CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018

Transcription

1 FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018

2 CONTENTS PAGE(S) MEMBERS LETTER 1 PRS PROVIDER S REPORT 2-10 Fund Objective and Policy Performance Data Market Review Fund Performance Portfolio Structure Market Outlook Investment Strategy Members Statistics Soft Commissions and Rebates STATEMENT BY THE PRS PROVIDER 11 TRUSTEE S REPORT 12 INDEPENDENT AUDITORS REPORT STATEMENT OF COMPREHENSIVE INCOME 17 STATEMENT OF FINANCIAL POSITION 18 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS 19 STATEMENT OF CASH FLOWS 20 NOTES TO THE FINANCIAL STATEMENTS DIRECTORY 39 LIST OF CWA (an Agency force of CIMB-Principal) OFFICES 40-44

3 MEMBERS LETTER Dear Valued Members, Thank you for your continued support and for the confidence that you have placed in us. We are pleased to share that CIMB-Principal Asset Management Berhad ( CIMB-Principal ) Malaysia concluded the 2 nd Half of 2017 with RM51 billion in Asset under Management ( AUM ). CIMB-Principal s Group AUM increased by 11% to RM68 billion, for 1-year period ending 31 December Our AUM for Private Retirement Scheme ( PRS ) business increased by 51% year-on-year ( y-o-y ) to RM517 million as at 31 December We continue to achieve prestigious recognitions from The Edge Thomson Reuters Lipper Fund Awards: The Edge Thomson Reuters Lipper Malaysia Fund Awards 2017 Best Equity Global, 3 years & 5 years : CIMB-Principal Global Titans Fund Best Equity Asia Pacific Ex-Japan, 5 years : CIMB-Principal Asian Equity Fund Best Equity Asia Pacific Ex-Japan - Malaysia Islamic, 5 years : CIMB Islamic Asia Pacific Equity Fund Thomson Reuters Lipper Fund Award Global Islamic 2017 Best Equity Asia Pacific Ex-Japan (Islamic), Best Fund over 5 years : CIMB Islamic Asia Pacific Equity Fund These awards reflect our consistent fund performance, in tandem with our commitment to provide the best customer experience to you. CIMB-Principal was also awarded Fund House of the Year in Malaysia by AsianInvestor for the Asset Management Awards 2017, its second consecutive win and The Employees' Provident Fund ( EPF ) External Portfolio Managers Awards 2017 for the Best Global Bond Portfolio Manager. These industry recognitions reflect our success in scaling up our investment capabilities while building a solid track record and earning the trust of our clients over time. Thank you once again. Yours faithfully, for CIMB-Principal Asset Management Berhad Munirah Khairuddin Chief Executive Officer 1

4 PRS PROVIDER S REPORT FUND OBJECTIVE AND POLICY What is the investment objective of the Fund? The Fund seeks to provide capital growth over the long-term by investing in a target fund with investments in the Asia Pacific ex Japan region. Has the Fund achieved its objective? For the financial year under review, the Fund has performed in line with its objective as stated under the Fund Performance section. What are the Fund investment policy and principal investment strategy? The Fund will invest at least 95% of its Net Asset Value ( NAV ) in the CIMB-Principal Asia Pacific Dynamic Income Fund ( Target Fund ), a Malaysian-domiciled fund established on 25 April 2011, which invests in the Asia Pacific ex Japan region. The Fund will also maintain up to a maximum of 5% of its NAV in liquid assets. Information on the Target Fund Management Company: CIMB-Principal Asset Management Berhad Regulatory Authority : Securities Commission Malaysia ( SC ) Fund category/type Feeder Fund - Equity When was the Fund launched? 12 November 2012 What was the size of the Fund as at 31 January 2018? RM million ( million units) What is the Fund s benchmark? The Fund has a target return of 8% per annum. This is not a guaranteed return and is only a measurement of the Fund s performance. The Fund may not achieve the target return in any particular financial year but targets to achieve this growth over the long-term. Note: The risk profile of the Fund is not the same as the risk profile of the benchmark. What is the Fund distribution policy? The Fund is not expected to pay any distribution.. 2

5 PERFORMANCE DATA Details of portfolio composition of the Fund for the last three financial years are as follows: % % % Collective investment scheme Cash and other net assets Performance details of the Fund for the last three financial years are as follows: NAV (RM Million) - Class A Class C Class X Units in circulation (Million) - Class A Class C Class X NAV per unit (RM) - Class A Class C Class X Highest NAV per unit (RM) - Class A Class C Class X Lowest NAV per unit (RM) - Class A Class C Class X Total return (%) - Class A (7.20) - Class C (7.20) - Class X (7.20) Capital growth (%) - Class A (7.20) - Class C (7.20) - Class X (7.20) Income distribution (%) - Class A Class C Class X

6 PERFORMANCE DATA (CONTINUED) CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Management Expense Ratio ( MER ) (%) ^ Portfolio Turnover Ratio ( PTR ) (times) # ^ The Fund s MER increased from 0.10% to 0.11% mainly due to increased expenses during the financial year under review. # The Fund s PTR decreased to 0.22 times from 0.26 times due to increased average NAV during the financial year under review % % % % % Annual total return - Class A (7.20) Class C (7.20) Class X (7.20) (Launch date: 12 November 2012) Past performance is not necessarily indicative of future performance and that unit prices and investment returns may go down, as well as up. All performance figures for the financial year have been extracted from Lipper. MARKET REVIEW (1 FEBRUARY 2017 TO 31 JANUARY 2018) The Morgan Stanley Capital International All Country ( MSCI AC ) Asia ex-japan Index posted a solid gain of 23.70%, closing at 2, points in Malaysian Ringgit ( MYR ) terms over the financial year under review. In US Dollar ( USD ) terms, the Index rose by 40.47%. First quarter of 2017 saw Asian markets continue to trend higher as economic momentum extended gains from second half of After a brief pause in January 2017, the global manufacturing output Purchasing Managers Index ( PMI ) continued its robust uptrend in February 2017 (the highest level since June 2011). The sectors that significantly outperformed in first quarter of 2017 were India financials, Korea information technology ( IT ), India energy, China consumer discretionary and China IT. Meanwhile, the markets that outperformed were India, Korea, China and Singapore. While closing second quarter of 2017 with very strong equity returns, the month of June 2017 itself was muted. In June 2017, markets seemed to be adjusting to the possibility of higher rates and lower monetary accommodation through reduced quantitative easing ( QE ) effects. The second quarter of 2017 earnings season also played its hand as markets waited to assess the extent of spillover of weak commodity prices into corporate earnings and confidence. A stronger Euro Dollar ( EUR ) pegged European equities back, while Asian and emerging equities continued to outperform developed markets. Asian markets trended higher in the third quarter of The global economy was in synchronised expansion and central banks appeared increasingly comfortable to look through low inflation and continued raising rates, or at least not ease them. Earnings revisions in Asia have picked up slightly due to operating leverage and better pricing power (supply side reform, stable/rising commodity prices). Equity fund flows have become more mixed with outflows from Korea, Taiwan and India while China continued to see inflows. Philippine equities set a new record high in September 2017 as market cheered the Senate Ways and Means Committee s approval of its version of tax reform as well as the Lower House s passage of the 2018 budget. 4

7 MARKET REVIEW (1 FEBRUARY 2017 TO 31 JANUARY 2018) (CONTINUED) Asian markets delivered strong gains in the fourth quarter of 2017 with Asia being the best-performing region in Emerging Markets ( EM ) in The 19 th National Congress of the Communist Party of China was held on 18 to 25 October 2017 in Beijing, with the new leadership team announced. The Indian Government announced a bold plan to recapitalize state-owned banks. China and South Korea agreed to mend ties after the Terminal High Altitude Area Defense ( THAAD ) feud. The European Central Bank ( ECB ) announced it would extend QE by nine months, to September 2018, at a reduced pace of EUR30 billion per month. December 2017 was marked by tax cuts in the US, the US Federal Reserve (the Fed ) hikes, strong European growth indicators, and People s Bank of China ( PBOC ) raising open market operations ( OMO ) rate by 5 basis points ( bps ). Market continued its rally in January 2018, on the back of positive revisions to global growth, lack of USD strength (post US tax reform), and increasing commodities prices. FUND PERFORMANCE 1 year to 3 years to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital Total Return Benchmark Average Total Return years to Since inception to Class A Class C Class X Class A Class C Class X % % % % % % Income Capital Total Return Benchmark Average Total Return For the 1-year period, Class A gained 27.19% while Class C and Class X gained 27.18%. The Fund has a target return of 8% per annum as benchmark. The outperformance of the Fund relative to its benchmark was mostly attributed to stock selection within the Target Fund (CIMB-Principal Asia Pacific Dynamic Income Fund). The slight variation in the performance between Class A, Class C and Class X, if any, was due to different timing of units created for each of the class. 5

8 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 FUND PERFORMANCE (CONTINUED) 1 year to CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% Class A, C and X* Benchmark 3 years to % 40.00% 30.00% 20.00% Class A, C and X* Benchmark 10.00% 0.00% % 6

9 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 Jan-14 Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Jan-13 May-13 Sep-13 Jan-14 May-14 Sep-14 Jan-15 May-15 Sep-15 Jan-16 May-16 Sep-16 Jan-17 May-17 Sep-17 Jan-18 FUND PERFORMANCE (CONTINUED) 5 years to CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY % % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Class A, C and X* Benchmark Since inception to % % % % 90.00% 80.00% 70.00% 60.00% 50.00% 40.00% 30.00% 20.00% 10.00% 0.00% Class A, C and X* Benchmark * Performance of Class A, Class C and Class X are almost the same. Slight variation was due to different timing of units created for each of the class. 7

10 FUND PERFORMANCE (CONTINUED) Changes in NAV CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CLASS A Changes % NAV (RM Million) NAV/Unit (RM) CLASS C Changes % NAV (RM Million) NAV/Unit (RM) CLASS X Changes % NAV (RM Million) NAV/Unit (RM) The Fund recorded positive net inflow from unit creations over the financial year under review for all the three classes - Class A, Class C and Class X. For the financial year under review, the Fund s NAV per unit for all three classes increased by 27.18% due to positive investment performance. For the 1-year financial period, the Fund ranked 1 st in Quartile 1 under the Equity Asia Pacific Ex Japan category in the Lipper rankings. Performance data represents the combined income and capital return as a result of holding units in the Fund for the specified length of time, based on NAV to NAV price. The performance data assumes that all earnings from the Fund are reinvested and are net of management and trustee fees. Past performance is not reflective of future performance and income distributions are not guaranteed. Unit prices and income distributions, if any, may fall and rise. All performance figures for the financial year have been extracted from Lipper. PORTFOLIO STRUCTURE Asset allocation (% of NAV) Collective investment scheme Cash and other net assets Total The Fund was fully invested during the financial year under review. A minimal level of liquid assets was maintained primarily for redemption purposes. 8

11 MARKET OUTLOOK* At a 13 times Price-to-Earnings ratio ( PER ) and 13% earnings per share ( EPS ) ratio growth during the financial year under review, Asian equities look reasonably priced and has upside especially if the cyclical sectors can see earnings upgrades. In Asia, financials, energy, materials, industrials and discretionary collectively account for 55% of the benchmark. We like companies that are deploying technology to gain a competitive advantage and differentiate, such as selective names in the banking and mining sector. Other themes that we like include consumer upgrading and high-end discretionary spend and companies that outspend peers in Research and Development for long-term growth. * This market outlook does not constitute an offer, invitation, commitment, advice or recommendation to make a purchase of any investment. The information given in this article represents the views of CIMB-Principal or based on data obtained from sources believed to be reliable by CIMB-Principal. Whilst every care has been taken in preparing this, CIMB-Principal makes no guarantee, representation or warranty and is under no circumstances liable for any loss or damage caused by reliance on, any opinion, advice or statement made in this market outlook. INVESTMENT STRATEGY As this is a Feeder Fund under the PRS, the Fund will continue to remain fully invested in the Target Fund with minimal cash kept for liquidity purposes. MEMBERS STATISTICS AS AT 31 JANUARY 2018 CLASS A Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 10, ,001-10,000 2, ,001-50,000 2, , , ,001 and above Total 16, CLASS C Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 2, ,001-10, ,001-50, , , ,001 and above Total 3,

12 MEMBERS STATISTICS AS AT 31 JANUARY 2018 (CONTINUED) CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CLASS X Size of unit holdings (units) No. of members No. of units held (million) % of units held 5,000 and below 1, ,001-10, ,001-50, , , ,001 and above Total 2, SOFT COMMISSIONS AND REBATES CIMB-Principal Asset Management Berhad (The PRS Provider ) and the Trustee (including their officers) will not retain any form of rebate or soft commission from, or otherwise share in any commission with, any broker in consideration for directing dealings in the investments of the Funds unless the soft commission received is retained in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. All dealings with brokers are executed on best available terms. During the financial year under review, the PRS Provider and the Trustee did not receive any rebates from brokers or dealers but have retained soft commissions in the form of goods and services such as financial wire services and stock quotations system incidental to investment management of the Funds. 10

13 STATEMENT BY THE PRS PROVIDER TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY We, being the Directors of CIMB-Principal Asset Management Berhad (the PRS Provider ), do hereby state that, in the opinion of the PRS Provider, the accompanying audited financial statements set out on pages 17 to 38 are drawn up in accordance with the provisions of the Deeds and give a true and fair view of the financial position of the Fund as at 31 January 2018 and of its financial performance, changes in net assets attributable to members and cash flows for the financial year then ended in accordance with the provisions of the Malaysian Financial Reporting Standards ( MFRS ) and International Financial Reporting Standards ( IFRS ). For and on behalf of the PRS Provider CIMB-Principal Asset Management Berhad (Company No.: K) MUNIRAH KHAIRUDDIN Chief Executive Officer/Executive Director ALEJANDRO ECHEGORRI Executive Director Kuala Lumpur 20 March

14 TRUSTEE S REPORT TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY We have acted as Trustee for CIMB-Principal PRS Plus Asia Pacific Ex Japan Equity (the Fund ) for the financial year ended 31 January To the best of our knowledge, for the financial year under review, CIMB-Principal Asset Management Berhad (the PRS Provider ) has operated and managed the Fund in accordance with the following:- (a) (b) (c) limitations imposed on the investment powers of the PRS Provider and Trustee under the Deeds, the Securities Commission s Guidelines on Private Retirement Schemes, the Capital Markets and Services Act 2007 and other applicable laws; the valuation/pricing is carried out in accordance with the Deeds and any regulatory requirement; and creation and cancellation of units are carried out in accordance with the Deeds and any regulatory requirement. For Deutsche Trustees Malaysia Berhad SOON LAI CHING Senior Manager, Trustee Operations RICHARD LIM HOCK SENG Chief Executive Officer Kuala Lumpur 20 March

15 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Our opinion CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY In our opinion, the financial statements of CIMB-Principal PRS Plus Asia Pacific Ex Japan Equity (the Fund ) give a true and fair view of the financial position of the Fund as at 31 January 2018, and of its financial performance and its cash flows for the year then ended in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. What we have audited We have audited the financial statements of the Fund, which comprise the statement of financial position as at 31 January 2018, and the statement of comprehensive income, statement of changes in net assets attributable to members and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies, as set out on pages 17 to 38. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and other ethical responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. 13

16 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Information other than the financial statements and auditors report thereon The PRS Provider of the Fund is responsible for the other information. The other information comprises the PRS Provider s report but does not include the financial statements of the Fund and our auditors report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements of the Fund or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the PRS Provider for the financial statements The PRS Provider of the Fund is responsible for the preparation of the financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards in Malaysia. The PRS Provider is also responsible for such internal control as the PRS Provider determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Fund, the PRS Provider is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the PRS Provider either intends to liquidate the Fund or to cease operations, or has no realistic alternative but to do so. 14

17 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: (a) (b) (c) (d) (e) Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the PRS Provider. Conclude on the appropriateness of the PRS Provider s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. 15

18 INDEPENDENT AUDITORS REPORT TO THE MEMBERS OF CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY (CONTINUED) REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED) Auditors responsibilities for the audit of the financial statements (continued) We communicate with the PRS Provider regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. OTHER MATTERS This report is made solely to the members of the Fund and for no other purpose. We do not assume responsibility to any other person for the content of this report. PRICEWATERHOUSECOOPERS PLT LLP LCA & AF 1146 Chartered Accountants Kuala Lumpur 20 March

19 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM INVESTMENT INCOME Dividend income 6,296,690 - Net gain on financial assets at fair value through profit or loss 7 31,977,062 25,100,845 Other income - 11,711 38,273,752 25,112,556 EXPENSES Private Pension Administrator s fee 4 64,431 49,848 Trustee s fee 5 64,431 49,848 Audit fee 9,860 9,160 Tax agent s fee 12,400 4,000 Other expenses 25,180 8, , ,081 PROFIT BEFORE TAXATION 38,097,450 24,991,475 Taxation INCREASE IN NET ASSETS ATTRIBUTABLE TO MEMBERS 38,097,450 24,991,475 Increase in net assets attributable to members is made up as follows: Realised amount 8,359,795 1,926,036 Unrealised amount 29,737,655 23,065,439 38,097,450 24,991,475 The accompanying notes to the financial statements form an integral part of the audited financial statements. 17

20 STATEMENT OF FINANCIAL POSITION AS AT 31 JANUARY 2018 CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM ASSETS Cash and cash equivalents 8 412,576 30,756 Financial assets at fair value through profit or loss 7 215,829, ,738,611 Amount due from the PRS Provider 9 795, ,142 Dividends receivable 1,907,797 - Tax recoverable 4,653 - TOTAL ASSETS 218,950, ,680,509 LIABILITIES Amount due to the PRS Provider 9 586, ,723 Other payables and accruals 32,430 21,728 TOTAL LIABILITIES (EXCLUDING NET ASSETS ATTRIBUTABLE TO MEMBERS) 618, ,451 NET ASSET VALUE OF THE FUND 218,332, ,806,058 NET ASSETS ATTRIBUTABLE TO MEMBERS 218,332, ,806,058 REPRESENTED BY: FAIR VALUE OF OUTSTANDING UNITS - CLASS A 166,019, ,192,620 - CLASS C 37,517,314 15,629,597 - CLASS X 14,795,480 7,983, ,332, ,806,058 NUMBER OF UNITS IN CIRCULATION (UNITS) - CLASS A 154,782, ,029,118 - CLASS C 34,976,638 18,530,889 - CLASS X 13,793,125 9,465, ,552, ,025,634 NET ASSET VALUE PER UNIT (RM) - CLASS A CLASS C CLASS X The accompanying notes to the financial statements form an integral part of the audited financial statements. 18

21 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO MEMBERS FOR THE FINANCIAL YEAR ENDED 31 JANUARY RM RM NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE BEGINNING OF THE FINANCIAL YEAR 135,806, ,306,711 Movement due to units created and cancelled during the financial year: - Creation of units from applications 78,046,017 51,166,993 - Cancellation of units (33,617,489) (57,659,121) 180,234, ,814,583 Increase in net assets attributable to members during the financial year 38,097,450 24,991,475 NET ASSETS ATTRIBUTABLE TO MEMBERS AT THE END OF THE FINANCIAL YEAR 218,332, ,806,058 The accompanying notes to the financial statements form an integral part of the audited financial statements 19

22 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY Note RM RM CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from disposal of collective investment scheme 13,405,000 35,180,000 Purchase of collective investment scheme (56,290,000) (29,460,000) Private Pension Administrator s fee paid (61,683) (49,387) Trustee s fee paid (61,683) (49,387) Payment for other fees and expenses (46,887) (22,601) Other income - 11,711 Net cash (used in)/generated from operating activities (43,055,253) 5,610,336 CASH FLOWS FROM FINANCING ACTIVITIES Cash proceeds from units created 77,821,216 50,800,732 Payments for cancellation of units (34,384,143) (56,810,734) Net cash generated from/(used in) financing activities 43,437,073 (6,010,002) Net increase/(decrease) in cash and cash equivalents 381,820 (399,666) Cash and cash equivalents at the beginning of the financial year 30, ,422 Cash and cash equivalents at the end of the financial year 8 412,576 30,756 Cash and cash equivalents comprised of: Bank balances 412,576 30,756 Cash and cash equivalents at the end of the financial year 8 412,576 30,756 The accompanying notes to the financial statements form an integral part of the audited financial statements 20

23 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 JANUARY 2018 CIMB-PRINCIPAL PRS PLUS ASIA PACIFIC EX JAPAN EQUITY 1. THE FUND, THE PRS PROVIDER AND ITS PRINCIPAL ACTIVITY CIMB-Principal PRS Plus Asia Pacific Ex Japan Equity (the Fund ) is governed by a Deed dated 8 November 2012, a First Supplemental Deed dated 2 January 2014 and a Second Supplemental Deed dated 25 November 2014 (collectively referred to as the Deeds ) made between CIMB-Principal Asset Management Berhad (the PRS Provider ) and Deutsche Trustees Malaysia Berhad (the Trustee ). The Fund offers three classes of units known respectively as Class A, Class C and Class X. In accordance with the Disclosure Document, Class A and Class C are for Members who have attained 18 years of age as of the date of opening a private pension account. Class A and C have different management fee. Class X is for members who participate via respective employers and is subject to a minimum of 200 participating employees per employer or 50 participating employees under payroll deduction per employer. The Fund will invest at least 95% of its NAV in the Target Fund, a Malaysian-domiciled fund established on 25 April 2011, which invests in the Asia Pacific ex Japan region. The Fund will also maintain up to a maximum of 5% of its NAV in liquid assets. All investments are subjected to the SC Guidelines on PRS, SC requirements, the Deeds, except where exemptions or variations have been approved by the SC, internal policies and procedures and the Fund s objective. The PRS Provider, a company incorporated in Malaysia, is a subsidiary of CIMB Group Sdn Bhd and regards CIMB Group Holdings Berhad as its ultimate holding company. The PRS Provider is also an associate of Principal International (Asia) Limited, which is a subsidiary of Principal Financial Group Inc. The principal activities of the PRS Provider are the establishment and management of unit trust funds and fund management activities. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been used consistently in dealing with items which are considered material in relation to the financial statements: (a) Basis of preparation The financial statements have been prepared in accordance with the provisions of the MFRS and IFRS. The financial statements have been prepared under the historical cost convention, as modified by financial assets at fair value through profit or loss. The preparation of financial statements in conformity with MFRS and IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported year. 21

24 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) It also requires the PRS Provider to exercise their judgment in the process of applying the Fund s accounting policies. Although these estimates and judgment are based on the PRS Provider s best knowledge of current events and actions, actual results may differ. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in Note 2(j). Standards, amendments to published standards and interpretations to existing standards that are effective: The Fund has applied the following amendments for the first time for the financial year beginning 1 February 2017: Amendments to MFRS 107 Statement of Cash Flows - Disclosure Initiative introduce an additional disclosure on changes in liabilities arising from financing activities. The adoption of these amendments did not have any impact on the current financial year or any prior financial year and is not likely to affect future years. The standards, amendments to published standards and interpretations to existing standards that are applicable to the Fund but not yet effective and have not been early adopted are as follows: (i) Financial year beginning on/after 1 February 2018 MFRS 9 Financial Instruments (effective from 1 January 2018) will replace MFRS 139 Financial Instruments: Recognition and Measurement. MFRS 9 retains but simplifies the mixed measurement model in MFRS 139 and establishes three primary measurement categories for financial assets: amortised cost, fair value through profit or loss and fair value through other comprehensive income ( OCI ). The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are always measured at fair value through profit or loss with an irrevocable option at inception to present changes in fair value in OCI (provided the instrument is not held for trading). A debt instrument is measured at amortised cost only if the entity is holding it to collect contractual cash flows and the cash flows represent principal and interest. For liabilities, the standard retains most of the MFRS 139 requirements. These include amortised cost accounting for most financial liabilities, with bifurcation of embedded derivatives. The main change is that, in cases where the fair value option is taken for financial liabilities, the part of a fair value change due to an entity s own credit risk is recorded in OCI rather than the income statement, unless this creates an accounting mismatch. 22

25 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (a) Basis of preparation (continued) (i) Financial year beginning on/after 1 February 2018 (continued) MFRS 9 introduces an expected credit loss ( ECL ) model on impairment that replaces the incurred loss impairment model used in MFRS 139. The expected credit loss model is forward-looking and eliminates the need for a trigger event to have occurred before credit losses are recognised. The Fund has reviewed its financial assets and liabilities and has assessed the following impacts from the adoption of the new standard on 1 February 2018: The Fund has reviewed its financial assets and liabilities and does not expect any impact from the adoption of the new standard on 1 February There will be no impact on the Fund's accounting for financial assets as the Fund's equity investments currently measured at fair value through profit or loss will continue to be measured on the same basis under MFRS 9. There will be no impact on the Fund's accounting for financial liabilities as the new requirements only affect the accounting for financial liabilities that are designated at fair value through profit or loss and the Fund does not have any such liabilities. The new impairment model requires the recognition of impairment provisions based on ECL rather than only incurred credit losses as is the case under MFRS 139. It applies to financial assets classified at amortised cost. Based on the assessments undertaken to date, the Fund does not expect any loss allowance to be recognised upon adoption of MFRS 9. (b) Financial assets and financial liabilities Classification The Fund designates its investments in collective investment scheme as financial assets at fair value through profit or loss at inception. Financial assets are designated at fair value through profit or loss when they are managed and their performance are evaluated on a fair value basis. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and have been included in current assets. The Fund s loans and receivables comprise cash and cash equivalents, amount due from the PRS Provider and dividends receivable. Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to the PRS Provider, and other payables and accruals as other financial liabilities. 23

26 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Recognition and measurement Regular purchases and sales of financial assets are recognised on the trade-date, the date on which the Fund commits to purchase or sell the asset. Investments are initially recognised at fair value. Financial liabilities, within the scope of MFRS 139, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. Financial assets are derecognised when the rights to receive cash flows from the investments have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when it is extinguished, i.e. when the obligation specified in the contract is discharged or cancelled or expired. Unrealised gains or losses arising from changes in the fair value of the financial assets at fair value through profit or loss are presented in the statement of comprehensive income within net gain or loss on financial assets at fair value through profit or loss in the financial year which they arise. Collective investment scheme is valued based on the most recent published NAV per unit or share of such collective investment scheme or, if unavailable, on the last published price of such unit or share (excluding any sales charge included in such selling price). Loans and receivables and other financial liabilities are subsequently carried at amortised cost using the effective interest method. Impairment for assets carried at amortised costs For assets carried at amortised cost, the Fund assesses at the end of the reporting year whether there is objective evidence that a financial asset or group of financial assets is impaired. A financial asset or a group of financial assets is impaired and impairment losses are incurred only if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset (a loss event ) and that loss event (or events) has an impact on the estimated future cash flows of the financial asset or group of financial assets that can be reliably estimated. The amount of the loss is measured as the difference between the asset s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset s original effective interest rate. The asset s carrying amount is reduced and the amount of the loss is recognised in statement of comprehensive income. If loans and receivables has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract. As a practical expedient, the Fund may measure impairment on the basis of an instrument s fair value using an observable market price. 24

27 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Financial assets and financial liabilities (continued) Impairment for assets carried at amortised costs (continued) If, in a subsequent financial year, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised (such as an improvement in the debtor s credit rating), the reversal of the previously recognised impairment loss is recognised in statement of comprehensive income. When an asset is uncollectible, it is written off against the related allowance account. Such assets are written off after all the necessary procedures have been completed and the amount of the loss has been determined. (c) Income recognition Dividend income is recognised on the ex-dividend date when the right to receive payment is established. Realised gain or loss on disposal of collective investment scheme is accounted for as the difference between the net disposal proceeds and the carrying amount of investments, determined on a weighted average cost basis. (d) Functional and presentation currency Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (the functional currency ). The financial statements are presented in Ringgit Malaysia ( RM ), which is the Fund s functional and presentation currency. (e) Creation and cancellation of units The members contributions to the Fund meet the definition of puttable instruments classified as financial liability under MFRS 132 Financial Instruments: Presentation. The Fund issues cancellable units, in three classes of units, known respectively as the Class A, Class C and Class X, which are cancelled at the member s option and do not have identical features subject to restrictions as stipulated in the Disclosure Document and SC Guidelines on PRS. The units are classified as financial liabilities. Cancellable units can be put back to the Fund at any time for cash equal to a proportionate share of the Fund s NAV of respective classes. The outstanding units are carried at the redemption amount that is payable at the date of statement of financial position if the member exercises the right to put back the unit to the Fund. Units are created and cancelled at the member s option at prices based on the Fund s NAV per unit of respective classes at the close of business on the relevant dealing day. The Fund s NAV per unit of respective classes is calculated by dividing the net assets attributable to members of respective classes with the total number of outstanding units of respective classes. (f) Cash and cash equivalents For the purpose of statement of cash flows, cash and cash equivalents comprise bank balances which are subject to an insignificant risk of changes in value. 25

28 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (g) Taxation Current tax expense is determined according to Malaysian tax laws at the current rate based upon the taxable profit earned during the financial year. (h) Increase/Decrease in net assets attributable to members Income not distributed is included in net assets attributable to members. (i) Segment information Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for allocating resources and assessing performance of the operating segments. (j) Critical accounting estimates and judgments in applying accounting policies The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, rarely equal the related actual results. To enhance the information content of the estimates, certain key variables that are anticipated to have material impact to the Fund s results and financial position are tested for sensitivity to changes in the underlying parameters. Estimates and judgment are continually evaluated by the PRS Provider and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In undertaking any of the Fund s investment, the PRS Provider will ensure that all assets of the Fund under management will be valued appropriately, that is at fair value and in compliance with the SC Guidelines on PRS. However, the PRS Provider is of the opinion that there are no accounting policies which require significant judgement to be exercised. 26

29 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT OBJECTIVES AND POLICIES Financial instruments of the Fund are as follows: Financial assets at fair value through profit or loss Loans and receivables Total RM RM RM 2018 Cash and cash equivalents (Note 8) - 412, ,576 Collective investment scheme (Note 7) 215,829, ,829,566 Amount due from the PRS Provider (Note 9) - 795, ,943 Dividends receivable - 1,907,797 1,907, ,829,566 3,116, ,945, Cash and cash equivalents (Note 8) - 30,756 30,756 Collective investment scheme (Note 7) 135,738, ,738,611 Amount due from the PRS Provider (Note 9) - 911, , ,738, , ,680,509 All current liabilities are financial liabilities which are carried at amortised cost. The investment objective of the Fund is to provide capital growth over the long-term by investing in a Target Fund with investments in the Asia Pacific ex Japan region. The Fund is exposed to a variety of risks which include market risk (inclusive of price risk), credit risk and liquidity risk. Financial risk management is carried out through internal control process adopted by the PRS Provider and adherence to the investment restrictions as stipulated in the Deeds and SC Guidelines on PRS. (a) Market risk (i) Price risk This is the risk that the fair value of investment in collective investment scheme will fluctuate because of changes in market prices. The value of investment may fluctuate according to the activities of individual companies, sector and overall political and economic conditions. Such fluctuation may cause the Fund s NAV and prices of units to fall as well as rise, and income produced by the Fund may also fluctuate. The price risk is managed through diversification and selection of collective investment scheme and other financial instruments within specified limits according to the Deeds. 27

30 3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) (a) Market risk (continued) (i) Price risk (continued) The Fund s overall exposure to price risk was as follows: RM RM Financial assets at fair value through profit or loss: - Collective investment scheme 215,829, ,738,611 The table below summarises the sensitivity of the Fund s profit or loss and NAV to movements in prices of collective investment scheme at the end of each financial year. The analysis is based on the assumptions that the price of the collective investment scheme fluctuates by 5% with all other variables held constant. This represents the PRS Provider s best estimate of a reasonable possible shift in the collective investment scheme, having regard to the historical volatility of the prices. % Change in price of collective investment scheme Market value Impact on profit or loss/nav RM RM % 205,038,088 (10,791,478) 0% 215,829,566-5% 226,621,044 10,791, % 128,951,680 (6,786,931) 0% 135,738,611-5% 142,525,542 6,786,931 (b) Credit risk Credit risk refers to the risk that a counter party will default on its contractual obligation resulting in financial loss to the Fund. The credit risk arising from cash and cash equivalents is managed by ensuring that the Fund will only place deposits in reputable licensed financial institutions. For amount due from the PRS Provider, the settlement terms of the proceeds from the creation of units receivable from the PRS Provider are governed by the SC Guidelines on PRS. 28