AmINVESTMENT GROUP BERHAD · 2018-04-18 · AmINVESTMENT GROUP BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES (Company No. 657000-X) ... ("SC") via its letter dated

Company No: 657000-X

AmINVESTMENT GROUP BERHAD(Incorporated in Malaysia)

AND ITS SUBSIDIARY COMPANIES(Company No. 657000-X)

FINANCIAL STATEMENTS FOR THE PERIOD ENDED 31 MARCH 2005

(In Ringgit Malaysia)

AmInvestment Group BerhadFinancial Statements For The Period Ended 31 March 2005


AmINVESTMENT GROUP BERHAD(Incorporated in Malaysia)AND ITS SUBSIDIARY COMPANIES

DIRECTORS' REPORT AND AUDITED FINANCIAL STATEMENTS31 MARCH 2005

CONTENTS PAGE

DIRECTORS' REPORT 1 - 13

STATEMENT BY DIRECTORS 14

STATUTORY DECLARATION 15

REPORT OF THE AUDITORS 16 - 17

BALANCE SHEETS 18 - 19

INCOME STATEMENTS 20

STATEMENTS OF CHANGES IN EQUITY 21 - 22

CASH FLOW STATEMENTS 23 - 25

NOTES TO THE FINANCIAL STATEMENTS 26 - 119



AmINVESTMENT GROUP BERHAD(Incorporated in Malaysia)AND ITS SUBSIDIARY COMPANIESFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005

DIRECTORS’ REPORT

PRINCIPAL ACTIVITIES

SIGNIFICANT EVENTS

(a)

(i)

(a)

(b)

The Company was incorporated on 23 June 2004, as an investment holding company to facilitate theimplementation of an internal reorganisation involving a transfer of subsidiaries and listing scheme. Pursuant tothe Group Internal Reorganisation, the ultimate holding, AMMB Holdings Berhad ("AHB")'s 100% equityinterest in AmMerchant Bank Berhad ("AmMerchant Bank") and AmSecurities Holding Sdn Bhd ("AMSH")will be transferred to the Company. Upon the completion of the transfers, the Company will undertake a ListingScheme to obtain listing of and quotation for its entire issued and paid-up share capital on the Main Board of theBursa Malaysia Securities Berhad as further described below.

The subsidiary companies, as listed in Note 12 to the financial statements, provide a wide range of merchantbanking and related financial services which also include the Islamic Banking Business, investment advisory andasset, property and unit trust management, stocks and futures broking.

There have been no significant changes in the nature of the activities of the Group and the Company during thefinancial period.

On 27 February 2004 and 31 May 2004, AHB announced the following proposals:

The Privatisation of AMFB Holdings Berhad (“AMFB”) through the acquisition by AHB of188,927,911 ordinary shares of RM1.00 each (“Shares”) in AMFB, representing 35.72% of the issuedand paid-up share capital of AMFB, not already owned by AHB by way of a scheme of arrangementbetween AMFB and its shareholders under Section 176 of the Companies Act, 1965 (“AMFBPrivatisation”). The AMFB Privatisation was approved by the shareholders of AMFB at the CourtConvened Meeting held pursuant to the Order of the High Court of Malaya on 31 January 2005.Further, the Order of the High Court of Malaya ("Court Order") sanctioning the Scheme ofArrangement was obtained on 17 February 2005.

AHB has also received the approval from the Securites Commission ("SC") via its letter dated 31January 2005 for the purchase consideration price for the AMFB Privatisation amounting toRM1,360,280,959 or RM7.20 per AMFB Share to be satisfied as follows:-

RM623,462,106 by way of issuance of 188,927,911 new AHB Shares on the basis of one (1) newAHB Share valued at RM3.30 per new AHB Share for every one (1) existing AMFB MinorityShare held; and

RM736,818,853 in cash, on the basis of RM3.90 for every one (1) existing AMFB MinorityShare held.

The directors have pleasure in presenting their report together with the audited financial statements ofAmInvestment Group Berhad for the financial period ended 31 March 2005.

1AmInvestment Group Berhad

Financial Statements For The Period Ended 31 March 2005


(ii)

1

2

3

(i)

(a)

(b)

in direct proportion to their shareholdings in AHB;

(ii)

The listing of AHB’s investment banking group, via a newly incorporated company, which wasincorporated under the name of the Company on the Main Board of the Bursa Securities (“ListingScheme”), comprising the following:

The incorporation of the Company, completed on 23 June 2004, as a wholly-owned subsidiarycompany of AHB, to act as the holding company/listing vehicle of AHB’s investment bankinggroup;

An internal reorganisation (“Internal Reorganisation”) involving the transfer of AHB’s 100%equity interest in AmMerchant Bank Berhad for a consideration of RM1,109,442,000 whollysatisfied through the issuance of 1,109,441,998 new ordinary shares of RM1.00 each in theCompany (“Transfer of AmMerchant Bank”), and 100% equity interest in AMSH for aconsideration of RM214,400,000 to be wholly satisfied by the Company in cash (“Transfer ofAMSH”), prior to the completion of which AmMerchant Bank and AMSH had separatelydeclare dividends to AHB amounting to RM249,840,000 in aggregate;

The issue/offer of 646,800,000 Shares comprising 210,558,000 new Shares and 436,242,000existing Shares, as follows:-

488,400,000 Shares allocated to shareholders of AHB, by way of:-

A renounceable restricted offer for sale of 330,278,078 Shares by AHB to theentitled shareholders of AHB; and

A restricted issue of 158,121,922 new Shares to Tan Sri Dato’ AzmanHashim and the related companies.

39,600,000 Shares allocated by way of a restricted offer for sale by AHB toeligible directors and employees of the Company and/or its Malaysian-incorporatedsubsidiary and associated companies, eligible directors of AHB and businessassociates of AHB, which includes persons who have contributed to the success ofthe Group; and

On 17 March 2005, the AMFB Privatisation was completed following the listing of and quotation forthe 188,927,911 AHB Shares issued to the minority shareholders of AMFB. Consequently, AMFBbecame a wholly-owned subsidiary of AHB.

The entire issued and paid-up share capital of AMFB was delisted from the Official List of BursaMalaysia Securities Berhad ("Bursa Securities") with effect from 30 March 2005 pursuant toParagraph 8.15(6) of the Listing Requirements of Bursa Securities.




(iii)

(a)

(b)

4

(c)

FINANCIAL RESULTS

Group CompanyRM'000 RM'000

Profit before share in results of associated companies and taxation 265,516 10,408Share in results of associated companies 16,595 -

Profit before taxation 282,111 10,408 Taxation (78,997) (2,918)

Profit before minority interests 203,114 7,490 Minority shareholders' interests in results of subsidiary companies (2,002) -

Net profit attributable to the shareholders 201,112 7,490

In the opinion of the directors, the results of the operations of the Group and of the Company during the financialperiod were not substantially affected by any item, transaction or event of a material and unusual nature.

118,800,000 Shares allocated to Tan Sri Dato’ Azman Hashim as an approvedBumiputera investor, by way of:-

An offer for sale of 66,363,922 Shares by AHB; and

A special issue of 52,436,078 new Shares

at an issue/offer price of RM1.40 per Share payable in full on application; and

The listing of and quotation for the entire enlarged issued and paid-up share capital of theCompany of RM1,320,000,000, comprising 1,320,000,000 Shares, on the Main Board ofBursa Securities.

The AMFB Privatisation and Listing Scheme were approved by the shareholders of AHB at theExtraordinary General Meeting held on 31 January 2005.

AHB has also obtained the approval of Bank Negara Malaysia and the Minister of Finance and theSC for, inter-alia, the AMFB Privatisation and the Proposed Listing of AIGB via their letters dated10 December 2004 and 16 December 2004, respectively. The AMFB Privatisation and the ListingScheme are inter-conditional with each other.

On 13 October 2004, AHB entered into an agreement with AmMerchant Bank, the then wholly ownedsubsidiary company for the acquisition of 47,116,000 ordinary shares of RM1.00 each representing47.116% of the issued and paid-up share capital of AmAssurance Berhad ("AmAssurance") fromAmMerchant Bank for a cash consideration of RM75,762,537 ("Acquisition by AHB"). Subsequently, byway of a supplemental agreement dated 21 March 2005, the cash consideration was revised fromRM75,762,537 to RM82,517,802, after taking into consideration the estimated share of profits fromAmAssurance for a period of 12 months from 1 April 2004 up to 31 March 2005.

The Acquisition by AHB are subject to the terms and conditions of AHB's sale and purchase agreement(“SPA”). The Acquisition was approved by the Minister of Finance on 23 September 2004 and SC on 23February 2005 and does not require the approval of AHB's shareholders as it is an excluded transactionpursuant to Chapter 10.02(j) of the Listing Requirements of Bursa Malaysia Securities Berhad. TheAcquisition by AHB was completed on 24 March 2005.




BUSINESS PLAN AND STRATEGY

OUTLOOK FOR NEXT FINANCIAL YEAR

The Internal Reorganization to create the AmInvestment Group Berhad (“AIGB”), which was set in motion inthe first half of 2004, was completed in March 2005 and the Group is on schedule for its initial public offering inMay 2005. The recently announced Investment Banking Framework by Bank Negara Malaysia affirmed theGroup’s vision of its investment banking model which will be able to compete effectively in a liberalised capitalmarkets environment.

The Group has proceeded to further integrate the major businesses within the Group, i.e. the merchant banking,stockbroking and funds management businesses, to enable these businesses to operate seamlessly throughout theGroup. However, the Group will also continue to enhance its competitiveness in segments in which it hasleadership positions. Emphasis will be given to the development of the Group’s human capital and distributionchannels, and also the enhancement of the Group’s regional capabilities. In the longer term, a strong regionalpresence will be important for competitive advantage as a result of the liberalization of the global capitalmarkets in which funds flows fluidly across borders

The Group is confident that its strategies going forward will be able to position the Group to compete effectivelywith both domestic investment banking groups as well as foreign-based competitors. The Group will leverageon its businesses’ operational efficiencies, deep market knowledge and varied product range to stay ahead ofcompetitors.

Malaysia’s economic growth is expected to moderate from 7.1% for 2004 to around 6.0% for 2005. Themoderation in economic growth can be primarily attributed to the volatility of crude petroleum prices that hasheightened uncertainties in the sustainability of economic growth globally which in turn have weakened externaldemand for Malaysian goods. The overall growth in the economy in 2005 would be supported largely bysustained domestic demand with the main contribution to growth coming from the private sector.

Despite lower external demand for Malaysian goods, the manufacturing sector is still expected to be the maingrowth engine for the Malaysian economy with higher value-added production playing a more prominent role inthe manufacturing sector. The services sector, the second engine of growth, is also expected to expand in linewith the expansion of trade and tourism activities, communications and financial services.

However, a moderating economy coupled with ample liquidity in the banking system will further suppress theprofitability of the banking industry’s traditional lending business. Although inflationary pressures are pickingup, it is unlikely interest rates will rise appreciably in the short term. Therefore, the banking sector as a wholewill continue to experience downward pressure on lending margins.

The volatility of petroleum prices has also affected the capital markets. Activity in the equity market has beendepressed due to the uncertainties that loom over the global economy as a result of possible escalation ofpetroleum prices. Until there is more stability in energy prices, investors will remain cautious. As a result, theinvestment banking and stockbroking industries will face challenging conditions in bringing deals to the marketamid such uncertainties.




ITEMS OF AN UNUSUAL NATURE

DIVIDENDS

RESERVES AND ALLOWANCES

Note to the Financial

Statements Group CompanyRM'000 RM'000

Allowances/(Reversal of allowances) :

Net interest suspended 27 18,544 -

Net income suspended 1,786 -

Loan and financing loss allowances:

General allowance - reversal 31 (11,313) -

Specific allowance - net 31 100,436 -

Provision for commitments 63 -

Allowance for diminution in value of investments - net 16,860 -

Write back of allowance for doubtful sundry receivables - net (2,042) -

Transfer to profit equalisation reserve 2,195 -

In the opinion of the directors, the results of operations of the Group and the Company for the financial periodhave not been substantially affected by any item, transaction or event of a material and unusual nature.

There has not arisen in the interval between the end of the financial period 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 affectsubstantially the results of the operations of the Group and the Company for the succeeding twelve months.

No dividends has been declared or paid by the Company since the incorporation of the Company. The directorsdo not recommend any dividend payment in respect of the current financial period.

The following material transfers to/(from) reserves, and allowances and provisions were made during thefinancial period:




BAD AND DOUBTFUL DEBTS AND FINANCING

CURRENT ASSETS

VALUATION METHODS

CONTINGENT AND OTHER LIABILITIES

(a)

(b)

CHANGE OF CIRCUMSTANCES

Before the income statements and balance sheets of the Group and the Company were made out, the directorstook reasonable steps to ascertain that action had been taken in relation to the writing off of bad debts andfinancing and the making of allowances for doubtful debts and financing and have satisfied themselves that allknown bad debts and financing had been written off and adequate allowance had been made for doubtful debtsand financing.

At the date of this report, the directors are not aware of any circumstances that would render the amount writtenoff for bad debts and financing or the amount of the allowance for doubtful debts and financing in the Groupand the Company inadequate to any substantial extent.

Before the income statements and balance sheets of the Group and the Company were made out, the directorstook reasonable steps to ascertain that current assets, other than debts and financing, which were unlikely torealise in the ordinary course of business, their values as shown in the accounting records of the Group and theCompany, have been written down to their estimated realisable values.

At the date of this report, the directors are not aware of any circumstances that would render the valuesattributed to the current assets in the financial statements of the Group and the Company misleading.

At the date of this report, the directors are not aware of any circumstances which have arisen which renderadherence to the existing methods of valuation of assets or liabilities in the Group's and the Company'sfinancial statements misleading or inappropriate.

At the date of this report, there does not exist:

any charge on the assets of the Group and the Company that has arisen since the end of the financialperiod and which secures the liabilities of any other person; or

any contingent liability in respect of the Group and the Company that has arisen since the end of thefinancial period, other than those incurred in the normal course of business.

No contingent or other liability of the Group and the Company has become enforceable or is likely to becomeenforceable within the period of twelve months after the end of the financial period which, in the opinion of thedirectors, will or may substantially affect the ability of the Group and the Company to meet their obligations asand when they fall due.

At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in thisreport or the financial statements of the Group and the Company, that would render any amount stated in thefinancial statements misleading.




ISSUE OF SHARES AND DEBENTURES

The movements in the issued and paid-up capital since the date of incorporation are as follows:

SHARE OPTIONS

TotalNo of ordinary issued and fully

Date of shares issued at paid up ordinaryallotment RM1.00 each share capital Consideration

RM

23.6.2004 2 2 At par for cash

10.3.2005 1,109,441,998 1,109,442,000 In settlement of the acquisitionof all the issued ordinary and

preference shares and theInterest-Bearing ICULS 2007 of

AmMerchant Bank Berhad from AHB

The Company has not issued any new debentures during the financial period.

There are no options granted by the Company to take up unissued shares of the Company.

No shares have been issued during the financial period by virtue of the exercise of any option to take upunissued shares of the Company. As at the end of the financial period, there were no unissued shares of theCompany under options.




DIRECTORS

Tan Sri Dato' Azman Hashim (Appointed on 4 January 2005)Prof Tan Sri Dato’ Dr Mohd Rashdan Haji Baba (Appointed on 4 January 2005)Tan Sri Datuk Dr Aris Osman @ Othman (Appointed on 4 January 2005)Tan Sri Datuk Clifford Francis Herbert (Appointed on 4 January 2005)Dato’ Izham Bin Mahmud (Appointed on 4 January 2005)Cheah Tek Kuang (Appointed on 4 January 2005)Kok Tuck Cheong (Appointed on 4 January 2005)Pushparani A/P A Moothathamby (Appointed on 4 January 2005)Yap Yee Chuan (First director and resigned on 4 January 2005)Ravindra Kumar Thambimuthu (First director and resigned on 4 January 2005)

DIRECTORS’ INTERESTS

DIRECT INTERESTS

In the Company

The directors who served on the Board since the date of incorporation and at the date of this report are:

In accordance with Article 89 of the Company's Articles of Association, all the directors retire at theforthcoming Annual General Meeting and, being eligible, offer themselves for re-election.

Balance Eligible at date of Rights/ Employees/ Balance at

Renounceable Rights incorporation Allocation Directors Bought 31.3.2005

Tan Sri Dato' Azman Hashim - 118,954,848 - - 118,954,848 Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba - 51,824 150,000 - 201,824 Tan Sri Datuk Dr Aris Osman @ Othman - - 50,000 - 50,000 Tan Sri Datuk Clifford - - 50,000 - 50,000 Francis HerbertDato’ Izham Mahmud - 1,070 100,000 - 101,070 Cheah Tek Kuang - 120,075 2,500,000 - 2,620,075 Kok Tuck Cheong - 4,584 1,500,000 - 1,504,584 Pushparani A/P A Moothathamby - 97,001 800,000 - 897,001

No. of Renouceable Rights of RM1.00 each Offer for sale

Under the Company's Articles of Association, the directors are not required to hold shares in the Company.

The interests in shares, debentures and share options in the Company and its subsidiary companies, of those whowere directors at the end of the financial period as recorded in the Register of Directors’ Shareholdings kept bythe Company under Section 134 of the Companies Act, 1965, are as follows:




DIRECTORS’ INTERESTS (CONTD.)

DIRECT INTERESTS

In the ultimate holding company,AMMB Holdings Berhad ('AHB")

* Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existing AMFBHoldings Berhad ("AMFB") share held by AMFB shareholders other than AHB.

Balance at date of *Share Balance at

Shares incorporation Bought Exchange Sold 31.3.2005

Tan Sri Dato' Azman Hashim - - 675,490 - 675,490Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba 226,071 - - - 226,071Dato' Izham bin Mahmud - - 4,670 - 4,670Cheah Tek Kuang 485,800 - 38,000 500,000 23,800Kok Tuck Cheong 20,000 - - 20,000 - Pushparani A/P A Moothathamby 420,663 - 2,486 - 423,149

No. of Ordinary Shares of RM1.00 each

Balance at date of Exercised/ Balance at

Warrants 1997/2007 incorporation Bought Sold 31.3.2005

Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba 19,795 - - 19,795 Pushparani A/P A Moothathamby 15,508 - - 15,508

No. of Warrants

Balance at date of Exercised/ Balance at

Warrants 2003/2008 incorporation Bought Sold 31.3.2005

Tan Sri Dato' Azman Hashim 245,793 - 245,793 - Cheah Tek Kuang 46,189 - - 46,189 Kok Tuck Cheong 11,547 - 11,547 - Pushparani A/P A Moothathamby 13,418 - - 13,418

No. of Warrants





DIRECT INTERESTS

In the ultimate holding company,AMMB Holdings Berhad ('AHB")

In the related finance company,AMFB Holdings Berhad

*

In the subsidiary company,AmMerchant Bank Berhad

Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existingAMFB Holdings Berhad ("AMFB") share held by AMFB shareholders other than AHB.

Balance at date of Balance at

Share Options incorporation Granted Expired 31.3.2005

Kok Tuck Cheong 65,984 - 65,984 -

No. of Options Over Ordinary Shares of RM1.00 each

Balance at date of *Share Balance at

Shares incorporation Bought Sold Exchange 31.3.2005

Tan Sri Dato' Azman Hashim Held directly 211,505 - - 211,505 - Held through nominees 522,985 - 59,000 463,985 - Dato' Azlan Hashim 95,952 - - 95,952 - Dato' Izham Mahmud 4,670 - - 4,670 - Cheah Tek Kuang 38,000 - - 38,000 -


Balance Redeemable Unsecured at date of Balance at Subordinated Bonds incorporation Acquired Sold 31.3.2005

Dato' Izham Mahmud 250,000 - - 250,000

Nominal Value of RM1.00 each





DEEMED INTERESTS

In the Company,

In the ultimate holding company,AMMB Holdings Berhad

* Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existingAMFB Holdings Berhad ("AMFB") share held by AMFB shareholders other than AHB.

Balance Name of at date of *Share Balance at

Shares Company incorporation Bought Exchange Sold 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Berhad 605,826,825 94,425,596 - 42,000,000 658,252,421 Hashim AMDB Equipment

Trading Sdn Bhd 198,000 - 241,047 - 439,047Azman Hashim Holdings Sdn Bhd 5,713,905 - - 4,800,000 913,905Ginagini Sdn Bhd 12,184,809 - - 12,184,809 - Regal Genius Sdn Bhd 21,750,000 7,740,000 - 29,490,000


Renounceable Name of Balance at Balance as at Rights Company 1.4.2004 Bought Rights Sold 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Berhad - - 150,896,688 - 150,896,688 Hashim AMDB Equipment

Trading Sdn Bhd - - 100,646 - 100,646Azman Hashim Holdings Sdn Bhd - - 209,502 - 209,502Regal Genius Sdn Bhd - - 6,760,238 - 6,760,238AMMB Holdings Bhd 1,109,442,000 - - - 1,109,442,000

No. of Renounceable Rights of RM1.00 each





DEEMED INTERESTS

In the ultimate holding company,AMMB Holdings Berhad

In the related finance company,AMFB Holdings Berhad

*

The share options in the ultimate holding company, which had an option period of five calendar years weregranted pursuant to AMMB Holdings Berhad Employees' Share Option Scheme II (“Scheme”) and the personsto whom the options are granted under the Scheme have no right to participate in any staff share option schemeof any other company in the Group.

By virtue of their shareholdings as mentioned above, the above directors are deemed to have an interest in theshares of the Company and its related companies, to the extent the companies as mentioned above have interest.

Arising from the exchange of shares on the basis of one (1) new AHB share for every one (1) existingAMFB Holdings Berhad ("AMFB") share held by AMFB shareholders other than AHB.

Balance Warrants Name of at date of Sold/ Balance at 2003/2008 Company incorporation Bought Exercised 31.3.2005

Tan Sri Dato' Arab-Malaysian Azman Corporation Berhad 75,214,328 - 69,260,231 5,954,097 Hashim AMDB Equipment

Trading Sdn Bhd 22,682 - - 22,682 Azman Hashim Holdings Sdn Bhd 3,342,309 - - 3,342,309 Slan Sdn Bhd 82,132 - 82,132 - Ginagini Sdn Bhd 3,945,451 - 3,945,451 - Indigenous Capital Sdn Bhd 280,435 - 280,435 - Regal Genius Sdn Bhd 2,989,936 - - 2,989,936 Corporateview Sdn Bhd - 31,658,738 - 31,658,738

No. of Warrants

Balance Name of at date of *Share Balance at

Shares Company incorporation Bought Exchange 31.3.2005

Tan Sri Dato' AMDB Equipment Azman Hashim Trading Sdn Bhd 241,047 - 241,047 -





DIRECTORS’ BENEFITS

ULTIMATE HOLDING COMPANY

RATING BY EXTERNAL AGENCY

AUDITORS

Tan Sri Dato' Azman Hashim Cheah Tek Kuang

Kuala Lumpur, Malaysia16 May 2005

Signed on behalf of the Board in accordance with a resolution of the directors

The auditors, Ernst & Young, have expressed their willingness to continue in office.

The directors regard AMMB Holdings Berhad, a company incorporated in Malaysia and quoted on the MainBoard of the Bursa Malaysia Securities Berhad as both the holding company and the ultimate holding company.

The Group’s merchant banking subsidiary company has been accorded strong domestic credit ratings of A1/P1from Rating Agency of Malaysia, and A+/MARC-1 from Malaysian Rating Corporation Berhad. This iscomplemented by international ratings of BB(Stable)/B from Standard and Poor’s and Capital Intelligence andBB-(Stable)/B from Fitch IBCA, Duff & Phelps. The Bank’s RM460.0 million Redeemable UnsecuredSubordinated Bonds have been accorded a long-term rating of A2 by Rating Agency Malaysia Berhad.

Neither at the end of the financial period, nor at any time during that period, no director of the Company hasreceived or become entitled to receive any benefit (other than a benefit included in the aggregate amount ofemoluments received or due and receivable by directors shown in the financial statements) by reason of acontract made by the Company or a related corporation with the director or with a firm in which the director is amember, or with a company in which the director has a substantial financial interest, except for the related partytransactions as shown in Note 32 to the financial statements.

Save for the benefits under the restricted offer for sale by AHB to its shareholders and the Company to eligibleemployees and directors pursuant to the listing of the Company on the Main Board of the Bursa MalaysiaSecurities Berhad and the share options granted to directors pursuant to the AHB's Employees’ Share OptionScheme which expired during the year, neither during nor at the end of the financial period was the Company aparty to any arrangements whose object is to enable the directors to acquire benefits by means of the acquisitionof shares in, or debentures of, the Company or any other body corporate.




(Incorporated in Malaysia)AND ITS SUBSIDIARY COMPANIES

STATEMENT BY DIRECTORSPURSUANT TO SECTION 169(15) OF THE COMPANIES ACT, 1965

Signed on behalf of the Board in accordance with a resolution of the directors

TAN SRI DATO' AZMAN HASHIM CHEAH TEK KUANG

Kuala Lumpur, MalaysiaDate: 16 May 2005

AmINVESTMENT GROUP BERHAD

We, TAN SRI DATO' AZMAN HASHIM and CHEAH TEK KUANG, being two of the directors ofAmINVESTMENT GROUP BERHAD, do hereby state that, in the opinion of the directors, theaccompanying financial statements set out on pages 18 to 119 are drawn up in accordance with applicableApproved Accounting Standards in Malaysia, Bank Negara Malaysia Guidelines and the provisions of theCompanies Act, 1965 so as to give a true and fair view of the financial position of the Group and of theCompany as at 31 March 2005 and of the results and the cash flows of the Group and of the Company forthe period then ended.




(Incorporated in Malaysia)AND ITS SUBSIDIARY COMPANIES

STATUTORY DECLARATIONPURSUANT TO SECTION 169(16) OF THE COMPANIES ACT, 1965

ARUNASALAM MUTHUSAMY

Before me,

COMMISSIONER FOR OATHS

Lodged on behalf by :Address: 22nd Floor, Bangunan AmBank Group, No 55 Jalan Raja Chulan, 50200 Kuala LumpurTelephone Number : 03-20782633/44/55

AmINVESTMENT GROUP BERHAD

I, ARUNASALAM MUTHUSAMY, being the officer primarily responsible for the financialmanagement of AmINVESTMENT GROUP BERHAD, do solemnly and sincerely declare that theaccompanying financial statements set out on pages 18 to 119 are in my opinion correct, and I make thissolemn declaration conscientiously believing the same to be true and by virtue of the provisions of theStatutory Declarations Act, 1960.

Subscribed and solemnly declared by theabovenamed ARUNASALAM MUTHUSAMY at Kuala Lumpur in the Wilayah Persekutuan on 16 May 2005




REPORT OF THE AUDITORS TO MEMBER OF(Incorporated in Malaysia)AmINVESTMENT GROUP BERHAD

In our opinion,

(a)

(i)

(ii)

(b)

We have audited the financial statements set out on pages 18 to 119. These financial statements are theresponsibility of the Company’s directors.

It is our responsibility to form an independent opinion, based on our audit, on the financial statements andto report our opinion to you, as a body, in accordance with Section 174 of the Companies Act, 1965 andfor no other purpose. We do not assume responsibility to any other person for the content of this report.

We conducted our audit in accordance with applicable Approved Standards on Auditing in Malaysia.Those standards require that we plan and perform the audit to obtain reasonable assurance about whetherthe financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by the directors, as well asevaluating the overall presentation of the financial statements. We believe that our audit provides areasonable basis for our opinion.

the financial statements have been properly drawn up in accordance with the provisions of theCompanies Act, 1965, Bank Negara Malaysia Guidelines and applicable MASB ApprovedAccounting Standards in Malaysia so as to give a true and fair view of:

the financial position of the Group and of the Company as at 31 March 2005 and of the resultsand the cash flows of the Group and of the Company for the period ended 31 March 2005; and

the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the financialstatements; and

the accounting and other records and the registers required by the Act to be kept by the Company andby its subsidiaries of which we have acted as auditors have been properly kept in accordance with theprovisions of the Act.

We have considered the financial statements and the auditors' report of the subsidiary of which we havenot acted as auditors, as indicated in Note 12 of the financial statements, being financial statements thathave been included in the consolidated financial statements.



REPORT OF THE AUDITORS TO THE MEMBER OFAmINVESTMENT GROUP BERHAD (cont’d.)

ERNST & YOUNG Yap Seng ChongAF : 0039 No.2190/12/05(J)Chartered Accountants Partner

Kuala Lumpur, Malaysia16 May 2005

We are satisfied that the financial statements of the subsidiaries that have been consolidated with thefinancial statements of the Company are in form and content appropriate and proper for the purposes ofthe preparation of the consolidated financial statements and we have received satisfactory informationand explanations required by us for those purposes.

The auditors’ reports on the financial statements of the subsidiaries were not subject to any qualificationand in respect of the subsidiaries incorporated in Malaysia, did not include any comment required to bemade under Section 174(3) of the Act.





BALANCE SHEETS AS AT 31 MARCH 2005

Group CompanyNote RM'000 RM'000

ASSETS

Cash and short-term funds 4 2,678,552 1 Securities purchased under resale agreements 139,931 - Deposits and placements with banks and

other financial institutions 5 393,133 - Dealing securities 6 2,786,435 - Investment securities 7 3,071,624 - Loans, advances and financing 8 4,536,049 - Other assets 9 564,216 7,634 Goodwill on consolidation 10 79,805 - Deferred tax asset 35 78,677 - Statutory deposit with Bank Negara Malaysia 11 244,294 - Investments in subsidiary companies 12 - 1,323,842 Investments in associated companies 13 40,098 - Property and equipment 14 45,326 - TOTAL ASSETS 14,658,140 1,331,477





BALANCE SHEETS AS AT 31 MARCH 2005 (CONTD.)


LIABILITIES AND SHAREHODERS'FUNDS

Deposits from customers 15 5,294,436 - Deposits and placements of banks and

other financial institutions 16 4,567,758 - Obligations on securities sold under repurchase

agreements 17 1,427,791 - Acceptances payable 18 3,186 - Amount due to Cagamas Berhad 19 132,798 - Other liabilities 20 631,259 214,545 Term loans 21 285,000 - Subordinated certificates of deposits 22 198,768 - Redeemable unsecured subordinated bonds 23 460,000 - Total liabilities 13,000,996 214,545

Minority interests 24 6,594 -

Share capital 25 1,109,442 1,109,442 Reserves 26 541,108 7,490 Shareholders' funds 1,650,550 1,116,932

TOTAL LIABILITIES ANDSHAREHOLDERS' FUNDS 14,658,140 1,331,477

COMMITMENTS AND CONTINGENCIES 41 14,824,997 -

NET TANGIBLE ASSETS PER SHARE (RM) 44 1.41 1.01

The accompanying notes form an integral part of the financial statements.





INCOME STATEMENTSFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005


Revenue 910,039 10,434

Interest income 27 583,973 434 Interest expense 28 (410,973) - Net interest income 173,000 434 Net income from Islamic Banking Business 49(xxii) 47,111 - Non-interest income 29 299,612 10,000 Net income 519,723 10,434 Non-interest expense 30 (188,845) (26) Operating profit 330,878 10,408 Allowance for losses on loans and financing 31 (48,286) - Allowance for diminution in value of

investments - net (16,860) - Transfer to profit equalisation reserve (2,195) - Provision for commitments (63) - Write back of allowance for doubtful sundry

receivables - net 2,042 - Profit before share in results of associated

companies 265,516 10,408 Share in results of associated companies 16,595 - Profit before taxation 282,111 10,408 Taxation: 34 (78,997) (2,918)

Company and subsidiaries (74,308) (2,918) Associates (4,689) -

Profit before minority interests 203,114 7,490 Minority shareholders' interests in results of

subsidiary companies (2,002) - Net profit attributable to the shareholders of

the Company 201,112 7,490

Basic earnings per share (sen) 37 17.5 0.7






STATEMENTS OF CHANGES IN EQUITYFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005

DistributableExchange

Share Capital Statutory fluctuation Unappropriatedcapital reserve reserve reserve profits Total

Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At date of incorporation -* - - - - -*Effects arising from merger 1,109,442 60,284 300,000 - 238,039 1,707,765 Prior year's adjustments (Note 48) - - - - (4,402) (4,402) As restated 1,109,442 60,284 300,000 - 233,637 1,703,363 Profit for the period - - - - 201,112 201,112 Interest on ICULS - - - - (6,766) (6,766) Translation adjustments - - - (4,519) - (4,519) Ordinary dividends paid - - - - (242,640) (242,640) At 31 March 2005 1,109,442 60,284 300,000 (4,519) 185,343 1,650,550

* Denotes RM2

Non-distributable






DistributableShare Unappropriated

capital profits TotalCompany RM'000 RM'000 RM'000

At date of incorporation -* - -*Issue of shares pursuant to the merger 1,109,442 - 1,109,442 Profit for the period - 7,490 7,490 At 31 March 2005 1,109,442 7,490 1,116,932

-* Denotes RM2





CASH FLOW STATEMENTSFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005


CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 282,111 10,408 Add/(Less) adjustments for: Loan and financing loss and allowances, net

of recoveries 48,286 - Net interest suspended 18,544 - Amortisation of premiums less accretion of

discounts – net 17,464 - Allowance for diminution in value of investments - net 16,860 - Depreciation of property and equipment 14,324 - Amortisation of goodwill 4,857 - Loss on sale of quoted securities - net 3,533 - Transfer to profit equalization reserve 2,195 - Net income suspended 1,786 - Amortisation of premium on acquisition 1,274 - Trading loss on futures 509 - Sundry bad debts written off - net 281 - Amortisation of intangible assets 176 - Provision for commitments 63 - Property and equipment written off 1 - Gross dividend income from investments (42,587) (10,000) Share in results of associated companies (16,595) - Capital gain arising from receipt of shares in Bursa

Malaysia Berhad (12,727) - Net income from derivatives (7,120) - Gain on sale of unquoted investments - net (2,934) - Write back of allowance for doubtful sundry receivables - net (2,042) - Gain on redemption of shares (773) - Gain on disposal of property and equipment (435) - Operating profit before working capital

changes carried forward 327,051 408







CASH FLOWS FROM OPERATING ACTIVITIES (CONTD.)

Operating profit before working capitalchanges brought forward 327,051 408

(Increase)/Decrease in operating assets: Securities purchased under resale agreement (128,143) - Deposits and placements with banks and other

financial institutions 58,198 - Dealing securities 382,425 - Loans, advances and financing 701,690 - Other assets 306,006 (434) Statutory deposit with Bank Negara Malaysia 80,110 - Deposits and monies held in trust with

financial institutions (69,659) - (Decrease)/Increase in operating liabilities: Deposits from customers (635,422) - Deposits and placements of banks and other

financial institutions (916,494) - Obligations on securities sold under repurchase

agreements - Acceptances payable (3,959) - Term loans (55,356) - Amount due to Cagamas Berhad (20,306) - Other liabilities (48,014) 27 Cash used in operations (78,633) 1 Taxation paid (60,775) - Net cash (used in)/generated from operating activities (139,408) 1







CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from disposal of investment securities - net 324,259 - Proceeds from disposal of an associated company 82,518 - Dividends received from other investments 30,662 - Dividends received from associated companies 4,433 - Capital repayment by an associated company 780 - Proceeds from disposal of property and equipment 706 - Acquisition of remaining 2.5% equity in stockbroking subsidiary

company (9,397) - Purchase of property and equipment (6,905) - Net cash generated from investing activities 427,056 -

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid by subsidiary companies (242,640) - ICULS interest paid (6,766) - Dividends paid to minority interests (864) - Net cash used in financing activities (250,270) -

Net increase in cash and cash equivalents 37,378 1 Cash and cash equivalents at beginning of period 2,463,675 - Cash and cash equivalents at end of period (Note 1) 2,501,053 1

Note 1 : Cash and cash equivalents


Cash and short term funds 2,678,552 1 Bank overdrafts (Note 20) (31,568) -

2,646,984 1 Less: Cash and bank balances and deposits held in trust (145,628) -

2,501,356 1 Effects of exchange rate differences (303) -

2,501,053 1


For the purpose of the cash flow statements, cash and cash equivalents consist of cash andshort-term funds,excluding deposits and monies held in trust, net of bank overdrafts. Cashand cash equivalents included in the cash flow statements comprise the following balancesheet amounts:





NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005

1. PRINCIPAL ACTIVITIES

2. BASIS OF PREPARATION OF THE FINANCIAL STATEMENTS

3. SIGNIFICANT ACCOUNTING POLICIES

The Company was incorporated on 23 June 2004, as an investment holding company to facilitate theimplementation of an internal reorganisation involving a transfer of subsidiaries and listing scheme.Pursuant to the Group Internal Reorganisation, AMMB Holdings Berhad's 100% equity interest inAmMerchant Bank Berhad and AmSecurities Holding Sdn Bhd will be transferred to the Company. Uponthe completion of the transfers, the Company will undertake a Listing Scheme to obtain listing of andquotation for its entire issued and paid-up share capital on the Main Board of the Bursa MalaysiaSecurities Berhad as further described in Note 46.

The subsidiary companies, as listed in Note 12, provide a wide range of merchant banking and relatedfinancial services which also include the Islamic Banking Business, investment advisory and asset,property and unit trust management, stocks and futures broking.

There have been no significant changes in the nature of the activities of the Group and the Companyduring the financial period.

The Company is a public limited liability company, incorporated and domiciled in Malaysia. Theregistered office and the principal place of business of the Company is located at 22nd Floor, BangunanAmBank Group, 55 Jalan Raja Chulan, 50200 Kuala Lumpur.

The financial statements of the Group and of the Company have been approved and authorised for issue bythe Board of Directors on 4 May 2005.

The financial statements of the Group and of the Company have been prepared in accordance with theprovisions of the Companies Act, 1965, the Banking and Financial Institutions Act, 1989, Bank NegaraMalaysia Guidelines and the applicable approved accounting standards of the Malaysian AccountingStandards Board. The financial statements incorporate those activities relating to Islamic Banking Businesswhich have been undertaken by the Group. Islamic Banking Business refers generally to the acceptance ofdeposits and granting of financing under the Shariah Principles.

During the financial period, the Group adopted the 3-month classification for non-performing loans fromthe previous 6-month classification which has been adopted retrospectively.

The effects of adopting the 3-month classification for non-performing loans retrospectively on theGroup's unappropriated profits are reflected as prior year adjustments in the statement of changes inequity and is disclosed in Note 48 to the financial statements. This change in accounting policy has beenaccounted for retrospectively and has resulted in an increase in interest income credited to the incomestatements for the financial period by RM4.3 million.




Basis of Accounting

Basis of Consolidation

Repurchase Agreements

The Group's financial statements include the financial statements of the Company and all its subsidiarycompanies listed under Note 12 made up to the end of the financial period except for P.T. AmCapitalIndonesia and Malaysian Ventures Management Incorporated Sdn Bhd, the financial statements of whichwere made up to 31 December 2004 with adjustments, where appropriate, made for any significanttransactions that occurred between 1 January 2005 to 31 March 2005.

All subsidiaries are consolidated using the acquisition method of accounting except where the criteria forthe merger method as prescribed by the Malaysian Accounting Standards Board ("MASB") Standard No.21: Business Combinations is met.

Under the acquisition method, the results of the subsidiary companies acquired or disposed of during thefinancial period are included in the Group financial statements from the effective date of acquisition or tothe effective date of disposal, as applicable. The excess of the cost of investments in the subsidiarycompanies over the attributable share in the fair value of the net assets of the subsidiary companies at thedate of acquisition is taken up as goodwill on consolidation. All significant intercompany transactions andbalances have been eliminated on consolidation and the consolidated financial statements reflect externaltransactions only.

Where the merger method is used, the cost of investment in the Company's records are recorded at thenominal value of ordinary shares issued and cash and cash equivalents, and the difference between thecarrying value of the investment and the nominal value of ordinary shares acquired is treated as a mergerreserve or merger deficit.Merger deficits are adjusted against suitable reserves of the subsidiaries acquiredto the extent that laws or statutes do not prohibit the use of such reserves. The results and financial positionof the companies being merged are included as if the merger had been effected throughout the entire year.

The merger method was adopted in respect of the transfer of AmMerchant Bank Berhad and AmSecuritiesHoldings Sdn Bhd and their respective subsidiaries, pursuant to the internal reorganisation of the Group asmentioned in Note 47. The subsidiary companies acquired prior to the internal reorganisation mentioned inNote 47 were accounted for under the acquisition method and this accounting treatment has beenconsistently applied.

The gain or loss on disposal of a subsidiary is the difference between the net disposal proceeds and theGroup’s share of its net assets together with exchange differences which were not previously recognised inthe consolidated income statements.

The financial statements of the Group and the Company have been prepared under the historical costconvention.

Securities purchased under resale agreements are securities which the Group had purchased withcommitments to resell at future dates. The commitments to resell the securities are reflected as an asset onthe balance sheet.

Conversely, obligations on securities sold under repurchase agreements are securities which the Group hadsold from its portfolio, with commitments to repurchase at future dates for funding purposes. The carryingvalues of the securities underlying these repurchase agreements remain in the respective asset accountswhile the obligations to repurchase such securities at agreed prices on specified future dates are accountedfor as a liability on the balance sheet.




Dealing Securities

Investment Securities

Allowance for doubtful debts and financing

Dealing securities are marketable securities that are acquired and held with the intention of reselling themin the short term.

Money market securities, debt equity conversion, quoted securities and private debt securities are stated atthe lower of cost and market value on a portfolio basis.

On disposal of the dealing securities, the differences between the net disposal proceeds and their carryingamounts are charged or credited to the income statement. Transfers, if any, between dealing and investment securities are made at the lower of cost and market value.

Investment securities are securities that are acquired and held for yield or capital growth or to meetminimum liquid assets requirements pursuant to Section 38 of the Banking and Financial Institutions Act,1989, and are usually held to maturity.

Malaysian Government Securities, Malaysian Government Investment Certificates, Cagamas bonds andother government securities and bank guaranteed private debt securities are stated at cost adjusted foramortisation of premium or accretion of discount, where applicable, to maturity dates. Other private debtsecurities are valued at lower of cost and market value.

Other investment securities are stated at cost and allowance is made in the event of any permanentdiminution in value.

On disposal of the investment securities, the differences between the net disposal proceeds and theircarrying amounts are charged or credited to the income statement.

Transfers, if any, between investment and dealing securities are made at the lower of carrying value andmarket value.

Based on management's evaluation of the portfolio of loans, advances and financing, specific allowancesfor doubtful debts and financing are made when the collectibility of receivables becomes uncertain. Inevaluating collectibility, management considers several factors such as the borrower's financial position,cash flow projections, management, quality of collateral or guarantee supporting the receivables as well asprevailing and anticipated economic conditions.

A general allowance based on set percentages of the net increase in receivables is also made. Thesepercentages are reviewed annually in the light of past experiences and prevailing circumstances and anadjustment is made to the overall general allowance, if necessary.

An uncollectible loan and financing or portion of a loan and financing classified as bad is written off aftertaking into consideration the realisable value of collateral, if any, when in the judgement of management,there is no prospect of recovery.




Trade and Other Receivables

(i)

(ii)

Foreclosed Properties

Amounts Recoverable from Pengurusan Danaharta Nasional Berhad ("Danaharta")

Trade and other receivables are stated at book value as reduced by the appropriate allowances for estimatedirrecoverable amounts. Allowance for doubtful debts is made based on estimates of possible losses whichmay arise from non-collection of certain receivable accounts.

The stock and share-broking subsidiary company, AmSecurities Sdn Bhd's policies for the identification ofbad and doubtful accounts, the making of specific allowance and the classification of the suspension ofinterest in respect of such accounts and the making of general allowance are in accordance with Schedule 7of the Rules of Bursa Malaysia Securities Berhad and are as follows:

Foreclosed properties are those acquired in full or partial satisfaction of debts and are stated at cost lessallowance for diminution in value, if any, of such properties.

This relates to the loans sold to Danaharta where the total consideration is received in two portions; uponthe sale of the loans (initial consideration) and upon the recovery of the loans (final consideration). Thefinal consideration amount represents the Group’s predetermined share of the surplus over the initialconsideration upon recovery of the loans.

The difference between the carrying value of the loans and the initial consideration is recognised as‘Amounts recoverable from Danaharta’ within the ‘Other Assets’ component of the balance sheet.Allowances against these amounts are made to reflect the Directors’ assessment on the realisable value ofthe final consideration as at the balance sheet date.

Specific allowance is made against bad and doubtful receivables ar rates of 50% and 100%,respectively, subject to deduction of interest-in-suspense and the value of collateral held. In addition ,a general allowance is maintained based on 1% of total trade receivables after deducting the amountof interest-in-suspense and the specific allowance in accordance with Schedule 7 of the Rules ofBursa Malaysia Securities Berhad.

Interest income accrued on these accounts are suspended when they are considered non-performingin accordance with Schedule 7 of the Rules of the Bursa Malaysia Securities Berhad.




Goodwill/Premium on Consolidation

Investments in Subsidiary Companies

Investments in Associated Companies

Goodwill on consolidation represents the excess of the purchase consideration over the share of the fairvalues of the identifiable net assets of a subsidiary company at the date of acquisition.

Goodwill is stated at cost less accumulated amortisation and impairment losses. Goodwill is generallyamortised evenly over an estimated useful life of twenty to fifty years. The policy for the recognition andmeasurement of impairment losses is in accordance with the policy on impairment of assets.

Subsidiary companies are those companies in which the Group has power to exercise control over thefinancial and operating policies so as to obtain benefits from their activities.

Investments in subsidiary companies, which are eliminated on consolidation, are stated in the Company'sfinancial statements at cost and are written down when the directors consider that there is an impairmentloss that is other than temporary on the value of such investments in the Company’s financial statements.The impairment loss, if any, is charged to the income statement.

On disposal of such investments, the difference between the net disposal proceeds and their carryingamount is charged or credited to the income statement.

Minority interests in the Group represent that part of the net results of operations, or of net assets, ofsubsidiary companies attributable to shares and debentures owned, directly or indirectly other than by theCompany or subsidiary companies

An associated company is a company in which the Group has a long term equity interest of between 20%and 50% and where the Group has representation on the Board and is in a position to exercise significantinfluence in its management. Investments in associated companies are stated at cost and are written down when the directors considerthat there is an impairment loss that is other than temporary on the value of such investments in theCompany’s financial statements. The impairment loss, if any, is charged to the income statement. In theconsolidated financial statements, the results of associated companies are accounted for under the equitymethod whereby the Group's share of post-acquisition profits less losses of associated companies isincluded in the consolidated income statement.The Group's interest in associated companies is stated at costplus adjustments to reflect changes in the Group's share of the net assets of the associated companies in theconsolidated balance sheet.

On disposal of such investments, the difference between the net disposal proceeds and their carryingamount is charged or credited to the income statement.

Premium on consolidation on the acquisition of associated companies is included within the carryingamount of the associated companies and represents the excess of the purchase consideration over theGroup’s interest in the fair values of the identifiable net assets of associated companies at the date ofacquisition. The premium on consolidation on the acquisition of associated companies is amortised over anestimated useful life of twenty five years.

When an indication of impairment exists, the carrying amount of goodwill is assessed and written downimmediately to its recoverable amount.




Property and Equipment and Depreciation

Freehold building 2%Leasehold buildings 2% or over the term of short term leaseMotor vehicles 20% - 33 1/3%Leasehold improvements 20%Computer hardware and software 20% - 33 1/3%Office equipment, furniture and fittings 10% - 33 1/3%

Assets Purchased Under Lease

Property and equipment are stated at cost less accumulated depreciation and any impairment losses.

Freehold land is not depreciated. Leasehold land is amortised over the shorter of the lease period or fiftyyears. Depreciation of other property and equipment is calculated using the straight-line method at ratesbased on the estimated useful lives of the various assets.

The annual depreciation rates for the various classes of property and equipment are as follows:

Assets purchased under finance leases which in substance transfer the risks and benefits of ownership ofthe assets to the Group are capitalised under property and equipment. The assets and the correspondinglease obligations are recorded at the lower of the present value of the minimum lease payments or the fairvalue of the leased assets at the beginning of the lease terms, less accumulated depreciation and impairmentlosses.

In calculating the present value of the minimum lease payments, the discount factor used is the interest rateimplicit in the lease, when it is practicable to determine, otherwise the Group's incremental borrowing rateis used.

Leases which do not meet such criteria are classified as operating leases and the related rentals are chargedto income statement as incurred.

When an operating lease is terminated before the lease period has expired, any payment required to bemade to the lessor by way of penalty is recognised as an expense in the period in which termination takesplace.

As at 31 March 2005, the Group and the Company do not have any assets purchased under lease.

Gain or loss arising from disposal of an asset is determined as the difference between the estimated netdisposal proceeds and the carrying amount of the asset, and is charged or credited to the income statement.




Impairment of Assets

Profit Equalisation Reserve ("PER")

Provisions

Liabilities

The carrying values of assets are reviewed for impairment when there is an indication that the asset mightbe impaired. Impairment is measured by comparing the carrying values of the assets with their recoverableamounts. The recoverable amount is the higher of net realisable value and value in use, which is measuredby reference to discounted future cash flows, if applicable. Recoverable amounts are estimated forindividual assets or, if it is not possible, for the cash generating unit.

An impairment loss is charged to the income statements immediately, unless the asset is carried at revaluedamount. Any impairment loss of a revalued asset is treated as a revaluation decrease to the extent ofpreviously recognised revaluation surplus for the same asset.

Subsequent increase in the recoverable amount of an asset is treated as reversal of the previous impairmentloss and is recognised to the extent of the carrying amount of the asset that would have been determined(net of amortisation and depreciation) had no impairment loss been recognised. The reversal is recognisedin the income statements immediately, unless the asset is carried at revalued amount. A reversal of animpairment loss on a revalued asset is credited directly to revaluation surplus. However, to the extent thatan impairment loss on the same revalued asset was previously recognised as an expense in the incomestatements, a reversal of that impairment loss is recognised as income in the income statement.

PER refers to the amount appropriated, under the Islamic Banking Business, out of the total gross income inorder to maintain a certain level of return for depositors. PER is deducted from the total gross income (inderiving the net gross income) as approved and endorsed by the National Advisory Council for IslamicBanking and Takaful of Bank Negara Malaysia. The PER is generally deducted at a rate which does notexceed the maximum amount of 15% of the total gross income of each financial year and is maintained upto the maximum of 30% of total Islamic banking capital fund.

A provision is recognised when it is probable that an outflow of resources embodying economic benefitswill be required to settle a present obligation as a result of a past event and a reliable estimate can be madeof the amount.

Trade and other payables are stated at cost which is the fair value of the consideration to be paid in thefuture for services received.

In respect of the stock and share-broking subsidiary company, trade payables represent contra gainsowing to non-margin clients and outstanding sale contracts of the Company which were entered into onbehalf of clients where settlement has yet to be made. The credit term for trade settlement of the companyis 3 market days according to rules of the Bursa Malaysia Securities Berhad. Clients and trust moniesrelate to monies owing to clients maintained in aggregated accounts of the company.

Deposits from customers are stated at placement values. Deposits and placement of banks and otherfinancial institutions are stated at placement values.




Redeemable Unsecured Subordinated Bonds

Interest Bearing Irredeemable Convertible Unsecured Loan Stocks (ICULS)

Employee Benefits

(i) Short-term Benefits

(ii) Defined Contribution Plan

(iii) Equity Compensation Benefits

Forward Exchange Contracts

Interest Rate Swaps, Futures and Forward Rate Contracts

Wages, salaries, paid annual leave and sick leave, bonuses and non-monetary benefits are accrued inthe period in which the associated services are rendered by employees of the Group.

As required by law, companies in Malaysia make contributions to the state pension scheme, theEmployees Provident Fund (“EPF”). Such contributions are recognised as an expense in the incomestatement as incurred. Once the contribution has been paid, the Group has no further paymentobligations.

The employees’ share option scheme allows the Group’s eligible directors and employees, except forexecutive directors who represent the Government or Government institutions/agencies andGovernment employees who are serving in the public service schemes defined under Article 132 ofthe Federal Constitution, to acquire shares of AHB and, when the granted options are exercised,equity is increased by the amount of the proceeds received.

Unmatured forward exchange contracts are valued at forward rates prevailing at balance sheet date,applicable to their respective dates of maturity, and the resultant gains and losses are recognised in theincome statement.

The Group acts as an intermediary with counterparties who wish to swap their interest obligations. TheGroup also uses interest rate swaps, futures and forward rate contracts in its trading activities and overallinterest rate risk management.

Interest income or interest expense associated with interest rate swaps that qualify as hedges is recognisedover the life of the swap agreement as a component of interest income or interest expense. Gains and losseson interest rate futures and forward rate contracts that qualify as hedges are generally deferred andamortised over the life of the hedged assets or liabilities as adjustments to interest income or interestexpense.

Gains and losses on interest rate swaps, futures and forward rate contracts that do not qualify as hedges arerecognised in the current year using the mark-to-market method and are shown in the income statement astrading gain or loss from derivatives.

These are long term debts with remaining maturity of more than one year. The issue proceeds arerecognised at cost and used to grant an unsecured term loan to its related licensed commercial bank forcapital refinancing purpose. The interest incurred is recognised on a straight-line accrual basis.

The ICULS are regarded as equity instruments and the full issuance proceeds reflected as equity. Theinterest is accrued on a straight-line basis and recognised in equity.




Sell and Buy Back Agreements

Financial Instruments

Equity Instruments

Interest and Financing Income and Expense Recognition

These are obligations of the Group to perform its commitment to buy back specified Islamic Securities atmaturity. Gains and losses are recognised upon sale and shown as trading gain or loss from dealingsecurities.

Interest income is recognised in the income statement for all interest bearing assets on an accrual basis.Interest income includes the amortisation of premiums or accretion of discounts. Interest and financingincome on dealing and investment securities are recognised on an effective yield basis.

The Group follows the financing method of accounting for income from leasing activities. Under thefinancing method, the excess of aggregate rentals over the cost (reduced by estimated residual value at theend of the lease) of the leased property is taken as income over the term of the lease in decreasing amountsproportionate to the declining balance of the unrecovered sum using the 'sum-of-digits' method.

While it is the Group's policy to recognise interest and financing income on the accrual basis, interest andfinancing income on non-performing accounts is not recognised as income and is suspended unlessreceived in cash or realisation in cash is assured.

An account is classified as non-performing where repayment is in arrears for more than three months andafter maturity dates for trade bills, bankers' acceptances and trust receipts.

Prior to this financial period, customers' accounts, other than trade bills, bankers' acceptances and trustreceipts, were deemed to be non-performing when repayment were in arrears for more than six months. Thechange in accounting policy has been accounted for retrospectively and the effect of this change isdisclosed in Note 48 to the financial statements.

The classification of non-performing loans and financing is in conformity with Bank Negara Malaysia’sGuideline on Classification of Non-Performing Loans and Provision for Bad and Doubtful Debts.

Interest expense and attributable income on deposits and borrowings (pertaining to activities relating toIslamic Banking Business) of the Group are accrued on a straight-line basis.

Financial instruments are recognised in the balance sheet when the group has become a party to thecontractual provisions of the instrument.

Financial instruments are classified as liabilties or equity in accordance with the substance of thecontractual arrangement. Interest, dividends and gains and losses relating to a financial instrumentclassified as a liability, is reported as expense or income. Distributions to holders of financial instrumentsclassified as equity are charged directly to equity. Financial instruments are offset when the Group has alegally enforceable right to offset and intends to settle either on a net basis or to realise the asset and settlethe liability simultaneously.

Ordinary shares are classified as equity. Dividends on ordinary shares are recognised in the equitystatement in the year in which they are declared.

The transaction costs of an equity are accounted for as a deduction from equity, net of tax. Equitytransaction costs comprise only those incremental external costs directly attributable to the equitytransaction which would otherwise have been avoided.




Fee and Other Income Recognition

Income Taxes

Tax on profit or loss for the financial year comprises current and deferred taxes. Income tax is recognisedin the income statement except to the extent it relates to items recognised directly in equity, in which case itis recognised in equity.

Current tax expense is determined according to the tax laws of each jurisdiction in which the Groupoperates and includes all taxes based on the taxable profits. Deferred tax is provided, using the liability method, on temporary differences arising between the tax basesof assets and liabilities and their carrying amounts in the financial statements. In principle, deferred taxliabilities are recognised for all taxable temporary differences and deferred tax assets are recognised for alldeductible temporary differences and unutilised tax losses to the extent it is probable that taxable profit willbe available against which the deductible temporary differences and unutilised tax losses can be utilised.Temporary differences are not recognised for goodwill or negative goodwill or from the initial recognitionof assets and liabilities that at the time of transaction, affects neither accounting nor taxable profits. Theamount of deferred tax provided is based on the expected manner of realisation or settlement of thecarrying amount of assets and liabilities, using tax rates enacted or substantially enacted at the balanceh d

Loan arrangement, management and participation fees and acceptance, underwriting and futures contractcommissions and brokerage fees are recognised as income upon execution of contracts.

Fees from advisory and corporate finance activities are recognised as income on completion of each stageof the engagement.

Asset, property and unit trust management, agency and commitment fees are recognised as income basedon time apportionment.

Revenue from sale of trust units is recognised upon allotment of units, net of cost of units sold. Ondisposal of investments, the difference between the net disposal proceeds and their carrying amounts aretaken to the income statements.

Guarantee fees are recognised as income upon issuance and, where the guarantee periods are longer thanone year, over the duration of the guarantee periods.

Equipment and property rental are recognised on an accrual basis.

Dividends from dealing and investment securities are recognised when received. Dividends fromsubsidiary and associated companies are recognised when the right to receive payment is established.




Foreign Exchange

31.3.2005

Singapore Dollar (SGD) 2.3034United States Dollar (USD) 3.8000Indonesia Rupiah (IDR) 0.0004Hong Kong Dollars (HKD) 0.4872

Operating Revenue

Cash Flow Statements

Cash and Cash Equivalents

The principal exchange rates for every unit of foreign currency ruling at balance sheet date used fortranslation are as follows:

Operating revenue of the Group and of the Company comprise net interest and financing income afterinterest and income suspended or recovered but before amortisation of premiums less accretion ofdiscounts, fee income, net trading income from money market securities, net trading income fromderivatives, net gain/(loss) on sale of quoted investments, gross dividend income from quoted investments,income from Islamic Banking Business before income attributable to depositors, foreign exchange gain andnet allowance or writeback for diminution in value of investments.

Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets andliabilities of the foreign entity and translated at the closing rate.

The Group and the Company adopt the indirect method in the preparation of the cash flow statements.

For the purpose of the cash flow statements, cash and cash equivalents consist of cash and short-termfunds,excluding deposits and monies held in trust, net of bank overdrafts.

Transactions in foreign currencies are converted into Ringgit Malaysia at the rates of exchange prevailingat transaction dates or, if covered by foreign exchange contracts, at contracted rates. Where settlement hasnot taken place at balance sheet date, translation into Ringgit Malaysia is at the approximate exchangerates prevailing at that date or at contracted rates. All foreign exchange gains or losses are taken up in theincome statement.

For the purpose of consolidation, assets and liabilities of subsidiary and associated companies expressed inforeign currencies are translated into Ringgit Malaysia at the rates of exchange ruling at the balance sheetdate while income statement is translated into Ringgit Malaysia at the average exchange rate for the year.Gains or losses arising on translation into Ringgit Malaysia are taken up in the exchange fluctuationreserve. Translation losses in excess of amounts in the exchange fluctuation reserve, if any, are taken up inthe income statement.




4. CASH AND SHORT-TERM FUNDS


Cash and bank balances 52,582 1 Money at call and deposits maturing

within one month:Licensed bank: Related 62,336 - Others 1,055,973 - Other licensed finance companies 5,000 - Bank Negara Malaysia 1,432,400 - Other financial institutions 70,261 -

2,678,552 1

5. DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS


Licensed banks:Related 2,523 - Others 210 -

Licensed merchant banks 25,000 - Bank Negara Malaysia 129,800 - Other financial institutions 235,600 -

393,133 -

Included in the above are interbank lendings of RM2,541,024,000 and short-term deposits and money heldon behalf of remisiers and clients amounting to approximately RM145,628,000 for the Group.

The deposits and placements with banks and other financial institutions mature within one year.

Included in the above are interbank lendings of RM390,400,000 for the Group.




6. DEALING SECURITIES

GroupRM'000

Money Market Securities:Malaysian Government Securities 720,971 Malaysian Government Investment Certificates 8,174 Negotiable Islamic Debt Certificates 48,112 Khazanah bonds 151,750 Islamic Bank Negara Malaysia bills 56,176 Cagamas Mudharabah bearer bonds 90,022 Negotiable instruments of deposits 533,647

1,608,852

Securities Quoted:In Malaysia: Shares 90,029 Trust units 8,360 Loan stocks 3,983 Corporate bonds 41,678 Outside Malaysia: Shares 151

144,201

Securities Unquoted In Malaysia:Shares 4,321

Unquoted Debt Equity Conversion ofCompanies Incorporated In Malaysia: Corporate bonds 18,261

Unquoted Private Debt Securities ofCompanies Incorporated In Malaysia: Islamic corporate bonds 618,496 Corporate notes 71,916 Corporate bonds 243,096

933,508

Unquoted Guaranteed Private Debt Securities Of Companies Incorporated In Malaysia: Corporate bonds 67,825 Islamic corporate notes 37,314

105,139

2,814,282

Allowance for diminution in value of investments (27,847) Total/Net 2,786,435




Market/Indicative Value:Money Market Securities:

Malaysian Government Securities 717,534 Malaysian Government Investment Certificates 8,303 Negotiable Islamic Debt Certificates 48,295 Khazanah bonds 152,276 Islamic Bank Negara Malaysia notes 56,323 Cagamas Mudharabah bearer bonds 90,361 Negotiable instruments of deposits 533,549

Securities Quoted:In Malaysia: Shares 80,636 Trust units 8,560 Loan stocks 1,613 Corporate bonds 41,628 Outside Malaysia: Shares 66

Unquoted Debt Equity Conversion OfCompanies Incorporated In Malaysia: Corporate bonds 18,261

Unquoted Private Debt Securities OfCompanies Incorporated In Malaysia: Islamic corporate bonds 613,174 Corporate notes 72,910 Corporate bonds 239,883

Unquoted Guaranteed Private Debt Securities Of Companies Incorporated In Malaysia: Corporate bonds 68,564 Islamic corporate notes 36,872

Certain money market securities held have been sold under repurchase agreements for funding purposes.The carrying values of the securities underlying these repurchase agreements remain in the respective assetaccounts while the obligations to repurchase such securities at an agreed price on a specified future dateare accounted for as a liability as shown in Note 17.




7. INVESTMENT SECURITIES

GroupRM'000

Money Market Securities:Negotiable instruments of deposits 1,113,637 Treasury bills 28,809

1,142,446

Quoted Securities: In Malaysia Shares 2,921 Corporate bonds 57,000 Outside Malaysia Shares 3,936 Corporate bonds 19,000

82,857

Debt Equity Conversion:Quoted in Malaysia Shares - with options 19,822 Shares 4,871 Loan stocks - collateralised 971 Loan stocks 194,005 Unquoted securities of companies incorporated : In Malaysia Shares 1,679 Corporate bonds 515,389 Outside Malaysia Shares 3,129

739,866

Unquoted Private Debt Securities Of Companies Incorporated: In Malaysia Corporate bonds 69,629 Corporate bonds and notes denominated in USD 86,813 Outside Malaysia Corporate bonds and notes denominated in USD 114,000

270,442




GroupRM'000

Unquoted Guaranteed Private Debt Securities Of Companies Incorporated In Malaysia: Corporate bonds 526,478

Investment In Related LicensedCommercial Bank Unsecured subordinated term loan: Licensed commercial bank 460,000

Unquoted Securities Of Companies Incorporated: In Malaysia Corporate bonds 100 Shares 60,988 Outside Malaysia Shares 11,957

73,045

Total 3,295,134 Allowance for diminution in value of investments for

companies incorporated: In Malaysia (81,023) Outside Malaysia (123,306)

Amortisation of premium less accretion of discount (19,181) Total/Net 3,071,624

Market/Indicative Value :Money Market Securities:

Negotiable instruments of deposits 1,112,665 Treasury bills 28,785

Quoted Securities: In Malaysia Shares 1,842 Corporate bonds 57,599 Outside Malaysia Shares 3,959 Corporate bonds 4,560

Debt Equity Conversion:Quoted in Malaysia Shares - with options 12,484 Shares 828 Loan stocks - collateralised 954 Loan stocks 107,571

Unquoted Guaranteed Private Debt Securities Of Companies Incorporated In Malaysia: Corporate bonds 495,413




GroupRM'000

Maturing within one year 1,016,877 One year to three years 103,990 Three to five years - Over five years 21,579

1,142,446

The maturity structure of money market securities held for investment by the Group is as follows:

Certain money market securities held have been sold under repurchase agreements for funding purposesand their carrying values remain in the respective asset accounts while the obligations to repurchase suchsecurities at an agreed price on a specified future date are accounted for as a liability as shown in Note 17.

The investment in related licensed commercial bank is in respect of a RM460 million 10-year unsecuredsubordinated term loan (“subloan”) to AmBank Berhad (“AmBank”) to refinance its RM460 millionexchangeable subordinated capital loan granted by Danamodal Nasional Berhad. In order to provide therefinancing arrangements to AmBank, the merchant banking subsidiary company, AmMerchant BankBerhad ("AmMerchant Bank") has issued RM460 million redeemable unsecured subordinated bonds(“SubBonds”) as explained in Note 23. The subloan bears interest at 0.375% above AmMerchant Bank’scost of SubBonds.




8. LOANS, ADVANCES AND FINANCING

GroupRM'000

Loans and financing:Customers 4,885,793 Related company 30,000 Staff 34,315

Claims on customers under acceptance credits 3,407 Gross loans, advances and financing 4,953,515

Less: Allowance for bad and doubtful debts and financing:

General 69,091 Specific 157,720

226,811 Interest/Income-in-suspense 190,655

417,466

Net loans, advances and financing 4,536,049

GroupRM'000

Maturing within one year 3,145,839 One year to three years 582,764 Three to five years 439,512 Over five years 785,400

4,953,515

Claims on customers under acceptance credits represent AmMerchant Bank's own acceptances createdand discounted. Own acceptances discounted and held in hand by the Group as at 31 March 2005amounted to RM221,000.

The maturity structure of loans, advances and financing is as follows:




GroupRM'000

Construction 1,175,512 Investment holdings 782,084 Purchase of securities 722,735 Manufacturing 428,836 Finance, insurance and business services 149,531 Agriculture 320,790 General commerce 509,516 Real estate 241,098 Transport, storage and communication 199,241 Electricity, gas and water 259,772 Purchase of landed property :

(a) Residential 30,542 (b) Non-residential 66,688

Mining and quarrying 610 Others 66,560

4,953,515

GroupRM'000

Domestic :Other non-bank financial institutions Stockbroking companies 12,437 Others 50,510 Business enterprises: Small medium enterprises 592,935 Others 3,921,168 Government and statutory bodies 38,004 Individuals 102,783 Other domestic entities 83,850

Foreign entities 151,828 4,953,515

GroupRM'000

Variable rateCost-plus 3,363,335 Other variable rates 405,755

Fixed rateHousing loans 30,509 Hire purchase receivables 3,761 Other fixed rates 1,150,155

4,953,515

Loans, advances and financing analysed by their economic purposes are as follows:

Net loans, advances and financing of the Group includes loans relating to the offshore banking subsidiarycompany amounting to USD46,846,000 and are translated into Ringgit Malaysia at the exchange rate ofRM3.80.

Loans, advances and financing analysed by type of customers are as follows:

Loans, advances and financing analysed by interest rate sensitivity are as follows:




GroupRM'000

GrossBalance at date of incorporation - Effects arising from merger 988,080 Prior year's adjustments (Note 48) 284,938 As restated 1,273,018 Non-performing during the period 368,462 Amount written off (42,196) Recoveries (138,865) Reclassification to performing loans and financing (350,424) Debt equity conversion (80,115) Balance at end of period 1,029,880

Less:Specific allowance 157,720 Interest/income-in-suspense 190,655

348,375

Non-performing loans, advances and financing - net 681,505

Ratios of non-performing loans, advances and financing to total loans, advances and financing - net 14.80%

Movements in non-performing loans, advances and financing including interest and income receivablesare as follows:-

During the financial period, for loans in arrears of more than 7 years, the Group has not assigned anyvalue as the realisable value for the property collaterals.




GroupRM'000

General allowance

Balance at date of incorporation - Effects arising from merger 80,404

80,404 Reversal of allowance during the period (Note 31) (11,313) Balance at end of period 69,091

% of total loans and financing less specific allowancesand interest/income-in-suspense 1.50%

Specific allowance


378,375 Allowance during the period 106,361 Amount written back in respect of recoveries and reversals (5,925) Net charge to income statements (Note 31) 100,436 Debt equity conversion (3,655) Amount written off (321,628) Reclassification from sundry receivables 4,192 Balance at end of period 157,720

Interest/Income-in-suspense

Balance at date of incorporation - Effects arising from merger 183,603 Prior year's adjustments (Note 48) 6,113 As restated 189,716 Interest/Income suspended during the period 93,975 Amount written back in respect of recoveries (72,836) Amount written back in respect of reversal (809) Net charge to income statements 20,330 Debt equity conversion (1,797) Amount written off (17,594) Balance at end of period 190,655

Movements in allowances for bad and doubtful debts and financing and interest/income-in-suspenseaccounts are as follows:




9. OTHER ASSETS


Trade receivables, net of allowance for doubtfuldebts for the Group of RM117,812,000 259,695 -

Other receivables, deposits and prepayments, net of allowance for doubtful debts for the Group of RM15,868,000 80,805 -

Interest/Dividends receivable 42,508 7,634 Amount due from Originators 132,798 - Amount due from brokers 17,447 - Amount due from:

Holding company 194 - Related companies 15,290 -

Assets acquired in exchange of debts 15,479 - 564,216 7,634

Trade receivables mainly pertain to stock and share-broking activities of subsidiary companies andrepresent amounts outstanding in purchase contracts net of allowances and share margin financing.

Amount due from Originators represent loans, hire purchase and leasing receivables acquired from theOriginators for onward sale to Cagamas Berhad as mentioned in Note 19.

Amounts due from holding company are unsecured, interest-free and represent expenses paid on behalfand interests receivable.

Amounts due from related companies are unsecured, interest-free and represent expenses paid on behalfand interests receivable.




10. GOODWILL ON CONSOLIDATION

The movements in goodwill on consolidation are as follows:

GroupRM'000

Cost

Balance at date of incorporation - Goodwill in the financial statements of subsidiaries acquired 102,569 Balance at end of period 102,569

Accumulated amortisation


17,907 Amortisation for the period (Note 30) 4,857 Balance at end of period 22,764

Net book value 79,805

11. STATUTORY DEPOSIT WITH BANK NEGARA MALAYSIA The non-interest bearing statutory deposit pertaining to the merchant banking subsidiary company ismaintained with Bank Negara Malaysia in compliance with Section 37(1)(c) of the Central Bank ofMalaysia Act, 1958, the amounts of which are determined at set percentages of total eligible liabilities.




12. INVESTMENTS IN SUBSIDIARY COMPANIES

CompanyRM'000

Unquoted shares, at cost 1,103,842Interest Bearing Irredeemable Convertible Unsecured Loan Stocks ("ICULS") 2002/2007 120,000Non-cumulative convertible preference shares of RM1.00 each 100,000

1,323,842

Issued and EffectivePaid-up Equity

Principal Activities Ordinary Capital InterestRM'000 %

Direct Subsidiary Companies

AmMerchant Bank Berhad Merchant banking 200,000 100 ("AmMerchant Bank")AmSecurities Holding Investment holdings 10,000 100 Sdn Bhd

Indirect Subsidiary Companies

AmInvestment Management of unit 5,539 70 Services Berhad trustsAMMB Consultant Sdn Bhd Investment consultant 500 100 AMMB Nominees (Tempatan) Sdn Bhd Nominee services 10 100 AMMB Nominees (Asing) Sdn Bhd Nominee services 10 100 AmProperty Trust Management of Management Bhd property trusts 500 100 AmInvestment Management Sdn Bhd Asset management 2,000 70 AMMB Properties Sdn Bhd Dormant -** 100 Malaysian Ventures Management Management of Incorporated Sdn Bhd venture capital 500 59

The subsidiary companies, all unquoted and incorporated in Malaysia, except for P.T.AmCapital Indonesia and AmSecurities (H.K.) Limited, which are incorporated in Indonesia andHong Kong, respectively, are:

The ICULS 2002/2007 issued by the merchant banking subsidiary company bear interest at anannual rate of 6.0% and are convertible at anytime after the date of issue to maturity date.




Issued and EffectivePaid-up Equity


AM Nominees (Tempatan) Sdn Bhd Nominee services -** 100 AM Nominees (Asing) Sdn Bhd Nominee services -** 100 AmSecurities Sdn Bhd Stock and share broking 100,000 100 AmFutures Sdn Bhd Futures and options 1 100 AMSEC Nominees Provision of nominees (Tempatan) Sdn Bhd services 1 100 AMSEC Nominees (Asing) Provision of nominees 1 100 Sdn Bhd servicesAmResearch Sdn Bhd Publishing and selling

research materials and reports and provision of consultancy, advisory and other research related services 10,000 500

AmEquities Sdn Bhd Collection of trade receivables 140,000 100 South Johor Securities Nominees (Tempatan) General insurance Sdn Bhd corporate agent -** 100 South Johor Securities Nominees (Asing) Sdn Bhd Dormant -** 100

US$'000AMMB Labuan (L) Ltd Dormant 200 100 AmInternational (L) Ltd Offshore banking 10,000 100

RP'000P.T. AmCapital Indonesia* Stock-broking,

underwriting and investment management 26,000,000 60

HK$000AmSecurities (H.K.) Limited Dormant 33,000 100

* Subsidiary company not audited by Ernst & Young** Subsidiary companies with an issued and paid up ordinary capital of RM2

On 24 June 2004, AmMerchant Bank acquired 100% of the issued and paid-up ordinary capitalof AM Nominees (Tempatan) Sdn Bhd and AM Nominees (Asing) Sdn Bhd for a cashconsideration of RM2.00 each from AmInvestment Management Sdn Bhd.




The purchase of the subsidiaries have been accounted for using the merger method of accountingas it arose from an internal reorganisation. The effects on the financial statements of the Groupare as follows:

RM'000

Cost of investment in equity of subsidiaries 1,103,842Less : Nominal value of ordinary shares acquired -210,000Merger deficit arising 893,842

The merger deficit arising have been set-off against the following reserves of the subsidiariesacquired as their usage is not prohibited by laws or statutes:

Balance as at Utilised against Balance as at1.4.2004 merger deficit 31.3.2005RM'000 RM'000 RM'000

Reserves of subsidiariesacquired:

Capital reserve 66,866 (66,866) - Exchange fluctuation reserve 33,758 (33,758) - Unappropriated profits 1,031,257 (793,218) 238,039

1,131,881 (893,842) 238,039




13. INVESTMENTS IN ASSOCIATED COMPANIES

GroupRM'000

Unquoted shares, at cost 22,049 Share in net post acquisition profits 13,748 Exchange fluctuation adjustment 6,167

41,964 Less: Accumulated amortisation of premium (1,866)

40,098

GroupRM'000

Group's share of aggregate net tangible assets 30,100 Group's share of aggregate intangible assets 2,541 Premium on acquisitions, net of amortisation of RM1,866,000 7,457

40,098

The associated companies, all unquoted, are as follows:

Issued andPaid-up Equity


Incorporated in Malaysia

Malaysian Ventures Sdn Bhd* Ceased operations 17 27.41 Malaysian Ventures (Two) Sdn Bhd * Venture capital 19 34.67 AmTrustee Berhad Trustee services 500 40.00

As at 31 March 2005, the carrying values of the investments in associated companies arerepresented by:




Issued andPaid-up Equity

Principal Activities Ordinary Capital InterestS$'000 %

Incorporated in Singapore

Frasers International Pte. Ltd. ("FIPL")# Investment holding 14,856 49.00 Fraser Securities Pte. Ltd. ("FSPL")# Stockbroking and (wholly-owned by FIPL) futures broker 32,528 33.18 Fraser Financial Planners Pte Ltd.# Financial planning (wholly-owned by FIPL) advisory 1,000 49.00 Fraser Financial Advisory Pte. Ltd.# (wholly-owned by FIPL) Insurance brokers 200 49.00 Fraser-AMMB Research Pte. Ltd.# (wholly-owned by FSPL) Research services 500 49.00 Frasers Nominees (Private) Limited# (wholly-owned by FSPL) Nominee Services 1 49.00

* Associated companies under members' voluntary liquidation# Associated companies not audited by Ernst & Young

On 30 August 2004, Malaysian Ventures (Two) Sdn Bhd ("MV2") was wound up voluntarilypursuant to an Extraordinary General Meeting of the members of MV2 and placed underliquidation. On 10 September 2004, MV2 declared and paid a first return to contributories in theamount of RM780,000 representing 6,500 issued and paid-up ordinary shares held at a rate ofreturn of RM120 per share.




14. PROPERTY AND EQUIPMENT

Long Computer OfficeFreehold leasehold hardware equipment,land and land and Motor Leasehold and furniture

Group building buildings vehicles improvements software and fittings TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

COST

Balance at date of incorporation - - - - - - - Effects arising from merger 905 20,620 6,013 21,831 106,558 31,897 187,824 Additions - - 1,202 1,456 2,895 1,352 6,905 Disposals (114) - (1,571) - (110) (103) (1,898) Write offs - - - - (1,634) (2) (1,636) Reclassification / Transfer - - - (6,605) 38 259 (6,308) Exchange adjustments - - (22) - (12) (24) (58) Balance at end of period 791 20,620 5,622 16,682 107,735 33,379 184,829

ACCUMULATED DEPRECIATION

Balance at date of incorporation - - - - - - - Effects arising from merger 73 844 5,066 8,430 89,566 24,582 128,561 Additions 6 413 681 1,543 9,777 1,904 14,324 Disposals - - (1,475) - (76) (77) (1,628) Write offs - - - - (1,634) (1) (1,635) Reclassification / Transfer - - - - (80) 8 (72) Exchange adjustments - - (15) - (10) (22) (47) Balance at end of period 79 1,257 4,257 9,973 97,543 26,394 139,503

NET BOOK VALUE

As at 31 March 2005 712 19,363 1,365 6,709 10,192 6,985 45,326




The three pieces of long leasehold land, two located in the Federal Territory of Labuan and one located inthe Federal Territory of Kuala Lumpur, are for lease periods of 99 years with unexpired lease periods of53, 85 and 86 years, respectively. Details of fully depreciated property and equipment which are still in use are as follows:

Computer Officehardware equipment,

Motor Leasehold and furniturevehicles improvements software and fittings TotalRM'000 RM'000 RM'000 RM'000 RM'000

GroupCost 2,396 5,990 87,172 18,511 114,069

Included under motor vehicles of the Group are assets acquired under hire-purchase arrangements withnet book value amounting to RM1.




15. DEPOSITS FROM CUSTOMERS

GroupRM'000

Term/Investment deposits from customers 4,911,612 Negotiable instruments of deposit 382,824

5,294,436

GroupRM'000

Due within six months 5,161,661 Six months to one year 132,275 One year to three years 200 Three to five years 300

5,294,436

GroupRM'000

Business enterprises 4,153,137 Individuals 4,714 Others 1,136,585

5,294,436

The maturity structure of term/investment deposits and negotiable instruments of deposit is as follows:

The deposits are sourced from the following types of customers:




16.

GroupRM'000

Licensed banks:Related 39,105 Others 836,461

Licensed merchant banks 90,265 Related licensed finance companies 528,702 Other financial institutions 3,073,225

4,567,758

GroupRM'000

Negotiable instruments of deposits 3,224,802 Interbank borrowings 273,140

GroupRM'000

Interbank lending (Notes 4 and 5) 2,931,424 Interbank borrowings (273,140)

Net interbank lending 2,658,284

Included under deposits and placements of banks and other financial institutions of the Group are thefollowing:

As at 31 March 2005 the net interbank borrowings and lending position of the Group are as follows:

DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS




17. OBLIGATIONS ON SECURITIES SOLD UNDER REPURCHASE AGREEMENTS

GroupRM'000

Obligations on securities sold under repurchase agreements to: Customers 1,314,724 Holding company 31,950 Related companies 81,117

1,427,791

18. ACCEPTANCES PAYABLE

19. AMOUNT DUE TO CAGAMAS BERHAD

Acceptances payable represent the merchant banking subsidiary company's own acceptances rediscountedand outstanding in the market.

Amount due to Cagamas Berhad represents the proceeds received from loans, hire purchase and leasingreceivables acquired from the Originators (excluding Islamic financing) as disclosed in Note 9 and solddirectly and indirectly to Cagamas Berhad with recourse. Under this back to back arrangements with theOriginators, the Group acts as the intermediary financial institution and undertakes to administer thereceivables on behalf of Cagamas Berhad and to buy back any receivables which are regarded as defectivebased on prudential criteria with recourse against the Originators.




20. OTHER LIABILITIES


Trade payables 257,535 - Other payables and accruals 123,944 26 Provision for commitments 63 - Amount due to :

Holding company 214,401 214,401 Related companies 1,037 - Associated companies (1,042) -

Bank overdrafts 31,568 - Taxation payable 752 118 Zakat payable 38 - Profit equalisation reserve 2,195 - Deferred tax liabilities (Note 35) 768 -

631,259 214,545

GroupRM'000

Interest payable 66,128

The movements in profit equalisation reserve are as follows:

GroupRM'000

Balance at date of incorporation - Provision during the period 6,042 Amount written back (3,847) Balance at end of period 2,195

Included under other payables and accruals of the Group are the following:

Amount due to holding company represents consideration payable for the transfer of 100% equity interestin AmSecurities Holding Sdn Bhd to the Company and expenses paid on behalf.

Amount due to associated and related companies represent interest payable on deposit placements.

Trade payables, pertaining to the stock and share-broking subsidiary company, represents amount payableunder outstanding sales contract




21. TERM LOANS

22. SUBORDINATED CERTIFICATES OF DEPOSITS

GroupRM'000

Balance at date of incorporation - Effects arising from merger 200,000 Less: Unamortised discount (1,232) Balance at end of period 198,768

The Subordinated Certificates of Deposits issued by the merchant banking subsidiary company representsRM200,000,000 nominal amount of unsecured Negotiable Subordinated Certificates of Deposit (“NSCD”)issued at a discount of RM6,750,600 for a total consideration of RM193,249,400. The accretion of discountof RM6,750,600 will be applied evenly over 5 years. The NSCD has a coupon rate of 8.00 % per annumfor the first five years and is redeemable on 1 March 2006 or on each anniversary date thereafter atnominal value. Subsequently, the interest rate for year 6 is 9.00% per annum and will be increased by 0.5%per annum for years 7 to 10.

The short term loan pertaining to the offshore banking subsidiary company in Labuan is secured by acorporate guarantee by the holding company with a tenure of 364 days from 5 January 2005. The shortterm loan facility bears interest at 0.20% per annum above LIBOR.




23. REDEEMABLE UNSECURED SUBORDINATED BONDS

The salient features of the SubBonds are as follows:

(a)

(b)

(c)

24. MINORITY INTERESTS

GroupRM'000

Balance at date of incorporation - Effects arising from merger 14,853 Disposal of shares in direct subsidiary company (9,397) Share in net results of subsidiary companies 2,002 Dividends received (864) Balance at end of period 6,594

Pursuant to a Trust Deed dated 23 September 2003, the merchant banking subsidiary company issuedRM460,000,000 nominal amount of Redeemable Unsecured Subordinated Bonds (“SubBonds”) to be usedto grant a RM460,000,000 10-year unsecured subordinated term loan to AmBank (Note 7), its relatedlicensed commercial bank for the purpose of refinancing its RM460,000,000 exchangeable subordinatedcapital loan from Danamodal Nasional Berhad.

The SubBonds bear interest at 6.5% per annum for the first five years and at 7.0% to 9.0% per annumor 3% above the yield of 5-year Malaysian Government Securities, whichever is higher for years 6 to10. The interest is payable on a semi-annual basis.

The SubBonds are for a period of ten years maturing on 30 September 2013. However, subject to theprior approval of Bank Negara Malaysia, the merchant banking subsidiary company may redeem theSubBonds on 30 September 2008 or on each anniversary date thereafter.

The SubBonds are redeemable on 30 September 2008 or on each anniversary date thereafter atnominal value together with interest accrued to the date of redemption.

Minority interests in the Group represent that part of the net results of operations, or net assets, ofsubsidiary companies attributable to shares owned other than by the Company.

The movements in minority interests in subsidiary companies are as follows:




25. SHARE CAPITAL

Group and Company

RM'000

Authorised: Shares of RM1.00 each Created at date of incorporation 5,000,000 Balance at end of period 5,000,000

Issued and fully paid: Ordinary shares of RM1.00 each Balance at date of incorporation -* Issued during the period pursuant to the transfer of

AmMerchant from AHB 1,109,442 Balance at end of period 1,109,442

* Denotes RM2

At the incorporation date on 23 June 2004, 2 new ordinary shares of RM1.00 each were issued at par forcash to AMMB Holdings Berhad.

On 10 March 2005, pursuant to the internal re-organisation and listing scheme as mentioned in Note 46,the Company increased its issued and fully paid share capital from RM2 to RM1,109,442,000 by an issueof 1,109,441,998 new ordinary shares of RM1.00 each in settlement of the acquisition of all issuedordinary and preference shares and the Interest-Bearing ICULS 2002/2007 of AmMerchant from AHB.




26. RESERVES

Reserves as at 31 March 2005 are analysed as follows after setting off the merger deficit as described in Note 13 :


Non-distributable reserves:Capital reserve 60,284 - Statutory reserve 300,000 - Exchange fluctuation reserve (4,519) -

Total non-distributable reserves 355,765 -

Distributable reserves:Unappropriated profits 185,343 7,490

Total distributable reserves 185,343 7,490

Total reserves 541,108 7,490

Movements in reserves are shown in the statements of changes in equity.

Capital reserve is in respect of the merger pursuant to the Group internal reorganisation.

The statutory reserve of the merchant banking subsidiary company is maintained in compliance with theprovisions of the Banking and Financial Institutions Act, 1989 and is not distributable as cash dividends.

Exchange differences arising on translation of foreign subsidiaries and associated companies are taken toexchange fluctuation reserve, as described in the accounting policies.

Distributable reserves are those available for distribution by way of dividends.

The Company has sufficient tax credit under Section 108 of the Income Tax Act, 1967 to frank thepayment of dividend out of all its distributable reserves as at 31 March 2005.




27. INTEREST INCOME


Short-term funds and depositswith financial institutions 64,403 -

Dealing securities 87,005 - Investment securities 155,289 - Loans and advances 280,327 - ICULS investment - 434 Others 32,957 - Gross interest income 619,981 434 Amortisation of premiums

less accretion of discounts (17,464) - Total before interest suspension 602,517 434

Interest suspended (92,188) - Interest recovered 73,644 - Net interest suspension (18,544) -

Total after net interest suspension 583,973 434

28. INTEREST EXPENSE


Deposits from customers 251,207 - Deposit of banks and other financial institutions 32,647 - Securities sold under repurchase agreements 35,199 - Subordinated deposits and term loans 26,275 - Redeemable unsecured subordinated bonds 29,900 - Others 35,745 -

410,973 -




29. NON-INTEREST INCOME


Fee income:Fees on loans and advances 10,723 - Corporate advisory fees 24,900 - Guarantee fees 11,312 - Underwriting commissions 6,881 - Portfolio management fees 9,829 - Unit trust management fees 20,009 - Property trust management fees 1,965 - Brokerage fees and commissions 50,445 Other fee income 20,367 -

156,431 -

Investment and trading income:Net income from: Dealing securities 73,346 - Investment securities 5,304 - Net income from derivatives 7,120 - Loss on sale of quoted securities - net (3,533) - Gain on sale of unquoted investments - net 2,934 - Gain on redemption of shares 773 - Trading loss on futures (509) - Gross dividend income from: Unquoted subsidiary companies - 10,000 Quoted investments in Malaysia 4,732 - Unquoted investments 37,855 -

128,022 10,000

Other income:Realised foreign exchange gain 100 - Gain on disposal of property and equipment - net 435 - Rental income 795 - Capital gain arising from receipt of shares in Bursa Malaysia Berhad 12,727 - Other non-operating income 1,102 -

15,159 -

299,612 10,000




30. NON-INTEREST EXPENSE


Personnel costs 109,128 - Establishment costs 35,384 - Marketing and communication expenses 15,093 - Administration and general expenses 29,240 26

188,845 26

Included in the above expenditure are the following statutory disclosures:


Directors' remuneration (Note 33) 3,226 - Rental of premises 11,077 - Depreciation of property and equipment (Note 14) 14,324 - Amortisation of intangible asset 176 - Goodwill on consolidation (Note 10) 4,857 - Amortisation of premium on acquisition 1,274 - Hire of motor vehicles and office equipment 1,340 - Auditors' remuneration:

Statutory audit 307 20 Special audit/Limited review 154 -

Property and equipment written off 1 - Sundry bad debts written off 281 -

The total number of employees of the Group as at 31 March 2005 was 1,387.

Staff costs include salaries, bonuses, contributions to employees provident fund and all other staff relatedexpenses. Contributions to employees provident fund of the Group amounted to RM14,870,676.




31. ALLOWANCE FOR LOSSES ON LOANS AND FINANCING

GroupRM'000

Allowance/(Reversal of allowance) for bad and doubtful debts and financing: Specific allowance - net 100,436 General allowance (11,313)

Bad debts and financing Written off 252 Recovered (30,112)

Recoveries of value impairment on amount recoverable from Danaharta (10,977) 48,286




32. RELATED PARTY TRANSACTIONS

(a) Transactions and outstanding balances with holding company and subsidiary companies.

Holding Subsidiary Company Companies

RM'000 RM'000

IncomeICULS investments - 434 Dividend income - gross - 10,000

- 10,434

AssetsInterest/dividends receivable - 7,634 ICULS 2002/2007 - 120,000

- 127,634

Liabilities/EquityAmount due to holding company 214,401 -

214,401 -

The Company is a subsidiary of AMMB Holdings Berhad, a company incorporated in Malaysia and quotedon the Main Board of the Bursa Malaysia Securities Berhad, which is also regarded as its ultimate holdingcompany.

The significant transactions and outstanding balances of the Company with its holding company andsubsidiary companies are as follows:

The above transactions have been entered into in the normal course of business and have beenestablished on terms and conditions that are no less favourable than those arranged with independentthird parties.




(b) Directors related transactions

Company Types of transactions RM'000

ExpenseAmFirst Property Trust Rental of premises 9,038 Bluestar Infotech (M) Sdn Bhd Computer maintenance 14 MCM Consulting Sdn Bhd Computer maintenance 334 MCM Systems Sdn Bhd Computer maintenance 199 AON Insurance Broker (M) Sdn Bhd Insurance broker services 2,137 Harpers Travel (M) Sdn Bhd Travelling expenses 890 Restaurant Sri Melayu Sdn Bhd Provision of food and beverages 100 AmRealty Sdn Bhd Rental of premises 114 Gubahan Impian Provision of flowers 10

Capital expenditure

MCM Consulting Sdn Bhd Purchase of computer hardware, software and related consultancy services 95

MCM Systems Sdn Bhd Purchase of computer hardware, software and related consultancy services 653

Melawangi Sdn Bhd Purchase of two (2) units of office lots in Pusat Perdagangan AMCORP 3,624

AmProperty Holdings Sdn Bhd Purchase of fourteen (14) office lots 18,620

Company RM'000

ExpenseFinancial Park (L) Sdn Bhd Rental of premises 214

The significant non-banking transactions of the Group with companies in which Tan Sri Dato’ AzmanHashim is deemed to have a substantial interest, are as follows:

The significant non-banking transaction of the Group with a company in which Mr. Cheah Tek Kuangis deemed to have a substantial interest, is as follows:




Company RM'000

ExpenseComputer Systems Advisers Computer maintenance 164 (M) Berhad

Capital ExpenditureComputer Systems Advisers Purchase of computer hardware, (M) Berhad software and related consultancy

services 862

(c) Renounceable Rights

RM'000

Number of sharesTan Sri Dato' Azman Hashim 118,954,848 Prof Tan Sri Dato' Dr Mohd Rashdan Haji Baba 201,824 Tan Sri Datuk Dr Aris Osman @ Othman 50,000 Tan Sri Datuk Clifford Francis Herbert 50,000 Dato’ Izham Mahmud 101,070 Cheah Tek Kuang 370,075 Kok Tuck Cheong 1,504,584 PusHParani A/P A Moothathamby 897,001

The significant non-banking transactions of the Group with a company in which Prof. Tan Sri Dato’Dr Mohd Rashdan Haji Baba is deemed to have a substantial interest, are as follows:

The above transactions have been entered into in the normal course of business and have beenestablished on terms and conditions that are no less favourable than those arranged with independentthird parties. As at 31 March 2005, there are no outstanding balances arising from directors' related transactions.

The employees’ renounceable rights were granted to the directors on the same terms and conditionsofferred to other employees of the Company.




33. DIRECTORS' REMUNERATION

GroupRM'000

Non-executive directorsFees 146 Salaries 1,116 Bonuses 840 Gratuity payment 300 Benefits-in-kind 164 Other remuneration 660

3,226

Total directors' remuneration excluding benefits-in-kind 3,062

Group

Non-executive directorsBelow RM50,000 3 RM50,001 – RM100,000 1 RM250,001 – RM300,000 1 RM900,001 – RM1,000,000 1 RM1,000,001 – RM2,000,000 1

Forms of remuneration in aggregate for all the Company's directors charged to the income statement for thefinancial period are as follows:

Directors' fees for directors who are executives of companies of the Group are paid to their respectivecompanies.

Included in the above is remuneration for directors who are executives of AmMerchant Bank Berhadamounting to RM2,764,918.

The number of directors of the Company whose total remuneration for the financial period falls within therequired disclosure bands is as follows:




34. TAXATION


Estimated current tax payable 70,733 2,918 Share in taxation of associated companies

incorporated in Malaysia 4,689 - Transfer from deferred tax liabilities (Note 35) 608 - Transfer from deferred tax assets (Note 35) (29,712) -

46,318 2,918 Underprovision of current taxation

in respect of prior years 32,679 - Total 78,997 2,918


Profit before taxation 282,111 10,408

Taxation at Malaysian statutory tax rate of 28% 78,991 2,914 Effect of different tax rates in Labuan

and certain subsidiaries (2,277) - Interest expense on ICULS included in

statement of changes in equity which is deductible for tax purposes (2,016) -

Income not subject to tax (6,879) - Expenses not deductible for tax purposes 11,178 - Tax expense for the period 78,997 2,914

For the year ended 31 March 2005, the Group has tax exempt income totalling RM30,984,000pertaining to subsidiary companies.

A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rateto income tax expense at the effective income tax rate of the Group and of the Company is as follows:




35. DEFERRED TAXATION

(a) Deferred tax assets

GroupRM'000

Balance at date of incorporation - Effects arising from merger (22,536) Net transfer to income statement (Note 34) (29,712) Reclassification from other assets (26,429) Balance at end of period (78,677)

GroupRM'000

The deferred taxation is in respect of the following: Temporary differences between depreciation and tax allowances on property and equipment 3,287 Allowance for diminution in value of investments (43,372) General allowance for loans, advances and financing (18,138) Allowance for value impairment on amount recoverable from Danaharta (19,713) Profit equalisation reserve (741)

(78,677)

(b) Deferred tax liabilities

GroupRM'000

Balance at date of incorporation - Effects arising from merger 160 Net transfer to income statement (Note 34) 608 Balance at end of period 768

Deferred tax liabilities of the Group is in respect of temporary differences between tax capitalallowances and book depreciation of property and equipment.

All movements in the components of deferred tax assets are recognised in the income statementother than the reclassification from other assets which relates to deferred tax asset arising fromallowance for diminution in value of investments.




36. DIVIDENDS

37. BASIC EARNINGS PER SHARE


Net profit attributable to shareholders of the Company 201,112 7,490 Less: Interest on ICULS (6,766) - Net profit attributable to shareholders of the Company after interest on ICULS 194,346 7,490

Weighted average number of ordinary shares in issue ('000) 1,109,442 1,109,442

Basic earnings per share (sen) 17.5 0.7

There are no potential dilutive ordinary shares during the financial period.

Basic earnings per share is calculated by dividing the net profit attributable to shareholders of theCompany by the weighted average number of ordinary shares in issue during the financial period.

No dividends has been declared or paid by the Company since the incorporation of the Company. Thedirectors do not recommend any dividend payment in respect of the current financial period.




38.

39. CAPITAL COMMITMENTS

GroupRM'000

Authorised and contracted but not provided for: Uncalled portion of total subscription price in the share capital of AmTrustee Berhad 100 Purchase of motor vehicles 1,044 Purchase of office equipment, information technology equipment and solutions 3,933 Purchase of other investments 1,893

6,970 Authorised but not contracted for:

Purchase of computer software and hardware, motor vehicles and renovation cost for computer center 5 Purchase of other investments 20,000

26,975

40. LEASE COMMITMENTS

GroupRM'000

Year ending 31 March2006 5,467 2007 591 2008 and thereafter 250

6,308

Investment portfolio funds managed on behalf of customers as at 31 March 2005 by the Group amountedto RM7,066,876,000.

As at 31 March 2005, the capital commitments pertaining to subsidiary companies are as follows:

The Group have lease commitments in respect of rental of premises and equipment on hire, all of whichare classified as operating leases. A summary of the non-cancellable long-term commitments, net of sub-leases is as follows:

The lease commitments represent minimum rentals not adjusted for operating expenses which the Groupare obligated to pay. These amounts are insignificant in relation to the minimum lease obligations. In thenormal course of business, leases that expire will be renewed or replaced by leases on other properties, thusit is anticipated that future annual minimum lease commitments will not be less than rental expenses for thefinancial period.

FIDUCIARY DUTY IN RESPECT OF INVESTMENT PORTFOLIO MANAGEMENT SERVICES




41. COMMITMENTS AND CONTINGENCIES

As at 31 March 2005, the commitments and contingencies outstanding are as follows:

Credit RiskPrincipal Equivalent Weighted

Amount Amount AmountRM'000 RM'000 RM'000

Group

Derivative Financial InstrumentsInterest rate related contracts:

Interest rate futures 550,000 - - Interest rate swaps: Related companies 1,700,000 34,063 6,813 Others 5,870,207 118,218 26,931

Foreign exchange related contracts: Forward exchange contracts 1,543,738 17,490 3,498 Cross currency swaps 463,600 32,512 6,502

Malaysian Government securities futures 27,900 - - 10,155,445 202,283 43,744

CommitmentsIrrevocable commitments to extend

credit maturing: within one year 747,783 - - more than one year 229,203 114,602 114,286

Sell and buy back agreements 1,797,884 1,797,884 965,427 Forward purchase commitments 113,040 113,040 20,285

2,887,910 2,025,526 1,099,998

Contingent LiabilitiesGuarantees given on behalf of customers 969,181 969,181 824,906 Underwriting liabilities 317,069 158,535 137,317 Certain transaction-related contingent items 495,392 247,696 217,744

1,781,642 1,375,412 1,179,967

14,824,997 3,603,221 2,323,709

In the normal course of business, the merchant banking subsidiary company,AmMerchant BankBerhad and the offshore banking subsidiary company in Labuan, AmInternational (L) Ltd("AmInternational") make various commitments and incur certain contingent liabilities with legalrecourse to its customers.No material losses are anticipated as a result of these transactions. Thecommitments and contingencies are not secured against the Group’s assets.




The credit equivalent amount is arrived at using the credit conversion factor as per Bank Negara Malaysia guidelines.

42. RISK MANAGEMENT POLICY

MARKET RISK MANAGEMENT

As required, the merchant banking subsidiary company, AmMerchant Bank has given a continuingguarantee to Bank Negara Malaysia on behalf of its offshore banking subsidiary in Labuan,AmInternational, to meet all its liabilities and financial obligations and requirements.

Risk management is about managing uncertainties such that deviations from the Group’s intendedobjectives are kept within acceptable levels. Sustainable profitability forms the core objectives of theGroup’s risk management strategy.

Every risk assumed by the Group carries with it potential for gains as well as potential to erodeshareholders’ value. The Group’s risk management policy is to identify, capture and analyse these risks atan early stage, continuously measure and monitor these risks and to set limits, policies and procedures tocontrol them to ensure sustainable risk-taking and sufficient returns.

The management approach towards the significant risks of the Group are enumerated below.

Market risk is the risk of loss from changes in the value of portfolios and financial instruments caused bymovements in market variables, such as interest rates, foreign exchange rates and equity prices.

The primary objective of market risk management is to ensure that losses from market risk can be promptlyarrested and risk positions are sufficiently liquid so as to enable the Group to reduce its position withoutincurring potential loss that is beyond the sustainability of the Group.

The market risk of the Group’s trading and non-trading portfolio is managed separately using value-at-riskapproach to compute the market risk exposure of non-trading portfolio and trading portfolio. Value at riskis a statistical measure that estimates the potential changes in portfolio value that may occur brought aboutby daily changes in market rates over a specified holding period at a specified confidence level undernormal market conditions. For the Group’s trading portfolio, the Group’s value at risk measurement takesa more sophisticated form by taking into account the correlation effects of various instruments in theportfolio.

The Group controls its market risk exposure of its trading and non-trading activities primarily through aseries of threshold limits. Stop loss, value at risk and position sensitivity limits are the primary means ofcontrol governing the trading activities of the Group while value at risk limits governs the non-tradingpositions.

To complement value at risk measurement, the Group also institutes a set of scenario analysis undervarious potential market conditions such as shifts in currency rates, general equity prices and interest ratemovements to assess the changes in portfolio value.




Non- EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest interest

month months months months years years sensitive Total rateRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

ASSETSCash and short-term funds 2,044,169 - - - - - 634,383 2,678,552 3.05 Securities purchased under

resale agreements 139,931 - - - - - - 139,931 2.87 Deposits and placements with

banks and other financial institutions - 322,033 38,000 - - - 33,100 393,133 2.87

Dealing securities 79,199 73,271 38,527 451,120 1,397,790 508,289 238,239 2,786,435 4.02 Investment securities 50,061 529,400 486,644 118,467 841,158 542,237 503,657 3,071,624 4.22 Loans, advances and financing: -

- performing 2,270,670 301,276 102,740 439,883 200,185 109,066 499,815 3,923,635 6.20 - non-performing * - - - - - - 612,414 612,414 -

Amount due from Originators - 3,363 - 7,684 121,751 - - 132,798 4.29 Other non-interest sensitive balances - - - - - - 919,618 919,618 - TOTAL ASSETS 4,584,030 1,229,343 665,911 1,017,154 2,560,884 1,159,592 3,441,226 14,658,140

LIABILITIES ANDSHAREHOLDER'S FUNDS

Deposits from customers 2,908,706 1,489,221 477,496 106,632 500 - 311,881 5,294,436 2.90 Deposits and placements of banks

and other financial institutions 1,181,315 660,229 698,548 362,784 709,999 599,260 355,623 4,567,758 3.39 Obligations on securities sold

under repurchase agreements 1,424,363 3,327 101 - - - - 1,427,791 2.59

The following table shows the interest rate sensitivity gap, by time bands, on which interest rates of instruments are next repriced on a contractual basis or, ifearlier, the dates on which the instruments mature.




Non- EffectiveGroup Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 interest interest

month months months months years years sensitive Total rateRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 %

Acceptances payable 996 1,456 734 - - - - 3,186 4.91 Amount due to Cagamas Berhad - 3,361 - 7,684 121,753 - - 132,798 4.29 Term loans - - 285,000 285,000 2.98 Subordinated certificates of deposits - - - 198,768 - - - 198,768 8.85 Redeemable unsecured subordinated

bonds - - - - 460,000 - - 460,000 6.50 Other non-interest sensitive balances - - - - - - 631,259 631,259 - Total Liabilities 5,515,380 2,157,594 1,461,879 675,868 1,292,252 599,260 1,298,763 13,000,996 Minority interests - - - - - - 6,594 6,594 - Shareholders' funds - - - - - - 1,650,550 1,650,550 - TOTAL LIABILITIES AND

SHAREHOLDERS' FUNDS 5,515,380 2,157,594 1,461,879 675,868 1,292,252 599,260 2,955,907 14,658,140

On-balance sheet interest sensitivitygap (931,350) (928,251) (795,968) 341,286 1,268,632 560,332 485,319 -

Off-balance sheet interest sensitivitygap (722,886) (1,090,609) (104,559) 875,362 776,189 266,503 - -

Total interest sensitivity gap (1,654,236) (2,018,860) (900,527) 1,216,648 2,044,821 826,835 485,319 -

Cumulative interest rate sensitivity gap (1,654,236) (3,673,096) (4,573,623) (3,356,975) (1,312,154) (485,319) -

* This is arrived at after deducting the general allowance, specific allowance and interest/income-in-suspense from gross non-performing loans outstanding.




Non- EffectiveCompany interest interest

sensitive Total rateRM'000 RM'000 %

ASSETSCash and short-term funds 1 1 2.70 Other non-interest sensitive balances 1,331,476 1,331,476 - TOTAL ASSETS 1,331,477 1,331,477

LIABILITIES ANDSHAREHOLDERS' FUNDS

Other non-interest sensitive balances 214,545 214,545 - Total Liabilities 214,545 214,545 Shareholder's funds 1,116,932 1,116,932 - TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 1,331,477 1,331,477

Total interest sensitivity gap - -

Cumulative interest rate sensitivity gap -




LIQUIDITY RISK

-

-

-

Liquidity risk is the risk that the organization will not be able to fund its day-to-day operations at areasonable cost.

The primary objective of liquidity risk management framework is to ensure the availability of sufficientfunds at a reasonable cost to honour all financial commitments as it becomes due.

The secondary objective is to ensure an optimal funding structure and to balance the key liquidity riskmanagement objectives, which includes diversification of funding sources, customer base, and maturityperiod.

The ongoing liquidity risk management at the Group is based on the following key strategies:

Management of cash-flow; an assessment of potential cash flow mismatches that may arise over aperiod of one-year ahead and the maintenance of adequate cash and liquefiable assets over and abovethe standard requirements of Bank Negara Malaysia.

Scenario analysis; a simulation on liquidity demands of new business, changes in portfolio as well asstress scenarios based on historical experience of large withdrawals.

Diversification and stabilisation of liabilities through management of funding sources, diversificationof customer depositor base and inter-bank exposures.

In the event of actual liquidity crisis occurring, a Contingency Funding Plan provides a formal process toidentify a liquidity crisis and detailing responsibilities among the relevant departments to ensure orderlyexecution of procedures to restore the liquidity position and confidence in the Group.




Group Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificmonth months months months years years maturity Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000ASSETSCash and short-term funds 2,625,969 - - - - - 52,583 2,678,552 Securities purchased under

resale agreements 139,931 - - - - - - 139,931 Deposits and placements with

banks and other financial institutions - 355,133 38,000 - - - - 393,133

Dealing securities 96,392 73,271 35,393 486,353 1,409,667 612,740 72,619 2,786,435 Investment securities 71,482 529,400 429,644 124,138 874,162 1,018,142 24,656 3,071,624 Loans, advances and financing 1,741,633 1,015,517 65,138 520,882 816,948 61,442 314,489 4,536,049 Amount due from Originators 3,361 - 7,684 121,753 132,798 Other assets 13,899 100,062 1,133 4,190 13,539 14,242 284,353 431,418 Deferred tax assets - - - - - - 78,677 78,677 Goodwill on consolidation - - - - - - 79,805 79,805 Statutory deposit with Bank

Negara Malaysia - - - - - - 244,294 244,294 Investments in associated companies - - - - - - 40,098 40,098 Property and equipment - - - - - - 45,326 45,326 TOTAL ASSETS 4,689,306 2,076,744 569,308 1,143,247 3,236,069 1,706,566 1,236,900 14,658,140

LIABILITIES ANDSHAREHOLDERS' FUNDS

Deposits from customers 3,105,146 1,568,124 488,391 132,275 500 - - 5,294,436 Deposits and placements of banks

and other financial institutions 1,313,419 839,400 732,945 363,196 719,537 599,261 - 4,567,758 Obligations on securities sold

under repurchase agreements 1,424,363 3,428 - - - - - 1,427,791

The following table shows the maturity analysis of the Group’s assets and liabilities based on contractual terms.




Group Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificmonth months months months years years maturity Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Acceptances payable 996 1,456 734 - - - - 3,186 Amount due to Cagamas Berhad - 3,361 - 7,684 121,753 - - 132,798 Other liabilities 455,475 10,069 6,787 1,618 3,475 6,991 146,844 631,259 Term loans 285,000 285,000 Subordinated certificates of deposits - - - - - 198,768 - 198,768 Redeemable unsecured subordinated

bonds - - - - - 460,000 - 460,000 Total Liabilities 6,299,399 2,425,838 1,228,857 789,773 845,265 1,265,020 146,844 13,000,996 Minority interests - - - - - - 6,594 6,594 Shareholders' funds - - - - - - 1,650,550 1,650,550 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 6,299,399 2,425,838 1,228,857 789,773 845,265 1,265,020 1,803,988 14,658,140

Net maturity mismatch (1,610,093) (349,094) (659,549) 353,474 2,390,804 441,546 (567,088) -




Company Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 Non specificmonth months months months years years maturity Total

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

ASSETSCash and short-term funds - - - - - - 1 1 Other assets 434 7,200 - - - - - 7,634 Investments in subsidiary companies - - - - - - 1,323,842 1,323,842 TOTAL ASSETS 434 7,200 - - - - 1,323,843 1,331,477

LIABILITIES ANDSHAREHOLDER'S FUNDS

Other liabilities - - - - - - 214,545 214,545 Total Liabilities - - - - - - 214,545 214,545 Shareholder's funds - - - - - - 1,116,932 1,116,932 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS - - - - - - 1,331,477 1,331,477

Net maturity mismatch 434 7,200 - - - - (7,634) -




CREDIT RISK MANAGEMENT

OPERATIONAL RISK MANAGEMENT

Credit risk is the risk of loss due to the inability or unwillingness of a counterparty to meet its paymentobligations. Exposure to credit risk arises primarily from lending and guarantee activities and, to a lesserextend, pre-settlement and settlement exposures of sales and trading activities.

The primary objective of the credit risk management framework is to ensure that exposure to credit risk isalways kept within its capability and financial capacity to withstand potential future losses.

For non-retail credits, risk measurement begins with an assessment and rating of the financial standing ofthe borrower or counterparty using an internally developed credit rating model. The model consists ofquantitative and qualitative scores which are translated into a rating grade, which ranges from “AAA”(lowest risk) to “C” (highest risk).

Credit risk is quantified based on Expected Default Frequencies and Expected Losses on default from itsportfolio of loans and off-balance sheet commitments. Expected Default Frequencies are calibrated to theinternal rating model while Loan Loss Estimates are based on past portfolio default experiences.

The Group’s lending activities are guided by internal credit policies and guidelines that are approved bythe Board of Directors. Within these policies, name limits restrict total exposure allowed to corporategroups according to their level of creditworthiness, while sector limits ensure that the Group’s total creditexposure to each economic sector is within prudent thresholds.

Operational risk is the potential loss from a breakdown in internal process, systems, deficiencies in peopleand management or operational failure arising from external events. It is increasingly recognised thatoperational risk is the single most widespread risk facing financial institutions today.

Operational risk management is the discipline of systematically identifying the critical potential points andcauses of failure, assess the potential cost and to minimise the impact of such risk through the initiation ofrisk mitigating measures and policies.

The Group minimises operational risk by putting in place appropriate policies, internal controls andprocedures as well as maintaining back-up procedures for key activities and undertaking contingencyplanning. These are supported by independent reviews by the Group’s Internal Audit team.




LEGAL AND REGULATORY RISK

RISK MANAGEMENT POLICY ON FINANCIAL DERIVATIVES

Purpose of engaging in financial derivatives

The Group manages legal and regulatory risks to its business. Legal risk arises from the potential thatbreaches of applicable laws and regulatory requirements, unenforceability of contracts, lawsuits, or adversejudgement, may lead to the incurrence of losses, disrupt or otherwise resulting in financial and reputationalrisk.

Legal risk is managed by internal legal counsel and where necessary, in consultation with external legalcounsel to ensure that legal risk is minimised.

Regulatory risk is managed through the implementation of measures and procedures within theorganization to facilitate compliance with regulations. These include a compliance monitoring andreporting process that requires identification of risk areas, prescription of controls to minimize these risks,staff training and assessments, provision of advise and disseminating of information.

Financial derivative instruments are contracts whose value is derived from one or more underlyingfinancial instruments or indices. They include swaps, forward rate agreements, futures, options andcombinations of these instruments. Derivatives are contracts that transfer risks, mainly market risks.Financial derivatives is one of the financial instruments engaged by the Group both for revenue purposes aswell as to manage the Group’s own market risk exposure. The Group’s involvement in financialderivatives is currently focussed on interest rate derivatives and foreign exchange rate derivatives.

The principal exchange rate contracts used are forward foreign exchange contracts and cross currencyswaps. Forward foreign exchange contracts are agreements to buy or sell a specified quantity of foreigncurrency on a specified future date at an agreed rate. A cross currency swap generally involves theexchange, or notional exchange, of equivalent amounts of two currencies and a commitment to exchangeinterest periodically until the principal amounts are re-exchanged on a future date.

The principal interest rate contracts used are interest rate futures, interest rate swaps and forward rateagreements. Forward rate agreements are contracts for the payment of the difference between a specifiedinterest rate and a reference rate on a notional deposit at a future settlement date. There is no exchange ofprincipal. An interest rate futures is an exchange traded contract whose value is based on the differencebetween a specific interest rate and a reference rate on a notional deposit or fixed income security at afuture settlement date. Interest rate swap transactions generally involve the exchange of fixed and floatinginterest payment obligations without the exchange of the underlying principal amounts.

For revenue purposes, the Group maintains trading positions in these instruments and engages intransactions with customers to satisfy their needs in managing their respective interest rate and foreignexchange rate exposures. Derivative transactions generate income for the Group from the buy-sell spreads.The Group also takes conservative exposures, within acceptable limits, to carry an inventory of theseinstruments in order to provide market liquidity and to earn potential gains on fluctuations in the value ofthese instruments.




Fair value of financial derivatives

GroupPrincipal Fair Amount ValueRM'000 RM'000

Interest rate related contracts:Interest rate futures 550,000 448 Interest rate swaps 7,570,207 140

Malaysian Government securities futures 27,900 (158) Foreign exchange related contracts:

Forward exchange contracts 1,543,738 (18) Cross currency swaps 463,600 (1,333)

10,155,445 (921)

Risk associated with financial derivatives

Market risk of derivatives used for trading purposes

The estimated fair values of the Group’s outstanding derivative financial instruments are as below. Theseare stand-alone values without taking into account their potential offsetting relationships with other non-derivatives exposures of the Group. As such, no adjustment is made in the financial statements.

As derivatives are contracts that transfer risks, they expose the holder to the same types of market andcredit risks as other financial instruments, and the Group manages these risks in a consistent manner underthe overall risk management framework.

As part of the asset and liability exposure management, the Group uses derivatives to manage the Group’smarket risk exposure. As the value of these financial derivatives are principally driven by interest rate andforeign exchange rate factors, the Group uses them to reduce the overall interest rate and foreign exchangerate exposures of the Group. These are performed by entering into an exposure in derivatives thatproduces opposite value movements vis-à-vis exposures generated by other non-derivative activities of theGroup. The Group manages these risks on a portfolio basis. Hence, exposures on derivatives areaggregated or netted against similar exposures arising from other financial instruments engaged by theGroup.

Market risk arising from the above interest rate-related and foreign exchange-related derivative contractsmeasures the potential losses to the value of these contracts due to changes in market rates/prices.Exposures to market risk may be reduced through offsetting on and off-balance sheet positions.




Credit risk of derivatives

The contractual amounts of these contracts provide only a measure of involvement in these types oftransactions and do not represent the amounts subject to market risk. Value at risk method is used tomeasure the market risk from these contracts. Value at risk, is a statistical measure that estimates thepotential changes in portfolio value that may occur brought about by daily changes in market rates over a90-day period at a 99% confidence level under normal market condition.

As at 31 March 2005, value at risk of foreign exchange-related derivative contracts used for tradingpurposes of the Group was RM25,849.

The value at risk of the interest rate related derivative contracts used for trading purposes wasRM5,392,001.

Counterparty credit risk arises from the possibility that a counterparty may be unable to meet the terms ofthe derivative contracts. Unlike conventional asset instruments, the Group’s financial loss is not the entirecontracted principal value of the derivatives, but rather a fraction equivalent to the cost to replace thedefaulted contract with another in the market. The cost of replacement is equivalent to the differencebetween the original value of the derivatives at time of contract with the defaulted counterparty and thecurrent fair value of a similar substitute at current market prices. The Group will only suffer a replacement cost if the contract carries a fair value gain at time of default.

As at 31 March 2005, the amount of credit risk, measured in terms of the cost to replace the profitablecontracts was RM20,257,362 for the Group. This amount will increase or decrease over the life of thecontracts, mainly as a function of movement in market rates and time.




43. FAIR VALUES OF FINANCIAL INSTRUMENTS

Financial instruments are contracts that give rise to both a financial asset of one enterprise and a financialliability or equity instrument of another enterprise. The fair value of a financial instrument is the amount atwhich the instrument could be exchanged or settled between knowledgeable and willing parties in an arm’slength transaction, other than a forced or liquidated sale. The information presented herein represents bestestimates of fair values of financial instruments at the balance sheet date.

Where available, quoted and observable market prices are used as the measure of fair values. Where suchquoted and observable market prices are not available, fair values are estimated based on a number ofmethodologies and assumptions regarding risk characteristics of various financial instruments, discountrates, estimates of future cash flows and other factors. Changes in the assumptions could materially affectthese estimates and the corresponding fair values.

In addition, fair value information for non-financial assets and liabilities such as investments in subsidiarycompanies and taxation are excluded, as they do not fall within the scope of MASB 24, which requires thefair value information to be disclosed.

The estimated fair values of the Group’s and the Company’s financial instruments are as follows:




Group CompanyCarrying Fair Carrying FairAmount Value Amount ValueRM'000 RM'000 RM'000 RM'000

Financial AssetsCash and short-term funds 2,678,552 2,678,552 1 1 Securities purchased under resale

agreements 139,931 139,931 - - Deposits and placements of banks and

other financial institutions ^ 393,133 392,331 - - Dealing securities 2,786,435 2,793,118 - - Investment securities 3,071,624 3,092,292 - - Loans, advances and financing * 4,605,140 4,655,331 - - Amount due from Originators 132,798 139,027 - - Other financial assets 415,939 415,939 - -

14,223,552 14,306,521 1 1 Non-financial assets 434,588 1,331,476 TOTAL ASSETS 14,658,140 1,331,477

Financial LiabilitiesDeposits from customers 5,294,436 5,295,085 - - Deposits and placements of banks and

other financial institutions 4,567,758 4,568,303 - - Obligations on securities sold under

repurchase agreements 1,427,791 1,500,029 - - Acceptances payable 3,186 3,186 - - Amount due to Cagamas Berhad 132,798 139,027 - - Term loans 285,000 285,000 - - Subordinated certificates of deposits 198,768 220,671 - - Redeemable unsecured subordinated bonds 460,000 435,906 - - Other financial liabilities 627,544 627,544 214,545 214,545

12,997,281 13,074,751 214,545 214,545 Non-Financial LiabilitiesOther non-financial liabilities 3,715 - Minority interests 6,594 - Shareholder's funds 1,650,550 1,116,932

1,660,859 1,116,932 TOTAL LIABILITIES AND

SHAREHOLDER'S FUNDS 14,658,140 1,331,477

*

^

The general allowance for loans, advances and financing for the Group amounting to RM69,091,000has been included under non-financial assets.

The fair value of deposits with financial institutions is below its carrying amount as a result of anincrease in Klibor rates. The Group has not reduced the carrying values as uncertainties surroundingthe circumstances may change and any changes in uncertainties could affect the resulting fair valueestimates.




(a) Cash And Short-Term Funds

(b)

(c) Dealing And Investment Securities

(d)

(e)

The fair values of derivatives financial instruments are shown in Note 42.

The fair values of contingent liabilities and undrawn credit facilities are not readily ascertainable. Thesefinancial instruments are presently not sold or traded. They generate fees that are in line with market pricesfor similar arrangements. The estimated fair value may be represented by the present value of the feesexpected to be received, less associated costs and potential losses that may arise should these commitmentscrystalize. The Group assesses that their respective fair values are unlikely to be significant from thecarrying value given that the overall level of fees involved is not significant and no provision is necessaryto be made.

The following methods and assumptions were used to estimate the fair value of assets and liabilities as at31 March 2005:

The carrying values are a reasonable estimate of the fair values because of negligible credit risk andshort-term in nature or frequent repricing.

The fair values of securities purchased under resale agreements and deposits and placements withfinancial institutions with remaining maturities less than six months are estimated to approximate theircarrying values. For securities purchased under resale agreements and deposits and placements withfinancial institutions with maturities of more than six months, the fair values are estimated based ondiscounted cash flows using the prevailing Klibor rates and interest rate swap rates.

Securities Purchased Under Resale Agreements And Deposits And Placements With Banks AndOther Financial Institutions

The fair value of variable rate loans and financing are estimated to approximate their carrying values.For fixed rate loans and financing, the fair values are estimated based on expected future cash flows ofcontractual instalment payments and discounted at prevailing indicative rates adjusted for credit risk.In respect of non-performing loans and financing, the fair values are deemed to approximate thecarrying values, net of interest/income in-suspense and specific allowance for bad and doubtful debtsand financing.

The fair values of deposits liabilities payable on demand (“current and savings deposits”) or withremaining maturities of less than six months are estimated to approximate their carrying values atbalance sheet date.

Deposits From Customers, Deposits And Placements Of Banks And Other Financial InstitutionsAnd Obligations On Securities Sold Under Repurchase Agreements

Loans, Advances And Financing And Subordinated Term Loans (“Loans And Financing”)

The estimated fair value is based on quoted or observable market prices at the balance sheet date.Where such quoted or observable market prices are not available, the fair value is estimated usingdiscounted cash flow or net tangible assets techniques. The fair values of unquoted debt equityconversion securities which are not actively traded, are estimated to be at par value, taking intoconsideration of the underlying collateral values.Where discounted cash flow techniques are used, theestimated future cash flows are discounted using market indicative rates of similar instruments at thebalance sheet date.




(e) Deposits From Customers, Deposits And Placements Of Banks And Other Financial Institutions And Obligations On Securities Sold Under Repurchase Agreements (Contd.)

(f) Acceptances Payables

(g) Amount Due To Cagamas Berhad

(h)

(i) Interest Rate Swaps, Futures And Forward Rate Agreements

(j) Short Term Financial Assets and Financial Liabilities

The carrying values are a reasonable estimate of their fair values based on their short-term nature.

The fair values for amount due to Cagamas Berhad are determined based on discounted cash flows offuture instalment payments at prevailing rates quoted by Cagamas Berhad at at balance sheet date.

The fair values of borrowings with remaining maturities of less than six months are estimated toapproximate their carrying values at balance sheet date. The fair values of borrowings with remainingmaturities of more than six months are estimated based on discounted cash flows using marketindicative rates of instruments with similar risk profiles at the balance sheet date.

Term Loans, Subordinated Certificates of Deposits And Subordinated Term Bonds

The estimated fair value is based on the market price to enter into an offsetting contract at balancesheet date.

The fair values of the other financial assets and other financial liabilities, which are considered shortterm in nature, are estimated to be approximately their carrying values.

As assumptions were made regarding risk characteristics of the various financial instruments, discountrates, future expected loss experience and other factors, changes in the uncertainties and assumptions couldmaterially affect these estimates and the resulting value estimates.

The fair value of term deposits, negotiable instrument of deposits and obligations on securities soldunder repurchase agreements with remaining maturities of more than six months are estimated basedon discounted cash flows using Klibor rates and interest rate swap rates.




44. NET TANGIBLE ASSETS PER SHARE (RM)


Total assets 14,658,140 1,331,477 Less :Total liabilities 13,000,996 214,545 Minority interest 6,594 - Goodwill on consolidation 79,805 -

Unamortised premium on acquisitions 7,457 - 13,094,852 214,545

Net tangible assets 1,563,288 1,116,932

Issued and fully paid up ordinary shares of RM1.00 each 1,109,442 1,109,442

Net tangible assets per share (RM) 1.41 1.01

Net tangible assets per share represents the balance sheet total assets value less total liabilities, includinglong term loans and minority interests and goodwill/premium expressed as an amount per ordinary share.

Net tangible assets per share is calculated as follows:




45. SEGMENT ANALYSIS

The Group’s businesses are organized into five segments, based on the products and services that itprovides. These segments are merchant banking, Islamic banking,offshore banking, funds management,broking and others.

Merchant banking

The merchant banking caters to the business needs of large corporate customers and financial institutionsand provides customers with, among other things, a broad range of financing options, treasury andderivative solutions and services, corporate finance services, debt capital market and private banking.

Islamic banking

Islamic banking segment relates to Islamic Banking Business activities undertaken by the Group whichcovers all Islamic products and services of investment banking.

Offshore banking

Through AmInternational (L) Ltd and AmMerchant Bank Labuan branch, the Group has established apresence in the international arena at the Labuan International Offshore Financial Centre. The productsand services offered include corporate finance, advisory and trust services, conventional and Islamicbanking and acting as Listing Sponsor for corporations seeking listing on the Labuan InternationalFinancial Exchange.

Funds management

The Group's funds management unit, AmInvest, comprising of AmInvestment Services Berhad andAmInvestment Management Sdn Bhd, provides investment management, management of unit trusts andcustomized investment solutions for both retail and institutional clients

Broking

Broking encompasses stockbroking and futures broking which offers stock and futures broking productsand services through AmSecurities Sdn Bhd and AmFutures Sdn Bhd. Others

Others are a variety of activities, which complements and supports the operations of the business units. Itincludes the Company's corporate income and expense items that are not allocated to individual businesssegments. In addition, the income and the Company's funding cost of the Group’s associated andsubsidiary companies are included in this category.




45. SEGMENT ANALYSIS (CONTD.)Group Total Elimination/

Merchant Islamic Offshore Fund Before ConsolidationBanking Banking Banking Management Broking Others Elimination Adjustments TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

External revenue 656,471 81,972 32,252 27,709 65,077 16,758 880,239 29,800 910,039 Revenue from other segments 35,809 533 18,364 - 63 844 55,613 (55,613) -

Operating revenue 692,280 82,505 50,616 27,709 65,140 17,602 935,852 (25,813) 910,039

Segments results 224,258 17,794 3,832 11,222 43,853 145,543 446,502 (176,129) 270,373 Amortisation of goodwill on consolidation - - - - - - - (4,857) (4,857)

Profit from operations 224,258 17,794 3,832 11,222 43,853 145,543 446,502 (180,986) 265,516 Share in results of associated companies - - - - - - - 16,595 16,595

Profit before taxation 224,258 17,794 3,832 11,222 43,853 145,543 446,502 (164,391) 282,111 Taxation (57,298) (5,035) - (3,289) (9,569) (40,544) (115,735) 36,738 (78,997) Minority interest - - - - - - - (2,002) (2,002)

Net profit for the period 166,960 12,759 3,832 7,933 34,284 104,999 330,767 (129,655) 201,112

Other InformationSegments assets 11,573,257 1,313,156 1,440,206 35,957 425,678 189,779 14,978,033 (439,796) 14,538,237 Investments in subsidiary companies 38,617 - - - 174,989 1,390,025 1,603,631 (1,603,631) - Investments in associated companies 21,950 - - - - 100 22,050 18,048 40,098 Goodwill on consolidation - - - - - - - 79,805 79,805

Total assets 11,633,824 1,313,156 1,440,206 35,957 600,667 1,579,904 16,603,714 (1,945,574) 14,658,140

Segment liabilities 10,286,309 1,108,723 1,503,263 16,143 126,522 288,923 13,329,883 (328,887) 13,000,996

Property and equipment purchases 3,388 57 12 1,284 1,950 205 6,896 9 6,905 Depreciation 11,161 48 104 632 2,215 338 14,498 (174) 14,324 Goodwill on consolidation - - - - - - - 4,857 4,857

95



46. CAPITAL ADEQUACY RATIO

The capital adequacy ratio of the Group as at 31 March 2005 is analysed as follows:

RM'000

Tier 1 capitalPaid-up ordinary share capital 1,109,442 Capital reserve 60,284 Statutory reserve 300,000 Exchange fluctuation reserve (4,519) Unappropriated profit at end of period 185,343 Minority interests 6,594

1,657,144 Less:

Goodwill (79,805) Deferred tax assets, net (77,909)

Total Tier 1 capital 1,499,430

Tier 2 capitalSubordinated certificates of deposits 198,650 Redeemable unsecured subordinated bonds 460,000 General allowance for bad and doubtful debts 69,091

Total Tier 2 capital 727,741

Total capital funds 2,227,171 Less: Investment in capital of related financial institutions (460,000) Capital base 1,767,171

Capital Ratios: Core capital ratio 14.45% Risk-weighted capital ratio 17.04%

The financial information by geographical segment is not presented as the Group’s activities areprincipally conducted in Malaysia except for Frasers International Pte. Ltd. and its subsidiary companies,PT AmCapital Indonesia and AmSecurities (HK) Ltd, activities of which are principally conducted inSingapore, Indonesia and Hong Kong, respectively.activities of which are principally conducted inSingapore. These activities in Singapore,Indonesia and Hong Kong are not significant (less than 1% overthe operating revenue, profit before taxation and total assets) in relation to the Group’s activities inMalaysia.




(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

Risk-Principal WeightedAmount AmountRM'000 RM'000

0% 3,589,931 - 10% 84,684 8,468 20% 4,610,521 922,104 50% 258,419 129,210 100% 9,310,824 9,310,824

17,854,379 10,370,606 47. SIGNIFICANT EVENT

(a)

(i)

(a)

(b)

On 27 February 2004 and 31 May 2004, the ultimate holding company, AMMB Holdings Berhad("AHB") announced the following proposals:

The Privatisation of AMFB Holdings Berhad (“AMFB”) through the acquisition by AHB of188,927,911 ordinary shares of RM1.00 each (“Shares”) in AMFB, representing 35.72% of theissued and paid-up share capital of AMFB, not already owned by AHB by way of a scheme ofarrangement between AMFB and its shareholders under Section 176 of the Companies Act, 1965(“AMFB Privatisation”). The AMFB Privatisation was approved by the shareholders of AMFB atthe Court Convened Meeting held pursuant to the Order of the High Court of Malaya on 31January 2005. Further, the Order of the High Court of Malaya ("Court Order") sanctioning theScheme of Arrangement was obtained on 17 February 2005.

AHB has also received the approval from the Securites Commission ("SC") via its letter dated 31January 2005 for the purchase consideration price for the AMFB Privatisation amounting toRM1,360,280,959 or RM7.20 per AMFB Share to be satisfied as follows:-

RM623,462,106 by way of issuance of 188,927,911 new AHB Shares on the basis of one (1)new AHB Share valued at RM3.30 per new AHB Share for every one (1) existing AMFBMinority Share held; and

RM736,818,853 in cash, on the basis of RM3.90 for every one (1) existing AMFB MinorityShare held.

On 17 March 2005, the AMFB Privatisation was completed following the listing of and quotationfor the 188,927,911 AHB Shares issued to the minority shareholders of AMFB. Consequently,AMFB became a wholly-owned subsidiary of AHB.

The entire issued and paid-up share capital of AMFB was delisted from the Official List of BursaMalaysia Securities Berhad ("Bursa Securities") with effect from 30 March 2005 pursuant toParagraph 8.15(6) of the Listing Requirements of Bursa Securities.




(ii)

1

2

3

(a)

(i)

(ii)

in direct proportion to their shareholdings in AHB;

(b)

(c)

(i)

(ii)

4

The listing of AHB’s investment banking group, via a newly incorporated company, which wasincorporated under the name of the Company on the Main Board of the Bursa Securities (“ListingScheme”), comprising the following:

The incorporation of the Company, completed on 23 June 2004, as a wholly-owned subsidiarycompany of AHB, to act as the holding company/listing vehicle of AHB’s investment bankinggroup;

An internal reorganisation (“Internal Reorganisation”) involving the transfer of AHB’s 100%equity interest in AmMerchant Bank Berhad ("AmMerchant") for a consideration ofRM1,109,442,000 wholly satisfied through the issuance of 1,109,441,998 new ordinary sharesof RM1.00 each in the Company (“Transfer of AmMerchant”), and 100% equity interest inAmSecurities Holding Sdn Bhd ("AMSH") for a consideration of RM214,400,000 to be whollysatisfied by the Company in cash (“Transfer of AMSH”), prior to the completion of whichAmMerchant Bank and AMSH had separately declare dividends to AHB amounting toRM249,840,000 in aggregate;

The issue/offer of 646,800,000 Shares comprising 210,558,000 new Shares and 436,242,000existing Shares, as follows:-

488,400,000 Shares allocated to shareholders of AHB, by way of:-

A renounceable restricted offer for sale of 330,278,078 Shares by AHB to the entitledshareholders of AHB; and

A restricted issue of 158,121,922 new Shares to Tan Sri Dato’ Azman Hashim and therelated companies

39,600,000 Shares allocated by way of a restricted offer for sale by AHB to eligibledirectors and employees of the Company and/or its Malaysian-incorporated subsidiary andassociated companies, eligible directors of AHB and business associates of AHB, whichincludes persons who have contributed to the success of the Group; and

118,800,000 Shares allocated to Tan Sri Dato’ Azman Hashim as an approved Bumiputerainvestor, by way of:-

An offer for sale of 66,363,922 Shares by AHB; and

A special issue of 52,436,078 new Shares

at an issue/offer price of RM1.40 per Share payable in full on application; and

The listing of and quotation for the entire enlarged issued and paid-up share capital of theCompany of RM1,320,000,000, comprising 1,320,000,000 Shares, on the Main Board ofBursa Securities.




(b)

48. PRIOR YEAR'S ADJUSTMENTS

Previouslystated Adjustments Restated

RM'000 RM'000 RM'000

GroupAs at 31 March 2004Unappropriated profit at end of year 4,402 (233,637) Gross non-performing loans and financing 284,938 1,273,018 Interest/Income-in-suspense (6,113) (189,716)

988,080 (183,603)

(238,039)

The AMFB Privatisation and Listing Scheme were approved by the shareholders of AHB at theExtraordinary General Meeting held on 31 January 2005.

AHB has also obtained the approval of Bank Negara Malaysia and the Minister of Finance and theSC for, inter-alia, the AMFB Privatisation and the Proposed Listing of AIGB via their letters dated10 December 2004 and 16 December 2004 respectively. The AMFB Privatisation and the ListingScheme are inter-conditional with each other.

On 13 October 2004, AHB entered into an agreement with AmMerchant Bank Berhad, a whollyowned subsidiary company for the acquisition of 47,116,000 ordinary shares of RM1.00 eachrepresenting 47.116% of the issued and paid-up share capital of AmAssurance Berhad("AmAssurance") from the Bank for a cash consideration of RM75,762,537 ("Acquisition byAHB"). Subsequently, by way of a supplemental agreement dated 21 March 2005, the cashconsideration is revised from RM75,762,537 to RM82,517,802, after taking into consideration theestimated share of profits from AmAssurance for a period of 12 months from 1 April 2004 up to 31March 2005.

The Acquisition by AHB are subject to the terms and conditions of AHB's sale and purchaseagreement (“SPA”). The Acquisition was approved by the Minister of Finance on 23 September 2004and SC on 23 February 2005 and does not require the approval of AHB's shareholders as it is anexcluded transaction pursuant to Chapter 10.02(j) of the Listing Requirements of Bursa MalaysiaSecurities Berhad.The Acquisition by AHB was completed on 24 March 2005.

During the financial period , the Group adopted the 3-month classification for non-performing loansinstead of the 6-month classification in previous years.

The accounting change has been accounted for retrospectively and the effects on prior years have beentaken up as prior year’s adjustments in the financial statements.

Accordingly, the following accounts in prior years have been restated to reflect the effects of the accountingchange:




49. ISLAMIC BANKING BUSINESS

BALANCE SHEETAS AT 31 MARCH 2005

Note GroupRM'000

ASSETS

Cash and short-term funds (ii) 581,950 Deposit with financial institutions (iii) 33,100 Dealing securities (iv) 165,618 Financing activities (v) 511,940 Statutory deposit with Bank Negara Malaysia 14,500 Other receivables, deposits and prepayments 3,218 Deferred tax assets (vi) 2,789 Property and equipment (vii) 41 TOTAL ASSETS 1,313,156

LIABILITIES AND ISLAMIC BANKING FUNDS

Deposits from customers (viii) 311,881 Deposits of banks and other financial institutions (ix) 355,623 Converted fund (x) 301,677 Other liabilities (xi) 139,541 Total Liabilities 1,108,722

ISLAMIC BANKING FUNDSCapital funds (xii) 100,000 Unappropriated profit 104,434 Islamic Banking Funds 204,434

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,313,156

COMMITMENTS AND CONTINGENCIES (xix) 2,287,399

The accompanying notes form an integral part of the Islamic Banking Business financial statements.

The state of affairs as at 31 March 2005 and the results for the financial period ended 31 March 2005 ofthe Islamic Banking Business of the merchant banking subsidiary company, AmMerchant Bank Berhadincluded in the Group financial statements are summarised as follows:




INCOME STATEMENTFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005

Note GroupRM'000

Income derived from investment of depositors' fundsand others (xiii) 40,295

Reversal of allowance for diminution in value of investments 35 Financing loss and allowances (xiv) (23,385) Transfer to profit equalization reserve (2,195) Total attributable income 14,750 Income attributable to the depositors (xv) (35,358) Loss attributable to the Group (20,608) Income derived from Islamic Banking Funds (xvi) 42,174 Total net income 21,566 Operating expenditure (xvii) (3,772) Profit before taxation 17,794 Taxation (xviii) (5,035) Profit after taxation 12,759







DistributableCapital Unappropriated

Group Funds Profit TotalRM'000 RM'000 RM'000

At date of incorporation - - - Effects arising from merger 60,000 91,675 151,675 Increase during the period 40,000 - 40,000 Profit for the period - 12,759 12,759

At 31 March 2005 100,000 104,434 204,434




CASH FLOW STATEMENTFOR THE FINANCIAL PERIOD ENDED 31 MARCH 2005

GroupRM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation 17,794 Add/(Less) adjustments for:Reversal of allowance for diminution in value of investments (35) Reversal of general allowance for bad and doubtful financing (1,166) Specific allowance for bad and doubtful financing 32,509 Net income suspended 1,786 Depreciation of property and equipment 48 Transfer to profit equalization reserve 2,195

Operating profit before working capital changes 53,131 (Increase)/Decrease in operating assets

Deposits with financial institutions (3,100) Dealing securities (107,000) Financing activities 43,424 Other receivables, deposits and prepayments (1,984)

Increase/(Decrease) in operating liabilitiesDeposits from customers 87,151 Deposits of banks and other financial institutions 52,659 Converted fund (26,644) Other liabilities 36,617

Net cash generated from operating activites 134,254

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of property and equipment (65) Net cash used in investing activities (65)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from increase in capital funds 40,000 Net cash generated from financing activities 40,000

Net increase in cash and cash equivalents 174,189 Cash and cash equivalents at beginning of period 407,761 Cash and cash equivalents at end of period 581,950





NOTES TO THE ISLAMIC BANKING BUSINESS FINANCIAL STATEMENTS

(i) ISLAMIC BANKING BUSINESS

Disclosure of Shariah Advisor

(a)

(b)

Zakat obligations

The Group does not pay zakat on behalf of the shareholder or depositors.

(ii) CASH AND SHORT TERM FUNDS

GroupRM'000

Cash and bank balances 150 Money on call and deposits maturing within one month:

Licensed banks:Related 30,000 Others 546,800

Other licensed finance companies 5,000 581,950

(iii) DEPOSITS WITH FINANCIAL INSTITUTIONS

GroupRM'000

Other financial institutions 33,100

The Group’s Islamic banking activities are subject to conformity with Shariah requirements andconfirmation by the Shariah Advisor, Professor Madya Dato’ Hj Md. Hashim bin Yahya, Dato’ SheikhGhazali bin Hj Abdul Rahman and Professor Dr Mohd Daud Bakar. The role and authority of theShariah Advisor are as follows:

Advise and provide guidance on all matters pertaining to Shariah principles including productdevelopment, marketing and implementation activities.

Assist in the setting up of business and operational procedures with respect to compliance withShariah principles.




(iv) DEALING SECURITIES

GroupRM'000

Money Market Securities:Cagamas bonds 60,022 Khazanah bonds 139 Negotiable Islamic debt certificates 48,112 Malaysian Government Investment Certificates 668

108,941

Unquoted Private Debt Securities of Companies Incorporated In Malaysia:

Islamic corporate bonds 56,677 165,618

Allowance for diminution in value of investments - Total/Net 165,618

Market/Indicative value:

Money Market Securities:Cagamas bonds 60,363 Khazanah bonds 138 Negotiable Islamic debt certificates 48,295 Malaysian Government Investment Certificates 671

Unquoted Private Debt Securities of Companies Incorporated In Malaysia:

Islamic corporate bonds 56,557




(v) FINANCING ACTIVITIES

GroupRM'000

Term financing 550,101

Less:General allowance for bad and doubtful financing 7,796 Specific allowance for bad and doubtful financing 22,352 Income-in-suspense 8,013

38,161

Net financing 511,940

Financing analysed by concepts are as follows:

Bai Bithaman Ajil 514,471 Murabahah 19,131 Wujuh 16,499

550,101

The maturity structure of financing are as follows:

Maturing within one year 504,253 One year to three years - Three to five years 20,099 Over five years 25,749

550,101

Financing analysed by their economic purposes are as follows:

Property investment holding 325,719 Electricity, gas and water 135,331 Agriculture 19,131 Construction 25,749 Transport, storage and communication 20,099 Real estate 9,552 Purchase of non-residential landed property 7,966 Manufacturing 6,554

550,101

Financing analysed by type of customers are as follows:

Business enterprises 221,422 Small and medium size industries 328,679

550,101




GroupRM'000

Financing analysed by profit rate sensitivity are as follows:

Fixed rateTerm loans 530,970

Variable rateCost-plus 19,131

550,101

Movements in non-performing financing are as follows:

GrossBalance at date of incorporation - Effects arising from merger 51,264 Non-performing during the period 1,826 Debt equity conversion (2,178) Recoveries (556) Reclassification to performing financing (70) Balance at end of period 50,286

Less:Specific allowance 22,352 Income-in-suspense 8,013

30,365

Non-performing financing - net 19,921

Ratio of non-performing financing to total financing - Net 3.83%

Non-performing financing analysed by their economic purposes are as follows:

Construction 25,749Real estate 9,552Purchase of non-residential landed property 7,966Manufacturing 6,554Others 465

50,286




GroupRM'000

General AllowanceBalance at date of incorporation - Effects arising from merger 8,962 Reversal of allowance during the period (1,166) Balance at end of period 7,796

% of total loans less specific allowance and income-in-suspense 1.50%

Specific AllowanceBalance at date of incorporation - Effects arising from merger 11,452 Allowance made during the period 32,509 Amount written off (21,609) Balance at end of period 22,352

Income-in-suspenseBalance at date of incorporation - Effects arising from merger 6,227

Income suspended during the period 1,787 Amount written back in respect of recoveries (1)

Net charge to income statement 1,786 Balance at end of period 8,013

Movements in allowances for bad and doubtful financing and income-in-suspense accounts are asfollows:




(vi) DEFERRED TAX ASSETS

GroupRM'000

Balance at date of incorporation - Effects arising from merger 2,509 Net transfer from income statement (Note xviii) 280 Balance at end of period 2,789

The deferred taxation is in respect of the following: General allowance for financing activites 2,184 Profit equalisation reserve 614 Temporary difference between depreciation

and tax allowance (9) 2,789

(vii) PROPERTY AND EQUIPMENT

Computer Officehardware equipment,

Leasehold and furniture andGroup improvements software fittings Total

RM'000 RM'000 RM'000 RM'000

COST

Balance at date of incorporation - - - - Effects arising from merger 3 40 104 147 Addition 36 27 2 65 Transfer - (8) - (8) At end of period 39 59 106 204

ACCUMULATED DEPRECIATION

Balance at date of incorporation - - - - Effects arising from merger 1 37 77 115 Addition 36 - 12 48 At end of period 37 37 89 163

NET BOOK VALUE

As at 31 March 2005 2 22 17 41




(viii) DEPOSITS FROM CUSTOMERS

GroupRM'000

Mudarabah FundMudarabah Special Investment deposits 311,881

311,881

The maturity structure of term/investment deposits is as follows:

GroupRM'000

Due within six months 286,238 Six months to one year 25,643

311,881

The deposits are sourced from the following types of customers:

GroupRM'000

Business enterprises 197,122 Others 114,759

311,881




(ix) DEPOSITS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

GroupRM'000

Mudarabah FundLicensed banks 99,614 Other financial institutions 226,009

Non-Mudarabah FundRelated licensed finance company 30,000

355,623

(x) CONVERTED FUND

(xi) OTHER LIABILITIES

GroupRM'000

Other payables and accruals 92,700 Taxation and zakat payable 44,646 Profit equalisation reserve 2,195

139,541

The movements in profit equalisation reserve are as follows:

GroupRM'000

Balance at date of incorporationEffects arising from merger - Provision during the period 6,042 Amount written back (3,847) Balance at end of period 2,195

This represent funds transferred from Non Islamic Banking Business to Islamic Banking Business forfunding purposes at commercial terms.




(xii) CAPITAL FUNDS

GroupRM'000

Allocated : Balance at date of incorporation - Effects arising from merger 60,000 Increase during the period 40,000 Balance at end of period 100,000

Utilised :Balance at date of incorporation - Effects arising from merger 60,000 Increase during the period 40,000 Balance at end of period 100,000

(xiii) INCOME DERIVED FROM INVESTMENT OF DEPOSITORS’ FUNDS AND OTHERS

GroupRM'000

Income derived from investment of:(i) general investment deposits 26,923 (ii) specific investment deposits 7,757 (iii) others 5,615

40,295

(i) Income derived from investment of general investment deposits

GroupRM'000

Finance income and hibah : Financing activities 17,165 Dealing securities 2,122 Money at call and deposits with financial institutions 9,114

28,401 Income-in-suspense (1,478)

26,923




(ii) Income derived from investment of specific investment deposits

GroupRM'000

Finance income and hibah : Financing activities 7,757

(iii) Income derived from investment of other deposits

GroupRM'000

Finance income and hibah : Financing activities 3,580 Dealing securities 442 Money at call and deposits with financial institutions 1,901

5,923 Income-in-suspense (308)

5,615

(xiv) FINANCING LOSS AND ALLOWANCES

GroupRM'000

(Reversal of allowance)/Allowance for bad and doubtfulfinancing:- general allowance (1,166) - specific allowance (net) 32,509

Bad debts recovered (7,958) 23,385




(xv) INCOME ATTRIBUTABLE TO DEPOSITORS

GroupRM'000

Deposits from customers- Mudarabah Fund 15,285

Deposits and placements of banks and other financialinstitutions- Mudarabah Fund 5,341 - Non-Mudarabah Fund -

Converted funds 14,732 35,358

(xvi) INCOME DERIVED FROM ISLAMIC BANKING FUNDS

GroupRM'000

Finance income and hibah :Financing activities 5,265 Dealing securities 474 Money at call and deposits with financial institutions 2,035

7,774

Net gain from sale of dealing securities 26,582

Fee and commission incomeGuarantee fees 3,200 Other fee income 4,618

7,818

Total 42,174

(xvii) OPERATING EXPENDITURE

GroupRM'000

Personnel costs 1,478 Establishment costs 66 Marketing and communication expenses 397 Administration and general expenses 1,831

3,772




(xviii) TAXATION

GroupRM'000

Estimated current tax payable 5,315 Transfer to deferred tax assets (Note vi) (280) Total 5,035

(xix) COMMITMENTS AND CONTINGENCIES

Credit RiskPrincipal Equivalent Weighted

Group Amount Amount AmountRM'000 RM'000 RM'000

CommitmentsIrrevocable commitments to extend credit

maturing within one year 75,000 - - Sell and buy back agreements 1,797,882 1,797,882 965,427

1,872,882 1,797,882 965,427

Contingent LiabilitiesIslamic revolving underwriting facilities 174,000 87,000 66,600 Certain transaction-related contingent items 2,444 1,222 1,222 Al-Kafalah guarantees 238,073 238,073 126,637

414,517 326,295 194,459

2,287,399 2,124,177 1,159,886

In the normal course of business, the Islamic Banking Business of the Group make variouscommitments and incur certain contingent liabilities with legal recourse to its customers. No materiallosses are anticipated as a result of these transactions. The commitments and contingencies are notsecured against the Group’s assets.

The credit equivalent amount is arrived at using the credit conversion factor as per Bank NegaraMalaysia guidelines.




(xx) YIELD/PROFIT RATE RISK

Non-Group Up to 1 >1 - 3 >3 - 6 >6 - 12 1 - 5 Over 5 yield/profit

month months months months years years sensitive TotalRM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

ASSETSCash and short-term funds 581,800 - - - - - 150 581,950 Deposits with financial institutions - 33,100 - - - - - 33,100 Dealing securities 17,193 - 15,865 25,250 105,010 2,300 - 165,618 Financing activities - performing 327,475 68,650 20,920 70,390 12,380 - - 499,815 - non-performing* - - - - - - 12,125 12,125 Other non-profit sensitive balances - - - - - - 20,548 20,548 TOTAL ASSETS 926,468 101,750 36,785 95,640 117,390 2,300 32,823 1,313,156

LIABILITIES AND ISLAMIC BANKING FUNDSDeposits from customers 196,440 78,903 10,895 25,643 - - - 311,881 Deposits of banks and other financial institutions 190,210 131,084 24,379 412 9,538 - - 355,623 Converted funds 5,704 152,741 5,370 1,073 - - 136,789 301,677 Other non-profit sensitive balances - - - - - - 139,541 139,541 Total Liabilities 392,354 362,728 40,644 27,128 9,538 - 276,330 1,108,722 Islamic Banking Funds - - - - - - 204,434 204,434 TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 392,354 362,728 40,644 27,128 9,538 - 480,764 1,313,156

On-balance sheet yield/profit rate sensitivity gap 534,114 (260,978) (3,859) 68,512 107,852 2,300 (447,941) - Off-balance sheet yield/profit rate sensitivity gap (696,772) (764,617) (240,651) 410,362 1,048,074 243,604 - - Total yield/profit rate sensitivity gap (162,658) (1,025,595) (244,510) 478,874 1,155,926 245,904 (447,941) -

Cumulative yield/profit rate sensitivity gap (162,658) (1,188,253) (1,432,763) (953,889) 202,037 447,941 - -

* This is arrived at after deducting the general allowance, specific allowance and income-in-suspense from gross non-performing financing outstanding.

The following table shows the effective profit rates at the balance sheet date and the periods in which the financial instruments reprice or mature, whichever is earlier.




(xxi) FAIR VALUE OF ISLAMIC BANKING OPERATIONS FINANCIAL INSTRUMENTS

Carrying FairGroup Value Value

RM'000 RM'000

Financial AssetsCash and short-term funds 581,950 581,950 Deposits with financial institutions 33,100 33,100 Dealing securities 165,618 166,024 Financing activities* 519,736 531,165 Other financial assets 3,218 3,218

1,303,622 1,315,457 Non-financial assets 9,534 TOTAL ASSETS 1,313,156

Financial LiabilitiesDeposits from customers 311,881 311,968 Deposits of banks and other financial institutions 355,623 355,738 Converted fund 301,677 301,677 Other financial liabilities 92,700 92,700

1,061,881 1,062,083 Non-financial liabilities

Other non-financial liabilities 46,841 Islamic Banking Funds 204,434

251,275

TOTAL LIABILITIES AND ISLAMIC BANKING FUNDS 1,313,156

The estimated fair values of the Group’s Islamic Banking Business financial instruments are as follows:

* The general allowance for the Group amounting to RM7,796,000 has been included under non-financial assets.




(xxii) NET INCOME FROM ISLAMIC BANKING BUSINESS

GroupRM'000

Income derived from investment of depositors' funds 40,295 Less : Income attributable to depositors (35,358) Income attributable to the Group 4,937 Income derived from Islamic Banking Funds 42,174

47,111

(xxiii) CAPITAL ADEQUACY RATIO

(i)

RM'000

Tier 1 capital Islamic Banking Funds 100,000 Unappropriated profit at end of period, net of deferred tax assets 101,645 Total tier 1 capital 201,645

Tier 2 capital General allowance for bad and doubtful financing 7,796 Total tier 2 capital 7,796

Capital base 209,441

Capital Ratios: Core capital ratio 11.17% Risk-weighted capital ratio 11.60%

(ii) Breakdown of gross risk-weighted assets in the various categories of risk-weights:

Risk-Principal WeightedRM'000 RM'000

0% 477,169 - 10% 54,433 5,44320% 1,249,864 249,97350% 222,873 111,437

100% 1,438,002 1,438,0023,442,341 1,804,855

For consolidation with the conventional operations, net income from Islamic Banking Businesscomprises the following items:

The capital adequacy ratio of the Islamic Banking Business as at 31 March 2005 is analysedas follows:




50. COMPARATIVES

51. CURRENCY

All amounts are in Ringgit Malaysia.

Comparative figures for the Group and the Company are not presented as this is the Group and Company'sfirst set of financial statements since its date of incorporation.The current year's financial statements of theCompany is for the period from 23 June 2004 (date of incorporation) to 31 March 2005, and the Group isfor the twelve months ended 31 March 2005.



Documents

AmINVESTMENT GROUP BERHAD · 2018-04-18 · AmINVESTMENT GROUP BERHAD (Incorporated in Malaysia) AND ITS SUBSIDIARY COMPANIES (Company No. 657000-X) ... ("SC") via its letter dated