Affin Holdings Cover (New)affin.listedcompany.com/newsroom/AFFIN-AnnualReport2008...Raja Dato’ Seri Aman bin Raja Haji Ahmad 25 April 1991 5/5 Maj. Gen. (R) Dato’Mohamed Isa bin

ContentsNotice of Annual General Meeting 2Statement Accompanying Notice of Annual General Meeting 5Corporate Information 6Board of Directors 7Directors’ Profile 9Audit Committee Report 14Corporate Governance Statement 19Statement On Internal Control 27Chairman’s Statement 28Five Year Group’s Financial Record 36Charts of the Group’s Five Year Financial Record 37Financial Statements 39Additional Disclosure 154Particulars of Properties 161Shareholding Statistics 175Warrantholding Statistics 177Proxy Form (Enclosed)

2 AFFIN HOLDINGS BERHAD | Annual Report 2008

Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN THAT the THIRTY-THIRD (33RD) ANNUAL GENERAL MEETING of AFFINHOLDINGS BERHAD will be held at 13th Floor, Bangunan LTAT, Jalan Bukit Bintang, 55100 Kuala Lumpur onMonday, 20 April 2009 at 10:00 a.m. to transact the following business:-

AGENDA

1. To receive and if thought fit, adopt the Audited Financial Statements for the financialyear ended 31 December 2008 and the Reports of the Directors and Auditors thereon.

2. To re-elect Professor Arthur Li Kwok Cheung retiring in accordance with Article 111 ofthe Company's Articles of Association and being eligible, offers himself for re-election.

3. To re-elect the following Directors who retire by rotation and being eligible, offerthemselves for re-election in accordance with Article 105 of the Company's Articles ofAssociation:-

3.1 Y. Bhg. Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Haji Zainuddin

3.2 Y. Bhg. Datuk Azzat bin Kamaludin

4. To consider and if thought fit, to pass the following resolutions in accordance withSection 129(6) of the Companies Act, 1965:-

4.1 "That pursuant to Section 129(6) of the Companies Act, 1965, Y. Bhg. Maj. Gen.(R) Dato' Mohamed Isa bin Che Kak be and is hereby re-appointed as Director ofthe Company to hold office until the next Annual General Meeting."

4.2 "That pursuant to Section 129(6) of the Companies Act, 1965, Y. Bhg. Dato'Mustafa bin Mohamad Ali be and is hereby re-appointed as Director of theCompany to hold office until the next Annual General Meeting."

4.3 "That pursuant to Section 129(6) of the Companies Act, 1965, Dr. The Hon. SirDavid Li Kwok Po be and is hereby re-appointed as Director of the Company tohold office until the next Annual General Meeting."

5. To approve Directors' Fees.

6. To re-appoint Auditors and to authorise the Directors to fix their remuneration.

Resolution 1

Resolution 2

Resolution 3

Resolution 4

Resolution 8

Resolution 9

Resolution 5

Resolution 6

Resolution 7

3Annual Report 2008 | AFFIN HOLDINGS BERHAD

Notice of Annual General Meeting (continued)

7. SPECIAL BUSINESS

To consider and if thought fit, to pass the following resolutions:-

7.1 Ordinary ResolutionAuthority to Allot and Issue Shares in General Pursuant to Section 132D ofthe Companies Act, 1965

"THAT pursuant to Section 132D of the Companies Act, 1965, and subject to theapprovals of the relevant governmental/regulatory authorities, the Directors be andare hereby empowered to issue shares in the capital of the Company from time totime and upon such terms and conditions and for such purposes as the Directors,may in their absolute discretion deem fit, provided that the aggregate number ofshares issued pursuant to this resolution does not exceed 10% of the issued sharecapital of the Company for the time being and that the Directors be and are herebyalso empowered to obtain the approval from Bursa Malaysia Securities Berhad forthe listing and quotation of the additional shares so issued and that such authorityshall continue to be in force until the conclusion of the next Annual GeneralMeeting of the Company."

7.2 Ordinary ResolutionProposed Shareholders' Mandate and Additional Mandate for RecurrentRelated Party Transactions of a Revenue or Trading Nature ("ProposedShareholders' Mandate")

"THAT authority be and is hereby given in line with Chapter 10.09 of the ListingRequirements of Bursa Malaysia Securities Berhad, for the Company, itssubsidiaries or any of them to enter into any of the transactions falling within thetypes of the Recurrent Related Party Transactions, particulars of which are set outin the Circular to Shareholders dated 27 March 2009 with the Related Parties asdescribed in the said Circular, provided that such transactions are of revenue ortrading nature, which are necessary for the day-to-day operations of the Companyand/or its subsidiaries within the ordinary course of business of the Companyand/or its subsidiaries, made on an arm's length basis and on normal commercialterms which are those generally available to the public and are not detrimental tothe minority shareholders of the Company;

AND THAT such authority shall commence immediately upon the passing of thisOrdinary Resolution until:

i. the conclusion of the next annual general meeting of the Company at whichtime the authority shall lapse unless by a resolution passed at a generalmeeting, the authority is renewed; or

ii. the expiration of the period within which the next annual general meeting afterthe date that is required by law to be held pursuant to Section 143(1) of theCompanies Act, 1965; or

iii. revoked or varied by a resolution passed by the shareholders of the Companyat a general meeting

whichever is earlier.

Resolution 10

Resolution 11


Notice of Annual General Meeting (continued)

AND FURTHER THAT the Board of Directors be and is hereby authorised to doall acts, deeds and things as may be deemed fit, necessary, expedient and/orappropriate in order to implement the Proposed Shareholders' Mandate with fullpower to assent to all or any conditions, variations, modifications and/oramendments in any manner as may be required by any relevant authorities orotherwise and to deal with all matters relating thereto and to take all such stepsand to execute, sign and deliver for and on behalf of the Company all suchdocuments, agreements, arrangements and/or undertakings, with any party orparties and to carry out any other matters as may be required to implement,finalise and complete, and give full effect to the Proposed Shareholders' Mandatein the best interest of the Company."

8. To transact any other ordinary business of the Company.

By Order of the Board

TAN LEH KIAHSUZANA BINTI AHMADTAY CHEE WAHSecretaries

Kuala Lumpur27 March 2009

Note:

a. A member entitled to attend and vote at the above meeting may appoint one or more proxies on his behalf. A proxy need not be a member of the Company. The instrument appointing a proxy or proxies must bedeposited at the Registered Office of the Company, 7th Floor, Chulan Tower, 3, Jalan Conlay, 50450 KualaLumpur not less than 48 hours before the time appointed to hold the meeting.

b. The proposed ordinary resolution 10, if passed, will give powers to the Directors to issue up to a maximum of10% of the issued share capital of the Company for the time being for such purposes as the Directors considerwould be in the interests of the Company. The authority will, unless revoked or varied by the Company in aGeneral Meeting, expire at the conclusion of the next Annual General Meeting or the expiration of the periodwithin which the next Annual General Meeting is required by law to be held, whichever is earlier.

c. The proposed ordinary resolution 11, if passed, will enable the Company and/or its subsidiaries to enter intorecurrent related party transactions of a revenue or trading nature which are necessary for the day-to-dayoperations of the Company and/or its subsidiaries, subject to the transactions being carried out in the ordinarycourse of business of the Company and/or its subsidiaries and on normal commercial terms which aregenerally available to the public and not detrimental to the minority shareholders of the Company.


Statement Accompanying Notice of Annual General Meeting

NAME OF DIRECTORS STANDING FOR RE-ELECTION OR RE-APPOINTMENT

The directors who are retiring pursuant to the Articles of Association and seeking for re-election in the forthcomingAGM:

i Y. Bhg. Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Haji Zainuddinii Y. Bhg. Datuk Azzat bin Kamaludin

The following directors who are over the age of seventy years and seeking re-appointment in the forthcoming AGM:

i Y. Bhg. Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak ii Y. Bhg. Dato’ Mustafa bin Mohamad Ali iii Dr. The Hon. Sir David Li Kwok Po

The profiles of the directors are set out on pages 9 to 13 of this Annual Report.

DETAILS OF BOARD MEETINGS

Five (5) Board Meetings were held during the financial year ended 31 December 2008. Details of the meetings areas follows:

Date of Meeting Time Venue

25 February 2008 2.30 pm 7th Floor, Chulan Tower 15 May 2008 3.45 pm 7th Floor, Chulan Tower 1 July 2008 2.30 pm 7th Floor, Chulan Tower 14 August 2008 10.05 am 7th Floor, Chulan Tower 10 November 2008 10.30 am 7th Floor, Chulan Tower

DETAILS OF ATTENDANCE OF DIRECTORS

Details of attendance of Directors at the Board Meetings held during the financial year ended 31 December 2008are as follows:

Name of Directors Date of Appointment No. of Meetings Attended

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Haji Zainuddin 17 October 2005 5/5

Tan Sri Dato’ Lodin bin Wok Kamaruddin 19 July 1986 5/5 Raja Dato’ Seri Aman bin Raja Haji Ahmad 25 April 1991 5/5 Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak 25 April 1991 5/5 Datuk Azzat bin Kamaludin 25 April 1991 5/5 Dato’ Mustafa bin Mohamad Ali 28 November 2002 5/5 Dr. The Hon. Sir David Li Kwok Po 21 May 2008 2/3Professor Arthur Li Kwok Cheung 21 May 2008 3/3Adrian David Li Man Kiu 21 May 2008 1/1

(Alternate Director to Dr. The Hon. Sir David Li Kwok Po)Daniel Wan Yim Keung 21 May 2008 0/0

(Alternate Director to Professor Arthur Li Kwok Cheung)


Corporate Information

BOARD OF DIRECTORS

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Haji Zainuddin (Chairman)

Tan Sri Dato’ Lodin bin Wok Kamaruddin (Deputy Chairman)

Raja Dato’ Seri Aman bin Raja Haji AhmadMaj. Gen. (R) Dato’ Mohamed Isa bin Che KakDatuk Azzat bin KamaludinDato’ Mustafa bin Mohamad AliDr. The Hon. Sir David Li Kwok PoProfessor Arthur Li Kwok CheungAdrian David Li Man Kiu(Alternate Director to Dr. The Hon. Sir David Li Kwok Po)

Daniel Wan Yim Keung (Alternate Director to Professor Arthur Li Kwok Cheung)

SECRETARIES

Tan Leh KiahSuzana binti AhmadTay Chee Wah

REGISTERED OFFICE

7th Floor, Chulan Tower3, Jalan Conlay50450 Kuala LumpurMalaysiaTelephone: (03) 2142 9569Fax: (03) 2143 1057

AUDITORS

PricewaterhouseCoopersLevel 10, 1 SentralJalan Travers, Kuala Lumpur SentralP.O. Box 1019250706 Kuala LumpurMalaysia

REGISTRAR

Boustead Management Services Sdn Bhd13th Floor, Menara Boustead69, Jalan Raja Chulan50200 Kuala LumpurTelephone: (03) 2141 9044Fax: (03) 2144 3016

PRINCIPAL BANKERS

AFFIN Bank BerhadPublic Bank Berhad

STOCK EXCHANGE

Bursa Malaysia Securities BerhadStock Code: 5185Stock Name: AFFIN

WEBSITE

http://www.affin.com.my


Tan Sri Dato’ Lodin bin Wok KamaruddinDeputy Chairman

Raja Dato’ Seri Aman bin Raja Haji AhmadIndependent Non-Executive Director

Datuk Azzat bin KamaludinNon-Independent Non-Executive Director

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj ZainuddinChairman

Board of Directors


Dato’ Mustafa bin Mohamad AliIndependent Non-Executive Director

Dr. The Hon. Sir David Li Kwok PoNon-Independent Non-Executive Director

Professor Arthur Li Kwok CheungNon-Independent Non-Executive Director

Maj. Gen. (R) Dato’ Mohamed Isa bin Che KakIndependent Non-Executive Director

Board of Directors (continued)


Directors’ Profile

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin HjZainuddin, a Malaysian aged 60, was appointed as aNon-Independent Non-Executive Director and Chairmanof the Board on 17 October 2005. He is also a memberof the Remuneration and Nomination Committees. Gen.(R) Tan Sri Dato’ Seri Mohd Zahidi served the MalaysianArmed Forces for 39 years, holding many keyappointments at field and ministerial level. He was theChief of Defence Forces with the rank of General from1st January 1999 till his retirement on 30th April 2005.Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi is a graduate ofSenior Executive Program in National and InternationalSecurity Harvard University, USA, Command andGeneral Staff College Philipines, Joint Services StaffCollege Australia and National Defence CollegePakistan. He also holds a Master of Science Degree(Defence and Strategic Studies) of Quaid-I-AzamUniversity Islamabad, Pakistan. His currentdirectorships in other public companies include CahyaMata Sarawak Berhad, Resort World Berhad, BintuluPort Holdings Berhad, Asiatic Development Berhad,Wah Seong Corporation Berhad and Bandar RayaDevelopment Berhad. He is made a member of DewanNegara Perak, elected by DYMM Paduka Seri SultanPerak on 25 November 2006 and also a director ofYayasan Sultan Azlan Shah. He is also made a memberof the Malaysian-Indonesian Eminent Persons Groupelected by the Prime Minister since July 2008. He doesnot have any family relationship with any Director and/ormajor shareholder of the Company, nor any personalinterest in any business arrangement involving theCompany. He has not been convicted of any offence.

Tan Sri Dato’ Lodin bin Wok Kamaruddin, a Malaysianaged 60, was appointed as a Director of AFFIN HoldingsBerhad on 19 July 1986. He was subsequentlyappointed as the Managing Director of the Company inFebruary 1991 and redesignated as Deputy Chairmanon 1 July 2008. He is also a member of the EmployeeShare Option Scheme and Nomination Committees. TanSri Dato’ Lodin has vast business and managementexperience pursuant to his various positions held inLembaga Tabung Angkatan Tentera (“LTAT”) Group ofCompanies. He is the Chief Executive of LTAT and theGroup Managing Director of Boustead Holdings Berhad.Prior to joining LTAT, he was the General Manager ofPerbadanan Kemajuan Bukit Fraser for 9 years. He sitson the Board of Boustead Heavy Industries CorporationBerhad, Boustead Plantations Berhad, BousteadProperties Berhad, UAC Berhad, Johan CeramicsBerhad, The University of Nottingham in Malaysia SdnBhd, Boustead Naval Shipyard Sdn Bhd, BousteadREIT Managers Sdn Bhd and Badan PengawasPemegang Saham Minoriti Berhad. He is also a memberof Yayasan Warisan Perajurit. Tan Sri Dato’ Lodin alsosits on the Board of subsidiaries of AFFIN HoldingsBerhad namely AFFIN Investment Bank Berhad, AXA-AFFIN Life Insurance Berhad and AFFIN Capital SdnBhd. He graduated from the University of Toledo, Ohio,USA with a Bachelor of Business Administration and aMaster of Business Administration Degree. He does nothave any family relationship with any Director and/ormajor shareholder of the Company, nor any personalinterest in any business arrangement involving theCompany. He has not been convicted of any offence.

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj ZainuddinChairman

Tan Sri Dato’ Lodin bin Wok KamaruddinDeputy Chairman


Directors’ Profile (continued)

Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak, aMalaysian aged 73, was appointed as an IndependentNon-Executive Director of AFFIN Holdings Berhad on25 April 1991. He is the Chairman of the AuditCommittee and a member of the Nomination andEmployee Share Option Scheme Committees. Maj.Gen. (R) Dato’ Mohamed Isa also sits on the Board ofLBS Bina Group Berhad and C.I. Holdings Berhad. Heserved the Armed Forces for 32 years since 1958 andhas more than 16 years of experience in private sectorservice. During his service with the armed forces, heheld many important posts. His last held rank wasMajor General. He does not have any familyrelationship with any Director and/or major shareholderof the Company, nor any personal interest in anybusiness arrangement involving the Company. He hasnot been convicted of any offence.

Dato’ Mustafa bin Mohamad Ali, a Malaysian aged 72,was appointed as an Independent Non-ExecutiveDirector of AFFIN Holdings Berhad on 28 November2002. He is also the Chairman of the Nomination andRemuneration Committees and a member of the AuditCommittee. Dato’ Mustafa sits on the Board ofsubsidiaries of AFFIN Holdings Berhad namely AFFINCapital Sdn Bhd and AXA-AFFIN Life InsuranceBerhad. Dato’ Mustafa also sits on the Board of PacificMutual Berhad and Batu Kawan Berhad. He graduatedwith a Bachelor of Arts (Honours) Degree majoring inEconomics from Cambridge University, UK. He alsoholds a Diploma in Advertising from the AdvertisingAssociation, UK. He has attended the AdvancedManagement Programme at the Harvard BusinessSchool, USA. Dato’ Mustafa held various positions,including as Marketing Director for Malaysian TobaccoCompany from 1974 to 1979, Corporate PlanningExecutive for British-American Tobacco, Co. Londonfrom 1980 to 1982, Managing Director (TobaccoDivision) for Malaysian Tobacco Company from 1982 to1988, Director of Sime Darby (International Operation)from 1988 to 1992 and Regional Director of Sime Darby(Malaysian Region Operations) from 1992 to 1994. Hewas an Adviser for Kumpulan Guthrie from 1994 to2002. Dato’ Mustafa is currently a trustee of HarvardBusiness School Alumni, Club of Malaysia Foundationand the British Graduates Association. He does nothave any family relationship with any Director and/ormajor shareholder of the Company, nor any personalinterest in any business arrangement involving theCompany. He has not been convicted of any offence.

Maj. Gen. (R) Dato’ Mohamed Isa bin Che KakIndependent Non-Executive Director

Dato’ Mustafa bin Mohamad AliIndependent Non-Executive Director



Raja Dato’ Seri Aman bin Raja Haji Ahmad, aMalaysian aged 63, was appointed as a Non-Independent Non-Executive Director of AFFINHoldings Berhad on 25 April 1991. He wasredesignated as an Independent Non-ExecutiveDirector on 15 January 2008. He is also a member ofthe Audit and Nomination Committees. Raja Dato’ SeriAman was the Chief Executive Officer of AFFIN BankBerhad, a wholly owned subsidiary of AFFIN HoldingsBerhad until May 2003. Presently, Raja Dato’ SeriAman sits on the board of AFFIN Investment BankBerhad, a subsidiary of AFFIN Holdings Berhad. He isalso presently a Director of Ahmad Zaki ResourcesBerhad, Tomei Consolidated Berhad. Raja Dato’ SeriAman is a member of the Malaysian Institute ofAccountants, a Certified Public Accountant and aFellow of the Institute of Chartered Accountant ofEngland and Wales. He held various positions inMaybank Group from 1974 to 1985 prior to joiningAFFIN Bank in 1985 as an Executive Director. He leftAFFIN Bank Berhad in 1992 to join PerbadananUsahawan Nasional Berhad as the Chief ExecutiveOfficer for one year before he was appointed as ChiefExecutive Officer of AFFIN Bank Berhad in 1995. Hedoes not have any family relationship with any Directorand/or major shareholder of the Company, nor anypersonal interest in any business arrangementinvolving the Company. He has not been convicted ofany offence.

Datuk Azzat bin Kamaludin, a Malaysian aged 63, wasappointed as a Non-Independent Non-ExecutiveDirector of AFFIN Holdings Berhad on 25 April 1991.He is the chairman of the Employee Share OptionScheme Committee and a member of theRemuneration Committee. He graduated from theUniversity of Cambridge with degrees in Law and inInternational Law in 1968 and 1969 respectively andwas admitted as a Barrister-at-Law of the MiddleTemple, London in 1970. He served as anAdministrative and Diplomatic Officer with the Ministerof Foreign Affairs Malaysia from 1970 to 1979. Sincethen he has been a partner of the legal firm of Azzat &Izzat. He is also presently a Director of BousteadHoldings Berhad, Pulai Springs Berhad, KPJHealthcare Berhad, Celcom (Malaysia) Berhad,Boustead Heavy Industries Corporation Berhad(formerly known as PSC Industries Berhad), TMInternational Berhad and VisDynamics HoldingsBerhad. He does not have any family relationship withany Director and/or major shareholder of the Company,nor any personal interest in any business arrangementinvolving the Company other than the rendering ofprofessional services to the Group which is carried outin the ordinary course of business of Azzat & Izzat, ofwhich he is a partner. He has not been convicted of anyoffence.

Raja Dato’ Seri Aman bin Raja Haji AhmadIndependent Non-Executive Director

Datuk Azzat bin KamaludinNon-Independent Non-Executive Director



Dr. The Hon. Sir David Li Kwok Po, a Chinese nationalaged 70 was appointed as a Non-Independent Non-Executive Director on 21 May 2008. Sir David is aMember of the Legislative Council of Hong Kong. He isa Member of the Banking Advisory Committee and aMember of the Council of the Treasury MarketsAssociation. Sir David is the Pro-Chancellor of theUniversity of Hong Kong, an Honorary Adviser of theBusiness and Economics Association of Hong KongUniversity Students’ Union (HKUSU) and an AdvisoryCommittee Member of the Chinese University of HongKong S.H. Ho College.

Dr. The Hon. Sir David Li Kwok Po is the Chairman andChief Executive of The Bank of East Asia, Limited(“BEA”). He joined BEA in 1969 and was appointed aDirector of BEA in 1977, Chief Executive in 1981,Deputy Chairman in 1995 and Chairman in 1997.

Sir David is the Chairman of The Chinese Banks’Association, Limited and the Hong Kong ManagementAssociation. He is the Honorary Advisor of TheInternational Chamber of Commerce – Hong Kong,China and the First Honorary Chairman of the HongKong Chamber of Commerce in China. He is also theHonorary Chairman of the Chamber of Hong KongListed Companies. Sir David is Vice President of theCouncil of the Hong Kong Institute of Bankers,Chairman of the St. Joseph’s College FoundationLimited and Chairman of the Advisory Council to theAustralian International School. He is also an EmeritusTrustee of the Cambridge Foundation and a Trustee ofthe Cambridge Overseas Trust. Sir David is Chairman

of the Advisory Board of The Salvation Army, HongKong and Macau Command, Chairman of theExecutive Committee of St. James’ Settlement and healso serves on Hong Kong Red Cross Advisory Board.He is a Council Member of the Employers' Federationof Hong Kong, a Director of the David Li Kwok-PoCharitable Foundation Limited, a Founder Member andan Executive Committee Member of the Heung YeeKuk Foundation Limited.

Sir David is a Director of China Overseas Land &Investment Limited, COSCO Pacific Limited, CriteriaCaixacorp, S.A., Guangdong Investment Limited, TheHong Kong and China Gas Company Limited, TheHongkong and Shanghai Hotels, Limited, Hong KongInterbank Clearing Limited, The Hong Kong MortgageCorporation Limited, PCCW Limited, San MiguelBrewery Hong Kong Limited, SCMP Group Limited,Vitasoy International Holdings Limited and IMGWorldwide Inc.

Sir David is a member of the Board of Trustees of theAsia Society International Council and Asia BusinessCouncil, a member of Deutsche Bank Asia PacificAdvisory Board and a member of the Asian YouthOrchestra Board. He serves on the advisory board ofCapital Magazine and the international advisory boardsof Carlos P. Romulo Foundation for Peace andDevelopment, Federal Reserve Bank of New York’sInternational Advisory Committee, Hospital for SpecialSurgery and Scripps International Network. Sir David isthe Chairman of INSEAD East Asia National Council,the Non-executive Chairman for Edelman Asia-Pacificand a Senior Adviser of Metrobank. He has not beenconvicted of any offence.

Dr. The Hon. Sir David Li Kwok PoNon-Independent Non-Executive Director


Professor Arthur Li Kwok Cheung, a Chinese nationalaged 63, was appointed as a Non-Independent Non-Executive Director on 21 May 2008. He is currently aNon-Executive Director of The Bank of East Asia,Limited. He is also a member of the NationalCommittee of the Chinese People’s PoliticalConsultative Conference.

Professor Li was the Secretary for Education andManpower of the Government of Hong Kong SpecialAdministrative Region (HKSAR) and a Member of theExecutive Council (from 2002 to June 2007). Beforethese appointments, he was the Vice Chancellor of theChinese University of Hong Kong (1996-2002) and wasthe Chairman of Department of Surgery and the Deanof Faculty of Medicine of the Chinese University ofHong Kong. Professor Li is currently a Non-ExecutiveDirector of The Bank of East Asia, Limited. He was aNon-Executive Director of China Mobile (Hong Kong)Limited, a director of Glaxo-Wellcome Plc., anIndependent Non-Executive Director of HendersonCyber Limited, a non-executive director of The Wharf(Holdings) Limited, and the Non-executive Chairman ofthe Board of Corus Hotels plc (formerly Corus andRegal Hotel Group plc).

Professor Li had held many important positions invarious social service organisations, medicalassociations, and educational bodies, including theEducation Commission, Committee on Science andTechnology, the Hospital Authority, the Hong KongMedical Council, the University Grants Committee, theCollege of Surgeons of Hong Kong, and the UnitedChristian Medical Services Board. He was a memberof the Board of Directors of the Hong Kong Scienceand Technology Parks Corporation and the Hong KongApplied Science and Technology Research Institute,and Vice President of the Association of UniversityPresidents of China. He was a Hong Kong AffairsAdviser to China. He has not been convicted of anyoffence.


Professor Arthur Li Kwok CheungNon-Independent Non-Executive Director


Audit Committee Report

The Board of AFFIN Holdings Berhad is pleased to present the Report on the Audit Committee (AC) for the financialyear ended 31 December 2008.

COMPOSITION OF MEMBERS AND MEETINGS

The AC members and details of the attendance of each member at five (5) AC meetings held on 15 February 2008,15 May 2008, 14 August 2008, 10 November 2008, 1 December 2008 and one (1) Special AC meeting on 22December 2008 are as follows:

No. Name No. of AC Meetings PercentageHeld Attended %

1. Maj. Gen. (R) Dato’ Mohamed Isa bin Che KakChairman/Independent Non-Executive Director 6 6 100

2. Dato’ Mustafa bin Mohamad AliMember/Independent Non-Executive Director 6 6 100

3. Raja Dato’ Seri Aman bin Raja Haji AhmadMember/Independent Non-Executive Director 6 5 83

The composition of AC had met the criteria set by the BMSB Listing Requirements Chapter 15 Part C on AuditCommittee and is in compliance with the principles and best practices set out in the Malaysian Code on CorporateGovernance.

The AC meetings’ agenda, relevant board papers and audit reports were distributed to the AC members one (1)week prior to the date of the meetings. The Head of Internal Audit attended all meetings during the financial year.Two (2) members of top management i.e. Executive Director was invited to attend five (5) AC meetings while theManaging Director, YBhg. Tan Sri Dato’ Lodin bin Wok Kamaruddin was invited to attend two (2) AC meetings in thefirst half of year 2008 prior to being appointed as the Deputy Chairman of the company with effect from 1 July 2008.

The Company’s external auditors attended two (2) AC meetings during the period. There were discussions betweenthe AC and the external auditors with regard to significant audit issues and business issues highlighted by them forfinancial year ended 31 December 2007. The AC had also reviewed the external auditors’ audit plan for the financialyear ending 31 December 2008. The AC had two (2) private meetings with the external auditors without thepresence of Management and Internal Auditors in 2008.

The Chairman of the Committee briefed the Board of Directors on issues discussed at the AC meetings.

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE

During the year, the AC carried out the following activities in discharging its duties and responsibilities:

External Audit

1) Reviewed the external auditor’s audit plan and audit strategy for the financial year ended 31 December 2008to ensure their scope of work adequately covered the activities of the Company and the Group;

2) Reviewed the results/issues arising from their audit of the financial year and resolution of such issueshighlighted in their report to the Committee;

3) Reviewed and evaluated the external audit performance, objectivity and independence during the year beforerecommending to the Board for their re-appointment and remuneration or removal.


Audit Committee Report (continued)

SUMMARY OF ACTIVITIES OF THE AUDIT COMMITTEE (continued)

Internal Audit

1) Reviewed the Internal Audit Plan and Training Budget for year 2009 in ensuring that adequate scope andcomprehensive coverage on the audit activities and principal risk areas are adequately identified and covered;

2) Reviewed the adequacy of resources and the competencies of staff within the Internal Audit Department toexecute the plan as well as the audit programmes used in the execution of internal auditors’ job to ensuresatisfactory performance of the Internal Audit Department;

3) Reviewed the internal audit reports, audit recommendations made and management response to theserecommendations and monitor the status of corrective actions taken by management to rectify any deficienciesidentified by internal audit as well as ensuring that all issues are adequately resolved on a timely basis;

4) Reviewed the status report of Internal Audit activities for the financial year ended 31 December 2008 to ensureall the planned activities were satisfactorily carried out;

5) Reviewed the Summary of Audit Findings and Quarterly Status Update on Issues Highlighted in the ExternalAuditors’ Audit Reports compiled by the Internal Auditors based on submissions by the Subsidiaries’ InternalAuditors to ensure that significant issues were addressed and resolved on a timely basis.

Financial Results

1) Reviewed with the top management the quarterly and half yearly unaudited financial results beforerecommending to the Board for their approval.

2) Reviewed with the top management and the external auditors the annual audited financial statements of theCompany and the Group before recommending to the Board for their approval and release of the Group’sresults to Bursa Malaysia focusing on the matters set out in the following Requirements, Acts and Standards:

a) Bursa Malaysia Securities Berhad (BMSB) Listing Requirements;

b) Provisions of the Companies Act;

c) Banking and Financial Institutions Act, 1989;

d) Applicable approved accounting standards in Malaysia; and

e) Other relevant legal and regulatory requirements.

Related Party Transactions

1) Reviewed related party transactions for compliance with the Listing Requirements of Bursa Malaysia and theappropriateness of such transactions before recommending to the Board for its approval.

AUDIT COMMITTEE TERMS OF REFERENCE

To comply with the revisions of the Bursa Malaysia Securities Berhad (BMSB) Listing Requirements in enhancingthe effectiveness, independence and transparency of the Audit Committee and in line with the revised MalaysianCode on Corporate Governance (MCCG), the Board has amended the Terms of Reference of the Audit Committeein February 2008.

1.0 OBJECTIVE

1.1 The Audit Committee (AC) plays an important role in ensuring that good Corporate Governance ismaintained by the AFFIN Group. It serves to implement and support the function of the Board byreinforcing the independence and objectivity of the Internal Audit Department (IA).



AUDIT COMMITTEE TERMS OF REFERENCE (continued)

2.0 COMPOSITION AND APPOINTMENT

2.1 The AC shall have at least three (3) members of whom all must be non-executive directors with amajority of them being independent directors. The Chairman of the Committee shall be anindependent, non-executive Director. No alternate Director shall be appointed to the AC.

2.2 At least one (1) member of the Committee must meet the criteria set by the Bursa Malaysia SecuritiesBhd’s Listing Requirements.

2.3 AC members and the Chairman shall be appointed by the Board of Directors based on therecommendations of the Nomination Committee.

2.4 The Board shall review the terms of reference and performance of the AC and each of its members atleast once every three (3) years to determine whether the AC has carried out its duties in accordancewith its terms of reference.

2.5 If a member of the Committee resigns or for any reason ceases to be member in the AC resulting innon-compliance with the requirements, then the Board shall, within three (3) months of the events,appoint such number of new members as may be required.

2.6 The AC shall have no executive powers.

3.0 AUTHORITY

3.1 The AC, whenever necessary and reasonable for the performance of its duties, shall in accordancewith the procedure determined by the Board and at the company’s expense:

3.1.1 Have authority to investigate any matters within its terms of reference;

3.1.2 Be able to obtain external legal or other independent professional advice or other necessaryresources to perform its duties;

3.1.3 Have full and unrestricted access to any information pertaining to the Group;

3.1.4 Have direct communication channels with the external auditors, internal auditors and allemployees of the Group;

3.1.5 Be able to convene meetings to discuss issues or reservations or any matter with the externalauditors, the internal auditors or both, in the absence of other directors and employees of thecompany, whenever deemed necessary;

3.1.6 Report to the Regulatory Bodies on matters duly reported by it to the Board which have notbeen satisfactorily resolved resulting in a breach of any regulatory requirements.

4.0 MEETINGS

4.1 The quorum for a meeting of the Committee shall be two thirds (2/3) of the Committee with the majoritypresent being independent, non-executive directors. If the Chairman is unable to attend any meeting,any other independent, non-executive member present shall act as Chairman. All resolutions of theCommittee shall be adopted by a simple majority vote, each member having one vote. In case ofequality of votes, the Chairman shall have a second or casting vote.




4.0 MEETINGS (continued)

4.2 The AC shall meet at least four (4) times in a financial year. In addition, the Chairman may call foradditional meeting/s at any time as circumstances dictate with reasonable notice to the AC membersto ensure that critical issues are highlighted to all Board members in a timely manner. Where possible,the AC meetings are convened before the Board meetings. The AC, through its Chairman, shall reportto the Board after each meeting where issues can be further deliberated, if necessary.

4.3 All minutes of the AC meetings shall be kept by the Company Secretary and shall be available forinspection by the AC members, internal and external auditors.

5.0 FUNCTIONS AND DUTIES

5.1 The functions and duties of AC shall include, but not limited to the following:

5.1.1 To ensure listed company/ies must establish an internal audit function which is independentof the activities it audits.

5.1.2 To review the adequacy of the scope, functions, competency and resources of the InternalAudit Department and the necessary authority to carry its work. The review may cover theplanned audit work, internal audit programmes, the results of completed work andmanagement implementation of agreed actions as recommended by the Head of InternalAudit (HIA). Where appropriate, the Committee may direct the management to rectify andimprove the system of internal controls and procedures based on the internal auditors’recommendations and suggestions for improvements.

5.1.3 To consider the major findings of internal investigations and management’s response.

5.1.4 To assess and determine the performance of HIA. The remuneration, annual increment andperformance related incentives of the HIA and IA should be decided by the AC.

5.1.5 To approve the appointment or termination of HIA and to be informed of the appointment orresignations of internal auditors.

5.1.6 To recommend to the Board the appointment of external auditors and their audit fee.

5.1.7 To review with the external auditors the scope of the audit plan, system of internal controls,the audit reports (including management letter and management response), the assistancegiven by the Management and any findings or action to be taken.

5.1.8 To act upon any request from the Board to investigate and report on any issues of concern asregard to the management of the Group.

5.1.9 To review the Group’s business risk management process including adequacy of the Group’scontrol environment.

5.1.10 To review the findings of any examinations by regulatory authorities and the managementresponse.

5.1.11 To review existing policies and practices within the Group in order to regulate and streamlinethe same to ensure uniformity.




5.0 FUNCTIONS AND DUTIES (continued)

5.1 The functions and duties of AC shall include, but not limited to the following: (continued)

5.1.12 To ensure that the accounts are prepared in a timely and accurate manner with frequentreviews of the adequacy of provisions against contingencies, bad and doubtful debts.

5.1.13 To review the quarterly results and year end financial statements prior to the approval by theBoard of Directors focusing on the following:

• Changes in or implementation of major accounting policy;• Significant and unusual events or any going concern assumption;• Significant adjustments arising from the audit;• Compliance with accounting standards and other legal requirements.

5.1.14 To review any related party transactions and conflict of interest situation that may arise withinthe AFFIN Group including any transaction, procedure or course of conduct that raisesquestions of management integrity.

5.1.15 To obtain external professional advice and to invite outsiders with relevant experience toattend meetings, subject to the approval of the relevant regulatory body, where necessary.

5.1.16 To review, if any, letter of resignation from the external auditors of AFFIN Group of companiesand assess whether there is reason (supported by grounds) to believe that the external auditoris not suitable for re-appointment.

5.1.17 To ensure that other directors and employees attend AC meeting only at the AC’s invitation.

5.1.18 To meet with the external auditors without the Executive of the company at least twice (2) a year.


Corporate Governance Statement

The Board of AFFIN Holdings Berhad fully subscribes and supports the Malaysian Code on Corporate Governance(“the Code”) and the relevant provisions in the Bursa Malaysia Securities Berhad (BMSB) Listing Requirements. TheBoard is committed to ensuring that the highest standards of corporate governance are practised throughout theGroup.

CORPORATE GOVERNANCE WITHIN AFFIN HOLDINGS BERHAD

The Board recognises that corporate governance is a continuous process that requires periodic reassessment andrefinement.

THE BOARD OF DIRECTORS

The Board has the responsibility for leading and controlling the Group including those pertaining to corporategovernance, strategic direction and overseeing the investments and operations of the Group.

COMPOSITION OF THE BOARD

The Board currently has eight (8) members comprising one Non-Independent Non-Executive Chairman, one (1)Non-Independent Non-Executive Deputy Chairman, three (3) Independent Non-Executive Directors and three (3)Non-Independent Non-Executive Directors.

(a) Board Members

Executive / Independent / Name of Directors Non-Executive Director Non-Independent Director

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj Zainuddin (Chairman) Non-Executive Non-Independent

Tan Sri Dato’ Lodin bin Wok Kamaruddin (Deputy Chairman) Non-Executive Non-Independent

Raja Dato’ Seri Aman bin Raja Haji Ahmad Non-Executive Independent

Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak Non-Executive Independent

Dato’ Mustafa bin Mohamad Ali Non-Executive Independent

Datuk Azzat bin Kamaludin Non-Executive Non-Independent

Dr. The Hon. Sir David Li Kwok Po Non-Executive Non-Independent

Professor Arthur Li Kwok Cheung Non-Executive Non-Independent

A brief description of the background of each Director is presented in this Annual Report.


Corporate Governance Statement (continued)

(b) Board Balance

The membership of the Board complies with the provision of the Code in that at least one-third of the Boardmust be independent. The Directors have a wide range of business, financial and technical skills andexperience. Together the members of the Board bring a mix of skills and experience required for the successof the Group.

There is a division of responsibility between the Chairman and the Deputy Chairman to ensure that there is abalance of power and authority. The roles of the Chairman and Deputy Chairman are defined in the BoardPolicy Manual.

There is also a balance in the Board with the presence of the Independent Non-Executive Directors of thenecessary calibre and experience to carry sufficient weight in Board decisions. Although all the Directors haveequal responsibility for the Group’s operations, the role of the Independent Non-Executive Directors isparticularly important in providing an independent view, advice and judgement to take into account the interestof the Group, shareholders, employees and communities in which the Group conducts business.

Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak is the Senior Independent Non-Executive Director, to whomconcerns from the other Directors, public or investors shall be conveyed.

Raja Dato’ Seri Aman bin Raja Haji Ahmad, a member of the Audit Committee, is a member of the MalaysianInstitute of Accountants (“MIA”) and meets the requirements of Paragraph 15.10(1) of the BMSB ListingRequirements.

BOARD MEETINGS

The Chairman is responsible for ensuring that the Board meets on a regular basis throughout the year. The Boardmeets at least four (4) times a year, with additional meetings convened as necessary. It has a formal time schedulethat is determined in advance. The notice of the meetings is circulated to Board members at least fourteen (14) daysbefore the meeting and the agenda and Board reports are circulated at least five (5) days before each meeting.

The Board has a formal schedule of matters (including strategic and policy issues, financial decisions and theannual business plan) reserved to it. The Board and its committees are supplied with all necessary information toenable them to effectively discharge their responsibilities.

The quorum for the Board meetings is a minimum of 3 attendees or 50% of total board members, whichever ishigher as set out in the Board Policy Manual and the revised Guidelines on Corporate Governance for LicensedInstitution (Revised BNM/GP1). All conclusions of the Board are duly recorded in the Board minutes.

During the financial year ended 31 December 2008, five (5) meetings were held. The details of attendance of eachDirector at the Board meetings held during his tenure of service are as follows:

Name of Directors Attendance at Board meetings

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj Zainuddin 5/5Tan Sri Dato’ Lodin bin Wok Kamaruddin 5/5Raja Dato’ Seri Aman bin Raja Haji Ahmad 5/5Maj. Gen. (R) Dato’ Mohamed Isa bin Che Kak 5/5Datuk Azzat bin Kamaludin 5/5Dato’ Mustafa bin Mohamad Ali 5/5Dr. The Hon. Sir David Li Kwok Po (Appointed on 21 May 2008) 2/3Professor Arthur Li Kwok Cheung (Appointed on 21 May 2008) 3/3Mr. Adrian David Li Man Kiu (Appointed on 21 May 2008) 1/1

(Alternate Director to Dr. The Hon. Sir David Li Kwok Po)Daniel Wan Yim Keung (Appointed on 21 May 2008) 0/0

(Alternate Director to Professor Arthur Li Kwok Cheung)



SUPPLY OF INFORMATION

All Directors are entitled to information pertaining to the Group to enable them to effectively discharge their dutiesas Directors. There are established procedures in place for any Director to obtain independent professional adviceat the cost of the Group. All Directors have access to the advice and services of the Company Secretary orSecretaries.

APPOINTMENT AND RE-ELECTION OF DIRECTORS

(a) Appointment

The Board Nomination Committee is in compliance with the best practice set out in the Code on theappointment of members to the Board, and is subject to the approval of Bank Negara Malaysia.

(b) Re-election

The Company’s Articles of Association provides for all Directors to be subjected to re-election by rotation ateach Annual General Meeting. The Articles of Association further provides for all Directors to submitthemselves for re-election at least once in three (3) years in compliance with the BMSB Listing Requirements.The re-appointment of directors retiring by rotation are also subject to the approval of Bank Negara Malaysia.

DIRECTORS’ TRAINING

An integral element in the process of appointing new Directors requires new Directors to undergo an orientationprogram in respect of the businesses of the Group together with meeting the management teams within the Group,including reiterating the expectations of the Board with regard to individual members’ contributions to the Board andthe Group.

The Nomination Committee further ensures that all Board members undergo the necessary training from time totime and are kept abreast with current regulatory issues and changing commercial risks. During the year, theDirectors have attended various courses and seminars to further enhance their skill and knowledge.

DIRECTORS’ REMUNERATION

The objective of the Company’s policy on Directors’ remuneration is to attract and retain Directors of the calibreneeded to lead the Group successfully.

The Remuneration Committee is responsible for recommending to the Board the framework of executiveremuneration and its cost, and the remuneration packages of the Executive Directors. The Executive Directors playno part in decisions on their own remuneration.

The determination of the remuneration for Non-Executive Directors is a matter for the Board as a whole. The levelof remuneration paid to Non-Executive Directors reflects the experience and level of responsibilities undertaken bythe particular Non-Executive Director concerned. The Non-Executive Directors do not participate in decision on theirown remuneration packages.

Fees payable to Directors are recommended by the Remuneration Committee to the Board for approval by theshareholders at the Annual General Meeting. The Company reimburses reasonable expenses incurred by theDirectors in the course of performing their duties as Directors.



DIRECTORS’ REMUNERATION (continued)

The details of the remuneration for the financial year ending 31 December 2008 of the Directors are as follows:

Other EPF BenefitDirectors Fees Allowances Emoluments Contribution in kind Total

(RM) (RM) (RM) (RM) (RM) (RM)

NON-EXECUTIVEDIRECTORS 698,548 449,900 251,000 10,500 19,357 1,429,305

TOTAL 698,548 449,900 251,000 10,500 19,357 1,429,305

The number of Directors whose total remuneration during the year fall within the following bands are as follows:

No. of Directors

Non-Executive Directors:RM 1 to RM 50,000 3RM 50,001 to RM 100,000 2RM 100,001 to RM 150,000 1RM 200,001 to RM 250,000 2RM 600,001 to RM 650,000 1

THE BOARD COMMITTEES

The current Board Committees to assist the Board in the execution of its responsibilities are as follows:• Audit Committee• Nomination Committee• Remuneration Committee• Employee Share Option Scheme (“ESOS”) Committee

(a) Audit Committee

The present terms of reference of the Board Audit Committee is in compliance with the requirements of theBMSB Listing Requirements and the best practices contained in the Code.

The report of the Audit Committee for the period is set out separately in the Annual Report.

(b) Nomination Committee

The members of the Nomination Committee are as follows:

Dato’ Mustafa bin Mohamad Ali (Chairman) Independent Non-Executive DirectorGen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj Zainuddin Non-Independent Non-Executive DirectorTan Sri Dato’ Lodin bin Wok Kamaruddin Non-Independent Non-Executive DirectorMaj. Gen. (R) Dato’ Mohamed Isa bin Che Kak Independent Non-Executive DirectorRaja Dato’ Seri Aman bin Raja Haji Ahmad Independent Non-Executive Director



THE BOARD COMMITTEES (continued)

(b) Nomination Committee (continued)

The composition of the Nomination Committee complies with BNM/GPI which requires a minimum of fivemembers of which at least four must be non-executive directors. It also complies with the best practices inMCCG which requires the Committee to be composed exclusively of non-executive directors, a majority ofwhom are independent.

The Nomination Committee has the following terms of reference:

• To recommend candidates for all directorships to be filled by shareholders or the Board;• To recommend Directors to fill the seats on Board Committees;• To assess the effectiveness of the Board as a whole and the Committees of the Board;• To assess the contribution of each individual Director;• Reviewing annually the Board structure, size and composition to ensure that the Board comprises a

majority of Non-Executive Directors with the appropriate mix of skills and experience, including corecompetencies which Non-Executive Directors should bring to the Board;

• Reviewing regularly the status of independent Directors;• Ensuring the existence of an appropriate framework and succession plan for the Executive Directors and

senior management of the Company;• Recommending Directors who are retiring (by rotation) for re-election and termination of Board

membership for appropriate reasons;• Ensuring that all Board appointees undergo the necessary training programs prescribed by the applicable

statutory and regulatory bodies; and• Providing for adequate training and orientation of new Directors with respect to the business, structure and

management of the Group as well as the expectations of the Board with regard to their contribution to theBoard and Group.

The Committee had reviewed the size and composition of the Board and its committees and is of the opinionthat the current Board and its committees possess the appropriate mix of skills and competencies required toeffectively lead the Group. The Nomination Committee held two (2) meetings during the financial year. Duringthe meetings, the Committee:-

i) noted the Bank Negara Malaysia’s approval dates for the re-appointment of directors and their respectiveexpiry dates;

ii) determined the directors who retire by rotation;iii) conducted assessment for the submission of application to BNM for the re-appointment of directors whose

terms of approval by BNM are due to expire;iv) conducted the Director’s Appraisal for the year 2008;v) noted the list of trainings available for directors in year 2009; andvi) conducted an assessment of Board effectiveness and contribution as required by the Green Book under

the Government Linked Companies (GLC) Transformation Programme;



THE BOARD COMMITTEES (continued)

(c) Remuneration Committee

The members of the Remuneration Committee are as follows:

Dato’ Mustafa bin Mohamad Ali (Chairman) Independent Non-Executive DirectorGen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj Zainuddin Non-Independent Non-Executive DirectorDatuk Azzat bin Kamaludin Non-Independent Non-Executive Director

The Remuneration Committee is responsible for setting the framework for the remuneration policy and forrecommending to the Board the remuneration and benefits extended to Executive Directors and employeeswith the Directors concerned abstaining from deliberations and voting on decisions in respect of his ownremuneration.

In addition, the Remuneration Committee also reviews and approves the Director’s recommendation on thesalary increment, bonus and other benefits extended to the Company’s senior management.

The Remuneration Committee held one (1) meeting during the financial year. During the meeting, theCommittee considered and proposed to the Board the revision in directors’ remuneration of AHB and itssubsidiaries.

(d) ESOS Committee

The members of the ESOS Committee are as follows:

Datuk Azzat bin Kamaludin (Chairman) Non-Independent Non-Executive DirectorTan Sri Dato’ Lodin bin Wok Kamaruddin Non-Independent Non-Executive DirectorMaj. Gen. (R) Dato’ Mohamed Isa bin Che Kak Independent Non-Executive Director

The terms of reference of the ESOS Committee is to assist the Board in the administration of the ESOS inaccordance to approve By-Laws, guidelines and rulings of the relevant authorities that are applicable duringthe period of the scheme. The ESOS Committee had no meeting during the financial year. The ESOS hadexpired on 13 February 2008.

SHAREHOLDERS

(a) Dialogue between the Company and Investors

The Group values dialogue with investors. The aims of the investor relations program are primarily to provideconsistent and accurate information to shareholders and fund managers on the Group and to provide promptfeedback to senior management on investors’ concerns and market perceptions thus, ensuring effectivenessof the information dissemination.

Various announcements and quarterly financial results were made during the year to provide shareholders withinformation on the Group’s performance and operations. The Group also holds meetings, briefings and roadshows with investors and fund managers from time to time to update them on the latest developments andcorporate exercises undertaken by the Group. The Board delegates the authority to the Chairman and DeputyChairman to speak for the Group.

In addition, the Group has established a website at www.affin.com.my which shareholders can access forinformation pertaining to the Group.



SHAREHOLDERS (continued)

(b) Annual General Meeting

The Annual General Meeting is the principal forum for dialogue with the shareholders. At each Annual GeneralMeeting, the Board presents the progress and performance of the business and encourages shareholders toparticipate in the question and answer session. All the Directors are available to respond to shareholders’questions during the meeting.

For re-election of Directors, full information is provided with the notice of the meeting regarding Directors whoare retiring and whether they are willing to serve if re-elected.

Each item of special business included in the notice of the meeting is accompanied by a full explanation of theeffects of a proposed resolution to facilitate understanding and evaluation of the issues involved. Separateresolutions are proposed for substantially separate issues at the meeting and the Chairman declares thenumber of proxy votes received both for and against each separate resolution.

ACCOUNTABILITY AND AUDIT

(a) Financial Reporting

In presenting the annual financial statements and quarterly announcements to shareholders, the Directors aimto present a balanced and understandable assessment of the Group’s position and prospects. This also appliesto other price-sensitive public reports and reports to regulators. In preparing the financial statements, theDirectors consider that the Group had used appropriate accounting policies, consistently applied and supportedby reasonable and prudent judgements and estimates.

(b) Internal Control

The Directors acknowledge their responsibility for the Group’s system of internal controls covering not onlyfinancial controls but also operational and compliance controls as well as risk management, to safeguardshareholders’ investments and the Group’s assets. The Board believes that the internal control systems andprocedures provide reasonable but not absolute assurance that assets are safeguarded, transactions areauthorised and recorded properly and that material errors and irregularities are either detected or minimised toprevent recurrence. The Board has appointed the Board Audit Committee to review the effectiveness of controlprocedures and report to the Board on all findings for deliberations.

Some of the key elements of the Group’s internal control systems are described below:

• Clearly defined delegation of responsibilities to the Board Committees and the management of the Group,including authorisation levels for all business units. Each business unit has clear accountabilities forensuring that appropriate risk management and control procedures are in place. These delegatedresponsibilities are subject to review throughout the year;

• Audits are undertaken at regular intervals to monitor compliance with policies and procedures; and• Monitoring of results against the annual business plan, with major variances examined and management

action taken.

Details of the Group’s internal control systems and the state of internal controls are further elaborated underthe Statement on Internal Control provided separately in the Annual Report.



ACCOUNTABILITY AND AUDIT (continued)

(c) Relationship with the auditors

Through the Audit Committee, the Group has established transparent and appropriate relationships with theGroup’s auditors, both external and internal. A report of the Audit Committee is provided in pages 14 to 18 inthis Annual Report.

(d) Directors’ Responsibilities in Respect of the Audited Financial Statements

The Directors are required by the Companies Act, 1965 to prepare financial statements for each year whichgive a true and fair view of the state of affairs of the Group and of the Company at the end of the financial yearand of their results and cash flows for the financial year then ended.

In preparing these financial statements, the Directors have:• adopted suitable accounting policies and applying them consistently;• made judgements and estimates that are prudent and reasonable;• ensured applicable accounting standards have been followed, subject to any material departures

disclosed and explained in the financial statements; and• prepared the financial statements on the going concern basis, unless it is inappropriate to presume that

the Group and the Company will continue in business.

The Directors are responsible for ensuring that the Company keeps proper accounting records which disclosewith reasonable accuracy at any time the financial position of the Group and of the Company and which enablethem to ensure that the financial statements comply with the Companies Act, 1965. The Directors have overallresponsibility for taking such steps that are reasonably open to them to safeguard the assets of the Group andthe Company to prevent and detect fraud and other irregularities.

Signed on behalf of the Board of Directors in accordance with their resolution dated 23 February 2009.

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj Zainuddin Tan Sri Dato’ Lodin bin Wok Kamaruddin Chairman Deputy Chairman


Statement on Internal Control

The Board recognises and exercises overall responsibilities in promoting good corporate governance and ensuringsound system of internal controls and risk management practices are maintained throughout the Group. The Boardis of the view that the system of internal controls instituted by the Group's operating units for the year under reviewand up to the date of annual report is sound and sufficient to safeguard shareholders' investment, customers'interests and the Group's assets. Notwithstanding this, there are on-going reviews to ensure the effectiveness,adequacy and integrity of the system. The control procedures are designed to manage rather than to eliminatecompletely all risks of failure to achieve business objectives and can only provide reasonable and not absoluteassurance against material errors, losses, fraud or the occurrence of unforeseeable circumstances.

The Board meets regularly to discuss matters related to system of internal control which covers inter alia financial,operational, compliance controls and risk management procedures. The key processes used by the Board incarrying out its review include the following:

1. Regular reports from the Heads of Key risk functions of the main operating subsidiaries that systems andprocedures are in place to identify, control and report on the major risks including credit risk, operational risk,market risk, IT risk and liquidity risk. The risk management framework is cascaded downwards through theManagement's efforts of fostering a risk-aware and control-conscious environment across the Group.

2. Regular reports received from the Group management on financial performance, key operating statistics, legaland regulatory compliance, breaches of law or regulations, unauthorised activities and fraud are reviewed bythe Board.

3. The subsidiaries annual business plan and budget approved at their respective Boards are submitted to theGroup management. The variances between the actual and targeted results are presented to the Board on aperiodic basis to allow for timely responses and corrective actions to be taken to mitigate risks.

4. The internal audit team of the Holding Company together with the internal audit team of the Banking Groupwho report to the Audit Committees of the respective Boards, carry out regular reviews of the businessprocesses to assess the effectiveness of internal control and highlight significant risks impacting the wholeGroup. The Audit Committees of the respective Boards conduct annual reviews on the adequacy of the InternalAudit Department's scope of work and resources.

5. The Audit Committees of the respective Boards regularly review and hold discussions with management on theaction taken on internal control issues identified by the internal auditors, the external auditors and regulatoryauthorities.

6. The Audit Committees of the respective Boards follow up and monitor the status of actions onrecommendations made by the internal auditors, the external auditors and regulatory authorities. In addition, itcan direct investigations in respect of any specific instances or events, which are deemed to have violatedinternal policies pertaining to confidentiality or financial impropriety, which has material impact on the Group.

7. There is a clearly defined framework and empowerment approved by the main operating subsidiaries'respective Board for acquisitions and disposals of property, plant and equipment, awarding tenders,applications for capital expenditure, writing off operational and credit items, approving general expensesincluding donations, etc.

8. The professionalism and competence of the Group's human resources is maintained through a recruitmentprocess, training and re-skilling programmes and a performance appraisal system.

9. Establishment of channels of communication and procedures for reporting immediately to appropriate levels ofmanagement any significant control failings or weaknesses that are identified together with details of correctiveaction being undertaken.


Chairman’s Statement

MY FELLOWSHAREHOLDERS,

On behalf of the

Board of Directors,

it is my pleasure to present

the Annual Report of

AFFIN Holdings Berhad

(the Group) for the

financial year ended

31 December 2008.

The Group’s performance was commendable, yetagain, during the year under review despite thechallenging business environment. Key in achievingthis growth is sustained domestic demand. With ampleliquidity in the financial system, financing to supportincreased activity is expected to continue. Publicspending, including on projects under the NinthMalaysia Plan and for the new economic corridors willreinforce the growth in the Malaysian economy.

The financial crisis of 2008 and resultant globaleconomic slow-down have impacted on the financialmarkets in Malaysia. Financial markets areexperiencing significant volatility and are affecting thebroader economy. The Government has taken variousmeasures to mitigate the economic slow-down bylowering interest rate, reducing EPF contribution and arecent RM 7 billion fiscal measure to stimulate theeconomy.

We believe the core fundamentals of our business andthe long-term prospects of the Malaysian economyremain positive. In the short term, we will reflect on thecurrent environment and remain prudent at this time tore-examine our fundamentals for managing risks tosupport growth in the future.

The recent volatility in the global and financial marketshas emphasised the importance of the effortsundertaken by the Group to strengthen its operationsand create new products. One such initiative is thesuccessful launching of an Islamic Debit MasterCard byAFFIN Bank Berhad, the first in the Asia Pacific region.

YEAR 2008 GROUP RESULTS

For Year 2008, the Group achieved satisfactory resultsoverall, with the Group reporting a consolidated profitbefore tax of RM 404.2 million as compared to RM 353.0million registered previously, an increase of RM 51.2million.

The Group has successfully integrated and rationalizedits core businesses to strategically position the AFFINBanking Group as a universal banking entity providinga comprehensive and seamless range of qualitybanking products and services. The Group hasenjoyed considerable success over the decades.However, 2008 will be remembered as the year we laidthe foundations for the next stage of our growth.


Chairman’s Statement (continued)

Luncheon talk on “Market Liquidity and Implication on World Economy”by Professor Datuk Ariff from Malaysian Institute of Economic Research(MIER) on 11 December 2008.

At this juncture, I would like to comment in more detailon the performance of each of our operatingsubsidiaries and associate during the year under review.

AFFIN BANK BERHAD (ABB)

In 2008, The Bank recorded a consolidated profitbefore tax and zakat of RM 454.6 million for thefinancial year ended 31 December 2008, representinga growth of 41.2% from last year’s result of RM 322.0million, the highest ever achieved in the history of thethe Bank. During the year, total assets increased byRM 1.1 billion to RM 33.0 billion from RM 31.9 billionrecorded the previous year. Meanwhile, net loans,advances and financing grew by 16.1% to register atRM 19.5 billion in 2008 from RM 16.8 billion in 2007.More importantly, the Bank managed to improve on itsnet non-performing loan (NPL) ratio further to 3.2%from 7.7% in 2007. This is a clear testimony to ourefforts in curbing the Bank’s legacy NPL problem.

The Bank had in 2008, focused on efforts to strengthenits position as a mid-sized anchor financial institution.Several important milestones were achieved in 2008.

In its continued effort to introduce various innovativeproducts and services to customers, the Banksuccessfully launched its retail internet banking portalaffinOnline.com in December 2008. The Bank’s long-term credit rating was upgraded one notch in Octoberby Rating Agency Malaysia from A3 to A2 while theBank’s short-term rating was reaffirmed at P1. This is amajor achievement for the Bank in view of presentmarket uncertainties. It is the expressed goal of theBank to further improve its financial position andachieve a double-A rating over the medium term.

The Bank has also won itself several industryaccolades. In 2008, AFFIN Bank was ranked amongthe top 30 Malaysia’s Most Valuable Brands (MMVB)for the second year running, with an estimated brandvalue of RM 237 million. In 2009, the Bank will furtherbuttress this achievement with an acceleration of itsbrand building efforts. The Bank was recognized in theMasterCard Asia/Pacific Middle East and Africaproduct Awards 2008 for Best Debit Program for itsDebit MasterCard. The AFFIN Bank Debit MasterCardis the first MasterCard Debit card and the first debitcard with Touch ‘n Go auto reload facility in the country.

Q & A Session during the luncheontalk on “Market Liquidity andImplication on World Economy”on 11 December 2008.



In April 2008, the Bank’s subsidiary, AFFIN IslamicBank became the first domestic islamic bank inMalaysia to enter into a Musyarakah Agreement with anotable property developer in Penang. TheMusyarakah was established via a special purposevehicle in which both AFFIN Islamic Bank and thedeveloper are joint partners. Musyarakah is apartnership between two or more parties where eachparty contributes capital and shares the profit of theventure based on a pre-agreed profit sharing ratio. Thispartnership allows us to earn blended returns where forthe same amount of exposure and risk, the Bank earnsboth equity and debt returns, while maintaining our riskposition as a creditor. In May 2008, AFFIN IslamicBank successfully launched its Islamic DebitMasterCard, the first in the Asia Pacific region.

Moving forward, AFFIN Bank remains committed tocontinuously provide quality innovative products andservices to meet the needs and requirements ofcustomers and clients. We foresee that the next twelvemonths will remain robust as we continue to reinventthe way we do business and set a firm foundation forthe next stage of growth.

AFFIN INVESTMENT BANK BERHAD (AIBB)

In 2008, external financial environment deterioratedwith the unfolding of the world’s financial crisis erupting

from the United States. Back home, the impact of avolatile financial market was less severe as evidencedby our increased resilience in dealing with financialshocks. Against this background, AIBB was involved inseveral notable corporate finance advisory initiativessuch as acting as the Principal Advisor for theconditional takeover of SILK Holdings Berhad and thesubsequent proposed restructuring and upliftment ofthe PN17 status of SILK Holdings Berhad. AIBB wasalso appointed the Independent Advisor for theproposed voluntary take-over for Sindora Berhad aswell as for Aliran Ihsan Berhad, and the Main Advisorfor the proposed debt restructuring of Pan GlobalBerhad.

Its debt capital market raised RM 752 million SukukMudharabah for Sunway Infrastructure Bhd torefinance and restructure its bond programme. AIBBwas also the Lead Arranger for a syndicated Term LoanFacility of up to RM 472 million for Matrix PromenadeSdn Bhd, a wholly-owned unit of Eastern & OrientalBerhad.

The Investment Bank’s subsidiary, AFFIN FundManagement Berhad, posted an improvement in profitbefore tax of RM 4.3 million for the financial year ended31 December 2008 despite the challenging marketenvironment during the year.

The signing ceremony of Hybrid Musharakah Agreement betweenAFFIN Islamic Bank and Mutiara Goodyear Development Bhd todevelop a high-end residential project in Penang on 1 April 2008.

The signing ceremony at Pendidikan Industri YS Sdn Bhd’s RM150 million Al Bai' Bithaman Ajil Islamic Debt Securities with

AFFIN Investment Bank Bhd as principal adviser and lead arrangeron 28 January 2008.



AFFIN Investment Bank had taken steps to improvethe quality of its balance sheet and had madeprovisions totaling RM 63.1 million that has resulted ina loss before tax of RM 40.4 million for the financialyear ended 31 December 2008 compared to a profitbefore tax of RM 62.0 million in the correspondingperiod previously. These prudent and conservativemeasures had improved the Net Non-Performing Loanratio significantly from 15.6% in 2007 to 2.4% in 2008while the Loan Loss Coverage also improved from50.1% in 2007 to 98.4% in 2008. The Investment Bankis now Basel II compliant and as a result of thisimplementation, the Risk Weighted Capital Ratio(RWCR) had increased from 16.2% in 2007 to 24.3%in 2008.

AFFIN FUND MANAGEMENT BERHAD (AFM)

AFM recorded a profit before tax of RM 4.4 million forthe financial year ended 31 December 2008 ascompared to RM 3.6 million previously. The better thenexpected results were due to AFM’s ability tosuccessfully implement strategic management plansas well as leveraging the continued support from LTAT.In 2008, AFM successfully launched two new unit trustfunds, namely AFFIN Islamic Money Market Fund andAFFIN Money Market Fund.

Concurrent to existing efforts to chart our futuredirection, AFM is continually identifying areas and newbusiness initiatives that will further consolidate ourposition. Such initiatives include equity funds, as wellas advancing our unit trust business. By embarking onthese strategic initiatives, we will add greater breathand stability to our long-term growth prospects.

The signing ceremony between Matrix Promenade Sdn Bhd and AFFIN Investment Bank Berhad, the Lead Arranger, Facility Agent and Security Agent in respect of a Syndicated Term Loan Facility of up to RM472 million on 27 August 2008.

Hari Raya gathering at Rumah Seri Kenangan, Seremban organized by AFFIN Investment Bank Berhad.



AFFIN MONEY BROKERS SDN BHD (AMBSB)

The Company’s net turnover was RM 9.5 million for theyear ended 31 December 2008, an increase of 4.4%,compared with RM 9.1 million for the previous year.Net Assets as 31 December 2008 were RM 7.3 million,an increase of 10.6%, compared with RM 6.6 million forthe previous year. The Company recorded a profit aftertax of RM 1.3 million, similar to 2007. The decrease innet turnover was due to the adverse impact of theglobal financial crisis which was apparent in the fourthquarter of 2008. The impact has resulted in lowerbrokerage income received in the fourth quarter.

The revenue contribution by products still revealed anexcellent overall performance recorded by the ForeignExchange and SWAP/ACU/Derivatives Desk. TheSWAP/ACU/Derivatives Desk contributed the highestbrokerage income of RM 4.1 million representing44.5% of total net brokerage income. This fineperformance was mainly due to active trading inInterest Rate Swaps, Ringgit Swap and CurrencyOptions which saw ample arbitrage opportunities. Thebrokerage income contribution from the ForeignExchange desk increased to RM 2.5 million andrepresents 30.7% of total net brokerage income.

The money market and instruments desk was the thirdhighest performer contributing RM 1.4 million or 15% oftotal net brokerage income. This good performance is

due to strategic planning in achieving greater marketshare. The Fixed Income desk contributed RM 0.6million or 6.5% of the total net brokerage income. TheIslamic Instrument desk contributed RM 0.3 million or3.3% of total net brokerage income.

Amidst the global financial crisis that was apparent inthe fourth quarter of 2008, the prospect of themoneybroking industry in 2009 would be adverse.

In view of the gloomy financial environment, the key tosustainability lies in the effective execution of ourcorporate strategies through commitment andteamwork.

AMBSB continues to be a highly cash generativebusiness which allowed us to invest in thedevelopment of the business and has enabled theCompany to maintain a progressive approach to thedividends paid to the shareholders; An interim dividendof RM 0.80 per share was declared and paid on 26December 2008 for the year in review.

AXA AFFIN LIFE INSURANCE BERHAD (AALIB)

For the financial year ended 2008, AALIB recorded agross premium growth of approximately 68.2% to RM43.9 million compared to RM 26.1 million achieved in2007. Overall net investment income is affected by the

The launching of AFFIN Islamic Money Market Fund and AFFIN Money Market Fund on 13 November 2008.



on-going financial turmoil, resulting in unrealisedlosses being posted, due mainly to the weakened localequities market in relation to the previous financialyear. In view of the uncertainties and volatility in theinvestment markets, both locally and across the region,AALIB has and will continue to undertake variousstrategic initiatives to better manage and minimise theexposure of its investment portfolio.

The multi-distribution platform developed throughout2008 is beginning to contribute positively to theAALIB’s new business premium. On thebancassurance front, AALIB launched itsBancassurance Financial Executive model with AFFINBank in January 2008 covering 49 AFFIN Bankbranches in Klang Valley, Northern and Southernregion. As part of the effort to broader itsbancassurance platform, AALIB launched its first DirectMarketing/Telemarketing (DM/TM) initiative with MBFCards in February 2008. The DM/TM campaignrecorded healthy contribution to AALIB’s new businesspremium, giving AALIB the opportunity to nurture newbusiness partnership in 2009.

On the tied agency front, AALIB set up 6 branches in2008 to support the development of its agency force.The branches are located at Johor Bahru (2), PetalingJaya, Penang, Sibu and Kuching. AALIB is targeting toexpand its agency foot print further in 2009 by settingup new branches at Ipoh, Bukit Mertajam, Seremban,Melaka, Kota Kinabalu and Miri.

To support its agency expansion, AALIB launched amarket leading product innovation in September 2008.Known as Dimension, this product offers a multi-purpose solution that addresses two core needs offinancial planning - retirement and education fundplanning. Dimension combines the certainty oftraditional life insurance with access to the potentialupside of investment linked funds. It can be structuredas an education or retirement fund solution dependingon customers’ need and risk profile.

As part of its branding campaign, AALIB launched itsonline interactive game, Turning Point in April 2008.The Turning Point contest is an interesting online boardgame aims to stimulate the quality of lifestyle andfinancial planning experience. The objective of thegame is to create awareness that financial planning isan important element in our everyday life. By creatinga virtual experience for players to plan their financescarefully. Turning Point played an important part inconsumer education. The contest attracted more than4,000 registered players and generated a total numberof 2,084,778 hits.

AALIB will continue to build its business growth andexpansion with upbeat confidence to achieve betterresults in 2009. With more product offers, businessimplementation plan and marketing initiatives inplaces, AALIB remain optimistic to meet the challengesahead.

Staff at work in AFFIN Moneybrokers Sdn Bhd. The Management of AXA-AFFIN General Insurance Bhd and TCCL Sdn Bhd, an insurance agency unveiling the Claims Service

Guarantee to Nissan and Renault customers on 7 July 2008.



AXA AFFIN GENERAL INSURANCE BERHAD(AAGIB)

2008 was a very good year for AAGIB in terms of GrossWritten Premium. The Company registered a growth of18.5% over 2007, jumping to RM 324.2 million fromRM 273.7 million. The Net Written Premium alsoregistered an increase of 13.4% against 2007. Thegrowth came from all lines of business, with Health andRetail exceeding expectations.

Profitability in 2008 came under severe pressure. TheUnderwriting Profit of RM 1.5 million was lower by91.7% compared to RM 18.1 million registered in 2007.The major contributing factor for this was the drasticincrease in claims in both the Private Motor andCommercial Motor business. This problem is notunique to the Company as the drastic increase in motorloss ratio had been an industry-wide phenomenon.AAGIB has identified the segments of business withadverse claims and has implemented the necessarycorrective actions and are confident that the resultscan be improved going forward. In addition, theeconomic turmoil in 2008 had an adverse impact onthe Company’s investment income. Whilst there wasan increase of 20% in our interest and dividendincomes, the realised gain from investment in equitiesdropped from RM 18.7 million in 2007 to RM 1.2 millionin 2008.

Given the overall economic climate, 2009 is notexpected to be any easier than 2008. Hence, AAGIB’sstrategies and plans for 2009 have been outlined totackle the challenges with special focus on ‘growth’ and‘better cost management’. The Company’s investmentin human capital and technology will naturally continueas in the past. With these strategies for 2009, AAGIB isconfident that its dedicated staff, positive mindset andhard work, will deliver the results.

AFFIN GROUP’S CORPORATE SOCIALRESPONSIBILITY (CSR) INITIATIVES

As AFFIN Group forges ahead with the next stage ofgrowth, AFFIN Group believes in maintaining goodrelations with the community and strives to create animage of a good corporate citizen that cares for thecommunity. Over the years, the Group has undertakennumerous corporate initiatives that take intoconsideration the interest of the community,employees, environment, shareholders and otherstakeholders. Given that AFFIN’s major shareholder isLembaga Tabung Angkatan Tentera (LTAT) and in linewith the aspiration of the Group to improve the well-being of retired and serving Armed Forces personneland their families, the Group has pledged an annualcontribution over RM 2 million to Yayasan Warisan

12 winners of Turning Point Contest sharing their joyful moment with the Chief Executive Officer of AXA AFFIN Life Insurance Berhad on 5 July 2008.



Perajurit. The objective of the Yayasan is to promoteand assist in the material and educational welfare ofthe members and children of the serving and retiredArmed Forces personnel who are in need. The CSRinitiatives of the Group are founded on the basis thatthe Group is not just an organization with profitobjectives, but is an organization which believes inbeing a responsible and caring corporate citizen.

ACKNOWLEDGEMENT

On behalf of the Board, I would like to take thisopportunity to thank everyone involved with the AFFINGroup, my colleagues on the Board and the Board ofsubsidiary and associate companies and themanagement team and staff of all companies under theGroup. I would also like to thank our shareholders,Lembaga Tabung Angkatan Tentera (LTAT) andBoustead Holdings Bhd and our customers for theirtrust, confidence and continuous support. Our progressover the years would not have been possible withoutthe trust, commitment, dedication and integrity of ourpeople. They have certainly contributed much to thepositive results I have just had the pleasure ofhighlighting to all the shareholders and otherstakeholders of the AFFIN Group.

Last but not least, my sincere thanks and appreciationto Bank Negara Malaysia for their support andguidance.

Gen. (R) Tan Sri Dato’ Seri Mohd Zahidi bin Hj. ZainuddinChairman, AFFIN Holdings Berhad


Five Year Group Financial Record

2008 2007 2006 2005 2004

For the financial year ended 31 December (RM Milion)

OPERATING RESULTSRevenue 2,115 2,185 1,988 1,918 1,509 Profit before taxation 404 353 314 327 326 Net profit attributable to equity holders of the company 293 252 227 236 232

As at 31 December (RM Million)

KEY BALANCE SHEET DATALoans, advances and financing 19,928 17,278 17,357 16,973 16,858 Total assets 36,836 36,813 35,484 31,178 32,856 Deposits from customers 26,935 25,559 25,688 21,465 21,519 Total liabilities 32,425 32,576 32,007 27,972 29,789 Commitments and contigencies 22,677 19,416 17,847 25,198 28,247 Paid-up capital 1,494 1,487 1,253 1,211 1,036 Shareholders' equity 4,411 4,237 3,477 3,206 2,687

SHARE INFORMATION Per share (sen)

Earnings - Basic 19.60 19.11 18.48 19.66 22.90 - Diluted 19.60 18.99 18.29 19.37 22.65

Gross Dividends 5.0 5.0 5.0 4.0 1.0 Net assets 295 285 278 265 259 Share price - high 278 308 204 201 185 Share price - low 114 181 154 144 104 Share price as at 31 December 152 259 192 157 169 Market capitalisation (RM' Million) 2,271 3,851 2,406 1,901 1,751

SEGMENT INFORMATIONProfit before tax by activity (RM' Million)

Commercial banking & hire purchase 455 322 272 275 287 Investment banking (41) 37 64 78 66 Stock-broking 1 25 6 1 8 Insurance* (5) 7 14 20 11 Others (5) (38) (42) (47) (46)

404 353 314 327 326

* net of tax

Paid-up Capital by Subsidiaries (RM Million)

AFFIN Bank Berhad 1,439.3 1,439.3 1,290.3 1,290.3 1,017.3 AFFIN Investment Bank Berhad 222.2 222.2 211.7 187.5 187.5 AFFIN-ACF Holdings Sdn Bhd 338.4 338.4 338.4 338.4 338.4 AFFIN Discount Berhad 70.0 70.0 70.0 70.0 70.0 AFFIN Capital Holdings Sdn Bhd 100.0 100.0 100.0 100.0 100.0 AFFIN Moneybrokers Sdn Bhd 1.0 1.0 1.0 0.2 0.2


Chart of the Group’s Five Year Financial Record

PROFIT BEFORE TAXATION(RM MILLION)

TOTAL ASSETS(RM BILLION)

SHAREHOLDERS’ EQUITY(RM BILLION)

EARNINGS PER SHARE(SEN)

GROSS DIVIDEND PER SHARE(SEN)

NET ASSETS PER SHARE(SEN)

404

353

314327 326

19.6 19.118.5

19.7

22.9

36.8 36.835.5

31.232.9

5.0 5.0 5.0

4.0

1.0

4.44.2

3.5

3.2

2.7

295285

278

265259

ContentsDirectors’ Report 39Balance Sheets 45Income Statements 47Consolidated Statement of Changes in Equity 48Company Statement of Changes in Equity 50Consolidated Cash Flow Statement 51Company Cash Flow Statement 54Summary of Significant Group Accounting Policies 56Notes to the Financial Statements 72Statement By Directors 151Declaration 151Independent Auditors’ Report 152


The directors hereby submit their report together with the audited financial statements of the Group and theCompany for the financial year ended 31 December 2008.

PRINCIPAL ACTIVITIES

The principal activity of the Company is investment holding. The principal activities of the subsidiaries arecommercial banking and hire purchase business, Islamic banking business, investment banking and stock-broking,money-broking, fund and unit trusts management.

The principal activity of the jointly controlled entities are underwriting of life insurance business and propertydevelopment while the associate is principally engaged in the underwriting of general insurance business.

There was no significant change in the nature of these activities other than the cessation of insurance-brokingbusiness upon the disposal of AFFIN Insurance Brokers Sdn Bhd during the financial year.

FINANCIAL RESULTS

GROUP COMPANYRM'000 RM'000

Profit before taxation and zakat 404,210 121,886Taxation and zakat (111,448) (29,457)

Net profit for the financial year 292,762 92,429

DIVIDENDS

The dividends on ordinary shares paid by the Company since 31 December 2007 were as follows:-

RM'000

In respect of the financial year ended 31 December 2007 as shown in the directors' report for that financial year:-

Final dividend of 3.0 sen gross per share, less 26% income tax, paid on 6 June 2008 33,175

In respect of the financial year ended 31 December 2008:-

Interim dividend of 5.0 sen gross per share, less 26% income tax, paid on 31 December 2008 55,292

At the forthcoming Annual General Meeting, the directors do not propose any final dividend in respect of the currentfinancial year.

RESERVES AND PROVISIONS

There were no material transfers to or from reserves or provisions during the financial year other than thosedisclosed in the financial statements and notes to the financial statements.

Directors’ Report


Directors’ Report (continued)

ISSUE OF SHARES

During the financial year, the following ordinary shares of RM1 each were issued by the Company:-

Terms of Class of Number ofDate issue shares Purpose shares '000

2 January 2008 to At RM1.00 Ordinary Shares issued pursuant to the exercise of the 588 13 February 2008 per share Company's Employee Share Option Scheme

("ESOS") by eligible employees in the Group

2 January 2008 to At RM1.41 Ordinary Shares issued pursuant to the exercise of the 6,79813 February 2008 per share Company's Employee Share Option Scheme

("ESOS") by eligible employees in the Group

The new ordinary shares issued during the year ranked pari passu in all respects with the existing ordinary sharesof the Company.

EMPLOYEE SHARE OPTION SCHEME

The Company's Employee Share Option Scheme ("ESOS") is governed by the by-laws which were approved by theshareholders on 30 April 2003. Details of the ESOS are set out in Note 25 to the financial statements.

The Company has been granted an exemption by the Companies Commission of Malaysia ("CCM") from having todisclose in the report the name of persons to whom options have been granted during the period and details of theirholdings. The information has been separately filed with CCM.

WARRANT 2000/2010

On 8 July 2000, the Company issued 153,775,702 new warrants ("AFFIN Warrants 2000/2005") at no cost togetherwith the rights issue exercise on the basis of one new AFFIN Warrants 2000/2005 for every four ordinary sharesheld. The exercise price of the AFFIN Warrants 2000/2005 was RM3.10 and was to expire on 7 July 2005. On 26November 2004, the shareholders of the Company and the holders of AFFIN Warrants 2000/2005 approved theextension of the exercise period for a further 5 years and a Supplemental Deed Poll dated 26 November 2004 wasexecuted to reflect the extension of the exercise period of the AFFIN Warrants 2000/2005 to expire on 7 July 2010("AFFIN Warrants 2000/2010"). The exercise price of the AFFIN Warrants 2000/2010 remains at RM3.10.

During the financial year, there was no exercise of AFFIN Warrants 2000/2010 to take up unissued ordinary sharesof RM1.00 each in the Company.

Number of AFFIN Warrants 2000/2010

At 1 January 2008/At 31 December 2008 153,775,702


DIRECTORS

The directors who have held office during the period since the date of the last report are:-

Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Haji Zainuddin Tan Sri Dato' Lodin bin Wok KamaruddinRaja Dato' Seri Aman bin Raja Haji AhmadMaj. Gen. (R) Dato' Mohamed Isa bin Che KakDatuk Azzat bin KamaludinDato' Mustafa bin Mohamad AliDr. The Hon. Sir David Li Kwok Po (appointed on 21.5.2008)Professor Arthur Li Kwok Cheung (appointed on 21.5.2008)Adrian David Li Man Kiu (Alternate Director to Dr. The Hon. Sir David Li Kwok Po) (appointed on 21.5.2008)Daniel Wan Yim Keung (Alternate Director to Professor Arthur Li Kwok Cheung) (appointed on 21.5.2008)

In accordance with Article 105 of the Company's Articles of Association, Gen. (R) Tan Sri Dato' Seri Mohd Zahidibin Haji Zainuddin and Datuk Azzat bin Kamaludin retire at the forthcoming Annual General Meeting and beingeligible, offer themselves for re-election.

Pursuant to section 129(6) of the Companies Act, 1965, Maj. Gen. (R) Dato' Mohamed Isa bin Che Kak, Dato'Mustafa bin Mohamad Ali and Dr. The Hon. Sir David Li Kwok Po retire and offer themselves for re-appointment atthe forthcoming Annual General Meeting.

In accordance with Article 111 of the Company's Articles of Association, Professor Arthur Li Kwok Cheung will retireand being eligible, offers himself for re-election.

DIRECTORS' BENEFITS

During and at end of the financial year, no arrangements subsisted to which the Company or its subsidiaries is aparty, with the object or objects of enabling directors of the Company to acquire benefits by means of the acquisitionof shares in, or debentures of, the Company or any other body corporate except for the share options granted todirectors of the Company by the Company, Boustead Holdings Berhad and Lembaga Tabung Angkatan Tentera.

Since the end of the previous financial year, no director has received or become entitled to receive any benefit (otherthan directors' remuneration as disclosed in Note 33 to the financial statements) by reason of a contract made bythe Company or a related corporation with the director or with a firm of which he is a member, or with a companyin which he has a substantial financial interest.

DIRECTORS' INTERESTS

According to the register of directors' shareholdings, the interest of directors in office at end of the financial year inshares, warrants and options over shares in the Company and its related companies are as follows:

NUMBER OF ORDINARY SHARES OF RM1 EACH

The Company At 1.1.2008 Bought Sold At 31.12.2008

Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Haji Zainuddin – 30,000 – 30,000

Tan Sri Dato' Lodin bin Wok Kamaruddin 8,714* 800,000 – 808,714*Raja Dato' Seri Aman bin Raja Haji Ahmad 55,500 150,000 – 205,500Datuk Azzat bin Kamaludin 110,000 – – 110,000

* Shares held in trust by nominee company



DIRECTORS' INTERESTS (continued)

NUMBER OF ORDINARY SHARES OF RM1 EACH

Related Companies At 1.1.2008 Bought Sold At 31.12.2008

Boustead Heavy Industries Corporation Berhad

Tan Sri Dato' Lodin bin Wok Kamaruddin 2,000,000 – – 2,000,000Datuk Azzat bin Kamaludin 515,300 – – 515,300

Boustead Petroleum Sdn Bhd

Tan Sri Dato' Lodin bin Wok Kamaruddin 5,466,465 – – 5,466,465

Boustead Properties Berhad

Datuk Azzat bin Kamaludin 5,000 – 5,000 –

Al-Hadharah Boustead REIT

Tan Sri Dato' Lodin bin Wok Kamaruddin 200,000 – – 200,000

UAC Berhad

Raja Dato' Seri Aman bin Raja Haji Ahmad 2,500 – – 2,500

NUMBER OF ORDINARY SHARES OF 50 SEN EACH

Related Companies At 1.1.2008 Bought Sold At 31.12.2008

Boustead Holdings Berhad

Tan Sri Dato' Lodin bin Wok Kamaruddin 21,695,000 – 1,879,000 19,816,000Datuk Azzat bin Kamaludin – 10,000 – 10,000

NUMBER OF WARRANTS 2000/2010

The Company At 1.1.2008 Bought Sold At 31.12.2008

Tan Sri Dato' Lodin bin Wok Kamaruddin 1,500 – – 1,500Raja Dato' Seri Aman bin Raja Haji Ahmad 9,250 – – 9,250

Each of the above Warrants 2000/2010 of the Company (previously known as "AFFIN Warrants 2000/2005") entitlesthe registered holder to subscribe for one new ordinary share of RM1.00 each in the Company at any time from thedate of issue of 8 July 2000 at the exercise price of RM3.10 per share. The original exercise period of the AFFINWarrants 2000/2010 was to expire on 7 July 2005. During the financial year 2005, AFFIN Warrants 2000/2005 wasextended for another five years and will expire on 7 July 2010 ("AFFIN Warrants 2000/2010").

OPTIONS OVER ORDINARY SHARES OF RM1 EACH

The Company At 1.1.2008 Granted Exercised At 31.12.2008

Tan Sri Dato' Lodin bin Wok Kamaruddin 800,000** – 800,000 –Raja Dato' Seri Aman bin Raja Haji Ahmad 150,000*** – 150,000 –

** This option was granted by the Company under its Employee Share Option Scheme at the option price ofRM1.41 per share and was exercised in full before the expiry date (i.e. 13 February 2008).

*** This option was granted by the Company under its Employee Share Option Scheme at the option price ofRM1.00 per share and was exercised in full before expiry date (i.e. 13 February 2008).



DIRECTORS' INTERESTS (continued)

OPTIONS OVER ORDINARY SHARES OF 50 SEN EACH

Related Companies At 1.1.2008 Granted Expired At 31.12.2008

Boustead Holdings Berhad

Tan Sri Dato' Lodin bin Wok Kamaruddin 5,912,699@ – 5,912,699 –

@ This was part of the option granted by Lembaga Tabung Angkatan Tentera ("LTAT") to acquire 29,912,699Boustead Holdings Berhad shares from LTAT at RM1.70 per share and has expired on 14 November 2008.

Other than the above, the directors in office at end of the financial year did not have any other interest in the shares,warrants and options over shares in the Company or its related companies during the financial year.

STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS

Before the financial statements of the Group and the Company were made out, the directors took reasonable steps:

(a) to ascertain that proper action had been taken in relation to the writing-off of bad debts and financing and themaking of allowance for doubtful debts and financing and satisfied themselves that all known bad debts hadbeen written-off and that adequate allowances had been made for doubtful debts and financing; and

(b) to ensure that any current assets, other than debts and financing, which were unlikely to realise in the ordinarycourse of business, their value as shown in the accounting records of the Group and the Company, have beenwritten-down to an amount which they might be expected so to realise.

At the date of this report, the directors are not aware of any circumstances:

(a) which would render the amounts written-off for bad debts and financing or the amount of allowances fordoubtful debts and financing in the financial statements of the Group and the Company inadequate to anysubstantial extent; or

(b) which would render the values attributed to current assets in the financial statements of the Group and theCompany misleading; or

(c) which have arisen which render adherence to the existing method of valuation of assets or liabilities of theGroup and the Company misleading or inappropriate.

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

(a) any charge on the assets of the Group and the Company which has arisen since the end of the financial yearwhich secures the liability of any other person; or

(b) any contingent liability of the Group and the Company which has arisen since the end of the financial year.

No contingent or other liability has become enforceable or is likely to become enforceable within the period of twelvemonths after the end of the financial year which, in the opinion of the directors, will or may substantially affect theability of the Group or the Company to meet their obligations when they fall due.

At the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report orthe financial statements which would render any amount stated in the financial statements misleading.



STATUTORY INFORMATION ON THE FINANCIAL STATEMENTS (continued)

In the opinion of the directors,

(a) the results of the Group's and the Company's operations during the financial year were not substantiallyaffected by any item, transaction or event of a material and unusual nature except as disclosed in Note 44 tothe financial statements; and

(b) there has not arisen in the interval between the end of the financial year and the date of this report any item,transaction or event of a material and unusual nature likely to substantially affect the results of the operationsof the Group or the Company for the financial year in which this report is made.

SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

Significant events during the financial year are disclosed in Note 44 to the financial statements.

SUBSEQUENT EVENTS

There were no material events subsequent to the balance sheet date that require disclosure or adjustment to thefinancial statements.

ULTIMATE HOLDING CORPORATE BODY

The directors regard Lembaga Tabung Angkatan Tentera, a corporate body established under the Tabung AngkatanTentera Act, 1973, as the ultimate holding corporate body of the Company.

AUDITORS

The auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.


TAN SRI DATO' LODIN BIN WOK KAMARUDDIN MAJ. GEN. (R) DATO' MOHAMED ISA BIN CHE KAKDIRECTOR DIRECTOR

Kuala Lumpur23 February 2009



GROUP COMPANYNote 2008 2007 2008 2007

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

ASSETS

Cash and short-term funds 2 6,851,602 8,386,113 34,293 238,213Deposits and placements with banks and other

financial institutions 3 – 721,548 295,121 230,000Securities held-for-trading 4 403,813 280,326 – –Securities available-for-sale 5 5,896,608 5,868,465 – –Securities held-to-maturity 6 602,665 443,307 – –Loans, advances and financing 7 19,927,677 17,277,639 – –Statutory deposits with Bank Negara Malaysia 8 835,628 841,647 – –Investment in subsidiaries 9 – – 3,807,617 3,807,617Investment in jointly controlled entities 10 96,030 97,330 120,870 111,180Investment in associate 11 113,661 109,976 10,597 10,597Trade debtors 12 40,005 174,859 – –Other assets 13 626,772 470,044 4,304 1,201Taxation recoverable 49,765 72,834 13,509 35,350Deferred tax assets 23 63,938 32,871 – –Property and equipment 14 203,153 226,159 1,104 1,245Land held for sale 15 87,412 92,835 – –Intangible assets 16 1,037,702 1,036,929 2 –

TOTAL ASSETS 36,836,431 36,132,882 4,287,417 4,435,403

LIABILITIES AND EQUITY

Deposits from customers 17 26,934,976 25,558,739 – –Deposits and placements of banks and other

financial institutions 18 3,888,707 4,079,074 – –Bills and acceptances payable 136,243 126,697 – –Trade creditors 19 36,941 163,656 – –Recourse obligation on loans sold to

Cagamas Berhad 20 11,088 361,510 – –Other liabilities 21 658,783 676,595 5,676 9,176Amount due to subsidiaries 22 – – 839,122 798,715Provision for taxation 57,131 25,317 – –Deferred tax liabilities 23 1,257 4,316 1,191 219Borrowings 24 700,000 900,000 200,000 400,000

TOTAL LIABILITIES 32,425,126 31,895,904 1,045,989 1,208,110

Balance Sheets31 December 2008



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

EQUITY

Share capital 25 1,494,367 1,486,981 1,494,367 1,486,981Share premium 1,399,970 1,397,183 1,399,970 1,397,183Reserves 26 1,516,968 1,352,814 347,091 343,129

TOTAL EQUITY 4,411,305 4,236,978 3,241,428 3,227,293

TOTAL LIABILITIES AND EQUITY 36,836,431 36,132,882 4,287,417 4,435,403

COMMITMENTS AND CONTINGENCIES 40(c) 22,682,166 19,416,143 – –

The accounting policies on pages 56 to 71 and the notes on pages 72 to 150 form an integral part of these financialstatements.

Balance Sheets (continued)31 December 2008



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

Revenue 27 2,115,438 2,184,873 141,382 421,587

Interest income 28 1,576,021 1,631,078 10,896 7,023Interest expenses 29 (851,776) (953,322) – –

Net interest income 724,245 677,756 10,896 7,023Islamic banking income 30 148,134 129,226 – –

872,379 806,982 10,896 7,023Other operating income 31 265,445 333,817 130,498 414,576

1,137,824 1,140,799 141,394 421,599Other operating expenses 32 (587,581) (579,381) (7,396) (6,858)

Operating profit before loan and financing loss and provision 550,243 561,418 133,998 414,741

Allowances for losses on loans, advancesand financing 34 (100,474) (146,911) – –

Impairment losses 35 (28,602) (39,489) – (5,784)Transfer from profit equalisation reserve – 501 – –

Operating profit 421,167 375,519 133,998 408,957Finance cost 36 (12,112) (29,439) (12,112) (29,439)Share of results of a jointly controlled entity (11,490) (10,583) – –Share of results of associate 6,645 17,474 – –

Profit before taxation and zakat 404,210 352,971 121,886 379,518Taxation 37 (109,059) (98,848) (29,457) (104,473)Zakat (2,389) (2,350) – –

Net profit for the financial year attributable to equity holders of the Company 292,762 251,773 92,429 275,045

Earnings per share attributable to equityholders of the Company (sen)- Basic 38 19.60 19.11- Fully diluted 38 19.60 18.99


Income StatementsFor the financial year ended 31 December 2008


<--------------- Attributable to Equity Holders of the Company ----------------><---------- Non-Distributable --------> Distributable

InvestmentShare Share Statutory fluctuation Retained

Note capital premium reserves reserves profits Total GROUP RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2008 1,486,981 1,397,183 534,212 17,201 801,401 4,236,978

Net change in fair value of securities available-for-sale – – – (52,223) – (52,223)

Deferred tax on revaluation of securities available-for-sale – – – 12,082 – 12,082

Income and expense recognised directly in equity – – – (40,141) – (40,141)

Net profit for the financial year – – – – 292,762 292,762

Total recognised income and expense for the financial year – – – (40,141) 292,762 252,621

Issue of share capital:-- pursuant to the exercise

of Employee Share Option Scheme 25 7,386 2,787 – – – 10,173

Transfer to statutory reserves – – 163,969 – (163,969) –

Dividends paid 39 – – – – (88,467) (88,467)

At 31 December 2008 1,494,367 1,399,970 698,181 (22,940) 841,727 4,411,305

Consolidated Statement of Changes in EquityFor the financial year ended 31 December 2008


<--------------- Attributable to Equity Holders of the Company ----------------><---------- Non-Distributable --------> Distributable

InvestmentShare Share Statutory fluctuation Retained

Note capital premium reserves reserves profits Total GROUP RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At 1 January 2007 1,252,913 1,077,424 410,230 13,043 723,233 3,476,843

Net change in fair value of securities available-for-sale – – – 4,310 – 4,310

Deferred tax on revaluation of securities available-for-sale – – – (152) – (152)

Income and expense recognised directly in equity – – – 4,158 – 4,158

Net profit for the financial year – – – – 251,773 251,773

Total recognised income and expensefor the financial year – – – 4,158 251,773 255,931

Issue of share capital:-- pursuant to the

exercise of Employee Share Option Scheme 25 40,865 15,614 – – – 56,479

- pursuant to the exercise of Warrants 1997/2007 1 3 – – – 4

- pursuant to placement of new ordinary shares to The Bank of East Asia, Limited ("BEA") 193,202 305,259 – – – 498,461

Share issue expenses on placement of shares to BEA – (1,117) – – – (1,117)

Transfer to statutory reserves – – 123,982 – (123,982) –

Dividends paid 39 – – – – (49,623) (49,623)

At 31 December 2007 1,486,981 1,397,183 534,212 17,201 801,401 4,236,978


Consolidated Statement of Changes in Equity (continued)For the financial year ended 31 December 2008


Non-Distributable Distributable

Share Share Retained Note capital premium profits Total

COMPANY RM'000 RM'000 RM'000 RM'000

At 1 January 2008 1,486,981 1,397,183 343,129 3,227,293

Total recognised income and expensefor the financial year

- Net profit for the financial year – – 92,429 92,429Issue of share capital:-- pursuant to the exercise of Employee

Share Option Scheme 25 7,386 2,787 – 10,173Dividends paid 39 – – (88,467) (88,467)

At 31 December 2008 1,494,367 1,399,970 347,091 3,241,428

At 1 January 2007 1,252,913 1,077,424 117,707 2,448,044

Total recognised income and expensefor the financial year

- Net profit for the financial year – – 275,045 275,045Issue of share capital:-- pursuant to the exercise of Employee

Share Option Scheme 25 40,865 15,614 – 56,479- pursuant to the exercise of

Warrants 1997/2007 1 3 – 4- pursuant to placement of new ordinary

shares to BEA 193,202 305,259 – 498,461Share issue expenses on placement

of shares to BEA – (1,117) – (1,117)Dividends paid 39 – – (49,623) (49,623)

At 31 December 2007 1,486,981 1,397,183 343,129 3,227,293


Company Statement of Changes in EquityFor the financial year ended 31 December 2008


2008 2007RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation and zakat 404,210 352,971

Adjustments for items not involving the movement of cash and cash equivalents:-Gain on disposal/redemption of securities

- securities held-for-trading (4,268) (7,129)- securities available-for-sale (17,833) (31,509)- securities held-to-maturity (15,230) (6,726)

Allowance for/(write-back of) impairment loss- securities available-for-sale 31,837 27,682- securities held-to-maturity (3,680) 11,845- property and equipment – (38)- land held for sale 445 –

Dimunition in value of foreclosed properties 558 11,836Interest income from securities

- securities held-for-trading (16,028) (24,847)- securities available-for-sale (139,707) (135,422)- securities held-to-maturity (20,467) (38,228)

Dividend income from securities- securities available-for-sale (212) (581)- securities held-to-maturity (4,556) (3,508)

Amortisation of premium net of accretion of discount- securities available-for-sale (1,572) 8,187- securities held-to-maturity (54,499) (63,610)

Unrealised (gain)/loss on revaluation- securities held-for-trading 8,084 (9,823)- derivatives 36,851 1,294- foreign exchange (40,704) (59,218)

Allowance for/(write-back of) bad and doubtful debts and financing- loans, advances and financing 332,572 404,299- trade debtors (553) (364)- other debtors 293 (661)

Bad debts written-off 8,929 4,136Gain on disposal of property and equipment (10,048) (2,684)Gain on disposal of foreclosed properties (2,883) (1,382)Loss on disposal of land held for sale 4,457 –Property and equipment written-off 835 1,215Intangible assets written-off 16 473Depreciation on property and equipment 27,474 26,493Amortisation of intangible assets 18,397 16,476Amortisation of prepaid lease payments 465 271Provision for amount recoverable from Danaharta – (39)Share of results of jointly controlled entity 11,490 10,583Share of results of associate (6,645) (17,474)Transfer from profit equalisation reserve – (501)Gain on disposal of a subsidiary (Note 44(b)) (1,500) –

OPERATING PROFIT BEFORE CHANGES IN WORKING CAPITAL 546,528 474,017

Consolidated Cash Flow StatementFor the financial year ended 31 December 2008


2008 2007RM'000 RM'000

INCREASE/(DECREASE) IN OPERATING ACTIVITIES

(Increase)/decrease in operating assets:- Deposits and placements with banks and other financial institutions 720,939 (395,066)Securities held-for-trading (111,275) 14,781Loans, advances and financing (2,991,539) (329,103)Statutory deposits with Bank Negara Malaysia 6,019 (20,892)Trade debtors 815,911 (41,872)Other assets (171,078) (200,568)Land held for sale 6,491 –

Increase/(decrease) in operating liabilities:-Deposits from customers 1,376,237 (129,354)Deposits and placements of banks and other financial institutions (190,367) 2,727,547Bills and acceptances payable 9,546 (154,480)Trade creditors (807,219) 63,006Recourse obligation on loans sold to Cagamas Berhad (350,422) (276,248)Obligation on securities sold under repurchase agreements – (1,760,313)Other liabilities (11,868) (68,609)

Cash used in operations (1,152,097) (97,154)Tax and zakat paid (130,574) (54,200)Tax refund 53,965 36,696

NET CASH USED IN OPERATING ACTIVITIES (1,228,706) (114,658)

CASH FLOW FROM INVESTING ACTIVITIES

Net purchase of securities available-for-sale (39,870) (270,911)Net (purchase)/disposal of securities held-to-maturity (138,876) 609,359Proceeds from disposal of property and equipment 18,131 7,502Proceeds from disposal of prepaid lease payments 1,318 228Proceeds from disposal/redemption of land held for sale 9,030 8,084Proceeds from disposal of foreclosed properties 23,498 6,190Net cash proceeds from disposal of a subsidiary 2,041 –Purchase of property and equipment (41,695) (33,314)Purchase of intangible assets (7,554) (2,314)Dividends received from associate – 5,840Capital injection into jointly controlled entities (10,190) –Interest received from securities

- securities available-for-sale 139,707 135,422- securities held-to-maturity 20,467 38,228

Dividend received from securities- securities available-for-sale 212 581- securities held-to-maturity 4,556 3,508

NET CASH (USED IN)/GENERATED FROM INVESTING ACTIVITIES (19,225) 508,403

Consolidated Cash Flow Statement (continued)For the financial year ended 31 December 2008


2008 2007RM'000 RM'000

CASH FLOWS FROM FINANCING ACTIVITIES

Decrease in borrowings (200,000) (262,644)Dividends paid to shareholders of the Company (88,467) (49,623)Proceeds from issue of shares pursuant to the exercise of

Employee Share Option Scheme and Warrants 10,173 56,483Proceeds from placement of new ordinary shares – 498,461

NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES (278,294) 242,677

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (1,526,225) 636,422CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 8,338,768 7,702,346

CASH AND CASH EQUIVALENTS AT END OF YEAR 6,812,543 8,338,768

ANALYSIS OF CASH AND CASH EQUIVALENTS

Cash and short-term funds (Note 2) 6,851,602 8,386,113Adjustment for money held in trust on behalf of clients and remisiers (39,059) (47,345)

Closing cash and cash equivalent 6,812,543 8,338,768


Consolidated Cash Flow Statement (continued)For the financial year ended 31 December 2008


2008 2007RM'000 RM'000

CASH FLOWS FROM OPERATING ACTIVITIES

Profit before taxation and zakat 121,886 379,518

Adjustments for items not involving the movement of cash and cash equivalents:-Gross dividends from subsidiaries (126,479) (406,560)Gross dividend from associate (4,000) (8,000)Depreciation of property and equipment 227 197Property and equipment written-off 6 8Gain on disposal of property and equipment – (1)Impairment loss on investment in subsidiary – 5,784

OPERATING LOSS BEFORE CHANGES IN WORKING CAPITAL (8,360) (29,054)

INCREASE/(DECREASE) IN OPERATING ACTIVITIES

(Increase)/decrease in operating assets:-Deposits and placements with banks and other financial institutions (65,121) (226,516)Other assets (3,103) 39,642

Increase/(decrease) in operating liabilities:-Other liabilities (3,500) (4,847)

Cash used in operations (80,084) (220,775)Tax refund 27,281 14,878

NET CASH USED IN OPERATING ACTIVITIES (52,803) (205,897)

CASH FLOWS FROM INVESTING ACTIVITIES

Dividend received from subsidiaries 93,594 365Dividend received from associate 2,960 5,840Net cash movement in amount due to subsidiaries 40,407 91,290Proceeds from disposal of property and equipment – 17Capital injection into a jointly controlled entity (9,690) –Purchase of property and equipment (92) (209)Purchase of intangible assets (2) –

NET CASH GENERATED FROM INVESTING ACTIVITIES 127,177 97,303

Company Cash Flow StatementFor the financial year ended 31 December 2008


2008 2007RM'000 RM'000

CASH FLOWS FROM FINANCING ACTIVITIES

Repayment of borrowings (200,000) (253,530)Dividends paid to shareholders of the Company (88,467) (49,623)Proceeds from issue of shares pursuant to the exercise of

Employee Share Option Scheme and Warrants 10,173 56,483Proceeds from placement of new ordinary shares – 498,461

NET CASH (USED IN)/GENERATED FROM FINANCING ACTIVITIES (278,294) 251,791

NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (203,920) 143,197CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 238,213 95,016

CASH AND CASH EQUIVALENTS AT END OF YEAR 34,293 238,213

ANALYSIS OF CASH AND CASH EQUIVALENTS

Cash and short-term funds (Note 2) 34,293 238,213


Company Cash Flow Statement (continued)For the financial year ended 31 December 2008


The following accounting policies have been used consistently in dealing with items which are considered materialin relation to the financial statements. These policies have been consistently applied to all the financial yearspresented, unless otherwise stated.

1 BASIS OF PREPARATION

The financial statements of the Group and the Company have been prepared under the historical costconvention except as disclosed in this summary of significant accounting policies and in accordance with theMalaysian Accounting Standards Board ("MASB") Approved Accounting Standards for Entities Other ThanPrivate Entities, Bank Negara Malaysia Guidelines, Syariah requirements and the provisions of the CompaniesAct, 1965.

The financial statements incorporate those activities relating to Islamic banking business which have beenundertaken by the Group. Islamic banking refers generally to the acceptance of deposits and granting offinancing under the Syariah principles.

The preparation of financial statements in conformity with the MASB Approved Accounting Standards forEntities Other Than Private Entities and BNM Guidelines requires the use of certain critical accountingestimates and assumptions that affect the reported amounts of assets and liabilities and disclosure ofcontingent assets and liabilities at the date of the financial statements, and the reported amounts of revenuesand expenses during the reported period. It also requires directors to exercise judgement in the process ofapplying the Group's accounting policies. Although these estimates are based on the directors' best knowledgeof current events and actions, actual results may differ from these estimates.

(a) Standards and amendments to published standards that are applicable and effective to the Group

The revision to the published standard effective for the Group's and the Company's financial periodsbeginning 1 January 2008 are as follows:

• FRS 107 Cash Flow Statement• FRS 112 Income Taxes• FRS 118 Revenue• FRS 134 Interim Financial Reporting• FRS 137 Provisions, Contingent Liabilities and Contingent Assets

The revised FRS 112 Income Taxes removes the requirements that prohibit recognition of deferred tax onunutilised reinvestment allowances or other allowances in excess of capital allowances. The adoption ofthis standard does not have any significant financial impact on the results of the Group and the Company.

Other revised standards have no significant changes compared to the original standards:

• FRS 107 Cash Flow Statement• FRS 118 Revenue• FRS 134 Interim Financial Reporting• FRS 137 Provisions, Contingent Liabilities and Contingent Assets

The adoption of these revised standards did not have a material impact on the financial statements of theGroup and the Company.

Summary of Significant Group Accounting PoliciesFor the financial year ended 31 December 2008


1 BASIS OF PREPARATION (continued)

(b) Standards, amendments to published standards and interpretations to existing standards that areeffective in 2008 but not relevant to the Group

The following standards, amendments to published standards and interpretations to the existing standardsare mandatory for accounting periods beginning on or after 1 January 2008 but they are not relevant tothe Group's operations:-

• FRS 111 Construction Contracts• FRS 120 Accounting for Government Grants and Disclosure of Government Assistant• Amendments to FRS 121 The Effects of Changes in Foreign Exchange Rates - Net Investment in a

Foreign Operations• IC Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities• IC Interpretation 2 Members' Shares in Co-operative Entities and Similar Instruments• IC Interpretation 5 Rights to Interests arising from Decommission, Restoration and Environmental

Rehabilitation Funds • IC Interpretation 6 Liabilities arising from Participating in a Specific Market - Waste Electrical and

Electronic Equipment • IC Interpretation 7 Applying the Restatement Approach under FRS 129 Financial Reporting in

Hyperinflationary Economies• IC Interpretation 8 Scope of FRS 2

(c) Standards, amendments to published standards and interpretations to existing standards that arenot yet effective and have not been early adopted

The new standards and IC Interpretation that are applicable to the Group, but which the Group has notearly adopted, are as follows:-

• FRS 8 Operating Segments (effective for accounting periods beginning on or after 1 July 2009). FRS8 replaces FRS 1142004 Segment Reporting. The new standard requires a 'management approach',under which segment information is presented on the same basis as that used for internal reportingpurposes. The Group will apply this standard when effective.

• IC Interpretation 9 Reassessment of Embedded Derivatives (effective for accounting periodsbeginning on or after 1 January 2010). IC Interpretation 9 requires an entity to assess whether anembedded derivative is required to be separated from the host contract and accounted for as aderivative when the entity first becomes a party to the contract. Subsequent reassessment isprohibited unless there is a change in the terms of the contract that significantly modifies the cashflows that otherwise would be required under the contract, in which case reassessment is required.The Group will apply this standard when effective.

• IC Interpretation 10 Interim Financial Reporting and Impairment (effective for annual period beginningon or after 1 January 2010). IC Interpretation 10 prohibits the impairment losses recognised in aninterim period on goodwill and investments in equity instruments and in financial assets carried at costto be reversed at a subsequent balance sheet date. The Group will apply this standard when effective.

• The following standards will be effective for annual period beginning on or after 1 January 2010. TheGroup will apply these standards when effective. The Group has applied the transitional provision inthe respective standards which exempts entities from disclosing the possible impact arising from theinitial application of the standard on the financial statements of the Group and Company:

- FRS 139 Financial Instruments: Recognition and Measurement - FRS 7 Financial Instruments: Disclosures

Summary of Significant Group Accounting Policies (continued)For the financial year ended 31 December 2008


1 BASIS OF PREPARATION (continued)

(c) Standards, amendments to published standards and interpretations to existing standards that arenot yet effective and have not been early adopted (continued)

Nevertheless, the accounting policies of the Group incorporate revised BNM/GP8 which includesselected principles of FRS 139.

2 ECONOMIC ENTITIES IN THE GROUP

The consolidated financial statements include the financial statements of the Company, subsidiaries, jointlycontrolled entities and associates, made up to the end of the financial year.

a) Subsidiaries

Subsidiaries are those corporations, partnerships or other entities in which the Group has power toexercise control over the financial and operating policies so as to obtain benefits from their activities,generally accompanying a shareholding of more than one half of the voting rights. The existence andeffect of potential voting rights that are currently exercisable or convertible are considered when assessingwhether the Group controls another entity.

Subsidiaries are consolidated using the purchase method of accounting. Under the purchase method ofaccounting, subsidiaries are fully consolidated from the date on which control is transferred to the Groupand de-consolidated from the date that control ceases. The cost of an acquisition is measured as fair valueof the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange,plus costs directly attributable to the acquisition. Identifiable assets acquired and liabilities and contingentliabilities assumed in a business combination are measured initially at their fair values at the acquisitiondate, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fairvalue of the Group's share of identifiable net assets acquired at the date of acquisition is reflected asgoodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired,the difference is recognised directly in the income statement.

Intra-group transactions, balances and unrealised gains on transactions between group companies areeliminated. Unrealised losses are also eliminated but considered an impairment indicator of the assettransferred. Accounting policies of subsidiaries have been changed where necessary, to ensureconsistency with the policies adopted by the Group.

The gain or loss on disposal of a subsidiary is the difference between net disposal proceeds and theGroup's share of its net assets as of the date of disposal including the cumulative amount of any exchangedifferences that relate to the subsidiary, is recognised in the consolidated income statement.

Minority interests represent that portion of the profit or loss and net assets of a subsidiary attributable toequity interests that are not owned, directly or indirectly through subsidiaries, by the Group. It is measuredat the minorities' share of the fair value of the subsidiaries' identifiable assets and liabilities at theacquisition date and the minorities' share of changes in the subsidiaries' equity since that date.



2 ECONOMIC ENTITIES IN THE GROUP (continued)

b) Jointly controlled entities

Jointly controlled entities are corporations, partnerships or other entities over which there is contractuallyagreed sharing of control by the Group with one or more parties where the strategic financial and operatingdecisions relating to the entities require unanimous consent of the parties sharing control.

Investments in jointly controlled entities are accounted for in the consolidated financial statements usingthe equity method of accounting and are initially recognised at cost. The Group's investment in jointlycontrolled entities includes goodwill identified on acquisition, net of any accumulated impairment loss.

The Group's share of the post-acquisition profits or losses of the jointly controlled entities are recognisedin the income statement, and its share of post-acquisition movements in reserves are recognised inreserves. The cumulative post-acquisition movements are adjusted against the carrying amount of theinvestment. When the Group's share of losses in a jointly controlled entity equals or exceeds its interestin the jointly controlled entity, including any other unsecured receivables, the Group's interest is reducedto nil and recognition of further losses is discontinued except to the extent that the Group has incurredlegal or constructive obligations or made payments on behalf of the jointly controlled entity.

Where necessary, adjustments have been made to the financial statements of jointly controlled entities toensure consistency of accounting policies with those of the Group.

Dilution gains and losses in jointly controlled entities are recognised in the income statement.

For incremental interest in a jointly controlled entity, the date of acquisition is purchase date at each stageand goodwill is calculated at each purchase date based on the fair value of assets and liabilities identified.There is no "step up to fair value" of net assets of previously acquired stake and the share of profits andequity movements for the previously acquired stake is recorded directly through equity.

c) Associates

Associates are those corporations, partnerships or other entities in which the Group exercises significantinfluence, but which it does not control, generally accompanying a shareholding of between 20% and 50%of the voting rights. Significant influence is the power to participate in the financial and operating policydecisions of the associates but not the power to exercise control over those policies.

Investments in associates are accounted for in the consolidated financial statements using equity methodof accounting as described in Note 2 (b) above.

In the Company's financial statements, the investments in subsidiaries, jointly controlled entity and associateare stated at cost less impairment losses. At each balance sheet date, the Company assesses whether thereis any indication of impairment. If such indications exist, an analysis is performed to assess whether thecarrying amount of the investment is fully recoverable. A write-down is made if the carrying amount exceedsthe recoverable amount. Any subsequent increase in recoverable amount is recognised in the incomestatement.



3 INTANGIBLE ASSETS

Goodwill

Goodwill represents the excess of the cost of acquisition of subsidiaries, jointly controlled entities andassociates over the fair value of the Group's share of the identifiable net assets at the date of acquisition.

Goodwill on acquisition of subsidiaries are included in the balance sheet as intangible assets. Goodwill istested for impairment annually or more frequently if events or changes in circumstances indicated that thegoodwill may be impaired. The amount retained in the consolidated financial statements is stated at cost lessaccumulated impairment losses. Impairment losses on goodwill are not reversed. Gains and losses on thedisposal of an entity include the carrying amount of goodwill relating to the entity sold.

Goodwill is allocated to the respective subsidiaries, representing the cash-generating units ("CGUs") of theGroup for the purpose of impairment testing. The allocation is made to those CGUs that are expected to benefitfrom the synergies of the business combination in which goodwill arose.

Goodwill on acquisition of jointly controlled entities and associates are included in investments in jointlycontrolled entities and associates respectively. Such goodwill is tested for impairment as part of the overallbalances.

Computer software

Acquired computer software are capitalised on the basis of the costs incurred to acquire and bring to use thespecific software. These costs are amortised over their estimated useful lives which are three to five years andare stated at cost less accumulated amortisation and accumulated impairment losses, if any.

Costs associated with developing or maintaining computer software programmes are recognised as anexpense as incurred. Costs that are directly associated with the production of identifiable and unique softwareproducts controlled by the Group, and that will probably generate economic benefits exceeding costs beyondone year, are recognised as intangible assets. Direct costs include software development employee costs andappropriate portion of relevant overhead.

4 IMPAIRMENT OF NON-FINANCIAL ASSETS

Assets that have an indefinite useful life, for example goodwill, are not subject to amortisation and are testedannually for impairment. Assets that are subject to amortisation are reviewed for impairment whenever eventsor changes in circumstances indicate that the carrying amount may not be recoverable.

An impairment loss is recognised for the amount by which the assets' carrying amount exceeds its recoverableamount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. Forthe purposes of assessing impairment, assets are grouped at the lowest levels for which there are separatelyidentifiable cash flows (cash-generating units). Non-financial assets other than goodwill that sufferedimpairment are reviewed for possible reversal of the impairment at each reporting date.

The impairment loss is charged to the income statement unless it reverses a previous revaluation in which caseit is charged to the revaluation surplus. Any subsequent increase in recoverable amount is recognised in theincome statement unless it reverses an impairment loss on a revalued asset in which case it is taken torevaluation surplus.




5 CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of cash in hand, bank balances and deposits and placements maturingwithin one month which are held for the purpose of meeting short-term commitments and are readily convertibleinto cash without significant risk of changes in value.

6 SECURITIES

The Group classified its securities portfolio into securities held-for-trading, securities available-for-sale andsecurities held-to-maturity. Classification of the securities is determined at initial recognition.

Securities are initially recognised at fair value. Securities are derecognised when the rights to receive cashflows from the securities have expired or where the Group has transferred substantially all risks and rewardsof ownership.

Subsequent measurement for each type of securities is as follows:-

Securities held-for-trading

Securities are classified as held-for-trading if they are acquired or incurred principally for the purpose of sellingor repurchasing in the near term or they are part of the portfolio of identified securities that are managedtogether and for which there is evidence of a recent actual pattern of short-term profit-taking.

Securities held-for-trading are stated at fair value. Any unrealised gains or losses arising from the change infair value or arising from sale of such securities are recognised in the income statement.

Securities available-for-sale

Securities available-for-sale are non-derivative financial assets that are either designated in this category ornot classified as securities held-for-trading or securities held-to-maturity.

Investments in equity instruments where there is no quoted market price in an active market and whose fairvalue cannot be reliably measured, will be stated at cost.

Any gains or losses arising from the change in fair value adjustments are recognised directly in equity throughthe statement of changes in equity except for impairment losses and foreign exchange gains or losses. Whenthe financial asset is derecognised, the cumulative gains or losses previously recognised in equity shall betransferred to the income statement.

Impairment of securities available-for-sale is assessed when there is an objective evidence of impairment.Cumulative unrealised losses that had been recognised directly in equity shall be removed and recognised inincome statement even though the securities have not been derecognised. Impairment loss in addition to theabove unrealised losses is also recognised in the income statement. Subsequent reversal of impairment ondebt instrument in the income statement is allowed when the decrease in impairment can be related objectivelyto an event occurring after the impairment was recognised.

Impairment losses recognised in the income statement for investments in equity instruments shall not bereversed.



6 SECURITIES (continued)

Securities held-to-maturity

Securities held-to-maturity are non-derivative financial assets with fixed or determinable payments and fixedmaturity that the Group has the positive intention and ability to hold to maturity, as well as those instrumentsallowed by Bank Negara Malaysia ("BNM"). In accordance with Guidelines on Financial Reporting for LicensedInstitutions ("Revised BNM/GP8") issued by BNM on 5 October 2004, the following instruments may beclassified as securities held-to-maturity and measured at cost:

i) equity securities held as investment in organisations which are set up for socio-economic reasons; and

ii) equity instruments received as a result of loan restructuring or loan conversion, where there is no quotedmarket price in an active market and whose fair value cannot be reliably measured.

Securities held-to-maturity are measured at amortised cost using the effective interest method. Gains or lossesare recognised in income statement when the securities are derecognised or impaired and through theamortisation process.

Any sale or reclassification of a significant amount of securities held-to-maturity before maturity during thecurrent financial year or last two preceding financial years will "taint" the entire category and result in theremaining securities held-to-maturity being reclassified to available-for-sale. However, the "tainting" rules willnot apply under the conditions stated in revised BNM/GP8 and provided that prior approval from the Board ofDirectors is obtained.

Impairment of securities held-to-maturity is assessed when there is an evidence of impairment, at the followingbasis:

i) Securities carried at amortised cost

The impairment loss is measured as the difference between the securities' carrying amount and thepresent value of estimated future cash flows discounted at the original effective interest rate. Subsequentreversal of impairment is allowed in the event of an objective decrease in impairment. Recognition ofimpairment losses and its reversal is made through the income statement.

ii) Securities carried at cost

The impairment loss is measured as the difference between the securities' carrying amount and thepresent value of estimated future cash flow discounted at the current market rate of return for similarsecurities. Such impairment losses shall not be reversed.

7 TRADE DEBTORS

Trade debtors arising from stock-broking business are carried at cost net of allowance for bad and doubtfuldebt. An estimate is made for doubtful debts based on the review of all outstanding amounts at the end of thefinancial year. Bad debts are written off during the financial year in which they are identified.


8 INCOME TAX

Current tax

Current tax expense is determined according to the tax laws of each jurisdiction in which the Group operatesand includes all taxes based upon the taxable profits for the financial year.

Deferred tax

Deferred tax is recognised in full, using the liability method, on temporary differences arising between theamounts attributed to assets and liabilities for tax purposes and their carrying amounts in the financialstatements. However, deferred tax is not accounted for if it arises from initial recognition of an asset or liabilityin a transaction other than a business combination that at the time of the transaction affects neither accountingnor taxable profit or loss.

Deferred tax assets are recognised to the extent that it is probable that taxable profit will be available againstwhich the deductible temporary differences or unused tax losses can be utilised.

Deferred tax is recognised on temporary differences principally arising from depreciation of property andequipment, amortisation of intangible assets, general allowances for loans, advances and financing, unrealisedgains/(losses) on revaluation of securities, forex and derivatives, provision for other liabilities and unused taxlosses carried forward.

Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted bythe balance sheet date and are expected to apply when the related deferred tax asset is realised or thedeferred tax liability is settled.

Deferred tax related to fair value re-measurement of securities available-for-sale, which are charged or crediteddirectly to equity and is subsequently recognised in the income statement together with the deferred gain or loss.

9 PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.Cost includes expenditure that is directly attributable to the acquisition of the items.

Subsequent costs are included in the asset's carrying amount or recognised as a separate asset, asappropriate, only when it is probable that future economic benefits associated with the item will flow to theGroup and the cost of the item can be measured reliably. The carrying amount of the replaced part isderecognised. All other repairs and maintenance are charged to the income statement during the financial yearin which they are incurred.

Freehold land is not depreciated as it has an infinite life. Other property and equipment are depreciated on thestraight line basis to write-off the cost of the assets or their revalued amounts, to their residual values over theirestimated useful lives, summarised as follows:-

Buildings on freehold land 50 yearsLeasehold buildings Over the remaining lease period Renovation and leasehold premises 5 to 10 years or the period of the lease, whichever is greaterFurniture and equipment 3 to 10 yearsComputer equipment and software 4 to 10 yearsMotor vehicles 5 years

Residual value and useful lives of assets are reviewed, and adjusted if appropriate, at each balance sheet date.



9 PROPERTY AND EQUIPMENT AND DEPRECIATION (continued)

At each balance sheet date, the Group assesses whether there is any indication of impairment. If suchindications exist, an analysis is performed to assess whether the carrying amount of the asset is fullyrecoverable. A write-down is made if the carrying amount exceeds the recoverable amount. Any subsequentincrease in the recoverable amount is recognised in the income statement.

Gains and losses on disposal are determined by comparing proceeds with carrying amount and are recognisedin the income statement.

10 LEASES

Accounting by lessee:-

(i) Finance leases

Leases of property and equipment where the Group assumes substantially all the benefits and risks ofownership are classified as finance leases.

Finance leases are capitalised at the inception of the lease at the lower of the fair value of the leasedproperty and the present value of the minimum lease payments. Each lease payment is allocated betweenthe liability and finance charges so as to achieve a periodic constant rate on the finance balanceoutstanding. The corresponding rental obligations, net of finance charges, are included in borrowings. Theinterest element of the finance charge is charged to the income statement over the lease period so as toproduce a constant periodic rate of interest on the remaining balance of the liability for each period.

Property and equipment acquired under finance leases are depreciated over the shorter of the estimateduseful life of the asset and the lease term.

(ii) Operating leases

Leases of assets where a significant portion of the risks and rewards of ownership are retained by thelessor are classified as operating leases. Payments made under operating leases (net of any incentivesreceived from the lessor) are charged to the income statement on the straight line basis over the leaseperiod.

The land and buildings elements of a leasehold land and buildings are considered separately for thepurpose of lease classification. The minimum lease payments (including any lump-sum upfront payments)are allocated between the land and buildings elements in proportion to the relative fair values of theleasehold interests in the land element and buildings element of the lease at the inception of the lease.

Leasehold land that normally has indefinite economic life and title is not expected to pass to the lessee bythe end of the lease term is treated as an operating lease. The minimum lease payments of leasehold landis accounted as prepaid lease rentals classified in 'other assets' and are amortised on straight line basisover the lease term. The Group's leasehold lands are amortised over the period of the respective leasesthat range from 60 to 999 years.

11 FORECLOSED PROPERTIES

Foreclosed properties are stated at the lower of cost and net realisable value.



12 LAND HELD FOR SALE

Land held for sale is stated at cost less accumulated impairment losses. Where an indication of impairmentexists, an analysis is performed to assess whether the carrying amount of the land is fully recoverable. A write-down is made if the carrying amount exceeds the recoverable amount. Any subsequent increase in recoverableamount is recognised in the income statement.

13 BILLS AND ACCEPTANCES PAYABLE

Bills and acceptances payable represent bills and acceptances rediscounted and outstanding in the market.

14 EMPLOYEE BENEFITS

Short-term employee benefits

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

Defined contribution plan

The defined contribution plan is a pension plan under which the Group pays fixed contributions to the NationalPension Scheme, the Employees' Provident Fund ("EPF") and will have no legal or constructive obligations topay further contributions if the fund does not hold sufficient assets to pay all employees benefits relating toemployee service in the current and prior periods.

The Group's contributions to the defined contribution plan are charged to the income statement in the periodto which they relate. Once the contributions have been paid, the Group has no further payment obligations.

Termination benefits

Termination benefits are payable whenever an employee's employment is terminated before the normalretirement date or whenever an employee accepts voluntary redundancy in exchange for these benefits. TheGroup recognises termination benefits when it is demonstrably committed to either terminate the employmentof current employees according to a detailed formal plan without any possibility of withdrawal or to providetermination benefits as a result of an offer made to encourage voluntary redundancy.

Share-based compensation

The Group operates an equity-settled, share-based compensation plan for the employees of the Group. Thefair value of the employee services received in exchange for the grant of the share options is recognised as anexpense in the income statement over the vesting periods of the grant with a corresponding increase in equity.

The total amount to be expensed over the vesting period is determined by reference to the fair value of theshare options granted, excluding the impact of any non-market vesting conditions (for example, profitability andsales growth targets). Non-market vesting conditions are included in assumptions about the number of optionsthat are expected to vest. At each balance sheet date, the Group revises its estimates of the number of shareoptions that are expected to vest. It recognises the impact of the revision of original estimates, if any, in theincome statement, with a corresponding adjustment to equity.

The proceeds received net of any directly attributable transaction costs are credited to share capital (nominalvalue) and share premium when the options are exercised.



15 OTHER PROVISIONS

Provisions are recognised by the Group when all of the following conditions have been met:

(i) the Group has a present legal or constructive obligation as a result of past events;(ii) it is probable that an outflow of resources to settle the obligation will be required; and(iii) a reliable estimate of the amount of obligation can be made.

16 ZAKAT

This represents business zakat payable by the Group to comply with the principles of Syariah and as approvedby the Syariah Supervisory Council. The Group only pays zakat on its business and does not pay zakat onbehalf of depositors or shareholders. Zakat provision is calculated based on 2.5% of the net assets method.

17 DIVIDENDS

Dividends on ordinary shares are recognised as liabilities when shareholders' right to receive the dividends isestablished.

18 COMPOUND FINANCIAL INSTRUMENTS

Compound financial instruments contain both liability and equity elements. The Company's compound financialinstruments comprise of Warrants 2000/2010. The Group has taken advantage of the exemption provided byFRS 132 "Financial Instruments: Disclosure and Presentation" not to reclassify compound instruments issuedby the Group prior to 31 December 2006 into liability and equity components. These instruments continued tobe classified according to their legal form.

19 INCOME RECOGNITION

Interest/financing income

Interest income and financing income are recognised on an accrual basis. Income on hire-purchase and leasereceivables is recognised using the "sum-of-digits" method, so as to produce a constant periodic rate of interest.

Islamic financing income is recognised on an accrual basis in accordance with the Syariah principles andGuidelines on Financial Reporting for Licensed Islamic Banks ("BNM/GP8-i"). Al-Ijarah Thumma Al-Bai'("AITAB") financing income recognised using the "sum-of-digit" method over the lease terms, whilst Al-Bai'Bithaman Ajil ("BBA"), Al-Murabahah, Al-Istisnaa and Bai' Inah financing income is recognised on a monthlybasis over the period of the financing contracts, based on an agreed profit at the inception of such contracts.

Customers' accounts are generally classified as non-performing where repayments are in arrears for three (3)months or more from the first day of default for loans and financing and overdrafts, and after three months ormore from maturity date for trade bills, bankers' acceptances and trust receipts and other instruments of similarnature.

Interest accrued and recognised as income prior to the date the loans are classified as non-performing shallbe reversed out of income by debiting the interest income in the income statement and crediting the accruedinterest receivable account in the balance sheet. Thereafter, interest earned on non-performing loans shall berecognised as income on a cash basis.

Interest income from securities portfolio is recognised on an accrual basis using the effective interest method. Theinterest income includes coupons earned and accrued discount and amortisation of premium on these securities.



19 INCOME RECOGNITION (continued)

Fees and other income

Loan arrangement fees and commissions are recognised as income when all conditions precedent are fulfilled.

Portfolio management fees, commitment fees, guarantee fees, agency fees and commissions are recognisedas income based on time apportionment.

Corporate advisory fees, project feasibility study, management and participation fees, acceptance andunderwriting commissions are recognised as income where progress payments are agreed, by reference to thestage of completion.

For stock-broking business, brokerage income is recognised on execution of contract. Interest income andother fee income are recognised on an accrual basis. Where debtors are classified as doubtful or bad, interestincome is suspended until it is realised on a cash basis as laid down in the Rules of the Bursa MalaysiaSecurities Berhad.

For fund and unit trusts management, initial service charge and management fee are recognised as income onan accrual basis at the rates stated in the prospectus of the respective unit trust funds. Distribution income fromthe unit trust funds is recognised on the ex-distribution date.

Dividends from securities portfolio are recognised when received.

Dividends from subsidiaries and associates are included in the income statement when the shareholders' rightto receive payment is established.

Fees and other profits from Islamic banking business are recognised on an accrual basis in accordance withthe principles of Syariah.

20 INTEREST, FINANCING AND RELATED EXPENSES RECOGNITION

Interest expense and attributable profit on deposits and borrowings are expensed as incurred.

Dealers' handling fees on hire purchase are charged to income statement in the period when they are incurredin accordance with BNM's circular dated 8 August 2003.

21 ALLOWANCE FOR BAD AND DOUBTFUL DEBTS AND FINANCING

Loans, advances and financing are recognised when cash is advanced to the borrowers.

Specific allowances are made for doubtful debts and financing based on management's evaluation of thecollectibility and the status of the loans, advances and financing and their related underlying securities.

A general allowance based on a percentage of the loans, advances and financing portfolio is also made tocover possible losses which are not specifically identified.

An uncollectible loan, advances and financing or portion of a loan, advance and financing classified as bad iswritten-off after taking into consideration the realisable value of collateral, if any, when in the judgement of themanagement, there is no prospect of recovery.



21 ALLOWANCE FOR BAD AND DOUBTFUL DEBTS AND FINANCING (continued)

The policy on allowance for non-performing debts and financing is more stringent than those laid down inrevised Guidelines on the Classification of Non-Performing Loans and Provision for Substandard, Bad andDoubtful Debts ("revised BNM/GP3").

In addition, BNM has granted indulgence to the Group from complying with requirement on the measurementof impaired credit facilities at their estimated recoverable amount using present value of estimated future cashflows discounted at original effective interest rate under the revised BNM/GP3.

22 CURRENCY TRANSLATION

Functional and presentation currency

Items included in the financial statements of each of the Group's entities are measured using the currency ofthe primary economic environment in which the entity operates (the "functional currency"). The consolidatedfinancial statements are presented in Ringgit Malaysia, which is the Group's functional and presentationcurrency.

Foreign currency transactions and balances

Foreign currency transactions are translated into the functional currency using the exchanges rate prevailingat the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of suchtransactions and from the translation at year-end exchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised in the income statement, except when deferred in equity asqualifying cash flow hedges and qualifying net investment hedges.

Changes in the fair value of monetary securities denominated in foreign currency classified as available-for-sale are analysed between translation differences resulting from changes in the amortised cost of the securityand other changes in the carrying amount of the security. Translation differences related to changes in theamortised cost are recognised in income, and other changes in the carrying amount are recognised in equity.

Translation differences on non-monetary financial assets and liabilities are reported as part of the fair valuegain or loss. Translation differences on non-monetary financial assets are recognised in income as part of fairvalue gain or loss. Translation differences on non-monetary financial assets such as equities classified asavailable-for-sale are included in the fair value reserve in equity.

23 DERIVATIVE FINANCIAL INSTRUMENTS

Derivatives are initially recognised at fair values on the date on which derivative contracts are entered into andare subsequently re-measured at their fair values. Fair values are obtained from quoted market prices in activemarkets, including recent market transactions, and valuation techniques, including discounted cash flowmodels and option pricing models, as appropriate. All derivatives are classified as assets when fair values arepositive and as liabilities when fair values are negative.

The best evidence of fair value of a derivative at initial recognition is the transaction price (i.e. the fair value ofthe consideration given or received) unless fair value of the instrument is evidenced by comparison with otherobservable current market transactions in the same instrument (i.e. without modification or repackaging) orbased on a valuation technique whose variables include only data from observable markets. When suchevidence exists, the Group recognises fair value gains or loss immediately.




23 DERIVATIVE FINANCIAL INSTRUMENTS (continued)

The method of recognising the resulting fair value gain or loss depends on whether the derivative is designedas a hedging instrument, and if so, the nature of the item being hedged. The Group designated certainderivatives as either: (1) hedges of the fair value of recognised assets or liabilities or firm commitments (fairvalue hedge); or (2) hedges of highly probable future cash flows attributable to a recognised asset or liability,or a forecasted transaction (cash flow hedge). Hedge accounting is used for designated derivatives providedcertain criteria are met.

The Group documents, at the inception of the transaction, the relationship between hedging instruments andhedged items, as well as its risk management objective and strategy for undertaking various hedgetransactions. The Group also documents its assessments, both at hedge inception and on an on-going basis,of whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fairvalues or cash flows of hedged items.

a) Fair value hedge

Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recordedin the income statement, together with any changes in the fair value of the hedged assets or liabilities thatare attributable to the hedged risk.

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount ofa hedged item for which the effective interest method is used, is amortised to income statement over theperiod to maturity. The adjustment to the carrying amount of a hedged equity security remains in retainedprofits until disposal of the equity security.

b) Cash flow hedge

The effective portion of changes in the fair value of derivatives that are designated and qualify as cashflow hedges are recognised in equity. The gain and loss relating to the ineffective portion is recognisedimmediately in the income statement.

Amounts accumulated in equity are recycled to the income statement in the periods in which the hedgeditem will affect income statement (for example, when the forecast sale that is hedged take place).

If the hedge no longer meets the criteria for hedge accounting, the adjustment to the carrying amount ofa hedged item for which the effective interest method is used is amortised to income statement over theperiod to maturity. The adjustment to the carrying amount of a hedged equity security remains in retainedearnings until the disposal of the equity security.

c) Derivatives that do not qualify for hedge accounting

Certain derivative instruments do not qualify for hedge accounting. Changes in the fair value of anyderivative instrument that does not qualify for hedge accounting are recognised immediately in the incomestatement.

Gains and losses on interest rate swaps, futures, forward and option contracts that qualify as hedges aredeferred and amortised over the life of hedged assets or liabilities as adjustments to interest income or interestexpense. Gains and losses on interest rate swaps, futures, forward and option contracts that do not qualify ashedges are recognised in the current financial year using the mark-to-market method and are included in theincome statement.



24 CONTINGENT LIABILITIES AND CONTINGENT ASSETS

The Group does not recognise a contingent liability but discloses its existence in the financial statements. Acontingent liability is a possible obligation that arises from past events whose existence will be confirmed bythe occurrence or non-occurrence of one or more uncertain future events beyond the control of the Group ora present obligation that is not recognised because it is not probable that an outflow of resources will berequired to settle the obligation. A contingent liability also arises in the extremely rare case where there is aliability that cannot be recognised because it cannot be measured reliably.

A contingent asset is a possible asset that arises from past events whose existence will be confirmed by theoccurrence or non-occurrence of one or more uncertain future events beyond the control of the Group. TheGroup does not recognise contingent assets but discloses its existence where inflows of economic benefits areprobable, but not virtually certain.

25 FINANCIAL LIABILITIES

All non-trading financial liabilities are initially recognised at fair value, being the consideration received attransaction date.

26 SEGMENT REPORTING

Segment reporting is presented for enhanced assessment of the Group's risks and returns. A businesssegment is a group of assets and operations engaged in providing products or services that are subject to riskand returns that are different from those of other business segments.

Segment revenue, expense, assets and liabilities are those amounts resulting from the operating activities ofa segment that are directly attributable to the segment and the relevant portion that can be allocated on areasonable basis to the segment. Segment revenue, expense, assets and liabilities are determined beforeintra-group balances and intra-group transactions are eliminated as part of the consolidation process, exceptto the extent that such intra-group balances and transactions are between group enterprises within a singlesegment. Inter-segment pricing is based on similar terms as those available to other external parties.

27 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Estimates and judgements are continually evaluated by the directors and are based on historical experience andother factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions

The Group makes estimates and assumptions that affect the reported amounts of assets and liabilities withinthe next financial year. Estimates and judgements are continually evaluated and are based on historicalexperience and other factors, including expectations of future events that are believed to be reasonable underthe circumstances.


27 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued)

Critical accounting estimates and assumptions (continued)

(a) Allowance for losses on loans, advances and financing

The Group makes allowance for losses based on assessment of recoverability. Whilst management'sjudgement is guided by the relevant BNM Guidelines, judgment is made about the future and other keyfactors in respect of the recovery of loans, advances and financing. Among the factors considered are theGroup's aggregate exposure to the borrower, the net realisable value of the underlying collateral value, theviability of the customer's business model and the capacity to generate sufficient cash flow to service debtobligations and the aggregate amount and ranking of all other creditor claims.

(b) Estimated impairment of goodwill

The Group performs an impairment review on an annual basis to ensure that the carrying value of thegoodwill does not exceed its recoverable amounts from cash-generating units to which the goodwill isallocated. The recoverable amount represents the present value of the estimated future cash flowsexpected to arise from continuing operations. Therefore, in arriving at the recoverable amount,management exercise judgement in estimating the future cash flows, growth rate and discount rate.



1 GENERAL INFORMATION

The principal activity of the Company is investment holding. The principal activities of the Company'ssubsidiaries are commercial banking, hire purchase business, Islamic banking business, investment bankingand stock-broking, money-broking, fund and unit trusts management. The principal activity of the jointlycontrolled entities are underwriting of life insurance business and property development while the associate isprincipally engaged in general insurance business.

The number of employees in the Group and the Company as at 31 December 2008 was 3,478 (2007: 3,644)and 21 (2007: 22) employees respectively.

The Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on theMain Board of the Bursa Malaysia Securities Berhad.

2 CASH AND SHORT-TERM FUNDS

GROUP COMPANY2008 2007 2008 2007

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

Cash and bank balances with banks andother financial institutions 146,974 170,761 30 45

Money at call and deposits placementsmaturing within one month 6,704,628 8,215,352 34,263 238,168

6,851,602 8,386,113 34,293 238,213

Included in cash and short-term funds of the Group is RM39,059,000 (2007: RM47,345,000) related toaccounts maintained for clients and remisiers.

3 DEPOSITS AND PLACEMENTS WITH BANKS AND OTHER FINANCIAL INSTITUTIONS

GROUP COMPANY2008 2007 2008 2007

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

Licensed banks – 721,548 295,121 230,000

Included in deposits placed with banks and other financial institutions for the previous financial year was RM Nil (2007: RM1,500,000) pledged with a licensed bank as security for an overdraft facility granted to thestock-broking subsidiary company.

Notes to the Financial Statements31 December 2008


4 SECURITIES HELD-FOR-TRADING

GROUP2008 2007

At fair value RM'000 RM'000

Malaysian Government Securities – 39,303Negotiable Instruments of Deposit 70,000 49,885Quoted securities- Shares 433 1,721- Warrants 57 383

Unquoted securities- Private Debt Securities 333,323 189,034

Total securities held-for-trading 403,813 280,326

5 SECURITIES AVAILABLE-FOR-SALE

GROUP2008 2007

At fair value RM'000 RM'000

Malaysian Government Securities 821,181 216,750Malaysian Government Treasury Bills 364,774 284,194Malaysian Government Investment Issuance 211,689 161,071Cagamas Bonds 461,298 454,211Khazanah Bonds 24,078 230,535Bankers' Acceptance and Islamic Acceptance Bills 320,824 495,009Bank Negara Malaysia Notes 897,736 1,070,385Negotiable Instruments of Deposit and Islamic Debt Certificate 639,702 1,139,190

3,741,282 4,051,345Quoted securities- Shares 83,646 185,315- Private Debt Securities 2,867 3,474- Irredeemable Convertible Unsecured Loan Stock 4,031 4,031

Unquoted securities- Shares 50 45- Private Debt Securities 2,198,234 1,768,999

6,030,110 6,013,209Allowance for impairment of securities (133,502) (144,744)

Total securities available-for-sale 5,896,608 5,868,465

Included in securities available-for-sale is the following:-

Amount pledged in accordance with the Trust Deed of the subordinated term loans as disclosed in Note 24 552,000 550,000

Notes to the Financial Statements (continued)31 December 2008


6 SECURITIES HELD-TO-MATURITY

GROUP2008 2007

At amortised cost RM'000 RM'000

Quoted securities- Private Debt Securities 38,123 38,123

Unquoted securities- Private Debt Securities 615,333 476,446

653,456 514,569At cost

Unquoted securities- Shares 57,240 56,384- Private Debt Securities 16 16

710,712 570,969Allowance for impairment of securities (108,047) (127,662)

Total securities held-to-maturity 602,665 443,307

7 LOANS, ADVANCES AND FINANCING

GROUP2008 2007

BY TYPE RM'000 RM'000

Overdrafts 2,059,761 1,880,246Term loans/financing- Housing loans/financing 4,620,336 4,063,704- Syndicated term loans/financing 1,354,582 766,835- Hire purchase receivables 7,253,275 6,982,975- Other term loans/financing 5,268,884 4,687,639Bills receivables 57,879 95,596Trust receipts 299,477 452,453Claims on customers under acceptance credits 583,103 731,869Staff loans/financing (of which RM Nil to directors) 164,295 161,437Credit/charge cards 108,273 115,291Revolving credit 2,540,205 1,460,173Margin financing 32,728 40,408Factoring 12,691 17,102

24,355,489 21,455,728Less: Unearned interest and income (3,568,311) (2,596,133)

Gross loans, advances and financing 20,787,178 18,859,595Less: Allowance for bad and doubtful debts and financing

- General (306,033) (274,585)- Specific (553,468) (1,307,371)

Total net loans, advances and financing 19,927,677 17,277,639

Included in term loans are housing loans amounting to RM11,088,000 (2007: RM116,284,000) and hirepurchase portfolio amounting to RM Nil (2007: RM245,226,000) sold to Cagamas Berhad with recourse.



7 LOANS, ADVANCES AND FINANCING (continued)

GROUP2008 2007

BY TYPE OF CUSTOMER RM'000 RM'000

Domestic non-banking institutions- Stock-broking companies 194 410- Others 939,819 157,121Domestic business enterprises- Small medium enterprise 6,271,165 5,354,466- Others 3,711,190 3,867,732Government and statutory bodies 91,130 53,499Individuals 9,451,464 9,136,558Other domestic entities 54,841 100,738Foreign entities 267,375 189,071

20,787,178 18,859,595

BY INTEREST/PROFIT RATE SENSITIVITY

Fixed rate- Housing loans/financing 451,498 478,049- Hire purchase receivables 6,118,148 5,911,029- Other fixed rate loans/financing 3,000,371 2,238,251- Margin financing 32,728 40,408Variable rate- BLR plus 8,328,511 9,050,970- Cost plus 2,855,922 1,140,888

20,787,178 18,859,595

BY ECONOMIC PURPOSE

Construction 462,359 580,620Purchase of landed property of which- Residential 3,381,681 3,262,510- Non-residential 1,456,315 962,186Purchase of securities 365,285 540,788Purchase of transport vehicles 6,163,738 5,948,323Fixed assets other than land and building 114,429 188,402Personal use 764,574 648,834Credit card 108,273 115,292Consumer durable 1,841 4,461Merger and acquisition 29,522 31,685Working capital 7,282,135 3,641,865Others 657,026 2,934,629

20,787,178 18,859,595




GROUP2008 2007

BY SECTOR RM'000 RM'000

Primary agriculture 608,588 257,245Mining and quarrying 170,103 74,135Manufacturing 1,536,451 1,736,814Electricity, gas and water supply 10,754 18,539Construction 2,017,580 1,618,135Real estate 1,161,005 780,705Wholesale and retail trade and restaurants and hotels 1,238,710 1,463,549Transport, storage and communication 895,997 663,413Finance, insurance and business services 2,848,131 1,930,305Education, health and others 568,687 784,044Household 9,537,023 9,204,306Community, social and personal services – 59,927Others 194,149 268,478

20,787,178 18,859,595

NON-PERFORMING LOANS/FINANCING

Movements in non-performing loans, advances and financing

Balance at beginning of financial year 2,691,432 3,089,706Classified as non-performing during the financial year 690,130 811,105Reclassified as performing during the financial year (478,188) (633,024)Loans/financing converted to securities – (25,723)Amount recovered (645,324) (503,257)Amount written-off (1,057,227) (47,497)Reclassification arising from the merger between AFFIN Securities

Sdn Bhd and AFFIN Investment Bank Berhad – 122

Balance at end of financial year 1,200,823 2,691,432Less: Specific allowance (553,468) (1,307,371)

Net non-performing loans, advances and financing ("NPL") 647,355 1,384,061

Net NPL as a % of gross loans, advances and financing less specific allowance 3.20% 7.89%




GROUP2008 2007

NON-PERFORMING LOANS/FINANCING (continued) RM'000 RM'000

Non-performing loans, advances and financing by economic purpose

Construction 62,132 43,633Purchase of landed property of which- Residential 405,854 546,544- Non-residential 73,948 138,123Purchase of securities 6,377 125,436Purchase of transport vehicles 82,306 269,636Fixed assets other than land and building 27,492 21,726Personal use 24,214 42,911Credit card 3,804 3,236Consumer durable 96 768Working capital 395,006 372,631Others 119,594 1,126,788

1,200,823 2,691,432

Non-performing loans, advances and financing by sector

Primary agriculture 6,428 13,421Mining and quarrying 4,753 4,792Manufacturing 206,992 475,787Electricity, gas and water supply 85 1,093Construction 125,761 384,935Real estate 93,763 90,935Wholesale and retail trade and restaurants and hotels 55,447 305,069Transport, storage and communication 46,539 103,193Finance, insurance and business services 52,874 82,904Education, health and others 37,964 254,762Household 540,930 934,363Others 29,287 40,178

1,200,823 2,691,432




GROUP2008 2007

Movement in allowance for bad and doubtful debts and financing RM'000 RM'000

General allowance

Balance at beginning of financial year 274,585 267,970Allowance made during the financial year 31,738 6,586Amount written-back during the financial year (290) –Reclassification arising from the merger between AFFIN Securities Sdn Bhd

and AFFIN Investment Bank Berhad – 29

Balance at end of financial year 306,033 274,585

As % of gross loans, advances and financing less specific allowance 1.51% 1.56%

Specific allowance

Balance at beginning of financial year 1,307,371 965,489Allowance made during the financial year 417,019 529,604Transferred to allowance for impairment of securities – (10,012)Amount written-off (1,055,027) (46,279)Amount written-back in respect of recoveries (115,895) (131,553)Reclassification arising from the merger between AFFIN Securities Sdn Bhd

and AFFIN Investment Bank Berhad – 122

Balance at end of financial year 553,468 1,307,371

8 STATUTORY DEPOSITS WITH BANK NEGARA MALAYSIA

The non-interest bearing statutory deposits are maintained with Bank Negara Malaysia in compliance withSection 37(1)(c) of the Central Bank of Malaysia Act, 1958 (Revised-1994), the amounts of which aredetermined as a set percentages of total eligible liabilities.

9 INVESTMENT IN SUBSIDIARIES

COMPANY2008 2007

RM'000 RM'000

Unquoted shares at cost 3,813,401 3,813,401Allowance for impairment losses (5,784) (5,784)

3,807,617 3,807,617



9 INVESTMENT IN SUBSIDIARIES (continued)

The subsidiaries, all of which are incorporated in Malaysia, are as follows:-

Issued and Effectivepaid up percentage of

Name Principal activities share capital equity heldRM'000 2008 2007

% %

(1) AFFIN Bank Berhad Provision of commercial banking 1,439,285 100 100and hire purchase services

- AFFIN Islamic Bank Bhd Provision of Islamic banking 160,000 100 100services

- ABB Trustee Berhad # Trustee management services 500 100 100

- PAB Properties Sdn Bhd Property management services 8,000 100 100

- ABB Nominee (Tempatan) Share nominee services 40 100 100Sdn Bhd

- ABB Nominee (Asing) Share nominee services @ 100 100Sdn Bhd

- AFFIN Factors Sdn Bhd Factoring credit facilities 10,000 100 100

- PAB Property Dormant 250 100 100Development Sdn Bhd

- PAB Property Management Dormant 30 100 100Services Sdn Bhd

- ABB Venture Capital Dormant 100 100 100Sdn Bhd

- AFFIN Futures Sdn Bhd Dormant 13,000 100 100

- ABB IT & Services Sdn Bhd Dormant 2,000 100 100

- BSNCB Nominees Dormant 10 100 100(Tempatan) Sdn Bhd

- BSNC Nominees Dormant 10 100 100(Tempatan) Sdn Bhd

- BSN Merchant Nominees Dormant 10 100 100(Tempatan) Sdn Bhd

- BSN Merchant Nominees Dormant 10 100 100(Asing) Sdn Bhd

- AFFIN Recoveries Berhad Dormant 125,000 100 100

- ABB Asset Management Dormant @ 100 100(M) Berhad

- AFFIN-ACF Nominees Dormant 25 100 100(Tempatan) Sdn Bhd



9 INVESTMENT IN SUBSIDIARIES (continued)

The subsidiaries, all of which are incorporated in Malaysia, are as follows:- (continued)

Issued and Effectivepaid up percentage of


% %

(2) AFFIN Investment Bank Provision of investment 222,246 100 100Berhad banking services

- AFFIN Fund Management Asset management and 12,000 100 100Berhad management of unit trust

- Merchant Nominees Nominees services 10 100 100(Tempatan) Sdn Bhd

- AFFIN Nominees (Tempatan) Nominees services @ 100 100Sdn Bhd

- AFFIN Nominees (Asing) Nominees services @ 100 100Sdn Bhd

- Classic Precision Sdn Bhd Investment holding 10 67 67

- Merchant Nominees (Asing) Dormant @ 100 100Sdn Bhd

- AFFIN Trust Management Dormant 5,000 100 100Berhad

(3) AFFIN-ADB Sdn Bhd Investment holding 70,000 100 100

(4) AFFIN Moneybrokers Sdn Bhd Money-broking 1,000 100 100

(5) AFFIN Capital Sdn Bhd Investment holding 100,000 100 100

- AFFIN Securities Sdn Bhd In members' voluntary winding-up – 100 100

(6) AFFIN-ACF Holdings Sdn Bhd Investment holding 338,382 100 100

- AFFIN-ACF Capital Sdn Bhd Dormant 498,499 100 100

- AFFIN Leasing Sdn Bhd In members' voluntary winding-up – 100 100

- AFFIN.Com Sdn Bhd In members' voluntary winding-up – 100 100

- AFFIN-ACF Management In members' voluntary winding-up – 100 100Services Sdn Bhd

# 80% held by directors of AFFIN Bank Berhad, in trust for AFFIN Bank Berhad@ Subsidiaries with issued and paid up share capital of RM2 each



10 INVESTMENT IN JOINTLY CONTROLLED ENTITIES

GROUP COMPANY2008 2007 2008 2007

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

Unquoted shares at cost 121,370 111,180 120,870 111,180Group's share of post acquisition retained losses (25,340) (13,850) – –

96,030 97,330 120,870 111,180

GROUP2008 2007

RM'000 RM'000

Group's share of net assets 96,030 97,330

The summarised financial information of jointly controlled entities are as follows:-

Revenue 54,230 41,425Loss after tax (23,021) (18,748)Total assets 427,719 447,774Total liabilities 239,410 256,436

The jointly controlled entities were incorporated in Malaysia and the details are as follows:-

Issued andpaid up Percentage of


% %

AXA AFFIN Life Insurance Berhad* Underwriting of life insurance 237,000 51 51business

AFFIN-I Goodyear Sdn Bhd# Property development 1,000 50 –

* Shareholding of AXA AFFIN Life Insurance Berhad held directly by the Company.# Shareholding of AFFIN-I Goodyear Sdn Bhd held directly by AFFIN Islamic Bank Berhad. As at year end,

AFFIN-I Goodyear Sdn Bhd has yet to commence operations.



11 INVESTMENT IN ASSOCIATE

GROUP COMPANY2008 2007 2008 2007

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

Unquoted shares at cost 10,597 10,597 10,597 10,597Group's share of post acquisition retained profits 103,064 99,379 – –

113,661 109,976 10,597 10,597

GROUP2008 2007

RM'000 RM'000

Group's share of net assets 114,187 110,502Discount on acquisition (526) (526)

113,661 109,976

The summarised financial information of associate are as follows:-

Revenue 346,064 292,624Profit after tax 21,264 39,614Total assets 624,203 550,055Total liabilities 325,311 265,266Capital commitment for property and equipment 2,500 1,949

The associate was incorporated in Malaysia and the details are as follows:-

Issued andpaid up Percentage of


% %

AXA AFFIN General Insurance Underwriting of general 100,000 40 40 Berhad* insurance business

* Shareholding held directly by the Company



12 TRADE DEBTORS

GROUP2008 2007

RM'000 RM'000

Management fees receivable on fund management 1,289 1,639Amount due from stock-broking clients (a) 46,399 129,335Amount due from Bursa Securities Clearing Sdn Bhd – 51,254

47,688 182,228Allowance for bad and doubtful accounts (b) (4,741) (4,947)

- specific allowance (76) (423)- general allowance (2,866) (1,999)

Interest-in-suspense 40,005 174,859

(a) Included in the amount due from stock-broking clients are following outstanding balances which have been classified as non-performing

Doubtful accounts 3 16Bad accounts 4,741 4,931

4,744 4,947

(b) Allowance for bad and doubtful debts and interest-in-suspensein respect of stock-broking business

Specific allowanceAt 1 January 4,947 5,481Allowance made during the financial year 793 220Amounts recovered (999) (754)

At 31 December 4,741 4,947

General allowanceAt 1 January 423 253Allowance made during the financial year 75 170Written-back during the financial year (422) –

At 31 December 76 423

Interest-in-suspenseAt 1 January 1,999 1,518Allowance made during the financial year 1,018 514Amounts recovered (151) (33)

At 31 December 2,866 1,999



13 OTHER ASSETS

GROUP COMPANY2008 2007 2008 2007

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

Clearing accounts 173,371 213,757 – –Accrued income/interest receivable 74,173 66,608 396 682Premium receivable – 1,431 – –Prepaid lease payments (a) 17,347 17,690 – –Foreclosed properties (b) 187,422 74,347 – –Derivative assets (c) 60,276 44,148 – –Other debtors, deposits and prepayments (d) 110,472 52,063 349 519Amount due from associate (e) 2,961 – 2,961 –Amount due from subsidiaries (f) – – 598 –Amount due from a jointly controlled entity (f) 750 – – –

626,772 470,044 4,304 1,201

GROUP2008 2007

RM'000 RM'000

(a) Prepaid lease payments

Cost

At 1 January 20,805 21,058Reclassification from property and equipment (Note 14) 1,440 –Disposals (2,078) (253)

At 31 December 20,167 20,805

Accumulated amortisation

At 1 January 3,115 2,869Amortisation during the year 465 271Disposals (760) (25)

At 31 December 2,820 3,115

Net book value

At 31 December 17,347 17,690



13 OTHER ASSETS (continued)

GROUP2008 2007

RM'000 RM'000

(b) Foreclosed properties

As at beginning of the financial year 74,347 85,068Amount arising during the financial year 134,248 5,923Disposals during the financial year (20,615) (4,808)

187,980 86,183Provision for dimunition in value of foreclosed properties (558) (11,836)

As at end of the financial year 187,422 74,347

(c) Derivative assets

At fair value:-

Foreign exchange derivatives- Currency forwards 5,936 3,112- Currency options – 318

Interest rate derivatives- Interest rate swap 22,407 39- Currency swaps 31,933 40,505- Exchange-traded interest rate futures – 174

60,276 44,148

(d) Other debtors, deposits and prepayments

GROUP COMPANY2008 2007 2008 2007

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

Other debtors, deposits and prepayments 119,497 61,854 349 519Less:- Allowance for bad and doubtful debts (9,025) (9,791) – –

110,472 52,063 349 519

(e) Amount due from associate

Included in the amount due from associate is an interim dividend of RM2,960,000 receivable from AXAAFFIN General Insurance Berhad for the financial year ended 31 December 2008. The said interimdividend has been paid to the Company on 9 January 2009.

(f) Amount due from subsidiaries and amount due from a jointly controlled entity

The amount due from subsidiaries and amount due from a jointly controlled entity are unsecured, interest-free and has no fixed term of repayment.

Included in the amount due from subsidiaries is an interim dividend of RM592,000 receivable from asubsidiary for the financial year ended 31 December 2008. The said interim dividend was received by theCompany on 9 January 2009.



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14 PROPERTY AND EQUIPMENT (continued)

ComputerFurniture equipment

and and MotorRenovations equipment software vehicles Total

COMPANY RM'000 RM'000 RM'000 RM'000 RM'000

2008

Cost

At 1 January 536 522 175 404 1,637- Additions 26 30 36 – 92- Disposals – (3) (9) (5) (17)

At 31 December 562 549 202 399 1,712

Accumulated depreciation

At 1 January 81 116 86 109 392- Charge for the financial year 55 59 33 80 227- Disposals – (3) (8) – (11)

At 31 December 136 172 111 189 608

Net book value

At 31 December 426 377 91 210 1,104

2007

Cost

At 1 January 540 525 147 303 1,515- Additions – 27 28 154 209- Disposals – (25) – (53) (78)- Write-off (4) (5) – – (9)

At 31 December 536 522 175 404 1,637

Accumulated depreciation

At 1 January 28 68 57 105 258- Charge for the financial year 53 57 29 57 196- Disposals – (9) – (53) (62)

At 31 December 81 116 86 109 392

Net book value

At 31 December 455 406 89 295 1,245



15 LAND HELD FOR SALE

GROUP2008 2007

RM'000 RM'000

Freehold land 87,412 92,835

Included in the land held for sale are the following:

(i) Freehold land of carrying value RM72,412,000 (2007: RM92,835,000) received by a subsidiary, namelyAFFIN Investment Bank Berhad ("AIBB") and other lenders as part settlement of the financial obligationof a borrower under a syndicated loan which had defaulted, in accordance with the terms of the settlementagreement. The land was subsequently transferred to Classic Precision Sdn Bhd ("Classic Precision"), a66.89% owned subsidiary of AIBB, which will hold the land for sale. The consideration for the land isreflected as 'Amount due to other shareholders of a subsidiary’ in Note 21 to the financial statements.

(ii) Freehold land of carrying value RM15,000,000 (2007: RM Nil) which was held for an intended sale toAFFIN-I Goodyear Sdn Bhd, a jointly controlled entity established by AFFIN Islamic Bank and Jurus PositifSdn Bhd during the financial year. The sale and purchase agreement with AFFIN-I Goodyear Sdn Bhd isexpected to be executed and completed in 2009.

16 INTANGIBLE ASSETS

ComputerGoodwill Software Total

GROUP RM'000 RM'000 RM'000

2008

Cost

At 1 January 989,741 89,770 1,079,511Reclassification from property and equipment (Note 14) – 11,633 11,633Additions – 7,554 7,554Write-off – (680) (680)

At 31 December 989,741 108,277 1,098,018

Accumulated amortisation and impairment losses

At 1 January – 42,582 42,582Charge for the financial year – 18,397 18,397Write-off – (663) (663)

At 31 December – 60,316 60,316

Net book value

At 31 December 989,741 47,961 1,037,702



16 INTANGIBLE ASSETS (continued)

ComputerGoodwill Software Total

GROUP RM'000 RM'000 RM'000

2007

Cost

At 1 January 989,741 120,118 1,109,859Reclassification from property and equipment (Note 14) – 3,611 3,611Additions – 2,314 2,314Write-off – (36,273) (36,273)

At 31 December 989,741 89,770 1,079,511

Accumulated amortisation and impairment losses

At 1 January – 61,711 61,711Reclassification from property and equipment (Note 14) – 195 195Charge for the financial year – 16,476 16,476Write-off – (35,800) (35,800)

At 31 December – 42,582 42,582

Net book value

At 31 December 989,741 47,188 1,036,929

Computer Software2008 2007

COMPANY RM'000 RM'000

Cost

At 1 January – –Additions 2 –

At 31 December 2 –

Accumulated amortisation

At 1 January – –Charge for the financial year – –

At 31 December – –

Net book value

At 31 December 2 –



16 INTANGIBLE ASSETS (continued)

Goodwill

The carrying amount of goodwill have been allocated to the respective subsidiaries (based on their principalactivities), representing the cash-generating units ("CGUs") of the Group as follows:-

Carrying Discount amount rate

Cash generating units RM'000 %

Commercial banking and hire purchase business 829,478 11.02Investment banking 97,346 11.16Stock-broking 51,797 11.23Money-broking 11,120 11.89

989,741

Goodwill is allocated to the Group's CGU which are expected to benefit from the synergies of the acquisitions.For annual impairment testing purposes, the recoverable amount of the CGUs are based on their value-in-usecalculations using the cash flow projections based on 5 years financial budgets of the respective subsidiaries,which were approved by directors. The cash flow beyond the fifth year are assumed to grow at 5% to infinity.

The cash flow projections are derived based on a number of key factors including past performance andmanagement's expectations of the market developments. The discount rates used are based on the pre-taxweighted average cost of capital plus an appropriate risk premium where applicable ("WACC"), at the date ofassessment of the CGUs.

No impairment charge was required for goodwill arising from all the business segments. The directors are ofthe view that any reasonable possible changes to the assumptions applied are not likely to cause therecoverable amount of all the business segments to be lower than its carrying amount.

17 DEPOSITS FROM CUSTOMERS

GROUP2008 2007

RM'000 RM'000

By type of deposits

Money market deposit 1,654,643 1,424,795Demand deposits 3,714,185 3,658,132Savings deposits 990,251 903,325Fixed deposits 16,521,716 15,860,651Negotiable instruments of deposit ("NID") 2,650,531 2,488,265Special investment deposits 1,403,650 1,223,571

26,934,976 25,558,739

Maturity structure of fixed deposits and NID are as follows:-Due within six months 16,566,570 14,332,480Six months to one year 2,412,991 3,014,233One year to three years 191,240 998,355Three years to five years 1,446 3,848

19,172,247 18,348,916



17 DEPOSITS FROM CUSTOMERS (continued)

GROUP2008 2007

RM'000 RM'000

By type of customers

Government and statutory bodies 5,087,629 5,605,041Business enterprise 10,274,853 9,052,289Individuals 3,467,846 3,317,576Others 8,104,648 7,583,833

26,934,976 25,558,739

18 DEPOSITS AND PLACEMENTS OF BANKS AND OTHER FINANCIAL INSTITUTIONS

GROUP2008 2007

RM'000 RM'000

Licensed banks 1,062,942 538,420Licensed investment banks 339,350 –Bank Negara Malaysia 65,353 327,280Other financial institutions 2,421,062 3,213,374

3,888,707 4,079,074

Maturity structure of deposits are as follows:-Due within six months 3,883,962 4,079,074Six month to one year 4,745 –

3,888,707 4,079,074

19 TRADE CREDITORS

GROUP2008 2007

RM'000 RM'000

Amount due to stock-broking clients 30,717 163,656Amount due to Bursa Securities Clearing Sdn Bhd 6,224 –

36,941 163,656

The above trade creditors represent amount payable under outstanding sales contracts in relation to the stock-broking business.



20 RECOURSE OBLIGATION ON LOANS SOLD TO CAGAMAS BERHAD

In the normal course of banking operations, the banking subsidiaries sell loans and advances to CagamasBerhad with recourse to the banking subsidiaries at values equivalent to the unpaid principal balances of loansand advances due from mortgages.

The banking subsidiaries are liable in respect of housing loans and hire purchase portfolio sold directly andindirectly to Cagamas Berhad, under the condition that the banking subsidiaries undertake to administer theloans on behalf of Cagamas Berhad and to buy back any loans which are regarded as defective based onagreed prudential criteria. Such financing transactions and the obligations to buy back the loans are reflectedas a liability in the balance sheet.

21 OTHER LIABILITIES

GROUP COMPANY2008 2007 2008 2007

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

Bank Negara Malaysia and Credit Guarantee Corporation Funding Programmes 69,358 124,254 – –

Amount due to other shareholders of a subsidiary (Note 15) 26,696 30,440 – –

Interest payable 183,315 177,834 4,481 8,120Margin and collateral deposits 43,916 38,723 – –Trust accounts for clients and remisiers 39,059 47,345 – –Defined contribution plan (a) 9,539 8,480 – –Accrued employee benefits (b) 987 1,577 63 52Derivative liabilities (c) 81,393 25,899 – –Other creditors and accruals 197,231 215,813 1,132 1,004Provision for zakat 7,289 6,230 – –

658,783 676,595 5,676 9,176

(a) Defined contribution plan

The Group contributes to the Employees Provident Fund ("EPF"), the national defined contribution plan.Once the contributions have been paid, the Group has no further payment obligations.

(b) Accrued employee benefits

This refers to the accruals for short-term employee benefits for leave entitlement. Under employmentcontract, employees earn their leave entitlement which they are entitled to carry forward and will lapse ifnot utilised in the following accounting period.



21 OTHER LIABILITIES (continued)

(c) Derivative liabilities

GROUP2008 2007

RM'000 RM'000

At fair value:-

Foreign exchange derivatives- Currency options – 318- Currency forwards 7,134 7,422

Interest rate derivatives- Interest rate swaps 58,100 3,945- Currency swaps 16,159 14,214

81,393 25,899

22 AMOUNT DUE TO SUBSIDIARIES

The amount due to subsidiaries is unsecured, interest-free and has no fixed term of repayment.

23 DEFERRED TAX ASSETS/(LIABILITIES)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assetsand current tax liabilities and when the deferred tax relate to the same tax authority. The following amounts,determined after appropriate offsetting, are shown in the balance sheet.

GROUP COMPANY2008 2007 2008 2007

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

Deferred tax assets 63,938 32,871 – –Deferred tax liabilities (1,257) (4,316) (1,191) (219)

62,681 28,555 (1,191) (219)

At beginning of the financial year 28,555 64,621 (219) 161Credited/(charged) to income statements (Note 37) 22,044 (35,914) (972) (380)Credited/(charged) to equity 12,082 (152) – –

At end of the financial year 62,681 28,555 (1,191) (219)



23 DEFERRED TAX ASSETS/(LIABILITIES) (continued)

The movements in deferred tax assets and liabilities during the financial year are as follows:-

GROUP COMPANY2008 2007 2008 2007

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

At beginning of the financial year 28,555 64,621 (219) 161Credited/(charged) to income statements (Note 37) 22,044 (35,914) (972) (380)

- property and equipment 355 (141) 28 (110)- intangible assets 1,613 2,510 – –- tax losses 5,262 (44,944) – –- general allowance on loans, advances and financing 5,067 706 – –- provision for other liabilities (5,853) (779) – (270)- revaluation gain/(losses) on forex 7,946 (1,324) – –- revaluation gain/(losses) on derivatives 1,908 (8,648) – –- unrealised gain on securities 2,994 9,178 – –- amortisation of premium less accretion of discounts 3,569 1,343 – –- accumulated impairment loss on securities 864 4,167 – –- others (1,681) 2,018 (1,000) –

Credited/(charged) to equity 12,082 (152) – –

At end of the financial year 62,681 28,555 (1,191) (219)

Subject to income tax:-

Deferred tax assets (before offsetting):-Intangible assets – 19 – –Provision for other liabilities 1,384 7,237 – –General allowance on loans, advances and financing 76,807 71,740 – –Tax losses 5,262 – – –Revaluation losses on forex 7,309 336 – –Revaluation losses on derivatives 1,908 – – –Accumulated impairment loss on securities 9,803 8,939 – –Investment fluctuation reserve 12,968 142 – –Others 265 242 – –

115,706 88,655 – –Offsetting (51,768) (55,784) – –

Deferred tax assets (after offsetting) 63,938 32,871 – –



23 DEFERRED TAX ASSETS/(LIABILITIES) (continued)

The movements in deferred tax assets and liabilities during the financial year are as follows:- (continued)

GROUP COMPANY2008 2007 2008 2007

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

Deferred tax liabilities (before offsetting):-Property and equipment (9,712) (10,067) (191) (219)Intangible assets (9,987) (11,619) – –Investment fluctuation reserve (3,835) (3,091) – –Revaluation gain on forex (14,769) (15,742) – –Unrealised gain on securities (842) (3,836) – –Accretion of discounts less amortisation of premium (7,501) (11,070) – –Others (6,379) (4,675) (1,000) –

(53,025) (60,100) (1,191) (219)Offsetting 51,768 55,784 – –

Deferred tax liabilities (after offsetting) (1,257) (4,316) (1,191) (219)

The amount of unused tax losses for which no deferred tax assets is recognised in the balance sheet are asfollows:-

GROUP COMPANY2008 2007 2008 2007

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

Tax losses 107,571 109,220 – –

24 BORROWINGS

GROUP COMPANY2008 2007 2008 2007

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

Unsecured short-term borrowings- Bank Guaranteed Medium Term Notes (a) 200,000 400,000 200,000 400,000

200,000 400,000 200,000 400,000

Unsecured long-term borrowings- Subordinated term loan (b) 500,000 500,000 – –

500,000 500,000 – –

Total borrowings 700,000 900,000 200,000 400,000



24 BORROWINGS (continued)

a) Bank Guaranteed Medium Term Notes ("BGMTNs")

i) The RM200 million outstanding BGMTNs as at 31 December 2008 were issued under a bankguaranteed Commercial Papers and/or Medium Term Notes issuance programme ("CP/MTNProgramme") of up to RM300 million in nominal value arranged by the Company in year 2006. TheCP/MTN Programme has a tenure of 7 years from the date of first issuance (i.e. 11 July 2006) and hadbeen accorded an indicative short-term rating of P1 (bg) and long-term rating of AAA (bg) by RAM inrespect of the RM200 million portion of the CP/MTN Programme guaranteed by a bank. The RM200million BGMTNs were issued on 11 July 2006 at a coupon of 4.7% per annum for a tenure of two years,maturing on 11 July 2008.

Upon maturity, the above BGMTNs were replaced by another issue of RM200 million BGMTNs at acoupon of 4.7% per annum for a tenure of one year, maturing on 12 July 2009.

ii) Included in the outstanding BGMTNs of RM400 million of the previous financial year were anotherRM200 million BGMTNs issued under another bank guaranteed Medium Term Notes issuanceprogramme ("BGMTN Programme") of up to RM525 million arranged by the Company in year 2005. Theavailability limit of the Programme had subsequently been reduced from RM525 million to RM285 millionarising from the cancellation of the unutilised balance of RM240 million under the Programme in 2006.The Programme had a tenure of 5 years from the date of first issuance (i.e. 19 January 2005) and hadbeen accorded an indicative long-term rating of AAA (bg) by Rating Agency Malaysia Berhad ("RAM").

The said BGMTNs of RM200 million were issued at a coupon of 4.1% for a tenure of one year,maturing on 23 January 2008. The Company had on 24 January 2008 fully redeemed the outstandingRM200 million BGMTNs under the Programme and thereafter decided to cancel the Programme dueto non-requirement.

b) Subordinated term loan

AFFIN Bank Berhad ("ABB") had on 31 December 2001 issued the subordinated Bonds 2002/2006 ("TheBonds") at a nominal value of RM500 million in multiples of RM1,000,000, which are subordinated to allother liabilities. The said Bond were constituted by Trust Deeds dated 28 December 2001. The said Bondwere unsecured and redeemable in full on 31 December 2006, five years from the issue date.

On 31 December 2003, ABB restructured the Bonds into a new 10-year subordinated term loan of thesame value, with a revised coupon rate. The principal terms and conditions of the subordinated term loanremain similar to the Bonds. The new subordinated term loan will have a prepayment option after the endof Year 5 and at each interest payment date, giving ABB the right, subject to Bank Negara Malaysiaapproval, to repay the subordinated term loan after the end of Year 5.

The nominal value and coupon rate of the subordinated term loan, payable semi-annually are as follows:

Value : RM500 millionCoupon rate : 7.30% per annum for a period of twenty months from the issue date, 6.80% per annum the

next sixteen months, 6.25% per annum for the next twelve months, 6% per annum for thenext twelve months and thereafter the higher of 5 year Malaysian Government Securitiesinterest rate plus 300 basis points or

Year 6 6.75%Year 7 7.25%Year 8 7.75%Year 9 8.25%Year 10 8.75%

In respect of the subordinated term loan, ABB has undertaken to pledge its securities of RM10,000,000every month beginning from one month after the issue date (31 January 2004) until the end of the thirdyear after the issue date. These securities may only be used to fund the payment of any monies under theTrust Deed and/or the subordinated term loan which is due and unpaid.



25 SHARE CAPITAL

Number of ordinary shares of RM1.00 each Amount

2008 2007 2008 2007GROUP AND COMPANY '000 '000 RM'000 RM'000

Authorised:-Ordinary shares of RM1 each 5,000,000 5,000,000 5,000,000 5,000,000

Issued and fully paid up:-Ordinary shares of RM1 eachAt 1 January 1,486,981 1,252,913 1,486,981 1,252,913Issue of share capital pursuant to:

- the exercise of Employee Share Option Scheme 7,386 40,865 7,386 40,865- the exercise of Warrants 1997/2007 – 1 – 1- placement of new ordinary shares to BEA – 193,202 – 193,202

At 31 December 1,494,367 1,486,981 1,494,367 1,486,981

a) Employee Share Option scheme

The Company implemented an Employee Share Option Scheme ("ESOS") on 14 February 2003 for aperiod of five years, by offering 82,254,000 shares at a subscription price of RM1.00 per share to eligibleemployees in the Group, of which only 79,154,000 share options were accepted by the said eligibleemployees. The ESOS is governed by the by-laws which were approved by the shareholders in financialyear 2003.

On 26 November 2004, the shareholders of the Company approved amendments to the by-laws to allowthe Company to issue additional options up to maximum of 15% of the issued and paid-up share capitalof the Company and extend the participation in the ESOS to eligible non-executive directors of the Group.

On 5 December 2005, the Company made a second offer of 81,510,000 shares to eligible employees inthe Group at a subscription price of RM1.41 per share, of which only 81,240,000 share options wereaccepted by the said eligible employees.

The main features of the ESOS are as follows:-

(i) The option was for a period of five years commencing from the date of first offer of the option andexpiring on 13 February 2008. The option may be exercised in full or such lesser number of ordinaryshares provided the number shall be in multiples of 1,000 shares.

(ii) The option price shall be set at the weighted average market price of the shares for the five marketdays immediately preceding the date of offer, with a discount of not more than 10% of the weightedaverage market price or the par value of the share, whichever is higher.

(iii) The maximum number of shares offered and allotted under the scheme shall not exceed in aggregatefifteen per centum of the issued ordinary share capital of the Company at any point of time during theduration of the ESOS.

(iv) Only staff, executive directors of the Group and non-executive directors of the Group who on the dateof allocation have been so appointed are eligible to participate in the ESOS. Executive directors arethose involved in the day-to-day management and on the payroll of the Group and the Company.



25 SHARE CAPITAL (continued)

a) Employee Share Option scheme (continued)

The main features of the ESOS are as follows:- (continued)

(v) Options granted under the ESOS carry no dividend or voting rights. Upon exercise of the options,shares issued rank pari passu in all respects with existing ordinary shares of the Company.

(vi) The persons to whom the options have been granted have no right to participate by virtue of theoptions in any share issue of any other company.

Set out below are details of the outstanding options over ordinary shares of the Company granted to andaccepted by the eligible employees under the ESOS:-

Number of options over ordinary shares of RM1.00 eachOption As at As atprice per 1 January Exercised Expired 31 December

Grant Date Expiry Date Share '000 '000 '000 '000

2008

14 Feb 03 13 Feb 08 RM1.00 7,920 588 7,332 –05 Dec 05 13 Feb 08 RM1.41 9,297 6,798 2,499 –

17,217 7,386 9,831 –

2007

14 Feb 03 13 Feb 08 RM1.00 10,702 2,782 – 7,92005 Dec 05 13 Feb 08 RM1.41 47,380 38,083 – 9,297

58,082 40,865 – 17,217

2008 2007'000 '000

Number of share options vested at balance sheet date – 17,217

Details of the options exercised during the financial year are as follows:-

Number of ordinary shares Fair value Option issuedper share as at price 2008 2007

Exercise Date share issue date per share '000 '000

2 Jan 2007 to 31 Dec 2007 RM1.81 - RM3.08 RM1.00 588 2,7822 Jan 2007 to 31 Dec 2007 RM1.81 - RM3.08 RM1.41 6,798 38,083

7,386 40,865



25 SHARE CAPITAL (continued)

a) Employee Share Option scheme (continued)

Details of the options exercised during the financial year are as follows:- (continued)

2008 2007RM'000 RM'000

Proceeds received on exercise of share options- Issue of ordinary shares of RM1.00 each at par 588 2,782- Issue of ordinary shares of RM1.00 each at RM1.41 per share 9,585 53,697

10,173 56,479

Fair value at exercise date of shares issued pursuant to the ESOS exercised 13,347 99,766

The fair value of shares issued on the exercise of options is the average of the last 5 market days' pricesat which the Company's shares were traded on the Bursa Malaysia Securities Berhad prior to the exerciseof the options.

b) Warrants 2000/2010

On 8 July 2000, the Company issued 153,775,702 new warrants ("AFFIN Warrants 2000/2005") at no costtogether with the right issue exercise on the basis of 1 new AFFIN Warrant 2000/2005 for every fourordinary shares held. The exercise price of AFFIN Warrants 2000/2005 was RM3.10 and was to expireon 7 July 2005. On 26 November 2004, the shareholders of the Company and the holders of AFFINWarrant 2000/2005 approved the extension of the exercise period for a further 5 years and a SupplementalDeed Poll dated 26 November 2004 was executed to reflect the extension of the exercise period of theAFFIN Warrants 2000/2005 to expire on 7 July 2010 ("AFFIN Warrants 2000/2010"). The exercise priceof the AFFIN Warrants 2000/2010 remain at RM3.10.

The movement of Warrants 2000/2010 during the financial year is as follows:-

Number of AFFIN Warrants 2000/2010

At 1 January 2008/At 31 December 2008 153,775,702

26 RESERVES

GROUP COMPANY2008 2007 2008 2007

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

Distributable- Retained profits 841,727 801,401 347,091 343,129

Non-distributable- Statutory reserves 698,181 534,212 – –- Investment fluctuation reserves (22,940) 17,201 – –

1,516,968 1,352,814 347,091 343,129



26 RESERVES (continued)

(a) As at 31 December 2008, the Company has sufficient tax credit under Section 108 of the Income Tax Act,1967 and tax exempt income under Section 12 of the Income Tax (Amendment) Act, 2001 (subject toagreement with the tax authorities) to frank the payment of dividends out of its entire retained profitswithout incurring additional tax.

(b) The statutory reserves of the Group are maintained in compliance with the provisions of the Banking andFinancial Institutions Act, 1989 and Islamic Banking Act, 1983, and are not distributable as cash dividends.

(c) Investment fluctuation reserves represent the unrealised gains or losses arising from the change in fairvalue of investments classified as securities available-for-sale. The gains or losses are transferred in theincome statement upon disposal or when the securities become impaired.

27 REVENUE

GROUP COMPANY2008 2007 2008 2007

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

Gross interest income (Note 28) 1,576,021 1,631,078 10,896 7,023

Other operating income:-Fee income 166,299 196,517 7 4Investment income (5,927) 55,386 – –Dividend income 4,768 4,155 130,479 414,560Foreign exchange gains/(losses)- realised 32,003 (8,176) – –- unrealised 40,704 59,218 – –Miscellaneous operating income 10,920 6,655 – –

248,767 313,755 130,486 414,564

Income from Islamic operations:-Income derived from investment of depositors'

funds and others 278,588 227,404 – –Income derived from the investment of Islamic

Banking Capital funds 12,062 12,636 – –

290,650 240,040 – –

TOTAL OPERATING REVENUE 2,115,438 2,184,873 141,382 421,587



28 INTEREST INCOME

GROUP COMPANY2008 2007 2008 2007

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

Loans, advances and financing- Interest income other than recoveries from NPLs 1,065,530 996,595 – 18- Recoveries from NPLs 77,505 115,265 – –Money at call and deposits with financial institutions 175,460 250,732 10,896 7,005Securities held-for-trading 16,028 24,847 – –Securities available-for-sale 139,707 129,867 – –Securities held-to-maturity 20,467 36,225 – –Interest rate derivatives 44,574 55,016 – –Others 241 193 – –

1,539,512 1,608,740 10,896 7,023Amortisation of premium less accretion of discount 56,071 46,136 – –Interest suspended (19,562) (23,798) – –

1,576,021 1,631,078 10,896 7,023

29 INTEREST EXPENSES

GROUP2008 2007

RM'000 RM'000

Deposits and placements of banks and other financial institutions 103,946 73,461Deposits from customers 654,065 726,891Subordinated term loan 30,151 31,280Loans sold to Cagamas Berhad 4,702 20,352Interest rate derivatives 50,358 67,255Others 8,554 34,083

851,776 953,322

30 ISLAMIC BANKING INCOME

GROUP2008 2007

RM'000 RM'000

Income derived from investment of depositors' funds and others 278,589 227,404Less: Income attributable to depositors (142,517) (110,814)

136,072 116,590Income derived from investment of shareholders' funds 12,062 12,636

148,134 129,226



31 OTHER OPERATING INCOME

GROUP COMPANY2008 2007 2008 2007

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

Fee income:-Fees on loans, advances and financing 298 562 – –Net brokerage 48,839 80,563 – –Underwriting fees 2,328 3,559 – –Portfolio management fees 6,353 5,777 – –Corporate advisory fees 4,123 6,434 – –Commission 14,354 16,728 – –Service charges and fees 48,310 52,854 – –Guarantee fees 27,652 21,081 – –Arrangement fees 7,021 1,209 – –Agency fees 1,787 693 – –Other fee income 5,234 7,057 7 4

166,299 196,517 7 4

Investment income:-Gains arising from sale/redemption of securities- Held-for-trading 4,268 7,129 – –- Available-for-sale 17,833 31,509 – –- Held-to-maturity 15,230 6,726 – –Gain on disposal of a subsidiary 1,500 – – –Unrealised (losses)/gains on revaluation of

securities held-for-trading (8,084) 9,823 – –Gains/(losses) on derivatives- realised 177 1,493 – –- unrealised (36,851) (1,294) – –

(5,927) 55,386 – –

Gross dividends- Securities held-for-trading – 66 – –- Securities available-for-sale 212 581 – –- Securities held-to-maturity 4,556 3,508 – –- Subsidiaries – – 126,479 406,560- Associate – – 4,000 8,000

4,768 4,155 130,479 414,560



31 OTHER OPERATING INCOME (continued)

GROUP COMPANY2008 2007 2008 2007

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

Other income:-Foreign exchange gains/(losses)- realised 32,003 (8,176) – –- unrealised 40,704 59,218 – –Rental income 1,493 1,038 – –Gain on disposal of property and equipment 10,048 2,684 – 1Gain on disposal of foreclosed properties 2,883 1,382 – –Proceeds from surrendering the discount

house license – 8,750 – –Other non-operating income 13,174 12,863 12 11

100,305 77,759 12 12

Total other operating income 265,445 333,817 130,498 414,576

32 OTHER OPERATING EXPENSES

GROUP COMPANY2008 2007 2008 2007

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

Personnel costs

Wages, salaries and bonus 225,455 242,418 2,068 1,983Defined contribution plan 35,537 35,155 369 363Termination benefits – 9 – –Other personnel costs 29,004 32,261 505 106

289,996 309,843 2,942 2,452

Promotion and marketing-related expenses

Business promotion and advertisement 3,433 3,006 – –Entertainment 2,583 2,998 – –Travelling and accommodation 3,711 3,480 – –Dealer's handling fees 30,998 27,987 – –Commission 339 850 – –Others 1,231 1,454 – –

42,295 39,775 – –



32 OTHER OPERATING EXPENSES (continued)

GROUP COMPANY2008 2007 2008 2007

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

Establishment-related expenses

Rental of premises 24,104 24,120 605 605Equipment rental 2,280 1,499 6 6Repair and maintenance 23,276 21,679 87 46Depreciation of property and equipment 27,474 26,493 227 197Amortisation of intangible assets 18,397 16,476 – –Lease rental - leasehold properties 465 271 – –IT consultancy fee 39,758 25,360 – –Dataline rental 5,939 6,268 – –Securities services 8,333 7,367 – –Others 16,634 16,239 17 –

166,660 145,772 942 854

General and administrative expenses

Telecommunication expenses 6,951 7,066 28 31Auditors' remuneration 1,393 1,383 182 177Professional fees 19,835 13,776 374 337Property and equipment written-off 835 1,215 6 8Intangible assets written-off 16 473 – –Diminution in value of foreclosed properties 558 11,836 – –Mail and courier charges 5,466 5,512 3 2Stationery and consumables 6,963 7,119 19 22Subscription 1,989 1,980 – –Subsidies and allowance 932 595 – –Transaction levy 1,249 1,896 – –Commissioned dealers representative

performance incentive 3,027 8,596 – –Loss on disposal of land held for sale 4,457 – – –Others 34,959 22,544 2,900 2,975

88,630 83,991 3,512 3,552

Total other operating expenses 587,581 579,381 7,396 6,858



32 OTHER OPERATING EXPENSES (continued)

The above expenditure includes the following statutory disclosures:-

GROUP COMPANY2008 2007 2008 2007

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

Directors' remuneration (see Note 33) 1,429 1,066 710 582Rental of premises 24,104 24,120 605 605Hire of equipment 2,280 1,499 6 6Auditors' remuneration:-- Statutory 966 988 149 142- Others 427 395 33 35Depreciation of property and equipment 27,474 26,493 227 197Amortisation of intangible assets 18,397 16,476 – –Property and equipment written-off 835 1,215 6 8Intangible assets written-off 16 473 – –

Termination benefits mainly comprise of the payment of employee under the Voluntary Separation Scheme("VSS") by the banking subsidiaries. The VSS is carried out to optimise the resources and to remaincompetitive in the industry.

33 DIRECTORS' REMUNERATION

The directors of the Company in office during the year were as follows:-

Non-executive directors

Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Hj ZainuddinRaja Dato' Seri Aman bin Raja Hj Ahmad Maj. Gen. (R) Dato' Mohamed Isa bin Che KakDatuk Azzat bin KamaludinDato' Mustafa bin Mohamad AliTan Sri Dato' Lodin bin Wok KamaruddinDr. The Hon. Sir David Li Kwok PoProfessor Arthur Li Kwok CheungAdrian David Li Man Kiu (Alternate Director to Dr. The Hon. Sir David Li Kwok Po)Daniel Wan Yim Keung (Alternate Director to Professor Arthur Li Kwok Cheung)

Tan Sri Dato' Lodin bin Wok Kamaruddin was the Managing Director of the Company till 30 June 2008 andredesignated as Deputy Chairman with effect from 1 July 2008 while Raja Dato' Seri Aman bin Raja Hj Ahmadwas the Chief Executive Officer of the commercial bank subsidiary until his resignation on 1 June 2003.Accordingly, they were granted options under the Company's Employee Share Option Scheme on the sameterms and conditions as those employees of the Group (see Note 25).



33 DIRECTORS' REMUNERATION (continued)

The number of options granted to the directors under the ESOS are as follows:-

Number of options over ordinary shares of RM1.00 eachOption As at As atprice per 1 January Granted Exercised 31 December

Grant Date Expiry Date Share '000 '000 '000 '000

2008

Tan Sri Dato' Lodin bin Wok Kamaruddin05 Dec 05 13 Feb 08 RM1.41 800 – 800 –

Raja Dato' Seri Aman bin Raja Hj Ahmad14 Feb 03 13 Feb 08 RM1.00 150 – 150 –

950 – 950 –

2007

Tan Sri Dato' Lodin bin Wok Kamaruddin05 Dec 05 13 Feb 08 RM1.41 800 – – 800

Raja Dato' Seri Aman bin Raja Hj Ahmad14 Feb 03 13 Feb 08 RM1.00 150 – – 150

950 – – 950

The aggregate amount of emoluments receivables by directors of the Company during the financial year wereas follows:-

GROUP COMPANY2008 2007 2008 2007

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

Non-executive directors- fees 699 273 459 180- other emoluments 711 315 233 199- estimated money value of benefits-in-kind 19 18 18 18

Executive directors- fees – 224 – 35- other emoluments – 236 – 150

Total directors' remuneration 1,429 1,066 710 582

Total directors' remuneration excluding estimated money value of benefits-in-kind 1,410 1,048 692 564



33 DIRECTORS' REMUNERATION (continued)

Other emoluments comprise mainly fixed allowances, EPF and meeting allowances paid by the Group andCompany during the year. The other emoluments of the Group and the Company also include professional feesof RM1,000 (2007: RM118,050) and RM500 (2007: RM42,050) respectively paid to a firm of which a directoris a partner.

The number of directors of the Company whose total remuneration (including benefits-in-kind) received fromthe Group falls into the following remuneration bands:-

GROUP<-------------- 2008 --------------> <--------------- 2007 ------------->

Number of Number of Number of Number ofnon-executive executive non-executive executive

directors directors directors directors

Remuneration band:-

RM1 - RM50,000 3 – 1 –RM50,001 - RM100,000 2 – – –RM100,001 - RM150,000 1 – 2 –RM150,001 - RM200,000 – – 2 –RM200,001 - RM300,000 2 – – –RM300,001 - RM650,000 1 – – 1

34 ALLOWANCES FOR LOSSES ON LOANS, ADVANCES AND FINANCING

GROUP2008 2007

RM'000 RM'000

Allowance for bad and doubtful debts and financing:-Specific allowance- made during the financial year 415,842 529,604- written-back during the financial year (114,718) (131,891)General allowance- made during the financial year 31,738 6,586- written-back during the financial year (290) –Bad debts- recovered (240,767) (260,460)- written-off 8,929 4,136Write-back of allowance made for amount recoverable from Danaharta – (39)(Write-back of)/additional allowance for bad and doubtful debts- trade debtors (553) (364)- other debtors 293 (661)

100,474 146,911



35 IMPAIRMENT LOSSES

GROUP COMPANY2008 2007 2008 2007

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

Property and equipment- Write-back of allowance for impairment loss – (38) – –Allowance made for impairment loss- Securities available-for-sale 36,653 43,626 – –- Securities held-to-maturity – 975 – –- Investment in a subsidiary – – – 5,784- Land held for sale 445 – – –Write-back of allowance for impairment loss- Securities available-for-sale (4,816) (96) – –- Securities held-to-maturity (3,680) (4,978) – –

28,602 39,489 – 5,784

Allowance for impairment loss on securities available-for-sale and securities held-to-maturity were made bycertain subsidiaries to write-down the carrying value of the securities to the recoverable amount.

36 FINANCE COST

GROUP AND COMPANY2008 2007

RM'000 RM'000

Interest expenses- Term loans – 5,835- Medium term notes 9,943 17,735Guarantee fees 2,169 5,869

12,112 29,439

37 TAXATION

GROUP COMPANY2008 2007 2008 2007

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

Malaysian income tax:-- Current tax 133,124 61,865 31,011 104,062- Deferred tax (Note 23) (22,044) 35,914 972 380

111,080 97,779 31,983 104,442(Over)/under provision in prior years (2,021) 1,069 (2,526) 31

109,059 98,848 29,457 104,473



37 TAXATION (continued)

The numeric reconciliation between the applicable statutory income tax rate to the effective income tax rate ofthe Group and of the Company is as follows:-

GROUP COMPANY2008 2007 2008 2007

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

Profit before tax 404,210 352,971 121,886 379,518

Statutory tax rate in Malaysia (26%) 105,095 95,302 31,690 102,470

Tax effect in respect of- change in tax rate 2,273 1,057 (8) (12)- non-allowable expenses 10,534 11,390 395 1,968- non-taxable income (6,183) (13,341) – (81)Effect of different tax rate (41) (361) – –Utilisation of previously unrecognised tax losses (329) (2,230) – –Unrecognised tax losses – 5,419 – –Others (269) 543 (94) 97(Over)/under provision in prior years (2,021) 1,069 (2,526) 31

Tax expense for the financial year 109,059 98,848 29,457 104,473

GROUP2008 2007

RM'000 RM'000

Tax losses are analysed as follows:-

Tax savings during the financial year arising from recognition of previously unrecognised tax losses 329 2,684

38 EARNINGS PER SHARE

Basic earnings per share

The basic earnings per share of the Group has been calculated based on the net profit attributable to the equityholders of the parent of RM292,762,000 (2007: RM251,773,000) divided by the weighted average number ofordinary shares in issue of 1,493,862,000 (2007: 1,317,481,000) during the financial year.

Diluted earnings per share

For the diluted earnings per share calculation, the weighted average number of ordinary shares in issue isadjusted to assume conversion of all dilutive potential ordinary shares. The Group has two categories of dilutivepotential ordinary shares: share options granted to employees and warrants convertible into ordinary shares.The share options granted to employee had expired on 13 February 2008 and thus, it has no dilutive effect onthe earnings per share for the current financial year.



38 EARNINGS PER SHARE (continued)

Diluted earnings per share (continued)

The share options is assumed to be converted into ordinary shares. A calculation is done to determine thenumber of shares that could have been acquired at fair value (determined as the average price of theCompany's shares) based on the monetary value of the subscription rights attached to outstanding shareoptions. The number of shares calculated is compared with the number of shares that would have been issuedassuming the exercise of the share options. The difference is added to the denominator as an issue of ordinaryshares for no consideration. This calculation serves to determine the 'bonus' element in the ordinary sharesoutstanding for the purposes of computing the dilution. No adjustment is made to the net profit for the financialyear for the share options calculation.

The conversion of warrants is considered dilutive when they would result in the issue of new ordinary sharesfor less than market value of the shares. As the current exercise price of the warrants is higher than the marketvalue of the ordinary shares, there is no impact of dilution to the earnings per share. Hence, the warrants arenot taken into the computation of diluted earnings per share.

GROUP2008 2007

RM'000 RM'000

Net profit attributable to equity holders of the parent 292,762 251,773

Weighted average number of ordinary shares in issue 1,493,862 1,317,481Adjustment for share options – 8,603

Weighted average number of ordinary shares for diluted earnings per share 1,493,862 1,326,084

Basic earnings per share (sen) 19.60 19.11Diluted earnings per share (sen) 19.60 18.99

'000 '000

Shares issued after the balance sheet date until 14 February 2008 arising from exercise of share options – 7,386



39 DIVIDENDS

Dividends declared or proposed for the financial year are as follows:


Gross Amount of Gross Amount ofdividend dividend dividend dividend

per share net of tax per share net of taxOrdinary shares sen RM'000 sen RM'000

- Final dividend – – 3.0 33,175- Interim dividend 5.0 55,292 2.0 21,698

5.0 55,292 5.0 54,873

At the forthcoming Annual General Meeting, the directors do not propose any final dividend in respect of thecurrent financial year.

Dividends recognised as distribution to ordinary equity holders of the Company:


Gross Amount of Gross Amount ofdividend dividend dividend dividend

per share net of tax per share net of taxOrdinary shares sen RM'000 sen RM'000

- Interim dividend 5.0 55,292 2.0 21,698- Final dividend for 2007 3.0 33,175 – –- Final dividend for 2006 – – 3.0 27,925

8.0 88,467 5.0 49,623

40 COMMITMENTS AND CONTINGENCIES

GROUP COMPANY2008 2007 2008 2007

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

(a) Capital commitments

Property and equipment:-Authorised capital expenditure contracted but

not provided for 7,261 11,912 – –Capital expenditure approved by the Board but

not contracted for 4,736 17,000 – 33

Others:-Capital expenditure approved by the Board but

not contracted for – 12 – –

11,997 28,924 – 33



40 COMMITMENTS AND CONTINGENCIES (continued)

(b) Lease commitments

The Group has lease commitments in respect of rented premises and hired equipment, all of which areclassified as operating leases. A summary of the non-cancellable long-term commitments, net of sub-leases are as follows:-

GROUP COMPANY2008 2007 2008 2007

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

Within one year 23,322 23,767 702 611Between one to five years 62,695 67,714 1,404 18 More than five years – 219 – –

(c) Other commitments and contingencies

In the normal course of the business, the Group makes various commitments and incur certain contingentliabilities with legal recourse to their customers. No material losses are anticipated as a result of thesetransactions.

GROUP<----------------- 2008 ----------------> <----------------- 2007 ----------------->

Credit Risk- Credit Risk-Principal Equivalent Weighted Principal Equivalent WeightedAmount Amount* Amount* Amount Amount* Amount*RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Direct credit substitutes 658,062 658,062 609,474 779,119 779,119 779,119Transaction related

contingent items 2,785,699 1,392,849 1,115,835 2,420,083 1,210,042 1,210,042Short-term self-liquidating

trade related contingencies 2,379,763 475,952 202,368 3,511,291 702,258 108,604Obligation under

underwriting commitments 60,214 30,107 20,622 283,000 141,500 141,500Foreign exchange related

contracts- less than one year 574,103 11,551 11,442 680,861 8,242 3,498- one year to less than

five years 164,180 10,543 6,715 249,529 19,474 9,737Interest rate related contracts

- less than one year 1,628,702 49,413 11,876 2,697,437 60,235 13,789- one year to less than

five years 940,234 31,074 12,297 492,688 23,459 7,435- five years and above 507,100 63,522 13,449 25,075 1,739 870

Irrevocable commitmentsto extend credit- maturity more than

one year 9,155,758 1,813,298 893,963 3,205,735 1,602,868 1,575,004- maturity less than one year 3,828,351 1,907,572 1,705,255 5,071,325 – –

22,682,166 6,443,943 4,603,296 19,416,143 4,548,936 3,849,598

* The credit equivalent amount and risk-weighted amount are derived at using the credit conversionfactors as per Bank Negara Malaysia guidelines.




(c) Other commitments and contingencies (continued)

Financial Derivatives

Financial derivatives are financial instruments whose characteristics are derived from the underlyingassets, or from interest and exchange rates or indices. These include forwards, swaps, futures andoptions.

Exchange rate contracts

Forward foreign exchange contracts are agreements to buy or sell fixed amounts of currency atagreed rates of exchange on a specified future date.

Cross currency swaps are agreements to exchange, and on termination of the swap, re-exchangeprincipal amounts denominated in different currencies. Cross currency swaps may involve theexchange of interest payments in one specified currency for interest payments in another specifiedcurrency for a specified period.

Currency futures are typically exchange-traded agreements to buy or sell standard amounts of aspecified currency at an agreed exchange rate on a standard future date.

Currency options give the buyer on payment of a premium the right, but not the obligation, to buy orsell specified amounts of currency at agreed rates of exchange on or before a specified future date.

Interest rate contracts

Interest rate swaps involve the exchange of interest obligations with counterparties for a specifiedperiod without exchanging the underlying (or notional principal).

Interest rate caps and floors give the buyer the ability to fix the maximum or minimum rate of interest.There is no facility to deposit or drawdown funds; instead the writer pays to the buyer the amount bywhich the market rate exceeds or is less than the cap rate or the floor rate respectively. A combinationof an interest rate cap and floor is known as an interest rate collar.

Forward rate agreements give the buyer the ability to determine the underlying rate of interest for aspecified period commencing on a specified future date (the settlement date). There is no exchangeof principal and settlement is effected on the settlement date. The settlement amount is calculated byreference to the difference between the contracted rate and the market rate prevailing on thesettlement date.

Swaptions give the buyer the right, but not the obligation, to enter an interest rate swap as either thepayer or receiver of the fixed side of the swap.

Market risk

Market risk is the potential change in value caused by movement in market rates or prices. Thecontractual amounts stated above provide only a measure of involvement in these types oftransactions and do not represent the amounts subject to market risk. Exposure to market risk maybe reduced through offsetting on and off-balance sheet positions. As at end of the financial year, thenotional amount of foreign exchange exposure which were not hedged and hence, exposed to marketrisk was RM1.3 million (2007: RM19.2 million), while the notional amount of interest rate contract wasRM868.5 million (2007: RM452.3 million).




(c) Other commitments and contingencies (continued)

Credit risk

Credit risk arises from the possibility that a counter-party may be unable to meet the terms of acontract in which the commercial bank has a gain position. As at reporting date, the amounts offoreign exchange and interest rate credit risk, measured in terms of the cost to replace the profitablecontracts, was RM27.6 million (2007: RM102.2 million) and RM45.49 million (2007: RM11.0 million)respectively. This amount will increase or decrease over the life of the contracts, mainly as a functionof maturity dates and market rates or prices.

41 LITIGATION AGAINST THE GROUP

(a) There are various other legal suits against AFFIN Bank Berhad ("ABB") in respect of claims and counterclaims of approximately RM103.8 million (31 December 2007: RM118.2 million). Based on legal advice,the Directors of the Bank are of the opinion that no provision for damages need to be made in the financialstatements, as the probability of adverse adjudication against ABB is remote.

(b) As part of a merger of banking businesses, by an Agreement dated 30 August 2000 ("the AcquisitionAgreement") between AFFIN Holdings Berhad ("AHB"), AFFIN Bank Berhad ("ABB" or "the Bank"), BSNCommercial Bank (Malaysia) Berhad ("BSNC") and Bank Simpanan Nasional Berhad ("BSN"), it wasagreed that all banking assets and liabilities of BSNC would be sold to ABB in consideration of a purchaseprice of RM338,560,000 to be paid partly in cash and partly in AHB shares ("the Purchase Price").Pursuant to clause 2.1.5 of the Acquisition Agreement, BSNC and BSN undertook to ABB that debts otherthan those reflected as bad or doubtful debts in the audited financial statements of BSNC will berecoverable in the ordinary course of business. For the debts not recoverable, BSNC undertook to payABB within 30 days from the date of receipt of the Bank's letter of demand, the amounts claimed subjectto a limit of 30% of the Purchase Price amounting to RM101,568,000.

Subsequent to the merger, an audit was conducted and it was found that there had been significant underprovisioning of bad and doubtful debts by BSNC. AHB, ABB and BSN agreed that the purchase pricepayable to BSNC would be reduced to compensate for this under provisioning ("the SettlementAgreement"). In return, it was agreed that ABB would assign the bad and doubtful debts to BSNC underclause 2.1.5 of the Acquisition Agreement, subject to approval being given to both parties by regulatoryauthorities for the reassignment. However, the accounts to be reassign to BSNC were not identified then.

Dispute arose when ABB subsequently did not agree with BSNC on the assignment of 106 non performingaccounts with gross amount of RM988,000,000 or net amount of RM578,000,000 which have beenidentified unilaterally by BSNC. In 2005, BSNC issued an Originating Summons against AHB and ABBseeking an order for ABB to reassign the 106 accounts to BSNC.

On 6 February 2009, the High Court has given its decision on the Originating Summons. The High Courtconcluded that there were numerous disputes of fact which had to be resolved before any final conclusioncould be reached and has ordered to proceed to a full trial. No date has been fixed for the trial.

The Directors are of the opinion that the probable outcome of the legal case is still uncertain at this junctionand it is too preliminary to quantify the financial impact to both ABB and the Group.



42 CAPITAL ADEQUACY

The components of the Group's Tier I and Tier II capital are that of the banking subsidiaries, namely AFFINBank Berhad, AFFIN Islamic Bank Berhad and AFFIN Investment Bank Berhad as follows:-

GROUPBasel II Basel I

2008 2007RM'000 RM'000

Tier 1 Capital

Share capital 1,661,531 1,661,531Share premium 550,659 550,659Retained profits 269,709 226,904Statutory reserve 749,330 585,361

3,231,229 3,024,455Less:-Goodwill (190,384) (190,384)Deferred tax assets/(liabilities) (55,896) (40,119)

Total Tier 1 capital (a) 2,984,949 2,793,952

Tier 2 Capital

Subordinated loans 500,000 500,000General allowance for bad and doubtful debts and financing 305,853 274,295

Total Tier 2 capital (b) 805,853 774,295

Total capital (a) + (b) 3,790,802 3,568,247Less:-Investment in subsidiaries (53,229) (53,229)

Capital base 3,737,573 3,515,018

The risk-weighted assets of the Group are derived by aggregating the risk-weighted assets of the bankingsubsidiaries. The breakdown of risk-weighted assets of the Group in the various categories of risk-weights areas follows:-


2008 2007RM'000 RM'000

Credit risk 24,545,176 23,934,662Market risk 320,843 866,562Operational risk 2,060,483 –

Total risk-weighted assets 26,926,502 24,801,224



42 CAPITAL ADEQUACY (continued)

The capital adequacy ratios of the Group are as follows:-


2008 2007RM'000 RM'000

Before deducting proposed dividends:-

Core capital ratio 11.08% 11.26%Risk capital weighted ratio 13.88% 14.17%

After deducting proposed dividends:-

Core capital ratio 11.00% 11.10%Risk capital weighted ratio 13.80% 14.01%

Pursuant to BNM's circular, 'Recognition of Deferred Tax Asset ("DTA") and Treatment of DTA for RWCRPurposes' dated 8 August 2003, deferred tax income/(expenses) is excluded from the calculation of Tier Icapital and DTA is excluded from the calculation of risk-weighted assets.

The Group implemented the Basel II - Risk Weighted Assets Computation under the BNM's Risk WeightedCapital Adequacy Framework with effect from 1 January 2008. The Group has adopted the StandardisedApproach for credit risk and market risk, and Basic Indicator Approach for operational risk computation.

Disclosure on capital adequacy under the standardised approach:-

Total risk-weighted

Risk- assets afterGross Net weighted effects of Capital

exposure exposure assets PSIA* requirement GROUP RM'000 RM'000 RM'000 RM'000 RM'000

Credit risk

On balance sheet exposure:-Sovereigns/central banks 8,194,386 8,194,386 1,901 1,901 152Public sector entities 54,259 52,253 10,451 10,451 836Banks, development financial

institutions and MDBs# 2,952,487 2,952,487 922,193 922,193 73,775Insurance companies, securities

firms and fund managers 145,323 145,323 145,323 145,323 11,626Corporate 11,558,834 11,425,172 9,444,984 9,444,984 755,599Regulatory retail 8,102,547 8,057,291 6,043,068 6,043,068 483,446Residential real estate financing 1,845,762 1,845,762 737,661 737,661 59,013Total higher risk assets 472,076 472,076 708,112 708,112 56,649Equity exposure 93,484 93,484 120,403 120,403 9,632Other assets 2,484,730 2,484,730 709,240 709,240 56,739Defaulted exposure 839,692 838,745 1,098,544 1,098,544 87,884

36,743,580 36,561,709 19,941,880 19,941,880 1,595,351

# Multi Lateral Development Banks ("MDBs")* Profit Sharing Investment Account ("PSIA")




Disclosure on capital adequacy under the standardised approach:- (continued)

Total risk-weighted

Risk- assets afterGross Net weighted effects of Capital

exposure exposure assets PSIA* requirement GROUP RM'000 RM'000 RM'000 RM'000 RM'000

Credit risk (continued)

Off balance sheet exposure:-Other than over the counter

derivatives or credit derivatives 6,349,888 6,306,255 4,462,263 4,462,263 357,647Defaulted exposure 94,055 94,055 141,033 141,033 11,283

6,443,943 6,400,310 4,603,296 4,603,296 368,930

Total credit risk 43,187,523 42,962,019 24,545,176 24,545,176 1,964,281

<-- Gross exposure -->Total risk-weighted

Risk- assets afterLong Short weighted effects of Capital

position position assets PSIA* requirement GROUP RM'000 RM'000 RM'000 RM'000 RM'000

Market risk

Interest rate risk 2,392,103 (2,036,324) 313,218 – 25,057Foreign currency risk 5,756 (3,935) 7,512 – 601Equity risk 57 – 113 – 9

Total market risk 2,397,916 (2,040,259) 320,843 – 25,667

Total risk-weighted

Risk- assets after weighted effects of Capital

assets PSIA* requirementGROUP RM'000 RM'000 RM'000

Operation risk 2,060,483 – 164,839

Total risk-weighted assets and capital requirement 26,926,502 24,545,176 2,154,787

* Profit Sharing Investment Account ("PSIA")





Disclosure on off-balance sheet and counterpart credit risk:-

Total Positive fairTotal credit value of Total risk-

principal equivalent derivative weighted amount amount contracts amount

GROUP RM'000 RM'000 RM'000 RM'000

Direct credit substitutes 658,062 658,062 – 609,474Transaction related contingent items 2,785,699 1,392,849 – 1,115,835Short term self liquidating trade related

contingencies 2,379,763 475,952 – 202,368Obligations under an on-going underwriting

agreement 60,214 30,107 – 20,622Foreign exchange related contracts- one year or less 574,103 11,551 5,247 11,442- over one year to five years 164,180 10,543 689 6,715Interest/Profit rate related contracts- one year or less 1,628,702 49,413 412 11,876- over one year to five years 940,234 31,074 26,349 12,297- over five years 507,100 63,522 28,328 13,449Other commitments, such as formal standby

facilities and credit lines, with an originalmaturity of over one year 3,808,203 1,904,102 – 1,703,167

Other commitments, such as formal standbyfacilities and credit lines, with an originalmaturity up to one year 8,669,397 1,715,466 – 820,105

Unutilised credit card lines 506,509 101,302 – 75,946

Total 22,682,166 6,443,943 61,025 4,603,296


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43 SIGNIFICANT RELATED PARTY TRANSACTIONS AND BALANCES

In the normal course of business, the Group and the Company undertakes various transactions with its ultimateholding corporate body, subsidiaries, jointly controlled entity, associate, substantial shareholder and otherrelated companies, which comprise subsidiaries and associated companies of Lembaga Tabung AngkatanTentera ("LTAT Group").

The related parties that have transactions and relationship with the Group and the Company are as follows:-

Related parties Relationship

Subsidiaries of the Company as disclosed in Note 9 Subsidiaries

Lembaga Tabung Angkatan Tentera ("LTAT") Ultimate holding corporate body

AXA AFFIN Life Insurance Berhad Jointly controlled entity

AXA AFFIN General Insurance Berhad Associate

Subsidiaries and associates of LTAT Subsidiaries and associated companies of the ultimate holding corporate body

The Bank of East Asia, Limited Substantial shareholder

Key management personnel The key management personnel of the Company consists of all directors of the Company

Related parties of key management personnel (i) Close family members and dependents of key(deemed as related to the Company) management personnel

(ii) Entities that are controlled, jointly controlled or significantly influenced by, or for which significant voting power in such entity resides with, directly or indirectly by key management personnel or its close family members

Key management personnel includes the directors of the Company in office during the year and theirremuneration for the financial year are disclosed in Note 33.


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44 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR

(a) Establishment of a jointly controlled entity namely AFFIN-I Goodyear Sdn Bhd

On 1 April 2008, AFFIN Islamic Bank Berhad and Jurus Positif Sdn Bhd, a subsidiary of Mutiara GoodyearDevelopment Berhad, entered into a joint venture agreement under the shariah principles ("MusharakahAgreement") to develop a land into a housing scheme at Bukit Gambir, Penang.

Pursuant to the joint venture, a joint venture company namely AFFIN-I Goodyear Sdn Bhd ("AFFIN-IGoodyear") had been incorporated on 13 March 2008 with an initial issued and paid-up share capital ofRM1.0 million divided into 1,000,000 ordinary shares of RM1.00 each, subscribed by and alloted andissued to AFFIN Islamic Bank Berhad and Jurus Positif Sdn Bhd in equal proportion of 50% each.

The agreement also includes an agreement where Jurus Positif Sdn Bhd may acquire the Bank's sharesupon the completion of the project at a mutually agreed price, unless if both shareholders decide tocontinue the joint venture for subsequent projects.

Under this hybrid structure, AFFIN Islamic Bank Berhad is the sole banker to AFFIN-I Goodyear and willbe providing financing to AFFIN-I Goodyear using the Islamic concept such as Murabahah for thepurchase of the land and Istisna' for bridging financing.

Major strategic operation and financial decisions relating to the activities of AFFIN-I Goodyear Sdn Bhdrequires unanimous consent by both joint venture parties. The Group's interest in AFFIN-I Goodyear SdnBhd has been treated as investment in jointly controlled entity, which has been accounted for in theconsolidated financial statements using the equity method of accounting.

AFFIN-I Goodyear has not started its operations during the year. Operation is expected to commence inthe financial year ending 31 December 2009.

(b) Disposal of 100% equity interest in AFFIN Insurance Brokers Sdn Bhd ("AIB")

On 10 November 2008, AFFIN-ACF Holdings Sdn Bhd ("AACH"), a wholly-owned subsidiary of AHBentered into a Share Sale Agreement ("SSA") with Commerce International Group Berhad ("CIGB") for theproposed disposal of its 100% equity interest in AFFIN Insurance Brokers Sdn Bhd ("AIB") to CIGB, for acash purchase consideration of RM2.5 million. The purchase consideration was based on the net assetvalue of AIB as at completion, to be determined pursuant to a post-completion audit notwithstanding anyother provision in the SSA, the purchase consideration must under no circumstances exceed RM2.55million, which shall be the maximum total amount payable by CIGB.

The proposed disposal had been approved by Bank Negara Malaysia on 25 September 2008 and wascompleted on the day of the execution of the SSA.



44 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (continued)

(b) Disposal of 100% equity interest in AFFIN Insurance Brokers Sdn Bhd ("AIB") (continued)

The net assets of AIB disposed are as follows:-

RM'000

Assets

Cash and short-term funds 209Deposits and placements with financial institutions 609Others assets 117Property and equipment 236

1,171

Liabilities

Provision for taxation (85)Deferred tax liabilities (39)Other liabilities (47)

Net assets of AIB disposed 1,000Cash consideration for the disposal 2,500

Gain on disposal of AIB 1,500

(c) Proposed acquisition by Boustead Holdings Berhad (Boustead) of the London Assurance Shareholdingsin BH Insurance Berhad ("BHI") and proposed rationalisation of Boustead's interest in BHI and AXA AFFINGeneral Insurance Berhad

On 25 July 2005, the Board of Directors of AFFIN Holdings Berhad ("AHB") announced that Bank NegaraMalaysia ("BNM") had vide its letter dated 21 July 2005 stated that it had no objection in principle forBoustead (a company related to AHB by virtue of LTAT being a common major shareholder in AHB andBoustead) to commence negotiations to acquire the entire 45.0% equity interest held by LondonAssurance in BHI.

Boustead intends to rationalise its shareholdings in BHI and consolidate its interests in BHI into AXAAFFIN General Insurance Berhad, a 40.0% associated company of AFFIN Holdings Berhad thereafter.

On 5 December 2007, the Board of Directors of Boustead announced that BNM had vide its letter dated4 December 2007 stated that it had no objection in principle for Boustead to commence preliminarynegotiations with the shareholders of AXA AFFIN General Insurance Berhad on the proposedrationalisation of Boustead's interest in BHI and AXA AFFIN General Insurance Berhad. The approval inprinciple from BNM for commencement of the negotiations is not an approval for the proposedrationalisation.



44 SIGNIFICANT EVENTS DURING THE FINANCIAL YEAR (continued)

(d) Proposed formation of AFFIN Banking Group ("ABG")

On 28 January 2008, the Company announced that Bank Negara Malaysia ("BNM") had vide its letterdated 25 January 2008 informed that BNM had obtained the approval from Minister of Finance for thefollowing:-

(i) Pursuant to Section 45(1)(a) and (b) of the Banking and Financial Institutions Act 1989 ("BAFIA") forAFFIN Capital Sdn Bhd ("ACSB"), a wholly-owned subsidiary of AHB, to acquire the entire equityinterest in ABB and AIBB;

(ii) Pursuant to Section 45(3) of the BAFIA for AHB to subscribe to the issuance of new ordinary sharesof RM1.00 each in ABB and AIBB;

(iii) Pursuant to Section 46 of BAFIA for ACSB to hold shares in ABB and AIBB in excess of the maximumpermissible limit;

(iv) Pursuant to Section 49 of the BAFIA for AHB and ACSB to enter into an agreement or arrangementwhich would result in the change in the control of ABB and AIBB, after (i) above; and

(v) Pursuant to Section 22 of the Islamic Banking Act 1983 for ACSB and ABB to enter into anarrangement or agreement for ACSB to acquire from ABB the entire equity interest in AFFIN Islamic,which would result in a change in the control or management of AFFIN Islamic.

Further, BNM informed that following the above internal restructuring exercise, in addition to AHB, ACSBis also designated as a Financial Holding Company in view of its holding of the licensed institutionscomprising ABB, AIBB and AFFIN Islamic (collectively the "Banking Subsidiaries"). In this regard, ACSBwould be subjected to the following conditions:-

(i) its investment should be confined to the financial sector and prior approval of BNM is to be obtainedfor any new investments; and

(ii) compliance with the Guidelines on Corporate Governance for Licensed Institutions (RevisedBNM/GP1).

45 SEGMENT ANALYSIS

The segment analysis is presented based on the principal activities of the subsidiaries. The Group's operationsare principally conducted in Malaysia and accordingly, no analysis in respect of geographical segments havebeen presented.

The format of the segment analysis is based on the internal financial reporting system which reflect the Group'smanagement reporting structure. The Group comprises the following main segments:-

Commercial Banking and Hire Purchase

The Commercial Banking and Hire Purchase segment focuses on business of banking in all aspects whichincludes Islamic Banking operations. Its activities are generally structured into two key areas, ConsumerBanking and Enterprise Banking Services.



45 SEGMENT ANALYSIS (continued)

Commercial Banking and Hire Purchase (continued)

Consumer Banking comprises the full range of products and services offered to individuals, including savingsand fixed deposits, remittance services, current accounts, consumer loans such as vehicle loans, housingloans, overdrafts and personal loans, credit cards, unit trusts and bancassurance products.

Enterprise Banking provides a full range of financial products and services to cater mainly the business andfunding needs of corporate customers, ranging from large corporate and the public sector to small and mediumenterprises. The products and services offered include long-term loans, project and equipment financing andshort-term credit such as overdrafts and trade financing, and other fee-based services.

Investment Banking

Investment Banking segment includes business of a merchant bank, discount house, fund and unit trustsmanagement.

This segment focuses on business needs of mainly large corporate customers and financial institutions. Theproducts and services offered to customers include advisory services and structuring of private debt securities,corporate finance and advisory services for corporate listings, mergers and acquisitions, capital raising throughissues of equity and debt instruments, corporate and debts restructuring exercises. It also provides structuredlending solutions mainly in support of corporate finance and capital market activities as well as access tovariety of funds and capital market investment products to both corporate and institutional investors forcompetitive returns and other investment benefits including portfolio diversification and liquidity enhancement.

Stock-broking

This segment comprises institutional and retail broking business for securities listed on the Bursa MalaysiaSecurities Berhad, investment management and research services.

Insurance

The insurance segment includes the business of underwriting all classes of general and life insurancebusinesses in Malaysia.

Others

Other business segments in the Group include operation of investment holding companies, money-broking,insurance-broking and other related financial services whose results are not material to the Group andtherefore do not render separate disclosure in the financial statements and have been reported in aggregate.




The segment analysis of the Group by activities in 2008 and 2007 are as follows:

CommercialBanking and Hire Investment Stock-

Purchase Banking broking Insurance Others Eliminations Group2008 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

Segment revenue 1,927,098 134,971 40,337 – 13,032 – 2,115,438Intersegment

revenue 6,321 9,314 – – 1,837 (17,472) –

Revenue 1,933,419 144,285 40,337 – 14,869 (17,472) 2,115,438

Segment results 454,628 (41,104) 685 – 3,528 10,755 428,492Unallocated

expenses – – – – – – (19,437)Share of results

of jointly controlled entity (net of tax) – – – (11,490) – – (11,490)

Share of results of associate(net of tax) – – – 6,645 – – 6,645

Profit before taxation and zakat 404,210

Taxation and zakat (111,448)

Net profit for the financial year 292,762

Segment assets 33,594,534 2,794,342 198,905 – 20,430 – 36,608,211Investment in jointly

controlled entities – – – 95,530 500 – 96,030Investment in

associate – – – 113,661 – – 113,661Unallocated assets – – – – – – 18,529

Total segment assets 36,836,431

Total segment liabilities 29,786,472 2,351,992 78,680 – 1,115 – 32,218,259

Unallocated liabilities – – – – – – 206,867

32,425,126





The segment analysis of the Group by activities in 2008 and 2007 are as follows: (continued)



Non-cash items

Capital expenditure 44,223 1,831 3,038 – 157 – 49,249Depreciation of

property and equipment 22,514 1,953 2,236 – 771 – 27,474

Amortisation of intangible assets 17,737 376 277 – 7 – 18,397

Allowances for losses on loans, advances and financing 280,113 52,570 (111) – – – 332,572

Other non-cash items* (173,592) (65,525) (343) 4,845 (1,510) – (236,125)

* Other non-cash income refers to net income earned from held-for-trading, available-for-sale and held-to-maturity securities.



Segment revenue 1,892,937 203,961 75,627 – 12,348 – 2,184,873Intersegment

revenue 198 4,650 312 – 1,152 (6,312) –

Revenue 1,893,135 208,611 75,939 – 13,500 (6,312) 2,184,873

Segment results 322,003 37,199 24,775 – 10,362 (12,931) 381,408Unallocated

expenses – – – – – – (35,328)Share of results of

jointly controlled entity (net of tax) – – – (10,583) – – (10,583)

Share of results of associate (net of tax) – – – 17,474 – – 17,474

Profit before taxation and zakat 352,971

Taxation and zakat (101,198)

Net profit for the financial year 251,773




The segment analysis of the Group by activities in 2008 and 2007 are as follows: (continued)



Segment assets 32,605,434 2,275,381 946,867 – 55,657 – 35,883,339Investment in

jointly controlled entities – – – 97,330 – – 97,330

Investment in associate – – – 109,976 – – 109,976

Unallocated assets – – – – – – 42,237

Total segment assets 36,132,882

Total segment liabilities 28,595,412 1,974,933 913,388 – 2,776 – 31,486,509

Unallocated liabilities – – – – – – 409,395

31,895,904

Non-cash items

Capital expenditure 32,290 1,567 1,464 – 307 – 35,628Depreciation

of property and equipment 21,227 1,943 2,655 – 668 – 26,493

Amortisation of intangible assets 15,596 431 376 – 73 – 16,476

Allowances for losses on loans, advances and financing 394,856 9,743 38 – (338) – 404,299

Impairment of property and equipment – – – – (38) – (38)

Other non-cash items* (195,963) (142,204) (663) (6,891) 19,537 – (326,184)

* Other non-cash income refers to net income earned from held-for-trading, available-for-sale and held-to-maturity securities.



46 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group has set up objectives and policies to manage the risks that arise in connection with financialinstruments. The risk management framework and policies of the Group are guided by specific objectives toensure that comprehensive and adequate risk management policies are established to mitigate the salient riskelements in the operations of the Group. The establishment of the overall financial risk management objectivesis consistent and in tandem with the strategy to create and enhance shareholders' value, whilst guided by aprudent and robust framework of risk management policies. In achieving the objective of maximising returns toshareholders, the Board takes cognisance of the risk elements that the Group is confronted with in itsoperations. In view of the multi-faceted risks inherent especially in the Group's operations in the banking sector,the Group places great emphasis on the importance of risk management and has put in place clear andcomprehensive risk management mechanisms and strategies to identify, monitor, manage and control therelevant risk factors.

Market Risk

Market risk refers to the impact on an institution's financial condition resulting from future adverse price orvolatility movements of the assets contained in its portfolio. The principal market risk of the Group's assets andliabilities management is primarily associated with the maturity and re-pricing mismatches of its assets andliabilities. The Board of each subsidiary is responsible for reviewing and recommending all market risk policiesand ensuring that sound market risk and effective risk management systems are established and compliedwith.

The market risk management framework of the subsidiaries comprises a series of cut-loss and potential losslimits approved by the Asset Liability Committee ("ALCO") of respective subsidiaries to ensure that risk-takersdo not exceed parameters set by management and periodic risk analysis which include among others Value-at-Risk ("VAR"), Present Value of a Basis Points ("PVBP") and stress tests.

Limits management is a control mechanism to ensure that all business activities are conducted in compliancewith the limits in the risk management guidelines and policies. VAR and PVBP analysis are conducted by theGroup's financial institution subsidiaries as part of the mechanism to quantify both the individual componentsand overall market risk exposures of the respective company. VAR measures the risk losses arising frompotential adverse movements in interest rates, equity prices and volatilities that could impact values of financialinstruments. PVBP measures the change in value of interest rate sensitive exposures and identifies interestrate exposures that are most vulnerable to interest rate changes and facilitates the implementation of hedgingstrategies. These limits are set and reviewed regularly according to a number of factors, including markettrading liquidity of the instruments and the subsidiaries' business strategy.

Periodic stress testing analysis is also conducted at the Group and subsidiaries level to ascertain impact ofmarket risk on the Group's financial position under abnormal market conditions.

Credit Risk

Credit risk refers to the risk of financial loss arising from defaults by counter parties in meeting their obligations.Exposure to credit risks for the Group arises primarily from lending activities by the financial institutions.

The management of credit risk in subsidiaries is governed by credit management policies and procedures setand approved by each subsidiary's Board of Directors. The procedures spell out the relevant approvalauthorities, limits, risks, credit ratings and other matters involved in order to ensure sound credit grantingstandards.



46 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)

Credit Risk (continued)

The banking subsidiaries have in place credit grading systems implemented for the corporate, business andretail loans. The grading is based on credit worthiness of the borrowers, i.e. ability to repay debt obligationsbased on the borrowers' current condition, with regard to its management capacity and its market position.

Portfolio management is put in place to evaluate the credit risk exposures, the portfolio's risk profiles and toidentify any adverse trends or risk concentration patterns. The focus of portfolio management is to ensure thatthe risk concentration areas and unacceptable risk factors are managed and mitigated early.

Liquidity risk

Liquidity risk is the risk of loss due to failure to access funds at reasonable cost to fund the Group's operationsand meet its liabilities when they fall due.

The Board of each subsidiary is responsible for the subsidiary's liquidity performance although the strategicmanagement of liquidity has been delegated to the ALCO. The respective Board is however informed regularlyof the liquidity situation of the subsidiaries. The respective ALCO of the subsidiaries execute the subsidiaries'liquidity strategy including ensuring that appropriate policies and procedures are established to control and limitliquidity risk. It is also responsible for ensuring that the subsidiaries have adequate information systems formeasuring, monitoring, controlling and reporting liquidity risk.

The Group's subsidiaries which are regulated by BNM adopts BNM's Liquidity Framework ("NLF") whichascertains the liquidity condition based on the contractual and behavioural cash flow of assets, liabilities andoff-balance sheet commitments, taking into consideration the realisable cash value of the eligible liquefiableassets.

The Group seeks to ensure that it has access to funds at reasonable cost even under adverse conditions, bymanaging its liquidity risk across all classes of assets and liabilities in accordance with regulatory guidelinesand to take advantage of any lending and investment opportunities as they arise.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people and systemsor from external events. As such, operational risk is inherent in each of the Group's business and operationalactivities. Such risks can potentially result in financial loss for the Group.

The monitoring and control of such risks are done through policies and procedures at the individual subsidiariesor operational activities level which serve as a reference guide for the operations of all key business units.These were designed taking into consideration the individual subsidiary's business activities, the market inwhich it is operating and any regulatory requirement in force. The risk management committees of keyoperating subsidiaries, namely AFFIN Bank Berhad and AFFIN Investment Bank Berhad are responsible toformulate operational risk management framework to ensure that operational risks within the subsidiaries areproperly identified, monitored, managed and reported.

The internal audit functions at the subsidiaries perform regular audits on various operations of the subsidiariesand monitor the key risk exposure areas to ensure that internal control procedures are in place and theprocedures able to mitigate risks associated with operational activities.


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2008

Ass

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h an

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term

fun

ds6,

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731

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uriti

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ava

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Loan

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Sta

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31 D

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Not

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31 D

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2007

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Dep

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2007

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48 CREDIT RISK (continued)

Short-term funds and placements with banks and Totalother financial Other on-balance

institutions assets sheetCOMPANY RM'000 RM'000 RM'000

2008

Finance, insurance and business services 329,414 396 329,810Others – 192 192

329,414 588 330,002

2007

Finance, insurance and business services 468,213 682 468,895Others – 227 227

468,213 909 469,122

49 FAIR VALUE OF FINANCIAL INSTRUMENTS

Financial instruments comprise financial assets, financial liabilities and also off-balance sheet financialinstruments. The fair value of a financial instrument is the amount at which the instrument could be exchangedor settled between knowledgeable and willing parties in an arm's length transaction. The information presentedherein represents estimates of fair values as at the balance sheet date.

Where available, quoted and observable market prices are used as the measure of fair values. Where suchquoted and observable market prices are not available, fair values are estimated based on a range ofmethodologies and assumptions regarding risk characteristics of various financial instruments, discount rates,estimates of future cash flows and other factors. Changes in the uncertainties and assumptions could materiallyaffect these estimates and the resulting fair value estimates.

In addition, fair value information for non-financial assets and liabilities is excluded as they do not fall within thescope of FRS132 which requires the fair value information to be disclosed. These include property andequipment, investments in subsidiaries, jointly controlled entities and associate, deferred tax, land held for saleand intangible assets.



49 FAIR VALUE OF FINANCIAL INSTRUMENTS (continued)

The fair value of the financial assets and financial liabilities of the Group and the Company approximated totheir respective carrying value as at the balance sheet date, except for the followings:-

GROUP COMPANYCarrying Fair Carrying Fair

value value value value2008 RM'000 RM'000 RM'000 RM'000

Financial assets

Securities held-to-maturity 602,665 700,038 – –Loan, advances and financing 19,927,677 20,133,818 – –

20,530,342 20,833,856 – –

Financial liabilities

Borrowings 700,000 681,065 200,000 200,000

700,000 681,065 200,000 200,000

2007

Financial assets

Securities held-to-maturity 443,307 543,279 – –Loan, advances and financing 17,277,639 17,358,602 – –

17,720,946 17,901,881 – –

Financial liabilities

Recourse obligation on loans sold to Cagamas Berhad 361,510 365,220 – –

Borrowings 900,000 942,922 400,000 400,000

1,261,510 1,308,142 400,000 400,000




The fair values of derivative financial instruments are as follows:-

GROUPUnderlying

notional Asset Liability2008 RM'000 RM'000 RM'000

Foreign exchange contracts- Forward contracts 738,283 5,936 7,134

Interest rate contracts- Swaps 3,076,036 55,089 74,259

2007

Foreign exchange contracts- Forward contracts 832,356 3,112 7,422- Option 98,034 318 318

Interest rate contracts- Swaps 3,150,200 40,544 18,159- Futures contracts 65,000 174 –

The derivative financial instruments become favourable (assets) or unfavourable (liabilities) as a result offluctuations in market interest rates or foreign exchange rates relative to their terms. The extent to whichinstruments are favourable or unfavourable and the aggregate fair values of derivative financial assets andliabilities can fluctuate significantly from time to time.

The fair values of the financial assets and liabilities are based on the following methodologies and assumptions:

Short-term funds and placements with banks and other financial institutions

For short-term funds and placements with banks and other financial institutions with maturities of less than sixmonths, the carrying amount is a reasonable estimate of the fair value.

For amounts with maturities of six months or more, fair values have been estimated by reference to currentrates at which similar deposits and placements would be made with similar risks and maturity profile.

Securities held-for-trading, securities available-for-sale and securities held-to-maturity

The fair values of securities held-for-trading, securities available-for-sale and securities held-to-maturity arereasonable estimates based on quoted market prices. In the absence of such quoted prices, the fair values arebased on the expected cash flows of the instruments discounted by indicative market yields for the similarinstruments as at balance sheet date or the audited net tangible asset of the invested company.

Other assets and liabilities

The carrying value less any estimated allowance for financial assets and liabilities included in other assets andother liabilities are assumed to approximate their fair values as these items are not materially sensitive to theshift in market interest rates.




Loans, advances and financing

Loans and advances of the Group comprise of floating rate loans and fixed rate loans. For performing floatingrate loans, the carrying amount is a reasonable estimate of their fair values.

The fair values of performing fixed rate loans are arrived at using the discounted cash flows based on theprevailing market rates of loans and advances with similar credit ratings and maturities.

The fair values of impaired loans and advances, whether fixed or floating are represented by their carryingvalues, net of specific provisions and the general allowances for bad and doubtful debts and financing whichcover unidentified losses inherent in the loan portfolio, being the reasonable estimate of recoverable amount.

Deposits from customers, banks and other financial institutionsObligation on securities sold under repurchase agreementsBills and acceptances payable

The carrying values of deposits and liabilities with maturities of six months or less are assumed to bereasonable estimates of their fair values. Where the remaining maturities of deposits and liabilities are abovesix months, their estimated fair values are arrived at using the discounted cash flows based on prevailingmarket rates currently offered for similar remaining maturities.

The estimated fair value of deposits with no stated maturity, which include non-interest bearing deposits,approximates carrying amount which represents the amount repayable on demand.

Recourse obligation on loans sold to Cagamas Berhad

For floating rate loans sold to Cagamas Berhad, the carrying value is generally a reasonable estimate of theirfair values.

The fair values of fixed rate loans sold to Cagamas Berhad are arrived at using the discounted cash flowmethodology at prevailing market rates of similarly profiled loans.

Borrowings

The estimated fair value of subordinated term loan is based on discounted cash flow model using a currentyield curve appropriate for the remaining term to maturity.

For fixed rate borrowings, the estimate of fair value is based on discounted cash flow model using prevailinglending rates for borrowings with similar risks and remaining term to maturity.

For floating rate borrowings, the carrying value is generally a reasonable estimate of their fair values.

Derivative financial instruments

The fair value of exchange rate and interest rate contracts is the estimated amount the Group would receiveor pay to terminate the contracts at the reporting date.

50 APPROVAL OF FINANCIAL STATEMENTS

The financial statements have been approved for issue in accordance with a resolution of the Board ofDirectors on 23 February 2009.



We, Tan Sri Dato' Lodin bin Wok Kamaruddin and Maj. Gen. (R) Dato' Mohamed Isa Bin Che Kak, two of thedirectors of AFFIN Holdings Berhad, state that, in the opinion of the directors, the accompanying financialstatements set out on pages 45 to 150 are drawn up so as to give a true and fair view of the state of affairs of theGroup and the Company as at 31 December 2008 and of the results and cash flows of the Group and the Companyfor the financial year ended on that date in accordance with the MASB Approved Accounting Standards for EntitiesOther Than Private Entities, Bank Negara Malaysia Guidelines and the provisions of the Companies Act, 1965.


TAN SRI DATO' LODIN BIN WOK KAMARUDDIN MAJ. GEN. (R) DATO' MOHAMED ISA BIN CHE KAKDIRECTOR DIRECTOR


Statement by DirectorsPursuant to Section 169(15) of the Companies Act, 1965

DeclarationPursuant to Section 169(16) of the Companies Act, 1965

I, Lee Yoke Kiow, the officer primarily responsible for the financial management of AFFIN Holdings Berhad, dosolemnly and sincerely declare that in my opinion, the financial statements set out on pages 45 to 150 are correctand I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions ofthe Statutory Declarations Act, 1960.

LEE YOKE KIOW

Subscribed and solemnly declared by the above named Lee Yoke Kiow at Kuala Lumpur in Malaysia on 23 February2009, before me.

COMMISSIONER FOR OATHS


Independent Auditors’ ReportTo the Members of AFFIN Holdings Berhad(Incorporated in Malaysia) (Company No. 23218-W)

REPORT ON THE FINANCIAL STATEMENTS

We have audited the financial statements of AFFIN Holdings Berhad, which comprise the balance sheets as at 31December 2008 of the Group and of the Company, and the income statements, statements of changes in equityand cash flow statements of the Group and of the Company for the year then ended, and a summary of significantaccounting policies and other explanatory notes, as set out on pages 45 to 150.

Directors' Responsibility for the Financial Statements

The directors of the Company are responsible for the preparation and fair presentation of these financial statementsin accordance with MASB Approved Accounting Standards in Malaysia for Entities Other than Private Entities, BankNegara Malaysia Guidelines and the Companies Act, 1965. This responsibility includes: designing, implementingand maintaining internal control relevant to the preparation and fair presentation of financial statements that are freefrom material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable in the circumstances.

Auditors' Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our auditin accordance with approved standards on auditing in Malaysia. Those standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on our judgment, including the assessment of risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the Company's preparation and fair presentation of the financial statements inorder to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressingan opinion on the effectiveness of the Company's internal control. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of accounting estimates made by thedirectors, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the financial statements have been properly drawn up in accordance with MASB ApprovedAccounting Standards in Malaysia for Entities Other than Private Entities, Bank Negara Malaysia Guidelines andthe Companies Act, 1965 so as to give a true and fair view of the financial position of the Group and of the Companyas of 31 December 2008 and of their financial performance and cash flows for the year then ended.


REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:

a) In our opinion, the accounting and other records and the registers required by the Act to be kept by theCompany and its subsidiaries have been properly kept in accordance with the provisions of the Act.

b) We are satisfied that the financial statements of the subsidiaries that have been consolidated with theCompany's financial statements are in form and content appropriate and proper for the purposes of thepreparation of the financial statements of the Group and we have received satisfactory information andexplanations required by us for those purposes.

c) Our audit reports on the financial statements of the subsidiaries did not contain any qualification or any adversecomment made under Section 174(3) of the Act.

OTHER MATTERS

This report is made solely to the members of the Company, as a body, in accordance with Section 174 of theCompanies Act, 1965 in Malaysia and for no other purpose. We do not assume responsibility to any other personfor the content of this report.

PRICEWATERHOUSECOOPERS MOHAMMAD FAIZ BIN MOHAMMAD AZMI(No. AF: 1146) (No. 2025/03/10 (J))Chartered Accountants Chartered Accountant


Independent Auditors’ Report (continued)To the Members of AFFIN Holdings Berhad

(Incorporated in Malaysia) (Company No. 23218-W)


Additional DisclosurePursuant to Listing Requirements

The information set out below is disclosed in accordance with the Listing Requirements of Bursa Malaysia Sdn Bhd('BMSB'):

1. Utilisation of proceeds from corporate proposal

There was no fund raising exercise by the Company in year 2008.

2. Share buy-backs during the financial year

The Company did not carry out any share buy-backs exercise during the financial year ended 31 December2008.

3. Options, warrants or convertible securities exercised

No options, warrants or convertible securities were issued by the Company or exercised during the financialyear ended 31 December 2008, except for the exercise of share options under AFFIN Holdings Berhad'sEmployees' Share Options Scheme as disclosed in Note 25 to the financial statements.

4. Sanctions / penalties

There were no sanctions and/or penalties imposed on the Company and its subsidiaries, directors andmanagement by the relevant regulatory bodies during the financial year ended 31 December 2008.

5. Non-audit fees

GROUP COMPANYRM'000 RM'000

Non-audit fees paid to external auditors for thefinancial year ended 31 December 2008 427 33

6. Variation in result

There were no profit estimate, forecast and projection issued by AFFIN Holdings Berhad and its subsidiarycompanies during the financial year ended 31 December 2008.

7. Profit guarantee

There were no profit guarantees given by the Company and its subsidiaries during the financial year ended 31December 2008.

8. Revaluation policy of landed properties

The Group does not revalue its landed properties classified as Property, Plant and Equipment.

9. Material contracts

There were no material contracts outside the ordinary course of business entered by the Group during thefinancial year except those disclosed in Note 44 to the financial statements.


10. Recurrent related party transactions of a revenue or trading nature

At the Annual General Meeting held on 16 April 2008, the Company obtained Shareholders' Mandate to allowthe Group to enter into recurrent related party transactions of a revenue or trading nature.

In accordance with Section 4.1.5 of Practise Note No. 12/2001 of the Bursa Malaysia Securities Berhad ListingRequirements, the details of recurrent related party transactions conducted during the financial year ended 31 December 2008 pursuant to the Shareholders' Mandate are disclosed as follows:

Interested Directors / Major Shareholders / persons Value of

Name of Related Nature of connected to Directors or Transactioncompany company transaction Major Shareholders RM'000

Additional Disclosure (continued)Pursuant to Listing Requirements

Interested DirectorsGen. (R) Tan Sri Dato' Seri MohdZahidi bin Haji Zainuddin, Tan SriDato' Lodin bin Wok Kamaruddinand Datuk Azzat bin Kamaludin

Interested Major ShareholdersLembaga Tabung Angkatan Tentera(“LTAT”) and Boustead HoldingsBerhad (“Boustead”)


Interested Major ShareholdersLTAT and Boustead



Interested DirectorDatuk Azzat bin Kamaludin



AFFINHoldingsBerhad

BousteadManagementServicesSdn Bhd

Irat Hotels& ResortsSdn Bhd(Irat)

BousteadTravelServicesSdn Bhd(BousteadTravel)

Azzat & Izzat

BousteadHotels &ResortSdn Bhd(BousteadHotels &Resort)

Provision of shareregistrar services

Rental payment forrental of officepremises, car parkand utilities chargespayable monthly for alease term renewableevery three (3) yearsand payment forother related services

Provision of travellingrelated services

Legal fees

Hotel facilities andrefreshment

65

636

18

1

4



10. Recurrent related party transactions of a revenue or trading nature (continued)













AFFINBankBerhad

BousteadAdvertisingSdn Bhd(BousteadAdvertising)

PerbadananPerwira NiagaMalaysia

BousteadTravel

BousteadPropertiesBerhad

LTAT

Artwork and materialcharges for printingof annual report andother services

Rental payment forrental of officepremises and carpark payablemonthly for a leaseterm renewableevery three (3) yearsand payment forother relatedservices

Provision oftravelling relatedservices

Rental payment forrental of officepremises and carpark payablemonthly for a leaseterm renewableevery five (5) years(Menara AFFIN)

Rental payment forrental of officepremises payablemonthly for a leaseterm renewableevery three (3) years

1

71

812

9,636

737







Interested DirectorDatuk Azzat bin Kamaludin


Interested Major ShareholdersBoustead and LTAT







AFFINIslamicBankBerhad

AFFINInvestmentBankBerhad

BousteadCurveSdn Bhd(BousteadCurve)

Azzat & Izzat

BousteadHotels andResort

BousteadTravel

BousteadTravel

BousteadRealtySdn Bhd(BousteadRealty)

Rental payment forrental of officepremises payablemonthly for a leaseterm renewableevery three (3) years

Legal fees

Hotelaccommodation



Rental payment forrental of officepremises and carpark payablemonthly for a leaseterm renewableevery three (3) yearsand payment forother related services

281

1

31

152

493

1,907
















BousteadPetroleumMarketingSdn Bhd

BousteadCurve

BousteadAdvertising

Irat

BousteadHotels &Resort

Petrol consumption

Rental payment forrental of officepremises, carparking and utilitiescharges monthly fora lease termrenewable everythree (3) year andpayment for otherrelated services

Design artwork,marketingadvertisement,signing ceremoniesand other relatedservices

Rental payment forrental of officepremises, car parkingand utilities chargesmonthly for a leaseterm renewable everythree (3) years andpayment for otherrelated services(Chulan Tower)

Hotel facilities andrefreshment

24

273

7

2,611

16
















AFFIN FundManagementBerhad

AFFINMoney-brokers SdnBhd

BousteadRealty

LTAT

BousteadRealty

BousteadAdvertising

Boustead Travel


Management fees


Artwork and materialcharges for printingof annual report

Provision of travelingrelated services

427

92

287

1

77








Interested DirectorsDavid William Mathews and VincentKwo Shih Kang

Interested Major ShareholderAXA Asia Pacific Ltd

Interested DirectorsDavid William Mathews and VincentKwo Shih Kang

Interested Major ShareholderAXA Asia Pacific Ltd



AXA AFFINLifeInsuranceBerhad

AFFINInsuranceBrokersSdn Bhd

Total

Irat

AXA AsiaPacific Ltd

AXA AsiaPacific Ltd

LTAT

Rental payment forrental of officepremises, car parkand utilities chargesfor lease termrenewable everythree (3) years andpayment for otherrelated services

Provision ofinformationtechnology supportservices

Provision of othersupport services


1,368

2,554

2,670

121

25,374



Particulars of PropertiesAs at 31 December 2008

AREASQ. FT. NET BOOK L: LAND APPROX. VALUEAREA AGE OF AS AT

LOCATION / DESCRIPTION / B: BUILT-UP BUILDING 31.12.2008 NO. TITLE/LOT NO. ADDRESS EXISTING USE TENURE AREA (YEARS) (RM)

1 HS(M) 6367, PT 7485 Nadi Kota, Bandar Single storey Leasehold L: 20,056 18 477,098 Mukim of Chenor Pusat Jengka bungalow / 99 yearsDistrict of Maran 26400 Jengka Branch premises Expiry:

Pahang (Jengka) 21/08/2091CRC

2 HS(D) 39216, K1 No. 1, Jln Tk 1/11a 3 storey basement Leasehold L: 3,900 14 1,588,612 PT 2068 Tmn Kinrara s/office / Expiry: B: 15,600Mukim and District Section 1, Batu 7 1/2 Branch premises 27/08/2091of Petaling Jln Puchong (Kinrara)

58200 Selangor CRC

3 Town Lease Lot 19 & 20 4 storey Leasehold L: 2,780 15 2,391,210 No. 017541374 Sadong Jaya s/office / 999 years B: 10,144& 017541383 Complex Branch premises Expiry:Lots 82 & 83, Blok K Jalan Juara Ikan 3 (Kota Kinabalu) 21/01/2901Mukim of Karamunsing Karamunsing CRCDistrict of K. Kinabalu 88300 K. Kinabalu

Sabah

4 PT 3686 & 3687 No. 10 4 storey Leasehold L: 3,681 12 1,973,985 HS(D) 5167 & 5168 Jln Todak 1 s/office / 99 years B: 13,716Mukim 1 Pusat Bandar Branch premises Expiry:District of Seberang Seberang Jaya (Seberang Jaya) 21/10/2092Perai Tengah 13700 Perai CRCPenang Penang

5 HS(D) 52849,52850, No. 81, 83 & 85 3 units of Leasehold L: 4,950 13 1,118,552 52988 & 52989 Jalan 2/3A 4 storey 99 years B: 16,733PT 2, 3, 6620 & 6621 Pusat Pasar Borong s/office / Expiry:Mukim of Batu KM 12, Jalan Ipoh Branch premises 01/01/2086District of 68100 Batu Caves (Selayang)W. Persekutuan Kuala Lumpur CRC

6 Lot 2387 & 2388 Lot 2387 & 2388 2 units of 3 storey Leasehold L: 3,190 12 955,819 Block 5 Jalan Boulevard 1A s/office / 60 years B: 8,371District of Miri Boulevard Branch premises Expiry:

Commercial Centre (Miri) 21/01/20503km, Jalan Miri-Pujut CRC/HPC98000 Miri, Sarawak

7 HS(D) 143324, a) Commercial Land 16 storey Leasehold L: 32,561 9 47,057,938 PT 18, Seksyen 14 Precint 3.4 building with 99 years B: 81,400Bandar Shah Alam Pusat Bandar 4 storey Expiry:Selangor Shah Alam Basement 11/05/2100

b) Bangunan BuildingAffinbank




8 Lot (PT) 34827 No. 1 & 3 2 Units of 3 1/2 Leasehold L: 4,843 15 3,540,155 HS(M) 18, 32987 Jalan Pandan s/apartment / 99 years B: 16,227Mukim of Ampang Indah 4/2 unoccupied Expiry:District of Ulu Langat Pandan Indah Branch premises 14/04/2087

55100 Kuala Lumpur Pandan Indah

9 Title No. 111/10/1825 Lot 1825 Double storey Leasehold L: 7,606 12 200,001 Lot No. 1825 Blok 10 bungalow / 99 years B: 2,500Block 10 Lorong Green 1 Branch Mgr's Expiry:Kuching Central Land Kuching, Sarawak residence 31/12/2038

(Kuching)Vacant

10 HS (M) 14862 & 14863 No. 29 & 31 2 units of 4 storey Leasehold L: 3,300 11 2,915,038 PT 21350 & 21351 Jalan Tiara 3 s/office / 99 years B: 13,200Tempat Bukit Raja Bandar Baru Kelang Branch premises Expiry:Mukim of Kapar 41150 Kelang (Klang Utara) 08/05/2093District of Klang Selangor CRC/HPC

11 (Upon issuance of Sub Lot 13 1 unit of 3 storey Leasehold L: 3,240 11 724,046 separate title) Off Lot 3299 s/office / 60 years B: 9,720Sub-lot 13, Lot 3060 Bintulu Town District Branch premisesDistrict of Bintulu Off Jalan Diwarta (Bintulu) *Separate title has 97000 Bintulu CRC/HPCnot been issued Sarawak

12 PTD 62642 & 62643 No. 49 & 51 2 adjacent Leasehold L: 5,468 11 1,394,936 HS (D) 227069 & Jalan Sri Perkasa 2/1 lots / 3 storey 99 years B: 10,710227070 Taman Tampoi Utama s/house / Expiry:Mukim of Pulai 81200 Tampoi Branch premises 13/04/2094District of Johor Bahru Johor Bahru, Johor (Tampoi)

CRC

13 Lot 27/28, Seksyen 1 No. 840 & 842, 4 1/2 storey Leasehold L: 3,081 23 1,842,835 No. Hakmilik 980/981 Bt 4 1/2 Jalan Ipoh building (with 60 years B: 9,243 Mukim of Pekan Batu 51200 Kuala Lumpur basement) / Expiry:

Branch premises 13/01/2037(Batu Cant.)CRC

14 PTD 112746, No. 40 & 41 2 units of 2 storey Leasehold L: 2,800 13 640,489HS(D) 380770 Pasir Gudang s/office / 99 years B: 4,327PTD 112747, Business Centre Unoccupied Expiry:HS(D) 380771 Jalan Bandar Branch premises 20/09/2084Mukim of Plentong 81700 (Pasir Gudang)District of Pasir Gudang VacantJohor Bahru, Johor Johor

Particulars of Properties (continued)As at 31 December 2008




15 Upon issuance of title No. 2, Jln 1/27F 4 storey Leasehold L: 4,480 10 2,870,005 HS(D) 96849 KLSC Wangsa s/office 99 years B: 14,920(30438 [New]) Maju, 53300 (Corner Unit)Lot/PT 6536 Kuala Lumpur(28035 [New]) [C7/5O/86-1 Mukim of Setapak C7/5O/86-2District & State of C7/5O/86-4 & Wilayah Persekutuan C7/5O/86-3]

(Upon issuance of title) No. 4, Jln 1/27F 3 storey Leasehold L: 1,920HD(D) 96848 KLSC Wangsa s/office 99 years B: 5,760(30437 [New]) Maju, 53300 Branch premises Expiry:Lot/PT 6537 Kuala Lumpur (Wangsa Maju) Not stated(28034 [New]) [C7/5O/85-1, CRCMukim of Setapak C7/5O/85-2,District & State of C7/5O/85-3]Wilayah Persekutuan

16 Developer's Lot No. 3 & 4 2 units of 3 storey Leasehold L: 3,532 12 860,670S03 & S04 Jalan Aman s/office / 99 years B: 9,900PT 72, Town of Kawasan Branch premises Expiry:Port Dickson Penambakan Laut (Port Dickson) 31/01/2085District of 71000 Port Dickson CRCPort Dickson Negeri SembilanNegeri Sembilan

17 Lots 436 & 437 No. 3788 H & 3788 I 2 units of 3 storey Leasehold L: 3,200 23 968,319 (Formerly PT133 & Jalan Sultan Ibrahim s/house / 66 years B: 9,152 PT134), PN 3930 15000 Kota Bharu Branch premises Expiry:& PN 3931 (Formerly Kelantan (Kota Bharu) 04/03/2063HSD4/98 & CRC/HPC (Lot No.436) HSD5/98), Section 13 09/03/2064 Town & District of (Lot No.437)Kota Bharu, Kelantan

18 HS(M) 6836 No. 101, 201, 301, Not stated / Leasehold Not stated 8 8,888,424 P.T. 14531 401 & 501, Branch premisesMukim of Damansara Block C, Menara (Kelana Jaya) District of Petaling Glomac, Kelana CRC

Business Centre97, Jalan 227/247301 Kelana JayaSelangor





19 HS(D) 103053 No. 11, Kompleks 1 unit of 4 storey Leasehold L: 1,650 8 2,205,882 Lot No. 770 Perdagangan Umno s/office / B: 8,000Section 11 Persiaran Damai Branch premisesDistrict of Petaling 40000 Shah Alam Note : Use byTown of Shah Alam Selangor Darul Ehsan SDM

HS(D) 103053 No. 12, Kompleks 1 unit of 4 storey Leasehold L: 1,650 Lot No. 770 Perdagangan Umno s/office / B: 8,000Section 11 Persiaran Damai Branch premisesDistrict of Petaling 40000 Shah Alam Note : Use byTown of Shah Alam Selangor Darul Ehsan SDM

20 HS(D) 9980 Corus Lagoon Not stated / Leasehold L: Not 8 161,021 PT 4370 Apartment Applicable Expiry: ApplicableMukim & District Unit B-L3-06 holiday 06/07/2087 B: 792Port Dickson Batu 2, Jalan Pantai resort

71000 Port Dickson apartment Negeri Sembilan

New Title:- Lot No. 287PN 2474 / M1 / 3/48Mukim Bandar Port DicksonDaerah Port Dickson

21 HS(D) 67297 No. 5, Jalan 2/23B 1 unit of 4 storey Leasehold L: 1,650 8 849,588 P.T. 9498 MWE Kepong s/office / B: 6,200Mukim Batu Comm. Park UnoccupiedDistrict of Wilayah 52100 Kuala Lumpur Branch premisesPersekutuan (Kpg Comm. Park)

Vacant Note: Use by PLD

22 HS(D) 1772 Awana Kijal Beach Holiday resort Leasehold – 8 349,769PT 2851 Resort Apartment apartmentMukim of Kijal (2 Rooms) 13B District of Kemaman Baiduri Apartment

KM 28, Jalan Kemaman-Dungun24100 KijalTerengganu

HS(D) 1772 Awana Kijal BeachPT 2851 Resort ApartmentMukim of Kijal (3 Rooms), 19A, District of Kemaman Baiduri Apartment

KM 28, Jalan Kemaman-Dungun24100 KijalTerengganu





23 Lot 1894 63 & 63A 3 storey Leasehold L: 4,171 8 1,734,581Title No. 1289 & Jalan Sultan Ismail s/office / 99 years Lot 1895 20200 Kuala Branch premises Expiry:Title No. 1290 Terengganu (Kuala 18/12/2048Daerah & Bandar Terengganu Terengganu)Kuala Terengganu CRC/HPCNegeri Terengganu

24 HS(D) 4705 & 4706 No. 200 & 201 2 units of Leasehold L : 4,430 28 532,966 District of Melaka Taman Melaka Raya 3 storey s/office / 90 years B : 10,031Tengah Off Jalan Branch premises Expiry:

Parameswara (Melaka Raya) 19/12/207575000 Melaka CRC/HPC

25 Lot 247 & 248, Lots 247 & 248 2 units of Leasehold L: 2,500 22 1,076,593 Section 49 Section 49, KTLD 4 storey s/office / 56 yearsLease of State Land Jalan Tunku Branch premises Expiry:

Abdul Rahman (Kuching) 24/07/204493100 Kuching CRC/HPC

26 Town Lease Lot 14, Block B 3 storey Leasehold 1200 / 3600 13 518,649117509707 MDLD, 3679 s/house / (89 years)Sabah Land Metro Commercial Branch premises Expiry:

Complex, 91110 31/12/2085Lahad Datu, Sabah

27 Lot 117, Section 12 Lot 117, Section 12 4 storey Leasehold L: 1,400 26 314,548 Kuching Town Land Bangunan Ejawaris s/office / 99 years B: 5,600

Jalan Haji Taha unoccupied Expiry:93400 Kuching Branch premises 30/06/2080Sarawak vacant

28 Town Lease Lot 516, Block 9 3 storey s/office / Leasehold L: 1,181 20 374,443 No. 492(1) Jalan Merbau Unoccupied 60 years B: 3,540Lot No. 516, Miri 98000 Miri Branch premises Expiry:Concession Land Sarawak vacant 31/05/2048

29 Towns Lease 21, Bintulu Town 4 storey Leasehold L: 1,300 20 424,820 No. 1147, Extension Centre s/office / 60 years B: 5,048Lot No. 2307 97000 Bintulu Unoccupied Expiry:

Sarawak Branch premises 31/01/2044vacant

30 HS(D) 5217 No. 1, Jln Berangan 4 storey Freehold L: 3,000 27 513,765 PT. 90 Section 1 42000 Port Klang s/office / B: 12,768Town of Selangor Branch premisesP Swethenham (Port Klang)District of Klang CRC/HPC





31 HS(D) 892 No. 1 3 1/2 storey Freehold L: 3,367 17 568,984PT 6727/24, Jln Tun Ismail s/office / B: 12,800Mukim of 25000 Kuantan Branch premisesKuala Kuantan Pahang (Kuantan)District of Kuantan CRC/HPCPahang

32 Lot 119, Section 14, No. 11 & 11A 5 storey Freehold L: 3,261 12 1,223,151 (Formerly P.T. 15727 Jln Mamanda 7/1 s/office B: 5,658& 15728) GRN 62485 Ampang Point (Grd Flr &(Formerly HS(D) 68000 Ampang 1st Flr) / 11547 & 11548) Selangor Branch premisesMukim of Ampang Darul Ehsan (Ampang Jaya)Town of Ampang CRCDistrict of Ulu LangatSelangor

33 HS(D) 14249 & 14250 No. 124 & 126 2 units of 3 storey Freehold L: 3,080 16 1,171,333 Lot 8552 & 8553 Jalan Mayang Pasir s/office/house / B: 8,360Mukim 12 Tmn Sri Tunas Branch premisesSouth West District 11950 Bayan Lepas (Bayan Baru)Penang Penang CRC

34 GRN 178175 No. 88, Jalan 2 storey Freehold L: 3,200 16 156,848 Lot 57266 Molek 2/17 Semi-detached / B: 2,090Mukim of Plentong Taman Molek Branch Mgr'sDistrict of Johor Bahru ResidenceJohor Bahru, Johor Johor (Johor Jaya)

Vacant

35 HS(D) 2874 & No. 503 3 storey Freehold L: 6,000 15 509,232PTB 4161 Jln Mersing s/office / B: 9,944T/ship of Kluang 86000 Kluang Branch premisesDistrict of Kluang Johor (Kluang)Johor CRC/HPC

36 HS(D) 9406 & No. 7 & 9 2 units of 4 storey Freehold L: 3,520 15 1,040,964HS(D) 9407 Jln SS15/8A s/office / B: 9,944PT 4045 & PT 4046 47500 Subang Jaya Branch premisesMukim of Damansara Selangor (Subang Jaya)District of Petaling CRCSelangor

37 Lot 51412 & 51413 No. 4 & 6 2 units of 3 storey Freehold L: 4,659 17 3,574,382 GRN 23844 & 23843 Jalan Telawi 3 s/office / B: 11,858Mukim of Kuala Lumpur Bangsar Baru Branch premisesDistrict of Kuala Lumpur 59100 Kuala Lumpur (Bangsar) CRCFederal Territory of Kuala Lumpur





38 HS(M) 4961 & No. 2 & 3, Jln Saga 2 units of Freehold L: 3,510 13 236,650 HS(M) 4962 Tmn Sri Saga 3 1/2 storey B: 11,136PT 457 & PT 458 Off Jln Sg Chua s/office /Mukim of Kajang 43000 Kajang Branch premisesDistrict of Hulu Langat (Kajang)Selangor CRC

39 H.S(M) 4884, No 195 Single-storey Freehold L: 16,620 15 122,679 Lot No. P.T. 10107 Persiaran Cinta detached house / B: 1,221Town of Sayang Branch Mgr's Sungai Petani Kelab Cinta Sayang residenceDistrict of Kuala Muda 08000 Sg. Petani (Sg Petani)Kedah Kedah vacant

40 GM 2251 & 2252 No. 1317 & 1318 2 units of 3 storey Freehold L: 2,390 13 552,478 Lots 3991 & 3992 Lorong Malinja s/house / B: 6,920Mukim 5 Tmn Sepakat Branch premises Seberang Perai Utara Off Jln Butterworth (Kepala Batas)Pulau Pinang Kepala Batas CRC

41 HS(D) 73618 & 73619 No. 5733 & 5734 2 units of 3 storey Freehold L: 3,600 14 755,533 PT 5733 & 5734 Jln TS 2/1D, Tmn s/office / B: 10,800Mukim of Labu Semarak Phase II Branch premises District of Seremban 71800 Nilai (Nilai) CRCNegeri Sembilan Negeri Sembilan

42 PTD 48474 & 48475 No. 130 & 132 2 units of 3 storey Freehold L: 4,773 14 1,578,037 HS(D) 86046 & 86047 Jln Rosmerah 2/17 s/house / B: 14,319Mukim of Plentong Tmn Johor Jaya Branch premises District of 81100 Johor Bahru (Johor Jaya)Johor Bharu, Johor Johor CRC/HPC

43 HS(D) 67773 & 67774 No. 47 & 49 2 units of 3 storey Freehold L: 5,138 17 3,657,259 Lots 29427 & 29428 Jalan Tun Mohd s/office / B: 11,250Mukim of Fuad 3 Branch premisesKuala Lumpur Taman Tun Dr Ismail (TTDI) CRCDistrict of 60000 Kuala LumpurKuala LumpurFederal Territory Kuala Lumpur

44 Lots 14127 & 14128 No. 159 & 161 2 units of 3 storey Freehold L: 4,306 20 1,890,986 GRN 7792 & 7793 Jalan Genting Kelang with basement / B: 17,224Mukim of Setapak 53000 Setapak s/office / District of Kuala Lumpur Branch premisesKuala Lumpur (Setapak)Federal Territory CRCof Kuala Lumpur





45 Lot 64341 & No. 23 & 25 2 units of 4 storey Freehold L: 3,840 15 1,892,709Lot 64342 Jalan Permas 10/2 s/house / B: 13,440GRN 144200 & Bandar Baru Branch premisesGRN 144205 Permas Jaya (Permas Jaya)(Formerly 81750 Masai CRCHS(D)215264 & JohorHS(D)215265)Mukim of PlentongDistrict of Johor Bahru, Johor

46 PTD 17855 & 17856, No. 18 & 20 2 units of 3 storey Freehold L: 3,840 26 2,112,829 HS(D) 39845 & 39846 Jln Serampang s/house / B: 11,520 Mukim of Plentong Taman Pelangi UnoccupiedDistrict of 80040 Johor Bahru Branch premisesJohor Bahru, Johor Johor (Johor Bahru)

Vacant

47 HS(D) 16728, No. 3 & 4 2 units of 3 storey Freehold L: 3,080 18 787,987 PTD 9887 & Jalan Merah s/house / B: 16,227HS(D) 16729 Taman Bukit Pasir Branch premisesPTD 9888 83000 Batu Pahat (Batu Pahat)Mukim of Johor Darul Takzim CRC/HPCSimpang KananDistrict of Batu Pahat

48 HS(D) 45011 No. 312, Jalan Batu 4 storey Freehold L: 2,780 12 1,482,686PT 42262 Unjur 7, Taman s/office / B: 11,116Mukim and District Bayu Perdana, Unoccupied of Kelang 41200 Klang Branch premisesSelangor Selangor (Pandamaran)

Vacant

49 GM 1434 No. A2 4 storey / Freehold L: 2,445 12 864,205 2400, Mukim of Seriab Taman Pengkalan Building / B: 9,677State of Perlis Assam Branch premises

01000 Kangar, Perlis (Kangar) CRC

50 HS(D) 100201 No. 41, 2 storey Freehold L: 2,607 18 218,964P.T.D. 62720 Jln Bakawali 35 s/house / B: 5,614 Mukim of Plentong Tmn Johor Jaya UnoccupiedDistrict of 81100 Johor Bahru BranchJohor Bahru, Johor Johor (Former JPC)





51 HSD 41955 & 41954 NOS. 39 & 41 2 units of 3 storey Freehold L: 5,565 11 2,553,526 PT 24179 & 24178 Jalan Taming s/office with B: 15,288Pekan Cheras Permai 1 basement /District of Ulu Langat Off Jalan Balakong Unoccupied Selangor 43300 Balakong Branch premises

Selangor (Balakong)Vacant

52 GRN 6787 149 & 151 2 units of 3 storey Freehold L: 3,304 11 1,325,109 1598, Mukim of Kuah Persiaran Bunga s/houses / B: 9,912District of Langkawi Raya, Langkawi Mall Branch premises Kedah Phase II, Kuah (Kuah)

07000 Langkawi CRCKedah

53 GRN 15684,15685, No. 7,7-1, 7-2,7-3A, 2 units of Freehold L: 3,509 12 1,496,79615694 & 15695 7-3B, 7-4A, 7-4B 5 storey B: 17,160(Formerly HS(D) No.8, 8-1, 8-2, s/office /7156,7157,7187 8-3A,8-3B, Apartment /& 7188), Lot No 967, 8-4A, 8-4B Branch premises968, 998 & 999 Jalan DR1 (Bukit Baru)(Formerly PT34, 35, Taman Delima Raya CRC65 & 66) Jalan PenghuluBandar Bukit Baru Abbas, Bukit Baru Seksyen III 75150 MelakaDistrict of Melaka Tengah, Malacca

54 Geran 26883 & No. 27 & 29 2 contiguous unit Freehold L: 163 28 985,11526903, 334 & 335 Jalan Tun Razak intermediate sq mtrSection 47 53000 Kuala Lumpur 4 storey terraced B: 163 Town and District (Everise Tours & s/house / sq mtrof Kuala Lumpur Travel S/B) UnoccupiedFederal Territory ofKuala Lumpur

55 Grant 99940 Suite B-4 Ground floor Freehold L: 9,064 10 2,155,511 9181, Town of Kulim Ground Floor commercial space B: 9,064District of Kulim KHTP Business KHTP Business Kedah Centre Centre /

Kulim Hi-tech Park Unoccupied 09800 Kulim Branch Premises

(Kulim Hi-tech) Vacant (5-s/office)





56 HS(D) 342228 & No. 93 & 94 2 units of Freehold L: 4,607 9 1,235,595 342229 Jalan Kenanga 29/7 4 storey s/houses / B: 17,749PTD 50679 & 50680 Taman Bandar UnoccupiedMukim of Senai-Kulai Indahpura Branch premisesDistrict of 81000 Kulai (Kulai)Johor Bahru, Johor Johor Vacant

57 Geran No.48649, Lot E189 Land / Freehold L: 9,534 8 162,078Lot No 8066, Kulim Golf & Branch Mgr'sHS(D) 895, Country Resort ResidenceNo. P.T. 1201, Kulim, Kedah (Kulim)Mukim Padang China VacantDistrict of Kulim

58 GRN 106574 & No. 1 & 3 2 adjacent units / Freehold L: 4,379 8 1,740,285106575 Jalan PSK 2 3 storey s/office / B: 13,13965325 & 65326 Pusat Perdagangan Unoccupied Pekan Serdang Sri Kembangan Branch premisesDistrict of Petaling 43300 Sri Kembangan Seri KembanganSelangor Selangor Vacant

59 Geran HBM No. 188-21-6 An end unit Freehold L: Not 8 197,401107/M1/22/124 Sri Sayang 3-bedroom applicableParcel No. 124 Jalan Batu apartment / B: 911Storey No. 22 Ferringhi Holiday resortBuilding No. M1 11000 Penang apartmentParent Lot 666Section 2Town of Batu FeringgiNorth East DistrictPenang

60 HS(D) 23766 No. 133, Jalan 1 unit 5 storey Freehold – 8 3,306,989PT 199, Seksyen 40 Bunus, Off Jalan s/office /Town of Kuala Lumpur Masjid India Branch premisesDistrict of Kuala Lumpur 50150 (Jln Bunus)Federal Territory Kuala Lumpur CRCof Kuala Lumpur

61 HSD 120238 & No. 16 & 18 2 unit 4 storey Freehold L: 3,300 8 1,137,227120239 Jalan Bandar 3 s/office / B: 12,400PT 39 & 40 Pusat Bandar Branch premisesPekan Desa Puchong Puchong (Puchong)District of Petaling 47100 Puchong CRCSelangor Selangor

62 HS(D) 36868, No. 161 3 storey s/house / Freehold L: 2,268 28 873,163Lot 25724, Jalan SS2/24 Branch premises B: 8,902Mukim of Petaling 47300 Petaling Jaya (SS2)

Selangor AIBB/HPC





63 GM 405, Lot 1927 Lot PT 1995/1996 1 unit 2 storey Freehold L: 2,000 8 312,772 GM 407, Lot 2007 Bandar Baru s/office / B: 4,000GM 409, Lot 2006 Bukit Bunga Branch premises Mukim Nibong 17700 Tanah Merah (Jeli)Tanah Merah Kelantan CRCKelantan

64 No. 14269, Lot 1929, No. 157 3 storey s/house / Freehold L: 1,700 32 289,031 Town of Taiping Jalan Kota Branch premises B: 4,960District of Larut 34000 Taiping (Taiping)Perak Perak CRC/HPC

65 Unit No. P1-01-32,Held Under HakmilikStrata No Berdaftar Geran 61929/M1/1/53Lot No. 1594, Seksyen 2Bandar Tanjong Tokong

Unit No. P1-02-32Held Under HakmilikStrata No BerdaftarGeran 61929/M1/2/121Lot No. 1594, Seksyen 2Bandar Tanjong Tokong

Unit No. P1-03-32 98-G-32 toHeld Under Hakmilik 98-3A-32 5 storey Freehold L: 1,037 8 1,988,734Strata No Berdaftar Block 32 S/house / B: 7,732Geran 61929/M1 Prima Tanjung Branch premisesMenara B/3/223 Business Centre (Fettes Park)Lot No. 1594 Jalan Tanjung CRCSeksyen 2 TokongBandar Tanjong Tokong 10470 Pulau Pinang

Unit No. P1-04-32,Held Under HakmilikStrata No Berdaftar Geran 61929/M1Menara B/4/257Lot No. 1594, Seksyen 2Bandar Tanjong Tokong

Unit No. P1-05-32,Held Under HakmilikStrata No BerdaftarGeran 61929/M1Menara B/5/259Lot No. 1594, Seksyen 2Bandar Tanjong Tokong





66 HS(D) 194608, Lot F1 (Corner Lot) 3 storey Freehold L: 3,563 8 1,500,267 PT 1106 Pusat Perdagangan s/house / B: 10,684Pekan Serdang Seri Kembangan Branch premisesDaerah Petaling 43300 (Seri Kembangan)Selangor Seri Kembangan CRC/HPC

Selangor

67 Lot No. 002595, 61, Jalan Selat 4 storey Freehold L: 1,841 24 562,234 HS(D) 810 Taman Selat s/office / B: 4,698Section 4 12000 Butterworth UnoccupiedDaerah Seberang Pulau Pinang Branch premisesPerai Utara Vacant

68 Lot PTB 8637, 8A, Jalan Tun 3 storey Freehold L: 1,350 25 320,924HS(D) 23625 Abdul Razak s/office / B: 4,698 Daerah Johor Bahru Susur 3, 80200 UnoccupiedJohor Johor Bahru Branch premises

Vacant

69 Lot 3672, 3673 & No 41, 43 & 45 4 storey Freehold L: 2,002 14 4,050,0003674, Mukim Jln SS 6/12 s/house eachDamansara Kelana JayaDistrict of Petaling 47301 PetalingSelangor Darul EhsanHS(D) 78045, HS(D) 78046 &HS(D) 78047

70 Lot 3675, 3676 & No 47, 49 & 51 4 storey Freehold Lot 3675 14 4,050,0003677, Mukim Jln SS 6/12 s/house & 3676Damansara Kelana Jaya L: 2,002District of Petaling eachSelangor Darul Ehsan Lot 3677HS(D) 78048, L: 2,034HS(D) 78049 &HS(D) 78050

71 Lot 2503, Section 41 No 383, Jln Tunku 5 storey Freehold L: 169 11 2,776,000Town and District Abdul Rahman s/house sq mtrof Kuala Lumpur 50100 B: 845Federal Territory Kuala Lumpur sq mtrKuala LumpurGeran 43738

72 Lot 1903, Section 41 No 385, Jln Tunku 4 storey Leasehold L: 330 14 4,724,000Town and District Abdul Rahman s/house 99 years sq mtrof Kuala Lumpur 50100 (Expiry B: 1,320Federal Territory Kuala Lumpur 12/1/2071) sq mtrKuala LumpurPajakan 6249





73 Lots 5109 & 5111 No 2, Jalan Dewan 6 1/2 storey Leasehold B: 3,320 14 9,200,000Section 41 Sultan Sulaiman 1 s/house 99 years sq mtrTown and District Off Jalan Tunku with a (Expiry & 2,864of Kuala Lumpur Abdul Rahman basement 12/1/2071 & sq mtrFederal Territory 50300 car park 29/9/2056 L: 512Kuala Lumpur Kuala Lumpur respectively) sq mtr

74 Lot 400, Mukim of No 596, Taman 2 storey Leasehold L: 139 15 300,000Kawasan Bandar Melaka Raya s/house 99 years sq mtrDistrict of Melaka Bandar Hilir (Expiry B: 269Tengah, Melaka 75000 Melaka 4/10/2082) sq mtrPajakan Negeri 2117

75 Lot 2661 No 11 2 storey Freehold L: 182 10 550,000Town and District Jln Kong Sang s/house sq mtrof Seremban SerembanNegeri Sembilan Negeri SembilanDarul KhususGeran 76404

76 4 storey s/house Lot No PT 714 4 storey 26 660,000Lot No PT 714 Section 9 s/houseSection 9 Jln Tok HakimJln Tok Hakim 15700 Kota Bharu15700 Kota Bharu

77 4 1/2 storey s/house No 1304 4 1/2 storey 24 450,000No 1304 Jln Tunku Ibrahim s/houseJln Tunku Ibrahim 05000 Alor Setar05000 Alor Setar Kedah Darul AmanKedah Darul Aman

78 Lot 17660 No 2, Jalan Susur 1 4 storey Freehold L: 3,369 26 850,000Geran 49403 Jln Tun Abdul Razak s/houseJohor Bahru Johor Darul TakzimJohor Darul Takzim

79 HS(D) 807 & 808 Nos. 55 & 57 2 units of Freehold L: 4,779 23 1,679,891PT 2592 & 2593 Taman Selat 4 storey B: 13,760District of Seberang Jalan Bagan Luar s/officePerai Utama 12000 Butterworth Branch premises

80 HS(M) 2926 & 2925 Nos.10 & 12 2 units of Leasehold L: 3,840 25 608,418PT 21346 & 21345 Jalan Radin Tengah 3 storey Expiry: B: 11,520Mukim of Petaling Bandar Baru s/office 5/04/2078District of W.P. Sri Petaling Branch Premises Long Term

50770 Kuala Lumpur






81 HS (D) 16521 & 16496 NOS. 20 & 22 2 units of Freehold L: 3,230 24 1,464,222PT 8192/1387 & Jln 21/22 3 storey B: 9,750PT 8912/1366 SEA Park s/officeMukim of 46730 Petaling Jaya Branch PremisesKuala LumpurDistrict of Petaling

82 Town Lease: No. TB 281, 282 3 units of Leasehold L:6,720 24 1,538,963107516432 & 283 4 storey Expiry: B: 13,440Town Lease: Jln Haji Karim s/office 31/12/2895107516441 Town Extension11 Branch Premises Long TermTown Lease: 91008 Tawau107516450 SabahDistrict of Tawau

83 HS(D) 3659 & 3662 NOS. 93A & 93B 2 units of Freehold L: 4,107 24 665,091 PT 3227 & 3228 Jln Rasah, 3 storey B: 8,400District of Seremban 70470 Seremban s/office

N. Sembilan Branch Premises


Shareholding StatisticsAs at 27 February 2009

Size of Shareholdings No. of Holders % No. of Shares %

1 - 99 406 2.26 14,782 0.00 100 - 1,000 2,630 14.66 2,420,547 0.161,001 - 10,000 12,068 67.26 45,934,947 3.0710,001 - 100,000 2,555 14.24 75,407,683 5.05100,001 - 74,718,332* 281 1.58 223,063,912 14.93 74,718,332 and above** 3 0.00 1,147,524,796 76.79

Total 17,943 100.00 1,494,366,667 100.00

* Less than 5% of issued shares** 5% and above of issues shares

LIST OF TOP 30 SHAREHOLDERS AS AT 27 FEBRUARY 2009

Name Shareholdings %

1 Lembaga Tabung Angkatan Tentera 531,832,763 35.59

2 Boustead Holdings Berhad 309,240,407 20.69

3 Mayban Nominees (Asing) Sdn Bhd 306,451,626 20.51The Bank of East Asia Limited Hong Kong for The Bank of East Asia, Limited

4 Employees Provident Fund Board 37,851,800 2.53

5 Amanah Raya Nominees (Tempatan) Sdn Bhd 10,007,000 0.67 Public South-East Asia Select Fund

6 Mayban Nominees (Asing) Sdn Bhd 9,725,000 0.65The Bank of East Asia Limited Hong Kong for Grandeur Profit Holdings Limited

7 Citigroup Nominees (Asing) Sdn Bhd 9,611,900 0.64CBNY for DFA Emerging Markets Fund

8 HSBC Nominees (Asing) Sdn Bhd 8,310,200 0.56 Exempt An for JPMorgan Chase Bank

9 Amanah Raya Nominees (Tempatan) Sdn Bhd 6,523,000 0.44 Public Growth Fund

10 Mayban Nominees (Tempatan) Sdn Bhd 6,499,600 0.43 Mayban Trustees Berhad for Public Regular Savings Fund

11 Amanah Raya Nominees (Tempatan) Sdn Bhd 5,198,000 0.35 Public Equity Fund

12 BHLB Trustee Berhad 4,665,000 0.31 Public Regional Sector Fund

13 Amanah Raya Nominees (Tempatan) Sdn Bhd 4,118,600 0.28 Public Far-East Select Fund

14 Mayban Nominees (Tempatan) Sdn Bhd 4,115,000 0.28 Mayban Trustees Berhad for PB Asean Dividend Fund

15 Amanah Raya Nominees (Tempatan) Sdn Bhd 4,001,100 0.27 Public Savings Fund


LIST OF TOP 30 SHAREHOLDERS (continued)AS AT 27 FEBRUARY 2009

Name Shareholdings %

16 Amanah Raya Nominees (Tempatan) Sdn Bhd 3,702,000 0.25Public Dividend Select Fund

17 Mayban Nominees (Tempatan) Sdn Bhd 3,420,400 0.23 Mayban Trustees Berhad for Public Aggressive Growth Fund

18 AFFIN Nominees (Tempatan) Sdn Bhd 3,241,000 0.22 Pacific Credit Leasing Sdn Bhd for Umatrac Enterprises Sdn Bhd

19 Alliance Group Nominees (Tempatan) Sdn Bhd 3,115,975 0.21 Pheim Asset Management Sdn Bhd for Employees Provident Fund

20 Amanah Raya Nominees (Tempatan) Sdn Bhd 2,769,800 0.19Public Far-East Balance Fund

21 SBB Nominees (Tempatan) Sdn Bhd 2,700,000 0.18 Universiti Malaya

22 BHLB Trustee Berhad 2,691,800 0.18 Public Focus Select Fund

23 HSBC Nominees (Asing) Sdn Bhd 2,620,000 0.18 Exempt An for Morgan Stanley & Co. International Plc

24 Yayasan Guru Malaysia Berhad 2,474,000 0.17

25 Mayland Parkview Sdn Bhd 2,154,000 0.14

26 HLB Nominees (Asing) Sdn Bhd 1,736,000 0.12 Pledged Securities Account for Keen Capital Investments Limited

27 HSBC Nominees (Asing) Sdn Bhd 1,720,200 0.12Exempt An for JPMorgan Chase Bank

28 National Land Finance 1,700,000 0.11

29 HSBC Nominees (Asing) Sdn Bhd 1,526,300 0.10BNY Brussels For City Of New York Group Trust

30 Citigroup Nominees (Asing) Sdn Bhd 1,519,100 0.10 CBNY For Dimensional Funds

Total 1,295,241,571 86.70

SUBSTANTIAL SHAREHOLDERS

Shareholdings %

1 Lembaga Tabung Angkatan Tentera 531,832,763 35.59


3 Mayban Nominees (Asing) Sdn Bhd 306,451,626 20.51The Bank of East Asia Limited Hong Kong for The Bank of East Asia, Limited

Shareholding Statistics (continued)As at 27 February 2009


Warrantholding StatisticsAs at 27 February 2009

WARRANT 2000/2010

Size of Warrantholdings No. of Holders % No. of Warrants %

1 - 99 330 5.81 14,753 0.01100 - 1,000 2,128 37.46 1,412,907 0.921,001 - 10,000 2,095 36.88 10,038,648 6.5210,001 - 100,000 968 17.04 35,443,491 23.05100,001 - 7,668,784* 157 2.77 54,234,086 35.277,688,784 and above** 2 0.04 52,631,817 34.23

Total 5,680 100.00 153,775,702 100.00

* less than 5% of issued warrants** 5% and above of issued warrants

LIST OF TOP 30 WARRANTHOLDERS AS AT 27 FEBRUARY 2009

Name Warrantholdings %


2 Mayban Nominees (Tempatan) Sdn Bhd 9,000,900 5.85Mayban Trustees Berhad for Public Balanced Fund

3 Amanah Raya Nominees (Tempatan) Sdn Bhd 5,626,000 3.66Public South-East Asia Select Fund

4 Mayban Nominees (Tempatan) Sdn Bhd 2,942,000 1.91Pledged Securities Account for Kek Lian Lye

5 OSK Nominees (Tempatan) Sdn Bhd 1,815,700 1.18Pledged Securities Account for Wong Tow Fock

6 Amanah Raya Nominees (Tempatan) Sdn Bhd 1,709,800 1.11 Public Equity Fund

7 Amanah Raya Nominees (Tempatan) Sdn Bhd 1,653,000 1.07Public Far-East Select Fund

8 Alliance Group Nominees (Tempatan) Sdn Bhd 1,491,000 0.97Pledged Securities Account for Noor Azman & Noor Hizam B Mohd Nurdin

9 Wong Neng Hook 1,217,700 0.79

10 Kee Hun Chang & Kee Ah Bah 1,211,000 0.79

11 Teo Kim Lap 1,062,000 0.69

12 Lim Feng Chieh 1,000,000 0.65

13 RHB Capital Nominees (Tempatan) Sdn Bhd 1,000,000 0.65Pledged Securities Account for Norazmi B Mohamed Nurdin

14 RHB Capital Nominees (Tempatan) Sdn Bhd 825,200 0.54Pledged Securities Account for Oh Kim Sun

15 Yeo Chong Yee 821,200 0.53


LIST OF TOP 30 WARRANTHOLDERS (continued)AS AT 27 FEBRUARY 2009


16 Public Nominees (Tempatan) Sdn Bhd 783,600 0.51Pledged Securities Account for Chow Soong Ming

17 Yong Li Li 720,000 0.47

18 Foo Min Loong @ Oh Min Loong 677,000 0.44

19 Poh Tak Kiau @ Poo Tak Kiau 620,000 0.40

20 Public Nominees (Tempatan) Sdn Bhd 600,000 0.39Pledged Securities Account for Wong Heng Kit

21 Lim Siew Cheng 550,000 0.36

22 Tan Tek Lai 500,000 0.33

23 S.A. Shipping Sdn Bhd 499,700 0.32

24 Ho Sue Wah 450,000 0.29

25 Tim Chai @ Ng Tiam Chai 450,000 0.29

26 Mayban Nominees (Tempatan) Sdn Bhd 439,300 0.29Pledged Securities Account for Lim Shew Poh

27 RHB Capital Nominees (Tempatan) Sdn Bhd 427,000 0.28Pledged Securities Account for Tan Kim Seng

28 RHB Nominees (Tempatan) Sdn Bhd 420,000 0.27Pledged Securities Account for Lim Kian Seng

29 Teo Kim Tay 400,050 0.26

30 Chong Kong Fat @ Chung Kong Fat 400,000 0.26

Total 82,943,067 53.94

SUBSTANTIAL WARRANTHOLDERS



2 Mayban Nominees (Tempatan) Sdn Bhd 9,000,900 5.85Mayban Trustees Berhad for Public Balanced Fund

3 Amanah Raya Nominees (Tempatan) Sdn Bhd 5,626,000 3.66Public South-East Asia Select Fund

Warrantholding Statistics (continued)As at 27 February 2009

Proxy FormAFFIN HOLDINGS BERHAD (23218-W)

(Incorporated In Malaysia)

NOTES:1. A member entitled to attend or vote at the meeting may appoint a proxy or proxies (not more than two) to attend and vote instead of him. A proxy need

not be a member.2. Where a member appoints more than one proxy, the appointment shall be invalid unless he specifies the proportions of his holdings to be represented

by each proxy.3. The instrument appointing a proxy in the case of any individual shall be signed by the appointer or his attorney and in the case of a corporation, under

its common seal or under the hand of the officer duly authorised.4. Unless voting instructions are indicated in the spaces provided above, the proxy may vote as he thinks fit.5. The instrument appointing a proxy must be deposited at the Registered Office of the Company, located at 7th Floor, Chulan Tower, 3, Jalan Conlay,

50450 Kuala Lumpur not less than forty-eight hours before the time of the Meeting or any adjournment thereof.

I/We, (Full Name in Block Capitals)

of being a member/members of AFFIN HOLDINGS BERHAD hereby appoint

of or failing him, of or failing him, the CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf at the AnnualGeneral Meeting of the Company to be held on Monday, 20 April 2009 at 10:00 a.m. at 13th Floor, Bangunan LTAT,Jalan Bukit Bintang, 55100 Kuala Lumpur and at any adjournment thereof.

My/our proxy is to vote as indicated below:-

RESOLUTION FOR AGAINST

1. To receive and adopt the Financial Statements and the Reports of the Directors andAuditors thereon

2. To re-elect Professor Arthur Li Kwok Cheung as Director

3. To re-elect Y. Bhg. Gen. (R) Tan Sri Dato' Seri Mohd Zahidi bin Haji Zainuddin as Director

4. To re-elect Y. Bhg. Datuk Azzat bin Kamaludin as Director

5. To re-appoint Y. Bhg. Maj. Gen. (R) Dato' Mohamed Isa bin Che Kak as Director

6. To re-appoint Y. Bhg. Dato' Mustafa bin Mohamad Ali as Director

7. To re-appoint Dr. The Hon. Sir David Li Kwok Po as Director

8. To approve Directors' Fees

9. To re-appoint Auditors

10.To authorise the Directors to allot and issue shares

11. To approve the Shareholders' Mandate for Recurrent Related Party Transactions ofa Revenue of Trading Nature

NO. OF SHARES HELD

Signature or common seal of Shareholder(s)

Signed this day of 2009

Fold here

Fold here

STAMP

AFFIN HOLDINGS BERHAD7th Floor, Chulan Tower3, Jalan Conlay50450 Kuala Lumpur

Documents

Affin Holdings Cover (New)affin.listedcompany.com/newsroom/AFFIN-AnnualReport2008...Raja Dato’ Seri Aman bin Raja Haji Ahmad 25 April 1991 5/5 Maj. Gen. (R) Dato’Mohamed Isa bin