Business Overview

ICompany No. 1010253-W I ICompany No. 1010253-W I 6. INFORMATION ON OUR GROUP 6.1 Our Company Our Company was incorporated in Malaysia under the Act as a private company limited by shares on 17 July 2012 under the name of MPHB Capital Sdn Bhd. On 23 July 2012, our Company was converted to a public company limited by shares and assumed our present name. We are principally an investment holding company whilst our subsidiaries are principally involved in general insurance business, credit business and investments. Our Group structure, including our associated company (after completion of the Pre-IPO Reorganisation on 29 March 2013), is as follows:
MPHB CAPITAL I
_-­ 1_______________________  _  1  ,  I I : INSURANCE &CREDIT : I I _______________________________________________  I : , _  INVESTMENTS  ———————­ I I I1
MPCapitalII 100.0%1
II~~~~J IIMPIB TUI I IL _____

I100.0%1 100.0%1 100.0%1 100.0%1 MPCredit QNTSBMP Credit MP Factors MPVentureNominees Magnum Leisure  MP Shipping  WJSB 70.0%
SPSSB MP Development
c==J Subsidiary Mulpha ; —-: Associated company L_ 46 5. INFORMATION ON OUR GROUP (cont’d)
6.2 Pre-IPO Reorganisation On 15 August 2012 and 29 March 2013, our Company entered into share sale agreements

with MPHB to acquire the following companies (“Acquisitions”): Satisfied via Ordinary  Preference  No. of new  share  share  Shares  Cash  Company  capital acquired(1}  capital acquired(l)  Purchase consideration  issued to MPHB  payable to MPHB  %  RMOOO  000  RMOOO  CGSB  100.0  n.a.  (2)  (3)  Jayavest  100.0  n.a.  35,118  35,118  Kelana Megah  100.0  100.0  142,510  141,976  534  Magnum.Com  100.0  n.a.  30,036  30,036  Magnum Leisure  100.0  n.a.  40,874  40,874  MP Capital  100.0  n.a.  392,831  355,293  37,538  MP Shipping  100.0  n.a.  1,926  1,926  SPSSB  100.0  n.a.  75,746  75,746  Tibanis  100.0  2.0(4)  91,612  91,612  Mimaland  98.2  n.a.  94,711  55,209  39,502  Leisure Dotcom  70.0  n.a.  (2)  (3)  QNASB  70.0  n.a.  (2)  (3)  QNTSB  70.0  n.a.  (2)  (3)  WJSB  70.0  n.a.  (2)  (~)  Total  905,364  715,000  190,364
Notes: (1) Information on the number of ordinary shares and preference shares of the respective companies are set out in Section 6.4 of this Prospectus.
(2) Represents purchase consideration of RM2.00.
(3) Represents 2 new Shares issued.
(4) Represents 1 preference share held by MPHB prior to the Acquisitions out of the total of 51 preference shares. The remaining 50 preference shares are held by other third parties.

n.a. not applicable. 6. INFORMATION ON OUR GROUP (cant’d) The purchase consideration for the abovementioned companies were arrived at after taking into consideration, among others, the audited NA as at 31 December 2011 and the earnings potential of these companies and their subsidiaries. In conjunction with the Acquisitions, MPHB had also entered into debt novation agreements whereby MPHB Capital had assumed from MPHB, the amounts owing by MPHB to MP Capital, Kelana Megah and Mimaland amounting to RM77.6 million in aggregate as at 30 June 2012 (“Debt Novation”). MPHB Capital had partly set-off the cash consideration due to MPHB of RM190.4 million arising from the Acquisitions against the amount due from MPHB pursuant to the Debt Novation of RM77.6 million. As a result, MPHB Capital owes MPHB a balance of RM112.8 million, which shall be payable within 18 months from the completion of the share sale agreements. The amount owing of RM112.8 million is intended to be paid using our Group’s internally generated funds (for instance through realising the value of our investments in properties) and/or borrowings. Our Board will evaluate the various options available to us in ensuring that the repayment to MPHB is made without any material and adverse impact on our financial strength in the near future. For example, we can utilise some of the cash proceeds of RM115.0 million from the compulsory acquisition of our land bank in Pengerang, Kota Tinggi, Johor by the State Authority of Kota Tinggi, Johor. Following the Debt Novation, there is an amount of RM77.6 million owing by our Company to MP Capital, Kelana Megah and Mimaland. These amounts may be repaid by our Company following the declaration of dividends by MP Capital, Kelana Megah and Mimaland. In such an event, the amount of cash dividends received by our Company will be reduced by the amount owing to MP Capital, Kelana Megah and Mimaland until the entire amount of RM77.6 million has been repaid by our Company. The Pre-IPO Reorganisation was completed on 29 March 2013. 6.3 Share capital Our authorised share capital as at the LPD is RM1 ,000,000,000.00 comprising 1,000,000,000 Shares while our issued and paid-up ordinary share capital as at the LPD is RM715,OOO,000.00 comprising 715,000,000 Shares. As at the LPD, neither our Company nor our subsidiaries and associated company has any outstanding warrant, options, convertible security or uncalled capital. Details of the changes to our issued and paid-up share capital since our incorporation up to the LPD are as follows: Cumulative issued Par and paid-up Date of allotment No. of Shares value Consideration share capital RM RM Ordinary shares 17.07.2012 2 1.00 Subscribers’ shares (cash) 2.00 29.03.2013 714,999,998 1.00 Issued pursuant to the 715,000,000.00 Acquisitions 6. INFORMATION ON OUR GROUP (cont’d) 6.4 Subsidiaries and associated company As at the date of this Prospectus, our subsidiaries and associated company are as follows:
Name  Date and country of incorporation  Issued and paid-up share capital RM unless otherwise stated  Group’s effective interest %  Principal activities  Subsidiaries  Direct wholly-owned subsidiaries of MPHB Capital  CGSB  21.11.2007 Malaysia  20.00  100.0  Investment holding  Jayavest  25.03.1981 Malaysia  50,000.00  100.0  Investment holding  Kelana Megah  22.05.1991 Malaysia  112,542,000.00*  100.0  Plantation and property holding  Magnum.Com  19.03.1997 Malaysia  34,296,002.00  100.0  Property investment  Magnum Leisure  27.01.1997 Malaysia  48,100,000.00  100.0  Operation of a hotel  MP Capital  09.04.1982 Malaysia  220,000,000.00  100.0  Investment holding  MP Shipping  08.03.1982 Malaysia  38,877,242.00  100.0  Investment holding and property investment  SPSSB  20.03.1972 Malaysia  47,936,000.00  100.0  Property investment and management and operation of hotel  Tibanis  02.01.2004 Malaysia  35,147,007.10*  100.0  Property investment  Direct partially-owned subsidiaries of MPHB Capital  Mimaland  03.12.1971 Malaysia  48,750,000.00  98.2  Property investment  Leisure Dotcom  25.04.2000 Malaysia  100,000.00  70.0  Property investment  QNASB  17.11.1995 Malaysia  10.00  70.0  Property investment  QNTSB  13.05.1982 Malaysia  4,000.00  70.0  Property investment  WJSB  20.01.1972 Malaysia  200,000.00  70.0  Investment holding and property investment  49
6. INFORMATION ON OUR GROUP (cant’d) Name  Date and country of incorporation  Issued and paid-up share capital RM unless othelWise stated  Group’s effective interest %  Principal activities  Subsidiaries of MP Capital  MP Credit Holdings  28.06.1995 Malaysia  15,000,002.00  100.0  Investment holding  MPIB  28.05.1973 Malaysia  100,000,000.00  100.0  General insurance business of all classes  Subsidiaries of MP Credit Holdings  MP Credit  21.11.1978 Malaysia  15,000,000.00  100.0  Credit and leasing business, hire purchase and general loans financing  MP Credit Nominees  17.08.1994 Malaysia  2.00  100.0  Nominee services  MP Factors  03.05.1995 Malaysia  34,600,000.00  100.0  Business of factoring and property investment  MP Venture  14.09.1994 Malaysia  2.00  100.0  Dormant  Subsidiaries of MP Shipping
MP Development  15.04.1977 Malaysia  1,154,506.00  100.0  Property development  Mulpha  03.06.1983 Malaysia  25,000.00  70.0  Property investment  Subsidiary of SPSSB  FMSB  11.12.1993 Malaysia  100,000.00  100.0  Hotel management  Associated company  Associated company of MP Capital  Tune  27.03.2009 Malaysia  USD143,000.00  20.0  Reinsurance  Note:
Includes preference shares issued by the respective companies. 6. INFORMATION ON OUR GROUP (cont’d) The details of our subsidiaries and associated company are set out below: 6.4.1 Direct wholly-owned subsidiaries of MPHB Capital (i) CGSB (Company No. 796653-M) (a) History and business CGSB was incorporated in Malaysia under the Act as a private limited company on 21 November 2007 under its present name and commenced its business on 28 April 2009. As at the LPD, the principal activity of CGSB is investment holding. CGSB owns parcels of land in Kuala Lumpur. CGSB will continue to seek strategic partnerships with property developers to develop these parcels of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of CGSB is RM100,OOO.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of CGSB as at the LPD is RM20.00 comprising 20 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-up share capital of CGSB for the 3 years preceding the LPD are as follows: Cumulative Date of allotment  No. of shares  Par value RM  Consideration  issued and paid-up share capital RM  Ordinary shares  20.04.2011  18  1.00  Cash, at RM1.00 per share  20.00
(c) Shareholder As at the date of this Prospectus, CGSB is our wholly-owned subsidiary. (d) Subsidiary or associated company As at the LPD, CGSB does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) (ii) Jayavest (Company No. 68778-A) (a) History and business Jayavest was incorporated in Malaysia under the Act as a private limited company on 25 March 1981 under its present name and commenced its business in 1985. As at the LPD, the principal activity of Jayavest is investment holding. Jayavest is the registered owner of the parcels of land in lVIinden Heights, Gelugor, Penang. It entered into a JV with PPM Realty Sdn Bhd for the development by PPM Realty Sdn Bhd of these parcels of land. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of Jayavest is RM20,OOO,OOO.00 comprising 20,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Jayavest as at the LPD is RM50,OOO.00 comprising 50,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of Jayavest for the 3 years preceding the LPD. (c) Shareholder As at the date of this Prospectus, Jayavest is our wholly-owned subsidiary. (d) Subsidiary and associated company As at the LPD, Jayavest does not have any sUbsidiary or associated company. (iii) Kelana Megah (Company No. 217579-H) (a) History and business Kelana Megah was incorporated in Malaysia under the Act as a private limited company on 22 May 1991 under its present name and commenced its business in 1996. As at the LPD, the principal activities of Kelana Megah are plantation and property holding. Kelana Megah owns plantation land in Johor, the operation of which is currently outsourced. Please refer to Section 7.3 of this Prospectus for further details. 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPO, the authorised share capital of Kelana Megah is RM200,OOO,OOO.00 comprising 195,000,000 ordinary shares of RM1.00 each and 5,000,000 preference shares of RM1.00 each. The issued and paid-up share capital of Kelana Megah as at the LPO is RM112,542,OOO.00 comprising 111,612,000 ordinary shares of RM1.00 each and 930,000 preference shares of RM1.00 each*. Note: The preference shares are Class ‘A’ 1.0% redeemable cumulative preference shares of RM1.00 each which were issued to MPHB which entitle the holder to a fixed cumulative preferential dividend at the rate of 1.0% per annum on the capital and are redeemable at any time by the companyout ofprofits atRM100.00 pershare. There has been no change to the issued and paid-up share capital of Kelana Megah for the 3 years preceding the LPO. (c) Shareholder As at the date of this Prospectus, Kelana Megah is our wholly-owned subsidiary. (d) Subsidiary and associated company As at the LPO, Kelana Megah does not have any subsidiary or associated company. (iv) Magnum.Com (Company No. 423770-V) (a) History and business Magnum.Com was incorporated in Malaysia under the Act as a private limited company on 19 March 1997 under the name of Outa Cergas Sdn Bhd. It changed to its present name on 10 April 2000. It commenced business on 17 March 2004. The principal activity of Magnum.Com is property investment. Magnum.Com owns parcels of land at the south west of Penang. It entered into a JV with Orion Vibrant Sdn Bhd (“Orion”), a wholly­owned subsidiary of BROB, for the proposed development by Orion of these parcels of land into a residential development comprising bungalows, semi-detached houses and condominium. Please refer to Section 7.3 of this Prospectus for further details. 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPD, the authorised share capital of Magnum.Com is RM50,OOO,OOO.00 comprising 50,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Magnum.Com as at the LPD is RM34,296,002.00 comprising 34,296,002 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-up share capital of Magnum.Com for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-up share allotment shares value Consideration capital RM RM Ordinary shares 03.05.2012 34,296,000 1.00 Cash, at RM1.00 per 34,296,002.00 share (c) Shareholder As at the date of this Prospectus, Magnum.Com is our wholly-owned subsidiary. (d) Subsidiary and associated company As at the LPD, Magnum.Com does not have any subsidiary or associated company. (v) Magnum Leisure (Company No. 418682-V) (a) History and business Magnum Leisure was incorporated in Malaysia under the Act as a private limited company on 27 January 1997 under the name of Syabas Jaguh Sdn Bhd. It changed to its present name on 31 March 1997. It commenced business on 11 August 2006. The principal activity of Magnum Leisure is operation of a hotel. Magnum Leisure is the registered owner and operator of Hotel Flamingo by the beach, in Tanjong Bungah, Penang. 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPD, the authorised share capital of Magnum Leisure is RM50,000,000.00 comprising 50,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Magnum Leisure as at the LPD is RM48,1 00,000.00 comprising 48,100,000 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-up share capital of Magnum Leisure for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-up share allotment shares value Consideration capital RM RM Ordinary shares 03.05.2012 48,000,000 1.00 Cash, at RM1.00 per 48,100,000.00 share (C) Shareholder As at the date of this Prospectus, Magnum Leisure is our wholly­owned sUbsidiary. (d) Subsidiary and associated company As at the LPD, Magnum Leisure does not have any sUbsidiary or associated company. (vi) MP Capital (Company No. 83311-U) (a) History and business MP Capital was incorporated in Malaysia under the Act as a private limited company on 9 April 1982 under the name of Aslira Sdn Bhd. It changed its name to Mulpha Capital Holdings Sdn Bhd on 30 April 1985. It was subsequently converted to a public company on 7 April 1993 and further changed to its present name on 13 May 1993. It commenced business on 23 September 1982. The principal activity of MP Capital is investment holding. (b) Share capital As at the LPD, the authorised share capital of MP Capital is RM1,000,OOO,OOO.00 comprising 1,000,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Capital as at the LPD is RM220,000,000.00 comprising 220,000,000 ordinary shares of RM1.00 each. There has been no change to the Issued and paid-up share capital of MP Capital for the 3 years preceding the LPD. 1Company NO.1 01 0253-W I 6. INFORMATION ON OUR GROUP (cont’d) (c) Shareholder As at the date of this Prospectus. MP Capital is our wholly-owned subsidiary. (d) Subsidiaries and associated company As at the LPD. MP Capital has 2 wholly-owned subsidiaries. namely MPIB and MP Credit Holdings. As at the LPD. MP Capital also holds 20.0% of the issued and paid-up share capital in Tune. (vii) MP Shipping (Company No. 82073-X) (a) History and business MP Shipping was incorporated in Malaysia under the Act as a public limited company on 8 March 1982 under its present name and commenced its business in 1984. The principal activities of IVIP Shipping are investment holding and property investment. MP Shipping owns parcels of land at the south west of Penang. MP Shipping will continue to seek strategic partnerships with property developers to develop these parcels of land. In addition. it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of MP Shipping is RM100,000,000.00 comprising 100,000,000 ordinary shares of RM 1.00 each. The issued and paid-up share capital of MP Shipping as at the LPD is RM38,877,242.00 comprising 38.877.242 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Shipping for the 3 years preceding the LPD. (c) Shareholder As at the date of this Prospectus, MP Shipping is our wholly-owned subsidiary. (d) Subsidiaries and associated company As at the LPD, MP Shipping has 2 subsidiaries. namely Mulpha and MP Development. MP Shipping does not have any associated company as at the LPD. I Company No. 1010253-W I 6. INFORMATION ON OUR GROUP (cont’d) (viii) SPSSB (Company No. 11920-A) (a) History and business SPSSB was incorporated in Malaysia under the Act as a private limited company on 20 March 1972 under the name of Sharikat Perniagaan Selangor Sdn Berhad. It changed to its present name on 24 January 1992. It commenced business on 1 March 1977. As at the LPD, the principal activities of SPSSB are property investment and management and operation of a hotel. SPSSB is the registered owner and operator of Hotel Flamingo by the lake and Plaza Flamingo, an office building, both located in Ampang, Selangor. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of SPSSB is RM50,OOO,OOO.00 comprising 50,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of SPSSB as at the LPD is RM47,936,OOO.00 comprising 47,936,000 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-up share capital of SPSSB for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-up share allotment shares value Consideration capital RM RM Ordinary shares 03.05.2012 45,936,000 1.00 Cash, at RM1.00 per 47,936,000.00 share (c) Shareholder As at the date of this Prospectus, SPSSB is our wholly-owned sUbsidiary. (d) Subsidiary and associated company As at the LPD, SPSSB has a wholly-owned subsidiary, namely FMSB. SPSSB does not have any associated company as at the LPD. 6. INFORMATION ON OUR GROUP (cont’d) (ix) Tibanis (Company No. 638536-A) (a) History and business Tibanis was incorporated in Malaysia under the Act as a private limited company on 2 January 2004 under its present name and commenced its business on 12 April 2004. The principal activity of Tibanis is property investment. Tibanis owns parcels of land in the district of Gombak, Selangor. It entered into a JV with Pinggir Mentari Sdn Bhd, a wholly-owned subsidiary of BRDB, for the proposed development of these parcels of land. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of Tibanis is RM50,000,000.00 comprising 49,999,990 ordinary shares of RM1.00 each and 100 preference shares of RMO.10 each. The issued and paid-Up share capital of Tibanis as at the LPD is RM35,147,007.10 comprising 35,147,002 ordinary shares of RM1.00 each and 51 preference shares of RMO.10 each*. Note: The preference shares are the Class ‘A’ 1.0% redeemable cumulative preference shares of RMO.10 each which entitle the holder to a fixed cumulative preferential dividend at the rate of 1.0% per annum on the capital and are redeemable at any time by the company out of profit at RM1.00 per share. Details of the changes to the issued and paid-Up share capital of Tibanis for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-up share allotment shares value Consideration capital RM RM Ordinary shares 03.05.2012 35,147,000 1.00 Cash, at RM1.00 per 35,147,007.10 share (C) Shareholder As at the date of this Prospectus, the entire ordinary shares of Tibanis are held by our Company. As at the LPD, the preference shares are held by 51 preference share holders, comprising 1 corporate preference share holder and 50 individual preference share holders. (d) Subsidiary and associated company As at the LPD, Tibanis does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) 6.4.2 Direct partially-owned subsidiaries of MPHB Capital (i) Mimaland (Company No. 11461-U) (a) History and business Mimaland was incorporated in Malaysia under the Act as a private limited company on 3 December 1971 under the name of Mimaland Sdn Berhad. It was converted to a public company on 2 December 1972 under its present name. It commenced business on 6 JUly 1975. The principal activity of Mimaland is property investment. lVIimaland owns parcels of land in Gombak, Selangor. It entered into a JV with Magna Senandung Sdn Bhd, a wholly-owned sUbsidiary of BRDB, for the proposed development by Magna Senandung Sdn Bhd of these parcels of land. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of Mimaland is RM50,OOO,OOO.00 comprising 50,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Mimaland as at the LPD is RM48,750,OOO.00 comprising 48,750,000 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-Up share capital of Mimaland for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-Up share allotment shares value Consideration capital RM RM Ordinary shares 04.01.2011 33,750,000 1.00 Cash, at RM1.00 per 48,750,000.00 share (C) Shareholder As at the date of this Prospectus, MPHB Capital owns 98.2% of the issued and paid-up share capital of Mimaland while the remaining 1.8% is held by 368 other shareholders, comprising 13 corporate shareholders and 355 individual shareholders. (d) Subsidiary and associated company As at the LPD, Mimaland does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) (ii) Leisure Dotcom (Company No. 512466-A) (a) History and business Leisure Dotcom was incorporated in Malaysia under the Act as a private limited company on 25 April 2000 under its present name and commenced its business on 21 June 2007. The principal activity of Leisure Dotcom is property investment. Leisure Dotcom had on 21 June 2007 entered into a conditional sale and purchase agreement with Globesource Sdn Bhd to acquire a piece of freehold land and 2 leases in Kuala Lumpur (“Properties”). Leisure Dotcom commenced a legal proceeding at the High Court of Malaya at Kuala Lumpur against Globesource Sdn Bhd claiming for among others, specific performance for delivery of the Properties pursuant to the conditional sale and purchase agreement. Please refer to Section 15.5 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of Leisure Dotcom is RM100,OOO.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Leisure Dotcom as at the LPD is RM100,OOO.00 comprising 100,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of Leisure Dotcom for the 3 years preceding the LPD. (c) Shareholders As at the date of this Prospectus, MPHB Capital owns 70.0% of the issued and paid-up share capital of Leisure Dotcom while the remaining 30.0% is owned by ISM Sendirian Berhad (“ISM”)”. Note: ISM was incorporated in Malaysia under the Act as a private limited company on 29 December 1983. Its authorised share capital is RM1,000,OOO comprising 1,000,000 ordinary shares of RM1.00 each of which RM350,000 are issued as fully paid-up. The principal activity of ISM is property investment. The directors and shareholders of ISM are Dato’ Cheah Siong Lack @ Dato’ Ray Cheah and Datin Teoh Lye Chan. ISM has no relationship with our Company, the Promoters and/or our substantial shareholders, other than being a shareholder of 30.0% of Leisure Dotcom, QNASB, QNTSB, WJSB and Mulpha. (d) Subsidiary and associated company As at the LPD, Leisure Dotcom does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) (iii) QNASB (Company No. 367638-A) (a) History and business QNASB was incorporated in Malaysia under the Act as a private limited company on 17 November 1995 under its present name and commenced its business on 17 November 1995. The principal activity of QNASB is property investment. QNASB owns a parcel of land in Kuala Lumpur. QNASB will continue to seek strategic partnerships with property developers to develop the parcel of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of QNASB is RM100,000.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of QNASB as at the LPD is RM10.00 comprising 10 ordjnary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of QNASB for the 3 years preceding the LPD. (c) Shareholder As at the date of this Prospectus, MPHB Capital owns 70.0% of the issued and paid-up share capital of QNASB while the remaining 30.0% is owned by ISM. Please refer to Section 6.4.2(ii)(c) of this Prospectus for further details of ISM. (d) Subsidiary and associated company As at the LPD, QNASB does not have any subsidiary or associated company. (iv) QNTSB (Company No. 84737-A) (a) History and business QNTSB was incorporated in Malaysia under the Act as a private limited company on 13 May 1982 under the name of Queensway Nominees Sdn Bhd. It changed to its present name on 13 September 1995. It commenced business on 1 April 1983. The principal activity of QNTSB is property investment. QNTSB owns parcels of land in Kuala Lumpur. QNTSB will continue to seek strategic partnerships with property developers to develop these parcels of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. 61 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPD, the authorised share capital of QNTSB is RM25,000.00 comprising 25,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of QNTSB as at the LPD is RIVI4,OOO.00 comprising 4,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of QNTSB for the 3 years preceding the LPD. (c) Shareholder As at the date of this Prospectus, MPHB Capital owns 70.0% of the issued and paid-up share capital of QNTSB while the remaining 30.0% is owned by ISM. Please refer to Section 6.4.2(ii)(c) of this Prospectus for further details of ISM. (d) Subsidiary and associated company As at the LPD, QNTSB does not have any subsidiary or associated company. (v) WJSB (Company No. 11684-K) (a) History and business WJSB was incorporated in Malaysia under the Act as a private limited company on 20 January 1972 under the name of Bovis Sdn Berhad. It changed its name to Bovis-Ene Sdn Bhd on 8 October 1973 and sUbsequently to its present name on 21 February 1981. It commenced business on 1 January 1974. The principal activities of WJSB are investment holding and property investment. WJSB owns a parcel of land in Kuala Lumpur. WJSB will continue to seek strategic partnerships with property developers to develop the parcel of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of WJSB is RM1,000,OOO.00 comprising 1,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of WJSB as at the LPD is RM200,OOO.00 comprising 200,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of WJSB for the 3 years preceding the LPD. 6. INFORMATION ON OUR GROUP (cont’d) (c) Shareholder As at the date of this Prospectus, MPHB Capital owns 70.0% of the issued and paid-up share capital of WJSB while the remaining 30.0% is owned by ISM. Please refer to Section 6.4.2(ii)(c) of this Prospectus for further details of ISM. (d) Subsidiary and associated company As at the LPO, WJSB does not have any subsidiary or associated company. 6.4.3 Subsidiaries of MP Capital (i) MP Credit Holdings (Company No. 348628-W) (a) History and business MP Credit Holdings was incorporated in Malaysia under the Act as a pUblic limited company on 28 June 1995 under the name of Multi­Purpose Credit Holdings Berhad. It was converted to a private limited company on 22 August 1995 under its present name. It commenced business on 28 June 1995. As at the LPO, the principal activity of MP Credit Holdings is investment holding. (b) Share capital As at the LPO, the authorised share capital of MP Credit Holdings is RM25,OOO,000.00 comprising 25,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Credit Holdings as at the LPO is RM15,OOO,002.00 comprising 15,000,002 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Credit Holdings for the 3 years preceding the LPO. (c) Shareholder As at the LPO, MP Credit Holdings is a wholly-owned subsidiary of MP Capital. (d) Subsidiaries and associated company As at the LPO, MP Credit Holdings has 4 wholly-owned subsidiaries,’ namely MP Credit, MP Credit Nominees, MP Factors and MP Venture. MP Credit Holdings does not have any associated company as at the LPO. 6. INFORMATION ON OUR GROUP (cont’d) (ii) MPIB (Company No. 14730-X) (a) History and business MPIB was incorporated in Malaysia under the Act as a public limited company on 28 May 1973 under the name of KSM Insuran Berhad. It changed its name to Kompas Insurans Bhd on 7 September 1991 and further changed to its present name on 11 January 1995. It commenced business on 14 August 1973. As at the LPD, the principal activity of MPIB is general insurance business of all classes. (b) Share capital As at the LPD, the authorised share capital of MPIB is RM100,OOO,OOO.00 comprising 100,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MPIB as at the LPD is RM100,OOO,OOO.00 comprising 100,000,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MPIB for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MPIB is a wholly-owned subsidiary of MP Capital.
(d) Subsidiary and associated company

As at the LPD, MPIB does not have any subsidiary or associated company. 6.4.4 Subsidiaries of MP Credit Holdings (i) MP Credit (Company No. 43310-W) (a) History and business MP Credit was incorporated in Malaysia under the Act as a private limited company on 21 November 1978 under the name of K.S.M. Credit & Leasing Sdn Bhd. It changed its name to KCB Credit & Leasing Sdn Bhd on 20 December 1990 and further changed its name to Multi-Purpose Credit & Leasing Sdn Bhd on 22 September 1993, before assuming its present name on 14 October 1994. It commenced business on 4 May 1979. The principal activities of MP Credit are credit and leasing business, hire purchase and general loans financing. 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPD, the authorised share capital of MP Credit is RM55,OOO,OOO.00 comprising 55,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Credit as at the LPD is RM15,OOO,OOO.00 comprising 15,000,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Credit for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MP Credit is a wholly-owned subsidiary of MP Credit Holdings. (d) SUbsidiary and associated company As at the LPD, I\IIP Credit does not have any subsidiary or associated company. (ii) MP Credit Nominees (Company No. 311917-X) (a) History and business MP Credit Nominees was incorporated in Malaysia under the Act as a private limited company on 17 August 1994 under the name of Potential Selection Sdn Bhd. It changed its name to MUlti-Purpose Credit Nominees Sdn Bhd on 26 April 1995 and further changed to its present name on 15 September 1995. It commenced business on 31 October 1995. The principal activity of MP Credit Nominees is nominee services. (b) Share capital As at the LPD, the authorised share capital of MP Credit Nominees is RM100,OOO.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Credit Nominees as at the LPD is R1\II2.00 comprising 2 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Credit Nominees for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MP Credit Nominees is a wholly-owned subsidiary of MP Credit Holdings. (d) Subsidiary and associated company As at the LPD, NIP Credit Nominees does not have any subsidiary or associated company. 65 6. INFORMATION ON OUR GROUP (cont’d) (iii) MP Factors (Company No. 342341-H) (a) History and business MP Factors was incorporated in Malaysia under the Act as a private limited company on 3 May 1995 under the name of Constant Matrix Sdn Bhd. It changed to its present name on 4 July 1995. It commenced business on 31 October 1995. The principal activities of MP Factors are business factoring and property investment. MP Factors owns parcels of land in Kuala Lumpur. MP Factors will continue to seek strategic partnerships with property developers to develop these parcels of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of MP Factors is RM50,000,000.00 comprising 50,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Factors as at the LPD is RM34,600,OOO comprising 34,600,000 ordinary shares of RM1.00 each. Details of the changes to the issued and paid-up share capital of MP Factors for the 3 years preceding the LPD are as follows: Cumulative issued and Date of No. of Par paid-up share allotment shares value Consideration capital RM RM Ordinary shares 17.05.2012 19,600,000 1.00 Cash, at RM1.00 per 34,600,000.00 share (c) Shareholder As at the LPD, MP Factors is a wholly-owned subsidiary of MP Credit Holdings. (d) Subsidiary and associated company As at the LPD, MP Factors does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) (iv) MP Venture (Company No. 315749-P) (a) History and business MP Venture was incorporated in Malaysia under the Act as a private limited company on 14 September 1994 under the name of Modern Venue Sdn Bhd. It changed to its present name on 5 January 1995. It commenced business on 14 April 1995. As at the LPD, MP Venture is dormant. Our Board has not identified a business to be carried out by MP Venture. (b) Share capital As at the LPD, the authorised share capital of MP Venture is RM100,OOO.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Venture as at the LPD is RM2.00 comprising 2 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Venture for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MP Venture is a wholly-owned sUbsidiary of MP Credit Holdings. (d) SUbsidiary and associated company As at the LPD, MP Venture does not have any subsidiary or associated company. 6.4.5 Subsidiaries of MP Shipping (i) MP Development (Company No. 32312-U) (a) History and business MP Development was incorporated in Malaysia under the Act as a private limited company on 15 April 1977 under the name of Multi­Purpose Development Sdn Bhd. It changed its name to Mulpha Tapah Maritime Carriers Sdn Bhd on 23 December 1988 and further changed to its present name on 6 July 2007. It commenced business in June 1988. 6. INFORMATION ON OUR GROUP (cont’d) As at the LPD, the principal activity of MP Development is property development. MP Development is the registered owner of the parcels of land in Paya Terubong, Penang. It entered into a JV with Jiran Cergas Sdn Bhd for the development by Jiran Cergas Sdn Bhd of these parcels of land. The said development has been completed and the receipt of our entitlement pursuant to the terms of the JV is pending the release of the remaining sale proceeds. These sale proceeds are currently held by a stakeholder pursuant to the terms of the sale and purchase agreement entered into by IVIP Development (as the landowner) and Jiran Cergas Sdn Bhd (as the developer) with buyers of the properties contained in the said development. Please refer to Section 7.3 of this Prospectus for further details. (b) Share capital As at the LPD, the authorised share capital of MP Development is RM10,OOO,OOO.00 comprising 10,000,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of MP Development as at the LPD is RM1,154,506.00 comprising 1,154,506 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of MP Development for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MP Development is a wholly-owned subsidiary of MP Shipping. (d) Subsidiary and associated company As at the LPD, MP Development does not have any subsidiary or associated company. (ii) Mulpha (Company No. 102146-K) (a) History and business Mulpha was incorporated in Malaysia under the Act as a private limited company on 3 June 1983 under the name of Multi-Purpose Hotels & Resort Development Sdn Bhd. It changed to its present name on 19 December 1988. It commenced business in July 1988. As at the LPD, the principal activity of Mulpha is property investment. Mulpha owns parcels of land in Kuala Lumpur. Mulpha will continue to seek strategic partnerships with property developers to develop these parcels of land. In addition, it may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of its existing land bank. Please refer to Section 7.3 of this Prospectus for further details. 6. INFORMATION ON OUR GROUP (cont’d) (b) Share capital As at the LPD, the authorised share capital of Mulpha is RM1 00,000.00 comprising 100,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of Mulpha as at the LPD is R1V125,OOO.00 comprising 25,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of Mulpha for the 3 years preceding the LPD. (c) Shareholder As at the LPD, MP Shipping owns 70.0% of the issued and paid-up share capital of Mulpha while the remaining 30.0% is owned by ISM. Please refer to Section 6.4.2(ii)(c) of this Prospectus for further details of ISM. (d) Subsidiary and associated company As at the LPD, Mulpha does not have any subsidiary or associated company. 6.4.6 Subsidiary of SPSSB FMSB (Company No. 283940-H) (i) History and business FMSB was incorporated in Malaysia under the Act as a private limited company on 11 December 1993 under the name of City Calibre Sdn Bhd. It changed its name to Tasek Ampang Hotel Sdn Bhd on 3 January 1994 and further changed to its present name on 4 October 2007. It commenced business on 1 January 1995. As at the LPD, the principal activity of FMSB is hotel management. (ii) Share capital As at the LPD, the authorised share capital of FMSB is RM500,OOO.00 comprising 500,000 ordinary shares of RM1.00 each. The issued and paid-up share capital of FMSB as at the LPD is RM100,000.00 comprising 100,000 ordinary shares of RM1.00 each. There has been no change to the issued and paid-up share capital of FMSB for the 3 years preceding the LPD. (iii) Shareholder As at the LPD, FMSB is a wholly-owned subsidiary of SPSSB. (iv) Subsidiary and associated company As at the LPD, FMSB does not have any subsidiary or associated company. 6. INFORMATION ON OUR GROUP (cont’d) 6.4.7 Associated company of MP Capital Tune (Company No. LL06997) (i) History and business Tune was incorporated in Malaysia under the Labuan Companies Act, 1990 as a private limited company on 27 March 2009 under its present name. It commenced business on 28 April 2009. Our subsidiary, MPIB, had provided accounting and record keeping support services to Tune from 2009 to June 2012. As at the LPD, the principal activity of Tune is provision of reinsurance. (ii) Share capital Under the Labuan Companies Act, 1990, there is no requirement for a Labuan company to have an authorised share capital and par value for its shares. The issued and paid-up share capital of Tune as at the LPD is USD143,OOO.00 comprising 143,000 ordinary shares. There has been no change to the issued and paid-up share capital of Tune for the 3 years preceding the LPD. (iii) Shareholder As at the LPD, MP Capital owns 20.0% of the issued and paid-up share capital of Tune while the remaining 80.0% is held by Tune Ins Holdings Berhad (formerly known as Tune Ins Holdings Sdn Bhd). (iv) Subsidiary and associated company As at the LPD, Tune does not have any subsidiary or associated company. 7. BUSINESS OVERVIEW 7.1 History and overview Our Group is predominantly involved in the business of underwriting all classes of general insurance. We also have a credit business and investment in properties in locations such as Kuala Lumpur, Selangor, Penang and Johor with a total land area of 2,727.1 acres which include 2 hotels, namely, Hotel Flamingo by the beach and Hotel Flamingo by the lake, which are located in Penang and Selangor respectively. The contribution of our businesses to our combined revenue and operating profit for the year ended 31 December 2012 is summarised as follows: Main business Other undertakings General insurance Investments Credit business 31 December 2012 RM 000 except percentages Revenue  247,220  75.9%  75,996  23.3%  2,386(1)  0.7%  Operating profit  60,016  68.8%  23,317  26.8%  3,850(1)  4.4%  Note:
(1) Comprises the MP Capital group excluding MPIB. The net assets attributed to our general insurance business, investments and credit business as at 31 December 2012 (excluding investments in an associated company and unallocated corporate assets and liabilities) were RM280.1 million, RM619.5 million and RM183.4 million respectively. Within our general insurance business, the fire and motor classes contributed 47.1% of our gross premiums for the year ended 31 December 2012. We derive returns on our investment in properties from our 4 ongoing JVs with property developers involving 682.2 acres of land, operation of 2 hotels, letting of an office building and profit sharing partnership with a third party operator for oil palm plantation operations in Johor. Our credit operations involve the provision of credit services such as term loan, project financing, hire purchase and other forms of credit. Our businesses currently form part of the MPHB Group. On 23 May 2012, MPHB announced a proposal which includes the Pre-IPO Reorganisation and this Offer for Sale, to demerge the IVIPHB Group into 2 listed entities (“Demerger”). The Demerger is intended to, among others, improve the operational and financial efficiency of its businesses. The resulting groups are the post-demerger MPHB Group, which would be substantially involved in the gaming business and our Group. Whilst underwriting of all classes of general insurance is our main business, we believe that it may be more relevant and appropriate that investment in properties form part of our Group as opposed to the MPHB Group which is intended to be a gaming business after the Demerger. This is particularly so as the ownership of some of the properties arose from our credit business. The Demerger was approved by the shareholders of MPHB on 5 December 2012 and the Pre-IPO Reorganisation was completed on 29 March 2013. The Demerger is intended to allow our Group to pursue business strategies that are appropriate for our Group while enhancing the profile of our Company. Upon completion of the IPO, we will have our own Board and management team whose focus is to grow our businesses. We would also be able to directly access the equity capital market in the future which would provide us with the financial flexibility to pursue growth opportunities. 7. BUSINESS OVERVIEW (cont’d) Under the Pre-IPO Reorganisation, our Company acquired our businesses from the MPHB Group. Following the completion of the Offer for Sale, the MPHB Group would have disposed of our Group and we will be separate from the MPHB Group. 7.2 Our insurance business 7.2.1 History The history of our insurance business can be traced back to 1973 when MPIB (then known as KSM Insuran Bhd) was incorporated to primarily provide in-house general insurance services to the then MPHB Group. IVIPIB had then been issued a licence under the Insurance Act 1963 to underwrite general insurance products. MPIB was sUbsequently granted a general insurer’s licence by the MoF under the Insurance Act (which repealed and replaced the Insurance Act 1963) on 27 June 1997 and was then involved in the underwriting of all classes of general insurance products and their distribution and marketing, through its distribution network. Following a restructuring of the MPHB Group in 2000 which scaled down the size of the group, the extent of general insurance services required of MPIB by the MPHB Group was correspondingly reduced. It was then decided by MPHB that MPIB should focus its general insurance business outside of the MPHB Group and to make that its core business. This culminated in a substantially new management team for MPIB in 2002. The table below sets out the transformation of MPIB since the entry of its new management team in 2002 up to 2012: As at 31 December 2002 2012 Gross premiums RM96.9 million }} RM505.4 million Market ranking of general insurance 26th out of 43 13th out of 26 companies by gross direct premiums companies }} companies Number of branches 4 }} 12 Number of staff 212 }} 461 Number of agents 236 }} 1,120 The early development strategy adopted by MPIB in offering general insurance services outside of the MPHB Group in the Malaysian market was to focus on the business contacts of the then MPHB Group. Its objective at that time was to target corporate customers given its limited scale and resources. This enabled higher aggregate premiums to be derived from a smaller customer base with less resources being expended to service customers as compared to having to build a business with retail customers. 7. BUSINESS OVERVIEW (cont’d) In 2003, we began expanding our business and introduced our personal line products such as Multi-PA Premier, Multi-PA Protector, Multi-Drive Protector, Multi-Medical Protector and Multi-Medi Plus. In addition, our commercial partnership with AirAsia began in February 2009. Under the partnership, we were the sole underwriter in Malaysia of the AirAsia travel personal accident insurance programme which offered PA products to passengers of AirAsia and this accelerated our retail customer base expansion. Although our partnership with AirAsia has ended on 3 September 2012, we have since leveraged on our experience from the said partnership to develop new retail oriented schemes that we view as having growth potential. These include schemes for golfers, association members, foreign workers as well as extension of the warranty period for certain products such as electrical/electronic appliances and motorcycles which we refer to as “extended warranty”, Through our partnership with AirAsia, we have also built on our use of the internet as a distribution platform, which we plan to continue using to distribute our products. The key milestones for our insurance business are as follows: Year Key milestones 1973 • MPIB was incorporated under the name of KSM Insuran Berhad which was granted a licence under the Insurance Act 1963 to underwrite general insurance products. 1979 • Our general insurance business opened its first branch in Ipoh, Perak. 1995 • Kompas Insurans Bhd was renamed under its present name. • Our credit business was acquired by MP Capital. 1997 • MPIB was granted a general insurer’s licence under the Insurance Act by the MoF to carry out general insurance business. 2000 • MPHB Group implemented an internal restructuring which saw the entry of new major shareholders which included Tan Sri Dato’ Surin. 2002 • MPIB shifted its focus to beyond the MPHB Group. 2003 • MPIB was selected to participate in the Petronas oil and gas insurance programme which covers off-shore and on-shore project assets as well as liability risks. 2011 • MPIB entered into a ‘bancassurance’ arrangement with Alliance Bank Malaysia Berhad to sell its insurance products and schemes to Alliance Bank Malaysia Berhad’s customers. 2012 • MPIB was appointed as an insurance provider by pas Malaysia, the country’s provider of mail services, that has an extensive network of more than 700 post offices and 300 PaS-Mini outlets nationwide. 2013 • Pursuant to the Pre-IPO Reorganisation, the general insurance and credit businesses as well as the property related investments of MPHB were consolidated under our Company. 7. BUSINESS OVERVIEW (cont’d) Motor Our motor insurance policies provide financial protection against physical damage or loss to the policyholders’ own motor vehicles as a result of accidental collision, overturning, impact damage, fire, theft, malicious damage and other accidental occurrences resulting from traffic accidents and/or bodily injury and property damage to third parties arising out of an accidental collision. The types of coverage provided are comprehensive, third party, and third party fire and theft. Motor vehicles covered by us include cars, motorcycles, omnibuses and lorries. To increase the scope of coverage of these products, we also offer a range of riders which include coverage for legal liability to passengers, windscreen damage, vehicle accessories, flood, windstorm, landslip, strike, riot and civil commotion. The gross premiums recorded by us from the motor class grew from RM95.2 million for the year ended 31 December 2009 to RM112.8 million for the year ended 31 December 2011, which represents a CAGR of 8.9%. The increase was in line with the growth from the motor class in Malaysia whereby over the same period, the gross premiums recorded by the motor class in Malaysia grew from RM5.3 billion to RM6.3 billion, which represents a CAGR of 9.0% (Source: Independent Market Research report by Frost &Sullivan). Additionally, we also derive income as a servicing insurer for the MMIP. The MMIP refers to a pooling arrangement between general insurance companies operating in Malaysia that underwrites insurance cover for vehicles whose owners are unable to obtain coverage from any individual insurer. These insurers jointly share losses incurred by the MMIP. Motor cover from the MMIP may be obtained from any general insurer or their branches as well as from pas Malaysia branches within Malaysia. As a servicing insurer, MPIB issues policies and settles claims on behalf of the MMIP. The income that we generated as a servicing insurer for the MIVIIP grew from RM3.6 million for the year ended 31 December 2009 to RM9.0 million for the year ended 31 December 2011 representing a CAGR of 58.1 %. PA PA insurance is one of the common personal lines of insurance and can be segmented into individual PA, group PA, travel PA and driver and passengers PA. PA products basically cover an insured person against death, injury or disability caused by violence or accident. Our ability to identify and respond quickly to market trends have also allowed us to enter niche markets through the introduction of new insurance products such as schemes for association members. PA for association members covers an insured person against death, injury or disability caused by violence or accident. The gross premiums recorded by us from the PA class increased from RM60.8 million for the year ended 31 December 2009 to RM87.7 million for the year ended 31 December 2011, which represents a CAGR of 20.1 %. Over the same period, the gross premiums recorded by us from the PA and medical classes increased from RM79.1 million to RM111.6 million, which represents a CAGR of 18.8% (The gross premiums from our medical class have been included to facilitate comparison against the industry below). 75 7. BUSINESS OVERVIEW (cont’d) The gross premiums for the PA and medical classes in Malaysia grew from RM1.5 billion in 2009 to RM1.9 billion in 2011, which represents a CAGR of 12.5% (Source: Independent Market Research report by Frost & Sullivan). MAT Under the MAT class, we predominantly offer cargo insurance policies which indemnifies the policyholder against the loss of cargo during transit, usually on a warehouse (of departure) to a warehouse (of arrival) basis caused by events specified in the policies. The insurance policy covers various modes of shipment including air, sea and inland transit. The gross premiums recorded by us from the MAT class reduced from RM30.2 million for the year ended 31 December 2009 to RM16.7 million for the year ended 31 December 2011, which represents a compounded annual decline rate of 34.5%. The decline was mainly due to the non-renewal of some large aviation and marine hull insurance which were underwritten in 2009. Over the same period, the gross premiums recorded by the MAT class in Malaysia grew from RM1.2 billion to RM1.4 billion, which represents a CAGR of 8.0% (Source: Independent Market Research report by Frost & Sullivan). Other insurance We also offer other types of general insurance policies such as medical, workmen’s compensation, employer’s liability, extended warranty, contractor’s all risks, bonds, oil and gas, and liability insurance. Our medical insurance product, Multi-Medical Protector, is a specially tailored hospital and surgical insurance which provides a range of coverage for surgery or treatment in hospitals for all the covered conditions, regardless whether it is a minor or major disability. In addition, it comes with a medical card that provides hospital admission in participating hospitals. Workmen’s compensation insurance policies indemnify the insured against all personal injury sustained by accident or disease arising out of and in the course of his employment. Employer’s liability insurance covers the liability of an employer if an employee is injured in the course of his or her employment. Contractor’s all risks insurance policies are designed to cover engineering projects involVing construction of buildings and other civil engineering works against material damage and third party liability. Bonds are insurance guarantees issued by us to a principal party to guarantee the performance of a contract or project by a contractor. Oil and gas insurance products cover the insured against damage to or loss of physical assets such as floating production facilities, sub-sea equipment, pipelines and supply vessels. We also offer golfers and foreign workers schemes. The golfers scheme covers injury or damage to person or property caused by the insured whilst playing or practicing on the golf course. The foreign workers scheme covers foreign workers employed by the insured against any personal injury caused by accidents or disease in the course of his employment. 7. BUSINESS OVERVIEW (cont’d) Our insurance products include the following: Insurance products General description
Fire Motor MAT PA Others • Houseowner and householder insurance
• Fire and fire consequential loss insurance
• Industrial all risks insurance
• Private car insurance
• Commercial vehicle insurance
• Motorcycle insurance
• Goods in transit
• Freight forwarders scheme
• Marine cargo Marine hull

• Aviation• Multi-PA Protector • Multi-Drive Protector • • Multi-PA Premier Travel PA insurance • The Gladiator • MPI Active Shield Plan • MPI Family Accident Protector Plan • MPIB Super Shield Plan • Group PA • Multi Lucky PA @ Multi Family Care • Multi-Medical Protector • Multi-Medi Plus • MPI Hospital Income Plan • MPIB Hospital Income Plan • Employer’s liability • Fidelity guarantee • Machine & equipment • Burglary• Money•
Heavy equipment • Public liability • Foreign workers compensation • Immigration bond for foreign workers • Contractor’s all risks • Product liability • Lawyers’ professional indemnity • Workmen’s compensation bond • Golfers scheme • Extended warranty • Additionally, we provide value added services such as road side assistance to our motor policyholders, technical advice on the insurance needs of our customers and risk management programmes to assist our customers to better manage their risks. 7. BUSINESS OVERVIEW (cont’d) Agencies An insurance agent is a person who acts for the insurer in soliciting, negotiating and procuring the issuance, renewal or continuance of a policy. Insurance agents include individual insurance agents and corporate agencies who promote and sell our insurance products for a commission but do not make underwriting decisions on our behalf. Agencies are one of our most important distribution channels in terms of gross premium contribution. As at the LPD, we have an agency force of over 1,100 agents who are located across Malaysia. Our agents actively promote our insurance products in the market with the objective of increasing the awareness of our insurance products to prospective corporate and retail (individual) customers. At the same time, our agents are also responsible for building and maintaining relationships with our customer base. We target to grow our agency force by 10.0% annually for the next 3 years to boost our market penetration. Insurance brokers Insurance brokers are essentially independent contractors who are appointed by policyholders to solicit, negotiate or procure or renew a policy from an insurer. Insurance brokers are an important distribution channel for us in terms of gross premiums contribution. As at the LPD, we maintain relationships with over 30 insurance brokers which include AON Insurance Brokers (M) Sdn Bhd, CIMB Insurance Brokers Sdn Bhd, Antah Insurance Brokers Sdn Bhd, Tradewinds International Insurance Brokers Sdn Bhd and MIT Insurance Brokers Sdn Bhd. For the year ended 3’1 December 2012, our top 5 insurance brokers contributed 57.0% of the total gross premiums from this distribution channel. Direct sales Our direct sales channel mainly comprises business that are developed by our own staff who are based at our head office in Kuala Lumpur and 12 branches which are located in major towns and cities within Peninsular and East Malaysia, namely in Klang, Penang, Kota Bahru, Ipoh, Johor Bahru, Kuantan, Malacca, Alor Setar, Kuching, Sibu, Kota Kinabalu and Sandakan. Our staff tap into and develop new business directly from corporate clients ranging from large corporate, small and medium sized industries and enterprises as well as individual customers. Our network of branches across Malaysia also allows us to tap into and service all walk-in customers who are seeking insurance coverage. Bancassurance Bancassurance broadly refers to the collaboration between banks and insurers to distribute insurance products to bank customers. In 2011, we entered into a ‘bancassurance’ arrangement with Alliance Bank Malaysia Berhad to sell our insurance products to Alliance Bank Malaysia Berhad’s customers. Financial institutions, such as Alliance Bank Malaysia Berhad, possess a strong database of individuals and corporate customers, which we may leverage on. Moreover, Alliance Bank Malaysia Berhad has about 88 branches throughout Malaysia as at the LPD, which provide an avenue for us to widen our reach in the Malaysian insurance market. 7. BUSINESS OVERVIEW (cont’d) In addition, we have been a panel insurer of Bank of China (Malaysia) Berhad and India International Bank Malaysia Berhad since 2011 and 2012 respectively. As a panel insurer, we are allowed to provide insurance coverage for items that are required to be insured by a borrower pursuant to the terms of a credit facility granted by the abovementioned banks such as properties, motor vehicles and equipment. Other distribution channels Our other distribution channels include franchise holders, other financial institutions and corporate partnerships. In February 2012, we were appointed as an insurance provider by POS Malaysia, the country’s provider of mail services with a network of more than 700 post offices and 300 POS-Mini outlets nationwide. Under this arrangement, we offer our motor insurance and personal line products as well as renewal of such policies through post offices throughout the country. This enhances our reach to customers in both the urban and sub-urban areas of Malaysia. We also have existing agreements with the franchise holders of Perodua and another local car manufacturer under which we offer our motor insurance products to new car buyers. The gross premiums contributed by the Perodua franchise holder for the years ended 31 December 2010, 2011 and 2012 were RM2.6 million, RM2.4 million and RM2.6 million respectively. The gross premiums contributed by the franchise holders of another local car manufacturer following our signing of the agreements with them in August 2011 and March 2012 were RMO.9 million for the year ended 31 December 2012. In addition to directly underwriting insurance policies from the end consumer, we also underwrite insurance risks which are ceded to us by other insurers. We refer to this as inward reinsurance. Our multi-channel network has allowed us to extend our market reach as well as enabled us to reinforce our presence in the insurance industry and capture the growing demand for insurance products in Malaysia. 7.2.4 Underwriting of insurance policies Underwriting refers to a process of assessing an insurance risk in order to decide whether to accept such risk and the terms and conditions on which the risks may be accepted. We have a centralised control structure which includes a multi-levelled authorisation system and operating procedures for our underwriting operations. Depending on the type and amount of risk involved, underwriting decisions are made by underwriters based at the head office and the relevant branches, in accordance with their authorisation level. The underwriting authority for each underwriting personnel is reviewed, evaluated and adjusted, from time to time, based on their work experience and performance. In cases involving underwriting of policies which are substantial, underwriting decisions are made through our risk review committee, which consists of the various portfolio heads. Major underwriting policies can only be issued after our reinsurance department has arranged for the appropriate reinsurance for the policy. 80 7. BUSINESS OVERVIEW (cont’d) We have determined different underwriting gUidelines for different lines of insurance products and review those guidelines as our business develops. Our underwriting personnel may also conduct site visits prior to making underwriting decisions, typically where the underwriting commitments are substantial or of a high risk nature. Our underwriting process flow is illustrated below: 2. Process1. Receive proposal proposalfor insurance policy
Approve I Approve with conditions Our underwriting process entails the evaluation of proposals for our insurance products by our team of underwriters and the RRC, where required, who will determine the type and the amount of risk that we are willing to accept as well as the premiums to be charged. The steps involved in underwriting are set out below: 1. Once a proposal is received from applicants, the underwriters will assess and decide whether or not to accept the risks against our underwriting guidelines. The underwriter may make a request for more information or to seek further clarification on the information provided.
2. Thereafter:

(i) If a proposal is accepted by the underwriters after assessing the risks, a policy will be issued on terms and conditions agreed with the policyholder; or 7. BUSINESS OVERVIEW (cont’d) (ii) If a proposal is rejected by the underwriters and an appeal is received from our marketing team, the appeal will be forwarded to the RRC for a decision. The RRC may: • Approve the appeal and a policy will be issued;
• Approve the appeal with attached conditions and a policy will be issued reflecting those conditions; or
• Reject the appeal.

7.2.5 Reinsurance In order to manage and reduce the exposure to potential claims and to increase our underwriting capacity, we reinsure a portion of the risk that we assume under the insurance policies that we underwrite and cede part of the premiums that we receive to the reinsurers. There are two methods of reinsurance that we use Le. treaty and facultative reinsurance. Our reinsurance treaty programmes provide us with automatic coverage against a pre-determined class of insurance and up to a maximum limit agreed under the treaty. These treaties are arranged with a tenure of 1 year and are entered into at the beginning of each year with a panel of reinsurers who participate by taking a certain percentage share of the treaty. These treaty programmes allow us to cede the portion of the risks that exceeds our limit of retention to the treaty reinsurers. The reinsurers are bound under the treaties to offer us their reinsurance protection for all risks that we have ceded within the scope of the treaty. Our facultative reinsurance contracts are placed separately for each insurance policy that is reinsured. We normally enter into facultative reinsurance contracts for insurance policies underwritten by us that are not covered by our reinsurance treaty programmes or where we have exceeded the limit of our reinsurance treaty programmes. Our facultative and treaty reinsurance contracts can be either proportional or non­proportional in nature. In proportional reinsurance contracts, the reinsurers will share on a proportionate basis the premium, commission and claims. On the other hand, under non-proportional reinsurance contracts, the reinsurers will be paid a lump sum premium for a period of 1 year and they will only be called upon to pay claims if such claims exceed the pre-determined amount agreed between us and the reinsurers under the non-proportional reinsurance contracts. Such situations normally arise when there is an occurrence of a catastrophic risk event such as floods or major fires which spread to neighbouring properties thus resulting in an accumulation of losses from various policies. 7. BUSINESS OVERVIEW (cont’d) Our treaty reinsurance programmes are structured to meet the following objectives: (i) to support our business development initiatives by enabling us to underwrite a broader range of insurance risks without unduly exposing our capital base;
(ii) to manage our exposure from catastrophic events or unforeseen accumulation of risks; and

(iii) to optimise the retention of risks that are within our risk appetite and to spread the balance to reinsurers. We determine the amount of insurance risk that we intend to retain and the coverage limit under our reinsurance agreements based on a combination of factors namely our financial strength, the size of premium for that class of business, risk profile of the subject covered by the policy, our risk appetite, claims history of the different types of general insurance products and the cost for the treaty programme. For insurance products with high risk concentration, such as special risk insurance and hull insurance products, we generally reinsure our risk exposure in excess of a certain insured amount or loss amount. For insurance products with high loss event exposure, we enter into catastrophe excess of loss reinsurance treaties to limit our potential losses within acceptable parameters. Catastrophe excess of loss reinsurance treaty is a treaty that is intended to protect us against any major financial losses which arise from a catastrophic risk event and where the loss exceeds a fixed amount that has been agreed with the treaty reinsurers. Major catastrophic events which usually occur include flood, windstorm and fire. For such events, all the claimsllosses insured by us will be accumulated and we will only bear the loss amount of up to a fixed amount beyond which we will recover from the treaty reinsurers up to the treaty limit. Our maximum net retained loss for anyone risk event for year 2013 is as follows: (i) RM500,OOO for anyone accident/loss involving motor vehicles;
(ii) RM1,OOO,OOO for anyone loss/claim arising involving fire/engineering and machine & equipment policies; and

(iii) RM500,OOO for anyone loss/claim involving PA and other miscellaneous classes including marine policies. 7. BUSINESS OVERVIEW (cont’d) We apply stringent criteria in the selection of reinsurers which include, among others, the following: Criteria Remarks Credit rating of reinsurers For those with credit ratings: • Minimum rating of ‘A’ from S&P; or
• Minimum financial strength rating of ‘A’ from A.M. Best Company

Internal credit assessment We use a point scoring system to rate and select the (for all reinsurers) reinsurers that we use by taking into consideration, among others, the following factors: • Financial strength;
• Service levels;
• Promptness in response to claims;
• Management of accounts; and
• Value added services such as provision of training and sharing of knowledge

In addition to arranging reinsurance for our own risks, we also accept risks that are offered to us from other insurance companies on a facultative and proportionate basis. The premiums for the risks accepted by us are classified as reinsurance inward premiums and under such reinsurance contract we are responsible for our proportionate share of the claim if it arises. Generally, risks offered to us from other insurance companies are risks with high sum insured or high limits of liability and the insurance policies covered are normally fire, contractors all risks, marine cargo and hull, and high value motor vehicles. Whilst we also participate in some treaty programmes, these are not significant and are limited to certain classes such as MAT and oil and gas. (The rest of this page has been intentionally left blank) 7. BUSINESS OVERVIEW (cont’d) 7.2.6 Claims settlement We have established a centralised control and verification mechanism, including a tiered authorisation system, for our claims settlement operations in order to help ensure effective claims control management and settlement. Claims processing and settlement procedures are also established and enforced to ensure that claims intimation are settled promptly. Our average claims settlement period by types of insurance products for the years ended 31 December 2010, 2011 and 2012 is as follows: Year ended 31 December 2010 2011 2012 days Motor -Own Damages 15 16 16 Motor -Third Party Property Damages 104 82 58 Motor -Third Party Bodily Injury 415 385 350 Fire 58 60 69 Medical 43 35 63 Others 62 48 46 The settlement of a repair claims for a damaged vehicle made by a policyholder is usually shorter than a third party claim due to the nature of third party claims which involve death, bodily injury or damage to the third party vehicle. The documentation required to process a third party claim is usually more extensive than a typical vehicle repair claim as additional documents such as police photographs, police sketch plan, key witness statements, findings of police investigation and medical reports are essential to establish the liability of the parties involved in the accident as well as to establish the extent of injury and disability period of the third party. Furthermore, most third party claimants are also represented by lawyers and where cases are filed in the courts, the settlement period would be further extended due to the nature of court proceedings. We believe that save for certain exceptional fire and medical insurance claims, our average claims settlement periods are in line with that of the industry. Our average claims settlement periods, save for fire and medical claims, have generally improved as a result of our strengthening of manpower in the claims department, tighter monitoring of our service levels as well as the re-engineering of our claims process by implementing the electronic claims notification and processing system for motor claims through the internet. The deterioration in claims settlement period for our fire and medical claims is due to the longer period required to settle complicated claims as well as the delays in receiving claims settlement documents from lead insurers. Our claims adjustment function is mostly outsourced to independent loss adjusters to investigate insurance claims and to determine the total cost of a loss or damage. 7. BUSINESS OVERVIEW (cont’d) Our claims management process flow is illustrated below:
2. Check if Norisk is insured with us
5. Determine No if claim is payable and amount to be paid
Our claim settlement practices aim to promptly register as well as process all claims intimation in accordance with BNM’s and our internal claims guidelines. The process for claims management is set out below: 1. Claims intimation will be received from agents, brokers, insured/insured’s representative or third party/third party solicitors. 7. BUSINESS OVERVIEW (cont’d) 2. Upon receipt of claims intimation, the examiner will check in the computer system to determine whether the risk is covered. (i) If the risk is not covered, we will advise the claimant accordingly.
(ii) If the risk is covered, we will determine whether an adjuster is required to investigate the claim reported.
(a) If an adjuster is required, we will appoint an adjuster and register the claim upon the adjuster’s preliminary loss advice.
(b) Otherwise, we will proceed to register the claim and request for documentation to substantiate the claim.

 

3. Claims will be processed upon: (i) receipt of the adjuster’s final report, if an adjuster is appointed.
(ii) receipt of full documentation from the claimant, if no adjuster is required.

4. We will then determine if the claim is payable and the amount to be paid. (i) If the claim is payable the necessary approval will be obtained and an offer for settlement together with a discharge voucher will be made, prior to making payment to the claimant; or
(ii) We will advise the claimant accordingly if the claim is not admissible.

7.2.7 Investments of our insurance business We invest the premiums and other funds received from our general insurance business, as well as our own surplus funds to maximise our returns. Our insurance business’ investment assets have grown over the years in line with our sustained growth and profitability. The NBV of our insurance business’ investment assets as at 31 December 2010, 2011 and 2012 were RM427.6 million, RM459.5 million and RM595.2 million respectively. The return on investment of our investment assets for the years ended 31 December 2010,2011 and 2012 were 5.5%,4.9% and 6.1% respectively. 7. BUSINESS OVERVIEW (cont’d) The investment policies of our insurance business are determined by the Board of MPIB who also establishes its investment committee, appoints the members of the investment committee and determines the terms of reference of the committee. The roles of the investment committee are as follows: (i)  Drafting/updating investment policies, based on the RBC Framework;  (ii)  Setting-up yearly investment plan and fund managers’ mandate;  (iii)  Appointing fund managers;  (iv)  Reviewing the performance of our investments inclUding the performance of  our fund managers; and  (v)  Making decision and monitoring the internally managed investment portfolio.
(The rest of this page has been intentionally left blank) ICompany No. 1010253-W I 7. BUSINESS OVERVIEW (cant’d) 7.3 Our properties A summary of our properties and the corresponding audited NBV as at 31 December 2012 and market values are as follows: I. Our non-JV properties Audited NBV Market value as at 31 as at 28 December February State Location Description Independent valuer Date of valuation Land area 2012 2013(1) acres RM 000 Kuala Bukit Bintang Land bank Burgess Rawson 28.02.2013 4.2 206,313 275,421 Lumpur Selangor Ampang Hotel Flamingo by the lake Henry Butcher 28.02.2013 12.3 36,568 82,000 Ampang Plaza Flamingo office building Henry Butcher 28.02.2013 2.7 39,012 48,000 Penang Balik Pulau Land bank Raine & Home 28.02.2013 207.6 31,465 63,300 Minden Heights Link houses Not applicable(2) Not applicable(2) 0.2(3) 3,240 3,240(4) Tanjung Bungah Hotel Flamingo by the beach Henry Butcher Penang 28.02.2013 2.3 45,200 84,000 4,493 (4)Jalan Cantonment MPIB’s Penang office Not applicable(2) Not applicable(2) Not 4,493 applicable(S) Johor Pengerang Oil palm plantation which is Henry Butcher Johor 28.02.2013 1,803.2 64,229 74,965 outsourced to a third party operator Terengganu Penarik, Setiu Land bank Not applicable(2) Not applicable(2) 7.7 2,200 2,200(4) Malacca Taman Melaka MPIB’s Malacca office Not applicable(2) Not applicable(2) 0.04 124 124(4) Raya 817 817’4)Kelantan Kota Bharu MPIB’s Kelantan office Not applicable(2) Not applicable(2) 0.04 Total (non.JV properties) 2,040.1 433,661 638,560 90 ICompany No. 1010253-W I 7. BUSINESS OVERVIEW (cant’d) II.  Our JV properties  Audited NBV  Market value  as at 31  as at 28  State  Location  Description  Independent valuer  Date of valuation  Land area  December 2012  – February 2013(1}  acres  RM 000
Selangor Rawang Land bank Burgess Rawson 28.02.2013 265.1 129,799 170,000 Gombak Land bank Burgess Rawson 28.02.2013 324.1 117,632 150,000 Penang Teluk Tempoyak Land bank Burgess Rawson 28.02.2013 83.0 55,501 76,900 Minden Heights Land bank Not applicable(2) Not applicable(2) 9.7 -(6) Not applicable Paya Terubong Land bank Not applicable(2) Not applicable(2) 5.1 -(6) Not applicable Total (JV properties) 687.0 302,932 396,900 Total (all properties) 2,727.1 736,593 1,035,460 Notes: (1) Independent valuations were only cam’ed out for our Group’s material property assets for indusion in this Prospectus for information purposes. The independent valuations have been prepared in conformity with the Malaysian Valuation Standard as laid down by the Board of Valuers, Appraisers and Estate Agents, Malaysia. The independent valuations are not subject to the approval of the SC and are consequently not submitted to and approved by the Sc. In addition, the market values have not been incorporated in our financial statements as such is not required pursuant to our Group’s accounting policies.
(2) No independent valuations were carried out for these lands or properties as they are deemed not matenal.
(3) This represents the land area of the link houses owned by MPIB. The land area of the link houses has not been taken into consideration for the calculation of the total land area as they have been developed on the lands in Minden Heights which are described under our JV properties in the table above.
(4) As no independent valuations were carried out for these lands or properties, the market values indicated assume that the market values of the relevant land or property are equivalent to their respective audited NB V.
(5) Land area is not applicable as these are strata-titled units.
(6) No values have been ascribed to these lands as they are deemed disposed pursuant to JV agreements that have been entered into.

Detailed information on the total land bank and properties owned by our Group (including land banks which are part of our JVs) can be found in Annexure B. 91 7. BUSINESS OVERVIEW (cont’d) Land bank management Our land bank in Kuala Lumpur is situated at the southern end of the Bukit Bintang area, a vibrant shopping and commercial district in Kuala Lumpur which includes prominent developments such as Pavilion KL, Sungei Wang Plaza and Berjaya Times Square. In addition, our land bank is also close to future projects such as the Tun Razak Exchange and UDA Holdings Berhad’s ex-Pudu Jail redevelopment. There have also been plans by the Government to expand the public transportation in the Bukit Bintang area as part of the Economic Transformation Programme. Our land bank in Selangor is located in Rawang and Gombak. Our land in Rawang is located within the locality of Sungai Bakau, Rawang which is accessible via the Rawang interchange of the North-South Highway which is located approximately 2.5 km away, following the Rawang-Batu Arang/Kuala Selangor trunk road. It is also accessible from the Latar Expressway. Property developments in the immediate neighbourhood include Bandar Tasik Puteri, Kundang Jaya and industrial schemes of Taman Velox and Rawang Integrated Industrial Park. Bandar Country Homes, an established residential cum commercial scheme, is also located within a short distance while the northern boundary of our Rawang land adjoins The Emerald Enclave and Anggun@Rawang mixed developments. Our Rawang land is also located close to the new AEON Rawang Anggun Shopping Centre. Our Rawang land has been committed to a JV with a developer. Please refer to the table below for further details. Our Gombak land is located off the left side of the old GombakiBentong trunk road travelling from Batu Caves towards Bentong town. It is accessible from Jalan Genting Kelang via GombakiBentong trunk road and from the MRR2 via the Sri Gombak interchange and thereafter via the GombakiBentong trunk road. Our Gombak land is situated about 20 km to the north of the Kuala Lumpur city centre. The immediate neighbourhood is still agriCUltural in nature comprising mainly kampung type dwelling homes scattered among jungle vegetation. Also located nearby, are the Ulu Gombak Forest reserve, Sungai Pusu Malay Reservation and Gombak Malay Reservation areas. Our Gombak land has been committed to a JV with a developer. Please refer to the table below for further details. Our land bank in Penang is located in Teluk Tempoyak, Paya Terubong, Minden Heights and Balik Pulau. Our Teluk Tempoyak land is within the locality of Teluk Tempoyak Village, off Jalan Teluk Tempoyak, and is about 14 km to the south-west and 7 km to the north of Georgetown and Penang International Airport respectively. It is accessible from Bayan Baru town via the Bayan Lepas expressway, Jalan Permatang Damar Laut and Jalan Teluk Tempoyak and commands a view of the south channel and the Straits of Malacca. Our Teluk Tempoyak land is also located close to South Bay development and the upcoming Penang Second Bridge. Our Teluk Tempoyak land has been committed to a JV with a developer. Please refer to the table below for further details. Our land in Balik Pulau is located 8 km from the Balik Pulau town centre and is accessible from the Balik Pulau town centre via Jalan Balik Pulau, Jalan Sungai Pinang, Jalan Sungai Rusa, Jalan Kuala Sungai Pinang and a bund road leading to the land. Neighbouring developments are predominantly agriCUltural and residential in nature. Residential housing schemes located nearby are Taman Nelayan, Taman Jelita and Taman Kuala Sungai Pinang. Landmarks in the vicinity of our land are the Penshrimp Sdn Bhd prawn farm, Yu Chye primary school, a future development scheme by Lembaga Kemajuan Wi/ayah Pulau Pinang (“PERDA”) and the Sungai Pinang Village Centre. Other notable landmarks in the Balik Pulau area include the Prince of Wales Island International School, Kolej Kemahiran Tinggi Mara as well as a new tourism university that is currently being developed. 7. BUSINESS OVERVIEW (cant’d) Our land in Minden Heights, Gelugor, is located off Jalan Bukit Gambir and adjacent to Universiti Sains Malaysia, offering good access to both Georgetown and the Penang Bridge. Our land in Paya Terubong is located off Jalan Paya Terubong, halfway between Bayan Lepas and Air Itam. Our lands in Minden Heights and Paya Terubong land have been committed to JVs with developers. Please refer to the table below for further details. The land bank that we own in Johor is located in Pengerang. It is currently utilised as an oil palm plantation which is operated by Bell Flower Sdn Bhd, a third party operator, under a profit sharing partnership. The land is accessible from Kota Tinggi town via Jalan Sungai Rengit leading to Sungai Rengit town and thereafter onto Jalan Tanjung Pengelih. The land is located about 200 metres off Jalan Tanjung Pengelih at around the 14-km mark from Sungai Rengit town. Part of this land bank is located adjacent to Petroliam I\lasional Berhad’s planned RM60 billion Refinery and Petrochemical Integrated Development, which is expected to be commissioned by the end of 2016. Several parcels of land which we originally owned in Pengerang had been compulsorily acquired by the Land Administrator of Kota Tinggi, Johor as they have been earmarked to be part of the Refinery and Petrochemical Integrated Development. Please refer to Section 5.1.18 of this Prospectus for further details. The land bank that we own in Terengganu is located in Penarik, Setiu, next to the coast and close to the mouth of the Setiu River. This land bank is located at the north-western side of the 60.8-km post of the Kuala Terengganu/Penarik/Kampung Raja main road (Laluan Pantai), within a locality known as Kampung Mangkok. It is located 18.7 km to the north-east of Bandar Permaisuri, which is the administrative and commercial centre for the Setiu district, and 65.3 km to the north-west of Kuala Terengganu city centre. Located nearby, is the Terrapuri Heritage Village resort. To realise the value of our land bank, we have entered into and will continue to explore opportunities to enter into JV with property developers to develop our land bank. Throughout the financial periods under review, the total PBT contribution from our JV projects was RM13.1 million which was recognised by MP Development, during the year ended 31 December 2012. ICompany NO.1 01 0253-W I 7. BUSINESS OVERVIEW (cont’d) The JVs which have been completed during the financial period under review and which are currently ongoing are as summarised below. Subsidiary  Developer  Location  Particulars of development including GDV and status  Size of land bank committed toJV -­ Share ofGDV or profit  Commencement of development orJV  Expected completion of development  acres  Ongoing JVs  Tibanis  BROB, through its wholly-owned subsidiary Pinggir Mentari Sdn Bhd  Rawang, Selangor  Housing development and commercial village with a projected total GOV of RM1.4 billion. Layout plans have been submitted to the relevant  265.1  22% of total GDV  April 2011  2021  authorities  Magnum.Com  BROB, through its Wholly-owned subsidiary, Orion Vibrant Sdn Bhd  Teluk Tempoyak, Penang  Housing development with a projected total GOV of RM604 million. Layout plan is being prepared for submission to the relevant authorities  83.0  22% of total GOV  April 2011  2019  Mimaland  BROB, through its Wholly-owned subsidiary, Magna Senandung Sdn Bhd  Gombak, Selangor  Housing development with a projected total GOV of RM2.2 billion. Layout plan is being prepared for submission to the relevant authorities  324.1  22% of total GOV  April 2011  2023  Jayavest  PPM Realty Sdn Bhd, a property developer based in Penang  Minden Heights, Penang  Housing development with a projected total GOV of RM170.7 million. The development has been launched. The first phase of the development has been completed while the second phase is currently under construction  10.0(1)  70% of total PBT  August 2009  Phase 1: Completed Phase 2: June 2013  Total  682.2
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ICompany No.1 01 0253-W I 7. BUSINESS OVERVIEW (cont’d) Size of land  Commencement  Expected  Particulars of development  bank committed  Share of GOV  of development  completion of  Subsidiary  Developer  Location  including GDV and status  toJV -­ or profit  orJV  development  acres -­ Completed JV  MP  Jiran Cergas Sdn  Paya  Housing development with a  6.1(2)  50% of total  September 2009  Completed in  Development  Bhd, a property  Terubong,  total GOV of RM71.0 million.  GDV  February 2012  developer based  Penang  The development has been  in Penang  completed and is pending the  release of the remaining sales  proceeds. These sale proceeds  are currently held by a  stakeholder pursuant to the  terms of the sale and purchase  agreements entered into by MP  Development (as the  landowner) and Jiran Cergas  Sdn Bhd (as the developer) with  buyers of the properties  contained in the said  development  Notes:
(1) After we had entered into the JV agreement with PPM Realty Sdn Bhd, 0.3 acres from the parcels of land committed to the JV have been surrendered to Majlis Perbandaran Pulau Pinang {“MPPP’J. The size of the parcels of land currently registered under Jayavest is 9.7 acres as set out in the summary of our properties above.
(2) After we had entered into the JV agreement with Jiran Cergas Sdn Bhd, 1.0 acre from the parcels of land committed to the JV has been surrendered to MPPP. The size of the parcels of land currently registered under MP Development is 5.1 acres as set out in the summary of ourproperties above.

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7. BUSINESS OVERVIEW (cont’d) As property development is not our core business, we believe that by entering into JVs to develop our land bank, we are better able to unlock the value of our land bank whilst managing our risk exposure and capital expenditure requirements. In addition, JVs allow us the flexilibity to partner with different developers for different pieces of land, thus allowing us to leverage on the different niche capabilities of these developers. Our role as a passive JV partner and land owner to the above JVs includes the following: (i) approving the final development plan or concept plan and the supporting feasibility study of the relevant development prior to the commencement of further works as well as the approval of selling prices prior to the commencement of marketing and selling of the properties;
(ii) monitoring the progress of the JV by reviewing the progress reports submitted by our JV partners and attending periodic meetings with our JV partners; and

(iii) inspecting and viewing the state and progress of the project. If we were to commit an event of default under the existing JV agreements with BROB’s wholly-owned subsidiaries, we may be liable to claims for specific performance of the said three JV agreements as well as any actual losses or damages (excluding anticipated profits) incurred by the JV partners under the said three JV agreements by reason of or arising from an event of default committed by us (where such event of default is capable of rectification by us but we have failed or refused to do so within the stipulated period). Alternatively, the JV partners are entitled to terminate the JV agreement applicable to them and simultaneously require us to purchase from the JV partner’s shareholder(s), all of its shares in the JV partner at a consideration of 130% of the net tangible assets of the JV partner. For example, in the event that Mimaland commits an event of default under its JV agreement with Magna Senandung Sdn Bhd (“Magna Senandung”), a wholly-owned subsidiary of BROB, Magna Senandung will be able to exercise its right to terminate the said JV agreement and compel Mimaland to purchase from BROB, all of the shares that it holds in Magna Senandung at a consideration of 130% of the net tangible assets of Magna Senandung. In addition, we have given an indemnity and agreed to keep the respective JV partners of the said 3 JV agreements, harmless from and against any damage, liability, expense, loss, claim or proceedings (unless the same arises as a consequence of a default on the part of the JV partner) due to our breach of any covenants, obligations, conditions and/or terms as stated in the said 3 JV agreements. Before entering into a JV, we assess the commercial viability of the JV proposal by considering factors which include the development plan, total GOV, the reputation and track record of our JV partner or its shareholders and the time frame of the proposal. Once we have selected our partner, we will then negotiate and finalise the details of the JV and development to ensure that our expectations relating to the JV can be met. Ouring the course of the JV, we continue to work closely with our existing JV partners and monitor the progress of the JV to ensure that the delivery of the projects are in line with our objectives and expectations. Our Group will continue to seek strategic partnerships with strong and established property developers with the aim of optimising returns on our remaining land bank. 7. BUSINESS OVERVIEW (cont’d) In addition, as part of our initiatives to manage our land bank, we may consider acquisition opportunities of land bank or properties that may complement or enhance the potential value of our existing land bank or properties such as parcels of land or properties that surround our existing land bank or properties. To this end, we would normally evaluate the viability of the potential investment in terms of, among others, the acquisition price as well as the potential capital appreciation or yield generation of the investment. We will assess periodically the various approaches that can be taken to realise the value of our land bank and properties which can be in the form of outright disposal, profit sharing partnerships or JVs with property developers. The evaluation will cover, among others, the potential returns on investment and the viability of the prospective project. Properly management The investments assets that we currently manage are as follows: (i) Hotel Flamingo by the beach, a 280-room, 4-star* hotel in Tanjung Bungah, Penang;
(ii) Hotel Flamingo by the lake, a 230-room, 3-star* hotel in Ampang, Selangor;

(iii) Plaza Flamingo office building, an office building located in Ampang, Selangor; and (iv) Oil palm plantation in Pengerang, Johor, which is outsourced to a third party operator. Note: The hotels’ratings are accredited by the Department of Standards, Malaysia. For details on the book and market values of investment assets which we manage as indicated above, please refer to the summary of our properties in this section. The Hotel Flamingo by the beach was refurbished in 2009 and is popular among local and foreign tourists especially during festive seasons due to its location by the beach along Tanjung Bungah, Penang. The Hotel Flamingo by the lake, which is located in Ampang, Selangor, is a popular venue for local visitors, ministries, government and semi-government bodies that utilise its accommodation, meeting and banqueting facilities. We promote our hotels through tie-ups with online booking portals, the hotel’s website (which has been enhanced to include features such as room booking via the website and mobile devices) and collaboration with travel agents. The Plaza Flamingo, which is adjacent to our Hotel Flamingo by the lake, has about 112,000 sq ft of leUable area and is 76.1 % tenanted as at the LPD. Our top 3 tenants in terms of leUable area are Royel Departmental Stores Sdn Bhd, Flamingo Antarabangsa Sdn Bhd and Tiens Health Development (M) Sdn Bhd which currently occupy 44.8% of the total leUable area of Plaza Flamingo. The tenure of the tenancy agreed with our tenants range up to 3 years. 7. BUSINESS OVERVIEW (cont’d) The occupancy rate, average room rate and average rental rate of Hotel Flamingo by the beach, Hotel Flamingo by the lake and Plaza Flamingo, where applicable, for the years ended 31 December 2010,2011 and 2012 are as follows: Year ended 31 December 2010 2011 2012 Hotel Flamingo by the beach Occupancy rate (%) 62.0 71.5 72.9 Average room rate (RM) 154.6 166.0 184.1 Hotel Flamingo by the lake Occupancy rate (%) 74.6 73.6 78.3 Average room rate (RM) 152.7 155.8 138.2 Plaza Flamingo Occupancy rate (%) 73.0 68.4 79.2 Average rental rate (RM/sq tt) 2.1 2.2 2.4 Kelana Megah, has entered into a profit-sharing partnership with Bell Flower Sdn Bhd, a third party operator to manage our oil palm plantation in Pengerang, Johor. The oil palm plantation consists of approximately 1,672.1 acres of plantable area. The plantation underwent replanting in stages starting from 2005 to 2011 and primarily consists of young and immature trees with an age profile of between 1 and 7 years with an average age of 4 years as at 31 December 2012. 97.1 % of the planted trees have started yielding and have achieved a fresh fruit bunch yield of 5.7 metric tonnes per hectare for the year ended 31 December 2012. Kelana Megah shares 50% of the revenues generated from the sale of its harvests, after subtracting operating costs and windfall levy. 7.4 Our credit business Our credit business is carried out by MP Credit which holds a moneylending business licence issued by the Registrar of Moneylenders, Malaysia pursuant to the Moneylenders Act 1951. Our credit business is principally involved in the provision of credit services, secured or unsecured, such as term loan, project financing, hire purchase and other forms of credit. We generate income from interest earned on the credit facilities extended, as well as from dividends or coupon paid on shares and loan stock held in our portfolio of assets recovered from previous debts. Our credit business is limited to a small and select group of customers that we are familiar with and where bank financing might not be practicable or obtainable in a timely manner. Our knowledge of our customers enables us to mitigate risks associated with the provision of credit. Our current customer is involved in the oil and gas sector. As at 31 December 2012, the total loans extended by us amounted to RM10A million and the entire amount is fully collateralised. The total loans extended by us represent 0.5% of our total assets. 7. BUSINESS OVERVIEW (cont’d) We have in place a system of processes and controls to monitor our credit business and undertake credit evaluation and assessment on all applicants. The assessment of creditworthiness encompasses the following: (i) credit and trade checks, document verification and site visits to evaluate a proposal;
(ii) review of security coverage and strength or quality of the security;

(iii) review of financial standing of the guarantor and borrower; (iv) review of repayment capability and source of repayment;
(v) review of business cycle, track record of the borrower and industry review; and
(vi) review of cashflow projections.

We have in place a credit team that evaluates an applicant’s creditworthiness based on the factors above. The team carries out document verification and analysis of the financial standing of an applicant and the industry in which the applicant operates. Following the assessment, a decision is made by the principal officer as to whether the risk is acceptable before presenting the proposal to the credit committee of MP Credit for approval. The credit committee will make the final decision based on the principal officer’s recommendation. The credit committee presently comprises our chief operating officer, our general manager of finance and administration and a representative from our Board. 7.5 Our strengths We rely on our following strengths to compete and grow our businesses: 7.5.1 Strong and experienced management team Our Group is spearheaded by our Managing Director who has played a pivotal role in steering the growth of our insurance business and the realisation of the value of our investment in properties. He oversees the formulation of the business strategies and direction of our Group and is actively involved in the policy making aspects of the operations of our Group. Our Managing Director is supported by an experienced and dedicated management team which include the chief executive officer and the chief operating officer of MPIB who have, on average, over 30 years of proven track record in the insurance industry. Their experience has provided them with in-depth knowledge of the insurance industry and this has allowed them to implement business strategies and respond promptly to the dynamic operating conditions of the Malaysian insurance market. Our property related operations are helmed by Mr. Ng Kok Cheang who has over 30 years of experience in the property industry while our credit business is led by our Company’s chief operating officer, who has over 25 years of experience in finance and operations. We believe that the knowledge and experience of our management team is important to the continued growth and future development of our Group’s businesses. For further information on our key management, please refer to Section 9.4 of this Prospectus. 7. BUSINESS OVERVIEW (cant’d) 7.5.2 Extensive agency network and multi-channel distribution platform We have an extensive network of agencies totalling over 1,100 agents who are located across Malaysia. These agents are trained to sell our products in accordance with customers’ requirements and in-line with market conditions and trends. This ;s aimed at enabling them to anticipate and respond to customer needs with the appropriate and relevant products. We target to grow our agency force by 10.0% annually for the next 3 years to boost our market penetration. As at the LPD, we maintain relationships with over 30 insurance brokers which serve as an important source of our business with large corporate clients. Given the role played by insurance brokers who seek the best insurance package for their customers, we have benefitted from this channel due to our focus on building and maintaining relationships with these insurance brokers. In addition, we have 12 branches located in major towns and cities within Peninsular Malaysia and East Malaysia to provide a greater reach and convenience to our agencies and customers. Besides the agency and broking channels, we continue to expand our other distribution channels to enhance our multi-channel distribution platform to widen our reach. In February 2012, we were appointed as an insurance provider by POS Malaysia, which allows us to leverage on POS Malaysia’s network of more than 700 post offices and 300 POS-Mini outlets in Malaysia to access prospective customers for our personal line products. The products are sold through counters at the post offices by POS Malaysia personnel. We also have a ‘bancassurance’ arrangement with Alliance Bank Malaysia Berhad which enables the sale of our insurance products to Alliance Bank Malaysia Berhad’s customers and thus, further Widening our reach in the Malaysian market. We also use the internet as a growing distribution channel for the future. For example, policies for motor, marine, immigration bonds and foreign workers insurance can be purchased and renewed online. In addition, we have launched our travel PA insurance using the internet as a distribution channel. 7.5.3 Market oriented and customer centric We believe that being a locally-owned insurer, we have certain advantages as compared to foreign-owned general insurance companies. The close proximity of our management to our place of business allows us to have better control over and visibility of our operations. With less bureaucracy, we believe that we have a faster decision making process and have been able to respond to new market trends and customer demands more quickly. Our market oriented nature is largely due to the extensive experience of our management team where its members have served a wide range of customers over the years in various businesses, and under different social and economic conditions. This has allowed us to anticipate evolving needs and demands of the local market as well as the dynamic environment of the general insurance market. 7. BUSINESS OVERVIEW (cant’d) 7.5.4 Stable financial position The CAR is an indicator of financial strength which is an important factor affecting public confidence in general insurance businesses. IVIPIB’s CAR has increased from 187.0% as at 31 December 2010 to 222.8% as at 31 December 2012. MPIB’s CAR has exceeded BNM’s minimum supervisory CAR of 130% as well as its internal CAR target which is above BNM’s minimum supervisory CAR. The growth in CAR over the years was contributed by, among others, profits generated from its insurance operations. In addition, our prudent approach to underwriting and effective cost controls have allowed us to register underwriting profits for the years ended 31 December 2010, 2011 and 2012. 7.5.5 Diversified portfolio of general insurance products We have a diversified portfolio of general insurance products that ranges from fire, motor, MAT, PA to policies such as contractor’s all risks, extended warranty and medical. We believe that our range of products positions us to not only capture shifting customer demands and market trends, but also reduces our exposure to concentration of insurance risks. For instance, should we only focus on the provision of motor insurance products, our underwriting results may be substantially affected by unanticipated shifts in key trends relating to the motor class, resulting in fluctuations in our year-on-year performance as we would not have other sources of premiums from other product classes to offset the losses arising from the shift in trends. Given the diversity of our product range and services, we are able to serve as a one­stop-centre for our customers and cover the needs of individuals from different backgrounds as well as companies with various scale of operations. In addition, we believe that the experience and knowledge gained over the years has helped us keep pace with the changing needs of our customers. 7.5.6 Land bank and properties that are generally located in prime areas Our investment properties and land bank are generally located in prime areas around Kuala Lumpur, Selangor, Penang and Johor. We own several parcels of land totalling approximately 4.2 acres in Bukit Bintang, Kuala Lumpur, a vibrant shopping and commercial district in Kuala Lumpur which includes prominent developments such as Pavilion KL, Sungei Wang Plaza and Berjaya Times Square. There have also been plans by the Malaysian government to expand the public transportation in the Bukit Bintang area as part of the Economic Transformation Programme (“ETptl). Our land banks in Selangor are located in Rawang and Gombak. These land banks are currently being developed by BRDB through its wholly-owned subsidiaries, Pinggir Mentari Sdn Bhd and Magna Senandung Sdn Bhd, under 2 JV agreements. Please refer to Section 7.3 of this Prospectus for more information on our land bank and Section 15.4 of this Prospectus for more information on the JV agreements with BRDB’s subsidiaries. 101 7. BUSINESS OVERVIEW (cont’d) In Penang, our land bank measuring an aggregate of 290.6 acres (after deducting parcels of land that are deemed disposed of pursuant to JV agreements that we have entered into) stands to benefit from among others, the future economic growth of Penang, the upcoming second Penang bridge, Penang’s status as the UNESCO World Heritage Site and the scarcity of land in the state. In addition, our land at Teluk Tempoyak, which is currently being developed via a JV with BRDB, through its wholly-owned subsidiary Orion Vibrant Sdn Bhd, is located near to the Penang Airport. Please refer to Section 15.4 of this Prospectus for more information on the JV agreements with BRDB’s subsidiaries. Our Balik Pulau land is located near the Yu Chye primary school, Prince of Wales International School, Kolej Kemahiran Tinggi Mara and the Pernship Sdn Bhd prawn farm. Please refer to Section 7.3 of this Prospectus for more information on our land bank. Our oil palm plantation land area of 1,803.2 acres is situated in Pengerang, which is located along international shipping routes and close to deep water port and petroleum production facilities in the state of Johor. Pengerang has also been identified as the site for the development of the Petroliam Nasional Berhad’s planned Refinery and Petrochemical Integrated Development project which is part of the ETP. We believe that the location of our land bank provides us with opportunities to realise our investments and/or development potential. 7.6 Business strategies, future plans and prospects We intend to focus on building our general insurance business, whilst managing the realisation of value from our investment in properties via the following strategies: 7.6.1 Building on general insurance business by expanding our products and distribution network We aim to position ourselves as one of the top 10 general insurance providers in Malaysia, based on gross premiums, by the end of 2015. We target to grow our general insurance business in Malaysia by focusing on expanding the classes of insurance where we retain a higher proportion of the premiums that we receive from underwriting an insurance policy, i.e. by not ceding a higher proportion of our premium to reinsurers. Our insurance products with higher premium retention levels generally encompass those with smaller insured amount, generally below RM5.0 million per policy. These products include PA, motor and fire products for small­medium enterprises and houseowners. However, as our exposure to the motor class is within our desired levels, we are currently not focusing on expanding this class. We also aim to maintain a risk-balanced portfolio of products with a non-motor portfolio commanding at least 70% to 80% of our overall gross premiums. For the year ended 31 December 2012, our non-motor portfolio contributed 74.8% to our overall gross premiums. The objective of a risk-balanced portfolio is to minimise our concentration of risk so that any adverse result of a particular class of products would not materially affect our overall underwriting results. We therefore aim to contain our motor portfolio to be in line with our underwriting strategy and risk appetite. 7. BUSINESS OVERVIEW (cont’d) To achieve the aforesaid future plans, we intend to undertake the following strategies: (i) Introduce new insurance products and schemes We expect the retail market to contribute to our insurance business’ next phase of growth. Our expansion into the retail market will be driven by the products and schemes that we offer and develop from time to time. We are constantly developing new products and schemes such as the golfers’ scheme, extended warranty scheme, freight forwarders’ scheme, foreign workers’ insurance scheme and PA schemes with associations, which we view as having growth potential. In addition, we also continuously develop and enhance new personal line products such as PA, health and surgical insurance, houseowner and household insurance to capture a wider market of customers. We are registered with the Health Ministry of Malaysia to underwrite the Foreign Workers Health Insurance Protection Scheme through the offering of health insurance products which are tailored for the foreign workers market segment. The Foreign Workers Health Insurance Protection Scheme commenced in 2011 and contributed RM1.1 million and RM3.5 million of our gross premiums for the years ended 31 December 2011 and 2012 respectively. We believe that our participation in this scheme has assisted us to further strengthen our market share not only through an increase in sales in the health segment, but also to increase the awareness of our product brand name in not only the retail market, but also the corporate market as our agents market this product to corporate clients and foreign workers recruitment agencies. (ii) Expand our distribution channels As explained in Section 7.2.3 of this Prospectus, we currently have a bancassurance arrangement with Alliance Bank Malaysia Berhad to sell our insurance products and schemes to their customers. Under this arrangement, a wide range of our insurance products are offered to their mortgage loan customers, small and medium enterprises as well as their corporate clients. We intend, not only to maintain our relationship and good rapport with Alliance Bank Malaysia Berhad, but to also enter into similar arrangements with other local and foreign banks. Currently, we are also a panel insurer of Bank of China (Malaysia) Berhad and India International Bank Malaysia Berhad. We plan to expand our branch network to improve our reach to our current and potential customers in the retail segment. We intend to establish branches based on our requirements in cities and towns in Malaysia where we currently do not have a branch. The costs relating to these expansions are expected to be funded using internally generated funds. To maximise costs efficiency and to complement our branch network, we plan to grow our agency network by an additional 10.0% annually for the next 3 years and to equip our agencies with product knowledge, marketing and selling skills to increase their efficiency and productivity. 7. BUSINESS OVERVIEW (cont’d) We are also planning to recruit experienced marketing personnel who have existing and sizeable business volume from their own network of customers or a group of agents which can expand our business. This would enable us to increase our market reach as well as heighten the awareness of our products and services. (iii) Expand our presence in the bumiputera broking market Our Group’s general insurance business maintains a high concentration of broking business from the non-bumiputera insurance sector in Malaysia. Moving forward, we intend to expand our coverage of the bumiputera insurance sector. We believe that the bumiputera insurance sector has potential for future growth. Our target is to grow the gross premiums contribution from bumiputera brokers from RM35.3 million that was recorded for the year ended 31 December 2012 to RM50.0 million by the end of 2015. As part of our strategy to penetrate the Bumiputera broking sector, we have in 2012, recruited our chief broking officer, who has more than 20 years of experience in the industry, and he will lead our broking unit in developing new businesses from the various brokers in the industry. Some of the initiatives that are being undertaken by us to grow this channel include: (a) providing value added services to brokers and/or their clients through advisory services such as risk management as well as providing insurance related seminars and training;
(b) improving support services to brokers relating to daily operations such as policy turnaround time, quotation response timelines and claims services;
(c) jointly developing new products or schemes as part of an exclusive arrangement with brokers;
(d) fostering closer relationship through social activities;
(e) developing closer relationship with identified key personnel in targeted broking firms;
(f) supporting the broker’s tender participation for corporate accounts and government-linked companies portfolio; and
(g) continuing joint scheduled meeting with brokers and their clients.

(iv) Enhance our e-commerce channels We recognise the importance of the internet as a medium of distribution for our products. We intend to enhance our e-commerce channel as an alternative distribution channel which would serve to expand our reach where consumers have become more technology-savvy as internet accessibility grows in Malaysia. In addition, this distribution avenue may potentially be more cost-efficient as compared to our other distribution channels. Some of our insurance products that can currently be purchased online include motor, marine, immigration bonds, foreign workers insurance and travel PA insurance. 7. BUSINESS OVERVIEW (cont’d) 7.6.2 Realising the value of our investment in properties We plan to realise the value of our investment in properties through the development of our land bank with JV partners, profit sharing partnerships or outright disposal when suitable opportunities arise. After excluding the land bank that we have committed to our JVs as listed in Section 7.3 above, our remaining land bank, excluding our 2 hotels and office building are as follows: State Size acres Kuala Lumpur 4.2 Penang 207.6 Johor 1,803.2 Terengganu 7.7 Total 2,022.7 On an ongoing basis, we plan to monitor the execution of our JV projects. In relation to our remaining land bank that are not committed to any JV, we intend to continue exploring new strategies to realise the value of our existing land bank located in Kuala Lumpur, Penang, Johor and Terengganu, to enhance our investment returns. These may include entering into profit sharing partnerships, strategic partnerships with property developers or outright disposals. Before entering into any property development partnerships, we will evaluate and assess our potential JV partners based on, among others, their track record and financial strength. With regard to our hotels and office building, we intend to continue to manage the said properties based on their current use while at the same time pursue opportunities to increase our return on investment in these properties. This may include efforts to renovate and enhance the value of the said buildings or outright disposals of the said properties. 7.7 Risk management 7.7.1 Internal audit Our Group’s internal audit function is carried out by our Group Internal Audit Department (“GlAD”). It assists the Audit Committee to monitor the risk management, internal control and governance system of our businesses. On an annual basis, an audit plan is presented to the Audit Committee for review and approval. The selection of the units or operations to be audited for the year is based on the risk assessment results and feedback from management and Audit Committee on their areas of concern. Areas which the Audit Committee considers as high risk are audited once every 12 months, whereas, areas which are considered as moderate and low risk are audited once every 2 and 3 years, respectively. GlAD also performs special reviews or investigations on an ad-hoc basis, where required, for instance, when it receives such requests from the management and/or Audit Committee as a result of a change in business risks. In discharging the independent audits, GlAD places emphasis on a risk-based auditing approach which covers not only financial risks, but operational, technology and strategic risks as well. 7. BUSINESS OVERVIEW (cont’d) The Audit Committee is responsible for the adequacy of the internal audit function and its resources, and ensures that recommendations raised in the internal audit reports are dealt with in an effective and timely manner, and that outstanding exceptions or recommendations are closely monitored. Where the result of an audit is unsatisfactory, a follow-up audit is conducted and reported to the Audit Committee. 7.7.2 MPIB’s Enterprise Risk Management (“ERM”) Framework The Board of MPIB, with the assistance of the management of MPIB, has implemented risk management processes that set out the overall business strategies and the general risk management philosophy. The major areas of risk that the activities of MPIB are exposed to are operational risk, financial risk and general risk.
MPIB’s 3-Tiered Risk Control MPIB’s ERM framework has a 3-tiered risk control structure. The lowest level is the operational functional units whereby the Head of Departments (UHODU) of the respective departments are responsible to identify and mitigate the risks within their department/business units. HODs are also required to manage the operational risks in the day-to-day operations and review the effectiveness of internal controls in order to mitigate the risks. The Strategic Operations Management Committee (“SOMC”), comprising the chief executive officer of MPIB (or his alternate) and the HODs, has an oversight role in relation to risk identification and risk mitigation measures presented by the managers of the respective departments and the risk management department. The second level of control will involve the Risk Review Committee (URRC”) and the Risk Management and Compliance Department (URMCD”). The RRC comprises at least 5 members who are mainly the operation heads of MPIB. This committee will formulate and formalise an effective risk management framework for approval by the Risk Management Committee (URMC”) and the Board of MPIB. 7. BUSINESS OVERVIEW (cont’d) The RMCD is responsible to develop risk management policies, processes and limits to control risks, to review them and if necessary to make recommendation for changes in line with the changes in risk thresholds set by the Board of MPIB. The risk management and compliance officer (URMCO”) who is also a member of the RRC works closely with the RRC and the HODs. He is responsible to coordinate and monitor the implementation and compliance of the risk management framework. He will also assess the effect of the major risks and work together with an external actuarial consultant to assess the impact on earnings and capital. The RMCO reports directly to the chairman of the RMC, who is appointed by the Board of MPIB. The RMC consists of at least 2 independent non-executive directors of MPIB whose roles are to review the effectiveness of MPIB’s risk management framework and ensure that adequate risk control measures are duly implemented to mitigate risks that have been identified. GlAD ultimately assesses the adequacy and effectiveness of the operational controls and risk management systems that have been put in place by MPIB as well as the level of compliance. GlAD highlights any deficiencies and/or breaches to the Audit Committee and recommends the appropriate remedial actions to be taken by MPIB. GlAD reports directly to the Audit Committee which is chaired by an independent non­executive director appointed by the Board. The role of the Audit Committee, supported by GlAD, is to provide an independent assessment of the adequacy and reliability of the risk management processes and systems of internal controls and compliance with risk policies, laws, internal and regulatory guidelines. The Board of MPIB is responsible for the overall governance of MPIB, the attainment of its corporate plans and objectives, and risk management oversight. The risk management policies are reviewed regularly to ensure that they remain relevant and effective in managing the associated risks due to changes in the market and regulatory environments. Management of risks After identifying the risks concerned, MPIB then segregates the risks into the following broad categories to determine the appropriate responses: (i) Inherent risks -these are risks that exist in the business environment. These risks are generally beyond the management’s control. However, the impact may be reduced to a certain extent through certain control actions.
(ii) Controllable risks -these are risks that may be detected and prevented by the management. Timely actions can then be taken to reduce the impact of such risks should they occur.

7. BUSINESS OVERVIEW (cant’d) Thereafter, an analysis is made to determine the impact of each potential risk to its general insurance business in the following manner: (i) identify the factors behind such risks and rate the probability of such risks occurring;
(ii) determine the consequence of such risks and rate the impact of such risks;

(iii) assess and categorise the degree of risk impact into 4 levels: very high, high, medium or low; and (iv) based on the above analysis, determine either of the following actions: (a) avoid the risk;
(b) transfer the risk;
(c) retain or accept the risk; or
(d) reduce the risk.

Business Continuity Framework MPIB has established the Business Continuity Framework which is an integral part of the ERM Framework to mitigate reputation risks and loss of business opportunity. The Business Continuity Framework is undertaken according to guidelines issued by BNM to ensure that all stakeholders can rely on the continuation of essential services from MPIB even in times of crisis or in the event of disruption. Compliance Management Framework MPIB is obliged to comply with a number of legislative requirements, industry regulations and various other requirements. Failure to comply with such requirements, regulations and standards may result in financial and reputational damage, exposure to fines, civil and criminal penalties, suspension or revocation of licence. MPIB could also be subject to disputes and legal action arising from its transactions or business operations. MPIB has established the Compliance Management Framework which is an essential component of the ERM Framework which is tasked to the RMCD to implement the policy and to reduce N1PIB’s exposure to legal and compliance risks. Capital Management Plan (“CMP”) Pursuant to the RBC Framework, the Board of MPIB had approved and adopted a CMP for I\i1PIB which is in-line with the requirements of the RBC Framework with effect from 1 January 2009. The objective of the CMP is to optimise the efficient and effective use of resources in order to maximise the return on equity and provide an appropriate level of capital to protect the policyholders after taking into account events that can directly or indirectly impact the operations and financial resilience of the Group whilst complying with the rules and regulations issued by the relevant authorities. The management of capital is guided by the CMP which is driven by the Group’s business and strategies and organisational requisites which take into account the business and regulatory environment in which MPIB operates. In this respect, MPIB sets capital targets for both Tier 1 and Tier 2 as defined under the RBC Framework that is above the minimum regulatory requirements. 7. BUSINESS OVERVIEW (cont’d) The management committee responsible for the oversight of MPIB’s capital management is the SOMC. All proposals on any deviation from capital targets or capital raising exercises must be addressed to and approved by the SOMC prior to recommendation to the Board of MPIB for approval and implementation. Stress Test The CMP also includes a Stress Policy which requires a stress test to be conducted twice a year to systematically evaluate the extent by which MPIB’s capital could withstand market shocks and by which capital will be eroded by the principal risks identified due to exceptional but adverse plausible events and to determine the impact on the performance and financial conditions. The stress tests results together with the counter measures are tabled to the RMC for deliberation and recommendation to MPIB’s Board for approval prior to submission to BNM. Asset/Liability Management (“ALM” The primary objective of MPIB’s ALM policy is to ensure that adequate liquid assets are held at all times and provide satisfactory and consistent earnings on these assets. MPIB’s ALM is integrated with the management of the financial risks associated with MPIB’s other financial assets and liabilities not directly associated with reinsurance. MPIB’s SOMC and investment committee are primarily responsible for the ALM based on the guidelines approved by the Board of MPIB. Fraud Management Framework MPIB has established the Fraud Management Framework which is an integral part of the ERM Framework to manage fraud risks arising from business transactions or operational activities. 7.7.3 Disaster recovery The business operating system of MPIB is fully supported by a disaster recovery programme. MPIB carries out tests on its business operating system twice a year to assess the robustness and condition of its operating system. 7.7.4 Compliance monitoring of our investment properties In relation to the properties that we own, we have implemented a compliance policy where, on a semi-annual basis, compliance checks are performed on the parcels of land that we own with regard to compliance with relevant conditions and regulations relating to the said parcels of land. When any relevant non-compliances are detected, we will assess and determine the appropriate course of action to be taken and implement them accordingly. 7. BUSINESS OVERVIEW (cont’d) We also monitor the progress of our JVs on an ongoing basis and when we detect any non-compliance by our JV partners in relation to the terms of the JV agreement such as compliance with relevant regulations in relation to the land and property development activities, we will take the necessary actions to ensure that such non-compliances are rectified accordingly. Notwithstanding this, we will be indemnified and kept harmless by our JV partners from any damages, liabilities, expenses, losses, claims or proceedings arising from the failure of our JV partners to perform their responsibilities under the JV agreements. 7.8 Key regulations affecting our businesses 7.8.1 General insurance business As with other insurance service providers operating in Malaysia, we are subject to, among others, the regulations and policies imposed by BNM as well as the provisions under the Insurance Act. (i) Insurance Act
The general insurance industry in Malaysia is regulated by the Insurance Act. The Insurance Act provides that no person shall carry on an insurance business, insurance broking business, adjusting business or financial advisory business unless it is licensed under the Insurance Act. In respect of the insurance business, the MoF (through BNM) is responsible for issuing the licence authorising the holder to carry on insurance business whereas BNM is responsible for the issuing of licence in connection with the insurance broking business, adjusting business or financial advisory business. The MoF or BNM, as the case may be, may at any time impose any condition on a licence or amend any condition imposed.
(ii) Financial Services Act, 2013 (UFSAU)

It is anticipated that the new FSA, which has been passed by Parliament but which, as of the date hereof, has not come into force, will consolidate the regulation of all financial services which were previously governed by BAFIA, the Exchange Control Act, 1953 (“ECAU ), the Insurance Act and the Payment Systems Act, 2003 (UPSAU). The FSA deals with the regulation and supervision of financial institutions, payment systems and the oversight of the money market and foreign exchange market. One of the significant changes that will be brought about by the FSA is the repeal of the BAFIA, the ECA, the Insurance Act and the PSA. Notwithstanding the repeal, any licence previously granted under (among others) the Insurance Act will be deemed to be a licence granted under the FSA, and will continue to authorise such person to carry on the insurance business that was covered under that licence. 7. BUSINESS OVERVIEW (cant’d) In addition, when the FSA comes into force, our Company (being a company that obtained the prior written approval of the MoF to hold an aggregate interest in shares of more than 50% in I’v1PIB) or such other corporation within our Group may be required to, among others, submit an application to BNM for it to be approved as a financial holding company (“FHC”). Once designated as a FHC, the said corporation is not permitted to carry on any business other than the business of holding investments (directly or indirectly) in corporations which are primarily engaged in financial services or in other services in connection with or for the purpose of such financial services, unless BNM otherwise approves. In addition, the FHC must comply with any prudential requirement specified by BNM. The FSA also empowers BNM to specify standards on prudential matters on a subsidiary of the FHC if BNM is of the view that the subsidiary poses a risk to a licensed person or its financial group and the subsidiary is required to comply with such standards. (iii) BNM BI\lM is a statutory body established under the Central Bank of Malaysia Act, 1958 (which has since been repealed by the Central Bank of Malaysia Act, 2009 (“CBMA”)). Notwithstanding the repeal of the Central Bank of Malaysia Act, 1958, BNM shall continue to be in existence under and be subject to the provisions of the CBMA. In addition to the functions of BNM (as provided under the CBMA), BNM is responsible for administering the Insurance Act and for regUlating, among others, the conventional insurance industry. As a regulator, BNM has broad powers, which include the power to request for the submission by an insurer of documents or information as may be required by BNM, issue guidelines, circulars or notices relating to the conduct of the business and affairs of an insurer, make regulations with the approval of the MoF, direct an insurer to submit new products for review before the products may be offered, recall any prodUcts offered, compensate consumers who have suffered losses, modify the terms and conditions of any products offered, impose additional capital charges and publish details of corrective actions taken against an insurer. (iv) PIAM MPIB is a member of the PIAM. PIAM was formed in May 1979 in compliance with Section 3(2) of the Insurance Act, 1963. This provision has been superseded by Section 22 of the Insurance Act. PIAM constitutes a statutory association recognised by the Government for all registered insurers which transact general insurance business in Malaysia. PIAM’s role includes, among others: • to promote the establishment of sound insurance structure in Malaysia in co-operation and consultation with BNM;
• to promote and represent the interests of members in or connected with Malaysia by all means and methods consistent with the laws and constitution of Malaysia;
• to render to members, where possible, such advice or assistance as may be deemed necessary and expedient;

111 7. BUSINESS OVERVIEW (cont’d) • to take note of events, statements and expressions of opinions affecting members, to advise them thereon and represent their interest by expression of views thereon on their behalf as may be necessary and expedient; and
• to make rules, regulations and bye-laws in accordance with these articles, in consultation with BNM.

Resolutions and circulars issued by PIAM relating to tariffs, policy guidelines and industry agreements are binding on the member insurance companies. (v) Capital requirements Under Section 18 of the Insurance Act and RegUlations 3 and 4 of the Insurance Regulations, 1996 (“Insurance Regulations”), a licensed local insurer is required to maintain a minimum paid-up share capital of RM100,000,OOO.00, failing which, the licensed local insurer shall be liable to a penalty of RM3,000,000.00. The RBC Framework is imposed by the MoF, pursuant to Section 23 of the Insurance Act as a licensing condition for insurers. This framework came into effect on 1 January 2009 and is a capital adequacy framework which is applicable to all insurers licensed under the Insurance Act. Under the RBC Framework, insurers are required to maintain a capital adequacy level that commensurate with their risk profiles. Each insurer is reqUired to determine the adequacy of the capital available in its insurance and shareholders’ fund to support the total capital reqUired by the insurer. This will serve as a key indicator of the insurer’s financial resilience and will be used by BNM to determine if any BNM supervisory intervention is required on the insurer. The framework also sets out the statutory valuation bases for the insurer’s assets and liabilities and BNM’s expectation of the investments and risk management policies of insurers. Presently, all insurance service providers are required to have a minimum CAR of 130% and must maintain an internal target CAR which is above 130%. In computing the CAR percentage, factors such as the share premium, retained profits, general reserves are taken into account. An insurer which fails to comply with the minimum CAR will face strict supervisory action by BNM which may include business restrictions and/or restructuring measures. Under Section 41 of the Insurance Act and Paragraph 5.1 on the Requirements on Margin of Solvency issued by the BNM, a licensed insurer is reqUired to maintain, at all times, assets in its insurance fund which is of a value equivalent to or higher than the liabilities of that insurance fund. Where a deficiency arises, the licensed insurer shall rectify it by way of a transfer of assets from its shareholders’ funds or from another insurance fund. 112 7. BUSINESS OVERVIEW (cont’d) (vi) Restrictions on grant of credit facilities and transfer of funds Under Section 49 of the Insurance Act, a licensed insurer shall not grant any credit facilities to (among others) the following entity/person, unless otherwise approved by the BNM: (a) a company or firm in which it or any of its directors has any interest as director, partner, controller, manager or agent, or to an individual for whom or a company or firm for which any of its directors is a guarantor;
(b) a company in which it, or anyone or more of its directors, has interest in shares of 20% or more;
(c) a company which has interest in shares of 20% or more in the licensed insurer or licensed insurance broker, as the case may be; and
(d) a company in which the company in subsection (c) above has interest in shares of 20% or more.

Under Section 93 of the Insurance Act, a licensed insurer can only payout dividends if, all of its capitalised expenditure (including preliminary expenses, organisation expenses, share selling commission, brokerage, amounts of losses incurred, and any other item of expenditure not represented by tangible assets) has been written off or if the payment would not impair its margin of solvency. This is further extended by the RBC Framework wherein, a licensed insurer shall not pay dividends if its CAR is less than the internal target CAR or if the payment would impair its CAR position to below its internal target. In addition, the BNM has the power to impose restrictions on insurers from making discretionary payments, including payment of interest or redemption of capital instruments. In addition to the above, pursuant to the conditions imposed by MoF through the BNM letter dated 21 December 2012 (as varied by BNM’s letter dated 20 March 2013) (“MoF Conditions”), the prior approval of BNM is required prior to any payment of dividends by our Company, MP Capital and MPIB while the prior approval of BNM is required before our Company provides any form of financial assistance (including loans, guarantees and indemnities) to the non-financial services business companies within our Group where such financial assistance exceeds the following thresholds: (a) 50% of the proforma consolidated shareholders’ funds of our Company (excluding shareholders’ funds of MPIB) as at 30 June 2012 or 50% of the latest audited consolidated shareholders funds’ of our Company (excluding the shareholders’ funds of MPIB) which has been announced to Bursa Securities, whichever is the later; or
(b) MPIB having a CAR of not less than 180% at the time of provision of the said financial assistance.

Please refer to Section 10.1.2 of this Prospectus for further details on the MoF Conditions. 113 7. BUSINESS OVERVIEW (cont’d) (vii) Reserve requirement The RBC Framework requires the appointment of a suitably qualified actuary by an insurer to ensure that the value of insurance liabilities and the various components of the solvency computation are determined in accordance with the standard set out in the framework. (viii) Reinsurance An insurer’s reinsurance arrangements must be consistent with sound insurance policies. The general principles to be observed in a reinsurance arrangement are the appropriateness of retention level, security of reinsurers, spread of reinsurers and appropriateness of reinsurance contracts. An insurer is required both to design its reinsurance programme in line with its exposure and portfolio of business, taking into account, among others, its insurance risk profile and the concentration of its business and to ensure that its reinsurance arrangements provide adequate protection for all classes of business underwritten to enable it to pay its liabilities as they come due. In placing reinsurance in respect of general insurance, an insurer must accord priority to local reinsurers up to such locally incorporated reinsurers’ full retention capacity before securing reinsurance from Labuan incorporated insurers and subsequently foreign incorporated insurers. (ix) Financial reporting requirements In general, insurers are required to submit each of the following to BNM within a specified timeframe: (a) audited annual accounts; (b) auditor’s report and certificate; (c) appointed actuary’s report and certificate; (d) report on the action taken by the Board on the auditor’s report; (e) the Board’s report on its operations; and (f) monthly and quarterly returns of each fiscal year. BNM has also issued guidelines which reqUire an insurer to submit additional reports which, among other things, relate to such insurer’s investments, claims, reinsurance, solvency and capital adequacy. (x) Management
The Insurance Act governs the appointment of directors and the chief executive officer of an insurance company. A director and/or chief executive officer of an insurance company must comply with the requirements imposed under the Insurance Act as well as obtain the approval of BNM prior to his or her appointment.
(xi) Investments

Insurance companies are required to comply with the investment risk and management policy spelt out under the RBC Framework. The RBC Framework provides that the oversight of and accountability for. the investment of insurance funds rests ultimately with the Board of the insurer. To ensure proper investment of insurance funds, insurers must put in place an investment and risk management policy that is in line with the risk appetite set by the Board of the insurer. The investment and risk management policy should be approved and reviewed regularly by the Board and cover overall investment strategy and proper risk management systems, including monitoring and control mechanisms. 114 7. BUSINESS OVERVIEW (cant’d) BNM may howe’ver impose requirements on a particular insurer to invest in a specified manner, or restrict or prohibit an insurer from investing in certain asset classes or individual assets to safeguard insurance funds. Such requirements, restriction or prohibition will form part of supervisory actions as a result of BNM’s assessment of an insurer’s risk profile and investment risk management function. (xii) Tariffs Industry players in the domestic insurance sector are also affected by tariffs implemented by prAM, subject to approvals from BNM. In view thereof, general insurance companies are unable to maximise their underwriting profits and at times, may suffer underwriting losses as tariffs limit their ability to price their insurance risks effectively. Nevertheless, BNM has recently introduced the new motor cover framework which is geared towards detariffing the motor insurance premium in which premium rates will be further differentiated in accordance to the risk profile of individual vehicles. Under this framework, motor insurance tariff rates are being revised by BNM on a gradual basis with a view towards the eventual abolishment of such tariffs by 2016. (xiii) MMIP All general insurance licence holders in Malaysia are collectively required to jointly share the losses of the MMIP. In recent years, the losses incurred by the MMIP have increased as more insurance companies have refused to insure vehicles of higher risk in nature, As such, an increasing number of vehicle owners have sought to obtain their insurance cover from the MMIP, as the insurer of last resort. (xiv) Internet insurance In view of the potential risks in internet insurance, BNM has formulated the Guidelines on Internet Insurance. The Guidelines serve to prescribe the minimum requirements which insurers should observe in the proVision of internet insurance. Whilst the internet enhances the environment in which insurance products can be better advertised, purchased, delivered and serviced, the protection of policy owners’ interests should not be compromised. Hence, any insurer who utilises the internet as a channel to transact with customers or as a platform for transmission of customers’ information, is required to seek BNM’s prior approval before conducting any activities online. (xv) Anti-Money Laundering and Anti-Terrorism Financing Act, 2001 (“AMLA”) The AMLA which came into force on 15 January 2002 criminalises money laundering of proceeds from the predicate offence and provides for suspicious transaction reporting, record-keeping and the functions of a financial intelligence unit that could co-operate with domestic as well as foreign enforcement agencies. In this respect, the MoF has appointed BNM as the competent authority to carry out the functions of the financial intelligence unit. The law also provides for investigation into money laundering activities, law enforcement agencies to freeze, seize and forfeit proceeds from predicate offences as well as prosecution of money launderers. 115 7. BUSINESS OVERVIEW (cant’d) As an insurance company, MPIB is categorised as a “reporting institution” pursuant to AMLA and is sUbject to the Anti-Money Laundering and Counter Financing of Terrorism Sectoral Guidelines 2 for Insurance and Takaful Industries. To ensure that all new insurance products or services as well as delivery mode does not create an avenue for money laundering and terrorism financing activities, we have to ensure that prior to the launch of any new insurance products or services or engagement of a new technology, controls to combat money laundering and terrorism financing practices are in place to address any risks these new products/services or technology may pose. As further required under the guideline, we have to verify and be satisfied with the identity of the policyholders and beneficiaries as well as the nature and legitimacy of the insurance transaction. We should not commence business relations or perform any transaction, or in the case of existing business relations with customers, we should terminate such business relations if the customer fails to comply with the customer due diligence requirements and consider lodging a suspicious transaction report with the financial intelligence unit in BNM. 7.8.2 Credit business (i) Moneylenders Act, 1951
The moneylending activities of MP Credit are governed by the Moneylenders Act 1951 which came into force on 31 March 1952. Under the said legislation, a company carrying on moneylending business is required to obtain a licence from the Registrar of Moneylenders, Malaysia. Further, a moneylender who intends to lend money to a borrower shall enter into a prescribed moneylending agreement with the borrower. If a moneylender fails to obtain a licence to carry on moneylending business or to comply with the relevant legislations in the course of carrying out the moneylending business, such moneylender shall be liable to a fine and/or imprisonment under the Moneylenders Act 1951.
(ii) Hire Purchase Act, 1967

The hire purchase business of MP Credit is governed by the Hire Purchase Act 1967 which came into force on 11 April 1968. (iii) AMLA MP Credit, which conducts our credit business, is also a “reporting institution” pursuant to AMLA, and is required to report suspicious transactions to BNM. 7.8.3 Hotel operations The hotel management business of Magnum Leisure and SPSSB are governed by, among others, the Local Government Act, 1976, which came into force on 1 January 1977 and the relevant by-laws passed by the respective municipal councils, namely the Municipal Council of Penang Island (Trades, Businesses and Industries) By-Laws 1991 and Hotels (Ampang Jaya Municipal Council) By-Laws 2007. Details of the major licences, permits and approvals granted to and obtained by our Group are set out in Annexure A of this Prospectus. 7. BUSINESS OVERVIEW (cont’d) 7.9 Competition Our general insurance business operates in a highly competitive environment in Malaysia and faces competition from local, foreign and takaful providers. As at the LPD, there are 24 general insurance companies and 7 general takaful providers that operate in Malaysia. 11 of the general insurance companies have majority foreign ownership, while the remaining 13 are locally-controlled. Since 2009, in conjunction with the liberalisation of the financial sector in Malaysia, the limit on foreign equity ownership in local insurance companies have been increased to 70% from 49% previously. This appears to have resulted in a number of foreign insurance companies acquiring or merging with local insurance companies. These foreign-controlled insurance companies generally have stronger capital bases and expertise which enable them to underwrite risks which are larger and more specialised. Although the size of the general takaful market had increased from RM767.6 million in 2006 to RM1.6 billion in 2011, our general insurance business has not been materially affected by the growth of the general takaful market (Source: Independent Market Research report by Frost & Sullivan). In addition, fire and motor classes, which presently contribute a significant portion of the gross premiums of our general insurance business, are subject to prescribed tariffs. As such, in these classes, we compete primarily on the basis of product offerings, as well as overall customer service levels. We believe that there are significant barriers of entry for new players in the industry in the form of licensing and capital requirements. Each insurance company is required to have a general insurance licence to operate in Malaysia, and new licenses may be difficult to obtain as BNM is currently encouraging the industry to consolidate. General insurance companies will also have to comply with the capital requirements, which impose a minimum RM100 million paid-up capital requirement along with a minimum CAR requirement of 130%. Additionally, acquisitions of equity interest in insurance companies or their controllers are regulated whereby any party that intends to acquire an equity interest of more than 5% in an insurance company or its controller must obtain the prior permission of MoF. 7.10 Intellectual property MPHB is currently registered as the proprietor of the “Multi-Purpose” trademark and logo and had on 8 August 2012 executed a deed of assignment to transfer the said trademark and logo to MPHB Capital. Please refer to Section 15.4(iv) of this Prospectus for more information. Save as disclosed above, as at the LPD, we do not have any brand names, patents, trademarks, technical assistance agreements, franchises and other intellectual property rights. 7.11 Major customers Our Group had no major customers that individually contributed 10.0% or more of our Group’s combined revenue for the years ended 31 December 2010,2011 and 2012. 7.12 Major suppliers Our Group had no major suppliers that individually contributed 10.0% or more of our Group’s combined cost of sales for the years ended 31 December 2010,2011 and 2012. 7. BUSINESS OVERVIEW (cont’d) 7.13 Dependence on material contracts/agreements/other matters As at the LPO, there are no material contracts, agreements, arrangements or other matters which had been entered into by us which we are highly dependent on. 7.14 Research and development Our Group did not have any research and development policies for the years ended 31 Oecember 2010, 2011 and 2012. 7.15 Interruptions to business for the past 12 months There was no significant interruption to our business and operations in the 12 months preceding the LPO. 7.16 IT Our IT infrastructure comprises integrated computer systems and software that are critical to our operations and business growth. (i) Policy M Policy M is a fUlly-integrated core insurance system which is designed to support our insurance business. It covers and links our various departments such as the underwriting, reinsurance, claims, accounting and finance departments of MPIB. Our core system supports the following functions: (a) manage the insurance policy and underwriting process;
(b) register and process claims;
(c) handle billings and collections; and
(d) implement cover notes control.

In order to cater to new business requirements, the system is continuously upgraded to improve its capability from time to time as well as to enhance our operating efficiency. We are currently in the process of replacing our core insurance system with a more advanced platform known as the Enterprise Insurance System (“EIS”). The EIS is expected to improve the overall operational efficiency and effectiveness of our insurance operations. The development of the EIS commenced on 3 February 2009 and is currently in the development and testing stage. The EIS was initially targeted to be rolled out by the end of 2012. However, the system test results were not satisfactory and as such the roll out has been delayed. We are still assessing the additional cost and time required to complete this project. 118 7. BUSINESS OVERVIEW (cant’d) (ii) Electronic Agency Services Centre (“EASC”) We have implemented the EASC system to handle transactions for various insurance such as motor, foreign workers compensation, bonds and cargo. The EASC system reduces the need for agents to physically visit our office to obtain insurance notes and policy papers as these documents can be printed on a real-time basis. (iii) Wide area network All of our branches are linked to our head office by a protocol secured wide area network. This enables our employees and agents to access the computer system on a real-time basis, which also facilitates a more efficient means of communication between branches and the head office. (iv) E-Merrimen We have implemented the E-Merrimen system which is a web-based application that provides the link between our claims department to loss adjusters and motor repair workshops in order to establish real-time transmittal of documents, thus overcoming postal delays and documents going astray. (v) Internet payment We have implemented an e-Payment system which enables payments to be made via a secure on-line environment. This enables payments or transfer of monies to our suppliers, claimants, workshops, lawyers or other payees in a timely and efficient manner. (vi) Business intelligence tool We have developed a business intelligence tool to help us better dissect business data and make more strategic decisions on our portfolio of business to improve the loss ratio and to assist agents to identify the type of businesses to focus on. ICompany No. 1010253-W I 7. BUSINESS OVERVIEW (cont’d) 7.17 Employees The number of employees of our Group for the years ended 31 December 2010,2011 and 2012 and as at the LPD is as follows: Total number of employees  Average year(s) of service as at the LPD  As at the  Division/Section  2010  2011  2012  LPD  < 1 year  1 -5 years  > 5 years  General insurance and credit businesses  General management, administration, human  19  22  25  26  4  7  15  resource, risk management  Finance & credit control  31  32  30  32  9  14  9  Underwriting (non-motor)  58  61  67  67  14  30  23  Claims (non-motor)  25  24  25  27  4  13  10  Motor (underwriting & claims)  24  26  34  39  8  24  7  Marketing (headquarter)  109  106  127  128  27  61  40  Branches  134  139  153  155  31  69  55  Investments  Property management  4  3  3  3  1  2  0  Executive office, administration & finance  22  23  22  21  1  16  4  Human resources  6  5  6  6  2  2  2  Training & development  1  1  1  2  1  1  0  Sales & marketing  22  21  16  17  7  9  1  Safety & security  18  17  18  17  3  9  5  Food & beverages  30  26  30  30  10  18  2  Kitchen  41  42  43  42  11  18  13  Engineering  21  23  23  22  6  16  0  Front office  44  39  47  48  14  31  3  Housekeeping  39  39  44  43  8  25  10  Total  648  -­ 649  714  725  161  365  199
120
7. BUSINESS OVERVIEW (cont’d) As at the LPD, we have a total workforce of 725 employees including 76 direct contract employees, of which more than 95% are Malaysians. Under our hotel operations, we also have 31 contract personnel who are engaged by firms who manage certain services which have been outsourced by us. None of our employees is represented by any union and we have not experienced any disruptions due to labour disputes in the past. We believe that labour relations within our Group and our relationships with our employees are good. 7.18 Training and development programmes We recognise the importance of human capital as one of our critical success factors. We manage our talent and develop future leaders through the assessment of performance as well as through implementation of training and development initiatives. As such, we provide training from time-to-time to guide our employees and agents in achieving our aims and embracing our values. The following are some of the training and career development programmes which MPIB provides to its employees and agents: Training and career development programmes Details (i) Executive career development programme
(ii) Young managers development programme

(iii) Competency Professional Development (“CPO”) training (iv) AMII examination
(v) Product training programmes

• caters to young executives
• 3-year programme
• focuses on insurance technical knowledge and soft skills
• training is provided regularly throughout the year
• caters to junior managers
• 3-year programme
• focuses on advance insurance technical knowledge and soft skills
• training is provided regularly throughout the year
• caters to MPIB’s agents, all of whom are registered with PIAM and professionally certified by the Malaysian Insurance Institute (“Mil”) where they are required to fulfil a minimum of 20 hours of CPD training hours annually
• covers a range of insurance related areas to develop technical skills and knowledge
• covers contemporary topics related to the insurance industry
• conducted by MPIB’s senior management personnel and insurance industry experts
• a professional examination tailored for the

insurance industry • organised by the Mil • covers a range of insurance products and schemes offered by MPIB
• caters to MPIB’s agents and employees

121 7. BUSINESS OVERVIEW (cont’d) Sponsorships In 2012, we started providing sponsorships to our employees to pursue the Mil certification as well as CPD training sessions to keep them up-to-date with the developments in the industry. As at the LPD, we have extended 4 sponsorships to our employees for the Mil certification. Retention ofstaffand agents Our Group is committed to the continuing development of our employees to assist them in their career development as well as for our succession planning. In order to encourage agency retention and to motivate our agents, we are focused on increasing training programmes and allowing career development through promotion opportunities, agent recognition programmes as well as attractive performance oriented commission package. (The rest of this page has been intentionally left blank)

 

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