EXPOSURE DRAFT DATED 10 OCTOBER 2012 THIS DOCUMENT- HAS NOT BEEN REGISTERED WITH THE SECURITIES COMMISSION MALAYSIA (“SC”). THE INFORMATION IN THIS DOCUMENT MAY BE SUBJECT TO FURTHER AMENDMENTS BEFORE THIS DOCUMENT IS REGISTERED WITH THE SC* UNDER NO CIRCUMSTANCES SHALL THIS DOCUMENT CONSTITUTE AN OFFER FOR SUBSCRIPTION OR PURCHASE OF, OR AN IN VITATION TO SUBSCRIBE FOR OR PURCHASE SECURITIES. INFORMATION IN THIS DOCUMENT HAS BEEN SET OUT ON THE ASSUMPTION THAT AIRASIA BERHAD HAS EXERCISED ITS CALL OPTION AND ACQUIRED 20% OF THE ENLARGED ISSUED AND PAID-UP SHARE CAPITAL OF TUNE INS HOLDINGS BERHAD PRIOR TO THE PUBLIC ISSUE (AS DEFINED HEREIN).______PROSPECTUS

1uh£I Insurance

Tune Ins Holdings Berhad (Company No. 948454-K) (Incorporated in Malaysia under the Companies Act, 1965) INITIAL PUBLIC OFFERING OF UP TO [210,224,929] ORDINARY SHARES OF RM0.10 EACH IN TUNE INS HOLDINGS BERHAD (“TIH”) COMPRISING A PUBLIC ISSUE OF UP TO [143,374,929] NEW ORDINARY SHARES OF RM0.10 EACH IN TIH (“TIH SHARES”) (“PUBLIC ISSUE SHARES”) AND AN OFFER FOR SALE OF UP TO [66,850,000] EXISTING TIH SHARES (“OFFER SHARES”) COMPRISING: (D THE INSTITUTIONAL OFFERING OF UP TO [102,028,129] PUBLIC ISSUE SHARES AND UP TO [66,850,000] OFFER SHARES TO: (A) MALAYSIAN INSTITUTIONAL AND SELECTED INVESTORS INCLUDING BUMIPUTERA INVESTORS APPROVED BY THE MINISTRY OF FINANCE; AND (B) FOREIGN INSTITUTIONAL AND SELECTED INVESTORS OUTSIDE THE UNITED STATES IN RELIANCE ON REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AT THE INSTITUTIONAL PRICE TO BE DETERMINED BY WAY OF BOOKBUILDING; AND (II) THE RETAIL OFFERING OF UP TO [41,346,800] PUBLIC ISSUE SHARES TO: (A) MALAYSIAN CITIZENS, COMPANIES, CO-OPERATIVES, SOCIETIES AND INSTITUTIONS; AND (B) THE ELIGIBLE DIRECTORS, EMPLOYEES AND PERSONS WHO HAVE CONTRIBUTED TO THE SUCCESS OF TIH AND ITS SUBSIDIARIES, AT THE RETAIL PRICE OF RM[»] PER PUBLIC ISSUE SHARE, SUBJECT TO CLAWBACK AND REALLOCATION PROVISIONS. THE RETAIL PRICE IS PAYABLE IN FULL UPON APPLICATION AND SUBJECT TO A REFUND OF THE DIFFERENCE IN THE EVENT THAT THE FINAL RETAIL PRICE IS LESS THAN THE RETAIL PRICE. THE FINAL RETAIL PRICE WILL EQUAL THE INSTITUTIONAL PRICE, SUBJECT THAT IT WILL NOT EXCEED THE RETAIL PRICE. Principal Adviser, Managing Underwriter and Joint Bookrunner Co-Adviser, Joint Underwriter and Joint Bookrunner

Investment RHB+ ecmlibra Bank RHB INVESTMENT BANK BERHAD ECM LIBRA INVESTMENT BANK BERHAD (682-X) (Company No. 19663-P) A Licensed Merchant Bank (A Participating Organisation of Bursa Malaysia Securities Berhad) A Participating Organisation of Bursa Malaysia Securities Berhad Joint Global Coordinator and Joint Bookrunner Joint Global Coordinator, Joint Underwriter and Joint Bookrunner CLSA CIMB

CIMB Investment Bank Berhad (18417-M) (A Participating Organisation of Bursa Malaysia Securities Berhad) INVESTORS ARE ADVISED TO READ AND UNDERSTAND THE CONTENTS OF THIS PROSPECTUS. IF IN DOUBT, PLEASE CONSULT A PROFESSIONAL ADVISER. THERE ARE CERTAIN RISK FACTORS WHICH PROSPECTIVE INVESTORS SHOULD CONSIDER. PLEASE REFER TO SECTION 4 HEREIN FOR “RISK FACTORS”. LISTING SOUGHT: MAIN MARKET OF BURSA MALAYSIA SECURITIES BERHAD THIS PROSPECTUS IS DATED [•] 2012 Company No. 948454-K

RESPONSIBILITY STATEMENTS

The Directors and Promoters (as defined in this Prospectus) of our Company as well as the Offeror, namely, Tune Money Sdn Bhd have seen and approved this Prospectus. They collectively and individually accept foil responsibility for the accuracy of the information contained in this Prospectus. Having made all reasonable enquiries, and to the best of their knowledge and belief, they confirm there is no false or misleading statement or other facts which if omitted, would make any statement in this Prospectus false or misleading.

RHB Investment Bank Berhad, being the Principal Adviser for our initial public offering (“IPO”), acknowledges that, based on all available information, and to the best of its knowledge and belief, this Prospectus constitutes a full and true disclosure of all material facts concerning our IPO.

ECM Libra Investment Bank Berhad, being the Co-Adviser for our IPO, acknowledges that, based on all available information, and to the best of its knowledge and belief, this Prospectus constitutes a full and true disclosure of all material facts concerning our IPO.

Although CLSA Singapore Pte Ltd is a Joint Global Coordinator and Joint Bookrunner in the Institutional Offering (other than in respect of the offering to Bumiputera investors approved by the Ministry of Finance), it will not be underwriting any portion of the Institutional Offering and the Retail Offering in Malaysia, and, as such, disclaims any responsibility for the Institutional Offering and the Retail Offering in Malaysia.

[You should note that any agreements by the Managing Underwriter and Joint Underwriters named in this Prospectus to underwrite our Shares under the Underwriting Agreement (as defined herein) are not to be taken as an indication of the merits of our Shares being offered.]

STATEMENTS OF DISCLAIMER

[The Securities Commission of Malaysia (“SC”) had on [•] approved our IPO and a copy of this Prospectus has been registered with the SC on [•]. The approval, and registration of this Prospectus, should not be taken to indicate that the SC recommends our IPO or assumes the responsibility for the correctness of any statement made or opinion or report expressed in this Prospectus. The SC has not, in any way, considered the merits of our Shares being offered for investment.]

The SC is not liable for any non-disclosure on our part and takes no responsibility for the contents of this Prospectus, makes no representation as to its accuracy or completeness, and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Prospectus.

YOU SHOULD RELY ON YOUR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE IPO AND AN INVESTMENT IN US. IF YOU ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN, YOU SHOULD CONSULT YOUR STOCKBROKERS, BANK MANAGERS, SOLICITORS, ACCOUNTANTS OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY.

[Approval has been obtained from Bursa Malaysia Securities Berhad (“Bursa Securities”) for the listing of and quotation for our entire issued and paid-up capital comprising ordinary shares of RM0.10 each in our Company (“Shares”). Our admission to the Official List of Bursa Securities is not to be taken as an indication of the merits of the invitation, our corporation or our securities. Bursa Securities shall not be liable for any non­ disclosure on our part and takes no responsibility for the contents of this Prospectus, makes no representation as to its accuracy or completeness, and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this Prospectus.]

[A copy of this Prospectus, together with the application forms, has also been lodged with the Registrar of Companies of Malaysia who takes no responsibility for its contents.]

i Company No. 948454-K

OTHER STATEMENTS

You are advised to note that recourse for false or misleading statements or acts made in connection with this Prospectus is directly available through sections 248, 249 and 357 of the Capital Markets & Services Act 2007 (“CMSA”).

Securities listed on Bursa Securities are offered to the public premised on full and accurate disclosure of all material information concerning the issue for which any of the persons set out in section 236 of the CMSA, e.g. directors and advisers, are responsible.

The distribution of this Prospectus and our IPO are subject to the laws of Malaysia. This Prospectus will not be distributed outside Malaysia except insofar as it is part of the offering memorandum distributed to foreign institutional and selected investors outside Malaysia in connection with our IPO. Our Board, Promoters, Offeror, Principal Adviser, Co-Adviser, Joint Global Coordinators, Joint Bookrunners, Managing Underwriter and Joint Underwriters named in this Prospectus have not authorised and take no responsibility for the distribution of this Prospectus outside Malaysia except insofar as it is part of the offering memorandum distributed to foreign institutional and selected investors outside Malaysia in connection with our IPO. No action has been taken to permit a public offering of our Shares in any jurisdiction other than Malaysia based on this Prospectus. Accordingly, this Prospectus may not be used for the purpose of and does not constitute an offer for subscription or purchase or invitation to subscribe for or purchase Shares offered under our IPO in any jurisdiction or in any circumstances in which an offer is not authorised or lawful or to any person to whom it is unlawful to make such offer or invitation. The distribution of this Prospectus and the sale of our Shares offered under our IPO in certain jurisdictions may be restricted by law. Persons who may be in possession of this Prospectus are required to inform themselves of and to observe such restrictions.

This Prospectus is published solely in connection with our IPO. Our Shares being offered in our IPO are offered solely on the information contained and the representations made in this Prospectus. Our Board, Promoters, Offeror, Principal Adviser, Co-Adviser, Joint Global Coordinators, Joint Bookrunners, Managing Underwriter and Joint Underwriters have not authorised anyone to provide any information or to make representation not contained in this Prospectus. Any information or representation not contained in this Prospectus must not be relied upon as having being authorised by our Board, Promoters, Offeror, Principal Adviser, Co-Adviser, Joint Global Coordinators, Joint Bookrunners, Managing Underwriter and Joint Underwriters or any of their respective directors or any other persons involved in our IPO.

This Prospectus has been prepared in the context of an IPO under the laws of Malaysia. It does not comply with the laws of any jurisdiction other than Malaysia and has not been and will not be lodged, registered or approved pursuant to or under any applicable securities or equivalent legislation or by any regulatory authority of any jurisdiction other than Malaysia.

Our Shares have not been and will not be registered under the US Securities Act (as defined herein), and subject to certain exemptions, may not be offered, sold, pledged or transferred within or into the United States (“IJS*’), except pursuant to an exemption under the US Securities Act. Our Shares are being offered and sold to investors outside the US in offshore transactions in reliance upon Regulation S under the US Securities Act.

Our Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission in the US or any other US regulatory authority, nor have any of the foregoing authorities passed upon or endorsed the merits of the IPO or the accuracy or adequacy of this Prospectus. Any representation to the contrary is a criminal offence in the US.

The acceptances of applications for our Shares is conditional upon permission being granted by Bursa Securities for the quotation of the entire enlarged issued and paid-up share capital of our Company on the Main Market of Bursa Securities. Accordingly, all monies paid in respect of all applications will be returned in full without interest to the applicants if the aforesaid permission is not granted within 6 weeks from the date of issue of this Prospectus (or such longer period as may be specified by the SC), provided that our Company is notified by Bursa Securities within the aforesaid timeframe. If such monies are not refunded in full within 14 days after we become liable to do so, the provision of sub-section 243(2) of the CMSA shall apply accordingly.

ii Company No. 948454-K

ELECTRONIC PROSPECTUS

This Prospectus can also be viewed or downloaded from the Bursa Securities' website at www.bursamalavsia.com. The contents of the Electronic Prospectus (as defined herein) and the copy of this Prospectus registered with the SC are the same.

You may also obtain a copy of the Electronic Prospectus from the website of RHB Bank Berhad at http://www.rhb.com.my, the website of CIMB Investment Bank Berhad at http://www.eipocimb.com, the website of Malayan Banking Berhad at www.maybank2u.com.my, the website of CIMB Bank Berhad at http://www.cimbclicks.com.my, the website of Public Bank Berhad at http://www.pbebank.com and the website of Affin Bank Berhad at http://www.affinOnline.com.

You are advised that the internet is not a fully secured medium, and that your Internet Share Application (as defined herein) may be subject to the risks of problems occurring during the data transmission, computer security threats such as viruses, hackers and crackers, faults with computer software and other events beyond the control of the Internet Participating Financial Institutions (as defined herein). These risks cannot be borne by the Internet Participating Financial Institutions.

If you are in doubt about the validity or integrity of an Electronic Prospectus, you should immediately request from us, the Principal Adviser, Co-Adviser or issuing house, a paper printed copy of this Prospectus.

In the event of any discrepancy arising between the contents of the Electronic Prospectus and the contents of the paper printed copy of this Prospectus for any reason whatsoever, the contents of the paper printed copy of this Prospectus which are identical to the copy of the Prospectus registered with the SC shall prevail.

In relation to any reference in this Prospectus to third party internet sites (referred to as “Third Party Internet Sites”), whether by way of hyperlinks or by way of description of the third party internet sites, you acknowledge and agree that:

(i) we and our Principal Adviser and Co-Adviser do not endorse and are not affiliated in any way with the Third Party Internet Sites and are not responsible for the availability of, or the contents or any data, information, files or other material provided on the Third Party Internet Sites. You shall bear all risks associated with the access to or use of the Third Party Internet Sites;

(ii) we and our Principal Adviser and Co-Adviser are not responsible for the quality of products or services in the Third Party Internet Sites, for fulfilling any of the terms of your agreements with the Third Party Internet Sites. We and our Principal Adviser and Co-Adviser are also not responsible for any loss or damage or costs that you may suffer or incur in connection with or as a result of dealing with the Third Party Internet Sites or the use of or reliance of any data, information, files or other material provided by such Third Party Internet Sites; and

(iii) any data, information, files or other material downloaded from the Third Party Internet Sites is done at your own discretion and risk. We and our Principal Adviser and Co-Adviser are not responsible, liable or under obligation for any damage to your computer system or loss of data resulting from the downloading of any such data, information, files or other material.

Where an Electronic Prospectus is hosted on the website of the Internet Participating Financial Institutions, you are advised that:

(i) the Internet Participating Financial Institutions are only liable in respect of the integrity of the contents of an Electronic Prospectus, to the extent of the contents of the Electronic Prospectus situated on the web server of the Internet Participating Financial Institutions and shall not be responsible in any way for the integrity of the contents of an Electronic Prospectus which has been downloaded or otherwise obtained from the web server of the Internet Participating Financial Institutions and thereafter communicated or disseminated in any manner to you or other parties; and

iii Company No. 948454-K

(ii) while all reasonable measures have been taken to ensure the accuracy and reliability of the information provided in an Electronic Prospectus, the accuracy and reliability of an Electronic Prospectus cannot be guaranteed as the internet is not a fully secured medium.

The Internet Participating Financial Institutions shall not be liable (whether in tort or contract or otherwise) for any loss, damage or costs, you or any other person may suffer or incur due to, as a consequence of or in connection with any inaccuracies, changes, alterations, deletions or omissions in respect of the information provided in an Electronic Prospectus which may arise in connection with or as a result of any fault or faults with web browsers or other relevant software, any fault or faults on your or any third party’s personal computer, operating system or other software, viruses or other security threats, unauthorised access to information or systems in relation to the website of the Internet Participating Financial Institutions, and/or problems occurring during data transmission, which may result in accurate or incomplete copies of information being downloaded or displayed on your personal computer.

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iv Company No. 948454-K

INDICATIVE TIMETABLE

The indicative timing of events leading up to the listing of and quotation for our entire enlarged issued and paid- up share capital on the Main Market of Bursa Securities is set out below:

EVENT TENTATIVE DATE I TIME

Opening of the Institutional Offering [•] 2012

Opening of the Retail Offering [•] 2012 at 10.00 a.m.

Closing of the Retail Offering [•] 2012 at 5.00 p.m.

Closing of the Institutional Offering [•] 2012 Price Determination Date [•] 2012 Balloting of the Public Issue Shares offered under the Retail Offering [•] 2012

Allotment/Transfer of the Public Issue Shares/Offer Shares to successful [•] 2012 applicants

Listing on the Main Market of Bursa Securities [•] 2012

Applications for the Public Issue Shares under the Retail Offering will open and close at the time and dates stated above or such other date or dates as our Board, Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners in their absolute discretion may decide. The Institutional Offering will open and close on the dates stated above or such other date or dates as our Board, the Offeror, Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners in their absolute discretion may decide.

In the event that the closing date and/or time of either the Institutional Offering or the Retail Offering is extended, the Price Determination Date and the dates for the balloting of applications for the Public Issue Shares offered under the Retail Offering, allotment/transfer of the Public Issue Shares/Offer Shares to successful applicants and our Listing may be extended accordingly. Any extension will be announced in widely circulated Bahasa Malaysia and English daily newspapers within Malaysia.

All terms used are defined under “Presentation of Financial and Other Information” and “Definitions” commencing on pages vi and viii respectively.

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v Company No. 948454-K

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Ail references to “our Company” or “TIH” in this Prospectus are to Tune Ins Holdings Berhad, while references to “our Group” or “TIH Group” are to our Company and our subsidiary companies. References to “we”, “us”, “our” and “ourselves” are to our Company or our Group or any member of our Group, as the context requires. References to “Offeror” are to Tune Money Sdn Bhd.

Certain abbreviations, acronyms and technical terms used are defined in the “Definitions” section of this Prospectus. Words denoting the singular shall include the plural and vice versa and words denoting the masculine gender shall, where applicable, include the feminine and neuter genders and vice versa. Reference to persons shall include companies and corporations.

Unless otherwise stated, any reference to dates and times in this Prospectus shall be a reference to dates and times in Malaysia.

Any reference to any enactment in this Prospectus shall be a reference to that enactment as for the time being amended or re-enacted.

This Prospectus includes statistical data provided by us and various third parties and cites third party projections regarding growth and performance of the industries in which our Group operates. This data is taken or derived from information published by industry sources and from our internal data. In each such case, the source is stated in this Prospectus; provided that where no source is stated, it can be assumed that the information originates from us.

In particular, certain information in this Prospectus is extracted or derived from the report prepared by Strategic Airport Planning Ltd and Milliman Limited, the independent market researchers. We believe that the statistical data and projections cited in this Prospectus are useful in helping you understand the major trends in the industries in which we operate. However, neither we nor our advisers have independently verified these data. Neither we nor our advisers make any representation as to the correctness, accuracy or completeness of such data, hence accordingly, you should not place undue reliance on the statistical data cited in this Prospectus. Similarly, third party projections cited in this Prospectus are subject to significant uncertainties that could cause actual data to differ materially from the projected figures. We give no assurance that the projected figures will be achieved and you should not place undue reliance on the third party projections cited in this Prospectus.

The information on our website or any website directly or indirectly linked to such website does not form part of this Prospectus and you should not rely on it.

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vi Company No. 948454-K

FORWARD-LOOKING STATEMENTS

This Prospectus includes forward-looking statements, which include all statements other than those of historical facts including among others, those regarding our Group’s financial position, business strategies, plans and objectives of our Group for future operations. Some of these statements can be identified by words that have a bias towards or are forward-looking such as “may”, “will”, “would”, “could”, “believe”, “expect”, “anticipate”, “intend”, “estimate”, “aim”, “plan”, “forecast” or similar expressions. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond our Group’s control that could cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. As such, we cannot assure you that the forward-looking statements in this Prospectus will be realised.

Such forward-looking statements are based on numerous assumptions regarding our Group’s present and future business strategies and the environment in which our Group operates. Additional factors that could cause our Group’s actual results, performance or achievements to differ materially include, but are not limited to, those discussed in Section 4 - “Risk Factors”, Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and Section 12 - “Pro Forma Financial Information” of this Prospectus.

These forward-looking statements are based on information available to us as at the date of this Prospectus. Subject to the provisions of Section 238 of the CMSA, we expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this Prospectus to reflect any changes in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

You will be deemed to have read and understood the descriptions of the assumptions and uncertainties underlying the forward-looking statements that are contained herein.

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vii Company No. 948454-K

DEFINITIONS

Unless otherwise defined or the context otherwise requires, the following definitions shall apply throughout this Prospectus:

1H Six months ended 30 June

AA Distribution The distribution agreement(s) signed between our Company and AirAsia. Agreement(s) collectively or individually as the context requires

AA Lifestyle Protection The lifestyle protection product currently branded as “AirAsia INSURE Plan Lifestyle Protection Plan” which is offered to customers of AirAsia in Malaysia, Thailand and Indonesia

Act Companies Act, 1965, as amended from time to time and any re-enactment thereof

ADA Authorised Depository Agent

Air Asia AirAsia Berhad and its affiliates, namely PT Indonesia AirAsia, Thai AirAsia Co. Ltd, AirAsia X Sdn. Bhd., AirAsia Inc and AirAsia Japan Co., Ltd, collectively or individually as the context requires

Air Asia Expedia AAE Travel Pte. Ltd., a joint venture between AirAsia Berhad and Expedia Inc.

Application Form(s) The printed application form(s) for the application of our IPO Shares accompanying this Prospectus

ATM(s) Automated Teller Machine(s)

AUD or Australian Dollar Australian Dollar, the lawful currency of Australia

Authorised Financial The authorised financial institution(s) participating in the Internet Share Institution Application with respect to payments for the Public Issue

BNM Bank Negara Malaysia

Board Board of Directors of TIH

Bursa Depository Bursa Malaysia Depository Sdn Bhd

Bursa Securities Bursa Malaysia Securities Berhad

ByLaws Bylaws governing the Employees’ Share Option Scheme

CAGR Compound annual growth rate

Capital OCA Capital OCA Berhad, a wholly-owned subsidiary of TIMB

CCM Companies Commission of Malaysia

CDS Central Depository System

CDS Account An account established by Bursa Depository for a depositor for the recording of deposits or withdrawals of securities and for dealings in such securities by the depositor

viii Company No. 948454-K

DEFINITIONS (Cant’d)

Central Depositories Act The Securities Industry (Central Depositories) Act, 1991, as amended from time to time and any re-enactment thereof

CIMB CIMB Investment Bank Berhad

CLSA CLSA Singapore Pte Ltd

CMSA Capital Markets and Services Act, 2007, as amended from time to time and any re-enactment thereof

ECM Libra or Co-Adviser ECM Libra Investment Bank Berhad

Electronic Prospectus Copy of this Prospectus that is issued, circulated or disseminated via the Internet and/or electronic storage medium, including but not limited to, CD-ROMs and thumb drives

Employees’ Share Option Employees’ share option scheme with respect to the grant of options to eligible Scheme employees and Directors of our Group

EPS Earnings per share

Equity Guidelines Equity Guidelines issued by the SC, as amended or expanded from time to time

ESA or Electronic Share Application for our Public Issue Shares through a Participating Financial Application Institution’s ATM

EY or Reporting Ernst & Young Accountants

Final Retail Price The final price per BPO Share equivalent to the Institutional Price, subject that it will not exceed the Retail Price

FY Financial year ended/ending 31 December

GDP Gross domestic product

IMR Report Independent market research report prepared by the Independent Market Researchers as included in Section 7 of this Prospectus

Independent Market S-A-P and Milliman Researchers

Indonesian Rupiah Indonesian Rupiah, the lawful currency of Indonesia

Institutional Offering Offering by our Company and the Offeror of up to [102,028,129] Public Issue Shares and up to [66,850,000] Offer Shares at the Institutional Price, subject to clawback and reallocation, to the following:

(i) Malaysian institutional and selected investors including Bumiputera investors approved by MOF; and

(ii) foreign institutional and selected investors outside the United States in reliance on Regulation S under the US Securities Act

Institutional Price Price per IPO Share to be paid by investors pursuant to the Institutional Offering which will be determined on the Price Determination Date by way of bookbuilding

ix Company No. 948454-K

DEFINITIONS (Cant’d)

Insurance Act : Insurance Act, 1996, as amended from time to time and any re-enactment thereof

Internet Participating : The participating financial institution(s) for Internet Share Application as listed Financial Institution^) in Section 16 of this Prospectus

Internet Share Application : Application for the Public Issue Shares through an Internet Participating Financial Institution

IP : Intellectual Property

IPO : Initial public offering comprising the Institutional Offering and the Retail Offering

IPO Share(s) : The Public Issue Shares and the Offer Shares, collectively

ISO : International Organisation for Standardisation

Issuing House : Malaysian Issuing House Sdn Bhd

Joint Bookrunners : RHB Investment Bank, ECM Libra, CLSA and CIMB, collectively

Joint Global Coordinators : CLSA and CIMB, collectively

Joint Underwriters : RHB Investment Bank, ECM Libra and CIMB, collectively

Labuan FSA : ILabuan Financial Services Authority

LFSSA : Labuan Financial Services and Securities Act, 2010, as amended from time to time and any re-enactment thereof

Listing : The admission to the Official List of Bursa Securities and the listing of and quotation for TIH’s entire enlarged issued and paid-up share capital of RM[75,176,000.90] comprising [751,760,009] Shares on the Main Market of Bursa Securities

Listing Requirements : Main Market Listing Requirements of Bursa Securities, as amended or expanded from time to time

LPD : [15 August 2012], being the latest practicable date prior to the issuance of this Prospectus

Market Day : Any day between Monday and Friday (both days inclusive) which is not a public holiday and on which Bursa Securities is open for trading of securities

MFRS : Malaysian Financial Reporting Standards

Milliman : Milliman Limited, the independent insurance consultant

MOF : The Ministry of Finance

NA : Net assets

NAV : Net assets value

NBV : Net book value

x Company No. 948454-K

DEFINITIONS (Co/it’d)

N/A : Not applicable

Offer for Sale : The offer for sale of the Offer Shares by the Offeror at the Institutional Price under the Institutional Offering

Offer Share(s) : Up to [66,850,000] Shares to be offered for sale by the Offeror pursuant to the Offer for Sale

Official List : A list specifying all securities which have been admitted for listing on the Main Market of Bursa Securities and not removed

Participating Financial : The participating financial institution(s) for the ESA as listed in Section 16 of Institution^) this Prospectus

PAT : Profit after taxation

PBT : Profit before taxation

Pink Form Shares : Up to [3,758,800] Public Issue Shares representing approximately [0.50%] of the enlarged and issued share capital of TIH which are reserved for application by the eligible Directors, employees and persons who have contributed to the success of our Group

PE Multiple : Price-eamings multiple

Price Determination Date : Date on which the Institutional Price and the Final Retail Price will be determined

Promoters) : TMSB, Tune Group Sdn Bhd, Tan Sri Dr Anthony Francis Fernandes, Dato’ Kamarudin Bin Meranun, Dato’ Seri Kalimullah Bin Masheerul Hassan and Lim Kian Onn, collectively

Prospectus : This prospectus dated [•] 2012 in relation to our IPO

Public Issue : Public issue of up to [143,374,929] Public Issue Shares by our Company comprising the following:

(i) the Institutional Offering of up to [102,028,129] Public Issue Shares at the Institutional Price; and

(ii) the Retail Offering at the Retail Price

Public Issue Share(s) : The new TIH Shares to be issued pursuant to the Public Issue

Retail Offering : Offering of up to [41,346,800] Public Issue Shares, subject to clawback and reallocation, to the Malaysian citizens, companies, co-operatives, societies and institutions and eligible Directors, employees and persons who have contributed to the success of our Group at the Retail Price, payable in Ml upon application and subject to a refund of the difference in the event that the Final Retail Price is less than the Retail Price

Retail Price : Initial price of RM[»] per Public Issue Share to be fully paid by the applicants pursuant to the Retail Offering subject to the adjustment as detailed in Section 3.5.1 of this Prospectus

xi Company No. 948454-K

DEFINITIONS (Cont’d)

RHB Investment Bank or RHB Investment Bank Berhad Principal Adviser or Managing Underwriter

Rules of Bursa Depository The rules issued by Bursa Depository

RGA Global RGA Global Reinsurance Company Ltd (Labuan Branch)

RM or Malaysian Ringgit Ringgit Malaysia and sen, respectively, the lawful currency of Malaysia and sen

S-A-P Strategic Airport Planning Ltd, the independent aviation consultant

SARS Severe Acute Respiratory Syndrome

SC Securities Commission Malaysia

SGD or Singapore Dollar Singapore Dollar, the lawful currency of Singapore

Sq. Ft. Square feet

Sq. m Square metre

Thai Baht Thai baht, the lawful currency of Thailand

TIH Tune Ins Holdings Berhad (948454-K)

TIH Group TIH and its subsidiary companies (including TIMB from its date of acquisition on 23 May 2012)

TIH Share(s) or Share(s) Ordinary share(s) of RM0.10 each in TIH

TIL Tune Insurance (Labuan) Ltd, our 80.0%-owned subsidiary

TIPG Our key online insurance software, Tune Insurance Policy Gateway

TIMB Tune Insurance Malaysia Berhad (formerly known as Oriental Capital Assurance Berhad), our 83.26%-owned subsidiary

TIMB Acquisition The acquisition of 83.26% of TIMB

TIMB Group TIMB and its subsidiary, Capital OCA

TMGR Tune Money GenRe Ltd, our wholly-owned subsidiary

TMLR Tune Money Life Re Ltd, our wholly-owned subsidiary

TMSB or Offeror Tune Money Sdn Bhd

Travel Protection Plan The travel insurance product currently branded as “AirAsia INSURE Travel Protection Plan” which is offered to the customers of AirAsia and underwritten by our local insurance partners, and in Malaysia by TIMB, our 83.26%-owned subsidiary commencing September 2012

Tune Companies Tune group of companies including Tune Hotels, collectively or individually as the context requires

xii Company No. 948454-K

DEFINITIONS (Cont’d)

Tune Hotels BCA : The business collaboration and outsourcing agreement dated 2 November2011 between TMSB and Tune Hotels, which was amended and novated in our favour by TMSB on 1 September 2012

Tune Hotels : Tune Hotels Regional Services Sdn Bhd

Tune Hotels Lifestyle : The lifestyle protection product which is offered to customers of Tune Hotels in Protection Plan Malaysia

Tune Hotels Personal : The personal accident product which is offered to customers of Tune Hotels in Accident Plan Malaysia and Indonesia

Underwriting Agreement : The underwriting agreement dated [*] 2012 made between the Company and the Joint Underwriters for the underwriting of up to [•] Public Issue Shares

US or United States : United States of America

USD or US Dollar : United States Dollar, the lawful currency of the United States

US Securities Act : United States Securities Act of 1933, as amended

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xiii Company No. 948454-K

DEFINITIONS (Cont’d)

Technical References cedant when an insurer transfers its risk by paying certain amount of premium to reinsurer, the insurer is the cedant cede transfer from insurer to reinsurer (of risk or premium) countries and territories countries and territories which our Travel Protection Plan are available to customers of AirAsia, which includes China, Hong Kong and Macau density rates with reference to insurance, means gross non-life premium per capita earned seats seats comprising seats sold to passengers (including no-shows), seats provided for promotional purposes and seats provided to staff for business travel facultative reinsurance the reinsurance of all or a portion of the insurance provided by a single policy. Each policy reinsured is separately negotiated. Facultative reinsurance is normally purchased by insurers where individual risks are not covered by their reinsurance treaties, for amounts in excess of the dollar limits of their reinsurance treaties or for unusual risks. Although underwriting expenses for facultative reinsurance are typically higher than expenses for reinsurance treaties, the underwriter can separately evaluate each risk reinsured and price the policy more accurately insurer the company selling/underwriting the insurance protection insured/policy holder the person/entity buying and covered by the insurance policy or the person/entity covered by the insurance policy non-proportional (excess of reinsurance that indemnifies the insured against all or a specified portion of loss) reinsurance individual or aggregated loss amounts exceeding the amount set forth in the reinsurance treaty penetration rates with reference to insurance, means the percentage of gross total non-life premium over GDP policies issued or policies with reference to travel insurance or our Travel Protection Plan, means reinsured certificates issued under our master agreement, which could be for one or more sectors depending on how many sectors are booked at the point of purchase. Therefore, “policies issued” or “policies reinsured” does not equate to “earned seats” flown. A “sector” means a single journey encompassing a single point of departure and a single point of arrival proportional reinsurance reinsurance whereby the reinsurer shares risks and losses with the ceding company in the same proportion as it shares premiums and policy amounts quota-share a form of proportional reinsurance in which the reinsurer assumes an agreed percentage of each insurance being reinsured reinsurance a financial transaction by which risk is transferred (ceded) from an insurer (cedant) to a reinsurer in exchange for a reinsurance premium reinsurance treaty a general reinsurance agreement between the cedant and the reinsurer containing terms applicable to the reinsurance of some class or classes of business, in contrast to a reinsurance agreement covering an individual risk

xiv xv Company No. 948454-K

TABLE OF CONTENTS

PAGE

1. CORPORATE DIRECTORY...... 1

2. SUMMARY INFORMATION...... 5

2.1 Overview...... 5 2.2 Financial Highlights...... 8 2.3 Dividend Policy...... 12 2.4 Summary of Our IPO...... 12 2.5 Risk Factors...... 14

3. PARTICULARS OF OUR IPO ...... 17

3.1 Introduction...... 17 3.2 Our IPO...... 18 3.3 Share Capital...... 23 3.4 Purpose of Our IPO...... 23 3.5 Pricing of Our IPO Shares...... 24 3.6 Dilution...... 25 3.7 Use of Proceeds...... 26 3.8 Brokerage, Underwriting Commission and Placement Fee...... 28 3.9 Salient Terms of the Underwriting Agreement...... 28

4. RISK FACTORS...... 29

4.1 Risks Relating to Our Business...... 29 4.2 Risks Relating to Our Industry ...... 46 4.3 Risks Relating to an Investment in Our Shares...... 48

5. INFORMATION ON OUR GROUP...... 52

5.1 Our History...... 52 5.2 Share Capital...... 54 5.3 Subsidiary Companies...... 54 5.4 Capital Expenditure and Divestitures...... 57 5.5 Key Achievements and Milestones...... 57

6. BUSINESS OVERVIEW...... 59

6.1 Overview...... 59 6.2 Our Key Competitive Strengths...... 60 6.3 Our Strategy and Future Plans...... 62 6.4 Our Products, Customers and Distribution Channels...... 64 6.5 Reinsurance and Retrocession...... 70 6.6 Marketing, Sales and Distribution...... 71 6.7 Claims Management...... 73 6.8 Information Technology...... 74 6.9 Risk Management and Internal Controls...... 74 6.10 Insurance...... 75

xvi Company No. 948454-K

TABLE OF CONTENTS (Cont’d)

6.11 Competition...... 75 6.12 Research and Development...... 76 6.13 Licences...... 76 6.14 Properties and Fixed Assets...... 76 6.15 Intellectual Property...... 79 6.16 Customers and Suppl iers...... 80 6.17 Business Interruption...... 81 6.18 Dependency on Commercial Contracts...... 81 6.19 Seasonality of the Business...... 83

7. INDUSTRY OVERVIEW...... 84

8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL...... 170

8.1 Promoters...... 170 8.2 Substantial Shareholders...... 176 8.3 Board of Directors...... 184 8.4 Audit and Risk, Nomination and Remuneration Committees...... 192 8.5 Key Management and Key Technical Personnel...... 197 8.6 Declarations by Promoters, Directors, Key Management and Key Technical Personnel...... 205 8.7 Family Relationships and Associations...... 205 8.8 Benefits Paid or Intended to be Paid...... 205 8.9 Service Agreements with Directors, Key Management and Key Technical Personnel...... 205 8.10 Information on Employees...... 206

9. APPROVALS AND CONDITIONS...... 210

9.1 Approvals from Relevant Authorities...... 210 9.2 Moratorium on Sale of Shares...... 211

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST...... 212

10.1 Related Party Transactions...... 212 10.2 Transactions That are Unusual in Nature or Conditions...... 223 10.3 Interests in Similar Businesses, Interests in Businesses of Our Customers or Suppliers and Other Conflicts of Interest...... 223 10.4 Loans Made by Our Group to or for the Benefit of Related Parties...... 223 10.5 Declaration by Advisers...... 224

11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS...... 228

11.1 Overview...... 228 11.2 Basisof Presentation...... 229 11.3 Factors Affecting Our Results of Operations...... 230 11.4 Results of Operations...... 241 11.5 Liquidity and Capital Resources...... 250 11.6 Indebtedness...... 252 11.7 Capital Expenditure...... 252 11.8 Key Financial Ratios...... 252

xvii Company No. 948454-K

TABLE OF CONTENTS (Cont’d)

11.9 Contingent Liabilities, Capital Commitments and Off-Balance Sheet Arrangements...... 254 11.10 Market Risks...... 255 11.11 Government, Economic, Fiscal and Monetary Policies...... 256 11.12 Inflation...... 256 11.13 Order Book...... 256 11.14 Prospects and Trends...... 256 11.15 Critical Accounting Policies...... 257 11.16 Changes in Accounting Framework...... 258 11.17 Recent Accounting Pronouncements...... 258

12. PRO FORMA FINANCIAL INFORMATION...... 260

12.1 Basis of Presentation...... 260 12.2 Pro Forma Adjustmentsto Consolidated Statements of Comprehensive Income...... 261 12.3 Reporting Accountant’s Letter on the UnauditedProforma Consolidated Financial Information...... 277

13, ACCOUNTANTS’ REPORT...... 294

14. DIRECTORS’ REPORT...... 485

15. ADDITIONAL INFORMATION...... 487

15.1 Share Capital...... 487 15.2 Articles of Association...... 487 15.3 Employees’ Share Option Scheme...... 492 15.4 Material Contracts...... 493 15.5 Material Litigation, Claims or Arbitration...... 493 15.6 Regulations...... 494 15.7 Repatriation of Capital and Remittance of Profit...... 500 15.8 Public T ake-0 ver Offers...... 500 15.9 Consents...... 500 15.10 Documents Available for Inspection...... 500 15.11 Responsibi lity Statement...... 501

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE...... 502

16.1 Opening and Closing of Application...... 502 16.2 Eligibility...... 502 16.3 Category of Investors...... 502 16.4 Procedures for Application...... 503 16.5 Authority of Our Directors and Our Issuing House...... 516 16.6 Over/Under-Subscription...... 517 16.7 Unsuccessful/Partially Successful Applicants...... 517 16.8 Successful Applicants...... 518 16.9 CDS Accounts...... 518 16.10 Enquiries...... 519 16.11 ListofADAs...... 520

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME...... 535

xviii Company No. 948454-K

1. CORPORATE DIRECTORY

BOARD OF DIRECTORS

Name/Designation Address Occupation Nationality

Razman Hafidz Bin Abu 8C-3A-1 Company Director Malaysian Zarim Sri Mumi Condominium Chairman, Independent Non- 8 Lorong Kota 4 Executive Director 50480 Kuala Lumpur

Tan Sri Dr Anthony Francis 37-2, Bangsar Heights Company Director Malaysian Fernandes Jalan Kaloi Non-Independent Non- Off Jalan Kurau Executive Director 59100 Kuala Lumpur

Tan Hong Kheng B-5-2, Kiaramas Sutera Banker Malaysian Non-Independent Non- No 7 Jalan Desa Kiara Executive Director 50480 Kuala Lumpur

Ng Soon Lai @ Ng Siek 20, Jalan Setia Mumi 6 Company Director Malaysian Chuan Damansara Heights Independent Non-Executive 50490 Kuala Lumpur Director

AUDIT AND RISK COMMITTEE

Name Designation Directorship Ng Soon Lai @ Ng Siek Chuan Chairman Independent Non-Executive Director Razman Hafidz Bin Abu Zarim Member Chairman, Independent Non­ Executive Director Tan Hong Kheng Member Non-Independent Non-Executive Director

NOMINATION COMMITTEE

Name Designation Directorship Ng Soon Lai @ Ng Siek Chuan Chairman Independent Non-Executive Director Razman Hafidz Bin Abu Zarim Member Chairman, Independent Non­ Executive Director

Tan Sri Dr Anthony Francis Member Non-Independent Non-Executive Fernandes Director

1 HEAD OFFICE : No. 36, Jalan Ampang 50450 Kuala Lumpur Malaysia Tel. No.: (603) 2070 2828 Fax. No.: (603) 2072 4150 Email: [email protected] Website: www.tuneinsurance.com

AUDITORS AND REPORTING Ernst & Young (AF 0039) ACCOUNTANTS Level 23 A, Menara Milenium Jalan Damanlela Pusat Bandar Damansara 50490 Kuala Lumpur Malaysia Tel. No.: (603) 7495 8000 Fax. No.: (603) 2095 9076 / 9078

SOLICITORS : As Malaysian Counsel to the Company

Foong & Partners Suite 21.08, Level 21, Plaza 138 138 Jalan Ampang 50450 Kuala Lumpur Malaysia Tel. No.: (603) 2713 2822 Fax. No.: (603) 2713 1822

As International Counsel to the Company as to certain matters o f United States federal securities law and English law

WongPartnership LLP

2 Company No. 948454-K

1. CORPORATE DIRECTORY (Cont’d)

One George Street #20-01 Singapore 049145 Tel. No.: (65) 6416 8000 Fax. No.: (65) 6532 5711

: As Malaysian Counsel to the Joint Global Coordinators, Joint Bookrunners and Joint Underwriters

Zaid Ibrahim & Co Level 19, Menara Milenium Pusat Bandar Damansara 50490 Kuala Lumpur Malaysia Tel. No.: (603) 2087 9999 Fax. No.: (603) 2094 4888 / 4666

As International Counsel to the Joint Global Coordinators, Joint Underwriters and Joint Bookrunners as to certain matters of United States federal securities law

Baker & McKenzie.Wong & Leow 8 Marina Boulevard #05-01 Marina Bay Financial Centre Tower 1 Singapore 018981 Tel. No.: (65) 6338 1888 Fax. No.: (65) 6337 5100

INDEPENDENT MARKET : Strategic Airport Planning Ltd RESEARCHERS 1324 Jones St, Suite 6 San Francisco, CA 94109 United States of America Tel. No.: 1 (415) 577 2127 Fax. No.: 1 (978) 246 6031

Milliman Limited Unit 3901-02 AIA Tower 183 Electric Road, North Point Hong Kong Tel. No.: (852) 2147 9678 Fax. No.: (852) 2147 9879

PRINCIPAL BANKERS : CIMB Bank Berhad 5 th Floor, Bangunan CIMB Jalan Semantan Damansara Heights 50490 Kuala Lumpur Malaysia Tel. No.: (603) 2093 0379 Fax. No.: (603) 2093 9688

: RHB Bank Berhad Level 7, Tower 2, RHB Centre Jalan Tun Razak 50400 Kuala Lumpur Tel. No.: (603) 9287 8888 Fax. No.: (603) 9287 4246

3 4 Company No. 948454-K

2. SUMMARY INFORMATION

THIS INFORMATION SUMMARY SETS OUT THE SALIENT INFORMATION CONTAINED IN THIS PROSPECTUS. YOU SHOULD READ AND UNDERSTAND THIS INFORMATION SUMMARY TOGETHER WITH THE FULL TEXT OF THIS PROSPECTUS BEFORE YOU DECIDE WHETHER TO INVEST IN OUR SHARES.

2.1 OVERVIEW

2.1.1 Our History and Business

We were incorporated under the Act on 14 June 2011 as a private limited company under the name of Tune Ins Holdings Sdn Bhd, and was subsequently converted to a public company on 17 August 2012 and assumed our present name to facilitate our listing on the Main Market of Bursa Securities.

We are an underwriter, directly and via reinsurance, of general and life insurance products across the Asia-Pacific region, operating two core businesses, an online insurance business through which we sell insurance products to customers as part of their online booking process with our online partners, and a general insurance business, currently only in Malaysia, through our 83.26%-owned subsidiary, TIMB,

Our online insurance business comprises primarily our Travel Protection Plan and we facilitated the issuance of approximately 5.6 million Travel Protection Plan policies to AirAsia customers in FY2011 and 3.0 million Travel Protection Plan policies to AirAsia customers in 1H2012 as reinsurers. Our online insurance business is now underpinned by exclusive long-term agreements with AirAsia. In addition to our relationship with AirAsia, we have entered into a contractual arrangement with Tune Hotels and are considering entering into similar long-term arrangements with other partners within the Tune Companies.

As the exclusive insurance product manager for AirAsia and Tune Hotels, we design and manage both general and life insurance products for their customers pursuant to 10-year agreements with AirAsia Berhad, AirAsia Japan Co., Ltd and Tune Hotels (expiring in 2022), 15-year agreements with certain other affiliates of AirAsia Berhad (namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd. and AirAsia Inc, expiring in 2027) and a 5-year agreement with Thai AirAsia Co. Ltd (expiring in 2017). These arrangements provide us with the opportunity to market to AirAsia’s and Tune Hotels’ substantial pool of customers, in addition to our own extensive database. We utilise the distribution channels of both AirAsia and the Tune Hotels, primarily their respective online booking websites, to offer these products to their customers as part of their booking process, and we arrange for local insurance partners to underwrite these products. In accordance with these arrangements with local insurance partners, we reinsure a portion of the risk associated with the writing of each policy. Where necessary, in order to optimise our risk-adjusted returns and to manage our own underwriting exposure, we have external reinsurance arrangements with highly-rated global reinsurance companies, as well as with national reinsurers.

We believe that our exclusive relationship with AirAsia places us in a unique position to benefit from the growth in travel within the Asia-Pacific region and particularly the increasing number of AirAsia’s customers.

TIL was incorporated on 27 March 2009 and is licensed to operate as an offshore captive insurer in Labuan. TIL was established as a 80:20 joint venture between TMSB and Multi-Purpose Capital Holdings Berhad with the primary purpose of reinsuring general insurance underwritten by Multi­ Purpose Insurans Bhd, a wholly-owned subsidiary of Multi-Purpose Capital Holdings Berhad. Multi­ Purpose Insurans Bhd is an insurance provider that, through a contractual relationship with AirAsia, negotiated agreements with local insurance partners outside Malaysia on AirAsia’s behalf with respect to AirAsia’s travel insurance, and underwrote such policies in Malaysia. Multi-Purpose Insurans Bhd also provided certain management functions to us in FY2009 and FY201Q.

5 Company No. 948454-K

SUMMARY INFORMATION (Cont’d)

TMGR and TMLR were incorporated on 10 February 2011 and 6 April 2011 respectively as wholly- owned subsidiaries of TMSB. On 26 May 2011, TMGR obtained a licence to carry on Labuan general reinsurance business in, from or through Labuan and on 15 June 2011, TMLR was issued a licence to carry on Labuan life reinsurance business in, from or through Labuan. Our Company was subsequently established in June 2011 and we acquired TIL, TMGR and TMLR from TMSB in October 2011 to consolidate our insurance business. With the acquisitions and the introduction of our new management at the end of 2010 and the beginning of 2011, we took over many of the management functions previously provided by Multi-Purpose Insurans Bhd to us.

In May 2012, we acquired an established Malaysian general insurance business, TIMB, which has approximately 1,000 agents and 16 branches throughout Malaysia as at the LPD and through which we cany out our general insurance business. This acquisition enables us to underwrite general insurance policies directly in Malaysia, as well as to offer a broader range of insurance products. Following our acquisition of TIMB, AirAsia terminated their agreement with Multi-Purpose Insurans Bhd, and the termination took effect on 3 September 2012.

Pursuant to the AA Distribution Agreements, we are the exclusive insurance product manager for AirAsia and effective 4 September 2012, our subsidiary, TEMB, underwrites the Travel Protection Plan directly in Malaysia.

We currently conduct the underwriting of our general and life reinsurance business across the Asia- Pacific region through TMGR and TMLR. We have also channelled our business previously conducted through TIL to TMGR.

We are actively pursuing acquisition targets in other Southeast Asia markets, specifically Indonesia and Thailand, to enable us to own general insurers in these markets and through which we can underwrite our online insurance business and offer products through other channels to these fast growing and sizeable markets whose insurance needs are under-served.

Our current Group structure is as follows:

TIH

Investment holding

1 | 80% (1) | 100% , 100% 83.26% ® r ,

TIL TMGR | TMLR k f TIMB ' J • J

Captive Insurance General Reinsurance Life Reinsurance General Insurance

| 100%

Capital OCA

Dormant

Notes:

0) The remaining 20% o f the equity interest in TIL is held by Multi-Purpose Capital Holdings Berhad (2) The remaining 16.74% o f the equity interest in TIMB is held by the minority shareholders o f TIMB

6 Company No. 948454-K

2. SUMMARY INFORMATION (Coin’d)

Please refer to Sections 5 and 6 of this Prospectus respectively for further information on our Group and our business.

2.1.2 Our Key Competitive Strengths

We believe that the following are our key competitive strengths:

(a) Strong and exclusive relationship with AirAsia across the region;

(b) Successful and regionally scalable business model that represents a compelling proposition for all stakeholders;

(c) Ability to tap extensive “digital” database to sell ancillary insurance products online;

(d) Benefit from attractive Southeast Asia general insurance market fundamentals; and

(e) Experienced management team and strong shareholder support.

Please refer to Section 6.2 of this Prospectus for further information on our key competitive strengths.

2.1.3 Our Strategy and Future Plans

We aim to strengthen our position as an underwriter of general and life insurance products across the Asia-Pacific region via the following strategies:

(a) Leverage on the growth of AirAsia’s businesses;

(b) Replicate our business model with new partners, whether travel partners or otherwise, and increase our product offerings to customers of our existing online partners;

(c) Improve Take-up Rates in our online insurance business to increase revenue;

(d) Integrate TIMB to capture additional revenue and cost synergies, and diversify product offerings; and

(e) Enhance revenue streams through appropriate acquisitions in Southeast Asia.

Please refer to Section 6.3 of this Prospectus for further information on our strategy and future plans.

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7 Company No. 948454-K

2. SUMMARY INFORMATION (Cant’d)

2.2 FINANCIAL HIGHLIGHTS

2.2.1 Consolidated Statements of Comprehensive Income and Financial Position of our Group for FY2009, FY2010, FY2011,1H2011 and 1H2012

The financial information of our Group as set out below are based on the financial statements for the relevant financial years/period covered in the Accountants’ Report and which have been audited (for the periods as indicated below) by the Reporting Accountants for the purposes of the Listing.

Consolidated Statements of Comprehensive Income

Audited Unaudited Audited Audited Audited 1H2012 1H2011 2011 2010 2009 TIH Group RM'000 RM’000 RM’000 RM’000 RM’000

Operating revenue 67,693 26,807 55,870 43,523 30,049

Gross earned premiums 65,851 26,807 55,493 43,523 30,049 Premiums ceded to reinsurers (19,440) (505) (1,063) (803) (524) Net earned premiums 46,411 26,302 54,430 42,720 29,525

Investment income 1,842 377 Realised gains and losses 1,061 •- -- Fees and commission income 1,360 ---- Other operating income 886 - 26 -- Other revenue 5,149 - 403 --

Gross claims paid (12,910) (366) (1,123) ' (1,222) (127) Claims ceded to reinsurers 3,629 ---- Gross change to contract liabilities (2,974) (572) (819) (302) (925) Change in contract liabilities ceded to 2,254 * ” ” reinsurers Net claims (10,001) (938) (1,942) (1,524) (1,052)

Fee and commission expenses (12,563) (8,637) (17,292) (14,473) (11,062) Management expenses (6,608) (95) (1,404) (202) (178) Other operating expenses (1,309) - - (99) - Finance cost (2,733) - - -- Other expenses (23,213) (8,732) (18,696) (14,774) (11,240)

Profit before taxation 18,346 16,632 34,195 26,422 17,233 Taxation (1,713) (20) (20) (20) (20) Net profit for the year/period 16,633 16,612 34,175 26,402 17,213 Gain on fair value changes of AFS 12 -- - - investments Total comprehensive income for the 16,645 16,612 34,175 26,402 17,213 year/period

Total comprehensive income attributable to: Equity attributable to owners of the 13,967 13,290 27,255 21,122 13,770 parent Non-controlling interests 2,678 3,322 6,920 5,280 3,443 16,645 16,612 34,175 26,402 17,213

Earnings per share attributable to owners of the parent (RM per share) Basic 1.0 13,290.0 6.8 N/A N/A

8 Company No. 948454-K

2. SUMMARY INFORMATION (Cont’d)

Consolidated Statements of Financial Position

Audited Unaudited Audited Audited Audited 1H2012 IH201I 2011 2010 2009 TIH Group RM'000 RM'000 RM'000 RM’000 RM’000

Assets

Property and equipment 10,197 4 3 4 -

Investment property 2,406 ----

Intangible assets 123 ----

Goodwill 29,696 ----

Investments 478,400 - 24,715 -- Reinsurance assets 153,777 240 223 228 154 Insurance receivables 70,009 22,909 16,771 26,806 17,503 Other receivables 28,395 - 63 -- Cash and bank balances 23,525 388 8,555 456 677 Total assets 796,528 23,541 50,330 27,494 18,334

Equity

Share capital 14,238 - 14,238 -- Merger (deficit)/reserve (13,838) 400 (13,838) 400 400

Available-for-sale reserves 10 ---- Retained earnings 33,655 9,734 19,698 12,843 8,650 Equity attributable to owners of the 34,065 10,134 20,098 13,243 9,050 parent Non-controlling interests 29,695 2,533 1,631 3,311 2,263 Total equity 63,760 12,667 21,729 16,554 11,313

Liabilities Insurance contract liabilities 462,668 10,483 10,481 9,465 6,552

Deferred tax liabilities 869 ----

Provision for taxation - 20 20 20 20

Borrowings 129,453 ---- Insurance payables 61,894 267 156 1,397 358 Retirement benefits 1,069 ---- Other payables 76,815 104 17,944 58 91 Total liabilities 732,768 10,874 28,601 10,940 7,021

Total equity and liabilities 796,528 23,541 50,330 27,494 18,334

2.2.2 Pro Forma Consolidated Statements of Comprehensive Income

The following table sets out our pro forma consolidated statements of comprehensive income for FY2009, FY2010, FY2011,1H2011 and 1H2012, which is the adjustments made for TIMB as if it had been acquired on 27 March 2009, which have been prepared for illustrative purposes only and based on the assumption that our current Group structure has been in existence throughout the financial years/periods under review.

You should read these pro forma consolidated statements of comprehensive income in conjunction with the accompanying notes and assumptions included in the Reporting Accountants’ Letter on Pro Forma Consolidated Financial Information as set out in Section 12.3 of this Prospectus and the Accountants’ Report as set out in Section 13 of this Prospectus.

9 Company No. 948454-K

2. SUMMARY INFORMATION (Cont’d)

— Pro forma — 1H2012 1H2011 2011 2010 2009 TIH Group RM’000 RM’000 RM'000 RM’000 RM'000

Operating revenue 181,349 148,422 319,331 300,789 268,923

Gross earned premium 172,689 141,015 301,263 287,669 256,329 Premiums ceded to reinsurers (67,626) (50,275) (90,408) (122,287) (117,911) Net earned premiums 105,063 90,740 210,855 165,382 138,418

Investment income 8,750 7,407 18,068 13,120 12,594 Realised gains and losses 5,262 3,278 6,060 3,144 4,739 Fees and commission income 8,727 9,184 13,551 15,747 19,329 Other operating income 1,167 68 156 373 123 Other revenue 23,906 19,937 37,835 32,384 36,785

Gross claims paid (54,946) (72,313) (138,293) (130,796) (226,205) Claims ceded to reinsurers 13,554 29,543 55,849 47,533 141,960 Gross changes to contract liabilities (29,989) (4,401) 11,002 47,693 121,222 Change in contract liabilities ceded to 5,357 (7,093) (38,444) (58,084) (125,844) reinsurers Net claims (66,024) (54,264) (109,886) (93,654) (88,867)

Fee and commission expenses (23,308) (22,441) (43,302) (38,304) (36,528) Management expenses (17,331) (14,939) (24,186) (23,43!) (24,046) Other operating expenses (1,309) (2,150) (99) Finance costs (2,733) Other expenses (44,681) (37,380) (69,638) (61,834) (60,574)

Profit before taxation 18,264 19,033 69,166 42,278 25,762 Taxation (1,761) (1,290) (8,738) (5,685) (2,751) Net profit for the period/year 16,503 17,743 60,428 36,593 23,011

Other comprehensive income: Available-for-sale fair value reserves: Gain on fair value changes of AFS 3,766 5,231 6,616 7,233 14,548 investments Realised gain transferred to income (5,257) (3,278) (6,032) (3,089) (4,716) statements Deferred tax relating to components 373 (488) (146) (1,036) (2,459) of other comprehensive income Other comprehensive income, net of (1,118) (1,465) 438 3,108 7,373 taxation Total comprehensive income for the 15,385 19,208 60,866 39,701 30,384 period/year

Profit attributable to: Owners of the parent 13,060 14,232 49,113 29,607 18,597 Non-controlling interests 3,443 3,511 11,315 6,986 4,414 16,503 17,743 60,428 36,593 23,011

Total comprehensive income attributable to: Equity attributable to owners of the parent 12,127 15,451 49,478 32,195 24,736 Non-controlling interests 3,258 3,757 11,388 7,506 5,648 15,385 19,208 60,866 39,701 30,384

10 Company No. 948454-K

SUMMARY INFORMATION (Cont’d)

2.2.3 Pro Forma Consolidated Statements of Financial Position

The following table sets out our pro forma consolidated statements of financial position as at 1H2012, assuming that our Public Issue, Offer for Sale and utilisation of proceeds had been effected as at that date, for illustrative purposes only, and should be read in conjunction with the notes and assumptions included in the Reporting Accountants’ Letter on Pro Forma Consolidated Financial Information as set out in Section 12.3 of this Prospectus.

Audited ------Pro forma------30.06.12 I II 111 IV Y TIH Group RM'000 RM'000 RM’000 RM’000 RM'000 RM’000 Assets Property and equipment 10,197 10,197 10,197 10,197 10,197 10,197 Investment property 2,406 2,406 2,406 2,406 2,406 2,406 Intangible assets 123 123 123 123 123 123 Goodwill 29,696 29,818 29,818 29,818 29,818 29,818 Investments 478,400 478,400 478,400 478,400 478,400 478,400 Reinsurance assets 153,777 153,777 153,777 153,777 153,777 153,777 Insurance receivables 70,009 70,009 70,009 70,009 70,009 70,009 Other receivables 28,395 28,395 28,395 28,395 28,395 28,395 Cash and bank balances 23,525 23,525 13,125 13,125 13,125 45,722 Total assets 796,528 796,650 786,250 786,250 786,250 818,847

Equity Share capital 14,238 14,238 14,238 60,838 60,838 75,175 Share premium ----- 151,012 Available-for-sale reserves 10 10 10 10 10 10 Merger deficit (13,838) (13,838) (13,838) (13,838) (13,838) (13,838) Retained earnings 33,655 33,655 33,655 33,655 33,655 30,355 Equity attributable to owners 34,065 34,065 34,065 80,665 80,665 242,715 of the parent Non-controlling interests 29,695 29,213 29,213 29,213 29,213 29,213 Total equity 63,760 63,278 63,278 109,878 109,878 271,928

Liabilities Insurance contract liabilities 462,668 462,668 462,668 462,668 462,668 462,668 Deferred tax liabilities 869 869 869 869 869 869 Retirement benefits 1,069 1,069 1,069 1,069 1,069 1,069 Term loans 129,453 129,453 129,453 129,453 129,453 - Insurance payables 61,894 61,894 61,894 61,894 61,894 61,894 Other payables 19,815 20,419 20,419 20,419 20,419 20,419 Advances from holding 57,000 57,000 46,600 - - - company 722,972 676,372 546,919 Total liabilities 732,768 733,372 676,372

786,250 Total equity and liabilities 796,528 796,650 786,250 786,250 818,847

Number of ordinary shares in 14,238 14,238 14,238 60,838 608,385 751,760 issue (’000 units)

Net assets (excluding non­ 2.39 2.39 2.39 1.33 0.13 0.32 controlling interests) per

11 Company No. 948454-K

2. SUMMARY INFORMATION (Cont’d)

Audited ------Pro forma------> 30.06.12 II III IV V TIH Group RM'000 RM'000 RM’000 RM'000 RM'000 RM'000 ordinary share (RM)

Net tangible assets 0.31 0.30 0.30 0.84 0.08 0.28 (excluding non-controlling interests and goodwill) per ordinary share (RM)

2.3 DIVIDEND POLICY

Our Company presently does not have any formal dividend policy. The declaration of interim dividends and the recommendation of any final dividends are subject to the discretion of our Board and any final dividend proposed is subject to our shareholders’ approval.

Our ability to pay future dividends to our shareholders is subject to various factors including but not limited to our financial performance, cash flow requirements, availability of distributable reserves and capital expenditure plans.

As our Company is a holding company, our income and therefore, our ability to pay dividends is dependent upon the dividends and other distributions that we receive from our subsidiary companies. The payment of dividends or other distributions by our subsidiary companies to us is subject to the availability of their distributable reserves and their having sufficient funds that are not needed to fund their operations, other obligations or business plans.

For further details on the risk factors relating to dividends, please refer to Sections 4.3(vi) and (vii) of this Prospectus.

2.4 SUMMARY OF OUR IPO

Size of our Institutional : Institutional Offering at the Institutional Price payable in full upon Offering allocation and determined by way ofbookbuilding

Our Company and the Offeror are offering up to [168,878,129] IPO Shares, representing up to [22.46]% of the enlarged issued and paid-up share capital of our Company, to be allocated in the following manner:

(i) Up to [66,850,000] Offer Shares, representing up to [8.89]% of the enlarged issued and paid-up share capital of our Company will be offered to Malaysian institutional and selected investors and foreign institutional and selected investors outside the United States in reliance on Regulation S under the US Securities Act, including Bumiputera investors approved by MOF; and

(ii) Up to [102,028,129] Public Issue Shares, representing up to [13.57]% of the enlarged issued and paid-up share capital of our Company will be offered to Malaysian institutional and selected investors and foreign institutional and selected investors outside the United States in reliance on Regulation S under the US Securities Act, including Bumiputera investors approved by MOF,

12 Company No. 948454-K

2. SUMMARY INFORMATION (Cont’d)

subject to the clawback and reallocation provisions as set out in Section 3.2.3 of this Prospectus. Size of our Retail Offering : Retail Offering at the Retail Price, payable in full upon allocation and subject to refund o f the difference between the Retail Price and the Final Retail Price in the event the Final Retail Price is less than the Retail Price

Our Company is offering up to [41,346,800] Public Issue Shares, representing up to [5.50]% of the enlarged issued and paid-up share capital of our Company, to be allocated in the following manner:

(i) [37,588,000] Public Issue Shares, representing [5.00]% of the enlarged issued and paid-up share capital of our Company, axe available for application by Malaysian citizens, companies, co-operatives, societies and institutions, of which [18,794,000] Public Issue Shares, representing [2.5]% of the enlarged issued and paid-up share capital of our Group, are set aside for Bumiputera individuals, companies, co­ operatives, societies and institutions. Any Public Issue Shares not subscribed by such Bumiputera investors will be made available for application by other Malaysian investors under the Retail Offering; and

(ii) Up to [3,758,800] Public Issue Shares, representing up to [0.5%] of the enlarged issued and paid-up share capital of our Company, for subscription by our eligible Directors, employees and persons who have contributed to the success of our Group in the following manner:

(a) Up to [400,000] Public Issue Shares, representing up to [0.05]% of the enlarged issued and paid-up share capital of our Company, have been reserved for our Directors;

(b) Up to [•] Public Issue Shares, representing up to [•]% of the enlarged issued and paid-up share capital of our Company, have been reserved for [•] eligible employees of our Group, who have been confirmed employees of our Group for at least [•] months as at the LPD and who have not submitted their resignation as at the date of this Prospectus; and

(c) Up to [•] Public Issue Shares, representing up to [•]% of the enlarged issued and paid-up share capital of our Company, have been reserved for [•] persons who have contributed to the success of our Group.

Applicants who apply for Public Issue Shares under (ii) may also apply for Public Issue Shares under (i).

Any remaining Public Issue Shares unallocated to eligible Directors, employees and persons who have contributed to the success of our Group under (ii) will be made available for application by investors

13 Company No. 948454-K

2. SUMMARY INFORMATION (Cant’d)

under (i) above, and subject to clawback and reallocation provisions as set out in Section 3.2.3 of this Prospectus.

Final Retail Price The Final Retail Price will be determined after the Institutional Price is fixed on the Price Determination Date and shall equal the Institutional Price.

In the event that the Final Retail Price is lower than the Retail Price, the difference between the Retail Price and the Final Retail Price will be refunded to successful applicants, without any interest thereon. Further details on the refund mechanism are set out in Section 3.5.3 of this Prospectus.

Prospective retail investors should be aware that the Final Retail Price will be equal to the Institutional Price and will not, in any event, be higher than the Retail Price nor lower than the par value of our Shares.

Utilisation of proceeds The gross proceeds from the Public Issue amounting to RM[«] from the Public Issue million is intended to be utilised in the following manner:

Purpose RM’000 %

[Repayment of bank borrowings] [•] [77.30] [Working capital] [•] [5.84] [Strategic investments] [•] [11.04] [Estimated listing expenses] [•] [5.82]

Total gross proceeds [•} 100.00

Total enlarged issued and [RM75,176,000.90] comprising [751,760,009] Shares paid-up share capital after Listing

Market capitalisation upon RM[«] Listing * Based on the Retail Price and [751,760,009] Shares

Detailed information on our IPO and utilisation of proceeds from the Public Issue are set out in Sections 3.2 and 3.7 respectively of this Prospectus.

2.5 RISK FACTORS

Before investing in our Shares, you should carefully consider, along with other matters in this Prospectus, the risks and investment considerations as set out in Section 4 of this Prospectus (which may not be exhaustive), and are summarised below:

Risks relating to our business: • We are dependent on AirAsia and the success of AirAsia for a substantial portion of our business. • We may not be able to provide our Travel Protection Plan to customers of AirAsia in new target markets in a timely manner or at all. • We may not fulfil certain conditions imposed by BNM relating to our acquisition of TIMB. • We may be unable to successfully integrate TIMB's business.

14 Company No. 948454-K

2. SUMMARY INFORM ATION (Cont’d)

• We may be subject to unknown or contingent liabilities and other inherent operational and actuarial valuation risks relating to TIMB's existing business. • Our acquisitions of new businesses in the future are dependent on a number of factors. • Our business is highly regulated and compliance with current or future requirements may limit our growth or adversely affect our future business. • Our captive insurance and reinsurance business licences with the Labuan FSA are subject to conditions prescribed by Labuan FSA. • We rely on tie-ups with local insurance partners in jurisdictions in which we do not have a physical presence and we rely on our arrangement with RGA Global, our life reinsurance partner for our lifestyle protection plans. • We may be unable to successfully cede our risk. • Failure to secure new distribution channels, as well as any termination or disruption of our existing arrangements under current distribution channels, may have a material adverse effect on our competitiveness and result in a material impact on our financial condition and results of operations. • Any substantial increase in claims in our travel insurance or other general insurance products could have a material adverse effect on our financial condition and results of operations. • Differences between actual benefits and claims experience and underwriting and reserving assumptions, as well as deviations from the assumptions used in pricing our lifestyle protection plans, could have a material adverse effect on our financial condition and results of operations. • Litigation, arbitration and/or regulatory investigations may result in significant financial losses and harm to our reputation. • Our business is affected by market fluctuations and general economic conditions, in particular affecting Southeast Asia from which we generate a substantial amount of our operating revenue. • Our local life insurance partners may be unable to match closely the duration of their assets and liabilities arising from their provision of our life insurance products, which could increase our exposure to interest rate risk. • Increases in the amount of allowances and impairments taken on our investments as well as losses on our investments may have a material adverse effect on our financial condition and results of operations. • Concentration of our investment portfolio in any particular asset class, market or segment of the economy may increase our risk of suffering investment losses. • We have a limited operating history. • We are not rated by any established credit rating agencies. • Our risk management policies and procedures and internal controls, as well as the risk management tools available to us, may not be adequate or effective. • We depend on key management and information technology, investment management, underwriting, sales staff and other personnel, and our business would suffer if we lose their services and are unable to adequately replace them. • If we are not able to attract, motivate and retain agency leaders and individual agents, our competitive position, growth and profitability will suffer. • Agent, employee and local insurance partner misconduct is difficult to detect and could harm our reputation or lead to regulatory sanctions or litigation against us. • Data privacy laws, rules and regulations in our geographical markets could have a material adverse effect on our business, financial condition and results of operations. • The impact of epidemics, international tension, terrorism, war, military actions, natural disasters, climate change or other catastrophes may materially and adversely affect our claims experience, investment portfolio, financial condition and results of operations. • We may need additional capital in the future, and we cannot assure you that we will be able to obtain such capital on acceptable terms or at all.

15 Company No. 948454-K

2. SUMMARY INFORMATION (Cont’d)

• Our business and prospects may be materially and adversely affected if we are not able to manage our growth successfully. • We may undertake investments, acquisitions, distribution arrangements, partnerships and new business lines and strategies, which may not be successful. • Our operations could be disrupted by unexpected network interruptions caused by system failures, natural disasters, terrorist attacks, unauthorised tampering or security breaches of our information technology systems. • Our brand names and intellectual property are important to us. • We may be adversely impacted by volatility in social and political conditions in certain Asian countries where our insurance products are available. • Fluctuations in exchange rates may have a material adverse effect on our business.

Risks relating to our industry: We face significant competition and our business and prospects will be materially harmed if we are not able to compete effectively. The rate of growth of the air-travel industry, travel insurance and general insurance industries in the Asia-Pacific region may not be as high or as sustainable as we anticipate. Government measures and regulations in response to financial and other crises may materially and adversely affect our business. Changes in taxation law or exchange controls may materially and adversely affect our business, financial condition and results of operations. Any outbreak of infectious disease or fear of an outbreak, or any other serious public health concerns in Southeast Asia or elsewhere may have an adverse effect on the economies of certain Southeast Asian countries and may adversely affect us

relating to an investment in our Shares: We are controlled by TMSB and AirAsia Berhad, whose interests may not be aligned with those of our other shareholders. The historical consolidated financial statements and the pro forma financial information contained in this Prospectus may not be accurately reflect our historical financial position, results of operations and cash flows. There has been no prior market for our Shares and the offering of our Shares may not result in an active liquid market for our Shares. . Our Share price may be volatile. There may be a delay in, or termination of, our Listing. We may not be able to pay dividends. We are a holding company and, as a result, are dependent on dividends from our subsidiaries to meet our obligations and to provide funds for payment of dividends on our Shares. The sale, or the possible sale, of a substantial number of our Shares in the public market following our Listing could adversely affect the price of our Shares. Purchasers of our Shares in our Listing will experience immediate and substantial dilution because the Institutional Price and Final Retail Price are higher than our NAV per Share.

THE REST OF THIS PA GE HAS BEEN INTENTIONALL Y LEFT BLANK

16 Company No. 948454-K

3. PARTICULARS OF OUR IPO

3.1 INTRODUCTION

This Prospectus is dated [•] 2012.

We have registered a copy of this Prospectus together with the Application Form with the SC. We have also lodged a copy of this Prospectus, together with the Application Form with the Registrar of Companies. Neither the SC nor the Registrar of Companies takes any responsibility for the contents of this Prospectus.

Bursa Securities had via its letter dated [•] granted its approval for the admission of our Company to the Official List of the Main Market of Bursa Securities and the listing of and quotation for our entire enlarged issued and paid-up share capital of [751,760,009] Shares. Our Shares will be admitted to the Official List of the Main Market of Bursa Securities and official quotation will commence after receipt of confirmation from Bursa Depository that all CDS accounts of the successful applicants have been duly credited and an undertaking that notices of allotment will be issued and dispatched to all successful applicants.

Under Bursa Securities’ trading rules, trading in all Bursa Securities’ listed securities can only be executed through an ADA who is also a Bursa Securities member with effect from the date of listing.

You must have a CDS Account prior to submitting applications for our Shares either by way of the Application Forms or Electronic Share Application. If you do not presently have a CDS Account, you should open a CDS Account at an ADA prior to making an application for our Shares. A corporation or institution cannot apply for the IPO Shares by way of Electronic Share Application.

Pursuant to Section 14(1) of the Central Depositories Act, Bursa Securities has prescribed our Shares as prescribed securities. Therefore, we will deposit the IPO Shares directly with Bursa Depository. Any dealings in our Shares will be carried out in accordance with the Central Depositories Act and the Rules of Bursa Depository. We will not issue share certificates to successful applicants.

Pursuant to the Listing Requirements, at least 25% of the issued and paid-up share capital of our Company must be held by a minimum number of 1,000 public shareholders holding not less than 100 Shares each. We expect to meet the above requirement at the point of Listing. However, if we do not meet the above requirement, we may not be allowed to proceed with our Listing. We will return in full, without interest, monies paid in respect of all applications. If any such monies are not repaid within 14 days after our Company is liable to repay it, the provision of sub-section 243(2) of the CMSA shall apply accordingly.

You should rely only on the information contained in this Prospectus. We or our advisers have not authorised anyone to provide you with information that is different and not contained in this Prospectus. The delivery of this Prospectus or any issue made in connection with this Prospectus shall not, under any circumstances, constitute a representation or create any implication that there has been no change in our affairs since the date of this Prospectus. Nonetheless, should we become aware of any material changes or developments affecting matters as disclosed in this Prospectus from the date of registration of this Prospectus with the SC up to the date of the Listing, we shall further issue a supplemented or replacement prospectus, as the case may be, in accordance with provisions of Section 238 of the CMSA.

The distribution of this Prospectus and the sale of our Shares will not be registered under any securities legislation of any jurisdiction except Malaysia. This Prospectus does not constitute and may not be used for the purpose of any offer to sell or an invitation of an offer to buy any IPO Shares in any jurisdiction and in any circumstance in which such offer or invitation is not authorised or lawful or to any person to whom it is unlawful to make such offer or invitation.

17 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont'd)

YOU SHOULD RELY ON YOUR OWN EVALUATION TO ASSESS THE MERITS AND RISKS OF THE INVESTMENT. IN CONSIDERING THE INVESTMENT, INVESTORS WHO ARE IN ANY DOUBT AS TO THE ACTION TO BE TAKEN SHOULD CONSULT YOUR STOCKBROKERS, BANK MANAGERS, SOLICITORS, ACCOUNTANTS OR OTHER PROFESSIONAL ADVISERS IMMEDIATELY BEFORE APPLYING FOR OUR IPO SHARES.

3.2 OUR IPO

Our IPO (comprising the Institutional Offering and Retail Offering) is subject to the terms and conditions of this Prospectus, and upon acceptance, will be allocated the aggregate of up to [210,224,929] Shares in the manner explained below which is subject to clawback and reallocation provisions as set out in Section 3.2.3 of this Prospectus.

3.2.1 Institutional Offering

Institutional Offering at the Institutional Price payable in full upon allocation and determined by way ofbookbuilding

TIH and the Offeror are offering up to [168,878,129] IPO Shares, representing up to [22.46]% of the enlarged issued and paid-up share capital of our Company, to be allocated in the following maimer:

(i) Up to [66,850,000] Offer Shares, representing up to [8.89]% of the enlarged issued and paid- up share capital of our Company will be offered to Malaysian institutional and selected investors and foreign institutional and selected investors outside the United States in reliance on Regulation S under the US Securities Act, including Bumiputera investors approved by MOF; and

(ii) Up to [102,028,129] Public Issue Shares, representing up to [13.57]% of the enlarged issued and paid-up share capital of our Company, will be offered to Malaysian institutional and selected investors and foreign institutional and selected investors outside the United States in reliance on Regulation S under the US Securities Act, including Bumiputera investors approved by MOF,

subject to the clawback and reallocation provisions as set out in Section 3.2.3 of this Prospectus.

3.2.2 Retail Offering

Retail Offering at the Retail Price, payable in full upon allocation and subject to refund of the difference between the Retail Price and the Final Retail Price in the event the Final Retail Price is less than the Retail Price

TIH is offering up to [41,346,800] Public Issue Shares, representing up to [5.50]% of the enlarged issued and paid-up share capital of our Company, to be allocated in the following manner:

(i) [37,588,000] Public Issue Shares, representing [5.00]% of the enlarged issued and paid-up share capital of our Company, are available for application by Malaysian citizens, companies, co-operatives, societies and institutions, of which [18,794,000] Public Issue Shares, representing [2.5]% of the enlarged issued and paid-up share capital of our Company, are set aside for Bumiputera individuals, companies, co-operatives, societies and institutions. Any Public Issue Shares not subscribed by such Bumiputera investors will be made available for application by other Malaysian investors under the Retail Offering; and

(ii) Up to [3,758,800] Public Issue Shares, representing up to [0.5%] of the enlarged issued and paid-up share capital of our Company, for subscription by our eligible Directors, employees and persons who have contributed to the success of our Group in the following manner:

18 19 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

Employees and persons who have contributed to the success o f our Group

The details of allocation of the Pink Form Shares to the eligible employees and persons who have contributed to the success of our Group are as follows:

Category of eligible employees No. of persons No. of Pink Form Shares allocated Managerial and professional r Technical and supervisory Executives and sales personnel Clerical and related occupations

Persons who have contributed to the [•] [•] success of our Group ______Total _[•]______L*L

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

20 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

The details and the shareholdings of the Offeror before and after the Offer for Sale are as follows:

< — Before IPO — > < ------Offer for Sale------> < — After IPO — > % of %of Relationship 'with the Group Share Capital Enlarged for the past No. of Shares % held No. of Shares as at the LPD* Share No. of Shares % held Offeror / Registered Address three years Capital** TMSB Promoter [486,708,080] [80.00] [66,850,000] [10.99] [8.89] [419,858,080] [55.85] B-13-15, Level 13 Menara Prima Tower B Jalan PJU 1/39 Dataran Prima 47301, Petaling Jaya Selangor Darul Ehsan

Notes: * Based on the existing issued and paid-up share capital o f [608,385,080] TIH Shares, i.e. before the IPO. ** Based on the issued and paid-up share capital o f [751,760,009] TIH Shares after the IPO.

3.2.3 Clawback and reallocation

The Retail Offering and Institutional Offering shall be subject to the following clawback and reallocation provisions:

(i) If the IPO Shares allocated to the Bumiputera investors approved by MOF under the Institutional Offering are not fully taken up, the IPO Shares which are not taken up will be made available to other Malaysian and foreign institutional and selected investors under the Institutional Offering, subject to satisfying the excess demand of the IPO Shares by the Bumiputera public investors under the Retail Offering as set out in Section 3,2,2(i) above;

(ii) Subject to Section 3.2.3(i) above, the Public Issue Shares allocated to eligible Directors, employees and persons who have contributed to the success of our Group which are not fully taken up, subject to satisfying the excess demand of the Public Issue Shares under the Retail Offering, will be made available to other Malaysian and foreign institutional and selected investors under the Institutional Offering;

(iii) Subject to Sections 3.2.3(i) and (ii) above, if there is an under-application in the Institutional Offering and a corresponding over-application in the Retail Offering, the IPO Shares may be clawed back from the Institutional Offering and allocated to the Retail Offering; and

(iv) Subject to Sections 3.2.3(i) and (ii) above, if there is an under-application in the Retail Offering and a corresponding over-application in the Institutional Offering, the Public Issue Shares may be clawed back from the Retail Offering and allocated to the Institutional Offering.

21 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

Save for Section 3.2.3(i) above, the clawback and reallocation provisions above shall not apply in the event of over-application in both the Retail Offering and the Institutional Offering.

THE REST OF THIS PA GE HAS BEEN INTENTIONALLY LEFT BLANK

22 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

3.3 SHARE CAPITAL

RM

Authorised share capital 150,000,000.00 1,500,000,000 ordinary shares of RM0.10 each

Issued and fully paid-up share capital as at the date o f this Prospectus 608,385,080 ordinary shares of RM0.10 each 60,838,508.00

To be issued and credited as fully paid-up pursuant to our Public Issue [143,374,929] new ordinaiy shares of RM0.10 each [14,337,492.90]

Enlarged issued and paid-up share capital upon Listing [751,760,009] ordinary shares of RM0.10 each [75,176,000.90]

Based on the Retail Price and [751,760,009] Shares, the total market capitalisation of our Company on the Main Market of Bursa Securities upon Listing would be approximately [•] million.

We have only one class of shares in our Company, namely ordinary shares of RM0.10 each. The IPO Shares will upon allotment rank pari passu in all respects with one another and all other existing issued and paid-up share capital in our Company, including voting rights and the rights to all dividends and other distributions that may be declared subsequent to the date of allotment of the IPO Shares.

Subject to any special rights attached to any shares which we may issue in the future, our shareholders shall, in proportion to the capital paid up on the Shares held by them, be entitled to share in the whole of the profits paid out by us as dividends and other distributions, and in the event of our liquidation, our shareholders shall be entided to any surplus in proportion to the capital paid up at the commencement of the liquidation, in accordance with our Articles of Association and the provisions of the Act.

Each shareholder is entitled to vote at our general meetings in person or by proxy or by attorney and on a show of hands, every person present who is a shareholder or authorised representative or proxy or attorney of a shareholder shall have one vote, and on a poll, every shareholder present in person or by proxy or by attorney or other duly authorised representative shall have one vote for each Share held. A proxy may but need not be a member of our Company, or a qualified legal practitioner, or an approved company auditor, or a person approved by CCM and the provisions of Section 149{l)(b) of the Act shall not apply to our Company.

3.4 PURPOSE OF OUR IPO

The purpose of our IPO is:

fi) to enable us to gain access to the capital market to raise funds for our future expansion and growth when the need arises in the future, through other forms of capital raising avenues;

(ii) to provide an opportunity for investors and institutions to participate in the continuing growth of our Group; and

(iii) to enhance our stature and heighten our public profile as well as increase market awareness of our products and services so as to assist us in expanding our customer base.

23 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

3.5 PRICING OF OUR IPO SHARES

3.5.1 The Retail Price

The Retail Price was determined and agreed upon by our Board, Promoters, Offeror, Joint Global Coordinators and Joint Bookrunners, after taking into account the prevailing market conditions and the following factors:

(i) Our operating history, financial performance and financial position as described in Sections 6, 11 and 12 of this Prospectus;

(ii) Our pro forma consolidated NA per share of [RM*] per Share, computed based on our Group’s pro forma NA of [RM*] million as at [•] 2012 and our enlarged issued and paid-up share capital pursuant to the Listing of [751,760,009] Shares;

(iii) Our key competitive strengths in terms of our:

• strong and exclusive relationship with AirAsia across the region; • successful and regionally scalable business model that represents a compelling proposition for all stakeholders; • ability to tap extensive “digital” databases to sell ancillary insurance products online; • benefit from attractive Southeast Asia general insurance market fundamentals; and • experienced management team and strong shareholder support.

Further details of our key competitive strengths are described in Section 6.2 of this Prospectus.

(iv) Our strategies and future plans, as follows:

• leverage on the growth of AirAsia’s business; • replicate our business model with new partners, whether travel partners or otherwise, and increase our product offerings to customers of our existing online partners; • improve Take-up Rates in our online insurance business to increase revenues; • integrate TIMB to capture additional revenue and cost synergies, and diversify product offerings; and • enhance revenue streams through appropriate acquisitions in Southeast Asia.

Further details of our strategies and future plans are described in Section 6.3 of this Prospectus.

The Final Retail Price will be determined after the Institutional Price is fixed on the Price Determination Date and shall equal the Institutional Price.

In the event that the Final Retail Price is lower than the Retail Price, the difference between the Retail Price and the Final Retail Price will be refunded to successful applicants, without any interest thereon. Further details on the refund mechanism are set out in Section 3.5.3 of this Prospectus.

Prospective retail investors should be aware that the Final Retail Price will be equal to the Institutional Price and will not, in any event, be higher than the Retail Price nor lower than the par value of our Shares.

The Final Retail Price and the Institutional Price are expected to be announced within two Market Days from the Price Determination Date in widely circulated Bahasa Malaysia and English daily newspapers within Malaysia. In addition, all successful applicants will be given written notice of the Final Retail Price and the Institutional Price, together with the notices of allotment.

24 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

You should note that the market price of our Shares upon and subsequent to our Listing is subject to the vagaries of market forces and other uncertainties, which may affect the price of our Shares being traded. You should bear in mind the risk factors as set out in Section 4 of this Prospectus and form your own views on the valuation of our IPO Shares before deciding on whether to invest in our Shares.

3.5.2 Institutional Price

The Institutional Price will be determined by a bookbuilding process wherein prospective institutional investors will be invited to bid for portions of the Institutional Offering by specifying the number of IPO Shares that they would be prepared to acquire and the price that they would be prepared to pay for such IPO Shares. This bookbuilding process will commence on [•] and will end on [•], or such other date or dates as our Board, Offeror, Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners in their absolute discretion may decide. Upon the completion of the bookbuilding process, the Institutional Price will be fixed by our Board, Promoters and the Offeror in consultation with the Joint Global Coordinators and Joint Bookrunners on the Price Determination Date.

3.5.3 Refund mechanism

In the event that the Final Retail Price is lower than the Retail Price, the difference will be refunded to successful applicants without any interest thereon. The refund in the form of cheques will be despatched by ordinary post to the address as stated in Bursa Depository’s records for applications made via the Application Form or by crediting into the account of the successful applicant with the relevant Participating Financial Institution for applications made via the Electronic Share Application or the Internet Participating Financial Institutions for applications made via the Internet Share Application, within ten Market Days from the date of the final ballot of applications, at the successful applicants’ own risk.

Please refer to Sections 16.4.3 and 16.4.5 of this Prospectus for further details of the refund mechanism.

3.6 DILUTION

Dilution is the amount by which the Retail/Institutional Price to be paid by applicants for our IPO Shares exceeds our NA per Share immediately after the IPO. The following table illustrates such dilution on a per Share basis assuming the Retail Price is equal to the Final Retail Price and Institutional Price:

RM

Assumed Final Retail Price/Institutional Price [•]

Pro forma consolidated NA per Share as at 30 June 2012 before our IPO [1.41]

Pro forma consolidated NA per Share as at 30 June 2012 after our IPO (after adjusting the effect [•] of the utilisation of proceeds)

Increase in pro forma consolidated NA per Share to existing shareholders [•]

Dilution in the pro forma consolidated NA per Share as compared to the assumed Final Retail [•] Price/Institutional Price

Dilution in the pro forma consolidated NA per Share as a percentage of the assumed Final Retail [.%] Price/Institutional Price

25 Company No. 948454-K

3. PARTICULARS OF OUR IPO (C'ont’d)

The following table summarises the total number of Shares received by our Directors, Offeror substantial shareholders, key management and key technical personnel or persons connected to them during the past three years prior to the date of this Prospectus and the average cost per Share to them and to the new investors who subscribe for our IPO Shares pursuant to the IPO:

Average No. of Shares No. of Shares Total Cost Per Before IPO From IPO Consideration Share RM RM Directors, Offeror, substantial shareholders, key management and key personnel or persons connected to them TMSB 2* 2 1.00 14,200,000* - 14,200,000 1.00 38,506* - 38,506 1.00 466,000,000 - 46,660,000 0.10

[AirAsia BerhadJ [121,677,000] - [•] [•]

Note:

# ordinary shares o f RM1.00 each

3.7 USE OF PROCEEDS

The total gross proceeds to be raised pursuant to the Offer for Sale will accrue to TMSB being the selling shareholder of the Offer Shares.

The total gross proceeds to be raised pursuant to the Public Issue is expected to be utilised in the manner set out below by our Group.

Estimated timeframe for use Purposes ^ ; RM’000 % (from the listing date)

(i) [Repayment of bank borrowings] [•] [77.30] Upon Listing

(ii) [Working capital] [•] [5.84] Within 24 months

(iii) [Strategic investments] [•] [11.04] Within 24 months

(iv) [Estimated listing expenses] [•] [5.82] Within 3 months

Total gross proceeds r*i 100

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3. PARTICULARS OF OUR IPO (Cont’d)

Notes:

(i) Repayment o f bank borrowings.

The proposed repayment o f bank borrowings is as follows.

Facility Amount Proposed Interest rate Purpose o f borrowing outstanding repayment (% per annum) as at the LPD / Maturity date (RM million) (RM million) (RM million) [•] [•] [•] [*] [•1

(ii) Working capital:

Proceeds in excess o f the amounts allocated for repayment o f bank borrowings, strategic investments and listing expenses (which may be in excess o f or less than the estimated amount) will be utilised for general working capital requirements o f our Group, including capitalisation o f TIMB, financing the daily operations and operating expenses o f our Company, which include administration and other operating expenses. Conversely, any shortfall in amounts allocated as set out above will be adjusted accordingly to the working capital requirements.

(Hi) Strategic investments:

Our strategic investments requirements are principally associated with the expansion o f our business including acquiring any additional equity interest in TIMB from minority shareholders and other acquisition opportunities within Southeast Asia. We are currently in preliminary discussions to acquire local insurance providers in Indonesia and Thailand through which we will be able to market our products directly in these countries. Please refer to Section 6.3.5 o f this Prospectus fo r further details on our strategic acquisition plans.

(iv) Estimated listing expenses:

Our Company will bear all the listing expenses and fees incidental to the Listing o f [RM*J million as follows:

R M ’000 Estimated professional fees [•] Brokerage, underwriting and placement fees [•] Regulatory fees [•] Other fees and expenses such as printing, advertising, travel and roadshow [•] expenses incurred in connection with the IPO Miscellaneous expenses and contingencies [•] Total [•]

Note:

I f the actual listing expenses are higher than estimated, the dejicit will be junded out o f working capital. However, if the actual listing expenses are lower than estimated, the excess will be utilised for general working capita! requirements o f our Group.

(v) The final utilisation ofproceeds may vary between items (ii), (iii) and (iv) depending on the needs o f our Company at that juncture. However, such variation will not be material for each category and in any event of reallocation of proceeds, our Company will observe the necessary disclosure requirements under the Listing Requirements.

Pending the eventual utilisation of the proceeds from our Public Issue for the above purposes, the proceeds will be placed in short-term deposits with licensed financial institutions or short-term money market instruments.

27 Company No. 948454-K

3. PARTICULARS OF OUR IPO (Cont’d)

Through the IPO, we will increase our shareholders’ funds and repay our bank borrowings, thereby reducing our gearing. We expect this to provide greater financial flexibility for us to fund our future expansion.

The pro forma financial impact arising from the utilisation of proceeds on our pro forma consolidated statements of financial position are set out in Section 12.3 of this Prospectus.

3.8 BROKERAGE, UNDERWRITING COMMISSION AND PLACEMENT FEE

Brokerage

Brokerage relating to our IPO Shares made available for application under the Retail Offering is payable by us at the rate of one percent (1%) of the Final Retail Price, in respect of successful applications bearing the stamp of participating organisations of Bursa Securities, members of the Association of Banks in Malaysia, members of the Malaysian Investment Banking Association or the Issuing House.

Underwriting commission

[•], as our Managing Underwriter and Joint Underwriter, have agreed to underwrite up to [•] Public Issue Shares, which is made available for application under the Retail Offering as set out in Section 3.2.2 of this Prospectus. Underwriting commission is payable by us to our Joint Underwriters at the rate [• %] of the total value of the underwritten Public Issue Shares at the Retail Price.

Placement fee

[• Placement agent] has arranged for the placement of [•] Offer Shares at a rate of between [•%] and [•%] of the value of the Offer Shares based on the Institutional Price. The Offeror will bear the expenses incurred relating to the Offer for Sale.

3.9 SALIENT TERMS OF THE UNDERWRITING AGREEMENT

We have entered into an underwriting agreement with the Joint Underwriters on [•] (“Underwriting Agreement”) to underwrite up to [•] Public Issue Shares, which is made available for application under the Retail Offering as set out in Section 3.2.2 of this Prospectus. The following salient terms are reproduced from the Underwriting Agreement. The terms and numbering references used in this section shall have the respective meanings and numbering references as ascribed thereto in the Underwriting Agreement.

[•]

28 Company No. 948454-K

4. RISK FACTORS

NOTWITHSTANDING THE PROSPECTS OF OUR GROUP AS OUTLINED IN THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS (WHICH MAY NOT BE EXHAUSTIVE) THAT MAY HAVE A SIGNIFICANT IMPACT ON OUR FUTURE PERFORMANCE, IN ADDITION TO OTHER INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS BEFORE INVESTING IN OUR SHARES.

If you are in any doubt as to the information contained in this section, you should consult your stockbroker, bank manager, solicitors, accountants or other professional adviser.

4.1 RISKS RELATING TO OUR BUSINESS

(i) We are dependent on AirAsia and the success of AirAsia for a substantial portion of our business

We depend on AirAsia for a substantial portion of our business. Since FY2009, our Travel Protection Plan has been offered to customers of AirAsia in the course of their purchase of AirAsia tickets and has been underwritten by our various local insurance partners in the relevant jurisdictions. These local insurance partners have separate agreements with AirAsia to offer the Travel Protection Plan and we reinsure these policies. Pursuant to the AA Distribution Agreements, which have terms of 10-years (with respect to AirAsia Berhad and AirAsia Japan Co., Ltd, expiring in 2022), 15-years (with respect to certain other affiliates of AirAsia Berhad, namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd. and AirAsia Inc, expiring in 2027) and 5-years (with respect to Thai AirAsia Co. Ltd, expiring in 2017), we will manage the travel insurance business of AirAsia and through this exclusive arrangement, the Travel Protection Plan is offered to customers of AirAsia. Consequently, all of our operating revenue for FY2009 and FY2010 and substantially all of our operating revenue for FY2011 are attributable to the Travel Protection Plan. The Travel Protection Plan contributed 17.5% and 18.2% to our pro forma operating revenue for FY2011 and 1H2012. We expect that the Travel Protection Plan will continue to account for a significant percentage of our revenue in the future.

Our business will be adversely affected by a decline in AirAsia customer volumes or Take-up Rates by AirAsia customers of the Travel Protection Plan as our travel insurance is principally offered for sale through the AirAsia website and other sales channels during the course of the purchase of AirAsia tickets. The growth in AirAsia customers is affected by a number of factors including increasing the frequency of flights to markets that it currently serves and expanding its route network (by obtaining new air operating certificates in new markets) and managing the competition it faces from full-service carriers and low-cost carriers.

We cannot assure you that AirAsia will continue their partnership with us after the expiration of the AA Distribution Agreements, in particular, if AirAsia Berhad reduces its shareholding interest in us partially or entirely. We may experience a significant decline in our operating revenue should AirAsia decide to discontinue their relationship with us after the expiration of the AA Distribution Agreements or if the AA Distribution Agreements were terminated prematurely for various reasons which may or may not be within our control. Whilst we aim to extend our travel insurance business beyond AirAsia, thereby expanding our customer reach, we cannot assure you that we will be able to decrease our dependence on AirAsia over time. Further, pursuant to the AA Distribution Agreements, we cannot provide travel insurance services to other airlines without obtaining AirAsia's approval and consent and offering AirAsia and/or its customers, terms which are no less favourable than the terms offered to those other airlines and/or their customers.

29 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(ii) We may not be able to provide our Travel Protection Plan to customers of AirAsia in new target markets in a timely manner or at all

Under the AA Distribution Agreements, we are liable to compensate AirAsia in the event AirAsia notifies us of its intention to launch its operations in a new target market and we fail to ensure our Travel Protection Plan is ready for sale t(i customers of AirAsia in such market within a three-month period from the fulfilment of conditions by AirAsia. We are not liable for delays due to, among others, AirAsia not providing us with the requisite documents or legal or regulatory prohibitions or restrictions.

In the event of breach, we are liable for compensating AirAsia for any loss of opportunity taking into account (a) the maximum regulated commission rate permitted in the new target market or a fixed percentage if there is no regulated commission rate in such market, (b) the number of AirAsia customers booking flights into or from the new target market from the date of the first commercial flight into or from such market to the date our Travel Protection Plan is ready for sale to AirAsia customers, and (c) the average monthly insurance Take-up Rate for the first three months experienced by AirAsia when opening new routes or markets. Prior to the signing of the AA Distribution Agreements, we have experienced instances where our Travel Protection Plan was not available for sale to customers of AirAsia within a three-month period after consultation with AirAsia. Following the signing of the AA Distribution Agreements, we have not been in breach of this provision to date. However, we cannot assure you that going forward, we will always be able to offer our Travel Protection Plan to customers of AirAsia in new target markets within the required timeline or that if we are unable to do so, and after consultation with AirAsia, we will not be liable to compensate AirAsia.

(iii) We may not fulfil certain conditions imposed by BNM relating to our acquisition of TIMB

Our acquisition of TIMB in May 2012 was subject to the following conditions imposed by BNM:

• undertaking by TMSB to ensure that the capital adequacy ratio of TIMB meets its internal target capital level of 180% by 8 January 2013, being the date falling six months from the completion of our acquisition of TIMB and the general mandatory offer on TIMB on 9 July 2012; and

• submission by us of a comprehensive plan, including timelines, for us to ensure that no individual has more than 10.0% effective interest in TIMB by 8 July 2017, being the date falling five years from the completion of our acquisition of TIMB and the general mandatory offer on TIMB on 9 July 2012.

Although TIMB's capital adequacy ratio currently meets the internal target capital level imposed by BNM, there is no assurance we can maintain this level going forward or that it would be 180% come 8 January 2013. We have also submitted our plan to BNM for Tan Sri Dr Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun to reduce their effective interests in TIMB to less than 10.0% each. As part of our plan submitted to BNM, we have obtained commitment from both Tan Sri Dr Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun to comply with this requirement within the stipulated timeline.

In the event of non-compliance with these conditions, BNM has the discretion to impose further conditions or sanctions on us including having us raise further capital which may dilute your shareholding.

30 Company No. 948454-K

4. RISK FACTORS (Coat’d)

(iv) We may be unable to successfully integrate TIMB's business

We have recently acquired TIMB in May 2012. The integration of the business practices and operations of TIMB with the rest of our business will require significant management time and resources. We may not be able to successfully integrate TIMB in a manner that will allow the combined operations to fully realise revenue opportunities and operating synergies, and achieve cost savings. Our integration plans include making some significant changes to TIMB’s current business and operations, in particular changes to its product offerings. Consequently, TIMB’s past performance is not necessarily indicative of its future performance.

If we are unable to integrate TIMB's business effectively and within the time frame expected, we may incur substantial integration costs without achieving our growth plans, which may have a material adverse effect on our results of operations and prospects. We expect to incur approximately RM10.0 million in upgrading and integrating TIMB's information technology system. We cannot assure you that we will not experience a cost over-run in excess of our targeted capital expenditure or we will not also incur other amounts for other areas such as upgrading and refurbishment of its fixed properties.

(v) We may be subject to unknown or contingent liabilities and other inherent operational and actuarial valuation risks relating to TIMB's existing business

Notwithstanding our legal, financial and actuarial due diligence exercise undertaken before the acquisition of TIMB, there may still be unknown or contingent liabilities, such as risks arising from inaccurate actuarial valuations on assets that TIMB had previously underwritten, which we may become liable for. We may not have adequate reserves to meet such future claims in the event these contingencies materialise. A failure to honour TIMB’s historical underwriting commitments effectively may result in a loss of reputation to us, all of which may have a material adverse effect on our results of operations and prospects.

(vi) Our acquisitions of new businesses in the future are dependent on a number of factors

As part of our growth strategy, we have made, and from time to time may continue to make, acquisitions and investments in companies or businesses. The success of our acquisitions and investments depends on a number of factors, including:

• our ability to identify suitable opportunities for investment or acquisition;

• whether we are able to reach an acquisition or investment agreement on terms that are satisfactory to us;

• the extent to which we are able to exercise control over the acquired company or business; the economic, business or other strategic objectives and goals of the acquired company or business compared to those of ours; our ability to successfully integrate the acquired company or business;

• our ability to integrate and retain the management team from acquired businesses;

• our ability to retain customers of the acquired businesses; and

• our ability to realise the expected benefits of the acquired company or business.

31 Company No. 948454-K

4. RISK FACTORS (Cont’d)

We may also be subject to additional risks and uncertainties in that we may be dependent upon, and subject to liability (including operational or tax liability), losses or reputational damage relating to, systems, controls and personnel that we acquire or that are not under our control. While we would generally attempt to negotiate in an acquisition or investment agreement that such liability or losses should be borne by the selling party (in the case of an acquisition) or the responsible party (in the case of an investment over which we are not in control), we may not be successful in negotiating for such provisions or indemnities in our contracts with counterparties or such provisions or indemnities may not be valid or enforceable. In addition, we would generally be liable on a going forward basis for any liabilities relating to the operations of the companies and businesses we acquire or invest in.

Further, to the extent that we pursue business opportunities in foreign countries, we will be subject to political, economic, legal, operational and other risks that are inherent in operating in a foreign country, including risks of possible nationalisation, expropriation, price controls, capital controls, exchange controls and other restrictive governmental actions, as well as the outbreak of hostilities. In certain countries, the laws and regulations applicable to our industry are uncertain and evolving, and it may be difficult for us to determine the exact requirements of local laws in every market. Our inability to remain in compliance with local laws in a particular foreign market could have a significant and negative effect not only on our businesses in that market but also on our reputation generally.

(vii) Our business is highly regulated and compliance with current or future requirements may limit our growth or adversely affect our future business.

We are subject to regulatory oversight in Malaysia. Please refer to Section 15.6 - “Regulations” of this Prospectus for further details.

During TIMB’s last audit / supervisory inspection by BNM in 2011, prior to our acquisition, BNM had highlighted several findings, including weakness and limitations in the following areas: (a) capital position, (b) senior management, (c) internal audit function, (d) risk management and compliance function, (e) information technology system, and (f) claims management process. BNM also expressed concerns in the motor insurance and marine insurance business of TIMB and provided that its capital adequacy ratio should be maintained at 180%.

TIMB is also subject to periodic audits by the General Insurance Association of Malaysia. At TIMB’s last audit / inspection by the General Insurance Association of Malaysia in 2011, which was prior to our acquisition, the General Insurance Association of Malaysia highlighted several findings in relation to one of our branch offices, including the following: (i) its agents did not comply with certain regulations and such breach of regulations were not reported to the General Insurance Association of Malaysia and (ii) premiums charged were below the tariff amount on a few occasions. We have fully addressed General Insurance Association of Malaysia’s concerns to date but it may have further concerns in the future.

While TIMB had responded to BNM and the General Insurance Association of Malaysia promptly relating to these issues and we, following our acquisition of TIMB, are addressing these issues as well, we cannot assure you we can fully address and rectify all of BNM’s and the General Insurance Association of Malaysia’s current and future findings within stipulated timeframes. In addition, if we do not fully address BNM’s concerns, BNM may take an active role in the governance and management of TIMB.

These regulators have broad authority over all aspects of our business, including our ownership and shareholding structure, our capital, solvency and reserve requirements, our ability to declare dividends and other distributions (including the timing of dividends and distributions), and our ability to expand our operations, enter certain lines of business and markets, offer new products, underwrite certain risks, price our products profitably and enter into certain distribution and outsourcing arrangements. Compliance with applicable laws, rules and regulations or any rulings or directions made or issued by regulators may restrict our business activities and require us to incur increased expense and to devote considerable time and management resources to such compliance efforts.

32 Company No. 948454-K

4. RISK FACTORS (Cont’d)

Insurance companies are generally required by applicable law to maintain their solvency at a level in excess of statutory minimum standards. Our solvency levels are determined primarily by the solvency margins we are required to maintain, which are in turn affected by the volume and type of new travel and general insurance policies we sell, the composition of our in-force insurance policies and by regulations on the determination of statutory reserves. Our solvency is also affected by a number of other factors, including the profit margin of our products, actual claim rates, returns on our assets and investments, interest rates, underwriting and acquisition costs, and policyholder and shareholder dividends. Compliance with changing solvency and risk-based capital requirements entails costs to us and may affect the rate of growth of our business.

Regulatory action may require us to underwrite certain unprofitable risks or restrict our ability to set product prices aligned with our product pricing and profitability criteria. For example, the Malaysian Motor Insurance Pool is a high-risk insurance pool participated by all general insurance companies (including TIMB). It seeks to provide motor insurance to vehicle owners who have difficulty obtaining motor insurance in the market. The Malaysian Motor Insurance Pool made a net loss of RM166.3 million for FY2011 and RM89.0 million for 1H2012. All general insurance companies (including TIMB) are to bear an equal share of loss in the Malaysian Motor Insurance Pool irrespective of their market share in the industry. Accordingly, in the event of consolidation of the general insurance companies going forward, TIMB, together with the remaining general insurance companies, would have to bear a larger proportion of loss in the Malaysian Motor Insurance Pool. BNM also subjects insurance products relating to, among others, motor, property and workmen compensation to tariffs and we may not be able to fully price our risk into the premiums we charge for such products.

Laws, rules, regulations and regulatory interpretations may change from time to time and such changes could have a material adverse effect on our business. New rulings or directions made or issued by regulators may also materially affect our business. For example, our Travel Protection Plan is predominantly sold through the AirAsia website and offered to AirAsia customers through a pre­ checked box. AirAsia customers who do not wish to buy our travel insurance are required to un-check the relevant option. In certain jurisdictions such as Australia, where consumer protection rules and regulations prohibit this format of marketing to customers, we have tailored the presentation of our products in compliance with the relevant rules and regulations. In the event new regulations arise in the other jurisdictions in which our travel insurance is available to customers of AirAsia restricting the manner in which we currently sell our insurance products, our business and results of operations may be materially and adversely affected. In addition, should there be any regulatory change in Malaysia to prohibit our reinsurance arrangement between TIMB and TMGR, this may materially affect our financial condition.

There could also be a substantial increase in government regulation and supervision of the insurance industries in the future or changes in government policy, legislation or regulatory interpretation and which in some circumstances may be applied retrospectively. Such changes may materially and adversely affect our product range, distribution network, capital requirements, day-to-day operations, corporate structure, which could have a material adverse effect on our business, financial condition and results of operations.

(viii) Our captive insurance and reinsurance business licences with the Labuan FSA are subject to conditions prescribed by Labuan FSA

TIL, TMGR and TMLR are Labuan-based captive insurance and reinsurance companies that are regulated by the Labuan FSA. For example, Section 109 of the LFSSA provides that every Labuan insurer, including an insurance licensee which carries on Labuan captive insurance business, shall ensure that the realisable value of its assets exceeds the amount of its liabilities by a margin in such an amount or calculated in such manner as may be specified in writing by Labuan FSA from time to time. In this respect, TMGR and TMLR are required to each maintain a solvency ratio margin of the greater of RM 10.0 million or 20% of its net premium income of the preceding year and TIL is required to maintain a surplus of assets over liabilities which is the greater of the amount of its working funds or 20% of its net premium income of the preceding year in respect of their respective insurance business.

33 Company No. 948454-K

4. RISK FACTORS (Cont’d)

The margin of solvency for TIL shows a deficiency of USD583,695 as at 30 June 2012. TIL had ceased underwriting new reinsurance contracts from March 2012. New reinsurance contracts are channeled to TMGR or TMLR, as the case may be. We had corresponded with the Labuan FSA and we will continue to support TIL’s operations and existing reinsurance contracts it entered into (prior to March 2012). We will also ensure that there are sufficient working funds available to meet TIL’s obligations and liabilities as and when they fall due. Notwithstanding so, Labuan FSA may nonetheless impose a penalty or revoke our licence.

Failure to comply with any of the applicable laws, rules and regulations (or increased enforcement of previously unenforced rules and regulations), including the deficiency in the margin of solvency for TIL as discussed above, could result in fines or suspension of our business licences (including the reinsurance licences issued by the Labuan FSA) or, in extreme cases, business licence revocation, each of which would have a material adverse effect on our business, liquidity, financial condition and results of operations.

(ix) We rely on tie-ups with local insurance partners in jurisdictions in which we do not have a physical presence and we rely on our arrangement with RGA Global, our life reinsurance partner for our lifestyle protection plans

Currently, one of the key elements of our business model is to operate in partnership, directly or indirectly, with local insurance partners in jurisdictions where our products, including our travel insurance, are currently offered and where we do not have the requisite general and life insurance licence to underwrite. We also work closely with our local life insurance partners in relation to our lifestyle protection plans.

The existing arrangements in place with our local insurance partners are subject to renewal annually. Our local insurance partners are contractually obligated to provide a 90-day notice period in the event that they wish to re-negotiate the existing terms of such agreements. There is also no assurance that our local insurance partners will continue their partnership with us going forward. There may be a significant decline in our revenue should a local insurance partner decide to discontinue their relationship with us and we are unable to find a replacement partner in a timely manner, or at all. In addition, if these local insurers are unable to perform their contractual obligations for any reason, including legal and/or regulatory prohibitions that prevent them from entering into such reinsurance arrangements with us, to underwrite such products offered to the end consumers, there can be no assurance that we would be able to enter into or source for another duly licensed insurer in that jurisdiction at comparable commercial terms and in a timely manner, or at all.

We also entered into an arrangement with RGA Global with respect to our lifestyle protection plans. Our local life insurance partners have entered into a reinsurance arrangement with RGA Global, which will then cede a portion of the risk to us. Should RGA Global discontinue their relationship with us going forward or should it be unable to perform its contractual obligations for any reason to reinsure our lifestyle protection plans from our local life insurance partners, it may have a material adverse effect on our results of operations and prospects.

(x) We may be unable to successfully cede our risk

We cede a portion of the business we underwrite, directly or via reinsurance, to a number of national and international reinsurance companies to reduce our underwriting risk, specifically in relation to losses arising from catastrophic events and TIMB’s motor and non-motor insurance. We generally cede a portion of our risk through reinsurance brokers. Reinsurance, however, may not protect us completely against all losses. Although a reinsurer is liable to us to the extent of the ceded reinsurance, we remain liable as the direct insurer, or reinsurer as the case may be, on all risks insured, or reinsured as the case may be. As a result, although we seek to enter into reinsurance arrangements only with reputable and creditworthy reinsurers, we are subject to credit risks of our reinsurers, which could increase our financial losses arising out of a risk we have insured.

34 Company No. 948454-K

4. RISK FACTORS (C ont’d)

In addition, the applicable Malaysian regulations relating to reinsurance currently require all Malaysian insurers to cede a portion of gross premiums under certain types of insurance policies to Malaysian Reinsurance Berhad (rated “A” by Fitch Ratings), the wholly-owned subsidiary of MNRB Holdings Berhad. Malaysian Reinsurance Berhad is the national reinsurer in Malaysia. In the event of a catastrophic loss that affects a significant number of Malaysian insurers, Malaysian Reinsurance Berhad may not be able to pay us on a timely basis, or at all. A default by Malaysian Reinsurance Berhad under our existing reinsurance arrangement would increase our financial losses arising out of a risk we have insured, which would reduce our profitability and may adversely affect our liquidity.

We generally do not reinsure our lifestyle protection plans. In the event we experience a substantial number of claims in relation to our lifestyle protection plans, we could experience a material adverse effect on our financial condition.

The availability and cost of reinsurance are subject to prevailing market conditions which are beyond our control and may affect our business and profitability. If we are not able to maintain reinsurance coverage in adequate amounts and on reasonable terms, either our net risk exposures would increase or, if we are unwilling to bear an increase in net risk exposures, our overall underwriting capacity would decrease. This could materially and adversely affect our business, results of operations and financial condition.

(xi) Failure to secure new distribution channels, as well as any termination or disruption of our existing arrangements under current distribution channels, may have a material adverse effect on our competitiveness and result in a material impact on our financial condition and results of operations

We have increasingly focused on improving our revenue through direct marketing and other alternative distribution channels. For example, we have entered into an agency agreement with ECM Libra and a travel insurance services agreement with AirAsia Expedia to diversify our distribution channels with respect to our general insurance products. As these distribution channels become increasingly important in the Asia-Pacific travel and general insurance industry, if we fail to secure new distribution relationships or to maintain our existing relationships, our competitiveness may be materially and adversely affected. However, such arrangements are new and untested distribution channels which we have recently begun and may not be as effective or successful as we had anticipated. Our direct marketing distribution channel could be adversely impacted by the loss of sales staff or sponsor partners, improper activities when selling travel and general insurance products, mishandling of customer complaints, changing regulation and suspension of our direct marketing programmes. To the extent we are not able to maintain our existing distribution relationships or secure new distribution relationships, we may not be able to maintain or grow our premiums, and our financial condition and results of operations may be materially and adversely impacted.

(xii) Any substantial increase in claims in our travel insurance or other general insurance products could have a material adverse effect on our financial condition and results of operations

Our net claims were RM1.1 million for FY2009, RM1.5 million for FY2010, RM1.9 million for FY2011 and RM10.0 million for 1H20I2. Our pro forma net claims for FY2011 and 1H20I2 were RM109.9 million and RM66.0 million. We cannot assure you that net claims going forward would continue to remain at this level. An increase in claims for our products by our customers could have a material adverse effect on our financial condition and results of operations.

(xiii) Differences between actual benefits and claims experience and underwriting and reserving assumptions, as well as deviations from the assumptions used in pricing our lifestyle protection plans, could have a material adverse effect on our financial condition and results of operations

We establish and carry reserves as balance sheet liabilities to pay future policyholder benefits and claims. We establish these reserves, price our lifestyle protection plans and report capital levels and the results of our long-term business operations based on many assumptions and estimates, including:

35 Company No. 948454-K

4. RISK FACTORS (Coat’d)

• estimated premiums we will receive over the assumed life of the insurance policy;

• lapse, surrenders and persistency (i.e., how long an insurance policy or contract stays in-force);

• timing of the event covered by the insurance policy;

• amount of benefits or claims to be paid;

• amount of expenses to be incurred;

• macroeconomic factors such as interest rates and inflation;

• investment returns on the assets we purchase with the premiums we receive;

• mortality rate (i.e., the relative incidence of death in a given time); and

• morbidity rate (i.e., the incidence rate of a disease or medical condition in a given time).

The process of determining these assumptions and estimates is a difficult and complex exercise involving many variable and subjective judgments. Due to the nature of the underlying risks and the high degree of uncertainty associated with the determination of the liabilities for unpaid benefits and claims, we cannot precisely determine the amount that we will ultimately pay to settle these liabilities. These amounts may vary from the estimated amounts, particularly when payments may not occur until well into the future. In addition, actual experience, such as lapse, mortality, expense and morbidity, can be different from the assumptions used when we establish reserves for and price our products or otherwise use such assumptions in the conduct of our business. For example, significant changes in mortality could emerge over time, due to changes in the natural environment, the health habits of the insured population, effectiveness of diagnosis and treatment of disease and disability, or other factors. In addition, we may lack sufficient data to make accurate estimates of the future benefits or claims experience. Significant deviations in actual experience from our assumptions could materially and adversely reduce our profitability.

We evaluate our reserves for insurance contract liabilities, net of expenses incurred in connection with the acquisition of new insurance contracts or the renewal of existing insurance policies periodically, based on changes in the assumptions and estimates used to establish these reserves, as well as our actual policy benefits and claims experience. A liability adequacy test is performed on all insurance contract liabilities at least annually. Please refer to the accounting policy notes for "Liability adequacy test" disclosed in the Accountant’s Report set out in Section 13 of this Prospectus. If the net reserves initially established for future policy benefits prove insufficient, we must increase our net reserves, which may have a material adverse effect on our liquidity, financial condition and results of operations.

(xiv) Litigation, arbitration and/or regulatory investigations may result in significant financial losses and harm to our reputation

We face a significant risk of litigation, arbitration, regulatory investigations and similar actions in the ordinary course of our business, including with respect to claims payments and procedures, disclosure and denial or delay of benefits. Any such action may include claims for substantial or unspecified compensatory and punitive damages, as well as civil, regulatory or criminal proceedings against our directors, officers or employees, and the probability and amount of liability, if any, may remain unknown for significant periods of time. We are also subject to various regulatory inquiries, such as information requests and examination of our books and records, from regulators and other authorities in Malaysia.

36 Company No. 948454-K

4. RISK FACTORS (Cont’d)

A substantial liability arising from a lawsuit judgment or a significant regulatory action against us or a disruption in our business arising from adverse adjudications in proceedings against our directors, officers or employees could have a material adverse effect on our business, financial condition and results of operations. Moreover, even if we ultimately prevail in the litigation, regulatory action or investigation, we could suffer significant harm to our reputation, which could materially affect our prospects and future growth, including our ability to attract new customers, retain current customers and recruit and retain employees and agents.

We are a party to several litigation and/or arbitration proceedings, particularly in relation to our motor insurance business and employment disputes, where the amount claimed in respect of each proceeding is less than RM3.0 million. Please refer to Section 15.5 — “Material Litigation, Claims or Arbitration” of this Prospectus for further information relating to our material litigation.

TIMB had also commenced proceedings against a number of its former agents and employees, which aggregate claims are approximately RM 1.0 million. (xv) Our business is affected by market fluctuations and general economic conditions, in particular affecting Southeast Asia from which we generate a substantial amount of our operating revenue

We generate substantial revenue from customers in Southeast Asia, in particular Malaysia. We expect to continue targeting customers located in Southeast Asia for our travel insurance, life insurance and general insurance businesses. We also target customers from the wider Asia-Pacific region. Consequently, our business depends substantially on the general economic conditions in Southeast Asia and the growth of our business depends on other markets to which we expand. Any economic crisis and continuing impact on these economies, or any new adverse economic development in these regions, could materially and adversely affect travel demand or demand for our other insurance products which would in turn have a material adverse effect on our business.

Difficult operating conditions, such as those present in 2008 and 2011, could reduce the demand for our products and services, reduce the returns from our investment activities, increase fraudulent claims and otherwise have a material adverse effect on our business, including in the following ways:

• Decreased sales o f our products. An economic downturn or other adverse events may result in higher unemployment levels, lower family income, decreased corporate earnings and reduced business investment and consumer spending, which could in turn significantly reduce the demand for our products, such as our travel insurance product and our lifestyle protection products.

• Losses fro m bonds. An economic downturn or other adverse events may result in financial difficulties or default of issuers of bonds held in our investment portfolios. In addition, credit spread and benchmark interest rate variations could also reduce the fair value of these bonds. Under these circumstances, we may have to impair these bonds or may recognise losses realised upon their sale. Moreover, shareholders' equity and earnings may be affected by fair value re-valuations of the bonds held in our investment portfolios.

• Equity price declines. We may suffer declines in the value of the equity securities held in our investment portfolio as a result of adverse capital market conditions.

37 Company No. 948454-K

4. RISK FACTORS (C ont’d)

(xvi) Our local life insurance partners may be unable to match closely the duration of their assets and liabilities arising from their provision of our life insurance products, which could increase our exposure to interest rate risk

Our local life insurance partners seek to match their liabilities arising from our AA Lifestyle Protection Plan and Tune Hotels Lifestyle Protection Plan with their investment assets. Matching the duration of their assets to their related liabilities reduces their exposure to fluctuations in interest rates. They seek to manage the risk of duration mismatch by focusing on product offerings whose maturity profiles are in line with the duration of investments available to them. However, their ability to invest in financial instruments that would enable them to closely match the duration and yield of their investment assets and insurance policy liabilities may be restricted by availability of assets, applicable insurance laws, rules and regulations. If they are unable to match closely the duration of their assets and liabilities, they will be exposed to interest rate fluctuations which may materially and adversely affect their financial condition and results of operations.

Fluctuations in interest rates could also adversely impact their solvency levels and capital position, which may in turn affect their ability to continue a business relationship with us. Insurance companies are generally required by applicable law to maintain their solvency at a level in excess of statutory minimum standards, and changing interest rates could adversely impact the ability of our local insurance partners to comply with these standards.

In addition, pricing of our lifestyle insurance products are based on assumptions of their investment returns and their matching of the durations of their assets and liabilities. Accordingly, a mismatch in their matching of assets and liabilities could affect our profitability.

(xvii) Increases in the amount of allowances and impairments taken on our investments as well as losses on our investments may have a material adverse effect on our financial condition and results of operations

We determine the amount of impairment losses to be recognised in respect of our investments in accordance with the requirements of MFRS. The accounting policies related to recognition of impairment losses on investments is disclosed in note 4.5.1(3)(e) to the Accountant's Report set out in Section 13 of this Prospectus. Such determination varies by investment type and is based upon our periodic evaluation and assessment of known and inherent risks associated with the respective asset classes. These evaluations and assessments are revised as conditions change and new information becomes available. The determination of the amount of impairment losses to be taken on our investment assets may require complex and subjective judgments. We cannot assure you that our management's best estimates reflect actual losses that will ultimately be incurred on these investments, that historical trends will be indicative of future impairment losses or that we will not be required under future accounting standards to change the amounts of impairment losses of our investments.

Additionally, our investment returns, and thus our profitability, may be materially and adversely affected by conditions affecting our investments, including currency exchange rates, credit and liquidity conditions, the performance and volatility of capital markets, asset values, and macroeconomic and geopolitical conditions. In particular, our ability to generate profits from underwriting general insurance business depends in part on the returns on investments supporting our obligations under these products, and the value of such investments may fluctuate substantially. Any significant deterioration in one or more of these factors could reduce the value of, and the income generated by, our investment portfolio and could have a material adverse effect on our business, financial condition and results of operations.

38 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(xviii) Concentration of our investment portfolio in any particular asset class, market or segment of the economy may increase our risk of suffering investment losses

Our investment portfolio is comprised primarily of fixed term deposits and short term deposits and we hold significant amounts of governmental agency bonds and corporate bonds. As a result, we have significant credit exposure to sovereign and corporate issuers. We also have significant risk exposure to banking and other financial institutions where we have our fixed term deposits and short term deposits. Events or developments that have a negative effect on any particular industry, asset class, group of related industries, country or geographic region may have a greater negative effect on our investment portfolio to the extent that our portfolio is concentrated. These types of concentrations in our investment portfolio increase the risk that, in the event we experience a significant loss in any of these investments, our financial condition and results of operations would be materially and adversely affected.

Issuers or borrowers whose securities or loans we hold may default on their obligations to us. Actions by regulatory bodies in response to financial and other crises could negatively impact these instruments, securities, transactions and investments. Moreover, certain portions of our investment portfolio may not be rated by independent parties and this may affect our and your ability to evaluate the risks of these investments. Defaults on our investment securities or governmental action involving the issuers of such securities may have a material adverse effect on our financial condition and results of operations, as well as our liquidity and profitability. Interest rate fluctuations may also affect the return on our investments. In addition, we cannot assure you that we will not suffer losses due to defaults if we enter into investment instruments with counterparties.

In addition, there may not be a liquid trading market for certain of our investments, which is in turn affected by numerous factors, including the existence of suitable buyers and market makers, market sentiment and volatility, the availability and cost of credit and general economic, political and social conditions. Due to the size of some of our fixed income investment holdings relative to the size and liquidity of the relevant market, our ability to sell certain securities without significantly depressing market prices, or at all, may be limited. We may also hold privately placed fixed income securities, structured securities, private equity investments and real estate investments in the future. If we were required to dispose of these or other potentially illiquid assets on short notice, we could be forced to sell such assets at prices significantly lower than the prices we have recorded in our consolidated financial information.

(xix) We have a limited operating history

We, TMGR and TMLR were incorporated in 2011. Prior to our incorporation, TIL (which was itself incorporated in 2009) was the sole operating entity. In addition, we have historically relied on Multi­ Purpose Insurans Bhd (a wholly-owned subsidiary of Multi-Purpose Capital Holdings Berhad, which in turn holds a 20.0% equity interest in TIL). TIL was established as a 80:20 joint venture between TMSB and Multi-Purpose Capital Holdings Berhad with the primary purpose of reinsuring general insurance business underwritten by Multi-Purpose Insurans Bhd. Multi-Purpose Insurans Bhd is an insurance provider that, through a contractual relationship with AirAsia, negotiated agreements with local insurance partners outside Malaysia on AirAsia’s behalf with respect to AirAsia’s travel insurance, and underwrote such policies in Malaysia. Multi-Purpose Insurans Bhd also provided certain management services to us in FY2009 and FY2010. With our incorporation and the acquisition of TIL, TMGR and TMLR from TMSB in 2011 and the introduction of our new management at the end of 2010 and the beginning of 2011, we took over many of these roles and following our acquisition of TIMB, AirAsia has terminated their agreement with Multi-Purpose Insurans Bhd. Pursuant to the AA Distribution Agreements, we are the exclusive insurance product manager for AirAsia and effective 4 September 2012, our subsidiary, TIMB, underwrites the Travel Protection Plan directly in Malaysia. As such, we do not have long operating histories by which our respective past performances may be judged. Our prospects must be considered in light of the risks, uncertainties and difficulties encountered by companies during the early stages of operations.

39 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(xx) We are not rated by any established credit rating agencies

We do not have financial strength ratings. Financial strength indicators may be an important factor in establishing competitive position in the insurance and reinsurance industry. The lack of a financial strength rating could result in a reduction in the number of insurance and reinsurance contracts we write and a loss of business as our customers move to competitors with a financial strength rating. If our competitors obtain or improve their financial strength ratings, our competitive position in the insurance and reinsurance industries would suffer and it may be more difficult for us to market our products. Our business depends upon, among others, consumer confidence in our financial strength. Consumers or potential investors may require a financial strength rating to determine our financial strength. Our lack of a financial strength rating could decrease consumer / investor confidence and could have a material adverse effect on our business and prospects. We may seek financial strength ratings in the future from established credit ratings agencies. We cannot assure you that we will be able to obtain a positive or strong rating, or at all.

(xxi) Our risk management policies and procedures and internal controls, as well as the risk management tools available to us, may not be adequate or effective

We have established risk governance and frameworks in managing our risk exposures, which include insurance, credit, market, liquidity, operational and related risks. Our risk management policies, procedures and internal controls may not be adequate or effective in mitigating our risk exposures, including risks that are unidentified or unanticipated. In particular, some methods of managing risk are based upon observed historical market behaviour and claims experience. These methods may fail to predict future risk exposures, which could be significantly greater than those indicated by historical measures. Other risk management methods depend upon an evaluation of available information regarding operating and market conditions and other matters. This information may not be accurate, complete, up-to-date or properly evaluated. In addition, in geographical markets that are rapidly developing, the information and experience data that we rely on may become quickly outdated by market and regulatory developments.

Management of operational, legal and regulatory risks requires, among other things, policies and procedures to record properly and verify a large number of transactions and events, as well as appropriate and consistently applied internal control systems. These policies, procedures and internal controls may not be adequate or effective, and our business, financial condition and results of operations could be materially and adversely affected by the corresponding increase in our risk exposure and actual losses experienced as a direct or indirect result of failures of our risk management policies and internal controls. We use models in our risk management procedures and these models rely on assumptions and projections that are inherently uncertain.

In addition, our investment portfolio is governed by our risk management and asset allocation decisions and is also partially outsourced to external investment advisors. We may not have adequate risk management tools, policies and procedures, and we may not have sufficient access to resources and trading counterparties to effectively implement investment risk mitigation strategies and techniques related to our investment portfolio. If our investment decision making process fails to minimise losses while capturing gains, we could experience significant financial losses and harm to our business.

(xxii) We depend on key management and information technology, investment management, underwriting, sales staff and other personnel, and our business would suffer if we lose their services and are unable to adequately replace them

The success of our business is dependent to a large extent on our ability to attract and retain key personnel who have in-depth knowledge and understanding of the insurance markets in which we operate, including members of our senior management, information technology specialists, experienced investment managers and finance professionals, underwriting personnel, sales staff and other personnel.

40 Company No. 948454-K

4. RISK FACTORS (C ont’d)

Our business could suffer if we lose the services of our personnel and cannot adequately replace them. Moreover, we may be required to increase substantially the number of such personnel in connection with any future growth plans, and we may face difficulty in doing so due to the intense competition in the Asia-Pacific insurance industry for such personnel. In addition, we may be subject to laws and regulations that restrict the way we compensate and recruit our employees. We cannot assure you that we will be able to attract and retain qualified personnel in the near future.

(xxiii) If we are not able to attract, motivate and retain agency leaders and individual agents, our competitive position, growth and profitability will suffer

TIMB depends to a significant extent on our agency leaders and individual agents to distribute our general insurance products. TIMB faces intense competition to attract and retain agency leaders and individual agents, and it competes with other companies for their services, primarily on the basis of our reputation, product range, compensation and retirement benefits, training, support services and financial position. TIMB may not always be successful in attracting agency leaders and individual agents, and we cannot assure you that our initiatives to retain and attract agency leaders and individual agents will succeed. Competition from other insurance companies and business institutions may also force TIMB to increase the benefits provided to its agency leaders and individual agents, which would increase operating costs and reduce our profitability. If TIMB is unsuccessful in attracting and retaining agency leaders and individual agents, its ability to effectively market and distribute its products may be negatively affected, which could have a material adverse effect on our financial condition and results of operations.

(xxiv) Agent, employee and local insurance partner misconduct is difficult to detect and could harm our reputation or lead to regulatory sanctions or litigation against us

Our agents, employees or local insurance partners' misconduct could result in violations of law, regulatory sanctions, litigation or serious reputational or financial harm. Such misconduct could include:

• binding us to transactions that exceed authorised limits;

• hiding unauthorised or unsuccessful activities, resulting in unknown and unmanaged risks or losses;

• improperly using or disclosing confidential information;

• making illegal or improper payments;

• recommending products, services or transactions that are not suitable for our customers;

• misappropriation of funds;

• engaging in misrepresentation or fraudulent, deceptive or otherwise improper activities when marketing or selling products;

• engaging in unauthorised or excessive transactions to the detriment of our customers; or

• otherwise not complying with applicable laws or our internal policies and procedures.

The measures that we have taken to detect and deter misconduct by our agents, employees and local insurance partners may not be effective and so we may not always be successful in detecting or deterring such misconduct. We cannot assure you that any such misconduct would not have a material adverse effect on our reputation, business, financial condition, results of operations and prospects.

41 Company No. 948454-K

4. RISK FACTORS (C oat’d)

(xxv) Data privacy laws, rules and regulations in our geographical markets could have a material adverse effect on our business, financial condition and results of operations

We are currently granted permission to market to customers of AirAsia and Tune Hotels through our respective agreements with AirAsia and Tune Hotels. Concurrently, we grant our local life insurance partners permission to market to customers of AirAsia and Tune Hotels. However, we are subject to data privacy laws, rules and regulations that regulate the use of customer data. Compliance with these laws, rules and regulations may restrict our business activities, require us to incur increased expense and devote considerable time to compliance efforts. For example, data privacy laws, rules and regulations could limit our ability to leverage our large customer base to develop cross-selling opportunities. Applicable data privacy laws, rules and regulations could also adversely impact our distribution channels, such as direct marketing, and limit our ability to use third-party firms in connection with customer data.

Certain of these laws, rules and regulations are relatively new and their interpretation and application remain uncertain. Data privacy laws, rules and regulations are also subject to change and may become more restrictive in the future. Changes in data privacy laws, rules and regulations could have a material adverse effect on our business, financial condition and results of operations.

(xxvi) The impact of epidemics, international tension, terrorism, war, military actions, natural disasters, climate change or other catastrophes may materially and adversely affect our claims experience, investment portfolio, financial condition and results of operations

The threat of epidemics, international tensions in many parts of the world, terrorism, ongoing and future military and other actions, heightened security measures in response to these threats, natural disasters, climate change or other catastrophes may cause disruptions to commerce, reduced economic activity and market volatility. Our insurance business exposes us to claims arising out of such events and catastrophes affecting a large segment of the population. In particular, our insurance business is exposed to the risk of catastrophic mortality, such as an epidemic or other events that cause a large number of deaths.

In addition, the occurrence and severity of many catastrophic events, such as epidemics, earthquakes, typhoons, floods and fires, is inherently unpredictable. Significant influenza epidemics have occurred three times in the last century, but the likelihood, timing and severity of any future epidemics cannot be predicted. The effectiveness of external parties, including governmental and non-governmental organisations, in combating the spread and severity of any epidemic could have a material impact on the losses experienced by us. In our group insurance business, a localised event that affects the workplace of one or more of our group insurance customers could cause a significant loss due to mortality or morbidity claims.

In accordance with MFRS, we do not establish reserves for catastrophes in advance of their occurrence, and the loss or losses from a single catastrophe or multiple catastrophes could materially and adversely affect our business, financial condition and results of operations. In addition, a significant portion of our assets is comprised of our investment portfolio, which consists primarily of debt and equity securities, and catastrophic events may materially and adversely affect market prices for these investments, thereby causing decreased asset values during a period in which we may also experience increases in claims incurred. A decrease in asset quality could result in, among other things, a write-down in the fair value of assets and other charges to our earnings, which would reduce our profitability.

42 Company No. 948454-K

4. RISK FACTORS (C oat’d)

(xxvii) We may need additional capital in the future, and we cannot assure you that we will be able to obtain such capital on acceptable terms or at all

We may require additional capital in the future in order for us to meet regulatory capital adequacy requirements, remain competitive, enter new businesses, pay operating expenses, conduct investment activities, meet our liquidity needs, expand our base of operations and offer new products and services. To the extent our existing sources of capital are not sufficient to satisfy our needs, we may have to seek external sources. Our ability to obtain additional capital from external sources in the future is subject to a variety of uncertainties, including:

• our future financial condition, results of operations and cash flows;

• our ability to obtain the necessary regulatory approvals on a timely basis;

• any tightening of credit markets (such as what occurred in 2008) and general market conditions for debt and equity raising activities by insurance companies and other financial institutions; and

• economic, political and social conditions in Malaysia and elsewhere.

We cannot assure you that we will be able to obtain additional capital in a timely manner or on acceptable terms, if at all. Future debt financing could include terms that restrict our financial flexibility or restrict our ability to manage our business freely. Furthermore, the terms and amount of any additional capital raised through issuances of equity securities may result in significant dilution to our shareholders1 equity interests.

(xxviii) Our business and prospects may be materially and adversely affected if we are not able to manage our growth successfully

The travel and general insurance market in the Asia-Pacific region has experienced significant growth in recent years. Management of our growth to date has required significant management and operational resources and is likely to continue to do so. We intend to expand our business and operations, and the successful management of any such future growth will require, among other things:

• the continued development of adequate underwriting and claim handling capabilities and skills;

• stringent cost controls;

• sufficient capital base;

• the continued strengthening of financial and management controls and information technology systems;

• increased marketing and sales activities; and

• the hiring and training of new employees and agents.

We cannot assure you that we will be successful in managing future growth. In particular, we may have difficulties in hiring and training sufficient numbers of customer service personnel and agents to keep pace with any future growth in the number of our customers. In addition, we may experience difficulties in upgrading, developing and expanding our information technology systems quickly enough to accommodate any future growth. If we are not able to manage future growth successfully, our business and prospects may be materially and adversely affected.

43 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(xxix) We may undertake investments, acquisitions, distribution arrangements, partnerships and new business lines and strategies, which may not be successful

As part of our overall strategy, we may acquire certain businesses, assets and technologies, as well as develop new products and distribution channels that are complementary to our business. Such transactions and initiatives could require that our management develop expertise in new areas, manage new business relationships and attract new types of customers. Furthermore, such transactions and initiatives may require significant attention from our management, and the diversion of our management's attention and resources could have a material adverse effect on our ability to manage our business. We may also experience difficulties integrating any investments, acquisitions, distribution arrangements and/or partnerships into our existing business and operations. We cannot assure you that we will be able to successfully implement these initiatives or that we will be able to identify successful initiatives in the future. These acquisition and business initiatives may also expose us to potential risks, including risks associated with:

• new geographical risks;

• the integration of new business lines, operations and personnel;

• the diversion of resources from our existing business and technologies;

• the potential loss of, or harm to, relationships with employees or customers; and

• unforeseen or hidden liabilities.

In addition, if we are to manage travel insurance for another airline, AirAsia are required to provide their consent, which may not be forthcoming, for whatever reasons. If we fail to successfully identify or undertake future investments, acquisitions, distribution arrangements, partnerships and new business lines and strategies, we may experience a material adverse effect on our business, financial condition and results of operations.

(xxx) Our operations could be disrupted by unexpected network interruptions caused by system failures, natural disasters, terrorist attacks, unauthorised tampering or security breaches of our information technology systems

On 1 August 2012, we acquired our key online insurance software, TIPG, from TMSB, which allows AirAsia customers to access through the internet, to query, book and purchase our Travel Protection Plan. Our business, particularly the operations of TIMB, depends heavily on the ability of our information technology systems to process on a timely basis a large number of transactions across different geographical markets and numerous product lines. In particular, transaction processes have become increasingly complex and the volume of transactions continues to grow. The proper functioning of our financial controls, accounting, customer database, customer service and other data processing systems, including those relating to underwriting and claims processing functions, together with the communications systems linking our headquarters, local operating units and main information technology centres, is critical to our operations and to our ability to compete effectively. In addition, any failure of information technology in AirAsia or our local insurance partners could also affect the integration of our system and ultimately affects potential customers from buying our Travel Protection Plan.

44 Company No. 948454-K

4. RISK FACTORS (Cont’d)

Although we maintain a network of disaster recovery facilities designed to be activated in place of primary facilities in the event of failure, we cannot assure you that our business activities would not be materially disrupted in the event of a partial or complete failure of any of these or other information technology or communications systems. These failures could be caused by, among other things, software bugs, computer virus attacks, conversion errors due to system upgrading, failure to successfully implement ongoing information technology initiatives, power failure, natural disasters such as earthquakes and floods, war, terrorist attack and unanticipated problems at our existing and future facilities. A failure of our information technology or communications systems could damage our reputation and have a material adverse effect on our business, financial condition and results of operations.

(xxxi) Our brand names and intellectual property are important to us

“AirAsia INSURE”, “Tune Insurance” and other brand names and intellectual property rights are important assets which do not belong to us. These have been licensed to us from their respective owners and/or licensors. The “AirAsia INSURE” trademark was granted to us by AirAsia under the respective AA Distribution Agreements for the duration of the respective agreements while the “Tune Insurance” trademark was granted to us by Tune Group.com Limited on an exclusive and perpetual basis. We have spent significant resources establishing and promoting these brand names, and we expect to expend significant resources promoting these brand names in the future. We may not be able to extend the licences for use of the "AirAsia INSURE11 and other brand names. In addition, our right to use the “AirAsia INSURE” trademark under the AA Distribution Agreements with the affiliates of AirAsia Berhad is dependent on the ability of these affiliates to maintain their respective licensing arrangements with AirAsia Berhad. The licensor, or sub-licensors, as the case may be, may also terminate our right to use the brand names and intellectual property rights in the event of a material breach under the relevant agreements. The licensor, or sub-licensors, as the case may be, may not renew the licensing of such brand names to us on the expiry of the respective agreements. Both scenarios would reduce the value of goodwill associated with our name, result in the loss of competitive advantage and materially harm our business and profitability.

Additionally, the validity, enforceability and scope of protection of our intellectual property rights under the licences in certain geographical markets in which we derive our revenue from may be uncertain, and we may not be successful in enforcing these rights. Any litigation, proceeding or other effort to protect such intellectual property rights could also result in substantial costs and diversion of resources and could materially harm our business and profitability. Consequently, our competitive position may be undermined, and we may suffer material losses as well as reputational damage.

(xxxii) We may be adversely impacted by volatility in social and political conditions in certain Asian countries where our insurance products are available

We have derived and expect to continue to derive substantial revenue from our Travel Protection Plan, where customers of such plan come substantially from various countries in the Southeast Asian markets. Volatility in social and political conditions in certain countries in Southeast Asia may interrupt, limit or otherwise affect our customers and consequently, our financial condition and result of operations. For example, the terrorist attacks of October 2002, August 2003 and September 2004 in Indonesia have caused increased political, social and economic instability in that country, which may be exacerbated by any additional acts of terrorism in the future. There have been incidences of violence in southern Thailand, near the Thai-Malaysian border and in response martial law has been imposed in Narathiwat, Pattani and Yala provinces. In recent years, certain Asian countries and territories, including Indonesia and other places where our Travel Protection Plan is available to customers, have implemented various measures aimed to effect economic or political reforms and changes. Some of these measures, especially where they are unexpected or severe, have led to increased incidents or higher risks of political instability and social unrest. Government-imposed wage and price controls, higher unemployment rates, mandated industry restructuring and trade barriers, such as high tariffs and customs duties, which negatively affect any domestic industry, are some examples of events causing increased volatility in social and political conditions in Asia.

45 Company No. 948454-K

4. RISK FACTORS (C ont’d)

(xxxiii) Fluctuations in exchange rates may have a material adverse effect on our business

Our financial statements are presented in Malaysian Ringgit. Because of the geographic diversity of our business, we receive revenue and expense corresponding commissions in a variety of currencies, such as Malaysian Ringgit, Thai Baht, Indonesian Rupiah and Singapore Dollar. Since mid-1997, a number of Asian currencies, such as the Thai Baht and the Indonesian Rupiah, have experienced significant volatility and depreciation, particularly during the Asian economic crisis. We have not entered into any hedging contracts to hedge fluctuations in exchange rates. Such volatility in the value of local currencies can cause fluctuations in our results of operations and could have a material adverse effect on us.

BNM has in the past intervened in the foreign exchange market to stabilise the Malaysian Ringgit including on 2 September 1998, setting a fixed exchange rate of RM3.80 to USD1.00. However, there can be no assurance that BNM will, or would be able to so intervene or maintain the fixed exchange rate in the future or that any such intervention or fixed exchange rate would be effective. There can be no assurance that the Government of Malaysia will not impose more restrictive or other foreign exchange controls.

4.2 RISKS RELATING TO OUR INDUSTRY

(i) We face significant competition and our business and prospects will be materially harmed if we are not able to compete effectively

We face significant competition in all of the geographical markets where our insurance products are available for end consumers. Our ability to compete is based on a number of factors, including existing relationships with AirAsia and the Tune Companies, premiums charged and other terms and conditions of coverage, product features, services provided, distribution capabilities, scale, experience, commission structure, brand strength and name recognition, information technology and actual or perceived financial strength. Our competitors include travel agents and general insurance companies and non-insurance financial institutions such as banks, mutual fund companies and investment management firms. Some of these companies have greater financial, management and other resources than we do, may have more established operating experience than us and may be able to offer a broader range of products and services than us. In addition, in certain of our markets, domestic insurance companies may benefit from different regulations or licensing requirements that may give them a competitive advantage. Consolidation, including acquisitions of insurance and other financial services companies in the Asia-Pacific region, could result in additional competitors with strong financial resources, marketing and distribution capabilities and brand identities. The increased competitive pressures resulting from these and other factors may materially harm our business and prospects, as well as materially reduce our profitability and prospects by, among other things:

• reducing our market share in the geographical markets in which we derive revenue from;

• decreasing our margins and spreads;

• reducing the growth of our customer base;

• increasing our policy acquisition costs;

• increasing our operating expenses, such as sales and marketing expenses; and

• increasing turnover of management and sales personnel, including agents.

46 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(ii) The rate of growth of the air-travel industry, travel insurance and general insurance industries in the Asia-Pacific region may not be as high or as sustainable as we anticipate

The rate of growth of the air-travel industry, travel insurance and general insurance industries in the Asia-Pacific region may not be as high or as sustainable as we anticipate. In particular, the air-travel industry, travel insurance and general insurance industries in the Asia-Pacific region may not expand, and a low penetration rate in a given market does not necessarily mean that a market has growth potential or that we will succeed in increasing our penetration into that market. Our Travel Protection Plan leverages on the growth of the air-travel industry, therefore the continued viability of the air-travel industry is critical to our future success. Our AA Lifestyle Protection Plan is also indirectly dependent on the air-travel industry and the customers of AirAsia. It is, however, difficult to predict the prospects of the air-travel industry. A decrease in demand for air-travel may consequently affect the growth of our travel insurance business and this could have a material adverse effect on our financial position and results of operations. The growth and development of the air-travel, insurance and general insurance industries in the Asia-Pacific region are subject to a number of industry trends and uncertainties that are beyond our control.

The travel insurance and general insurance markets as well as our customers' preferences are constantly evolving. Notwithstanding an increase in air-travel, such travellers might not purchase travel insurance. As a result, we must continually respond to changes in these markets and customer preferences to remain competitive, grow our business and maintain market share in the geographical markets in which our revenue are derived. An inability to successfully offer our products to the market would materially impair the viability of our business. Accordingly, our future success will depend on our ability to adapt to changing customer preferences, industry standards and new product offerings and services. Any inability to adapt to these changes would have a material adverse effect on our business, financial condition and results of operations.

(iii) Government measures and regulations in response to financial and other crises may materially and adversely affect our business

In 2008, global financial and credit markets experienced extraordinary levels of volatility and disruption, putting downward pressure on financial and other asset prices generally and on credit availability. In response, governments and governmental and regulatory bodies in numerous jurisdictions have taken, and may continue to take, various measures in response to the problems faced by financial institutions, including insurance companies. These measures have included increased regulatory scrutiny of, as well as restrictions on, the business and operations of certain financial institutions. These measures, and related laws, rules and regulations may change from time to time and we cannot assure you that future legislative or regulatory changes would not have a material adverse effect on our business, financial condition and results of operations. In addition, there can be no assurance that actions of governmental and regulatory bodies taken for the purpose of stabilising capital markets and certain companies will achieve their intended effect or will resolve the credit or liquidity issues of affected companies.

(iv) Changes in taxation law or exchange controls may materially and adversely affect our business, financial condition and results of operations

Our business and operations are subject to tax laws and regulations. Changes in tax laws, tax regulations or interpretations of such laws or regulations may have a material adverse effect on our business, financial condition and results of operations. Such changes also could materially reduce the sales of certain of our products. For example, an increase in corporate tax rates could increase the amounts of tax that we pay as well as our withholding tax. We cannot predict whether any tax laws or regulations impacting corporate taxes or insurance products will be enacted, what the specific terms of any such laws or regulations will be or whether, if at all, any laws or regulations would have a material adverse effect on our business, financial condition and results of operations.

47 Company No. 948454-K

4. RISK FACTORS (Cont’d)

Any imposition, variation or removal of exchange controls may lead to less independence in the Government's conduct of its domestic monetary policy and increased exposure of the Malaysian economy to the potential risks and vulnerability of external developments in the international markets. Consequently, this may adversely affect the value of our Shares and any dividends payable thereon and the ability of shareholders to liquidate our Shares or repatriate the proceeds from the liquidation of such Shares out of Malaysia.

(v) Any outbreak of infectious disease or fear of an outbreak, or any other serious public health concerns in Southeast Asia or elsewhere may have an adverse effect on the economies of certain Southeast Asian countries and may adversely affect us

The outbreak of an infectious disease in Southeast Asia or elsewhere or fear of an outbreak, together with any resulting travel restrictions or quarantines, could have a negative impact on the economy and business activity and thereby adversely affect our revenue. Examples are the outbreak in 2003 of SARS and the outbreak in 2004 and 2005 of Avian influenza, or “bird flu”, in Asia.

During the last three years, large parts of Asia experienced unprecedented outbreaks of the avian flu. No fully effective avian flu vaccines have been developed and an effective vaccine may not be discovered in time to protect against the potential avian flu pandemic. In April 2009, there was an outbreak of the Influenza A (H1N1) virus (swine flu) which originated in Mexico but subsequently spread to Indonesia, Hong Kong, Japan, Malaysia, Singapore, and elsewhere in Asia. The Influenza A (H1N1) virus is believed to be highly contagious and may not be easily contained.

An outbreak of avian flu, SARS, the Influenza A (H1N1) virus or another contagious disease or the measures taken by the governments of affected countries, including Indonesia, against such potential outbreaks, could seriously interrupt our operations or the services or operations of our suppliers and customers, which could have a material adverse effect on our business, financial condition, results of operations and prospects. The perception that an outbreak of avian flu, SARS, the Influenza A (H1N1) virus or another contagious disease may occur may also have an adverse effect on the economic conditions of countries in Southeast Asia and thereby adversely affect our business, financial condition, results of operations and prospects.

4.3 RISKS RELATING TO AN INVESTMENT IN OUR SHARES

(i) We are controlled by TMSB and AirAsia Berhad, whose interests may not be aligned with those of our other shareholders

Upon the successful completion of our Listing, TMSB will own [55.85%] and AirAsia Berhad will own [16.19%] of our enlarged and issued paid-up share capital and will be our major shareholders. As our major shareholders, other than in respect of certain votes regarding matters in which they are interested parties and must abstain from voting under the Listing Requirements, TMSB and AirAsia Berhad will be able to influence the approval of any corporate proposal or transaction requiring a shareholders' resolution under the Act. This includes the approval of all final dividends and the appointment of directors and delaying or preventing a change in control of our Company, even if such transactions would be beneficial to our other shareholders. In addition, TMSB and AirAsia Berhad and their affiliates may seek to influence our business or operations decisions. We cannot assure you that the interests of TMSB and AirAsia Berhad will be aligned with those of our other shareholders. In addition our dependence on AirAsia for a substantial portion of our business may create conflicts of interest as we seek to expand our business and provide our travel insurance product to other airlines.

After the completion of our IPO, we will continue to engage in transactions with AirAsia and the Tune Companies. Although our Audit and Risk Committee will review all material transactions between us and AirAsia and/or TMSB, circumstances may arise in which the interests of AirAsia and/or TMSB could conflict with our interests or the interests of our other shareholders.

48 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(ii) The historical consolidated financial statements and the pro forma financial information contained in this Prospectus may not accurately reflect our historical financial position, results of operations and cash flows

The historical consolidated financial statements for FY2009, FY2010 and FY2011, and 1H2011 and 1H2012 included elsewhere in this Prospectus have been prepared on a consolidated basis. The historical consolidated financial statements have been prepared on the basis that our Group existed with different equity stakes held across different entities throughout the periods. Please refer to Section 11.2 - “Management’s Discussion and Analysis of Financial Condition and Result of Operations - Basis of Presentation” of this Prospectus for further details. Therefore, they do not reflect the financial position, results of operations and cash flows that would have occurred had the formation of our Group in its existing form been effected on 27 March 2009 (being the date of incorporation of TIL).

The pro forma financial information for FY2009, FY2010 and FY2011, and 1H2011 and 1H2012 included elsewhere in this Prospectus has been prepared on the basis that the formation of our Group (including the acquisition of TIMB by our Group) occurred as at 27 March 2009 (being the date of incorporation of TIL). As the pro forma financial information is prepared for illustrative purposes only, such information, because of its nature, may not give a true picture of the effects of the formation of our Group on the financial position, results of operations or cash flows of our Group had the transactions or events actually occurred on the stated date of such pro forma financial information. Further, such information does not purport to predict our Group’s future financial condition, results of operations, prospects or cash flows.

As a result, your ability to understand our financial condition and results of operations or cash flows based on our historical consolidated financial statements or pro forma financial information may be limited.

(iii) There has been no prior market for our Shares and the offering of our Shares may not result in an active liquid market for our Shares

There has been no prior market for our Shares, and there is no assurance as to the liquidity of any market that may develop for our Shares, the ability of holders to sell our Shares or the prices at which holders would be able to sell our Shares.

Application has been made to Bursa Securities for our listing of, and quotation for, our enlarged and issued paid-up share capital on the Main Market of Bursa Securities. On [•], we obtained the approval of Bursa Securities for our listing of, and quotation for, our enlarged and issued paid-up share capital on the Main Market of Bursa Securities, and it is expected that there will be an approximate 12-Market Day gap between the closing of our IPO and trading of our Shares. We cannot assure you that there will be no event or occurrence that will have an adverse impact on the securities markets, our industry or us during this period that would adversely affect the market price of our Shares when they begin trading.

(iv) Our Share price may be volatile

The market price of our Shares could be affected by numerous factors, including:

• general market, political and economic conditions;

• trading liquidity of our Shares;

• differences in our actual financial and operating results and those expected by investors and analysts;

• changes in earnings estimates and recommendations by financial analysts;

49 Company No. 948454-K

4. RISK FACTORS (Cont’d)

• changes in market valuations of listed shares in general or shares of companies comparable to ours;

• perceived prospects of our business and the travel insurance industry;

• changes in government policy, legislation or regulation; and

• general operational and business risks.

In addition, many of the risks described elsewhere in this Prospectus could materially and adversely affect the market price of our Shares. Accordingly, there can be no assurance that our Shares will not trade at prices lower than the Retail Price.

Over the past few years, the Malaysian, regional and global equity markets have experienced significant price and volume volatility that have affected the share prices of many companies. Share prices of many companies have experienced wide fluctuations that are often unrelated to the operating performance of these companies. There is no assurance that the price and trading of our Shares will not be subject to fluctuations.

(v) There may be a delay in, or termination of, our Listing

The occurrence of certain events, including the following, may cause a delay in, or termination of, our Listing:

• we are unable to meet the minimum public spread requirement as determined by Bursa Securities; that is, having at least 25% of our issued and paid-up share capital in the hands of at least 1,000 public shareholders holding at least 100 Shares each at the point our Listing; or

• we are not able to obtain the approval of Bursa Securities for our Listing for whatever reason.

In such an event, investors will not receive any Shares, and we will be liable to return in full all monies paid in respect of any application for our Shares. If such monies are not paid within 14 days after we become liable to repay it, then, pursuant to sub-section 243(2) of the CMS A, we will become liable to repay the monies with interest at the rate of 10% per annum or such other rate as may be prescribed by the SC upon expiration of that period until full refund is made.

(vi) We may not be able to pay dividends

Dividend payments are not guaranteed, and our Board may decide, in its sole and absolute discretion, at any time and for any reason, not to pay dividends. If we do not pay dividends, or pay dividends at levels lower than that anticipated by investors, the market price of our Shares may be negatively affected and the value of the investment in our Shares may be reduced.

Further, our payment of dividends may adversely affect our ability to fund unexpected capital expenditures as well as our ability to make repayments on any borrowings we may have outstanding at the time. As a result, we may be required to borrow additional money or raise capital by issuing equity securities, which may not be on favourable terms or available at all. Further, in the event we incur new borrowings subsequent to our Listing, we may be subject to covenants restricting our ability to pay dividends.

There is no assurance that the Company will be able to pay shareholders dividends out of distributable profits.

50 Company No. 948454-K

4. RISK FACTORS (Cont’d)

(vii) We are a holding company and, as a result, are dependent on dividends from our subsidiaries to meet our obligations and to provide funds for payment of dividends on our Shares

We are a holding company and conduct substantially all of our operations through our subsidiaries. Accordingly, dividends and other distributions received from our subsidiaries are our principal source of income. Consequently, the amount of these dividends and distributions are an important factor in our ability to pay dividends on our Shares (to the extent declared by our Board). The ability of our subsidiaries to pay dividends or make other distributions to us is subject to the availability of their distributable reserves and their having sufficient funds that are not needed to fund their operations, other obligations or business plans. Please also refer to Section 4.1(vi) - “Risks Relating to Our Business - Our business is highly regulated and compliance with current or future requirements may limit our growth or adversely affect our future business” of this Prospectus.

In particular, TIMB is a regulated insurer in Malaysia and may only pay dividends if it is able to meet the requirements specified in the Insurance Act or achieves a capital adequacy ratio that is satisfactory to BNM.

In addition, changes in applicable accounting standards may affect the ability of our subsidiaries and, consequently, our ability to declare and pay dividends. As we are a shareholder of our subsidiaries, our claims as a shareholder will generally rank junior to all claims of our subsidiaries' creditors and claimants, if any. In the event of a liquidation of a subsidiary, there may not be sufficient assets for us to recoup our investment in that entity.

(viii) The sale, or the possible sale, of a substantial number of our Shares in the public market following our Listing could adversely affect the price of our Shares

Following the offering and sale of up to [210,224,929] Shares, up to [27.96%] of our Shares will be publicly held by investors participating in our Listing, while [419,858,080] Shares, or [55,85%] of our issued and paid-up share capital, will be held directly by TMSB and [121,677,000] Shares, or [16.19%] of our issued and paid-up share capital, will be held directly by AirAsia Berhad. Following our Listing, our Shares will be tradable on the Main Market of Bursa Securities without restriction. Our Shares may also be sold outside the United States, subject to the restrictions of Regulation S under the US Securities Act. [We and [•] have entered into lock-up arrangements and [•] and [•], as Promoters, are subject to a moratorium in accordance with the SC's requirements.]

However, notwithstanding our existing level of cash and cash equivalents, we may issue additional Shares after the end of the lock-up period in connection with financing activities or otherwise, and it is possible that [•] or [•] may dispose of some or all of their Shares after the lock-up period or moratorium period, as applicable, pursuant to their own investment objectives. If [•] or [•] sell, or are perceived as intending to sell, a substantial amount of our Shares, the market price for our Shares could be adversely affected.

(ix) Purchasers of our Shares in our Listing will experience immediate and substantial dilution because the Institutional Price and Final Retail Price are higher than our NAV per Share

The Institutional Price and Final Retail Price are higher than the NAV per Share. Therefore, purchasers of our Shares in our Listing will experience an immediate dilution in NAV of RM[»] per Share assuming that the Institutional Price and Final Retail Price is [•] and our existing shareholders will experience an increase in the NAV per Share,

In addition, should we elect to raise funds in the future through the issuance of new Shares, existing shareholders who do not or are unable to subscribe or participate in such fund raising exercises will experience a dilutive effect on their shareholdings.

51 Company No. 948454-K

5. INFORMATION ON OUR GROUP

5.1 OUR HISTORY

We were incorporated under the Act on 14 June 2011 as a private limited company under the name of Tune Ins Holdings Sdn Bhd, and was subsequently converted to a public company on 17 August 2012 and assumed our present name to facilitate our listing on the Main Market of Bursa Securities.

We are an underwriter, directly and via reinsurance, of general and life insurance products across the Asia-Pacific region, operating two core businesses, an online insurance business through which we sell insurance products to customers as part of their online booking process with our online partners, and a general insurance business, currently only in Malaysia, through our 83.26%-owned subsidiary, TIMB.

Our online insurance business comprises primarily our Travel Protection Plan and we facilitated the issuance of approximately 5.6 million Travel Protection Plan policies to AirAsia customers in FY2011 and 3.0 million Travel Protection Plan policies to AirAsia customers in 1H2012 as reinsurers. Our online insurance business is now underpinned by exclusive long-term agreements with AirAsia. In addition to our relationship with AirAsia, we have entered into a contractual arrangement with Tune Hotels and are considering entering into similar long-term arrangements with other partners within the Tune Companies.

As the exclusive insurance product manager for AirAsia and Tune Hotels, we design and manage both general and life insurance products for their customers pursuant to 10-year agreements with AirAsia Berhad, AirAsia Japan Co., Ltd and Tune Hotels (expiring in 2022), 15-year agreements (with certain other affiliates of AirAsia Berhad (namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd. and AirAsia Inc, expiring in 2027) and a 5-year agreement with Thai AirAsia Co. Ltd (expiring in 2017). These arrangements provide us with the opportunity to market to AirAsia’s and Tune Hotels’ substantial pool of customers, in addition to our own extensive database. We utilise the distribution channels of both AirAsia and the Tune Hotels, primarily their respective online booking websites, to offer these products to their customers as part of their booking process, and we arrange for local insurance partners to underwrite these products. In accordance with these arrangements with local insurance partners, we reinsure a portion of the risk associated with the writing of each policy. Where necessary, in order to optimise our risk-adjusted returns and to manage our own underwriting exposure, we have external reinsurance arrangements with highly-rated global reinsurance companies, as well as with national reinsurers.

We believe that our exclusive relationship with AirAsia places us in a unique position to benefit from the growth in travel within the Asia-Pacific region and particularly the increasing number of AirAsia’s customers.

TIL was incorporated on 27 March 2009 and is licensed to operate as an offshore captive insurer in Labuan. TIL was established as a 80:20 joint venture between TMSB and Multi-Purpose Capital Holdings Berhad with the primary purpose of reinsuring general insurance underwritten by Multi­ Purpose Insurans Bhd, a wholly-owned subsidiary of Multi-Purpose Capital Holdings Berhad. Multi­ Purpose Insurans Bhd is an insurance provider that, through a contractual relationship with AirAsia, negotiated agreements with local insurance partners outside Malaysia on AirAsia’s behalf with respect to AirAsia’s travel insurance, and underwrote such policies in Malaysia. Multi-Purpose Insurans Bhd also provided certain management functions to us in FY2009 and FY2010.

TMGR and TMLR were incorporated on 10 February 2011 and 6 April 2011 respectively as wholly- owned subsidiaries of TMSB. On 26 May 2011, TMGR obtained a licence to carry on Labuan general reinsurance business in, from or through Labuan and on 15 June 2011, TMLR was issued a licence to carry on Labuan life reinsurance business in, from or through Labuan.

Our Company was subsequently established in June 2011 and we acquired TIL, TMGR and TMLR from TMSB in October 2011 to consolidate our insurance business. With the acquisitions and the introduction of our new management at the end of 2010 and the beginning of 2011, we took over many of the management functions previously provided by Multi-Purpose Insurans Bhd to us.

52 Company No. 948454-K

INFORMATION ON OUR GROUP (Cont’d)

In May 2012, we acquired an established Malaysian general insurance business, TIMB, which has approximately 1,000 agents and 16 branches throughout Malaysia as at the LPD and through which we carry out our general insurance business. This acquisition enables us to underwrite general insurance policies directly in Malaysia, as well as to offer a broader range of insurance products. Following our acquisition of TIMB, AirAsia terminated their agreement with Multi-Purpose Insurans Bhd, and the termination took effect on 3 September 2012.

Pursuant to the AA Distribution Agreements, we are the exclusive insurance product manager for AirAsia and effective 4 September 2012, our subsidiary, TIMB, underwrites the Travel Protection Plan directly in Malaysia.

We currently conduct the underwriting of our general and life reinsurance business across the Asia- Pacific region through TMGR and TMLR. We have also channelled our business previously conducted through TIL to TMGR.

We are actively pursuing acquisition targets in other Southeast Asia markets, specifically Indonesia and Thailand, to enable us to own general insurers in these markets and through which we can underwrite our online insurance business and offer products through other channels to these fast growing and sizeable markets whose insurance needs are under-served.

Our Group structure is as follows:

/■ TIH

J Investment holding 1 | 80%(1) 100% 1 83.26%(2) I 100% ’ r r f ~.... ----- 1 ------TIL % TMGR ft TMLR | TIMB \_ J y . J

Captive Insurance General Reinsurance Life Reinsurance General Insurance

Dormant

Notes:

The remaining 20% o f the equity interest in TIL is held by Multi-Purpose Capital Holdings Berhad <2) The remaining 16.74% o f the equity interest in TIMB is held by the minority shareholders o f TIMB

THE REST OF THIS PA GE HAS BEEN INTENTIONALL Y LEFT BLANK

53 Company No. 948454-K

5. INFORMATION ON OUR GROUP (C o in ’d)

5.2 SHARE CAPITAL

The present authorised share capital of our Company is RM150,000,000.00 comprising 1,500,000,000 ordinary shares of RM0.10 each, of which RM60,83 8,508.00 comprising 608,385,080 Shares are issued and credited as fully paid-up. Upon completion of our Public Issue, our issued and paid-up share capital will be increased to RM[75,176,000.90] comprising [751,760,009] Shares. The changes in our issued and paid-up share capital since our incorporation are as follows:

Date of No. of shares ::: Cumulative Allotm ent : Allotted Par Value Consideration ..... Total RM 14.06.2011 2 1.00 Subscribers’ shares 2

05.10.2011 14,200,000 1.00 Otherwise than cash 14,200,002

31.10.2011 38,506 1.00 Otherwise than cash 14,238,508

04.10.2012 142,385,080 0.10 Subdivision of shares par value from 14,238,508 RM1.00 to RM0.10

04.10.2012 466,000,000 0.10 Capitalisation of shareholder’s loan 60,838,508

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in our Company. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

5.3 SUBSIDIARY COMPANIES

5.3.1 TIL (Company No.: LL06997)

(i) History and Business

TIL was incorporated on 27 March 2009 in the Federal Territory of Labuan, Malaysia as a company limited by shares under the Offshore Companies Act, 1990 and began its operations in the same year. TIL is licensed to operate as an offshore captive insurer in Labuan.

(ii) Share Capital

TIL does not have an authorised share capital. The issued and paid-up capital of TIL is USD143,000.00 comprising of 143,000 ordinary shares. The changes in the issued and paid- up share capital of TIL since its incorporation are as follows:

Date o f... No. of Ordinary Cumulative Allotment I Shares Allotted Is;>ue Price Consideration ...... Total

•::: / • y. UoL>:: 27.03.2009 100 i Subscribers’ shares 100

29.06.2009 142,900 i Cash 143,000

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in TIL. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

54 Company No. 948454-K

5. INFORMATION ON OUR GROUP (Cont’d)

(iii) Shareholders and Directors

As at the LPD, TIL is our 80% owned subsidiary company and the remaining 20% equity interest in TIL is held by Multi-Purpose Capital Holdings Berhad. As at the LPD, the Directors of TIL are Kheoh And Yeng, Peter Dixon Miller, Fazlin Binti Abu Hassan Shaari, Karena Fernandes and Chan Yee Ngor.

(iv) Subsidiary and Associated Companies

As at the LPD, TIL does not have any subsidiary or associated company.

5.3.2 TMGR (Company No.: LL08072)

(i) History and Business

TMGR was incorporated on 10 February 2011 in the Federal Territory of Labuan, Malaysia as a company limited by shares under the Labuan Companies Act, 1990 and began its operations in the same year. TMGR is licensed to carry on Labuan general reinsurance business in, from or through Labuan.

(ii) Share Capital

TMGR does not have an authorised share capital. The issued and paid-up capital of TMGR is USD3,207,288.00 comprising of 3,207,288 ordinary shares. The changes in the issued and paid-up share capital of TMGR since its incorporation are as follows:

Date of No. of Ordinary Cumulative Allotment Shares Allotted Issue Price Consideration Total USD USD 10.02.2011 1 1 Subscriber’s share 1

12.09.2012 3,207,287 1 Cash 3,207,288

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in TMGR. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

(iii) Shareholders and Directors

As at the LPD, TMGR is our wholly-owned subsidiary company and its Directors are Peter Dixon Miller and Fazlin Binti Abu Hassan Shaari.

(iv) Subsidiary and Associated Companies

As at the LPD, TMGR does not have any subsidiary or associated company.

5.3.3 TMLR (Company No.: LL08176)

(i) History and Business

TMLR was incorporated on 6 April 2011 in the Federal Territory of Labuan, Malaysia as a company limited by shares under the Labuan Companies Act, 1990 and began its operations in the same year. TMLR is licensed to carry on life reinsurance business in, from or through Labuan.

55 Company No. 948454-K

5. INFORMATION ON OUR GROUP (Cont’d)

(ii) Share Capital

TMLR’s does not have an authorised share capital. The issued and paid-up capital of TMLR is USD3,207,288.00 comprising 3,207,288 ordinary shares. The changes in the issued and paid- up share capital of TMLR since its incorporation are as follows:

D ate of No. of Ordinary Cumulative Allotment Shares Allotted Issue Price Consideration Total USD USD 06.04.2011 1 1 Subscriber’s share 1

12.09.2012 3,207,287 1 Cash 3,207,288

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in TMLR. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

(iii) Shareholders and Directors

As at the LPD, TMLR is our wholly-owned subsidiary company and its Directors are Peter Dixon Miller and Fazlin Binti Abu Hassan Shaari.

(iv) Subsidiary and Associated Companies

As at the LPD, TMLR does not have any subsidiary or associated company.

5.3.4 TIMB (Company No.: 30686-K)

(i) History and Business

TIMB was incorporated in Malaysia on 27 December 1976 as a private limited company under the Act as United Oriental Assurance Sdn Bhd and began its operations in 1977. It was converted to a public limited company on 1 August 1997 and assumed the name United Oriental Assurance Berhad. On 31 January 2003, it changed its name to Oriental Capital Assurance Berhad and subsequently on 21 September 2012, changed its name to its current name, Tune Insurance Malaysia Berhad. TIMB is principally involved in underwriting all classes of general insurance in Malaysia.

(ii) Share Capital

TIMB’s present authorised share capital is RM200,000,000 comprising 200,000,000 ordinary shares of RM1.00 each, of which RM100,013,218 comprising 100,013,218 ordinary shares of RM1.00 each are issued and credited as fully paid-up. There have been no changes in the issued and paid-up share capital of TIMB for the last three years preceding the LPD.

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in TIMB. In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

(iii) Shareholders and Directors

As at the LPD, TIMB is our 83.26%-owned subsidiary company and the remaining 16.74% of the equity interest in TIMB is held by the minority shareholders of TIMB. As at the date of this Prospectus, the Directors of TIMB are Ng Soon Lai @ Ng Siek Chuan, Peter Dixon Miller, Chee Siew Eng, Mohd Yusof Bin Hussian and Ooi Say Teng.

56 Company No. 948454-K

5. INFORMATION ON OUR GROUP (Cont’d)

(iv) Subsidiary and Associated Companies

As at the LPD, TIMB has one subsidiary company, Capital OCA, and does not have any associated company.

5.3.5 Capital OCA (Company No.: 10393-D)

(i) History and Business

Capital OCA was incorporated in Malaysia on 10 February 1971 as a public limited company under the Act as Asia Insurance Berhad, and began its operations in the same year. On 12 January 1973, it changed its name to Capital Insurance Bhd and subsequently on 21 March 2003, changed its name to Capital OCA Berhad. Capital OCA is currently a dormant company.

(ii) Share Capital

Capital OCA’s present authorised share capital is RM100,000,000 comprising 100,000,000 ordinary shares of RM1.00 each, of which RM2.00 comprising two ordinary shares of RM1.00 each are issued and credited as fully paid-up. There have been no changes in the issued and paid-up share capital of Capital OCA for the last three years preceding the LPD.

As at the LPD, there are no outstanding warrants, options, convertible securities or uncalled capital in Capital OCA.In addition, there are no discounts, special terms or instalment payment terms applicable to the payment of the consideration for the allotment.

(iii) Shareholders and Directors

As at the LPD, Capital OCA is a wholly-owned subsidiary company of TIMB and its Directors are Peter Dixon Miller, Fazlin Binti Abu Hassan Shaari and Karena Fernandes.

(iv) Subsidiary and Associated Companies

As at the LPD, Capital OCA does not have any subsidiary or associated company.

5.4 CAPITAL EXPENDITURE AND DIVESTITURES

We have not incurred any material capital expenditures and divestitures in FY2009 to FY2011 and up to the LPD.

There are no divestitures currently in progress, within or outside Malaysia. For planned material capital expenditures, please refer to Section 11.7 - “Capital Expenditures” of this Prospectus.

5.5 KEY ACHIEVEMENTS AND MILESTONES

The following are some of our Group’s key achievements and milestones:

Year______Key achievements and milestones ......

2009 Commenced business via TIL to reinsure travel protection plans in Malaysia, Thailand, Indonesia, Singapore, China and Macau

4.1 million policies reinsured by us

2010 Commenced reinsuring travel protection plans in Hong Kong and Australia

Successfully enhanced the Travel Protection Plan with the addition of a two-hour flight delay benefit

57 Company No. 948454-K

5. INFORMATION ON OUR GROUP (Cont’d)

Year______Key achievements and milestones ______Restructured insurance business by hiring more experienced executives to build a more profitable business

4,9 million policies reinsured by us

2011 Commenced reinsuring travel protection plans in the Philippines, Cambodia, Laos, Vietnam and New Zealand

Continued process of hiring experienced executives

Expanded geographical coverage for our online travel insurance business to a total of 13 countries and territories (including Hong Kong and Macau as individual markets).

Started TIH and established TMGR and TMLR as full-fledged Labuan reinsurers to maximise retention within our Group and increase profitability

Commenced direct marketing channel offering AirAsia’s customers and Tune Hotels’ guests lifestyle protection pian providing long-term protection against accident, hospitalisation, death and critical illness

Integrated insurance into the mobile application of AirAsia to enable customers of AirAsia to purchase travel insurance via mobile

Set up a dedicated customer experience team to manage all insurance related enquiries from customers of AirAsia

5.6 million policies reinsured by us

Started life insurance business in Indonesia and Malaysia via telemarketing channel supported by Electronic Direct Marketing and SMS

2012 Commenced reinsuring travel protection plans in Japan and India and expanding geographical coverage for our online travel insurance business to a total of 14 countries arid territories

Further enhanced the online capabilities to offer travel insurance coverage for the “fly-thru” option offered by AirAsia to provide comprehensive protection to meet airlines cross-sector convenience

Acquired TIMB to directly underwrite general insurance in Malaysia

3 million policies reinsured by us for 1H2012

Achieved annualised first year premiums of RM20.0 million from life insurance business

Integrated insurance into the “AirAsia Simplified WAP” application thereby enabling customers of AirAsia to purchase travel insurance via tablet and mobile

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58 Company No. 948454-K

6. BUSINESS OVERVIEW

6.1 OVERVIEW

We are an underwriter, directly and via reinsurance, of general and life insurance products across the Asia-Pacific region, operating two core businesses, an online insurance business through which we sell insurance products to customers as part of their online booking process with our online partners, and a general insurance business, currently only in Malaysia, through our 83.26%-owned subsidiary, TIMB.

Our online insurance business comprises primarily our Travel Protection Plan and we facilitated the issuance of approximately 5.6 million Travel Protection Plan policies to AirAsia customers in FY2011 and 3.0 million policies to AirAsia customers in 1H2012 as reinsurers. Our online insurance business is now underpinned by exclusive long-term agreements with AirAsia. In addition to our relationship with AirAsia, we have entered into a contractual arrangement with Tune Hotels and are considering entering into similar long-term arrangements with other partners within the Tune Companies.

As the exclusive insurance product manager for AirAsia and Tune Hotels, we design and manage both general and life insurance products for their customers pursuant to 10-year agreements with AirAsia Berhad, AirAsia Japan Co., Ltd and Tune Hotels (expiring in 2022), 15-year agreements with certain other affiliates of AirAsia Berhad (namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd. and AirAsia Inc, expiring in 2027) and a 5-year agreement with Thai AirAsia Co. Ltd (expiring in 2017). These arrangements provide us with the opportunity to market to AirAsia’s and Tune Hotels’ substantial pool of customers, in addition to our own extensive database. We utilise the distribution channels of both AirAsia and the Tune Hotels, primarily their respective online booking websites, to offer these products to their customers as part of their booking process, and we arrange for local insurance partners to underwrite these products. In accordance with these arrangements with local insurance partners, we reinsure a portion of the risk associated with the writing of each policy. Where necessary, in order to optimise our risk-adjusted returns and to manage our own underwriting exposure, we have external reinsurance arrangements with highly-rated global reinsurance companies, as well as with national reinsurers.

We believe that our exclusive relationship with AirAsia places us in a unique position to benefit from the growth in travel within the Asia-Pacific region and particularly the increasing number of AirAsia’s customers. According to S-A-P, international tourism in Asia-Pacific has increased significantly from 2010 to 2011 and the Asia-Pacific region grew at a higher rate than any other region (6.2%), and within Asia-Pacific, Southeast Asia grew at the highest rate (10.4%). Further, S-A-P expects that based on AirAsia’s success in growing its aviation business over the last few years and its plans for significant fleet expansion, with orders for delivery of 175 Airbus A3 20s and another 200 Airbus A320-NEOs between 2016 and 2026, AirAsia will continue its growth in existing and new markets as opportunities become available.

In addition to our relationships with AirAsia and Tune Hotels, we have also entered into arrangements with AirAsia Expedia to provide our insurance products to AirAsia Expedia customers making online bookings initially through three of their websites in Asia. Further, we are in discussions with other third party airlines and other potential partners to provide similar services to their online booking customers.

In May 2012, we acquired an established Malaysian general insurance business, TIMB, which has approximately 1,000 agents and 16 branches throughout Malaysia as at the LPD and through which we carry out our general insurance business. This acquisition enables us to underwrite general insurance policies directly in Malaysia, as well as to offer a broader range of insurance products. We are actively pursuing acquisition targets in other Southeast Asia markets, specifically Indonesia and Thailand, to enable us to own general insurers in these markets and through which we can underwrite our online insurance business and offer products through other channels to these fast growing and sizeable markets whose insurance needs are under-served.

Our operating revenues were approximately RM30.0 million in FY2009, RM43.5 million in FY2010 and RM55.9 million in FY2011, having grown at a CAGR of 36.5% from FY2009 to FY2011. Our pro forma operating revenues (reflecting the TIMB Acquisition) were approximately RM319.3 million in FY20I1 andRM181.4 million in 1H2012.

59 Company No. 948454-K

6. BUSINESS OVERVIEW (Cont’d)

6.2 OUR KEY COMPETITIVE STRENGTHS

6.2.1 Strong and exclusive relationship with AirAsia across the region

We manage AirAsia’s insurance business on an exclusive basis pursuant to the AA Distribution Agreements, which allow us to market to their customers and leverage their strong branding to exclusively sell our Travel Protection Plan, the “AirAsia INSURE Travel Protection Plan”, to their customers, as part of their online ticket purchase process. According to AirAsia Berhad’s annual report for FY2011, AirAsia carried approximately 29.8 million passengers, of which 21.7 million were in the markets we offer travel insurance and of which 26.49% were covered by our Travel Protection Plan. As well as being offered as part of customers’ online booking process when they plan to travel on AirAsia, our Travel Protection Plan is also available through selected travel agents in Malaysia and Indonesia. As part of the process that customers undertake when purchasing a ticket, customers must decide whether or not to purchase our Travel Protection Plan. Without the incremental cost of approaching customers to buy our travel insurance products on a stand-alone basis, we are able to offer our products very competitively relative to discrete insurance products that customers could purchase, and we believe the ease and lower cost makes our products very attractive to AirAsia’s customers.

Consequently we are well-positioned to benefit from growth in intra-Asian travel in general, as well as the strong historical and future growth in AirAsia’s customer volumes. According to S-A-P, aviation traffic is growing along with the economic and population growth occurring in Asia. We believe that AirAsia will continue to pursue strong growth in customer volumes. In particular, AirAsia Berhad has launched two new joint ventures in the Philippines (March 2012) and Japan (August 2012) in order to expand its fleet, increase route frequency and add new routes. AirAsia Berhad has also announced that it is in the process of acquiring Batavia Air in Indonesia. We believe that any growth in AirAsia’s customer volumes in the countries in which we now offer our travel insurance products will allow us to increase our revenues with minimal additional cost. According to S-A-P, from 2001 to 2011, “revenue- passenger-kilometre” in the Asia-Pacific region grew 92.1% while during the same period, it grew 69.2% in Europe. Asia-Pacific region passenger traffic, as measured in “revenue-passenger-kilometre”, has surpassed that of North America in 2011. “Revenue-passenger-kilometres” in the Asia-Pacific region is expected to experience strong growth rate from 2011 to 2030 at a CAGR of 7.0% continuing to be one of the fastest growing regions in the world long term. Southeast Asia is one of the world's most dynamic regions for air travel. “Revenue-passenger-kilometres” within Southeast Asia is projected to grow at a CAGR of 7.4% from 2011 to 2030.

6.2.2 Successful and regionally scalable business model that represents a compelling proposition for all stakeholders

We believe our core online insurance product offering, which we initially offered with AirAsia, is transferable to any provider that uses online means to distribute their products, and whose offering would be complemented by the cross-selling of our insurance products. Our opportunity to market to customers of AirAsia is assured through exclusive long-term arrangements. A key element to the success of our online insurance business model are the established relationships we have with local insurance partners, particularly in our key markets of Indonesia, Thailand, Singapore and China (including Hong Kong and Macau). These relationships allow our local partners to offer their products to such secured customers pursuant to our exclusive long-term distribution arrangements, and then allow us, through our reinsurance model to assume a portion of underwriting risk and consequential revenue from each sale. See Section 6.1 — “Overview” of this Prospectus.

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As a result, we have successfully entered into similar exclusive arrangements with Tune Hotels, whereby we offer exclusive tailored insurance products for customers of hotels operated by Tune Hotels. We have also benefited from opportunities to sell our products through other AirAsia business ventures and continue to seek opportunities to enter into similar arrangements with these companies. For example, we have also entered into an agreement with AirAsia Expedia to market and cross-sell our general insurance products through three of AirAsia Expedia’s web portals in Asia, thereby substantially increasing our potential customer reach. According to S-A-P, in 1996, less than 1% of all airline tickets were sold online. As of 2010, approximately 50% of airline ticket sales were made through airline websites. Over a third of online ticket sales were booked through online travel agency sites such as Expedia, Travelocity, Orbitz, and Zuji. Similar to the AirAsia ticket purchase process, users of such web portals will be able to acquire our insurance products as part of their ticket purchase process. Additionally stand alone insurance products will also be available via AirAsia Expedia’s web portals. We are also progressing opportunities to enter into similar arrangements with independent third party providers, whereby we would be able to offer them a similar business model, generating incremental revenue from their existing captive customer base.

We believe that our business model, which incorporates the core elements of a captive customer base, predetermined and fixed long term revenue model, low operating costs and local insurance representation across key Asian markets, is attractive to our potential partners, as well as being difficult to replicate and providing a barrier to entry. As a result, we believe that this business model, coupled with our experience and proprietary technology can be utilised to the sale of other insurance products, extended to additional countries and replicated with other partners, including other airline operators.

6.2.3 Ability to tap extensive “digital” databases to sell ancillary insurance products online

We have managed to build a substantial database of approximately 5.5 million policyholders as of 31 July 2012 derived from policies we have underwritten via our key online insurance software, TIPG since April 2011. Further, under our existing distribution arrangements with AirAsia and the Tune Hotels, we are also permitted to market our general insurance products to customers of AirAsia and the Tune Hotels. This provides us with a cost effective means of reaching such customers and prospects. Since a significant majority of the information that we have access to have been provided as part of the purchase process for air tickets or insurance products, such information is more accurate and up-to-date than that typically available to insurance companies. Following our acquisition of TIMB, we can now offer our insurance products to such customers in Malaysia, which are underwritten by TIMB, at a price that we believe an agency-based distribution model would likely be unwilling to match. We believe that our extensive digital database, and the marketing opportunities that it provides, will become increasingly important as the purchase of insurance through online methods becomes more widely accepted across Asian markets.

6.2.4 Benefit from attractive Southeast Asia general insurance market fundamentals

We operate, and plan to expand, our general insurance business in a stable underwriting environment that is characterised by an under-penetrated market, particularly in Malaysia, Indonesia, Thailand and the Philippines. According to Milliman, despite strong GDP growth at a CAGR of 16.5% from 2006 to 2011 in Asia ex-Japan, markets such as Malaysia, Thailand, Indonesia and the Philippines all have reported “penetration rates” under 2.0% and “density rates” under USD200, which are much lower than the mature markets in the region as well as Europe, North America and Japan. As we develop our general insurance business both domestically and outside of Malaysia, our insurance products are expected to benefit from economic growth in the Asia-Pacific emerging markets, especially in the areas of personal protection and asset protection insurance, including motor, property and personal accident insurance where, according to Milliman, the general insurance market had grown at a CAGR of between 9.1% to 18.1% from 2006 to 2011 for markets such as Malaysia, Thailand, Indonesia and the Philippines, As well as offering general insurance products through more traditional means, we believe that the marketing opportunities to existing customers of our online partners, AirAsia and Tune Hotels, will provide substantial cross-selling opportunities of our general insurance products.

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6.2.5 Experienced management team and strong shareholder support

We have a highly experienced management team with a strong track record with leading companies in the insurance industry and experience in revenue generation, innovation and profitability. Our management team comprises members who possess extensive operating and management experience in Malaysia, as well as internationally in the insurance, technology and financial services industries. Our management team was instrumental in developing strong relationships with our key business partners, including local insurance partners, as well as optimising our reinsurance and insurance business models.

In addition, we are able to take advantage of the support and expertise from our major shareholders, TMSB and AirAsia Berhad, in particular, Tan Sri Dr Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun, both of whom have reputations and proven track records as leading entrepreneurs. AirAsia and the Tune Companies are in different businesses and we are able to leverage the distinct branding and customer base of both groups through the agreements that we had entered into with them. For example, we are in a position to utilise the “BIG” loyalty programme of Think Big Digital Sdn Bhd (a 50/50 joint venture between AirAsia Berhad and TMSB) to promote our product offerings to “BIG” loyalty programme members. In addition, we have been provided access to the other business ventures of our major shareholders. Recently, we took advantage of advertising and sponsorship opportunities with Queen’s Park Rangers Football Club, in particular, during its recent pre-season tour in Asia, and Caterham Formula One, which these major shareholders own, to market our insurance products.

6.3 OUR STRATEGY AND FUTURE PLANS

6.3.1 Leverage on the growth of AirAsia’s businesses

We intend to continue to manage the insurance needs of AirAsia’s customers. As AirAsia expands its footprint, where it is commercially viable to do so, we intend to expand into these new markets alongside AirAsia. We currently offer insurance products to such customers in 14 out of 21 countries and territories to which AirAsia currently flies and are negotiating with third party local insurance partners in three of the others. We believe that AirAsia will continue to be aggressive in its expansion plans, and we intend to use our position as the exclusive insurance product manager for AirAsia to design and manage insurance products for their customers to continue to further expand our customer base and drive revenue growth alongside their growth.

6.3.2 Replicate our business model with new partners, whether travel partners or otherwise, and increase our product offerings to customers of our existing online partners

We aim to extend our travel insurance business beyond AirAsia and Tune Hotels, thereby expanding our customer reach. We believe our business model offers an attractive proposition to third parties who would benefit from the incremental revenue derived from the distribution of our insurance products alongside their own products. It also provides local insurance providers with the opportunity to market to the large customer bases of our online partners allowing them to sell products with very low sales and marketing costs and finally, it allows end customers to purchase low cost insurance products with minimal effort as part of a purchase process they are already undertaking.

We intend to accomplish our goal of expanding beyond AirAsia and Tune Hotels by establishing tie- ups with other partners, including other airlines, leveraging on our established systems infrastructure, such as our key online insurance software TIPG, our existing relationships with local insurance partners and our experience in developing relationships with local insurance partners in new markets. We have replicated our reinsurance model in relation to AirAsia Expedia, where we will initially offer “Tune Insurance” and “Expedia” co-branded products to users purchasing tickets through three of AirAsia Expedia’s web portals in Asia. We are also currently in advanced discussions with a regional airline’s primary insurer. Where we enter into distribution arrangements with new partners, we intend to follow a similar model to our existing online insurance arrangements to work with our own and local insurance partners and, where appropriate, to reinsure a portion of the risk such partners assume.

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Further, we intend to utilise our experience and track record of successfully implementing this highly attractive business model to drive expansion through our relationships with existing partners, such as AirAsia and Tune Hotels, including by offering products in countries in which we currently do not offer our travel insurance product but which AirAsia currently flies or will in the future fly from.

6.3.3 Improve Take-up Rates in our online insurance business to increase revenues

We aim to increase Take-up Rates for our online insurance business, by improving consumer education through advertisements explaining the benefits of purchasing insurance as part of the booking process. Further, where appropriate, we may elect to contact certain customers of AirAsia who have not taken up insurance at the time of their online booking to explore the various insurance options available to them. We also intend to be innovative in our marketing initiatives by leveraging our access to the brand recognition of AirAsia and the Tune Companies’ other businesses and building up the “Tune Insurance” brand going forward. See Section 6.6 - “Marketing, Sales and Distribution” of this Prospectus for further details.

We constantly evaluate market conditions in each country in which we offer our insurance products and tailor our sales and marketing efforts accordingly. To that end, we intend to focus on expanding our various product offerings, including life insurance products, into new jurisdictions beyond Malaysia, Thailand and Indonesia, and increase online direct sales into markets such as Australia and Singapore where consumers are amenable to sales of insurance products through electronic media as opposed to direct contact (such as telemarketing).

6.3.4 Integrate TIMB to capture additional revenue and cost synergies, and diversify product offerings

Our acquisition of TIMB enables us to capture revenue from underwriting travel insurance in Malaysia that was previously earned by our third party insurance partner in Malaysia and provides us with the ability to underwrite other general insurance products in Malaysia. We are in the process of integrating the insurance business of TIMB, which we believe will generate significant cost-saving synergies, particularly focusing on improving the profitability and portfolio mix of TIMB’s insurance products, improving the effectiveness of TIMB’s existing network of agents and multi-channel distribution platforms and upgrading its information technology systems, whilst maintaining a disciplined approach to underwriting risk, capital conservation and expense management.

TIMB intends to replace its existing core policy administration system with a new information technology system by the end of the first quarter of 2013. This new system will provide new business processing, underwriting, administration, claims, management information systems and a differentiated front-end offering superior usability for customers and agents. The system will support the on-going enhancement of the oversight over the adequacy and effectiveness of our risk management and internal control systems.

We intend to leverage our access to AirAsia and the Tune Companies’ other businesses for marketing and branding opportunities to attract customers to purchase a greater range of products underwritten by TIMB. We also intend to offer the broader suite of insurance products that TIMB currently offers to customers of AirAsia and Tune Hotels who had purchased our insurance products, and to our online partners.

Additionally, we intend to offer a broad suite of products to the staff of AirAsia, Tune Companies and respective business partners to supplement existing employee benefit programs and to cover personal needs through products such as motor, accident and household insurance.

We intend to complete the integration process of TIMB by the end of the first quarter of 2013.

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6.3.5 Enhance revenue streams through appropriate acquisitions in Southeast Asia

In addition to organic growth, we intend to grow our business through acquisitions. In Malaysia, we recently acquired TIMB and we are currently seeking opportunities to acquire businesses with the relevant licences in our other core markets in Southeast Asia, such as Indonesia and Thailand which we believe are sizeable markets where insurance needs are under-served. As well as broadening our ability to offer a range of insurance products in those Asian markets that we consider under-penetrated, such acquisitions would allow us to underwrite and insure products directly in those markets, thereby increasing the revenue derived from our online insurance business. We are currently in discussions to acquire local insurance providers in Indonesia and Thailand through which we are able to market our products directly in these countries.

6.4 OUR PRODUCTS, CUSTOMERS AND DISTRIBUTION CHANNELS

We provide general and life reinsurance for customers of AirAsia and Time Hotels across the Asia- Pacific region and issue general insurance policies in Malaysia. Our insurance activities have primarily centred on our online insurance business, which is underpinned by our relationships with AirAsia and Tune Hotels, for whom we design and manage both general and life insurance retail product offerings to their respective customers.

AirAsia is a leading low cost carrier operating in the Asia-Pacific region and has an extensive network of more than 150 routes in 21 countries and territories with over 400 daily flights. AirAsia was named the World’s Best Low Cost Airline in the World Airline Survey by Skytrax for four consecutive years (2009 through 2012).

The Tune Companies were founded by Tan Sri Dr Anthony Francis Femandes and Dato’ Kamarudin Bin Meranun, and are involved in the hotel, financial services, education, entertainment and mobile services industries.

6.4.1 Our Online Insurance Business Model

Our online insurance product offerings are sold through the websites of our online partners, currently AirAsia, Tune Hotels and AirAsia Expedia. In particular, we or our local insurance partners, as the case may be, offer core products to customers of our online partners in the following key segments:

• travel insurance, sold to customers of AirAsia and branded as the “AirAsia INSURE Travel Protection Plan”;

• lifestyle protection insurance which are marketed to AirAsia customers and Tune Hotels customers, whose information is made available to us under the respective distribution and/or collaboration agreements;

• Guest Personal Accident insurance for Tune Hotels; and

• travel insurance, sold to customers of AirAsia Expedia.

We have established arrangements for our online partners to offer our insurance products in various countries and jurisdictions across the Asia-Pacific region comprising Malaysia, Thailand, Indonesia, Singapore, Australia, the Philippines, China, Hong Kong, Macau, Japan, Cambodia, Laos, Vietnam and India. We are in the process of securing arrangements in Myanmar, South Korea and Taiwan, the other countries in which AirAsia operates. For Tune Hotels, we currently only offer in Malaysia and Indonesia.

A diagrammatical illustration of our online insurance business model, in particular, our travel insurance, is set out below:

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AA Distribution commissions Agreements

reinsurance premium Customers of AirAsia premium Local insurance TMGR/TIH partner

risk risk

As part of the online booking process of a flight, hotel room, or as the case may be, the travel-related services offered by AirAsia Expedia in a country that we have established arrangements to offer our insurance products, customers of the online partner are given the option to purchase certain insurance products relating to the booking that they are in the process of completing, such as travel insurance if the customer is booking an AirAsia flight, or a personal accident protection plan if a customer of hotels operated by Tune Hotels is booking a room. Any purchase of the insurance product made is then bundled together as part of the main booking process, with the customer paying one overall fee, and only being required to use one set of registration information.

In each country that our online partner wishes to be able to offer our insurance products, we coordinate for our online partner to enter into business collaboration arrangements (which may be structured as agency, referral, marketing and/or distribution agreements to meet local regulation) with one of our local insurance partners. For AirAsia customers, the country of the appropriate local insurance partner is determined depending on the country of departure of the flight in question, irrespective of where the ticket itself is bought. For example, if a customer’s flight departs from Malaysia and arrives in Singapore and that customer purchases the Travel Protection Plan at the time of purchasing the flight ticket, we will underwrite the plan directly in Malaysia. On the other hand, if the customer’s flight departs from Singapore and arrives in Thailand and that customer purchases the Travel Protection Plan at the time of purchasing the flight ticket, our local insurance partner in Singapore would underwrite the plan in Singapore.

Pursuant to these business collaboration agreements, the local insurance partners agree to underwrite the insurance policies purchased online by the customers of the online partner in the relevant country. These arrangements are generally for a term of one to two years and govern the payment of commissions, as well as the reimbursement of marketing expenses, to the online partner for promoting and marketing our insurance products.

We then enter into reinsurance arrangements with each of these local insurance partners, who are required to cede to us their underwriting risk under a “quota-share” arrangement. To manage our own underwriting exposure, we typically cede catastrophic excess-of-loss risk in relation to each policy based on a percentage of our reinsurance premium. Please refer to Section 6.5 - “Reinsurance and Retrocession” of this Prospectus for further details. .

The amount of the premium that is apportioned between the local insurance partner and us is set out in the reinsurance agreements between ourselves and the local insurance partners and are determined after taking into account factors such as the prevailing market conditions, projected sales volumes, premiums to be charged, competition, regulation and relationship with the insurer in other markets These agreements are typically for terms of one-year, and are renewable annually or re-negotiated, each year to take into account market conditions and other relevant factors.

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Following our acquisition of TIMB in May 2012, we are now licensed to underwrite directly, through TIMB, insurance products sold as part of our online insurance business originating in Malaysia. As such, the role of the local insurance partner in Malaysia under our business model was assumed by TIMB in September 2012. Prior to the completion of the TIMB Acquisition and until September 2012, all of our Malaysian online insurance products were underwritten by Multi-Purpose Insurans Bhd. Please refer to Section 6.3.5 - “Strategies - Enhance revenue streams through appropriate acquisitions in Southeast Asia” of this Prospectus for further details.

6.4.2 Distribution arrangements with our online partners

Under the AA Distribution Agreements, which have terms of 10-years (with respect to AirAsia Berhad and AirAsia Japan Co., Ltd, expiring in 2022) and 15 years (with respect to certain other affiliates of AirAsia Berhad, namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd, and AirAsia Inc, expiring in 2027) and 5-years (with respect to Thai AirAsia Co.Ltd, expiring in 2017), we have been appointed, on an exclusive basis, to manage AirAsia’s insurance business. The AA Distribution Agreements may be renewed for such period and upon such terms and conditions as the parties may agree in writing.

Under the AA Distribution Agreements, we have agreed not to manage the insurance business of other parties for similar services unless approved by AirAsia in writing. If we manage the insurance business of other airlines, AirAsia and/or its customers will enjoy terms which are no less favourable than the terms offered to those other airlines and/or their customers.

AirAsia has also granted us a limited, non-exclusive, non-transferable and non-sub-licensable right to use, display and reproduce the “AirAsia INSURE” marks for the duration of the AA Distribution Agreements. Accordingly, we have branded our Travel Protection Plan distributed to AirAsia customers as the “AirAsia INSURE Travel Protection Plan”.

Pursuant to the AA Distribution Agreements and the corresponding business collaboration arrangements that AirAsia has with each of our local insurance partners, AirAsia receives a portion of the gross premium paid by customers for each purchase of our Travel Protection Plan as commission. While this varies in each market in which we offer our online insurance products depending on the prevailing market conditions in a particular country and whether there is regulation on the commissions paid, this is generally determined as a fixed percentage of the gross premium received and is set out in the business collaboration agreements entered into with each local insurance partner, which are typically renewed on an annual or bi-annual basis. Currently, AirAsia’s portion may range between 16.0% and 31.0% of the gross premium paid by customers depending on the market in which our Travel Protection Plan is underwritten. In addition to the commission paid to AirAsia, they may be reimbursed a specified percentage of the gross premium paid by customers, subject to applicable regulations, to the extent that it undertakes approved marketing activities to promote and market our insurance product.

To complement our insurance product offerings which are sold online, we have also introduced other products such as the AA Lifestyle Protection Plan and the Tune Hotels Lifestyle Protection Plan. These plans are offered to customers of AirAsia and the hotels operated by Tune Hotels, who have consented to receive marketing communication and product offers.

6.4.3 Our Online Insurance Products

(a) AirAsia

Travel Insurance - "AirAsia INSURE Travel Protection Plan "

We offer the Travel Protection Plan pursuant to the AA Distribution Agreements. Our Travel Protection Plan is available to customers of AirAsia on flights originating from 14 countries and territories.

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Our Travel Protection Plan is branded the “AirAsia INSURE Travel Protection Plan” and is designed exclusively for AirAsia’s customers who purchase flight tickets through AirAsia’s website. As well as being able to purchase our Travel Protection Plan online, it is also sold through AirAsia’s other distribution channels as part of the booking process, including via selected travel agents in Malaysia and Indonesia, as well as AirAsia’s mobile platform. A significant majority of Travel Protection Plans are sold via the AirAsia website or mobile platform.

Our Travel Protection Plan provides coverage for losses arising from, among others, personal accident, medical and evacuation, emergency medical evacuation and mortal remains repatriation, travel inconvenience such as flight cancellation or loss or damage to baggage and personal effects, flight delay and on-time guarantee. The plan includes an “on-time” guarantee benefit which compensates the customers of AirAsia for any delay of flights by AirAsia beyond two hours of the scheduled time of departure.

The coverage purchased by the customers corresponds with the type of ticket purchased, with “One­ Way Plan” coverage for one-way trips and a “Retum-Trip Plan” for return trips. The coverage on the “Return-Trip Plan” commences when the insured checks-in for his or her departure flight and terminates when he reaches the flight terminal on his return flight. The coverage for the “One-Way Plan” commences when the insured checks-in for his departure flight and terminates when he reaches the flight terminal of his or her destination.

The revenues from our travel insurance product have seasonal variances, matching the seasonality profile of the travel industry in general, in particular air travel. As such, our travel insurance revenues are generally highest in the fourth quarter of the financial year and increase during holiday seasons.

Lifestyle Protection Plan - "AirAsia INSURE Lifestyle Protection Plan "

In 2011, we introduced the AA Lifestyle Protection Plan branded as the “AirAsia INSURE Lifestyle Protection Plan”, which is offered to customers of AirAsia in Malaysia, Thailand and Indonesia and is underwritten by our local life insurance partners. Under the AA Distribution Agreements, in addition to the provision of our Travel Protection Plan, we are able to market and offer life, accident, health and other insurance policies to customers of AirAsia. Information on these customers is available to us regardless of whether they have purchased our insurance products, as long as they have provided consent, via the AirAsia website or otherwise, to be contacted.

Our local life insurance partners directly promote and underwrite the AA Lifestyle Protection Plan to these AirAsia customers, marketing such plans as an AirAsia-branded product given customers’ familiarity and perception of AirAsia’s reputation or the AirAsia brand.

Products currently offered and branded AA Lifestyle Protection Plan include (a) a cancer plan which is a 15-year protection plan providing death and cancer coverage. If no claims are made during the term of the policy, the insured will get back the total annual premium paid on the life coverage upon maturity of the policy, and (b) an accident and hospital income plan which is a term protection plan with coverage until an insured reaches age 70. It provides death, accidental permanent total disability and hospital income benefits. As at August 2012, 6,943 policies in force were issued under the AA Lifestyle Protection Plan.

In order to meet the local insurer and regulatory requirements for our life insurance business in Malaysia, Thailand and Indonesia, we have appointed RGA Global as a strategic life reinsurance partner. RGA Global is wholly-owned by Reinsurance Group of America, Incorporated and was established to insure business from countries outside North America. Accordingly, RGA Global enters into reinsurance agreements with our local life insurance partners. We subsequently provide, through TMLR, our wholly-owned subsidiary, by way of retrocessional coverage to RGA Global, reinsurance of up to 50.0% of the total risk in respect of which the customer has sought insurance coverage.

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A diagrammatical illustration of the reinsurance arrangement in relation to the AA Lifestyle Protection Plan is set out below:

insurance reinsurance reinsurance premium premium Customers of RGA Global premium AirAsia insurance partner risk risk risk

The costs of marketing the AA Lifestyle Protection Plan by our local life insurance partners are managed via a co-insurance arrangement between our local life insurance partners, RGA Global and TMLR. Under this arrangement, TMLR is only responsible for a proportionate share of marketing costs when its cashflow with respect to AA Lifestyle Protection Plan operations becomes positive.

Under the AA Distribution Agreements, AirAsia is entitled to a portion of the revenue or premiums derived by us.

(b) Tune Hotels

Life Insurance - Tune Hotels Lifestyle Protection Plan

In 2011, we supplemented our AirAsia insurance product offerings by entering into the Tune Hotels BCA.

The Tune Hotels BCA is for a term of ten years and may be renewed for such period and upon such terms and conditions as the parties may mutually agree in writing. During the term of the agreement, Tune Hotels shall not engage with any other third party for the outsourcing or the management of any insurance business.

Similar to our arrangements with AirAsia, under the Tune Hotels BCA, we have the ability to market our branded lifestyle protection plan to customers of the hotels operated by Tune Hotels in Malaysia and offer life, accident and health policies to Tune Hotels’ registered customers. Information on these customers is available to us regardless of whether they have purchased our insurance products, as long as they have provided consent, via the Tune Hotels website, to be contacted. These products have been offered since January 2012.

Our local life insurance partner directly promotes and underwrites the Tune Hotels Lifestyle Protection Plan to such customers of hotels operated by Tune Hotels. As at August 2012, 351 policies in force were issued under the Tune Hotels Lifestyle Protection Plan.

The Tune Hotels Lifestyle Protection Plan has the same coverage and benefits as the AA Lifestyle Protection Plan and similar to the ceding of risk in relation to the AA Lifestyle Protection Plan, our local life insurance partner will cede a portion of its underwriting risk to RGA Global. RGA Global, in turn, will cede its risk to TMLR.

Under the Tune Hotels BCA, Tune Hotels and/or its affiliates are entitled to a portion of our revenue or premiums derived from the same Tune Hotels Lifestyle Protection Plan underwritten by our local life insurance partner.

Personal Accident Insurance - Tune Hotels Personal Accident Plan

In addition to the Tune Hotels Lifestyle Protection Plan, the Tune Hotels Personal Accident Plan is also designed exclusively for customers of hotels operated by Tune Hotels in Malaysia and Indonesia and underwritten by our local insurance partners.

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Customers who book hotel rooms are given an option, as part of their booking process, to purchase a Tune Hotels Personal Accident Plan, which covers losses arising from, among others, personal accidents and medical expenses arising from such accidents. Coverage of the plan begins upon the scheduled check-in time at the Tune hotel in question and ends at the official check-out time of the hotel or the scheduled check-out time, whichever is the earlier.

(c) AirAsia Expedia

We are the non-exclusive insurance manager for AirAsia Expedia, and have commenced marketing a line of insurance products through three of AirAsia Expedia’s websites in Asia, thereby substantially increasing our potential customer reach. We commenced offering our travel insurance products branded with the “Tune Insurance” and “Expedia” marks in September 2012, and these products include the following:

• personal accident benefits, including accidental death or permanent disablement;

• travel inconvenience, such as trip cancellation, trip curtailment, loss or damage to baggage and personal effects, baggage delay, loss of personal money, loss of travel documents or credit cards and trip delay;

• medical benefits, including medical expenses reimbursement, emergency medical evacuation or repatriation, mortal remains repatriation, compassionate visit due to hospitalisation or death, child care benefit and hospital allowance;

• personal liability;

• home care benefits, which includes covering theft of property during a trip; and

• travel assistance services, i.e. providing travel assistance for the entire trip.

6.4.4 Our General Insurance Business in Malaysia

Following the TIMB Acquisition, we are licensed to issue policies in all classes of general insurance in Malaysia across a broad range of industry and customer segments.

In relation to our general insurance business through TIMB, we have entered into a number of treaty and facultative reinsurance arrangements to manage our own underwriting exposure in accordance with our risk appetite. For example, we reinsure our underwriting risk in relation to losses arising out of low probability high-impact events, such as multiple loss of life, whilst retaining our underwriting risk associated with losses which are potentially less significant, for example, loss of baggage. TIMB purchases reinsurance coverage in relation to its general insurance business, which involves TIMB ceding to a panel of highly-rated reinsurance companies a portion of the underwriting risk to manage their own underwriting exposure. In particular, for our non-motor insurance products, we cede the bulk of the risk to our reinsurers and we retain a small percentage of the risk.

Our acquisition of TIMB allows us to provide general insurance products in Malaysia. These products include the aforementioned AirAsia and the Tune Hotels products as well as other general insurance products set out below:

• Motor Insurance - Our motor insurance plan provides protection for vehicle owners against losses that may arise in connection with accidents and theft involving the insured vehicle. Malaysian law requires that any vehicle on the road be insured against liability for injury or death to third parties;

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• Fire Insurance - Our fire insurance plan is specifically designed by us to cover residential and commercial properties. The premium for such insurance is determined and charged in accordance with the rate in the regulated Fire Insurance Tariff. There are three main types of fire insurance policies, namely, the fire and perils insurance, house owners insurance and householders insurance;

• Marine Insurance - Our marine cargo insurance plan provides cover to the owner of goods against loss or damage to the goods whilst in transit, from a place of shipment to a destination named in the policy. Transits may be by approved conveyances by sea, air, land or a combination of sea/air and land. The shipment may be within Malaysia and/or imported to or exported from Malaysia. We also offer marine open cover for our customers. All the shipments falling within the ambit of the open cover are automatically covered by us, subject to full declaration of each shipment. In addition, we offer marine hull insurance products;

• Health Insurance (Sihat Malaysia) - Sihat Malaysia is a standard product which was introduced by the National Insurance Association of Malaysia to prepare the insured for the costly financial expenses that the insured may incur in the event he is hospitalised due to an accident or illness;

• Dental Insurance - Our dental insurance is specifically designed to enhance the employee benefits companies offer to their employees. Our dental insurance product was developed via collaboration with Universal MediDent Sdn Bhd, with whom we have secured an additional two-year exclusive distribution right expiring end 2014;

• Personal Accident Insurance - Our Selective Personal Accident Policy provides worldwide coverage for the whole year through and it also allows flexibility in the choice of benefits. In addition, our motorists personal accident plan provides cover to drivers and passengers of private cars insured with us;

• Engineering Insurance - We have various engineering insurance plans which cover, among others, civil engineering works that are under construction, protection against risks involved in the erection of machinery, plant and steel structures, insurance for plant, machinery and mechanical equipment and protection to electronic equipment; and

• Foreign Workers Insurance - Our foreign workers insurance plan covers all foreign workmen employed by a company. We also offer an insurance guarantee scheme for such foreign workers.

6.5 REINSURANCE AND RETROCESSION

We reinsure a substantial portion of our underwriting risk in order to manage our own underwriting exposure. In doing so, we cede to our reinsurers a portion of the risk that we assume through our provision of insurance products (directly to customers in Malaysia). We generally reinsure by engaging reinsurance brokers. The reinsurance premiums we pay vary depending of the amount and type of risk we cede.

For our Travel Protection Plan we typically cede catastrophe excess-of-loss risk and this is based on a percentage of reinsurance premiums received. For many of our other insurance products, particularly our non-retail corporate/commercial products, we cede the bulk of the risk to our reinsurers and we retain a small percentage of the risk. For our motor insurance, we cede a portion of gross earned premium.

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For underwriting risk we incur through TIMB, reinsurance is provided through TMGR, our wholly- owned subsidiary, and other panel reinsurers such as Malaysian Reinsurance Berhad (rated “A” by Fitch Ratings), Sompo Japan Insurance Inc. (rated “A” by Fitch Ratings), Labuan Reinsurance (L) Ltd (rated “A-“ by Fitch Ratings). TMGR reinsures TIMB’s online business and then obtains retrocessional coverage through third party reinsurance providers.

TIMB typically obtains reinsurance through reinsurance treaties (as opposed to obtaining facultative reinsurance where a separate reinsurance contract is negotiated for each original policy to be insured). It obtains facultative reinsurance for insurance business that exceeds certain limits under the reinsurance treaties. Facultative reinsurance requires a reinsurer’s consent before TIMB can commit to a particular policy. It has entered into treaties on a proportional (also known as pro rata) basis with respect to its fire, general accident, engineering and marine products through a number of brokers. In a proportional treaty, the reinsurer (for example, Malaysian Reinsurance Berhad) indemnifies the ceding insurer (in this case, TIMB) against a predetermined percentage of losses and expenses.

TIMB has also entered into treaties on a non-proportional (also known as excess-of-loss) basis with respect to its motor, liabilities and personal accident products. In a non-proportional treaty, the reinsurer indemnifies the ceding insurer against a portion of losses and expenses incurred in excess of a certain threshold (either dollar amount or percentage amount).

With respect to policies reinsured with TMGR, we obtain retrocessional coverage with other rated reinsurers and cede to such reinsurers a portion of the risk we have assumed. The retrocessionaires we obtain coverage from are Lloyds syndicate members with a minimum rating of “A” by Standard & Poor’s.

6.6 MARKETING, SALES AND DISTRIBUTION

6.6.1 Our Online Insurance Business

We leverage on the AirAsia and the Tune Hotels brands and marketing infrastructure in the marketing of our services/products that we provide to their customers. In addition, we intend to build up the “Tune Insurance” brand going forward by embarking on marketing efforts to enhance our brand by advertising on AirAsia related materials, such as boarding passes and in-flight magazines.

For example, the “AirAsia INSURE” branded products are marketed and sold on the website of AirAsia and also through other distribution channels, such as selected travel agents in Malaysia and Indonesia, while the Tune Hotels Personal Accident Plan is marketed and sold on the website of Tune Hotels. We also have a marketing tie-up with Think Big Digital Sdn Bhd, the operator of the “BIG” loyalty programme in Malaysia, through which customers of our Travel Protection Plan and other general insurance products will be awarded “BIG” points which can be redeemed for, among others, free AirAsia flights.

We are able to leverage our relationships with AirAsia and the Tune Companies to access certain advertising and sponsorship opportunities with Queen’s Park Rangers Football Club and the Caterham Formula One team. Tan Sri Dr Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun are the majority shareholders of Queen’s Park Rangers Football Club and Tan Sri Dr Anthony Francis Fernandes is the team principal of Caterham Formula One. As our relationship with AirAsia and the Tune Companies continues, we are confident similar future opportunities will be available.

We also, through our arrangement with AirAsia Expedia, use AirAsia Expedia’s web portals to market our products to customers of AirAsia Expedia.

We have emphasised and continue to emphasise consumer education in our advertising efforts. As such, we focus on educating potential customers of the necessity of travel insurance and lifestyle protection. We advertise in Travel 3sixty (AirAsia’s in-flight magazine), airports as well as through other print and digital materials of AirAsia and on strategic travel magazines, using an advertorial approach to create awareness of the “AirAsia INSURE” and “Tune Insurance” brands.

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6.6.2 Our General Insurance Business

As of the LPD, TIMB engages approximately 1,000 agents in 16 branches across Malaysia, who promote TIMB’s general insurance products. TIMB’s agents are registered with General Insurance Association of Malaysia, which is the statutory association recognised by the Government of Malaysia for all registered insurers who transact in the general insurance business in Malaysia. It issues each agent with an identification card which indicates TIMB as principal thus enabling clients to verify the agent’s authenticity. They are experienced in the marketing and servicing of general insurance products. We are focused on motivating our agents so that they promote our products over those of other insurance companies and ensure that we can attract customers to use us to meet all their insurance needs.

After our acquisition of TIMB, we have commenced activities relating to our agency distribution channel to improve the effectiveness of TIMB’s network of agents to increase our profit margins, including suspension of unprofitable agents, encouraging agents to sell a more diversified portfolio of insurance products and hiring agents with a track record of profitability. We have also modified the profit commissions payable to profitable agents to retain and incentivise them. In addition, we plan to optimise our branch network, including amalgamating our Petaling Jaya and Shah Alam branches, opening a branch in Kluang, Johor and expanding our Johor Bahru branch.

We have introduced loyalty and recognition programs as tools for our agents to attract and retain customers. These include both agent-focused and customer-focused programs. Our agent-focuscd programs include providing special recognition to high-performing agents in conventions and other official company functions, providing increased training and changing our profit commission strategy to increase motivation for agents. Our customer-focused programs, subject to the approval from BNM, will include providing access to rewards to our general insurance customers through the “BIG” loyalty programme of Think Big Digital Sdn Bhd.

We have also commenced efforts to reposition our products. Previously, TIMB was known primarily as a motor-insurance provider. We aim to position TIMB as a provider of a diversified portfolio of insurance products particularly retail products and will use our motor insurance relationships as a gateway to introduce our customers to a broader range of insurance products and our online relationships to introduce a broader range of direct ”no frills” products. We entered into a corporate agency agreement dated 4 June 2012 with ECM Libra, pursuant to which licensed brokers at ECM Libra are able to sell TIMB’s general insurance products on our behalf on a commission basis.

In addition, we have a direct sales department in TIMB, which acts as a single point of contact for our customers to obtain various services related to personal general insurance products, such as motor insurance, personal accident insurance and fire insurance.

In addition to our own agents directly selling our general insurance products to customers, we use alternative channels to increase our distribution network, including through the use of the following:

• Franchise - TIMB’s franchise department solicits business from motor vehicle franchise businesses and provides insurance services such as motor insurance and extended warranty programs. TIMB currently transacts motor insurance business with Daihatsu Malaysia Sdn Bhd and with several of Perodua’s branches in Malaysia. In addition, it operates extended warranty programs for Peugeot. In July 2012, we hired a new department head for our franchising department and have submitted business proposals to a number of other leading motor franchises in Malaysia for both motor and extended warranty programs business.

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• Brokers - In June 2012, we hired a new head of broking to cultivate relationships with leading insurance brokers in Malaysia. TIMB currently has existing broking relationships with SP&G Insurance Brokers, Tradewinds International Insurance Brokers, Willis (Malaysia) Sdn Bhd, Malene CSB Insurance Brokers Sdn Bhd, Marsh Insurance Brokers (Malaysia) Sdn Bhd, Insfleld Insurance Brokers Sdn Bhd and CIMB Insurance Brokers Sdn Bhd. Our main insurance products underwritten via such brokers comprise major coiporate/commercial classes of products including marine, oil & gas, aviation, engineering, property and foreign workers. These products are provided for key customers including Petroliam Nasional Berhad, MISC Berhad, Malaysia Marine Heavy Engineering Bhd, Muhibbah Engineering (M) Berhad and SapuraCrest Petroleum Berhad.

6.7 CLAIMS MANAGEMENT

6.7.1 Our Online Insurance Business

For our online insurance business, claims are typically received by staff in our customer experience department or directly by our local insurance partners. Where claims are received by us, they are forwarded to our local insurance partners, unless they relate to products that we are directly underwriting. Our local insurance partners examine and verify the claims. For more complex or serious cases or where our local partners need to verify certain information with us, they do so expediently. Once the claim is verified, the amount payable is calculated and, once approved, is distributed to the policyholder. For those claims that are distributed directly to a policyholder by our local insurance partners, they will submit a claim to us pursuant to our respective reinsurance agreement. Upon receipt of these claims from our local partners, we will distribute the amount payable in proportion to the risk we were reinsuring.

Our claims response system is continually reviewed as part of our overall customer relationship management system. In addition, we have broadly similar obligations under the AA Distribution Agreements and work together with AirAsia and our local insurance partners to ensure that claims and complaints are processed efficiently.

Feedbacks and/or claims from our customers are taken seriously and we process such claims quickly and efficiently, usually within seven days upon receipt of such claims. We believe that efficient claim procedures and prompt claim payment would encourage more new customers as well as repeat customers.

We have an agreement with Asia Assist Network (M) Sdn Bhd under which we outsource certain of our call centre services to them. Their call operators provide call support in relation to travel-related emergency assistance and claims.

6.7.2 Our General Insurance Business

Claims with respect to products underwritten by TIMB are submitted to our agents, brokers and direct sales representatives. The claim details are then relayed to the TIMB claims department. The claims department appoints adjusters, if necessary, and corresponds with the reinsurers to distribute liability. Claimants have a right to appeal disputed claims to the Financial Mediation Bureau. In addition, we provide a roadside assistance hotline for our motor insurance products.

We appointed a new head of claims in September 2012 for TIMB’s general insurance business whose initial focus will be to optimise the claims process and to implement automated services and management information systems in accordance with regulatory guidelines.

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6.8 INFORMATION TECHNOLOGY

6.8.1 Our Online Insurance Business

Information technology is an essential element of our business infrastructure. We have invested in developing information technology as effective systems directly lower our operating costs, enable scalable operations and improve overall efficiency. Our key online insurance software is our TIPG which was acquired by us from TMSB on 1 August 2012.

The TIPG is a backend insurance host system which remote third-party applications/agents can access through the internet, to query, book and purchase our online insurance products. It is currently only used for the Travel Protection Plan, but is scalable and could be incorporated to accommodate the products of our other future partners. TIPG also provides the mechanism to interface with insurance providers which registers the policy with respective insurer. This is also scalable and expandable to enable to business to grow.

The TIPG leverages on a web infrastructure, where the application is centrally installed and managed on our in-house servers. Part of our strategy is to engage third party service providers to host our required software to achieve greater scalability and lower capital outlay. Being a web-based service, the TIPG can be scaled and expanded over multiple servers as the demand arises without any additional modifications to the system.

As part of our business continuity programme in view of our heavy dependence on our software and server systems, we have established disaster recovery procedures with a robust backup data centre with adequate data communication redundancies. See Section 4.1(xxx) - “Risk Relating to Our Business - Our operations could be disrupted by unexpected network interruptions caused by system failures, natural disasters, terrorist attacks, unauthorised tampering or security breaches of our information technology systems” of this Prospectus for further details.

6.8.2 Our General Insurance Business

TIMB is implementing a new information technology system that is selected with regional deployment in mind and is scheduled to be ready in the first quarter of 2013. TIMB currently uses a core insurance IT system known as GIS 2000, an established system in the Malaysian insurance industry that provides the following functions: policy administration, claims administration, underwriting and financial accounting.

The process of implementing a new core insurance system and associated technology in TIMB includes integrating TIPG into this new core insurance system. The new system will include: (a) a leading-edge “front-end” system; (b) a core integrated back end system including policy administration, claims, underwriting and accounting; (c) automated integration with our own and industry gateways such as FinancialLink; (d) e-Agency module for foreign workers insurance; and (e) a management information system data centre.

In addition, TIMB is expected to roll-out its e-Agency module at the end of 2012.

6.9 RISK MANAGEMENT AND INTERNAL CONTROLS

Management of risk exposure is fundamental to our operation and our long-term growth. Our risk management policy is designed to ensure that risks which could undermine our strategy, reputation and long-term viability are identified and addressed. In addition, there is an on-going oversight of the adequacy and effectiveness of our risk management policy by our Audit and Risk Committee. Our Audit and Risk Committee comprised Ng Soon Lai @ Ng Siek Chuan as Chairman, Razman Hafidz Bin Abu Zarim and Tan Hong Kheng. It reports directly to our Board. Our Audit and Risk Committee is assisted by our Group Risk Department, which is spearheaded by Liyana Abdullah, who is in turn supported by working committees at both the TIH level and the TIMB level in each case with representation by the chief executive officer of the respective entities.

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6. BUSINESS OVERVIEW (Cont’d)

Our Group Risk Department works closely with our Group Internal Audit Department, which reports directly to our Audit and Risk Committee.

As TIMB is subject to more stringent regulations than our other subsidiaries, it has a separate risk management committee that designs and implements a risk management framework for TIMB. This committee comprises Chee Siew Eng (Independent Chairman), Mohd Yusof Bin Hussian (Independent Director) and Peter Dixon Miller (Director) and reports to the board of directors of TIMB. TIMB has in addition, a separate audit committee, investment committee and nomination and remuneration committee.

6.10 INSURANCE

We believe that we have insured each of our properties in accordance with industry practice in Malaysia. Our insurance policies cover risks related to fire, business interruption and public liability (including third parties’ property damage and/or personal injury). We also maintain other insurance policies for our employees, including personal accident insurance and group medical insurance policies for our employees and their dependents.

Our insurance policies are reviewed annually to ensure that we have sufficient insurance coverage.

We believe that our current insurance coverage is adequate and sufficient for our current operations as at the LPD. However, any significant damage to our properties or disruptions to our operations, whether as a result of fire, natural and/or man-made causes, may still negatively impact our results of operations or financial position.

6.11 COMPETITION

We face competition in our online and general insurance businesses. We compete based on factors including pricing, size and reach of our distribution channels, product design features, customer services, reputation, perceived financial strength and our experience in the line of the insurance to be underwritten.

We are the exclusive manager of insurance products for customers of AirAsia and hotels operated by Tune Hotels and our products are offered in the course of the booking process for flights and/or rooms (as the case may be), which is one of the earliest points of time at which customers would consider purchasing travel insurance. Consequently, we believe that we face limited competition for AirAsia and Tune Hotel’s customers for these products. AirAsia customers may however, have purchased annual travel insurance from our competitors or may have received complimentary travel insurance, although we believe such policies provide less coverage than our Travel Protection Plan, from these competitors when they pay for their air tickets using certain credit cards. Please refer to Section 7.5 of the IMR Report for details of our competitors.

In our general insurance business in Malaysia, we face competition from domestic non-life insurance companies as well as life insurance companies and foreign-invested insurers operating in Malaysia.

For our other insurance products, the success of our sales and distribution channel lies in the capabilities of our agents. Agents in Malaysia are permitted to sell products of up to two insurance companies and we compete with other insurance companies for agency sales. We will mitigate the effects of competition by leveraging our extensive database of customers and utilising customer information to customise product offerings. We also face competition in developing relationships with key corporate customers for our corporate insurance products.

Some of our competitors are large multinational insurance companies that offer a wider range of insurance products than us and have a substantial capitalisation which allows them to diversify their risk portfolio and underwrite more sophisticated risks.

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BUSINESS OVERVIEW (Cont’d)

We face significant competition for the products offered by TIMB as many of these are standard insurance products offered by many insurance companies in Malaysia. The premiums for motor insurance products, in particular, are subject to tariff and we are unable to significantly distinguish ourselves based on premiums.

6.12 RESEARCH AND DEVELOPMENT

We do not have a separate research and development team but each department is responsible for research and development activities relating to their functional areas with progress reviewed via management committees. For example, teams will check on other airlines insurance offerings including marketing, pricing and process.

6.13 LICENCES

During the course and nature of operations, we are required to comply with local regulatory and governmental licensing requirements. The major licences, permits and registrations of our Group as at the LPD, together with the conditions attached and status of compliance are as follows:

Company Issuing Type of Licences Issue Date / Salient Conditions Status of : Authority Validity Period Compliance

TMGR Labuan FSA Licence to carry on Issued on 26 May The holder of a licence to carry Compliant Labuan general 2011. No expiry on the Labuan reinsurance reinsurance business date. business must ensure that such licence is not transferred and submit any change in ownership of the licensee to Labuan FSA for its approval.

TMLR Labuan FSA Licence to carry on Issued on 15 June The holder of a licence to carry Compliant Labuan life 2011. No expiry on the Labuan reinsurance reinsurance business date. business must ensure that such licence is not transferred and submit any change in ownership of the licensee to Labuan FSA for its approval.

TIMB Minister of Licence to operate a Issued on 23 April Not applicable Not applicable Finance general insurance 2003. No expiry business date

TIL Labuan FSA Licence to carry on Issued on 28 April The holder of a licence to cany Compliant business as an 2009. No expiry on the Labuan reinsurance offshore captive date. business must ensure that such insurer licence is not transferred and submit any change in ownership of the licensee to Labuan FSA for its approval.______

Save as disclosed above, we are not dependent on any major licences for our business operations.

6.14 PROPERTIES AND FIXED ASSETS

6.14.1 Owned Properties

As at the LPD, we own the following properties:

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months to ascertain whether a copy o f the original certificate o f fitness fo r occupation can be located from its records. TIMB has been further informed that in the event Majlis Perbandaran Klang is unable to locate a copy o f the certificate o f fitness for occupation, TIMB will be required to apply for a new certificate o f completion and compliance, and the process will take approximately six to seven months.

In addition, TIMB has on 6 September 2012, submitted an enquiry to the Klang district and land office to ascertain the classification/category o f land use o f the land on which the said property is situated and informed the Klang district and land office o f the current usage o f the said property, TIMB has been informed by the Klang district and land office that TIMB would be advised on the next course o f action once the land registry has completed a review o f its records.

It is the intention o f TIMB to re-apply fo r the certificate offitness fo r occupation from Majlis Perbandaran Klang as well as to convert or rectify the classification/category o f land use in the land title documents as soon as possible.

6.14.2 Rented Properties

In addition, as at the LPD, we also leased the following properties for our operations:

Tenant ; : Landlord Address ...... Description/ : Rental Period Annual Rental Approximate Existing Use : RM ■ Land Area/ Built -up Area (sq ft) TIMB OCBC Bank No. 11, Leboh Union, Penang Branch 1.5 years from 216,000 10,550 (Malaysia) 10200 Penang Office 16 November Berhad 2011

TIMB Fascimark Ground and first floor, Ipoh Branch Office 2 years from i 24,000 2,740 (M) Sdn Bhd No. 52, Jalan Medan August 2012 Istana, Bandar Ipoh Raya, 30000 Ipoh, Perak

TIMB Malayan Real No. 629 & 530, Melaka Branch 3 years from 1 38,400 2,418 Property Sdn Ground Floor, Taman Office January 2010 Bhd Melaka Raya, 75000 Melaka

TIMB Kartika Pintar Ground Floor, A 109, ICuaiitan Branch 2 years from 1 36,000 1,320 Sdn Bhd Sri Dagangan, Jalan Office February 2012 Tun Ismail, 25000 Kuantan

TIMB N.S. Ground Floor, No. 12, Seremban Branch 2 years from 1 28,800 2,200 Kwongsai Jalan Dato’ Lee Fong Office October 2011 Association Yee, 70000 Seremban, Negeri Sembilan

TIMB Koperasi No. 702, Ground Kota Bharn Branch 2 years from 1 19,200 1,600 Gura-Guru Floor, Seksyen 9, Office May 2011 DTC Jalan Tok Hakim, Malaysia 15000 Kota Bharu, Berhad Kelantan

TIMB Foo Shui No. 703, Ground Kota Bharu Branch 2 years from 1 19,200 1,600 Ceong Floor, Seksyen 9, Office November 2011 Jalan Tok Hakim, 15000 Kota Bharu, Kelantan

TIMB Tampoi Auto No. 77, (Ground Johor Bharu Branch 3 years from 1 58,800 2,400 Supply Sdn Floor), Jalan Glasiar, Office August 2011 Bhd Taman Tasek, 80200 Johor Bahru, Johor

TIMB Anak Sabah Ground Floor and 1st Kota Kinabalu 3 years from I 75,600 2,400 Motor Sdn Floor, No. 15, Jalan Bhara Branch Office February 2010 Bhd Pantai, Kota Kinabalu

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Tenant Landlord Address Description/ Rental Period Annual Rental Approximate Existing Use RM Land Area/ Built -up Area (sqft) : V TIMB Mahindir Lot 579, Ground Floor Kuching Bharu 3 years from 1 54,000 2,200 Singh and 13 Floor, Section Branch Office October 2011 10 Kuching Town Land District

TIMB Khoo Khoon No. 132-A, Jalan Sungai Petani 1 year from 1 16,800 1,020 Hong and Masjid. Taman Pekan Branch May 2012 Wang Ming Barn, 08000 Sungai Eng Petani, Kedah

TIMB David Lim Lot 807, Ground Miri Branch 3 years from 1 26,400 1,200 Chin Chai Floor, Block 7, Jalan November 2011 Bintang Jaya, 98007 Miri, Sarawak

TIMB Nip Wing TB 4620, Block B, Ba Tawau Branch 2 years from I 43,200 1,410 Him Zhong Commercial January 2011 Centre, Jalan Tawau Lama, 91000 Tawau, Sabah

TIMB Meditek No. 28-1 & 28-2 Petaling Jaya 2 years from 1 45,600 1,341 Equipment {Ground Floor and Branch May 2012 Sdn Bhd First Floor), Jalan 14/22, The Right Angle, 46100 Petaling Jaya, Selangor Darul Ehsan

TIMB Kesaniaga No. 57, Ground Floor Shah Alam Branch 3 years from 1 60,000 2,800 Sdn Bhd and First Floor, Jalan March 2011 Snuker 13/28, Seksyen 13,40100 Shah Alam, Selangor

TIMB Ace Property No. 53-G, Jalan Puteri Puchong Branch 2 years from 1 48,000 3,442 Maintenance 2/3, Bandar Puteri, June 2011 Sdn Bhd 47100 Puchong

TIMB Daphne Lim Ground Floor, No. Terengganu Branch Monthly 2,100 (monthly) 1.084 120-J, Jalan Sultan Ismail, 20200 Kuala Terengganu

6.15 INTELLECTUAL PROPERTY

As at the LPD, we do not own any trademarks.

Use of the “AirAsia INSURE” trademark was granted to us on a non-exclusive basis by AirAsia under the respective AA Distribution Agreements for the duration of the respective agreements. In addition, under the distribution agreement with AirAsia X Sdn Bhd, we were granted a non-exclusive licence to use the marks of AirAsia X Sdn Bhd for the duration of the agreement.

Pursuant to the Tune Hotels BCA, we were granted the use of the “Tune Hotels” trademark on a non­ exclusive basis for the duration of the agreement in tandem with our introduction of the Tune Hotels Lifestyle Protection Plan.

In addition, and under a licensing agreement entered into with Tune Group.com Limited, we were granted a licence to use the “Tune Insurance” trademark on an exclusive and perpetual basis. A royalty is to be paid to the licensor.

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6. BUSINESS OVERVIEW (Coat'd)

Under a merchant partner agreement with Think Big Digital Sdn Bhd, we were granted a non-exclusive licence for the duration of the agreement to use the marks of Think Big Digital Sdn Bhd in advertising and promotional materials in connection with our participation in the “BIG” loyalty programme.

Further, pursuant to a travel insurance service agreement with AirAsia Expedia, we were granted a non-exclusive licence to use the marks of AirAsia Expedia and its affiliates for the duration of the agreement.

6.16 CUSTOMERS AND SUPPLIERS

We operate an online insurance business through which insurance products are offered to the customers of our partners as part of their online booking process with our partners, and a general insurance business in Malaysia, through our subsidiary, TIMB.

Our Online Insurance Business

We market our online insurance product offerings through the websites of our online partners who enter into business collaboration arrangements with our local insurance partners. These local insurance partners in turn underwrite the insurance policies purchased online by the customers of our online partners. We then enter into reinsurance arrangements with each of these local insurance partners, who are required to cede to us their underwriting risk under a "quota-share" arrangement.

As part of our online insurance business, we have entered into the AA Distribution Agreements. Pursuant to these agreements and the corresponding agreements that AirAsia has with each of our local insurance partners, AirAsia receives a portion of the premium paid by customers of our Travel Protection Plan, as commission. We and the respective local insurance partner account for the premium received and the commission paid to AirAsia proportionately according to the agreed “quota-share” as described in Section 11.3.1 - “Premiums - Online Insurance Business” of this Prospectus. AirAsia is also reimbursed a portion of the premium paid, subject to applicable regulations, for promoting and marketing this plan.

For FY2009, FY2010 and FY2011, the gross premiums received by our general reinsurance subsidiaries TIL and TMGR derived from our Travel Protection Plan contributed approximately 11.7%, 15.1% and 18.4% to our pro forma gross earned premiums.

For the purposes of this Section 6.16, we have regarded our local insurance partners who underwrite our Travel Protection Plan and Tune Hotels Personal Accident Plan, and RGA Global with respect to the AA Lifestyle Protection Plan and Tune Hotels Lifestyle Protection Plan as our customers in relation to our online insurance business when the premiums are ceded to our subsidiaries (TIL, TMGR and TMLR).

For FY2009, FY2010 and FY2011, our local insurance partner, Multi-Purpose Insurans Bhd which underwrites our Travel Protection Plan contributed 11.7%, 15.1% and 18.1% to our pro forma gross earned premiums. Save for Multi-Purpose Insurans Bhd, none of our customers contributed 10.0% or more to our pro forma gross earned premiums for FY2009, FY2010 and FY2011.

For the corresponding periods, the commissions and marketing expenses paid and/or reimbursed via our local insurance partners (including Multi-Purpose Insurans Bhd) to AirAsia accounted for approximately 14.5%, 18.4% and 20.0% to our pro forma expenses (comprising among others, fees and commissions, management expenses and other operating expenses).

Our General Insurance Business in Malaysia

We underwrite general insurance policies directly in Malaysia and market our insurance products through TIMB’s agents.

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6. BUSINESS OVERVIEW (Cant’d)

In relation to our general insurance business, we have regarded the corporate entities and individuals, who had purchased our general insurance products through TIMB, as our customers. No individual customer or corporate entity accounted for 10.0% or more of our pro forma gross earned premium for FY2009, FY2010 and FY2011.

6.17 BUSINESS INTERRUPTION

We have not experienced any material interruption in business which had a significant effect on our operations during the past 12 months preceding the LPD.

6.18 DEPENDENCY ON COMMERCIAL CONTRACTS

The following contracts and arrangements, being contracts and arrangements within the ordinary course of business, are those which we are highly dependent on and are material to our business or profitability.

6.18.1 Distribution agreement dated 20 April 2012 between ourselves and AirAsia Berhad

AirAsia Berhad has agreed, and shall use its best efforts to procure its affiliates to agree, to outsource and appoint us to manage the insurance business of AirAsia Berhad and its affiliates in the following countries that AirAsia Berhad and its affiliates are or will be operating in, namely, but not limited to the following: (a) Malaysia, (b) Thailand, (c) Indonesia, (d) Macau, (e) Singapore, (f) Cambodia, (g) the Philippines, (h) Vietnam, (i) China, (j) Australia, (k) Hong Kong, (1) Laos, (m) New Zealand, (n) India, (o) Japan and (p) Taiwan and such other country as may be informed by AirAsia Berhad and/or its affiliates.

We have been granted the right to access the information and/or records of the customers of AirAsia Berhad and its affiliates. We have also been granted a limited, non-exclusive, non-transferable and non-sublicensable right to use, display and reproduce the “AirAsia INSURE” trademark for the duration of this agreement.

This agreement is for a period of 10 years commencing from 20 April 2012.

With respect to our Travel Protection Plan, we will procure our local insurance partners to pay and/or reimburse AirAsia Berhad for, among others, the following:

• commissions at the maximum regulated commission rate (where applicable) or if no such regulated rate exists, a specified percentage of the gross premium of our Travel Protection Plan; and

• a specified percentage of the gross premium of our Travel Protection Plan (subject to applicable regulations) as reimbursement of marketing expenses incurred by AirAsia Berhad and its affiliates for the purposes of directly or indirectly promoting such plan (“Marketing Reimbursement”).

With respect to our AA Lifestyle Protection Plan, the revenue to be received by us from our local insurance partners is shared between ourselves and AirAsia Berhad based on the pre-determined formula.

The appointment of us as manager and the grant of the right as set out above is solely and exclusively to us and AirAsia Berhad shall not engage any third party to manage the insurance business or grant the right to use the information and/or records of the customers of AirAsia Berhad and its affiliates to any third party for the purposes of the same and we agree to manage the insurance business of AirAsia Berhad and its affiliates solely and exclusively for AirAsia Berhad and its affiliates, and shall not engage with other competing parties for similar services provided under the agreement unless approved by AirAsia Berhad in writing.

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Where we provide travel insurance to other airlines, AirAsia Berhad and/or its customers shall enjoy terms which are no less favourable than the terms offered to those other airlines and/or their customers. In the event that other airlines and/or their customers enjoy terms which are more favourable than AirAsia Berhad, then the terms for AirAsia Berhad shall be adjusted accordingly failing which the parties agree on a rebate mechanism which ensures parity of the terms.

This agreement may be terminated in the following circumstances: (a) breach of a material term by either party, (b) changes in the legal or regulatory requirements that would render the performance of any material terms illegal, and (c) insolvency (or similar circumstance) of any party.

6.18.2 Distribution agreement dated 4 October 2012 between ourselves and PT Indonesia AirAsia

The terms of this agreement are materially similar to the distribution agreement between ourselves and AirAsia Berhad as set out in Section 6.18.1 of this Prospectus save that:

• this agreement is for a period of 15 years commencing from 4 October 2012; and

• this agreement does not provide for a similar Marketing Reimbursement.

6.18.3 Distribution agreement dated S October 2012 between ourselves and Thai AirAsia Co. Ltd

The terms of this agreement are materially similar to the distribution agreement between ourselves and AirAsia Berhad as set out in Section 6.18.1 of this Prospectus save that:

• this agreement is for a period of 5 years commencing from 5 October 2012; and

• this agreement does not provide for a similar Marketing Reimbursement.

6.18.4 Distribution agreement dated 4 October 2012 between ourselves and AirAsia X Sdn. Bhd.

The terms of this agreement are materially similar to the distribution agreement between ourselves and AirAsia Berhad as set out in Section 6.18.1 of this Prospectus save that:

• this agreement is for a period of 15 years commencing from 4 October 2012; and

• this agreement does not provide for a similar Marketing Reimbursement.

6.18.5 Distribution agreement dated 4 October 2012 between ourselves and AirAsia Inc

The terms of this agreement are materially similar to the distribution agreement between ourselves and AirAsia Berhad as set out in Section 6.18.1 of this Prospectus save that:

• this agreement is for a period of 15 years commencing from 4 October; and

• this agreement does not provide for a similar Marketing Reimbursement.

6.18.6 Distribution agreement dated 28 September 2012 between ourselves and AirAsia Japan Co., Ltd

The terms of this agreement are materially similar to the distribution agreement between ourselves and AirAsia Berhad as set out in Section 6.18.1 of this Prospectus save that:

• this agreement is for a period of 10 years commencing from 28 September 2012; and

• this agreement does not provide for a similar Marketing Reimbursement.

82 Company No. 948454-K

6. BUSINESS OVERVIEW (Cont’d)

6.18.7 License agreement dated 27 September 2012 between ourselves and Tune Group.com Limited

Tune Group.com Limited has agreed to grant, and we have accepted, the exclusive, territorially limited right and license during the term of this agreement to use, reproduce and incorporate the “Tune Insurance” trademark in connection with the conduct of the business of our Group including but not limited to the marketing, advertising and promotion of the business of our Group.

The right and license granted to us shall extend only to the following territories, namely (a) Malaysia, (b) Indonesia, (c) Thailand, and (d) any other South East Asian countries as agreed upon in writing from time to time between ourselves and Tune Group.com Limited.

The term of this agreement shall be effective as at the date of this agreement and shall continue to subsist indefinitely unless sooner terminated in accordance with the terms of this agreement including, in the event of a material breach by either party. In addition, Tune Group.com Limited shall be entitled to terminate this agreement by giving us not less than three months notice in writing.

In consideration of the rights granted to us under this agreement, we have agreed to pay Tune Group.com Limited the following:

• a nominal license fee upon the execution of this agreement; and

• on an annual basis, a specified royalty fee unless otherwise agreed by Tune Group.com Limited in writing.

Save as disclosed above, we are not dependent on any material contracts or agreements including licences, industrial, commercial and financial contracts, which are material to our business or profitability.

6.19 SEASONALITY OF THE BUSINESS

We experience seasonal fluctuations in our business, mostly within an annual cycle. In particular, we achieve higher gross earned premiums for our Travel Protection Plan during periods of high travel volume such as festivals and holidays in particular during the first and fourth quarters of each calendar year as compared with the second and third quarters. We do not experience any significant seasonality trends for our general insurance in relation to TIMB’s business.

THE REST OF THIS PA GE HAS BEEN INTENTIONALLY LEFT BLANK

83 Company No. 948454-K

fJKThe SIAlP Group Strategic Airport Planning Milliman

Asia-Pacific: 55 Soi Langsuan, Suite 1902 3901-02 A IA Tow er Ploenchit Road 183 Electric Road Bangkok, Thailand 10330 North Point, Hong Kong

Americas: 1342 Jones Street Suite 6 San Francisco, California 94109 USA +1 415 577-2127 (office) +1 978 246-6031 (fax) [email protected]

Please use San Francisco address for correspondence.

Final Report

Independent Report of the Industry Consultants Tune Ins Holdings Berhad

prepared for Tune Ins Holdings Berhad Kuala Lumpur

prepared by The S-A-P Group Milliman Ltd Bangkok and San Francisco Hong Kong

report date 10 September 2012

84 Company No. 948454-K

7. INDUSTRY OVERVIEW (Cont’d)

Independent Report of the Industry Consultants: Tune Ins Holdings Berhad i * $ J t - 10 September 2012

TABLE OF CONTENTS

1 INTRODUCTION...... 1 1.1 Report A pproach...... 1

2 FACTORS DRIVING AVIATION INDUSTRY GROWTH IN ASIA...... 2 2.1 Economics and Population...... 2 2.1.1 World GDP and Air Travel Activity...... 2 2.1.2 . Per Capita GDP and Air Travel Activity...... 3 2.1.3 Population and Urbanisation...... 4 2.1.4 Economics and Population in AirAsia Group Markets...... 7 2.2 T rade...... 8 2.3 Tourism ...... 8 2.3.1 Global Tourist Arrivals...... 9 2.3.2 Tourism in Malaysia...... 10 2.3.3 Tourism in Thailand...... 12 2.3.4 Tourism in Indonesia...... 14 2.3.5 Tourism in the Philippines...... 16 2.3.6 Tourism in China...... 18 2.3.7 Tourism in India...... 19 2.3.8 Conclusion...... 20 2.4 Airline Fares and D istrib u tio n ...... 21 2.5 Geographical Characteristics...... 22 2.6 Liberalisation of Air Travel...... 22 2.6.1 ASEAN Member States and Open Skies...... 22 2.6.2 Outside of ASEAN ...... 23 2.6.3 Conclusion...... 23

3 HISTORICAL AVIATION ACTIVITY IN THE ASIA-PACIFIC REGION...... 24

4 LOW COST CARRIER BACKGROUND AND GROWTH...... 25 4.1 Introduction...... 25 4.2 The LCC Business M o d e l...... 29 4.3 Ancillary Revenues...... 29 4.4 LCC Development in A sia...... 31 4.5 LCC Development in Southeast Asia...... 31 4.6 AirAsia Group Carrier Market Shares at Major A irp o rts...... 33 4.7 Long-Haul LCCs...... 35 4.8 Conclusion...... 35

5 AIRASIA GROUP'S MARKET POSITION...... 36 5.1 AirAsia Group's Market Position in Current Markets...... 36 5.1.1 AirAsia Group in Malaysia...... 36 5.1.2 AirAsia Group in Thailand...... 37 5.1.3 AirAsia Group in Indonesia...... 39 5.1.4 AirAsia Group in the Philippines...... 40 5.1.5 AirAsia Group in Japan...... 41 5.1.6 AirAsia Group in China and India...... 41 5.2 AirAsia Group's Fleet Plan and Growth Prospects...... 42

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TABLE OF CONTENTS-continued

6 AVIATION INDUSTRY OUTLOOK...... 44 6.1 Global Aviation Demand Forecasts...... 44 6.2 Asia-Pacific Aviation G rowth Considerations...... 45 6.3 Potential Constraints to Aviation Industry Growth in Asia-Pacific...... 46 6.4 Asia-Pacific Aviation Demand Forecasts...... 47 6.5 Southeast Asia Aviation Demand Forecasts...... 48

7 THE NON-LIFE INSURANCE MARKETS OF MALAYSIA, THAILAND, INDONESIA, THE PHILIPPINES AND THE REST OF ASIA (EX-JAPAN)...... 49 7.1 Overview...... 49 7.2 Strong Economic G ro w th ...... 52 7.3 Insurance Penetration and GDP g ro w th ...... 52 7.4 Distribution Trends...... 53 7.5 Travel Insurance in Asia ex Japan...... 54 7.6 Malaysia...... 56 7.6.1 Underwriting Experience and Investment Income...... 58 7.6.2 Regulations and Developments...... 59 7.6.3 Market Trend...... 60 7.6.4 Shift to Innovative Delivery Channels...... 61 7.7 Thailand...... 62 7.7.1 Underwriting Experience and Investment Income...... 63 7.7.2 Regulation...... 65 7.7.3 Market Trend ...... 66 7.7.4 Impact from the 2011 Flood Losses...... 67 7.7.5 Possible Industry Consolidation...... 68 7.8 Indonesia...... 68 7.8.1 Regulation...... 69 7.8.2 Market Trend ...... 70 7.8.3 Market Consolidation Continues...... 72 7.8.4 A More Open Policy for Foreign Participation...... 72 7.9 The Philippines...... 73 7.9.1 Regulation and Capital Requirement...... 73

8 TiH'S INSURANCE OPERATION...... 73 8.1 Overview...... 73

9 THE DIRECT LIFE INSURANCE BUSINESS IN MALAYSIA, THAILAND, CHINA, INDONESIA, INDIA, AUSTRALIA, AND THE REST OF ASIA EX-JAPAN REGION...... 75 9.1 Overview...... 75 9.2 Indonesia...... 75 9.3 Malaysia...... 75 9.4 Thailand...... 76 9.5 A u stra lia ...... 76 9.6 C hina...... 77 9.7 In d ia ...... 77

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7. INDUSTRY OVEROVERVIEW (Cont’d)

independent Report 10 Septe m ber 2 012

ABBREVIATIONS AND DEFINITIONS

A&H Accident and Health AACP Ayudhya Allianz Charoen Pokphand Life AAJI Indonesia Life Insurance Association AAMI Australian Associated Motor Insurers Limited AIA American International Assurance

AirAsia AirAsia Berhad AirAsia Group AirAsia Berhad, AirAsia Japan Co. Ltd., AirAsia X Berhad, AirAsia Philippines Inc., PT Indonesia AirAsia, and Thai AirAsia Company Limited APE Annual Premium Equivalent ASEAN Association of Southeast Asian Nations Bapepam-LK The Capital Market and Financial Institution Supervisory Board (Indonesia's insurance regulator)

BNM Bank Negara Malaysia (Central Bank of Malaysia) BPJS Social Security Providers Bill (Indonesia's new social security law) CAGR compound annual growth rate CAPA Center fo r Asia Pacific Aviation Cigna CMC Cigna and China Merchants Club Life Insurance Company

CMFISA The Capital Market and Financial institution Supervisory Board (Indonesia's insurance regulator) DMTM Direct Mail and Telemarketing DRTV Direct response television E estimated (eg, 2015E represents estimated data for 2015} GDP Gross Domestic Product

GWP Gross Written Premium IATA Internationa! Air Transport Association IMF International Monetary Fund km kilometre(s) KLIA Kuala Lumpur International Airport

LCC low-cost carrier MAHB Malaysia Airports Holdings Berhad Milliman Miiliman Ltd n.a. not available or not applicable OIC Office of Insurance Commission {Thailand's insurance regulator)

OJK Otoritas Jasa Keuangan (The new Indonesian insurance regulator that will replace Bapepam-LK} PA Personal Accident RBC Risk Based Capital RHB RHB Bank Berhad RM Malaysian Ringgit

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7. INDUSTRY OVERVIEW (Cont’d)

Independent Report of the Industry Consultants: Tune Ins Holdings Berhad v 10 September 2012

IMPORTANT NOTES

The S-A-P Group {Strategic Airport Planning Ltd} and Milliman Ltd were asked by Tune Ins Holdings Berhad (TIH) to prepare this Independent Report of the Industry Consultants regarding aviation and travel insurance demand in the Asia-Pacific region. This independent expert report was prepared to be included in the documentation (including, but not limited to any prospectus or offering circular) in support of the Initial Public Offering of Tune Ins Holdings Berhad expected to occur in 2012.

The S-A-P Group (S-A-P) is an aviation consulting firm that specialises in the preparation of aviation activity forecasts and strategic business plans. Over the past 16 years, S-A-P staff has prepared forecasts of aviation activity in the Asia-Pacific region. In addition, S-A-P reports have supported the initial public offering circulars of several Southeast Asia-based carriers, including AirAsia Berhad, Thai AirAsia, AirAsia X Berhad, Garuda Indonesia Airlines, and Tiger Airways.

Milliman Ltd is wholly owned and managed by approximately 400 Principals, who have been elected in recognition of their technical, professional and business achievements. Our sole business is providing independent consulting services. We are not affiliated with any public accounting or brokerage firms. Milliman Ltd's clients include the leading insurance institutions in the Asia-Pacific region. Milliman Ltd consultants have extensive market knowledge, initial public offering, and merger and acquisition experiences across Asia. In particular, Milliman Ltd performed actuarial services for PICC Property and Casualty Limited and China Pacific Insurance Group in their proposed initial public offerings.

This report includes forecasts and other forward-looking estimates. These forecasts and forward-looking estimates are necessarily based on various assumptions that are inherently subject to risks and substantial uncertainties. Among these are the possible invalidity of the underlying assumptions and estimates and possible changes or development of social, economic, business, industry, market, legal, government, and regulatory circumstances, conditions and actions taken or omitted by others.

Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic and competitive market conditions and future governmental, regulatory and business decisions, all of which are difficult or impossible to predict with any degree of accuracy. Actual results and future events could differ materially from such forecasts, estimates, predictions, or such statements. Readers of this report should not place undue reliance on such statements, or on the ability of us or any third party, to accurately predict future Industry trends or market performance.

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7. INDUSTRY OVERVIEW (Cont’d)

Independent Report of the Industry Consultants: Tune Ins Holdings Berhad vi 10 September 2012-

This report contains information supplied by and analysis based on public anal private sources. To the extent such sources have been cited herein, we hereby confirm that we are allowed to reference such sources. Although we believe that the sources of such information are appropriate sources for such information and have taken reasonable care in extracting and reproducing such information, we have not verified the data for accuracy or completeness and make no representation with respect to information from any source external to us.

We have relied on such information in the preparation of this report. If the information from such sources is inaccurate or incomplete, the information contained in this report may likewise be inaccurate or incomplete. Some amounts in this report are rounded. Financial and operating data for some air carrier groups may include cargo and other activities.

The results shown in this report are not intended to represent an opinion of market value and should not be interpreted in that manner.

We acknowledge that this report wiil be included in the Prospectus and we further confirm that we are aware of our responsibilities under Section 214 of the Capital Markets and Services Act 2007 of Malaysia.

We further acknowledge that if we are aware of any significant changes to the information contained in this report either prior to the issue date of the Prospectus or after the issue date of the Prospectus, but before the issue date of the securities, we have an on-going obligation to either cause this report to be updated so as to correct any inaccuracies, and, where applicable, cause TIH to issue a supplementary prospectus, or, should they fail to do so, withdraw our consent to the inclusion of this report in the Prospectus.

Date of report: 10 September 2012

STRATEGIC AIRPORT PLANNING LTD

L ' Bill A. M atz \ Managing Director The S-A-P Group

The S-A-P Group and Milliman Ltd 90 Company No. 948454-K

7. INDUSTRY OVERVIEW (Cont’d)

Independent Report of the Industry Consultants: Tune Ins Holdings Berhad vii 10 September 2012 •S

MILLlKTXN LTD

Cathy Hwang Principal and Consulting Actuary Milliman Ltd

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7. INDUSTRY OVERVIEW (Cont’d)

Independent Report of the Industry Consultants: Tune Ins Holdings Berhad 1 10 September 2012

INDEPENDENT REPORT OF THE INDUSTRY CONSULTANTS

Tune ins Holdings Berhad

10 September 2012

1 INTRODUCTION

Aviation and travel insurance products are driven by common drivers: a desire by consumers to travel. Historically, the sale of travel insurance products has been performed by travel agents or at airport counters or kiosks. With the introduction of airline and travel agency websites that allow for the online purchase of airlines tickets and other travel products, access to potential buyers of travel and other insurance products has expanded.

Airlines, especially low-cost carriers, and online travel agencies have strongly embraced the revenue generating opportunities of selling ancillary products such as travel insurance. As a result, the promotion of these ancillary products on travel-related websites has increased the exposure of insurance products to potential customers.

Aviation traffic is growing along with the economic and population growth occurring in Asia. Many countries in Asia are in an economic stage that is resulting in the emergence of a growing middle class with increasing levels of discretionary income to spend on travel. At the same time, liberalisation of the aviation industry in the region has reduced the costs of travel, increasing the potential for more people to fly.

The insurance market also expands with the thriving economy in Asia. For instance, the demand for commercial property and marine cargo and hull insurance increases with trade activities and motor insurance market grows with the number of cars on the road. On the consumer side, as disposable income increases and general awareness for insurance products increases, more consumers purchase personal protection such as life and accident and health insurance. As the aviation and travel industry develop, compounded with the increasing demand for insurance protection, travel insurance industry thrives.

1.1 Report Approach

This report represents the compilation of analysis performed by aviation industry consultants (The S-A-P Group} and travel insurance industry consultants (Milliman Ltd.)

The aviation industry sections of this report, which were prepared by The S-A-P Group, document historical and forecasted aviation growth and the factors driving aviation growth in Asia. The sections highlight the growth and market share of AirAsia Group carriers, which partner with TIH to sell travel insurance to its customers.

The insurance industry sections of this report, which were prepared by Milliman, provide an overview of the non-life and direct life insurance market in Asia. The sections discuss historical and current trends in Asia insurance markets with focus on several selected markets.

Sections 1 to 6 were authored by The S-A-P Group (S-A-P) and Sections 7 to 9 were authored by Milliman Ltd {Milliman).

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2 FACTORS DRIVING AVIATION INDUSTRY GROWTH IN ASIA

2.1 Economics and Population

2.1.1 World GDP and Air Travel Activity

Historically, air travel activity has shown a strong statistical relationship with overall economic activity, as measured by gross domestic product (GDP). Over the last four decades, world airline activity has grown at average rates per annum of approximately double those of world GDP.

Figure 1, below, shows that from 1971 to 2011, world GDP grew at a CAGR (compound annual growth rate) of 3.1%, while world airline RPKs grew at approximately twice that rate, at a CAGR o f 6.0%.

Figure 1

RELATIONSHIP BETWEEN WORLD GDP AND WORLD AIRLINE RPKs 1971 to 2011

1,200 | —•— Indexed World Airline RPKs (1971 = 100}

Sources: RPKs: Airline Monitor and Boeing Current Market Outlook, multiple years including 2011 (RPKs = revenue passenger kilometers for all airlines) GDP: World Bank, World Development Indicators, 2011 and WTO estimate for 2011 (GDP sVtorkJGDP in current US dollars indexed to 1971)

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*f " 'i/1'--.. Independent Report of the Industry Consultants: Tune Ins Holdings Berhad 3 10 September 2012

2.1.2 Per Capita GDP and Air Travel Activity

Per capita income grow th results from grow th in GDP levels and employment. Increased disposable income results from growth in the middle class income bracket in countries that are experiencing increased per capita income levels.

In most areas of the world, per capita incomes correlate well with per capita air travel levels. Countries with high per capita incomes tend to have high levels of air travel, while countries with low per capita incomes tend to have lower than average levels of air travel.

As shown in Tables 1 and 2, below, which document key economic indicators for select countries in the Asia-Pacific region, several countries in the region had high rates of growth from 2000 to 2010 for GDP and GDP per capita in current US dollars. The Southeast Asian countries shown below grew at an average CAGR of 11.9% during this period.

According to the International Monetary Fund (IMF), total current GDP for most of the Asian countries shown below are projected to experience strong growth over the next five years, although at mostly slower rates than during the past decade.

Table 1

KEY ECONOMIC INDICATORS: GDP Select Countries in the Asia-Pacific Region 2000-2017

GDP (current US$ million)______CAGR Growth Historical amounts______Estimated airounts______Historical Projected CY2000- CY2012-

County 2000 2005 2010 2011 2012 2017 CY2010 CY2017 Indonesia $ 165.021 $ 285,739 $ 708,352 $ 845,680 $ 928,274 $ 1,592,935 15.7% 11.4% Cambodia $ 3,653 $ 6,293 $ 11,255 $ 12,861 i 14,204 $ 20,986 119% 8.1% Laos $ 1,640 $ 2,726 $ 6,461 $ 7,891 $ 8,937 $ 12,763 14.7% 7.4% Vietnam $ 31,176 $ 52,931 J 103,575 $ 122,722 $ 135,411 i 190,126 12.8% 7.0% Malaysia $ 93,789 $ 137,960 $ 237,803 $ 278,680 $ 305,826 i 417,194 9.8% 6.4% Myanrrar $ 8,905 I 11,987 $ 45,380 $ 51,925 $ 54,416 $ 72,336 17.7% 5.9% Philippines $ 81,023 $ 103,072 $ 199,591 $ 213,129 $ 227,584 $ 299,619 9.4% 5.7% Thailand $ 122,725 $ 176,352 $ 318,908 $ 345,649 $ 377,158 $ 494,255 10.0% 5.6% East Timor $ 335 $ 815 i 3,199 $ 4,315 i. 4,073 $ 5,009 25.3% 4.2% Singapore $ 94,308 $ 125,429 $ 227,382 $ 259,849 $ 270,020 $ 321,723 9.2% 3.6% Brunei $ 6,001 $ 9,531 $ 12,371 I 15,533 $ 17,092 $ 17,382 7.5% 0.3% Total for countries shown $ 608,576 $ 912,835 $ 1,874,277 i 2,156,234 $ 2,342,995 $ 3,444,330 11.9% 8.0%

India t 476,350 $ 808,668 $ 1,597,945 t 1,676,143 $ 1,779,279 $ 2,628,926 129% 8,1% China % 1,198,477 $ 2,256,919 $ 5,930,393 t 7.298,147 $ 7,991,738 $ 11,598,974 17.3% 7.7% Soulh Korea $ 533,385 $ 844,366 $ 1,014,890 $ 1,116,247 $ 1,163 532 $ 1,533,422 6.6% 5,7% Australia $ 399,540 $ 732,095 $ 1,245,305 $ 1,488,221 $ 1,585,964 $ 1,833,075 12.0% 2.9% New Zealand $ 53,100 $ 111,676 $ 140,787 $ 161,851 $ 180,548 $ 204,216 10.2% 2.5% Japan $ 4,731,199 $ 4,571,867 $ 5,488,424 $ 5,869.471 $ 5,980,997 $ 6,531,077 1.5% 1.8%

Source: IMF Vtortt Economic OuBook Database, April 2012. Some amount are estimated.

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Table 2

KEY ECONOMIC INDICATORS: GDP PER CAPITA Select Countries in the Asia-Pacific Region 2000-2017

GDP per cap s (current US$)______CAGR Growth Historical amounte______Estimated amounts______Historical Projected CY2000- CY2012- Counry 2000 2005 2010 2011 2012 2017 CY2010 CV2017 Indonesia % 800 $ 1,291 t 2,981 $ 3,509 $ 3,797 $ 6,071 14.1% 9.6% Cambodia % 288 $ 455 $ 753 $ 652 $ 931 $ 1,309 10.1% 7.0% Vietiam $ 402 $ 637 $ 1,174 $ 1,374 $ 1,498 $ 1,982 11.3% 5.8% Laos $ 304 $ 464 $ 1,004 $ 1,204 $ 1,338 $ 1,744 12.7% 5.4% Thailand $ 1,983 $ 2,825 $ 4,992 $ 5,394 $ 5,851 $ 7,442 9.7% 4.9% Malaysia $ 4,030 $ 5,211 $ 8,418 $ 9,700 t 10,467 $ 13,124 7.6% 4.6% Myanmar $ 178 $ 216 $ 742 $ 832 $ 855 $ 1,028 15.4% 3.8% Philippines $ 1,055 $ 1,209 $ 2,123 $ 2,223 $ 2,329 $ 2,778 7.2% 3.6% Singapore $ 22,791 $ 28,500 $ 43,862 $ 49,270 $ 50,321 $ 55,005 6.8% 1.8% EastTimor $ 410 $ 862 $ 2,998 $ 3,948 t 3,640 $ 3,994 22.0% 1.9% Brunei $ 18,465 $ 25,759 $ 29,882 $ 36,548 t 39,382 $ 35,913 4.9% -1.8% Averaj e for countries aba ve $ 1,172 t 1,632 $ 3,117 $ 3,539 I 3,786 $ 5,174 10.3* 6.4%

China J 946 $ 1,726 $ 4,421 $ 5,414 $ 5,899 $ 8,350 16.7% 7-2% India $ 465 $ 729 $ 1,342 $ 1,389 $ 1,455 t 2,013 11.2% 6,7% Soulh Korea J 11,347 $ 17,551 $ 20,765 $ 22,778 $ 23,680 $ 30,797 6,27. 5,4% Japan $ 37,303 $ 35,787 $ 43,015 $■ 45,920 $ 46,973 $ 52,440 1.4% 2,2% Austria $ 20,731 t 35,635 $ 56,476 $ 65,477 $ 68,916 $ 74,856 10.3% 1.7% New Zealand i 13,746 $ 26,962 $ 32,224 $ 36,651 $ 40,454 $ 43,524 8.9% 15%

Source: IMF Vforld Economic Outlook Database, April 2012. Some amount are estimated.

Rising wages and a broadening distribution of wealth in rapidly developing countries in Asia are resulting in an increasing share of the population with the ability to travel by air. Based on the historical growth that has occurred during a decade with economic slowdowns and other crises, S-A-P expects that the region will continue experiencing economic growth in the future. S-A-P anticipates th a t as the economy in Asia develops and the middle class grows and becomes a larger share of the population, air travel demand wiii increase. Asian airlines have the opportunity to benefit from the air travel demand spurred by regional economic growth.

2.1.3 Population and Urbanisation

Population growth and urbanisation are expected to result in further air travel growth in Asia. Due to the large populations in selected Asian countries, a small population growth rate can result in large increases in total population numbers. The combination of such population growth and economic development in countries such as China and India can result in significantly increased demand for air travel.

The S-A-P Group and Milliman Ltd 95 Independent Report of the Industry Consultants: Tune Ins Holdings Berhad 10 September 2012

Table 3, below, documents population data for select countries in the Asia-Pacific region. The population of Southeast Asia is estimated by the IMF to grow at a CAGR of 1.5% from 2012 to 2017, which compares to a CAGR estimate of 1.2% for the world during the same period.

Table 3

POPULATION INDICATORS Select Countries in the Asia-Pacific Region 2000-2017

CAGR Actual Population E stofed Population Hisbrical Projected Country 2000 2005 2010 2011 2012 2017 2000-2010 2012-2017 Indonesia 206,265,000 221,398,000 237,641,000 241,030,000 244,468,000 262,404,000 1.4% 1.4% Philippines 76,790,000 85,260,000 94,010,000 95,856,000 97,737,000 107,871,000 2.0% 20% Vetnam 77,635,000 83,106,000 88,257,000 89,316,000 90,388,000 95,943,000 1.3% 1.2% Thailand 61,879,000 62,418,000 63,878,000 64,076,000 64,460,000 66,418,000 03% 0.6% Myanmar 50,130,000 55,392,000 61,187,000 62,417,000 63,672,000 70,334,000 2.0% 2.0% Malaysia 23,275,000 26,477,000 28,251,000 28,731,000 29,219,000 31,789,000 2.0% 1.7% Cambodia 12,680,000 13,828,000 14,953,000 15,103,000 15,254,000 16,032,000 1.7% 10% Laos 5,403,000 5,880,000 6,437,000 6,556,000 6,678,000 7,320,000 1.8% 1.9% Singapore 4,138,000 4,401,000 5,184,000 5,274,000 5,366,000 5,849,000 2.3% 1.7% East Timor 818,000 946,000 1,067,000 1,093,000 1,119,000 1,254,000 2,7% 2.3% Brunei 325,000 370,000 414,000 425,000 434,000 484,000 2.4% 2.2% Countries shown above 519,338,000 559,476,000 601,279,000 609,877,000 618,795,000 665,698,000 1.5% 1.5%

China 1,267,430,000 1,307,560,000 1,341,414,000 1,348,121,000 1,354,861,000 1,389,073,000 0.6% 0.5% India 1,024,250,000 1,110,000,000 1,190,524,000 1,206,917,000 1,223,170,000 1,305,774,000 1.5% 1.3% Japan 126,831,000 127,752,000 127,594,000 127,819,000 127,329,000 124,543,000 0.1% -0.4% South Korea 47,008,000 48,138,000 48,876,000 49,006,000 49,136,000 49,791,000 0,4% 0.3% Australia 19,273,000 20,544,000 22,448,000 22,729,000 23,013,000 24,488,000 1.5% 1.3% New Zealand 3,363,000 4,142,000 4,369,000 4,416,000 4,463,000 4,692,000 1.2% 1.0%

World Total 5,970,583,000 6,410,136,000 6,815,272,000 6,865,208,000 6,945,111,000 7,362,940,000 1.3% 1.2%

Source: IMF Vtorld Economic Oulook Database, April 2012. Note: Some amounts are estimated.

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Urbanisation rates can serve as an indicator of propensity to travel by air because urban dwellers typically have higher-than-average income levels and are usually located in closer proximity to airports than non-urban dwellers are located. The development of existing and new urban centres is expected to create new destinations for regional travei in Asia.

Countries in Southeast Asia typically have lower rates of urbanisation than do those of the world and the Asia-Pacific region in total. As a result, S-A-P believes that urbanisation rates in Southeast Asia will grow at rates greater than those of more developed regions of the world. As urbanisation and population growth combine with continued economic growth, income per capita is expected to increase, resulting in growth in Asia's middle class consumers.

Table 4, below, documents urbanisation data for select countries in the Asia-Pacific region.

Table 4

URBANISATION INDICATORS Select Countries in the Asia-Pacific Region 2010-2020 Cities of 1 million persons or a Share ot urban

Urbanization population in (share of totai population Number of cities of 1 million Population______living in urban i cities (a)______or greater Estimated CAGR Actual Forecast Actual Actual Country 2011 2011-2015 2010 2020 2010 2010 Indonesia 241,030,000 14% 44.3% 48.1% 7 20.2% Philippines 95,856,000 2.0% 48.9% 52.6% 2 28.7% Vietnam 89,316,000 12% 30.4% 37.0% 2 33.6% Thailand 64,076,000 0.6% 34.0% 38.9% 2 42.9% Myanmar 62,417,000 2.0% 33.7% 40.7% 3 31.2% Malaysia 28,731,000 1.7% 72.2% 78.5% 3 17.9% Cambodia 15,103,000 1.0% 21.1% 23 8% 1 47.8% Laos 6,556,000 1.9% 33.2% 44.2% - Singapore 5,274,000 1.7% 100.0% 100.0% 1 100.0% East Timor 1,093,000 2.3% 100.0% 100.0% - - Brunei 425,000 2.2% 100.0% 100.0% Countries shown above 609,877,000 1.5% 42.0% (b) 21 27.5 %

China 1,348,121,000 0.5% 47.0% 55.0% 94 43.6% India 1,206,917,000 1.3% 30.0% 33.9% 43 41.2% Japan 127,819,000 ■0.4% 90.5% 95.3% 8 54.9% South Korea 49,006,000 0.3% 82.9% 85.4% 8 57.7% Australia 22,729,000 1.3% 88.9% 93.8% 5 70.6% New Zeaiand 4,416,000 1.0% 86.2% 86,8% 1 37.0%

World Total 6,835,208,000 1.2% 50,4% 54.4% 449 39.8%

Sources: IMF World Economic Outlook Database, April 2012 and UN World Urbanization Prospects: 2011 revision. Note: 2010-2015 population growth rates represent IMF forecasts. Some 2011 population amounts are estimated. (a) Cities or agglomerations with populations of greater than 1 million persons. (b) Average urbanization share not available because the IMF does not publish 2020 population forecasts.

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2.1,4 Economics and Population in AirAsia Group Markets

AirAsia Group has operations through locally owned and operated carriers in Malaysia, Thailand, and Indonesia, in addition, AirAsia Group recently launched operations using carriers established in Japan and the Philippines. AirAsia Group carriers fly to other countries in the Asia-Pacific region, including the world's two most populous countries: China and India. In the markets that are currently served or targeted by the AirAsia Group, socioeconomic indicators point toward high potential growth in airline traffic. Asia is a high growth continent, with half the world's population and some of the largest and fastest growing countries in the world. The region is also home to several countries that are in the phase of economic development that leads to a burgeoning middle class (i.e., consumers with discretionary income to spend on travel).

As shown in the preceding tables:

• In Malaysia, GDP grew at a 9.8% CAGR from 2000 to 2010 and is projected to continue growing at a still high rate of 6.4% from 2012 to 2017. With a population of 29 million and one of the highest levels of per capita income in Asia, Malaysia is expected to be a strong economic market into the future.

• The economy in Thailand grew at a CAGR of 10.0% from 2000 to 2010 despite serious short-term downturns due to natural disasters and political unrest. Thailand also has a relatively high GDP per capita (fourth highest in ASEAN) and a large population, which is expected to translate into continued strong economic growth.

• Indonesia has the largest population of all the countries in ASEAN with over 240 million people. As GDP per capita has risen to a level where Indonesia has the fifth highest GDP per capita in ASEAN, the country is experiencing the emergence of a large middle class with discretionary income to spend on higher-end products like travel.

• The Philippines has the second largest population in ASEAN with nearly 100 million people. Both GDP and GDP per capita have grown at high CAGRs over the past decade at 9.4% and 7.2%, respectively. With high growth in income and an already large population, the Philippines is expected to be a strong economic market in the future.

While growth in population and income in Japan has been slower compared to growth in the emerging ASEAN countries, income per capita in Japan is one of the highest in the world and over ten times the average per capita income in ASEAN nations as a whole. With a wealthy population already very accustomed to flying, but with a culture of seeking value in product selection, Japan is expected to be a strong growth area for aviation as LCCs enter the market.

China and India are the largest countries in the world. With close proximity to ASEAN nations and cultural and economic ties to countries in the region, it is expected that these markets will continue to be a source of strong economic growth for businesses that target them.

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2.2 Trade

Increased intra-regional business and reduced trade barriers between countries generate cross-border travel demand. High levels of trade and other commercial activities lead to increased demand for travel, which includes air travel for business and tourism. Countries with competitive aviation industries generate increased levels of aviation activity per capita.

According to the World Trade Organization, global trade growth has slowed in recent years. The primary reasons were slow economic growth, particularly in European countries, and shocks to the global economy such as the earthquake and tsunami in Japan. However, despite the decreasing growth rates, trade is expected to continue growing at stronger rates in the future.1

Most countries in Asia have been moving toward increasingly close business relationships, with reduced trade barriers fostering increased trade and air travel levels. According to the Boeing Company, trade liberalisation and openness to international trade has implications to aviation growth, with air travel growth, as measured in RPKs, closely correlated with economic growth. Air travel typically outpaces GDP growth by approximately 1 percent to 2 percent. The liberalisation of international trade, which serves as an important driver of GDP, has a resulting effect on aviation demand.2

In addition, as nations reduce the internal barriers to creating new businesses, individual entrepreneurs and new small businesses will seek new markets. Low-cost air travel provides an opportunity for small business owners and their staff to seek opportunities outside of their main base of operations.

2.3 Tourism

International tourism in Asia-Pacific has, as shown in Table 5, which follow s, increased significantly from 2010 to 2011. With growth of 6.2%, the Asia-Pacific region grew at the fastest rate of any major world region. Amongst Asia-Pacific sub-regions. Southeast Asia's 10.4% growth rate was the highest rate of any sub-region.

As tourists from developed and developing Asian countries continue to travel within the region, air travel in the region can be expected to continue to experience strong growth. Although recent events in Europe and the Middle East have resulted in some slowing of tourism growth, global tourism traffic has continued to expand in 2012.

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Table 5

INTERNATIONAL TOURIST ARRIVALS Arrivals by Region and Sub-Region 2010-2011

TouristArrivals

Arrivals (millions) World share Growth

2010 2011 2011 2010-2011

Northeast Asia 111.5 115.8 11.8% 3.9% Southeast Asia 69.9 77.2 7.9% 10,4% South Asia 11.5 12.4 1.3% 7.8% Oceania 11.6 11.7 1.2% 0.9%

Subtotal (Asia Pacifc) 204.4 217.0 22.1% 6.2%

Europe 474.7 503.7 51.3% 6.1% Americas 149.7 155,9 15.9% 4.1% Middle East 60.4 55.4 5.6% -8.3% Africa 49.7 50.1 5.1% 0.8%

Subtotal (RestofW orld) 734.5 765.1 77.9% 4.2%

World Total 938.9 982.1 100.0% 4.6%

Source: United Nations World Tourism Organization, World Tourism Barometer, May 2012. Note: Arrivals may include non-air border crossings.

2.3.1 Global Tourist Arrivals

Table 6, which follows, shows that Malaysia is one of only two Asian countries included in the world's top 10 countries for international tourist arrivals.

Table 6

INTERNATIONAL TOURIST ARRIVALS IN THE 10 LEADING DESTINATION COUNTRIES IN 2011 World 2010-2011

Tourist Arrivals (millions)______Growth

Rank Destination Country______2010 2011 2010—2011

1 France 77.1 79,5 3.0% 2 United States 59.8 62.3 4.2% 3 China 55.7 57.6 3.4% 4 Spain 52.7 56.7 7.6% 5 Italy 43.6 46.1 5.7% 6 Turkey 27.0 29.3 8.7% 7 United Kingdom 28.3 29.2 3.2% 8 Germany 26.9 28.4 5.5% 9 Malaysia 24.6 24.7 0.6% 10 Mexico 23.3 23.4 0.6%

Source: Wforld Tourism Organization (UNW TO), 2012. Note: Arrivals may include non-air border crossings.

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2.3.2 Tourism in Malaysia

As shown in Figure 2, below, total international tourist arrivals to Malaysia have grown at a CAGR of 6.8% over the past decade, despite several disruptions to travel in the region caused by economic downturns and natural disasters.

Figure 2

INTERNATIONAL TOURIST ARRIVALS Malaysia 2001-2011

30.000.000

25.000.000

20.000.000

15.000.000

10.000.000

5,000,000 i

- .... - r - r T-CM CO i n CO r * - CO O o c p o o o o o O o O o O o o o O O o CMCM CMCM CMCM CMCM CM CM CM

Source: Tourism Malaysia, September 2012. Note: Arrivals may include non-air border crossings.

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Arrivals from most of the ten leading origin countries have grown at high rates from 2001 to 2011, as shown in Table 7, below.

Table 7

INTERNATIONAL TOURISTARRIVALS IN MALAYSIA FROM THE 10 LEADING ORIGIN COUNTRIES IN 2011 Malaysia 2001-2011

Tourist arrivals CAGR ?ank Country 2001 2011 2011 share 2001-2011 1 Singapore 6,951,594 13,372,647 54.1% 6.8% 2 Indonesia 777,449 2,134,381 8.6% 10.6% 3 Thailand 1,018,797 1,442,048 5.8% 3.5% 4 China 597,857 1,250,536 5.1% 7.7% 5 Brunei 309,529 1,239,404 5.0% 14.9% 6 India 143,513 693,056 2.8% 17.1% 7 Australia 222,340 558,411 2.3% 9.6% 8 United Kingdom 262,423 403,940 1.6% 4.4% 9 Japan 397,639 386,974 1.6% -0.3% 10 Philippines 122,428 362,101 1.5% 11.5% Other 1,971,504 2,870,826 11.6% 3.8% Total 12,775,073 24,714,324 100.0% 6.8%

Source: Tourism Malaysia and the Malaysian Irnmigratjon Department, June 2012. Note: Arrivals may include non-air border crossings.

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2.3.3 Tourism in Thailand

As shown in Figure 3, below, tourist arrivals in Thailand have grown over the past decade despite significant disruptions, including the SAR5 epidemic, the tsunami of 2004, and the coup and resulting civil unrest from 2006 to 2009.

Figure 3

INTERNATIONAL TOURIST ARRIVALS Thailand 2001-2010

18,000,000

16,000,000 ■ 14,000,000

12,000,000

10,000,000 .j

j 8,000,000

6,000,000

4,000,000 4

2,000,000 I - oooooooocs^- o o o o o o o o o o OairvJCMCsJCMCNCMCNJCMCM

Source: Ministry of Tourism and Sports, Thailand, 2012. Note: Arrivals may include non-air border crossings.

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Table 8, below, lists the top ten origin countries for international tourists to Thailand in 2009 and 2010. As shown, from 2009 to 2010, the highest rates of growth were for tourists arriving from Russia, China, South Korea, and India.

Table 8

INTERNATIONAL TOURISTARRIVALS IN THAILAND FROM THE 10 LEADING ORIGIN COUNTRIES IN 2010 Thailand 2009-2010

Tourist arrivals Growth ?ank Country 2009 2010 2010 share 2009-2010 1 Malaysia 1,757,813 2,058,956 12.9% 17.1% 2 China 777,508 1,122,219 7.0% 44.3% 3 Japan 1,004,453 993,674 6,2% -1.1% 4 United Kingdom 841,425 810,727 5.1% -3.6% 5 South Korea 618,227 805,445 5.1% 30.3% 6 India 614,566 760,371 4.8% 23.7% 7 Laos 655,034 715,345 4.5% 9.2% 8 Australia 646,705 698,046 4.4% 7.9% 9 Russia 336,965 644,678 4.0% 91.3% 10 USA 627,074 611,792 3.8% -2.4% Other 6,270,072 6,715,147 42.1% 7.1% Total 14,149,842 15,936,400 100.0% 12.6%

Source: Ministry ofTourism and Sports, Thailand, 2012. Note: Arrivals may include non-air border crossings.

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2.3.4 Tourism in Indonesia

As shown in Figure 4, below, tourism in Indonesia has increased significantly since 2001 despite economic downturns and natural disasters.

Figure 4

INTERNATIONAL TOURIST ARRIVALS Indonesia 2001-2011

9,000,000 -

8,000,000 - j®5 7,000,000

6,000,000 -

5,000,000 -

4,000,000 ■

3,000,000 -

2,000,000 -

1,000,000

0 - r— CNJOO'«^I l-OCOr^COCT>0'<— OOOOOOOOO t— T- OOOOOOOOOOOCNJCNJCNCNJCNJCNJCNJCNCNCMCN

Source: Badan PusatStafsik, Indonesia, 2012. Note: Arrivals may include non-air border crossings.

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Table 9, below, lists the top ten origin countries for international tourists for Indonesia in 2002 and 2010. As shown, visitor arrivals from China, Malaysia, the Philippines, and Australia grew at doubie-digit per annum rates from 2002 to 2010.

S-A-P believes that much of the growth from Malaysia, the Philippines, and Australia is attributed to the introduction of low-cost carrier services between these countries, including those of the AirAsia Group and other carriers. S-A-P believes that China's high growth can be attributed to the rapid growth in income and resultant propensity to travel experienced by China in recent years.

Table 9

INTERNATIONAL TOURIST ARRIVALS IN INDONESIA FROM THE 10 LEADING ORIGIN COUNTRIES IN 2010 Indonesia 2002-2010

Tourist arrivals CAGR ?ank Country 2002 2010 2010 share 2002-2010 1 Singapore 1,447,315 1,373,126 19.6% -0.7% 2 Malaysia 475,163 1,277,476 18.2% 13.2% 3 Auslralia 346,245 771,792 11.0% 10.5% 4 China 36,685 469,365 6.7% 37.5% 5 Japan 620,722 418,971 6.0% -4.8% 6 South Korea 210,581 274,999 3.9% 3.4% 7 Taiwan 400,334 213,442 3.0% -7.6% 8 United Kingdom 160,077 192,259 2.7% 2.3% 9 Philippines 84,060 189,486 2.7% 10.7% 10 USA 160,982 180,361 2.6% 1.4% Other 1,091,236 1,641,667 23.4% 5.2% Total 5,033,400 7,002,944 100.0% 4.2%

Source: Badan PusatStaSslik, Indonesia, June 2012. Note: Arrivals may include non-air border crossings.

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2.3.5 Tourism in the Philippines

As shown in Figure 5, below, tourism in the Philippines has followed a similar upward growth pattern as other nations in Asia, particularly since 2001, with some slowing during the global financial crises and as a result of natural disasters and other events that slowed aviation growth in Asia at various times during the last decade.

Figure 5

INTERNATIONAL TOURIST ARRIVALS Philippines 2001-2011

4,500,000 -j

4.000.000 -j a . i s ' 3,500,000 ~j

3.000.000 \ 2,5°0,000 j 2.000.000 -j » y**'*

1,500,000 |

1,000,000 |

500,000 -j

| _ ^ ( T T 2010 2005 2006 200S 2011 2004 2006 2007 2002 2003 2001

Sou rce: Philippines Department of Tourism, 2012 Note: Arrivals may include non-air border crossings.

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Table 10, below, lists the top ten origin countries for international tourists for the Philippines in 2009 and 2011. As shown, South Koreans comprised the largest share of tourist arrivals in both years.

Table 10

INTERNATIONAL TOURISTARRIVALS IN THE PHILIPPINES FROM THE 10 LEADING ORIGIN COUNTRIES IN 2011 Philippines 2009-2011

Tourist arrivals CAGR tank Country 2009 2011 2011 share 2009-2011 1 South Korea 497,936 925,204 23.3% 36.3% 2 Japan 324,980 375,496 9.5% 7.5% 3 China 155,019 243,137 6.1% 25.2% 4 Taiwan 102,274 181,738 4.6% 33.3% 5 Australia 132,330 170,736 4.3% 13.6% 6 Singapore 98,305 137,802 3.5% 18.4% 7 Hong Kong 122,786 112,106 2.8% -4.4% 8 Malaysia 68,679 91,752 2.3% 15.6% 9 Other 72,596 71,797 1.8% -0.6% 10 India 32,817 42,884 1.1% 14.3% Other 1,409,377 1,619,880 40.8% 7.2% Total 3,017,099 3,972,532 100.0% 14.7%

Source: Philippines Department of Tourism, 2012 Note: Arrivals may include non-air border crossings.

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2.3.6 Tourism in China

China has become a popular tourist destination for international travellers. Although data is not readily available, overall incoming tourism is reported to have grown from just 300,000 in 1978 as the country began to open up to the outside world to over 20 million today.3

With strong cultural ties to many countries in Asia, China currently attracts visitors from ali over the region. China is expected to experience increased inbound Asian tourism as the countries in the region continue to grow economically.

Tablel 1, below, lists the top 10 origin countries for international tourist arrivals in China in 2009 and 2010.

Table 11

INTERNATIONAL TOURISTARRIVALS IN CHINA FROM THE 10 LEADING ORIGIN COUNTRIES China 2009-2010

Tourist arrivals Growth Rank Country 2009 2010 2010 share 2009-2010 1 Souih Korea 3,197,500 4,076,400 15.6% 27.5% 2 Japan 3,317,500 3,731,200 14.3% 12.5% 3 Russia 1,743,000 2,370,300 9.1% 36.0% 4 USA 1,709,800 2,009,600 7.7% 17.5% 5 Malaysia 1,059,000 1,245,200 4.8% 17.6% 6 Singapore 889,500 1,003,700 3.8% 12.8% 7 Philippines 748,900 828,300 3.2% 10.6% 8 Mongolia 576,700 794,400 3.0% 37.7% 9 Canada 550,300 685,300 2.6% 24.5% 10 Australia 561,500 661,300 2.5% 17.8% Other 7,583,800 8,721,200 39.8% 15.0% Total 21,937,500 26,126,900 100.0% 19.1%

Source: China National Tourist Office Note: Arrivals may include non-air border crossings.

3 National Tourism Administration, Peoples Republic of China

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A significant consideration for Asian tourism overall is the rapidly growing outgoing tourism market from China to destinations throughout Asia. As China's middle class has grown and achieved income levels high enough to afford international travel, outbound tourism has increased siqnificantly. In 2011, 51 million tourists travelled outside China, a 20% increase over 2010.4

2.3.7 Tourism in India

As shown in Figure 6, below, tourism in India has followed a trend similar to that of other Asian countries over the past several years with strong growth of international arrivals over the past decade.

Figure 6

INTERNATIONAL TOURIST ARRIVALS India 2001-2011

7,000,000 •

6,000,000 - X w 5,000,000

4.000.000 -

3.000.000 X'

2.000.000 -

1,000,000

I - '- OO o> o ■«— o o o o3 o o o o O T— *— o o o o o o O Q o o o

Source: Bureau of Immigration, Government of India (for 2001-2010). Ministry of Tourism, Government of India (for 2011). Note: Arrivals may indude non-air border crossings.

4 Travelchmaguide.com

The S-A-P Group and Milliman Ltd 110 Tourist arrivals CAGR lank Country 2001 2011 2011 share 2001-2011 1 USA 329,147 734,240 11.7% 8.4% 2 United Kingdom 405,472 705,407 11.2% 5.7% 3 Bangladesh n.a. 696,739 11.1% n.a. 4 Sri Lanka 112,813 176,567 2.8% 4.6% 5 Canada 88,600 175,345 2.8% 7.1% 6 Germany 80,011 156,808 2.5% 7.0% 7 France 102,434 154,813 2.5% 4.2% 8 Malaysia 57,869 119,292 1.9% 7.5% 9 Japan 80,634 109,867 1.7% 3.1% 10 Australia 52,691 107,286 1.7% 7.4% Others 1,230,329 3,153,636 50.1% 9.9% Total 2,540,000 6,290,000 100.0% 9.5%

Source: Bureau oflmrrigration, Government of India, 2012. Nate: Arrivals may include non-air border crossings.

2.3.8 Conclusion

Tourism in Asia has grown at significant rates over the past decade despite regional and global economic challenges, natural disasters, and other impediments to growth. In all of the markets in which AirAsia Group operates, tourism is a strong component of the economy and is expected to continue to drive increased air traffic.

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2.4 Airline Fares and Distribution

As LCCs have grown rapidly in Asia, lower fares have become available in many markets and stimulated demand for air travel. Along with lower fares have come efforts to increase ancillary revenue through the sale of upgrades and options with each flight. This has resulted in structural changes in the way airlines distribute tickets with a much greater emphasis on attracting customers to their own airline websites for ticket purchases. This reduces distribution costs for airlines and enables them to increase ancillary revenue sales.

Until the mid-1990s, approximately 80% of all airline ticket sales were sold through traditional travel agencies.5 With the emergence of the internet, sales migrated to online websites like Orbitz and Expedia that became the largest travel agencies, as well as to the airlines' proprietary websites. In 1996, less than 1% of all airline tickets were sold online5. As of 2010, approximately 50% of airline ticket sales were made through airline websites.7 Over a third of online ticket sales were booked through online travel agency sites such as Expedia, Travelocity, Orbitz, and Zuji.8

Further developments have occurred in which search tools have contributed to the process consumers use to find airfares. In 2011, search engine firm Google purchased ITA Software, a major developer of airline ticket search tools used by companies such as Kayak.com. The purchase was approved with some restrictions, but will enable Google to provide airline fare information directly to its search users, rather than just point them toward sites that specialise in selling airline tickets. Google says it does not have plans to sell airline tickets, but S-A-P believes that the transaction could put further competitive pressure on traditional third party distributors, such as online travel sites, and push distribution toward airline websites.

As sales have migrated online, airlines have made concerted efforts to attract customers to their own websites to purchase tickets. Customers usually use travel agency sites to allow for price comparisons and bundling of packages that include multiple airlines. The more an airline can attract customers to their proprietary site, the higher chance the airline will have of selling them a ticket for their airline vs. the competition. In addition to saving on distribution costs, attracting customers to proprietary airline websites allows for opportunities to sell ancillary revenues products such as travel insurance and other upgrades. For example, Air New Zealand sells a four- seat combination for one person to use the seats as a bed in coach. Air New Zealand claims that this type of upgrade involves complexity that is difficult to have offered on third party websites. Unique offerings allow for increased revenue to offset the reduced fares offered by LCCs.

Airlines have taken different approaches for creating a balance between attracting customers while also allowing their information to be sold through third parties. For example, US-based LCC Southwest Airlines did not allow other sites to sell their tickets until recently. Southwest kept distribution costs very low by only selling tickets on their own website. European LCC Ryanair has worked aggressively to pull sales into its own website distribution system. The carrier specifically has targeted companies that use technology to gather flight information from Ryanair's website to list and sell on their ow n sites.

5 eTN Global Travel Industry News, May 12, 2009. http://www.eturbonews.com/9242/southwest-deal-could-add-ticket-distribution- fees 6 ABC News, http://abcnews.go com/Travel/story?id=1187258page=1#.UC5iTauF-K4 7 Airline Weekly, June 2010. http://www.airlineweekly.com/AWSR3.pdf 8 Travel Agent Central, June 2011, http://www.travelagentcentral.com/technology/online-agencies-in-global-battle-for-market-share- 28791

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Some airlines have mounted legal challenges against travel online travel agencies and taken other steps to minimise external distribution costs, while also trying to attract customers to their own websites, furthering the trend of airlines wanting to directly connect with the buyers of their product.

In a special partnership, AirAsia Group joined forces with Expedia, one of the world's largest online travel agencies. AirAsia Group and Expedia have established a joint venture in which Expedia's online booking expertise will be combined with AirAsia Group's established web presence and brand to leverage the strengths of each other and reach more online customers.

2.5 Geographical Characteristics

Countries with widely distributed population centres or with large surrounding bodies of water or mountains tend to have higher-than-average aviation activity levels. The combination of Asia’s large size, the separation of many parts of Asia by bodies of water, and the general lack of competing sea or land transport alternatives provide an ideal market for air travei. Two of AirAsia Group’s target markets, Indonesia and the Philippines, are large archipelago nations with air travel providing the most efficient means of travel between islands.

Unlike in the US and Europe, where extensive road and rail networks provide a competitive substitute for air transport, these transportation options are less developed in Southeast Asia, or not as practical given the geographical characteristics of the region, therefore, competition from these modes of transport is less common for airlines operating in Southeast Asia. The introduction of widely available low air fares in the Asia-Pacific region has greatly reduced the cost barrier to air travel and created a competitive transport substitute for ground travei for many people.

2.6 Liberalisation of Air Travel

Studies have shown that the liberalisation of air services can lead to new and better air services, thereby increasing trade in airlines services, gains in consumer welfare and economic growth. Liberal aviation agreements allow for increased competition on routes and lower airfares, thereby stimulating additional activity.

Countries across Asia are liberalising the international bilateral agreements that can, in their extreme, regulate items such as the precise number and type of carriers that can operate, the number of total seats that can be provided, and the levels of airfares that can be charged.

The December 2008 lifting of restrictions on the Kuala Lumpur-Singapore route offers a good example of the impact that the easing of aviation market restrictions can have. Capacity (as measured by weekly flight frequencies, according to OAG) on this route for the month of September 2009 increased 72.5% as compared to September 2008 levels.

2.6.1 ASEAN Member States and Open Skies

The trend of deregulation and liberalisation in Asia is expected to continue, particularly amongst countries that are part of ASEAN. ASEAN was established in 1967 with initially five member countries but has grown to include ten countries in Southeast Asia.

Subsequent to an aviation liberalisation roadmap adopted by ASEAN member states in 2004, in November 2010, the member states reaffirmed their collective commitment to building an

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ASEAN Single Aviation Market by 2015. The November 2010 ASEAN Multilateral Agreement on the Full Liberalisation of Passenger Air Services (MAFLPAS) and its tw o Protocols provides for further expansion of the scope of the ASEAN Multilateral Agreement on Air Services (MAAS) to include other ASEAN cities. The agreement and its protocols provide for designated airlines of a member state to provide air services from any city with international airports in its territory to any city with international airports in the territory of the other member states and vice-versa with defined traffic rights.

2.6.2 Outside of ASEAN

Chinese government aviation officials have signed an agreement with ASEAN to build a more liberal air service framework between China and the ASEAN countries. Other developments contributing to the eventual achievement of open skies are potential similar agreements forthcoming between ASEAN and India as well as ASEAN and Korea.

China, Japan, and South Korea have indicated an interest in developing a unified aviation market comprising the ten ASEAN members plus China, Japan, India and South Korea, which could lead to the creation of an East Asian-pius-lndia Common Market. In addition. South Korea, China, and Japan have been working on a "North Asia Triangle" open skies agreement.

2.6.3 Conclusion

Asia-Pacific countries, especially those in Southeast Asia and North Asia, are projected by S-A-P to continue to remove regulatory restrictions on air services, leading to increased regional air travel, competition, and lower airfares.

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3 HISTORICAL AVIATION ACTIVITY IN THE ASIA-PACIFIC REGION

Aviation activity in the Asia-Pacific region has grown rapidly since 2001, as shown in Figure 7, below, From 2001 to 2011, RPKs in the Asia-Pacific region grew 92.1% while during the same period RPKs increased 69.2% in Europe. S-A-P believes that much of the growth achieved is the result of strong growth by LCCs. Asia-Pacific region passenger traffic, as measured in RPKs, is now greater than that of North America.

North America activity levels over the past several years have declined, the result of airline consolidation, a sluggish economy, and the region's maturity as a domestic aviation market. In addition, most of the stimulative effect of LCC service introductions has already been achieved in North America.

Figure 7

REVENUE PASSENGER KILOMETERS (RPKs) Select Regions 2001-2011

1,600,000

1.400.000

1.200.000

1,000,000

800,000

600,000

400.000

200.000

Unit RPK millions. Source: Euromonitor International from International Civil Aviation Organization (ICAO), United Nations, World Bank, and national statistics, 2012.

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4 LOW COST CARRIER BACKGROUND AND GROWTH

4.1 Introduction

Historically, much of the focus of the global airline industry has been on creating opportunities to increase revenues. In-flight meals and entertainment, high-tech seats, and the consolidated scheduling of flights at hub airports have been used by passenger airlines to attract passengers, increase market shares, and raise total revenues.

However, over the past four decades, and particularly during the last 10 years, the LCC model has grown rapidly to become a dominant model in the industry. The success of LCCs around the world has changed the focus in the industry from increasing passenger revenues to increasing operating efficiencies. LCCs that have been successful in lowering their costs are now turning the focus once again on increasing revenues, through the sale of ancillary revenue products.

Reactions to the growth of the LCC model have included attempts to lower costs, engagement in fare wars to compete intensely in the short term, or attempts to start up LCC subsidiaries. However, during the last decade, several airlines around the world have found success and have experienced significant growth with the LCC model.

The growth of LCCs in Europe has contributed to significant increases in passenger traffic. For example, from 2001 to 2011, total RPKs in Western Europe grew 63.0%.9 LCCs had a 4.9% share of departing seats in Western Europe in 2001 while in 2011 the share was 35.9%.10

Many of the successful LCCs launched their operations without the cost, operating, and labour restrictions found at most legacy carriers. With low unit costs, LCCs have driven significant growth in airline traffic around the world. The seat market share of LCCs globally has grown rapidly, from an 8.0% share of global seats in 2001 to 26.5% in 2012. In North America, the seat market is 30.0% in 2012.10

Figures 8 to 13, which follow, document LCC seat market shares in various regions.

9 Basis for analysis. Euromonitor International from International Civil Aviation Organization (ICAO), United Nations, World Bank, and national statistics, 2012 10 CAPA (Centre for Aviation} based on OAG data, 1B August 2012. 2012 data reflects January-August 2012 activity

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4.2 The LCC Business Model

LCCs are defined by their ability to achieve drastically reduced unit operating costs. As a result, the average airfares they offer can be substantially lower than those of mainline carriers. In their pursuit of keeping costs low, LCCs typically have most, but not necessarily all, of the following operating and financial characteristics:

* Operate primarily point-to-point services using a young, single fleet type,

• Sell most flight-related products such as checked baggage and refreshments on a fee basis,

* Offer lower-than-average airfares, and

• Strongly promote ancillary products, such as hotel accommodations, car rentals, and insurance products.

4.3 Ancillary Revenues

The focus of an LCC, and the purpose for all the cost reduction efforts listed above, is to have the ability to offer low fares to customers to stimulate demand and achieve profitability. Passenger yields (i.e., the revenues generated per km flown) are typically lower at LCCs than they are at full- service carriers. One of the ways that LCCs are able to achieve profitability is through efforts to find and generate ancilfary revenues from customers.

Ancillary revenues grew substantially after the economic crises that began in 2007. Baggage fees were adopted by many airlines from LCCs to full-service carriers. Other revenues come from charges for in-flight meals, wireless internet, on-demand movies, on-board movies, priority boarding, lounge passes, flight insurance, and frequent flier mile purchases.

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Table 13, below, shows the top ten airlines in the world ranked by their ancillary revenues (as a share of total revenues) as availabie/reported for 2010 and 2011. The table also displays the top ten airlines in the world ranked by their ancillary revenues per passenger, as available/reported for 2010 and 2011.

Table 13

ANCILLARY REVENUES AS A SHARE OF TOTAL REVENUES AND PER PASSENGER (IN US$) Top 10 Airlines Reporting (LCC and Mainline) 2010-2011

Ancillary Revenues as a % of Total 2010 2010 2011 2011 Rank Airline (Primary Base) Results Rank Airline (Primary Base) Results 1 Allegiant Air (USA) 29.2% 1 Spirit Airlines (USA) 33.2% 2 Spirit Airlines (USA) 22.6% 2 Jet2.com (UK) 27.1% 3 Ryanair (Ireland) 22.1% 3 Allegiant Air (USA) 27.0% 4 Jet2.com (UK) 21.0% 4 easyJet(UK) 20.8% 5 Tiger Airways (Singapore) 20.5% 5 Ryanair (Ireland) 20.5% 6 easyJet(UK) 19.2% 6 Tiger Airways (Singapore) 19.1% 7 AirAsia (Malaysia) 18.7% 7 AirAsia Group (Malaysia) (a) 17.3% 8 AirAsia X (Malaysia) 18.1% 8 Flybe (UK) 17.0% 9 Flybe (UK) 15,7% 9 AirAsia X (Malaysia) 16.5% 10 United Airlines (USA) 14,7% 10 Jetstar (Australia) 15.3%

Ancillary Revenues per Passenger (US$) 2010 2010 2011 2011 Rank Airline (Primary Base) Revenues Rank Airline (Primary Base) Revenues 1 AirAsia X (Malaysia) $ 41.60 1 Qantas Airways (Australia) $ 50.82 2 Qantas Group (Australia) (b) $ 37.00 2 Spirit Airlines (USA) $ 41.75 3 United Continental (USA) $ 34.32 3 Jet2.com (UK) $ 41.37 4 Jet2.com (UK) $ 34.24 4 AirAsia X (Malaysia) $ 38.25 5 Allegiant Air (USA) $ 32.86 5 United Continental (USA) $ 36.47 6 Spirit Airlines (USA) $ 25.16 6 Allegiant Air (USA) $ 34.00 7 Aer Lingus (Ireland) $ 24.91 7 Alaska Airlines (USA) $ 24.61 8 Alaska Airlines (USA) $ 23.68 8 Jetelar (Australia) $ 23.35 9 Delta Air Lines (USA) $ 22.75 9 Aer Lingus (Ireland) $ 22.02 10 Flybe (UK) $ 20.99 10 Flybe (UK) $ 21.92

Source: Yearbook of Ancillary Revenue Results, The Ideaworks Company, 2012. (a) Author of the report does not disclose if the amounts incorporate AirAsia X performance. (b) Includes Jetstar.

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4.4 LCC Development in Asia

Although the introduction of significant levels of LCC activity occurred later in Asia than in the US and Europe, LCC activity has grown rapidly over the past decade and continues to grow rapidly. The share of total seat capacity operated by LCCs in Asia more than doubled in the five years from 2007 to 2012.14

According to CAPA, LCCs have captured 24.6% of the Asia-Pacific market as of 2012 YTD. However, Asian LCCs currently have a smaller presence in the region's two largest domestic markets: Japan and China, with LCCs in China capturing just 6.6% of the domestic market and 4.3% of the international market, and LCCs in Japan capturing 21.9% of the domestic market, but only 4.0% of the international market.15

The introduction and growth of LCCs have had several effects on the Asian aviation industry:

• LCC competition has encouraged established carriers to operate more efficiently, thereby driving down average airfares and stimulating demand across the entire market.

• Some Asian network carriers have introduced, or are planning to introduce their own LCCs such as Qantas' Jetstar, Japan Airlines' JAL Express, Singapore Airlines' Scoot, and ANA's Peach in Japan.

• Some airport operators in the region are providing aeronautical charge discounts for new routes and for efficient use of airport facilities, while airport operators in Malaysia and Singapore have created dedicated LCC passenger terminal facilities.

• Some governments have accelerated the establishment of bilateral aviation agreements and development of new airport capacity to accommodate LCC demand.

4.5 LCC Development in Southeast Asia

The development of the LCC model in Asia first started in Southeast Asia, in the domestic markets of Malaysia and the Philippines. As a result of the liberalised aviation policies, LCC operators began to develop, with LCC bases being established in other Southeast Asia countries, such as Thailand, Singapore, and Indonesia. Key operators in these markets include:

* Cebu Pacific was launched in March 1996 as a domestic LCC and currently the largest domestic carrier in the Philippines

• Malaysia-based AirAsia Berhad commenced services in January 2002 and is now the largest LCC in Asia in terms of number of passengers carried.16 It is based at Kuala Lumpur International Airport's Low Cost Carrier Terminal. AirAsia Berhad has established affiliate airlines in Thailand, Indonesia, the Philippines, and Japan.

CAPA (Centre for Aviation) based on OAG data, 18 August 2012. 2012 data reflects January-August 2012 activity. 15 CAPA (Centre for Aviation) based on OAG data, 18 August 2012. 2012 data reflects January-August 2012 activity. China domestic and international shares of LCC traffic exclude Hong Kong and Macau. 16 Airline Monitor, 2011

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4.6 AirAsia Group Carrier Market Shares at Major Airports

Tables 14 and 15, below, document weekly scheduled seat capacity for carriers at the major cities in Southeast Asia, As shown, LCC activity represents a significant share of activity at most airports.17

Table 14

SCHEDULED DEPARTING SEAT CAPACITY International Airports In Kuala Lumpur and Bangkok Activity date: 1~7 July 2012

Weekly departing seats

Full-service carriers/others Low-cost carriers (LCC) Total

Share of

Kuala Lumpur International Airport (KUL) Seats S e a t LCC total Seate

AirAsia 192,060 75.2% 192,060 AirAsia X 27,521 10.8% 27,521 Indonesia AirAsia 16,380 6.4% 16,380 Thai AirAsia 3,780 1.5% 3,780

AirAsia Group 239,741 93.9% 239,741

Tiger Airways 4,500 1.8% 4,500 Jefetar Asia 3,780 1.5% 3,780 All others 266,375 7,400 2.9% 273,775

Total 266,375 255,421 100.0% 521,796 Share oftotel 51.0% 49.0% 100.0%

Weekly departing seafe

Full-service

carriers/others Low-cost carriers (LCC) Total

Bangkok-Suvarnabhumi Infl Airport (BKK> and Share of

Bangkok-Don Mueang Inti Airport (DMK) Seafe Sea6 LCC total Seate

Thai AirAsia 82,260 51.1% 82,260 AirAsia 6,300 3.9% 6,300 Indonesia AirAsia 2,700 1.7% 2,700

AirAsia Group 91,260 56.7% 91,260

Nok Air 37,604 23.3% 37,604 Tiger Airways 6,300 3.9% 6,300 Jetstar Asia 3,420 2.1% 3,420 Jetelar Airways 909 0.6% 909 All others 519,921 21,552 13.4% 541,473

Total 519,921 161,045 100.0% 680,966 Share oftotal 76.4% 23.6% 100.0%

Source: S-A-P, using OAG data pubiished on 21May12.

17 Incorporates the following LCCs: Air Asia, AirAsia X, Cebu Pacific, Indonesia Air Asia, Jetstar Asia, Jetstar Pacific Airlines, Lion Air, Nok Air, One Two Go, Thai Air Asia, Tiger Airways, and Valuair.

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Table 15

SCHEDULED DEPARTING SEAT CAPACITY International Airports in Singapore and Jakarta Activity date: 1-7 July 2012

______Weekly departing seals______

Full-service

carriers/others Low-cost carriers (LCC)______Total

Share of

Singapore-Changi Airport (SN) Seats Seats LCC total Seats

AirAsia 25,920 14.7% 25,920 Indonesia AirAsia 16,380 9.3% 16,380 Thai AirAsia 7,560 4.3% 7,560

AirAsia Group 49,860 28.3% 49,860

Tiger Airways 44,100 25.0% 44,100 Jetsfar A sa 33,784 19.2% 33,784 Valuair 6,480 3.7% 6,480 Jelstar Airways 6,189 3.5% 6,189 Scoot 3,936 2.2% 3,936 All others 472,304 31,941 18,1% 504,245

Total 472,304 176,290 100.0% 648,594 Share oftotal 72.8% 27.2% 100.0%

Weekly departing seate

Full-service

carriersfathers Low-cost carriers (LCC) Total

Share of

Jakarta-Soekarna Hatta Inft Airport(CGK) Seats Seats LCC total Seats

Indonesia AirAsia 32,760 10,7% 32,760 AirAsia 4,320 1.4% 4,320

AirAsia Group 37,080 12.2% 37,080

Valuair 3,420 1.1% 3,420 Tiger Airways 2,520 0.8% 2,520 Jetetar Asia 1,080 0,4% 1,080 All others 355,563 260,835 85.5% 616,398 Total 355,563 304,935 100.0% 660,498 Share of total 53.8% 46.2% 100.0%

Source: S-A-P, using OAG data published on 21May12.

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5 AIRASIA GROUP'S MARKET POSITION

5.1 AirAsia Group's Market Position in Current Markets

5.1.1 AirAsia Group in Malaysia

Kuala Lumpur International Airport (KUA) is the busiest airport in Malaysia and serves as the base of operations for the country's two largest carriers. As shown in Table 16, below, the largest share of passenger movements at KUA in 2011 was carried by AirAsia Berhad, which in 2011 surpassed Malaysia Airlines, the national carrier, to become the largest carrier operating at KLIA.

Low-cost carrier operations in Malaysia have created significant changes to the market since commencement of operations in 2002, resulting in changes including reduced airfares and increased affordability of air travel in the country.

Table 16

PASSENGER ACTIVITY LEVELS AT KLIA International and Domestic Passenger Movements, by Airline 2009-2011

______Passenger Movements______CAGR Carrier______2009______2010______2011 2011 share 2009-2011 AirAsia 10,613,235 11,898,089 13,064,014 34.6% 10.9% Indonesia AirAsia 910,038 961,665 1,213,421 3.2% 15.5% AirAsia X 981,241 1,821,207 2,388,702 6.3% 56.0% Subtotal AirAsia Group 12,504,514 14,680,961 16,666,137 44.2% 15.4%

Malaysia Airlines 10,922,855 12,146,702 12,391,538 32.9% 6.5% Emirates 411,658 648,244 725,500 1,9% 32.8% Cathay Pacific Airways 539,004 671,127 678,633 1.8% 12.2% Tiger Airways - - 449,850 1.2% n.a. KLM-Royal Dutch Airiines 409,083 - 443,291 1.2% 4,1% SilkAir 302,160 422,082 426,882 1,1% 18.9% Thai Airways Internationa! 337,652 387,960 370,782 1.0% 4.8% Other 4,255,167 5,130,560 5,551,897 14.7% 14.2% Total 29,682,093 34,087,636 37,704,510 100.0% 12.7%

Source: Malaysia Airports Holdings Berhad Annual Report 2011

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MAHB, the primary airport operator in Malaysia, is in the process of developing a major terminal complex {KL!A2} at Kuala Lumpur International Airport (KLIA), which is scheduled for completion in 2013 and is scheduled to be the largest terminal in the world dedicated to low cost carriers. The terminal building is designed for the purpose of facilitating travel between low cost carriers and full service carriers.19

S-A-P expects airline activity in Malaysia to continue to grow over the long term. In the short term, growth rates could slow—compared to the previously high rates—as a result of more moderate economic growth in China and other parts of the region, and as continued high fuel costs continue to impact airline operating costs. However, S-A-P anticipates that these macro factors will be offset, to some degree, by continued expansion of LCC services on short- and long haul routes, as well as by the continued development of LCC facilities and the promotion of LCC services in Malaysia and other countries.

5.1.2 AirAsia Group in Thailand

Thai AirAsia launched domestic operations in Thailand in February 2004 and serves 37 routes to 29 destinations from its base of operations at Suvarnabhumi International Airport and additional hubs in Phuket and Chiang Mai. Two additional hubs are planned for Hat Yai in 2013 and Udon Thani in 2014.20 The carrier serves destinations in Thailand and other countries using a fleet of 24 Airbus A320 aircraft in a single-class configuration of 180 seats.

As shown in Table 17, below, air passenger activity at commercial airports in Thailand21 grew at a CAGR of 10.9% from 2009 to 2011. Passenger movements of the AirAsia Group carriers grew at a CAGR of 17.2% during the period.

The largest share of passenger traffic in Thailand is carried by Thai Airways International, followed by Thai AirAsia, which is the only low-cost carrier that serves both domestic and international destinations from Suvarnabhumi International Airport22. As shown in the table, Thai AirAsia has the second largest share of passenger movements in Thailand.

Since the start of low-cost carrier operations in the country in 2004, with the launch of Thai AirAsia, low-cost carrier operations at Thai airports have created significant changes to the market including reduced airfares and increased affordability of air travel in the country.

19 Malaysia Airports Holdings Berhad Annual Report, 2011 20 AirAsia Annual Report, 2011 21 Includes the airports managed by Airports of Thailand PCL (AOT) and the Thai Department of Civil Aviation (DCA) which, together represent nearly all commercial airports in Thailand A low number of small commercial airports are operated by the private sector 22 AirAsia Group carriers are currently shifting their operaltons to Bangkok's Don Mueang International Airport.

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Table 17

HISTORICAL AIR PASSENGER MOVEMENTS, BY AIRLINE AOT Airports in Thailand 2009-2011 (period: 1 October to 30 September)

Passenger Movements______CAGR Carrier 2009 2010 2011 2011 share 2009-2011 Thai Air Asia 6,728,445 7,418,352 8,725,383 13.1% 13.9% AirAsia 329,197 413,618 918,696 1.4% 67.1% Indonesia Air Asia 96,543 92,464 182,845 0.3% 37.6% AirAsia Group 7,154,185 7,924,444 9,826,924 14.8% 17.2%

Thai Airways International 22,517,047 21,637,221 21,644,398 32.6% -2.0% Nok Air 1,819,988 2,975,343 4,239,135 6.4% 52.6% Bangkok Airways 2,875,734 3,141,726 3,753,765 5.7% 14.3% Orient Thai Airlines 753,151 1,406,138 2,130,001 3.2% 68.2% Calhay Pacific Airways 1,401,463 1,392,701 1,515,482 2.3% 4.0% Emirates 1,001,111 1,220,538 1,363,056 2.1% 16.7% Korean Air 654,932 769,554 912,649 1.4% 18.0% China Airlines 1,001,783 783,804 801,523 1.2% -10.6% Tiger Airways 187,508 255,673 703,433 1.1% 93.7% Singapore Airlines 814,221 671,320 674,627 1.0% -9.0% Others 13,756,070 16,061,129 18,806,134 28.3% 16.9% Total 53,937,193 58,239,591 66,371,127 100.0% 10.9%

Source: AOT, August 2012.

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5.1.3 AirAsia Group in Indonesia

PT Indonesia AirAsia was established in 2004 and has grown to an operation with five hubs and 19 A320-200s. Although Indonesia AirAsia reduced its fleet size in 2011 from 18 to 17, two aircraft have already been added to the fleet in 2012 and two additional are scheduled to enter the fleet before year end 2012. The decrease in fleet number resulted from the retirement of Boeing 737s, accomplishing AirAsia Group's goal of operate a single-type fleet of Airbus A320s.

AirAsia Berhad recently presented a bid to purchase Batavia Air, the second largest LCC in Indonesia after Lion Air, with the plan to combine its operations with PT Indonesia AirAsia and significantly increase the carrier's market share. The merger is currently in the regulatory approval process. If approved, PT Indonesia AirAsia would become the second largest LCC in Indonesia and the third largest domestic carrier in Indonesia. AirAsia Berhad anticipates closing the merger in 2013.

Table 18, below, documents the total number of domestic and international passenger movements at airports in Indonesia.

Table 18

HISTORICAL PASSENGER MOVEMENTS Airports in Indonesia 2009-201123

Passenger Movements CAGR Service 2009 2010 2011 2011 share 2009-2011 Domestic 87,616,066 103,551,312 120,078,586 88.0% 17.1% International 10,008,112 13,229,874 16,304,266 12.0% 27.6% Total 97,624,178 116,781,186 136,382,852 100.0% 18.2% Growlh

Indonesia AirAsia 3,461,896 3,921,039 5,009,924 20.3% Share o f all activity 3.5% 3.4% 3.7%

23 Sources Indonesia Directorate General of Civil Aviation and AirAsia Group annual reports.

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5.1.4 AirAsia Group in the Philippines

AirAsia Philippines Inc. was launched in March, 2012 with routes to Kalibo, Davao, and Puerto Princesa from Manila's Clark Field, and with plans for at least two more destinations before year- end 2012.24 AirAsia expects high growth to occur in the Philippines due to the large population, archipelago geography, current government focus on tourism, strong historical tourism growth, and expectations for high growth of aviation traffic in general in the country. The Philippines Civil Aeronautics Board expects air travel in the country to grow by double digits.25

Table 19, below, documents passenger movement growth in the Philippines over the last several years. As shown, passenger movements in the country grew at a CAGR of 12.0% from 2009 to 2011. LCC Cebu Pacific now has the largest share of passenger activity in the Philippines.

Table 19

HISTORICAL AIR PASSENGER MOVEMENTS Philippines 2009-2011

Passenger Movements CAGR Carrier 2009 2010 2011 2011 share 2009-2011 Philippine Airlines 9,442,563 9,244,324 8,218,053 23.9% -6.7% Cebu Pacifc 8,860,548 10,047,944 10,940,581 31.8% 11.1% Zest Airways 879,594 1,326,807 2,374,420 6.9% 64.3% SEAIR 184,367 199,771 335,138 1.0% 34.8% Airphil Express 408,863 1,872,277 3,849,953 11.2% 206.9% Spirit of Manilla 39 10,464 4,841 0.0% 1014.1% Others 7,671,305 8,149,826 8,710,172 25.3% 6.6% Total 27,447,379 30,851,413 34,433,158 100.0% 12.0%

Source: Philippines Civil Aeronautics Board, 2012.

?aAirAsia Annual Report, 2012. 25AirAsia Annual Report, 2012.

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5.1.5 AirAsia Group in Japan

Efforts in 1998 to deregulate Japan's domestic aviation industry led to the creation of several discount carriers, including Skymark Airlines and Hokkaido International Airlines (Air Do). However, the LCC model has taken longer to fully develop in Japan due in part to high operating costs, constrained airport capacity, and competition from train services in the country. LCC capacity has recently begun to increase rapidly, with LCC shares of domestic seat capacity offered in Japan at 21.9% in 2012 YTD, more than doubling from the LCC seat market share of 9.0% in 2011.26

Skymark is currently Japan's largest discount carrier, with its headquarters at Tokyo Haneda Airport. It is the dominant carrier at Kobe Airport. Other LCCs operating in Japan are Starflyer, based on the hybrid LCC model offered by JetBlue in the US, and JAL Express, a wholly owned subsidiary of Japan's flag carrier, Japan Airlines, that operates scheduled and non-scheduled passenger services.

Three new LCCs will commence operating in 2012 in Japan including AirAsia Japan Co. Ltd., a joint venture between AirAsia and ANA. AirAsia Japan Co. Ltd. received its operating certificate in February 2012 and launched services with its first flight on 1 August 2012 from Narita to Fukuoka. AirAsia Japan Co. Ltd. expects to grow to a fleet of four A320s during its initial phase of operations. Operations will focus first on domestic service but are expected to expand in the future to destinations in the neighbouring countries of China, Korea, the Philippines, and Russia.

Other new LCCs that will be competing with AirAsia Japan Co, Ltd. are Jetstar Japan, a low cost airline joint venture between Qantas subsidiary Jetstar and Japan Airlines, and ANA's LCC subsidiary, Peach, which commenced operations on 1 March 2012 between Osaka Kansai and Sapporo New Chitose Airport.

Despite competition in the market, AirAsia expects strong growth from AirAsia Japan Co. Ltd. due to AirAsia's competitive advantages in the region and the strong market for air travel in Japan. Japan has the highest GDP per capita in Asia and large population with a historical interest in tourism.

5.1.6 AirAsia Group in China and India

Although AirAsia Group has not announced plans to establish operation bases in China or India, AirAsia Group carriers operate a significant number of flights to/from the countries and has announced plans to increase the number of routes and frequencies for both countries. Due to the size of the populations and rapid development and increase in income occurring in these countries, S-A-P believes that significant opportunities exist for growth into China and India.

26 CAPA (Centre for Aviation) b ased on OAG data, 18 August 2012 2012 data reflects January-August 2012 activity

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Current markets served by AirAsia Group carriers in the two countries include the following:

China India Beijing Kolkata Hangzhou Chennai Chengdu Tiruchirappalli Chongqing Kochi Guilin Bangalore Guangzhou Shenzhen

5.2 AirAsia Group's Fleet Plan and Growth Prospects

Tabie 20 outlines AirAsia Group's current fleet and aircraft on order. 175 Airbus A320s are currently on order, with deliveries currently in process. Another 200 Airbus A320-NEOs are on order, for delivery between 2016 and 2026. Based on the number aircraft on order, AirAsia Group has the capacity to more than triple its current fleet.

Due to the young age of the 100 aircraft currently in operation, retirement of existing aircraft could be avoided for several years into the future, giving AirAsia Group significant potential for expansion.

Table 20

AIRASIA GROUP FLEET PLAN As of Year-End 2011

Current Fleet Aircraf Airbus A320s AirAsia 57 Thai AirAsia 24 Indonesia AirAsia 17 Philippines’ AirAisa 2 Subtotal 100

Airbus A330s and A340s AirAsia X 11 Total: Current Fleet 111

On Order Airbus A320 175 Airbus A320-NEO 200 Airbus A330s and A35Gs 34 Total: On Order 409

Source: AirAsia Annual Report 2011 and other sources, 2012.

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AirAsia Group has been very successful in growing their business over the past ten years. The company is aggressive in leveraging its successful brand, marketing strength, and unique culture to enter new markets, stimulate demand, and compete successfully against incumbent, full- service carriers and other LCC start-ups. S-A-P expects AirAsia Group to continue its growth and expansion in existing markets and new markets as opportunities become available.

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6 AVIATION INDUSTRY OUTLOOK

6.1 Global Aviation Demand Forecasts

Historical and forecast passenger growth rates for select air markets are provided in the sections that follow. The forecasts are based on industry publications that rely on econometric analysis of socioeconomic growth factors, global surveys of origins and destinations and infrastructure development, and other factors and analysis. As with most aviation activity forecasts, significant levels of judgment are employed and actual results may be significantly different than the forecasts.

As shown in Table 21, which follows, global passenger air travel, as measured in revenue passenger kilometres (RPKs), grew at a CAGR of 4.5% from 2001 to 2010 and is forecasted to grow at a CAGR of 5.1% from 2011 to 2030.

Table 21

HISTORICAL AND FORECAST ANNUAL PASSENGER GROWTH RATES Activity (in RPKs) Within Select Regions of the World 2001 to 2030

CAGR Historical Forecast 2001-2010 2011-2030 Global 4.5% 5.1%

Within regions within China 16.2% 7.5% within Europe 4.1% 4.0% within Middle East 12.3% 5.0% within North America 1.4% 2.3% within Northeast Asia -1.2% 3.3% wifriin Oceania 5.3% 4.7% within South America 9.4% 7.0% within Soulh Asia 12.8% 9.4% within Southeast Asia 9.7% 7.4%

Source: The Boeing Company, Current MarketOulook, 2003, 2009, and 2011. NorfeeastAsia: Japan, North Korea and South Korea South Asia: India, Pakistan, and Atjhanistan Southeast Asia: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam Oceania: Australia, New Zealand, Melanesia, Micronesia and Polynesia

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6.2 Asia-Pacific Aviation Growth Considerations

For several reasons, S-A-P anticipates that Southeast Asia's domestic and international markets will enjoy strong long-term growth rates:

• Proximity to major populations with strong economic growth. Approximately one-tenth of the w orld's population lives w ithin Southeast Asia, one-third w ithin Asia-Pacific, and half in Asia, indicating the potential size of the regional aviation market. However, as a result of low GDP per capita throughout most of the region and other factors, a large proportion of the population has, historically, been unable to afford air transportation. As mentioned previously, S-A-P expects the affordability of air travel to grow with increases in GDP per capita and growth in LCC development, which should result in higher population penetration of air travel.

• Location on maior trade routes. Southeast Asia is well positioned between Europe/Middle East and the Pacific region, as well as between North Asia and South Asia, all containing large population and emerging economic centres.

• Proximity to China. With strong economic growth, business links, and increasingly relaxed restrictions on travel to foreign destinations, travellers from the world's most populous country have and will continue to create significant demand for leisure and business travel to Southeast Asian countries.

• Proximity to Australia and Japan. Australia and Japan have two of the most mature economies in the region, with a high GDP per capita, high levels of disposable income, high propensity to travel rates per capita, and strong tourism connections with Southeast Asia.

• Location between South Asia and China. The region's role as a destination for visitors from China (the world's most populous country) and South Asia, which includes India (the world's second most populous country}, Pakistan (sixth), and Bangladesh (seventh) will grow in prominence as the people of these countries increase their frequency of travel.

• Transport substitution. As income levels increase and air transport costs decrease, S-A-P expects air transport will increasingly substitute for land and sea-based transport modes such as rail, buses, and ferries.

• Liberalisation of aviation agreements. Southeast Asian countries have become more liberal with their aviation agreements, both within ASEAN and with other countries.

• Tourist infrastructure. The region's well-developed tourist infrastructure will continue to attract leisure travellers.

• Urbanisation. The share of the population in Southeast Asian countries living in and moving to cities is generally expected to continue to increase,

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6.3 Potential Constraints to Aviation Industry Growth in Asia-Pacific

The opportunities for industry-wide aviation activity growth could be offset by:

• Increased fuel prices and/or unfavourable currency exchange levels could constrain aviation demand if air and other travel costs increase and travellers' disposable income levels decrease.

• Regional conflicts or scares. Civil unrest, terrorist events, or other events could constrain future activity levels.

• Travel restrictions. Government restrictions on travel, by limiting the number of entry/exit visas issued or by imposing high visa costs, could limit future aviation growth.

• Insufficient airport or airspace capacity. Economic or other constraints could result in delays or changes in plans by governments regarding planned aviation industry infrastructure expansion. However, significant investments have been made in airline and airport infrastructure during the previous decade, notwithstanding economic and other shocks that negatively affected airline traffic growth.

• Environmental factors. Natural and man-made environmental events, such as haze, volcanic ash, and natural disasters could negatively impact future activity levels.

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6.4 Asia-Pacific Aviation Demand Forecasts

According to the Boeing Company, passenger air travel in the Asia-Pacific region—as measured in RPKs—grew at a CAGR of 9.5% from 2003 to 2010, one of the highest growth rates in the world during this period, and is expected to experience strong growth rates from 2011 to 2030, continuing to be one of the fastest growing regions in the world long term27.

Travel volumes in the Asia-Pacific region are already large, accounting for approximately 27% of global travel, according to Boeing28. Air travel, as measured in RPKs, within the Asia-Pacific region is projected by Boeing to grow at a CAGR of 7.0% from 2011 to 2030. Boeing expects air travel (RPKs) to, from, and within the Asia-Pacific region to grow at a CAGR of 6.7% during the same period.

Table22, below, documents forecasted growth rates between major regions of the world. As shown, growth rates to and from the Asia-Pacific region are some of the highest inter-regional growth rates.

Table 22

FORECAST AVERAGE ANNUAL PASSENGER GROWTH RATES Activity (in RPKs) Between Regions of the World 2011-2030

______Forecast CAGR______Latin North Region Africa America Middle East Europe America Asia-Paalic Asia Pacific 8.1% 5.7% 7.2% 5.9% 5.1% 7.0% North America 6.4% 5.4% 7.3% 3.6% 2.3% Europe 4.6% 4.8% 5.4% 4.0%

Middle East 6.4% - 5.0% Latin America 6.0% 6.7% Atica 5.1%

Global/Total 5.1% 6.9% 6.6% 4.3% 2.9% 6.7%

Source: The Boeing Company, Current Market Outlook 2011.

21 Boeing Current Market Outlook, 2011 Boeing Current Market Outlook, 2011

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6.5 Southeast Asia Aviation Demand Forecasts

Southeast Asia is one of the world's most dynamic regions for air travel. Passenger air travel within Southeast Asia grew at a CAGR of 7.3% from 1985 to 2010, as measured in RPKs, and is projected to grow at a CAGR of 7.4% from 2011 to 2030.

Historical and forecast growth rates for passenger activity within the Southeast Asia region and between the Southeast Asia region and select world regions are shown in Table 23, below.

Table 23

HISTORICAL AND FORECAST ANNUAL PASSENGER GROWTH RATES Activity (in RPKs) Within and Between Southeast Asia and Select Regions of the World 1985-2030

CAGR Historical Forecast 1965-1990 1990-1995 1995-2000 2000-2005 2005-2010 1985-2010 2011-2030 Within SoutheastAsia 11.1% 12.5% -0.1% 9.7% 3.7% 7.3% 7.4%

Between SoulheastAsia and: China 12.4% 9.7% 5.0% 9.1% 3.3% 7.8% 8.3% Oceania 14.7% 6.4% 6.9% 4.8% 2.0% 6.9% 5.9% Northeast Asia 15.2% 6.4% 1.8% 7.0% 0.9% 6.1% 6.0% South Asia 0.5% 6.9% 6.2% 8.1% 6.9% 5.7% 8.5%

Source: The Boeing Company, Current Market Outlook, 2003, 2009, and 2011. Northeast Asia: Japan, North Korea and South Korea South Asia: India, Pakistan, and Afthanistan SoulheastAsia: Brunei, Burma, Cambodia, Indonesia, Laos, Malaysia, Philippines, Singapore, Taiwan, Thailand, and Vietnam

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7 THE NON-LIFE INSURANCE MARKETS OF MALAYSIA, THAILAND, INDONESIA, THE PHILIPPINES AND THE REST OF ASIA (EX-JAPAN)

7.1 Overview

The following tables set forth the historical and nominal amounts and growth of non-life premiums by country in the Asia ex-Japan region, as well as Europe, North America and Japan, from 2006 to 2011.

Table 24

NOMINAL NON-LIFE PREMIUMS US$ millions 2006 to 2011

Year Location 2006 2007 2008 2009 2010 2011 China 25,708 33,810 44,986 53,872 71,628 87,319 South Korea 30,342 35,019 30,046 34,835 42,905 51,223 Taiwan 10,318 10,708 11,517 11,444 12,505 14,283 India 5,747 7,597 7,299 8,274 10,395 12,187 Singapore 3,450 4,204 4,827 6,037 6,688 8,188 Thailand 3,240 3,764 4,321 4,336 5,285 6,028 Malaysia 2,683 2,981 3,175 3,331 4,434 4,965 Indonesia 2,025 2,210 2,199 2,777 3,839 4,655 Hong Kong 2,339 2,480 2,736 2,961 3,080 3,293 Vietnam 419 514 672 800 916 1,027 Philippines 641 774 857 690 865 991 Kazakhstan 974 1,164 1,062 705 823 989 Sri Lanka 250 282 354 365 330 382 Bangladesh 129 155 183 205 229 255

Asia ex Japan 102,742 123,318 135,406 153,259 189,177 225,439 Europe 573,703 649,538 707,615 660,968 658,573 713,699 North America 690,708 714,090 719,072 702,425 718,847 736,152 Japan 95,895 96,084 103,022 108,619 117,246 130,741

Source: Swiss Reinsurance Company Sigma Reports No. 4/2007, 3/2008,3/2009,2/2010,2/2011,3/2012.

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Table 25

NOMINAL NON-LIFE INSURANCE MARKET GROWTH 2006 to 2011

CAGR Location______2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 (2006-2011) China 31.5% 33.1% 19.8% 33.0% 21.9% 27.7% Vietnam 22.7% 30.7% 19.0% 14.5% 12.1% 19.6% Singapore 21.9% 14.8% 25.1% 10.8% 22.4% 18.9% Indonesia 9.1% -0.5% 26.3% 38.2% 21.3% 18.1% India 32.2% -3.9% 13.4% 25.6% 17.2% 16.2% Bangladesh 20.2% 18.1% 12.0% 11.7% 11.4% 14.6% Thailand 16.2% 14.8% 0.3% 21.9% 14.1% 13.2% Malaysia 11.1% 6.5% 4.9% 33.1% 12.0% 13.1% South Korea 15.4% -14.2% 15.9% 23.2% 19.4% 11.0% Philippines 20.7% 10.7% -19.5% 25.4% 14.6% 9.1% Sri Lanka 12.8% 25.5% 3.1% -9.6% 15.8% 8.8% Hong Kong 6.0% 10.3% 8.2% 4.0% 6.9% 7.1% Taiwan 3.8% 7.6% -0.6% 9.3% 14.2% 6.7% Kazakhstan 19.5% -8.8% -33.6% 16.7% 20.2% 0.3%

Asia ex Japan 20.0% 9.8% 13.2% 23.4% 19.2% 17.0% Europe 13.2% 8.9% -6.6% -0.4% 8.4% 4.5% North America 3.4% 0.7% -2.3% 2.3% 2.4% 1.3% Japan 0.2% 7.2% 5.4% 7.9% 11.5% 6.4%

Source: Swiss Reinsurance Company Sigma Reports No. 4/2007, 3/2008,3/2009,2/2010,2/2011, 3/2012.

Asia ex-Japan non-life premiums have been growing strongly at a CAGR of 17.0% from 2006 to 2011, notwithstanding the slowdown in growth in 2008 due to the global financial crisis. Total non-life insurance premiums grew from US$102.7 billion in 2006 to US$225.4 billion in 2011.

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Figures 14 and 15 summarise the insurance penetration and density by country from 2006 to 2011. Insurance penetration and density are defined as percentage of gross total non-life premium over GDP and gross non-life premium per capita, respectively.

Figure 14

NON-LIFE INSURANCE PENETRATION 2011

5.0% 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

■ 2011 ^ CAGR (2006-2011)

Figure 15

NON-LIFE INSURANCE DENSITY (US$) 2011

§2011 “ CAGR (2006-2011)

Source: Swiss Reinsurance Company Sigma Reports No. 4/2007, 3/2008,3/2009,2/2010,2/2011,3/2012

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7.2 Strong Economic Growth

Despite the global economic downturn, Asia ex-Japan consistently outperformed other world economies with a CAGR of 16.5% from 2006 to 2011.

7.3 Insurance Penetration and GDP growth

Despite strong insurance market growth in recent years, markets such as Malaysia, Thailand, Indonesia, and the Philippines all have reported non-life insurance penetration rates under 2.0% and corresponding density rates under US$200, which are much lower than the mature markets in the region as well as Europe, North America and Japan.

According to a paper published by the Geneva Association29 in 2000 about the correlation between per-capita GDP and insurance penetration, due to the change of income elasticity of demand for insurance while the economy matures, the insurance penetration could increase at a higher rate than the per-capita GDP. This is better represented by non-life than life insurance penetration.

Figure 16 is a plot of 2011 non-life insurance penetration of various countries in the world against their respective GDP per capita. It shows that non-life insurance penetration increases with the growth of per-capita GDP. On the other hand, insurance density is the product of insurance penetration and GDP per capita, with insurance penetrations growing with GDP per capita, insurance density would increase at even a higher rate.

Based on this study, it is expected that the non-life insurance markets of these developing markets will grow at a faster pace than their GDP growth.

29 The S-Curve Relation Bewteen Per-Capita Income and Insurance Penetration, the Geneva Papers on Risk and Insurance Vol 25 No.3 {July 2000) 396-406

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Figure 16

NON-LIFE INSURANCE PENETRATION OF VARIOUS COUNTRIES IN THE WORLD AGAINST THEIR RESPECTIVE GDP PER CAPITA 2011

6.0% ; ......

0.0% # ' ...... I ...... -...... T...... !...... I...... ■­ 0...... 10,000...... 20,000...... 30,000...... 40,000...... 50,000...... 60,000...... 70,000 GDP per capita

Source: World Bank, EIU as of December 2011

7.4 Distribution Trends

Most non-life insurance companies in Asia have initially developed around the agency and broker distribution models, as face to face communication presents the best opportunity to educate customers and interact with them.

Direct marketing is another widely used distribution channel in the region for more than a decade. Some companies in the region have their entire business built around this channel.

Direct Mail and Telemarketing (DMTM) used to be two common forms of direct marketing. However, with the increasing cost of printing and postage, direct mail is used only selectively today and DMTM has evolved to be mostly telemarketing. Telemarketing has an advantage over other direct marketing channels in that it involves human interaction, which facilitates two-way communication and gives customers immediate feedback. At the same time, a telemarketing agent can handle a large number of customers in a day, which makes it a more cost effective and productive marketing medium compared with direct mail.

While the above remains a significant distribution channel, with the advancement of communication technology and the encouragement of the local regulators, non-life insurance

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companies have started to distribute their insurance products using other direct methods, such as through the Internet. In recent years, several non-life insurers have emerged in the region such as Singapore and Hong Kong focusing on online channels to distribute personal non-life insurance products, such as travel and motor insurance. This is a convenient and relatively low cost channel to sell and it makes it easy to understand products, especially if the purchase is incidental to another activity (e.g., a simple add-on travel insurance coverage when purchasing an airline ticket online}.

South Korea is one of the regional pioneers in developing an online insurance market. With the high population of internet users, several foreign insurers established a niche in the online market in 2005 and local insurers gradually followed to expand their presence in this space. The internet is now an important channel for distributing motor, travel and other accident and health insurance coverage in South Korea.

According to the Internet World Stats, the number of Internet users in the Asia ex-Japan region has a CAGR o f 26.8% from 2000 to 2011 compared to CAGRs of 8.8% in North America and 15.2% in Europe in the same period. Outside South Korea, while internet penetration is rapidly growing, , internet penetration in the Asia ex-Japan region on average Is still far below that of North America {78.6%) and Europe (61.3%) at a rate of 24.4% as of 31 December 2011.

Although the Internet distribution channel is still in its infancy tn Asia ex-Japan markets, online Travel insurance sales have enjoyed some initial success through airline and bank websites, given the simple and standard structure of the products without complicated underwriting rules or protocols. Although we do not have the relevant statistics in Asia, according to the US Travel Insurance Association, the online sales of the US travel insurance for 2010 grew by 38% from 2008 and nearly 25% from 2009, while the corresponding amounts for traditional agency channels were 3.4% and 13%, respectively. In Thailand, some companies are experimenting with iPhone apps as a medium to distribute travel insurance.

7.5 Travel Insurance in Asia ex Japan

As mentioned in Section 2, travel demand in Asia ex-Japan is being fuelled by strong economic growth, a rising population coupled with an emerging middle class. The advent of low cost carriers in the region has further boosted demand for travel by driving down travel costs and thus making it more affordable. All of this travel growth, in turn, fuels the demand for travel insurance.

More people are buying travel insurance today as they become increasingly more knowledgeable about the risks of travel, the high cost of overseas medical treatment and the financial losses incurred from trip cancellations. A string of catastrophic events such as the 9/11 attacks, the Icelandic volcano eruptions which affected flights across Europe and the March 2011 Japanese earthquakes have also heightened awareness for the need of travel insurance. Wanting a peace of mind, protection against unforeseen events and refunds for travel cancellations are prime motivators for consumers to buy travel insurance.

Travel insurance is a fairly simple and standardised product in Asia, typically providing coverage for travel delays, loss or damage of baggage, personal liability, medical expenses, international emergency assistance and personal accident. Insurers usually offer several product choices with varying amount of cover, ranging from the lower end ones for domestic travel and higher end ones for international travel with substantially higher limits. What follows is an illustrative product design of policies typically offered in Malaysia.

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Table 26

ILLUSTRATIVE SAMPLE PRODUCT OF POLICIES TYPICALLY OFFERED IN MALAYSIA

Plan 1 Plan 2 Benefits (Amounts in RM) Domestic/Regional Travel International Travel Accidental Death and Bodily Disablement Up to 125,000 Up to 250,000

Medical Expenses Up to 50,000 Up to 200,000

Emergency Medical Evacuation and Up to 100,000 Unlimited Repatriation of Mortal Remains

Compassionate Visit n.a. Up to 5,000

Travel Cancellation Up to 1,000 Up to 10,000

Flight Delay Up to 150 Up to 1,500 (150 per 6 hour (150 per 6 hour delay period) delay period)

Lost or Damaged Baggage Up to 1,000 Up to 5,000 (Max 500 per item) (Max 500 per item)

Loss of Money n.a. Up to 1,000

Loss of Travel Documents n.a. Up to 2,000

Personal Liability n.a. Up to 500,000

Travel Assistance Sen/ice Included Included

Source for this illustrative example: Milliman Ltd.

Although the traditional agency and broker distribution model is still predominant in Asia, Internet sales of travel insurance have also started to take off with several insurers enjoying some initial success w ith their launch o f direct sales websites (see Section 7.4, Distribution Trends). Online sales can also be facilitated through an airline's own website.

This distribution model has the distinct advantage of bringing greater convenience to airline customers by providing a one-stop-shop for booking flights, arranging accommodations and the buying of insurance, without the need to complete multiple forms containing essentially similar information. Customers can obtain insurance simply by pointing and clicking to choose the coverage they desire.

Several insurers are already exploiting this distribution model with TIH's partnership with AirAsia being the most prominent. Its products are tailored especially for AirAsia customers with benefits tied specifically to its on-time performance which increases the product attraction to customers. Chartis is another well-known insurer that markets its travel insurance products through the

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airline partnership distribution model. Together with Jetstar and Air Philippines, it sells its TravelGuard policies online in several countries including Singapore, Thailand, Indonesia, Vietnam, and the Philippines. eTiQa also has similar arrangements with Malaysian Airlines although sales are limited to trips originating from Malaysia only.

The following section discusses the non-life insurance industry and major trends for Malaysia, Thailand, Indonesia, and the Philippines.

7.6 Malaysia

Malaysia's non-life insurance market is the seventh largest in the Asia ex-Japan region, generating approximately US$5 billion in non-life premiums in 2011. The country has experienced strong economic growth, with GDP growing at a CAGR of 12.2% from 2006 to 2011. Both non-life penetration rate {1.8% in 2011) and density rate (US$175 in 2011} are relatively low, suggesting that there are ample opportunities for growth.

There were 28 non-life direct insurers in Malaysia as of 2011. The number has been reducing since the implementation of Risk Based Capital ("RBC") regulation in 2009. It may reduce further if the reaction to the regulator's move to strengthen capital requirements for the industry results in continued consolidation efforts.

Table 27 shows the number of non-life insurers in Malaysia from 2006 to 2011.

Table 27

NUMBER OF NON-LIFE INSURERS Malaysia 2006-2011

2006 2007 2008 2009 2010 2011

Number of non-life Insurers 34 33 33 31 30 28

Source: Bank Negara Malaysia, Insurance Statistics

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Figure 17 shows a breakdown of Malaysia's non-life insurance premiums by major lines of business for 2011. Motor is the largest single line of business accounting for almost half of the non-life premiums, followed by Fire and Accident & Health ("A&H").

Figure 17

MARKET SHARE OF PRIMARY NON-LIFE INSURANCE PREMIUM Malaysia 2011

Others A&H\ A . 13% 14% . X

Fire \ 17% X

\ Marine / \ 10% / Motor / 46% /

Source: Bank Negara Malaysia, Insurance Statistics

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7.6.1 Underwriting Experience and Investment Income

Figure 18 shows the non-life combined ratios in Malaysia for the 2006-2011 period.

Non-life operating profits have been steadily improving since 2007 including the lowest combined ratio30 in the last six years of 89.8% in 2011. The 6 year average combined ratio from 2006 to 2011 is 94.0%. Based on Bank Negara Malaysia ("BNM") statistics, the improved underwriting experience is driven by improving motor insurance loss ratios. At the same time, net investment income grew at 13.1% in 2011, the highest rate over the 2006 to 2011 period.

Figure 18

NON-LIFE COMBINED RATIO Malaysia 2006-2011

102.0%

100.0%

98.0%

96.0%

94.0% 92.0%

90.0%

88.0%

86.0 % 84.0% 2006 2007 2008 2009 2010 2011

Source: Bank Negara Malaysia, Insurance Statistics.

30 Combined Ratio - Defined as the sum of Net Claims Incurred, Net Commissions and Management Expenses divided by Earned Premium Income

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Table 28 shows the investment income of non-life insurers in Malaysia in RM millions.

Table 28

INVESTMENT INCOME OF NON-LIFE INSURERS (RM MILLIONS} Malaysia 2006-2011

2006 2007 2008 2009 2010 2011 Net Investment Income 697.8 759.3 782.3 740.1 780.8 883.1 Year-to-Year Growth 8.8% 3.0% -5.4% 5.5% 13.1%

Source: Bank Negara Malaysia, Insurance Statistics

7.6.2 Regulations and Developments

BNM is responsible for insurance regulation and derives its powers from the Insurance Act 1996. The BNM has broad powers, including the power to issue guidelines and circulars, create regulations, review and direct the insurers to recall any insurance products offered, compensate consumers who have suffered losses, modify product terms and conditions, impose capital charges, and take corrective actions against an insurer.

BNM has put in place an RBC framework since 1 January 2009 and introduced guidelines on dynamic solvency testing. In addition to the RBC framework requirements, insurers must also consider their own risk profile to determine their own solvency capital needs and maintain a capital adequacy ratio that is higher than the 130% benchmark. The RBC framework is constantly reviewed and enhanced, with proposals being put forward on refining life insurance valuation methodologies and the treatment of reinsurance arrangements. There are also plans to extend the RBC framework to Takaful. operators.

BNM also have plans to liberalise the insurance market. Plans include the deregulation of fire and motor tariffs, and relaxing foreign ownership limits from 49% to 70% for all financial institutions except commercial banks.

There is an industry pool, Malaysian Motor Insurance Pool ("MMIP"). The pool is the residual insurer in the market catering to those cannot obtain motor insurance from any insurer.

When MMIP established in 1992, there were only two insurers acting as Servicing Insurers. Since May 2011, all non-life and Takaful companies have been required to issue MMIP covers on behalf of MMIP. The losses of MMIP are shared equally by all non-life and Takaful companies.

According to the General Insurance Association of Malaysia, MMIP recorded gross written premiums of RM 210.5 million in 2011.

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Figure 20 shows the annual growth rates of direct non-life premiums in Malaysia by major line of business and in total from 2006/07 to 2010/11.

Figure 20

ANNUAL GROWTH RATES OF DIRECT NON-LIFE PREMIUMS Malaysia 2006/07 to 2010/11

16.0%

■2.0% — A&H - ; ■ All Lines of Business Motor Fire Marine --x-* Others

Source: Bank Negara Malaysia, Insurance Statistics

7.6.4 Shift to Innovative Delivery Channels ■

In 2011, BNM released a ten-year Financial Sector Master Plan that laid out a recommendation to encourage insurers and Takaful operators to enhance the offering of insurance and Takaful products through more innovative delivery channels. This is intended to expand the outreach of insurance and Takaful services through more cost-effective means and contribute towards enhancing the insurance and Takaful penetration rate in the country.

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7.7 Thailand

Thailand is the sixth largest non-life insurance market in the Asia ex-Japan region, having approximately US$6 billion of non-life premium in 2011. The country had good economic growth from 2006 to 2011, with GDP increasing at a CAGR of 10.8% during that period. Non-life insurance penetration rate (1.7% in 2011} and density rate (US$88 in 2011) are still relatively low. Aii these point to significant growth opportunities in the non-life insurance market.

The Thailand insurance market is relatively fragmented, with 67 non-life direct insurers in Thailand as of 2011. However, some consolidation has occurred recently after the introduction of the actuarial reserving regulation in 2009 and the RBC regulation in 2011.

Table 29 shows the number of direct non-life insurers in Thailand during 2006-2011.

Table 29

NUMBER OF DIRECT NON-LIFE INSURERS Thailand 2006-2011

2006 2007 2008 2009 2010 2011 Number of non-life insurers 74 75 74 71 69 67

Source: The Office of Insurance Commission

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Figure 21 shows a breakdown of Thailand's non-life insurance premiums by major lines of business for 2011 (provisional statistics). The largest non-life insurance line, Motor, represents 60.0% of total non-life insurance premiums in Thailand.

Figure 21

MARKET SHARE OF PRIMARY NON-LIFE PREMIUM Thailand 2011 (Provisional)

P A ^ \ / Others 11% / 20%

Fire/ — 6% Marine 1 3% V ''"' :i:

Motor / 60% /

Source: The Office of Insurance Commission

7.7.1 Underwriting Experience and Investment Income

Thai non-life operating profits reached its peak in 2008 when the combined ratio was 94.8% and the net investment income peaked at Baht 4.07 billion. The industry combined ratio increased thereafter and stood at 97.8% as of 2010. This was compounded by the reduction of net investment income in the same period due to interest rate cuts in the market.

While the 2011 annual insurance statistics have not yet been released, the industry expects an underwriting loss for the year due to the severe floods in the country in 2011 September to December (to be discussed below).

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Table 30 shows investment income of non-life insurers in Thailand (Baht millions) for 2006 to 2010 .

Table 30

INVESTMENT INCOME OF NON-LIFE INSURERS (BAHT MILLIONS) Thailand 2006 to 2010

2006______2007______200B 2009______2010 Net Investment Income 2,724.1 3,701.6 4,069.9 4,019.6 3,452.2 Year-to-Year Growth 35.9% 9.9% -1.2% -14.1%

Source: The Office of Insurance Commission

7.7.2 Regulation

Regulation of the insurance industry is overseen by the Office of Insurance Commission ("OIC"), which is an independent governmental body under the Ministry of Finance. In addition to the prudential supervision of insurers and ensuring compliance with capital requirements, the OIC also plays a large role in regulating the insurance market, with powers to control the number of insurers, types of products, policy wordings, and premiums that may be charged.

There have been several regulatory reforms in Thailand recently. First, the OIC introduced mandatory loss reserving requirements in 2009, including the involvement of a qualified actuary in setting loss reserves for non-life insurers in Thailand, Very recently, the RBC regimes became effective on 1 September 2011.

The new RBC rules require insurers to calculate the capital required for market risk, credit risk, concentration risk, and insurance risk. Insurers must hold solvency capital at a level not lower than the minimum Capital Adequacy Ratio ("CAR"), which is initially set at 125% but will go up to 140% by 1 January 2013. While changes are not expected to be made until 2015, the OIC is already considering a review of the risk charges and RBC enhancements, with a particular focus on stress testing and operational risk.

The OIC has also been active on the regulation of non-agency distribution channels such as telemarketing and direct marketing over the past 2 to 3 years, to provide a robust regulatory framework for future development of these channels.

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Figure 24 shows the growth rates of non-life premiums in Thailand by major line of business and in total (2010/11 amounts are provisional).

Figure 24

GROWTH RATES OF NON-LIFE PREMIUMS Thailand 2003/07—2010/11P (2010/11 amounts are provisional)

30.0%

■20,0% ' —f —pa : ; All Lines of Business —*«Motor ~ c~ F ire Marine Others

Source: The Office of Insurance Commission

7.7.4 Impact from the 2011 Flood Losses

Severe flooding occurred in Thailand from September to December 2011. According to a briefing issued by A.M . Best Company, Inc. in February 201231, the estimated insured losses on an industry wide basis was about US$15 billion. This would place the Thai floods in a tie for the fifth costliest insured loss event in the past 31 years, and the costliest natural disaster in Southeast Asia.

31 rlood Losses Prompt Key Changes in Thai Insurance Industry. A.M. Best Company, !nc. 9 February 2012

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Immediately after the event, the market observed a hardening of premium rates coupied with contracted capacity in the domestic insurance and reinsurance markets. To ease insurers' concerns and ensure that flood protection remains available and affordable in the Thai market, the Thai government has established a US$1.62 billion National Catastrophe Insurance Fund in March 2012 which is capable of covering losses up to US$16.2 billion. This potential risk-sharing scheme between the Thai government and non-life insurance companies, if successful, would be the biggest excess-of-loss property catastrophe treaty in the world.

7.7.5 Possible Industry Consolidation

Mounting claims related to the 2011 Thai floods and the increase of minimum capital adequacy ratio requirement in 2013 may force financially weak insurers to seek new partners, as evidenced by Fairfax's recent agreement to acquire 25% of Thai Re for US$70 million.

7.8 Indonesia

Indonesia is the eighth largest non-life market in the Asia ex-Japan region, with approximately US$4.7 billion of non-life premium in 2011. The country's GDP has been growing robustly at a CAGR of 18.4% from 2006 to 2011. Recent economic growth combined with one of the lowest non-life penetration rates {0.6% in 2011) and density rates {US$88 in 2011} in the Asia Pacific region, signal strong growth opportunities in the non-life market.

Similar to Thailand, the Indonesia non-life insurance market is fragmented, but experienced some consolidation in recent years. There were 87 non-life direct insurers as of 2010. The number of insurers may reduce further if market players react to the regulator's move to strengthen the capital requirements for the industry.

Table 31 shows the number of direct non-life insurers in Indonesia during 2006-2010.

Table 31

NUMBER OF DIRECT NON-LIFE INSURERS Indonesia 2006-2010

2006 2007 2008 2009 2010 Number of non-life insurers 97 94 90 89 87

Source: Bapepam-LK

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Figure 25 shows a breakdown of Indonesia's non-iife insurance premiums by major lines of business for 2010. Motor, Property and A&H represented more than 70.0% of total non-life insurance premiums.

Figure 25

MARKET SHARE OF NON-LIFE DIRECT WRITTEN PREMIUM32 Indonesia 2010

Marine A&H'X / \ 10% 10% / - \

/ Others \ / 18% \ Motor ) I 32% : /

Property / 30%

Source: Bapepam-LK

7.8.1 Regulation

Indonesia's insurance sector falls under the jurisdiction of the Ministry of Finance and is currently regulated by the Insurance Bureau of the Capital Markets and Financial Institution Supervisory Agency ("CMFISA” or "Bapepam-LK"). The main duties of Bapepam-LK include the drafting of insurance legislation, initiating and supporting educational initiatives in relation to insurance and providing supervision and enforcement over insurance companies.

In 2011, Indonesia passed a bill to create a new, independent financial regulator, Otoritas Jasa Keuangan ("OJK"), to supervise and regulate financial services. OJK ultimately will replace Bank Indonesia and Bapepam-LK as supervisor for banking and insurance, respectively. Commissioners for OJK are presently being chosen. It will take time for the new regulatory body to be up and running, with an initial transition for the banking sector first. It is expected that OJK will help to implement insurance regulations more actively.

32 Direct Written Premium - Defined as Gross Written Premium less Reinsurance Inward Prem ium

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There has been an increased focus on solvency and capital adequacy in recent years. Insurance (and also reinsurance) companies are required to progressively increase their capital base until it has reached specified minimum levels, which are Rp.40 million currently, Rp.70 million by December 31, 2012 and Rp.100 million by December 31, 2014.

In January 2011, the Ministry of Finance issued a draft guideline entitled "Financial Health of Insurance and Reinsurance Companies", which set out new proposed regulations on the solvency level of insurance/reinsurance companies. The proposed regulations included a requirement to adopt a gross premium valuation for life insurance liabilities and discussed the establishment of a policyholders' protection fund. Following feedback from the industry, a revised draft was issued in April 2011 and new gross premium valuation rules are expected to apply from 31 December, 2012.

Foreign insurers' shareholdings in joint ventures are capped at 80%. This level is flexible; however, provided that the Indonesian partner's aggregate paid-up capital is maintained. Then, the foreign insurer can increase its stake beyond 80%.

7.8.2 Market Trend

Emerging A&H Insurance Market

There is a new national social security law, BPJS, requiring workers to pay medical insurance premiums and removing their current coverage provided by the public health insurance scheme. Together with the increasing awareness of the private health insurance products and growing expenditures on private medical care in Indonesia, the A&H insurance premium has been growing at a CAGR of 30.0% in recent years.

A&H was the third largest line of business by gross written premium in 2010, after Motor and Property.

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Figure 26 shows the growth rate of non-life premium in Indonesia, by line of business and in total, during 2007-2010.

Figure 26

GROWTH RATE OF NON-LIFE PREMIUM Indonesia 2007-2010

50%

■10% ...... - ® -M H —♦—All Lines of Business Property Motor Marine —*-O thers

Source: Bapepam-LK

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7.9 The Philippines

The Philippines is ranked the 11th in market size in the Asia ex-Japan region, with approximately US$1.0 billion of non-life premium in 2011. The country has seen its GDP grow at a CAGR of 13.0% from 2006 to 2011.

The Philippines is another fragmented market that has seen consolidation in the recent past. Table 32 shows the number of nonlife and composite insurers in the past six years.

Table 32

NUMBER OF DIRECT NON-LIFE AND COMPOSITE INSURERS The Philippines 2006-2011

2006 2007 2008 2009 2010 2011 Number of non-life and composite insurers 94 90 87 86 87 83

Source: Insurance Commission

7.9.1 Regulation and Capital Requirement

insurance companies in the market are regulated by the Insurance Commission of the Philippines.

As of 2012, the minimum paid-up capital for existing companies is PHP 250 million and will be increased to PHP 1 billion in 2016, which is applied to new insurers already. There are no restrictions on ownership related to foreign investment.

The regulator also requires insurers to hold a minimum capital of 100% RBC capital adequacy ratio.

8 TIH'S INSURANCE OPERATION

8.1 Overview

TIMB is a Malaysian nonlife insurance company, majority-owned (83.26%) by TIH. TIMB was known as the Oriental Capital Assurance Bhd prior to T!H's acquisition of its majority ownership in May 2012 and its gross written premium ("GWP”) amounted to RM 213 million in 2011, which made up 2% of the total market. Figure 28, which follows, shows the breakdown of TIMB's 2011 premium by line of business. Travel and accident products are recorded under Misc.

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Figure 28

BUSINESS MIX OF TIMB BY GROSS WRITTEN PREMIUM 2011

Misc., 2% ^ ^Liability, 2%

MAT, 25% / \ \ A

Worker’s Comp,__^ Motor, 54% 0%

CAR, 3 % y Fire 10% \ /

Medical, 4%

Source: Bank Negara Malaysia, Insurance Statistics

Travel and accident coverage only accounted for a fraction of the total portfolio in 2011. However, with a ten-year contract that secures TIMB as the exclusive insurance product manager for Air Asia and Tune Hotels, TIMB will have a significant boost in its distribution channel as the contract gives TIMB a unique competitive advantage to tap into both Air Asia and Tune Hotels' vast client base. This distributional change could result in additional business for TIMB in the future.

In terms o f m arket environm ent, as discussed in Section 7.6.3, A&H business in Malaysia has been growing notably over the past few years. We expect this momentum to continue in the near future, which in turn would create a favourable base for TIMB to grow its business,

TIH is also a non-exclusive insurance product manager for Air Asia Expedia. This agreement enables TIH to provide insurance products to AirAsia Expedia customers making online bookings, initially through three of their websites in Asia. TIH is considering acquiring more insurance companies in the region, too. Should these deals go through, it would allow TIH to write business directly in these countries.

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9 THE DIRECT LIFE INSURANCE BUSINESS IN MALAYSIA, THAILAND, CHINA, INDONESIA, INDIA, AUSTRALIA, AND THE REST OF ASIA EX-JAPAN REGION

9.1 Overview

Here we provide a market overview of direct distribution of life insurance ("Direct Life") in six markets: Australia, China, India, Indonesia, Malaysia, and Singapore. We take Direct Life to mean direct mail, telemarketing, SMS, and online distribution of life products. In most of the six markets, the Direct Life channel is poised for growth off a small base, partly spurred by growth in online distribution, particularly in the Indian market. For all six countries except Australia, Direct Life has an approximate estimated channel market share of between 1% and 4% of New Business Annual Premium Equivalent ("APE").

Absolute growth of the segment is driven particularly by (1) foreign-invested life companies eager to leapfrog barriers to expansion—mainly economic and practical, but in the case of india and China, also regulatory—in the primary agency and bancassurance channels in many of these markets; and (2) the presence of Direct Life specialists like Cigna, Aegon, and Metlife, who focus on their channel niche in their chosen markets and thereby expand the segment. Products tend to be similar across all markets ex-Australia: term life, health and medical cover, and other simple- to-understand life products.

9.2 Indonesia

The Direct Life market in Indonesia in 2011 constituted an estimated 4.1% of total New Business33, or around US$99.7 million, up from around 3.4% in 2010, or around US$75.5 million. Almost all companies in the market have a Direct presence, and several foreign life companies are becoming particularly active in the telemarketing space, including through their bancassurance partners. The largest Direct Life provider in Indonesia is Cigna, which derives most of its new business premiums from telemarketing (not bancassurance related) and whose Direct New Business alone constituted 2.7% of the industry's total new business in 201 134.

Online distribution is currently limited. Sinarmas MSIG has an online life insurance purchase engine and Cigna allows online quotation and application with telemarketing follow up for most products. There has been some experimentation with Direct Response Television ("DRTV") campaigns over 2011 by Cigna and Sinarmas MSIG, mainly around term life, but this has not yet become a significant distribution channel. Typical products in the Direct Life channel are hospital cash plans, personal accident, term life and simple endowment plans. Many of the policies are one year duration with automatic renewal provided the policyholder continues paying premiums.

9.3 Malaysia

In Malaysia, Direct Life sourced through bancassurance relationships, which is thought to constitute most of the Direct Life business, constituted around 1.0% of new business market share in 2009 and 0.7% in 201 135, In 2011, most conventional life insurers used Direct in some

33 Midpoint of 3.6-4.7% of total New Business estimated as follows: 3.6% being Cigna and AXA Mandiri's APE market share of New Business from the “Other" channel in AAJI's 2011 statistics, and known to be non-bancassurance related telemarketing. 4.7% is market share from all "Other" channel Individual Regular Premium business, less Jiwasraya premiums which are known to be not through telemarketing. 2010 estimates made on same basis 34 AAJI statistics 2011 35 Channel estimates provided by LIAM in August 2012

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form, while a third of all family (i.e. life} takaful providers used the Direct Life channel. In 2011, AXA Affin Life sourced 24.5% of its New Business through the Direct Life channel, representing 133% growth over 20103S, while other foreign companies like Allianz and AIA are also active in this channel. There is some experimentation with social media marketing, but purely as a lead generator. At present, online life insurance distribution is limited to quotation engines and lead generation and it is not yet possible to transact fully over the internet for life insurance.

Much of the Direct Life activity is through bancassurance partnerships, mainly focused on selling term life products (e.g., Tokio Marine Life with RHB Bank, ING with Public Bank, and CIMB Aviva Life). Other than bank partnerships. Direct Life has also marketed to affinity groups, such as the telemarketing partnership between AIA and AirAsia (actually, its related company Tune Money) for term life with cancer protection riders. The Takaful provider, Takaful Malaysia, announced in 2011 plans to provide an online Takaful life plan called FirstLife. As of mid-2012, this was not operational. Term life, and sometimes Personal Accident, is the main products sold through the Direct Life channel in Malaysia.

9.4 Thailand

The Thai Direct Life segment produced US$81.1 million in New Business APE in 201 137, constituting a 3.5% channel market share. The Direct Life segment has grown at a CAGR of 3.3% since 2009 on a local currency basis, but channel share has decreased from 3.8% in 2009. The top five companies in this segment in 2011 by New Business market share were AACP, AIA, Generali, Muang Thai Life, and Prudential, constituting close to 70% of total new business in this channel, and none of these companies are direct marketing specialists. Both AACP and Cigna began DRTV advertising campaigns to promote simple products via cable and TV in 2011. Similar to Korea's well-entrenched home shopping life insurance channel, in Thailand the DRTV channel promotes simple products on television and the customer then phones in to make the purchase.

There are no life insurance products sold fully online in Thailand, although several companies, including Cigna and AACP, have online quotation engines and the ability to initiate inquiries (to then be followed up usually by telephone). The Direct Life channel in Thailand is focused on telemarketing activity, mainly outbound, and to affinity groups such as credit card customer bases. Typical products sold are Personal Accident (classified as a life insurance product in Thailand) and credit card balance insurance. There is a well-established third-party call centre industry that serves the needs of life insurers {and other financial services providers) that do not have telemarketing capability in-house.

9,5 Australia

The Australian Direct Life segment produced US$171 million in New Business APE in 2011, constituting 16% channel market share. The Life Direct channel has grown at a CAGR of 17% since 2009 on a local currency basis and channel share has increased from 13% in 200938. Unlike most Asian markets (except India) online distribution is well-established in Australia. Australia's life insurance market is highly disintermediated, and some life companies market only through Direct bases, such as Allianz. Other companies have a large Direct Life presence, such as Commlnsure, AAMI, AIA, AXA, OnePath, and the insurance distributor Hoilard. There is also a

56 Channel estimates provided by LIAM in August 2012, 17 TLAA Channel New Business statistics, 2011 30 NMG Consulting - Australia Life Insurance Insights Report 2012

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significant online aggregator and broker presence (e.g. www.insurancewatch.com.au, www.lifebroker.com.au). Products sold through the Direct Life channel are typically Term Life, Critical Illness, Income Protection (which is popular in Australia, but not in any other Asian market), and Funeral Insurance (mainly online).

9.6 China

A number of the life foreign ventures in China have been actively developing their telemarketing channels over the past few years. According to a recent survey,39 the DMTM channel had between 1.5% and 6% market shares (depending on the product type) in China on a policy count basis in 2011, although this would likely translate to lower market share on a premium basis. The channel is significantly more important to the foreign joint venture life companies in China than local companies, partly because it allows some relief from the primary channel (agency and Bancassurance) growth constraints they face. Direct Life is particularly important for several of the foreign joint ventures whose foreign parent company has a specialisation in this distribution channel, such as Cigna CMC Life, Metlife, and Aegon-CNOOC Life.

Several companies have developed their online platforms relatively rapidly since 2010, notably Ping An, the third party intermediary CNInsure, and aggregators like www.taobao.com, although the focus tends to be on non-life products and lead generation (for conclusion of the sale by telephone). As of mid-2012 there was no fully online distribution of core life products in China, merely non-life and health products. Products typically sold through Direct Life channels are critical illness, personal accident, endowments with return of premium, and hospital income plans.

9.7 India

Unlike other regional markets, it is online distribution of life insurance, rather than telemarketing, which has captured most of the attention over the past two years. The size of the total Direct Life channel is unknown, but most estimates put the online distribution portion at being less than 0.5% of totai market new business in 2011. Online term insurance was first offered in India in 2009, by Aegon Religare, but is now a feature of most life companies in the market. Recent foreign new entrants like Future Generali and Aegon Religare, which are still very small, are particularly focused on Direct Life channels, and specifically online distribution: Aegon Religare in 2011 made 18% of its new business sales through Direct, and 6% through online40 means.

The Indian non-life insurance direct distributor, Berkshire India, a subsidiary of Berkshire Hathaway, stated in August 2012 that it will expand into life insurance in the near future. While direct distribution allows some respite for market participants from the regulatory constraints placed on other primary channels, the Indian life insurance regulator has imposed some rules on the direct channel which restricts provision of services such as those provided by online aggregators.

’9 KPMG online survey of 1,220 life insurance purchasers in China, 2012. Policy count channeE shares by product type were: Life non­ participating - 2%; Life participating - 1.5%; Hospital cash - 3%; Critical illness- 3%; Universal life -1.5% ; Investment linked plans 6% d0 "Online boost to term insurance plans*, Times of India, 10 January 2012

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Most companies in the market now allow purchase of life insurance online: typically health, investment (unit linked) and term life. Term life, in particular, when bought online is offered at steep price discounts of up to 50% off the offline equivalent.

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8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL

8.1 PROMOTERS

8.1.1 Profiles

TMSB Promoter and Substantial Shareholder

TMSB was incorporated in Malaysia as a private company limited by shares under the Act on 30 December 2005. The principal activity of TMSB is the provision of financial and other related services. As at the LPD, the authorised share capital of TMSB is RM50,000,000.00 comprising 40,000,000 ordinary shares of RM1.00 each and 10,000,000 irredeemable convertible preference shares of RM1.00 each, of which RM36,000,000.00 comprising 27,000,000 ordinary shares of RM1.00 each and 9,000,000 irredeemable convertible preference shares of RM1.00 each are issued and credited as fully paid-up.

As at the LPD, the direct substantial shareholders (holding more than 5% of shares in TMSB) are Tune Group Sdn Bhd holding 42.64%, CIMB SI II Sdn Bhd holding 25%, Dato’ Seri Kalimullah Bin Masheerul Hassan holding 8.21%, Lim Kian Onn holding 8.21% and East Pacific Capital Limited holding 11.21%.

The directors of TMSB as at the LPD are Dato’ Kamarudin Bin Meranun, Tan Sri Dr Anthony Francis Fernandes, Dato’ Seri Kalimullah Bin Masheerul Hassan (Alternate: Lim Kian Onn), Tan Hong Kheng and Fazlin Binti Abu Hassan Shaari.

Tune Group Sdn Bhd Promoter and Substantial Shareholder

Tune Group Sdn Bhd was incorporated in Malaysia as a private company limited by shares under the Act on 10 December 2007 under the name of Atlas Bond Sdn Bhd and assumed its present name on 30 January 2008. The principal activity of Tune Group Sdn Bhd is investment holding. As at the LPD, the authorised share capital of Tune Group Sdn Bhd is RM 100,000.00 comprising 100,000 ordinary shares of RM1.00 each, of which RM2.00 comprising 2 ordinary shares of RM1.00 each are issued and credited as fully paid-up.

As at the LPD, Tune Group Sdn Bhd is jointly owned by Tan Sri Dr Anthony Francis Fernandes and Dato’ Kamarudin Bin Meranun. The directors of Tune Group Sdn Bhd as at the LPD are Tan Sri Dr Anthony Francis Fernandes (Alternate: Lee Yu-Chem), Dato’ Kamarudin Bin Meranun (Alternate: Fazlin Binti Abu Hassan Shaari) and Fazlin Binti Abu Hassan Shaari.

Tan Sri Dr Anthony Francis Fernandes (widely known as Tan Sri Dr Tony Fernandes) Promoter, Non-Independent Non-Executive Director and Substantial Shareholder

Tan Sri Dr Tony Fernandes, Malaysian, aged 48 was appointed to the Board on 5 October 2012 as a Non-Independent Non-Executive Director and is one of the co-founders of TMSB. He is also the co­ founder and director of Tune Group Sdn Bhd and was the Group Chief Executive Officer of AirAsia Berhad until June 2012 when he was redesignated as non-independent non-executive director of AirAsia Berhad and appointed as Group Chief Executive Officer of AirAsia ASEAN Inc.

Prior to joining AirAsia Berhad in 2001, he was the Financial Controller at Virgin Communications London (1987 to 1989), and moved on to be the Senior Financial Analyst at Warner Music International London (1989 to 1992), Managing Director at Warner Music Malaysia (1992 to 1996), Regional Managing Director, Asean (1996 to 1999) and Vice President, Asean at Warner Music South East Asia (1999 to 2001).

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Tan Sri Dr Tony Fernandes graduated with a Bachelor of Science in Accounting and Finance from the London School of Economics in 1987. He was admitted as an Associate Member of the Association of Chartered Certified Accountants in 1991, and became a Fellow Member in 1996. He also received an Honorary Doctorate of Business Innovation from Universiti Teknologi Malaysia (UTM) in March 2010 for his role in changing the face of aviation and benefitting travellers and economies locally and in the region.

He was the proud recipient of the Masterclass Global CEO of the Year award at the 2nd Malaysia Business Leadership Award (MBLA) 2010 ceremony for his immense contributions to the country’s economy.

Tan Sri Dr Tony Fernandes is also an independent non-executive director of Star Publications (Malaysia) Berhad, a company listed on the Main Market of Bursa Securities.

Dato’ Kamarudin Bin Meranun Promoter and Substantial Shareholder

Dato’ Kamarudin Bin Meranun, Malaysian, aged 51, is one of the co-founders of TMSB. He is also the co-founder and director of Tune Group Sdn Bhd and was the Deputy Group Chief Executive Director and President of Group Finance, Treasury, Corporate Finance and Legal of AirAsia Berhad, a low-cost airline listed on the Main Market of Bursa Securities, until June 2012 when he was redesignated as non-independent non-executive director of AirAsia Berhad and appointed as Deputy Group Chief Executive Officer and President of Group Finance, Treasury, Corporate Finance and Legal of AirAsia ASEAN Inc.

Prior to joining AirAsia Berhad in 2001, he worked in Arab-Malaysian Merchant Bank from 1988 to 1993 as a Portfolio Manager, managing both institutional and high net-worth individual clients’ investment funds. In 1994, he was appointed as an executive director of Innosabah Capital Management Sdn Bhd, a subsidiary of Innosabah Securities Sdn Bhd. He subsequently acquired the shares of the joint venture partner of Innosabah Capital Management Sdn Bhd, which was later renamed Intrinsic Capital Management Sdn Bhd.

Dato’ Kamarudin Bin Meranun received a Diploma in Actuarial Science from Universiti Teknologi MARA (UiTM) and was named the “Best Actuarial Student” by the Life Insurance Institute of Malaysia in 1983. He further received a Bachelor of Science (BSc) with Distinction (Magna Cum Laude) majoring in Finance in 1986, and a Master of Business Administration (MBA) in 1987 from Central Michigan University.

Dato’ Seri Kalimullah Bin Masheerul Hassan Promoter

Dato' Seri Kalimullah bin Masheerul Hassan, a Malaysian, aged 54, is an old boy of Pykett Methodist School (1965 - 1969) and Methodist Boys School (1970 - 1974). He began a career in journalism in 1979 and served in various local and international news organizations before becoming a businessman in 1995. He has gained vast corporate experience having held key positions in various Malaysian listed corporations.

He was also tapped by the Government to serve on various Government agencies and boards. In September 2002, he was appointed chairman of the national news agency, Bemama, for a two-year term by DYMM Yang di-Pertuan Agong but resigned to become Group Editor-in-Chief and deputy chairman of the News Straits Times Press (M) Bhd on 1 January 2004.

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8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cant'd)

He retired as Group Editor-in-chief on 31 December 2005 to resume his position as Chief Executive Officer and Executive Chairman of boutique financial services group ECM Libra, which he started with two partners in 2002. He retired as Deputy Chairman of New Straits Times Press (M) Bhd on 31 December 2008. Dato’ Seri Kalimullah also served as a member of the National Unity Advisory Panel for four years from 1 January 2005; the Multimedia Development Corporation (MDeC), the National Information Technology Council and various public-listed companies, including the TA group, MBf Group, FACB, TSH Ekowood and others since the late 1990s. Earlier in 2010, he resigned from most of his positions to focus on charity works undertaken by the ECM Libra Foundation which was set up by him and his two partners, Chua Ming Huat and Lim Kian Onn.

Dato’ Seri Kalimullah remains Chairman of ECM Libra Financial Group Berhad (“ECMLFG”) and is also an adjunct professor at the Limkokwing University. He is also a member of the Methodist Boys School Board of Governors, a trustee of the ECM Libra Foundation and remains a director of several companies within the Tune Companies.

Lim Kian Onn Promoter

Lim Kian Onn, a Malaysian, aged 56, founded the Libra Capital Group in 1994 and co-founded the ECM Libra Group in 2002. Subsequently, he was appointed to the Board of Directors of ECMLFG in June 2006 and redesignated as Managing Director in May 2007, a position that he held until August 2010. In August 2010, he was redesignated as non-independent non-executive director of ECMLFG. During this period, he was also appointed as the Acting Chief Executive Officer and executive director of ECM Libra from February 2008 to August 2008 when he was redesignated as non-executive director of ECM Libra.

Lim Kian Onn has been a member of the Institute of Chartered Accountants in England & Wales since 1981. He served his articleship with KMG Thomson McLintock in London for 4 years from 1977 to 1981 and was a consultant with Andersen Consulting from 1981 to 1984. Between 1984 and 1993, he was with the Hong Leong Group, Malaysia, where he helped set up the stockbroking business.

Lim Kian Onn is also the non-executive Chairman of Plato Capital Limited, a company listed on the Catalist Board of Singapore Exchange Securities Trading Limited, and a trustee of ECM Libra Foundation.

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8.1.2 Shareholdings

The shareholdings of our Promoters in our Company before and after our IPO are as follows:

<------. —. -Before IPO...... — > <------After IPO------■> < ------Direct ----- > < — Indirect- — > < ------Direct ---- > < — Indirect- -> Nationality/ No. of Shares No, of Shares No. of Shares No. of Shares Name Place of held % held % held % held % Incorporation held held held held

TMSB Malaysia [486,708,080] [80.00] - [419,858,080] [55.85] [-] [-]

Tune Group Sdn Bhd Malaysia - [486,708,080(1)] [80.00] [-] H [419,858,080

Tan Sri Dr Anthony Malaysian - [608,385,080<2>] [100.00] [100,000(4)] [0.01] [541,535,080<2)] [72.04] Francis Fernandes

Dato’ Kamarudin Bin Malaysian - [608,385,080(3)] [100.00] H [-] [541,535,080(3)] [72.04] Meranun

Dato’ Seri Malaysian “ - - [-] [-] [-] H Kalimullah Bin Masheerul Hassan

Lim Kian Onn Malaysian - -- [-] [-] [-] H

Notes:

a> Deemed interested by virtue o f its 42.64% interest in TMSB pursuant to Section 6A o f the Act Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 48.83% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 40.23% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act (4> Assuming full subscription o f the Pink Form Shares allocated to him under the Retail Offering

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8.1.3 Changes in Promoters’ Shareholdings since Incorporation

Save as disclosed below, there has been no change in the shareholdings of our Promoters in our Company since incorporation up to the date of this Prospectus:

<------D irect------> <------In d ire c t------> No. of Shares No. of Shares Date of Acquisition/ Acquired/ Cumulative No. Acquired/ Cumulative No. Name Disposal (Disposed) of Shares (Disposed) of Shares

TMSB 01.08.2011 2# 2* 05.10.2011 14,200,000* 14,200,002s - - 31.10.2011 38,506" 14,238,508s - - 04.10.2012 142,385,080’ 142,385,080 04.10.2012 466,000,000 608,385,080 [•] [(121,677,000)] [486,708,080]

Tune Group Sdn Bhd 26.09.2012 *- 14,238,508* 14,238,508*(l) 04.10.2012 - - 142,385,080’ 142,385,080(li 04.10.2012 - - 466,000,000 608,385,080U) [•] -- [(121,677,000)] [486,708,080](1) 2#(2a> Tan Sri Dr Anthony Francis Fernandes 01.08.2011 _ 2* 05.10.2011 -- 14,200,000" 14,200,002#(2a) 31.10.2011 -- 38,506" 14,238,508#(2a) 26.09.2012 -- 14,238,508" 14,238,508#(2b) 04.10.2012 -- 142,385,080’ 142,385,080l2b) 04.10.2012 - - 466,000,000 608,385,080(2b) [•] - - [(121,677,000)] [486,708,080](2b) [•] - - [121,677,000] [608,385,080]<2c) 2# Dato’ Kamarudin Bin Meranun 01.08.2011 __ 2»a) 05.10.2011 - - 14,200,000" 14,200,002#(3a} 31.10.2011 - - 38,506* 14,238,508',(3a> 26.09.2012 - - 14,238,508" 14,238,508#(3b) 04.10.2012 -- 142,385,080* 142,385,080(3b) 04.10.2012 -- 466,000,000 608,385,080(3b) 174 Company No. 948454-K

8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

<------D irect------> <------In d ire c t------> No. of Shares No. of Shares Date of Acquisition/ Acquired/ Cumulative No. Acquired/ Cumulative No. Name Disposal (Disposed) of Shares (Disposed) of Shares [•] [(121,677,000)] [486,708,080]ub> [•] - [121,677,000] [608,385,080]°c)

Notes:

# Ordinary shares o f RM l. 00 each Subdivision o f shares par value from RMI.00 to RM0.10 Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 48.83% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act (3a> Deemed interested by virtue o f his 30% interest in Tune Ventures Sdn Bhd pursuant to Section 6A o f the Act (lb) Deemed interested by virtue o f his 50% in Tune Group Sdn Bhd pursuant to Section 6A o f the Act (3c) Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 40.23% interest in Tune A ir Sdn Bhd pursuant to Section 6A o f the Act

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8.2 SUBSTANTIAL SHAREHOLDERS

8.2.1 Profiles

The profiles of TMSB, Tune Group Sdn Bhd, Tan Sri Dr Anthony Francis Fernandes and Dato1 Kamarudin Bin Meranun are set out in Section 8.1.1 of this Prospectus.

CIMB SI II Sdn Bhd Substantial shareholder

CIMB SI II Sdn Bhd was incorporated in Malaysia as a private company limited by shares under the Act on 2 March 2007 under the name of Value Profile Sdn Bhd and assumed its present name on 15 March 2007. The principal activity of CIMB SI II Sdn Bhd is investment holding. As at the LPD, the authorised share capital of CIMB SI II Sdn Bhd is RM500,000.00 comprising 100,000 ordinary shares of RMl.00 each and 40,000,000 redeemable preference shares of RM0.01 each, of which RM92,782.00 comprising 2 ordinary shares of RM1.00 each and 9,278,000 redeemable preference shares of RM0.01 each are issued and credited as folly paid-up.

As at the LPD, CIMB SI II Sdn Bhd is a wholly-owned subsidiary of CIMB Group Sdn Bhd. The directors of CIMB SI II Sdn Bhd are Ng Ing Peng, Chew Ker Chee and Tan Hong Kheng.

CIMB Group Sdn Bhd Substantial shareholder

CIMB Group Sdn Bhd was incorporated in Malaysia as a private company limited by shares under the Act on 18 August 2005. The principal activity of CIMB Group Sdn Bhd is investment holding. As at the LPD, the authorised share capital of CIMB Group Sdn Bhd is RM10,119,200,000.00 comprising 10,000,000,000 ordinary shares of RMI.00 each, 10,000,000 Class A redeemable preference shares of RM0.01 each, 100,000 Class B redeemable preference shares of RM1.00 each, 10,000,000,000 Class C redeemable preference shares of RM0.01 each and 1,900,000,000 Class D redeemable preference shares of RM0.01 each, of which RM9,765,930,290.00 comprising 9,671,119,945 ordinary shares of RM l.00 each, 7,868,792,000 Class C redeemable preference shares of RM0.01 each and 1,612,242,500 Class D redeemable preference shares of RM0.01 each are issued and credited as fully paid-up.

As at the LPD, CIMB Group Sdn Bhd is a wholly-owned subsidiary of CIMB Group Holdings Berhad. The directors of CIMB Group Sdn Bhd are Tan Sri Dato’ Md Nor Yusof, Dato’ Sri Nazir Razak, Dato’ Zainal Abidin Putih, Dato’ Robert Cheim Dau Meng, Watanan Petersik, Cezar Peralta Consing, Datuk Dr. Syed Muhamad Syed Abdul Kadir, Glenn Muhammad Surya Yusuf, Katsumi Hatao and Dato’ Hamzah Bakar.

CIMB Group Holdings Berhad Substantial shareholder

CIMB Group Holdings Berhad was incorporated as Bian Chiang Bank Limited in Sarawak under the Sarawak Ordinance No.38 of 1956 on 24 December 1956. On 20 August 1979, its name was changed to Bank of Commerce Berhad. Bank of Commerce Berhad changed its name to Commerce Assct- Holdings Berhad on 10 October 1991, and subsequently to Bumiputra-Commerce Holdings Berhad on 13 October 2005, and thereafter assumed its present name on 9 September 2009.

The principal activity of CIMB Group Holdings Berhad is investment holding. The principal activities of the significant subsidiaries consist of commercial banking, investment banking, Islamic banking, offshore banking, debt factoring, trustee and nominee services, property ownership and management, management of unit trust funds and fund management business, stock and sharebroking and the provision of other related financial services.

CIMB Group Holdings Berhad is a public limited liability company, domiciled in Malaysia, and listed on the Main Market of Bursa Securities.

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As at the LPD, the authorised share capital of CIMB Group Holdings Berhad is RM 10,000,000,000.00 comprising 10,000,000,000 ordinary shares of RM1.00 each, of which RM7,432,774,646.00 comprising 7,342,774,646 ordinary shares of RM 1.00 each are issued and credited as fully paid-up.

As at the LPD, the direct substantial shareholders of CIMB Group Holdings Berhad (holding more than 5% of shares in CIMB Group Holdings Berhad) are Khazanah Nasional Berhad, holding 29.9% and Employee Provident Fund, holding 12.57%. The directors of CIMB Group Holdings Berhad are Tan Sri Dato’ Md Nor Yusof, Dato’ Sri Nazir Razak, Dato’ Zainal Abidin Putih, Dato’ Robert Cheim Dau Meng, Watanan Petersik, Cezar Peralta Consing, Datuk Dr. Syed Muhamad Syed Abdul Kadir, Glenn Muhammad Surya Yusuf, Katsumi Hatao and Dato’ Hamzah Bakar.

AirAsia Berhad Substantial shareholder

AirAsia Berhad was incorporated in Malaysia as a private company limited by shares under the Act on 20 December 1993 under the name of AirAsia Sdn Bhd. It had subsequently converted to a public company on 8 June 2004 and assumed its present name. AirAsia Berhad is principally providing air transportation services and an investment holding company while the principal activities of its subsidiaries includes the provision of insurance services, the provision of financing and leasing arrangements and others. As at the LPD, the authorised share capital of AirAsia Berhad is RM500,000,000.00 comprising 5,000,000,000 ordinary shares of RM0.10 each, of which RM277,96I,158.00 comprising of 2,779,611,580 ordinary shares of RM0.10 each are issued and credited as fully paid-up.

As at the LPD, AirAsia Berhad is 23.06% owned by Tune Air Sdn Bhd, 8.86% owned by Employees Provident Fund Board, 9.74% owned by Wellington Management Company, LLP and the remaining 58.34% owned by other shareholders. The directors of AirAsia Berhad as at the LPD are Dato’ Abdel Aziz @ Abdul Aziz Bin Abu Bakar, Tan Sri Dr Anthony Francis Fernandes, Dato’ Kamarudin Bin Meranun, Mr. Conor Mc.Carthy, Dato’ Leong Sonny @ Leong Khee Seong, Dato’ Fam Lee Ee, Dato’ Mohamed Khadar Bin Merican, Datuk Mohd Omar Bin Mustapha and Cik Aireen Omar.

T une Air Sdn Bhd Substantial shareholder

Tune Air Sdn Bhd was incorporated in Malaysia as a private company limited by shares under the Act on 24 May 2001. The principal activity of Tune Air Sdn Bhd is investment holding. As at the LPD, the authorised share capital of Tune Air Sdn Bhd is RM 1,000,000.00 comprising 1,000,000 ordinary shares of RM 1.00 each, of which RM 1,000,000.00 comprising of 1,000,000 ordinary shares of RM 1.00 each are issued and credited as fully paid-up.

As at the LPD, Tune Air Sdn Bhd is 48.83% owned by Tan Sri Dr Anthony Francis Fernandes, 40.23% owned by Dato’ Kamarudin Bin Meranun and the remaining 10.94% owned by Dato’ Abdel Aziz @ Abdul Aziz Bin Abu Bakar. The directors of Tune Air Sdn Bhd as at the LPD are Tan Sri Dr Anthony Francis Fernandes, Dato’ Kamarudin Bin Meranun and Dato’ Abdel Aziz @ Abdul Aziz Bin Abu Bakar.

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8.2.2 Shareholdings

The shareholdings of our substantial shareholders in our Company before and after our IPO are as follows:

< ------Direct ------> < — Indirect- ---> < ------Direct ----> < — Indirect— > No. of Shares No. of Shares No. of Shares No. of Shares Name Nationality/ Place held % held % held % held % of Incorporation held held held held

TMSB Malaysia [486,708,080] [80.00] - - [419,858,080] [55.85] [-] [-]

Tune Group Sdn Bhd Malaysia - - [486,708,080(,)] [80.00] H H [419,858,080(1) [55.85] ]

T an Sri Dr Anthony Malaysian - - [608,3 8 5,080(2)] [100.00 [100,000] [0.01] [541,535,080(2) [72.04] Francis Fernandes ] ]

Dato’ Kamarudin Bin Malaysian - - [608,385,080{3)] [100.00 [-] [-] [541,535,080(3) [72.04] Meranun ] ]

CIMB SI 11 Sdn Bhd Malaysia -- [486,708,080<4)] [80.00] [-] [-] [419,858,080<4)] [55.85]

CIMB Group Sdn Bhd Malaysia -- [486,708,080(5)] [80.00] [■] [-] [419,858,080

CIMB Group Holdings Malaysia - - [486,708,080(6)] [80.00] [-] [-] [419,858,080(6)] [55.85] Berhad

AirAsia Berhad Malaysia [121,677,000] [20.00] - - [121,677,000] [16.19] [-] [-]

Tune Air Sdn Bhd Malaysia -- [121,677,000<7)] [20.00] H [-] [121,677,000(7)] [16.19]

Notes:

Deemed interested by virtue o f its 42.64% interest in TMSB pursuant to Section 6A o f the Act Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 48,83% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 40.23% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act

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Deemed interested by virtue o f its 25% interest in TMSB pursuant to Section 6A o f the Act Deemed interested by virtue o f its 100% interest in CIMB SI II Sdn Bhd pursuant to Section 6A o f the Act Deemed interested by virtue o f its 100% interest in CIMB Group Sdn Bhd pursuant to Section 6A o f the Act Deemed interested by virtue o f its 23.06% interest in AirAsia Berhad pursuant to Section 6A o f the Act

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8.2.3 Changes in Substantia] Shareholders’ Shareholdings since Incorporation

Save as disclosed below, there has been no change in the shareholdings of our substantial shareholders in our Company since incorporation up to the date of this Prospectus:

<------Direct------> <------Indirect------> No. of Shares No. of Shares Date of Acquisition/ Acquired/ Cumulative No. Acquired/ Cumulative No, Name Disposal (Disposed) of Shares (Disposed) of Shares 2# TMSB 01.08.2011 2* 05.10.2011 14,200,000" 14,200,002* - - 31.10.2011 38,506* 14,238,508" -- 04.10.2012 142,385,080* 142,385,080 04.10.2012 466,000,000 608,385,080 [•] [(121,677,000)] [486,708,080]

Tune Group Sdn Bhd 26.09.2012 -- 14,238,508* 14,238,508* 04.10.2012 - - 142,385,080* 142,385,080(2b> 04.10.2012 - - 466,000,000 608,385,080l2b) [•] -- [(121,677,000)] [486,708,080](2b) [•] - - [121,677,000] [608,385,080](2c> 2#(3a) Dato’ Kamarudin Bin Meranun 01.08.2011 2* 05.10.2011 - - 14,200,000* 14,200,002#(3il> 31.10.2011 - - 38,506* 14,238,508#(3a) 26.09.2012 - - 14,238,508* 14,238,508*(3b) 04.10.2012 142,385,080* 142,385,080<3b)

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<------— D ire c t------> <------In d ire c t------> No. of Shares No. of Shares Date of Acquisition/ Acquired/ Cumulative No. Acquired/ Cumulative No. Name Disposal (Disposed) of Shares (Disposed) of Shares 04.10.2012 - - 466,000,000 608,385,080w [•] - - [(121,677,000)] [486,708,080](3b) [•] - [121,677,000] [608,385,080]Oc)

CIMB SI II Sdn Bhd 01.08.2011 _ - 2* 2m 05.10.201! - - 14,200,000* 14,200,002m 31.10.2011 - - 38,506# 14,238,508w) 04.10.2012 142,385,080* I42,385,080(4) 04.10.2012 - - 466,000,000 608,385,080(4> [•] - - [(121,677,000)] [486,708,080](4)

CIMB Group Sdn Bhd 01.08.2011 __ 2* 2#

2#( 6) CIMB Group Holdings Berhad 01.08.2011 - - 2# 05.10.2011 - - 14,200,000* 14,200,002#(6) 31.10.2011 - - 38,506* 14,238,508#)(6) 04.10.2012 142,385,080’ 142,385,080(6> 04.10.2012 - - 466,000,000 608,385,080(6>

[•] - - [(121,677,000)] [486,708,080](6>

AirAsia Berhad [•] [121,677,000] [121,677,000] --

Tune Air Sdn Bhd [•] - - [121,677,000] [121,677,000]t?>

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Notes:

Ordinary shares o f RM1.00 each Subdivision o f shares par value from RM1.00 to RMO. 10 (!) Deemed interested by virtue o f its 42,64% interest in TMSB pursuant to Section 6A o f the Act <2a> Deemed interested by virtue o f his 40% interest in Tune Ventures Sdn Bhd pursuant to Section 6A o f the Act (2b) Deemed interested by virtue o f his 50% in Tune Group Sdn Bhd pursuant to Section 6A o f the Act (2 c ) Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 48.83% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act <}a> Deemed interested by virtue o f his 30% interest in Tune Ventures Sdn Bhd pursuant to Section 6A o f the Act m Deemed interested by virtue o f his 50% in Tune Group Sdn Bhd pursuant to Section 6A o f the Act 0c) Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 40.23% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act (*) Deemed interested by virtue o f its 25% interest in TMSB pursuant to Section 6A o f the Act Deemed interested by virtue o f its 23.06% interest in AirAsia Berhad pursuant to Section 6A o f the Act

8.2.4 Involvement in other businesses and corporations carrying on a similar trade as that of our Group or in other businesses and corporations which are our customers or suppliers

Save as disclosed below, as at the LPD, none of our substantial shareholders has direct or indirect interests in other businesses and corporations carrying on a similar trade as that of our Group or in other businesses and corporations which are our customers or suppliers:

<----- — As at the LPD------> Direct Indirect No. of No. of shares shares % held % Substantial Shareholders Businesses/Corpo rations Description of business activities held held hetd

CIMB Group Holdings CIMB Insurance Brokers Sdn Insurance brokers who play an intermediary role between, -- 1,000,000(IM2) 100 Berhad and CIMB Group Sdn Bhd among others, corporate customers of CIMB Group Holdings Bhd Berhad and the insurers

CIMB Aviva Assurance Provides a range of life insurance products through its various 123,420,000(IK2) 51 Berhad distribution channels, namely bancassurance, direct marketing, telemarketing and corporate business in Malaysia. Their primary target segment is the customers of CIMB Bank Berhad.

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— As at the L P D ------> Direct Indirect .. No. of : : : : Of shares .shares : iidd' Substantial Shareholders Businesses/Corporations Description of business activities held -'i'Ueld-': held

CIMB Aviva Takaful Berhad Provides a range of Takaful products (Islamic insurance -- 51,000,000(1X2) 51 products) through its various distributions channels namely bancassurance, direct marketing, telemarketing and corporate business in Malaysia.

PT CIMB Sun Life Provides a range of life insurance products through its various 137,837<1X3) 51 distribution channels, namely bancassurance, direct marketing, telemarketing and corporate business in Indonesia. Their primary target segment is the customers of CIMB Niaga.

AirAsia Berhad AirAsia Corporate Services Provides captive insurance and/or reinsurance in relation 1,000 100 “ - Limited to, inter alia, aircraft hull all risk, hull war and allied Tune Air Sdn Bhd risks, hull deductable and airline general third party 1,000(4) 100 liability to AirAsia Berhad and companies within the AirAsia group.

Notes:

® With respect to CIMB Group Holdings Berhad, deemed interested by virtue of its 100% interest in CIMB Group Sdn Bhd pursuant to Section 6A of the Act ® With respect to CIMB Group Sdn Bhd, deemed interested by virtue o f its 100% interest in CIG Berhad pursuant to Section 6A o f the Act ® With respect to CIMB Group Sdn Bhd, deemed interested by virtue o f its 100% interest in CIG Berhad and 96,92% interest in PT Bank CIMB Niaga TBK pursuant to Section 6A o f the Act (4> Deemed interested by virtue of its 23.06% interest in AirAsia Berhad pursuant to Section 6A o f the Act

The indirect interests of CIMB Group Holdings Berhad and CIMB Group Sdn Bhd in the businesses/corporations set out above, either as insurance brokers, underwriter of life insurance or Takaful operators operating Takafiil products do not compete directly with our Group, as our Group is not involved in the business of insurance brokers, underwriting life insurance or Takaful products.

The direct interest of AirAsia Berhad and the indirect interest of Tune Air Sdn Bhd in AirAsia Corporate Service Limited do not compete directly with our Group, as our Group is not offering the products offered by AirAsia Corporate Services Limited.

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8.3 BOARD OF DIRECTORS

8.3.1 Profile

The profile of Tan Sri Dr Anthony Francis Fernandes is set out in Section 8.1.1 of this Prospectus.

Razman Hafidz Bin Abu Zarim, Malaysian, aged 57 Chairman, Independent Non-Executive Director

Razman Hafidz Bin Abu Zarim was appointed to the Board on 5 October 2012 as our Chairman, Independent Non-Executive Director.

He graduated with a joint-honours degree in Economics and Accounting, BSc (Econs) from University College, Cardiff, Wales, in 1977. He has more than thirty years experience in the fields of corporate restructuring, mergers and acquisitions, corporate finance, management consulting and auditing.

Razman Hafidz Bin Abu Zarim started his career with Touche Ross & Co., Chartered Accountants, London, England and later joined Hacker Young, Chartered Accountants, London, England, where he was admitted as an Audit Partner. In 1989, he returned to Malaysia as an Audit Partner of Price Waterhouse and later Partner-in-Charge of Price Waterhouse’s Management Consulting Practice and became an Executive Committee member. In 1994, he established Norush Sdn Bhd., an investment holding and business advisory firm, where he remains as Chairman.

He is a fellow member of the Institute of Chartered Accountants in England & Wales and a member of the Malaysian Institute of Accounts.

He holds independent directorships in Panasonic Manufacturing Malaysia Berhad and Yeo Hiap Seng (Malaysia) Berhad, both of which are public listed companies. He presently serves as an independent director on the board of non-Iisted public entities at Linde Malaysia Holdings Berhad (formerly Malaysian Oxygen Berhad) and Sumitomo Mitsui Banking Corporation Malaysia Berhad, where he is currently the Chairman. He also sits on the board of several private limited companies.

Tan Hong Kheng, Malaysian, aged 44 Non-Independent Non-Executive Director

Tan Hong Kheng was appointed to the Board on 5 October 2012 as our Non-Independent Non­ Executive Director.

He obtained his Bachelor of Economics (Accounting major) and Bachelor of Laws from Monash University, Australia. Tan Hong Kheng is a member of the Malaysian Bar and the Australian Society of CPA’s (Certified Practising Accountants). He is the Head of the Special Situation Investments department of CIMB Group that he set up in 2006 with the mandate for direct principal investments and investments in private equity funds and hedge funds. The direct principal investments made include take private transactions, leveraged buyouts, expansion capital and early stage investing. Total realised internal rate of return on the direct principal investments overseen by Tan Hong Kheng for the CIMB Group from 2006 to the present is 22.7%.

Prior to setting up the Special Situation Investments department in CIMB Group, Tan Hong Kheng was selected to head up CIMB Group’s first investment banking foray out of Malaysia in 2003. As the Executive Director of PT CIMB Niaga Securities Indonesia (“CNS”), he established an investment banking presence for CIMB Group in Indonesia and successfully executed numerous investment banking mandates. Under his leadership, CNS was named by Bloomberg as the most active lead underwriter for initial public offerings and market leader for equity and equity-related issues in Indonesia in 2005.

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Before his stint in Indonesia, Tan Hong Kheng was active in mergers and acquisitions, initial public offerings and fond raising deals with the Investment Banking division, Corporate Finance department and Capital Markets department of CIMB Group.

Also a qualified advocate and solicitor of the Malaysian Bar, Tan Hong Kheng’s other employment positions were with Shook Lin & Bok, Lee Choon Wan & Co and he was the Investment Manager for Jemeh Insurance Berhad from 1997 to 1999.

Ng Soon Lai @ Ng Siek Chuan, Malaysian, aged 58 Independent Non-Executive Director

Ng Soon Lai @ Ng Siek Chuan was appointed to the Board on 5 October 2012 as our Independent Non-Executive Director.

A chartered accountant by training, he has been a member of the Institute of Chartered Accountants in England & Wales since 1977. Ng Soon Lai @ Ng Siek Chuan gained his post qualifying experience in audit and accounting with Coopers & Lybrand in London and Kuala Lumpur before embarking on his career path in the financial sector in 1980. He then served in various positions in a leading local merchant bank and a finance company.

Subsequently, he joined Alliance Bank (M) Berhad in July 1991 as General Manager of Credit. He was appointed as Chief Executive Director of Alliance Bank (M) Berhad on 21 January 1994 and to the Board of Alliance Bank (M) Berhad on 22 July 2002 until his resignation on 31 August 2005. He also sits on the boards of S P Setia Bhd, Deutsche Bank (Malaysia) Bhd, Hiap Teck Venture Bhd, TIMB and Unico-Desa Plantations Berhad.

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8.3.2 Shareholdings

The shareholdings of our Directors in our Company before and after our IPO (assuming full subscription of the Pink Form Shares allocated to our Directors under the Retail Offering) are as follows:

------Before IPO------> <------After IPO------> < -----Direct ------> < — Indirect— > < ----- Direct — > < — Indirect— > No. of No. of Shares No, of No. of Shares Shares % held % Shares % held % Name Designation Nationality held held held held held held

Razman Hafidz Bin Chairman, Malaysian - -- [100,000(2)] [0.01] [-] H Abu Zarim Independent Non- Executive Director

Tan Sri Dr Anthony Non-Independent Malaysian - [608,385,080(1)] [100.00] [100,000(3)] [0.01] [541,535,080(1)] [72.04] Francis Fernandes Non-Executive Director

Tan Hong Kheng Non-Independent Malaysian - - - [100,000a)] [0.01] [-] [-] Non-Executive Director

Ng Soon Lai @ Ng Independent Non- Malaysian “ -- [100,000(2)] [0.01] [-] [-] Siek Chuan Executive Director

Notes:

Deemed interested by virtue o f his 50% interest in Tune Group Sdn Bhd and 48.83% interest in Tune Air Sdn Bhd pursuant to Section 6A o f the Act a> Assuming full subscription o f the Pink Form Shares allocated to oar Directors under the Retail Offering

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8.3.3 Principal Activities Performed Outside Our Group

Save as disclosed below, none of our Directors have performed any principal business activities outside our Group.

The directorships of our Directors outside our Group at present and in the last five years preceding the LPD are as follows:

Involvement in business activities oilier than as a Name Directorships director

Razman Hafidz Present directorships Bin Abu Zarim • Panasonic Manufacturing Malaysia Berhad Yeo Hiap Seng (Malaysia) Bhd Linde Malaysia Holdings Berhad (formerly Malaysian Oxygen Bhd) Sumitomo Mitsui Banking Corporation Malaysia Berhad Norush Sdn Bhd Green Peninsula Agencies Sdn Bhd L.T. Shipping Sdn Bhd Permodalan K.T. Sdn Bhd RHAZ Sdn Bhd NRT Ventures Holdings Sdn Bhd Style Ventures Sdn Bhd Evergreen Marine Corp. (Malaysia) Sdn Bhd Perceptive Logistics Properties Sdn Bhd Round-The-World Corp (M) Logistics Sdn Bhd

Past directorships eBworx Bhd (resigned on 4 July 2012) Mithril Bhd (resigned on 31 August 2010) Toyochem Corporation Bhd (resigned on 9 April 2009) Courts Mammoth Bhd (resigned on 30 August 2007) J P Morgan Chase Bank Bhd (resigned on 23 May 2011) PIT Capital Corporation Bhd (resigned on 31 December 2008) Mithril Saferay Sdn Bhd (resigned on 31 August 2010) Mithril Clay Manufacturing Sdn Bhd (resigned on 31 August 2010) Mithril FRP Industries Sdn Bhd (resigned on 31 August 2010) Mithril Management Services Sdn Bhd (resigned on 31 August 2010) Mithril Marketing Sdn Bhd (resigned on 31 August 2010) Mithril Clay Industries Sdn Bhd (resigned

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Iuvoivement in business activities other than as a Name ...... 'directorDirectorships on 31 August 2010) • Mithril PVC Sdn Bhd (resigned on 31 August 2010) • Mithril Polymers Sdn Bhd (resigned on 31 August 2010) • Mithril Realty Sdn Bhd (resigned on 31 August 2010) • Mithril FRP Sdn Bhd (resigned on 31 August 2010) • Prominent Landscape Sdn Bhd (resigned on 31 August 2010) • Tajo Project Management Sdn Bhd (resigned on 31 August 2010) • Alpha Glow Sdn Bhd (resigned on 31 August 2010) • Resolute Omega Sdn Bhd (resigned on 31 August 2010) • Tajo Development Sdn Bhd (resigned on 31 August 2010) • Esperanza Mgt Advisors Sdn Bhd (resigned on 17 March 2009) • Avon Cosmestics (Malaysia) Sdn Bhd (resigned on 15 August 2008)

Tan Sri Dr Present directorships • Group CEO, AirAsia Anthony Francis Non-profit organisations: ASEAN Inc. Fernandes • Mahathir Science Award Foundation ♦ Principal, Caterham FI • Yayasan Satu Malaysia Team

Listed issuer(s): • AirAsia Berhad • Star Publications (Malaysia) Berhad

Other corporations: • I Malaysia Racing Team Sdn Bhd • 1 Malaysia Racing Team (UK) Ltd • AAE Travel Pte Ltd • Aero Ventures Sdn Bhd • AirAsia Exp Pte Ltd • AirAsia Go Holiday Sdn Bhd • AirAsia Go Holiday Co. Ltd • AirAsia Inc. • AirAsia Japan Co., Ltd • AirAsia (Mauritius) Ltd • AirAsia Philippines Inc • AirAsia X Sdn Bhd • Amulya Property Limited • Asia IP Ventures Pte Ltd • Asian Aviation Centre of Excellence Sdn Bhd • Asian Contact Centres Sdn Bhd

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Involvement in business activities other than as a Name Directorships director 1 October 2010) • Tune Sport Sdn Bhd (resigned on 1 January 2012) • Asean Basketball League Sdn Bhd (resigned on 12 January 2010) • Tune Hotels.com Capital Partners Limited (resigned on 1 January 2012) • Tune Hotels Real Estates Pte Ltd (resigned on 3 March 2010) • Tune Ventures Sdn Bhd (in members' voluntary liquidation)

Tan Hong Kheng Present directorships • CIMB SI Sdn Bhd • CIMB SI 1 Sdn Bhd • CIMB SI II Sdn Bhd • Engage Media Sdn Bhd • TMSB • Maju Uni-Concept Sdn Bhd • CIMB Private Equity Sdn Bhd • CIMB Real Estate Sdn Bhd • Financial Park (Labuan) Sdn Bhd • Asia Advisory Partners Ltd • CIMB Securities International Pte Ltd

Past directorships • Commerce Asset Ventures Sdn Bhd (resigned on 25 November 2011) • TTK Holdings Sdn Bhd (resigned on 31 July 2012)

Ng Soon Lai @ Present directorships Ng Siek Chuan • S P Setia Bhd • Deutsche Bank (Malaysia) Bhd • Hiap Teck Venture Bhd • Unico-Desa Plantations Berhad • Pekemojaya Sdn Bhd • Stellar Crest Sdn Bhd • Herlitz AG • Herlitz PBS AG

Past directorships • Proton Commerce Sdn Bhd (resigned on 1 August 2010) • Proton Finance Limited (resigned on 1 March 2010) • Lotus Finance Limited (resigned on 1 March 2010)

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Our Directors believe their involvement in other directorships and business activities outside our Group will not affect their contribution to our Group as they are all non-executive Directors and are not involved in the day-to-day operations of our Group.

8.3.4 Directors’ Remuneration and Material Benefits-in-Kind

The current remunerations and proposed remunerations for services rendered/to be rendered by our Directors in all capacities to our Group for FY2011 and FY2012 are as follows:

Compensation Band (RM) Director FY2011 FY2012

Razman Hafidz Bin Abu Zarim - 70,001 - 120,000

Tan Sri Dr Anthony Francis Fernandes - 70,001 - 120,000

Tan Hong Kheng - 70,001 - 120,000

Ng Soon Lai @ Ng Siek Chuan - 70,001 - 120,000

The above remunerations, which comprise salaries, incentives, bonuses, fees, allowances and other benefits-in-kind must be considered and recommended by the Remuneration Committee and subsequently approved by our Board. Our Directors’ fees and incentives must be further approved or endorsed by our shareholders at a general meeting.

8.3.5 Directors’ Term of Office

Our Directors were appointed to the Board and has served in their respective capacities since the dates set out in Sections 8.1.1 and 8.3.1 of this Prospectus. Our Board comprises three Non-Independent Non-Executive Directors and two Independent Non-Executive Directors and their respective terms of office are as follows:

Name Designation Expiration of term of office*

Razman Hafidz Bin Abu Chairman, Independent Until the next annual general meeting Zarim Non-Executive Director of our Company, which shall not be later than 30 June 2013

Tan Sri Dr Anthony Francis Non-Independent Non­ Until the next annual general meeting Fernandes Executive Director of our Company, which shall not be later than 30 June 2013

Tan Hong Kheng Non-Independent Non­ Until the next annual general meeting Executive Director of our Company, which shall not be later than 30 June 2013

Ng Soon Lai @ Ng Siek Independent Non-Executive Until the next annual general meeting Chuan Director of our Company, which shall not be later than 30 June 2013

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Note:

* According to Article 128 o f our Articles o f Association:

“The Directors may appoint a person who is willing to act as Director, either to fill a casual vacancy or as an additional Director, provided that the appointment does not cause the number o f Directors to exceed any number fixed by or in accordance with these Articles as the maximum number o f Directors. A Director so appointed shall hold office only until the next following annual general meeting and shall then be eligible for re-election. This power shall be exercised by the Directors in the manner required in order to preserve the majority requirement in Article 106, failing which either the Chairman o f the board of Directors or the Directors who are Malaysian nationals shall be seized with such power and shall exercise the same accordingly. ’’

In addition, according to Article 123 o f our Articles o f Association on Retirement o f Directors:

“At every annual general meeting, one-third (1/3) o f the Directors are subject to retirement by rotation such that each Director shall retire from office once in every three (3) years or, if their number is not three (3) or a multiple o f three (3), the number nearest to one-third (1/3) shall retire from office such that each Director shall retire from office once in every three (3) years, and if there is only one (I) Director who is subject to retirement by rotation, he shall retire. An election o f Directors shall take place every year. ’’

8.4 AUDIT AND RISK, NOMINATION AND REMUNERATION COMMITTEES

8.4.1 Audit and Risk Committee

Our Audit and Risk Committee was established on 5 October 2012 and comprises three Non-Executive Directors, of which two are independent. Members of our Audit and Risk Committee are as follows:

Name Designation Directorship

Ng Soon Lai @ Ng Siek Chuan Chairman Independent Non-Executive Director

Razman Hafidz Bin Abu Zarim Member Chairman, Independent Non­ Executive Director

Tan Hong Kheng Member Non-Independent Non-Executive Director

Our Audit and Risk Committee was established by our Board in order to assist it in overseeing the internal controls of our Group independent from our management and to oversee the risk management activities of our Group, approving appropriate risk management procedures and methodologies across the organisation as well as to identify business risks of our Group. Our Audit and Risk Committee has full access to both internal and external auditors and vice versa.

Under our Audit and Risk Committee’s terms of reference, at least one member of our Audit and Risk Committee must either be a member of the Malaysian Institute of Accountants, or if not, he/she must have at least three years’ working experience and must have passed certain examinations stipulated in the Accountants Act 1967, or any other requirement as prescribed by Bursa Securities or the SC. The Chairman of our Audit and Risk Committee must be an independent Director appointed by the Board, based on the recommendation of our Nomination Committee.

Our Audit and Risk Committee’s terms of reference include the following:

(i) To consider the appointment or re-appointment of the external auditor, the audit fees, any questions of resignation or dismissal of the external auditor and to recommend the nomination of the external auditors;

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(ii) To assess the suitability and independence of the external auditor;

(iii) To discuss with the external auditor before the audit commences, the nature and scope of the audit, and ensure co-ordination where more than one audit firm is involved;

(iv) To provide a line of communication between our Board and the external auditors;

(v) To review the quarterly and year-end financial statements of the Group and Company, focusing particularly on:

(a) any change and appropriateness of accounting policies and practices; (b) significant adjustments arising from the audit; (c) litigation that could affect the results materially; (d) significant and unusual events; (e) the going concern assumption; (f) compliance with approved accounting standards and other legal requirements; and (g) ensuring the timely release of such financial statements;

(vi) To discuss problems and reservations arising from the interim and final audits, and any matter the external auditor may wish to discuss (in the absence of management where necessary) including the audit report and the level of assistance given by our employees to the external auditor;

(vii) To review the external auditor’s management letter and management’s response in evaluating our Company’s and our Group’s system of internal control;

(viii) To do the following, in relation to the internal audit function:

(a) mandate the internal audit function to report directly to our Audit and Risk Committee; (b) review the adequacy of the scope, functions, competency and resources of the internal audit function, and that it has the necessary independence and authority to carry out its work, which should be performed professionally and with impartiality and proficiency; (c) review the internal audit programme and results of the internal audit process and, where necessary, ensure that appropriate actions are taken on the recommendations of the internal audit functions; (d) review any appraisal or assessment of the performance of members of the internal audit function; (e) approve any appointment or termination of senior staff members of the internal audit function; and (f) take cognisance of resignations of internal audit staff and provide the staff an opportunity to submit reasons for resigning;

(ix) Review and monitor the adequacy and integrity of our Company’s system of internal controls and management information systems, including systems to ensure compliance with applicable laws, regulations, rules, directives and guidelines;

(x) To consider and evaluate any related party transactions or conflict of interest situations that may arise within our Company or our Group including any transaction, procedure or course of conduct that raises questions of management integrity;

(xi) To consider the major findings of internal investigations and management’s response;

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(xii) To review the risk management framework of our Group and our Company to ensure the existence of effective risk management policies and controls to monitor and manage all financial and non-financial risks;

(xiii) To review our Company’s procedures for detecting fraud and whistle blowing and ensure that arrangements are in place by which staff may, in confidence, raise concerns about possible improprieties in matters of financial reporting, financial control or any other matters (in compliance with provisions made in the Act; and

(xiv) To consider any other matters as directed by our Board.

8.4.2 Nomination Committee

Our Nomination Committee was established on 5 October 2012 and comprises three Non-Executive Directors, of which two are independent. Members of our Nomination Committee are as follows:

Name Designation Directorship

Ng Soon Lai @ Ng Siek Chuan Chairman Independent Non-Executive Director

Razman Hafidz Bin Abu Zarim Member Chairman, Independent Non­ Executive Director

Tan Sri Dr Anthony Francis Fernandes Member Non-Independent Non-Executive Director

Our Nomination Committee was established by our Board in order to, inter alia, ensure that our Board is composed of effective and qualified members by nominating and appointing, current and prospective members of our Board.

Our Nomination Committee’s terms of reference include the following:

(i) Recommending to our Board for approval, the minimum requirements for our Board, i.e. required mix of skills, knowledge, experience, qualification and other core competencies required of a Director;

(ii) Recommend to our Board, candidates for all directorships to be filled by the shareholders or our Board, taking into consideration the candidates’:

(a) skills, knowledge, expertise and experience; (b) professionalism; (c) integrity; and (d) in the case of candidates for the position of independent non-executive Directors, ability to discharge such responsibilities/ functions as expected from independent non-executive Directors;

(iii) Consider, in making its recommendation, candidates proposed by our Chief Executive Officer and within the bounds of practicality, by any senior executive or any Director or shareholder;

(iv) Assessing and evaluating, on an annual basis:

(a) the desirability of the overall composition of our Board, considering the structure and development of excessive number of directorships, to ensure appropriate size, skills and professionalism;

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(b) the balance between executive Directors, non-executive Directors and independent Directors are maintained in accordance with the Listing Requirements and in consideration of corporate governance best practices; (c) the required mix of skills and experience and other qualities, including core competencies, which non-executive Directors should bring to our Board; (d) the desirable number of independent Directors and independence of our Board’s independent Directors consistent with all legal and regulatory requirements including, but not limited to, the Listing Requirements and the Malaysian Code of Corporate Governance 2012 issued by the SC; (e) the desirability of renewing existing directorships, with due consideration given to the extent to which the interplay of the Directors’ expertise, skills, knowledge and experience was demonstrated with those of other Board members; and (f) the possible representation of interest groups on our Board;

(v) Recommending to our Board the removal of Director(s) from our Board, if the Director is ineffective, errant and/or negligent in discharging his/her responsibilities;

(vi) Establishing a mechanism for the formal annual assessment on the effectiveness of our Board as a whole and the contribution of each Director to the effectiveness of our Board and the contribution of the Board’s various committees. Our Nomination Committee’s annual assessment should be based on objective performance criteria, in line with established key performance indicators, as approved by our Board. All assessments and evaluations carried out by our Nomination Committee in the discharge of all its functions should be properly documented;

(vii) Recommending and ensuring that all Directors receive appropriate continuous training in order to maintain an adequate level of competency in order to effectively discharge their roles as Directors, including but not limited to keeping abreast with developments in the financial industry and with changes in the relevant statutory and regulatory requirements;

(viii) Overseeing the appointment, management succession planning and performance evaluation of our Board, our Board committees and individual Directors and to report their performance and areas of improvement to our Board at the end of each fiscal year; and

(ix) Periodically reporting to the Board on succession planning for the Board Chairman and Chief Executive Officer, and working with the Board to evaluate potential successors.

The Nomination Committee is authorised to seek independent professional advice, at the expense of our Company, in carrying out their duties.

8.4.3 Remuneration Committee

Our Remuneration Committee was established on 5 October 2012 and comprises three Non-Executive Directors, of which two are independent. Members of our Remuneration Committee are as follows:

Name Designation Directorship

Ng Soon Lai @ Ng Siek Chuan Chairman Independent Non-Executive Director

Razman Hafidz Bin Abu Zarim Member Chairman, Independent Non­ Executive Director

Tan Sri Dr Anthony Francis Fernandes Member Non-Independent Non-Executive Director

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Our Remuneration Committee was established by our Board in order to, inter alia, develop remuneration policy for the Directors and Chief Executive Officer and ensure that compensation is competitive and consistent with our Company’s business strategy and long-term objectives.

Our Remuneration Committee’s terms of reference include the following:

(i) Review annually and recommend to our Board the overall remuneration policy for Directors and Chief Executive Officer (including but not limited to Directors’ fees, salaries, allowances, bonuses, share options and benefits-in-kind) that support our Company’s long-term success and shareholder value, and ensure that compensation is consistent with our Company’s business strategy and long-term objectives, including but not limited to:

(a) attracting and retaining Directors and a Chief Executive Officer of requisite quality that increases productivity and profitability in the long run; (b) motivating and creating incentives for Directors and the Chief Executive Officer to perform at their best; and (c) focusing attention on the achievement of desired goals and objectives;

(ii) make recommendations to our Board on the individual remuneration packages for executive Directors and the Chief Executive Officer (including but not limited to Director’s fees, salaries, allowances, bonuses, share options and benefits-in-kind). Our Remuneration Committee shall ensure that such remuneration packages are competitive, fair and not excessive, and in determining such packages and arrangements our Remuneration Committee must consider:

(a) the individual level of responsibilities undertaken, skills and experience as well as performance and contribution to our Company’s growth and profitability, ensuring that the linkage between remuneration and performance is robust; (b) the underlying performance of our Company as a company on the whole, in light of our Company’s business plans and consider competitors’ results, analyst reports and the views of the Chairman of other Board committees; (c) the relative weighting of fixed and variable remuneration for target performance varies with level of responsibility, complexity of the role and typical market practice; (d) relevant market comparisons and practice as well as any other relevant guidance; (e) that the performance criteria set are genuinely challenging and that they are more suitable than possible alternatives; and (f) any other such factors as our Remuneration Committee considers necessary or appropriate;

(iii) Review annually the performance of the Directors and the Chief Executive Officer and recommend to our Board specific adjustments in remuneration and/or reward payments, if any, taking into account the consideration the points set out in paragraphs (ii)(a) to (f) above;

(iv) Obtain advice from external sources or experts, if necessary, regarding remuneration practices of other companies of a similar size in a comparable industry sector for the purposes of comparison;

(v) Review and recommend to our Board the compensation payable to Directors and the Chief Executive Officer in connection with any loss or termination of their office or appointment to ensure that such compensation is determined in accordance with relevant contractual terms and that such compensation is otherwise fair and not excessive for our Company;

(vi) Review and recommend to our Board compensation arrangements relating to dismissal or removal of executive Directors for misconduct to ensure that such arrangements are determined in accordance with relevant contractual terms and that any compensation payment is otherwise reasonable, appropriate, fair and not excessive for our Company;

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(vii) Review its own performance and terms of reference at least once a year to ensure that our Remuneration Committee is operating at maximum effectiveness and recommend any change it considers necessary to our Board for approval; and

(viii) Ensure adequate disclosure of the remuneration of Directors for the financial year in our Company’s annual report in accordance with the Listing Requirements.

8.5 KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL

8.5.1 Profiles

Peter Dixon Miller, British, aged 47 Chief Executive Officer of TIH

Peter Dixon Miller, aged 47, is the Chief Executive Officer of TIH. He graduated with a Bachelor of Science, Mathematics from Leicester University, England in 1986. He began his career as an IT professional with global insurance broker, Willis Faber before joining Clerical Medical Investment Group. Peter first came to Malaysia in 1995 with United Kingdom based Management Consultants TBOi to work on a major bancassurance project and then spent the next 5 years across 5 continents in financial services distribution, in particular alternative distribution including initiatives such as Branchless Banking (USA), Internet Insurance (USA), Supermarket Financial Services (South Africa), Direct Distribution (Australia) and Pre-eminent Advice Network (New Zealand). Peter then spent 5 years with insurance giant AIA between 2001 to 2006. He was Regional Bancassurance Director from 2001 to 2004 and AIA’s Head of Bancassurance, China from 2004 to 2006. In 2006, Peter joined ■ Southern Bank Berhad as the Head of Consumer Banking. When Southern Bank Berhad merged with CIMB Group, Peter oversaw CIMB’s insurance interests in Malaysia, Indonesia, Singapore and Thailand and was a director of CIMB Sun Life, CIMB Aviva Assurance & Takaful, Labuan Re and CIG Bhd. Peter joined TMSB in October 2010 and holds directorships in our subsidiaries, TIL, TMGR. TMLR, TIMB and Capital OCA, as well as in companies outside our Group, namely Tune Money Capital Sdn Bhd, Think Big Digital Sdn Bhd, Tune Money Employee Holding Sdn Bhd, Tune Money Company Limited and PT Tune Money.

Sasitharan A/L Krishnan, Malaysian, aged 41 General Manager of TIH

Sasitharan A/L Krishnan, aged 41, is the General Manager of TIH and oversees TIH’s life and general reinsurance business as well as partnership with AirAsia and the Tune Group. He graduated with a Bachelor of Laws (Hons) from University of London and is a Chartered Financial Consultant (ChFC), Chartered Life Underwriter (CLU) and Certified Financial Partner (CFP). Sasitharan has 17 years of experience in the financial services industry, including bancassurance distribution and financed reinsurance, with companies such as Mayban Life Assurance, AmBank and HSBC. Prior to joining TIH, Sasitharan served as Country Manager for ReMark International covering Direct Marketing channel development consultancy. As part of his role, Sasitharan is developing the insurance direct marketing business into a core pillar of TMSB’s overall regional business via sophisticated customer satisfaction analysis and a differentiated offering both in terms of product benefits as well as by interlinking with TMSB’s digital marketing expertise.

Teng Mee Nguk, Malaysian, aged 45 Head of Finance of TIH

Teng Mee Nguk, aged 45, is the Head of Finance in TIH and brings with her over 20 years of working experience in accounting, tax and finance operations. Prior to joining TIH, she was heading the Finance division at Jemeh Insurance (now known as ACE Jemeh) for more than 5 years. She is an Associate Member of the Chartered Institute of Management Accountants.

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Andria Geni Adnani, Malaysian, aged 41 Head of General Insurance of TIH

Andria Geni Adnani, aged 41, is the Head of General Insurance in TIH with particular focus on maximizing the value of the AirAsia and Tune Group general insurance partnership. Andria holds a Certificate in Insurance (General) and has been in the insurance business and sales development for the last 17 years with multinational organizations, including 5 years in senior management capacity with broad experience in managing both commercial and personal retail business portfolios.

Sarah Sri Cahaya Binti Abdul Hamid, Malaysian, aged 32 Head of Programme Management Office of TIH

Sarah Sri Cahaya Binti Abdul Hamid, aged 32, is the Head of Programme Management Office at TIH. She has more than 10 years of working experience in the financial services industry, which includes life underwriting experience at Prudential and new business operations at Mayban Life Assurance. Sarah was involved in the Mayban Fortis - Malaysia National Insurance - Takaful Nasional merger programme at Etiqa Insurance & Takaful before moving to Maybank to set up the PMO for the Maybank Group’s transformation programme, for which she subsequently managed the programme finances for. Sarah graduated with a Bachelor of Science degree in Biomedical Sciences.

Virendra Antony Sukrutaraj, Indian, aged 38 Head of Information & Communication Technology of TIH

Virendra Antony Sukrutaraj, aged 38, is the Head of Information & Communication Technology in TIH. He graduated with a First Class Bachelor of Science in Computer Science from Bharatidasan University in India and brings with him over 15 years of working experience in India and Singapore. Prior to joining TMSB in February 2012, Virendra was Asia Pacific Head of IT for Convergys in Singapore before starting his own IT consultancy services. In September 2012, he was seconded by TMSB to TIH. In TIH, Virendra’s role includes the development and implementation of an ICT strategy for the Group in order for the business to be supported and enabled by state-of-the-art technology. His main focus currently is the implementation of the core general insurance system which will be used as a regional technology platform.

Yeoh Chi Chern, Malaysian, aged 33 IT Manager for Insurance Systems of TIH

Yeoh Chi Chern, aged 33, is the IT Manager for Insurance Systems whereby he is involved in system development, system support and project management of system implementation. He graduated with a Bachelor of Science in Computer Science and subsequently worked as a programmer before serving as a Director/Manager of several IT solutions provider. Prior to joining TIH, he held directorships at Viztel Solutions Bhd, Mplay Solutions Sdn Bhd, Halycon Digital Sdn Bhd, Alpha Red Solutions Sdn Bhd and Oriented Media Group Bhd, all of which are IT system development companies. Lawrence currently still holds directorships at Halycon Digital Sdn. Bhd, Alpha Red Solutions Sdn Bhd. and Oriented Media Group Bhd.

Su Tieng Teck, Malaysian, aged 52 Chief Executive Officer of TIMB

Su Tieng Teck, aged 52, is the Chief Executive Officer of TIMB. He obtained his Diploma in Commerce (majoring in Financial Accounting) from Kolej Tunku Abdul Rahman in 1983. In 1992, he was conferred as a Fellow Member of the Australian & New Zealand Insurance Institute & Finance and in 1999, he obtained his Master in Business Administration (majoring in Strategic Management and Marketing) from University of Portsmouth, United Kingdom. He began his career as an accounting apprentice in Hii King Hiong & Co (an audit firm based in Sibu, Sarawak) in 1984,

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He started his career in General Insurance when he joined Antah Sedgwick Chartered Insurance Brokers Sdn Bhd as an Assistant Manager, running its Penang branch. In 1992, he joined Arab Malaysian Eagle Assurance Bhd (now known as AmG Insurance Bhd) as Northern Regional Manager based in Penang. In 1994, he was transferred to the Head Office in Kuala Lumpur taking charge of Direct & Corporate Department and subsequently took over other marketing departments namely, International Business Department, Public Sector Department, Agency Department and Branch Operations Department. Before leaving the company in 2001, he held the position of Assistant General Manager for 5 years. In 2001, he joined Tokio Marine Insurans (Malaysia) Berhad as Assistant General Manager responsible in development of the entire Agency Business on a nationwide basis. In 2010, he left the company with his last posting as a Senior General Manager in charge of Agency & Branch. Prior to joining TIMB, Daniel was the Chief Executive Officer of MUI Continental Insurance Bhd. He does not hold any directorships in any other companies.

Leong Pang Cheung, Malaysian, aged 57 Chief Financial Officer of TIMB

Leong Pang Cheung, aged 57, is the Chief Financial Officer of TIMB. He previously served in various middle, professional and managerial group in the Office of the Auditor General Malaysia for 20 years until his last position as Auditor/Deputy to the Assistant Auditor-General. Subsequently, he joined Mayban Securities before moving on to the insurance industry in 2002. He was Chief Financial Officer at PanGIobal Insurance and Tahan Insurance prior to joining TIMB. He is an Associate of the Institute of Management Accountants (UK), Chartered Global Management Accountant (UK) and Chartered Accountant of the Malaysian Institute of Accountants.

Goh Ching On, Malaysian, aged 51 Senior General Manager - Claims Operations of TIMB

Goh Ching On, aged 51, is the Senior General Manager for Claims Operations at TIMB. He is a Fellow Member of the Insurance Institute of Canada/University of Toronto (major in Underwriting & Claims) and has an MBA from Universiti Kebangsaan Malaysia. He qualified as an Associate Member of the Australian Insurance Institute in 1986 and is also an Associate Member of the Insurance & Risk Management Society of Canada. He is also a Certified Financial Planner. Goh Ching On started his insurance career as a Loss Adjuster before joining Commercial Union Assurance of Canada as a Senior Claims Examiner. He was trained by an American Consultant in Process Re-design and Reengineering Work in claims operation. He was the project lead in MAA Assurance (now known as Zurich Malaysia) in the development of the electronic paperless claims system, which was introduced at Zurich Malaysia in year 2000. Goh Ching On is active in claims training and education in the industry. He has been serving in various sub-committees in the General Insurance Association of Malaysia. He leads a project team in the General Insurance Association of Malaysia to develop and implement the e- KfK (Knock-for-Knock) Paperless Workflow System for intercompany KfK claims management for the Malaysia insurance industry. He is also the founding Chairman of the National Insurance Claims Society (NICS) of Malaysia. He last served as the Chief Claims Officer of Zurich Malaysia for 15 years before joining TIMB to head its Claims Operations in September 2012.

Lim Thai Yoong, Malaysian, aged 50 General Manager - Underwriting/Risk Survey of TIMB

Lim Thai Yoong, aged 50, is the General Manager for Underwriting/Risk Survey at TIMB. He is a Certified Insurance Professional (from Australian Insurance Institute) and an Associate Member of both the Australian Insurance Institute and the Institute of Chartered Secretaries & Administrators, UK. He has more than 20 years of experience in general insurance. He started as a risk surveyor in Hong Leong Assurance before moving on to Aetna Insurance to head broking business development. Prior to joining TIMB, He was with MUI Continental Insurance for 14 years, where he headed the broking division and subsequently was appointed as Chief Underwriter.

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8. INFORMATION ON PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

Low Yew Pong, Malaysian, aged 50 Assistant General Manager - Investment Management of TIMB

Low Yew Pong, aged 50, is the Assistant General Manager for Investment Management at TIMB. He has a Bachelor of Business Administration degree from University of Texas at Austin with a double major in Finance and Information Systems and an MBA from St. Edward’s University . He started his career as a remisier with TA Securities Holdings Berhad before subsequently moving on to MSC-Syme Business School to serve as a lecturer for the Monash University Twinning program where he taught Investment and Statistics related subjects. He joined Capital Insurance Berhad in 1996 where he was responsible for the management of the company’s general insurance fund. He has more than 20 years of experience in securities dealing and fund management business. He is also a Chartered Financial Analyst.

Ng Teck Sing, Malaysian, aged 48 Assistant General Manager - Information & Communication Technology of TIMB

Ng Teck Sing, aged 48 is the Assistant General Manager and heads the IT department at TIMB. He has more than 25 years of General Insurance system development and IT management experience. He started his career in 1985 as an electronic data processing executive in a local general insurance company. He joined a software house in 1989 and was posted to Hong Kong where he successfully implemented General Insurance Systems for two general insurance companies and an insurance broker. Ng Teck Sing joined Zurich Insurance Malaysia Berhad (formerly known as Malaysian Assurance Alliance Berhad) in 1992 and subsequently transferred to Zurich Technology Services Sdn Bhd (formerly known as MAAGNET Systems Sdn Bhd) 10 years later to oversee system development and application support for Zurich Insurance Malaysia Berhad as well as other MAA Holdings overseas insurance operations prior to acquisition of MAA Assurance by Zurich.

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

8.5.2 Shareholdings

The shareholdings of our key management and key technical personnel before and after our IPO are as follows:

.... Rrfnri' IP O ...... —> A ID n < ------D irect ------> < — Indirect- — > < ------Direct —— > < — Indirect-- > No. o f No. of No. of No. of Shares % Shares % Shares % Shares % Name Designation Nationality held held held held heid held held held

Peter Dixon Miller Chief Executive British - -- [•] [•] [•] [•] Officer o f TIH

Sasitharan A/L Krishnan General Manager of Malaysian - -- [•] [•] [•] [•] TIH

Teng Mee Nguk Head of Finance of Malaysian -- ■ [•] [•] [•1 [•] TIH

Andria Geni Adnani Head of General Malaysian -- - [•] [•][•] [•] Insurance of TIH

Sarah Sri Cahaya Binti Abdul Head of Programme Malaysian - - " [•] [•] [*] M Hamid Management Office ofTIH

Virendra Antony Sukrutaraj Head of Information Indian ■ - " [•] [•][•) [•] & Communication Technology ofTIH

Yeoh Chi Chem IT Manager for Malaysian -- ” [*] [•] [•] [•] Insurance Systems of TIH

Su Tieng Teck Chief Executive Malaysian - -- [•] [•] [•] [•] Officer of TIMB

Leong Pang Cheung Chief Financial Malaysian - -- [•] [•] [•][•] Officer of TIMB

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL {Cont’d)

A fter IP O < ----Direct ------> < — Indirect— > < -----Direct - — > < -■— Indirect- > No. of No. of No. of No. of Shares % Shares % Shares % Shares % Name Designation Nationality held held held held held held held held

Goh Ching On Senior General Malaysian -- [•] [•] [•] [•] Manager - Claims Operations of TIMB

Lim Thai Yoong General Manager - Malaysian [•] [•] [•) [•] Underwriting/Risk Survey of TIMB

Low Yew Pong Assistant General Malaysian [*] [•] [•J [•] Manager - Investment Management of TIMB

Ng Teck Sing Assistant General Malaysia [•] [•] [•] [•] Manager - Information & Communication Technology of TIMB

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

8.5.3 Involvement of Key Management and Key Technical Personnel in Other Businesses or Corporations

Save as disclosed below, none of our key management and key technical personnel has any interest, direct or indirect, in any other businesses and corporations outside of our Group or are involved in other businesses/corporations outside of our Group as at the LPD:

~ As at LPD------Direct Indirect No. of No. of Date shares % shares % Name Company Principal Activities Designation Appointed held held held held

Peter Dixon Miller Think Big Digital Sdn Bhd Marketing of loyalty program Director 9 December - - - - 2010

Tune Money Capital Sdn Bhd Dormant Director 23 September - --- 2010

Tune Money Employee Investment holding Director 23 September 1 50 -- Holding Sdn Bhd 2010

Tune Money Company Limited Loyalty management Director 13 January ---- 2012

PT Tune Money Management consulting President 18 October 2,500 1 - - Director 2011

Yeoh Chi Chern Halcyon Digital Sdn Bhd Telecommunications Systems Director 27 May 2008 51 51 - - Consultancy Services

MPlay Solutions Sdn Bhd Business and System Development and -- 30 30 -- IT Consulting

Alpha Red Solutions Sdn Bhd IT Consultancy & Systems Intergrator Director 1 September 49 49 -• 2009

Oriented Media Group Bhd Internet Ad-Servers, Game Publishing, Executive 27 December - -- - Interactive Media Outsourcing Director 2011 Services

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

Save as disclosed above, as at the LPD, none of our key management and key technical personnel has any interest, direct or indirect, in any other businesses and corporations outside of our Group. The involvement of Peter Dixon Miller and Yeoh Chi Chem in other businesses/corporations outside our Group is minimal and does not affect their duties to our Group. Hence, we do not foresee any conflict of interest arising from this.

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

8.5.4 Chief Executive Officer’s Remuneration and Material Benefits-in-Kind

The current remunerations and proposed remunerations for services rendered/to be rendered by our Chief Executive Officer for FY2011 and FY2012 are as follows:

Compensation Band (RM) Name FY2011 FY2012

Peter Dixon Miller - 950,001 - 1,000,000

The above remunerations, which comprise salaries, incentives, bonuses, fees, allowances and other benefits-in-kind must be considered and recommended by the Remuneration Committee and subsequently approved by our Board.

8.6 DECLARATIONS BY PROMOTERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL

Based on the declarations by our Promoters, Directors, key management and key technical personnel, none of our Promoters, Directors, key management and key technical personnel is or has been involved in any of the following events {whether in or outside Malaysia):

(i) A petition under any bankruptcy or insolvency laws was filed (and not struck out) against such person or any partnership in which he was a partner or any corporation of which he was a director or key personnel;

(ii) Disqualification from acting as a director of any corporation, or from taking part directly or indirectly in the managing of a corporation;

(iii) Charged and/or convicted in a criminal proceeding or is a named subject of a pending criminal proceeding;

(iv) Any judgement entered against such person involving a breach of any law or regulatory requirement that relates to the securities or futures industry; or

(v) The subject of any order, judgment or ruling of any court, government or regulatory authority or body temporarily enjoining him from engaging in any type of business practice or activity.

8.7 FAMILY RELATIONSHIPS AND ASSOCIATIONS

There are no family relationships (as defined under Section 122A of the Act) or associations amongst our Promoters, Directors, substantial shareholders, key management and key technical personnel.

8.8 BENEFITS PAID OR INTENDED TO BE PAID

Save as disclosed in Section 8.3.4 of this Prospectus, there is no amount or benefit paid or intended to be paid or given to any of our Promoters, Directors or substantial shareholders within the two ycajs preceding the date of this Prospectus.

8.9 SERVICE AGREEMENTS WITH DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL

Save as disclosed below, as at the LPD, there are no other existing or proposed service agreements entered into or to be entered into between our Group and our Directors, key management and key technical personnel.

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

Leong Pang Cheung has a service agreement with TIMB for a period of two years effective from 2 July 2012. This service agreement is subject to mutual termination provisions through the giving of three months’ prior notice.

8.10 INFORMATION ON EMPLOYEES

8.10.1 Employment Structure

As at the LPD, we have a total workforce of 315 personnel. All of our employees are employed in Malaysia.

The breakdown of our employees by category as at 31 December 2009, 2010 and 2011 as well as at the LPD is as follows:

<------Number of Employees------> I <----- As at 31 December ----- > As at the Cateeorv 2009* 2010* 2011 LPD* Managerial 1 - 2 29

Supervisory - - - 136

Sales and marketing 1 1 9 9

Finance, human resource and administration 1 1 1 40

Operations 2 2 4 14

Clerical/ non-executive - - - 80

Others non clerical - - - 7

Total 5 4 16 315(a)

Notes;

# Employed by TMSB for the operation o f TIL * The significant change in number of employees of our Group as at the LDP is pursuant to our acquisition o f TIMB (a> Including 16 employees employed based on fixed term contracts and I personnel seconded by TMSB to our Company

8.10.2 Training and Development

Our Group understands and is committed to the importance of the training and development of our workforce. Training and development plans are rolled out based on the role and scope, the responsibilities and impact, regulatory compliance and mostly, customer satisfaction. Our goal is to continuously orientate and instil within our employees our Group’s culture, vision and business priorities. Managers are required to give on-the-job training and coaching frequently. We provide employees opportunities for lateral movement and internal promotions as a key component to learn new skills and develop their existing strengths.

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

New employees will participate in our Group’s Induction and Orientation Programme. The new employees are given an overview of the business of our Group and an introduction to our vision and corporate culture. New employees also undergo a briefing on risk management policies, an introduction to ISO and Compliance processes, and a briefing on anti-money laundering policies as well as covering the Employee Handbook with our Human Resource Department. New employees will be assigned their Key Result Areas for their first six months, during which on-the-job training and coaching is conducted on an on-going basis to impart functional knowledge and skills to the new employees.

Our Human Resource Department is responsible for the preparation of annual training plans and calendar, taking into account the need for technical and non-technical skills. The training calendar is shared with the head of departments of our Group, who can then nominate attendees to our Human Resource Department. Employees can also request for training either listed in the calendar or in addition to the calendar. However, this is, subject to the approval of the head of departments and Human Resource Department.

As our Group possesses the MS ISO 9001:2008 certification; in-house training on standard operating procedures are conducted by the Internal Quality Auditor. Other in-house training conducted on technical subjects include Motor Insurance; Introduction to Insurance; Fire Insurance; Misc Classes; Marine Insurance; Reinsurance; Engineering and Claims. Employees are regularly encouraged to upgrade themselves and to keep abreast with the latest market trends and developments.

Our employees have had the opportunity to participate in training programmes to develop industry knowledge to enhance proficiency in their daily tasks. Some of the training programmes attended by our employees in year 2012 are as follows:

Date Programme Venue Facilitator/ Organiser

30 March The 2nd General Insurance Prince Hotel Actuarial Society of & Takafiil Actuarial Malaysia Seminar

24 April Financing Reporting Pacific Regency Labuan International Standards for Insurance Hotel Insurance Association Companies

14 May Managing Discipline AirAsia Training AirAsia Berhad Facility

21 May Towards Supervisory Malaysian Institute Malaysian Institute of Excellence of Management, Management Jalan Ampang

28 May Managing Performance Malaysian Institute Malaysian Institute of Improvement in the of Management, Management Workplace Jalan Ampang

11 June How to Enhance Customer Malaysian Institute Malaysian Institute of Service & Retention of Management, Management Jalan Ampang

20 June Effective Middle Malaysian Institute Malaysian Institute of Management of Management, Management Jalan Ampang

27 June Risk Based Capital Novotel Hotel Labuan International Insurance Association

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

Date Programme Venue Facilitator/ Organiser

4 July T alent Management in Sunway Putra Hotel HR Republic Challenging Economic Climate

18 July How to Increase Sales & Malaysian Institute Malaysian Institute of Develop Effective of Management, Management Marketing Strategies Jalan Ampang

8.10.3 Management Succession Plan

Our corporate culture places high emphasis on employee engagement and employee development. We know that our success depends on the passion and performance of our employees, more so our key talent in pivotal roles and our high-potential employees.

Our Group has a management succession plan consisting of:

(a) Identifying Pivotal Roles within the Organisation

Pivotal roles include key management roles, high customer/partner interaction roles and roles which have a higher or longer learning curve.

(b) Identifying Core Competencies and Job Competencies

Competencies and attributes that drive organisational success are identified and groomed, through our performance management process.

(c) Identifying High Potentials

Employees who are in the top percentile of the organisation are high potentials and are rewarded accordingly during the annual performance review. All internal positions are also broadcasted for internal employees to apply and have the opportunity at career advancement or career enhancement.

(d) Learning & Development

Apart from attending in-house or external training, employees who are identified based on any process above are given opportunities to develop and sharpen their skills by taking on additional tasks and projects, conducting training on their areas of expertise and cross exposure in different departments.

(e) Implementing & Review

While succession planning is a continuous effort and inter-twined with leadership and human resource responsibilities, it is reviewed formally during the annual business planning process where all employees in pivotal roles are required to identify, groom and develop employees for their own succession plans. If the need arises, external talent will be recruited to close any talent gaps.

In addition, entry level employees and new employees joining our Group will be encouraged to contribute ideas and participate actively in organisational activities to allow them to develop their full potential.

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8. INFORMATION ON OUR PROMOTERS, SUBSTANTIAL SHAREHOLDERS, DIRECTORS, KEY MANAGEMENT AND KEY TECHNICAL PERSONNEL (Cont’d)

8.10.4 Unions

As at the LPD, certain of our employees who are employed under TIMB, are members of the following unions:

(a) in respect of employees who are categorised as clerical, the National Union of Commercial Workers in Companies Represented by Association of Insurance Employers; and

(b) in respect of employees who are categorised as executive, Persatuan Pegawai-Pegawai Pentadbiran Industri Insuran Semenanjung Malaysia.

As at the LPD, there has been no industrial disputes with the unions involving our Group.

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9. APPROVALS AND CONDITIONS

9.1 APPROVALS FROM RELEVANT AUTHORITIES

Our IPO is subject to the following approvals being obtained:

(a) the approval of the SC, pursuant to Section 212(5) of the CMSA and the equity requirements for public companies, which was obtained vide its letter dated [•] 2012;

(b) BNM, which was obtained vide its letter dated [•] 2012;

(c) MOF, which was obtained vide its letter dated [•] 2012; and

(d) Bursa Securities for the admission of to the Official List and the listing of and quotation for our entire enlarged issued and paid-up share capital on the Main Market of Bursa Securities, which was obtained vide its letter dated [•] 2012.

Conditions on Approvals

The conditions imposed by the SC vide its letter dated [•] 2012 and the status of compliance with these conditions are as follows:

Conditions Imposed by the SC Status of Compliance [•] [•]

The SC has, vide its letter dated [•] 2012, approved the waivers sought in relation to compliance with certain requirements under the Equity Guidelines. The details of the waivers sought and accompanying conditions imposed by the SC are as follows

Reference Details of Waiver Sought Conditions Imposed Status of Compliance r » i [•] [ • 1 [•]

The conditions imposed by BNM vide its letter dated [•] 2012 and the status of compliance with these conditions are as follows:

Conditions Imposed by BNM Status of Compliance

[•] . [•1

The conditions imposed by MOF vide its letter dated [•] 2012 and the status of compliance with these conditions are as follows:

Conditions Imposed by MOF Status of Compliance [•] [•]

The conditions imposed by Bursa Securities vide its letter dated [•] 2012 and the status of compliance with these conditions are as follows:

Conditions Imposed by Bursa Securities Status of Compliance [•] [•]

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9. APPROVALS AND CONDITIONS (Cont’d)

9.2 MORATORIUM ON SALE OF SHARES

In compliance with the Equity Guidelines, a moratorium shall be imposed on the entire shareholdings held by TMSB, in its capacity as one of our Promoters comprising [419,858,080] Shares, representing [55.85%] of our enlarged issued and paid-up share capital. TMSB is not allowed to sell, transfer or assign its entire shareholding in our Company within six months from the date of Listing.

In accordance with the Equity Guidelines, TMSB, has undertaken not to sell, transfer or assign its entire shareholdings of [419,858,080] Shares in our Company, representing [55.85%] of the enlarged issued and paid-up share capital of our Company as at the date of Listing, for a period of six months from the date of Listing.

In accordance with the Equity Guidelines, the shareholders of TMSB (including our Promoters), have undertaken not to sell, transfer or assign their respective shareholdings in TMSB as at the date of Listing, for a period of six months from the date of Listing.

In accordance with the Equity Guidelines, the respective shareholders of Tune Group Sdn Bhd. CIMB SI II Sdn Bhd, CIMB Group Sdn Bhd, SBB Berhad, Tune Money Employee Holding Sdn Bhd, Tune Strategic Investments Limited and East Pacific Capital Limited, have undertaken not to sell, transfer or assign their respective shareholdings in Tune Group Sdn Bhd, CIMB SI II Sdn Bhd, CIMB Group Sdn Bhd, SBB Berhad, Tune Money Employee Holding Sdn Bhd, Tune Strategic Investments Limited and East Pacific Capital Limited as at the date of Listing, for a period of six months from the date of Listing.

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211 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST

10.1 RELATED PARTY TRANSACTIONS

Under the Listing Requirements, a “related party transaction” is a transaction entered into by a listed issuer or its subsidiaries that involves the interest, direct or indirect, of a related party. A “related party” of a listed issuer (not being a special purpose acquisition company) is:

(i) a director falling within the meaning given in Section 2(1) of the CMS A and includes any person who is or was within the preceding six months of the date on which the terms of the transaction were agreed upon, a director of the listed issuer, its subsidiary or holding company or a chief executive of the listed issuer, its subsidiary or holding company; or

(ii) a major shareholder of the listed issuer or its subsidiaries or holding company, being a shareholder who has or had an interest or interests in one or more voting shares in a corporation (being either the listed issuer, or its subsidiaries or holding company, or a combination of the said corporations) and the nominal amount of that share or aggregate of the nominal amounts of those shares is:

(a) 10% or more of the aggregate of the nominal amounts of all the voting shares in the corporation; or

(b) 5% or more of the aggregate of the nominal amounts of all the voting shares in the corporation where such person is the largest shareholder of the corporation;

and includes such person who is or was within the preceding six months of the date on which the terms of the transaction were agreed upon, a major shareholder of the issuer or its subsidiaries or holding company; or

(iii) a person connected with such director or major shareholder.

Certain transactions, despite falling within the definition above, are not normally regarded as related party transactions. These are detailed in paragraph 10.08(11) of the Listing Requirements.

The abbreviated terms in Section 10.1.1 of this Prospectus refer to our Directors and major shareholders as follows:

AAB : AirAsia Berhad KM : Dato’ Kamarudin Bin Meranun TF : Tan Sri Dr Anthony Francis Fernandes THK Tan Hong Kheng TMSB : Tune Money Sdn Bhd

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10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

10.1.1 Existing and proposed related party transactions

Save as disclosed below, our Board confirms that there is no other existing or presently proposed related-party transactions entered/to be entered into between our Group and our Directors, major shareholders and/or persons connected with them, during the past three FY2009 to FY2011 and current FY2012:

fa)_____ Non-recurrent related party transactions

E stim ate for the FY <------f y ------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM

TMSB TMSB is a major shareholder Call Option Agreement in respect of the N/A N/A N/A N/A(1) of our Company. option granted by TMSB and our Company to AAB for AAB to acquire TMSB is 42.64% owned by up to 20% of the issued and paid-up Tune Group Sdn Bhd, which in share capital of our Company at the time turn is jointly owned by TF and the call option is exercised from TMSB KM. Source Code Transfer Agreement in N/A N/A N/A 130,000 TF and THK are our Directors respect of the sale of the TIPG by TMSB and directors of TMSB. to our Company

Advances made by our Company to N/A N/A 3,800,000 15,400,000 TMSB

Advances made by TMGR to TMSB N/A N/A N/A 200,000

AAB AAB is a major shareholder of Call Option Agreement in respect of the N/A N/A N/A N/A{1) our Company. option granted by TMSB and our Company to AAB for AAB to acquire AAB is 23.06% owned by up to 20% of the issued and paid-up Tune Air Sdn Bhd, which in share capital of our Company at the time turn is 48.8% owned by TF and the call option is exercised from TMSB 40.2% owned by KM.

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10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estimate for the FY <------FY------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM TF is our Director and director of AAB.

CIMB Bank Berhad CIMB Bank Berhad is a Tenancy Agreement in respect of the N/A N/A N/A 196,000 99.99% subsidiary of CIMB property with the address at No. 77, Group SdnBhd, which in turn Jalan Kapar, 41400 Klang, Selangor is the holding company of held in the name of TIMB CIMB SI II Sdn Bhd.

CIMB SI II Sdn Bhd holds 25% equity interest in TMSB, our major shareholder.

Note:

(l) The purchase consideration to be paid by AirAsia Berhad to TMSB pursuant to the exercise o f the call option shall be computed based on the net asset value o f TIH at the time o f exercise o f the option (subject to a maximum purchase consideration o f RM l6,000,000.00) to be satisfied in cash

(b)_____ Recurrent related party transactions

Estimate for the FY <------FY— ------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM

TMSB TMSB is a major shareholder Shared Services Agreement for TMSB N/A N/A N/A 788,000 o f our Company. to provide services to our Company, including human resources, information technology and other services as may be agreed upon from time to time,

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10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estim ate for the FY ■FY------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM TMSB is 42.64% owned by including general management, Tune Group Sdn Bhd, which in corporate functions, legal and turn is jointly owned by TF and administrative services KM.

TF and THK are our Directors and directors of TMSB.

AAB AAB is a major shareholder of Distribution Agreement in respect of the N/AN/A N/A 117,887 our Company. outsourcing and appointment of our Company to manage the travel insurance AAB is 23.06% owned by business of AAB on an exclusive basis Tune Air Sdn Bhd, which in and the grant of right to our Company to turn is 48.8% owned by TF and market insurance products to the 40.2% owned by KM. customers of AAB via direct marketing initiatives TF is our Director and director of AAB. Business Collaboration and Marketing N/AN/A N/A 3,748,619 Agreement to enable TIMB to underwrite the Travel Protection Plan originating in Malaysia for passengers of AAB

AirAsia X Sdn Bhd AirAsia X Sdn Bhd is a person Distribution Agreement in respect of the N/A N/A N/A N/A connected to AAB as AAB outsourcing and appointment of our owns 18.34% equity interest in Company to manage the travel insurance AirAsia X Sdn Bhd. business of AirAsia X Sdn Bhd on an exclusive basis and the grant of right to AAB is a major shareholder of our Company to market insurance our Company. products to the customers of AirAsia X Sdn Bhd via direct marketing initiatives

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10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estim ate for the FY <------FY— ------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM AAB is 23.06% owned by Agency Agreement in respect of the N/AN/A N/A 731,703 Tune Air Sdn Bhd, which in appointment of AirAsia X Sdn Bhd as a turn is 48.8% owned by TF and corporate agent of TIMB 40.2% owned by KM.

TF is our Director and director of AirAsia X Sdn Bhd.

PT Indonesia AirAsia PT Indonesia AirAsia is a Distribution Agreement in respect of the N/A N/AN/A 30,056 person connected to AAB as outsourcing and appointment of our AAB owns 100% equity Company to manage the travel insurance interest in AirAsia Investment business of PT Indonesia AirAsia on an Ltd, which in turn owns 49% of exclusive basis and the grant of right to PT Indonesia AirAsia. our Company to market insurance products to the customers of PT AAB is a major shareholder of Indonesia AirAsia via direct marketing our Company. initiatives

AAB is 23.06% owned by Business Collaboration Agreement to N/AN/A N/A 283,210 Tune Air Sdn Bhd, which in enable TIMB to underwrite the Travel turn is 48.8% owned by TF and Protection Plan originating in Malaysia 40.2% owned by KM. for passengers of PT Indonesia AirAsia

TF is our Director and director of PT Indonesia AirAsia.

Thai AirAsia Co. Ltd Thai AirAsia Co. Ltd is a Distribution Agreement in respect of the N/A N/A N/A 5,693 person connected to AAB as outsourcing and appointment of our AAB owns 100% equity Company to manage the travel insurance interest in AirAsia Investment business of Thai AirAsia Co. Ltd on an Ltd, which in turn owns 45% of exclusive basis and the grant of right to Thai AirAsia Co. Ltd. our Company to market insurance

216 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

E stim ate for the FY ' <------F Y - Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM products to the customers of Thai AAB is a major shareholder of AirAsia Co. Ltd via direct marketing our Company. initiatives

AAB is 23.06% owned by Business Collaboration Agreement to N/A N/A N/A 78,146 Tune Air Sdn Bhd, which in enable TIMB to underwrite the Travel turn is 48.8% owned by TF. Protection Plan originating in Malaysia for passengers of Thai AirAsia Co. Ltd TF is our Director and director of Thai AirAsia Co. Ltd.

AirAsia Inc. AirAsia Inc. is a person Distribution Agreement in respect of the N/A N/A N/A N/A connected to AAB as AAB outsourcing and appointment of our owns 39.9% equity interest in Company to manage the travel insurance AirAsia Inc. business of AirAsia Inc. on an exclusive basis and the grant of right to our AAB is a major shareholder of Company to market insurance products our Company, to the customers of AirAsia Inc. via direct marketing initiatives AAB is 23.06% owned by Tune Air Sdn Bhd, which in Business Collaboration Agreement to N/A N/A N/A 9,884 turn is 48.8% owned by TF and enable TIMB to underwrite the Travel 40.2% owned by KM. Protection Plan originating in Malaysia for passengers of AirAsia Inc. TF is our Director and director of AirAsia Inc.

217 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estim ate for the FY <------FY------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM AirAsia Japan Co. Ltd AirAsia Japan Co. Ltd is a Distribution Agreement in respect of the N/A N/A N/A N/A person connected to AAB as outsourcing and appointment of our AAB owns 100% equity Company to manage the travel insurance interest in Asia Investment Co. business of AirAsia Japan Co. Ltd on an Ltd, which in turn own 49% in exclusive basis and the grant of right to AirAsia Japan Co. Ltd. our Company to market insurance products to the customers of AirAsia AAB is a major shareholder of Japan Co. Ltd via direct marketing our Company. initiatives

AAB is 23.06% owned by Tune Air Sdn Bhd, which in turn is 48.8% owned by TF and 40.2% owned by KM.

TF is our Director and director of AirAsia Japan Co., Ltd.

AAE Travel Pte Ltd AAE Travel Pte Ltd is a person Travel Insurance Services Agreement in N/AN/AN/A 18,000 connected to AAB as AAB respect of the appointment of our owns 50% equity interest in Company as the insurance manager for AAE Travel Pte Ltd. travel insurance products which are marketed by our Company directly to AAB is a major shareholder of end-users through certain websites our Company. operated by AAE Travel Pte Ltd

AAB is 23.06% owned by Tune Air Sdn Bhd, which in turn is 48.8% owned by TF and 40.2% owned by KM.

218 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estim ate for the FY FY— — —> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM TF is our Director and director of AAE Travel Pte Ltd.

Multi-Purpose Insurans Multi-Purpose Insurans Bhd is Reinsurance arrangement between 18,859,659 27,828,648 36,582,469 11,872,346 Bhd a person connected to Multi­ Multi-Purpose Insurans Bhd and TIL in purpose Capital Holdings respect of the Travel Protection Plan Berhad as it is a wholly-owned underwritten by Multi-Purpose Insurans subsidiary of Multi-Purpose Bhd Capital Holdings Berhad.

Multi-Purpose Capital Holdings Berhad holds 20% in TIL.

Think Big Digital Sdn Think Big Digital Sdn Bhd is a Merchant Partner Agreement in respect N/AN/A N/A 100,000 Bhd person connected to our major of our Company’s participation in the shareholders, TMSB and AAB “BIG Loyalty Programme” which as Think Big Digital Sdn Bhd is entitles our Company to purchase and a 50:50 joint venture between issue “BIG Points” as part of our TMSB and AAB. Group’s marketing initiatives

Tune Group.com Tune Group.com Limited is License Agreement in respect of the N/A N/A N/A USD 10,000 Limited jointly owned by TF and KM, grant of the licence and right to use the who are persons connected to ‘Tune Insurance’ trademark by Tune our major shareholders, TMSB Group.com Limited to our Company and AAB.

TMSB is 42.64% owned by Tune Group Sdn Bhd, which in turn is jointly owned by TF and KM.

219 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estimate for the FY < FY— ----- > Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM AAB is 23.06% owned by Tune Air Sdn Bhd, which in turn is 48.8% owned by TF and 40.2% owned by KM.

Tune Hotels Tune Hotels is a wholly-owned Business Collaboration and Outsourcing N/AN/A N/A 8,957 subsidiary of Tune Hotels.com Agreement in respect of the retail Limited. insurance partnership and outsourcing arrangement for our Company to Tune HoteIs.com Limited is manage, amongst others, the direct 44.9% owned by Tune Group marketing initiatives of Tune Hotels Sdn Bhd, which in turn is jointly owned by TF and KM, who are persons connected to our major shareholders, TMSB and AAB.

TMSB is 42.64% owned by Tune Group Sdn Bhd, which in turn is jointly owned by TF and KM.

AAB is 23.06% owned by Tune Air Sdn Bhd, which in turn is 48.8% owned by TF and 40.2% owned by KM.

TF is our Director and director of Tune Hotels.

220 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estimate for the FV <— ------>';; Related Party Nature of Relationship Nature of Transaction 2010 2011 ...... RM PT CIMB Sunlife PT CIMB Sunlife is a 51% Cooperation Agreement between our N/A N/A N/A 60,113 indirect subsidiary of CIMB Company and PT CIMB Sunlife for the Group Sdn Bhd, which in turn marketing and distribution of life is the holding company of insurance products of PT CIMB Sunlife CIMB SI II Sdn Bhd. by our Company to passengers of AirAsia in Indonesia CIMB SI II Sdn Bhd holds 25% equity interest in TMSB, our major shareholder.

CIMB Insurance CIMB Insurance Brokers Sdn Broking arrangement between CIMB N/A N/A N/A 1,000,000 Brokers Sdn Bhd Bhd is an indirect subsidiary of Insurance Brokers Sdn Bhd and TIMB CIMB Group Sdn Bhd, which in turn is the holding company of CIMB SI II Sdn Bhd.

CIMB SI II Sdn Bhd holds 25% equity interest in TMSB, our major shareholder.

SP&G Insurance SP&G Insurance Brokers is a Broking arrangement between SP&G N/AN/AN/A 250,000 Brokers company owned by an Insurance Brokers and TIMB immediate family member of KM, a person connected to our major shareholders, TMSB and AAB.

TMSB is 42.64% owned by Tune Group Sdn Bhd, which in turn is 50% owned by KM.

221 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

Estim ate for the FY <------f y ------> Related Party Nature of Relationship Nature of Transaction 2009 2010 2011 2012 RM AAB is 23.06% owned by Tune Air Sdn Bhd, which in turn is 40.2% owned by KM.

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10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

All the related party transactions disclosed above would not give rise to any conflict of interest situation and were transacted based on arm’s length basis, which are not detrimental to the interests of our Group.

Upon Listing, our Directors, through our Audit and Risk Committee, will ensure that any related party transactions (recurrent inclusive, if any) are carried out on an arm’s length basis and are also not to our detriment and to the detriment of our minority shareholders.

Our Directors and substantial shareholders are also not aware of any other transactions that may give rise to conflict of interest situations between our Group and any of our Directors, substantial shareholders, key management and key technical personnel and/or persons connected with them.

10.2 TRANSACTIONS THAT ARE UNUSUAL IN NATURE OR CONDITIONS

There are no transactions that are unusual in nature or conditions, involving goods, services, tangible or intangible assets, to which our Group or its parent, TMSB, was a party to during the past three FY2009 to FY2011 and current FY2012. Our Directors and substantial shareholders are also not aware of any transaction that is unusual in nature or condition, involving goods, services, tangible or intangible assets, to which our Group was a party.

10.3 INTERESTS IN SIMILAR BUSINESSES, INTERESTS IN BUSINESSES OF OUR CUSTOMERS OR SUPPLIERS AND OTHER CONFLICTS OF INTEREST

Save as disclosed in Sections 8.2.4 and 8.3.3 of this Prospectus, as at the LPD, none of our Directors and/or substantial shareholders has any interest, direct or indirect, in any other businesses and corporations carrying on a trade similar to that of our Group and/or any business or corporations which are also the customers or suppliers of our Group.

Our Board is of the opinion that there is no existing or potential conflict of interest situation arising from the interests of the Directors and/or substantial shareholders of our Group in the businesses and corporations disclosed in Sections 8.2.4 and 8.3.3 of this Prospectus.

10.4 LOANS MADE BY OUR GROUP TO OR FOR THE BENEFIT OF RELATED PARTIES

Our parent, TMSB had provided advances to or for the benefit of our Group’s related parties. The outstanding advances due from our Group’s related parties to TMSB as at 31 August 2012 amounted to RM l7.97 million and there is no fixed terms of repayment.

Save as disclosed above, there are no outstanding loans, including guarantees of any kind, made by our Group or its parent, TMSB, to or for the benefit of related parties during the past three FY2009 to FY2011 and up to the LPD.

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223 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

10.5 DECLARATION BY ADVISERS

10.5.1 Declaration by RHB Investment Bank

RHB Investment Bank and/or its related companies (“RHB Banking Group”) engage in private banking, commercial banking and investment banking transaction including, inter-alia brokerage, securities trading, asset and funds management and credit transaction service businesses. The RHB Banking Group has engaged and may in the future, engage in transactions with and perform services for our Company and/or our affiliates, in addition to the roles set out in this Prospectus. In addition, in the ordinary course of business, any member of the RHB Banking Group may at any time offer or provide their services to or engage in any transactions (on their own account or otherwise) with any member of our Group or any other entity or person, hold long or short positions, and may trade or otherwise effect transactions for their own account or the account of their other customers in debt or equity securities or senior loans of our Company and/or our affiliates. The related companies of RHB Investment Bank may bid for the IPO Shares to be offered under the Institutional Offering.

As at the LPD, RHB Bank Berhad, a company related to RHB Investment Bank has in the ordinary course of business extended credit facilities to our Group and our Company’s major shareholder, TMSB. RHB Bank Berhad and CIMB Bank jointly extended term loan facilities to our Group and TMSB, of which RHB Bank Berhad’s portion amounted to RM100.0 million and RM11.8 million respectively. The outstanding borrowings owing by our Group and TMSB as at the LPD stood at RM83.1 million and [RM11.8] million respectively. The said borrowings were utilised to, among others, part finance the acquisition of TIMB, which was completed in May 2012.

It is expected that our Group and TMSB will channel part of the proceeds arising from the IPO to prepay (partially or fully) the amount owing to RHB Bank Berhad.

Although the term loan facilities have maximum tenure of 5 years, it was agreed pursuant to the relevant facility agreement that in the event of a listing of any member of our Group on any stock exchanges, the proceeds raised from the said listing shall be used to prepay (partially or fully) the said loan.

RHB Investment Bank is of the view that there is no conflict of interest in its capacities as the Principal Adviser, Managing Underwriter and Joint Bookrunner in relation to the IPO in view that the credit facilities are not material compared to RHB Bank Berhad’s total loan, advances and financing as at 31 December 2011. Furthermore, the team(s) in charge of the IPO in RHB Banking Group is independent from the team handling the credit facilities.

10.5.2 Declaration by ECM Libra

Dato’ Seri Kalimullah bin Masheerul Hassan is a Non-Independent Non-Executive Chairman of ECMLFG and a shareholder of ECMLFG. He is also a shareholder of TMSB, a director of TMSB and a promoter of our Company in relation to the IPO. Lim Kian Onn is a Non-Independent Non-Executive Director of ECMLFG and ECM Libra and a substantial shareholder of ECMLFG. He is also a shareholder of TMSB, an alternate director of TMSB and a promoter of our Company in relation to the IPO. TMSB is a promoter of our Company in relation to the IPO and is the Offeror for the Proposed Offer for Sale.

ECM Libra has been appointed as TIMB’s agent to transact insurance business on behalf of TIMB pursuant to an Agency Agreement dated 4 June 2012.

224 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

ECMLFG and/or its subsidiaries (“ECMLFG Group”) are engaged in investment banking, inter-alia, securities trading and brokerage, local and foreign nominee services, provision of asset and funds management, investment research, Labuan investment banking and related financial services and credit transaction services in their ordinary course of business. In addition, any member of the ECMLFG Group may at any time offer or provide their services to or engage in any transactions (on their own account or otherwise) with any member of our Group or any other entity or person, hold long or short positions, and may trade or otherwise effect transactions for their own account or the account of their other customers in debt or equity securities or senior loans of our Company and/or our subsidiaries. The subsidiaries of ECMLFG may bid for the IPO Shares to be offered under the Institutional Offering.

Notwithstanding the aforementioned, ECM Libra confirms that there is no existing or potential conflict of interest in its capacity as the Co-Adviser, Joint Underwriter and Joint Bookrunner for the IPO, in relation to the listing of our Company on the Main Market of Bursa Securities.

10.5.3 Declaration by CLSA

CLSA confirms that there is no existing or potential conflict of interests in its capacity as the Joint Global Coordinator and Joint Bookrunner for our Listing.

In the ordinary course of business, CLSA and/or its affiliated companies (collectively, the “CLSA Group”) do or may engage in transactions with and perform services for our Company and/or our affiliates. Members of the CLSA Group may extend credit facilities or may engage in private banking, commercial banking and investment banking transactions including, inter alia, brokerage, securities trading, asset and funds management and credit transaction services in their ordinary course of business with our Company and/or our affiliates. Further, any member of the CLSA Group may at any time offer or provide its services to, or engage in any transactions (on its own account or otherwise), with our Company and/or our affiliates, hold long or short positions, and may trade or otherwise effect transactions for its own account or the account of its other customers in debt or equity securities or senior loans of our Company and/or our affiliates.

10.5.4 Declaration by CIMB

CIMB, its subsidiaries and associated companies, as well as its holding company, CIMB Group Holdings Berhad and the subsidiaries and associated companies of its holding company (“CIMB Group”) form a diversified financial group and are engaged in a wide range of investment and commercial banking, brokerage, securities trading, asset and funds management and credit transaction service businesses. The CIMB Group has engaged and may in the future, engage in transactions with and perform services for any member of our Group and any of its respective affiliates, in addition to the roles set out in this Prospectus. In addition, in the ordinary course of business, any member of the CIMB Group may at any time offer or provide its services to or engage in any transactions (on its own account or otherwise) with any member of our Group, its affiliates and/or any other persons, hold long or short positions in securities issued by our Company and/or its affiliates, make investment recommendation and/or publish or express independent research views on such securities, and may trade or otherwise effect transactions for its own account or for the account of its customers in debt or equity securities or senior loans of any member of our Group or its affiliates. This is a result of the businesses of CIMB Group generally acting independent of each other, and accordingly there may be situations where parts of the CIMB Group and/or its customers currently have or in the future, may have interest or take actions that may conflict with the interests of our Group.

CIMB Group has in the ordinary course of its banking business, granted credit facilities to our Group and TIH’s major shareholder, TMSB. As at the LPD, CIMB Bank Berhad and RHB Bank Berhad jointly extended term loan facilities to our Group and TMSB, of which CIMB Bank Berhad’s portion amounted to RM60.0 million and RM12.1 million respectively. The outstanding borrowings owing by our Group and TMSB as at the LPD stood at RM49.8 million and [RM12.1] million respectively. The said borrowings were utilised to, among others part finance the acquisition of TIMB, which was completed in May 2012.

225 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (Cont’d)

It is expected that our Group and TMSB will channel part of the proceeds arising from the IPO to prepay (partially or fully) the amount owing to the CIMB Group.

Although the term loan facilities have maximum tenure of 5 years, it was agreed pursuant to the relevant facility agreement that in the event of a listing of any member of our Group on any stock exchanges, the proceeds raised from the said listing shall be used to prepay (partially or fully) the said loan.

CIMB Group Holdings Berhad, through its indirect wholly-owned subsidiary, CIMB SI II Sdn Bhd (“CIMB SI II”) owns 25% of the total issued and paid-up ordinary share capital and 28% of the outstanding irredeemable convertible preference shares of TMSB. TMSB owns [80%] equity interests in our Company as at the LPD. Upon completion of the IPO, TMSB’s equity interest in our Company is expected to be reduced to [55.85]%.

CIMB SI II is an investment holding company established to invest in TMSB on behalf of CIMB Group. CIMB SI II has a corporate representative on the board of TMSB in a capacity of a non­ executive director of TMSB and who is not involved in the day-to-day management and operations of TMSB and its subsidiaries.

CIMB SI II and CIMB are deemed related companies, by virtue of both companies being subsidiaries of CIMB Group Holdings Berhad. There are no common directors between CIMB SI II and CIMB.

CIMB Group is of the view that the above does not result in a conflict of interest situation which prevents it from acting in its capacity as the Joint Global Coordinator, Joint Bookrunner and Joint Underwriter for the IPO as:

(i) the granting of the financing facilities is part of the ordinary course of business of the CIMB Group;

(ii) the conduct of the CIMB Group in its banking business is strictly regulated by the Banking and Financial Institution Act, 1989 and CIMB Group’s own internal controls and checks;

(iii) the total outstanding amounts owed by our Group and TMSB are not material when compared to CIMB Group’s audited consolidated total assets of RM300.2 billion as at 31 December 2011;

(iv) CIMB SI IPs investment in TMSB and indirectly in our Company was made independent of the role of CIMB as the Joint Global Coordinator, Joint Bookrunner and Joint Underwriter and is not contingent upon the successful listing of our Company; and

(v) the pricing of the IPO Shares will be market driven after considering the demand and supply for the said shares and market conditions and sentiments at the point of IPO, through a book building process.

10.5.5 Declaration by EY

EY confirms that there is no existing or potential conflict of interests in its capacity as the Auditors and Reporting Accountants of our Company for our Listing.

10.5.6 Declaration by Foong & Partners

Foong & Partners confirms that there is no existing or potential conflict of interests in its capacity as Malaysian Counsel to our Company for our Listing.

226 Company No. 948454-K

10. RELATED PARTY TRANSACTIONS AND CONFLICTS OF INTEREST (C ont’d)

10.5.7 Declaration by WongPartnership LLP

WongPartnership LLP has acted as advisers for the Joint Bookrunners and other companies controlled by or associated with any of them in other transactions. WongPartnership LLP confirms that there is no existing or potential conflict of interests in its capacity as International Counsel to our Company as to certain matters of United States federal securities law and English law for our Listing.

10.5.8 Declaration by Zaid Ibrahim & Co

Zaid Ibrahim & Co confirms that there is no existing or potential conflict of interests in its capacity as Malaysian Counsel for the Joint Global Coordinators, Joint Bookrunners and Joint Underwriters for our Listing.

10.5.9 Declaration by Baker & McKenzie.Wong & Leow

Baker &McKenzie. Wong & Leow confirms that there is no existing or potential conflict of interests in its capacity as International Counsel to the Joint Global Coordinators, Joint Underwriters and Joint Bookrunners as to certain matters of United States federal securities law for our Listing.

10.5.10 Declaration by S-A-P

S-A-P confirms that there is no existing or potential conflict of interests in its capacity as the independent market research consultant for our Listing.

10.5.11 Declaration by Milliman

Milliman confirms that there is no existing or potential conflict of interests in its capacity as the independent market research consultant for our Listing.

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227 Company No. 948454-K

11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion and analysis arc based on consolidated financial information of our Company and our subsidiaries (including TIMB from the date of its acquisition on 23 May 2012) and contain forward-looking statements that involve risks and uncertainties. Our actual results may differ significantly from those stated in such forward-looking statements. Factors that could cause future results to differ significantly from those stated in these forward-looking statements include, but are not limited to, those discussed below and elsewhere in this Prospectus, particularly in Section 4 - "Risk Factors" of this Prospectus.

11.1 OVERVIEW

We are an underwriter, directly and via reinsurance, of general and life insurance products across the Asia- Pacific region, operating two core businesses, an online insurance business through which we sell insurance products to customers as part of their online booking process with our online partners, and a general insurance business, currently only in Malaysia, through TIMB (which we acquired in May 2012).

Our online insurance business comprises primarily our Travel Protection Plan and we facilitated the issuance of approximately 5.6 million Travel Protection Plan policies to AirAsia customers in FY2011 and 3.0 million policies in 1H2012 as reinsurers. Our online insurance business is now underpinned by exclusive long-term agreements with AirAsia. In addition to our relationship with AirAsia, we have entered into a contractual arrangement with Tune Hotels and are considering entering into similar long-term arrangements with other partners within the Tune Companies.

As the exclusive insurance product manager for AirAsia and Tune Hotels, we design and manage both general and life insurance products for their customers pursuant to 10-year agreements with AirAsia Berhad , AirAsia Japan Co., Ltd and Tune Hotels (expiring in 2022), 15-year agreements with certain other affiliates of AirAsia Berhad (namely PT Indonesia AirAsia, AirAsia X Sdn. Bhd. and AirAsia Inc, expiring in 2027) and a 5-year agreement with Thai AirAsia Co.Ltd (expiring in 2017). These arrangements provide us with the opportunity to market to AirAsia’s and Tune Hotels’ substantial pool of customers, in addition to our own extensive customer database. We utilise the distribution channels of both AirAsia and the Tune Hotels, primarily their respective online booking websites, to offer these products to their customers as part of their booking process, and we arrange for local insurance partners to underwrite these products. In accordance with these arrangements with local insurance partners, we reinsure a portion of the risk associated with the writing of each policy. Where necessary, in order to optimise our risk-adjusted returns and to manage our own underwriting exposure, we have external reinsurance arrangements with highly- rated global reinsurance companies, as well as with national reinsurers. In May 2012, we acquired an established Malaysian general insurance business, TIMB, which has approximately 1,000 agents and 16 branches throughout Malaysia as at the LPD and through which we carry out our general insurance business. This acquisition enables us to underwrite general insurance policies directly in Malaysia, as well as to offer a broader range of insurance products.

In addition to our relationships with AirAsia and Tune Hotels, we have also entered into arrangements with AirAsia Expedia to provide our insurance products to AirAsia Expedia customers making online bookings initially through three of their websites in Asia. We are also in discussions with other third party airlines and other potential partners to provide similar services to their online booking customers. We are actively pursuing acquisition targets in other Southeast Asia markets, specifically Indonesia and Thailand, to enable us to own general insurers in these markets and through which we can underwrite our online insurance business and offer products through other channels to these fast growing and sizeable markets whose insurance needs are under-served.

Our operating revenues were approximately RM30.0 million in FY2009, RM43.5 million in FY2010, RM55.9 million in FY2011 and RM67.7 million in 1H2012. Our pro forma operating revenues (reflecting the TIMB Acquisition) were approximately RM319.3 million in FY2011 andRM181.4 million in 1H2012,

228 229 Company No. 948454-K

11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont’d)

Our consolidated financial statements are the financial statements of the companies of our Group. All material intra-group transactions and balances have been eliminated on consolidation. See Section 5 - “Information on our Group” of this Prospectus for more information regarding our corporate structure and history.

Our consolidated financial statements are prepared in accordance with MFRS on a historical cost basis, except where otherwise stated in the notes to the financial statements. The financial statements are presented in Malaysian Ringgit which is our functional currency. See “Reporting Accountants’ Report in relation to the Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012.”

11.3 FACTORS AFFECTING OUR RESULTS OF OPERATIONS

Our financial condition and results of operations, as well as the period-to-period comparability of our financial results, are significantly affected by a number of external factors, most of which are beyond our control and are described below.

11.3.1 Premiums

Online Insurance Business

During FY2009, FY2010, FY2011 and 1H2012, our Travel Protection Plan was directly underwritten by our local insurance partner in all the markets in which we offer it and then ceded to us as reinsurer. Our gross earned premium from this arrangement contributed all of our operating revenue for FY2009 and FY2010 and substantially all of our operating revenue for FY2011 and 1H2012 (excluding the operating revenue from TIMB after its acquisition). The “quota-share” arrangement between us and our local insurance partner is determined following negotiations with the local insurance partner after taking into account factors such as regulation, competition between insurers, expected volume of policies and other prevailing market conditions.

The premiums charged to customers of AirAsia for our Travel Protection Plan have remained fairly constant from 2009 to date and does not differ significantly among most of our markets as it is a standard product for most of our markets, except from time to time due to an increase in additional product benefits. The average premium (being gross written premium over the number of travel insurance policies issued) for our key markets, i.e. Malaysia, Thailand, Indonesia, Singapore and China (which for the avoidance of doubt, includes Hong Kong and Macau) ranges from RM14 to RM20 in each of FY2011 and 1H2012. We determine the premium to be charged after consultation with our local insurance partners taking into account market rates and regulatory requirements. Consequently, we do not expect significant changes to premiums charged except adjusting for inflation or changes in market conditions.

If the amount of actual claims varies from the assumptions that we make both when we design and price our products and when we calculate our insurance contract liabilities, our profitability will be adversely affected.

Our agreements with our local insurance partners are for one-year terms, renewable annually and our “quota-share” may be re-negotiated each year. Our “quota-share” with different local insurance partners can vary among our different markets. We recognise only that portion of our “quota-share” of the premium paid by the purchasers of our Travel Protection Plan as our gross earned premium. Our “quota-share” of the premium for our key markets of Malaysia, Thailand, Indonesia, Singapore and China (which for the avoidance of doubt, includes Hong Kong and Macau) ranged from 60% to 80% in FY2011 and 1H2012.

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11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont’d)

We acquired TIMB in May 2012, which allows us to underwrite our Travel Protection Plan directly in Malaysia. Since 4 September 2012, we have been using TIMB to underwrite our Travel Protection Plan directly in Malaysia and hence we expect to recognise the full amount of premium paid by purchasers of our Travel Protection Plan in Malaysia less the compulsory ceding (2.5%) to the national reinsurer, Malaysian Reinsurance Berhad. Please refer to Section 10.1.1 - “Existing and proposed related party transactions” of this Prospectus for a description of the agreements between TIMB and AirAsia in relation to the underwriting and marketing of the Travel Protection Plan by TIMB. As part of our strategy, we are considering acquiring other licensed general insurers in other jurisdictions, such as Thailand and Indonesia. This would similarly allow us to underwrite our Travel Protection Plan in these countries and territories and hence recognise the full value of the premiums. Where we underwrite the Travel Protection Plan directly through our locally-licensed subsidiaries, we will also be liable to pay the full amount of the commission to our partners, such as AirAsia and Tune Hotels. Please refer to Section 11.3.9 - “Commissions under the AA Distribution Agreements” of this Prospectus for further details.

General Insurance Business

Certain of our insurance products (for example, motor insurance) are products which premiums are regulated by tariff and we are unable to set premiums beyond a cap or range allowed by regulators. Among our products not subject to tariff, we have retail products and corporate risk products. Premiums for our retail products are affected by pricing set by our competitors and depend on the target market for such products. Typically, pricing for these products depend on a variety of factors such as risks covered and pricing of the risks, pricing proposed by competitors or lead underwriters in syndicated transactions, cost of reinsurance if we are the fronting underwriter and actuarial analysis. Our ability to attract customers to purchase corporate risk products, which generally have higher premiums, is primarily dependent on our brokers’, or our own, relationship with the corporate customer. In addition, in periods of economic downturns, we have experienced some pricing pressure leading to declines in premiums for insurance products. As and when we acquire other licensed general insurers in other jurisdictions, we would be able to offer customers of such insurers a broader range of insurance products, subject to applicable regulations. We also intend to offer a broader suite of products and change the product mix currently offered by TIMB. To the extent we offer more products which premiums are not subject to or capped by tariff, this may lead to improved revenue as a result of such higher premiums products.

11.3.2 Number of policies issued

Our operating revenue is affected by the number of policies issued, in particular for our travel and retail insurance products. The number of policies issued is generally affected by, among others, the following:

(a) General industry factors

Online Insurance Business

Growth in air-travel or tourism in the Asia-Pacific region would generally result in increases in the number of travel insurance policies taken up. Demand for air-travel or tourism is affected by a variety of factors including the price of the air tickets, which is in turn more generally affected by the economy in the Asia-Pacific region and oil prices. 5.6 million Travel Protection Plan policies were issued in FY2011 and 3.0 million policies were issued in 1H2012. The geographical breakdown of these policies in FY201I and 1H2012 is as follows:

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According to S-A-P, as the economy in Asia develops and the middle class grows and becomes a larger proportion of the population, air travel will increase and Asian airlines have the opportunity to benefit from the air travel demand spurred by regional economic growth. In addition, threats or perceived threats of terrorist activity, incidents of violence in Asia-Pacific region and other world events have had a negative impact on air travel and tourism industries in Asia. The outbreaks of SARS or similar contagious diseases have had and would also have a material adverse impact on air travel.

General industry factors, such as demand for travel insurance, differ from market to market within the Asia-Pacific region. For example, Singapore and Hong Kong generally experience higher Take-up Rates relative to other countries in the region, and Take-up Rates in Australia tend to be relatively lower as the result of the method of offering insurance policies online. According to Milliman, in recent years, several non-life insurers have emerged in the region such as Singapore and Hong Kong focusing on online channels to distribute personal non-life insurance products, such as travel and motor insurance. This is a convenient and relatively low cost channel to sell relatively low cost and easy to understand products, especially if the purchase is incidental to another activity, e.g. a simple add-on travel insurance coverage when purchasing an air ticket online.

General Insurance Business

Our other general insurance products offered in Malaysia are generally affected by general industry factors in Malaysia. According to Milliman, accident and hospital insurance in Malaysia is driven by an increase in healthcare expenditure, a rise in the volume of outbound tourists and growing consumer awareness regarding the benefits of insurance products. To the extent we make any acquisitions in other jurisdictions, such as Thailand and Indonesia, we would generally be affected by industry factors in such jurisdictions as well.

(b) Ability to access potential customers through our sales and distribution channels

Our ability to grow our operating revenue is affected by our ability to attract new customers to purchase our insurance products or to sell new or additional products to existing customers. We leverage on AirAsia and the Tune Companies in our marketing of our services/products in relation to general and life insurance or reinsurance, as the case may be. For example, the “AirAsia INSURE” branded products are marketed and sold on the website of AirAsia and also through other distribution channels, such as selected travel agents in Malaysia and Indonesia, while the Tune Hotels insurance plan is marketed and sold on the website of Tune Hotels. We also utilise agents of TIMB located in 16 branches (as at the LPD) in all states of Malaysia except Perlis to promote TIMB’s core insurance products, including motor, property (fire and contents), foreign workers, individual and employee benefits (health, dental, personal accident), marine- related (cargo, transit, hull) and engineering.

Online Insurance Business

Our operating results for our Travel Protection Plan are materially affected by the number of AirAsia customers during any financial period as our Travel Protection Plan is primarily offered to such customers during the course of their flight booking.

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In addition to the factors affecting the demand for air-travel or tourism as set out above, the growth in AirAsia customers is also affected by a number of factors including increasing the frequency of flights to markets that it currently serves, expanding its route network and managing the competition it faces from full-service carriers and low-cost carriers.

We intend to diversify our distribution channels to grow and are considering entering into similar long-term arrangements with other partners within the Tune Companies, which allows us to attract more customers and consequently improve our operating revenue. In addition to our relationships with AirAsia and Tune Hotels, we have also entered into arrangements with AirAsia Expedia to provide our insurance products to AirAsia Expedia customers making online bookings initially through three of their websites in Asia.

General Insurance Business

The number and quality of agents are key factors that affect our ability to attract customers through our agent distribution channels. As of the LPD, TIMB had approximately 1,000 agents throughout Malaysia. We are focused on motivating our agents so that they promote our products over those of other insurance companies and ensure that we can attract customers to use us to meet all their insurance needs. Please refer to Section 6.6.2 - “Our General Insurance Business” for more information on our strategies to motivate our agents. We aim to position TIMB as a provider of a diversified portfolio of insurance products. We will use our motor insurance plan as a gateway insurance product to introduce our customers to a broader range of insurance products and our online relationships to introduce a broader range of no “frills” products.

(c) Take-up Rate by customers of AirAsia

The number of Travel Protection Plan policies issued depends on the Take-up Rate of AirAsia customers which is in turn dependent on various factors affecting consumer preferences such as promotions by AirAsia, availability of other travel insurance products in the market, premium to be paid by the purchasers of our Travel Protection Plan, ease of process and consumers’ benefit awareness. Our Take-up Rates for our key markets, i.e. Malaysia, Thailand, Indonesia, Singapore and China (which for the avoidance of doubt, includes Hong Kong and Macau) range from 25% to 34% in FY2011 and 23% to 32% in 1H2012. We have undertaken several marketing efforts to further increase Take-up Rates, such as providing customers the ability to purchase our Travel Protection Plan in the course of a flight booking with pre-checked boxes in most jurisdictions, marketing campaigns to promote benefit awareness and brand awareness, and messaging customers post-flight booking if they have not purchased our Travel Protection Plan.

(d) Brand recognition

We believe one of the key factors affecting consumer preferences in their choice of insurance provider is their familiarity with and perception of the reputation or brand of the distributor. Consequently, our Travel Protection Plan provided to AirAsia customers is branded “AirAsia INSURE” leveraging the consumers’ affinity with and familiarity with the AirAsia brand as we believe that potential customers are already familiar with the AirAsia brand, particularly as it relates to air travel.

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In addition, we intend to build up the “Tune Insurance” brand going forward by embarking on marketing efforts to enhance our brand by advertising on AirAsia related materials, such as boarding pass and in-flight magazines. Feedbacks and/or claims from our customers are taken seriously and are processed quickly and effectively, usually within seven days upon receipt of such feedback and/or claims. We believe efficient claim procedures and prompt claim payout would encourage more new customers as well as repeat customers.

11.3.3 Claims made and claims experience

Our gross claims paid reflect the amount of valid claims made and paid during the particular financial period. This is affected by the occurrence of incidents which lead to a valid claim and policyholder behaviour (including whether the policyholder is interested in making the claim).

Generally, our policy for travel insurance requires policyholders to notify our local insurance partners of a claim within 30 days from the date of incidence. Our local insurance partners examine and verify the claims. For more complex or serious cases or where our local insurance partners need to verify certain information with us, they do so expediently. Once the claim is verified, the amount payable is calculated and, once approved, is distributed to the policyholder. For those claims that are distributed to policyholder directly by our local insurance partners, they will submit a claim to us pursuant to our respective reinsurance agreement. Upon receipt of these claims from our local insurance partners, we will distribute the amount payable in proportion to the risk we are reinsuring.

Claims with respect to other insurance products are submitted to our agents, brokers and direct sales representatives. The claim details are then relayed to the TIMB claims department. The claims department appoints adjusters if necessary and corresponds with the reinsurers to distribute liability.

Our gross change to contract liabilities reflects the actuarial valuation of our incurred but not reported claims. Our actuarial valuer will consider, among others, our historical claims experience, the policies issued and the gross claims paid in evaluating the gross change to contract liabilities which we should provide for. Claims experience varies over time and from one type of product to another, and, in particular for our non-travel products, may be impacted by specific events and changes in macroeconomic conditions, population demographics, mortality, morbidity and other factors.

In relation to our general insurance business, TIMB also considers the claims ratio (also known as the “loss ratio”, being net claims over net earned premiums) in determining whether to continue offering its insurance products. TIMB has from time to time discontinued an insurance product when its claims ratio reached a very high and unsustainable level.

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11.3.4 Costs and availability of reinsurance

We cede a portion of our risk to external reinsurers in order for us to optimise our risk-adjusted returns and to manage our own underwriting exposure. For underwriting risk we incur through TIMB, reinsurance is provided through our own subsidiary TMGR and other panel reinsurers such as Malaysian Reinsurance Berhad (rated “A” by Fitch Ratings), Sompo Japan Insurance Inc. (rated “A” by Fitch Ratings), Labuan Reinsurance (L) Ltd (rated “A-” by Fitch Ratings). TMGR reinsures TIMB’s online business and then obtains retrocessional coverage through third party reinsurance providers. With respect to policies reinsured with TMGR, we obtain retrocessional coverage with other rated reinsurers and cede to such insurers a portion of the risk we have assumed. The retrocessionaires we obtain coverage from are Lloyd’s market syndicate members with a minimum rating “A” by Standard & Poor’s.

For our Travel Protection Plan we typically cede catastrophe excess-of-loss risk and this is based on a percentage of reinsurance premiums received. For many of our other insurance products, particularly our non retail corporate and commercial products, we cede the bulk of the risk to our reinsurers and we retain a small percentage of the risk. For our motor insurance, we cede a portion of the gross earned premium. The reinsurance premium and the percentage we cede to our reinsurers are subject to negotiation and have changed from FY2009 to 1H2012.

Premiums paid to reinsurers for our travel insurance product in connection with our reinsurance arrangements were RM524,000, RM803,000, RMl,063,000 and RM584,000 for FY2009, FY2010, FY2011 and 1H2012, respectively, representing 1.7%, 1.8%, 1.9% and 1.8% of our total gross earned premiums (excluding TIMB after its acquisition in 1H2012) for the respective periods.

The cost and availability of reinsurance is affected by general conditions in the reinsurance market, particularly for our non-travel insurance products. Premiums ceded to reinsurers in connection with TIMB’s reinsurance arrangements were RM l 17.4. million, RM12I.5 million, RM89.3 million and RM67.0 million for FY2009, FY2010, FY2011 and 1H2012, respectively, representing 51.9%, 49.8%, 36.4% and 47.8% of TIMB’s total gross earned premiums for the respective periods. As part of TIMB’s risk management strategy, it entered into a new reinsurance arrangement with Swiss Re pursuant to which it will cede 25% of all motor insurance policies with effect from 1 August 2012, prior to which no such quota share arrangement existed.

The reinsurance market is cyclical, with periodic fluctuations in underwriting capacity in the market affecting the price at which reinsurance can be obtained. Underwriting capacity and rates in the reinsurance market, which are determined largely by underwriting conditions in the international market, may not necessarily move in tandem with those in the Malaysian direct insurance market. Generally, offshore reinsurance is more expensive than reinsuring onshore. Scarcity of underwriting capacity in the reinsurance market may result in increases in reinsurance rates which could raise the cost of reinsurance for us and potentially decrease our profitability. Reinsurance rates have increased in recent years following the occurrence of major regional natural disasters, such as earthquakes in Japan and New Zealand and the 2008 global financial crisis.

In addition, we are subject to credit risks of our reinsurers, especially our offshore reinsurers, which could increase our financial losses arising out of a risk we have insured should any of them default on their obligations towards us. In particular, due to a major catastrophic event with significant claimable events or otherwise, a default by one or more of our reinsurers under our reinsurance arrangements would increase the financial losses arising out of a risk we have insured or reinsured, as the case may be, which would reduce our profitability and may have a material adverse effect on our liquidity position.

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11.3.5 Acquisition of TIMB

In May 2012, we completed the acquisition of 79.84% interest in TIMB. Following the acquisition, we made a mandatory general offer, which closed on 9 July 2012, for all the remaining shares in TIMB from its minority shareholders. We now hold 83.26% in TIMB. The acquisition of TIMB and the mandatory general offer was settled with cash, which was fully funded by bank borrowings and advances from our shareholder. This will contribute to a finance cost of approximately RM10.0 million from May to December in FY2012 (assuming repayment of the bank term loan on 31 December 2012 and of which approximately RM2.0 million has been recognized as finance cost in 1H2012) which will have an adverse impact on our profitability for FY2012. In addition, we had to take into consideration any amortisation of intangibles or other costs of the acquisition. Upon the completion of such acquisition, we will integrate TIMB’s operations and streamline our costs and product offerings, requiring us to incur additional capital expenditure.

For FY201I and 1H2012, TIMB would have comprised 82.5% and 81.9% of our pro forma operating revenues, respectively. Our results for FY2012 and future periods, consolidating the results of TIMB, will differ significantly from our results for prior periods.

For FY2009, FY2010, FY2011 and 1H2012, gross earned premiums from TIMB’s motor products have been the most significant contributor to TIMB’s total gross earned premiums, followed by gross earned premiums from its MAT (marine, aviation and transit) products and its fire products. We intend to encourage TIMB’s agents to sell a more balanced portfolio of insurance products (including an emphasis on selling more foreign worker, fire, personal accident and extended warranty products) which may consequently result in a decline in the proportion of motor insurance products sold.

See Section 12 - “Pro forma Financial Information” of this Prospectus for further details.

11.3.6 Investment

Our investment portfolio is comprised primarily of fixed-term deposits and short-term deposits and we hold significant amounts of governmental agency bonds and corporate bonds. Fluctuations in interest rates will affect our holdings in the floating rate term deposits and our debt securities. The following table sets forth our investment portfolio as at 31 December 2011 and 30 June 2012:

As at Investment 31 December 2011 30 June 2012 (RM ’000)

Debts securities from non-government corporate 133,609 Equities 21,041 Unit trusts 19,791 Fixed deposit 24,715 303,188

Loans 771 Total investment assets 24,715 478,400

Total assets 50,330 796,528 Total investment assets as a percentage of total 49.1% 60.1% assets

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A sustained period of lower interest rates would generally reduce the investment yield of our investment portfolio over time as higher yielding investments mature or are redeemed and proceeds are reinvested in new investments with lower yields. Conversely, rising interest rates should, over time, increase our investment income, but may reduce the market value of our investment portfolio. Our holding of debt securities also exposes us to counterparty default risk. Fluctuations in the equity markets will also affect our investment returns. See Section 11.10 - “Market Risks” of this Prospectus for sensitivity analysis on fluctuations in foreign currencies, interest rate and the FTSE Bursa Malaysia KLCI Index.

11.3.7 Regulatory Environment

Our business operations, which are conducted in Malaysia, are highly regulated. We are subject to the regulatory oversight of a number of regulators, primarily BNM, which has broad authority over our business. Our ability to price our general insurance products, such as motor insurance and fire insurance, is also directly regulated by BNM. Regulatory action may require us to underwrite certain unprofitable risks. For example, the Malaysian Motor Insurance Pool is a high-risk insurance pool participated by all general insurance companies (including TIMB). Please refer to Section 11.3.12 - “Malaysian Motor Insurance Pool” of this Prospectus.

We may have to incur significant costs and expenses to comply with, and our prospects may be adversely affected by, the applicable laws, rules and regulations, which may reduce our profitability as well as affect our future growth.

11.3.8 Competition

There is significant competition in the insurance industry and we face competition in our online and general insurance businesses. We compete based on factors including our marketing channels such as “BIG” loyalty points, pricing, size and reach of our distribution channels, product design features, customer services, reputation, perceived financial strength and our experience in the line of the insurance to be underwritten. However, because of the nature of our travel and other insurance products, we employ different approaches to deal with our competition. We are the exclusive insurance product manager for AirAsia and Tune Hotels and we offer travel insurance for customers of AirAsia and lifestyle insurance for AirAsia and Tune Hotels customers in the course of the booking process for flights and/or rooms (as the case may be), which is one of the earliest points of time at which customers would consider purchasing insurance. Consequently, we believe that we face limited competition for AirAsia and Tune Hotels customers for these products. AirAsia customers may have purchased annual travel insurance from our competitors or may have complimentary travel insurance, though generally quite limited, from these competitors when they pay for their air tickets using certain credit cards. Please refer to Section 7.5 of the IMR Report for details of our competitors.

For our other insurance products, the success of our sales and distribution channel lies in the capabilities of our agents. Agents in Malaysia are permitted to sell products of up to two insurance companies and we compete with other insurance companies for agency sales. We mitigate the effects of competition by leveraging our extensive database of customers and utilising customer information to customise product offerings. We also face competition in developing relationships with key corporates for our corporate insurance products.

Some of our competitors are large multinational insurance companies that offer a wider range of insurance products than us and have a substantial capitalisation which allows them to diversify their risk portfolio and underwrite more sophisticated risks. These competitors can utilise their experience and resources in other markets to launch new products and have the financial resources to withstand a big launch of a new product.

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We face significant competition for the products offered by TIMB as many of these are standard insurance products offered by many insurance companies in Malaysia. The premiums for motor insurance products, in particular, are subject to tariff and we are unable to significantly distinguish ourselves based on premiums.

11.3.9 Commissions under the AA Distribution Agreements

Pursuant to the AA Distribution Agreements and the corresponding agreements that AirAsia has with each partner local insurance underwriter, AirAsia receives a portion of the premium paid by the purchasers of our Travel Protection Plan as commission.

The commission paid under the AA Distribution Agreements is generally a fixed percentage for policies issued by our local insurance partner in that market although the respective agreements are subject to renewal annually or bi-annually (as the case may be) and this agreed percentage may change in subsequent periods and ranges from 16.0% to 31.0%. This commission however differs from market to market depending on the prevailing market conditions in that country and whether there is regulation on the commissions paid.

We and the respective local insurance underwriter account for the premium received and the commission paid to AirAsia according to the agreed “quota-share” as described in Section 11.3.1 - “Premiums - Online Insurance Business” of this Prospectus.

11.3.10 Geographical mix

We offer our Travel Protection Plan in 14 countries and territories. Our principal markets by operating revenue contribution are Malaysia, Indonesia and Thailand, and Singapore and China {which for the avoidance of doubt, includes Hong Kong and Macau) have also been key contributors. Our operating results are affected by the relative sales of the Travel Protection Plan in these countries and territories during the relevant period as the premiums charged, “quota- share” with local insurance partners and commissions paid under the AA Distribution Agreements differ from market to market. In addition, with the acquisition of TIMB and consequently the commencement of our direct underwriting of these policies in Malaysia effective 4 September 2012, Malaysia as a market will contribute even more to our gross earned premiums as we will no longer be sharing the premiums with a local insurance partner. Any future acquisition of locally- licensed insurance underwriters will similarly affect our geographical mix.

In addition, the average Take-up Rate for AirAsia customers in certain markets tends to be higher than others, reflecting in part the general Take-up Rate for countries in sophisticated markets as compared with relatively emerging economies. According to Milliman, relatively under-insured markets include Malaysia, Thailand, Indonesia and the Philippines which have reported “penetration rates” under 2.0% and “density rates” under USD200, much lower than in mature markets in the region as well as Europe, North America and Japan. Consequently, we expect to benefit in the near-term from growth in AirAsia customers in markets where the Take-up Rate is higher and to benefit in the long-term from an eventual improvement in Take-up Rates in markets with high customer volumes but where the Take-up Rate is relatively lower.

The geographical mix will be further affected by the launching of new or removal of any AirAsia markets, addition or removal of routes within those countries and territories, changes to the frequency to/from any particular market, marketing and promotional campaigns in certain markets, political, economic or social factors in specific markets and other factors specifically affecting customer growth in any particular market.

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With our acquisition of TIMB in May 2012, we expect that the operating revenue contribution for Malaysia will increase. Pro forma for the acquisition of TIMB, 93.6% and 91.4% of our operating revenue in FY2011 and 1H20I2, respectively, was from Malaysia.

11.3.11 Exchange rates

Our reporting currency is the Malaysian Ringgit and a significant portion of our operating revenue (primarily our Travel Protection Plan sold in Malaysia and, effective May 2012, also including our TIMB insurance business) and expenses (primarily consisting of claims, corresponding fee and commission expenses and fixed overheads such as management expenses) are denominated in Malaysian Ringgit.

We face foreign exchange rate risk arising from the conversion of the functional currencies relating to any insurance product sold outside Malaysia, primarily our Travel Protection Plan, to our reporting currency. Our exposure to foreign exchange rate risk in each of the 14 countries and territories, however, is mitigated because the premium earned and corresponding expenses associated with that policy (other than certain costs such as overhead costs which are incurred in Malaysian Ringgit) are typically denominated in the same local currency. We are also exposed to fluctuations in the US Dollar arising from ceding of risk to reinsurers as certain international reinsurers charge us in US Dollar. Foreign exchange rates between the Malaysian Ringgit and local currencies in the other 13 countries and territories, in particular, the Indonesian Rupiah, the Thai Baht, the Singapore Dollar and the Australian Dollar, have in the past and will likely in the future fluctuate. We do not engage in foreign exchange currency hedging activities. See Section 11.10 - “Market Risks” of this Prospectus for a sensitivity analysis of our foreign exchange risk.

11.3.12 Malaysian Motor Insurance Pool

As with all general insurance companies in Malaysia, TIMB participates in the Malaysian Motor Insurance Pool which is a high risk insurance pool. It seeks to provide motor insurance to vehicle owners who have difficulty obtaining motor insurance in the market. Our share of gross earned premium, investment income, net claims, fee and commission expense and management expense from the Malaysian Motor Insurance Pool is reflected in the respective line items in our financial statements. These are reflected as and when the statements are received from the Malaysian Motor Insurance Pool which may not be received on a regular basis, which in the past has resulted in an uneven impact on our results of operations. We have commenced recognising our share of the Malaysian Motor Insurance Pool on a best estimate basis to reduce the uncertainty of fluctuations. Our share of the Malaysian Motor Insurance Pool is generally a share of loss. All general insurance companies (including TIMB) bear an equal share of loss in the Malaysian Motor Insurance Pool regardless of their size or market share in the industry. Accordingly, in the event of consolidation of general insurance companies in the future, TIMB would have to bear a larger proportion of loss.

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11.4 RESULTS OF OPERATIONS

The following table sets forth our consolidated statement of comprehensive income for the periods indicated:

FY2009 FY2010 FY2011 1H2011 1H2012 (RM ’000) (RM ’000) (RM ’000) (RM ’000) (RM ’000) (audited) (audited) (audited) (unaudited) (audited) Operating revenue 30,049 43,523 55,870 26,807 67,693

Gross earned premiums 30,049 43,523 55,493 26,807 65,851 Premiums ceded to reinsurers (524) (803) (1,063) (505) (19,440) Net earned premiums 29,525 42,720 54,430 26,302 46,411

Investment income . - 377 - 1,842

Realised gains and losses - --- 1,061 Fees and commission income ---- 1,360 Other operating income -- 26 - 886 Other revenue - - 403 - 5,149

Gross claims paid (127) (1,222) (1,123) (366) (12,910) Claims ceded to reinsurers ---- 3,629 Gross change to contract (925) (302) (819) liabilities (572) (2,974) Change in contract liabilities ceded to reinsurers - 2,254 Net claims (1,052) (1,524) (1,942) (938) (10,001) Fee and commission (11,062) (14,473) (17,292) expenses (8,637) (12,563) Management expenses (178) (202) (1,404) (95) (6,608) Other operating expenses - (99) - - (1,309) Finance cost -- -- (2,733) Other expenses (11,240) (14,774) (18,696) (8,732) (23,213)

Profit before taxation 17,233 26,422 34,195 16,632 18,346 Taxation (20) (20) (20) (20) (1,713) Net profit for the year / 17,213 26,402 34,175 16,612 16,633 period Net other comprehensive - - - - 12 income for the year/period

Total comprehensive 17,213 26,402 34,175 16,612 16,645 income for the year/period Total comprehensive income attributable to:

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Equity attributable to owners 13,770 21,122 27,255 13,290 13,957 of the parent Non-controlling interests 3,443 5,280 6,920 3,322 2,676

17,213______26,402______34,175______16,612______16,633

Earnings per Share (RM) Basic N/A(1) N/A(l) 6.8 1.0 1.0

Note:

:l) Not applicable as there were no ordinary shares in issue during the said year / period.

11.4.1 Revenue

The principal components of our operating revenue are revenue from gross earned premiums and investment income.

Gross earned premium is recognised after deducting unearned premiums from the gross written premiums. Gross written premiums are the amount of premium charged for a policy. Unearned premiums are those proportions of premiums written in a year that relate to periods of risk after the reporting date. Unearned premiums are calculated on a time apportioned basis over the period of the risks or the method that most accurately reflects the actual unearned premium. The proportion attributable to subsequent periods is deferred as a provision for unearned premiums. In other words, the unearned premium refers to the portion of the gross written premium for the unexpired policy period. Gross earned premiums

Our gross earned premiums for FY2009, FY2010 and FY2011 are the proportionate share of the gross premiums received by us from our customers in relation to the reinsurance of our Travel Protection Plan, less provision for unearned premiums. The majority of our gross earned premiums for 1H2012 are in relation to our Travel Protection Plan and general insurance products underwritten by TIMB since our acquisition in May 2012, while the balances are for our lifestyle plans. Gross earned premiums contributed by TIMB consist of the gross premiums TIMB receives from its customers on motor insurance products and non-motor insurance products as well as its share from the Malaysian Motor Insurance Pool, less provision for unearned premiums. TIMB’s non-motor insurance products include fire, MAT (marine, aviation and transit) and miscellaneous insurance products (including health, dental, engineering, workman compensation and foreign workers).

Premiums ceded to reinsurers

Premiums ceded to reinsurers are reinsurance premiums we pay to our external reinsurers in order for us to optimise our risk-adjusted returns and to manage our own underwriting exposure. Since our acquisition of TIMB in May 2012, our premiums ceded to reinsurers also include those ceded by TIMB. TIMB cedes out a small percentage of the premiums for its motor insurance products and cedes out the majority of the premiums for its non-motor insurance products.

Net earned premiums

Our revenue from net earned premiums comprises mainly gross earned premiums received by us from our customers in relation to the reinsurance and/or sale of our other general insurance products deducting the premiums ceded to external reinsurers.

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Investment income

Our investment income comprises primarily interest income from our fixed deposit. Since our acquisition of TIMB in May 2012, investment income also includes primarily interest income from “held-to-maturity” financial assets, “available-for-sale” financial assets, loans-and- receivabies and others, as well as dividends from equity investments and TIMB’s share of investment income from the Malaysian Motor Insurance Pool.

Realised gains and losses

Our realised gains and losses, which are attributable solely to TIMB and reflected in our consolidated financial statements from 1H2012, comprise TIMB’s gains and losses on disposal of equity investments.

Fees and commission income

Our fees and commission income, which is attributable solely to TIMB and reflected in our consolidated financial statements from 1H2012, comprises the commissions TIMB receives from its external reinsurers when it enters into reinsurance arrangements with them.

Other operating income

Our other operating income comprises realised foreign exchange gains on the settlement of foreign denominated balance due from cedants. Since our acquisition of TIMB in May 2012, other operating income also includes sundry income which comprises primarily administrative printing fees it receives for its policies, motor ownership transfer fees and proceeds from the disposal of small assets.

11.4.2 Expenses

The principal components of our expenses are net claims, fee and commission expenses, management expenses and other operating expenses.

Net claims

Our net claims are the gross claims paid to our local insurance partners and/or customers who made a claim on the insurance purchased and gross change to contract liabilities.

Gross claims are actual amounts paid for losses suffered and claimed by our customers while gross change to contract liabilities refers to change in our provision for reported claims and "incurred but not reported" claims, which are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern.

Since our acquisition of TIMB in May 2012, net claims also include net claims relating to TIMB. Net claims for TIMB are the summation of (a) gross claims paid by TIMB to its customers, (b) claims ceded to reinsurers, which are amounts paid by its reinsurers pursuant to claims paid by TIMB to its customers, (c) gross change in contract liability, which refers to the change in provision for reported claims and "incurred but not reported” claims and are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern and (d) change in contract liabilities ceded to reinsurers, which is the change in provision for the amount to be paid by TIMB’s reinsurers for its reported claims and “incurred but not reported” claims. Gross claims paid and gross change to contract liabilities also include TIMB’s share from the Malaysian Motor Insurance Pool.

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II. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cant'd)

Fee and commission expenses

Our fee and commission expenses are paid to our local insurance partners, primarily for our proportionate share of the commissions and reinsurance commissions. Since our acquisition of TIMB in May 2012, fee and commission expenses also include commissions paid to its agents, brokers and franchisees as well as TIMB’s share from the Malaysian Motor Insurance Pool.

Management expenses

Our management expenses primarily comprise staff costs (including salaries and bonuses and contributions to Employees Provident Fund in Malaysia), marketing expenses and administration and general expenses. Since our acquisition of TIMB in May 2012, management expenses also comprise certain expenses relating to TIMB, including employee benefits expenses, directors’ remuneration, auditors’ remuneration, depreciation of property and equipment, depreciation of investment property, amortization of intangible assets, reversal of allowance for impairment losses on insurance receivables, provision for Takafiil and Insurance Benefits Protection System levy, rental of premises, publicity and marketing expenses, communication expenses, computer expenses, administration and general expenses, as well as TIMB’s share of management expenses from the Malaysian Motor Insurance Pool.

Other operating expenses

Our other operating expenses comprise unrealised foreign exchange losses and acquisition costs for TIMB. Since our acquisition of TIMB in May 2012, other operating expenses also comprise primarily impairment losses for TIMB’s properties.

Finance cost

Our finance cost comprises interest attributable to our term loan from RHB Bank Berhad and CIMB Bank Berhad granted to us on 21 May 2012 as well as advances from TMSB.

11.4.3 1H2012 compared to 1H2011

Operating Revenue

Total operating revenue increased from RM26.8 million for 1H2011 to RM67.7 million for 1H2012.

Gross earned premiums

Our gross earned premiums increased from RM26.8 million for 1H2011 to RM65.9 million for 1H2012 primarily as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s gross earned premiums of RM33.4 million since the date of acquisition, as well as an increase in gross earned premiums for policies issued by our local insurance partners from RM26.8 million in lH2011to RM32.5 million in 1H2012. Gross earned premiums for such policies increased primarily because of:

(a) an increase in the number of policies issued by our local insurance partner from 2.8 million in 1H2011 to 3.0 million in 1H2012 which was driven primarily by the addition of new markets and consequently policies ceded by the respective local insurance partners (Japan in 2012 as well as Laos, Vietnam and New Zealand, all in the second half of 2011), partially offset by the cancellation of routes by AirAsia X Sdn Bhd to London, Paris, Mumbai and Delhi in 2012; and

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(b) an increase of 9.9% in the average premium charged to end-customers from RM15.5 in 1H2011 to RM16.65 in 1H2012 due to enhanced product benefits such as the introduction of a flight delay benefit to our Travel Protection Plan in a number of new and existing markets.

Premiums ceded to reinsurers

Premiums ceded to reinsurers increased from RM505,000 for 1H2011 to RM19.4 million for 1H2012 primarily as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s premiums ceded to reinsurers of RM18.9 million since the date of acquisition. Excluding the premiums ceded to reinsurers by TIMB, our premiums ceded to reinsurers increased slightly by RM79,000 in 1H2012. This was due to an increase in our gross earned premiums and was partially offset by a slight reduction in percentage of reinsurance premiums we ceded to external reinsurers from 1.9% in 1H2011 to 1.75% in 1H2Q12. The reduction in percentage of reinsurance premiums ceded was a result of a renegotiation of cession terms with external reinsurers.

Net earned premiums

As a result of the above, our net earned premiums increased 76.5% from RM26.3 million for 1H2011 to RM46.4 million for 1H20I2. Our net earned premiums are affected by the change in our gross earned premiums and premiums ceded to reinsurers.

Investment income

Our investment income increased from nil for 1H2011 to RM1.8 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s investment income of RM1.4 million since the date of acquisition, as well as interest of RM0.4 million accruing from our fixed deposits which we commenced making deposits from 2H2011.

Realised gains and losses

Our realised gains and losses increased from nil for IH2011 to RM1.1 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s realised gains and losses since the date of acquisition.

Fees and commission income

Our fees and commission income increased from nil for 1H2011 to RM1.4 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s fees and commission income since the date of acquisition.

Other operating income

Our other operating income increased from nil for 1H2011 to RM887,000 for IH2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s other operating income since the date of acquisition.

Expenses

Total expenses increased from RM9.7 million for 1H2011 to RM33.2 million for 1H2012.

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Net claims

Our net claims increased from RM938,000 for 1H2011 to RM10.0 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s net claims of RM8.9 million since the date of acquisition, as well as an increase in the gross claims paid by our other subsidiaries from RM366,000 in 1H2011 to RM828,000 in 1H20I2, partially offset by a decrease in gross changes to contract liabilities of our other subsidiaries from RM572,000 in 1H2011 to RM309,000 in 1H2012.

Fee and commission expenses

Our fee and commission expenses increased by 45.5% from RM8.6 million for 1H2011 to RM12.6 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s fees and expenses of RM2.4 million since the date of acquisition, as well as an increase in the fee and commission expenses paid by our other subsidiaries from RM8.6 million in 1H2011 to RM10.2 million in 1H2012. The proportion of gross premiums paid as commission by our other subsidiaries did not change from 1H2011 to 1H2012. Since our gross premiums increased from 1H2011 to 1H2012, the amount of commission paid correspondingly also increased.

Management expenses

Our management expenses increased from RM95,000 for 1H2011 to RM6.6 million for 1H2012 as a result of our acquisition of TIMB in May 2012 and the inclusion of TIMB’s management expenses of RM l.6 million since the date of acquisition, as well as an increase in the management expenses for the other entities in our Group from RM95,000 for 1H2011 to RM5.0 million for 1H20I2 due mainly to an increase of staff costs and administration and general expenses following the commencement of operations of TIH, TMGR and TMLR.

Other operating expenses

Our other operating expenses increased from nil for 1H2011 to R M l.3 million for 1H2012 as a result of a one-off acquisition cost of RM809,000 for the acquisition of TIMB and accruals of listing expenses of RM500,000.

Finance cost

Our finance cost increased from nil for 1H2011 to RM2.7 million for 1H2012 as a result of interest arising from our term loan and advances from TMSB for our acquisition of TIMB in May 2012.

11.4.4 FY2011 compared to FY2010

Operating Revenue

Total operating revenue increased by 28.5% from RM43.5 million for FY2010 to RM55.9 million for FY2011.

Gross earned premiums

Our gross earned premiums increased by 27.5% from RM43.53 million for FY2010 to RM55.49 million for FY2011 primarily because of:

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(a) an increase in the number of policies issued by our local insurance partners from 4.9 million in FY2010 to 5.6 million in FY2011 which was driven primarily by:

(i) an increase in the number of end-customers being offered our Travel Protection Plan; (ii) local insurance partners in new markets (the Philippines, Cambodia, Laos, Vietnam and New Zealand); (iii) the introduction of mobile phones as a distribution channel; and (iv) increased marketing by our insurance partners. For example, we had extensive advertisements of our Travel Protection Plan benefits in the Kuala Lumpur low cost carrier terminal international boarding area and we introduced the sale of travel insurance via mobile; and

(b) an increase of 7% in the average premium charged to end-customers from RM14.32 in FY2010 to RM15.37 in FY2011 due to enhanced benefits such as increased sum assured and the introduction of a flight delay benefit to our product in a number of new markets.

Premiums ceded to reinsurers

Premiums ceded to reinsurers increased by 37.5% from RM0.8 million for FY2010 to RM1.1 million forFY2011. We pay a fixed percentage of our reinsurance premiums to external reinsurers which did not change from FY2010 to FY2011. Accordingly, our premiums ceded to reinsurers correspondingly increased when our gross earned premiums increased.

Net earned premiums

As a result of the above, our net earned premium increased by 27.4% from RM42.7 million for FY2010 to RM54.4 million for FY2011. Our net earned premiums are affected by the change in our gross earned premiums and premiums ceded to reinsurers.

Investment income

Our investment income increased from nil for FY2010 to RM0.4 million for FY2011 as a result of interests accruing from our fixed deposit of RM24.7 million which we started making placements in May 2011.

Other operating income

Our other operating income increased from nil for FY2010 to RM26,000 for FY2011 as a result of realised foreign exchange gains on the settlement of foreign denominated balances due from cedants.

Expenses

Total expenses increased by 27.0% from RMI6.3 million for FY2010 to RM20.7 million for FY201I.

Net claims

Our net claims increased by 26.7% from RM1.5 million for FY2010 to RM1.9 million for FY2011. Net claims are affected by gross claims paid, which decreased by 8.1% from RM1.2 million for FY2010 to RM1.1 million for FY2011and gross change to contract liabilities, which increased by 171.2% from RM302,000 for FY2010 to RM819,000 for FY201I.

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Fee and commission expenses

Our fee and commission expenses increased by 19.3% from RM14.5 million for FY2010 to RM17.3 million for FY2011. The proportion of gross premiums that is paid as commission did not change from FY2010 to FY2011. Since our gross premiums increased from FY2010 to FY2011, the amount of commission paid would correspondingly also increase. The reinsurance commissions paid to our local insurance partners increased from RM3.1 million for FY2010 to RM3.4 million for FY2011 as a result of renegotiation of terms with our local insurance partners.

Management expenses

Our management expenses increased by 595.0% from RM202,000 for FY2010 to RMl,404,000 for FY2011 primarily due to increase of staff costs and administration and general expenses following the commencement of operations of TIH, TMGR and TMLR in 2011, which were reimbursed to TMSB.

Other operating expenses

Our operating expenses decreased from RM99,000 for FY2010 to nil for FY2011 as a result of lower unrealised foreign exchange loss recognised due to more favourable exchange rates.

11.4.5 FY2010 compared to FY2009

Operating Revenue

Total operating revenue increased by 45.0% from RM30.0 million for FY2009 to RM43.5 million for FY2010.

Gross earned premiums

Our gross earned premiums increased by 45.0% from RM30.0 million for FY2009 to RM43.5 million for FY2010 as a result of an increase in the number of policies issued by our local insurance partners from 4.1 million in FY2009 to RM4.9 million in FY2010 which was driven primarily by:

(a) an increase in the number of end-customers being offered our Travel Protection Plan; and

(b) an increase of 13% in the average premium charged to end-customers from RMl2.66 in FY2009 to RM14.32 in FY2010 due to the introduction of a flight delay benefit to our product in Malaysia.

Premiums ceded to reinsurers

Premiums ceded to reinsurers increased by 60.0% from RM0.5 million for FY2009 to RM0.8 million for FY2010. We reinsure a fixed percentage of our premiums to external reinsurers which did not change from FY2009 to FY2010. Accordingly, our premiums ceded to reinsurers would correspondingly increase when our gross earned premiums increase.

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Net earned premiums

As a result of the above, our net earned premiums increased by 44.7% from RM29.5 million for FY2009 to RM42.7 million for FY2010. Our net earned premiums are affected by the change in our gross earned premiums and premiums ceded to reinsurers.

Investment income

We had no investment income in FY2009 and FY2010.

Other operating income

We had no other operating income in FY2009 and FY2010.

Expenses

Total expenses increased by 32.5% from RM12.3 million for FY2009 to RM16.3 million for FY2010.

Net claims

Our net claims increased by 36.4% from RM1.1 million for FY2009 to RMl.5 million for FY2010. Net claims are affected by gross claims paid, which increased by 862.2% from RM127,000 for FY2009 to RMl,222,000 for FY2010 and gross change to contract liabilities, which decreased by 67.4% from RM925,000 for FY2009 to RM302,000 for FY2010.

Fee and commission expenses

Our fee and commission expenses increased by 30.6% from RM1I.1 million for FY2009 to RM14.5 million forFY2010. The proportion of gross premiums that is paid as commission did not change from FY2010 to FY2011. Since our gross premiums increased from FY2010 to FY2011, the amount of commission paid correspondingly also increased. The reinsurance commissions paid to our local insurance partners increased from RM2.3 million for FY2009 to RM3.1 million for FY2010 as a result of renegotiation of terms with our local insurance partners.

Management expenses

Our management expenses increased by 13.5% from RM l78,000 for FY2009 to RM202,000 for FY2010 as a result of an increased in payment to the Insurance Guarantee Scheme Fund Levies of Malaysia from RM66,000 in FY2009 to RM84,000, which was due to an increase in our gross premiums.

Other operating expenses

Our operating expenses increased from nil for FY2009 to RM99,000 for FY2010. We had no unrealised foreign exchange loss in FY2009 while in FY2010, an unrealised foreign exchange loss of RM99,000 as a result of translation loss of foreign denominated cash and bank balances.

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11.5 LIQUIDITY AND CAPITAL RESOURCES

11.5.1 Working capital

Our principal sources of liquidity are cash generated from our operations, cash and cash equivalents and borrowings from financial institutions. In the last three financial years and 1H2012, we used these funds for, among others, the funding of our acquisition of TIMB and general working capital. As at 30 June 2012, we had cash and cash equivalents of RM139.4 million and total banking facilities of RM132.5 million, of which the full amount has been utilised. Our ability to obtain these sources of funding is affected by a number of factors, including the results of our operations and financial position and the conditions in the Malaysian and international financial markets. Further, in the event we incur new borrowings, we may be subject to financial covenants.

Our Board believes that our future cash flow generated by operating activities and our borrowing capacity will be sufficient for our working capital requirements for a period of 12 months from the date of this Prospectus.

11.5.2 Cashflow

The following table is a summary of our cash flow statements for the periods indicated:

FY2009 FY2010 FY2011 IH2011 1H2012 (RM ’000) (RM ’000) (RM ’000) (RM ’000) (RM ’000) (audited) (audited) (audited) (unaudited) (audited) Net cash generated 6,577 20,944 44,096 20,432 17,186 from operating activities Net cash used in (4) (78,063) investing activities Net cash (used (5,900) (21,161) (11,282) (20,500) 166,971 in)/generated from financing activities Net increase / 677 (221) 32,814 (68) 106,094 (decrease) in cash and cash equivalents Cash and cash 677 456 456 33,270 equivalents at beginning o f the year / period Cash and cash 677 456 33,270 388 139,364 equivalents at end of the year / period

Cash flows generated from operating activities

Our net cash flows from operating activities was approximately RM6.6 million for FY2009, RM20.9 million forFY2010, RM44.I million forFY2011 andRM17.2 million for 1H2012.

For 1H20I2, adjustments to reconcile RM18.3 million profit before taxation to net cash generated from operating activities consisted primarily of adjustments for reduction in non-cash items of RM7.1 million, primarily relating to movement in the non-cash item of loans and receivables and offset by movement in working capital items of RM8.2 million. These movements are mainly a result of our acquisition of TIMB in May 2012.

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For FY2011, adjustments to reconcile RM34.2 million of profit before taxation to cash generated from operating activities of RM44.I million consisted primarily of adjustments for non-cash investment income of RM377,000 and working capital adjustments primarily of an addback of amount due from a cedant of RM10.0 million. The amount due from the cedant was mainly for balances receivables from our reinsurer from travel business, which had decreased during the year. Cash generated from operating activities was further adjusted for net interest income from fixed deposits with licensed financial institutions received of RM377,000 and income tax paid of RM20,000, resulting in net cash generated from operating activities of RM44.I million.

For FY2010, adjustments to reconcile RM26.4 million of profit before taxation to cash generated from operating activities of RM20.9 million consisted primarily of adjustments for working capital adjustments of RM5.5 million. Net working capital outflow was mainly due to an increase in amount due from the cedant by RM9.3 million and increase in insurance contract liabilities of RM2.9 million and insurance payables of RM l.0 million. The increase in amount due from the cedant mainly relates to increase in travel business and timing of settlements from the cedant. The increase in insurance contract liabilities and insurance payables were mainly as a result of increase in business volume during the year. Income tax paid was RM20,000.

For FY2009, adjustments to reconcile RMl7.2 million profit before taxation to cash generated from operating activities of RM6.6 million consisted primarily of adjustments for working capital adjustments of RM10.6 million. Net working capital outflow was mainly contributed by amount due from cedant of RMl7.5 million and insurance contract liabilities of RM6.6 million. No income tax was payable in FY2009.

Cash flows used in investing activities

Our net cash used in investing activities was nil for FY2009, RM4,000 in FY2010, nil for FY2011 and RM78.1 million for 1H2012.

For 1H2012, our net cash used in investing activities was primarily for cash used in the acquisition of TIMB.

ForFY2010, our net cash used in investing activities was from investment in office equipment.

No cash was used in investing activities for FY2009 and FY2011. Cash flows (used in)/generated from financing activities

Our net cash used in Financing activities was approximately RM5.9 million for FY2009, RM21.2 million for FY2010 and RMl 1.3 million for FY2011 and net cash generated from financing activities was approximately RM167.0 million for 1H2012.

ForlH2012, our net cash generated from financing activities was primarily from proceeds from borrowings and advances from TMSB which were partially used for the acquisition of TIMB.

FY2010 and FY2009, our net cash used in financing activities was primarily for the payment of dividends to our shareholders and non-controlling interest, being TMSB and Multi-Purpose Capital Holdings Berhad respectively.

For FY2011, the net cash used in financing activities was primarily for the payment of dividends to our shareholders and non-controlling interest was offset by advances from holding company amounting to R M l7.2 million.

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Save as disclosed elsewhere in this Prospectus, there is no legal, financial or economic restriction on the abilities of our subsidiaries to transfer funds to us in the form of cash dividends, loans or advances.

11.6 INDEBTEDNESS

Most of our indebtedness comprised term loans to finance the acquisition of TIMB. As at the LPD, our total indebtedness amounted to RM132.96 million. The following loan facility remains outstanding as at the LPD:

Term Loan from RHB Bank Berhad and CIMB Bank Berhad

Pursuant to a facility agreement dated 21 May 2012, RHB Bank Berhad and CIMB Bank Berhad granted our Company a secured term loan of up to RM l60.0 million. The facility is secured by, among others, a charge over all the shares of TIMB owned by our Company. The loan shall be repaid in 16 quarterly principal instalments commencing from the end of the 15th month from the date of the first drawdown. Interest is payable at the prevailing cost of funds plus a margin. The facility also imposes a restriction on the payment of dividends. The facility agreement required the Company to undertake to prepay the loan in whole or in part (as determined by the lenders) upon the occurrence of certain events, including the IPO.

The purpose of the secured term loan is to part finance the TIMB Acquisition.

As at the LPD, we had drawn down RMl 32.96 million. We intend to utilise the net proceeds of this IPO to repay this loan in whole or in part. See Section 3.7 - “Use of Proceeds” of this Prospectus for further details.

11.7 CAPITAL EXPENDITURE

FY2009 through 1H2012

We had no material capital expenditure forFY2009, FY2010, FY2011 and 1H2012.

Planned Capital Expenditure

We plan to utilise approximately RM10.0 million for FY2013 for the implementation of a new core insurance system and associated technology in TIMB, which had been approved but not contracted for. The anticipated sources of funding for our planned capital expenditure are cash flows from operation.

11.8 KEY FINANCIAL RATIOS

The following table sets forth certain of our key financial ratios for the financial years and six months indicated:

Key Financial Ratios FY2009 FY2010 FY2011 1H2011 1H2012

Trade receivables turnover days'-1'1 213 225 110 312 389 Trade payables turnover days12'1 249 635 54 192 1162 Inventory turnover days N.A.N.A. N.A. N.A.N.A. Current ratio (times )<3) 2.6 2.5 1.7 2.1 1.4 Gearing Ratio(4) - - - - 3.8 Net gearing Ratio(5) --- - -

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Notes:- 1 Trade receivables divided by total revenue and multiplied by 365 days. l2/ Trade payables divided by total cost of sales less depreciation and amortisation and multiplied by 365 days. n' Current assets over current liabilities {excluding term loan and shareholder’s advance for the acquisition of TIMB). (4) Total borrowings (excluding shareholder’s advance) over equity attributable to owners of the parent. (5) Total borrowings minus cash and cash equivalent {including fixed deposits in investment portfolio) over equity attributable to owners of the parent.

Trade Receivables Turnover Days

The increase in trade receivables turnover days in 1H2012 as compared to 1H2011 was a result of our acquisition of TIMB and its trade receivables of RM51.7m against its gross earned premiums of RM33.7 million in 1H2012 since the date of acquisition.

The decrease in trade receivables turnover days of 110 in FY2011 as compared to 225 in FY2010 was primarily a result of the implementation of stricter credit controls by the new management team who joined at the end of FY2010/beginning of FY2011 for amounts outstanding.

Trade receivables turnover days increased from 213 in FY2009 to 225 for FY2010. This was primarily a result of increase operating revenue in FY20I0.

Trade Payable Turnover Days

The increase in trade payable turnover days for 1H2012 as compared to 1H2011 was a result of our acquisition and its trade payables of RM61.8 million since the date of acquisition.

The decrease in trade payable turnover days of 54 in FY2011 as compared to 635 in FY2010 was primarily a result of the implementation of stricter credit controls by the new management team who joined at the end of FY2010/beginning of FY2011, in particular in netting off payables to and receivables from the particular creditor.

The increase in trade payables turnover days of 635 in FY2010 as compared to 249 in FY2009 was primarily a result of the increase in operating revenue in FY2010 together with the delay in netting off premium receivables from premium payables by our insurance partner who managed the finance function prior to the time when our new management team joined at the end of FY2010/beginnmg of FY2011.

Inventory Turnover Days

Due to the nature of our business, we do not have any inventory, and accordingly, we do not have any inventory turnover days.

Current Ratio

The current ratio increased from 2.1 times in 1H2011 to 4.2 times in 1H20I2 as a result of our acquisition of TIMB and its insurance liabilities of RM298 million since the date of acquisition.

The current ratio decreased from 2.5 times in FY2010 to 1.8 times in FY2011 as a result of an increase contract liabilities reserves arising from “incurred but not reported” provision based on the actuarial valuation.

The current ratio decreased slightly from 2.6 times in FY2009 to 2.5 times in FY2010 as a result of “incurred but not reported” provision based on the actuarial valuation.

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Gearing Ratio

The gearing ratio increased from nil times in 1H2011 to 4.2 times in 1H2012 as we had entered into a term loan agreement from RHB Bank Berhad and CIMB Bank Berhad for up to RM160.0 million in 21 May 2012 for the acquisition of TIMB. As at 30 June 2012, the outstanding amount payable was RM132.5 million.

Net gearing ratio

The net gearing ratio increased from nil times in 1H2011 to nil times in 1H2012 as the cash and cash equivalent was more than sufficient to repay the term loan from RHB Bank Berhad and CIMB Bank Berhad.

Ageing analysis

The ageing analysis for trade receivables and payables as at 31 December 2011 is as follows:

1_30 31-60 61 - 90 91-120 120 days - Over 1 Ageing days days days days 1 year year Total (RM ’000) Trade receivables 10,467 1,311 2,902 2,091 - - 16,771 Trade payables 156 - - - - - 156

Most of our trade receivables are amounts due from our insurance partner. Our credit terms with these counterparties are generally for payment within 60 days and payments are generally made once a month, There is no allowance made for the impairment of these receivables as there is no objective evidence of impairment. As at 31 December 2011, 71.0% of our trade receivables were within 60 days.

Most of our trade payables are amounts due to our insurance partner for “excess of loss” cover purchase. Minimum deposits are payable on the inception of the coverage and adjust half-yearly based on the premium underwritten during the first half year.

Other ratios

For 1H2012, TIH had a combined ratio of 60%. The combined ratio is the sum of net claims, management expenses and fees and commission expenses divided by net earned premiums. We believe similar metrics for FY2009, FY2010 and FY2011 are not comparable because certain expense sharing arrangements with our business partner ceased with effect from the beginning of 2012.

For FY2009, FY2010, FY201I and 1H2012, TIMB generated a combined ratio of 108%, 101%, 92% and 112% respectively. For FY2011 and 1H2012, our pro forma combined ratio amounts to 78% and 93%.

11.9 CONTINGENT LIABILITIES, CAPITAL COMMITMENTS AND OFF-BALANCE SHEET ARRANGEMENTS

Contingent Liabilities

We do not have any contingent liability as at the LPD.

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Capital Commitments

As at the LPD, we have capital commitments of RM10.0 million. See Section 11.7 - “Capital Expenditure” of this Prospectus for further details.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that we believe have or are reasonably likely to have a current or future material effect on our financial condition, change in financial condition, revenues or expenses, results of operations, capital expenditures or capital resources.

11.10 MARKET RISKS

We are exposed to a variety of financial risks, including the effects of changes in foreign currency exchange rates, interest rates and equity market prices.

Our management monitors financial position closely with an objective to minimise potential adverse effects on our financial performance. We may use derivative financial instruments, where appropriate, for our risk management activities but we do not hold or issue derivative financial instruments for trading purposes. Foreign Exchange Risk

Our reporting currency is the Malaysian Ringgit and a significant portion of our operating revenue (primarily our Travel Protection Plan sold in Malaysia and, effective May 2012, our TIMB insurance business) and expenses (primarily consisting of corresponding fee and commission expenses and fixed overheads such as management expenses) are denominated in Malaysian Ringgit. We face foreign exchange rate risk arising from the conversion of the functional currencies relating to any insurance product sold outside Malaysia, primarily our Travel Protection Plan, to our reporting currency. These foreign exchange risk exposures are mainly in Thai Baht, US Dollar, Indonesian Rupiah and Singapore Dollar. We are also exposed to fluctuations in the US Dollar arising from ceding of risk to reinsurers as certain international reinsurers charge us in US Dollar.

A 5% strengthening/weakening of the Ringgit Malaysia against foreign currencies as at the end of 30 June 2012 would have increased/decreased net profit by approximately RM237,000, assuming all other variables remain constant.

Interest Rate Risk

Our exposure to interest rate risk arises primarily from the variable interest rate borrowings and investments in debt securities classified as available-for-sale. Our policy is to obtain the most favourable interest rates available. Any surplus funds will be placed with licensed banks to generate interest income.

At 30 June 2012, if interest rates had been 100 basis points lower/higher, with all other variables held constant, our net profit would have been RM138,000 higher/lower, arising manly as a result of lower/higher interest expense on floating rate loans and borrowings. The assumed movement in basis points for interest rate sensitivity analysis is based on the currently observable market environment.

Equity Price Risk

Changes in the market value of investment securities can affect our net income and financial position. The investment committee at TIMB, which has oversight over investment decisions, manages the risk of unfavourable changes by cautious review of the investments before investing and continuous monitoring of their performance and risk profiles.

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Our investment securities are classified as held-for-trading or available-for-sale.

As of 30 June 2012, our available-for-sale equity portfolio consists of shares of companies and unit trusts in Malaysia. A 5% increase/decrease in the prices of these securities as of 30 June 2012 would have increased/decreased our equity by RM1.5 million, arising as a result of higher/lower fair value gains, assuming all other variables were held constant

11.11 GOVERNMENT, ECONOMIC, FISCAL AND MONETARY POLICIES

Risks relating to government, economic, fiscal or monetary policies or factors which may materially affect our operations are set out in Section 4 - “Risk Factors” of this Prospectus.

11.12 INFLATION

We do not believe that inflation has had a material impact on our business, financial condition or results of operations. If we were to experience significantly higher inflation than we have experienced in the past, we may not be able to fully offset such higher costs through price increases. Our failure or inability to do so could adversely affect our business, financial condition and results of operations.

11.13 ORDER BOOK

Due to the nature of our business, we do not maintain an order book.

11.14 PROSPECTS

The results of our operations for FY2012 are expected to be primarily influenced by the following factors, in addition to the factors included in Section 4 - “Risk Factors” and Section 11.3 - “Factors Affecting Our Results of Operations” of this Prospectus:

(a) Our ability to grow our revenue;

(b) Local and global economies and expectation of growth in air-travel or tourism in the Asia-Pacific region; and

(c) Management of operating expense.

Save as disclosed in Section 4 - “Risk Factors” and Section 11.3 - “Factors Affecting Our Results of Operations” of this Prospectus, we are not aware of any known trends, uncertainties, demands, commitments or events that are reasonably likely to have a material effect on net sales or revenue, profitability, liquidity or capital resources, or that would cause financial information disclosed in this Prospectus to be not necessarily indicative of our future operating results or financial condition in respect ofFY2012.

Subject to the factors described in this section of this Prospectus, our Board expects the results of our operations for FY2012 to be satisfactory.

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11.15 CRITICAL ACCOUNTING POLICIES

We prepare our financial statements in conformity with MFRS. In applying these accounting policies, we are required to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities and reported amounts of revenues and expenses as of and during the reporting period and that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that we consider to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Valuation of general insurance

The principal uncertainty in our general insurance business arises from the technical provisions which include the provisions for premium liabilities and claim liabilities. The provisions for premium liabilities comprise unearned premium reserves, unexpired risk reserves and provision for risk margin for adverse deviation, while claims liabilities comprise provision for outstanding claims. Generally, provisions for premiums and claim liabilities are determined based upon historical claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. In particular, we consider past experience with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. We rely on third party actuarial analysis for these estimates. We expect that actual future premium and claim liabilities will not develop exactly as projected and may vary from our projections.

The estimates of premium and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of premium and claim liabilities may vary from the initial estimates.

At each reporting date, the estimates of premium and claim liabilities are re-assessed for adequacy by a qualified independent actuary and changes will be reflected as adjustments to these liabilities.

Impairment o f non-financial and financial assets

The carrying amounts of non-financial assets are assessed for impairment annually, or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Where such indications exist, the carrying amount of the asset is written down to its recoverable amount, which is the higher of the fair value less costs to sell and the value in use. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit to which the asset belongs to.

257 Company No. 948454-K

11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont’d)

We assess at each reporting date whether there is any objective evidence that a financial asset is impaired. Receivables that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis based on similar risk characteristics. Objective evidence of impairment of receivables could include our past experience of collecting payments, an increase in the number of delayed payments past the average credit period and observable changes in economic conditions. If any such evidence exists, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate. The impairment loss is recognised in profit or loss. The carrying amount of the financial asset is reduced by the impairment loss except for receivables, where the carrying amount is reduced through the use of an allowance account. When a receivable becomes uncollectible, it is written off against the allowance account. If in a subsequent period, the amount of the impairment loss decreases as a result of an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed to the extent that the carrying amount of the asset does not exceed its amortised cost at the reversal date. The amount of reversal is recognised in profit or loss.

Provisions

Provisions are recognised when we have a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provision are reviewed at each reporting date and adjusted to reflect the correct best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre tax rate that reflects, where appropriate the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

11.16 CHANGES IN ACCOUNTING FRAMEWORK

The financial statements of our Group for the financial period ended 31 December 2009 is the first MFRS financial statements. MFRS 1 First-Time Adoption of Malaysian Reporting Standards (“MFRS I”) has been applied.

Our Group has adopted MFRS 1 on the date of incorporation of TIL, 27 March 2009. The adoption of MFRS 1 has not have any impact on the financial statements of the Group for the financial period/years ended 31 December 2009, 2010 and 2011. For the TIMB Group, the implication for the transition to MFRS is disclosed in Note 4.5.1 (4) of Section II - TIMB Group to the attached Accountants' Report.

11.17 RECENT ACCOUNTING PRONOUNCEMENTS

The following MFRSs, amendments to MFRSs and IC Inteipretations have been issued by the MASB but are not yet effective and have not been adopted by us: Effective for financial periods beginning on or after 1 July 2012:

• Amendments to MFRS 101: Presentation of Items of Other Comprehensive Income

Effective for financial periods beginning on or after 1 January 2013

• Amendments to MFRS 1: Government Loans • Amendments to MFRS 7: Disclosures - Offsetting Financial Assets and Financial Liabilities • MFRS 3 Business Combinations (IFRS 3 Business Combinations issued by IASB in March 2004) • MFRS 10 Consolidated Financial Statements • MFRS 11 Joint Arrangements • MFRS 12 Disclosure of Interests in Other Entities

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11. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Cont’d)

• MFRS 13 Fair Value Measurement • MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011) • Amendments to MFRS 10, MFRS 11 and MFRS 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance • MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) • MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as amended by IASB in May 2011) • MFRS 128 Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2011) • IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine • Annual Improvements 2009-2011 Cycle:

- Amendments to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards - Amendments to MFRS 101 Presentation of Financial Statements - Amendments to MFRS 116 Property, Plant and Equipment - Amendments to MFRS 132 Financial Instruments: Presentation - Amendments to MFRS 134 Interim Financial Reporting - Amendments to IC 2 Members ’ Shares in Co-operatives Entities and Similar Instruments

Effective for financial periods beginning on or after 1 January 2014

• Amendments to MFRS 132: Offsetting Financial Assets and Financial Liabilities

Effective for financial periods beginning on or after 1 January 2015

• MFRS 9 Financial Instruments (IFRS 9 issued by IASB in November 2009) • MFRS 9 Financial Instruments (IFRS 9 issued by IASB in October 2010)

We plan to adopt the above pronouncements when they become effective in the respective financial periods. These pronouncements are expected to have no significant impact to our financial statements upon their initial application.

THE REST OF THIS PA GE HAS BEEN INTENTIONAL!. Y LEFT BLANK

259 Company No. 948454-K

12. PRO FORM A FINANCIAL INFORMATION

In the following section we discuss and analyse our pro forma consolidated statements of comprehensive income for FY2009, FY2010, FY2011, 1H2011 and 1H2012. You should read the following discussion and analysis together with (a) Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY201I, 1H2011 and 1H2012; and (b) Reporting Accountants' Report in relation to the Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 included in this Prospectus.

This discussion and analysis contains forward-looking statements that reflect our current views with respect to future events and our financial performance. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under Section 4 - “Risk Factors” and “Forward-Looking Statements” of this Prospectus. We have derived our pro forma consolidated financial information from historical consolidated financial statements of TIH Group (being TIH and its subsidiaries (including TIMB from the date of its acquisition on 23 May 2012)) and TIMB Group (being TIMB and its subsidiaries).

For a discussion of risks relating to relying on our pro forma consolidated financial information, please refer to Section 4.3(ii) “Risk Factors—Risks relating to an investment in our Shares—The historical consolidated financial statements and the pro forma financial information contained in this Prospectus may not accurately reflect our historical financial position, results of operations and cash flows.” of this Prospectus.

12.1 BASIS OF PRESENTATION

We have prepared and presented our pro forma consolidated statements of comprehensive income based on the historical consolidated statements of comprehensive income of TIH Group and TIMB Group for FY2009, FY2010, FY2011,1H2011 and 1H2012.

Please refer to Section 5 - “Information on Our Group” and note 3 of Appendix 1 of the Reporting Accountant’s Letter on the Pro Forma Consolidated Financial Information to our pro fonna consolidated financial information as set out in this Prospectus for a further discussion of our corporate structure and history and the presentation of our pro forma consolidated financial information, respectively.

The pro forma consolidated statements of comprehensive income are not necessarily indicative of the financial results that would have been attained had the TIMB Acquisition actually occurred earlier, in particular because we have made and intend to continue to make significant changes to TIMB’s business and operations. The pro forma consolidated statements of comprehensive income have been prepared for illustrative purposes only and are based on certain bases and assumptions, and because of its nature, may not give a true picture of our actual results of operations. As such, investors should not unduly rely on the pro forma consolidated statements of comprehensive income.

The pro forma statements of comprehensive income have been compiled based on:

(a) the audited historical consolidated statements of comprehensive income of TEH Group (including TIMB from the date of its acquisition on 23 May 2012) which were prepared in accordance with MFRS for FY2009, FY2010 and FY2011;

(b) the unaudited historical consolidated statements for comprehensive income of TIH Group (including TIMB from the date of its acquisition on 23 May 2012) which were prepared in accordance with MFRS for 1H2011 and 1H20I2;

(c) the audited historical consolidated statements of comprehensive income of TIMB Group which were prepared in accordance with MFRS forFY2009, FY2010 and FY2011; and

260 Company No. 948454-K

12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

(d) the unaudited historical consolidated statements of comprehensive income of TIMB Group which were prepared in accordance with MFRS for 1H20I1 and 1H2012,

The pro forma consolidated statements of comprehensive income were prepared to reflect the financial results for FY2009, FY2010, FY2011, 1H2011 and 1H20I2 had the TIMB Acquisition been made on 27 March 2009 (the date of incorporation of TIL).

The historical consolidated statements of comprehensive income of TIH Group and TIMB Group for FY2009, FY2010, FY2011 and 1H2012 were audited by the Reporting Accountants. The Reporting Accountants reported on the above financial statements, which were not subjected to any qualifications, modifications or disclaimers. The pro forma consolidated statements of comprehensive income are expressed in Malaysian Ringgit, and are rounded to the nearest thousand, unless otherwise stated.

12.2 PRO FORMA ADJUSTMENTS TO CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

In the preparation of the pro forma consolidated statements of comprehensive income, the TIMB Acquisition is assumed to have occurred on 27 March 2009 (the date of incorporation of TIL). The following tables show the pro forma adjustments, as a result of the TIMB Acquisition, made to the consolidated statements of comprehensive income ofTIH Group for the respective periods presented. The profit and loss pertaining to TIMB Group is included in our pro forma statements of comprehensive income forFY2009, FY2010, FY2011, 1H2011 and 1H2012 as consolidated entities on 27 March 2009.

1H2012

Consolidated statement of Consolidated Pro forma comprehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income1 (Audited) (Audited) (Unaudited) (RM’000) (RM’000) (RM’000) Operating revenue 32,947 148,492 181,439

Gross earned premiums 32,492 140,197 172,689 Premiums ceded to reinsurers (584) (67,042) (67,626) Net earned premiums 31,908 73,155 105,063

Investment income 455 8,295 8,750 Realised gains and losses 5,263 5,263 Fees and commission income 8,727 8,727 Other operating income 1,166 1,166 Other revenue 4S5 23,451 23,906

Gross claims paid (828) (54,1 IS) (54,946) Claims ceded to reinsurers 13,554 13,554 Gross changes to contract liabilities (309) (29,680) (29,989) Change in contract liabilities ceded to reinsurers 5,357 5,357 Net claims (1,137) (64,887) (66,024)

Fee and commission expenses (10,182) (13,126) (23,308) Management expenses (5,041) (12,290) (17,331) Other operating expenses (1,309) - (1,309) Finance cost (2,733) - (2,733) Other expenses (19,265) (25,416) (44,681)

Profit before taxation 11,961 6,303 18,264 Taxation (40) (1,721) (1,761) Net profit for the year 11,921 4,582 16,503

261 Company No. 948454-K

12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

’Extracted from Section 6 of Appendix I to the Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY2011 ,1H2011 and 1H20I2

1H2011

idated statement of Consolidated Pro forma ehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income1 (Audited) (Audited) (Unaudited) (RM’000) (RM’000) (RM'000) Operating revenue 26,807 121,615 148,422

Gross earned premiums 26,807 114,208 141,015 Premiums ceded to reinsurers (505) (49,770) (50,275) Net earned premiums 26,302 64,438 90,740

Investment income 7,407 7,407 Realised gains and losses - 3,278 3,278 Fees and commission income - 9,184 9,184 Other operating income - 68 68 Other revenue - 19,937 19,937

Gross claims paid (366) (71,947) (72,313) Claims ceded to reinsurers - 29,543 29,543 Gross changes to contract liabilities (572) (3,829) (4,401) Change in contract liabilities ceded to reinsurers - (7,093) (7,093) Net claims (938) (53,326) (54,264)

Fee and commission expenses (8,637) (13,804) (22,441) Management expenses (95) (14,844) (14,939) Other expenses (8,732) (28,648) (37,380)

Profit before taxation 16,632 2,401 19,033 Taxation (20) (1,270) (1,290) Net profit for the year 16,612 1,131 17,743

'Extracted from Section 6 of Appendix I to the Reporting Accountants’ Letter on die Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY2011, 1H2011 and 1H2012

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12. PRO FORM A FINANCIAL INFORMATION (Cont’d)

FY2011

idated statement of Consolidated Pro forma ehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income (Unaudited) (Unaudited) (Unaudited) (RM’000) (RM’000) (RM'000) Operating revenue 55,870 263,461 319,331

Gross earned premiums 55,493 245,770 301,263 Premiums ceded to reinsurers (1,063) (89,345) (90,408) Net earned premiums 54,430 156,425 210,855

Investment income 377 17,691 18,068 Realised gains and losses ■ - 6,060 6,060 Fees and commission income - 13,551 13,551 Other operating income 26 130 156 Other revenue 403 37,432 37,835

Gross claims paid (1,123) (137,170) (138,293) Claims ceded to reinsurers - 55,849 55,849 Gross changes to contract liabilities (819) 11,821 11,002 Change in contract liabilities ceded to reinsurers - (38,444) (38,444) Net claims (1,942) (107,944) (109,886)

Fee and commission expenses (17,292) (26,010) (43,302) Management expenses (1,404) (22,782) (24,186) Other operating expenses - (2,150) (2,150) Other expenses (18,696) (50,942) (69,638)

Profit before taxation 34,195 34,971 69,166 Taxation (20) (8,718) (8,738) Net profit for the year 34,175 26,253 60,428

'Extracted from Section 6 of Appendix I to the Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY2011,1H201I and 1H2012

FY2010

Consolidated statement of Consolidated Pro forma comprehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income (Audited) (Audited) (Unaudited) (RM’000) (RM’000) (RM’000) Operating revenue 43,523 257,266 300,789

Gross earned premiums 43,523 244,146 287,669 Premiums ceded to reinsurers (803) (121,484) (122,287) Net earned premiums 42,720 122,662 165,382

Investment income 13,120 13,120 Realised gains and losses 3,144 3,144 Fees and commission income 15,747 15,747 Other operating income 373 373 Other revenue 32,384 32,384

Gross claims paid (1,222) (129,574) (130,796)

263 Company No. 948454-K

12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

Consolidated statement of Consolidated Pro forma comprehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income Claims ceded to reinsurers - 47,533 47,533 Gross changes to contract liabilities (302) 47,995 47,693

Change in contract liabilities ceded to reinsurers - (58,084) (58,084) Net claims (1,524) (92,130) (93,654)

Fee and commission expenses (14,473) (23,831) (38,304) Management expenses (202) (23,229) (23,431) Other operating expenses (99) - (99) Other expenses (14,774) (47,060) (61,834)

Profit before taxation 26,422 15,856 42,278 Taxation (20) (5,665) (5,685) Net profit for the year 26,402 10,191 36,593

'Extracted from Section 6 of Appendix I to the Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY2011,1H2011 and IH2012

FY2009

idated statement of Consolidated Pro forma ehensive income of statement of consolidated TIH Group comprehensive statements of income of TIMB comprehensive Group income (Audited) (Audited) (Unaudited) (RM’000) (RM’000) (RM’000)

Operating revenue 30,049 238,874 268,923 Gross earned premiums 30,049 226,280 256,329 Premiums ceded to reinsurers (524) (117,387) (117,911) Net earned premiums 29,525 108,893 138,418 Investment income - 12,594 12,594 Realised gains and fosses - 4,739 4,739 Fees and commission income - 19,329 19,329 Other operating income - 123 123 Other revenue - 36,785 36,785 Gross claims paid (127) (226,078) (226,205) Claims ceded to reinsurers - 141,960 141,960 Gross changes to contract liabilities (925) 122,147 121,222 Change in contract liabilities ceded to reinsurers - ' (125,844) (125,844) Net claims (1,052) (87,815) (88,867)

Fee and commission expenses (11,062) (25,466) (36,528) Management expenses (178) (23,868) (24,046) Other expenses (11,240) (49,334) (60,574)

Profit before taxation 17,233 8,529 25,762 Taxation (20) (2,731) (2,751) Net profit for the year 17,213 5,798 23,011

’Extracted from Section 6 of Appendix I to the Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Statements of our Company and our Subsidiaries for the Financial Years Ended 31 December 2009, 2010 and 2011 and six months ended 30 June 2011 and 2012 for our pro forma consolidated financial information for FY2009, FY2010, FY201 f, 1H2011 and 1H2012

264 Company No. 948454-K

12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

Revenue

The principal components of pro forma operating revenue are revenue from gross earned premiums and investment income. Other revenue includes investment income, realised gains and losses, fees and commission income and other operating income.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the principal components of revenue with respect to TIH Group.

Gross earned premiums

Pro forma gross earned premiums consist of the gross earned premiums of TIH Group and the gross earned premiums of TIMB Group. Gross earned premiums of TIMB Group consist of the gross premiums TIMB receives from its customers on motor insurance products and non-motor insurance products as well as its share from the Malaysian Motor Insurance Pool, less provision for unearned premiums. TIMB’s non-motor insurance products consist of its fire, MAT (marine, aviation and transit) and miscellaneous insurance products (including health, dental, engineering, workman compensation and foreign workers).

Premiums ceded to reinsurers

Pro forma premiums ceded to reinsurers consist of the premiums ceded to reinsurers by TIH Group and TIMB Group. TIMB Group cedes out a small percentage of the premiums for its motor insurance products and cedes out the majority of the premiums for its non-motor insurance products.

Net earned premiums

Pro forma revenue from net earned premiums is the result of gross earned premiums received from customers by TIH Group and TIMB Group after deducting the premiums ceded to external reinsurers.

Investment income

Pro forma investment income comprises investment income from TIH Group and TIMB Group. Investment income of TIMB Group is primarily interest income from “held-to-maturity” financial assets, “available- for-sale” financial assets, loans-and-receivables and others, as well as dividends from equity investments and TIMB Group’s share of investment income from the Malaysian Motor Insurance Pool.

Realised gains and losses

Pro forma realised gains and losses are solely attributable to gain and losses on disposal of equity investments by TIMB Group.

Fees and commission income

Pro forma fees and commission income is solely attributable to the commissions TIMB Group receives from its external reinsurers when it enters into reinsurance arrangements with them, primarily in relation to its non-motor insurance products.

Other operating income

Pro forma other operating income comprises other operating income from TIH Group and TIMB Group. Other operating income with respect to TIMB Group is its sundry income which comprises primarily administrative printing fees it receives for its policies, motor ownership transfer fees and proceeds from the disposal of small assets.

265 Company No. 948454-K

12. PRO FORM A FINANCIAL INFORMATION (Cont’d)

Expenses

The principal components of pro forma expenses are net claims, fee and commission expenses, management expenses and other operating expenses.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the components of expenses with respect to TIH Group.

Net claims

Pro forma net claims are the net claims paid to local insurance partners and/or customers who made a claim on the insurance purchased during the relevant year/period for TIH Group and TIMB Group.

Net claims for TIMB Group are the summation of (a) gross claims paid by TIMB Group to its customers, (b) claims ceded to reinsurers, which are amounts paid by its reinsurers pursuant to claims paid by TIMB to its customers, (c) gross change to contract liability, which refers to the change in provision for reported claims and "incurred but not reported" claims and are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern and (d) change in contract liabilities ceded to reinsurers, which is the change in provision for the amount to be paid by TIMB’s reinsurers for its reported claims and “incurred but not reported” claims. Gross claims paid and gross change to contract liabilities also include TIMB Group’s share from the Malaysian Motor Insurance Pool.

Fee and commission expenses

Pro forma fee and commission expenses consist of fee and commission expenses ofTIH Group and TIMB Group. Fee and commission expenses of TIMB Group are primarily for commissions paid to its agents, brokers and franchisees and also include TIMB Group’s share from the Malaysian Motor Insurance Pool.

Management expenses

Pro forma management expenses comprise the management expenses of TIH Group and TIMB Group. The management expenses of TIMB Group comprise employee benefits expenses, directors’ remuneration, auditors’ remuneration, depreciation of property and equipment, depreciation of investment property, amortization of intangible assets, reversal of allowance for impairment losses on insurance receivables, provision for Takaful and Insurance Benefits Protection System levy, rental of premises, publicity and marketing expenses, communication expenses, computer expenses and administration and general expenses, as well as TIMB Group’s share of management expenses from the Malaysian Motor Insurance Pool.

Other operating expenses

Pro forma other operating expenses comprise other operating expenses for TIH Group and TIMB Group. Other operating expenses for TIMB Group comprise primarily impairment losses for properties.

Finance cost

Pro forma finance costs are solely attributable to finance costs for TIH Group, which comprise interest attributable to TIH Group’s term loan from RHB Bank Berhad and CIMB Bank Berhad as well as advances from TMSB.

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12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

1H2012 compared to 1H2Q11

Revenue

Total pro forma operating revenue increased by 22.2% from RM148.4 million for 1H2011 to RM181.4 million for 1H2012.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in revenue with respect to TIH Group.

Gross earned premiums

Pro forma gross earned premiums increased by 22.5% from RM141.0 million for 1H2011 to RM172.7 million for 1H2012.

The increase in pro forma gross earned premiums was due to an increase in gross earned premiums for TIMB Group from RMl 14.2 million for 1H2011 to RM140.2 million for 1H2012 and an increase in the gross earned premiums of the TIH Group from RM26.8 million for 1H2011 to RM32.5 million for 1H2012.

The increase in gross earned premiums for TIMB Group was due to an increase in gross earned premiums from RM58.0 million to RM76.2 million in relation to its motor insurance products and from RM56.2 million to RM64.0 million in relation to its non-motor insurance products. Gross earned premiums for motor insurance products increased primarily because of the number of underwritten policies covered by TIMB Group during the periods (in particular the carryover effect of unearned premiums for prior periods) and the increase in gross earned premiums from TIMB Group’s share of the Malaysian Motor Insurance Pool in 1H2012 (as compared with the prior period due to the delay in issuing statements by the Malaysian Motor Insurance Pool of TIMB Group’s share in 1H2011).

Premiums ceded to reinsurers

Pro forma premiums ceded to reinsurers increased by 34.5% from RM50.3 million for 1H2011 to RM67.6 million for 1H2012.

The increase in pro forma premiums ceded to reinsurers was due to an increase in premiums ceded to reinsurers by TIMB Group from RM49.8 million for 1H2011 to RM67.0 million for 1H2012 and an increase in premiums ceded to reinsurers by the TIH Group from RM505,000 for 1H2011 to RM584,000 for 1H2012.

The increase in premiums ceded to reinsurers by TIMB Group for motor policies was in line with the increase in gross earned premiums for motor policies from 1H2011 to 1H2012 and was also due to an increase in gross earned premiums for non-motor policies and risk ceded for certain high-risk classes of non-motor policies such as offshore oil and gas products.

Net earned premiums

As a result of the above, pro forma net earned premiums increased by 15.8% from RM90.7 million for 1H2011 to RM105.0 million for 1H2012,

Investment income

Pro forma investment income increased by 18.1% from RM7.4 million for 1H2011 to RM8.8 million for 1H2012.

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12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

The increase in pro forma investment income was due to an increase in investment income for TIMB Group from RM7.4 million for 1H2011 to RM8.3 million for 1H2012 and an increase in investment income for TIH Group from nil for 1H2011 to RM455,000 for 1H2012.

The increase in investment income for TIMB Group was primarily due to an increase in interest income from deposits from RM2.8 million in 1H2011 to RM4.1 million in 1H2012 which was partially offset by a decrease in interest income from “held-to-maturity” financial assets from RM568.000 in 1H2011 to nil in 1H2012.

Realised gains and losses

Pro forma realised gains and losses increased by 60.5% from RM3.3 million for 1H2011 to RM5.3 million for 1H2012.

The increase in pro forma realised gains and fosses, which is solely attributable to TIMB Group, was primarily due to the liquidation of certain equity investments to lock-in gains in the value of these investments and to reduce exposure to market risk. TIMB Group is in the process of reducing equity market risk exposure and commenced liquidating its equity investments in 1H2012.

Fees and commission income

Pro forma fees and commission income decreased by 5.0% from RM9.2 million for 1H2011 to RM8.7 million for 1H2012. This decrease was attributable entirely to TIMB GrdUp since the TIH Group did not have any fees and commission income for 1H2011 and 1H2012.

The decrease was in line with the decrease in gross premiums received in 1H2012 compared to 1H2011. Gross earned premiums increased in 1H2012 compared to 1H2011 even though gross premiums received decreased because of changes in the provision for unearned premium. Fees and commission income decreased even though premiums ceded to reinsurers increased primarily because the rates of commission payable by reinsurers for certain classes of insurance products were lower in 1H2012 as compared to 1H2011.

Other operating income

Pro forma other operating income increased from RM68,000 for 1H2011 to RM1.2 million for 1H2012.

The increase in pro forma other operating income was entirely due to an increase in other operating income for TIMB Group from RM68,000 for 1H2011 to RM1.2 million for 1H2012.

The increase in other operating income for TIMB Group was primarily due to an increase in investment income from TIMB Group’s share of the Malaysian Motor Insurance Pool in 1H2012 as compared to 1H2011.

Expenses

Total pro forma expenses increased by 20.8% from RM91.6 million for 1H2011 to RM110.7 million for 1H2012.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in expenses with respect to TIH Group.

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12. PRO FORMA FINANCIAL INFORMATION (Cont’d)

Net claims

Pro forma net claims increased by 21.7% from RM54.3 million for 1H2011 to RM66.0 million for 1H2012.

The increase in pro forma net claims was due to an increase in net claims for TIMB Group from RM53.3 million for 1H2011 to RM64.9 million for 1H2012 and an increase in net claims for the TIH Group from RM938,000 for 1H2011 to RM1.1 million for 1H2012.

The increase in net claims for TIMB Group was primarily due to a general growth in policies underwritten and comprised (a) an increase in gross change to contract liabilities from RM3.8 million to RM29.7 million, and (b) a decrease in claims ceded to reinsurers from RM29.5 million to RM13.5 million, which are partially offset by (c) a decrease in gross claims paid by TIMB Group to its customers from RM71.9 million to RM54.1 million, and (d) an increase in the change in contract liabilities ceded to reinsurers from RM(7.1) million to RM5.4 million. The increase in net claims was also partially due to the increase in net claims from TIMB Group’s share of the Malaysian Motor Insurance Pool in 1H2012 (as compared with the prior period due to the delay in the issuance of statements by the Malaysian Motor Insurance Pool of TIMB Group’s share in IH2011).

Fee and commission expenses

Pro forma fee and commission expenses increased by 3.9% from RM22.4 million for 1H2011 to RM23.3 million for 1H2012.

The increase in pro forma fee and commission expenses was due to an increase in the fee and commission expenses for TIH Group from RM8.6 million for 1H2011 to RM l0.2 million for 1H2012, partially offset by a decrease in fee and commission expenses for TIMB Group from R M l3.8 million for 1H2011 to RM13.1 million for 1H2012.

The decrease in fee and commission expenses of TIMB Group was primarily due to a decrease in gross premiums received in 1H2012 compared to the same period in 2011. Gross earned premiums increased in 1H2012 even though gross premiums received decreased as a result of changes in the provision for unearned premium.

Management expenses

Pro forma management expenses increased by 16.0% from RM14.9 million for 1H2011 to RM17.3 million for 1H2012.

The increase in pro forma management expenses was due to an increase in management expenses for TIH Group from RM95,000 for IH2011 to RM5.0 million for 1H2012, partially offset by a decrease in management expenses for TIMB Group from RM14.8 million for 1H2011 to RM12.3 million for 1H2012,

The decrease in management expenses for TIMB Group was primary due to a reversal of allowance for impairment losses on insurance receivables of 2.1 million as compared to an additional impairment provision of RMl.6 million in 1H2011, partially offset by an increase in employee benefits by RM1.3 million. The reversal (write back) of allowance for impairment losses was due to tighter credit control and intensified legal recovery of long outstanding bad debts.

Other operating expenses

Pro forma other operating expenses increased from nil for IH2011 to RMl.3 million for 1H2012. The increase in pro forma management expenses was entirely due to an increase in other operating expenses for TIH Group.

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Pro forma finance cost

Pro forma finance costs increased from nil for 1H2011 to RM2.7 million for 1H2012. This increase was solely attributable to TIH Group.

FY2011 compared to FY2010

Revenue

Total pro forma operating revenue increased by 6.2% from RM300.8 million for FY2010 to RM319.3 million for FY2011.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in revenue with respect to TIH Group.

Gross earned premiums

Pro forma gross earned premiums increased by 4.7% from RM287.7 million for FY2010 to RM301.3 million for FY2011.

The increase in pro forma gross earned premiums was due to an increase in gross earned premiums ofTIH Group from RM43.5 million for FY2010 to RM55.5 million for FY2011 and an increase in gross earned premiums for TIMB Group from RM244.1 million forFY2010 toRM245.8 million forFY2011.

The increase in gross earned premiums for TIMB Group was due to an increase in gross earned premiums from RM101.5 million to RM138.8 million in relation to its motor insurance product, mostly offset by a decrease in gross earned premiums from RM142.7 million to RM107.0 million in relation to its non-motor insurance products.

TIMB Group achieved higher gross earned premiums from its motor insurance products in FY2011 primarily due to contributions from its agency business / relationship with Perodua which increased substantially since commencing in January 2009 and which more than offset the cessation of TIMB Group’s agency business/relationship with Toyota in June 2010 due to its high proportion of net claims incurred to net earned premium (i.e. a high loss ratio). New insurance policies for taxis in Tawau and Kota Bharu, Malaysia were also underwritten during FY2011, further contributing to the increase in the gross earned premium income for TIMB Group’s motor insurance segment.

The gross earned premiums from TIMB Group’s non-motor insurance products decreased from RM142.7 million in FY2010 to RM107.0 million in FY2011. This decrease was a result of management’s decision to reduce its sales activities and/or its “fronting” business (in which TIMB Group acted as a fronting insurer for reinsurers) in relation to its higher risk insurance products such as aviation, fire, engineering and marine products. In particular, the gross earned premium from TIMB Group’s marine cargo and marine hull insurance products decreased sharply. The general decrease in the gross earned premiums for non-motor products was partially offset by an increase in gross earned premiums from personal accident and bond insurance products.

Premiums ceded to reinsurers

Pro forma premiums ceded to reinsurers decreased by 26.1% from RM122.3 million for FY2010 to RM90.4 million for FY2011.

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The decrease in pro forma premiums ceded to reinsurers was due to a decrease in premiums ceded to reinsurers by TIMB Group from RM12I.5 million for FY2010 to RM89.3 million for FY2011, partially offset by an increase in premium ceded to reinsurers by the TIH Group from RM803,000 for FY2010 to RMl,063,000 for FY2011.

The decrease in premiums ceded to reinsurers by TIMB Group was due to a corresponding decrease in TIMB Group’s decision to reduce its sales activities and/or its “fronting" business in relation to its higher risk insurance products such as aviation, fire, engineering and marine hull insurance products.

Net earned premiums

As a result of the above, pro forma net earned premiums increased by 27.5% from RMl 65.4 million for FY2010 to RM210.9 million for FY2011.

Investment income

Pro forma investment income increased by 38.2% from RM13.1 million forFY2010 to RM18.1 million for FY2011.

The increase in pro forma investment income was due to an increase in investment income for TIMB Group from RMl3.1 million for FY2010 to RM17.7 million for FY2011 and an increase in investment income for TIH Group from nil for FY2010 to RM377,000 for FY2011.

The increase in investment income for TIMB Group was primarily due to an increase in interest income from “loans-and-receivables” deposits from RM4.2 million to RM6.5 million, an increase in dividend income from RM970.000 to RM l,823,000 and an increase in interest income from “available-for-sale” financial assets from RM5.7 million to RM5.9 million, which was partially offset by a decrease in interest income from “held-to-maturity” financial assets from RM l,297,000 to RM638,000. This increase was due to an increase in the principal invested for of “loans-and-receivables” and “available-for-sale” financial assets as well as an increase in the average interest rate for “loans-and-receivables” deposits, partially offset by a decrease in the principal invested in of “held-to-maturity” financial assets.

Realised gains and losses

Pro forma realised gains and losses increased by 96.8% from RM3.1 million forFY2010 to RM6.1 million for FY2011.

The increase in pro forma realised gains and losses, which is solely attributable to TIMB Group, was primarily due to an increase in realised gains for “available-for-sale” financial assets from RM4.0 million to RM6.7 million which was a result of the disposal and/or maturities of investments and a decrease in realised losses from RM932,000 to RM704,000.

Fees and commission income

Pro forma fees and commission income decreased by 13.4% from RM15.7 million forFY2010 to RM13.6 million for FY2011.

This decrease was attributable entirely to TIMB Group since TIH Group did not have any fees and commission income for FY2010 and FY2011. The decrease was primarily due to a corresponding decrease in premiums ceded to reinsurers by TIMB Group.

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Other operating income

Pro forma other operating income decreased by 58.2% from RM373,000 for FY2010 to RM156,000 for FY2011.

The decrease in pro forma other operating income was due to a decrease in other operating income for TIMB Group from RM373,000 to RM130,000, which was partially offset by an increase in other operating income for TIH Group from nil to RM26,000.

The decrease in other operating income for TIMB Group was primarily due to a decrease in proceeds from the disposal of fixed assets.

Expenses

Total pro forma expenses increased by 15.4% from RMI55.5 million for FY2010 to RM179.5 million for FY2011.

See Section II - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in expenses with respect to TIH Group.

Net claims

Pro forma net claims increased by 17.3% from RM93.7 million for FY2010 to RM110.0 million for FY2011.

The increase in pro forma net claims was due to an increase in net claims for TIMB Group from RM92.1 million for FY2010 to RM107.9 million for FY2011 and an increase in net claims for TIH Group from RM1.5 million for FY2010 to RM1.9 million for FY2011.

The increase in net claims for TIMB Group was due to (a) an increase in gross claims paid by TIMB Group to its customers from RM129.6 million to RM137.2 million, (b) an increase in claims ceded to reinsurers from RM47.5 million to RM55.8 million, which are partially offset by (c) a decrease in gross change to contract liabilities from RM48.0 million to RM11.8 million and (d) a decrease in change in contract liabilities ceded to insurers from RM58.1 million to RM38.4 million.

The increase in net claims for TIMB Group was primarily from an increase in net claims of TIMB Group’s motor insurance business from RM90.9 million to RM104.7 million as a result of the TIMB Group expediting the settling and closing of a significant number of older claims files before the expiry of the six- year statutory limitation period relating to claims settlement. Although net claims increased, the effectiveness of TIMB Group’s claims management also improved from FY2010 to FY2011 as evidenced from the decrease in its loss ratio (ratio of net claims incurred to net earned premium) from 75% in FY2010 to 69% in FY20U.

Fee and commission expenses

Pro forma fee and commission expenses increased by 13.1% from RM38.3 million for FY2010 to RM43.3 million for FY2011.

The increase in pro forma fee and commission expenses was due to an increase in the fee and commission expenses for TIH Group from RM14.5 million for FY2010 to RM17.3 million for FY2011 and an increase in fee and commission expenses for TIMB Group from RM23.8 million for FY2010 to RM26.0 million for FY2011.

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The increase in fee and commission expenses of TIMB Group was primarily due to an increase in the number of policies sold. TIMB Group also entered into new agency arrangements involving extended motor vehicle warranties in 2011 which contributed to the increase in commissions being paid to its agents, brokers and motor franchise partners.

Management expenses

Pro forma management expenses increased by 3.4% from RM23.4 million for FY2010 to RM24.2 million forFY2011.

The increase in pro forma management expenses was due to an increase in TIH Group management expenses from RM202,000 for FY2010 to RMl,403,000 for FY2011, partially offset by a decrease in management expenses for TIMB Group from RM23.2 million for FY2010 to RM22.8 million for FY2011.

The decrease in management expenses for TIMB Group was primary due to an increase in reversal of allowance for impairment losses on insurance receivables from RM511,000 to RM3,759,000, partially offset by, among others, an increase in employee benefits expenses by RM2.1 million, publicity expenses by RM510,000, administration and general expenses by RM497,000, legal and professional fees by RM422,000 and rental of premises expenses by RMl29,000. The increase in reversal (write back) of allowance for impairment losses was due to tighter credit control and intensified legal recovery of long outstanding bad debts.

Other operating expenses

Pro forma other operating expenses increased from RM99.000 for FY2010 to RM2.2 million for FY2011.

The increase in pro forma other operating expenses was due to an increase in other operating expenses for TIMB Group from nil for FY2010 to RM2,150,000 for FY2011, partially offset by a decrease in TIH Group other operating expenses from RM99,000 forFY2010 to nil forFY2011.

The increase in other operating expenses for TIMB Group was due to an impairment loss of property and equipment in FY2011 of RM2,150,000 as a result of a valuation performed by an external professional valuer. There was no such impairment in FY2010 as TIMB did not value property and equipment in FY2010 as this is not required to be valued annually.

FY2010 compared to FY2009

Operating Revenue

Total pro forma operating revenue increased by 11.9% from RM268.9 million for FY2009 to RM300.8 million for FY2010.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in revenue with respect to TIH Group.

Gross earned premiums

Pro forma gross earned premiums increased by 12.3% from RM256.3 million for FY2009 to RM287.7 million for FY2010.

The increase in pro forma gross earned premiums was due to an increase in gross earned premiums for TIMB Group from RM226.3 million for FY2009 to RM244.1 million for FY2010 and an increase in the gross earned premiums of TIH Group from RM30.0 million for FY2009 to RM43.5 million for FY2010.

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The increase in gross earned premiums for TIMB Group was due to an increase in gross earned premiums in relation to TIMB Group’s motor class from RM88.I million for FY2009 to RMl 01.5 million for FY2010 and an increase in gross earned premiums in relation to TIMB Group’s non-motor insurance class from RM138.2 million for FY2009 to RM142.7 million forFY2010.

The gross earned premiums from TIMB Group’s motor class increased partially as a result of TIMB Group withdrawing from its Toyota agency business due to its high loss ratio and focusing on more profitable business opportunities with other agencies, for example, Perodua. It also increased because of the increase of the “loading rate” (the additional premium charged to cars above a certain age) of third party commercial vehicles from 100% in FY2009 to 150% in FY2010 in all TIMB Group’s branches and an increase of TIMB Group’s focus on more profitable business from FY2009 to FY2010 resulting in an increase in Permit C policies (which are policies for certain commercial lorries in Malaysia) underwritten from FY2009 to FY2010.

Gross earned premiums for TIMB’s non-motor insurance class increased slightly despite a significant drop in the gross earned premiums frdfh marine cargo and marine insurance products as a result of a general increase in the gross earned premiums from non-MAT insurance products.

Premiums ceded to reinsurers

Pro forma premiums ceded to reinsurers increased by 3.7% from RMl 17.9 million for FY2009 to RM122.3 million for FY2010.

The increase in pro forma premiums ceded to reinsurers was due to an increase in premiums ceded to reinsurers by TIMB Group from RMl 17.4 million for FY2009 to RM121.5 million for FY2010 and an increase in premiums ceded to reinsurers by the TIH Group from RM524,000 for FY2009 to RM803.000 for FY2010.

The increase in premiums ceded to reinsurers for TIMB Group was a result of the increase in gross earned premiums, partially offset by TIMB Group generally ceding a smaller proportion of premiums to reinsurers.

Net earned premiums

As a result of the above, pro forma net earned premium increased by 19.5% from RM138.4 million for FY2009 to RM l65.4 million for FY2010.

Investment income

Pro forma investment income increased by 4.0% from RM12.6 million for FY2009 to RM13.1 million for FY2010. The increase in pro forma investment income was due entirely to an increase in investment income for TIMB Group from RM l2.6 million for FY2009 to RM l3.1 million for FY2010.

This increase was due to an increase in interest income from “loans-and receivables” deposits from RM3.1 million to RM4.2 million as a result of an increase in principal amount from RM146.5 million for FY2009 to RM181.1 million for FY2010, partially offset by a decrease in dividend income from RM l.5 million to RM970,000 and a decrease in interest income from “held-to-maturity” financial assets from RM l.6 million for FY2009 to RM1.3 million for FY2010 as a result of a decrease in principal amount from RM35.4 million for FY2009 to RM30.2 million for FY2010.

There was no investment income for TIH Group in FY2009 and FY2010.

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Realised gains and losses

Pro forma realised gains and losses decreased by 34.0% from RM4.7 million for FY2009 to RM3.1 million for FY2010.

The decrease in pro forma realised gains and losses was due to a decrease in realised gains and losses for TIMB Group from RM4.7 million for FY2009 to RM3.1 million for FY2010, which was primarily due a decrease in total realised gains for “available-for-sale” financial assets from RM4.7 million to RM3.1 million. The TIH Group did not have any realised gains and losses in FY2009 and FY2010.

Fees and commission income

Pro forma fees and commission income decreased by 18.7% from RM19.3 million for FY2009 to RM15.7 million for FY2010. This was attributable entirely to TIMB Group since the TIH Group did not have any fee and commission income for FY2009 and FY2010. The decrease was primarily due to an increase in retention ratio (the ratio of measuring the proportion of the premium TIMB retains as opposed to ceding to reinsurers) from 49.8% in FY2009 to 60.6% in FY2010. The increase in retention ratio is mainly due to the increase in the retention ratio of the non-motor insurance class.

Other operating income

Pro forma other operating income increased from RM123,000 for FY2009 to RM373.000 for FY2010, primarily due to an increase in proceeds from the disposal of fixed assets. TIH Group did not have any other operating income for FY2009 and FY2010.

Expenses

Total pro forma expenses increased by 4.1% from RM149.4 million for FY2009 to RMI55.5 million for FY2010.

See Section 11 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Prospectus for a discussion on the reasons for changes in expenses with respect to TIH Group.

Net claims

Pro forma net claims increased by 5.4% from RM88.9 million for FY2009 to RM93.7 million for FY2010.

The increase in pro forma net claims was due to an increase in net claims for TIMB Group from RM87.8 million for FY2009 to RM92.1 million for FY2010 and an increase in net claims for the TIH Group from RM1.1 million for FY2009 to RM1.5 million for FY2010. The increase in net claims for TIMB Group was primarily due to a decrease in change in contract liabilities ceded to insurers from RM125.8 million to RM58.1 million, a decrease in gross claims paid from RM226.1 million to RM129.6 million, a decrease in claims ceded to insurers from RM142 million to RM47.5 million and a decrease in gross change in contract liabilities from RM 122.1 million to RM48 million.

Net claims increased primarily because of an increase in “incurred but not reported” reserves for TIMB’s miscellaneous insurance class, an increase in the number of claims and average claim amount, and an increase in the loss ratio (proportion of net claims to net earned premiums) for TIMB’s motor and non­ motor insurance products classes.

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Fee and commission expenses

Pro forma fee and commission expenses increased by 4.9% from RM36.5 million for FY2009 to RM38.3 million for FY2010.

The increase in pro forma fee and commission expenses was due to an increase in fee and commission expenses for TIH Group from RMl 1.1 million for FY2009 to RM14.5 million for FY2010, partially offset by a decrease in fee and commission expenses for TIMB Group from RM25.5 million for FY2009 to RM23.8 million for FY2010.

Fee and commission expenses for TIMB Group comprise primarily commissions paid to agents, brokers and franchisees. The decrease for TIMB Group was primarily due to the decrease in policies sold from FY2009 to FY2010.

Management expenses

Pro forma management expenses decreased by 2.5% from RM24.0 million for FY2009 to RM23.4 million forFY2010.

The decrease in pro forma management expenses was due to a decrease in management expenses for TIMB Group from RM23.9 million for FY2009 to RM23.2 million for FY2010 which was partially offset by an increase in management expenses for TIH Group from RM178,000 for FY2009 to RM202,000 for FY2010.

The decrease in management expenses was primary due to decrease in employee benefits expenses by approximately RM1.0 million, due to decrease in wages and salaries and other benefits of RM0.5m respectively.

Other operating expenses

Pro forma other operating expenses increased from nil for FY2009 to RM99,000 for FY2010.

The increase in pro forma other operating expenses was due to an increase in other operating expenses for TEH Group from nil for FY2009 to RM99,000 for FY2010. The other operating expenses for TIMB Group remained unchanged at nil from FY2009 to FY2010.

THE REST OF THIS PA GE HAS BEEN INTENTIONALL YLEFT BLANK

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REPORTING ACCOUNTANTS’ LETTER ON THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION {Prepared for inclusion in the draft Prospectus of Tune Ins Holdings Berhad (formerly known as Tune Ins Holdings Sdn. Bhd.) to be dated 9 October 2012) [Date] The Board of Directors Tune Ins Holdings Berhad (formerly known as Tune Ins Holdings Sdn. Bhd.) Lot 5.01, Level 5, 1 Tech Park Tanjung Bandar Utama, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan Dear Sirs,

TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) REPORTING ACCOUNTANTS’ LETTER ON THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION We report on the accompanying pro forma consolidated financial information of Tune Ins Holdings Berhad (formerly known as Tune Ins Holdings Sdn. Bhd.) ("TIH" or "the Company") and its subsidiaries ("TIH Group” or "the Group") as set out in Appendix I. The pro forma consolidated financial information has been prepared by the Directors of TIH for illustrative purposes only, for inclusion in the Prospectus to be dated 9 October 2012 in connection with the listing of TIH on the Main Market of Bursa Malaysia Securities Berhad (“Bursa Securities”) and has been prepared on the basis described in the accompanying notes. The transactions that have been considered in this letter include the following (collectively referred to as "the proposals"):

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A. Additional investments in subsidiaries: The following transactions have been implemented as of the date of this letter: (a) Acquisition of an additional 0.3% equity interest in Tune Insurance Malaysia Berhad ("TIMB") (formerly known as Oriental Capital Assurance Berhad) from certain minority shareholders. (b) Settlement of balances with the holding company, Tune Money Sdn. Bhd. ("TMSB") and receipt of advances for additional investments in subsidiaries, involving: (i) Settlement of the following balances of the TIH Group with TMSB: - RM10,400,000 owing by TIH, to TMSB; and - RM10,000,000 each owing by Tune Money GenRe Ltd. ("TMGR") and Tune Money Life Re Ltd. ("TMLR") respectively, to TMSB. (ii) Receipt of advances of RM20,000,000 by TIH from TMSB for additional investments in TMGR and TMLR of RM10,000,000 each. B. Restructuring scheme: The following have been implemented as of the date of this letter: (a) Sub-division of 14,238,508 ordinary shares of TIH of RM1.00 each into 142,385,080 ordinary shares of RM0.10 each. (b) The issuance of 466,000,000 new ordinary shares of RM0.10 each in TIH to the holding company, TMSB via capitalisation of the amount owing to the holding company of RM46,600,000. The following will be implemented prior to TIH's listing scheme: (a) Exercise of Air Asia Berhad's option to purchase a 20% equity interest in TIH from TMSB at a price per share equal to the Net Book Value per share of TIH on the date the option is exercised, pursuant to a Call Option Agreement dated 20 April 2012. C. Listing scheme: In conjunction with the listing and quotation for TIH's shares on the Main Market of Bursa Securities, the following will be implemented: (a) Initial public offering and offer for sale of TIH's shares: Initial public offering of up to 210,224,929 ordinary shares of RM0.10 each in TIH comprising a public issue of up to 143,374,929 new ordinary shares of RM0.10 each in TIH ("public issue shares") and an offer for sale of up to 66,850,000 existing ordinary shares of TIH of RM0.10 each ("offer shares"), involving:

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C. Listing scheme (cont'cU: (a) Initial public offering and offer for sale of TIH's shares (cont'd.): (i) The institutional offering of up to 102,028,129 public issue shares and up to 66,850,000 offer shares to Bumiputera investors approved by the Ministry of Finance, other Malaysian institutional and selected investors and foreign institutional and selected investors at the institutional price to be determined by way of bookbuilding; and (ii) The retail offering of up to 41,346,800 public issue shares to Malaysian citizens, companies, co-operatives, societies and institutions, the eligible directors, employees and persons who have contributed to the success of TIH and its subsidiaries, at the retail price of RM[«] per public issue share. The above will be subject to clawback and reallocation provisions. This letter is required by and is given for the purpose of complying with the Prospectus Guidelines - Equity and Debt issued by the Securities Commission (“Prospectus Guidelines”) and for no other purpose. The pro forma consolidated financial information, because of its nature, may not be reflective of the Group’s actual financial results, financial position and cash flows.

Responsibilities It is solely the responsibility of the Board of Directors of TIH to prepare the pro forma consolidated financial information in accordance with the requirements of the Prospectus Guidelines. It is our responsibility to form an opinion as required by the Prospectus Guidelines, as to the proper compilation of the pro forma consolidated financial information, and to report our opinion to you. In providing this opinion, we are not responsible for updating or refreshing any reports or opinions previously made by us on any financial information used in the compilation of the pro forma consolidated financial information, nor do we accept responsibility for such reports or opinions beyond that owed to those to whom those reports or opinions were addressed by us at the dates of their issue.

Basis of Opinion We conducted our work in accordance with Malaysian Approved Standard on Assurance, ISAE 3000 - Assurance Engagements Other Than Audits or Reviews of Historical Financial Information. The work that we performed for the purpose of making this report, which involved no independent examination of any of the underlying financial information, consisted primarily of comparing the unadjusted financial information with the source documents, considering the evidence supporting the adjustments and discussing the pro forma consolidated financial information with the Directors of TIH.

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Basis of Opinion (cont'd.) We planned and performed our work so as to obtain the information and explanations we considered necessary in order to provide us with reasonable assurance that the pro forma consolidated financial information has been properly prepared on the basis stated using financial statements prepared in accordance with Malaysian Financial Reporting Standards, and in a manner consistent with both the format of the financial statements and the accounting policies adopted by the TIH Group. Our work also involves assessing whether each material adjustment made to the information used in the preparation of the pro forma consolidated financial information is appropriate for the purposes of preparing the pro forma consolidated financial information.

Our Opinion

In our opinion: (a) the pro forma consolidated financial information which has been prepared by the Directors of TIH has been properly prepared on the basis stated using the financial statements prepared in accordance with Malaysian Financial Reporting Standards and in a manner consistent with both the format of the financial statements and accounting policies adopted by the TIH Group; and (b) each material adjustment made to the information used in the preparation of the pro forma consolidated financial information is appropriate for the purposes of preparing the pro forma consolidated financial information.

Ernst & Young Brandon Bruce Sta Maria AF: 0039 No. 2937/09/13(J) Chartered Accountants Chartered Accountant Kuala Lumpur, Malaysia

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APPENDIX I

TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

1. Introduction The pro forma consolidated financial information of Tune Ins Holdings Berhad (formerly known as Tune Ins Holdings Sdn. Bhd.) ("TIH" or "the Company") and its subsidiaries (“TIH Group”), consists of the following: (a) The audited consolidated statements of financial position of TIH Group as at 30 June 2012; (b) The pro forma consolidated statements of comprehensive income of TIH Group for the financial years ended 31 December 2009, 31 December 2010 and 31 December 2011 and for the six-month financial period ended 30 June 2012; and

(c) The pro forma consolidated statements of cash flows of TIH Group for the financial years ended 31 December 2009, 31 December 2010 and 31 December 2011 and for the six- month financial period ended 30 June 2012. The basis of preparation of the pro forma consolidated financial information is further elaborated in Section 3 of this Appendix.

2. The Proposals A. Additional investments in subsidiaries: The following transactions have been implemented as of the date of this letter: (a) Acquisition of an additional 0.3% equity interest in Tune Insurance Malaysia Berhad ("TIMB") (formerly known as Oriental Capita! Assurance Berhad) from certain minority shareholders. (b) Settlement of balances with the holding company, Tune Money Sdn. Bhd. ("TMSB") and receipt of advances for additional investments in subsidiaries, involving: (i) Settlement of the following balances of the TIH Group with TMSB: - RM10,400,000 owing by TIH, to TMSB; and - RM10,000,000 each owing by Tune Money GenRe Ltd. ("TMGR") and Tune Money Life Re Ltd. ("TMLR") respectively, to TMSB. (ii) Receipt of advances of RM20,000,000 by TIH from TMSB for additional investments in TMGR and TMLR of RM10,000,000 each.

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

2. The Proposals (cont'd.) B. Restructuring scheme: The following have been implemented as of the date of this letter: (a) Sub-division of 14,238,508 ordinary shares of TIH of RM1.00 each into 142,385,080 ordinary shares of RM0.10 each. (b) The issuance of 466,000,000 new ordinary shares of RM0.10 each in TIH to the holding company, TMSB via capitalisation of the amount owing to the holding company of RM46,600,000. The following will be implemented prior to TIH's listing scheme: (a) Exercise of Air Asia Berhad's option to purchase a 20% equity interest in TIH from TMSB at a price per share equal to the Net Book Value per share of TIH on the date the option is exercised, pursuant to a Call Option Agreement dated 20 April 2012. C. Listing scheme: In conjunction with the listing and quotation for TIH's shares on the Main Market of Bursa Securities, the following will be implemented: (a) Initial public offering and offer for sale of TIH's shares: Initial public offering of up to 210,224,929 ordinary shares of RM0.10 each in TIH comprising a public issue of up to 143,374,929 new ordinary shares of RM0.10 each in TIH ("public issue shares") and an offer for sale of up to 66,850,000 existing ordinary shares of TIH of RM0.10 each ("offer shares"), involving: (i) The institutional offering of up to 102,028,129 public issue shares and up to 66,850,000 offer shares to Bumiputera investors approved by the Ministry of Finance, other Malaysian institutional and selected investors and foreign institutional and selected investors at the institutional price to be determined by way of bookbuilding; and (ii) The retail offering of up to 41,346,800 public issue shares to Malaysian citizens, companies, co-operatives, societies and institutions, the eligible directors, employees and persons who have contributed to the success of TIH and its subsidiaries, at the retail price of RM[»] per public issue share. The above will be subject to clawback and reallocation provisions.

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

3. Basis of preparation The pro forma consolidated financial information have been prepared for illustrative purposes only on the bases stated below, using the audited financial statements of the TIH Group and TIMB for the financial years ended 31 December 2009, 31 December 2010 and 31 December 2011 and for the six-month financial periods ended 30 June 2012. These financial statements have been prepared in accordance with Malaysian Financial Reporting Standards, and presented in a manner consistent with both the format of the financial statements and the accounting policies adopted by the TIH Group: (a) The pro forma consolidated statements of financial position as at 30 June 2012 are prepared to show the pro forma effects of each of the proposals described in Section 2 of this Appendix, with the exception of the exercise of AAB's option, which has been described in 2.B.{b). The exercise of AAB's option will not have any effect on the financial statements of the TIH Group as it involves a transaction between the existing shareholder of TIH, namely TMSB, and AAB. The pro forma consolidated statements of financial position have been prepared on the assumption that the relevant proposals have been completed as of 30 June 2012. (b) For the purposes of the pro forma consolidated statements of comprehensive income and statements of cash flows for the years ended 31 December 2009, 31 December 2010 and 31 December 2011 and for the six-month financial period ended 30 June 2012, the results and cash flows of the TIH Group includes those of TIMB, which was acquired on 23 May 2012. These pro forma statements of comprehensive income and pro forma statements of cash flows assume that the TIH Group (including TIMB) have been in existence throughout the financial years/period.

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

4. Pro forma consolidated statements of financial position at 30 June 2012

Audited <------— Pro forma —■ — > 30.06.12 1 II 111 IV V TIH Group: RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Note 5(a) Note 5(b) Note 5(c) Note 5(d) Note 5(e) Assets Property and equipment 10,197 10,197 10,197 10,197 10,197 [•] Investment property 2,406 2,406 2,406 2,406 2,406 [•] Intangible assets 123 123 123 123 123 [•] Goodwill 29,696 29,818 29,818 29,818 29,818 [•] Investments 478,400 478,400 478,400 478,400 478,400 [•] Reinsurance assets 153,777 153,777 153,777 153,777 153,777 M Insurance receivables 70,009 70,009 70,009 70,009 70,009 M Other receivables 28,395 28,395 28,395 28,395 28,395 W Cash and bank balances 23,525 23,525 13,125 13,125 13,125 [•] Total assets 796,528 796,650 786,250 786,250 786,250 [•]

Equity Share capital 14,238 14,238 14,238 14,238 60,838 W Share premium . -- -- [•] Available-for-sale reserves 10 10 10 10 10 M Merger deficit (13,838) (13,838) (13,838) (13,838) (13,838) [•] Retained earnings 33,655 33,655 33,655 33,655 33,655 [•] Equity attributable to owners of the parent 34,065 34,065 34,065 34,065 80,665 [•] Non-controlling interests 29,695 29,213 29,213 29,213 29,213 [•] Total equity 63,760 63,278 63,278 63,278 109,878 [•]

Liabilities Insurance contract liabilities 462,668 462,668 462,668 462,668 462,668 [•] Deferred tax liabilities 869 869 869 869 869 [•] Retirement benefits 1,069 1,069 1,069 1,069 1,069 [•] Term loans 129,453 129,453 129,453 129,453 129,453 [•] Insurance payables 61,894 61,894 61,894 61,894 61,894 [•I Other payables 19,815 20,419 20,419 20,419 20,419 [•] Advances from holding company 57,000 57,000 46,600 46,600 - [•] Total liabilities 732,768 733,372 722,972 722,972 676,372 [•]

Total equity and liabilities 796,528 796,650 786,250 786,250 786,250 [•]

Number of ordinary shares in issue ('000 units) 14,238 14,238 14,238 142,385 608,335 [•]

Net assets (excluding non-controliing interests) per ordinary share (RM) 2.39 2-39 2.39 0.24 0.13 M

Net tangible assets (excluding non-controlling interests and goodwill) per ordinary share (RM) 0.31 0.30 0.30 0.03 0.08 [•]

8

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

5. Effects on pro forma consolidated statements of financial position

(a) Pro forma consolidated statement of financial position I (Pro forma I) Acquisition of an additional 0.3% equity interest in TIMB Pro forma I incorporates the effects of the acquisition of an additional 0.3% equity interest in TIMB, a general insurance company, licensed under the Insurance Act, 1996 as if the additional acquisition had been completed on 30 June 2012. TIH's equity holding in TIMB as of 30 June 2012 was 82.96%. With the additional acquisition of 0.3%, the pro forma equity holding is 83.26%. The acquisition of TIMB was completed on 23 May 2012 for a cash consideration of RM163,632,000. The effects of the acquisition of the additional 0.3% equity interest in TIMB on goodwill, non­ controlling interests and other payables of the TIH Group are as follows:

Goodwill: RM'000

Audited goodwill, at 30 June 2012 29,696 Consideration to be paid in cash for the acquisition of an additional 0.3% equity interest in TIMB 604 Share of net assets of TIMB, at 0.3% (482) 122 Goodwill arising on acquisition, Pro forma I 29,818 Non-controlling interests: RM'000

Audited non-controlling interests, at 30 June 2012 29,695 Effects of acquisition of an additional 0.3% equity interest on non-controlling interests (482) Non-controlling interests, Pro forma I 29,213

Other payables: RM'000

Audited other payables, at 30 June 2012 19,815 Consideration to be paid in cash for the acquisition of an additional 0.3% equity interest in TIMB 604 Other payables, Pro forma I 20,419

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

5. Effects on pro forma consolidated statements of financial position (cont'd.)

(b) Pro forma consolidated statement of financial position II {Pro forma 11} Settlement of balances with the holding company, TMSB and receipt of advances for additional investments in subsidiaries Pro forma II incorporates Pro forma I and the effects of the following: (i) Settlement of the following balances of the TIH Group with TMSB: - RM10,400,000 owing by TIH, to TMSB; and - RM10,000,000 each owing by TMGR and TMLR respectively, to TMSB. (ii) Receipt of advances of RM20,000,000 by TIH from TMSB for additional investments in TMGR and TMLR of RM10,000,000 each. The effects of the above on advances from holding company and cash and bank balances are as follows: Advances from holding company: RM'000 RM'000 Advances from holding company, Pro forma I 57.000 Settlement of RM10,400,000 owing by TIH, to TMSB Settlement of RM10,000,000 each owing by TMGR and TMLR respectively, to TMSB (30.400) Receipt of additional advances of RM20,000,00G from TMSB 20.000 Advances from holding company, Pro forma II 46,600 Cash and bank balances: RM'000 Cash and bank balances, Pro forma I 23,525 Settlement of RM10,400,000 owing by TIH, to TMSB Settlement of RM10,000,000 each owing by TMGR and TMLR respectively, to TMSB (30.400) Receipt of additional advances of RM20,000,000 from TMSB 20,000 Cash and bank balances, Pro forma II 13,125 The advances of RM20,000,000 received by TIH from TMSB for additional investments in TMGR and TMLR will not have any effect on the net assets of the TIH Group.

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

5. Effects on pro forma consolidated statements of financial position (cont'd.)

(c) Pro forma consolidated statement of financial position III (Pro forma III) Sub-division of shares Pro forma III incorporates Pro forma I and Pro forma 11 and the effects of the sub-division of ordinary shares of TIH ("sub-division of shares"). For this purpose, 14,238,508 ordinary shares of TIH of RM1.00 each is sub-divided into 142,385,080 ordinary shares of RM0.10 each and the effect on share capital is as follows: Issued and paid-up share capital: Number of shares Amount '000 RM’000

Ordinary share capital of RM1.00 each, Pro forma II 14,238 14,238 Sub-division of shares 128,147 Ordinary share capital of RM0.10 each, Pro forma III 142,385 14,238 The sub-division of shares under Pro forma III does not have any effect on the total net assets of the TIH Group. However, the net assets and net tangible assets per ordinary share is reduced from RM2.39 and RM0.30 per share under Pro forma II to RM0.24 and RM0.03 per ordinary share respectively under Pro forma III.

(d) Pro forma consolidated statement of financial position IV (Pro forma IV) Capitalisation of advances from holding company Pro forma IV incorporates Pro forma I to Pro forma 111 and the effects arising from the issuance of 466,000,000 new ordinary shares of RM0.10 each in TIH to the holding company, TMSB via capitalisation of the advances from holding company of RM46,600,000. The new ordinary shares issued to TMSB rank pari passu with existing ordinary shares as of the date of capitalisation of the balances owing to TMSB. The effects of the above on advances from holding company and share capital are as follows:

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

5. Effects on pro forma consolidated statements of financial position (cont'd.)

(d) Pro forma consolidated statement of financial position IV (Pro forma IV) (cont'd.) Advances from holding company: RM'000

Advances from holding company, Pro forma III 46,600 Conversion to ordinary shares in TIH (46,600) Advances from holding company, Pro forma IV Issued and paid-up share capital: Number of shares '000 RM’000

Share capital, Proforma 111 142,385 14,238 Issuance of new ordinary shares of RM0.10 each to TMSB 466,000 46,600 Share capital, Pro forma IV 608,385 60,838

(e) Pro forma consolidated statement of financial position V (Pro forma V) Initial public offering and offer for sale of TIH's shares Pro forma V incorporates Pro forma I to Pro forma IV and the effects arising from the initial public offering of TIH's shares and the utilisation of the estimated proceeds from the initial public offering. In conjunction with the listing and quotation for TIH's shares on the Main Market of Bursa Securities, the following will be implemented: Initial public offering of up to 210,224,929 ordinary shares of RM0.10 each in TIH comprising a public issue of up to 143,374,929 new ordinary shares of RM0.10 each in TIH ("public issue shares") and an offer for sale of up to 66,850,000 existing ordinary shares of TIH of RM0.10 each ("offer shares"), involving:

(i) The institutional offering of up to 102,028,129 public issue shares and up to 66,850,000 offer shares to Bumiputera investors approved by the Ministry of Finance, other Malaysian institutional and selected investors and foreign institutional and selected investors at the institutional price to be determined by way of bookbuilding; and

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

5. Effects on pro forma consolidated statements of financial position (cont'd.)

(e) Pro forma consolidated statement of financial position V (Pro forma V) (cont'd.) (ii) The retail offering of up to 41,346,800 public issue shares to Malaysian citizens, companies, co-operatives, societies and institutions, the eligible directors, employees and persons who have contributed to the success of TIH and its subsidiaries, at the retail price of RM[»] per public issue share. The above will be subject to clawback and reallocation provisions. For purposes of Pro forma V, the initial public offer price for both the institutional and retail offerings are assumed to be RM[»] per share. The expected utilisation of the estimated proceeds from the initial public offering are as follows: RM'000

Repayment of term loans from licensed banks [•] Working capital [•] Future strategic acquisitions !•] Estimated listing expenses _W_ [•] It is assumed that RM6,700,000 out of the total estimated listing expenses of RM10,000,000 will qualify for set-off against the share premium account arising from the listing of TIH's shares and the balance of RM3,300,000 of the estimated listing expenses will be expensed to profit and loss. The effects of Pro forma V on cash and bank balances, share capital, share premium, retained earnings and term loans of the TIH Group are as follows: Cash and bank balances: RM'000 RM'000

Cash and bank balances, Pro forma II to IV [•] Net cash inflow arising as a result of Initial Public Offering: Cash received from listing of 143,374,929 new TIH shares at an issue price of RM[»] per share [•l Estimated listing expenses [•] Repayment of term loans from licensed banks [•] [•] Cash and bank balances, Pro forma V [•]

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

6. Pro forma consolidated statements of comprehensive income for the financial years ended 31 December 2009, 2010 and 2011 and the six-m onth financial period ended 30 Ju n e 2012

— Pro forma — ----- > 01.01.2012 01.01.2011 01.01.2010 01.01.2009 to to to to 30.06.2012 31.12.2011 31.12.2010 31.12.2009 TIH Group: RM’000 RM'000 RM'000 RM'000

Operating revenue 181,439 319,331 300,789 268,923

Gross earned premium 172,689 301,263 287,669 256,329 Premiums ceded to reinsurers (67,626) (90,408) (122,287) (117,911) Net earned premiums 105,063 210,855 165,382 138,418

Investment income 8,750 18,068 13,120 12,594 Realised gains and losses 5,262 6,060 3,144 4,739 Fees and commission income 8,727 13,551 15,747 19,329 Other operating income 1,167 156 373 123 Other revenue 23,906 37,835 32,384 36,785

Gross claims paid (54,946) (138,293) (130,796) (226,205) Claims ceded to reinsurers 13,554 55,849 47,533 141,960 Gross changes to contract liabilities (29,989) 11,002 47,693 121,222 Change in contract liabilities ceded to reinsurers 5,357 (38,444) (58,084) (125,844) Net claim s (66,024) (109,886) (93,654) (88,867) Fee and commission expenses (23,308) (43,302) (38,304) (36,528) Management expenses (17,331) (24,186) (23,431) (24,046) Other operating expenses (1,309) (2,150) (99) Finance costs (2,733) O ther expenses (44,681) (69,638) (61,834) (60,574) Profit before taxation 18,264 69,166 42,278 25,762 Taxation (1,761) (8,738) (5,685) (2,751) Net profit for the period/year 16,503 60,428 36,593 23,011

Other comprehensive income: Available-for-sale fair value reserves: Gain on fair value changes of AFS investments 3,766 6,616 7,233 14,548 Realised gain transferred to income statements (5,257) (6,032) (3,089) (4,716) Deferred tax relating to components of other comprehensive income 373 (146) (1,036) (2,459) Other comprehensive income, net of taxation (1,118) 438 3,108 7,373 Total comprehensive income for the period/year 15,385 60,866 39,701 30,384

Profit attributable to: Owners of the parent 13,060 49,113 29,607 18,597 Non-controlling interests 3,443 11,315 6,986 4,414 16,503 60,428 36,593 23,011 Total comprehensive income attributable to: Owners of the parent 12,127 49,478 32,195 24,736 Non-controlling interests 3,258 11,388 7,506 5,648 15,385 60,866 39,701 30,384

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

7. Pro forma consolidated statements of cash flows for the financial years ended 31 December 2009, 2010 and 2011 and for the six-month financial period ended 30 June 2012

<------pro fo rm a ------> 01.01.2012 01.01.2011 01.01.2010 01.01.2009 to to to to 30.06.2012 31.12.2011 31.12.2010 31.12.2009 TIH G roup: RM'000 RM'000 RM'000 RM'000

Operating activities:

Profit before taxation 18,264 69,166 42,278 25,762

Investment income (8,752) (18,093) (13,293) (12,647) Realised gain on disposal of investments (5,257) (6,032) (3,089) (4,716) Purchases of AFS financial assets (38,241) (52,225) (55,018) (85,224) Proceeds from maturities/disposal of AFS financial assets 48,209 39,960 40,836 69,206 Proceeds from maturities/disposal of HTM financial assets 30,000 5,000 16,982 Increase in loans and receivables (23,327) (56,998) (42,520) 5,101

Non-cash items Gain on disposal of property and equipment (5) (28) (55) (23) Depreciation of property and equipment 394 505 515 909 Depreciation of investment property 11 22 21 22 Amortisation of intangible assets 30 148 101 115 Impairment loss of property and equipment 2,150 Net amortisation of premiums on investment 25 173 53 Reversal of impairment losses of insurance receivables (3,661) (3,759) (511) (403) Allowance for staff retirement gratuities 85 202 180

Changes in working capital: Reinsurance assets 4,410 25,371 93,875 122,975 Insurance receivables (12,772) 13,619 (8,147) (28,517) Other receivables 1,986 (3,297) 2,098 (2,195) Insurance contract liabilities 18,370 5,109 (71,862) (102,642) Insurance payables 10,685 507 10,412 (1,664) Other payables 2,661 (6,781) (1,252) 15,162 Cash generated from/(used in) operating activities 13,007 39,454 (236) 18,436

Net interest received 5,970 15,536 10,831 8,813 Net dividend received 813 1,858 908 1,011 Rental received 183 346 356 368 Retirement benefits paid (267) (297) (774) (1,287) Income tax paid (2,382) (3,439) (2,668) 10,621 Net cash flows generated from operating activities 17,324 53,458 8,417 37,962

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TUNE INS HOLDINGS BERHAD (FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) NOTES TO THE PRO FORMA CONSOLIDATED FINANCIAL INFORMATION

7. Pro forma consolidated statements of cash flows for the financial years ended 31 December 2009, 2010 and 2011 and for the six-month financial period ended 30 June 2012 (cont’d.)

<------pro fo rm a ------> 01.01.2012 01.01.2011 01.01.2010 01.01.2009 to to to to 30.06.2012 31.12.2011 31.12.2010 31.12.2009 TIH Group: RM'000 RM'000 RM’000 RM'000

Investing activities

Proceeds from disposal of property and equipment 5 29 55 23 Purchase of property and equipment (321) (489) (231) (206) Purchase of subsidiaries (163,028) Purchase of intangibles (186) (51) Net cash flows (used in)/generated from investing activities (163,344) (646) (176) (234)

Financing activities

Net borrowings 129,453 Amount owing to ultimate holding company 40,018 17,218 - - Issuance of share capital --- 500 Dividends paid to equity holders of the parent - (20,400) (16,929) (5,120) Dividends paid to non-controlling interests (2,500) (8,100) (4,232) (1,280) Net cash flows generated from/(used in) financing activities 166,971 (11,282) (21,161) (5,900)

Net increase/(decrease) in cash and cash equivalents 20,951 41,530 (12,920) 31,828 Cash and cash equivalents at beginning of period/year 118,413 76,883 89,803 57,975 Cash and cash equivalents at end of periodyyear 139,364 118,413 76,883 89,803

Cash and cash equivalents comprise: Fixed and call deposits (with maturity of less than three months) 115,839 104,706 73,285 81,219 Cash and bank balances 23,525 13,707 3,598 8,584 139,364 118,413 76,883 89,803

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13. ACCOUNTANTS’ REPORT

I...... Ernst & Young A F ; 0 0 3 9 =!l E r n s t & Y o u n g Level 23A, Menara Milenium Jalan Damanleta Pusat Bandar Damansara 50490 Kuata Lumpur, Malaysia Mail address: P.O. Bo* 11040 50734 Kuala Lumpur, Malaysia Tel: +603 7495 8000 Fax: +603 2095 5332 (Genera! line) +603 2095 9076 +603 2095 9078 Accountants’ report ww w .ey.com (Prepared for inclusion in the draft Prospectus to be dated 9 October 2012} 4 October 2012 The Board of Directors Tune Ins Holdings Berhad (Formerly known as Tune Ins Holdings Sdn. Bhd.) Lot 5.01, Level 5, 1 Tech Park Tanjung Bandar Utama, Bandar Utama 47800 Petaling Jaya Selangor Darul Ehsan

Dear Sirs,

TUNE INS HOLDINGS BERHAD {FORMERLY KNOWN AS TUNE INS HOLDINGS SDN. BHD.) ACCOUNTANTS' REPORT

1. PURPOSE OF REPORT This report has been prepared by Ernst & Young, for inclusion in the Prospectus in connection with the listing of Tune Ins Holdings Berhad (“TIH" or “the Company”) on the Main Market of Bursa Malaysia Securities Berhad ("Bursa Securities”). The details of the listing scheme are disclosed in Note 2.4 in this report.

2. DETAILS OF THE PROPOSALS

2.1 THE COMPANY The Company was incorporated as a private limited liability company on 14 June 2011. On 17 August 2012, the Company converted its status from a private company to a public company. Accordingly, the name of the Company was changed from Tune Ins Holdings Sdn. Bhd. to Tune Ins Holdings Berhad. The registered office of the Company is located at B-13-15, Level 13, Menara Prima Tower B, Jalan PJU 1/39, Dataran Prima, 47301 Petaling Jaya, Selangor Darul Ehsan. The Company is an investment holding company. The principaf activities of the subsidiaries are described in Note 1.1 of Section I - TIH Group.

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2. DETAILS OF THE PROPOSALS (CONT’D.)

2.1 THE COMPANY (CONT’D.) There have been no significant changes in the nature of the activities of the Company and its subsidiaries, other than: (a) Acquisition of Tune Money GenRe Ltd. {'TMGR") from Tune Money Sdn Bhd ('TMSB"), the holding company of the Company on 1 August 2011; (b) Acquisition of Tune Money Life Re Ltd. ("TMLR") from TMSB on 1 August 2011; (c) Acquisition of Tune Insurance (Labuan) Ltd. ("TIL") from TMSB on 19 September 2011; and (d) Acquisition of Tune Insurance Malaysia Berhad ("TIMB") (formerly known as Oriental Capital Assurance Berhad ("OCA")) and its subsidiary ("TIMB Group"), Capital OCA Berhad, on 23 May 2012. as disclosed in Note 1 of Section I - TIH Group.

2.2 ACQUISITION OF A NEW SUBSIDIARY AND ADDITIONAL INVESTMENTS IN EXISTING SUBSIDIARIES The following transactions have been implemented subsequent to 30 June 2012 and prior to the restructuring scheme in Note 2.3 of Section I - TIH Group: (a) Acquisition of an additional 0.3% equity interest in TIMB, as described in Note 4.5.4 of Section I - TIH Group. (b) Settlement of balances with the holding company, Tune Money Sdn. Bhd. ("TMSB") and receipt of advances for additional investments in subsidiaries, involving: (i) Settlement of existing loans totalling RM10,400,000 by TIH, to TMSB; (ii) Advances of RM20,000,000 by TIH from TMSB for additional investment in TIH's subsidiaries, TMGR and TMLR; and (iii) Settlement of existing loans totalling RM20,000,000 by TMGR and TMLR, to TMSB.

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13. ACCOUNTANTS’ REPORT (Cont’d)

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2.3 RESTRUCTURING SCHEME The following have been implemented as of the date of this letter: (a) Sub-division of 14,238,508 ordinary shares of TIH of RM1.00 each into 142,385,080 ordinary shares of RM0.10 each. (b) The issuance of 466,000,000 new ordinary shares of RM0.10 each in TIH to the holding company, TMSB via capitalisation of the amount owing to the holding company of RM46,600,000. The following wil! be implemented prior to TIH's listing scheme: (a) Exercise of Air Asia Berhad's option to purchase a 20% equity interest in TIH from TMSB at a price per share equal to the Net Book Value per share of TIH on the date the option is exercised, pursuant to a Call Option Agreement dated 20 April 2012.

2.4 LISTING SCHEME In conjunction with the listing and quotation for TIH’s shares on the Main Market of Bursa Securities, the following will be implemented: (a) Initial public offering and offer for sale of TIH's shares Initial public offering of up to 210,224,929 ordinary shares of RM0.10 each in TIH comprising a public issue of up to 143,374,929 new ordinary shares of RM0.10 each in TIH ("public issue shares”) and an offer for sale of up to 66,850,000 existing ordinary shares of TIH of RM0.10 each ("offer shares"), involving: (i) The institutional offering of up to 102,028,129 public issue shares and up to 66,850,000 offer shares to Bumiputera investors approved by the Ministry of Finance, other Malaysian institutional and selected investors and foreign institutional and selected investors at the institutional price to be determined by way of bookbuilding; and (ii) The retail offering of up to 41,346,800 public issue shares to Malaysian citizens, companies, co-operatives, societies and institutions, the eligible directors, employees and persons who have contributed to the success of TIH and its subsidiaries, at the retail price to be determined, per public issue share.

3. CONTENT OF THIS REPORT This Accountants' Report is divided into the following sections: Section I : TIH and its subsidiaries ("TIH Group") Section II : TIMB and its subsidiary ("TIMB Group") Section 111: TIH Group's significant accounting policies

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3. CONTENT OF THIS REPORT (CONT’D.) The consolidated financial information presented in this report are for the financial period/ years ended 31 December 2009, 2010 and 2011 and for the six-month financial period ended 30 June 2012 of the TIH Group and TIMB Group. TIMB Group was acquired by TIH on 23 May 2012 and therefore has only been consolidated and reported as part of the TIH Group for the financial period ended 30 June 2012 from the date of acquisition.

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SECTION I TIH GROUP

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13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

1. GROUP STRUCTURE The structure of TIH Group as at 30 June 2012 is as follows:

1.1 SUBSIDIARIES

The subsidiaries of TIH, all of which are incorporated in Malaysia, are as follows: =U E

Name of Date of Date of Principal Proportion of ownership interest {%) t s n r subsidiaries incorporation acquisition activities 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Y & 1. TMGR 10.02.2011 01.08.2011 Operating a general 100.00 100.00 reinsurance business g n u o

2. TMLR 06.04.2011 01.08.2011 Operating a life 100.00 100.00 reinsurance business 3. TIL 27.03.2009 19.09.2011 Operating an offshore 80.00 80.00 captive insurance business 4. TIMB 27.12.1976 23.05.2012 Underwriting of all 82.96 classes of general insurance business 5. Capital 10.02.1971 23.05.2012 Dormant 82.96 OCA Berhad (Held via TIMB)

6 299 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

1. GROUP STRUCTURE (CONT’D.)

1.1 SUBSIDIARIES (CONTD.)

Acquisition of subsidiaries (cont'd.)

(i) Acquisition of TMGR, TMLR and TiL: =!l

(a) TMGR and TMLR: E t s n r On 1 August 2011, TIH acquired the following:

(1) 100% of the issued and paid-up share capital of TMGR from its holding company, TMSB, comprising 1 ordinary share of USD1 Y & each for a cash consideration of USD1. g n u o (2) 100% of the issued and paid-up share capital of TMLR from TMSB, comprising 1 ordinary share of USD1 each for a cash consideration of USD! (b) TIL: On 19 September 2011, the TIH acquired 80% of the issued and paid-up share capital of TIL from TMSB, comprising 114,400 ordinary shares of USD1 each for a purchase consideration of RM14,238,506, being the net assets (excluding non-controlling interest) as of that date. The purchase consideration was satisfied by way of issuance of 14,238,000 ordinary shares of RM1 each in the Company at par to the holding company, TMSB. The acquisitions of the 100% equity interest in TMGR and TMLR on 1 August 2011 and the 80% equity interest in TIL on 19 September 2011 arose from a common control transfer and have been accounted for in the consolidated financial statements using merger method of accounting, as if the group structure had been in existence throughout 2009, 2010, 2011 and 2012, or since their respective dates of incorporation, whichever is the shorter period.

7 300 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

1. GROUP STRUCTURE (CONT'D.)

1.1 SUBSIDIARIES (CONT’D.)

Acquisition of subsidiaries (cont'd.)

(i) Acquisition of TMGR, TMLR and TIL (cont’d.): =!l

This manner of presentation reflects the economic substance of the combining companies, which were under common control throughout E the relevant periods, as a single economic entity, although certain legal parent-subsidiary relationships were not in place until after the t s n r respective reporting dates.

Accordingly, the assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial Y &

statements of the controlling holding company. Any difference between the consideration paid and the share capital of the "acquired” entity g n u o is reflected within equity as merger reserve or deficit. (ii) Acquisition of TIMB and its subsidiary, Capital OCA Berhad: On 23 April 2012, TIH signed a Share Sale Agreements with Maika Holdings Berhad, G Team Resources & Holding Sdn. Bhd. and Gryss Holdings Sdn. Bhd to acquire their 77.92% and 1.92% equity holdings respectively in TIMB. Pursuant to the Share Sale Agreements and in accordance with the Malaysian Code on Take-Overs and Mergers, TIH made a mandatory general offer ("general offer") to the remaining shareholders of TIMB to acquire their respective individual shareholdings thereon. Certain individual shareholders had accepted the general offer, which ended on 9 July 2012. As a result of this exercise, TIH has acquired an additional 3.12% in TIMB, resulting in an equity holding of 82.96% in TIMB as at 30 June 2012. The total purchase consideration for the said 82.96% stake in TIMB amounted to RM163,028,000. The details of the acquisition of the above subsidiaries and the effect of the said transactions on the financial statements of the TIH Group are shown in Note 4.5.4 of Section I - TIH Group.

8 301 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

1 TIH GROUP

1. GROUP STRUCTURE (CONT'D.)

1.2 ASSOCIATES The TIH Group did not have any associates as at 31 December 2009, 2010 and 2011 and 30 June 2012. =!l 2. FINANCIAL STATEMENTS AND AUDITORS E Messrs. Horwath TH Liew Tong (AAL: 0029) audited the financial statements of TIL for the financial period/years ended ("FYE") 31 December rnst 2009, 2010 and 2011 and TMGR and TMLR for the financial period ended 31 December 2011. Messrs. Crowe Horwath (AF: 1018) audited the financial statements of TIH for the financial period ended 31 December 2011. The financial statements of TIL for the FYE 31 December 2009, Y & 2010 and 2011 and TMGR, TMLR and TIH for the FYE 31 December 2011 were prepared in accordance with Financial Reporting Standard (“FRS") in Malaysia. The independent auditors’ reports issued in respect of the above financial statements were not subject to any qualification. g n u o For the purposes of the submission of the proposed listing scheme of TIH to the Securities Commission of Malaysia, Ernst & Young (AF : 0039) have been appointed to conduct a special purpose audit on the financial statements of TIH Group for the FYE 31 December 2009, 2010 and 2011 and for the six-months period ended 30 June 2012 in accordance with Approved Standards on Auditing in Malaysia. The financial information presented in this report were derived from the audited financial statements of TIH Group, as audited by us for FYE 31 December 2009, 2010 and 2011 and for the six-month period ended 30 June 2012 and have been prepared using the Malaysian Financial Reporting Standards ("MFRS"). Our audit opinions in respect of the said financial years/period were not subject to any qualification. The six-month comparable comparatives period ended 30 June 2011 included in the audited financial statements for the six-month period ended 30 June 2012 have not been audited by us or any other independent auditors.

9 302 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

1. GROUP STRUCTURE (CONT'D.)

3. BASIS OF PREPARATION The financial information of the TiH Group as set out in the following sections are extracted from the financial statements for the relevant financial years/period covered in this report. These financial statements have been audited by Ernst & Young Malaysia for the purposes of the proposed listing of TIH on the Main Market of Bursa Malaysia Securities Berhad ("proposed listing"). The scope of work involved in the preparation of this report does not constitute an audit in accordance with approved standards on auditing in Malaysia. The presentation currency of TIH Group is Ringgit Malaysia CRM”).

10 303 Company No. 948454-K

I...... =!l E r n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP

4.1 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION The consolidated statements of financial position of TIH Group based on its audited financial statements for the financial period/years ended 31 December 2009, 2010 and 2011 and the six-month period ended 30 June 2012, are as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group Note RM'000 RM'000 RM’000 RM’000

Assets Property and equipment 4.5.1 10,197 3 4 - Investment property 4.5.2 2,406 - - - Intangible assets 4.5.3 123 --- Investment in subsidiaries 4.5.4 - - - - Goodwill 4.5.5 29,696 --- Investments 4.5.6 478,400 24,715 -- Reinsurance assets 4.5.7 153,777 223 228 154 Insurance receivables 4.5.8 70,009 16,771 26,806 17,503 Other receivables 4.5.9 28,395 63 -- Cash and bank balances 23,525 8,555 456 677 Total assets 796,528 50,330 27,494 18,334

Equity Share capital 4.5.10 14,238 14,238 -- Merger (deficit)/reserve 4.5.11 (13,838) (13,838) 400 400 Available-for-safe reserves 10 - - - Retained earnings 33,655 19,698 12,843 8,650 Equity attributable to owners of the parent 34,065 20,098 13,243 9,050 Non-controlling interests 29,695 1,631 3,311 2,263 Total equity 63,760 21,729 16,554 11,313

Liabilities Insurance contract liabilities 4.5.12 462,668 10,481 9,465 6,552 Deferred tax liabilities 4.5.13 869 --- Provision for taxation - 20 20 20 Borrowings 4.5.14 129,453 - - - Insurance payables 4.5.15 61,894 156 1,397 358 Retirement benefits 4.5.16 1,069 --- Other payables 4.5.17 76,815 17,944 58 91 Total liabilities 732,768 28,601 10,940 7,021

Total equity and liabilities 796,528 50,330 27,494 18,334

11

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.2 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME The consolidated statements of comprehensive income of TIH Group based on its audited financial statements for the financial period/years ended 31 December 2009, 2010 and 2011 and the six-month period ended 30 June 2012, and unaudited statement of comprehensive income for the six-months period ended 30 June 2011, are as follows:

Audited Unaudited 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group Note RM'000 RM'000 RM'000 RM’000 RM’000

Operating revenue 4.5.18 67,693 26,807 55,870 43,523 30,049 Gross earned premiums 4.5.19(a]) 65,851 26,807 55,493 43,523 30,049 Premiums ceded to reinsurers 4.5.19(b]) (19,440) (505) (1,063) (803) (524) Net earned premiums 46,411 26,302 54,430 42,720 29,525

Investment income 4.5.20 1,842 - 377 - - Realised gains and losses 4.5.21 1,061 - - - - Fees and commission income 1,360 - - - - Other operating income 4.5.22 886 _ 26 _ Other revenue 5,149 - 403 - - Gross claims paid 4.5.23(a)I (12,910) (366) (1,123) (1,222) (127) Claims ceded to reinsurers 4.5.23(b)I 3,629 -- - - Gross change to contract liabilities 4.5.23(c) (2,974) (572) (819) (302) (925) Change in contract liabilities ceded to reinsurers 4.5.23(d)' 2,254 . Net claims (10,001) (938) (1,942) (1,524) (1,052) Fees and commission expense (12,563) (8,637) (17,292) (14,473) (11,062) Management expenses 4.5.24 (6,608) (95) (1,404) (202) (178) Other operating expenses 4.5.22 (1,309) -- (99) - Finance costs 4.5.25 (2,733) ---- Other expenses (23,213) (8,732) (18,696) (14,774) (11,240)

12

305 I...... =!l E r n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.2 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (CONT'D.)

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group Note RM'000 RM'000 RM'000 RM’000 RM’000

Profit before taxation 18,346 16,632 34,195 26,422 17,233 Taxation 4.5.26 Net profit for the period/year 16,633 16,612 34,175 26,402 17,213

Movements in available-for-sale fair vaiue reserves: Gain on fair value changes of AFS investments 1,073 ---- Realised gain transferred to profit or loss (1,057) ---- Deferred tax relating to components of other comprehensive income (4) Net other comprehensive income for the period 12 Total comprehensive income for the period 16,645 16,812 34,175 26,402 17,213

Profit attributable to: Owners of the parent 13,957 13,290 27,255 21,122 13,770 Non-controlling interest 2,676 3,322 6,920 5,280 3,443 16,633 16,612 34,175 26,402 17,213

Other comprehensive income attributable to: Owners of the parent 10 Non-controlling interest 2 ---- 12 ----

Total comprehensive income attributable to: Owners of the parent 13,967 13,290 27,255 21,122 13,770 Non-controlling interest 2,678 3,322 6,920 5,280 3,443 16,645 16,612 34,175 26,402 17,213

Earnings per share attributable to owners of the parent (RM per share) Basic 4.5.27 1.0 13,290.0 6.8 n/a n/a

13

306 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.3 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The consolidated statements of changes in equity of TIH Group based on its audited financial statements for the financial period/years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, and unaudited statements of changes in equity for the six-month period ended 30 June 2011, are as follows: =!l <- Attributable to the owners of the parent -> E

D is- rnst Non distributable tributable Y & Merger Available- Non- Share (deficit)/ for-sale Retained controlling Total

capital reserve reserves earnings Total interest equity g n u o Group RM'000 RM'000 RM'000 RM’000 RM'000 RM'000 RM'000 (Note 4.5.10 (Note 4.5.11 of Section I - of Section I - Financial period/year: TIH Group) TIH Group)

At date of incorporation on 27 March 2009 - _ _ _ Issuance of shares during the period - 400 - - 400 100 500 Total comprehensive income for the period --- 13,770 13,770 3,443 17,213 Dividends (Note 4.5.28 of Section I - TIH Group) - - - (5,120) (5,120) (1,280) (6,400) At 31 December 2009 - 400 - 8,650 9,050 2,263 11,313 Total comprehensive income for the year -- - 21,122 21,122 5,280 26,402 Dividends (Note 4.5.28 of Section I - TIH Group) -- (16,929) (16.929) (4,232) (21,161) At 31 December 2010 - 400 - 12,843 13,243 3,311 16,554 Issuance of shares during the year 14,238 (14,238) - ---- Total comprehensive income for the year - - - 27,255 27,255 6,920 34,175 Dividends (Note 4.5.28 of Section I - TIH Group) -- - (20,400) (20,400) (8,600) (29,000) At 31 December 2011 14,238 (13,838) - 19,698 20,098 1,631 21,729

14 307 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.3 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (CONT'D.)

<• Attributable to the owners of the parent ->

D is- Non distributable tributable =!l

Merger Available- Non­ E

Share (deficit)/ for-sale Retained controlling Total t s n r capital reserve reserves earnings Total interest equity G ro u p RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

(N ote 4.5.10 (N ote 4.5.11 Y & o f S ectio n I - o f S ectio n I - For the six-month financial period: TIH Group) TIH Group) g n u o

Unaudited:

A t1 Ja n u a ry 2011 _ 400 12,843 13,243 3,311 16,554 Total comprehensive income for the period --- 13,290 13,290 3,322 16,612 Dividends (Note 4.5.28 of Section I - TIH Group) --- (16,400) (16,400) (4,100) (20,500)

A t 30 Ju n e 2011 • 400 - 9,733 10,133 2,533 12,666

A udited:

At 1 January 2012 14,238 (13,838) . 19,698 20,098 1,631 21,729 Arising from acquisition of a subsidiary

(Note 4.5.4{ii) of Section I - TIH Group) - ---- 27,386 27,386 Total comprehensive income for the period -- 10 13,957 13,967 2,678 16,645 Dividends (Note 4.5.28 of Section I - TIH Group) ----- (2,000) (2,000) A t 30 Ju n e 2012 14,238 (13,838) 10 33,655 34,065 29,695 63,760

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.4 CONSOLIDATED STATEMENTS OF CASH FLOWS The consolidated statements of cash flows of TIH Group based on its audited financial statements for the financial period/years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, and unaudited statements of cash flows for the six- month period ended 30 June 2011, are as follows:

Cash flows from operating activities Profit before taxation 18,346 16,632 34,195 26,422 17,233 Adjustments for: Investment income (1,842) - (377) - - Realised gain on disposal of investments (1,057) - - - - Purchases of AFS financial assets (80) - - - - Proceeds from maturities/ disposal of AFS financial assets 2,992 - - Increase in LAR 7,556 - - Gain on disposal of property and equipment (4) - - Depreciation of property and equipment 66 - 1 Depreciation of investment property 2 - - Amortisation of intangible assets 5 - - Reversal of allowance for impairment losses of insurance receivables (2,147) ---- Operating profit before working capital changes: 23,837 16,632 33,819 26,422 17,233 Reinsurance assets 10,387 (12) 4 (74) (154) insurance receivables (996) 3,897 10,035 (9,303) (17,503) Other receivables (1,980) - (62) -- Insurance contract liabilities (9,161) 1,018 1,016 2,913 6,552 Insurance payables (2,752) (1,130) (1,241) 1,040 357 Other payables (3,725) 47 168 (34) 92 Cash generated from operating activities 15,610 20,452 43,739 20,964 6,577

16

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.4 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT’D.)

Audited Unaudited — Audited — 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 G ro u p RM’000 RM'000 RM'000 RM’000 RM’000

Net interest received 1,817 377 Net dividend received 160 Rental received 31 Retirement benefits paid (68) Income tax paid J2 2 1 got J201. Net cash generated from operating activities 17,186 20,432 44,096 20,944 6,577

Investing activities Proceeds from disposal of property and equipment 4 Purchase of property and e q u ip m e n t (182) -- (4) - Acquisition of a subsidiary (77,885) - - ~ - Net cash used in investing activities (78,063) (4)

Financing activities Proceeds from borrowings 129,453 Advances from holding compan;y 40,018 - 17,218 -- Advances from subsidiaries ---- 500 Dividends paid to equity holders (20,400) (16,929) (5,120) o f th e p a re n t (16,400) Dividends paid to non-controllinci in te re st (2,500) (4,100) (8,100) (4,232) (1,280) Net cash generated from/ (used in) financing activities 166,971 (20,500) (11,282) (21,161) (5,900)

Net increase/(decrease) in cash and cash equivalents 106,094 (68) 32,814 (221) 677 Cash and cash equivalents at beginning of periods/ years/at the date of incorporation 33,270 456 456 677 - Cash and cash equivalents at end of periods/years 139,364 388 33,270 456 677

310 Company No. 948454-K

I...... =!l E r n s t & Y o u n g Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS

4.5.1 Property and equipment

Furniture,

fittings, =!l <------Properties------> office

Buildings on equipment E Freehold freehold Motor and rnst land land Renovation vehicles computers Total Group RM'000 RM’000 RM'000 RM'000 RM'000 RM'000 Y &

Cost At 1 January 2010 4 4 g n u o Additions - - -- D isposals At 31 D ecem b er 2010 4 4 Additions • -- - D isposals At 31 D ecem b er 2011 - - - - 4 4 Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 9,263 4,271 2,241 955 17,358 34,088 A dditions - - 91 - 91 182 D isposals ---- (921) (921) At 30 June 2012 9,263 4,271 2,332 955 16,532 33,353

19 312 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.1 Property and equipment (cont’d.)

F u rn itu re, fittin g s, =!l <------P r o p e r tie s ------> office

Buildings on e q u ip m e n t E

F re e h o ld freeh o ld M otor a n d t s n r land land Renovation v e h ic le s c o m p u te rs T otal G ro u p RM '000 RM'000 RM'000 RM '000 RM’000 RM’000 Y & Accumulated depreciation and impairment loss At 1 January 2010 g n u o C h arg e for th e y e ar D isposals At 31 D ecem ber 2010

C h arg e for th e y ear -- - - 1 1 D isposals

At 31 D ecem b er 2011 - - - - 1 1 Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 2,150 1,971 2,046 902 16,941 24,010 Charge for the period 7 6 2 51 66 D isposals -- -- (921) (921) At 30 June 2012 2,150 1,978 2,052 904 16,072 23,156

Net carrying amount At 31 December 2010 4 4

At 31 December 2011 -- - - 3 3 At 30 June 2012 7,113 2,293 280 51 460 10,197

20 313 Company No. 948454-K

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.2 Investment property

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 Freehold land and building:

Cost At 1 January - - - - Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - T IH Group) 2,408 - - - Less: Accumulateddepreciation ______;______:______- At 30 June / 31 December 2,406______-______-______- Fair value _____ 3,000

The fair value is determined based on the discounted cash flow of the expected rental income from the investment property, which has been estimated using a valuation technique based on certain assumptions of rental income and discount rate. M anagement believes the estimated fair values resulting from the valuation technique are reasonable and the most appropriate at the reporting date.

4.5.3 Intangible assets

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM’000 RM’000 Computer software

Cost At 1 January - - - - Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 2,158 - - - A dditions ______;______-______;______At 30 June 1 31 December ______2,1 5 8 ______:______:______

Accumulated amortisation At 1 January Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 2,030 Amortisation ______5 At 30 June / 31 December _____ 2,035 Net carrying amount ______123

21

314 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investment in subsidiaries

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

Name of Date of Date of Principal Proportion of ownership interest (%) =U E subsidiaries incorporation acquisition activities 30.06.2012 31.12.2011 31.12.2010 31.12.2009 t s n r 1. TMGR 10.02.2011 01.06.2011 Operating a general 100.00 100.00 reinsurance business

2. TMLR 06.04.2011 01.08,2011 Operating a life 100.00 100.00 Y & reinsurance business g n u o 3. TIL 27.03.2009 19.09.2011 Operating an offshore 80.00 80.00 captive insurance business

TIMB 27.12.1976 23.05.2012 Operating a general 82.96 insurance business

5. Capital 10.02.1971 23.05.2012 Dormant 82.96 OCA Berhad (Held via TIMB)

22 315 Company No. 948454-K

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.4 Investment in subsidiaries (cont'd.)

Acquisition of subsidiaries

(i) TMGR, TMLR and TIL

TMGR and TMLR:

On 1 August 2011, TIH acquired the following:

(a) 100% of the issued and paid-up share capital of TMGR from its holding company, TMSB, comprising 1 ordinary share of USD1 each for a cash consideration of USD1.

(b) 100% of the issued and paid-up share capital of TMLR from TMSB, comprising 1 ordinary share of USD1 each for a cash consideration of USD1.

TIL:

On 19 September 2011,TIH acquired 80% of the issued and paid-up share capital of TIL from TMSB, comprising 114,400 ordinary shares of USD1 each for a purchase consideration of RM14,238,506, being the net assets (excluding non-controlling interest) as of that date. The purchase consideration was satisfied by way of issuance of 14,238,000 ordinary shares of RM1 each in TIH at par to the holding company, TMSB.

The acquisition of the 100% equity interest in TMGR and TMLR on 1 August 2011 and the 80% equity interest in in TIL on 19 Septem ber 2011 arise from a common control transfer and have been accounted for in the consolidated financial statements under the principle of merger method of accounting.

Details of net assets of TIL acquired are as follows: Recognised acquisition values RM’000 Assets Equipment 4 Due from cedant 13,648 Cash and bank balances ______5 ,3 4 2 Total assets 18,994

Liabilities Insurance contract liabilities 208 Provision for taxation 20 Insurance payables 870 Other payables ______98 Total liabilities ______1,196

23

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i TiH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.4 Investment in subsidiaries (cont’d.)

Acquisition of subsidiaries (cont'd.)

(i) TMGR, TMLR and TIL (cont'd.)

Recognised acquisition values RM’000

Net identifiable assets 17,798 Non-controlling interest (3 ,5 6 0 ) Total purchase consideration 1 4 ,2 3 8

Basis of consolidation of TMGR, TMLR and TIL

The acquisitions of the 100% equity interest in TMGR and TMLR on 1 August 2011 and the 80% equity interest in TIL on 19 September 2011 arose from a common control transfer and have been accounted for in the consolidated financial statements using merger method of accounting, as if the group structure had been in existence throughout 2009, 2010 and 2011, or since their respective dates of incorporation, whichever is the shorter period.

This manner of presentation reflects the economic substance of the combining companies, which were under common control throughout the relevant periods, as a single economic entity, although certain legal parent-subsidiary relationships were not incorporated until after the respective reporting dates.

Accordingly, the assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the “acquired" entity is reflected within equity as m erger reserve or deficit.

The merger (deficit)/reserve arising as a result of the above are as follows:

<------Audited------30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM’000 RM’000

Purchase consideration (14,238) (1 4 ,2 3 8 ) Less: Carrying value of ordinary shares in TMGR, TMLR and TIL acquired 400 4 0 0 4 0 0 4 0 0 Merger (deficit)/reserve (Note 4.5.11 of Section I -TIH Group) (1 3 ,8 3 8 ) (13,838) 400 4 0 0

24

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investment in subsidiaries (cont'd.)

Acquisition of subsidiaries (cont’d.)

(ii) Acquisition of TIMB and its subsidiary, Capital OCA Berhad On 23 April 2012, TIH signed a Share Sale Agreements with Maika Holdings Berhad, G Team Resources & Holding Sdn. Bhd. and Gryss Holdings Sdn. Bhd to acquire its 77.92% and 1.92% equity holdings respectively in TIMB. Pursuant to the Share Sale Agreements and in accordance with the Malaysian Code on Take-Overs and Mergers, TIH made a mandatory general offer ("general offer'1) to the remaining shareholders of TIMB to acquire their respective individual shareholdings thereon. Certain individual shareholders had accepted the general offer, which ended on 9 July 2012. As a result of this exercise, TIH has acquired an additional 3.12% in TIMB, resulting in an equity holding of 82.96% in TIMB as at 30 June 2012. The total purchase consideration for the said 82.96% stake in TIMB amounted to RM163,028,000. (a) Details of the acquisition of TIMB and the net assets acquired as of 23 May 2012 are as follows:

RM'000 Purchase consideration: -Cash paid 163,028 - Share of net assets of subsidiary acquired (133,332) Goodwill 29,696 Details of net assets of subsidiary acquired are as follows:

Recognised acquisition values RM’000 Assets Property and equipment 10,078 Investment property 2,408 Intangible assets 128 Investments 446,106 Reinsurance assets 163,943 Insurance receivables 52,287 Other receivables 27,253 Cash and bank balances 5,838 Total assets 708,041

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investment in subsidiaries (cont'd.)

Acquisition of subsidiaries (cont'd.)

(ii) Acquisition of TIMB and its subsidiary, Capital OCA Berhad (cont'd.) (a) Details of the acquisition of TIMB and the net assets acquired as of 23 May 2012 are as follows (cont'd ): Recognised acquisition values RM’000 Liabilities Insurance contract liabilities 461,348 Deferred tax liabilities 939 Insurance payables 64,490 Other payables 19,409 Retirement benefits ______1,137 Total liabilities 547,323 Net identifiable assets 160,718 Non-controlling interest (27,386) Share of net assets acquired 133,332 (b) The effect of the acquisition on cash flows is as follows:

RM’000 Details of cash flows arising from the acquisition are as follows: Purchase consideration settled in cash 163,028 Less: Cash and cash equivalents of subsidiary acquired Fixed and call deposits (with maturity of less than three months) with licensed financial institutions (79,305) Cash and bank balances (5,838) Net cash outflow of TIH on acquisition of subsidiary 77,885 (c) Provisional accounting for the acquisition of TIMB Group As at 30 June 2012, TIH has accounted for the acquisition of TIMB Group on a provisional basis as the purchase price allocation ("PPA") exercise and allocation of goodwill to specific cash generating units ("CGU") are not yet completed. TIH anticipates to be able to complete the PPA and allocation of goodwill exercises not exceeding one year from the acquisition date. Upon the completion of these exercise, the carrying amount of the residual goodwill will be adjusted accordingly on a retrospective basis.

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investment in subsidiaries (cont'd.)

Cessation and commencement of business by the subsidiaries The Board of Directors of TIL had, on 4 July 2012 resolved that TIL will cease to underwrite new reinsurance contracts and have put the insurance business of TIL into run-off, effective from March 2012. TMLR and TMGR commenced their principal activities as a life reinsurer and a general reinsurer respectively in July 2011 and December 2011.

4.5.5 Goodwill

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 At 1 January - - - - Arising from acquisition of a subsidiary (Note 4.5.4(ii) 29,696 - - - of Section I - TIH G r o u p ) ______At 30 June / 31 December 29,696 ______-______-______- The goodwill above arose from the acquisition of TIMB on 23 May 2012. Goodwill is allocated to the TIH Group’s Cash Generating Unit (“CGU") which is expected to benefit from the synergies of the acquisition. The recoverable amount of the CGU is assessed based on its value-in-use and compared to the carrying value of the CGU to determine whether any impairment exists. Impairment is recognised in profit or loss if the carrying amount of the CGU exceeds its recoverable amount. The value-in-use calculations apply discounted cash flow projections prepared and approved by management, covering a five-year period. The other key assumptions for the computation of value-in-use are as follows: (i) The growth in business volume is expected to be at 10% per annum; (ii) The discount rate applied is the internal weighted average cost of capital of TIMB at the time of the assessment, which is estimated to be 10.2% per annum (pre-tax discount rate of 13.6% per annum); and (iii) Terminal value cash flow growth rate of 5%, which is consistent with the Gross Domestic Product rate. The allocation of goodwill exercise for TIMB Group is provisional in nature, as at 30 June 2012, as disclosed in Note 4.5.4(ii)(c) of Section I - TIH Group.

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.5 Goodwill (cont'd.) Management believes that reasonably possible changes in any of the above key assumptions would not cause the carrying value of the CGU to exceed its recoverable amount. Accordingly, there is no evidence of impairment of goodwill as at the financial period-end.

4.5.6 Investments

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000

Debt securities 133,609 - - - Equity securities 21,041 - - - Unit and property trust funds 19,791 - - - L o an s 771 - - - D ep o sits with financial institutions 303,188______24,715______-______- 478,400 24,715______-______- The Group’s financial investments are summarised by categories as follows: LAR (Note (a)) 303,959 24,715 AFS financial assets (Note (b)) 174,441______-______478,400 24,715______

(a) LAR

------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000

At amortised cost: Fixed and call deposits with licensed financial institutions 303.188 24,715 - - Loans receivable: Staff mortgage loans 736 - -- Other staff loans: Secured 35 - -- 771 -- - 303,959 24,715 - - Included in fixed and call deposits with licensed financial institutions of the TIH Group are short term deposits with maturity periods of less than 3 months amounting to RM115,839,000 (2011: RM24,715,000) which have been classified as cash and cash equivalents for the purpose of the statements of cash flows.

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322 Company No. 948454-K

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.6 Investments (cont’d.)

(d) Fair values of financial investments The following tables show financial investments recorded at fair value analysed by the different bases as follows:

AFS Group RM'000

30 June 2012 Quoted market bid price 174,266 At cost less impairment 175 174,441 Included in the quoted category are financial instruments that are measured in whole or in part by reference to quoted market bid prices. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, secondary market via dealer and broker, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm's length basis. For the Group and TIH's unquoted equity securities, fair value cannot be measured reliably. These financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. For financial investments carried at fair value, please refer to Note 4.5.36 of Section I - TIH Group for the fair value hierarchy disclosure.

(e) Average effective interest rates The average effective interest rates and the earlier of the contractual re-pricing or maturity dates for each class of interest-bearing investment and placements with licensed financial institutions, at net carrying amounts are as below:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 % % % % Debt securities 4.69 Loans 5.00 Deposits with financial institutions 3.37 3.30

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TiH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.7 Reinsurance assets

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 Claims liabilities (Note 4.5.12 (i) of Section I - TIH Group) 127,364 - - - Premium liabilities (Note 4.5.12 (ii) of Section I-TIH Group) 26,413 223 228 154 153,777 223 228 154

4.5.8 Insurance receivables

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 Due premiums including agents, brokers and co-insurers balances 36,286 - - - Due from reinsurers and cedants 53,066______16,771______26,806______17,503 89,352 16,771 26,806 17,503 Accumulated impairment loss (19,343) - - - 70,009 16,771 26,806 17,503

Movement in allowance accounts: At 1 January Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) (17,196) Impairment losses written-off (1,443) Reversal of allowance for impairment losses (704) At 30 June / 31 December (19,343)

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.9 Other receivables

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM’000 RM’000 RM’000

Financial assets: Income due and accrued 5,085 - - - Assets held under the Malaysian Motor Insurance Poo! ("MMIP") 20,174 - - - Other receivables ______1,231______63______:______- 26,490______63______-______-

Non-financial asset: Tax recoverable 1,905 - 28,395______63 The carrying amounts of financial assets included under other receivables (excluding net assets held under MMIP) approximate their respective fair values due to the relatively short­ term maturity of these balances.

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325 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.10 Share capital

Number of ordinary shares of RM1 e a c h Amount =!l

30.06.2012 31.12.2011 31.12.2010 31.12.2009 30.06.2012 31.12.2011 31.12.2010 31.12.2009 E

'000 '000 '000 '000 RM'000 RM'000 RM'000 RM'000 t s n r Authorised: At 1 January / date of incorporation 25,000 100 25,000 100 Created during the period 24,900 24,900 Y & At 30 June / 31 December 25,000 25,000 - 25,000 25,000 - g n u o Issued and fully paid: At 1 January / date of incorporation 14,238 * - 14,238 * - Issued during the period pu rsu an t to acquisition of TIL 14,238 14,238 At 30 June / 31 December 14,238 14,238 - 14,238 14,238 -

The holders of ordinary shares are entitled to receive dividends as and when declared by TIH. Allordinary shares carry one vote per share without restrictions and rank equally with regard to TIH's residual assets.

TIH issued 14,238,000 ordinary shares of RM1.00 each at par to its holding company for the acquisition of an 80% equity interest in TIL. The new ordinary shares issued ranked pari passu with the existing ordinary shares in issue as of the issuance date.

* Denotes share capital of RM2.00

33 326 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.11 Merger (deficitj/reserve

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM’000 RM’000

Merger (deficit)/reserve (13,838) (13,838) 400 400

Merger (deficst)/reserve represents the difference between consideration given and the carrying value of ordinary shares of the subsidiary acquired.

34 327 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.12 Insurance contract liabilities

30.06.2012 31.12.2011 31.12.2010 31.12.2009 Reinsu­ Reinsu­ Reinsu­ Reinsu­ Gross rance Net Gross rance Net Gross rance Net Gross rance Net =!l RM‘000 RM'000 RM'000 RM'000 RM'000 RM'000 RM’000 RM'000 RM'000 RM‘000 RM'000 RM'000 E Provision for claims reported t s n r by policyholders 241,370 (94,850} 146,520 503 - 503 105 - 105 100 - 100 Provision for IBNR claims 108,503 (32,514) 75,989 1,543 1,543 1,122 1,122 825 825 Claims liabilities {i) 349,873 (127,364) 222,509 2,046 2,046 1,227 1,227 925 925 Premium liabilities (ii) 86.382 8,435 (223) 8.212 8,238 (228) 8,010 5,627 (154) 5,473 112,795 (26,413) Y & 462,668 (153,777) 308,891 10,481 (223) 10,258 9,465 (228) 9,237 6,552 (154) 6,398

(i) Claims liabilities g n u o

At 1 January / date of incorporation 2,046 2,046 1,227 1,227 925 925 _ Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 344,853 (128,603) 216,250 ------Claims incurred in the current accident year 24,336 (3,057) 21,279 1,942 - 1,942 1,524 - 1,524 1,052 - 1,052 Adjustment to claims incurred in prior accident years due to changes in accident years due to changes in assumptions (8,452) 667 (7,785) ------• - Claims paid during the period/years (12,910) 3,629 (9.281) (1.123) _ (1,123) (1,222) - (1,222) (127) - (127) At 30 June / 31 December 349,873 (127,364) 222,509 2,046 - 2,046 1,227 - 1,227 925 - 925

35 328 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.12 Insurance contract liabilities (cont'd.)

<- - Audited - 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Reinsu­ Reinsu­ Reinsu­ Reinsu- Gross rance Net Gross rance Net Gross rance Net Gross ranee Net =!l RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM’000 RM'000 RM’000 RM'000 E (ii) Premium liabilities t s n r

At 1 January / date of incorporation 8,435 (223) 8,212 8,238 (228) 8,010 5,627 (154) 5,473

Arising from acquisition of a Y & subsidiary (Note 4.5.4(ii} of Section I - TIH Group) 116,495 (35,340) 81,155

Premiums written in the g n u o period /years 53,716 (10,290) 43,426 55,690 (1,058) 54,632 46,134 (877) 45,257 35,676 (678) 34,998 Premiums earned during period/years (65,851) 19,440 (46.411) (55,493) 1,063 (54,430) (43,523) 803 (42,720) (30.049) 524 (29,525) At 30 June / 31 December 112,795 (26,413) 86.382 8,435 (223) 8,212 a,238 (228) 8,010 5,627 Ji54i_ 5,473

36 329 Company No. 948454-K

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.13 Deferred tax liabilities

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 At 1 January - - - - Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I- T IH Group) (939) - - - Recognised in: Profit or loss 74 - - - Other comprehensive income ______(4)______;______^______At 30 June / 31 December ______(869)______-______-______-

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the sam e tax authority.

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM’000 RM’000 RM’000

Presented after appropriate offsetting as follows: Deferred tax liabilities (1,193) - - - D eferre d tax a s s e t s ______324______-______-______( 8 6 9 ) ______:______;______

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332 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.14 Borrowings (cont'd.)

However, pursuant to Clause 8.2 of the Term Loan Facility Agreement dated 21 May 2012, TIH is required to undertake mandatory repayment of loan in whole or in part at any time during the tenure upon receiving the proceeds arising from its listing exercise on the Main Market of Bursa Securities.

With the anticipation that the listing exercise will be carried out by November to December 2012, the term loan is classified as short term and repayable within 1 year as at 30 June 2012.

The carrying amount approximates fair value due to the relatively short-term maturity.

The fair value of the borrowing is determined by reference to discounting the present value of future cash flows, discounted at the market rate of profit at the end of the reporting date.

4.5.15 Insurance payables

<------Audited------30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000RM’000

Due to agents, brokers, co-insurers and insureds 17,119 - - - Due to reinsurers and cedants 4 4 ,7 7 5 ______156______1,397______358 61,894 156 1,397 358 The carrying amounts approximate fair value due to their relatively short-term maturity.

4.5.16 Retirement benefits

< Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000

At 1 January - - - - Arising from acquisition of a subsidiary (Note 4.5.4(ii) of Section I - TIH Group) 1,137 - - - Payments during the year ______{68]______-______-______^ At 30 June / 31 December _____ 1,069______-______-______-

Amount payable after 12 months ______1,069

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333 Company No. 948454-K

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

Financial liabilities: Amount due to holding company 57,748 17,218 - - Dividend payable - 500 Finance cost payable 853 - - - Claims payable 5,887 - - - Reinsurance deposits 2,784 - - - O th e rs 3,704______226______58______91 70,976 17,944 58 91 Non-financial liabilities: Accrued expenses 5,839______;______-______- 76,815 17,944______58______91

The carrying am ounts approximate fair value due to their relatively short-term maturity.

Included in the amount due to holding company of the Group and TIH are net advances received of RM57,000,000 (31.12.2011: RM20,000,000) and RM37,000,000, respectively, taken for the purpose of the acquisition of TIMB and working fund of the Company and its subsidiaries. This advances is unsecured and repayable on demand.

The weighted average effective interest rates for the advances are as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 % % % %

Advances from holding company ______6 .08 ______4 .8 5

The amount due to subsidiaries is unsecured, interest free and is repayable on demand.

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1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.18 Operating revenue

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000

Gross earned premium (Note 4.5.19 of Section I - TIH Group) 65,851 26,807 55,493 43,523 30,049 Investment income (Note 4.5.20 of Section I - TIH Group) 1,842 377 67,693 26,807 55,870 43,523 3 0 ,0 4 9

4.5,19 Net earned premiums

Audited Unaudited — Audited — ------> 11.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 10.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000

(a) Gross earned premiums General insurance c o n tra c ts 5 3 ,7 1 6 27,253 55,690 46,134 35,676 C h a n g e in prem ium liabilities 12,135 (446) (197) (2,611) (5,627) 65,851 26,807 55,493 43,523 30,049

(b) Premiums ceded to reinsurers General insurance c o n tra c ts 10,290 517 1,058 877 678 C h a n g e in prem ium liabilities 9,1 5 0 (12) 5 (74) (154) 1 9,440 5 05 1,063 803 524 Net earned premiums 46,411 2 6 ,3 0 2 54,430 42,720 29,525

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336 Company No. 948454-K

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44

337 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.23 Net claims

Audited Unaudited <------— Audited ------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000

(a) Gross claims paid General insurance contracts (12,910)

(b) Claims ceded to reinsurers General insurance contracts 3,629

N et c laim s paid (a) (9,281) (366) (1,123) (1,222) (127)

(c) Gross change to contract liabilities General insurance contracts (2,974) (572) (819) (302) (925)

(d) Change in contract liabilities ceded to reinsurers Genera] insurance contracts 2,254 - - . - -

N et c h a n g e in c o n tra c t liabilities (b) (720) (572) (819) (302) (925)

Net claims (a)+(b) (10,001) (938) (1,942) (1,524) (1,052)

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338 Company No. 948454-K

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i TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.24 Management expenses

Audited Unaudited — Audited -­ 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM’000 RM'000 RM’000 RM’000 Reimbursement of expenses incurred by the holding company: Staff costs: - Salaries and bonuses 1,507 - 506 -- - Defined contribution plan 158 - 52 - - - Staff recruitment costs 29 - --- - Other employee benefits 43 _ 11 -- 1,737 - 569 -- Marketing expenses 14 - 5 - - Rental of premises 28 - 12 - - Professional fees 34 - 147 -- Administration and general expenses 385 273 -- 2,198 1,006 Reimbursement of expenses incurred by the cedant company: Provision for Takaful and Insurance Benefits Protection System/ (2010/2009: Insurance Guarantee Scheme Fund Levies) 46 84 66 Employee benefits expense (Note 4.5.24(a) of Section I - TIH Group) 1,786 Directors' remuneration (Note 4.5.24(b)) Section I - TIH Group) 28 26 Auditors’ remuneration: - statutory audits 67 40 28 25 Depreciation of property and equipment 66

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I TIH GROUP

Depreciation of investment property 2 Amortisation of intangible assets 5 Reversal of allowance for impairment losses on insurance receivables (704) Provision for Takaful and Issuance Benefits Protection System 34 Marketing expenses 1,834 138 Rental of premises 70 Professional fees 10 88 Printing charges 49 Publicity expenses 203 Communication expenses 40 Computer expenses 42 Administration and general expenses 878 49 106______90______87 6,608 95 1,404______202______178

(a) Employee benefits expense Wages and salaries 1,296 Social security contributions 12 Contributions to defined contribution plan-EPF 206 Other benefits 272 1,786

(b) Directors’ remuneration The details of directors' remuneration for the year/period are as follows: Non-executive directors: Fees 17 - 24 Allowances and other emoluments ______11______;______2 28 - 26

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I TIH GROUP 4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.25 Finance costs

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM'000 RM’000 RM’000

Interest expense on: Borrowings - term loans 1,490 Advances from holding company 1,243 2,733 ----

4.5,26 Taxation

Audited Unaudited < ------■— Audited — ------> 11.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 10.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000 Current income tax: Malaysian income tax 1,899 20 20 20 20 Over provision in prior year (112) ___ 1,787 20 20 20 20 Deferred tax (Note 4.5.13 of Section I - TIH Group) Relating to origination and reversal of temporary differences (51) Over provision in prior year (23) _- -- (74) ---- 1,713 20 20 20 20 TIH is not subject to tax as it is in a tax loss position. The Labuan subsidiaries are entitled to elect to pay tax of 3% of the chargeable profits or RM20.000 based on the election under Section 7 of the Labuan Business Activity Tax Act, 1990 in respect of its chargeable profits for the years/period. The income tax for the general insurance subsidiary namely, TIMB, is based on the tax rate of 25% of the estimated assessable profit for the financial period.

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341 Company No. 948454-K

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.26 Taxation (cont'd.) A reconciliation of income tax expense applicable to profit before taxation at the statutory income tax rate to income tax expenses at the effective income tax rate is as follows:

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I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.27 Earnings per share Earnings per share is calculated by dividing the profit for the year/period attributable to ordinary equity holder of TIH by the weighted average number of ordinary shares in issue during the year/period.

There were no dilutive potential ordinary shares as at the end of the respective year/period. There have been no other transactions involving ordinary shares between the reporting date and the date of completion of these financial statements. The earnings per share for the financial period ended 31 December 2009 and financial year ended 31 December 2010 was not computed as TiH was not in existence as of that dates.

* Denotes share capital of RM2.00

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343 Company No. 948454-K

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[ TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.28 Dividends

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000 Recognised during the financial years/period: Dividend on ordinary shares: Interim tax exempt dividend of RM69.93 per ordinary share in respect of the financial period ended 30 June 2012 2,000 Interim tax exempt dividend of RM244.75 per ordinary share in respect of the financial year ended 31 December 2011 - 20,500 21,000 Final tax exempt dividend of RM55.94 per ordinary share in respect of the financial year ended 31 December 2010 - - 8,000 Interim tax exempt dividend of RM147.98 per ordinary share in respect of the financial year ended 31 December 2010 - - - 21,161 Interim tax exempt dividend of RM44.76 per ordinary share in respect of the financial period ended 31 December 2009 ______:______:______:______-______6,400 2,000 20,500 29,000 21,161______6,400 The dividend per ordinary share disclosed above is arrived at based on the total dividends paid by the TIH Group to the holding company and non-controlling interest, divided by the number of ordinary shares of TIL as of the respective dates of declaration/payment of the dividends. The number of ordinary shares of TIL is used as the Group and TIH were not in existence as of the dates such dividends were declared/paid.

51

344 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Operating lease arrangements

(a) TIH as lessee TIH has entered into a lease agreement for rental of office premises. The future aggregate minimum lease payments under operating lease contracted for as at the reporting date but not recognised as liabilities are as follows:

Future minimum rental payments: <------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000

Rental of office premises: Payable within one year 661 Payable after one year ______275 936

(b) TIH as lessor TIH has entered into a non-cancellable operating lease arrangement on its investment property. The lease have remaining non-cancellable lease term of 3 years. The future minimum lease payments receivable under a non-cancellabie operating lease contracted for as at the reporting date but not recognised as receivables, are as foilows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000 Receivable within one year 341 Receivable after one year ______364 705 Renta! income on investment property recognised in the statements of comprehensive income during the relevant financial years is disclosed in Note 4.5.20 of Section I - TIH Group.

52

345 I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Capital commitments The commitments of the Group and TIH as at the financial period-end are as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM’000

Capital expenditure: Approved but not contracted for: Property and equipment 10,000 10,000

4.5.31 Related party disclosures

(a) Significant related party transactions The TIH Group had the following significant transactions with related parties during the financial year/period:

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM’000 RM‘000 RM’000 (Expense)/income:

Holding company, TMSB: Reimbursement of expenses incurred (2,198) (1,006) Dividend paid (16,400) (20,400) (16,929) (5,120)

Corporate shareholder of a subsidiary, TIL: Dividend paid (2,000) (4,100) (8,600) (4,232) (1,280) Gross earned premiums 12,208 26,807 54,457 43,523 30,049 Fee and commission expense (2,194) (8,637) (16,752) (14,473) (11,062) Reimbursement of expenses _ (46) - 84 66 Gross claims paid (681) (366) (1,123) (1,222) (127) Details of balances with related parties at the end of the respective years/period are disclosed in Notes 4.5.9 and 4.5.17 of Section I - TIH Group.

53

346 I...... =!l Er n s t & Y o u n g

54

347 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.32 Regulatory capital/working fund and solvency requirements of subsidiaries

(i) TMGR, TMLR and TIL The Guidelines on Application for License - Insurance and Insurance Related Activities ("the Guideline") was introduced as the capital adequacy, working fund and solvency requirement for all insurers licensed under the Labuan Financial Services and Securities Act 2010 ("LFSSA 2010") effective from 13 December 1997. It has been imposed by the Labuan Financial Services Authority ("Labuan FSA"), pursuant to Section 109 of the LFSSA 2010 as a licensing condition for insurance companies.

(a) TMGR and TMLR TMGR and TMLR, as Labuan reinsurers are required to maintain at all times, a minimum paid-up capital/networking funds of RM10.0 million each. In addition, TMGR and TMLR are also each required to have minimum solvency margin of: (1) RM10.0 million; or (2) 20% of net premium income of the preceding year, whichever is greater. As at 30 June 2012, TMGR and TMLR's paid-up capital was USD1 and is not in compliance with the Guideline. As disclosed in Note 4.5.40 of Section I - TIH Group, TIH, on 12 September 2012 has contributed additional paid-up capital of USD3,207,287 each for TMGR and TMLR via advances received from its holding company, TMSB, in order to make good the deficiency and to ensure compliance by the subsidiaries with the capital adequacy requirement stipulated in the Guideline.

(b) TIL TIL, as a Labuan captive insurer is required to maintain at all times a surplus of assets over liabilities, which is: (1) equivalent to, or more than the amount of it’s working fund; or (2) 20% of the net premium income for the preceding year in respect of the general insurance business, whichever is greater. As at 30 June 2012, TIL’s margin of solvency shows a deficiency of RM2,385,000 (2011: RM897.000). As TIL is currently in run-off, TIH will continue to support its operations should there not be sufficient working funds available to meet the subsidiary’s obligations and liabilities as and when they fall due.

55

348 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.32 Regulatory capital/working fund and solvency requirements of subsidiaries

(ii) TIMB

Regulatory capital requirement The capital structure of TIMB as at 30 June 2012, as prescribed under the RBC Framework, is provided as below:

30.06.2012 RM'000

4.5.33 Risk management framework The Board of the insurance subsidiary has established a Risk Management Committee ("RMC) of 3 members, comprising two Non-Executive Directors, the Chief Executive Officer and other members of staff. The Committee is responsible for regularly identifying risks, ensuring that adequate risk management policies and procedures are in place, and monitoring compliance with policies and procedures. The Committee has worked with the Management to develop these policies and both Management and Board have agreed to adopt these policies to govern the running of the business.

Risk appetite The insurance subsidiary's risk appetite has been established as 3% of shareholders funds i.e. approximately RM4 million on any one event or series of events arising from a single cause.

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349 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I...... " =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies The TIH Group's financial risk management policy seeks to ensure that adequate financial resources are available for the development of the TIH Group’s business whilst managing the key risks faced by the TtH Group.

A. Underwriting

i. Risk Acceptance of poor insurance risks, risks with low profit margins and inadequate reinsurance arrangements contribute to low profitability and inadequate capital growth. Insurance risk is also the risk of outstanding insurance contract liabilities being greater than estimated.

ii. Policy The following outlines the TIH Group’s policies to safeguard against these risks: (a) Underwrite only classes of risks which have been approved by the Board; (b) Accept risks within the approved classes only according to comprehensive underwriting guidelines and within limits of delegated authority; (c) Expand into new lines only where there is adequate experience within the TIH Group and after management has obtained appropriate Board authority; (d) Price risks with sufficient margin to ensure ongoing viability of the business, and maintaining a professional approach to this function; (e) Retain risks according to guidelines on maximum risks to be retained; (f) Mitigate foreign currency risks on reinsurance by all significant reinsurance arrangements being entered into in Malaysian Ringgit; (g) Ensure compliance with treaty arrangements in accepting risks; (h) Maintain a balanced portfolio to yield a reasonable level of profits; and (i) Review on a regular basis the reserves for unearned premiums and IBNR claims.

57

350 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies (cont'd.)

B. Reinsurance Maintain prudent reinsurance arrangements with reputable reinsurers to safeguard the ongoing viability of the business including its capacity to meet obligations to cedants and shareholders. Assess the credit worthiness of reinsurance counterparties and their ability to service their claims obligations.

C. Claims

i. Risk Exposure to unexpected or excessive losses, fraudulent claims and inadequate provisions for outstanding claims could affect the TIH Group’s profitability, financial position and reputation.

ii. Policy The TIH Group's policies to guard against these risks are: (a) Identify claims exposures and properly assess them, and routinely review them upon advent of further information and at least once a year. (b) Maintain good claims administration and settlement processes to ensure prudent claims estimation and appropriate loss adjustment. (c) Make adequate provisions for all claims liabilities, especially for long-tail liabilities and the effect of superimposed inflation and adverse foreign exchange movements on such liabilities. (d) Assess exposure to fraud periodically and employ measures to minimise potential losses through accepting claims outside contractual obligations for fraudulent reasons and for detecting fraudulent claims. (e) Ensure that losses are mitigated and potential recovery action is followed up in a professional and timely fashion.

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351 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies (cont'd.)

D. Investments

I. Risk Investment risk is the risk of inadequate investment returns from poor investment strategies and adverse movements in the value of investments. Investment risk is derived from market risk, credit risk, investment concentration risk, liquidity risk, and asset/liability mismatch risk.

ii. Policy Returns from investment of premium income are an important source of income to TIH and maintenance of the market value of the investments is essential for the financial stability of the TIH Group. Absence of prudent investment strategies and investment decision framework could result in poor investment return which would affect the TIH Group’s profitability and competitiveness and also result in the TIH Group not being able to meet its obligations as they fall due. It is the TIH Group's policy to: (a) Implement an investment strategy to ensure appropriate asset allocation, concentration of investments and matching of asset and liability portfolios. (b) Ensure that investments are held in different classes within limits specified by the Investment Committee. (c) Undertake a thorough analysis before making an investment to minimise market risk and continuously monitor the performance and risk of the investment. (d) Manage disposal of investments to optimise the returns on realisation. (e) Limit exposure to interest rate risk by investing in term deposits, corporate bonds and government securities on a long and short-term basis at competitive rates. (f) Ensure liquidity by maintaining sufficient cash float at any time and regularly matching expected duration of liabilities and investment; and uncertainties arising from timing and amount of cash flows.

59

352 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies (cont’d.)

E. Credit Quality

i. Risk The TIH Group's exposure to credit risks are mainly due to uncertainty in counter parties' (mainly from cedants, reinsurers and intermediaries) ability to meet the financial and contractual obligations to the TIH Group when they are due. The TIH Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. Impairment is estimated by management based on prior experience and the current economic environment. The TIH Group's insurance receivables are concentrated to amount owing by a single cedant without any collateral. The TIH Group's maximum exposure to credit risk is represented by the carrying amount of its financial assets as at the end of the reporting period.

ii. Policy Policies to limit credit risks include the following: (a) Maintain credit control in accordance with appropriate policies and procedures which govern the extension of credit to the cedants and specifies guidelines for setting limits on credit as per the quota share agreement. (b) Monitor compliance with such established credit limits.

60

353 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies (cont'd.)

F. Operations

i. Risk Non-financial or operational risks the TtH Group faces include technology risk, risk to reputation, fraud, compliance, legal risk, physical damage to property, poor outsourcing arrangements, threats to business continuity and key person risk.

ii. Policy The policies to monitor and minimise these risks are as follows: (a) Undertake annual risk audits to identify material operations risks to which the TIH Group is exposed. (b) Effect appropriate insurance cover for all identified operations risks which can be cost-effectively insured. (c) Closely monitor the external relationships. (d) Ensure at all times that compliance with regulatory requirements and fulfillment of material obligations under the legislative framework is maintained. (e) Maintain an ethics and personal conduct policy to conduct the affairs of the TIH Group are conducted in a manner that would avoid any action by the TIH Group or its officers that would bring disrepute to the TIH Group. (f) Implement adequate security procedures to prevent unauthorized access, damage, loss to assets and facilities and harm to employees. (g) Ensure that division and responsibility is clear and mutually understood where any part of the TIH Group’s business is outsourced to third parties whilst ultimate control over the outsourced operations is retained by the TIH Group. (h) Identify the possible types of fraud the TIH Group are exposed to and develop and maintain effective controls to prevent them and to take appropriate and prompt action if fraud occurs.

61

354 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.33 Risk management framework (cont'd.)

Overview of risk management policies (cont'd.)

G. Regulatory compliance and corporate governance The Management is responsible to follow a systematic approach to the business and effectively manage the risks, The key risks that have been identified are monitored and their status communicated as appropriate throughout all levels of the organisation and are also incorporated in the TIH Group’s performance management reporting.

H. Regulations of risk management In accordance with these policies a framework for management of risks identified has been developed for the effective management of risk. Effective and efficient operation of the organisation would be ensured through: (a) Providing a framework for an organisation that enables for activities to be undertaken in a consistent and controlled manner. (b) A management structure that clearly identifies the roles and responsibilities of the staff. (c) Development of procedures to ensure that the risk management strategies are implemented. (d) Retention of a well-qualified level of staff through appropriate recruitment, training and staff development programme. (e) Improving motivation of staff through a suitable communication, review, feedback and rewards system. (f) Prompt and comprehensive management reporting systems to assess performance and progress of the business and the utilisation of its resources.

62

355 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.34 Insurance risk TIH has in place comprehensive underwriting guidelines and limits of authority to ensure that risks are accepted in accordance with the authorised limits. The retention of risks is protected by proportional and non-proportional treaties with reputable reinsurers and brokers, and premised on the risk appetite of the TIH Group.

(a) Concentration of risks

(i) General reinsurance The following table sets out the concentration of travel insurance risks by country/regions based on the geographical location of the primary insurers or reinsurers from which the gross premium are written.

Geographical diversification

Audited Unaudited <------— Audited — ------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000 Malaysia 16,519 17,731 34,784 31,609 25,494 Thailand 6,356 3,841 8,577 5,400 3,981 Indonesia 4,032 2,854 5,574 4,352 3,786 Singapore 2,647 1,627 3,394 2,336 1,865 Australia 807 456 1,256 1,428 - Shenzhen, China 853 294 985 333 307 Hong Kong, China 114 309 657 528 - Macau, China 241 86 235 148 243 Philippines 761 30 108 - - Cambodia 703 25 106 - - Japan 264 - Laos 15 - 14 -- 33,312 27,253 55,690 46,134 35,676

63

356 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.34 Insurance risk (cont'd.)

(a) Concentration of risks by class of business

(ii) General insurance The table below shows the concentration of gross written premium by class of business:

Audited Unaudited - Audited - 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 toto to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM'000 RM'000 RM’000 RM’000 Motor 9,746 - - - Fire 2,896 - - * Marine, aviation and transit 5,535 - - - Others 2,227______-______-______- 20,404 - - - The table below shows the concentration of premium liabilities by class of business:

Re­ Gross insurance Net premium premium premium liabilities liabilities liabilities 30.06.2012 RM'000 RM’000 RM'000 Motor 61,555 (777) 60,778 Fire 10,243 (3,006) 7,237 Marine, aviation and transit 21,935 (19,694) 2,241 Others 9,807 (2,695) 7,112 103,540 (26,172) 77,368 The table beiow shows the concentration of claim liabilities by class of business:

Re­ Gross insurance Net claim claim claim liabilities liabilities liabilities 30.06.2012 RM'000 RM'000 RM'000 Motor 177,619 (6,820) 170,799 Fire 24,372 (18,559) 5,813 Marine, aviation and transit 87,960 (69,143) 18,817 Others 57,567 (32,842) 24,725 347,518 (127,364) 220,154 64

357 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TiH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.34 Insurance risk (cont'd.)

(b) Sensitivity analysis

Key assumptions The principal assumptions underlying the estimation of liabilities is that the TIH Group’s future claims development will follow a similar pattern to past claims development experience. This includes key assumptions such as the adopted Ultimate Loss Ratios ("ULR"), risk margin percentages (i.e. Provision of Risk Margin for Adverse Deviation {''PRAD")) and provision for claims handling costs. Additional qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors, such as, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as judicial decisions and government legislation affect the estimates.

Sensitivities The general re/insurance claim liabilities are sensitive to the key assumptions shown below. It is not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process. The analysis below is performed for reasonably possible movements in key assumptions with all other assumptions held constant, showing the impact on Gross and Net Liabilities, Profit before Tax and Equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear.

(i) General reinsurance

358 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.34 Insurance risk (cont'd.)

(b) Sensitivity analysis (cont'd.)

(i) General reinsurance (cont'd.)

<------lncrease/(decrease)— ------> Impact Impact Impact on profit Changes on gross on net before Impact in liabilities liabilities taxation on equity variable RM'000 RM'000 RM'000 RM'000

31.12.2010 Loss ratio 1% 435 435 435 435 - 1% (435) (435) (435) (435)

31.12.2009 Loss ratio 1% 300 300 300 300 - 1% (300) (300) (300) (300)

(ii) General insurance

-I n crease/(dec rease)— Impact Impact impact on profit Changes on gross on net before Impact in liabilities liabilities taxation on equity variable RM'000 RM'000 RM*000 RM'000

30.06.2012 Loss ratio +10% ' 61 ,163 40,528 (40,528) (30,396) PRAD +10% 2 ,261 1,900 (1,900) (1,425) Provision for expenses +10% 447 726 (726) (545)

66

359 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.34 Insurance risk (cont'd.)

(c) Claims development table

(i) Genera] reinsurance

As this is only the fourth financial year since the incorporation of TILand second financial year since the incorporation of TMGR, i! is not meaningful to present the claims development table E 01 in the financial statements.

(Ii) General insurance t s n r

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year ai each reporting date, together with cumulative payments to-date of TIMB. Y & In setting provisions for claims, TIH gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of caution in setting reserves when there is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost g n u o of claims becomes more certain, the relative ievel of margin maintained should decrease.

Gross general insurance contract liabilities for 30.06.2012:

Accident year 2006 2006 2007 2008 2009 2010 2011 2012 Totai RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000

At end of accident year 215,703 171,487 168,060 231,999 174,026 170,544 164,136 90.838 One year later 206,489 189,062 158,065 251,136 124,814 168,597 162,513 Two years later 190,753 238,023 161,022 211,179 117,799 168,767 Three years later 105,568 190,660 157,899 206,783 116,935 Four years later 185,137 192,144 152,896 206,202 Five years later 190,674 190,249 152,051 Six years later 186,659 100,431 Seven years later 208,485 Current estimate of cumulative claims incurred 208,485 190,431 152,051 206,202 116,935 168,767 162,513 90,838 1,296,222

67 360 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.6.34 Insurance risk (cont'd.)

(c) Claims development table (cont'd.)

(ii) General insurance (cont'd.)

Gross general Insurance contract liabilities for 30.06.2012 (cont'd.):

Accident year 200S 200G 2007 2008 2009 2010 2011 2012 Total RM'000 RM’000 RM'000 RM'000 RM'000 RM'000 RM’000 RM'000 RM'000 At end of accident year (56,005) (39,651) (52,065) (43,395) (39,747) (3B.182) (30,815) (7,615) I One year later (108,271) (111,344) (97,631) (146,308) (73,127) (95,372) (54,615) C/i Two years later (147,832) (131,382) (120,035) (173,375) (88,940) (101,311) •H Three years later (158,615) (172,851) (133,779) (188,104) (97,178) Four years later (166,057) (177,927) (140,857) (191,176) Five years later (170,840) (178,884) (142,324) Six years later (173,027) (179,324) Seven years later (175,162) Cumulative payments to-date (175.162) (179.324) (142,324) (191,175) (97.178) (101,311) (54,615) (7,615) (948,704) Gross general Insurance contract liabilities per I statements of financial position 33,323 11,107 1,727 15,027 19,757 67,456 107,898 63,223 347,518

Net general insurance contract liabilities for 30.06.2012:

Accident year 2005 2006 2007 2003 2009 2010 2011 2012 Total RM'000 RM'000 RM'000 RM'000 RM’000 RM'000 RM'000 RM'000 RM'000

At end of accident year 86,749 93,390 90,326 102,392 104,437 114,029 134,667 71,260 One year later 90,534 96,696 65,079 92,619 68,388 106,956 130,410 Two years later 88,846 87,560 84,367 89,334 87,742 106,360 Three years later 79,869 65,438 64,684 85,705 86,934 Four years later 79,430 66,228 80,836 85,396 Five years later 80,828 84,087 60,639 Six years later 77,700 84,044 Seven years later 62,651 Current estimate of cumulative claims incurred 82,651 64,044 60,639 85,396 86,934 106,360 130,410 71,260 727,694

68 361 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.6.34 Insurance risk (cont’d.)

(c) Claims development table (cont’d.)

(il) General insurance (cont'd.)

Net general insurance contract liabiiitres for 30.06.2012 Icont'd.l: =U E

Accident year 2005 2006 2007 2008 2009 2010 2011 2012 Total

RM'000 RM'000 RM000 RM‘000 RM'000 RM'000 RM'000 RM'000 RM'OCO t s n r

At end of accident year (27,106) (34,194) (32,610) (34,131) (36,105) (34,592) (28,737) (7,352) One year later (57,734) (64,307) (60,380) (63,502) (62,444) (67,162) (50,190) Two years later (65,144) (70,765) (66,712) (71,614) (70,711) (71,712) Y & Three years later (66,029) (74,012) (71,810) (75,894) (73,371) Four years later (70,604) (77,293) (74,337) (77,234) Five years later

(72,926) (77,821) (74,987) g n u o Six years later (73,708) (76,045) Seven years later (74,649) Cumulative payments to-date (74,649) (78,045) (74,967) (77,234) (73,371) (71,712) (50,190) (7,352) (507,540)

Net general insurance contract liabilities per statements of financial position 8,002 5.969 5,652 8.162 13,563 34,646 80,220 63,906 220,154 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

t TIH GROUP

4. FI NANCIAL STATEMENTS OF TIH GROUP (CONT'D.}

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks

(a) Credit risk

Treaty reinsurers and brokers credit ratings are evaluated prior to entering into treaty arrangements. The TIH Group observes the Bank Negara Malaysia GuideSines and internal Group policies in assessing the credit ratings of reinsurers and brokers. =!l The settlement risks are also mitigated through prompt reconciliations of records and recovery actions, avoiding at all times delays in collection from reinsurers and entering into commutations for run off reinsurers. The TIH Group has tightened the credit collection and recovery policies to expedite collections. The TIH Group is unable to avoid any deterioration E in credit ratings of reinsurers after inception of treaties. t s n r

Credit exposure

At the reporting date, the TIH Group's maximum exposure to credit risk is represented by the maximum amount of each class of financial assets recognised in the statements of financial position as shown in the table below: Y &

<— ------— ------Audited------> g n u o 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM’000 RM’000 LAR: Fixed and call deposits with licensed financial institutions 303,188 24,715 -- Loans receivable: S ta ff m ortgage loans 736 --- O th e r s ta ff loans: Secured 35 --- AFS financial assets: Debt securities 133,609 --- Reinsurance assets 153,777 - 228 154 Insurance receivabies 70,009 16,771 26,006 17,503 Other receivables 28,395 63 -- Cash and bank balances 23,525 8,555 456 677 713,274 50,104 27,490 16,334

70 363 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

l TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.35 Financial risks (cont'd.)

(a) Credit risk (cont'd.)

Credit exposure by credit rating

The table below provides information regarding the credit risk exposures of the TIH Group by classifying assets according to the TIH Group' s credit ratings of counterparties. =U E

Neither impaired nor past*due

P a st-d u e t s n r B B S a nd N o t b u t n o t AAA AA A lo w e r ra te d im p a ire d T o ta l RM’OOQ RM'000 RM '000 R M '000 R M '000 R M '000 R M '000 Y & 30.06.2012 LAR:

Fixed and call deposits with licensed financial institutions 121,946 61,616 48,104 71,522 _ 303,188 g n u o Loans receivable-. S ta ff m ortgage loans .•_ 736 _ 736 Other staff loans: Secured --_. 35 _ 35 AFS financial assets: Debt securities 60,811 64,445 1,032 . 7,321 . 133,609 Reinsurance assets 242 248 48,207 6,160 98,920 153,777 Insurance receivables 1,187 1,691 6,048 272 16,375 43,636 70,009 Other receivables 2,070 2,502 546 23,277 _ 28,395 Cash and bank balances 24,758 453 1,303 - (2,969) - 23,525 211,014 130,955 106,040 6,432 215,197 43,636 713,274

31.12.2012 LAR:

Fixed and call deposits with licensed financial institutions 24,716 . „ 24,715 Reinsurance assets 223 __ . 223 Insurance receivables • - 16,771 _ 16,771 Other receivables -- .. 63 . 63 Cash and bank balances 8,555 --._ 8,555 33,493 - -- 16,834 - 50,327

71 364 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(a) Credit risk (cont'd.)

Credit exposure by credit rating (cont'd.)

Neither impaired nor past-due =!l Past-due BBB and Not but not E AAAAA A lower rated impaired Total t s n r RM’000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 31.12.2010 Reinsurance assets 228 . * __ 223 Insurance receivables -- - - 26,806 . 26,806 Y & Cash and bank balances 456 -- -- . 456 684 - - - 26,806 - 27,490 g n u o 31.12.2009 Reinsurance assets 164 154 Insurance receivables - -- - 17,503 . 17,503 Cash and bank balances 677 --- - 677 831 --- 17,503 - 18,334

Age analysis of financial assets past-due but not impaired

Past due but not Impaired 31 to 60 61 to 90 91 to 180 More than < 30 days days days days 180 days Total RM’000 RM'000 RM'000 RM'000 RM'000 RM'000 30.06.2012 Insurance receivables: Due premium including agents, brokers and co-insurers balances 2,299 14,337 2,781 862 5,428 25,707 Due from reinsurers and cedants 1,453 4,918 644 221 10,693 17.929 3,752 19,265 3,425 1,083 16,121 43,636

As at 30 June 2012 based on the assessment of the receivables, there were impaired insurance receivable of RM 19,343,000. A reconciliation of the allowance for the impairment losses for the insurance receivables is disclosed in Note 4.5.8 of Section i - TIH Group.

72 365 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TiH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.S NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(b) Liquidity risk

Liquidity risk is the risk where the TIH Group is unable lo meet its obligations in a timely manner ai a reasonable cos! at any time. The TIH Group maintains a large tranche of liquid asset instruments, primarily bank deposits and Malaysian Government Securities, to ensure high liquidity.

Maturity profiles =!l

The table below summarises the maturity profile of the financial assets and liabilities of the TIH Group based on remaining undiscounted contractual obligations, including interest payable and E

receivable. t s n r

For insurance contracts liabilities and reinsurance assets, maturity profiles are determined based on estimated timing of net cash outflows from (he recognised insurance liabilities. Y & No Carrying Less than Over 1-5 Ovor 5 maturity value 1 year years years date Total g n u o RM'000 RM'000 RM'000 RM'000 RM*000 RM'000 30.06.2012 LAR: Fixed and call deposits with licensed financial institutions 303,166 303,188 --- 303,188 Loans receivable: Staff mortgage loans 736 3 35 698 - 736 O ther s ta ff loans: Secured 35 3 32 -- 35 AFS financial asseis: Equity securities 20,866 -- 20,866 20,866 Unit and property trust funds 19,791 --- 19,791 19,791 Debt securities 133,609 19,992 116,789 11,506 - 148,289 Reinsurance assets 163,777 19,557 73,545 34,506 26,170 153,777 Insurance receivables 70,009 70,009 -- 70,009 Other receivables 28,395 5,300 2 - 23,093 28,395 Cash and bank balances 23,525 16,236 -- 7,289 23,525 753,931 434,286 190,403 46,711 97,209 768,611

Insurance contract liabilities 462,668 94,833 210,138 54,157 103,540 462,668 Borrowings 129,453 129,453 --- 129,453 Insurance payables 61,894 61,894 --- 61,894 Retirement benefits 1,069 60 579 430 - 1,069 Other payables 76,815 71,616 428 - 4,571 76,815 731,899 358,056 211,145 54,587 108,111 731,899 Liquidity gap 22,032 76,232 (20,742) (7,876) (10,902) 36,712

73 366 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(b) Liquidity risk (cont'd.)

Carrying Less than Over 1-5 Over 5 maturity value 1 year years years date Total RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 31,12.2011 =!l LAR: Fixed and call deposits with licensed financial institutions 24,715 24,715 - 24,715 E Reinsurance assets 223 223 ■ - 223 Insurance receivables 16,771 16,771 -- 16,771 t s n r Other receivables 63 63 ■ - 63 Cash and bank balances 8,555 8,555 -- B,555 50,327 50,327 ■ - 50,327 Y & Insurance contract liabilities 10,481 10,481 . _ 10,481 insurance payables 156 156 - - 156

Other payables 17,944 17,944 -- 17,944 g n u o 28,581 28,581 ■ - 28,681 Liquidity gap 21,746 21,746 .- 21,746

31.12.2010 Reinsurance assets 228 228 228 Insurance receivables 26,806 26,806 ■ 26,806 Cash and bank balances 456 456 456 27,490 27,490 -- 27,490

insurance contract liabilities 9,465 9,465 . _ 9,465 Insurance payables 1,397 1,397 ■ - 1,397 Other payables 58 58 - - 58 10,920 10,920 ■ - 10,920 Liquidity gap 16,570 16,570 .- 16,370

31.12.2009 Reinsurance assets 154 154 154 Insurance receivables 17,503 17,503 - 17,503 Cash and bank balances 677 677 677 18,334 18,334 ■ 18,334

Insurance contract liabilities 6,552 6,552 6,552 Insurance payables 358 358 - 358 Other payables 91 91 91 7,001 7,001 - 7,001 Liquidity gap 11,333 11,333 - 11,333

74 367 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

{b) Liquidity risk (cont'd.) The table below summarises the expected utilisation or settlement of assets Non- Current* current Total RM'000 RM’000 RM'000 =!l 30.06.2012 Property and equipment . 10,197 10,197 E

Investment property - 2,406 2,406 t s n r Intangible assets - 123 123 Goodwill - 29,696 29,696 Investments:

LAR Y & Fixed and call deposits with licensed financial institutions 303.188 303,188 Loans receivable:

Staff mortgage loans 3 733 736 g n u o Other staff loans: Secured 3 32 35 AFS financial assets Equity securities 20,866 20,666 Unit and property trust funds 19,791 19,791 Debt securities 5,312 126,297 133,609 Reinsurance assets 19,557 134,220 153,777 Insurance receivables 70tD09 - 70,009 Other receivables 5,300 23,095 28,395 Cash and bank balances 16,236 7,289 23,525 419,608 376,745 796,353 31.12.2011 Property and equipment - 3 3 Investments: LAR 24,715 » 24,715 Reinsurance assets 223 - 223 Insurance receivables 16,771 - 16,771 O ther receivables 63 - 63 Cash and bank balances 8,555 - 8,555 50,327 3 50,330

31,12.2010 Property and equipment 4 4 Reinsurance assets 226 - 22 B Insurance receivables 26,506 - 26,806 Cash and bank balances 456 - 456 27,490 4 27,494

75 368 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(b) Liquidity risk (cont'd.)

The table below summarises the expected utilisation or settlement of assets (cont'd.}

Non- Current* current Total =!l RM'OQO RM'000 RM'000 E

31.12.2009 t s n r Reinsurance assets 154 - '154 Insurance receivables 17,503 - 17,503 Cash and bank balances ______§77______-______677

18,334______18,334 Y & * Expected utilisation or settlement within 12 months from the reporting date.

(c) Market risk g n u o

Market risk arises with changes in equity and bond prices. This risk is mitigated through proper initial and continuous credit evaluation of bonds and shares respectively, purchase of high grade shares and bonds, and constant watch on investment portfolio for adverse changes and opportunities.

Credit risk, especially settlement risk is mitigated With proper credit monitoring of bonds held.

Fund managers' performance are monitored constantly, parameters are prescribed to fund managers according to the TIH Group's risk appetite on purchase of equity, bonds ant3 unit trusts, and by placing limits on categories of purchase.

Holding of unquoted shares is progressively reduced, with an emphasis on risk and return.

Equity price risk

Management's best estimate of the effect on the net income for the year and equity due to a reasonably possible change in the FTSE Bursa Malaysia K lC l Index ("FBMKLCI") with all other variables held constant is indicated in the table below:

76 369 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(c) Market risk (cont'd.)

Equity price risk (cont'd.) <— lncrease/(decrease) --> E ffe c t o n =!l net Change In income for E ffe c t on E F8MKLCI the period e q u ity % RM '000 RM ’000 t s n r 30.06.2012 Market indices: FBM KLCI + 10 3,049

FBMKLCI -10 (3,049) Y &

interest rate risk g n u o

The TIH Group's exposure to interest rate risk arises primarily from their borrowings and investments in debt securities classified as available-for-sale. The interest and capital value of the latter may be affected by changes in the interest yield curve. The TIH Group has an investment policy !hat investments are made at competitive interest rates,

Sensitivity analysis:

The analysis below is performed for reasonably possible movements in key variables wiih all other variables held constant, showing the impact on income or loss and impact on equity. The correlation of variables will have a significant effect in determining the ultimate impact on interest rate yield risk but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basts, It should be noted that movements in these variables are non-linear.

<— lncrease/(decrease) -> E ffe c t on n e t income for E ffe c t o n C h anges in th e y e a r e q u ity basis points RM'000 RM '000

30.06.2012 Interest rates + 100 bps (138) (104) Variable interest rate borrowings + 100 bps (1,007) (2.001) Investments in debt securities classified as available-for-sale (1.145) (2,105)

Interest rates Variable interest ra!e borrowings -100 bps (138) (104) Investments in debt securities classified as available-for-sale -100 bps 1,007 2,001 869 1,898

77 370 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.35 Financial risks (cont'd.)

(c) Market risk (cont'd)

Foreign currency risk

The TIH Group is exposed to foreign currency risk on transactions and baiances that are denominated in currencies other than Ringgit Malaysia. Foreign currency risk is monitored closely on =!l an ongoing basis to ensure that the net exposure is at an acceptable level.

The TIH Group's exposure to foreign currency is as follows E t s n r 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM’000 RM’000 RM’000

Insurance receivables: Y & Thai Baht 1,189 714 -- Indonesian Rupiah 1,512 394 --

Singapore Dollar 775 206 -- g n u o Macau Pataca 89 27 - - Hong Kong Dollar 331 59 -- United States Dollar 66 9 -- Philippines Peso 118 5 -- China Yuen Renmimbi 406 - 4,486 1,414 - -

Cash and bank balances United States DoBar 220 259 - '

Sensitivity analysis:

A 5% strengthening / weakening of the Ringgit Malaysia against the foreign currencies as at the end of 30 June 2012 would have increased / decreased net profit by approximately RM237.G00. This assumes that all other variables remain constant.

78 371 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I TIH G RO UP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.36 Fair values of financial assets and liabilities

The TIH Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly =!l

Level 3: Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data E

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy: t s n r

| ------Valuation technique using ------1 Un-

Quoted Observable observable Y & market price inputs inputs {Level 1) (Level 2) (Level 3) Total

RM'000 RM'000 RM'000 RM'000 g n u o

AFS financial assets:

30.06.2012 Equity securities: Quoted in Malaysia 20,666 - - 20,866 Unit and properly trust funds: Quoted in Malaysia 19,791 - - 19,791 Debt securities: Q uoted in M alaysia ______133,609______^______:______133,609 174,266 - - 174,266

79 372 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.37 Capital management The TIH Group’s capital management objective is to ensure that the TIH Group creates value for its shareholders while minimising the potential adverse effects on the performance of the TIH Group. The TIH Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain or adjust the capital structure, the TIH Group may adjust the dividend payment to shareholders, return capital to shareholders or issue new shares. No changes were made in the objectives, policies or processes during the financial period/years ended 31 December 2009, 2010 and 2011 and for the six-month period ended 30 June 2012. TIH is not subject to any externally imposed capital requirements. The Labuan subsidiaries are required to comply with the capital requirements stipulated under the Guidelines on application for License - Insurance and Insurance Related Activities ("the Guideline"), as issued by the Labuan Financial Services Authority. Whereas, TIMB is required to meet the minimum capital adequacy requirements as prescribed by the RBC Framework. The status of compliance of the subsidiaries with the Guideline and RBC Framework above are disclosed in Note 4.5.32 of Section I - TIH Group.

80

373 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.38 Segmental information

The Group is organised into four major business segments, investment holding, general reinsurance, life reinsurance and general insurance business. The Directors are of the opinion that all inter-segment transactions have been entered into in the normal course of business based on negotiated and mutual terms.

(a) Business segment: =!l General Life General Adjust­

Investment reinsurance reinsurance insurance ments and E

Audited holding business business business elimination Consolidated t s n r For the six-month period ended 30 June 2012 RM‘000 RM'000 RM’000 RM'000 RM'000 RM'000

Operating revenue

External 32 32,763 152 34,746 67,693 Y & Inter-segment 8,000 (8,000) 8,032 32,763 152 34,746 (8,000) 67,693 g n u o Results Gross earned premiums 32,492 33,359 65,851 Premiums ceded to reinsurers (584) (18,856) (19,440) Net earned premiums 31,908 14,503 46,411

Investment income 8,032 271 152 1,387 (8,000) 1,842 Realised gains and losses - -- 1,060 - 1,060 Fees and commission income --- 1,360 - 1,360 Other operating income - - - 887 - 887 Other revenue 8,032 271 152 4,694 (8,000) 5,149

Gross claims paid _ (828) . (12,082) . (12,910) Claims ceded to reinsurers - - - 3,629 - 3,629 Gross changes to contract liabilities - (309) - (2,665) - (2,974) Change in contract liabilities ceded to reinsurers - - 2,254 - 2,254 Net claims - (1 = 137) - (8,864) - (10,001)

Fee and commission expense - (10,182) - (2,381) - (12,563) Management expenses (1,101) (3,433) (507) (1,567) - (6,608) Other operating expenses (1,309) ---• (1,309) Finance costs (1,665) (534) (534) -- (2,733) Other expenses (4,075) (14,149) (1,041) (3,948) - (23,213)

Profit before taxation 3,957 16,893 (889) 6,385 (8,000) 18,346 Taxation - (40) - (1,673) - (1,713) Net profit for the period 3,957 16,853 (889) 4,712 (8,000) 16,633 81 374 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.38 Segmental inform ation (cont'd.)

(a) Business segment (cont'd.):

General Life General A d ju s t ­ Investment reinsurance reinsurance insurance ments and Consolidated A u d ite d holding business business business elimination =U E As at 30 June 2012 RM'000 RM'000 RM'000 R M '0 0 0 RM'000 R M '0 0 0

A s s e ts t s n r Property and equipment . 3 - 10 ,1 9 4 - 10 ,1 9 7 Investment property --- 2 ,4 0 6 - 2 ,4 0 6 Intangible assets _-. 123 - 123 1 78 ,075 --• (1 7 8 ,0 7 5 ) -

Investment in subsidiaries Y & G o o d w ill ---- 2 9 ,6 9 6 2 9 ,6 9 6 Investments 10,240 14,485 10,000 4 4 3 ,6 7 5 ■ 4 7 8 ,4 0 0

Reinsurance assets - 242 - 1 5 3 ,5 3 5 1 5 3 ,7 7 7 g n u o Insurance receivables - 18 ,2 8 7 - 51 ,7 2 2 - 7 0 ,0 0 9 Other receivables 16,828 4,289 31 2 8 ,1 6 4 (20,917) 28,395 Casti and bank balances 15,309 9 1 5 12 7 .2 8 9 - 2 3 ,5 2 5 Total assets 220,452 38,221 10,043 697,108 (169,296) 7 9 6 ,5 2 8

Equity Share capital 14,238 500 - 100,013 (100,513) 14 ,2 3 8 Share premium --- 3,335 (3,335) - Merger deficit - • -- (13,838) (13,838) Available-for-sale reserves -- - 6,011 (6,001) 10 Retained earnings 18,510 14,377 (928) 56,083 (54.387) 33,655 Equity attributable to owners of the parent 32,748 14,877 (928) 165,442 (178,074) 34.065 Non-controlling interests -. -- 2 9 ,6 9 5 29 ,6 9 5 Total equity 32,748 14.877 (928) 165,442 (148,379) 63 ,7 6 0

Liabilities Insurance contract liabilities 11,610 4 5 1 ,0 5 8 4 6 2 ,6 6 8 Deferred tax liabilities --- 869 - 8 6 9 Provision for taxation - 4 0 - - (40) - Borrowings 1 29 ,453 ---- 1 2 9 ,4 5 3 Insurance payables - 87 - 61 ,8 0 7 - 61 ,8 9 4 Retirement benefits •.- 1,069 - 1,069 Other payables 58,251 11,607 10,971 16,863 (20,877) 76,815 Total liabilities 187,704 23,344 10.971 531.666 (20,917) 732,768

Total equity and liabilities 220,452 38,221 10,043 697,108 (169,296) 796,528

82 375 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.38 Segmental information (cont'd.)

(a) Business segment (cont'd.):

General Life General Adjust­ Investment reinsurance reinsurance insurance ments and =!l Unaudited holding business business business elimination Consolidated For the six-month period ended 30 June 2011 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 E t s n r Operating revenue E xte rn a l - 26,807 ■ -- 26,807 Inter-segment - 26,807 - - - 26,807 Y &

Results

Gross earned premiums - 26,807 -- - 26,807 g n u o Premiums ceded to reinsurers (505) -- - (505) Net earned premiums - 26,302 --- 26,302

Gross claims paid (366) .. (366) Gross changes to contract liabilities - (572) -- - (572) Net claims - (938) - - - (938)

Fee and commission expense (8,637) .. (8,637) Management expenses - (95) - - - 05) Other expenses - (8,732) - - - (8,732)

Profit before taxation 16,632 16,632 T a xa tio n - (20) -- (20) Net profit for the period - 16,612 -- - 16,612

83 376 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.38 Segmental information (cont'd.)

(a) Business segment (cont’d.):

General Life General Adjust­ Investment reinsurance reinsurance insurance ments and =!l Audited holding business business business elimination Consolidated As at 31 December 2011 RM‘000 RM'000 RM'000 RM'000 RM'000 RM'000 E t s n r Assets Property and equipment - 3 - -- 3 Investment in subsidiaries 14,238 -- - (1 4 ,2 3 8 ) - Investments - 14,563 10,152 - - 2 4 ,7 1 5 Y & Reinsurance assets - 223 •-- 2 2 3 Insurance receivables - 16,771 -- - 16,771

Other receivables 5,6 2 5 3 2 31 - (5,6 2 5 ) 63 g n u o Cash and bank balances 8 ,1 3 0 4 1 5 10 - - 8 ,5 5 5 Total assets 27,993 32,007 10,193 - (1 9 ,8 6 3 ) 5 0 ,3 3 0

Equity Share capital 14,238 500 - - (500) 1 4 ,2 3 8 Merger deficit - --- (1 3 ,8 3 8 ) (1 3 ,8 3 8 ) Retained earnings 13,744 7,524 (39) - (1 .5 3 1 ) 1 9 ,6 9 8 Equity attributable to owners of the parent 2 7 ,9 8 2 8 ,0 2 4 (39) - (1 5 ,8 6 9 ) 2 0 ,0 9 8 Non-controlling interests . - -- 1,631 1,631 Total equity 2 7 ,9 8 2 8 .0 2 4 (39) - (14,238) 21,729

Liabilities Insurance contract liabilities - 10,481 - -- 10,481 Provision for taxation - 2 0 --- 20 Insurance payables - 156 --- 156 Other payables 11 13,326 10,232 - (5 ,6 2 6 ) 17 ,9 4 4 Total liabilities 11 23,983 10,232 - (5,625) 28,601

Total equity and liabilities 27,993 32,007 10,193 (19,863) 50,330

There is no segmental information provided for financial period ended 31 December 2009 to 2011 as the financial results generaied from activities other than travel insurance / reinsurance business are insignificant.

84 377 Company No. 948454-K

I...... =!l Er n s t & Y o u n g

i TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.39 Comparatives

The acquisition of the 100% equity interest in TMGR and TMLR on 1 August 2011 and the 80% equity interest in TIL on 19 September 2011 have been accounted for using the merger method of accounting. Accordingly, the results, cash flows and the financial position of the TIH Group have been stated as if the subsidiaries have been combined with the TIH Group throughout the current and previous accounting periods, since 27 March 2009, which is the earliest date from which an entity within the TIH Group was incorporated i.e. TIL.

Accordingly, the first financial statem ents of the TIH Group have been prepared for the financial period from 27 March 2009 (being the date of incorporation of TIL) to 31 December 2009. Accordingly, the results, cash flows and related notes of the TIH Group for the financial period ended 31 December 2011 have not been prepared in respect of comparable financial periods compared to 31 December 2010 and 31 December 2011.

Summary of changes to the previously issued audited financial statements

Restatements

The adoption of MFRS has no impact on the opening statement of financial position as at 27 March 2009.

However, the following adjustments were made to the previously prepared FRS statements of comprehensive income for the financial period from 27 March 2009 to 31 December 2009, and the financial years ended 31 December 2010 and 2011 and statements of financial position as at 31 December 2009, 2010 and 2011. The previously reported balances of the TIH Group referred to in this Note, for the financial period ended 31 December 2009 and financial year ended 31 December 2010 relate to those of TIL, as earlier explained, and for 31 December 2011, the TIH Group: 31 December 2009 As previous iv Re­ TiH Group reported statement Restated RM'000 RM'000 RM'000 Statement of comprehensive income For the financial period from 27 March 2009 (date of incorporation) to 31 December 2009 Gross earned premiums K a) 27,558 2,491 30,049 Gross change to contract liabilities 1(b) (100) (825) (925) Fee and commission expense 1(c) (8,571) (2,491) (11,062) Statement of financial position As at 31 December 2009 Reinsurance assets 1(d) - 154 154 Due from cedant 1(e) 12,030 5,473 17,503 Insurance contract liabilities 1(f) - 6,552 6,552 Insurance payables 1(9) 42 4 (66) 358 Other payables 1(h) 125 (34) 91 Share capital 1(i) 500 (500) - Merger reserve 1(i) - 400 400 Retained earnings 1(k) 11,638 (2,988) 8,650 Non-controlling interests 1(1) - 2,263 2,263

8 5

378 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I...... " =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.39 Comparatives (cont'd.)

Summary of changes to the previously issued audited financial statements (cont'd.)

Restatements (cont'd.)

31 December 2009 (cont'd.)

The details of the restatements are provided below:

1(a) Gross earned premiums

In deriving gross earned premiums, the related premium liabilities have now been estimated, including allowing for commission deductions at the period end.

1(b) Gross change to contract liabilities

Adjustment for recognition for provision of IBNR claims at the period end.

1 (c) Fee and commission expense

Effect arising from item disclosed in 1 (a) above.

1(d) Reinsurance assets

Adjustment to recognise reinsurance assets as result of grossing up of insurance contract liabilities.

1(e) Due from cedants

Adjustments for under recognition of gross written premium and reinsurance premium and effect arising from item disclosed in 1(c) above.

1(f) Insurance contract liabilities

Effect arising from items disclosed in 1(a), 1(d) and 1(e) above and reclassification of provision for claims outstanding from other payables.

1(g) Insurance payables

Adjustment for reclassification of reimbursable Insurance Guarantee Scheme Fund Levies payable to a ceding company.

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|| |l IH ^ 11111 =!l Er n s t &Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP {CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.39 Comparatives (cont'd.)

Summary of changes to the previously issued audited financial statements (cont'd.)

Restatements (cont'd.)

31 December 2009 (cont'd.)

1(h) Other payables

Effect arising from item s disclosed in 1 (f) an d 1 (g) a b o v e.

1(i) Share capital

Adjustment for the application of merger method of accounting.

1 (j) Merger reserve

Adjustment for the application of merger method of accounting.

1(k) Retained earnings

Effect arising from items disclosed in 1 (a) to 1 (c) above.

1(1) Non-controlling interests

Adjustment for the application of merger method of accounting.

31 December 2010

As previously Re- TIH Group reported statement Restated RM'000 RM'000 RM'000 Statement of comprehensive income For the financial year ended 31 December 2010 Gross earned premiums 2(a) 42,253 1,270 43,523 Premiums ceded to reinsurers 2(b) (877) 74 (803) Gross change to contract liabilities 2(c) (4) (298) (302) Fee and commission expense 2(d) (13,203) (1,270) (14,473)

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I TIH GROUP 4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.39 Comparatives (cont'd.) Summary of changes to the previously issued audited financial statements (cont'd.) Restatements (cont'd.) 31 December 2010 (cont'd.) As previously Re- TIH Group reported statement Restated RM'000 RM'000 RM'000 Statement of financial position As at 31 December 2010 Reinsurance assets 2(e) - 228 228 Due from cedant 2(f) 18,796 8,010 26,806 Insurance contract liabilities 2(g) • 9,465 9,465 Insurance payables 2(h) 1,471 (74) 1,397 Other payables 2(i) 162 (104) 58 Share capital 20) 500 (500) - Merger reserve 2{k) - 400 400 Retained earnings 2(0 17,103 (4,260) 12,843 Non-controlling interests 2(m) - 3,311 3,311

The details of the restatements are provided below: 2(a) Gross earned premiums

In deriving gross earned premiums, the related premium liabilities have now been estimated, including allowing for commission deductions at the year end. 2(b) Premiums ceded to reinsurers

Adjustment to recognise premiums ceded to reinsurers on grossed up basis. 2(c) Gross change to contract liabilities

Adjustment for recognition for provision of IBNR cfaims at the period end. 2(d) Fee and commission expense

Effect arising from item disclosed in 2(a) above.

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I...... " =!l Er n s t & Y o u n g

I TIH GROUP 4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.39 Comparatives (cont'd.) Summary of changes to the previously issued audited financial statements (cont’d.) Restatements (cont'd.) 31 December 2010 (cont'd.) 2(e) Reinsurance assets

Adjustment to recognise reinsurance assets as result of grossing up of insurance contract liabilities. 2(f) Due from cedants

Adjustments for under recognition of gross written premium and reinsurance premium and effect arising from item disclosed in 2(d) above. 2(g) Insurance contract liabilities

Effect arising from items disclosed in 1(b), 2(c), 2{e) and 2(f) above and reclassification of provision for outstanding claims from other payables. 2(h) Insurance payables

Adjustments for over recognition of reinsurance premium payable. 2(i) Other payables

Adjustments for reclassification of provision for outstanding claims to insurance contract liabilities. 2(j) Share capital

Adjustment for the application of merger method of accounting. 2(k) Merger reserve

Adjustment for the application of merger method of accounting. 2(1) Retained earnings

Effect arising from items disclosed in 1(a) to 1{c) and 2(a) to 2(d) above.

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.39 Comparatives (cont'd.)

Summary of changes to the previously issued audited financial statements (cont'd.)

Restatements (cont'd.)

31 December 2010 (cont'd.)

2(m) Non-controlling interests Adjustment for the application of merger method of accounting. 31 December 2011

As previously Re­ TIH Group reported statement Restated RM'000 RM'000 RM'000 Statement of comprehensive income For the financial year ended 31 December 2011 Gross earned premiums 3(a) 15,645 39,848 55,493 Premiums ceded to reinsurers 3(b) (281) (782) (1,063) Other operating income 3(c) - 26 26 Gross claims paid 3(d) (703) (420) (1,123) Gross change to contract liabilities 3(e) - (819) (819) Fee and commission expense 3(f) (5,188) (12,104) (17,292) Management expenses 3(g) (1,305) (99) (1,404) Taxation 3(h) - (20) (20) Statement of financial position As at 31 December 2011 Reinsurance assets 3(i) - 223 223 Due from cedant 3Q) 9,450 7,321 16,771 Other receivables 3(k) 3,053 (2,990) 63 Insurance contract liabilities 3(1) 1,311 9,170 10,481 Insurance payables 3(m) 207 (51) 156 Other payables 3(n) 21,395 (3,451) 17,944 Merger deficit 3(o) - (13,838) (13,838) Retained earnings 3(P) 6,675 13,023 19,698 Non-controlling interests 3(q) 1,930 (299) 1,631

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I...... " =!l Er n s t & Y o u n g

I TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.39 Comparatives (cont’d.)

Summary of changes to the previously issued audited financial statements (cont’d.)

Restatements (cont'd.)

31 December 2011 (cont'd.)

The details of the restatements are provided below:

3(a) Gross earned premiums

in deriving gross earned premiums, the reiated premium liabilities have now been estimated, including allowing for commission deductions at the year end.

In addition, adjustment for the application of merger method of accounting has been applied, instead of acquisition accounting as previously reported.

3(b) Premiums ceded to reinsurers

Adjustment to recognise premiums ceded to reinsurers on grossed up basis and application of merger method of accounting.

3(c) Other operating income

Application of merger method of accounting.

3(d) Gross claims paid

Application of merger method of accounting.

3(e) Gross change to contract liabilities

Adjustment for recognition for provision of IBNR claims at the period end and application of merger method of accounting.

3(f) Fee and commission expense

Effect arising from item disclosed in 3{a) above and application of merger method of accounting.

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4. FINANCIAL STATEMENTS OF TIH GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.39 Comparatives (cont'd.)

Summary of changes to the previously issued audited financial statements (cont'd.)

Restatements (cont'd.)

31 December 2011 (cont'd.)

3(g) Management expenses Adjustments for recognition of directors fee payable, reversal of reimbursable Insurance Guarantee Scheme Fund Levies payable to a ceding company, reclassification of travelling expenses from other operating expenses to management expenses, recognition of withholding and foreign tax on the commission paid to the foreign ceding companies and application of merger method of accounting. 3(h) Taxation Application of merger method of accounting. 3(i) Reinsurance assets Adjustment to recognise reinsurance assets as result of grossing up of insurance contract liabilities and application of merger method of accounting.

3Q) Due from cedants Adjustments for under recognition of gross written premium and reinsurance premium and effect arising from item disclosed in 3(f) above and application of merger method of accounting. 3(k) Other receivables Application of merger method of accounting. 3(l) Insurance contract liabilities Effect arising from items disclosed in 1(b), 2(c), 3(e), 3(i) and 3® above, reclassification of provision for outstanding claims from other payabies and application of merger method of accounting.

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1 TIH GROUP

4. FINANCIAL STATEMENTS OF TIH GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.39 Comparatives (cont'd.)

Summary of changes to the previously issued audited financial statements (cont'd.)

Restatements (cont'd.)

31 December 2011 (cont'd.)

3(m) Insurance payables Adjustments for under recognition of reinsurance premium and application of merger method of accounting. 3(n) Other payables Adjustments for recognition of directors fee payable, reversal of reimbursable Insurance Guarantee Scheme Fund Levies payable to a ceding company, reclassification of provision for outstanding claims to insurance contract liabilities and application of merger method of accounting. 3(o) Merger deficit Adjustment for the application of merger method of accounting. 3(p) Retained earnings Effect arising from items disciosed in 1(a) to 1(c), 2(a) to 2(d) and 3(a) to 3(h) above.

3(q) Non-controlling interests Adjustment for the application of merger method of accounting. 4.5.40 Significant and subsequent events

Subscription of additional shares In TMGR and TMLR On 12 September 2012, TiH increased its investment in TMGR and TMLR by USD3,207,287 each, satisfied by the issuance of 3,207,287 new ordinary shares of USD1 each in TMGR and TMLR at an issue price of USD1 per share. The new ordinary shares issued by TMGR and TMLR ranked pari passu with the ordinary shares in existence as of the issue date above. With the above subscription, the issued and paid-up capital of TMGR and TMLR has increased from USD1 to USD3,207,288 each, comprising 3,207,288 ordinary shares of USD1 each.

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94

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13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

1. GROUP STRUCTURE The Company is engaged principally in the underwriting of all classes of general insurance business. The structure of the TIMB Group as at 30 June 2012 was as follows:

1.1 SUBSIDIARY E HI

Details of the subsidiary is as follows; t s n r

Date of Country of Principal Proportion of ownership interest (%) Name of subsidiary incorporation incorporation activities 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Y &

1. Capital OCA Berhad 10 Feb 1971 Malaysia Dormant 100.00 100.00 100.00 100.00 g n u o 1.2 ASSOCIATES The TIMB Group did not have any associates as at 31 December 2009, 2010, 2011 and 30 June 2012.

2. FINANCIAL STATEMENTS AND AUDITORS Ernst & Young Malaysia (AF: 0039) audited the financial statements of the TIMB Group for the FYE 31 December 2009, 2010, 2011 and for the six- months period ended 30 June 2012. Such financial statements were prepared in accordance with FRS in Malaysia. The independent auditors’ reports issued in respect of the above financial statements were not subject to any qualification. For the purposes of the submission of the proposed listing scheme of TIH to the Securities Commission of Malaysia, Ernst & Young {AF: 0039) have been appointed to conduct a special purpose audit on the financial statements of TIMB Group for the FYE 31 December 2009, 2010, 2011 and for the six-months period ended 30 June 2012 in accordance with Approved Standards on Auditing in Malaysia. The financial information presented in this report were derived from the audited financial statements of TIMB Group, as audited by us for FYE 31 December 2009, 2010, 2011 and and for the six-months period ended 30 June 2012 and have been prepared using the MFRS. Our audit opinions in respect of the said financial years were unqualified.

95 388 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

2. FINANCIAL STATEMENTS AND AUDITORS (CONT'D.) The six-month comparable comparatives period ended 30 June 2011 included in the audited financial statements for the six-month period ended 30 June 2012 have not been audited by us or any other independent auditors.

3. BASIS OF PREPARATION =!l

The financial information of the TIMB Group as set out in the following sections are extracted from the financial statements for the relevant financial E

years covered in this report. These financial statements have been audited by Ernst & Young Malaysia for the purposes of the proposed listing. t s n r

The scope of work involved in the preparation of this report does not constitute an audit in accordance with approved standards on auditing in Y & Malaysia. The presentation currency of TIMB Group is RM. g n u o

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It TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP

4.1 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

The consolidated statements of financial position of TIMB Group based on its audited financial statements for the financial years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, are as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group Note RM’000 RM’000 RM’000 RM'000

Assets Property and equipment 4.5.1 10,194 10,267 12,433 12,721 Investment property 4.5.2 2,406 2,417 2,439 2,460 Intangible assets 4.5.3 123 153 115 216 Investments 4.5.4 443,675 430,686 384,157 336,418 Investment in subsidiary 4.5,5 ---- Reinsurance assets 4.5.6 153,537 157,966 183,333 277,282 Insurance receivables 4.5.7 51,722 36,805 36,630 37,636 Other receivables 4.5.8 27,697 22,825 17,346 18,362 Deferred tax assets • 4.5.12 -- 39 - Cash and bank balances 7,209 5,152 3,142 7,907 Total assets 696,643 666,271 639,634 693,002

Equity Share capital 4.5.9 100,013 100,013 100,013 100,013 Share premium 3,335 3,335 3,335 3,335 Available-for-sale reserves 6,010 7,128 6,690 3,582 Retained earnings 4.5.10 55,623 51,505 25,252 15,061 Total equity 164,981 161,981 135,290 121,991

Liabilities Insurance contract liabilities 4.5.11 451,058 433,817 429,724 504,499 Deferred tax liabilities 4.5.12 869 1,266 * 901 Insurance payables 4.5.13 61,807 51,053 49,305 34,419 Other payables 4.5.14 16,636 16,818 23,767 29,072 Retirement benefits 4.5.15 1,292 1,336 1,548 2,120 Total liabilities 531,662 504,290 504,344 571,011

Total equity and liabilities 696,643 666,271 639,634 693,002

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONTD.)

4.2 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

The consolidated statements of comprehensive income of TIMB Group based on its audited financial statements for the financial years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, and unaudited statement of comprehensive income for the six-months period ended 30 June 2011, are as follows:

Audited Unaudited — Audited -• 01.01.2012 01.01.2011 01.01.2011 01.01.2010 01.01.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group Note RM’000 RM’000 RM'000 RM’000 RM’000

Operating revenue 4.5.16 148,868 121,615 263,461 257,266 238,874

Gross earned premiums 4.5.17(a) 140,197 114,208 245,770 244,146 226,280 Premiums ceded to reinsurers 4.5.17(b) (67,042) (49,770) (89,345) (121,484) (117,387) Net earned premiums 73,155 64,438 156,425 122,662 108,893

Investment income 4.5.18 8,671 7,407 17,691 13,120 12,594 Realised gains and losses 4.5.19 5,262 3,278 6,060 3,144 4,739 Fee and commission income 8,728 9,184 13,551 15,747 19,329 Other operating income 4.5.20 172 68 130 373 123 Other income 22,833 19,937 37,432 32,384 36,785

Gross claims paid 4.5.21(a) (54,118) (71,947) (137,170) (129,574) (226,078) Claims ceded to reinsurers 4.5.21(b) 13,554 29,543 55,849 47,533 141,960 Gross change to contract liabilities 4.5.21(c) (29,680) (3,829) 11,821 47,995 122,147 Change in contract liabilities ceded to reinsurers 4.5.21(d) 5,357 (7,093) (38,444) (58,084) (125,844) Net claims (64,887) (53,326) (107,944) (92,130) (87,815)

Fee and commission expense (13,125) (13,804) (26,010) (23,831) (25,466) Management expenses 4.5.22 (12,291) (14,844) (22,782) (23,229) (23,868) Other operating expenses 4.5.20 (2,150) Other expenses (25,416) (28,648) (50,942) (47,060) (49,334)

Profit before taxation 5,685 2,401 34,371 15,856 0,529 Taxation 4.5.23 (1,567} (1,270) (8,718) (5,665) (2,731) Net profit for the period/year 4,118 1,131 26,253 10,191 5,798

Other comprehensive income: Movements in available-for-saie reserves: Gain on fair value changes of A FS investments 3,766 5,231 6,616 7,233 14,548 Realised gain transferred to profit or loss (5,257) (3,278) (6,032) (3,089) (4,716) Deferred tax relating to components of other comprehensive income 373 (488} (146) (1,036) (2,459) Other comprehensive income for the period/ year, net of taxation (1,118) 1,465 438 3,108 7,373

Total comprehensive income for the period/ year 3,000 2,596 26,691 13,299 13,171

Earnings per share (sen) Basic 4.5.24 4.1 1,1 26.2 10.2 5.8

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.3 CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

The consolidated statements of changes in equity of TIMB Group based on its audited financial statements for the financial years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, and unaudited statements of changes in equity for the six-months period ended 30 June 2011, are as follows:

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.4 CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE FINANCIAL PERIOD ENDED 30 JUNE 2012, YEARS ENDED 31 DECEMBER 2011, 2010 AND 2009

The consolidated statements of cash flows of TIMB Group based on its audited financial statements for the financial years ended 31 December 2009, 2010 and 2011 and the six-months period ended 30 June 2012, and unaudited statements of cash flows for the six-months period ended 30 June 2011, are as follows:

Audited Unaudited ------> 01.01.2012 01.01.2011 01.01,2011 01.01.2010 01.01.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000 RM’000

Profit before taxation 5,685 2,401 34,971 15,856 8,529

Investment income (8,673) (7,475) (17,716) (13,293) (12,647) Realised gain on disposal of investments (5,257) (3,278) (6,032) (3,089) (4,716) Purchases of A FS financial assets (38,241) (25,852) (52,225) (55,018) (85,224) Proceeds from maturities/disposal of A FS financial assets 48,209 12,876 39,960 40,836 69,206 Proceeds from maturities/disposal of HTM financial assets 9,882 30,000 5,000 16,982 Increase in LAR (23,327) (2,747) (56,998) (42,520) 5,101

Non-cash items Gain on disposal of property and equipment (5) (1) (28) (55) (23) Depreciation of property and equipment 394 425 504 515 909 Depreciation of investment property 11 11 22 21 22 Amortisation of intangible assets 30 - 148 101 115 Impairment loss of property and equipment -- 2,150 - - Net amortisation of premiums on investment 2 68 25 173 53 Reversal of allowance for impairment losses of insurance receivables (2,106) 1,602 (3,759) (511) (403) Allowance for staff retirement gratuities -- 85 202 180

Changes in working capital: Reinsurance assets 4,429 183,333 25,367 93,949 123,129 Insurance receivables (12,812) (28,849) 3,584 1,156 (11,014) Other receivables 2,942 (734) (3,235) 2,098 (2,195) Insurance contract liabilities 17,241 (158,495) 4,093 (74,775) (109,194) Insurance payables 10,754 34,807 1,748 9,372 (2,022) Other payables 41 (4,179) (6,949) (1,218) 15,071 Cash (used in)/generated from operating activities (683) 13,795 (4,285) (21,200) 11,859

Net interest received 5,891 5,626 15,159 10,831 8,813 Net dividend received 814 816 1,858 908 1,011 Renta! received 183 172 346 356 368 Retirement benefits paid (267) (120) (297) (774) (1,287) Income tax paid (2,362) (1,771) (3,419) (2,648) 10,621 Net cash flows generated from/(used in) operating activities 3,576 18,518 9,362 (12,527) 31,385

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11111111 s!IE r n s t & Y o u n g

it TtMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROU P (CONT D.)

4.4 CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D.)

Audited Unaudited <------Audited —...... > 01.01.2012 01.01.2011 01.01.2011 01.01.2010 01.01.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM’000 RM’000 RM’000

Investing activities Proceeds from disposal of property and equipment 5 - 29 55 23 Purchase of property and equipment (321) (235) (489) (227) (206) Purchase of intangibles ______-______-______(1 86)______-______(51) Net cash flows used in investing activities (316) (235) (646) (172) (234)

Net increase/(decrease) in cash and cash equivalents 3,260 18,233 8,716 (12,699) 31,151 Cash and cash equivalents at beginning of period/ year 85,143 76,427 76,427 89,126 57,975 Cash and cash equivalents at end of period/year 88,403_____ 94,710______85,143 76,427 89,126

Cash and cash equivalents comprise: Fixed and call deposits (with maturity of less than three months) with licensed financial institutions 81,114 90,848 79,991 73,285 81,219 Cash and bank balances 7,289 3,862______5,152 3,142 7,907 88,403 94,710 85,143 76,427 89,126

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13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.S NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.1 Property and equipment

Furniture, fittings, =U E <------Properties------■*> office

Buildings on equipment t s n r Freehold freehold Motor and land land Renovation vehicles computers Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM’000 Y &

Cost At 1 January 2009 9,263 4,271 1,994 1,802 16,734 34,064 g n u o Additions -- 78 - 128 206 Disposals --- (189) (1) (190) At 31 December 2009 9,263 4,271 2,072 1,613 16,861 34,080 Additions -- 3 - 224 227 Disposals --- (576) - (576) At 31 December 2010 9,263 4,271 2,075 1,037 17,085 33,731 Additions -- 138 78 273 489 Disposals --- (160) (108) (268) At 31 December 2011 9,263 4,271 2,213 955 17,250 33,952 Additions -- 119 - 202 321 Disposals ---- (925) (925) At 30 June 2012 9,263 4,271 2,332 955 16,527 33,348

102 395 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.1 Property and equipment (cont'd.) Furniture,

fittings, =!l <------Properties------> office Buildings on equipment E Freehold freehold Motor and t s n r land land Renovation vehicles computers Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 Y & Accumulated depreciation and

impairment loss g n u o At 1 January 2009 - 1,678 1,796 1,772 15,394 20,640 Charge for year - 86 105 29 6 8 9 90 9 Disposals - - - (189) (1) (190) At 31 December 2009 - 1,764 1,901 1,612 16,082 2 1 ,3 5 9 C h a rg e for y e a r - 84 78 - 353 51 5 D isp o sals --- (576) - (576) At 31 December 2010 - 1,848 1,979 1,036 16,435 21,298 C h a rg e for y e a r - 87 38 16 363 504 D isp o sals - - - {160} (107) (267) impairment ioss during the year 2 ,1 5 0 ---- 2 ,1 5 0 At 31 December 2011 2,150 1,935 2,017 892 16,691 23,685 Charge for period 43 35 12 304 394 Disposals - - - - (925) (925) At 30 June 2012 2,150 1,978 2,052 904 16,070 23,154 Net carrying amount At 31 December 2009 9,263 2,507 171 1 779 12,721 At 31 December 2010 9,263 2,423 96 1 650 12,433

At 31 December 2011 7,113 2,336 196 63 Cn CD 10,267 At 30 June 2012 7,113 2,293 2 86 51 457 10,194

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.2 Investment property

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000

Freehold land and building:

Cost At 1 January 2,665 2,665 2,665 2,665 Less: Accumulated depreciation (259) (248) (226) (205) At 30 June/31 December 2,406 2,417 2,439 2,460

Fair value 3,000 3,000 3,700 2,700 The fair value is determined based on the discounted cash flow of the expected rental income from the investment property, which has been estimated using a valuation technique based on certain assumptions of rental income and discount rate. Management believes the estimated fair values resulting from the valuation technique are reasonable and the most appropriate at the reporting date.

4.5.3 Intangible assets

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000

Computer software

Cost At 1 January 2,158 1,972 1,972 1,921 Additions 186 51 At 30June/31 December 2,158 2,158 1,972 1,972

Accumulated amortisation At 1 January 2,005 1,857 1,756 1,641 Amortisation 30 148 101 115 At 30June/31 December 2,035 2,005 1,857 1,756

Net carrying amount 123 153 115 216

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.4 Investments <------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000 Malaysian government securities - - 30,135 35,385 Debt securities 133,609 131,581 126,328 127,758 Equity securities 21,041 26,508 21,709 13,280 Unit and property trust funds 19,791 27,813 24,905 13,501 Loans 771 821 913 846 Deposits with financial institutions 268,463 243,963 180,167 145,648 443,675 430,686 384,157 336,418 The TIMB Group’s financial investments are summarised by categories as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000 HTM financial assets {Note (a)) - - 30,135 35,385 LAR {Note (b)) 269,234 244,784 181,080 146,494 AFS financial assets (Note (c)) 174,441 185,902 172,942 154,539 443,675 430,686 384,157 336,418

(a) HTM financial assets

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000

At amortised cost: Malaysian government securities - - 30,135 35,385

At fair value: Malaysian government securities - - 30,202 35,858

105

398 Company No. 948454-K

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP {CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

At amortised cost: Fixed and call deposits with licensed financial institutions 268,463 243,963 180,167 145,648 Loans receivable: Staff mortgage loans 736 759 829 739 Other staff loans: Secured 35 46 68 89 Unsecured - 16 16 18 771 821 913 846 269,234 244,784 181,080 146,494 Included in fixed and call deposits with licensed financial institutions are short term deposits with maturity periods of less than 3 months amounting to RM 81,114,000 (31.12.2011: RM79,991,000; 2010: RM73,285,000; 2009: RM81,219,000) which have been classified as cash and cash equivalents for the purpose of the statements of cash flows. The carrying value of the fixed and call deposits approximates fair value due to the relatively short term maturities. The carrying value of the staff mortgage loans and other staff loans are reasonable approximations of fair value due to the insignificant impact of discounting.

106

399 Company No. 948454-K

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

At fair value: Equity securities: Quoted in Malaysia 20,866 26,287 21,438 13,038 Unit and property trust funds: Quoted in Malaysia 19,791 27,813 24,905 13,501 Debt securities: Quoted in Malaysia 133,609 131,581 126,328 127,758 174,266 185,681 172,671 154,297 At cost less impairment: Equity securities: Unquoted in Malaysia 175 221 271 242 174,441 185,902 172,942 154,539

107

400 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.4 Investments (cont'd.)

(e) Carrying values of financial instruments =!l

HTM LAR AFS Total E Group RM‘000 RM'000 RM'000 RM'000 t s n r

At 1 January 2009 47,497 120,832 128,506 296,835 Purchases 5,125 1,290,953 85,224 1,381,302 Y & Maturities/disposals (16,982) (1,265,291) (69,206) (1,351,479) Fair value gains recorded in: g n u o Other comprehensive income - 14,548 14,548 Realised gain transferred to profit or loss - (4,716) (4,716) Amortisation of investments (255) - 183 (72) At 31 December 2009 35,385 146,494 154,539 336,418

At 1 January 2010 35,385 146,494 154,539 336,418 Purchases - 1,703,309 55,018 1,758,327 Maturities/disposals (5,000) (1,668,723) (40,836) (1,714,559) Fair value gains recorded in: Other comprehensive income - 7,233 7,233 Realised gain transferred to profit or loss - - (3,089) (3,089) Amortisation of investments (250) - 77 (173) At 31 December 2010 30,135 181,080 172,942 384,157

108 401 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF T1MBGROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investments (cont'd.)

(e) Carrying values of financial instruments (cont'd.) sU

HTM LAR AFS Total E G roup RM'000 RM’000 RM’000 RM’000 t s n r

At 1 January 2011 30,135 181,080 172,942 384,157 Y & Purchases - 2,024,400 52,225 2,076,625 Matu rities/d isposals (30,000) (1,960,696) (39,960) (2,030,656) Fair value gains recorded in: g n u o Other comprehensive income -- 6,616 6,616 Realised gain transferred to profit or loss - - (6,032) (6,032)

Amortisation of investments (135) - 111 (24) At 31 December 2011 - 244,784 185,902 430,686

At 1 January 2012 244,784 185,902 430,686 Purchases - 973,365 38,241 1,011,606 Maturities/disposals - (948,915) (48,209) (997,124) Fair value gains recorded in Other comprehensive income - _ 3,766 3,766 Realised gain transferred to profit or loss - (5,257) (5,257) Amortisation of investments - - (2) (2) At 30 June 2012 269,234 174,441 443,675

109 402 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP 4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.4 Investments (cont'd.) (f) Fair values of financial investments The following tables show financial investments recorded at fair value analysed by the different bases as follows: AFS Total Group RM'000 RM'000 30.06.2012 Quoted market bid price 174,266 174,266 At cost less impairment 175 175 174,441 174,441 31.12.2011 Quoted market bid price 185,681 185,681 At cost less impairment 221 221 185,902 185,902 31.12.2010 Quoted market bid price 172,671 172,671 At cost less impairment 271 271 172,942 172,942 31.12.2009 Quoted market bid price 154,297 154,297 At cost less impairment 242 242 154,539 154,539

110 403 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.4 Investments (cont'd.)

(f) Fair values of financial investments (cont'd.) =!l

Included in the quoted category are financial instruments that are measured in whole or in part by reference to quoted market bid E prices. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from t s n r an exchange, secondary market via dealer and broker, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. Y & For the Group's unquoted equity securities, fair value cannot be measured reliably. These financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to g n u o the acquisition are also included in the cost of the investment. For financial investments carried at fair value, please refer to Note 4.5.32 of Section II - TIMB Group for the fair value hierarchy disclosure.

(g) Average effective interest rates The average effective interest rates and the earlier of the contractual re-pricing or maturity dates for each class of interest-bearing investment and placements with licensed financial institutions, at net carrying amounts are as below:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group % % % % Malaysian government securities _ 4.22 4.09 Debt securities 4.69 4.64 4.66 4.78 Loans 5.00 5.00 5.00 5.00 Deposits with financial institutions 3.37 3.31 2.89 2.24

111 404 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

11111111 s!IE r n s t & Y o u n g

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.5 Investment in subsidiary

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 TIMB RM'000 RM'000 RM'000 RM'000 Unquoted shares -* -* -* -*

* Denotes share capital of RM2 TIMB has a 100% interest (2011: 100%; 2010: 100%; 2009: 100%) in the subsidiary, Capital OCA Berhad, a company incorporated in Malaysia. The subsidiary company is dormant.

4.5.6 Reinsurance assets

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM’000 RM’000 Claims liabilities (Note 4.5.11 of 127,365 122,008 160,452 218,536 Section II - TIMB Group) Premium liabilities (Note 4.5.11 of 26,172 35,958 22,881 58,746 Section II - TIMB Group) 153,537 157,966 183,333 277,282

4.5.7 Insurance receivables

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM’000 RM'000 RM'000 Due premiums including agents, brokers and co-insurers balances 36,286 21,323 22,034 30,881 Due from reinsurers and cedants 34,779 38,487 41,360 34,030 71,065 59^810 63,394 64,911 Accumulated impairment loss (19,343) (23,005) (26,764) (27,275) 51,722 36,805 36,630 37,636 Movement in allowance accounts: At 1 January 23,005 26,764 27,275 27,678 Reversal of allowance for impairment losses (2,106) (3,527) (511) (403) Written off (1,556) (232) - - At 30 June/31 December 19,343 23,005 26,764 27,275

112

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.8 Other receivables

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM’000 RM'000

Financial assets: Income due and accrued 5,041 3,256 2,902 2,544 Assets held under the Malaysian Motor Insurance Pool ("MMIP") 19,555 17,085 8,154 4,887 Malaysian Institute of Insurance ("Mil") bonds 260 260 260 260 Other receivables 1,650 1,676 1,342 1,073 26,506 22,277 12,658 8,764

Non-financial asset: Tax recoverable 1,191 548 4,688 9,598 27,697 22,825 17,346 18,362 The carrying amounts of financial assets included under other receivables (excluding net assets held under MMIP) approximate their respective fair values due to the relatively short-term maturity of these balances.

113

406 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP 4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.9 Share capital Number of ordinary shares of RM1 each Amount <------— ------Audited------> E HI 30.06.2012 31.12.2011 31.12.2010 31.12.2009 30.06.2012 31.12.2011 31.12.2010 31.12.2009

TIMB RM'000 '000 '000 ’000 RM'000 RM'000 RM’000 RM'000 rnst

Authorised: At beginning and end of year 200,000 200,000 200,000 200,000 200,000 200,000 200,000 200,000 Y & Issued and fully paid: At beginning and end of year 100,013 100,013 100,013 100,013 100.013 100,013 100,013 100,013 g n u o The holders of ordinary shares are entitled to receive dividends as and when declared by TIMB. All ordinary shares carry one vote per share without restrictions and rank equally with regard to TIMB residual assets.

4.5.10 Retained earnings Presently, Maiaysian companies adopt the full imputation system. In accordance with the Finance Act, 2007, which was gazetted on 28 December 2007, companies shall not be entitled to deduct tax on dividend paid, credited or distributed to its shareholders ("single-tier system”). However, there is a transitional period of six years expiring on 31 December 2013, to allow companies to pay franked dividends to their shareholders under limited circumstances. Companies also have an irrevocable option to disregard their accumulated tax credits under Section 108 of the Income Tax Act, 1967 (“Section 108 balance”) and opt to pay dividends under the single-tier system. The change in the tax legislation also provides for the Section 108 balance to be locked in as at 31 December 2007 in accordance with Section 39 of the Finance Act, 2007. TIMB did not elect for the irrevocable option to disregard the Section 108 balance. During the transitional period, TIMB may utilise the credits in the Section 108 balance as at 30 June 2011 to distribute cash dividend payments to ordinary shareholder as defined under the Finance Act, 2007. TIMB has sufficient Section 108 balance to frank the payment of dividends out of its entire retained earnings as at 30 June 2012, subject to meeting the capital adequacy requirements as stipulated under the RBC Framework.

114 407 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.11 Insurance contract liabilities

30.06.2012 31.12.2011 31.12.2010 31.12.2009 Reinsu­ Reinsu­ Reinsu­ Reinsu­ Gross rance Net Gross rance Net Gross rance Net Gross rance Net Group RM'OQO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM’OOO RM'OOO =!l

Provision for claims reported E

by policyholders 240,903 (94,850) 146,053 239,584 (90,000) 149,584 274,474 (130,211) 144,263 281,477 (140,193) 141,284 rnst Provision for IBNR claims and PRAD 106,615 (32,515) 74,100 78,254 (32,008) 46,246 55,185 (30,241) 24,944 96,177 (78,343) 17,834 Claims liabilities (i) (127,365) 347,510 220,153 317,838 (122,008) 195,830 329,659 (160,452) 169,207 377,654 (218,536) 159,116 Y & Premium liabilities (ii) 103,540 (26,172) 77,368 115,979 (35,958) 60,021 100,065 (22,881) 77,184 126,845 (50,746) 68,099 451,058 (153,537) 297,521 433,817 (157,966) 275,051 429,724 (183,333) 246,391 504,499 (277,282) 227,217

(i) Claims liabilities g n u o At 1 January 317.838 (122,006) 195,630 329,659 (160,462) 169,207 377,654 (218,536) 159,118 499,801 (344,380) 155,421 Claims incurred in the current accident period/year 90,838 (19,579) 71,259 164,447 (29,449) 134,998 170,542 (61,726) 108,816 360,358 (205,216) 155,142 Adjustment to claims incurred in prior accident years due to changes in assumptions (8.452) 667 (7,785) (39,098) 12,044 (27,054) (88,963) 72,277 (16.6B6) (256,427) 189,100 (67,327) Claims paid during the period/ year (52,706) 13,555 (39,151) (137,170) 55,849 (81,321) (129,5741 47,533 (82,041) (226,078) 141,960 (84.118) At 30 June/31 December 347,518 (127,365) 220,153 317,838 (122,008) 195,830 329,659 (160,452) 169,207 377,654 (218,536) 159.118

(ii) Premium liabilities At 1 January 115,979 (35,958) 80,021 100,065 (22,881) 77,104 126,845 (58,746) 68,099 113,892 (56,031) 57.861 Premiums written in the period/ year 127,758 (57,256) 70,502 261,684 (102,422) 159,262 217,366 (85,619) 131,747 239,233 (120,102) 119,131 Premiums earned during the period/year (140,197) 67,042 (73,155) (245,770) 89,345 (156,425) (244,146) 121,464 (122,662) (226,280) 117,387 (108,893) At 30 June/31 December 103.540 (26,172) 77,368 115,979 (35,958) B0,021 100,065 (22,861) 77,184 126,845 (58,746) 68,099

115 408 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

I! TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.12 Deferred tax (liabilities)/assets

<------Audited ------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM’000 RM'000 RM'000 RM'000

At 1 January (1,266) 39 (901) 2,361 Recognised in: Profit or loss 24 (1,159) 1,976 (803) Other comprehensive income 373 (146) (1,036) (2,459) At 30 June/31 December (869) (1,266) 39 (901) Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when the deferred taxes relate to the same tax authority.

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12,2009 Group RM’000 RM'000 RM'000 RM'000 Presented after appropriate offsetting as follows: Deferred tax liabilities (1,193) (1,578) (1,458) (2,094) Deferred tax assets 324______312 1,497 1,193 (869) (1,266) 39 (901) Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d) II TIMB GROUP 4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.12 Deferred tax (liabilities)/assets (cont'd.) The components and movements of deferred tax liabilities and assets during the financial year/period prior to offsetting are as follows: Accelerated capital allowance on Fair value property of AFS and financial equipment assets Others Total Group RM’OOO RM'OOO RM'OOO RM'OOO Deferred tax liabilities At 1 January 2009 (141) 77 (1,944) (2,008) Recognised in: Profit or loss 47 2,326 2,373 Other comprehensive income - (2,459) - (2,459) At 31 December 2009 (94) (2,382) 382 (2,094) Recognised in: Profit or loss (19) 1,691 1,672 Other comprehensive income - (1,036) - (1,036) At 31 December 2010 (113) (3,418) 2,073 (1,458) Recognised in: Profit or loss 26 26 Other comprehensive income - (146) - (146) At 31 December 2011 (87) (3,564) 2,073 (1,578) Recognised in: Profit or loss 12 12 Other comprehensive income - 373 - 373 At 30 June 2012 (75) (3,191) 2,073 (1,193) Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

I! TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.12 Deferred tax (liabilities)/assets (cont'd.)

Premium Unutilised =!l liabilities Receivables losses Others Total Group RM’000 RM'000 RM'000 RM'000 RM'000 E t s n r Deferred tax assets Y & At 1 January 2009 - 1,331 17 3,021 4,369 Recognised in: g n u o Profit or loss - (138) (17) (3,021) (3,176) At 31 December 2009 - 1,193 -- 1,193 Recognised in: Profit or loss - (463) _ 767 304 At 31 December 2010 - 730 - 767 1,497 Recognised in: Profit or loss 311 (730) _ (766) (1,185) At 31 December 2011 311 - - 1 312 Recognised in: Profit or loss 176 . _ (164) 12 At 30 June 2012 487 -- (163) 324

118 411 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

11111111 s!IE r n s t & Y o u n g

11 TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOT ES TO TH E FI NANCIAL STATEM ENTS (CONT'D.)

4.5.13 Insurance payables

<------A u d ite d ------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 G roup RM'OOO RM’OOO RM'OOO RM’OOO

Due to agents, brokers, co-insurers and insureds 17,119 12,336 9,546 13,935 Due to reinsurers and cedants 44,688 38,717 39,759 20,484 61,807 51,053 49,305 34,419

The carrying amounts disclosed above approximate their fair values at the reporting date.

4.5.14 Other payables

<------A u d ite d ------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM'OOO RM'OOO RM'OOO RM'OOO

Financial liabilities: Claims payable 5,887 4,603 11,643 14,980 Reinsurance deposits 2,784 3,478 3,936 3,633 Others 3,502 4,658 3,321 5,485 12,173 12,739 18,900 24,098

Non-financial liabilities: Accrued expenses 4,463 4,079 4,867 4,974 16,636 16,818 23,767 29,072

The carrying amounts of financial liabilities disclosed above approximates fair values at the reporting date,

4.5.15 Retirement benefits <------A u d ite d ...... — ...... -> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 G roup RM'OOO RM’OOO RM'OOO RM'OOO

At beginning of period/year 1,336 1,548 2,120 3,227 Provision for the period/year 223 85 202 180 1,559 1,633 2,322 3,407 Payments during the periocS/year (267) (297) (774) (1,287) At 30 J une/31 December 1,292 1,336 1,548 2,120

Amount payable after 12 months 1,232 1,105 1,171 1,368

119

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEM ENTS (CONT'D.)

4.S.16 Operating revenue

Audited Unaudited < - — 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 G roup RM'000 RM'000 RM'000 RM’000 RM’000

Gross earned premiums 140,197 114,208 245,770 244,146 226,280 Investment income 8,671 7,407 17,691 13,120 12,594 148,868 121,615 263,461 257,266 238,874

4.5.17 Net earned premiums

Audited Unaudited < — — Audited —------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000 RM’000

(a) Gross earned premiums

General insurance contracts 127,758 143,064 261,684 217,366 239,233 Change in premium liabilities 12,439 (28,856) (15,914) 26,780 (12,953) 140,197 114,208 245,770 244,146 226,280

(b) Premiums ceded to reinsurers

General insurance contracts 57,256 64,710 102,422 85,619 120,102 C hange in premium liabilities 9,786 (14,940) (13,077) 35,865 (2,715) 67,042 49,770 89,345 121,484 117,387

Net earned premiums 73,155 64,438 156,425 122,662 108,893

4.5.18 Investm ent income

Audited Unaudited <------— Audited — ----- > 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM'000 RM’000

Rental income from investment property 183 175 346 354 350 Interest income: - HTM financial assets _ 568 638 1,297 1,601 - AFS financial assets 2,998 2,866 5,892 5,669 5,860 -LAR 4,122 2,788 6,456 4,242 3,050 - Others 569 252 2,561 761 319 Dividend income 801 826 1,823 970 1,467 8,673 7,475 17,716 13,293 12,647 Net amortisation of premiums on investments. (2) (68) (25) (173) (53) 8,671 7,407 17,691 13,120 12,594

120

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121

414 Company No. 948454-K

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II TIM B G R O UP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.20 Other operating incorne/(experise)

Audited Unaudited <­ — Audited - 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'OOO RM'OOO RM'OOO RM'OOO RM’OOO

Other operating revenue:

Sundry income 172 68 130 373 123

Other operating expense:

impairment loss of property and equipment (2,150)

4.5.21 Net claims

Audited Unaudited <------— Audited — - 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 G roup RM’OOO RM'OOO RM’OOO RM'OOO RM’OOO

(a) Gross claims paid General insurance contracts (54,118) (71,947) (137,170) (129,574) (226,078)

(b) Claims ceded to reinsurers General insurance contracts 13,554 29,543 55,849 47,533 141,960

Net claims paid (a) (40,564) (42,404) (81,321) (82,041) (84,118)

i General insurance contracts (29,680) (3,829) 11,821 47,995 122,147

Change in contract liabilities cede to reinsurers General insurance contracts 5,357 (7,093) (38,444) (58,084) (125,844)

Net change in contract liabiiities (b) <24,323) (10,922) (26,623) (10,089) (3,697)

Net claims (a) + (b) (64,887) (53,326) (107,944) (92,130) (87,815)

122

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II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.S NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.22 Management expenses

Audited Unaudited - Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM’000 RM'000 RM'000 RM’000 RM'000

Employee benefits expense (Note 4.5.22(a) of Section II - TIMB Group) 8,447 7,118 14,607 12,460 13,466 Directors' remuneration (Note 4.5.22(b) of Section II - TIMB Group) 246 520 356 532 444 Auditors' remuneration: - statutory audits 80 110 163 173 110 - other services -- 42 137 37 Depreciation of property and equipment 394 425 504 515 909 Depreciation of investment property 11 11 22 21 22 Amortisation of intangible assets 30 - 148 101 115 Reversal of allowance for impairment losses on insurance receivables (2,106) 1,602 (3,759) (511) (403) Provision for Takaful and Insurance Benefits Protection System ("TIPS") (2010/2009: Insurance Guarantee Scheme Fund ("IGSF")) levy 75 195 204 323 351 Rental of premises 412 369 746 617 621 Printing charges 315 407 796 1,040 1,050 Publicity expenses 1,148 1,183 2,278 1,768 1,504 Communication expenses 305 297 695 667 583 Computer expenses 518 509 1,249 1,152 1,410 Administration and general expenses 2,416 2,098 4,731 4,234 3,649 12,291 14,844 22,782 23,229 23,868

(a) Employee benefits expense

Wages and salaries 5,481 4,575 10,115 9,082 9,582 Social security contributions 70 66 136 127 123 Contributions to defined contribution plan-EPF 895 705 1,493 1,345 1,301 Other benefits 2,001 1,772 2,863 1,906 2,460 8,447 7,118 14,607 12,460 13,466

Included in employee benefits expense is CEO's remuneration of RM472.000 (2011: RM682.000; 2010: RM429.000; 2009: RM883.000) as detailed in Note 4.5.22(c) of Section il - TfMB Group.

123

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13. ACCOUNTANTS’ REPORT (Cont’d)

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Ii TIMB G R OUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.22 Management expenses (cont'd.)

(b) Directors’ remuneration

The details of directors' remuneration for the year are as follows:

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM’OOO RM'OOO RM'OOO RM'OOO RM’OOO

Executive director; Fees - - - - 24 Allowances and other emoluments ______:______-______-______;______7______;______;______;______;______31_

Non-executive directors: Fees 192 108 109 138 186 Allowances and other emoluments ______54______412______247______394______227 246 520 356 532 413 246 520 356 532 444

The number of non-executive directors of the TIMB Group whose remuneration during the financial year fell within the following bands is analysed below:

Number o f directors 30.06.2012 30.06.2011 2011 2010 2009

Non-executive directors: Below RM5Q.000 5 2 4 2 1 RM50.000 - RM100.000 1 2 1 - 2 RM100.001 -RM150.000 - 2 1 - 2 RM 150.001-RM 200.000 ______;______;______;______3______^

(c) C E O 's remuneration

The details of remuneration received by the CEO during the year are as follows:

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 G roup RM'OOO RM'OOO RM'OOO R M ’OOO R M ’OOO

Salary 269 195 462 312 207 EPF 49 23 70 44 34 Bonus 140 - 120 56 1 Gratuity _;______;______;______;______633 Total remuneration excluding the benefits in kind 458 218 652 412 875 Estimated money vaiue of benefits in kind 14 13 30 17 8 Totai remuneration (Note 4 .5 .2 2 (a ) ______of Section II-T IM B Group) 472______231______682______429______883_

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13. ACCOUNTANTS’ REPORT (Cont’d)

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.23 Taxation

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.0S.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'000 RM'000 RM'000 RM’000 RM’000

Current income tax: Malaysian Income tax 1,703 1,270 8,964 4,327 1,782 (Over)/under provision in prior years ______(1 1 2 )______-______(1,405)______3,314______146 1,591______1,270______7,559______7,641______1,928

Deferred tax (Note 4.5.12 of Section II - TIMB Group) Relating to origination and reversal of temporary differences (1) - 553 (33) 1,077 (Over)/under provision in prior years (23) - 606 (1,943) (274) (24) - 1,159 0976)" 803~ 1,567______1,270 8,718 5,665 2,731

The income tax is based on the tax rate of 25% (2011: 25%: 2010: 25%; 2009: 25%) of the estimated assessable profit for the financial year.

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

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 G roup RM’000 RM‘000 RM'000 RM'000 RM'000

Profit before taxation 5,685 2,401 34,971 15,856 8,529

Taxation at Malaysian statutory tax rate of 25% 1,421 600 8,743 3,964 2,132 Expenses not deductible for tax purposes 281 670 774 330 727 (Over)/under provision of taxation in prior years (112) - (1,405) 3,314 146 (Over)Zunder provision of deferred taxation in prior years (23) - 606 (1,943) (274) Tax expense for the year 1,567______1,270 8,718 5,665 2,731

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4. FINANCIAL STATEMENTS OF Tl MB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

There were no dilutive potential ordinary shares as at the end of the relevant reporting dates. There have been no other transactions involving ordinary shares between the reporting date and the date of completion of these financial statements.

4.5.25 Operating lease arrangements

(a) TIMB a s lesse e

TiMB has entered into a lease agreem ent for rental of office premises.

The future aggregate minimum lease payments under operating lease contracted for as at the reporting date but not recognised a s liabilities are as follows:

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.25 Operating lease arrangements (cont'd.)

(b) TIMB a s lesso r

TIMB has entered into a non-cancellable operating lease arrangement on its investment property. The lease have remaining non-cancellable lease term of 3 years.

The future minimum lease payments receivable under a non-cancellable operating lease contracted for as at the reporting date but not recognised as receivables, are as follows:

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27,03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM’000 RM'000 RM'000 RM’000 RM’000

Receivable within one year 341 338 338 198 336 Receivable after one year ______364______532______532______-______196 705______870______870______198 532

Rental income on investment property recognised in the statements of comprehensive income during tfie relevant financial years is disclosed in Note 4.5.18 of Section II - TIMB Group.

4.5.26 Capital commitments

The commitments of the TIM B Group as af the financial period-end are as follows:

<------Audited------> 30.06.2012 31.12.2011 31.12.2010 31.12.2009 RM’000 RM'000 RM'000 RM’000

Capital expenditure:

Approved but not contracted for Property and equipment 10,000 10,000

4.5.27 Related party disclosures

(a) Significant related party transactions

The Group had the following significant transactions and outstanding balances with related parties:

Audited Unaudited <------Audited------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 RM'000 RM’000 RM'000 RM’000 RM’000 Premium income:

Director-related corporation, Asian Institute of Medicine, Science & Technology - - - - 907 Fellow subsidiary, Maika Intellectual Resources Sdn Bhd - - - - 2

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.27 Related party disclosures

(b) Compensation of key management personnel

The remuneration of key management personnel during the period/year was as follows:

Audited Unaudited — Audited — ------> 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 Group RM'OOO RM'OOO RM'OOO RM’OOO RM’OOO

Non-executive directors' remuneratior 246 520 356 532 444 CEO's remuneration 472 231 682 429 883 Other key management personnel: Short term employee benefits 501 264 747 760 924 EPF expenses 60 32 90 112 168 Gratuity 7 4 21 699 - Benefits-in-kind 16 11 15 22 50 1,302 1,062 1,911 2,554 2,469

Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the Group. The key management personnel of the Group includes the Directors, Chief Executive Officer, Financial Controller and Assistant General Managers.

4.5.28 Regulatory capital requirement

The capital structure of TIMB as at 30 June 2012, as prescribed under the RBC Framework, is provided as below:

Audited Unaudited <------Audited - - 01.01.2012 01.01.2011 01.01.2011 01.01.2010 27.03.2009 to to to to to 30.06.2012 30.06.2011 31.12.2011 31.12.2010 31.12.2009 TIMB RM'OOO RM'OOO RM’OOO RM’OOO RM’OOO

Eligible Tier 1 capital Share capital (paid-up) 100,013 100,013 100,013 100,013 100,013 Reserves, including retained earnings 59,422 54,840 54,840 28,587 21,052 159,435 154,853 154,853 128,600 121,065

Tier 2 capital Eligible reserves 6,011 7,128 7,128 6,690 926

Amount deducted from capital 362 344 344 115 216

Total capital available 165,084 161,637 161,637 135,175 121,775

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4. FINANCIAL STATEMENTS OF TIMB GROUP {CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework As a genera! insurance company, TIMB is in the business of absorbing the risk of financial loss on behalf of its clients. In meeting these requirements, the Board of Directors {"Board") of TIMB, which has the ultimate responsibility for ensuring an adequate system of risk management, has established a Risk Management Committee ("RMC") of 3 members, comprising two Non­ Executive Directors, the Chief Executive Officer and other members of staff. The Risk Management Committee of TIMB is responsible for regularly identifying risks, ensuring that adequate risk management policies and procedures are in place, and monitoring compliance with policies and procedures. The Committee has worked with the Management to develop these policies and both Management and Board have agreed to adopt these policies to govern the running of the business.

Risk appetite TIMB’s risk appetite has been established as 3% of shareholders funds i.e. approximately RM4 million on any one event or series of events arising from a singie cause.

Overview of risk management policies The key risks facing TIMB are well categorised and are covered by the following policies. However, recognising new risks requires constant vigilance.

A. Underwriting

i. Risk Acceptance of poor insurance risks, risks with low profit margins and inadequate reinsurance arrangements contribute to low profitability and inadequate capital growth. Insurance risk is also the risk of outstanding insurance contract liabilities being greater than estimated.

ii. Policy The following outlines TIMB’s policies to safeguard against these risks: (a) Underwrite only classes of risks which have been approved by the Board;

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework (cont'd.)

A. Underwriting (cont'd.)

ii. Policy (cont'd.) (b) Accept risks within the approved classes only according to comprehensive underwriting guidelines and within limits of delegated authority; (c) Expand into new lines only where there is adequate experience within TIMB and after management has obtained appropriate Board authority; (d) Price risks with sufficient margin to ensure ongoing viability of the business, and maintaining a professional approach to this function; (e) Retain risks according to guidelines on maximum risks to be retained; (f) Mitigate foreign currency risks on reinsurance by all significant reinsurance arrangements being entered into in Malaysian Ringgit; (g) Ensure compliance with treaty arrangements in accepting risks; (h) Maintain a balanced portfolio to yield a reasonable level of profits; and (i) Review on a regular basis the reserves for unearned premiums and IBNR. TIMB does not accept risks of an economic or political nature or those that have a long gestation period.

B. Reinsurance Maintain prudent reinsurance arrangements with reputable reinsurers to safeguard the ongoing viability of the business including its capacity to meet obligations to policyholders and shareholders. Assess the credit worthiness of reinsurance counterparties and their ability to service their claims obligations.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework (cont’d.)

C. Claims

I. Risk Exposure to unexpected or excessive losses, fraudulent claims and inadequate provisions for outstanding claims couid affect TIMB’s profitability, financial position, capital and reputation.

ii. Policy TIMB's policies to guard against these risks are: (a) Identify claims exposures and properly assess them, and routinely review them upon advent of further information and at least once a year. (b) Maintain good claims administration and settlement processes to ensure prudent claims estimation and appropriate loss adjustment. (c) Make adequate provisions for all claims liabilities, especially for long-tail liabilities and the effect of superimposed inflation and adverse foreign exchange movements on such liabilities. (d) Assess exposure to fraud periodically and employ measures to minimise potential losses through accepting claims outside contractual obligations for fraudulent reasons and for detecting fraudulent claims. (e) Ensure that losses are mitigated and potential recovery action is followed up in a professional and timely fashion.

D. Investments

i. Risk Investment risk is the risk of inadequate investment returns from poor investment strategies and adverse movements in the value of investments. Investment risk is derived from market risk, credit risk, investment concentration risk, liquidity risk, and asset/liability mismatch risk.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.29 Risk management framework (cont'd.)

D. Investments (cont'd)

ii. Policy Returns from investment of premium income are an important source of income to TIMB and maintenance of the market value of the investments is essentia! for the financial stability of TIMB. Absence of prudent investment strategies and investment decision framework could result in poor investment return which would affect TIMB’s profitability and competitiveness and also result in TIMB not being able to meet its obligations as they fall due. It is TIMB's policy to: (a) Implement an investment strategy to ensure appropriate asset allocation, concentration of investments and matching of asset and liability portfolios. (b) Ensure that investments are held in different classes within limits specified by the Investment Committee. (c) Undertake a thorough analysis before making an investment to minimise market risk and continuously monitor the performance and risk of the investment. (d) Manage disposal of investments to optimise the returns on realisation. (e) Limit exposure to interest rate risk by investing in term deposits, corporate bonds and government securities on a long and short-term basis at competitive rates. (f) Ensure liquidity by maintaining sufficient cash float at any time and regularly matching expected duration of liabilities and investment; and uncertainties arising from timing and amount of cash flows. (g) Minimise credit risk and investment concentration risk by investing with institutions that have a minimum rating of “B” within specific overall limits for each institution. (h) Monitor investment portfolio and performance weekly or at other shorter intervals and report investment exposure and performance to the Board monthly. TIMB does not use derivatives.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONTD.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework (cont'd.)

E. Credit Quality

i. Risk Risk associated with credit exposure that increase the risk profile of TIMB and can adversely affect TIMB’s viability. The risk arises mainly from default of premiums due and large exposures.

ii. Policy Policies to limit credit risks include the following: (a) Maintain credit control in accordance with appropriate policies and procedures which governs the extension of credit to brokers, agents and reinsurance partners and specifies guidelines for setting limits on credit. (b) Limit exposure to single parties or groups of related entities to 30% of TIMB’s capital base. However, specific Board approval is required to sanction exposures including facultative reinsurance placements which exceed 30% of TIMB’s capital base as well as exposure arrangements made in exception cases. (c) Monitor compliance with such established credit limits. (d) Collect amounts due in accordance with agreed credit terms, enforce prompt collection of overdue amounts in the case of premiums due, consider the cancellation of insurance policies at the expiry of credit terms.

F. Operations

i. Risk Non-financial or operational risks TIMB faces include technology risk, risk to reputation, fraud, compliance, legal risk, physical damage to property, poor outsourcing arrangements, threat to business continuity, and key person risk.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework (cont'd.)

F. Operations (cont’d.) ii. Policy The policies to monitor and minimise these risks are as foilows: (a) Undertake annual risk audits to identify material operations risks to which TiMB is exposed. (b) Effect appropriate insurance cover for ail identified operations risks which can be cost-effectively insured. (c) Maintain a business continuity plan for events that may lead to a disruption in business including a computer disaster, together with appropriate insurance. (d) Maintain an IT security management policy that identifies the rules and procedures that all persons accessing computer resources must adhere to in order to ensure confidentiality, integrity and availability of data resources and protects the data resources from viruses. (e) Closely monitor the externa! relationships. (f) Retain records in accordance with an approved document retention policy and safeguard such documents from accidental damage or destruction; (g) Ensure at all times that compliance with regulatory requirements and fulfilment of material obligations under the total legislative framework that applies is maintained. (h) Maintain an ethics and personal conduct policy to conduct the affairs of TIMB in a manner that would avoid any action by TIMB or its officers that would bring disrepute to TIMB. (i) Implement adequate security procedures to prevent unauthorised access, damage, loss to assets and facilities and harm to employees and undertake staff training in relation to those procedures. (j) Ensure that division and responsibility is clear and mutually understood where any part of TIMB’s business is outsourced to third parties whilst ultimate control over the outsourced operations is retained by TIMB.

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4. FINANCIAL STATEMENTS OF TIMB GROUP {CONT’D.}

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.29 Risk management framework (cont'd.)

F. Operations (cont'd.)

ii. Policy (cont'd.) (k) Identify the types of fraud TIMB is exposed to and develop and maintain effective controls to prevent them and to take appropriate and prompt action if fraud occurs.

G. Regulatory compliance and corporate governance The Management is responsible to follow a systematic approach to the business and effectively manage the risks. The key risks that have been identified are monitored and their status communicated as appropriate throughout all levels of the organisation and also incorporated in TIMB's performance management reporting. TIMB maintains a register of risks and follows a project management approach toward mitigation of risk. The Internal Audit Department, which reports independently to the Board, undertakes a wide ranging programme of work designed to keep the Board fully informed on the compliance of the business with agreed risk management policies, controls and procedures. Regular reports are submitted to the Board with Key Performance Indicators covering TIMB’s performance and the key risks identified. A Compliance Department is formed to ensure regulatory compliance. The department is under the responsibility of the Manager - Quality Audit/Compliance who shall monitor compliance to regulatory requirements. The Manager - Quality Audit/Compliance shall take responsibility to ensure regulatory compliance is adhered to and any changes to policy and practices are communicated appropriately to all parties concerned.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.29 Risk management framework (cont'd.)

H. Regulations of risk management In accordance with these policies a procedural framework for management of these risks has been developed for the effective management of risk. Effective and efficient operation of the organisation would be ensured through: (a) Providing a framework for an organisation that enables for activities to be undertaken in a consistent and controlled manner. (b) A management structure that clearly identifies the roles and responsibilities of the staff at all levels. (c) Development of procedures to ensure that the risk management strategies are implemented. (d) Retention of a well-qualified level of staff through appropriate recruitment, training and staff development systems and procedures. (e) Improving motivation of staff through a suitable communication, review, feed back and reward systems. (f) Prompt and comprehensive management reporting systems to assess performance and progress of the business and the utilisation of its resources.

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II TIMB GROUP 4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.) 4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.) 4.5.30 Insurance risk TIMB has in place comprehensive underwriting guidelines and limits of authority to ensure that risks are accepted in accordance with the authorised limits. The retention of risks is protected by proportional and non-proportional treaties with reputable reinsurers and brokers, and premised on the risk appetite of TIMB. (a) Concentration of risks by class of business The table below shows the concentration of premium liabilities by class of business: Re­ Gross insurance Net premium premium premium liabilities liabilities liabilities Group RM'000 RM'000 RM'000 30.06.2012 Motor 61,555 (777) 60,778 Fire 10,243 (3,006) 7,237 Marine, aviation and transit ("MAT1') 21,935 (19,694) 2,241 Others 9,807 (2,695) 7,112 103,540 (26,172) 77,368 31.12.2011 Motor 78,606 (10,009) 68,597 Fire 6,395 (3,832) 2,563 MAT 21,636 (18,983) 2,653 Others 9,342 (3,134) 6,208 115,979 (35,958) 80,021 31.12.2010 Motor 63,099 (1,117) 61,982 Fire 5,635 (2,497) 3,138 MAT 21,951 (16,990) 4,961 Others 9,380 (2,277) 7,103 100,065 (22,881) 77,184 31.12.2009 Motor 48,196 (2,367) 45,829 Fire 6,727 (2,694) 4,033 MAT 64,435 (52,075) 12,360 Others 7,487 (1,610) 5,877 126,845 (58,746) 68,099

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(a) Concentration of risks by class of business (cont'd) The table below shows the concentration of claim liabilities by class of business:

Re­ Gross insurance Net claimclaim claim liabilities liabilities liabilities Group RM'OOO RM'OOO R M ’OOO

30.6.2012 Motor 177,619 (6,820) 170,799 Fire 24,372 (18,559) 5,813 MAT 87,960 (69,143) 18,817 Others 57,567 (32,843) 24,724 347,518 (127,365) 220,153 31.12.2011 Motor 155,110 (7,617) 147,493 Fire 24,096 (18,304) 5,792 MAT 78,924 (60,076) 18,848 Others 59,708 (36,011) 23,697 317,838 (122,008) 195,830

31.12.2010 Motor 116,709 (7,608) 109,101 Fire 22,840 (16,240) 6,600 MAT 115,550 (88,511) 27,039 Others 74,560 (48,093) 26,467 329,659 (160,452) 169,207

31.12.2009 Motor 87,382 (7,409) 79,973 Fire 31,253 (22,380) 8,873 MAT 187,606 (141,057) 46,549 Others 71,413 (47,690) 23,723 377,654 (218,536) 159,118

(b) Sensitivity analysis

Key assumptions The principal assumptions underlying the estimation of liabilities is that TIMB's future claims development will follow a similar pattern to past claims development experience. This includes key assumptions such as the adopted Ultimate Loss Ratios ("ULR"), risk margin percentages (i.e. Provision of Risk Margin for Adverse Deviation ("PRAD")) and provision for claims handling costs. 138

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS {CONT'D.}

4.5.30 Insurance risk (cont'd.)

(b) Sensitivity analysis (cont'd.)

Key assumptions (cont'd.) Additional qualitative judgments are used to assess the extent to which past trends may not apply in the future, for example, isolated occurrence, changes in market factors such as public attitude to claiming, economic conditions, as well as internal factors, such as, portfolio mix, policy conditions and claims handling procedures. Judgement is further used to assess the extent to which external factors, such as judicial decisions and government legislation affect the estimates.

Sensitivities The general insurance claim liabilities are sensitive to the key assumptions shown below. It has not been possible to quantify the sensitivity of certain assumptions, such as, legislative changes or uncertainty in the estimation process. - Adopted ULR; - PRAD; and - Provision for expenses (which includes claims handling cost and other overheads). The analysis below is performed for reasonably possible movements in key assumptions (i.e. a 10% increase) with all other assumptions held constant, showing the impact on Gross and Net Liabilities, Profit before Tax and Equity. The correlation of assumptions will have a significant effect in determining the ultimate claims liabilities, but to demonstrate the impact due to changes in assumptions, assumptions had to be changed on an individual basis. It should be noted that movements in these assumptions are non-linear.

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4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(b) Sensitivity analysis (cont'd.)

Sensitivities (cont'd.)

- Increase/(decrease)------> Impact Impact Impact on profit Changes on gross on net before Impact in liabilities liabilities taxation on equity Group variable RM’OOO RM'OOO RM'OOO RM'OOO

Loss ratio +10% 61,163 40,528 (40,528) (30,396) PRAD +10% 2,261 1,900 (1,900) (1,425) Provision for expenses +10% 447 726 (726) (545)

31.12.2011 Loss ratio +10% 57,635 36,159 (36,159) (27,119) PRAD +10% 2,040 1,797 (1,797) (1,348) Provision for expenses +10% 525 1,118 (1,118) (839)

31.12.2010 Loss ratio +10% 21,367 16,632 (16,632) (12,474) PRAD +10% 2,787 1,327 (1,327) (995) Provision for expenses +10% 1,811 1,811 (1,811) (1,358)

31.12.2009 Loss ratio +10% 47,775 21,124 (21,124) (15,843) PRAD +10% 4,628 1,209 (1,209) (907) Provision for expenses + 10% 1,711 1,711 (1,711) (1,283)

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1! TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table

The following tables show the estimate of cumulative incurred claims, including both claims notified and IBNR for each successive accident year at each reporting date, together

with cumulative payments to-date. sU

In setting provisions for claims, TIMB gives consideration to the probability and magnitude of future experience being more adverse than assumed and exercises a degree of E caution in setting reserves when there Is considerable uncertainty. In general, the uncertainty associated with the ultimate claims experience in an accident year is greatest when t s n r the accident year is at an early stage of development and the margin necessary to provide the necessary confidence in adequacy of provision is relatively at its highest. As claims develop and the ultimate cost of claims becomes more certain, the relative level of margin maintained should decrease.

Gross general insurance contract liabilities for 30.06.2012: Y &

Accident year 2005 2006 2007 2008 2009 2010 2011 2012

RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'OOO RM’OOO g n u o

At end of accident year 215,703 171,487 168,880 231,999 174,026 170,544 164,136 90,838 One year later 206,489 189,062 158,065 251,136 124,814 168,597 162,513 Two years laler 199,753 238,023 161.822 211,179 117,799 168,767 Three years later 185,568 190,660 157,899 206,783 116,935 Four years later 185,137 192,144 152,896 206.202 Five years later 190,674 190,249 152,051 Six years later 186,659 190,431 Seven years later 208,485 Current estimate of cumulative claims incurred 208,485 190,431 152,051 206.202 116,935 168,767 162,513 90,838 1,296,222

At end of accident year (56,005} (39,651) (52,065) (43,395) (39,747) (38,182) (30,815) (7,615) One year later (108,271) (111,344) (97,631) (146,308) (73,127) (95,372) (54,615) Two years later (147,832) (131,382) (120,035) (173,375) (88,940) (101,311) Three years later (158,615) (172,851) (133,779) (188,104) (97,178) Four years later (166,057) (177,927) (140,857) (191,175) Five years later (170,840) (178,884) (142,324) Six years later (173,027) (179,324) Seven years later (175,162) Cumulative payments to-date (175,162) (179,324) (142,324) (191,175) (97,178) (101,311) (54,615) (7,615)

Gross general insurance contract liabilities per statements of financial position 33,323 11,107 9,727 15,027 19,757 67,456 107,898 83,223 347,518

141 434 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP {CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table (cont'd.)

Net general insurance contract liabilities for 30.06.2012: =!l Accident year 2005 2006 2007 2008 2009 2010 2011 2012 Total RM'OOO RM'OOO RM'OOO

RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO E t s n r At end of accident year 86,749 93,390 90,326 102,392 104,437 114,029 134,687 71,260 One year later 90,534 96,896 85,079 92,619 88,388 106,956 130,410 Two years later 88,846 87,560 84,387 89,334 87,742 106,360 Three years later 79,869 85,438 84,684 85,705 86,934 Y & Four years later 79,430 86,228 80,836 85,396 Five years later 80,628 84,087 80,639

Six years later 77,700 84,044 g n u o Seven years later 82,651 Current estimate of cumulative claims incurred 82,651 84,044 80,639 85,396 86,934 106,360 130,410 71,260 727,694

At end of accident year (27,106) (34,194) (32,810) (34,131) (36,105) (34,592) (28,737) (7,353) One year later (57,734) (64,307) (60,380) (63,502) (62,444) (67,182) (50,190) Two years later (65,144) (70,765) (66,712) (71,614) (70,711) (71,712) Three years later (68,029) (74,012) (71,819) (75,894) (73,371) Four years later (70,604) (77,293) (74,337) (77,234) Five years later (72,926) (77,821) (74,987) Six years later (73,708) (78,045) Seven years later (74,649) Cumulative payments to-date (74,649) (78,045) (74,987) (77,234) (73,371) (71,712) (50,190) (7,353) (507,541)

Net general insurance contract liabilities per statements of financial position 8.002______5,999______5,652 8,162 13,563 34,646 80,220 63,907 220,153

142 435 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEME NTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table (cont'd.)

Gross general insurance contract liabilities for 30.6.2011:

2004 2005 2006 2007 2003 2009 2010 2011 Total =!l Accident Year RM'000 RIWOOO RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 E

At end of accident year 303,677 215,703 171,487 168,880 231,999 174,026 170,544 164,136 rnst One year later 315,814 206,489 189,062 158,065 251,136 124,814 168,597 Two years later 303,539 199,753 238,023 161,822 211,179 117,799 Three years later 310,463 185,566 190,600 157,899 206,783 Y & Four years later 298,651 185,137 192,144 152,896 Five years later 283,421 190,674 190,249 286,545 186,659 Six years later g n u o Seven years later 309,785 Current estimate of cumulative claims incurred 309,785 186,659 190,249 152,896 206,783 117,799 168,597 164,136 1,496,904

At end of accident year (75,031) (56,005) (39,651) (52,065) (43,395) (39,747) (38,182) (30,815) One year later (213,832) (108,271) (111,344) (97,631) (146,308) (73,127) (95,372) Two years later (249,244) (147,832) (131,382) (120,035) (173,375) (88,940) Three years later (265,409) (158,615) (172,851) (133,779) (188,104) Four years later (269,059) (166,057) (177,927) (140,857) Five years later (272,534) (170,840) (178,884) Six years later (274,978) (173,027) Seven years later (283,067) Cumulative payments to-date (283,067) (173,027) (178,884) (140,857) (188,104) (88,940) (95,372) (30,815) (1,179,066)

Gross general insurance contract liabilities per statements of financial position 26,718 13,632 11,365 12,039 18,679 26,659 73,225 133,321 317,338

143 436 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table (cont’d.)

Net general insurance contract liabilities for30.6.2011:

2004 2005 2006 2007 2008 2009 2010 2011 Total =!l Accident Year RM'OOO RM'OOO RM’OOO RM'OOO RM'OOO RM'OOO RM'OOO RM’OOO RM'OOO E t s n r At end of accident year 99,947 86,749 93,390 90,326 102,392 104,437 114,029 134,687 One year later 99,776 90,534 96,896 85,079 92,619 88,388 106,956 Two years later 101,532 88,846 87,560 84,387 89,334 87,742 Three years later 102,721 79,869 85,438 84,684 85,705 Y & Four years iater 93,982 79,430 86,228 80,836 Five years later 91,252 80,828 84,087

Six years later 93,194 77,700 g n u o Seven years later 96,654 Current estimate of cumulative claims incurred 96,654 77,700 84,087 80,836 85,705 87,742 106,956 134,687 754,367

At end of accident year (39,398) (27,106) (34,194) (32,810) (34,131) (36,105) (34,592) (28,737) One year later (66,242) (57,734) (64,307) (60,380) (63,502) (62,444) (67,182) Two years later (75,465) (65,144) (70,765) (66,712) (71,614) (70,711) Three years later (82,227) (68,029) (74,012) (71,819) (75,894) Four years later (83,721) (70,604) (77,293) (74,337) Five years lafer (85,375) (72,926) (77,821) Six years laier (86,838) (73,708) Seven years later (90,147) Cumulative payments to-date (90,147) (73,708) (77,821) (74,337) (75,894) (70,711) (67,182) (28,737) (558,537)

Net general insurance contract liabilities per statements of financial position 6,507 3,992______6,266 6,499 9,811 17,031 39,774 105,950 195,830

144 437 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

il TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table (cont'd.)

Gross general insurance contract liabilities for 30.6.2010: =!l 2003 2004 2005 2006 2007 2008 2009 2010 Total

Accident Year RM'000 RM'000 RMr000 RM'000 RM’000 RM’000 RM'000 RM'000 RM'000 E rnst At end of accident year 274,230 298,627 212,285 167,686 166,086 231,338 173,640 170,237 One year laler 252,462 308,207 200,053 183,227 154,839 250,131 124,133

Two years later 273,148 295,351 192,945 232,046 158,509 209,999 Y & Three years later 275,965 302,121 178,676 184,539 154,492 Four years later 279,967 290,270 178,194 186,016 Five years later 276,344 274,991 183,709 Six years later 264,309 278,062 g n u o Seven years later 285,860 Current estimate of cumulative claims incurred 285,860 278,062 183,709 186,016 154,492 209,999 124,133 170,237 1,592,508

At end of accident year (49,691) (69,981) (52,586) (35,851) (49,271) (42,734) (39,361) (37,877) One year later (171,642) (206,226) (101,836) (105,509) (94,405) (145,303) (72,446) Two years iater (221,305) (241,056) (141,024) (125,407) (116,722) (172,194) Three years later (226,437) (257,067) (151,724) (166,789) (130,372) Four years later (235,945) (260,678) (159,113) (171,800) Five years later (238,010) (264,104) (163,874) Six years later (241,863) (266,495) Seven years later (247,791) Cumulative payments to-date (247,791) (266,495) (163,874) (171,800) (130,372) (172,194) (72,446) (37,877) (1,262,849) Gross general insurance contract liabilities per statements of financial position 38,069 11.567 19.835 14.216 24,120 37,805 51,687 132,360 329,659

145 438 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.30 Insurance risk (cont'd.)

(c) Claims development table (cont'd.)

Net general insurance contract liabilities for 30.6.2010: =!l 2003 2004 2005 2006 2007 2008 2009 2010 Total Accident Year RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO E t s n r At end of accident year 105,491 95,411 83,525 89,507 87,488 101,725 104,039 113,716 One year later 101,642 92,614 84,403 90,969 81,750 91,616 87,675 Two years later 98,891 93,019 82,385 81,533 80,953 86,173 Three years later 99,713 94,852 73,352 79,346 81,155 Y & Four years later 101,386 86,073 72,853 80,061 Five years later 97,931 83,295 74,222

Six years later 96,289 85,197 g n u o Seven years later 103.940 Current estimate of cumulative claims incurred 103,940 85,197 74,222 80,061 81,155 88,173 87,675 113,716 714,139

At end of accident year (36,424) (34,863) (23,882) (30,311) (29,972) (33,463) (35,706) (34,281) One year later (69,498) (59,079) (51,603) (58,380) (57,052) (62,499) (61,731) Two years later (78,955) (67,752) (58,684) (64,738) (63,277) (70,453) Three years lafer (84,036) (74,358) (61,513) (67,919) (68,290) Four years later (88,730) (75,812) (64,026) (71,125) Five years later (89,940) (77,418) (66,320) Six years later (91,128) (78,841) Seven years later (93,891) Cumulative payments to-date (93,891) (78,841) (66,320) (71,125) (68,290) (70,453) (61,731) (34,281) (544,932)

Net general insurance contract liabilities per statements of financial position 10,049 6,356 7,902 8,936 12,865 17,720 25,944 79,435 169,207

The gross and net general insurance claims development tables for the financial year ended 31 December 2009 of Group have not been disclosed as it is not practicable to obtain the information without incurring excessive cost or resources.

146 439 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP {CONT'D.)

4.5 NOTES TO TH E FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks

(a) Credit risk

Treaty reinsurers and brokers credit ratings are evaluated prior to entering into treaty arrangements. The Group and the Company observe the Bank Negara Malaysia

Guidelines and internal Group policies in assessing the credit ratings of reinsurers and brokers. =!l

The settlement risks are also mitigated through prompt reconciliations of records and recovery actions, avoiding at all times delays in collection from reinsurers and E

entering into commutations for run off reinsurers. The Group and the Company has tightened the credit collection and recovery policies to expedite collections. The rnst Group and the Company is unable to avoid any deterioration in credit ratings of reinsurers after inception of treaties.

Credit exposure Y &

At the reporting date, the Group's and the Company's maximum exposure to credit risk is represented by the maximum amount of each class of financial assets

recognised in the statements of financial position as shown in the table below; g n u o

<------Audited —...... > 30.06.2012 31.12.2011 31.12.2010 31.12.2009 Group RM’000 RM'000 RM’000 RM’000

HTM financial assets: Malaysian government securities - 30,135 35,385 LAR: Fixed and call deposits with licensed financial institutions 268,463 243,963 180,167 145,648 Loans receivable: Staff mortgage loans 736 759 829 739 Other staff loans: Secured 35 46 68 89 Unsecured - 16 16 18 A FS financial assets: Debt securities 133,609 131,581 126,328 127,758 Reinsurance assets 153,537 157,966 183,333 277,282 Insurance receivables 51,722 36,805 36,630 37,636 Other receivables 27,697 22,825 17,346 18,362 Cash and bank balances 7,289 5,152 3,142 7,907 643,068 599,113 577,994 650,824

147 440 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONTD.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.S.31 Financial risks (cont'd.)

(a) Credit risk (confd.)

Credit exposure by credit rating =!l

The table below provides information regarding the credit risk exposures of the Group by classifying assets according to the Group's credit ratings of counterparties. E t s n r

| Neither past-due nor impaired | Past-due BBB and Not but not Y & AAA AA A lower rated impaired Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 RM’000 g n u o

30.06.2012 LAR: Fixed and call deposits with licensed financial institutions 87,221 61.616 48,104 - 71,522 _ 268,463 Loans receivable: Staff mortgage loans --. _ 736 _ 736 Other staff loans: Secured __ . _ 35 . 35 A FS financial assets: Debt securities 60,011 64,445 1,032 7,321 133,609 Reinsurance assets - 248 48,207 6,160 98,922 _ 153,537 Insurance receivables 1,187 1.604 6,217 214 (1,136) 43,636 51,722 Other receivables 2,225 1,868 481 _ 23,123 - 27,697 Cash and bank balances 8,522 453 1,303 (2,989) - 7,289 159.966 130,234 105,344 6.374 197.534 43.636 643,088

148 441 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

it TIM B G R O U P

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(a) Credit risk (cont’d.)

Credit exposure by credit rating (cont'd.) =U E

Neither past-due nor impaired P ast-d ue

B BB and Not but not rnst AAA AA A low er rated im paired T o tal R M ’000 RM'000 RM'000 R M ’000 RM ’000 R M '000 RM '000 Y & 31.12.2011 LAR:

Fixed and call deposits with g n u o licensed financial institutions 77,886 75,871 16,604 - 73,602 - 243,963 Loans receivable: Staff mortgage loans - - -- 759 - 759 Other staff loans: Secured 46 _ 46 Unsecured - - - - 16 - 16 A FS financial assets; Debt securities 55,675 68,545 . _ 7,361 _ 131,581 Reinsurance assets - 934 47,040 8,757 101,235 - 157,966 Insurance receivables 1,416 1,080 6,076 578 (562) 28,217 36,805 Other receivables 1,357 1,285 112 - 20,071 - 22,825 Cash and bank balances 4,042 756 1,352 - (998) - 5,152 140,376 148.471 71.184 9,335 201.530 28,217 599,113

149 442 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4,5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(a) C redit risk (cont'd.)

Credit exposure by credit rating (cont'd.) =!l Neither past-due nor impaired

Past-due E

BBB and N ot b u t n o t rnst AAA AAA lo w er rated im paired To tal R M ’OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO Y &

31.12.2010

HTM financial assets ; g n u o Malaysian government securities - - - - 30,135 - 30,135 LAR: Fixed and call deposits with 180,167 licensed financial institutions 40,594 54,962 10,000 - 74,611 - Loans receivable: Staff mortgage loans --- - 829 - 829 Other staff loans: _ Secured 68 68 Unsecured - -- - 16 - 16 A FS financial assets: . - 126,328 Debt securities 55,770 63,150 7,408 - 183,333 Reinsurance assets 3,637 18,308 43,698 14,286 102,904 Insurance receivables 783 (4) 7,804 225 2,751 25,071 36,630 Other receivables 1,025 981 39 - 15,301 - 17,346 3,142 Cash and bank balances 3,371 460 894 - (1,583) 105.180 138,357 62,435 14,511 232.440 25,071 577,994

150 443 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIM B G R O U P

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO TH E FINANCIAL STATEM ENTS (CONT’D.)

4.5.31 Financial risks (cont'd.)

(a) Credit risk (cont'd.)

Credit exposure by credit rating (cont'd.) =!l ______Neither past-due nor impaired______|

Past-due E

BBB and Not but not rnst AAA AA A lower rated impaired Total RM'000 RM'000 RM'000 RM'000 RM’000 RM'000 RM'000 Y &

31.12.2009

HTM financial assets : g n u o Maiaysian government securities 35,385 - 35,385 LAR: Fixed and call deposits with licensed financial institutions 145,648 - 145,648 Loans receivable: Staff mortgage loans 739 - 739 Other staff loans; Secured 89 - 89 Unsecured 18 - 18 A FS financial assets: Debt securities 50,348 70,055 - - 7,355 - 127,758 Reinsurance assets 1 722 10,612 45,180 - 219,768 - 277,282 Insurance receivables 28,202 9,434 37,63$ Other receivables 18,362 - 18,362 Cash and bank balances .______.______-______7,907______;______7,907 52.070 80,667 45.180______463,473______9,434 650,824

151 444 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(a) Credit risk (cont'd.)

Age analysis of financial assets past-due but not impaired =!l Past due but not impaired E 31 to 60 61 to 90 91 to 180 More than rnst < 30 days days days days 180 days Total Group RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO RM'OOO Y & 30.06.2012 Insurance receivables: Due premium including agents, brokers and co-insurers balances 2,299 14,337 2,781 862 5,426 25,707 Due from reinsurers and cedants 1,453 4,918 644 221 10,693 17,929 g n u o 3,752 19,255 3,425 1,083 16,121 43,636

31.12.2011 Insurance receivables: Due premium including agents, brokers and co-insurers balances 2,950 1,097 947 677 3,872 9,553 Due from reinsurers and cedants 6,805 113 1,027 1,809 8,910 18,664 9,765 1,210 1,974 2,486 12,782 28,217

31,12.2010 Insurance receivables: Due premium including agents, brokers and co-insurers balances 3,088 965 1,426 869 1,240 7,588 Due from reinsurers and cedants 3,251 68 237 4,395 9,532 17,483 6,339 1,033 1,663 5,264 10,772 25,071

31.12.2009 Insurance receivables; Due premium including agents, brokers and co-insurers balances 2,474 1,806 2,000 741 7,023 Due from reinsurers and cedants 966 958 487 - - 2,411 3,440 2,766 2,487 741 - 9,434

As at 30 June 2012 based on the assessment of the receivables, there were impaired insurance receivable of RM19.343.000. As at 31 December 2011, 2010 and 2009 based on the assessment of the receivables, there were impaired insurance receivable of RM23,005,000, RM26.764.000 and RM27,275,0D0, respectively. A reconciiiation of the allowance for the impairment losses for the insurance receivables is disclosed in Note 4.5.7 of Section II - TIMB Group.

152 445 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(b) Liquidity risk

Liquidity risk is the risk where the Group and the Company is unable to meet its obligations in a timely manner at a reasonable cost at any time. The =!l Group maintains a large tranche of liquid asset instruments, primarily bank deposits and Malaysian Government Securities, to ensure high liquidity. E

Maturity profiles t s n r

The table below summarises the maturity profile of the financial assets and liabilities of the Group and the Company based on remaining undiscounted contractual obligations, including interest payable and receivable. Y &

For insurance contracts liabilities and reinsurance assets, maturity profiles are determined based on estimated timing of net cash outflows from the

recognised insurance liabilities. Unearned premiums and the reinsurers' share of unearned premiums have been excluded from the analysis as they are g n u o

Carrying Less than Over 1-5 Over 5 No maturity value 1 year years years date Total Group RM’000 RM’000 RM'000 RM’000 RM’000 RM’000

30.06.2012 LAR: Fixed and call deposits with licensed financial institutior 268,463 271,443 271,443 Loans receivable: Staff mortgage loans 736 3 35 698 736 Other staff loans: Secured 35 3 32 35 AFS financial assets: Equity securities 21,041 21,041 21,041 Unit and property trust funds 19,791 19,791 19,791 Debt securities 133,609 19,992 116,789 11,508 148,289 Reinsurance assets 153,537 19,315 73,545 34,505 26,172 153,537 Insurance receivables 51,722 51,722 51,722 Other receivables 27,697 5,067 2 22,628 27,697 Cash and bank balances 7,289 7,289 7,289 683,920 367,545 190,403 46,711 96,921 701,580

153 446 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

li TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(b) Liquidity risk (cont’d.)

Carrying Less than Over 1 -5 Over 5 No maturity =U E value 1 year years years date Total Group RM'000 RM'000 RM'000 RM'000 RM'000 RM'000 rnst 30.06.2012 (cont'd.) Insurance contract liabilities 451,058 83.223 210,138 54,157 103,540 451,058

Insurance payables 61,807 61,807 61,807 Y & Other payables 16,636 11,860 428 4,348 16,636 Retirement benefits 1,292______60 S79______653_ 1,292 211,145_____ 54,810 107,888 530,793

530,793 156,950 g n u o

31.12.2011 LAR: Fixed and call deposits with licensed financial institutions 243,963 247,663 - - - 247,663 Loans receivable: Staff mortgage loans 759 - 25 734 - 759 Other staff loans: Secured 46 5 41 _ 46 Unsecured 16 16 - - - 16 AFS financial assets: Equity securities 26,508 _ 26,508 26,508 Unit and property trust funds 27,813 --- 27,813 27,813 Debt securities 131,581 32,117 111,420 - - 143,537 Reinsurance assets 157,966 89,989 66,505 1,472 - 157,966 Insurance receivables 36,805 36,805 --- 36,805 Other receivables 22,825 3,472 2 - 19,351 22,825 Cash and bank balances 5,152 -- - 5,152 5,152 653,434 410,067 177,993______2,206______78,824 669,090

154 447 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.31 Financial risks (cont’d.)

(b) Liquidity risk (cont'd.) No Carrying Less than Over 1 -5 Over 5 maturity value 1 year years years date Total

Group RM'OOO RM’OOO RM'OOO RM’OOO RM'OOO RM'OOO =U E

31.12.2011 (cont'd.)

Insurance contract liabilities 433,817 171,530 140,771 5,537 115,979 433,817 rnst Insurance payables 51,053 51,053 --- 51,053 Other payables 16,818 10,162 437 - 6,219 16,818

Retirement benefits 1,336 231 676 429 - 1,336 Y & 503,024 232,976 141,884 5,966 122,198 503,024

31.12.2010 g n u o HTM financial assets: Malaysian government securities 30,135 30,202 - - 30,202 LAR: Fixed and cafl deposits with licensed financial institutions 180,167 181,428 - -- 181,428 Loans receivable: Staff mortgage loans 829 12 23 794 - 829 Other staff loans: Secured 68 _ 68 _ - 68 Unsecured 16 16 • - - 16 AFS financial assets: Equity securities 21,709 __ 21,709 21,709 Unit and property trust funds 24,905 --- 24,905 24,905 Debt securities 126,328 19,550 118,800 3,561 - 141,911 Reinsurance assets 183,333 84,038 71,356 5,058 22,881 183,333 Insurance receivables 36,630 36,630 --- 36,630 Other receivables 17,346 2,894 2 - 14,450 17,346 Cash and bank balances 3,142 3,142 --- 3.142 624,608 357,912______190,249______9,413______83,945______641,519

insurance contract liabilities 429,724 166,388 150,622 12,649 100,065 429,724 Insurance payables 49,305 49,305 - - - 49,305 Other payables 23,767 15,964 568 - 7,235 23,767 Retirement benefits 1,548 377 740 431 - 1,548 504,344 232,034..... 151,930 13,080 107,300 504,344

155 448 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(b) Liquidity risk (cont'd.) No Carrying Less than Over 1-5 Over 5 maturity value 1 year years years date Total =U E RM’000 Group RM'000 RM’000 RM'000 RM'000 RM'000 rnst 31.12.2009 HTM financial assets:

Malaysian government securities 35,385 5,017 30,841 - - 35,858 Y & LAR: Fixed and call deposits with 145,648 145,648 - - - 145,648 licensed financial institutions g n u o Loans receivable: 739 Staff mortgage loans 739 739 - - - Other staff loans: Secured 89 89 . -- 89 Unsecured 18 18 - - - 18 AFS financial assets: . __ Equity securities 13,280 13,280 13,280 13,501 Unit and property trust funds 13,501 --- 13,501 143,817 Debt securities 127,758 35,520 99,392 8,905 - Reinsurance assets 277,282 112,802 98,109 7,625 58,746 277,282 Insurance receivables 37,636 37,636 - -- 37,636 Other receivables 18,362 2,558 2 - 15,802 18,362 7,907 Cash and bank balances 7,907 7,907 - - - 677.605______347,934______228.344 16,530______101,329______694,137

Insurance contract liabilities 504,499 194,096 170,632 12,926 126,845 504,499 Insurance payables 34,419 34,419 - - - 34,419 Other payables 29,072 19,413 249 - 9,410 29,072 Retirement benefits 2,120 2,120 - ______; ______2,120 570,110______250,048 170,861______12.926______136,255______570,110

156 449 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(b) Liquidity risk (cont'd.)

The table below summarises the expected utilisation or settlement of assets =!l

Non- Current* current Total E rnst Group RM’OOO RM'OOO RM'OOO

30.06.2012 Y & Property and equipment - 10,194 10,194 Investment property - 2,406 2,406 - 123 123

Intangible assets g n u o Investments: LAR 268,434 800 269,234 AFS financial assets 16,562 157,879 174,441 Reinsurance assets 85,560 67,977 153,537 Insurance receivables 51,722 - 51,722 Other receivables 8,963 18,734 27,697 Cash and bank balances 7,289 - 7,289 438,530 258,113 696.643

31.12.2011 Property and equipment - 10,267 10,267 Investment property - 2,417 2,417 Intangible assets - 153 153 Investments: LAR 243,984 800 244,784 AFS financial assets 20,161 165,741 185,902 Reinsurance assets 89,989 67,977 157,966 Insurance receivables 36,805 - 36,805 Other receivables 3,472 19,353 22,825 Cash and bank balances 5,152 - 5,152 399.563 266,708 666.271

157 450 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

Ii TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(b) Liquidity risk (cont'd.)

Non- Current* current Total sU RM’000 RM'000 RM'000

Group E t s n r 31.12.2010 Property and equipment . 12,433 12,433 Investment property - 2,439 2,439 Intangible assets - 115 115 Y & Investments: 30,135 _ 30,135 HTM financial assets g n u o LAR 181,080 - 181,080 AFS financial assets 15,162 157,780 172,942 Reinsurance assets 96,022 87,311 183,333 Insurance receivables 36,630 - 36,630 Other receivables 2,894 14,452 17,346 Cash and bank balances 3,142 - 3,142 365.065 274,530 639.595

31.12.2009 Property and equipment 12,721 12,721 Investment property . 2,460 2,460 Intangible assets - 216 216 Investments: HTM financial assets 5,000 30,385 35,385 LAR 146,494 - 146,494 AFS financial assets 26,290 128,249 154,539 Reinsurance assets 143,125 134,157 277,282 Insurance receivables 37,636 - 37,636 Other receivables 2,558 15,804 18,362 Cash and bank balances 7,907 - 7,907 369.010 323.992 693.002 Expected utilisation or settlement within 12 months from the reporting date.

158 451 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

il TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT’D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(c) Market risk

Market risk arises with changes in equity and bond prices. This risk is mitigated through proper initial and continuous credit evaluation of bonds and =!l shares respectively, purchase of high grade shares and bonds, and constant watch on investment portfolio for adverse changes and opportunities. E

Credit risk, especially settlement risk is mitigated with proper credit monitoring of bonds held. t s n r

Fund managers' performance are monitored constantly, parameters are prescribed to fund managers according to the Group's risk appetite on purchase of equity, bonds and unit trusts, and by placing limits on categories of purchase. Y & Holding of unquoted shares is progressively reduced, with an emphasis on risk and return. g n u o Equity price risk

Management’s best estimate of the effect on the net income for the year and equity due to a reasonably possible change in the F T S E Bursa Malaysia K LCI index ("FBMKLCI") with all other variables held constant is indicated in the table beiow:

<— lncrease/(decrease) — > Effect on net Change in income for Effect on FBMKLCI the year equity Group % RM'OOO RM’OOO

30.6.2012 Market indices: FBM KLCI FBMKLCI +10 500 819 -10 (500) (819) 31.12.2011 Market indices: FBM KLCI + 10% 527 948 FBMKLCI - 10% (527) (948)

159 452 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT’D.)

4.5.31 Financial risks (cont'd.)

(c) Market risk (cont'd.)

Equity price risk (cont'd.) =!l

<— lncrease/(decrease) —> E Effect on rnst net Change in income for Effect on

FBMKLCI the year equity Y & Group % RM'000 RM’000

31.12.2010 g n u o Market indices: FBMKLCI 197 510 FBMKLCI -10% (197) (510)

31.12.2009 Market indices: FBMKLCI +10% 810 608 FBMKLCI -10% (810) (608)

Interest rate risk

The Group has no borrowings, hence limiting its exposure to interest risk to holdings in term deposits, corporate bonds and government securities. The interest and capital value of the latter may be affected by changes in the interest yield curve. The Group has an investment policy that investments are made at competitive interest rates.

Sensitivity analysis:

The analysis below is performed for reasonably possible movements in key variables with all other variables held constant, showing the impact on income or loss and impact on equity. The correlation of variables will have a significant effect in determining the ultimate impact on interest rate yield risk but to demonstrate the impact due to changes in variables, variables had to be changed on an individual basis. It should be noted that movements in these variables are non-linear.

160 453 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

Ii TIM B G RO U P

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.31 Financial risks (cont'd.)

(c) Market risk (cont’d.)

Interest rate risk (cont'd.) =U E

Sensitivity analysis (cont'd.):

<— lncrease/(decrease) — > rnst Effect on

net Y & income for Effect on Changes in the year equity Group basis points RM'OOO RM'OOO g n u o

30.6.2012 Interest rates + 100 bps (1,007) (4,520) Interest rates -1 0 0 bps 1,007 4372

31.12.2011 Interest rates + 100 bps (1,830) (4,539) Interest rates -100 bps 1,830 4,446

31.12.2010 Interest rates + 100 bps (1,351) (4,551) Interest rates -100 bps 1,351 4,652

31.12.2009 Interest rates + 100 bps (2,784) (2,784) Interest rates - 100 bps 3,812 3,812

161 454 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont’d)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO TH E FINANCIAL STATEMENTS (CONT'D.)

4.5.32 Fair values of financial assets and liabilities

The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1: Quoted (unadjusted) prices in active markets for identical assets or liabilities =!l

Level 2: Other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly E rnst Level 3; Techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data

The following table shows an analysis of financial instruments recorded at fair value by level of the fair value hierarchy: Y &

| ...... Valuation technique using------| Un- Quoted Observable observable g n u o market price inputs inputs (Level 1) (Level 2) (Level 3) Total Group RM'000 RM'000 RM'000 RM'000

AFS financial assets:

30.06.2012 Equity securities: Quoted in Malaysia 20,866 - - 20,866 Unit and property trust funds: Quoted in Malaysia 19,791 -- 19,791 Debt securities: Quoted in Malaysia 133,609 - - 133,609 174,266 -- 174,266

31.12.2011 Equity securities: Quoted in Malaysia 26,287 - - 26,287 Unit and property trust funds: Quoted in Malaysia 27,813 -- 27,813 Debt securities: Quoted in Malaysia 131,581 -- 131,581 185,681 -- 185,681

162 455 Company No. 948454-K

13. ACCOUNTANTS’ REPORT (Cont'd)

II TIMB GROUP

4. FINANCIAL STATEMENTS OF TIMB GROUP (CONT'D.)

4.5 NOTES TO THE FINANCIAL STATEMENTS (CONT'D.)

4.5.32 Fair values of financial assets and liabilities (cont'd.)

| ...... Valuation technique using ...... j Un- Quoted Observable observable market price inputs inputs =U E (Level 1) (Level 2) (Level 3) Total RM'OOO RM'OOO RM’OOO RM'OOO

Group t s n r

AFS financial assets (cont'd.):

31.12.2010 Y & Equity securities: 21,438 21,438 Quoted in Malaysia g n u o Unit and property trust funds: Quoted in Malaysia 24,905 -- 24,905 Debt securities: Quoted in Malaysia 126,328 126,328 172,671 -- 172,671

31.12.2009 Equity securities: Quoted in Malaysia 13,038 - - 13,038 Unit and property trust funds: Quoted in Malaysia 13,501 -- 13,501 Debt securities: Quoted in Malaysia 127,758 _ 127,758 154,297 - - 154,297

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SECTION III

TIH Group's significant accounting policies ("Group Significant Accounting Policies")

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1. Basis of preparation The financial statements of the Group and of the Company have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS") as issued by the Malaysian Accounting Standards Board {"MASB"). These financial statements are prepared in compliance with International Financial Reporting Standards. The financial statements of the Group and the Company have been prepared under the historical cost convention, unless otherwise stated in the accounting policies. Financial assets and financial liabilities are offset and the net amount reported in the statements of financial position only when there is legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or to realize the assets and settle the liability simultaneously. Income and expense will not be offset in the statements of comprehensive income unless required or permitted by any accounting standard or interpretation, as specifically disclosed in the accounting policies of the Group and of the Company. The financial statements are presented in Ringgit Malaysia (RM) and all values are rounded to the nearest thousand (RM’000) except when otherwise indicated.

2. Basis of consolidation

(a) Basis of consolidation and business combinations The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at reporting date. Subsidiaries are fully consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated until the date when such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. All intra­ group balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends are eliminated in full. Losses within a subsidiary are attributed to any non-controlling interest, even if this results in a deficit balance.

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III Group Significant Accounting Policies

2. Basis of consolidation (cont'd.)

(a) Basis of consolidation and business combinations (cont'd.) A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it: - Derecognises the assets (including goodwill) and liabilities of the subsidiary - Derecognises the carrying amount of any non-controlling interest - Derecognises the cumulative translation differences recorded in equity - Recognises the fair value of the consideration received - Recognises the fair value of any investment retained - Recognises any surplus or deficit in profit or loss - Reclassifies the parent’s share of components previously recognised in other comprehensive income to profit or loss or retained earnings, as appropriate

(b) Business combinations and goodwill Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at acquisition date fair value and the amount of any non-controlling interest in the acquiree. For each business combination, the Group has an option to measure any non­ controlling interests in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions at the acquisition date. This includes the separation of embedded derivatives in host contracts by the acquiree. No reclassification of insurance contracts is required as part of the accounting for the business combination. If the business combination is achieved in stages, the acquisition date fair value of the acquirer’s previously held equity interest in the acquiree is remeasured to fair value as at the acquisition date through profit or loss. Any contingent consideration to be transferred by the acquirer will be recognised at fair value at the acquisition date. Subsequent changes to the fair value of the contingent consideration, which is deemed to be an asset or a liability, will be recognised as measurement period adjustments in accordance with the applicable MFRS. If the contingent consideration is classified as equity, it will not be remeasured and its subsequent settlement will be accounted for within equity.

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III Group Significant Accounting Policies

2. Basis of consolidation (cont'd.)

(b) Business combinations and goodwill (cont'd.) Goodwill is initially measured at cost, being the excess of the fair value of the consideration transferred over the Group’s share in the net identifiable assets acquired and liabilities assumed and net of the fair value of any previously held equity interest in the acquiree. Fair values for general reinsurance contracts are derived by calculating the present value of claims reserves. If this consideration is lower than the fair value of the net assets of the subsidiary acquired, the difference is recognised in profit or loss. After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purposes of impairment testing, goodwill acquired in a business combination is allocated to an appropriate cash-generating unit that is expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill forms part of a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss on disposal of the operation. Goodwill disposed of in this circumstance is measured based on the relative values of the operation disposed of and the portion of the cash-generating unit retained.

(c) Merger method of accounting Business combinations involving entities under common control are accounted for by applying the merger method of accounting. The acquisition of the 100% equity interest in Tune Money GenRe Ltd. ("TMGR") and Tune Money Life Re Ltd. ("TMLR") on 1 August 2011 and the 80% equity interest in Tune Insurance (Labuan) Ltd. (’TIL”) on 19 September 2011 has been accounted for as a business combination among entities under common control. Accordingly, the assets and liabilities of the combining entities are reflected at their carrying amounts reported in the consolidated financial statements of the controlling holding company. Any difference between the consideration paid and the share capital of the "acquired" entity is reflected within equity as merger reserve or merger deficit. The statements of comprehensive income reflects the results of the combining entities for the full year, irrespective of when the combination takes place. Comparatives are presented as if the entities have always been combined since the date the entities had come under common control.

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II! Group Significant Accounting Policies

3. Summary of significant accounting policies

(a) Property and equipment Property and equipment includes property occupied by the Group, renovations, furniture, fittings, office equipment, computers and motor vehicles. Freehold land is not depreciated and is carried at cost. Other property and equipment are stated at cost less accumulated depreciation and any impairment losses. Residual values, useful life and depreciation method are reviewed, and adjusted if appropriate, at each reporting date to ensure that the amount, method and period of depreciation are consistent with previous estimates and the expected pattern of consumption of the future economic benefits embodied in the items of property and equipment. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(e). The cost of an item of property and equipment comprises its purchase price and any directly attributable costs of bringing the asset to its working condition for its intended use. Expenditure incurred after items of property and equipment have been put into operation, such as repairs and maintenance, is charged to profit or loss in the period in which it is incurred. Subsequent costs are included in the asset's carrying amount, or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. The carrying amount of the replaced part is derecognised. Depreciation of property and equipment other than freehold land is provided for on a straight-line basis to write off the cost of each asset to its residual value over its estimated useful life at the following annual rates: Buildings 2% Renovations 10% Motor vehicles 20% Furniture, fittings and office equipment 12% -17% Computers 25% An item of property and equipment is derecognised upon disposal or when no future economic benefits are expected from its use or disposal. Upon the disposal of a property and equipment, the difference between the net disposal proceeds and the net carrying amount is recognised in profit and loss.

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III Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(b) Investment property Properties that are held for long-term rental yields or for capital appreciation or both, and that are not significantly occupied by the Group, for use by, or in the operations of the Group, are classified as investment property. If an investment properly becomes owner-occupied, it is reclassified to property and equipment at its carrying value on the date of transfer. Investment properties are initially measured at cost, including related transaction costs. Subsequent to initial recognition, the investment properties are carried at cost less accumulated depreciation and any accumulated impairment losses. The policy for the recognition and measurement of impairment losses is in accordance with Note 3(e). Depreciation is provided for on a straight-line basis over the estimated useful life of 50 years for the investment properties. The residual values and useful lives of the investment properties are reviewed, and adjusted if appropriate, at each reporting date. Any gains or losses on the retirement or disposal of an investment property are recognised when it has been disposed off or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the retirement or disposal of an investment property are recognised in profit or loss in the year of retirement or disposal.

(c) Intangible assets Intangible assets of the Group and of the Company consist of computer software. These intangible assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and any accumulated impairment losses. intangible assets with finite lives are amortised on a straight-line basis over the estimated economic useful lives and assessed for impairment whenever there is an indication that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with a finite useful life are reviewed at least once annually at each reporting date.

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ill Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(d) Subsidiaries A subsidiary is an entity over which the Group has the power to govern the financial and operating policies so as to obtain benefits from its activities. In the Company’s separate financial statements, investments in subsidiaries are accounted for at cost less impairment losses.

(e) Impairment of non-financial assets The carrying amounts of assets other than investment properties and deferred tax are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is estimated to determine the amount of loss. For goodwill, the recoverable amount is estimated at each reporting date or more frequently when indicators of impairment are identified. For the purpose of impairment testing of these assets, recoverable amount is determined on an individual asset basis unless the asset does not generate cash flows that are largely independent of those from other assets. If this is the case, recoverable amount is determined for the cash-generating unit ("CGU") to which the asset belongs. Goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group's CGUs that is expected to benefit from the synergies of the combination. An asset’s recoverable amount is the higher of an asset’s or CGU fair value less costs to sell and its value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Where the carrying amount of an asset exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. Impairment losses recognised in respect of a CGU is allocated first to reduce the carrying amount of any goodwill allocated to those units or groups of units and then, to reduce the carrying amount of the other assets in the unit on a pro-rata basis. An impairment ioss is recognised in profit or loss in the period in which it arises, unless the asset is carried at a revalued amount, in which case the impairment loss is accounted for as a revaluation decrease to the extent that the impairment loss does not exceed the amount held in the asset revaluation reserve for the same asset.

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ill Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(e) Impairment of non-financial assets (cont’d.) Impairment loss on goodwill is not reversed in a subsequent period. An impairment loss for an asset other than goodwill is reversed if, and only if, there has been a change in the estimates used to determine the asset's recoverable amount since the last impairment loss was recognised. The carrying amount of an asset is increased to its revised recoverable amount, provided that this amount does not exceed the carrying amount that would have been determined (net of amortisation or depreciation) had no impairment loss been recognised for the asset in prior years. A reversal of impairment loss for an asset other than goodwill is recognised in profit or loss, unless the asset is carried at revalued amount, in which case, such reversal is treated as a revaluation increase.

(f) Investments and financial assets The Group classifies its investments into financial assets at fair value through profit or loss ("FVTPL"), held-to-maturity ("HTM"), loans and other receivables ("LAR") and available-for-sale ("AFS") financial assets. The classification depends on the purpose for which the investments were acquired or originated. Management determines the classification of its investments at initial recognition and re-evaluates this at every reporting date. Financial assets are classified as FVTPL where the Group’s documented investment strategy is to manage financial assets on a fair value basis. The AFS and HTM categories are used when the relevant liability (including shareholders’ funds) are carried at amortised cost. All regular way purchases and sales of financial assets are recognised on the trade date which is the date that the Group commits to purchase or sell the asset. Regular way purchases or sales of financial assets require delivery of assets within the period generally established by regulation or convention in the market place. Financial assets at FVTPL Financial assets at FVTPL include financial assets held-for-trading and those designated as FVTPL at inception. Investments typically bought with the intention to sell in the near future are classified as held-for-trading. For investments designated as FVTPL, the following must be met: - the designation eliminates or significantly reduces the inconsistent treatment that would otherwise arise from measuring the assets or liabilities or recognising gains or losses on a different basis, or

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III Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(f) Investments and financial assets (cont'd.) Financial assets at FVTPL (cont'd.) - the assets and liabilities are part of a group of financial assets, financial liabilities or both which are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy. These investments are initially recorded at fair value. Subsequent to initial recognition these investments are measured at the fair value. Fair value adjustments and realised gains and losses are recognised in profit or loss. HTM financial assets Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as HTM when the Group has the positive intention and ability to hold until maturity. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. After initial measurement, HTM financial assets are measured at amortised cost, using the effective yield method, less provision for impairment. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. LAR LAR are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. These investments are initially recognised at cost, being the fair value of the consideration paid for the acquisition of the investment. All transaction costs directly attributable to the acquisition are also included in the cost of the investment. After initial measurement, loans and receivables are measured at amortised cost, using the effective yield method, less provision for impairment. Gains and losses are recognised in profit or loss when the investments are derecognised or impaired, as well as through the amortisation process. AFS financial assets AFS financial assets are non-derivative financial assets that are designated as AFS or are not classified in any of the three preceding categories. These investments are initially recorded at fair value.

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III Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(f) Investments and financial assets (cont'd.) AFS financial assets (cont'd.) After initial measurement, AFS financial assets are measured at fair value. Fair value gains and losses of monetary and non-monetary securities are reported as a separate component of equity until the investment is derecognised or investment is determined to be impaired. Fair value gains and losses of monetary securities denominated in a foreign currency are analysed between translation differences resulting from changes in amortised cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognised in profit and loss; translation differences on non-monetary securities are reported as a separate component of equity until the investment is derecognised. On derecognition or impairment, the cumulative fair value gains and losses previously reported in equity is transferred to profit or loss.

(g) Fair value of financial assets The fair value of financial instruments that are actively traded in organised financial markets is determined by reference to quoted market bid prices for assets at the close of business on the reporting date. For investments in unit and property trusts, fair value is determined by reference to published bid values. The fair values of floating rate over-night deposits with financial institutions is their carrying value. The carrying value is the cost of the deposit/placements. The fair values of Malaysian Government Securities, Cagamas Papers and unquoted corporate bonds are determined by reference to Bond Pricing Agency Malaysia. If the fair value cannot be measured reliably, these financial instruments are measured at cost, being the fair value of the consideration paid for the acquisition the instrument or the amount received on issuing the financial liability. All transaction costs directly attributable to the acquisition are also included in the cost of the investment.

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3. Summary of significant accounting policies (cont'd.)

(h) Impairment of financial assets The Group assesses at each reporting date whether a financial asset or Group of financial assets is impaired. Objective evidence that an investment security is impaired includes observable data about loss events like significant financial difficulty of the issuer or obligor; significant adverse changes in the business environment in which the issuer or obligor operates and the disappearance of an active market for that investment security because of financial difficulties which indicate that there is measurable decrease in the estimated future cash flows. However, it may not be possible to identify a single, discrete event that caused the impairment. Rather, the combined effect of several events is considered in determining whether an investment securities is impaired. Assets carried at amortised cost If there is objective evidence that an impairment loss on assets carried at amortised cost has been incurred, the amount of impairment loss is measured as the difference between the asset’s carrying amount and the present 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/yield. The carrying amount of the asset is reduced and the loss is recorded in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a Group of financial assets with similar credit risk characteristics and the Group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment. The impairment assessment is performed at each reporting date. If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment is recognised in profit and loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

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13. ACCOUNTANTS’ REPORT (Cont’d)

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III Group Significant Accounting Policies

3. Summary of significant accounting policies (cont’d.)

(h) Impairment of financial assets (cont'd.) Asset carried at cost If there is objective evidence that an impairment loss on an investment security carried at cost has been incurred, the amount of the loss is measured as the difference between the security carrying amount and the present value of estimated future cash flows discounted at the current market rate of return for similar security. Such impairment losses are recognised in profit or loss and not reversed in subsequent periods. AFS financial assets If an AFS financial asset is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in other comprehensive income, is transferred from other comprehensive income to profit or loss. Reversals in respect of equity instruments classified as AFS are not recognised in profit or loss. Reversals of impairment losses on debt instruments classified as AFS are reversed through profit or loss if the increase in the fair value of the instruments can be objectively related to an event occurring after the impairment losses were recognised in profit or loss. When assessing the impairment of an equity instrument, the Group considers, in addition to observable data about loss events, whether there is significant or prolonged decline in the fair value of the equity instrument, and whether the cost of the investment in the equity instrument may be recovered. Where there is evidence that the cost of the investment in the equity instrument may not be recovered, impairment loss is provided.

(i) Derecognition of financial assets A financial asset is derecognised when: - the contractual right to receive cash flows from the financial asset expired. - The Group retains the contractual rights to receive cash flow from the asset but has assumed obligation to pay them in full without material delay to a third party. - The Group has transferred its rights to receive cash flows from the asset and either:

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III Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(i) Derecognition of financial assets (cont'd.) (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. Where the Group has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Group's continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration that the Group could be required to repay.

(j) Equity instruments Ordinary share capital The Company has issued ordinary shares that are classified as equity. Incremental external costs that are directly attributable to the issue of these shares are recognised in equity, net of tax. Dividends on ordinary share capital Dividends on ordinary shares are recognised as a liability and deducted from equity when they are approved by the Company's shareholder. Interim dividends are deducted from equity when they are paid. Dividends for the year that are approved after the reporting date are dealt with as an event after the reporting date.

(k) Product classification The Group currently only issues contracts that transfer insurance risk. Insurance contracts are those contracts that transfer significant insurance risk. An insurance contract is a contract under which the Group (the reinsurer) has accepted significant insurance risk from another party (the cedants/policyholders) by agreeing to compensate the cedants/policyholders if a specified uncertain future event (the insured event) adversely affects the cedants/policyholders. As a general guideline, the Group determines whether it has significant insurance risk, by comparing claims paid with claims payable if the insured event did not occur.

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3. Summary of significant accounting policies (cont'd.)

(k) Product classification (cont'd.) Once a contract has been classified as an insurance contract, it remains an insurance contract for the remainder of its life-time, even if the insurance risk reduces significantly during the period, unless ail rights and obligations are extinguished or expired. When insurance contracts contain both a financial risk component and a significant insurance risk component and the cash flows from the two components are distinct and can be measured reliably, the underlying amounts are unbundled. Any premiums relating to the insurance risk component are accounted for on the same bases as insurance contracts and the remaining element is accounted for as a deposit through the statements of financial position similar to investment contracts. Investments contracts are those contracts that do not transfer significant insurance risk.

(I) Reinsurance The Group assumes reinsurance risk in the normal course of business for general and life insurance contracts when applicable. Premiums and claims on assumed reinsurance are recognised as revenue or expenses in the same manner as they would be if the reinsurance were considered direct business, taking into account the product classification of the reinsured business. Reinsurance liabilities represent balances due to reinsurance companies. Amounts payable are estimated in a manner consistent with the related reinsurance contract. Reinsurance assets or liabilities are derecognised when the contractual rights are extinguished or expire or when the contract is transferred to another party. Reinsurance contracts that do not transfer significant insurance risk are accounted for directly through the statements of financial position. These are deposit assets or financial liabilities that are recognised based on the consideration paid or received less any explicit identified premiums or fees to be retained by the reinsured. Investment income on these contracts is accounted for using the effective yield method when accrued. Reinsurance assets represent balances due from reinsurance companies. Amounts recoverable from reinsurers are estimated in a manner consistent with the outstanding claims provision or settled claims associated with the reinsurer's policies and are in accordance with the related reinsurance contracts.

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3. Summary of significant accounting policies (cont'd.)

(I) Reinsurance (cont'd.) Ceded reinsurance arrangements do not relieve the Group from its obligations to policyholders. Premiums and claims are presented on gross basis for both ceded and assumed reinsurance. Reinsurance assets are reviewed for impairment at each reporting date or more frequently when an indication of impairment arises during the reporting period. Impairment is recognised when there is objective evidence as a result of an event that occurs after initial recognition of the reinsurance asset that the Group may not receive all outstanding amounts due under the terms of contract and the event has a reliably measurable impact on the amounts that the Group will receive from the reinsurer. The impairment loss is recorded in profit or loss.

(m) General reinsurance underwriting results The general reinsurance underwriting results are determined after taking into account premiums, movements in premium liabilities and claims liabilities and commissions.

(i) Gross premiums Gross premiums are recognised as income in a financial period in respect of risks assumed during that particular financial period. Inwards facultative reinsurance premiums are recognised in the financial period in respect of the facultative risks assumed during that particular financial period, as in the case of direct policies, following individual risks' inception dates. Inward treaty reinsurance premiums comprise both proportional and non­ proportional treaties. In respect of reinsurance premiums relating to proportional treaties, it is recognised on the basis of periodic advices received from the cedants given that the periodic advices reflect the individual underlying risks being incepted and reinsured at various inception dates of these risks and contractually accounted for, as such to reinsurers under the terms of the proportional treaties. In respect of reinsurance premiums relating to non-proportional treaties which cover losses occurring during a specified treaty period, the inwards treaty reinsurance premiums are recognised based on the contractual premiums already established at the start of the treaty period under the non-proportional treaty contract.

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3. Summary of significant accounting policies (cont’d.)

(m) General reinsurance underwriting results (cont'd.)

(ii) Premium liabilities Premium liabilities represent the reinsurance subsidiaries' future obligations on insurance contracts as represented by premiums received for risks that have not yet expired. The movement in premium liabilities is released over the term of the insurance contracts and is recognised as premium income. Premium liabilities are reported at the higher of the aggregate of the unearned premium reserves ("UPR") for ail lines of business or the best estimate value of the reinsurance subsidiaries' unexpired risk reserves ("URR") at the end of the financial period and PRAD calculated at 75% confidence level at the overall level for the insurance subsidiary.

(a) Unexpired risk reserves The URR is a prospective estimate of the expected future payments arising from future events insured under policies in force as at the end of the financial year and also includes allowance for expenses, including overheads and cost of reinsurance, expected to be incurred during the unexpired period in administering these policies and settling the relevant claims, and expected future premium refunds. URR is estimated via an actuarial valuation performed by a qualified actuary, using a mathematical method of estimation similar to incurred but not reported claims ("IBNR").

(b) Unearned premium reserves UPR represent the portion of the net premiums of insurance policies written that relate to the unexpired periods of the policies at the end of the financial period. In determining UPR at reporting date, the method that most accurately reflects the actual unearned premium used is as follows: - 25% method for marine, aviation cargo and transit business - 1/24th method for all other classes of Malaysian policies reduced by the corresponding percentage of accounted gross direct business commissions and agency-related expenses not exceeding the limits specified by BNM as follows:

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3. Summary of significant accounting policies (cont’d.)

(m) General reinsurance underwriting results (cont'd.)

(ii) Premium liabilities (cont'd.)

(b) Unearned premium reserves (cont'd.) Motor 10% Fire, engineering, aviation and marine hull 15% Medical and health - Standalone individuals 15% - Group of 3 or more 10% Workmen's compensation and employers' liability - Foreign workers 10% - Other workers 25% - Employers' Liability 25% Other classes 25% - 1/8th method for all other classes of overseas inward treaty business with a deduction of 20% for commission - Non-annual policies are time apportioned over the period of the risks

(iii) Claims liabilities Claim liabilities are recognised as the obligation to make future payments in relation to all claims that have been incurred as at the end of the financial year. The value is the best estimate value of claim liabilities which includes provision for claims reported, claims incurred but not enough reserved ("IBNER"), claims incurred but not reported (''IBNR”) and direct and indirect claim-related expenses as well as the provision of risk margin for adverse deviation ("PRAD") at 75% confidence level calculated at the overall insurance subsidiary level. These are based on an actuarial valuation by a qualified actuary, using a mathematical method of estimation based on, among others, actual claims development pattern.

(iv) Liability adequacy test At each reporting date, the Group reviews all insurance contract liabilities to ensure that the carrying amount of the liabilities is sufficient or adequate to cover the obligations of the Group, contractual or otherwise, with respect to insurance contracts issued. In performing this review, the Group compares all contractual cash flows against the carrying value of insurance contract liabilities. Any deficiency is recognised in the statements of comprehensive income.

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3. Summary of significant accounting policies (cont'd.)

(m) General re/insurance underwriting results (cont'd.)

(iv) Liability adequacy test (cont'd.) The estimation of claim and premium liabilities performed at reporting date is part of the liability adequacy tests performed by the Group. Based on this, all insurance contract liabilities as at the reporting date are deemed to be adequate.

(v) Acquisition cost The gross costs of acquiring and renewing reinsurance policies and income derived from ceding reinsurance premiums are recognised as incurred and properly allocated to the periods in which it is probable they give rise to income.

(n) Insurance receivables Insurance receivables are recognised when due and measured on initial recognition at the fair value of the consideration received or receivable. Subsequent to initial recognition, insurance receivables are measured at amortised cost, using the effective yield method. !f there is objective evidence that the insurance receivable is impaired, the Group reduces the carrying amount of the insurance receivable accordingly and recognises that impairment loss in profit or loss. The Group gathers the objective evidence that an insurance receivable is impaired using the same process adopted for financial assets carried at amortised cost. The impairment loss is calculated under the same method used for these financial assets. These processes are described in Note 3(e). Insurance receivables are derecognised when the derecognition criteria for financial assets, as described in Note 3(d), have been met.

(o) Insurance payables Insurance payables are recognised when due and measured on initial recognition at the fair value of the consideration received less directly attributable transaction costs. Subsequent to initial recognition, they are measured at amortised cost using the effective interest rate method. Derecognition insurance payables Insurance payables are derecognised when the obligation under the liability is settled, cancelled or expired.

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3. Summary of significant accounting policies (cont'd.)

(p) Other revenue recognition Other revenue is recognised to the extent that it is probable that the economic benefits wii! flow to the Group and the revenue can be reliably measured. Rental income Rental income is recognised on an accrual basis in accordance with the substance of the relevant agreements. Interest income Interest income is recognised using the effective interest method. Dividend income Dividend income represents gross dividends and is recognised on a declared basis when the shareholder's right to receive payment is established. Realised gain and losses on investments Realised gains and losses recorded in profit or loss on investments include gains and losses on financial assets. Gains and losses on the sale of investments are calculated as the difference between net sales proceeds and the original, revalued or amortised cost and are recorded on occurrence of the sale transaction. Commission income Commission income derived from reinsurers in the course of ceding of premiums to reinsurers are charged to profit or loss in the period in which they are incurred.

(q) Income tax Income tax expense for the year comprises current and deferred tax. Current tax is the expected amount of income taxes payable in respect of the taxable profit and surplus for the year and is measured using the tax rates that have been enacted at the reporting date.

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3. Summary of significant accounting policies (cont'd.)

(q) Income tax (cont'd.) Deferred tax is provided for, using the liability method. In principle, deferred tax liabilities are recognised for ail taxable temporary differences and deferred tax assets are recognised for all deductible temporary differences, unused tax losses and unused tax credits to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised. Deferred tax is not recognised if the temporary difference arises from the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction, affects neither accounting profit nor taxable profit. Deferred tax is measured at the tax rates that are expected to apply in the period when the asset is realised or the liability is settled, based on tax rates that have been enacted or substantively enacted at the reporting date. Deferred tax is recognised as income or an expense and included in the income statement for the period, except when it arises from a transaction which is recognised directly in equity, in which case the deferred tax is also recognised directly in equity. For Labuan incorporated subsidiaries, the income tax represents the amount payable in respect of the chargeable profit for the year and is measured at 3% of the chargeable profit or by election under Section 7 of the Labuan Business Activity Tax Act, 1990, to pay a flat amount of RM20,000.

(r) Provisions Provisions are recognised when the Group and the Company has a present obligation as a result of a past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the amount can be made. Provision are reviewed at each reporting date and adjusted to reflect the current best estimate. Where the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects, where appropriate the risks specific to the liability. Where discounting is used, the increase in the provision due to the passage of time is recognised as finance cost.

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13. ACCOUNTANTS’ REPORT (Cont’d)

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3. Summary of significant accounting policies (cont’d.)

(s) Employee benefits Short-term benefits Wages, salaries, bonuses and social security contributions are recognised as an expense in the year in which the associated services are rendered by employees. Short­ term accumulating compensated absences such as paid annual leave are recognised when services are rendered by employees that increase their entitlement to future compensated absences. Short-term non-accumulating compensated absences such as sick leave are recognised when the absences occur. Defined contribution plans Defined contribution plans are post-employment benefit plans under which the Group pays fixed contributions into separate entities or funds and will have no legal or constructive obligation to pay further contributions if any of the funds do not hold sufficient assets to pay all employee benefits relating to employee services in the current and preceding financial years. Such contributions are recognised as an expense in profit or loss as incurred. As required by law, the Group makes such contributions to the Employees Provident Fund {"EPF'). Staff retirement benefits Provision for retirement benefits is made for all eligible staff in the Group from the date of employment under an unfunded defined contribution plan. For eligible executive staff, gratuity is calculated based on the last drawn monthly salary of an employee multiplied by years of service up to a maximum of 15 years. For eligible clerical staff, an additional 3% over and above the Group’s monthly statutory EPF contribution is provided. The staff will be entitled to this gratuity upon completion of 5 years of service in the Group.

Other staff are entitled to additional EPF contribution between 1% to 5% over the Group’s monthly statutory EPF contribution rate after completion of 1 year of service. This benefit is charged to profit or loss as incurred.

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111 Group Significant Accounting Policies

3. Summary of significant accounting policies (cont'd.)

(t) Foreign currencies (cont'd.)

(i) Functional and presentation currency The financial statements of the Group and the Company are recorded using the currency of the primary economic environment in which the entity operates (“the functional currency”). The financial statements are presented in Ringgit Malaysia (RM), which is also the Group and the Company’s functional currency.

(ii) Foreign currency transactions In preparing the financial statements of the Group and the Company, transactions in currencies other than the Group and the Company's functional currencies are recorded on initial recognition in the functional currencies at exchange rates approximating those ruling at the transaction dates. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange ruling at the reporting date. Non-monetary items denominated in foreign currencies that are measured at historical cost are translated using the exchange rates as at the dates of the initial transactions. Non-monetary items denominated in foreign currencies measured at fair value are translated using the exchange rates at the date when the fair value was determined. Exchange differences arising on the translation of non-monetary items carried at fair value are included in profit or loss for the period except for the differences arising on the translation of non-monetary items in respect of which gains and losses are recognised directly in equity. Exchange differences arising from such non-monetary items are also recognised directly in equity.

(u) Financial liabilities Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. Financial liabilities are recognised in the statements of financial position when, and only when, the Group and the Company become a party to the contractual provisions of the financial instrument. AN financial liabilities of the Group and the Company, comprising the borrowings and other payables, except for those covered under MFRS 4, are classified as other financial liabilities.

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3. Summary of significant accounting policies (cont'd.)

(u) Financial liabilities (cont'd.) Borrowings are recognised initially at fair value, net of transaction costs incurred, and subsequently measured at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group and the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date. Insurance payables, retirement benefits and other payables are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective interest method. For other financial liabilities, gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. A financial liability is derecognised when the obligation under the liability is extinguished. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(v) Borrowing costs Borrowing costs are recognised in profit or loss in the period they are incurred. Borrowing costs consist of interest and other costs that the Group and the Company incurred in connection with the borrowing of funds.

(w) Cash and cash equivalents Cash and cash equivalents consist of cash in hand and deposits held at call with financial institutions with original maturities of three months or less.

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3. Summary of significant accounting policies (cont'd.)

(x) Transactions with non-controiling interests Non-controlling interest represents the equity in subsidiaries not attributable, directly or indirectly, to owners of the Company, and are presented separately in the consolidated statement of comprehensive income and within equity in the consolidated statement of financial position, separately from equity attributable to owners of the Company. Changes in the Company owners’ ownership interest in a subsidiary that do not result in a loss of control are accounted for as equity transactions. In such circumstances, the carrying amounts of the controlling and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between the amount by which the non-controlling interest is adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company,

4. Standards issued but not yet effective As at the date of authorisation of these financial statements, the following MFRSs, amendments to MFRSs and IC Interpretations have been issued by the MASB but are not yet effective and have not been adopted by the Group.

Effective for financial periods beginning on or after 1 July 2012 • Amendments to MFRS 101 Presentation of Items of Other Comprehensive income

Effective for financial periods beginning on or after 1 January 2013 • Amendments to MFRS 1 Government Loans • Amendments to MFRS 7 Disclosures - Offsetting Financial Assets and Financial Liabilities • MFRS 3 Business Combinations (!FRS 3 Business Combinations issued by IASB in March 2004) • MFRS 10 Consolidated Financial Statements • MFRS 11 Joint Arrangements • MFRS 12 Disclosure of Interests in Other Entities • MFRS 13 Fair Value Measurement • MFRS 119 Employee Benefits (IAS 19 as amended by IASB in June 2011) • Amendments to MFRS 10, MFRS 11 and MFRS 12 Consolidated Financial Statements, Joint Arrangements and Disclosure of Interests in Other Entities: Transition Guidance • MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as revised by IASB in December 2003) • MFRS 127 Consolidated and Separate Financial Statements (IAS 27 as amended by IASB in May 2011)

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4. Standards issued but not yet effective (cont'd.)

Effective for financial periods beginning on or after 1 January 2013 • MFRS 128 Investments in Associates and Joint Ventures (IAS 28 as amended by IASB in May 2011) * IC Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine • Annual Improvements 2009-2011 Cycle: - Amendment to MFRS 1 First-time Adoption of Malaysian Financial Reporting Standards - Amendment to MFRS 101 Presentation of Financial Statements - Amendment to MFRS 116 Property, Plant and Equipment - Amendment to MFRS 132 Financial Instruments: Presentation - Amendment to MFRS 134 Interim Financial Reporting - Amendment to IC 2 Members' Shares in Co-operatives Entities and Similar Instruments

Effective for financial periods beginning on or after 1 January 2014 • Amendments to MFRS 132 Offsetting Financial Assets and Financial Liabilities

Effective for financial periods beginning on or after 1 January 2015 * MFRS 9 Financial Instruments (IFRS 9 issued by IASB in Nov 2009) * MFRS 9 Financial Instruments (IFRS 9 issued by IASB in Oct 2010) The Group and the Company plans to adopt the above pronouncements when they become effective in the respective financial periods. The directors expect that the adoption of the standards and interpretations above will have no material impact on the financial statements of the Group and the Company in the period of initial application.

5. Significant accounting judgements, estimates and assumptions

(a) Critical judgements made in applying accounting policies The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group's accounting policies. These are areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectation of future events that are believed to be reasonable under the circumstances. The Group makes estimates and assumptions concerning the future. The resulting accounting estimates, by definition, may cause material adjustments to the carrying amounts of assets and liabilities within the next financial year such as those discussed below: 188

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5. Significant accounting judgements, estimates and assumptions (cont'd.)

(a) Critical judgements made in applying accounting policies (cont'd.) (i) Deferred tax assets Deferred tax assets are recognised for unutilised business losses, unutilised capital allowances, various allowances and provisions to the extent that it is probable that taxable profit will be available against which these losses, allowances and provisions can be utilised. Significant judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing of future taxable profits together with future tax planning strategies. (ii) income taxes The Group is subject to income taxes in Malaysia. Significant judgement is required in determining the allowances and deductibility of certain expenses during the estimation of the provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. (iii) Property and equipment Property and equipment requires the review of the residual value and remaining useful life of an item of property and equipment at least at each financial year end. Management estimates that the residual values and remaining useful lives are applicable for the current financial year.

(b) Key sources of estimation uncertainty and assumptions The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (i) Valuation of general insurance contract liabilities For general insurance contracts, estimates have to be made for both the expected ultimate cost of claims reported at the reporting date and for the expected ultimate cost of claims incurred but not yet reported at the reporting date (“IBNR").

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5. Significant accounting judgements, estimates and assumptions (cont'd.)

(b) Key sources of estimation uncertainty and assumptions (cont'd.) (i) Valuation of general insurance contract liabilities (cont'd.) It can take a significant period of time before the ultimate claims costs can be established with certainty and for some type of policies, IBNR claims form the majority of the liability at the reporting date. The ultimate cost of outstanding claims is estimated by using a range of standard actuarial claims projection techniques, such as the Link Ratios. The main assumption underlying these techniques is that a Group’s past claims development experience can be used to project future claims development and hence, ultimate claims costs. As such, these methods extrapolate the development of paid and incurred losses, average costs per claim and claim numbers based on the observed development of earlier years and expected loss ratios. Historical claims development is mainly analysed by accident years, but can also be further analysed by geographical areas, as well as by significant business lines and claims type. Large claims are usually separately addressed, either by being reserved at the face value of loss adjuster estimates or separately projected in order to reflect their future development. In most cases, no explicit assumptions are made regarding future rates of claims inflation or loss ratios. Instead, the assumptions used are those implicit in the historic claims development data on which the projections are based. Additional qualitative judgement is used to assess the extent to which past trends may not apply in future, (for example, to reflect once-off occurrences, changes in external or market factors such as public attitudes to claiming, economic conditions, level of claims inflation, judicial decisions and legislation, as well as internal factors such as portfolio mix, policy features and claims handling procedures) in order to arrive at the estimated ultimate cost of claims that present the likely outcome from the range of possible outcomes, taking account of all the uncertainties involved. (ii) Uncertainty in accounting estimates for general insurance business The principal uncertainty in the Group's general insurance business arises from the technical provisions which include the premium liabilities and claim liabilities. The premium liabilities comprise unearned premium reserves, unexpired risk reserves and provision for risk margin for adverse deviation while claim liabilities comprise provision for outstanding claims.

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13. ACCOUNTANTS’ REPORT (Cont’d)

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III Group Significant Accounting Policies

5. Significant accounting judgements, estimates and assumptions (cont’d.)

(b) Key sources of estimation uncertainty and assumptions (cont'd.) (ii) Uncertainty in accounting estimates for general insurance business (cont'd.) Generally, premium and claim liabilities are determined based upon previous claims experience, existing knowledge of events, the terms and conditions of the relevant policies and interpretation of circumstances. Particularly relevant is past experience with similar cases, historical claims development trends, legislative changes, judicial decisions and economic conditions. It is certain that actual future premiums and claims liabilities will not exactly develop as projected and may vary from the Group's projections. The estimates of premium and claim liabilities are therefore sensitive to various factors and uncertainties. The establishment of technical provisions is an inherently uncertain process and, as a consequence of this uncertainty, the eventual settlement of premiums and claims liabilities may vary from the initial estimates. There may be significant reporting lags between the occurrence of an insured event and the time it is actually reported to the Group. Following the identification and notification of an insured loss, there may still be uncertainty as to the magnitude of the claim. There are many factors that will determine the level of uncertainty such as inflation, inconsistent judicial interpretations, legislative changes and claims handling procedures. . At each reporting date, these estimates are reassessed for adequacy and changes will be reflected as adjustments to the liability.

Yours faithfully,

AF: 0039 No. 2937/09/13(J) Chartered Accountants Chartered Accountant

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14. DIRECTORS’ REPORT

7 ^ f Money A Tune Group Company

Registered Office: B-13-15, Level 13 Menara Prima Tower B, Jalan PJU 1/39 Dataran Prima 47301, Petaling Jaya Selangor Darul Ehsan

Date: 10 October 2012

The Shareholders of Tune Ins Holdings Berhad Dear Sir/Madam, On behalf of the Board of Directors of Tune Ins Holdings Berhad ("T!H”), I wish to report after due inquiry that during the period from 30 June 2012 (being the date to which the last audited financial statements of TIH and our subsidiaries (“Group”) have been made up) to the date herein (being a date not earlier than fourteen (14) days before the issue of this Prospectus):

(a) the business of our Group has, in the opinion of the Directors, been satisfactorily maintained; (b) in the opinion of the Directors, no circumstances have arisen subsequent to the last audited financial statements of our Group which have adversely affected the trading or the value of the assets of our Group; (c) the current assets of our Group appear in the books at values, which are believed to be realisable in the ordinary course of business; (d) saved as disclosed in Section 11.9 of this Prospectus, there are no contingent liabilities by reason of any guarantees or indemnities given by our Group; (e) there has been, since the last audited financial statements of our Group, no default or any known event that could give rise to a default situation, in respect of payments of either interest and/ or principal sums in respect of any borrowings; and

TUNE INS HOLDINGS BHD. ■tflomtw'iy no. l o t &.OI &. 1 T&r.iuiKj Banter 47-&00 P i'la lllK f Jay.i, S ta r r ie r C'oiru! f . lf ij: ! .

Tt*l -f-Q 1) F a * ’ C.Ci ?-L5la9 <1^90 W D liiitt vvw.v.luliOii>ur'U'>.f.c-in

485 Company No. 948454-K

14. DIRECTORS’ REPORT (Cont’d) luhe 9 Money A Turie Group Com pany (f) save as disclosed in Section 12.3 of this Prospectus, there have been, since the last audited financial statements of our Group, no material changes in the published reserves or any unusual factors affecting the profits of our Group.

Yours faithfully For and on behalf of the Board of Directors TUNE INS HOLDINGS BERHAD

RAZMAN HAFIDZ BIN ABU ZARIM Chairman, Independent Non-Executive Director

TUNE INS HOLDINGS BHD. ■tflomtw'iy no. l o t &.OI &. 1 T&r.iuiKj Banter Lrt.w.tt- 47-fiOO P i'la lllK f Ja'V.i, D dfui f . lf ij: ! .

Tt*l -f-Q 1) F a * ’ C.Ci <1^90 W D liiitt vv w.v.luliOii>ur'U'>.f.c-in

486 Company No. 948454-K

15. ADDITIONAL INFORMATION

15.1 SHARE CAPITAL

(i) Save for the Employees’ Share Option Scheme as disclosed in Section 15.3 of this Prospectus, no securities will be allotted or issued on the basis of this Prospectus later than 12 months after the date of this Prospectus.

(ii) Save for the Employees’ Share Option Scheme as disclosed in Section 15.3 of this Prospectus, none of the capital of our Company or our subsidiary companies are under option or agreed conditionally or unconditionally to be put under option,

(iii) Save for the Employees’ Share Option Scheme as disclosed in Section 15.3 of this Prospectus, there is no scheme involving our employees in the capital of our Company or our subsidiary companies.

(iv) Save as disclosed in Section 8.1 of this Prospectus, there are no other persons who are able to, directly or indirectly, jointly or severally, exercise control over our Company or our subsidiary companies,

(v) Save as disclosed in Sections 15.2 and 15.6 of this Prospectus, there is no limitation on the right to own securities, including limitations on the right of non-resident or foreign shareholders to hold or exercise voting rights in our Shares, imposed by the applicable Malaysian law or by our Memorandum and Articles of Association.

15.2 ARTICLES OF ASSOCIATION

The following provisions relate to the remuneration of directors, voting and borrowing powers of directors, transfer of securities and changes in capital and variation of class rights as reproduced from our Articles of Association (“Articles”). The words and expressions appearing in the following provisions shall bear the same meaning used in our Articles unless they are otherwise defined here or the context otherwise requires:

(i) Remuneration of Directors

Article 107- Remuneration o f Directors

The Directors shall be paid by way of remuneration for their services such fixed sum (if any) as shall from time to time be determined by an ordinary resolution o f the Company in general meeting, and such remuneration shall be divided among the Directors in such proportions and manner as the Directors may determine, or, failing agreement, equally, except that any Director who shall hold office or part only of the period in respect of which such remuneration is payable shall be entitled only to rank in such division for a proportion o f the remuneration related to the period during which he has held office Provided Always that:-

(1) the fees payable to the Directors shall not be increased except pursuant to a resolution of the Company in general meeting, where notice of the proposed increase has been given in the notice convening the general meeting;

(2) on the other hand, an executive Director shall, subject to the terms of any agreement (if any) entered into in any particular case, receive such remuneration (whether by way of salary, commission or participation in profits, or partly in one way and partly in another) as the Directors may determine;

(3) fees payable to non-executive Directors shall be a fixed sum, and not by a commission on or percentage ofprofits or turnover;

(4) salaries payable to executive Directors may not include a commission on or percentage o f turnover; and

487 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

(5) any fee paid to an alternate Director shall be such as shall be agreed between himself and the Director nominating him and shall be paid out o f the remuneration o f the latter.

(ii) Borrowing Powers of Directors and Voting Powers

Article 121(a) — General Borrowing Powers

(a) The Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and uncalled capital or any part thereof and to issue debentures and other Securities, whether outright or as security for any debt, liability or obligation o f the Company or its subsidiaries.

Article 121(b) — Restrictions on Borrowing

(b) The Directors shall not borrow any money or mortgage or charge any of the Company’s or its subsidiaries ’ undertaking, property or any uncalled capital, or to issue debentures and other Securities whether outright or as security for any debt, liability or obligation o f an unrelated third party.

Article 150 - Disqualification from Voting

A Director shall not vote at a meeting of Directors or o f a committee o f Directors on any resolution concerning any contract, proposed contract, arrangement or other matter in which he has directly or indirectly, a personal interest. A Director shall not be counted in the quorum present at a meeting in relation to a resolution on which he is not entitled to vote.

(iii) Transfer of Securities

Article 40 — Transfer of Securities

Subject to the Act, these Articles, the Central Depositories Act, the Rules and the Regulations, the transfer of any Deposited Securities or class of Deposited Securities o f the Company which have been deposited with the Depository shall be made by way of book entry by the Depository in accordance with the Rules and, notwithstanding Sections 103 and 104 of the Act, but subject to subsection 107C(2) o f the Act and any exemption that may be made from compliance with subsection 107C(1) of the Act, the Company shall be precluded from registering and effecting any transfer o f such Deposited Security.

Article 44 - Transfer fully paid Securities

Subject to the Central Depositories Act, the Rules and the Regulations, any Member may transfer all or any o f its Deposited Securities by instrument in writing in the form prescribed and approved by Bursa Malaysia and the Registrar (as the case may be). Subject to the provisions of the Act, the Central Depositories Act, the Rules [and the Regulationsj, there shall be no restriction on the transfer o f fully paid-up Securities, except where required by law and no Securities shall in any circumstances be transferred or transmitted to any infant, bankrupt or person o f unsound mind or a person who is insolvent or to a partnership or an unincorporated body. The instruments shall be executed by or on behalf of the transferor and the transferee and all transfers o f Deposited Securities shall be effected in accordance with the Act, the Central Depositories Act, the Rules and the Regulations. Every instrument of transfer shall be presented to the Depository with suck evidence (if any) as the Depository may require to prove the title of the intending transferor and that the intended transferee is a qualified person.

488 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

Article 43 - Depository’s Right to Refuse Transfer

The Depository, in its absolute discretion, may refuse to register arty transfer of Deposited Securities that does not comply with the Central Depositories Act and the Rules.

Article 45 - Closure o f Register

The Register and the Record o f Depositors shall be closed at such time for such periods as the Directors may from time to time determine provided always that the Register or the Record o f Depositors shall not be closed for more than thirty (30) days in any year. The Company shall before it closes the Register and the Record o f Depositors:

(1) in the case of the Register, give notice of such intended closure in accordance with Section 160 o f the Act;

(2) in the case of the Record o f Depositors, give notice of such intended closure to Bursa Malaysia at least ten (10) Market Days before the intended date o f such closure or such number o f Market Days which Bursa Malaysia may stipulate from time to time including in such notice, such date, the reason for such closure and the address o f the share registry at which documents will be accepted for registration;

(3) in the case of the Record of Depositors, publish in at least one (1) nationally circulated Bahasa Malaysia or English daily newspaper, a notice of such intended closure including the information to be included in the notice referred to in Article 45(2).

The Company shall give written notice in accordance with the Rules to prepare the appropriate Record o f Depositors. At least three (3) Market Days prior notice shall be given to the Depository to prepare the appropriate Record of Depositors Provided that where the Record of Depositors is required in respect of corporate actions at least seven (7) Market Days prior notice shall be given to the Depository or such other notice period in accordance with the Rules to enable the Depository to issue the appropriate Record o f Depositors.

Article 23 - Renunciation

The Directors may at any time after the allotment of any Security but before any person has been entered into the Register as the holder recognise a renunciation o f such Security by the allottee in favour of some other person and may accord to any allottee o f a Security a right to effect such renunciation on such terms and conditions as the Directors may determine.

Article 48 - Non-liability for the Company's Directors and Office in respect o f Transfer

Neither the Company nor its Directors nor any of its officers shall incur any liability for registering or acting upon a transfer o f shares apparently made by sufficient parties, although the same may by reason of any fraud or other cause not known to the Company or its Directors or other officers be legally in-operative or insufficient to pass the property in the shares proposed or professed to be transferred, and although the transfer may, as between the transferor and transferee, be liable to be set aside and in every such case, the person registered as transferee, his executors, administrators and assignees alone shall be entitled to be recognised as the holder of such shares and the previous holder shall, so far as the Company is concerned, be deemed to have transferred his whole title thereto, PROVIDED ALWAYS that where the share is a Deposited Security, subject to the Rules, a transfer or withdrawal o f the share may be carried out by the person becoming so entitled.

489 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

Article 51 - Transmission o f Securities

Where-

(1) the securities of the Company are listed on another stock exchange; and

(2) such Company is exempted from compliance with section 14 of the Central Depositories Act or section 29 of the Securities Industry (Central Depositories) (Amendments) Act 1998, as the case may be, under the Rules in respect of such Securities,

such Company shall, upon request of a Securities holder, permit a transmission o f Securities held by such Securities holder from the register o f holders maintained by the registrar o f the Company in the jurisdiction o f the other stock exchange, to the register of holders maintained by the registrar o f the Company in Malaysia and vice versa provided that there shall be no change in the ownership o f such Securities.

(iv) Changes in Capital and Variation of Class Rights

Article 70 - Power to Increase Capital

The Company may from time to time, by ordinary resolution in general meeting, whether all the shares for the time being authorised shall have been issued or all the shares for the time being issued shall have been fully called up or not, increase its share capital and/or its authorised capital by the creation and issue of new shares, such new capital to be of such amount and to be divided into shares o f such respective amounts and to carry such rights or to be subject to such conditions or restrictions in regard to dividend, return of capital or otherwise as the Company by the resolution authorising such increase directs. Provided that where the capital of the Company consists of shares of different monetary denominations, voting rights (if specified in such resolution) shall be prescribed in such a manner that a unit of capital in each class, when reduced to a common denominator, shall carry the same voting power when such right is exercisable.

Article 71 - Rights and Privileges o f New Shares

Subject to any special rights for the time being attached to any existing class o f shares, the new shares shall be issued upon such terms and conditions and with such rights and privileges annexed thereto as the general meeting resolving upon the creation thereof shall direct and, in default o f such direction, as the Directors may determine and in particular such shares may be issued with a preferential or qualified right to dividends and in the distribution of assets o f the Company and with a special or without any right of voting.

Article 1 9 - Pre-emption

Subject to any direction to the contrary that may be given by the Company in general meeting, all new shares or other convertible Securities for the time being unissued and not allotted and any new shares or Securities from time to time to be created shall before they are issued, be offered to such persons as at the date o f the offer are entitled to receive notices from the Company of general meetings in proportion, as nearly as the circumstances admit, to the amount of the existing shares or Securities to which they are entitled. The offer shall be made by notice specifying the number of shares or Securities offered, and limiting a time within which the offer, if not accepted, will be deemed to be declined, and after the expiration o f that time, or on the receipt of an intimation from the person to whom the offer is made that he declines to accept the shares or Securities offered, the Directors may dispose o f those shares or Securities in such manner as they think most beneficial to the Company. The Directors may likewise also dispose o f any new shares or Securities which (by reason o f the ratio which the new shares or Securities bear to the shares or Securities held by persons entitled to an offer o f new shares or Securities) cannot, in the opinion o f the Directors be conveniently offered under this Article.

490 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont'd)

Article 20 - Waiver fo r issues

Notwithstanding Article 19 (but subject to the Act), the Company may (if required) apply to Bursa Malaysia for a waiver from convening an extraordinary general meeting to obtain Members' approval for further issue or issues of shares (other than bonus or rights issue) where:

(1) the aggregate issues o f shares (other than bonus and rights issues and other issues of shares which have been specifically approved by the Members in an extraordinary general meeting) in any one financial year in which such further issues or issues are made do not exceed ten per cent (10%) (or such higher percentage as Bursa Malaysia may from time to time allow either in respect o f a particular financial year, generally or otherwise) of the Company's issued share capital (excluding treasury shares): and

(2) there is in force at the time o f the application fo r such waiver, a resolution o f the Company in general meeting authorising the Directors to make such further issue or issues as stated above.

Article 72 - Application o f Provision to New Shares

All new shares shall be subject to the same provisions as to the payment o f calls, lien, transfer, transmission, forfeiture and otherwise as the shares in the existing share capital.

Article 66 - Power to Alter Capital

The Company may from time to time in general meeting by ordinary resolution:-

(1) consolidate and divide all or any of its share capital into shares of larger amount than its existing shares;

(2) divide its share capital or any part thereof into shares of smaller amount than is fixed by the Memorandum o f Association by subdivision of its existing shares or any of them subject nevertheless to the provisions o f the Act and so that as between the resulting shares, one or more of such shares may, by the resolution by which such sub-division is effected, be given any preference or advantage as regards dividend, return o f capital, voting or otherwise over the others or any other o f such shares;

(3) cancel any shares which, at the date of the passing of the resolution in that behalf, have not been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount o f the shares so cancelled; or

(4) subject to the provisions of these Articles and the Act, convert and/or re-classify any class o f shares into any other class o f shares.

Article 69 - Power to Reduce Capital

The Company may from time to time by special resolution reduce its share capital, any capital redemption reserve fund or any share premium account in any manner and with, and subject to, any authorisation, and consent required by the provisions o f the Act.

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15. ADDITIONAL INFORMATION (Cont’d)

Article 13 - Rights o f Shareholders may be Altered

If at any time the share capital is divided into different classes o f shares, the rights attached to any class shall be expressed herein or in the resolution creating the same and may subject to the provisions of the Act whether or not the Company is being wound up, be varied or abrogated with the consent in writing o f the holders of three-fourths (%) o f the issued shares o f that class, or with the sanction o f a special resolution passed at a separate general meeting o f the holders o f the shares o f that class. To every such separate general meetings the quorum shall be two (2) persons at least holding or representing by proxy one-tenth (1/10) of the issued shares of the class and that any holder o f shares o f the class present in person or by proxy may demand a poll To every such special resolution the provisions of section 152 o f the Act shall with such adaptations as are necessary apply. A resolution in writing signed by all the holders of a class or if all the shares in a class are held by one sole holder a resolution in writing signed by such sole holder shall have the same effect and validity as a special resolution o f the holders o f the class passed at a separate general meeting of the holders o f that class duly convened or held and constituted and may consist o f several documents in the like form each signed by one or more o f such holders and if a holder is a corporation, then such resolution shall be signed by its representatives.

Article 15 - Ranking o f Class Rights

The rights conferred upon the holders o f the shares o f any class issued with preferred or other rights shall not, unless otherwise expressly provided by the terms o f issue o f the shares o f that class, be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or in all respects pari passu therewith.

15.3 [EMPLOYEES’ SHARE OPTION SCHEME]

[The Employees’ Share Option Scheme came into effect on [•] 2012 and shall be in force for a period of 10 years. During the subsistence of the Employees’ Share Option Scheme, we will make available new Shares not exceeding in aggregate an amount equivalent to 10% of the issued and paid-up share capital (excluding treasury shares) of our Company at any one time, to be issued following the options granted under the Employees’ Share Option Scheme to our eligible employees and Directors of our Group.

The purpose of the Employees’ Share Option Scheme is to, inter alia, recognise the contribution of our employees whose services are valued and considered vital to the operations and continued growth of our Group, retain our employees and to inculcate a greater sense of belonging and dedication amongst our employees.

Under the ByLaws as detailed in Annexure A of this Prospectus, our ESOS Committee (as defined in the ByLaws) may, at its discretion at any time and from time to time during the duration of the Employees’ Share Option Scheme, make offers to our eligible employees and Directors of our Group. An eligible employee or Director of our Group (as the case may be) who accepts an offer shall pay a sum of RMl.00 as non-refundable consideration for the option. An option shall be exercisable at a price which is the higher of the weighted average market price of our Shares for five Market Days immediately preceding the date the option is offered, subject to a discount of not more than 10% which our ESOS Committee may at its discretion decide to give; or the par value of our Shares.

The new Shares to be allotted and issued upon any exercise of the options granted under the Employees’ Share Option Scheme shall, upon allotment and issue, rank pari passu in all respects with the existing Shares in issue save and except that they will not be entitled to any dividends, rights, allotments and/or other distributions that may be declared by our Company in respect of which the entitlement dates are prior to the allotment and issue of the new Shares pursuant to the exercise of the options granted under the Employees’ Share Option Scheme.]

492 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

15.4 MATERIAL CONTRACTS

Save as disclosed below, there are no material contracts (including contracts not in writing), not being contracts in the ordinary course of business, that have been entered into by our Group within the two years preceding the date of this Prospectus:

(i) On 20 April 2012, TIH and TMSB entered into a call option agreement with AirAsia Berhad whereby TIH and TMSB agreed to grant to AirAsia Berhad an option to acquire up to 20% of the issued and paid-up share capital ofTIH at the time the call option is exercised from TMSB for a purchase consideration computed based on the net asset value of TIH at the time of exercise of the option (subject to a maximum purchase consideration of RM16,000,000.00) to be satisfied in cash;

(ii) On 23 April 2012, TIH entered into a share sale agreement with Maika Holdings Berhad and G Team Resources & Holding Sdn Bhd whereby TIH agreed to acquire 74.17% and 3.75% of the issued and paid-up share capital of TIMB comprising 74,174,592 and 3,755,282 ordinary shares of RMI.OO each from Maika Holdings Berhad and G Team Resources & Holding Sdn Bhd respectively for a purchase consideration of RM145,753,073.28 and RM7,379,129.13 respectively to be satisfied in cash;

(iii) On 23 April 2012, TIH entered into a share sale agreement with Gryss Holdings Sdn Bhd whereby TIH agreed to acquire 1.92% of the issued and paid-up share capital of TIMB comprising 1,920,000 ordinary shares of RMI.OO each from Gryss Holdings Sdn Bhd for a purchase consideration of RM3,772,800.00 to be satisfied in cash; and

(iv) [On [•] 2012, TIH entered into an underwriting agreement with the Joint Underwriters for the underwriting of up to [•] Public Issue Shares for an underwriting commission of [•%] of the total value of the underwritten Public Issue Shares at the Retail Price.]

15.5 MATERIAL LITIGATION, CLAIMS OR ARBITRATION

Save as disclosed below, as at the LPD, neither we nor our subsidiary companies are engaged in any material litigation, claims or arbitration, either as plaintiff or defendant, and our Directors do not know of any proceedings pending or threatened against our Company or our subsidiary companies, or of any fact likely to give rise to any proceeding which may materially and adversely affect our financial position or business:

(i) TIMB (then known as Oriental Capital Assurance Berhad) was named as a third party in a third party notice dated 4 October 2011 by Hailek Concrete Sdn Bhd (“Hailek”) in respect of a suit brought against Hailek by a third party for damages / losses sustained by the third party from the collapse of the arm of the cement pump truck which was owned by Hailek and insured by TIMB. TIMB was not aware of the said third party notice and Hailek obtained a judgment in default of appearance against TIMB on 19 October 2011 (“JID”). The suit between the third party and Hailek proceeded and on 30 November 2011, the third party was awarded RM108,000 for general damages and RM184,304 for special damages plus interests.

On 28 August 2012, Hailek issued a winding-up notice to TIMB and on 23 April 2012, Hailek commenced winding up proceedings against TIMB.

TIMB has filed an application for an order to set aside the JID and has also filed for an order to strike out Hailek’s winding up proceedings. The application for an order to set aside the JID was fixed for delivery of ruling on 14 September 2012.

493 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

On 3 September 2012, Hailek has, through its solicitors, agreed to accept the sum of RM217,758.50 as full and final settlement of its claim against TIMB by way of the exchange of correspondence between the solicitors of Hailek and TIMB. The settlement sum has been paid by TIMB and received by Hailek’s solicitors on 10 September 2012. Upon receipt of the said sum, Hailek will have no further claims against TIMB and will withdraw the winding up proceedings.

15.6 REGULATIONS

15.6.1 Insurance Industry in Malaysia

15.6.1.1 Legislative Framework

The insurance industry in Malaysia is governed by the Insurance Act which came into force on 1 January 1997. The Insurance Act is supplemented by the Insurance Regulations, 1996 (Regulations) which prescribe the details of mandatory requirements contained in certain provisions of the Insurance Act. In addition, the Insurance Act empowers BNM to specify matters pursuant to the provisions of the Insurance Act.

BNM may issue guidelines, circulars, or notices in respect of the Insurance Act relating to the conduct of the business and affairs of the licensed insurer. BNM, with the approval of the Minister of Finance, or the Minister of Finance, as the case may be, may make regulations for carrying into effect the objects of the Insurance Act or any provisions of the Insurance Act and for prescribing anything which is required to be prescribed under the Insurance Act.

(Source: Insurance Annual Report 2005, Sections 202 and 203 o f the Insurance Act)

15.6.1.2 Regulatory framework

In addition to the functions conferred on BNM under the Central Bank of Malaysia Act, 1958, BNM shall have all the functions conferred on it by the Insurance Act.

For the purposes of the Insurance Act, insurance business shall be divided into two classes:

(a) Life business, which in addition to all insurance business concerned with life policies shall include any type of insurance business carried on as incidental only to the life insurer’s business; and

(b) General business, which means all insurance business which is not life insurance.

Under the Insurance Act, it is stated that no licensed insurer shall carry on its licensed business unless it is a member of an association of general insurers for general insurance business, namely General Insurance Association of Malaysia.

The key objects and powers of the General Insurance Association of Malaysia are:

• To promote the establishment of sound insurance structure in Malaysia in co-operation and consultation with BNM. • To promote and represent the interests of members in or connected with Malaysia by all means and methods consistent with the laws and Constitution of Malaysia. • To render to members where possible such advice or assistance as may be deemed necessary and expedient. • To take note of events, statements and expressions of opinion affecting members, to advice them thereon and represent their interests by expression of views thereon on their behalf as may be deemed necessary and expedient. • To work as far as possible in co-operation with other similar associations elsewhere in the world.

494 Company No. 948454-K

IS. ADDITIONAL INFORMATION (Cont’d)

• To circulate information likely to be of interest to members and to collect, collate and publish statistics and any other relevant information relating to general insurance. • To work in conjunction with any legal body or any chamber or committee or commission appointed or to be appointed for consideration, framing, amendment or alteration of any law relating to insurance. • To organise and manage arrangements and matters of common interest, concern or benefit to members or any group of members and to collect and manage funds for the same. • To make rules, regulations and by laws in consultation with BNM.

(Source: Sections 3, 4 and 22 of the Insurance Act and Official Website of General Insurance Association o f Malaysia)

15.6.1.3 Licensing regime

Under the Insurance Act, no person unless it is licensed under the Insurance Act, shall carry on insurance business. The Minister of Finance shall be responsible for the issue of a licence authorising the holder to carry on insurance business.

The Minister of Finance at any time may:

(a) impose any condition on a licence; or

(b) amend any condition imposed on a licence.

Pursuant to the Insurance Act:

• No licensee incorporated in Malaysia shall establish or acquire a subsidiary in or outside Malaysia without the prior written approval of BNM. • No licensee incorporated in Malaysia shall open an office in or outside Malaysia, and no licensed foreign insurer shall open an office in Malaysia, without the prior written approval of BNM. • No person shall enter into an agreement or arrangement to acquire or dispose of any interest in shares of a licensee incorporated in Malaysia or of its controller by which, he would, either alone or with any associate, acquire or dispose of an aggregate interest in shares exceeding five per cent of the shares of that licensee or of its controller without obtaining the prior written approval of the Minister of Finance. For the purpose of the Insurance Act, “controller” in relation to an institution, means, inter alia, a person who, either alone or with any associate (i) has interest in one-third or more of its voting shares; (ii) has the power to appoint, or cause to be appointed, a majority of its directors; or (iii) has the power to decide, or cause to be decided, in respect of its business or administration. • No person who has obtained approval under section 67(1) of the Insurance Act or who holds more than five per cent of the shares of a licensee or of its controller, shall enter into subsequent agreement or arrangement to acquire or dispose of any interest in shares of the licensee or of its controller without obtaining the prior written approval of the Minister of Finance. • Except where the Minister of Finance, on the recommendation of BNM, otherwise approves and subject to such condition as the Minister of Finance may impose, no person, subject to section 67 of the Insurance Act, shall hold an interest in shares: (a) where that person is a licensee, of another licensee incorporated in Malaysia; or (b) where that person is a person other than a licensee, of two or more licensees incorporated in Malaysia unless they are licensed insurers carrying on different classes of insurance business. • No licensee, and no controller of a licensee, shall appoint a person as director or chief executive officer unless it has obtained the prior written approval of BNM for the proposed appointment.

495 Company No. 948454-K

15. ADDITIONAL INFORM ATION (Cont’d)

• A licensed local insurer shall not pay any dividend on its shares (i) until all its capitalized expenditures (including preliminary expenses, organization expenses, share selling commission, brokerage, amounts of losses incuired and any other item of expenditure not presented by tangible assets) has been written of; or (ii) if the payment of dividend would impair its margin of solvency.

The Minister of Finance, on the recommendation of BNM, may revoke the licence of a licensed insurer if:

• the licensed insurer has ceased to issue any new policy in respect of its licensed business; • the licensed insurer is carrying on its business in a manner which is likely to be detrimental to the interests of its customers; • the licensed insurer is contravening or has contravened any of the provisions of the Insurance Act or any conditions imposed on its licence or any directions given by BNM under the Insurance Act; • the licensed insurer, or any of its officers responsible for its management, has furnished false misleading or inaccurate information or has concealed, or failed to disclose, material facts in its application for a licence or in any returns filed under the Insurance Act; • the licensed insurer, or any of its directors or officers responsible for its management, has been convicted of an offence under the Insurance Act or an offence relating to fraud or dishonesty under any other written law; • the licensed insurer is unable to meet its obligations under the Insurance Act, financial or otherwise; • the licensed insurer proposes to make or has made a composition or arrangement with its creditors or has gone into liquidation or has been ordered to be wound up or otherwise dissolved; • a receiver or manager of the property of the licensed insurer has been appointed; • possession of property of the licensed insurer has been taken by or on behalf of a debenture holder pursuant to a charge on the property; or • it is in the interest of the public to do so.

The Minister of Finance, on the recommendation of BNM, may revoke the licence of a licensed insurer if it is satisfied that the licensed insurer has failed to effect reinsurance arrangements appropriate to the business and has failed to comply with BNM’s written direction on reinsurance arrangements.

(Source: Sections 9, 13, 23, 31, 35, 36, 67, 69, 70 and 93 o f the Insurance Act)

15.6.1.4 Restriction o f Business

Section 28 of the Insurance Act provides that except with the prior written approval of BNM, a licensee shall not carry on any activity in or outside Malaysia, otherwise than in connection with or for the purposes of its licensed business.

15.6.1.5 Margin of Solvency

Under Section 46 of the Insurance Act, a licensed insurer shall maintain a margin of solvency in respect of each class of its insurance business of such amount, and in such manner, as may be prescribed.

BNM may specify:

(a) the class or description of assets of a licensed insurer; or

(b) the extent of a class or description of assets of a licensed insurer, which may be taken into account for the purpose of the licensed insurer’s margin of solvency.

A licensed insurer shall hold assets representing its margin of solvency within its respective insurance funds unless otherwise approved by BNM.

496 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

15.6.1.6 The Risk-Based Capital framework

The Risk-Based Capital framework (“Framework”), is the capital adequacy framework for all insurers licensed under the Insurance Act.

The Framework which requires each insurer to maintain a capital adequacy level that is commensurate with its risk profiles has been developed based on the following principles:

(a) Allowing greater flexibility for an insurer to operate at different risk levels in line with its business strategies, so long as it holds commensurate capital and observes the prudential safeguards set by BNM;

(b) Explicit quantification of the prudential buffer with the aim of improving transparency;

(c) Providing incentives for insurers to put in place appropriate risk management infrastructure and adopt prudent practices;

(d) Promoting convergence with international practices so as to enhance comparability across jurisdictions and reduce opportunities for regulatory arbitrage within the financial sector; and

(e) Providing an early warning signal on the deterioration in capital adequacy level, hence allowing prompt and pre-emptive supervisory actions to be taken.

The board of directors and senior management of the licensed insurer are responsible to ensure that risks which are not adequately addressed under the Framework are properly identified, monitored and controlled. This includes periodic reviews of the strategies, internal policies and decision-making processes with respect to the risks that insurers assume. Licensed insurers are also expected by BNM to actively manage their capital adequacy by taking into account the potential impact of business strategies on the insurer’s risk profile and overall financial resilience.

The Framework is imposed by the Minister of Finance, pursuant to Section 23 of the Insurance Act as a licensing condition for insurers and is effective from 1 January 2009. The Framework is applicable to all insurers, including reinsurers, licensed under the Insurance Act for businesses generated from within and outside Malaysia. The Framework is applied to insurance business generated outside Malaysia to mitigate the risks of losses that may arise from the foreign business that would adversely affect the capital adequacy position of the insurer and compromise the insurer’s ability to meet its obligations to policyholders and beneficiaries in Malaysia.

(Source: Guidelines issued by Prudential Financial Policy Department BNM/RH/GL 003-24)

15.6.1.7 Takaful and Insurance Benefits Protection Systems Pursuant to Section 36 of the Malaysia Deposit Insurance Corporation Act, 2011, a company carrying on insurance business under Section 16 of the Insurance Act is deemed to be a member of Malaysia Deposit Insurance Corporation (“PIDM”). The Takaful and Insurance Benefits Protection Systems (which replaces the existing Insurance Guarantee Scheme Fund administered pursuant to the Insurance Act) was introduced by PIDM on 31 December 2010 and operates as an explicit compensation scheme to protect consumers of the insurance industry in the event of a failure of an insurer. (Source: Section 36 o f the Malaysia Deposit Insurance Corporation Act, 2011 and Financial Stability and Payment Systems Report 2010)

497 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

15.6.1.8 Ownership Restrictions

Subject to the approval of BNM for each relevant proposal and transaction, flexibility has been accorded for an increase in the foreign equity limits from 49% to 70% for any proposal or transaction concerning the acquisition of equity interest in insurance companies.

(Source: Liberalisation of the Financial Sector, Press Statement dated 27 April 2009 by Dato' Sri Mohd Najib Bin Tun Haji Abdul Razak, Prime Minister o f Malaysia.)

15.6.2 Labuan Insurance Business

15.6.2.1 Legislative Framework

All insurance and reinsurance related entities set up in Labuan International Business and Financial Centre {“Labuan IBFC”) are regulated under the LFFSA, Part VII, specifically provisions contained in Sections 102 to 107 of the LFSSA.

15.6.2.2 Regulatory framework

The Labuan insurance business is regulated by Labuan FSA.

Pursuant to Section 103(l)(f) of the LFSSA, an applicant for a Labuan insurance licence shall satisfy the Labuan FSA that it will become a member of an association of Labuan insurers, namely Labuan International Insurance Association which was registered with the Registrar of Societies on 25 May 1998. The objectives for which the association is established are:

• To obtain and represent the views of the membership and to represent these views to the Labuan FSA. • To promote and represent the interests of the membership by only means and methods consistent with the laws of the Labuan IBFC of the Federal Territory of Labuan. • To take note of all events, statements and expressions of opinion affecting the membership to advise it thereon and to represent its interests by expression of views thereon on its behalf. • To work in conjunction with any legal body or any chamber or committee or commission appointed or to be appointed for the consideration, framing, amendment or alteration of any law relating to insurance.

(Source: The Official Website o f Labuan International Insurance Association)

15.6.2.3 Licensing Regime

The range of Labuan insurance activities regulated under the LFSSA includes:

• Insurance and reinsurance. • Takaful and retakaful business. • Captive insurance. • Such other offshore insurance business as may be approved by Labuan FSA.

Pursuant to the LFSSA, the Labuan insurer shall obtain approval from the Labuan FSA prior to effecting, inter alia, the following matters:

• The making of any amendment or alteration to any of its constituent documents, or prior to any change of its person in control, director or principal officer. • Amendment or alteration to any information which had been furnished to Labuan FSA in connection with the application for the insurance licence. • Any change in participant of the Labuan insurer who holds fifteen per centum (15%) or more of the paid-up capital of the applicant.

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15. ADDITIONAL INFORMATION (Cont’d)

• Open any office other than its principal place of business in Labuan, or acquire or establish any subsidiary.

(Source: Sections 107 and 112 o f the LFSSA)

Pursuant to Section 167 of the LFSSA, Labuan FSA may revoke any consent, licence or registration made under the LFSSA:

• at the request of the licensed entity; or • in the case where: • the licensed entity has ceased to carry on business in or from within Labuan; • the licensed entity has contravened any provision of the LFSSA or any terms, conditions, restrictions or limitations attached to the licence or registration as the case may be; • Labuan FSA has, either in connection with the application for the licence or registration, or at any time after the grant of the licence or registration, been provided with false or misleading information, document or declaration by or on behalf of the licensed entity; • the licensed entity has been convicted of an offence under the LFSSA or of a criminal offence in any recognised country or jurisdiction; • the licensed entity has knowingly and wilfully supplied false, misleading or inaccurate information or failed to disclose infonnation required under the LFSSA; • the licensed entity is carrying on business in a manner that the Labuan FSA reasonably believes to be detrimental to the interests of, in the case of licensed entities under Part III, LFSSA investors of mutual funds, or to the public interest; • the licensed entity is declared bankrupt or has been wound-up or otherwise dissolved; • a resolution for the licensed entity’s voluntary winding-up has been passed; • Labuan FSA in its discretion deems fit for any other reason.

15.6.2.4 Margin o f Solvency

Pursuant to Section 109 of LFSSA, every Labuan insurer, including an insurance licensee which carries on Labuan captive insurance business, shall ensure that the realisable value of its assets exceeds the amount of its liabilities by a margin in such an amount or calculated in such manner as may be specified in writing by Labuan FSA from time to time.

15.6.2.5 Restriction in Business

Pursuant to Section 113 of the LFSSA, no Labuan insurer shall carry on any business activities in Labuan or elsewhere from its office in Labuan other than its Labuan insurance business or business activities in connection with or for the purposes of such Labuan insurance business.

Notwithstanding the definition of “Labuan insurance business” and notwithstanding the paragraph above, a Labuan insurer may carry on the reinsurance of domestic insurance business, including the reinsurance of domestic insurance business transacted in the Malaysian currency and such other business as may be specified by Labuan FSA.

15.6.2.6 Anti-Money Laundering and Anti-Terrorism Financing Act, 2001 (“AMLATFA”)

Pursuant to Section 14 of the AMLATFA, reporting institutions shall promptly report to the competent authority any transaction:

(a) exceeding the amount as the competent authority may specify; and

(b) where the identity of the persons involved, the transaction itself or any other circumstances concerning that transaction gives any officer or employee of the reporting institution reason to suspect that the transaction involves proceeds of an unlawful activity.

499 Company No. 948454-K

15. ADDITIONAL INFORMATION (Cont’d)

For the purposes of AMLATFA, “reporting institution” includes any person who is licensed under the Offshore Insurance Act which was repealed by the LFSSA.

15.6.2.7 Ownership Restrictions

There are no ownership restrictions in the Labuan insurance business as a foreign Labuan company is eligible to apply for the insurance licence to carry on insurance business in Labuan.

(Source: Section 103 o f the LFSSA)

15.7 REPATRIATION OF CAPITAL AND REMITTANCE OF PROFIT

We are not affected by any requirement in respect of the repatriation of capital and remittance of profit by or to our Group as we have not established any place of business outside Malaysia.

15.8 PUBLIC TAKE-OVER OFFERS

Save as disclosed below, none of the following has occurred in the last financial year or the current financial year up to the LPD:

(i) Public take-over offers by third parties for our Shares; and

(ii) Public take-over offers by our Company for other companies’ shares.

In May 2012, we completed the acquisition of 79.84% interest in TIMB. Following the acquisition, our Company made a mandatory general offer for all the remaining shares in TIMB from its minority shareholders at the offer price of RM1.965 per ordinary share of RMI.OO each. The mandatory general offer closed on 9 July 2012 and we now hold 83.26% in TIMB. The acquisition of TIMB and the mandatory general offer was settled in cash, which was funded by bank borrowing and advances from our shareholder.

15.9 CONSENTS

The written consents of our Principal Adviser, Co-Adviser, Joint Global Coordinators, Joint Bookrunners, Joint Underwriters, Solicitors, Principal Bankers, Issuing House, Share Registrar and Company Secretary for inclusion in this Prospectus of their names and all references thereto in the manner, form and context in which their names appear have been given before the issue of this Prospectus and have not subsequently been withdrawn.

The written consent of the Auditors and Reporting Accountants for the inclusion of its name, Accountants’ Report, Letter on the Pro Forma Consolidated Financial Information and all references thereto in the maimer, form and context in which they appear in this Prospectus has been given before the issue of this Prospectus and has not subsequently been withdrawn.

The written consents of the Independent Market Researchers for the inclusion in this Prospectus of their names and the IMR Report and all references thereto in the manner, form and context in which they appear in this Prospectus have been given before the issue of this Prospectus and have not subsequently been withdrawn.

15.10 DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents may be inspected at our Registered Office during normal business hours for a period of 12 months from the date of this Prospectus:

(i) Memorandum and Articles of Association of our Company; (ii) Material contracts as referred to in Section 15.4 of this Prospectus; (iii) Contracts as referred to in Section 6.18 of this Prospectus;

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15. ADDITIONAL INFORMATION (Cont’d)

(iv) Writ and relevant cause papers for material litigation and arbitration as referred to in Section 15.5 of this Prospectus; (v) Reporting Accountants’ Letter on the Pro Forma Consolidated Financial Information as included in Section 12.3 of this Prospectus; (vi) Accountants’ Report as included in Section 13 of this Prospectus; (vii) IMR Report referred to in this Prospectus as included in Section 7 of this Prospectus; (viii) Directors’ Report as included in Section 14 of this Prospectus; (ix) Audited financial statements of our Company and subsidiary companies for FY2009, FY2010 and FY2011; (x) Audited financial statements of our Company and subsidiary companies for 1H2012; and (xi) Letters of consent as referred to in Section 15.9 of this Prospectus.

15.11 RESPONSIBILITY STATEMENT

Our Directors, Promoters and Offeror have seen and approved this Prospectus and they collectively and individually accept full responsibility for the accuracy of the information contained herein and confirm, after having made all reasonable enquiries, that to the best of their knowledge and belief there are no false or misleading statement or other facts the omission of which would make any statement herein false or misleading.

RHB Investment Bank, being our Principal Adviser, acknowledges that, based on all available information, and to the best of its knowledge and belief, this Prospectus constitutes a full and true disclosure of all material facts concerning our IPO.

ECM Libra, being our Co-Adviser, acknowledges that, based on all available information, and to the best of its knowledge and belief, this Prospectus constitutes a full and true disclosure of all material facts concerning our IPO.

THE REST OF THIS PAGE HAS BEEN INTENTIONALLY LEFT BLANK

501 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE

16.1 OPENING AND CLOSING OF APPLICATION

Application for our Public Issue Shares pursuant to the Retail Offering will open at 10.00 a.m. on [•] and will remain open until 5.00 p.m. on [•] or such later date or dates as our Board, Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners, may mutually decide at their absolute discretion. Any extension of the closing date of application will be published in a widely circulated English and Bahasa Malaysia newspaper in Malaysia prior to the original closing date of application. Late applications will not be accepted.

16.2 ELIGIBILITY

You can only apply for our Public Issue Shares pursuant to the Retail Offering if you fulfil all of the following:

(i) You must have a CDS account. If you do not have a CDS account, you may open one by contacting any of the AD As listed in Section 16.11 of this Prospectus;

(ii) You must be one of the following:

(a) a Malaysian citizen who is at least 18 years old as at the closing date of the application; or

(b) a corporation/ institution incorporated in Malaysia or outside Malaysia with a Malaysian address; or

(c) a superannuation, co-operative, foundation, provident or pension fund established or operating in Malaysia.

We will not accept applications from trustees, persons under 18 years of age, sole proprietorships, partnerships or other incorporated bodies or associations, other than corporations / institutions referred to in (b) or (c) above.

(iii) You are not a director or employee of our Issuing House or their immediate family members.

16.3 CATEGORY OF INVESTORS

Application for the Public Issue Shares pursuant to the Retail Offering must be made using the method designated for each of the three categories of investors as follows:

Category of investors Application Method

Malaysian Public (for individuals) White Application Form or Electronic Share Application(I) or Internet Share Application(2)

Malaysian Public (for non-individuals, e.g. White Application Form corporations, institutions, etc.) Eligible Directors, employees and business Pink Application Form associates of our Group

Note:

(1> The following processing fee per Electronic Share Application will be charged by the respective Participating Financial Institutions:

• Affln Bank Berhad - No fee will be charged for application by their account holders • AmBank (M) Berhad — RM I. 00;

502 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

• CIMB B ank B erhad - R M 2.50; • HSBC Bank Malaysia Berhad - RM2.5Q; • M alayan B anking B erhad - R M L 00; • Public B ank Berhad - RM 2 00; • RHB Bank Berhad - RM 2.50; or • Standard Chartered Bank Malaysia Berhad (at selected branches only) - RM2.50.

® The following processing fee per Internet Share Application will be charged by the respective Internet Participating Financial Institutions:

• Affin Bank Berhad (www.affinOnline.com) - No fee will be charged for application by their account holders • CIMB Investment Bank Berhad (www.eipocimb.com) - RM2.00 for payment via CIMB Bank Berhad or Malayan Banking Berhad; • CIMB Bank Berhad (www.cimbcticks.com.my) - RM2.00 for applicants with CDS accounts held with CIMB Investment Bank Berhad and RM2.50 for applicants with CDS accounts with other ADAs; • Malayan Banking Berhad (www.maybank2u.com.my) - R M l. 00; • Public Bank Berhad (www.pbebank. com) - RM2.00; and • RHB Bank Berhad (www. rhb.com. my) - R M l. 50.

16.4 PROCEDURES FOR APPLICATION

Only one application from each applicant will be considered and an application must be for at least 100 Shares or multiples thereof, Multiple applications will not be accepted. If you submit multiple applications in your own name or by using the name of others, with or without their consent, you commit an offence under Section 179 of the CMS A and if convicted, may be punished with a minimum fine of RMl million and a jail term of up to 10 years under Section 182 of the CMSA.

16.4.1 Procedures for application by way of an Application Form

The public, the identified investors and other investors should follow the following procedures in making an application:

Step 1: Obtain application documents

Obtain the Application Form together with the Official ‘A’ and ‘B’ envelopes and this Prospectus. These documents can be obtained subject to availability from the following parties:

(i) the Principal Adviser;

(ii) the Co-Adviser;

(iii) participating organisations of Bursa Securities;

(iv) members of the Association of Banks in Malaysia;

(v) members of the Malaysian Investment Banking Association; and

(vi) our Issuing House.

Step 2: Read the Prospectus

In accordance with Section 232(2) of the CMSA, the Application Form is accompanied by this Prospectus. You are advised to read and understand this Prospectus before making your application.

Step 3: Complete the Application Form

Complete the relevant Application Form legibly and STRICTLY in accordance with the notes and instructions printed on it and in this Prospectus.

503 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(i) Personal particulars

You must ensure that your personal particulars submitted in your application are identical with the records maintained by Bursa Depository. Please inform Bursa Depository promptly of any changes to your personal particulars.

If you are an individual and you are not a member of the armed forces or police, your name and national registration identity card (“NRIC”) number or passport number must be the same as that stated in:

(a) your NRIC/passport;

(b) any valid temporary identity document issued by the National Registration Department from time to time; or

(c) your ‘Resit Pengenalan Sementara (JPN KP 09)’ issued pursuant to Peraturan 5(5), Peraturan-peraturan Pendaftaran Negara 1990.

If you are a member of the armed forces or police, your name and your armed forces or police personnel number, as the case may be, must be the same as that stated in your authority card. If you are a corporation/institution, your name and incorporation number must be the same as that stated in your certificate of incorporation.

(ii) CDS account number

You must state your CDS account number in the space provided in the Application Form. Invalid, nominee or third party CDS accounts will not be accepted.

(iii) Details of payment

You must state the details of your payment in the appropriate boxes provided in the Application Form.

(iv) Number of Shares applied

Your application must be for at least 100 Shares or multiples thereof.

Step 4: Prepare appropriate form of payment

Prepare the correct form of payment in RM for the FULL amount payable for our IPO Shares based on the Retail Price, which is [*] per IPO Share.

Payment must be made in favour of ‘MIH SHARE ISSUE ACCOUNT NO. [•]’ and crossed ‘A/C PAYEE ONLY’ (excluding ATM statements) and endorsed on the reverse side with your name and address. We only accept the following forms of payment:

(i) banker's draft or cashier's order purchased within Malaysia only and drawn on a bank in Kuala Lumpur; or

(ii) money order or postal order (for applicants from Sabah and Sarawak only); or

(iii) Guaranteed Giro Order ("GGO") from Bank Simpanan Nasional Malaysia Berhad; or

(iv) ATM statement obtained only from any of the following financial institutions:

504 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

- AFFIN BANK BERHAD; or - ALLIANCE BANK MALAYSIA BERHAD; or - AMBANK (M) BERHAD; or - CIMB BANK BERHAD; or - HONG LEONG BANK BERHAD; or - MALAYAN BANKING BERHAD; or - RHB BANK BERHAD.

We will not accept applications with excess or insufficient remittances or inappropriate forms of payment.

Step 5: Finalise application

Insert the Application Form with the appropriate payment and a legible photocopy of your identification document (NRIC/valid temporary identity document issued by the National Registration Department/* Resit Pengenalan Sementara (JPN KP09)’/authority card/certificate of incorporation) into the Official ‘A’ envelope and seal it. Write your name and address on the outside of the Official ‘A’ and ‘B’ envelopes. The name and address written must be identical to your name and address as per your NRIC/valid temporary identity document issued by the National Registration Department/‘Resit Pengenalan Sementara (JPN KP09)7authority card/certificate of incorporation. Affix a stamp on the Official ‘A’ envelope and insert the Official ‘A ’ envelope into the Official ‘B’ envelope.

Step 6: Submit application

You can submit your application in the Official ‘B’ envelope by either one of the following methods:

(i) despatch by ORDINARY POST to:

Malaysian Issuing House Sdn Bhd (258345-X) Level 6, Symphony House Pusat Dagangan Dana 1 Jalan PJU 1A/46 47301 Petaling Jaya P.O. Box 8269 Pejabat Pos Kelana Jaya 46785 Petaling Jaya

(ii) DELIVERY BY HAND and deposit in the Drop-in Boxes provided at the front portion of Symphony House, Pusat Dagangan Dana 1, Jalan PJU 1A/46, 47301 Petaling Jaya, Selangor Darul Ehsan,

so as to arrive not later than 5.00 p.m. on [•] 2012 or such later date or dates as our Board, the Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners, may mutually decide at their absolute discretion.

No acknowledgement of receipt of Application Form or application monies will be made.

16.4.2 Procedures for application by way of an Electronic Share Application (for individual Malaysian public only)

Applications for our IPO Shares by way of ESA are only applicable to Malaysian public who are individuals. Please read carefully and follow the terms of this Prospectus, the procedures, terms and conditions for ESA and the procedures set out on the ATM screens of the Participating Financial Institution before making an ESA.

505 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(i) Steps for Electronic Share Application through a Participating Financial Institution’s ATM

You may apply for our IPO Shares via the ATM of the Participating Financial Institution by choosing the ESA option. Mandatory statements required for the application are set out in Section 16.4.3 below. You are to enter at least the following information through the ATM where the instructions on the ATM screen at which you enter your ESA require you to do so:

- Personal Identification Number (“PIN”); - MIH Share Issue Account Number • ; - CDS Account Number; - Number of IPO Shares applied for and/or the RM amount to be debited from the account; and - Confirmation of several mandatory statements.

(ii) Participating Financial Institutions

ESA may be made through an ATM of the following Participating Financial Institutions and their branches:

- AFFIN BANK BERHAD; or - AMBANK (M) BERHAD; or - CIMB BANK BERHAD; or - HSBC BANK MALAYSIA BERHAD; or - MALAYAN BANKING BERHAD; or - PUBLIC BANK BERHAD; or - RHB BANK BERHAD; or - STANDARD CHARTERED BANK MALAYSIA BERHAD (at selected branches only).

16.4.3 Terms and conditions of Electronic Share Application

The procedures for ESA are set out on the ATM screens of the relevant Participating Financial Institutions (“Steps”). For illustration purposes, the procedures for ESA at ATMs are set out in Section 16.4.2(i) above. The Steps set out the actions that you must take at the ATM to complete an ESA. Please read carefully the terms of this Prospectus, the Steps and the terms and conditions for ESA set out below before making an ESA.

You must have a CDS Account to be eligible to utilise the facility. The CDS account must be in your own name. Invalid, nominee or third party CDS accounts will not be accepted. You must have an existing account with, and be an ATM cardholder of, one of the Participating Financial Institutions before you can make an ESA. An ATM card issued by one of the Participating Financial Institutions cannot be used to apply for our IPO Shares at an ATM belonging to other Participating Financial Institutions. Upon the completion of your ESA transaction, you will receive a computer-generated transaction slip (“Transaction Record”) confirming'the details of your ESA. The Transaction Record is only a record of the completed transaction at the ATM and not a record of the receipt of the ESA or any data relating to such an ESA by our Company or our Issuing House. You must retain the Transaction Record and should not submit the Transaction Record with any Application Form.

Upon the closing of offer for the application for our IPO Shares on [•] at 5.00 p.m. or such later date or dates as our Board, the Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners, in their absolute discretion may mutually decide (“Closing Date and Time”), the Participating Financial Institutions shall submit magnetic tapes containing their respective customers’ applications for our IPO Shares to our Issuing House as soon as practicable but not later than 12.00 p.m. of the 2nd business day after the Closing Date and Time.

506 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

You are allowed to make an ESA for our IPO Shares via an ATM that accepts the ATM cards of the Participating Financial Institution with which you have an account at one of its branches, subject to you making only one application.

You must ensure that you use your own CDS account number when making an ESA. If you have a joint account with any Participating Financial Institution, you must ensure that you enter your own CDS account number when using an ATM card issued to you in your own name. Your application will be rejected if you fail to comply with the foregoing.

The ESA shall be made on, and subject to, the above terms and conditions as well as the terms and conditions appearing below:

(i) The ESA shall be made in connection with and subject to the terms of this Prospectus and our Memorandum and Articles of Association.

(ii) You are required to confirm the following statements (by pressing predesignated keys (or buttons) on the ATM keyboard) and undertake that the following information given is true and correct:

• You have attained 18 years of age as at the closing date of the share application; • You are a Malaysian citizen residing in Malaysia; • You have read this Prospectus and understood and agreed with the terms and conditions of this application; • This is the only application that you are submitting; and • You hereby give consent to the Participating Financial Institution and Bursa Depository to disclose information pertaining to you and your account with the Participating Financial Institution and Bursa Depository to our Issuing House or other relevant regulatory bodies.

The application will not be successfully completed and cannot be recorded as a completed transaction at the ATM unless you complete all the Steps required by the Participating Financial Institution. By doing so, you shall be treated as signifying your confirmation of each of the above statements as well as giving consent in accordance with the relevant laws of Malaysia including Section 97 of the Banking and Financial Institutions Act, 1989 and Section 45 of the Central Depositories Act to the disclosure by the relevant Participating Financial Institution or Bursa Depository, as the case may be, of any of your particulars to our Issuing House, or any relevant regulatory bodies.

(iii) You confirm that you are not applying for our IPO Shares as a nominee of any other person and that any ESA that you make is made by you as the beneficial owner. You shall only make one ESA and shall not make any other application for our IPO Shares, whether at the ATMs of any Participating Financial Institution or on the prescribed Application Forms.

(iv) You must have sufficient funds in your account with the relevant Participating Financial Institution at the time you make your ESA, failing which your ESA will not be completed. Any ESA, which does not strictly conform to the instructions set out on the screens of the ATM through which the ESA is being made, will be rejected.

(v) You agree and undertake to subscribe for or purchase and to accept the number of IPO Shares applied for as stated on the Transaction Record or any lesser number of IPO Shares that may be allotted or allocated to you in respect of your ESA. In the event that we decide to allot or allocate any lesser number of such IPO Shares or not to allot or allocate any IPO Shares to you, you agree to accept any such decision as final. If your ESA is successful, your confirmation (by your action of pressing the designated key on the ATM) of the number of IPO Shares applied for shall signify, and shall be treated as, your acceptance of the number of IPO Shares that may be allotted or allocated to you and to be bound by our Memorandum and Articles of Association.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(vi) Our Issuing House, on the authority of our Directors, reserves the right to reject any ESA or accept any ESA in part only without assigning any reason therefor. Due consideration will be given to the desirability of allotting or allocating our IPO Shares to a reasonable number of applicants with a view to establishing an adequate market for our Shares.

(vii) If your ESA is not accepted or accepted in part only, the relevant Participating Financial Institution will be informed of the non-successful or partially successful application within two (2) Market Days after the balloting date. If your ESA is not successful, the relevant Participating Financial Institution will credit the full amount of the application monies without interest into your account with that Participating Financial Institution within two (2) Market Days after the receipt of confirmation from our Issuing House, You may check your account on the fifth (5th) Market Day from the balloting date.

If your ESA is accepted in part only, the relevant Participating Financial Institution will credit the balance of the application monies without interest into your account with that Participating Financial Institution within two (2) Market Days after the receipt of confirmation from our Issuing House. A number of applications will, however, be held in reserve to replace any successfully balloted applications, which are subsequently rejected. For such applications which are subsequently rejected, the application monies without interest will be refunded to you by our Issuing House by crediting into your account with the Participating Financial Institution within two (2) Market Days after the receipt of confirmation from our Issuing House.

Should you encounter any problems with your application, you may refer to the Participating Financial Institutions.

(viii) You request and authorise us:

(a) to credit our IPO Shares allotted or allocated to you into your CDS account; and

(b) to issue share certiflcate(s) representing such IPO Shares allotted or allocated in the name of Bursa Malaysia Depository Nominees Sdn Bhd and send the same to Bursa Depository.

(ix) You acknowledge that your ESA is subject to risks of electrical, electronic, technical and computer-related faults and breakdowns, fires and other events beyond our control, our Issuing House or the Participating Financial Institution and irrevocably agree that if:

(a) our Company or our Issuing House did not receive your ESA; and

(b) data relating to your ESA is wholly or partially lost, corrupted or not otherwise accessible, or not transmitted or communicated to us or Issuing House,

you shall be deemed not to have made an ESA and you shall not claim whatsoever against our Company, our Issuing House or the Participating Financial Institution for our IPO Shares applied for or for any compensation, loss or damage.

(x) All your particulars in the records of the relevant Participating Financial Institution at the time you make your ESA shall be deemed to be true and correct and we, our Issuing House and the relevant Participating Financial Institution shall be entitled to rely on the accuracy thereof.

(xi) You shall ensure that your personal particulars as recorded by both Bursa Depository and the relevant Participating Financial Institution are correct and identical. You must inform Bursa Depository promptly of any change in address failing which the notification letter of successful allocation will be sent to your registered or correspondence address last maintained with Bursa Depository.

508 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(xii) By making and completing an ESA, you agree that:

(a) in consideration of our Company agreeing to allow and accept the making of any application for our IPO Shares via the ESA facility established by the Participating Financial Institutions at their respective ATMs, your ESA is irrevocable;

(b) our Company, the Participating Financial Institutions, Bursa Depository and our Issuing House shall not be liable for any delays, failures or inaccuracies in the processing of data relating to your ESA due to a breakdown or failure of transmission or communication facilities or to any cause beyond our/their control;

(c) notwithstanding the receipt of any payment by or on behalf of our Company, the acceptance of your offer to subscribe for and purchase our IPO Shares for which your ESA has been successfully completed shall be constituted by the issue of notices of successful allocation for prescribed securities, in respect of the said IPO Shares;

(d) you irrevocably authorise Bursa Depository to complete and sign on your behalf as transferee or renouncee any instrument of transfer and/or other documents required for the issue or transfer of our IPO Shares allocated to you; and

(e) we agree that in relation to any legal action or proceedings arising out of or in relation with the contract between the parties and/or the ESA scheme and/or any terms herein, all rights, obligations and liabilities shall be construed and determined in accordance with the laws of Malaysia and with all directives, rules, regulations and notices from regulatory bodies and that we irrevocably submit to the jurisdiction of the Courts of Malaysia.

(xiii) If you are successful in your ESA, our Directors reserve the right to require you to appear in person at the registered office of our Issuing House within 14 days from the date of the notice issued to you to ascertain your application is genuine and valid. Our Directors shall not be responsible for any loss or non-receipt of the said notice nor shall they be accountable for any expenses incurred or to be incurred by you for the purpose of complying with this provision.

(xiv) Our Issuing House, on the authority of our Directors, reserves the right to reject any application which does not conform to these instructions.

16.4.4 Procedures for application by way of Internet Share Application (for individual Malaysian public only)

(i) Steps for Internet Share Application

The exact steps for Internet Share Application in respect of the Public Issue Shares are as set out on the Internet financial services website of the Internet Participating Financial Institutions.

For illustration purposes only, the steps for an application for the Public Issue Shares via Internet Share Application may be as set out below. The steps set out the actions that the applicant must take at the Internet financial services website of the Internet Participating Financial Institution to complete an Internet Share Application.

PLEASE NOTE THAT THE ACTUAL STEPS FOR INTERNET SHARE APPLICATIONS CONTAINED IN THE INTERNET FINANCIAL SERVICES WEBSITE OF THE INTERNET PARTICIPATING FINANCIAL INSTITUTIONS MAY DIFFER FROM THE STEPS OUTLINED BELOW.

(a) Connect to the Internet financial services website of the Internet Participating Financial Institution with which the applicant has an account.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(b) Login to the Internet financial services facility by entering the applicant’s user identification and PIN/password.

(c) Navigate to the section of the website on applications in respect of initial public offerings.

(d) Select the counter in respect of the Public Issue Shares to launch the Electronic Prospectus and the terms and conditions of the Internet Share Application.

(e) Select the designated hyperlink on the screen to accept the abovementioned terms and conditions, having read and understood such terms and conditions.

(f) At the next screen, complete the online application form.

(g) Check the information contained in the online application form such as the share counter, NRIC number, CDS account number, number of Public Issue Shares applied for and the account number to debit are correct, and select the designated hyperlink on the screen to confirm and submit the online application form.

(h) By confirming such information, the applicant also undertakes that the following information given is true and correct:­

* the applicant has attained 18 years of age as at the date of the application for the Public Issue Shares; • the applicant is a Malaysian citizen residing in Malaysia; • the applicant has, prior to making the Internet Share Application, received and/or has had access to a printed/electronic copy of this Prospectus, the contents of which the applicant has read and understood; • the applicant agrees to all the terms and conditions of the Internet Share Application as set out in this Prospectus and has carefully considered the risk factors as set out in this Prospectus, in addition to all other information contained in this Prospectus before making the Internet Share Application for the Public Issue Shares; • the Internet Share Application is the only application that the applicant is submitting for the Public Issue Shares; • the applicant authorises the Authorised Financial Institution to deduct the full amount payable for the Public Issue Shares form the applicant’s account with the Authorised Financial Institution; • the applicant gives express consent in accordance with the relevant laws of Malaysia (including but not limited to Section 99 of the Banking and Financial Institutions Act, 1989 and Section 45 of the Securities Industry (Central Depositories) Act, 1991) to the disclosure by the Internet Participating Financial Institution, the Authorised Financial Institution and/or Bursa Depository, as the case maybe, of information pertaining to the applicant, the Internet Share Application made by the applicant or the applicant’s account with the Internet Participating Financial Institution , to the Issuing House and the Authorised Financial Institution, the SC and any other relevant authority; • the applicant is not applying for the Public Issue Shares as a nominee of any other person and the application is made in the applicant’s own name, as beneficial owner and subject to the risks referred to in this Prospectus; and

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont'd)

* the applicant authorises the Internet Participating Financial Institution to disclose and transfer to any person, including any government or regulatory authority in any jurisdiction, our Company or other relevant parties in connection with Public Issue, all information relating to the applicant if required by any law, regulation, court order or any government or regulatory authority in any jurisdiction or if such disclosure and transfer is, in the reasonable opinion of the Internet Participating Financial Institution, necessary for the provision of the Internet Share Applications services or if such disclosure is requested or required in connection with the Public Issue. Further, the Internet Participating Financial Institution will take reasonable precautions to preserve the confidentiality information relating to the applicant furnished by the applicant to the Internet Participating Financial Institution in connection with the use of the Internet Share Application services.

(i) Upon submission of the online application form, the applicant will be linked to the website of the Authorised Financial Institution to effect the online payment of the application money for the Public Issue.

(j) As soon as the transaction is completed, a message from the Authorised Financial Institution pertaining to the payment status will appear on the screen of the website through which the online payment of the application money is being made.

(k) Subsequent to the above, the Internet Participating Financial Institution shall confirm the Internet Share application has been completed, via the Confirmation Screen on its website.

(1) The applicant is advised to print out the Confirmation Screen for their reference and retention.

16.4.5 Terms and Conditions for Internet Share Application

Applications for the Public Issue Shares may be made through the Internet financial services website of the Internet Participating Financial Institutions.

APPLICANTS ARE ADVISED NOT TO APPLY FOR THE PUBLIC ISSUE SHARES THROUGH ANY WEBSITE OTHER THAN THE INTERNET FINANCIAL SERVICES WEBISTE OF THE INTERNET PARTICIPATING FINANCIAL INSTITUTIONS.

Internet Participating Financial Institution

Internet Share Applications may be made through the Internet financial services websites of the following Internet Participating Financial Institutions :-

(i) Affin Bank Berhad at www.affmOnline.com; or (ii) RHB Bank Berhad at www.rhb.coni.mv (via hyperlink to Bursa Securities’ website at www.bursamalavsia.com); or (iii) Malayan Banking Berhad at www.mavbank2u.com.mv (via hyperlink to Bursa Securities’ website at www.bursamalavsia.com): or (iv) CIMB Investment Bank Berhad at www.eipocimb.com: or (v) CIMB Bank Berhad at www.cimbclicks.com.mv: or (vi) Public Bank Berhad at www.ubebanlc.com (via hyperlink to Bursa Securities’ website at www.bursamalavsia.com).

PLEASE READ THE TERMS OF THIS PROSPECTUS, THE TERMS AND CONDITIONS FOR THE INTERNET SHARE APPLICATIONS SET OUT HEREIN AND THE STEPS FOR INTERNET SHARE APPLICATION SET OUT HEREIN CAREFULLY PRIOR TO MAKING AN INTERNET SHARE APPLICATION.

511 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

THE EXACT TERMS AND CONDITIONS AND ITS SEQUENCE FOR INTERNET SHARE APPLICATIONS IN RESPECT OF THE PUBLIC ISSUE SHARES ARE AS SET OUT ON THE INTERNET FINANCIAL SERVICES WEBSITE OF THE INTERNET PARTICIPATING FINANCIAL INSTITUTIONS.

PLEASE NOTE THAT THE ACTUAL TERMS AND CONDITIONS OUTLINED BELOW SUPPLEMENT THE ADDITIONAL TERMS AND CONDITIONS FOR INTERNET SHARE APPLICATION CONTAINED IN THE INTERNET FINANCIAL SERVICES WEBSITES OF THE INTERNET PARTICIPATING FINANCIAL INSTITUTIONS.

An Internet Share Application shall be made on and shall be subject to the terms and conditions as set out herein:-

(i) An applicant making an Internet Share Application shall:­

- be an individual with a CDS account and in the case of joint account, an individual CSD account registered in the applicant’s name which is to be used for the purpose of the application if the applicant is making the application instead of the CDS account registered in the joint account holder’s name; - having an existing account with access to Internet financial services facilities with and Internet Participating Financial Institution. Applicant must have ready their user identification (“User ID”) and Personal Identifications Numbers (“PIN”)/password for the relevant Internet financial services facilities; and - be a Malaysian citizen and have a mailing address in Malaysia.

Applicants are advised to note that a User ID and PIN/password issued by one of the Internet Participating Institutions cannot be used to apply for the Public Issue Shares at Internet financial service websites of other Internet Participating Financial Institutions.

(ii) An Internet Share Application shall be made on and shall be subject to the terms of this Prospectus and our Company’s Memorandum and Articles of Association.

(iii) The applicant is required to confirm the following statements (by selecting the designated hyperlink on the relevant screen of the Internet financial services website of the Internet Participating Financial Institution) and to undertake that the following information given is true and correct:­

- the applicant has attained 18 years of age as at the date of the application for the Public Issue Shares; - the applicant is a Malaysian citizen residing in Malaysia; - the applicant has, prior to making the Internet Share Application, received and/or has had access to a printed/electronic copy of this Prospectus, the contents of which the applicant has read and understood; - the applicant agrees to all the terms and conditions of the Internet Share Application as set out in this Prospectus and has carefully considered the risk factors as set out in this Prospectus, in addition to all other information contained in this Prospectus before making the Internet Share Application for the Public Issue Shares; - the Internet Share Application is the only application that the applicant is submitting for the Public Issue Shares; - the applicant authorises the Authorised Financial Institution to deduct the full amount payable for the Public Issue Shares form the applicant’s account with the Authorised Financial Institution;

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

- the applicant gives express consent in accordance with the relevant laws of Malaysia (including but not limited to Section 99 of the Banking and Financial Institutions Act, 1989 and Section 45 of the Securities Industry (Central Depositories) Act, 1991) to the disclosure by the Internet Participating Financial Institution, the Authorised Financial Institution and/or Bursa Depository, as the case maybe, of information pertaining to the applicant, the Internet Share Application made by the applicant or the applicant’s account with the Internet Participating Financial Institution , to the Issuing House and the Authorised Financial Institution, the SC and any other relevant authority; - the applicant is not applying for the Public Issue Shares as a nominee of any other person and the application is made in the applicant’s own name, as beneficial owner and subject to the risks referred to in this Prospectus; and - the applicant authorises the Internet Participating Financial Institution to disclose and transfer to any person, including any government or regulatory authority in any jurisdiction, our Company or other relevant parties in connection with Public Issue, all information relating to the applicant if required by any law, regulation, court order or any government or regulatory authority in any jurisdiction or if such disclosure and transfer is, in the reasonable opinion of the Internet Participating Financial Institution, necessary for the provision of the Internet Share Applications services or if such disclosure is requested or required in connection with the Public Issue. Further, the Internet Participating Financial Institution will take reasonable precautions to preserve the confidentiality information relating to the applicant furnished by the applicant to the Internet Participating Financial Institution in connection with the use of the Internet Share Application services.

(iv) The application will not be successfully completed and cannot be recorded as a completed application unless the applicant has completed all relevant application steps and procedures for the Internet Share Application which would result in the Internet financial services website displaying the Confirmation Screen.

For the purposes of this Prospectus “Confirmation Screen” shall mean the screen which appears or is displayed on the Internet financial services website which confirms that the Internet Share Application has been completed and states the details of the applicant’s Internet Share Application, including the number of Public Issue Shares applied for which can be printed out by the applicant for his records.

Upon display of the Confirmation Screen, the applicant shall be deemed to have confirmed the truth of the statements set out in Section 16.4.5(c) of this Prospectus.

(v) The applicant must have sufficient funds in the applicant’s account with the Internet Participating Financial Institution or the Authorised Financial Institution at the time of making the Internet Share Application, to cover and pay for the Public Issue Shares and the related processing fees, charges and expenses, if any, to be incurred, failing which the Internet Share Application will not be deemed complete, notwithstanding the display of the Confirmation Screen. Any Internet Share Application which does not conform strictly to the instructions set out in this Prospectus or any instructions displayed on the screens of the Internet financial services website through which the Internet Share Application is made shall be rejected.

(vi) The applicant irrevocably agrees and undertakes to subscribe for and to accept the number of Public Issue Shares applied for as stated on the Confirmation Screen or any lesser number of Public Issue Shares that may be allotted to the applicant in respect of the Internet Share Application. In the event our Company decides to allot any lesser number of such Public Issue Shares or not to allot any Public Issue Shares to the applicant, the applicant agrees to accept any such decision of our Company as final.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

In the course of completing the Internet Share Application on the website of the Internet Participating Financial Institution, the confirmation by the applicant of the number of Public Issue Shares applied for (by way of the applicant’s action of clicking the designated hyperlink on the relevant screen of the website) shall be deemed to signify and be treated as:­

- acceptance by the applicant of the number of Public Issue Shares that may be allotted or allocated to the applicant in the event the applicant’s Internet Share Application is successful or successful in part, as the case may be; and - the applicant’s agreement to be bound by the Memorandum and Articles of Association of our Company.

(vii) The applicant is fully aware that multiple of suspected multiple Internet Share Applications for the Public Issue Shares of our Company will be rejected. Our Company reserves the right to reject any Internet Share Application or accept any Internet Share Application in part only without assigning any reason therefor. Due consideration will be given to the desirability of allotting or allocating the Public Issue Shares to a reasonable number of applicants with a view of establishing a liquid and adequate market for the shares.

(viii) Where an Internet Share Application is unsuccessful or successful in part only, the Internet Participating Financial Institution will be informed of the unsuccessful or partially successful Internet Share Application. Where an Internet Share Application is unsuccessful, the Internet Participating Financial Institution will credit or arrange with the Authorised Financial Institution to credit the full amount of the application monies in Ringgit Malaysia (without interest or any share revenue or other benefit arising therefrom) into the applicant’s account with the Internet Participating Financial Institution or the Authorised Financial Institution within two (2) Market Days after receipt of written confirmation from the Issuing House.

The Issuing House shall inform the Internet Participating Financial Institution of unsuccessful or partially successful applications within two (2) Market Days from the balloting date.

Where the Internet Share Application is accepted in part only, the relevant Internet Participating Financial Institution will credit the balance of the application monies in Ringgit Malaysia (without interest or any share or revenue or other benefit arising therefrom) into the applicant’s account with the Internet Participating Financial Institution within two (2) Market Days after receipt of written confirmation from the Issuing House. A number of the applications will however be held in reserve to replace any successfully balloted applications that are subsequently rejected. In respect of such applications that are subsequently rejected, the application monies (without interest or any share of revenue or other benefit arising therefrom) will be refunded to applicants by the Issuing House by crediting into the applicant’s account with the Internet Participating Financial Institution within two (2) Market Days after receipt of written confirmation from the Issuing House.

For applications that are held in reserve and are subsequently unsuccessful (or only partly successful), the Internet Participating Financial Institution will credit the application monies (or any part thereof but without interest or any share of revenue or other benefit arising therefrom) into the applicant’s account within two (2) Market Days after receipt of confirmation from the Issuing House.

Except where the Issuing House is required to refund the application monies, it is the sole responsibility of the Internet Participating Financial Institution to ensure the timely refund of the application monies from unsuccessful or partially successful Internet Share Applications. Therefore, applicants are strongly advised to consult the Internet Participating Financial Institution through which the application was made in respect of the mode or procedure of enquiring on the status of an applicant’s Internet Share Application in order to determine the status or exact number of Public Issue Shares allotted, if any, before trading the Public Issue Shares on Bursa Securities.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(ix) Internet Share Applications will be closed at 5.00p.m on [•] 2012 or such other date(s) as our Board, Principal Adviser, Co-Adviser, Joint Global Coordinators and Joint Bookrunners may in their absolute discretion mutually decide. An Internet Share Application is deemed to be received only upon its completion that is when the Confirmation Screen is displayed on the Internet financial services website. Applicants are advised to print out and retain a copy of the Confirmation Screen for record purposes. Late Internet Share Applications will not be accepted.

(x) The applicant irrevocably agrees and acknowledges that the Internet Share Application is subject to risk of electrical, electronic, technical and computer-related faults and breakdowns, faults with computer software, problems occurring during data transmission, computer security threats such as viruses, hackers and crackers, fires, acts of God and other events beyond the control of the Internet Participating Financial Institution, the Authorised Financial Institution and our Company. If, in any such event, our Company, the Issuing House and/or the Internet Participating Financial Institution and/or the Authorised Financial Institution do not receive the applicant’s Internet Share Application and/or the payment therefor, or in the event that any data relating to the Internet Share Application or the tape or any other devices containing such data is lost, corrupted or destroyed or otherwise not accessible, whether wholly or partially and for any reason whatsoever, the applicant shall be deemed not to have made an Internet Share Application and the applicant shall have no claim whatsoever against our Company, the Issuing House or the Internet Participating Financial Institution and the Authorised Financial Institution in relation to the Public Issue Shares applied for or for any compensation, loss or damage whatsoever, as a consequence thereof or arising therefrom.

(xi) All particulars of the applicant in the records of the relevant Internet Participating Financial Institution at the time of the Internet Share Application shall be deemed to be true and correct, and our Company, the Internet Participating Financial Institutions, the Issuing House and all other persons who, are entitled or allowed under the law to such information or where the applicant expressly consent to the provision of such information shall be entitled to rely on the accuracy thereof.

The applicant shall ensure that the personal particulars of the applicant as recorded by both Bursa Depository and the Internet Participating Financial Institution are correct and identical, otherwise the applicant’s Internet Share Application is liable to be rejected. The notification letter on successful allotment will be sent to the applicant’s address last registered with Bursa Depository. It is the responsibility of the applicant to notify the Internet Participating Financial Institution and Bursa Depository of any changes in the applicant’s personal particulars that may occur from time to time.

(xii) By making and completing an Internet Share Application, the applicant is deemed to have agreed that:­

- in consideration of our Company making available the Internet Share Application facility to the applicant, through the Internet Participating Financial Institution acting as agents of our Company, the Internet Share Application is irrevocable; - the applicant has irrevocably requested and authorised our Company to register the Public Issue Shares allotted to the applicant for deposit into the applicant’s CDS account; - neither our Company nor the Internet Participating Financial Institution shall be liable for any delay, failure or inaccuracy in the recording, storage or transmission or delivery of data relating to the Internet Share Application to the Issuing House or Bursa Depository due to any breakdown or failure of transmission, delivery of communication facilities or due to any risk referred to in page (iii) of this Prospectus or to any cause beyond their control;

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

- the applicant shall hold the Internet Participating Financial Institution harmless from any damages, claims or losses whatsoever, as a consequence of or arising from any rejection of the applicant’s Internet Share Application by the Issuing House, us and/or the Internet Participating Financial Institution for reasons of multiple application, suspected multiple application, inaccurate and/or incomplete details provided by the applicant, or any other cause beyond the control of the Internet Participating Financial Institution; - the acceptance of the offer made by the applicant to subscribe for the Public Issue Shares for which the applicant’s Internet Share Application has been successfully completed shall be constituted by written notification in the form of the issue of a notice of allotment by or on behalf of our Company and not otherwise, notwithstanding the receipt of any payment by or on behalf of our Company; - in making the Internet Share Application, the applicant has relied solely on the information contained in this Prospectus. Our Company, the Joint Underwriters, the Principal Adviser and the Co-Adviser and any other person involved in the Public Issue shall not be liable for any information not contained in this Prospectus which may have been relied on by the applicant in making the Internet Share Application; and - the acceptance of an applicant’s Internet Share application by our Company and the contract resulting therefrom from the Public Issue shall be governed by and construed in accordance with the laws of Malaysia, and the applicant irrevocably submits to the jurisdiction of the courts of Malaysia.

(xiii) The following processing fee per Internet Share Application will be charged by the respective Internet Participating Financial Institution:­

- Affin Bank Berhad (www.affmOnline.com) - No fee will be charged for application by their account holders; - CIMB Investment Bank Berhad

16.5 AUTHORITY OF OUR DIRECTORS AND OUR ISSUING HOUSE

If you are successful in your application, our Directors reserve the right to require you to appear in person at the registered office of our Issuing House within fourteen (14) days from the date of the notice issued to you to ascertain your application is genuine and valid. Our Directors are not responsible for any loss or non-receipt of the said notice nor shall they be accountable for any expenses incurred or to be incurred by you for the purpose of complying with this provision.

Applicants will be selected in a manner to be determined by our Directors. Due consideration will be given to the desirability of allotting or allocating our IPO Shares to a reasonable number of applicants with a view to establishing an adequate market for our Shares.

Our Issuing House, on the authority of our Directors, reserves the right to:

(i) reject applications which do not conform to the instructions in this Prospectus or are illegible, incomplete or inaccurate;

(ii) reject or accept any application, in whole or in part, on a non-discriminatory basis without giving any reason; and

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

(iii) bank in all application monies from unsuccessful / partially successful applicants which would subsequently be refunded without interest by registered post.

16.6 OVER/UNDER-SUBSCRIPTION

In the event of an over-subscription, our Issuing House will conduct a ballot in a manner as approved by our Directors to determine acceptance of applications. In determining the manner of balloting, our Directors will consider the desirability of distributing our IPO Shares in a fair and equitable manner to a reasonable number of applicants for the purpose of broadening our shareholding base and establishing an adequate market in the trading of our Shares.

Pursuant to the Listing Requirements, we are required to have at least 25% of our enlarged issued and paid-up share capital to be held by a minimum number of 1,000 public shareholders holding not less than 100 Shares each upon our Listing and completion of this IPO. We expect to achieve this at the point of our Listing. However, in the event that the above requirement is not met, we may not be allowed to proceed with our Listing. In the event thereof, monies paid in respect of all applications will be returned without interest.

In the event of an under-subscription, subject to clawback and reallocation as set out in Section 3.2.3 of this Prospects, all the Public Issue Shares not applied for under the Retail Offering will be underwritten by our Managing Underwriter and Joint Underwriters.

Where your successfully balloted application made under White Application Form is subsequently rejected, the full amount of your application monies, will be refunded without interest to you within ten (10) Market Days from the date of the final ballot of application list to your address registered with the Bursa Depository.

Where your successfully balloted application under the Electronic Share Application or Internet Share Application is subsequently rejected, the full amount of your application monies will be refunded without interest to you by crediting into your account with the Participating Financial Institution or Internet Participating Financial Institution respectively.

16.7 UNSUCCESSFUL / PARTIALLY SUCCESSFUL APPLICANTS

If you are unsuccessful / partially successful in your application, we will return your application monies without interest in the following manner:

16.7.1 For applications by way of Application Form

(i) The application monies or the balance of it, as the case may be, will be returned to you via the self-addressed and stamped Official ‘A’ envelope you provided by ordinary post (for fully unsuccessful applications) or by registered post to your last address maintained with Bursa Depository (for partially successful applications) within ten (10) Market Days from the date of the final ballot.

(ii) If your application was rejected because you did not provide a CDS account number, your application monies will be sent to the address stated in the NRIC or ‘Resit Pengenalan Sementara (JPN KP 09)’ or any valid temporary identity document issued by the National Registration Department from time to time at your own risk.

(iii) Our Issuing House reserves the right to bank in all application monies from unsuccessful applicants. These monies will be refunded by registered post to your last address maintained with Bursa Depository or as per item (ii) above, as the case may be, at your own risk within ten (10) Market Days from the date of the final ballot.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

16.7.2 For applications by way of Electronic Share Application and Internet Share Application

(i) Our Issuing House shall inform the Participating Financial Institutions of the non-successful or partially successful applications within two (2) Market Days after the balloting date. The application monies or the balance of it will be credited into your account with the Participating Financial Institution without interest within two (2) Market Days after the receipt of confirmation from our Issuing House.

(ii) You may check your account on the fifth (5*) Market Day from the balloting date.

(iii) A number of applications will be reserved to replace any balloted applications which are rejected. The application monies relating to these applications which are subsequently rejected will be refunded without interest by our Issuing House by crediting into your account with the Participating Financial Institution/Internet Participating Financial Institution within two (2) Market Days after the confirmation from our Issuing House. For applications that are held in reserve and are subsequently unsuccessful (or only partly successful), the relevant Participating Financial Institution/Internet Participating Financial Institution will arrange for a refund of the application money (or part thereof) without interest by crediting into your account with the Participating Financial Institution within two (2) Market Days after the receipt of confirmation from our Issuing House.

16.8 SUCCESSFUL APPLICANTS

If you are successful in your application:

(i) our Shares allocated to you will be credited into your CDS account. We will not be issuing any share certificates to you.

(ii) a notice of allotment will be despatched to you at the address last maintained with Bursa Depository where you have an existing CDS account at your own risk prior to our Listing. This is your only acknowledgement of acceptance of your application.

16.9 CDS ACCOUNTS

. Pursuant to Section 29 of the Central Depositories Act, all dealings in our Shares, including our IPO Shares, will be by book entries through CDS accounts. No share certificates will be issued but notices of allotment or transfer shall be despatched.

You must have a CDS account when applying for our IPO Shares. If you do not presently have a CDS account, you should open a CDS account at an ADA prior to making an application for our IPO Shares.

In the case of an application by way of Application Form, you should state your CDS account number in the space provided on the Application Form and you shall be deemed to have authorised Bursa Depository to disclose information pertaining to your CDS account to our Issuing House or our Company.

In the case of an application by way of ESA, you shall furnish your CDS account number to the Participating Financial Institution by way of keying in your CDS account number if the instructions on the ATM screen require you to do so.

Failure to comply with these specific instructions or inaccuracy in the CDS account number, arising from use of invalid, third party or nominee accounts, may result in your application being rejected. If a successful applicant fails to state his/her CDS account number, our Issuing House, on the authority of our Directors, will reject the application. Our Issuing House, on the authority of our Directors, also reserves the right to reject any incomplete and/or inaccurate application. Applications may also be rejected if the applicants’ particulars provided in the Application Forms, or in the case of ESA, if the records of the Participating Financial Institutions at the time of making the ESA, differ from those in Bursa Depository’s records, such as the identity card number, name and nationality.

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont'd)

16.10 ENQUIRIES

You may contact our Issuing House if you have any queries on the White Application Form at 03-7841 8000 or 03-7841 8289. If you have any enquiry with regards to your ESA, you may refer to the relevant Participating Financial Institution.

You may check the status of your application by logging into our Issuing House's website at www.mih.com.my or by calling our Issuing House at 03-7841 8000 or 03-7841 8289 or your ADA at the telephone number as stated in Section 16.11 below between five (5) to ten (10) Market Days (during office hours only) after the balloting date.

THE REST OF THIS PA GE HAS BEEN INTENTIONALLY LEFT BLANK

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

16.11 LIST OF ADAS

The list of AD As and their respective addresses, telephone numbers and broker codes are as follows:

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

KUALA LUMPUR

A.A. ANTHONY SECURITIES SDN 078-004 CIMB INVESTMENT BANK BERHAD 065-001 BHD 9th Floor, Commerce Square N3, Plaza Damas Jalan Semantan, Damansara Heights 60, Jalan Sri Hartamas 1 50490 Kuala Lumpur Sri Hartamas Tel N o : 03-20849999 50480 Kuala Lumpur Tel No : 03-62011155

AFFIN INVESTMENT BANK'BERHAD 028-001 ECM LIBRA INVESTMENT BANK 052-009 Ground Mezzanine & 3rd Floor BERHAD Chulan Tower 1st Floor, Wisma Gentjng No. 3, Jalan Conlay Jalan Sultan Ismail 50450 Kuala Lumpur 50250 Kuala Lumpur Tel No : 03-21438668 Tel N o: 03-21781133

AFFIN INVESTMENT BANK BERHAD 028-005 ECM LIBRA INVESTMENT BANK 052-001 38A& 40A BERHAD Jalan Midah 1 Bangunan ECM Libra Taman Midah 8, Jalan Damansara Endah 56000 Cheras Damansara Heights Kuala Lumpur 50490 Kuala Lumpur Tel No : 03-91308803 Tel N o: 03-20891888

ALLIANCE INVESTMENT BANK 076-001 HONG LEONG INVESTMENT BANK 066-001 BERHAD BERHAD Level 17, Menara Multi-Purpose Level 8, Menara HLA Capital Square No. 3, Jalan Kia Peng No. 8, Jalan Munshi Abdullah 50450 Kuala Lumpur 50100 Kuala Lumpur Tel No : 03-21681168 Tel N o: 03- 26976333

AMINVESTMENT BANK BERHAD 086-001 HWANGDBS INVESTMENT BANK 068-009 15th Floor, Bangunan AmBank Group BERHAD 55, Jalan Raja Chulan 2nd Floor, Bangunan AHP 50200 Kuala Lumpur No. 2, Jalan Tun Mohd Fuad 3 Tel N o : 03-20782788 Taman Tun Dr. Ismail 60000 Kuala Lumpur Tel N o: 03-77106688

BIMB SECURITIES SDN BHD 024-001 HWANGDBS INVESTMENT BANK 068-014 32nd Floor, Menara Multi-Purpose BERHAD Capital Square 7th, 22nd, 23rd & 23A Floor No. 8, Jalan Munshi Abdullah Menara Keck Seng 50100 Kuala Lumpur 203 Jalan Bukit Bintang Tel No. :26918887 55100 Kuala Lumpur Tel N o: 03-27116888

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16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont'd)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

HWANGDBS INVESTMENT BANK 068-017 MAYBANK INVESTMENT BANK 098-001 BERHAD BERHAD No. 57-10 Level 10 5-13 Floor, MaybanLife Tower The Boulevard, Mid Valley City Dataran Maybank Lingkaran Syed Putra No. 1, Jalan Maarof 59000 Kuala Lumpur 59000 Kuala Lumpur Tel No : 03-22872273 Tel No : 03-22978888

INTER-PACIFIC SECURITIES SDN 054-001 MERCURY SECURITIES SDN BHD 093-002 BHD L-7-2, No. 2 West Wing, Level 13 Jalan Solaris Berjaya Times Square Solaris Mont Kiara No. 1, Jalan Imbi 50480 Kuala Lumpur 55100 Kuala Lumpur Tel No : 03-62037227 Tel N o: 03-21171888

INTER-PACIFIC SECURITIES SDN 054-003 MIDF AM AN AH INVESTMENT BANK 026-001 BHD BERHAD Ground Floor, 7-0-8 Jalan 3/I09F 11th & 12th Floor, Menara MIDF Danau Business Centre, Danau Desa 82, Jalan Raja Chulan 58100 Kuala Lumpur 50200 Kuala Lumpur Tel No : 03-79847796 Tel No : 03-21788888

INTER-PACIFIC SECURITIES SDN 054-005 MIMB INVESTMENT BANK BERHAD 061-001 BHD Level 18, Menara EON Bank Stesyen Minyak SHELL 288, Jalan Raja Laut Jalan 1/116B, Off Jalan Kuchai Lama 50350 Kuala Lumpur Kuchai Entrepreneur Park Tel No : 03-26928899 58200 Kuala Lumpur Tel No : 03-79818811

JUPITER SECURITIES SDN BHD 055-001 OSK INVESTMENT BANK BERHAD 056-001 7th -9lh Floor, Menara Olympia 20Ih Floor, Piaza OSK 8, Jalan Raja Chulan Jalan Ampang 50200 Kuala Lumpur 50450 Kuala Lumpur Tel No : 03-20341888 Tel N o: 03-23338333

KAF-SEAGROATT & CAMPBELL 053-001 OSK INVESTMENT BANK BERHAD 056-028 SECURITIES SDN BHD No. 62 & 64, Vista Magna 1 1th-14th Floor, Chulan Tower Jalan Prima, Metro Prima No. 3, Jalan Conlay 52100 Kuala Lumpur 50450 Kuala Lumpur Tel No : 03-62575869 Tel N o: 03-21688800

KENANGA INVESTMENT BANK 073-001 OSK INVESTMENT BANK BERHAD 056-054 BERHAD Ground Floor 8th Floor, Kenanga International No. M3-A-7 & M3-A-8 Jalan Sultan Ismaii Jalan Pandan Indah 4/3A 50250 Kuala Lumpur Pandan Indah Tel No : 03-21649080 55100 Kuaia Lumpur Tel N o : 03-42804798

M & A SECURITIES SDN BHD 057-002 OSK INVESTMENT BANK BERHAD 056-058 Level 1-2, No. 45 & 47 Ground, 1st, 2nd & 3rd Floor, No. 55, Zone J4 The Boulevard, Mid Valley City Jalan Radin Anum Lingkaran Syed Putra Bandar Baru Seri Petaling 59200 Kuala Lumpur 57000 Kuala Lumpur Tel N o: 03-22821820 Tel No : 03-90587222

521 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

PM SECURITIES SDN BHD 064-001 RHB INVESTMENT BANK BERHAD 087-001 Ground, Mezzanine, 1“ & 10* Floor Level 10, Tower One Menara PMI RHB Centre, Jalan Tun Razak No. 2, Jalan Changkat Ceylon 50400 Kuala Lumpur 50200 Kuala Lumpur Tel No : 03-92873888 Tel No : 03-21463000

PUBLIC INVESTMENT BANK 051-001 TA SECURITIES HOLDINGS BERHAD 058-003 BERHAD Floor 13, 15-18, 20, 23, 28-30, 34 & 35 27,h Floor, Public Bank Building Menara TA One No. 6, Jalan Sultan Sulaiman No. 22, Jalan P. Ramlee 50000 Kuala Lumpur 50250 Kuala Lumpur Tel N o: 03-20313011 Tel No : 03-20721277

SELANGOR DARUL EHSAN

AFFIN INVESTMENT BANK BERHAD 028-002 CIMB INVESTMENT BANK BERHAD 065-009 2nd, 3rd & 4th Floor Level G & Level 1 Wisma Amsteel Securities Tropicana City Office Tower . No. 1, Lintang Pekan Barn 3, Jalan SS20/27 Off Jalan Meru 47400 Petaling Jaya 41050 Klang Selangor Darul Ehsan Selangor Darul Ehsan Tel No : 03-77173388 Tel No : 03-33439999

AFFIN INVESTMENT BANK BERHAD 028-003 ECM LIBRA INVESTMENT BANK 052-015 Lot 229, 2nd Floor, The Curve BERHAD No. 6, Jalan PJU 7/3 35 (Ground & 1st Floor) Mutiara Damansara Jalan Tiara 3, Bandar Baru Klang 47800 Petaling Jaya 41150 Klang Selangor Darul Ehsan Selangor Darul Ehsan Tel No : 03-77298016 Tel No : 03-33488080

AFFIN INVESTMENT BANK BERHAD 028-006 ECM LIBRA INVESTMENT BANK 052-017 Is' Floor, 20-22 BERHAD Jalan 21/22, SEA Park Level 1 East Wing, Wisma Consplant 2 46300 Petaling Jaya No.7, Jalan SS16/1, Selangor Darul Ehsan 47500 Subang Jaya Tel No: 03-78776299 Selangor Darul Ehsan Tel No : 03-56212118

AFFIN INVESTMENT BANK BERHAD 028-007 HONG LEONG INVESTMENT BANK 066-002 No. 79-1 & 79-C BERHAD Jalan Batu Nilam 5 Level 10 Bandar Bukit Tinggi 1 First Avenue 41200 Klang Bandar Utama Selangor Darul Ehsan 47800 Petaling Jaya Tel No: 03-33221999 Selangor Darul Ehsan Tel N o : 03-77246888

AM IN VESTMENT BANK BERHAD 086-003 HWANGDBS INVESTMENT BANK 068-002 4th Floor, Plaza Damansara Utama BERHAD No. 2, Jalan SS21/60 16th, 18th-20th Floor, Plaza Masalam 47400 Petaling Jaya No. 2, Jalan Tengku Ampuan Zabedah Selangor Darul Ehsan E9/E Section 9 Tel No : 03-77106613 40100 Shah Alam Selangor Darul Ehsan Tel No : 03-55133288

522 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

HWANGDBS INVESTMENT BANK 068-010 KENANGA INVESTMENT BANK 073-016 BERHAD BERHAD East Wing & Centre Link Lot 240,2nd Floor, The Curve Floor 3 A, Wisraa Consplant 2 No. 6, Jalan PJU 7/3 No. 7, Jalan SS 16/1 Mutiara Damansara 47500 Subang Jaya 47800 Petaling Jaya Selangor Darul Ehsan Selangor Darul Ehsan Tel N o : 03-56356688 Tel N o : 03-77259095

JF APEX SECURITIES BERHAD 079-001 OSK INVESTMENT BANK BERHAD 056-011 6th Floor, Menara Apex 24, 24M, 24A, 26M, 28M, 28A & 30 Off Jalan Semenyih, Bukit Mewah Jalan SS 2/63 43000 Kajang 47300 Petaling Jaya Selangor Darul Ehsan Selangor Darul Ehsan Tel N o: 03-87361118 Tel N o : 03-78736366

JF APEX SECURITIES BERHAD 079-002 OSK INVESTMENT BANK BERHAD 056-045 15th & 16th Floor No. 37, Jalan Semenyih Menara Choy Fook On 43000 Kajang No. IB, Jalan Yong Shook Lin Selangor Darul Ehsan 46050 Petaling Jaya Tel N o : 03-87363378 Selangor Darul Ehsan Tei No : 03-76201118

KENANGA INVESTMENT BANK 073-005 OSK INVESTMENT BANK BERHAD 056-047 BERHAD Ground & 1st Floor Ground - Fifth Floor No. 15, Jalan Bandar Rawang 4 East Wing, Quattro West 48000 Rawang No. 4, Lorong Persiaran Barat Selangor Darul Ehsan 46200 Petaling Jaya Tel No : 03-60928916 Selangor Darul Ehsan Tel No: 03-78626200

KENANGA INVESTMENT BANK 073-006 OSK INVESTMENT BANK BERHAD 056-048 BERHAD Ground & Mezzanine Floor 1st Floor, Wisma UEP No. 87 & 89, Jalan Susur Pusat Pemiagaan USJ 10 Pusat Pemiagaan NBC Jalan USJ 10/1A Batu 1!/;, Jalan Meru 47620 Subang Jaya 41050 Klang Selangor Darul Ehsan Selangor Darul Ehsan Tel N o: 03-80241682 Tel N o: 03-33439180

KENANGA INVESTMENT BANK 073-007 OSK INVESTMENT BANK BERHAD 056-063 BERHAD 3rd Floor, 1A-D Room 7.02, Level 7, Menara ING Jalan USJ 10/1A Intan Millenium Square Pusat Pemiagaan USJ 10 No. 68, Jalan Batai Laut 4 47610 UEP Subang Jaya Taman Intan Selangor Darul Ehsan 41300 Klang Tel No : 03-80236518 Selangor Darul Ehsan Tel No : 03-30057550

523 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

OSK INVESTMENT BANK BERHAD 056-065 SJ SECURITIES SDN BHD 096-001 11-1, Jaian PJU 5/12 Ground Floor, Podium Block Dataran Sunway Wisma Synergy Kota Damansara Lot 72, Persiaran Jubli Perak 47810 Petaiing Jaya Section 22 Selangor Darul Ehsan 40200 Shah Alam Tel No : 03-6148 3361 Selangor Darul Ehsan Tel No : 03-51920202

OSK INVESTMENT BANK BERHAD 056-066 TA SECURITIES HOLDINGS BERHAD 058-005 Ground & 1st Floor No. 2-1, 2-2, 2-3 & 4-2 No. 13 Jalan Kenari 3 Jalan USJ 9/5T, Subang Business Centre Bandar Puchong Jaya 47620 UEP Subang Jaya 47100 Puchong Selangor Darul Ehsan Selangor Darul Ehsan Tel No : 03-80251880 Tel No : 03-80706899

PM SECURITIES SDN BHD 064-003 TA SECURITIES HOLDINGS BERHAD 058-007 No. 157 & 159, Jalan Kenari 23/A Damansara Utama Branch Bandar Puchong Jaya 2nd Floor Wisma TA 47100 Puchong 1A, Jalan SS20/1 Selangor Darul Ehsan 47400 Petaling Jaya Tel No : 03-80700773 Selangor Darul Ehsan Tel N o : 03-77295713

PM SECURITIES SDN BHD 064-007 No. 18 & 20, Jalan Tiara 2 Bandar Baru Klang 41150 Klang Selangor Darul Ehsan Tel No : 03-33415300

MELAKA

CIMB INVESTMENT BANK BERHAD 065-006 MALACCA SECURITIES SDN BHD 012-001 Ground, 1st & 2nd Floor No. 1, 3 & 5, Jalan PPM9 No. 191, Taman Melaka Raya Plaza Pandan Malim (Business Park) Off Jalan Parameswara Balai Panjang, P. O. Box. 248 75000 Melaka 75250 Melaka Tel No : 06-2898800 Tel No : 06-3371533

ECM LIBRA INVESTMENT BANK 052-008 MERCURY SECURITIES SDN BHD 093-003 BERHAD No. 81-B & 83-B, Jalan Merdeka 71A&B & 73A&B, Jalan Merdeka Taman Melaka Raya Taman Melaka Raya 75000 Melaka 75000 Melaka Tel No : 06-2921898 Tel No: 06-2881720

ECM LIBRA INVESTMENT BANK 052-016 OSK INVESTMENT BANK BERHAD 056-003 BERHAD 579, 580 & 581 22A & 22A-1 and 26 & 26-1 Taman Melaka Raya Jalan MP 1 75000 Melaka Taman Merdeka Permai Tel No : 06-2825211 75350 Batu Berendam Melaka Tel No : 06-3372550

524 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

PM SECURITIES SDN BHD 064-006 RHB INVESTMENT BANK BERHAD 087-002 No. 11 & 13, Jalan PM2 Lot 7-13 & 15,1st Floor Plaza Mahkota Tabung Haji Building 75000 Melaka Jalan Bandar Kaba Tel No : 06-2866008 75000 Melaka Tel No : 06-2833622

PERAK DARUL RIDZUAN

A.A. ANTHONY SECURITIES SDN 078-009 HWANGDBS INVESTMENT BANK 068-003 BHD BERHAD 29G, Jalan Intan 2 Ground, Level 1, 2 & 3 Bandar Baru 21, Jalan Stesen 36000 Teluk Intan 34000 Taiping Perak Darul Ridzuan Perak Darul Ridzuan Tel N o : 05-6232328 Tel No : 05-8066688

CIMB INVESTMENT BANK BERHAD 065-010 HWANGDBS INVESTMENT BANK 068-015 Ground, No. 8, 8A-C BERHAD Persiaran Greentown 4C Ground & 1st Floor Greentown Business Centre No. 22, Persiaran Greentown 1 30450 Ipoh Greentown Business Centre Perak Darul Ridzuan 30450 Ipoh Tel No : 05-2082688 Perak Darul Ridzuan Tel N o : 05-2559988

ECM LIBRA INVESTMENT BANK 052-002 M & A SECURITIES SDN BHD 057-001 BERHAD M & A Building No. 63 Persiaran Greenhill 52A, Jalan Sultan Idris Shah 30450 Ipoh 30000 Ipoh Perak Darul Ridzuan Perak Darul Ridzuan Tel N o: 05-2422828 Tel No : 05-2419800

ECM LIBRA INVESTMENT BANK 052-006 MAYBANK INVESTMENT BANK 098-002 BERHAD BERHAD No. 7B-I, Jalan Laman Intan B-G-04 (Ground Floor), Level 1 & 2 Bandar Baru Tetuk Intan 42 Persiaran Greentown 1 36000 Teluk Intan Pusat Dagangan Greentown Perak Darul Ridzuan 30450 Ipoh Tel No : 05-6222828 Perak Darul Ridzuan Tel No : 05-2453400

ECM LIBRA INVESTMENT BANK 052-014 OSK INVESTMENT BANK BERHAD 056-002 BERHAD 21-25, Jalan Seenivasagam Ground Floor Greentown No. 25 & 25A 30450 Ipoh Jalan Jaya2, Medan Jaya Perak Darul Ridzuan 32000 Sitiawan Tel N o: 05-2415100 Perak Darul Ridzuan Tel No : 05-6939828

525 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont'd)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

OSK INVESTMENT BANK BERHAD 056-014 OSK INVESTMENT BANK BERHAD 056-052 Ground & 1st Floor Ground Floor No. 17, Jalan Intan 2, Bandar Barn No. 2, Jalan Wawasan 4 36000 Teluk Intan Taman Wawasan Perak Darul Ridzuan 34200 Parit Buntar Tel N o : 05-6236498 Perak Darul Ridzuan Tel No : 05-7170888

OSK INVESTMENT BANK BERHAD 056-016 HONG LEONG INVESTMENT BANK 066-003 1st Floor, No. 23 & 25 BERHAD Jalan Lumut 51-53, Persiaran Greenbill 32000 Sitiawan 30450 Ipoh Perak Darul Ridzuan Perak Darul Ridzuan Tel No : 05-6921228 Tel No : 05-2530888

OSK INVESTMENT BANK BERHAD 056-034 TA SECURITIES HOLDINGS BERHAD 058-001 Ground Floor, No. 40,42 & 44 Ground, 1st & 2nd Floor Jalan Berek Plaza Teh Teng Seng 34000 Taiping No. 227, Jalan Raja Permaisuri Bainun Perak Darul Ridzuan 30250 Ipoh Tel No : 05-8088229 Perak Darul Ridzuan Tel No : 05-2531313

OSK INVESTMENT BANK BERHAD 056-044 72, Ground Floor Jalan Idris 31900 Kampar Perak Darul Ridzuan Tel No : 05-4651261

PULAU PINANG

A.A. ANTHONY SECURITIES SDN 078-002 AM IN VESTMENT BANK BERHAD 086-004 BHD Mezzanine Floor & Level 3 1st, 2nd & 3rd Floor, Bangunan Heng Guan No. 37, Jalan Sultan Ahmad Shah 171 Jalan Burmah 10050 Pulau Pinang 10050 Pulau Pinang Tel No : 04-2261818 Tel No : 04-2299318

A.A. ANTHONY SECURITIES SDN 078-003 AMINVESTMENT BANK BERHAD 087-007 BHD Level 3 No. 2, Jalan Pemiagaan 2 No. 15, Lebuh Pantai Pusat Pemiagaan Alma 10300 Pulau Pinang 14000 Bukit Mertajam Tel No: 04-2618688 Pulau Pinang Tel No : 04-5541388

ALLIANCE INVESTMENT BANK 076-015 CIMB INVESTMENT BANK BERHAD 065-003 BERHAD Ground Floor Suite 2.1 & Suite 2.4, Level 2 Suite 1.01, Menara Boustead Penang Wisma Great Eastern 39, Jalan Sultan Ahmad Shah No. 25, Leboh Light 10050 Pulau Pinang 10200 Pulau Pinang Tel No : 04-2385900 Tel No: 04-2611688

526 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

ECM LIBRA INVESTMENT BANK 052-010 M&A SECURITIES SDN BHD 057-005 BERHAD 332H-I & 332G-2 7th Floor, Menara Boustead Penang Harmony Square 39, Jalan Sultan Ahmad Shah Jalan Perak 10050 Pulau Pinang 11600 Georgetown Tel No : 04-2283355 Pulau Pinag Tel N o: 04-2817611

HWANGDBS INVESTMENT BANK 068-001 OSK INVESTMENT BANK BERHAD 056-004 BERHAD 64 & 64-D Level 2, 3,4, 7 & 8, Wisma Sri Pinang Tingkat Bawah - Tingkat 3 & Tingkat 5 • 60, Green Hall Tingkat 8 10200 Pulau Pinang Lebuh Bishop Tel No : 04-2636996 10200 Pulau Pinang Tel No : 04-2634222

HWANGDBS INVESTMENT BANK 068-006 OSK INVESTMENT BANK BERHAD 056-005 BERHAD Ground, 1st & 2nd Floor No. 2 & 4 No. 2677, Jalan Chain Ferry Jalan Perda Barat Taman Inderawasih Bandar Perda 13600 Prai 14000 Bukit Mertajam Pulau Pinang Pulau Pinang Tel No : 04-3900022 Tel No : 04-5372882

INTER-PACIFIC SECURITIES SDN 054-002 OSK INVESTMENT BANK BERHAD 056-015 BHD Ground & Upper Floor Ground, Mezzanine & 8th Floor No. 11 A, Jalan Keranji Bangunan Mayban Trust Off Jalan Padang Lallang No. 3, Penang Street 14000 Bukit Mertajam 10200 Pulau Pinang Pulau Pinang Tel No : 04-2690888 Tel N o : 04-5402888

KENANGA INVESTMENT BANK 073-013 OSK INVESTMENT BANK BERHAD 056-032 BERHAD 834 Jalan Besar, Sungai Bakap Lot 1.02, Level 1, Menara KWSP 14200 Sungai Jawi 38, Jalan Sultan Ahmad Shah Seberang Perai Selatan 10050 Pulau Pinang Pulau Pinang Tel No : 04-2106666 Tel No : 04-5831888

MERCURY SECURITIES SDN BHD 093-001 OSK INVESTMENT BANK BERHAD 056-042 Ground, 1st, 2nd & 3rd Floor Ground & 1st Floor Wisma UMNO No. 15-G-5, 15-G-6,15-1-5 & 15-1-6 Lorong Bagan Luar Dua Medan Kampung Relau {Bayan Point) 12000 Butterworth 11950 Pulau Pinang Pulau Pinang Tel No : 04-6404888 Tel No : 04-3322123

MERCURY SECURITIES SDN BHD 093-004 OSK INVESTMENT BANK BERHAD 056-064 2nd Floor, Standard Chartered Bank 4I-A, 41-B and 41-C Chambers Lintang Angsana 2 Lebuh Pantai Bandar Baru Air Itam 10300 Pulau Pinang 11500 Pulau Pinang Tel No : 04-2639118 Tel N o : 04-8352988

527 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

PM SECURITIES SDN BHD 064-004 Level 25, Menara BHL 51, Jalan Sultan Ahmad Shah 10050 Pulau Pinang Tel N o: 04-2273000

PERLIS1NDRA KAYANGAN

ALLIANCE INVESTMENT BANK 076-003 OSK INVESTMENT BANK BERHAD 056-061 BERHAD Ground & 1 st Floor 2nd Floor, Podium Block No. 39, Taman Suriani KWSP Building Persiaran Jubli Emas 01000 Kangar 01000 Kangar Perlis Indra Kayangan Perlis Indra Kayangan Tel N o: 04-9765200 Tel No : 04-9793888

KEDAH DARUL AMAN

A.A. ANTHONY SECURITIES SDN 078-007 OSK INVESTMENT BANK BERHAD 056-017 BHD No. 112, Jalan Pengkalan Lot 4, 5 & 5A Taman Pekan Baru Tingkat 1EMUM 55 08000 Sungai Petani No. 55, Jalan Gangsa Kedah Darul Aman Kawasan Perusahan Mergong 2 Tel N o: 04-4204888 Seberang Jalan Putra 05150 AlorSetar Kedah Darul Aman No Tel: 04-7322111

ALLIANCE INVESTMENT BANK 076-004 OSK INVESTMENT BANK BERHAD 056-019 BERHAD 35, Ground Floor 2nd Floor, Wisma PKNK Jalan Suria 1, Jalan Bayu Jalan Sultan Badlishah 09000 Kulim 05000 Alor Setar Kedah Darul Aman Kedah Darul Aman Tel No : 04-4964888 Tel No: 04-7317088

HWANGDBS INVESTMENT BANK 068-011 OSK INVESTMENT BANK BERHAD 056-021 BERHAD Ground & 1st Floor No. 70 A, B, C, Jalan Mawar 1 215-A & 215-B Taman Pekan Bara Medan Putra, Jalan Putra 08000 Sungai Petani 05150 Alor Setar Kedah Darul Aman Kedah Darul Aman Tel No : 04-4256666 Tel No : 04-7209888

NEGERI SEMBILAN DARUL KHUSUS

ECM LIBRA INVESTMENT BANK 052-013 HWANGDBS INVESTMENT BANK 068-007 BERHAD BERHAD 1C-1 & ID-1, First Floor Ground & 1st Floor Jalan Tunku Munawir 105,107 & 109, Jalan Yam Tuan 70000 Seremban 70000 Seremban Negeri Sembilan Negeri Sembilan Darul Khusus Tel N o: 06-7655998 Tel No : 06-7612288

528 Company No. 948454-K

A.A. ANTHONY SECURITIES SDN 078-006 AMINVESTMENT BANK BERHAD 086-006 BHD 18lh & 31st Floor, Selesa Tower No. 70, 70-01,70-02 Jalan Dato’ Abdullah Tahir Jalan Rosmerah 2/17 80300 Johor Bahru Taman Johor Jaya Johor Darul Takzim 81100 Johor Bahru Tel No : 07-3343855 Johor Darul Takzim Tel No : 07-3513218

AA. ANTHONY SECURITIES SDN 078-008 ECM LIBRA INVESTMENT BANK 052-004 BHD BERHAD No. 171 (Ground Floor) No. 57, 59 & 61, Jalan Ali Jalan Bestari 1/5 84000 Muar Taman Nusa Bestari Johor Darul Takzim 81300 Skudai Tel No : 06-9532222 Johor Darul Takzim Tel No : 07-5121633

529 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

ECM LIBRA INVESTMENT BANK 052-005 KENANGA INVESTMENT BANK 073-011 BERHAD BERHAD Ground Floor No. 4, Jalan Dataran 1 No. 234, Jalan Besar Taman Bandar Tangkak Taman Semberong Baru 84900 Tangkak 83700 YongPeng Johor Darul Takzim Johor Darul Takzim Tel No : 06-9782292 Tel No ; 07-4678885

HWANGDBS INVESTMENT BANK 068-004 KENANGA INVESTMENT BANK 073-017 BERHAD BERHAD Level 7, Johor Bahru City Square No. 24, 24A & 24B (Office Tower) Jalan Penjaja 3 106-108 Jalan Wong Ah Fook Kim Park Centre 80000 Johor Bahru 83000 Batu Pahat Johor Darul Takzim Johor Darul Takzim Tel No : 07-2222692 Tel No : 07-4326963

INTER-PACIFIC SECURITIES SDN 054-004 M&A SECURITIES SDN BHD 057-003 BHD Suite 5.3 A, Level 5 Menara Pelangi 95, Jalan Tun Abdul Razak Jalan Kuning, Taman Pelangi 80000 Johor Bahru 80400 Johor Bahru Johor Darul Takzim Johor Darul Takzim Tel N o: 07-2231211 Tel N o: 07-3381233

KENANGA INVESTMENT BANK 073-004 M&A SECURITIES SDN BHD 057-006 BERHAD 26, Jalan Indah 16/5 Level 2, Menara Pelangi Taman Bukit Indah Jalan Kuning, Taman Pelangi 81200 Johor Bahru 80400 Johor Bahru Johor Darul Takzim Johor Darul Takzim Tel No : 07 2366288 Tel No : 07-3333600

KENANGA INVESTMENT BANK 073-008 MERCURY SECURITIES SDN BHD 093-005 BERHAD Suite 17.1, Level 17, Menara Pelangi No. 31 Lorong Dato’ Ahmad No. 1, Jalan Kuning, Taman Pelangi Jalan Khalidi 80400 Johor Bahru 84000 Muar Johor Darul Takzim Johor Darul Takzim Tel No: 07-3316992 Tel N o: 06-9542711

KENANGA INVESTMENT BANK 073-009 MIMB INVESTMENT BANK BERHAD 061-002 BERHAD Suite 25.02, Level 25 Ground & Mezzanine Floor Johor Bahru City Square (Office Tower) No. 34 Jalan Genuang No. 106-108, Jalan Wong Ah Fook 85000 Segamat 80000 Johor Bahru Johor Darul Takzim Johor Darul Takzim Tel No : 07-9333515 Tel N o : 07-2227388

KENANGA INVESTMENT BANK 073-010 MIMB INVESTMENT BANK BERHAD 061-003 BERHAD 1st Floor, No. 9 No. 33 & 35 Jalan Kundang (Ground & 1 st Floor A&B) Taman Bukit Pasir Jalan Syed Abdul Hamid Sagaff 83000 Batu Pahat 86000 KJuang Johor Darul Takzim Johor Darul Takzim Tel No : 07-4313688 Tel N o: 07-7771161

530 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

OSK INVESTMENT BANK BERHAD 056-006 OSK INVESTMENT BANK BERHAD 056-035 6th Floor, Wisma Tiong-Hua Ground, Is1 & 2sd Floor 8, Jalan Keris, Taman Sri Tebrau No. 10, Jalan Anggerik 1 80050 Johor Bahru Taman Kulai Utama Johor Darul Takzim 81000 Kulai Tel No : 07-2788821 Johor Darul Takzim Tel N o : 07-6626288

OSK INVESTMENT BANK BERHAD 056-009 OSK INVESTMENT BANK BERHAD 056-038 53, 53-A & 53-B, Jalan Sultanah Ground, 1st & 2nd Floor 83000 Batu Pahat No. 343, Jalan Muar Johor Darul Takzim 84900 Tangkak Tel No : 07-4380288 Johor Darul Takzim Tel N o: 06-9787180

OSK INVESTMENT BANK BERHAD 056-025 OSK INVESTMENT BANK BERHAD 056-039 No. 33-1,1st & 2nd Floor 1st Floor, No. 2 & 4, Jalan Makmur Jalan Ali Taman Sri Aman 84000 Muar 85300 Labis Johor Daru! Takzim Johor Darul Takzim Tel No : 06-9538262 Tel N o : 07-9256881

OSK INVESTMENT BANK BERHAD 056-029 OSK INVESTMENT BANK BERHAD 056-043 Ground & 1st Floor Ground, Is1 Floor & 2nd Floor No. 119 & 121 No. 21 & 23 Jalan Sutera Tanjung 8/2 Jalan Molek 1/30 Taman Sutera Utama Taman Molek 81300 Skudai 81100 Johor Bahru Johor Darul Takzim Johor Darul Takzim Tel No : 07-5577628 Tel N o : 07-3522293

OSK INVESTMENT BANK BERHAD 056-030 PM SECURITIES SDN BHD 064-005 Ground, 1 st & 2nd Floor No. 4 1, Jalan Molek 2/4 No. 3, Jalan Susur Utama 2/1 Taman Molek Taman Utama 81100 Johor Bahru 85000 Segamat Johor Darul Takzim Johor Darul Takzim Tel No : 07-3513232 Tel N o: 07-9321543

OSK INVESTMENT BANK BERHAD 056-031 PM SECURITIES SDN BHD 064-008 Ground, 1 st & 2nd Floor Ground & 1st Floor No. 17 Jalan Manggis No. 43 & 43A, Jalan Penjaja 3 86000 Kluang Taman Kim’s Park, Business Centre Johor Darul Takzim 83000 Batu Pahat Tel N o : 07-7769655 Johor Darul Takzim Tel No : 07-4333608

PAHANG DARUL MAKMUR

ALLIANCE INVESTMENT BANK 076-002 CIMB INVESTMENT BANK BERHAD 065-007 BERHAD Ground, Is1 & 2Bd A-397, A-399 & A-401 No. A-27 (Aras G, 1 & 2) Taman Sri Kuantan III, Jalan Beserah Jalan Dato’ Lim Hoe Lek 25300 Kuantan 25200 Kuantan Pahang Darul Makmur Pahang Darul Makmur Tel N o : 09-5660800 Tel No : 09-5057800

531 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

ECM LIBRA INVESTMENT BANK 052-007 OSK INVESTMENT BANK BERHAD 056-022 BERHAD Ground Floor, 98 Jalan Pasdec A I5, A17 & AI9, Ground Floor 28700 Bentong Lorong Tun Ismail 2 Pahang Darul Makmur Sri Dagangan 2 Tel No : 09-2234943 25000 Pahang Darul Makmur Tel No : 09-5171698

OSK INVESTMENT BANK BERHAD 056-007 OSK INVESTMENT BANK BERHAD 056-041 B2 & B34, Lorong Tun Ismail 8 Ground Floor Seri Dagangan II No. 76-A, Persiaran Camelia 4 25000 Kuantan Tanah Rata Pahang Darul Makmur 39000 Cameron Highlands Tel No : 09-5173811 Pahang Darul Makmur Tel No : 05-4914913

KELANTAN DARUL NAIM

OSK INVESTMENT BANK BERHAD 056-020 TA SECURITIES HOLDINGS BERHAD 058-004 Ground & Is1 Floor 298, Jalan Tok Hakim No. 3953-H, Jalan Kebun Sultan 15000 Kota Bharu 15350 Kota Bharu Kelantan Darul Naim Kelantan Darul Naim Tel No : 09-7432288 Tel No : 09-7430077

TERENGGANU DARUL IMAN

ALLIANCE INVESTMENT BANK 076-009 OSK INVESTMENT BANK BERHAD 056-027 BERHAD Ground & 1st Floor No. ID, Ground & Mezzanine 9651, Cukai Utama No. IE, Ground, Mezzanine Jalan Kubang Kurus 1st & 2nd Floor, Jalan Air Jemeh 24000 Kemaman 20300 Kuala Terengganu Terengganu Darul Iman Terengganu Darul Iman Tel No : 09-8502730 Tel N o: 09-6317922

FA SECURITIES SDN BHD 021 -001 OSK INVESTMENT BANK BERHAD 056-055 No. 51 &51A 31 A, Ground Floor Ground, Mezzanine & 1 st Floor 3IA & 31B , 1st Floor Jalan Tok Lam Jalan Sultan Ismail 20100 Kuala Terengganu 20200 Kuala Terengganu Terengganu Darul Iman Terengganu Darul Iman Tel No : 09-6238128 Tel No : 09-6261816

SARAWAK

AMINVESTMENT BANK BERHAD 086-005 CIMB INVESTMENT BANK BERHAD 065-004 No. 164, 166 & 168 Level 1, Wisma STA 1st, 2nd & 3rd Floor 26 Jalan Datuk Abang Abdul Rahim Jalan Abell 93450 Kuching 93100 Kuching Sarawak Sarawak Tel No : 082-358606 Tel N o : 082-244791

532 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

CIMB INVESTMENT BANK BERHAD 065-008 OSK INVESTMENT BANK BERHAD 056-012 No. 6A, Ground Floor Lot 1268,1st & 2nd Floor Jalan Bako, Off Brooke Drive Lot 1269, 2nd Floor 96000 Sibu Centre Point Commercial Centre Sarawak Jalan Melayu Tel N o : 084-367700 98000 Miri Sarawak Tel N o : 085-422788

HWANGDBS INVESTMENT BANK 068-005 OSK INVESTMENT BANK BERHAD 056-013 BERHAD 101 & 102, Pusat Pedada Ground Floor & 1st Floor Jalan Pedada No. 1, Jalan Pending 96000 Sibu 1st Floor, No. 3 Jalan Pending Sarawak 93450 Kuching Tel N o: 084-329100 Sarawak Tel N o: 082-341999

HWANGDBS INVESTMENT BANK 068-016 OSK INVESTMENT BANK BERHAD 056-050 BERHAD Ground Floor & 1st Floor No. 282, 1st Floor No. 10, Jalan Bersatu Park City Commercial Centre 96100 Sarikei Phase 4, Jalan Tun Ahmad Zaidi Sarawak 97000 Bintulu Tel No : 084-654100 Sarawak Tel No : 086-330008

KENANGA INVESTMENT BANK 073-002 OSK INVESTMENT BANK BERHAD 056-053 BERHAD Ground Floor & 1st Floor Lot 2465, Jalan Boulevard Utama No. 221, Parkcity Commerce Square Boulevard Commercial Centre Phase III, Jalan Tun Ahmad Zaidi 98000 Miri 97000 Bintulu Sarawak Sarawak Tel No : 085-435577 Tel N o: 086-311770

KENANGA INVESTMENT BANK 073-003 RHB INVESTMENT BANK BERHAD 087-003 BERHAD Yung Kong Abell Level 5, Wisma Mahmud Units No. 1-10,2nd Floor Jalan Sungai Sarawak Lot 365, Section 50, Jalan Abell 93100 Kuching 93100 Kuching Sarawak Sarawak Tel N o: 082-338000 Tel N o : 082-250888

KENANGA INVESTMENT BANK 073-012 TA SECURITIES HOLDINGS BERHAD 058-002 BERHAD 12G, H & I No. 11-12 (Ground & 1st Floor) Jalan Kampong Datu Lorong Kampung Datu 3 96000 Sibu 96000 Sibu Sarawak Sarawak Tel N o: 084-319998 Tel No : 084-313855

OSK INVESTMENT BANK BERHAD 056-008 TA SECURITIES HOLDINGS BERHAD 058-006 Lot 170 &171 2nd Floor, (Bahagian Hadapan) Section 49, K.T.L.D Bangunan Binamas, Lot 138 Jalan Chan Chin Ann Section 54, Jalan Pandung 93100 Kuching 93100 Kuching Sarawak Sarawak Tel No : 082-422252 Tel N o : 082-236333

533 Company No. 948454-K

16. PROCEDURES FOR APPLICATION AND ACCEPTANCE (Cont’d)

Name, Address and Telephone Number ADA Name, Address and Telephone Number ADA Code Code

SABAH

CIMB INVESTMENT BANK BERHAD 065-005 OSK INVESTMENT BANK BERHAD 056-010 1st & 2nd Floor 5!b Floor, Wisma BSN Sabah Central Building Jalan Kemajuan, Karamunsing No.28, Jalan Sagunting 88000 Kota Kinabalu 88000 Kota KinabaJu Sabah Sabah Tel N o : 088-269788 Tel No : 088-328878

ECM LIBRA INVESTMENT BANK 052-012 OSK INVESTMENT BANK BERHAD 056-057 BERHAD Ground Floor, Block 2 Aras 8, Wisma Great Eastern Lot 4 & Lot 5, Bandar Indah, Mile 4 68, Jalan Gaya North Road 88000 Kota Kinabalu 91000 Sandakan Sabah Sabah Tel No : 088-236188 Tel No : 089-229286

HWANGDBS INVESTMENT BANK 068-008 OSK INVESTMENT BANK BERHAD 056-067 BERHAD Lot 14-0, Ground Floor Suite 1-9-El, 9lh Floor, CPS Tower Lorong Lintas Plaza 2 Centre Point Sabah Lintas Plaza, Off Jalan Lintas No. 1, Jalan Centre Point 88300 Kota Kinabalu 88000 Kota Kinabalu Sabah Sabah Tel N o: 088-258618 Tel N o: 088-311688

INNOSABAH SECURITIES BERHAD 020-001 11, Equity House, Block K Sadong Jaya, Karamunsing 88100 Kota Kinabalu Sabah ’ Tel No : 088-234090

THE REST OF THIS PA GE HAS BEEN INTENTIONALLY LEFT BLANK

534 Company No. 948454-K

ANNEX LIRE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME

BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME OF

TUNE INS HOLDINGS BERHAD

1. DEFINITIONS

1.1 In these Bylaws, except where the context otherwise requires, the following expressions shall have the following meanings:

“Act” The Companies Act, 1965 as amended from time to time and any re-enactment thereof “Board” The Board of Directors of the Company “Bursa Depository” Bursa Malaysia Depository Sdn Bhd “Bursa Securities” Bursa Malaysia Securities Berhad “Bylaws” These Bylaws of the Scheme, as amended from time to time “Date of Acceptance” The date on which the ESOS Committee shall receive the written notice accepting an Offer from an Eligible Person “Date of Offer” The date inscribed on a particular Offer document on which an Offer is deemed to have been made by the ESOS Committee to an Eligible Person “Director(s)” A person who holds a directorship in a company in the TIH Group whether in an executive or non-executive capacity “Disciplinary Proceedings" Proceedings instituted by any company in the TIH Group against any Grantee or Eligible Person for any alleged misbehaviour, misconduct and/or any other acts of such Grantee or Eligible Person deemed to be unacceptable by the said company whether or not such disciplinary proceedings may give rise to a dismissal or termination of service of such Grantee or Eligible Person “Eligible Person” An Employee who is employed by and on the payroll of any company in the TIH Group, save for companies which are dormant, and/or a Director who fulfils the conditions of eligibility stipulated in Bylaw 4 '‘Employee” Any person in the employment of the Group including person employed by the Group on a contract basis

“ESOS” or “Scheme” Employees’ share option scheme for the grant of Options to Eligible Persons upon the terms as set out in these Bylaws

“ESOS Committee” The Board or a committee appointed by the Board pursuant to Bylaw 2 to administer the Scheme “Executive Directors)” A person who holds a directorship in a company in the TIH Group in an executive capacity

535 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

“Exercise Condition” A condition or conditions attaching to an Option in accordance with Bylaw 10.3 “Grantee” An Eligible Person to whom an Offer has been made and who has accepted an Offer (or any part thereof) in accordance with the terms of the Scheme “Listing Requirements” Main Market Listing Requirements of Bursa Securities as amended from time to time “M&A” Memorandum and Articles of Association of the Company, as amended from time to time “Market Day” A day on which Bursa Securities is open for trading of securities “Offer” An offer to take up options to subscribe for Shares made in writing by the ESOS Committee to any Eligible Person in the manner provided in Bylaw 6 “Offer Period” In respect of an Offer, the period during which such Offer remains valid as set out in Bylaw 6.4. “Option Period” In respect of an Option, the period during which such Option remains valid commencing from the Date of Acceptance of an Offer or any part thereof as set out in Bylaw 7 and until expiry of the Scheme as set out in Bylaw 21, subject always to any early termination in accordance with these Bylaws “Option(s)” The right of the Grantee to subscribe for such new TIH Shares pursuant to the contract constituted by acceptance in the manner set out in Bylaw 7 “TIH” or “Company” Tune Ins Holdings Berhad “TIH Group” or “Group” TIH and its subsidiaries which are not dormant companies “TIH Share(s)” or “Share(s)” Means ordinary shares of RM0.10 each in the capital of the Company (unless otherwise adjusted) “Principal Adviser” A person as described in paragraph 1.01 of the Listing Requirements “RM” and “sen” Ringgit Malaysia and sen respectively “Scheme Shares” Shares issued pursuant to the Scheme “Subscription Price” The price at which a Grantee shall be entitled to subscribe for each new TIH Share as determined in accordance with Bylaw 9

1.2 Any reference to a statutory provision shall include any subordinate legislation made from time to time under that provision and the Listing Requirements, policies and / or guidelines of Bursa Securities (whether or not having the force of law but, if not having the force of law, the compliance with which is in accordance with reasonable commercial practice of persons to whom such requirements, policies, regulations and / or guidelines are addressed by Bursa Securities);

1.3 Any reference to a statutory provision shall include that provision as from time to time modified or re­ enacted whether before or after the date of these By-Laws so far as such modification or re-enactment applies or is capable of applying to any Options offered and accepted within the duration of the Scheme, and shall also include any past statutory provision (as from time to time modified or re-enacted) which such provision has directly or indirectly replaced;

536 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

1.4 In these Bylaws, unless the context requires otherwise, words denoting the singular number shall include the plural number and words denoting one gender shall include the other gender.

1.5 The headings in these Bylaws are for convenience only and shall not be taken into account in the interpretation of these Bylaws.

1.6 If an event is to occur on a stipulated day which is not a Market Day, then the stipulated day will be taken to be the first Market Day after that day.

1.7 This Scheme shall be known as the “TIH Employees Share Option Scheme”.

1A. RATIONALE AND OBJECTIVES OF THE SCHEME

1A.1 The implementation of the Scheme primarily serves to align the interests of the Eligible Persons with an opportunity to have equity participation in the Company and help achieve the positive objectives as set out below:

(i) to recognise the contribution of the Eligible Persons whose services are valued and considered vital to the operations and continued growth of the TIH Group;

(ii) to motivate the Eligible Persons towards improved performance through greater productivity and loyalty;

(iii) to inculcate a greater sense of belonging and dedication as the Eligible Persons are given the opportunity to participate directly in the equity of the Company;

(iv) to retain the Eligible Persons, hence ensuring that the loss of key personnel is kept to a minimum level; and

(v) to reward the Eligible Persons by allowing them to participate in the profitability of the Group and eventually realise any capital gains arising from appreciation in the value of the Company’s shares.

1A.2 The Scheme is also extended to the non-executive Directors(s) of the Group, eligible for participation in the Scheme as set out in the By-Laws, as they discharge important functions and their services and contributions are valued by the Group.

2. ADMINISTRATION

2.1 The Scheme shall be administered by the ESOS Committee consisting of such number of person(s) as shall be appointed by the Board from time to time. The Board shall have the power to determine all matters pertaining to the ESOS Committee, including, without limitation, setting the terms of reference for the ESOS Committee, determining its composition, duties, powers and limitations. The Board is also entitled at any time and from time to time to rescind the appointment of any member of the ESOS Committee and appoint replacement members to the ESOS Committee, to change the terms of appointment of the members of the ESOS Committee and to determine and change the terms of reference for the ESOS Committee.

2.2 The ESOS Committee shall administer the Scheme in such manner as it shall in its discretion deem fit and with such powers and duties as are conferred upon it, subject only to these Bylaws as may be amended from time to time. The ESOS Committee may meet together for the despatch of business, to adjourn or otherwise regulate its meetings as it thinks fit.

537 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

3. MAXIMUM NUMBER OF SHARES AVAILABLE UNDER THE SCHEME

3.1 At any point of time during the existence of the Scheme and subject to Bylaw 3.2, the aggregate number of Scheme Shares comprised in:

(a) Options exercised by all the Grantees;

(b) Options remaining exercisable by all the Grantees; and

(c) unexpired Offers pending acceptance by all the Eligible Persons;

(hereinafter referred to as “the Aggregate”) shall not exceed an amount equivalent to ten percent (10%) of the issued and paid-up ordinary share capital (excluding treasury shares) of the Company at any one time.

3.2 Notwithstanding the provision of Bylaw 3.1 and any other provision herein contained, in the event the Aggregate exceeds the aforesaid ten percent (10%) (excluding treasury shares) as a result of the Company purchasing its own Shares in accordance with the provisions of Section 67A of the Act or undertaking any other corporate proposal and reducing its issued and paid-up ordinary share capital, then all Offers and Options granted prior to the reduction of the issued and paid-up ordinary share capital of the Company shall remain valid and exercisable in accordance with the provisions of this Scheme as if that reduction had not occurred. However, in such a situation, the ESOS Committee shall not make any further Offers unless the total number of Scheme Shares falls below ten per cent (10%) of the issued and paid-up ordinary share capital (excluding treasury shares) of the Company.

3.3 The Company shall keep available sufficient unissued Shares in the authorised share capital of the Company to satisfy all outstanding Offers and Options throughout the duration of the Scheme.

4. ELIGIBILITY

4.1 Subject to the discretion of the ESOS Committee, any Employee or any Director of the Group shall be eligible to participate in the Scheme if, as at the Date of Offer, the Employee or Director:

(a) is a natural person and has attained the age of eighteen (18) years;

(b) in the case of an Employee (including Executive Directors), is employed by and on the payroll of the Group and whose employment has been confirmed in writing;

(c) in the case of a non-executive Director, is duly elected as a member of the board of directors of the companies within the Group and is entitled to Director’s fee;

(d) is not a participant of any other employees’ share option scheme implemented by any other company within the Group which is in force for the time being. A Director or Employee who has participated in the employees’ share option scheme currently in operation of one company and who moves to another company within the Group is not allowed to participate in the employees’ share option scheme currently in operation of such other company;

(e) falls within any other eligibility criteria that may be set by the ESOS Committee at any time and from time to time at its absolute discretion.

538 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

4.2 In addition to the foregoing, the specific allotment to be made to any person, who is a director, major shareholder or chief executive of TIH or a holding company of TIH or person connected with such director, major shareholder or chief executive (as defined in the Listing Requirements), shall also be approved by the shareholders of the Company in general meeting and is not prohibited or disallowed by the relevant authorities or law from participating in the Scheme.

4.3 No Director and senior management shall participate in the deliberation or discussion of their own allocation.

4.4 An Eligible Person who is being subjected to Disciplinary Proceedings as at the Date of Offer, may be made a conditional Offer upon such terms and conditions as the ESOS Committee shall deem appropriate in its discretion and subject to the provisions of Bylaw 10.9.

4.5 Eligibility under the Scheme does not confer on an Eligible Person a claim or right to participate in or any rights whatsoever under the Scheme and an Eligible Person does not acquire or have any rights over or in connection with Options or the Shares comprised therein unless an Offer has been made by the ESOS Committee to the Eligible Person and the Eligible Person has accepted the Offer in accordance with the terms of the Offer and the Scheme.

4.6 No Employee of a dormant company within the Group shall be eligible to participate in the ESOS.

4.7 Verification of allocation of Scheme Shares to Eligible Persons shall be carried out by the audit committee of the Company at the end of each financial year and a statement to the effect that the audit committee has conducted such verification will be disclosed in the annual report of the Company.

5. BASIS OF ALLOTMENT

5.1 Subject to any adjustment which may be made under Bylaw 14, the ESOS Committee shall be entitled in its discretion to determine the number of Shares to be comprised in an Offer made to an Eligible Person under the Scheme.

5.2 The actual entitlement of an Eligible Person shall be at the absolute discretion of the ESOS Committee, after taking into account such criteria as may be determined by the ESOS Committee in its sole discretion (subject always to the Bylaws and any applicable law). The allocation to a Director or Employee who, either singly or collectively, through persons connected to him (as defined in paragraph 1.01 of the Listing Requirements), holds 20% or more of the issued and paid-up share capital (excluding treasury shares) of the Company, shall not exceed 10% of the total number of shares to be issued under the ESOS.

5.3 An Eligible Person who is promoted during the tenure of the Scheme may be eligible for consideration of an additional offer of Shares for the category to which he has been promoted subject to the availability of Options. The decision in this regard shall be made by the ESOS Committee in its absolute discretion.

5.4 An Eligible Person who is demoted during the tenure of the Scheme may be eligible for consideration of an offer of Shares for the category to which he belonged prior to his demotion. The decision in this regard shall be made by the ESOS Committee in its absolute discretion.

5.5 A Director and/or Employee who during the tenure of the Scheme becomes an Eligible Person may be eligible for Shares (to be decided by the ESOS Committee in its absolute discretion) for the category to which he has been admitted.

539 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

5.6 The determination of eligibility and allocation are performed by the ESOS Committee at the point of granting of the Options, after taking into consideration the above factors and amongst others, the length of service, seniority and individual performance in the TIH Group. Thereafter, the Grantees are free to exercise the Options without further performance targets being achieved, subject to the terais and conditions of this ESOS Bylaws.

6. OFFER

6.1 The ESOS Committee may at its discretion at any time and from time to time as it shall deem fit during the duration of the Scheme make one or more Offers to any Eligible Person whom the ESOS Committee in its absolute discretion select, PROVIDED THAT such exercise of the Option shall not be less than one hundred (100) Shares and shall be in multiples of one hundred (100) Shares or shall be in multiples of Shares equivalent to the board lot of Bursa Securities applicable thereat.

6.2 Subject always to Bylaw 3.1, the ESOS Committee may make one or more Offers to each Eligible Person during the Option Period provided always that the total aggregate number of Shares to be so offered to each Eligible Person shall not exceed the maximum entitlement of that Eligible Person under Bylaw 5.2.

6.3 An Offer may be made upon such terms and conditions as the ESOS Committee may decide from time to time. An Offer or any part thereof shall automatically lapse and be null and void in the event the Eligible Person prior to the acceptance of such Offer: -

(a) ceases to be employed by the Group, or

(b) dies or becomes a bankrupt.

6.4 An Offer shall be valid for a period of thirty (30) days from the Date of Offer or such longer period as may be determined by the ESOS Committee at its sole and absolute discretion (“Offer Period”).

6.5 The ESOS Committee shall state the following particulars in the Offer:

(a) the criteria for the allocation of Options;

(b) the number of Shares under the Options that are being offered to the Eligible Person;

(c) the Option Period;

(d) the Subscription Price;

(e) the Offer Period; and

(f) any other information deemed necessary by the ESOS Committee.

6.6 In the event of an error on the part of the Company in stating any of the particulars referred to in 6.5 above, the following provisions shall apply:

(a) Within one (1) month after discovery of the error, the Company shall issue a supplementary offer, stating the correct particulars referred to in 6.5 above;

(b) In the event that the error relates to particulars other than the Subscription Price, the Subscription Price applicable in the supplemental offer shall remain as the Subscription Price as per the original Offer; and

540 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

(c) In the event that the error relates to the Subscription Price, the Subscription Price stated in the supplemental offer shall be the Subscription Price applicable and the supplemental offer shall take effect as if it were issued on the date of the original Offer, save and except with respect to any Option which has already been exercised as at the date of issue of the supplemental offer.

6.7 When an Offer is made pursuant to these Bylaws, the ESOS Committee shall ensure that the Company makes an announcement of the following to the Bursa Securities on the date of the Offer:-

(a) the date of Offer;

(b) the Subscription Price of Options offered, if any;

(c) the number of Options or Shares offered;

(d) the market price of its Shares on the date of the Offer;

(e) the number of Options or Shares to each Director (if any); and

(f) the vesting period of the Options or Shares offered (if any).

7. ACCEPTANCE OF OFFER

7.1 Unless otherwise specified in an Offer, an Offer must be accepted by the Eligible Person by way of a written notice of acceptance and in such manner and time as prescribed by the ESOS Committee, and accompanied by a payment to the Company of a sum of Ringgit Malaysia One (RMl.00) only as non- rei'undable consideration for the Option. The date of receipt by the ESOS Committee of such written notice shall constitute the Date of Acceptance.

7.2 The ESOS Committee shall within thirty (30) calendar days of the Date of Acceptance issue to the Grantee an option certificate in such form as may be determined by the ESOS Committee.

7.3 If the Offer is not accepted in the manner aforesaid, such Offer shall upon the expiry of the Offer Period automatically lapse and be null and void and of no further effect. The Shares comprised in those Options not taken up as a result of non-acceptance of Offers at the expiry of the Offer Period shall form part of the balance of the Scheme Shares available to be offered to other Eligible Persons or for future Offers.

7.4 The Company shall keep and maintain at its own expense a register of Grantees and shall enter therein the following information in respect of each Grantee:

(a) name;

(b) address;

(c) maximum entitlement of Shares under each Options granted;

(d) number of Options granted;

(e) number of Options exercised;

(f) the Date of Offer for each Option; and

(g) the Subscription Price for each Option.

541 Company No. 948454-K

ANNEXLRE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

8. NON-TRANSFERABILITY OF THE OPTION

An Option is personal to the Grantee and is exercisable only by the Grantee personally during his/her lifetime whilst he/she is in the employment of any company in the Group. An Option shall not be transferred, assigned, disposed of or subject to any encumbrances by the Grantee save and except in the event of the death of the Grantee as provided under Bylaw 18.4. Any such transfer, assignment, disposal or encumbrance shall result in the automatic cancellation of the Option rendering the Option void.

9. SUBSCRIPTION PRICE

9.1 The listing of the Company on the Main Market of Bursa Securities, the price at which the Grantee is entitled to subscribe for new Shares upon the exercise of any Option shall be the higher of:

(a) the weighted average market price of the Shares for the five (5) Market Days immediately preceding the Date of Offer, subject to a discount of not more than ten percent (10%) which the ESOS Committee may at its discretion decide to give; or

(b) the par value of the Shares; or

(c) such other price as may be determined by any change in law and/or regulations affecting the same whereupon the provisions in this Clause 8.1 shall be accordingly revised and amended but only in so far as such changes are mandatory and not voluntary.

9.2 The Subscription Price shall be stipulated in each Option Certificate.

10. EXERCISE OF OPTION

10.1 The Option granted to a Grantee under the Scheme is exercisable only by that Grantee during his employment with the Group or during his tenure as Director of the Group and within the Option Period subject to Bylaw 18 below.

10.2 An Option shall be valid only from the Date of Acceptance until the earliest of any of the following events:

(a) the expiry of the duration of the Scheme pursuant to Bylaw 21;

(b) any of the termination event stipulated in Bylaw 18; or

(c) upon liquidation of the Company.

10.3 The ESOS Committee may impose any condition or conditions on any Option which they grant preventing its exercise unless such condition has been complied with. If after the ESOS Committee has imposed an Exercise Condition, an event occur which cause the ESOS Committee to consider that it is no longer appropriate, they may at their absolute discretion, vary the Exercise Condition. Without prejudice to the generality of the foregoing, the ESOS Committee may impose an Exercise Condition that the Options granted herein shall only be exercised during specific periods in each month within the Option Period and in such proportions as shall be determined by the ESOS Committee (in its absolute discretion at any time and from time to time) and notified in writing to the Grantee.

10.4 An Option may be exercised in whole or in part PROVIDED THAT such exercise of the Option shall be in multiples of Shares equivalent to the board lot of Bursa Securities applicable thereat unless otherwise determined by the ESOS Committee. Subject to the foregoing, a partial exercise of an Option shall not preclude the Grantee from exercising his Option with respect to the balance of the Shares comprised in his Option subject to Bylaw 10.2.

542 Company No. 948454-K

ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

10.5 The Grantee shall notify the Company in writing of his intention to exercise the Option in such form as may be prescribed by the ESOS Committee. Every notice of exercise of an Option shall be accompanied by a remittance in Ringgit Malaysia in the form of a banker’s draft or cashier’s order drawn and payable in Malaysia or any other mode acceptable to the ESOS Committee for the full amount of the subscription monies in relation to the number of Shares in respect of which the Option is being exercised. A Grantee who exercises his Option shall provide the ESOS Committee with his or his authorised nominee (as the case may be) Central Depository System Account (“CDS Account”) number in the notice as referred to. Within eight (8) Market Days of the date of receipt of the abovementioned notice at the registered office of the Company together with the requisite payment or such other period as may be prescribed or allowed by Bursa Securities, the Company will issue and allot such new Shares, despatch to the Grantee a notice of allotment stating the number of Shares credited into the CDS Account and make an application for the quotation of the new Shares on the Bursa Securities, subject to the provisions of the M&A. No physical share certificate will be issued to the Grantee or his authorised nominee (as the case may be).

10.6 Any failure to comply with the procedures specified by the ESOS Committee or to provide information required by the Company or inaccuracy in the CDS Account number provided shall result in the notice of exercise of an Option being rejected at the discretion of the ESOS Committee. The ESOS Committee shall inform the Grantee of the rejection of the said notice of exercise within fourteen (14) Market Days from the date of rejection thereof whereupon the Grantee shall be deemed not to have exercised the Option.

10.7 The Company, the Board and the ESOS Committee shall not under any circumstances be held liable to any person for any cost, loss, expense, damage or liability whatsoever and howsoever arising in the event of any delay on the part of the Company in allotting and issuing the Shares or in procuring Bursa Securities to list and quote the Shares subscribed for by a Grantee or any delay in receipt or non-receipt by the Company of the notice of exercise of an Option or for any errors in any Offer.

10.8 Every Option shall be subject to the condition that no new Shares shall be issued pursuant to the exercise of an Option if such issue would be contrary to any law, enactment, rule and /or regulation of any legislative or non­ legislative body which may be in force during the Option Period or such period as may be extended.

10.9 Notwithstanding anything to the contrary herein contained in these Bylaws, the ESOS Committee shall have the right at its discretion by notice in writing to that effect, to suspend the rights of any Grantee who is being subjected to Disciplinary Proceedings to exercise his Option pending the outcome of such Disciplinary Proceedings. In addition to this right of suspension, the ESOS Committee may impose such terms and conditions as the ESOS Committee shall deem appropriate in its discretion, on the right of exercise of the Option having regard to the nature of the charges made or brought against such Grantee, PROVIDED ALWAYS that:

(a) in the event such Grantee is found not guilty of the charges which gave rise to such Disciplinary Proceedings, the ESOS Committee shall reinstate the rights of such Grantee to exercise his Option;

(b) in the event such Grantee is found guilty resulting in the dismissal or termination of service of such Grantee, the Option shall immediately lapse and be null and void and of no further force and effect upon pronouncement of the dismissal or termination of service of such Grantee; and

(c) in the event such Grantee is found guilty but no dismissal or termination of service is recommended, the ESOS Committee shall have the right to determine at its discretion whether or not the Grantee may continue to exercise his Option and if so, to impose such terms and conditions as it deems appropriate, on such exercise.

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ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

11. RIGHTS ATTACHING TO THE NEW SHARES

11.1 The new Shares to be allotted upon the exercise of an Option shall, upon issue and allotment, rank pari passu in all respects with the existing issued and paid-up ordinary shares in the capital of the Company, except that they will not rank for any dividend, rights, transfer, allotment or distribution declared, made or paid to shareholders which record date thereof precedes the date of allotment of the new Shares and will be subject to all the provisions of the M&A relating to transfer, transmission and otherwise. For the purpose hereof, the expression “record date” means the date as at the close of business on which names of shareholders appear on the Record of Depositors of the Company in order to participate in any dividend, rights, allotment or any distribution.

11.2 The Options shall not carry any right to vote at any general meeting of the Company.

12. LISTING AND QUOTATION OF NEW SHARES

The new Shares (if any) comprised in an Offer to the Grantee or his financier, as the case may be, will not be allotted, listed or quoted on the Bursa Securities until the Option is exercised in accordance with these Bylaws. The Company will apply to the Bursa Securities for listing of and quotation for such new Shares issued under the Scheme and will use its best endeavours to obtain permission for such listing and quotation.

13. RETENTION PERIOD

The new Shares to be allotted and issued to the Grantees (excluding non-executive Directors) pursuant to any exercise of the Options will not be subject to retention period or restriction of transfer save as specifically stated in the M&A. However, the Grantees are encouraged to hold the Shares.

Notwithstanding the above, a Grantee who is a non-executive Director must not sell, transfer or assign new Shares obtained through the exercise of the Options granted to him pursuant to the Scheme within one (1) year from the Date of Offer.

14. ALTERATION OF SHARE CAPITAL DURING THE OPTION PERIOD

14.1 In the event of any alteration in the capital structure of the Company during the Option Period, whether by way of rights issues, bonus issues or other capitalisation issues, subdivisions or consolidation of shares or capital reduction or any other variation of capital:

(a) the Subscription Price;

(b) the number of new TIH Shares which a Grantee shall be entitled to subscribe for upon the exercise of each Option (excluding Options already exercised); and/or

(c) the number of new TIH Shares and/or Subscription Price comprised in an Option which is open for acceptance (if such Option is subsequently accepted in accordance with terms of the Offer and the Scheme),

shall be adjusted in such manner as the external auditors or the Principal Adviser of the Company for the time being (acting as experts and not as arbitrators), upon reference to them by the ESOS Committee, confirm in writing to be in their opinion, fair and reasonable, PROVIDED ALWAYS THAT:

(a) in detennining a Grantee’s entitlement to subscribe for new Shares, any fractional entitlement will be disregarded;

(b) any adjustment to the Subscription Price shall be rounded up to the nearest one (1) sen;

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(c) no adjustment to the Subscription Price shall be made which would result in the new TIH Shares to be issued on the exercise of the Option being issued at a discount to par value, and if such an adjustment would but for this provision have so resulted, the Subscription Price payable shall be the par value of the new TIH Shares; and

(d) upon any adjustment being made pursuant to this Bylaw, the ESOS Committee shall within thirty (30) days of the effective date of the alteration in the capital structure of the Company notify the Grantee (or his legal or personal representatives where the Grantee is deceased) in writing informing him of the adjusted Subscription Price thereafter in effect and/or the revised number of new TIH Shares thereafter to be issued on the exercise of the Option and the event giving rise thereto.

Any adjustments to the Subscription Price and/or the number of new TIH Shares comprised in the Options so far as unexercised other than adjustments resulting from a bonus issue, must be confirmed in writing to be fair and reasonable by the external auditors or Principal Adviser of the Company.

Should there be other circumstances which give rise to a consideration for adjustments to the Subscription Price or the number of new TIH Shares in favour of all Grantees, but it is decided that no adjustments will be made, such decision must be made known to all the Grantees via a timely notice subject to compliance with the Listing Requirements.

14.2 In addition to Bylaw 14.1 and not in derogation thereof, the Subscription Price and the number of new Shares relating to the Options so far as unexercised shall from time to time be adjusted in accordance with the following relevant provisions in consultation with the external auditors or Principal Adviser:

(a) If and whenever a TIH Share by reason of any consolidation or subdivision or conversion shall have a different par value, the Subscription Price shall be adjusted by multiplying it by the revised par value and dividing the result by the former par value:

New Subscription Price S x Revised Par Value Former Par Value

Where S = Existing Subscription Price.

and the number of additional new Shares relating to the Options to be issued shall be calculated as follows:

Additional number of Shares T x Former Par Value Revised Par Value

Where T = Existing number of Shares relating to the Options so far as unexercised

Such adjustment will be effective from the close of business on the Market Day immediately following the date on which the consolidation or subdivision or conversion becomes effective (being the date when TIH Shares are traded on Bursa Securities at the new par value), or such period as may be prescribed by Bursa Securities.

(b) If and whenever the Company shall make any issue of new TIH Shares to ordinary shareholders credited as fully paid-up, by way of bonus issue or capitalisation issue (whether of a capital or income nature and including any share premium account and capital redemption reserve fund), the Subscription Price shall be adjusted by multiplying it by the following fraction:

A + B

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and the number of additional new Shares relating to the Options to be issued shall be calculated as follows:

Additional number of Shares Tx A + B -T _ A

Where

A The aggregate number of issued and fully paid-up TIH Shares immediately before such bonus issue or capitalisation issue;

B The aggregate number of new Shares to be issued pursuant to any allotment to ordinary shareholders credited as fully paid-up by way of bonus issue or capitalisation issue (whether of a capital or income nature and including any share premium account and capital redemption reserve fund); and

As T above

Such adjustment will be effective from the commencement of the Market Day immediately following the entitlement date for such issue.

(c) If and whenever the Company shall make:

(i) a Capital Distribution (as defined below) to ordinary shareholders whether on a reduction of capital or otherwise (but excluding any cancellation of capital which is lost or unrepresented by available assets); or

(ii) any offer or invitation to its ordinary shareholders whereunder they may acquire or subscribe for TIH Shares by way of rights; or

(iii) any offer or invitation to ordinary shareholders by way of rights whereunder they may acquire or subscribe for securities convertible into TIH Shares or securities with rights to acquire or subscribe for TIH Shares,

then and in respect of each such case, the Subscription Price shall be adjusted by multiplying it by the following fraction:

C-D

and in respect of each such case referred to in Bylaw 14.2(c)(ii) hereof, the number of additional new Shares relating to the Options to be issued shall be calculated as follows:

Additional number of Shares Tx -T C-D*

Where

C The current market price of each TIH Share on the Market Day immediately preceding the date on which the Capital Distribution or, as the case may be, the offer or invitation is publicly announced to Bursa Securities or (failing any such announcement) immediately preceding the date of the Capital Distribution or, as the case may be, of the offer or invitation;

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D = (i) In the case of an offer or invitation to acquire or subscribe for TIH Shares by way of rights under Bylaw I4.2(c)(ii) above or for securities convertible into TIH Shares or with rights to acquire or subscribe for TIH Shares under Bylaw 14.2(c)(iii) above, the value of rights attributable to one (1) TIH Share (as defined below); or

(ii) In the case of any other transaction falling within Bylaw 14.2(c) hereof, the fair market value as determined (with the concurrence of the auditor) by the external auditors or Principal Adviser of that portion of the Capital Distribution attributable to one (1) Share;

D* = The “value of the rights attributable to one (1) Share” (as defined below); and

T = As T above.

For the purpose hereof, “value of rights attributable to one (1) TIH Share” shall be calculated in accordance with the formula:

C - E F + 1

Where

C = As C above;

E = The subscription price for one (1) additional TIH Share or one (1) additional security convertible into TIH Shares or one (1) additional security with rights to acquire or subscribe for TIH Shares under the terms of such offer or invitation; and

F = The number of TIH Shares which it is necessary to hold in order to be offered or invited to acquire or subscribe for one (1) additional TIH Share or security convertible into TIH Shares or rights to acquire or subscribe for TIH Shares.

For the purpose of Bylaw 14.2(c) hereof, “Capital Distribution” shall (without prejudice to the generality of that expression) include distributions in cash or specie or by way of issue of TIH Shares (not falling under Bylaw 14.2(b) hereof) or other securities credited as folly or partly paid- up by way of bonus issue or capitalisation issue (whether of a capital or income nature and including any share premium account or capital redemption reserve fund).

Any dividend declared or provided for in the accounts of the Company for any period shall (whenever paid and howsoever described) be deemed to be a Capital Distribution unless it is paid out of the aggregate of the net profits attributable to the ordinary shareholders as shown in the audited consolidated financial statements of the Company.

Such adjustment will be effective from the commencement of the Market Day immediately following the entitlement date for such Capital Distribution or offer or invitation, as the case may be.

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(d) If and whenever the Company makes any allotment to its ordinary shareholders as provided in Bylaw 14.2(b) above and also makes any offer or invitation to its ordinary shareholders as provided in Bylaw 14.2(c)(ii) or (iii) above and the entitlement date for the purpose of the allotment is also the entitlement date for the purpose of the offer of invitation, the Subscription Price shall be adjusted by multiplying it by the following fraction:

(G x C) + (H x I) (G + H + B) x C

and where the Company makes any allotment to its ordinary shareholders as provided in Bylaw 14.2(b) above and also makes any offer or invitation to its ordinary shareholders as provided in Bylaw 14.2(c)(ii) above and the entitlement date for the purpose of the allotment is also the entitlement date for the purpose of the offer or invitation, the number of additional new Shares relating to the Options to be issued shall be calculated as follows:

Additional number of Shares fT x (G +H* + B) x C -T (G x C) + (H* x 1*)

Where

B As B above;

C As C above;

G The aggregate number of issued and fully paid-up TIH Shares on the entitlement date;

H The aggregate number of new TIH Shares under an offer or invitation to acquire or subscribe for TIH Shares by way of rights or under an offer or invitation by way of rights to acquire or subscribe for securities convertible into TIH Shares or securities with rights to acquire or subscribe for TIH Shares, as the case may be;

H* The aggregate number of new TIH Shares under an offer or invitation to acquire or subscribe for TIH Shares by way of rights;

The subscription price of one (1) additional TIH Share under the offer or invitation to acquire or subscribe for TIH Shares or the exercise price on conversion of such securities or exercise of such rights to acquire or subscribe for one (1) additional TIH Share, as the case may be;

The subscription price of one (1) additional TIH Share under the offer or invitation to acquire or subscribe for TIH Shares; and

As T above.

Such adjustment will be effective from the commencement of the Market Day immediately following the entitlement date for such issue.

(e) If and whenever the Company makes any offer or invitation to its ordinary shareholders to acquire or subscribe for TIH Shares as provided in Bylaw 14.2(c)(ii) above together with an offer or invitation to acquire or subscribe for securities convertible into or rights to acquire or subscribe for ordinary shares as provided in Bylaw 14.2(c)(iii) above, the Subscription Price shall be adjusted by multiplying it by the following fraction:

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ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

Where

B = As B above.

C = As C above;

G = As G above;

H = As H above;

H* = As H* above;

I = As I above;

p = As I* above;

J = As J above;

K = As K above; and

T = As T above.

Such adjustment will be effective from the commencement of the Market Day immediately following the entitlement date for such issue.

(g) If and whenever (otherwise than pursuant to a rights issue available to all ordinary shareholders and requiring an adjustment under Bylaw 14.2(c)(ii), (c)(iii). (d), (e) or (f) above), the Company shall issue either any new TIH Shares or any securities convertible into TIH Shares or any rights to acquire or subscribe for TIH Shares, and in any such case, the Total Effective Consideration per TIH Share (as defined below) is less than 90% of the average price of one (1) TIH Share as derived from the last dealt prices for one or more board lots of TIH Shares as quoted on Bursa Securities on the Market Day comprised in the period used as a basis upon which the issue price of such TIH Shares is determined (“Average Price for one (1) TIH Share”) or, as the case may be, the price at which the TIH Shares will be issued upon conversion of such securities or exercise of such rights is determined, the Subscription Price shall be adjusted by multiplying it by the following fraction:

L + M L + N

Where

L = The number ofTIH Shares in issue at the close of business on the Market Day immediately preceding the date on which relevant adjustment becomes effective;

M = The number ofTIH Shares which the Total Effective Consideration (as defined below) would have purchased at the Average Price of one (1) TIH Share (exclusive of expenses); and

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N = The aggregate number of TIH Shares so issued or, in the case of securities convertible into TEH Shares or rights to acquire or subscribe for TIH Shares, the maximum number (assuming no adjustment of such rights) of TIH Shares issuable upon full conversion of such securities or the exercise in full of such rights.

For the purpose of Bylaw 14.2(g), “Total Effective Consideration” shall be determined by the Board with the concurrence of the external auditors or Principal Adviser and shall be:

(i) in the case of the issue of new TIH Shares, the aggregate consideration receivable by the Company on payment in full for such TIH Shares; or

(ii) in the case of the issue by the Company of securities wholly or partly convertible into TIH Shares, the aggregate consideration receivable by the Company on payment in full for such securities or such part of the securities as is convertible together with the total amount receivable by the Company upon full conversion of such securities (if any); or

(iii) in the case of the issue by the Company of securities with rights to acquire or subscribe for TIH Shares, the aggregate consideration attributable to the issue of such rights together with the total amount receivable by the Company upon full exercise of such rights;

in each case without any deduction of any commission, discount or expenses paid, allowed or incurred in connection with the issue thereof, and the “Total Effective Consideration per TIH Share” shall be the Total Effective Consideration divided by the number of TIH Shares issued as aforesaid or, in the case of securities convertible into TIH Shares or securities with rights to acquire or subscribe for TIH Shares, by the maximum number of TIH Shares issuable on full conversion of such securities or on exercise in full of such rights.

Such adjustment will be effective (if appropriate, retroactively) from the close of business on Bursa Securities on the Market Day preceding the date on which the issue is announced, or (failing any such announcement) on the Market Day immediately preceding the date on which the Company determines the offer price of such TEH Shares for such issue. Such adjustment will be effective (if appropriate retroactively) from the commencement of the Market Day immediately following the completion of the above transaction. The adjustment pursuant to this Bylaw shall be made on the day immediately following the books closure date for the event giving rise to the adjustment.

14.3 The provisions of this Bylaw 14 shall not apply where the alteration in the capital structure of the Company arises from:

(a) the issue of securities as consideration for an acquisition of any other securities, assets or business;

(b) a special issue of new TIH Shares approved by the relevant governmental authorities;

(c) a private placement or restricted issue of new TIH Shares by the Company;

(d) an issue of new TIH Shares arising from the exercise of any conversion rights attached to securities convertible into new TIH Shares or upon exercise of any other rights to acquire or subscribe for new TIH Shares, including warrants (if any) issued by the Company;

(e) an issue of new TIH Shares upon the exercise of Options pursuant to the Scheme;

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(f) an issue of farther Options to Eligible Persons under these Bylaws; or

(g) a share buy-back arrangement by the Company pursuant to the Section 67A of the Act:

(i) if the number of TIH Shares in respect of the Options granted by TIH as at the date of designation of the TEH Shares so purchased as treasury shares or cancellation of such treasury shares is greater than ten per centum (10%) of the issued capital ofTIH after such designation or cancellation, the ESOS Committee shall not make any further Offers; and

(ii) if the number of TIH Shares in respect of the Options granted by TIH as at the date of designation of the TIH Shares so purchased as treasury shares or cancellation of such treasury shares is less than ten per centum (10%) of the issued capital ofTIH after such designation or cancellation, the ESOS Committee may make further Offers only until the total number of Shares comprised in the Options granted by TIH is equivalent to ten per centum (10%) of the issued capital ofTIH after such designation or cancellation..

14.4 Upon any adjustment being made, the ESOS Committee shall within thirty (30) days of the effective date of the alteration in capital structure of the Company notify the Grantee (or his legal or personal representatives where the Grantee is deceased) in writing to inform him of the adjusted Subscription Price thereafter in effect and/or the revised number of new TIH Shares thereafter to be issued on the exercise of the Option and the event giving rise thereto.

14.5 In the event of any alteration in the capital structure of the Company during the tenure of the Option Period for which the formula has not already been set out in this Bylaw 14, the Board shall have the discretion to decide and accordingly assess the practicality of complying with the requirement to cause such corresponding adjustment (if any) to be made to:

(a) the Subscription Price; and/ or

(b) the number of new TIH Shares comprised in the Option or any portion thereof which have not been exercised; and/or

(c) the number of new TIH Shares and/or Subscription Price comprised in an Offer which is open for acceptance (if such Offer is subsequently accepted in accordance with terms of the Offer and the Scheme); and/ or

(d) the formula for adjustment which shall be generally acceptable, in compliance with the Listing Requirements (if any), and not detrimental to the Grantee.

15. TAKEOVER

Notwithstanding Bylaw 10 hereof and subject to the provisions of any applicable laws, rules, regulations, guidelines and/or conditions issued by the relevant authorities, in the event of:

15.1 a takeover offer being made for the Company through a general offer to acquire the whole of the issued ordinary share capital of the Company (or such part thereof not at the time held by the person making the general offer (“Offeror”) or any persons acting in concert with the Offeror) a Grantee will be entitled within three (3) months of such a general offer being made, to exercise all or any part of his unexercised Options or until the expiry of the Option Period pursuant to Bylaw 21, whichever is earlier. The Board shall use their best endeavours to procure that such a general offer be extended to any new Shares that may be issued pursuant to the exercise of Options under this Bylaw; and

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15.2 the Offeror becoming entitled or bound to exercise the rights of compulsory acquisition of Shares under the provisions of the Capital Markets and Services Act 2007 or other relevant laws applicable at the material time and gives notice to the Company that it intends to exercise such right on a specific date, a Grantee wili be entitled to exercise all or any part of his unexercised Option from the date of service of the said notice to the Company until and inclusive of the date on which the right of compulsory acquisition is exercised.

In the foregoing circumstances, if the Grantee fails to exercise his/her Options or elects to exercise only in respect of a portion of such Options, then any Options to the extent unexercised by the expiry of the periods stipulated in the aforesaid circumstances shall automatically lapse and be null and void.

16. SCHEME OF ARRANGEMENT, AMALGAMATION, RECONSTRUCTION, ETC

Notwithstanding Bylaw 10 but subject to the discretion of the ESOS Committee, in the event of the court sanctioning a compromise or arrangement between the Company and its members proposed for the purposes of, or in connection with, a scheme of arrangement and reconstruction of the Company under Section 176 of the Act or its amalgamation with any other company or companies under Section 178 of the Act, a Grantee may be entitled to exercise all or any part of his Option remaining unexercised at any time commencing from the date upon which the compromise or arrangement is sanctioned by the court and ending on the date immediately preceding upon which it becomes effective. Upon the aforesaid compromise or arrangement become effective, all or any part of an Option which remains unexercised shall automatically lapse and be null and void. In the event that the Company is not liquidated, all or part of an Option which remains unexercised shall remain in force until the expiry of the Option Period.

17. MODIFICATION / VARIATION TO THE SCHEME

17.1 The ESOS Committee may at any time and from time to time recommend to the Board any amendments and/or modifications to all or any of the provisions of the Scheme and these Bylaws and the power to amend and/or modify all or any of the provisions of the Scheme and these Bylaws shall rest with the Board PROVIDED THAT no amendment shall alter adversely the rights attaching to any Options granted prior to such amendment, nor alter such rights to the advantage of any Grantee without the prior approval of the shareholders of the Company. The Company is required to submit to Bursa Securities a confirmation letter that the amendment or modification does not contravene any of the provisions of the Listing Requirements on employees’ share option scheme and the rules issued by Bursa Depository no later than five (5) Market Days after the effective date of the said amendment or modification is made.

17.2 No such addition or amendment, modification and/or deletion of these By-Laws shall be made which will: (a) prejudice any rights then accrued to any Grantee without the prior consent or sanction of the majority of the Grantees at a meeting called for such purpose. The quorum for such meetings of Grantees shall be two (2); and

(b) prejudice any rights of the shareholders of the Company without the prior approval of the Company's shareholders in a general meeting.

18. TERMINATION OF OPTIONS

18.1 Unless otherwise determined by the ESOS Committee in its absolute discretion, upon the cessation of employment of a Grantee with the Group or the cessation of the directorship of a Grantee who is a Director for whatever reason prior to the exercise of the Option or any part thereof, such unexercised Option shall forthwith cease and the balance of any unexercised Option may be offered to other Eligible Persons.

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18.2 Should the following circumstances occur:

(a) retirement on attaining the retirement age under the Group's retirement policy; or

(b) retirement before attaining the normal retirement age but with the consent of the ESOS Committee;

a Grantee shall not be eligible to any new Offer but shall be entitled only to exercise any Option which has not been exercised during the Option Period up to and including the last day of employment (or such extended period as the ESOS Committee may allow).

18.3 Upon the bankruptcy of a Grantee, any and all unexercised portion of the Option shall immediately become null and void and have no further effect as if the same had never been granted in the first place. 18.4 In the event a Grantee dies before the expiry of the Option Period and at the date of his death held an Option unexercised in whole or in part, his legal or personal representatives may exercise his entire unexercised Option within six (6) calendar months from the date of his death or such extended period as the ESOS Committee may allow failing which such unexercised Option shall immediately become null and void and of no further force and effect,

18.5 Save for the amendments and/or changes to the relevant statutes, guidelines and/or regulations currently in force, the Scheme may be terminated by the Company at any time during the duration of the Scheme provided the Company announces to Bursa Securities:

(a) the effective date of termination;

(b) the number of Options exercised or Shares vested; and

(c) the reasons for termination.

18.6 Notwithstanding Bylaw 18.1 above, the ESOS Committee may at its discretion allow an Option to remain exercisable on such terms and conditions as it shall deem fit if the cessation of appointment or employment, as the case may be, occurs as a result of:

(a) redundancy;

(b) ill-health, injury, physical or mental disability; or

(c) any other circumstances which are acceptable to the ESOS Committee;

18.7 Any Option which the ESOS Committee permits to be exercisable pursuant to Bylaws 18.2 and 18.6, to the extent unexercised by the Grantee (or his legal representatives) as at the cessation of the Option Period or such extended period as may be permitted by the ESOS Committee in accordance with the relevant Bylaws, shall automatically lapse thereafter.

19. DIVESTMENT FROM THE GROUP

If a Grantee who was in the employment of a corporation in the Group which was subsequently divested, then such Grantee shall:

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(a) notwithstanding such divestment or any of the provisions of any Bylaw herein at the discretion and approval of the ESOS Committee, be entitled to continue to exercise all such unexercised Option which were granted to him under the Scheme within a period of six (6) calendar months from the date of such divestment (within the Option Period), failing which the right of such Grantee to subscribe for that number of the new Shares under his Option shall, together with the remainder of his Option, automatically lapse and be null and void and of no further force and effect; and

(b) not be eligible to participate for further Offers under the Scheme.

20. LIQUIDATION OF THE COMPANY

In the event of any proceedings of winding-up of the Company, all unexercised Options shall be suspended until the winding-up proceedings are withdrawn or resolved subsequent to which only any unexercised Options shall be allowed to be exercised, PROVIDED ALWAYS the exercising of the Options is within the Option Period or such extended period as the ESOS Committee may allow.

21. DURATION OF THE SCHEME

21.1 The effective date for the implementation of the Scheme shall be______.

21.2 Subject to Bylaw IB.5, the Scheme shall be in force for a period of ten (10) years commencing from the effective date for the implementation of the Scheme, which shall be the date of full compliance with all relevant requirements including the following:

(a) submission of the final copy of the Bylaws to Bursa Securities together with a letter of compliance pursuant to Paragraph 2.12 of the Listing Requirements and a checklist showing compliance with Appendix 6E of the Listing Requirements; (b) receipt of approval-in-principle from Bursa Securities for the listing of and quotation for the TIH Shares to be issued pursuant to the exercise of Options granted under the Scheme; (c) the approval of the shareholders of TIH for the ESOS being obtained; (d) receipt of the approval(s) of any other relevant authorities (where applicable); and (e) fulfilment or waiver (as the case may be) of all applicable conditions attached to the above approvals (if any)

22. SUBSEQUENT EMPLOYEES’ SHARE OPTION SCHEMES

The Company may implement more than one (1) employees’ share option scheme provided that the aggregate number of shares available under all the Scheme does not breach the limit stipulated in Bylaw 3 or upon termination of the Scheme pursuant to the provisions of Bylaw 18.5, subject to the approval of Bursa Securities, shareholders of the Company at a general meeting and any other relevant authorities/parties.

23. TAXES

All taxes (including income tax), if any, arising from the exercise of any Option under the Scheme shall be borne by the Grantee.

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24. COSTS AND EXPENSES

24.1 For the avoidance of doubt, all other costs, fees, levies and/or charges that are incurred by Grantee pursuant or relating to the exercise of any Option, and any holding or dealing of such TIH Shares (such as (but not limited to) brokerage commissions and stamp duty), shall be borne by that Grantee for his/her own account, and TIH shall not be liable for any one or more of such costs, fees, levies and/or charges.

24.2 Save for the taxes referred to in Bylaw 23 and the fees referred to in Bylaw 24.1, all fees, costs and expenses incurred by the Company in relation to the Scheme including but not limited to the fees, costs and expenses relating to the allotment and issue of the Scheme Shares by the Company pursuant to the exercise of any Option shall be borne by the Company.

25. DISCLAIMER OF LIABILITY

Notwithstanding any provisions contained herein and subject to the Act, the Board, the ESOS Committee and the Company and/or its agents, shall not under any circumstances be held liable for any cost, losses, expenses and damages whatsoever and howsoever arising in any event, including but not limited to the Company’s delay in allotting and issuing the Scheme Shares or in applying for or procuring the listing of the Scheme Shares on the Bursa Securities.

26. DISPUTES

Any dispute or difference of any nature arising hereunder shall be referred to the decision of the ESOS Committee. The said decision shall be final and binding on the parties unless the Eligible Person or Grantee, as the case may be, shall dispute the same by notice to the ESOS Committee within fourteen (14) days of the receipt of the decision of the ESOS Committee, in which case, such dispute or difference shall be referred to the decision of an approved company auditor as defined under Section 8 of the Act (acting as expert and not as arbitrator), whose decision shall be binding in all respects and whose costs shall be borne by the party against whom the decision is given on appeal.

27. COMPENSATION

27.1 The Scheme shall afford the Grantee no additional right to compensation or damages in the event of the cessation of his employment or appointment for any reason whatsoever.

27.2 Participation in this Scheme by an Eligible Person is a matter entirely separate from his terms and conditions of employment and participation in this Scheme shall in no respects whatever affect in any way a Grantee’s terms and conditions of employment. In particular (but without limiting the generality of the foregoing words) any Grantee who leaves employment shall not be entitled to any compensation for any loss of any right or benefit or prospective right or benefit under this Scheme which he might otherwise have enjoyed whether such compensation is claimed by way of damages for wrongful dismissal, dismissal without just cause or excuse, or other breach of contract or by way of compensation for loss of office or otherwise howsoever.

28. SCHEME NOT A TERM OF EMPLOYMENT

This Scheme does not form part nor shall it in any way be construed as part of the terms and conditions of employment of any Eligible Person.

29. INSPECTION OF THE AUDITED FINANCIAL STATEMENTS

All Grantees shall be entitled to inspect a copy of the latest audited financial statements of the Company which shall be made available at the registered office of the Company during normal office hours on any working day of the Company.

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ANNEXURE A - BYLAWS OF THE EMPLOYEES’ SHARE OPTION SCHEME (Cont’d)

30. NOTICE

30.1 Any notice which under the Scheme is required to be given to or served upon the ESOS Committee by an Eligible Person or Grantee or any correspondence to be made between an Eligible Person or Grantee and the ESOS Committee shall be given or served in writing and either delivered by hand or sent to the registered office of the Company by facsimile or ordinary letter. Proof of posting shall not be evidence of receipt of the letter.

30.2 Any notice under the Scheme required to be given to or served upon an Eligible Person or Grantee shall be deemed to be sufficiently given, served or made if it is given, served or made by hand, by electronic mail, by facsimile transmission and/or by letter sent via ordinary post addressed to the Eligible Person or Grantee at his/her place of employment, to his/her electronic mail address, at his/her last facsimile transmission number known to TIH, or to his/her last-known address. Any notice served by hand, by facsimile, by electronic mail or post as aforesaid shall be deemed to have been received at the time when such notice (if by hand) is received and acknowledged, (if by facsimile transmission) is transmitted with a confirm log print-out for the transmission indicating the date, time and transmission of all pages, (if by electronic mail) the dispatch of the electronic mail, (if any post) 3 days after postage.

30.3 Any notice served by a party after the Company’s official working hours shall be deemed tohave been served on the next working day.

31. MEMORANDUM AND ARTICLES OF ASSOCIATION

Notwithstanding the terms and conditions contained in this Scheme, if a situation of conflict should arise between this Scheme and the M&A, the provisions of the M&A shall prevail at all times.

32. GOVERNING LAW

The Scheme, the Bylaws, and all Offers and all Options made and granted and actions taken under the Scheme shall be governed by and construed in accordance with the Malaysian law.

33. SEVERABILITY

33.1 Any term, condition, stipulation or provision in these Bylaws which is illegal, void, prohibited or unenforceable shall be ineffective to the extent of such illegality, voidness, prohibition or unenforceability without invalidating the remaining provisions hereof, and any such illegality, voidness, prohibition or unenforceability shall not invalidate or render illegal, void or unenforceable any other term, condition, stipulation or provision herein contained.

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