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078 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Directors Reportfor the year ended 31 December 2018
The Directors have pleasure in submitting their report and the
audited financial statements of the Group and of the Company for
the financial year ended 31 December 2018.
Principal activities
The Company is principally engaged in managing family and
general takaful businesses. On 1 June 2018, the Company transferred
its general takaful business to a subsidiary as required by Islamic
Financial Services Act 2013. The principal activities of the
subsidiaries are as stated in Note 6 to the financial statements.
There has been no significant change in the nature of these
activities during the financial year.
Ultimate holding company
The Directors regard Lembaga Tabung Haji, a statutory body
established under the Tabung Haji Act 1995 (Act 535), as the
Company's ultimate holding corporation during the financial year
until the date of this report.
Conversion of Composite Licence to Single Licences and Change of
Company's Name
In line with the requirements of the Islamic Financial Services
Act 2013, the Company had on 1 June 2018 successfully completed the
conversion of the composite licence to single licences and
surrendered the composite licence in exchange for the two single
licences. Consequently, the Company changed its name to Syarikat
Takaful Malaysia Keluarga Berhad (STMKB) and is principally engaged
in the underwriting of family takaful business while a new company
by the name of Syarikat Takaful Malaysia Am Berhad (STMAB), a
wholly-owned subsidiary of STMKB is principally engaged in the
underwriting of general takaful business.
Results Group Company RM000 RM000
Profit for the year attributable to:Owners of the Company
294,924 230,106 Non-controlling interests (2,307) -
292,617 230,106
Reserves and provisions
There were no material transfers to or from reserves and
provisions during the financial year under review, except as
disclosed in the financial statements.
Dividends
Since the end of the previous financial year, the Company:
i) paid an interim single tier dividend of 15.00 sen per
ordinary share totalling RM123,471,851 in respect of the financial
year ended 31 December 2017 on 19 January 2018; and
ii) declared an interim single tier dividend of 15.00 sen per
ordinary share totalling RM123,632,726 in respect of the financial
year ended 31 December 2018 on 11 December 2018 which was paid on
11 January 2019.
No final dividend is recommended to be paid for the year under
review by the Directors.
Directors of the Company
Directors who served since the date of the last report are:
Tan Sri Dato' Ahmad Fuzi Haji Abdul Razak Dato Othman Abdullah
Datin Sri Azlin Arshad Mahadzir Azizan Zakaria Ismail Mohd Tarmidzi
Ahmad NordinDatuk Rozaida Omar (Ceased office on 15 May 2018)
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079SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Directors Reportfor the year ended 31 December 2018
Directors of the Company (continued)
In accordance with Rule 74 of the Companys Constitution, Dato
Othman Abdullah and Tan Sri Dato' Ahmad Fuzi Haji Abdul Razak will
retire at the forthcoming Annual General Meeting and, being
eligible, offer themselves for re-election.
List of Directors of subsidiaries
Pursuant to Section 253 of the Companies Act 2016 in Malaysia,
the list of Directors of the subsidiaries during the financial year
and up to the date of this report is as follows:
Syarikat Takaful Malaysia Am Berhad
Tan Sri Dato' Ahmad Fuzi Haji Abdul Razak Mahadzir Azizan Dato
Haji Che Pee Samsudin (Appointed on 30 August 2018) Datin Dr. Nik
Sarina Lugman Hashim (Appointed on 30 August 2018) Abdul Rahman
Talib (Appointed on 30 August 2018) P.T. Syarikat Takaful Indonesia
and P.T. Asuransi Takaful Keluarga
Dato Sri Mohamed Hassan Kamil Mahadzir Azizan Tri Djoko Santoso
Ibrahim Ali Shoukry (Appointed on 16 October 2018)Imran Nahar
(Appointed on 1 August 2018) Muhamed Zaffarullah Sathar (Ceased
office on 16 October 2018)Mohamad Harris (Ceased office on 1 August
2018) Directors interests in shares None of the Directors holding
office as at 31 December 2018 had any interest in the shares and
options over shares of the Company and of its related corporations
during the financial year.
Issue of shares and debentures
During the financial year, the Company allotted and issued
1,072,500 new ordinary shares, pursuant to the Companys Performance
Share Plan under the Long Term Incentive Plan.
The new ordinary shares issued during the financial year ended
31 December 2018 rank pari passu in all respects with the existing
ordinary shares of the Company.
There were no other changes in the issued and paid-up capital of
the Company during the financial year.
There were no debentures issued during the financial year.
Long Term Incentive Plan
At the Extraordinary General Meeting held on 24 July 2013, the
Companys shareholders approved the establishment of a Long Term
Incentive Plan (LTIP), which comprises a Restricted Share Plan
(RSP) and a Performance Share Plan (PSP), of not more than 10% of
issued and paid-up share capital of the Company (excluding treasury
shares) to eligible employees and the executive director of the
Company. The LTIP was effected on 25 July 2013 following the
submission of the By-Laws for the LTIP to Bursa Malaysia Securities
Berhad, the receipt of all required approvals and the compliance
with the requirements pertaining to the LTIP.
The salient features of the LTIP are as disclosed in Note 14 to
the financial statements.
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080 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Long Term Incentive Plan (continued)
As at the date of this Report, the shares granted under LTIP are
as follows:
Number of ordinary shares At At 1 January 31 December 2018
Granted Exercised Forfeited 2018
Performance Share Plan 6,387,000 3,123,900 (1,072,500) (770,500)
7,667,900
Options granted over unissued shares
Other than for LTIP, no options were granted to any person to
take up unissued shares of the Company during the financial
year.
Directors benefits
Since the end of the previous financial year, no Director of the
Company has received nor become entitled to receive any benefit
(other than a benefit included in the aggregate amount of
emoluments received or due and receivable by Directors as shown in
the financial statements or the fixed salary of a full time
employee of the Company or of related corporations) by reason of a
contract made by the Company or a related corporation with the
Director or with a firm of which the Director is a member, or with
a company in which the Director has a substantial financial
interest.
There were no arrangements during and at the end of the
financial year which has 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 body corporate.
Indemnity and takaful coverage costs
The following disclosure on particulars of indemnity given, to,
or takaful coverage effected for, any Director or officer of the
Company is made pursuant to Section 289(7) of the Companies Act
2016: Amount paid Sum covered RM000 RM000
Directors and Officers Liability takaful coverage 56 35,000
To the extent permitted by law, the Company has agreed to
indemnify its auditors as part of the terms of its non-audit
engagement against claims by third parties arising from the
non-audit engagement. No payment has been made to indemnify the
auditors during the financial year.
Statement on corporate governance and internal controls
(a) Board responsibilities
The Board of Directors (the Board) is ultimately responsible for
the proper stewardship of the Groups and Companys resources, the
achievement of corporate objectives and good corporate citizenship
and discharges this responsibility through compliance with the
Islamic Financial Services Act 2013 and Bank Negara Malaysias (BNM)
Guidelines on Corporate Governance and other directives, in
addition to adopting other best practices on corporate
governance.
The Board currently comprises six Non-Executive Directors to
enable a balanced and objective consideration of issues, hence
facilitating optimal decision making. The Group Chief Executive
Officer adds value to the decision making process by providing a
management and operational perspective to issues placed before the
Board.
(b) Management accountability
The Group and the Company have an organisational structure
showing all reporting lines as well as clearly documented job
descriptions for all management and executive employees.
Authority limits, as approved by the Board, are clearly
established and made available to all employees.
Directors Reportfor the year ended 31 December 2018
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081SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statement on corporate governance and internal controls
(continued)
(c) Corporate independence
The Group and the Company have complied with BNMs Guidelines on
Related Party Transactions for Takaful Operators (BNM/RH/GL 004-7).
Necessary disclosures have been made to the Board and when
required, prior Boards approval has been obtained. All material
related party transactions have been disclosed in Note 39 to the
financial statements.
(d) Internal controls and operational risk management
The Board has overall oversight responsibility to ensure that
the Group and the Company maintain an adequate system of internal
controls, effective and efficient operations, and risk management,
as well as procedures to ensure compliance with laws, regulations,
internal guidelines and requirements to safeguard the assets of the
Group and the Company and stakeholders interests.
The Company established the Enterprise Risk Management Framework
to ensure an ongoing process of identifying, evaluating, monitoring
and managing the significant risk exposures surrounding its
business strategies and operations.
All new Takaful products are governed by the Companys Product
Development Framework.
Whistle Blowing Policy & Fraud and Integrity Policy, Shariah
Governance Framework and Assets and Liabilities Management
Framework are also in place to provide basic structure and further
strengthen the existing control mechanism underlying the business
activities.
Business Continuity Management is consistently practiced and
tested twice a year (BCP test is once a year and DRP test is twice
a year) to safeguard the lives of the employees and others in the
office premises and ensure the business is up and running at all
times.
The Board, Group Chief Executive Officer and Management
Committee are consciously committed to the risk culture and ensure
Board Risk Committee perform as required.
(e) Public accountability
As custodian of public funds, the Groups and the Companys
dealings with the public are always conducted fairly, honestly and
professionally.
(f) Financial reporting
The Group and the Company have maintained proper accounting
records and the Groups and the Companys financial statements are
prepared in accordance with Malaysian Financial Reporting Standards
(MFRS) issued by the Malaysian Accounting Standards Board (MASB),
International Financial Reporting Standards (IFRS), the
requirements of the Companies Act 2016, the Islamic Financial
Services Act 2013 and Takaful Guidelines / Circulars issued by BNM
and Principles of Shariah.
Other statutory information
Before the financial statements of the Group and of the Company
were made out, the Directors took reasonable steps to ascertain
that:
i) all known impaired debts have been written off and adequate
impairment allowance made for impaired debts,
ii) any current assets which were unlikely to be realised in the
ordinary course of business have been written down to an amount
which they might be expected so to realise, and
iii) there was adequate provision for incurred claims, including
Incurred But Not Reported (IBNR) claims.
Directors Reportfor the year ended 31 December 2018
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082 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Other statutory information (continued)
At the date of this report, the Directors are not aware of any
circumstances:
i) that would render the amount written off for impaired debts
or the amount of the allowance for impaired debts and provision for
incurred claims including IBNR claims of the Group and of the
Company inadequate to any substantial extent, or
ii) that would render the value attributed to the current assets
in the financial statements of the Group and of the Company
misleading, or
iii) which have arisen which render adherence to the existing
method of valuation of assets or liabilities of the Group and of
the Company misleading or inappropriate, or
iv) not otherwise dealt with in this report or the financial
statements, that would render any amount stated in the financial
statements of the Group and of the Company misleading.
At the date of this report, there does not exist:
i) any charge on the assets of the Group or of the Company that
has arisen since the end of the financial year and which secures
the liabilities of any other person, or
ii) any contingent liability in respect of the Group or of the
Company that has arisen since the end of the financial year.
No contingent liability or other liability of any company in the
Group has 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 Group and of the Company to
meet their obligations as and when they fall due.
For the purpose of this paragraph, contingent and other
liabilities do not include liabilities arising from contracts of
takaful underwritten in the ordinary course of business of the
Group and of the Company.
In the opinion of the Directors, the financial performance of
the Group and of the Company for the financial year ended 31
December 2018 have not been substantially affected by any item,
transaction or event of a material and unusual nature nor has any
such item, transaction or event occurred in the interval between
the end of the financial year and the date of this report.
Auditors
The auditors, Messrs KPMG Desa Megat PLT, do not seek for
re-appointment. The auditors remuneration is disclosed in Note 26
to the financial statements.
Signed on behalf of the Board of Directors in accordance with a
resolution of the Directors:
..................Tan Sri Dato Ahmad Fuzi Haji Abdul Razak
..................Mahadzir Azizan
Kuala Lumpur
Date: 24 January 2019
Directors Reportfor the year ended 31 December 2018
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083SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Shariah Advisory Bodys Report
We have reviewed the principles and the contracts relating to
the products introduced by Syarikat Takaful Malaysia Keluarga
Berhad (STMKB) during the period ended 31 December 2018. We have
also conducted our review to form an opinion as to whether STMKB
has complied with the Shariah principles and with the Shariah
rulings issued by the Shariah Advisory Council of Bank Negara
Malaysia.
The management of STMKB is responsible for ensuring that the
conduct of its businesses is in accordance with Shariah principles.
It is our responsibility to form an independent opinion, based on
our review of the operations of STMKB.
We have assessed the work carried out by Shariah review and
Shariah audit which included examining, on a test basis, relevant
transactions, documentation and procedures adopted by STMKB. We
performed our review so as to obtain all the information and
explanations which we considered necessary in order to provide us
sufficient evidence to give reasonable assurance that there are no
violations of the Shariah principles.
In our opinion:
1. the contracts and related documentation used by STMKB during
the year ended 31 December 2018 that we have reviewed are in
compliance with the Shariah principles;
2. the allocation of profit between shareholders fund and
participants investment funds conform to the basis that had been
approved by us in accordance with Shariah principles;
3. the calculation of zakat is in compliance with Shariah
principles;
4. all Shariah non-compliance incidences have been rectified
according to the plans that were approved by us and the Board of
Directors. The incidences were duly reported to Bank Negara
Malaysia (BNM) in accordance with the Shariah non-compliance
reporting requirements imposed by BNM; and
5. all earnings that have been realized from sources or by means
prohibited by the Shariah principles have been considered for
disposal to charitable purposes.
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084 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
We, the members of the Shariah Advisory Body of STMKB, do hereby
confirm that the operations of STMKB for the year ended 31 December
2018 have been conducted in conformity with the Shariah
principles.
We bear witness only to what we know, and we could not well
guard against the unseen! (surah Yusuf, verse: 81)
Chairman of STMKB's SAB : Prof. Dr. Muhamad Rahimi Osman
Member of STMKB's SAB : Dr. Ahmad Suffian Che Abdullah
Kuala Lumpur
Date: 24 January 2019
Shariah Advisory Bodys Report
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085SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statements of Financial Positionas at 31 December 2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Group Operator Takaful Takaful Group Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
ASSETS
Property and equipment 3 44,254 - - 277,164 39,639 - - 273,156
Investment properties 4 11,295 247,235 10,615 36,235 11,403 233,305
24,940 36,131 Intangible assets 5 93,368 - - 93,368 47,832 - -
47,832 Other investments 7 623,032 4,372,110 444,082 5,403,121
577,477 3,910,047 412,829 4,861,657 Retakaful assets 8 - 202,223
334,914 537,137 - 211,459 294,137 505,596 Deferred tax assets 9
39,386 - - 39,386 31,202 - - 31,202 Current tax assets 45,732 - -
45,732 32,024 - - 32,024 Loans and receivables,excluding takaful
receivables 10 362,986 867,237 165,894 1,354,547 339,043 927,584
116,839 1,313,705 Takaful receivables 11 - 76,216 62,879 139,095 -
77,441 94,676 172,117 Cash and cash equivalents 12 321,533 567,466
116,792 1,005,791 205,265 594,175 121,740 921,180
TOTAL ASSETS 1,541,586 6,332,487 1,135,176 8,931,576 1,283,885
5,954,001 1,065,161 8,194,600
EQUITY AND LIABILITIES
Share capital 13 185,352 - - 185,352 179,371 - - 179,371
Reserves 13 798,281 - - 798,281 639,337 - - 639,337
Total equity attributable toowners of the Company 983,633 - -
983,633 818,708 - - 818,708 Non-controlling interests 28,525 - -
28,525 14,746 - - 14,746
TOTAL EQUITY 1,012,158 - - 1,012,158 833,454 - - 833,454
LIABILITIES
Takaful contract liabilities 15 - 6,147,597 1,016,084 7,127,578
- 5,811,342 936,866 6,709,512 Expense reserves 16 251,806 - -
251,806 196,655 - - 196,655 Takaful payables 17 20,137 51,553
42,577 114,267 18,280 27,701 61,002 106,983 Other payables 18
255,219 119,501 73,523 406,673 233,202 100,983 64,551 328,975
Current tax liabilities 2,266 13,836 2,992 19,094 2,294 13,985
2,742 19,021
TOTAL LIABILITIES 529,428 6,332,487 1,135,176 7,919,418 450,431
5,954,011 1,065,161 7,361,146
TOTAL EQUITY AND LIABILITIES 1,541,586 6,332,487 1,135,176
8,931,576 1,283,885 5,954,011 1,065,161 8,194,600
The notes on pages 97 to 323 are an integral part of these
financial statements.
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086 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Company Operator Takaful Takaful Company Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
ASSETSProperty and equipment 3 19,966 - - 229,716 22,513 - -
240,553 Investment properties 4 11,295 232,040 - 33,585 11,275
217,370 24,940 35,545 Intangible assets 5 93,368 - - 93,368 47,832
- - 47,832 Investments in subsidiaries 6 136,393 - - 136,393 49,376
- - 49,376Other investments 7 505,564 4,145,154 - 4,614,615 551,960
3,678,264 412,829 4,604,357 Retakaful assets 8 - 178,790 - 178,790
- 190,090 294,137 484,227 Deferred tax assets 9 2,001 - - 2,001
29,504 - - 29,504 Current tax assets 43,936 - - 43,936 32,024 - -
32,024 Loans and receivables,excluding takaful receivables 10
242,582 855,457 - 1,065,994 335,081 916,902 116,839 1,299,102
Takaful receivables 11 - 68,007 - 68,007 - 72,969 94,676 167,645
Cash and cash equivalents 12 218,801 432,682 - 651,483 177,121
444,794 121,740 743,655
TOTAL ASSETS 1,273,906 5,912,130 - 7,117,888 1,256,686 5,520,389
1,065,161 7,733,820
EQUITY AND LIABILITIES
Share capital 13 185,352 - - 185,352 179,371 - - 179,371Reserves
13 747,665 - - 747,665 639,038 - - 639,038
Total equity attributable to owners of the Company 933,017 - -
933,017 818,409 - - 818,409
LIABILITIES
Takaful contract liabilities 15 - 5,738,914 - 5,702,811 -
5,383,000 936,866 6,281,170 Expense reserves 16 99,240 - - 99,240
191,808 - - 191,808 Takaful payables 17 8,999 47,511 - 56,510
17,167 25,302 61,002 103,471Other payables 18 232,650 111,869 -
312,474 229,302 98,102 64,551 322,235Current tax liabilities -
13,836 - 13,836 - 13,985 2,742 16,727
TOTAL LIABILITIES 340,889 5,912,130 - 6,184,871 438,277
5,520,389 1,065,161 6,915,411
TOTAL EQUITY AND LIABILITIES 1,273,906 5,912,130 - 7,117,888
1,256,686 5,520,389 1,065,161 7,733,820
Statements of Financial Positionas at 31 December 2018
The notes on pages 97 to 323 are an integral part of these
financial statements.
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087SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statements of Profit or Loss and Other Comprehensive Income for
the year ended 31 December 2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Group Operator Takaful Takaful Group Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
Operating revenue 19 45,130 1,859,701 737,976 2,639,065 39,272
1,488,225 616,678 2,139,160
Takaful operator income 903,840 - - - 711,024 - - -
Gross earned contributions 20(i) - 1,608,527 685,759 2,294,334 -
1,264,496 554,244 1,818,938 Contributions cededto retakaful 20(ii)
- (90,408) (262,388) (352,796) - (56,178) (241,398) (297,576)
Net earned contributions 20(iii) - 1,518,119 423,371 1,941,538 -
1,208,318 312,846 1,521,362
Administrative income - 2,501 72,441 74,942 - 6,018 74,847
80,865 Investment income 21 45,130 251,544 28,690 321,574 39,272
241,969 29,334 305,362 Realised gains and (losses) 22 369 1,870 47
2,286 1,665 19,165 2,247 23,077 Fair value gains and (losses) 23
(9,143) (71,057) (2,826) (80,549) 1,246 (2,328) 630 (7,472)
Reversal of impairment losseson financial instruments 449 2,546
2,922 5,917 - 1,264 - 1,264Other operating income 24 14,043 - 255
2,607 13,531 1,081 165 2,783
Other income 50,848 187,404 101,529 326,777 55,714 267,169
107,223 405,879
Gross benefits and claims paid 25 - (850,944) (270,206)
(1,112,580) - (763,320) (248,319) (1,005,307)Claims ceded to
retakaful 25 - 59,156 101,059 160,215 - 55,347 108,649 163,996
Gross change to contractliabilities 25 - (17,962) (70,757) (88,719)
- 26,781 7,830 34,611 Change to contract liabilities ceded to
retakaful 25 - 6,612 35,201 41,813 - 8,662 (14,125) (5,463)
Net benefits and claims 25 - (803,138) (204,703) (999,271) -
(672,530) (145,965) (812,163)
Wakalah fee expense - (524,875) (321,985) - - (366,587)
(263,445) - Administrative fees (184,149) - - (184,149) (146,154)
(68) - (146,222)Expense reserves 16 (52,260) - - (52,260) (37,897)
- - (37,897)Management expenses 26 (367,160) - - (368,534)
(312,931) - - (313,634)Impairment losses onfinancial instruments -
- - - - (499) (1,432) (1,931)Other operating expenses 28 (14,115)
(2,716) (360) (15,831) (14,693) (10,168) (3,611) (23,532)
Other expenses (617,684) (527,591) (322,345) (620,774) (511,675)
(377,322) (268,488) (523,216)
Total profit / (loss) for the year 337,004 374,794 (2,148)
648,270 255,063 425,635 5,616 591,862
Profit attributable to the Takaful Operator / participants -
(374,794) 2,148 (311,266) - (425,635) (5,616) (338,209)
Profit before zakat and taxation 337,004 - - 337,004 255,063 - -
253,653 Zakat (1,021) - - (1,021) (1,075) - - (1,075)Tax expense 29
(43,366) - - (43,366) (47,843) - - (47,505)
Profit for the year 292,617 - - 292,617 206,145 - - 205,073
The notes on pages 97 to 323 are an integral part of these
financial statements.
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088 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Group Operator Takaful Takaful Group Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
Profit for the year 292,617 - - 292,617 206,145 - - 205,073
Other comprehensive income / (expense), net of taxItems that
will not be reclassified subsequently to profit or
lossRemeasurement of defined benefit liability (302) - - (302)
(315) - - (315) Revaluation of propertyand equipment 3,608 - -
10,599 3,322 - - 16,445 Other comprehensive incomeattributable to
participants - - - (6,991) - - - (12,051)
3,306 - - 3,306 3,007 - - 4,079
Items that may be reclassified subsequently to profit or
lossDebt investments measured atfair value through
othercomprehensive income (FVOCI)- net change in fair value 3,443
42,555 3,346 3,443 - - - - - reclassified to profit or loss (281)
(1,870) (47) (281) - - - - Fair value change of available-for-sale
financial assets - - - - 5,822 23,667 3,549 5,822 Foreign currency
translationdifferences for foreignoperations (3,235) 1,565 -
(3,235) (8,518) 1,411 - (8,518) Other comprehensive
incomeattributable to participants - (42,250) (3,299) - - (25,078)
(3,549) -
(73) - - (73) (2,696) - - (2,696)
Total other comprehensiveincome for the year 30 3,233 - - 3,233
311 - - 1,383
Total comprehensive income for the year 295,850 - - 295,850
206,456 - - 206,456
The notes on pages 97 to 323 are an integral part of these
financial statements.
Statements of Profit or Loss and Other Comprehensive Income for
the year ended 31 December 2018
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089SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Group Operator Takaful Takaful Group Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
Profit / (Loss) for the year attributable to:Owners of the
Company 294,924 - - 294,924 207,771 - - 206,699 Non-controlling
interests (2,307) - - (2,307) (1,626) - - (1,626)
292,617 - - 292,617 206,145 - - 205,073
Total comprehensive income / (expense) for the year attributable
to:Owners of the Company 297,863 - - 297,863 206,727 - - 206,727
Non-controlling interests (2,013) - - (2,013) (271) - - (271)
295,850 - - 295,850 206,456 - - 206,456
Basic earnings per ordinary share (sen) 31 35.79 25.13
Diluted earnings per ordinary share (sen) 31 35.66 25.04
The notes on pages 97 to 323 are an integral part of these
financial statements.
Statements of Profit or Loss and Other Comprehensive Income for
the year ended 31 December 2018
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090 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Company Operator Takaful Takaful Company Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
Operating revenue 19 37,633 1,728,631 325,329 2,087,904 36,689
1,340,249 619,314 1,991,293
Takaful operator income 699,672 - - - 679,962 - - -
Gross earned contributions 20(i) - 1,490,446 288,313 1,778,759 -
1,133,942 552,383 1,686,168Contributions ceded toretakaful 20(ii) -
(70,873) (105,617) (176,490) - (41,465) (239,898) (281,363)
Net earned contributions 20(iii) - 1,419,573 182,696 1,602,269 -
1,092,477 312,485 1,404,805
Administrative income - - 26,361 26,361 - 3,795 74,861 78,656
Investment income 21 37,633 237,058 11,401 282,403 36,689 226,188
28,321 286,396 Realised gains and (losses) 22 378 1,870 47 2,295
1,452 17,909 2,247 21,608 Fair value gains and (losses) 23 (7,974)
(60,463) (2,945) (68,839) 275 12,046 630 6,256 Reversal of
impairment losseson financial instruments 455 2,546 - 2,536 - 1,264
- 1,264Other operating income 24 10,625 - 148 1,963 6,591 786 95
1,196
Other income 41,117 181,011 35,012 246,719 45,007 261,988
106,154 395,376
Gross benefits and claims paid 25 - (758,059) (115,192)
(867,221) - (668,523) (242,291) (907,478)Claims ceded to retakaful
25 - 45,760 43,404 89,164 - 44,176 107,564 151,740 Gross change to
contractliabilities 25 - (17,680) (2,329) (20,009) - 27,915 4,441
32,356 Change to contract liabilitiesceded to retakaful 25 - 6,770
(12,330) (5,560) - 7,728 (13,158) (5,430)
Net benefits and claims 25 - (723,209) (86,447) (803,626) -
(588,704) (143,444) (728,812)
Wakalah fee expense - (500,259) (147,994) - - (337,452)
(265,182) - Administrative fees (136,981) (130) - (137,111)
(131,018) (68) - (131,086)Expense reserves 16 (38,014) - - (38,014)
(37,950) - - (37,950)Management expenses 26 (283,629) - - (282,793)
(287,236) - - (285,161)Impairment losseson financial instruments -
- (465) - - - (1,432) (1,432)Other operating expenses 28 (24,724)
(1,997) (71) (25,432) (11,833) (8,520) (1,593) (19,375)
Other expenses (483,348) (502,386) (148,530) (483,350) (468,037)
(346,040) (268,207) (475,004)
Total profit / (loss) for the year 257,441 374,989 (17,269)
562,012 256,932 419,721 6,988 596,365
Profit attributable to theTakaful Operator / participants -
(374,989) 17,269 (304,571) - (419,721) (6,988) (340,843)
Profit before zakat and taxation 257,441 - - 257,441 256,932 - -
255,522 Zakat (600) - - (600) (1,000) - - (1,000)Tax expense 29
(26,735) - - (26,735) (47,192) - - (46,854)
Profit for the year 230,106 - - 230,106 208,740 - - 207,668
Statements of Profit or Loss and Other Comprehensive Income for
the year ended 31 December 2018
The notes on pages 97 to 323 are an integral part of these
financial statements.
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091SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statements of Profit or Loss and Other Comprehensive Income for
the year ended 31 December 2018
The notes on pages 97 to 323 are an integral part of these
financial statements.
2018 2017 Takaful Family General Takaful Family General Operator
Takaful Takaful Company Operator Takaful Takaful Company Note RM000
RM000 RM000 RM000 RM000 RM000 RM000 RM000
Profit for the year 230,106 - - 230,106 208,740 - - 207,668
Other comprehensive income / (expense), net of tax
Items that will not be reclassified subsequently to profit or
lossRevaluation of propertyand equipment 10 - - 2,980 10 - - 9,620
Other comprehensive incomeattributable to participants - - -
(2,970) - - - (8,538)
10 - - 10 10 - - 1,082
Items that may be reclassified subsequently to profit or
lossDebt investments measured atfair value through
othercomprehensive income (FVOCI)- net change in fair value 2,588
40,684 (2,708) 2,588 - - - -- reclassified to profit or loss (281)
(1,870) (47) (281) - - - -Fair value change of available-for-sale
financial assets - - - - 4,608 20,969 3,549 4,608 Other
comprehensive (income) /expense attributable to participants -
(38,814) 2,755 - - (20,969) (3,549) -
2,307 - - 2,307 4,608 - - 4,608
Total other comprehensiveincome for the year 30 2,317 - - 2,317
4,618 - - 5,690
Total comprehensive income for the year 232,423 - - 232,423
213,358 - - 213,358
Profit for the year attributable to:Owners of the Company
230,106 - - 230,106 208,740 - - 207,668
Total comprehensive income for the year attributable to:Owners
of the Company 232,423 - - 232,423 213,358 - - 213,358
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092 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Distributable Non- Share Share Translation Revaluation Fair
value LTIP Retained controlling Total capital premium reserve
reserve reserve reserve earnings Total interests equityGroup Note
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
At 1 January 2017 164,189 12,332 3,178 12,226 2,363 7,638
526,200 728,126 15,017 743,143 Remeasurement of defined benefit
liability 30 - - - - - - (235) (235) (80) (315)Revaluation
ofproperty andequipment 30 - - - 2,937 - - - 2,937 1,457 4,394 Fair
value ofavailable-for-salefinancial assets 30 - - - - 5,330 - -
5,330 492 5,822 Foreign currencytranslationdifferences for foreign
operations 30 - - (8,004) - - - - (8,004) (514) (8,518)
Other comprehensive(expense) / incomefor the year - - (8,004)
2,937 5,330 - (235) 28 1,355 1,383 Profit for the year - - - - - -
206,699 206,699 (1,626) 205,073
Total comprehensive (expense) / income for the year - - (8,004)
2,937 5,330 - 206,464 206,727 (271) 206,456
Contributions by anddistributionsto ownersof the Company
- LTIP exercised 14 2,850 - - - - (2,850) - - - -- Share-based
payment transactions 14 - - - - - 7,327 - 7,327 - 7,327 - Dividends
to owners of the Company 32 - - - - - - (123,472) (123,472) -
(123,472)
Total transactions with owners of the Company 2,850 - - - -
4,477 (123,472) (116,145) - (116,145)Transfer in accordance with
Section 618(2) of the Companies Act 2016 13 12,332 (12,332) - - - -
- - - -
At 31 December 2017 179,371 - (4,826) 15,163 7,693 12,115
609,192 818,708 14,746 833,454
Note 13 Note 13 Note 13 Note 13 Note 13 Note 13
The notes on pages 97 to 323 are an integral part of these
financial statements.
Statements of Changes in Equity for the year ended 31 December
2018
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093SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
The notes on pages 97 to 323 are an integral part of these
financial statements.
Statements of Changes in Equity for the year ended 31 December
2018
Distributable Non- Share Share Translation Revaluation Fair
value LTIP Retained controlling Total capital premium reserve
reserve reserve reserve earnings Total interests equityGroup Note
RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000 RM000
At 31 December 2017 179,371 - (4,826) 15,163 7,693 12,115
609,192 818,708 14,746 833,454Adjustment on initial application of
MFRS 9 - - - - (7,703) - 3,574 (4,129) 169 (3,960)Reclassification
- - - - - - (15,623) (15,623) 15,623 -
At 1 January 2018, restated 179,371 - (4,826) 15,163 (10) 12,115
597,143 798,956 30,538 829,494 Remeasurement of defined benefit
liability 30 - - - - - - (226) (226) (76) (302)Revaluation
ofproperty andequipment 30 - - - 2,025 - - - 2,025 1,583 3,608 Fair
value ofdebt investmentsmeasured at FVOCI 30 - - - - 3,162 - -
3,162 - 3,162 Foreign currencytranslationdifferences for foreign
operations 30 - - (2,022) - - - - (2,022) (1,213) (3,235)
Other comprehensive(expense) / incomefor the year - - (2,022)
2,025 3,162 - (226) 2,939 294 3,233 Profit for the year - - - - - -
294,924 294,924 (2,307) 292,617
Total comprehensive (expense) / income for the year - - (2,022)
2,025 3,162 - 294,698 297,863 (2,013) 295,850
Contributions by anddistributionsto ownersof the Company
- LTIP exercised 14 5,981 - - - - (5,981) - - - -- Share-based
payment transactions 14 - - - - - 10,447 - 10,447 - 10,447 -
Dividends to owners of the Company 32 - - - - - - (123,633)
(123,633) - (123,633)
Total transactions with owners of the Company 5,981 - - - -
4,466 (123,633) (113,186) - (113,186)
At 31 December 2018 185,352 - (6,848) 17,188 3,152 16,581
768,208 983,633 28,525 1,012,158
Note 13 Note 13 Note 13 Note 13 Note 13 Note 13
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094 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Distributable Share Share Revaluation Fair value LTIP Retained
Total capital premium reserve reserve reserve earnings
equityCompany Note RM000 RM000 RM000 RM000 RM000 RM000 RM000
At 1 January 2017 164,189 12,332 1,972 3,615 7,638 531,450
721,196
Revaluation of property and equipment 30 - - 1,082 - - - 1,082
Fair value of available-for-sale financial assets 30 - - - 4,608 -
- 4,608
Other comprehensive income for the year 30 - - 1,082 4,608 - -
5,690 Profit for the year - - - - - 207,668 207,668
Total comprehensive income for the year - - 1,082 4,608 -
207,668 213,358
Contributions by and distributions to ownersof the Company
- LTIP exercised 14 2,850 - - - (2,850) - - - Share-based
payment transactions 14 - - - - 7,327 - 7,327 - Dividends to owners
of the Company 32 - - - - - (123,472) (123,472)
Total transactions with owners of the Company 2,850 - - - 4,477
(123,472) (116,145)Transfer in accordance with Section 618(2) of
the Companies Act 2016 13 12,332 (12,332) - - - - -
At 31 December 2017 179,371 - 3,054 8,223 12,115 615,646
818,409Adjustment on initial application of MFRS 9 - - - (8,233) -
3,604 (4,629)
At 1 January 2018, restated 179,371 - 3,054 (10) 12,115 619,250
813,780
Revaluation of property and equipment 30 - - 10 - - - 10 Debt
investments measured at FVOCI 30 - - - 2,307 - - 2,307
Other comprehensive income for the year 30 - - 10 2,307 - -
2,317 Profit for the year - - - - - 230,106 230,106
Total comprehensive income for the year - - 10 2,307 - 230,106
232,423
Contributions by and distributions to ownersof the Company
- LTIP exercised 14 5,981 - - - (5,981) - - - Share-based
payment transactions 14 - - - - 10,447 - 10,447 - Dividends to
owners of the Company 32 - - - - - (123,633) (123,633)
Total transactions with owners of the Company 5,981 - - - 4,466
(123,633) (113,186)
At 31 December 2018 185,352 - 3,064 2,297 16,581 725,723
933,017
Note 13 Note 13 Note 13 Note 13 Note 13 Note 13
The notes on pages 97 to 323 are an integral part of these
financial statements.
Statements of Changes in Equity for the year ended 31 December
2018
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095SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statements of Cash Flows for the year ended 31 December 2018
Group Company 2018 2017 2018 2017 RM000 RM000 RM000 RM000
Cash flows from operating activitiesProfit before zakat and
taxation 337,004 253,653 257,441 255,522 Adjustments
for:Amortisation of intangible assets 22,464 13,115 22,464 13,115
Depreciation 19,378 17,221 9,853 10,515 Equity settled share-based
payment 10,447 7,327 10,447 7,327 Fair value change of investment
properties (253) (1,236) (240) (1,220)Fair value change of fair
value through profit or loss financial assets 80,802 8,708 69,079
(5,036)Profit from financing receivables (3,435) (3,552) (3,435)
(3,552)Profit from Islamic debt securities and investment accounts
(300,663) (279,807) (262,295) (260,981)Profit from Malaysian
Government Islamic papers (11,995) (10,667) (11,347) (10,667)
Dividend income from Shariah approved shares (10,375) (16,018)
(9,414) (15,583)Gains from disposal of debt investments at fair
value through other comprehensive income (2,287) - (2,287) -Gains
on disposal of available-for-sale financial assets - (23,135) -
(21,603)Losses / (Gains) on disposal of property and equipment 6 58
(8) (5)Gains on disposal of investment properties (5) - - -Losses
on disposal of a subsidiary - 2,396 - -Write-off of property and
equipment - 1 - 1 Amortisation of premiums, net of accretion of
discounts 7,843 7,875 7,087 7,875 Reversal of impairment losses on
financial instruments (5,917) - (2,536) -Impairment loss of
financial assets - 8,092 - 7,593 Impairment loss of investment in
subsidiaries - - 12,983 -
Operating profit / (loss) before changes in working capital
143,014 (15,969) 97,792 (16,699)
Profit received from Islamic debt securities, investment
accounts and Malaysian Government Islamic papers 298,626 279,535
261,063 260,709 Dividend income from Shariah approved shares 10,375
16,018 9,414 15,583 Purchase of investments (1,136,286) (2,392,588)
(945,841) (1,588,366)Proceeds from sale of investments 726,413
1,906,300 665,982 1,137,755 Maturity of other investments 191,691
119,362 154,537 100,904 (Increase) / Decrease in retakaful assets
(32,511) (41,010) 17,165 (35,924)Increase in receivables (362,480)
(14,396) (257,194) (8,702)Increase in Takaful contract liabilities
377,054 316,715 305,975 320,389 Increase in payables 136,613 37,691
54,494 38,168
352,509 211,658 363,387 223,817 Zakat paid (500) (300) (500)
(300)Income taxes paid (68,000) (81,092) (45,000) (80,761)
Net cash generated from operating activities 284,009 130,266
317,887 142,756
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096 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Statements of Cash Flows for the year ended 31 December 2018
Group Company 2018 2017 2018 2017 RM000 RM000 RM000 RM000
Cash flows from investing activities
Acquisition of intangible assets (68,000) (17,000) (68,000)
(17,000)Acquisition of general takaful business 14,585 - -
-Acquisition of a subsidiary - - (100,000) -Transferred of general
takaful business to a subsidiary - - (107,229) -Purchase of
property and equipment (14,372) (3,004) (11,429) (2,325)Proceeds
from sale of property and equipment 81 59 71 9 Proceeds from sale
of investment properties 126 - - -Net outflow from disposal of a
subsidiary - (11,029) - -
Net cash used in investing activities (67,580) (30,974)
(286,587) (19,316)
Cash flows from financing activity
Dividends paid to owners of the Company (123,472) (98,514)
(123,472) (98,514)
Net cash used in financing activity (123,472) (98,514) (123,472)
(98,514)
Net increase / (decrease) in cash and cash equivalents 92,957
778 (92,172) 24,926 Effect of exchange rate fluctuations on cash
held (8,346) (21,207) - -Cash and cash equivalents at 1 January
921,180 941,609 743,655 718,729
Cash and cash equivalents at 31 December 1,005,791 921,180
651,483 743,655
Cash and cash equivalents
Cash and cash equivalents included in the statements of cash
flows comprise the following statements of financial position
amounts:
Group Company 2018 2017 2018 2017 RM000 RM000 RM000 RM000
Cash and bank balances and fixed and call deposits with licenced
financial institutions with maturity less than three months-
Takaful Operator (Note 12) 321,533 205,265 218,801 177,121 - Family
Takaful Fund (Note 12) 567,466 594,175 432,682 444,794 - General
Takaful Fund (Note 12) 116,792 121,740 - 121,740
1,005,791 921,180 651,483 743,655
The notes on pages 97 to 323 are an integral part of these
financial statements.
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097SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
Syarikat Takaful Malaysia Keluarga Berhad (formerly known as
Syarikat Takaful Malaysia Berhad) is a public limited liability
company, incorporated and domiciled in Malaysia and is listed on
the Main Market of Bursa Malaysia Securities Berhad. The address of
the principal place of business and registered office of the
Company is as follows: 26th Floor, Annexe Block Menara Takaful
Malaysia No. 4, Jalan Sultan Sulaiman 50000 Kuala Lumpur
The consolidated financial statements of the Company as at and
for the financial year ended 31 December 2018 comprise the Company
and its subsidiaries (together referred to as the Group and
individually referred to as "Group entities"). The financial
statements of the Company as at and for the financial year ended 31
December 2018 do not include other entities. The Company is
principally engaged in managing family and general takaful
businesses. On 1 June 2018, the Company transferred its general
takaful business to a subsidiary as required by Islamic Financial
Services Act 2013. The principal activities of the subsidiaries are
as stated in Note 6 to the financial statements. There has been no
significant change in the nature of these activities during the
financial year.
The immediate holding company during the financial year is BIMB
Holdings Berhad, a company incorporated in Malaysia and listed on
the Main Market of Bursa Malaysia Securities Berhad. The ultimate
holding corporation of the Company during the financial year is
Lembaga Tabung Haji, a statutory body established under the Tabung
Haji Act 1995 (Act 535). The financial statements were authorised
for issue by the Board of Directors on 24 January 2019.
1. Basis of preparation
(a) Statement of compliance
The financial statements of the Group and of the Company have
been prepared in accordance with Malaysian Financial Reporting
Standards (MFRSs), International Financial Reporting Standards, the
Companies Act 2016, Islamic Financial Services Act 2013, Takaful
Guidelines / Circulars issued by Bank Negara Malaysia (BNM) and
Principles of Shariah.
A Takaful Operator is required to present consolidated financial
statements for itself and the Takaful funds it manages and controls
in accordance with the requirements of MFRS 10, Consolidated
Financial Statements. The statements of financial position and the
statements of profit or loss and other comprehensive income of the
Takaful Operator, Family Takaful Fund and General Takaful Fund are
supplementary financial information presented in accordance with
the requirements of BNM and Islamic Financial Services Act 2013 in
Malaysia to segregate assets, liabilities, income and expenses of
Takaful funds from its own. The statements of financial position
and profit or loss and other comprehensive income of the Takaful
Operator include only assets, liabilities, income and expenses of
the Takaful Operator, excluding the Takaful funds managed by it.
The statements of financial position and profit or loss and other
comprehensive income of the Family and General Takaful Fund include
only the assets, liabilities, income and expenses of the family
solidarity fund and General Takaful Fund that is set up, managed
and controlled by the Takaful Operator.
In preparing the Company-level consolidated financial
statements, the balances and transactions of the Takaful Operator
are amalgamated and combined with those of the takaful funds.
Interfund assets and liabilities, income and expenses relating to
transactions between the funds are eliminated in full during
amalgamation. The accounting policies adopted for the Takaful
Operator and takaful funds are uniform for like transactions and
events in similar circumstances.
The takaful fund are consolidated and amalgamated from the date
of control and continue to be consolidated until the date such
control ceases which occur when the Groups and the Companys licence
to manage takaful business is withdrawn or surrendered.
Notes to the Financial Statements
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098 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
1. Basis of preparation (continued)
(a) Statement of compliance (continued)
The following are accounting standards, amendments and
interpretations that have been issued by the Malaysian Accounting
Standards Board (MASB) but have not been adopted by the Group and
the Company:
MFRSs, Interpretations and amendments effective for annual
periods beginning on or after 1 January 2019 MFRS 16, Leases IC
Interpretation 23, Uncertainty over Income Tax Treatments
Amendments to MFRS 3, Business Combinations (Annual Improvements to
MFRS Standards 2015-2017 Cycle) Amendments to MFRS 9, Financial
Instruments Prepayment Features with Negative Compensation
Amendments to MFRS 11, Joint Arrangements (Annual Improvements to
MFRS Standards 2015-2017 Cycle) Amendments to MFRS 112, Income
Taxes (Annual Improvements to MFRS Standards 2015-2017 Cycle)
Amendments to MFRS 123, Borrowing Costs (Annual Improvements to
MFRS Standards 2015-2017 Cycle) Amendments to MFRS 128, Investments
in Associates and Joint Ventures Long-term Interests in Associates
and Joint
Ventures
MFRSs, Interpretations and amendments effective for annual
periods beginning on or after 1 January 2020 Amendments to MFRS 3,
Business Combination - Definition of a Business Amendments to MFRS
101, Presentation of Financial Statements and MFRS 108, Accounting
Policies, Changes in
Accounting Estimates and Errors - Definition of Material
MFRSs, Interpretations and amendments effective for annual
periods beginning on or after 1 January 2021 MFRS 17, Insurance
Contracts
MFRSs, Interpretations and amendments effective for a date yet
to be confirmed Amendments to MFRS 10, Consolidated Financial
Statements and MFRS 128, Investments in Associates and Joint
Ventures Sale or Contribution of Assets between an Investor and
its Associate or Joint Venture
The Group and the Company plan to apply the abovementioned
standards, amendments and interpretations:
from the annual period beginning on 1 January 2019 for those
accounting standards, amendments or interpretations that are
effective for annual periods beginning on or after 1 January 2019,
except for Amendments to MFRS 11, Amendments to MFRS 123 and
Amendments to MFRS 128 which are not applicable to the Group and
the Company;
from the annual period beginning on 1 January 2020 for those
accounting standards, amendments or interpretations that are
effective for annual periods beginning on or after 1 January 2020;
and
from the annual period beginning on 1 January 2021 for those
accounting standards, amendments or interpretations that are
effective for annual periods beginning on or after 1 January
2021.
The initial application of the abovementioned standards,
amendments and interpretations are not expected to have any
material impacts to the financial statements of the Group and the
Company except as mentioned below:
MFRS 16, Leases
MFRS 16 replaces existing leases guidance, including MFRS 117
Leases, IC Interpretation 4 Determining whether an Arrangement
contains a Lease, IC Interpretation 115 Operating Leases -
Incentives and IC Interpretation 127 Evaluating the Substance of
Transactions Involving the Legal Form of a Lease.
Notes to the Financial Statements
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099SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
1. Basis of preparation (continued) (a) Statement of compliance
(continued)
MFRS 16, Leases (continued)
The Group and the Company are required to adopt MFRS 16 Leases
from 1 January 2019. The Group and the Company have assessed the
estimated impact that initial application of MFRS 16 will have on
the consolidated financial statements, as described below. The
actual impacts of adopting the standard on 1 January 2019 may
change because the new accounting policies are subject to change
until the Group and the Company present their first financial
statements that include the date of initial application.
MFRS 16 introduces a single, on-balance sheet lease accounting
model for lessees. A lessee recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. There
are recognition exemptions for short-term leases and leases of
low-value items.
Lessor accounting remains similar to the current standard - i.e.
lessors continue to classify leases as finance or operating
leases.
(i) Leases in which the Group and the Company are lessee
The Group and the Company will recognise new assets and
liabilities for its operating leases. The nature of expenses
related to those leases will now change because the Group and the
Company will recognise a depreciation charge for right-of-use
assets and profit expense on lease liabilities.
Previously, the Group and the Company recognised operating lease
expense on a straight-line basis over the term of lease, and
recognised assets and liabilities only to the extent that there was
a timing difference between actual lease payments and the expense
recognised.
The Group and the Company plan to apply MFRS 16 on 1 January
2019, using modified retrospective approach. The Group and the
Company choose to measure the right-of-use asset equals to the
lease liability at 1 January 2019 with no restatement of
comparative information.
Based on the information available, the Group and the Company
estimate that it will recognise lease liabilities and right-of-use
of RM1,575,000 as at 1 January 2019. The Group and the Company do
not expect the adoption of MFRS 16 to impact its ability to comply
with the regulatory capital requirements described in Note 42.
(ii) Leases in which the Group and the Company are lessor
No significant impact is expected for leases in which the Group
and the Company are lessor.
MFRS 17, Insurance Contracts
MFRS 17 was issued by MASB in August 2017. The standard will
replace the existing MFRS 4 and establishes the principles for
recognition, measurement, presentation and disclosure of insurance
contracts. The Group is currently assessing the financial impact of
adopting MFRS 17.
(b) Basis of measurement
The financial statements have been prepared on the historical
cost basis other than as disclosed in Note 2.
Notes to the Financial Statements
-
Strategic ReviewProfiles
Corporate Governance
Financial Statements
Other Inform
ation
100 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
1. Basis of preparation (continued)
(c) Functional and presentation currency
These financial statements are presented in Ringgit Malaysia
(RM), which is the Companys functional currency. All financial
information is presented in RM and has been rounded to the nearest
thousand, unless otherwise stated.
(d) Use of estimates and judgements
The preparation of financial statements in conformity with MFRS
requires management to make judgements, estimates and assumptions
that affect the application of accounting policies and the reported
amount of assets, liabilities, income and expenses. Actual results
may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
There are no significant areas of estimation uncertainty and
critical judgements in applying accounting policies that have
significant effect on the amounts recognised in the financial
statements other than those disclosed in the following notes:
Note 2(g) and Note 4 Investment properties Note 2(c) and Note 36
Financial instruments Note 2(o) and Note 16 - Computation of
expense reserves Note 2(m), (n), Note 8 and Note 15 Provision for
outstanding claims including IBNR claims and actuarial
liabilities
2. Summary of significant accounting policies
The accounting policies set out below have been applied
consistently to the periods presented in these financial
statements, and have been applied consistently by Group entities,
unless otherwise stated. This is the first set of the Groups and
the Companys annual financial statements in which MFRS 9, Financial
Instruments have been applied. The effect of the changes in
accounting policies arising from adoption of MFRS 9 are disclosed
in Note 40.
(a) Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities, including structured entities,
controlled by the Company. The financial statements of subsidiaries
are included in the consolidated financial statements from the date
that control commences until the date that control ceases.
The Group controls an entity when it is exposed, or has rights,
to variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the
entity. Potential voting rights are considered when assessing
control only when such rights are substantive. The Group also
considers it has de facto power over an investee when, despite not
having the majority of voting rights, it has the current ability to
direct the activities of the investee that significantly affect the
investee's return.
Investments in subsidiaries are measured in the Companys
statement of financial position at cost less any impairment losses,
unless the investment is classified as held for sale or
distribution. The cost of investments includes transaction
costs.
Notes to the Financial Statements
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101SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(a) Basis of consolidation (continued)
(ii) Business combinations
Business combinations are accounted for using the acquisition
method from the acquisition date, which is the date on which
control is transferred to the Group.
The Group measures the cost of goodwill at the acquisition date
as: the fair value of the consideration transferred; plus the
recognised amount of any non-controlling interests in the acquiree;
plus if the business combination is achieved in stages, the fair
value of the existing equity interest in the acquiree; less the net
recognised amount (generally fair value) of the identifiable assets
acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
For each business combination, the Group elects whether it
measures the non-controlling interests in the acquiree either at
fair value or at the proportionate share of the acquirees
identifiable net asset at the acquisition date.
Transaction costs, other than those associated with the issue of
Islamic debt or equity securities, that the Group incurs in
connection with a business combination are expensed as
incurred.
(iii) Acquisition of non-controlling interests
The Group treats all changes in its ownership interest in a
subsidiary that do not result in a loss of control as equity
transactions between the Group and its non-controlling interest
holders. Any difference between the Groups share of net assets
before and after the change, and any consideration received or
paid, is adjusted to or against Group reserves.
(iv) Loss of control
Upon the loss of control of a subsidiary, the Group derecognises
the assets and liabilities of the former subsidiary, any
non-controlling interests and the other components of equity
related to the former subsidiary. Any surplus or deficit arising on
the loss of control is recognised in profit or loss. If the Group
retains any interest in the former subsidiary, then such interest
is measured at fair value at the date that control is lost.
Subsequently it is accounted for as an equity accounted investee or
as an available-for-sale financial asset depending on the level of
influence retained.
(v) Non-controlling interests
Non-controlling interests at the end of the reporting period,
being the equity in a subsidiary not attributable directly or
indirectly to the equity holders of the Company, are presented in
the consolidated statement of financial position and statement of
changes in equity within equity, separately from equity
attributable to the owners of the Company. Non-controlling
interests in the results of the Group is presented in the
consolidated statement of profit or loss and other comprehensive
income as an allocation of the profit or loss and the comprehensive
income for the year between non-controlling interests and the
owners of the Company.
Losses applicable to the non-controlling interests in a
subsidiary are allocated to the non-controlling interests even if
doing so causes the non-controlling interests to have a deficit
balance.
(vi) Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income
and expenses arising from intra-group transactions, are eliminated
in preparing the consolidated financial statements.
Notes to the Financial Statements
-
Strategic ReviewProfiles
Corporate Governance
Financial Statements
Other Inform
ation
102 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(b) Foreign currency
(i) Foreign currency transactions
Transactions in foreign currencies are translated to the
respective functional currencies of the Group entities at exchange
rates at the dates of the transactions.
Monetary assets and liabilities denominated in foreign
currencies at the reporting date are retranslated to the functional
currency at the exchange rate at that date.
Non-monetary assets and liabilities denominated in foreign
currencies are not retranslated at the reporting date, except for
those that are measured at fair value are retranslated to the
functional currency at the exchange rate at the date that the fair
value was determined.
Foreign currency differences arising are generally recognised in
the profit and loss. However, foreign currency differences arising
from the translation of an investment in equity securities
designated as at fair value through other comprehensive income
(FVOCI) are recognised in other comprehensive income (OCI) (2017:
available-for-sale equity securities (except on impairment, in
which case foreign currency differences that have been recognised
in OCI are reclassified to profit or loss)).
In the consolidated financial statements, when settlement of a
monetary item receivables from or payable to a foreign operation is
neither planned nor likely to occur in the foreseeable future,
foreign exchange gains and losses arising from such monetary item
are considered to form part of a net investment in a foreign
operation and are recognised in other comprehensive income, and are
presented in the foreign currency translation reserve (FCTR) in
equity.
(ii) Operations denominated in functional currencies other than
Ringgit Malaysia
The assets and liabilities of operations denominated in
functional currencies other than RM and fair value adjustments
arising on acquisition, are translated to RM at exchange rates at
the end of the reporting period. The income and expenses of foreign
operations are translated to RM at exchange rates at the dates of
the transactions.
Foreign currency differences are recognised in other
comprehensive income and accumulated in the foreign currency
translation reserve (FCTR) in equity. However, if the operation is
a non-wholly-owned subsidiary, then the relevant proportionate
share of the translation difference is allocated to the
non-controlling interests. When a foreign operation is disposed of
such that control, significant influence or joint control is lost,
the cumulative amount in the FCTR related to that foreign operation
is reclassified to profit or loss as part of the profit or loss on
disposal.
When the Group disposes of only part of its interest in a
subsidiary that includes a foreign operation, the relevant
proportion of the cumulative amount is reattributed to
non-controlling interests. When the Group disposes of only part of
its investment in an associate or joint venture that includes a
foreign operation while retaining significant influence or joint
control, the relevant proportion of the cumulative amount is
reclassified to profit or loss.
(c) Financial instruments
(i) Recognition and initial measurement
A financial assets or a financial liabilities is recognised in
the statement of financial position when and only when, the Group
and the Company become a party to the contractual provisions of the
instrument.
Notes to the Financial Statements
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103SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(c) Financial instruments (continued)
(i) Recognition and initial measurement (continued)
A financial assets (unless it is a takaful receivables without a
significant financing component) or financial liability is
initially measured at fair value plus, for an item not at fair
value through profit or loss (FVTPL), transaction costs that are
directly attributable to its acquisition or issue. A takaful
receivables without a significant financing component is initially
measured at the transaction price.
(ii) Classification and subsequent measurement
Financial assets - Policy applicable from 1 January 2018
On initial recognition, a financial asset is classified as
measured at: amortised cost, fair value through other comprehensive
income (FVOCI) - debt investments; FVOCI - equity instrument; or
FVTPL.
Financial assets are not reclassified subsequent to their
initial recognition unless the Group and the Company change its
business model for managing financial assets, in which case all
affected financial assets are reclassified on the first day of the
first reporting period following the change in the business
model.
Amortised cost
A financial assets measure at amortised cost if it meets both of
the following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is to hold
assets to collect contractual cash flows; and- its contractual
terms give rise on specified dates to cash flows that are solely
payments of principal and interest
on the principal amount outstanding. FVOCI - debt
investments
A debt investment is measured at FVOCI if it meets both of the
following conditions and is not designated as at FVTPL:
- it is held within a business model whose objective is achieved
by both collecting contractual cash flows and selling financial
assets; and
- its contractual terms give rise on specified dates to cash
flows that are solely payments of principal and interest on the
principal amount outstanding.
FVOCI - equity instrument
On initial recognition of an equity investment that is not held
for trading, the Group and the Company may irrevocably elect to
present subsequent changes in the investment's fair value in OCI.
This election is made on an investment-by-investment basis.
FVTPL
All financial assets not classified as measured at amortised
cost or FVOCI as described above are measured at FVTPL. On initial
recognition, the Group and the Company may irrevocably designate a
financial asset that otherwise meets the requirements to be
measured at amortised cost or at FVOCI as at FVTPL if doing so
eliminates or significantly reduces an accounting mismatch that
would otherwise arise.
Notes to the Financial Statements
-
Strategic ReviewProfiles
Corporate Governance
Financial Statements
Other Inform
ation
104 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets - Policy applicable from 1 January 2018
(continued)
FVTPL (continued)
All financial assets, except for those measured at FVTPL and
equity investments measured at FVOCI, are subject to impairment
assessment (see Note 2(i)(i)).
Financial assets - Business model assessment: Policy applicable
from 1 January 2018
The Group and the Company make an assessment of the objective of
the business model in which a financial asset is held at portfolio
level because this best reflects the way the business is managed
and information is provided to management. The information
considered includes:
- the stated policies and objectives for the portfolio and the
operation of those policies in practice. These include whether
management's strategy focuses on earning contractual profit income,
maintaining a particular profit rate profile, matching the duration
of the financial assets to the duration of any related liabilities
or expected cash outflows or realising cash flows through the sale
of the assets;
- how the performance of the portfolio is evaluated and reported
to the Group's and the Company's management;
- the risks that affect the performance of the business model
(and the financial assets held within the business model) and how
those risks are managed;
- how managers of the business are compensated - e.g. whether
compensation is based on fair value of the assets management or the
contractual cash flows collected; and
- the frequency, volume and timing of sales of financial assets
in prior periods, the reasons for such sales and
expectations about future sales activity.
Transfers of financial assets to third parties in transactions
that do not qualify for derecognition are not considered sales for
this purpose, consistent with the Group's and the Company's
continuing recognition of the assets.
Financial assets that are held for trading or are managed and
whose performance is evaluated on a fair value basis are measured
at FVTPL.
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest: Policy applicable from 1
January 2018
For the purpose of this assessment, 'principal' is defined as
the fair value of the financial asset on initial recognition.
'Interest' is defined as consideration for the time value of
money and for the credit risk associated with the principal amount
outstanding during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and administrative
costs), as well as a profit margin.
Notes to the Financial Statements
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105SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets - Assessment whether contractual cash flows are
solely payments of principal and interest: Policy applicable from 1
January 2018 (continued)
In assessing whether the contractual cash flows are solely
payments of principal and interest, the Group and the Company
consider the contractual terms of the instrument. This includes
assessing whether the financial asset contains a contractual term
that could change the timing or amount of contractual cash flows
such that it would not meet this condition. In making this
assessment, the Group and the Company consider:
- contingent events that would change the amount or timing of
cash flows;- terms that may adjust the contractual coupon rate,
including variable-rate features;- prepayment and extension
features; and - terms that limit the Group's and Company's claim to
cash flows from specified assets (e.g. non-recourse
features).
A prepayment feature is consistent with the 'solely payments of
principal and interest' criterion if the prepayment amount
substantially represents unpaid amounts of principal and interest
on the principal amount outstanding, which may include reasonable
additional compensation for early termination of the contract.
Additionally, for a financial asset acquired at a discount or
premium to its contractual par amount, a feature that permits or
requires prepayment at an amount that substantially represents the
contractual par amount plus accrued (but unpaid) contractual
interest (which may also include reasonable additional compensation
for early termination) is treated as consistent with this criterion
if the fair value of the prepayment feature is insignificant at
initial recognition.
Financial assets - Subsequent measurement and gains and losses:
Policy applicable from 1 January 2018
Financial assets at FVTPL
These assets are subsequently measure at fair value. Net gains
and losses, including any profit or dividend income, are recognised
in profit or loss.
Financial assets at amortised cost
These assets are subsequently measured at amortised cost using
the effective profit method. The amortised cost is reduced by
impairment losses. Profit income, foreign exchange gains and losses
and impairment are recognised in profit or loss. Any gain or loss
on derecognition is recognised in profit or loss. Profit income is
recognised by applying effective profit rate to the gross carrying
amount except for credit impaired financial assets (see Note
2(i)(i)) where the effective profit rate is applied to the
amortised cost.
Debt investments at FVOCI
These assets are subsequently measured at fair value. Profit
income calculated using the effective profit methods, foreign
exchange gains and losses and impairment are recognised in profit
or loss. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are reclassified
to profit or loss. Profit income is recognised by applying
effective profit rate to the gross carrying amount except for
credit impaired financial assets (see Note 2(i)(i)) where the
effective profit rate is applied to the amortised cost.
Equity investments at FVOCI
These assets are subsequently measured at fair value. Dividends
are recognised as income in profit or loss unless the dividend
clearly represents a recovery of part of the cost of the
investment. Other net gains and losses are recognised in OCI. On
derecognition, gains and losses accumulated in OCI are not
reclassified to profit or loss.
Notes to the Financial Statements
-
Strategic ReviewProfiles
Corporate Governance
Financial Statements
Other Inform
ation
106 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(c) Financial instruments (continued)
(ii) Classification and subsequent measurement (continued)
Financial assets - Policy applicable before 1 January 2018
The Group and the Company classified its financial assets into
one of the following categories: loans and receivables;
held-to-maturity; available-for-sale; and at FVTPL, and within this
category as: - held for trading; or - designated as at FVTPL.
Financial assets - Subsequent measurement and gains and losses:
Policy applicable before 1 January 2018
Financial assets at FVTPL
Measured at fair value and changes therein, including any profit
or dividend income, were recognised in profit or loss.
Held-to-maturity financial assets
Measured at amortised cost using the effective profit
method.
Loans and receivables Measured at amortised cost using the
effective profit method.
Available-for-sale financial assets
Measured at fair value and changes therein, other than
impairment losses, profit income and foreign currency differences
on debt instruments, were recognised in OCI and accumulated in the
fair value reserve. When these assets were derecognised, the gain
or loss accumulated in equity was reclassified to profit or
loss.
Financial liabilities - Classification, subsequent measurement
and gains and losses
Financial liabilities are classified as measured at amortised
cost using effective profit method. Profit expense and foreign
exchange gains and losses are recognised in profit or loss. Any
gain or loss on derecognition is also recognised in profit or
loss.
(iii) Derecognition
Financial assets
The Group and the Company derecognise a financial asset when the
contractual rights to the cash flows from the financial asset
expire, or it transfers the rights to receive the contractual cash
flows in a transaction in which substantially all of the risks and
rewards of ownership of the financial assets are transferred or in
which the Group and the Company neither transfers nor retains
substantially all of the risks and rewards of ownership and it does
not retain control of the financial asset.
The Group and the Company enter into transactions whereby it
transfers assets recognised in its statement of financial position,
but retains either all or substantially all of the risks and
rewards of the transferred assets. In these cases, the transferred
assets are not derecognised.
Notes to the Financial Statements
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107SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(c) Financial instruments (continued) (iii) Derecognition
(continued) Financial assets (continued)
On derecognition of a financial assets, the difference between
the carrying amount of the financial assets and the sum of
consideration received (including any new asset obtained less any
new liability assumed) is recognised in profit or loss.
Financial liabilities
The Group and the Company derecognise a financial liability when
the contractual obligations are discharged or cancelled, or expire.
The Group and the Company also derecognise a financial liability
when its terms are modified and the cash flows of the modified
liability are substantially different, in which case a new
financial liability based on the modified terms is recognised at
fair value.
On derecognition of a financial liability, the difference
between the carrying amount extinguished and the consideration paid
(including any non-cash assets transferred or liabilities assumed)
is recognised in profit or loss.
(iv) Offsetting
Financial assets and financial liabilities are offset and the
net amount presented in statement of financial position when, and
only when, the Group and the Company currently have a legally
enforceable right to set off the amounts and it intends either to
settle them on a net basis or to realise the asset and settle the
liability simultaneously.
(d) Property and equipment
(i) Recognition and measurement
The land and buildings are stated at cost / valuation less any
accumulated depreciation and any accumulated impairment losses.
Items of equipment are measured at cost less any accumulated
depreciation and any accumulated impairment losses.
The Group and the Company revalue their land and buildings
annually and at shorter intervals whenever the fair values of the
revalued assets are expected to differ materially from their
carrying value. Additions subsequent to their revaluation are
stated in the financial statements at cost until the next
revaluation exercise.
An external independent valuation company, having the
appropriate recognised professional qualifications, values the
Groups land and buildings on an annual basis. The revalued amounts
are based on market value, being the estimated amount for which a
property could be exchanged between a willing buyer and a willing
seller in an arms length transaction.
Surpluses arising from revaluation are dealt with in the
revaluation reserve account. Any deficit arising is offset against
the revaluation reserve to the extent of any previous surpluses
recognised for the same property. In all other cases, a decrease in
carrying amount is charged to profit or loss.
Notes to the Financial Statements
-
Strategic ReviewProfiles
Corporate Governance
Financial Statements
Other Inform
ation
108 SYARIKAT TAKAFUL MALAYSIA KELUARGA BERHADANNUAL REPORT
2018
2. Summary of significant accounting policies (continued)
(d) Property and equipment (continued)
(i) Recognition and measurement (contin