ECONOMIC PROFIT AND LOSS STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2013

Economic profit or loss is an amount earned for a period by a business after deducting the operating expenses and a charge of opportunity cost of capital employed. The economic profit and loss statement set out in Table 1 is disclosed on a voluntary basis.

The assumptions used in computing the economic profit/loss are set out below:

(i) The cost of equity is calculated based on the following formula:

Cost of equity = (Beta x Market Risk Premium) + Risk Free Rate

(ii) The Beta used in the calculation is the 5 years adjusted Bloomberg Rate:

Quarterly Period Beta
4th Quarter 2013=1.414

2nd Quarter 2013=1.400

4th Quarter 2012=1.510

(iii)The risk free rate is the rate of return of a 10-year Malaysian Government Securities at the closing of the reporting period:

Risk Free Rate

At 31 December 2013=3.765%

At 30 June 2013=3.700%

At 31 December 2012=3.490%

(iv) The market risk premium is assumed at 5.64%, which represents the market return in excess of the return earned on risk free asset.