annual report 2010 annual report 2010

Transcription

1 annual report 2010 Manulife Holdings Berhad (24851-H) Manulife Holdings Berhad (24851-H) 12th Floor, Menara Manulife 6 Jalan Gelenggang, Damansara Heights Kuala Lumpur, Malaysia. Tel : Fax : Manulife Holdings Berhad (24851-H) annual report 2010

2 Manulife s Vision and Values Manulife Financial s vision is to be the most professional financial services organisation in the world, providing strong, reliable, trustworthy and forward-thinking solutions for our clients most significant financial decisions. With vision comes values. These values guide everything we do - from strategic planning to dayto-day decision-making, to the manner in which we treat our customers and other stakeholders. These values are described by the acronym P R I D E : P R I D E Professionalism Real Value to Our Customers Integrity Demonstrated Financial Strength Employer of Choice

3 Contents 2 Notice of Annual General Meeting 5 Corporate Information 6 Corporate Structure 7 Financial Highlights 8 Board of Directors 10 Directors Profile 15 Chairman s Statement 20 Corporate Governance Statement 26 Internal Control Statement 28 Additional Compliance Information 29 Group Audit Committee Report 37 Financial Statements 119 Regional Support Centres 120 Head Office Management 121 List of Properties 122 Analysis of Shareholdings Proxy form

4 Manulife Holdings Berhad (24851-H) 2 notice of annual general meeting NOTICE IS HEREBY GIVEN THAT the Thirty-Fifth Annual General Meeting of the Company will be held at Dewan Berjaya, Bukit Kiara Resort, Jalan Bukit Kiara, Off Jalan Damansara, Kuala Lumpur on Thursday, 23 June 2011 at 2.30 p.m. for the following purposes:- AGENDA 1. To receive the Audited Financial Statements for the financial year ended together with the Reports of the Directors and the Auditors thereon. 2. To approve the declaration of a first and final dividend of 18 sen per share less income tax at 25% for the financial year ended. 3. To re-elect Datuk Abu Hassan Bin Kendut who retires pursuant to Article 93(B) of the Company s Articles of Association. 4. To consider and if thought fit, to pass the following ordinary resolution in accordance with Section 129 of the Companies Act, 1965:- (Resolution 1) (Resolution 2) (Resolution 3) (Resolution 4) THAT pursuant to Section 129 of the Companies Act, 1965, Tan Sri Dato Mohd Sheriff Bin Mohd Kassim who has attained the age of over seventy (70) years be and is hereby re-appointed as Director of the Company and to hold office until the conclusion of the next Annual General Meeting. 5. To approve the payment of Directors remuneration for the financial year ended 31 December To re-appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the next Annual General Meeting and to authorise the Directors to fix their remuneration. (Resolution 5) (Resolution 6) As Special Business 7. To consider and if thought fit, with or without modifications, to pass the following resolutions as Ordinary Resolutions:- ORDINARY RESOLUTION 1 - AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965 (Resolution 7) THAT pursuant to Section 132D of the Companies Act, 1965, the Directors be and are hereby empowered to issue and allot shares in the Company, at any time to such persons and upon such terms and conditions and for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregate number of shares issued pursuant to this resolution does not exceed 10% of the issued share capital of the Company for the time being and that the Directors be and are also empowered to obtain the approval for the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhad and that such authority shall continue in force until the conclusion of the next Annual General Meeting of the Company.

5 3 Annual Report 2010 notice of annual general meeting ORDINARY RESOLUTION 2 - PROPOSED NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE (Resolution 8) THAT subject to the Companies Act, 1965 (the Act), the Memorandum and Articles of Association of the Company and Bursa Malaysia Securities Berhad Main Market Listing Requirements, a shareholders mandate be and is hereby granted to Manulife Holdings Berhad and its subsidiary companies (Manulife Group) to enter into the Recurrent Related Party Transactions as described in the Circular to Shareholders dated 1 June 2011 with the related parties mentioned therein PROVIDED THAT:- (i) (ii) the Recurrent Related Party Transactions are in the ordinary course of business which are necessary for day-to-day operations and are on terms not more favourable than those generally available to the public; and disclosure is made in the annual report breakdown of the aggregate value of transactions conducted pursuant to the shareholders mandate during the financial year; AND THAT the authority conferred by such mandate shall commence immediately upon the passing of this ordinary resolution and continue to be in force until:- (a) (b) (c) the conclusion of the next Annual General Meeting (AGM) of the Company following the general meeting at which such mandate was passed, at which time it will lapse, unless by a resolution passed at the meeting, the authority is renewed; the expiration of the period within which the next AGM of the Company after that date it is required to be held pursuant to Section 143(1) of the Act (but must not extend to such extension as may be allowed pursuant to Section 143(2) of the Act); or revoked or varied by resolution passed by the shareholders of the Company in general meeting; whichever is the earlier; AND THAT, the Directors and/or any of them be and are hereby authorised to complete and do all such acts and things (including executing such documents as may be required) as they may consider expedient or necessary to give effect to the transactions contemplated and/or authorised by this resolution. 8. To transact any other ordinary business for which due notice has been given. NOTICE OF DIVIDEND ENTITLEMENT NOTICE IS HEREBY GIVEN THAT a first and final dividend of 18 sen per share less income tax of 25% in respect of the financial year ended 31 December, 2010, if approved, will be paid on 13 July 2011 to shareholders whose names appear in the Company s Record of Depositors and /or Register of Members at the close business at 5.00 p.m. on 30 June FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement to dividend only in respect of:- a) shares transferred into the Depositor s Securities Account before 4.00 p.m. on 30 June 2011 in respect of ordinary transfers; and b) shares bought on Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa Malaysia Securities Berhad.

6 Manulife Holdings Berhad (24851-H) 4 notice of annual general meeting By Order of the Board CHUA SIEW CHUAN (MAICSA ) Chin Mun Yee (MAICSA ) Company Secretaries Kuala Lumpur Dated : 1 June 2011 * The following Directors have expressed their intention not to seek for re-election/re-appointment at the forthcoming Annual General Meeting:- (1) Encik Ahmad Riza Bin Basir (retires pursuant to Article 93(B) of the Company s Articles of Association); and (2) Datuk Ismail Bin Haji Ahmad (retires pursuant to Section 129 of the Companies Act, 1965). Notes :- 1. In respect of deposited securities, only Members whose names appear in the Record of Depositors on 16 June 2011 ( General Meeting Record of Depositors ) shall be eligible to attend the Meeting. 2. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or an attorney to attend and vote in his stead. A proxy or attorney need not be a member of the Company. 3. If the appointer is a corporation, the form of proxy or power of attorney should be executed under its common seal or under the hand of a person duly authorised. 4. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where two (2) proxies are appointed, a member shall specify the proportion of his holdings to be represented by each proxy, failing which the appointment shall be invalid. 5. The instrument appointing a proxy or a power of attorney must be deposited at Securities Services (Holdings) Sdn. Bhd. of Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur not less than 48 hours before the time appointed for holding the meeting. EXPLANATORY NOTE ON DIVIDEND PAYMENT Dividend declaration may be limited in the event the Group s whollyowned subsidiary, Manulife Insurance Berhad is unable to meet its Internal Capital Adequacy Ratio Target set pursuant to regulatory requirements. EXPLANATORY NOTE ON SPECIAL BUSINESS (1) AUTHORITY PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965 The Company wishes to renew the mandate on the authority to issue shares pursuant to Section 132D of the Companies Act 1965 at the Thirty-Fifth Annual General Meeting of the Company (hereinafter referred to as the General Mandate ). The Company had been granted a general mandate by its shareholders at the Thirty-Fourth Annual General Meeting of the Company held on 28 June, 2010 (hereinafter referred to as the Previous Mandate ). The Previous Mandate granted by the shareholders had not been utilised and hence no proceed was raised therefrom. The purpose to seek the General Mandate is to provide flexibility to the Company for allotment of shares for any possible fund raising activities for the purpose of funding working capital without convening a general meeting as it would be both time and cost-consuming to organise a general meeting. (2) AUTHORITY TO ENTER INTO NEW SHAREHOLDERS MANDATE FOR RECURRENT RELATED PARTY TRANSACTIONS OF A REVENUE OR TRADING NATURE The proposed adoption of the Ordinary Resolution No. 2 is to obtain the Shareholders Mandate to enable the Group to enter into Recurrent Related Party Transactions of a Revenue or Trading Nature which are necessary for the Group s day-to-day operations, subject to the transactions being in the ordinary course of business and on normal commercial terms which are not more favourable to the related parties than those generally available to the public and are not to the detriment of the minority shareholders of the Company. Further information on the Proposed New Shareholders Mandate for Recurrent Related Party Transactions of a Revenue or Trading Nature is set out in the Circular to Shareholders of the Company which is despatched together with the Company s 2010 Annual Report.

7 5 Annual Report 2010 corporate information BOARD OF DIRECTORS Tan Sri Dato Mohd Sheriff Bin Mohd Kassim PSM, JMN, KMN, DSDK BA (Hons), MA, Diploma in Eco. Development Chairman/Independent non-executive director Michael Chan Yui Lung FCMA, HKICPA, HKRFP, LIMRA Group Chief Executive Officer/Managing Director Ahmad Riza Bin Basir BA Law (Hons), Barrister-at-law (Lincoln s Inn) Independent non-executive director Datuk Ismail Bin Haji Ahmad PSD, JSM, PMK, ASDK, AMN, ADK BA (Hons), MA (Wisconsin) Independent non-executive director Datuk Abu Hassan Bin Kendut PJN, MIA, MICPA Independent non-executive director Robert Allen Cook BA (University of Calgary), MBA (University of Toronto) Non-independent non-executive director Philip John Hampden-Smith Graduate of The Royal Military Academy, Sandhurst Non-independent non-executive director Gianni Fiacco B. Comm, CA Non-independent non-executive director JOINT SECRETARIES Chua Siew Chuan (MAICSA ) Chin Mun Yee (MAICSA ) COMMITTEES OF THE BOARD EXECUTIVE COMMITTEE Tan Sri Dato Mohd Sheriff Bin Mohd Kassim (Chairman) Philip John Hampden-Smith Michael Chan Yui Lung GROUP AUDIT COMMITTEE/GROUP RISK MANAGEMENT COMMITTEE Datuk Abu Hassan Bin Kendut (Chairman) Ahmad Riza Bin Basir Robert Allen Cook (Resigned on 17 March 2011) Gianni Fiacco (Appointed on 17 March 2011) GROUP NOMINATING/ REMUNERATION COMMITTEE Tan Sri Dato Mohd Sheriff Bin Mohd Kassim (Chairman) Ahmad Riza Bin Basir Datuk Abu Hassan Bin Kendut Datuk Ismail Bin Haji Ahmad Philip John Hampden-Smith REGISTERED OFFICE 12th Floor, Menara Manulife, 6 Jalan Gelenggang, Damansara Heights, Kuala Lumpur Tel : Fax : REGISTRAR Securities Services (Holdings) Sdn Bhd Level 7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, Kuala Lumpur Tel : Fax : PRINCIPAL BANKERS Malayan Banking Berhad Public Bank Berhad OCBC Bank (Malaysia) Berhad Citibank Berhad HSBC Bank Malaysia Berhad AUDITORS Messrs. PricewaterhouseCoopers (No. AF-1146) Level 10, 1 Sentral Jalan Travers, Kuala Lumpur Sentral, P. O. Box 10192, Kuala Lumpur SOLICITORS Messrs. Shook Lin & Bok 20th Floor, Ambank Group Building, 55 Jalan Raja Chulan, Kuala Lumpur INVESTOR RELATIONS Tel : susan_ong@manulife.com AGM HELPDESK Tel : coco_ling@manulife.com STOCK EXCHANGE LISTING Bursa Malaysia Securities Berhad - Main Market

8 Manulife Holdings Berhad (24851-H) 6 corporate structure 100% Manulife Insurance Berhad 100% Manulife Unit Trusts Berhad 100% Manulife Asset Management (Malaysia) Sdn Bhd 100% Britama Credit Sdn Bhd 100% Britama Properties Sdn Bhd 100% The E-Software House Sdn Bhd 100% British American Investments Pte Ltd

9 7 Annual Report 2010 financial highlights Group Income (RM Mil) Group Assets (RM Mil) (0.9) Group Premium Investment income and other operating income-net , , , , , , , , , ,691.8 Life fund Gen/SH Fund Total Assets Policyowners benefit paid and payable (RM Mil) Group net profit attributable to shareholders (RM Mil)

10 Manulife Holdings Berhad (24851-H) 8 board of directors 1. Tan Sri Dato Mohd Sheriff Bin Mohd Kassim Chairman/Independent non-executive director 2. Philip John Hampden-Smith Non-independent non-executive director 3. Datuk Ismail Bin Haji Ahmad Independent non-executive director 4. Ahmad Riza Bin Basir Independent non-executive director

11 9 Annual Report 2010 board of directors 5. Michael Chan Yui Lung Group Chief Executive Officer/Managing Director 6. Robert Allen Cook Non-independent non-executive director 7. Gianni Fiacco Non-independent non-executive director 8. Datuk Abu Hassan Bin Kendut Independent non-executive director

12 Manulife Holdings Berhad (24851-H) 10 directors profile TAN SRI DATO MOHD SHERIFF BIN MOHD KASSIM Chairman/Independent non-executive director Tan Sri Dato Mohd Sheriff bin Mohd Kassim, aged 71, a Malaysian, was appointed a director of the Company on 3 September 2004 and subsequently, Chairman of the Board on 13 October He holds a B A (Honours) Economics degree from University Malaya and a Diploma in Economic Development from Oxford University, United Kingdom. He also holds a M A Economics from Vanderbilt University, USA. Tan Sri is also Chairman of the Executive Committee and Group Nominating/Remuneration Committee of the Board of Directors. He had attended all five (5) Board meetings of the Company and all two (2) Special Board meetings for noninterested Directors of the Company for the Conditional Take Over held during the financial year ended. Tan Sri was the Managing Director of Khazanah Nasional Berhad from 1994 to August 2003 and past Director of United Engineers (Malaysia) Berhad and former Chairman of UEM Land Sdn Bhd (formerly known as Renong Berhad). Prior to joining Khazanah Nasional Berhad as the Managing Director in 1994, he served as the Secretary General of Treasury, Ministry of Finance for three (3) years. Tan Sri Dato Mohd Sheriff is a non-independent non-executive Chairman of PLUS Expressways Berhad, Chairman of the Malaysian Institute of Economic Research, Deputy President of the Malaysian Economic Association and Nonexecutive Chairman of Projek Penyelenggaran Lebuhraya Berhad and Projek Lebuhraya Utara-Selatan Berhad. He is also the independent non-executive Chairman of Scientex Berhad, Standard Chartered Bank Malaysia Berhad and Standard Chartered Saadiq Bhd.

13 11 Annual Report 2010 directors profile AHMAD RIZA BIN BASIR Independent non-executive director Encik Ahmad Riza bin Basir, aged 50, a Malaysian, was appointed to the Board on 6 February He obtained his Bachelor of Law Degree with honours from the University of Hertfordshire, UK and qualified as a barrister-at-law of the Honourable Society of Lincoln s Inn, London, UK. Encik Riza is a member of the Group Audit Committee, Group Risk Management Committee and Group Nominating/ Remuneration Committee of the Board of Directors. He had attended four (4) out of the five (5) Board meetings of the Company and one (1) out of the two (2) Special Board meetings for non-interested Directors of the Company for the Conditional Take Over held during the financial year ended. Encik Riza sits on the Boards of Jerneh Asia Berhad and United Plantations Berhad. He is also a member of the Audit Committee of United Plantations Berhad. DATUK ISMAIL BIN HAJI AHMAD Independent non-executive director Datuk lsmail bin Haji Ahmad, aged 74, a Malaysian, was appointed to the Board on 19 December He graduated from University Malaya with a Bachelor of Arts Degree (honours) and later obtained his Masters Degree in Public Policy and Administration from the University of Wisconsin, USA. He had also attended the Senior Management Program conducted by the Harvard Business School. Prior to joining the private sector, he had served as an officer in the Administrative and Diplomatic Service Malaysia in the Prime Minister s Department, Ministry of Home Affairs and the Ministry of Primary Industries. While in the Government service, he had served in senior positions as the Deputy Secretary General of the Ministry of Primary Industries and the Chief Executive Officer of the Commodities Trading Commission. After his retirement from the Civil Service, he had served as Chairman of Bank Muamalat Malaysia Berhad and Board member of Advanced Packaging Technology (M) Berhad. Datuk lsmail is a member of the Group Nominating/ Remuneration Committee of the Board of Directors. He had attended four (4) out of the five (5) Board meetings of the Company and all two (2) Special Board meetings for noninterested Directors of the Company for the Conditional Take Over held during the financial year ended 31 December 2010.

14 Manulife Holdings Berhad (24851-H) 12 directors profile DATUK ABU HASSAN BIN KENDUT Independent non-executive director Datuk Abu Hassan bin Kendut, aged 68, a Malaysian, was appointed to the Board on 20 November He was articled with Messrs Turquand Youngs & Co and qualified as an accountant in He joined Malaysian Airline System Berhad in 1971 as its Accounts Manager and left in 1974 to join the practice of Messrs Coopers & Lybrand. He retired as a Senior Partner of the firm in Datuk Abu Hassan sits on the Boards of Metrod (Malaysia) Berhad, I-Berhad, Standard Chartered Bank Malaysia Berhad, Standard Chartered Saadiq Berhad and several other private companies. Datuk Abu Hassan is Chairman of the Group Audit Committee and Group Risk Management Committee and is a member of the Group Nominating/Remuneration Committee of the Board of Directors. He had attended all five (5) Board meetings and all two (2) Special Board meetings for noninterested Directors of the Company for the Conditional Take Over held during the financial year ended 31 December MICHAEL CHAN YUI LUNG Group Chief Executive Officer/Managing Director Mr Michael Chan Yui Lung, aged 56, a British citizen, was appointed as Group Chief Executive Officer of Manulife Holdings Berhad with effect from 16 February Mr Chan was a graduate of the Hong Kong Polytehcnic University, a Fellow Member of the British Royal Chartered Institute of Management Accountants, Associate Member of Hong Kong Institute of Certified Public Accountants and a qualified member of the society of Registered Financial Planners, Hong Kong. Mr Chan is also a qualified member of the Life Insurance Management Research Association since Mr Chan joined Manulife (International) Limited on 15 February 1995 as Assistant Vice President, Sales and Marketing of the Group Benefit Area. Mr Chan held various posts during his career with Manulife and just prior to being posted to Malaysia, he was Vice President, Distribution. As the Head of Sales for Manulife Hong Kong, he supervised 450 Corporate Brokers and 3,600 tie in-house agents. Prior to joining Manulife in 1995, Mr Chan worked in a number of insurance companies in various roles. Mr Chan has more than 26 years of experience in life insurance. Mr Chan is a member of the Executive Committee of the Board of Directors. He is also the Chief Executive Officer of Manulife Insurance Berhad and a director on the Board of Manulife Unit Trusts Berhad, Manulife Asset Management (Malaysia) Sdn Bhd, Britama Properties Sdn Bhd and The E-Software House Sdn Bhd. These companies are the wholly-owned subsidiaries of Manulife Holdings Berhad. He had attended all five (5) Board meetings of the Company held during the financial year ended.

15 13 Annual Report 2010 directors profile ROBERT ALLEN COOK Non-independent non-executive director Mr Robert Allen Cook, aged 56, Canadian, was appointed to the Board on 4 October He holds a Master Degree in Business Administration from the University of Toronto and a Bachelors Degree in Pure Mathematics from University of Calgary. Mr Cook is Senior Executive Vice President and General Manager, Asia, responsible for Manulife Financial s insurance and wealth management operations in Japan, China, Hong Kong, Indonesia, the Philippines, Singapore, Taiwan, Vietnam, Malaysia, Thailand and Macau. Previously, he was Executive Vice President, US Insurance Group with overall general management responsibility for the John Hancock Life Insurance, John Hancock Long-Term Care and John Hancock Financial Network business units. Mr Cook has been involved in the Life Insurance Industry since 1978 and has held management positions in Manulife s U.S., Canadian, International and corporate divisions. His experience spans a number of areas including strategic planning, product management for insurance & annuities, sales and marketing. Mr Cook has resigned as a member of the Group Audit Committee and Group Risk Management Committee of the Board of Directors on 17 March He had attended all five (5) Board meetings of the Company held during the financial year ended. Mr Cook is a representative of the Company s largest shareholder, Manulife Century Holdings (Netherlands) B.V, whose ultimate holding company is Manulife Financial Corporation, where he is a member of the Executive Committee and Management Committee. PHILIP JOHN HAMPDEN-SMITH Non-independent non-executive director Mr Philip John Hampden-Smith, aged 52, from the UK, was appointed to the Board on 5 January He is a Graduate of the Royal Military Academy, Sandhurst. Having worked in the UK, Europe and Asia, Mr Hampden-Smith has extensive experience in the financial services industry. He is currently Executive Vice President and General Manager, South East Asia Operations, Manulife Financial. Mr Hampden- Smith is responsible for Manulife s six (6) operations in the ASEAN area (Singapore, Indonesia, Malaysia, Thailand, the Philippines and Vietnam). Mr Hampden-Smith first joined Manulife Financial in Hong Kong in 1996 and concurrently held two (2) positions - President & CEO of Manulife s Investment operations and Vice President, Marketing & Communications. While in Hong Kong during this period, Mr Hampden-Smith was elected an Executive Board member of the Hong Kong Investments Funds Association and was a member of the Hong Kong Securities Institute. Prior to his posting in Singapore, Mr Hampden-Smith was Vice President, Regional Operations, Asia, for Manulife Financial, and was responsible for overseeing the company s operations in the Philippines and Singapore as well as mutual fund development across Asia. Prior to this, he was President Director of Manulife Indonesia for three (3) years. During his time in this position, Mr Hampden-Smith oversaw a four-fold increase in assets of Manulife Indonesia, the rapid development of Manulife Asset Management Indonesia and a significant acquisition that made Manulife Indonesia the leading pension provider in the country as well as Indonesia s leading insurer and fund manager. Mr Hampden-Smith is a member of the Executive Committee and Group Nominating/Remuneration Committee of the Board of Directors. He had attended all five (5) Board meetings of the Company held during the financial year ended. Mr Hampden-Smith is a representative of the Company s largest shareholder, Manulife Century Holdings (Netherlands) B.V, whose ultimate holding company is Manulife Financial Corporation, where he is a member of the Management Committee.

16 Manulife Holdings Berhad (24851-H) 14 directors profile GIANNI FIACCO Non-independent non-executive director Mr Gianni Fiacco, aged 33, Canadian, was appointed to the Board on 22 May He is a Chartered Accountant and holds a Bachelor of Commerce Degree from the University of Toronto. Mr Fiacco is a Vice President and the Regional Controller, Asia, responsible for providing leadership to Manulife Financial s financial and accounting functions across Asia, identifying opportunities; recommending and establishing accounting policy; and establishing, implementing and monitoring viable and robust financial and accounting systems and processes. The responsibilities also include providing leadership in the planning, reporting, accounting, expense management, financial policy, and control procedures areas, so as to ensure effective controls are in place to safeguard assets, and to ensure that the financial accounts are accurate on both a Canadian and US GAAP basis. Previously, he was an Assistant Vice President, Manulife Financial Canada with responsibility for global accounting policy and the interpretation and implementation of company wide accounting policies in accordance with Canadian and US GAAP requirements. Mr Fiacco has been involved in the Life Insurance Industry since 2005 and before joining Manulife, he was with PricewaterhouseCoopers LLP working in their Audit and Assurance Services group. Mr Fiacco was appointed as a member of the Group Audit Committee and Group Risk Management Committee on 17 March He had attended all five (5) Board meetings of the Company held during the financial year ended 31 December Mr Fiacco is a representative of the Company s largest shareholder, Manulife Century Holdings (Netherlands) B.V, whose ultimate holding company is Manulife Financial Corporation. Other information on directors Save as disclosed, none of the Directors have any family relationship with any director and/or major shareholder of the Company nor any conflict of interest with the Company. None of the Directors has had any convictions for any offences within the past ten (10) years. There were five (5) Board Meetings and two (2) Special Board Meetings for non-interested Directors for the Conditional Take Over held during the financial year ended. The details of attendance of the Directors are as follows:- Attendance Attendance Special Board Name of Board of Directors Board Meetings Meetings Tan Sri Dato Mohd Sheriff bin Mohd Kassim 5 out of 5 2 out of 2 En Ahmad Riza bin Basir 4 out of 5 1 out of 2 Datuk Abu Hassan bin Kendut 5 out of 5 2 out of 2 Datuk Ismail bin Haji Ahmad 4 out of 5 2 out of 2 Michael Chan Yui Lung 5 out of 5 N/A Robert Allen Cook 5 out of 5 N/A Philip John Hampden-Smith 5 out of 5 N/A Gianni Fiacco 5 out of 5 N/A

17 15 Annual Report 2010 chairman s statement Review of Results For the financial year under review, the Group registered a pre-tax profit of RM82.2 million compared with the preceding year of RM79.4 million, an increase of 3.5%. The Group s profit after tax and earnings per share were higher by 8.8% at RM64.4 million and 31.8 sen respectively compared with the preceding year of RM59.1 million and 29.2 sen. Dear shareholders, On behalf of the Board of Directors, it is my pleasure to present the Annual Report and Audited Financial Statements of the Group and the Company for the financial year ended. The higher profit was primarily attributable to higher investment income and higher life fund transfer from insurance business for year 2010 as compared to year Review of Operations Insurance The year 2010 saw improved market sentiment and higher consumer confidence amongst the Malaysian public which resulted in strong economic growth for the country. Market sentiment and consumer confidence are key indicators that have a direct impact on the performance of the life insurance industry. In line with the overall positive momentum, Manulife Insurance Berhad (Manulife Insurance) also registered a successful year. Manulife Insurance recorded another year of growth in new business annualised premium. For the financial year 2010, new business annualised premium grew 6% to reach RM68.2 million. It was a significant achievement given that the Company was focused mainly on the Agency channel, contributing 96% towards new business sales. During the year, the Company withdrew all single premium plans and as a result, regular premium sales accounted for 97% of total new business sales. TAN SRI DATO MOHD SHERIFF BIN MOHD KASSIM Chairman/Independent non-executive director

18 Manulife Holdings Berhad (24851-H) 16 chairman s statement As part of the continuing Agency growth strategy, the Company made further inroads in developing a professional agency force through improving agency activity, productivity, recruitment and retention. These initiatives bore results as the Agency new business annualised premium grew 17% over Agency manpower achieved a second consecutive year of record-breaking manpower growth with a historic 1,550 new agents joining the Company during the year. In terms of new business performance, the year s top agency manager and unit manager were also record breakers, surpassing previous records by a considerable margin. As consumer confidence rose, Manulife Insurance took the opportunity to launch new products and new business sales saw improvements. Amongst them included a regular premium non-participating term plan that gives a payout at the earlier stages of Critical Illness and a new series of regular premium investment-linked insurance plans. To ensure our agency members were well informed on these new products, the product development team introduced new and innovative programmes and materials that were very well received by all. The Company recruited a new Head of Agency Sales Development to further drive development and productivity of the Agency force through structured coaching programs. On the Financial Advisors front, the Company signed on four more partners, increasing the tally to ten. The second Regional Support Centre (RSC) in East Malaysia was officially opened in December 2010 in Kuching, Sarawak to tap the growing affluence in the state. The opening of the newest RSC will also support the business unit s efforts to grow our market position and strengthen our agency force in East Malaysia. In 2010, Manulife Insurance embraced new technology to deliver training to our agency members throughout the country. The Video Conference system was introduced in all the RSCs to allow agents to attend training remotely at the RSCs. Manulife Insurance also implemented a web-based e-learning platform where agency members can access training modules at their convenience. Unit Trust The Group s unit trust operation is carried out by Manulife Unit Trusts Berhad (Manulife Unit Trusts), its wholly-owned subsidiary. Incorporated on 30 September 2008, Manulife Unit Trusts commenced operations on 22 June Manulife Unit Trusts started 2010 by launching three foreign-focused funds through the feeder fund structure. These funds were aimed at providing our customers the opportunity to participate in the potential growth of the China and India economies as well as the global resources sector. The new funds joined the existing two local funds which made up a balanced and complementary range of funds with different risk ratings. Manulife Unit Trusts is currently exploring further funds to be launched in the coming year. The Company will continue to capitalise on the strength of the Group s existing agency force as its first channel of distribution. During the year, Manulife Unit Trusts initiated discussions with potential partners to expand our distribution capability. In preparation for distribution expansion, the business unit further upgraded our backroom infrastructure capabilities and strategically increased headcount to provide higher level of service. The unit trust team conducted extensive briefing and training sessions to the agency force with the view to encourage these agents to seek the Certified Unit Trust Examination (CUTE) licence. These sessions resulted in a 170% increase in CUTE-certified members amongst the Group s life insurance agency force.

19 17 Annual Report 2010 chairman s statement Corporate Social Responsibility The Group s Corporate Social Responsibility (CSR) philosophy is to make a positive difference in the communities where we do business. In doing so, the Group aims to promote the importance of giving back to the society. The Group actively encourages CSR participation among its staff and agency members, in the firm belief that every single contribution and act of giving is a step forward towards building better communities. During the year under review, the Group collaborated with a diverse group of deserving organisations to improve the quality of life for underprivileged children, old folks, mentally disabled children or the physically handicapped. The first CSR recipient for year 2010 was Persatuan Kebajikan Bagi Orang Istimewa in Kampar, Perak which received rehabilitative equipment to help stroke patients regain mobility. Agency members in Kuching, Sarawak, volunteered their time to raise funds for the Kuching Autistic Association. To commemorate Universal Children s Day on 20 November 2010, a special Movie Day Out was organised for the children under the care of Rumah Amal Kasih Bestari, The Pure Life Society and Praise Emmanuel Children s Home. Asset Management The Group s asset management operation is carried out by Manulife Asset Management (Malaysia) Sdn. Bhd. (Manulife Asset Management), its wholly-owned subsidiary. Incorporated on 15 May 2008, Manulife Asset Management commenced operations on 1 April would best be summarised as a year of building Manulife Asset Management foundations, preparing to grow its third party mandates while at the same time improving on its investment track record. During the year, Manulife Asset Management increased its headcount by 30% to 13. Today, it has 6 investment professionals with close to 66 years of combined investment experience. Performance of both its on and off-balance sheet funds for 2010 have outperformed the respective benchmarks. Manulife Unit Trusts local equity unit trust fund under its management is ranked in the 1st quartile on a rolling 6-month to December Manulife Asset Management assets under management also increased by 20% to RM2.9 billion during the year, securing mandates from both retail and institutional clients. The Group continued its long standing support to the Terry Fox Run, a family-oriented fun run aimed at raising funds in aid of cancer research. This year, an overwhelming 400 agency members and staff registered to support the event. With cancer increasingly affecting more families, the Group committed funds for the printing of information leaflets by Majlis Kanser Negara (MAKNA) to create better awareness of cancer among Malaysians. Risk Management Risk Management in the financial services industry is a critical factor in determining the success of an organisation and its continuity. It is a discipline designed to identify potential events that may affect the business continuity of an organisation so as to protect, manage and minimise the risks involved. The Group s risk taking activities are undertaken with the understanding that risk taking and effective risk management are necessary and integral to achieving strategic objectives and managing business operations. The Company seeks to strategically optimise risk taking and risk management to support long term revenue and earning growth and shareholder value growth. This is done by:- capitalising on business opportunities that are aligned with the Group s overall risk appetite and return expectations; identifying, measuring and assessing, and monitoring and reporting on principal risks taken; and proactively executing effective risk controls and mitigation programmmes.

20 Manulife Holdings Berhad (24851-H) 18 chairman s statement Aside from establishing an Enterprise Risk Management Policy to introduce a structured risk management framework, the Group has in place a variety of policies related to business risk management, among others, the Code of Business Conduct and Ethics, Anti-Money Laundering and Anti-Terrorism Financing Manual and Procurement Policy. Business Development and Trend Life Insurance The life insurance industry registered improved results in 2010 on the back of economic recovery and increasing awareness on the role of insurance as a protection and financial planning tool. Improvements in the employment market, rising disposable income and revival in economic activities generated spins-off to the life insurance sector and created a greater demand for insurance products. Consumers started looking again at insurance needs and long-term savings. With the improved market sentiment, investment-linked sales picked up as customers anticipated the potential upside of market performance for such products as the stock market rose. During the year, there were a number of key announcements by the Government that is expected to propel the growth of the life insurance industry:- The insurance industry has been earmarked by the Government as one of the key areas that would contribute to the nation s economic growth under the Economic Transformation Programme (ETP). With this focus, ETP expects insurance penetration rate to reach 4% of gross domestic products (GDP) by 2020 and the number of policies per population to hit the 75% mark as compared with the 41% level in The introduction of a private pension scheme where initiatives for allowing Employees Provident Fund (EPF) funds to be channeled out for private pension funds are being studied. Four new family takaful licences were awarded by Bank Negara Malaysia in September 2010 following the approval from the Finance Ministry. The move by Bank Negara Malaysia was also in line with the Government s aim of making Malaysia an international Islamic financial hub. A plan to introduce a micro insurance scheme aimed at assisting low income small business owners in securing financial protection was unveiled in the Budget While it is still in the preliminary stage, it is viewed as a positive move as insurance protection could be extended to a large majority of the population. Also in Budget 2010, the Government had increased the tax relief for EPF contribution and life insurance premiums from RM6,000 to RM7,000. This additional RM1,000 was granted for annuity premiums of plans offered by insurance companies. This incentive was most appropriate to support the development of retirement schemes by life insurance companies. As part of the liberalisation measures towards greater transparency and disclosure, the Guidelines on Product Transparency and Disclosure issued by Bank Negara Malaysia came into effect on 1 January The Guidelines are geared towards promoting consumer awareness and understanding of the various financial products and services. Information would now be presented in a standard product disclosure sheet to enable consumers to make comparison with the different types of products and minimise any form of mis-selling by intermediaries. In addition, full commission disclosure was introduced for investment-linked insurance with effect from April 2010 while commission disclosure for traditional products is planned to take effect in June Unit Trust The unit trust industry has, by and large, continued to record solid growth this year, supported by a strong recovery on Bursa Malaysia.

21 19 Annual Report 2010 chairman s statement Translating the generally favourable stock market performance, the unit trust industry s total net asset value as at end-december 2010 stood at RM226.8 billion, compared to RM191.7 billion in December 2009, representing a substantial increase of 18.3%. This increase is attributed to net sales in unit trusts coupled with asset price increases when stock markets recovered. Investment 2010 was generally a good year for both the local fixed income and equity markets. The performance in the first half of the year was driven primarily by the bond market as risk aversion spurred demand for safer assets amidst expectations of a bumpy global economic recovery. Foreign funds were attracted to Malaysian bonds on expectations that (i) the Ringgit would appreciate since Malaysia was ahead of the rate normalisation curve amongst its regional peers (the Ringgit appreciated by 10.6% against the US Dollar during the year); and (ii) the widening interest rate differential in favour of the Ringgit vis-à-vis the US Dollar resulted in a positive carry trade. However, in the second half of the year, fortunes reversed with the local equity market outperforming the bond market. As fears of a Europe-led global double dip abated, the equity market resumed its upward trajectory. Higher development expenditure from the newly released 10th Malaysian Plan and the potential of the ETP bringing economic reforms and stronger long-term sustainable economic growth to Malaysia fuelled investors confidence. The Kuala Lumpur Composite Index ended the year at 1, points, up 19.3% year on year, positioning itself as the 5th best performing market in Asia after the Thailand, Indonesia, Philippines and Korea. Current Year Prospects The financial services landscape in Malaysia is rapidly evolving into a dynamic and consumer focused industry in Malaysia. It is noted that this industry is one of the key pillars in driving economic growth as evidenced by the numerous measures and initiatives undertaken by the Government. The emerging environment offers tremendous potential for the Group to be an active contributor towards its growth. The Group will adopt a customer-centric approach when launching life insurance and unit trusts products that will complement the customers financial planning needs. In addition, the Group will be prudent in its utilisation and management of resources as it moves towards achieving its growth objectives. With these plans, we expect the Group to remain competitive in the insurance, unit trust and asset management industries. Barring any unforeseen circumstances, the Directors expect the Group s performance to remain satisfactory in the next financial year ending 31 December 2011 as the Group invests further towards its business expansion. Dividend The Board of Directors is pleased to recommend, subject to shareholders approval at the forthcoming Annual General Meeting, a first and final dividend of 18 sen per share less income tax at 25% amounting to RM27,319,950 for the financial year ended. Acknowledgements Finally, on behalf of the Board of Directors, I would like to thank our shareholders, policyowners and business associates for their continued support, our Agency force and staff for their dedication and hard work, and I trust that we will continue to benefit from their support in the coming year. Tan Sri Dato Mohd Sheriff bin Mohd Kassim Chairman Kuala Lumpur 16 March 2011

22 Manulife Holdings Berhad (24851-H) 20 corporate governance statement The Board of Directors ( the Board ) is committed to ensuring that the highest standards of corporate governance are practised throughout the Group as a fundamental part of discharging its responsibilities to protect and enhance shareholders value and the financial performance of Manulife Holdings Berhad ( the Company ). To this end, the Board fully supports the disclosure requirements of the Malaysian Code on Corporate Governance ( the Code ) and strives to achieve the best practices embodied in the revised Code and the Corporate Governance Guide issued by Bursa Malaysia Securities Berhad in June Unless as otherwise stated, the Board has complied with the principles and best practices of the Code. THE BOARD OF DIRECTORS An effective Board leads and controls the Company. The Manulife Holdings Berhad Board meeting is held at least once a quarter, with additional meetings convened as necessary. All Board members bring an independent judgement to bear on issues of strategy, performance, resources and standards of conduct. Four (4) of the directors are independent. For the financial year ended, five (5) board meetings and two (2) special board meetings for non-interested Directors for the Conditional Take Over were held and the attendance of each director is recorded in their respective profiles. The Board has delegated specific responsibilities to four (4) Board Committees, namely:- Executive Committee of the Board Group Audit Committee Group Risk Management Committee Group Nominating/Remuneration Committee The Terms of Reference of the Board Committees clearly define the duties and obligations of the Board Committees in assisting and supporting the Board. The ultimate responsibility for the final decision on all matters lies with the entire Board. Executive Committee of the Board The Executive Committee has three (3) members, comprises two (2) Non-Executive Directors and one (1) Executive Director. Members 1. Tan Sri Dato Mohd Sheriff bin Mohd Kassim, Chairman/Independent Non-Executive Director 2. Mr Philip John Hampden-Smith, Member/Non-Independent Non-Executive Director 3. Mr Michael Chan Yui Lung, Member/Group Chief Executive Officer/Managing Director Terms of Reference The Company s Articles of Association provides that the Board of Directors may appoint the Executive Directors and certain Non-Executive Directors to the Executive Committee which shall consist of not more than seven (7) members. Further, subject to the express directions of the Board and to any directions which may be given by the Company in a general meeting, the Executive Committee shall manage the business of the Company, and shall be empowered to do on behalf of the Company any act which the directors may do, except make calls, forfeit shares, borrow money, or fill a casual vacancy on the Board.

23 21 Annual Report 2010 corporate governance statement Group Audit Committee The Group Audit Committee has three (3) members, comprises two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. The Report of the Group Audit Committee for the financial year can be found in pages 29 to 36 of the Annual Report. Members 1. Datuk Abu Hassan bin Kendut, Chairman/Independent Non-Executive Director 2. En Ahmad Riza bin Basir, Member/Independent Non-Executive Director 3. Mr Robert Allen Cook, Member/Non-Independent Non-Executive Director (Resigned on 17 March 2011) 4. Mr Gianni Fiacco, Member/ Non-Independent Non-Executive Director (Appointed on 17 March 2011) Terms of Reference The terms of reference of the Group Audit Committee are set out under the Report of the Group Audit Committee on pages 29 to 35 of the Annual Report. Meeting Attendance The attendance list for the Group Audit Committee s members for the financial year ended is found on page 29 of the Annual Report. Group Risk Management Committee The Group Risk Management Committee has three (3) members, comprising two (2) Independent Non-Executive Directors and one (1) Non-Independent Non-Executive Director. Members 1. Datuk Abu Hassan bin Kendut, Chairman/Independent Non-Executive Director 2. En Ahmad Riza bin Basir, Member/Independent Non-Executive Director 3. Mr Robert Allen Cook, Member/ Non-Independent Non-Executive Director (Resigned on 17 March 2011) 4. Mr Gianni Fiacco, Member/Non-Independent Non-Executive Director (Appointed on 17 March 2011) Terms of Reference The Group Risk Management Committee is responsible for:- 1. Reviewing and recommending risk management strategies, policies and risk tolerance for the Board s approval; 2. Reviewing and assessing the adequacy of risk management policies and framework for identifying, measuring, monitoring and controlling risks as well as the extent to which these are operating effectively; 3. Ensuring adequate infrastructure, resources and systems are in place for an effective risk management, i.e. ensuring that staff responsible for implementing risk management systems perform these duties independently of the Group s risk taking activities; and 4. Reviewing the management s periodic reports on risk exposure, risk portfolio composition and risk management activities. Meeting Attendance The attendance list for the Group Risk Management Committee s members for the financial year ended are as follows:- Name of members Attendance Datuk Abu Hassan bin Kendut 4 out of 4 En Ahmad Riza bin Basir 3 out of 4 Mr Robert Allen Cook 4 out of 4