What corruption... still only a footnote30 Jul 2024 14:34
Tue 30 Jul 2024 14:12
RNS Number : 4395Y
Prudential PLC
30 July 2024
This announcement contains inside information.
Update on consolidation of Prudential's ownership interest in Prudential Assurance Malaysia Berhad ("PAMB").
Today Prudential plc ("Prudential") has provided an update on its ownership interest in PAMB, which is Prudential's conventional life insurance business in Malaysia and forms part of its Malaysian life insurance segment.
Prudential holds a 51 per cent stake in Sri Han Suria Sdn Bhd ("SHS"), the holding company of PAMB. Detik Ria Sdn Bhd ("Detik Ria") holds the other 49 per cent. There was an agreement between Prudential and Detik Ria which allowed Prudential to acquire from Detik Ria their 49 per cent shareholding in SHS under a put option arrangement. In 2008, the put option was exercised by Detik Ria for which it received payments for the shares over a 10 year period in accordance with the agreement. When Detik Ria failed to complete the share transfer in 2019, Prudential had to file a legal action against Detik Ria with the Kuala Lumpur High Court to enforce its rights. Subsequent decisions by the High Court and the Court of Appeal were both made in favour of Prudential in confirming the contractual rights of Prudential to increase its shareholding in SHS to 100 per cent. Following a further appeal made by Detik Ria, the Federal Court of Malaysia has today overturned the previous rulings of the High Court and the Court of Appeal.
Prudential currently holds a 51 per cent shareholding in SHS, and its economic interest in PAMB was consolidated at 100 per cent in its Annual Report and Accounts for the year ended 31 December 2023.
To reflect this Federal Court decision, Prudential will continue to consolidate the business of PAMB, which remains a subsidiary controlled by the Prudential Group, but will now reflect a 49% non-controlling interest in its group financial statements for the minority shareholding of Detik Ria. In line with the Prudential Group's policy, operating metrics will continue to be shown before the effect of minority interests.
The change in accounting treatment of Prudential's ownership interest in PAMB will be reflected in the Prudential Group's HY24 financial reporting. If it had been applied as at 31 December 2023, IFRS and EEV shareholders' equity would have been reduced by marginally less than 5% and marginally less than 4%, respectively.
The decision has no impact on the business of PAMB at an operational level. Ownership of and accounting for the Prudential Group's separate Malaysian takaful business is unaffected. The Court decision is related to a one-off shareholder dispute at an intermediate holding company level. Prudential is evaluating next steps.
We are surprised and deeply disappointed with the Federal Court decision given previous rulings in our favour by the High Court and the Court of Appeal.
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