Download - Manulife Insurance Berhad

Manulife Holdings Berhad (24851-H)annualreport2009Bringing Dreams to Life

Contents> 2Notice of AnnualGeneral Meeting> 4StatementAccompanyingNotice of AnnualGeneral Meeting> 4AdditionalComplianceInformation> 5CorporateInformation> 6CorporateStructure> 7FinancialHighlights> 8Board ofDirectors> 10Directors’Profile> 15Chairman’sStatement> 20CorporateGovernanceStatement> 26Internal ControlStatement>28Group AuditCommitteeReport> 35FinancialStatements> 105Regional SupportCentres> 106Head OfficeManagement> 107List ofProperties>108Analysis ofShareholdingsProxyform

Manulife Holdings Berhad (24851-H) 2notice ofannual general meetingNOTICE IS HEREBY GIVEN THAT the Thirty-Fourth Annual General Meeting of the Company will be heldat Dewan Berjaya, Bukit Kiara Resort, Jalan Bukit Kiara, Off Jalan Damansara, 60000 Kuala Lumpur onMonday, 28 June 2010 at 10.00 a.m.AGENDA1. To receive the Audited Financial Statements for the financial year ended 31 December 2009 together withthe Reports of the Directors and the Auditors thereon. (Resolution 1)2. To approve the declaration of a first and final dividend of 17 sen per share less income tax at 25% for thefinancial year ended 31 December 2009. (Resolution 2)3. To re-elect Mr. Robert Allen Cook who retires pursuant to Article 93(B) of the Company’s Articles ofAssociation. (Resolution 3)4. To re-elect Mr. Gianni Fiacco who retires pursuant to Article 98 of the Company’s Articles of Association. (Resolution 4)5. To consider and if thought fit, to pass the following ordinary resolution in accordance with Section 129 ofthe Companies Act 1965: -“THAT pursuant to Section 129 of the Companies Act 1965, Tan Sri Dato’ Mohd Sheriff Bin Mohd Kassimwho has attained the age of seventy (70) years be and is hereby re-appointed as Director of the Companyand to hold office until the conclusion of the next Annual General Meeting.” (Resolution 5)6. To consider and if thought fit, to pass the following ordinary resolution in accordance with Section 129 ofthe Companies Act 1965: -“THAT pursuant to Section 129 of the Companies Act 1965, Datuk Ismail Bin Haji Ahmad who is over theage of seventy (70) years be and is hereby re-appointed as Director of the Company and to hold office untilthe conclusion of the next Annual General Meeting.” (Resolution 6)7. To approve the payment of Directors’ remuneration for the financial year ended 31 December 2009. (Resolution 7)8. To appoint Messrs. PricewaterhouseCoopers as Auditors of the Company until the conclusion of the nextAnnual General Meeting and to authorise the Directors to fix their remuneration. (Resolution 8)9.As Special BusinessTo consider and if thought fit, with or without modifications, to pass the following resolution as OrdinaryResolution:-ORDINARY RESOLUTION- AUTHORITY TO ISSUE SHARES PURSUANT TO SECTION 132D OF THE COMPANIES ACT 1965“THAT pursuant to Section 132D of the Companies Act 1965, the Directors be and are hereby empoweredto issue and allot shares in the Company, at any time to such persons and upon such terms and conditionsand for such purposes as the Directors may, in their absolute discretion deem fit, provided that the aggregatenumber of shares issued pursuant to this resolution does not exceed 10% of the issued share capital ofthe Company for the time being and that the Directors be and are also empowered to obtain the approvalfor the listing of and quotation for the additional shares so issued on Bursa Malaysia Securities Berhadand that such authority shall continue in force until the conclusion of the next Annual General Meeting ofthe Company.” (Resolution 9)

3Annual Report 2009notice of annual general meetingNotice of Dividend PaymentNOTICE IS HEREBY GIVEN THAT a first and final dividend of 17 sen per share less income tax of 25% in respect of the financialyear ended 31 December, 2009, if approved, will be paid on 13 July 2010 to shareholders whose names appear on the Company’sRecord of Depositors and /or Register of Members at the close business at 5.00 p.m. on 30 June 2010.FURTHER NOTICE IS HEREBY GIVEN THAT a depositor shall qualify for entitlement to dividend only in respect of:-a)b)shares transferred into the Depositor’s Securities Account before 4.00 p.m. on 30 June 2010 in respect of ordinary transfers;andshares bought on the Bursa Malaysia Securities Berhad on a cum entitlement basis according to the Rules of Bursa MalaysiaSecurities Berhad.By Order of the BoardCHUA SIEW CHUAN (MAICSA 0777689)chin mun yee (MAICSA 7019243)Company SecretariesKuala LumpurDated : 4 June 2010Notes :-1. In respect of deposited securities, only Members whose namesappear in the Record of Depositors on 21 June 2010 (“GeneralMeeting Record of Depositors”) shall be eligible to attend theMeeting.2. A member of the Company entitled to attend and vote at thismeeting is entitled to appoint a proxy or an attorney to attend andvote in his stead. A proxy or attorney need not be a member of theCompany.3. If the appointer is a corporation, the form of proxy or power ofattorney should be executed under its common seal or under thehand of a person duly authorised.4. A member shall not be entitled to appoint more than two (2)proxies to attend and vote at the same meeting and where two(2) proxies are appointed, a member shall specify the proportionof his holdings to be represented by each proxy, failing which theappointment shall be invalid.5. The instrument appointing a proxy or a power of attorney mustbe deposited at Securities Services (Holdings) Sdn. Bhd. of Level7, Menara Milenium, Jalan Damanlela, Pusat Bandar Damansara,Damansara Heights, 50490 Kuala Lumpur not less than 48 hoursbefore the time appointed for holding the meeting.EXPLANATORY NOTE ON DIVIDENDS PAYMENTDividends declaration may be limited in the event the Group’s whollyowned subsidiary, Manulife Insurance Berhad is unable to meet itsInternal Capital Adequacy Ratio Target set pursuant to regulatoryrequirements.EXPLANATORY NOTE ON SPECIAL BUSINESSAUTHORITY PURSUANT TO SECTION 132D OF THE COMPANIESACT 1965The Company wishes to renew the mandate on the authority to issueshares pursuant to Section 132D of the Companies Act 1965 at theThirty-Fourth Annual General Meeting of the Company (hereinafterreferred to as the “General Mandate”). The Company had been granteda general mandate by its shareholders at the Thirty-Third Annual GeneralMeeting of the Company held on 24 April, 2009 (hereinafter referred toas the “Previous Mandate”).The Previous Mandate granted by the shareholders had not been utilisedand hence no proceed was raised therefrom.The purpose to seek the General Mandate is to provide flexibility to theCompany for allotment of shares for any possible fund raising activitiesfor the purpose of funding working capital without convening a generalmeeting as it would be both time and cost-consuming to organise ageneral meeting.

Manulife Holdings Berhad (24851-H) 4statement accompanyingnotice of annual general meetingPursuant to Paragraph 8.27(2) of Bursa Malaysia Securities Berhad Main Market Listing RequirementsThere is no individual who is standing for election as Director.additionalcompliance information1. NON-STATUTORY AUDIT FEESThe following non-statutory audit fees for the Group and the Company paid to Messrs PricewaterhouseCoopers, the Auditorsand its affiliated companies for the financial year ended 31 December 2009 amounted to RM35,000.00ServicesPricewaterhouseCoopers Non-statutory audit related services 35,000Total 35,000RM2. MATERIAL CONTRACTSThere were no material contracts entered into by the Company and its subsidiaries involving director and major shareholders’interests which were still subsisting as at the end of the financial year or if not then subsisting, entered into since the end of theprevious financial year.

Manulife Holdings Berhad (24851-H) 6corporatestructure100%ManulifeInsuranceBerhad100%ManulifeUnit TrustsBerhad100% 100%ManulifeAssetManagement(Malaysia)Sdn BhdBritamaCreditSdn Bhd100%BritamaPropertiesSdn Bhd100%TheE-SoftwareHouseSdn Bhd100%BritishAmericanInvestmentsPte Ltd

7financialAnnual Report 2009highlightsGroup Income600Group Assets35006005003000 35005004004003003002002001002500 30002000 25001500 20001000 15001000 500100050002005 2006 2007 2008 20092005 2006 2007 2008 20090362.7 461.5 443.2 503.7 454.901,873.2 2,186.0 2,549.9 2,580.3 2,943.1121.0 141.1 308.7 70.3 116.5363.3 404.7 457.7 458.5 503.0Group PremiumInvestment income and otheroperating income-net2,236.5 2,590.7 3,007.6 3,038.8 3,446.1Life fund Gen/SH Fund Total Assets350Policyowners benefit paid and payable300 350250 300200 250150 200100 150100 50500100Group net profit attributable to shareholders10080806060404020200002005 2006 2007 2008 20092005 2006 2007 2008 2009145.5 179.9 247.4 304.5 346.740.0 50.7 85.0 47.0 59.1

Manulife Holdings Berhad (24851-H)8board ofdirectors32 411234Tan Sri Dato’ Mohd Sheriff Bin Mohd KassimChairman/Independent non-executive directorDatuk Abu Hassan Bin KendutIndependent non-executive directorPhilip John Hampden-SmithNon-independent non-executive directorRobert Allen CookNon-independent non-executive director

9 Annual Report 2009board of directors56 7 85678Michael Chan Yui LungGroup Chief Executive Officer/Managing DirectorAhmad Riza Bin BasirIndependent non-executive directorDatuk Ismail Bin Haji AhmadNon-independent non-executive directorGianni FiaccoNon-independent non-executive director

Manulife Holdings Berhad (24851-H) 10directors’profileTAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIMChairman/Independent non-executive directorTan Sri Dato’ Mohd Sheriff bin Mohd Kassim, aged 70, a Malaysian, was appointed a director of the Company on 3 September2004 and subsequently, Chairman of the Board on 13 October 2004. He holds a B A (Honours) Economics degree from UniversityMalaya and a Diploma in Economic Development from Oxford University, United Kingdom. He also holds a M A Economics fromVanderbilt University, USA.Tan Sri is also Chairman of the Executive Committee and Group Nominating/Remuneration Committee of the Board of Directors. Heattended all five Board meetings of the Company held during the financial year ended 31 December 2009.Tan Sri was the Managing Director of Khazanah Nasional Berhad from 1994 to August 2003 and past Director of United Engineers(Malaysia) Berhad and former Chairman of UEM Land Sdn Bhd. Prior to joining Khazanah Nasional Berhad as the ManagingDirector in 1994, he served as the Secretary General of Treasury, Ministry of Finance for 3 years.Tan Sri Dato’ Mohd Sheriff is a non-independent non-executive Chairman of PLUS Expressways Berhad. He is also the Chairmanof the Malaysian Institute of Economic Research, Deputy President of the Malaysian Economic Association and he serves asnon-executive Chairman of Projek Penyelenggaran Lebuhraya Berhad, Projek Lebuhraya Utara-Selatan Berhad, Scientex Berhad,Standard Chartered Bank Malaysia Berhad and Standard Chartered Saadiq Bhd.

11Annual Report 2009directors’ profileAHMAD RIZA BIN BASIRIndependent non-executive directorEncik Ahmad Riza bin Basir, aged 49, aMalaysian, was appointed to the Boardon 6 February 1996. He obtained hisBachelor of Law Degree with honoursfrom the University of Hertfordshire, UKand qualified as a barrister-at-law of theHonourable Society of Lincoln’s Inn,London, UK. Encik Riza is a member ofthe Group Audit Committee, Group RiskManagement Committee and GroupNominating/Remuneration Committeeof the Board of Directors. He attendedall five Board meetings of the Companyheld during the financial year ended 31December 2009.Encik Riza sits on the Boards of KESMIndustries Berhad, Jerneh Asia Berhadand United Plantations Berhad. He isalso a member of the Audit Committeeof United Plantations Berhad and KESMIndustries Berhad.DATUK ISMAIL BIN HAJI AHMADNon-independent non-executive directorDatuk lsmail bin Haji Ahmad, aged 73, aMalaysian, was appointed to the Boardon 19 December 1996. He graduatedfrom University Malaya with a Bachelor ofArts Degree (honours) and later obtainedhis Masters Degree in Public Policy andAdministration from the University ofWisconsin, USA. He had also attended theSenior Management Program conductedby the Harvard Business School.Prior to joining the private sector, he hadserved as an officer in the Administrativeand Diplomatic Service Malaysia in thePrime Minister’s Department, Ministry ofHome Affairs and the Ministry of PrimaryIndustries. While in the Governmentservice, he had served in senior positionsas the Deputy Secretary General ofthe Ministry of Primary Industries andthe Chief Executive Officer of theCommodities Trading Commission.After his retirement from the CivilService, he had served as Chairman ofBank Muamalat Malaysia Berhad andBoard member of Advanced PackagingTechnology (M) Berhad and TracomaHoldings Berhad.Datuk lsmail is a member of the GroupNominating/Remuneration Committeeof the Board of Directors. He attendedall five Board meetings of the Companyheld during the financial year ended 31December 2009.

Manulife Holdings Berhad (24851-H)12directors’ profileDatuk Abu Hassan bin Kendut, aged 67,a Malaysian, was appointed to the Boardon 20 November 2001. He was articledwith Messrs Turquand Youngs & Co andqualified as an accountant in 1967. Hejoined Malaysian Airline System Berhadin 1971 as its Accounts Manager andleft in 1974 to join the practice of MessrsCoopers & Lybrand. He retired as aSenior Partner of the firm in 1997.Datuk Abu Hassan is Chairman of theGroup Audit Committee and Group RiskManagement Committee and is a memberof the Group Nominating/RemunerationCommittee of the Board of Directors. Heattended all five Board meetings of theCompany held during the financial yearended 31 December 2009.DATUK ABU HASSAN BIN KENDUTIndependent non-executive directorDatuk Abu Hassan sits on the Boardsof Metrod (Malaysia) Berhad, I-Berhad,Standard Chartered Bank MalaysiaBerhad, Standard Chartered Saadiq Bhdand several other private companies.Mr Michael Chan Yui Lung, aged 55, aBritish citizen, was appointed Directoras Group Chief Executive Officer on 16February 2009. Mr Chan is a FellowMember of the British Royal CharteredInstitute of Management Accountants,Associate Member of Hong KongInstitute of Certified Public Accountantsand a qualified member of the societyof Registered Financial Planners,Hong Kong. Mr Chan has also been aqualified member of the Life InsuranceManagement Research Association since1997.Mr Chan is a member of the ExecutiveCommittee of the Board of Directorsand a Director of Manulife InsuranceBerhad, Manulife Unit Trusts Berhad,Manulife Asset Management (Malaysia)Sdn Bhd, Britama Credit Sdn Bhd,Britama Properties Sdn Bhd and TheE-Software House Sdn Bhd, whollyownedsubsidiaries of the Company. Heattended all five Board meetings of theCompany held during the financial yearended 31 December 2009.MICHAEL CHAN YUI LUNGGroup Chief Executive Officer/Managing DirectorMr Chan joined Manulife InternationalLtd, Hong Kong in 2000 as VicePresident, Group Life and Health. He wasappointed as Vice President, Distributionin 2004, as head of Sales Operation of450 Corporate Brokers and 3,600 tie inhouseagents. Prior to joining Manulifein 2000, Mr Chan served on the Boardsof a number of insurance companies, andas an Accounting Officer in ManagementAccounting Branch, Treasury for HongKong Government.

13Annual Report 2009directors’ profileROBERT ALLEN COOKNon-independent non-executive directorMr Robert Allen Cook, aged 55,Canadian, was appointed to the Boardon 4 October 2007. He holds a MasterDegree in Business Administration fromthe University of Toronto and a Bachelors’Degree in Pure Mathematics fromUniversity of Calgary.Mr Cook is Senior Executive VicePresident and General Manager, Asia,responsible for Manulife Financial’sinsurance and wealth managementoperations in Japan, China, Hong Kong,Indonesia, the Philippines, Singapore,Taiwan, Vietnam, Malaysia, Thailand andMacau. Previously, he was ExecutiveVice President, US Insurance Group withoverall general management responsibilityfor the John Hancock Life Insurance,John Hancock Long-Term Care and JohnHancock Financial Network businessunits.Mr Cook has been involved in the LifeInsurance Industry since 1978 andhas held management positions inManulife’s U.S., Canadian, Internationaland corporate divisions. His experiencespans a number of areas includingstrategic planning, product managementfor insurance & annuities, sales andmarketing.Mr Cook is a member of the Group AuditCommittee and Group Risk ManagementCommittee of the Board of Directors. Heattended all five Board meetings of theCompany held during the financial yearended 31 December 2009.Mr Cook is a representative of theCompany’s largest shareholder, ManulifeCentury Holdings (Netherlands) B.V,whose ultimate holding company isManulife Financial Corporation, where heis a member of the Executive Committeeand Management Committee.PHILIP JOHN HAMPDEN-SMITHNon-independent non-executive directorMr Philip John Hampden-Smith, aged 51,from the UK, was appointed to the Boardon 5 January 2006. Having worked inthe UK, Europe and Asia, Mr Hampden-Smith has extensive experience in thefinancial services industry. He is currentlyExecutive Vice President and GeneralManager, South East Asia Operations,Manulife Financial. Mr Hampden-Smith isresponsible for Manulife’s six operationsin the ASEAN area (Singapore, Indonesia,Malaysia, Thailand, the Philippines andVietnam).Mr Hampden-Smith first joined ManulifeFinancial in Hong Kong in 1996 andconcurrently held 2 positions - President& CEO of Manulife’s Investmentoperations and Vice President, Marketing& Communications. While in Hong Kongduring this period, Mr Hampden-Smithwas elected an Executive Board memberof the Hong Kong Investments FundsAssociation and was a member of theHong Kong Securities Institute.Prior to his posting in Singapore, MrHampden-Smith was Vice President,Regional Operations, Asia, for ManulifeFinancial, and was responsible foroverseeing the company’s operationsin the Philippines and Singapore as wellas mutual fund development acrossAsia. Prior to this, he was PresidentDirector of Manulife Indonesia for 3years. During his time in this position,Mr Hampden-Smith oversaw a four-foldincrease in assets of Manulife Indonesia,the rapid development of Manulife AssetManagement Indonesia and a significantacquisition that made Manulife Indonesiathe leading pension provider in thecountry as well as Indonesia’s leadinginsurer and fund manager.Mr Hampden-Smith is a member ofthe Executive Committee and GroupNominating/Remuneration Committeeof the Board of Directors. He attendedall five of the Board meetings of theCompany held during the financial yearended 31 December 2009.Mr Hampden-Smith is a representativeof the Company’s largest shareholder,Manulife Century Holdings (Netherlands)B.V, whose ultimate holding company isManulife Financial Corporation, wherehe is a member of the ManagementCommittee.

Manulife Holdings Berhad (24851-H) 14directors’ profileGIANNI FIACCONon-independent non-executive directorMr Gianni Fiacco, aged 32, Canadian,was appointed to the Board on 22 May2009. He holds a Bachelor of CommerceDegree from the University of Toronto.Mr Fiacco is a Vice President and theRegional Controller, Asia, responsible forManulife Financial’s financial reportingand analysis, business planning,implementing financial controls andensuring compliance with policies inoperations in Japan, China, Hong Kong,Indonesia, the Philippines, Singapore,Taiwan, Vietnam, Malaysia and Thailand.Previously, he was an Assistant VicePresident, Manulife Financial Canada withresponsibility for global accounting policyand the interpretation and implementationof company wide accounting policiesin accordance with Canadian and U.S.regulatory and statutory requirements.Mr Fiacco has been involved in theLife Insurance Industry since 2005 andbefore joining Manulife, he was withPricewaterhouseCoopers LLP workingin their Audit and Assurance Servicesgroup.Since his appointment with effect from 22May 2009, he has attended all four Boardmeetings of the Company held during thefinancial year ended 31 December 2009.Other information on directorsSave as disclosed, none of the Directors have any family relationship with any director and/or major shareholders of the Company nor any conflictof interest with the Company. None of the Directors has had any convictions for any offences within the past ten years.There were five (5) Board Meetings held during the financial year ended 31 December 2009. The details of attendance of the Directors are asfollows:-Name of Board of DirectorsAttendanceTan Sri Dato’ Mohd Sheriff bin Mohd Kassim 5 out of 5En Ahmad Riza bin Basir 5 out of 5Datuk Abu Hassan bin Kendut 5 out of 5Datuk Ismail bin Haji Ahmad 5 out of 5Michael Chan Yui Lung 5 out of 5Robert Allen Cook 5 out of 5Philip John Hampden-Smith 5 out of 5Gianni Fiacco 4 out of 4

15 Annual Report 2009chairman’sstatementDear shareholders,On behalf of the Board of Directors, it ismy pleasure to present the Annual Reportand Audited Financial Statements of theGroup and the Company for the financialyear ended 31 December 2009.TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIMChairman/Independent non-executive directorReview of ResultsFor the financial year under review, the Group registered a pre-tax profit of RM79.4 million comparedwith the preceding year of RM61.1 million, an increase of 30.0%. The Group’s profit after tax andearnings per share were higher by 25.7% at RM59.1 million and 29.2 sen respectively compared withthe preceding year of RM47.0 million and 23.2 sen.The higher profit was primarily attributable to better underwriting performance as well as rebound in theperformance of investment returns, for year 2009 as compared to year 2008. A fair value gain of RM4.2million was also recognized for investment properties, based on the valuation assessment of the headoffice as of 31 December 2009.

Manulife Holdings Berhad (24851-H) 16chairman’s statementReview of OperationsInsuranceThe Group’s life insurance operation is carried out by ManulifeInsurance Berhad (“Manulife Insurance”), its wholly-ownedsubsidiary.The Group’s insurance business was transferred to ManulifeInsurance on 1 October 2008 and 2009 was the first full yearthat Manulife Insurance operated in its current structure.During the year, Manulife Insurance undertook several initiativesto cushion itself from the effects of the economic slowdown.The Company focused its efforts on growing the Agencybusiness and improving its operational efficiency. As part ofits Agency growth strategy, a new Head of Agency joined theCompany to drive the Agency channel amidst a challengingmarket environment and to accelerate its growth. On theFinancial Advisors front, the Company signed on an additionalthree partners, thus increasing the number of partners to six.Manulife Insurance achieved new business annualised premiumof RM64.4 million, an increase of 3% over 2008. Regular premiumlife products accounted for 96% of the total sales with Agencychannel contributing 90% towards regular premium sales. Theeffect of a dampened economy was felt particularly over thefirst three quarters of the year which saw cautious consumerspending. Correspondingly, new business performance wasalso affected. As economic activity began to gradually recoverin response to the significant fiscal and monetary measuresimplemented by the Government in early 2009, ManulifeInsurance took the opportunity to launch a new series of savingproducts and new business sales saw improvements. TheCompany recorded an outstanding Q4 results which helped toput 2009 sales performance ahead of 2008.In line with the Company’s strategy to focus on Agency growthin 2009, the Agency channel made significant progress. TheAgency’s productivity continued to improve and contributedsignificantly to the Company’s growth of new business annualisedpremium. Amidst a trying economic climate, the Agency newbusiness annualised premium grew 25.8% over 2008. ManulifeAgency made history when its net manpower achieved 1,720agents, a record since Manulife entered the Malaysian marketin 2004. The Company has built a productive and outstandingAgency force and will continue to drive growth by driving higherproduction and recruitment standards.The launch of new products in 2009, comprising the medicalplan, a limited payment endowment plan and a regular premiumlimited payment participating whole life plan also contributed tothe good performance of the Agency channel. The Companyalso launched a simple term plan with accidental indemnitycover to help new Agents kick-start their career in Manulife.The Company continued to use technology to improve itsoperational efficiency. Customer and Agency web portals wereimproved to provide more information to its users. The CustomerService Centre was expanded to include call centre facilities withoutreach to our customers and distributors nationwide.Unit TrustThe Group’s unit trust operation is carried out by ManulifeUnit Trusts Berhad (“Manulife Unit Trusts”), its wholly-ownedsubsidiary. Incorporated on 30 September 2008, Manulife UnitTrusts commenced operations on 22 June 2009. During theyear, Manulife Unit Trusts brought on board a number of keypersonnel with extensive wealth management experience todrive the Company’s entry into the unit trust sector.2009 was also a year which saw Manulife Unit Trusts puttingits operational framework into place in anticipation of its fundlaunches in 2010. Manulife Unit Trusts worked on developing itsbackroom infrastructure to support unit trusts distribution sales,the contracting and compensation requirements for distributorsand the review and selection of funds to be launched.The Company will capitalise on the existing strength of theexisting agency force as its first channel of distribution. To thisend, in the second half of 2009, the unit trust team conductedextensive briefing and training sessions to the agency forcewith the view to encourage these agents to seek the CertifiedUnit Trust Examination (CUTE) licence. In addition, ManulifeUnit Trusts leveraged on the experience and expertise availablewithin the Group to set-up systems and processes that enabledit to exceed the standards required by the industry.

17Annual Report 2009chairman’s statementOrphanage in Penang, Society of the Blind in Sibu and SelangorFamily Aid Association in Rawang. A special visit to Sherun OldFolk’s Home in Johor Bahru was organized to coincide withWorld Senior Citizen Day.The Group saw overwhelming support and participation fromover 400 Agency members and staff for the Terry Fox Run, aworthy event that aims to raise funds in aid of cancer research.Risk ManagementAsset ManagementThe Group’s asset management operation is carried out byManulife Asset Management (Malaysia) Sdn. Bhd. (“ManulifeAsset Management”), its wholly-owned subsidiary. Incorporatedon 15 May 2008, Manulife Asset Management commencedoperations on 1 April 2009.2009 saw Manulife Asset Management (Malaysia) Sdn Bhdsetting up its operational framework, separating itself as anindependent entity from the Group’s investment arm. During theyear, the Company took over the management of a major portionof the Group’s investments as well as secured the mandate tomanage an equity investment-linked fund - HSBC Growth Fund.Total funds under management as at 31 December 2009 stoodat RM2.4 billion.Corporate Social ResponsibilityDuring the year, the Group actively undertook corporate socialresponsibility (CSR) initiatives that benefited the less fortunatein the communities in which it does business. During the year,the Group’s CSR initiatives emphasised employee and Agencyparticipation as well as contribution in kind that helped toimprove the quality of life for underprivileged children, old folks,mentally disabled children or the physically handicapped.Risk Management in the financial services industry is a criticalfactor in determining the success of an organisation and itscontinuity. It is a discipline designed to identify potential eventsthat may affect the business continuity of an organisation so asto protect, manage and minimise the risks involved. The Group’srisk taking activities are undertaken with the understanding thatrisk taking and effective risk management are necessary andintegral to achieving strategic objectives and managing businessoperations. The Group seeks to strategically optimize risk takingand risk management to support long term revenue and earninggrowth, with the ultimate objective of increasing shareholdervalue. In optimizing risk, the Group aims to:• capitalize on opportunities that provide desired returns, whileensuring they align with the Group’s overall risk philosophyand appetite;• clearly identify, consistently measure, and continuouslymonitor all key risks taken; and• proactively employ effective risk controls and mitigationprograms.Aside from establishing an Enterprise Risk Management Policyto introduce a structured risk management framework, theGroup has in place a variety of policies related to business riskmanagement, among others, the Code of Business Conduct andEthics, Anti-Money Laundering and Anti-Terrorism FinancingManual and Procurement Policy.The Group started the year by funding the establishment ofa bakery at Sekolah Sinar Harapan, a welfare school in BukitMertajam for mentally disabled children. The Group’s contributionof electrical and bakery equipment will enable the children tolearn bakery skills that can potentially lead to income-earningopportunities in the future. Realising the importance of providingIT education to children at an early stage, Manulife donated fiveunits of computers to a primary school in Johor, with the aim ofhelping to set up a computer lab for the students.During the year, a number of cheer visits to underprivilegedhomes were carried out by our Agency members and staffat their respective regions. Among the homes are PreciousGift Home and Pusat Jagaan Diamond in Ipoh, St. Joseph’s

Manulife Holdings Berhad (24851-H) 18chairman’s statementBusiness Development and TrendLife Insurance2009 saw a resurgence in life insurance sales with the industryregistering overall growth. Consumers favoured insuranceproducts that provided guarantees, and as a result, the marketsaw increase in sales and launches of new traditional planscompared to investment-linked plans.Bank Negara Malaysia’s Risk-Based Capital Framework (RBC)took effect from 1 January 2009, requiring insurers to maintainan appropriate level of capital that is commensurate with theirrisk profile. With its implementation, the strength and resilienceof life insures have been significantly enhanced.In 2Q 2009, Bank Negara Malaysia announced liberalisationmeasures for the financial sector with the aim to enhance therole of this sector as the catalyst of economic growth. Amongthe measures related to the insurance industry are as follows:-• Increase in foreign equity participation in insurancecompanies and takaful operators to 70 percent. A higherforeign equity limit above 70 percent for insurance companiescan be considered if player can facilitate consolidation andrationalisation of the insurance industry.• Two new takaful licences will be granted to insurancecompanies that can offer value-added services to thefinancial sector.• The restriction on opening of branches, employment ofexpatriates and bancassurance arrangement for locallyincorporated insurers have been lifted.The above measures bodes well for the continued developmentof the life insurance and takaful industries. It raises the bar forcompetition, innovation, and service levels which would lead tohigher insurance penetration in Malaysia.Unit TrustThe unit trust industry rebounded in 2009 after a disappointing2008, with industry-wide net sales of RM24.8 billion, as a result ofthe equity market recovery and improving investor sentiment.As part of its initiative to facilitate market expansion forthe industry, the Securities Commission inked the MutualRecognition Agreement with the Dubai Financial ServicesAuthority and another, more recently, with the Hong Kong SFCto enable cross-border distribution of Islamic funds on a bilateralbasis.Investment2009 turned out to be one of the best years for the local stockmarket after a dismal 2008. Although the local equities marketbegan 2009 on a subdued note, the market rallied strongly fromApril onwards in anticipation of an economic recovery thanksto unprecedented economic stimulus measures undertakenby governments around the world. Closer to home, Malaysiaannounced 2 stimulus packages to revive the economy. Asthe year progressed, emerging economic data began to showthat a recovery was taking hold. Driven by improved economicnumbers, corporate earnings and consumer sentiment, the KLCIrallied 45.1% to end 2009 at 1,272.78 points.To spur economic growth, Bank Negara Malaysia reduced theOvernight Policy Rate by a total of 150bps between 4Q 2008to 1Q 2009. Despite the accommodative monetary policy,domestic bond yields were pressured upwards following theannouncement of large fiscal stimulus measures, which led toa record amount of government bond issuance for the wholeof 2009. Whilst the corporate bond segment was initiallysluggish, investors’ risk appetite gradually improved as the yearprogressed following encouraging economic releases on theglobal and domestic front.

19Annual Report 2009chairman’s statementCurrent Year ProspectsWith consumer optimism on the rise as the Government putsin place measured initiatives to drive economic growth, weforesee the financial sector as one of the main beneficiaries ofthe improved customer sentiment. The Group will capitalise onthe economic growth to introduce new life insurance and unittrust products that appeal to the different consumer appetiteswhile consciously managing its bottom line.With these plans, we expect the Group to remain competitive inthe respective industries it operates in. Barring any unforeseencircumstances, the Directors expect the Group’s performanceto remain satisfactory in the next financial year ending 31December 2010.Board of DirectorsOn behalf of the Board of Directors, I am pleased to welcomeMr. Gianni Fiacco, a representative of Manulife, to the boardof Manulife Holdings Berhad. Appointed on 22 May 2009,Mr. Fiacco brings with him valuable financial expertise andexperience.AcknowledgementsFinally, on behalf of the Board of Directors, I would like to thankour shareholders, policyowners and business associates fortheir continued support, our Agency force and staff for theirdedication and hard work, and I trust that we will continue tobenefit from their support in the coming year.DividendsThe Board of Directors is pleased to recommend, subject toshareholders’ approval at the forthcoming Annual GeneralMeeting, a first and final dividend of 17 sen per share less incometax at 25% amounting to RM25,802,175.00 for the financial yearended 31 December 2009.Tan Sri Dato’ Mohd Sheriff bin Mohd KassimChairmanKuala Lumpur18 March 2010

Manulife Holdings Berhad (24851-H) 20corporate governancestatementThe Board of Directors (“the Board”) is committed to ensuring that the highest standardsof corporate governance are practised throughout the Group as a fundamental part ofdischarging its responsibilities to protect and enhance shareholders’ value and the financialperformance of Manulife Holdings Berhad (“the Company”).To this end, the Board fully supports the disclosure requirements of the Malaysian Code on Corporate Governance (“the Code”) andstrives to achieve the best practices embodied in the revised Code and the Corporate Governance Guide issued by Bursa MalaysiaSecurities Berhad in June 2009.Unless as otherwise stated, the Board has complied with the principles and best practices of the Code.THE BOARD OF DIRECTORSAn effective Board leads and controls the Company. The Manulife Holdings Berhad Board meeting is held at least once a quarter,with additional meetings convened as necessary. All Board members bring an independent judgment to bear on issues of strategy,performance, resources and standards of conduct. Three (3) of the directors are independent.For the financial year ended 31 December 2009, five (5) board meetings were held and the attendance of each director is recordedin their respective profiles.The Board has delegated specific responsibilities to four (4) Board Committees, namely:• Executive Committee of the Board• Group Audit Committee• Group Risk Management Committee• Group Nominating/Remuneration CommitteeThe Terms of Reference of the Board Committees clearly define the duties and obligations of the Board Committees in assisting andsupporting the Board. The ultimate responsibility for the final decision on all matters lies with the entire Board.Executive Committee of the BoardThe Executive Committee has three (3) members, comprises two (2) Non-Executive Directors and one (1) Executive Director.Members1. Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim, Chairman/Independent Non-Executive Director2. Mr Philip John Hampden-Smith, Member/Non-Independent Non-Executive Director3. Mr Michael Chan Yui Lung, Member/Group Chief Executive Officer/Managing DirectorTerms of ReferenceThe Company’s Articles of Association provides that the Board of Directors may appoint the Executive Directors and certain Non-Executive Directors to the Executive Committee which shall consist of not more than seven (7) members. Further, subject to theexpress directions of the Board and to any directions which may be given by the Company in a general meeting, the ExecutiveCommittee shall manage the business of the Company, and shall be empowered to do on behalf of the Company any act which thedirectors may do, except make calls, forfeit shares, borrow money, or fill a casual vacancy on the Board.

21Annual Report 2009corporate governance statementGroup Audit CommitteeThe Group Audit Committee has three (3) members, comprises two (2) Independent Non-Executive Directors and one (1) Non-Executive Director. The Report of the Group Audit Committee for the financial year can be found in pages 28 to 34 of the AnnualReport.Members1. Datuk Abu Hassan bin Kendut, Chairman/Independent Non-Executive Director2. En Ahmad Riza bin Basir, Member/Independent Non-Executive Director3. Mr Robert Allen Cook, Member/ Non-Independent Non-Executive DirectorTerms of ReferenceThe terms of reference of the Group Audit Committee set out under the Report of the Group Audit Committee on pages 28 to 33 ofthe Annual Report.Meeting AttendanceThe attendance list for the Group Audit Committee’s members for the financial year ended 31 December 2009 are found on page28 of the Annual Report.Group Risk Management CommitteeThe Group Risk Management Committee has three (3) members, comprises two (2) Independent Non-Executive Directors and one(1) Non-Executive Director.Members1. Datuk Abu Hassan bin Kendut, Chairman/Independent Non-Executive Director2. En Ahmad Riza bin Basir, Member/Independent Non-Executive Director3. Mr Robert Allen Cook, Member/ Non-Independent Non-Executive DirectorTerms of ReferenceThe Group Risk Management Committee is responsible for :-1. Reviewing and recommending risk management strategies, policies and risk tolerance for the Board’s approval;2. Reviewing and assessing the adequacy of risk management policies and framework for identifying, measuring, monitoring andcontrolling risks as well as the extent to which these are operating effectively;3. Ensuring adequate infrastructure, resources and systems are in place for an effective risk management, i.e. ensuring that staffresponsible for implementing risk management systems perform these duties independently of the Group’s risk taking activities;and4. Reviewing the management’s periodic reports on risk exposure, risk portfolio composition and risk management activities.Meeting AttendanceThe attendance list for the Group Risk Management Committee’s members for the financial year ended 31 December 2009 are asfollows:-Name of membersAttendanceDatuk Abu Hassan bin Kendut 4 out of 4En Ahmad Riza bin Basir 4 out of 4Mr Robert Allen Cook 4 out of 4

Manulife Holdings Berhad (24851-H) 22corporate governance statementGroup Nominating/Remuneration CommitteeThe Group Nominating/Remuneration Committee has five (5) members, comprises three (3) Independent Non-Executive Directorsand two (2) Non-Executive Directors.Members1. Tan Sri Dato Mohd Sheriff bin Mohd Kassim, Chairman/Independent Non-Executive Director2. En Ahmad Riza bin Basir, Member/Independent Non-Executive Director3. Datuk Abu Hassan bin Kendut, Member/Independent Non-Executive Director4. Datuk Ismail bin Haji Ahmad, Member/ Non-Independent Non-Executive Director5. Mr Philip John Hampden-Smith, Member/ Non-Independent Non-Executive DirectorTerms of ReferenceThe Group Nominating Committee’s primary objective is to establish a documented formal and transparent procedure for theappointment of directors and key senior officers and to assess the effectiveness of directors, the Board as a whole and the variouscommittees of the Board. The Committee regularly reviews the profile of the required skills and attributes of the Directors to ensurethat the Board has the appropriate balance of expertise and ability to discharge its responsibilities.The Group Remuneration Committee’s primary objective is to establish a formal and transparent procedure for developinga remuneration policy for directors and key senior officers and ensuring that their compensation is competitive and strategic.Additionally, the Committee is also responsible for recommending a framework of remuneration, based on the agreed KeyPerformance Indicators, as well as recommending specific remuneration packages for directors and key senior officers.Meeting AttendanceThe attendance list for the Group Nominating/Remuneration Committee’s members for the financial year ended 31 December 2009are as follows:-Name of membersAttendanceTan Sri Dato’ Mohd Sheriff bin Mohd Kassim 2 out of 2En Ahmad Riza bin Basir 2 out of 2Datuk Abu Hassan bin Kendut 2 out of 2Datuk Ismail bin Haji Ahmad 2 out of 2Mr Philip John Hampden-Smith 2 out of 2The Board has also established various Management Committees. The key Management Committees are the Executive ManagementTeam, the Senior Management Team, the Asset and Liability Management Committee, Investment Committee, IT Steering Committeeand the Business Continuity Management Committee.BOARD BALANCE, DUTIES AND RESPONSIBILITIESThe Board currently has eight (8) members, comprising three (3) Independent Non-Executive Directors (including the Chairman),four (4) Non-Independent Non-Executive Directors and an Executive Director. Together, the directors bring with them a wealthof experience, and the required mix of skills and core competencies which are necessary to enable the Company to achieve itscorporate objectives and fulfil all its fiduciary duties.There is a clear division of responsibility between the Chairman and the Group Chief Executive Officer to ensure that there is abalance of power and authority.

23Annual Report 2009corporate governance statementBOARD BALANCE, DUTIES AND RESPONSIBILITIES (Cont’d)There is also a balance in the Board because of the presence of Independent Non-Executive Directors of the calibre necessaryto carry sufficient weight in the Board’s decisions. Although all the directors have an equal responsibility for the Company’soperations, the role of these Independent Non-Executive Directors is particularly important in ensuring that the strategies proposedby management are fully discussed and examined, and take into account of the long term interests, not only of the shareholders,but also of the policyholders, employees, suppliers and the communities in which the Company conducts its business.Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim, is the Chairman of the Board and an Independent Non-Executive Director to whommatters concerning the Company may be conveyed.Whilst the Company has a significant shareholder, the investment of minority shareholders is fairly reflected through the Board’srepresentation.The Board oversees the overall corporate governance practices and performance of the Group. The responsibilities of the Boardinclude:-(i) Reviewing and adopting the Company’s annual business plans, and the medium-term and long term strategic plans;(ii) Overseeing the conduct of the Company’s business to evaluate whether the business is being properly managed;(iii) Ensure that the operating infrastructure, systems of control, systems for risk management, financial and operational controlsare in place and properly implemented;(iv) Succession planning, including appointing, training and fixing the compensation of Directors and key senior management;(v) Investor relations; and(vi) Identifying principal risks and ensuring the implementation of appropriate systems to manage these risks.SUPPLY OF INFORMATIONAll directors are provided with the agenda and Board reports with sufficient time prior to a Board meeting. This is to enable thedirectors to obtain further explanations, where necessary, in order to be briefed properly before the meeting.As and when necessary, the Board, in furtherance of their duties, may seek independent professional advice at the Company’sexpense.All directors have access to the advice and services of the Joint Company Secretaries.BOARD APPOINTMENTS AND RE-ELECTIONSThe Code endorses as a good practice, a formal procedure for appointments to the Board, with a Group Nominating/RemunerationCommittee making recommendations to the Board.The Company’s Articles of Association requires all directors to submit themselves for re-election by shareholders at the AnnualGeneral Meeting (“AGM”) at least once in every 3 years. Further, pursuant to Section 129 of the Companies Act, 1965, Directorswho are over the age of 70 years shall retire at every annual general meeting and may offer themselves for re-appointment to holdoffice until the next annual general meeting.

Manulife Holdings Berhad (24851-H) 24corporate governance statementDIRECTORS’ TRAININGThe Directors have participated in conferences, seminars and training programmes from time to time, particularly on new laws and regulations.In 2009, Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim and En Ahmad Riza bin Basir attended the Financial Institutions DirectorsEducation (FIDE) training programme organised by Bank Negara Malaysia. FIDE is a value-enhancing programme which focuses onhoning essential skill sets and enhancing the knowledge and expertise of directors to effectively discharge their responsibilities forthe effective governance of financial institutions.Other conferences, seminar and training programmes attended by the various Directors in year 2009 were:- The Global Financial Crisis: Implications for Corporate Governance in Asia- Corporate Directors Training Programme- Discussion on Succession Planning for Directors and briefing on behaviour of delinquency- BNM Financial Industry Conference- AML/CFT Trends and Typologies- Effective Media Communications and Spokersperson- Management of Operational Risk- Masterclass for Islamic Banks Board of Directors- Islamic Financial Services Board Public Lecture and Bank Negara Malaysia High Level Conference Policy and Stability- Banking Course for Non-Banking directors- Wholesale Bank Credit Portfolio: briefing on Mart-To-Market and Revised Underwriting Standard- Basel II workshop- Market Outlook, Product and Financial update- EVA approach to value creation- Ideas for corporate development planning- Budget update IRS 139 and FRS 137In addition, on 30 June 2009, Mr Leo Ng, Chief Financial Officer and Mr Tang Loon Khoon, Vice President, Finance jointly organisedan inhouse training on Market Outlook, Product and Financial Update for the Board. The Board will on a continuous basis, evaluateand determine the training needs of Directors.DIRECTORS’ REMUNERATIONThe remuneration of the directors for the financial year ended 31 December 2009 is set out below:-i) The aggregate remuneration of directors with categorisation into appropriate components distinguishing between the Executiveand Non-Executive Directors.Executive Non-Executive(RM’000)(RM’000)Fees - 333Salaries 946 -Bonus 170 -Benefits-in-kind 447 -Meeting allowances - 84Total 1,563 417ii)The number of directors whose remuneration falls into each successive band of RM50,000, distinguishing between theExecutive and Non-Executive Directors.Executive Non-ExecutiveRM50,000 and below - 2RM50,001 – RM100,000 - 5RM100,001 – RM1,550,000 - -RM1,550,001 – RM1,600,000 1 -The level of remuneration of the Directors is linked to their level of responsibilities and contributions to the overall effectivefunctioning of the Board. The remuneration of the Board is reviewed annually by the Group Nominating/Remuneration Committeeof the Board.

25Annual Report 2009corporate governance statementSHAREHOLDERS’ COMMUNICATIONS AND INVESTOR RELATIONS POLICYThe Board believes in clear and timely communication with its shareholders. In addition to the various announcements and pressreleases made during the financial year, the Annual Report and the quarterly financial results provide shareholders and the generalpublic with an overview of the Group’s business activities and performance.Enquiries by shareholders are dealt with promptly as practicable. The Company has been using the AGM as a means of communicationwith its shareholders. The Board encourages participation from shareholders by having question and answer sessions during theAGM where members of the Board as well as the external auditors are available to answer questions raised at the Meeting.The Group also conducts regular briefings for fund managers and analysts to update them on the Group’s progress towards meetingits business objectives. In addition, the Group has established a website at www.manulife.com.my which shareholders can accessfor information.FINANCIAL REPORTINGIn presenting the annual financial statements and quarterly announcements to shareholders, the Board aims to present a balancedand understandable assessment of the Group’s position and prospects. This also applies to reports to regulators.STATEMENT OF DIRECTORS’ RESPONSIBILITY FOR PREPARING THE FINANCIAL STATEMENTSThe Board is required by the Companies Act, 1965 to prepare financial statements for each financial year which have been made outin accordance with the Financial Reporting Standards, the Malaysian Accounting Standards Board (“MASB”) approved accountingstandards in Malaysia for Entities Other than Private Entities and to give a true and fair view of the state of affairs of the Group andCompany at the end of the financial year and of the results and cash flows of the Group and Company for the financial year.In preparing the financial statements, the Board has• selected suitable accounting policies and applied them consistently;• made judgments and estimates that are reasonable and prudent;• ensured that all applicable accounting standards have been followed; and• prepared financial statements on the going concern basis as the directors have a reasonable expectation, having made enquiries,that the Group and the Company have adequate resources to continue in operational existence in the foreseeable future.The Board has the responsibility for ensuring that the Group and the Company keep accounting records which disclose withreasonable accuracy the financial position of the Group and Company and which enable them to ensure that the financial statementscomply with the Companies Act, 1965.The Board has overall responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group andthe Company and to prevent and detect fraud and other irregularities.RELATIONSHIP WITH AUDITORSThe Board has a formal and transparent arrangement for maintaining an appropriate relationship with the Group’s auditors.INTERNAL CONTROLThe Group’s Internal Control Statement is set out on pages 26 and 27 of the Annual Report.This statement is made in accordance with a resolution of the Board dated 18 March 2010.

Manulife Holdings Berhad (24851-H) 26internal controlstatementBoard’s ResponsibilityThe Board of Directors (“the Board”) affirms its overall responsibility for Manulife Holdings Berhad and its subsidiary companies’(“the Group”) system of internal controls and risk management practices, and for reviewing the adequacy and integrity of thesesystems. However, such systems are designed to manage rather than eliminate the risk of failure to achieve business objectives andaccordingly, they can provide only reasonable, and not absolute, assurance against material misstatement or loss.The Group has in place an on-going process for identifying, evaluating, monitoring and managing significant risks that may affectthe achievement of the Group’s business objectives throughout the year under review and up to the date of this report. This processis regularly reviewed by the Board via the Group Audit Committee and the Group Risk Management Committee.The management assists the Board in the implementation of the policies and procedures on risk management and internal controlby identifying, measuring and evaluating the enterprise risk taking activities undertaken to achieve the strategic objectives andmanaging business operations.Key Internal Controls and Risk Management ProcessesThe key processes that have been put in place to review the adequacy and integrity of system of internal controls and riskmanagement include the following:• The Group Audit Committee reviews audit issues concerning internal controls and risk management identified by the GroupInternal Audit Department, external auditor and regulatory examiners. The Group Audit Committee annually reviews andapproves the audit plan and budget to ensure that the Group Internal Audit function operates effectively. The Group AuditCommittee meets at least quarterly to review the audit reports tabled by Group Internal Audit Department.• The Group Risk Management Committee reviews both the key risks identified by management and plans for the mitigationof these risks. The key risks areas examined are strategic risk, product risk, asset liability and market risk, credit risk andoperational risk. A formalised risk assessment is conducted quarterly by the respective risk managers comprising the headsof business units. For the key risks identified, management action plans are formulated and implemented. The results of therisk assessments are reviewed by the Senior Management before reporting to the Board via the Group Risk ManagementCommittee.• The Group Internal Audit function monitors and evaluates the Group’s business risks, monitor compliance with policies andprocedures and the effectiveness of the internal control systems and highlight significant findings in respect of any noncompliance. The audit scope covers auditable areas in Head Office and Regional Support Centres encompassing financialoperations, investment operations, insurance operations, agency operations and information systems. An annual audit plan isdeveloped based on Group Internal Audit’s annual risk assessment on all identified auditable areas. The progress of the auditplan and a summary of audit issues are reported to the Group Audit Committee as and when it meets.• The Compliance function ensures that the Group works within the applicable statutory, regulatory and ethical framework definedby all applicable laws, regulations and guidelines governing the insurance, asset management and unit trust industries.• There is a detailed and formalised annual business and budget planning process to ensure that the Group’s business objectivesare clearly defined. The Board reviews and approves the Group’s business plan. Comprehensive management reports aresubmitted to the Board as and when it meets throughout the year. The Board monitors the Group’s performance closely andvariances are followed-up promptly by management.• An annual review of the current and future financial position of the Group’s insurance business is performed by the appointedActuary as guided by Bank Negara Malaysia’s JPI/GPI 24 concerning Guidelines on Financial Condition Report. This includes adynamic solvency test assessing the Group’s insurance business ability to withstand various adverse scenarios.

27Annual Report 2009internal control statement• There are proper processes within the Group for hiring, termination and promotion of staff, formal training programmes forstaff, annual and semi annual performance appraisals and other relevant procedures in place to ensure staff members arecompetent, adequately trained in carrying out their roles and responsibilities and focused to achieve desired results andbusiness objectives.• There is a clearly defined assignment of responsibilities to the Committees of the Board and to management to provide oversightand governance over the Group’s activities.• There are clearly documented authority limits, policies and procedures that underpin the internal control process; e.g. staffintegrity, staff competency, check and balances, segregation of duties, independent checks and verification processes, systemaccess controls and layers of internal transaction authorisation, which set out in the policies and procedural manuals, guidelines,and directives issued by the Company and its subsidiaries and updated from time to time.Review of Statement by External AuditorsAs required by paragraph 15.23 of Bursa Malaysia Securities Berhad Main Market Listing Requirements, the external auditors havereviewed this Internal Control Statement. Their review was performed in accordance with Recommended Practice Guide (“RPG”)5 issued by the Malaysian Institute of Accountants. Based on their review, the external auditors have reported to the Board thatnothing has come to their attention that causes them to believe that this Statement is inconsistent with their understanding of theprocess the Board has adopted in the review of the adequacy and integrity of internal control of the Group. RPG 5 does not requirethe external auditors to and they did not consider whether this Statement covers all risks and controls, or to form an opinion on theeffectiveness of the Group’s risk and control procedures.ConclusionBased on the above, the Board believes that the system of internal controls and risk management of the Group is sound andsufficient to safeguard shareholders’ investments and the Group’s assets.This statement was made in accordance with a resolution of the Board of Directors dated 24 February 2010.

Manulife Holdings Berhad (24851-H) 28group auditcommittee reportI. COMPOSITION OF THE GROUP AUDIT COMMITTEEDatuk Abu Hassan bin Kendut (independent non-executive director) (Chairman)Encik Ahmad Riza bin Basir (independent non-executive director)Mr Robert Allen Cook (non-independent non-executive director)The details of attendance of each member at the Group Audit Committee meetings held during 2009 are as follows:Name of committee membersAttendanceDatuk Abu Hassan bin Kendut 5 out of 5En Ahmad Riza bin Basir 5 out of 5Mr Robert Allen Cook 5 out of 5II.TERMS OF REFERENCE1. Establishment1.1 The Board of Directors (“the Board”) shall form a committee of directors to perform the role of the Group AuditCommittee for Manulife Holdings Berhad and its group of companies (collectively, “Manulife Group”) save andexcept for Manulife Insurance Berhad.1.2 The written terms of reference for the Group Audit Committee shall provide a clear understanding of the Group AuditCommittee’s role. The terms of reference shall be made available to board members, management and internalauditors of Manulife Group.2. Composition of the Group Audit Committee2.1 The Group Audit Committee should be composed of no fewer than three (3) non-executive members appointed fromthe Board.2.2 The members of the Group Audit Committee should be appointed after taking into consideration the recommendationsof the Group Nominating/Remuneration Committee. In determining the appropriate size and composition of theGroup Audit Committee, the Board should in particular, take into consideration the necessary mix of skills andexperience required for the Group Audit Committee to effectively discharge its responsibilities.2.3 The Group Audit Committee shall include at least one (1) person who is a member of the Malaysian Institute ofAccountants or alternatively a person who must have at least three (3) years’ working experience and have passedthe examinations specified in Part I of the 1st Schedule of the Accountants Act, 1967 (“Schedule”) or is a memberof one of the associations of accountants specified in Part II of the said Schedule or fulfils such other requirementsas prescribed or approved by Bursa Malaysia Securities Berhad (“Bursa Securities”).2.4 The Board shall review the term of office and performance of Group Audit Committee and each of its members atleast once every three (3) years to determine whether such Group Audit Committee and members have carried outtheir duties in accordance with their Terms of Reference.2.5 If for any reason the number of Group Audit Committee members at any point in time is reduced to below three (3)and thereby resulting in a breach of Bursa Securities Main Market Listing Requirements, the vacancy(s) shall be filledwithin three (3) months from the date of such breach.3. Qualification, Experience, Knowledge and Skills3.1 Candidates for the Group Audit Committee should have sound judgment, objectivity, an independent attitude,management experience and adequate knowledge of the insurance, fund management and wealth managementindustries. They should be committed to the task and demonstrate a keen perception of the internal controlenvironment within Manulife Group and an ability to make probing inquiries.

29Annual Report 2009group audit committee reportII.TERMS OF REFERENCE (Cont’d)3. Qualification, Experience, Knowledge and Skills (Cont’d)3.2 Collectively, the Group Audit Committee should have a wide range of necessary skills to undertake its duties andresponsibilities. All Group Audit Committee members should be able to understand the financial reporting processand be financially literate. At a minimum, at least one (1) member of the Group Audit Committee should be familiarwith accounting, auditing practices and financial reporting requirements. This individual should be a member of arecognised professional accounting body.3.3 In addition, in view of the important role of the Group Audit Committee in ensuring that there are adequate checksand balances within the operations of Manulife Group, all Group Audit Committee members, either individually orcollectively, are also expected to be familiar with areas included in the scope of internal insurance, fund managementand wealth management audits.4. Independence of Group Audit Committee Members4.1 All Group Audit Committee members shall be independent. Where this cannot be achieved, the majority of theGroup Audit Committee members, including the Chairman of the Group Audit Committee, should be independent.In the absence of the Chairman of the Group Audit Committee, the members of the Group Audit Committee shallelect a Chairman from amongst themselves who shall be an independent non-executive director.4.2 An independent director should comply with Paragraph 1.01 of Bursa Securities Main Market Listing Requirementsand should not:(a)(b)(c)(d)(e)(f)(g)be an Executive Director within Manulife Group;hold more than 5% equity interest directly or indirectly in any company within Manulife Group;be employed as an officer (except as a non-executive director) of any company within Manulife Group at leasttwo (2) years prior to his appointment date;be a relative of any executive director, officer or major shareholder of any company within Manulife Group orany of its related corporations;act as a nominee or representative of any executive director or major shareholder of any company withinManulife Group or any of its related corporations;be engaged as a professional adviser by any company within Manulife Group or any of its related corporationsunder such circumstances as prescribed by Bursa Securities or is not presently a partner, director (exceptas an independent director) or major shareholder, as the case may, of a firm or corporation which providesprofessional advisory services to any company within Manulife Group or any of its related corporations undersuch circumstances as prescribed by Bursa Securities; andbe engaged in any transaction with any company within Manulife Group or its related corporations under suchcircumstances as prescribed by Bursa Securities or is not presently a partner, director or major shareholder,as the case may be, of a firm or corporation (other than subsidiaries of any company within Manulife Group)which has engaged in any transaction with any company within Manulife Group or any related corporationunder such circumstances as prescribed by Bursa Securities.5. Authority5.1 The Group Audit Committee should have explicit authority to investigate any matter within its terms of reference andfull access to all information and documents relevant to its activities, to the internal and external auditors, and toemployees and agents of any company within Manulife Group.5.2 The Group Audit Committee should be kept regularly updated on audit mailers and be notified immediately of any fraudand significant irregularities or internal control deficiencies discovered by management or the internal audit department.Fraud and irregularities discovered by management should be referred to the internal audit department for investigation.5.3 The Group Audit Committee should have access to copies of audit reports (including interim financial audits) on a timelybasis and should be kept regularly informed of corrective actions arising from internal and external audit findings.5.4 The Group Audit Committee should have adequate resources to perform its duties and discharge its responsibilitiesand should be authorised to obtain external professional advice and to invite outsiders with relevant experience toattend, if necessary.

Manulife Holdings Berhad (24851-H) 30group audit committee reportII.TERMS OF REFERENCE (Cont’d)6. Meetings6.1 The Group Audit Committee should meet regularly, with due notice of issues to be discussed, and should record itsconclusions in discharging its duties and responsibilities.6.2 In addition, the Chairman of the Group Audit Committee should call a meeting of the Group Audit Committee ifrequested to do so by any Group Audit Committee member, the management or the internal or external auditors.6.3 The quorum for Group Audit Committee meetings should be at least two thirds of the members with independentdirectors forming the majority. Seven (7) days’ notice of Group Audit Committee Meetings shall be given to all GroupAudit Committee members unless the Group Audit Committee waives such requirement.6.4 If at any meeting, the Group Audit Committee Chairman is not present within 15 minutes after the time for holdingthe meeting, the members present may choose one of their member to be the Chairman of the meeting.6.5 The finance director, the head of internal audit and a representative of the external auditors should normally attendmeeting. Other board members may attend meeting upon invitation of the Group Audit Committee. While theGroup Audit Committee may invite any person to be in attendance to assist it in its deliberations, the Group AuditCommittee should ensure that it meets exclusively when necessary.6.6 The Company Secretary should act as Secretary of the Group Audit Committee and should be responsible for drawingup the agenda with the concurrence of the Chairman and circulating it, supported by explanatory documentation, toGroup Audit Committee members within a reasonable timeframe prior to each meeting.6.7 The Secretary should also be responsible for keeping the minutes of meetings of the Group Audit Committee,their timely circulation to Group Audit Committee members and other members of the Board, and following up onoutstanding matters in relation to the meetings.6.8 Questions arising at any meeting of the Group Audit Committee shall be decided by a majority of votes of themembers present, and in the case of equality of votes, the Chairman of the Group Audit Committee shall have asecond or casting vote.6.9 A resolution in writing signed by all members of the Group Audit Committee for the time being entitled to receivenotice of a meeting of the audit committee, shall be as valid and effectual as if it had been passed at the meeting ofthe Group Audit Committee duly convened and held. Any such resolution may consist of several documents in likeform, each signed by one or more members of the Group Audit Committee.6.10 The Chairman of the Group Audit Committee should provide written reports to the Board on the deliberations ofthe Group Audit Committee on a regular basis. In addition, the Chairman should also present a summary of allsignificant matters (highlighting the risks and implications) and resolutions made by the Group Audit Committee atBoard meetings.6.11 The Chairman of the Group Audit Committee should engage on a continuous basis with senior management, suchas the Chairman, the Chief Executive Officer, the Finance Director, the Chief of Internal Audit and the externalauditors in order to be kept informed of matters affecting a company within Manulife Group.

31Annual Report 2009group audit committee reportII.TERMS OF REFERENCE (Cont’d)7. Duties and responsibilitiesThe Group Audit Committee’s duties and responsibilities in relation to the internal audit and external audit function shouldinclude the following:7.1 Internal auditThe Group Audit Committee should:-(a)(b)(c)(d)(e)(f)Ensure that the internal audit department is distinct and has the appropriate status within the overallorganisational structure for the internal auditors to effectively accomplish their audit objectives.Ensure the effective organisation of the internal audit function, with due regard to the professionalism, capacityand competence of the internal audit personnel.Review and approve the audit plan, audit charter and budget required.Ensure that reporting relationships of the internal audit staff do not impede the exercise of independentjudgment by the internal auditors. In particular, internal audit reports should not be subject to the clearance ofa Chief Executive Officer or any Executive Director.Review the internal audit programme and results of the internal audit process.The Group Audit Committee should also review the scope of internal audit procedures, in particular:-i. Any restrictions placed on access by the internal auditors to any company’s records, assets, personnelor processes which are relevant to the conduct of audits;ii. Appropriateness of the risk assessment methodology employed to determine the frequency and scopeof audits, having regard to the nature, size and complexity of a company’s operations;iii Compliance with internal auditing standards; andiv. Coordination between internal and external auditors.(g)The Group Audit Committee members should ensure that they are adequately informed of, and understand,the risks and implications of internal audit findings and recommendations. The Group Audit Committee shouldpay particular attention to internal audit assessments of:-i. Compliance with company policies, relevant laws and regulatory requirements;ii. Effectiveness of internal controls in critical areas of operations (eg accounting, underwriting, claims,investment, derivatives and information technology management); andiii. Management’s responsiveness to, and corrective actions taken in respect of, internal audit findings andrecommendations.(h)(i)(j)The Group Audit Committee should ensure that all findings and recommendations are resolved effectively andin a timely manner.The Group Audit Committee should note any significant disagreements between the internal auditor andmanagement irrespective of whether they have been resolved in order to identify any impact that this mayhave on the audit process or findings.Resources and staffing. The Group Audit Committee should ensure on an ongoing basis the internal auditdepartment has adequate and competent resources, given the size and complexity of a Company’s operations.In this respect, the Group Audit Committee should:-i. Review any appraisal or assessment of the performance of members of the internal audit function;ii. Approve any appointment or termination of senior staff members of the internal audit function; andiii. Take cognizance of resignations of internal staff members and provide the resignation staff member anopportunity to submit his reasons for resigning.

Manulife Holdings Berhad (24851-H) 32group audit committee reportII.TERMS OF REFERENCE (Cont’d)7. Duties and responsibilities (Cont’d)7.1 Internal audit (Cont’d)7.2 External auditorThe Group Audit Committee should ensure that internal audit staff receives necessary training to performaudit work. In this respect, there should be a programme of continuing education and training to enablethe internal auditors to keep abreast of business trends and latest developments at both the institution andindustry levels, as well as to enhance technical skills required to effectively support the audit function.The Chief of Internal Auditor shall report directly to the Group Audit Committee and shall have direct accessto the Chairman of the Group Audit Committee.(a)(b)Appointment of external auditor. The Group Audit Committee is responsible for the appointment, resignationor dismissal of the external auditor, having particular regard to the external auditor’s objectivity, performanceand independence.The Group Audit Committee should:i. Review and assess various relationships between the external auditor and the Company or any otherentity that may impair or appear to impair the externals auditor’s judgement or independence in respectof the company.ii. Review and assess fees paid to the external auditor, considering economic importance of a Company(in terms of total fees paid) to the external auditor; fees paid for non-audit services as a proportion oftotal fees; and whether an effective, comprehensive and complete audit could be reasonably conductedfor the audit fee paid.iii. Investigate reasons for any request made by management to dismiss the external auditor, or anyresignation by the external auditor.iv. Approve the provision of any non-audit services by the external auditor. The Group Audit Committee’sdecisions with respect to the provision of non-audit services should be documented in a statementwhich outlines whether or not it believes the level of provision of non-audit services by the externalauditor is compatible with maintaining auditor independence together with supporting reason.(c)Audit plan, findings and recommendations. The Group Audit Committee should review:i. with the external auditor the Audit plan prior to the commencement of the annual audit, the nature andthe scope of audit;ii. the Quarterly and year end financial statements;iii. audit reports;iv. any significant disagreements between the external auditor and management irrespective of whetherthey have been resolved in the absence of management where necessary; andv. any other findings, issues or reservations faced by the external auditor arising from interim and financialresults.The Group Audit Committee should also review and monitor management’s responsiveness to and actiontaken on external audit findings and recommendations. In this regard, the Group Audit Committee shouldensure that all findings and recommendations are resolved effectively and in a timely manner.In order to allow external auditors to express concerns, problems and reservations arising from financialaudits effectively, the Group Audit Committee should meet at least twice a year with the external auditors inthe absence of management/executive board members.

33Annual Report 2009group audit committee reportII.TERMS OF REFERENCE (Cont’d)8. Other ResponsibilitiesThe Group Audit Committee should also:(a)Review:-i. The interim financial reports and preliminary announcements;ii. Corporate governance disclosures made in the Directors’ Report and be satisfied that any departure from theFramework principles and the circumstances justifying such departure are sufficiently explained;iii. All representation letters signed by management, and be satisfied that the information provided is completeand appropriate;iv. External auditor’s management letter and management’s response; andv. Any related-party transactions and conflicts of interest situations that may arise within a company includingany transaction, procedure or conduct that raises questions of management integrity.(b)Prepare an annual report to the Board that provides a summary of the activities of the Group Audit Committee forinclusion in the Company’s annual report.(c) Assist the Board of the Company in the following for publication in the Company’s annual report: -i. Statement on the Company’s application of the principles set out in Part 1 of the Malaysian Code of CorporateGovernance (MCCG);ii. Statement on the extent of compliance with the Best Practices in Corporate Governance set out in Part 2 ofthe MCCG, specifying reasons for any areas of non-compliance (if any) and the alternatives adopted in suchareas; andiii. Statement on the Board’s responsibility for preparing the annual audited accounts.(d)(e)(f)(g)Ensure that a Company’s accounts are prepared in a timely and accurate manner for regulatory, management andgeneral reporting purposes, with regular reviews carried out on the adequacy of provisions made.Ensure that supervisory issues raised by a regulator concerning a member of the Manulife Group is resolved in atimely manner.Report any breaches of the Main Market Listing Requirements, which have not been satisfactorily resolved, to BursaSecurities.The Group Audit Committee shall also be responsible for any other functions as may be determined by the Boardand reflected in its terms of reference.9. Minutes9.1 The Secretary shall keep the minutes of the Group Audit Committee meetings at the Company registered office.9.2 The minutes shall be signed by the Chairman of the meeting at which the proceeding were held or by the Chairmanof the next succeeding meeting.9.3 As a reporting procedure, the minutes shall be circulated to all members of the Board.III. MEETINGSThe Committee had five (5) meetings during the year, which were attended by all members. Upon invitation, the Chief ExecutiveOfficer and members of senior management attended all the meetings.The Group’s external auditors attended three (3) of the meetings during the year.

Manulife Holdings Berhad (24851-H) 34group audit committee reportIV. SUMMARY OF ACTIVITIESThe main activities of the Group Audit Committee during the year were as follows:-i. reviewed the quarterly financial results announcements of the Group prior to Board’s approval, focusing particularly on overallperformance and prospects of the Group and compliance with accounting standards and other legal requirements;ii. reviewed the external auditors’ scope of work and audit plans for the year; andiii. reviewed the internal audit reports, audit plan and budget for the year.V. GROUP INTERNAL AUDIT FUNCTIONThe Group has a well-established Group Internal Audit Department, which reports directly to the Group Audit Committee andassists the Board in monitoring and evaluating the adequacy and effectiveness of the risk management, internal controls andgovernance processes. The Group Audit Committee approves the following year’s group internal audit plan and budget duringthe last Group Audit Committee meeting each year. Any subsequent significant interim changes will be submitted to the GroupAudit Committee for approval including any resource limitations that impact the Group Internal Audit activities.The scope of Group Internal Audit covers the audits of all units and operations of Manulife Holdings Berhad and its subsidiaries.The areas audited by the Group Internal Audit during the year were selected based on an independent assessment of theinherent risks in each of the auditable areas by the internal auditors. The frequency of each audit depends on the audit risksassessed whereby areas with higher audit risks will be subject to more frequent audit, ranging from annually to once everythree-year.In any audit performed, the internal auditors will assess and evaluate the adequacy of the risk management practices, operationalcontrols, compliance with regulatory requirements, management efficiency and test the effectiveness of the system of internalcontrol, amongst others. These audits ensure that the established system of internal controls and the implemented riskmanagement practices are appropriately and effectively applied and achieve acceptable risk exposures that are consistent withthe Group’s risk management policy and appetite. The Group Internal Audit Department also carries out special assignmentsas directed by the Group Audit Committee.The Group Audit Committee receives a detailed audit report after the completion of each audit assignment from the GroupInternal Audit Department. The Group Internal Audit Department summarises the audit findings for deliberation at each meetingof the Group Audit Committee together with an update on management actions taken to-date pertaining to the audit findingsreported. The Group Internal Audit Department also follows up and reports to the Group Audit Committee on the managementactions taken pertaining to any audit findings reported by the regional auditors.A number of internal control weaknesses were identified during the year, all of which have been, or are being, addressed. Noneof the weaknesses have resulted in any material losses, contingencies or uncertainties that would require disclosure in theGroup’s annual report.The total costs incurred in managing internal audit activities for Manulife Holdings Berhad and its subsidiaries in year 2009 wereRM 494,854.

35 Annual Report 2009Financial Statemets> 36Directors’Report> 40IncomeStatements> 41BalanceSheets> 42Life FundBalance Sheet> 43Life InsuranceRevenueAccount> 44Statements ofChanges in Equity> 46Cash FlowStatements> 47Notes to theFinancialStatements> 102Statement byDirectors> 102StatutoryDeclaration> 103IndependentAuditors’ Report

Manulife Holdings Berhad (24851-H) 36directors’reportDIRECTORS’ REPORTThe directors hereby submit their report together with the audited financial statements of the Group and of the Company for thefinancial year ended 31 December 2009.PRINCIPAL ACTIVITIESThe Company is engaged principally in investment holding whilst the principal activities of the subsidiaries are as stated in note 8to the financial statements.There have been no significant changes in the principal activities of the Company and its subsidiaries during the financial year.FINANCIAL RESULTSGroup CompanyRM’000 RM’000Net profit for the financial year 59,148 88,946DIVIDENDSSince the end of previous financial year, the Company paid a first and final dividend of 13 sen per share, less 25% tax, amountingto RM19,685,995 in respect of the financial year ended 31 December 2008.The directors recommend the payment of a first and final dividend of 17 sen per share, less 25% tax, amounting to RM25,802,175for the financial year ended 31 December 2009, which is subject to the approval of the shareholders of the Company at theforthcoming Annual General Meeting.RESERVES AND PROVISIONSMaterial transfers to or from reserves and provisions during the financial year are as disclosed in the financial statements.BAD AND DOUBTFUL DEBTSBefore the income statements and balance sheets of the Group and the Company were made out, the directors took reasonablesteps to ascertain that action had been taken in relation to the writing off of bad debts and the making of allowances for doubtfuldebts, and satisfied themselves that all known bad debts had been written off and that adequate allowance had been made fordoubtful debts.At the date of this report, the directors are not aware of any circumstances that would render the amounts written off for baddebts or the amounts of allowance for doubtful debts in the financial statements of the Group and the Company inadequate to anysubstantial extent.

37Annual Report 2009directors’ reportCURRENT ASSETSBefore the income statements and balance sheets of the Group and the Company were made out, the directors took reasonablesteps to ascertain that any current assets, other than debts, which were unlikely to be realised in the ordinary course of business,their values as shown in the accounting records of the Group and the Company have been written down to an amount which theymight 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 currentassets in the financial statements of the Group and the Company misleading.VALUATION METHODSAt the date of this report, the directors are not aware of any circumstances which have arisen which render adherence to the existingmethods of valuation of assets or liabilities of the Group and the Company misleading or inappropriate.CONTINGENT AND OTHER LIABILITIESAt the date of this report, there does not exist:(a)(b)any charge on the assets of the Group and the Company which has arisen since the end of the financial year which securesthe liabilities of any other person; orany contingent liability of the Group and the Company which has arisen since the end of the financial year.No contingent or other liability of the Group and the Company has become enforceable or is likely to become enforceable within theperiod of twelve months after the end of the financial year which, in the opinion of the directors, will or may substantially affect theability of the Group and the Company to meet their obligations when they fall due.For the purpose of this paragraph, contingent or other liabilities do not include liabilities arising from contracts of insuranceunderwritten in the ordinary course of business of the Group.CHANGE OF CIRCUMSTANCESAt the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or the financialstatements of the Group and the Company which would render any amount stated in the financial statements misleading.ITEMS OF AN UNUSUAL NATUREThe results of the operations of the Group and the Company 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 other than those disclosed in the financialstatements.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 ofa material and unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Groupand the Company for the financial year in which this report is made.

Manulife Holdings Berhad (24851-H) 38directors’ reportDIRECTORSThe directors who have held office during the period since the date of the last report are:Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim (Chairman)Datuk Ismail bin Haji AhmadDatuk Abu Hassan bin KendutAhmad Riza bin BasirPhilip John Hampden-SmithRobert Allen CookChan Yui LungGianni Fiacco (Appointed on 22 May 2009)In accordance with Article 93(B) of the Company‘s Articles of Association, Robert Allen Cook retires at the forthcoming AnnualGeneral Meeting and, being eligible, offers himself for re-election.In accordance with Article 98 of the Company‘s Articles of Association, Gianni Fiacco retires at the forthcoming Annual GeneralMeeting and, being eligible, offers himself for election.In accordance with Section 129 of the Companies Act, 1965, Tan Sri Dato’ Mohd Sheriff bin Mohd Kassim and Datuk Ismail Bin HajiAhmad retire at the forthcoming Annual General Meeting and, being eligible, offer themselves for re-election.DIRECTORS’ BENEFITSSince the end of the previous financial year, no director of the Company has received or become entitled to receive any benefit(other than benefits disclosed as directors’ remuneration and benefits in the financial statements) by reason of a contract made bythe Company or a related company with a director or with a firm of which the director is a member, or with a company in which thedirector has a substantial financial interest.During and at the end of the financial year, no arrangements subsisted to which the Company is a party, with the object or objectsof enabling directors of the Company to acquire benefits by means of the acquisition of shares in or debentures of the Company orany other body corporate.DIRECTORS’ INTERESTSAccording to the register of Directors’ shareholdings, particulars of interests of Directors who held office at the end of the financialyear in shares of the Company and of its related corporations are as follows:Number of ordinary shares of RM0.50 eachAs atAs at1.1.2009 Acquired Sold 31.12.2009Manulife Holdings BerhadTan Sri Dato’ Mohd Sheriff bin Mohd Kassim- Direct 50,000 - - 50,000No other directors in office at the end of the financial year held any interest in the shares in the Company or its related corporationsduring the financial year.

39Annual Report 2009directors’ reportAUDITORSThe auditors, PricewaterhouseCoopers, have expressed their willingness to continue in office.Signed on behalf of the Board of Directors in accordance with their resolution dated 18 March 2010.TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIMCHAIRMANCHAN YUI LUNGDIRECTORKuala Lumpur

Manulife Holdings Berhad (24851-H) 40incomestatementsFor the financial year ended 31 December 2009OPERATING REVENUEGroupCompanyNote 2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000- Continuing operations 22 577,749 638,528 91,891 15,786- Discontinued operations 22 - - - 458,561CONTINUING OPERATIONSSurplus transferred from Lifeinsurance revenue account (page 43) 64,020 47,525 - -Shareholders’ fund:Investment income 23 17,705 18,384 91,891 15,786Other operating income/(expenses) - net 24 9,294 (972) 6,416 (2,131)Management expenses 25 (11,638) (3,881) (7,635) (3,118)Profit before taxation 79,381 61,056 90,672 10,537Taxation 26 (20,233) (14,053) (1,726) (3,710)Profit from continuing operations 59,148 47,003 88,946 6,827NET PROFIT FOR THE FINANCIALYEAR ATTRIBUTABLE TOSHAREHOLDERS 59,148 47,003 88,946 6,827Basic earnings per share for profitattributable to the equity holdersof the Company during thefinancial year (sen) 27 29.23 23.23Dividends per share (sen) 28 13.00 28.00The accompanying notes are an integral part of these financial statements.

41Annual Report 2009balancesheetsAs at 31 December 2009GroupCompanyNote 2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000ASSETSSHAREHOLDERS’ FUND ASSETSProperty and equipment 5 10,767 9,150 10,312 9,150Investment properties 6 31,016 27,990 31,016 27,990Intangible assets 7 54 - - -Subsidiary companies 8(a) - - 175,922 163,923Investments 9 - 277,046 - 138,147Available-for-sale financial assets 10 301,593 - 142,374 -Loans and receivables 13 151,728 129,532 71,055 51,938Assets held for sale 12 - 2,261 - 2,261Deferred tax assets 18 427 1,505 - 2,075Current tax recoverable 3,475 3,117 3,470 3,117Cash and bank balances 15 3,989 7,931 2,346 4,398503,049 458,532 436,495 402,999TOTAL LIFE FUND ASSETS (Page 42) 2,943,074 2,580,292 - -TOTAL ASSETS 3,446,123 3,038,824 436,495 402,999LIABILITIESSHAREHOLDERS’ FUND LIABILITIESProvision for outstanding claims 16 178 619 178 619Payables 17 5,712 8,344 5,954 3,760Net amount due to a subsidiary company 8(b) - - 4,038 46,900Current tax payable 4,531 10,185 103 -Deferred tax liabilities 18 4,384 1,406 264 -14,805 20,554 10,537 51,279TOTAL LIFE FUND LIABILITIES (Page 42) 389,885 306,010 - -LIFE POLICYHOLDERS’ FUND 19 2,553,189 2,274,282 - -TOTAL LIABILITIES 2,957,879 2,600,846 10,537 51,279SHAREHOLDERS’ FUNDShare capital 20 101,185 101,185 101,185 101,185Reserves 21 387,059 336,793 324,773 250,535488,244 437,978 425,958 351,720TOTAL LIABILITIES AND SHAREHOLDERS’ FUND 3,446,123 3,038,824 436,495 402,999The accompanying notes are an integral part of these financial statements.

Manulife Holdings Berhad (24851-H) 42life fundbalance sheetAs at 31 December 2009GroupNote 2009 2008RM’000 RM’000ASSETSProperty and equipment 5 5,109 5,934Investment properties 6 47,990 48,010Intangible assets 7 307 430Investments 9 - 1,557,754Available-for-sale financial assets 10 1,565,694 -Fair value through profit and loss financial assets 11 306,784 -Loans and receivables 13 599,298 667,169Insurance receivables 14 24,462 27,579Assets held for sale 12 - 1,255Deferred tax assets 18 11 7,018Current tax recoverable 1,786 1,772Cash and bank balances 15 15,783 11,660Investment-linked business assets 30 375,850 251,711TOTAL LIFE FUND ASSETS 2,943,074 2,580,292LIABILITIESProvision for outstanding claims 16 27,247 20,706Payables 17 347,665 282,901Deferred tax liabilities 18 6,346 -Investment-linked business liabilities 30 8,627 2,403TOTAL LIFE FUND LIABILITIES 389,885 306,010LIFE POLICYHOLDERS’ FUND 19 2,553,189 2,274,282TOTAL LIFE FUND LIABILITIES AND LIFE POLICYHOLDERS’ FUND 2,943,074 2,580,292The accompanying notes are an integral part of these financial statements.

43Annual Report 2009life insurancerevenue accountFor the financial year ended 31 December 2009GroupCompanyNote 2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Gross premium 22 454,928 503,650 - 371,144Reinsurance (9,077) (5,558) - (3,524)Net premium 445,851 498,092 - 367,620Gross benefits paid and payable:Death (13,928) (16,811) - (13,073)Maturity (152,532) (117,077) - (79,472)Surrender (100,107) (96,206) - (67,410)Cash bonus (34,082) (31,381) - (20,546)Others (46,753) (44,426) - (33,370)Reinsurance recoveries 680 1,416 - 1,870(346,722) (304,485) - (212,001)Commission and agency expenses (58,704) (54,498) - (39,986)Management expenses 25 (32,970) (32,928) - (24,588)(91,674) (87,426) - (64,574)Investment income 23 105,116 116,494 - 87,417Other operating expenses - net 24 (15,598) (63,606) - (37,532)Surplus before taxation for the financial year 96,973 159,069 - 140,930Taxation 26 (6,143) (4,506) - (3,533)Surplus after taxation for the financial year 90,830 154,563 - 137,397Surplus/(deficit) from investment-linked business 30 84,308 (67,687) - (45,909)Life fund surplus after taxation 175,138 86,876 - 91,488Net movement of fair value reserve 19 94,355 - - -Net movement of asset revaluation reserve 19 (59) (61) - (61)269,434 86,815 - 91,427Life policyholders’ fund at 1 January 2,274,282 2,234,992 - 2,234,992Effect of adoption of FRS 139 2(h) 73,493 - - -Balance before allocation 2,617,209 2,321,807 - 2,326,419Business Transfer 3 - - - (2,326,419)Transfer to Income Statement (page 40) 19 (64,020) (47,525) - -Life policyholders’ fund at 31 December 19 2,553,189 2,274,282 - -The accompanying notes are an integral part of these financial statements.

Manulife Holdings Berhad (24851-H) 44statements ofchanges in equityFor the financial year ended 31 December 2009GroupIssued Asset Currencyshare Share revaluation translation Fair value RetainedNote capital premium reserve reserve reserve earnings TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000At 1 January 2008 101,185 1,884 2,503 5,190 - 321,821 432,583Surplus from revaluationof properties - - 301 - - - 301Deferred tax charge 18 - - (75) - - - (75)Transfer of revaluationsurplus on disposalof properties - - (359) - - 359 -Total net gains recogniseddirectly in equity - - (133) - - 359 226Net profit forthe financial year - - - - - 47,003 47,003Dividends paid 28 - - - - - (41,834) (41,834)At 31 December 2008 101,185 1,884 2,370 5,190 - 327,349 437,978At 1 January 2009 101,185 1,884 2,370 5,190 - 327,349 437,978Change in accounting policy:Effect of adoption ofFRS 139, net ofdeferred tax 2(h) - - - - 6,309 5,140 11,449At 1 January 2009, restated 101,185 1,884 2,370 5,190 6,309 332,489 449,427Movement in fair value foravailable-for-salefinancial assets - - - - (2,201) - (2,201)Surplus from revaluationof properties - - 1,341 - - - 1,341Deferred tax (charge)/credit 18 - - (335) - 550 - 215Transfer of revaluationsurplus on disposalof properties - - (890) - - 890 -Total net gains recogniseddirectly in equity - - 116 - (1,651) 890 (645)Net profit forthe financial year - - - - - 59,148 59,148Dividends paid 28 - - - - - (19,686) (19,686)At 31 December 2009 101,185 1,884 2,486 5,190 4,658 372,841 488,244

45Annual Report 2009statements of changes in equityFor the financial year ended 31 December 2009Non-distributableDistributableIssuedAssetshare Share revaluation Fair value RetainedNote capital premium reserve reserve earnings TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000CompanyAt 1 January 2008 101,185 1,884 2,144 - 281,288 386,501Surplus from revaluationof properties - - 301 - - 301Deferred tax charge 18 - - (75) - - (75)Net gains recognised directly in equity - - 226 - - 226Net profit for the financial year - - - - 6,827 6,827Dividends paid 28 - - - - (41,834) (41,834)At 31 December 2008 101,185 1,884 2,370 - 246,281 351,720At 1 January 2009 101,185 1,884 2,370 - 246,281 351,720Change in accounting policy:Effect of adoption of FRS 139,net of deferred tax 2(h) - - - (3,281) 5,140 1,859At 1 January 2009, restated 101,185 1,884 2,370 (3,281) 251,421 353,579Movement in fair value foravailable-for-sale financial assets - - - 2,818 - 2,818Surplus from revaluation of properties - - 1,341 - - 1,341Deferred tax charge 18 - - (335) (705) - (1,040)Transfer of revaluation surpluson disposal of properties - - (890) - 890 -Total net gains recogniseddirectly in equity - - 116 2,113 890 3,119Net profit for the financial year - - - - 88,946 88,946Dividends paid 28 - - - - (19,686) (19,686)At 31 December 2009 101,185 1,884 2,486 (1,168) 321,571 425,958The accompanying notes are an integral part of these financial statements.

Manulife Holdings Berhad (24851-H) 46cash flowstatementsFor the financial year ended 31 December 2009CASH FLOWS FROM OPERATING ACTIVITIESGroupCompanyNote 2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Net profit attributable to shareholders 59,148 47,003 88,946 6,827Adjustments for non-cash items 29 (48,413) 73,807 (94,166) 93,893Operating profit/(loss) before changes inoperating assets and liabilities 10,735 120,810 (5,220) 100,720Purchase of investments (619,246) (760,389) (13,351) (496,271)Proceeds from sale/maturity of investments 404,422 592,732 14,342 488,068Arising from Business Transfer - - - (35,197)Interest received 99,145 102,221 5,954 77,566Dividends received 20,045 20,414 82,937 14,427Rental received 4,802 2,389 2,656 2,362Interest paid (11,828) (10,484) - (7,740)(Increase)/decrease in receivables (6,769) 76,924 (21,714) 71,228Increase/(decrease) in payables 50,534 (59,607) 2,194 (113,450)Increase/(decrease) in provisionfor outstanding claims 6,100 7,701 (441) 10,238Decrease in fixed and call deposits 69,366 8,608 2,228 62,344Decrease in loan receivables 18,696 19,077 361 16,278Cash generated from operations 46,002 120,396 69,946 190,573Income taxes paid (30,628) (28,788) (1,181) (26,188)Net cash inflow from operating activities 15,374 91,608 68,765 164,385CASH FLOWS FROM INVESTING ACTIVITIESPurchase of investment properties - (46,147) - -Purchase of property and equipment (1,162) (5,214) (189) (2,000)Additional investment in subsidiary companies - - (12,000) (152,500)Proceeds from disposal of property and equipment 3,966 1,051 2,626 238Proceeds from disposal of investment properties 1,294 - 1,294 -Net cash inflow/(outflow) from investing activities 4,098 (50,310) (8,269) (154,262)CASH FLOWS FROM FINANCING ACTIVITIES(Repayment to)/advance from a subsidiary company - - (42,862) 20,087Shareholders’ dividends paid (19,686) (41,834) (19,686) (41,834)Net cash outflow from financing activities (19,686) (41,834) (62,548) (21,747)CASH AND CASH EQUIVALENTSNet decrease during the financial year (214) (536) (2,052) (11,624)Cash and cash equivalents at 1 January 20,393 20,929 4,398 16,022Cash and cash equivalents at 31 December 15 20,179 20,393 2,346 4,398The accompanying notes are an integral part of these financial statements.

47Annual Report 2009notes to thefinancial statements31 December 20091. GENERAL INFORMATION AND PRINCIPAL ACTIVITIESGeneralThe Company is a public limited liability company, incorporated and domiciled in Malaysia, and listed on the Main Market ofBursa Malaysia Securitites Berhad (“Bursa Malaysia”).Principal activitiesThe Company is engaged principally in investment holding whilst the principal activities of the subsidiaries are as stated in note8 to the financial statements.There have been no significant changes in the principal activities of the Company and its subsidiaries during the financialyear.Registered office and principal place of businessThe registered office and principal place of business of the Company is located at 12 th Floor, Menara Manulife, 6 JalanGelenggang, Damansara Heights, 50490 Kuala Lumpur.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESThe following accounting policies have been used consistently in dealing with item which are considered material to thefinancial statements.(a)Basis of preparationThe financial statements of the Group and the Company have been prepared under the historical cost convention exceptas disclosed in this summary of significant accounting policies, and comply with the Financial Reporting Standards(“FRS”), the MASB approved accounting standards in Malaysia for Entities Other than Private Entities, the provisions ofthe Companies Act, 1965, the Insurance Act, 1996 and the relevant Guidelines/Circulars issued by Bank Negara Malaysia(“BNM”) in all material aspects.The preparation of financial statements in conformity with the FRS requires the directors to exercise their judgementin the process of applying the Group’s accounting policies. It also requires the use of estimates and assumptions thataffect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of thefinancial statements, and the reported amounts of revenues and expenses during the reported financial year. Althoughthese estimates are based on the directors’ best knowledge of current events and actions, actual results could differ fromthose estimates. Critical accounting estimates and assumptions used that are significant to the financial statements, andareas involving a higher degree of judgement or complexity, are disclosed in note 4 to the financial statements.The Group has early adopted FRS 139, Financial Instruments: Recognition and Measurement beginning 1 January2009.The early adoption of FRS 139 has resulted in a change in the accounting policy relating to the classification andmeasurement of financial assets of the Group and of the Company. FRS 139 is applied prospectively upon first applicationof the standard, following the transitional provision of the said standard, hence the comparatives are not restated. Thefinancial impact of early adopting FRS 139 to the financial assets of the Group and of the Company is disclosed in notes2(g) and 2(h) to the financial statements.In November 2008, BNM issued detailed guidelines under the Risk-Based Capital Framework for Insurers (“RBC”) which iseffective for annual period beginning on or after 1 January 2009. As required under RBC, the Group’s subsidiary, ManulifeInsurance Berhad has adopted the new accounting policy on the valuation of insurance liabilities as specified under RBC.The impact of adopting this accounting policy to the Group is disclosed in Note 2(v) to the financial statements.

Manulife Holdings Berhad (24851-H) 48notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(a)Basis of preparation (Cont’d)The following accounting standards, amendments and interpretations have been issued by the Malaysian AccountingStandards Board but are not yet effective for the Group and the Company:FRSs/InterpretationEffective dateFRS 8 Operating Segments 1 July 2009FRS 4 Insurance Contracts 1 January 2010FRS 7 Financial Instruments: Disclosures 1 January 2010FRS 101 Presentation of Financial Statements 1 January 2010FRS 123 Borrowing Costs 1 January 2010FRS 1 First-time Adoption of Financial Reporting Standards 1 July 2010FRS 3 Business Combinations 1 July 2010FRS 127 Consolidated and Separate Financial Statements 1 July 2010Improvement to FRSs (2009) 1 January 2010Amendments to FRS 1, First-time Adoption of Financial Reporting Standardsand FRS 127, Consolidated and Separate Financial Statements:Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate 1 January 2010Amendments to FRS 2, Share-based Payment: Vesting Conditions and Cancellations 1 January 2010Amendments to FRS 2 Share-based Payment 1 July 2010Amendments to FRS 5 Non-current Assets Held for Sale and Discontinued Operations 1 July 2010Amendments to FRS 138 Intangible Assets 1 July 2010IC Interpretation 9 Reassessment of Embedded Derivatives 1 January 2010IC Interpretation 10 Interim Financial Reporting and Impairment 1 January 2010IC Interpretation 11, FRS 2 - Group and Treasury Share Transactions 1 January 2010IC Interpretation 13, Customer Loyalty Programmes 1 January 2010IC Interpretation 14, FRS 119 - The Limit on a Defined Benefit Asset,Minimum Funding Requirements and their Interaction 1 January 2010IC Interpretation 12 Service Concession Arrangements 1 July 2010IC Interpretation 15 Agreements for the Construction of Real Estate 1 July 2010IC Interpretation 16 Hedges of a Net Investment in a Foreign Operation 1 July 2010IC Interpretation 17 Distributions of Non-cash Assets to Owners 1 July 2010The impact of applying FRS 4 and FRS 7 on the financial statements of the Group and the Company upon first adoptionas required by paragraph 30(b) of FRS 108, Accounting Policies, Changes in Accounting Estimates and Errors is notdisclosed by virtue of the exemptions given in the respective FRSs. The adoption of the other revised FRSs, amendmentsto FRSs and IC Interpretations is not expected to have any material impact on the financial statements of the Group andof the Company.(b)Basis of consolidationThe Group’s financial statements include the financial statements of the Company and its subsidiaries made up to theend of the financial year. Subsidiaries are those enterprises in which the Group has power to exercise control over thefinancial and operating policies so as to obtain benefits from their activities, generally accompanying a shareholding ofmore than one half of the voting rights. The existence and effect of potential voting rights that are currently exercisableare considered when assessing whether the Group controls another entity. Subsidiaries are consolidated using thepurchase method of accounting from the date on which control is transferred to the Group and are de-consolidated fromthe date that control ceases.All inter-company transactions, balances and unrealised gains or losses on transactions between group of companiesare eliminated.

49Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(b)Basis of consolidation (Cont’d)Goodwill arising on consolidation represents the excess of the purchase consideration over the fair value of the identifiablenet assets of subsidiaries at the date of acquisition. In respect of subsidiaries acquired before 1 January 2006, goodwillon consolidation was written off against retained earnings in the financial year of acquisition.The gain or loss on disposal of subsidiary is the difference between net disposal proceeds and the Group’s share of itsnet assets together with any exchange differences which were not previously recognised in the consolidated incomestatement.(c)Subsidiary companiesInvestment in subsidiaries is stated at cost less accumulated impairment losses. Where an indication of impairmentexists, the carrying amount of the investment is assessed and written down immediately to its recoverable amount. Seeaccounting policy note 2(k) on impairment.(d)Property and equipmentProperty and equipment are stated at cost or valuation less accumulated depreciation and accumulated impairmentlosses.The cost of property and equipment includes expenditure that is directly attributable to the acquisition of the items.Dismantlement, removal or restoration costs are included as part of the cost of property and equipment if the obligationfor dismantlement, removal or restoration is incurred as a consequence of acquiring or using the asset.Subsequent expenditure relating to the property and equipment that has already been recognised is added to the carryingamount of the asset when it is probable that future economic benefits, in excess of the standard of performance of theasset before the expenditure was made, will flow to the Group and the cost can be reliably measured. Other subsequentexpenditure is recognised as an expense during the financial year in which it is incurred.Land and buildings, which are substantially occupied by the Group for its operations, are classified under property andequipment.Land and buildings are initially stated at cost and subsequently revalued by the directors, based on independent valuationof the open market value on the existing use basis carried out by professional valuers. The valuation of land and buildingsis carried out once in every five years or earlier if the carrying values of the revalued assets are materially higher than themarket values.When the land and buildings are revalued, any accumulated depreciation at the date of revaluation is eliminated againstthe gross carrying amount of the asset. The net amount is then restated to the revalued amount of the asset.The surplus arising on revaluation is credited to the asset revaluation reserve account except that a surplus, to the extentthat such surplus is related to and not greater than a deficit arising on revaluation previously recorded as an expense, iscredited to the income statement/revenue account. A deficit arising on revaluation is recognised as an expense exceptthat, to the extent that such a deficit is related to a surplus which was previously recorded as a credit to the assetrevaluation reserve account and which has not been subsequently reversed or utilised, it is charged directly to thataccount.No depreciation is charged on freehold land. Leasehold buildings are amortised in equal instalments over the period oftheir respective leases or earlier if the expected useful life is lower than the leasehold period.

Manulife Holdings Berhad (24851-H) 50notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(d)Property and equipment (Cont’d)All other property and equipment are depreciated on a straight line basis to write off the cost of the assets over theirestimated useful lives. The principal annual rates of depreciation used are as follows:Buildings - over the remaining useful lives following the date of the latest valuationFurniture, fittings and equipment - 10% to 20%Motor vehicles - 20%The residual values and useful lives of property and equipment are reviewed, and adjusted as appropriate, at eachbalance sheet date.At each balance sheet date, the Group and the Company assesses whether there is any indication of impairment. Wherean indication of impairment exists, the carrying amount of the asset is assessed and written down immediately to itsrecoverable amount. See accounting policy note 2(k) on impairment.On disposal of property and equipment, the difference between net proceeds and the carrying amount is recognisedin the revenue account or income statement. On disposal of revalued assets, the amounts of any remaining revaluationsurplus relating to those assets are transferred to retained earnings or revenue account.Repairs and maintenance are charged to the income statement and/or revenue account during the period in which theyare incurred.(e)Prepaid lease paymentsLeasehold lands are amortised in equal instalments over the period of their respective leases or earlier if the expecteduseful life is lower than the leasehold period.(f)Intangible assetsIntangible assets represent the cost of software rights developed or acquired. These rights are amortised on a straightlinebasis over a period of four and five years respectively.(g)InvestmentsArising from the adoption of FRS 139 with effect from 1 January 2009, investments are classified and measured usingthe accounting policies as set out in note 2(h) to the financial statements. Prior to 1 January 2009, investments wererecognised initially at purchase price plus attributable transaction costs. Subsequent to initial recognition:(i)(ii)(iii)Malaysian Government Securities, Government Investment Issues and other unquoted approved debt securitiesas specified by BNM are stated at cost, adjusted for the amortisation of premiums or accretion of discounts,calculated on a constant yield basis, from the date of purchase to maturity date. The amortisation of premiums andaccretion of discounts are recognised in the revenue account or income statement.Quoted debt securities are stated at the lower of cost and market value.Other quoted investments are stated at the lower of cost and market value determined on the aggregate portfoliobasis by category of investments, except that if diminution in value of a particular investment is not regardedas temporary, specific allowance is made against the value of that investment. Market value is determined byreference to the stock exchange closing price at the balance sheet date.

51Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(g)Investments (Cont’d)(iv)(v)Unquoted investments are stated at cost and an allowance for diminution in value is made where, in the opinionof the directors, there is a decline other than temporary in the value of such investments. Where there has beena decline other than temporary in the value of an investment, such a decline is recognised as an expense in thefinancial year in which the decline is identified.Investments of the investment-linked business, other than unquoted corporate debt securities, loans, equity calloptions and investment in foreign assets are stated at the closing market prices as at the balance sheet date.Unquoted corporate debt securities are stated at average indicative market prices quoted by at least two licensedbanks and loans are stated at valuation based on discounted future cash flows, taking into consideration marketconditions and contractual terms of the loans. Investment in equity call options is valued at the fair value quotedby a counter party based on a specific valuation model as at the balance sheet date. Investments in foreign assetscomprised of investments under the Manulife Global Fund platform of mutual funds and are valued at the net assetvalues of the underlying funds as at the balance sheet date.Any increase or decrease in the value of these investments is recognised in the investment-linked business revenueaccount.Profits or losses arising on disposal of investments are credited or charged to the revenue account or income statementas appropriate.(h)Financial instrumentsPursuant to the adoption of FRS 139 for the financial year ended 31 December 2009, the Group and the Company hasadopted the following accounting policies in respect of the financial assets.(i)Classification, recognition and measurement of financial assetsThe Group and the Company classifies the financial assets into the following categories: financial assets at fairvalue through profit or loss (“FVTPL”), held-to-maturity (“HTM”) financial assets, available-for-sale (“AFS”) financialassets, and loans and receivables (“LAR”).The classification depends on the purpose for which the investments were acquired or originated. Managementdetermines the classification of its investments at initial recognition and re-evaluates this at every reporting date.(1) FVTPLFinancial assets at FVTPL include financial assets held for trading and those designated at fair value throughprofit or loss at inception. Investments typically bought with the intention to sell in the near future are classifiedas held-for-trading. For investments designated as at fair value through profit or loss, the following criteriamust be met:• the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arisefrom measuring the assets or liabilities or recognising gains or losses on a different basis, or• the assets and liabilities are part of a group of financial assets, financial liabilities or both which aremanaged and their performance are evaluated on a fair value basis, in accordance with a documentedrisk management or investment strategy.These investments are initially recorded at fair value and transaction costs are expensed in profit or loss.Subsequent to initial recognition, these investments are remeasured at fair value. Fair value adjustments andrealised gains and losses are recognised in profit or loss.

Manulife Holdings Berhad (24851-H) 52notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(h)Financial instruments (Cont’d)(i)Classification, recognition and measurement of financial assets (Cont’d)(2) HTM(3) LAR(4) AFSNon-derivative financial assets with fixed or determinable payments and fixed maturities are classified as HTMwhen the Company has the positive intention and ability to hold until maturity. These investments are initiallyrecognised at cost, being the fair value of the consideration paid for the acquisition of the investment. Afterinitial measurement, HTM financial assets are measured at amortised cost, using the effective yield method,less allowance for impairment. Gains and losses are recognised in profit or loss when the investments arederecognised or impaired, as well as through the amortisation process.LAR are non-derivative financial assets with fixed or determinable payments that are not quoted in an activemarket. These investments are initially recognised at cost, being the fair value of the consideration paid for theacquisition of the investments. All transaction costs directly attributable to the acquisition are also included inthe cost of the investment. After initial measurement, loans and receivables are measured at amortised cost,using the effective yield method, less allowance for impairment. Gains and losses are recognised in profit orloss when the investments are derecognised or impaired, as well as through the amortisation process.AFS are non-derivative financial assets that are designated as available-for-sale or are not classified in any ofthe three preceding categories. These investments are initially recognised at cost, being the fair value of theconsideration paid for the acquisition of the investment. After initial measurement, AFS are remeasured at fairvalue.Fair value gains and losses of these investments are reported as a separate component of equity or life fundreserve until the investments are derecognised or the investments are determined to be impaired.On derecognition or impairment, the cumulative fair value gains and losses previously reported in equity or lifefund reserve is transferred to profit or loss.

53Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(h)Financial instruments (Cont’d)(i)Classification, recognition and measurement of financial assets (Cont’d)(4) AFS (Cont’d)The change in accounting policies in respect of the Group’s and the Company’s financial assets have been appliedprospectively by adjusting the opening balance as at 1 January 2009 as follows:Shareholdersfund - GroupRM’000Dr/(Cr)Shareholdersfund - CompanyRM’000Dr/(Cr)Available-for-sale financial assets (note 10) 15,265 2,479Fair value reserve (page 44 and 45) (6,309) 3,281Deferred tax (note 18) (3,816) (620)Retained earnings (page 44 and 45) (5,140) (5,140)Life fund - GroupFair value reserve (note 19) 36,701Unallocated surplus (note 19) (110,194)Total adjustments made to life policyholders’ fund (page 43) (73,493)Available-for-sale financial assets (note 10) 60,100Fair value through profit and loss financial assets (note 11) 19,784Deferred tax (note 18) (6,391)(ii)Derecognition and impairment of financial assetsFinancial assets are derecognised when the rights to receive cash flows from the financial assets have expired orwhen they have been transferred and the Group and the Company have also transferred substantially all risks andrewards of ownership.All financial assets, except for FVTPL, are subject to review for impairment (see note 2(k)).(i)Fair value of financial instrumentsThe fair value of financial instruments that are actively traded in organised financial markets is determined by referenceto quoted market bid prices for assets and offer prices for liabilities, at the close of business on the balance sheet date.For investments in unit and real estate investment trusts, fair value is determined by reference to published bid values.For financial instruments where there is no an active market, the fair value is determined by using valuation techniques.Such techniques include using recent arm’s length transactions, reference to the current market value of anotherinstrument which is substantially the same, discounted cash flow analysis and/or option pricing models making maximumuse of market inputs and relying as little as possible on entity-specific inputs. For discounted cash flow techniques,estimated future cash flows are based on management’s best estimates and the discount rate used is a market relatedrate for a similar instrument. Certain financial instruments are valued using pricing models that consider, among otherfactors, contractual and market prices, co-relation, time value of money, credit risk, yield curve volatility factors and/or prepayment rates of the underlying positions. The use of different pricing models and assumptions could producematerially different estimates of fair values.

Manulife Holdings Berhad (24851-H) 54notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(i)Fair value of financial instruments (Cont’d)The fair value of floating rate and over-night deposits with financial institutions is their carrying value. The carrying value isthe cost of the deposits/placements and accrued interests/profits. The fair value of fixed interest/yield-bearing depositsis estimated using discounted cash flow techniques. Expected cash flows are discounted at current market rates forsimilar instruments at the balance sheet date.If the fair value cannot be measured reliably, these financial instruments are measured at cost, being the fair value ofthe consideration paid for the acquisition of the instrument or the amount received on issuing the financial liability. Alltransaction costs directly attributable to the acquisition are also included in the cost of the investment.(j)Investment propertiesInvestment properties comprise land and buildings held by the Group and the Company which are held for long termrental yields or for capital appreciation, or both and are not substantially occupied by the Group and the Company.Investment properties are initially stated at cost including related and incidental expenditure incurred, and are subsequentlycarried at fair value by the directors based on independent valuation of the open market values on existing use basiscarried out by professional valuers. These valuations are reviewed annually and a formal valuation by an independentprofessional valuer is carried out once in every three years or earlier if the carrying values of the investment propertiesare materially higher than the market values. Investment properties are not depreciated.Any changes in the fair values of the investment properties are recorded in the income statement or revenue account.On disposal of an investment property, the difference between net proceeds and the carrying amount is recognised inthe income statement or revenue account as appropriate.(k)Impairment(i)Financial assetsThe Group and the Company assesses at each balance sheet date whether a financial asset or group of financialassets is impaired.Assets carried at amortised costIf there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred,the amount of the impairment loss is measured as the difference between the asset’s carrying amount and thepresent value of estimated future cash flows (excluding future expected credit losses that have not been incurred)discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced andthe impairment loss is recorded in profit or loss.The Group and the Company first assesses whether objective evidence of impairment exists individually for financialassets that are individually significant, and individually or collectively for financial assets that are not individuallysignificant. If it is determined that no objective evidence of impairment exists for an individually assessedfinancial asset, whether significant or not, the asset is included in a group of financial assets with similar credit riskcharacteristics and that group of financial assets is collectively assessed for impairment. Assets that are individuallyassessed for impairment and for which an impairment loss is or continues to be recognised are not included in thecollective assessment of impairment. The impaiment assessment is performed at each balance sheet date.If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectivelyto an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed.Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying valueof the asset does not exceed its amortised cost at the reversal date.

55Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(k)Impairment (Cont’d)(i)Financial assets (Cont’d)AFS financial assetsIf an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principalrepayment and amortisation) and its current fair value, less any impairment loss previously recognised in othercomprehensive income, is transferred from equity / life fund reserve to profit or loss. Reversals in respect ofequity instruments classified as AFS are not recognised in profit or loss. Reversals of impairment losses on debtinstruments classified as AFS are reversed through profit or loss if the increase in the fair value of the instrumentscan be objectively related to an event occurring after the impairment losses were recognised in profit or loss.(ii)Non-financial assetsAssets that have an indefinite useful life are not subject to amortisation and are tested annually for impairment.Assets that are subject to amortisation are reviewed for impairment whenever events or changes in circumstancesindicate that the carrying amount may not be recoverable. Impairment loss is recognised for the amount by whichthe carrying amount of the asset exceeds its recoverable amount. The recoverable amount is the higher of anasset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are groupedat the lowest level for which there is separately identifiable cash flows.Non-financial assets that suffered an impairment are reviewed for possible reversal of the impairment at eachreporting date. The impairment loss is charged to the revenue account or income statement unless it reverses aprevious revaluation in which case it is charged to the revaluation surplus. Any subsequent increase in recoverableamount is recognised in the revenue account or income statement unless it reverses an impairment loss on arevalued asset, in which case it is taken to revaluation surplus.(l)Employee benefits(i)Short-term employee benefitsWages, salaries, paid annual leave and sick leave, bonuses, and non-monetary benefits are accrued in the financialyear in which the associated services are rendered by employees of the Group and the Company.(ii)Post-employment benefitsThe Group and the Company are required to contribute to the Employees’ Provident Fund, a defined contributionplan.Other than the mandatory contributions to the Employees’ Provident Fund, the Group and the Company makecontributions to a separately funded defined contribution retirement benefits scheme (“the Scheme”), which isadministered by Trustees, for all employees of the Group. Under the Scheme, the Company and its subsidiarycompanies shall make contributions to the Scheme at such rate and at such frequency as shall be determined fromtime to time by the Company and the Trustees of the Scheme, with the advice of an Actuary, provided that the totalcontribution by the Company and the subsidiary companies to the Scheme and to the Employees’ Provident Funddoes not exceed 15% of the employees’ salary. An actuarial investigation into the financial condition of the Schemeis made at intervals not longer than one year. The last actuarial investigation was performed as at 31 December2009.The contribution payable for the financial year is charged to the revenue account or the income statement. Oncethe contributions have been paid, the Group and the Company have no further payment obligations.

Manulife Holdings Berhad (24851-H) 56notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(m) Other revenue recognitionInterest income is recognised on an accrual basis except that interest income on a loan is suspended where the loan isconsidered non-performing. Subsequent to suspension, interest on the loan is recognised on the receipt basis until allarrears have been paid.Other interest income including the amount of amortisation of premiums and accretion of discounts is recognised on atime proportion basis that takes into account the effective yield of the assets.Rental income is recognised on an accrual basis except where default in payment of rent has already occurred andthe rent due remains outstanding for over three months, in which case recognition of rental income is suspended.Subsequent to suspension, rental income is recognised on the receipt basis until all arrears have been paid.Dividend income is recognised in the financial statements when the right to receive payment is established.Management and investment advisory fees are recognised when the services are provided.(n)Assets held for saleNon-current assets are classified as assets held for sale and stated at the lower of carrying amount and fair value less coststo sell if their carrying amount is recovered principally through a sale transaction rather than through a continuing use.(o)Life insurance underwriting results(i)Transfer of Life fund surplus to Shareholders’ fundThe surplus transferable from the life insurance revenue account to the income statement is based on the surplusdetermined by an annual actuarial valuation of the long term liabilities to policyholders made in accordance with theprovisions of the Insurance Act, 1996 and the relevant regulations by the Appointed Actuary of the life insurancecompany.(ii)Premium incomePremium income includes premium recognised in the Life fund and the Investment-linked fund. Premium incomeof the Life fund is recognised as soon as the amount of the premium can be reliably measured. First premium isrecognised from inception date and subsequent premium is recognised when it is due.At the end of the financial year, all due premiums are accounted for to the extent that they can be reliablymeasured.Outward reinsurance premiums are recognised in the same accounting period as the original policies to which thereinsurance relates.Premium income of the Investment-linked fund is in respect of the net creation of units which represents premiumspaid by policyholders as payment for a new contract or subsequent payments to increase the amount of thatcontract. Net creation of units is recognised on a receipt basis.(iii)Commission and agency expensesCommission and agency expenses, which are costs directly incurred in securing premium on insurance policies,net of income derived from reinsurers in the course of ceding of premium to reinsurers, are charged to the revenueaccount in the financial year in which they are incurred.

57Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(o)Life insurance underwriting results (Cont’d)(iv)Provision for claimsClaims and settlement costs that are incurred during the financial year are recognised when a claimable eventoccurs and/or the insurer is notified.Recoveries on reinsurance claims are accounted for in the same financial year as the original claims arerecognised.Claims and provisions for claims arising on life insurance policies including settlement costs, less reinsurancerecoveries, are accounted for using the case basis method and for this purpose, the benefits payable under a lifeinsurance policy are recognised as follows:(1) maturity or other policy benefit payments due on specified dates are treated as claims payable on the duedates;(2) death, surrender and other benefits without due dates are treated as claims payable, on the date of receipt ofintimation of death of the assured or occurrence of contingency covered.(p)Foreign currencies(i)Functional and presentation currencyItems included in the financial statements of each entity in the Group are measured using the currency of theprimary economic environment in which the entity operates (“the functional currency”). The functional currencyof all entities in the Group is Ringgit Malaysia where a subsidiary company has previously changed its functionalcurrency from Singapore Dollar to Ringgit Malaysia with effect from financial year ended 31 December 2005.The consolidated financial statements are presented in Ringgit Malaysia, which is the Company’s functional andpresentation currency.(ii)Transactions and balancesTransactions in a currency other than the functional currency (“foreign currency”) are translated into the functionalcurrency using the exchange rates prevailing at the dates of the transactions. Currency translation gains andlosses resulting from the settlement of such transactions and from the translation at year-end exchange rates ofmonetary assets and liabilities denominated in foreign currencies are recognised in the revenue account or incomestatement.(iii)Translation of Group’s entity financial statementsThe results and financial position of the Group’s entities that have a functional currency that is different from thepresentation currency are translated into the presentation currency as follows:(1) Assets and liabilities for balance sheet presented are translated at the closing rate at the date of the balancesheet;(2) Income and expenses for income statement are translated at average exchange rate (unless this average isnot a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, inwhich case income and expenses are translated using the exchange rates at the dates of the transactions);and(3) All resulting exchange differences are taken to the foreign currency translation reserve within equity.

Manulife Holdings Berhad (24851-H) 58notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(q)DividendsDividends on ordinary shares are recognised as a liability in the period in which it is declared.(r) Cash and cash equivalentsCash and cash equivalents consist of cash and bank balances and excluding fixed and call deposits with licensed bank.(s)Insurance receivablesInsurance receivables are carried at invoiced amount less an allowance made for doubtful debts. Known bad debts arewritten off and specific allowances are made for any premiums including agents’ balances or reinsurance balances whichremain outstanding for more than six months from the date on which they become receivable, and for all debts which areconsidered doubtful.(t)TaxationCurrent tax expense is determined according to the tax laws of jurisdictions in which the Group and the Companyoperate and includes all taxes based upon the taxable profits.The income tax charge in the life insurance revenue account is calculated at current tax rate based on the methodprescribed under the Income Tax Act, 1967 for life insurance business.The income tax charge in the income statement is calculated at the current tax rate based on the estimated chargeableincome for the financial year.Deferred tax is recognised in full, using the liability method, on temporary differences arising between the amountsattributed to assets and liabilities for tax purposes and their carrying amounts in the financial statements.Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available againstwhich the deductible temporary differences or unused tax losses can be utilised.Deferred tax is determined using tax rates (and tax laws) that have been enacted or substantially enacted by the balancesheet date and are expected to apply when the related deferred tax asset is realised or when the deferred tax liability issettled.(u)Contingent liabilities and contingent assetsThe Group and the Company do not recognise a contingent liability but disclose its existence in the financial statements.A contingent liability is a possible obligation 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 and the Companyor a present obligation that is not recognised because it is not probable that an outflow of resources will be required tosettle the obligation. A contingent liability also arises in the extremely rare circumstance where there is a liability thatcannot be recognised because it cannot be measured reliably.A contingent asset is a possible asset that arises from past event whose existence will be confirmed by the occurrenceor non-occurrence of one or more uncertain future events beyond the control of the Group and the Company. The Groupand the Company do not recognise contingent assets but disclose their existence where inflows of economic benefitsare probable, but not virtually certain.

59Annual Report 2009notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(v)Life insurance liabilitiesLife insurance liabilities are recognised when insurance contracts are entered into and premiums are charged.Prior to 1 January 2009, the principles on which the valuation was made were determined by the Appointed Actuaryhaving regard to the Insurance Regulations, 1996. In the case of life policies where the minimum valuation basis isspecified under the Insurance Regulations, 1996, a reserve was set up such that it would not fall below the reservedetermined on the minimum valuation basis. For other policies where the nature of benefit suggested that the minimumvaluation basis was not applicable, a reserve was set up such that this reserve together with future premiums would besufficient to meet the future policy liabilities.The mortality table employed for life policies was the Statutory Valuation Mortality Table (“SVMT”) 1996 ultimate mortalitytable. The rate of interest assumed was 4% per annum for regular premium policies and 4.5% for single premiumpolicies.For investment-linked policies, the non-unit net liability was taken as the unearned amount of insurance charges forthe insurance benefit appropriately loaded to the minimum of the SVMT 1996 mortality table. In addition, provision wasmade for future expenses by taking the difference between the present value of future commissions and agency relatedexpenses and the present value of unallocated premiums and the bid-offer spread. The mortality basis assumed was theSVMT 1996 table, interest rate at 6% and withdrawal rates at BNM’s maximum allowable rates.With effect from 1 January 2009, liabilities of insurance business are determined in accordance to BNM’s Risk-BasedCapital Framework for Insurers. In general, the life insurance liabilities have been valued using a prospective actuarialvaluation based on the sum of the present value of future guaranteed and in the case of a participating life policy,appropriate level of non-guaranteed benefits, and the expected future management and distribution expenses, less thepresent value of future gross considerations arising from the policy discounted at the appropriate risk discount rate, alsoknown as Gross Premium Valuation method.The change in the valuation basis has resulted in the following retrospective adjustments within the components of thelife policyholders’ fund:As previouslyreportedChange inaccountingpolicyAs restatedRM’000 RM’000 RM’000As at 1 January 2008Actuarial liabilities 1,648,975 105,675 1,754,650Unallocated surplus 374,319 (105,675) 268,644As at 31 December 2008Actuarial liabilities 1,711,826 124,884 1,836,710Unallocated surplus 313,089 (124,884) 188,205

Manulife Holdings Berhad (24851-H) 60notes to the financial statements31 December 20092. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont’d)(v)Life insurance liabilities (Cont’d)The liability in respect of policies of a participating insurance fund was taken as the higher liability value derived at thefund level:(i)(ii)where only the guaranteed benefits are considered, by discounting all cash flows at the pre-tax risk-free discountrate; orwhere total guaranteed and non-guaranteed benefits are considered, by discounting all cash flows at after-taxfund-based yield of the participating fund. The level of discretionary benefits to be valued was determined in amanner consistent with the fund-based yield selected as the discount rate, sales practices and illustrations andwith due regard to the insurer’s regulatory duty to treat its policyholders fairly and meeting policyholders’ reasonableexpectations. For a participating life policy sold on or after 1 July 2005, the level of discretionary benefits assumed,including vesting terminal bonus, was based on the bonus scale as supportable by the most recent asset sharestudy or any prevailing regulatory requirement as at the valuation date.In determining liability of a non-participating policy, all cash flows were discounted at the pre-tax risk-free discountrate.The expected future cash flows were determined using best estimate assumptions with due regard to significant recentexperience. An appropriate allowance for provision of risk margin for adverse deviation from expected experience wasused in the valuation of non-participating life policies and the guaranteed benefits liabilities of participating life policies(item (i) above). For other policies where the nature of benefit suggested that the valuation basis described above is notapplicable, a reserve was set up such that this reserve together with future premiums would be sufficient to meet thefuture policy liabilities.For investment-linked policies, a matched position has been maintained in respect of unit liability of an investment-linkedfund and the value of the unit liability has been taken as the Net Asset Value of the matched units as at the valuationdate. The valuation of the non-unit liabilities was conducted using cash flow projection method. The liability is valued byprojecting future cash flows to ensure that all future outflows can be met without recourse to additional finance or capitalsupport at any future time during the duration of the investment-linked policy. The cash flow projection was conductedusing best estimate assumptions with the appropriate allowance for provision of risk margin for adverse deviation fromexpected experience. All cash flows are discounted at the pre-tax risk-free discount rate.3. BUSINESS TRANSFEROn 29 September 2008, the Minister of Finance, via BNM’s letter granted a licence to Manulife Insurance Berhad (a whollyownedsubsidiary company) to commence life insurance business with effective from 1 October 2008 pursuant to a scheme(“Business Transfer”) approved and confirmed by the High Court of Malaya in accordance with Part XI of the Insurance Act,1996 on 14 August 2008 and approved by the relevant regulatory authorities.On 1 October 2008, the Company transferred its entire life insurance business, assets, liabilities and its undertakings toManulife Insurance Berhad, pursuant to the Business Transfer scheme. Consequently, there were no balances in respect ofthe life fund for the Company as at 31 December 2008 and accordingly, the life fund business was a discontinued operationof the Company during the financial year ended 2008.

61Annual Report 2009notes to the financial statements31 December 20094. CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTSThe Group and the Company make estimates, assumptions and judgements that affect the reported amounts of assets andliabilities. Estimates and judgements are continuously evaluated and are based on historical experience and other factors,including expectations of future events and reinsurance premium levels that are believed to be reasonable with the knowledgeand information then available. Best estimates assumptions are constantly reviewed to ensure that they remain relevant andvalid.The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates, assumptions andjudgements that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities withinthe next financial year are discussed below.Liabilities of insurance businessThe valuation of the ultimate liability arising from policy benefits made under life insurance contracts is the Group’s mostcritical accounting estimate.The main assumptions used relate to mortality, morbidity, longevity, investment returns, expenses, lapse and surrender ratesand discount rates. The Group base mortality and morbidity on established industry and Malaysian tables which reflect historicalexperiences, adjusted when appropriate to reflect the Group’s unique risk exposure, product characteristics, target marketsand own claims severity and frequency experiences. For those contracts that insure risk to longevity, prudent allowance ismade for expected future mortality improvements.Estimates are also made as to future investment income arising from the assets backing life insurance contracts. Theseestimates are based on current market returns as well as expectations about future economic and financial developments.Assumptions on future expenses are based on current expense levels, adjusted for expected expense inflation adjustments, ifappropriate.Lapse and surrender rates are based on the Group’s historical experience of lapses and surrenders.Discount rate for non-participating policies, guaranteed benefits of participating policies and the non-unit liability of investmentlinkedpolicies accord a level of guarantee which is no less certain than that accorded by a Malaysian Government Security(“MGS”). In the case of the total benefits liabilities of participating policies, the discount rate is based on the historical yieldand future investment outlook of the participating fund, net of tax on investment income of the life fund.Any movement in the above key assumptions will have an effect in determining the insurance business liabilities. It should benoted that movements in these assumptions are non-linear and would vary according to the current economic assumptions.

Manulife Holdings Berhad (24851-H) 62notes to the financial statements31 December 20095. PROPERTY AND EQUIPMENTShareholders’ fundFurniture,Freehold fitting and Motorland Buildings equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000GroupCost/valuationAt 1 January 2008 2,180 8,935 477 - 11,592Assets held for sale (note 12) (1,850) (485) - - (2,335)Additions - - 460 - 460Disposals (330) (450) - - (780)Write off - - (42) - (42)Transfer from Life fund - - 625 931 1,556Reclassification from investment properties (note 6) - 358 - - 358Revaluation deficit - (258) - - (258)At 31 December 2008/1 January 2009 - 8,100 1,520 931 10,551Additions - - 243 - 243Write off - - (266) - (266)Transfer from Life fund - - 1,018 - 1,018Revaluation surplus - 1,136 - - 1,136At 31 December 2009 - 9,236 2,515 931 12,682Comprising assets stated at:Valuation in 2009 - 9,236 - - 9,236Cost - - 2,515 931 3,446At 31 December 2009 - 9,236 2,515 931 12,682Comprising assets stated at:Valuation in 2008 - 8,100 - - 8,100Cost - - 1,520 931 2,451At 31 December 2008 - 8,100 1,520 931 10,551Accumulated depreciationAt 1 January 2008 - 479 449 - 928Charge for the financial year - 204 14 20 238Assets held for sale (note 12) - (74) - - (74)Disposals - (50) - - (50)Write off - - (19) - (19)Transfer from life fund - - 450 487 937Reversal on revaluation of property - (559) - - (559)At 31 December 2008/1 January 2009 - - 894 507 1,401Charge for the financial year - 205 173 90 468Write off - - (266) - (266)Transfer from Life fund - - 517 - 517Reversal on revaluation of property - (205) - - (205)At 31 December 2009 - - 1,318 597 1,915Net book valueAt 31 December 2009 - 9,236 1,197 334 10,767At 31 December 2008 - 8,100 626 424 9,150

63Annual Report 2009notes to the financial statements31 December 20095. PROPERTY AND EQUIPMENT (Cont’d)Shareholders’ fund (Cont’d)Furniture,Freehold fitting and Motorland Buildings equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000CompanyCost/valuationAt 1 January 2008 1,850 8,485 - - 10,335Assets held for sale (note 12) (1,850) (485) - - (2,335)Additions - - 460 - 460Reclassification from investment properties (note 6) - 358 - - 358Revaluation deficit - (258) - - (258)Transfer from a subsidiary - - 625 931 1,556At 31 December 2008/1 January 2009 - 8,100 1,085 931 10,116Additions - - 189 - 189Revaluation surplus - 1,136 - - 1,136Write off - - (244) - (244)At 31 December 2009 - 9,236 1,030 931 11,197Comprising assets stated at:Valuation in 2009 - 9,236 - - 9,236Cost - - 1,030 931 1,961At 31 December 2009 - 9,236 1,030 931 11,197Comprising assets stated at:Valuation in 2008 - 8,100 - - 8,100Cost - - 1,085 931 2,016At 31 December 2008 - 8,100 1,085 931 10,116Accumulated depreciationAt 1 January 2008 - 434 - - 434Charge for the financial year - 199 9 20 228Assets held for sale (note 12) - (74) - - (74)Transfer from a subsidiary - - 450 487 937Reversal on revaluation of property - (559) - - (559)At 31 December 2008/1 January 2009 - - 459 507 966Charge for the financial year - 205 73 90 368Reversal on revaluation of property - (205) - - (205)Write off - - (244) - (244)At 31 December 2009 - - 288 597 885Net book valueAt 31 December 2009 - 9,236 742 334 10,312At 31 December 2008 - 8,100 626 424 9,150

Manulife Holdings Berhad (24851-H) 64notes to the financial statements31 December 20095. PROPERTY AND EQUIPMENT (Cont’d)Shareholders’ fund (Cont’d)The freehold buildings of the Group and the Company were revalued in 2009 based on the investment method carried out byan independent qualified valuer, Mr Foo Gee Jen (B.Surv (Hons) Prop.Mgt.,MISM) of C H Williams Talhar & Wong Sdn Bhd. Thevaluation of these properties was adopted by the directors on 31 December 2009.The net book value of revalued freehold buildings had these assets been carried at cost less accumulated depreciation is asfollows:Shareholders’ fundGroup and Company2009 2008RM’000 RM’000Freehold building 5,328 5,533As at the balance sheet date, the title of the above building has yet to be registered in the name of the Company whom is thebeneficial owner.The title to the freehold building of the Group and the Company is in the process of being transferred to the Group andthe Company. Risk, rewards and effective titles to this building have been passed to the Group and the Company uponunconditional completion of the acquisition of this building. The Group and the Company has submitted the relevantdocuments to the authorities for transfer of legal titles to them and are awaiting the process and finalisation of these transferto be completed.Life fund - GroupFurniture,Freehold Leasehold fitting and Motorland Buildings buildings equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000Cost/ValuationAt 1 January 2008 175 90 900 12,776 900 14,841Disposals (175) (90) - - (190) (455)Additions - - - 4,379 375 4,754Assets held for sale (note 12) - - (900) - - (900)Write off - - - (3,834) - (3,834)Transfer to Shareholders’ fund - - - (625) (931) (1,556)At 31 December 2008/ 1January 2009 - - - 12,696 154 12,850Disposal - - - - (4) (4)Additions - - - 915 4 919Write off - - - (365) - (365)Transfer to Shareholders’ fund - - - (1,018) - (1,018)At 31 December 2009 - - - 12,228 154 12,382

65Annual Report 2009notes to the financial statements31 December 20095. PROPERTY AND EQUIPMENT (Cont’d)Life fund - Group (Cont’d)Furniture,Freehold Leasehold fitting and Motorland Buildings buildings equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000Accumulated depreciationAt 1 January 2008 - 2 22 9,963 693 10,680Charge for the financial year - 2 9 795 50 856Disposals - (4) - - (190) (194)Assets held for sale (note 12) - - (31) - - (31)Write off - - - (3,458) - (3,458)Transfer to Shareholders’ fund - - - (450) (487) (937)At 31 December 2008/1 January 2009 - - - 6,850 66 6,916Disposals - - - - (4) (4)Charge for the financial year - - - 1,221 19 1,240Write off - - - (362) - (362)Transfer to Shareholders’ fund - - - (517) - (517)At 31 December 2009 - - - 7,192 81 7,273Net book valueAt 31 December 2009 - - - 5,036 73 5,109At 31 December 2008 - - - 5,846 88 5,934Life fund - CompanyFurniture,Freehold Leasehold fitting and Motorland Buildings buildings equipment vehicles TotalRM’000 RM’000 RM’000 RM’000 RM’000 RM’000Cost/ValuationAt 1 January 2008 175 90 900 12,776 900 14,841Disposals (175) (90) - - (190) (455)Additions - - - 1,165 375 1,540Assets held for sale (note 12) - - (900) - - (900)Write off - - - (3,561) - (3,561)Business Transfer (note 3) - - - (10,380) (1,085) (11,465)At 31 December 2008 - - - - - -Accumulated depreciationAt 1 January 2008 - 2 22 9,963 693 10,680Charge for the financial year - 2 9 775 46 832Disposals - (4) - - (190) (194)Write off - - - (3,431) - (3,431)Assets held for sale (note 12) - - (31) - - (31)Business Transfer (note 3) - - - (7,307) (549) (7,856)At 31 December 2008 - - - - - -Net book value - At 31 December 2008 - - - - - -

Manulife Holdings Berhad (24851-H) 66notes to the financial statements31 December 20096. INVESTMENT PROPERTIESShareholders’ fundGroup and Company2009 2008RM’000 RM’000At 1 January 27,990 30,840Disposals (1,200) (1,640)Reclassification to property and equipment (note 5) - (358)Fair value gain/(loss) 4,226 (852)At 31 December 31,016 27,990Represented by:Freehold land - 760Freehold buildings 31,016 27,23031,016 27,990Life fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000At 1 January 48,010 280 - 280Additions - 47,675 - -Adjustment (20) - - -Disposals - (280) - (280)Fair value gain - 335 - -At 31 December 47,990 48,010 - -Represented by:Freehold buildings 47,990 48,010 - -In 2009, the Group and the Company carried out a valuation of the properties based on the investment method carried outby an independent qualified valuer, Mr Foo Gee Jen (B.Surv (Hons) Prop.Mgt.,MISM) of C H Williams Talhar & Wong Sdn Bhd.The valuation of these properties was adopted by the directors on 31 December 2009, except for the Life fund as the directorsare of the opinion that the latest market value assessed approximate the existing carrying amounts, hence no adjustment havebeen made in the current financial year.The adjustment made in the Life fund in the current financial year is in respect of an over accrual of transaction costs recordedin 2008.As at the balance sheet date, the carrying values of investment properties for which titles have yet to be registered in the nameof the Company which is the beneficial owner are as follows:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Shareholders’ fund 31,016 27,990 31,016 27,990Life fund 47,990 48,010 - -79,006 76,000 31,016 27,990

67Annual Report 2009notes to the financial statements31 December 20096. INVESTMENT PROPERTIES (Cont’d)The titles to the investment properties of the Group and the Company are in the process of being transferred to the Groupand the Company. Risk, rewards and effective titles to these investment properties have been passed to the Group and theCompany upon unconditional completion of the acquisition of these properties. The Group and the Company has submittedthe relevant documents to the authorities for transfer of legal titles to them and are awaiting the process and finalisation ofthese transfer to be completed.The following are amounts arising from investment properties that have been recognised in the income statement/revenueaccount during the financial year:Shareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Rental income 3,102 2,772 3,102 2,763Direct operating expenses arising from investmentproperties that generate rental income (808) (1,081) (958) (1,246)Direct operating expenses arising from investmentproperties that did not generate rental income (228) (270) (228) (268)Life fundRental income 2,749 435 - 13Direct operating expenses arising from investmentproperties that generate rental income (932) (304) - (15)Direct operating expenses arising from investmentproperties that did not generate rental income (317) (55) - (2)7. INTANGIBLE ASSETSShareholders’ fundGroup2009 2008RM’000 RM’000CostAt 1 January 827 827Additions 57 -At 31 December 884 827Accumulated amortisationAt 1 January (827) (827)Amortisation during the financial year (3) -At 31 December (830) (827)Net book value 54 -

Manulife Holdings Berhad (24851-H) 68notes to the financial statements31 December 20097. INTANGIBLE ASSETS (Cont’d)Life fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000CostAt 1 January 491 - - -Additions - 491 - 491Arising from Business Transfer (note 3) - - - (491)At 31 December 491 491 - -Accumulated amortisationAt 1 January 61 - - -Charge for the financial year 123 61 - 31Arising from Business Transfer (note 3) - - - (31)At 31 December 184 61 - -Net book valueAt 31 December 307 430 - -Intangible assets represents the cost of software rights acquired/developed.8. SUBSIDIARY COMPANIESCompany2009 2008RM’000 RM’000(a) Unquoted shares at cost 183,675 171,676Accumulated impairment losses (7,753) (7,753)175,922 163,923(b)Net balance with a subsidiary company:Unquoted shares at cost 25,036 25,036Loan from a subsidiary company (29,074) (71,936)Net amount due to a subsidiary (4,038) (46,900)The loan from a subsidiary company is unsecured, interest free and is expected to be repaid when the investment in thissubsidiary is realised.

69Annual Report 2009notes to the financial statements31 December 20098. SUBSIDIARY COMPANIES (Cont’d)Details of the subsidiary companies are as follows:Country ofGroup’s interestName of company incorporation 2009 2008 Principal activities% %Manulife Asset Management Malaysia 100 100 Investment and fund management(Malaysia) Sdn BhdManulife Insurance Berhad Malaysia 100 100 Life insurance businessManulife Unit Trusts Berhad Malaysia 100 100 Management of unit trust fundsBritama Credit Sdn Bhd Malaysia 100 100 Money lending and hire purchaseBritama Properties Sdn Bhd Malaysia 100 100 Property rental and managementThe e-Software House Sdn Bhd Malaysia 100 100 DormantBritish American Singapore 100 100 DormantInvestments Pte Ltd (Note a)Note a: The subsidiary company is audited by PricewaterhouseCoopers Singapore.9. INVESTMENTSShareholders’ fund2009 2008Book Market Book Marketvalue value value valueRM’000 RM’000 RM’000 RM’000GroupAt cost:Malaysian Government Securities - 136,473Amortisation of premiums - net - (10)- - 136,463 143,139Government Investment Issues - 19,879Accretion of discounts - net - 25- - 19,904 21,354Specified debt securities - unquoted - 99,601Accretion of discounts - net - 2,546- 102,147Shares, warrants and convertibleloan stocks quoted in Malaysia - 23,992Allowance for diminution in value - (6,855)- - 17,137 17,960Unquoted shares - 572Investment-linked fund units - - 823 975TOTAL INVESTMENTS - SHAREHOLDERS’ FUND - 277,046

Manulife Holdings Berhad (24851-H) 70notes to the financial statements31 December 20099. INVESTMENTS (Cont’d)Shareholders’ fund (Cont’d)2009 2008Book Market Book Marketvalue value value valueRM’000 RM’000 RM’000 RM’000CompanyAt cost:Malaysian Government Securities - 43,437Accretion of discounts - net - 34- - 43,471 44,708Government Investment Issues - 9,105Accretion of discounts - net - 25- - 9,130 9,727Specified debt securities - unquoted - 64,457Accretion of discounts - net - 2,576- 67,033Shares, warrants and convertibleloan stocks quoted in Malaysia - 23,992Allowance for diminution in value - (6,855)- - 17,137 17,960Unquoted shares - 553Investment-linked fund units - - 823 975TOTAL INVESTMENTS - SHAREHOLDERS’ FUND - 138,147

71Annual Report 2009notes to the financial statements31 December 20099. INVESTMENTS (Cont’d)Life fund - GroupNon Investment-Linked Business2009 2008Book Market Book Marketvalue value value valueRM’000 RM’000 RM’000 RM’000At cost:Malaysian Government Securities - 508,776Accretion of discounts - net - 322- - 509,098 562,283Government Investment Issues - 88,497Accretion of discounts – net - 119- - 88,616 94,143Specified debt securities - unquoted - 663,955Accretion of discounts - net - 16,192- 680,147Shares, warrants and convertibleloan stocks quoted in Malaysia - 377,942Allowance for diminution in value - (99,993)- - 277,949 277,949Unquoted shares - 1,944TOTAL INVESTMENTS –NON INVESTMENT-LINKED BUSINESS - 1,557,754

Manulife Holdings Berhad (24851-H) 72notes to the financial statements31 December 20099. INVESTMENTS (Cont’d)Life fund - Group (Cont’d)Investment-Linked Business2009 2008RM’000 RM’000Shares and warrants:Quoted in MalaysiaAt cost - 93,124Unrealised loss - (32,497)At market value - 60,627Malaysian Government Securities:At cost - 1,490Unrealised gain - 23At indicative market value - 1,513Specified debt securities – unquoted:At cost - 35,429Unrealised loss - (78)At indicative market value - 35,351Investment in equity call options:At cost - 5,842Unrealised exchange loss - (331)Unrealised loss - (2,784)At market value - 2,727Investment in foreign assets:At cost - 80,456Unrealised exchange gain - 269Currency translation difference - 567Unrealised loss - (21,794)At market value - 59,498TOTAL INVESTMENTS - INVESTMENT-LINKED BUSINESS - 159,716

73Annual Report 2009notes to the financial statements31 December 20099. INVESTMENTS (Cont’d)The maturity structure of Malaysian Government Securities, Government Investment Issues and unquoted specified debtsecurities held as at the balance sheet date is as follows:Shareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Maturing within 12 months - 1,497 - 1,497Maturing after 12 months - 257,017 - 118,137- 258,514 - 119,634Life fund – GroupNon investmentInvestment-linked business-linked business2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Maturing within 12 months - 8,534 - 1,966Maturing after 12 months - 1,269,327 - 34,898- 1,277,861 - 36,864Arising from the adoption of FRS 139 from 1 January 2009, the investments are classified and measured using the accountingpolicies as stated in note 2(h) to the financial statements.10. AVAILABLE-FOR-SALE FINANCIAL ASSETSShareholders’ fund Life fundGroup Company Group2009 2009 2009RM’000 RM’000 RM’000Equity securitiesQuoted 36,511 21,210 520,877Unquoted 572 572 1,944Investment-linked Funds 3,171 3,171 -Malaysian Government Securities 138,567 45,947 367,238Government Investment Issues 20,917 10,243 62,278Corporate Debt securities - Unquoted 101,855 61,231 613,357301,593 142,374 1,565,694No comparative figures has been presented for 31 December 2008 based on the new classification of financial assets resultingfrom the adoption of FRS 139 by virtue of the prospective application allowed under the transitional provision of FRS 139. Thechange in the accounting policy for the measurement of these securities has been applied prospectively and the effect of thechange is set out in note 2(h) to the financial statements.All Malaysian Government Securities, Government Investment Issues and unquoted specified debt securities held as at thebalance sheet date are maturing after 12 months.

Manulife Holdings Berhad (24851-H) 74notes to the financial statements31 December 200911. FAIR VALUE THROUGH PROFIT AND LOSS FINANCIAL ASSETSLife fund - GroupNon Investment- Investment-Linked LinkedBusiness Business2009 2009RM’000 RM’000Equity Securities - Quoted - 151,327Malaysian Government Securities 125,841 1,463Government Investment Issues 20,000 -Corporate Debt Securities - Unquoted 160,943 40,372Equity Call Options - Unquoted - 6,586Unit Trust Funds - Quoted outside Malaysia - 110,293306,784 310,041No comparative figures has been presented for 31 December 2008 based on the new classification of financial assets resultingfrom the adoption of FRS 139 by virtue of the prospective application allowed under the transitional provision of FRS 139. Thechange in the accounting policy for the measurement of these securities has been applied prospectively and the effect of thechange is set out in note 2(h) to the financial statements.Recovery and settlement of fair value through profit and loss financial assets are expected to be within 12 months from thebalance sheet date.12. ASSETS HELD FOR SALEShareholders’ fundGroup and Company2009 2008RM’000 RM’000Property and equipment - 2,261Property and equipment held for sale comprise the following:Valuation in 2008 (note 5) - 2,335Accumulated depreciation (note 5) - (74)Net book value - 2,261

75Annual Report 2009notes to the financial statements31 December 200912. ASSETS HELD FOR SALE (Cont’d)Life fund – GroupProperty Prepaidandleaseequipment payments TotalRM’000 RM’000 RM’000CostAt 1 January 2008 - - -Reclassification 900 400 1,300At 31 December 2008/1 January 2009 (note 5) 900 400 1,300Disposal (900) (400) (1,300)At 31 December 2009 - - -Accumulated depreciation/amortisationAt 1 January 2008 - - -Charge for the financial year 31 14 45At 31 December 2008/1 January 2009 (note 5) 31 14 45Disposal (31) (14) (45)At 31 December 2009 - - -Net book valueAt 31 December 2009 - - -At 31 December 2008 869 386 1,255Life fund - CompanyProperty Prepaidandleaseequipment payments TotalRM’000 RM’000 RM’000CostAt 1 January 2008 - - -Reclassification 900 400 1,300Arising from Business Transfer (note 3) (900) (400) (1,300)At 31 December 2008 - - -Accumulated depreciation/amortisationAt 1 January 2008 - - -Charge for the financial year 31 10 41Arising from Business Transfer (note 3) (31) (10) (41)At 31 December 2008 - - -Net book valueAt 31 December 2008 - - -The assets held for sale in the previous financial year were in respect of self-occupied properties where Sales and Purchaseagreements had been signed and the status of sale was pending the receipt of the full sale proceeds amount as at 31December 2008.

Manulife Holdings Berhad (24851-H) 76notes to the financial statements31 December 200913. LOANS AND RECEIVABLESShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Loans:Secured loans 2,904 3,264 2,904 3,264Other loans 423 679 1 23,327 3,943 2,905 3,266Interest in suspense - (3) - -Allowance for doubtful debts - (11) - -3,327 3,929 2,905 3,266Fixed and call deposits with licensed bank 80,322 74,253 36,494 38,722Other receivables:Amount due from subsidiary companies - - 28,154 7,664Investment income due and accrued 3,105 3,097 1,075 1,083Other debtors 1,995 670 1,890 582Deposits and prepayments 894 819 537 621Amount due from Life fund (note 17) 62,085 46,764 - -68,079 51,350 31,656 9,950151,728 129,532 71,055 51,938Loans:Receivable within 12 months 1,347 1,070 80 791Receivable after 12 months 1,980 2,859 2,825 2,4753,327 3,929 2,905 3,266Fixed and call deposits with licensed bank:Receivable within 12 months 65,822 59,753 21,994 24,222Receivable after 12 months 14,500 14,500 14,500 14,50080,322 74,253 36,494 38,722

77Annual Report 2009notes to the financial statements31 December 200913. LOANS AND RECEIVABLES (Cont’d)Life fund – GroupNon investmentInvestment-linked business-linked business2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Loans:Policy loans 356,450 371,831 - -Mortgage loans 1,829 2,025 - -Secured loans 19,980 22,455 339 381378,259 396,311 339 381Interest in suspense (471) (471) - -Allowance for doubtful debts (83) (83) - -377,705 395,757 339 381Fixed and call deposits with licensed bank 204,941 255,421 58,690 83,645Other receivablesInvestment income due and accrued 12,898 12,701 863 812Other debtors 2,671 2,377 2,500 1,509Deposits and prepayments 869 582 - -Amount due from related companies 214 137 - -Proceeds receivable from sale/maturity of investments - 194 2,271 -16,652 15,991 5,634 2,321599,298 667,169 64,663 86,347Loans:Receivable within 12 months 8,571 5,637 84 84Receivable after 12 months 369,134 390,120 255 297377,705 395,757 339 381Fixed and call deposits with licensed bank:Receivable within 12 months 125,132 177,600 9,394 30,018Receivable after 12 months 79,809 77,821 49,296 53,627204,941 255,421 58,690 83,645

Manulife Holdings Berhad (24851-H) 78notes to the financial statements31 December 200914. INSURANCE RECEIVABLESShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Due from reinsurers and cedants 1,075 1,075 1,075 1,075Allowance for doubtful debts (1,075) (1,075) (1,075) (1,075)- - - -Life fundGroup2009 2008RM’000 RM’000Due premiums including agents’ balances 25,514 28,375Due from reinsurers 59 32025,573 28,695Allowance for doubtful debts (1,111) (1,116)24,462 27,57915. CASH AND CASH EQUIVALENTSGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Cash and bank balances:- Shareholders’ funds 3,989 7,931 2,346 4,398- Life fund - Non investment- linked business 15,783 11,660 - -- Life fund – Investment- linked business (note 30) 407 802 - -20,179 20,393 2,346 4,39816. PROVISION FOR OUTSTANDING CLAIMSShareholders’ fundGroup and Company2009 2008RM’000 RM’000Provision for outstanding claims 178 619Life fundGroup2009 2008RM’000 RM’000Provision for outstanding claims 28,608 22,762Recoverable from reinsurers (1,361) (2,056)Net outstanding claims 27,247 20,706

79Annual Report 2009notes to the financial statements31 December 200917. PAYABLESShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Trade payablesDue to reinsurers and cedants 231 231 231 231Other payablesOther creditors 1,950 6,724 3,308 2,260Accrued liabilities 2,691 933 1,575 813Amount due to related companies 840 456 840 4565,712 8,344 5,954 3,760Life fundGroup2009 2008RM’000 RM’000Trade payablesDue to reinsurers and cedants 2,191 1,594Due to agents 2,937 2,817Due to insureds 253,005 215,183258,133 219,594Other payablesAmount due to Shareholders’ fund (note 13) 62,085 46,764Amount due to holding company 1,026 79Other creditors 18,072 10,917Accrued liabilities 8,349 5,547347,665 282,901

Manulife Holdings Berhad (24851-H) 80notes to the financial statements31 December 200918. DEFERRED TAXDeferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against currenttax liabilities and when the deferred taxes relate to the same tax authority. The following amounts, determined after appropriateoffsetting, are shown in the balance sheet:Shareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Deferred tax assets/(liabilities):At 1 January 99 (1,916) 2,075 22- Effect of adoption of FRS 139 (note 2(h)) (3,816) - (620) -(3,717) (1,916) 1,455 22(Charged)/credited to Income Statement (note 26)- property and equipment 92 (183) 92 (183)- investment in subsidiary companies - - - (78)- financial assets/investments 4 2,039 4 2,039- investment properties (775) 350 (775) 350- tax losses 95 (122) - -- others 129 6 - -(455) 2,090 (679) 2,128Credited/(charged) to fair value reserve- financial assets 550 - (705) -Charged to assets revaluation reserve- property and equipment (335) (75) (335) (75)At 31 December (3,957) 99 (264) 2,075Comprising:Deferred tax assets 427 1,505 - 2,075Deferred tax liabilities (4,384) (1,406) (264) -(3,957) 99 (264) 2,075Subject to income tax:Deferred tax assets (before offsetting)- investment in subsidiary companies - - 1,938 1,938- financial assets/investments 3,019 1,383 3,019 1,383- tax losses 218 122 - -- others 218 - - -3,455 1,505 4,957 3,321Offsetting (3,028) - (4,957) (1,246)Deferred tax assets (after offsetting) 427 1,505 - 2,075

81Annual Report 2009notes to the financial statements31 December 200918. DEFERRED TAX (Cont’d)Shareholders’ fund (Cont’d)GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Subject to income tax:Deferred tax liabilities (before offsetting)- property and equipment (638) (730) (638) (730)- financial assets/investments (4,899) - (2,957) -- investment properties (1,626) (516) (1,626) (516)- others (249) (160) - -(7,412) (1,406) (5,221) (1,246)Offsetting 3,028 - 4,957 1,246Deferred tax liabilities (after offsetting) (4,384) (1,406) (264) -Life fund - GroupNon investmentInvestment-linked business-linked business2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Deferred tax assets/(liabilities):At 1 January 7,018 (1,089) 4,448 (1,976)- Effect of adoption of FRS 139 (note 2(h)) (6,391) - - -627 (1,089) 4,448 (1,976)Credited/(charged) to insurance revenue accounts(note 26 and note 30)- property and equipment 106 (228) - -- financial assets/investments 1,135 8,380 (7,371) 6,424- investment properties 2 (45) - -1,243 8,107 (7,371) 6,424Charged to life fair value reserve - financial assets (note 19) (8,205) - - -At 31 December (6,335) 7,018 (2,923) 4,448Comprising:Deferred tax assets 11 7,018 - 4,448Deferred tax liabilities (6,346) - (2,923) -(6,335) 7,018 (2,923) 4,448

Manulife Holdings Berhad (24851-H) 82notes to the financial statements31 December 200918. DEFERRED TAX (Cont’d)Life fund - Group (Cont’d)Non investmentInvestment-linked business-linked business2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Subject to income tax:Deferred tax liabilities (before offsetting)- property and equipment (307) (413) - -- financial assets/investments (6,014) - (2,923) (10)- investment properties (25) (27) - -(6,346) (440) (2,923) (10)Offsetting - 440 - 10Deferred tax liabilities (after offsetting) (6,346) - (2,923) -Deferred tax assets (before offsetting)- financial assets/investments 11 7,458 - 4,458Offsetting - (440) - (10)Deferred tax assets (after offsetting) 11 7,018 - 4,448CompanyDeferred tax assets/(liabilities):At 1 January - (1,089) - (1,976)Credited/(charged) to insurance revenue accounts(note 26 and note 30)- property and equipment - (10) - -- investments - 7,807 - 4,573- investment properties - (18) - -- 7,779 - 4,573- 6,690 - 2,597Arising from Business Transfer (note 3) - (6,690) - (2,597)At 31 December - - - -

83Annual Report 2009notes to the financial statements31 December 200919. LIFE POLICYHOLDERS’ FUNDGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Actuarial liabilities 1,862,288 1,836,710 - -Unallocated surplus 266,024 188,205 - -Fair value reserve 57,654 - - -Assets revaluation reserve - 59 - -Investment-linked policyholders’ account (note 30) 367,223 249,308 - -Life policyholders’ fund 2,553,189 2,274,282 - -Actuarial liabilities:At 1 January, as previously stated 1,711,826 1,648,975 - 1,648,975- Effect of change in accounting policy on actuarialliabilities valuation, adjusted retrospectively (note 2(v)) 124,884 105,675 - 105,675At 1 January, as restated 1,836,710 1,754,650 - 1,754,650Add: (Decrease)/increase in policy reserves (105,608) (50,087) - 45,716Bonus allocated to participating policyholdersincluding interim bonus 131,498 132,461 - 256Less: Interim bonus paid (312) (314) - (256)25,578 82,060 45,716Arising from Business Transfer (note 3) - - - (1,800,366)At 31 December 1,862,288 1,836,710 - -Unallocated surplus:At 1 January, as previously stated 313,089 374,319 - 374,319- Effect of change in accounting policy on actuarialliabilities valuation, adjusted retrospectively (note 2(v)) (124,884) (105,675) - (105,675)188,205 268,644 268,644- Effect of adoption of FRS 139,adjusted prospectively (note 2(h)) 110,194 - - -At 1 January, restated 298,399 268,644 - -Add: Surplus arising during the financial year 163,143 99,547 - 2,072Less: Bonus allocated to participatingpolicyholders including interim bonus (131,498) (132,461) - (256)Transfer to Income Statement (page 43) (64,020) (47,525) - -(32,375) (80,439) - 1,816Arising from Business Transfer (note 3) - - - (270,460)At 31 December 266,024 188,205 - -

Manulife Holdings Berhad (24851-H) 84notes to the financial statements31 December 200919. LIFE POLICYHOLDERS’ FUND (Cont’d)GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Fair value reserveAt 1 January - - - -Change in accounting policy- Effect of adoption of FRS 139,adjusted prospectively (note 2(h)) (36,701) - - -At 1 January, restated (36,701) - - -Movement in fair value foravailable-for-sale financial assets 102,560 - - -Deferred tax charge (note 18) (8,205) - - -Net movement of fair value reserve (page 43) 94,355 - - -At 31 December 57,654 - - -Asset revaluation reserveAt 1 January 59 120 - 120Transfer to revenue account on disposal ofproperty and equipment (note 24) (59) (61) - (61)- 59 - 59Arising from Business Transfer (note 3) - - - (59)At 31 December - 59 - -The asset revaluation reserve represented the revaluation surplus arising from the revaluation of property and equipment andinvestment properties of the Life fund in 2005.20. SHARE CAPITALGroup and Company2009 2008RM’000 RM’000Authorised:250,000,000 ordinary shares of 50 sen each 125,000 125,000Group and Company2009 2008Number Nominal Number Nominalof shares value of shares value’000 RM’000 ’000 RM’000Issued and fully paid up:Ordinary shares of 50 sen each:At 1 January / 31 December 202,370 101,185 202,370 101,185No new ordinary shares were issued by the Company during the financial year.

85Annual Report 2009notes to the financial statements31 December 200921. RESERVESShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Non-distributable:Share premium 1,884 1,884 1,884 1,884Asset revaluation reserve 2,486 2,370 2,486 2,370Fair value reserve 4,658 - (1,168) -Currency translation reserve 5,190 5,190 - -14,218 9,444 3,202 4,254Distributable:Retained earnings 372,841 327,349 321,571 246,281387,059 336,793 324,773 250,535The Company has sufficient tax credit under Section 108(6) of the Income Tax Act, 1967 and exempt income account balanceto enable the distribution of all its retained earnings as at 31 December 2009 if paid out as dividends.The asset revaluation reserve represents the revaluation surplus arising from the revaluation of properties of the Shareholders’fund and cannot be distributed as cash dividends until after realisation of the assets concerned.All of the Group’s and the Company’s properties which were held as property and equipment and investment properties werelast revalued in 2009 as mentioned in notes 5 and 6 to the financial statements respectively.22. OPERATING REVENUEGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Continuing operationsGross premium – Life fund 454,928 503,650 - -Investment income 122,821 134,878 91,891 15,786577,749 638,528 91,891 15,786Discontinued operationsGross premium – Life fund - - - 371,144Investment income - - - 87,417- - - 458,561

Manulife Holdings Berhad (24851-H) 86notes to the financial statements31 December 200923. INVESTMENT INCOMEShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Interest income from:Malaysian Government Securitiesand Government Investment Issues 6,216 3,715 2,200 3,090Specified debt securities 5,297 6,748 2,464 5,851Other loans 21 300 - 266Fixed and call deposits 2,192 3,096 1,321 2,158Accretion of discounts, net of amortisation of premiums 169 1,019 635 1,083Gross dividends from:Shares quoted in Malaysia 914 958 649 958Unquoted shares 123 123 98 123Subsidiaries - - 82,151 -Rental income - net 2,805 2,465 2,656 2,29417,737 18,424 92,174 15,823Less: Investment expenses (32) (40) (283) (37)17,705 18,384 91,891 15,786Life FundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Interest income from:Malaysian Government Securitiesand Government Investment Issues 22,436 24,124 - 17,923Specified debt securities 31,703 29,766 - 21,868Mortgage loans 94 109 - 83Policy loans 23,048 23,606 - 17,771Other loans 1,521 2,304 - 1,881Fixed and call deposits 5,763 9,050 - 7,011Accretion of discounts, net of amortisation of premiums 8,198 7,856 - 5,913Gross dividends from:Shares quoted in Malaysia 13,590 19,733 - 15,075Rental income - net 2,097 141 - 35108,450 116,689 - 87,560Less: Investment expenses (3,334) (195) - (143)105,116 116,494 - 87,417Rental income of the Shareholders’ fund of the Company includes an amount of RM934,871 (2008: RM1,043,604) from theinsurance businesses for the rental of properties owned by the Shareholders’ fund.

87Annual Report 2009notes to the financial statements31 December 200924. OTHER OPERATING INCOME/(EXPENSES) - NETShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Loss/(profit) on sale of investments (529) 5,940 (599) 4,757Outsourcing fee income 1,187 388 1,698 388Allowance for diminution in value of investments - (6,855) - (6,855)Fair value gain/(loss) - investment properties 4,226 (852) 4,226 (852)Realised exchange loss - (35) - (78)Gain on disposal of property and equipment - 90 - -Gain on disposal of assets held for sale 365 - 365 -Gain on disposal of investment properties 94 - 94 -Other income 586 352 632 509Management fee income 3,355 - - -Unrealised exchange gain 10 - - --Other operating income/(expenses) – net 9,294 (972) 6,416 (2,131)Life fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Gain on disposal of assets held for sale 85 - - -(Loss)/profit on sale of investments (4,889) 33,557 - 55,630Fair value loss on FVTPL financial assets (14,134) - - -Allowance for diminution in value of investments - (99,833) - (94,806)Fair value gain on investment properties - 335 - -Transfer of revaluation surplus on disposal ofproperty and equipment (note 21) 59 61 - 61Realised exchange gain 4 57 - -Loss on disposal of property and equipment - (23) - (23)Other income 3,277 2,240 - 1,606Other operating expenses - net (15,598) (63,606) - (37,532)

Manulife Holdings Berhad (24851-H) 88notes to the financial statements31 December 200925. MANAGEMENT EXPENSESShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Staff costs 5,399 1,288 3,160 858Retirement benefits contributions 692 160 366 108Total staff costs 6,091 1,448 3,526 966Directors’ remuneration:- Fees 333 103 297 100- Other emoluments 1,647 625 1,605 624Auditors’ remuneration:- Statutory audit 106 93 50 64- Audit related services 35 85 35 85Depreciation of property and equipment 471 238 368 228Property and equipment written off - 23 - -Write-back of doubtful debts (11) - - -Other expenses 2,966 1,266 1,754 1,05111,638 3,881 7,635 3,118Life fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Staff costs 13,382 13,547 - 10,648Retirement benefits contributions 1,917 1,737 - 1,342Total staff costs 15,299 15,284 - 11,990Directors’ remuneration:- Fees 20 197 - 192- Other emoluments 908 1,197 - 1,191Auditors’ remuneration:- Statutory audit 131 130 - 98Office rental payable to:- Shareholders’ fund 932 955 - 762- Others 535 397 - 310Depreciation of property and equipment 1,239 856 - 832Property and equipment written off 3 376 - 130Printing and stationery 1,080 1,186 - 752Postage and courier charges 893 1,052 - 826(Writeback of)/allowance for doubtful debts (5) 138 - 4Other expenses 11,935 11,160 - 7,50132,970 32,928 - 24,588Office rental payable to the Shareholders’ fund is in respect of properties of the Shareholders’ fund used by the insurancebusinesses (note 23).The retirement benefits contributions of the Group and the Company were made to the defined contribution plans as mentionedin note 2(l).

89Annual Report 2009notes to the financial statements31 December 200926. TAXATIONShareholders’ fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000In respect of current financial year:Current tax 18,424 15,980 2,731 5,675Deferred tax (note 18) 455 (2,090) 679 (2,128)18,879 13,890 3,410 3,547In respect of prior years:Under/(over) provision in respect of prior financial years 1,354 163 (1,684) 16320,233 14,053 1,726 3,710Life fundGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000In respect of current financial year:Current tax 7,386 11,782 - 10,481Deferred tax (note 18) (1,243) (8,107) - (7,779)6,143 3,675 - 2,702In respect of prior years:Under provision in respect of prior financial years - 831 - 8316,143 4,506 - 3,533The taxation charge in the income statement of the Group relates to income attributable to the Shareholders’ funds.The reconciliation between the average effective tax rate and the Malaysian tax rate for the current financial year is asfollows:Shareholders’ fundGroupCompany2009 2008 2009 2008% % % %Malaysian tax rate 25 26 25 26Tax effects of:- section 110B set off (3) (5) - -- expenses not deductible for tax purposes 2 2 - 7- tax exempt income - - (21) -Average effective tax rate 24 23 4 33As at the balance sheet date, the Group has unutilised tax losses of approximately RM875,000 (2008: RM887,000) availablefor carry forward to offset against its future taxable income, subject to the provisions of the tax legislations and agreement withthe tax authorities.

Manulife Holdings Berhad (24851-H) 90notes to the financial statements31 December 200927. EARNINGS PER SHAREBasic earnings per share of the Group are calculated by dividing the Group’s net profit attributable to shareholders over theweighted average number of ordinary shares of the Company in issue of 202,370,000 (2008: 202,370,000) shares.Group2009 2008RM’000 RM’000Net profit attributable to shareholders (RM’000) 59,148 47,003Basic earnings per share (sen) 29.23 23.2328. DIVIDENDSCompany2009 2008GrossGrossdividend Amount of dividend Amount ofper share dividend per share dividendSen RM’000 Sen RM’000Dividends paid, net of tax 13 19,686 28 41,834The directors recommend the payment of a first and final dividend of 17 sen per share, less 25% tax, amounting to RM25,802,175for the financial year ended 31 December 2009, which is subject to the approval of the shareholders of the Company at theforthcoming Annual General Meeting.These financial statements do not reflect this final dividend which will be accounted for in the shareholders’ equity as anappropriation of retained earnings in the financial year ending 31 December 2010 when approved by the shareholders.

91Annual Report 2009notes to the financial statements31 December 200929. ADJUSTMENTS FOR NON-CASH ITEMSNon-cash items in the statements of cash flow comprise:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Life fund surplus after taxation 175,138 86,876 - 91,488Transfer of life fund surplus to income statement (64,020) (47,525) - -Loss/(profit) on sale of investments 8,497 (37,632) 599 (61,531)Allowance for diminution in value of investments - 187,425 - 157,337(Writeback of)/allowance for doubtful debts (16) 138 - 4Accretion of discounts - net (7,720) (6,945) (635) (5,548)Depreciation of property and equipment 1,708 1,093 368 1,058Amortisation of intangible assets 126 61 - -Transfer of revaluation reserve to revenueaccount upon disposal of properties (59) (61) - (61)Property and equipment written off 3 400 - 130(Gain)/loss on revaluation of investment properties (4,226) 517 (4,226) 852Gain on disposal of investment properties (94) - (94) -Interest income (100,484) (105,133) (5,985) (79,567)Interest expense 11,828 10,484 - 7,740Dividend income (19,309) (25,643) (82,898) (18,943)Rental income - net (4,886) (2,606) (2,656) (2,329)(Gain)/loss on disposal of assets held for sale (450) (60) (365) 23Taxation 34,003 12,777 1,726 3,240Transfer of revaluation surplus to retainedearnings upon disposal of properties (890) (359) - -Fair value gain on financial assets (77,562) - - -(48,413) 73,807 (94,166) 93,89330. INVESTMENT-LINKED BUSINESSBALANCE SHEET AS AT 31 DECEMBER 2009Group2009 2008RM’000 RM’000ASSETSInvestments (note 9) - 159,716FVTPL financial assets (note 11) 310,041 -Loans and receivables (note 13) 64,663 86,347Deferred tax assets (note 18) - 4,448Current tax recoverable 739 398Cash and bank balances (note 15) 407 802TOTAL ASSETS 375,850 251,711LIABILITIESPayables 5,287 2,121Current tax payable 417 282Deferred tax liabilities (note 18) 2,923 -TOTAL LIABILITIES 8,627 2,403NET ASSET VALUE OF FUNDS 367,223 249,308

Manulife Holdings Berhad (24851-H) 92notes to the financial statements31 December 200930. INVESTMENT-LINKED BUSINESS (Cont’d)BALANCE SHEET AS AT 31 DECEMBER 2009 (Cont’d)GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000REPRESENTED BY:Policyholders’ account:At beginning of financial year 249,308 211,578 - 211,578Net creation of units 33,607 105,417 - 89,865Surplus/(deficit) after taxation for the financial year 84,635 (68,198) - (45,714)Currency translation reserve (327) 511 - (195)Arising from Business Transfer (note 3) - - - (255,534)At end of financial year (note 19) 367,223 249,308 - -STATEMENT OF INCOME AND EXPENDITUREFOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2009GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Investment income 8,158 7,145 - 4,452Other operating income/(expenses) - net 88,378 (78,344) - (52,620)Management expenses (4,274) (2,781) - (1,549)Surplus/(deficit) before taxation for the financial year 92,262 (73,980) - (49,717)Taxation:- current tax (448) (553) - (570)- over/(under) provision in prior years 192 (89) - -- deferred tax (note 18) (7,371) 6,424 - 4,57384,635 (68,198) - (45,714)Currency translation reserve (327) 511 - (195)Surplus/(deficit) after taxation for the financial year (page 43) 84,308 (67,687) - (45,909)

93Annual Report 2009notes to the financial statements31 December 200931. SIGNIFICANT RELATED PARTY DISCLOSURESThe related parties of the Company are Manulife Financial Corporation (“MFC”), the ultimate holding company of ManulifeCentury Holdings (Netherlands) BV which is a substantial shareholder of the Company and its subsidiary and associatedcompanies (“Manulife Group”). The former substantial shareholder of the Company was John Hancock International Holdings,Inc. a subsidiary of MFC, which disposed of its entire shareholding in the Company during the financial year.The related parties of, and their relationships with the Company, other than subsidiaries, are as follows:Country ofName of company incorporation RelationshipManulife Century Holdings (Netherlands) BV Netherlands Substantial shareholderThe Manufacturers Life Insurance Company Canada Holding company of substantial shareholderManulife Technology and Services Sdn Bhd Malaysia Related company of substantial shareholderIn the normal course of business, the Group and the Company undertake various transactions with other companies deemedrelated parties by virtue of being subsidiary and associated companies of MFC, collectively known as the Manulife Group.Related party transactions were carried out on terms and conditions no more favourable than those available on similartransactions to its unrelated parties.The significant related party transactions during the financial year and balances at the financial year end between the Groupand the Company and the related parties are set out below.Significant related party transactionsGroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Transactions with Manulife Group:Outsourced IT services expenses 2,186 1,413 - 1,413Management fees and maintenance charges - - 72 166Rental of office expenses - - - 8Outsourcing fees (1,698) (388) (1,698) (388)Rental income (421) (268) (421) (268)Book-keeping fees and administration fees (32) (20) (32) (20)Fund management fee - - 265 -Related party balancesRelated party balances with Manulife Group included in the following notes to the financial statements are:Amounts due from included in otherpayables of Shareholders’ fund:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Other payables (note 17) (840) (456) (840) (456)

Manulife Holdings Berhad (24851-H) 94notes to the financial statements31 December 200931. SIGNIFICANT RELATED PARTY DISCLOSURES (Cont’d)The Directors of the Company in office during the financial year were as follows:Non-executive directorsTan Sri Dato’ Mohd Sheriff bin Mohd Kassim (Chairman)Datuk Ismail bin Haji AhmadDatuk Abu Hassan bin KendutAhmad Riza bin BasirPhilip John Hampden-SmithRobert Allen CookGianni Fiacco (Appointed on 22 May 2009)Executive directorChan Yui Lung (Appointed on 16 February 2009)The aggregate amount of emoluments received or receivable by directors of the Company during the financial year was asfollows:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Executive director:- salaries 946 972 946 972- bonus 170 415 170 415- benefits-in-kind 447 369 447 3691,563 1,756 1,563 1,756Non-executive directors:- fees 333 299 297 292- meeting allowance 84 66 42 59417 365 339 3511,980 2,121 1,902 2,107The total compensation paid to the Group and the Company’s key management personnel are as follows:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Salaries and other short-term employee benefits 5,605 3,904 2,773 3,200Retirement benefits contribution 230 85 124 675,835 3,989 2,897 3,267The retirement benefits contributions were made to the defined contribution plans as mentioned in note 2(l) to the financialstatements.Key management personnel are defined as those persons having authority and responsibility for planning, directing andcontrolling the activities of the Group and the Company either directly or indirectly. The key management personnel of theGroup and the Company include the executive director and certain members of senior management of the Group and theCompany.

95Annual Report 2009notes to the financial statements31 December 200932. SEGMENTAL REPORTINGThe Ordinary Life segment is a traditional core business of the Group and the Company and serves individuals with a range oflife insurance products including long-term care insurance. The results of these various segments are set out as follows:Operating RevenueGroup2009 2008RM’000 RM’000Gross PremiumOrdinary Life Participating 193,288 186,169Ordinary Life Non Participating 92,317 87,961Investment-Linked 169,323 229,520Total gross premium (note 22) 454,928 503,650Investment IncomeOrdinary Life Participating 78,301 86,247Ordinary Life Non Participating 18,562 21,189Investment-Linked 1,233 1,218Annuity Participating 7,020 7,840Life Insurance business 105,116 116,494Shareholders and others 17,705 18,384Total investment income 122,821 134,878Total operating revenue (note 22) 577,749 638,528Profit before TaxationOrdinary Life Participating 15,333 15,421Ordinary Life Non Participating 33,293 22,900Investment-Linked 15,115 8,933Annuity Participating 279 271Life Insurance business 64,020 47,525Shareholders and others 15,361 13,531Profit before taxation 79,381 61,056Taxation (20,233) (14,053)Net profit for the financial year attributable to shareholders 59,148 47,003

Manulife Holdings Berhad (24851-H) 96notes to the financial statements31 December 200932. SEGMENTAL REPORTING (Cont’d)Group2009 2008RM’000 RM’000Segment assetsOrdinary Life Participating 1,896,483 1,707,704Ordinary Life Non Participating 495,044 459,018Investment-Linked (Note 30) 375,850 251,711Annuity Participating 175,697 161,859Life Insurance business 2,943,074 2,580,292Shareholders and others 503,049 458,532Total assets 3,446,123 3,038,824Segment liabilitiesOrdinary Life Participating 249,502 194,875Ordinary Life Non Participating 126,605 105,785Investment-Linked (Note 30) 8,627 2,403Annuity Participating 5,151 2,947Life Insurance business 389,885 306,010Shareholders and others 14,805 20,554Total liabilities (excluding Life policyholders’ fund) 404,690 326,564Capital expenditureLife Insurance business - Ordinary Life Non Participating 919 4,754Shareholders and others 300 460Total capital expenditure 1,219 5,214Depreciation and amortisationLife Insurance business - Ordinary Life Non Participating 1,363 922Shareholders and others 471 238Total depreciation and amortisation 1,834 1,160Information on the Group’s operations by geographical segments is not provided as the Group operates principally inMalaysia.

97Annual Report 2009notes to the financial statements31 December 200933. RISK MANAGEMENT POLICIES AND FINANCIAL INSTRUMENTSThe Board of Directors (“the Board”) has overall responsibilities to oversee risk management within the Group. In relation tofinancial instruments, the day to day risks inherent to the business are managed by the individual Operating Units throughinternal control procedures, standard operating procedures, compliance with relevant Insurance Act and Regulations as wellas BNM’s guidelines and circulars.The mandate of the Asset-Liability Committee (“ALCO”) is to monitor the asset-liability risks of the Group’s insuranceoperations. This includes identification, assessment, and management of asset-liability risks, establishment of asset-liabilitypolicies and procedures, implementation of the policies and procedures, and oversight of the Group’s asset liability activities.The ALCO is part of the Enterprise Risk Management Framework.The Investment Committee monitors on a monthly basis, the implementation of investment policies approved by the Boardand reviews the policies with the consideration of changes in business environment and economic outlook. The results of theinvestment activities are reported to the Board regularly.The principal risks pertaining to financial instruments are as follows:(a)Credit riskCredit risk is the risk of loss due to inability or unwillingness of an issuer or borrower to service its debt obligations. Therisk arising from lending and investment activities is monitored regularly with respect to single customer limit, exposureto sector type, credit rating and remaining term to maturity, according to guidelines and limits approved by the Board andwithin guidelines issued by BNM.At balance sheet date, the credit exposure is within the guidelines and limits approved by the Board. The maximumexposure to credit risk is the carrying amount as stated in the financial statements.The Group’s and the Company’s exposure to credit risk is further analysed as follows:GroupCompany2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Rating of specified debt securitieson carrying value basisAAA 431,985 355,302 48,954 40,805AA 157,696 218,990 5,631 11,446A - 9,980 - 1,497Government guaranteed andother low risk debt securities 326,846 233,373 6,646 13,285916,527 817,645 61,231 67,033The rating categories are based on the ratings of reputable Malaysian rating agencies.

Manulife Holdings Berhad (24851-H) 98notes to the financial statements31 December 200933. RISK MANAGEMENT POLICIES AND FINANCIAL INSTRUMENTS (Cont’d)(b) Market risk(i) Interest rate riskInvestment activities and insurance business are inherently exposed to interest rate risk. This risk arises due to differences in pricing or tenure of investments andliabilities. Interest rate is managed by targeting a desired return, which is reviewed periodically, based on management’s long term view on interest rates. Theinvesting of assets at the target return over an extended time horizon mitigates the impact of this risk in the long term.The average effective interest rate and maturity period for the financial assets are as follows:Interest-bearing: Maturity period Total Average1 – 2 2 – 3 3 - 4 4 – 5 carrying effective5 years value interest rateRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %Group2009Malaysian Government Securities - 35,769 25,481 - 42,141 529,718 633,109 4.40Government Investment Issues - - - - 5,011 98,184 103,195 4.22Specified debt securities- unquoted 3,450 31,374 137,562 92,976 107,639 543,526 916,527 4.03Loan receivables 1,259 18 143 22,422 104 357,425 381,371 6.40Fixed and call deposits 200,348 86,305 - - - 57,300 343,953 1.81205,057 153,466 163,186 115,398 154,895 1,586,153 2,378,155Interest-bearing: Maturity period Total Average1 – 2 2 – 3 3 - 4 4 – 5 carrying effective5 years value interest rateRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %Group2008Malaysian Government Securities - - 35,619 49,983 - 561,472 647,074 4.37Government Investment Issues - 4,999 - - - 103,521 108,520 4.22Specified debt securities- unquoted 11,996 3,454 19,686 121,237 93,567 567,705 817,645 4.05Loan receivables 730 108 56 175 25,642 373,356 400,067 6.46Fixed and call deposits 267,371 - 90,645 - - 55,303 413,319 2.51280,097 8,561 146,006 171,395 119,209 1,661,357 2,386,625

99Annual Report 2009notes to the financial statements31 December 200933. RISK MANAGEMENT POLICIES AND FINANCIAL INSTRUMENTS (Cont’d)(b) Market risk (Cont’d)(i) Interest rate risk (Cont’d)Interest-bearing: Maturity period Total Average1 – 2 2 – 3 3 - 4 4 – 5 carrying effective5 years value interest rateRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %Company2009Malaysian Government Securities - 204 7,950 - 5,268 32,525 45,947 3.86Government Investment Issues - - - - 1,002 9,241 10,243 4.21Specified debt securities- unquoted - 4,884 7,280 7,599 2,619 38,849 61,231 3.76Loan receivables 80 - - 2,825 - - 2,905 7.49Fixed and call deposits 21,994 2,500 - - - 12,000 36,494 2.9822,074 7,588 15,230 10,424 8,889 92,615 156,820Interest-bearing: Maturity period Total Average1 – 2 2 – 3 3 - 4 4 – 5 carrying effective5 years value interest rateRM’000 RM’000 RM’000 RM’000 RM’000 RM’000 RM’000 %Company2008Malaysian Government Securities - - 203 7,797 - 35,471 43,471 3.72Government Investment Issues - - - - - 9,130 9,130 4.24Specified debt securities- unquoted 1,497 - 4,192 7,013 7,700 46,631 67,033 3.86Loan receivables 91 - - - 3,175 - 3,266 7.70Fixed and call deposits 24,222 - 2,500 - - 12,000 38,722 3.3425,810 - 6,895 14,810 10,875 103,232 161,622There are no interest-bearing financial liabilities as at 31 December 2009.* Disclosure information for financial assets and liabilities that relates to rights and obligations arising under insurance contracts is not shown as it is excludedfrom the scope of Financial Reporting Standard (“FRS”) 132 “Financial Instruments: Disclosure and Presentation”.

Manulife Holdings Berhad (24851-H) 100notes to the financial statements31 December 200933. RISK MANAGEMENT POLICIES AND FINANCIAL INSTRUMENTS (Cont’d)(b)Market risk (Cont’d)(ii)Foreign exchange riskThe Group’s exposure to foreign currency risk is in relation to its investment in a wholly-owned subsidiaryincorporated in Singapore. The risk is mitigated by the fact that the investments held by the Singapore subsidiaryare substantially denominated in Ringgit Malaysia. As a result, the Group does not hedge its foreign currencyexposure.(iii)Equity riskEquity risk results from adverse changes in the equity market. The Board has set internal limits for maximum equityexposure and individual stock exposure, which are consistent with BNM’s guidelines and has also imposed dailytrading limits. In addition, the Investment Committee at its monthly meeting discusses the economic and marketoutlook, reviews transactions and deliberates on further equity allocation. Any additional allocation is made onlyafter calculating the buffer for the funds at different market levels.(iv)Liquidity riskLiquidity risk arises due to the inability of the Group to meet its financial obligations as and when due. This riskis managed via a three-year planning process to ascertain operational cash flow requirements and maintaining areasonable level of liquid assets to meet any unexpected cash flow.(c)Estimated fair valuesThe carrying values of financial instruments as at the balance sheet date approximate their fair values, except for thefollowing:GroupCarrying valueFair value2009 2008 2009 2008RM’000 RM’000 RM’000 RM’000Malaysian Government Securities 633,109 647,074 633,109 706,934Government Investment Issues 103,195 108,520 103,195 115,497Specified debt securities - unquoted 916,527 817,645 916,527 845,958Fixed and call deposits 343,953 413,319 343,945 413,306Loan receivables 381,371 400,067 383,954 401,339Investment-linked fund units - 823 - 975CompanyMalaysian Government Securities 45,947 43,471 45,947 44,708Government Investment Issues 10,243 9,130 10,243 9,727Specified debt securities - unquoted 61,231 67,033 61,231 67,679Fixed and call deposits 36,494 38,722 36,494 38,722Loan receivables 2,905 3,266 3,241 3,439Investment-linked fund units - 823 - 975The carrying amounts of investment in fixed and call deposits of the Group have not been written down to their fair valuesas at 31 December 2008 and 2009 as the directors are of the opinion that the investments will be held for long-termpurposes.

101Annual Report 2009notes to the financial statements31 December 200934. COMPARATIVE FIGURESIn addition to the disclosures in note 10 and 11 to the financial statements, certain accounts have been reclassified for 2008comparative in order to conform with the current financial year’s presentation pursuant to the adoption of FRS 139 on 1January 2009.AsAspreviouslyrepresented Reclassification presentedRM’000 RM’000 RM’000SHAREHOLDER’S FUND BALANCE SHEET - GROUPInvestments 277,046 (74,253) 351,299Loan receivables - (3,929) 3,929Receivables - (51,350) 51,350Loans and receivables 129,532 129,532 -SHAREHOLDER’S FUND BALANCE SHEET - COMPANY406,578 - 406,578Investments 138,147 (38,722) 176,869Loan receivables - (3,266) 3,266Receivables - (9,950) 9,950Loans and receivables 51,938 51,938 -LIFE FUND BALANCE SHEET - GROUP190,085 - 190,085Investments 1,557,754 (255,421) 1,813,175Loan receivable - (395,757) 395,757Receivables - (43,570) 43,570Loans and receivables 667,169 667,169 -Insurance receivables 27,579 27,579 -INVESTMENT- LINKED BUSINESS BALANCE SHEET - GROUP2,252,502 - 2,252,502Investments 159,716 (83,645) 243,361Loan receivable - (381) 381Receivables - (2,321) 2,321Loans and receivables 86,347 86,347 -246,063 - 246,063The life assets revaluation reserve for the Life fund previously recorded on the balance sheet separately is now presented as acomponent of the life policyholders’ fund in order to conform with the current financial year’s presentation.AsrepresentedRM’000AspreviouslypresentedRM’000Life policyholders’ fund 2,274,282 2,274,223Life assets revaluation reserve - 5935. AUTHORISATION OF FINANCIAL STATEMENTSThese financial statements were authorised for issue in accordance with a resolution of the directors on 18 March 2010.

Manulife Holdings Berhad (24851-H) 102statement bydirectorsPursuant to Section 169(15) of the Companies Act, 1965We, Tan Sri Dato’ Mohd Sheriff Bin Mohd Kassim and Chan Yui Lung, two of the directors of Manulife Holdings Berhad, state that,in the opinion of the directors, the financial statements set out on pages 40 to 101 are drawn up so as to give a true and fair view ofthe state of affairs of the Group and of the Company at 31 December 2009, and of the results and cash flows of the Group and theCompany for the financial year ended on that date in accordance with the MASB approved accounting standards in Malaysia forEntities Other than Private Entities and the provisions of the Companies Act, 1965.Signed on behalf of the Board of Directors in accordance with their resolution dated 18 March 2010.TAN SRI DATO’ MOHD SHERIFF BIN MOHD KASSIMCHAIRMANCHAN YUI LUNGDIRECTORKuala LumpurstatutorydeclarationPursuant to Section 169(16) of the Companies Act, 1965I, Tang Loon Khoon, the officer primarily responsible for the financial management of Manulife Holdings Berhad, do solemnlyand sincerely declare that the financial statements set out on pages 40 to 101 are, in my opinion, correct and I make this solemndeclaration conscientiously believing the same to be true, and by virtue of the provisions of the Statutory Declarations Act, 1960.TANG LOON KHOONSubscribed and solemnly declared by the abovenamed Tang Loon Khoon at Kuala Lumpur in Malaysia on 18 March 2010,before me.COMMISSIONER FOR OATHS

103Annual Report 2009independentauditors’ reportTo the members of Manulife Holdings Berhad (Incorporated in Malaysia) (Company No. 24851-H)REPORT ON THE FINANCIAL STATEMENTSWe have audited the financial statements of Manulife Holdings Berhad, which comprise the balance sheets as at 31 December 2009of the Group and of the Company, and the income statements, revenue account, statements of changes in equity and cash flowstatements of the Group and of the Company for the year then ended, and a summary of significant accounting policies and otherexplanatory notes, as set out on pages 40 to 101.Directors’ Responsibility for the Financial StatementsThe directors of the Company are responsible for the preparation and fair presentation of these financial statements in accordancewith MASB approved accounting standards in Malaysia for Entities Other than Private Entities and the Companies Act, 1965. Thisresponsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentationof financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making accounting estimates that are reasonable in the circumstances.Auditor’s ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordancewith approved standards on auditing in Malaysia. Those standards requires that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. Theprocedures selected depend on our judgment, including the assessment of risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity’s preparationand fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, butnot for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluatingthe appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well asevaluating 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 audit opinion.OpinionIn our opinion, the financial statements have been properly drawn up in accordance with the MASB approved accounting standardsin Malaysia for Entities Other than Private Entities and the Companies Act, 1965 so as to give a true and fair view of the financialposition of the Group and of the Company as of 31 December 2009 and of their financial performance and cash flows for the yearthen ended.

Manulife Holdings Berhad (24851-H) 104independent auditors’ reportTo the members of Manulife Holdings BerhadREPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTSIn accordance with the requirements of the Companies Act, 1965 in Malaysia, we also report the following:(a)(b)(c)(d)In our opinion, the accounting and other records and the registers required by the Act to be kept by the Company and itssubsidiaries of which we have acted as auditors have been properly kept in accordance with the provisions of the Act.We have considered the financial statements and the auditors’ reports of the subsidiaries of which we have not acted asauditors, which are indicated in note 8 to the financial statements.We are satisfied that the financial statements of the subsidiaries that have been consolidated with the Company’s financialstatements are in form and content appropriate and proper for the purposes of the preparation of the financial statements ofthe Group and we have received satisfactory information and explanations required by us for those purposes.The audit reports on the financial statements of the subsidiaries did not contain any qualification or any adverse commentmade under Section 174(3) of the Act.OTHER MATTERSThis report is made solely to the members of the Company, as a body, in accordance with Section 174 of the Companies Act, 1965in Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report.PRICEWATERHOUSECOOPERS(No. AF: 1146)Chartered AccountantsSHIRLEY GOH(No. 1778/08/10 (J))Chartered AccountantKuala Lumpur18 March 2010

105Annual Report 2009regionalsupport centres

Manulife Holdings Berhad (24851-H) 106head officemanagementList of OfficersManulife Holdings BerhadGroup Chief Executive OfficerMICHAEL CHAN YUI LUNGFCMA, HKICPA, HKRFP, LIMRAVice President, Human ResourcesROSLIN BIN ASTHERMHRMgt & IR, DBS, ACSHead, Distribution Admin & MarketingSUSAN ONG CHAR KWEEMBA, ACS, FLMIVice President, Legal & ComplianceJASBENDER KAURLLB (Hons), CLPVice President, Head of AgencyJEFFRIE TEH CHENG KEATDip. Marketing, MCIMManulife Insurance BerhadChief Executive OfficerKEVIN D. MCWHINNEYB.A (Hons), CLU, CHFC, CFP, LLIFAsst Vice President, InsuranceOperationsWILLIAM NG CHENG CHUANDip. Med. Asst., FLMI, ALHCAsst Vice President, ProductDevelopmentGRACE LEE YING HUIB.Sc Act & Mathematics, ACS, FLMIAppointed ActuaryLEO NG HO LAIB.Maths, FSA, FCIAAsst Vice President, Manulife Training& DevelopmentJOSEPH A. ILLINGWORTHProfessional Business Coach,ACII (UK), CHFC, CLU, RFP, CFPAsst Vice President, Manulife AgencyYAP KOON YUMB.Econ (Hons), CIAMChief Operating OfficerTANG LOON KHOONB.Acct (Hons), CPA (M), CA(M)Asst Vice President, ActuarialTAN CHUE CHAUB.Sc Mathematics, FSAAsst Vice President, FinanceTHAM KOK YOKEFCCA, CA(M)Manulife Unit Trusts BhdChief Executive OfficerYAP SUAT YENB.A (Hons)Asst Vice President, Unit TrustsERIC CHEE WENG WAHB.Econ (Hons), CFP, RFC, RFPManulife Asset Management (Malaysia) Sdn BhdChief Executive OfficerJASON CHONG SOON MINB.Sc (Hons) Economics & FinanceAsst Vice President,(Fixed Income)HO SU-ANNB.A (Hons) FinanceAsst Vice President, (Equities)TOCK CHIN HUICFA, CPA, B.Acct

107Annual Report 2009list ofpropertiesas at 31 December 2009LocationLand Area(sq.ft)Built Up Area(sq.ft)TenureApprox Ageof Building(Years)Net BookValue(RM’000)LastRevaluation(Year)Menara Manulife6, Jalan GelenggangDamansara Heights50490 Kuala LumpurMalaysia(18 storey building)46,997 181,831 Freehold 12 88,242 2009The above properties are for office and commercial use.Revaluation policies on landed properties.Properties are revalued in accordance with the requirement of Regulatory Authorities.

Manulife Holdings Berhad (24851-H) 108analysis ofshareholdingsas at 30 April 2010Authorised Share Capital : RM125,000,000Issued and Paid-up : RM101,185,000 comprising 202,370,000 Ordinary Shares of 50 sen eachClass of Shares : Ordinary Shares of 50 sen eachVoting Rights : 1 vote per Ordinary ShareNo. of shareholders : 3,579Size of ShareholdingsNo. ofShareholders% ofShareholdersNo. of Shares% of IssuedCapital1-99 236 6.59 7,627 0.00100 to 1,000 875 24.45 688,635 0.341,001 to 10,000 1,912 53.42 8,043,008 3.9810,001 to 100,000 460 12.85 13,952,798 6.90100,001 to less than 5% of issued shares 95 2.66 87,067,599 43.025% of issued shares and above 1 0.03 92,610,333 45.76Total 3,579 100.00 202,370,000 100.00SUBSTANTIAL SHAREHOLDERS ACCORDING TO THE REGISTER OF SUBSTANTIAL SHAREHOLDERSNameShareholdings% of IssuedCapitalManulife Century Holdings (Netherlands) B.V 92,610,333 45.76DIRECTORS’ SHAREHOLDINGS ACCORDING TO THE REGISTER OF DIRECTORS’ SHAREHOLDINGSNameNo. of SharesDirect% of IssuedShare CapitalNo. of SharesIndirect% of IssuedShare CapitalTan Sri Dato’ Mohd Sheriff Bin Mohd Kassim 50,000 0.02 - -Datuk Ismail Bin Haji Ahmad 20,000 0.01 - -Save as disclosed above, none of the Directors have any direct and deemed interest in the Company.

109Annual Report 2009analysis of shareholdingsas at 30 April 201030 LARGEST SHAREHOLDERSName1 HSBC NOMINEES (ASING) SDN BHDEXEMPT AN FOR THE BANK OF NEW YORK MELLON[manulife century holdings (netherlands) b.v]No. ofShareholdings% of IssuedCapital92,610,333 45.762 MAYBAN NOMINEES (TEMPATAN) SDN BHDMAYBAN TRUSTEES BERHAD FOR PUBLIC REGULAR SAVINGS FUND9,260,733 4.583 AMANAHRAYA TRUSTEES BERHADPUBLIC SMALLCAP FUND7,167,500 3.544 AMANAHRAYA TRUSTEES BERHADPUBLIC SAVINGS FUND5,085,000 2.515 AMANAHRAYA TRUSTEES BERHADPUBLIC GROWTH FUND4,993,166 2.476 AMANAHRAYA TRUSTEES BERHADPUBLIC EQUITY FUND4,523,500 2.247 EMPLOYEES PROVIDENT FUND BOARD 4,279,690 2.118 MAYBAN NOMINEES (TEMPATAN) SDN BHDMAYBAN TRUSTEES BERHAD FOR PUBLIC AGGRESSIVE GROWTH FUND3,942,066 1.959 AMANAHRAYA TRUSTEES BERHADPUBLIC SECTOR SELECT FUND3,835,700 1.9010 HSBC NOMINEES (ASING) SDN BHDBNP PARIBAS SECS SVS LUX FOR ABERDEEN GLOBAL3,511,800 1.7411 AMANAHRAYA TRUSTEES BERHADPUBLIC ENHANCED BOND FUND3,071,500 1.5212 AMANAHRAYA TRUSTEES BERHADPUBLIC DIVIDEND SELECT FUND3,069,200 1.5213 MAYBAN NOMINEES (TEMPATAN) SDN BHDABERDEEN ASSET MANAGEMENT SDN BHD FORTHE EMPLOYEES’ PROVIDENT FUND BOARD2,790,000 1.3814 MAYBAN NOMINEES (TEMPATAN) SDN BHDMAYBAN TRUSTEES BERHAD FORPUBLIC BALANCED FUND2,554,500 1.2615 AMANAHRAYA TRUSTEES BERHADPUBLIC SOUTH-EAST ASIA SELECT FUND2,076,100 1.03

Manulife Holdings Berhad (24851-H) 110analysis of shareholdingsas at 30 April 201030 LARGEST SHAREHOLDERS (Cont’d)Name16 ALLIANCEGROUP NOMINEES (TEMPATAN) SDN BHDPHEIM ASSET MANAGEMENT SDN BHD FOR EMPLOYEES PROVIDENT FUNDNo. ofShareholdings% of IssuedCapital1,928,400 0.9517 HSBC NOMINEES (ASING) SDN BHDEXEMPT AN FOR BNP PARIBAS SECURITIES SERVICES (SINGAPORE - SGD)1,425,000 0.7018 YEOH KEAN HUA 1,190,000 0.5919 GAN TENG SIEW REALTY SDN. BERHAD 1,091,000 0.5420 MAYBAN NOMINEES (TEMPATAN) SDN BHDABERDEEN ASSET MANAGEMENT SDN BHD FORMALAYSIAN TIMBER COUNCIL (ENDOWMENT FUND)1,064,300 0.5321 FU, CHEN SHU-CHEN 980,700 0.4822 CHENG WEN-YIH 923,000 0.4623 HSBC NOMINEES (ASING) SDN BHDBBH AND CO BOSTON FOR GENESIS ASEAN OPPORTUNITIES FUND (GEMOFPLC)700,366 0.3524 LEE HUNG FONG 644,980 0.3225 GHS CAPITAL SDN BHD 634,600 0.3126 MOHD ARIS @ NIK ARIFF BIN NIK HASSAN 628,000 0.3127 MAYBAN NOMINEES (TEMPATAN) SDN BHDABERDEEN ASSET MANAGEMENT SDN BHD FORMALAYSIAN TIMBER COUNCIL (OPERATING FUND)615,000 0.3028 KEY DEVELOPMENT SDN. BERHAD 564,000 0.2829 ARSHAD BIN AYUB 550,875 0.2730 NEOH CHOO EE & COMPANY, SDN. BERHAD 500,000 0.25Total 166,211,009 82.13

proxyformI/We(FULL NAME AND NRIC/PASSPORT NO./COMPANY NO. IN BLOCK LETTERS)ofbeing a member/members of the abovenamed Company, hereby appoint(FULL NAME AND NRIC/PASSPORT NO. IN BLOCK LETTERS)or failing him THE CHAIRMAN OF THE MEETING as my/our proxy to vote for me/us on my/our behalf, at the Thirty-Fourth AnnualGeneral Meeting of the Company to be held on Monday, 28 June 2010 at 10.00 a.m. and at any and every adjournment thereof.My/Our proxy is to vote on the business before the meetings as indicated below (if no indication is given my/our proxy will vote orabstain from voting at his discretion):-No. Resolution For Against1. Directors’ Report and Audited Financial Statements2. Declaration of Dividend3. Mr Robert Allen Cook4. Mr Gianni Fiacco5. Tan Sri Dato’ Mohd Sheriff Bin Mohd Kassim6. Datuk Ismail Bin Haji Ahmad7. Directors’ Remuneration in respect of 20098. Re-appointment of Auditors9. Special Business – Ordinary ResolutionDated this day of 2010Number of Shares HeldCDS Account No.Signature(s)/Seal of the Shareholder(s)Notes:1. In respect of deposited securities, only members whose names appear in the Record of Depositors on 21 June 2010 (“General Meeting Recordof Depositors”) shall be eligible to attend the meeting.2. A member of the Company entitled to attend and vote at this meeting is entitled to appoint a proxy or an attorney to attend and vote in his stead.A proxy or attorney need not be a member of the Company.3. If the appointer is a corporation, the form of proxy or power of attorney should be executed under its common seal or under the hand of a personduly authorised.4. A member shall not be entitled to appoint more than two (2) proxies to attend and vote at the same meeting and where two (2) proxies areappointed, a member shall specify the proportion of his holdings to be represented by each proxy, failing which the appointment shall beinvalid.5. The instrument appointing a proxy or a power of attorney must be deposited at Securities Services (Holdings) Sdn. Bhd. of Level 7, MenaraMilenium, Jalan Damanlela, Pusat Bandar Damansara, Damansara Heights, 50490 Kuala Lumpur not less than 48 hours before the timeappointed for holding the meeting.

Fold hereaffixstampTHE COMPANY SECRETARYMANULIFE HOLDINGS BERHAD (24851-H)C/O Securities Services (Holdings) Sdn BhdLevel 7, Menara MileniumJalan DamanlelaPusat Bandar DamansaraDamansara Heights50490 Kuala LumpurFold here

Manulife Holdings Berhad (24851-H)12th Floor, Menara Manulife,6 Jalan Gelenggang, Damansara Heights,50490 Kuala Lumpur, Malaysia.Tel : 603 - 2719 9228Fax : 603 - 2095 3804www.manulife.com.my