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593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Contents Page
Directors' report 1 - 9
Statement by directors 10
Statutory declaration 10
Independent auditors' report 11 - 12
Report of the shariah committee 13
Statement of comprehensive income 14 - 15
Statement of financial position 16 - 17
Statement of changes in equity 18
General takaful fund statement of comprehensive income 19 - 20
General takaful fund statement of financial position 21
Family takaful fund statement of comprehensive income 22 - 23
Family takaful fund statement of financial position 24
Cash flows statement 25 - 26
Notes to the financial statements 27 - 148
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Directors' report
Principal activities
Results
RM'000
Net profit for the year 8,941
Dividends
Reserves and provisions
Provision for outstanding claims
Before the statement of comprehensive income and statement of financial position were made
out, the directors took reasonable steps to ascertain that there was adequate provision for claims
reported, claims incurred but not enough reserved ("IBNER"), claims incurred but not reported
(“IBNR”) and the actuarial valuation of family takaful liabilities.
The directors have pleasure in submitting their report together with the audited financial
statements of the Company for the financial year ended 31 March 2011.
The Company is engaged principally in the managing of general, family and investment-linked
takaful businesses.
There have been no significant changes in the nature of these activities during the financial year.
No dividend has been paid or declared by the Company since the end of the previous financial
year. The directors do not recommend the payment of any final dividend in respect of the current
financial year.
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 financialThere were no material transfers to or from reserves or provisions during the financial year.
1
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Bad and doubtful debts
Current assets
Valuation methods
Contingent and other liabilities
At the date of this report, there did not exist:
(a)
(b)
Before the statement of comprehensive income and statement of financial position were made
out, the directors took reasonable steps to ascertain that action had been taken in relation to the
writing off of bad debts and the making of allowance for doubtful debts and satisfied themselves
that there were no known bad debts and that adequate allowance had been made for doubtful
debts.
At the date of this report, the directors were not aware of any circumstances which would render
the amount of allowance for doubtful debts in the financial statements of the Company
inadequate to any substantial extent.
Before the statement of comprehensive income and statement of financial position were made
out, the directors took reasonable steps to ensure that any current assets which were unlikely to
realise their values as shown in the accounting records of the Company in the ordinary course of
business had been written down to an amount which they might be expected so to realise.
At the date of this report, the directors were not aware of any circumstances which would render
the values attributed to current assets in the financial statements of the Company misleading.
At the date of this report, the directors were not aware of any circumstances which had arisen
which would render adherence to the existing method of valuation of assets or liabilities of the
Company misleading or inappropriate.
any charge on the assets of the Company which had arisen since the end of the financial
year which secures the liabilities of any other person; or
any contingent liability of the Company which had arisen since the end of the financial year
other than those arising in the ordinary course of business of the Company.
No contingent or other liability had become enforceable or is likely to become enforceable within
the period of twelve months after the end of the financial year which, in the opinion of the
directors, will or may substantially affect the ability of the Company to meet its obligations as and
when they fall due.
For the purpose of this paragraph, contingent or other liabilities do not include liabilities arising
from contracts of takaful effected/underwritten in the ordinary course of business of the
Company.
2
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Change of circumstances
Items of an unusual nature
Corporate governance
The Company had complied with all the prescriptive requirements of, and adopts management
practices that are consistent with the principles prescribed under BNM/RH/GL/003-1: Minimum
Standards for Prudential Management of Insurers (Consolidated) and BNM/RH/GL/003-2
Prudential Framework of Corporate Governance for Insurers issued by Bank Negara Malaysia,
and the principles of Shariah.
The Board of Directors ("the Board") is committed in ensuring the highest standards of corporate
governance is practised by the Company. This is a fundamental part in discharging their
responsibilities to protect and enhance stakeholders' value and the financial performance of the
Company.
At the date of this report, the directors were 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.
The results of the operations of the Company during the financial year were not, in the opinion of
the directors, substantially affected by any item, transaction or event of a material and unusual
nature, other than those arising from the adoption of FRS 4 : Insurance Contracts as disclosed in
Note 2.27 of the financial statements.
There had not arisen in the interval between the end of the financial year and the date of this
report any item, transaction or event of a material and unusual nature likely, in the opinion of the
directors, to affect substantially the results of the operations of the Company for the financial
year in which this report was made.
3
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Directors
The directors who served since the date of the last report and at the date of this report are:
Encik Sharkawi bin Alis - Chairman
Y. Bhg. Dato' Haji Syed Moheeb bin Syed Kamarulzaman - President/CEO
Y. Bhg. Dato' Haji Othman bin Hashim
Tuan Haji Halim bin Haji Din
Encik Paisol bin Ahmad
Encik Yahaya bin Besah
Dr Syed Musa Syed bin Syed Jaafar Alhabshi
Tuan Haji Anuar bin Mohd. Hassan (retired on 31 March 2011)
Tuan Haji Yusoff bin Yaacob (resigned on 30 December 2010)
Directors’ benefits
Directors’ interests
1 April 31 March
2010 Acquired Sold 2011
Direct Interest:
Tuan Haji Anuar bin Mohd.
Hassan 300,000 - - 300,000
Number of ordinary shares of RM1.00 each
During and at the end of the financial year, no arrangement subsisted to which the Company is a
party with the object of enabling directors of the Company to acquire benefits by means of the
acquisition of shares in or debentures of the Company or any other corporate body.
Since the end of the previous financial year, no director has received or become entitled to
receive a benefit (other than benefits included in the aggregate amount of emoluments received
or due and receivable by the directors, or the fixed salary and benefits receivable as a full time
employee of the Company as disclosed in Notes 11, 12 and 34 to the financial statements as well
as the fixed salary and benefits receivable as a full-time employee of the Company) by reason of
a contract made by the Company or a related corporation with any director or with a firm of which
he is a member, or with a company in which he has a substantial financial interest.
According to the register of directors' shareholdings, the interest of a director in office at the end
of the financial year in shares in the holding company during the financial year were as follows:
In accordance with Article 96A of the Articles of Association of the Company, Encik Paisol bin
Ahmad and Tuan Haji Halim Haji Din retire by rotation and, being eligible, offer themselves for re-
election.
Other than as stated above, none of the other directors in office at the end of the financial year
had any interest in shares in the Company or its related corporations during the financial year.
4
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Board of directors
Directors Attendance
Encik Sharkawi bin Alis - Chairman 8/8
Non-independent, non-executive director
Y. Bhg. Dato' Haji Syed Moheeb bin Syed Kamarulzaman 8/8
Non-independent, executive director
Encik Paisol bin Ahmad 8/8
Non-independent non-executive director
Y. Bhg. Dato' Haji Othman bin Hashim 8/8
Independent non-executive director
Tuan Haji Halim bin Haji Din 8/8
Independent non-executive director
Encik Yahaya bin Besah 7/8
Independent non-executive director
Dr Syed Musa Syed bin Syed Jaafar Alhabshi 7/8
Independent non-executive director
Tuan Haji Anuar bin Mohd. Hassan (retired on 31 March 2011) 8/8
Non-independent, non-executive director
Tuan Haji Yusoff bin Yaacob (resigned on 30 December 2010) 6/6
Independent non-executive director
The Board presently has 7 members, comprising 4 independent non-executive directors, 2 non-
independent non-executive directors and a non-independent executive director. Together the
directors bring a wide range of business, financial and management experience relevant in
charting the strategic direction of the Company.
During the financial year, 8 Board meetings were held. Details of the Directors' attendance at the
Board meetings during the financial year are disclosed hereunder:
The Board has delegated specific responsibilities to the Audit, Nomination, Remuneration,
Investment and Risk Management Committees of the Board.
5
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Audit Committee
Directors Attendance
Tuan Haji Halim bin Haji Din - Chairman 6/6
Y. Bhg. Dato' Haji Othman bin Hashim 6/6
Encik Paisol bin Ahmad 6/6
Encik Yahaya bin Besah 6/6
Dr Syed Musa Syed bin Syed Jaafar Alhabshi 5/6
Tuan Haji Yusoff bin Yaacob (resigned on 30 December 2010) 4/4
Nomination Committee
During the financial year, 6 meetings were held. Details of the members of the Committee's
attendance at the meetings held during the financial year are disclosed hereunder:
The Nomination Committee comprises 3 independent non-executive directors and 1 non-
independent non-executive directors.
The primary objective of this Committee is to establish a documented, formal and transparent
procedure for the appointment of directors, principal officer and key senior officers and to assess
the effectiveness of directors, the Board as a whole and the various committees of the Board, the
principal officer and key senior officers.
The Audit Committee comprises 4 independent non-executive directors and 1 non-independent
non-executive director whereby 2 members of the Committee are qualified accountants and
members of the Malaysian Institute of Accountants.
The terms of reference of the Audit Committee include the review of and deliberation of the
Company's financial statements, findings of the External and Internal Auditors, any related party
transactions and any conflict of interest situation within the Company as well as making
recommendation to the Board on appointment/reappointment of External Auditors.
The Committee's primary duties are as spelt out in BNM/RH/GL/003-22 : Guidelines on Audit
Committee and Internal Audit Department (Part A) and BNM/RH/GL 013-4 : Guidelines on
Internal Audit Function of Licensed Institutions issued by BNM.
The Board comprises 6 non-executive directors to enable a balanced and objectiveWhilst the Board is responsible for creating the framework and policies within which theAll material related party transactions have been disclosed in Note XX to the financialThe Board exercises overall responsibility for the Company internal controls and itsThe Board takes responsibility in establishing the Risk Management Committee ("RMC"). TheThe proposed risk management framework for the Company would comprise three mainThe Board also takes responsibility in establishing the Nomination and RemunerationThe Remuneration Committee, on the other hand, is responsible to provide a formal andAs custodian of public funds, the Company’s dealings with the public are always conductedThe Board takes responsibility for presenting a balanced and comprehensive assessment of the
6
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Nomination Committee (cont'd.)
Directors Attendance
Dr Syed Musa Syed bin Syed Jaafar Alhabshi - Chairman (appointed
on 17 January 2011) N/A*
Tuan Haji Halim bin Haji Din 4/4
Y. Bhg. Dato' Haji Othman bin Hashim 4/4
Encik Sharkawi bin Alis 4/4
Tuan Haji Anuar bin Mohd. Hassan (retired on 31 March 2011) 4/4
Tuan Haji Yusoff bin Yaacob - Chairman (resigned on 30 December 2010) 3/3
* There has been no further meetings held since the date of appointment.
Remuneration Committee
Directors Attendance
Encik Yahaya Besah - Chairman 3/3
Y. Bhg. Dato' Haji Othman bin Hashim 3/3
Tuan Haji Halim bin Haji Din 3/3
En Paisol bin Ahmad 3/3
Tuan Haji Anuar bin Mohd. Hassan (retired on 31 March 2011) 3/3
During the financial year, 4 meetings were held. Details of the members of the Committee's
attendance at the meetings held during the financial year are disclosed hereunder:
The Remuneration Committee comprises 3 independent non-executive directors and 1 non-
independent non-executive directors.
The primary objective of the Committee is to provide a formal and transparent procedure for
developing a remuneration policy for directors, principal officer and key senior officers and
ensuring that their compensation is competitive and consistent with the Company's culture,
objectives and strategy.
During the financial year, 3 meetings were held. Details of the members of the Committee's
attendance at the meetings held during the financial year are disclosed hereunder:
Chairman:This Committee considers and evaluates the appointment of new Directors of the Company andThe Remuneration Committee comprises two independent, non-executive directors and three
7
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Investment Committee
Directors Attendance
Encik Paisol bin Ahmad - Chairman (appointed on 25th May 2011) 4/4
Y. Bhg. Dato' Haji Syed Moheeb bin Syed Kamarulzaman 4/4
Dr Syed Musa Syed bin Syed Jaafar Alhabshi 2/4
Tuan Haji Anuar bin Mohd. Hassan - Chairman (retired on 31 March 2011) 4/4
Tuan Haji Yusoff bin Yaacob (resigned on 30 December 2010) 3/3
Risk Management Committee
Directors Attendance
Y. Bhg. Dato' Haji Othman bin Hashim - Chairman 6/6
Encik Paisol bin Ahmad 6/6
En Yahaya bin Besah 6/6
Dr Syed Musa Syed bin Syed Jaafar Alhabshi 6/6
Tuan Haji Anuar bin Mohd. Hassan (retired on 31 March 2011) 6/6
Tuan Haji Yusoff bin Yaacob (resigned on 30 December 2010) 5/5
During the financial year, 4 meetings were held. Details of the members of the Committee's
attendance at the meetings held during the financial year are disclosed hereunder:
The Investment Committee comprises 1 independent non-executive directors, 1 non-independent
non-executive directors and 1 non-independent executive director.
This Committee oversees, guides and monitors the investment operations of the Company as
well as approves recommended investment related transactions. The Committee is also
responsible to note and approve specific transactions of a nature that require, by regulation,
awareness of and sanctioning by the Board of Directors.
The Risk Management Committee comprises 3 independent non-executive directors and a non-
independent non-executive directors.
The Risk Management Committee reviews and recommends risk management strategies,
policies and risk tolerance limits for the Board’s approval. The Committee reviews the progress
and assesses the effectiveness and adequacy of the risk management policies and framework
adopted by the Company for identifying, measuring, monitoring and controlling risks within the
Company. The Committee also reviews the adequacy and effectiveness of the infrastructure,
resources and systems in place to ensure effective and timely reporting of risk management
activities.
During the financial year, 6 meetings were held. Details of the members of the Committee's
attendance at the meetings held during the financial year are disclosed hereunder:
8
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Corporate governance (cont'd.)
Holding and ultimate holding company
Auditors
Signed on behalf of the Board in accordance with a resolution of the directors.
Sharkawi bin Alis Halim bin Haji Din
Kuala Lumpur, Malaysia
25 May 2011
The directors regard MNRB Holdings Berhad, a company incorporated in Malaysia, as the
Company's holding and ultimate holding company.
The auditors, Ernst & Young, retire and have expressed their willingness to accept re-
appointment.
Before the balance sheet and income statement of the Company were made out, the directorsto ensure that any current assets which were unlikely to realise their value as shown inany charge on the assets of the Company which has arisen since the end of the financialany contingent liability in respect of the Company which has arisen since the end of theno item, transaction or event of a material and unusual nature has arisen in the intervalrequire any amount to be written off as bad debts or render the amount of the provisionAt the date of this report, the directors are not aware of any circumstances which would:render the values attributed to the current assets in the financial statements of theto ascertain that proper action had been taken in relation to the writing off of bad debtsno contingent liability or other liability has become enforceable or is likely to becomeAt the date of this report, the directors are not aware of any circumstances not otherwise dealtAt the date of this report, the directors are not aware of any circumstances which have arisen
9
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Statement of comprehensive income
For the year ended 31 March 2011
Note 2011 2010
RM'000 RM'000
(Restated)
Operating revenue 3 211,910 190,190
Investment income 5 5,375 4,091
Realised gains and losses 6 464 4,337
Fair value gains and losses 7 (309) (1,899)
Fee income 8 213,289 194,926
Other operating revenue 9 346 620
Other revenue 219,165 202,075
Commission expenses 8 (115,676) (100,519)
Management expenses 11 (89,983) (86,629)
Change in expenses liability 13 605 5,739
Other expenses (205,054) (181,409)
Profit before taxation 14,111 20,666
Zakat (400) (385)
Taxation 14 (4,770) (6,509)
Net profit for the year 8,941 13,772
Earnings per share (sen)
Basic 28 4.6 7.1
14
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Statement of comprehensive income
For the year ended 31 March 2011 (cont'd.)
Note 2011 2010
RM'000 RM'000
(Restated)
Net profit for the year (cont'd.) 8,941 13,772
Other comprehensive income:
Available-for-sale fair value reserves
Net gains on fair value changes 802 5,298
Deferred tax on fair value changes 102 (240)
Realised gain transferred to statement of
comprehensive income (1,065) (4,337)
Total comprehensive income for the year 8,780 14,493
The accompanying notes form an integral part of the financial statements.
15
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Statement of financial position as at 31 March 2011
Note 2011 2010 1.4.2009
RM'000 RM'000 RM'000
(Restated) (Restated)
Assets
Property, plant and equipment 15 14,237 13,663 5,675
Intangible assets 16 4,583 4,573 3,479
Financial instruments:
Financial assets at fair value
through profit and loss 18(a) 712 1,364 380
Held-to-maturity investments 18(b) 40,450 24,448 26,051
Available-for-sale
financial assets 18(c) 60,888 35,873 20,205
Loans and receivables 18(d) 119,083 155,508 156,506
Deferred tax assets 21 5,170 6,241 7,038
Tax recoverable 2,128 617 227
Cash and bank balances 7,630 1,453 269
Total shareholder's fund assets 254,881 243,740 219,830
Total general takaful fund
assets 338,155 272,976 185,380
Total family takaful fund
assets (page 24) 1,300,836 950,777 735,034
Total assets 1,893,872 1,467,493 1,140,244
Liabilities
Expenses liabilities 22 15,146 15,750 21,489
Due to agents, retakaful operators
and brokers 13,498 15,873 11,997
Due to related companies 20 22 1,132 349
Zakat payable 573 370 93
Other payables 25 25,125 14,547 13,071
Provisions 26 6,344 10,675 1,930
Total shareholder's fund liabilities 60,708 58,347 48,929
Total general takaful fund
liabilities and participants'
fund 338,155 272,976 185,380
Total family takaful fund
liabilities (page 24) 1,300,836 950,777 735,034
Total liabilities 1,699,699 1,282,100 969,343
16
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Statement of financial position as at 31 March 2011 (cont'd.)
Note 2011 2010 1.4.2009
RM'000 RM'000 RM'000
(Restated) (Restated)
Equity
Share capital 27 195,000 195,000 195,000
Accumulated losses (1,535) (10,476) (24,247)
Available-for-sale reserves 708 869 148
Total shareholder's equity 194,173 185,393 170,901
Total liabilities, shareholder's equity
and participants' funds 1,893,872 1,467,493 1,140,244
The accompanying notes form an integral part of the financial statements.
17
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Statement of changes in equity
For the year ended 31 March 2011
Non (Accumulated
distributable losses)/
Share Available-for distributable
Note capital sale reserves retained profits Total
RM'000 RM'000 RM'000 RM'000
At 1 April 2009, previously stated 195,000 148 (8,130) 187,018
Effects of adopting FRS 4 2.27(a) - - (16,117) (16,117)
At 1 April 2009, restated 195,000 148 (24,247) 170,901
Total comprehensive income for the year - - 14,493 14,493 At 31 March 2010, restated 195,000 148 (9,754) 185,394
At 31 March 2010, previously stated 195,000 869 1,336 197,205
Effects of adopting FRS 4 2.27(a) - - (11,812) (11,812)
At 31 March 2010, restated 195,000 869 (10,476) 185,393
Total comprehensive income for the year - (161) 8,941 8,780 At 31 March 2011 195,000 708 (1,535) 194,173
The accompanying notes form an integral part of the financial statements.
18
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
General takaful statement of comprehensive income
For the year ended 31 March 2011
Note 2011 2010
RM'000 RM'000
(Restated)
Operating revenue 3 232,756 223,383
Gross earned contribution 4(a) 210,526 216,319
Earned contribution ceded
to retakaful operators 4(b) (32,549) (25,247)
Net earned contribution 177,977 191,072
Investment income 5 8,560 5,764
Realised gains and losses 6 2,706 308
Fair value gains and losses 7 3,035 (1,005)
Fee and commission income 8 3,938 4,505
Other revenue 18,239 9,572
Gross claims paid (104,436) (87,591)
Claims ceded to retakaful operators 6,995 9,360
Gross change to certificate liabilities (48,224) (40,625)
Change in certificate liabilities ceded
to retakaful operators 13,248 (3,605)
Net claims (132,417) (122,461)
Fee expenses 8 (56,157) (64,026)
Other operating expenses 9 (1,770) (1,376)
Other expenses (57,927) (65,402)
Surplus before taxation 5,872 12,781
Taxation 14 (1,427) (2,511)
Net surplus for the year 4,445 10,270
19
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
General Takaful Statement of comprehensive income
For the year ended 31 March 2011 (cont'd.)
Note 2011 2010
RM'000 RM'000
(Restated)
Net surplus for the year (cont'd.) 4,445 10,270
Other comprehensive income:
Available-for-sale fair value reserves
Net gains on fair value changes 2,287 2,152
Deferred tax on fair value changes 36 (480)
Realised gain transferred to statement of
comprehensive income (2,467) (230)
Total comprehensive income for the year 4,301 11,712
The accompanying notes form an integral part of the financial statements.
20
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
General takaful statement of financial position
As at 31 March 2011
Note 2011 2010 1.4.2009
RM'000 RM'000 RM'000
(Restated) (Restated)
Assets
Financial instruments:
Financial assets at fair value
through profit and loss 18(a) 1,105 1,529 329
Held-to-maturity investments 18(b) 67,268 40,725 32,456
Available-for-sale
financial assets 18(c) 105,145 52,891 21,293
Loans and receivables 18(d) 60,449 121,481 93,170
Retakaful certificates assets 23 34,351 29,669 30,842
Takaful certificates receivables 19 32,798 36,156 17,319
Deferred tax assets 21 1,571 2,342 3,316
Cash and bank balances 47,511 226 4,698 Total general takaful assets 350,198 285,019 203,423
Liabilities
Takaful certificates liabilities 23 291,733 228,254 184,563
Takaful certificates payables 24 7,932 5,641 4,786
Tax payable 566 2,017 9
Other payables 25 39,475 42,915 12,143
Total general takaful liabilities 339,706 278,827 201,501
Participants' Fund
General takaful fund 29 10,492 6,192 1,922
Total general takaful liabilities
and participants' fund 350,198 285,019 203,423
The accompanying notes form an integral part of the financial statements.
21
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Family takaful statement of comprehensive income
For the year ended 31 March 2011
Note 2011 2010
RM'000 RM'000
(Restated)
Operating revenue 3 519,889 380,004
Gross contribution 486,530 357,610
Contribution ceded to retakaful operators (44,244) 8,807
Net contribution 442,286 366,417
Investment income 5 31,121 20,220
Realised gains and losses 6 8,073 2,024
Fair value gains and losses 7 (8,065) 27,302
Fee and commission income 8 - 63
Other revenue 31,129 49,609
Gross benefits paid 10 (117,700) (92,780)
Benefits ceded to retakaful operators 25,303 14,049
Gross change to certificate liabilities (3,655) (11,607)
Change in certificate liabilities ceded
to retakaful operators 16,540 3,246
Net claims (79,512) (87,092)
Fee expenses 8 (149,726) (125,339)
Other operating expenses 9 (2,829) (4,774)
Other expenses (152,555) (130,113)
Surplus before taxation 241,348 198,821
Taxation 14 (2,983) (2,622)
Net surplus for the year 238,365 196,199
Surplus/(deficit) from investment-linked business 32 (448) (2,212)
22
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Family Takaful Statement of comprehensive income
For the year ended 31 March 2011 (cont'd.)
Note 2011 2010
RM'000 RM'000
(Restated)
Net surplus for the year (cont'd.) 238,365 196,199
Other comprehensive income:
Available-for-sale fair value reserves
Net gains on fair value changes 9,482 3,927
Deferred tax on fair value changes (175) (272)
Realised gain transferred to statement of
comprehensive income (7,458) (523)
Total comprehensive income for the year 240,214 199,331
The accompanying notes form an integral part of the financial statements.
23
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Family takaful statement of financial position
As at 31 March 2011
Note 2011 2010 1.4.2009
RM'000 RM'000 RM'000
(Restated) (Restated)
Assets
Investment properties 17 103,518 110,000 69,966
Financial instruments:
Financial assets at fair value
through profit and loss 18(a) 1,832 17,923 17,090
Held-to-maturity investments 18(b) 212,387 205,796 133,123
Available-for-sale
financial assets 18(c) 303,601 205,062 143,185
Loans and receivables 18(d) 302,289 221,201 192,668
Retakaful certificates assets 23 137,383 105,811 133,313
Takaful certificates receivables 19 83,818 38,761 30,467
Cash and bank balances 62,916 2,832 8,559
Investment-linked business assets 32 93,092 43,391 6,663 Total family takaful assets 1,300,836 950,777 735,034
Liabilities
Takaful certificates liabilities 23 1,104,189 846,087 665,983
Takaful certificates payables 24 34,406 19,464 13,104
Tax payable 1,260 1,046 205
Deferred tax liabilities 21 2,135 2,304 -
Other payables 25 65,754 38,485 49,079
Investment-linked business liabilities 32 2,865 684 399
Investment-linked business
participants' fund 90,227 42,707 6,264
Total family takaful liabilities 1,300,836 950,777 735,034
The accompanying notes form an integral part of the financial statements.
24
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Cash flows statement
For the year ended 31 March 2011
Note 2011 2010
RM'000 RM'000
Operating Activities
Profit before zakat and taxation 14,111 20,666
Adjustments for:
Depreciation for property, plant and equipment 4,101 2,250
Amortisation of intangible assets 1,169 781
Property, plant and equipment written off - 7
Net accretion of discounts (1,297) (1,265)
Profit on investment accounts (43,759) (28,810)
Fair value adjustments of financial assets at FVTPL (56) (5,028)
Impairment of AFS financial assets 323 371
Impairment of HTM financial asset - 962
Gain on disposal of investments (12,077) (6,669)
Gain on disposal of property, plant and equipment 834 -
Gain on fair value adjustment of investment properties 7,490 (22,535)
Impairment of takaful receivables (2,418) 1,832
Increase in contribution liabilities 23,821 633
Increase in expenses liabilities (605) (5,739)
Results of general takaful fund 4,301 10,270
Results of family takaful fund 238,365 196,199
Operating profit before working capital changes 234,303 163,925
Purchase of financial assets/investments (199,146) (219,040)
Decrease/(Increase) in islamic investment accounts 47,210 (48,862)
Increase in loans receivable (3) (850)
Increase in trade receivables (39,281) (28,964)
Increase in other receivables (53,472) (6,545)
Increase in outstanding claims 53,464 52,592
Increase in trade payables 14,858 11,092
Increase in other payables 32,492 45,283
Net change in balance with holding company (5,994) 784
Net cash generated/(used in) from operating
activities 84,431 (30,585)
Investment income received 44,106 33,890
Hibah to participants 29 (1) (80)
Income tax paid (7,097) (6,342)
Zakat paid (197) (123)
Net cash flows from operating activities 30 121,242 (3,240)
25
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Cash flows statement
For the year ended 31 March 2011 (cont'd.)
Note 2011 2010
RM'000 RM'000
Investing Activities
Proceeds from disposal of property and equipment 21 23,847
Purchase of property and equipment (6,709) (10,246)
Purchase of intangibles - (1,876)
Purchase of investment properties (1,008) (17,499)
Net cash flows from investing activities 30 (7,696) (5,774)
Net increase in cash and cash equivalents 113,546 (9,014)
Cash and cash equivalents at beginning of year 4,511 13,525
Cash and cash equivalents at end of year 118,057 4,511
Cash and bank balances of:
Shareholder's fund 7,630 1,453
General takaful fund 47,511 226
Family takaful fund 62,916 2,832
Cash and bank balances 118,057 4,511
The accompanying notes form an integral part of the financial statements.
26
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
Notes to the financial statements - 31 March 2011
1. Corporate information
2. Significant accounting policies
2.1 Basis of preparation
The Company has prepared the financial statements in accordance with item 10.3 of
BNM's Guideline on Financial Reporting for Takaful Operators which was issued on 23
December 2010. The guideline requires takaful operators to present the statements of
financial position, statement of comprehensive income and related explanatory notes by
funds, i.e. the Company's statement of financial position, the Company's statement of
comprehensive income, family takaful statement of financial position, family takaful
statement of comprehensive income, general takaful statement of financial position
and general takaful statement of comprehensive income. This is a modification to FRS
101 : Presentation of Financial Statements which is approved by BNM under Section 41
of the Takaful Act 1984.
The financial statements of the Company comply with the provisions of the Companies
Act, 1965 and Financial Reporting Standards ("FRS") in Malaysia, as modified by Bank
Negara Malaysia ("BNM"). The financial statements of the Company also comply with
the Takaful Act, 1984, the Guidelines and Circulars issued by BNM and where
applicable are modified to comply with the principles of Shariah.
The Company is engaged principally in the managing of general, family and investment-
linked takaful businesses. There were no significant changes in the principal activities of the
Company during the financial year.
At the beginning of the current financial year, the Company had adopted new and
revised FRSs which are mandatory for the financial periods beginning on or after 1 April
2010 as described fully in Note 2.27.
The financial statements were authorised for issue by the Board of Directors in accordance
with a resolution of the directors on 25 May 2011.
The number of employees in the Company at the end of the financial year was 470 (2010:
443).
The Company is a private limited liability company, incorporated and domiciled in Malaysia.
The registered office of the Company is located at 9th Floor, IKHLAS Point, Tower 11A,
Avenue 5, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia.
The holding and ultimate holding company is MNRB Holdings Berhad, a company
incorporated and domiciled in Malaysia and listed on the Main Market of Bursa Malaysia
Securities Berhad.
27
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.1 Basis of preparation (cont'd.)
2.2 Property, plant and equipment and depreciation
(i) Recognition and measurement
(ii) Subsequent costs
The financial statements are presented in Ringgit Malaysia (RM) and all values are
rounded to the nearest thousand (RM'000) except when otherwise indicated.
Only assets costing above RM300 will be capitalised. Assets costing RM300 and
below are charged to the statement of comprehensive income in the year of
purchase.
On disposal of property, plant and equipment, the difference between net proceeds
and the carrying amount is recognised in the statement of comprehensive income.
The cost of replacing part of an item of property, plant and equipment is recognised
in the carrying amount of the item if it is probable that the future economic benefits
embodied within the part will flow to the Company and its cost can be measured
reliably. The costs of the day-to-day servicing of property, plant and equipment are
recognised in the statement of comprehensive income as incurred.
Financial assets and financial liabilities are offset and the net amount reported in the
statement of financial position only when there is a legally enforceable right to offset the
recognised amounts and there is an intention to settle on a net basis, or to realise the
assets and settle the liability simultaneously. Income and expense will not be offset in
the statement of comprehensive income unless required or permitted by any accounting
standard or interpretation, as specifically disclosed in the accounting policies of the
Company.
The financial statements of the Company have also been prepared on a historical cost
basis, except for those financial instruments that have been measured at their fair
values.
All items of property, plant and equipment are initially recorded at cost. Subsequent
to recognition, property, plant and equipment are stated at cost less accumulated
depreciation and any accumulated impairment losses.
Assets costing more than RM300 up to a maximum of RM1,000 are written down to
RM1 in the year of purchase. The write down is charged to the statement of
comprehensive income as depreciation.
28
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.2 Property, plant and equipment and depreciation (cont'd.)
(iii) Depreciation
Computer equipment 33 1/3%
Furniture, fittings and office equipment 15%
Motor vehicles 20%
2.3 Investment properties
Fair value is arrived at by reference to market evidence of transaction prices for similar
properties and is performed by registered independent valuers having an appropriate
recognised professional qualification and recent experience in the location and category
of the properties being valued.
Gains or losses arising from changes in fair value of investment properties are
recognised in the statement of comprehensive income in the year in which they arise.
Investment properties are derecognised when either they have been disposed of or
when the investment property is permanently withdrawn from use and no future
economic benefit is expected from its disposal. Any gains or losses on the retirement or
disposal of an investment property are recognised in the statement of comprehensive
income in the year in which they arise.
Depreciation of property, plant and equipment 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 rates:
The residual values, useful life and depreciation method are reviewed at each
financial year-end to ensure that the amount, method and period of depreciation
are consistent with previous estimates and the expected pattern of consumption of
the future economic benefits embodied in the items of property, plant and
equipment.
Investment properties are properties which are owned or held under a leasehold
interest to earn rental income or for capital appreciation or for both.
Such properties are measured initially at cost, including transaction costs. Subsequent
to initial recognition, investment properties are stated at fair value.
29
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.4 Intangible assets
Amortisation is charged to the statement of comprehensive income.
Software development in progress
Computer software and licences
The useful lives of intangible assets are assessed to be either finite or indefinite.
Intangible assets with finite lives are amortised on a straight lines basis over the
estimated economic useful lives and assessed for impairment whenever there is an
indication that the intangible asset may be impaired. The amortisation period and the
amortisation method for an intangible asset with a finite useful life are reviewed at least
at each financial year end.
Software development in progress are tested for impairment annually and represent
development expenditure on software. Following the initial recognition of the
development expenditure, the cost model is applied requiring the asset to be carried at
cost less any accumulated impairment losses. Amortisation of the asset begins when
development is complete and the asset is available for use. It is amortised over the
period of expected future use. During the period of which the assets is not yet in use it
is tested for impairment annually.
The useful lives of computer software and licenses are considered to be finite because
computer software and licenses are susceptible to technological obsolescence.
The acquired computer software and licenses are amortised using the straight line
method over their estimated useful lives not exceeding 6 years. Impairment is assessed
whenever there is indication of impairment and the amortisation period and method are
also reviewed at least at each financial year end.
Intangible assets with indefinite useful lives are not amortised but tested for impairment
annually or more frequently if the events or changes in circumstances indicate that the
carrying value may be impaired either individually or at the cash-generating unit level.
The useful life of an intangible asset with an indefinite life is also reviewed annually to
determine whether the useful life assessment continues to be supportable.
30
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.5 Impairment of Non-Financial Assets
2.6 Investments and financial assets
The significant accounting policies by the categories above are as follows :
The classification depends on the purpose for which the investments were acquired or
originated. Management determines the classification of its investments at initial
recognition and re-evaluates this at every financial year end.
An impairment loss for an asset is reversed if, and only if, there has been a change in
the estimates used to determine the asset’s recoverable amount since the last
impairment loss was recognised. The carrying amount of an asset is increased to its
revised recoverable amount, provided that this amount does not exceed the carrying
amount that would have been determined (net of amortisation or depreciation) had no
impairment loss been recognised for the asset in prior years. A reversal of impairment
loss for an asset other than goodwill is recognised in statement of comprehensive
income.
An asset’s recoverable amount is the higher of an asset’s or cash-generating unit
("CGU") fair value less costs to sell and its value in use. In assessing value in use, the
estimated future cash flows are discounted to their present value using a pre-tax
discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset. Where the carrying amount of an asset exceeds its
recoverable amount, the asset is considered impaired and is written down to its
recoverable amount. Impairment losses recognised in respect of a CGU is allocated
first to reduce the carrying amount of any goodwill allocated to those units or groups of
units and then, to reduce the carrying amount of the other assets in the unit on a pro-
rata basis.
The carrying amounts of assets other than deferred tax asset and investment properties
are reviewed at each financial year end to determine whether there is any indication of
impairment. If any such indication exists, the asset's recoverable amount is estimated to
determine the amount of loss.
An impairment loss is recognised in statement of comprehensive income in the period
in which it arises.
The Company classifies its investments into financial assets at fair value through profit
and loss ("FVTPL"), held-to-maturity ("HTM"), loans and other receivables ("LAR") and
available-for-sale-financial assets ("AFS").
Investment properties are properties which are held either to earn rental income or for Investment properties are derecognised when either they have been disposed of or
31
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.6 Investments and other financial assets (cont'd.)
-
-
HTM
Investments held under the investment-linked funds are designated as FVTPL at
inception as they are managed and evaluated on a fair value basis in accordance with
the respective investment strategies and mandates.
Financial assets classified as FVTPL include shariah approved quoted shares and
warrants.
FVTPL
Financial assets classified as HTM include unquoted Islamic government guaranteed
and unsecured private debt securities and government investment issues.
the designation eliminates or significantly reduces the inconsistent treatment that
would otherwise arise from measuring the assets or liabilities or recognising gains
or losses on a different basis, or
Financial assets at FVTPL include financial assets held for trading and those
designated at fair value through profit and loss at inception. Investments typically
bought with the intention to sell in the near future are classified as held-for-trading. For
investments designated as at fair value through profit and loss, the following must be
met:
the assets and liabilities are part of a group of financial assets, financial liabilities or
both which are managed and their performance evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy.
These investments are initially recorded at fair value. Subsequent to initial recognition
these investments are measured at the fair value. Fair value adjustments and realised
gains and losses are recognised in statement of comprehensive income.
Non-derivative financial assets with fixed or determinable payments and fixed maturities
are classified as HTM when the Company has the positive intention and ability to hold
until maturity. These investments are initially recognised at cost, being the fair value of
the consideration paid for the acquisition of the investment. After initial measurement,
HTM financial assets are measured at amortised cost, using the effective yield method,
less provision for impairment. Gains and losses are recognised in statement of
comprehensive income when the investments are derecognised or impaired, as well as
through the amortisation process.
32
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.6 Investments and other financial assets (cont'd.)
LAR
AFS
2.7 Fair value of financial instruments
For investments in investment linked units, unit and real estate investment trusts, if any,
fair value is determined by reference to published bid values.
On derecognition or impairment, the cumulative fair value gains and losses previously
reported in equity is transferred to statement of comprehensive income.
LAR are non-derivative financial assets with fixed or determinable payments that are
not quoted in an active market. These investments are initially recognised at cost, being
the fair value of the consideration paid for the acquisition of the investment.All
transaction costs directly attributable to the acquisition are also included in the cost of
the investment. After initial measurement, loans and receivables are measured at
amortised cost, using the effective yield method, less provision for impairment. Gains
and losses are recognised in statement of comprehensive income when the
investments are derecognised or impaired, as well as through the amortisation process.
AFS are non-derivative financial assets that are designated as available-for-sale or are
not classified in any of the three preceding categories. These investments are initially
recorded at fair value. After initial measurement, AFS are measured at fair value.
The fair value of financial assets that are actively traded in organised financial markets
is determined by reference to quoted market bid prices for assets and offer prices for
liabilities, at the close of business on the reporting date.
Financial assets classified as LAR include Islamic investment accounts with licensed
banks and building society, Islamic repo placements, institutional trust fund, secured
staff loans and benevolent loan provided by shareholder's fund to the general takaful
fund.
Financial assets classified as AFS are unquoted unsecured Islamic private debt
securities, shariah approved quoted equities and unit trust funds.
Any gains or losses from changes in fair value of the financial assets are recognised in
the other comprehensive income or takaful certificate liabilities, except for impairment
losses and profits calculated using the effective profit method which are recognised in
the statement of comprehensive income accordingly. The cumulative gain or loss
previously recognised in other comprehensive income is recognised in the statement of
comprehensive income when the financial asset is derecognised.
33
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.7 Fair value of financial instruments (cont'd.)
2.8 Impairment of Financial Assets
(i) Financial assets carried at amortised cost
For financial instruments on debt securities and government investment issues, these
are measured using valuation techniques. The indicative fair values are determined
based on quotations obtained from brokers in three financial institutions.
The Company assesses at each financial year end whether there is any objective
evidence that a financial asset or a group of financial assets is impaired.
The Company first assesses whether objective evidence of impairment exists
individually for financial assets that are individually significant, and individually or
collectively for financial assets that are not individually significant. If it is determined
that no objective evidence of impairment exists for an individually assessed
financial asset, whether significant or not, the asset is included in a group of
financial assets with similar credit risk characteristics and that group of financial
assets is collectively assessed for impairment. Assets that are individually
assessed for impairment and for which an impairment loss is or continues to be
recognised are not included in a collective assessment of impairment. The
impairment assessment is performed at each reporting date.
If the fair value of a financial asset cannot be measured reliably, for example LAR, the
asset is measured at cost, being the fair value of the consideration paid for the
acquisition of the investment or the amount received on issuing the financial asset. All
transaction costs directly attributable to the acquisition are also included in the cost of
the financial asset. After initial measurement, LAR are measured at amortised cost
using effective yield method, less allowance for impairment.
Objective evidence that a financial asset is impaired includes observable data about
loss events like significant financial difficulty of the issuer or obligor; significant adverse
changes in the business environment in which the issuer or obligor operates and the
disappearance of an active market for that financial asset because of financial
difficulties which indicate that there is a measurable decrease in the estimated future
cash flows. However it might not be possible to identify a single, discreet event that
caused the impairment. Rather, the combined effect of several events are considered in
determining whether an asset is impaired.
The fair value of floating rate and over-night deposits with financial institutions is their
carrying value. The carrying value is the cost of the deposit/placement and accrued
profit. The fair value of fixed yield-bearing deposits is estimated using discounted cash
flow techniques. Expected cash flows are discounted at current market rates for similar
instruments at the end of the financial year.
34
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.8 Impairment of Financial Assets (cont'd.)
(ii) AFS financial assets
If an AFS financial asset is impaired, an amount comprising the difference between
its cost (net of any principal payment and amortisation) and its current fair value,
less any impairment loss previously recognised in statement of comprehensive
income, is transferred from other comprehensive income to statement of
comprehensive income.
Significant or prolonged decline in fair value below cost, significant financial
difficulties of the issuer or obligor, and the disappearance of an active trading
market are considerations to determine whether there is objective evidence that
investment securities classified as AFS financial assets are impaired.
If, in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was
recognised, the previously recognised impairment loss is reversed. Any subsequent
reversal of an impairment loss is recognised in statement of comprehensive
income, to the extent that the carrying value of the asset does not exceed its
amortised cost at the reversal date.
If there is objective evidence that an impairment loss on assets carried at amortised
cost has been incurred, the amount of the impairment loss is measured as the
difference between the asset’s carrying amount and the present value of estimated
future cash flows (excluding future expected credit losses that have not been
incurred) discounted at the financial asset’s original effective yield. The carrying
amount of the asset is reduced and the loss is recorded in statement of
comprehensive income.
Impairment losses on AFS equity investments are not reversed in statement of
comprehensive income in the subsequent periods. Increase in fair value, if any,
subsequent to impairment loss is recognised directly in other comprehensive
income/takaful certificate liabilities. For AFS debt investments, impairment losses
are subsequently reversed in statement of comprehensive income if an increase in
the fair value of the investment can be objectively related to an event occurring
after the recognition of the impairment loss in statement of comprehensive income.
35
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
(iii) Loans and receivables
2.9 Derecognition of Financial Assets
2.10 Measurement and impairment of Qard
Any deficits arising in the Takaful Funds are made good via a benevolvent loan, or
Qard, granted by the Shareholder's Fund to the Takaful Funds. The Qard is stated at
cost less any impairment losses in the Shareholder's Fund. In the Takaful Funds, the
Qard is stated at cost. The Qard shall be repaid from future surpluses of the Takaful
Funds.
The Company first assesses whether there is objective evidence that an
impairment loss on the loans and receivables has been incurred. The Company
considers factors such as the probability of insolvency or significant financial
difficulties of the borrower and default or significant delay in principal or yield
payments. Loans that are assessed not to be impaired individually are
subsequently assessed for impairment on a collective basis based on similar risk
characteristics. The amount of impairment loss is measured as the difference
between the carrying amount and the present value of estimated future cash flows,
discounted at the loan's original effective profit rate. The impairment loss is
recognised in statement of comprehensive income.
The carrying amount of the loan is reduced by the impairment loss directly for all
loans, where the carrying amount is reduced through the use of an allowance
account.
If in a subsequent period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the impairment was
recognised, the previously recognised as impairment loss is reversed to the extent
that the carrying amount does not exceed its amortised costs at the reversal date.
The amount of reversal is recognised in statement of comprehensive income.
Financial assets are derecognised when the rights to receive cash flows from them
have expired or when they have been transferred and the Company has also
transferred substantially all risks and rewards of ownership.
The Qard is tested for impairment on an annual basis via an assessment of the
estimated surpluses or cashflows from the Takaful Funds to determine whether there is
objective evidence of impairment. If the Qard is impaired, an amount comprising the
difference between its cost and its recoverable amount, less any impairment loss
previously recognised in statement of comprehensive income, is recognised in the
statement of comprehensive income.
36
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.10 Measurement and impairment of Qard (cont'd.)
2.11 Equity Instruments
Ordinary Share Capital
Dividend on Ordinary Share Capital
2.12 Product Classification
The Company has issued ordinary shares that are classified as equity. Incremental
external costs that are directly attributable to the issue of these shares are recognised
in equity, net of tax.
Dividends on ordinary shares are recognised as a liability and deducted from equity
when they are approved by the Company's shareholders. Interim dividends are
deducted from equity when they are paid.
Impairment losses are subsequently reversed in the statement of comprehensive
income if objective evidence exists that the Qard is no longer impaired.
The Company as the operator of the participants' fund issues certificates that contains
takaful risk or financial risk or both.
Financial risk is the risk of a possible future change in one or more of a specified profit
rate, financial instrument price, commodity price, foreign exchange rate, index of price
or rate, credit rating or credit index or other variable, provided in the case of a non-
financial variable that the variable is not specific to a party to the contract. Underwriting
risk is the risk other than financial risk.
Takaful certificates are those certificates that contain significant underwriting risk. A
takaful certificate is a certificate under which the participants' fund has accepted
significant risk from the participants by agreeing to compensate the participants if a
specified uncertain future event adversely affects the participants. As a general
guideline, the Company determines whether it has significant underwriting risk, by
comparing claims paid with claims payable if the event did not occur.
Investment contracts are those contracts that do not transfer significant takaful risk.
Once a certificate has been classified as a takaful certificate, it remains a takaful
certificate for the remainder of its life-time, even if the underwriting risk reduces
significantly during this period, unless all rights and obligations are extinguished or
expire. Investment contracts can, however, be reclassified as takaful certificates after
inception if takaful risk becomes significant.
Dividends for the year that are approved after the financial year end are dealt with as an
event after the financial year end.
37
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.12 Product Classification (cont'd.)
2.13 Retakaful
When takaful certificates contain both a financial risk component and a significant
underwriting risk component and the cash flows from the two components are distinct
and can be measured reliably, the underlying amounts are unbundled. Any
contributions relating to the underwriting risk component are accounted for on the same
basis as takaful certificates and the remaining element is accounted for as a deposit
through the statement of financial position similar to investment contracts.
Retakaful certificates liabilities represent balances due to retakaful operators. Amounts
payable are estimated in a manner consistent with the related retakaful certificates.
Retakaful certificates assets or liabilities are derognised when the contractual rights are
extinguished or expire when the contract is transferred to another party.
Ceded retakaful arrangements do not relieve the Company from the obligations to
participants. Contributions and claims are presented on a gross basis.
The Company as the operator of the participants' fund cedes underwriting risk in the
normal course of business for all its business. Retakaful certificates assets represent
balances due from retakaful operators. Amounts recoverable from retakaful operators
are estimated in a manner consistent with the outstanding the outstanding claims
provisions or settled claims associated with the retakaful operator's policies and are in
accordance with the related retakaful certificates.
Based on the company's product classification review, all products fall under the
classification of takaful certificates.
Retakaful certificates that do not transfer significant underwriting risk are accounted for
directly through the statement of financial position. These are deposit assets or financial
liabilities that are recognised based on the consideration paid or received less any
explicit identified contributions or fees to be retained by the retakaful operators.
Investment income on these contracts are accounted for using the effective yield
method when accrued.
Retakaful certificates assets are reviewed for impairment at each financial year end or
more frequently when an indication of impairment arises during the reporting period.
Impairments occurs when there is objective evidence as a results of an event that
occurred after initial recognition of the retakaful certificates assets that the Company
may not receive all outstanding amounts due under the terms of the contract and the
event has a reliable measurable impact on the amounts that the Company will receive
from the retakaful operator. The impairment loss is recorded in statement of
comprehensive income.
38
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.14 General takaful fund
(i) Contribution income
(ii) Contribution Liabilities
Prior to 1 April 2010, contribution liabilities comprised of unearned contribution
reserves (“UCR”) for all lines of business.
The general takaful fund is maintained in accordance with the Takaful Act, 1984 and
consists of unearned contribution reserves and any surplus/deficit arising during the
year. Underwriting deficit will be made good by the shareholder's fund via a benevolent
loan or Qard.
Surplus is distributable to the shareholder and participants in accordance with the terms
and conditions prescribed by the Shariah Committee of the Company. The general
takaful fund surplus or deficit is determined after deducting retakaful, net claims
incurred, wakalah fees, other operating expenses, taxation and surplus administration
charges transferred to the shareholder's fund, and adjusting for contribution liabilities
and impairment of trade receivables.
General takaful revenue consists of gross contributions and investment income.
Revenue is accounted for on an accrual basis as approved by the Company's Shariah
Committee. Unrealised income is deferred and receipts in advance are treated as
liabilities in the statement of financial position.
Contribution from direct and facultative inwards are recognised as soon as the
amount of contribution can be reliably measured in accordance with the principles
of Shariah. Contributions are recognised in a financial period in respect of risks
assumed during that particular financial period. Inward treaty retakaful contributions
are recognised on the basis of periodic advices received from ceding takaful
operators.
The contribution liabilities represents contributions received for risks that have not
yet expired. Generally, the reserve is released over the term of the certificates.
Effective 1 April 2010, contribution liabilities are reported at the higher of the
aggregate of the UCR for all lines of business and the best estimate value of the
Company’s unexpired risk reserves (“URR”) as at the end of the financial year and
a provision of risk margin for adverse deviation ("PRAD") calculated at 70%
confidence level at the overall Company level.
39
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.14 General takaful fund (cont'd.)
(ii) Contribution Liabilities (cont'd.)
(a) Unearned Contribution Reserves
-
- 25% method for Marine and Aviation Cargo;
-
(b) Unexpired Risks Reserves
Time apportionment method for all classes of general takaful business within
Malaysia except Marine and Aviation cargo;
Non-annual certificates are time apportioned over the period of the takaful
certificates.
The Unearned Contribution Reserves ("UCR") represent the portion of net
contribution income of takaful certificates written that relate to the unexpired
periods of certificates at the end of the financial year. The UCR is calculated on
net contribution income with a further deduction for Wakalah fee expenses to
reflect the Wakalah business principle. In determining the UCR at the end of
the financial year, the method that most accurately reflects the actual unearned
contribution is used as follows:
URR is a prospective estimate of the expected future payments arising from
future events expected to be incurred as at the end of the financial year and
also includes cost of retakaful, expected to be incurred during the unexpired
period in adminestering these certificates and settling the relevant claims, and
expected future return contributions.
In estimating the Best Estimate URR, the resulting Loss Ratio based on Best
Estimate claims incurred but not reported (“IBNR”) is applied to the
corresponding UCR as the prospective assessment of the amount that needs
to be set aside in order to provide for claims and allocated claim costs that will
result out of unexpired future periods of cover. In order to arrive at 70% level of
confidence of the URR, the resulting Loss Ratio based on the IBNR plus PRAD
at 70% level of confidence is applied to the corresponding UCR for each line of
business.
40
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.14 General takaful fund (cont'd.)
(ii) Contribution Liabilities (cont'd.)
Liability Adequacy Test
(iii) Claims Liabilities
The liability is calculated by a qualified actuary at the financial year end using a
range of standard actuarial claim projection techniques based on empirical data
and current assumptions that may include a margin for adverse deviation. The
liability is not discounted for the time value of money. No provision for equalisation
or catastrophe reserves is recognised. The liabilities are derecognised when the
certificates expires, is discharged or is cancelled.
Prior to 1 April 2010, claims liabilities are valued at the best estimate which include
provision for claims reported, claims incurred but not enough reserved ("IBNER")
and claims incurred but not reported (“IBNR”) together with related claims handling
costs and reduction for the expected value of salvage and other recoveries. For the
financial period beginning 1 April 2010, PRAD at 60% confidence level calculated
at the overall Company level were included in claim liabilities.
Effective 1 April 2010, the PRAD level is increased to 70% confidence level
calculated at the overall Company level.
Claims and settlement costs that are incurred during the financial year are
recognised when a claimable event occurs and/or the Company is notified. The
amount of outstanding claims is the best estimate of the expenditure required
together with related expenses less recoveries to settle the obligation at the end of
the financial year.
At each financial year end, the Company reviews its unexpired risks and a liability
adequacy test is performed to determine whether there is any overall excess of
expected claims over unearned contributions. This calculation uses current
estimates of future contractual cash flows (taking into consideration current loss
ratios) after taking account of the investment return expected to arise on assets
relating to the relevant general takaful technical provisions. If these estimates show
that the carrying amount of the unearned contributions is inadequate, the
deficiency is recognised in statement of comprehensive income by setting up a
provision for contributions deficiency.
Delays can be experienced in the notification and settlement of certain types of
claims, therefore, the ultimate cost of these claims cannot be known with certainty
at the end of the financial year.
41
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
(iv) Commission earned
2.15 Family takaful fund
(i) Contribution income
(ii) Provision for outstanding claims
Commission earned net off expense paid from retakaful in the course of
ceding/accepting contributions to/from retakaful operators are recognised in the
general takaful statement of comprehensive income, as incurred and properly
allocated to the periods in which it is probable they give rise to income. This is in
accordance with the principles of Wakalah as approved by the Shariah Committee
and as agreed between the participants and the Company.
The family takaful fund is maintained in accordance with the requirements of the
Takaful Act, 1984 and includes the amount attributable to participants.
The family takaful fund surplus or deficit is determined by an annual actuarial valuation
of the family takaful fund. Any actuarial deficit in the family takaful fund will be made
good by the shareholder's fund via a benevolent loan or Qard. Surplus distributable to
the participants is determined after deducting benefits paid and payable, retakaful,
provisions, reserves, wakalah fees, taxation and surplus administration charge
transferred to the shareholder's fund. The surplus may be distributed to the shareholder
and participants in accordance with the terms and conditions prescribed by the Shariah
Committee of the Company.
Family takaful revenue consists of gross contributions and investment income. Revenue
is accounted for on accrual basis and as approved by the Company’s Shariah
Committee. Unrealised income is deferred and receipts in advance are treated as
liabilities on the statement of financial position.
Contribution is recognised as soon as the amount of contribution can be reliably
measured in accordance with the principles of Shariah. First contribution is
recognised on assumption of risks and subsequent contributions are recognised on
due dates. Contributions outstanding at financial year end is recognised as income
for the period provided they are within the grace period allowed for payment and
there are sufficient funds available in the participants' accounts to cover such
contributions due.
Claims and settlement costs that are incurred during the financial year are
recognised when a claimable event occurs and/or the Company is notified.
42
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.15 Family takaful fund (cont'd.)
(ii) Provision for outstanding claims (cont'd.)
(a)
(b)
(iii) Creation / cancellation of units
(iv) Investments of the Investment-Linked Funds
(v) Family Takaful Certificates Liabilities
Claims and provisions for claims arising on family takaful certificates, including
settlement costs, are accounted for using the case basis method, and for this
purpose, the benefits payable under a takaful certificates are recognised as
follows:
maturity or other certificate benefit payments due on specified dates are
treated as claims payable on due dates.
death, surrender and other benefits without due dates are treated as claims
payable on receipt of intimation of death of the certificate holder or occurrence
of contingency covered.
Amounts received for units created represent contributions paid by
policyholders/unitholders as payment for new contracts or subsequent payments to
increase the amount of the contracts.
Creation/cancellation of units are recognised in the financial statements at the next
valuation date, after the request to purchase/sell units are received from the
unitholders.
These liabilities, with the exception of Mortgage Term Takaful and Group Credit
certificates, are measured using the unexpired reserve of the gross monthly
tabarru' (risk charges). For Mortgage Term Takaful and Group Credit certificates,
the liability is determined by the Net Contribution Valuation method using the
statutory mortality table adjusted for retakaful arrangements and discounted at the
appropriate risk discount rate.
Family takaful certificates liabilities are recognised when certificates are in-forced
and contributions are charged.
All investments of the investment-linked funds are stated at closing market prices
or indicative market prices as at financial year end.
Any increase or decrease in value of investments is taken into the investment-
linked funds statement of comprehensive income.
43
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.15 Family takaful fund (cont'd.)
(v) Family Takaful Certificates Liabilities (cont'd.)
2.16 Shareholder's Fund
(i) Commission expenses/acquisition cost
The family takaful certificates liabilities are derecognised when the contract expires,
is discharged or is cancelled. At each reporting date, an assessment is made of
whether the recognised family takaful certificates liabilities are adequate by using
an existing liability adequacy test.
In the case of a 1-year family takaful certificates covering contingencies other than
death or survival, such as the group health & surgical certificates, the liability for
such family takaful contracts comprises the provision for unearned contributions
and expired risks, as well as for claims outstanding, which includes an estimate of
the incurred claims that have not yet been reported to the Company ("IBNR").
Commission expenses, which are costs directly incurred in securing contributions
on takaful certificates, are recognised as incurred and properly allocated to the
periods in which it is probable they give rise to income. Commission expenses are
borne by the shareholder's fund in the shareholder's fund statement of
comprehensive income at an agreed percentage for each certificate underwritten.
This is in accordance with the principles of Wakalah as approved by the Shariah
Committee and as agreed between the participants and the Company.
Surplus arising from the difference between the value of the family fund and the
liabilities, if any, will be distributed in equal proportion to the participants and the
contingency (special) fund after deducting the applicable Company's surplus
administration charge.
If the difference between the value of the family fund and the liabilities results in a
deficit, the Company will arrange a Qard (benevolent loan) which will be repaid
when the fund returns to a surplus position. An impairment test may be conducted
to a Qard which has not been repaid within a specific period of time.
44
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.16 Shareholder's Fund (cont'd.)
(ii) Expenses liability
(a) Expenses liability of General Takaful Fund
Unearned wakalah fee
In carrying out the fiduciary duty, the Company must put in place sufficient
measures to ensure sustainability of general and family takaful funds to meet
takaful benefits and shareholders’ fund to support the takaful certificates for the full
term. These measures include setting up of appropriate provisions for liabilities in
shareholder's fund and on behalf of participants in general and family takaful funds,
to ensure that adequate funds would be available to meet all contractual obligations
and commitments as they fall due, with a reasonable level of certainty.
The expenses liability of shareholder's fund consists of expenses liability of general
takaful fund and family takaful fund which are computed separately by an Actuary
approved by BNM.
The contract underlying takaful operations defines a unique relationship between
takaful operator and participants of a takaful scheme. While takaful fund is
responsible to meet contractual benefits accorded to participants on the basis of
mutual assistance amongst participants, the Company is expected to duly observe
fundamental obligations toward participants, particularly in term of adhering to
Shariah principles and undertaking fiduciary duties to prudently manage the takaful
funds as well as meet costs involved in managing the takaful business.
The UWF Reserves represent the portion of wakalah fee income allocated for
management expenses of general takaful certificates that relate to the
unexpired periods of certificates at the end of the financial year. The method
used in computing UWF is consistent with the calculation of UCR under Note
2.14(ii)(a). In determining the UWF at the end of the financial year,70% of the
wakalah fee income is recognised in the financial year in which the certificates
are issued. The remaining 30% of the wakalah fee income is transferred to the
UWF reserves and is recognised in the following financial year.
The expenses liability is reported at the higher of the aggregate of Unearned
Wakalah Fee ("UWF") and the best estimate value of Unexpired expense risk
("UER") as at the end of the financial year.
45
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.16 Shareholder's Fund (cont'd.)
(a) Expenses liability of General Takaful Fund (cont'd.)
Unexpired expense reserve
Liability Adequacy Test
(b) Expenses liability of Family Takaful Fund
2.17 Cash and cash equivalents
2.18 Takaful Certificates Receivables
The UER is determined based on the expected future expenses payable from
shareholder's fund in managing the general takaful fund for the full contractual
obligation of the takaful certificate as at the end of the financial year, less
expected shareholders’ fund income calculated at 70% confidence level at the
overall Company level. The method used to value the UER is consistent with
the method used to value the URR under note 2.14(ii)(b).
The expenses liability is determined based on the expected future expenses
payable from shareholder's fund in managing the family takaful fund for the full
contractual obligation of the takaful certificate as at the end of the financial
year, less expected shareholders’ fund income. The method used to value
expense liabilities shall be consistent with the method used to value takaful
liabilities of the corresponding family takaful certificate under note 2.15(v).
Takaful certificates receivables are recognised when due and measured on initial
recognition at the fair value of the consideration received or receivable. Subsequent to
initial recognition, takaful certificates receivables are measured at cost, which
approximate the fair value.
Cash and cash equivalents include cash in hand and at banks, excluding fixed and call
deposits with licensed financial institutions, which have an insignificant risk of changes
in value. The cash flows statement has been prepared using the indirect method.
At each financial year end, the Company reviews its unexpired expense risks
and a liability adequacy test is performed to determine whether there is any
overall excess of expected expenses over unearned wakalah fee. If these
estimates show that the carrying amount of the unearned wakalah fee is
inadequate, the deficiency is recognised in statement of comprehensive
income by setting up a provision for expenses deficiency.
46
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.18 Takaful Certificates Receivables (cont'd.)
2.19 Balances with related companies
2.20 Taxation
Balances with related companies are stated at the amounts which are due and
expected to be settled.
If there is objective evidence that the takaful certificates receivables is impaired, the
Company reduces the carrying amount of the takaful certificates receivables
accordingly and recognises that impairment loss in statement of comprehensive
income. The Company gathers the objective evidence that a takaful certificates
receivables is impaired using the same process adopted for financial assets carried at
amortised cost. The impairment loss is calculated under the same method used for
these financial assets. These processes are described in Note 2.8 (i).
Takaful certificates receivabless are derecognised when the derecognition criteria for
financial assets, as described in Note 2.9, have been met.
Deferred tax is provided for, using the liability method, on temporary differences at the
end of the financial year between the tax bases of assets and liabilities and their
carrying amounts in the financial statements. In principle, deferred tax liabilities are
recognised for all taxable temporary differences and deferred tax assets are recognised
for all deductible temporary differences, unused tax losses and unused tax credits to
the extent that it is probable that taxable profit will be available against which the
deductible temporary differences, unused tax losses and unused tax credits can be
utilised.
Income tax on the statement of comprehensive income for the year comprises current
and deferred tax. Current tax is the expected amount of income taxes payable in
respect of the taxable profit for the year and is computed using the tax rates that have
been enacted at the reporting year.
Deferred tax is computed at the tax rates that are expected to apply in the period when
the asset is realised or the liability is settled, based on tax rates that have been enacted
or substantively enacted at the reporting date. Deferred tax is recognised in the
statement of comprehensive income, except when it arises from a transaction which is
recognised directly in equity/participants' fund, in which case the deferred tax is also
charged or credited directly in equity/participants' fund.
47
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.21 Financial liabilities
(a) Financial liabilities at FVTPL
(b) Other financial liabilities
The Company's other financial liabilities include trade payables and other payables.
Financial liabilities are classified according to the substance of the contractual
arrangements entered into and the definitions of a financial liability.
Financial liabilities, within the scope of FRS 139, are recognised in the statement of
financial position when, and only when, the Company becomes a party to the
contractual provisions of the financial instrument. Financial liabilities are classified as
either financial liabilities at FVTPL or other financial liabilities.
Financial liabilities held for trading include derivatives entered into by the Company
that do not meet the hedge accounting criteria. Derivative liabilities are initially
measured at fair value and subsequently stated at fair value, with any resultant
gains or losses recognised in statement of comprehensive income. Net gains or
losses on derivatives include exchange differences.
The Company has not designated any financial liabilities as at FVTPL.
Trade and other payables are recognised initially at fair value plus directly
attributable transaction costs and subsequently measured at amortised cost using
the effective profit method.
Financial liabilities at FVTPL include financial liabilities held for trading and financial
liabilities designated upon initial recognition as at FVTPL.
For other financial liabilities, gains and losses are recognised in statement of
comprehensive income when the liabilities are derecognised, and through the
amortisation process.
A financial liability is derecognised when the obligation under the liability is
extinguished. When an existing financial liability is replaced by another from the same
lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition
of the original liability and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in statement of comprehensive income.
48
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.22 Provisions for liabilities
2.23 Employee benefits
(i) Short-term benefits
(ii) Defined contribution plan
2.24 Foreign currencies
Wages, salaries, bonuses and social security contributions are recognised as an
expense in the year in which the associated services are rendered by employees of
the Company. Short-term accumulating compensated absences such as paid
annual leave are recognised when services are rendered by employees that
increase their entitlement to future compensated balances. Short-term non-
accumulating compensated absences such as sick leave are recognised when the
absences occur.
Transactions in foreign currencies are converted into Ringgit Malaysia at rates of
exchange ruling at the transaction dates. Monetary assets and liabilities in foreign
currencies at the end of the financial year are translated into Ringgit Malaysia at rates
of exchange ruling at that date. All exchange differences are taken to the statement of
comprehensive income and/or revenue accounts. The principal exchange rate for every
unit of United States Dollar ruling at financial year end used is RM3.0259 (2010:
RM3.2730).
Provisions for liabilities are recognised when the Company has a present obligation as
a result of a past event and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation, and a reliable estimate of the
amount can be made. Provisions are reviewed at each financial year end and adjusted
to reflect the current best estimate. Where the effect of the time value of money is
material, the amount of provision is the present value of the expenditure expected to be
required to settle the obligation.
As required by law, the Company makes contributions to the national pension
scheme, the Employees Provident Fund ("EPF"). The Company also makes
additional contributions to the EPF for eligible employees by reference to their
length of service and earnings. Such contributions are recognised as an expense in
the statement of comprehensive income as incurred.
49
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.25 Other Revenue recognition
(i) Profit and investment income
(ii) Dividend income
Dividend income is recognised when the right to receive payment is established.
(iii) Wakalah fees
(iv) Rental income
2.26 Zakat
2.27
Profit and investment income on Shariah compliant investments are recognised on
an accrual basis using the effective yield of the asset.
This represents an obligatory amount payable by the Company to comply with the
principles of Shariah. Zakat is computed using the “net-asset” method as approved by
the Shariah Committee. Only the zakat that is attributable to the individual Muslim
shareholders of the holding company was provided for in the financial statements. The
zakat computation is reviewed by the Shariah Committee. The Board has the discretion
to pay additional zakat above the obligatory amount payable.
Wakalah fees are recognized as soon as the amount of contribution can be reliably
measured in accordance with the principles of Shariah.
The significant accounting policies adopted are consistent with those applied in the
annual audited financial statements for the financial year ended 31 March 2010, except
for the adoption of the following new/revised FRSs, amendments to FRSs and
Interpretations of the Issues Committee ("IC") issued by the Malaysian Accounting
Standards Board ("MASB") that are mandatory for the financial period beginning 1
January 2010.
Rental income receivable under tenancy agreements is recognised on a straight-
line basis over the term of the tenancy.
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
50
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
Standard/Interpretation
FRS 4: Insurance Contracts
FRS 7: Financial Instruments: Disclosures
FRS 8: Operating Segments
FRS 101: Presentation of Financial Statements (Revised 2009)
FRS 123: Borrowing Costs
Amendments to FRS 1: First-time Adoption of Financial Reporting Standards and
FRS 127: Consolidated and Separate Financial Statements: Cost of an Investment
in a Subsidiary, Jointly Controlled Entity or Associate
Amendments to FRS 2: Share-based Payment - Vesting Conditions and
Cancellations
Amendments to FRS 132: Financial Instruments: Presentation
Amendments to FRS 139: Financial Instruments: Recognition and Measurement,
FRS 7: Financial Instruments: Disclosures
Amendments to FRSs contained in the documents entitled 'Improvements to
FRSs (2009)'
IC Interpretation 9: Reassessment of Embedded Derivatives
IC Interpretation 10: Interim Financial Reporting and Impairment
IC Interpretation 11: FRS 2 - Group and Treasury Share Transactions
IC Interpretation 13: Customer Loyalty Programmes
IC Interpretation 14: FRS 119 - The Limit on a Defined Benefit Asset, Minimum
Funding Requirements and their Interaction
TR i - 3: Presentation of Financial Statements of Islamic Financial Institutions
FRS 4 : Insurance Contracts
On adoption of FRS 4, expanded disclosures are required and reclassification of certain
items in the statement of financial position (including comparatives) previously reported
on net basis to gross basis is required.
Unless otherwise described below, the directors expect that the adoption of the
pronouncements above will have no material impact on the financial statements of the
Company in the period of their initial application:
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
FRS 123, Amendments to FRS 1, IC Interpretation 9 and 13 are not applicable to the
Company.
51
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 4 : Insurance Contracts (cont'd.)
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
FRS 4 requires a test for the adequacy of recognised takaful certificates liabilities at
each financial year end using current estimates of future cash flows under its takaful
certificates. For the purpose of complying with the requirements of a liability adequacy
test under FRS 4 : Insurance Contracts, takaful operators are deemed to comply if the
valuation methods used are in accordance with BNM/RH/GL 004-20 Guideline on
Valuation Basis for Liabilities of Family Takaful Business and BNM/RH/GL 004-21
Guideline on Valuation Basis for Liabilities of General Takaful Business.
FRS 4 requires impairment tests to be performed for takaful and retakaful certificates
assets and receivables and to reduce its carrying amount accordingly and recognise
that impairment in the statement of comprehensive income. BNM has in December
2010 issued Guidelines on Financial Reporting for Takaful Operators in order to bring
financial reporting for takaful operators in line with the requirements of FRSs issued by
MASB. For the purpose of complying with paragraph 58 of FRS 139 and paragraph
20(a) of FRS 4, objective evidence of impairment is deemed exist where the principal or
profit or both for receivables that are individually assessed for impairment, is past due
for more than 90 days or 3 months. Previously, the requirement by BNM was for takaful
operators to make full provision for outstanding contribution including agents, brokers
and retakaful operators balances in arrears for more than 30 days for motor class and 6
months for other classes of takaful certificates from the date on which they become
receivable.
Upon the adoption of FRS 139 and FRS 4, an impairment loss is recognised in respect
of retakaful certificate assets and takaful certificate receivables when there is objective
evidence that an impairment loss has been incurred in accordance with the policies
described in Notes 2.18. The amount of the loss is measured as the difference
between the carrying amount of the receivables and the present value of the estimated
future cashflows discounted at the receivable's original effective profit rate.
The adoption of FRS 4 also requires the identification of takaful certificates which do
not contain significant takaful risks to be reclassified as investment contracts. The
Company defines takaful risk to be significant when the ratio of amount payable upon
insurable event over amount payable upon non-insurable event (“the Significant Takaful
Risk Ratio”) must be at a specified level in order to be considered to have significant
takaful risk.
Accordingly, all products are classified as takaful certificates as at the date of this
statement of financial position.
52
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 4 : Insurance Contracts (cont'd.)
(a) Effects of changes on opening reserves
Restated
As at Increase / As at
1 April 2009 (decrease) 1 April 2009
RM '000 RM '000 RM '000
Shareholder's fund
Retained profits: (8,130) (16,117) (24,247)
- Expenses Liabilities of General
Takaful Fund
- Unearned wakalah fees reserve (3,877)
- Provision for expenses deficiency (734)
- Expenses Liabilities of Family
Takaful Fund (16,878)
- Deferred tax 5,372
General takaful fund
Accumulated deficits: 3,981 (2,059) 1,922
- Impairment of Takaful certificates
receivables (2,746)
- Deferred tax 687
Family takaful fund
Unallocated surplus: 20,036 1,638 21,674
- Impairment of Takaful certificates
receivables 1,638
FRS 4 does not contain a transitional provision similar to FRS 139, and as such the
accounting policy change will have to be accounted retrospectively in the opening
balance of retained profits and accumulated deficits of the general takaful fund in
accordance with FRS 108: Accounting Policies, Changes in Accounting Estimates and
Error. The effects arising as a result of adopting the above are detailed as follows:
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
53
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 4 : Insurance Contracts (cont'd.)
(a) Effects of changes on opening reserves (cont'd.)
Restated
As at Increase / As at
1 April 2010 (decrease) 1 April 2010
Shareholder's fund RM '000 RM '000 RM '000
Retained profits: 1,336 (11,812) (10,476)
- Expenses Liabilities of General
Takaful Fund
- Unearned wakalah fees reserve (4,014)
- Provision for expenses deficiency (1,943)
- Expenses Liabilities of Family
Takaful Fund (9,793)
- Deferred tax 3,938
General takaful fund
General takaful fund: 8,794 (2,602) 6,192
- Impairment of Takaful certificates
receivables (3,470)
- Deferred tax 868
Family takaful fund
Unallocated surplus: 35,579 1,495 37,074
- Impairment of Takaful certificates
receivables 1,495
(b) Reclassification of comparatives
The effects of the adoption of FRS 4 on the comparative statement of financial
position as at 31 March 2010 are summarised as follows:
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
54
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 4 : Insurance Contracts (cont'd.)
As
previously Re- As
Shareholder's fund reported classification restated
RM '000 RM '000 RM '000
Assets
Deferred tax assets 2,303 3,938 6,241
Liabilities
Expenses liabilities - 15,750 15,750
Equity
Retained profits/
(accumulated losses) 1,336 (11,812) (10,476)
General takaful fund
Assets
Takaful certificates receivables 39,626 (3,470) 36,156
Deferred tax assets 1,474 868 2,342
Participants' Fund
General takaful fund 8,794 (2,602) 6,192
Family takaful fund
Assets
Takaful certificates receivables 37,266 1,495 38,761
Liabilities
Takaful certificates liabilities
- Unallocated surplus 35,579 1,495 37,074
(c) Current year effects
The following tables provide estimates of the extent to which each of the line items
in the statement of financial position and statement of financial position for the
financial year ended 31 March 2011 are higher or lower than it would have been
had the previous policies been applied in the current year.
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
55
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2.27
FRS 4 : Insurance Contracts (cont'd.)
Increase/
(c) Current year effects (cont'd.) (decrease)
2011
(i) Effects on statement of financial position: RM'000
Shareholder's fund
Assets
Deferred tax assets 3,787
Liabilities
Expenses liabilities (15,146)
Equity
Retained profits/(accumulated losses) 11,359
General takaful fund
Assets
Takaful certificates receivables (322)
Deferred tax assets 80
Participants' Fund
General takaful fund 4,740
Family takaful fund
Assets
Takaful certificates receivables 113
Liabilities
Takaful certificates liabilities
- Unallocated surplus (1,609)
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
56
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 4 : Insurance Contracts (cont'd.)
Increase/
(c) Current year effects (cont'd.) (decrease)
2011
(ii) Effects on statement of comprehensive income: RM'000
Shareholder's fund
Change in expenses liability (605)
General takaful fund
Fair value gains and losses:
Allowance/(writeback) for impairment
of takaful receivables (3,792)
Taxation 948
Family takaful fund
Fair value gains and losses:
Allowance/(writeback) for impairment
of takaful receivables 1,609
FRS 7 : Financial Instruments: Disclosures
The Company has applied the FRS 7 prospectively in accordance with the transitional
provision. Hence, the new disclosures are included throughout the Company's financial
statements for the year ended 31 March 2011.
Prior to 1 January 2010, information about financial instruments was disclosed in
accordance with the requirements of FRS 132 Financial Instruments: Disclosure and
Presentation. FRS 7 introduces new disclosures to improve the information about
financial instruments. It requires the disclosure of qualitative and quantitative
information about exposure to risks arising from financial instruments, including
specified minimum disclosures about credit risk, liquidity risk and market risk, including
sensitivity analysis to market risk.
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
57
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
FRS 101 : Presentation of Financial Statements
The revised FRS 101 was adopted retrospectively by the Company.
Standards issued but not yet effective
Effective for financial periods beginning on or after 1 March 2010
Amendments to FRS 132: Financial Instruments: Presentation – Classification of
Rights Issues
The revised FRS 101 also prescribes one-reporting entity model, i.e. singular financial
statement presentation for all funds on a combined/consolidated basis. However
BNM/RH/GL 004-6 Guidelines on Financial Reporting for Takaful Operators requires
the Company to prepare the financial statements separately for Shareholder's Fund,
General Takaful Fund and Family Takaful Fund.
The revised FRS 101 also requires the Company to make new disclosures to enable
users of the financial statements to evaluate the Company's objectives, policies and
processes for managing capital risk.
In addition, a statement of financial position is required at the beginning of the earliest
comparative period following a change in accounting policy, the correction of an error or
the classification of items in the financial statements. The Company's statement of
financial position at the beginning of the earliest comparative period, i.e. 1 April 2009
has been included following the change in the comparative figures for 31 March 2010 to
conform with current year's presentation.
The revised FRS 101 introduces changes in the presentation and disclosures of
financial statements. The revised Standard separates owner and non-owner changes in
equity. The statement of changes in equity includes only details of transactions with
owners, with all non-owner changes presented as a single line. The Standard also
introduces the statement of comprehensive income, with all items of income and
expense recognised in statement of comprehensive income, together with all other
items of recognised income and expense recognised directly in equity, either in one
single statement, or in two linked statements. The Company have elected to present
this statement in one single statement.
As at the date of authorisation of these financial statements, the following FRSs,
Amendments to FRSs and Interpretations of the Issues Committee ("IC Interpretations")
have been issued by the Malaysian Accounting Standards Board ("MASB") but are not
yet effective and have not been adopted by the Company.
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
58
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.27
Effective for financial periods beginning on or after 1 July 2010
FRS 1: First-time Adoption of Financial Reporting Standards (revised)
FRS 3: Business Combinations (revised)
Amendments to FRS 2: Share-based Payment
Amendments to FRS 5: Non-current Assets Held for Sale and Discontinued Operations
Amendments to FRS 127: Consolidated and Separate Financial Statements
(revised 2010)
Amendments to FRS 138: Intangible Assets
Amendments to IC Interpretation 9: Reassessment of Embedded Derivatives
IC Interpretation 12: Service Concession Arrangements
IC Interpretation 15: Agreements for the Construction of Real Estate
IC Interpretation 16: Hedges of a Net Investment in a Foreign Operation
IC Interpretation 17: Distribution of Non-cash Assets to Owners
Effective for financial periods beginning on or after 1 January 2011
Amendments to FRS 1: Limited Exemption from Comparative FRS 7 Disclosures for
first- time Adopters
Amendments to FRS 1: Additional Amendments for First-time adopters
Amendments to FRS 2: Group Cash-settled Share-based Payments Transactions
Amendments to FRS 7: Improving Disclosures about Financial Instruments
IC Interpretation 4: Determining whether an Arrangement contains a lease
IC Interpretation 18: Transfer of Assets from Customers
TR 3: Guidance on Transition to IFRSs
Tri-4: Shariah Compliant Sale Contracts.
Effective for financial periods beginning on or after 1 July 2011
Amendments to IC Interpretation 14, Prepayments of a Minimum Funding Requirements
IC Interpretation 19, Extinguishing Financial Liabilities with equity instruments
Effective for financial periods beginning on or after 1 January 2012
FRS 124: Related Party Disclosures (revised)
IC Interpretation 15: Agreements for the Construction of Real Estate
Changes in Accounting Policies and Effects Arising from Adoption of New and
Revised FRSs and Issues Committee Interpretations ("IC Interpretations")
(cont'd.)
59
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant accounting estimates and judgments
(a) Critical judgements made in applying accounting policies
(i)
(ii) Impairment of AFS financial assets
The preparation of the Company's financial statements requires management to make
judgements, estimates and assumptions that affect the reported amount of revenues,
expenses, assets and liabilities at the financial year end. However, uncertainty about
these assumptions and estimates could result in outcomes that could require a material
adjustment to the carrying amount of the asset or liability affected in the future.
The following are the judgements made by management in the process of applying
the Company's accounting policies that have the most significant effect on the
amount recognised in the financial statements. Judgements are continually
evaluated and are based on historical experiences and other factors, including
expectations of future events that are believed to be reasonable under the
circumstances.
Classification between investment properties and property, plant and
equipment
The Company has developed certain criteria based on FRS 140 in making
judgement whether a property qualifies as an investment property. Investment
property is a property held to earn rentals or for capital appreciation or both.
Some properties comprise a portion that is held to earn rentals or for capital
appreciation and another portion that is held for use in the production or supply
of goods or services or for administrative purposes. If these portions could be
sold separately (or leased out separately under a finance lease), the Company
would account for the portions separately. If the portions could not be sold
separately, the property is an investment property only if an insignificant portion
is held for use in the production or supply of goods or services or for
administrative purposes. Judgement is made on an individual property basis to
determine whether ancillary services are so significant that a property does not
qualify as investment property.
Significant judgement is required to assess impairment for available-for-sale
investments. The Company evaluates the duration and extent to which the fair
value of an investment is less than its cost; the financial health and near term
business outlook for the investee, including but not limited to factors such as
industry and sector performance, changes in technology and operational and
financial cash flow.
60
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(a) Critical judgements made in applying accounting policies (cont'd.)
(iii) Impairment of takaful and retakaful certificates receivables
(b) Key sources of estimation uncertainty
(i) Depreciation and amortisation
The key assumptions concerning the future and other key sources of estimation
uncertainty at the reporting date that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the next financial
year are discussed below.
Depreciation and amortisation is based on management’s estimates of the
future estimated average useful lives and residual values of property, plant and
equipment and intangible assets. Estimates may change due to technological
developments, expected level of usage, competition, market conditions and
other factors, and could impact the estimated average useful lives and the
residual values of these assets.
This may result in future changes in the estimated useful lives and in the
depreciation or amortisation expenses. It is currently estimated that the
property, plant and equipment and intangible assets of the Company will not
have any residual values.
Collective assessment is performed by grouping receivables with similar credit
risk characteristics and the future cash flows are estimated based on historical
loss experience for receivables with similar credit risk characteristics.
The Company performs individual assessment for takaful and retakaful
certificates receivables that are individually significant, or collectively for
financial assets that are not individually significant by calculating the present
value of future cash flows against the carrying amount of receivables. The
future cash flows are determined based on credit assessment on each
impaired receivable.
61
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(b) Key sources of estimation uncertainty (cont'd.)
(ii)
The principal uncertainty in the general takaful certificate liabilities arises from
the technical provisions which include the contribution liabilities and claims
liabilities.
The estimates of contribution liabilities and claims liabilities are therefore
sensitive to various factors and uncertainties. The establishment of technical
provisions is an inherently uncertain process and, as a consequence of this
uncertainty, the eventual settlement of contribution and claim liabilities may
vary from the initial estimates. At each financial year end, the estimates of
financial year end are re-assessed for adequacy by an appointed actuary and
changes will be reflected as adjustments to these liabilities. The appointment of
the actuary is approved by BNM.
Uncertainty in accounting estimates for general takaful certificate
liabilities
The estimation bases for contribution liabilities for general takaful certificate
liabilities is explained in Note 2.14 (ii) of the Summary of Significant Accounting
Policies.
Generally, claims liabilities on reported claims or case reserves are estimated
based upon historical claims experience, existing knowledge of events, the
terms and conditions of the relevant policies and interpretation of
circumstances. Particularly relevant is past experience of similar cases,
historical claims development trends, legislative changes, judicial decisions and
economic conditions. It is certain that final claim liabilities may vary from
current projection. The uncertainty is also inherent in the projected contribution
liabilities as it is correlated to the projected claims liabilities.
There may be reporting lag between the occurrence of an insured event and
the time it is actually recorded. For these cases, the IBNR reserves are
estimated. Even for liabilities which have been recorded, there are potential
uncertainties as to the magnitude of the final claims compared to initial reserve
provisions. For these cases, IBNER reserve provision are estimated. There are
various factors affecting the level of uncertainty such as inflation, judicial
interpretations, legislative changes and claims handling procedures.
62
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(b) Key sources of estimation uncertainty (cont'd.)
(ii)
(iii)
Bank Negara Malaysia has issued new Guidelines on Valuation Basis for
Liabilities of General Takaful Business which shall take effect beginning on and
after 1 July 2011. The guidelines sets out prudential requirements that should
be observed by takaful operators in valuing liabilities of their general takaful
business, with the aim of providing for those liabilities at a specified level of
adequacy with explicit prudential margins. The Guidelines is intended to reflect
the takaful operator’s fiduciary duty to manage the takaful funds prudently,
treat participants fairly as well as to ensure that the shareholders’ fund can
adequately support the takaful business. Currently, the Company has adopted
a level of provision of risk margin for adverse deviation ("PRAD") calculated at
70% confidence level. This is a progressive measure taken by the Company
towards meeting the PRAD at 75% confidence level as required by the
guidelines by financial year ending 31 March 2013.
Uncertainty in accounting estimates for general takaful certificate
liabilities (cont'd.)
The estimation of the ultimate liability arising from claims made under family
takaful certificates is a critical accounting estimate. There are several sources
of uncertainty that need to be considered in estimation of the liabilities that the
family takaful fund will ultimately be required to pay as claims.
For those certificates that cover risks related to disability, estimates are made
based on recent past experience and emerging trends. However epidemics, as
well as wide ranging changes to lifestyle, could result in significant changes to
the expected future exposures.
For family takaful certificates, estimates are made for future deaths, disabilities,
maturities, investment returns, voluntary terminations and expenses in
accordance with contractual and regulatory requirements. The family takaful
fund bases the estimate of expected number of deaths on statutory mortality
tables, adjusted where appropriate to reflect the fund's unique risk exposures.
The estimated number of deaths determines the value of possible future
benefits to be paid out, which will be factored into ensuring sufficient cover by
reserves, which in return is monitored against current and future contributions.
Uncertainty in accounting estimates for family takaful certificate liabilities
63
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(b) Key sources of estimation uncertainty (cont'd.)
(iii)
(iv)
Bank Negara Malaysia has issued new Guidelines on Valuation Basis for
Liabilities of Family Takaful Business which shall take effect beginning on and
after 1 July 2011. The guidelines sets out prudential requirements that should
be observed by takaful operators in valuing liabilities of their family takaful
business, with the aim of providing for those liabilities at a specified level of
adequacy with explicit prudential margins. The Guidelines is intended to reflect
the takaful operator’s fiduciary duty to manage the takaful funds prudently,
treat participants fairly as well as to ensure that the shareholders’ fund can
adequately support the takaful business. The Company had not adopted the
guidelines earlier in its financial statement for the year ended 31 March 2011.
The principal uncertainty in the shareholder's fund takaful certificate liabilities
arises from the technical provisions which includes the unearned wakalah fees
reserve and expenses liabilities of general and family takaful fund.
The estimation bases for unearned wakalah fees for general takaful certificate
liabilities is explained in Note 2.16 (i) (a) of the Summary of Significant
Accounting Policies.
All of these will give rise to estimation uncertainties of projected ultimate liability
of the family takaful fund.
At each financial year end, these estimates are reassessed for adequacy and
changes will be reflected as adjustments to the liability.
The best estimate for unexpired expense reserve for general takaful business
on a going concern basis is derived from the estimation for expected certificate
management expenses required to maintain existing certificates and the costs
of claims handling expenses to administer and settle open claim files.
Uncertainty in accounting estimates for family takaful certificate liabilities
(cont'd.)
Uncertainty in accounting estimates for shareholder's fund expenses
liabilities
64
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(b) Key sources of estimation uncertainty (cont'd.)
(iv)
(iv)
(v) Pipeline contributions
The unexpired expense reserve is the present value of future maintenance
expenses on the current in-force family takaful contracts and is further reduced
by the present value of future shareholders income realisable with reasonable
certainty relating to those in-force family takaful contracts.
The present value of the future shareholders income relates to future renewal
wakalah fees as well as investment performance fee of the PA and the non-
medical risk fund's surplus administration charge.
The general takaful fund has recognised pipeline contribution amounting to
approximately RM6,093,143 (2010: RM7,400,000) at the end of the current
financial year. Estimations made by management are based on expected and
actual risks underwritten and is as advised by the relevant agents or
underwriters. Other factors taken into consideration include average monthly
trends for turnaround time of certificate issuance.
The unexpired expense reserve is calculated using adjusted parameters to
provide sufficiency at the appropriate percentile of statistical variation that is
higher than the best estimate values.
Uncertainty in accounting estimates for shareholder's fund expenses
liabilities (cont'd.)
The unexpired expense reserve for family business is estimated assuming that
the block of in-force contracts are to be maintained on a 'going concern' basis.
Under a 'going concern' scenario, the contracts so valued are taken as a
particular sub-block of contracts and the maintenance expenses for which are
valued to the point the last certificate goes off the books.
The maintenance expenses related to such contracts include the cost of
functions that would normally associated with operation of the business on a
'going concern' basis.
Uncertainty in accounting estimates for shareholder's fund expenses
liabilities
65
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
2. Significant accounting policies (cont'd.)
2.28 Significant Accounting Estimates and Judgments (cont'd.)
(b) Key sources of estimation uncertainty (cont'd.)
(vi) Impairment of takaful receivables
(vii) Deferred tax assets
The amount of deferred tax assets recognised at 31 March 2011 was
approximately RM 5,169,860 (2010: RM 2,303,390) for the shareholder's fund
and RM 1,570,313 (2010: RM 1,473,794) for the general takaful fund; also the
amount of deferred tax liabilities for the family takaful fund is approximately
RM 2,133,882 (2010: RM 2,303,549) as disclosed in Note 21.
Deferred tax assets are recognised for all unused tax losses to the extent that it
is probable that taxable profit will be available against which the losses can be
utilised. Significant management judgement is required to determine the
amount of deferred tax assets that can be recognised, based on the likely
timing and level of future taxable profits together with future tax planning
strategies.
Assumptions about generation of future taxable profits depend on
management’s estimates of future cash flows. These depends on estimates of
future production and sales volume, operating costs, capital expenditure,
dividends and other capital management transactions. Judgement is also
required about application of income tax legislation. These judgements and
assumptions are subject to risks and uncertainty, hence there is a possibility
that changes in circumstances will alter expectations, which may impact the
amount of deferred tax assets recognised in the statement of financial position
and the amount of unrecognised tax losses and unrecognised temporary
differences.
The Company reviews its takaful receivables on a regular basis to assess
whether an allowance for impairment should be recorded in the statement of
comprehensive income/revenue account. In particular, judgement by
management is required in the estimation of the amount and timing of future
cash flows when determining the level of impairment required. Such estimates
are necessarily based on assumptions about the probability of default and
probable losses in the event of default, the value of the underlying security, and
realisation costs.
66
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
3. Operating revenue
2011 2010
Shareholder's fund RM '000RM '000 RM '000
Wakalah fees:
General takaful fund 56,157 55,931
Family takaful fund 150,378 125,700
206,535 181,631
Investment income:
Profit on investment accounts 5,188 8,421
Net accretion of discounts on investments 187 138
5,375 8,559
211,910 190,190
General takaful fund
Gross contribution 224,196 217,230
Investment income:
Profit on investment accounts 8,544 6,044
Net accretion of discounts on investments 16 109
8,560 6,153
232,756 223,383
Family takaful fund
Gross contribution 486,530 357,610
Investment income:
Profit on investment accounts 31,749 21,119
Net accretion of discounts on investments 1,094 1,048
32,843 22,167
Investment income of Investment-linked fund (Note 33(a)) 516 227
519,889 380,004
67
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
4. Net earned contributions
2011 2010
General takaful fund RM '000RM '000 RM '000
(a) Gross earned contribution
Gross contribution 224,196 217,230
Change in unearned contribution provision (13,670) (911)
210,526 216,319
(b) Earned contribution ceded to retakaful operators
Contribution ceded to retakaful operators (22,398) (25,525)
Change in unearned contribution provision (10,151) 278
(32,549) (25,247)
Net Earned Contribution 177,977 191,072
5. Investment income
Shareholder's General Family
fund takaful fund takaful fund
RM '000 RM '000 RM '000
31 March 2011
Financial assets at FVTPL:
Dividend income
- quoted shares in Malaysia 16 16 380
HTM investments:
Profit income 1,082 97 6,643
AFS financial assets:
Profit income 1,494 2,559 11,856
Dividend income
- quoted shares in Malaysia 340 858 1,149
Loans and receivables:
Profit income 1,938 5,014 6,958
Dividend income
- institutional trusts 318 - 897
Rental income from investment properties - - 3,866
Net accretion of discounts on investments 187 16 1,094
Investment expenses - - (1,722)
5,375 8,560 31,121
68
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
5. Investment income (cont'd.)
Shareholder's General Family
fund takaful fund takaful fund
31 March 2010 RM '000 RM '000 RM '000
Financial assets at FVTPL:
Dividend income
- quoted shares in Malaysia 13 14 1,026
HTM investments:
Profit income 997 1,436 5,308
AFS financial assets:
Profit income 1,018 1,592 8,508
Dividend income
- quoted shares in Malaysia 171 382 -
Loans and receivables:
Profit income 1,514 2,231 3,615
Dividend income
- institutional trusts 240 - 668
Rental income from investment properties 600
Net accretion of discounts on investments 138 109 1,018
Investment expenses - - (523)
4,091 5,764 20,220
6. Realised gains and losses
Shareholder's General Family
fund takaful fund takaful fund
31 March 2011 RM '000 RM '000 RM '000
Property, plant and equipment
Realised losses (834) - -
Financial assets at FVTPL:
Realised gains:
Quoted shares in Malaysia:
Shariah approved equities 233 239 615
AFS financial assets:
Realised gains:
Unquoted Islamic private debt securities:
Unsecured - - 3,044
Quoted shares in Malaysia:
Shariah approved equities 1,065 2,467 3,483
Shariah approved unit trust funds - - 931
1,065 2,467 7,458
464 2,706 8,073
69
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
6. Realised gains and losses (cont'd.)
Shareholder's General Family
fund takaful fund takaful fund
RM '000 RM '000 RM '000
31 March 2010
Financial assets at FVTPL:
Realised gains:
Quoted shares in Malaysia:
Shariah approved equities - 78 1,501
AFS financial assets:
Realised gains:
Quoted shares in Malaysia:
Shariah approved equities 4,337 230 51
Shariah approved unit trust funds - - 472
4,337 230 523
4,337 308 2,024
7. Fair value gains and losses
Shareholder's General Family
fund takaful fund takaful fund
31 March 2011 RM '000 RM '000 RM '000
Investment properties - - (7,490)
Financial assets at FVTPL 14 (19) 61
Impairment of AFS financial assets (323) - -
Allowance/(writeback) for impairment
of takaful receivables - 3,054 (636)
(309) 3,035 (8,065)
31 March 2010
Investment properties - - 22,535
Financial assets at FVTPL 170 199 4,659
Impairment of AFS financial assets (1,107) 389 347
Impairment of HTM financial assets (962) - -
Allowance/(writeback) for impairment
of takaful receivables - (1,593) (239)
(1,899) (1,005) 27,302
70
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
8. Fee and commission income
2011 2010
RM '000RM '000 RM '000
Shareholder's fund
Fee income
Wakalah fees:
General takaful fund 56,157 55,931
Family takaful fund 150,378 125,700
Surplus administrative charges :
General takaful fund - 8,095
Family takaful fund 4,378 732
Investment performance fee from family takaful fund 2,376 4,468
213,289 194,926
Commission expense
Commissions paid to agents (115,676) (100,519)
General takaful fund
Fee and commission income
Retakaful Commission Income 3,938 4,505
Fee expense
Wakalah fees (56,157) (55,931)
Surplus administrative charges - (8,095)
(56,157) (64,026)
Family takaful fund
Fee and commission income
Retakaful Commission Income - 63
Fee expense
Wakalah fees (143,009) (120,139)
Surplus administrative charges (4,341) (732)
Investment performance fee (2,376) (4,468)
(149,726) (125,339)
71
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
9. Other operating income/(expenses)
2011 2010
RM '000RM '000 RM '000
Shareholder's fund
Miscellaneous income 346 620
346 620
General takaful fund
Miscellaneous income/(expenses) 50 (1)
Bank charges (1,818) (1,382)
Stamp duty (2) 7
(1,770) (1,376)
Family takaful fund
Miscellaneous expenses (419) (2,771)
Bank charges (1,461) (1,137)
Participants' medical fees (461) (352)
Stamp duty (488) (514)
(2,829) (4,774)
10. Net benefits 2011 2010
RM '000RM '000 RM '000
Family takaful fund
Gross benefits and claims paid :
Death (39,070) (29,585)
Surrender (41,367) (19,700)
Medical (32,821) (27,724)
Others (4,442) (15,771)
(117,700) (92,780)
72
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
11. Management expenses
2011 2010
RM '000 RM '000
Shareholder's fund
Staff costs:
Non-executive directors' remuneration (Note 12 (a)) 845 805
Executive director's remuneration (Note 12 (b)) 1,404 1,417
Salaries, bonus, and other related costs 34,617 41,291
Pension costs - EPF 7,872 5,051
Short-term accumulating compensated absences 174 95
44,912 48,659
Auditors’ remuneration
- statutory audit 131 87
- other services 21 23
Office rental 5,296 3,284
Amortisation of software development costs 1,169 781
Depreciation of property, plant and equipment 4,101 2,250
Property, plant and equipment written off - 7
Management fees paid to holding company 3,914 2,252
Share of acquisition costs on quota share retakaful 4,367 4,152
Marketing and communication 6,150 5,249
Electronic data processing 3,420 3,445
Agency expenses 5,962 4,613
Contribution to Perbadanan Insurans Deposit
Malaysia ("PIDM") 1,282 -
Other expenses 9,258 11,827
89,983 86,629
12. Directors' remuneration
(a) Non-executive directors' remuneration:
Fees 672 626
Allowances and other emoluments 173 179
845 805
(b) Executive director's remuneration:
Salary and bonus 1,200 1,172
Pension costs - EPF 204 155
Retirement benefits - 90
Benefits-in-kind 96 121
1,500 1,538
Total CEO's remuneration excluding benefits-in-kind 1,404 1,417
73
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
12. Directors' remuneration (cont'd.)
2011 2010
Executive director:
RM1,300,001 - RM1,800,000 1 1
Non-executive directors:
RM100,001 - RM500,000 6 4
RM50,001 - RM100,000 2 2
13. Change in expenses liability
2011 2010
Shareholder's fund RM '000 RM '000
Expense liability of general takaful fund
Increase in unearned wakalah fees reserve 236 137
Increase in provision for expenses deficiency 1,630 1,209
Expense liability of family takaful fund
Decrease in unexpired expense reserve (2,471) (7,085)
(605) (5,739)
Number of directors
The number of directors of the Company whose total remuneration during the financial year
fell within the following bands is analysed below:
74
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
14. Taxation
2011 2010
RM '000RM '000 RM '000
Shareholder's fund
Current year's provision 3,944 6,848
Overprovision of tax expense in prior years (347) (896)
Deferred tax relating to origination and
reversal of temporary differences (Note 21) 1,173 557
Tax expense for the year 4,770 6,509
2011 2010
RM '000RM '000 RM '000
Profit before taxation 14,111 14,926
Taxation at Malaysian statutory tax rate 3,527 3,732
Income not subject to tax (73) -
Expenses not deductible for tax purposes 1,593 996
Underprovision of deferred tax liabilities in prior years 70 2,678
Overprovision of tax expense in prior years (347) (896) Tax expense for the year 4,770 6,510
Domestic income tax for shareholder's fund is calculated at the Malaysian statutory tax rate
of 25% (2009: 25%) of the estimated assessable profit for the year.
A reconciliation of income tax expenses applicable to profit before taxation at the statutory
income tax rate to income tax expense at the effective income tax rate of the shareholder's
fund is as follows:
75
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
14. Taxation (cont'd.)
2011 2010
RM '000RM '000 RM '000
General takaful fund
Current year's provision 474 2,004
Underprovision of tax expense in prior years 146 -
Deferred tax relating to origination and
reversal of temporary differences (Note 21) 807 507
Tax expense for the year 1,427 2,511
2011 2010
RM '000RM '000 RM '000
Surplus before taxation 5,872 13,504
Taxation at Malaysian statutory tax rate 1,468 3,376
Income not subject to tax (182) -
Expenses not deductible for tax purposes 216 1
Utilisation of capital allowances allocated
from the Shareholder's fund (279) (1,514)
Underprovision of deferred tax in prior year 58 648
Underprovision of tax expense in prior years 146 - Tax expense for the year 1,427 2,511
A reconciliation of income tax expenses applicable to profit before taxation at the statutory
income tax rate to income tax expense at the effective income tax rate of the general takaful
fund is as follows:
Domestic income tax for general takaful fund is calculated at the Malaysian statutory tax rate
of 25% (2009: 25%) of the estimated assessable profit for the year.
76
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
14. Taxation (cont'd.)
2011 2010
RM '000RM '000 RM '000
Family takaful fund
Current year's provision 2,830 843
Underprovision of tax expense in prior years 497 -
Deferred tax relating to origination and
reversal of temporary differences (Note 21) (344) 1,779
Tax expense for the year 2,983 2,622
2011 2010
RM '000RM '000 RM '000
Surplus for the year 241,348 198,821
Surplus administration charges transferred to
shareholders' fund - 732
Surplus before taxation 241,348 199,553
Taxation at preferential tax rate of 8% 19,308 15,964
Income not subject to tax (16,628) (12,682)
Expenses not deductible for tax purposes (132) 8
Utilisation of capital allowances allocated
from the Shareholder's fund (193) (283)
Under/(Over)provision of deferred tax in prior years 131 (385)
Underprovision of tax expense in prior years 497 -
Tax expense for the year 2,983 2,622
A reconciliation of income tax expenses applicable to surplus before taxation at the statutory
income tax rate to income tax expense at the preferential income tax rate of the family
takaful fund is as follows:
Family takaful business is taxed at the preferential tax rate of 8% (2010: 8%) of taxable
investment income for the year.
77
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
15. Property, plant and equipment
Furniture,
Fittings and
Computer Office Motor
2011 equipment Equipment Vehicles Total
RM'000 RM'000 RM'000 RM'000
Shareholder's fund
Cost
At 1 April 2010 4,955 18,581 430 23,966
Additions 340 4,710 480 5,530
Write offs (514) (3,700) - (4,214)
Reclassifications 1,042 (1,042) -
At 31 March 2011 5,823 18,549 910 25,282
Accumulated Depreciation
At 1 April 2010 4,224 5,810 269 10,303
Charge for the year 840 3,176 85 4,101
Write offs (512) (2,847) - (3,359)
Reclassifications 54 (54) - -
At 31 March 2011 4,606 6,085 354 11,045
Net Book Value
At 31 March 2011 1,217 12,464 556 14,237
2010
Cost
At 1 April 2009 4,558 8,806 430 13,794
Additions 448 9,798 - 10,246
Write offs (51) (23) - (74)
At 31 March 2010 4,955 18,581 430 23,966
Accumulated Depreciation
At 1 April 2009 3,737 4,282 100 8,119
Charge for the year 537 1,545 169 2,251
Write offs (50) (17) - (67)
At 31 March 2010 4,224 5,810 269 10,303
Net Book Value
At 31 March 2010 731 12,771 161 13,663
78
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
16. Intangible assets
Software
Development Computer
Cost in Software and
Progress Licenses Total
RM'000 RM'000 RM'000
Shareholder's fund
Cost
At 1 April 2010 1,564 9,427 10,991
Additions 78 1,101 1,179
Reclassifications (392) 392 -
At 31 March 2011 1,250 10,920 12,170
Accumulated Amortisation
At 1 April 2010 - 6,418 6,418
Charge for the year 1,169 1,169
At 31 March 2011 - 7,587 7,587
Net Carrying Amount
At 31 March 2011 1,250 3,333 4,583
At 31 March 2010 1,564 3,009 4,573
17. Investment properties
2011 2010
RM'000 RM'000
Family takaful fund
At fair value:
At 1 April 110,000 69,966
Additions 1,008 17,499
Fair value adjustments (7,490) 22,535
At 31 March 103,518 110,000
These are leasehold properties acquired from a third party vendor on 19 and 22 November
2008. These properties are carried at fair value at 31 March 2011 in accordance with the
accounting policy disclosed in Note 2.3.
The components and movements of deferred tax liabilities during the balance sheet date is asThe component and movement of deferred tax liability during the financial year are asDeferred tax assets and liabilities are offset when there is a legally Amortisation
79
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
18. Financial instruments
Shareholder's General Family Total Shareholder's General Family Total
fund takaful fund takaful fund fund takaful fund takaful fund
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
Unquoted Islamic private debt securities:
Government guaranteed 15,026 14,324 24,103 53,453 - - 8,933 8,933
Unsecured 57,140 92,609 304,071 453,820 27,910 44,765 212,552 285,227
Government investment issues 24,041 50,940 163,241 238,222 24,063 38,719 173,836 236,618
Quoted shares in Malaysia:
Shariah approved equities 5,650 9,742 17,820 33,212 9,535 11,543 29,610 50,688
Shariah approved unit trust funds - 5,888 8,585 14,473 - - 3,850 3,850
Warrants 15 15 - 30 117 118 - 235
Golf club memberships 178 - - 178 60 - - 60
Islamic investment accounts with licensed:
Islamic banks 13,755 32,249 90,006 136,010 23,395 35,100 63,150 121,645
Investment banks - - 1,507 1,507 13,039 7,960 72,425 93,424
Development bank 13,472 18,577 59,356 91,405 4,631 4,926 6,037 15,594
Building society 8,269 - - 8,269 19,324 20,738 - 40,062
Islamic repo placements 12,668 5,814 113,967 132,449 37,689 51,202 57,234 146,125
Institutional trust fund 6,592 - 18,592 25,184 6,287 - 17,732 24,019
Units held in investment-linked fund 10,000 - - 10,000 5,000 - - 5,000
Secured staff loans:
Receivable within 12 months 1,289 - - 1,289 1,184 - - 1,184
Receivable after 12 months 2,723 - - 2,723 2,825 - - 2,825
Qard to general takaful fund(i)
12,043 - - 12,043 12,043 - - 12,043
Due from: - - - - - - - -
General takaful fund 2,739 - 12,967 15,706 11,594 - 522 12,116
Family takaful fund 28,935 - - 28,935 13,400 - - 13,400
Investment-linked fund 174 - 3 177 69 - - 69
Amount due from holding company - - 5,247 5,247 - - 363 363
Income due and accrued 1,022 2,160 199 3,381 763 1,152 3,724 5,639
Other receivables, deposits and prepayments 5,402 1,649 445 7,496 4,265 403 14 4,682
221,133 233,967 820,109 1,275,209 217,193 216,626 649,982 1,083,801
The Company's financial instruments are
summarised by categories as follows:
Financial assets at FVTPL (Note 18(a)) 712 1,105 1,832 3,649 1,364 1,529 17,923 20,816
HTM investments (Note 18(b)) 40,450 67,268 212,387 320,105 24,448 40,725 205,796 270,969
AFS financial assets (Note 18(c)) 60,888 105,145 303,601 469,634 35,873 52,891 205,062 293,826
Loans and receivables (Note 18(d)) 119,083 60,449 302,289 481,821 155,508 121,481 221,201 498,190
221,133 233,967 820,109 1,275,209 217,193 216,626 649,982 1,083,801
31 March 2011 31 March 2010
80
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
18. Financial instruments (cont'd.)
Shareholder's General Family Total Shareholder's General Family Total
fund takaful fund takaful fund fund takaful fund takaful fund
(a) Financial assets at FVTPL RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At cost:
Quoted shares in Malaysia:
Shariah approved equities 875 1,303 2,073 4,251 1,442 1,607 18,225 21,274
Warrants 7 7 - 14 106 107 - 213
882 1,310 2,073 4,265 1,548 1,714 18,225 21,487
At fair value:
Quoted shares in Malaysia:
Shariah approved equities 697 1,090 1,832 3,619 1,247 1,411 17,923 20,581
Warrants 15 15 - 30 117 118 - 235
712 1,105 1,832 3,649 1,364 1,529 17,923 20,816
(b) HTM investments
At amortised cost:
Unquoted Islamic private debt securities:
Government guaranteed 15,026 14,324 24,103 53,453 - - 8,933 8,933
Unsecured 1,383 2,004 25,043 28,430 385 2,006 23,027 25,418
Government investment issues 24,041 50,940 163,241 238,222 24,063 38,719 173,836 236,618
40,450 67,268 212,387 320,105 24,448 40,725 205,796 270,969
At fair value:
Unquoted Islamic private debt securities:
Government guaranteed 15,087 14,383 24,164 53,634 - - 8,795 8,795
Unsecured 1,495 2,036 25,542 29,073 385 2,032 23,490 25,907
Government investment issues 24,342 51,521 164,112 239,975 24,390 38,904 174,248 237,542
40,924 67,940 213,818 322,682 24,775 40,936 206,533 272,244
31 March 2011 31 March 2010
The fair values of the financial investments are their quoted prices on the stock exchanges or broker/dealer price quotations. Where the information is not available, fair value has been estimated
using quoted market prices for securities with a similar credit, maturity and yield characteristic.
81
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
18. Financial instruments (cont'd.)
Shareholder's General Family Total Shareholder's General Family Total
fund takaful fund takaful fund fund takaful fund takaful fund
(c) AFS financial assets RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At amortised cost/cost:
Unquoted Islamic private debt securities:
Unsecured 54,789 88,994 270,399 414,182 27,134 41,979 185,240 254,353
Quoted shares in Malaysia:
Shariah approved equities 4,977 8,479 15,458 28,914 7,521 11,768 15,064 34,353
Shariah approved unit trust funds - 5,998 8,997 14,995 - - 3,323 3,323
Golf club memberships 178 - - 178 60 - - 60
59,944 103,471 294,854 458,269 34,715 53,747 203,627 292,089
At fair value:
Unquoted Islamic private debt securities:
Unsecured 55,757 90,605 279,028 425,390 27,525 42,759 189,525 259,809
Quoted shares in Malaysia:
Shariah approved equities 4,953 8,652 15,988 29,593 8,288 10,132 11,687 30,107
Shariah approved unit trust funds - 5,888 8,585 14,473 - - 3,850 3,850
Golf club memberships 178 - - 178 60 - - 60
60,888 105,145 303,601 469,634 35,873 52,891 205,062 293,826
(d) Loans and receivables
Shareholder's General Family Total Shareholder's General Family Total
At cost: fund takaful fund takaful fund fund takaful fund takaful fund
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
Islamic investment accounts with licensed:(i)
Islamic banks 13,755 32,249 90,006 136,010 23,395 35,100 63,150 121,645
Investment banks - - 1,507 1,507 13,039 7,960 72,425 93,424
Development bank 13,472 18,577 59,356 91,405 4,631 4,926 6,037 15,594
Building society 8,269 - - 8,269 19,324 20,738 0 40,062
Islamic repo placements 12,668 5,814 113,967 132,449 37,689 51,202 57,234 146,125
Institutional trust fund 6,592 18,592 25,184 6,287 17,732 24,019
Units held in investment-linked fund 10,000 - - 10,000 5,000 - - 5,000
Secured staff loans:
Receivable within 12 months 1,289 - - 1,289 1,184 - - 1,184
Receivable after 12 months 2,723 - - 2,723 2,825 - - 2,825
Qard to general takaful fund(ii)
12,043 - - 12,043 12,043 - - 12,043
The fair values of the financial investments are their quoted prices on the stock exchanges or broker/dealer price quotations. Where the information is not available, fair value has been estimated
using quoted market prices for securities with a similar credit, maturity and yield characteristic.
31 March 2011 31 March 2010
31 March 2011 31 March 2010
82
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
18. Financial instruments (cont'd.)
Shareholder's General Family Total Shareholder's General Family Total
fund takaful fund takaful fund fund takaful fund takaful fund
(d) Loans and receivables (cont'd.) RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At cost (cont'd.):
Due from:
General takaful fund 2,739 - 12,967 15,706 11,594 - 522 12,116
Family takaful fund 28,935 - - 28,935 13,400 - 13,400
Investment-linked fund 174 - 3 177 69 - 69
Amount due from holding company - - 5,247 5,247 - - 363 363
Income due and accrued 1,022 2,160 199 3,381 763 1,152 3,724 5,639
Other receivables, deposits and prepayments 5,402 1,649 445 7,496 4,265 403 14 4,682
119,083 60,449 302,289 481,821 155,508 121,481 221,201 498,190
At fair value:
Islamic investment accounts with licensed:(i)
Islamic banks 13,755 32,249 90,006 136,010 23,395 35,100 63,150 121,645
Investment banks - - 1,507 1,507 13,039 7,960 72,425 93,424
Development bank 13,472 18,577 59,356 91,405 4,631 4,926 6,037 15,594
Building society 8,269 - - 8,269 19,324 20,738 - 40,062
Islamic repo placements 12,668 5,814 113,967 132,449 37,689 51,202 57,234 146,125
Institutional trust fund 6,592 - 18,592 25,184 6,287 - 17,732 24,019
Units held in investment-linked fund 10,000 - - 10,000 5,000 - - 5,000
Secured staff loans:
Receivable within 12 months 1,289 - - 1,289 1,184 - - 1,184
Receivable after 12 months 2,723 - - 2,723 2,825 - - 2,825
Qard to general takaful fund(ii)
12,043 - - 12,043 12,043 - - 12,043
Due from:
General takaful fund 2,739 - 12,967 15,706 11,594 - 522 12,116
Family takaful fund 28,935 - - 28,935 13,400 - - 13,400
Investment-linked fund 174 - 3 177 69 - - 69
Amount due from holding company - - 5,247 5,247 - - 363 363
Income due and accrued 1,022 2,160 199 3,381 763 1,152 3,724 5,639
Other receivables, deposits and prepayments 5,402 1,649 445 7,496 4,265 403 14 4,682
119,083 60,449 302,289 481,821 155,508 121,481 221,201 498,190
31 March 2011 31 March 2010
The fair values of the LAR have been established by comparing current profit rates for similar financial instruments to the rates offered when the LAR were first recognized together with
appropriate market credit adjustments.
83
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
18. Financial instruments (cont'd.)
The following tables show financial investments recorded at fair value analysed by the different basis of fair values as follows:
Financial AFS Financial AFS
assets at financial assets at financial
FVTPL assets Total FVTPL assets Total
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Shareholder's fund
Quoted market price 712 4,953 5,665 1,364 8,288 9,652
Valuation techniques - market observable inputs - 55,757 55,757 - 27,525 27,525
At cost less impairment - 178 178 - 60 60
712 60,888 61,600 1,364 35,873 37,237
General takaful fund
Quoted market price 1,105 14,540 15,645 1,529 10,132 11,661
Valuation techniques - market observable inputs - 90,605 90,605 - 42,759 42,759
1,105 105,145 106,250 1,529 52,891 54,420
Family takaful fund
Quoted market price 1,832 24,573 26,405 17,923 15,537 33,460
Valuation techniques - market observable inputs - 279,028 279,028 - 189,525 189,525
1,832 303,601 305,433 17,923 205,062 222,985
(i)
(ii)
31 March 2010
Qard represents a benevolent loan provided to the general takaful fund. It is provided in order to make good the underwriting deficit experienced by the general takaful fund during a financial
period. The amount is unsecured, not subject to any profit elements and has no fixed terms of repayment.
The Islamic investment accounts of general takaful fund of RM 56,640,000 (2010 : RM 119,926,000) above has been off-set against qard of RM 12,043,000 (2010 : 12,043,000) in arriving at
the total general takaful fund assets and liabilities and participants' fund of RM 338,155,000 (2010 : RM272,976,000) on the Company's statement of financial position at page 16.
31 March 2011
84
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
19. Takaful certificates receivables
2011 2010
RM'000 RM'000
General takaful fund
Contributions receivable 33,525 45,388
Due from agents, retakaful operators and brokers 7,328 1,877
40,853 47,265
Allowance for impairment (8,055) (11,109)
32,798 36,156
Family takaful fund
Contributions receivable 84,700 39,007
Allowance for impairment (882) (246)
83,818 38,761
20. Due from/(to) related companies
2011 2010
Shareholder's Fund RM'000 RM'000
Due to:
Holding company (22) (1,037)
Fellow subsidiaries - (95)
(22) (1,132)
21. Deferred tax assets/(liabilities)
2011 2010
RM'000 RM'000
Shareholder's fund
At beginning of year
- As previously stated 2,303 1,666
- Effect of adopting FRS 4 (Note 2.27) 3,938 5,372
At beginning of year (as restated) 6,241 7,038
Recognised in AFS reserve 102 (240)
Recognised in statement of comprehensive income (1,173)
- As previously stated 877
- Effect of adopting FRS 4 (Note 2.27) - (1,434)
At end of year 5,170 6,241
The amounts due from/(to) related companies are non-trade in nature, unsecured, not subject
to any profit elements and repayable upon demand.
85
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
21. Deferred tax assets/(liabilities) (cont'd.)
2011 2010
RM RM
General takaful fund
At beginning of year
- As previously stated 1,474 2,629
- Effect of adopting FRS 4 (Note 2.27) 868 687
At beginning of year (as restated) 2,342 3,316
Recognised in AFS reserve 36 (467)
Recognised in statement of comprehensive income (807)
- As previously stated (688)
- Effect of adopting FRS 4 (Note 2.27) 181
At end of year 1,571 2,342
Family takaful fund
At beginning of year (2,304) (253)
Recognised in AFS reserve (175) (272)
Recognised in statement of comprehensive income 344 (1,779)
At end of year (2,135) (2,304)
Shareholder's fund
Property,
Financial plant and
Assets Receivables equipment Total
RM'000 RM'000 RM'000 RM'000
2011
At 1 April 2010
- As previously stated 2,009 294 - 2,303
- Effect of adopting FRS 4 - 3,938 - 3,938
At 1 April 2010 (as restated) 2,009 4,232 - 6,241
Recognised in AFS reserve 102 - - 102
Recognised in statement of
comprehensive income (4) (1,169) - (1,173)
At 31 March 2011 2,107 3,063 - 5,170
The components and movements of deferred tax assets/(liabilities) during the financial year
are as follows:
86
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
21. Deferred tax assets/(liabilities) (cont'd.)
Shareholder's fund (cont'd.)
Property,
Financial plant and
Assets Receivables equipment Total
2010 RM'000 RM'000 RM'000 RM'000
At 1 April 2009
- As previously stated 1,774 732 (840) 1,666
- Effect of adopting FRS 4 - 5,372 - 5,372
At 1 April 2009 (as restated) 1,774 6,104 (840) 7,038
Recognised in AFS reserve (240) - - (240)
Recognised in statement of
comprehensive income
- As previously stated 475 (438) 840 877
- Effect of adopting FRS 4 - (1,434) - (1,434)
At 31 March 2010 (restated) 2,009 4,232 - 6,241
General takaful fund
2011
At 1 April 2010
- As previously stated 395 1,079 - 1,474
- Effect of adopting FRS 4 868 868
At 1 April 2010 (as restated) 395 1,947 - 2,342
Recognised in AFS reserve 36 - - 36
Recognised in statement of
comprehensive income 5 (812) - (807)
At 31 March 2011 436 1,135 - 1,571
2010
At 1 April 2009
- As previously stated 913 1,716 - 2,629
- Effect of adopting FRS 4 - 687 - 687
At 1 April 2009 (as restated) 913 2,403 - 3,316
Recognised in AFS reserve (480) - - (480)
Recognised in statement of
comprehensive income
- As previously stated (39) (636) - (675)
- Effect of adopting FRS 4 - 181 - 181
At 31 March 2010 394 1,948 - 2,342
87
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
21. Deferred tax assets/(liabilities) (cont'd.)
Family takaful fund Property,
Financial plant and
Assets Receivables equipment Total
2011 RM'000 RM'000 RM'000 RM'000
At 1 April 2010 (501) (1,803) - (2,304)
Recognised in AFS reserve (175) (175)
Recognised in statement of
comprehensive income (255) 599 344
At 31 March 2011 (931) (1,204) - (2,135)
2010
At 1 April 2009 (253) - - (253)
Recognised in AFS reserve (272) - - (272)
Recognised in statement of
comprehensive income 24 (1,803) - (1,779)
At 31 March 2010 (501) (1,803) - (2,304)
22. Expenses liabilities
2011 2010 1.4.2009
Shareholder's fund RM'000 RM'000 RM'000
Expense liabilities for general takaful fund:
Unearned wakalah fees reserve 4,251 4,014 3,877
Provision for expenses deficiency 3,573 1,943 734
7,824 5,957 4,611
Expense liabilities for family takaful fund :
Unexpired expense reserve 7,322 9,793 16,878
15,146 15,750 21,489
2011 2010
Gross / net Gross / net
RM'000 RM'000
At beginning of the year, previously stated - -
Effect of adoption of FRS 4 15,750 21,489
At beginning of the year, restated 15,750 21,489
- Wakalah fee received during the year 56,157 55,931
- Wakalah fee earned during the year (55,920) (55,794)
- Movement in provision for expenses deficiency 1,630 1,209
- Movement in provision for UER (2,471) (7,085)
At end of the year 15,146 15,750
88
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
23. Takaful certificates liabilities
Gross Retakaful Net Gross Retakaful Net Gross Retakaful Net
General takaful fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Provision for claims reported
by certificateholders 116,482 (23,418) 93,064 82,766 (10,170) 72,596 66,888 (13,775) 53,113
Provision for incurred but not
reported claims ("IBNR") 66,597 (7,789) 58,808 46,852 (5,954) 40,898 33,635 (5,253) 28,382
Provision for risk margin for
adverse deviations ("PRAD") 10,033 (1,203) 8,830 13,685 (1,453) 12,232 - - -
Claim Liabilities (i)
193,112 (32,410) 160,702 143,303 (17,577) 125,726 100,523 (19,028) 81,495
Contribution liabilities (ii)
98,621 (1,941) 96,680 84,951 (12,092) 72,859 84,040 (11,814) 72,226
291,733 (34,351) 257,382 228,254 (29,669) 198,585 184,563 (30,842) 153,721
Gross Retakaful Net Gross Retakaful Net Gross Retakaful Net
Family takaful fund(iii)
RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
Provision for claims reported
by certificateholders 33,668 (24,395) 9,273 30,013 (7,855) 22,158 18,406 (4,609) 13,797
Participants Account ("PA") 916,304 (91,770) 824,534 683,746 (60,015) 623,731 609,830 (128,704) 481,126
Participants' Special Account ("PSA") 51,868 (21,218) 30,650 89,141 (37,941) 51,200 13,092 - 13,092
Available-for-sale reserves 7,962 - 7,962 6,113 - 6,113 2,981 - 2,981
Unallocated surplus 94,387 - 94,387 37,074 - 37,074 21,674 - 21,674
1,104,189 (137,383) 966,806 846,087 (105,811) 740,276 665,983 (133,313) 532,670
2011 2010 2009
20092011 2010
89
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
23. Takaful certificates liabilities (cont'd.)
The movement of claim liabilities of general takaful fund, contribution liabilities of general takaful fund and family takaful fund liabities are presented as follows:
Gross Retakaful Net Gross Retakaful Net
(i) Claim liabilities of general takaful fund RM'000 RM'000 RM'000 RM'000 RM'000 RM'000
At beginning of year 143,303 (17,577) 125,726 100,523 (19,028) 81,495
Claims incurred in the current accident year 172,075 (23,637) 148,438 137,296 (12,492) 124,804
Adjustment to claims incurred in prior accident years due to changes
in assumptions:
Change in PRAD (3,655) 250 (3,405) 13,685 (1,453) 12,232
Change in Expected Ultimate Loss Ratio (17,330) 741 (16,589) (20,606) 5,289 (15,317)
Movements in claims incurred in prior accident years 3,155 818 3,973 (4) 747 743
Claims paid during the year (104,436) 6,995 (97,441) (87,591) 9,360 (78,231)
At end of year 193,112 (32,410) 160,702 143,303 (17,577) 125,726
(ii) Contribution liabilities of general takaful fund
At beginning of year 84,951 (12,092) 72,859 84,040 (11,814) 72,226
Contribution written in the year 224,196 (22,398) 201,798 217,230 (25,525) 191,705
Contribution earned during the year (210,526) 32,549 (177,977) (216,319) 25,247 (191,072)
At end of year 98,621 (1,941) 96,680 84,951 (12,092) 72,859
(iii)Family takaful fund
At beginning of year 846,087 (105,811) 740,276 665,983 (133,313) 532,670
Effect of adopting FRS 4 (Note 2.27) - - - 1,495 - 1,495
At beginning of year, as restated 846,087 (105,811) 740,276 667,478 (133,313) 534,165
Increase in PA reserve 232,558 (31,755) 200,803 73,916 68,689 142,605
Increase/(decrease) in participants' risk fund (194,025) 64,622 (129,403) (49,450) (60,797) (110,247)
Contributions received 486,530 (44,244) 442,286 357,610 8,807 366,417
Liabilities paid for death,maturities, surrenders, benefits and claims (Note 10) (117,700) (3,655) (121,355) (92,780) 14,049 (78,731)
Benefits and claims experience variation 3,655 (16,540) (12,885) 11,607 (3,246) 8,361
Fees deducted (149,726) - (149,726) (124,607) - (124,607)
Transfer to special fund (698) - (698) (87) - (87)
Available-for-sale net gains on fair value changes 9,482 - 9,482 3,927 - 3,927
Available-for-sale deferred tax effect on fair value changes (175) - (175) (272) - (272)
Available-for-sale Realised gain transferred to statement of comprehensive income (7,458) - (7,458) (523) - (523)
Transfer to shareholder's fund (4,341) - (4,341) (732) - (732)
At end of year 1,104,189 (137,383) 966,806 846,087 (105,811) 740,276
2011 2010
90
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
23. Takaful certificates liabilities (cont'd.)
24. Takaful certificates payables
2011 2010
General takaful fund RM'000 RM'000
Due to agents, retakaful operators and brokers (7,932) (5,641)
Family takaful fund
Due to agents, retakaful operators and brokers (34,406) (19,464)
25. Other payables
2011 2010
Shareholder's fund RM'000 RM'000 RM'000
Outstanding commissions 15,457 6,031
Deferred wakalah fee 2,720 4,243
Other accruals and payables 6,948 4,273
25,125 14,547
General takaful fund
Deposit contributions - 11,181
Advance contributions - 2,844
Amount due to shareholders' fund* 2,739 11,594
Amount due to family takaful fund* 12,970 522
Other accruals and payables 23,766 16,774
39,475 42,915
Included in the family takaful fund's takaful certificate liabilities is an amount of RM
7,962,141 (2010 : 6,113,338) being the AFS reserves of the family takaful fund. In
accordance to FRS 139, the AFS reserves of the family takaful fund should be accounted
for as equity of the Company (or Participants' Fund of the Family takaful fund).
In accordance with the requirements of the Guidelines on Financial Reporting for Takaful
Operators issued by BNM, the Company has continued to classify the AFS reserves of the
family takaful fund as takaful certificates liabilities. These are the modifications to the FRS
which had been approved by BNM under Section 41 of the Takaful Act 1984. Had the
Company applied the requirements of the Standards and the FRS Framework, the takaful
certificates liabilities of family takaful fund would be lowered by RM 7,962,141 (2010 :
RM6,113,338).
91
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
25. Other payables (cont'd.)
2011 2010
Family takaful fund RM'000 RM'000 RM'000
Deposit contributions 30,232 20,881
Amount due to shareholders' fund* 28,932 13,400
Amount due to investment-linked fund* 3 118
Other accruals and payables 6,587 4,086
65,754 38,485
*
26. Provisions
2011 2010
RM'000 RM'000 RM'000
Shareholder's fund
Short-term accumulating compensated absences 466 292
Provision for bonus 5,878 10,383
6,344 10,675
27. Share capital
Amount
2011 2010 2011 2010
RM'000 RM'000
Authorised: 500,000 500,000 500,000 500,000
Issued and fully paid:
At beginning of year 195,000 195,000 195,000 195,000
Issued during the year - - - -
At end of year 195,000 195,000 195,000 195,000
Number of ordinary shares
of RM1.00 each
The amounts due to shareholders' fund, general takaful fund and family takaful fund are
non-trade in nature, unsecured, not subject to any profit elements and has no fixed
terms of repayment.
On 1 April 2011, the paid-up capital of the Company had been increased to RM
295,000,000 by way of issuance of 100,000,000 new ordinary shares of RM 1.00 each to
MNRB Holdings Berhad for cash.
92
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
28. Earnings per share
2011 2010
Net profit for the year (RM'000) 8,941 13,772
Number/weighted average number of ordinary
ordinary shares in issue ('000) 195,000 195,000
Basic earnings per share (sen) 4.6 7.1
29. General takaful fund
2011 2010
RM'000 RM'000
Accumulated deficit
At beginning of year
- As previously stated (4,731) (14,102)
- Effect of adopting FRS 4 (Note 2.27) (2,602) (2,059)
At beginning of year (restated) (7,333) (16,161)
Underwriting surplus/(deficit) transferred from
General takaful statement of comprehensive income 4,445
- as previously stated 10,812
- Effect of adopting FRS 4 (Note 2.27) - (543)
Transfer from special fund - (1,361)
Hibah (profit) paid to participants during the year (1) (80)
At end of year (2,889) (7,333)
Qard *
At beginning of the year 12,043 12,043
Increase in Qard - -
At end of the year 12,043 12,043
Available-for-sale reserves
At beginning of year 1,482 40
Net gains on fair value changes 2,287 2,152
Deferred tax on fair value changes 36 (480)
Realised gain transferred to statement of
comprehensive income (2,467) (230)
At end of year 1,338 1,482
The basic earnings per share (EPS) is calculated by dividing the net profit for the year by
the number (2010: weighted average number) of ordinary shares in issue during the year
as follows:
93
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
29. General takaful fund (cont'd.)
2011 2010
RM'000 RM'000
General takaful fund at end of the year
Accumulated deficits (2,889) (7,333)
Qard 12,043 12,043
AFS reserves 1,338 1,482
10,492 6,192
*
30. Segmental information on cash flow
General Family
Shareholder's takaful takaful
fund fund fund Total
2011 RM RM RM'000 RM'000
Net cash flow generated from/
(used in):
Operating activities 12,865 47,285 61,092 121,242
Investing activities (6,688) - (1,008) (7,696)
Financing activities - - - -
6,177 47,285 60,084 113,546
Net increase in
cash and cash equivalents: 6,177 47,285 60,084 113,546
At 1 April 2010 1,453 226 2,832 4,511
At 31 March 2011 7,630 47,511 62,916 118,057
2010
Net cash flow generated/(used in)
from:
Operating activities 7,243 (7,236) (3,247) (3,240)
Investing activities (6,058) 2,764 (2,480) (5,774)
1,185 (4,472) (5,727) (9,014)
Net increase/(decrease) in
cash and cash equivalents: 1,185 (4,472) (5,727) (9,014)
At 1 April 2009 268 4,698 8,559 13,525
At 31 March 2010 1,453 226 2,832 4,511
The qard of RM 12,043,000 (2010 : 12,043,000) above has been off-set against Islamic
investment accounts of RM 56,640,000 (2010 : RM 119,926,000) in arriving at the total
general takaful fund assets and liabilities and participants' fund of RM 338,155,000
(2010 : RM272,976,000) on the Company's statement of financial position at page 16.
94
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
31. Segmental information on general takaful fund
(a) General takaful fund revenue account for the year ended 31 March 2011
2011 2010 2011 2010 2011 2010 2011 2010 2011 2010
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
Gross contribution 224,196 217,230 23,172 30,674 177,564 159,004 872 2,517 22,588 25,035
Change in unearned
contribution provision (13,670) (911) (3,106) (5,712) (7,651) (1,171) 30 (295) (2,943) 6,267
Gross earned contribution 210,526 216,319 20,066 24,962 169,913 157,833 902 2,222 19,645 31,302
Contribution ceded to
retakaful operators (22,398) (25,525) (10,360) (10,525) (3,988) (3,241) (443) (1,502) (7,607) (10,257)
Change in unearned
contribution provision (10,151) 278 (3,753) (73) (2,308) 1,031 (549) (661) (3,541) (19)
Earned contribution ceded to
retakaful operators (32,549) (25,247) (14,113) (10,598) (6,296) (2,210) (992) (2,163) (11,148) (10,276)
Net earned contribution 177,977 191,072 5,953 14,364 163,617 155,623 (90) 59 8,497 21,026
Gross claims paid (104,436) (87,591) (3,755) (6,571) (92,607) (72,489) (1,054) (738) (7,020) (7,793)
Claims ceded to
retakaful operators 6,995 9,360 1,218 5,108 3,104 470 430 127 2,243 3,655
Gross change to certificate
liabilities (48,224) (40,625) 1,802 1,577 (34,231) (39,374) (942) (1,591) (14,853) (1,237)
Change in certificate liabilities
ceded to retakaful operators 13,248 (3,605) 662 (4,427) 300 (88) (1,616) 1,773 13,902 (863)
Net claims incurred (132,417) (122,461) (73) (4,313) (123,434) (111,481) (3,182) (429) (5,728) (6,238)
Net commission earned 3,938 4,505 2,325 2,171 95 201 66 235 1,452 1,898
Underwriting surplus
before wakalah fees 49,498 73,116 8,205 12,222 40,278 44,343 (3,206) (135) 4,221 16,686
Marine, Aviation
MiscellaneousTotal & TransitFire Motor
95
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
31. Segmental information on general takaful fund (cont'd.)
(b) Contribution liabilities
31 March 2011
Gross Retakaful Gross Retakaful Gross Retakaful Gross Retakaful Gross Retakaful
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At beginning of year 84,951 (12,092) 21,337 (5,110) 59,618 (1,604) 223 (612) 3,773 (4,766)
Contribution written in the year 224,196 RM '000'000 (22,398) RM '000'000 23,172 RM '000'000 (10,360) RM '000'000 177,564 RM '000'000 (3,988) RM '000'000 872 RM '000'000 (443) RM '000'000 22,588 RM '000'000 (7,607)
Contribution earned during
the year (210,526) 32,549 (20,066) 14,113 (169,913) 6,296 (902) 992 (19,645) 11,148
At end of year 98,621 (1,941) 24,443 (1,357) 67,269 704 193 (63) 6,716 (1,225)
31 March 2010
At beginning of year 84,040 (11,814) 15,431 (5,183) 58,446 (573) (58) (1,273) 10,221 (4,785)
Contribution written in the year 217,230 (25,525) 30,674 (10,525) 159,004 (3,241) 2,517 (1,502) 25,035 (10,257)
Contribution earned during
the year (216,319) 25,247 (24,768) 10,598 (157,832) 2,210 (2,236) 2,163 (31,483) 10,276
At end of year 84,951 (12,092) 21,337 (5,110) 59,618 (1,604) 223 (612) 3,773 (4,766)
Marine, Aviation
Total Fire Motor & Transit Miscellaneous
96
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
31. Segmental information on general takaful fund (cont'd.)
(c) Claims liabilities
Gross Retakaful Gross Retakaful Gross Retakaful Gross Retakaful Gross Retakaful
31 March 2011 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At beginning of year 143,303 (17,577) 9,695 (5,035) 113,330 (429) 5,071 (4,328) 15,207 (7,785)
Claims incurred in the current
accident year 172,075 (23,637) 6,111 (3,375) 139,390 (989) 652 (298) 25,922 (18,975)
Adjustment to claims incurred
in prior accident years due to
changes in assumptions:
Change in PRAD (3,655) 250 (167) 153 (3,509) (1,835) 409 1,352 (388) 580
Change in Expected Ultimate
Loss Ratio (17,330) 741 (4,286) 2,193 (14,249) (676) 1,148 (363) 57 (413)
Movements in claims incurred
in prior accident years 3,155 818 (1,314) 760 7,774 (2,473) (1,202) 1,485 (2,103) 1,046
Claims paid during the year (104,436) 6,995 (3,755) 1,218 (92,607) 3,104 (1,054) 430 (7,020) 2,243
At end of year 193,112 (32,410) 6,284 (4,086) 150,129 (3,298) 5,024 (1,722) 31,675 (23,304)
31 March 2010
At beginning of year 100,523 (19,028) 11,685 (9,875) 75,101 (1,663) 1,935 (1,011) 11,802 (6,479)
Claims incurred in the current
accident year 137,296 (12,492) 5,830 (1,876) 114,867 (577) 2,783 (2,099) 13,816 (7,940)
Adjustment to claims incurred
in prior accident years due to
changes in assumptions:
Change in PRAD 13,685 (1,453) 541 (198) 10,089 1,046 1,657 (1,600) 1,398 (701)
Change in Expected Ultimate
Loss Ratio (20,606) 5,289 (1,936) 1,445 (14,465) 670 (632) 486 (3,573) 2,688
Movements in claims incurred
in prior accident years (4) 747 146 361 227 (375) 66 (231) (443) 992
Claims paid during the year (87,591) 9,360 (6,571) 5,108 (72,489) 470 (738) 127 (7,793) 3,655
At end of year 143,303 (17,577) 9,695 (5,035) 113,330 (429) 5,071 (4,328) 15,207 (7,785)
Marine, Aviation
Total Fire Motor & Transit Miscellaneous
97
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
32. Investment-linked fund
(a) Statement of comprehensive income
For the year ended 31 March 2011
2011 2010
RM '000 RM '000
INCOME
Investment income (Note (c)) 516 227
Realised gains and losses (Note (d)) 4,660 2,471
Financial assets at FVTPL's
fair value gains and losses 3,342 1,067
Retakaful commission income 21 -
8,539 3,765
OUTGO
Fee expenses (Note (e)) (7,407) (5,561)
Other operating expenses (966) (255)
(8,373) (5,816)
Deficit of income over outgo before tax 166 (2,051)
Taxation (Note (h)) (614) (161)
Deficit of income over outgo after tax (448) (2,212)
(b) Statement of financial position
For the year ended 31 March 2011
2011 2010
RM '000 RM '000
Assets
Financial instruments (Note (f)):
Financial assets at fair value
through statement of comprehensive income 86,949 33,648
Loans and receivables 3,216 6,474
Takaful certificates receivables 87 64
Cash and bank balances 2,840 3,205
Total Investment-linked business assets 93,092 43,391
Liabilities
Tax payable 505 175
Deferred tax liabilities 362 95
Other payables (Note (g)) 1,998 414
Total Investment-linked business liabilities 2,865 684
Participants' fund (Note (i)) 90,227 42,707
Total liabilities and participants' fund 93,092 43,391
98
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
32. Investment-linked fund (cont'd.)
(c) Investment income 2011 2010
RM '000 RM '000
Financial assets at FVTPL:
Profit income 217 109
Dividend income
- quoted shares in Malaysia 175 89
Loans and receivables:
Profit income 124 29
516 227
(d) Realised gains and losses
Financial assets at FVTPL:
Unquoted Islamic private debt securities:
Unsecured 44 4
Quoted shares in Malaysia 227 168
Shariah approved unit trust funds 4,389 2,299
4,660 2,471
(e) Fee expense
Wakalah fees (7,370) (5,561)
Surplus administrative charges (37) -
(7,407) (5,561)
(f) Financial assets/investments 2011 2010
RM '000 RM '000
(i) Financial assets at FVTPL
At amortised cost/cost:
Unquoted Islamic private debt securities:
Government guaranteed 259 -
Unsecured 4,229 3,881
Government investment issues 701 -
Quoted shares in Malaysia:
Shariah approved equities 8,423 2,923
Shariah approved unit trust funds 68,777 22,839
82,389 29,643
At fair value:
Unquoted Islamic private debt securities:
Government guaranteed 251 -
Unsecured 4,236 1,855
Government investment issues 698 -
Quoted shares in Malaysia:
Shariah approved equities 8,751 4,396
Shariah approved unit trust funds 73,013 27,397
86,949 33,648
99
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
32. Investment-linked fund (cont'd.)
(ii) Loans and receivables 2011 2010
RM '000 RM '000
At cost:
Islamic repo placements 3,237 1,694
Due from:
General takaful fund 4 2
Family takaful fund - 118
Income due and accrued (25) 4,660
3,216 6,474
At fair value:
Islamic repo placements 3,237 1,694
Due from:
General takaful fund 4 2
Family takaful fund - 118
Income due and accrued (25) 4,660
3,216 6,474
2011 2010
(g) Other payables RM '000 RM '000
Deposit contributions 340 296
Amount due to shareholders' fund* 174 69
Amount due to family takaful fund* 3 -
Other accruals and payables 1,481 49
1,998 414
* The amounts due to shareholders' fund and family takaful fund are non-trade in nature,
unsecured, not subject to any profit elements and has no fixed terms of repayment.
100
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
32. Investment-linked fund (cont'd.)
2011 2010
RM '000 RM '000
(h) Taxation
Current year's provision 347 161
Deferred tax relating to origination and
reversal of temporary differences 267 -
Tax expense for the year 614 161
2011 2010
RM '000 RM '000
Surplus before taxation 166 (2,051)
Taxation at Malaysian statutory tax rate of 8% 13 (164)
Income not subject to tax (3,331) (2,866)
Expenses not deductible for tax purposes 487 99
Overprovision of prior year deferred tax 7 -
Tax expense for the year (2,824) (2,931)
2011 2010
(i) Participants' fund RM '000 RM '000
Risk fund 772 836
Unitholders' capital 86,928 40,229
Undistributed surplus 2,527 1,642
90,227 42,707
At beginning of year 42,707 6,264
Net creation of units 49,381 39,831
Net cancellation of units (6,255) (1,112)
Net asset value attributable to unitholders 4,394 (2,276)
At end of year 90,227 42,707
Investment-linked business is taxed at the preferential tax rate of 8% of taxable
investment income for the period.
A reconciliation of income tax expense applicable to surplus before taxation at the
statutory income tax rate to income tax expense at the effective income tax rate of the
fund is as follows:
101
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
33. Capital commitments
2011 2010
RM'000 RM'000
Shareholder's fund
Authorised and contracted for:
- Intangible assets - computer software (payable
within 12 months) 4,110 4,865
Authorised but not contracted for:
- Intangible assets - computer software 8,245 617
- Renovation work 466 -
8,711 617
Payable within 12 months 466 617
Payable after 12 months 8,245 -
8,711 617
Family takaful fund
Authorised and contracted for:
- Outstanding payments on investment properties
in progress (payable within 12 months) 543 2,015
34. Related party disclosures
For the purposes of these financial statements, parties are considered to be related to the
Company if the Company has the ability, directly or indirectly, to control the party or exercise
significant influence over the party in making financial and operating decisions, or vice versa,
or where the Company and the party are subject to common control or common significant
influence. Related parties may be individuals or other entities.
Key management personnel are defined as those persons having authority and responsibility
for planning, directing and controlling the activities of the Company either directly or indirectly.
The key management personnel include all the Directors of the Company and certain
members of senior management of the Company.
102
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
34. Related party disclosures (cont'd.)
(a) The significant related party transactions and balances during the year are as follows:
General Family
Shareholder's takaful takaful
fund fund fund
2011 RM'000 RM'000 RM'000
Income/(expenses) :
Transactions with MNRB Holdings
Berhad ("MNRB"):
Gross contributions - 429 47
Management fees (4,441) - -
Transactions with Malaysian Reinsurance
Berhad ("MRB"), a fellow subsidiary:
Gross contributions - 64 91
Retakaful outward contributions - (1,271) -
Retakaful commissions - 225 -
Management fees (144) - -
Rental Expenses (425) - -
Transactions with MNRB Retakaful Berhad,
a fellow subsidiary:
Gross contributions - 15 19
Retakaful outward contributions - (3,003) (834)
Retakaful commissions - 638 -
Transactions with Labuan Re,
in which MNRB is a substantial
shareholder:
Gross contributions - 11 -
Retakaful outward contributions - (941) -
Retakaful commissions - 269 -
Transactions with MIDF Amanah Investment
Bank Berhad, in which a director,
Encik Sharkawi Bin Alis is also
a director
Investment income - 40 22
103
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
34. Related party disclosures (cont'd.)
General Family
Shareholder's takaful takaful
fund fund fund
2011 (cont'd.) RM'000 RM'000 RM'000
Transactions with Alliance Bank Berhad,
in which a director of the holding company,
Hj Megat Dziauddin Bin Megat Mahmud
is also a director
Bank charges - - -
Commissions (57) - -
Investment income 75 2 53
Transactions with Malayan Banking Bhd,
in which Permodalan Nasional
Bhd, a substantial shareholder is also a
substantial shareholder:
Bank charges (147) - (2,516)
Commissions - - -
Investment income 23 373 45
Transactions with Etiqa Takaful Bhd,
in which Permodalan Nasional
Bhd, a substantial shareholder is also a
substantial shareholder:
Inwards contributions - 375 -
Commission expenses - (125) -
Retakaful outward contributions - (204) -
Retakaful commissions 251 -
Transactions with Bank Kerjasama Rakyat
(M) Berhad, in which a director of
the holding company,
Datuk Hj Mohd Khalil Bin Dato' Hj Mohd
Noor is also a director :
Gross contributions - 1,636 -
Commissions (20,692) - -
Investment income 323 92 2,068
104
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
34. Related party disclosures (cont'd.)
General Family
Shareholder's takaful takaful
fund fund fund
2010 RM'000 RM'000 RM'000
Income/(expenses) :
Transactions with MNRB Holdings
Berhad ("MNRB"):
Gross contributions - 152 414
Management fees (2,252) - -
Transactions with Malaysian Reinsurance
Berhad ("MRB"), a fellow subsidiary:
Gross contributions - 752 -
Retakaful outward contributions - (66) -
Rental Expenses (1,510) - -
Transactions with MNRB Retakaful Berhad,
a fellow subsidiary:
Gross contributions - 74 -
Retakaful outward contributions - (5,888) -
Transactions with Malaysian Re Dubai,
a fellow subsidiary:
Gross contributions - - 5
Transactions with MIDF Amanah Investment
Bank Berhad, in which a director,
Encik Sharkawi Bin Alis is also
a director
Investment income 8 39 -
Transactions with Alliance Bank Berhad,
in which a director of the holding company,
Hj Megat Dziauddin Bin Megat Mahmud
is also a director
Bank charges - - -
Commissions - (14) -
Investment income 59 74 70
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34. Related party disclosures (cont'd.)
General Family
Shareholder's takaful takaful
fund fund fund
2010 (cont'd.) RM'000 RM'000 RM'000
Transactions with Bank Kerjasama Rakyat
(M) Berhad, in which a director of
the holding company,
Datuk Hj Mohd Khalil Bin Dato' Hj Mohd
Noor is also a director :
Gross contributions - 411 -
Commissions (1,725) - -
Investment income 200 493 1,051
Transactions with Permodalan Nasional
Bhd, which is a substantial shareholder
of MNRB Holdings Bhd:
Investment income - - 2,015
Outstanding balances arising from the transactions above as at 31 March have been
disclosed in Notes 18 and 19.
106
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(Incorporated in Malaysia)
34. Related party disclosures (cont'd.)
(b) Compensation of key management personnel
2011 2010
RM'000 RM'000
Non-executive director's remuneration (Note 12(a)):
Fees 672 626
Allowances and other emoluments 173 179
Executive director's remuneration (Note 12(b)):
Salaries and bonus 1,200 1,172
Pension costs - EPF 204 155
Short-term accumulating compensated
absences - -
Retirement benefits - 90
Benefits-in-kind 96 121
1,500 1,538
Other key management personnel's remuneration:
Salaries and bonus 3,067 2,922
Pension costs - EPF 537 456
Benefits-in-kind 215 189
Total 3,819 3,567
(c) Transactions related to key management personnel
2011 2010
RM'000 RM'000
Contributions paid for takaful certificates issued
by the takaful funds 75 61
In addition, the Company had the following transactions with directors and other key
management during the financial year:
The remuneration of directors and other members of key management during the year
was as follows:
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35. Risk management Framework
(a) Risk governance framework
The key objectives of the risk management framework are to:
- provide information on risk governance and accountabilities;
- provide guidance to a standard approach to managing risks;
- create a risk awareness culture; and
- enhance professionalism, increase profitability and value for shareholders.
The Risk Management Governance structure are as follows:
-
-
- Risk Management Department: Assist the RMCB and ORMC in developing and
maintaining the Risk Management Framework in consultation with stakeholders;
The Company's Risk Management Framework is designed to determine the level of risk
acceptable to the Company relating to its core operations by setting the appropriate
Board approved limits for adherence by management after taking into account the risk
parameters, the nature, the size, mix and complexity of business and operations. An
enterprise risk management process is adopted to identify and evaluate key business
risks that may affect the organization and to establish and implement an appropriate
system of internal controls to manage these risks while ensuring full and effective control
over significant strategic, financial, organizational and compliance matters.
The Risk Management Framework aims to serve as a guide for the effective
management of risk throughout the Company. The Framework is intended to provide
guidance to the Company in performing its risk management roles and responsibilities in
activities for which it is responsible, and ultimately aims to support the achievement of the
Company's strategic & financial objectives.
In pursuit of the above objectives, it is the Company's policy to implement good
governance, risk management and compliance principles and best practices, and to
uphold high standards of business practices in all the activities undertaken by the
Company.
Operational Risk Management Committee ("ORMC") which comprises the President
/ Chief Executive Officer and Senior Management assists the RMCB in identifying,
measuring, monitoring and controlling risks within the Company to ensure adequacy
and effectiveness of the infrastructure, resources and systems are in place;
Board of Directors & Board Risk Management Committee ("RMCB"): The Board is
ultimately responsible for the management of risks. The RMCB reviews and assess
the adequacy of risk management policies and framework for identifying, measuring,
monitoring and controlling risks, ensure adequate infrastructure, resources and
systems for an effective management of risk are in place and it is also responsible to
review and recommend to the Board on risk management strategies, policies and risk
tolerance;
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35. Risk management Framework (cont'd.)
(a) Risk governance framework (cont'd.)
-
-
1.
2.
3.
(b) Capital Management Objectives, Policies and Approach
Investment Policy – the investment policy and strategy of the Company is to invest
mainly in low risks assets such as government Islamic papers, fixed and call deposits
with licensed financial institutions, Islamic debt securities and marketable securities.
In this respect, the Company mitigates its credit risk of its debt securities portfolio by
investing mainly in Islamic debt securities with good ratings obtained from reputable
rating agencies.
The Company has an Investment Committee to further manage risks in investment and
asset allocation.
The Company has put in place the following policies to ensure the proper risk
management:
Underwriting Policy – the underwriting policy and strategy of the Company is to have
a balanced mix and spread of business and by observing underwriting guidelines and
limits, having conservative estimations made for claims provisions, and applying
prudent standards in terms of the assessment of security of its key retakaful
operators. In this respect, the Company complies with the guidelines imposed by
BNM in conducting the underwriting business.
Claim Reserving Policy – claims liabilities are determined based upon previous
claims experience, existing knowledge of events, the terms and conditions of the
relevant policies and interpretation of circumstances. Particularly relevant is past
experience with similar cases, historical claims development trends, legislative
changes, judicial decisions and economic conditions, and
Departments: Implement the risk management policies, that are consistent with Risk
Management Framework, to address specific Departmental requirements and
ensuring that they are in compliance with the day-to-day operations; and
The Capital Management Plan (“CMP”) presents descriptions of triggers and action plans
in place for the Company to monitor its Solvency Margin Ratio ("SMR") and to carry out
corrective measures when necessary to maintain the financial health of the Company. It
is intended that capital will be utilized more efficiently in a controlled manner so that
Company will be able to manage its capital position above its internal target. BNM has
issued a concept paper on Risk Based Capital Framework for Takaful Operators.
Line Managers: Responsible for using the various components of the Risk
Management Framework as an integral part of their normal processes and
procedures.
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(Incorporated in Malaysia)
35. Risk management Framework (cont'd.)
(b) Capital Management Objectives, Policies and Approach (cont'd.)
Capital Management Objectives
Capital Management Policies
-
-
Approach to capital management
(c) Regulatory framework
BNM/RH/CIR/004-13 Minimum Paid-up Capital Requirement for Takaful Operators
(effective from 31 December 2004) requires a minimum paid-up capital requirement of
RM100 million for existing takaful operators.
Ensure the Company has adequate capital, expressed as SMR within a range that
supports stakeholders' objectives.
The main objective of the capital management is to monitor and maintain at all times an
appropriate level of capital which commensurate with its risk profile. The key objective of
the capital management plan ("CMP") is to trigger appropriate action plans to be taken by
the Board and management of the Company in the event of internal solvency margin ratio
("SMR") falling below the internal target requirement. The CMP will require Board and the
management of the Company to undertake remedial actions so as to improve the
Company's capital position.
The Company conduct stress test in compliance with the Guidelines of Stress Testing for
Takaful Operators (BNM/RH/GL 004-16). The impact of the adverse scenarios on the
capital position of the Company on the SMR is assessed quarterly focusing on short to
medium term views.
The Company has to comply with the Takaful Act 1984 and Regulations which is
administered by BNM. BNM is primarily interested in protecting the rights of participants
and monitors the Takaful Operators closely to ensure prudent management of its
business operation. At the same time, BNM is also interested in ensuring that the
Company maintains an appropriate solvency position to meet unforeseen liabilities arising
from economic cycle or natural disasters.
Establish responsibility of the Company’s management and Board in developing an
internal capital adequacy assessment process and setting capital targets that
commensurate with its risk profile and control environment.
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35. Risk management Framework (cont'd.)
(d) Asset-Liability Management (“ALM”) Framework
36. Underwriting risk
General takaful fund
(a) Nature of risk
The Company principally issues the following types of general takaful certificates: motor,
household and commercial fire, business interruption, personal accident, and other
miscellaneous commercial contracts. Risks under these certificates usually cover a twelve
month duration other than long term fire which may be extended up to thirty years or
more. For general takaful certificates, the most significant risk arise from accident
frequency and severity of the accident. These risks do vary significantly in relation to
location of risk, type of risk covered and industry.
The above risks are mitigated by diversification across a large portfolio of business. The
variability of risks is designed to improve the portfolio experience by implementation of
underwriting strategies and claim management policies which attempt to minimise losses.
The Company also manages its loss exposure by the use of retakaful arrangements. The
retakaful treaty arrangements are reviewed annually by RMCB and approved by the
Board.
The main risk that the Company faces due to the nature of its investment and liabilities is
mismatch of asset to the liability profile (investment risks). The Company manages these
positions within ALM framework that is currently being developed to achieve long-term
investment returns in excess of its obligations under the takaful contracts. The principal
technique identified is to match assets to the liabilities arising from takaful contracts by
reference to the type of benefits payable to participants. Amongst the mechanism to
manage the ALM framework is the assessment and monitoring of the portfolio duration as
well as duration for specific products. An ALCO has been established to manage and
monitor asset-liability mismatched risks. The ALCO ultimately reports to the Board
through the Investment Committee.
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(Incorporated in Malaysia)
36. Underwriting risk (cont'd.)
General takaful fund (cont'd.)
(b) Concentration of by type of certificates
The table below sets out the concentration on takaful certificates liabilities by class :
Gross Retakaful Net
RM'000 RM'000 RM'000
Fire 30,727 (5,443) 25,284
Motor 217,398 (2,594) 214,804
Marine, Aviation & Transit 5,217 (1,785) 3,432
Miscellaneous 38,391 (24,529) 13,863
291,733 (34,351) 257,382
(c) Impact on liabilities, profit and equity
Key Assumptions
Sensitivities
The analysis below is performed for reasonably possible movements in key assumptions
with all other assumptions held constant, showing the impact on Gross and Net liabilities,
profit before Tax and Equity. The correlation of assumptions will have a significant effect
in determining the ultimate claims liabilities, but to demonstrate the impact due to
changes in assumptions, assumptions had to be changed on an individual basis. It should
be noted that movements in these assumptions are non-linear.
Additional qualitative judgments are used to assess the extent to which past trends may
not apply in the future, for example, isolated occurrence, changes in market factors such
as public attitude to claiming, economic conditions, as well as internal factors such as
portfolio mix, policy conditions and claims handling procedures. Judgment is further used
to assess the extent to which external factors, such as judicial decisions and government
legislation affect the estimates.
Other key circumstances affecting the reliability of assumptions include variation in profit
rates and delays in settlement.
The general takaful claim liabilities are sensitive to the key assumptions shown below. It
has not been possible to quantify the sensitivity of certain assumptions, such as,
legislative changes or uncertainty in the estimation process.
31 March 2011
The principal assumptions underlying the estimation of liabilities is that the Company's
future claims development will follow a similar pattern to past claims development
experience.
The related parties and their relationship with the Company as of 31 March 2009 are as112
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(Incorporated in Malaysia)
36. Underwriting risk (cont'd.)
General takaful fund (cont'd.)
(c) Impact on liabilities, profit and equity (Contd.)
Sensitivities (cont'd.)
RM'000 RM'000 RM'000 RM'000
Motor Act Average
Severity +5% 85,673 69,312 (64,867) (58,820)
Motor Others Expected
Loss Ratio +10% 21,424 21,095 (16,650) (10,603)
* The impact on participants' fund reflects the after tax impact .
(d) Claims Development table
Sensitivity has been applied to the major classes only which are Motor Act, Motor Others,
Fire and Personal Accident by considering the ultimate loss ratio with an extra charge for
the provision in adverse deviation.
31 March 2011
The method used for deriving sensitivity information and significant assumption did not
change from the previous period.
The following tables show the estimate of cumulative incurred claims, including both
claims notified and IBNR for each successive accident year at each financial year end,
together with cumulative payments to-date.
In setting provisions for claims, the Company gives consideration to the probability and
magnitude of future experience being more adverse than assumed and exercises a
degree of caution in setting reserves when there is considerable uncertainty. In general,
the uncertainty associated with the ultimate claims experience in an accident year is
greatest when the accident year is at an early stage of development and the margin
necessary confidence in adequacy of provision is relatively at its highest. As claims
develop and the ultimate cost of claims becomes more certain, the relative level of margin
maintained should decrease.
Change in
assumption
of Ultimate
Claims
Ratio
Impact
on
Surplus
before
Tax
Impact
on Net
Liabilities
Impact
on Gross
Liabilities
Impact
on Partici-
pants'
Fund*
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36. Underwriting risk (cont'd.)
General takaful fund (cont'd.)
(d) Claims Development table (Contd.)
Gross General Takaful Certificate Liabilities for 2011:
Accident year Note 2004 2005 2006 2007 2008 2009 2010 2011 Total
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At the end of accident year 1,027 11,728 29,337 36,388 50,997 100,090 125,472 144,938
One year later 875 10,898 27,311 36,179 51,290 93,740 142,627 -
Two year later 855 9,936 26,773 35,120 51,483 89,887 - -
Three year later 806 9,683 26,178 33,672 51,708 - - -
Four year later 790 8,396 25,494 33,695 - - - -
Five year later 787 7,951 24,949 - - - - -
Six year later 735 7,900 - - - - - -
Seven year later 740 - - - - - - -
Current estimate of
cumulative claims incurred* 740 7,900 24,949 33,695 51,708 89,887 142,627 144,938
At the end of accident year 203 3,957 8,984 13,366 17,599 29,070 43,215 48,128
One year later 610 6,632 18,976 25,083 34,059 64,212 83,077 -
Two year later 614 7,123 20,128 27,784 39,159 72,939 - -
Three year later 687 7,436 21,967 30,245 44,893 - - -
Four year later 714 7,728 23,560 31,292 - - - -
Five year later 730 7,807 24,474 - - - - -
Six year later 730 7,826 - - - - - -
Seven year later 734 - - - - - - -
Cumulative payments to-date 734 7,826 24,474 31,292 44,893 72,939 83,077 48,128
certificates liabilities per
Statement of Financial
Position: 23
Best Estimate of Claims
Liabilities (incl. Allocated Loss Adjustment
Expenses "ALAE") 6 74 475 2,403 6,815 16,948 59,550 96,810 183,081
Fund PRAD at 70% 10,031
Total 193,112
Gross general takaful
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36. Underwriting risk (cont'd.)
General takaful fund (cont'd.)
(d) Claims Development table (Contd.)
Accident year Note 2004 2005 2006 2007 2008 2009 2010 2011 Total
RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
At the end of accident year 923 9,974 27,944 33,895 47,452 83,588 114,632 134,955
One year later 791 9,613 26,062 34,140 47,361 81,492 119,456 -
Two year later 786 8,675 25,794 33,195 47,903 78,446 - -
Three year later 736 8,488 24,073 31,470 47,484 - - -
Four year later 737 7,398 23,420 31,341 - - - -
Five year later 721 6,978 23,128 - - - - -
Six year later 671 6,903 - - - - - -
Seven year later 674 - - - - - - -
Current estimate of
cumulative claims incurred* 674 6,903 23,128 31,341 47,484 78,446 119,456 134,955
At the end of accident year 203 3,121 8,406 11,984 16,995 27,613 40,682 44,714
One year later 544 5,636 18,391 23,422 32,713 56,404 79,479 -
Two year later 548 6,128 19,542 26,017 37,616 64,559 - -
Three year later 621 6,440 21,101 28,199 42,202 - - -
Four year later 648 6,732 22,694 29,091 - - - -
Five year later 665 6,811 22,968 - - - - -
Six year later 665 6,831 - - - - - -
Seven year later 668 - - - - - - -
Cumulative payments to-date 668 6,831 22,968 29,091 42,202 64,559 79,479 44,714
certificates liabilities per
Statement of Financial
Position: 23
Best Estimate of Claims Liabilities (incl. ALAE) 6 72 160 2,250 5,282 13,887 39,977 90,241 151,875
Fund PRAD at 70% 8,827
Total 160,702
Net General Takaful Certificate Liabilities for 2011:
Net general takaful
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36. Underwriting risk (cont'd.)
Family takaful fund
(a) Nature of risk
The Company principally issues the following types of family takaful certificates: Family
Takaful Plans, Mortgage Takaful Plans, Group Takaful Plans and Investment-linked
Takaful Plans.
Family takaful underwriting risk exist from the pricing and the pool of risk in the
participants' risk fund arising from family takaful certificates. The risks arise when actual
claims experience is different from the assumptions used in setting the prices for products
and establishing the technical provisions and liabilities for claims. Sources of risk include
certificate lapses and certificate claims such as mortality, morbidity and expenses.
The Company reviews the actual experience of mortality, morbidity, lapses and
surrenders, as well as expenses to ensure that appropriate policies, guidelines and limits
put in place to manage these risks remain adequate and appropriate.
The Family Takaful funds are participating in nature. In the event of volatile investment
climate and/or unusual claims experience, the investment profit and surplus distribution to
the participants may be reduced.
For investment-linked funds, the risk exposure for the participant's risk fund is limited only
to the underwriting aspect as all investment risks are borne by the participant.
Stress Testing (“ST”) is performed twice a year. The purpose of the ST is to test the
solvency of the family takaful fund under the various scenarios according to regulatory
guidelines, simulating drastic changes in major parameters such as new business
volume, investment environment, mortality/morbidity patterns and lapse rates.
The Company utilizes retakaful to manage the mortality and morbidity risks. The
Company’s retakaful management strategy and policy are reviewed by the Asset-Liability
Committee ("ALCO") and RMCB, and approved by the Board. Retakaful structures are
set based on the type of risk.
The related parties and their relationship with the Company as of 31 March 2009 are as
116
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(Incorporated in Malaysia)
36. Underwriting risk (cont'd.)
Family takaful fund (cont'd.)
(b) Concentration of by type of certificates
The Table below shows the concentration of family takaful certificates liabilities :
Gross Retakaful Net
RM'000 RM'000 RM'000
Family takaful plans 255,843 - 255,843
Investment-linked takaful plans 563 - 563
Mortgage takaful plans 368,534 (68,936) 299,598
Group credit takaful plans 126,764 (8,986) 117,778
Risk Fund 78,272 (21,218) 57,054
Special Fund 68,192 - 68,192
Others 173,125 (13,848) 159,277
1,071,293 (112,988) 958,305
(c) Key Assumptions
i) Mortality and Morbidity rates
Material judgement is required in determining the liabilities and in the choice of
assumptions. Assumptions used are based on past experience, current internal data,
external market indices and benchmarks which reflect current observable market prices
and other published information. Assumptions and prudent estimates are determined at
the date of valuation and no credit is taken for possible beneficial effects of voluntary
withdrawals. Assumptions are further evaluated on a continuous basis in order to ensure
realistic and reasonable valuations.
31 March 2011
As all of the business are derived from Malaysia, the entire family takaful certificates
liabilities are in Malaysia.
Assumptions are based on the mortality rates as set out in the Actuarial Certificate
submitted to Bank Negara Malaysia. They reflect the historical local experience and
are adjusted, when appropriate, to reflect the Participants' own experience.
Assumptions are differentiated by gender, occupational class and product group.
An increase in rates will lead to a larger number of claims (as claims could occur
sooner than anticipated), which will reduce surplus from the Risk Fund and
subsequently reduce profits for the shareholders in terms of reduction of income
arising from the surplus administration charge.
The key assumptions to which the estimation of liabilities is particularly sensitive are as
follows:
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(Incorporated in Malaysia)
36. Underwriting risk (cont'd.)
Family takaful fund (cont'd.)
(c) Key Assumptions (cont'd.)
ii) Discount rates
31 March 2011 %
Type of Business
3%
Others 3%
(1)
(2)
Base mortality 1
Various industry mortality and morbidity experience tables that were used to
determine the contribution rates
Retakaful rates obtained through retakaful arrangements with respect to the MRTT
and GCT business
A decrease in the discount rate will increase the value of the family takaful liability and
therefore reduce profits for the shareholders in terms of reduction of income arising
from the surplus administration charge.
The assumptions that have the great effect on the Statement of Financial Position and
statement of comprehensive income of the Company are listed below by portfolio
assumptions impacting net liabilities:
Base mortality1
and
adjusted for retakaful
rates 2
Credit related (MRTT and GCT)
Mortality and Morbidity
rates
Discount
rates
Family takaful liabilities of credit-related products (Mortgage Reducing Term Takaful
("MRTT") and Group Credit Takaful ("GCT")) are determined as the sum of the
discounted value of the expected benefits less the discounted value of the expected
tabarru' (risk charge) that would be required to meet these future cash outflows.
Discount rates are based on the Family Fund's historical investment performance and
adjusted downwards for conservatism.Discount rates are based on the Family Fund's
historical investment performance and adjusted downwards for conservatism.
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(Incorporated in Malaysia)
36. Underwriting risk (cont'd.)
Family takaful fund (cont'd.)
(d) Sensitivity analysis
Sensitivity analysis
% % % % %
Family Takaful Certificates
31 March 2011
Mortality / morbidity + 10% 9,548 9,548 (915) (668)
Discount rates + 1% (1,378) (1,378) 93 68
Impact on Equity reflects adjustments for tax, where applicable.
The method used and significant assumptions made for deriving sensitivity information did not change from the previous period.
Impact on Profit
Before Tax
Impact on Equity
The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on gross
and net liabilities, profit before tax and equity. The correlations of assumptions will have a significant effect in determining the ultimate claims liabilities, but to
demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these
assumptions are non-linear. Sensitivity information will also vary according to the current economic assumptions.
Change in
Assumptions
Impact on Gross
Liabilities
Impact on Net
liabilities
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(Incorporated in Malaysia)
37. Financial Risk
(a) Credit Risk
-
-
- Contribution credit risks - financial loss arising from non-payment of contribution.
-
-
-
The Company is exposed to investment credit risk on its investment portfolio, primarily
from investments in corporate bonds. Creditworthiness assessment for new and existing
investments is undertaken by the Company in accordance with the Investment Policy as
approved by the Investment Committee. In addition the credit ratings of bond portfolio are
regularly monitored and any downgrade in credit rating will be evaluated to determine
actions required. The Company's bond portfolio is highly rated, with no material exposure
below investment grade.
The Company is exposed to retakaful counterparty risk of three different types:
from retakaful contributions payments made to the retakaful operator in advance; and
Transactions in financial instruments may result in the Company assuming financial risks.
These include credit risk, liquidity risk and market risk. This note presents information about
the Company’s exposure to each of the above risks, the Company’s objectives, policies and
processes for measuring and managing such risks. Comparative figures or analysis have not
been presented for 31 March 2010.
Credit risk in respect of customer balances incurred on non-payment of general takaful
contribution will only persist during the contribution warranty period specified in the
certificate or until expiry, when the certificate expired or terminated.
Credit risk includes the following elements:
Retakaful counterparty risk – financial loss arising from a retakaful operator’s default,
or the deterioration of the retakaful operator’s solvency position;
as a result of reserves held by the retakaful operator which would have to be met by
the Company in the event of default.
Investment credit risk – financial loss arising from a change in the value of an
investment due to a rating downgrade, default or widening of credit spreads. Changes
in credit spreads are also affected by the liquidity of the stock, but since the liquidity is
usually closely related to credit risk, the risk is managed as credit risk;
as a result of debts arising from claims made by the Company but not yet paid by the
retakaful operator;
Credit risk represents the loss that would be recognized if counterparties to retakaful and
investment transactions failed to meet their contractual obligations.
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37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
-
- counterparty limits are set for investments and cash deposits.
-
-
-
The table below shows the maximum exposure to credit risk for the components of the
statement of financial position and items such as future commitments. The maximum
exposure is shown gross, before the effect of mitigation through the use of master netting
or collateral agreements.
investment policies will have a prescribed minimum credit rating of bonds that may be
held. Investing in a diverse portfolio reduces the impact from individual companies
defaulting.
To mitigate credit risk:
To mitigate retakaful counterparty risk, the Company will give due consideration to the
credit quality of a retakaful operator before incepting a retakaful treaty. To facilitate
this process, a list of acceptable retakaful operators is maintained within the
Company.
the Company's investment portfolio is managed following standards of diversification.
It focuses on investing in high quality investment grade fixed income securities.
for the financial year ended 31 March 2011, the average credit quality of the
Company's investment portfolio was AAA by Rating Agency Malaysia ("RAM") or
Malaysian Rating Corporation Berhad ("MARC").
The related parties and their relationship with the Company as of 31The related parties and their relationship with the Company as of 31 March121
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(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Objectives in managing credit risk
Credit Exposure
Note Shareholder's General Family Investment-
fund takaful fund takaful fund linked fund Total
31 March 2011 RM'000 RM'000 RM'000 RM'000 RM'000
Financial investments at FVTPL 18(a)
Unquoted Islamic private debt securities:
Government guaranteed - - - 251
Unsecured - - - 4,236 4,236
Government investment issues 698
Shariah approved unit trust funds - 5,888 8,585 73,013 87,486
HTM financial investments 18(b)
Unquoted Islamic private debt securities:
Government guaranteed 15,026 14,324 24,103 - 53,453
Unsecured 1,383 2,004 25,043 - 28,430
Government investment issues 24,041 50,940 163,241 - 238,222
AFS financial investments 18(c)
Unquoted Islamic private debt securities:
Unsecured 55,757 90,605 279,028 - 425,390
Quoted shares in Malaysia:
Shariah approved equities 4,953 8,652 15,988 - 29,593
Shariah approved unit trust funds - 5,888 8,585 - 14,473
Golf club memberships 178 - - - 178
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37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit Exposure (cont'd.) Note Shareholder's General Family Investment-
fund takaful fund takaful fund linked fund Total
31 March 2011 RM'000 RM'000 RM'000 RM'000 RM'000
LAR 18(d)
Islamic investment accounts with licensed:
Islamic banks 13,755 32,249 90,006 - 136,010
Investment banks - - 1,507 - 1,507
Development bank 13,472 18,577 59,356 - 91,405
Building society 8,269 - - - 8,269
Islamic repo placements 12,668 5,814 113,967 3,237 135,686
Institutional trust fund 6,592 - 18,592 - 25,184
Units held in investment-linked fund 10,000 - - - 10,000
Secured staff loans:
Receivable within 12 months 1,289 - - - 1,289
Receivable after 12 months 2,723 - - - 2,723
Qard to general takaful fund* 12,043 - - - 12,043
Due from:
General takaful fund 2,739 - 12,967 4 15,710
Family takaful fund 28,935 - - - 28,935
Investment-linked fund 174 - 3 - 177
Amount due from holding company - - 5,247 - 5,247
Income due and accrued 1,022 2,160 199 (25) 3,356
Other receivables, deposits and prepayments 5,402 1,649 445 - 7,496
Retakaful certificates assets - 34,351 137,383 - 171,734
Takaful certificates receivables 19 - 32,798 83,818 87 116,703
Cash and bank balances 7,630 47,511 62,916 2,840 120,897
228,051 353,410 1,110,979 84,341 1,775,832
* The qard from shareholders' fund are non-trade in nature, unsecured, not subject to any profit elements and has no fixed terms of repayment.
Credit Exposure - non investment instruments
In the case of contributions obligations by cedant or brokers , the Company has sound Credit Control policies in place to ensure that contributions are duly
collected from the cedants and brokers.
The related parties and their relationship with the Company as of 31 MarchThe related parties and their relationship with the Company as of 31 March
123
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating
The table below provides information regarding the credit risk exposures of the Company by classifying assets according to the Company's credit ratings of counterparties :
Shareholder's fund
AAA/P1 AA A BBB (C to BB) Not Rated Total
31 March 2011 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 697 697
Warrants - - - - - - - 15 15
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 15,026 - - - - - - - 15,026
Unsecured - 998 - - 385 - - - 1,383
Government investment issues 24,041 - - - - - - - 24,041
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured - 35,296 20,461 - - - - - 55,757
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 4,953 4,953
Golf club memberships - - - - - - - 178 178
LAR
Islamic investment accounts with licensed:
Islamic banks - 1,600 1,004 2,599 - - 8,552 - 13,755
Development bank - - 5,199 - - - 8,273 - 13,472
Building society - - - - - - 8,269 - 8,269
Islamic repo placements - - - 5,000 - - 7,668 - 12,668
Institutional trust fund - - - - - - 6,592 - 6,592
Units held in investment-linked fund - - - - - - 10,000 - 10,000
Secured staff loans:
Receivable within 12 months - - - - - - 1,289 - 1,289
Receivable after 12 months - - - - - - 2,723 - 2,723
Qard to general takaful fund - - - - - - 12,043 - 12,043
Non-
investment
grade *Government
guaranteed
Not subject
to credit
risk
Neither pass-due nor impaired
Investment grade *
124
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating (cont'd.)
Shareholder's fund (cont'd.)
AAA/P1 AA A BBB (C to BB) Not Rated Total
31 March 2011 (cont'd.) RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
LAR (cont'd.)
Due from:
General takaful fund - - - - - - - 2,739 2,739
Family takaful fund - - - - - - - 28,935 28,935
Investment-linked fund - - - - - - - 174 174
Income due and accrued - - - - - - - 1,022 1,022
Other receivables, deposits and prepayments - - - - - - - 5,402 5,402
Cash and bank balances - 5,886 1,066 663 - - - 15 7,630
39,067 43,780 27,730 8,262 385 - 65,409 44,130 228,763
General takaful fund
31 March 2011
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 1,090 1,090
Warrants - - - - - - - 15 15
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 14,324 - - - - - - - 14,324
Unsecured - - - - - - 2,004 - 2,004
Government investment issues 50,940 - - - - - - - 50,940
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured - 38,509 - - - - 52,096 - 90,605
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 8,652 8,652
Shariah approved unit trust funds - - - - - - - 5,888 5,888
Neither pass-due nor impaired
Non-
investment
grade *
Not subject
to credit
risk
Investment grade *
Government
guaranteed
125
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating (cont'd.)
General takaful fund (cont'd.)
AAA/P1 AA A BBB (C to BB) Not Rated Total
31 March 2011 (cont'd.) RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
LAR
Islamic investment accounts with licensed:
Islamic banks - 4,085 - - - - 28,164 - 32,249
Development bank - - - - - - 18,577 - 18,577
Islamic repo placements - 4,978 - - - - 836 - 5,814
Income due and accrued - - - - - - - 2,160 2,160
Other receivables, deposits and prepayments - - - - - - - 1,649 1,649
Retakaful certificates assets - - - - - - - 34,351 34,351
Takaful certificates receivables - 2,161 5,366 2,477 466 - 22,328 - 32,798
Cash and bank balances - 45,891 441 1,105 - - 74 - 47,511
65,264 95,624 5,807 3,582 466 - 124,079 53,805 348,627
Family takaful fund
31 March 2011
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 1,832 1,832
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 24,103 - - - - - - - 24,103
Unsecured - 17,027 8,016 - 25,043
Government investment issues 163,241 - - - - - - - 163,241
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured - 170,766 108,262 - 279,028
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 15,988 15,988
Shariah approved unit trust funds - - - - - - 8,585 - 8,585
Neither pass-due nor impaired
Non-
investment
grade *
Not subject
to credit
risk
Investment grade *
Government
guaranteed
126
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating (cont'd.)
Family takaful fund (cont'd.)
AAA/P1 AA A BBB (C to BB) Not Rated Total
31 March 2011 (cont'd.) RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000 RM '000
LAR
Islamic investment accounts with licensed:
Islamic banks - 7,345 22,798 38,421 - - 21,442 - 90,006
Investment banks - - - 1,507 - - - - 1,507
Development bank - - 40,496 - - - 18,860 - 59,356
Islamic repo placements - 32,286 44,892 23,081 - - 13,708 - 113,967
Institutional trust fund - - - - - - 18,592 - 18,592
Due from:
General takaful fund - - - - - - - 12,967 12,967
Investment-linked fund 3 3
Amount due from holding company - - - - - - - 5,247 5,247
Income due and accrued - - - - - - - 199 199
Other receivables, deposits and prepayments - - - - - - - 445 445
Retakaful certificates assets - - - - - - 137,383 - 137,383
Takaful certificates receivables - - 2,602 37 9 - 81,170 - 83,818
Cash and bank balances - 60,488 613 1,062 - - 754 - 62,917
187,344 287,912 227,679 64,108 9 - 300,497 36,678 1,104,227
Investment-linked fund
31 March 2011
Financial investments at FVTPL
Unquoted Islamic private debt securities:
Government guaranteed 251 - - - - - - - 251
Unsecured - 2,725 1,511 - - - - - 4,236
Government investment issues 698 - - - - - - - 698
Quoted shares in Malaysia:
Shariah approved equities - - - - - - - 8,751 8,751
Shariah approved unit trust funds - - - - - - - 73,013 73,013
LAR
Islamic repo placements - - 550 2,687 - - - - 3,237
Due from:
General takaful fund - - - - - - - 4 4
Income due and accrued - - - - - - - (25) (25)
Takaful certificates receivables - - - - - - 87 - 87
Cash and bank balances - 340 2,495 - - - 5 - 2,840
949 3,065 4,556 2,687 - - 92 81,743 93,092
* Based on public ratings assigned by external rating agencies including Rating Agency Malaysia ("RAM") and Malaysian Rating Corporation ("MARC")
Government
guaranteed
Neither pass-due nor impaired
Non-
investment
grade *
Not subject
to credit
risk
Investment grade *
127
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating (cont'd.)
Age Analysis of Financial Assets Past-Due But Not impaired
General takaful fund
Total
RM' 000 RM' 000 RM' 000 RM' 000
Takaful certificates receivables 21,300 3,868 7,630 32,798
Family takaful fund
Total
RM' 000 RM' 000 RM' 000 RM' 000
Takaful certificates receivables 66,775 10,026 7,017 83,818
Impaired Financial Assets
For assets to be classified as 'past due and impaired' , please refer to Note 2.18.
The movement of allowance for impairment on trade receivables are as follows:
General Family
takaful fund takaful fund
2011 2011
RM'000 RM'000
At beginning of year 11,109 246
Additional allowance during the year (3,054) -
Writeback of allowance during the year - 636
At end of year 8,055 882
Specific provisions are made for any outstanding contributions including brokers, agent or
retakaful balances which remaining outstanding as per Note 2.18.
31 March 2011
Receivables are carried out at anticipated realizable value. Bad debts are written off once
identified. An estimate is made for doubtful debts based on a review of all outstanding
amounts as at financial year end.
0-180 Days 181-365 Days > 365 Days
31 March 2011
0-180 Days 181-365 Days > 365 Days
The related parties and their relationship with the Company as of 31The related parties and their relationship with the Company as of 31 March
128
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(a) Credit Risk (cont'd.)
Credit exposure by credit rating (cont'd.)
Loan
(b) Liquidity Risk
-
-
-
-
-
-
-
Liquidity risk is concerned with the risk that a company will not have available sufficient
cash resources to meet its payment obligations without incurring material additional costs.
the ability to meet the company’s payment obligations under normal and stressed
operating environments without suffering any loss;
efficient management of additions/withdrawals from the company’s investment funds;
and
As part of its liquidity management strategy is to put in place the necessary framework
capable of measuring and reporting on:
The fair values of loans receivable are determined by discounting the cash flows using the
prevailing profit rates for similar instruments at financial year end.
The company will meet shareholder's liquidity needs arising in a number of key areas :
have the appropriate measures in place to respond to liquidity risk.
The table below summarizes the maturity profile of the financial assets and liabilities of
the Company based on remaining undiscounted contractual obligations, including profit
payable and receivable.
For takaful certificates liabilities and retakaful certificate assets, maturity profiles are
determined based on estimated timing of net cash outflows from the recognised takaful
certificates liabilities.
daily cash flows;
minimum liquidity holdings;
the holding of liquid assets in the respective Takaful Funds.
Maturity Profiles
the composition and market values of company’s investment portfolios, including liquid
holdings; and
For managing the liquidity of the takaful funds, it is appropriate to maintain a certain
proportion of the Takaful Funds in liquid assets which is derived from investment mandate
of each funds. Each fund specifies a percentage of minimum holding but there is no limit
in deposits.
129
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
Maturity profiles (cont'd.)
Shareholder's Fund
31 March 2011 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities 697 - - - - 697 697
Warrants 15 - - - - 15 15
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 15,026 - 612 3,054 15,550 - 19,216
Unsecured 1,383 1,000 - - 383 - 1,383
Government investment issues 24,041 4,053 837 18,055 4,185 - 27,130
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured 55,757 - 7,507 33,212 27,856 - 68,575
Quoted shares in Malaysia:
Shariah approved equities 4,953 - - - - 4,953 4,953
Golf club memberships 178 - - - - 178 178
LAR
Islamic investment accounts with licensed:
Islamic banks 13,755 6,261 7,494 - - - 13,755
Development bank 13,472 9,766 3,706 - - - 13,472
Building society 8,269 1,710 6,559 - - - 8,269
Islamic repo placements 12,668 12,668 - - - - 12,668
Institutional trust fund 6,592 - - - - 6,592 6,592
Units held in investment-linked fund 10,000 - - - - 10,000 10,000
Secured staff loans:
Receivable within 12 months 1,289 664 625 - - - 1,289
Receivable after 12 months 2,723 - - 2,723 - - 2,723
Qard to general takaful fund 12,043 - - - - 12,043 12,043
No
maturity Total
0-6
months
6-12
months
Over 1-5
years
Over 5
years
Carrying
value
130
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
Maturity profiles (cont'd.)
Shareholder's Fund (cont'd.)
31 March 2011 (cont'd.) RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000
LAR (cont'd.)
Due from:
General takaful fund 2,739 - - - - 2,739 2,739
Family takaful fund 28,935 - - - - 28,935 28,935
Investment-linked fund 174 - - - - 174 174
Income due and accrued 1,022 - - - - 1,022 1,022
Other receivables, deposits and prepayments 5,402 - - - - 5,402 5,402
Cash and bank balances 7,630 - - - - 7,630 7,630
Total Assets 228,763 36,122 27,340 57,044 47,974 80,380 248,860
Expenses liabilities 15,146 - - - - 15,146 15,146
Due to agents, retakaful operators
and brokers 13,498 - - - - 13,498 13,498
Due to related companies 22 - - - - 22 22
Zakat payable 573 - - - - 573 573
Other payables 25,125 - - - - 25,125 25,125
Provisions 6,344 - - - - 6,344 6,344
Total Liabilities 60,708 - - - - 60,708 60,708
0-6
months
6-12
months
Over 1-5
years
Over 5
years
No
maturity Total
Carrying
value
131
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
Maturity profiles (cont'd.)
General takaful fund
31 March 2011 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities 1,090 - - - - 1,090 1,090
Warrants 15 - - - - 15 15
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 14,324 - 584 2,912 14,825 - 18,321
Unsecured 2,004 - 97 2,106 - 2,203
Government investment issues 50,940 1,974 2,016 20,669 41,146 - 65,805
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured 90,605 2,000 4,156 78,557 23,756 - 108,469
Quoted shares in Malaysia:
Shariah approved equities 8,652 - - - - 8,652 8,652
Shariah approved unit trust funds 5,888 - - - - 5,888 5,888
LAR
Islamic investment accounts with licensed:
Islamic banks 32,249 29,843 2,406 - - - 32,249
Development bank 18,577 14,036 4,541 - - - 18,577
Islamic repo placements 5,814 5,814 - - - - 5,814
Units held in investment-linked fund - - - - - - -
Income due and accrued 2,160 - - - - 2,160 2,160
Other receivables, deposits and prepayments 1,649 - - - - 1,649 1,649
Retakaful certificates assets 34,351 410 1,300 111 120 32,410 34,351
Takaful certificates receivables 32,798 19,135 2,165 3,868 7,630 - 32,798
Cash and bank balances 47,511 - - - - 47,511 47,511
Total Assets 348,627 73,212 17,265 108,223 87,477 99,375 385,552
Takaful certificates liabilities 291,733 23,880 54,725 1,610 18,406 193,112 291,733
Takaful certificates payables 7,932 - - - - 7,932 7,932
Other payables 39,475 - - - - 39,475 39,475
Total Liabilities 339,140 23,880 54,725 1,610 18,406 240,519 339,140
No
maturity Total
0-6
months
6-12
months
Over 1-5
years
Over 5
years
Carrying
value
132
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
Maturity profiles (cont'd.)
Family takaful fund
31 March 2011 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000
Financial investments at FVTPL
Quoted shares in Malaysia:
Shariah approved equities 1,832 - - - - 1,832 1,832
HTM financial investments
Unquoted Islamic private debt securities:
Government guaranteed 24,103 - 805 13,430 15,550 - 29,785
Unsecured 25,043 12,165 649 9,721 5,387 - 27,922
Government investment issues 163,241 18,884 26,547 63,357 88,323 - 197,111
AFS financial investments
Unquoted Islamic private debt securities:
Unsecured 279,028 - 12,917 162,630 194,998 - 370,545
Quoted shares in Malaysia:
Shariah approved equities 15,988 - - - - 15,988 15,988
Shariah approved unit trust funds 8,585 - - - - 8,585 8,585
LAR
Islamic investment accounts with licensed:
Islamic banks 90,006 74,258 12,200 3,548 - - 90,006
Investment banks 1,507 1,507 - - - - 1,507
Development bank 59,356 48,844 10,238 274 - - 59,356
Islamic repo placements 113,967 113,967 - - - - 113,967
Institutional trust fund 18,592 - - - - 18,592 18,592
Due from:
General takaful fund 12,967 - - - - 12,967 12,967
Investment-linked fund 3 - - - - 3 3
Amount due from holding company 5,247 - - - - 5,247 5,247
Income due and accrued 199 - - - - 199 199
Other receivables, deposits and prepayments 445 - - - - 445 445
Retakaful certificates assets 137,383 - - - 563 136,820 137,383
Takaful certificates receivables 83,818 66,775 10,026 7,017 - - 83,818
Cash and bank balances 62,917 - - - - 62,917 62,917
Total Assets 1,104,227 336,400 73,382 259,977 304,821 263,595 1,238,175
0-6
months
6-12
months
Over 1-5
years
Over 5
years
No
maturity Total
Carrying
value
133
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
Maturity profiles (cont'd.)
Family takaful fund (cont'd.)
31 March 2011 (cont'd.) RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000 RM' 000
Takaful certificates liabilities 1,104,189 2,291 2,143 21,617 806,445 271,693 1,104,189
Takaful certificates payables 34,406 - - - - 34,406 34,406
Other payables 65,754 - - - - 65,754 65,754
Total Liabilities 1,204,349 2,291 2,143 21,617 806,445 371,853 1,204,349
Investment-linked fund
31 March 2011
Financial investments at FVTPL
Unquoted Islamic private debt securities:
Government guaranteed 251 5 5 270 - - 280
Unsecured 4,236 104 104 2,141 3,079 - 5,428
Government investment issues 698 14 14 108 768 - 904
Quoted shares in Malaysia:
Shariah approved equities 8,751 - - - - 8,751 8,751
Shariah approved unit trust funds 73,013 - - - - 73,013 73,013
LAR
Islamic repo placements 3,237 3,237 - - - - 3,237
Due from:
General takaful fund 4 - - - - 4 4
Income due and accrued (25) - - - - (25) (25)
Other receivables, deposits and prepayments - - - - - - -
Retakaful certificates assets - - - - - - -
Takaful certificates receivables 87 - - - - 87 87
Cash and bank balances 2,840 - - - - 2,840 2,840
Total Assets 93,092 3,360 123 2,519 3,847 84,670 94,519
Participants' fund 90,227 - - - - 90,227 90,227
Other payables 1,998 - - - - 1,998 1,998
Total Liabilities 92,225 - - - - 92,225 92,225
Over 5
years
No
maturity Total
0-6
months
6-12
months
Over 1-5
years
Carrying
value
134
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk
-
-
-
Profit rate risk
Profit rate risk – the risk of fluctuations in fair value or future cash flows of a financial
instrument arising from variability in profit rates; and
Market risk is the risk of loss arising from a change in the values of, or the income from, assets
or in profit. A risk of loss also arises from volatility in asset prices or profit rates. Market risk
includes the following three elements:
Equity risk – the risk of fluctuations in fair value or future cash flows of a financial
instrument arising from stock market dynamic impacting the equity prices;
Property risk – the risk of fluctuations in fair value or future cash flows of a financial
instrument arising from decline in real estate values or income.
The Company is exposed to fair value profit rate risk where changes to profit rates result in
changes to fair values rather than cash flows, for example fixed profit rate loans and assets.
Conversely, floating rate loans expose the Company to cash flow profit rate risk.
The earnings of the Company are affected by changes in market profit rates due to the impact
such changes have on profit income from cash and cash equivalents, including investments in
fixed deposits.
The nature of the Company's exposure to profit rate risk and its objectives, policies and
processes for managing profit rate risk have not changed significantly from the previous
financial year.
The Company manages its profit rate risk by matching, where possible, the duration and profile
of assets and liabilities to minimize the impact of mismatches between the value of assets and
liabilities from profit rate movements.
The related parties and their relationship with the Company as of 31The related parties and their relationship with the Company as of 31The related parties and their relationship with the Company as of 31The related parties and their relationship with the Company as of 31
135
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk (Contd.)
Profit rate risk (cont'd.)
Shareholder's Fund
31 March 2011 RM'000 RM'000 RM'000
Unquoted Islamic private debt securities:
Government guaranteed 612 3,054 15,550
Unsecured 8,507 33,212 28,239
Government investment issues 4,890 18,055 4,185
Islamic investment accounts with licensed:
Islamic banks 13,755 - -
Development bank 13,472 - -
Building society 8,269 - -
Islamic repo placements 12,668 - -
Secured staff loans:
Receivable within 12 months 1,289 - -
Receivable after 12 months - 2,723 -
63,462 57,044 47,974
General takaful fund
31 March 2011
Unquoted Islamic private debt securities:
Government guaranteed 584 2,912 14,825
Unsecured 6,253 80,663 23,756
Government investment issues 3,990 20,669 41,146
Islamic investment accounts with licensed:
Islamic banks 32,249 - -
Development bank 18,577 - -
Islamic repo placements 5,814 - -
67,467 104,244 79,727
The following tables set out the carrying amount, by maturity, of the Company’s financial
instruments that are exposed to profit rate risk.
Within 1 year 1 to 5 years More than 5
years
136
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Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk (Contd.)
Profit rate risk (cont'd.)
Family takaful fund
31 March 2011 RM'000 RM'000 RM'000
Unquoted Islamic private debt securities:
Government guaranteed 805 13,430 15,550
Unsecured 25,731 172,351 200,385
Government investment issues 45,431 63,357 88,323
Islamic investment accounts with licensed:
Islamic banks 86,458 3,548 -
Investment banks 1,507 - -
Development bank 59,082 274 -
Islamic repo placements 113,967 - -
332,981 252,960 304,258
Investment-linked fund
31 March 2011
Unquoted Islamic private debt securities:
Government guaranteed 10 270 -
Unsecured 208 2,141 3,079
Government investment issues 28 108 768
Islamic repo placements 3,237 - -
3,483 2,519 3,847
Sensitivity Analysis
Shareholder's Fund
Changes in
basis point
Impact on
asset
Impact on
AFS reserve
Impact on
Profit before
tax
RM' 000 RM' 000 RM' 000
Debt Securities + 25 (625) 625 -
- 25 638 (638) -
Within 1 year More than 5
years
A change of 25 basis points ("bp") in profit rates at the reporting date would have increased /
(decreased) the value of investment instruments by the amounts shown below:
1 to 5 years
31 March 2011
137
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Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk (Contd.)
Profit rate risk (cont'd.)
Sensitivity Analysis (cont'd.)
Changes in
basis point
Impact on
asset
Impact on
AFS reserve
Impact on
Surplus
before tax
General takaful fund RM' 000 RM' 000 RM' 000
Debt Securities + 25 (912) 912 -
- 25 928 (928) -
Family takaful fund
Debt Securities + 25 (4,049) 4,049 -
- 25 4,146 (4,146) -
Investment-linked fund
Debt Securities + 25 59 - 59
- 25 (59) - (59)
Government Investment Issues + 25 (132) - (132)
- 25 137 - 137
Equity risk
Equity price risk is the risk that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in market prices (other than those arising from profit yield risk or
currency risk) whether those changes are caused by factors specific to the individual financial
instruments or its issuer or factors affecting all similar financial instruments traded in the
market.
The Company's price risk policy requires it to manage such risks by setting and monitoring
objectives and constraints on investments, diversification plans, limits on investments in each
country, sector, market and issuer, having regards also to such limits stipulated by BNM. The
Company complies with BNM stipulated limits during the financial year and has no significant
concentration of price risk.
31 March 2011
The Company's equity price risk exposures relates to financial assets and financial liabilities
whose values will fluctuate as a result of changes in market prices.
138
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk (Contd.)
Equity risk (cont'd.)
Shareholder's Fund
Changes in
variable
Impact on
asset
Impact on
AFS reserve
Impact on
Profit before
tax
RM' 000 RM' 000 RM' 000
Market Indices
Bursa Malaysia + 5% 36 - 36
Bursa Malaysia - 5% (36) - (36)
Changes in
variable
Impact on
asset
Impact on
AFS reserve
Impact on
Surplus
before tax
RM' 000 RM' 000 RM' 000
General takaful fund
Market Indices
Bursa Malaysia + 5% 55 - 55
Bursa Malaysia - 5% (55) - (55)
Family takaful fund
Market Indices
Bursa Malaysia + 5% 128 - 128
Bursa Malaysia - 5% (132) - (132)
Investment-linked fund
Market Indices
Bursa Malaysia + 5% 4,112 - 4,112
Bursa Malaysia - 5% (4,112) - (4,112)
31 March 2011
31 March 2011
The analysis below is performed for reasonably possible movements in share prices with all
other variables held constant, showing the impact on equity in respect of quoted investment.
The correlation of variables will have significant effect in determining the ultimate impact on
price risk, but to demonstrate the impact due to changes in variables, variables had to be
changed on an individual basis. It should be noted that movements in these variables are non-
linear.
139
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
37. Financial Risk (cont'd.)
(c) Market Risk (Contd.)
Property Risk
38. Operational Risk
39. Shariah Non-compliance Risk
The financial risk of the declining tenants are managed through careful selection of properties,
having quality tenants with long term tenancies and continuously maintaining and upgrading
facilities.
The Company has no significant exposure of property risk.
Shariah Non-Compliance risk refers to possible failure to meet the obligation of Shariah principles.
When controls fail to perform, Shariah non-compliance risk can cause reputational and operational
damage, have regulatory implications or can even lead to financial loss and finally, impediment
from Allah’s barakah or blessing. The Company expect to mitigate such risk by initiating,
monitoring and responding to robust Shariah control framework. Controls include effective
oversight of the Shariah Committee, supported by internal Shariah Compliance Department in all
aspects of the Company's operations. Other relevant controls include staff awareness training and
internal operating guidelines, including the use of internal and external Shariah audit.
Property risk is the risk associated with the Company's investment in property or real estates
for own occupancy, investment or rental purpose. The Operational risk of the Company's
property is controlled by having detailed operation manual. The manual describes the
responsibilities in relation to management of the properties to maintain quality and satisfied
tenants.
Operational Risk is the risk of loss arising from system failure, human error, fraud or external
events. When controls fail to perform, operational risks can cause damage to reputation, have
legal or regulatory implications or can lead to financial loss. The Company cannot expect to
eliminate all operational risks, but by initiating a rigorous control framework and by monitoring and
responding to potential risks, the Company is able to manage risks. Controls, amongst others,
include effective segregation of duties, access controls, authorization and reconciliation
procedures, staff education and assessment processes, including the use of internal audit.
Business risks such as changes in technology and the industry are monitored through the
Company's strategic planning and budgeting process.
140
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
40. Compliance Risk
41. Comparatives
As Adjustments/
previously Re- As
reported classification restated
Shareholder's fund RM '000 RM '000 RM '000
Statement of comprehensive income:
Wakalah fees 181,632 (181,632) -
Surplus administration charges transferred from:
General takaful fund 8,095 (8,095) -
Family takaful fund 732 (732) -
Investment income 8,558 (4,467) 4,091
- Investment performance fee from
family takaful fund (4,467)
199,017 (194,926) 4,091
Fee income - 194,926 194,926
- Wakalah fees 181,632
- Surplus administration charges 8,827
- Investment performance fee 4,467
Net other operating income/(expenses) 3,058 (3,058) -
Realised gains and losses - 4,337 4,337
Fair value gains and losses - (1,899) (1,899)
Other operating revenue - 620 620
- 3,058 3,058
Compliance risk is the risk arising from violations of, or non-conformance with business principles,
internal policies and procedures, related laws, rules and regulations governing the Company's
products, services and activities.
The Company has established a Compliance Management Department to look into all compliance
aspects in observing the regulatory requirements. In this respect, it has developed internal policies
and procedures to ensure compliance with all applicable laws and guidelines issued by the
regulatory authorities.
Certain comparative figures in the Statement of Financial Position and Statement of
comprehensive income as at 31 March 2010 have been reclassified to conform with current year's
presentation.
Consequently, the exposure to this risk can damage the Company's reputation, lead to legal or
regulatory sanctions and/or financial loss.
141
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
reported classification restated
Shareholder's fund (cont'd.) RM '000 RM '000 RM '000
Statement of comprehensive income (cont'd.):
Change in expenses liability - 5,739 5,739
- Effect of adopting FRS 4 (Note 2.27) 5,739
Taxation (5,075) (1,434) (6,509)
- Effect of adopting FRS 4 (Note 2.27) (1,434)
Statement of Financial Position :
Assets
Deferred tax assets 2,303 3,938 6,241
- Effect of adopting FRS 4 (Note 2.27) 3,938
Liabilities
Expenses liabilities - 15,750 15,750
- Effect of adopting FRS 4 (Note 2.27) 15,750
Other payables 26,354 (11,807) 14,547
Due to related companies - 1,132 1,132
Provisions - 10,675 10,675
- 11,807 11,807
Equity
Retained profits/(accumulated losses) 1,336 (11,812) (10,476)
- Effect of adopting FRS 4 (Note 2.27) (11,812)
General takaful fund
Statement of comprehensive income:
Gross contribution 217,230 (217,230) -
Less: Retakaful (25,525) 25,525 -
(Increase)/decrease
in unearned contribution reserves (633) 633 -
Earned contribution 191,072 (191,072) -
Gross earned contribution - 216,319 216,319
Earned contribution ceded
to retakaful operators - (25,247) (25,247)
Net earned contribution - 191,072 191,072
142
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
reported classification restated
General takaful fund (cont'd.) RM '000 RM '000 RM '000
Statement of comprehensive income (cont'd.):
Net claims incurred (122,462) 122,462 -
Gross claims paid - (87,591) (87,591)
Claims ceded to retakaful operators - 9,360 9,360
Gross change to certificate liabilities - (40,625) (40,625)
Change in certificate liabilities ceded
to retakaful operators - (3,605) (3,605)
Net claims - (122,461) (122,461)
Net commission earned 4,505 (4,505) -
Fee and commission income - 4,505 4,505
Net other operating expenses (869) 869 -
- Miscellaneous expenses 1,376
- Gain on disposal of AFS and FVTPL
financial assets (308)
- Fair value adjustments of financial assets
at FVTPL (199)
Investment income 6,153 (389) 5,764
- Impairment of AFS financial assets (389)
Provision for doubtful debts (869) 869 -
Realised gains and losses - 308 308
- Gain on disposal of AFS and FVTPL
financial assets 308
Fair value gains and losses - (1,005) (1,005)
- Impairment of AFS financial assets 389
- Fair value adjustments of financial assets
at FVTPL 199
- Provision for doubtful debts (869)
- Effect of adopting FRS 4 (Note 2.27) (724)
Other operating expenses - (1,376) (1,376)
- Miscellaneous expenses (1,376)
Wakalah fees (55,931) 55,931 -
Surplus administration charges transferred
to shareholder's fund (8,095) 8,095 -
(64,026) 64,026 -
143
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
General takaful fund (cont'd.) reported classification restated
RM '000 RM '000 RM '000
Statement of comprehensive income (cont'd.):
Fee expenses - (64,026) (64,026)
Taxation (2,692) 181 (2,511)
- Effect of adopting FRS 4 (Note 2.27) 181
Statement of Financial Position :
Assets
Trade receivables 39,626 (39,626) -
Takaful certificates receivables - 36,156 36,156
- As reclassed from Trade receivables 39,626
- Effect of adopting FRS 4 (Note 2.27) (3,470)
Retakaful certificates assets - 29,669 29,669
- Claim liabilities ceded to retakaful operators 17,577
- Contribution liabilities ceded to retakaful operators 12,092
Deferred tax assets 1,474 868 2,342
- Effect of adopting FRS 4 (Note 2.27) 868
Liabilities
Provision for outstanding claims 125,726 (125,726) -
- Gross outstanding claims (143,303)
- Outstanding claims ceded to retakaful operators 17,577
Trade payables 5,641 (5,641) -
Takaful certificates payables - 5,641 5,641
Takaful certificates liabilities - 228,254 228,254
- Gross claim liabilities 143,303
- Gross contribution liabilities 84,951
Other payables 31,321 11,594 42,915
- Due to shareholder's fund 11,594
Due to shareholder's fund 11,594 (11,594) -
144
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
General takaful fund (cont'd.) reported classification restated
RM '000 RM '000 RM '000
Statement of Financial Position (cont'd.) :
Participants' Fund
General takaful fund 8,794 (2,602) 6,192
- Effect of adopting FRS 4 (Note 2.27) (2,602)
Unearned contribution reserves 72,859 (72,859) -
- Gross unearned contribution reserves (84,951)
- Unearned contribution reserves
ceded to retakaful operators 12,092
Family takaful fund
Statement of comprehensive income:
Benefits paid and payable (87,092) 87,092 -
Gross benefits paid - (92,780) (92,780)
Benefits ceded to retakaful operators 14,049 14,049
Gross change to certificate liabilities (11,607) (11,607)
Change in certificate liabilities ceded
to retakaful operators 3,246 3,246
Net claims - (87,092) (87,092)
Investment income 18,401 1,819 20,220
- Investment performance fee 4,468
- Gain on disposal of FVTPL financial assets (1,501)
- Gain on disposal of AFS financial assets (472)
- Fair value adjustments of financial assets at FVTPL (329)
- Impairment of AFS financial assets (347)
Realised gains and losses - 2,024 2,024
- Gain on disposal of FVTPL financial assets 1,501
- Gain on disposal of AFS financial assets 523
Fair value gains and losses - 27,302 27,302
- Fair value adjustments of financial assets at FVTPL 4,659
- Impairment of AFS financial assets 347
- Gain on fair value adjustment on investment properties 22,535
- Impairment of takaful certificate receivables (96)
- Effect of adopting FRS 4 (Note 2.27) (143)
145
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
Family takaful fund (cont'd.) reported classification restated
RM '000 RM '000 RM '000
Statement of comprehensive income (cont'd.):
Net commission earned 63 (63) -
Fee and commission income - 63 63
Wakalah fees (120,139) 120,139 -
Surplus administration charges
transferred to shareholder's fund (732) 732 -
Fee expenses - (125,339) (125,339)
- Wakalah fees (120,139)
- Surplus administration charges
transferred to shareholder's fund (732)
- Investment performance fee (4,468)
Net other operating income/(expenses) 22,142 (22,142) -
- Fair value adjustments of financial
assets at FVTPL (4,330)
- Gain on disposal of AFS financial assets (51)
- Gain on fair value adjustment on
investment properties (22,535)
- Miscellaneous expenses 2,771
- Bank charges 1,137
- Participants' medical fees 352
- Stamp duty 514
Allowance for doubtful debts (96) 96 -
Other operating expenses - (4,774) (4,774)
- Miscellaneous expenses (2,771)
- Bank charges (1,137)
- Participants' medical fees (352)
- Stamp duty (514)
Statement of Financial Position :
Assets
Retakaful certificates assets - 105,811 105,811
- Claim liabilities ceded to retakaful operators 7,855
- PA 60,015
- PSA 37,941
146
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
reported classification restated
Family takaful fund (cont'd.) RM '000 RM '000 RM '000
Statement of Financial Position (cont'd.) :
Assets (cont'd.)
Takaful certificates receivables 37,266 1,495 38,761
- Effect of adopting FRS 4 (Note 2.27) 1,495
Investment-linked business assets 43,991 (600) 43,391
- Investment-linked business liabilities (600)
Liabilities
Provision for outstanding claims 22,158 (22,158) -
- Gross claim liabilities (30,013)
- Claim liabilities ceded to retakaful operators 7,855
Takaful certificates liabilities - 846,087 846,087
- Gross Claim liabilities 30,013
- PA 683,746
- PSA 120,382
- Available-For-Sale Reserve 6,113
- Unallocated surplus
- As previously reported 4,338
- Effect of adopting FRS 4 (Note 2.27) 1,495
Trade payables 19,464 (19,464) -
Takaful certificates payables - 19,464 19,464
Other payables 25,085 13,400 38,485
- Due to shareholder's fund 13,400
Due to shareholder's fund 13,400 (13,400) -
Investment-linked business liabilities 1,284 42,107 43,391
- Participants' Fund 42,707
- Investment-linked business assets (600)
147
593075-U
Takaful Ikhlas Sdn. Bhd.
(Incorporated in Malaysia)
41. Comparatives (cont'd.)
As Adjustments/
previously Re- As
reported classification restated
Family takaful fund (cont'd.) RM '000 RM '000 RM '000
Statement of Financial Position (cont'd.) :
Participants' Fund
Family takaful fund 716,623 (716,623) -
- PA
- Gross (683,746)
- Retakaful 60,015
- PSA
- Gross (120,382)
- Retakaful 37,941
- AFS Reserve (6,113)
- Unallocated surplus (4,338)
Investment-linked fund 42,707 (42,707) -
148