KENANGA ANNUAL REPORT 2018

94 KENANGA INVESTMENT BANK BERHAD DIRECTORS’ REPORT KENANGA GROUP EMPLOYEES’ SHARE SCHEME (“ESS” OR “SCHEME”) The Kenanga Group ESS is governed by the by-laws approved by the shareholders of the Bank at an Extraordinary General Meeting held on 25 May 2017. The ESS was implemented on 21 September 2017. It is valid for a period of five (5) years from its commencement date, and may be extended for a further period of five (5) years and is administered by the ESS Committee. The aggregate maximum number of the Bank shares which may be made available under the Scheme shall not in aggregate exceed 10% of the issued share capital of the Bank (excluding treasury shares) at any point in time during the duration of the Scheme. Other principal features of the ESS are as follows: (i) The employees eligible to participate in the ESS must be at least eighteen (18) years of age on the Award date and are employed by, and are on the payroll of the Kenanga Group and are confirmed in service. The ESS applies to the Bank and its non-dormant subsidiary companies. (ii) The entitlement under the ESS for the Executive Directors is subject to the approval of the shareholders in a general meeting and is not prohibited or disallowed by the relevant authorities or laws from participation in the Scheme. The ESS encompasses two (2) primary schemes in the form of Employees’ Share Option Scheme (“ESOS”) and Employee Share Grant Plan (“ESGP”). The actual allocation of share options to senior management of the Group is 38.0% as at 31 December 2018. More details of the ESS are as disclosed in Note 55 to the financial statements. ISSUANCE OF SHARES During the financial year, the Bank increased its share capital from RM246,136,750 as at 31 December 2017 to RM246,248,530 as at 31 December 2018 via issuance of 194,400 new ordinary shares amounting to RM111,780 to eligible employees who exercised their options under the ESOS. BUSINESS REVIEW FOR 2018 The profit before tax (“PBT”) of the Group and the Bank for the financial year ended 31 December 2018 (“FYE18”) are RM28.9 million and RM38.6 million, compared to PBT of RM40.6 million and RM61.6 million respectively in the previous financial year (“FYE17”). The performance of the Group’s respective business segments are analysed below: STOCKBROKING Stockbroking division registered loss before tax (“LBT”) of RM13.5 million for FYE18 (FYE17: PBT of RM37.6 million) mainly due to lower brokerage income, trading and investment income as a result of the volatile stock market in 2018. In addition, there was higher provision for impairment on share margin financing.