pushing - petronas gas
TRANSCRIPT
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P E T R O N A S G A S B E R H A DI N T E G R A T E D R E P O R T 2 0 1 9
PETRONAS GAS BERHAD (PGB) continues to operate at world-class
standards befitting our role as a Leading Gas Infrastructure and
Centralised Utilities Company. With the liberalisation of the Malaysian
gas market, we foresee exciting new developments ahead for the
industry and we are accelerating momentum towards being a more
competitive solutions provider in this new era.
We will continue pushing forward in elevating our operational and
commercial efficiencies across our four core businesses as well as
achieving our growth aspirations. We will also continue our pursuit to
expand our customer base by targeting both existing and emerging
industrial hubs. With digitalisation, underpinned by our strong systems
and processes to maintain world-class standards, we are confident that
our strategies will continue to strengthen our presence and provide
a sustainable future for PGB.
We remain committed in delivering value to our stakeholders and meeting
the nation’s needs in a responsible manner.
PETGAS AR2019 IR COV FA_13032020.indd 6 14/03/2020 2:15 PM
PETRONAS GAS BERHAD (PGB) continues to operate at world-class
standards befitting our role as a Leading Gas Infrastructure and
Centralised Utilities Company. With the liberalisation of the Malaysian
gas market, we foresee exciting new developments ahead for the
industry and we are accelerating momentum towards being a more
competitive solutions provider in this new era.
We will continue pushing forward in elevating our operational and
commercial efficiencies across our four core businesses as well as
achieving our growth aspirations. We will also continue our pursuit to
expand our customer base by targeting both existing and emerging
industrial hubs. With digitalisation, underpinned by our strong systems
and processes to maintain world-class standards, we are confident that
our strategies will continue to strengthen our presence and provide
a sustainable future for PGB.
We remain committed in delivering value to our stakeholders and meeting
the nation’s needs in a responsible manner.
PETGAS AR2019 IR COV FA_13032020.indd 6 14/03/2020 2:15 PM
PETRONAS GAS BERHAD INTEGRATED REPORT
SCOPE AND BOUNDARY OF REPORTING
This report covers the primary activities of the Group, our business segments and our subsidiaries as well as joint venture operations, with the aim to address the information requirement of long term investors. We also present information relevant to the way we create value for other key stakeholders, including our employees, customers, government agencies and authorities, suppliers and communities.
This report covers the period from 1 January to 31 December 2019, unless otherwise stated.
At PETRONAS Gas Berhad (PGB), we advocate transparency to
stakeholders and we are honoured to present this report as the
primary source of information on our Group’s financial and non-
financial performance for 2019. It forms part of our reporting suite
which comprises:
REGULATIONS COMPLIED
• Bursa Malaysia Main Market Listing Requirements• Companies Act 2016 • Malaysian Code on Corporate Governance 2017• Corporate Governance (3rd Edition) issued by
Bursa Malaysia• Malaysian Financial Reporting Standards• International Financial Reporting Standards
INTEGRATED REPORT<IR>
GOVERNANCE& FINANCIALREPORT
SUSTAINABILITYREPORT
AboutThis Report
Our Integrated Report is the primary report to our stakeholders, showcasing our value creation proposition and delivery.
Our Governance and Financial Report provides our comprehensive approach towards protection of value in our activities, together with our financial performance of the year.
Our Sustainability Report details our efforts and commitment towards creating a sustainable business, positioned for long term success.
RATIONALE
PETRONAS Gas Berhad continues to operate at world-class standards befitting our role as a Leading Gas Infrastructure and Centralised Utilities Company. With the liberalisation of the Malaysian gas market, we foresee exciting new developments ahead for the industry and we are accelerating momentum towards being a more competitive solutions provider in this new era.
We will continue pushing forward in elevating our operational and commercial efficiencies across our four core businesses as well as achieving our growth aspirations. We will also continue our pursuit to expand our customer base by targeting both existing and emerging industrial hubs. With digitalisation, underpinned by our strong systems and processes to maintain world-class standards, we are confident that our strategies will continue to strengthen our presence and provide a sustainable future for PGB.
We remain committed in delivering value to our stakeholders and meeting the nation’s needs in a responsible manner.
Scan this QR code with your smart device to access our Integrated Report suite.
Integrated Reporting cross-referencing
1 Strategy
2 Performance
3 Business Review
4 Financials
5 Investor Relations
6 Corporate Governance
7 Sustainability
8 Operating Environment
9 Key Stakeholders
10 Material Matters
11 Risk Management
12 Our Value Creation
We create value through these six identified capitals:
Financial
Nature
Asset
Intellectual
Human Capital
Discussions that relate to our stakeholders have beenidentified and highlighted with the following icons:
Investors and Funding Institutions
Customers
Business Partners
Suppliers and Vendors
Employees and Unions
Government Agencies and Authorities
Communities
ANNUAL GENERAL MEETING FOR PETRONAS GAS BERHAD
The Majestic Hotel Kuala Lumpur
Thursday, 25 June 2020
10.00 a.m.37 th
SUSTAINABILITY
Consistent with our commitment to sustainability, we also provide extensive report on how we respond to stakeholders in relation to economic, environmental, social and governance aspects.
Social and Relationship
8 About PETRONAS Gas Berhad8 Who We Are10 What We Do12 Where We Operate
14 Our Group Business Activities and Processes
18 Our Key Milestones20 Our Group Corporate Structure21 Why Invest in Us
A. Forward Strategies52 Our Operating Environment 56 Stakeholders Engagement58 Material Matters60 Key Risks and Mitigation64 Strategic Blueprint66 Strategic Focus Areas and Key Performance Indicators68 Performance Scorecard
24 Chairman’s Statement28 Message from MD/CEO 34 Group Financial Review40 2019 Key Highlights
40 Business Highlights40 Financial Highlights41 Sustainability Highlights
OUR APPROACH TO INTEGRATED REPORTING
What’sInside THIS REPORT
44 Our Value Creating Business Model46 Key Resource Capitals:
Role and Scoreboard48 Stakeholder Value Creation
1
4
2 3OVERVIEW OF PGB
OUR VALUE PROPOSITION
KEY MESSAGES VALUE WE CREATE
B. Forward Driven Performance74 5-year Group Financial Analysis76 5-year Financial Summary78 5-year Group Financial Information79 Group Quarterly Performance80 Simplified Group Statement of
Financial Position82 Key Interest Bearing Assets and
Liabilities82 Statement of Value Added83 Distribution of Value Added84 Investor Relations87 Financial Calendar88 Share Price Performance
C. Forward Focused90 Business Review
90 Gas Processing92 Gas Transportation94 Regasification96 Utilities98 Ancillary Services
132 Enriching Lives Through Sustainable Practices
102 Board of Directors104 Board at a Glance106 Profile of the Board of Directors114 Leadership Team116 Profile of Leadership Team120 Organisation Structure
124 Value Creation Through Good Governance
140 Corporate Information141 Corporate Directory 142 Notice of Annual General Meeting 145 Administrative Details for the 37th AGM150 Glossary
• Proxy Form
Chairman’s Statement
2019 Key Highlights
Strategic Focus Areas & Key Performance Indicators
Stakeholder Value Creation
page 24
page 40
page 66
page 48
HIGHLIGHT:
7 8
5 6
TOWARDS A SUSTAINABLE FUTURE
OTHER INFORMATION
OUR LEADERSHIP
RESPONSIBLEGOVERNANCE
STATEMENT OF PURPOSE
INFLUENCING OUR INTEGRATED THINKING
EXTERNAL FACTORS
OUR BUSINESS APPROACH
A progressive energy and solutions partner enriching lives for a sustainable future
Operating Environment
Key external factors which include aspects of legal, commercial, social, environment and political context, that could affect PGB’s ability to create value in the short, medium and long term.
8 Read more on page 52.
Stakeholders Engagement
The outcome of our communications with key stakeholders, including how and to what extent we understand, take into account and respond to their legitimate needs and interests.
9 Read more on page 56.
Our Strategic Thrusts
• Operational Excellence• Commercial Excellence• Growth• People, Systems and Culture
1 Read more on page 64.
MATERIAL MATTERS IMPACTING THE GROUP
PROCESS
Identify
We conduct the necessary research to analyse our business context, considering our operating environment, the resources we rely on, as well as feedback from our stakeholders (internal and external) to assess matters that can be of financial, reputational, operational, environmental, social, strategic or legislative significance. Based on the matters identified, we discuss our risks and opportunities to each component accordingly.
Prioritise
Using the outcome of the aforementioned analysis as well as the key risks and opportunities identified, we prioritise those matters that are most material to our ability to create sustained value in the short, medium and long term.
Integrate
We integrate our material matters into our strategy, and track our performance against this strategy using clearly identified strategic focus areas and key performance indicators (KPIs) that are cascaded and monitored throughout the organisation.
Our Approach to Integrated Reporting
GOVERNANCE& SUSTAINABILITYAPPROACH
Our Ability to Create and Protect Value
Our governance approach promotes strategic decision-making that combines long term and short term outcomes to reconcile the interests of the Group and the society in our pursuit of sustainable value. Our governance framework supports the creation and protection of value in our activities which enables ethical and effective leadership, corporate citizenship and sustainable organisation.
Similarly, our sustainability approach reflects our concerted efforts to promote long term value creation.
Read more on Corporate Governance in our Governance & Financial Report
Read more on Sustainability in our Sustainability Report6 7
INTEGRATED REPORT 2019p.4
KEY PERFORMANCE INDICATORS
STRATEGY
We present the list of measurable values, both leading and lagging, used to gauge our effectiveness in achieving targets under identified strategic focus areas.
2 Read more on page 66.
OUR RESPONSEMATERIAL MATTERS IMPACTING THE GROUP
PROCESS
OUTCOME
OperationalReliability, Delivery
and Efficiency
Health, Safety, Security and
Environment (HSSE)
Business Growth
Gas Market Liberalisation
Human Capital
Compliance to Regulation
Sustainability
Gas Market Dynamics
We elaborate on PGB’s ‘R2 Game Plan: 301Q99 Pushing Foward’ as the response to address Material Matters, based on the Group’s strategic thrusts i.e. Operational Excellence, Commercial Excellence and Growth, underpinned by People, Systems and Culture.
1 Read more on page 64.
Read more on Material Matters on page 58.
Read more on our Key Risks and Mitigation on page 60.
10
11
Scorecard
We prepare periodic tracking of our progress against the agreed KPIs for performance assessment and corrective actions, if required.
2 Read more on page 68.
Business Review
We conduct detailed periodic analysis on respective businesses including operational highlights, challenges/risks and initiatives for performance assessment and corrective actions, if required.
3 Read more on page 90.
Financial Performance
We report financial-related performance metrics as well as capital market activities.
4 Read more on Financial Performance on page 74.
5 Read more on Investor Relations on page 84.
Key Resource Capitals
Our integration between capitals and processes, including the necessary trade-offs in order to create value over time for our stakeholders.
Read more on page 46.12
Read more on page 48.12
Stakeholder Value Creation
Our showcase of stakeholder engagement initiatives and the corresponding results, as way of value we offer to our stakeholders.
2 3 4 5 6p.51
PUSHING FORWARD ACCELERATING MOMENTUM
PGBOverview of
8 About PETRONAS Gas Berhad8 Who We Are10 What We Do12 Where We Operate
14 Our Group Business Activities and Processes18 Our Key Milestones20 Our Group Corporate Structure21 Why Invest in Us
1
OVERVIEW OF PGB INTEGRATED REPORT 2019p.8
STATEMENT OF PURPOSE
A progressiveenergy andsolutions partner enriching lives fora sustainablefuture
WHO WE ARE
We are Malaysia’s Leading Gas Infrastructure and Centralised Utilities Company and one of the largest companies on the local bourse in terms of market capitalisation, with core businesses in Gas Processing, Gas Transportation, Regasification and Utilities.
A Leading Gas Infrastructure and Utilities Company
• We are a Business Entity
• Gas Infrastructure and Utilities is our Core Business
• We Operate Safely, Reliably and Competitively
• We Optimise the Gas Value Chain to Maximise Returns for our Stakeholders
VISION
MISSION
LOYALTY
PROFESSIONALISM
COHESIVENESS
INTEGRITY
SHARED VALUES
About PETRONAS Gas Berhad
2 3 4 5 6p.91
PUSHING FORWARD ACCELERATING MOMENTUM
HOW WE CREATE SUSTAINABLE VALUE
HOW WE DIFFERENTIATE OURSELVES
PETRONAS CULTURAL BELIEFS
VISION AND MISSION
STRATEGIC OBJECTIVES
MATERIAL MATTERS
TARGETS, RESULTS & PRIORITISATIONS
STRATEGIC THRUSTS
GOVERNANCE
OUR INTEGRATED GAS INFRASTRUCTURE AND
UTILITIES FACILITIES
OUR OPERATIONAL EXCELLENCE & RELIABLE PRODUCT DELIVERY AT
COMPETITIVE COST
OUR PROFITABLE AND BALANCED BUSINESS
PORTFOLIO
OURHIGH-PERFORMING
PEOPLE
FOCUSED EXECUTION
OWN IT!
I plan, commit and deliver with discipline
I own the results and don’t blame others
RESULTS MATTERI stretch my limits to
deliver superior results
TELL ME
NURTURE TRUST
SHARED SUCCESS
I seek, give and act positively on feedback
I always keep my promise and build mutual trust
I collaborate for the greater good of PETRONAS
OVERVIEW OF PGB INTEGRATED REPORT 2019p.10
GAS PROCESSING
GAS TRANSPORTATION
UTILITIES
Process PETRONAS’ upstream natural gas from offshore
Peninsular Malaysia into salesgas, ethane, propane and
butane
Transport salesgas to shippers’ end-customers through Peninsular Gas Utilisation (PGU) pipeline network and Pengerang Gas Pipeline (PGP)
REGASIFICATION
Receive capacity users’ imported Liquefied Natural Gas (LNG), store it in LNG Regasification Terminal Sungai Udang’s (RGTSU) floating storage units and LNG Regasification Terminal Pengerang’s (RGTP) storage tanks and convert the LNG to salesgas
Produce, market and supply electricity, steam, industrial gases and other utility products to various petrochemical businesses and third parties in Kertih and Gebeng
BUSINESS UNITS AND HIGHLIGHTS
WHAT WE DO
About PETRONAS Gas Berhad
2 3 4 5 6p.111
PUSHING FORWARD ACCELERATING MOMENTUM
GROSS PROFIT
REVENUE
RM1.7
MILLION
BILLION
RM816.5 RM799.5
RM1.2REVENUE
RM611.0 RM160.1
RM1.2BILLION
GROSS PROFIT GROSS PROFIT
REVENUE
RM1.4
MILLION MILLION
BILLION
GROSS PROFIT
REVENUE
MILLION
BILLION
SABAHKimanis
SOUTH CHINA SEA
SARAWAK
GPS
UtilitiesKertih
SOUTH CHINA SEA
TERENGGANU
VRSBUtilities Gebeng
GPK
PAHANG
OF MELAKA
SELANGOR
MELAKA
JOHOR
SINGAPORE
NEGERISEMBILANSTRAITS
PULAUPINANG
PERAK
KEDAH
KELANTAN
PERLIS
OVERVIEW OF PGB INTEGRATED REPORT 2019p.12
About PETRONAS Gas Berhad
Headquartered at
PETRONAS Twin Towers,
Kuala Lumpur
Eight operating sites across
Malaysia
Two gas processing
complexes in Kertih and
Santong, Terengganu
Two utilities facilities in
Kertih, Terengganu and
Gebeng, Pahang
2,623 km of pipeline in
Peninsular Malaysia
Two LNG regasification
terminals in Sungai Udang,
Melaka and Pengerang,
Johor
Operations and
maintenance (O&M) service
provider
WHERE WE OPERATE
OUR PRESENCE
Industry
Compressor Station
Gas Processing Plant
Utilities Plant
Tenaga Nasional Berhad Power Station
Independent Power Producer Power Station
Kimanis Power Plant
Offshore LNG Regasification Terminal
Onshore LNG Regasification Terminal
Air Separation Unit
O&M Services
LEGENDS
MAIN PGU PIPELINE LENGTH GAS – IN
PGU I : Kertih – Teluk Kalong 32 km 1983
PGU II 714 km
Sector I : Teluk Kalong – Segamat 265 km 1991
Sector II : Segamat – Kapar 241 km 1991
Sector III : Segamat – Plentong 208 km 1991
PGU III 450 km
Sector I : Meru – Lumut 184 km 1996
Sector II : Lumut – Gurun 130 km 1996
Sector III : Gurun – Pauh 136 km 1996
Loop 1 : Kertih – Segamat 266 km 1999
Loop 2 : Segamat – Meru 228 km 2000
Total 1,690 km
OVERALL PIPELINE LENGTH (KM)
Main PGU 1,690
Lateral 458
Liquid 373
Sungai Udang 30
Pengerang 72
Total 2,623
SABAHKimanis
SOUTH CHINA SEA
SARAWAK
GPS
UtilitiesKertih
SOUTH CHINA SEA
TERENGGANU
VRSBUtilities Gebeng
GPK
PAHANG
OF MELAKA
SELANGOR
MELAKA
JOHOR
SINGAPORE
NEGERISEMBILANSTRAITS
PULAUPINANG
PERAK
KEDAH
KELANTAN
PERLIS
2 3 4 5 6p.131
PUSHING FORWARD ACCELERATING MOMENTUM
N
COMPLEX GPP CAPACITY (mmscfd)
Gas Processing Kertih (GPK)
1 310
2 250
3 250
4 250
Gas Processing Santong (GPS)5 500
6 500
Total 2,060
OPERATIONS & MAINTENANCE (O&M) SERVICES
1. Trans Thai-Malaysia (M) Sdn Bhd (TTM)2. Voltage Renewables Sdn Bhd (VRSB)
COMPLEX
PRODUCT CAPACITY
Electricity (MW)
Steam (t/h)
Oxygen(Nm3/h)
Nitrogen(Nm3/h)
Utilities Kertih (UK) 160 600 32,000 54,500
Utilities Gebeng (UG) 96 360 – 8,240
Total 256 960 32,000 62,740
LNG REGASIFICATION TERMINALCAPACITY(mmscfd)
Sungai Udang, Melaka 530
Pengerang, Johor 490
OVERVIEW OF PGB INTEGRATED REPORT 2019p.14
Our Group Business Activities and Processes
ACTIVITIES AND PROCESSESSOURCES
UPSTREAM
WATER AIR
FUEL GAS
LNG CARGOES
MALAYSIA - THAILAND
JOINT DEVELOPMENT
AREA
RE
GA
SIF
ICA
TIO
N
(RG
T)
GA
S T
RA
NS
PO
RT
AT
ION
(G
T)
UT
ILIT
IES
(U
T)
GA
S P
RO
CE
SS
ING
(G
P) Feedgas
LNG
Salesgas
Salesgas Chemical
Raw Water Air
Gas Transportation (GT)
RGTP
OnshorePipeline
OffshorePipeline
Gas Transportation (GT)
GPS
UK
UG
GPK
ASU
KIMANIS
RGTSU
Butane
Propane
Ethane
Salesgas
Steam
Industrial gases
Others
Industrial gases
Electricity
Salesgas
2 3 4 5 6p.151
PUSHING FORWARD ACCELERATING MOMENTUM
ACTIVITIES AND PROCESSES PETRONAS AND PGB CUSTOMERS GROWTH
Gas Transportation (GT)
Gas Transportation (GT)
Export Terminal
New Nitrogen
Generation Unit*
Ancillary Services:
– LNG Bunkering*
– Gassing Up Cooling Down (GUCD)
– LNG Reloading
– LNG Truck Loading*
*In progress
Legend
Resources
Products
Salesgas pipeline
Products pipeline
LNG pipeline
UT delivery to Customers
Electricity Transmission Grid
RAPID
Small industries
Small commercial
Residential
SESB
TNB
Domestic to Independent Power Producers (IPP)
Export to Senoko/Keppel
Petrochemical plants
Large industries
Export
Power Substation
Pengerang Gas Pipeline
Gas Transportation (GT)
Pip
elin
e n
etw
ork
mo
re t
han
2,5
00
km
acr
oss
Pen
insu
lar
Mal
aysi
a
Salesgas
Salesgas
Salesgas
OVERVIEW OF PGB INTEGRATED REPORT 2019p.16
Our Group Business Activities and Processes
FEEDGASFEED LIQUID
*Resources and products belong to customer
FEED PRE-TREATMENT UNIT
ACID GAS REMOVAL UNIT
DEHYDRATION &MERCURY REMOVAL UNIT
LOW TEMPERATURESEPARATION UNIT:
1. De-Methaniser Column
PRODUCT RECOVERY UNIT: 1. De-Ethaniser Column 2. De-Propaniser 3. De-Buthaniser Column
CONDENSATE STRIPPER
Carbon Dioxide
Remove
Moisture
Water & Chloride
Mercury
Hydrogen Sulphide
Liquid
Gas
Product
Contaminants
By-product
PGU PIPELINE
TERENGGANU CRUDE OIL TERMINAL
PETROCHEMICAL PLANTS
LARGE INDUSTRIES
STABILISEDCONDENSATE
SALESGAS
ETHANE
PROPANE
BUTANE
Salesgas from:
GAS PROCESSING PLANTS
LNG REGASIFICATIONTERMINALS
MALAYSIA-THAILANDJOINT DEVELOPMENT AREA
*Resources and products belong to customer
PIPELINE
COMPRESSOR STATION
METERING STATION
Tenaga Nasional Berhad
Gas Malaysia Berhad
Independant Power Producers (IPP)
Petrochemical Plants
Senoko/Keppel
Large Industries
POWER
NON-POWER
SERVICESRESOURCES* TRANSPORTATION SYSTEM
Salesgas Delivered to Customer
PRODUCTS*RESOURCES* GAS PROCESSING PLANT
2 3 4 5 6p.171
PUSHING FORWARD ACCELERATING MOMENTUM
PENGERANGINTEGRATED
COMPLEX
PGU PIPELINE
SALESGAS
(offshore) (onshore)
STORAGE UNIT
REGASIFICATION UNIT
RGTSU RGTP
LIQUIFIED NATURAL GAS
*Resources and products belong to customer
REGASIFICATION PLANTRESOURCES* SERVICES
WATER
AIR
FUEL GAS
Product
By-product
HHP : High High Pressure
HP : High Pressure
LP : Low Pressure
IP : Intermediate Pressure
NGU : Nitrogen Generation Unit
N2 : Nitrogen
O2 : Oxygen
Natural Gas
Treated Water
Ambient Air
Effluent Water
DEMIN PLANT
EFFLUENT WATER PLANT
COOLING WATER PLANT
AIR SEPARATION / NITROGEN GENERATION UNIT
COGENERATION PLANT
Electricity
Condensate water
Electricity / LP SteamIP Steam / HP Steam / HHP Steam
• Demineralised Water • Treated Water• Fire Water
• LP Nitrogen• HP Nitrogen• LP Oxygen
• Liquid Nitrogen• Liquid Oxygen• Liquid Argon
Waste Water
TNB
PETROCHEMICAL PLANTS
INDUSTRIES
INDUSTRIES
UTILITIES PLANT PRODUCTSRESOURCES*
OVERVIEW OF PGB INTEGRATED REPORT 2019p.18
Our Key Milestones
First salesgas delivery to Senoko Power Station in Singapore via submarine pipeline.
Commencement of operations of GPP2, GPP3 and GPP4.
19
87
-19
91
19
92
-19
94 Incorporation of
PETRONAS Gas Sdn Bhd (PGSB) as a wholly-owned subsidiary of Petroliam Nasional Berhad (PETRONAS) in 1983.
Commencement of operations of Peninsular Gas Utilisation (PGU) 1 and commissioning of Gas Processing Plant (GPP) 1.
Appointment of PGSB as a throughput and servicing agent to PETRONAS for PGU via Throughput Agreement.
Commencement of operations of PGU2.
Officiation of Segamat Gas Transmission Centre by the Prime Minister of Malaysia.
20
19
Execution of the 2nd term of GPA with PETRONAS.
Execution of Gas Transportation Agreement (GTA) for PGU, Terminal Use Agreement (TUA) for RGTSU and TUA for RGTP with PETRONAS Energy & Gas Trading Sdn Bhd (PEGT).
Successful delivery of maiden LNG third party cargo at RGTSU.
Introduction of new integrated ancillary services at RGTP.
Commencement of full commercial operation at ASU, Pengerang.
Commencement of operations at LNG Regasification Terminal Pengerang (RGTP).
Execution of a 20-year Operation and Maintenance (O&M) Agreement with PETRONAS Carigali Sdn Bhd for operation and maintenance of the Sabah-Sarawak Gas Pipeline (SSGP).
Regulation of the Group’s Gas Transportation and Regasification businesses by the Malaysian Government pursuant to the Gas Supply (Amendment) Act 2016.
Commencement of commercial operation at Train 1, Air Separation Unit (ASU), Pengerang.
20
17
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18
19
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-19
84
2 3 4 5 6p.191
PUSHING FORWARD ACCELERATING MOMENTUM
Execution of a 20-year Gas Processing and Gas Transmission Agreement (GPTA) between PGSB and PETRONAS.
Listing of PETRONAS Gas Berhad (PGB) on the main board of the Kuala Lumpur Stock Exchange (now known as Bursa Malaysia Securities Berhad).
Completion of PGU3.
Execution of the first Sale and Purchase Agreement with Centralised Utility Facilities (CUF).
Execution of Operation and Maintenance Services Agreement with Trans Thai-Malaysia (M) Sdn Bhd.
Ground breaking ceremony of Kimanis Power Plant project by Chief Minister of Sabah.
Commencement of operations of GPP5 and GPP6.
First delivery of electricity to customers from CUF Kertih and CUF Gebeng.
Secured RM1.4 billion worth of Islamic Financing from the domestic private debt securities to partly finance CUF project.
Completion of Plant Rejuvenation and Revamp Project for GPP2, GPP3 and GPP4.
Secured USD500 million Term Loan Facility from Mizuho Bank to fund capital projects.
Signing of Shareholders Agreement between PGB and Linde Malaysia Sdn Bhd for the development of Air Separation Unit (ASU) project in Pengerang, Johor.
20
15
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16
20
13
-20
14
20
10
-20
11
Commencement of operations at RGTSU.
Commencement of operations of Kimanis Power Plant.
Execution of new Gas Processing Agreement (GPA) and Gas Transportation Agreement (GTA) with PETRONAS for another 20 years.
Announcement of the development of Malaysia’s first liquefied natural gas (LNG) Regasification Terminal in Sungai Udang, Melaka (RGTSU) by Prime Minister of Malaysia.
Announcement of PGB Network Code to Bursa Malaysia.
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00
20
05
-20
09
19
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98
REGAS TERMINAL
(SG. UDANG) SDN BHD
100%PETRONAS GAS BERHAD
REGAS TERMINAL
(PENGERANG) SDN BHD
100%PETRONAS GAS BERHAD
REGAS TERMINAL
(LAHAD DATU) SDN BHD
100%PETRONAS GAS BERHAD
PENGERANG LNG (TWO)
SDN BHD
65%PETRONAS GAS BERHAD
25%DIALOG LNG SDN BHD
10%PERMODALAN DARUL TA’ZIM SDN BHD
GAS MALAYSIA
BERHAD
35.77%PUBLIC SHAREHOLDERS
30.93%MMC CORPORATION BERHAD
18.5%TOKYO GAS-MITSUI & CO HOLDINGS SDN BHD
14.8%PETRONAS GAS BERHAD
PETRONASGAS
BERHAD
* Although the Group has more than 50% ownership, the Group treats these companies as joint ventures in accordance with Malaysian Financial Reporting Standard 10.
Our Group Corporate Structure
KIMANIS POWER
SDN BHD*
KIMANIS O&M SDN BHD*
PENGERANG GAS SOLUTIONS
SDN BHD*
INDUSTRIAL GASES
SOLUTIONS SDN BHD
60%PETRONAS GAS BERHAD
40%NRG CONSORTIUM (SABAH) SDN BHD
60%PETRONAS GAS BERHAD
40%NRG CONSORTIUM (SABAH) SDN BHD
51%PETRONAS GAS BERHAD
49%LINDE MALAYSIA SDN BHD
50%PETRONAS GAS BERHAD
50%LINDE MALAYSIA SDN BHD
SUBSIDIARY ASSOCIATEJOINT VENTURE
OVERVIEW OF PGB INTEGRATED REPORT 2019p.20
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PUSHING FORWARD ACCELERATING MOMENTUM
ROBUSTBALANCESHEET
Underpinned by Long Term Contracts
STABILITYOF EARNINGS
to Shareholders
SUSTAINABLE RETURNS
High Reliability Across All Assets
WORLD CLASSPERFORMANCEOwner and
Operations & Maintenance (O&M)Service Provider
LEADING GASINFRASTRUCTURE
Providing Agility to Capture Opportunities
OUR VALUE PROPOSITION
Why Invest In Us
MessagesKey
24 Chairman’s Statement28 Message from MD/CEO 34 Group Financial Review40 2019 Key Highlights
40 Business Highlights40 Financial Highlights41 Sustainability Highlights
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DEAR SHAREHOLDERS
Chairman’s Statement
It gives me great pleasure to present an overview of PGB’s performance for
the year 2019. It was a milestone year for us, as we entered into a game-
changing era of the gas industry. Our operating environment has become
increasingly dynamic, largely characterised by the recent gas market liberalisation
and availability of competing alternatives such as coal and solar as fuel source.
We fully embrace the industry’s liberalisation in anticipation of the positive results it will bring, yet recognise the need to challenge ourselves in the way we manage the accompanying changes. As of 1 January 2019, our gas transportation and regasification businesses were subjected to the Incentive-based Regulation (IBR) Pilot Regulatory Period. While faced with lower tariffs which led to lower revenue for the Group, our response, however, proves that every challenge truly brings opportunities. We continued to focus our effort to become the solutions partner to our customers, while sustaining good operational performance at all our assets. Additionally, we have been intensifying all efforts to operate at optimal efficiencies while stretching our boundaries as we seek new sources of income, exploring every possible avenue to further monetise our assets.
For the first time ever, in October 2019, 3.5 trillion British thermal units of gas was delivered to the Tuanku Jaafar Power Station in Port Dickson and Connaught Bridge Power Station in Klang by a third party shipper using our LNG Regasification Terminal Sungai Udang and Peninsular Gas Utilisation (PGU) pipeline network. The historic delivery marks the beginning of true liberalisation of the industry, heralding a new era not only for gas users but also PGB as the leading provider of regasification and gas transportation services in the country.
DIVIDEND PER SHARE
EARNINGS PER SHARE
82
97.8 sen
2018: 72 sen
2018: 90.6 sen
DIVIDEND DECLARED
RM1.6billion
sen
2018: RM1.4 billion
INTEGRATED REPORT 2019KEY MESSAGESp.24
ADIF ZULKIFLIChairman
PETRONAS Gas Berhad
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...we seek to leverage our extensive background
in the gas value chain to offer integrated gas and
utilities solutions...
Chairman’s Statement
We believe there is potential for Malaysia to become a leading LNG hub in Southeast Asia and are capitalising on our regasification terminals to provide various LNG-related services. We also seek to leverage our extensive background in the gas value chain, and the support of PETRONAS group of companies, to offer integrated gas and utilities solutions thus connecting the dots for local and international players for LNG or power projects either as a project owner, investor or joint venture partner. Meanwhile, as the power industry is being liberalised under the Malaysian Electricity Supply Industry (MESI 2.0) programme, we are also looking towards expanding our presence in this sector.
These developments are very exciting and are set to change the face of PGB, transforming us into a more dynamic energy solutions partner. We have outlined a new four-year strategy, called R2 Game Plan: 301Q99 Pushing Forward, to help us navigate the new operating landscape and have already begun to see some positive outcomes. These are reflected in our financial performance for the year, which defied general expectations. Despite the lower tariffs, our revenue remained comparable to the previous year at RM5.5 billion while profit after tax improved by 5% at RM2.0 billion.
Based on our resilient performance, we declared interim dividends of 16 sen per share for the first and second quarters of the year, and upped it to 18 sen per share in the third quarter. For the fourth quarter the Board has approved a final dividend of 22 sen and a special dividend of 10 sen, which brought our total dividend for the year to 82 sen, translating into RM1.6 billion of total dividend declared.
INTEGRATED REPORT 2019KEY MESSAGESp.26
Our operational and financial successes are premised on sound governance which underlines our sustainability. Together with my colleagues on the Board, we continue to ensure PGB adheres to the Malaysian Code on Corporate Governance (MCCG) 2017. As a result of continued vigilance on integrity and transparency, we were placed fourth in terms of Excellence for Corporate Governance Disclosure, and sixth for Overall Corporate Disclosure and Performance by the Minority Shareholders Watch Group (MSWG) – ASEAN Corporate Governance in 2019. The corporate governance body also presented us with the Industry Excellence Award for the Energy and Utilities category. The ASEAN Corporate Governance Scorecard applies global standards, adopting the OECD Principles of Corporate Governance as its main benchmark. To boot, PGB is placed as one of the top 10 listed companies in corporate reporting transparency in Malaysian Institute of Corporate Governance’s (MICG) report, entitled ‘Transparency in Corporate Reporting: Assessing Malaysia’s Top 100 Public Listed Companies’ (TRAC Report 2019).
While maintaining a high level of trust through strong corporate governance, we further strengthen our stakeholder relationships via regular engagements and value creation. Among the key issues today are climate change and the responsibil ity of al l organisations – specifically governments and corporations – to play our parts in minimising greenhouse gas (GHG) emissions. Our Government has pledged to reduce the country’s GHG emissions intensity by 45% as a measure of gross domestic product (GDP) by the year 2030 from the 2005 baseline. PGB is fully supportive of nurturing a low-carbon economy. Towards this end, in so far as the country is still reliant on hydrocarbons to fuel our energy needs, we are advocating greater use of gas which is known to be the cleanest type of fossil fuel. At the same time, we are establishing optimal energy efficiency in our operations to reduce our GHG emissions, and have set a target to cap our emissions for PGB and subsidiaries at 5.0 million tonnes of CO
2 equivalent by 2024.
Our environmental stewardship extends to the preservation of important ecosystems. In 2019, we entered the second year of our collaboration with the Malaysian Nature Society (MNS) to rehabilitate the mangrove network in Kampung Sungai Latoh. Through this five-year programme we hope to restore the health of the ecosystem for its own sake as well as for the benefit of the local community, whose livelihood is dependent on healthy ecosystem.
The importance of sustainability to PGB is further emphasised by the debut of our first standalone Sustainability Report. I urge you to read this report and provide feedback on how we can further improve our social and environmental scorecards.
All our stakeholders are important to us and we are committed to creating value for you. Before ending this statement, I would like to thank Suruhanjaya Tenaga for engaging with us; our shareholders for your trust in our ability to deliver; and our business partners as well as suppliers for ensuring our safe and reliable operations. At the same time, I would like to express my gratitude to all our Directors for your wise counsel in steering PGB as we move into uncharted territories. To our capable Management, it is encouraging to see the manner in which you are leading the charge in transforming PGB. Finally, to all our employees, thank you for your hard work and commitment to our shared goals.
PGB has come a long way, but we still have far to go. Let us continue to work together in Pushing Forward: Accelerating Momentum as we grow in our role as a leading gas infrastructure and utilities company serving the nation and its people today, tomorrow and many years in the future.
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p.27
2019 was a commendable year for PGB as we proved to be resilient entering
into the Pilot Regulatory Period under the Incentive-based Regulation (IBR) for
our regulated Gas Transportation and Regasification business segments.
Building on our transformation efforts and supported
by digitalisation initiatives, we continued to record
excellent operational performance whilst making
several significant steps towards securing our future
revenue streams. These include acquisition of new
customers for steam and electricity for our utilities
in Gebeng as well as the introduction of new ancillary services at our regasification terminals.
These shall strengthen PGB’s future position in
becoming an integrated energy solutions
partner.
KAMAL BAHRIN AHMADManaging Director/
Chief Executive Officer
DEAR SHAREHOLDERS
Message from MD/CEO
INTEGRATED REPORT 2019KEY MESSAGESp.28
Although our gas transportation and regasification tariffs were regulated, we were compensated by higher remuneration via the second term of the 20-year Gas Processing Agreement with PETRONAS commencing on 1 January 2019, which influences our operating targets and planned expenditure over the next five years. Additionally, we achieved higher selling prices for our utilities products. As a result, despite expectations to the contrary, we achieved comparable revenue against the year 2018 and grew our profit after tax (PAT) by 5%.
Our resilience was the result of operational and commercial excellence driven by the ongoing R2 Game Plan: 301Q99 Pushing Forward. By adhering to this game plan and pushing forward with growth initiatives, we continue to grow from strength to strength, becoming a leaner, more efficient and diversified organisation that is prepared for market liberalisation and the accompanying challenges.
OUR OPERATING ENVIRONMENT
Our operating environment is getting more excit ing as we embrace gas market liberalisation and look forward to the new future that power market liberalisation under the Malaysian Electricity Supply Industry (MESI 2.0) shall bring. We believe that gas market liberalisation will introduce competitive gas prices into domestic market, encouraging it to grow further. While under the MESI 2.0 programme, being an experienced utilities player, there are opportunities available for us to expand and play our part to ensure a competitive landscape for the benefit of our nation.
On top of that, the liberalisation of the gas industry brings about new tariff structures for gas transportation and regasif ication businesses. Under the IBR, these tariffs are to be regulated by Suruhanjaya Tenaga, with the intention to provide a more level playing field while attracting new players to enter the domestic gas market.
In order to sustain our business financially, it is imperative for us to operate at the highest level of efficiency and to actively explore new sources of revenue. At the same time, we believe it is important to create greater awareness on the potential of which natural gas can play being the cleanest source of hydrocarbon-based energy and its contribution to support the nation’s transition to a low-carbon economy. Natural gas generally offers a faster solution to fulfil Malaysia’s commitment in reducing our carbon emissions intensity by 45% by the year 2030 from the 2005 baseline, under the Paris Agreement.
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Read more on Operating Environment on
page 52.
HIGH PLANT RELIABILITY SUSTAINED AT >99%
NEW REMUNERATION TERMS
ANCILLARY SERVICES AT RGTP
NEW NITROGEN GENERATION UNIT TO SUPPORT DEMAND
Excellent Plant Performance
2nd Term Gas Processing Agreement
New Revenue Stream
Expansion of Utilities business
Achieved performance incentives
Higher Reservation Charge and new Agreed Ethane Target Incentive
First Gassing Up Cooling Down (GUCD) and reloading
Extension and new contracts secured for electricity and steam
ACHIEVEMENTS
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INTEGRATED REPORT 2019KEY MESSAGESp.30
Message from MD/CEO
OUR STRATEGY – R2 GAME PLAN: 301Q99 PUSHING FORWARD
In the face of rapid transformation of the gas industry, we launched a new four-year strategic blueprint to guide us from 2019 to 2022, namely R2 Game Plan: 301Q99 Pushing Forward. The Game Plan focuses on three areas:
• ‘30’ which represents improvement of plant utilisation gap by 30%, to be achieved by retaining existing while capturing new customers for our business;
• ‘1Q’ which represents driving the energy and cost efficiency to achieve top quartile performance at all our plants; and
• ‘99’ which represents protecting PETRONAS enterprise value by sustaining our asset reliability.
More than 70 Key Result Areas (KRAs) have been outlined in order to achieve these three strategic priorities, with signposts for each year of the four-year journey to track our progress. It gives me great pleasure to share that all goals set for the year 2019 were met, enabling us to realise approximately RM68.0 million in value creation.
Broadly, our responses to the challenges posed in the current operating environment are twofold. Firstly, we seek to diversify into ancillary services related to our regasification operations. Secondly, we strive to expand our utilities capacity in line with our marketing initiatives in order to increase our customer base, together with demand for the products and services we provide.
STRATEGY HIGHLIGHTS
In terms of diversifying into ancillary services, we outlined four projects that will enable us to fully leverage the capacity of our LNG regasification terminals in Sungai Udang, Melaka (RGTSU) and Pengerang, Johor (RGTP). Of these, gassing up cooling down (GUCD) service at RGTP commenced operations in April 2019, and to date we have completed eight GUCD services. GUCD is a specialised service to displace inert gas from an LNG vessel before it is cooled down. This process is required, typically post-dry docking, prior to loading the vessel’s next LNG cargo.
We also introduced LNG reloading services, from our storage tanks into vessels at RGTP in August 2019, as part of LNG bunkering/breakbulking value chain. Through the launch of this service, we provide the opportunities to capacity users of RGTP to also export LNG. This will help to position RGTP as an LNG hub in the region by way of offering wide range of services to its customers. In 2019, RGTP has successfully completed three reloading services.
The other two projects, i.e. LNG bunkering at RGTSU and LNG truck loading at RGTP are well underway and slated for completion in the second quarter of 2020. The introduction of LNG bunkering service will result in higher utilisation rate at RGTSU.
Meanwhile, we are also expanding our unregulated businesses, particularly the Utilities segment. There are opportunities in the cogeneration sector given the high efficiency of the assets in generating electricity. We recently secured new contracts to extend our supply of electricity and steam to our long term customers for 20 years, while at the same time obtained licence to supply power to a potential customer beyond our traditional captive areas in Gebeng, Kuantan. This marks a significant milestone as we make our move outside our comfort zone. On the industrial gases front, we successfully achieved Final
Investment Decision (FID) for the construction of a nitrogen plant in Kertih, to capture demand as well as improve back-up supply to existing customers. The new nitrogen facility is expected to begin its commercial operation in 2021.
On another note, we recently expanded the facility at our Tanjung Sulong Export Terminal (TSET) in Kemaman, Terengganu to allow our sister company to import propane (C3) and butane (C4). The import facility will provide PGB with a terminal utilisation contract for 15 years while assisting to address any supply imbalance for PETRONAS.
1 Read more on Our Strategy on page 64.
BUSINESS REVIEW
While focusing on building our business, PGB also continued to place emphasis on maintaining our world-class operations across all four core businesses, with encouraging results.
GAS PROCESSING
We sustained 100% salesgas reliability for both processing and delivery to our customers. Plant reliability, meanwhile, remained high with salesgas averaging 99.7%, ethane 99.0%, and propane as well as butane at 99.2%. Our Operational Equipment Effectiveness (OEE) for all gases was commendable, with ethane, propane and butane averaging more than 98%, contributing to higher incentives from both Performance Based Structure (PBS) as well as additional ethane target effective 1 January 2019.
GAS TRANSPORTATION
Within the Gas Transportation segment, our PGU recorded zero supply curtailment with 100% sales gas delivery. Our national pipeline has sustained world-class reliability performance at 99.99% since 2018. To uphold safe and reliable operations, we continue to run regular maintenance programmes and in 2019, embarked on an exercise to replace our 37-year PGU1 pipeline measuring up to 35 km in length.
UTILITIES
Our Utilities plants achieved their top reliability performance, with electricity reliability averaging 99.8%, steam 99.7% and industrial gases 99.0%. We also recorded 100% OEE for electricity, 99.8% for steam, and 98.0% for industrial gases. Electricity and steam OEE exceeded 2018 performance. Product Delivery Reliability (PDR) for electricity and steam were 100%. We have secured new contracts to extend our supply of electricity and steam in Gebeng, Kuantan with Kaneka (Malaysia) Sdn. Bhd. and Polyplastics Asia Pacific Sdn. Bhd. for 20 years.
REGASIFICATION
Both RGTSU and RGTP maintained 100% OEE as well as Reliability and Availability at more than 99% since 2018. In 2019, we received a total of 45 cargoes at both terminals combined, an increase from 23 cargoes recorded in 2018.
3 Read more on Business Review on page 90.
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OUR DIGITAL JOURNEY
Further enhancing our operations, we continue to build on our process of digitalisation in line with PETRONAS’ enterprise digital agenda.
With the aim to unlock greater value from our assets, we are currently implementing the PETRONAS Integrated Vision for Operational Excellence and Technology (PIVOT) programme. Essentially, PIVOT is used to track and anticipate potential issues in the plants through descriptive and advanced analytics dashboard. PIVOT utilises big data and data analytics to manage our physical assets more efficiently.
As for our pipeline integrity, the implementation of PiriGIS software provides a gateway to comprehensive Geospatial Information System (GIS) and non-spatial data that visualises all of our Gas Transportation and Regasification (GTR) assets. PiriGIS allows us to explore, analyse and retrieve data and perform simple analytics with enhanced confidence on PGB’s entire pipeline network. At our GTR operations, real time data is provided for ease of our personnel to make prompt decisions. This will also enable us to pinpoint and address issues proactively which contributes immensely to our Health, Safety, Security and Environment (HSSE) performance by safeguarding our people, environment, assets and reputation.
2 Read more on Scorecard on page 68.
SAFETY: OUR TOP PRIORITY
Whilst we are proud of PGB’s continued excellent operational results, it is even more heartening to see that this has been accomplished without any compromise on safety. Safety is given top priority in the Company, and we strive constantly to reinforce safe behaviours through programmes such as Jom Patuh dan Tegur (Let’s Comply and Intervene). To further reinforce a safety culture, we also embarked on Generative HSSE Culture Programme this year, which aims to ensure all employees assume responsibility for their own safety as well as for others.
In addition to PIVOT and PiriGIS, we subscribe to various other PETRONAS digital solutions such as its Fatigue Management System (FMS), electronic Permit To Work (ePTW), Plant Operational Integrated Tools (POINT), and Machinery Monitoring Prediction and Detection system (MMPD) to enhance and sustain safety along with reliability and efficiency.
In 2019, we were pleased to have recorded zero fatality, zero major loss of primary containment (LOPC) and zero major fire. Unfortunately, we experienced two lost time injury (LTI) incidents. There is more to be done to ensure zero LTI in future, and PGB is taking steps to enhance our safety culture as a way to mitigate future occurrences.
FINANCIAL PERFORMANCE
It gives me great pleasure to share that, PGB achieved revenue for the year of RM5.5 billion, which was comparable to the revenue in 2018 despite lower tariffs for gas transportation and regasification businesses under the IBR. This was mainly driven from higher revenue from the Gas Processing and Utilities segments, which negated the lower revenue received from Gas Transportation and Regasification segments.
At the same time, we recorded a PAT of RM2.0 billion, 5% higher than RM1.9 billion in 2018. This came on the back of higher share of profit from joint ventures, unrealised foreign exchange gains, and higher interest income from fund investments.
Along with the increase in PAT, our earnings per share (EPS) grew by 8%, reflecting higher profits attributable to shareholders of the Company.
BUILDING OUR CAPABILITIES
As we grow and expand our business into new, more exciting areas, we need to ensure that our people are equipped with the skills to sustain our ongoing success. Recognising their immense value, we are investing into their professional development through various programmes.
Among the newer initiatives launched is RESCISCO, which was introduced at the PETRONAS Group level in 2018. The programme seeks to create a paradigm shift in developing competencies via fit-for-purpose, flexible career pathing to deliver empowered, enabled and agile talent. RESCISCO was implemented as a pilot involving Mechanical disciplines. In 2019, it was expanded to include Technical disciplines Groupwide.
AWARDS & RECOGNITION
While our results speak for themselves, it is always encouraging to receive affirmation of our performance from external parties. Throughout the years, PGB has accumulated an impressive string of accolades, and continued to do so in 2019. We were privileged to be the leaders in areas related to HSSE, corporate governance, and transparency reporting.
SUSTAINABILITY & ENRICHING LIVES
The importance of sustainability to PGB is further demonstrated in our first standalone Sustainability Report which emphasises three key thrusts – Sustainable Business, Social Responsibility and Resource Efficiency.
We also acknowledge the value and impact of our business to the various stakeholders surrounding us and aspire that our presence will positively benefit them. Thus, our highest commitment is towards meeting their expectations and requirements in reaching out through various Corporate Social Responsibility (CSR) initiatives in educational, environment as well as community well-being and development.
INTEGRATED REPORT 2019KEY MESSAGES
Message from MD/CEO
p.32
Our collaboration with Yayasan PETRONAS benefitted approximately 1,000 school children in Negeri Sembilan and Perlis in which school uniforms, backpacks and stationeries were distributed through the Sentuhan Ilmu – Back-To-School programme. Our environmental efforts continue with the preservation of important ecosystems through our ongoing partnership with the Malaysian Nature Society (MNS) to rehabilitate the mangrove and preserve a healthy ecosystem in Kampung Sungai Latoh, Johor. Whilst PGB’s annual “Free Market” programme has continued to help ease the burden of underprivileged families with participation of our employees in contributing cash and in-kind.
Further elaboration on the various initiatives are detailed out in our official website at www.petronasgas.com
OUTLOOK
The operating environment in 2020 looks set to continue along the same vein as in 2019. Gas market liberalisation has truly taken shape with the delivery of our first consignment of gas from a third party supplier. The process is likely to be repeated so long as buyers are able to secure gas at competitive rates.
Within this open landscape, PGB will play our part to ensure the success of TPA. At the same time, we will continue to focus on growing our business as we step up on our R2 Game Plan: 301Q99 Pushing Forward to ensure we sustain safe, reliable and efficient operations. A number of projects initiated in 2019 will be completed and commissioned in 2020 – such as the LNG bunkering project at RGTSU and LNG truck loading service at RGTP.
These, together with the new propane/butane import facilities in Kemaman, which were completed in November 2019, will enhance our revenue beginning from 2020. Meanwhile, we will ensure the successful completion of other growth projects undertaken while looking out for even more opportunities that we can tap into using our expertise. One potential area is the power supply market which is also being opened up under MESI 2.0. Given our expertise in running power plants, we believe we are well-positioned to participate as a key player in this space.
ACKNOWLEDGEMENTS
I would like to take this opportunity to thank everyone who has been associated with the Company in particular, our current Board of Directors for your wise counsel; our Management for your leadership; and all our employees for your hard work and commitment to our shared goals.
In addition, I would like to thank the various government agencies and regulatory bodies, our shareholders, customers business partners and contractors and business partners for your steady and invaluable support throughout the years.
It is with all the support, that we managed to secure reasonable tariff for Regulatory Period 1 that will ensure a stable revenue for the Group for the next three years. It is also important to note that, as the majority of our business is fully secured by long term contracts, it will minimise the impact due to the challenging and uncertainties of the market.
With everyone’s continued collaboration I believe we can truly Push Forward and Accelerate the Momentum to supply the needs of our stakeholders. Gas has a role to play in a sustainable tomorrow, and we will play our part to see that it continues to fuel the nation.
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PGB Group turned in a resilient financial performance for the year ended 31 December 2019, amidst structural changes in its operating environment.
The Incentive-based Regulation (IBR) was in full force for the Group’s regulated business segments – Gas Transportation and Regasification – with the Pilot Regulatory Period (PRP) in 2019. For PRP, Suruhanjaya Tenaga has determined tariffs of RM1.072/GJ for the Group’s PGU pipeline, RM3.518/mmBtu for LNG Regasification Terminal Sungai Udang and USD0.637/mmBtu for LNG Regasification Terminal Pengerang. This translated to lower revenue overall for both business segments.
The IBR impact was, however, cushioned by higher revenue for the Group’s Gas Processing business segment following improved terms concluded under the 2nd term Gas Processing Agreement, effective 1 January 2019.
Hence the Group’s operating profit remained comparable against 2018 at RM2.6 billion. Profit for the year increased by 5% to RM2.0 billion on higher contribution from the Group’s joint venture companies, supported by favourable foreign exchange movements and higher fund investment income. Meanwhile, the Group’s total assets continued to grow, increasing by RM1.3 billion to RM19.6 billion.
With higher profits and strengthened balance sheet, the Group declared total dividends of 82 sen per share for the year, including a special dividend of 10 sen per share. This translates to a dividend payout ratio of 84% compared to 80% last year, the highest ever in history.
As the Group forges ahead, the primary focus areas on the financial end are as follows:
EFFICIENT CAPITAL AND CASH MANAGEMENT
The Group’s f inancial standing and fundamentals remain very strong. Gearing as at 31 December 2019 remains prudent at 22% (including arrangement accounted for as leases under MFRS), providing sufficient headroom for the Group to raise funds should the need arise. In so far as funding is concerned, the Group gives due consideration between equity and debt funding, depending on the specific nature and requirements.
Current external borrowings relate primarily to a USD500 million Term Loan Facility with Mizuho Bank Limited, used to finance the LNG Regasification Terminal and Air Separation Unit in Pengerang via on-lending to our subsidiary and joint venture companies respectively. Both companies are performing well financially, contributing healthy earnings to the Group. The Term Loan is due to be repaid in 2021 with a balance outstanding of USD434.6 million as at 31 December 2019.
The Group’s cash and bank balances are predominantly held in In-House Accounts managed by PETRONAS Integrated Financial Shared Service Centre. This enables more efficient cash management at an operational level. As at 31 December 2019, cash and cash equivalents stood at just over RM4.0 billion.
PROFIT AFTER TAX
REVENUE
RM2.0
RM5.5
5%
-1%
billion
billion
2018: RM1.9 billion
2018: RM5.5 billion
INTEGRATED REPORT 2019KEY MESSAGES
Group Financial Review
p.34
Nevertheless, strategic decisions on capital and cash flow management continue to remain under the purview of the Group. Capital and cash flow requirements are rigorously prepared and monitored, and working capital levels are reviewed on annual basis. This ensures timely repatriation and compliance to minimum cash requirement levels set, while taking into account potential business opportunities as well as variability.
The Group also has a dividend policy now in place, as recently approved by the Board on 18 February 2020. The dividend policy - a payout ratio of around 50% consolidated profit after tax and non-controlling interest - underlines our commitment to ensure sustained level of returns to our shareholders. Notwithstanding the policy, the Group’s actual dividend payout ratio has consistently been more than 70% over the last five years.
Moving forward, we will continuously review and adapt our capital structure to ensure efficient capital management and optimum returns for the Group and its shareholders.
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SHARIZA SHARIS MOHD YUSOF
Chief Financial Officer
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Group Financial Review
ENHANCED FISCAL DISCIPLINE AND GOVERNANCE
We continued to strengthen fiscal discipline and governance across the Group throughout the year under review. This is especially relevant in view of our target to achieve and sustain first quartile cost performance and considering two of our business segments are now under economic regulatory control.
Costs discipline and monitoring was a key area across the businesses. With various initiatives to promote efficiency and keep operating costs down, the Group recorded total operating expenditure (OPEX) excluding depreciation of RM1.1 billion, slightly higher by 4.8% compared to 2018 amidst higher intensity of plant activities during the year following several planned statutory turnarounds and shutdowns. Indeed, for the five-year period from 2015 to 2019, total Group OPEX excluding depreciation has remained more or less flat with a cumulative average growth rate or CAGR of only 0.9%.
Total capital expenditure (CAPEX) for 2019 was RM1.3 billion, similarly higher compared to 2018 due to increased level of activities throughout the Group. This includes CAPEX for on-going growth projects, namely the new Nitrogen Generation Unit and ancillary services at our regasification terminals.
The IBR has required us to be even more meticulous when it comes to costs relating to the regulated businesses or assets for the Gas Transportation and Regasification segments. Furthermore, as the industry landscape continues to evolve, we will need to continue driving fiscal discipline and look for more cost effective solutions across the Group so as to ensure we remain in the forefront in terms of competitiveness.
During the year, we have also revised PGB’s Limits of Authority to address new business requirements, tighten controls as well as align our CAPEX and OPEX budgeting and spending with Third Party Access (TPA) guidelines for Gas Transportation and Regasification businesses, and with Gas Processing Agreement terms for Gas Processing business. This should allow for efficient decision making while at the same time ensuring compliance as well as appropriate line of sight.
EFFECTIVE FINANCIAL RISK MANAGEMENT
Whilst the Group is subject to several financial risks arising from the normal course of business, in particular credit risk, liquidity risk and market risk, these continue to be timely and proactively managed.
Credit risk
Credit risk is minimised as we only enter into contracts with counterparties with high credit standing. We also implement other credit enhancement measures where applicable, such as cash deposits and bank guarantees.
With potential new shippers and capacity users under TPA, we acknowledge that the Group’s customer credit profile will change in the future. To this end, we have strengthened our credit management process and procedures during the year. A Credit Risk Committee has been established to oversee, deliberate and where necessary, mitigate customer credit risks. The Group’s Credit Guidelines have also been reviewed and updated.
Liquidity Risk
With sufficient cash and liquid marketable assets to ensure smooth running of our business, the Group’s liquidity position remains robust. Underpinned by long-term contracts and with over 90% of our business based on fixed returns, our core business model remains cash accretive. Investment funding is done via internal equity, external term loans and loans from corporate shareholders of our joint venture company.
Market Risk
The market risks to which we are exposed primarily relate to foreign currency exchange rates and interest rates.
While most of our business is Ringgit-based, we undertake foreign exchange hedging arrangements on foreign exchange transactions where applicable to manage exchange rate fluctuations.
We also have in place interest rate hedging arrangements with hedge counterparties to manage and mitigate the interest risk on our USD500 million Term Loan facility, which is floating rate borrowing. The hedging arrangements enable PGB to effectively pay a fixed interest rate on the Term Loan regardless of interest rate fluctuations.
In undertaking hedging activities, the Group leverages on PETRONAS Group Treasury Division, which has the necessary knowledge and expert ise on such transactions. Transactions entered into are non-speculative and are in accordance with PETRONAS Groupwide policies and guidelines.
INTEGRATED REPORT 2019KEY MESSAGESp.36
ENRICHED MARKET ENGAGEMENT AND ACTIVITIES
With PRP well underway, we continued to step-up on investor relations activities and engagements in terms of frequency as well as content sharing. With the aim of providing timely and relevant information to our current and potential investors, capital market communications were also made more external, targeted and forward-focused.
This began with a special face-to-face engagement session on TPA conducted early in 2019, held in conjunction with our Q4 2018 results briefing. Besides providing access to PGB Management, we shared on how the TPA would work as well as on how it may impact our performance.
We are pleased to note that the response from the capital market has been positive and we saw a notable uptick in terms of level of interest and lines of query during the year. Indeed the number of engagements both at events and one-to-one has increased.
With the three-year Regulatory Period tariffs now set for 2020 to 2022 and with some new sources of revenue also coming in, we foresee there will be a need for further increased engagements in terms of providing guidance in the years ahead.
Having achieved various milestones with close to 25 years post-listing, PGB Group has an indubitable strong track record of operational and financial performance. While the next few years will be an interesting one for the Group not just operationally but also financially, we have proven ourselves to be resilient in terms of results and returns. As one of the top counters in Bursa Malaysia, our commitment remains, first and foremost, to ensure sustainable returns to our shareholders.
5
Read more on Investor Relations on page
84.
GROUP FINANCIAL PERFORMANCE REVIEW
2019RM’000
2018RM’000
Restated
Variance%
Revenue 5,458,250 5,498,074 -1%
Cost of revenue (3,071,201) (2,962,141) 4%
Gross profit 2,387,049 2,535,933 -6%
Administration expenses (94,825) (90,051) 5%
Other expenses – (21,360) >100%
Other income 263,621 146,107 80%
Financing costs (229,684) (169,387) 36%
Profit before taxation 2,462,885 2,334,588 6%
Taxation (478,833) (443,715) 8%
Profit after taxation 1,984,052 1,890,873 5%
Profit or Loss
Group revenue remained comparable at RM5.5 billion for the financial year ended 31 December 2019, registering a marginal decrease of 0.7% against 2018.
Lower revenue from Gas Transportation and LNG Regasification Terminal Pengerang (RGTP) as a result of lower tariffs as determined by Suruhanjaya Tenaga for the Pilot Regulatory Period (PRP) was offset by higher revenue from Gas Processing and Utilities segments arising from improved reservation charge under the 2nd term Gas Processing Agreement and higher selling prices respectively.
Cost of revenue registered a slight increase of 3.7% or RM109.0 million mainly due to higher fuel gas costs to produce electricity, steam and industrial gases in line with upward fuel gas price revision on 1 January and 1 July 2019.
Gross profit decreased by 5.9% or RM148.8 mi l l ion, largely at t r ibutable to Gas Transportation, Regasification and Utilities segment results amidst improved results from Gas Processing segment.
Other expenses for 2018 were largely due to impairment loss on assets totaling RM16.9 million following change of business at one of the Group’s customer after all efforts to find alternative use for the facilities were exhausted.
1 2 3 4 5 6 7 8
PUSHING FORWARD ACCELERATING MOMENTUM
p.37
Group Financial Review
Other income surged by 80.4% or RM117.5 million attributable to unrealised foreign exchange gains and higher interest income from fund investments. The unrealised foreign exchange gains mainly arose from the discontinuance of hedge accounting on translation of USD lease liabilities for floating storage units at the Group’s LNG regasification terminal in Sungai Udang, Melaka (RGTSU). The higher interest income is in line wiith higher cash and bank balances.
Financing costs recorded an increase of 35.6% or RM60.3 million due to interest expense from recognition of finance lease liabilities relating to jetty facilities at RGTP following adoption of MFRS 16 Leases effective 1 January 2019.
Share of profit from joint ventures and associate improved significantly by RM203.4 million from loss of RM66.7 million last year to profit of RM136.7 million as the Group saw improved contribution from Kimanis Power Sdn Bhd (KPSB) and Pengerang Gas Solutions Sdn Bhd (PGSSB). Last year, KPSB de-recognised deferred tax assets due to time utilisation limit on certain tax benefits whilst PGSSB recorded higher profit with first full year of earnings from its Air Separation Unit in Pengerang, Johor.
Profit before tax improved by 5.5% or RM128.3 million, mainly driven by improved contribution from joint ventures, unrealised foreign exchange gains from translation of USD denominated lease liabilities and higher interest income from fund investment.
Against profit after tax, tax expense of RM478.8 million resulted in an effective tax rate lower that the statutory tax rate of 24%. This was mainly due to tax incentives granted for RGTP.
Correspondingly, profit for the year improved by 4.9% or RM93.2 million to RM2.0 billion.
Segment revenue grew by 8.4% or RM131.3 million on the back of higher reservation charge under the 2nd term Gas Processing Agreement effective 1 January 2019, supported by higher Performance Based Structure (PBS) revenue in line with strong operational performance throughout the year.
Segment results surged by 27.7% or RM177.2 million driven by higher revenue coupled with lower depreciation expense.
Under TPA, new tariffs are applicable for both RGTSU and RGTP effective 1 January to 31 December 2019.
Segment revenue was comparable to last year at RM1,237.9 million as decrease in revenue from RGTP was offset by higher revenue from RGTSU.
Segment results declined by 12.5% or RM87.0 million mainly attributable to higher depreciation upon recognition of jetty facilities as right-of-use assets at RGTP under new Malaysian accounting standard and higher operating costs.
Segment revenue was 15.3% or RM208.1 million lower in line with lower gas transportation tariff for Peninsular Malaysia effective 1 January to 31 December 2019 under TPA.
Segment results were correspondingly lower by 21.5% or RM218.5 million on the back of lower revenue and higher operating costs.
Segment revenue for the year rose by 3.4% or RM44.5 million, attributable to higher selling prices to customers following upward revision of fuel gas price on 1 January and 1 July 2019, coupled with additional surcharge on national electricity tariff. This was offset by lower volumes following the planned statutory turnaround in the third quarter of the year.
Segment results nevertheless declined by 11.4% or RM20.5 million on higher cost of sales following upward revision of fuel gas price.
REGASIFICATION
UTILITIES
GAS PROCESSING
GAS TRANSPORTATION
SEGMENTAL REVIEW
INTEGRATED REPORT 2019KEY MESSAGESp.38
Financial Position
Assets
The Group’s total assets grew by 7.2% or RM1.3 billion to RM19.6 billion, mainly contributed by higher property plant and equipment balance following adoption of MFRS 16 Leases which resulted in the recognition of right-of-use (ROU) assets and corresponding lease liabilities effective from 1 January 2019 and higher cash and cash equivalents generated from operating activities.
Liabilities
Group total liabilities increased by 18.6% at RM942.8 million, mainly attributable to recognition of finance lease liabilities for ROU assets.
Equities
Total equity attributable to shareholders of the Company of RM13.2 billion was higher by 3.3% or RM421.9 million in line with profit recorded during the year, partially offset by dividend payments to shareholders.
Cash Flows
The Group’s cash and cash equivalents stood at RM4.0 billion as at 31 December 2019, an increase of 11.2% or RM405.7 million from RM3.6 billion as at 31 December 2018.
Net cash generated from operating activities was higher by 1.4% or RM46.1 million, mainly contributed by higher interest income from fund investments offset by lower revenue from Gas Transportation and Regasification segment and higher tax paid.
Net cash used in investing activities increased by 29.6% or RM250.5 million, largely attributable to higher level of planned statutory turnaround activities at the Group’s facilities.
Net cash used in financing activities was higher by 37.3% or RM502.9 million mainly due to lower term loan drawdown, higher dividends paid, higher redemption of preference shares by a subsidiary to a non-controlling interest and higher finance cost paid in line with higher term loan balance.
4 Read more on Financial Performance on page 74.
1,571.01,702.3
885.8 816.5931.7
639.3
2018
Revenue COR Gross Profit2019 2018 2019 2018 2019
1,245.41,237.9
626.9 611.0547.4
698.0
2018
Revenue COR Gross Profit2019 2018 2019 2018 2019
1,360.6
1,152.5
353.0
799.5
342.6
1,018.0
2018
Revenue COR Gross Profit2019 2018 2019 2018 2019
1,321.11,365.6
1,205.5
160.11,140.5 180.6
2018
Revenue COR Gross Profit2019 2018 2019 2018 2019
Gas Processing (RM million)
Gas Transportation (RM million)
Regasification (RM million)
Utilities (RM million)
1 2 3 4 5 6 7 8
PUSHING FORWARD ACCELERATING MOMENTUM
p.39
> RESILIENT FINANCIAL RESULTS SUPPORTED BY IMPROVED GPA RESERVATION CHARGE AND HIGHER UTILITIES PRICES AMIDST LOWER TARIFFS FOR GAS TRANSPORTATION AND REGASIFICATION BUSINESSES
> PUSHING FORWARD, ACCELERATING MOMENTUM TOWARDS BECOMING A SUSTAINABLE SOLUTIONS PARTNER
Stellar plant and facility reliability performance across all segments at par with world-class standards
Smooth implementation of Incentive-based Regulation (IBR) and successful regasification of maiden third party LNG cargo at RGTSU as
well as delivery via PGU
REGULATION UNDER THIRD
PARTY ACCESS
Higher processing fees and remuneration to enhance collaboration across the gas value chain
• New revenue stream from integrated ancillary services comprising Gassing Up Cooling Down and LNG Reloading at RGTP
• First full year of revenue stream from Air Separation Unit, Pengerang
CONTRIBUTION FROM GROWTH
PROJECTS
DIVIDENDS REVENUE MARKET CAPITALISATION
PROFIT AFTER TAX
TOTAL ASSETS
82 RM5.5 RM32.9RM2.0 RM19.6-1% 5% 7%
sen/share billion billionbillion billion2018: 72 sen/share 2018: RM5.5 billion 2018: RM38.0 billion2018: RM1.9 billion 2018: RM18.3 billion
BUSINESS HIGHLIGHTS
FINANCIAL HIGHLIGHTS
SUSTAINED OPERATIONAL EXCELLENCE
SECOND TERM OF GAS PROCESSING AGREEMENT (GPA)
INTEGRATED REPORT 2019KEY MESSAGES
2019 Key Highlights
p.40
2018: 4.6 million tonnes CO2e
2018: 62%
2018: RM1.7 million
Carbon Emission
4.4 million tonnes CO
2e
SAYANGI SUNGAI LATOH
WASTE RECYCLED
Ecosystem baseline assessment
Achieved Reduction in
Waste Disposal
spent for waste disposal effort
RM1.9million
28%
48%COMMUNITIES
PROGRAM SENTUHAN KASIH PETRONAS
PROGRAM SENTUHAN ALAM PETRONAS
PROGRAM SENTUHAN ILMU PETRONAS
HSSE
Fatalities
2018: 0
0DIVIDENDS PAID
RM1.4 billion2018: RM1.4 billion
4,961 hectares2018: 4,961 hectares
LAND
RM429.8 million2018: RM386.7 million
TAX PAID
2,272 mmscfd2018: 2,060 mmscfd
SALESGAS DELIVERED
100%2018: 100%
PRODUCT DELIVERY RELIABILITY(C1, C3, C4, Electricity)
RM426.8 million2018: RM403.2 million
EMPLOYEE COMPENSATION
1,829 employees2018: 1,959 employees
WORKFORCE
MajorFire 2018: 0
02018: 0
2Lost Time Injury
LEAD SELFLEAD OTHERSLEAD BUSINESS
HARVARD MANAGEMENTOR
2018: 11%
SKILL
2018: 89%TECHNICAL
88%
12%NON-TECHNICAL
ECONOMIC ENVIRONMENT SOCIAL
2018: 33%
2018: 50%
GENDER DIVERSITY
Women Composition
BOARD
LEADERSHIP TEAM
50%
33%
SUSTAINABILITY HIGHLIGHTS
1 2 3 4 5 6 7 8
Note: Carbon emission stated above is for PGB and its subsidiaries.
PUSHING FORWARD ACCELERATING MOMENTUM
p.41
3
CreateValue We
44 Our Value Creating Business Model46 Key Resource Capitals:
Role and Scoreboard48 Stakeholder Value Creation
INTEGRATED REPORT 2019VALUE WE CREATEp.44
COST STRUCTURE Depreciation and operational costs such as repair and maintenance, materials and supplies, as well as professional and purchased services
GAS PROCESSING (GP)
Process PETRONAS’ upstream natural gas delivered from offshore Peninsular Malaysia into salesgas, ethane, propane and butane to be transported to PETRONAS’ customers by our GT business
RESOURCESPRODUCTS/
SERVICES
UTILITIES (UT)
Produce, market and supply electricity, steam, industrial gases and other utility products to various petrochemical businesses and third parties
GAS TRANSPORTATION (GT)
Transport salesgas from our Gas Processing Plants (GPPs), Joint Development Area (JDA) in Thailand and LNG regasification terminals (RGTs) in Sungai Udang, Melaka and Pengerang, Johor to shippers’ end customers in Peninsular Malaysia and Singapore through Peninsular Gas Utilisation (PGU) pipeline network and Pengerang Gas Pipeline (PGP)
REGASIFICATION (RGT)
Receive capacity users’ imported Liquefied Natural Gas (LNG), stores in Regasification Terminal Sungai Udang’s (RGTSU) floating storage units and Regasification Terminal Pengerang’s (RGTP) storage tanks, converts the LNG into salesgas and injects into PGU pipeline network to be delivered to shippers’ customers by our GT business
OUR CORE BUSINESSES AND ACTIVITIES
• Natural gas from offshore platforms
• Salesgas from GPPs and JDA
• Ethane, propane and butane from GPPs
• Regasified LNG from RGTs
• LNG
• Fuel gas • Chemicals• Raw water • Air
• Salesgas• Ethane• Propane• Butane
• Transported salesgas
• Regasified LNG
• Electricity & steam• Industrial gases
such as oxygen & nitrogen • Demineralised
water, raw water, cooling water & boiler feed water
HUMAN CAPITAL
ASSETS
• Gas Processing Kertih (GPP1, 2, 3 and 4)
• Gas Processing Santong (GPP5 and 6)
• Tanjung Sulong Export Terminal at Kemaman, Terengganu
• 2,590 km Peninsular Gas Utilisation (PGU) pipeline network
Male90%
Female10%
1,023EMPLOYEES
Male87%
Female13%
328EMPLOYEES
Male94%
Female6%
114EMPLOYEES
Male92%
Female8%
240EMPLOYEES
Facilities located at both Sungai Udang and Pengerang: • Offshore and onshore LNG
regasification terminal• 30 km onshore and 3 km
offshore pipeline• 2 leased Floating Storage
Units (FSU) and 2 LNG storage tanks
• LNG Jetty
Facilities located at both Kertih and Gebeng:• Cogeneration Plant (COGEN)• Air Separation Unit (ASU)• Demin and Cooling Water Unit• Nitrogen Generation Unit (NGU)• Effluent Treatment Plant
Our Value Creating Business Model
1 4 5 6 7 82p.45
PUSHING FORWARD ACCELERATING MOMENTUM
3
Our business model is built across four strategic business units which actively interact and integrate with one
another, thus ensuring resources are utilised to the fullest. It allows for dynamic decision making as
well as focused execution and growth, enabling us to deliver value to both PETRONAS Group
and to our own stakeholders.
REVENUE STRUCTURE
GAS PROCESSING (GP)
• Reservation charge (fixed)• Flowrate charge (variable)• Performance Based Structure income• Additional Ethane Target incentive• Internal Gas Consumption incentive
GAS TRANSPORTATION (GT)
• Transportation fee (fixed)
REGASIFICATION (RGT)
• Regasification fee (fixed)
UTILITIES (UT)
• Sales of utilities
Read more about our business segment performance on pages 90 to 99.
CUSTOMERS
PETRONAS
PGB distributes the output to PETRONAS’ customers – power and non-power sector including the petrochemical sector
SHIPPERS
PGB distributes the output to shippers’ customers – power and non-power sector including the petrochemical sector
CAPACITY USERS
PGB distributes the output to capacity users’ customers – power and non-power sector, including the petrochemical sector
UTILITIES CUSTOMERS
Petrochemical and industrial customers in Kertih Integrated Petrochemical Complex, Terengganu and Gebeng Industrial Area, Pahang
Nature 2018 2019
Natural gas (mmscfd) 1,999 1,604Freshwater withdrawal (m3) 6.4 6.1Land area (hectare) 4,961 4,961
Asset 2018 2019
Plants and pipelines value (RM million) 10,856 11,394Project in progress value (RM million) 688 891CAPEX (RM million) 1,047 1,318
Intellectual
• Systems and processes
• Digitalisation
• Skills, experience and technically qualified employees, industry
thought leaders and experts
Social and Relationship
• Business Partners
• Communities
• Customers
• Employees and Unions
• Government Agencies/
Authorities
• Investors and Funding
Institutions
• Suppliers and Vendors
Financial 2018 2019
Equity funding 80% 78%Debt funding 20% 22%WACC* 8.1% 7.2%Interest earned from investment (RM million) 113 154Interest expense paid (RM million) 175 230Market capitalisation (RM billion) 38 33
* as published by Bloomberg
Human Capital 2018 2019
Number of employees 1,959 1,829
2018 2019
Greenhouse gas emission (million tonnes/CO2e
) 5.4 5.1Waste generated (tonnes) 2,359 2,437Waste recycled (tonnes) 1,466 1,179Percentage of waste recycled 62% 48%Energy Efficiency Index 103 92
2018 2019
Number of Work Processes 5 5Number of coaches/mentors 19 59
2018 2019
Revenue (RM million) 5,498 5,458Gross Profit margin 46% 44%Tax paid to the government (RM million) 387 430Corporate Social Responsibility programmes 33 39Corporate Governance Disclosure rating Top 30
ASEAN
Top 4
ASEAN
2018 2019
Operating profit (RM million) 2,571 2,556Cash from operating activities (RM million) 3,311 3,357EBITDA (RM million) 3,612 3,503Dividend paid to shareholders (RM million) 1,365 1,425EPS (sen) 90.6 97.8
2018 2019
Salesgas delivered (mmscfd) 2,060 2,272Electricity (RM million) 595 652Depreciation (RM million) 1,137 1,138Industrial gases (RM million) 246 234Product delivery 100% 100%Reliability 99% 100%OEE 99% 99%HSSE Total Recordable Cases (TRC) 1 4Number of national power disruption – –
2018 2019
Training mandays per employee 6 7Total wages and salaries (RM million) 403 427Investment in training (RM’000) 5.2 8.4Number of work-related fatalities – –In-house training programme introduced – 2
SIX INPUT CAPITALS OUTPUT/OUTCOME
INTEGRATED REPORT 2019VALUE WE CREATE
Key Resource Capitals: Role and Scoreboard
p.46
Propane Butane Electricity
Sale
sga
s
Eth
an
e
Ste
am
NATURAL GAS
WATER
AIR
Nitro
ge
n
Ox
yg
en
We invest in social & relationship capital for long term financial capital growth. However, in the short term, both financial and human capitals are required.
We affect natural resources through our business processes as well as emission. Addressing the impact requires utilisation of our financial, assets and human capitals.
Investing in intellectual capital reduces our financial capital in the short term. Nevertheless, in the longer term, financial, natural resources, human and social & relationship capitals will be enhanced.
Optimisation for efficiency has required us to increase our investment on capability and leadership, depleting financial capital. However, in the long run, intellectual and financial capitals will be positively impacted, as we become more capable and cost efficient.
By applying our financial capital to create value, there will be positive impact on asset, human, intellectual and social & relationship capitals. This, however, may result in depletion of natural resources.
Improving our asset performance requires financial capital in the short term but will positively contribute to financial, natural resources, human and social & relationship capitals in a longer term.
Involves various processes such as
gas processing, gas transportation, regasification and utilities to convert natural resources utilising all other key inputs into
valuable products and output
Integration between capitals and external environment to create value over time from our key resources whilst meeting stakeholders needs in a responsible manner.
KEY PROCESS ACTIONS TO ENHANCE OUTCOMES TRADE OFFS
Optimising financial capital
• Sustainable returns via dividend distribution to shareholders in line with industry dividend payout ratio
• Optimum hedging strategy through continuous assessment on various funding alternatives to cater for growth opportunities
Elevating asset performance
• Investment on LNG Regasification Terminal and Air Separation Unit (ASU) projects in Pengerang, Johor
• Implementation of R2 Gameplan: 301Q99 focusing on operational and commercial excellence
• Plant rejuvenation for GPS
Nurturing people
• Enhanced Leadership programme• World-class working environment, culture and ethics in
nurturing leadership capability• Highly engaged, capable and diversified workforce
Engaging stakeholders
• National energy security• Gas advocacy efforts• Well-established corporate reputation via effective
engagements with stakeholders and corporate social responsibility programmes
• PETRONAS Vendor Development Programme
Leveraging intellectual capital
• Implementation of standardised Work Process (WP) and Operational Excellence Management System (OEMS) Platform
• Automation of processes to eliminate errors, enhance quality and free resources for more value-added tasks
• Outsourcing of project management, procurement and transactional finance functions to PETRONAS for efficiency and best practices
Managing natural resources
• Investment in research and development as well as technologies to improve energy efficiency and address negative impact on natural elements by minimising pollution and promoting water stewardship
• RM2 million allocated for effective waste disposal with 28% target on annual reduction in waste disposal
• ‘Sayangi Sungai Latoh’ programme to preserve the biodiversity of rivers near our operating sites
• Investment in clean air regulation requirements
1 4 5 6 7 82p.47
PUSHING FORWARD ACCELERATING MOMENTUM
3
KEY STAKEHOLDER GROUP VALUE FOR US VALUE FOR THEM STAKEHOLDER ENGAGEMENT INITIATIVES RESULTS
INVESTORS AND FUNDING INSTITUTIONS
• Access to equity and debt funding• Liquidity of our shares• Fair rating of our shares• Open dialogue to understand and address their
concerns
• Solid investment case and understanding of the business strategy
• Continued, sustained growth in capital and distributions• Assurance that business activities and decisions are
aligned to strategy in creating sustained value• Assurance that sustainability and compliance with
governance principles is considered and integrated into business strategy
• Ability to pay interest and repay debt capital
• Guided disclosure on company focus, financial performance and progress of growth projects
• Special briefing session on Third Party Access• Issuance of media release for PGB quarterly results• Increased engagement with investors and funding institutions• Disclosure of ESG practices in the Annual Report
• Greater awareness and increased interaction with the capital market:– Increased number of meetings with investors and analysts (2019 = 83 vs.
2018 = 66)– Increased participation in investor conferences, both domestic and
international (2019 = 3 vs. 2018 = 1)– Increased number of analyst coverage (2019 = 15 vs. 2018 = 14)– Increased nomination for Malaysian Investor Relations Association (MIRA)
Awards (2019 = 5 vs. 2018 = 0)
CUSTOMERS
• Deliver a superior offering that reflects our operational and commercial excellence
• Extension of contracts• Secure new contracts
• Product Delivery Reliability (PDR)• Competitive rates and product offering
• Close integration along the value chain to ensure reliability and PDR
• Increased offering of customer centric-solutions for both products and prices
• Increased customer engagement and visits • Increased marketing activities and outreach to customers
• Increased positive and constructive feedback from customers• New and extension of contracts from customers• Secured Heads of Agreement for new product offtake• Successful delivery of Malaysia’s maiden third party LNG cargo
BUSINESS PARTNERS
• Responsible, compliant business partner • Mutually beneficial partnerships• Quality relationships and support in business
operations
• Assimilation of operational and commercial excellence to drive performance
• Identification of potential business opportunities• Mutual secondment of staff• Focused effort on managing existing and potential partners
• Commercial operation of Pengerang Air Separation Unit ahead of schedule• Strong performance of joint venture entities• Mutual understanding towards common goals• Transfer of knowledge and skills
SUPPLIERS AND VENDORS
• Delivery of services aligned to PETRONAS/PGB values and with a positive impact on brand and reputation
• Fair opportunities and negotiation processes• Opportunities and partnerships that assist in growing
their business
• Leverage on PETRONAS Group Procurement services• Communications and guidance of standards through:
– PETRONAS Code of Conduct and Business Ethics (COBE);– PETRONAS Anti-Bribery and Corruption Manual (ABC); and– PETRONAS Vendor Development Programme.
• Improved delivery of services• Improved two-way communication between suppliers/vendors and PGB
EMPLOYEES AND UNIONS
• Engaged employees that make valuable contributions to deliver on business strategy, achieve strategic goals and act as brand custodians
• Employees who generate and implement innovative ideas and solutions to ensure we remain relevant
• Filling the skills gap: nurturing and developing future talent
• A work environment that promotes sustainability• Opportunities for learning, development and growth• Career growth prospects• Opportunity to make valuable contributions and
achieve personal fulfilment and satisfaction
• “Workplace for Tomorrow” to encourage openness and collaborative workforce
• Increased flexibility in working arrangements• Revision and introduction of benefits e.g. medical, pilgrimage
for all religions• Structured leadership development framework• Internal programmes to encourage staff participation and
understanding of PGB’s strategy and business plans
• Positive barometer survey results specifically relating to leadership, HSSE, culture and system
• Implementation of talent mix strategy, addressing Diversity and Inclusion (DNI) and mobility
GOVERNMENT AGENCIES/ AUTHORITIES
• Acceptance of PGB’s role in delivering sustainable energy for the nation
• Consultative partner in defining the role of gas in the energy market
• Extensive gas delivery network in Peninsular Malaysia• Cleaner energy from cogeneration plants• Safe, reliable and efficient operations across all
facilities
• Formal and informal engagements• Joint emergency response exercises• Familiarisation visit to PGB facilities• Regular reporting to government agencies
• Better understanding and appreciation of PGB business operations• Increased involvement and contribution towards gas market needs• Successful testing of PGB readiness to implement Third Party Access (TPA)
system• Successful delivery of Malaysia’s maiden third party LNG cargo• Approval of Regulatory Period 1 (RP1) tariffs with consideration of protecting
shareholders’ interests• Emergency response preparedness tested and executed successfully with
relevant parties
COMMUNITIES
• Engaged communities who understand PGB’s business and operations
• Positive image of the Company
• Health and safety of PGB operations with no impact to surrounding communities
• Education and social support• Environmental protection and biodiversity preservation
• Implementation of Corporate Social Responsibilty (CSR) programmes in the areas of education, environment and social support– Back-to-school programmes– ‘Sayangi Sungai Latoh’ mangrove planting programme– Free market of which the proceeds were channelled to B40
recipients• Sponsorships and donations• Outreach programmes to foster good relationship with community
• Increased engagement and awareness of PGB operations• Increased outreach programmes with positive feedback• Amicable resolutions of issues and concerns with the local communities
INTEGRATED REPORT 2019VALUE WE CREATE
Stakeholder Value Creation
p.48
KEY STAKEHOLDER GROUP VALUE FOR US VALUE FOR THEM STAKEHOLDER ENGAGEMENT INITIATIVES RESULTS
INVESTORS AND FUNDING INSTITUTIONS
• Access to equity and debt funding• Liquidity of our shares• Fair rating of our shares• Open dialogue to understand and address their
concerns
• Solid investment case and understanding of the business strategy
• Continued, sustained growth in capital and distributions• Assurance that business activities and decisions are
aligned to strategy in creating sustained value• Assurance that sustainability and compliance with
governance principles is considered and integrated into business strategy
• Ability to pay interest and repay debt capital
• Guided disclosure on company focus, financial performance and progress of growth projects
• Special briefing session on Third Party Access• Issuance of media release for PGB quarterly results• Increased engagement with investors and funding institutions• Disclosure of ESG practices in the Annual Report
• Greater awareness and increased interaction with the capital market:– Increased number of meetings with investors and analysts (2019 = 83 vs.
2018 = 66)– Increased participation in investor conferences, both domestic and
international (2019 = 3 vs. 2018 = 1)– Increased number of analyst coverage (2019 = 15 vs. 2018 = 14)– Increased nomination for Malaysian Investor Relations Association (MIRA)
Awards (2019 = 5 vs. 2018 = 0)
CUSTOMERS
• Deliver a superior offering that reflects our operational and commercial excellence
• Extension of contracts• Secure new contracts
• Product Delivery Reliability (PDR)• Competitive rates and product offering
• Close integration along the value chain to ensure reliability and PDR
• Increased offering of customer centric-solutions for both products and prices
• Increased customer engagement and visits • Increased marketing activities and outreach to customers
• Increased positive and constructive feedback from customers• New and extension of contracts from customers• Secured Heads of Agreement for new product offtake• Successful delivery of Malaysia’s maiden third party LNG cargo
BUSINESS PARTNERS
• Responsible, compliant business partner • Mutually beneficial partnerships• Quality relationships and support in business
operations
• Assimilation of operational and commercial excellence to drive performance
• Identification of potential business opportunities• Mutual secondment of staff• Focused effort on managing existing and potential partners
• Commercial operation of Pengerang Air Separation Unit ahead of schedule• Strong performance of joint venture entities• Mutual understanding towards common goals• Transfer of knowledge and skills
SUPPLIERS AND VENDORS
• Delivery of services aligned to PETRONAS/PGB values and with a positive impact on brand and reputation
• Fair opportunities and negotiation processes• Opportunities and partnerships that assist in growing
their business
• Leverage on PETRONAS Group Procurement services• Communications and guidance of standards through:
– PETRONAS Code of Conduct and Business Ethics (COBE);– PETRONAS Anti-Bribery and Corruption Manual (ABC); and– PETRONAS Vendor Development Programme.
• Improved delivery of services• Improved two-way communication between suppliers/vendors and PGB
EMPLOYEES AND UNIONS
• Engaged employees that make valuable contributions to deliver on business strategy, achieve strategic goals and act as brand custodians
• Employees who generate and implement innovative ideas and solutions to ensure we remain relevant
• Filling the skills gap: nurturing and developing future talent
• A work environment that promotes sustainability• Opportunities for learning, development and growth• Career growth prospects• Opportunity to make valuable contributions and
achieve personal fulfilment and satisfaction
• “Workplace for Tomorrow” to encourage openness and collaborative workforce
• Increased flexibility in working arrangements• Revision and introduction of benefits e.g. medical, pilgrimage
for all religions• Structured leadership development framework• Internal programmes to encourage staff participation and
understanding of PGB’s strategy and business plans
• Positive barometer survey results specifically relating to leadership, HSSE, culture and system
• Implementation of talent mix strategy, addressing Diversity and Inclusion (DNI) and mobility
GOVERNMENT AGENCIES/ AUTHORITIES
• Acceptance of PGB’s role in delivering sustainable energy for the nation
• Consultative partner in defining the role of gas in the energy market
• Extensive gas delivery network in Peninsular Malaysia• Cleaner energy from cogeneration plants• Safe, reliable and efficient operations across all
facilities
• Formal and informal engagements• Joint emergency response exercises• Familiarisation visit to PGB facilities• Regular reporting to government agencies
• Better understanding and appreciation of PGB business operations• Increased involvement and contribution towards gas market needs• Successful testing of PGB readiness to implement Third Party Access (TPA)
system• Successful delivery of Malaysia’s maiden third party LNG cargo• Approval of Regulatory Period 1 (RP1) tariffs with consideration of protecting
shareholders’ interests• Emergency response preparedness tested and executed successfully with
relevant parties
COMMUNITIES
• Engaged communities who understand PGB’s business and operations
• Positive image of the Company
• Health and safety of PGB operations with no impact to surrounding communities
• Education and social support• Environmental protection and biodiversity preservation
• Implementation of Corporate Social Responsibilty (CSR) programmes in the areas of education, environment and social support– Back-to-school programmes– ‘Sayangi Sungai Latoh’ mangrove planting programme– Free market of which the proceeds were channelled to B40
recipients• Sponsorships and donations• Outreach programmes to foster good relationship with community
• Increased engagement and awareness of PGB operations• Increased outreach programmes with positive feedback• Amicable resolutions of issues and concerns with the local communities
Read more about our Stakeholders Engagement on page 56.9
1 4 5 6 7 82p.49
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A. Forward Strategies52 Our Operating Environment 56 Stakeholders Engagement58 Material Matters60 Key Risks and Mitigation64 Strategic Blueprint66 Strategic Focus Areas and Key Performance Indicators68 Performance Scorecard
B. Forward Driven Performance74 5-year Group Financial Analysis76 5-year Financial Summary78 5-year Group Financial Information79 Group Quarterly Performance80 Simplified Group Statement of
Financial Position82 Key Interest Bearing Assets and
Liabilities82 Statement of Value Added83 Distribution of Value Added84 Investor Relations87 Financial Calendar88 Share Price Performance
C. Forward Focused90 Business Review
90 Gas Processing92 Gas Transportation94 Regasification96 Utilities98 Ancillary Services
PropositionOur Value4
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.52
MALAYSIAN GAS SUPPLY & DEMAND OUTLOOK
• With the onstream of several coal power plants, and continued push by the Government for higher share of renewables in the energy mix, we expect slowing demand for gas from the power industry.
• However, this will be offset by higher demand from non-power sector.
Impact on our business
• Re-focus our strategy towards non-power industry for expansion such as new industrial hubs.• Increasing focus on asset optimisation, operating efficiencies and value-adding activities to our existing assets.• Potential growth in other related space, capitalising on our plant operating experience.
How we responded
• Creating greater awareness of the benefits of gas as a clean source of energy and its role as a transitional fuel as Malaysia moves towards low-carbon economy.
• Close engagement with the relevant stakeholders such as government ministries and state agencies to advocate on the importance of gas as part of Malaysia’s economic policies and masterplan.
• Diversifying into other areas related to our core business such as Gassing Up and Cooling Down (GUCD), invested in infrastructure to support LNG bunkering/reloading and LNG truck loading businesses at our regasification terminals.
Outlook
• Gas will remain a critical fuel component of power industry as it provides stability to the national grid.• As a cleaner fuel alternative, it will play a significant role in Malaysia’s efforts towards compliance with the
Paris Agreement to reduce Greenhouse Gas (GHG) emissions by 45% by 2030 in relation to 2005 GDP.
Our operating environment is becoming increasingly dynamic, largely characterised by the recent gas market liberalisation and rising challenges from competing alternatives, such as coal and solar, as a fuel source. PGB monitors changes in our operating environment and reflects them in our material matters which, in turn, influence our strategy to become a leading gas infrastructure and utilities company.
Our Operating Environment
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MALAYSIAN GAS MARKET LIBERALISATION
• Gas market liberalisation will encourage participation from new gas players and promote competition in the domestic gas market.
• External gas suppliers can now import gas into Malaysia and compete with domestic gas suppliers.• This provides a competitive environment for gas supply and price while ensuring security of supply for Malaysia.• To ensure a level playing field, Suruhanjaya Tenaga has regulated the tariff for Gas Transportation and Regasification
segments.
Impact on our business
• Change in our tariff formula for Transportation and Regasification businesses.• Potential variability in revenue due to changes in tariff for regulated businesses.
How we responded
• Collaborated effectively with Suruhanjaya Tenaga to ensure that our infrastructure and systems are ready to accept third party cargoes.
• Strengthen our operations and reduce costs with 301Q99 Pushing Forward game plan to mitigate impact to revenue.• Diversification into ancillary services.• Expansion of our Utilities business by securing electricity supply licenses outside our traditional captive area
to a new customer.
Outlook
• Increased usage of our regasification terminals for LNG imports will position the terminals as emerging regional hubs for gas.
• Increased demand for related gas hub services such as GUCD, LNG bunkering/breakbulking and storage at our terminals.
THIRD PARTY ACCESS PROVIDES MORE OPTIONS FOR CONSUMERS TO PURCHASE NATURAL GAS
• Shippers can engage the services of gas facilities licensees to send their gas to consumers
Regasification Terminals
Transmission Pipelines
Distribution Pipelines
• Any party can be an importer and/or shipper and sell directly to consumers
• Consumers have the option to choose from any of the licensed shippers registered with Suruhanjaya Tenaga
Electricity Sector
Commercial Sector
Transportation Sector
Retail Sector
Industrial Sector
ResidentialSector
LICENSED LNG IMPORTERS& SHIPPERS
GAS FACILITIES GAS CONSUMERS
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.54
POWER MARKET LIBERALISATION
• Power market liberalisation under MESI 2.0 aims to provide power consumers with choices and control while ensuring competitive electricity prices.
• This is done through opening up of the power segments to allow greater participation by market players.• Transmission and Distribution networks will be accessible to the third party electricity producers to allow them to sell
direct to end customers.• This provides consumers with more choices of electricity supplier which in turn will boost market efficiencies.
Our Operating Environment
Impact on our business
• Opportunity for PGB to access new growth area to cushion any impact on regulated business.• Launchpad for the next stage of growth for PGB in Utilities business.
How we responded
• Set up dedicated team to study the next stage of Utilities business in PGB and beyond.• Explore areas of potential participation and identify PGB’s inherent strengths and value propositions.• Close monitoring of MESI 2.0 development and continuous engagement with MyPower and Suruhanjaya Tenaga for updates.
Outlook
• Opening up of the market will happen in phases, with several studies and pilots currently being conducted by MyPower.
• MyPower is expected to commence a pilot period for a third party access for renewables in the first half of 2020.
• Under the plan, green energy buyers can sign a third party contract with renewable energy power producers and directly purchase up to a total of 100MW from them.
• It will set up the stage for a Third Party Access into Malaysia’s electric power transmission and distribution lines for other power producers.
TNB-FUEL PETRONAS
TNBGENERATION
IPPS(INCLUDING RE)
TNB Retail
MALAYSIA ELECTRICITY SUPLLY INDUSTRY (MESI)
FUE
LG
RID
GE
NE
RA
TIO
N
TNB Transmission
TNB Distribution
TNB Retail
FUE
LG
RID
GE
NE
RA
TIO
N
TNB Transmission
TNB Distribution
TNB-FUEL
TNB-GEN
GAS SUPPLIER
COALSUPPLIER
IPPs
PETRONAS
GENTAILER
New Retailer Gentailer
ISB IGSO
(Including Renewable Energy) (Generator-Retailer)
NEDA
MESI 1.0 (2010 - 2014) MESI 2.0 (Recommendation) (2019 - 2025)
NEDA RF-SB RF-GSO
Source: Ministry of Energy, Science, Technology, Environment and Climate Change (MESTECC)Note: Full details on abbreviation are available in the Glossary.
7 8
AUTONOMOUSROBOTS
BIG DATAANALYTICS
SIMULATION
CYBER SECURITY
AUGMENTEDREALITY
ADDITIVE MANUFACTURINGCLOUD COMPUTING
INDUSTRY 4.0INTERNET
OF THINGS
SYSTEMINTEGRATION
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INDUSTRIAL REVOLUTION 4.0
• The Fourth Industrial Revolution is rapidly driving transformational disruption across every sector.• Industry structures and business models are being disrupted by innovation in new products and services,
changing cost structures and lower barriers to entry.• It changes the way we operate and the characteristics of talents and culture required.
Impact on our business
• Enhanced operational efficiencies contributing to improved profitability.• Increased effectiveness in monitoring of plant operations through one-stop online digital dashboard.• Safer and more efficient management of plant turnarounds.
How we responded
• Focus on transforming into a data-driven organisation employing descriptive and advanced analytics.• Implementation of PIVOT initiatives to:
– Strengthen barrier management to prevent plant interruption.– Build solid foundation for efficient plant operations through effective plant safety monitoring.
Outlook
• PGB will continue to innovate to stay ahead in plant operations and in providing solutions to customers.• Big data analytics and use of clouds in managing our operations will allow PGB to make better and quicker
decisions in operations.• Increasing digitalisation will transform our work processes and drive depth in data insights.
INVESTORS AND FUNDING INSTITUTIONS
CUSTOMERS
BUSINESS PARTNERS
SUPPLIERS AND VENDORS
EMPLOYEES AND UNIONS
GOVERNMENT AGENCIES AND AUTHORITIES
COMMUNITIES
KEY STAKEHOLDER GROUPS
CHANNEL & FREQUENCY OF ENGAGEMENT
• Annual Report and Annual General Meeting• Quarterly analyst briefings• Investor roadshows and conferences• One-on-one meetings• Site visits• PGB website
• Annual customer experience survey• Customer visits• Industry conferences, forums and events• One-on-one meetings
• Board meetings• Management committee meetings• Strategic dialogues, conferences, forums and events• One-on-one meetings
• Toolbox sessions• Project sponsor meetings
• Annual townhall• Union engagement and activities• Monthly engagement with the Leadership Team• Periodic employee engagement with Human Resources Department• Intranet and Internal newsletters• Bi-annual PGB Barometer survey• R2C2 monthly message sharing
• Quarterly engagement programmes• Consultative sessions• One-on-one meetings
• Quarterly Corporate Social Responsibility (CSR) programmes• Periodic briefings and engagements with local communities
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019
Stakeholders Engagement
p.56
7 8
OUR RESPONSE
12Read more on our Stakeholder Value Creation on page 48
KEY CONCERNS
• Shareholders’ return• Third Party Access and regulatory risks to
business• Future growth strategy• Environment, Social and Governance (ESG)
practice
• Product Delivery Reliability (PDR)• Product quality• Competitive product offering
• Performance and returns of business ventures• Opportunity for growth and value creation• Sustaining long-term partnership• Regulatory compliance
• Fair procurement and pricing practice• Project delivery performance
• Conducive working environment• Diversity and Inclusivity (DNI)• Staff understanding on their contribution to
company’s strategy and business plans
• Gas supply, security and reliability• Economic impact to consumers• Regulatory compliance• Health and safety of PGB operations and
impact to surrounding communities• Ethical business practice
• Health and safety of PGB operations and impact to surrounding communities
• Education and social support• Environmental protection and biodiversity
preservation
We are cognisant of the need to engage our stakeholders and obtain their feedback on material sustainability areas in deriving and implementing our strategies. We will continue to engage our various stakeholder groups to ensure alignment of expectation for best outcomes.
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Sustainability
Complia
nce to Regulation
Human Capital
Business Growth
Gas
Mar
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ation
Gas
Mark
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Operati
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Rel
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ery
and E
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Health, Safety
, Sec
uri
ty a
nd
En
viro
nmen
t (HSSE)
08
07
06
05
04
03
02
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> IDENTIFICATION
> PRIORITISATION
> INTEGRATION
CA
PIT
ALS
STR
AT
EG
YST
AK
EH
OLD
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GR
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IMP
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Immediate Medium
Me
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Long
MATERIALITY MATRIX
TIMEFRAME
Hig
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Health, Safety, Security and Environment (HSSE)
Compliance to Regulation
Operational Reliability, Delivery and Efficiency
Business Growth
Human Capital
Gas Market Dynamics
Sustainability
Gas Market Liberalisation
Material Matters
are matters that
have the greatest
impact on an
organisation’s
financial
performance
and on the
organisation’s
ability to create
value and deliver
on its Strategy.
1
2
3
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OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019
Material Matters
p.58
7 8
MATERIAL MATTERS
WHAT ARE THE RISKSWHAT ARE THE OPPORTUNITIES
OUR RESPONSE LINKS TO:
Health, Safety, Security and Environment
(HSSE)
Occurrence of major HSSE incidents affecting PGB business and reputation
Inculcation of behavioural safety culture with commitment from all staff, leading to increasing operational reliability and efficiency
Strengthen HSSE practices via identified key focus areas, which include:
• HSSE compliance improvement via digitalisation;• Efficient functional assurance;• Upskilling HSSE capability; and• Effective communication programme.
Concerted and continued efforts to strengthen behaviour towards Generative HSSE Culture.
1
Read more on our Strategic Focus Areas on page 66
11
Read more on our Risk Management on page 60
7
Read more on our Sustainability practices on page 132
Operational Reliability,
Delivery and Efficiency
Unsustainable operational performance and non-competitive costs impacting customers
Development of key operational strategies to achieve and sustain world-class standard which can be leveraged upon to generate additional revenue
Development of initiatives to ensure cost-competitiveness
Identification and timely completion of operational initiatives under R2 Game Plan:301Q99 Pushing Forward.
Implementation of digital solutions for effective monitoring and intervention.
Gas Market Dynamics
Low asset utilisation arising from reduced demand for gas, use of alternative fuels, and increasing call for renewables
Advocacy on the use of natural gas towards achieving sustainable energy mix in Malaysia to generate business opportunities
Explore growth opportunities to add further value to existing assets and future-proof the business.
Gas Market Liberalisation
Pressure on tariffs and earnings for regulated businesses
Potential growth opportunities in non-regulated areas, such as utilities, power and ancillary services
Undertake efforts in ensuring fair tariff development through continuous engagement with Suruhanjaya Tenaga, Ministry of Economic Affairs (MEA) and economic consultant.
Identification and effective implementation of commercial initiatives under R2 Game Plan: 301Q99 Pushing Forward.
Business Growth
Challenges in achieving growth targets to support PGB business
Potential growth opportunities in core and adjacent plays to add further value to the business
Strategic engagements with various parties to explore potential collaboration opportunities.
Establishment of Result Delivery Steering Committee to closely monitor growth progress.
Human Capital
Readiness of competent and capable talents to drive value in business operations and strategies
Robust talent management strategies and plans to produce capable and continuous pipeline of talents
Development and implementation of Talent Mix Strategy which enables empowered organisation, agile workforce as well as diversity and inclusion.
Management of talent competencies through RESCISCO implementation.
Compliance to Regulation
Potential breaches of critical laws, regulations and licenses resulting in reputational damage and financial loss
Adherence to critical laws and regulations resulting in strong reputation and standing
Execution of awareness and communication programmes on laws, regulations and licenses across PGB.
Sustainability
Inability to ensure and balance sustainability from economic, social and governance standpoints
Potential collaboration with all stakeholders along the value chain to deliver sustainable solutions
Identification and monitoring of annual sustainability targets.
Deliberate on sustainability practices at PGB Leadership Team meeting.
Alignment of sustainability targets and initiatives with PETRONAS.
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CONTINUOUS IMPROVEMENTS
We continue to enhance risk management awareness and capabilities across the Group through continued engagement and application of best practices.
In addition, we benefit from being part of PETRONAS Group where PGB is part of various Community of Practice (CoP) discussions which provides platforms to share and learn best practices as well as discuss on issues and improvements relating to Risk Management and Business Continuity Management implementation. Implementation on risk assurance exercises are in place within the Group to safeguard, control and mitigate risks, as part of its aspirations to achieve safe, reliable and efficient organisation.
We continue to focus on institutionalisation of risk management practice throughout the organisation.
Key risks identified under the PGB Enterprise Risk Profile as well as other risk focus areas are regularly monitored to ensure timely completion of their mitigations.
TYPE OF RISK
TYPE OF RISK
HSSE
Occurrence of major HSSE incidents affecting PGB business and reputation
Unsustainable operational performance could result in supply interruptions to customers
RISK DESCRIPTION
RISK DESCRIPTION
MITIGATION ACTIONS
MITIGATION ACTIONS
Strengthening HSSE practices via identified key focus areas which includes HSSE compliance improvement via digitalisation, efficient functional assurance, upskilling HSSE capability and effective communication programme.
Continuous efforts are also in place in strengthening behavioural-based safety towards Generative Safety Culture.
Close monitoring and reporting of progress and ensure timely completion of operational Key Result Areas (KRAs) for improvement initiatives under PGB R2 Game Plan: 301Q99 Pushing Forward, and implementation of digital solutions for effective monitoring and tracking. Physical asset, safety and equipment risk were monitored under Plant Facilities Risk Management mitigations.
RESULT
RESULT
HSSE performance recorded two LTIs incidents which was below the allowable limit and despite higher manhours as compared to previous year.
Sustainable improvement of key operational indicators on higher product delivery reliability to customers and Overall Equipment Effectiveness (OEE) which translated into uninterrupted delivery.
Operational
Key Risks and Mitigation
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.60
7 8
TYPE OF RISK
TYPE OF RISK
TYPE OF RISK
Variability of tariff for the next regulatory period
Possible breaches of critical laws, regulations and licenses resulting in reputational damage
Variability of PBT post-TPA regime roll-out and credit risk exposure
Challenges in achieving growth targets to support PGB business
RISK DESCRIPTION
RISK DESCRIPTION
RISK DESCRIPTION
MITIGATION ACTIONS
MITIGATION ACTIONS
MITIGATION ACTIONS
Undertake efforts in ensuring fair tariff development through continuous engagement with the regulator, relevant government ministries and economic consultant as well as effective implementation of R2 Game Plan: 301Q99 Pushing Forward.
Adhering to the critical laws and regulations through awareness communications on new laws, regulations and licenses across PGB i.e. PETRONAS Third Party Risk Management and PETRONAS Personal Data Protection Act and Anti-Competition Act & GSA 2016.
Close monitoring and reporting to ensure timely completion of PGB 301Q99 Pushing Forward target in reducing operation and maintenance costs.
Continues to apply the Credit Risk Management processes following Third Party Access (TPA) implementation which exposed the company to potential losses in the event of non-payment by customers.
Establishment of Growth Working Committee to closely monitor Growth progress and progress monthly reporting to R2 Steering Committee (R2SC).
RESULT
RESULT
RESULT
Proposed Regulatory Period (RP1) was approved by Suruhanjaya Tenaga.
No breaches of current critical laws, regulations and licenses.
Sustained world-class reliability at lower cost which resulted in higher PBT than previous years thus cushioning the current impact from TPA.
Credit Risk Management Committee (CRMC) established and Credit Risk Guidelines enhanced.
Implementation of current undergoing growth activities on track.
Strategy
Regulatory
Financial
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Market
TYPE OF RISK
TYPE OF RISK
TYPE OF RISK
Pressure on profitability for utilities business due to cost creep
Potential leakage of confidential data and exposure to operations system arising from cyber security threats
Potential inability to conform to sustainability requirements impacting PGB reputation
RISK DESCRIPTION
RISK DESCRIPTION
RISK DESCRIPTION
MITIGATION ACTIONS
MITIGATION ACTIONS
MITIGATION ACTIONS
Perform assessment on overall Utilities pricing mechanism and business model, continuous stakeholder management and negotiations, close monitoring of Utilities 301Q99 KRA efforts in reducing operating cost as well as Commercial Excellence (CX) initiatives to retain existing customers and capture new customers.
PETRONAS Groupwide Cyber Security Assurance Programme in strengthening current measures and continued regular interactions with various parties for corporate digital initiative alignment.
Continuous monitoring of sustainability targets and deliberation on sustainability practices at PGB Leadership Team meeting and aligning sustainability targets and initiatives with PETRONAS.
Sustainable utilities PBT through ongoing effort to sustain its existing business and secured new future business for the supply of power and steam.
Zero cases of cyber security breach.
PGB’s listing in FTSE4GOOD reflects good sustainability practices.
Technology
Governance
Key Risks and Mitigation
RESULT
RESULT
RESULT
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.62
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OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.64
Strategic Blueprint
• Achieve superior and sustainable plant performance focusing on:
– Safe, reliable and efficient operations while reducing costs to ensure price competitiveness.
– Improve plant reliability performance to secure higher PBS amount.
• Deliver superior and competitive service to retain and extend new products to existing customers.
• Secure new customers by being:– customer centric; and– a solutions provider of choice in terms of cost, pace and service.
• Advocate the role of natural gas towards sustainable energy mix.
• Leverage on our capabilities and strengths to compete and secure new growth opportunities in our existing space.
• Step out into adjacent play that can add value to our existing assets.
• Transform Employee Experience through talent mobility and agile workforce.
• Promote Diversity and Inclusion as enablers to grow a diverse and inclusive workforce in a supportive working environment.
• Efficient leadership and capability development.
• Efficient and sustainable management systems and work processes.
PEOPLE,SYSTEMS AND CULTURE
OPERATIONAL EXCELLENCE
COMMERCIAL EXCELLENCE
GROWTH
ST
RA
TE
GIC
T
HR
US
TS
7 81 2 5 63p.65
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Gas AdvocacyPGB is pushing forward to explore growth opportunities that can add further value to existing assets and future-proof the business. To this end, PGB is actively advocating towards the use of natural gas in achieving sustainable energy mix in Malaysia.
LONG TERM
The action plans are translated to Key Result Areas (KRAs) to del iver the target value creation for each element. OE R2 3Play (Work Process, Management System and Empowerment) and Digital solutions will act as strategic drivers to sustain the value creation of PGB R2 Game
Plan.
More than 70 Key Result Areas
(KRAs) were identified.A total of
RM68.0 million
value creationwas achieved from PGB R2
Game Plan
2 0 1 9
PGB R2 GAME PLAN 301Q99 PUSHING FORWARD IS A FOUR-YEAR JOURNEY STARTING FROM 2019 TO 2022 WITH FOCUS AREA OF MAXIMISING ASSET UTILISATION IN A SAFE, RELIABLE AND EFFICIENT MANNER.
‘1Q’ represents driving the energy and cost efficiency to achieve Quartile 1 target in order to bring down the unit production cost.
• Energy Index (EI)• Maintenance Cost over Current Plant
Replacement Value (MC/CPRV) • Maximising productivity through empowerment
‘30’ represents improvement of plant utilisation gap by 30%. The focus being to:
• Retain existing customers by improving product delivery reliability and HSSE
• Capture new customers by expanding PGB resources to increase product sales
‘99’ represents protecting enterprise value by sustaining asset reliability at 99%. It also focuses on maximising Performance Based Structure (PBS) incentives through higher plant reliability.
301Q99 PUSHING FORWARD
STRATEGIC FOCUS AREAS KEY PERFORMANCE INDICATORS 2019 INITIATIVES AND RESULTS 2020 PRIORITIES
• Ensure safe operations at all facilities Zero HSSE Incident* Four (4) TRC Incidents• Sustain the momentum of 2019 value creation
and initiatives
• Identify and execute more initiatives through Key Results Area (KRA) to maximise the value creation
• Drive efficiencies and improve plant utilisation
• Improve plant reliability performance to secure higher PBS revenue
Plant reliability and efficiency:
(a) Average OEE – GP, UT & RGT(b) Salesgas PDR – PGU(c) Ethane Utilisation(d) Energy Efficiency Index
Above world-class operational performance:
(a) 99.3%(b) 100% (c) 84.5%(d) 97.24
Obtain approval of Regulatory Period 1 (RP1) tariffs
TPA Regulatory Period 1 Tariffs:
(a) PGU(b) RGTSU (c) RGTP
(a) RM1.129/GJ (b) RM3.455/GJ (c) RM3.485/GJ
• Renewal of Utilities contracts in 2020
• Secure new Utilities customers outside of captive area
• Proactive identification of new opportunities
Retain existing customers Expand resources to capture new customers
Extension of existing contracts New sales contracts
Extended long term contracts and secured new sales with existing customers for electricity and steam
Advocate the role of natural gas towards sustainable energy mix
Engagements with statutory bodies Participation in industry conferences
Active participation at high level industry platform such as:
(a) Malaysian Gas Association (MGA) Industry Talk on the Journey towards Natural Gas Market Liberalisation
(b) Malaysian Gas Symposium 2019(c) International Gas Union (IGU) Council Workshop 2019 (d) MGA Forum on Cogeneration
Explore growth opportunities in existing businesses and adjacent space
Achievement of key milestones for projects and opportunities identified
(a) Additional Nitrogen Generation Unit at Kertih (b) Gassing Up Cooling Down at RGTP (c) LNG Reloading at RGTP
• Execution and completion of endorsed projects
• LNG bunkering at RGTSU
• LNG truck loading at RGTP
• Proactive identification of new opportunities
Transform Employee Experience through talent mobility and agile workforce
Promote Diversity and Inclusion towards supportive working environment
Effective leadership and capability development
(a) No. of Ready Talent for Business Critical Positions
(b) Implementation of Talent Mix Strategy
(c) PGB Barometer score
(a) 5.2 :1(b) Implementation of Talent Mix Strategy (i) Development of agile workforce initiative (ii) Empowerment of female workforce in technical and
managerial position(c) Score 3.49 out of maximum 4.00
Continued implementation of talent strategy and initiatives
Implement efficient and sustainable system and work process
(a) Digital Initiatives (b) OE R2 Initial Implementation Readiness
Assessment to reach above threshold of 50%
(a) (i) PETRONAS Integrated Vision for Operational Excellence (PIVOT)
(ii) Geospatial Information System (PiriGIS) (iii) Active participation in PETRONAS digital platform i.e.
SWITCH(b) (i) Utilities Gebeng: 86% (ii) Tanjung Sulong Export Terminal: 91%
Continued improvements toward self-empowered organisation
In realising our strategy, we focus on four strategic thrusts to ensure a robust and fundamentally resilient business that can respond quickly to changes in the business environment.
ST
RA
TE
GIC
TH
RU
ST
S
OPERATIONAL EXCELLENCE
COMMERCIAL EXCELLENCE
PEOPLE, SYSTEMS AND CULTURE
GROWTH
* Fatal Accident, Major Fire, Loss of Primary Containment and regulatory compound.
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019
Strategic Focus Areas and Key Performance Indicators
p.66
7 8
STRATEGIC FOCUS AREAS KEY PERFORMANCE INDICATORS 2019 INITIATIVES AND RESULTS 2020 PRIORITIES
• Ensure safe operations at all facilities Zero HSSE Incident* Four (4) TRC Incidents• Sustain the momentum of 2019 value creation
and initiatives
• Identify and execute more initiatives through Key Results Area (KRA) to maximise the value creation
• Drive efficiencies and improve plant utilisation
• Improve plant reliability performance to secure higher PBS revenue
Plant reliability and efficiency:
(a) Average OEE – GP, UT & RGT(b) Salesgas PDR – PGU(c) Ethane Utilisation(d) Energy Efficiency Index
Above world-class operational performance:
(a) 99.3%(b) 100% (c) 84.5%(d) 97.24
Obtain approval of Regulatory Period 1 (RP1) tariffs
TPA Regulatory Period 1 Tariffs:
(a) PGU(b) RGTSU (c) RGTP
(a) RM1.129/GJ (b) RM3.455/GJ (c) RM3.485/GJ
• Renewal of Utilities contracts in 2020
• Secure new Utilities customers outside of captive area
• Proactive identification of new opportunities
Retain existing customers Expand resources to capture new customers
Extension of existing contracts New sales contracts
Extended long term contracts and secured new sales with existing customers for electricity and steam
Advocate the role of natural gas towards sustainable energy mix
Engagements with statutory bodies Participation in industry conferences
Active participation at high level industry platform such as:
(a) Malaysian Gas Association (MGA) Industry Talk on the Journey towards Natural Gas Market Liberalisation
(b) Malaysian Gas Symposium 2019(c) International Gas Union (IGU) Council Workshop 2019 (d) MGA Forum on Cogeneration
Explore growth opportunities in existing businesses and adjacent space
Achievement of key milestones for projects and opportunities identified
(a) Additional Nitrogen Generation Unit at Kertih (b) Gassing Up Cooling Down at RGTP (c) LNG Reloading at RGTP
• Execution and completion of endorsed projects
• LNG bunkering at RGTSU
• LNG truck loading at RGTP
• Proactive identification of new opportunities
Transform Employee Experience through talent mobility and agile workforce
Promote Diversity and Inclusion towards supportive working environment
Effective leadership and capability development
(a) No. of Ready Talent for Business Critical Positions
(b) Implementation of Talent Mix Strategy
(c) PGB Barometer score
(a) 5.2 :1(b) Implementation of Talent Mix Strategy (i) Development of agile workforce initiative (ii) Empowerment of female workforce in technical and
managerial position(c) Score 3.49 out of maximum 4.00
Continued implementation of talent strategy and initiatives
Implement efficient and sustainable system and work process
(a) Digital Initiatives (b) OE R2 Initial Implementation Readiness
Assessment to reach above threshold of 50%
(a) (i) PETRONAS Integrated Vision for Operational Excellence (PIVOT)
(ii) Geospatial Information System (PiriGIS) (iii) Active participation in PETRONAS digital platform i.e.
SWITCH(b) (i) Utilities Gebeng: 86% (ii) Tanjung Sulong Export Terminal: 91%
Continued improvements toward self-empowered organisation
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Performance Scorecard
Zero Fatality, Major LOPC and Major Fire Incident, However two Lost Time Injury (LTI) incidents were recorded during the year.>
CategoryUnits of
measurement Description 2015 2016 2017 2018 2019 YoY Trend
Fatality Number of incidents
Total number of reportable fatalities (staff, contractor and third party)
3 0 3 0 0
Lost Time Injury (LTI)
Number of incidents
An injury is assessed to be on LTI when the injured person cannot return for duty during next shift or next day
5 6 2 0 2
Major Lost of Primary Containment (LOPC)
Number of incidents
Total number of LOPC related to process safety incidents with the greatest consequences
3 0 0 0 0
Major Fire Incident
Number of incidents
Total number of fire or explosion resulting in the greatest consequences
1 0 0 0 0
Total Recordable Cases (TRCs)
Number of incidents
The sum of fatalities and total injuries resulting in Permanent Total Disabilities (PTD), Permanent Partial Disabilities (PPD), Lost Work Day Cases (LWC), Restricted Work Cases (RWC) and Medical Treatment Cases (MTC)
7 10 5 1 4
HEALTH, SAFETY, SECURITY AND ENVIRONMENT (HSSE)
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019p.68
7 8
• OEE – A measure of plant performance against
its limits and identified sources of loss within
the plant and a measure of how well equipment
is used when available.
• World-class performance benchmark for OEE
is 95%.
• Reliability – A measure to determine the impact
of unscheduled downtime on the availability
of the plant.
• World-class performance benchmark for
Reliability is 98%.
ObjectivesUnits of
Measurement Description 2015 2016 2017 2018 2019 YoY Trend
Salesgas PDR %
Product delivered as per customers’
nomination
100.0 100.0 100.0 100.0 100.0
Electricity PDR % 99.98 100.0 100.0 100.0 99.99
Steam PDR % 99.91 100.0 99.8 99.98 99.76
Ethane Production (MT/hr)Annual average ethane production
from the gas processing plants135 142 134 142 144
Gas Processing OEE (%)
Regasification OEE (%)
2018 2019
RGTSU RGTP
100.0
100.0
100.0
100.0
Utilities OEE (%)
2018 2019
Electricity Steam Ind. Gases
99.799.499.7
98.0
99.099.1
Gas Transportation
Reliability (%)
Overall
2018 2019
99.9999.99
Salesgas (without standby)C2 C3 C4
2018 2019
99.8 99.7 99.3
99.0
98.7 98.7
98.7 98.6
Higher Operational Equipment Effectiveness (OEE) achieved for Gas Processing, Utilities and Regasification has translated into higher Product Delivery Reliability (PDR) to customers. Higher transmission reliability demonstrated our world-class performance in transmission operations, ensuring security of gas supply to the nation.
OPERATIONS
>
1 2 5 63p.69
PUSHING FORWARD ACCELERATING MOMENTUM
4
Baby Boomers
632018 : 942017 : 116
Gen X
6452018 : 6852017 : 701
Millenials
1,1002018 : 1,1642017 : 1,138
Post Millenials
202018 : 162017 : 1
* Manpower generation data 2018 is based on the new definition i.e Baby Boomers (1965 and before), Gen X (1966-1979), Millenials (1980-1994), Post Millenials (1995 and after).
Objectives Units of measurement 2015 2016 2017 2018 2019
Total employees Number of staff 2,187 2,117 1,956 1,959 1,829
Other nationality Number of staff 14 14 9 8 3
Employee turnover % 1.1 0.7 0.5 0.6 0.56
Staff costs RM million 374.5 324.5 353.5 403.2 388.5
Mandays training per employee days 9.8 10.3 6.4 6.2 7.4
Training investment per employee RM’000 7.8 6.3 3.6 5.2 8.4
> We have adopted an empowered organisation model, we continue to review the effectiveness of our organisation as we strive to achieve world-class competitiveness.
> We provide continuous Leadership and Technical Capability Development programmes to enhance staff capability in building a highly engaged and capable workforce to realise our aspiration to become a world-class organisation. Harvard Manage Mentor (HMM) is a digital learning platform which encourages our staff to drive their own learning and capability development.
1,8292018 : 1,9062017 : 1,897
33%2018 : 33%2017 : 33%
50% 2018 : 50%2017 : 43%
Women in Leadership
TeamPermanent
Women in Board
Composition
HUMAN CAPITAL
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019
Performance Scorecard
p.70
7 8
DIGITAL INITIATIVES
> Digital revolution has already fundamentally affected the environment we are in and how we operate our business. In order to meet the rapidly evolving expectations of customers, PGB aspires to adopt digitalisation in applicable aspects of our business to improve plant performance, drive innovation and create sustainable value.
PIVOT
PGB began implementing the PETRONAS Integrated Vision for Operational Excellence Technology (PIVOT) programme in 2017, as part of PETRONAS enterprise digital agenda to support new ways of working towards becoming a data-driven organisation.
Launched at PGB’s gas processing plants, PIVOT is a persona-driven performance and insights dashboard with the objective of allowing the users to see relevant operational indicators and barriers from a single platform throughout their daily operations.
By having the descriptive analytics on a digital dashboard, we practice data transparency and integrity as all information are accessible to all users encompassing from the top management down to the operating level.
PIVOT has also reduced reporting layers and at the same time allowed the staff to allocate more time to analyse things better. This consequently led to a timely and more accurate decision making process. PiriGIS™
The new PiriGIS software opens a gateway to comprehensive Geospatial Information System (GIS) and non-spatial data that visualises all of our Gas Transportation and Regasification (GTR) assets.
PiriGIS allows us to explore, analyse, retrieve data and perform simple analytics with increased confidence on PGB’s entire pipeline network.
At our GTR operations, real time data is provided for ease of our personnel to inspect and examine the state and healthiness of our pipelines that will provide prompt decision making.
This will also enable us to proactively pinpoint and address issues which contributes immensely to our HSSE performance by safeguarding our people, environment and assets.
PGB’s PiriGIS™ was awarded the prestigious GeoInnovation Awards in 2019, an award that is conferred only to selected organisations.
1 2 5 63p.71
PUSHING FORWARD ACCELERATING MOMENTUM
4
Lower due to Incentive-based Regulation (IBR)
on GT & RGT Segments.
Lower, albeit still very healthy, due to higher payable balances at the year end.
Higher mainly due to increase in utilities cost of sales in line with upward fuel gas price revision.
Higher mainly due to share of profit from joint ventures.
Comparable reflecting business model with fixed returns.
46.1% 43.7%
2018 2019
7.0
5.2
2018 2019
53.9%56.3%
2018 2019
Gross profit margin is defined as a ratio of gross
profit to revenue.
Current ratio is defined as the Company’s ability to meet its
short term obligations.
Cost to Income (CTI) is a measure of cost of revenue
divided by revenue.
Net profit margin is defined as a ratio of net profit after
tax to revenue.
Return on Asset (ROA) is an indicator that measures the
Company’s efficiency in using the total assets to generate profit.
34.4% 36.4%
2018 2019
10.3% 10.1%
2018 2019
FINANCIAL
OUR VALUE PROPOSITION – FORWARD STRATEGIES
INTEGRATED REPORT 2019
Performance Scorecard
p.72
7 8
Comparable reflecting stability of earnings.
Higher in tandem with higher dividends declared.
Higher with increased distribution to shareholders, including special dividends
Higher in line with improved profits for the year.
Declining share price trend during the year reflecting general market
movements.
72 sen 82 sen
2018 2019
Return on Equity (ROE) is defined as profit attributable to shareholders
divided by the average shareholders’ equity for the financial year.
Dividend Payout Ratio (DPR) is defined as the percentage
of earnings paid to shareholders in dividend.
Dividends Per Share (DPS) is dividends declared to the
shareholders divided by the number of ordinary shares issued.
Earnings Per Share (EPS) represents the portion of the
Company’s distributable income allocated to each equity share.
Total Shareholders’ Return (TSR) is measure of share price performance and dividends paid during the year, divided by the opening share prices.
14.0% 14.6%
2018 2019
90.6 sen97.8 sen
2018 2019
79.5%83.8%
2018 2019
14.0%
-9.2%
2018
2019
1 2 5 63p.73
PUSHING FORWARD ACCELERATING MOMENTUM
4
ANALYSIS
2015
• Completion of the last series of plant revamp and rejuvenation project (PRR) for GP segment (PRR for Gas Processing Plant (GPP) 2 and 3 was completed in 2013 and PRR for GPP4 was completed in 2015).
• Compared to 2014, the Group’s profit increased as a result of recognition of tax incentives arising from ITA and reinvestment allowances granted by MIDA on PRR totalling RM443.1 million.
• This was partially offset by unrealised foreign exchange (forex) loss on USD finance lease liabilities totalling RM199.9 million due to weakening of the Ringgit.
• Excluding impact of tax incentives and forex, profit remained strong at RM1.7 billion.
Item 2015 2016 2017 2018 2019
Profit After Tax (RM million) 1,985.9 1,736.3 1,816.9 1,890.9 1,984.1
2016
• Compared to 2015, excluding impact of tax incentives and forex, profit remained steady at RM1.7 billion.
2017
• Achieved commercial operations of Malaysia’s second LNG regasification terminal in Pengerang, Johor on November 2017.
• Compared to 2016, profit was higher as a result of new revenue stream from RGT Pengerang.
2018
• Regulation of the Group’s Gas Transportation and Regasification businesses under Gas Supply (Amendment) Act 2016 which includes economic, safety and technical regulation by Suruhanjaya Tenaga.
1,985.9*
1,736.3
2015 2016 2017 2018 2019
1,816.9
1,984.11,890.9
Profit After Tax(RM million)
• Compared to 2017, profit was higher driven by second LNG regasification terminal in Pengerang, Johor which commenced commercial operations in November 2017 and being further supported by higher revenue from all other segments.
2019
• Achieved full commercial operations for Air Separation Unit project in Pengerang, Johor under Pengerang Gas Solutions Sdn. Bhd., a 51% joint venture of the Group.
• Compared to 2018, profit was higher driven by higher share of profit from joint ventures, unrealised foreign exchange gains from translation of USD denominated lease liabilities and higher interest income from fund investment.
* Includes tax incentives and forex impact of RM243.2 million.
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
5-year Group Financial Analysis
p.74
Item 2015 2016 2017 2018 2019
Total Assets (RM million) 14,382.0 16,553.6 17,627.5 18,275.6 19,583.5
ANALYSIS
Item 2015 2016 2017 2018 2019
Property, plant and equipment 11,323.8 12,807.5 12,898.6 12,487.6 13,246.5
Fixed assets 9,737.9 9,660.8 12,188.5 11,799.2 12,355.3
Project-in-progress 1,585.9 3,146.7 710.1 688.4 891 .2
Cash and cash equivalents 1,230.8 1,763.1 2,500.4 3,616.0 4,021 .7
2015
• Compared to 2014, total assets of the Group increased mainly attributed to higher property, plant and equipment (PPE) arising from completion of plant revamp and rejuvenation project (PRR) for GPP4 and higher cash balances.
2016
• Compared to 2015, total assets surged to RM16.6 billion as the Group embarked into Malaysia’s Second LNG Regasification Terminal and Air Separation Unit plant projects in Pengerang, Johor.
2017
• Compared to 2016, total assets increased due to higher cash balances contributed by cash generated from operations.
2018
• Compared to 2017, total assets increased mainly contributed by higher cash and cash equivalents generated from the Group’s full year revenue stream from LNG regasification terminal in Pengerang, Johor.
14,382.0
16,553.6
17,627.5
18,275.6
19,583.5
2015 2016 2017 2018 2019
Total Assets(RM million)
2019
• Compared to 2018, total assets grew by 7% mainly contributed by higher PPE balance following adoption of MFRS 16 Leases which resulted in recognition of right-of-use assets effective 1 January 2019 and higher cash and cash equivalents generated from operating activities.
7 81 2 5 63
PUSHING FORWARD ACCELERATING MOMENTUM
p.754
Year 2015 2016 2017 2018 2019
Revenue (RM million) 4,455.9 4,561.3 4,896.7 5,498.1 5,458.3
Profit after tax (RM million) 1,985.9 1,736.3 1,816.9 1,890.9* 1,984.1
EBITDA (RM million) 2,762.0 2,960.5 3,183.7 3,611.8 3,502.8
Dividends per share (sen) 60.0 62.0 66.0 72.0 82.0
Earnings per share (sen) 100.4 87.9 90.6 90.6* 97.8
Total assets (RM million) 14,382.0 16,553.6 17,627.5 18,275.6* 19,583.5
Total equity (RM million) 11,594.9 12,161.2 12,762.4 13,200.0* 13,565.2
Market capitalisation (RM billion) 44.9 42.1 34.6 38.0 32.9
Closing share price (RM) 22.70 21.30 17.48 19.20 16.62
* Certain 2018 comparatives have been restated.
REVENUE (RM million)
PROFIT AFTER TAX (RM million)
4,455.9 4,561.34,896.7
5,498.1 5,458.3
2015 2016 2017 2018 2019
2,762.02,960.5
3,183.7
3,611.8 3,502.8
2015 2016 2017 2018 2019
EBITDA (RM million)
1,985.9
1,736.31,816.9
1,890.9 1,984.1
2015 2016 2017 2018 2019
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
5-year Financial Summary
p.76
44.942.1
34.638.0
32.9
2015 2016 2017 2018 2019
100.4
87.9 90.6 90.697.8
2015 2016 2017 2018 2019
11,594.912,161.2
12,762.4 13,200.0 13,565.2
2015 2016 2017 2018 2019
22.7021.30
17.48
19.20
16.62
2015 2016 2017 2018 2019
DIVIDENDS PER SHARE (sen)
TOTAL ASSETS (RM million)
MARKET CAPITALISATION (RM billion)
EARNINGS PER SHARE (sen)
TOTAL EQUITY (RM million)
SHARE PRICE (RM)
60.0 62.066.0
72.0
82.0
2015 2016 2017 2018 2019
14,382.0
16,553.617,627.5
18,275.6
19,583.5
2015 2016 2017 2018 2019
7 81 2 5 63
PUSHING FORWARD ACCELERATING MOMENTUM
p.774
Year 2015 2016 2017 2018 2019
Key results (RM million)
Revenue 4,455.9 4,561.3 4,896.7 5,498.1 5,458.3
By segment:
Gas Processing 1,533.6 1,557.2 1,572.3 1,571.0 1,702.3
Gas Transportation 1,311.6 1,303.9 1,382.4 1,360.6 1,152.5
Regasification 637.1 631.1 773.5 1,245.4 1,237.9
Utilities 973.6 1,069.1 1,168.5 1,321.1 1,365.6
By geography:
Peninsular Malaysia 4,428.8 4,545.4 4,801.3 5,422.0 5,410.3
Sabah & Sarawak 27.1 15.9 95.4 76.1 48.0
Interest income 31.8 54.2 84.8 112.6 154.2
Cost of revenue 2,316.5 2,495.4 2,666.8 2,962.2 3,071.2
By segment:
Gas Processing 836.7 908.8 921.4 931.7 885.8
Gas Transportation 302.4 328.5 331.3 342.6 353.0
Regasification 339.6 344.8 395.5 547.4 626.9
Utilities 837.8 913.2 1,018.6 1,140.5 1,205.5
Financing costs 90.1 93.9 113.5 169.4 229.7
Administration expenses 89.5 93.1 84.3 90.0 94.8
Operating profit 2,016.9 2,137.1 2,278.4 2,570.6 2,555.9
Earnings before interests, taxes, depreciation and amortisation 2,762.0 2,960.5 3,183.7 3,611.8 3,502.8
Profit before taxation 2,002.1 2,106.8 2,252.7 2,334.6 2,462.9
Profit after taxation 1,985.9 1,736.3 1,816.9 1,890.9 1,984.1
Profit attributable to shareholders of the Company 1,987.5 1,739.1 1,792.7 1,793.0 1,935.3
Key statement of financial position (RM million)
Property, plant and equipment 11,323.8 12,807.5 12,898.6 12,487.6 13,246.5
Cash and cash equivalents 1,230.8 1,763.1 2,500.4 3,616.0 4,021.7
Total assets 14,382.0 16,553.6 17,627.5 18,275.6 19,583.5
Borrowings 1,058.3 2,249.5 3,084.3 3,327.0 3,898.9
Total liabilities 2,787.1 4,392.4 4,865.1 5,075.6 6,018.3
Share capital 1,978.7 1,978.7 3,165.2 3,165.2 3,165.2
Reserves 9,460.1 9,988.0 9,349.8 9,658.3 10,080.2
Total equity attributable to shareholders of the Company 11,438.8 11,966.7 12,515.0 12,823.5 13,245.4
Non-controlling interests 156.1 194.5 247.4 376.5 319.8
Total equity 11,594.9 12,161.2 12,762.4 13,200.0 13,565.2
Share information
Earnings per share (sen) 100.4 87.9 90.6 90.6 97.8
Dividends per share (sen) 60.0 62.0 66.0 72.0 82.0
Net assets per share (RM) 5.78 6.05 6.32 6.48 6.69
Closing share price (RM) 22.70 21.30 17.48 19.20 16.62
Number of ordinary shares (‘000) 1,978,732 1,978,732 1,978,732 1,978,732 1,978,732
Market capitalisation (RM billion) 44.9 42.1 34.6 38.0 32.9
Note: Certain 2018 comparatives have been restated.
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
5-year Group Financial Information
p.78
2019
2018
In RM millionFirst
QuarterSecond
QuarterThird
QuarterFourth
QuarterYear 2018
Operating revenue 1,350.8 1,358.3 1,401.8 1,387.2 5,498.1
Operating profit 659.0 658.2 655.0 598.4 2,570.6
Profit before taxation 637.0 632.8 634.8 430.0 2,334.6
Profit after taxation 505.3 537.1 523.4 325.1 1,890.9
Profit attributable to shareholders of the Company 483.3 509.3 499.8 300.6 1,793.0
Earnings per share (sen) 24.4 25.7 25.3 15.2 90.6
Dividends per share (sen) 16.0 16.0 18.0 22.0 72.0
Note: Certain 2018 comparatives have been restated.
In RM millionFirst
QuarterSecond
QuarterThird
QuarterFourth
QuarterYear 2019
Operating revenue 1,367.7 1,380.2 1,338.0 1,372.4 5,458.3
Operating profit 691.1 661.5 574.8 628.5 2,555.9
Profit before taxation 670.0 651.3 553.3 588.3 2,462.9
Profit after taxation 530.8 514.8 445.5 493.0 1,984.1
Profit attributable to shareholders of the Company 515.6 502.9 431.5 485.3 1,935.3
Earnings per share (sen) 26.1 25.4 21.8 24.5 97.8
Dividends per share (sen) 16.0 16.0 18.0 32.0 82.0
Group Quarterly Performance
7 81 2 5 63
PUSHING FORWARD ACCELERATING MOMENTUM
p.794
Property, Plant and Equipment 68%
Cash and Cash Equivalents 20%
Trade and Other Receivables 5%
Investment in Joint Ventures 2%
Deferred Tax Assets 2%
Long Term Receivables 2%
Investment in Associate 1%
Trade and Other Inventories 0%*
Tax Recoverable 0%*
Property, Plant and Equipment 68%
Cash and Cash Equivalents 21%
Trade and Other Receivables 5%
Investment in Joint Ventures 3%
Deferred Tax Assets 1%
Long Term Receivables 1%
Investment in Associate 1%
Trade and Other Inventories 0%*
Tax Recoverable 0%*
* Insignificant percentage (%)
* Insignificant percentage (%)
Note: Certain 2018 comparatives have been restated.
1%
5%
2%2% 2%
68%
20%
RM18.3 billion
2018
1%
5%3% 1%1%
68%
21%
RM19.6 billion
2019
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
Simplified GroupStatement of Financial Position
p.80
TOTAL EQUITY AND LIABILITIES
Reserves 53%
Non-Current Borrowings 18%
Share Capital 17%
Deferred Tax Liabilities 6%
Trade and Other Payables 3%
Non-Controlling Interests 2%
Current Borrowings 1%
Deferred Income 0%*
Reserves 51%
Non-Current Borrowings 19%
Share Capital 16%
Deferred Tax Liabilities 6%
Trade and Other Payables 5%
Non-Controlling Interests 2%
Current Borrowings 1%
Deferred Income 0%*
* Insignificant percentage (%)
Note: Certain 2018 comparatives have been restated.
* Insignificant percentage (%)
1%
6%
17%
3% 2%
53%
18%
RM18.3 billion
2018
1%
6%
16%
5%2%
51%
19%
RM19.6 billion
2019
7 81 2 5 63
PUSHING FORWARD ACCELERATING MOMENTUM
p.814
2018 2019
As at 31 December
RM million
EffectiveInterest Rate
%
InterestIncome/
(Expenses)RM million
As at 31 December
RM million
EffectiveInterest Rate
%
InterestIncome/
(Expenses)RM million
Interest earning assets
Cash and cash equivalents 3,616.0 3.3 112.6 4,021.7 3.3 154.2
Interest bearing liabilities
Finance lease liabilities 1,014.3 9.1 (91.8) 1,656.7 7.7 (146.6)
Term loan 1,793.6 3.3 (45.1)* 1,781.2 2.5 (50.1)
Loan from corporate shareholder of a subsidiary 519.0 6.5 (33.3)* 461.0 6.5 (33.0)
* Part of interest expenses are being capitalised as part of projects-in-progress.
2018RM million
2019RM million
Revenue 5,498.1 5,458.3
Purchase of goods and services (1,488.8) (1,599.7)
Value added by the Group 4,009.3 3,858.6
Other income and expenses 124.7 263.6
Financing costs (169.4) (229.7)
Share of profit after tax of equity accounted associate and jointly controlled entity (66.6) 136.7
Value added available for distribution 3,898.0 4,029.2
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
Key Interest Bearing Assets and Liabilities
Statement of Value Added
p.82
10%
10%
38%
42%
2%
10%
10%
37%
43%
2018RM million
2019RM million
To employees
Employment costs 403.2 426.8
To government
Taxation 380.1 383.5
To shareholders
Dividends 1,365.3 1,424.8
Non-controlling interest 97.9 48.8
Retained for reinvestment and future growth
Depreciation, amortisation and impairment 1,160.2 1,139.5
Deferred tax expense 63.6 95.3
Retained profit 427.7 510.5
3,898.0 4,029.2
To employees To government To shareholders Retained for reinvestment and future growth
20192018
Note: Certain 2018 comparatives have been restated.
7 81 2 5 63
Distribution of Value AddedPUSHING FORWARD ACCELERATING MOMENTUM
p.834
As several key external factors continue to affect the environment and the way we operate, it was essential for PGB to engage with our capital market stakeholders more frequently. Our activities were guided by our investor relations programme, which was developed annually and tailored to address the relevant topics at the time.
Our 36th Annual General Meeting (AGM) was held on 30 April 2019 at the Mandarin Oriental Hotel, Kuala Lumpur. Key highlights of the Group’s performance for the year under review were presented and the 1,696 shareholders and proxies who attended the meeting were given the opportunity to actively participate by raising queries and providing suggestions to the company. This was the third time we utilised digital voting for the meeting resolutions. All proposed resolutions were duly passed and minutes of the AGM is available on our official website at www.petronasgas.com.
RELEVANT INDUSTRY UPDATES ARE SHARED SO AS TO FACILITATE INVESTORS IN MAKING INFORMED INVESTMENT DECISIONS
As one of the top companies by market capitalisation on Bursa Malaysia Securities Berhad (Bursa Malaysia), PGB places utmost importance in establishing and maintaining a strong and transparent relationship with our shareholders and the broader community.
We consistently issue our quarterly financial results to Bursa Malaysia, in line with the Main Market Listing Requirements and the Malaysian Code of Corporate Governance 2017. Subsequently, we conduct quarterly analyst briefings via webcast and conference call to allow further clarification and interaction between the Group’s spokespersons and the capital market. The f inancial results announcements and recordings of webcast and conference calls are available on our website for reference.
For 2019, it was imperative for PGB to engage and provide more clarifications related to the Third Party Access (TPA) Pilot Regulatory Per iod and the impact to our Gas Transportation and Regasification businesses. Hence, we organised a special face-to-face briefing session to provide company updates on the topic as well as to address the capital market queries directly.
Relating to TPA, we also announced the updated agreements which have adopted the new tariffs as approved by Suruhanjaya Tenaga.
We consequently announced the approved tariffs for the first Regulatory Period (RP1) for all three facilities, effective 1 January 2020 until 31 December 2022.
Aside from the above topic, we also communicated on PGB’s business ventures, such as the execution of Heads of Agreement (HoA) to supply nitrogen to PETRONAS Chemicals Group’s subsidiaries. In addition, the Group had also introduced ancillary services consisting of Gassing Up Cooling Down (GUCD) and LNG reloading at our LNG Regasification Terminal Pengerang to complement our service offering to the customers.
We recognise the need for our stakeholders to appreciate the nature of our business. During the year under review, we received 24 of our retail shareholders at our Segamat Operation Centre in Segamat, Johor. The event received positive feedback from the attendees who appreciated the role PGB plays in ensuring gas supply delivery and reliability for the nation.
As a result, Investor Relations conducted over 20% more engagements with various investors and analysts via one-on-one meetings, group meetings, conference calls, analyst briefings, investor conferences and site visit in 2019. All sessions were led by our designated spokespersons, namely our MD/CEO, CFO and Head of Investor Relations.
Overall, 2019 proved to be a notable year for us as our efforts to communicate effectively had been acknowledged via a number of awards received during the year, including:
• MSWG-ASEAN Corporate Governance 2018– Excellence Award for Corporate
Governance disclosure – ranked 4th place
– Industry Excellence Award – Energy and Utilities
– Overall Corporate Governance & Performance – ranked 6th place
• Malays ian Inst i tute of Corporate Governance (MICG)– Transparency in Corporate Reporting
– Top 10
• National Annual Corporate Report Awards (NACRA) – Platinum Award for Best Designed
Annual Report
We continuously strive to maintain accessibility to our stakeholders. For more specific investor-related queries and feedback, we can be reached at [email protected].
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
Investor Relations
p.84
INVESTOR RELATIONS ACTIVITIES
Quarterly Results and Analyst Briefing
RESULTS ANNOUNCEMENT DATE BRIEFING DATE TYPE OF MEETING
Q1 28 May 2019 28 May 2019 Webcast and conference call
Q2 27 August 2019 27 August 2019 Webcast and conference call
Q3 19 November 2019 20 November 2019 Webcast and conference call
Q4 18 February 2020 19 February 2020 Webcast and conference call
Investor Conferences
DATE EVENT LOCATION
3 – 4 January 2019 CIMB 11th Annual Malaysia Corporate Day 2019 Kuala Lumpur, Malaysia
24 – 25 January 2019 Invest Malaysia Tokyo 2019 Tokyo, Japan
19 March 2019 Invest Malaysia Kuala Lumpur 2019 Kuala Lumpur, Malaysia
Investor Day
DATE EVENT LOCATION
19 February 2019 Third Party Access Sharing Session Kuala Lumpur, Malaysia
Site Visit
DATE EVENT SITE LOCATION
13 January 2020 Retail Shareholders Visit Segamat Operation Centre Johor, Malaysia
Annual General Meeting (AGM)30 April 2019, Mandarin Oriental Hotel, Kuala Lumpur
Shareholders and proxies attended: 1,696
36TH
Analyst & Institutional Investor Meetings
Face-to-face meeting Conference call/Tele-conference
652018
12018
812019
22019
7 81 2 5 63
PUSHING FORWARD ACCELERATING MOMENTUM
p.854
SIGNIFICANT ANNOUNCEMENTS
Date Event
15 April 2019Update on Fire Incident at Pengerang Integrated Complex, which had no operational nor financial impact to PGB.
Bursa Announcement
16 April 2019
Announcement on the updated:
i. Gas Transportation Agreement (GTA) for Peninsular Gas Utilisation (PGU) Pipeline;
ii. Terminal Use Agreement (TUA) for LNG Regasification Terminal Sungai Udang (RGTSU), Melaka; and
iii. Terminal Use Agreement (TUA) for LNG Regasification Terminal Pengerang (RGTP), Johor
in respect of the Third Party Access agreements.
Bursa Announcement
28 May 2019Q1 2019 results and announcement of new Gassing Up and Cooling Down service at RGTP.
Quarterly Analyst Briefing
3 June 2019
Memorandum of Understanding for the execution of Heads of Agreements for the supply of nitrogen to PETRONAS Chemicals Group’s subsidiaries.
Bursa Announcement
19 August 2019Q2 2019 results and announcement of new LNG reloading service at RGTP. Quarterly
Analyst Briefing
17 September 2019
Q3 2019 results and announcement of successful delivery of PGB’s maiden third party LNG cargo, shipped by Shell Malaysia Trading Sdn. Bhd. for Tenaga Nasional Berhad (TNB).
The cargo was received and regasified at RGTSU, and subsequently transported via PGU pipeline to TNB’s power stations in Port Dickson and Klang.
Quarterly Analyst Briefing
29 November 2019
Execution of Heads of Agreements for the supply of nitrogen to PETRONAS Chemicals Group’s subsidiaries.
Bursa Announcement
29 November 2019
Notice of arbitration to PGB on the claim relating to the Procurement, Construction and Commissioning of Pengerang Gas Pipeline Project.
Bursa Announcement
20 December 2019
Publication of Regulatory Period 1 (RP1) Tariffs for PGU, RGTSU, and RGTP under the TPA regime.
Bursa Announcement
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
Investor Relations
p.86
2019
2020
Date of payment of the interim dividend for the first quarter ended 31 March 2019
Date of payment of the interim dividend for the fourth quarter ended 31 December 2019
Date of payment of the interim dividend for the second quarter ended 30 June 2019
37thAnnual GeneralMeeting
Date of payment of the interim dividend for the third quarter ended 30 September 2019
Date of payment of the interim dividend for the fourth quarter ended 31 December 2018
Announcement of the unaudited consolidated results for the fourth quarter ended 31 December 2019
36th Annual General Meeting
Date of Notice of the 37th Annual General Meeting and date of issuance of Integrated Report 2019
Announcement of the unaudited consolidated results for the second quarter ended 30 June 2019
Announcement of the unaudited consolidated results for the third quarter ended 30 September 2019
18 FEBRUARY 30 MARCH 28 MAY
27 SEPTEMBER
25 JUNE
15 MARCH
18 FEBRUARY
30 APRIL
20 MARCH
27 JUNE
26 MARCH
27 AUGUST 19 NOVEMBER
18 DECEMBER
Announcement of the unaudited consolidated results for the fourth quarter ended 31 December 2018
Date of Notice of the 36th Annual General Meeting and date of issuance of 2018 Annual Report
Announcement of the unaudited consolidated results for the first quarter ended31 March 2019
7 81 2 5 63
Financial CalendarPUSHING FORWARD ACCELERATING MOMENTUM
p.874
MARKET CAPITALISATION
RM32.9 billion – 2019RM38.0 billion – 2018
RM19.20 – Opening
RM16.62 – Closing
RM18.58 – Peak
866,900 – 2019817,625 – 2018
97.8 sen – 201990.6 sen – 2018
82 sen – 201972 sen – 2018
-9.2% – 201914.0% – 2018
SHARE PRICE
AVERAGE DAILY TRADED VOLUME (ADTV)
EARNINGS PER SHARE
DIVIDEND PER SHARE
TOTAL SHAREHOLDER RETURN
SHARE PRICE PERFORMANCE
1,450
1,500
1,550
1,600
1,650
1,700
1,750
14.00
15.00
16.00
17.00
18.00
19.00
20.00
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19
FBMKLCI PGB
31 December 2019Closing Price
RM16.62
Volume Traded
2 January 2019Opening Price
RM19.20
Share Price (RM) FBM KLCI
Share price VolumeFBM KLCI
16 sen27 June 2019
16 sen 27 September 2019
18 sen 18 December 2019
32 sen 26 March 2020
Q1 Q2 Q3 Q4
DIVIDEND PAYMENT DATE
OUR VALUE PROPOSITION – FORWARD DRIVEN PERFORMANCE
INTEGRATED REPORT 2019
Share Price Performance
p.88
10.1%
51.0%
38.9%
1.2% 2.6%0.7%
4.4%
91.1%
SHAREHOLDINGS RESEARCH COVERAGE
PETRONAS
Other Local
Foreign
51.0%
38.9%
10.1%
Malaysia
USA-Canada
Europe
Asia Pacific
Others
91.1%
4.4%
1.2%
0.7%
2.6%
Source: Symphony and Bloomberg as at 31 December 2019
PGB continues to attract a consistent following from both domestic and foreign investors. We remain a well-covered stock with 15 research houses maintaining core coverage as at end December 2019.
Scan this QR code with your smart device for more Investor FAQ
BY INSTITUTIONS
BY GEOGRAPHY
7 81 2 5 63
Affin Hwang Capital Kenanga Investment Bank
AllianceDBS Research Macquarie Securities
AmInvestment Bank Maybank Investment Bank
BIMB Securities MIDF Amanah Investment Bank
CIMB Investment Bank Nomura Securities
CLSA Securities RHB Research
J.P. Morgan Securities TA Securities
KAF Seagroatt & Campbell Securities
1 Third Party Access (TPA) Pilot Regulatory Period
Confirmation on tariff and earnings for regulated businesses
2 Business Growth
Future growth plans moving forward post the completion of projects at Pengerang
3 Return to Shareholders
Sustainability of business and ability to provide returns to shareholders
KEY DISCUSSION TOPICS:
PUSHING FORWARD ACCELERATING MOMENTUM
p.894
4
MOHD KABIR NOORDINHead of Gas Processing andUtilities Division
Product Delivery Reliability for salesgas, propane and butane100%
All achieved OEE above world-class standard
Liquid Production Volume(MT million)
1.31.2
0.8
Ethane Propane Butane
Revenue:
RM1.7billion
Gross Profit:
RM816.5million
Segment Assets:
RM4.3billion
Salesgas:
99.7%2018: 99.99%
Ethane:
99.0%2018: 99.7%
Propane:
98.7%2018: 99.1%
Butane:
98.6%2018: 99.1%
Health, Safety, Security and Environment (HSSE)
MSOSH OSH Grand Award
Grand Award
• Tanjung Sulong Export Terminal (TSET)
• Utilities Gebeng
Gold Merit Award• GPK
• GPS
British Royal Society of Prevention Accident (RoSPA)
Gold Awards
• Gas Processing Santong
• Tanjung Sulong Export Terminal
Innovation and Improvement
Institut Kimia Malaysia (IKM) Laboratory • Excellence Silver Award for Analytical
Technology Santong
• Excellence Award for Analytical
Technology Kertih and Analytical
Technology Export Terminal
PETRONAS Continuous Improvement Convention (CIC) • Multiple Award Categories in PGB CIC
• Multiple Award Categories in PETRONAS
CIC
Gold Award in Annual Productivity
Improvement Convention (APIC)
Gold Award in Regional Team Excellence
Convention (RTex)
Gold Award in International Convention
of Quality Control Circle (ICQCC), Japan
Male920
Female103
EMPLOYEES1,023
Read more about our segment financial performance on page 39.
FINANCIAL PERFORMANCE
OPERATIONAL PERFORMANCE
HUMAN CAPITAL
RECOGNITION/AWARDS
OUR VALUE PROPOSITION – FORWARD FOCUSED
INTEGRATED REPORT 2019
Business Review– GAS PROCESSING
p.90
Challenges/Risks Mitigation Strategies Results
HSSE• Higher major turnaround activities
throughout the year which involved
over 3,000 personnel from staff and
contractors
• Continue digitalisation initiatives for effective
plant and equipment monitoring and tracking
• Digitalisation initiatives are executed as per
plan contributing to safe and reliable operation.
Operational• GPU reliability issues resulting in
interruption to customers
• New ways of working by adoption to digital
solution: Digital Turnaround – RFID, Wide
CCTV coverage & monitoring, intensified
drone surveillance, compliances to Fatigue
Management System, mobile digital billboard,
rigorous HSE audits throughout turnaround
and gate-closing policy
• Turnarounds were completed safely, within
schedule and budget with the value saving of
RM69 million at the following plants; GPP3
(4.4 days), GPP4 (5.5 days) GPP5 (4.9 days)
and GPP6 (1.5 days)
Strategic Objectives Initiatives in 2019 Targets in 2020
Operational Excellence
• Digitalisation of reporting for better
monitoring of plant operation performance,
safety monitoring and financial performance
• Compliance to HSSE governance and
assurance framework, Integrated Assurance
Programme (IAP)
• Further digitalisation enhancement for
improvement in operation performance, safety
performance and financial performance
• Gas Processing Kerteh, Gas Processing Santong,
and Export Terminal ISO45001 certification by
2020
Commercial Excellence
• Plant improvement initiatives under PGB R2
301Q99 FY2019-2022 Initiatives which
contributed to improvement in plant reliability
and integrity resulting to enhanced cost
efficiency
• Further improvement on cost-to-serve to
improve plant margins to allow retention and
capture of customers
Growth
• Optimisation and improvement in equipment
efficiencies which resulted to value creation
• Further equipment optimisation to enhance
efficiencies and increase value creation. For
Utilities, to look into opportunity to supply
electricity to new customers
To sustain best ever financial performance
by further improving our performance in
safety and reliable operation towards
productive, efficient and competitive assets
v ia d ig i ta l i sat ion, cont inuous plant
improvements, preventive maintenance and
efficient turnaround activities.
HIGHLIGHTS 2019
CHALLENGES/RISKS
OUTLOOK AND PROSPECTS
In line with PGB R2 Game Plan: 301Q99 Pushing
Forward activities, GPU will continue to create
value in delivering superior operational excellence
and financial results.
Expect to further improve on operational
excellence by Digitalisation implementation which
will result in further improvement in financial
performance.
7 81 2 5 63p.914
PUSHING FORWARD ACCELERATING MOMENTUM
Health, Safety, Security and Environment (HSSE)
MSOSH OSH Grand Award
Gold Merit Award• Eastern Operation
– Kuantan Regional Office
• Southern Operation
– Segamat Regional Office
Gold Class 1 Award
• Central Operation
– Shah Alam Regional Office
• Northern Operation
– Gurun Regional Office
Gold Class 2 Award• Northern Operation
– Gurun Regional Office
• Sarawak Operation
– Miri Regional Office
British Royal Society of Prevention Accident (RoSPA)
Silver Award• Eastern Operation
– Kuantan Regional Office
• Southern Operation
– Segamat Regional Office
BURHAN ABDULLAHHead of Gas Transmission andRegasification Division
Reliability – A measure to
determine the impact of
unscheduled downtime on the
availability of the pipeline
transmission.
World class performance
benchmark for Reliability is 98%.
99.9% 99.9%
2018 2019
GT Reliability(%)
Innovation and Improvement
PETRONAS Continuous Improvement Convention (CIC)
Best OPU of the month (Common
– applicable to GT and RGT)
Leadership Persona (Common –
applicable to GT and RGT)
OPERATIONAL PERFORMANCE RECOGNITION/AWARDS
Male284
Female44
EMPLOYEES328
HUMAN CAPITAL
Revenue:
RM1.2billion
Gross Profit:
RM799.5million
Segment Assets:
RM2.9billion
FINANCIAL PERFORMANCE
4
Read more about our segment financial performance on page 39.
OUR VALUE PROPOSITION – FORWARD FOCUSED
INTEGRATED REPORT 2019
Business Review– GAS TRANSPORTATION
p.92
Challenges/Risks Mitigation Strategies Results
Business Environment • Amendment of Gas Supply Act i.e.
introduction of TPA which affects operational and commercial aspects of GT Business
• Customer expectation on ZERO interruption
• Regular engagement with Suruhanjaya Tenaga to share concerns and impact to Gas Transportation business
• Competitive GT tariff of RM1.129/GJ for Regulatory Period 1 (RP1) secured
Mindset Change• We are still at Calculative HSE Culture• Adaptability to Work Process System• Non-pervasive empowerment culture
• Eestablishment of a few KRA in order to improve HSE performance as well as to move our HSE culture towards Generative HSSE Culture
• Implementation of GT OFWP and MFWP• Inculcate empowerment culture through the
establishment of GTR Empowerment Implementation Team and continual reporting of progress to R2 Steering Committee
• Safety critical mindset and behaviour programmes implemented as part of continuous effort towards Generative HSSE Culture
Asset Operational• Low assets utilisation of PGU due to
lower demand from power sectors • Managing PGU pipeline integrity and
geo-hazard for safe and reliable operations
• Registered and monitored under PGB 301Q99 Pushing Forward
• Pipeline Integrity assessment and geo-hazard improvement
• Establish dedicated team to focus on improvement of Equipment Reliability Strategy
• Identified growth project executed timely in order to increase gas utilisation and balance the low power sector demand
Strategic Objectives Initiatives in 2019 Targets in 2020
Operational Excellence
• Sustaining world-class performance of Reliability with zero HSSE incidents at all times
• Completion of major repair work of Feed Condensate Pipeline for 12 locations with zero HSSE incident recorded attributable to relentless HSSE focus through enhancements of Generative HSSE Culture
• Improved pipeline and land encroachment monitoring through technology and digital i.e. PiriGIS. Drone, CCTV, Parameter Instrusion Detection System (PIDS)
• Strengthening of GTR HSSE and Operational Excellence through Technology and Digital (i.e. PIVOT, MVP) and instil Generative HSSE Culture at all level
• Strengthening of O&M activities through realignment of current Work Process under OE R2 towards safe, reliable and efficient operation of GTR infrastructure
• Embarking on Flexible Working Arrangement (FWA) for Gas Transportation which will lead to increase in wrench time and subsequently reduce waste.
Commercial Excellence
• Plant improvement Key Result Areas (KRAs) i.e. MC/CPRV and Energy Index which contributed to Cost-To-Serve and Energy Efficiency resulted to cost efficiency
• Increase utilisation gap of PGU pipeline• Inaugural of third party gas from third party
shipper under TPA regime
• To continue minimise value leakages and optimise overall asset utilisation through establishment of KRAs i.e. reduction of FSR utilisation for rotating equipment, turbo-health to monitor compressor performance, optimisation of compressor station operation
Growth• Several projects undertaken to connect our
PGU pipeline to new customer e.g. Telok Gong Loop Pipeline
• Further enhancement of overall asset utilisation through pipeline extension to new demand hubs
Sustaining world-class performance of gas pipeline with continuous improvement on asset integrity programme towards safe, reliable and efficient operations
Continuous effort towards operational excellence on implementation of OE R2 Work Process, management system and empowerment to ensure competitiveness against other organisation in global benchmarking.
HIGHLIGHTS 2019
CHALLENGES/RISKS
OUTLOOK AND PROSPECTS
7 81 2 5 63p.934
PUSHING FORWARD ACCELERATING MOMENTUM
BURHAN ABDULLAHHead of Gas Transmission andRegasification Division
Male107
Female7
EMPLOYEES114
OEE – A measure of plant
performance against its limits
and identified sources of loss
within the plant and a measure
of how well equipment is used
when available.
World-class performance
benchmark for OEE is 95%.
100%
20192018RGTP OEE
100% 100%
20192018RGTSU
100%
Regasification OEE(%)
Health, Safety, Security and Environment (HSSE)
MSOSH OSH Grand Award
Gold Merit Award• Regasification Terminal (Sg Udang) Sdn
Bhd
Gold Class 2 Award• Pengerang LNG (Two) Sdn Bhd –
Regasification Terminal Pengerang
British Royal Society of Prevention Accident (RoSPA)
Silver Award• Regasification Terminal (Sg Udang)
Sdn Bhd
Anugerah Hijau Negeri Melaka 2019
RGT Sungai Udang – Silver Award for
Green Project Category
5S Certification from Malaysia Productivity Corporation
1st ever offshore platform 5S certificated by MPC – RGT Sungai Udang Terminal
Innovation and Improvement
PETRONAS Continuous Improvement Convention (CIC)
Best Sustainability Project – Regasification
Terminal (Sg Udang) Sdn Bhd
Gold CIC Showcase – Regasification
Terminal (Sg Udang) Sdn Bhd
Silver CIC Showcase – Pengerang LNG
(Two) Sdn Bhd – Regasification Terminal
Pengerang
Best OPU of the month – (Common –
applicable to GT and RGT)
Leadership Persona – (Common –
applicable to GT and RGT)
OPERATIONAL PERFORMANCE
HUMAN CAPITAL
Revenue:
RM1.2billion
Gross Profit:
RM611.0million
Segment Assets:
RM6.6billion
RECOGNITION / AWARDS
FINANCIAL PERFORMANCE
4
Read more about our segment financial performance on page 39.
OUR VALUE PROPOSITION – FORWARD FOCUSED
INTEGRATED REPORT 2019
Business Review– REGASIFICATION
p.94
Challenges/Risks Mitigation Strategies Results
Business Environment • Amendment of Gas Supply Act i.e.
introduction of TPA that has changed the fundamental economic model for Regasification business
• Customer expectation on zero interruption
• Regular engagement with Suruhanjaya Tenaga as well as Ministry of Economic Affairs (MEA) to share concerns and impact to Regasification business.
• Sustaining GTR reliability above world-class standards through effective implementation of O&M best practices
• Secured competitive RGTSU and RGIP tariff of RM3.455/GJ and RM3.485/GJ respectively
Mindset Change• We are still at HSSE Calculative Culture• Inflexibility Work Process• Lack of Empowerment Culture
• We have established a few KRA in order to improve HSSE performance as well as to move our HSE culture towards Generative Culture
• Implementation of RGT Operate Facility Work Process (OFWP) and Maintain Facility Work Process (MFWP)
• Inculcate empowerment culture by establishment of GTR Empowerment Implementation Team and progress reported to R2 Steering Committee (R2SC)
• Implement safety critical mindset and behavior programme as part of continuous effort towards Generative HSSE Culture
Asset Operational• Lower asset utilisation of PGU and RGTSU
due to lower demand from Power Sectors • Managing PGU pipeline integrity & geo-
hazard for safe & reliable operations• Incomprehensive Equipment Reliability
Strategy
• Captured under PGB R2 Game Plan: 301Q99 Pushing Forward
• Pipeline Integrity assessment and geo-hazard improvement
• Established dedicated team to focus on improvement of Equipment Reliability Strategy
• Identified growth projects were executed timely in order to increase gas utilisation and balance the low power sector demand
Strategic Objectives Initiatives in 2019 Targets in 2020
Operational Excellence
• Sustaining above world-class benchmarks of OEE of 95% and compliance with various HSSE governance and assurance frameworks as well as the PETRONAS Mandatory Control Framework at all time
• Completion of major turnaround at RGTSU with zero HSSE incident recorded attributable to relentless HSE focus through enhancements of HSSE Generative Culture
• Accredited with national and international awards and certification
• Strengthening of the Operational Excellence through Technology and Digital (i.e. PIVOT, RMS) and instill Generative HSSE Culture at all level.
• Sustaining RGTSU and RGTP OEE and reliability through comprehensive integrity programme and work process
• Strengthening of O&M activities through realignment current Work Process under OE R2 towards safe, reliable and efficient operation of GTR infrastructure
Commercial Excellence
• Implementation of Regasification Management System (RMS) to manage multiple capacity users in TPA environment
• Continuous effort to minimise value leakages and optimise overall asset utilisation through establishment of KRAs i.e. RGTEC Optimisation, Sea Water Flow Optimisation etc
Growth
• Successfully completed eight Gassing Up Cooling Down services for various LNG vessels and completed three reloading services at RGTP
• Successfully completed unloading and regasifying 1st third party cargo at RGTSU
• Capture new business growth at Regasification facilities:
– LNG Bunkering at RGTSU – LNG Truck Loading at RGTP
Continue to grow our regasification terminals into world-class LNG hubs to support the Group’s strategy on diversification and mitigate TPA impact on our bottomline
HIGHLIGHTS 2019
CHALLENGES / RISKS
OUTLOOK AND PROSPECTS
7 81 2 5 63p.954
PUSHING FORWARD ACCELERATING MOMENTUM
MOHD KABIR NOORDINHead of Gas Processing andUtilities Division
All achieved OEE above world-class standard
Production Volume
1,866
3,864
524.8
Electricity(GWh)
Steam(kMT)
Industrial Gases(Mil Nm3)
Electricity:
99.7%2018: 99.6%
Steam:
99.7%2018: 99.6%
Male222
Female18
EMPLOYEES240
Industrial Gasses:
98.0%2018: 98.9%
Electricity:
99.99%Steam:
99.8%
Industrial Gasses:
99.2%
Product Delivery Reliability
Health, Safety, Security and Environment (HSSE)
MSOSH OSH Grand Award
Grand Award
• Utilities Gebeng
Gold Merit Award• Utilities Kertih
British Royal Society of Prevention Accident (RoSPA)
Gold Award
• Utilities Gebeng
• Utilities Kertih
Innovation and Improvement
Institut Kimia Malaysia (IKM)
Excellence Award for Analytical Technology
Utilities Kertih
Excellence Award for Analytical Technology
Utilities Gebeng
OPERATIONAL PERFORMANCE RECOGNITION / AWARDS
HUMAN CAPITAL
Revenue:
RM1.4billion
Gross Profit:
RM160.1million
Segment Assets:
RM1.3billion
FINANCIAL PERFORMANCE
4
Read more about our segment financial performance on page 39.
OUR VALUE PROPOSITION – FORWARD FOCUSED
INTEGRATED REPORT 2019
Business Review– UTILITIES
p.96
Challenges/Risks Mitigation Strategies Results
Operational• Sustaining of GPU reliability to prevent
salesgas supply interruption to customers
• To continue on Digitalisation initiatives for effective plant and equipment monitoring and tracking
• Digitalisation initiatives are executed as per plan contributing to safe, reliable and efficient operation.
HSSE• Higher major turnaround activities
throughout the year which involved over 3000 personnel from staff and contractors
• New ways of working by adoption to digital solution: Digital TA – RFID, Wide CCTV coverage & Monitoring, Intensify Drone Surveillance, Compliances to Fatigue Management System, Mobile digital billboard, Rigorous HSE audits throughout TA and Gate closing policy
• Turnarounds were completed ahead of schedule with the value creation of RM69 million. Ahead of schedule at the following plants; ASU1 (2.2 days) and Demin (4.6 days)
Strategic Objectives Initiatives in 2019 Targets in 2020
Operational Excellence
• Digitalisation of reporting for better monitoring of plant operation performance, safety monitoring and financial performance
• Complied to HSSE governance and assurance framework, Integrated Assurance (IA)
• Further digitalisation enhancement for further improvement in operation performance, safety performance and financial performance
• Conversion of Utilities Kerteh and Utilities Gebeng from OHSAS18000 to ISO45001
Commercial Excellence
• Plant improvements initiatives under PGB R2 301Q99 FY2019-2022 Initiatives which contributed to improvement in plant reliability and integrity resulting in enhanced cost efficiency
• Further improvement on Cost-To-Serve to be cost competitive
• Retain existing customer through extension of contracts
• Capture new customers and offer new product to existing customer to improve plant utilisation
Growth
• Optimisation and improvement in equipment efficiencies which resulted to value creation
• Further equipment optimisation to enhance efficiencies and increase value creation.
• Searching of opportunity to supply electricity to new customers
To sustain our best ever financial performance by further improve our performance in safety and reliable operation towards productive, efficient and competitive assets via digitalisation, continuous plant improvement, preventive maintenance and efficient turnaround activities.
HIGHLIGHTS 2019
CHALLENGES / RISKS
OUTLOOK AND PROSPECTS
In line with PGB R2 301Q99 activities, utilities will continue to create value in delivering superior operational excellence and financial results.
Expect to further improve on operational excellence via digitalisation which will result in further improvement in financial performance.
7 81 2 5 63p.974
PUSHING FORWARD ACCELERATING MOMENTUM
GASSING UP COOLING DOWN (GUCD)
On 19 April 2019, RGTP welcomed its maiden GUCD vessel, Puteri Zamrud Satu, marking the launch of the first ancillary service offered by PGB.
GUCD is a specialised service to bring the storage tanks on LNG carriers, after dry-docking, to a natural environment and cool it down to cryogenic temperature, -160°C, before loading its next cargo.
With attractive rates and top-quality service, RGTP will be able to attract more LNG vessel operators and owners vessels to utilise its services, and allow the facility to grow as a solutions hub, being strategically located along the Straits of Johor, close to the nearby Pasir Gudang and Singapore dockyards.
In 2019, we successfully completed eight GUCD services for our customers.
LNG RELOADING SERVICE
Beginning August 2019, RGTP commenced a new stream of revenue through LNG reloading services for bunker vessels, mid-size cargoes and conventional LNG carriers.
We introduced the service in October 2018 where we successfully reloaded LNG into the world’s largest LNG bunker vessel, Kairos.
Through the launch of this service, we are able to provide flexibility to capacity users of RGTP to export LNG. This signifies RGTP as an LNG Hub in the region, offering wide range of services to its customers.
In 2019, we successfully completed three reloading services.
OUR VALUE PROPOSITION – FORWARD FOCUSED
INTEGRATED REPORT 2019
Business Review– ANCILLARY SERVICES
p.98
7 81 2 5 63p.994
PUSHING FORWARD ACCELERATING MOMENTUM
Leadership102 Board of Directors104 Board at a Glance106 Profile of the Board of Directors114 Leadership Team116 Profile of Leadership Team120 Organisation Structure
Our5
Leadership
Standing, from left to right:
1. MARINA MD TAIB Non-Independent Non-Executive Director
2. DATO’ AB. HALIM MOHYIDDIN Independent Non-Executive Director
3. EMELIANA DALLAN RICE-OXLEY Non-Independent Non-Executive Director
4. KAMAL BAHRIN AHMAD Managing Director/Chief Executive Officer
5. ADIF ZULKIFLI Chairman, Non-Independent Non-Executive Director
OUR LEADERSHIP
Board of Directors
p.102
6. HABIBAH ABDUL Senior Independent Director
7. FARINA FARIKHULLAH KHAN Independent Non-Executive Director
8. DATO’ ABDUL RAZAK ABDUL MAJID Independent Non-Executive Director
9. SYUHAIDA AB RASHID Company Secretary
10. YEAP KOK LEONG Company Secretary
Scan this QR code with your smart device for profile of Directors.
p.103
1 1
33
44
1
1
2
4
1
2
2
3
Senior Independent Director 1
Independent Non-Executive Director 3
Non-Independent Non-Executive Director(including the Chairman)
3
Executive Director 1
Male 4
Female 4
Age 70-79 1
Age 60-69 2
Age 50-59 3
Age 40-49 2
7-9 years 1
4-7 years 1
2-4 years 2
0-2 years 4
COMPOSITION
GENDER TENURE
AGE GROUP
p.104p.104 OUR LEADERSHIP
Board at a Glance
Required Skillsand/or Experience
Adif Zulkifli
Kamal Bahrin Ahmad
HabibahAbdul
FarinaFarikhullah
Khan
Dato’ Ab.Halim
Mohyiddin
Dato’ Abdul Razak
Abdul Majid
EmelianaDallan
Rice-Oxley
Marina Md Taib
Banking & Finance
Commercial/Marketing
Corporate Planning & Development
Economics
Engineering/Technical
Finance/Audit
Human Resource
Legal/Regulatory
Oil & Gas
Operations
Regional/International
Shipping/Logistics
SKILLS AND EXPERIENCE MATRIX
1 2 3 6 7 84p.1055
PUSHING FORWARD ACCELERATING MOMENTUM
p.106
Profile of the Board of Directorsas at 10 February 2020
ADIF ZULKIFLIChairman, Non-Independent Non-Executive Director
Academic/Professional Qualifications
• Masters of Business Administration, Kellogg School of Management, Northwestern University, USA
• Bachelor of Science Degree in Petroleum Engineering, Colorado School of Mines, USA
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company:
• None
Present Appointments
• Executive Vice President and Chief Executive Officer, PETRONAS Upstream
• Member, PETRONAS Executive Leadership Team• Board Member, various companies in PETRONAS
Past Experience
• Executive Vice President, Gas & Energy• Senior Vice President, PETRONAS Development and Production
Upstream Business• Senior Vice President, PETRONAS Corporate Strategy • Vice President, Malaysia Petroleum Management• Head, Strategy & New Ventures Division in Exploration & Production
Business• 25 years of extensive experience in oil and gas industry
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
49/Male
1 July 2019
7 months
3/3
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
OUR LEADERSHIP
p.107
KAMAL BAHRIN AHMADManaging Director/Chief Executive Officer
Academic/Professional Qualifications
• Bachelor Degree in Chemical Engineering, University of Texas, USA• Advanced Management Programme, Harvard Business School, USA
Present Directorships
Listed issuers:
• PETRONAS Gas Berhad• Gas Malaysia Berhad
Other public company:
• None
Present Appointments
• Member, Gas & New Energy Executive Leadership Team, PETRONAS• Board Member, various companies in PETRONAS
Past Experience
• Member, Downstream Executive Leadership Team, PETRONAS• MD/CEO, PETRONAS Penapisan (Melaka) Sdn Bhd (PPMSB)• General Manager (Refinery), Engen Limited, South Africa• Head, Project Management & Delivery, Technical & Engineering Division,
PETRONAS• Senior General Manager, Plant Operation Division, PETRONAS
Gas Berhad• General Manager (Production), PPMSB• Project Engineer in Refining Sector, Kertih Refinery Reformer Project
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
55/Male
1 June 2017
2 years 8 months
6/6
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
p.108
Profile of the Board of Directorsas at 10 February 2020
HABIBAH ABDULSenior Independent Director
Academic/Professional Qualifications
• Bachelor of Economics (Accounting), University Malaya• Fellow, Institute of Chartered Accountants in England and Wales
(ICAEW)• Member, Malaysian Institute of Certified Public Accountants• Member, Malaysian Institute of Accountants
Present Directorships
Listed issuers:
• PETRONAS Gas Berhad• KLCC Property Holdings Berhad
Other public company:
• None
Present Appointments
• Member, Board Audit Committee, PETRONAS Gas Berhad• Member, Nomination and Remuneration Committee, PETRONAS Gas
Berhad• Member, Board Audit Committee, KLCC Property Holdings Berhad• Member, Nomination and Remuneration Committee, KLCC Property
Holdings Berhad
Past Experience
• Member of Securities Commission• Experienced in providing audit and business advisory services to several
large public listed, multinationals and local corporations• Partner, Arthur Andersen• Partner, Ernst & Young
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
Malaysian
64/Female
13 September 2013
6 years 5 months
6/6
OUR LEADERSHIP
p.109
FARINA FARIKHULLAH KHANIndependent Non-Executive Director
Academic/Professional Qualifications
• Bachelor of Commerce (Accounting), University of New South Wales, Australia
• Fellow, Chartered Accountants, Australia & New Zealand (CA ANZ)• Advanced Management Program, Harvard Business School, USA
Present Directorships
Listed issuers:
• PETRONAS Gas Berhad• KLCC Property Holdings Berhad• AMMB Holdings Berhad• Icon Offshore Berhad
Other public company:
• Ambank Islamic Berhad
Present Appointments
• Chairman, Board Audit Committee of PETRONAS Gas Berhad• Chairman, Audit Committee of KLCC Property Holdings Berhad• Chairman, Risk Management Committee of Ambank Islamic Berhad• Member, Audit Examination Committee of AMMB Holdings Berhad• Member, Group Nomination and Remuneration Committee of AMMB
Holdings Berhad• Member, Audit Committee of Icon Offshore Berhad
Past Experience
• Board Member, Progress Energy Canada Ltd• Chief Financial Officer, PETRONAS Chemicals Group Berhad• Chief Financial Officer, PETRONAS Exploration & Production• Chief Financial Officer, PETRONAS Carigali Group of Companies• Senior Manager, Corporate Planning & Development Division, PETRONAS• Senior Associate, Business Services, Coopers & Lybrand, Australia
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
47/Female
1 September 2018
1 year 5 months
6/6
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
p.110 OUR LEADERSHIP
Profile of the Board of Directorsas at 10 February 2020
DATO’ AB. HALIM MOHYIDDINIndependent Non-Executive Director
Academic/Professional Qualifications
• Master of Business Administration, University of Alberta, Canada• Bachelor of Economics in Accounting, University Malaya• Diploma in Accountancy, University Malaya• Member, Malaysian Institute of Accountants
Present Directorships
Listed issuers:
• PETRONAS Gas Berhad• MISC Berhad• KNM Group Berhad
Other public company:
• None
Present Appointments
• Chairman, MISC Berhad• Chairman, KNM Group Berhad• Chairman, Nomination and Remuneration Committee, PETRONAS Gas
Berhad• Chairman, Audit Committee, KNM Group Berhad• Chairman, Nomination Committee, KNM Group Berhad • Member, Board Audit Committee, PETRONAS Gas Berhad• Member, Remuneration Committee, KNM Group Berhad
Past Experience
• Partner, KPMG/KPMG Desa Megat & Co.• Member, Education Committee International Federation of Accountants
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
74/Male
4 August 2011
8 years and 6 months
6/6
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
p.111
DATO’ ABDUL RAZAK ABDUL MAJIDIndependent Non-Executive Director
Academic/Professional Qualifications
• Masters Degree in Business Administration, Ohio University, USA• Bachelor of Electrical Engineering, Brighton University, UK
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company:
• None
Present Appointments
• Chairman, Energy Council of Malaysia• Chief Executive Officer, MyPower Corporation MESI 2.0 (Government
of Malaysian Undertaking)
Past Experience
• Chairman, Energy Commission Malaysia• Chief Executive Officer, MyPower Corporation MESI 1.0 (Incorporated
by Ministry of Energy)• Senior Vice President (Corporate Affairs Division), Tenaga Nasional
Berhad• Vice President (Generation), Tenaga Nasional Berhad• Secondment, Economic Planning Unit – Prime Minister’s Department
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
69/Male
1 September 2018
1 year 5 months
5/6
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
p.112
Profile of the Board of Directorsas at 10 February 2020
EMELIANA DALLAN RICE-OXLEYNon-Independent Non-Executive Director
Academic/Professional Qualifications
• Degree in Geology, University of South Carolina, USA• Advanced Management Programme, Harvard Business School, USA
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company:
• None
Present Appointments
• Vice President, Exploration PETRONAS Upstream Business• Member, Upstream Leadership Team, PETRONAS• Member, Upstream People Development Council, PETRONAS• Champion, PETRONAS Leading Women Network• Board Member, various companies in PETRONAS
Past Experience
• Vice President of Exploration Malaysia, PETRONAS• Led PETRONAS strategy to accelerate monetisation of the gas-rich
resources in East Malaysia as well as international exploration growth• Served numerous technical and managerial roles in Malaysia, Central
North Sea, Brazil, Onshore United States of America and Latin America for Shell
• Exploration Portfolio and Planning Manager for Asia Pacific region for Shell
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
57/Female
1 September 2016
3 years and 5 months
5/6
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
OUR LEADERSHIP
p.113
Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
MARINA MD TAIBNon-Independent Non-Executive Director
NATIONALITY
AGE/GENDER
DATE OF APPOINTMENT
LENGTH OF SERVICE
BOARD MEETING ATTENDED
Malaysian
47/Female
1 September 2019
5 months
2/2
Academic/Professional Qualifications
• Master of Petroleum Business Management, University of Adelaide, Australia
• Bachelor of Social Studies Accountancy, University of Exeter, UK• Fellow, Institute of Chartered Accountants in England and Wales
(ICAEW) • Advanced Management Programme, Harvard Business School
Present Directorships
Listed issuer:
• PETRONAS Gas Berhad
Other public company:
• None
Present Appointments
• Member, Board Audit Committee, PETRONAS Gas Berhad• Head, Corporate Strategic Planning, PETRONAS• Board Member, various companies in PETRONAS
Past Experience
• Head, Brunei Operations, PETRONAS Carigali Sdn Bhd• Head, Strategic Planning, Petroleum Management Unit, PETRONAS• Senior Manager, Corporate Planning and Development Division,
PETRONAS
Declaration
• No family relationship with any Director/Major Shareholder• No conflict of interest with PETRONAS Gas Berhad• No conviction of offences within the past five years other than traffic
offences, if any• Does not hold more than 5 directorships in listed issuers
From left to right:
1. BARISHAH MD HANIPAH Head of Human Resources Management
2. NIK IRWAN IZANEE NIK ABDULLAH Head of Corporate Affairs
3. ABDUL RAZAK SAIM Head of Business Development
and Commercial
4. MOHD KABIR NOORDIN Head of Gas Processing and Utilities
5. SHARIZA SHARIS MOHD YUSOF Chief Financial Officer
OUR LEADERSHIP
Leadership Team
p.114
Scan this QR code with your smart device for Profile of Leadership Team.
6. KAMAL BAHRIN AHMAD* Managing Director/ Chief Executive Officer 7. SYUHAIDA AB RASHID Head of Legal and Corporate Secretariat
8. BURHAN ABDULLAH Head of Gas Transmission and Regasification
9. MUHAMMAD NAZOMI OMAR Head of Business Excellence
* Profile of Kamal Bahrin Ahmad can be referred on page 107.
p.115
OUR LEADERSHIPp.116
MOHD KABIR NOORDINHead of Gas Processing and Utilities
BURHAN ABDULLAHHead of Gas Transmission and Regasification
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay53/MaleJuly 20154 years 6 months
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay52/MaleJanuary 20173 years 1 month
Responsibilities
• Overall management and operations of Gas Processing and Utilities facilities by ensuring safe, optimum and efficient plant operations
• Ensure delivery of contracted utilities which satisfies customers’ requirements as well as achieving optimum gas value chain for PETRONAS and PGB
• Ensure compliance with regulations and statutory requirements
Academic/Professional Qualifications
• Degree in Chemical Engineering, University of Leeds, United Kingdom
Present Appointments
• Chairman, Voltage Renewables Sdn Bhd• Director, Industrial Gases Solutions Sdn Bhd• Director, CEFS Response• Vice President, Kelab Golf dan Rekreasi PETRONAS
Past Experience
• Head of Production, Gas Processing and Utilities, PGB• General Manager, Operations, Malaysia LNG Sdn Bhd• Production Specialist, PETRONAS Penapisan (Melaka) Sdn Bhd• Member, Production Technology, PETRONAS Penapisan (Terengganu)
Sdn Bhd• Various positions within PETRONAS Penapisan (Melaka) Sdn Bhd
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
Responsibilities
• Overall management and operations of Gas Transmission and Regasification facilities by ensuring safe, optimum and efficient pipeline network and regasification operations
• Ensure delivery of gas which satisfies PETRONAS customers’ requirements as well as achieving optimum gas value chain for PETRONAS
• Ensure compliance with regulations and statutory requirements
Academic/Professional Qualifications
• Bachelor of Chemical Engineering from University of Texas A&I, United States of America
• First Grade Steam Engineer from Malaysian Department of Occupational Safety & Health
Present Appointments
• Chief Executive Officer, Regas Terminal (Sg. Udang) Sdn Bhd
Past Experience
• Vice President Operations, Trans-Thai Malaysia (Thailand) Ltd• Senior Operation Manager, PETRONAS Gas Berhad• Shift Supervisor, Ethylene (Malaysia) Sdn Bhd• Operation Engineer, PETRONAS Penapisan (Terengganu) Sdn Bhd
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
Profile of Leadership Teamas at 10 February 2020
1 2 3 6 7 84p.1175
PUSHING FORWARD ACCELERATING MOMENTUM
SHARIZA SHARIS MOHD YUSOFChief Financial Officer
ABDUL RAZAK SAIMHead of Business Development and Commercial
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay45/FemaleSeptember 20172 years 5 months
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay53/MaleFebruary 20136 years and 11 months
Responsibilities
• Overall Group’s financial and fiscal management as well as investor relations
• Provide strategic partnering and finance advisory to the business particularly on business ventures and commercial arrangements
Academic/Professional Qualifications
• Bachelor of Science in Economics and Accounting, University of Bristol, United Kingdom
• Fellow, Institute of Chartered Accountants in England and Wales (ICAEW)
• Member, Malaysian Institute of Accountants
Present Appointments
• Director, Kimanis Power Sdn Bhd• Director, Kimanis O&M Sdn Bhd• Director, Pengerang Gas Solutions Sdn Bhd• Director, TTM Sukuk Berhad• Alternate Director, Pengerang LNG (Two) Sdn Bhd• Alternate Director, Gas Malaysia Berhad
Past Experience
• Financial Controller, PETRONAS Chemicals Group Berhad• Senior Manager, Strategic Planning, PETRONAS• Head, Finance and Administration, Dragon LNG, United Kingdom• Manager, Financial Accounting, PETRONAS Dagangan Berhad• Analyst, President/CEO’s Office, PETRONAS• Executive, Corporate Finance, PETRONAS• Auditor, Wenham Major Chartered Accountants, United Kingdom
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
Responsibilities
• Maximise Group’s profitability through effective business development for growth, commercial negotiations and resolutions, business ventures management, land acquisition and management
• Oversee business operations under the Third Party Access (TPA)
Academic/Professional Qualifications
• Degree in Mechanical Engineering (Hons), University of Wollongong, New South Wales, Australia
Present Appointments
• Director/CEO, Pengerang LNG (Two) Sdn Bhd• Director, Industrial Gases Solutions Sdn Bhd• Director, PETRONAS Energy (India) Ptd Ltd• Director, Gas District Cooling (GDC) Sdn Bhd• Director, Regas Terminal (Lahad Datu) Sdn Bhd• Director, Regas Terminal (Pengerang) Sdn Bhd
Past Experience
• Director, Transasia Pipeline Pvt Ltd• Commissioner, PT Transportasi Gas Indonesia• Chief Operating Officer, BAKIPC Sdn Bhd• General Manager, Gas Business Development, Gas Business Unit, PETRONAS• Head, Malaysia Gas Management, Gas Business Unit, PETRONAS• Manager, Gas Supply Planning, PETRONAS• Manager, Business Planning, PETRONAS Australia Pty Ltd• Senior Executive, Marketing, East Australia Pipeline Marketing Pty Ltd• Various technical positions in PGB on gas compression and facilities
management• Procurement Executive, Gas Transmission Operation, PGB
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
OUR LEADERSHIPp.118
Profile of Leadership Teamas at 10 February 2020
BARISHAH MD HANIPAHHead of Human Resources Management
SYUHAIDA AB RASHIDHead of Legal & Corporate Secretariat
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay55/FemaleMarch 20136 years 10 months
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay46/FemaleMay 20181 year 9 months
Responsibilities
• Formulate talent strategies and initiatives in developing competent and capable leaders and workforce across PGB Group including securing, developing and retaining talents
• Provide Human Resources advisory to adapt and adopt the right HR solutions at the strategic, tactical and operational level
• Create positive experience through empowered, agile and enabled talent eco-system
Academic/Professional Qualifications
• Bachelor of Business Administration (Cum Laude), University of Toledo, Ohio, USA
Present Appointments
• Joint Secretary, Nomination and Remuneration Committee
Past Experience
• Senior Manager, Sponsorship and Talent Sourcing, PETRONAS• Manager, Human Resource Management, PETRONAS Chemicals
Fertiliser (Kedah) Sdn Bhd• Manager, HR Planning and Development, PGB• Manager, Remuneration Administration, PETRONAS• Executive within HRM Division of PETRONAS in the areas of People
Development, Capability Development and HR Information System• Executive, Education Sponsorship, PETRONAS
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
Responsibilities
• Overall management of legal affairs and company secretarial services of PGB Group
Academic/Professional Qualifications
• LLB (Hons) International Islamic University Malaysia• Licensed Company Secretary• Professional Certificate on International Intellectual Property, University
of Victoria, Canada BC
Present Appointments
• General Counsel, Legal Gas & Energy, Group Legal, PETRONAS• Joint Company Secretary, PGB• Secretary, Board Audit Committee PGB• Joint Secretary, Nomination & Remuneration Committee PGB
Past Experience
• Senior Legal Counsel, PETRONAS Project Delivery & Technology• Senior Legal Counsel, PETRONAS Carigali Sdn Bhd• Senior Legal Counsel, PETRONAS Chemicals Group Berhad• Legal Counsel, (UzGTL) LLC • Legal Counsel, Petchem Business and GTL Project, PETRONAS• Legal Counsel, PETRONAS Research and Scientific Services Sdn Bhd• Executive Business Improvement, PETRONAS Corporate Development
Unit
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
1 2 3 6 7 84p.1195
PUSHING FORWARD ACCELERATING MOMENTUM
MUHAMMAD NAZOMI OMARHead of Business Excellence
NIK IRWAN IZANEE NIK ABDULLAHHead of Corporate Affairs
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay39/MaleJune 20197 months
Nationality/EthnicityAge/GenderDate of AppointmentLength of Service
Malaysian/Malay43/MaleNovember 20181 year 3 months
Responsibilities
• Manage overall PGB strategies and plans implementation, as well as risk management to ensure PGB business continuity while safeguarding and sustaining the long term interests of the shareholders, employees and customers in line with the Company’s direction, policy, procedures and statutory requirements
• Manage deliverable of key business reporting to relevant stakeholders and analyse gaps for business opportunities and portfolio performance
• Ensure the development and effectiveness of PGB management system and business process to improve performance and create value for stakeholders
Academic/Professional Qualifications
• Bachelor in Electrical and Electronic Engineering, University Sains Malaysia
Present Appointments
• Nil
Past Experience
• Manager, Commercial Plant and Utilities, PETRONAS Gas Berhad• Head, Project Management Office GPU, PGB• Head, Operations GP3/4 and KCS A/B and COGEN, GPU, PGB• Head, Operations COGEN, PGB• Executive, Shift Supervisor, PGB
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
Responsibilities
• Lead and drive the corporate affairs functions which include external stakeholders’ engagement, media management, corporate and crisis management communications, sustainable development, staff & public relations and administration to meet the short, medium and long term objectives of PGB
• Formulate strategies and programmes and the required approach to define the desired reputation and brand positioning to continuously secure shareholders’ satisfaction and confidence towards PGB
• Ensure positive positioning of PGB’s reputation as a socially responsible organisation and the community’s business partner of choice through various Corporate Social Responsibilities (CSR) initiatives
Academic/Professional Qualifications
• Bachelor of Business Administration, Western Michigan University, USA
Present Appointments
• Nil
Past Experience
• Head, Corporate Affairs & Administration, PETRONAS Carigali Iraq Holding B.V.
• Manager, Stakeholder Relations (International), PETRONAS• Manager, Corporate Brand & Policy, PETRONAS• Executive, Public Relations, Advertising and Promotions, Events
Management, PETRONAS
Declaration
• No family relationship with any director and/or major shareholder of PGB
• No conflict of interest with PGB• No conviction of offences within the past five years other than traffic
offences, if any
For more details on talent management, refer to our Sustainability Report.7
* Corporate Secretariat functions are undertaken by PETRONAS Group Legal
BOARD OF DIRECTORS
COMPANYSECRETARY*
MANAGING DIRECTOR/CHIEF EXECUTIVE OFFICER
BOARD AUDITCOMMITTEE
NOMINATION AND REMUNERATION
COMMITTEE
LEADERSHIP TEAM
CorporateAffairs
BusinessExcellence
Legal AndCorporate
Secretariat*
Human Resources
Management
Business Development
and Commercial
FinanceGas Transmission
and Regasification
Internal Audit
Gas Processing
and Utilities
OUR LEADERSHIP
Organisation Structure
p.120
1 2 3 6 7 84p.1215
PUSHING FORWARD ACCELERATING MOMENTUM
NUMBER OF EMPLOYEES
1,829as at 1 December 2019
Male87%
Female13%
GENDER DIVERSITY
NON-TECHNICAL
12%
GEN X
646 (35.3%)
MILLENIALS
1,100 (60.2%)
BABYBOOMERS
63 (3.4%)
POST MILLENIALS
20 (1.1%)
AGE DIVERSITY*
TECHNICAL KNOWLEDGE
DIVERSITY
* Manpower generation data 2019 is based on the new definition i.e Baby Boomers (1965 and before), Gen X (1966-1979), Millenials (1980-1994) and Post Millenials (1995 and after).
TECHNICAL
88%
6GovernanceResponsible
124 Value Creation Through Good Governance
RESPONSIBLE GOVERNANCE INTEGRATED REPORT 2019
Value Creation Through Good Governance
The Board and the Management strive to chart our business direction and createmaximum shared value across all spheres, led by our Statement of Purpose which is
“A Progressive Energy and Solutions Partner Enriching Lives For A Sustainable Future”
as we drive strategic responses and heed market needs.
We anchor on our shared values of Loyalty, Integrity, Professionalismand Cohesiveness which form the backbone of our business conduct,
to deliver results to stakeholders. In the course of doing so, we do notwaver from our goal to create value to our stakeholders.
We respond to risks and opportunities, ensure relevance and sustainability of the business model, monitor the overall environment, the availability and quantity of
capital inputs and acknowledge the needs of all stakeholders. This strategy is executed through our strategic focus areas and enables the Group to remain
steadfast in managing our operations supported by good governance and simultaneously, meeting and delivering financial targets.
PGB is committed to the highest standards of governance, ethics and integrity
p.124
1 2 3 4 7 85
Board of Directors
Adif Zulkifli
Habibah AbdulSenior Independent Director
Member of BAC Member of NRC
Farina Farikhullah KhanIndependent Non-Executive Director
Chairman of BAC
Dato’ Ab. Halim MohyiddinIndependent Non-Executive Director
Chairman of NRCMember of BAC
Dato’ Abdul Razak Abdul MajidIndependent Non-Executive Director
Member of BAC Member of NRC
Emeliana Dallan Rice-OxleyNon-Independent
Non-Executive Director
Kamal Bahrin AhmadManaging Director/
Chief Executive Director
1
Marina Md TaibNon-Independent
Non-Executive DirectorMember of BAC
BAC: Board Audit Committee
NRC: Nomination & Remuneration Committee
Chairman, Non-Independent Non-Executive Director
Note:
p.1256PUSHING FORWARD ACCELERATING MOMENTUM
RESPONSIBLE GOVERNANCE INTEGRATED REPORT 2019
Value Creation Through Good Governance
VALUE-DRIVEN OBJECTIVES OF OUR BOARD: PILLAR OF SUSTAINABLE VALUE CREATION
Value-driven objectives of our Board are rooted in corporate governance principles and best practices espoused in the Malaysian Code on Corporate Governance 2017 (MCCG 2017), reporting disclosures and increased compliance requirements of the Main Market Listing Requirement (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia), Companies Act 2016 and other applicable regulations.
3
Strong leadership is critical to value creation. The Board sets the tone, provides leadership and vision and leads the Group ethically, effectively and responsibly.
The Board has the power to shape the Group’s direction and culture through its corporate governance philosophy and ethical practices. In this way the Board ensures that the Group plays a significant role in society as an employer, taxpayer and contributor of the country’s economic growth.
The Board takes accountability for the Group’s performance. The Board sets the Group’s strategic aims and ensures that the necessary resources are in place to meet its objectives and review Management’s performance.
The Board supports the Group in its implementation of the Group’s value-driven strategic objectives and the effort put in place in achieving them. The required disclosures are contained in this Integrated Report and other reports available at the Company’s website at www.petronasgas.com
The Board is collectively responsible for delivering sustainable value through oversight of the management of the Group’s business through its Board Committees.
In providing leadership and vision to the Group, the Board ensures sustainable growth and delivery of the Group’s purpose and objectives for the benefit of all stakeholders.
OUR GOVERNANCE POLICY
Our Board is committed to the highest standards and levels of governance, ethics and integrity within the Group.
The Board believes that excellence in corporate governance is vital to achieve the highest standards of professionalism and business ethics across the Company’s spectrum of business activities.
In PGB, we embrace world-class business practices and robust institutional framework and constantly review, enhance and strengthen these practices to ensure we act in the best interest of our stakeholders.
PGB, with four core business segments, ie, gas processing, gas transportation, LNG regasification and utilities has established itself as Malaysia’s leading gas infrastructure and utilities company.
PGB adopts world-class governance practices and globally recognised standards for sustainable practices to ensure sustained strength of our business segments and services. In so doing, we are resilient and at the same time, flexible in adopting new regulatory changes, responding and adapting to the challenging and competitive regional and global business environment.
Our good governance is not a box-ticking exercise. It entails far more than legislative, regulatory compliance and principles of best practices.
We believe that good governance with value-driven objectives as its mainstay, contributes to raising values through enhanced accountability, strong risk and performance management, transparency and effective leadership.
Good corporate governance creates and sustains shareholder value; ensures that our behaviour is ethical and promotes positive outcomes for all stakeholders.
2
Effective Ethical Leadership
Governance Structure and Delegation Sustainable Growth and Stakeholders
Strategy, Performance and Reporting
p.126
• Oversight role
• Reviews the quality of financial information
• Provides an unbiased review of effectiveness and efficiency in the Group’s internal control systems.
• Reviews and recommends to the Board on the structure, size and composition of the Board
• Responsible for the nomination, appointment, assessment, remuneration and compensation of the Board
Board Audit Committee
(BAC)
Nomination and
Remuneration Committee
(NRC)
PGB Group
Board of Directors
1 2 3 4 7 85
COLLECTIVE RESPONSIBILITIES OF THE BOARD
A director, when exercising his/her power, owes a fiduciary duty to the Company and collectively should act honestly in good faith in the best interest of the Company. Our Board is collectively responsible for the long term success of PGB and delivering sustainable value through oversight of the management of the Group’s business.
The main functions of the Board include the following:
• Reviews, approves and monitors strategic business plans, goals and policies
• Ensures appropriate policies are in place, adopted, executed effectively and regularly reviewed
• Provides oversight of the conduct and performance of the Management and the Group’s business
• Ensures and provides accountability to its members or shareholders and to some extent, towards a wider range of stakeholders
Our Board and Board Committees
The Board provides leadership and strategic guidance to safeguard stakeholder value creation within a framework of prudent and effective controls. This makes it possible for the Group to assess and manage risks to ensure long term sustainable development and growth.
The Board is ultimately accountable and responsible for the performance and affairs of PGB and ensures that the Group adheres to high standards of ethical behaviour.
The Board Committees assist the Board in the discharge of its duties and responsibilities.
Each Board Committee has a formal written Terms of Reference that are effectively delegated in respect of some of the Board’s responsibilities.
The Board monitors these responsibilities to ensure effective coverage of and control over, the Group’s operations.
The Board engaged in strategy sessions with Management throughout the year.
The Board also dealt with strategic focus areas such as PGB’s Growth Strategy and Digital Initiative.
The Board deliberated and approved the Company’s Business Plan and Budget.
INVOLVEMENT IN COMPANY’S STRATEGIC MATTERS
Although the Board maintains its independence, it is important that it engages with Management on multiple levels tounderstand fully the Group’s business.
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5
p.1276PUSHING FORWARD ACCELERATING MOMENTUM
RESPONSIBLE GOVERNANCE INTEGRATED REPORT 2019
Value Creation Through Good Governance BOARD DIVERSITY
The Directors bring with them years of experience in managing sustainable business growth and collectively represent leadership with diversity of perspectives that supports effective decision-making.
A diverse Board is necessary to provide unique perspectives, experience and expertise required to achieve effective stewardship thereby, creating value.
Diversity that embraces mixed profiles, age and gender, knowledge, skill, regional and industry experience at Board level are key considerations in the Board selection process.
In addition, each of the director has the character, experience, integrity, competence and time to effectively discharge his/her role as a director.
Female Directors currently represent 50% of the Board composition in line with the Government’s aspiration and Practice 4.1 of the MCCG 2017.
BOARD INDEPENDENCE
The Board is diverse in demographics, skills and experience.
The Board comprises eight Directors, four of whom, represents 50% of Independent Directors who promote independent judgement and diverse mind sets and opinions. All Directors must exercise their judgement independently, irrespective of status and are required to act in the best interests of the Company.
All Directors are assessed annually via the Board Effectiveness Evaluation exercise.
The Independent Directors assessed in 2019 satisfied the independence criteria and therefore, maintained their independent status.
In line with the exemplary practice as recommended by MCCG 2017, the Company has adopted a tenure policy whereby the total tenure of the Independent Directors is capped at nine years.
BOARD SKILLS MATRIX
The Board has members with a broad range of skills and experiences that helps to create value in the interests of the Company and its shareholders.
With the appropriate mix of skills and experience, the Board is assured that it is well-equipped to guide and steer our strategy into the future and thereby, create value.
BOARD TENURE AND AGE DISTRIBUTION
RISK MANAGEMENT
Risks arising from a constantly shifting global industrial and geopolitical landscape are among the major challenges our business faces in progressing with our goal of growing shareholders’ value in a sustainable manner.
Risk management is fundamental to the Group’s strategy and our gas infrastructure and utilities business. The pervasiveness of risk in this industry means that our Board deems risk management as an integral part of our business strategy.
Risk management oversight is carried out by the Board and the Board Audit Committee (BAC) via the Risk Management Unit (RMU) which reports on risk management to the BAC.
The BAC reviews and challenges the Enterprise Risk Report (ERR) which entails among others, the risk profile and status of risk mitigation and implementation.
PGB has adopted the PETRONAS Resiliency Model in managing risks with three focus areas, namely Enterprise Risk Management (ERM), Crisis Management and Business Continuity Model.
The business environment within which we operate, requires us to be vigilant in our risk management and to continuously identify new emerging risks.
6
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Banking & Finance Commercial/Marketing Corporate Planning & Development Economics
Engineering/Technical Finance/Audit Human Resource Legal/Regulatory Oil & Gas
Operations Regional/International Shipping/Logistics
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No
. of
Bo
ard
Me
mb
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Required Skills and Experience
Length of Services
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1
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7-9 years 1 4-7 years 1 2-4 years 2 0-2 years 4
Age 70-79 1 Age 60-69 2 Age 50-59 3 Age 40-49 2
p.128
6Read more in our Governance & Financial Report.
1 2 3 4 7 85
CONFLICT OF INTEREST
A Director is prohibited from using his or her position or confidential or price-sensitive information to benefit herself or himself or any related third party, financially or otherwise.
Directors are also required to inform the Board of conflicts or potential conflicts of interest that they may have in relation to particular items of business or other directorships. They must declare any actual or potential conflict of interest at the Board meeting where the matter is being transacted and discussed.
A Director may accept other Board appointments provided the appointments do not conflict with the Group and/or adversely affect the Director’s duties as well as time-commitment.
A Non-Executive Director should not hold more than five directorships in listed entities.
OUR APPROACH TO COMPLIANCE
We comply with and subscribe to various legislations and regulatory requirements, such as MMLR by Bursa Malaysia, MCCG 2017, Companies Act 2016, Malaysian Financial Reporting Standards and International Financial Reporting Standards.
Appropriate procedures and mechanisms are in place to ensure full and continuous adherence to these laws and regulation.
Our business compliance covers a wide range of laws and regulatory areas, including anti-competition, strategic trade, anti-bribery and corruption, international sanctions and data protection.
The principles governing our ethical standards and compliance can be found within CoBe, Whistleblowing Policy and the Anti-Bribery and Corruption Manual.
11
12
COMMITMENT ON ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG) MATTERS
We are committed to ensure the highest standards of environmental, social and governance practices.
We believe for a company to be successful and create long term value, sustainable development has to be incorporated in the business value chain.
We progressively keep abreast of evolving social and environmental expectations by continuously engaging with our stakeholders.
13
INTEGRITY AND ETHICS
PGB acknowledges the Board’s role in establishing a corporate culture that encompasses and embraces ethical conduct within the Group. The adoption of these policies is to ensure that the conduct of business and the Company’s employees are consistently carried out ethically and with integrity.
During the year under review, the Company had conducted series of staff engagement to instill awareness on these policies as part of the Company’s annual event.
14
The Board assumes ultimate responsibility
for PGB’s ethics performance and
adherence to human rights principles.
This responsibility is delegated to the
Management which uses various tools to fulfil its
mandate.
Code of Conduct and Business Ethics
(CoBE)
Trading on Insider
Information
Whistleblowing Policy
Selection of Vendors (PETRONAS Tenders
and Contracts Administrative
Manual)
Anti-Bribery and
Corruption Manual
Corporate Liability
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SustainableFuture
Towards A
132 Enriching Lives Through Sustainable Practices
7
Future
OUR SUPPORT FOR UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS (UNSDGs)
PGB is in support of eight UNSDGs where we believe we can contribute to the greatest possible impact to society. It helps us to coordinate our efforts effectively towards global sustainability agenda whilst enhancing our collaborations with local community to deliver sustainable value creation.
Good health is essential to sustainable development and the newly implemented 2030 Agenda reflects the complexity and interconnectedness of the two. It takes into account widening economic and social inequalities, rapid urbanisation, threats to the climate and the environment, the continuing burden of HIV and other infectious diseases, and emerging challenges such as non-communicable diseases. Universal health coverage will be integral to achieving SDG 3, ending poverty and reducing inequalities. Emerging global health priorities that are not explicitly included in the SDGs, including antimicrobial resistance, also demand for action.
Since 2000, there has been an enormous progress in achieving the target of universal primary education. The total enrolment rate in developing regions have reached 91% in 2015, and the worldwide number of children out-of-school has dropped by almost half. There has also been a dramatic increase in literacy rates, and many more girls are in school than ever before. These are all remarkable successes achieved from the SDG.
The efforts to achieve inclusive and quality education for all reaffirm the belief that education is indeed one of the most powerful instruments for sustainable development. This goal is targeting for all girls and boys to complete free primary and secondary education by 2030. It also aims to provide equal access to affordable vocational training, eliminate gender and wealth disparities, as well as achieve universal access to a quality higher education.
Between 2000 and 2016, the proportion of the global population having access to electricity has increased from 78% to 87%, and the number of people living without electricity dipped to just below one billion.
The demand for cheap energy increases in proportion to the continuous growth of the population. For economies heavily reliant on fossil fuels, this will bring forth drastic changes to our climate.
Investing in solar, wind and thermal power, improving energy productivity, and ensuring energy for all are vital if we are to achieve SDG 7 by 2030.
Infrastructure expansion and technology upgrade in order to provide clean and more efficient energy in every country will promote growth and help the environment.
The goals under SDG 8 promote sustained economic growth, higher levels of productivity and technological innovation. Encouraging entrepreneurship and job creation are key to this, as are effective measures to eradicate forced labour, slavery and human trafficking. With these targets in mind, the goal is to achieve full and productive employment, and decent work, for both women and men by 2030.
Achieving economic growth and sustainable development requires us to urgently reduce our ecological footprint by changing the way we produce and consume goods and resources. Agriculture is the biggest user of water worldwide, and irrigation now claims close to 70% of all freshwater for human use.
The efficient management of our shared natural resources, and the way we dispose of toxic waste and pollutants are important targets for the achievement of SDG 12. Encouraging industries, businesses and consumers to recycle and reduce waste is equally important, as is supporting developing countries to move towards more sustainable patterns of consumption by 2030.
TOWARDS A SUSTAINABLE FUTURE INTEGRATED REPORT 2019
Enriching Lives Through Sustainable Practices
p.132
Greenhouse gas emissions are more than 50% higher than it was in 1990. Global warming is causing long-lasting changes to our climate system, of which our lack of action will bring threats and irreversible consequences which threatens if we do not act.
The annual average economic losses from climate-related disasters are in the hundreds of billions of dollars. SDG 13 aims to mobilise US$100 billion annually by 2020 to address the needs of developing countries to both adapt to climate change and invest in low-carbon development.
The target to limit the increase in global mean temperature to two degrees Celsius above pre-industrial levels, aiming at 1.5 °C is still possible provided that there are strong political will, increased investment and utilisation of the existing technologies. However, this would require urgent and ambitious collective action.
Oceans absorb about 30% of the carbon dioxide produced by humans, and we are seeing a 26% rise in ocean acidification since the beginning of the industrial revolution. Marine pollution, an overwhelming majority of which comes from land-based sources, is reaching alarming levels, with an average of 13,000 pieces of plastic litter to be found on every square kilometre of ocean.
The goals under SDG 14 aim to sustainably manage and protect marine and coastal ecosystems from pollution, as well as to address the impacts of ocean acidification. Enhancing conservation and the sustainable use of ocean-based resources through international law will also help mitigate some of the challenges facing our oceans.
Plant life provides 80% of the human diet, and we rely heavily on agriculture as important economic resources. Forests cover 30% of the Earth’s surface, providing vital habitats for millions of species, and are important sources for clean air and water, as well as being crucial for combating climate change.
Urgent action must be taken to reduce the loss of natural habitats and biodiversity which have been a part of our common heritage and to support global food and water security, climate change mitigation and adaptation, and peace and security.
Source: Sustainable Development Goals, United Nations Development Programme
SUSTAINABILITY FRAMEWORK
We view sustainability or sustainable development as a business imperative. This means looking beyond financial profitability by balancing economic, social and environmental considerations in making sound business decisions.
EnvironmentEconomic Society Governance
S U S T A I N A B I L I T Y F R A M E W O R K
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2011• Certified with MS ISO 14001:2004
(Environmental Management System) • Implemented 4G Initiative (Green
Care, Green Mind, Green Ownership and Green Growth)
2013• 50% reduction of energy
consumption resulted from 4G Initiative
• Seeding Programme to develop future talents by recruiting fresh graduates
• PGB greenhouse gas emission reporting enhancement via SANGEA® software
2012• 32% savings of waste-handling
costs resulted from 4G initiative • Implementation of Program
Bakti Pendidikan PETRONAS (PBPP), which is now rebranded as Program Sentuhan Ilmu PETRONAS
2014• Commissioning of Flare Gas Recovery
Unit (FGRU), resulted in reduction of flaring emission
• Mercury management through HycaptureTM Hg
• Installation of high pressure online washing at gas turbines inlet to reduce energy consumption
2005 – 2010• Implementation of Program Sentuhan
Kasih PETRONAS • Execution of Building Leaders
Programme • Commissioning of Acid Gas Oxidiser
(AGO) to reduce acid gas emissions
KEY MILESTONES
Enriching Lives Through Sustainable Practices
1 2 3 4 85 6p.1357
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2015• Installation of cogeneration
(COGEN) unit• Collaboration with
Malaysian Nature Society (MNS) to preserve the biodiversity of Sungai Paka
• Collaboration with Yayasan Salam Malaysia on the Livelihood Programme
2016• Developed a structured Leak
Detection and Repair (LDAR) programme to monitor fugitive emissions
• Installation of Predictive Emission Monitoring System (PEMS)
• Displayed Accelerating Culture Change (ACC) programme
2019• Launching of 301Q99
Pushing Forward Game Plan to improve energy efficiency index, reduction of maintenance cost and increase utilisation
• Implementation generative HSSE culture
• RGTSU Export Compressor (RGTEC) won Silver Award from Anugerah Hijau Negeri Melaka under Green Project Category in Year 2019
• ‘Sayangi Sungai Latoh’ baseline assessment and tree planting in three phases
• Completion of Predictive Emission Monitoring System (PEMS)
• Participation in Hibiscus Award for seven plants
• Completion and commissioning of COGEN E
• Completion and the start of CO
2 recycling project
(COSLA)• Life Cycle Assessment for
GPS and UG
2018• Launched of ‘Sayangi Sungai Latoh’
programme• Conversion of ISO14001:2004 into
ISO14001:2015• Received Green Apple Award for water
conservation project at Utilities Kertih• Diamond Project at GPS bestowed with
the “5 Stars Band Award Project” from Malaysia Productivity Cooperation (MPC)
2017• Launched Mangrove Tree
Planting programme at Hutan Simpan Kekal Kuala Paka
• Organised “Jom Buat Mudball” activity which was one of the activities planned under the Sayangi Sungai Paka programme launched back in 2015
• Utilities Kertih Plant Sustainable Water Management Project announced the winner for Special Project Award (Gold) of the Prime Minister’s Hibiscus Award (PMHA) 2016/2017
SUSTAINABILITY STRATEGY
Sustainability plays a significant role in formulating our business plans and activities. As a leading gas infrastructure and centralised utilities company, we have the responsibility to demonstrate leadership not only in the business areas that we are in, but also with our environment and community. It is with this in mind that we have developed our Sustainability Strategy, which is aligned with our consideration for material matters and net positive impact that it has on our stakeholders.
Our strategy was also developed with reference to UN Sustainable Development Goals (SDGs) to ensure balanced focus and emphasis, as well as reflecting our support for global sustainability agenda. Our Sustainable Strategy focuses on three anchors; Sustainable Business, Social Responsibility and Resource Efficiency.
How each of the strategy addresses our material matters is illustrated below:
Sustainability Strategy
Material Matters Responses ResultLink to
UNSDGs
Sustainable Business
1. Operational Reliability, Delivery and Efficiency
2. Gas Market Dynamics
3. Gas Market Liberalisation
4. Business Growth
5. Compliance to Regulation
6. Sustainability
1. 301Q99 Pushing Forward Game Plan 2. Efficient management of regulated assets3. Business expansions:
a. Expansion of utilities capacity and customer base.
b. Expansion of Tanjung Sulong Export Terminal (TSET)
4. Introduction of ancillary services: a. Gassing Up Cooling Down (GUCD)b. LNG reloadingc. LNG bunkeringd. LNG truck loading
1. Increased profit and higher dividend paid in 2019 despite the challenges faced by the Group
2. Ready infrastructure to support Third Party Access (TPA) at our gas facilities in supplementing domestic gas supply to ensure supply security. We also provide environment for competitive pricing in the liberalised gas market
3. Business growth
4. Diversified business for new revenue streams
Social Responsibility: Commitment to Health, Safety and Security
1. Health, Safety, Security and Environment (HSSE)
2. Operational Reliability, Delivery and Efficiency
3. Compliance to Regulation4. Human Capital5. Sustainability
1. Generative HSSE Culture and PETRONAS Zero Tolerance (ZeTo) Rulesa. Stop Work Policyb. Jom Patuh dan Tegurc. 50,000 Safety Observations
2. Medical privileges:a. Preventive Health Screeningb. Setting up of Kertih Interplant Clinic
(KIC) at Kertih Integrated Petroleum Complex
3. Staff welfare4. Security measures:
a. 200 Emergency Response Exercisesb. Perimeter Intrusion Detection System
(PIDS) and CCTV across all our sites
1. Zero Fatality, zero fire accident with multiple MSOSH Award in 2019 for outstanding OSH performance
2. Award winner for Excellent Occupational Health & Safety (Chief Executive Officer/Private Company) from Department of Safety and Occupational Health
3. Comprehensive medical benefits to staff and PETRONITA Creche for staff children
4. Low security-related incidents and interventions for the past three years
Sustainable Business
Resource Efficiency
Social Responsibility
Progressive partner anchoring on operational and commercial excellence as well as growth.
Commitment towards HSSE, caring for our talents and society
Efficient use of our resources towards sustainable future generation.
SUSTAINABILITYSTRATEGY
TOWARDS A SUSTAINABLE FUTURE INTEGRATED REPORT 2019
Enriching Lives Through Sustainable Practices
p.136
Sustainability Strategy
Material Matters Responses ResultLink to
UNSDGs
Social Responsibility: Caring for Our Talents
1. Health, Safety, Security and Environment (HSSE)
2. Human Capital
3. Sustainability
1. Benchmark practice with the United Nations Guiding Principle on Business and Human Right (UNGPs)
2. Effective talent sourcing and people management
3. Pursue diversity in the workforce
4. Comparable staff benefits
1. Employee work-life balance through flexible working hours and Compressed Work Week (CWW) programmes
2. Skilled workforce and quality leaders, with smooth succession planning execution and low staff turnover
3. Improved perspectives in insights and decision making
Social Responsibility: Caring for the Society
1. Human Capital
2. Sustainability
1. School painting activities programme
2. Free market activities
3. Back-to-School programmes
1. Conducive learning environment
2. Improved life for the less-fortunate community in Paka
3. Better school-readiness for more than 200 students
ResourceEfficiency
1. Health, Safety, Security and Environment (HSSE)
2. Operational Reliability, Delivery and Efficiency
3. Business Growth
4. Compliance to Regulation
5. Sustainability
1. GHG’s emission target of 5.0 Million tCO2e
by 2024*
2. Installation of Solar Photovoltaic System
3. Installation of Best Available Technique (BAT) for air emission monitoring and control
4. New COGEN with nitrogen oxide removal (deNO
X)
5. 3R Programme – Re-use of spent catalyst and Benfield solution
6. Life Cycle Assessment (LCA)
7. Sayangi Sungai Latoh Programme
1. Reduction of CO2 emission
2. Circular economy by recycling CO
2 for other uses. Reduction in
Energy Intensity under 301Q99 Pushing Forward game plan
3. Cost-saving from electricity generated from sustainable source
4. Efficient management of air emission
5. Reduction of NOx emission intensity
6. RM5.0 million of cost saving from 3R Programme
7. 87% of PGB sites have been certified with MS ISO 14001:2015
8. More than 6,000 mangrove saplings have been planted to improve the ecosystem
* Target for PGB & its subsidiaries
Read more on Our Sustainability Practices in our Sustainability Report.7
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8
InformationOther
140 Corporate Information141 Corporate Directory 142 Notice of Annual General Meeting 145 Administrative Details for the 37th AGM150 Glossary
• Proxy Form
Information
BOARD OF DIRECTORS
Corporate Information
Adif Zulkifli (Chairman)
Kamal Bahrin Ahmad (MD/CEO)
Habibah Abdul (Senior Independent Director)
BOARD AUDIT COMMITTEE
Farina Farikhullah Khan (Chairman)
Habibah AbdulDato’ Ab. Halim MohyiddinDato’ Abdul Razak Abdul MajidMarina Md Taib
NOMINATION AND REMUNERATION COMMITTEE
Dato’ Ab. Halim Mohyiddin (Chairman)
Habibah AbdulDato’ Abdul Razak Abdul Majid
COMPANY SECRETARIES
Syuhaida Ab Rashid (MACS 01582)
Yeap Kok Leong(MAICSA 0862549)
REGISTRAR
Boardroom Share Registrars Sdn Bhd
Registration No. 199601006647 (378993-D)
11th Floor, Menara Symphony
No. 5, Jalan Prof. Khoo Kay Kim
Seksyen 13
46200 Petaling Jaya Selangor
Malaysia
Tel : (+603) 7890 4700
Fax : (+603) 7890 4670
Email address:
REGISTERED OFFICE
Tower 1, PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala LumpurMalaysiaTel : (+603) 2331 5000
BUSINESS ADDRESS
Level 49 & 50, Tower 1 PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala LumpurMalaysiaTel : (+603) 2331 5000
STOCK EXCHANGE LISTING
Listed on the Main Market of Bursa Malaysia Securities BerhadListing Date : 4 September 1995Stock Name : PETGASStock Code : 6033Stock Sector : Utilities
BANKING SERVICES PROVIDER
PETRONAS Integrated Financial Shared Services Centre (IFSSC)*
AUDITORS
KPMG PLT(LLP0010081-LCA & AF 0758)
Chartered Accountants
10th Floor, KPMG Tower
Bandar Utama
47800 Petaling Jaya
Selangor Darul Ehsan
Malaysia
Tel : (+603) 7721 3388Fax : (+603) 7721 3399
INVESTOR RELATIONS
Izan Hajar IshakHead of Investor RelationsLevel 49 & 50, Tower 1PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala Lumpur
Email address:[email protected]
SENIOR INDEPENDENT DIRECTOR
Habibah Abdul
Email address:[email protected]
Farina Farikhullah Khan (Independent Non-Executive Director)
Dato’ Ab. Halim Mohyiddin (Independent Non-Executive Director)
Dato’ Abdul Razak Abdul Majid (Independent Non-Executive Director)
Emeliana Dallan Rice-Oxley (Non-Independent Non-Executive Director)
Marina Md Taib (Non-Independent Non-Executive Director)
* Banking requirements are managed centrally by IFSSC to enable more efficient banking management for PGB Group.
www.petronasgas.comOFFICIAL WEBSITE
OTHER INFORMATION INTEGRATED REPORT 2019p.140
7
GAS PROCESSING
Gas Processing Plant, KertihKM 105, Jalan Kuantan-Kuala Terengganu24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 831 2345F: +(609) 827 1710
Gas Processing Plant, SantongKM 8, Kampung Tok Arun Off Jalan Santong23100 Paka, DungunTerengganu Darul ImanT: +(609) 831 2345F: +(609) 827 4578
Tanjung Sulong Export TerminalTanjung Sulong 24000 KemamanTerengganu Darul ImanT: +(609) 862 4321F: +(609) 863 1146
GAS TRANSPORTATION
Gurun Regional OfficeKM 1, Jalan Jeniang P.O. Box 31 08300 GurunKedah Darul AmanT: +(604) 468 5518F: +(604) 468 5519
Kertih Regional OfficeAras 1, Kompleks Pejabat PETRONAS Wilayah Pantai Timur (PWPT)24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 867 3500F: +(609) 864 0375
PETRONAS GAS BERHAD
Level 49 & 50 Tower 1, PETRONAS Twin Towers Kuala Lumpur City Centre 50088 Kuala Lumpur, MalaysiaT: +(603) 2331 5000F: +(603) 2331 6987 +(603) 2051 6992
Kuantan Regional OfficeLot 1, Sektor 1, Bandar Indera Mahkota25200 KuantanPahang Darul MakmurT: +(609) 573 2811F: +(609) 573 2813
Pasir Gudang Regional OfficePLO 332, Jalan Perak 4Kawasan Perindustrian Pasir Gudang81700 Pasir GudangJohor Darul TakzimT: +(607) 251 0333F: +(607) 251 0400
Segamat Operation CentreKM 10, Lebuhraya Segamat-Kuantan85000 SegamatJohor Darul TakzimT: +(607) 935 3000F: +(607) 931 6521
Seremban Regional OfficeKM 11, Jalan Seremban/Tampin71450 Sungai GadutNegeri Sembilan Darul KhususT: +(606) 677 6777F: +(606) 677 7799
Shah Alam Regional OfficeLot 1, Jalan Jemuju Lima 16/13EKawasan Perindustrian Seksyen 1640200 Shah AlamSelangor Darul EhsanT: +(603) 5510 6222F: +(603) 5510 1528
Sitiawan Regional OfficeLot 33263, Jalan Dato’ Ahmad Yunus32000 SitiawanPerak Darul RidzuanT: +(605) 692 5611/12/13/14F: +(605) 692 5615
REGASIFICATION
Pengerang LNG (Two) Sdn BhdTingkat 2 Bangunan Pengerang Terminal (Two) Sdn BhdLot PTD 4836, Jalan Damai 2 Kampung Sungai Kapal81600 PengerangJohor Darul TakzimT: +(607) 817 7692
Regas Terminal (Sg. Udang) Sdn BhdPejabat Operasi Regas TerminalPETRONAS Penapisan Melaka Persiaran Penapisan 76300 Sungai Udang MelakaT: +(607) 352 3801
UTILITIES
Utilities Plant, KertihKertih Integrated Petrochemical ComplexKM 105, Jalan Kuantan – Kuala Terengganu24300 Kertih, KemamanTerengganu Darul ImanT: +(609) 830 5500F: +(609) 830 5514
Utilities Plant, GebengLot 139A, Gebeng Industrial Area Fasa III26080 KuantanPahang Darul MakmurT: +(609) 586 3300F: +(609) 586 3311
JOINT VENTURES
Kimanis Power Sdn BhdKimanis Operation CentreLot 2, Block A, Ground FloorMembakut Jaya89728 Membakut SabahT : +6087 88 6217/224F : +6087 88 6219
Pengerang Gas Solutions Sdn BhdLot 137, ASU RAPIDPengerang Integrated Complex81600 PengerangJohor Darul TakzimT: +(607) 817 5915
1 2 3 4 5 6
Corporate Directory
p.141
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ORDINARY BUSINESS
1. To receive the Audited Financial Statements for the financial year ended 31 December 2019 together with the Reports of the Directors and Auditors thereon.
Please refer to Explanatory Note A 2. To re-elect the following Directors who retire by rotation pursuant to Article 107 of the Company’s Constitution:
(a) Dato’ Ab. Halim Mohyiddin
(b) Emeliana Dallan Rice-Oxley
Please refer to Explanatory Note B
3. To re-elect the following Directors who were appointed during the year pursuant to Article 100 of the Company’s Constitution:
(a) Adif Zulkifli
(b) Marina Md Taib
Please refer to Explanatory Note B
4. To approve the Directors’ Fees and Allowances payable to the Non-Executive Directors of up to RM2,600,000 with effect from 26 June 2020 until the next Annual General Meeting of the Company.
Please refer to Explanatory Note C 5. To approve the re-appointment of KPMG PLT, as Auditors of the Company for the financial year ending 31 December
2020 and to authorise the Directors to fix their remuneration.
Please refer to Explanatory Note D
6. To transact any other business of which due notice shall have been given in accordance with the Companies Act 2016 and Company’s Constitution.
NOTICE IS HEREBY GIVEN THAT the 37th Annual General Meeting (AGM) of PETRONAS Gas Berhad will be held at The
Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia
on Thursday, 25 June 2020 at 10.00 a.m. to transact the following businesses:
(Resolution 1)
(Resolution 2)
(Resolution 3)
(Resolution 4)
(Resolution 5)
(Resolution 6)
FURTHER NOTICE IS HEREBY GIVEN THAT for the purposes of determining a member who shall be entitled to attend and vote at the forthcoming 37th AGM, the Company shall be requesting the Record of Depositors as at 19 June 2020. Only a depositor whose name appears on the Record of Depositors as at 19 June 2020 shall be entitled to attend, participate, speak and vote at the meeting as well as for appointment of proxy(ies) to attend, participate, speak and vote on his/her stead.
By Order of the Board
Syuhaida Ab Rashid (MACS 01582) Yeap Kok Leong (MAICSA 0862549)Company Secretary Company Secretary
Kuala Lumpur20 March 2020
OTHER INFORMATION INTEGRATED REPORT 2019
Notice of Annual General Meeting
p.142
7
NOTES:
Proxy and/or Authorised Representative
1. A member of the Company entitled to attend, participate, speak and vote at the meeting may appoint not more than two proxies to attend and vote on his behalf provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy. There shall be no restriction as to the qualification of the proxy.
2. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint at least one proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said Securities accounts.
3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for the multiple beneficial owners in one Securities Account (omnibus account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account if holds.
4. Where a member or the authorised nominee appoints two proxies, or where an Exempt Authorised Nominee appoints two or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.
5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit your electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of the Proxy Form in the Administrative Details for submission of electronic Proxy Form.
6. If the Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If the Proxy Form is signed by an attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.
7. Pursuant to Paragraph 8.29A of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad all resolution set out in the Notice of 37th AGM will be put to vote as a poll.
Explanatory Notes
Note A
Audited Financial Statements for the Financial Year Ended 31 December 2019
The audited financial statements are laid before the shareholders pursuant to the provision of Section 244(2)(a) of the Companies Act 2016 for discussions only. The audited financial statements do not require shareholders’ approval and hence, will not be put forward for voting.
Note B
Re-election of Directors who retire in accordance with Article 100 and Article 107 of the Company’s Constitution
(i) Re-election of Directors who retire in accordance with Article 107 of the Company’s Constitution
Article 107 of the Company’s Constitution provides that one-third of the Directors of the Company for the time being shall retire by rotation at an AGM of the Company provided always that all Directors, shall retire from office once at least in each three years but shall be eligible for re-election at the AGM. A Director retiring at a meeting shall retain office until the close of the meeting whether adjourned or not.
At the forthcoming 37th AGM, two directors will be retiring in accordance with Article 107 of the Company’s Constitution. They are Dato’ Ab. Halim Mohyiddin and Emeliana Dallan Rice-Oxley, whom being eligible for re-election have given their consent for re-election at the AGM.
The Board endorsed the Nomination and Remuneration Committee’s recommendation that the Directors who retire in accordance with Article 107 the Company’s Constitution are eligible to stand for re-election.
(ii) Re-election of Directors who retire in accordance with Article 100 of the Company’s Constitution
Article 100 of the Company’s Constitution provides, that the Board shall have the power to appoint any person to be a Director to fill a casual vacancy or as an addition to the existing Board, and that any Director so appointed shall hold office until the next following AGM and shall be eligible for re-election.
In view that Adif Zulkifli and Marina Md Taib were appointed during the financial year under review, they will be retiring under Article 100 of the Company’s Constitution. They, being eligible for re-election have also given their consent for re-election.
The Board endorsed the Nomination and Remuneration Committee’s recommendation that the Directors who retire in accordance with Article 100 the Company’s Constitution are eligible to stand for re-election.
The profiles of the retiring Directors are set out in the Profile of the Board of Directors in the Our Leadership section of the Integrated Report.
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Note C
Non-Executive Directors’ Fees and Allowances
Pursuant to Section 230(1) of the Companies Act 2016, the fees of the directors, and any benefits payable to the directors including any compensation for loss of employment of a director or former director of a public company or a listed company and its subsidiaries, shall be approved at a general meeting.
The fees and allowances structure of the Non-Executive Directors (“NEDs”) of the Company is as follows:
• Monthly fixed fees for duties as Director/Chairman;
• Meeting allowance for each Board/Board Committee attended; and
• Fuel allowance.
The Directors’ fees and meeting allowances for Non-Independent Non-Executive Directors who are also employees of Petroliam Nasional Berhad (PETRONAS) are paid directly to PETRONAS.
The shareholders at the last AGM held on 30 April 2019 approved the Directors’ fees and allowance of up to RM2,500,000 for the period from 1 May 2019 until the next AGM of the Company. The actual Directors’ fees and other benefits paid to NEDs for the said period was RM2,099,000.
The Directors’ fees and allowances for the NEDs for the period from 26 June 2020 until the conclusion of the next AGM of the Company (Mandate Period) are estimated not to exceed RM2,600,000. The calculation is based on the estimated number of scheduled Board and Board Committees’ meetings and on assumption that all the NEDs will remain in office until the next AGM. This resolution is to facilitate payment of the Directors’ fees and allowances for the Mandate Period.
The Board will seek shareholders’ approval at the next AGM in the event the Directors’ fees and allowances proposed are insufficient.
Details of the fees paid to the Non-Executive Directors for the financial year ended 31 December 2019 are published in the Corporate Governance Report on the Company’s official website at www.petronasgas.com.
Note D
Re-appointment of Auditors
On 4 March 2019, the Board Audit Committee (BAC) has endorsed the adoption of PETRONAS Framework on External Auditors (the Framework) for PGB. The Framework states that BAC shall carry out annual assessment on the performance and independence of the external auditors based on the following four key areas:
(a) Quality of engagement team and services;(b) Adequacy of resources;(c) Quality of communication and interaction;
and(d) Independence, objectivity and professional
scepticism.
The assessment was conducted in January 2020 whereby the BAC was satisfied with the performance and independence of the external auditors.
KPMG PLT has also met the criteria prescribed by Paragraph 15.21 of the Main Market Listing Requirements of Bursa Malaysia Securities Berhad.
The Board at its meeting held on 18 February 2020 recommended the re-appointment of KPMG PLT as external auditors of the Company for the financial year ending 31 December 2020 for approval of the shareholders under Resolution 6.
Abstention from Voting
Any NED of the Company who is a shareholder of the Company will abstain from voting on Resolution 5 concerning remuneration of the NEDs at the 37th AGM.
Other Information
The Company has engaged independent scrutineers to count, audit and validate the votes for each proposal presented to shareholders.
OTHER INFORMATION INTEGRATED REPORT 2019
Notice of Annual General Meeting
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REGISTRATION
(1) Registration will start at 8:00 a.m. on Thursday, 25 June 2020 at The Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia.
(2) Please produce your original MyKad/passport (for foreigners) to the registration staff for verification. Please ensure to collect your MyKad/passport thereafter.
(3) Upon verification, you are required to write your name and sign on the Attendance List placed on the registration table.
(4) You will also be given an identification wristband with personalised passcode for the voting purpose. No person will be allowed to enter the meeting hall without the identification wristband. There will be no replacement in the event that you lose or misplace the identification wristband.
(5) No person will be allowed to register on behalf of another person, even with the original MyKad/passport of that person.
(6) The registration counter will handle only verification of identity and registration.
(7) Please vacate the registration area immediately after registration.
PROXY
(8) A member entitled to attend and vote is entitled to appoint proxy/proxies, to attend and vote instead of him. If you are unable to attend the meeting and wish to appoint a proxy to vote on your behalf, please submit your Proxy Form in accordance with the notes and instructions printed therein.
(9) The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit your electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of Proxy Form for submission of the electronic Proxy Form.
(10) If you wish to attend the meeting yourself, please do not submit any Proxy Form. You will not be allowed to attend the meeting together with a proxy appointed by you.
(11) If you have submitted your Proxy Form prior to the meeting and subsequently decided to attend the meeting yourself, please proceed to the Helpdesk to revoke the appointment of your proxy.
POLL VOTING
(12) The voting at the 37th AGM will be conducted by poll in accordance with Paragraph 8.29A of Main Market Listing Requirements of Bursa Malaysia Securities Berhad. The Company has appointed Tricor Investor & Issuing House Services Sdn Bhd (Tricor) as Poll Administrator to conduct the poll by way of electronic voting (e-voting) and Boardroom Share Registrars Sdn Bhd as Scrutineers to verify the poll results.
(13) During the 37th AGM, the Chairman will invite the Poll Administrator to brief you on the e-voting procedures using smartphone or tablet (voting device).
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(14) Members and proxies who wish to use their own voting device to vote are required to take note of the following e-voting requirements and procedures:
(a) Download Tricor e-Vote App (Version 1.3.7) onto your voting device before attending the meeting. Tricor e-Vote App download is available at no cost from Google Play Store or Apple App Store. If you require assistance on how to download the Tricor e-Vote App, please contact Tricor officers listed in Item 29 below.
(b) When you arrive at the meeting venue, connect to the Wi-Fi network provided by Tricor for use and access to Tricor e-Vote App:
Wi-Fi Name: Tricor e-Vote
Password: PGB2506
(c) Use the camera function of your voting device to capture the passcode on your wristband to access Tricor e-Vote App.
(d) Once logged in, you can proceed to vote on the resolutions and submit your votes at any time from 10.00 a.m. but before the completion of the voting session which will be announced by the Chairman during the meeting.
(15) Members and proxies who do not have voting device to submit their votes, they can do so at the voting kiosks. The Chairman will announce the commencement of voting at the kiosks upon conclusion of the deliberations of all the businesses transacted at the 37th
AGM. Members and proxies will be directed to the kiosks which are equipped with voting devices and polling officers are stationed to assist. The duration of voting at the kiosks is estimated to be 10 minutes.
(16) Upon completion of the voting session for the 37th AGM, the Scrutineers will verify and announce the poll results followed by the Chairman’s declaration whether the resolutions are duly passed.
REMOTE PARTICIPATION AND VOTING (RPV)
(17) Members (individuals only) who are unable or do not wish to be physically present at The Majestic Hotel Kuala Lumpur will have the option to participate and vote remotely at the 37th AGM via the RPV facilities which are available on Tricor’s TIIH Online website at https://tiih.online
(18) If you wish to engage in remote participation through live streaming and online remote voting at the 37th AGM using the RPV facilities, please read and follow the procedures below:
Procedure Action
BEFORE THE AGM DAY
(a) Register as a user with TIIH Online
• Using your computer, access the website at https://tiih.online. Register as a user under the “e-Services”. Refer to the tutorial guide posted on the homepage for assistance.
• If you are already a user with TIIH Online, you are not required to register again. You will receive an e-mail to notify you that the remote participation is available for registration at TIIH Online.
(b) Submit your request
• Registration is open from 10.00 a.m. on Friday, 20 March 2020 up to 10.00 a.m. Tuesday, 23 June 2020.• Login in with your user ID and password and select the corporate event: “(REGISTRATION) PETRONAS GAS
BERHAD 37TH AGM REMOTE PARTICIPATION”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Insert the CDS account number and indicate the number of shares.• Submit to register your remote participation.• System will send an e-mail to notify that your registration for remote participation is received and will be verified.• After verification of your registration against the General Meeting ROD as at 19 June 2020, the system will
send you an e-mail to approve or reject your registration for remote participation.
OTHER INFORMATION INTEGRATED REPORT 2019
Administrative Details for the 37th Annual General Meeting
p.146
7
Procedure Action
ON THE AGM DAY
(c) Login to TIIH Online
• Login with your user ID (i.e e-mail address) and password for remote participation at the 37th AGM at any time from 9.40 a.m. i.e. 20 minutes before the commencement of meeting at 10.00 a.m. on Thursday, 25 June 2020.
(d) Participate through Live Streaming
• Select the corporate event: “(LIVE STREAMING MEETING) PETRONAS GAS BERHAD 37TH AGM” to engage in the proceedings of the 37th AGM remotely.
• If you have any question(s) for the Chairman/Board, you may use the query box to transmit your question(s). The Chairman/Board will try to respond to relevant questions submitted by remote participants during the 37th AGM. If there is time constraint, the responses will be e-mailed to you at the earliest possible, after the meeting.
• Take note that the quality of the live streaming is dependent on the bandwidth and stability of the internet connection at the location of the remote participants.
(e) Online Remote Voting
• Select the corporate event: “(REMOTE VOTING) PETRONAS GAS BERHAD 37TH AGM”.• Read and agree to the Terms & Conditions and confirm the Declaration.• Voting session commences from 10.00 a.m. Thursday, 25 June 2020 until a time when the Chairman
announces the completion of the voting session at the 37th AGM venue.• Select the CDS account that represents your shareholdings.• Indicate your votes for the resolutions that are tabled for voting.• Confirm and submit your votes.
(f) End of remote participation
• Upon the announcement by the Chairman on the closure of the 37th AGM, the live streaming will end.
CORONAVIRUS DISEASE (COVID-19) OUTBREAK
(19) Your safety is the Company’s priority. As you are already aware, the COVID-19 has infected more than 100,000 people globally and there are already 99 cases (as at 8 March 2020) in Malaysia. In view of the COVID-19 outbreak, we advise members to take advantage of the RPV facilities (in items 17 and 18 above) to attend the 37th AGM remotely as a precautionary measure. You may also consider appointing Chairman of the meeting as your proxy to attend and vote on your behalf at the forthcoming 37th AGM.
If you have travelled overseas to China and other affected countries (as and when announced by the World Health Organisation or Malaysia’s Ministry of Health in the past 14 days or if you are unwell with sore throat/fever/flu/cough/shortness of breath, please quarantine yourself at home. Under such circumstances, you are advised to attend the 37th AGM remotely using the RPV facilities.
(20) As a precautionary measure, we will be conducting temperature checks on all persons upon arrival at the AGM venue. If a member has high temperature or showed symptoms of respiratory illness such as coughing and sneezing, we would strongly advise him/her not to attend the 37th AGM.
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INTEGRATED REPORT 2019
(21) PGB’s Integrated Report (IR) for the Financial Year 2019 is available on:
https://www.bursamalaysia.com https://www.petronasgas.com (22) You may request for a printed copy of the IR 2019 at https://tiih.online by selecting “Request for Annual Report” under the “Investor
Services”. Limited copies of the IR 2019 will be available for collection on a first-come-first-served basis, on the date of the 37th AGM.
(23) Nevertheless, we hope you would consider the environment before you decide to print the above reports or request for the printed copy of the IR 2019. The environmental concerns like global warming, deforestation, climate change and many more affect every human, animal and nation on this planet.
HELPDESK
(24) Please proceed to the PGB’s Helpdesk for any clarification or enquiry.
(25) Poll Administrator’s Helpdesk will handle the revocation of a proxy’s appointment.
PARKING
(26) Please take note that PGB will not be providing cash reimbursement for parking. Instead, you are advised to park at The Majestic Hotel Kuala Lumpur. Please bring your original parking ticket for validation at the counter in Majestic Hotel Ballroom on Level 2. Nevertheless, since the parking bays at the hotel are limited, it will be on first-come-first-served basis.
(27) By validating the parking ticket, you will not be charged for parking when you leave. Please be advised, that the parking ticket expires at 3.00 p.m. on 25 June 2020. Any additional costs incurred for parking after 3.00 p.m. will not be borne by PGB.
(28) Please be advised that PGB will not reimburse any parking costs incurred at any other locations nor other types of transportation fees such as fuels, taxi/e-hailing services, LRT/MRT, bus, flight, etc. As such, please observe the abovementioned parking area.
ENQUIRY
(29) If you have any query in relation to printed copy, Proxy Form and RPV facilities prior to the meeting, please contact the following officers during office hours:
Tricor Investor & Issuing House Services Sdn BhdRegistration No. 197101000970 (11324-H)Unit 32-01, Level 32, Tower AVertical Business Suite, Avenue 3, Bangsar South No. 8, Jalan Kerinchi59200 Kuala Lumpur, Malaysia
Telephone Number
General Line 603-2783 9299
Ros Sakila BahariMuhammad Ashraff Mohd Khaizan
603-2783 9277603-2783 9276
Fax Number 603-2783 9222
OTHER INFORMATION INTEGRATED REPORT 2019
Administrative Details for the 37th Annual General Meeting
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ANNEXURE
ELECTRONIC SUBMISSION OF PROXY FORM VIA TIIH ONLINE
Dear Shareholders,
We are pleased to inform that you as a shareholder can have the option to submit your proxy forms by electronic means through our system,
TIIH Online (“e-Proxy”).
TIIH Online is an application that provides an online platform for shareholders (individuals only) to submit document/form electronically which includes
proxy form in paperless form (“e-Submission”). Once you have successfully submitted your e-proxy form, you are no longer required to complete
and submit the physical proxy form to the company or Tricor office.
To assist you on how to engage with e-Proxy, kindly read and follow the guidance notes which are detailed below:
1. Sign up as user of TIIH Online
Using your computer, access our website at https://tiih.online
Sign up as a user by completing the registration form, registration is free
Upload a softcopy of your MyKad (front and back) or your passport
Administrator will approve your registration within one working day and notify you via email
Activate your account by re-setting your password
Notes: (i) If you are already a user of TIIH Online, you are not required to sign up again
(ii) An email address is allowed to be used once to register as a new user account, and the same email cannot be used to register another
user account
(iii) At this juncture, only individual security holders are offered to register as user and participate in e-Proxy
2. Proceed with submission of e-Proxy
After the release of the Notice of Meeting by the Company, login with your user name (i.e. e-mail address) and password
Select the corporate event: “Submission of Proxy Form”
Read and agree to the Terms & Conditions and confirm the Declaration
Select/insert the CDS account number and indicate the number of shares for your proxy(s) to vote on your behalf
Appoint your proxy(s) or chairman and insert the required details of your proxy(s)
Indicate your voting instructions – FOR or AGAINST, otherwise your proxy will decide your vote
Review & confirm your proxy(s) appointment
Print e-proxy for your record
Should you need assistance on our e-Submission, please contact us. Thank you.
Tricor Investor & Issuing House Services Sdn BhdUnit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi,59200 Kuala Lumpur, Malaysia
Telephone No: 03-27839299Fax No: 03-27839222E-mail: [email protected]
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ABC Anti-Bribery and Corruption
ACC Accelerating Cultural Change
AGO Acid Gas Oxidiser
AGRU Acid Gas Removal Unit
ASU Air Separation Unit
BCM Business Continuity Management
BCP Business Continuity Plan
BCP Business Critical Position
BLP Building Leaders Programme
CAPEX Capital Expenditure
CCP Control Critical Position
CEMS Continuous Emission Monitoring System
CFP Corporate Financial Policy
CG Corporate Governance
CoBE Code of Conduct and Business Ethics
COGEN Cogeneration Plant
COP Community of Practice
CoRA Contractor Risk Assessment
CRM Customer Relationship Management
CSC Commercial Steering Committee
CSR Corporate Social Responsibilities
CX Commercial Excellence
DOE Department of Environment
DOSH Department of Occupational Safety and Health
DPR Dividend Payout Ratio
DPS Dividend Per Share
DTA Deferred Tax Assets
EBITDA Earnings Before Interest, Tax, Depreciation and Amortisation
EC Energy Commission
ECER East Coast Economic Region
EIA Environmental Impact Assessment
ELMS Energy Loss Management System
EMS Environmental Management System
EPS Earning Per Share
ERE Emergency Response Exercise
ERM Enterprise Risk Management
ERP Enterprise Risk Profile
ERS Equipment Reliability Strategy
ESG FTSE Environmental, Social and Governance
FEL Front-end Loading
FGRU Flare Gas Recovery Unit
FLL Finance Lease Liabilities
FOREX Foreign Exchange
FRIM Forest Research Institute of Malaysia
FSU Floating Storage Unit
FTSE Financial Times Stock Exchange
GEES Graduate Employability Enhancement Scheme
GHG Greenhouse Gases
GHSE Group Health, Safety and Environment
GIA Group Internal Audit
GPA Gas Processing Agreement
GPK Gas Processing Kertih
GPP Gas Processing Plant
GPS Gas Processing Santong
GPU Gas Processing and Utilities
GSA Gas Supply (Amendment) Act 2016
GTA Gas Transportation Agreement
GTR Gas Transmission and Regasification
GUCD Gassing Up Cooling Down
GWh Gigawatt Hour
HMM Harvard Manage Mentor
HPRT Hydraulic Power Recovery Turbine
HRSG Heat Recovery Steam Generation
HSSE Health, Safety, Security and Environment
ICT Information and Communication Technology
IETS Industrial Effluent Treatment System
IFSSC Integrated Financial Shared Services Centre
IMC Integrated Marketing Communications
IPP Independent Power Producers
ITA Investment Tax Allowance
JMP Journey Management Plan
JV Joint Venture
KAPENAS Kesatuan Kakitangan Petroliam Nasional Berhad
KIPC Kertih Integrated Petrochemical Complex
KMt Kilometric tonnes
KPI Key Performance Indicators
KRA Key Results Area
OTHER INFORMATION INTEGRATED REPORT 2019
Glossary
p.150
7
KRI Key Risk Indicators
KWAP Kumpulan Wang Persaraan (Diperbadankan)/Retirement Fund (Incorporated)
LDAR Leak Detection and Repair
LNG Liquified Natural Gas
LOA Limits of Authority
LOPC Loss of Primary Containment
LT Leadership Team
LTI Lost Time Injury
LTIF Lost Time Injury Frequency
LTIR Lost Time Incident Rate
MAP Mandatory Accreditation Programme
MASB Malaysian Accounting Standards Board
MCCG Malaysian Code on Corporate Governance
MCF Mandatory Control Framework
MFRS Malaysian Financial Reporting Standards
MGA Malaysia Gas Association
MI Mechanical Integrity
MIA Malaysian Institute of Accountants
MICG Malaysian Institute of Corporate Governance
MIDA Malaysian Industrial Development Authority
MMLR Main Market Listing Requirements
MMSCFD Million Standard Cubic Feet Per Day
Nm3 Normal Cubic Meters
MNS Malaysian Nature Society
MSOSH Malaysian Society for Occupational Safety and Health
MSWG Minority Shareholders Watch Group
MTJDA Malaysia-Thailand Joint Development Area
NACRA National Annual Corporate Report Awards
NGU Nitrogen Generation Unit
O&M Operation and Maintenance
OE Operational Excellence
OEE Overall Equipment Effectiveness
OE&I Operational Excellence and Improvement
OEMS Operational Excellence Management System
OHSAS Occupational Health and Safety Assessment Series
OPEX Operating Expenditure
OPU Operating Units
OSH Occupational Safety and Health
PBPP Program Bakti Pendidikan PETRONAS
PBS Performance Based Structure
PCB PETRONAS Cultural Beliefs
PCP Pengerang Cogeneration Plant
PCRRS PETRONAS Credit Risk Rating System
PDR Product Delivery Reliability
PD&T Project Delivery and Technology
PEMS Predictive Emission Monitoring System
PFRM Plant and Facilities Risk Management
PGPP Pengerang Gas Pipeline Project
PGU Peninsular Gas Utilisation
PIC Pengerang Integrated Complex
PIMS Pipeline Integration Management System
PIVOT PETRONAS Integrated Vision for Operational Excellence and Technology
PLT Plant Leadership Team
PPE Property, Plant and Equipment
PPMS PETRONAS Project Management System
PRBI PETRONAS Risk-Based Inspection
ProFIT Product Flaring Improvement Taskforce
PRR Plant Rejuvenation and Revamp
PSC Project Steering Committee
PSIP Program Sentuhan Ilmu PETRONAS
PSKP Program Sentuhan Kasih PETRONAS
PSM Process Safety Management
PTW Permit-To-Work
QA Quality Assurance
QASR Quarterly Audit Status Report
QC Quality Control
R2 Desired Result
RA Reinvestment Allowance
RAPID Refinery and Petrochemicals Integrated Development
RCC Risk and Compliance Committee
RCFA Root Cause Failure Analysis
RGT Regasification Terminal
RGTEC RGT Minimum Sent Out Capability
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RMU Risk Management Unit
ROA Return on Asset
ROE Return on Equity
ROW Right of Way
RSA Regasification Service Agreement
SCE Safety Critical Element
SESB Sabah Electricity Sdn Bhd
SL1M Skim Latihan 1Malaysia
SOGT Sabah Oil-Gas Terminal
SSGP Sabah-Sarawak Gas Pipeline
SSI Special Scheme Inspection
STAR Supplier Tracking Assessment Rating
TA Turnaround
TOR Terms of Reference
TPA Third Party Access
TSET Tanjung Sulong Export Terminal
TSR Total Shareholders’ Return
TTS Technical Trade Specialist
UNGP United Nations Guiding Principles
WACC Weighted Average Cost of Capital
WP Work Process
Y-o-Y Year-on-year
ZeTo PETRONAS Zero Tolerance
OTHER INFORMATION INTEGRATED REPORT 2019
Glossary
p.152
No. of Ordinary Shares Held
CDS Account No.
I/We NRIC/Passport No./Company No.: (Full Name In Block Letters)
of Telephone No.: (Full Address)
being a member of PETRONAS Gas Berhad (“the Company”) hereby appoint:
Full Name (in Block Letters) Proportion of Shareholdings
NRIC/Passport No. No. of Shares %
Address
and/or (delete as appropriate)
Full Name (in Block Letters) Proportion of Shareholdings
NRIC/Passport No. No. of Shares %
Address
or failing him/her, the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the 37th Annual General Meeting of the Company to be held at The Majestic Ballroom, Level 2, The Majestic Hotel Kuala Lumpur, 5, Jalan Sultan Hishamuddin, 50000 Kuala Lumpur, Malaysia on Thursday, 25 June 2020 at 10.00 a.m. and at any adjournment thereof.
Resolution Ordinary Business For Against
1 Re-election of Dato’ Ab. Halim Mohyiddin as a Director
2 Re-election of Emeliana Dallan Rice-Oxley as a Director
3 Re-election of Adif Zulkifli as a Director
4 Re-election of Marina Md Taib as a Director
5 Directors’ Fees and Allowances of up to RM2,600,000 with effect from 26 June 2020 until the next Annual General Meeting of the Company payable to Non-Executive Directors
6 Re-appointment of KPMG PLT as Auditors of the Company
Note:* Please refer to the Notice of Annual General Meeting for full details of the proposed Resolutions.
(Please indicate with an “X” in the spaces provided whether you wish your vote to be cast for or against the Resolutions. In the absence of specific directions, your proxy will vote or abstain as he/she thinks fit)
Date: 2020. Signature/Common Seal of Shareholders
PETRONAS Gas Berhad Reg No. 198301006447 (101671-H)
Proxy Formfor the 37th Annual General Meeting
FOLD HERE
FOLD HERE
AFFIXSTAMPHERE
NOTES:
Proxy and/or Authorised Representative
1. A member of the Company entitled to attend, participate, speak and vote at the meeting may appoint not more than two proxies to attend and vote on his behalf provided that the member specifies the proportion of the member’s shareholdings to be represented by each proxy. There shall be no restriction as to the qualification of the proxy.
2. Where a member of the Company is an Authorised Nominee as defined under the Securities Industry (Central Depositories) Act, 1991 (SICDA), it may appoint at least one proxy in respect of each Securities account it holds with ordinary shares of the Company standing to the credit of the said Securities accounts.
3. Where a member of the Company is an Exempt Authorised Nominee which holds ordinary shares in the Company for the multiple beneficial owners in one Securities Account (omnibus account), there is no limit to the number of proxies which the Exempt Authorised Nominee may appoint in respect of each omnibus account if holds.
4. Where a member or the authorised nominee appoints two proxies, or where an Exempt Authorised Nominee appoints two or more proxies, the proportion of shareholdings to be represented by each proxy must be specified in the instrument appointing the proxies.
5. The instrument appointing a proxy shall be in writing under the hand of the appointer or his attorney duly authorised in writing or if the appointer is a corporation either under seal or under the hand of an officer or attorney duly authorised. The appointment of a proxy may be made in hard copy form or by electronic form. If the appointment is made in hard copy form, the Proxy Form must be deposited with Tricor Investor & Issuing House Services Sdn Bhd at Unit 32-01, Level 32, Tower A, Vertical Business Suite, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur, Malaysia or the Customer Service Centre at Unit G-3, Ground Floor, Vertical Podium, Avenue 3, Bangsar South, No. 8, Jalan Kerinchi, 59200 Kuala Lumpur or alternatively to submit the electronic Proxy Form via TIIH Online at https://tiih.online not less than 48 hours before the time fixed for holding the meeting. Please refer to the Annexure of the Proxy Form in the Administrative Details for submission of electronic Proxy Form.
6. If the Proxy Form is signed under the hand of an officer duly authorised, it should be accompanied by a statement reading “signed as authorised officer under Authorisation Document which is still in force, no notice of revocation having been received”. If the Proxy Form is signed by an attorney duly appointed under a power of attorney, it should be accompanied by a statement reading “signed under Power of Attorney which is still in force, no notice of revocation having been received”. A copy of the Authorisation Document or the Power of Attorney, which should be valid in accordance with the laws of the jurisdiction in which it was created and is exercised, should be enclosed with this Proxy Form.
TRICOR INVESTOR & ISSUING HOUSE SERVICES SDN BHD
Unit 32-01, Level 32, Tower A
Vertical Business Suite, Avenue 3, Bangsar South
No. 8, Jalan Kerinchi, 59200 Kuala Lumpur
Malaysia