Contents :
AFFIN Holdings Berhad ("the Company") would like to announce its achievement of headline Key Performance Indicators ("KPIs") for the financial year ended 31 December 2006 and the revised KPIs for the financial year ending 31 December 2007. The KPIs achievement for financial year 2006 and the revised KPIs for financial year 2007 have been agreed by the Board and management of the Company as part of the broader KPI framework that the Company has in place, as prescribed under the GLC Transformation program, and is disclosed on a voluntary basis.
BACKGROUND INFORMATION
On 22 March 2006, the Company announced the following KPIs for financial years 2006 and 2007:-
Financial Year 2006 Headline KPIs
 |
Headline KPIs
|
2006
|
2005
Actual
|
|
1
|
After Tax Return on Equity (ROE) |
8.9%
|
8.0%
|
|
2
|
After Tax Return on Assets (ROA) |
0.9%
|
0.7%
|
|
3
|
Net NPL Ratio |
10.6%
|
14.2%
|
|
4
|
Earnings Per Share (EPS) |
25.0 sen
|
20.0 sen
|
Financial Year 2007 Headline KPIs
|
Headline KPIs
|
2007
|
|
1
|
After Tax Return on Equity (ROE) |
9.8%
|
|
2
|
After Tax Return on Assets (ROA) |
1.0%
|
|
3
|
Net NPL Ratio |
8.0%
|
|
4
|
Earnings Per Share (EPS) |
28.0 sen
|
The headline KPIs represent the main corporate targets set by the Company for the period and should not be constituted as being forecasts. In this respect please note the following; These headline KPIs are targets or aspirations set by the Company as a transparent performance management practice. These headlines shall not be construed as either forecasts, projections or estimates of the Company or representations of any future performance, occurrence or matter as the headlines are merely a set of targets/aspirations of future performance aligned to the Company's strategy. The KPIs have been developed based on the Group’s strategic plan and based on the assumption that there will be no significant changes in the prevailing economic and political conditions, present legislation and government regulations and on the assumption that the business of the Group will continue to grow as projected and the amount of non-performing loans, provision for loan loss and financing and recoveries will not vary significantly from the amount projected. HEADLINES KPIs ACHIEVED FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2006
|
Headline KPIs (2006)
|
Achieved
|
Announced
|
Variance
|
|
1
|
After Tax Return on Equity (ROE) |
6.8%
|
8.9%
|
- 2.1%
|
|
2
|
After Tax Return on Assets (ROA) |
0.7%
|
0.9%
|
- 0.2%
|
|
3
|
Net NPL Ratio |
12.1%
|
10.6%
|
- 1.5%
|
|
4
|
Earnings Per Share (EPS) |
18.5 sen
|
25.0 sen
|
- 6.5 sen
|
The KPIs achieved by the Group for the financial year ended 31 December 2006 were lower as compared to the announced KPIs mainly due to lower profits achieved by the main subsidiary of the Company, AFFIN Bank Berhad (ABB). ABB achieved an unaudited pretax profit of RM 272.3 million for the financial year ended 31 December 2006 as compared to the budgeted pre-tax profit of RM 354.6 million, a negative variance of 23.2 %. The lower profits achieved by AFFIN Bank was mainly attributed to adverse variance in loan loss provisions of RM 37.4 million, impairment loss on debt securities not budgeted for of RM 35.6 million and negative impact of RM 31.8 million due to change in NPL classification based on 3 months instead of 6 months in arrears. The lower reduction in Net NPL ratio was attributed to slower loan growth of 4.1 % during the financial year as compared to budgeted loan growth of 8.5%. REVISED HEADLINES KPIs FOR THE FINANCIAL YEAR ENDING 31 DECEMBER 2007
|
Headline KPIs (2007)
|
As announced on 22 Mar 2006
|
As revised
|
|
1
|
After Tax Return on Equity (ROE) |
9.8%
|
7.1%
|
|
2
|
After Tax Return on Assets (ROA) |
1.0%
|
0.7%
|
|
3
|
Net NPL Ratio |
8.0%
|
8.2%
|
|
4
|
Earnings Per Share (EPS) |
28.0 sen
|
19.0 sen
|
The KPIs are revised downwards mainly due to lower business growth budgeted in year 2007 in line with the prevailing market conditions and changes to key assumptions of the budget based on the latest financial position of the Group. The revised KPIs are based on year 2007 budget of the Group and based on the assumption that there will be no significant changes in the prevailing economic and political conditions, present legislation and government regulations and on the assumption that the business of the Group will continue to grow as budgeted and the amount of non-performing loans, provision for loan loss and financing and recoveries will not vary significantly from the amount budgeted. The Group is continuing its acquisition and rationalisation exercises to strengthen the Group to be in line with Bank Negara Malaysia (BNM)’s Financial Sector Master Plan guidelines and to enhance shareholders’ value. The sale and transfer of the discount house business of AFFIN Discount Berhad (ADB) to AFFIN Investment Bank Berhad (formerly known as AFFIN Merchant Bank Berhad)(AIBB) for the formation of AFFIN Investment Bank was completed on 1 July 2006. On the same date, AIBB had also completed the acquisition of AFFIN Fund Management Sdn Bhd from the company after all the requisite approvals for the acquisition had been obtained. On 14 December 2006, AIBB entered into a Business Transfer Agreement with AFFIN Securities Sdn Bhd (ASSB) to acquire certain assets and liabilities of the stockbroking business of ASSB for a cash purchase consideration of RM 103.5 million. The transfer of the stockbroking business of ASSB to AIBB was completed on 1 January 2007 and with the completion of the transfer, the Group had formed a full fledged Investment Bank in accordance to the guidelines on investment banks jointly issued by BNM and the Securities Commission. The Group has also obtained approval from BNM to commence negotiations with The Bank of East Asia, Limited relating to a possible acquisition of minority stake in the Company. The negotiations are on-going where there can be no certainty about the outcome, or that any agreement will be reached. No terms have yet been agreed for the proposed transaction. Any further development in the above matter will be announced to Bursa Malaysia Securities Berhad at the appropriate time.
