AmFAMILY TAKAFUL BERHAD V

Transcription

1 AmFAMILY TAKAFUL BERHAD V Directors' Report and Audited Financial Statements 31 March 2013

2 Contents Page Directors' report 1-13 Statement by directors 14 Statutory declaration 14 Independent auditors' report Report of the Shariah Committee Statements of comprehensive income Statements of financial position Statements of changes in equity 25 Statements of cash flows Notes to the financial statements

3 Directors' report The directors hereby present their report together with the audited financial statements of the Company for the financial year ended 31 March Principal activity The Company is principally engaged in managing family takaful business including group takaful and investment-linked business. There has been no significant change in the nature of these principal activities during the financial year. Results RM Net loss for the financial year (8,782,681) There were no material transfers to or from reserves or provisions during the financial year other than those disclosed in the financial statements. In the opinion of the directors, the results of the operations of the Company during the financial year were not substantially affected by any item, transaction or event of a material and unusual nature. Dividend No dividend has been paid or declared by the Company during the year. The directors do not recommend any dividend payment in respect of the current financial year. Issue of shares and debentures The Company has not issued any new shares or debentures during the financial year. Share options There were no options granted during the financial year by the Company to any parties to take up unissued shares of the Company. No shares have been issued during the financial year by virtue of the exercise of any option to take up unissued shares of the Company. As at the end of the financial year, there were no unissued shares of the Company under options. 1

4 Directors The names of the directors of the Company in office since the date of the last report and at the date of this report are: Tan Sri Azman Hashim (Chairman) (Non-independent, non-executive director) Datuk Lakshmanan Meyyappan (Independent, non-executive director) Datuk Wira (Dr.) Ameer Ali Bin Mydin (Independent, non-executive director) Mr Cho Horng Fatt (Independent, non-executive director) Datuk Mohamed Azmi Bin Mahmood (Non-independent, non-executive director) Mr John Van Der Wielen (Non-independent, non-executive director) Mr Tan Lai Hing (appointed on ) (Non-independent, non-executive director) Mr Loh Chen Peng (appointed on ) (Independent, non-executive director) Mr Cheah Tek Kuang (resigned on ) (Non-independent, non-executive director) Mr Richard Patrick George Duxbury (resigned on ) (Non-independent, non-executive director) Directors' benefits Neither at the end of the financial year, nor at any time during that year, did there subsist any arrangement to which the Company was a party, whereby the directors might acquire benefits by means of the acquisition of shares in or debentures of the Company or any other body corporate, other than those arising from the scheme shares and options granted pursuant to the Executives Share Scheme of AMMB Holdings Berhad, the ultimate holding Company. No director of the Company has received or become entitled to receive a benefit (other than benefits included in the aggregate amount of emoluments received or due and receivable by the directors as shown in Notes 10 and 25 to the financial statements) by reason of a contract made by the Company or a related corporation with any director or with a firm in which he is a member or with a company in which he has a substantial financial interest, except for the related party transactions as shown in Note 25 to the financial statements. 2

5 Directors' interests According to the Register of Directors' Shareholdings, the interests of the directors in office at the end of the financial year in shares and options in the ultimate holding company during the financial year are as follows: Direct interest: In the ultimate holding company, AMMB Holdings Berhad ( AMMB ) Number of ordinary shares of RM1.00 each ("shares") Shares Bought/ As at vested/ As at exercised Sold Cheah Tek Kuang 136, , , ,800 Datuk Mohamed Azmi Bin Mahmood 200, , , ,000 Number of shares pursuant to AMMB Executives' Share Scheme As at As at Scheme shares* Granted Vested Forfeited^ Cheah Tek Kuang 492, , ,500 8, ,000 Datuk Mohamed Azmi Bin Mahmood 237, , ,000 4, ,900 Number of shares pursuant to AMMB Executives' Share Scheme As at As at Shares under options* Granted Vested Forfeited^ Cheah Tek Kuang 558, ,300 49, ,300 Datuk Mohamed Azmi Bin Mahmood 312, ,100 26, ,400 3

6 Directors' interests (cont'd.) In the ultimate holding company, AMMB (cont'd.) Number of shares pursuant to AMMB Executives' Share Scheme Options* As at As at (vested account) Vested Exercised Cheah Tek Kuang - 281, ,300 - Datuk Mohamed Azmi Bin Mahmood 160, , , ,300 Notes: * ^ The vesting of the Scheme Shares and/or the entitlement to exercise the Options are conditional upon the satisfaction of the service condition and performance targets of AMMB Group, and all other conditions as set out in the By-Laws of AMMB Executives' Share Scheme. Forfeited due to non-vesting of Long Term Incentive award pursuant to the By-Laws of AMBB Executives' Share Scheme. Number of shares As at As at Shares Bought Sold Tan Sri Azman Amcorp 505,780,554 1,839,701 13,500,000 Hashim Group Berhad 494,120,255 By virtue of Tan Sri Azman Hashim s shareholding in the ultimate holding company, AMMB, through his interest in the corporate shareholder, Amcorp Group Berhad, he is deemed to have interests in the shares of the Company and its related corporations, to the extent the ultimate holding company has an interest. Other than as disclosed above, none of the other directors in office at the end of the financial year had any interest in shares of the Company or its related corporations during the financial year. 4

7 Corporate governance The Company has complied with all the prescriptive requirements of, and adopts management practices that are consistent with the principles prescribed under BNM's Guidelines, BNM/RH/GL/004-1 Guidelines on Directorship for Takaful Operators and BNM/RH/GL/003-2 Prudential Framework of Corporate Governance for Insurers. Board responsibilities The Board of Directors ( the Board ) remains fully committed in ensuring that the principles and best practices in corporate governance are observed in the Company. The Board supervises the management of the Company in business policies and affairs with the goal of enhancing shareholders value. The Board will meet regularly to carry out its duties and responsibilities, with additional Board meetings being convened, whenever required. The Board addresses key matters concerning strategy, finance, organisation structure, business development, human resource and establishes guidelines for overall business, risk and control policies, capital allocation as well as approves all key business developments. Board activities The Board currently comprises eight (8) directors with wide-ranging skills and experience. The Board is represented by four (4) non-independent, non-executive directors and four (4) independent, non-executive directors of calibre, and with necessary skills and diverse corporate experience to ensure that strategies proposed by the management are fully discussed and examined, as well as to take into account the long term interests of various stakeholders. During the year, the Board has met nine (9) times. All directors review Board reports prior to the Board meetings. The reports are issued with sufficient time to enable the directors to obtain further explanations, where necessary, before the meetings. 5

8 Corporate governance (cont'd.) Board activities (cont'd.) In addition, the Board decides on matters reserved specifically for its decision, including the approval of corporate plans and budgets, acquisitions and disposals of assets that are material to the Company, major investments, changes to the management and control structure of the Company, including key policies, procedures and authority limits. The Board has also adopted a policy for induction and education of directors. The program is to provide essential and comprehensive information to a new director in order for him to be familiar with relevant takaful industry regulatory requirements and the Company s nature of business. The directors may also request independent professional advice, at the Company s expense. The Company Secretary, to whom the directors have independent access, assists the Board and keeps it appraised of relevant laws and regulations. Membership and Board Meetings for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Tan Sri Azman Hashim (Chairman) 9 / 9 Datuk Lakshmanan Meyyappan 8 / 9 Datuk Wira (Dr.) Ameer Ali Bin Mydin 9 / 9 Mr Cho Horng Fatt 9 / 9 Datuk Mohamed Azmi Bin Mahmood 7 / 9 Mr John Van Der Wielen 7 / 9 Mr Tan Lai Hing (appointed on ) 4 / 5 Mr Loh Chen Peng (appointed on ) 5 / 5 Mr Cheah Tek Kuang (resigned on ) 7 / 9 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 Board Committees The Board delegates certain responsibilities to the Board Committees. The Committees which were set up to assist the Board in certain areas of deliberation are as follows: (1) Nomination Committee (2) Remuneration Committee (3) Risk Management Committee (4) Audit & Examination Committee (5) Investment Committee 6

9 Corporate governance (cont'd.) Board Committees (cont'd.) Nomination Committee The Nomination Committee comprises three (3) independent, non-executive directors and one (1) non-independent, non-executive director of the Board with mixed skills, experience and competencies for the effectiveness of the Committee. The functions of the Committee are to: (a) (b) (c) (d) recommend and assess the nominees for new appointments of directors, the various Board Committees membership as well as the nominees for the Chief Executive Officer ("CEO") position including assessing the directors and CEO proposed for reappointment, before an application for approval is submitted to BNM; establish minimum requirements for the Board and the CEO to perform their responsibilities effectively and review the overall composition of the Board in terms of appropriate size, structure, mix of skills and experience and other qualities and competencies, besides the balance between executive, non-executive and independent directors; establish a mechanism for formal assessment of the effectiveness of the Board, the contribution of the Board s various Committees and the performance of the CEO; and review the composition of the Board and Committees of the Board during the financial year and ensure that the recommendations have been implemented by the Board during the financial year. Membership and Meetings of the Nomination Committee for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Datuk Lakshmanan Meyyappan (Chairman) 6 / 6 Datuk Wira (Dr.) Ameer Ali Bin Mydin 6 / 6 Mr Cho Horng Fatt 6 / 6 Mr Tan Lai Hing (appointed on ) 1 / 2 Mr Cheah Tek Kuang (ceased as member w.e.f ) 5 / 6 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 7

10 Corporate governance (cont'd.) Board Committees (cont'd.) Remuneration Committee The Remuneration Committee comprises three (3) independent, non-executive directors and one (1) non-independent, non-executive director. The functions of the Committee are to: (a) determine and recommend to the Board the framework or broad policy for the remuneration of the directors, CEO, senior management and other members of the staff. The remuneration policy: (i) (ii) is documented and approved by the full Board and any changes thereto are subjected to the endorsement of the full Board; reflects the experience and level of responsibility borne by individual directors, the CEO and senior management; (iii) (iv) is sufficient to attract and retain directors, CEO and senior management of calibre needed to manage the Company successfully; and is balanced against the need to ensure that the funds of the Company are not used to subsidise excessive remuneration packages. (b) recommend specific remuneration packages for directors, CEO and senior management. The remuneration packages: (i) (ii) are based on an objective consideration and approval by the full Board; take due consideration of the assessments of the Nomination Committee of the effectiveness and contribution of the directors and CEO; (iii) are not decided by the exercise of sole discretion of any individual or restricted group of individuals; and (iv) are competitive and consistent with the Company s culture, objective and strategies. 8

11 Corporate governance (cont'd.) Board Committees (cont'd.) Remuneration Committee (cont'd.) (c) ensure the remuneration packages for directors are linked to their levels of responsibilities undertaken and contributions to the effective functioning of the Board. Membership and Meetings of the Remuneration Committee for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Datuk Wira (Dr.) Ameer Ali Bin Mydin (Chairman) 4 / 4 Datuk Lakshmanan Meyyappan 4 / 4 Mr Cho Horng Fatt 4 / 4 Mr Tan Lai Hing (appointed on ) 2 / 2 Mr Cheah Tek Kuang (ceased as member w.e.f ) 3 / 4 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 Risk Management Committee The Committee currently comprises three (3) independent, non-executive directors and two (2) non-independent, non-executive directors. The primary objective of the Risk Management Committee is to oversee senior management s activities in managing the key risk areas of the Company and to determine that the risk management process is in place and functioning effectively. The functions of the Committee are to: (a) (b) (c) (d) reviewing and recommending Risk Management strategies, policies and risk tolerance for the board s approval; 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; ensuring that adequate infrastructure, resources and systems are in place for an effective Risk Management i.e. ensuring that the staff responsible for implementing Risk Management systems perform those duties independently of the takaful operator s risk taking activities; and reviewing the investment portfolio s risk exposure and risk management activities and revise the investment policy and guidelines to ensure investment management activities conform to current risk appetite. 9

12 Corporate governance (cont'd.) Board Committees (cont'd.) Risk Management Committee (cont'd.) Membership and Meetings of the Risk Management Committee for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Mr Cho Horng Fatt (Chairman) 9 / 9 Datuk Lakshmanan Meyyappan 9 / 9 Datuk Wira (Dr.) Ameer Ali Bin Mydin 8 / 9 Datuk Mohamed Azmi Bin Mahmood 8 / 9 Mr Tan Lai Hing (appointed on ) 5 / 6 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 Audit and Examination Committee The Board has appointed the Audit and Examination Committee ( AEC ) to assist in discharging its duties of maintaining a sound system of internal control to safeguard the Company s assets and shareholders investments. The Committee currently comprises four (4) independent, nonexecutive directors and one (1) non-independent, non-executive director. The primary objective of the AEC is to provide assistance to and review and report to the Board in relation to: (i) (ii) fulfilling the statutory and fiduciary responsibilities of the Board; and monitoring of the accounting and financial reporting practices of the Company. The AEC also determines that the Company has adequate established policies, procedures and guidelines as well as operating and internal controls, and that they are being complied with and are operating effectively in promoting efficiency and proper conduct including protection of the assets of the Company. 10

13 Corporate governance (cont'd.) Board Committees (cont'd.) Audit and Examination Committee (cont'd.) Membership and Meetings of the Audit and Examination Committee for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Mr Loh Chen Peng (Chairman) (appointed on ) 2 / 2 Mr Cho Horng Fatt 4 / 4 Datuk Lakshmanan Meyyappan 3 / 4 Datuk Wira (Dr.) Ameer Ali Bin Mydin 3 / 4 Mr. Tan Lai Hing (appointed on ) 2 / 2 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 Investment Committee The Committee currently comprises one (1) independent, non-executive director and two (2) nonindependent, non-executive directors. The primary objective of the Investment Committee is to oversee Investment Management s activities in managing the investment funds of the takaful operator and that the risk management and compliance process are effective. The functions of the Committee are: (a) (b) (c) (d) reviewing the investment performances of the investment portfolio by the internal investment department and external fund managers; reviewing and recommending investment strategies within approved risk levels for the Committee s approval; presenting the investment outlook and strategies with regards to the various asset classes of all funds under management; and reviewing the risk management activities and the portfolio risk exposures. Membership and Meetings of the Investment Committee for the financial year ended 31 March 2013 Members Number of Meetings (Attended/Held) Datuk Mohamed Azmi Bin Mahmood (Chairman) 7 / 7 Datuk Lakshmanan Meyyappan 7 / 7 Mr Tan Lai Hing (appointed on ) 4 / 5 Mr Richard Patrick George Duxbury (resigned on ) 1 / 1 11

14 Corporate governance (cont'd.) Issuance of shares There were no changes in the authorised, issued and paid-up capital of the Company during the financial year. There were no debentures issued during the financial year. Other statutory information (a) Before the statement of comprehensive income and statement of financial position of the Company were made out, the directors took reasonable steps: (i) (ii) to ascertain that proper action had been taken in relation to the writing off of bad debts and the making of provision for doubtful debts and satisfied themselves that there were no known bad debts and that no provision for doubtful debts was required; and to ensure that any current assets which were unlikely to realise their values as shown in the accounting records in the ordinary course of business had been written down to an amount which they might be expected so to realise. (b) At the date of this report, the directors are not aware of any circumstances which would render: (i) (ii) it necessary to write off any bad debts or to make any provision for doubtful debts; and the values attributed to the current assets in the financial statements of the Company misleading. (c) (d) At the date of this report, the directors are not aware of any circumstances which have arisen which would render adherence to the existing method of valuation of assets or liabilities of the Company misleading or inappropriate. At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financial statements of the Company which would render any amount stated in the financial statements misleading. (e) At the date of this report, there does not exist: (i) (ii) any charge on the assets of the Company which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the Company which has arisen since the end of the financial year. 12

15 Corporate governance (cont'd.) Other statutory information (cont'd.) (f) In the opinion of the directors: (i) (ii) no contingent liability or other liability has become enforceable or is likely to become enforceable within the period of twelve months after the end of the financial year which will or may affect the ability of the Company to meet its obligations as and when they fall due; and no item, transaction or event of a material and unusual nature has arisen in the interval between the end of the financial year and the date of this report which is likely to affect substantially the results of the operations of the Company for the financial year in which this report is made. For the purpose of paragraphs (e)(ii) and (f)(i), contingent or other liabilities do not include liabilities arising from contracts of takaful underwritten in the ordinary course of business of the Company. (g) Before the statement of financial position and statement of comprehensive income of the Company were made out, the directors took reasonable steps to ascertain that there was adequate provision made for its takaful contract liabilities in accordance with the Guidelines issued by Bank Negara Malaysia. Significant event Details of the significant event during the financial year is disclosed in Note 31 to the financial statements. Auditors The auditors, Ernst & Young, have expressed their willingness to continue in office. Signed on behalf of the Board in accordance with a resolution of the directors. Tan Sri Azman Hashim Datuk Mohamed Azmi Bin Mahmood Kuala Lumpur, Malaysia Date: 30 May

16 Statement by directors Pursuant to Section 169(15) of the Companies Act, 1965 We, Tan Sri Azman Hashim and Datuk Mohamed Azmi Bin Mahmood, being two of the directors of, do hereby state that, in the opinion of the directors, the accompanying financial statements set out on pages 20 to 117 are properly drawn up in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia and in compliance with Shariah requirements so as to give a true and fair view of the financial position of the Company as at 31 March 2013 and of its financial performance and the cash flows for the financial year ended 31 March Signed on behalf of the Board in accordance with a resolution of the directors Tan Sri Azman Hashim Datuk Mohamed Azmi Bin Mahmood Kuala Lumpur, Malaysia Date: 30 May 2013 Statutory declaration Pursuant to Section 169(16) of the Companies Act, 1965 I, Wan Zamri Wan Zain, being the officer primarily responsible for the financial management of, do solemnly and sincerely declare that the accompanying financial statements set out on pages 20 to 117 are in my opinion correct, and I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the ) abovenamed Wan Zamri Wan Zain ) at Kuala Lumpur in Wilayah Persekutuan ) on 30 May 2013 ) Wan Zamri Wan Zain Before me, 14

17 Independent auditors' report to the member of Report on the financial statements We have audited the financial statements of, which comprise the statement of financial position as at 31 March 2013 of the Company, and the statement of comprehensive income, statement of changes in equity and statement of cash flows of the Company for the year then ended, and a summary of significant accounting policies and other explanatory notes, as set out on pages 20 to 117. Directors responsibility for the financial statements The directors of the Company are responsible for the preparation of financial statements that give a true and fair view in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. The directors are also responsible for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with approved standards on auditing in Malaysia. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the Company s preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company s internal control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. 15

18 Independent auditors' report to the member of (cont'd.) Opinion In our opinion, the financial statements give a true and fair view of the financial position of the Company as at 31 March 2013 and of its financial performance and cash flows for year ended 31 March 2013 in accordance with Malaysian Financial Reporting Standards, International Financial Reporting Standards and the requirements of the Companies Act, 1965 in Malaysia. Report on other legal and regulatory requirements In accordance with the requirements of the Companies Act 1965 in Malaysia, we also report that in our opinion, the accounting and other records and the registers required by the Act to be kept by the Company have been properly kept in accordance with the provisions of the Act. Other matters This report is made solely to the member of the Company, as a body, in accordance with Section 174 of the Companies Act 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Brandon Bruce Sta Maria No. 2937/09/13 (J) Chartered Accountant Kuala Lumpur, Malaysia Date: 30 May

19 Report of the Shariah Committee Shariah committee The Company is advised by a Shariah Committee, whose composition since the date of incorporation and at the date of this report are as follows: Assoc. Prof. Dr. Azman Mohd Noor Assoc. Prof. Dr. Amir Husin Mohd Nor Assoc. Prof. Datin Dr. Noor Naemah Abd Rahman Assoc. Prof. Dr. Nurdianawati Irwani Abdullah Dr. Adnan Yusoff The main duties and responsibilities of the Shariah Committee are to: (a) advise the Board on Shariah matters; (b) (c) provide input to the Company on Shariah matters in order for the Company to comply with Shariah principles at all times; endorse Shariah policies and procedures prepared by the Company and to ensure that the contents do not contain any elements which are not in line with Shariah; (d) ensure that the products of the Company comply with Shariah principles; (e) (f) (g) (h) assess the work carried out by Shariah review and Shariah audit in order to ensure compliance with Shariah matters; provide assessment of Shariah compliance and assurance information in the annual report; provide necessary assistance to the related parties in the Company on Shariah matters; and act as focal point/contact of reference in relation to any Shariah issues referred to the Shariah Advisory Council of Bank Negara Malaysia. The Shariah Committee will meet at minimum six (6) times a year. The Shariah Committee met nine (9) times during the financial year. The attendance of members at the Shariah Committee meetings is as follows: Name Number of Meetings (Attended/Held) Assoc. Prof. Dr. Azman Mohd Noor (Chairman) 9 / 9 Assoc. Prof. Dr. Amir Husin Mohd Nor 8 / 9 Assoc. Prof. Datin Dr. Noor Naemah Abd Rahman 9 / 9 Assoc. Prof. Dr. Nurdianawati Irwani Abdullah 9 / 9 Dr. Adnan Yusoff 6 / 9 17

20 Report of the Shariah Committee (cont'd.) Statement by the Shariah Committee In the name of Allah, the most Beneficent, the most Merciful. Praise to Allah, the Lord of the Worlds and peace and blessings be upon our Prophet Muhammad, and on his family members and companions. Assalamualaikum Wa Rahmatullahi Wabarakatuh. In compliance with the Shariah Committee Terms of Reference of we are required to submit the following report: We have reviewed the policies, products and contracts relating to the transactions and applications executed by during the financial year ended 31 March We have also conducted our review to form an opinion as to whether AmFamily Takaful Berhad has complied with Shariah rules and principles and also with the Shariah resolutions issued by us. s Management is responsible for ensuring that AmFamily Takaful Berhad conducts its business in accordance with Shariah rules and principles. It is our responsibility to form our independent opinion, based on our review of the operations of AmFamily Takaful Berhad and to report to you. We conducted our review which included examining, on a test basis, each type of transaction, the relevant documents and procedures adopted by. We planned and performed our view so as to obtain all the information and explanations which we consider necessary in order to provide us with sufficient evidence to give reasonable assurance that has not violated the Shariah rules and principles. In our opinion: (a) (b) the contracts, transactions and dealings entered into by during the financial year ended 31 March 2013 that we have reviewed are in compliance with Shariah rules and principles; and the allocation of fees or amount relating to investment fund and risk fund accounts conform to the bases that have been approved by us in accordance with Shariah rules and principles. This opinion is rendered based on what has been presented to us by the Management of and its Shariah Department. We pray to Allah the Almighty to grant us success and the path of straight-forwardness. Wassalamualaikum Wa Rahmatullahi Wabarakatuh. 18

21 Report of the Shariah Committee (cont'd.) Statement by the Shariah Committee (cont'd.) Signed by the Shariah Committee, Assoc. Prof. Dr. Azman Mohd Noor Chairman Assoc. Prof. Datin Dr. Noor Naemah Abdul Rahman Member Assoc. Prof. Dr. Amir Husin Mohd Nor Member Assoc. Prof. Dr. Nurdianawati Irwani Abdullah Member Dr. Adnan Yusoff Member Kuala Lumpur, Malaysia Date: 30 May

22 Statement of comprehensive income for the year ended 31 March to to Family Family Note Takaful takaful Takaful takaful operator fund Company operator fund Company RM RM RM RM RM RM Operating revenue 4 14,904,889 41,159,626 44,302, ,809 10,301,974 1,153,217 Gross contributions - 38,461,257 38,461, , ,502 Net creation of units - 1,996,928 1,996,928-10,000,000 - Contributions ceded to retakaful operator - (780,450) (780,450) - (1,206) (1,206) Net contributions 5-39,677,735 39,677,735-10,287, ,296 Investment income 6 3,142, ,441 3,844, ,243 13, ,715 Realised gains 7 157, , , Fair value gain/(loss) on financial assets at FVTPL - 325, ,603 - (88,772) (11,949) Fee and commission income 8 11,762, , Other operating income 9 160,886-35, Other revenue 15,223,211 1,242,528 4,501, ,809 (75,300) 852,766 Gross benefits and claims paid - (468,042) (468,042) Claims ceded to retakaful - 202, , Gross change to certificate liabilities - (28,974,280) (28,897,457) - (10,141,426) (218,249) Change in certificate liabilities ceded to retakaful operator - 147, ,486-1,206 1,206 Net benefits and claims - (29,092,476) (29,015,653) - (10,140,220) (217,043) 20

23 Statement of comprehensive income for the year ended 31 March 2013 (cont'd.) to to Family Family Note Takaful takaful Takaful takaful operator fund Company operator fund Company RM RM RM RM RM RM Fee and commission expenses 8 (4,029,243) (11,762,038) (4,029,243) (28,860) (86,566) (28,860) Management expenses 10 (16,115,090) - (16,115,090) (11,274,092) - (11,274,092) Change in expense liabilities 18 (3,725,000) - (3,725,000) (675,000) - (675,000) Other operating expenses 9 (84,522) (153,576) (112,706) - (1,718) (1,718) Other expenses (23,953,855) (11,915,614) (23,982,039) (11,977,952) (88,284) (11,979,670) Operating loss (8,730,644) (87,827) (8,818,471) (11,040,143) (16,508) (11,056,651) Transfer of surplus to participants fund 17 - (246,825) (246,825) Loss before taxation (8,730,644) (334,652) (9,065,296) (11,040,143) (16,508) (11,056,651) Taxation ,381 (78,766) 282,615 - (1,077) (1,077) Net loss for the year / period (8,369,263) (413,418) (8,782,681) (11,040,143) (17,585) (11,057,728) Loss per share (sen) - Basic 23 (0.09) (44.96) The accompanying notes form an integral part of the financial statements. 21

24 Statement of comprehensive income for the year ended 31 March 2013 (cont'd.) to to Family Family Note Takaful takaful Takaful takaful operator fund Company operator fund Company RM RM RM RM RM RM Net loss for the year / period (cont'd.) (8,369,263) (413,418) (8,782,681) (11,040,143) (17,585) (11,057,728) Other comprehensive income: Available-for-sale fair value reserve: Gain/(loss) on fair value changes 1,896,716-1,364,939 (293,756) - (370,579) Realised gain transferred to income statement (157,436) - (157,436) Deferred tax relating to components of other comprehensive income 19 (361,381) - (361,381) Other comprehensive income for the year/period, net of tax 1,377, ,122 (293,756) - (370,579) Total comprehensive loss for the year/period (6,991,364) (413,418) (7,936,559) (11,333,899) (17,585) (11,428,307) The accompanying notes form an integral part of the financial statements. 22

25 Statement of financial position as at 31 March 2013 As at As at Family Family Note Takaful takaful Takaful takaful operator fund Company operator fund Company RM RM RM RM RM RM Assets Motor vehicle and equipment , ,784 30,149-30,149 Investments 13 89,028,738 38,640, ,060,573 91,622,183 9,893,714 91,515,897 Takaful receivables 14-1,654 1, Retakaful assets , ,052-1,206 1,206 Other receivables 16 1,375,918 1,475,980 1,952,865 2,509,775 28,661 2,490,295 Cash and cash equivalents 43,000 2,897,677 2,940,677 29, , ,189 Total assets 90,766,440 43,366, ,625,605 94,191,246 10,198,631 94,341,736 Liabilities and equity Liabilities Participants' fund , , Takaful certificate liabilities 15-39,391,918 29,391,918-10,141, ,249 Expense liabilities 18 4,400,000-4,400, , ,000 Deferred tax liabilities 19-19,125 19, Takaful payables 20 41,427 2,803,447 2,844,874-25,338 25,338 Other payables 21 4,650, ,690 5,025,936 4,850,145 30,790 4,850,379 Provision for taxation - 59,812 59,812-1,077 1,077 Total liabilities 9,091,703 43,366,798 41,990,471 5,525,145 10,198,631 5,770,043 23

26 Statements of financial position as at 31 March 2013 (cont'd.) As at As at Family Family Note Takaful takaful Takaful takaful operator fund Company operator fund Company RM RM RM RM RM RM Equity Share capital ,000, ,000, ,000, ,000,000 Available-for-sale fair value reserves 1,084, ,543 (293,756) - (370,579) Accumulated losses (19,409,406) - (19,840,409) (11,040,143) - (11,057,728) Total equity attributable to owners of the Company 81,674,737-80,635,134 88,666,101-88,571,693 Total liabilities and equity 90,766,440 43,366, ,625,605 94,191,246 10,198,631 94,341,736 The accompanying notes form an integral part of the financial statements. 24

27 Statement of changes in equity for the year ended 31 March 2013 Non-distributable Availablefor-sale Share fair value Accumulated capital reserves losses Total equity RM RM RM RM At date of incorporation on 26 January 2011 Increase during the 99,999, ,999,990 period (Note 22) Total comprehensive loss for the period - (370,579) (11,057,728) (11,428,307) At 31 March ,000,000 (370,579) (11,057,728) 88,571,693 At 1 April ,000,000 (370,579) (11,057,728) 88,571,693 Total comprehensive loss for the year - 846,122 (8,782,681) (7,936,559) At 31 March ,000, ,543 (19,840,409) 80,635,134 The accompanying notes form an integral part of the financial statements. 25

28 Statement of cash flows for the year ended 31 March to to RM RM Cash flows from operating activities Loss before taxation (9,065,296) (11,056,651) Adjustments for: Depreciation of motor vehicle and equipment 101,488 5,673 Impairment of motor vehicle 75,787 - Net amortisation of premiums on investments 41, Profit on investment accounts (3,773,431) (865,419) Gross dividend income (112,105) Gains on disposal of AFS financial assets (157,436) - Gain on disposal of financial assets at FVTPL (215,661) - Fair value (gain)/loss on financial assets at FVTPL (248,603) 11,949 Increase in expense liabilities 3,725, ,000 Operating loss before working capital changes (9,629,013) (11,228,744) Decrease/(increase) in placements and deposits 16,302,806 (66,891,277) Proceeds from disposal of investments 369,445 - Purchase of other investments (40,428,970) (25,007,852) Increase in takaful receivables (1,654) - Decrease/(increase) in other receivables 889,909 (2,287,129) Increase in takaful payables 2,819,536 25,338 Increase in other payables 175,557 4,850,379 Increase in participants' fund 248,982 - Increase in takaful certificate liabilities 28,823, ,043 (429,579) (100,322,242) Profit income received 3,420, ,253 Gross dividend income received 112,105 - Taxation paid (1,077) - Net cash flow generated from/(used in) operating activities 3,102,398 (99,659,989) Cash flows from investing activity Purchase of motor vehicle and equipment, representing net cash flow used in investing activity (465,910) (35,822) 26

29 Statement of cash flows for the year ended 31 March 2013 (cont'd.) to to RM RM Cash flows from financing activity Issuance of ordinary shares, representing net cash flow generated from financing activity - 99,999,990 Net increase in cash and cash equivalents 2,636, ,179 Cash and cash equivalents at beginning of the year/ date of incorporation 304, ,940, ,189 Cash and cash equivalents comprise: Cash and bank balances of: Takaful operator 43,000 29,139 Family takaful fund 2,897, ,050 2,940, ,189 The accompanying notes form an integral part of the financial statements. 27

30 Notes to the financial statements - 31 March Corporate information The Company is principally engaged in the activity of managing family takaful business including group takaful and investment-linked business. There has been no significant change in the nature of this principal activity during the financial year. The Company is a public limited liability company, incorporated on 26 January 2011 under the Companies Act 1965 and Takaful Act 1984 and domiciled in Malaysia. The registered office and principal place of business of the Company are located at 22nd Floor, Bangunan AmBank Group, No. 55 Jalan Raja Chulan, Kuala Lumpur and 12th Floor, Bangunan AmAssurance, No. 1 Jalan Lumut, Kuala Lumpur respectively. The immediate holding company is AMAB Holdings Sdn. Bhd, a company incorporated in Malaysia. The ultimate holding company is AMMB Holdings Berhad ("AMMB") a public listed company incorporated in Malaysia and listed on Main Market of Bursa Malaysia. The financial statements were authorised for issue by the Board of Directors in accordance with a resolution of the directors on 30 May Significant accounting policies 2.1 Basis of preparation The financial statements of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS"), International Financial Reporting Standards ("IFRS") and the requirements of the Companies Act, 1965 in Malaysia. In the previous financial period, the financial statements of the Company were prepared in accordance with Financial Reporting Standards ("FRS") in Malaysia as modified by Bank Negara Malaysia ("BNM") Guidelines. These are the Company first annual financial statements prepared in accordance with MFRS. The financial statements of the Company have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. The financial statements are presented in Ringgit Malaysia ("RM"), which is the Company's functional currency, and all values are rounded to the nearest Ringgit Malaysia (RM). 28

31 2. Significant accounting policies (cont'd.) 2.1 Basis of preparation (cont'd.) In preparing the Company-level financial statements, the balances and transactions of the takaful operator fund are amalgamated and combined with those of the family takaful fund. Interfund balances, transactions and unrealised gains and losses are eliminated in full during amalgamation. The accounting policies adopted for the takaful operator and family takaful fund are uniform for like transactions and events in similar circumstances. The family takaful fund is consolidated and amalgamated from the date of control and continue to be consolidated until the date such control ceases which will occur when the Company's license to manage takaful business is withdrawn or surrendered. Takaful operators and its funds Under the concept of takaful, individuals make contributions to a pool which is managed by a third party with the overall aim of using the monies to aid fellow participants in times of need. Accordingly, as a takaful operator, the Company manages the family takaful fund in line with the principles of Wakalah (agency), which is the business model used by the Company. Under the Wakalah model, the takaful operator is not a participant in the fund but manages the fund (including the relevant assets and liabilities) towards the purpose outlined above. In accordance with the Takaful Act 1984, the assets and liabilities of the family takaful fund are segregated from those of the takaful operator: a concept known as segregation of funds. Accordingly, in prior year, the financial statements of the takaful operator presented separate statements of financial position, income statements and statements of comprehensive income for the family takaful fund to clearly segregate the assets, liabilities, income and expenses of the takaful operator from those of the family takaful fund which it manages but does not own. This was a modification to Financial Reporting Standards by Bank Negara Malaysia as permitted uder Section 41 of the Takaful Act 1984 in Malaysia. Effective this year, in full compliance with MFRS 127 Consolidated and Separate Financial Statements, the assets, liabilities, income and expenses of the family takaful fund are consolidated with those of the takaful operator to represent the control possessed by the operator over the financial and operating policies of the fund. Upon consolidation, the related interfund balances and transactions are eliminated in full. The inclusion of separate financial information of the family takaful fund and the takaful operator together with the consolidated financial information of the Company in the statement of financial position and the statement of comprehensive income as well as certain relevant notes to the financial statements represents additional supplementary information required for purposes of complying with Bank Negara Malaysia reporting requirements. 29

32 2. Significant accounting policies (cont'd.) 2.2 Motor vehicle, equipment and depreciation (a) Recognition and measurement All items are initially recorded at cost. The cost of an item is recognised as an asset if, and only if, it is probable that future economic benefits associated with the item will flow to the Company and the cost of the item can be measured reliably. Only assets costing above RM500 per unit will be capitalised. Assets costing RM500 and below per unit are charged to the income statement in the year of purchase. On disposal, the difference between net proceeds and the carrying amount is recognised in the income statement. (b) Subsequent costs Subsequent to initial recognition, assets are measured at cost less accumulated depreciation and accumulated impairment losses. When significant parts of assets are required to be replaced in intervals, the Company recognises such parts as individual assets with specific useful lives and depreciation, respectively. All other repairs and maintenance are recognised in the income statement as incurred. (c) Depreciation Depreciation is provided for on a straight-line basis to write off the cost of each asset to its residual value over its estimated useful life, at the following annual rate: Motor vehicle 20% Office equipment 20% The residual values, useful life and depreciation method are reviewed at each financial year end to ensure that the amount, method and year of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the assets. 30

33 2. Significant accounting policies (cont'd.) 2.3 Leases (a) Classification A lease is recognised as a finance lease if it transfers substantially to the Company all the risks and rewards incidental to ownership. All leases that do not transfer substantially all the risks and rewards are classified as operating leases. (b) Operating leases - company as lessee Operating lease payments are recognised as an expense in the income statement on a straight-line basis over the term of the relevant lease. The aggregate benefit of incentives provided by the lessor is recognised as a reduction of rental expense over the lease term on a straight-line basis. 2.4 Financial assets (a) Initial recognition Financial assets are recognised in the financial statements when, and only when, the Company and the family takaful fund become a party to the contractual provisions of the financial instrument. A financial asset is recognised initially, at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. (b) Classification and subsequent measurement The Company determines the classification of its financial assets at initial recognition and this depends on the purpose for which the financial assets were acquired or originated. The Company classifies its financial assets into the following measurement categories: (i) Financial assets held at fair value through profit or loss ("FVTPL") This category comprises two sub-categories: financial assets held for trading and those designated by Management as at fair value through profit or loss on inception. 31

34 2. Significant accounting policies (cont'd.) 2.4 Financial assets (cont'd.) (b) Classification and subsequent measurement (cont'd.) (i) Financial assets held at fair value through profit or loss ("FVTPL") (cont'd.) (1) Financial assets held for trading ("HFT") A financial asset is classified as held for trading if it is acquired principally for the purpose of selling it in the near term. (2) Financial assets designated at fair value through profit or loss Financial assets may be designated at fair value through profit or loss when the following criteria are met, and designation is determined on an instrument by instrument basis: the application of the fair value option eliminates or significantly reduces a measurement or recognition inconsistency that would otherwise arise from measuring assets on a different basis; or the financial assets are part of a portfolio of financial instruments which is managed and its performance evaluated on a fair value basis; or the assets include embedded derivatives and such derivatives are required to be recognised separately. Financial assets held at fair value through profit or loss are subsequently carried at fair value, with gains and losses arising from changes in fair value recognised in profit or loss. Net gains or net losses on financial assets at fair value through profit or loss do not include exchange differences, profit and dividend income. Exchange differences, profit and dividend income on financial assets at fair value through profit or loss are recognised separately in the income statement as part of other losses or other income. 32

35 2. Significant accounting policies (cont'd.) 2.4 Financial assets (cont'd.) (b) Classification and subsequent measurement (cont'd.) (ii) Held-to-maturity investments ("HTM") Financial assets with fixed or determinable payments and fixed maturity are classified as HTM when the Company has the positive intention and ability to hold the investment to maturity. Subsequent to initial recognition, HTM investments are measured at amortised cost using the effective profit method. Gains and losses are recognised in the income statement when the HTM investments are derecognised or impaired, and through the amortisation process. (iii) Loans and receivables ("LAR") Financial assets with fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Subsequent to initial recognition, loans and receivables are measured at amortised cost using the effective profit method. Gains and losses are recognised in the income statement when the loans and receivables are derecognised or impaired, and through the amortisation process. (iv) Available-for-sale financial assets ("AFS") AFS financial assets are financial assets that are designated as available for sale or are not classified in any of the three preceding categories. After initial recognition, AFS financial assets are measured at fair value. Any gains or losses from changes in fair value of the financial asset are recognised in other comprehensive income, except that impairment losses, foreign exchange gains and losses on monetary instruments and profit calculated using the effective profit method are recognised in the income statement. The cumulative gain or loss previously recognised in other comprehensive income are reclassified to the income statement as a reclassification adjustment when the financial asset is derecognised. Profit calculated using the effective profit method is recognised in the income statement. Investments in equity instruments whose fair value cannot be reliably measured are measured at cost less impairment loss. 33