Laporan Tahunan 2013 Annual Report - ECM Libra
Transcript of Laporan Tahunan 2013 Annual Report - ECM Libra
Laporan Tahunan 2013 Annual Report
ECM Libra Financial Group Berhad (713570-K)
3 CorporateInformation
4 Directors’Profile
8 GroupChiefExecutiveOfficer
9 BoardAudit&RiskManagement CommitteeReport
11 CorporateGovernanceStatement
18 Chairman’sStatement
20 NoticeofAnnualGeneralMeeting
24 StatementAccompanying NoticeofAnnualGeneralMeeting
26 Directors’Report
32 StatementbyDirectors
32 StatutoryDeclaration
33 Auditors’Report
35 StatementsofFinancialPosition
38 StatementsofComprehensive Income
40 StatementsofChangesinEquity
44 StatementsofCashFlows
48 NotestotheFinancialStatements
144 OtherInformation
FormofProxy
contents
corporate information
DIRECTORSDato’SeriKalimullahbinMasheerulHassan(Chairman)Dato’Ab.HalimbinMohyiddin(ViceChairman)MrLimKianOnnDatukKamarudinbinMdAliDato’OthmanbinAbdullahEnMahadzirbinAzizanMrLumSingFai
SECRETARIESMsIreneLowYuetChunMsChanSoonLee
AUDITORSMessrsErnst&YoungCharteredAccountantsLevel23A,MenaraMileniumJalanDamanlelaPusatBandarDamansara50490KualaLumpurTel :03-74958000Fax:03-20959076
REGISTRARTricorInvestorServicesSdnBhdLevel17,TheGardensNorthTowerMidValleyCityLingkaranSyedPutra59200KualaLumpurTel :03-22643883Fax :03-22821886
REGISTERED OFFICE2ndFloor,WestWing,BangunanECMLibra8JalanDamansaraEndahDamansaraHeights50490KualaLumpurTel :03-20891888Fax :03-20961188
BUSINESS ADDRESSGroundFloor,EastWing,BangunanECMLibra8JalanDamansaraEndahDamansaraHeights50490KualaLumpurTel :03-20891888Fax :03-20961188
WEBSITEwww.ecmlibra.com
LISTINGMainMarketofBursaMalaysiaSecuritiesBerhad
ECMLibraFinancialGroupBerhadANNUALREPORT20133
directors’ profile
Dato’SeriKalimullahbinMasheerulHassanChairman/Non-IndependentNon-Executive
Dato’SeriKalimullahbinMasheerulHassan,aMalaysian,aged55,beganhiscareerinjournalismin1979andmovedontothecorporatesector in1995.Hehasgainedvastcorporateexperience,havingheldkeypositions invariousMalaysianlistedcorporations.InSeptember2002,Dato’SeriKalimullahwasappointedaschairmanofthenationalnewsagency,Bernama,foratwo-yeartermbyDYMMYangdi-PertuanAgongbutresignedtotakeonhispositionasGroupEditor-in-ChiefinTheNewsStraitsTimesPress(M)Bhd(“NSTP”)on1January2004.HeleftasGroupEditor-in-Chiefon31December2005uponexpiryofhiscontractandreturnedtohis financialservicesbusiness.HewasappointedDeputyChairmanofNSTPon1January2006andresignedon31December2008.Dato’SeriKalimullahwasappointedbytheFederalGovernmentasamemberoftheNationalUnityAdvisoryPanelon1January2005foratwo-yearterm.Hewasre-appointedforanothertwo-yeartermon1January2007.
Dato’SeriKalimullahwasappointedChairmanoftheBoardofDirectors(“Board”)ofECMLibraFinancialGroupBerhad(“ECMLFG”or“Company”)on16June2006.Hewasre-designatedExecutiveChairman&CEOwitheffectfrom1May2007,apositionheheldtill5February2010.On6February2010,hewasre-designatedChairmanoftheCompany.HeattendedsixoftheeightBoardmeetingsheldduringthefinancialyearended31January2013.
Dato’SeriKalimullahisalsoadirectorofAirAsiaXBerhadandatrusteeofECMLibraFoundation.HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
Dato'Ab.HalimbinMohyiddinViceChairman/IndependentNon-Executive
Dato’ Ab. Halim bin Mohyiddin, a Malaysian, aged 67, serves on the Board of Amway (Malaysia) Holdings Berhad, Digi.ComBerhad, HeiTech Padu Berhad, Idaman Unggul Berhad, KNM Group Berhad, Kumpulan Perangsang Selangor Berhad, UtusanMelayuMalaysiaBerhad,IdrisHydraulic(Malaysia)Berhad,TahanMalaysiaBerhad,AmcorpPropertiesBerhad,RCECapitalBerhadandPetronasGasBerhad.
Dato’Ab.HalimgraduatedwithaBachelorofEconomics(Accounting)degreefromUniversityofMalayain1971andthereafterjoinedUniversitiKebangsaanMalaysiaasaFacultymemberoftheFacultyofEconomics.HeobtainedhisMastersofBusinessAdministrationdegreefromUniversityofAlberta,Canadain1973.
Dato’Ab.Halimretired fromKPMGMalaysia inOctober2001,a firmhe joined in1977andhadhisearlyaccountingtraininginMalaysiaandtheUnitedStates.Hewasmadepartnerofthefirmin1985.Atthetimeofhisretirement,hewasthepartnerin-charge of the Assurance and Financial Advisory Services Divisions of the firm and was also looking after the Securede-CommercePracticeofthefirm.
Dato’Ab.HalimwasappointedViceChairmanofECMLFGon26March2007.HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.HeisamemberoftheBoardNominationCommittee(“BNC”)andBoardRemunerationCommittee(“BRC”)ofECMLFG. HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
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directors’ profile continued
DatukKamarudinbinMdAliIndependentNon-Executive
Datuk Kamarudin bin Md Ali, a Malaysian, aged 63, is a retired police commissioner. He holds a Masters in Science(Engineering)fromUniversityofBirmingham,UnitedKingdomandBachelorofScience(Honours)(MechanicalEngineering)fromUniversityofStrathclyde,Glasgow,Scotlandandhasattendedspecialisedcoursesat theRoyalCollegeofDefenseStudies, United Kingdom and University of Pittsburgh in the United States. Datuk Kamarudin retired from the RoyalMalaysiaPolice(“RMP”)on4May2006withmorethan30years’experiencewithextensiveknowledgeandskillsinlogisticsandfinancialmanagement,manpowerdevelopment,strategicplanning,trainingandcrimesuppressionandprevention,gainedthroughawiderangeofcommandpostsandmanagerialcapacitiesheldduringhistenureintheRMP.HeisactivelyinvolvedinNGOsandisnotedforhiscontributiontotheMalaysianCrimePreventionFoundationofwhichheisoneofthethreeViceChairmen.
DatukKamarudinwasappointedtotheBoardofECMLFGon16June2006. HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.HeistheChairmanoftheBoardAudit&RiskManagementCommittee(“BARMC”)andamemberoftheBNCofECMLFG.
DatukKamarudin isalsoadirectorofAnnJooResourcesBerhad,MasterskillEducationGroupBerhad,GabunganAQRSBerhadandLibraInvestBerhad.HeresignedfromtheBoardofECMLIBon14December2012.HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
MrLimKianOnnNon-IndependentNon-Executive
MrLimKianOnn,aMalaysian,aged56,isamemberoftheInstituteofCharteredAccountantsinEngland&WalesandtheMalaysianInstituteofAccountants.HeservedhisarticleshipwithKMGThomsonMcLintockinLondonforfouryearsandwasaconsultantwithAndersenConsultingfrom1981to1984.Between1984and1993,hewaswithHongLeongGroup,MalaysiaasanExecutiveDirectorinthestockbrokingarmresponsibleforcorporatefinance,researchandinstitutionalsales.MrLimfoundedtheLibraCapitalGroupin1994andco-foundedtheECMLibraGroupin2002.
MrLimwasappointedtotheBoardofECMLFGon16June2006andre-designatedManagingDirectorwitheffectfrom1May2007,apositionheheldtill5August2010.On6August2010,hewasre-designatedNon-ExecutiveDirectoroftheCompany.HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.
MrLimisalsothenon-executiveChairmanofPlatoCapitalLimited,acompanylistedontheStockExchangeofSingapore,adirectorofAirAsiaXBerhadandatrusteeofECMLibraFoundation.HeresignedfromtheBoardofECMLibraInvestmentBankBerhad(“ECMLIB”)on14December2012.HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
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directors’ profilecontinued
EnMahadzirbinAzizanIndependentNon-Executive
EnMahadzirbinAzizan,aMalaysian,aged64,isaBarrister-At-LawfromLincoln’sInn,London,UnitedKingdomandwascalledtotheEnglishBarin1978.
EnMahadzirhasheldkeypositionsbothintheprivateandpublicsectors.Aftergraduation,hejoinedtheJudicialandLegalServiceoftheMalaysianGovernmentasaDeputyPublicProsecutorandFederalCounselandsubsequentlyventuredintotheprivatesectorandservedMalaysianInternationalShippingCorporationBerhadandIsland&PeninsularBerhad,thepropertyarmofPermodalanNasionalBerhad. Whilst intheprivatesector,healsoservedasAhliMajlisMARA,directorofAmanahRayaBerhadandTabungHajigroupofcompaniesaswellasvariousotherdirectorshipsingovernment-linkedcompanies.
EnMahadzirwasappointedtotheBoardofECMLFGon16June2006.HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.HeistheChairmanoftheBRC,amemberoftheBARMCandBNCofECMLFG.
EnMahadzir isalsoadirectorofSyarikatTakafulMalaysiaBerhadandLibraInvestBerhad.HeresignedfromtheBoardofECMLIBon14December2012.HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
Dato'OthmanbinAbdullahIndependentNon-Executive
Dato’OthmanbinAbdullah,aMalaysian,aged64, isanaccountantbyprofessionwithextensive financialknowledgeandskills.Hebeganhiscareerin1977asTreasuryAccountantattheAccountantGeneral’sDepartmentandheldvariouspositions intheDepartment.HewassecondedtoSabahElectricityBoardasDeputyGeneralManager (Finance) from1987to1993andsubsequentlywastransferredbacktotheDepartmentandwasappointedasAccountantGeneralofMalaysiafrom2003to2005.
Dato’OthmanwasappointedtotheBoardofECMLFGon16June2006.HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.HeistheChairmanoftheBNCandamemberoftheBARMCofECMLFG.
Dato’OthmanisalsoadirectorofSyarikatPerumahanNegaraBerhadandSyarikatTakafulMalaysiaBerhad.Heresignedfrom the Board of ECMLIB on 14 December 2012. He has no family relationship with the other directors or majorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
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directors’ profilecontinued
MrLumSingFaiNon-IndependentNon-Executive
MrLumSingFai,aMalaysian,aged48,istheManagingDirectorofCapitalMarketsforAmcorpGroupBerhad.
MrLum,agraduateofUniversityofMalayawithaBachelorofEconomics(Honours)inBusinessAdministration,hasover25yearsofextensiveexperienceinbankingandfinance.AsManagingDirectoroftheCapitalMarketsdivisionofAmcorpGroupBerhad,hehassuccessfully ledabroadrangeoffinancialserviceendeavoursduringhis18years’tenure. Priorto joiningAmcorpGroupBerhad,MrLumwasattachedtoSouthernBankBerhadfrom1987to1994workinginvariouscapacitiesfromoperationstocorporatebanking.HealsositsontheBoardofthecompanieswithintheAmcorpGroupBerhad.
MrLumwasappointedtotheBoardofECMLFGon6February2008.HeattendedalleightBoardmeetingsheldduringthefinancialyearended31January2013.HeisamemberoftheBNCandBRCofECMLFG.
MrLumresignedfromtheBoardofECMLIBon14December2012.HehasnofamilyrelationshipwiththeotherdirectorsormajorshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
ECMLibraFinancialGroupBerhadANNUALREPORT20137
group chief executive officer
MsAzlinbintiArshadMsAzlinbintiArshad,aMalaysian,aged40,holdsaBachelor’sDegreeinAccounting&Finance(Hons.)fromUniversityofGlamorgan,SouthWales,TheUnitedKingdom.
MsAzlinhasextensiveexperienceinCorporateFinancespanning16years,havingbeenattachedtotheCorporateFinancedepartmentofthethenAmanahMerchantBankBerhad(nowAllianceInvestmentBankBerhad)andsubsequentlythethen Aseambankers Malaysia Berhad (now Maybank Investment Bank Berhad). She left Maybank Investment BankBerhadin2009tojoinECMLibraInvestmentBankBerhadasHeadofCorporateFinance&Director,InvestmentBanking,andsubsequentlyassumedthepostofDeputyChiefExecutiveOfficerinDecember2010tillDecember2012.ShewasaQualifiedSeniorPersonnelregisteredwiththeSecuritiesCommission.ShehasextensiveCorporateFinanceexperiencewhereshehasbeendirectlyinvolved,atvariouslevels,ininitialpublicofferings,secondaryofferings,reversetake-overs,mergersandacquisitions, listingofRealEstate InvestmentTrusts,generaloffers,andprivatedebtsecurities,amongstothers. Her experience and network also extends into the private equity arena where she has worked with local andinternationalfirmsinstructuringdeals.
MsAzlinwasappointedGroupChiefExecutiveOfficerofECMLibraFinancialGroupBerhad(“ECMLFG”)on22January2013. She has no interest in the securities of ECMLFG or its subsidiaries, no family relationship with the directors orsubstantialshareholdersofECMLFG,noconflictofinterestwithECMLFGandhasnoconvictionforoffenceswithinthepasttenyears.
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board audit & risk management committee report
Constitution
TheBoardAudit&RiskManagementCommittee(“BARMC”)wasestablishedon28June2006bytheBoardofDirectors.
Composition
ThemembersoftheBARMCduringthefinancialyearended31January2013were:
Chairman : DatukKamarudinbinMdAli (IndependentNon-ExecutiveDirector)
Members : Dato’OthmanbinAbdullah (IndependentNon-ExecutiveDirector)
EnMahadzirbinAzizan (IndependentNon-ExecutiveDirector)
Functions and Responsibilities of the BARMC
ThekeyfunctionsandresponsibilitiesoftheBARMCare:
(i) to review and approve the internal and statutory audit plans and the audit reports, and evaluate internal controls, including risk management andcompliancematters;
(ii) toreviewthequarterlyfinancialresultsandyear-endfinancialstatementsoftheGroupandtheCompany;
(iii) toconsiderrelatedpartytransactionsandconflictofinterestsituationsthatmayarisewithinthecompaniesintheGroup;and
(iv) to review the appointment/re-appointment of the external auditors and their fees, and the scope, competency and resources of the internal audit function.
Activities
Duringthefinancialyearended31January2013,seven(7)meetingswereheldwhichwereattendedbyallBARMCmembers.
TheBARMCreviewedthequarterlyfinancialstatementsandauditedfinancialstatementsoftheCompanyandGrouppriortosubmissiontoBankNegaraMalaysia (“BNM”) for approval and its subsequent release to Bursa Malaysia Securities Berhad (“Bursa Securities”). In reviewing the quarterly financialstatementsandauditedfinancialstatementsoftheCompanyandGroup,theBARMCensuredfairandtransparentreportingandpromptpublicationofthesaidstatements.
TheBARMCalsoreviewedtheexternalauditors’scopeofworkandauditplanfortheGroup,consideredsignificantchangesinstatutoryandaccountingrequirements and auditing issues, reviewed the management letter and management’s response and discussed applicable accounting and auditingstandards.TheBARMCmetwith theexternalauditors twiceduringthe financialyearwithout thepresenceof theotherDirectorsormanagement. TheBARMCalsoreviewedandapprovedtheresourcerequirementsoftheinternalauditfunction,therisk-basedstrategicinternalauditplan,auditprogrammesandreviewedtheauditfindings/recommendations.
ThekeyactivitiesoftheBARMCduringthefinancialyearunderreviewwereasfollows:
(i) Internal Audit
TheBARMCreviewedtheauditsundertakenbyGroupInternalAudit,reportingontheoutcomeoftheoperationsandsystemsauditsconducted,theeffectivenessoftheriskmanagementandinternalcontrolsimplementedandhighlightingkeycontrolissuesimpactingtheoperationsoftheGroup.Indischargingitsrole,GroupInternalAudit:
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board audit & risk management committee reportcontinued
(i) Internal Audit(continued)
•evaluateswhethertheGroupisincompliancewithinternalpoliciesandprocedures,applicablelaws,guidelinesanddirectivesissuedbyregulatory authoritiesinrespectoftheGroup’sbusinesses;
•evaluatesthequalityandappropriatenessofmanagement’sapproachtoriskandcontrol intheir frameworkobjectivesandeffectivenessofrisk managementpracticesandrobustnessofstresstestingprocedures;
•assessestheadequacyandeffectivenessofinternalcontrolsystemsandgovernanceprocessesimplemented,i.e.,accounting,systemandoperational controls,bygivingopinionsontheeffectivenessofthesaidcontrols,continuityandreliabilityofinformationsystemsandprovideassurancethat sufficientcontrolsareinplacetosafeguardassets;
•assesses the adequacy of controls to ensure the reliability (including accuracy and completeness), integrity and timeliness of the regulatory reporting,accountingrecords,financialreportsandmanagementinformation;and
•assists the management to review and strengthen the control features to prevent recurrence of fraud, errors, lapses and omissions and other significantcontrolweaknesses.
TheseenabledtheBARMCtoexecuteitsoversightfunctionandformanopinionontheadequacyofmeasuresundertakenbymanagement.
Incarryingoutitsduties,GroupInternalAuditreliedontheInternationalStandardsfortheProfessionalPracticeof InternalAuditing,RulesofBursa Securities(Rule510.2),BNMGuidelinesonInternalAudit(GP10)andrelevantSecuritiesCommissiondirectivesasauthoritativeguidingprinciplesfor internalauditing.
ThetotalcostincurredfortheinternalauditfunctionfortheGroupduringthefinancialyearwasaboutRM1.2million.
(ii) Risk Management
TheBARMCoverseestheestablishmentofa robust riskmanagement infrastructure, reviewstheadequacyand integrityof internalcontrolsystemsandensuresthatGroupRiskManagementperformsitsdutiesindependentlyoftherisktakingactivities.GroupRiskManagementprovidesthecentralresourcefordevelopingtoolsandmethodologiesfortheidentification,quantification,andmanagementoftheportfolioofriskstakenbytheGroupasawhole.
(iii) Compliance
The BARMC reviews the reports of Group Compliance on compliance of the Stockbroking, Options & Futures, Fund Management, Collective InvestmentSchemes,Research,offshoreoperationsandAnti-MoneyLaunderingandCounterFinancingofTerrorismmatters.
Theinternalaudit,riskmanagementandcompliancefunctionswereorganisedonaGroupbasiswiththerespectivedepartmentsestablishedatECMLibraInvestmentBankBerhad(“ECMLIB”)upto14December2012.SubsequenttothedisposalofECMLIBonthesaiddate,theBARMChasconsideredvariousproposals from professional service providers and has approved the outsourcing of the internal audit function. As the asset management subsidiaryis regulated by the Securities Commission (“SC”), the outsource arrangement is subject to the approval of the SC in accordance with the Guidelines onOutsourcingforCapitalMarketIntermediaries.ThecompliancefunctionhassincebeenestablishedattheassetmanagementsubsidiarywhilsttheGroupChiefExecutiveOfficeroverseesriskmanagementonaGroupbasis.
Therewasnoallocationofoptionsforthefinancialyearended31January2013pursuanttotheEmployees’ShareOptionSchemeoftheCompany.
ThisReportwasapprovedbytheBoardofDirectorson20March2013.
10ECMLibraFinancialGroupBerhadANNUALREPORT2013
corporate governance statement
TheBoardofDirectors(“Board”)ofECMLibraFinancialGroupBerhad(“ECMLFG”or“Company”)iscommittedtomanagetheECMLFGGroupinlinewithcorporate governance practices as set out in the Malaysian Code on Corporate Governance 2012 (“Code”). The Board firmly believes that corporateaccountabilitycomplementsbusinesspracticesthatwillfacilitatetheachievementoftheCompany’sgoalsandobjectives.
Inpreparingthisstatement,theBoardispleasedtoreportthattheGrouphasappliedtheprinciplesandcompliedwiththerecommendationsassetoutintheCodethroughoutthefinancialyearended31January2013exceptasotherwisestated.
A. DIRECTORS
(i) The Board
TheCompanyisledbyaproactiveBoardwithablendofgoodmanagementandentrepreneurialskills,supportedbyindependentDirectorswho bringtotheBoardtheirdiversefieldsoftrainingandexperiences.
TheBoardisprimarilyentrustedwiththeresponsibilityofsettingthegoals,strategiesandthebusinessandorganisationalpoliciesoftheGroup.ItalsooverseestheconductoftheGroup’sbusinesses,ensuringvariouscontrolsystemsareinplaceaswellasregularlyevaluatingsuchsystemsto ensure its integrity. The Board Charter approved by the Board on 22 November 2012 and made available on the Company’s website, hasestablishedthefunctions,rolesandresponsibilitiesoftheBoardwhichalsosetsoutthecodeofconductforDirectorsandemployeesoftheGroup.InformulatingthegoalsandstrategiesoftheGroup,theBoardensuresthatparticularattentionisgiventopromotesustainability. TheGrouphasbeenactivelyinvolvedinpromotingsocialresponsibilitythroughtheECMLibraFoundation,withitsactivitieselaboratedintheChairman’sStatementonpages18to19.
The Chairman of the Board leads the Directors in the performance of the Board’s responsibilities and oversight of management whilst theresponsibility of managing the Group’s business activities, implementing the Board’s policies and overseeing the day-to-day management isdelegatedtotheChiefExecutiveOfficer(“CEO”),whoisaccountabletotheBoard.
ToensurethattheECMLFGGroup isefficientlymanaged,theBoardmeetsonaquarterlybasisandadditionallyasandwhenrequired,withaformalscheduleofmattersspecificallyreservedforitsdeliberationanddecision.Duringthefinancialyearunderreview,eight(8)Boardmeetingswere held and all the Directors had complied with the requirements in respect of Board meeting attendance as provided in the Articles ofAssociation.AllDirectorsattendedtheeight(8)meetingsexceptforDato’SeriKalimullahbinMasheerulHassanwhoattendedsix(6)meetingsheldduringthefinancialyearended31January2013.
TheBoardcollectively reviewsandconsidersallcorporateproposalsprior to their implementation. Corporateproposalsareput tovoteaftercarefuldeliberation.TheChairmanofthemeetingshallhaveasecondorcastingvoteintheeventofatieinvotesfororagainstanyparticularproposal,exceptwhenonlytwoDirectorsarecompetenttovoteonthequestioninissue.
The Directors are updated on ECMLFG Group’s affairs at Board meetings.The Directors are encouraged to obtain information on the Group’sactivitiesatanytimebyconsultationwithseniormanagement.ThisistoenabletheBoardmemberstodischargetheirdutiesandresponsibilitiescompetentlyandinaninformedmanner.
TheChairmanoftheBoard,Dato’SeriKalimullahbinMasheerulHassan,isanon-independentnon-executivemember. IncompliancewiththeCode,theBoardcomprisedamajorityofindependentDirectors.ThepositionofGroupCEOisheldbyMsAzlinbintiArshad,whowasappointedon22January2013.PriortoMsAzlin’sappointment,thepositionofCEOwasleftvacant.
(ii) Board Balance
For the financialyearended31January2013, theBoardcomprisedseven (7)Directors, four (4)ofwhomare independent. AllDirectorsholdpositionsinanon-executivecapacity.ThereisacleardivisionofresponsibilitiesattheheadoftheCompanytoensureabalanceofauthorityandpower.Thewidespectrumofknowledge,skillsandexperienceoftheBoardmembersgivesaddedstrengthtotheleadershipwhichisnecessaryfortheeffectivestewardshipoftheGroup.
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corporate governance statementcontinued
A. DIRECTORS (continued)
(ii) Board Balance (continued)
TheBoardrecognisestheimportanceandcontributionof its independentnon-executiveDirectors. Theyrepresenttheelementofobjectivity,impartialityandindependentjudgmentoftheBoard.ThisensuresthatthereisadequatecheckandbalanceattheBoard.Thefour(4)independentDirectorsoftheCompanyprovidetheBoardwithvastandvariedexposure,expertiseandbroadbusinessandcommercialexperiences.
NoneoftheindependentDirectorshasservedacumulativeperiodofnine(9)yearswiththeCompany.
The Board has identified Datuk Kamarudin bin Md Ali, the Chairman of the Board Audit & Risk Management Committee (“BARMC”), as theindependentnon-executiveDirectortowhomconcernsmaybeconveyed,whowouldbringthesametotheattentionoftheBoard.
AbriefprofileoftheDirectorsissetoutonpages4to7.
(iii) Supply of information
Boardmembersareprovidedwiththenotice,settingouttheagendaandthecomprehensiveBoardpapers inatimelymannerpriortoBoardmeetings.ThisistoensureandenablethemembersoftheBoardtodischargetheirdutiesandresponsibilitiescompetentlyandinawell-informedmanner. All members of the Board have access to the advice and support of suitably qualified Company Secretaries, and where necessary,independentprofessionaladvisersattheexpenseoftheCompany.TheBoardwilldiscussandcollectivelydecideonseekingsuchindependentadvice when the need arises. They also have unlimited access to all information with regard to the activities of the ECMLFG Group duringdeliberationsattheBoardmeetingsaswellasthroughregularinteractionwiththemembersoftheseniormanagement.
(iv) Appointments to the Board
The Board Nomination Committee (“BNC”), set up on 27 September 2006, comprised four (4) independent non-executive Directors and one(1) non-independent non-executive Director during the financial year ended 31 January 2013. The BNC is responsible for proposing andrecommendingnewnomineestotheBoardaswellasDirectorstofillseatsonBoardcommittees;assessingtheeffectivenessoftheBoardandtheBoardcommittees;andreviewtherequiredmixofskills,experienceandotherqualitieswhichDirectorsshouldbringtotheBoard.TheBNCisalsoresponsibleforassessingandrecommendingtheappointmentofthekeyseniormanagementoftheGroup.
The assessment of the Board and Board Committees based on, amongst others, their skills, experience, contribution and commitment, isundertakenannuallyandisformallydocumented.TheBNChasalsoestablishedthecriteriaforandundertakenanassessmentoftheindependentDirectors forthefinancialyearunderreview. Whilst theDirectorsrecognisethecontributionthatwomencouldbringtotheBoard, ithasnotestablishedapolicyorspecifictargetfortheappointmentofwomencandidatesinitsrecruitmentofdirectors.InconsideringappointmentstotheBoard,dueregardwouldbegiventotheskills,experience,contributionandcommitmentthatapersonwouldbringtotheBoard.
TheDirectorswillinformtheBoardontheirappointmentasdirectorinothercompanies.
TheBNChasassessedtheperformanceoftheBoardandBoardCommitteesandissatisfiedwithitscurrentcompositionandthatexpectationshavebeenmet.TherewasnonewappointmentmadetotheBoardduringthefinancialyear.
TheBNCduringthefinancialyearended31January2013comprised:
-Dato’OthmanbinAbdullah(Chairman)
-DatukKamarudinbinMdAli
-EnMahadzirbinAzizan
-Dato’Ab.HalimbinMohyiddin
-MrLumSingFai
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corporate governance statementcontinued
A. DIRECTORS (continued)
(v) Re-election
TheArticlesofAssociationoftheCompanyprovidethatatleastone-thirdoftheDirectorsaresubjecttoretirementbyrotationateachAnnualGeneralMeeting(“AGM”)andthatallDirectorsshallretireatleastonceineverythreeyears.TheArticlesofAssociationalsoprovidethataDirectorwhoisappointedbytheBoardinthecourseoftheyearshallbesubjecttore-electionatthenextAGMtobeheldfollowinghisappointment.
Directors over seventy years of age are required to submit themselves for re-appointment annually in accordance with Section 129(6) of theCompaniesAct,1965.
(vi) Directors’ Training
All Directors of the Company have completed the Mandatory Accreditation Programme. The Company does not have a formal trainingprogrammefornewDirectorsbuttheyreceiveregularbriefingsandupdatesontheGroup’sbusinesses,operations,riskmanagement,internalcontrols, finance and changes to relevant legislation, rules and regulations. The Directors are encouraged to attend courses, briefings andseminars tokeepthemselvesabreastwith latestdevelopments inthe industry, regulatoryupdatesorchangesandtoenhancetheirskillsandknowledge.
During the financial year under review, a Board member attended the Financial Institution Directors Education (“FIDE”) Programme, aprogrammedevelopedbyBankNegaraMalaysia incollaborationwithPerbadanan InsuransDepositMalaysiaandthe InternationalCentre forLeadershipinFinance.AllDirectorsoftheCompanyhavecompletedtheFIDEProgrammewhichisaimedatpromotinghighimpactboardsinfinancial institutions. In addition, individual Board members have also participated in the following external training courses, briefings orseminarstokeepupdatedonlatestdevelopmentsandtoenhancetheirknowledge:
-FIDEElectiveProgrammeonInternalCapitalAdequacyAssessmentProcessManagement
-EffectiveDisputeResolutionforCorporateMalaysia
-RoleofAuditCommitteeinAssuringAuditQuality
-SeminaronMalaysianCodeonCorporateGovernance2012
-Governance,RiskManagementandCompliance:WhatDirectorsShouldKnow
-SeminarontheNewCorporateGovernanceBlueprintandRegulatoryUpdate
-TheBuzanTechniques:MindMappingandCreativity
-AmendmenttoListingRequirementsofBursaSecurities–NewCorporateGuideandCorporateGovernanceBlueprint2011
-ConcentrationonConvergenceofInternationalFinancialReportingStandardsandMalaysianFinancialReportingStandards
-TheMalaysianCodeonCorporateGovernance–TheImplicationandChallengestoPublicListedCompanies
-DisclosureObligationsofDirectorsandSubstantialShareholders
-ICAA-MICPAAuditForum–RoleofAuditCommittee
-Director:AnImpossibleTask?ImpactofRecentDevelopmentsontheRoleofDirectors
-TaxForum:TimeforActionDrivingTransformationTowardsDevelopedNation
-SeminaronMalaysianFinancialReportingStandardsUpdate2012/2013
-OptimisingIFRSConvergence
-InternationalAccountantsConferenceECMLibraFinancialGroupBerhadANNUALREPORT201313
corporate governance statementcontinued
B. DIRECTORS’ REMUNERATIONThe Board Remuneration Committee (“BRC”), set up on 27 September 2006, comprised two (2) independent non-executive Directors and one (1)non-independentnon-executiveDirectorduringthefinancialyearended31January2013.ThemembersoftheBRCwere:
-EnMahadzirbinAzizan(Chairman)
-Dato’Ab.HalimbinMohyiddin
-MrLumSingFai
TheBRCisresponsibleforassessingandrecommendingtotheBoardtheremunerationofDirectors,keyseniormanagementofficers,andthepaymentofperformancebonusandsalaryincrementsforemployeesoftheGroup.TheDirectorsdonotparticipateinthediscussionandvotingondecisionsregardingtheirownremuneration.TheaggregateannualDirectors’feesasrecommendedbytheBoardareapprovedbyshareholdersattheAGM.
ECMLFG has an established framework to evaluate performance and reward for executive Directors and all employees. Remuneration packagesfor theexecutiveDirectorsandemployeesare formulatedtobecompetitive,withemphasisbeingplacedonperformanceof theGroupaswellastheindividual,whichaimstoattract,motivateandretainall levelsofstafftomanagetheECMLFGGroup. Fornon-executiveDirectors,thelevelofremunerationwouldcommensuratewiththeexperienceandlevelofresponsibilitiesundertakenbythem.TheDirectorsarepaidannualfeesandanallowanceofRM1,000foreveryBoardandBoardCommitteemeetingattended.
ThedetailsoftheremunerationoftheDirectorsofECMLFGaresetoutintheauditedfinancialstatementsonpage101.
C. ACCOUNTABILITY AND AUDIT
(i) Financial Reporting
TheBoardisresponsibletopresentabalancedandcomprehensiveassessmentofECMLFGGroup’sfinancialpositiontoshareholdersbymeansof the annual and quarterly reports and other published information. In this regard, the Board is responsible for the preparation of financialstatementsthatpresentafairandbalancedreportofthefinancialstateofaffairsoftheECMLFGGroup.
TheBoardhasdelegatedtheresponsibilityofreviewingandensuringthatthefinancialstatementscomplywithapplicablefinancialreportingstandardstotheBARMC.TheBARMChasensuredthatthefinancialstatementsareareliablesourceoffinancialinformationoftheGroupandCompany.
(ii) Risk Management & Internal Control
TheStatementonRiskManagement&InternalControlassetoutbelowprovidesanoverviewofthemanagementofrisksandstateofinternalcontrolswithintheGroup.
(iii) Relationship with Auditors
The Company, through the BARMC, has an appropriate and transparent relationship with the external auditors. Key features underlying therelationshipoftheBARMCwiththeexternalauditorsareincludedintheBARMCReportassetoutonpages9and10.
TheBARMCundertakesanannualassessmentofthesuitabilityandindependenceoftheGroup’sexternalauditorsbeforerecommendingtheirre-appointmenttotheDirectorsandshareholdersforapproval. Inundertakingtheassessment,dueconsiderationisgiventotheadequacyofresourcesoftheexternalauditortomanageandundertaketheaudit,thelevelandqualityofserviceprovidedbytheauditteamaswellasthecompetence,knowledge,experienceandindependenceofadviceprovidedbytheengagementpartner.
14ECMLibraFinancialGroupBerhadANNUALREPORT2013
corporate governance statementcontinued
D. CORPORATE DISCLOSURESTheCompanyiscommittedtoprovideallstakeholderswithtimelyandequitableaccesstomaterialinformationthatiscomprehensiveandaccuratetoensure itscompliancewith thedisclosure requirementsassetout in theMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”)andotherapplicablelaws.Inlinewiththiscommitmentandfortransparencyandaccountability,materialcorporatedisclosuresaredeliberatedbytheBoardbeforebeingreleasedtothepublic.
Tomaintaintransparencyandtopromotethetimelydisseminationofcorporatedisclosures,allinformationmadepublictoBursaSecurities,suchastheCompany’sAnnualReport,thequarterlyfinancialresults,allcorporateannouncements,circulartoshareholdersandothercorporateinformationaremadeavailableontheGroup’swebsite,www.ecmlibra.com,atthededicatedsectiononInvestorRelations.
E. SHAREHOLDERSTheCompany’sgeneralmeetingsserveasaforumfordialoguewithshareholders.Atthegeneralmeetings,shareholdersareencouragedtoparticipateinthequestionandanswersession.TheBoardmembersandmanagementwillclarifyandelaborateonanyissueraisedbyshareholdersatthemeeting.InaccordancewiththeCompany’sArticlesofAssociation,votingatgeneralmeetingsareconductedbyshowofhandsorbypollifsodemandedbytheshareholdersortheChairmanofthemeeting.VotingonresolutionsbywayofpollwillalsobeconductedifrequiredbytheListingRequirementsofBursaSecurities.TheresultofallresolutionsproposedatgeneralmeetingsissubmittedtoBursaSecuritiesattheendofthemeetingday.
Otherthancontactsatgeneralmeetings,thereisnoformalprogrammeorscheduleofmeetingswithinvestors,shareholdersorthepublicgenerally.However,themanagementhastheoptionofcallingformeetingswithinvestors/analystsifitisdeemednecessary.Thusfar,theBoardisoftheopinionthatthisarrangementhasbeensatisfactorytoallparties.
F. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL
Responsibility
TheBoardisresponsibleformanagingrisksoftheGroupanditssystemofinternalcontrolaswellasreviewingitsadequacyandintegrity.TheBoardrecognisesthattheGroup’ssystemofinternalcontrolisdesignedtomanageandnoteliminatetheriskoffailuretoachievetheGroup’sobjectives.Hence,itcanonlyprovidereasonableandnotabsoluteassuranceagainstmaterialmisstatementofmanagementandfinancialinformationoragainstfinanciallossesandfraud.
Key Processes
Thereisanon-goingprocessforidentifying,evaluatingandmanagingthesignificantrisksfacedbytheGroup,andthesaidprocessisreviewedbytheBoardandaccordswiththeStatementonRiskManagement&InternalControl:GuidelinesforDirectorsofListedIssuers.
The Board has appointed the BARMC comprising independent Directors to examine the effectiveness of the Group’s risk management policies,processes and infrastructure which are established to manage various types of risks and to ensure an effective internal audit function. This isaccomplishedthroughthereviewoftheworkoftheGroupRiskManagementDepartment,GroupComplianceDepartmentandGroupInternalAuditDepartment,whichfocusonareasofpriority identifiedthroughriskassessmentandinaccordancewiththeplansapprovedbytheBARMC.GroupRiskManagementcoverscreditriskmanagement,marketriskmanagementandoperationalriskmanagement,andthedepartmentisheadedbytheHeadofRiskManagement.Whilebusiness/operatingunitshavetheprimaryresponsibilityformanagingspecificrisksassumedbythem,GroupRiskManagementprovidesthecentralresourcefordevelopingtoolsandmethodologiesfortheidentification,quantification,monitoringandmanagementoftheriskstakenbytheGroupasawhole.
ECMLibraFinancialGroupBerhadANNUALREPORT201315
F. STATEMENT ON RISK MANAGEMENT & INTERNAL CONTROL (continued)In carrying out its responsibilities, the BARMC relies on the support of Group Compliance Department and Group Internal Audit Department inprovidingassuranceontheadequacyofinternalcontrols.GroupComplianceDepartmentprovidestheBARMCperiodicreportsoncompliancewithrelevantregulatoryandstatutoryrequirementswhilstGroupInternalAuditDepartmentprovidesBARMCwithperiodicreportshighlightingonanynon-complianceaswellasrecommendationsandmanagementactionplanstoimprovethesystemofinternalcontrols.
TheframeworkoftheGroup’ssystemofinternalcontrolandkeyproceduresinclude:
-Amanagementstructurewithclearlydefinedlinesofresponsibilityandappropriatelevelsofdelegation.
-Keyfunctionssuchasfinance,creditcontrol,treasury,humanresourcesandlegalmattersarecontrolledcentrally.
-Themanagementdeterminestheapplicabilityofriskmonitoringandreportingproceduresandisresponsiblefortheidentificationandevaluation ofsignificantrisksapplicabletotheirareasofbusinesstogetherwiththedesignandoperationofsuitableinternalcontrols.
-CleardefinitionsoflimitsofauthorityandresponsibilitieshavebeenapprovedbytheBoardandsubjecttoregularreviewsandenhancements.
-PoliciesandprocedureswithembeddedinternalcontrolsaredocumentedinaseriesofPoliciesandProcedures,whicharesubjectedtoannual reviewforupdatingofanychangesinoperationalprocessesorregulatoryrequirements.BusinessandsupportunitsintheGroupmustensure compliancewiththePoliciesandProcedures.
-Corporatevalues,whichemphasiseonethicalbehaviourandqualityservices,are formalised intoaCodeofConduct incorporatingaWhistle BlowingPolicy,issetoutintheGroup’sEmployeeHandbookandtheBoardCharter.
Onayearlybasis,all thebusinessunitswithintheGroupdrawuptheirbusinessplanandbudget for theBoard’sapprovalandtheperformance istrackedonamonthlybasis.
Duringthefinancialyearupto14December2012,theGroupRiskManagementDepartment,theGroupComplianceDepartmentandGroupInternalAuditDepartmentwereorganisedattheinvestmentbankingsubsidiary.Subsequenttothedisposaloftheinvestmentbankon14December2012,theComplianceDepartmentisorganisedattheassetmanagementsubsidiarywhilsttheGroupCEOoverseesriskmanagementfortheGroup.TheBARMChasconsideredandapprovedtheoutsourcingoftheinternalauditfunctiontoanindependentprofessionalfirm.AstheassetmanagementsubsidiaryisregulatedbytheSecuritiesCommission(“SC”),theoutsourcearrangementissubjecttotheapprovaloftheSCinaccordancewiththeGuidelinesonOutsourcingforCapitalMarketIntermediaries.
AnassociatedcompanywhichislistedontheStockExchangeofSingaporehasnotbeendealtwithaspartoftheGroupforpurposesofapplyingthisguidance.However,astheassociatedcompanyoperateswithinahighlyregulatedbusinessenvironmentandthroughperiodicreportingtotheGroup,theBoardbelievesthattheriskmanagementand internalcontrolpracticesofthisassociatedcompanyhadbeeneffectivelycarriedoutby itsownboardandmanagement.
AnotherassociatedcompanywhichisanindirectsubsidiaryofacompanylistedontheStockExchangeofSingaporehasalsonotbeendealtwithaspartoftheGroupforpurposesofapplyingthisguidanceonthesamepremisethatitsriskmanagementandinternalcontrolpracticeshadbeencarriedoutbyitsownboardandmanagement.
TheBoardhasreceivedassurancefromtheGroupCEOandChiefFinancialOfficerthattheGroup’sriskmanagementandinternalcontrolsystemisoperatingadequatelyandeffectively,inallmaterialaspects,basedontheriskmanagementandinternalcontrolsystemoftheGroup.
corporate governance statementcontinued
16ECMLibraFinancialGroupBerhadANNUALREPORT2013
G. DIRECTORS’ RESPONSIBILITY IN FINANCIAL REPORTINGTheBoardisrequiredbytheListingRequirementsofBursaSecuritiestopreparefinancialstatementsforeachfinancialyearwhichgiveatrueandfairviewofthestateofaffairsoftheGroupandoftheCompanyasattheendofthefinancialyearandoftheresultsandcashflowsfortheyearthenended.TheDirectorsaresatisfiedthatinpreparingthefinancialstatementsoftheGroupforthefinancialyearended31January2013,theGrouphadadoptedandappliedconsistentlyappropriateaccountingpolicies,supportedbyreasonableandprudentjudgmentsandestimates.TheDirectorsalsoconsiderthatallapplicableapprovedaccountingstandardsinMalaysiahadbeenfollowedandthefinancialstatementshadbeenpreparedonagoingconcernbasis.
The Directors are responsible for ensuring that the Company maintains sufficient accounting records that disclose with reasonable accuracy thefinancialpositionoftheGroupandtheCompany,andwhichenablethemtoensurethatthefinancialstatementscomplywiththeCompaniesAct,1965.
TheDirectorsalsohavegeneralresponsibilityfortakingsuchstepsthatarereasonablyexpectedofthemtosafeguardtheassetsoftheGroupandtheCompany,andtakingreasonablestepsforthepreventionanddetectionoffraudandotherirregularities.
ThisStatementwasapprovedbytheBoardofDirectorson20March2013.
corporate governance statementcontinued
ECMLibraFinancialGroupBerhadANNUALREPORT201317
chairman’s statement
DearShareholders,
On behalf of the Board of Directors, I am pleased to present the Annual Report and audited financial statements for the financial year ended 31January2013.
Financial and Business Review
Theyearunder reviewmarkedasignificantmilestone in thecorporatehistoryof theGroupwith thedisposalof theentireequity interest inECMLibraInvestmentBankBerhad(“ECMLIB”).ECMLIB,beingtheinvestmentbankingsubsidiaryoftheGroup,representedamajorcomponentoftheGroup.Arisingfromthedisposal,theGrouphasahealthycashpositionandalsodoesnotcarryanylongtermliabilities.
TheGrouphadon15June2012enteredintoaconditionalsharepurchaseagreementwithKenangaInvestmentBankBerhad(“KIBB”)andK&NKenangaHoldingsBerhad(“KNKH”)forthedisposaloftheentireequityinterestinECMLIBtoKIBBforatotaldisposalconsiderationofRM875.11millioncomprisingRM659.61millioncash,RM95.50millionnominalvalueredeemablenon-convertibleunsecuredloanstocktobeissuedbyKNKH(“RULS”)and120millionKNKHsharestobeissuedatpar.ThedisposalofECMLIBwascompletedon14December2012andthefinancialresultsofECMLIBupto13December2012havebeenconsolidatedintothegroupresultsforthefinancialyearended31January2013.
Intermsofthebusinessoperations,theGroupreportedaprofitbeforetaxofRM34.65millionandprofitaftertaxofRM26.52millionforthefinancialyearended31January2013.However,theoverallfinancial impactfromthedisposalofECMLIBandtheconsequentialgoodwillwrite-offresultedinalossofRM68.65million.AfteraggregatingthelossondisposalofECMLIBofRM68.65million,theGroupreportedalossaftertaxofRM42.13million.
UponcompletionofthedisposalofECMLIBon14December2012,theCompanyisconsideredaPracticeNote17(“PN17”)companypursuanttoParagraph8.04andParagraph2.1(g)ofPN17oftheMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad.TheCompanytriggeredParagraph2.1(g)ofthePN17criteriabyvirtueofthedisposalofitsinvestmentbankingbusinesswhichcontributedmorethan70%ofthegrouprevenue.TheBoardwishestoemphasisethattheCompanyisnotafinanciallydistressedcompanyasithashealthycashreserveswithnoborrowings.TheBoardisevaluatingvariousoptionsinitsendeavourtoformulateaplantoregularisetheCompany’sfinancialconditiontoupliftthePN17status.
ConsequenttothedisposalofECMLIB,theCompanyhadproceededwithacapitalrestructuringexercisetoreturnexcesscapitaltoshareholders.TheissuedcapitaloftheCompanywasreducedfromRM828.82milliontoRM268.22millionon28February2013tocommensuratewiththereducedscaleofbusinessafterthesaiddisposal.Thecapitalrepaymenttoshareholderswascompletedon4April2013andinvolvedthedistributionofRM442.65millioncashandthedistribution-in-specieof120millionKNKHsharesandRULSwithnominalvaluetotallingRM47.75million.
After thecapital repaymentexercise, theCompanyand itssubsidiariescontinuetohavethe financialandoperational resources tocarryontheGroup’sremainingbusinessoperations.TheGrouphasexistinglicencesthatenabletheGrouptocontinuetooperatefinancialservicesrelatedbusinesses.OvertimetheBoardintendstousetheGroup’sresourcestogrowthebusiness.TheGroupwillcontinuetonurtureitsfundmanagementbusinesswhichisoperatedunder Libra Invest Berhad.The Group has reactivated its structured financing activity and has started to generate loan income.The Group also derivesincomefromits investmentportfolioandproperty.Additionally,theGroupwillcontinuetoget involvedinareasrelatingtofinancialserviceswheretheGrouphasexpertise.
Corporate Social Responsibility
IamhonouredtosharewithyouthatECMLibraFinancialGroupwasconferredthePrimeMinister’sCorporateSocialResponsibility(“CSR”)Award2011intheEducationCategoryinOctober2012basedontheworkdonethroughECMLibraFoundation.Wewereadjudgedtheoutrightwinnercompetingwithmanylargecorporatenamesincludingmajorgovernmentlinkedcompaniesandprivateenterprises,allfocusedonCSRineducation.Webelieveweedgedouttheothercompetitorsbecauseourprogrammesaremulti-yearandhavedeliveredclearoutcomeswhichhaveapositiveimpactonthecommunitiesweareworkingwith.
18ECMLibraFinancialGroupBerhadANNUALREPORT2013
chairman’s statementcontinued
Corporate Social Responsibility (continued)
OurCSRworkineducationisfocusedonhelpingchildrenofpoorcommunitiesstayinschool,aswecontinuetobelievethateducationisthebestmeansforbreakingthepovertycycle.Wesponsorsupplementalprogrammessuchaspre-schoolreadingandwritingprogrammesandtuitionprogrammestoensurepoorchildrenwhocannotaffordprivatetuitionhaveanequalopportunitytosucceedthroughtheirprimaryandsecondaryeducation.ThisStay-in-SchoolProgramme isspreadoutacross theOrangAslicommunities, the Indiancommunities inplantationsaswellas themulti-racialurbanpoor inPeninsularMalaysia. In the Orang Asli community, our programme now covers 7 villages benefiting about 290 children. In plantations and for the urban poor, weprovidetuitionfor180childreninKaparandthesurroundingplantations.InSabahandSarawakwesponsorprogrammesacross8villagesbenefitingabout200studentswhoaremainlynatives.Thesemulti-yearprogrammesaremonitoredthroughschoolandpublicexaminationresultsallowingustoseetheimpactofourinterventions.
Outsidetheclassroom,theFoundationacknowledgesthatsportsandyouthdevelopmentcancontributetomoldabalancedperson.LikeourStay-in-SchoolProgramme,wefocusonprovidingunderprivilegedchildrenanequalopportunity insportsandsocialskillsdevelopment.OurprogrammeincludesthesponsorshipforunderprivilegedbuttalentedchildreninsoccertrainingwiththeRoyalSelangorClubchildren’ssoccerprogramme.TheFoundationhasalsoextendeditshandtoabout83childrenfromvarioushomesnamelyRumahKebajikanAl-Taqwa,ThePureLifeSociety,RumahCharis,RumahHopeandHouseofJoytoattendbadmintontrainingatMichael’sBadmintonAcademyinPuchong.Thechildrenareevaluatedperiodicallyandourprogrammesfine-tunedtoensuretheybenefitthemostdeservingchildren.LikewisewealsosponsorunderprivilegedchildrenfromselectedhomesgivingthemopportunitiestoattendyouthleadershipcampsrunbyLeaderonomics.
Dividends
InAugust2012,theGrouppaidasingletiersharedividendof2.4senperordinaryshareinrespectofthepreviousfinancialyear.TheBoardisnotproposinganyfinaldividendforthefinancialyearended31January2013inviewofthecapitalrepaymentexercisethatwascompletedon4April2013whichreturnedtoshareholderstheequivalentof67.6senperECMshareheld.
Appreciation
On behalf of the Board, I would like to extend our appreciation to the management and staff of the Group for their contributions, commitment anddedication.Dato’AbHalimbinMohyiddinwillbeleavingtheBoardashewillnotbeseekingre-electionatthecomingAnnualGeneralMeetingandweextendourappreciationforhiscontributionandwishhimthebest.Wewouldalsoliketothankourshareholdersfortheircontinuedsupportandconfidenceinus.
Dato’SeriKalimullahbinMasheerulHassan
Chairman
5April2013
ECMLibraFinancialGroupBerhadANNUALREPORT201319
notice of annual general meeting
NOTICE IS HEREBY GIVEN thattheEighthAnnualGeneralMeetingofECMLibraFinancialGroupBerhad(“Company”)willbeheldatGroundFloor,EastWing,BangunanECMLibra,8JalanDamansaraEndah,DamansaraHeights,50490KualaLumpuronThursday,23May2013at10.00a.m.inorder:
AGENDA
1. toreceivetheauditedfinancialstatementstogetherwiththereportsoftheDirectorsandAuditorsthereonforthefinancialyearended31January2013;
2. toapprovethepaymentofDirectors’feesofRM300,000.00tobedividedamongsttheDirectorsinsuchmannerastheDirectorsmaydetermine;
3. tore-electEnMahadzirbinAzizanwhoretirespursuanttotheCompany’sArticlesofAssociation;
4. tore-appointMessrsErnst&YoungasAuditorsoftheCompanyandauthorisetheDirectorstofixtheirremuneration;
AS SPECIAL BUSINESS
Toconsiderandifthoughtfit,passthefollowingresolutions:
5. Ordinary Resolution on Authority to Directors to Issue Shares
“THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue shares in theCompany,atanytimeanduponsuchtermsandconditionsandforsuchpurposesastheDirectorsmay,intheirabsolutediscretion,deemfit,providedthattheaggregatenumberofsharesissuedpursuanttothisresolutioninanyonefinancialyeardoesnotexceed10%oftheissuedandpaid-upsharecapitaloftheCompanyforthetimebeingandtheDirectorsbeandarealsoempoweredtoobtainapprovalforthelistingofandquotationfortheadditionalsharessoissuedonBursaMalaysiaSecuritiesBerhadANDTHATsuchauthorityshallcontinueinforceuntiltheconclusionofthenextAnnualGeneralMeetingoftheCompany.”;
6. Special Resolution on Proposed Amendments to the Articles of Association
“THAT theproposedamendmentstotheArticlesofAssociationof theCompanyassetout inAppendix1attachedtothisNoticeofAnnualGeneralMeetingbeandareherebyapprovedandinconsequencethereof,thenewsetofArticlesofAssociationincorporatingtheamendmentsbeadoptedANDTHATtheDirectorsand/orSecretariesbeandareherebyauthorisedtocarryoutallthenecessarystepstogiveeffecttotheamendments.”;
7. toconsideranyotherbusinessofwhichduenoticeshallhavebeengiven.
ByOrderoftheBoard
IRENELOWYUETCHUNCHANSOONLEESecretaries
KualaLumpur30April2013
20ECMLibraFinancialGroupBerhadANNUALREPORT2013
notice of annual general meetingcontinued
NOTES:
1. OnlyadepositorwhosenameappearsintheRecordofDepositorsoftheCompanyasat17May2013shallberegardedasamemberentitled to attend, speak and vote, and appoint a proxy to attend, speak and vote on his/her behalf, at the Eighth Annual GeneralMeeting.
2. Amemberentitledtoattendandvoteattheabovemeetingisentitledtoappointnotmorethantwo(2)proxiestoattendandvoteinhisstead.WhereamemberoftheCompanyisanexemptauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991whichholdsordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(“OmnibusAccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachOmnibusAccountitholds.AproxymaybutneednotbeamemberoftheCompanyandtheprovisionsofSection149(1)(a)and(b)oftheCompaniesAct,1965shallnotapplytotheCompany.
3. Whereamemberappointsmorethanone(1)proxytoattendthemeeting,themembershallspecifytheproportionofhisshareholdingstoberepresentedbyeachproxy.
4. Theinstrumentappointingaproxyshallbeinwritingunderthehandoftheappointerorofhisattorneydulyauthorisedinwritingoriftheappointerisacorporation,eitherunderitscommonsealorunderthehandofadulyauthorisedofficerorattorneyofthecorporation.
5. TheFormofProxymustbedepositedattheRegisteredOfficeoftheCompanyat2ndFloor,WestWing,BangunanECMLibra,8JalanDamansaraEndah,DamansaraHeights,50490KualaLumpurnotlessthan48hoursbeforethetimeappointedforholdingthemeetingoradjournedmeeting.
6. RetirementofDirectors
Dato’Ab.HalimbinMohyiddinwhoretiresinaccordancewiththeArticlesofAssociationoftheCompanyhasexpressedhisintentionnottoseekre-electionandhence,willretainofficeuntilthecloseoftheEighthAnnualGeneralMeeting.
Explanatory note on special business
1. Ordinary Resolution on Authority to Directors to Issue Shares
Theordinaryresolution,ifpassed,willgivearenewedmandatetotheDirectorsoftheCompanytoissuesharesoftheCompanyfromtimetotimeprovidedthattheaggregatenumberofsharesissuedpursuanttothisresolutioninanyonefinancialyeardoesnotexceed10%oftheissuedcapitaloftheCompanyforthetimebeing(“RenewedMandate”).TheRenewedMandate,unlessrevokedorvariedatageneralmeeting,willexpireattheconclusionofthenextAnnualGeneralMeetingoftheCompany.
AsatthedateofthisNotice,nonewsharesintheCompanywereissuedpursuanttothemandategrantedtotheDirectorsatthelastAnnualGeneralMeetingheldon31July2012andwhichwilllapseattheconclusionoftheEighthAnnualGeneralMeeting.
In circumstances where an expansion/diversification plan requires the issue of new shares, the Renewed Mandate will enable theDirectorstotakepromptactionandtoavoiddelayandcostinconveninggeneralmeetingstoapprovesuchissueofshares.
2. Special Resolution on Proposed Amendments to the Articles of Association
TheproposedamendmentstotheArticlesofAssociationoftheCompanyaretoaligntheCompany’sArticlesofAssociationwiththeMainMarketListingRequirementsofBursaMalaysiaSecuritiesBerhad.
ECMLibraFinancialGroupBerhadANNUALREPORT201321
notice of annual general meetingcontinued
Appendix 1
Proposed Amendments to the Articles of Association of ECM Libra Financial Group Berhad
Article No
70
Notice of General Meetings
Every notice calling a general meeting shall appearwith reasonable prominence in every such notice astatementthataMemberentitledtoattendandvoteisentitledtoappointoneormoreproxy/proxiestoattendand vote instead of him and that the proxy need notbeamemberoftheCompany.WhereamemberoftheCompany is an authorized nominee as defined underthe Central Depositories Act, it may appoint at leastoneproxyinrespectofeachsecuritiesaccountitholdswith ordinary shares of the Company standing to thecreditof thesaidsecuritiesaccount.WhereaMemberappoints more than one (1) proxy to attend the samemeeting,theMembershallspecifytheproportionofhisshareholdingstoberepresentedbyeachproxy.
EverynoticecallingageneralmeetingshallappearwithreasonableprominenceineverysuchnoticeastatementthataMemberentitledtoattendandvote,other than an exempt authorised nominee,isentitledtoappointone or more proxy/proxies not more than two (2) proxiestoattendandvoteinsteadofhim.andthattheproxyneednotbeamemberof theCompany.Wherea member of the Company is an authorized nomineeas defined under the Central Depositories Act, it mayappointatleastoneproxyinrespectofeachsecuritiesaccount itholdswithordinarysharesof theCompanystanding to the credit of the said securities account.Where a Member of the Company is an exempt authorised nominee which holds ordinary shares in the Company for multiple beneficial owners in one (1) securities account (“Omnibus Account”), there is no limit to the number of proxies which the exempt authorised nominee may appoint in respect of each Omnibus Account it holds.
An exempt authorised nominee refers to an authorised nominee defined under the Central Depositories Act which is exempted from compliance with the provisions of subsection 25A(1) of the Central Depositories Act.
WhereaMemberappointsmorethanone(1)proxytoattendthesamemeeting,theMembershallspecifytheproportion of his shareholdings to be represented byeachproxy.
Existing Article Proposed Amendments to Existing Article
22ECMLibraFinancialGroupBerhadANNUALREPORT2013
notice of annual general meetingcontinued
Article No
88
95
Vote of Members
Subjecttoanyrightsorrestrictionsforthetimebeingattachedtoanyclassorclassesofshares,atmeetingsofMembersorclassesofMembers,eachMembershallbe entitled to be present and to vote at any generalmeetingoftheCompanyeitherpersonallyorbyproxyor by attorney and to be reckoned in a quorum inrespectofsharesfullypaidandinrespectofpartlypaidshareswherecallsarenotdueandunpaid.
On a poll votes may be given either personally or byproxy or attorney and a member entitled to morethanonevoteneednot,ifhevotes,useallhisvotesorcastallthevotesheusesinthesameway.AproxyorattorneyoradulyauthorisedrepresentativeneednotbeaMemberandtheprovisionsofSection149(1)(b)oftheActneednotapply.
Subjecttoanyrightsorrestrictionsforthetimebeingattachedtoanyclassorclassesofshares,atmeetingsof Members or classes of Members, each Membershall be entitled to be present and to vote at anygeneral meeting of the Company either personally orbyproxyorbyattorney or by other duly authorised representative and to be reckoned in a quorum inrespectofsharesfullypaidandinrespectofpartlypaidshareswherecallsarenotdueandunpaid.
A proxy or attorney or other duly authorised representative appointed to attend and vote at any general meeting of the Company shall have the same rights as the Member to speak at the meeting.
On a poll votes may be given either personally or byproxy or attorney or duly authorised representativeand a member entitled to more than one vote neednot, if he votes, use all his votes or cast all the votesheusesinthesameway.Aproxyorattorneyoradulyauthorised representative need not be a Member of the Company. There shall be no restriction as to the qualification of the proxy and the provisions ofSection149(1)(b)oftheActneednotapply.
Existing Article Proposed Amendments to Existing Article
Appendix 1 (continued)
Proposed Amendments to the Articles of Association of ECM Libra Financial Group Berhad
ECMLibraFinancialGroupBerhadANNUALREPORT201323
notice of annual general meetingcontinued
statement accompanyingnotice of annual general meeting
Details of persons who are standing for election as Directors
NoindividualisseekingelectionasaDirectorattheEighthAnnualGeneralMeetingoftheCompany.
(PursuanttoParagraph8.27(2)oftheListingRequirementsofBursaMalaysiaSecuritiesBerhad)
24ECMLibraFinancialGroupBerhadANNUALREPORT2013
financialstatements
directors’ report
ThedirectorsherebysubmittheirreporttogetherwiththeauditedfinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended31January2013.
Principal activities
TheprincipalactivitiesoftheCompanyareinvestmentholdingandprovisionofmanagementservices.TheprincipalactivitiesofthesubsidiarycompaniesaresetoutinNote13tothefinancialstatements.
Therehavebeennosignificantchangesinthenatureoftheseactivitiesduringtheyear,exceptasstatedbelow:
PursuanttoParagraph8.04andParagraph2.1(g)ofPracticeNote17(“PN17”)oftheMainMarketListingRequirements(“MMLR”)ofBursaMalaysiaSecuritiesBerhad(“BursaSecurities”),theCompany,on14December2012announced(“FirstAnnouncement”)thattheCompanyisconsideredaPN17Company.
PursuanttoParagraph8.04(3)oftheMMLRofBursaSecurities,aPN17Companymustregulariseitsconditioninthefollowingmanner:
(i) within12monthsfromthedateoftheFirstAnnouncement:
(a) submitaregularisationplantotheSecuritiesCommission(“SC”)iftheplanwillresultinasignificantchangeinthebusinessdirectionorpolicyoftheCompany;or
(b) submitaregularisationplantoBursaSecuritiesiftheplanwillnotresultinasignificantchangeinthebusinessdirectionorpolicyoftheCompany,andobtainBursaSecurities’approvaltoimplementtheplan;and
(ii) implementtheplanwithinthetimeframestipulatedbytheSCorBursaSecurities,asthecasemaybe.
Further,PN17oftheMMLRofBursaSecuritiesstatesthataPN17CompanymustannouncetoBursaSecurities:
(i) withinthree(3)monthsfromthisFirstAnnouncement,onwhethertheregularisationplanwillresultinasignificantchangeinthebusinessdirectionorpolicyoftheCompany;
(ii) thestatusofitsregularisationplanandthenumberofmonthstotheendoftherelevanttimeframesreferredtoinParagraphs5.1or5.2ofPN17oftheMMLRofBursaSecurities,asmaybeapplicable,onamonthlybasisuntilfurthernoticefromBursaSecurities;
(iii) itscomplianceornon-compliancewithaparticularobligationimposedpursuanttoPN17oftheMMLRofBursaSecurities,onanimmediatebasis;
(iv) detailsoftheregularisationplan(“RequisiteAnnouncement”)andsufficientinformationtodemonstratethattheCompanyisabletocomplywithalltherequirementssetoutinParagraph3.1ofPN17oftheMMLRofBursaSecuritiesafterimplementationoftheregularisationplan,whichshallincludeatimelineforthecompleteimplementationoftheregularisationplan.TheRequisiteAnnouncementmustbemadebytheCompany’sPrincipalAdviser;and
26ECMLibraFinancialGroupBerhadANNUALREPORT2013
directors’ report continued
Principal activities (continued)
(v) where the Company fails to regularise its condition, the dates of suspension and de-listing of its listed securities immediately upon notification ofsuspensionandde-listingbyBursaSecurities.
IntheeventtheCompanyfailstocomplywiththeobligationstoregulariseitscondition,allitslistedsecuritieswillbesuspendedfromtradingonthenextmarketdayafterfive(5)marketdaysfromthedateofnotificationofsuspensionbyBursaSecuritiesandde-listingproceduresshallbetakenagainsttheCompany,subjecttotheCompany’srighttoappealagainstthede-listing.
Results Group Company RM’000 RM’000
(Loss)/profitattributabletoownersoftheCompany (42,131) 83,770
Therewerenomaterialtransferstoorfromreservesorprovisionsduringthefinancialyearotherthanasdisclosedinthefinancialstatements.
Dividends
ThedividendpaidbytheCompanysincetheendofthepreviousfinancialyearisasfollows: RM’000In respect of the financial year ended 31 January 2012: Finalsingle-tierdividendof2.4senperordinaryshareofRM1.00eachper ordinarysharecomputedbasedon828,819,091ordinaryshares(excluding 2,082,862treasurysharesheldbytheCompany)paidon14August2012 19,892
Thedirectorsdonotproposeanyfinaldividendforthecurrentfinancialyearended31January2013.
Share buy-back and share capital
Duringthefinancialyear,theCompanycancelled2,082,862treasuryshareswithacarryingamountofRM1,578,943oranaveragepriceofRM0.7581pershare.TheamountofthesharecapitalcancelledwastransferredtocapitalredemptionreserveinaccordancewiththerequirementofSection67AoftheCompaniesAct,1965.
Asat31January2013,theCompanydoesnotholdanytreasuryshares.
ECMLibraFinancialGroupBerhadANNUALREPORT201327
Directors
ThedirectorsoftheCompanyinofficesincethedateofthelastreportandatthedateofthisreportare:
Dato’SeriKalimullahbinMasheerulHassanDato’AbHalimbinMohyiddinMrLimKianOnnDatukKamarudinbinMdAliDato’OthmanbinAbdullahEnMahadzirbinAzizanMrLumSingFai
InaccordancewithArticle103oftheArticlesofAssociationoftheCompany,Dato’AbHalimbinMohyiddinandEnMahadzirbinAzizanwillretireattheforthcomingAnnualGeneralMeetingandbothareeligibleforre-election.EnMahadzirbinAzizanoffershimselfforre-electionwhilstDato’AbHalimbinMohyiddindoesnotwishtoseekre-election.
Directors’ interests
Thedirectorsholdingofficeat theendof the financialyearwhohadbeneficial interests in theordinaryshares/options*of theCompanyand/or relatedcorporationsduringthefinancialyearended31January2013,asrecordedintheRegisterofDirectors’ShareholdingskeptbytheCompanyunderSection134oftheCompaniesAct,1965,areasfollows:
Shareholdings in which directors have interests Number of ordinary shares/options* As at As at 1.2.2012 Acquired Sold 31.1.2013 Direct interest in ECM Libra Financial Group Berhad (“ECMLFG”)
Dato’SeriKalimullahbinMasheerulHassan 32,969,696 - - 32,969,696 29,000,000* - - 29,000,000*Dato’AbHalimbinMohyiddin 200,000* - - 200,000*MrLimKianOnn 80,287,710 38,559,100 - 118,846,810 29,000,000* - - 29,000,000*DatukKamarudinbinMdAli 200,000* - - 200,000*Dato’OthmanbinAbdullah 200,000* - - 200,000*EnMahadzirbinAzizan 200,000* - - 200,000*
Indirect interest in ECMLFG
MrLimKianOnn - 4,440,900 - 4,440,900
*TheoptionsoverordinarysharesweregrantedpursuanttotheCompany’sEmployees’ShareOptionScheme(“ESOS”).
directors’ report continued
28ECMLibraFinancialGroupBerhadANNUALREPORT2013
directors’ report continued
Directors’ benefits
Sincetheendofthepreviousfinancialyear,noneofthedirectorsoftheCompanyhasreceivedorbecomeentitledtoreceiveabenefit(otherthanabenefitincludedintheaggregateamountofemolumentsreceivedordueandreceivablebythedirectorsorthefixedsalaryofafull-timeemployeeoftheCompanyorofarelatedcompanyasdisclosedinNote30ofthefinancialstatements)byreasonofacontractmadebytheCompanyorarelatedcorporationwiththedirectororwithafirmofwhichthedirectorisamember,orwithacompanyinwhichthedirectorhasasubstantialfinancialinterestexceptforMrLimKianOnnwhomaybedeemedtoderiveabenefitbyvirtueofthosetransactions,contractsandagreementsfortheacquisitionand/ordisposalofstocksandsharesand/ortheprovisionofservicesincludingbutnotlimitedtomanagementandconsultancyservices,tenanciesand/ortheprovisionoftreasuryfunctionsandtheconductofnormalstockbrokingbusinessbetweentheCompanyanditsrelatedcorporationsorcorporationsinwhichMrLimKianOnnisdeemedtohaveinterests.
TherewerenoarrangementsduringandattheendofthefinancialyearwhichhadtheobjectofenablingthedirectorsoftheCompanytoacquirebenefitsbymeansoftheacquisitionofsharesin,ordebenturesoftheCompanyoranyotherbodycorporateotherthantheshareoptionsgrantedpursuanttotheESOS.
Employees’ share option scheme (“ESOS”)
TheCompany’sESOSisgovernedbytheby-lawsapprovedbytheshareholdersatanExtraordinaryGeneralMeetingheldon1December2005.TheESOSwasimplementedon1December2005andwillbeinforceforaperiodoften(10)years.
ThemainfeaturesoftheESOSare,interalia,asfollows:
(i) TheeligibilityofanemployeeordirectoroftheGrouptoparticipate intheESOSshallbeatthediscretionoftheOptionsCommittee.TheOptions Committee may from time to time at its discretion select and identify suitable eligible employees to be offered options.The maximum allowable allotmentsforthedirectorshadbeenapprovedbytheshareholdersoftheCompanyinageneralmeeting.
(ii) The aggregate number of shares to be issued under the ESOS shall not exceed 15% of the total issued and paid-up ordinary share capital of the Companyforthetimebeing.
(iii) TheESOSshallbeinforceforaperiodof10yearsfrom1December2005.
(iv) Theoptionpriceshallnotbeatadiscountofmorethantenpercent(10%)(orsuchdiscountastherelevantauthoritiesshallpermit)fromthe5-day weighted average market price of the shares of the Company preceding the date of offer and shall in no event be less than the par value of the sharesoftheCompanyofRM1.00.
(v) Anoptionholdermay, inaparticularyear,exerciseuptosuchmaximumnumberofshares in theoptioncertificateasdeterminedbytheOptions Committeeorasspecifiedintheoptioncertificate.
Asat31January2013,therewasnoissuanceofnewsharesarisingfromtheexerciseofoptionspursuanttotheESOS.
ECMLibraFinancialGroupBerhadANNUALREPORT201329
Other statutory information
(I) As at the end of the financial year
(a) Before the statements of comprehensive income and statements of financial position of the Group and the Company were made out, the directorstookreasonablesteps:
(i) toascertainthatproperactionhadbeentakeninrelationtothewritingoffofbaddebtsandfinancingandthemakingofallowancefor doubtful debts and financing and had satisfied themselves that there were no known bad debts and financing and that no allowance fordoubtfuldebtsandfinancingwasnecessary;and
(ii) to ensure that any current assets, other than debts and financing, which were unlikely to realise their book values as shown in the accountingrecordsintheordinarycourseofbusinesshadbeenwrittendowntotheirestimatedrealisablevalues. (b) Intheopinionofthedirectors,theresultsoftheoperationsoftheGroupandoftheCompanyduringthefinancialyearwerenotsubstantially affectedbyanyitem,transactionoreventofamaterialandunusualnatureotherthanthechangesinaccountingpolicies(asdisclosedinNotes 2(a)and2(b)ofthefinancialstatements),thedisposalofECMLibraInvestmentBankBerhadanditssubsidiaries(asdisclosedinNote33ofthe financialstatements)andthecapitalrestructuringexercise(asdisclosedinNote42ofthefinancialstatements).
(II) From the end of the financial year to the date of this report
(a) Thedirectorsarenotawareofanycircumstances:
(i) which would render it necessary to write off any bad debts and financing or the amount of the allowance for doubtful debts and financinginadequatetoanymaterialextent; (ii) whichwouldrenderthevaluesattributedtocurrentassetsinthefinancialstatementsmisleading;and
(iii) whichhadarisenwhichwouldrenderadherencetotheexistingmethodofvaluationofassetsorliabilitiesoftheGroupandtheCompany misleadingorinappropriate.
(b) Intheopinionofthedirectors:
(i) theresultsoftheoperationsoftheGroupandtheCompanyforthefinancialyearended31January2013arenotlikelytobesubstantially affected by any item, transaction or event of a material and unusual nature which had arisen in the interval between the end of the financialyearandthedateofthisreport;and
(ii) nocontingentorother liabilityhasbecomeenforceable,or is likelytobecomeenforceable,withintheperiodoftwelvemonthsafterthe endof the financialyearwhichwillormayaffect theabilityof theGroupandtheCompanytomeet theirobligationsasandwhenthey falldue.
directors’ report continued
30ECMLibraFinancialGroupBerhadANNUALREPORT2013
directors’ report continued
Other statutory information (continued)
(III) As at the date of this report
(a) TherearenochargesontheassetsoftheGroupandtheCompanywhichhadarisensincetheendofthefinancialyeartosecuretheliabilities ofanyotherperson.
(b) Therearenocontingentliabilitieswhichhadarisensincetheendofthefinancialyear.
(c) The directors are not aware of any circumstances not otherwise dealt with in the report or financial statements which would render any amountstatedinthefinancialstatementsmisleading.
Significant and subsequent events
SignificantandsubsequenteventsoftheGroupisasdisclosedinNote42ofthefinancialstatements.
Auditors
Theauditors,Ernst&Young,haveexpressedtheirwillingnesstocontinueinoffice.
SignedonbehalfoftheBoardinaccordancewitharesolutionofthedirectors.
Dato’SeriKalimullahbinMasheerulHassan LimKianOnn
20March2013
ECMLibraFinancialGroupBerhadANNUALREPORT201331
statement by directors(PursuanttoSection169(15)oftheCompaniesAct,1965)
We,Dato’SeriKalimullahbinMasheerulHassanandLimKianOnn,beingtwoofthedirectorsofECMLibraFinancialGroupBerhad,doherebystatethat,intheopinionofthedirectors,theaccompanyingfinancialstatementssetoutonpages35to143aredrawnupinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965inMalaysiasoastogiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31January2013andoftheirresultsandtheircashflowsfortheyearthenended.
SignedonbehalfoftheBoardinaccordancewitharesolutionofthedirectors.
Dato’SeriKalimullahbinMasheerulHassan LimKianOnn
20March2013
statutory declaration(PursuanttoSection169(16)oftheCompaniesAct,1965)
I, Chan Soon Lee, being the officer primarily responsible for the financial management of ECM Libra Financial Group Berhad, do solemnly and sincerelydeclarethattheaccompanyingfinancialstatementssetoutonpages35to143areinmyopinioncorrect,andImakethissolemndeclarationconscientiouslybelievingthesametobetrueandbyvirtueoftheprovisionsoftheStatutoryDeclarationsAct,1960.
Subscribedandsolemnlydeclaredby theabovenamedChanSoonLeeat KualaLumpurintheFederalTerritory on20March2013 ChanSoonLee
Beforeme,
ZulkiflaMohdDahlimCommissionerforOaths
20March2013
32ECMLibraFinancialGroupBerhadANNUALREPORT2013
auditors’ report
Independent auditors’ report to the members of ECM Libra Financial Group Berhad(IncorporatedinMalaysia)
Report on the financial statements
WehaveauditedthefinancialstatementsofECMLibraFinancialGroupBerhad,whichcomprisethestatementsoffinancialpositionasat31January2013oftheGroupandoftheCompany,statementsofcomprehensiveincome,statementsofchangesinequityandstatementsofcashflowsoftheGroupandoftheCompanyfortheyearthenended,andasummaryofsignificantaccountingpoliciesandotherexplanatoryinformation,assetoutonpages35to143.
Directors’ responsibility for the financial statements
ThedirectorsoftheCompanyareresponsibleforthepreparationoffinancialstatementsthatgiveatrueandfairviewinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965inMalaysia,andforsuchinternalcontrolasthedirectorsdetermineisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditors’ responsibility
Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithapprovedstandardsonauditinginMalaysia.Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.
Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependonourjudgment,includingtheassessmentofrisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassessments,weconsiderinternalcontrolrelevanttotheCompany’spreparationoffinancialstatementsthatgiveatrueandfairviewinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheCompany’sinternalcontrol.Anauditalsoincludesevaluatingtheappropriatenessoftheaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebythedirectors,aswellasevaluatingtheoverallpresentationofthefinancialstatements.
Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.
Opinion
Inouropinion,thefinancialstatementsgiveatrueandfairviewofthefinancialpositionoftheGroupandoftheCompanyasat31January2013andoftheirfinancialperformancesandcashflowsfortheyearthenendedinaccordancewithMalaysianFinancialReportingStandards,InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965inMalaysia.
ECMLibraFinancialGroupBerhadANNUALREPORT201333
Report on other legal and regulatory requirements
InaccordancewiththerequirementsoftheCompaniesAct,1965inMalaysia,wealsoreportthefollowing:
(a) Inouropinion, theaccountingandother recordsandtheregisters requiredbytheAct tobekeptby theCompanyand itssubsidiarieshavebeen properlykeptinaccordancewiththeprovisionsoftheAct.
(b) Wearesatisfiedthat the financial statementsof thesubsidiaries thathavebeenconsolidatedwith the financial statementsof theCompanyare in form and content appropriate and proper for the purposes of the preparation of the consolidated financial statements and we have received satisfactoryinformationandexplanationsrequiredbyusforthosepurposes.
(c) Theauditors’reportsonthefinancialstatementsofthesubsidiarieswerenotsubjecttoanyqualificationandinrespectofthecompaniesincorporated inMalaysia,didnotincludeanycommentrequiredtobemadeunderSection174(3)oftheAct.
Other reporting responsibilities
ThesupplementaryinformationsetoutinNote43onpage143isdisclosedtomeettherequirementofBursaMalaysiaSecuritiesBerhadandisnotpartofthefinancialstatements.ThedirectorsareresponsibleforthepreparationofthesupplementaryinformationinaccordancewithGuidanceonSpecialMatterNo. 1, Determination of Realised and Unrealised Profits or Losses in the Context of Disclosure Pursuant to Bursa Malaysia Securities Berhad ListingRequirements,asissuedbytheMalaysianInstituteofAccountants(“MIAGuidance”)andthedirectiveofBursaMalaysiaSecuritiesBerhad.Inouropinion,thesupplementaryinformationisprepared,inallmaterialrespects,inaccordancewiththeMIAGuidanceandthedirectiveofBursaMalaysiaSecuritiesBerhad.
Other matters
AsstatedinNote2(b)tothefinancialstatements,ECMLibraFinancialGroupBerhadadoptedMalaysianFinancialReportingStandardson1February2012with a transition date of 1 February 2011. These standards were applied retrospectively by directors to the comparative information in these financialstatements, including the statements of financial position as at 31 January 2012 and 1 February 2011, and the statements of comprehensive income,statementsofchangesinequityandstatementsofcashflowsfortheyearended31January2012andrelateddisclosures.Wewerenotengagedtoreportonthecomparativeinformationanditisunaudited.OurresponsibilitiesaspartofourauditofthefinancialstatementsoftheGroupandoftheCompanyfortheyearended31January2013have,inthesecircumstances,includedobtainingsufficientappropriateauditevidencethattheopeningbalancesasat1February2012donotcontainmisstatementsthatmateriallyaffectthefinancialpositionasof31January2013andfinancialperformanceandcashflowsfortheyearthenended.
ThisreportismadesolelytothemembersoftheCompany,asabody,inaccordancewithSection174oftheCompaniesAct,1965inMalaysiaandfornootherpurpose.Wedonotassumeresponsibilitytoanyotherpersonforthecontentofthisreport.
Ernst&Young ChanHooiLam AF:0039 No.2844/02/14(J) CharteredAccountants CharteredAccountant KualaLumpur,Malaysia
20March2013
auditors’ report continued
34ECMLibraFinancialGroupBerhadANNUALREPORT2013
statements of financial position asat31January2013
Group 31 January 31 January 1 February Note 2013 2012 2011 RM’000 RM’000 RM’000
ASSETSCashandshort-termfunds 3 73,468 252,020 245,155
Depositswithfinancialinstitutions 4 - 20,631 21,489
Securitiesheld-for-trading 5 24,921 360,985 353,818
Securitiesavailable-for-sale 6 697,656 675,033 519,479
Securitiesheld-to-maturity 7 47,750 200,000 70,000
Derivativefinancialassets 8(a) 1,203 6,688 9,552
Loans,advancesandfinancing 9 4,102 556,570 658,351
Tradereceivables 10 7,849 363,500 485,318
Otherassets 11 3,857 29,443 21,760
StatutorydepositwithBankNegaraMalaysia 12 - 27,165 8,834
Investmentinassociatedcompanies 14 35,579 19,976 19,757
Deferredtaxassets 16 705 735 11,687
Property,plantandequipment 17 26,371 44,916 42,451
Intangibleassets 18 - 284,500 284,500
Total assets 923,461 2,842,162 2,752,151
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201335
Group 31 January 31 January 1 February Note 2013 2012 2011 RM’000 RM’000 RM’000
LIABILITIES AND EQUITY
Liabilities
Depositsfromcustomers 19 - 1,081,483 1,046,806
Depositsandplacementsofbanksandotherfinancialinstitutions 20 - 341,371 201,008
Derivativefinancialliabilities 8(b) - 57 -
Tradepayables 21 7,207 324,413 428,095
Otherliabilities 22 5,999 61,299 73,865
Provisionfortaxation 58 4,455 2,160
Deferredtaxliabilities 16 257 8,041 958
Total liabilities 13,521 1,821,119 1,752,892
Equity attributable to equity holders of the Company
Sharecapital 23 828,819 830,902 830,902
Reserves 24 81,121 191,720 176,243
Less:Treasuryshares,atcost 25 - (1,579) (7,886)
Shareholders’ equity 909,940 1,021,043 999,259
Total equity and liabilities 923,461 2,842,162 2,752,151
Commitment and contingencies (investment banking operations) 37 - 559,055 317,193
statements of financial position continuedasat31January2013
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
36ECMLibraFinancialGroupBerhadANNUALREPORT2013
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
Company 31 January 31 January 1 February Note 2013 2012 2011 RM’000 RM’000 RM’000
ASSETS
Cashandshort-termfunds 3 54,317 10,043 6,483
Securitiesavailable-for-sale 6 697,656 - -
Securitiesheld-to-maturity 7 47,750 - -
Otherassets 11 2,071 19,076 39,662
Investmentinsubsidiarycompanies 13 147,848 888,360 888,764
Investmentinassociatedcompany 14 7,200 - -
Amountowingbysubsidiarycompanies 15 30,263 892 659
Deferredtaxassets 16 705 - -
Property,plantandequipment 17 27,687 27,187 21,181
Total assets 1,015,497 945,558 956,749
LIABILITIES AND EQUITY
Liabilities
Otherliabilities 22 4,227 2,247 365
Amountowingtosubsidiarycompanies 15 86,227 79,346 79,850
Deferredtaxliabilities 16 - 571 914
Total liabilities 90,454 82,164 81,129
Equity attributable to equity holders of the Company
Sharecapital 23 828,819 830,902 830,902
Reserves 24 96,224 34,071 52,604
Less:Treasuryshares,atcost 25 - (1,579) (7,886)
Shareholders’ equity 925,043 863,394 875,620
Total equity and liabilities 1,015,497 945,558 956,749
statements of financial position continuedasat31January2013
ECMLibraFinancialGroupBerhadANNUALREPORT201337
statements of comprehensive incomefortheyearended31January2013
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Continuing operations
Revenue 2(r) 16,579 13,980 1,282 18,073
Interestincome 26 1,625 1,079 976 406
Non-interestincome 27 14,954 12,901 306 17,667
Othernon-operatingincome 28 1,628 1,541 1,832 1,447
Netincome 18,207 15,521 3,114 19,520
Operatingexpenses 29 (15,590) (13,755) (4,628) (3,214)
Operatingprofit/(loss) 2,617 1,766 (1,514) 16,306
Shareofprofitofanassociatedcompany 8,403 219 - -
Allowanceforlossesonloans,advancesandfinancing 31 (140) - - -
Profit/(loss)beforetax 10,880 1,985 (1,514) 16,306
Incometaxexpense 32 (657) (797) 95 (754)
Profit/(loss)fromcontinuingoperations 10,223 1,188 (1,419) 15,552
Discontinued operations
Profitfromdiscontinuedoperations,netoftax 33 16,298 28,759 - -
(Loss)/gainondisposalofsubsidiary 33 (68,652) - 85,189 -
(Loss)/profitfromdiscontinuedoperations (52,354) 28,759 85,189 -
(Loss)/profit for the year (42,131) 29,947 83,770 15,552
38ECMLibraFinancialGroupBerhadANNUALREPORT2013
statements of comprehensive income continuedfortheyearended31January2013
Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Othercomprehensiveincome:
Net(loss)/gainonavailable-for-salefinancialassets (29,598) 26,217 (2,491) -
Currencytranslationdifferences 41 2 - -
Incometaxrelatingtocomponentsofother comprehensiveincome 16 7,399 (6,604) 623 -
Othercomprehensive(loss)/incomefortheyear,netoftax (22,158) 19,615 (1,868) -
Comprising:
-Continuingoperations
Netlossonavailable-for-salefinancialassets (1,669) (199) (1,868) -
Currencytranslationdifferences 41 2 - -
(1,628) (197) (1,868) -
-Discontinuedoperations 33 (20,530) 19,812 - -
(22,158) 19,615 (1,868) -
Totalcomprehensive(loss)/incomefortheyear (64,289) 49,562 81,902 15,552
(Loss)/profitattributabletoownersoftheCompany
-Continuingoperations 10,223 1,188 (1,419) 15,552
-Discontinuedoperations (52,354) 28,759 85,189 -
(42,131) 29,947 83,770 15,552
Totalcomprehensive(loss)/incomeattributabletoownersof theCompany
-Continuingoperations 8,595 991 (3,287) 15,552
-Discontinuedoperations (72,884) 48,571 85,189 -
(64,289) 49,562 81,902 15,552
Earningspershare(“EPS”)attributabletoownersoftheCompany:
Basic/dilutedearnings/(loss)pershare Note Sen Sen
Fromcontinuingoperations 34 1.23 0.14
Fromdiscontinuedoperations 34 (6.32) 3.50
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201339
statements of changes in equityfortheyearended31January2013
<---------------------------------------------------------- Non-distributable ---------------------------------------------------- -> Distributable Continuingoperations Discontinuedoperations Foreign Available- Available- Capital currency for-sale Equity for-sale Share Treasury Mergerredemptiontranslationrevaluationcompensation Generalrevaluation Statutory Regulatory Retained Note capital shares reserve reserve reserve reserve reserve reserve reserve reserve reserve profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 1 February 2012
- as previously reported 830,902 (1,579) 26,561 - (3,293) (199) 3,122 159 20,530 80,787 - 59,307 1,016,297
- effect of change in accounting policy (Note 2(b)(i)) - - - - - - - - - - - 4,746 4,746
830,902 (1,579) 26,561 - (3,293) (199) 3,122 159 20,530 80,787 - 64,053 1,021,043
Total comprehensive income/(loss):
- Continuing operations - - - - 41 (1,669) - - - - - 10,223 8,595
- Discontinued operations - - - - - - - - (20,530) - - (52,354) (72,884)
- - - - 41 (1,669) - - (20,530) - - (42,131) (64,289)
Transactions with owners:
Continuingoperations
ESOS lapsed during the year - - - - - - (361) - - - - - (361)
Cash dividend paid 35 - - - - - - - - - - - (19,892) (19,892)
Cancellation of treasury shares 25 (2,083) 1,579 - 2,083 - - - - - - - (1,579) -
Discontinuedoperations
Transfer to regulatory reserve - - - - - - - - - - 4,746 (4,746) -
Write-off of merger reserve 33(b) - - (26,561) - - - - - - - - - (26,561)
Disposal of ECM Libra
Investment Bank Berhad 33(b) - - - - - - - - - (80,787) (4,746) 85,533 -
(2,083) 1,579 (26,561) 2,083 - - (361) - - (80,787) - 59,316 (46,814)
Asat31January2013 828,819 - - 2,083 (3,252) (1,868) 2,761 159 - - - 81,238 909,940
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
40ECMLibraFinancialGroupBerhadANNUALREPORT2013
<---------------------------------------------------------- Non-distributable ---------------------------------------------------- -> Distributable Continuingoperations Discontinuedoperations Foreign Available- Available- Capital currency for-sale Equity for-sale Share Treasury Mergerredemptiontranslationrevaluationcompensation Generalrevaluation Statutory Regulatory Retained Note capital shares reserve reserve reserve reserve reserve reserve reserve reserve reserve profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group (continued)
As at 1 February 2011
- as previously reported 830,902 (7,886) 26,561 - (3,295) - 3,526 159 718 65,720 - 76,501 992,906
- effect of change in accounting policy (Note 2(b)(i)) - - - - - - - - - - - 6,353 6,353
830,902 (7,886) 26,561 - (3,295) - 3,526 159 718 65,720 - 82,854 999,259
Total comprehensive income:
- Continuing operations - - - - 2 (199) - - - - - 1,188 991
- Discontinued operations - - - - - - - - 19,812 - - 28,759 48,571
- - - - 2 (199) - - 19,812 - - 29,947 49,562
Transactions with owners:
Continuingoperations
Arising from the Company’s
ESOS vested during the year - - - - - - 186 - - - - - 186
ESOS lapsed during the year - - - - - - (590) - - - - - (590)
Share buy-back by the Company 25 - (12,170) - - - - - - - - - - (12,170)
Cash dividend paid 35 - - - - - - - - - - - (15,204) (15,204)
Share dividend - 18,477 - - - - - - - - - (18,477) -
Discontinuedoperations
Transfer to statutory reserve - - - - - - - - - 15,067 - (15,067) -
- 6,307 - - - - (404) - - 15,067 - (48,748) (27,778)
As at 31 January 2012 830,902 (1,579) 26,561 - (3,293) (199) 3,122 159 20,530 80,787 - 64,053 1,021,043
statements of changes in equity continuedfortheyearended31January2013
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201341
statements of changes in equity continuedfortheyearended31January2013
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
<-------------- Non-distributable --------------> Distributable Available- Capital for-sale Equity Share Treasury redemption revaluation compensation Retained Note capital shares reserve reserve reserve profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company
Asat1February2012 830,902 (1,579) - - 3,122 30,949 863,394
Totalcomprehensiveincome
-Continuingoperations - - - (1,868) - (1,419) (3,287)
-Discontinuedoperations - - - - - 85,189 85,189
- - - (1,868) - 83,770 81,902
Transactionswithowners:
ESOSlapsedduringtheyear - - - - (361) - (361)
Cashdividendpaid 35 - - - - - (19,892) (19,892)
Cancellationoftreasuryshares 25 (2,083) 1,579 2,083 - - (1,579) -
(2,083) 1,579 2,083 - (361) (21,471) (20,253)
As at 31 January 2013 828,819 - 2,083 (1,868) 2,761 93,248 925,043
42ECMLibraFinancialGroupBerhadANNUALREPORT2013
statements of changes in equity continuedfortheyearended31January2013
<-------------- Non-distributable --------------> Distributable Available- Capital for-sale Equity Share Treasury redemption revaluation compensation Retained Note capital shares reserve reserve reserve profits Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Company (continued)
Asat1February2011 830,902 (7,886) - - 3,526 49,078 875,620
Totalcomprehensiveincome
-Continuingoperations - - - - - 15,552 15,552
Transactionswithowners:
ArisingfromtheCompany’s
ESOSvestedduringtheyear 29 - - - - 186 - 186
ESOSlapsedduringtheyear - - - - (590) - (590)
Sharebuy-backbytheCompany 25 - (12,170) - - - - (12,170)
Cashdividendpaid 35 - - - - - (15,204) (15,204)
Sharedividend - 18,477 - - - (18,477) -
- 6,307 - - (404) (33,681) (27,778)
Asat31January2012 830,902 (1,579) - - 3,122 30,949 863,394
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201343
statements of cash flowsfortheyearended31January2013
Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES
Profit/(loss)beforetaxationfrom:
-Continuingoperations 10,880 1,985 (1,514) 16,306
-Discontinuedoperations (44,881) 49,630 85,189 -
(34,001) 51,615 83,675 16,306
Adjustmentsfor:
Continuing operations
Depreciationofproperty,plantandequipment 17 1,033 835 812 739
Unrealised(gain)/lossonforeignexchangetransactions 28 (1) 1 - (2)
Gainondisposalofsubsidiary 33(b) - - (85,189) -
Shareofprofitofanassociatedcompany (8,403) (219) - -
Property,plantandequipmentwritten-off 29 3 - 3 -
Netgainondisposalofsecuritiesavailable-for-sale 27 (350) (484) (181) -
Netunrealisedloss/(gain)onrevaluationof:
-securitiesheld-for-trading 27 400 - - -
-derivatives 27 (1,204) - - -
Dividendincome 27 - (20) - (17,667)
CostarisingfromESOS 29 (149) (4) 26 -
Allowanceforlossesonloans,advancesandfinancing 31 140 - - -
Gainondisposalofproperty,plantandequipment 28 - (91) - (91)
Interestincome 26 (1,625) (1,079) (976) (406)
Balancecarriedforward (44,157) 50,554 (1,830) (1,121)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
44ECMLibraFinancialGroupBerhadANNUALREPORT2013
statements of cash flows continued fortheyearended31January2013
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
Balancebroughtforward (44,157) 50,554 (1,830) (1,121)
Discontinued operations (Notes 33(b) and (c))
Writebackofimpairmentoninvestments (1,528) (1,651) - -
Depreciationofproperty,plantandequipment 4,827 4,858 - -
Unrealisedgainonforeignexchangetransactions (2,650) (3,752) - -
Lossondisposalofsubsidiary 68,652 - - -
Property,plantandequipmentwritten-off 1,056 20 - -
Netgainondisposalof:
-securitiesheld-for-trading (10,037) (12,061) - -
-securitiesavailable-for-sale (17,091) (9,788) - -
-derivatives (3,396) (1,938) - -
Netunrealisedloss/(gain)onrevaluationof:
-securitiesheld-for-trading 1,260 (307) - -
-derivatives 6,250 1,691 - -
Dividendincome (2,721) (1,981) - -
CostarisingfromESOS (212) (400) - -
Allowanceforlossesonloans,advancesandfinancing 3,728 671 - -
Allowancefor/(writebackof )badanddoubtfuldebts 17 (6,493) - -
Gainondisposalofproperty,plantandequipment - (2,399) - -
Interestincome (68,935) (82,071) - -
Interestexpense 41,577 46,975 - -
Operatinglossbeforeworkingcapitalchanges (23,360) (18,072) (1,830) (1,121)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201345
statements of cash flows continued fortheyearended31January2013
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM OPERATING ACTIVITIES (continued)
Balancebroughtforward (23,360) (18,072) (1,830) (1,121)
Decrease/(increase)inoperatingassets:
Securitiesheld-for-trading 344,441 5,201 - -
Derivativefinancialinstruments 3,766 3,168 - -
Loan,advancesandfinancing 11,093 101,110 - -
Tradereceivables (99,441) 128,311 - -
Otherassets (59,948) (25,798) 17,294 (459)
(Decrease)/increaseinoperatingliabilities:
Depositsfromcustomers (167,044) 34,677 - -
Depositsandplacementsofbanksandotherfinancialinstitutions (266,371) 140,363 - -
Tradepayables (19,781) (94,878) - -
Otherliabilities 37,526 (10,593) 1,980 1,881
Amountowingby/tosubsidiarycompanies - - (22,490) (737)
Cash(usedin)/generatedfromoperations (239,119) 263,489 (5,046) (436)
Taxrefunded 3,932 615 - 440
Taxpaid (10,883) (4,464) (574) (205)
Netcash(usedin)/generatedfromoperatingactivities (246,070) 259,640 (5,620) (201)
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
46ECMLibraFinancialGroupBerhadANNUALREPORT2013
statements of cash flows continued fortheyearended31January2013
Group Company Note 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
CASH FLOWS FROM INVESTING ACTIVITIES
Dividendsreceived 2,721 1,533 - 34,786
Purchaseofproperty,plantandequipment 17 (8,601) (14,598) (1,315) (4,294)
Purchaseoftreasuryshares 25 - (12,170) - (12,170)
Disposalofsubsidiary 33(e) (204,939) - 542,072 -
Advancestoassociatedcompany (7,200) - (7,200) -
Netdisposal/(acquisition)of:
-securitiesavailable-for-sale 130,101 (119,620) (464,753) -
-securitiesheld-to-maturity 160,000 (127,800) - -
-property,plantandequipment - 8,910 - 249
Interestincomereceived 77,082 78,238 982 392
Netcashgeneratedfrom/(usedin)investingactivities 149,164 (185,507) 69,786 18,963
CASH FLOWS FROM FINANCING ACTIVITIES
Placementofmoniesheldintrust (17,782) (6,266) - -
Dividendspaid 35 (19,892) (15,204) (19,892) (15,204)
Interestpaid (43,361) (47,870) - -
Netcashusedinfinancingactivities (81,035) (69,340) (19,892) (15,204)
Net (decrease)/increase in cash and cash equivalents (177,941) 4,793 44,274 3,558
Effects of foreign exchange differences 2,692 3,752 - 2
Cash and cash equivalents at beginning of year 248,717 240,172 10,043 6,483
Cash and cash equivalents at end of year 73,468 248,717 54,317 10,043
Cash and cash equivalents comprise:
Cashandshort-termfunds 3 73,468 252,020 54,317 10,043
Depositswithlicensedfinancialinstitutions 4 - 20,631 - -
Moniesheldintrustfordealers’representatives - (23,934) - -
73,468 248,717 54,317 10,043
Theaccompanyingnotesformanintegralpartofthefinancialstatements.
ECMLibraFinancialGroupBerhadANNUALREPORT201347
notes to the financial statements
1. CORPORATE INFORMATION
TheCompanyisapubliclimitedcompanyincorporatedinMalaysiaandlistedontheMainMarketofBursaMalaysiaSecuritiesBerhad(“BursaMalaysia”).TheprincipalplaceofbusinessoftheCompanyislocatedat2ndFloor,EastWing,BangunanECMLibra,8JalanDamansaraEndah,DamansaraHeights,50490KualaLumpur.
The principal activities of the Company are investment holding and provision of management services. The principal activities of the subsidiarycompaniesaresetoutinNote13.
Therehavebeennosignificantchangesinthenatureoftheseactivitiesduringtheyear.TheinvestmentbankingsubsidiariesweredisposedoffduringthefinancialyearasdisclosedinNotes13and33.
ThefinancialstatementswereauthorisedforissuebytheBoardofDirectorsinaccordancewitharesolutionofthedirectorson20March2013.
2. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation
The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards(“MFRS”),InternationalFinancialReportingStandardsandtherequirementsoftheCompaniesAct,1965inMalaysia.ThesearetheGroupandtheCompany’sfirstannualfinancialstatementspreparedinaccordancewithMFRSandMFRS1First-Time Adoption of Malaysian Financial Reporting Standards (“MFRS1”)hasbeenapplied.Inpreviousfinancialyears,thefinancialstatementsoftheGroupandoftheCompanywerepreparedinaccordancewithFinancialReportingStandards(“FRS”)inMalaysia.
ThefinancialstatementsoftheGroupandoftheCompanyhavebeenpreparedonahistoricalcostbasis,exceptforsecuritiesheld-for-trading,securities available-for-sale, derivative financial assets and liabilities that have been stated at their fair values. The financial statements arepresentedinRinggitMalaysia(“RM”)andallvaluesareroundedtothenearestthousand(RM’000),unlessotherwiseindicated.Asatthereportingdate,thefinancialstatementshavebeenpreparedpursuanttotheBNM/GP8presentationasthesignificantportionofresultsandpositionsofthe Group were contributed from subsidiaries disposed as disclosed in Note 33.These financial statements are prepared in accordance withdisclosurerequirementsunderMFRS5Non-Current Assets Held-for-Sale and Discontinued Operations(“MFRS5”)asthedisposalwascompletedon14December2012.
(b) Transition to MFRS and application of MFRS 1
As disclosed in Note 2(a), these are the first financial statements of the Group and of the Company prepared in accordance with MFRS.TheaccountingpoliciessetoutinNotes(d)to(x)havebeenappliedinpreparingthefinancialstatementsoftheGroupandoftheCompanyforthefinancialyearended31January2013,thecomparativeinformationpresentedinthesefinancialstatementsforthefinancialyearended31January2012andinthepreparationoftheopeningstatementsoffinancialpositionat1February2011(whichisalsotheGroupandtheCompany’sdateoftransition).
TheGrouphasalsoadoptedFinancialReportingStandardsImplementationCommittee(“FRSIC”)Consensus18Monies Held in Trust by Participating Organisation at Bursa Malaysia Securities Berhad (“FRSIC18”)duringthefinancialyear.
In preparing their opening statement of financial position as at 1 February 2011, the Group and the Company have restated the amountspreviouslyreportedinfinancialstatementspreparedinaccordancewithFRS.AnexplanationofhowthetransitionfromFRStoMFRSandadoptionofFRSIC18haveaffectedtheGroup’sandtheCompany’sfinancialposition,financialperformanceandcashflowsissetoutasfollows:
48ECMLibraFinancialGroupBerhadANNUALREPORT2013
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
Reconciliation of financial position as at 31 January 2012
Note 2(b)(i) Note 2(b)(ii) Under the Effect of Effect of Under the FRS transition adopting MFRS Group Framework to MFRS FRSIC 18 Framework As at 31 January 2012 RM’000 RM’000 RM’000 RM’000
ASSETS
Cashandshort-termfunds 410,566 (158,546) 252,020
Depositswithfinancialinstitutions 20,631 20,631
Securitiesheld-for-trading 360,985 360,985
Securitiesavailable-for-sale 675,033 675,033
Securitiesheld-to-maturity 200,000 200,000
Derivativefinancialassets 6,688 6,688
Loans,advancesandfinancing 550,242 6,328 556,570
Tradereceivables 363,500 363,500
Otherassets 29,443 29,443
StatutorydepositwithBankNegaraMalaysia 27,165 27,165
Investmentinassociatedcompany 19,976 19,976
Deferredtaxassets 735 735
Property,plantandequipment 44,916 44,916
Intangibleassets 284,500 284,500
TOTAL ASSETS 2,994,380 2,842,162
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT201349
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
Reconciliation of financial position as at 31 January 2012 (continued)
Note 2(b)(i) Note 2(b)(ii) Under the Effect of Effect of Under the FRS transition adopting MFRS Group Framework to MFRS FRSIC 18 Framework As at 31 January 2012 (continued) RM’000 RM’000 RM’000 RM’000
LIABILITIES
Depositsfromcustomers 1,081,483 1,081,483
Depositsandplacementsofbanksandotherfinancialinstitutions 341,371 341,371
Derivativefinancialliabilities 57 57
Tradepayables 482,959 (158,546) 324,413
Otherliabilities 61,299 61,299
Provisionfortaxation 2,873 1,582 4,455
Deferredtaxliabilities 8,041 8,041
TOTAL LIABILITIES 1,978,083 1,821,119
LIABILITIES AND EQUITY
EQUITY
Sharecapital 830,902 830,902
Reserves 186,974 4,746 191,720
Less:Treasuryshares,atcost (1,579) (1,579)
TOTAL EQUITY 1,016,297 1,021,043
TOTAL LIABILITIES AND EQUITY 2,994,380 2,842,162
Netassetspershare(RM) 1.23 1.23
50ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
Reconciliation of financial position as at 1 Febuary 2011
Note 2(b)(i) Note 2(b)(ii) Under the Effect of Effect of Under the FRS transition adopting MFRS Group Framework to MFRS FRSIC 18 Framework As at 1 February 2011 RM’000 RM’000 RM’000 RM’000
ASSETS
Cashandshort-termfunds 394,897 (149,742) 245,155
Depositswithfinancialinstitutions 21,489 21,489
Securitiesheld-for-trading 353,818 353,818
Securitiesavailable-for-sale 519,479 519,479
Securitiesheld-to-maturity 70,000 70,000
Derivativefinancialassets 9,552 9,552
Loans,advancesandfinancing 649,880 8,471 658,351
Tradereceivables 485,318 485,318
Otherassets 21,760 21,760
StatutorydepositwithBankNegaraMalaysia 8,834 8,834
Investmentinassociatedcompany 19,757 19,757
Deferredtaxassets 11,687 11,687
Property,plantandequipment 42,451 42,451
Intangibleassets 284,500 284,500
TOTAL ASSETS 2,893,422 2,752,151
ECMLibraFinancialGroupBerhadANNUALREPORT201351
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
Reconciliation of financial position as at 1 February 2011 (continued)
Note 2(b)(i) Note 2(b)(ii) Under the Effect of Effect of Under the FRS transition adopting MFRS Group Framework to MFRS FRSIC 18 Framework As at 1 February 2011 (continued) RM’000 RM’000 RM’000 RM’000
LIABILITIES AND EQUITY
LIABILITIES
Depositsfromcustomers 1,046,806 1,046,806
Depositsandplacementsofbanksandotherfinancialinstitutions 201,008 201,008
Tradepayables 577,837 (149,742) 428,095
Otherliabilities 73,865 73,865
Provisionfortaxation 42 2,118 2,160
Deferredtaxliabilities 958 958
TOTAL LIABILITIES 1,900,516 1,752,892
EQUITY
Sharecapital 830,902 830,902
Reserves 169,890 6,353 176,243
Less:Treasuryshares,atcost (7,886) (7,886)
TOTAL EQUITY 992,906 999,259
TOTAL LIABILITIES AND EQUITY 2,893,422 2,752,151
Netassetspershare(RM) 1.21 1.22
52ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
(i) MFRS 139 Financial Instruments: Recognition and Measurement (“MFRS 139”) - Accounting policy on collective assessment allowance for loans, advances and financing (“loans”)
Prior to the transition to MFRS 139, the Group maintained its collective assessment allowance at 1.5% of total outstanding loans, net of individualassessmentallowance,inlinewithBankNegaraMalaysia(“BNM”)’stransitionalprovisionsunderitsGuidelinesonClassificationand Impairment Provisions for Loans/Financing. Upon the transition to MFRS 139 on 1 February 2012, these transitional provisions, which wereallowedunderthepreviousFRSframework,wereremovedandtheGroupappliedtherequirementsofMFRS139inthedetermination ofcollectiveassessmentallowance.
UnderMFRS139,collectiveassessment isperformedon loanswhicharenot individuallysignificantbasedonthe incurred lossapproach. Loanswhichare individuallyassessedandwherethere isnoobjectiveevidenceof impairmentarealso includedinthegroupof loansfor collectiveassessment.Theseloansarepooledintogroupswithsimilarcreditriskcharacteristicsandthefuturecashflowsforeachgroupis estimatedonthebasisofthehistoricallossexperienceforsuchassetsanddiscountedtopresentvalue.Collectiveassessmentallowanceis madeonanyshortfallinthesediscountedcashflowsagainstthecarryingvalueofthegroupofloans.
This change in accounting policy has been accounted for retrospectively and has resulted in a decrease in the collective assessment allowance charged in the income statement and a writeback of collective assessment allowance to the opening retained profits and opening collective assessment allowance in the statement of financial position. BNM required ECM Libra Investment Bank Berhad, a subsidiaryoftheGrouptoclassifythewritebackofcollectiveassessmentallowanceintoregulatoryreserveuntilthevalidationiscompleted. AsummaryofthefinancialimpactofthechangeinaccountingpolicyonthefinancialstatementsoftheGroupareasfollows:
Group 31 January 1 February 2012 2011 Statement of Financial Position RM’000 RM’000
Loans, advances and financing
- collective assessment allowance
Aspreviouslystated 8,704 10,176
Effectofchangeinaccountingpolicy (6,328) (8,471)
Asrestated 2,376 1,705
Retained profits
Aspreviouslystated 59,307 76,501
Effectofchangeinaccountingpolicy 4,746 6,353
Asrestated 64,053 82,854
ECMLibraFinancialGroupBerhadANNUALREPORT201353
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(b) Transition to MFRS and application of MFRS 1 (continued)
(ii) FRSIC 18 Monies Held in Trust by Participating Organisations of Bursa Malaysia Securities Berhad (“FRSIC 18”)
FRSIC18wasdevelopedbytheFRSICandissuedbytheMalaysianInstituteofAccountants(“MIA”or“Institute”)on18September2012.
FRSIC 18 provides that the trust monies do not constitute part of the participating organisation’s assets because it does not have any control over the trust monies to obtain the future economic benefits embodied in trust monies. Although a participating organisation isrequiredtomaintainthetrustmoniespursuanttoCapitalMarketsandServicesAct,2007(“CMSA2007”)andBursaMalaysiaRules,itdoesnot have any contractual or statutory obligation to its clients on the trust monies that would result in an outflow of resources embodying economicbenefitsfromit.However,aliabilitywillberecognisedintheeventofalossoftrustmonieswhichwouldresultinthepaymentof anycompensationbytheparticipatingorganisationtoitsclient.
Hence,therecognitionofthetrustmoniesaspartoftheparticipatingorganisation’sassetswithcorrespondingliabilitiesisinappropriatefrom thecontextofMFRS.
TheGrouphasappliedtherequirementofFRSIC18accordingly.Thischangehasbeenaccountedforretrospectivelyandhasresultedina decreaseintheopeningcashandbalanceswithbanksandotherliabilitiesrespectivelyinthestatementoffinancialposition.Asummaryof thefinancialimpactofthechangeinaccountingpolicyonthefinancialstatementsoftheGroupisasfollows:
Group 31 January 1 February 2012 2011 Statement of Financial Position RM’000 RM’000
Cash and balances with banks
Aspreviouslystated 410,566 394,897
EffectofchangeduetoFRSIC18 (158,546) (149,742)
Asrestated 252,020 245,155
Trade payables
Aspreviouslystated 482,959 577,837
EffectofchangeduetoFRSIC18 (158,546) (149,742)
Asrestated 324,413 428,095
54ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Standards issued but not yet effective
Asatthedateofauthorisationofthesefinancialstatements,thefollowingstandards,AmendmentsandIssuesCommittee(“IC”)InterpretationshavebeenissuedbytheMalaysianAccountingStandardsBoard(“MASB”)butarenotyeteffectiveandhavenotbeenadoptedbytheGroupandbytheCompany:
Effective for financial periods beginning on or after 1 January 2013
MFRS3BusinessCombination
MFRS10ConsolidatedFinancialStatements
MFRS11JointArrangements
MFRS12DisclosureofInterestsinOtherEntities
MFRS13FairValueMeasurement
MFRS119EmployeeBenefits(revised)
MFRS127ConsolidatedandSeparateFinancialStatements(revised)
MFRS128InvestmentsinAssociates(revised)
AmendmentstoMFRS7FinancialInstruments:Disclosures-OffsettingFinancialAssetsandFinancialLiabilities
AmendmentstoMFRS1First-timeAdoptionofMalaysianFinancialReportingStandards-GovernmentLoans
AmendmentstoMFRS1First-timeAdoptionofMalaysianFinancialReportingStandards(AnnualImprovements2009-2011Cycle)
AmendmentstoMFRS101PresentationofFinancialStatements(AnnualImprovements2009-2011Cycle)
AmendmentstoMFRS116Property,PlantandEquipment(AnnualImprovements2009-2011Cycle)
AmendmentstoMFRS132FinancialInstruments:Presentation(AnnualImprovements2009-2011Cycle)
AmendmentstoMFRS134InterimFinancialReporting(AnnualImprovements2009-2011Cycle)
AmendmentstoMFRS10ConsolidatedFinancialStatements:TransitionGuidance
AmendmentstoMFRS11JointArrangements:TransitionGuidance
AmendmentstoMFRS12DisclosureofInterestsinOtherEntities:TransitionGuidance
ICInterpretation2Members’SharesinCo-operativeEntitiesandSimilarInstruments(AnnualImprovements2009-2011Cycle)
ECMLibraFinancialGroupBerhadANNUALREPORT201355
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Standards issued but not yet effective (continued)
Effective for financial periods beginning on or after 1 January 2014
AmendmentstoMFRS132FinancialInstruments:Presentation-OffsettingFinancialAssetsandFinancialLiabilities
Effective for financial periods beginning on or after 1 January 2015
MFRS9FinancialInstruments
AmendmentstoMFRS7FinancialInstruments:Disclosures-MandatoryDateofMFRS9andTransitionDisclosures
TheGroupandtheCompanyplantoadopttheabovepronouncementswhentheybecomeeffectiveintherespectivefinancialperiods.Thesepronouncements are expected to have no significant impact to the financial statements of the Group and of the Company upon their initialapplicationexceptasdescribedbelow:
(i) MFRS 9 Financial Instruments (“MFRS 9”)
MFRS 9, as issued, reflects the first phase of the IASB’s work on the replacement of MFRS 139 Financial Instruments: Recognition and Measurement(“MFRS139”)andappliestoclassificationandmeasurementoffinancialassetsandfinancialliabilitiesasdefinedinMFRS139 andreplacestheguidanceinMFRS139.
Insubsequentphases,theIASBwilladdresshedgeaccountingandimpairmentoffinancialassets.TheadoptionofthefirstphaseofMFRS9 mayhaveaneffectontheclassificationandmeasurementoftheGroup’sandoftheCompany’sfinancialassetsandfinancialliabilities.The GroupandtheCompanywillquantifytheeffectinconjunctionwiththeotherphaseswhenthefinalstandardwhichincludesallphasesis issued.
(ii) MFRS 10 Consolidated Financial Statements (“MFRS 10”)
MFRS10establishesasinglecontrolmodelthatappliestoallentitiesincludingspecialpurposeentities.ThechangesintroducedbyMFRS 10 will require management to exercise significant judgment to determine which entities are controlled and therefore are required to be consolidatedbyaparent,comparedwiththerequirementsthatwereinMFRS127ConsolidatedandSeparateFinancialStatementsandIC Interpretation112SpecialPurposeEntities.Basedonthepreliminaryanalysisperformed,MFRS10 isnotexpectedtohaveany impacton theinvestmentscurrentlyheldbytheGroupandtheCompany.
(iii) MFRS 12 Disclosure of Interests in Other Entities (“MFRS 12”)
MFRS 12 includes all disclosures that were previously in MFRS 127 related to consolidated financial statements as well as all of the disclosuresthatwerepreviouslyincludedinMFRS11JointArrangementsandMFRS128InvestmentsinAssociates.Thesedisclosuresrelated toanentity’sinterestsinsubsidiaries,jointarrangements,associatesandstructuredentities.Anumberofnewdislcosuresarealsorequired butwillhavenoimpactontheGroup’sandtheCompany’sfinancialpositionorperformance.
(iv) MFRS 13 Fair Value Measurement (“MFRS 13”)
MFRS13establishesasinglesourceofguidanceunderMFRSforall fairvaluemeasurements.MFRS13doesnotchangewhenanentity is requiredtousefairvaluebutratherprovidesguidanceonhowtomeasurefairvalueunderMFRSwhenfairvalueisrequiredorpermitted. TheGroupandtheCompanyarecurrentlyassessingthe impactthatthisstandardwillhaveonthefinancialpositionandperformanceof theGroupandoftheCompanybutbasedonpreliminaryanalysis,nomaterialimpactisexpected.
56ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(d) Subsidiaries and basis of consolidation
(i) Subsidiaries
Subsidiariesareentitiesoverwhich theGrouphas theability togovern the financialandoperatingpoliciessoas toobtainbenefits from their activities. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessingwhethertheGrouphassuchpoweroveranotherentity.
IntheCompany’sseparatefinancialstatements, investmentsinsubsidiariesarestatedatcostlessimpairmentlosses, ifany.Ondisposalof suchinvestments,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisincludedinprofitorloss.
(ii) Basis of consolidation
TheconsolidatedfinancialstatementscomprisethefinancialstatementsoftheCompanyanditssubsidiariesasatthereportingdate.The financial statements of the subsidiaries are prepared for the same reporting date as the Company. Consistent accounting policies are appliedtoliketransactionsandeventsinsimilarcircumstances.
Allintra-groupbalances,incomeandexpensesandunrealisedgainsandlossesresultingfromintra-grouptransactionsareeliminatedinfull.
Subsidiaries are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidateduntilthedatethatsuchcontrolceases.
(iii) Purchase method of consolidation
Acquisitions of subsidiaries are generally accounted for using the acquisition method. The acquisition 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, liabilitiesincurredorassumed,andequityinstrumentsissued.Acquisition-relatedcostsarerecognisedasexpensesintheperiodsinwhich thecostsareincurredandtheservicesarereceived.
Anyexcessof thecostof theacquisitionover theGroup’s interest in thenet fairvalueof the identifiableassets, liabilitiesandcontingent liabilities represents goodwill. Any excess of the Group’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilitiesoverthecostofacquisitionisrecognisedimmediatelyasagainfromabargainpurchaseinprofitorlossonthedateofacquisition.
(iv) Merger principles of accounting
Businesscombinationsinvolvingentitiesundercommoncontrolareaccountedforusingmergerprinciplesofaccounting.Whenthemerger principlesofaccountingareadopted,thedifferencebetweenthecostofinvestmentintheCompany’srecordsandthesharecapitalofthe “acquiredentity”istreatedasamergerreserveoramergerdeficit.Theresultsofthecompaniesmergedareincludedasifthemergerhad beeneffectedfromdayonethroughoutthefinancialperiodspresented.
ThemergerprinciplesofaccountingwereadoptedbytheGroupinrespectoftheacquisitionofAvenueCapitalResourcesBerhad(“ACRB”) anditssubsidiariespursuanttotheACRBreorganisationexerciseinthepreviousfinancialyears.
ECMLibraFinancialGroupBerhadANNUALREPORT201357
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(e) Associates
AssociatesareentitiesinwhichtheGrouphassignificantinfluenceandthatisneitherasubsidiarynoraninterestinajointventure.Significantinfluenceisthepowertoparticipateinthefinancialandoperatingpolicydecisionsoftheinvesteebutnotincontrolorjointcontroloverthosepolicies.
Investmentsinassociatesareaccountedforintheconsolidatedfinancialstatementsusingtheequitymethodofaccounting.Undertheequitymethod,theinvestmentinanassociateiscarriedintheconsolidatedstatementoffinancialpositionatcostadjustedforpost-acquisitionchangesintheGroup’sshareofnetassetsoftheassociate.TheGroup’sshareofthenetprofitor lossoftheassociateisrecognisedintheconsolidatedprofitorloss.Wheretherehasbeenachangerecogniseddirectlyintheequityoftheassociate,theGrouprecognisesitsshareofsuchchanges.Inapplyingtheequitymethod,unrealisedgainsandlossesontransactionsbetweentheGroupandtheassociateareeliminatedtotheextentoftheGroup’sinterestintheassociate.Afterapplicationoftheequitymethod,theGroupdetermineswhetheritisnecessarytorecogniseanyadditionalimpairmentlosswithrespecttotheGroup’snetinvestmentintheassociate.TheassociateisequityaccountedforfromthedatetheGroupobtainssignificantinfluenceuntilthedatetheGroupceasestohavesignificantinfluenceovertheassociate.
WhentheGroup’sshareoflossesinanassociateequalsorexceedsitsinterestintheassociate,includinganylong-termintereststhat,insubstance,formpartoftheGroup’snetinvestmentintheassociate,theGroupdoesnotrecognisefurtherlosses,unlessithasincurredobligationsormadepaymentsonbehalfoftheassociate.
ThemostrecentavailableauditedfinancialstatementsoftheassociatesareusedbytheGroupinapplyingtheequitymethod.WherethedatesoftheauditedfinancialstatementsusedarenotcoterminouswiththoseoftheGroup,theshareofresultsisarrivedatfromthelastauditedfinancialstatementsavailableandmanagementfinancialstatementstotheendoftheaccountingperiod.Uniformaccountingpoliciesareadoptedforliketransactionsandeventsinsimilarcircumstances.
In the Company’s separate financial statements, investments in associates are stated at cost less impairment losses. On disposal of suchinvestments,thedifferencebetweennetdisposalproceedsandtheircarryingamountsisincludedintheprofitorloss.
(f) Intangible assets
(i) Goodwill
Goodwill acquired in a business combination is initially measured at cost being the excess of the cost of business combination over the Group’sinterestinthenetfairvalueoftheidentifiableassets,liabilitiesandcontingentliabilities.Followingtheinitialrecognition,goodwill ismeasuredatcostlessanyaccumulatedimpairmentlosses.Goodwillisnotamortisedbutinstead,itisreviewedforimpairment,annually ormorefrequentlyifeventsorchangesincircumstancesindicatethatthecarryingvaluemaybeimpaired.Gainsandlossesonthedisposal ofanentityincludethecarryingamountofgoodwillrelatingtotheentitysold.
(ii) Merchant bank licence
This represents contribution to BNM for a merchant bank licence to transform ECM Libra Investment Bank Berhad, the universal broker subsidiaryintoaninvestmentbank.Themerchantbanklicencehasindefiniteusefullifeandisstatedatcostlessaccumulatedimpairment losses.
Merchantbank licence isnotamortisedbut tested for impairmentannuallyormore frequently if theeventsorchanges incircumstances indicatethatthecarryingvaluemaybeimpaired.Anyimpairmentlossisrecognisedinprofitorloss.
58ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(g) Property, plant and equipment
Allitemsofproperty,plantandequipmentareinitiallyrecordedatcost.Thecostofanitemofproperty,plantandequipmentisrecognisedasanassetif,andonlyif,itisprobablethatfutureeconomicbenefitsassociatedwiththeitemwillflowtotheGroupandtheCompanyandthecostoftheitemcanbemeasuredreliably.
Subsequenttorecognition,property,plantandequipmentaremeasuredatcostlessaccumulateddepreciationandanyaccumulatedimpairmentlosses.When significant parts of property, plant and equipment are required to be replaced in intervals, the Group recognises such parts asindividualassetswithspecificusefullivesanddepreciation,respectively.Likewise,whenamajorinspectionisperformed,itscostisrecognisedinthecarryingamountoftheplantandequipmentasareplacementiftherecognitioncriteriaaresatisfied.Allotherrepairandmaintenancecostsarerecognisedinprofitorlossasincurred.
Work-in-progresscomprisestherenovationworkofbuildingswhichhavenotbeencompletedandthereforeitisnotdepreciated.
Freeholdlandhasanunlimitedusefullifeandthereforeisnotdepreciated.
Depreciationofotherproperty,plantandequipmentisprovidedforonastraight-linebasistowriteoffthecostofeachassettoitsresidualvalueovertheestimatedusefullife,atthefollowingannualrates:
%
Building 2
Furnitureandfittingsandofficeequipment 10-20
Computers 20-25
Motorvehicles 20
Thecarryingvaluesofproperty,plantandequipmentarereviewedforimpairmentwheneventsorchangesincircumstancesindicatethatthecarryingvaluemaynotberecoverable.
Theresidualvalue,usefullifeanddepreciationmethodarereviewedateachfinancialyearend,andadjustedprospectively,ifappropriate.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected from its use ordisposal.Thedifferencebetweenthenetdisposalproceeds,ifany,andthenetcarryingamountisrecognisedintheprofitorloss.
(h) Impairment of non-financial assets, investments in subsidiaries and associates
TheGroupassessesateachreportingdatewhetherthereisanindicationthatanassetmaybeimpaired.Ifanysuchindicationexists,orwhenanannualimpairmentassessmentforanassetisrequired,theGroupmakesanestimateoftheasset’srecoverableamount.
Anasset’srecoverableamountisthehigherofanasset’sfairvaluelesscoststosellanditsvalueinuse.Forthepurposeofassessingimpairment,assetsaregroupedatthelowestlevelsforwhichthereareseparatelyidentifiablecashflows(cash-generatingunits(“CGU”)).
ECMLibraFinancialGroupBerhadANNUALREPORT201359
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(h) Impairment of non-financial assets, investments in subsidiaries and associates (continued)
Inassessingvalueinuse,theestimatedfuturecashflowsexpectedtobegeneratedbytheassetarediscountedtotheirpresentvalueusingapre-taxdiscountratethatreflectscurrentmarketassessmentsofthetimevalueofmoneyandtherisksspecifictotheasset.Wherethecarryingamountofanassetexceedsitsrecoverableamount,theassetiswrittendowntoitsrecoverableamount.ImpairmentlossesrecognisedinrespectofaCGUorgroupsofCGUsareallocatedfirsttoreducethecarryingamountofanygoodwillallocatedtothoseunitsorgroupsofunitsandthen,toreducethecarryingamountoftheotherassetsintheunitorgroupsofunitsonapro-ratabasis.
Impairmentlossesarerecognisedinprofitorloss.
Anassessmentismadeateachreportingdateastowhetherthereisanyindicationthatpreviouslyrecognisedimpairmentlossesmaynolongerexistormayhavedecreased.Otherthangoodwill,apreviouslyrecognised impairment loss is reversedonly if therehasbeenachange intheestimatesusedtodeterminetheasset’srecoverableamountsincethelastimpairmentlosswasrecognised.Ifthatisthecase,thecarryingamountoftheassetisincreasedtoitsrecoverableamount.Thatincreasecannotexceedthecarryingamountthatwouldhavebeendetermined,netofdepreciation,hadnoimpairmentlossbeenrecognisedpreviously.Suchreversalisrecognisedinprofitorloss.Impairmentlossongoodwillisnotreversedinasubsequentperiod.
(i) Financial assets
Financialassetsarerecognisedinthestatementsoffinancialpositionwhen,andonlywhen,theGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancialinstrument.
Whenfinancialassetsarerecognisedinitially,theyaremeasuredatfairvalue,plus,inthecaseoffinancialassetsnotatfairvaluethroughprofitorloss,directlyattributabletransactioncosts.
TheGroupandtheCompanydeterminetheclassificationoftheirfinancialassetsatinitialrecognition,andthecategoriesincludefinancialassetsatfairvaluethroughprofitorloss,loansandreceivables,held-to-maturityinvestmentsandavailable-for-salefinancialassets.
(i) Financial assets at fair value through profit or loss
Financial assets are classified as financial assets at fair value through profit or loss if they are held-for-trading (“HFT”) or are designated assuchuponinitialrecognition.FinancialassetsHFTarederivatives(includingseparatedembeddedderivatives)orfinancialassetsacquired principallyforthepurposeofsellinginthenearterm.
Subsequentto initial recognition, financialassetsat fairvaluethroughprofitor lossaremeasuredat fairvalue.Anygainsor lossesarising from changes in fair value are recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss donot includeexchangedifferencesonmonetary items, interestanddividend income.Exchangedifferencesonmonetary items, interest anddividendincomeonfinancialassetsatfairvaluethroughprofitorlossarerecognisedseparatelyinprofitorlossaspartofotherlosses orotherincome.
Financialassetsatfairvaluethroughprofitorlosscouldbepresentedascurrentornon-current.Financialassetsthatareheldprimarilyfor tradingpurposesarepresentedascurrentwhereasfinancialassetsthatarenotheldprimarilyfortradingpurposesarepresentedascurrent ornon-currentbasedonthesettlementdate.
60ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(i) Financial assets (continued)
(ii) Loans and receivables
Financialassetswithfixedordeterminablepaymentsthatarenotquotedinanactivemarketareclassifiedasloansandreceivables.
Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective interest method. Gains and lossesarerecognisedinprofitorlosswhentheloansandreceivablesarederecognisedorimpaired,andthroughtheamortisationprocess.
Loansandreceivablesareclassifiedascurrentassets,exceptforthosehavingmaturitydateslaterthan12monthsafterthereportingdate whichareclassifiedasnon-current.
(iii) Held-to-maturity (“HTM”) investments
Financialassetswith fixedordeterminablepaymentsandfixedmaturityareclassifiedasHTMwhentheGroupandtheCompanyhasthe positiveintentionandabilitytoholdtheinvestmenttomaturity.
Subsequent to initial recognition,HTM investmentsaremeasuredatamortisedcostusingtheeffective interestmethod.Gainsand losses arerecognisedinprofitorlosswhentheHTMinvestmentsarederecognisedorimpaired,andthroughtheamortisationprocess.
HTMinvestmentsareclassifiedasnon-currentassets,exceptforthosehavingmaturitywithin12monthsafterthereportingdatewhichare classifiedascurrent.
(iv) Available-for-sale (“AFS”) financial assets
AFSarefinancialassetsthataredesignatedasavailable-for-saleorarenotclassifiedinanyofthethreeprecedingcategories.
Afterinitialrecognition,AFSfinancialassetsaremeasuredatfairvalue.Anygainsorlossesfromchangesinfairvalueofthefinancialasset arerecognisedinothercomprehensiveincome,exceptthatimpairmentlosses,foreignexchangegainsandlossesonmonetaryinstruments andinterestcalculatedusingtheeffectiveinterestmethodarerecognisedinprofitorloss.Thecumulativegainorlosspreviouslyrecognised in other comprehensive income is reclassified from equity to profit or loss as a reclassification adjustment when the financial asset is derecognised.Interestincomecalculatedusingtheeffectiveinterestmethodisrecognisedinprofitorloss.DividendsonanAFSinstrument arerecognisedinprofitorlosswhentheGroup’sandtheCompany’srighttoreceivepaymentisestablished.
Investmentsinequityinstrumentswhosefairvaluecannotbereliablymeasuredaremeasuredatcostlessimpairmentloss.
AFSfinancialassetsareclassifiedasnon-currentassetsunlesstheyareexpectedtoberealisedwithin12monthsafterthereportingdate.
A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financialasset in itsentirety, thedifferencebetweenthecarryingamountandthesumof theconsideration receivedandanycumulative gainorlossthathadbeenrecognisedinothercomprehensiveincomeisrecognisedinprofitorloss.
Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the period generally established by regulation or convention in the marketplace concerned. All regular way purchases and sales of financial assets are recognisedorderecognisedonthetradedatei.e.,thedatethattheGroupandtheCompanycommittopurchaseorselltheasset.
ECMLibraFinancialGroupBerhadANNUALREPORT201361
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Reclassification of financial assets
TheGroupandtheCompanymaychoosetoreclassifynon-derivativeassetsoutfromtheHFTcategory,inrarecircumstances,wherethefinancialassetsarenolongerheldforthepurposeofsellingorrepurchasingintheshortterm.Inaddition,theGroupandtheCompanymayalsochoosetoreclassifyfinancialassetsthatwouldmeetthedefinitionofloansandreceivablesoutoftheHFTorAFScategoriesiftheGroupandtheCompanyhavetheintentionandabilitytoholdthefinancialassetfortheforeseeablefutureoruntilmaturity.
Reclassificationsaremadeatfairvalueasatthereclassificationdate,wherebythefairvaluebecomesthenewcostoramortisedcost,asapplicable.Anyfairvaluegainsorlossespreviouslyrecognisedinprofitorlossarenotreversed.
Asatreportingdate,theGroupandtheCompanyhavenotmadeanysuchreclassificationoffinancialassets.
(k) Determination of fair value
Allfinancialinstrumentsarerecognisedinitiallyatfairvalue.Atinitialrecognition,thefairvalueofafinancialinstrumentisthetransactionprice,i.e.thefairvalueoftheconsiderationgivenorreceived.Subsequenttoinitialrecognition,thefairvalueofthefinancialinstrumentsmeasuredatfairvaluearemeasuredinaccordancewiththevaluationmethodologiesassetoutinNote41.
Investmentsinunquotedequityinstrumentswhosefairvaluecannotbereliablymeasuredaremeasuredatcost,andassessedforimpairmentateachreportingdate.
MFRS7FinancialInstruments:Disclosuresrequirestheclassificationoffinancialinstrumentsheldatfairvalueaccordingtoahierarchythatreflectsthesignificanceofinputsusedinmakingthemeasurements,inparticular,whethertheinputsusedareobservableorunobservable.Thefollowinghierarchyisusedfordetermininganddisclosingthefairvalueoffinancialinstruments:
Level1-quotedmarketprices:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;.
Level2-valuationtechniquesusingobservableinputs:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetorliability,whetherdirectly(i.e.prices)orindirectly(i.e.derivedfromprices),areused;
Level3-valuationtechniqueswithsignificantunobservableinputs:inputsusedarenotbasedonobservablemarketdata.
For financial instruments measured at fair value, where available, quoted and observable market prices in an active market or dealer pricequotationsareusedtomeasurefairvalue.TheseincludelistedequitysecuritiesandbrokerquotesfromBloombergandReuters.
Wheresuchquotedandobservablemarketpricesarenotavailable, fairvaluesaredeterminedusingappropriatevaluationtechniques,whichincludetheuseofmathematicalmodels,suchasdiscountedcashflowmodelsandoptionpricingmodels,comparisontosimilarinstrumentsforwhichmarketobservablepricesexistandothervaluation techniques.Valuation techniquesused incorporateassumptions regardingdiscountrates,interestrateyieldcurves,estimatesoffuturecashflowsandotherfactors.
Changes in these assumptions could materially affect the fair values derived. The Group and the Company generally use widely recognisedvaluationtechniqueswithmarketobservableinputsforthedeterminationoffairvalueduetothelowcomplexityofthefinancialinstrumentsheld.
62ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(l) Offsetting of financial instruments
Financialassetsandliabilitiesareoffsetandthenetamountreportedinthestatementsoffinancialpositionwhenthereisalegallyenforceablerighttooffsettherecognisedamountsandthereisanintentiontosettleonanetbasis,ortorealisetheassetandtosettletheliabilitysimultaneously.Thisisnotgenerallythecasewithmasternettingagreementsandtherefore,therelatedassetsandliabilitiesarepresentedonagrossbasisinthestatementsoffinancialposition.
(m) Impairment of financial assets
TheGroupandtheCompanyassessateachreportingdatewhetherthereisanyobjectiveevidencethatafinancialassetisimpaired.
(i) Trade and other receivables and other financial assets carried at amortised cost
Tradereceivablesarecarriedatanticipatedrealisablevalues.Impairedaccountsarewrittenoffaftertakingintoconsiderationtherealisable valuesofcollaterals,ifany,wheninthejudgmentofthemanagement,thereisnoprospectofrecovery.
Individual impairment assessment allowances for receivables are made for accounts which are considered doubtful or which have been classifiedasimpaired,netofinterest-in-suspenseandaftertakingintoconsiderationanycollateralheldbytheGroup.Collectiveimpairment assessmentallowanceismadeifnecessarybasedonhistoricallossexperiencebasedonacertainpercentageoftradereceivables(excluding outstandingpurchasecontractswhicharenotdueforpayment),netofindividualimpairmentassessmentallowances.Whenanaccountis classifiedas impaired, interest issuspendedand is recognisedonacashbasis fortradereceivables. Interest-in-suspenseformspartof the individualimpairmentassessmentallowances.
Otherreceivablesandother financialassetsarecarriedatanticipatedrealisablevalues. Impairedaccountsarewrittenoffafter taking into consideration the realisable values of collaterals, if any, when in the opinion of the management, there is no prospect of recovery. An estimateismadeforimpairmentallowancebasedonreviewofalloutstandingamountsasatreportingdate.
InaccordancewiththeRulesofBursaMalaysia,clients’accountsareclassifiedasnon-performingunderthefollowingcircumstances:
Types of account Criteria for classification as non-performing
Contralosses Whentheaccountremainsoutstandingfor16calendardaysormorefromthedateofcontratransaction.
Overduepurchasecontracts WhentheaccountremainsoutstandingfromT+3marketdaysonwards.
Marginaccounts Whenthevalueofcollateralhasfallenbelow130%oftheoutstandingbalance.
(ii) Unquoted equity securities carried at cost
If there is objective evidence (such as significant adverse changes in the business environment where the issuer operates, probability of insolvencyorsignificantfinancialdifficultiesoftheissuer)thatanimpairmentlossonfinancialassetscarriedatcosthasbeenincurred,the amountofthelossismeasuredasthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows discountedatthecurrentmarketrateofreturnforasimilarfinancialasset.Suchimpairmentlossesarenotreversedinsubsequentperiods.
ECMLibraFinancialGroupBerhadANNUALREPORT201363
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(m) Impairment of financial assets (continued)
(iii) AFS financial assets
Significantorprolongeddeclineinfairvaluebelowcost,significantfinancialdifficultiesoftheissuerorobligor,andthedisappearanceofan active trading market are considerations to determine whether there is objective evidence that investment securities classified as AFS financialassetsareimpaired.
IfanAFSfinancialassetisimpaired,anamountcomprisingthedifferencebetweenitscost(netofanyprincipalpaymentandamortisation) anditscurrentfairvalue,lessanyimpairmentlosspreviouslyrecognisedinprofitorloss,istransferredfromequitytoprofitorloss.
Impairment losses on AFS equity investments are not reversed in profit or loss in the subsequent periods. Increase in fair value, if any, subsequent to impairment loss is recognised in other comprehensive income. For AFS debt investments, impairment losses are subsequentlyreversedinprofitorlossifanincreaseinthefairvalueoftheinvestmentcanbeobjectivelyrelatedtoaneventoccurringafter therecognitionoftheimpairmentlossinprofitorloss.
(n) Cash and cash equivalents
Cashandcashequivalentscomprisecashatbankandonhandanddepositplacementsmaturinglessthanonemonthheldforthepurposeofmeetingshort-termcommitments,andreadilyconvertibletoknownamountofcash,whicharesubjecttoaninsignificantriskofchangesinvalue,andexcludingmoniesheldintrustforclientsanddealers’representatives.
(o) Provisions
Provisionsare recognisedwhentheGroupand theCompanyhaveapresentobligation (legalorconstructive)asa resultofapastevent, it isprobable that an outflow of economic resources will be required to settle the obligation and the amount of the obligation can be estimatedreliably.
Provisionsarereviewedateachreportingdateandadjustedtoreflect thecurrentbestestimate. If it isno longerprobablethatanoutflowofeconomicresourceswillberequiredtosettletheobligation,theprovisionisreversed.Iftheeffectofthetimevalueofmoneyismaterial,provisionsarediscountedusingacurrentpre-taxratethatreflects,whereappropriate,therisksspecifictotheliability.Whendiscountingisused,theincreaseintheprovisionduetothepassageoftimeisrecognisedasafinancecost.
(p) Financial liabilities
Financialliabilitiesareclassifiedaccordingtothesubstanceofthecontractualarrangementsenteredintoandthedefinitionsofafinancialliability.
Financialliabilitiesarerecognisedinthestatementsoffinancialpositionwhen,andonlywhen,theGroupandtheCompanybecomeapartytothecontractualprovisionsofthefinancial instrument.Financial liabilitiesaremeasuredatamortisedcost.TheGroupandtheCompanydonothaveanynon-derivativefinancialliabilitiesdesignatedatfairvaluethroughprofitorloss.Financialliabilitiesmeasuredatamortisedcostincludedepositsfromcustomers,depositsfrombanks,debtsecuritiesissuedandotherborrowedfunds.
A financial liability is derecognised when the obligation under the liability is extinguished.When an existing financial liability is replaced byanotherfromthesamelenderonsubstantiallydifferentterms,orthetermsofanexistingliabilityaresubstantiallymodified,suchanexchangeormodificationistreatedasaderecognitionoftheoriginalliabilityandtherecognitionofanewliability,andthedifferenceintherespectivecarryingamountsisrecognisedinprofitorloss.
64ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(q) Employee benefits
(i) Short-term employee 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. Short-term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absencessuchassickleavearerecognisedwhentheabsencesoccur.
(ii) Defined contribution plans
TheGroupandtheCompanyparticipateinthenationalpensionschemesasdefinedbythelawsofthecountriesinwhichithasoperations. The companies in the Group make contributions to the Employee Provident Fund in Malaysia, a defined contribution pension scheme. Contributionstodefinedcontributionpensionschemesarerecognisedasanexpenseintheperiodinwhichtherelatedserviceisperformed.
(iii) Employee share option plans
EmployeesoftheGroupreceiveremunerationintheformofshareoptionsoftheholdingcompanyasconsiderationforservicesrendered. Thecostoftheseequity-settledtransactionswithemployeesismeasuredbyreferencetothefairvalueoftheoptionsatthedateonwhich theoptionsaregranted.Thiscost is recognised inprofitor loss,withacorresponding increase intheemployeeshareoptionreserveover thevestingperiod.Thecumulativeexpenserecognisedateachreportingdateuntilthevestingdatereflectstheextenttowhichthevesting periodhasexpiredandtheGroup’sbestestimateofthenumberofoptionsthatwillultimatelyvest.Thechargeorcredittoprofitorlossfor aperiodrepresentsthemovementincumulativeexpenserecognisedatthebeginningandendofthatperiod.
Noexpenseisrecognisedforoptionsthatdonotultimatelyvest,exceptforoptionswherevestingisconditionaluponamarketornon-vesting condition,whicharetreatedasvestedirrespectiveofwhetherornotthemarketornon-vestingconditionissatisfied,providedthatallother performanceand/orserviceconditionsaresatisfied.Theemployeeshareoptionreserve istransferredtoretainedearningsuponexpiryof theshareoptions.Whentheoptionsareexercised,theemployeeshareoptionreserveistransferredtocapitalreserve.
(r) Revenue and income recognition
RevenueisrecognisedtotheextentthatitisprobablethattheeconomicbenefitswillflowtotheGroupandtheCompanyandtherevenuecanbereliablymeasured.Thefollowingspecificrecognitioncriteriamustalsobemetbeforerevenueisrecognised:
(i) Grossbrokeragefeeisrecognisedupontheexecutionoftradeonbehalfofclients,computedbasedonapre-determinedpercentageofthe contractvalue.
(ii) Margin income comprise margin interest income and rollover fees. Margin interest income is recognised on an effective interest method except where such margin account is considered impaired in accordance with Schedule 7A of the Rules of Bursa Malaysia, in which case recognition of such interest is suspended. Subsequent to suspension, interest is recognised upon receipt until all arrears have been paid. Rollover fees are recognised on an accrual basis. Rollover fees from impaired margin accounts will be suspended until the accounts are reclassifiedasperforming.
(iii) Gainsorlossesondisposalofinvestmentsarerecogniseduponconfirmationoftransactionsbythestockbrokers.
(iv) Unittrustandfundmanagementfeesarerecognisedonanaccrualbasis.
ECMLibraFinancialGroupBerhadANNUALREPORT201365
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(r) Revenue and income recognition (continued)
(v) Underwriting,advisory,arrangementandplacementfeesarerecognisedasandwhenservicesareperformed.
(vi) OtherrevenueearnedbytheGrouparerecognisedonthefollowingbases:
Dividendincome -whentherighttoreceivepaymentisestablished.
Managementfeeandrentalincome -accrualbasisbyreferencetotheagreementsentered.
Otherinterestincome -on an accrual basis using the effective interest method unless collectibility is in doubt, in whichcasetheyarerecognisedonreceiptbasis.
(s) Foreign currencies
(i) Functional and presentation currency
The individual financialstatementsofeachentity intheGrouparemeasuredusingthecurrencyoftheprimaryeconomicenvironment in which the entity operates (“the functional currency”).The financial statements are presented in Ringgit Malaysia (RM), which is also the Company’sfunctionalcurrency.Allvaluesareroundedtothenearestthousand(RM’000)exceptwhenotherwiseindicated.
(ii) Foreign currency transactions
Transactions in foreign currencies are measured in the respective functional currencies of the Company and its subsidiaries and are recordedoninitialrecognitioninthefunctionalcurrenciesatexchangeratesapproximatingthoserulingatthetransactiondates.Monetary assetsand liabilitiesdenominated in foreigncurrenciesare translatedat therateofexchangerulingat the reportingdate.Non-monetary itemsdenominatedinforeigncurrenciesthataremeasuredathistoricalcostaretranslatedusingtheexchangeratesasatthedatesofthe initialtransactions.Non-monetaryitemsdenominatedinforeigncurrenciesmeasuredatfairvaluearetranslatedusingtheexchangerates atthedatewhenthefairvaluewasdetermined.
Exchangedifferencesarisingonthesettlementofmonetaryitemsorontranslatingmonetaryitemsatthereportingdatearerecognisedin profitorlossexceptforexchangedifferencesarisingonmonetaryitemsthatformpartoftheGroup’snetinvestmentinforeignoperations, which are recognised initially in other comprehensive income and accumulated under foreign currency translation reserve in equity.The foreigncurrencytranslationreserveisreclassifiedfromequitytoprofitorlossoftheGroupondisposaloftheforeignoperation.
Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period exceptforthedifferencesarisingonthetranslationofnon-monetary itemsinrespectofwhichgainsandlossesarerecogniseddirectly in equity.Exchangedifferencesarisingfromsuchnon-monetaryitemsarealsorecogniseddirectlyinequity.
(iii) Foreign operations
The results and financial position of foreign operations that have a functional currency different from the presentation currency of the consolidatedfinancialstatementsaretranslatedintoRMasfollows:
- Assetsandliabilitiespresentedaretranslatedattheclosingrateprevailingatthereportingdate;
- Incomeandexpensesaretranslatedataverageexchangeratesfortheyear,whichapproximatestheexchangeratesatthedatesofthe transactions;and
- Allresultingexchangedifferencesaretakentotheforeigncurrencytranslationreservewithinequity.
66ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(t) Income tax
(i) Current tax
Currenttaxassetsandliabilitiesaremeasuredattheamountexpectedtoberecoveredfromorpaidtothetaxationauthorities.Thetaxrates andtaxlawsusedtocomputetheamountarethosethatareenactedorsubstantivelyenactedbythereportingdate.
Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in othercomprehensiveincomeordirectlyinequity.
(ii) Deferred tax
Deferred tax is provided using the liability method on temporary differences at the reporting date between the tax bases of assets and liabilitiesandtheircarryingamountsforfinancialreportingpurposes.
Deferredtaxliabilitiesarerecognisedforalltemporarydifferences,except:
- where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a businesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofitorloss;and
- inrespectoftaxabletemporarydifferencesassociatedwithinvestmentsinsubsidiaries,associatesandinterestsinjointventures,where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverseintheforeseeablefuture.
Deferredtaxassetsarerecognisedforalldeductibletemporarydifferences,carryforwardofunusedtaxcreditsandunusedtaxlosses,tothe extentthatit isprobablethattaxableprofitwillbeavailableagainstwhichthedeductibletemporarydifferences,andthecarryforwardof unusedtaxcreditsandunusedtaxlossescanbeutilisedexcept:
- wherethedeferredtaxassetrelatingtothedeductibletemporarydifferencearisesfromtheinitialrecognitionofanassetorliabilityina transactionthatisnotabusinesscombinationand,atthetimeofthetransaction,affectsneithertheaccountingprofitnortaxableprofit orloss;and
- in respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognised only to the extent that it is probable that the temporary differences will reverse in the foreseeable futureandtaxableprofitwillbeavailableagainstwhichthetemporarydifferencescanbeutilised.
Thecarryingamountofdeferredtaxassetsisreviewedateachreportingdateandreducedtotheextentthatitisnolongerprobablethat sufficient taxable profit will be available to allow all or part of the deferred tax asset to be utilised. Unrecognised deferred tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferredtaxassetstobeutilised.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liabilityissettled,basedontaxratesandtaxlawsthathavebeenenactedorsubstantivelyenactedatthereportingdate.
Deferred tax relating to items recognised outside profit or loss is recognised outside profit or loss. Deferred tax items are recognised in correlation to the underlying transaction either in other comprehensive income or directly in equity and deferred tax arising from a businesscombinationisadjustedagainstgoodwillonacquisition.
Deferredtaxassetsanddeferredtaxliabilitiesareoffset, ifalegallyenforceablerightexiststosetoffcurrenttaxassetsagainstcurrenttax liabilitiesandthedeferredtaxesrelatetothesametaxableentityandthesametaxationauthority.
ECMLibraFinancialGroupBerhadANNUALREPORT201367
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(u) Share capital and share issuance expenses
An equity instrument is any contract that evidences a residual interest in the assets of the Group and the Company after deducting all of itsliabilities.Ordinarysharesareequityinstruments.
Ordinarysharesarerecordedattheproceedsreceived,netofdirectlyattributableincrementaltransactioncosts.Ordinarysharesareclassifiedasequity.Dividendsonordinarysharesarerecognisedinequityintheperiodinwhichtheyaredeclared.
(v) Treasury shares
Treasurysharesaresharesrepurchasedandaccountedforusingthetreasurystockmethod.Thetreasurysharesaremeasuredandcarriedatthecostofpurchasewhichcomprisetheamountoftheconsiderationpaidanddirectattributablecosts.
The carrying amount of the treasury shares is offset against equity. The excess of the carrying amount over the share premium account isconsideredasareductionofanyotherreserves.
Thetreasurysharescaneitherbedistributedassharedividendsorreissuedbyresaleintheopenmarket.Wheretreasurysharesaredistributedassharesdividends,thecostofthetreasurysharesisaccountedforasareductionofthesharepremiumand/ordistributablereservesinaccordancewithSection67A(3D)of theCompaniesAct,1965.Wheretreasurysharesareresold intheopenmarket,nogainor loss is recognisedandthedifferencesbetweenthesalesconsiderationsandthecarryingamountofthetreasurysharesisrecordedasamovementinequity.
CancellationoftreasurysharesisdealtwithinaccordancewithSection67AoftheCompaniesAct,1965.Theissuedandpaid-upsharecapitaloftheCompanyisreducedbythesharescancelledandthesameamountofwhichistransferredtotheCapitalRedemptionReserve.
(w) Significant accounting judgments and estimates
ThepreparationoftheGroup’sandtheCompany’sfinancialstatementsrequiresmanagementtomakejudgments,estimatesandassumptionsthataffectthereportedamountsofrevenues,expenses,assetsandliabilities,andthedisclosureofcontingent liabilitiesatthereportingdate.However,uncertaintyabouttheseassumptionsandestimatescouldresultinoutcomesthatcouldrequireamaterialadjustmenttothecarryingamountoftheassetorliabilityaffectedinthefuture.
IntheprocessofapplyingtheGroup’sandtheCompany’saccountingpolicies,managementhasmadethefollowingjudgments,apartfromthoseinvolvingestimations,whichhavethemostsignificanteffectontheamountsrecognisedinthefinancialstatements:
(i) Impairment of goodwill and other intangible assets
TheGroupdetermineswhethergoodwillandotherintangibleassetsareimpairedatleastonanannualbasis.Thisrequiresanestimationof the value-in-use of the CGU to which goodwill and other intangible assets are allocated. Estimating a value-in-use amount requires managementtomakeanestimateoftheexpectedfuturecashflowsfromtheCGUandalsotochooseasuitablediscountrateinorderto calculatethepresentvalueofthosecashflows.
68ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(w) Significant accounting judgments and estimates (continued)
(ii) Classification of investments
TheGroupclassifiesandaccountsforitssecuritiesportfolioasfollows:
- SecuritiesHFT,tobestatedatfairvaluewithgainorlossrecognisedinprofitorloss.
- SecuritiesAFS,tobestatedatfairvalueorcost(wherefairvaluecannotbedeterminedwithreasonablecertainty) lessanyimpairment loss.Fairvaluegainsorlossesarerecognisedinequityandimpairmentlossesarerecognisedinprofitorloss.
- SecuritiesHTM,tobestatedatamortisedcost,lessanyimpairmentlosses.Amortisationandimpairmentlossesarerecognisedinprofitor loss.
(iii) Deferred tax assets
Deferredtaxassetsarerecognisedforallunusedtaxlossesandunabsorbedcapitalallowancestotheextentthatitisprobablethattaxable profitwillbeavailableintherespectiveentitywithintheGroupagainstwhichthelossesandcapitalallowancescanbeutilised.Significant management judgment, which will be reviewed periodically, is required to determine the amount of deferred tax assets that can be recognised,baseduponthelikelytimingandleveloffuturetaxableprofitstogetherwithfuturetaxplanningstrategies.
(iv) Provision for ESOS-related costs
TheGroupandtheCompanymadecertainprovisionsforESOS-relatedcostswhicharecalculatedusingabinomialmodel.Thefairvalueof equity-settled share options granted is estimated as at the date of grant using the binomial model, taking into account the terms and conditionsuponwhichtheoptionsweregranted.Thefollowingtableliststheassumptioninputstothemodelused:
<--------------------------------------------- As at ---------------------------------------------> 6 January 24 August 22 August 7 April 25 January 2012 2009 2009 2009 2009
Shareprice(RM) 0.785 0.663 0.525 0.670 0.815
Exerciseprice(RM) 1.00 1.00 1.00 1.00 1.00
Expectedvolatility(%) 37.26 37.89 38.82 40.00 32.08
Riskfreeinterestrate(%) 3.20 3.76 3.75 3.67 3.50
Dividendpayout(RM) 0.00 0.00 0.00 0.00 0.02
Averagedividendyield(%) 0.00 0.00 0.00 0.00 1.50
Historicaldividendyield(%) 2.00 2.00 1.00 1.00 1.00
Expectedfuturedividendyield(%) 0.00 0.00 0.00 0.00 2.00
Actualvolatilityinthefuturemaydifferfromtheexpectedvolatility,nonethelesstheexpectedvolatilityreflectstheGroup’sbestestimateof futurevolatilityovertheremainingoptionperiod.
ECMLibraFinancialGroupBerhadANNUALREPORT201369
notes to the financial statementscontinued
2. SIGNIFICANT ACCOUNTING POLICIES (continued)
(x) Segment reporting
For management purposes, the Group is organised into operating segments based on their products and services which are independentlymanagedby the respective segmentmanagers responsible for theperformanceof the respectivesegmentsunder theircharge.Thesegmentmanagers report directly to the management of the Company who regularly review the segment results in order to allocate resources to thesegmentsandtoassessthesegmentperformance.AdditionaldisclosuresoneachofthesesegmentsareshowninNote40,includingthefactorsusedtoidentifythereportablesegmentsandthemeasurementbasisofsegmentinformation.
3. CASH AND SHORT-TERM FUNDS Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Cashandbalanceswithbanksandotherfinancialinstitutions 12,762 69,108 72,709
Moneyatcallanddepositsplacementsmaturingwithinonemonth 60,706 182,912 172,446
73,468 252,020 245,155
Company 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Cashandbalanceswithbanksandotherfinancialinstitutions 3,787 195 1,181
Moneyatcallanddepositsplacementsmaturingwithinonemonth 50,530 9,848 5,302
54,317 10,043 6,483
4. DEPOSITS WITH FINANCIAL INSTITUTIONS Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Licensedbanks - 20,631 1,489
Licensedinvestmentbanks - - 20,000
- 20,631 21,489
70ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
5. SECURITIES HFT
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At fair value
MalaysianGovernmentSecurities - 60,708 -
Bankers’acceptances - 194,977 304,060
BankNegaraMalaysiaNotes - 93,225 49,758
Quotedshares 24,921 2,001 -
UnquotedPrivateDebtSecurities - 10,074 -
24,921 360,985 353,818
6. SECURITIES AFS Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At fair value, or at cost for certain unquoted securities
MalaysianGovernmentSecurities - 254,019 70,973
MalaysianGovernmentInvestmentIssuance - 89,122 -
Cagamasbonds - 40,278 60,014
BankNegaraMalaysiaNotes - - 149,498
Quotedshares 69,600 147,398 46,247
Unquotedsecurities
-Privatedebtsecurities 48,070 130,027 195,251
-Shares - 2,200 2,200
Unittrustfunds 579,986 15,042 -
697,656 678,086 524,183
Less:Impairmentlossonsecurities - (3,053) (4,704)
697,656 675,033 519,479
ECMLibraFinancialGroupBerhadANNUALREPORT201371
notes to the financial statementscontinued
6. SECURITIES AFS (continued)
Company 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At fair value
Quotedshares 69,600 - -
Unquotedsecurities
-Privatedebtsecurities 48,070 - -
Unittrustfunds 579,986 - -
697,656 - -
IncludedinsecuritiesAFSoftheGroupandoftheCompanyare120,000,000K&NKenangaHoldingsBerhad(“KNKH”)ordinarysharesofRM1.00eachand47,750,000redeemablenon-convertibleunsecuredloanstocks(“RULS”)issuedbyKNKHtobedistributedtoshareholdersaspartoftheCompany’scapitalrepaymentexercise.Thus, fairvaluechangesandincomeor lossarisingtherefromincludingdividendsandcouponaredirectlyattributabletoshareholders.At31January2013,fairvaluelossonKNKHsharesandcouponfromRULSofRM600,000andRM320,000respectivelyareincludedinotherreceivables(Note11).
ThebalanceofsecuritiesthatwerereclassifiedoutfromHFTtoAFSinapreviousyear:
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At fair value
Carryingvalueasatbeginningoffinancialyear 3,045 3,926 49,282
Disposalofsecurities (3,045) - (47,215)
Lossonrevaluation
-recognisedinAFSrevaluationreserves - (881) (1,082)
Deferredtaxunder-recognised - - 2,941
Carryingvalueasatendoffinancialyear - 3,045 3,926
72ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
7. SECURITIES HTM
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At amortised cost
RULS 47,750 - -
Negotiableinstrumentsofdeposit - 200,000 70,000
47,750 200,000 70,000
Company 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
At amortised cost
RULS 47,750 - -
At31January2013,currentmarketvalueofsecuritiesHTMisequivalenttotheircarryingamount.
8. (a) DERIVATIVE FINANCIAL ASSETS
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Equity related contracts - Options
-Notionalamount 26,123 78,732 55,244
-Fairvalue 1,203 58 1,693
Embedded derivatives
-Notionalamount - 124,075 147,075
-Fairvalue - 6,630 7,859
Totalfairvalueofderivativeassets 1,203 6,688 9,552
ECMLibraFinancialGroupBerhadANNUALREPORT201373
notes to the financial statementscontinued
8. (b) DERIVATIVE FINANCIAL LIABILITIES
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Foreign exchange related contracts
-Notionalamount - 2,140 -
-Fairvalue/totalfairvalueofderivativeliabilities - 57 -
9. LOANS, ADVANCES AND FINANCING Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Sharemarginfinancing - 360,591 319,135
Termloans 4,242 189,649 276,004
Revolvingcredit - 8,706 5,882
Bridgingloans - - 59,035
Grossloans,advancesandfinancing 4,242 558,946 660,056
Less:Collectiveassessmentallowance
-Continuingoperations (140) - -
-Discontinuedoperations - (2,376) (1,705)
Totalnetloans,advancesandfinancing 4,102 556,570 658,351
Analysis of gross loans, advances and financing
(i) By economic purpose
Purchaseofsecurities - 404,530 473,531
Workingcapital - 79,367 111,469
Others 4,242 75,049 75,056
Grossloans,advancesandfinancing 4,242 558,946 660,056
74ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
9. LOANS, ADVANCES AND FINANCING (continued)
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
(ii) By interest rate sensitivity
Fixedrate
-Sharemarginfinancing,termloans,revolvingcreditandbridgingloans 4,242 558,946 660,056
Grossloans,advancesandfinancing 4,242 558,946 660,056
(iii) By type of customer
Domesticbusinessenterprises 4,242 417,999 377,112
Individuals - 122,275 240,128
Domesticnon-bankfinancialinstitutions - 18,672 42,816
Grossloans,advancesandfinancing 4,242 558,946 660,056
(iv) Movements in allowance for losses on loans, advances and financing
Group 31 January 31 January 2013 2012 RM’000 RM’000
Collective assessment allowance
Balanceatbeginningoffinancialyear
-aspreviouslyreported 8,704 10,176
-effectofchangeinaccountingpolicy(Note2(b)(i)) (6,328) (8,471)
2,376 1,705
Allowancemadeduringtheyear
-Continuingoperations(Note31) 140 -
-Discontinuedoperations(Note33) 3,728 671
Disposalofsubsidiaries(Note33) (6,104) -
Balanceatendoffinancialyear 140 2,376
As%ofgrossloans,advancesandfinancinglessindividualassessmentallowance 3.3% 0.4%
ECMLibraFinancialGroupBerhadANNUALREPORT201375
notes to the financial statementscontinued
9. LOANS, ADVANCES AND FINANCING (continued)
(iv) Movements in impaired loans, advances and financing (continued)
Individual assessment allowance
Asat31January2013/2012,thereisnoindividualassessmentallowancemadeasthereisnoimpairedloanduringandattheendofthecurrent andpreviousyears.
10. TRADE RECEIVABLES Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Amountowingbyclients - 165,279 217,143
Amountowingbybrokers - 196,574 265,989
- 361,853 483,132
Less: Impairmentallowanceforbadanddoubtfulreceivables
Individualassessmentallowance - (1,044) (1,010)
- 360,809 482,122
Amountowingbytrustees 7,849 2,691 3,196
7,849 363,500 485,318
Thetradesettlementfortheamountsowingbyclientsandbrokersis3marketdaysaccordingtotheFixedDeliveryandSettlementSystem(“FDSS”)tradingrulesofBursaMalaysia.
Movementsintheallowanceforimpairedaccountsareasfollows:
Group 31 January 31 January 2013 2012 RM’000 RM’000
(a) Collectiveassessmentallowance:
Balanceatbeginningoffinancialyear - -
Allowancewrittenbackduringtheyear - -
Balanceatendoffinancialyear - -
76ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
10. TRADE RECEIVABLES (continued)
Movementsintheallowanceforimpairedaccountsareasfollows(continued):
Group 31 January 31 January 2013 2012 RM’000 RM’000
(b) Individualassessmentallowance:
Balanceatbeginningoffinancialyear 1,044 1,010
Allowancemadeduringtheyear(includinginterest-in-suspense) - 34
Disposalofsubsidiaries(Note33) (1,044) -
Balanceatendoffinancialyear - 1,044
TheclassificationofimpairedaccountsinaccordancewithRule1104.1,Schedule7AoftheRulesofBursaMalaysiaisasfollows:
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Impairedaccounts,classifiedasdoubtful - 287 133
Impairedaccounts,classifiedasbad - 4,371 3,282
Totalimpairedaccounts - 4,658 3,415
ECMLibraFinancialGroupBerhadANNUALREPORT201377
notes to the financial statementscontinued
11. OTHER ASSETS
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Interestreceivable 331 7,653 3,813
Deposits 416 6,410 5,066
Taxrecoverable 1,654 1,448 5,636
Otherreceivableandprepayments 1,456 16,208 9,696
3,857 31,719 24,211
Less:Individualassessmentallowance - (2,276) (2,451)
3,857 29,443 21,760
Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Interestreceivable 329 14 -
Deposits 8 8 8
Taxrecoverable 1,102 1,086 1,768
Otherreceivableandprepayments 632 17,968 37,886
2,071 19,076 39,662
Included in other receivables and prepayments of the Group and of the Company is unrealised revaluation loss on KNKH shares net of accrual ofcoupononRULSissuedbyKNKHofRM280,000whichisdirectlyattributabletoshareholders.TheKNKHsharesandtheRULSwerepartofthesale consideration for the disposal of subsidiaries referred in Note 33, and which were held in trust by the Company as part of the Company’s capital repaymentexercisereferredtoinNote42.
78ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
12. STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA
Group
Thenon-interestbearingstatutorydepositwasmaintainedbytheinvestmentbankingsubsidiarywithBNMincompliancewithSection37(1)(c)of the Central Bank of Malaysia Act, 1958 (revised 1994), the amount was determined as a set percentage of total eligible liabilities. Following the completionofdisposalofECMLibraInvestmentBankBerhad,theGroupisnolongerrequiredtomaintainastatutorydepositwithBNM.
13. INVESTMENT IN SUBSIDIARY COMPANIES Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Unquotedsharesinsubsidiaries,atcost 887,921 887,921 887,921
Less:
Subsidiariesdisposedoffduringtheyear(Note33) (513,595) - -
Impairmentloss (226,530) - -
(740,125) - -
Add/(less)shareoptionsmovements:
Balanceatbeginningoffinancialyear 439 843 1,163
Vestedduringtheyear - 186 128
Lapsedduringtheyear (387) (590) (448)
Balanceatendoffinancialyear 52 439 843
147,848 888,360 888,764
Thesubsidiarycompanies,allincorporatedinMalaysiaexceptasotherwiseindicated,areasfollows:
Effective Percentage of Ownership Name of Company 2013 2012 Principal Activities
% %
ECMLibraInvestmentBankBerhad - 100 Investmentbanking
anditssubsidiaries(disposedoff
duringtheyear,seeNote33):
- ECMLNominees(Tempatan)Sdn.Bhd. - 100 Provisionofnomineeservicesforlocalclients
ECMLibraFinancialGroupBerhadANNUALREPORT201379
notes to the financial statementscontinued
13. INVESTMENT IN SUBSIDIARY COMPANIES (continued)
Effective Percentage of Ownership Name of Company 2013 2012 Principal Activities
% %
- ECMLNominees(Asing)Sdn.Bhd. - 100 Provisionofnomineeservicesforforeignclients
- AvenueKestrelSdn.Bhd. - 100 Dormant
LibraInvestBerhadanditssubsidiary: 100 100 Provisionofunittrustandasset
managementservices
-AvenueAssetManagementServices(Labuan)Ltd. 100 100 Provisionofportfoliomanagementservices
AvenueServicesSdn.Bhd. 100 100 Inmember’svoluntaryliquidation
ECMLibraHoldingsLimitedanditssubsidiaries: 100 100 Investmentholdingandprovision
ofadvisoryservices
- ECMLibraInvestmentBankLimitedand 100 100 ProvisionofLabuaninvestmentbankingand
itssubsidiary: relatedfinancialservices
-ECMLibraInvestmentsLimited 100 100 Investmentholdingandprovision
(IncorporatedinBritishVirginIslands) offinancialservices
ECMLibraCapitalSdn.Bhd. 100 100 Provisionofinvestmentresearchservices
ECMLibraPartnersSdn.Bhd. 100 100 Provisionofcreditservices
ECMLibraCapitalMarketsSdn.Bhd. 100 100 Dormant
AvenueCapitalResourcesBerhadanditssubsidiary: 100 100 Investmentholdingandprovisionof
managementservices
-UltimateAcresSdn.Bhd. - 100 Thecompanywasdissolvedduringtheyear
ACRBCapitalSdn.Bhd. 100 100 Inmember’svoluntaryliquidation
ECMLibraSecuritiesSdn.Bhd.anditssubsidiaries: 100 100 Dormant
-ECMLibraSecuritiesNominees(Tempatan)Sdn.Bhd. 100 100 Dormant
-ECMLibraSecuritiesNominees(Asing)Sdn.Bhd. 100 100 Dormant
-ECMLibraSecuritiesNomineesSdn.Bhd. - 100 Thecompanywasdissolvedduringtheyear
-ECMLibraSecuritiesPortfolioManagementSdn.Bhd. - 100 Thecompanywasdissolvedduringtheyear
80ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
14. INVESTMENT IN AN ASSOCIATED COMPANY
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Unquotedshares,outsideMalaysia -* - -
Advances 7,200 - -
7,200 - -
Quotedshares,outsideMalaysia 43,544 43,544 43,544
Shareinpost-acquisitionresults 9,002 599 380
52,546 44,143 43,924
Less:Impairmentloss (24,167) (24,167) (24,167)
28,379 19,976 19,757
Totalinvestmentinassociatedcompanies 35,579 19,976 19,757
Quotedshares,outsideMalaysia
Atmarketvalue 19,987 14,669 13,047
Atfairvalue 29,421 20,163 19,743
Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Unquotedshares,outsideMalaysia -* - -
Advances 7,200 - -
7,200 - -
*DenotesRM9.
The carrying value of the Group’s quoted investment in associated companies exceeded the market value by approximately RM8,392,000 (2012:RM5,307,000 and 2011: RM6,710,000). Based on the directors’ valuation, the carrying value of the Group’s investment in associated companies issupportedbyitsrecoverableamount.
ECMLibraFinancialGroupBerhadANNUALREPORT201381
notes to the financial statementscontinued
14. INVESTMENT IN AN ASSOCIATED COMPANY (continued)
Detailsoftheassociatedcompaniesareasfollows: Effective Percentage of
Ownership Name of Companies Principal Activities Year end 2013 2012 % %
PositiveCarryLimited(incorporatedinBritishVirginIslands) Investmentholding 31December 30 -
ISRCapitalLimited Investmentholding 31December 24 24 (formerlyknownasAsiasonsWFGFinancialLtd.)
(IncorporatedinSingapore)
Thefollowingamountsrepresenttheassets,liabilities,revenueandexpensesofISRCapitalLimited(formerlyknownasAsiasonsWFGFinancialLtd.),theassociatedcompanyoftheGroupasat31December2012andforthefinancialyear: Group
31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Property,plantandequipment 265 502 336
Financialassetsatfairvaluethroughprofitorloss - 16,079 -
SecuritiesAFS 19,328 9,958 11,925
Currentassets 106,580 61,735 71,454
Currentliabilities (5,339) (4,526) (2,572)
Longtermliabilities (108) (1,010) (129)
Netassets 120,726 82,738 81,014
Revenue 42,010 4,551 6,100
Expenses (6,026) (3,114) (4,631)
Profitbeforetaxation 35,984 1,437 1,469
Incometaxexpense 1,116 (828) (302)
Profitfromcontinuingoperations 37,100 609 1,167
Lossfromdiscontinuedoperations,netoftax (2,329) - -
Profitfortheyear 34,771 609 1,167
82ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
15. AMOUNT OWING BY/(TO) SUBSIDIARY COMPANIES
Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Amountowingbysubsidiarycompanies 30,263 892 659
Amountowingtosubsidiarycompanies (86,227) (79,346) (79,850)
Theamountsowingby/(to)subsidiarycompaniesmainlyrepresentpaymentsmadeonbehalfandunsecuredadvances,whichareinterestfreeand repayableondemand.
16. DEFERRED TAX ASSETS/(LIABILITIES) Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Atbeginningofthefinancialyear (7,306) 10,729 27,739
Recognisedinprofitorloss(Note32)
-Relatingtooriginationandreversaloftemporarydifferences
-Continuingoperations 307 (63) 14
-Discontinuedoperations (2,538) (10,218) (21,473)
-Over/(under)provisionoftaxinprioryears
-Continuingoperations 4 185 -
-Discontinuedoperations 159 (1,335) 601
(2,068) (11,431) (20,858)
Recognisedinequity 7,399 (6,604) 3,848
Discontinuedoperations 3,168 - -
Othermovement (745) - -
Atendofthefinancialyear 448 (7,306) 10,729
Presentedafterappropriateoffsettingasfollows:
Deferredtaxassets 705 735 11,687
Deferredtaxliabilities (257) (8,041) (958)
448 (7,306) 10,729
ECMLibraFinancialGroupBerhadANNUALREPORT201383
16. DEFERRED TAX ASSETS/(LIABILITIES) (continued)
Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Atbeginningofthefinancialyear (571) (914) 69
Recognisedinprofitorloss(Note32)
-Relatingtooriginationandreversaloftemporarydifferences 650 342 (982)
-Over/(under)provisionoftaxinprioryears 3 1 (1)
653 343 (983)
Recognisedinequity 623 - -
Atendofthefinancialyear 705 (571) (914)
Presentedafterappropriateoffsettingasfollows:
Deferredtaxassets 705 - -
Deferredtaxliabilities - (571) (914)
705 (571) (914)
AllmovementsindeferredtaxliabilitiesandassetshavebeenrecognisedinprofitorlossexceptforthoserelatingtoAFSrevaluationreserve,where themovementisrecognisedinothercomprehensiveincome.Thecomponentsofdeferredtaxliabilitiesandassetsasattheendofthefinancialyear areasfollows:
Unused AFS Other tax revaluation temporary Group losses reserve Provisions difference Total RM’000 RM’000 RM’000 RM’000 RM’000
31 January 2013
Atbeginningofthefinancialyear - (6,682) 8,915 (9,539) (7,306)
Recognisedinprofitorloss - - (196) 507 311
Recognisedinequity - 623 - - 623
Discontinuedoperations - 6,682 (8,639) 8,777 6,820
Atendofthefinancialyear - 623 80 (255) 448
notes to the financial statementscontinued
84ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
16. DEFERRED TAX ASSETS/(LIABILITIES) (continued)
Unused AFS Other tax revaluation temporary Group losses reserve Provisions difference Total RM’000 RM’000 RM’000 RM’000 RM’000
31 January 2012
Atbeginningofthefinancialyear 5,279 (78) 8,911 (3,383) 10,729
Recognisedinprofitorloss (5,279) - 4 (6,156) (11,431)
Recognisedinequity - (6,604) - - (6,604)
Atendofthefinancialyear - (6,682) 8,915 (9,539) (7,306)
1 February 2011
Atbeginningofthefinancialyear 29,185 (3,926) 3,898 (1,418) 27,739
Recognisedinprofitorloss (23,906) - 5,013 (1,965) (20,858)
Recognisedinequity - 3,848 - - 3,848
Atendofthefinancialyear 5,279 (78) 8,911 (3,383) 10,729
Company
31 January 2013
Atbeginningofthefinancialyear - - 81 (652) (571)
Recognisedinprofitorloss - - (1) 654 653
Recognisedinequity - 623 - - 623
Atendofthefinancialyear - 623 80 2 705
31 January 2012
Atbeginningofthefinancialyear 17 - 78 (1,009) (914)
Recognisedinprofitorloss (17) - 3 357 343
Atendofthefinancialyear - - 81 (652) (571)
ECMLibraFinancialGroupBerhadANNUALREPORT201385
notes to the financial statementscontinued
16. DEFERRED TAX ASSETS/(LIABILITIES) (continued)
Deferredtaxassetshavenotbeenrecognisedinrespectofthefollowingitems: Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Unusedtaxlosses 33,240 33,240 33,245
Unutilisedcapitalallowances 188 619 508
33,428 33,859 33,753
There is no evidence to support that sufficient taxable profit will be available against which the deductible temporary differences of certain subsidiariescanbeutilised.
TheunutilisedtaxlossesandunabsorbedcapitalallowancesoftheGroupareavailableindefinitelyforoffsettingagainstfuturetaxableprofitsofthe respective entities within the Group, subject to no substantial change in shareholdings of those entities under the Income Tax Act, 1967 and guidelinesissuedbythetaxauthority.
17. PROPERTY, PLANT AND EQUIPMENT Furniture and Freehold fittings and Work-In- land and office Motor Group Progress building equipment Computers vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost
At1February2012 586 23,817 20,284 25,292 4,732 74,711
Additions 612 4,029 1,640 2,021 299 8,601
Transfer (1,001) 933 68 - - -
Write-offs:
-Continuingoperations(Note29) - - - (7) - (7)
-Discontinuedoperations (11) (184) (6,663) (130) (6,988)
Disposals - - - - (748) (748)
Discontinuedoperations - (3,213) (19,902) (17,685) (2,248) (43,048)
At 31 January 2013 197 25,555 1,906 2,958 1,905 32,521
86ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
17. PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture and Freehold fittings and Work-In- land and office Motor Group Progress building equipment Computers vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Accumulated depreciation
At1February2012 - 2,094 6,633 18,626 2,442 29,795
Chargeduringtheyear:
-Continuingoperations(Note29) - 575 78 167 213 1,033
-Discontinuedoperations(Note33(c)) 1,307 734 2,383 403 4,827
Write-offs:
-Continuingoperations(Note29) - - - (4) - (4)
-Discontinuedoperations (1) (99) (5,702) (130) (5,932)
Disposals - - - - (449) (449)
Discontinuedoperations - (1,614) (6,842) (13,283) (1,381) (23,120)
At 31 January 2013 - 2,361 504 2,187 1,098 6,150
Net carrying amount
At 31 January 2013 197 23,194 1,402 771 807 26,371
Cost
At1February2011 4,359 21,977 18,148 28,158 3,896 76,538
Additions 586 2,904 6,914 2,557 1,637 14,598
Transfer (4,359) 6,968 (2,609) - - -
Write-offs - - (2,121) (4,895) - (7,016)
Disposals - (8,032) (48) (528) (801) (9,409)
At31January2012 586 23,817 20,284 25,292 4,732 74,711
ECMLibraFinancialGroupBerhadANNUALREPORT201387
notes to the financial statementscontinued
17. PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture and Freehold fittings and Work-In- land and office Motor Group Progress building equipment Computers vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Accumulated depreciation
At1February2011 - 3,427 6,995 21,308 2,357 34,087
Chargeduringtheyear:
-Continuingoperations(Note29) - 335 83 96 321 835
-Discontinuedoperations(Note33(c)) - 103 1,714 2,635 406 4,858
Write-offs - - (2,111) (4,885) - (6,996)
Disposals - (1,771) (48) (528) (642) (2,989)
At31January2012 - 2,094 6,633 18,626 2,442 29,795
Net carrying amount
At31January2012 586 21,723 13,651 6,666 2,290 44,916
Cost
At1February2010 339 21,977 23,636 23,766 4,380 74,098
Additions 4,020 - 8,711 5,790 - 18,521
Write-offs - - (14,091) (1,077) (4) (15,172)
Disposals - - (108) (321) (480) (909)
At31January2011 4,359 21,977 18,148 28,158 3,896 76,538
Accumulated depreciation
At1February2010 - 3,023 17,802 20,663 1,919 43,407
Chargeduringtheyear(Note29) - 404 1,553 2,037 643 4,637
Write-offs - - (12,252) (1,071) (4) (13,327)
Disposals - - (108) (321) (201) (630)
At31January2011 - 3,427 6,995 21,308 2,357 34,087
Net carrying amount
At1February2011 4,359 18,550 11,153 6,850 1,539 42,451
88ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
17. PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture and Freehold fittings and Work-In- land and office Motor Company Progress building equipment Computers vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Cost
At1February2012 586 27,389 3 28 1,591 29,597
Additions 612 275 129 - 299 1,315
Disposal - - - (7) - (7)
Transfer (1,001) 933 68 - - -
At 31 January 2013 197 28,597 200 21 1,890 30,905
Accumulated depreciation
At1February2012 - 1,526 1 9 874 2,410
Chargeduringtheyear(Note29) - 588 8 6 210 812
Disposal - - - (4) - (4)
At 31 January 2013 - 2,114 9 11 1,084 3,218
Net carrying amount
At 31 January 2013 197 26,483 191 10 806 27,687
Cost
At1February2011 4,359 17,517 2 20 1,592 23,490
Additions 586 2,904 1 8 795 4,294
Disposal - - - - (796) (796)
Transferfromsubsidiary - 2,609 - - - 2,609
Transfer (4,359) 4,359 - - - -
At31January2012 586 27,389 3 28 1,591 29,597
ECMLibraFinancialGroupBerhadANNUALREPORT201389
notes to the financial statementscontinued
17. PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture and Freehold fittings and Work-In- land and office Motor Company Progress building equipment Computers vehicles Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Accumulated depreciation
At1February2011 - 1,110 - 5 1,194 2,309
Chargeduringtheyear(Note29) - 416 1 4 318 739
Disposal - - - - (638) (638)
At31January2012 - 1,526 1 9 874 2,410
Net carrying amount
At31January2012 586 25,863 2 19 717 27,187
Cost
At1February2010 339 17,517 2 17 1,592 19,467
Additions 4,020 - 2 3 - 4,025
Write-offs - - (2) - - (2)
At31January2011 4,359 17,517 2 20 1,592 23,490
Accumulated depreciation
At1February2010 - 759 - 2 875 1,636
Chargeduringtheyear - 351 - 3 319 673
At31January2011 - 1,110 - 5 1,194 2,309
Net carrying amount
At1February2011 4,359 16,407 2 15 398 21,181
90ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
18. INTANGIBLE ASSETS
Merchant bank Group Goodwill licence Total RM’000 RM’000 RM’000
31 January 2013
Cost/Net carrying amount
At1February2012 232,000 52,500 284,500
Disposalofsubsidiaries(Note33) (232,000) (52,500) (284,500)
At 31 January 2013 - - -
31 January 2012
Cost/Net carrying amount
At1February2011/31January2012 232,000 52,500 284,500
The merchant bank licence represents contribution by the investment bank subsidiary to BNM to carry on merchant banking business and is consideredtohaveindefiniteusefullife,whichwasnotamortisedandwasassessedforimpairmentannually.
Upon disposal of the investment bank subsidiary, the merchant bank license has been written off. Goodwill associated with the acquisition of operatingsubsidiariesoftheGroupwasalsowrittenoffduringthefinancialyear.
19. DEPOSITS FROM CUSTOMERS
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
By type of deposits:
Short-termdeposits - 1,064,920 1,043,290
Negotiableinstrumentsofdeposit - 16,563 3,516
- 1,081,483 1,046,806
ECMLibraFinancialGroupBerhadANNUALREPORT201391
notes to the financial statementscontinued
19. DEPOSITS FROM CUSTOMERS (continued)
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
By type of customers:
Governmentandstatutorybodies - 116,300 70,000
Domesticbusinessenterprises - 177,508 173,913
Domesticotherentities - 600 -
Individuals - 26,991 22,133
Non-bankfinancialinstitutions - 760,084 780,760
- 1,081,483 1,046,806
20. DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Licensedbanks - 266,409 201,008
Licensedinvestmentbanks - 74,962 -
- 341,371 201,008
92ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
21. TRADE PAYABLES
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Amountowingtoclients - 102,743 178,563
Amountowingtobrokers - 221,589 248,295
Amountowingtotrustees 7,207 81 1,237
7,207 324,413 428,095
Thetradesettlementfortheamountsowingtoclientsandbrokersis3marketdaysaccordingtotheFDSStradingrulesofBursaMalaysia.
22. OTHER LIABILITIES Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Interestpayables - 2,585 4,552
Accrualsanddepositsreceived 1,684 8,968 14,196
Remisiers’anddealers’trustaccounts - 20,710 19,531
Otherpayables 4,315 29,036 35,586
5,999 61,299 73,865
Company 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Accrualsanddepositsreceived 403 383 365
Otherpayables 3,824 1,864 -
4,227 2,247 365
ECMLibraFinancialGroupBerhadANNUALREPORT201393
notes to the financial statementscontinued
23. SHARE CAPITAL
Amount of ordinary shares of RM1 each Amount 31 January 31 January 31 January 31 January Group and Company 2013 2012 2013 2012 units ’000 units ’000 RM’000 RM’000
Authorised:
Atbeginning/endofyear 1,500,000 1,500,000 1,500,000 1,500,000
Issuedandfullypaid-up:
Atbeginningofyear 830,902 830,902 830,902 830,902
TreasurysharescancelledpursuanttoSection67A(Note25) (2,083) - (2,083) -
Atendofyear 828,819 830,902 828,819 830,902
TheCompany’sESOSisgovernedbytheby-lawsapprovedbytheshareholdersatanExtraordinaryGeneralMeetingheldon1December2005.The ESOSwasimplementedon1December2005andwillbeinforceforaperiodoften(10)years.
ThemainfeaturesoftheESOSare,interalia,asfollows:
(i) The eligibility of an employee or director of the Group to participate in the ESOS shall be at the discretion of the Options Committee. The OptionsCommitteemayfromtimetotimeatitsdiscretionselectandidentifysuitableeligibleemployeestobeofferedoptions.Themaximum allowableallotmentsforthedirectorshadbeenapprovedbytheshareholdersoftheCompanyinageneralmeeting.
(ii) TheaggregatenumberofsharestobeissuedundertheESOSshallnotexceed15%ofthetotalissuedandpaid-upordinarysharecapitalofthe Companyforthetimebeing.
(iii) TheESOSshallbeinforceforaperiodof10yearsfrom1December2005.
(iv) Theoptionpriceshallnotbeatadiscountofmorethantenpercent(10%)(orsuchdiscountastherelevantauthoritiesshallpermit)fromthe 5-dayweightedaveragemarketpriceofthesharesoftheCompanyprecedingthedateofofferandshallinnoeventbelessthantheparvalue ofthesharesoftheCompanyofRM1.00.
(v) An option holder may, in a particular year, exercise up to such maximum number of shares in the option certificate as determined by the OptionsCommitteeorasspecifiedintheoptioncertificate.
Asat31January2013,therehasnotbeenissuanceofnewsharesarisingfromtheexerciseofoptionspursuanttotheESOS.
94ECMLibraFinancialGroupBerhadANNUALREPORT2013
23. SHARE CAPITAL (continued)
AsummaryofthemovementsinthenumberofESOSgrantedtoemployeesanddirectorsoftheGroupareasfollows:
Number of share options 2013 2012 units '000 units ’000
At1February2012/2011 72,668 72,960
Granted - 4,000
Lapsed (12,968) (4,292)
At31January 59,700 72,668
Exercisableasat31January 59,700 70,668
Exerciseprice RM1.00 RM1.00
The aggregate number of options granted to the directors at the beginning of the financial year and which remained outstanding at the end of thefinancialyearwere58,800,000. Inaccordancewiththeby-lawsoftheESOS,theaggregatemaximumallocationofoptionstothedirectorsand seniormanagement is50%.Theactualpercentageofoptionsgrantedtothedirectorsandseniormanagementduringthecommencementof the schemewas47%whilstduringthefinancialyearwas50%.
Therewerenooptionsgrantedtoorexercisedbythenon-executivedirectorsduringthefinancialyear.
24. RESERVES Group 31 January 31 January 1 February Note 2013 2012 2011
RM’000 RM’000 RM’000
Non-distributable:
Mergerreserve (a) - 26,561 26,561
Foreigncurrencytranslationreserve (3,252) (3,293) (3,295)
Equitycompensationreserve (b) 2,761 3,122 3,526
AFSrevaluationreserve (c) (1,868) 20,331 718
Statutoryreserve (d) - 80,787 65,720
Generalreserve 159 159 159
Capitalredemptionreserve 2,083 - -
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT201395
24. RESERVES (continued)
Group 31 January 31 January 1 February Note 2013 2012 2011
RM’000 RM’000 RM’000
Distributable:
Retainedprofits (e) 81,238 64,053 82,854
81,121 191,720 176,243
Company 31 January 31 January 1 February Note 2013 2012 2011
RM’000 RM’000 RM’000
Non-distributable:
Equitycompensationreserve (b) 2,761 3,122 3,526
AFSrevaluationreserve (c) (1,868) - -
Capitalredemptionreserve 2,083 - -
Distributable:
Retainedprofits (e) 93,248 30,949 49,078
96,224 34,071 52,604
(a) MergerreservearoseupontakingoverofthelistingstatusofasubsidiarycompanywheretheresultsandthefinancialpositionoftheGroup hadbeencombinedunderthemergerprinciplesofaccounting,asdescribedintheaccountingpolicies.
The entire merger reserve was reversed during the financial year upon disposal of ECM Libra Investment Bank Berhad (“ECMLIB”) and its subsidiaries.Theamountwasnettedoffagainstthegoodwillinderivingthegainorlossondisposal(seeNote33(b)).
(b) EquitycompensationreservearosefromthegrantingofshareoptionstodirectorsoftheCompanyandmanagementpersonneloftheGroup.
(c) AFSrevaluationreserverepresentsunrealisedgainsorlossesarisingfromchangesinfairvaluesofsecuritiesclassifiedasAFS.
(d) The statutory reserve was maintained by the investment banking subsidiary, ECMLIB, in compliance with Section 36 of the Banking and FinancialInstitutionsAct,1989andwasnotdistributableascashdividends.UpondisposalofECMLIB(seeNote33),theGroupderecognises allassetsandliabilitiesofthesubsidiary,andthebalanceinstatutoryreservewasreclassifiedtoretainedprofits.
notes to the financial statementscontinued
96ECMLibraFinancialGroupBerhadANNUALREPORT2013
24. RESERVES (continued)
(e) In the past, Malaysian companies adopt 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 dividend paid, credited or distributed to its shareholders, and such dividendswillbeexemptedfromtaxinthehandsoftheshareholders(“singletiersystem”).However,thereisatransitionalperiodofsixyears, expiringon31December2013,toallowcompaniestopayfrankeddividendstotheirshareholdersunderlimitedcircumstances.Companies alsohaveanirrevocableoptiontodisregardtheSection108balanceandopttopaydividendsunderthesingletiersystem.Thechangeinthe taxlegislationalsoprovidesfortheSection108balancetobelocked-inasat31December2007inaccordancewithSection39oftheFinance Act2007.
Asat31January2013,theSection108balanceoftheCompanyisnil.TheCompanymaydistributedividendsoutofitsentireretainedprofits underthesingletiersystem.
25. TREASURY SHARES
Theshareholdersof theCompanyapproved,at theExtraordinaryGeneralMeetingheldon31January2008, theCompanytobuy-back itsownshares of up to 10% of the total issued and paid-up share capital of the Company at any point in time, in accordance with Section 67A of theCompaniesAct,1965.
ThedirectorsoftheCompanywerecommittedtoenhancingthevalueoftheCompanytoitsshareholdersandbelievedthatthesharebuy-backcouldbeappliedinthebestinterestsoftheCompanyanditsshareholders.
Duringtheyear,theCompanycancelledall2,082,862treasurysharesbroughtforwardfromthepreviousfinancialyearwithacarryingamountofRM1,578,943oranaveragepriceofRM0.7581pershare.TheamountofthesharecapitalcancelledwastransferredtocapitalredemptionreserveinaccordancewiththerequirementofSection67AoftheCompaniesAct,1965.
Asat31January2013,theCompanydoesnotholdanytreasuryshares.
26. INTEREST INCOME Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Loansandadvances 175 - - -
Short-termfundsanddepositswithfinancialinstitutions 1,129 1,078 656 406
HTMsecurities 321 - 320 -
Others - 1 - -
1,625 1,079 976 406
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT201397
27. NON-INTEREST INCOME
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Fee income
-Feesonloansandadvances 125 - 125 -
-Portfoliomanagementfees 11,772 10,429 - -
-Otherfeeincome 1,903 1,968 - -
13,800 12,397 125 -
Investment and trading income
NetgainarisingfromsecuritiesHFT
-Unrealisedlossonrevaluation (400) - - -
(400) - - -
NetgainarisingfromsecuritiesAFS
-Netgainondisposal 350 484 181 -
-Grossdividendincome - 20 - -
350 504 181 -
Netgainarisingfromderivatives
-Unrealisedgainonrevaluation 1,204 - - -
1,204 - - -
Grossdividendincome
-Subsidiaries - - - 17,667
Total non-interest income 14,954 12,901 306 17,667
notes to the financial statementscontinued
98ECMLibraFinancialGroupBerhadANNUALREPORT2013
28. OTHER NON-OPERATING INCOME
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Rentalincome 1,593 1,358 1,831 1,358
Gainondisposalofproperty,plantandequipment - 91 - 91
Gain/(loss)onforeignexchangetransactions(net) 1 (1) - (2)
Others 34 93 1 -
1,628 1,541 1,832 1,447
29. OPERATING EXPENSES Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Personnel expenses
Salaries,allowanceandbonus 7,443 6,618 316 -
Contributionstodefinedcontributionplan 808 645 43 -
CostarisingfromESOS (149) (4) 26 -
Otherpersonnelcosts 798 651 22 -
8,900 7,910 407 -
Establishment costs
Depreciationofproperty,plantandequipment(Note17) 1,033 835 812 739
Property,plantandequipmentwrittenoff 3 - 3 -
Rentalofpremises 297 291 - 1
Rentalofnetworkandequipment 212 130 6 -
Otherestablishmentcosts 34 19 - -
1,579 1,275 821 740
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT201399
29. OPERATING EXPENSES (continued)
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Marketing and communication expenses
Advertisingexpenses 3 138 2 -
Entertainment 107 130 - -
Othermarketingexpenses 501 444 - -
611 712 2 -
Administrative and general expenses
Auditfees
-statutoryaudit 104 83 54 30
Legalandprofessionalfees 1,160 1,045 947 758
Printingandstationery 42 42 2 -
Insurance,postagesandcourier 83 49 54 31
Electricityandwatercharges 40 28 - -
Telecommunicationexpenses 114 121 - -
Travellingandaccommodation 92 14 65 -
Others 2,865 2,476 2,276 1,655
4,500 3,858 3,398 2,474
Total operating expenses 15,590 13,755 4,628 3,214
Includedintheoperatingexpensesaredirectors’remunerationofRM859,000(2012:RM497,000)andRM779,000(2012:RM375,000)oftheGroupand oftheCompanyrespectively.
notes to the financial statementscontinued
100ECMLibraFinancialGroupBerhadANNUALREPORT2013
30. DIRECTORS' REMUNERATION
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Non-executivedirectors:
Fees 622 620 300 300
Otherremuneration 4,732 3,609 4,586 3,435
5,354 4,229 4,886* 3,735*
*Includedinthedirectors’remunerationoftheCompanyisanamountofRM4,107,000(2012:RM3,360,000)paidbyasubsidiary.
Thedirectors’remunerationfromcontinuingoperationsanddiscontinuedoperationsareasfollows: Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Continuingoperations 859 497 779 375
Discontinuedoperations 4,495 3,732 - -
5,354 4,229 779 375
ThetotalremunerationofthedirectorsoftheCompanyforthefinancialyearfallwithinthefollowingbands:
Number of directors 2013 2012 Non-executivedirectors:
BelowRM50,001 - 1
RM50,001toRM100,000 1 -
RM100,001toRM150,000 1 1
RM150,001toRM200,000 3 2
RM200,001-RM1,000,000 - 1
RM1,000,001-RM2,500,000 2 2
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013101
31. ALLOWANCE FOR LOSSES ON LOANS, ADVANCES AND FINANCING
Group 2013 2012 RM’000 RM’000
Collectiveassessmentallowance
-Allowancemadeduringthefinancialyear 140 -
32. INCOME TAX EXPENSE Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Incometax:
-Currentyear’sprovision 5,558 2,790 450 1,097
-Underprovisionoftaxinprioryears 504 7,447 108 -
6,062 10,237 558 1,097
Deferredtaxation(Note16):
-Relatingtooriginationandreversaloftemporarydifferences 2,231 10,281 (650) (342)
-(Over)/underprovisionofdeferredtaxinprioryears (163) 1,150 (3) (1)
2,068 11,431 (653) (343)
8,130 21,668 (95) 754
Incometaxexpenseon:
-Continuingoperations 657 797 (95) 754
-Discontinuedoperations(Note33(c)) 7,473 20,871 - -
Totalincometaxexpense 8,130 21,668 (95) 754
IncometaxiscalculatedattheMalaysianstatutorytaxrateof25%(2012:25%)oftheestimatedassessableprofitfortheyear.
notes to the financial statementscontinued
102ECMLibraFinancialGroupBerhadANNUALREPORT2013
32. INCOME TAX EXPENSE (continued)
A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expense at theeffectiveincometaxrateoftheGroupandoftheCompanyisasfollows:
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Profitbeforetaxationfrom:
-Continuingoperations 10,880 1,985 (1,514) 16,306
-Discontinuedoperations (44,881) 49,630 85,189 -
(34,001) 51,615 83,675 16,306
TaxatMalaysianStatutoryrateof25%(2012:25%)
-Continuingoperations 2,720 496 (379) 4,077
-Discontinuedoperations (11,220) 12,408 21,297 -
Taxeffectsof:
Non-allowableexpenses
-Continuingoperations 936 810 57,462 445
-Discontinuedoperations 19,095 578 - -
Non-taxableincome
-Continuingoperations (3,102) (560) (78,580) (3,767)
-Discontinuedoperations (640) (661) - -
(Over)/underprovisioninprioryears
-taxexpenses
-Continuingoperations 107 235 108 -
-Discontinuedoperations 397 7,212 - -
-deferredtax
-Continuingoperations (4) (185) (3) (1)
-Discontinuedoperations (159) 1,335 - -
8,130 21,668 (95) 754
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013103
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES
TheCompanyhadon15June2012,enteredintoaconditionalsharepurchaseagreement(“SPA”)withKenangaInvestmentBankBerhadandK&NKenanga Holdings Berhad (“KNKH”) for the proposed disposal by the Company of the entire equity interest in ECM Libra Investment Bank Berhad(“ECMLIB”)anditssubsidiariesforatotaldisposalconsiderationofRM875,114,000.
AspartoftheSPA,theCompanyshallpurchaseorprocureanymemberof itsGrouptopurchaseaportfolioofsecuritiesfromECMLIBonmutuallyacceptabletermsforcashbywayofasaletobeeffectedontheclosingdateofdisposal.
Thesubsidiarywasnotadiscontinuedoperationsorclassifiedasheldforsaleasat31January2012andthecomparativeconsolidatedprofitorlossandothercomprehensiveincomehavebeenre-presentedtoshowthediscontinuedoperationsseparatelyfromcontinuingoperations.
(a) Loss after tax from discontinued operations RM’000
Lossaftertaxfromdiscontinuedoperationsarisingfrom:
Resultsofdiscontinuedoperations 16,298
Lossondisposalofsubsidiarycompanies(Note33(b)) (68,652)
(52,354)
(b) The effects of the disposal on the Company’s and the Group’s financial statements
The disposal of ECMLIB Group gave rise to a gain of RM85,189,000 at the Company level and a loss of RM68,652,000 at the Group level, respectively.Detailsofthedisposalareasfollows:
RM’000
Cashproceeds 659,614
120,000,000ordinarysharesofRM1.00eachinKNKH 120,000
95,500,000KNKH’sRULSofnominalvalueofRM1.00each 95,500
875,114
RevaluationofKNKHsharesat14December2012 (49,800)
825,314
Less:Costofinvestmentinsubsidiary(Note13) (513,595)
311,719
ReductionincashproceedsforpurchaseofsecuritiesfromECMLIB (117,542)
CarryingamountofsecuritiespurchasedfromECMLIB 117,542
Less:Writedownofsubsidiariestonettangibleassets (226,530)
GainondisposalatCompanylevel 85,189
notes to the financial statementscontinued
104ECMLibraFinancialGroupBerhadANNUALREPORT2013
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES (continued)
(b) The effects of the disposal on the Company’s and the Group’s financial statements (continued) RM’000
Gainondisposalbeforewritedownofsubsidiariestonettangibleassets 311,719
Realisationofstatutoryreserve (80,787)
Realisationofregulatoryreserve (4,746)
Postacquisitionreservesrecogniseduptothedateofdisposal (89,399)
136,787
Goodwill,netofmergerreservesofRM26,561,000,writtenoff (205,439)
LossondisposalatGrouplevel (68,652)
(c) Statement of comprehensive income for discontinued operations:
ThefinancialresultsofECMLIBGroupwhichwereincludedintheconsolidatedstatementsofcomprehensiveincomeupto14December2012, thecompletiondateofthedisposal,areasfollows: Group 1.2.2012 to 1.2.2011 to 14.12.2012 31.1.2012 RM’000 RM’000
Revenue 148,830 166,565
Interestincome 68,935 82,071
Interestexpense (41,577) (46,975)
Netinterestincome 27,358 35,096
Non-interestincome 79,895 84,494
Othernon-operatingincome 1,380 3,994
Netincome 108,633 123,584
Operatingexpenses (82,645) (81,427)
Operatingprofit 25,988 42,157
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013105
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES (continued)
(c) Statement of comprehensive income for discontinued operations (continued): Group 1.2.2012 to 1.2.2011 to 14.12.2012 31.1.2012 RM’000 RM’000
Allowanceforlossesonloans,advancesandfinancing (3,728) (671)
(Allowancefor)/writebackofimpairmentallowanceforbadanddoubtfuldebts (17) 6,493
Writebackofimpairmentloss 1,528 1,651
Profitbeforetax(Note32) 23,771 49,630
Incometaxexpense(Note32) (7,473) (20,871)
Profitfromdiscontinuedoperations 16,298 28,759
Othercomprehensive(loss)/income:
Net(loss)/gainonavailable-for-salefinancialassets (27,372) 26,416
Incometaxrelatingtocomponentsofothercomprehensiveincome(Note32) 6,842 (6,604)
Othercomprehensive(loss)/incomefortheyear,netoftax (20,530) 19,812
Totalcomprehensive(loss)/incomefortheyear (4,232) 48,571
Totalcomprehensive(loss)/incomeattributabletoownersoftheCompany (4,232) 48,571
Other operating expenses
Includedintheincomestatementsofdiscontinuedoperationsarethefollowingitemscredited/(charged): Group 1.2.2012 to 1.2.2011 to 14.12.2012 31.1.2012 RM’000 RM’000
CostarisingfromESOS 212 400
Depreciation(Note17) (4,827) (4,858)
Directors’remuneration (4,577) (3,732)
Dividendincome 2,721 1,981
Gainondisposalofproperty,plantandequipment - 2,399
Interestincome 68,911 82,071
Interestexpense (41,674) (46,975)
notes to the financial statementscontinued
106ECMLibraFinancialGroupBerhadANNUALREPORT2013
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES (continued)
(c) Statement of comprehensive income for discontinued operations (continued):
Other operating expenses (continued)
Includedintheincomestatementsofdiscontinuedoperationsarethefollowingitemscredited/(charged)(continued): Group 1.2.2012 to 1.2.2011 to 14.12.2012 31.1.2012 RM’000 RM’000
Merchantbanklicensewrittenoff (52,500) -
Netgainondisposalof:
-securitiesHFT 10,037 12,061
-securitiesAFS 17,091 9,788
-derivatives 3,396 1,938
Netunrealised(loss)/gainonrevaluationof:
-securitiesHFT (1,260) 307
-derivatives (6,250) (1,691)
Allowanceforlossesonloans,advancesandfinancing(Note9(iv)) (3,728) (671)
(Allowancefor)/writebackofbadanddoubtfuldebts (17) 6,493
Writebackofimpairmentoninvestments 1,528 1,651
Property,plantandequipmentwrittenoff (1,056) (20)
Unrealisedgainonforeignexchangetransactions 2,650 3,752
(d) Statement of cash flows for discontinued operations Group 2013 2012 RM’000 RM’000
Cash flows (used in)/generated from disposed subsidiary
Netcash(usedin)/generatedfromoperatingactivities (1,197,447) 250,194
Netcashgeneratedfrom/(usedin)investingactivities 976,432 (167,546)
Netcashusedinfinancingactivities (11,550) (85,027)
Effectoncashflows (232,565) (2,379)
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013107
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES (continued)
(e) The disposal had the following effects on the financial position of the Group: As at 14 December 2012 RM’000
ASSETS
Cashandshort-termfunds 746,516
Depositsandplacementswithfinancialinstitutions 495
SecuritiesAFS 72,282
SecuritiesHTM 40,000
Derivativefinancialinstruments(asset) 48
Loans,advancesandfinancing 537,507
Tradereceivables 455,075
Otherassets 81,463
StatutorydepositwithBankNegaraMalaysia 24,720
Property,plantandequipment(Note17) 20,227
TOTAL ASSETS OF ECMLIB 1,978,333
LIABILITIES
Depositsfromcustomers 914,440
Depositsandplacementsofbanksandotherfinancialinstitutions 75,000
Tradepayables 297,425
Derivativefinancialinstruments(liabilities) 36
Otherliabilities 52,237
Deferredtaxliabilities 3,168
TOTAL LIABILITIES OF ECMLIB 1,342,306
notes to the financial statementscontinued
108ECMLibraFinancialGroupBerhadANNUALREPORT2013
33. DISCONTINUED OPERATIONS/DISPOSAL OF SUBSIDIARIES (continued)
(e) The disposal had the following effects on the financial position of the Group (continued): As at 14 December 2012 RM’000
NET ASSETS OF ECMLIB 636,027
Merchantbanklicense 52,500
688,527
Considerationreceived 825,314
Goodwill,netofmergerreserveswrittenoff (205,439)
Loss on disposal at Group level (68,652)
Cash portion of consideration 659,614
Less:costofpurchaseofsecuritiesfromECMLIB (117,542)
Netcashproceedsfromdisposal 542,072
CashandcashequivalentsofECMLIB 746,516
DepositsandplacementsofECMLIBwithfinancialinstitutions 495
Net cash outflow from disposal (204,939)
34. EARNINGS PER ORDINARY SHARE
ThebasicanddilutedearningsperordinaryshareiscalculatedbydividingtheGroup’sprofitaftertaxationfromcontinuingoperationsofRM10,223,000(2012:RM1,188,000)and lossaftertaxationfromdiscontinuedoperationsofRM52,354,000(2012:profitofRM28,759,000)bytheweightedaveragenumberofordinarysharesinissueduringtheyearof828,819,091(2012:822,706,000).
Forboththefinancialyearsended31January2013and31January2012,outstandingESOShavebeenexcludedfromthecomputationoffullydilutedearningsperRM1.00ordinarysharesastheirconversiontoordinaryshareswouldbeanti-dilutive.
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013109
35. DIVIDENDS
Group 2013 2012 RM’000 RM’000
Final dividend for 2012:
-Singletierdividendof2.4sen,on828,819,091ordinaryshares
(excludingtreasurysharesof2,082,862ordinaryshares)paidon14August2012 19,892 -
Final dividend for 2011:
-Singletierdividendof1.89sen,on804,452,937ordinaryshares
(excludingtreasurysharesof26,449,016ordinaryshares)paidon7June2011 - 15,204
19,892 15,204
Thedirectorsdonotproposeanyfinaldividendforthecurrentfinancialyearended31January2013.
36. CAPITAL ADEQUACY AND CAPITAL MANAGEMENT
(a) AsdisclosedinNote33above,theCompanydisposedoffECMLIBGroupduringthefinancialyear.UpondisposalofECMLIBGroup,theCompany is no longer a financial holding company and therefore, the Group does not fall within the purview of Bank Negara Malaysia (“BNM”). The followingisthecapitaladequacyratioofECMLIB,hereafterreferredtoas“theBank”forthepreviousfinancialyearended31January2012.
Thecapitalbaseandrisk-weightedassets(“RWA”)thatrelatetothepreviousfinancialyearassetoutbelowweredisclosedinaccordancewith theRisk-WeightedCapitalAdequacyFramework(BaselII)issuedbyBNM.
2012 %
Before deducting proposed dividend
Corecapitalratio 50.45
Risk-weightedcapitalratio 51.11
After deducting proposed dividend
Corecapitalratio 50.45
Risk-weightedcapitalratio 51.11
notes to the financial statementscontinued
110ECMLibraFinancialGroupBerhadANNUALREPORT2013
36. CAPITAL ADEQUACY AND CAPITAL MANAGEMENT (continued)
Capital management process
The Bank had in place an Internal Capital Adequacy Assessment Process (“ICAAP”) which was largely conceptualised from the BNM’s Concept Paper on ICAAP (Basel II - Pillar 2). The computation of the internal risk-weighted capital ratio requirement was derived from using a simple aggregation approach and stress testing methodologies that was in line with the nature and complexity of the Bank’s business operations.TheapplicationofICAAPwasbasedonstresstestmethodologiesunderpinnedbythefollowingstructuredapproach:
(i) assessthecapitalbufferrequirementsoverashort-termperiodunderastressedevent;
(ii) addressmajorrisksnotaddressedunderPillar1;
(iii) assessthecapitalbufferrequirementsbasedonthebusinessactivitiesgeneratedundertheBank’sBusinessPlans,usuallyoveraperiodof1 to3years.
(b) ThecomponentsofTierIandTierIICapitaloftheBankareasfollows:
2012 RM’000
Tier I Capital
Paid-upsharecapital 513,000
Retainedprofit 69,055
Statutoryreserve 80,787
Otherreserves 212
663,054
Less:Deferredtaxassets* -
Total Tier I Capital (a) 663,054
Tier II Capital
Collectiveassessmentallowanceforloans,advancesandfinancing 2,376
Total Tier II Capital (b) 2,376
Total capital (a) + (b) 665,430
Less:Investmentinsubsidiaries -
Capital base 665,430
Total RWA 1,314,270
*ExcludesdeferredtaxonAFSreserve.
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013111
36. CAPITAL ADEQUACY AND CAPITAL MANAGEMENT (continued)
(c) ThebreakdownofRWAbyeachmajorriskcategoryisasfollows:
2012 RM’000
Creditrisk 511,769
Marketrisk 528,595
Operationalrisk 273,906
1,314,270
37. COMMITMENTS
Group 31 January 31 January 1 February 2013 2012 2011
RM’000 RM’000 RM’000
Capital commitments
Approvedandcontractedfor:
Purchaseofproperty,plantandequipment 1,946 2,573 7,559
Non-cancellation operating lease commitments
Futureminimumrentalspayable:
Notlaterthan1year - 2,599 1,901
Laterthan1yearandnotlaterthan5years - 2,363 2,316
- 4,962 4,217
notes to the financial statementscontinued
112ECMLibraFinancialGroupBerhadANNUALREPORT2013
37. COMMITMENTS (continued)
Commitments and Contingencies
Group
Credit Risk- Nominal equivalent weighted amount amount amount
RM’000 RM’000 RM’000
As at 31 January 2013
Commitmentstoextendcreditswithmaturityoflessthan1year:
-marginfacilities - - -
-othertermloansfacilities - - -
Foreignexchangerelatedcontracts - - -
- - -
As at 31 January 2012
Commitmentstoextendcreditswithmaturityoflessthan1year:
-marginfacilities 492,574 98,515 68,415
-othertermloansfacilities 60,667 13,183 32,462
Foreignexchangerelatedcontracts 5,814 91 35
559,055 111,789 100,912
As at 1 February 2011
Commitmentstoextendcreditswithmaturityoflessthan1year:
-marginfacilities 269,365 53,873 46,872
-othertermloansfacilities 47,828 9,566 9,566
317,193 63,439 56,438
*ThecreditequivalentamountwasarrivedatusingthecreditconversionfactorsasspecifiedbyBNM.
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013113
38. SIGNIFICANT RELATED PARTY TRANSACTIONS
(a) Related parties and relationships
Therelatedpartiesof,andtheirrelationship(otherthanthosedisclosedinNote13andNote14tothefinancialstatements)withtheGroupand theCompanyareasfollows:
Relationship Related parties
Keymanagementpersonnel AlldirectorsoftheCompanyandmembersofmanagementcommitteewhomakecriticaldecisionsin relationtothestrategicdirectionoftheGroupandoftheCompany.
Relatedpartiesofkey Closefamilymembersanddependantsofkeymanagementpersonnelandentitiesthatarecontrolledor managementpersonnel significantlyinfluencedby,orforwhichsignificantvotingpowerinsuchentityresidewith,directly,or (deemedasrelatedtotheGroup) indirectlybykeymanagementpersonneloritsclosefamilymembers.
(b) Significant related party transactions and balances
Inadditiontothetransactionsdetailedelsewhereinthefinancialstatements,setoutbelowaretheGroup’sandtheCompany’sothersignificant relatedpartytransactionsandbalances:
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Income
Interestincomefrom:
-asubstantialshareholder 5,466 2,793 - -
-subsidiaries - - 345 406
Commitmentfeeincomefromasubstantialshareholder - 211 - -
Dividendincomefromsubsidiaries - - - 17,667
Brokeragefeeincomefromarelatedparty 28 61 - -
Rentalincomefromasubsidiary - - 238 1,358
Managementfeefromdirectors 25 31 - -
notes to the financial statementscontinued
114ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
38. SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(b) Significant related party transactions and balances (continued)
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Expenditure
Interestondepositsandplacementstorelatedparties 300 311 - -
Interestondepositsandplacementstokeymanagementpersonnel - 20 - -
Rentalexpenseschargedbyarelatedparty 1,870 2,236 - -
Projectmanagementfeechargedbyarelatedparty 267 266 - -
Amount due from
Fixeddepositsplacedwithasubsidiary - - - 9,848
Dividendreceivablefromsubsidiaries - - - 17,667
Interestreceivablefromasubsidiary - - - 14
Amount due to
Depositsfromotherrelatedparties - 8,311 - -
Interestpayabletootherrelatedparties - 3 - -
ThedirectorsoftheCompanyareoftheopinionthattheabovetransactionshadbeenenteredintointhenormalcourseofbusinessandhadbeen
establishedundertermsthatarenolessfavourablethanthosearrangedwithindependentthirdparties.
ECMLibraFinancialGroupBerhadANNUALREPORT2013115
notes to the financial statementscontinued
38. SIGNIFICANT RELATED PARTY TRANSACTIONS (continued)
(c) Compensation of key management personnel
Theremunerationofdirectorsandothermembersofkeymanagementfortheyearwasasfollows:
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Feesandmeetingallowances 1,048 804 406 375
Short-termemployeebenefits 12,177 6,391 4,144 3,000
Definedcontributionplan 1,136 801 499 360
Share-basedpayment - 186 - -
14,361 8,182 5,049 3,735
Includedinthetotalcompensationofdirectorsandkeymanagementpersonnelare:
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
Directors’remuneration(Note30) 5,528 4,229 4,886 3,735
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
Overview
TheGroupismainlyexposedtoavarietyoffinancialrisks,mainlycreditrisk,marketrisk,liquidityriskandoperationalriskthroughtheactivitiesofitssubsidiary,ECMLibraInvestmentBankBerhad(“ECMLIB”or“theBank”).Inaddition,thefiduciaryriskthroughtheactivitiesofitssubsidiary,LibraInvestBerhad(“LIB”)largelystemsfromtheperformancehurdlessuchasthebenchmarksbywhichthefundmanagersareexpectedtomatchorout-performwithinthemandatesthatdetailtheparametersimposedonthem.
The Group’s financial risks are managed by the Board of Directors, through the Board Audit and Risk Management Committee (“BARMC”) whichoversees the establishment of enterprise-wide risk management policies and processes.The BARMC reviews the integrity of internal controls andensuresthatGroupRiskManagementdepartment(“GRM”)performsitsdutiesindependentlyoftherisktakingactivities.GRMprovidesthecentralresourcefordevelopingtoolsandmethodologiesfortheidentification,quantificationandmanagementoftheportfolioriskstakenbytheGroupasawhole.
116ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Overview (continued)
ThefiduciaryriskthroughtheGroup’sassetmanagementcompanyLIB,largelystemsfromgovernanceriskandoperationalrisk.TheGroup’sappointedBARMCmaintainsoversightoftheseriskswiththesupportoftheGroupCompliancedepartmentandGRM.
TheGroup’soverallriskmanagementpoliciesisbeingseparatelysetoutbelowasitreflectsthesubstantialcomponentoftheGroup’sfinancialriskmanagementobjectivesandpolicies.
GRM and Group Compliance functions were organised on a Group basis with the respective departments established at the Bank level up to 14December2012.SubsequenttothedisposalofECMLIBonthesaiddate,theCompliancefunctionhassincebeenestablishedatLIBlevelwhilsttheGroupChiefExecutiveOfficeroverseesriskmanagementonaGroupbasis.
Credit risk
Creditriskisthepotentiallossofrevenueasaresultoffailurebytheborrowersorcounterpartiestomeettheircontractualfinancialobligations.AstheGroup’sprimarybusinesswasininvestmentbanking,itsexposuretocreditriskwasprimarilyfromitslendingandfinancingtoretailconsumers,SmallandMediumEnterprises(“SMEs”),andcreditriskistheriskoflossarisingfromtheactualorperceiveddecliningcreditqualityandactualdefaultofanobligor,counterpartyorcorporatecustomersaswellasunderwritingcommitments.TradingandinvestingthesurplusfundsoftheBank,suchastradingandholdingofdebtsecurities,settlementoftransactions,alsoexposedtheBanktocreditriskandcounterpartyrisk.
Riskgovernance
TheBank’sBoardhasappointedtheBoardCreditCommittee(“BCC”)tooverseeallaspectsofcreditriskmanagementintheBankwiththesupportoftheCreditApprovalExecutiveCommittee(“CAEC”).TheBCCcomprisesboardmemberswhohavethevetopowertorejectcreditsormodifythetermsofcreditsthathavebeenapprovedbytheCAEC.ItreviewsandapprovescreditriskmanagementpoliciesasrecommendedbyCAEC.
TheCAECistaskedtoformulatecreditriskmanagementpolicies, reviewandapprovecreditapplications inaccordancewiththeBank’sprescribedapprovallimitsaslaiddownbytheBCC.TheCAECisrepresentedbymembersofseniormanagementoftheBankincludingtheHeadofCreditControldepartment(“CCD”).
Riskmanagementapproach
(a) Lending to retail consumers
ThecreditgrantingtoretailconsumersandSMEsisindividuallyunderwritten,whichamongstothers,includestheassessmentofthehistoricalrepayment track record, the current repayment capacity of the customer and types of facilities including the collaterals offered. The creditapprovingauthorityhastheresponsibilitytoensurethatcreditriskisproperlyassessedandallcrucialcreditinformationofthecustomer,facilitytypeandcollateralsofferedisincludedintheloanapplication.
(b) Lending to corporate and institutional customers
Creditgrantingtocorporateandinstitutionalcustomersis individuallyunderwritten.Creditofficers identifyandassessthecreditrisksof largecorporateorinstitutionalcustomers,orcustomergroups,takingintoconsiderationtheirfinancialandbusinessprofiles,industryandeconomicfactors,orothercreditsupportsuchasequityoptions.
(c) Credit risk from trading and investment activities
ThemanagementofthecreditriskarisingfromtheGroup’stradingor investingitssurplusfundsisprimarilyviathesettingofspecifictradinglimitsincludinginstrumenttypeandcounterpartylimitswhicharespecificallyapprovedbytheGroup’sBoard.Inaddition,theGrouphasinplacevariousmanagementactiontriggersandrelatedguidelinesundertheCreditRiskManagementFrameworktoavoidundueconcentrationofcreditrisk.
ECMLibraFinancialGroupBerhadANNUALREPORT2013117
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach(continued)
(d) Counterparty credit risk on derivative financial instruments
CreditriskarisesfromthepossibilitythatacounterpartymaybeunabletomeetthetermsofacontractinwhichtheGrouphasagaininacontract.
Therehavebeennochangessincetheendofthepreviousfinancialyearinrespectofthefollowing:
(i) thetypesofderivativefinancialcontractsentered intoandtherationaleforentering intosuchcontracts,aswellastheexpectedbenefits accruingfromthesecontracts;
(ii) theriskmanagementpoliciesinplaceformitigatingandcontrollingtherisksassociatedwiththesefinancialderivativecontracts;and
(iii) therelatedaccountingpolicies.
Asat31January2013,theamountofcreditriskintheGroup,measuredintermsofthecosttoreplacetheprofitablecontractswasRM26,123,000(2012:RM202,807,000).Thisamountwillincreaseordecreaseoverthelifeofthecontracts,mainlyasafunctionofmaturitydatesandmarketratesorprices.Derivativefinancialinstrumentsattheircontractualandfairvalueamountsareasfollows:
Group Group Group 31 January 2013 31 January 2012 1 February 2011 Notional Notional Notional amount Fair value amount Fair value amount Fair value RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Equityrelatedcontracts,options purchasedandembeddedderivatives 26,123 1,203 202,807 6,688 202,319 9,552
(e) Independent credit assessment
Independent credit assessments are performed on large credits to complement risk identification as well as to evaluate the quality of credit appraisalsandthecompetencyofcreditpersonnel. InternalriskmanagementreportsarepresentedtotheBARMC,containinginformationon economictrendsacrossmajorportfolios,qualityofcreditportfolios,resultsofindependentcreditreview,resultsoftheriskprofilingconducted, significantcreditexposurestoconnectedpartiesandcreditconcentrationbyeconomicsectorsandbylargesinglecustomers.
(i) Creditriskexposuresandcreditriskconcentration
ThefollowingtablepresentstheGroup’sexposuretocreditriskoffinancialassetsbeforetheeffectofcreditriskmitigation,brokendownby therelevantcategoryandclassoffinancialassetagainsttherelevantindustryandmaturity.Foron-balancesheetexposures,themaximum exposuretocreditriskequalstheircarryingamounts.Forcreditcommitments,themaximumexposuretocreditriskisthefullamountofthe undrawncreditgrantedtocustomers.
Aconcentrationofcreditriskexistswhenanumberofcounterpartiesareengagedinsimilaractivitiesandhavesimilareconomiccharacteristics thatwouldcausetheirabilitytomeetcontractualobligationstobesimilarlyaffectedbychangesineconomicandotherconditions.
TheGroup’screditriskfromfinancialinstrumentswerealllocatedinMalaysia.
118ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(i) Creditriskexposuresandcreditriskconcentration(continued)
Byclassoffinancialinstrument
Transport Agriculture, Government storage and manufacturing, Construction Other Purchase and Central Financial business wholesale & & real consumer of Banks services services retail trade estate Utilities loans securities Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 31 January 2013
On-Balance Sheet financial assets
Cashandshort-termfunds - 73,468 - - - - - - 73,468
SecuritiesHFT - - - 24,921 - - - - 24,921
SecuritiesAFS - 697,656 - - - - - - 697,656
SecuritiesHTM - 47,750 - - - - - - 47,750
Derivativefinancialassets - - - 1,203 - - - - 1,203
Grossloans,advances andfinancing - - - 4,242 - - - - 4,242
Tradereceivables - 7,849 - - - - - - 7,849
Total - 826,723 - 30,366 - - - - 857,089
ECMLibraFinancialGroupBerhadANNUALREPORT2013119
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(i) Creditriskexposuresandcreditriskconcentration(continued)
Byclassoffinancialinstrument
Transport Agriculture, Government storage and manufacturing, Construction Other Purchase and Central Financial business wholesale & & real consumer of Banks services services retail trade estate Utilities loans securities Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 31 January 2012
On-Balance Sheet financial assets
Cashandshort-termfunds 52 251,968 - - - - - - 252,020
Depositswith financialinstitutions - 20,631 - - - - - - 20,631
SecuritiesHFT 153,933 200,674 729 5,537 112 - - - 360,985
SecuritiesAFS 370,886 92,710 3,550 9,268 188,577 10,042 - - 675,033
SecuritiesHTM - 200,000 - - - - - - 200,000
Derivativefinancialassets - 52 - - 6,630 - 6 - 6,688
Grossloans,advances andfinancing - 18,672 47,307 295,643 75,049 - - 122,275 558,946
StatutorydepositswithBNM 27,165 - - - - - - - 27,165
Tradereceivables - 199,265 - - - - - 164,235 363,500
552,036 983,972 51,586 310,448 270,368 10,042 6 286,510 2,464,968
Commitments and contingencies
Commitments (creditequivalentamount) - 10,070 1,750 1,133 - - 21 98,815 111,789
Total 552,036 994,042 53,336 311,581 270,368 10,042 27 385,325 2,576,757
120ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(i) Creditriskexposuresandcreditriskconcentration(continued)
Byclassoffinancialinstrument
Transport Agriculture, Government storage and manufacturing, Construction Other Purchase and Central Financial business wholesale & & real consumer of Banks services services retail trade estate Utilities loans securities Total RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 1 February 2011
On-Balance Sheet financial assets
Cashandshort-termfunds 64,954 180,201 - - - - - - 245,155
Depositswithfinancialinstitutions - 21,489 - - - - - - 21,489
SecuritiesHFT 49,758 304,060 - - - - - - 353,818
SecuritiesAFS 250,872 102,773 13,104 10,560 115,479 26,691 - - 519,479
SecuritiesHTM - 70,000 - - - - - - 70,000
Derivativefinancialassets - - - 1,651 7,901 - - - 9,552
Grossloans,advancesandfinancing - 42,815 106,313 195,745 75,055 - - 240,128 660,056
StatutorydepositswithBNM 8,834 - - - - - - - 8,834
Tradereceivables - 269,185 - - - - - 216,133 485,318
374,418 990,523 119,417 207,956 198,435 26,691 - 456,261 2,373,701
Commitments and contingencies
Commitments(creditequivalentamount) - 4,000 803 810 - - - 57,826 63,439
Total 374,418 994,523 120,220 208,766 198,435 26,691 - 514,087 2,437,140
ECMLibraFinancialGroupBerhadANNUALREPORT2013121
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(i) Creditriskexposuresandcreditriskconcentration(continued)
Allloansandfinancingaresecuredbycollateralsincash,sharesorproperties.
(ii) Creditqualityofgrossloansandadvances
Grossloans,advancesandfinancingareanalysedasfollows:
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Neitherpastduenorimpaired 4,242 558,946 660,056
(A) Neitherpastduenorimpaired
Grossloans,advancesandfinancingwhichareneitherpastduenorimpairedareanalysedasfollows:
Group 31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Retailloans/financing - 122,275 240,128
Corporateloans/financing 4,242 436,671 419,928
4,242 558,946 660,056
(B) Pastduebutnotimpaired
Pastduebutnotimpairedloansareloanswherethecustomerhasfailedtomakeaprincipalorinterestpaymentwhencontractuallydue,and includesloans,advancesandfinancingwhicharedueoneormoredaysafterthecontractualduedatebutlessthanthree(3)months.
Asat31January2013,therearenobalanceswhicharepastduebutnotimpaired(2012:Nil).
122ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach(continued)
(e) Independent credit assessment (continued)
(ii) Creditqualityofgrossloansandadvances(continued)
(C) Impairedloans
Forallloansthatareconsideredindividuallysignificant,theGroupassessesonacase-by-casebasisateachreportingdatewhetherthereis anyobjectiveevidencethataloanisimpaired.ThecriteriathattheGroupusetodeterminethatthereisobjectiveevidenceofimpairment include:
(a) theprincipalorinterestorbothispastdueformorethan90daysor3months;
(b) theamountispastdueortheoutstandingamounthasbeeninexcessoftheapprovedlimitfor90daysor3monthsorless,whereby thefacilityorborrowerexhibitscreditqualityweaknessesarisingfromtheGroup’sinternalcreditriskratingassessmentexercise;
(c) for loanfacilitieswithrepaymentsofprincipalor interestorboththat isscheduledonintervalsof3monthsor longer,theloanis classifiedasimpairedassoonasadefaultoccursunlesstherearestrongmitigatingfactors.However,shouldthefacilityremainspast dueforafurther90daysor3months,theloanandfinancingisimmediatelyclassifiedasimpaired.
Asat31January2013,therearenoimpairedloans.
(D) Rescheduled/restructuredloans,advancesandfinancing
Rescheduled/restructuredloansandfinancingincludeextendedpaymentarrangements,andthemodificationanddeferralofpayments.
At31January2013,therewerenorestructuredloans(2012:RM8,354,971).
(E) ThecreditriskoffinancialassetoftheGroupismitigatedbythecollateralsheldagainstthefinancialasset.
Noloans,advancesandfinancingwassubjecttoindividualassessmentimpairmentreviewasatthecurrentandpreviousfinancialyearend.Thecollateralmitigatescreditriskandwouldreducetheextentofimpairmentallowancefortheassetsubjecttoimpairmentreview.
Fortradereceivables,individualassessmentallowancesoftheGroupasatthedateofthestatementsoffinancialpositionwouldhavebeenhigherbyapproximatelyRMNil(2012:RM3,600,000)withoutthecollateralheld.
(F) Repossessedcollateral
Theseareassetsobtainedbytakingpossessionofcollateralheldassecurityagainstloans,advancesandfinancing.
Repossessedcollateralaresoldassoonaspracticable.Repossessedcollateralarerecognisedinotherassetsonthestatementoffinancial position.TheGroupdonotoccupyrepossessedpropertiesforitsbusinessuse.
(iii) Impairmentofprivatedebtsecurities
The Group determines that there is objective evidence of impairment of private debt securities when a default occurs upon a breach of contractualrepaymentscheduleoraratingdowngrademaybeconsideredasimpaired.However,securitiesthatareratedbyexternalrating agenciesshallbeimmediatelyclassifiedasimpairedwhenithasbeenratedas“D”(RAM,MARCoritsequivalent).
ECMLibraFinancialGroupBerhadANNUALREPORT2013123
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(iv) Creditqualityoffinancialinvestments
Setoutbelowareanalysisofratedfinancialinvestmentsanalysedbyratingsfromexternalcreditratingsagencies:
Financial Assets Placements with <--------- Financial Investments ----------> financial institutions* HFT AFS HTM Total At At At At At amortised fair fair fair amortised cost value value value cost RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 31 January 2013
A+toA- 60,706 - - - - 60,706
Notrated - - 24,921 697,656 47,750 770,327
60,706 - 24,921 697,656 47,750 831,033
Group
As at 31 January 2012
AAA+toAA- 158,543 - 205,742 106,058 200,000 670,343
A+toA- 20,000 - - 10,282 - 30,282
Notrated - - 153,933 343,141 - 497,074
Unrated 25,000 - 1,310 215,552 - 241,862
203,543 - 360,985 675,033 200,000 1,439,561
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39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Credit risk (continued)
Riskmanagementapproach (continued)
(e) Independent credit assessment (continued)
(iv) Creditqualityoffinancialinvestments(continued)
Setoutbelowareanalysisofratedfinancialinvestmentsanalysedbyratingsfromexternalcreditratingsagencies:
Financial Assets Placements with <--------- Financial Investments ----------> financial institutions* HFT AFS HTM Total At At At At At amortised fair fair fair amortised cost value value value cost RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Group
As at 1 February 2011
AAA+toAA- 4,035 - 304,060 165,475 70,000 543,570
A+toA- 20,000 - - 28,705 - 48,705
Notrated 64,900 - 49,758 220,471 - 335,129
Unrated 105,000 - - 104,828 - 209,828
193,935 - 353,818 519,479 70,000 1,137,232
*Comprisesofmoneyatcallanddepositsplaced.
Theratingsshownformoneymarketinstruments(e.g.negotiableinstrumentsofdeposit)arebasedontheratingsassignedtotherespective financialinstitutionissuingthefinancialinstruments.Theratingsshownfordebtsecuritiesarebasedontheratingsassignedtothespecific debtissuance.
Note:Theratedfinancialinvestmentsshownabovedonotincludegovernmentsecuritiesandtreasurybills,unittrustfundsandequitysecurities.
Market risk
Marketriskistheriskoflossesinonandoff-balancesheetpositionsarisingfrommovementsinmarketprices.MarketriskistheriskthattheGroup’searningsandcapital,oritsabilitytomeetitsbusinessobjectives,willbeadverselyaffectedbymovementsinmarketratesorpricessuchasinterestrates,foreignexchangerates,equitypricesand/orcreditspreads.
Riskgovernance
GRM supports the BARMC in market risk management oversight, reviews the Group’s market risk framework and policies, aligns market riskmanagementwithbusinessstrategiesandplanning,andrecommendsactionstoensurethatthemarketrisksremainwithinestablishedrisktolerance.ThemarketriskoftheGroupisidentifiedintotradedmarketriskandnon-tradedmarketrisk.
ECMLibraFinancialGroupBerhadANNUALREPORT2013125
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk
(a) Traded market risk
Traded market risk, primarily the interest rate risk and credit spread risk, exists in the Group’s trading book positions held for the purpose ofbenefitingfromshort-termpricemovements,whichareconductedprimarilybythetreasuryoperations.
Risk measurement approach
TheGroup’stradedmarketriskframeworkcomprisesmarketriskpoliciesandpractices,delegationofauthority,marketrisklimitsandvaluationmethodologies.TheGroup’stradedmarketriskforitsinterest-sensitivefixedincomeinstrumentsismeasuredbythepresentvalueofaonebasispointchange(“PV01”)andismonitoredindependentlybytheGRMonadailybasisagainstapprovedmarketrisklimits.Inaddition,TreasuryBack-Officedepartmentisalsoresponsibletomonitorandreportonlimitexcessesandthedailymark-to-marketvaluationoffixedincomesecurities.Themarketrisklimitsaredeterminedaftertakingintoaccounttheriskappetiteandtherisk-returnrelationshipandareperiodicallyreviewedbyBARMC.ChangestomarketrisklimitsmustbeapprovedbytheGroup’sBoard.ThetradingbookpositionsandlimitsareregularlyreportedtotheBARMC.
(b) Equity risk
Marketriskonequitiesisthepotentiallossinthevalueoftheinvestmentinsharesandinterest-in-sharesduetothechangesinmarketprice.ThismarketriskisbeingmonitoredusingValue-at-Risk(“VaR”).VaRreferstothemaximumlossnotexceededwithagivenprobabilitydefinedastheconfidenceleveloveragivenperiodoftime.
Risk measurement approach
TheBank’sGRMmonitorsandmanagesmarketriskexposureviastresstesting,inadditiontoreviewingandanalysingitstreasurytradingstrategy,positionsandactivitiesvis-à-vischanges inthefinancialmarket,monitoring limitusage,assessing limitadequacy,andverifyingtransactionprices.
(c) Non-traded market risk
TheBank’scorenon-tradedmarketrisksareinterestraterisk(“IRR”)inthebankingbookandforeignexchangerisk.
Interest rate risk
IRRemanatesfromtherepricingmismatchesoftheGroup’sbankingassetsandliabilitiesandalsofromtheGroup’sinvestmentsoftheirsurplus funds.
Risk measurement approach
BalancesheetmanagementunderthepurviewofAssetsandLiabilitiesCommittee(“ALCO”)includesriskmanagementofthepotentialchangeinearningsandcapitalarisingfromtheeffectofmovementsininterestratesonthestructuredbankingbookoftheBank.Toachievethis,ALCOusesvarioustoolsincludinginterestrategapanalysis.Simulatingaparallelyieldcurveshift,thismeasurementissometimesknownasEarnings-at-Risk(“EAR”)andspecifictolerancelimithasbeensettomonitorthismarketriskexposure.
notes to the financial statementscontinued
126ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
The tables below summarise the Group’s exposure to IRR. The assets and liabilities at carrying amount are categorised by the earlier of contractualrepricingormaturitydatesasfollows:
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2013 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
ASSETS
Cashandshort-termfunds 55,930 4,776 - - - 12,762 - 73,468 3.07
SecuritiesHFT - - - - - 24,921 - 24,921 -
SecuritiesAFS - - - - - 697,656 - 697,656 -
SecuritiesHTM - - - 47,750 - - - 47,750 5.00
Derivativefinancialassets - - - - - 1,203 - 1,203 -
Loans,advancesandfinancing
-Performing - - - - 4,242 (140)* - 4,102 10.00
Tradereceivables - - - - - 7,849 - 7,849 -
Otherassets^ - - - - - 66,512 - 66,512 -
Total assets 55,930 4,776 - 47,750 4,242 810,763 - 923,461
^Otherassetsincludeotherassets,investmentinassociatedcompany,property,plantandequipmentandintangibleassetsasdisclosedinthe consolidatedstatementoffinancialposition.
*Thenegativebalancerepresentscollectiveassessmentallowanceforloans,advancesandfinancing.
ECMLibraFinancialGroupBerhadANNUALREPORT2013127
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2013 (continued) RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
LIABILITIES AND EQUITY
LIABILITIES
Tradepayables - - - - - 7,207 - 7,207 -
Otherliabilities# - - - - - 6,314 - 6,314 -
Total liabilities - - - - - 13,521 - 13,521
Shareholders’equities - - - - - 909,940 - 909,940 -
Total equity and liabilities - - - - - 923,461 - 923,461
On-BalanceSheetinterest sensitivitygap 55,930 4,776 - 47,750 4,242 (112,698) - -
Off-BalanceSheetinterest sensitivitygap - - - - - - - -
Total interest sensitivity gap 55,930 4,776 - 47,750 4,242 (112,698) - -
#Otherliabilitiesincludeotherliabilities,provisionfortaxationanddeferredtaxliabilitiesasdisclosedintheconsolidatedstatementoffinancial position.
128ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2012 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
ASSETS
Cashandshort-termfunds 182,912 - - - - 69,108 - 252,020 3.02
Depositswithfinancialinstitutions - 20,051 580 - - - - 20,631 3.20
SecuritiesHFT - - - - - - 360,985 360,985 -
SecuritiesAFS 3,053 5,006 71,006 97,277 199,664 14,189 284,838 675,033 4.11
SecuritiesHTM 75,000 125,000 - - - - - 200,000 3.19
Derivativefinancialassets - - - - - - 6,688 6,688 -
Loans,advancesandfinancing
-Performing 218,878 133,643 159,925 - 46,500 (2,376)* - 556,570 7.86
StatutorydepositwithBNM - - - - - 27,165 - 27,165 -
Tradereceivables 5,284 - - - - 358,216 - 363,500 9.00
Otherassets^ - - - - - 379,570 - 379,570 -
Total assets 485,127 283,700 231,511 97,277 246,164 845,872 652,511 2,842,162
^Otherassetsincludeotherassets,investmentinassociatedcompany,property,plantandequipmentandintangibleassetsasdisclosedinthe consolidatedstatementoffinancialposition.
*Thenegativebalancerepresentscollectiveassessmentallowanceforloans,advancesandfinancing.
ECMLibraFinancialGroupBerhadANNUALREPORT2013129
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2012 (continued) RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
LIABILITIES AND EQUITY
LIABILITIES
Depositsfromcustomers 849,139 207,974 24,370 - - - - 1,081,483 3.25
Depositsandplacementsof banksandotherfinancial institutions 341,371 - - - - - - 341,371 3.08
Tradepayables - - - - - 324,413 - 324,413 -
Otherliabilities# - - - - - 73,852 - 73,852 -
Total liabilities 1,190,510 207,974 24,370 - - 398,265 - 1,821,119
Shareholders’equities - - - - - 1,021,043 - 1,021,043
Total equity and liabilities 1,190,510 207,974 24,370 - - 1,419,308 - 2,842,162
On-BalanceSheetinterest sensitivitygap (705,383) 75,726 207,141 97,277 246,164 (573,436) 652,511 -
Off-BalanceSheetinterest sensitivitygap - - - - - - - -
Total interest sensitivity gap (705,383) 75,726 207,141 97,277 246,164 (573,436) 652,511 -
#Otherliabilitiesincludeotherliabilities,provisionfortaxationandderivativesfinancialliabilitiesasdisclosedintheconsolidatedstatementof financialposition.
notes to the financial statementscontinued
130ECMLibraFinancialGroupBerhadANNUALREPORT2013
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2011 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
ASSETS
Cashandshort-termfunds 172,446 - - - - 72,709 - 245,155 2.70
Depositswithfinancialinstitutions - 20,849 640 - - - - 21,489 2.88
SecuritiesHFT - - - - - - 353,818 353,818 -
SecuritiesAFS 4,703 154,505 38,469 194,067 83,992 (2,504)* 46,247 519,479 4.88
SecuritiesHTM 20,000 50,000 - - - - - 70,000 2.97
Derivativefinancialassets - - - - - - 9,552 9,552 -
Loans,advancesandfinancing
-Performing 129,445 209,923 320,688 - - (1,705)** - 658,351 8.21
StatutorydepositwithBNM - - - - - 8,834 - 8,834 -
Tradereceivables 5,718 - - - - 479,600 - 485,318 9.00
Otherassets^ - - - - - 380,155 - 380,155 -
Total assets 332,312 435,277 359,797 194,067 83,992 937,089 409,617 2,752,151
^Otherassetsincludeotherassets,investmentinassociatedcompany,property,plantandequipmentandintangibleassetsasdisclosedinthe consolidatedstatementoffinancialposition.
* Thenegativebalanceisinclusiveofnetimpairmentlossonsecurities.
**Thenegativebalancerepresentscollectiveassessmentallowanceforloans,advancesandfinancing.
notes to the financial statementscontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013131
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
<------------------------------ Non-trading book -----------------------------> Effective Up to 1 > 1 - 3 > 3 - 12 Over Non-interest Trading interest Group month months months 1 - 5 years 5 years sensitive book Total rate As at 31 January 2011 (continued) RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 RM ‘000 %
LIABILITIES AND EQUITY
LIABILITIES
Depositsfromcustomers 767,114 156,676 123,016 - - - - 1,046,806 3.02
Depositsandplacementsof banksandotherfinancial institutions 85,000 106,008 10,000 - - - - 201,008 2.98
Tradepayables - - - - - 428,095 - 428,095 -
Otherliabilities# - - - - - 76,983 - 76,983 -
Total liabilities 852,114 262,684 133,016 - - 505,078 - 1,752,892
Shareholders’equities - - - - - 999,259 - 999,259
Total equity and liabilities 852,114 262,684 133,016 - - 1,504,337 - 2,752,151
On-BalanceSheetinterest sensitivitygap (519,802) 172,593 226,781 194,067 83,992 (567,248) 409,617 -
Off-BalanceSheetinterest sensitivitygap - - - - - - - -
Total interest sensitivity gap (519,802) 172,593 226,781 194,067 83,992 (567,248) 409,617 -
#Otherliabilitiesincludeotherliabilitiesandprovisionfortaxationasdisclosedintheconsolidatedstatementoffinancialposition.
132ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Market risk (continued)
Typesofmarketrisk (continued)
(c) Non-traded market risk (continued)
Interest rate risk (continued)
TheCompanyisexposedtointerestrateriskthroughtheholdingofshort-termdepositsinfinancialinstitutions.
A25basispointincreaseininterestratesbasedoncurrentlyobservablemarketenvironmentwithallothervariablesheldconstant,wouldhave thefollowingeffectontheCompany’sprofitaftertaxandequity:
31 January 31 January 1 February 2013 2012 2011 RM’000 RM’000 RM’000
Increaseinprofitaftertax 95 18 10
Anequivalentdecreaseininterestratesshownabovewouldresultinanequivalent,butoppositeimpact.
The reported amounts do not take into account actions that would be taken by the Group to mitigate the impact of this IRR. In reality, managementseeks toproactivelychangethe IRRprofile tominimise lossesandmaximisenet revenues.Theprojectionassumes that interest rates of all maturities move by the same amount and, therefore, do not reflect the potential impact on the Net Interest Income (“NII”) and Economic Value of Equities (“EVE”) of some rates changing while others remain unchanged.The projection also assume a constant financial positionandthatallpositionsruntomaturity.
Liquidity and funding risk
LiquidityriskistheriskthattheGroupisunabletomaintainsufficientliquidassetstomeetitsfinancialcommitmentsandobligationswhentheyfall dueorsecuringthefundingrequirementsatexcessivecost.FundingriskistheriskthattheGroupdoesnothavesufficientlystableanddiversesources offundingorthefundingstructureisinefficient.
Riskgovernance
The BARMC supported by the Group’s ALCO is the primary party responsible for liquidity management based on guidelines. Liquidity policies andframeworksarereviewedbytheGRMandapprovedbytheBARMCpriortoimplementation.
Riskmanagementapproach
LiquidityriskmanagementisalignedwiththeNewLiquidityFrameworkissuedbyBNM,andismeasuredandmanagedonaprojectedcashflowbasis. InadditiontoensuringthecompliancewiththeNewLiquidityFramework,theGroupmaintainsaliquiditycompliancebuffertomeetanyunexpected cashoutflows.
Theday-to-dayfundingmanagementisundertakenbythetreasuryoperationsandthisincludesthemaintenanceofaportfolioofhighlyliquidassets thatcanbeeasily liquidatedasprotectionagainstanyunforeseen interruptiontocashflowandthereplenishmentof fundsastheymatureorare borrowedbycustomers.
ECMLibraFinancialGroupBerhadANNUALREPORT2013133
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Liquidity and funding risk (continued)
Riskmanagementapproach(continued)
TheGroup’sliquidityandfundingpositionweresupportedbytheBank’ssignificantcustomerdepositbase,accompaniedbyfundingfromwholesale markets.TheBank’sretaildepositbasecomprisedshort-termandfixeddeposits.TheBank’sreputation,earningsgenerationcapacity, financialand capitalstrengthincludingofferingofcompetitivedepositratesarecoreattributestopreservedepositors’confidenceandensureliquidity.TheBank accessesthewholesalemarketsthroughtheissuanceofcertificateofdepositsandthetakingofmoneymarketdepositstomeetshort-termobligations andtomaintainitspresenceinthelocalmoneymarkets.
The primary tools for monitoring liquidity is the maturity mismatch analysis, assessment on the concentration of funding, the availability of unencumberedassetsandtheuseofmarket-wideinformationtoidentifypossibleliquidityproblems.LiquiditypositionsarereportedtotheBARMC onaquarterlybasisandinRinggitMalaysia.
Contingencyfundingplansareinplacetoidentifyearlywarningsignalsofaliquidityproblem.Thecontingencyfundingplansalsosetoutthecrisis escalationprocessaswellasthevariousstrategiestobeemployedtopreserveliquidityincludinganorderlycommunicationchannelduringaliquidity problem. A liquidity stress test programme is in place to ensure liquidity stress tests are systematically performed to determine the cash flow mismatchesunderthe“BankSpecificLiquidityCrisis”and“GeneralMarketLiquidityCrisis”scenariosandthepossiblesourceoffundingtomeetthe shortfallsduringaliquiditycrisis.
(a) Maturityanalysisoffinancialliabilitiesandoff-balancesheetcommitmentsonanundiscountedbasis
The following tables show the contractual undiscounted cash flows payable for financial liabilities and off-balance sheet commitments by remainingcontractualmaturities.Thefinancialliabilitiesinthetablesbelowwillnotagreetothebalancesreportedinthestatementsoffinancial position as the tables incorporate all contractual cash flows, on an undiscounted basis, relating to both principal and interest payments.The contractualmaturityprofiledoesnotnecessarilyreflectthebehaviouralcashflows.
134ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Liquidity and funding risk (continued)
Riskmanagementapproach (continued)
Up to > 7 days - > 1 - 3 > 3 - 6 > 6 - 12 > 1Group 7 days 1 month months months months year TotalAs at 31 January 2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Tradepayables 7,207 - - - - - 7,207
Financialliabilities 1,210 64 68 314 28 - 1,684
Otherpayables 59 502 689 2,016 371 678 4,315
Total liabilities 8,476 566 757 2,330 399 678 13,206
Total off-balance sheet items - - - - - - -
Total liabilities and off-balance sheet items 8,476 566 757 2,330 399 678 13,206
Group
As at 31 January 2012
Depositsfromcustomers 358,802 461,067 209,126 4,665 20,326 - 1,053,986
Depositsfrombanks 105,023 266,820 - - - - 371,843
Total liabilities 463,825 727,887 209,126 4,665 20,326 - 1,425,829
Loancommitments 481,286 161 12,115 80 56,099 3,500 553,241
Total off-balance sheet items 481,286 161 12,115 80 56,099 3,500 553,241
Total liabilities and off-balance sheet items 945,111 728,048 221,241 4,745 76,425 3,500 1,979,070
Group
As at 1 February 2011
Depositsfromcustomers 336,819 518,383 223,740 182,841 124,001 - 1,385,784
Depositsfrombanks 15,362 82,236 146,743 - 37,978 - 282,319
Total liabilities 352,181 600,619 370,483 182,841 161,979 - 1,668,103
Loancommitments 269,373 20,000 9,050 18,770 - - 317,193
Total off-balance sheet items 269,373 20,000 9,050 18,770 - - 317,193
Total liabilities and off-balance sheet items 621,554 620,619 379,533 201,611 161,979 - 1,985,296
ECMLibraFinancialGroupBerhadANNUALREPORT2013135
notes to the financial statementscontinued
39. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
Operational risk
Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This risk is managed by the Group in accordance with the Group’s operational risk management framework with established operational risk management processes.Tomanageandcontroloperationalrisk,theGroupplacesgreatemphasisontheimportanceofpropermonitoringandreportingofbusiness units’adherencetoestablishedriskpolicies,proceduresandlimitsbyindependentcontrolandsupportunits,oversightprovidedbythemanagement andtheBoardofDirectors,andindependentassessmentoftheadequacyandreliabilityoftheriskmanagementprocessesbytheBARMC.
TheGroup’soperationalriskmanagementprocessesincludeestablishmentofsystemofinternalcontrols,identificationandassessmentofoperational riskinherentinnewandexistingproducts,processesandsystems,regulardisasterrecoveryandbusinesscontinuityplanningandsimulationsandself- assessmentaudit.
40. SEGMENTAL REPORTING
Business segments
TheGroupdeterminesandpresentsoperatingsegmentsbasedontheinformationprovidedtoseniormanagementoftheGroup.
TheGroup’sreportableoperatingsegmentsareidentifiedbasedonbusinessunitswhichareengagedinprovidingdifferentservicesandproducts,as follows:
(a) Stockbroking-stockbroking,sharemarginfinancinganddealinginsecurities.
(b) Investmentbankingandstructuredfinancing-corporatefinanceadvisory,equitycapitalmarketsservices,debtcapitalmarketsandstructured lendingactivities.
(c) Treasuryandcapitalmarketoperations-treasuryactivitiesincludingmoneymarketoperations,foreignexchangeandproprietaryinvestments.
(d) Fundmanagement-unittrustfundsandassetmanagement.
(e) Others-notsignificanttobeindividuallydisclosed.
136ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
40. SEGMENTAL REPORTING (continued)
Business segments (continued)
<--Continuing operations--> <----------------------Discontinued operation--------------------> Investment holding Investment Treasury and capital banking and and capital Inter- market Fund structured market segment Group operations management Stockbroking finance operations Others Total elimination total 12 months ended 31 January 2013 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenuefromexternalcustomers 4,221 12,358 48,045 43,097 52,437 3,290 163,448 - 163,448
Inter-segmentrevenue - - 20 - 43,236 12 43,268 (43,268) -
4,221 12,358 48,065 43,097 95,673 3,302 206,716 (43,268) 163,448
Netinterestincome 1,370 255 2,584 18,009 6,123 644 28,985 - 28,985
Non-interestincome 2,851 12,103 37,115 11,668 27,893 2,058 93,688 - 93,688
Othernon-operatingincome 1,628 - 514 45 (328) 53 1,912 - 1,912
Netincome 5,849 12,358 40,213 29,722 33,688 2,755 124,585 - 124,585
Operatingexpenses (5,766) (9,824) (43,650) (4,459) (30,151) (2,130) (95,980) - (95,980)
Operatingprofit/(loss) 83 2,534 (3,437) 25,263 3,537 625 28,605 - 28,605
(Allowancefor)/writebackoflosses onloans,advancesandfinancing (140) - - (4,080) 352 - (3,868) - (3,868)
(Allowancefor)/writebackofbadand doubtfuldebts - - (104) - 87 - (17) - (17)
Writebackofimpairment oninvestments - - - - 1,528 - 1,528 - 1,528
Profit/(loss) by segments (57) 2,534 (3,541) 21,183 5,504 625 26,248 - 26,248
Shareofprofitofanassociated company 8,403
Lossondisposalofsubsidiaries (68,652)
Loss before tax (34,001)
Segment assets 866,544 21,338 - - - - 887,882 - 887,882
Investmentinassociatedcompanies 35,579
Total assets 923,461
ECMLibraFinancialGroupBerhadANNUALREPORT2013137
notes to the financial statementscontinued
40. SEGMENTAL REPORTING (continued)
Business segments (continued)
<--Continuing operations--> <----------------------Discontinued operation--------------------> Investment holding Investment Treasury and capital banking and and capital Inter- market Fund structured market segment Group operations management Stockbroking finance operations Others Total elimination total 12 months ended 31 January 2012 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
Revenuefromexternalcustomers 2,499 11,481 57,330 45,283 59,757 1,937 178,287 - 178,287
Inter-segmentrevenue - - - - 50,077 241 50,318 (50,318) -
2,499 11,481 57,330 45,283 109,834 2,178 228,605 (50,318) 178,287
Netinterestincome 806 273 2,769 20,797 11,146 384 36,175 - 36,175
Non-interestincome 1,693 11,208 48,890 8,497 24,795 1,126 96,209 - 96,209
Othernon-operatingincome 1,541 - 2,712 67 (219) 180 4,281 - 4,281
Netincome 4,040 11,481 54,371 29,361 35,722 1,690 136,665 - 136,665
Operatingexpenses (4,833) (8,922) (50,616) (4,990) (18,041) (5,340) (92,742) - (92,742)
Operatingprofit/(loss) (793) 2,559 3,755 24,371 17,681 (3,650) 43,923 - 43,923
(Allowancefor)/writebackoflosses onloans,advancesandfinancing - - (311) (406) - 46 (671) - (671)
Writebackof/(allowancefor)badand doubtfuldebts - - 110 (73) 6,456 - 6,493 - 6,493
Writebackofimpairment oninvestments 87 (87) - - 1,651 - 1,651 - 1,651
Profit/(loss) by segments (706) 2,472 3,554 23,892 25,788 (3,604) 51,396 - 51,396
Shareofprofitofanassociated company 219
Profit before tax 51,615
Segment assets 51,500 15,141 471,430 446,468 1,510,224 75,836 2,570,599 (32,913) 2,537,686
Investmentinassociatedcompanies 19,976
Intangibleassets 284,500
Total assets 2,842,162
138ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
41. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES
Determination of fair value and the fair value hierarchy
MFRS7FinancialInstruments:Disclosuresrequirestheclassificationoffinancialinstrumentsheldatfairvalueaccordingtoahierarchythatreflectsthe significanceofinputsusedinmakingthemeasurements,inparticular,whethertheinputsusedareobservableorunobservable.Thefollowinghierarchy isusedfordetermininganddisclosingthefairvalueoffinancialinstruments:
Level1- Quotedmarketprices:quotedprices(unadjusted)inactivemarketsforidenticalassetsorliabilities;
Level2- Valuationtechniquesusingobservableinputs:inputsotherthanquotedpricesincludedwithinLevel1thatareobservablefortheassetor liability,whetherdirectly(i.e.prices)orindirectly(i.e.derivedfromprices),areused;
Level3- Valuationtechniqueswithsignificantunobservableinputs:inputsusedarenotbasedonobservablemarketdata.
Forfinancialinstrumentsmeasuredatfairvalue,whereavailable,quotedandobservablemarketpricesinanactivemarketordealerpricequotations areusedtomeasurefairvalue.TheseincludelistedequitysecuritiesandbrokerquotesfromBloombergandReuters.
Wheresuchquotedandobservablemarketpricesarenotavailable,fairvaluesaredeterminedusingappropriatevaluationtechniques,whichinclude theuseofmathematicalmodels,suchasdiscountedcashflowmodelsandoptionpricingmodels,comparisontosimilarinstrumentsforwhichmarket observablepricesexistandothervaluationtechniques.Valuationtechniquesusedincorporateassumptionsregardingdiscountrates,interestrateyield curves,estimatesoffuturecashflowsandotherfactors.Changesintheseassumptionscouldmateriallyaffectthefairvaluesderived.TheGroupand the Bank generally use widely recognised valuation techniques with market observable inputs for the determination of fair value due to the low complexityofthefinancialinstrumentsheld.
ThefollowingtableshowstheGroup’sfinancialassetsandliabilitieswhicharemeasuredatfairvalueanalysedbylevelwithinthefairvaluehierarchy:
ECMLibraFinancialGroupBerhadANNUALREPORT2013139
notes to the financial statementscontinued
41. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
Determination of fair value and the fair value hierarchy (continued)
Group Level 1 Level 2 Level 3 Total 2013 RM’000 RM’000 RM’000 RM’000
FinancialassetsHFT
-Non-moneymarketinstruments 24,921 - - 24,921
FinancialassetsAFS
-Non-moneymarketinstruments 69,600 628,056 - 697,656
Totalfinancialassetsmeasuredatfairvalue 94,521 628,056 - 722,577
2012
FinancialassetsHFT
-Governmentsecuritiesand treasurybills - 153,933 - 153,933
-Moneymarketinstruments - 194,977 - 194,977
-Non-moneymarketinstruments 2,001 10,074 - 12,075
2,001 358,984 - 360,985
FinancialassetsAFS
-Governmentsecuritiesandtreasurybills - 383,419 - 383,419
-Non-moneymarketinstruments 147,398 142,016 - 289,414
147,398 525,435 - 672,833
Totalfinancialassetsmeasuredatfairvalue 149,399 884,419 - 1,033,818
140ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
41. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
Determination of fair value and the fair value hierarchy (continued)
Company Level 1 Level 2 Level 3 Total 2013 RM’000 RM’000 RM’000 RM’000
FinancialassetsAFS
-Non-moneymarketinstruments 69,600 628,056 - 697,656
Totalfinancialassetsmeasuredatfairvalue 69,600 628,056 - 697,656
2012
FinancialassetsAFS
-Non-moneymarketinstruments - - - -
Totalfinancialassetsmeasuredatfairvalue - - - -
Group 2013 2012 Carrying Carrying Amount Fair Value Amount Fair Value RM’000 RM’000 RM’000 RM’000
Financial assets
FinancialassetsAFS - - 2,200 2,200
FinancialassetsHTM
-Non-moneymarketinstruments 47,750 47,750 200,000 200,000
Company 2013 2012 Carrying Carrying Amount Fair Value Amount Fair Value RM’000 RM’000 RM’000 RM’000 Financial assets
FinancialassetsAFS - - - -
FinancialassetsHTM
-Non-moneymarketinstruments 47,750 47,750 - -
ECMLibraFinancialGroupBerhadANNUALREPORT2013141
notes to the financial statementscontinued
41. FAIR VALUE OF FINANCIAL ASSETS AND LIABILITIES (continued)
Determination of fair value and the fair value hierarchy (continued)
Itisnotpracticaltoestimatethefairvalueoftheunquotedsharesduetoabsenceofanactivemarket.However,theDirectorsdonotanticipatethe carryingamountrecordedatthereportingdatetobesignificantlydifferentfromthevaluethatwouldeventuallybereceived.
Themethodsandassumptionsusedtoestimatethefairvaluesofthesefinancialinstrumentsnotcarriedatfairvalueareasfollows:
(i) Securities HFT, securities AFS and securities HTM
Theestimatedfairvaluesaregenerallybasedonquotedandobservablemarketprices.Wheresuchquotedorobservablemarketpricesarenot available,thefairvaluesareestimatedusingpricingmodels,discountedcashflowtechniquesornettangibleassetbackingoftheinvesteewhere applicable.Wherethediscountedcashflowtechniqueisused,theexpectedfuturecashflowsarediscountedusingmarketinterestratesforsimilar instruments.
Fairvalueofembeddedderivativesarederivedusingthebinomiallatticeapproachwhereapplicable.
(ii) Cash and cash equivalents, trade, loan and other receivables, trade and other payables, deposits from customers and deposits and placements of banks and other financial institutions
Thecarryingamountsapproximatefairvaluebecauseoftheshortmaturityoftheseinstruments.
42. SIGNIFICANT AND SUBSEQUENT EVENTS
On15June2012,theCompanyannouncedthat:
(i) It had entered into a conditional share purchase agreement with Kenanga Investment Bank Berhad (“KIBB“) and K & N Kenanga Holdings Berhad (“KNKH“) for the disposal of its entire equity interest in ECM Libra Investment Bank Berhad (“ECMLIB”) to KIBB for a total disposal considerationofRM875,114,000(“ProposedDisposal”);and
(ii) PursuanttotheProposedDisposal,ECMLIBsimultaneouslyenteredintoabusinessmergeragreementwithKIBBfortheproposalbusinessmerger ofthebusinessesofECMLIBandKIBB(“ProposedBusinessMerger”).
Inconjunctionwithandarisingfromtheabove,theCompanyalsoannouncedthatitproposedtoundertakeacapitalrestructuringasfollows:
(i) Proposed capital repayment to its shareholders comprising a total of RM442,647,000 in cash, 120,000,000 KNKH shares and RM47,750,000 Redeemable Non-convertible Unsecured Loan Stocks (“RULS”) issued by KNKH via a reduction of the par value of the existing shares of the Companybyanamounttobedetermined,inaccordancewithSection64oftheCompaniesAct,1965(“ProposedCapitalRepayment”);
(ii) ProposedsharesplitinvolvingthesubdivisionofitssharesaftertheProposedCapitalRepayment,tofacilitatetheProposedShareConsolidation (asdefinedbelow)(“ProposedShareSplit”);and
(iii) ProposedconsolidationoftheCompany’ssharesaftertheProposedShareSplitresultingintheCompanyhavingareducedissuedandpaid-up sharecapitaltakingintoaccounttheProposedDisposalandtheProposedCapitalRepayment(“ProposedShareConsolidation”),
(collectivelyreferredtoasthe“Proposals”).
142ECMLibraFinancialGroupBerhadANNUALREPORT2013
notes to the financial statementscontinued
42. SIGNIFICANT AND SUBSEQUENT EVENTS (continued)
AttheExtraordinaryGeneralMeetingoftheCompanyheldon31July2012,theshareholdershadapprovedalltheProposals.
On 14 December 2012, the Proposed Disposal and Proposed Business Merger were completed.The Proposed Capital Repayment shall be based ontheclosingpriceofKNKHsharesofRM0.585perKNKHshareon14December2012(“CapitalRepayment”)resultinginatotalCapitalRepaymentof RM560,597,000.
Theresultantissuedandpaid-upsharecapitaloftheCompanywouldbeRM268,222,091comprising268,222,091sharesofRM1.00each.
SubsequenttoobtainingtheorderoftheHighCourtofMalayaon7February2013,on28February2013,theCompanyfiledthecourtorderforcapital reductionwiththeCompaniesCommissionofMalaysiaforthecapitalreductiontotakeeffectaccordingly.
On 14 March 2013, the Company completed the distribution of the cash and KNKH shares, and allotted the consolidated shares to the entitled shareholders.
TheCapitalRepaymentexerciseisontracktobecompletedupondistributionoftheRULSon4April2013.
43. SUPPLEMENTARY INFORMATION - BREAKDOWN OF RETAINED PROFITS INTO REALISED AND UNREALISED
ThebreakdownoftheretainedprofitsoftheGroupandoftheCompanyasat31January2013 intorealisedandunrealisedprofits ispresented inaccordancewiththedirectiveissuedbyBursaMalaysiaSecuritiesBerhaddated25March2010andpreparedinaccordancewithGuidanceonSpecialMatterNo.1,DeterminationofRealisedandUnrealisedProfitsorLosses in theContextofDisclosurePursuant toBursaMalaysiaSecuritiesBerhadListingRequirements,asissuedbytheMalaysianInstituteofAccountants.
Group Company 2013 2012 2013 2012 RM’000 RM’000 RM’000 RM’000
TotalretainedprofitsoftheGroupanditssubsidiaries
-Realised 87,010 64,835 93,166 30,949
-Unrealised 489 (3,322) 82 -
87,499 61,513 93,248 30,949
Totalshareofretainedprofitsfromassociatedcompanies
-Realised 9,002 600 - -
96,501 62,113 93,248 30,949
Add:Consolidationadjustments (15,263) 1,940 - -
Retainedprofitsasperfinancialstatements 81,238 64,053 93,248 30,949
ECMLibraFinancialGroupBerhadANNUALREPORT2013143
other information
1. MATERIAL CONTRACTS
Saveasdisclosedbelow,therearenomaterialcontractsincludingcontractsrelatingtoloans(notbeingcontractsenteredintointheordinarycourseofbusiness)whichhadbeenenteredintobytheCompanyanditssubsidiariesinvolvingDirectors’andmajorshareholders’interests,eitherstillsubsistingattheendofthefinancialyearorenteredintosincetheendofthepreviousfinancialyear:
TheCompanyhadon15June2012enteredintoaconditionalsharepurchaseagreementwithKenangaInvestmentBankBerhad(“KIBB”)andK&NKenangaHoldingsBerhad(“KNKH”)forthedisposalbytheCompanyoftheentireissuedandpaid-upsharecapitalofECMLibraInvestmentBankBerhad(“ECMLIB”)comprising513,000,000ordinarysharesofRM1.00eachtoKIBB(“Disposal”)foratotalconsiderationofRM875,114,000(“Consideration”).PursuanttotheDisposal,ECMLIBsimultaneouslyenteredintoabusinessmergeragreementwithKIBBforthetransferofECMLIB’sentirebusinessasagoingconcern(includingsubstantiallyalltheassetsandliabilities)toKIBBbywayofavestingordertobeobtainedfromtheHighCourtinMalaya(“BusinessMerger”)ataconsiderationequivalenttotheConsideration.
TheConsiderationistobesatisfiedinthefollowingmanner:
(i) RM659,614,000payablebyKIBB;(ii) IssuanceofRM95,500,000nominalvalueofRedeemableNon-convertibleUnsecuredLoanStocksbyKNKH;and(iii) Issuanceof120,000,000newordinarysharesofRM1.00eachinKNKHatanissuepriceofRM1.00eachbyKNKH.
Mr.LumSingFaiisaDirectorintheCompanyandECMLIBrepresentingtheinterestofAmcorpGroupBerhad,amajorshareholder.AmcorpGroupBerhadisapersonconnectedwithTanSriDato’AzmanbinHashim.TanSriDato’AzmanbinHashim,anindirectmajorshareholderintheCompany,isdeemedinterestedintheDisposalandBusinessMergerbyvirtueofhisbrother,EncikAbdulAzizbinHashim,beingadirectorandshareholderofKNKH.EncikAbdulAzizbinHashim,togetherwithhisdaughter,hasdirectandindirectinterestsinthesharesofKNKH.
TheDisposalandBusinessMergerwerecompletedon14December2012.
2. NON-AUDIT FEES
Theamountofnon-auditfeespaidandpayablebytheCompanyanditssubsidiariestotheexternalauditorsforthefinancialyearended31January 2013wasRM43,335.
3. SHARE BUY-BACK FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2013
TheCompanydidnotpurchaseanyofitssharesfromtheopenmarketduringthefinancialyearended31January2013andon1October2012,the Companycancelled2,082,862ofitssharesheldastreasuryshares.
4. SANCTIONS/PENALTIES
TherewerenopublicsanctionsormaterialpenaltiesimposedontheCompanyand/oritssubsidiaries,directorsormanagementbyanyregulatoryauthorityduringthefinancialyearended31January2013.
144ECMLibraFinancialGroupBerhadANNUALREPORT2013
5. DIRECTORS’ INTERESTS AS AT 29 MARCH 2013
Subsequenttothefinancialyearended31January2013,thedirectors’interestsintheshares/optionsoftheCompanyand/oritsrelatedcorporations areasfollows:
Direct interest Deemed interest Number of % Number of % Name of directors shares/options* shares/options*
Dato’SeriKalimullahbinMasheerulHassan 10,669,640 3.98 - - 9,396,000* - - -
Dato’Ab.HalimbinMohyiddin 64,800* - - -
MrLimKianOnn 46,000,519 17.15 1,437,163# 0.54
9,396,000* - - -
DatukKamarudinbinMdAli 64,800* - - -
Dato’OthmanbinAbdullah 64,800* - - -
EnMahadzirbinAzizan 64,800* - - -
Note:
* The options over ordinary shares were granted pursuant to the Company’s Employees’ Share Option Scheme
# Indirect interest through spouse pursuant to Section 134(12)(c) of the Companies Act, 1965
6. ANALYSIS OF SHAREHOLDERS AS AT 29 MARCH 2013
Authorisedsharecapital :RM1,500,000,000.00
Issued&paid-upcapital :RM268,222,091
Classofshares :OrdinarySharesofRM1.00
Votingrights
-onshowofhands :1vote
-onapoll :1voteforeachshareheld
other informationcontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013145
6. ANALYSIS OF SHAREHOLDERS AS AT 29 MARCH 2013 (continued)
Distribution schedule of shareholdings:
Size of holdings Number of shareholders % Number of shares %
Lessthan100 5,341 30.67 155,722 0.06
100–1,000 5,676 32.59 2,328,776 0.87
1,001–10,000 5,124 29.42 16,024,566 5.97
10,001–100,000 1,129 6.48 29,481,161 10.99
100,001–lessthan5%ofissuedshares 142 0.82 103,047,432 38.42
5%andaboveofissuedshares 4 0.02 117,184,434 43.69
17,416 100.00 268,222,091 100.00
Thirty Largest Shareholders:
Name of shareholders Number of shares %
1. AmsecNominees(Tempatan)SdnBhd 43,506,036 16.22 -FulcrumAssetManagementSdnBhdforEquityVisionSdnBhd
2. KenangaNominees(Tempatan)SdnBhd 32,962,626 12.29 -PledgedSecuritiesAccountforLimKianOnn
3. CitigroupNominees(Asing)SdnBhd 24,201,598 9.02 -exemptanforCitibankNA,Singapore(JuliusBaer)
4. HikkayaJayaSdnBhd 16,514,174 6.16
5. LimKianOnn 13,037,893 4.86
6. AmsecNominees(Tempatan)SdnBhd 10,669,640 3.98 -PledgedSecuritiesAccount–AmBank(M)BerhadforKalimullahbinMasheerulHassan
7. SumberamaSdnBhd 5,215,031 1.94
8. MalaysiaNominees(Tempatan)SendirianBerhad 5,011,201 1.87 -PledgedSecuritiesAccountforGooiSeongGum
9. Arab-Malaysian(CSL)SdnBhd 4,397,533 1.64
10. CitigroupNominees(Tempatan)SdnBhd 3,734,378 1.39 -exemptanforOCBCSecuritiesPrivateLimited
11. LimSuTong@LimCheeTong 3,636,270 1.36
other informationcontinued
146ECMLibraFinancialGroupBerhadANNUALREPORT2013
6. ANALYSIS OF SHAREHOLDERS AS AT 29 MARCH 2013 (continued)
Thirty Largest Shareholders:
Name of shareholders Number of shares %
12. UOBKayHianNominees(Tempatan)SdnBhd 2,810,291 1.05 -exemptanforUOBKayHianPteLtd
13. CitigroupNominees(Asing)SdnBhd 2,509,434 0.94 -exemptanforUBSAGSingapore
14. CitigroupNominees(Asing)SdnBhd 2,352,950 0.88 -CBNYforDimensionalEmergingMarketsValueFund
15. Multi-PurposeHoldingsBerhad 2,346,771 0.87
16. ECMLNominees(Tempatan)SdnBhd 2,168,252 0.81 -PledgedSecuritiesAccountforCIMBIslamicTrusteeBerhadforLibraValueOpportunityFund
17. CimsecNominees(Tempatan)SdnBhd 2,032,712 0.76 -exemptanforCIMBSecurities(Singapore)PteLtd
18. AmcorpGroupBerhad 2,026,830 0.76
19. ECMLNominees(Tempatan)SdnBhd 1,938,907 0.72 -LibraInvestBerhadforECMLibraFoundation
20. CartabanNominees(Asing)SdnBhd 1,566,131 0.58 -SSBTFundJ728forSPDRS&PEmergingAsiaPacificETF
21. YuKokAnn 1,469,561 0.55
22. QuekSiowLeng 1,437,163 0.54
23. YapSookChin 1,200,000 0.45
24. CitigroupNominees(Asing)SdnBhd 1,186,120 0.44 -exemptanforOCBCSecuritiesPrivateLimited
25. TanKimKee@TanKee 1,181,212 0.44
26. SooNgikGee@SooYehJoo 1,160,595 0.43
27. SharikatKimLoongSendirianBerhad 1,019,516 0.38
28. ECMLNominees(Tempatan)SdnBhd 897,627 0.33 -PledgedSecuritiesAccountforGanKongHiok
29. MegaFirstHousingDevelopmentSdnBhd 857,593 0.32
30. ECMLNominees(Tempatan)SdnBhd 786,406 0.29 -PledgedSecuritiesAccountforNgBoonHock
other informationcontinued
ECMLibraFinancialGroupBerhadANNUALREPORT2013147
other informationcontinued
6. ANALYSIS OF SHAREHOLDERS AS AT 29 MARCH 2013 (continued)
Substantial Shareholders: Direct interest Deemed interest Name of shareholders Number of shares % Number of shares %
MrLimKianOnn 46,000,519 17.15 1,437,163(1) 0.54
HikkayaJayaSdnBhd 16,514,174 6.16 - -
EquityVisionSdnBhd 43,506,036 16.22 - -
TanSriDato’AzmanbinHashim - - 66,444,573(2) 24.77
AmcorpGroupBerhad 2,026,830 0.76 20,911,707(3) 7.80
AmcorpCapitalMarketsSdnBhd - - 20,911,707(3) 7.80
ClearGoalSdnBhd - - 22,938,537(4) 8.55
Note:
(1) Indirect interest through spouse pursuant to Section 134(12)(c) of the Companies Act, 1965
(2) Deemed interest of 24.77% by virtue of Section 6A of the Companies Act, 1965 held through Amcorp Group Berhad (2,026,830), Hikkaya Jaya Sdn Bhd (16,514,174), Arab-Malaysian (CSL)
Sdn Bhd (4,397,533) and Equity Vision Sdn Bhd (43,506,036)
(3) Deemed interest of 7.80% by virtue of Section 6A of the Companies Act, 1965 held through Hikkaya Jaya Sdn Bhd (16,514,174) and Arab-Malaysian (CSL) Sdn Bhd (4,397,533)
(4) Deemed interest of 8.55% by virtue of Section 6A of the Companies Act, 1965 held through Amcorp Group Berhad (2,026,830), Hikkaya Jaya Sdn Bhd (16,514,174) and Arab-Malaysian
(CSL) Sdn Bhd (4,397,533)
7. PROPERTIES Built up Age of Net book Description/ area property value Date of Location & Description Existing use Tenure (sq. ft.) (years) (RM’000) acquisition
BangunanECMLibra Building Freehold 48,115 17 15,707 08.09.2004 Centre&EastWings 8JalanDamansaraEndah DamansaraHeights 50490KualaLumpur
148ECMLibraFinancialGroupBerhadANNUALREPORT2013
I/We (NRICNo./Co.No.)
of beingamember/membersofECMLibra
FinancialGroupBerhadherebyappoint (NRICNo.)
of
orfailinghim/her (NRICNo.)
of
orfailinghim/her,theChairmanofthemeetingasmy/ourproxy/proxiestovoteforme/usonmy/ourbehalfattheEighthAnnualGeneralMeeting
(“8thAGM”)oftheCompanytobeheldatGroundFloor,EastWing,BangunanECMLibra,8JalanDamansaraEndah,DamansaraHeights,50490Kuala
LumpuronThursday,23May2013at10.00a.m.andatanyadjournmentthereof.
My/Ourproxy/proxiesis/aretovoteeitheronshowofhandsoronapollasindicatedbelowwithan“X”:
Datedthis_________dayof_________________2013
____________________________________
Signature(s)/CommonSealofMember(s)
Notes
1. OnlyadepositorwhosenameappearsintheRecordofDepositorsoftheCompanyasat17May2013shallberegardedasamemberentitledtoattend,speakandvote,andappointaproxytoattend,speakandvoteonhis/herbehalf,atthe8thAGM.
2. Amemberentitledtoattendandvoteattheabovemeetingisentitledtoappointnotmorethantwo(2)proxiestoattendandvoteinhisstead.WhereamemberoftheCompanyisanexemptauthorisednomineeasdefinedundertheSecuritiesIndustry(CentralDepositories)Act1991whichholdsordinarysharesintheCompanyformultiplebeneficialownersinone(1)securitiesaccount(“OmnibusAccount”),thereisnolimittothenumberofproxieswhichtheexemptauthorisednomineemayappointinrespectofeachOmnibusAccountitholds.AproxymaybutneednotbeamemberoftheCompanyandtheprovisionsofSection149(1)(a)and(b)oftheCompaniesAct,1965shallnotapplytotheCompany.
3. Whereamemberappointsmorethanone(1)proxytoattendthemeeting,themembershallspecifytheproportionofhisshareholdingstoberepresentedbyeachproxy.
4. The instrument appointing a proxy shall be in writing under the hand of the appointer or of his attorney duly authorised in writing or if the appointer is acorporation,eitherunderitscommonsealorunderthehandofadulyauthorisedofficerorattorneyofthecorporation.
5. The Form of Proxy must be deposited at the Registered Office of the Company at 2nd Floor, West Wing, Bangunan ECM Libra, 8 Jalan Damansara Endah,DamansaraHeights,50490KualaLumpurnotlessthan48hoursbeforethetimeappointedforholdingthemeetingoradjournedmeeting.
RESOLUTIONS FOR AGAINST
1. Toreceivetheauditedfinancialstatementsandreports
2. ToapprovethepaymentofDirectors’fees
3. Tore-electEnMahadzirbinAzizanasDirector
4. Tore-appointMessrsErnst&YoungasAuditorsoftheCompanyandauthorisetheDirectorstofixtheirremuneration
5. ToapprovetheAuthoritytoDirectorstoIssueShares
6. ToapprovetheProposedAmendmentstotheArticlesofAssociation
Forappointmentoftwoproxies,percentageofshareholdingstoberepresentedbytheproxies:
No. of shares Percentage
Proxy 1
Proxy 2
Total 100%
Number of shares held
ECM Libra Financial Group Berhad (713570-K)(IncorporatedinMalaysia)
FORM OF PROXY
AFFIXSTAMP
CompanySecretaryECM Libra Financial Group Berhad (713570-K)
2ndFloor,WestWing,BangunanECMLibra,8JalanDamansaraEndah,DamansaraHeights,50490KualaLumpur.