PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) ACCOUNTS - 31 DECEMBER 1999

Transcription

1 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) ACCOUNTS - 31 DECEMBER 1999

2 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) CONTENTS PAGE DIRECTORS' REPORT 1-10 STATEMENT BY DIRECTORS 11 STATUTORY DECLARATION 12 AUDITORS' REPORT BALANCE SHEETS 15 PROFIT AND LOSS ACCOUNTS 16 CONSOLIDATED CASH FLOW STATEMENT NOTES TO THE ACCOUNTS 19-65

3 1 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) DIRECTORS' REPORT FOR THE YEAR ENDED 31 DECEMBER 1999 The directors have pleasure in submitting their thirty-fourth annual report to the members together with the audited accounts of the and the for the year ended 31 December PRINCIPAL ACTIVITIES The is principally engaged in all aspects of banking, financing, stock and futures broking, provision of finance to purchasers of licensed public vehicles, provision of related financial services, management of unit trusts and investment holding. The is principally engaged in all aspects of banking business and the provision of related financial services. There have been no significant changes to these principal activities during the financial year. RESULTS RM'000 RM'000 Profit before exceptional item 838, ,995 Exceptional item - 88,246 Profit before taxation 838, ,241 Taxation (50,762) (2,877) Profit after taxation 787, ,364 Minority interests (171,271) - Profit after taxation and minority interests 616, ,364 Transfer to reserves (157,968) (129,591) 458, ,773 Retained profit brought forward 617, ,018 Profits available for distribution 1,075,351 1,028,791 Dividends (95,435) (95,435) Retained profit carried forward 979, ,356 ====== ======

4 2 DIVIDENDS Since the end of the previous financial year, the paid a final dividend of 4.0% less 28% taxation as proposed in the previous year s directors report. The amount of dividend paid of RM million includes RM782,000 being an underprovision of dividends for the previous financial year. The underprovision was a result of the exercise of options granted under the Option Schemes subsequent to the previous financial year end. No interim dividend was paid during the year. The directors now recommend a final tax exempt dividend of 8.0% amounting to RM million in respect of the current financial year, based on the issued and paid-up capital of 2,366,321,484 ordinary shares of RM0.50 each. SHARE CAPITAL During the financial year, the issued and paid-up capital of the was increased from 2,314,478,854 ordinary shares of RM0.50 each to 2,366,321,484 ordinary shares of RM0.50 each via the issuance of 40,142,000 and 11,700,630 new ordinary shares of RM0.50 each pursuant to the exercise of options granted under the PBB ESOS (1998) and the 1989 Option Scheme at the option prices of RM1.66 and RM2.24 per share, respectively. All the new shares that were issued rank pari passu in all respects with the existing shares of the. EMPLOYEES' SHARE OPTION SCHEME The has established two (2) Employees Share Option Schemes ( Option Schemes ) as follows:- (1) The 1989 Option Scheme; and (2) Public Berhad ( PBB ) ESOS (1998) The main features of 1989 Option Scheme are :- (a) (b) (c) (d) (e) (f) The eligibility for participation in the 1989 Option Scheme is at the discretion of the Board of Directors. It is open to any eligible executive staff of the and certain of its subsidiary companies; The total number of shares to be offered shall not exceed 5% of the issued share capital of the at any point of time during the existence of the scheme; No option shall be granted for less than 4,000 shares nor more than 38,000 shares unless so adjusted pursuant to (e) below; The option price for each ordinary share of RM0.50 each shall be the average of the middle market quotation of the shares of the as shown in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) trading days preceding the offering date; The number of outstanding options to subscribe for shares or the option price or both may be adjusted following any issue of additional shares, by way of rights or capitalisation of profits or reserves, made by the while an option remains unexercised; and The options can be exercised during the period of forty-five (45) days after the date on which the interim and final audited results of the are publicly announced or such other period of time as the Committee may in its discretion allow but not later than five (5) calendar years from the offer date of the options.

5 3 The first offer of options under the 1989 Option Scheme expired on 27 June 1994 and all unexercised options granted lapsed. On 13 June 1994, a second offer of options under the 1989 Option Scheme to subscribe for ordinary shares of RM0.50 each at an option price of RM3.92 per share was made to eligible employees. There were adjustments to the number of options and option price as a result of additional shares issued by way of a bonus issue in 1996 and rights cum bonus issues in The offer price of RM3.92 per share was revised to RM2.94 in 1996 and RM2.24 in 1998 accordingly. The second offer of options under the 1989 Option Scheme expired on 13 June 1999 and all unexercised options granted lapsed. The main features of the PBB ESOS (1998) are :- (a) (b) (c) (d) (e) (f) The eligibility for participation in the PBB ESOS (1998) is at the discretion of the PBB ESOS Committee. It is open to any eligible employee, with at least three (3) years continuous service, of the Public of companies; The total number of shares to be offered under the PBB ESOS (1998) (including aggregate number of options exercised under the 1989 Option Scheme), and options to be offered under any future schemes, shall not exceed 10% of the total issued and paid-up share capital of the at any point in time during the duration of the scheme; No option shall be granted for less than 1,000 shares nor more than 500,000 shares unless so adjusted pursuant to (e) below; The option price for each ordinary share of RM0.50 each shall be the average of the mean market quotation of PBB shares quoted as Local on the Main Board of the KLSE and as shown in the daily official list issued by the Kuala Lumpur Stock Exchange for the five (5) trading days preceding the offer date; The number of outstanding options to subscribe for shares or the option price or both may be adjusted following any issue of additional shares, by way of rights or capitalisation of profits or reserves, made by the while an option remains unexercised; and The options can be exercised four (4) times per annum during such period of time determined at the discretion of the PBB ESOS Committee but not later than five (5) calendar years from 25 February On 10 April 1998, an offer of options under the PBB ESOS (1998) to subscribe for ordinary shares of RM0.50 each at an option price of RM1.66 was made to eligible employees. The movements in the number of unexercised options to take up new ordinary shares of RM0.50 each of the Option Schemes are as follows : Option Scheme PBB ESOS (1998) Total (Number of Options) (Number of Options) (Number of Options) At 1 January ,123,200 75,878,250 90,001,450 Exercised during the year (11,700,630) (40,142,000) (51,842,630) Lapsed (2,422,570) (583,750) (3,006,320) At 31 December ,152,500 35,152,500 ======== ======== ======== The options granted do not confer any right to participate in any share issue of any other company.

6 4 Company No H RESERVES AND PROVISIONS There were no material transfers to or from reserves or provisions during the year other than those disclosed in the accounts. BAD AND DOUBTFUL DEBTS Before the profit and loss accounts and balance sheets of the and the were made out, the directors took reasonable steps to ascertain that actions had been taken in relation to the writing off of bad debts and the making of provisions for doubtful debts, and satisfied themselves that all known bad debts had been written off and that adequate provisions had been made for bad and doubtful debts. At the date of this report, the directors are not aware of any circumstances which would render the amount written off for bad debts, or the amount of the provision for doubtful debts in the accounts of the and the, inadequate to any substantial extent. CURRENT ASSETS Before the profit and loss accounts and balance sheets of the and the were made out, the directors took reasonable steps to ensure that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business at their value as shown in the accounting records of the and the have been written down to an amount which they might be expected to realise. At the date of this report, the directors are not aware of any circumstances which would render the values attributed to the current assets in the accounts of the and the misleading. VALUATION METHODS At the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existing methods of valuation of assets and liabilities in the accounts of the and the misleading or inappropriate. CONTINGENT AND OTHER LIABILITIES At the date of this report, there does not exist :- (a) (b) any charge on the assets of the or the which has arisen since the end of the financial year which secures the liabilities of any other person; or any contingent liability in respect of the or the that has arisen since the end of the financial year other than in the ordinary course of business. No contingent or other liability of the and the has become enforceable, or is likely to become enforceable, within the period of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect the ability of the or the to meet their obligations as and when they fall due. CHANGE OF CIRCUMSTANCES At the date of this report, the directors are not aware of any circumstances, not otherwise dealt with in this report or the accounts of the and the, which would render any amount stated in the accounts misleading.

7 5 ITEMS OF AN UNUSUAL NATURE The results of the operations of the and the during the financial year were not, in the opinion of the directors, substantially affected by any item, transaction or event of a material and unusual nature except as disclosed in the accounts. 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, in the opinion of the directors, to affect substantially the results of the operations of the and the for the current financial year in which this report is made. DIRECTORS The directors who served since the date of the last report are :- Y.Bhg. Tan Sri Dato Thong Yaw Hong Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow Y.Bhg. Datuk Tay Ah Lek Y.Bhg. Dato Yeoh Chin Kee Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah Tuan Haji Abdul Aziz bin Omar (appointed on 5 January 2000) In accordance with Article 101 of the 's Articles of Association, Y.A.M. Tengku Abdul Rahman Ibni Sultan Haji Ahmad Shah Al-Mustain Billah retires by rotation at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. In accordance with Article 105 of 's Articles of Association, Tuan Haji Abdul Aziz bin Omar retires from the board at the forthcoming Annual General Meeting and, being eligible, offers himself for re-election. Y.Bhg. Tan Sri Dato Thong Yaw Hong and Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow retire pursuant to Section 129 of the Companies Act, 1965 at the forthcoming Annual General Meeting and offer themselves for re-appointment in accordance with Section 129(6) of the Companies Act, 1965 to hold office until the conclusion of the next Annual General Meeting of the. DIRECTORS' INTERESTS According to the register of directors' shareholdings, the interest of the directors who were in office at the end of the financial year in shares of the and its subsidiary companies are as follows:- Number of Ordinary Shares of RM0.50 each Balance at Balance at Bought Sold The Direct shareholdings Y.Bhg. Tan Sri Dato Thong Yaw Hong 222, ,000 Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow 210, ,000 Y.Bhg. Datuk Tay Ah Lek 136, ,000 Y.Bhg. Dato Yeoh Chin Kee 469, , ,000

8 6 Company No H Number of Ordinary Shares of RM0.50 each Balance at Balance at Bought Sold The Deemed interest Y.Bhg. Tan Sri Dato Thong Yaw Hong 615, ,000 Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow 783,974,000 81,279,000 81,025, ,228,000 Y.Bhg. Datuk Tay Ah Lek 133, ,000 Number of Options Option Balance at Balance at Price Entitlement Exercised The PBB ESOS (1998) Share options Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow RM , ,000 Y.Bhg. Datuk Tay Ah Lek RM , ,000 Number of Ordinary Shares of RM1.00 each Balance at Balance at Bought Sold Public Finance Berhad Direct shareholdings Y.Bhg. Tan Sri Dato Thong Yaw Hong 2, ,580 Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow 16, ,500 Y.Bhg. Datuk Tay Ah Lek 1, ,650 Y.Bhg. Dato Yeoh Chin Kee 8,000-8,000 - Deemed interest (excluding shares held by the ) Y.Bhg. Tan Sri Dato Thong Yaw Hong 6, ,052 Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow 2,552,521-2,552,521 - Y.Bhg. Datuk Tay Ah Lek 2, ,349

9 7 Y.Bhg. Tan Sri Dato Dr. Teh Hong Piow, by virtue of his interest in the, is also deemed interested in the shares of all the 's subsidiary companies to the extent the has an interest. Other than as disclosed, none of the directors in office at the end of the financial year had any interest in shares of the and its related corporations during the financial year. DIRECTORS' BENEFITS During and at the end of the financial year, no arrangements subsisted, to which the or its subsidiary companies is a party with the object of enabling directors of the to acquire benefits by means of the acquisition of shares in or debentures of the or any other body corporate except for the Employees Share Option Scheme described above. Since the end of the previous financial year, no director of the has received or become entitled to receive any benefit (other than a benefit included in the aggregate amount of emoluments received or due and receivable by the directors or the fixed salary of a full time employee of the as disclosed in Note 26 to the accounts) by reason of a contract made by the or a related corporation with the director or with a firm of which he is a member, or with a company in which he has substantial financial interest. Transactions of the and its subsidiary companies with the Directors of the and with companies in which certain Directors are deemed to have interests arising in the ordinary course of business are disclosed in Notes 23, 25(b) and 25(c) to the accounts. SIGNIFICANT EVENTS Significant events during the financial year include the following :- (a) (b) In 1999, approval from the Securities Commission was obtained for the proposed restructuring of certain subsidiary companies involving Public Consolidated Holdings Sdn. Bhd. ( PCH ), PB Securities Sdn Bhd ( PBS ) and Kuala Lumpur Mutual Fund Berhad ( KLMF ) that was announced on 19 November Arising from the SC approval, the restructuring exercise was effected as follows:- (i) The acquisition of 19.6% equity interest from Swiss Corporation in PCH, comprising 14,000,000 ordinary shares of RM0.50 each, for a cash consideration of RM1.00; (ii) The acquisition of 55% equity interest in KLMF, comprising 3,300,000 ordinary shares of RM1.00 each, by PCH from the for a consideration of RM93,710,830 which was satisfied via the issuance of 9,371,083 new ordinary shares of RM0.50 each in PCH to the at RM10.00 per share; (iii) (iv) (v) The subscription of 5,111,500 new ordinary shares of RM1.00 each in Business Premium Sdn. Bhd. at an issue price of RM10.00 per share for cash and the acquisition of four (4) existing ordinary shares of RM1.00 each in Business Premium Sdn. Bhd. for a cash consideration of RM40.00 by PCH; The disposal of 30% equity interest in KLMF, comprising 1,800,000 ordinary shares of RM1.00 each by Encik Mohamad Nizam bin Tun Abdul Razak, a former director of the, to Business Premium Sdn. Bhd. for a cash consideration of RM51,115,000; and The acquisition of 30% equity interest in PCH, comprising 26,118,572 ordinary shares of RM0.50 each, by the from Encik Mohamed Nizam bin Tun Abdul Razak, for a consideration of RM1.00. With the completion of the restructuring exercise, PCH became a wholly owned subsidiary and KLMF became an effectively 78.2% owned subsidiary of the.

10 8 Company No H (c) (d) (e) On 23 July 1999, 30 September 1999 and 29 December 1999 respectively, PCH increased its issued and paid up capital from RM35,714,286 to RM175,000,000 via: (i) A rights issue of 15,633,333 new ordinary shares of RM0.50 each, for cash at RM10.00 per new ordinary share credited as fully paid up on the basis of 2 new ordinary shares for approximately 9 existing ordinary shares; (ii) An issuance of 9,371,083 new ordinary share of RM0.50 each at an issue price of RM10.00 per new ordinary share to finance the acquisition of 55% equity interest in KLMF from the and (iii) A rights issue of 253,567,012 new ordinary shares of RM0.50 each at an issue price of RM1.00 per new ordinary share for working capital purposes. On 29 July 1999, Negara Malaysia announced a consolidation programme for the domestic banking industry in Malaysia with the intention to create six anchor banking groups and the was selected as an anchor bank. Following this, the entered into Memoranda of Understanding with the identified merger partners to facilitate negotiations on the proposed mergers. Subsequently, in October 1999, Negara Malaysia announced changes to its guidelines to allow banking groups to choose their respective merger partners and also to choose the party to lead in their respective groupings. Negara Malaysia announced the formation of 10 banking groups in mid February 2000 and the was again named as an anchor bank. The s approved merger partners are Hock Hua Berhad, Advance Finance Berhad and Sime Merchant ers Berhad. On 17 November 1999, PBS increased its issued and paid-up share capital by way of a rights issue of 15,000,000 new ordinary shares of RM1.00 each at an issue price of RM10.00 per new ordinary share to its existing shareholder in the proportion of 3 new ordinary shares of RM1.00 each for every 4 existing ordinary shares of RM1.00 each in the company. The company also redeemed its existing issue of 150,000 Redeemable Cumulative Convertible Preference ( RCCP ) shares of RM1.00 each which were issued at a premium of RM per share at a redemption amount of RM1, per RCCP share. The balance of 112,000,000 RCCP shares of RM1.00 each which were issued at RM1.00 each were converted into ordinary shares on the basis of one ordinary share of RM1.00 each for every one RCCP share held BUSINESS PLAN In 1999, the Public continued to strengthen its existing domestic and overseas operations. As part of its business strategy, Public remained prudent and vigilant against credit risks. The remained focused on risk management and continued to place a high degree of importance in maintaining strong capital ratios and reserves as well as a healthy balance sheet. Because of low interbank interest rates, the allocated more resources to generate fee based income to mitigate the decline in interest income. To support the country s economic recovery, the further promoted loans under both conventional and Islamic banking schemes to achieve a 9.3% growth of its domestic loan portfolio, not only to its existing high quality customers but also new customers across major industries. The had also been effective in promoting Negara Malaysia funds to support small and medium scale enterprises and also housing loans to support two Home Ownership Campaigns. To improve asset quality, the implemented measures to further improve recovery and detect early warning signs of deterioration in asset quality.

11 9 Company No H As part of its business plan, Public continued to introduce new products and services and enhance the existing ones under both conventional and Islamic banking. The s new products and services include its 5 Home Plan and MORE Plan and its ABBA 5 Home Plan. In support of small and medium scale enterprises, the launched its SWIFT loan schemes in BUSINESS OUTLOOK FOR 2000 In 2000, the Public anticipates further improvement in the economic and banking business environment in Malaysia. The Malaysian economy is expected to further expand based on greater business confidence and consumer sentiment. It will continue to benefit from expansionary fiscal stimulus and easy monetary policy with low interest rates in While the will remain focused on managing its interest rate risk, it is well positioned to further expand its business operations in The will continue to encourage lending activities to achieve a higher loan growth by focusing on lending to productive and priority sectors as identified by Negara Malaysia. The will also focus on mobilizing low cost deposits through convenient banking facilities, new products and services and wide branch network. The also looks forward to complete its merger exercise. Barring unforeseen circumstances, the is expected to complete its merger plan in To remain competitive, the will further leverage on its technology and branch network to introduce new products and services and develop cheaper delivery channels for customer convenience. The will also continue to take measures to make it a true customer orientated bank by further improving its high standard of customer service. The will continue to invest in staff development to enhance their professionalism and performance. YEAR 2000 (Y2K) CROSSOVER All of the Public s computer systems have crossed over into the Year 2000, and are in full operation processing the s business transactions. As a conclusion to preparations for the physical crossover event, a series of confirmatory tests were designed in order to re-validate all Year 2000 preparations and carry out final checks to ensure that all areas concerning business processing were functioning as expected; post crossover tests were also carried out to ensure that all data and processes were correct after the event. The Public had developed a detailed timetable for all the crossover activities which ensured a smooth transition into the new millennium. The Y2K Crossover Plan, together with the post crossover validation procedures constituted the Public s main Y2K zero day strategies. The Directors are pleased to announce that the Public had completed a successful crossover into the year 2000.

12 10 Company No H AUDITORS The retiring auditors, Messrs KPMG (formerly known as KPMG Peat Marwick), have indicated their willingness to accept re-appointment. Signed on behalf of the Board in accordance with a resolution of the directors :- TAN SRI DATO THONG YAW HONG Director TAN SRI DATO DR. TEH HONG PIOW Director Kuala Lumpur, Dated: 29 February 2000

13 11 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) STATEMENT BY DIRECTORS We, TAN SRI DATO THONG YAW HONG and TAN SRI DATO DR. TEH HONG PIOW, being two of the directors of PUBLIC BANK BERHAD, do hereby state that, in the opinion of the directors, the accompanying balance sheets of the and the at 31 December 1999 and the profit and loss accounts of the and the and the cash flow statement of the for the year then ended, together with the notes thereto, are properly drawn up in accordance with applicable approved accounting standards in Malaysia so as to give a true and fair view of the state of affairs of the and the at 31 December 1999 and of the results of the and the and cash flows of the for the year then ended. On behalf of the Board TAN SRI DATO THONG YAW HONG Director TAN SRI DATO DR. TEH HONG PIOW Director Kuala Lumpur, Dated: 29 February 2000

14 12 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) STATUTORY DECLARATION I, CHRISTOPHER KOE SOO JIN, being the officer primarily responsible for the financial management of PUBLIC BANK BERHAD, do solemnly and sincerely declare that the accompanying balance sheets of the and the at 31 December 1999 and the profit and loss accounts of the and the and the cash flow statement of the for the year then ended, together with the notes thereto are, to the best of my knowledge and belief correct and I make this solemn declaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, Subscribed and solemnly declared by the abovenamed CHRISTOPHER KOE SOO JIN at KUALA LUMPUR in WILAYAH PERSEKUTUAN this 29 th day of February BEFORE ME:- SOO THIEN MING Commissioner for Oaths Kuala Lumpur

15 13 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) REPORT OF THE AUDITORS TO THE MEMBERS We have audited the accounts set out on pages 15 to 65. The preparation of the accounts is the responsibility of the s directors. Our responsibility is to express an opinion on the accounts based on our audit. We conducted our audit in accordance with approved Standards on Auditing in Malaysia. These standards require that we plan and perform the audit to obtain all the information and explanations which we consider necessary to provide us with evidence to give reasonable assurance that the accounts are free of material misstatement. An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the accounts. An audit also includes an assessment of the accounting principles used and significant estimates made by the directors as well as evaluating the overall adequacy of the presentation of information in the accounts. We believe our audit provides a reasonable basis for our opinion. In our opinion: (a) the accounts are properly drawn up in accordance with the provisions of the Companies Act, 1965 and applicable approved accounting standards in Malaysia so as to give a true and fair view of: and (b) i) the state of affairs of the and of the at 31 December 1999 and the results of their operations and cash flows of the for the year ended on that date; and ii) the matters required by Section 169 of the Companies Act, 1965 to be dealt with in the accounts of the and of the ; the accounting and other records and the registers required by the Companies Act, 1965 to be kept by the and the subsidiary companies of which we have acted as auditors have been properly kept in accordance with the provisions of the said Act.

16 14 Company No H The subsidiary companies in respect of which we have not acted as auditors are identified in Note 10 to the accounts and we have considered their accounts and the auditor reports thereon. We are satisfied that the accounts of the subsidiary companies that have been consolidated with the Company s accounts are in form and content appropriate and proper for the purposes of the preparation of the consolidated accounts and we have received satisfactory information and explanations required by us for those purposes. None of the audit reports on the accounts of the subsidiary companies were subject to any qualification nor included any comment under sub-section (3) of Section 174 of the Act. KPMG Firm Number : AF 0758 Public Accountants SEOW YOO LIN Partner Approval Number : 1497/2/01(J) Kuala Lumpur, Dated : 29 February 2000

17 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) BALANCE SHEETS AT 31 DECEMBER 1999 Note ASSETS Cash and short term funds 3 7,164,355 5,455,980 6,951,614 5,900,393 Securities purchased under resale agreements - 100, Deposits and placements with financial institutions 4 2,567,265 1,445,588 1,983,190 1,468,389 Dealing securities 5 3,107,295 7,088,956 3,284,624 7,314,178 Investment securities 6 6,683,124 5,460,618 3,509,417 1,850,293 Loans, advances and financing 7 21,259,552 19,730,115 12,611,787 11,604,168 Other assets 8 766,454 1,011, , ,033 Statutory deposits with Central s 9 782, , , ,456 Investments in subsidiary companies ,068, ,661 Investment in associated companies 11 39,764 40,420 18,965 18,965 Investment properties 12 40,969 39, Fixed assets , , , ,552 TOTAL ASSETS 43,237,602 41,951,819 30,898,141 30,479,088 ======= ======== ======== ======== LIABILITIES AND SHAREHOLDERS' FUNDS Deposits from customers 14 33,044,406 32,499,588 22,951,219 21,882,994 Deposits and placements of banks and other financial institutions 15 3,034,457 1,704,554 3,010,176 3,798,588 Obligations on securities sold under repurchase agreements 565,029 1,449, , ,208 Bills and acceptances payable 639, , , ,108 Other liabilities 16 1,018,873 1,229, , ,131 Total Liabilities 38,302,736 37,744,209 27,590,308 27,687, Share Capital 18 1,183,161 1,157,240 1,183,161 1,157,240 Reserves 19 2,659,700 2,073,987 2,124,672 1,634,819 Shareholders Funds 3,842,861 3,231,227 3,307,833 2,792, Minority Interests 1,092, , TOTAL LIABILITIES AND SHAREHOLDERS FUNDS 43,237,602 41,951,819 30,898,141 30,479,088 ======== ======== ======== ======== COMMITMENTS AND CONTINGENCIES 31 11,422,525 13,338,816 9,346,147 10,924,587 ======== ======== ======== ======== The accompanying notes form an integral part of these accounts. 15

18 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) PROFIT AND LOSS ACCOUNTS FOR THE YEAR ENDED 31 DECEMBER 1999 Note Operating revenue 2(c) 3,720,051 4,762,100 1,927,860 2,943,395 ======= ======= ======= ======= Interest income 20 3,141,873 4,362,533 1,742,030 2,707,761 Interest expense 21 (1,662,160) (2,894,658) (1,111,684) (1,864,309) Net interest income 1,479,713 1,467, , ,452 Islamic banking income 36(i) 27,925 15,446 15,172 11,963 1,507,638 1,483, , ,415 Non-interest income , , , ,277 Net income 1,941,918 1,877, ,576 1,128,692 Overhead expenses 23 (694,933) (794,036) (360,096) (443,992) Operating profit 1,246,985 1,083, , ,700 Loan and financing loss and provision 24 (413,318) (887,459) (78,485) (337,939) 833, , , ,761 Share of results of associated companies 4,507 2, Profit before exceptional item 838, , , ,761 Exceptional item ,246 - Profit before taxation 838, , , ,761 Taxation 28 (50,762) (111,746) (2,877) (71,644) Profit after taxation 787,412 87, , ,117 Minority interests (171,271) (35,819) - - Profit after taxation and minority interests 616,141 51, , ,117 Retained profit brought forward 617, , , ,009 1,233, ,835 1,158, ,126 Transfer to reserves 19.1 (157,968) (74,329) (129,591) (68,780) Profit available for distribution 1,075, ,506 1,028, ,346 Dividends 29 (95,435) (33,328) (95,435) (33,328) Retained profit carried forward , , , ,018 ======= ======= ======= ======= Earnings per 50 sen share (sen) ======= ======= The accompanying notes form an integral part of these accounts. 16

19 17 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 31 DECEMBER 1999 CASH FLOWS FROM OPERATING ACTIVITIES RM'000 RM'000 Profit before taxation, minority interests and extraordinary items 838, ,791 Adjustments for :-) Share of (profit)/loss in associated companies (4,507) 6,364 Amortisation of goodwill net of reserve arising on consolidation Depreciation 55, ,238 (Gain)/Loss on disposal of fixed assets (120) 587 Provision for bad and doubtful debts and financing 229, ,378 Bad debts and financing written off 184,068 66,494 Gain on sale of investment securities (54,374) (19,696) Dividends from investment securities (1,818) (2,474) (Accretion of discount less amortisation of premium)/ amortisation of premium less accretion of discount of investment securities (37,775) 21,514 Loss on revaluation of investment properties 3,081 22,763 Provision for diminution in value of investment securities (947) 2,485 Loss on disposal of associated company 134 2,434 Dilution of interest from minority interests Operating profit before working capital changes 1,211,514 1,223,689 Decrease in securities purchased under resale agreement 100, ,883 Increase in deposits and placement with financial institutions (1,121,677) (966,808) Decrease/(Increase) in dealing securities 3,981,661 (4,021,416) Increase in loans and advances (1,849,229) (50,593) Decrease in other assets 244,806 37,925 (Increase)/Decrease in statutory deposits with Central s (39,694) 1,886,697 Increase in deposits from customers 544, ,969 Increase/(Decrease) in deposits and placements of banks and other financial institutions 1,329,903 (722,502) (Decrease)/Increase in securities sold under repurchase agreements (884,517) 760,375 Decrease in bills and acceptances payable (221,196) (345,967) Decrease in other liabilities (192,083) (232,300) Cash generated/(used in) from operations 3,104,306 (1,977,048) Income taxes paid (152,137) (194,052) Net cash generated/(used in) from operating activities 2,952,169 (2,171,100)

20 18 CASH FLOWS FROM INVESTING ACTIVITIES RM'000 RM'000 Additional investment in subsidiary company (51,115) - Subscription of rights issue by minority interest 46,900 - Dividend received by minority interest (31,944) - Dividend received from associates 3,902 - Funds provided/(paid) by minority interests 1,500 (1,280) Dividends from investment securities 1,818 2,474 Purchase of fixed assets (51,814) (78,361) Proceeds from disposal of fixed assets 1,160 4,879 Purchase of investment securities (24,863,590) (20,496,201) Proceeds from disposal of investment securities 23,640,654 19,845,252 Proceeds from disposal of associated company - 4,037 Net cash used in investing activities (1,302,529) (719,200) CASH FLOWS FROM FINANCING ACTIVITIES Net proceeds from issuance of shares 92, ,927 Dividends paid (34,110) (70,823) Net cash generated from financing activities 58, , NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS 1,708,375 (2,619,196) CASH AND CASH EQUIVALENTS BROUGHT FORWARD 5,455,980 8,075,176 CASH AND CASH EQUIVALENTS CARRIED FORWARD 7,164,355 5,455,980 ======= ======== ANALYSIS OF CASH AND CASH EQUIVALENTS Cash and short-term funds 7,164,355 5,455,980 ======= ======== The accompanying notes form an integral part of these accounts.

21 19 PUBLIC BANK BERHAD AND ITS SUBSIDIARY COMPANIES (Company No H) (Incorporated in Malaysia) NOTES TO THE ACCOUNTS - 31 DECEMBER PRINCIPAL ACTIVITIES The is principally engaged in all aspects of banking, financing, stock and futures broking, provision of finance to purchasers of licensed public vehicles, provision of related financial services, management of unit trusts and investment holdings. The is principally engaged in all aspects of banking business and the provision of related financial services. There have been no significant changes to these principal activities during the financial year. 2. SIGNIFICANT ACCOUNTING POLICIES (a) Basis of Accounting The accounts have been prepared under the historical cost convention in accordance with the applicable approved Accounting Standards in Malaysia and Negara Malaysia Guidelines and comply with the provisions of the Companies Act, The accounts incorporate all activities relating to the Islamic ing business which have been undertaken by the and its subsidiary finance company in Malaysia. Islamic ing business refers generally to the acceptance of deposits and granting of financing under the principles of Syariah. (b) Basis of Consolidation The consolidated accounts include the accounts of the and its subsidiary companies made up to the end of the financial year. All inter company balances and transactions have been eliminated on consolidation. Details of the subsidiary companies are set out in Note 10 to the accounts. Goodwill or reserve arising on consolidation is included in the consolidated balance sheet based on the difference between the purchase price and the value of the net assets of subsidiary companies at the date of acquisition. Goodwill or reserve arising on consolidation is amortised over ten years from the date of acquisition. (c) Operating Revenue Operating revenue of the comprises all types of revenue derived from banking, financing, stock and futures broking, leasing and factoring, sales of unit trusts as well as trustee services but excluding all related companies transactions. Operating revenue of the comprises interest, commission and other income derived from banking operations.

22 20 (d) Associated Companies The treats associated companies as those companies in which a long term equity interest of between 20 to 50 percent is held and where it exercises significant influence through management participation. In the consolidated balance sheet, the 's interests in associated companies are stated at the net asset value of associated companies at the date of acquisition plus the 's share of post acquisition profits and reserves less provision for permanent diminution in value. The difference between the cost of investment and the underlying net asset value which represents goodwill or reserve is amortised to the consolidated profit and loss account in accordance with the policy as referred to in Note 2 (b). (e) Income Recognition Interest income is recognised on an accrual basis. Interest income on overdrafts, term loans and housing loans is recognised by reference to rest periods which are either monthly or daily. Where an account becomes non-performing, interest is suspended until it is realised on a cash basis. Customers accounts are deemed to be non-performing where repayments are in arrears for more than six (6) months and one (1) month after maturity date for trade bills, bankers acceptances and trust receipts except for the subsidiary companies operating in Hong Kong which deem customer accounts as nonperforming where repayment are in arrears for more than three (3) months. The policy on suspension of interest is in conformity with Negara Malaysia's Guidelines on the suspension of interest on non-performing loans and provision for bad and doubtful debts, BNM/GP3 (Revised - 23 September 1998). Income from the various activities of the is accrued using the following basis :- (i) (ii) Interest income on hire purchase, block discounting and leasing business is recognised on the sum of digits method; Dividend income from investment in Malaysian Government Investment Certificates invested for the purpose of Islamic ing is recognised on an accrual basis; (iii) Factoring commission income is recognised upon acceptance of the factored invoices. Factoring interest is recognised on an accrual basis; and (iv) Other fees and commissions on a variety of services and facilities extended to customers are recognised on inception of such transactions.

23 21 (f) Fixed Assets and Depreciation Fixed assets are stated at cost less accumulated depreciation. Freehold land and construction-in-progress are not depreciated. Depreciation of other fixed assets is provided on a straight line basis calculated to write off the cost of each asset over its estimated useful life. The principal annual depreciation rates are :- Long term leasehold land Over leasehold periods of 87.7 to 94 years Buildings 2.0% Renovations Over the term of the leases ranging from 2 to 50 years Office equipment, furniture and fittings 7.5% % Computer equipment and software 20.0% % Motor vehicles 20.0% (g) Investment Properties Investment properties which are stated at cost or valuation are not depreciated. It is the 's policy to appraise its investment properties annually or such longer period as may be considered appropriate, by independent professional valuers based on open market value. Any surplus arising therefrom will be taken to a capital reserve account. A deficit is charged to the profit and loss account to the extent that it is in excess of the amounts outstanding in the capital reserve account. (h) Currency Conversion Transactions in foreign currencies during the year are translated into Ringgit Malaysia at the rates of exchange approximating those ruling at the transaction dates. Foreign currency assets and liabilities are stated in the balance sheet at spot rates which closely approximate the rates of exchange ruling at the balance sheet date. Gains or losses both realised and unrealised resulting from the year's operations have been treated as normal revenue items in the year they arise. The accounts of foreign branches are translated into Ringgit Malaysia at the rates of exchange ruling at the balance sheet date. The results of these branches for the year are accounted for based on closing rates of exchange at balance sheet date. Gains or losses both realised and unrealised resulting from the year's operations have been treated as normal revenue items in the year they arise. The accounts of foreign subsidiary companies and a subsidiary incorporated in the Federal Territory of Labuan are translated into Ringgit Malaysia at the rates of exchange ruling at the balance sheet date. The results of these entities for the year are accounted for based on the closing rate of exchange at the balance sheet date. Gains or losses arising on translation into Ringgit Malaysia are taken to exchange equalisation reserve. Translation losses in excess of the amount in the exchange equalisation reserve are taken to the profit and loss account.

24 22 (i) Forward Exchange Contracts Outstanding forward exchange contracts at the balance sheet date are valued based on the applicable spot rates ruling at that date adjusted for the applicable premium or discount to maturities. Gains or losses are recognised in the year they arise. (j) Dealing Securities Dealing securities are marketable securities that are acquired and held with the intention of resale in the short term, and are stated at the lower of cost and net realisable value. Transfers, if any, between dealing and investment securities are made at the lower of cost and market value. (k) Investment Securities Investment securities are securities that are acquired and held for yield or capital growth or to meet minimum liquid asset requirements pursuant to Section 38 of the ing and Financial Institutions Act 1989, and are usually held to maturity. Malaysian Government Securities, Cagamas Bonds, other Government Securities and quoted Private Debt Securities held for investment are stated at cost adjusted for amortisation of premium and accretion of discount to maturities. A provision is made when the directors are of the view that there is a permanent diminution in the value. Quoted shares are stated at the lower of cost and market value determined on an aggregate basis. Unquoted shares, Malaysian Government Investment Certificates and unquoted Private Debt Securities are stated at cost less provision for any permanent diminution in value. (l) Investments in Subsidiary Companies A subsidiary company is a company in which the controls the composition of its Board of Directors or holds more than half of its voting power, or holds more than half of its issued ordinary share capital. Investments in subsidiary companies are stated at cost, and provision is made in the event of any permanent diminution in value. (m) Foreclosed Properties Foreclosed properties are stated at the lower of cost and net realisable value. (n) Deferred Taxation Deferred taxation is provided under the liability method in respect of all material timing differences arising from different accounting and taxation treatment of certain income and expenditure items except that where the timing differences give rise to net deferred tax benefits, these net tax benefits are not recognised.

25 23 (o) Staff Retirement Benefits The and certain subsidiary companies contribute to the Public Officers' Retirement Benefits Fund (the "Fund") in respect of retirement benefits for eligible officers. The Fund is a defined benefit scheme duly approved by the Inland Revenue Board. Contributions to the Fund are made semi-annually and such contributions may be adjusted based on the actuarial valuation conducted periodically. The last actuarial valuation, using the "Attained Age Method", was as at 31 December The latest actuarial valuation of the Fund, which is fully funded, indicated that the Fund had sufficient assets to meet its liabilities. JCG Holdings Limited and its subsidiary companies contribute to a separate scheme, which is a defined contribution scheme. (p) Provision for Doubtful Debts Provisions for bad and doubtful debts and financing are made with regard to specific risks and relate to those items that have been individually reviewed and specifically identified as bad and doubtful. A general provision based on a percentage of total outstanding loans (including accrued interest), net of interest in suspense and the specific provision for bad and doubtful debts, is maintained by the against risks which are not specifically identified. An uncollectible loan or portion of a loan classified as bad is written off after taking into consideration the realisable value of collateral, if any, when in the judgement of the management, there is no prospect of recovery. (q) Repurchase Agreements Securities purchased under resale agreements are securities which the commits to resell at future dates and is reflected as an asset. Obligation on securities sold under repurchase agreements are securities which the commits to repurchase at future dates and is reflected as a liability. (r) Interest Rate Swaps and Forward Contracts The acts as an intermediary with counter parties who wish to swap their interest obligations. Interest income or interest expense associated with interest rate swaps that qualify as hedges is recognised over the life of the swap agreement as a component of interest income or interest expense.

26 24 3 CASH AND SHORT TERM FUNDS Cash and balances with banks and other financial institutions 738, , , ,723 Money at call and deposit placements maturing within one month 6,425,677 5,121,835 6,342,394 5,654,670 7,164,355 5,455,980 6,951,614 5,900,393 ======= ======= ======= ======= Deposits totalling RM2,445,000 ( RM2,453,000) have been pledged to certain banks by a foreign subsidiary for facilities obtained. 4. DEPOSITS AND PLACEMENTS WITH FINANCIAL INSTITUTIONS Licensed banks 1,289, ,003 1,098, ,214 Licensed finance companies 756, ,010 20, ,000 Other financial institutions 521, , , ,175 2,567,265 1,445,588 1,983,190 1,468,389 ======= ======= ======= ======= A fixed deposit of RM100,000 ( RM100,000) favouring the Accountant General has been placed by a subsidiary with a licensed bank in accordance with Section 4(2) of the Labuan Trust Companies Act, DEALING SECURITIES Money market instruments :- Negotiable instrument of deposits 3,062,436 7,031,241 3,284,436 7,281,241 Unit trusts 44,671 24, Khazanah bonds - 10,789-10,789 3,107,107 7,066,808 3,284,436 7,292,030 Amortisation of premium less accretion of discounts , ,148 3,107,295 7,088,956 3,284,624 7,314,178 ======= ======= ======= ======= Market value:- Unit trusts 49,491 26, ======= ======= ======= =======

27 25 6. INVESTMENT SECURITIES Money market instruments :- Malaysian Government Treasury Bills 25,686 17,523 25,686 17,523 Malaysian Government Securities 790, , , ,040 Malaysian Government Investment Certificates 128,830 2,000 63,920 2,000 Cagamas bonds 121, ,156 61, ,970 Cagamas notes 472, , , ,086 ers' acceptances and Islamic accepted bills 1,635, ,439 1,342, ,159 Danamodal bonds 588, , , ,487 Danaharta bonds 206, ,152 - Khazanah bonds 137, ,728 - Negotiable instrument of deposits 1,536,687 2,289, ,643,106 4,724,823 2,734,024 1,434, Quoted securities :- Shares in Malaysia 36,661 35,167 12,403 9,320 Shares outside Malaysia 27,044 27, ,705 62,211 12,403 9, Unquoted securities :- Shares 104, ,366 90,271 81,931 Private debt securities 1,032, , , ,052 1,136, , , , Amortisation of premium less accretion of discounts (3,386) (15,139) 2,532 5,525 Provision for diminution in value of investment securities (13,710) (14,657) - - Provision for bad and doubtful debts - specific provision (140,022) (93,259) (32,490) (22,800) - general provision (3,374) (3,374) ,683,124 5,460,618 3,509,417 1,850,293 ======= ======= ======= =======

28 Market value :- Malaysian Government Securities 801, , , ,903 Malaysian Government Investment Certificates 133,647 2,076 67,056 2,076 Cagamas bonds 123, ,256 62, ,129 Cagamas notes 472, , , ,091 Danamodal bonds 609, , , ,919 Danaharta bonds 211, ,856 - Khazanah bonds 138, ,062 - Shares quoted in Malaysia 55,492 31,618 26,938 18,302 Shares quoted outside Malaysia 7,433 6, ,553,139 1,899,407 1,424,621 1,076,420 ======= ======= ======= ======= The maturity structure of money market instruments held are as follows:- Maturity within one year 3,726,840 3,741,845 1,842,757 1,006,048 One year to three years 576, , , ,333 Three years to five years 892, , , ,564 Over five years 447, ,949-32,320 5,643,106 4,724,823 2,734,024 1,434,265 ======= ======= ======= ======= LOANS, ADVANCES AND FINANCING Overdrafts 3,263,579 3,308,658 3,231,084 3,268,236 Term loans 13,420,496 12,311,403 9,204,386 8,596,894 Credit card receivables 276, , , ,702 Bills receivable 74,264 84,147 74,074 84,025 Trust receipts 233, , , ,823 Claims on customers under acceptance credits 405, , , ,311 Lease, factored and confirming receivables 57,822 66, Hire purchase 7,179,925 7,356, * Staff loans 398, , , ,432 Unearned interest and income (2,102,493) (2,041,364) (186,698) (16,148) Gross loans, advances and financing 23,207,602 22,287,043 13,482,094 12,987,275 Housing loans sold to Cagamas (548,557) (1,229,251) (177,166) (645,616) 22,659,045 21,057,792 13,304,928 12,341,659