is capable of producing and deducting therefrom the outgoings to arrive at the annual net income. The comparison method entails critical analyses of recent evidence of values of comparable properties in the neighbourhood and making adjustments for differences.

If the freehold land and buildings were measured using the cost model, the carrying amounts would be as follows:

Freehold land Buildings total rM’000 rM’000 rM’000

Cost

At 1 April 2011 15,886 164,890 180,776Additions – 4,453 4,453

At 31 March 2012 15,886 169,343 185,229Additions – 1,505 1,505

At 31 March 2013 15,886 170,848 186,734

accumulated depreciation

At 1 April 2011 – 13,600 13,600Charge for the year – 4,669 4,669

At 31 March 2012 – 18,269 18,269Charge for the year – 4,673 4,673

At 31 March 2013 – 22,942 22,942

net carrying amount

At 31 March 2013 15,886 147,906 163,792

At 31 March 2012 15,886 151,074 166,960

At 31 March 2011 15,886 151,290 167,176


14. propertY, plant anD eQuIpMent (Cont’D)

Furniture, fittings Computer and office Motor equipment equipment vehicles totalCompany rM’000 rM’000 rM’000 rM’000

Cost

At 1 April 2011 3,447 1,850 1,331 6,628Additions 775 20 596 1,391Disposals – – (796) (796)Written off – (11) – (11)

At 31 March 2012 4,222 1,859 1,131 7,212Additions 211 544 677 1,432Disposals (180) – – (180)

At 31 March 2013 4,253 2,403 1,808 8,464

accumulated depreciation

At 1 April 2011 3,004 1,591 564 5,159Charge for the year 530 52 230 812Disposals – – (317) (317)

At 31 March 2012 3,534 1,643 477 5,654Charge for the year 411 35 338 784Disposals (180) – – (180)

At 31 March 2013 3,765 1,678 815 6,258

net carrying amount

At 31 March 2013 488 725 993 2,206

At 31 March 2012 688 216 654 1,558

At 31 March 2011 443 259 767 1,469

15. InVeStMent propertIeS

Group 31.3.2013 31.3.2012 rM’000 rM’000At fair value:

At beginning of the year 5,600 28,600Fair value gains recognised in income statement (Note 8) 600 –Transfer to non-current asset held for sale (Note 23) – (23,000)

At end of the year 6,200 5,600



16. IntanGIBle aSSetS

Software Computer development software in and progress licenses totalGroup rM’000 rM’000 rM’000

Cost

At 1 April 2011 4,668 27,144 31,812Additions 3,053 851 3,904Reclassification (7) 7 –

At 31 March 2012 7,714 28,002 35,716Additions 1,101 1,163 2,264Reclassification (126) 126 –

At 31 March 2013 8,689 29,291 37,980

accumulated amortisation

At 1 April 2011 – 18,842 18,842Amortisation for the year – 2,904 2,904

At 31 March 2012 – 21,746 21,746Amortisation for the year – 3,045 3,045

At 31 March 2013 – 24,791 24,791

net carrying amount

At 31 March 2013 8,689 4,500 13,189

At 31 March 2012 7,714 6,256 13,970

At 31 March 2011 4,668 8,302 12,970


16. IntanGIBle aSSetS (Cont’D)

Software Computer development software in and progress licenses totalCompany rM’000 rM’000 rM’000

Cost

At 1 April 2011 900 5,974 6,874Additions 672 360 1,032

At 31 March 2012 1,572 6,334 7,906Additions 265 250 515

At 31 March 2013 1,837 6,584 8,421

accumulated amortisation

At 1 April 2011 – 5,643 5,643Amortisation for the year – 189 189

At 31 March 2012 – 5,832 5,832Amortisation for the year – 350 350

At 31 March 2013 – 6,182 6,182

net carrying amount

At 31 March 2013 1,837 402 2,239

At 31 March 2012 1,572 502 2,074

At 31 March 2011 900 331 1,231



17. DeFerreD taX (lIaBIlItIeS)/aSSetS

Group 31.3.2013 31.3.2012 rM’000 rM’000

At beginning of year (2,595) 41Recognised in income statement (1,525) 1,274Recognised in other comprehensive income 2,496 (3,910)

At end of year (1,624) (2,595)

Presented as follows:- Deferred tax assets 10,955 11,636- Deferred tax liabilities (12,579) (14,231)

(1,624) (2,595)

Company 31.3.2013 31.3.2012 rM’000 rM’000

At beginning of year 1,844 3,098Recognised in income statement (420) (1,207)Recognised in other comprehensive income 45 (47)

At end of year 1,469 1,844

Presented after appropriate offsetting as follows:- Deferred tax assets 1,872 2,258- Deferred tax liabilities (403) (414)

1,469 1,844


17. DeFerreD taX (lIaBIlItIeS)/aSSetS (Cont’D)

Deferred tax assets have not been recognised in respect of the following items of the retakaful subsidiary as the probability of recognition cannot be determined with certainly given the recent history of losses recorded.

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Unutilised business losses 10,004 6,624 7,656Temporary differences:

- net accretion of discounts 334 16 15- net amortisation of premiums 37 5 3- contribution liabilities – 63 102- impairment of investments – 11 –- impairment loss on takaful receivables 75 280 391- provisions 81 113 161- financial assets 20 18 38

10,551 7,130 8,366

The components and movements of deferred tax assets / (liabilities) during the financial year are as follows:

unabsorbed property, Impairment revaluation capital plant and premium losses on Financial of land and allowances equipment receivables liabilities investments assets buildings others total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000Group

2013

At 1 April 2012 594 (1,420) 7,636 560 798 (6,111) (6,700) 2,048 (2,595)Recognised in:Income statement (189) 199 (933) (1,589) 578 (14) – 423 (1,525)Other comprehensive income – – – – – 2,919 (423) – 2,496

At 31 March 2013 405 (1,221) 6,703 (1,029) 1,376 (3,206) (7,123) 2,471 (1,624)

2012

At 1 April 2011 594 (3,461) 7,053 18 1,466 (3,772) (5,261) 3,404 41Recognised in:Income statement – 2,041 583 542 (668) 132 – (1,356) 1,274Other comprehensive income – – – – – (2,471) (1,439) – (3,910)

At 31 March 2012 594 (1,420) 7,636 560 798 (6,111) (6,700) 2,048 (2,595)



17. DeFerreD taX (lIaBIlItIeS)/aSSetS (Cont’D)

The components and movements of deferred tax assets / (liabilities) during the financial year are as follows: (cont’d)

unabsorbed property, Impairment capital plant and losses on Financial allowances equipment receivables investments assets others total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000Company

2013

At 1 April 2012 594 (367) 4 307 (47) 1,353 1,844Recognised in:Income statement (189) (34) – (307) – 110 (420)Other comprehensive income – – – – 45 – 45

At 31 March 2013 405 (401) 4 – (2) 1,463 1,469

2012

At 1 April 2011 594 (413) 52 218 – 2,647 3,098Recognised in:Income statement – 46 (48) 89 – (1,294) (1,207)Other comprehensive income – – – – (47) – (47)

At 31 March 2012 594 (367) 4 307 (47) 1,353 1,844

18. InVeStMent In SuBSIDIarIeS

Company 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Unquoted shares, at cost:In Malaysia 905,000 905,000 795,000

Less: Impairment loss (6,869) (6,869) (6,869)

898,131 898,131 788,131Outside Malaysia 6,370 6,370 6,370

904,501 904,501 794,501


18. InVeStMent In SuBSIDIarIeS (Cont’D)

Details of the subsidiaries are as follows:

name of Country of effectiveSubsidiaries incorporation principal activities ownership interest 31.3.2013 31.3.2012 1.4.2011 % % %

Malaysian Reinsurance Malaysia Underwriting of all classes of 100 100 100Berhad general reinsurance business

Takaful Ikhlas Sdn. Bhd. Malaysia Management of family, general 100 100 100 and takaful investment linked business

MNRB Retakaful Berhad Malaysia Management of family and 100 100 100 general retakaful business

MMIP Services Sdn. Bhd. Malaysia Managing the Malaysian Motor 100 100 100 Insurance Pool which provides motor insurance to vehicle owners who are unable to obtain

insurance protection

Malaysian Re Dubai, Marketing and promotional 100 100 100(Dubai) Ltd.* United Arab activities and servicing of

Emirates clients on behalf of Malaysian Re

* Audited by a firm of chartered accountants other than Ernst & Young.

The impairment loss of RM6,869,000 was made in respect of the retakaful subsidiary, which had recorded a net loss in the prior years, due mainly to the impairment of Qard provided to the general retakaful fund. The impairment loss also resulted in the total shareholder’s equity of the retakful subsidiary being lower than its issued and paid-up share capital.



19. InVeStMent In aSSoCIateS

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Unquoted shares in Malaysia, at cost 77,615 77,615 77,615Share of post acquisition retained profits (6,306) (7,614) 24,808Post acquisition foreign exchange translation reserve* 17,147 16,382 15,119

88,456 86,383 117,542

Represented by share of net assets 88,456 86,383 117,542

Company 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Unquoted shares in Malaysia, at cost 1,957 1,957 1,957

Details of the associates which are all incorporated in Malaysia are as follows:

name of proportion of ownership interestassociates Year end principal activities and voting power 31.3.2013 31.3.2012 1.4.2011 % % %

Held by the Company:

Motordata Research 31 December Development and provision 40 40 40Consortium Sdn. Bhd. of a centralised motor parts

price database for the Malaysian insurance industry

Held by Malaysian re:

Labuan Reinsurance 31 December Underwriting of all classes of 20 20 20(L) Ltd. (“Labuan Re”) general reinsurance business

in the Federal Territory of Labuan

* This is in respect of retranslation of the cost of the investment in Labuan Re at the rate of exchange prevailing at the reporting date.

The financial statements of the above associates are not co-terminous with those of the Group. For the purpose of applying the equity method of accounting, the audited financial statements of the associates for the year ended 31 December 2012 and management financial statements to the end of the accounting period of 31 March 2013 have been used.


19. InVeStMent In aSSoCIateS (Cont’D)

The summarised financial information of the associates are as follows:

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

assets and liabilities:

Current assets 1,641,561 1,783,150 1,481,973Non-current assets 54,377 52,050 36,965

Total assets 1,695,938 1,835,200 1,518,938

Current liabilities 74,199 231,806 24,213Non-current liabilities 1,151,881 1,144,462 907,387

Total liabilities 1,226,080 1,376,268 931,600

results:Revenue 710,522 855,669 773,901Profit/(loss) for the year 6,882 (148,079) 32,671

20. FInanCIal aSSetS

The following table summarises the carrying values of financial assets of the Group and the Company:

Group Company

31.3.2013 31.3.2012 1.4.2011 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At carrying value:

Malaysian government securities 79,131 49,513 100,738 – – –Government investment issues 583,107 410,985 314,900 – – –Islamic BNM monetary notes – 1,988 4,996 – – –Debt securities 1,780,728 1,535,521 1,210,923 – 5,059 6,967Equity securities 118,783 181,373 148,253 494 1,173 2,602Institutional trust deposit 84,848 80,933 77,187 – – –Shariah approved unit trust funds 138,079 135,988 87,487 – – –Structured products 5,494 12,296 12,019 – – –Fixed and call deposits 686,972 563,343 560,810 7,607 15,664 4,069Islamic investment accounts 750,463 706,517 450,407 855 3,909 3,813Islamic repo placements 68,093 9,105 135,686 – – –Other loans and receivables 108,229 88,178 80,144 8,002 3,554 2,877

4,403,927 3,775,740 3,183,550 16,958 29,359 20,328



20. FInanCIal aSSetS (Cont’D)

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000


At fair value:

Quoted shares in Malaysia:Shariah approved equities 6,537 7,494 14,641Others – 1,578 –

Structured products 5,494 12,296 12,019Warrants 42 27 45Shariah approved unit trust funds 117,094 116,068 73,014Government investment issues – – 698Quoted debt securities – – 4,487

129,167 137,463 104,904

Group Company

31.3.2013 31.3.2012 1.4.2011 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

(b) HtM investments

(i) At amortised cost / cost:

Islamic BNM monetary notes – 1,988 4 ,996 – – –Malaysian government securities 79,131 5,805 56,832 – – –Unquoted corporate debt securities: 149,756 167,384 187,339 – 5,059 6,967Government investment issues 542,884 220,679 139,660 – – –Commercial papers 14,882 36,367 17,526 – – –

786,653 432,223 406,353 – 5,059 6,967

(ii) At fair value:

Islamic BNM monetary notes – 1,988 4,996 – – –Malaysian government securities 80,812 6,148 56,937 – – –Unquoted corporate debt securities: 152,317 170,141 187,128 – 5,059 6,967Government investment issues 549,977 224,806 141,032 – – –Commercial papers 14,877 36,363 17,538 – – –

797,983 439,446 407,631 – 5,059 6,967



Group Company

31.3.2013 31.3.2012 1.4.2011 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

(c) aFS financial assets

At cost:

Unquoted shares in Malaysia(i) 44,503 45,003 46,152 – 500 1,649

At fair value:

Malaysian government securities – 43,708 43,906 – – –Unquoted debt securities 1,616,090 1,331,770 1,005,360 – – –Golf club memberships 228 228 228 50 50 50Quoted shares in Malaysia 67,267 126,744 86,846 444 623 903Quoted shares outside Malaysia 193 224 341 – – –Warrants 13 75 – – – –Shariah approved unit trust funds 20,985 19,920 14,473 – – –Government investment issues 40,223 190,306 170,753 – – –

1,789,502 1,757,978 1,368,059 494 1,173 2,602

(d) loans and receivables

At amortised cost / cost / fair value:

Fixed and call deposits with licensed:

Commercial banks 166,118 132,546 129,776 975 8,266 3,069Investment banks 520,854 430,797 431,034 6,632 7,398 1,000

Islamic investment accounts with licensed:

Co-operative bank 49,791 61,344 85,069 – – –Islamic banks 507,677 445,491 264,157 855 3,909 3,813Investment banks 27,608 40,427 1,507 – – –Development bank 137,284 153,424 91,405 – – –Building society 28,103 5,831 8,269 – – –

Institutional trust deposit 84,848 80,933 77,187 – – –Islamic repo placements 68,093 9,105 135,686 – – –Secured staff loans 9,226 11,227 12,618 1,879 2,309 2,334Amounts due from subsidiaries (ii) – – – 4 ,177 537 459Income due and accrued 39,183 29,644 23,174 12 381 26Due from Insurance Pool accounts 32,134 19,969 19,533 – – –Other receivables and deposits 27,686 27,338 24,819 1,934 327 58

1,698,605 1,448,076 1,304,234 16,464 23,127 10,759




(d) loans and receivables (cont’d)

(i) The pertinent information of the investments in unquoted shares in Malaysia are as follows:

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

– 27,500,000 ordinary shares of RM1.00 each of Financial Park (Labuan) Sdn. Bhd. (“FPL”), representing an equity shareholding of 9%. 28,283 28,283 28,283

Less: Impairment loss (4,759) (4,759) (4,759)

23,524 23,524 23,524 20,000,000 redeemable preference shares of RM1.00 each of FPL 20,569 20,569 20,569

44,093 44,093 44,093

– 410,000 ordinary shares of Malaysian Rating Corporation Berhad (“MARC”) of RM1.00 each, representing an equity shareholding of 4%. 410 410 410

– Others – 500 1,649

44,503 45,003 46,152

(ii) These amounts are non-trade in nature, are unsecured, not subject to any interest/profit elements and repayable on demand.


21. InSuranCe/taKaFul ContraCt lIaBIlItIeS

31.3.2013 31.3.2012 1.4.2011

reinsurance/ reinsurance/ reinsurance/ Gross retakaful net Gross retakaful net Gross retakaful net rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

General reinsurance/takaful/ retakaful fund (Note (a)) 2,048,080 (292,651) 1,755,429 1,993,784 (406,321) 1,587,463 1,757,320 (188,316) 1,569,004

Family takaful/retakaful fund (Note (b)) 1,520,942 (95,325) 1,425,617 1,212,731 (26,560) 1,186,171 990,023 (27,513) 962,510

Shareholders’ fund (Note (c)) 23,939 – 23,939 20,230 – 20,230 20,630 – 20,630

Total 3,592,961 (387,976) 3,204,985 3,226,745 (432,881) 2,793,864 2,767,973 (215,829) 2,552,144

31.3.2013 31.3.2012 1.4.2011


(a) General reinsurance/ takaful/retakaful funds

Claims liabilities (Note (i)) 1,671,998 (260,411) 1,411,587 1,664,599 (385,388) 1,279,211 1,379,133 (167,448) 1,211,685

Premium/contribution liabilities (Note (ii)) 376,082 (32,240) 343,842 329,185 (20,933) 308,252 378,187 (20,868) 357,319

2,048,080 (292,651) 1,755,429 1,993,784 (406,321) 1,587,463 1,757,320 (188,316) 1,569,004

31.3.2013 31.3.2012 1.4.2011


(i) Claims liabilities

At beginning of year 1,664,599 (385,388) 1,279,211 1,379,133 (167,448) 1,211,685 1,258,707 (149,374) 1,109,333

Claims incurred in the current accident year 243,977 (44,631) 199,347 515,204 (214,640) 300,564 312,561 (50,610) 261,951

Adjustment to claims incurred in prior accident years due to changes in IBNR and PRAD 22,602 3,051 25,652 60,336 (28,076) 32,260 (17,075) 1,898 (15,177)

Movements in claims incurred in prior accident years 566,906 (49,943) 516,963 467,870 (28,009) 439,861 538,630 (17,404) 521,226

Claims paid during the year (826,086) 216,500 (609,586) (757,944) 52,785 (705,159) (713,690) 48,042 (665,648)

At end of year 1,671,998 (260,411) 1,411,587 1,664,599 (385,388) 1,279,211 1,379,133 (167,448) 1,211,685



21. InSuranCe/taKaFul ContraCt lIaBIlItIeS (Cont’D)

31.3.2013 31.3.2012 1.4.2011


(a) General reinsurance/ takaful/retakaful funds

(ii) premium/ contribution liabilities

At beginning of the year 329,185 (20,933) 308,252 378,187 (20,868) 357,319 339,818 (44,310) 295,508

Premiums/contributions written in the year 1,562,938 (259,797) 1,303,141 1,398,248 (240,204) 1,158,044 1,440,353 (144,014) 1,296,339

Premiums/contributionsearned during the year (1,516,041) 248,490 (1,267,551) (1,447,250) 240,139 (1,207,111) (1,401,984) 167,456 (1,234,528)

At end of the year 376,082 (32,240) 343,842 329,185 (20,933) 308,252 378,187 (20,868) 357,319

(b) Family takaful/ retakaful funds

Provision for claims reported by certificate holders 41,695 (9,664) 32,031 36,440 (10,840) 25,600 33,668 (5,639) 28,029

Participants’ Account (“PA”) 1,275,542 (5,482) 1,270,060 1,036,655 (1,864) 1,034,791 827,591 (656) 826,935

Participants’ Special Account (“PSA”) 96,859 (80,179) 16,680 33,181 (13,856) 19,325 49,309 (21,218) 28,091

NAV attributable to unitholders 106,846 – 106,846 106,455 – 106,455 79,455 – 79,455

1,520,942 (95,325) 1,425,617 1,212,731 (26,560) 1,186,171 990,023 (27,513) 962,510


21. InSuranCe/taKaFul ContraCt lIaBIlItIeS (Cont’D)

31.3.2013 31.3.2012 1.4.2011


Family takaful/retakaful fund

At beginning of year 1,212,731 (26,560) 1,186,171 990,023 (27,513) 962,510 794,678 (106,472) 688,206Net earned contributions 542,343 (14,607) 527,736 465,617 (48,302) 417,315 494,213 (44,403) 449,810Net creation of units 14,872 – 14,872 36,473 – 36,473 – – –Liabilities paid

for death, maturities,surrenders, benefits and claims (265,041) 56,254 (208,787) (151,476) (344) (151,820) (128,903) 608 (128,295)

Net cancellation of units (21,259) – (21,259) (9,849) – (9,849) – – –Benefits and claims

experience variation – – – 2,772 (5,201) (2,429) 3,655 (16,540) (12,885)Fees deducted (142,502) 1,176 (141,326) (144,516) – (144,516) (157,132) – (157,132)Other revenue

and expenses 6,778 – 6,778 376 – 376 – – –Transfer to

shareholder’s fund (11,135) – (11,135) ( 4,575) – ( 4,575) (4,378) – (4,378)Increase/(decrease)

in reserve 242,783 (111,588) 131,195 79,026 54,800 133,826 11,752 (4,258) 7,494Transfer to

special fund reserve (11,083) – (11,083) (18,915) – (18,915) – – –Transfer to

unallocated surplus (47,545) – (47,545) (5,570) – (5,570) – – –Increase in pa reserve – – – – – – 233,121 (31,755) 201,366Decrease in participants’ risk fund – – – (26,655) – (26,655) (256,983) 175,307 (81,676)

At end of year 1,520,942 (95,325) 1,425,617 1,212,731 (26,560) 1,186,171 990,023 (27,513) 962,510

31.3.2013 31.3.2012 1.4.2011 Gross/net Gross/net Gross/net rM’000 rM’000 rM’000

(c) Shareholders’ fund

At beginning of the year 20,230 20,630 20,110General takaful and retakaful funds:- Wakalah fee received during the year 60,036 55,356 65,522- Wakalah fee earned during the year (59,627) (56,514) (64,161)- Movement in provision for expense deficiency 2,410 108 1,630

Family takaful and retakaful funds:- Movement in provision for UER 890 650 (2,471)

At end of the year 23,939 20,230 20,630



22. InSuranCe anD taKaFul reCeIVaBleS

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Due contributions including agents’ balances 93,266 94,648 118,313Amounts due from brokers and ceding companies 337,448 250,814 186,493Less: Allowance for impairment (26,655) (13,799) (16,324)

404,059 331,663 288,482

Included in amounts due from brokers and ceding companies is an amount of RM584,048 (2012: RM862,000) due from an associate, Labuan Reinsurance (L) Ltd. The amount receivable is subject to settlement terms stipulated in the reinsurance contracts.

23. non-Current aSSetS HelD For Sale

Group 31.3.2013 31.3.2012 rM’000 rM’000

Freehold land and buildings:At beginning of the year 56,601 34,173Transfer from investment properties (Note 15) – 23,000Less: Costs to sell – (572)Less: Disposal (56,601) –

At end of the year – 56,601

(i) On 31 October 2011, the Group’s reinsurance subsidiary had entered into a sale and purchase agreement to dispose of an investment property, a five storey commercial building in Kuala Lumpur; and

(ii) On 30 November 2011, the Group’s reinsurance subsidiary had entered into a sale and purchase agreement to dispose of an investment property, a six storey factory/office building and a leasehold land in Petaling Jaya.

The purchase considerations for the two investment properties had been received during the financial year and the sale had been completed. Upon completion of the disposal, revaluation reserves amounting to RM3.184 million were reclassified to retained earnings.


24. partICIpantS’ FunDS

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

takaful/retakaful funds and Company

General takaful fund (Note (a)) 20,346 9,622 10,728Family takaful fund (Note (b)) 213,799 159,458 105,700General retakaful fund (Note (c)) – – 70Family retakaful fund (Note (d)) – 1,302 1,346

234,145 170,382 117,844Less : Qard elimination (74,928) (52,933) (62,969)

159,217 117,449 54,875Recognised in income statement 74,828 53,087 53,815Recognised in other comprehensive income 110 – –

234,155 170,536 108,690

(a) General takaful fund

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Accumulated deficit (Note (i)) 19,760 7,784 (2,889)Qard (Note (ii)) – – 12,043AFS reserves (Note (iii)) 586 1,838 1,574

20,346 9,622 10,728

(i) accumulated surplus

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of year 7,784 (2,889)Net surplus of the general takaful fund 17,197 10,673Hibah paid and payable to participants (5,221) –




24. partICIpantS’ FunDS (Cont’D)

(a) General takaful fund (cont’d)

(ii) Qard

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year – 12,043Increase in Qard – (12,043)

At end of the year – –

(iii) aFS reserves

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 1,838 1,574Net gain on fair value changes (737) 2,828Realised gain transferred to income statement (932) (2,477)Deferred tax on fair value changes 417 (87)

At end of the year 586 1,838

(b) Family takaful fund

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Accumulated surplus (Note (i)) 185,382 129,856 80,815AFS reserves (Note (ii)) 7,416 13,462 8,745Revaluation surplus (Note (iii)) 21,001 16,140 16,140

213,799 159,458 105,700

(i) accumulated surplus

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of year 129,856 80,815Net surplus of the family takaful fund 11,083 18,915Hibah paid and payable to participants 44,443 30,126




(b) Family takaful fund (cont’d)

(ii) aFS reserves

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 13,462 8,745Net (loss)/gain on fair value changes (385) 14,022Realised gain transferred to income statement (6,187) (8,902)Deferred tax on fair value changes 526 (403)


(iii) revaluation surplus

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 16,140 16,140Recognised in other comprehensive income 5,284 –Deferred tax on revaluation surplus (423) –


(c) General retakaful fund

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Accumulated deficit (Note (i)) (63,522) (53,087) (50,926)Qard (Note (ii)) 63,632 52,933 50,926AFS reserves (Note (iii)) (110) 154 70

– – 70

(i) accumulated deficit

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of year (53,087) (50,926)Net deficit of the general retakaful fund (10,435) (2,161)

At end of the year (63,522) (53,087)




(c) General retakaful fund (cont’d)

(ii) Qard

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 52,933 50,926Increase in Qard 10,699 2,007


(iii) aFS reserves

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 154 70Net (loss)/gain on fair value changes (147) 225Realised gain transferred to income statement (205) (113)Deferred tax on fair value changes 88 (28)

At end of the year (110) 154

Qard is a loan provided by the shareholder’s fund to make good the current year underwriting deficit experienced by the general retakaful fund. It does not have any profit elements, is unsecured and is repayable out of future surpluses of the fund.

(d) Family retakaful fund

31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Accumulated (deficit)/surplus (Note (i)) (11,306) 1,227 1,317Qard (Note (ii)) 11,296 – –AFS reserves (Note (iii)) 10 75 29

– 1,302 1,346



(d) Family retakaful fund (cont’d)

(i) accumulated (deficit)/surplus

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 1,227 1,317Net deficit of the family retakaful fund (12,533) (90)

At end of the year (11,306) 1,227

(ii) Qard

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year – –Increase in Qard 11,296 –

At end of the year 11,296 –

(iii) aFS reserves

31.3.2013 31.3.2012 rM’000 rM’000

At beginning of the year 75 29Net (loss)/gain on fair value changes (23) 137Realised gain transferred to income statement (63) (75)Deferred tax on fair value changes 21 (16)

At end of the year 10 75

Qard is a loan provided by the shareholder’s fund to make good the current year underwriting deficit experienced by the family retakaful fund. It does not have any profit elements, is unsecured and is repayable out of future surpluses of the fund.



25. BorroWInGS

Group Company

31.3.2013 31.3.2012 1.4.2011 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Islamic medium term notes (“IMTN”) – 150,000 150,000 – 200,000 200,000Short term revolving credit facility – 120,000 – – 120,000 –Islamic revolving credit facility

(“RC-i Facility”) 200,000 – – 200,000 – –Sukuk Mudharabah programme 120,000 – – 120,000 – –

320,000 270,000 150,000 320,000 320,000 200,000

Company 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

IMTN held by subsidiaries:

Malaysian Reinsurance Berhad – 40,000 40,000MNRB Retakaful Berhad – 10,000 10,000

– 50,000 50,000

On 5 April 2012, the Company had obtained an Islamic revolving credit facility (“RC-i Facility”), amounting to RM200 million and denominated in Ringgit Malaysia. The RC-i Facility is unsecured and carries a floating profit rate that is reviewed quarterly.

On 9 October 2012, the Company had obtained approval from the Securities Commission of Malaysia for the establishment of a Sukuk Mudharabah Programme (“Sukuk Programme”) with a full nominal value up to RM150 million. The Sukuk Programme is based on the Islamic financing principle of Mudharabah, has a tenure of 5 years from the date of the first issue and is unrated and unsecured. Profit is payable semi-annually in arrears from the date of issue and will be determined prior to issuance.

On 10 December 2012, a full drawdown of the RC-i Facility was made and utilised towards the redemption of the IMTN. The profit rate for the amount drawn as at 31 March 2013 was 5.71% per annum and is repayable on 10 December 2017, five years from the date of drawdown. On the same date, the Company also issued RM120 million under its Sukuk Programme. The issued Sukuk carries a fixed profit rate of 5.4% per annum and has a final redemption date on 10 December 2017.


26. InSuranCe anD taKaFul paYaBleS

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Due to brokers and retrocessionaires 110,072 78,922 57,153Due to agents, retakaful operators and brokers 101,652 99,179 55,836

211,724 178,101 112,989

Included in amount due to brokers and retrocessionaires is an amount of RM276,919 (2012: RM1,639,000) due to an associate, Labuan Reinsurance (L) Ltd. The amount payable is subject to settlement terms stipulated in the reinsurance contracts.

27. otHer paYaBleS

Group 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Advance contributions 2,989 2,593 4,871Deposit contributions 28,801 33,452 30,572Outstanding commissions 11,509 6,888 15,457Provisions 29,264 21,098 31,108Sundry payables and accruals 44,412 46,543 40,281

116,975 110,574 122,289

Company 31.3.2013 31.3.2012 1.4.2011 rM’000 rM’000 rM’000

Provisions 5,858 5,371 10,562Amount due to subsidiaries – 6,999 –Sundry payables and accruals 2,916 4,734 3,364

8,774 17,104 13,926

28. SHare CapItal

number of ordinary shares of rM1.00 each amount 31.3.2013 31.3.2012 31.3.2013 31.3.2012 ‘000 ‘000 rM’000 rM’000

Authorised 500,000 500,000 500,000 500,000

Issued and fully paid:At beginning and end of the year 213,070 213,070 213,070 213,070



29. retaIneD proFItS

Prior to the year of assessment 2008, Malaysian companies adopted the full imputation system. In accordance with the Finance Act 2007 which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividends paid, credited or distributed to its shareholders, and such dividends will be exempted from tax in the hands of the shareholders (“single tier system”). However, there is a transitional period of six years, expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances.

Companies also have an irrevocable option to disregard their accumulated tax credits under Section 108 of the Income Tax Act, 1967 (“Section 108 balance”) and opt to pay dividends under the single tier system. The change in the tax legislation also provides for the Section 108 balance to be locked-in as at 31 December 2007 in accordance with Section 39 of the Finance Act 2007.

The Company did not elect for the irrevocable option to disregard the Section 108 balance. Accordingly, during the transitional period, the Company may utilise the credits in the Section 108 balance as at 31 December 2007 to distribute cash dividend payments to ordinary shareholders as defined under the Finance Act 2007. The Company also has tax exempt income available for distribution of approximately RM60,251,000 (2012: RM60,588,000) as at 31 March 2013. As at 31 March 2013, the Company has tax credits in the Section 108 balance amounting to RM148,175,000, which are sufficient to pay franked dividends out of its entire retained earnings.

30. DIVIDenDS

amount net dividend per share 2013 2012 2013 2012 rM’000 rM’000 Sen Sen

recognised during the year:

Dividend paid in respect of the financial year ended 31 March 2011:Final dividend of 20% less 25% tax – 31,960 – 15.0

Dividend paid in respect of the financial year ended 31 March 2012:First and final dividend of 17% less 25% tax * 27,166 – 12.7 –

27,166 31,960 12.7 15.0

* At the forthcoming Annual General Meeting, a first and final dividend in respect of the current financial year ended 31 March 2013 of 32% less 25% tax based on the issued and paid-up share capital of 213,069,500 ordinary shares at the date of this report, amounting to a total dividend of RM51,136,000, will be proposed for shareholders’ approval. The financial statements for the current financial year do not reflect this proposed dividend. Such dividend, if approved by the shareholders, will be accounted for in the shareholders’ equity as an appropriation of retained profits in the next financial year ending 31 March 2014.


31. earnInGS per SHare

The basic earnings per share (EPS) is calculated by dividing the net profit for the year by the number of ordinary shares in issue during the year.

Group Company 2013 2012 2013 2012

Net profit for the year (RM’000) 112,665 89,369 24,532 30,588

Number of ordinary shares in issue (‘000) 213,070 213,070 213,070 213,070Basic EPS (sen) 52.9 41.9 11.5 14.4

32. operatInG leaSe arranGeMentS

(a) the Group as lessee

The Group has entered into non-cancellable operating lease agreements for the use of office premises. This lease is for a period of 5 years and subject to review every 2 years. There are no restrictions placed upon the Group by entering into this lease.

The future aggregate minimum lease payments under non-cancellable operating leases contracted for as at the reporting date but not recognised as liabilities, are as follows:

Group 31.3.2013 31.3.2012 rM’000 rM’000

Future minimum rental payments:

Not later than 1 year 1,068 1,153Later than 1 year and not later than 5 years 925 1,405

1,993 2,558

Company 31.3.2013 31.3.2012 rM’000 rM’000

Future minimum rental payments:

Not later than 1 year 1,097 1,097Later than 1 year and not later than 5 years – 1,097

1,097 2,194



32. operatInG leaSe arranGeMentS (Cont’D)

(b) the Group as lessor

The Group has entered into non-cancellable operating lease agreements on its portfolio of investment properties. These leases have remaining non-cancellable lease terms of between 5 and 10 years. All leases include a clause to enable upward revision of the rental charge on an annual basis based on prevailing market conditions and certain contracts include contingent rental arrangements computed based on sales achieved by tenants.

The future minimum lease payments receivable under non-cancellable operating leases contracted for as at the reporting date but not recognised as receivables, are as follows:

Group 31.3.2013 31.3.2012 rM’000 rM’000

Future minimum rental receipts:

Not later than 1 year 3,765 5,033Later than 1 year and not later than 5 years 2,013 4,856

5,778 9,889

33. CoMMItMentS

The commitments of the Group and of the Company as at the financial year-end are as follows:

Group Company 31.3.2013 31.3.2012 31.3.2013 31.3.2012 rM’000 rM’000 rM’000 rM’000

Authorised and contracted for:- Tangible assets 1,797 2,310 431 –- Intangible assets* 365 1,094 – –

2,162 3,404 431 –

Authorised but not contracted for:- Tangible assets 204 – – –- Intangible assets* 8,340 9,735 – –

8,544 9,735 – –

* Relating to purchases and enhancement of the takaful and retakaful subsidiaries’ computer systems.


34. relateD partY DISCloSure

For the purposes of these financial statements, parties are considered to be related to the Group and the Company if the Group and the Company have 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 Company and the party are subject to common control or common significant influence. Related parties may beindividuals or other entities.

Key management personnel are defined as those persons having authority and responsibility for planning, directing and controlling the activities of the Company either directly or indirectly. The key management personnel include all the Directors of the Group and the Company, and certain members of senior management of the Group and the Company.

(a) the significant transactions with related parties are as follows:

Group Company 2013 2012 2013 2012Income/(expenses): rM’000 rM’000 rM’000 rM’000

transactions with subsidiaries:Management fees received 36,452 35,983 28,264 29,213Net dividend received 35,000 37,500 35,000 37,500Rental paid (1,411) (1,391) (1,170) (1,104)Profit on IMTN payable (1,642) (2,375) (1,642) (2,375)

transactions with takaful funds of a subsidiary:Takaful contributions paid (618) (321) – –Net reinsurance inwards 17,948 14,896 – –

transactions with retakaful funds of a subsidiary:Net reinsurance inwards 1,457 2,267 – –Net reinsurance outwards (21) (507) – –

transactions with an associate, labuan reinsurance (l) ltd:Net reinsurance inwards 2,219 1,742 – –Net reinsurance outwards – (135) – –Rental received 938 839 – –

transactions with an associate, Motordata research Consortium Sdn Bhd:

Net dividend received – – – 320

The Group’s related party transactions disclosed above provide an indication of the intercompany transactions between subsidiaries within the Group that have been eliminated upon consolidation.

The directors are of the opinion that all the transactions above have been entered into in the normal course of business and have been established on terms and conditions that are not materially different from those obtainable in transactions with unrelated parties.

Outstanding balances arising from the transactions above as at 31 March have been disclosed in Notes 22 and 26 of the financial statements as well as on the face of statements of financial position.



34. relateD partY DISCloSure (Cont’D)

(b) the key management personnel compensations are as follows:


Non-executive directors’ fees 2,370 2,115 700 696Non-executive directors’ allowances 629 526 139 160Non-executive directors’ benefits-in-kind 31 31 31 31Executive directors and director of a subsidiary’s remuneration:

Salaries and bonus 3,987 3,643 2,108 946Pension costs - EPF 630 528 353 155Social security cost 2 1 2 1Allowances 134 124 134 124Benefits-in-kind 160 232 36 49

Other key management personnel’s remuneration:Salaries and bonus 9,328 9,516 3,849 4,109Pension costs - EPF 1,578 1,607 665 687Social security cost 6 7 5 6Allowances 941 985 486 650Benefits-in-kind 323 416 58 115

20,119 19,731 8,566 7,729

35. SeGMent InForMatIon

Investment reinsurance takaful retakaful Holding Business operator operator elimination ConsolidatedGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

2013

resultsNet earned premiums and contributions – 1,067,936 653,893 117,044 – 1,838,873Interest / profit income 3,168 69,511 66,121 4,919 (1,641) 142,078Other revenue 75,146 47,774 31,226 2,918 (81,204) 75,860Net claims – (626,208) (421,012) (109,913) – (1,157,133)Other expenses (i) (29,973) (387,781) (220,175) (29,022) 36,188 (630,763)Depreciation (785) (3,341) (5,642) (82) – (9,850)Amortisation (350) (1,656) (1,036) (2) – (3,044)Finance cost (16,063) – – – 1,641 (14,422)Share of results of associates 229 1,079 – – – 1,308

operating profit/(loss) before surplus transfer, zakat and tax 31,372 167,314 103,375 (14,138) (45,016) 242,907Zakat – – (400) – – (400)Tax expense (6,611) (41,602) (20,133) – 10,000 (58,346)

net profit/(loss) before surplus transfer 24,761 125,712 82,842 (14,138) (35,016) 184,161Surplus attributable to takaful participants – – (72,723) 1,227 – (71,496)

net profit/(loss) for the year 24,761 125,712 10,119 (12,911) (35,016) 112,665


35. SeGMent InForMatIon (Cont’D)

Investment reinsurance takaful retakaful Holding Business operator operator elimination ConsolidatedGroup (Cont’d) rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

2012

resultsNet earned premiums and contributions – 972,446 636,503 70,426 – 1,679,375Interest / profit income 751 64,581 54,971 4,383 (2,375) 122,311Other revenue 79,422 52,926 25,095 2,849 (91,652) 68,640Net claims – (601,486) (438,403) (51,736) – (1,091,625)Other expenses (i) (23,608) (332,428) (191,361) (20,486) 39,357 (528,526)Depreciation (812) (3,359) (5,746) (95) – (10,012)Amortisation (189) (1,601) (1,112) (2) – (2,904)Finance cost (14,544) – – – 2,375 (12,169)Share of results of associates 741 (30,851) – – – (30,110)

operating profit before surplus transfer, zakat and tax 41,761 120,228 79,947 5,339 (52,295) 194,980Zakat – – (400) – – (400)Tax expense (10,432) (39,220) (11,324) – 12,500 (48,476)

net profit before surplus transfer 31,329 81,008 68,223 5,339 (39,795) 146,104Surplus attributable to takaful participants – – (56,825) 90 – (56,735)

net profit for the year 31,329 81,008 11,398 5,429 (39,795) 89,369

31.3.2013

assetsSegment assets (i) 939,928 2,747,850 2,580,774 192,293 (905,923) 5,554,922Investment in associates 1,957 75,658 – – – 77,615

Add: Consolidation adjustments 1,170 9,671 – – – 10,841

943,055 2,833,179 2,580,774 192,293 (905,923) 5,643,378

liabilities and participants’ fundsSegment liabilities

Participants’ funds – – 234,145 10 – 234,155Borrowings 320,000 – – – – 320,000Insurance and takaful contract liabilities – 1,643,324 1,826,830 122,807 – 3,592,961Other liabilities 8,774 125,005 211,793 20,168 (1,422) 364,318

328,774 1,768,329 2,272,768 142,985 (1,422) 4,511,434

equitiesSegment equities (i) 613,111 1,055,179 308,006 49,308 (904,501) 1,121,103

Add: Consolidation adjustments 1,170 9,671 – – – 10,841

614,281 1,064,850 308,006 49,308 (904,501) 1,131,944

total liabilities, participants’ fundsand equity 943,055 2,833,179 2,580,774 192,293 (905,923) 5,643,378




Investment reinsurance takaful retakaful Holding Business operator operator elimination ConsolidatedGroup (Cont’d) rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

31.3.2012


Add: Consolidation adjustments 941 7,827 – – – 8,768

953,924 2,707,527 2,184,451 161,742 (959,195) 5,048,449


Participants’ funds – – 169,080 1,456 – 170,536Borrowings 320,000 – – – (50,000) 270,000Insurance/takaful contract liabilities - 1,618,214 1,518,237 90,294 – 3,226,745Other liabilities 17,104 109,664 193,082 7,434 (4,604) 322,680

337,104 1,727,878 1,880,399 99,184 (54,604) 3,989,961

equitiesSegment equities (i) 615,879 971,822 304,052 62,558 (904,591) 1,049,720


616,820 979,649 304,052 62,558 (904,591) 1,058,488

total liabilities, participants’ fundsand equity 953,924 2,707,527 2,184,451 161,742 (959,195) 5,048,449

1.4.2011



831,558 2,376,897 1,745,845 146,029 (842,816) 4,257,513


Participants’ funds – – 107,274 1,416 – 108,690Borrowings 200,000 – – – (50,000) 150,000Insurance and takaful contract liabilities – 1,392,077 1,294,408 81,488 – 2,767,973Other liabilities 13,926 75,985 152,638 6,202 1,926 250,677

213,926 1,468,062 1,554,320 89,106 (48,074) 3,277,340

equitiesSegment equities (i) 617,112 869,428 191,525 56,923 (794,742) 940,246


617,632 908,835 191,525 56,923 (794,742) 980,173

total liabilities, participants’ funds and equity 831,558 2,376,897 1,745,845 146,029 (842,816) 4,257,513



(i) Included in segment assets is a Qard granted to the general and family retakaful funds by the shareholder’s fund of the retakaful subsidiary, amounting to RM74.9 million (31.3.2012: RM52.9 million; 1.4.2011: RM50.9 million). Qard represents a loan to the general family retakaful funds to make good any underwriting deficit experienced during a financial period. These balances, including the impairment recognised thereon (31.3.2013: RM29.3 million; 31.3.2012: RM19.2 million; 1.4.2011: RM14.6 million), have been eliminated in full upon consolidation.

36. rISK ManaGeMent FraMeWorK

(a) risk governance framework

The Group’s Risk Management Framework is designed to determine the level of risk acceptable to the Group relating to its core operations by setting the appropriate Board approved limits for adherence by management after taking into account the risk parameters, the nature, the size, mix and complexity of business and operations. An enterprise risk management process is adopted to identify and evaluate key business risks that may affect the organisation and to establish and implement an appropriate system of internal controls to manage these risks while ensuring full and effective control over significant strategic, financial, organisational and compliance matters.

The key objectives of the risk management framework are to:

(i) provide information on risk governance and accountabilities;(ii) provide guidance to a standard approach to managing risks;(iii) create a risk awareness culture; and(iv) enhance professionalism, increase profitability and value for shareholders.

The Risk Management Governance structure is as follows:

(i) The Board had established a dedicated Board Committees known as the Risk Management Committee of the Board (“RMCB”) at the company and subsidiary level to oversee the implementation of the risk management framework;

(ii) The Operational Risk Management Committee (“ORMC”) which comprises the President/Group Chief Executive Officer and senior management implement the risk management processes, provide assurance to the Board that the processes have been carried out effectively and ensures that a proactive risk management culture exists on an enterprise-wide basis;

(iii) The Group Chief Risk Management and Compliance Officer (“GRMCO”) and Group Risk Management & Compliance Division establishes the infrastructure and facilitates the risk management process across the subsidiaries through the adoption of the Group’s risk management framework;

(iv) At the operational level the implementation of risk management process is consistent with the risk management framework and aligned with day-to-day operations; and

(v) The Line Managers of each Department in the Group are responsible for using the various components of the risk management framework as an integral part of their normal processes and procedures.

The Group has an Investment Committee to further manage risks associated with investments and asset allocation.



36. rISK ManaGeMent FraMeWorK (Cont’D)

(b) Capital Management objectives, policies and approach

The Capital Management Plan (“CMP”) is designed and implemented at the subsidiary level to ensure an effective management of the subsidiaries’ capital. The CMP is expected to maximise the Group’s value by optimising capital structure and enhancing capital efficiency. It is also designed to address the funding requirements of the Group to meet its various financial obligations.

Under the CMP, the subsidiaries measure and monitor their respective capital position mainly via the Capital Adequacy Ratio (“CAR”) or Solvency Margin Ratio (“SMR”).

The CMP identifies certain trigger points of the CAR or SMR position and further describes a set of corrective action plans that will be implemented towards maintaining an adequate level of capital. It is intended that capital will be utilised more efficiently in a controlled manner so that the subsidiaries will be able to manage their capital position above the internal target.

Capital Management objectives

The main objective of capital management is to monitor and maintain, at all times, an appropriate level of capital which is commensurate with the subsidiaries’ business operations and the resultant risk profile. The key objective of the CMP is to trigger appropriate action plans to be taken by the Board and the management of the subsidiaries in event of internal capital levels falling below the internal target requirement. This includes remedial actions that must be undertaken by the subsidiaries’ Board and the management to improve the capital position.

Capital Management policies

The key capital management policies are as follows:

(i) Ensure the Group has adequate capital within a range that supports stakeholders’ objectives; and

(ii) Establish responsibility of the subsidiaries’ Board and management in developing an internal capital adequacy assessment process and setting capital targets that commensurate with its business operations and the resultant risk profile and control environment.

approach to capital management

The subsidiaries conduct stress tests on their CAR or SMR in compliance with BNM/RH/GL 003-23: Guidelines of Stress Testing for Insurer and BNM/RH/GL 004-16: Guidelines of Stress Testing for Takaful Operators. The impact of the adverse scenarios on the capital position of the subsidiaries and the Group on the CAR or SMR is assessedquarterly and is focused on short to medium term views.

(c) regulatory framework

The reinsurance subsidiary and the takaful and retakaful subsidiaries are required to comply with the Insurance Act and Regulations 1996 and the Takaful Act 1984, respectively, which are administered by Bank Negara Malaysia. BNM is primarily interested in protecting the rights of policyholders and participants and monitoring the subsidiaries closely to ensure prudent management of its business operations. At the same time, BNM is also interested in ensuring that the subsidiaries maintain an appropriate solvency position to meet unforeseen liabilities arising from economic cycle or natural disasters.

In addition, the Company is required to comply with the Listing Requirements of Bursa Malaysia Securities Berhad, Guidelines issued by the Securities Commission and the Capital Markets and Services Act 2007 as a result of its status as a listed company on the Main Market of Bursa Malaysia Securities Berhad.


37. unDerWrItInG rISK

(a) General reinsurance

(i) nature of risk

The reinsurance subsidiary principally underwrites the following main classes of general reinsurance business: Fire, Motor, Marine, and Miscellaneous. Risks under these contracts usually cover a twelve month duration other than some long term contracts which may cover up to 3 years or more. For general reinsurance, the most significant risks arise from adverse development of the loss ratios and catastrophic loss events. These risk vary significantly in relation to economic conditions and territories from which the risk originates.

The above risks are mitigated by diversification across a large portfolio of business to ensure a balanced mix and spread of business as required by underwriting policies. Diversification through the implementation of underwriting strategies and claim management policies reduces the volatility of risks and improves the overall portfolio experience, and also ensures that conservative estimates are secured on its insurance contract liabilities.

The reinsurance subsidiary also manages its loss exposure through the use of retrocession programmes which are reviewed annually by the ORMC and RMCB, and subsequently approved by the Board. Prudent standards are applied in the assessment of the security of the Company’s key retrocessionaires. To manage its underwriting risk, the reinsurance subsidiary also complies with guidelines imposed by BNM in conducting the underwriting of business.

(ii) Concentration of risk by type of business

The table below measures the concentration of contracts by liabilities exposure:

retro- Gross cession net rM’000 rM’000 rM’000

31.3.2013

Fire 693,255 (90,259) 602,996Motor 371,712 (60,571) 311,141Marine 254,908 (57,732) 197,176Miscellaneous 323,449 (16,154) 307,295

1,643,324 (224,716) 1,418,608

Local 1,075,918 (151,447) 924,471Overseas 567,406 (73,269) 494,137

1,643,324 (224,716) 1,418,608



37. unDerWrItInG rISK (Cont’D)

(a) General reinsurance (cont’d)

(ii) Concentration of risk by type of business (cont’d)

retro- Gross cession net rM’000 rM’000 rM’000

31.3.2012

Fire 691,210 (250,046) 441,164Motor 387,389 (7,477) 379,912Marine 233,623 (72,640) 160,983Miscellaneous 305,992 (27,473) 278,519

1,618,214 (357,636) 1,260,578

Local 1,054,897 (146,348) 908,549Overseas 563,317 (211,288) 352,029

1,618,214 (357,636) 1,260,578

1.4.2011

Fire 457,190 (41,635) 415,555Motor 424,694 120 424,814Marine 211,699 (94,162) 117,537Miscellaneous 298,494 (10,920) 287,574

1,392,077 (146,597) 1,245,480

Local 1,083,270 (144,333) 938,937Overseas 308,807 (2,264) 306,543

1,392,077 (146,597) 1,245,480

(iii) reserving risk

The reinsurance subsidiary’s claim liabilities, and consequently some of the inputs used in determining its premium liabilities, are based upon previous claims experience, existing knowledge of events, the terms and conditions of relevant policies and interpretation of circumstances. Upon notification of a claim by its cedants, the reinsurance subsidiary sets aside reserves to meet the expected ultimate loss arising from this claim. These claim reserves are updated periodically for further developments via advice from cedants.

At each reporting date, the reinsurance subsidiary performs a test on the adequacy of its liabilities via the services of an independent qualified external actuary engaged for the purpose of ensuring that claim and premium liabilities are objectively assessed and adequately provided for. Any such deficiency is recognised in the financial statements.




(iv) Impact on liabilities, profit and equity

Key assumptions

Liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant contracts and interpretation of circumstances. Particularly relevant are past experiences with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions.

The inherent uncertainties in estimating liabilities can arise from a variety of factors such as the range and quality of data available, underlying assumptions made and random volatility in future experience.

Sensitivity analysis

As a general reinsurer, the insurance contract liabilities of the reinsurance subsidiary are sensitive to various key factors which are both internal and external. External factors to which the reinsurance subsidiary is sensitive to include:

(i) Claims practices of ceding companies;(ii) Frequency and severity of claims incurred by cedants;(iii) Changes in premium rates in insurance and reinsurance markets; and(iv) Legislative and regulatory changes.

In general, due to the number of cedants providing business to the reinsurance subsidiary, the impact of changes to such variables cannot be reliably predicted. Accordingly, management believes that an analysis to provide an accurate reflection of the sensitivity of the general reinsurance business to changes in these factors cannot be reliably performed.

The main internal factors to which the reinsurance subsidiary is sensitive to pertain to the loss ratios observed from its claims experience. The most significant component of this would be large or catastrophic claims reported by cedants to the reinsurance subsidiary. Based on historical trends and claims performance, large losses reported by cedants are increasing in terms of frequency and severity. Accordingly, the sensitivity analysis is performed by determining the estimated large losses that management believes would reasonably occur over the next 12 months as noted below.

This analysis assumes that other factors relevant, but not significant, to the valuation of claim liabilities are constant.

Impact on Impact Impact Gross on net on profit Impact on liabilities liabilities before tax equity* rM’000 rM’000 rM’000 rM’000

31.3.2013

Fire 62,920 20,890 20,890 15,668Marine 15,702 5,778 5,778 4,334Motor 1,659 1,659 1,659 1,244Miscellaneous 12,211 4,332 4,332 3,249

92,492 32,659 32,659 24,495





(iv) Impact on liabilities, profit and equity (cont’d)

Sensitivity analysis (cont’d)

Impact on Impact Impact Gross on net on profit Impact on liabilities liabilities before tax equity* rM’000 rM’000 rM’000 rM’000

31.3.2012

Fire 50,565 17,687 17,687 13,265Marine 19,149 7,157 7,157 5,368Motor 1,185 1,185 1,185 889Miscellaneous 16,639 6,156 6,156 4,617

87,538 32,185 32,185 24,139

1.4.2011Fire 26,799 14,543 14,543 10,908Marine 16,656 9,039 9,039 6,779Motor 91 91 91 69Miscellaneous 6,297 3,418 3,418 2,563

49,843 27,091 27,091 20,319

* The impact on the equity reflects the after tax impact.

The method used in performing the sensitivity analysis did not change from the previous year.

(v) Claims development table

The following tables show the estimate of cumulative ultimate incurred claims, including both claims provisions and IBNR for each successive underwriting year at each financial year end, along with cumulative claim payments to-date.

In setting provisions for claims, the reinsurance subsidiary relies on advice by its cedants and exercises discretion where the claim may develop more adversely than advised. An estimate will be made in the absence of a reported figure or in the event the loss is still preliminary and has not been fully assessed.

The estimates of the ultimate incurred claims are subject to a great deal of uncertainty in the early stages as claims are still being intimated and developed, particularly so for large and catastrophic claims. These uncertainties reduce over time as the claims develop and progress towards the ultimate cost.

Beginning 1 April 2009, the methodology used in the valuation of general reinsurance liabilities was changed. This change involved a more granular segregation of the business of the reinsurance subsidiary into specific portfolios with the intention of achieving greater accuracy in the estimation process. Accordingly, data pertaining to the gross general reinsurance liabilities prior to underwriting year 2009 was not available and hence only post underwriting year 2009 developments in gross general reinsurance liabilities are disclosed.




(v) Claims development table (cont’d)

The following tables have excluded the impact of specific large losses and other claims that management believes are not relevant for purposes of establishing claims development trends.

Gross General reinsurance Contract liabilities for 2013:

Before Subunderwriting Year 2005 2005 2006 2007 2008 2009 2010 2011 2012 total rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000

At the end of accident year 418,389 573,070 640,777 643,911 663,610

One year later 408,945 496,009 570,029 603,851 722,113Two year later 403,736 448,593 493,161 573,383 671,472Three year later 334,075 417,448 464,785 492,705 633,549Four year later 338,991 399,937 457,881 576,942Five year later 326,336 395,525 555,322Six year later 324,864 438,867Seven year later 359,307

Current estimate of bookedultimate claims incurred (a) 359,242 438,594 554,849 574,103 625,871 650,143 664,583 385,874

At the end of accident year 45,677 42,356 53,719 63,614 92,548 81,664 72,602 45,707

One year later 178,766 217,724 224,029 256,339 301,430 304,808 457,413Two year later 240,126 294,220 333,537 358,844 430,566 489,316Three year later 265,782 335,359 379,990 411,516 544,943Four year later 290,901 355,014 403,432 515,279Five year later 303,512 369,071 517,164Six year later 310,509 420,704Seven year later 350,143

Cumulative payments to-date (b) 350,143 420,704 517,164 515,279 544,943 489,316 457,413 45,707

expected claim liabilities (a) - (b) 35,245 9,099 17,890 37,685 58,824 80,928 160,827 207,170 340,167 947,835

other portfolios 330,973

Best Estimate of Claim Liabilities 1,278,808Claim handling expenses 3,067Fund PRAD at 75% Confidence Interval 102,842

Gross General reinsurance Claim liabilities 1,384,717






net General reinsurance Contract liabilities for 2013:

Before Subaccident year 2005 2005 2006 2007 2008 2009 2010 2011 2012 total rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000 rM‘000


One year later 309,925 328,514 418,288 480,442 545,681 557,852 707,118 –Two year later 316,181 366,752 439,019 476,158 549,676 626,114 – –Three year later 331,467 371,474 441,390 479,882 593,617 – – –Four year later 325,088 350,446 437,100 546,688 – – – –Five year later 309,576 344,994 519,346 – – – – –Six year later 307,374 382,902 – – – – – –Seven year later 337,577 – – – – – – –




Cumulative paymentsto-date (b) 330,728 369,377 497,241 501,521 526,099 471,728 451,089 45,219



Best Estimate of Claim Liabilities 1,092,887Claim handling expenses 3,067Fund PRAD at 75% Confidence Interval 84,595Less: Retrocession recoveries (13,992)

net General reinsurance Claim liabilities 1,166,557







At the end of accident year – – – – 418,389 573,070 640,777 643,911

One year later – – – 408,945 496,009 570,029 603,851 –Two year later – – 403,736 448,593 493,161 573,383 – –Three year later – 334,075 417,448 464,785 492,705 – – –Four year later 352,998 338,991 399,937 457,881 – – – –Five year later 357,333 326,336 395,525 – – – – –Six year later 345,542 324,864 – – – – – –Seven year later 343,972 – – – – – – –


















Current estimate of booked ultimate claims incurred (a) 319,596 307,294 344,768 435,391 474,801 537,454 524,077 302,725






Best Estimate of Claim Liabilities 990,033Claim handling expenses 2,156Fund PRAD at 75% Confidence Interval 79,887Less: Retrocession recoveries (38,510)








At the end of accident year – – – – – 418,389 573,070 640,777

One year later – – – – 408,945 496,009 570,029 –Two year later – – – 403,736 448,593 493,161 – –Three year later – – 334,075 417,448 464,785 – – –Four year later – 352,998 338,991 399,937 – – – –Five year later 322,570 357,333 326,336 – – – – –Six year later 288,868 345,542 – – – – – –Seven year later 271,056 – – – – – – –

Current estimate of bookedultimate claimsincurred (a) 271,053 345,528 326,144 399,062 461,086 483,090 533,575 365,939


One year later 139,587 210,770 178,766 217,724 224,029 256,339 301,430 -Two year later 200,142 263,625 240,126 294,220 333,537 358,844 – –Three year later 219,409 291,312 265,782 335,359 379,990 – – –Four year later 232,395 308,433 290,901 355,014 – – – –Five year later 246,072 321,954 303,512 – – – – –Six year later 255,423 331,801 – – – – – –Seven year later 261,529 – – – – – – –





















Best Estimate of Claim Liabilities 939,372Claim handling expenses 3,657Fund PRAD at 75% Confidence Interval 75,260Less: Retrocession recoveries (15,051)




(b) General takaful fund

(i) nature of risk

The takaful subsidiary principally issues the following types of general takaful certificates: motor, household and commercial fire, business interruption, personal accident, and other miscellaneous commercial contracts. Risks under these certificates usually cover a twelve month duration other than long term fire which may be extended up to thirty years or more. For general takaful certificates, the most significant risk arise from accident frequency and severity of the accident. These risks do vary significantly in relation to location of risk, the type of risk covered and the industry.

The above risks are mitigated by diversification across a large portfolio of business and careful selection of risks. The variability of risks is designed to improve the portfolio experience by implementation of underwriting strategies and claim management policies which attempt to minimise losses.

The takaful subsidiary also manages its loss exposure by the use of retakaful arrangements. The retakaful treaty arrangements are reviewed annually by RMCB and approved by the Board.

Stress Testing (“ST”) is performed twice a year. The purpose of the ST is to test the solvency of the general takaful fund under the various scenarios according to regulatory guidelines, simulating drastic changes in major parameters such as new business volume and investment environment.

(ii) Concentration of risk by type of certificates

The table below sets out the concentration of takaful certificates liabilities by class:

Gross retakaful net rM’000 rM’000 rM’000

31.3.2013

Fire 40,940 (7,890) 33,050Motor 212,858 (49,705) 163,154Marine, Aviation & Transit 900 (508) 392Miscellaneous 46,854 (4,809) 42,045

301,553 (62,912) 238,641

31.3.2012

Fire 35,638 (3,396) 32,242Motor 213,980 (20,429) 193,551Marine, Aviation & Transit 1,531 (606) 925Miscellaneous 42,561 (17,725) 24,836

293,710 (42,156) 251,554




(b) General takaful fund (cont’d)

(ii) Concentration of risk by type of certificates (cont’d)


1.4.2011

Fire 30,727 (5,443) 25,284Motor 217,398 (2,594) 214,804Marine, Aviation & Transit 5,217 (1,785) 3,432Miscellaneous 38,391 (24,529) 13,862

291,733 (34,351) 257,382

All business of the general takaful fund is derived from participants in Malaysia; accordingly, disclosure of concentration risk by geographical region is not relevant to the general takaful fund.

(iii) Impact on liabilities, profit and equity

Key assumptions

The principal assumptions underlying the estimation of liabilities is that the takaful subsidiary’s future claims development will follow a similar pattern to past claims development experience.

Additional qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, changes in market factors such as public attitude to claims notification and reporting, economic conditions, as well as internal factors such as portfolio mix, policy conditions and claims handling procedures. Judgment is further used to assess the extent to which external factors, such as judicial decisions and government legislation affect the estimates.

Other key circumstances affecting the reliability of assumptions include variation in profit rates and delays in settlement.


The general takaful claim liabilities are sensitive to the key assumptions shown below. It has not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty 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 claim liabilities. 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.

Sensitivity has been applied to the motor classes only (comprising Motor Act and Motor Others) by considering the ultimate loss ratio with an extra charge for the provision in adverse deviation.




(iii) Impact on liabilities, profit and equity (cont’d)

Sensitivity analysis (cont’d)

Change in Impact on assumption Impact Impact Impact on General of ultimate on Gross on net Surplus takaful Claims liabilities liabilities before tax fund* ratio rM’000 rM’000 rM’000 rM’000

31.3.2013

Motor Act Average Severity +10% 18,758 16,559 (16,559) (12,419)Motor Others ExpectedLoss Ratio +10% 32,560 19,801 (19,801) (14,851)

31.3.2012

Motor Act Average Severity +10% 12,330 15,766 (15,766) (11,825)Motor Others ExpectedLoss Ratio +10% 20,535 24,130 (24,130) (18,098)

1.4.2011

Motor Act AverageSeverity +5% 85,673 69,312 (69,312) (51,984)Motor Others Expected Loss Ratio +10% 21,424 21,095 (21,095) (15,821)

* The impact on participants’ fund reflects the after tax impact.

The method used for deriving sensitivity information and significant assumption did not change from the previous period.

(iv) Claims development table

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each financial year end, together with cumulative payments to-date.

In setting provision for claims, the takaful subsidiary 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 greatest when the accident year is at an early stage of development and the margin necessary to ensure adequacy of provision is relatively at its highest. As the claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease.





(iv) Claims development table (cont’d)

Gross General takaful Certificate liabilities for 2013:

accident year 2006 2007 2008 2009 2010 2011 2012 2013 total rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

At the end of accident year 29,337 36,388 50,997 100,090 125,472 144,938 150,396 108,384One year later 27,311 36,179 51,290 93,740 142,627 146,833 140,864 –Two year later 26,773 35,120 51,483 89,887 134,623 137,705 – –Three year later 26,178 33,672 51,708 86,452 128,689 – – –Four year later 25,494 33,695 50,301 82,702 – – – –Five year later 24,949 32,743 50,507 – – – – –Six year later 24,732 32,433 – – – – – –Seven year later 24,550 – – – – – – –

Current estimate ofcumulative claims incurred 24,550 32,433 50,507 82,702 128,689 137,705 140,864 108,384


Cumulative payments to-date 24,551 32,280 49,488 78,729 105,741 112,994 88,890 41,749

Gross general takaful certificates liabilities per Statement of Financial position:

Best Estimate of Claims Liabilities (incl. Allocated LossAdjustment Expenses “ALAE”) (1) 153 1,019 3,973 22,948 24,711 51,974 66,635 171,412

Fund PRAD at 75% 26,203

Total 197,615





net General takaful Certificate liabilities for 2013:






net general takaful certificates liabilities per Statement of Financial position:

Best Estimate of Claims Liabilities (incl. ALAE) – 140 572 3,378 21,407 21,384 44,437 47,863 139,181


Total 159,873












Gross general takafulcertificates liabilities perStatement of Financial position:

Best Estimate of ClaimsLiabilities (incl. Allocated LossAdjustment Expenses “ALAE”) 10 210 768 2,579 8,627 34,084 51,516 101,268 199,062


Total 210,669











net general takafulcertificates liabilities perStatement of Financial position:

Best Estimate of Claims Liabilities (incl. ALAE) 9 (96) 697 2,173 7,608 29,457 43,114 93,528 176,490


Total 187,133








At the end of accident year 1,027 11,728 29,337 36,388 50,997 100,090 125,472 144,938One year later 875 10,898 27,311 36,179 51,290 93,740 142,627 –Two year later 855 9,936 26,773 35,120 51,483 89,887 – –Three year later 806 9,683 26,178 33,672 51,708 – – –Four year later 790 8,396 25,494 33,695 – – – –Five year later 787 7,951 24,949 – – – – –Six year later 735 7,900 – – – – – –Seven year later 740 – – – – – – –

Current estimate ofcumulative claims incurred 740 7,900 24,949 33,695 51,708 89,887 142,627 144,938

At the end of accident year 203 3,957 8,984 13,366 17,599 29,070 43,215 48,128One year later 610 6,632 18,976 25,083 34,059 64,212 83,077 –Two year later 614 7,123 20,128 27,784 39,159 72,939 – –Three year later 687 7,436 21,967 30,245 44,893 – – –Four year later 714 7,728 23,560 31,292 – – – –Five year later 730 7,807 24,474 – – – – –Six year later 730 7,826 – – – – – –Seven year later 734 – – – – – – –

Cumulative payments to-date 734 7,826 24,474 31,292 44,893 72,939 83,077 48,128

Gross general takafulcertificates liabilities perStatement of Financial position:

Best Estimate of ClaimsLiabilities (incl. Allocated LossAdjustment Expenses “ALAE”) 6 74 475 2,403 6,815 16,948 59,550 96,810 183,081


Total 193,112








Current estimate ofcumulative claims incurred 674 6,903 23,128 31,341 47,484 78,446 119,456 134,955


Cumulative payments to-date 668 6,831 22,968 29,091 42,202 64,559 79,479 44,714

net general takafulcertificates liabilities perStatement of Financial position:

Best Estimate of Claims Liabilities (incl. ALAE) 6 72 160 2,250 5,282 13,887 39,977 90,241 151,875


Total 160,702




(c) Family takaful fund

(i) nature of risk

The takaful subsidiary principally issues the following types of family takaful certificates: Family Takaful Plans, Mortgage Takaful Plans, Group Takaful Plans and Investment-linked Takaful Plans.

Family takaful underwriting risk arises from the pricing and the pool of risks in the participants’ risk fund arising from family takaful certificates. The risks arise when actual claims experience is different from the assumptions used in setting the prices for products and establishing the technical provisions and liabilities for claims. Sources of risk include certificate lapses and certificate claims such as mortality, morbidity and expenses.

The takaful subsidiary utilises retakaful to manage the mortality and morbidity risks. The Company’s retakaful management strategy and policy are reviewed by the RMCB, and approved by the Board. Retakaful structures are set based on the type of risks to be recovered.

The takaful subsidiary reviews the actual experience of mortality, morbidity, lapses and surrenders, as well as expenses to ensure that appropriate policies, guidelines and limits put in place to manage these risks remain adequate and appropriate.

The Family Takaful funds are participating in nature. In the event of volatile investment climate and/or unusual claims experience, the investment profit and surplus distribution to the participants may be reduced.

For investment-linked funds, the risk exposure for the participant’s risk fund is limited only to the underwriting aspect as all investment risks are borne by the participant.

Stress Testing is performed twice a year. The purpose of the ST is to test the solvency of the family takaful fund under the various scenarios according to regulatory guidelines, simulating drastic changes in major parameters such as new business volume, investment environment, mortality/morbidity patterns and lapse rates.



(c) Family takaful fund (cont’d)

(ii) Concentration of risk by type of certificates


31.3.2013

Family takaful plans 535,924 – 535,924Investment-linked takaful plans 1,617 – 1,617Mortgage takaful plans 487,607 (49,359) 438,248Group credit takaful plans 305,807 (19,222) 286,585Others 23,741 (11,598) 12,143

1,354,696 (80,179) 1,274,517

31.3.2012

Family takaful plans 378,245 – 378,245Investment-linked takaful plans 1,010 – 1,010Mortgage takaful plans 425,344 (75,351) 349,993Group credit takaful plans 168,145 (8,416) 159,729Risk Fund 62,351 (13,856) 48,495Special Fund 86,860 – 86,860Others 33,515 (7,221) 26,294

1,155,470 (104,844) 1,050,626

1.4.2011

Family takaful plans 255,843 – 255,843Investment-linked takaful plans 772 – 772Mortgage takaful plans 368,534 (68,936) 299,598Group credit takaful plans 126,764 (8,986) 117,778Risk Fund 78,272 (21,218) 57,054Special Fund 68,192 – 68,192Others 67,799 (13,848) 53,951

966,176 (112,988) 853,188

All business of the family takaful fund is derived from participants in Malaysia; accordingly, disclosure of concentration risk by geographical region is not relevant to the family takaful fund.





(iii) Key assumptions

Material judgement is required in determining the liabilities of the family takaful fund and in the selection of assumptions. Assumptions used are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

The key assumptions to which the estimation of liabilities is particularly sensitive are as follows:

Mortality and Morbidity rates

Assumptions on mortality rates are based on those rates detailed in the Actuarial Certificate submitted to Bank Negara Malaysia. They reflect the historical experience in the market and are adjusted, when appropriate, to reflect the Participants’ own experience. Assumptions are differentiated by gender, occupational class and product group.

An increase in rates will lead to a larger number of claims (as claims could occur sooner than anticipated), which will reduce the surplus from the Risk Fund and subsequently reduce profits for the shareholders in terms of lower surplus administration charge income.

Discount rates

Family takaful liabilities of credit-related products (Mortgage Reducing Term Takaful (“MRTT”) and Group Credit Takaful (“GCT”)) are determined as the sum of the discounted value of the expected benefits less the discounted value of the expected tabarru’ (risk charge) that would be required to meet these future cash outflows. Discount rates are based on the Family Fund’s historical investment performance and adjusted downwards for conservatism.

A decrease in the discount rate will increase the value of the family takaful liability and therefore reduce profits for the shareholders in terms of lower surplus administration charge income.

The assumptions that have a significant effect on the statement of financial position and income statement of the family takaful fund are listed below by portfolio assumptions impacting net liabilities:

2013/2012 2012/2011 2011/2010type of Mortality and morbidity Discount Discount DiscountBusines rates rates rates rates

Credit related Base mortality1 3% 3% 3%(MRTT and GCT) and adjusted for retakaful rates2

Other Base mortality 3% 3% 3%

1 These rates are obtained from the various industry mortality and morbidity experience tables that were used to determine the contribution rates.

2 Retakaful rates are derived from the fund’s retakaful arrangements with respect to the MRTT and GCT business.




(iv) Sensitivity analysis

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 correlations of assumptions will have a significant effect in determining the ultimate claim liabilities. To demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are nonlinear. Sensitivity information will also vary according to the current economic

Impact on Impact Impact Impact Family Change in on Gross on net on profit takaful assumptions liabilities liabilities Before tax fund* % rM’000 rM’000 rM’000 rM’000

31.3.2013

Mortality/morbidity + 10% 605 605 (605) (605)Discount rates + 1% (329) (329) 329 329

31.3.2012

Mortality / morbidity + 10% 1,957 1,957 (1,957) (1,957)Discount rates + 1% (1,247) (1,247) 1,247 1,247

1.4.2011

Mortality / morbidity + 10% 9,548 9,548 (9,548) (9,548)Discount rates + 1% (1,378) (1,378) 1,378 1,378

* Impact on family takaful fund reflects adjustments for tax, where applicable.

The method used and significant assumptions made for deriving sensitivity information did not change from the previous period.

(d) General retakaful fund

(i) nature of risk

The retakaful subsidiary principally underwrites facultative and proportional and non proportional treaty business accepted from takaful and retakaful operators. Portfolios are segregated by class and by domestic and overseas businesses.

For general retakaful, the most significant risks arise from adverse development of the loss ratios and catastrophic loss events. These risks vary significantly in relation to economic conditions and territories from which the risk originates.

The retakaful subsidiary also manages its loss exposure by the use of retrotakaful arrangements. The retrotakaful arrangements are reviewed annually by the RMCB and approved by the Board.




(d) General retakaful fund (cont’d)

(ii) Concentration of risk

The table below sets out the concentration of takaful contract liabilities by classes of business and by local and overseas:


31.3.2013

Fire 50,026 (1,846) 48,180Motor 16,458 (18) 16,440Marine, Aviation & Transit 15,426 (2,926) 12,500Miscellaneous 21,293 (233) 21,060

103,203 (5,023) 98,180

Local 75,537 (2,164) 73,373Overseas 27,666 (2,859) 24,807

103,203 (5,023) 98,180

31.3.2012

Fire 43,712 (4,083) 39,629Motor 9,301 – 9,301Marine, Aviation & Transit 12,022 (2,411) 9,611Miscellaneous 16,825 (35) 16,790

81,860 (6,529) 75,331

Local 54,515 (3,933) 50,582Overseas 27,345 (2,596) 24,749

81,860 (6,529) 75,331

1.4.2011

Fire 40,921 (4,580) 36,341Motor 5,197 – 5,197Marine, Aviation & Transit 9,365 (2,686) 6,679Miscellaneous 18,027 (102) 17,925

73,510 7,368 66,142

Local 47,685 (1,346) 46,339Overseas 25,825 (6,022) 19,803

73,510 (7,368) 66,142





Key assumptions

Additional qualitative judgements are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrences, changes in market factors such as public attitude to claims notification and reporting, 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 estimates.

Other key circumstances affecting the reliability of assumptions include variation in profit rates and delays in settlement.


The general retakaful fund’s claim liabilities are sensitive to changes in the loss ratio especially in the event of large or catastrophic claims. However, as the business is still relatively new, the amount of information available to conduct a sensitivity analysis is limited.

Due to limited information, the analysis below is carried out by assuming the IBNR provision is insufficient and that the ultimate loss requires a 5% top-up. The top-up is applied to all classes of business and does not have any impact on the retrotakaful programme.

This analysis assumes all other parameters are held constant.

Impact on Impact Impact Impact on General on Gross on net Surplus retakaful liabilities liabilities before tax fund* rM’000 rM’000 rM’000 rM’000

31.3.2013

Fire 7 ,244 6,994 6 ,994 6,994Motor 1 ,097 1,097 1 ,097 1,097Marine, Aviation & Transit 330 372 372 372Miscellaneous 1 ,868 1,866 1 ,866 1,866

31.3.2012

Fire 4,172 3,746 3,746 3,746Motor 560 560 560 560Marine, Aviation & Transit 667 649 649 649Miscellaneous 1,268 1,268 1,268 1,268

1.4.2011

Fire 1,544 1,544 1,544 1,544Motor 288 288 288 288Marine, Aviation & Transit 259 259 259 259Miscellaneous 968 968 968 968

* The impact on the general retakaful fund reflects the after tax impact.





(iv) Claims Development table

As this is only the sixth financial year since the incorporation of the retakaful subsidiary, it is not meaningful to present the claims development table in the financial statements.

(e) Family retakaful fund

(i) nature of risk

The retakaful subsidiary principally underwrites the following types of family retakaful treaties: Individual Family Retakaful Plans, Group Family Retakaful Plans, Individual Medical Retakaful Plans and Retakaful Individual Facultative.

Family Retakaful underwriting risk relates to the pricing and loss ratios arising from family Retakaful products. The risks arise when actual claims experience is different from the assumptions used in setting the yearly renewable term fees for retakaful products. Deviations in actual claims experience compared to the assumptions used may be due to deviations in actual mortality, morbidity and expense experience.

The retakaful subsidiary utilises retrotakaful to manage mortality and morbidity risks. The retakaful subsidiary’s retrotakaful strategy and policy are reviewed annually by the ORMC and RMCB, and approved by the Board.

The retakaful subsidiary reviews the actual experience of mortality, morbidity and expense experience to ensure that appropriate policies, guidelines and limits put in place to manage these risks remain adequate and appropriate.

ST is performed twice a year. The purpose of the ST is to test the solvency of the family retakaful fund under various scenarios. These scenarios are based on regulatory guidelines and simulate drastic changes in major parameters such as new business volume, investment environment and mortality / morbidity patterns.



(e) Family retakaful fund (cont’d)

(ii) Concentration of risk

The table below sets out the concentration of retakaful contract liabilities by local and overseas treaties:


31.3.2013

Local Treaties 17,398 (5,357) 12,041Overseas Treaties 307 (125) 182

17,705 (5,482) 12,223

31.3.2012

Local Treaties 4,544 (1,611) 2,933Overseas Treaties 810 (253) 557

5,354 (1,864) 3,490

1.4.2011

Local Treaties 2,265 (619) 1,646Overseas Treaties 229 (37) 192

2,494 (656) 1,838

Business of the family retakaful fund is derived from Malaysia and overseas risks. Accordingly, liabilities of the family retakaful fund are mainly spread along these regions namely Malaysia, Brunei and Indonesia.


Key assumptions

Material judgement is required in determining the liabilities and in the choice of assumptions. Assumptions in use are based on past experience, current internal data, external market indices and benchmarks which reflect current observable market prices and other published information. Assumptions and prudent estimates are determined at the date of valuation and no credit is taken for possible beneficial effects of voluntary withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure realistic and reasonable valuations.

The estimation of liabilities is particularly sensitive to the assumption of loss ratios due to the nature of the pricing of family retakaful products which are based on yearly renewable terms.




(e) Family retakaful fund (cont’d)

(iii) Impact on liabilities, profit and equity (cont’d)


Impact on Impact on Change in Surplus actuarial assumptions before tax reserve rM’000 rM’000

31.3.2013

Loss ratio -20% (2,715) (2,715)Loss ratio +20% 2,840 2,840

31.3.2012

Loss ratio -20% (751) (751)Loss ratio +20% 1,371 1,371

1.4.2011

Loss ratio -20% (430) (430)Loss ratio +20% 650 650

38. FInanCIal rISK

Transactions in financial instruments may result in the Group assuming financial risks. These include credit risk, liquidity risk and market risk. This note presents information about the Group’s exposure to each of the above risks and the Group’s objectives, policies and processes for measuring and managing such risks.

(a) Credit risk

Credit risk is the risk of financial loss resulting from the failure of counterparties to reinsurance, takaful, retakaful and investment transactions to meet their contractual obligations.

Credit risk includes the following major elements:

(i) Investment credit risk which is the risk of financial loss arising from a change in the value of an investment due to a rating downgrade, default, or widening of credit spreads. Changes in credit spreads are largely driven by the different economic cycles and operating cycles while the less liquid securities tend to be priced at a wider spread. The liquidity of the securities is directly determined by its bid-to-ask spread.

(ii) Derivative counterparty risk which is the risk of financial loss arising from a derivative counterparty’s default, or the deterioration of the derivative counterparty’s financial position. As at the reporting date, the Group does not transact in derivatives and is not exposed to this risk; and


38. FInanCIal rISK (Cont’D)

(a) Credit risk (cont’d)

(iii) Reinsurance/retakaful counterparty risk which is the risk of financial loss arising from a default by the retrocessionaire/retakaful operator, or the deterioration of the solvency position of the retrocessionaire/retakaful operator.

The Group is exposed to investment credit risk on its investment portfolio, primarily from investments in corporate bonds. A creditworthiness assessment for new and existing investments is undertaken by the Group in accordance with the Investment Policy as approved by the Investment Committee. In addition, the credit ratings of the bond portfolio are regularly monitored and any downgrade in credit ratings will be evaluated to determine the required actions. As at the reporting date, the Group’s bond portfolio has no material exposure below investment grade.

The Group is exposed to reinsurance/retakaful counterparty risks of three different types:

(i) as a result of recoveries owing from the retrocessionaire/retakaful operators for claims;

(ii) from the advance settlement of premiums/contributions to the reinsurer/retakaful operator; and

(iii) as a result of reserves held by the reinsurer/retakaful operator which would have to be met by the reinsurance/takaful/ retakaful subsidiary in the event of default.

Management of credit risk

In order to manage and mitigate credit risk, the following policies and procedures were set in place:

(i) Investment policies prescribe the minimum credit rating for bonds that may be held. In addition, the policies are further aimed at investing in a diverse portfolio of bonds in order to reduce the potential impact that may arise from individual companies defaulting;

(ii) Counterparty limits are set for investments, cash deposits and foreign exchange trade exposure to ensure that there is no concentration of credit risk;

(iii) The Group’s investment portfolio is managed to ensure diversification and focuses on high quality investment grade fixed income securities. For the financial year ended 31 March 2013, the average credit quality of the Group’s investment portfolio was AAA as determined by Rating Agency Malaysia (“RAM”) or Malaysian Rating Corporation Berhad (“MARC”); and

(iv) To mitigate reinsurance/retakaful counterparty risk, the Group will give due consideration to the credit quality of a reinsurer/retakaful operator. To facilitate this process, a list of acceptable reinsurers/retakaful operators based on their rating is maintained within the Group. The Group regularly reviews the financial security of its reinsurers/retakaful operators.





Credit exposure by credit rating for 2013

The table below provides information regarding the credit risk exposures of the Group by classifying assets according to the Group’s credit ratings of counterparties.

not Government BBB subject to guaranteed to aaa C to BB credit risk not rated totalGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Financial assets at FVtplQuoted shares in Malaysia: – – – 6,537 – 6,537Structured products – – – – 5,494 5,494Warrants – – – 42 – 42Shariah approved unit trust funds – – – 117,094 – 117,094

HtM investmentsMalaysian government securities 79,131 – – – – 79,131Unquoted corporate

debt securities 129,486 20,004 266 – – 149,756Government investment issues 542,884 – – – – 542,884Short term commercial papers – 14,882 – – – 14,882

aFS financial assetsUnquoted shares in Malaysia – – – 44,503 – 44,503Unquoted secured

corporate debt securities 264,734 1,344,565 – – 6,791 1,616,090Government investment issues 40,223 – – – – 40,223Golf club memberships – – – 228 – 228Quoted shares in Malaysia – – – 67,267 – 67,267Quoted shares outside Malaysia – – – 193 – 193Shariah approved

unit trust funds – – – 20,985 – 20,985Warrants – – – 13 – 13

loans and receivablesFixed and call deposits

with licensed:Commercial banks – 166,118 – – – 166,118Investment banks – 520,854 – – – 520,854


Co-operative bank – 49,791 – – – 49,791Islamic banks – 338,539 – – 169,138 507,677Investment banks – – – – 27,608 27,608Development bank – 100,846 – – 36,438 137,284Building society – 28,103 – – – 28,103




Credit exposure by credit rating for 2013 (cont’d)


loans and receivables (cont’d)Institutional trust deposit 57,165 – – – 27,683 84,848Islamic repo placements – 43,426 – – 24,667 68,093Staff loans – – – – 9,226 9,226Income due and accrued – – – – 39,183 39,183Due from insurance Pool accounts – – – – 32,134 32,134Other receivables, deposits

and prepayments – – – – 27,686 27,686Reinsurance/retakaful assets – 93,581 – – 287,324 380,905Insurance/takaful receivables – 58,549 – – 345,510 404,059Cash and bank balances – 65,131 – 24 9,573 74,728

1,113,623 2,844,389 266 256,886 1,048,455 5,263,619

not Government BBB subject to guaranteed to aaa C to BB credit risk not rated totalCompany rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

2013

aFS financial assets

Golf club memberships – – – 50 – 50Quoted Shariah approved

equities in Malaysia – – – 444 – 444

loans and receivables

Fixed and call deposits with licensed:

Commercial banks – 975 – – – 975Investment banks – 6,632 – – – 6,632

Islamic investment accounts with licensed

Islamic banks – 855 – – – 855Staff loans – – – – 1,879 1,879Income due and accrued – – – – 12 12Amounts due from subsidiaries – 2,452 – – 1,725 4,177Other receivables and deposits – – – – 1,934 1,934

Cash and bank balances – 2,932 – – – 2,932

– 13,846 – 494 5,550 19,890








Financial assets at FVtplQuoted shares in Malaysia:

Shariah approved equities – – – 7,494 – 7,494Others – – – 1,578 – 1,578

Structured products – – – – 12,296 12,296Warrants – – – 27 – 27Shariah approved

unit trust funds – – – 116,068 – 116,068

HtM investmentsIslamic BNM Monetary notes 1,988 – – – – 1,988Malaysian government

securities 5,805 – – – – 5,805Unquoted corporate

debt securities 124,314 37,054 279 – 5,737 167,384Government investment issues 220,679 – – – – 220,679Commercial papers – 36,367 – – – 36,367

aFS financial assetsUnquoted shares in Malaysia – – – 45,003 – 45,003Unquoted secured

corporate debt securities 88,933 1,242,837 – – – 1,331,770Malaysian government securities 43,708 – – – – 43,708Government investment issues 190,306 – – – – 190,306Golf club memberships – – – 228 – 228Quoted shares in Malaysia: – – – 126,744 – 126,744Quoted shares outside Malaysia – – – 224 – 224Shariah approved unit trust funds – – – 19,920 – 19,920Warrants – – – 75 – 75




Co-operative bank – 61,344 – – – 61,344Islamic banks – 243,422 – – 202,069 445,491Investment banks – 10,412 – – 30,015 40,427






loans and receivables (cont’d)Development bank – 80,535 – – 72,889 153,424Building society – 5,831 – – – 5,831Institutional trust deposit 54,529 – – – 26,404 80,933Islamic repo placements – 3,456 – – 5 ,649 9,105Staff loans – – – – 11,227 11,227Income due and accrued – – – – 29,644 29,644Due from insurance Pool accounts – – – – 19,969 19,969Other receivables, deposits

and prepayments – – – – 27,338 27,338Reinsurance/retakaful assets – 195,930 – – 235,409 431,339Insurance/takaful receivables – 53,482 – – 278,181 331,663Cash and bank balances – 77,477 – – 3,094 80,571

730,262 2,611,490 279 317,361 959,921 4,619,313


2012

HtM investmentsUnquoted secured

corporate debt securities – – – – 5,059 5,059

aFS financial assetsUnquoted shares in Malaysia – – – 500 – 500Golf club memberships – – – 50 – 50

Shariah approved equities – – – 623 – 623



Islamic investment accounts with licensed

Islamic banks – 3,909 – – – 3,909Staff loans – – – – 2,309 2,309Income due and accrued – – – – 381 381Due from subsidiaries – – – – 537 537Other receivables and deposits – – – – 327 327

Cash and bank balances – 11 – – – 11

– 19,584 – 1,173 8,613 29,370








Financial assets at FVtplQuoted shares in Malaysia – – – 14,641 – 14,641Structured products – – – – 12,019 12,019Warrants – – – 45 – 45Shariah approved unit trust funds – – – 73,014 – 73,014Government investment issues 698 – – – – 698Unquoted corporate

debt securities 251 4,236 – – – 4,487

HtM investmentsIslamic BNM Monetary notes 4,996 – – – – 4,996Malaysian government

securities 56,832 – – – – 56,832Unquoted corporate

debt securities 119,195 55,114 385 – 12,645 187,339Government investment issues 139,660 – – – – 139,660Commercial papers – 17,526 – – – 17,526

aFS financial assetsUnquoted shares in Malaysia – – – 46,152 – 46,152Unquoted corporate

debt securities 26,129 979,231 – – – 1,005,360Malaysian government

securities 43,906 – – – – 43,906Government investment issues 170,753 – – – – 170,753Golf club memberships – – – 228 – 228Quoted shares in Malaysia – – – 86,846 – 86,846Quoted shares outside Malaysia – – – 341 – 341Shariah approved unit trust funds – – – 14,473 – 14,473


with licensed:Commercial banks – 129,776 – – – 129,776Investment banks – 381,032 – – 50,002 431,034


Co-operative bank – 85,069 – – – 85,069Islamic banks – 174,691 – – 89,466 264,157Investment banks – 1,507 – – – 1,507Development bank – 57,764 – – 33,641 91,405Building society – 8,269 – – – 8,269Institutional trust deposit 52,003 – – – 25,184 77,187Islamic repo placements – 114,310 – – 21,376 135,686






loans and receivables (cont’d)Staff loans – – – – 12,618 12,618Income due and accrued – – – – 23,174 23,174Due from insurance Pool accounts – – – – 19,533 19,533Other receivables, deposits

and prepayments – – – – 24,819 24,819Reinsurance/retakaful assets – 22,150 – – 175,283 197,433Insurance/takaful receivables – 16,949 – – 271,533 288,482Cash and bank balances – 122,097 – – 847 122,944

614,423 2,169,721 385 235,740 772,140 3,792,409


2011

HtM investmentsUnquoted secured

corporate debt securities – – – – 6,967 6,967

aFS financial assetsUnquoted secured

corporate debt securities – – – – – –Unquoted shares in Malaysia – – – 1,649 – 1,649Golf club memberships – – – 50 – 50Quoted shares in Malaysia:Shariah approved equities – – – 903 – 903




Islamic banks – 3,813 – – – 3,813Staff loans – – – – 2,334 2,334Income due and accrued – – – – 26 26Due from subsidiaries – 235 – – 224 459Other receivables and deposits – – – – 58 58

Cash and bank balances – 75 – – – 75

– 8,192 – 2,602 9,609 20,403





loan

The fair values of loans receivable are equivalent to their carrying value as they are either receivable within 12 months from the date of recognition or are issued at interest rates comparable to those for similar instruments in the market.

Movement of allowance for impairment losses on receivables

31.3.2013 31.3.2012 1.4.2011Group rM’000 rM’000 rM’000

At beginning of year 13,799 16,324 18,548Charge/(recoveries) for the year 14,068 (2,525) (2,224)Written off during the year (1,212) – –

At end of year 26,655 13,799 16,324

(b) liquidity risk

Liquidity risk is the risk that the Group will not have available sufficient cash resources to meet its payment obligations without incurring material additional costs.

The Group assesses its liquidity risk by ensuring the following:

(i) the Group is able to meet its payment obligations under normal and stressed operating environments without suffering any loss;

(ii) additions/withdrawals from the Group’s investment funds are managed efficiently; and(iii) appropriate measures are in place to respond to liquidity risk.

As part of its liquidity management strategy, the Group has in place a framework capable of measuring and reporting on:

(i) daily cash flows;(ii) minimum liquidity holdings;(iii) cash flow forecasts covering a minimum period of 2 months and up to a maximum of one year;(iv) the composition and market values of company’s investment portfolios, including liquid holdings; and(v) the holding of liquid assets in the respective reinsurance, takaful and retakaful funds.

In order to manage the liquidity of the reinsurance/takaful/retakaful funds, the investment mandate requires that a certain proportion of the fund is maintained as liquid assets. Accordingly, the Group is required to maintain a minimum holding of low risk assets between 10% and 15% and no maximum limit on its placements in fixed and call deposits.



(b) liquidity risk (cont’d)

Maturity profiles

The table below summarises the maturity profile of the financial assets and liabilities of the Group based on remaining undiscounted contractual obligations, including interest payable and receivable.

For takaful, retakaful certificates and reinsurance contracts liabilities and assets, maturity profiles are determined based on estimated timing of net cash outflows from the recognised insurance/takaful liabilities.

Unearned premiums/contributions and the reinsurers’/retakaful operator’s share of unearned premiums/contributions have been excluded from the analysis as they are not contractual obligations.

Maturity profiles for 2013

no Carrying up to 1 - 5 over maturity value 1 year years 5 years date totalGroup rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Financial assets at FVtplQuoted shares in Malaysia: 6,537 – – – 6,537 6,537Structured products 5,494 5,494 – – – 5,494Warrants 42 – – – 42 42Shariah approved unit trust funds 117,094 – – – 117,094 117,094

HtM investmentsMalaysian government securities 79,131 3,285 13,115 110,444 – 126,844Unquoted corporate

debt securities: 149,756 50,216 77,945 47,537 – 175,698Government investment issues 542,884 31,032 85,109 610,079 – 726,220Commercial papers 14,882 14,882 – – – 14,882

aFS financial assetsUnquoted shares in Malaysia – – – – 44,503 44,503Unquoted corporate

debt securities 1,616,090 149,242 719,317 1,265,127 – 2,133,686Government investment issues 40,223 1,446 5,775 44,234 – 51,455Golf club memberships 228 – – – 228 228Quoted shares in Malaysia 67,267 – – – 67,267 67,267Quoted shares outside Malaysia 193 – – – 193 193Warrants 13 – – – 13 13Shariah approved unit trust funds 20,985 – – – 20,985 20,985





Maturity profiles for 2013 (cont’d)



with licensed:Commercial banks 166,118 166,920 – – – 166,920Investment banks 520,854 522,775 – – – 522,775

Islamic investment accounts with licensed:Co-operative bank 49,791 50,240 – – – 50,240Islamic banks 507,677 512,653 – – – 512,653Investment banks 27,608 27,873 – – – 27,873Development bank 137,284 137,121 – – – 137,121Building society 28,103 28,334 – – – 28,334Institutional trust deposit 84,848 65,233 24,417 – – 89,650Islamic repo placements 68,093 68,145 – – – 68,145Staff loans 9,226 2,779 4,414 2,033 – 9,226Income due and accrued 39,183 39,183 – – – 39,183Due from insurance

Pool accounts 32,134 32,134 – – – 32,134Other receivables, deposits

and prepayments 27,686 27,686 – – – 27,686Reinsurance/retakaful assets 355,736 122,499 121,221 81,385 30,630 355,735Insurance/takaful receivables 404,059 404,059 – – – 404,059Cash and bank balances 74,728 74,728 – – – 74,728

total financial and insurance assets 5,193,947 2,537,959 1,051,313 2,160,839 287,492 6,037,603

Borrowings (320,000) (17,900) (379,715) – – (397,615)Insurance/takaful

contract liabilities (3,202,940) (837,773) (862,753) (1,287,208) (215,206) (3,202,940)Insurance and takaful payables (211,724) (211,724) – – – (211,724)Other payables (116,975) (116,975) – – – (116,975)

total financial and insurance liabilities (3,851,639) (1,184,372) (1,242,468) (1,287,208) (215,206) (3,929,254)





no Carrying up to 1 - 5 over maturity value 1 year years 5 years date totalCompany rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

aFS financial assetsGolf club memberships 50 – – – 50 50Quoted shares in Malaysia 444 – – – 444 444


with licensed:Commercial banks 975 975 – – – 975Investment banks 6,632 6,634 – – – 6,634


Islamic banks 855 857 – – – 857Staff loans 1,879 851 1,028 – – 1,879Amounts due from subsidiaries 4,177 4,117 4,117Income due and accrued 12 12 – – – 12Other receivables, deposits

and prepayments 1,934 1,934 – – – 1,934Cash and bank balances 2,932 2,932 – – – 2,932

total financial and insurance assets 19,890 18,312 1,028 – 494 19,834

Borrowing (320,000) (17,900) (379,715) – – (397,615)Other payables (8,774) (8,774) – – – (8,774)

total financial and insurance liabilities (328,774) (26,674) (379,715) – – (406,389)








Financial assets at FVtplQuoted shares in Malaysia 9,072 – – – 9,072 9,072Structured products 12,296 6,828 – – 5,468 12,296Warrants 27 – – – 27 27Shariah approved unit trust funds 116,068 – – – 116,068 116,068

HtM investmentsIslamic BNM Monetary notes 1,988 1,988 – – – 1,988Malaysian government securities 5,805 255 1,276 7,858 – 9,389Unquoted corporate

debt securities 167,384 21,200 88,938 62,031 – 172,169Government investment issues 220,679 23,474 44,320 223,005 – 290,799Commercial papers 36,367 36,367 – – – 36,367

aFS financial assetsUnquoted shares in Malaysia 45,003 – – – 45,003 45,003Unquoted corporate

debt securities 1,331,770 142,940 798,291 793,833 – 1,735,064Malaysian government

securities 43,708 31,860 14,234 – – 46,094Government investment issues 190,306 22,024 108,357 87,758 – 218,139Golf club memberships 228 – – – 228 228Quoted shares in Malaysia 126,744 – – – 126,744 126,744Quoted shares outside Malaysia 224 – – – 224 224Warrants 75 – – – 75 75Shariah approved

unit trust funds 19,920 – – – 19,920 19,920




Co-operative bank 61,344 61,653 – – – 61,653Islamic banks 445,491 450,300 – – – 450,300Investment banks 40,427 41,228 – – – 41,228Development bank 153,424 157,122 – – – 157,122Building society 5,831 5,975 – – – 5,975






loans and receivables (cont’d)Institutional trust deposit 80,933 4,056 85,503 – – 89,559Islamic repo placements 9,105 9,273 – – – 9 ,273Staff loans 11,227 4,481 6,746 – – 11,227Income due and accrued 29,644 29,644 – – – 29,644Due from insurance

Pool accounts 19,969 19,969 – – – 19,969Other receivables, deposits


total financial and insurance assets 4,599,922 2,237,337 1,342,265 1,185,250 368,045 5,132,897

Borrowings (270,000) (278,711) – – – (278,711)Insurance/takaful

contract liabilities (2,887,330) (687,036) (872,829) (1,226,903) (100,562) (2,887,330)Insurance/takaful payables (178,101) (178,101) – – – (178,101)Other payables (110,574) (110,574) – – – (110,574)

total financial and insurance liabilities (3,446,005) ( 1,254,422) (872,829) (1,226,903) (100,562) (3,454,716)







HtM investmentsUnquoted corporate

debt securities 5,059 5,077 – – – 5,077

aFS financial assetsUnquoted shares in Malaysia 500 – – – 500 500Golf club memberships 50 – – – 50 50Quoted shares in Malaysia 623 – – – 623 623


with licensed: Commercial banks 8,266 8,292 – – – 8,292Investment banks 7,398 7,430 – – – 7,430


Islamic banks 3,909 3,922 3,922Staff loans 2,309 2,309 2,309Amount due from subsidiaries 537 537 – – – 537Income due and accrued 381 381 – – – 381Other receivables, deposits

and prepayments 327 327 – – – 327Cash and bank balances 11 11 11

total financial and insurance assets 29,370 28,286 – – 1,173 29,459

Borrowing (320,000) (314,253) – – – (314,253)Other payables (17,104) (17,104) – – – (17,104)

total financial and insurance liabilities (337,104) (331,357) – – – (331,357)







Financial assets at FVtplQuoted shares in Malaysia 14,641 – – – 14,641 14,641Structured products 12,019 – 12,019 – – 12,019Warrants 45 – – – 45 45Shariah approved unit trust funds 73,014 – - – 73,014 73,014Government investment issues 698 28 108 768 – 904Quoted debt securities 4,487 218 2,411 3,079 – 5,708

HtM investmentsIslamic BNM Monetary notes 4,996 5,000 – – – 5,000Malaysian government securities 56,832 57,508 – – – 57,508Unquoted corporate

debt securities 187,339 56,787 92,605 94,550 – 243,942Government investment issues 139,660 22,779 46,536 80,221 – 149,536Commercial papers 17,526 18,002 – – – 18,002

aFS financial assetsUnquoted shares in Malaysia 46,152 – – – 46,152 46,152Unquoted secured

corporate debt securities 1,005,360 124,582 632,637 485,727 – 1,242,946Malaysian government

securities 43,906 1,778 46,291 – – 48,069Government investment issues 170,753 6,788 116,498 80,063 – 203,349Golf club memberships 228 – – – 228 228Quoted shares in Malaysia 86,846 – – – 86,846 86,846Quoted shares outside Malaysia 341 – – – 341 341Shariah approved unit trust funds 14,473 – – – 14,473 14,473










Co-operative bank 85,069 85,542 – – – 85,542Islamic banks 264,157 262,242 3,587 – – 265,829Investment banks 1,507 1,517 – – – 1,517Development bank 91,405 92,368 – – – 92,368Building society 8,269 8,404 – – – 8,404Institutional trust deposit 77,187 3,869 85,413 – – 89,282Islamic repo placements 135,686 135,851 – – – 135,851Staff loans 12,618 7,578 5,040 – – 12,618Income due and accrued 23,174 23,174 – – – 23,174Due from insurance

Pool accounts 19,533 1,164 18,369 – – 19,533Other receivables, deposits


total financial and insurance assets 3,790,468 1,991,340 1,141,016 774,540 244,473 4,151,369

Borrowings (150,000) (7,125) (154,958) – – (162,083)Insurance/takaful

contract liabilities (2,379,156) (613,755) (647,748) (873,602) (244,051) (2,379,156)Insurance/takaful payables (112,989) (112,989) – – – (112,989)Other payables (122,289) (122,289) – – – (122,289)

total financial and insurance liabilities (2,764,434) (856,158) (802,706) (873,602) (244,051) (2,776,517)






HtM investmentsUnquoted corporate

debt securities: 6,967 130 7,011 – – 7,141

aFS financial assetsUnquoted shares in Malaysia 1,649 – – – 1,649 1,649Golf club memberships 50 – – – 50 50Quoted shares in Malaysia 903 – – – 903 903




Islamic banks 3,813 3,813 – – – 3,813Staff loans 2,334 2,334 – – – 2,334Amount due from subsidiaries 459 459 – – – 459Income due and accrued 26 26 – – – 26Other receivables, deposits

and prepayments 58 – – – 58 58Cash and bank balances 75 75 – – – 75

total financial and insurance assets 20,403 10,906 7,011 – 2,660 20,577

Borrowing (200,000) (9,500) (209,500) – – (219,000)Other payables (13,926) (13,926) – – – (13,926)

total financial and insurance liabilities (213,926) (23,426) (209,500) – – (232,926)




(c) Market risk

Market risk is the risk of loss arising from a change in the values of, or the income from, assets. A risk of loss also arises from volatility in asset prices, interest/profit rates, or exchange rates. Market risk includes the following elements:

(i) Equity price risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from stock market dynamics impacting equity prices;

(ii) Foreign exchange risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from a movement of or volatility in exchange; and

(iii) Interest/profit rate risk which is the risk of fluctuations in the fair value or future cash flows of a financial instrument arising from variability in interest/profit rates.

equity risk

Equity price risk is the risk that the fair value of future cash flows of a financial instrument fluctuates because of changes in market prices (other than those arising from interest rate/profit yield risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer or factors affecting similar financial instruments traded in the market.

The Group’s equity risk exposures relates to financial assets and financial liabilities whose values will fluctuate as a result of changes in market prices.

The Group’s price risk policy requires it to manage such risks by setting and monitoring objectives and constraints on investments, diversification plans, limits on investments in each country, sector, market and issuer, having regard also to such limits as stipulated by BNM for its reinsurance, takaful and retakaful subsidiaries. The Group complied with such limits as stipulated by BNM during the financial year and has no significant concentration of price risk.

The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on profit before tax and equity (inclusive of the impact on other comprehensive income). The correlation of variables have a significant effect in determining the ultimate impact on price risk, but to demonstrate the impact due to changes in variables, changes in variables are considered individually. It should be noted that movements in these variables are non-linear.



(c) Market risk (cont’d)

equity risk (cont’d)


Impact on Changes profit/ Impact on in market Surplus equity/ indices before tax Funds rM’ 000 rM’ 000

2013

GroupPrice + 5% 604 2,219Price - 5% (958) (2,219)

2012

GroupPrice +5% 914 5,979Price -5% (918) (5,917)

2011

GroupPrice +5% 1,229 6,751Price -5% (1,233) (6,852)

Management is of the opinion that the Company is not subject to significant equity price risk and, hence, a sensitivity analysis has not been performed.

Foreign exchange risk/currency risk

Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate due to volatility in foreign exchange rates.

As the Group’s business is conducted primarily in Malaysia, the Group’s functional and presentation currency is Malaysian Ringgit. The Group’s main foreign exchange risk from recognised assets and liabilities are resulting from reinsurance and retakaful transactions of the reinsurance and retakaful subsidiaries. These balances are expected to be settled and realised on net basis within 12 months; accordingly, the impact arising from sensitivityin foreign exchange rates is deemed to be minimal.




(c) Market risk (cont’d)

equity risk (cont’d)

Interest/profit rate risk

The Group is exposed to fair value interest/profit rate risk where changes to interest/profit rates result in changes to fair values rather than cash flows on assets such as fixed interest income assets. Conversely, floating rate loans expose the Group to cash flow interest/profit rate risk.

The earnings of the Group are affected by changes in market interest/profit rates due to the impact such changes have on interest/profit income from cash and cash equivalents, including investments in fixed/Islamic deposits. Fixed Income portfolio is inversely related to profit rates hence it is the source of portfolio volatility.

The Group manages its interest/profit rate risk by matching, where possible, the duration and profile of assets and liabilities to minimise the impact of mismatches between the value of assets and liabilities from interest/profit rate movements.

The nature of the Group’s exposure to interest/profit rate risk and its objectives, policies and processes for managing interest/profit rate risk have not changed significantly from the previous financial year.

The following tables set out the carrying amount, by maturity, of the Group’s financial instruments that are exposed to interest/profit rate risk.


A change of 25 basis points (“bp”) in interest/profit rates at the reporting date would have increased/(decreased) the value of the portfolio of fixed-income investment by the amounts shown below.

Impact on Changes equity/ in variable Funds rM’000

2013

GroupInterest/profit rates +25 bp (21,609)Interest/profit rates -25 bp 21,609

2012


2011



39. otHer rISKS

(a) property risk

Property risk is the risk associated with the Group’s investment in property or real estate for own occupancy, investment or rental purpose. The Operational Risk of the Group’s Property is controlled by having detailed operation manual. The manual describes the responsibilities in relation to management of the properties to maintain quality and satisfied tenants.

The financial risk of declining tenants are managed through careful selection of properties, having quality tenants with long term tenancies and continuously maintaining and upgrading facilities.

The Group has no significant exposure of property risk.

(b) operational risk

Operational risk is the risk of loss arising from system failure, human error, fraud or external events. When controls fail to perform, operational risks can cause damage to reputation, have legal or regulatory implications or can lead to financial loss. The Group cannot expect to eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and responding to potential risks, the Group is able to manage risks. Controls include effective segregation of duties, access controls, authorisation and reconciliation procedures, staff education and assessment processes, including the use of internal audit. Business risks such as changes in environment, technology and the industry are monitored through the Group’s strategic planning and budgeting process.

(c) Shariah non-Compliance risk

Shariah non-compliance risk refers to possible failure to meet the obligation of Shariah principles. When controls fail to perform, Shariah non-compliance risk can cause reputational and operational damage, have regulatory implications or can even lead to financial loss. The takaful and retakaful subsidiaries mitigate such risk by initiating,monitoring and responding to a robust Shariah control framework which includes the establishment of a Shariah Committee for monitoring and oversight purposes.

(d) Compliance risk

Compliance risk is the risk arising from violations of, or non conformance with business principles, internal policies and procedures, related laws, rules and regulations governing the Group’s products, services and activities.

Consequently, the exposure to this risk can damage the Group’s reputation, lead to legal or regulatory sanctions and/or financial loss.

The Group has established a Compliance Division at the Group and subsidiary level to oversee and monitor all compliance aspects in observing regulatory requirements. In this respect, it has developed internal policies and procedures to ensure compliance with all applicable laws and guidelines issued by the regulatory authorities.



40. InSuranCe, taKaFul anD retaKaFul FunDS

Consolidated Income Statement by Fund

(i) For the year ended 31 March 2013

General reinsurance & General Family General Family elimination shareholders’ takaful takaful retakaful retakaful & fund fund fund fund fund adjustment Consolidated rM’000 rM’000 rM’000 rM’000 rM’000 rM’000 rM’000

Gross earned premiums/contributions 1,249,025 184,179 542,343 82,837 53,246 (21,280) 2,090,350

Premiums/contributions ceded to reinsurers/retakaful (181,089) (56,169) (14,607) (11,232) (7,807) 19,427 (251,477)

net earned premiumsand contributions 1,067,936 128,010 527,736 71,605 45,439 (1,853) 1,838,873

Investment income 139,661 10,403 51,231 2,491 450 (52,314) 151,922Realised gains and losses 16,831 1,896 11,424 244 63 – 30,458Fair value gains and losses 113 9 5,483 (47) (2) (1,042) 4 ,514Fee and commission income 290,917 10,806 (75) 1,093 191 (277,856) 25,076Other operating revenue 5,082 – – 744 41 101 5 ,968

other revenue 452,604 23,114 68,063 4,525 743 (331,111) 217,938

Gross claims and benefit paid (686,707) (107,394) (165,843) (31,985) (49,584) (47,130) (1,088,643)Claims and benefit ceded to

reinsurers/retakaful 193,490 21,648 21,167 1,362 5,672 – 243,339Gross change in

contract liabilities 4,943 24,378 (282,997) (25,396) (12,351) 47,130 (244,293)Change in contract and

certificate liabilities ceded to reinsurers/ retakaful (137,934) 2,882 65,147 (1,249) 3,618 – (67,536)

net claims and benefits (626,208) (58,486) (362,526) (57,268) (52,645) – (1,157,133)


40. InSuranCe, taKaFul anD retaKaFul FunDS (Cont’D)

Consolidated Income Statement by Fund (cont’d)

(i) For the year ended 31 March 2013 (cont’d)


Fee and commission expense (426,127) (67,441) (158,892) (28,727) (6,070) 241,404 (445,853)Management expenses (214,647) – – – – 41,834 (172,813)Finance cost (16,063) – – – – 1,641 (14,422)Other operating expenses (19,031) (282) (11,309) (569) – 9,909 (21,282)Changes in expenses liability (3,709) – – – – – (3,709)

other expenses (679,577) (67,723) (170,201) (29,296) (6,070) 294,788 (658,079)

Share of results of associates – – – – – 1,308 1,308

operating profit before surplus transfer, zakat and tax 214,755 24,915 63,072 (10,434) (12,533) (36,868) 242,907

Zakat (400) – – – – – (400)Tax expenses (56,267) (7,718) (4,444) – – 10,083 (58,346)

net profit after surplus transfer 158,088 17,197 58,628 (10,434) (12,533) (26,785) 184,161

Surplus attributable to takaful participants – (17,197) (58,628) – 1,227 3,102 (71,496)

net profit/(loss) for the year attributable to equity holders of the Company 158,088 – – (10,434) (11,306) (23,683) 112,665





(ii) For the year ended 31 March 2012


Gross earned premiums/contributions 1,178,499 209,314 501,636 59,437 26,000 (20,364) 1,954,522

Premiums/contributions ceded to reinsurers/retakaful (206,053) (23,451) (48,302) (10,634) (4,377) 17,670 (275,147)

net earned premiums and contributions 972,446 185,863 453,334 48,803 21,623 (2,694) 1,679,375

Investment income 144,254 10,782 41,902 1,223 487 (60,282) 138,366Realised gains and losses 9,951 2,580 9,461 131 80 – 22,203Fair value gains and losses 165 (133) 1,172 1 – – 1 ,205Fee and commission income 261,177 7,278 70 1,120 108 (245,280) 24,473Other operating revenue 7,923 – – 476 – (3,695) 4 ,704

other revenue 423,470 20,507 52,605 2,951 675 (309,257) 190,951

Gross claims and benefit paid (610,705) (122,249) (141,537) (24,990) (19,788) – (919,269)Claims and benefit ceded

to reinsurers and retakaful operators 39,547 10,205 82,374 3,033 2,428 – 137,587

Gross change in contract liabilities (258,221) (17,557) (238,604) (9,688) (2,860) – (526,930)

Change in contract and certificate liabilities ceded to reinsurers and retakaful operators 227,893 (8,874) (2,161) (1,079) 1,208 – 216,987

net claims and benefits (601,486) (138,475) (299,928) (32,724) (19,012) – (1,091,625)




(ii) For the year ended 31 March 2012 (cont’d)


Fee and commission expense (371,761) (54,486) (144,516) (20,793) (3,342) 209,297 (385,601)Management expenses (191,195) – – – – 42,173 (149,022)Finance cost (14,544) – – – – 2,375 (12,169)Other operating expenses (8,775) (466) (5,857) (398) (34) 8,311 (7,219)Change in expense liabilities 400 – – – – – 400

other expenses (585,875) (54,952) (150,373) (21,191) (3,376) 262,156 (553,611)

Share of results of associates – – – – – (30,110) (30,110)

operating profit before surplus transfer, zakat and tax 208,555 12,943 55,638 (2,161) (90) (79,905) 194,980

Zakat (400) – – – – – (400)Tax expenses (54,208) (2,270) (4,498) – – 12,500 (48,476)

net profit after surplus transfer 153,947 10,673 51,140 (2,161) (90) (67,405) 146,104

Surplus attributable to takaful participants – (10,673) (51,140) – 90 4 ,988 (56,735)

net profit/(loss) for the year attributable to equity holders of the Company 153,947 – – (2,161) – (62,417) 89,369




Consolidated Statement of Financial position by Fund

(i) as at 31 March 2013


assetsProperty, plant

and equipment 132,773 – – – – 105,192 237,965Investment properties 6,200 – 105,192 – – (105,192) 6,200Intangible assets 13,189 – – – – – 13,189Deferred tax assets 7,906 317 – 37 – 2,695 10,955Investment in associates 77,615 – – – – 10,841 88,456Financial assets:

Financial assets at fair value through profit or loss (“FVTPL”) 7,317 1,153 120,194 480 23 – 129,167

Held-to-maturity (“HTM”) investments 339,005 74,621 352,546 16,719 3,762 – 786,653

AFS financial assets 1,030,206 82,117 644,184 28,081 4,914 – 1,789,502Loans and receivables (“LAR”) 1,253,679 123,093 409,891 39,402 11,351 (138,811) 1,698,605

Reinsurance and retakaful assets 224,716 62,912 89,843 5,023 5,482 – 387,976

Insurance and takaful receivables 229,470 28,804 121,439 23,283 1,063 – 404,059

Tax recoverable 15,909 – – 8 6 – 15,923Cash and bank balances 10,131 32,549 32,026 13 9 – 74,728

total assets 4,252,617 405,566 1,875,315 113,046 26,610 (1,029,776) 5,643,378



Consolidated Statement of Financial position by Fund (cont’d)

(i) as at 31 March 2013 (cont’d)



Participants’ funds – 20,346 214,339 – – (530) 234,155Borrowings 320,000 – – – – – 320,000Insurance and takaful

contract liabilities 1,667,263 301,553 1,513,237 103,203 17,705 (10,000) 3,592,961Insurance and

takaful payables 107,428 20,299 65,253 9,843 8,901 – 211,724Other payables 67,386 57,515 75,214 – – (83,140) 116,975Deferred tax liabilities 6,655 – 2,685 – 4 3,235 12,579Provision for taxation 12,085 5,853 4,587 – – – 22,525Provision for zakat 515 – – – – – 515

total liabilities and participant’s funds 2,181,332 405,566 1,875,315 113,046 26,610 (90,435) 4,511,434

eQuItYShare capital 1,124,569 – – – – (911,499) 213,070Reserves 946,716 – – – – (27,842) 918,874

total equity attributableto equity holders of the Company 2,071,285 – – – – (939,341) 1,131,944

total liabilities, participants’ fundsand equity 4,252,617 405,566 1,875,315 113,046 26,610 (1,029,776) 5,643,378





(ii) as at 31 March 2012



and equipment 136,198 – – – – 101,729 237,927Investment properties 5,600 – 103,828 – – (103,828) 5,600Intangible assets 13,970 – – – – – 13,970Deferred tax assets 7,596 1,195 – – – 2,845 11,636Investment in associates 77,615 – – – – 8,768 86,383Financial assets:

Financial assets at fair value through profit or loss (“FVTPL”) 17,953 1,049 118,423 38 – – 137,463


AFS financial assets 1,101,127 139,601 548,757 14,748 3,865 (50,120) 1,757,978Loans and receivables (“LAR”) 1,025,882 70,418 401,663 33,199 993 (84,079) 1,448,076

Reinsurance and retakaful assets 357,636 42,156 24,696 6,529 1,864 – 432,881

Insurance and takaful receivables 150,100 25,463 130,382 23,281 2,437 – 331,663

Tax recoverable 15,466 – – 7 4 – 15,477Cash and bank balances 2,760 22,212 55,581 9 9 – 80,571Non-current asset held for sale 56,601 – – – – – 56,601

total assets 4,112,970 345,811 1,516,679 89,302 12,873 (1,029,186) 5,048,449




(ii) as at 31 March 2012 (cont’d)



Participants’ funds – 9,622 161,757 – 1,302 (2,145) 170,536Borrowings 320,000 – – – – (50,000) 270,000Insurance and takaful

contract liabilities 1,638,444 293,710 1,217,377 81,860 5,354 (10,000) 3,226,745Insurance and

takaful payables 88,110 13,827 69,774 4,069 2,321 – 178,101Other payables 57,740 26,075 59,943 3,322 3,871 (40,377) 110,574Deferred tax liabilities 8,162 – 2,978 51 25 3,015 14,231Provision for taxation 11,957 2,577 4,850 – – – 19,384Provision for zakat 390 – – – – – 390

total liabilities and participants’ funds 2,124,803 345,811 1,516,679 89,302 12,873 (99,507) 3,989,961

eQuItYShare capital 1,124,569 – – – – (911,499) 213,070Reserves 863,598 – – – – (18,180) 845,418

total equity attributable to equity holders of the Company 1,988,167 – – – – (929,679) 1,058,488

total liabilities, participants’ fundsand equity 4,112,970 345,811 1,516,679 89,302 12,873 (1,029,186) 5,048,449





(iii) as at 1 april 2011



and equipment 125,932 – – – – 103,518 229,450Investment properties 28,600 – 103,518 – – (103,518) 28,600Intangible assets 12,970 – – – – – 12,970Deferred tax assets 8,188 1,492 – – – 2,855 12,535Investment in subsidiaries 794,501 – – – – (794,501) –Investment in associates 77,615 – – – – 39,927 117,542Financial assets:

Financial assets at fair value through profit or loss (“FVTPL”) 14,912 1,105 88,782 70 35 – 104,904


AFS financial assets 880,466 130,071 397,820 6,369 3,648 (50,315) 1,368,059Loans and receivables (“LAR”) 1,037,605 60,449 305,503 45,093 7,824 (152,240) 1,304,234

Reinsurance and retakaful assets 146,597 34,351 26,857 7,368 656 – 215,829

Insurance and takaful receivables 138,173 32,798 102,662 13,929 920 – 288,482

Tax recoverable 11,428 – – 6 4 – 11,438Cash and bank balances 9,482 47,511 65,756 14 181 – 122,944Non-current asset held for sale 34,173 – – – – – 34,173

total assets 3,557,607 350,434 1,209,917 76,853 16,976 (954,274) 4,257,513




(iii) as at 1 april 2011 (cont’d)



Participants’ funds – (1,315) 105,900 70 1,346 2,689 108,690Borrowings 200,000 – – – – (50,000) 150,000Insurance and takaful

contract liabilities 1,412,707 291,733 997,529 73,510 2,494 (10,000) 2,767,973Insurance and

takaful payables 65,394 7,932 34,406 3,250 2,007 – 112,989Other payables 97,847 51,520 67,748 – 11,120 (105,946) 122,289Deferred tax liabilities 6,915 – 2,566 23 9 2,981 12,494Provision for taxation – 564 1,768 – – – 2,332Provision for zakat 573 – – – – – 573

total liabilities and participants’ funds 1,783,436 350,434 1,209,917 76,853 16,976 (160,276) 3,277,340

eQuItYShare capital 1,014,569 – – – – (801,499) 213,070Reserves 759,602 – – – – 7,501 767,103

total equity attributable to equity holders of the Company 1,774,171 – – – – (793,998) 980,173

total liabilities, participants’ fundsand equity 3,557,607 350,434 1,209,917 76,853 16,976 (954,274) 4,257,513

41. SIGnIFICant eVentS

During the year, the Company settled its Islamic Medium Term Notes and its short term revolving credit facility amounting to RM200 million and RM120 million respectively via the issuance of Sukuk Mudharabah amounting to RM120 million and a drawdown of its Islamic revolving credit facility amounting to RM200 million. The details of these transactions are further disclosed in Note 25.



42. FaIr ValueS oF FInanCIal InStruMentS

FRS 7 Financial Instruments: Disclosures requires the classification of financial instruments held at fair value according to a hierarchy that reflects the significance of inputs used in making the measurements, in particular, whether the inputs used are observable or unobservable. The following levels of hierarchy are used for determining and disclosing the fair value of the Group and of the Company’s financial instruments:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities

Level 2 - Inputs that are based on observable market data, either directly or indirectly

Level 3 - Inputs that are not based on observable market data

As at the reporting date, the Group and the Company held the following financial assets that are measured at fair value:

level 1 level 2 level 3 totalGroup rM’000 rM’000 rM’000 rM’000

31.3.2013


Quoted shares in Malaysia 6,537 – – 6,537Structured products 5,494 – – 5,494Warrants 42 – – 42Shariah approved unit trust funds 117,094 – – 117,094

129,167 – – 129,167


Unquoted debt securities – 1,616,090 – 1,616,090Golf club memberships – – 228 228Quoted shares in Malaysia 67,267 – – 67,267Quoted shares outside Malaysia 193 – – 193Warrants 13 – – 13Shariah approved unit trust funds 20,985 – – 20,985Government investment issues – 40,223 – 40,223

88,458 1,656,313 228 1,744,999


42. FaIr ValueS oF FInanCIal InStruMentS (Cont’D)

level 1 level 2 level 3 totalGroup (cont’d) rM’000 rM’000 rM’000 rM’000

31.3.2012


Quoted shares in Malaysia 9,072 – – 9,072Structured products – 12,296 – 12,296Warrants 27 – – 27Shariah approved unit trust funds 116,068 – – 116,068

125,167 12,296 – 137,463


Malaysian government securities – 43,708 – 43,708Unquoted debt securities – 1,331,770 – 1,331,770Golf club memberships – – 228 228Quoted shares in Malaysia 126,744 – – 126,744Quoted shares outside Malaysia 224 – – 224Warrants 75 – – 75Shariah approved unit trust funds 19,920 – – 19,920Government investment issues – 190,306 – 190,306

146,963 1,565,784 228 1,712,975

1.4.2011


Quoted shares in Malaysia 14,641 – – 14,641Structured products – 12,019 – 12,019Warrants 45 – – 45Shariah approved unit trust funds 73,014 – – 73,014Government investment issues – 698 – 698Quoted debt securities 4,487 – – 4,487

92,187 12,717 – 104,904


Malaysian government securities – 43,906 – 43,906Unquoted debt securities – 1,005,360 – 1,005,360Golf club memberships – – 228 228Quoted shares in Malaysia 86,846 – – 86,846Quoted shares outside Malaysia 341 – – 341Shariah approved unit trust funds 14,473 – – 14,473Government investment issues – 170,753 – 170,753

101,660 1,220,019 228 1,321,907



42. FaIr ValueS oF FInanCIal InStruMentS (Cont’D)

level 1 level 2 level 3 totalCompany rM’000 rM’000 rM’000 rM’000

31.3.2013


Golf club memberships – – 50 50Quoted shares in Malaysia 444 – – 444

444 – 50 494

31.3.2012



623 – 50 673

1.4.2011



903 – 50 953


43. SuppleMentarY InForMatIon - BreaKDoWn oF retaIneD proFItS Into realISeD anD unrealISeD proFItS or loSSeS

The breakdown of the retained profits of the Group and of the Company as at 31 March 2013 into realised and unrealised profits or losses is presented in accordance with the directives issued by Bursa Malaysia Securities Berhad dated 25 March 2010 and 20 December 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.


Realised and unrealised profits / (losses)of the Company and its subsidiaries:- Realised 759,885 669,843 293,561 295,728- Unrealised 1,892 3,251 1,424 1,891

761,777 673,094 294,985 297,619

Share of accumulated losses from associated companies:- Realised (6,306) (7,614) – –- Unrealised – – – –

755,471 665,480 294,985 297,619

Less: Consolidation adjustments 2,492 3,800 – –

Total retained profits 757,963 669,280 294,985 297,619

Financial Statements - MNRB profit for the year 112,665 24,532 ... financial statements for the...

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Transcript of Financial Statements - MNRB profit for the year 112,665 24,532 ... financial statements for the...