PUSHING - PETRONAS Gas Reports... · 2020. 4. 7. · 62 List of Internal Policies 1 2 RESPONSIBLE...

P E T R O N A S G A S B E R H A DG O V E R N A N C E & F I N A N C I A L R E P O R T 2 0 1 9

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PETRONAS GAS BERHAD198301006447 (101671-H)

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PETRONAS GAS BERHAD GOVERNANCE & FINANCIAL 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 corporate governance

and financial statements 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

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.

What’s Inside

2 Board of Directors4 Board at a Glance6 Profile of the Board of Directors14 Profile of Leadership Team17 Organisation Structure18 Chairman’s Introduction to Corporate Governance19 Corporate Governance Overview Statement

34 Board Audit Committee Report40 Nomination and Remuneration Committee Report

48 Statement on Risk Management and Internal Controls62 List of Internal Policies

1

2

RESPONSIBLE GOVERNANCE

64 Statement of Directors’ Responsibilities in relation to the Financial Statements

65 Directors’ Report71 Statement by Directors71 Statutory Declaration72 Consolidated Statement of Financial Position73 Consolidated Statement of Profit or Loss and Other

Comprehensive Income74 Consolidated Statement of Changes in Equity78 Consolidated Statement of Cash Flows79 Statement of Financial Position80 Statement of Profit or Loss and Other Comprehensive

Income81 Statement of Changes in Equity82 Statement of Cash Flows83 Notes to the Financial Statements173 Independent Auditors’ Report177 Analysis of Shareholdings180 Summary of Landed Property, Plant and Equipment 188 Top 10 Landed Property, Plant and Equipment

FINANCIAL STATEMENTS

p.2p.2 RESPONSIBLE GOVERNANCE

Board of Directors

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

p.3p.3

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.

Board at a Glance

Composition

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

RESPONSIBLE GOVERNANCE GOVERNANCE & FINANCIAL REPORT 2019p.4

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

2p.51

PUSHING FORWARD ACCELERATING MOMENTUM

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

Profile of the Board of Directorsas at 10 February 2020

RESPONSIBLE GOVERNANCEp.6

KAMAL BAHRIN AHMADManaging Director/Chief Executive Officer


• Bachelor Degree in Chemical Engineering, University of Texas, USA• Advanced Management Programme, Harvard Business School, USA


Listed issuers:

• PETRONAS Gas Berhad• Gas Malaysia Berhad


• None


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

55/Male

1 June 2017

2 years 8 months

6/6




p.7

HABIBAH ABDULSenior Independent Director


• 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


Listed issuers:

• PETRONAS Gas Berhad• KLCC Property Holdings Berhad


• None


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

64/Female

13 September 2013

6 years 5 months

6/6






FARINA FARIKHULLAH KHANIndependent Non-Executive Director


• 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


Listed issuers:

• PETRONAS Gas Berhad• KLCC Property Holdings Berhad• AMMB Holdings Berhad• Icon Offshore Berhad


• Ambank Islamic Berhad


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

47/Female

1 September 2018

1 year 5 months

6/6




p.9

DATO’ AB. HALIM MOHYIDDINIndependent Non-Executive Director


• 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


Listed issuers:

• PETRONAS Gas Berhad• MISC Berhad• KNM Group Berhad


• None


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

74/Male

4 August 2011

8 years and 6 months

6/6






DATO’ ABDUL RAZAK ABDUL MAJIDIndependent Non-Executive Director


• Masters Degree in Business Administration, Ohio University, USA• Bachelor of Electrical Engineering, Brighton University, UK


Listed issuer:



• None


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

69/Male

1 September 2018

1 year 5 months

5/6




p.11

EMELIANA DALLAN RICE-OXLEYNon-Independent Non-Executive Director


• Degree in Geology, University of South Carolina, USA• Advanced Management Programme, Harvard Business School, USA


Listed issuer:



• None


• 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



NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

57/Female

1 September 2016

3 years and 5 months

5/6









MARINA MD TAIBNon-Independent Non-Executive Director

NATIONALITY

AGE/GENDER

DATE OF APPOINTMENT

LENGTH OF SERVICE


Malaysian

47/Female

1 September 2019

5 months

2/2


• 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


Listed issuer:



• None


• 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



p.13

RESPONSIBLE GOVERNANCE GOVERNANCE & FINANCIAL REPORT 2019

MOHD KABIR NOORDINHead of Gas Processing and Utilities

KAMAL BAHRIN AHMADManaging Director/Chief Executive Officer

BURHAN ABDULLAHHead of Gas Transmission and Regasification

Nationality/EthnicityAge/GenderDate of AppointmentLength of Service

Malaysian/Malay53/MaleJuly 20154 years 6 months


Malaysian/Malay55/MaleJune 20172 years 7 months


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


• Degree in Chemical Engineering, University of Leeds, United Kingdom


• 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 the business, organisational effectiveness and the implementation of the Group’s strategies and policies

• Manage the respective responsibilities of the divisions and departments in the Company


• Bachelor Degree in Chemical Engineering, University of Texas, USA

• Advanced Management Programme, Harvard Business School, USA


• 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




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


• 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


• 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




Profile of Leadership Teamas at 10 February 2020

p.14

2

SHARIZA SHARIS MOHD YUSOFChief Financial Officer

ABDUL RAZAK SAIMHead of Business Development and Commercial


Malaysian/Malay45/FemaleSeptember 20172 years 5 months


Malaysian/Malay53/MaleFebruary 20136 years and 11 months

Responsibilities

• Overall Group’s f inancial and fiscal management as well as investor relations

• Provide strategic partnering and finance advisory to the business particularly on business ventures and commercial arrangements


• 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


• 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




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)


• Degree in Mechanical Engineering (Hons), University of Wollongong, New South Wales, Australia


• 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




BARISHAH MD HANIPAHHead of Human Resources Management


Malaysian/Malay55/FemaleMarch 20136 years 10 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 posit ive experience through empowered, agile and enabled talent eco-system


• Bachelor of Business Administration (Cum Laude), University of Toledo, Ohio, USA


• 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




p.151PUSHING FORWARD ACCELERATING MOMENTUM


MUHAMMAD NAZOMI OMARHead of Business Excellence

NIK IRWAN IZANEE NIK ABDULLAHHead of Corporate Affairs

SYUHAIDA AB RASHIDHead of Legal & Corporate Secretariat


Malaysian/Malay39/MaleJune 20197 months


Malaysian/Malay43/MaleNovember 20181 year 3 months


Malaysian/Malay46/FemaleMay 20181 year 9 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


• Bachelor in Electrical and Electronic Engineering, University Sains Malaysia


• 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




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


• Bachelor of Business Administration, Western Michigan University, USA


• 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




Responsibilities

• Overall management of legal affairs and company secretarial services of PGB Group


• LLB (Hons) International Islamic University Malaysia

• Licensed Company Secretary• Professional Certificate on International

Intellectual Property, University of Victoria, Canada BC


• 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




Profile of Leadership Teamas at 10 February 2020

p.16

2


Malaysian/Malay43/MaleNovember 20181 year 3 months

Organisation Structure

* 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

p.17


1

We believe good governance depends on strong, effective leadership and healthy corporate culture, supported by robust systems and processes. This is apparent in the role played by members of the Board who are drawn from a range of expertise, experience and wide-ranging backgrounds. Diversity of mixed profiles, age and gender of the Board is also crucial as it provides different perspectives thereby supporting effective decision-making. In this regard, we are pleased to share that PGB’s Board composition reflects this diversity. 50% of PGB Board is represented by female Directors in line with the Government’s aspiration and Practice 4.1 of the Malaysian Code on Corporate Governance 2017 (MCCG 2017) on gender diversity.

During the year under review, PGB had a change in its Board composition as a result of PETRONAS’ internal restructuring exercise which ensued in the resignation of Datuk Mohd Anuar Taib and Wan Shamilah Wan Muhammad Saidi as Non-Independent Non-Executive Directors of the Company. I took

over the role as the new Chairman of the Board whilst Marina Md Taib replaced Wan Shamilah Wan Muhammad Saidi. On behalf of the Board, I wish to record its appreciation and gratitude to both Datuk Mohd Anuar Taib and Wan Shamilah Wan Muhammad Saidi for their invaluable contribution during their tenure as Directors of the Company.

PGB’s commitment towards doing business responsibly is evidenced by the continuous enhancements made to its internal governance practices. PGB has adopted most of the recommendations under MCCG 2017 including the step-ups, which include the adoption of a nine-year tenure policy for our independent non-executive Directors, the adoption of an assessment Framework on External Auditor as well as a two-year cooling-off period for the appointment of former key audit partner as Director of PGB.

In addition, PGB’s internal controls were further strengthened where the Board has revised the Company’s policy, guideline and procedures on Related Party Transactions

(RPT) and Conflict Of Interest Situations to ensure that RPT management and activities are carried out at arm’s length basis and not to the detriment of the minority shareholders. Following the recent amendments to the Malaysian Anti-Corruption Commission Act 2009 (MACC Act 2009) in imposing corporate liability, the Company has also taken proactive actions to equip our Directors with better understanding of their liability and the impact of the new Section 17A of MACC Act 2009, as well as putting adequate procedures in place to prevent occurrences of bribery and corruption.

Whilst the Board has laid down a solid foundation on corporate governance and ethical conduct for the Company, we remain committed to continue strengthening the governance processes vis-a-vis promoting a business that is resilient, responsible and thriving for opportunities.

Adif ZulkifliChairman


Chairman’s Introduction to Corporate Governance

Dear Valued Shareholders,

The Board of Directors (the Board) of PETRONAS Gas Berhad (PGB or the Company) believes that excellence in corporate governance is vital to achieve the highest standards of professionalism and business ethics across the Company’s spectrum of activities. The Board acknowledges that it is a form of self-regulation which is aimed at enhancing business propositions, maximising shareholders’ value and protect stakeholders’ interests.

This Corporate Governance Overview Statement (CG Statement) seeks to provide investors with vital insights into the corporate governance practices in PGB. The CG Statement shall be read together with the Corporate Governance Report published in the Company’s official website at www.petronasgas.com.

p.18

• Financial Reporting• Internal Reporting• Risk Management*

• Board Performance, Succession Plan & Remuneration

This CG Statement reports on the manner the Group has adopted and applied the principles and best practices as set out in the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia), Companies Act 2016 (CA 2016), the Malaysian Code on Corporate Governance 2017 (MCCG 2017) and Corporate Governance (3rd Edition) issued by Bursa Malaysia in addition to being benchmarked against the ASEAN Corporate Governance Scorecard.

Division reporting/progress updates

Board of Directors (Board)

GOVERNANCE STRUCTURE

Decision making process

* There is no immediate business requirement by PGB to establish a separate Board Risk Committee. Hence, the risk oversight function remains with BAC.

Managing Director/Chief Executive Officer (MD/CEO)Responsible for the overall operations of the business, organisational effectiveness and

implementation of the Group’s strategies and policies

ChairmanResponsible for

the orderly conduct and

function of the Board

Senior Independent Director (SID)

Acts as the point of contact between Non-

Executive Directors(NEDs) and Chairman

as well as shareholders

Independent Non-Executive

Directors (INEDs)Provide independent

judgement and views

Non-Independent Non-Executive

Directors (NINEDs)Provide in-depth

knowledge and insight from PETRONAS’

perspective

Board Audit Committee (BAC)4 INEDs1 NINED

Nomination and Remuneration Committee (NRC)

3 INEDs

Result Delivery (R2) Steering Committee

Leadership Team (LT)

Risk and Compliance Committee

Working GroupDivisional Plant Leadership Teams, Divisional HOD Meeting, HSE Committee, Sustainable Development Working Committee,

Project Steering Committees, Credit Risk Management Committee

Internal Audit Department

Quarterly Audit Status Report

Monthly reporting, performance & strategic KPIs

Quarterly Financial Reporting,

Quarterly Enterprise Risk Report

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2

Corporate Governance Overview Statement


p.191

HOW THE BOARD OPERATES

The Board Charter

In discharging its duties and responsibilities effectively, the Board is guided by the Board Charter, a document which sets out the principles and guidelines that are to be applied by the Board. The delegation of authority as set out in the Board Charter is clear and ensures that the line of authority is in line with the legal and regulatory requirements.

The Board Charter will be reviewed and updated from time to time to reflect relevant changes to the policies, procedures and processes as well as amendments to rules and regulations to ensure the document remains relevant and consistent with the applicable rules and regulations and recommended best practices.

The Board Charter is available on the Company’s official website at www.petronasgas.com together with the Terms of References (TOR) of all Board Committees.

The Board’s Responsibilities and Duties

The Board is entrusted with the responsibility to promote the success of the Group by directing and supervising the Group’s affairs in a responsible and effective manner. Each Director has a duty to act in good faith and in the best interest of the Company. The Directors are aware of their collective and individual responsibilities to all shareholders for the manner in which the affairs of the Company are managed, controlled and operated. The Board is satisfied that it has fulfilled these duties and obligations during the year under review.

Scan this QR code with your smart device for our Board Charter.

03

04

01

02THE

BOARD’S MAIN FUNCTIONS

STRATEGY FORMULATION

• To review, approve and monitor the annual corporate plans which

includes overall corporate strategy, marketing plan, human

resources plan, financial plan and budget, risk

management plan and information technology

plan.

PROVIDING ACCOUNTABILITY

• To be accountable to its shareholders, and to some extent, accountability towards a wider range of stakeholders affected by PGB’s decision such as employees, suppliers, customers, the local community and the state/country where PGB is operating.

POLICY MAKING

• To ensure

that appropriate

policies are in place,

adopted effectively and

regularly reviewed in

light of changing circumstances.

RISK MANAGEMENT & INTERNAL CONTROL

• To review and approve financial statements.

• To review and manage principal risks and adequacy of PGB’s internal control system including systems for compliance with applicable laws, regulations, rules and guidelines.

• To ensure that there is an appropriate succession plan for members of the Board and the Senior Management.



p.20

13%

50%

37%

DESIGNATION

Independent Non-Executive Directors

Non-Independent Non-Executive Directors (including Chairman)

Executive Director (MD/CEO)

4 out of 8

3 out of 8

1 out of 8

NUMBER OF DIRECTORS

Board Balance and Composition

As at the date of this Integrated Report, the Board comprises eight members, one of whom holds an Executive Office, having a dual role as Managing Director as well as Chief Executive Officer. There are four members who are independent and non-executive, three non-independent and non-executive members, including the Chairman and one Executive Director. None of former PGB’s MD/CEO has been appointed as a Board member of PGB.

The Board composition is further elaborated as follows:

The composition of the Board exceeds the requirements of Paragraph 15.02 of the MMLR as more than one-third of its members are Independent Non-Executive Directors. This composition enables an effective and objective check and balance on the Board’s deliberation and decision making. The presence of the Independent Non-Executive Directors is crucial in the mitigation of any possible conflict of interest in relation to related party transactions.

During the year under review, the Company had seen some changes in the composition of the Board. Adif Zulkifli was appointed as the Chairman of the Company effective 1 July 2019 in place of Datuk Mohd Anuar Taib. In addition, on 1 September 2019, Marina Md Taib was appointed to the Board as NINEDs of PGB in place of Wan Shamilah Wan Muhammad Saidi. These changes were due to PETRONAS’ internal restructuring exercise.

The Board wishes to record its appreciation and gratitude to Datuk Mohd Anuar Taib and Wan Shamilah Wan Muhammad Saidi for their contributions during their tenure as Chairman and members of the Board.

The Directors are selected based on their individual merits and experience. The current Board composition comprises individuals of diverse backgrounds with expertise and skills in the oil and gas industry, legal and regulatory, economics, engineering/technical, finance, operations and corporate planning. These are important to ensure diversity of views, which facilitates effective decision making and constructive Board deliberation during its meetings.

The profile of each Director is presented on pages 6 to 13 of this Governance & Financial Report.

The Non-Executive Directors possess the necessary expertise and experience to ensure that the formulation of policies and strategies proposed by the Management are fully deliberated and examined. They also provide guidance and promote professionalism among Management.

In line with the MMLR, none of the members of the Board holds more than five directorships in listed companies.

Prior to acceptance of any other appointment of directorships in other listed companies, the Directors are required to notify the Chairman to ensure that such appointments would not unduly effect their time commitments and responsibilities to the Board. In addition, none of the Directors have appointed alternates.

BOARD’S COMPOSITION

2


p.211

Separate roles of Chairman and MD/CEO

The positions of Chairman and MD/CEO are held separately by Adif Zulkifli and Kamal Bahrin Ahmad, respectively. This segregation ensures a clear distinction of responsibilities between the Chairman and the MD/CEO.

The Chairman is primarily responsible for the stewardship and smooth functioning of the Board, whilst the MD/CEO is responsible for the overall operations of the business, organisational effectiveness and the implementation of the Group’s strategies and policies. Given the Company’s business integration and synergy with PETRONAS, the Chairmanship of the Company remains with a NINED. This separation of roles is imperative as both roles have different expectations and serve distinct primary audiences.

The MD/CEO manages the respective responsibilities of the divisions and departments in the Company and he is assisted by the LT who ensures effective systems, controls and resources are in place to execute business strategies and decisions.

Separation of Powers between the Board and Management

The MD/CEO is assisted by the LT, R2 Steering Committee and Risk and Compliance Committee in managing the business on a day-to-day basis, with whom he consults regularly.

The LT ensures that effective systems, controls and resources are in place to execute business strategies and decisions taken by the Board and/or the MD/CEO. These committees report the performance and strategic KPIs on monthly basis to the MD/CEO, whilst progress and updates are reported regularly by the working groups within the business units.

• Leading the Board in setting the values and ethical standards of PGB.

• Chairing the Board meetings and stimulating debates on issues and encouraging positive contributions from each Director.

• Consulting with the Company Secretary in setting the agenda for Board meetings and ensuring that all relevant issues are on the meetings’ agendas.

• Maintaining a relationship of trust with and between the MD/CEO and Non-Executive Directors.

• Ensuring the provision of accurate, timely and clear information to Directors.

• Ensuring effective communication with shareholders and relevant stakeholders.

• Conducting performance assessment of the Board, its Committees and individual Directors, including assessment of the independence of Independent Non-Executive Directors.

• Facilitating effective contribution of Non-Executive Directors and ensuring constructive discussions at Board meetings.

• Ensuring that all Directors are properly apprised on issues arising at Board meetings and there is sufficient time allowed for discussion on complex or contentious issues and where appropriate, arranging for informal meetings beforehand to enable thorough preparations.

• Allowing every Board resolution to be voted on and ensuring the will of the majority prevails.

• Casting votes in accordance with the prescribed Articles in the Constitution of PGB.

• Ensuring that all Board members, upon taking up their office, are fully briefed on the terms of their appointment, time commitment, duties and responsibilities, and the business of PGB.

• Acting as liaison between the Board and Management, and between the Board and the MD/CEO.

Adif ZulkifliChairman

Roles of Chairman, MD/CEO and Senior Independent Director



p.22

Kamal Bahrin AhmadManaging Director/Chief Executive Officer

Responsibilities to the Board and PGB:

• To develop and recommend to the Board the long term strategy and vision for PGB and/or Group that leads to the creation of long term prosperity and stakeholder value.

• To develop and recommend to the Board the operational plan and budget that support PGB’s and/or Group’s long term strategy.

• To foster a corporate culture that promotes ethical practices, encourages individual integrity and the fulfillment of PGB’s corporate social responsibilities.

• To maintain a positive and ethical working environment that is conducive to attracting, retaining and motivating a diverse workforce at all levels.

Habibah AbdulSenior Independent Director

The Senior Independent Director (SID) acts as a point of contact between the Independent Non-Executive Directors and the Chairman on sensitive issues and is available to confidential discussions with other Non-Executive Directors who may have concerns which they believe have not been considered by the Board as a whole. She has also been identified as a designated contact to whom shareholders’ concerns or queries may be raised, as an alternative to the formal channel of communication with shareholders.

The respective roles and responsibilities of the Chairman and MD/CEO can be viewed under the Board Charter in the Company’s official website at www.petronasgas.com.

Responsibilities to the Management and business operation:

• To report to the Board periodically on the Company’s financial positions and results, key performance indicators, market conditions and business development.

• To ensure continuous improvement in quality and value of PGB’s products and services.

• To serve as spokesperson for PGB.

• To refer to the Board Committee on matters as requested from time to time.

• To recommend suitable management structure and operating authority levels which include delegations of responsibilities to the Management.

• To ensure an effective LT below the level of the MD/CEO and to develop an appropriate succession plan.

• To formulate and oversee implementation of major corporate policies.

• To be accountable to the Board for the financial management and reporting, including forecasts and budgets of PGB.

Habibah Abdul who fulfils the criteria under the definition of Independent Director pursuant to MMLR is the SID. The appointment is in line with the best practice recommended by the ASEAN CG Scorecard, which is used as a benchmark by the Company in its effort to maintain the highest standards of good governance.

All queries relating to shareholders’ matters can be channeled to the following address:

Habibah AbdulSenior Independent Director PETRONAS Gas BerhadLevel 49 & 50, Tower 1 PETRONAS Twin TowersKuala Lumpur City Centre50088 Kuala Lumpur

Email address: [email protected]

2


p.231

(c) Declared their interest or any possible conflict of interest in any matter tabled prior to the commencement of Board meetings. Directors are able to ascertain their involvement in any proposal as the papers are disseminated to them at least five business days before each meeting. In a situation where there is conflict of interest, Directors are required to recuse themselves and abstain from deliberation to allow unbiased and free discussion and decision making. This also holds true for and applies to NINEDs.

In line with the exemplary practice as recommended by the MCCG 2017, the Company has adopted a tenure policy whereby an INED’s total tenure on the Board is capped at nine years.

Board Meetings and Attendance

The Board meets at least quarterly with additional meetings convened as and when necessary. The Board meetings for 2019 were scheduled as early as November 2018 to facilitate the Directors in planning ahead and incorporating the Board meetings into their respective schedules. This also serves to provide the members with ample notice of the meetings.

The Board has a formal schedule of matters reserved at Board meetings which includes corporate plans, annual budgets, operational and financial performance reviews, major investments and financial decisions, risk management, Management performance assessment, changes to the Management and control structure within the Group, including key policies and procedures and delegated authority limits. Board meetings are convened immediately following the finalisation of the Company’s quarterly and annual results for the Board to review and approve prior to announcement to Bursa Malaysia. The reports of the BAC and NRC are also presented and deliberated at Board meetings. All proceedings of Board meetings are duly recorded in the minutes of meeting and the signed minutes are properly kept by the Company Secretary.

Board Diversity

The Board recognises that diversity is a key driver to enhance its effectiveness by allowing for a broader scope for debate within itself. PGB Diversity Policy is in place to ensure a mix of member profiles in terms of age and gender. A diverse Board is necessary to provide distinct perspective, experience and expertise required to attain effective stewardship, hence, creating value. Diversity is also important to ensure the Company remains relevant and sustainable in the rapidly t ransforming and evolv ing business environment. The Board also supports the country’s aspirational target of 30% representation of women directors. To-date, there are four female Directors on the Board of PGB that constitutes 50% of the composition. In tandem with the emphasis on gender diversity, the Board is committed in developing a corporate culture that also embraces the aspect of gender diversity.

The NRC is empowered to review and assess the composition and performance of the Board annually, as well as identifying qualified candidates to occupy Board positions. Several suitable qualified independent directors have also been identified and included in the directors’ pool for possible nomination as part of the succession plan for PGB directors. As for the composition of the Board, the NRC will determine the benefits of diversity in order to maintain an optimum mix of skills, knowledge and experience of the Board. In determining the composition of the Board that best fit the needs of the Company,the NRC is responsible to review its Boardskill matrix on an annual basis and mayseek to improve one or more aspects ofthe skill matrix, as and when necessary.

The NRC will continue to focus on diversity when recommending new candidates for Board memberships, as well as evaluating the performance of the Board and its individual members.

The Board Diversity Policy is accessible to the public for reference on the Company’s official website at www.petronasgas.com.

Independence

Our Board recognises the important contributions that INEDs make to good corporate governance. All Directors, regardless of their independent statuses, are required to act in the best interests of the Company and to exercise unfettered and independent judgment. To date, all four INEDs satisfy the following criterias:

(a) Independent from Management and free from any business or other relationship which could interfere with independent judgement or the ability to act in the best interests of the Company.

(b) Not involved in the day-to-day operations of the Company other than when collective Board approval is required. This mitigates the risk of undue influence from third parties and allows INEDs to exercise fair judgement.

(a) Adhere to the recruitment and sourcing process that seeks to include diverse candidates; including women in any director search

(b) Assess the appropriate mix of diversity including gender, ethnicity, age, skills, experience and expertise required on the Board and address gaps, if any.

(c) Make recommendations to the Board in relation to the appointments and maintain an appropriate mix of diversity, skills, experience and expertise on the Board.

(d) Periodically review and report to the Board on requirements in relation to diversity on the Board, if any.

In line with its effortto create and maintain a diverse

Board, the NRC will:



p.24

BOD

BAC

NRC

AGM

Q1, 2019 Q2, 2019 Q3, 2019 Q4, 2019

18 February20 March

12 February4 March

23 January11 February

–

28 May

24 May

–

30 April

27 August

11 July15 August

–

–

19 November6 December

13 November

13 November

–

The Directors may request for clarification or raise comments on the minutes prior to their confirmation.

During the year under review, the Board met six times. All Directors have complied with the minimum attendance requirement of at least 50% of Board meetings held during the financial year pursuant to the MMLR. The Directors’ commitment in discharging their duties and responsibilities is reflected by their attendance at the Board meetings. The overall percentage of all Board meetings attended by the Directors during the year was almost 100%. The Board is satisfied with the level of commitment given by the Directors toward fulfilling their roles and responsibilities.

The breakdown of the meetings of the Board, Board Committees and Annual General Meeting held and the attendance of the Directors who had served PGB during the year under review, are as follows:

Board of Directors (BOD) Board Audit Committee (BAC) Nomination & Remuneration Committee (NRC) Annual General Meeting (AGM)

^ appointed with effect from 1 July 2019^^ appointed with effect from 1 September 2019

* resigned with effect from 1 July 2019** resigned with effect from 1 September 2019

NAME OF DIRECTORS

Adif Zulkifli^

Kamal Bahrin Ahmad

Habibah Abdul

Farina Farikhullah Khan

Dato’ Ab Halim Mohyiddin

Dato’ Abdul Razak Abdul Majid

Emeliana Dallan Rice-Oxley

Marina Md Taib^^

Wan Shamilah Wan Muhammad Saidi**

Datuk Mohd Anuar Taib*

BOD BAC NRC AGM

TOTAL ATTENDANCE

3/3

6/6

6/6

5/6

6/6

5/6

2/2

2/3

3/4

5/6

100%

100%

100%

80%

100%

80%

80%

100%

70%

75%

6/6

6/6

5/6

5/6

4/6

100%

100%

80%

80%

70%

3/3

3/3

3/3

100%

100%

100%

1/1

1/1

1/1

1/1

1/1

1/1

1/1

1/1

100%

100%

100%

100%

100%

100%

100%

100%

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p.251

Aside from Board meetings, urgent matters will also be decided via written circular resolution. In discharging their responsibilities during each Board and Committee meeting, the INED’s were inquisitive in the quest for better understanding of items being discussed, vocal during discussions and judicious in the decision-making process. They were impartial in their views with the Company’s and stakeholders’ best interest at the forefront of every major decision.

Board Strategic Conversation (Board Away Day/Site Visit)

In addition to the above meetings, the PGB Board Strategic Conversation was held on 22-23 October 2019 which was also attended by the LT of the Company to provide updates and deliberations on the market outlook, external environment analysis and the Group’s strategic and growth plans. The Management also shared the Company’s Digital Journey and Implementation Plan. Apart from the above agenda, the NEDs also had a private session without the presence of the MD/CEO and the LT.

Board Committees

As part of its efforts to ensure effective discharge of its duties, the Board has delegated certain functions to certain Committees with their own Terms of Reference.

The Chairman of all the Committees will report to the Board on the decision or outcome of the committee meetings. The reports of the NRC and BAC are set out on pages 34 to 44 of this Governance & Financial Report.

Supply and Access to Information

Prior to each Board meeting, the agenda and a set of Board Papers encompassing qualitative and quantitative information relevant to the business of the meeting are circulated to all Directors within five business days of the meeting dates. This enables the Directors to have sufficient time to peruse the Board Papers and seek clarification or further details from the Management or the Company Secretary before each meeting to ensure preparedness for the meeting. Any Director

may request matters to be included in the agenda. Urgent papers may be presented and tabled at a meeting under the item “Any Other Business”, subject to the endorsement of both the MD/CEO and the Chairman. The content of the Board Papers prepared are comprehensive and include objectives, background, critical issues, implications, risks, strategic fit, recommendations and other pertinent information to enable informed decision-making by the Board.

Presentations and briefings by the Management and relevant external consultants, where applicable, are also held at Board meetings to furnish clarifications to assist the Board in making a decision.

Access by the Board to Board Papers is carried out online through a secured collaborative software which allows the Directors to securely access Board documents and collaborate with other Board members and the Company Secretary electronically. The online accessibility facilitates the Directors to read and review documents or communicate with other Board members at any time.

The Directors have direct access to the Management and have unrestricted access to any information relating to the Group to enable them to discharge their duties. The Directors also have direct access to the advice and services of the Company Secretaries and are regularly updated on new statutory and regulatory requirements relating to the duties and responsibilities of the Directors. The Directors, whether as a full Board or in their individual capacity, may seek independent professional advice at the Company’s expense in furtherance of their duties.

PGB Board visiting Jetty Regasification Unit at Sungai Udang, Melaka.



p.26

HIGHLIGHTS OF THE BOARD ACTIVITIES DURING 2019

The diagram illustrated below shows the key areas of focus for the Board which appear as items on the Board’s agenda at respective meetings throughout the year. Concentrated discussion of these items assists the Board in making the right decision taking into account long-term implications to the business and stakeholders.

FINANCIAL PERFORMANCE

• Quarterly Group Performance• Audited Financial Statements for FY2018

• Quarterly Financial Results• Quarterly Interim Dividend

RISK AND INTERNAL CONTROLS

• Quarterly Enterprise Risk Report• Quarterly Litigation Updates• Quarterly Audit Status Report• Quarterly Status Update on Recurrent Related Party

Transactions

• Annual Enterprise Risk Profile• Establishment of Internal Audit Department• Revision to PGB Limits of Authority • Adoption of Enhanced PETRONAS Risk Policy

STRATEGY AND GROWTH

• Business Plan and Budget for FY2020-2024• Update/Approval on PGB Projects• PGB Strategic Plan on Third Party Access• PGB Investment Opportunity and Development Plan

• PGB Digital Journey and Implementation Plan• PGB Investment Criteria • Update/Approval on Award Recommendations and Final

Investment Decision

CORPORATE GOVERNANCE & COMPLIANCE

• 2018 Annual Reports Statements• Corporate Governance Report to Bursa Malaysia• Amendments to the Constitution of the Company• Appointment and Resignation of Non-Independent

Non-Executive Directors

• Analysis on Performance Evaluation for Board of Directors and Board Committee Members

• Guideline and Procedures on Related Party Transactions and Conflict of Interest Situation

• Revision of PGB high level Organisational Structure• Update/Approval on Agreements and Contracts

2


p.271

Directors’ Indemnity

PGB continues to provide and maintain indemnification for its Directors throughout the financial year as allowed under the CA 2016 to the extent it is insurable under the Directors’ and Officers’ Liability Insurance (D&O) procured by the Company. Directors and Officers are indemnified against any liability incurred by them in discharging their duties while holding office as Directors and Officers of the Company.

All Directors may opt to obtain D&O insurance to provide insurance protection (to the extent it is insurable) against unindemnified liabilities by the Company or uninsured circumstances. The premium to be paid by all Directors is determined by the insurance company.

Succession Plan

The Board Succession Plan Framework has been adopted by the Board to assist the Company in ensuring the orderly identification and selection of new Non-Executive Directors in the event of an opening on the Board, whether such opening exists by reason of an anticipated retirement, the expansion of the size of the Board, or otherwise. Such structured Succession Plan addresses the composition and effectiveness of the Board.

In addition to the Succession Plan for Directors, the NRC also reviewed the Succession Plan for the Senior Management of the Company.

Onboarding and Continuing Development Programme for Directors

All new Directors appointed to the Board shall receive a comprehensive onboarding programme, conducted by members of the LT covering key areas of the business, an overview of the Group’s financial risk management processes, innovation and technology, and the corporate governance framework within the Group. Directors were also updated on ongoing and potential projects undertaken by the Group. This programme helps the new Directors to familiarise themselves with the Group’s businesses. During the year under review, PGB conducted the onboarding programme for its two newly appointed Directors, Adif Zulkifli and Marina Md Taib in August and October 2019, respectively. They have also attended the Mandatory Accreditation Programme as required under the MMLR of Bursa Malaysia.

In line with Paragraph 15.08 of the MMLR, the Directors acknowledged the importance and value of attending conferences, training programmes and seminars in order to keep themselves abreast with the development and changes in the industry in which the Group operates, as well as to update themselves on new statutory and regulatory requirements. During the year under review, the Directors attended and participated in programmes, conferences and forums that covered the areas of corporate governance, financial, relevant industry updates and global business developments which they considered as useful in contributing to the effective discharge of their duties as Directors. All members of the BAC have also fulfilled the requirement of Practice 8.5 of MCGG 2017 by attending the relevant trainings on accounting and auditing standards. In addition, the Directors also participated in a site visit at the LNG Regasification Terminal Sg Udang in Melaka in October 2019. The visit provided the Directors experiential learning and familiarisation of the facility as well as being able to have a better understanding of the sites’ performance and challenges. It also allowed better deliberation on strategies and execution of growth agenda for PGB’s business.

Board Effectiveness Evaluation

The Board Effectiveness Evaluation (BEE) is to evaluate the performance of Board/Board Committees/Members of the Board as well as identifying any gaps or areas of improvement, where required. Every year, under the purview of the NRC, a formal evaluation is undertaken to assess the effectiveness of the following:

(a) The Board as a whole and the Board Committees

(b) Contribution of each individual Director

(c) Independence of Independent Directors

The BEE was conducted internally, focusing on maximising the effectiveness and performance of the Board and its Committees in the best interests of the Company. Every five years, the Board will be engaging the services of an external consultant to facilitate the BEE for the Board. The Board takes cognisance that the external evaluation is intended to provide more objectivity that could at times be lacking when carrying out the process internally.

Board Effectiveness Evaluation 2019

During the year under review, the Board was satisfied that the Board members had discharged their functions, duties and responsibilities in accordance with the Board Charter. The results of the BEE were reviewed by the NRC on 11 February 2020 and presented thereafter to the Board in 18 February 2020. The Board noted the findings and areas that necessitates further improvements.



p.28

During the year under review, the Directors participated in seminars and training programmes in various capacities, as delegates and/orspeakers, the details of which are set out below:

Director Programmes Attended in 2019 Date

Adif Zulkifli Asia Oil & Gas Conference (AOGC) 2019 (Speaking Panel for Session 3 – Creating Disruption, Managing Risks)

24 – 25 June 2019

Talk on “Challenges Toward Grand Energy Transition” and “Innovations on Renewables & Hydrogen”, by Sam Muraki

10 July 2019

Mandatory Accreditation Programme (MAP) 19 – 20 August 2019

Onboarding Programme for New Director 26 August 2019

PGB Board Strategic Conversation/Site Visit 22 – 23 August 2019

Top Leader Engagement Session with Chief Commissioner of the MACC: “Progressing Towards PETRONAS’ Culture of Integrity”

04 November 2019

Kamal Bahrin Ahmad Marketing Fast Forward Conference 2019 27 March 2019

PETRONAS Board Excellence: Advance 1 Programme 01 April 2019

Asia Oil & Gas Conference (AOGC) 2019 23 – 25 June 2019

Malaysian Gas Symposium – MyGAS 2019 26 June 2019

PETRONAS Board Excellence Programme: Advanced 2 – Effective Strategy For Stakeholders Management

08 July 2019


10 July 2019

International Greentech & Ecoproducts Exhibition Conference Malaysia 2019 09 – 10 October 2019

Asia Petroleum Geoscience Conference & Exhibition (APGCE) 2019 29 – 30 October 2019


04 November 2019

Habibah Abdul Implementation of Strategic Business Plan, Process by Mr Boey Tay 06 March 2019

Effective Strategy for Stakeholders Management Advanced 2 08 July 2019


10 July 2019

Tax Budget Seminar 17 October 2019

PGB Board Strategic Conversation/Site Visit 22 – 23 October 2019

Securities Commission Malaysia’s Audit Oversight Board Conversation with Audit Committees

08 November 2019

Workshop on MFRS Updates for Public Listed Companies’ Board Audit Committee Members

03 December 2019

2


p.291


Farina Farikhullah Khan CG Watch: How Does Malaysia Rank? 03 May 2019

Cyber Security Awareness 25 June 2019

“Challenges Toward Grand Energy Transition" And "Innovations on Renewables & Hydrogen", by Sam Muraki

10 July 2019

Talk on “Challenges Towards Grand Energy Transition” and “Innovations on Renewables & Hydrogen”, by Sam Muraki

10 July 2019

Anti Money Laundering FY2017/18 11 July 2019

Risk Management: Basel FIRB Accreditation- Refresher for Board Members 15 July 2019

Session with Prof Dr Kamal Munir 24 September 2019

Raising Defences: Section 17A, MACC Act 17 October 2019


Audit Committee Seminar for the Public and Private Sectors 17 December 2019

Dato’ Ab Halim Mohyiddin 1st MISC Group Directors’ Training 2019 26 June 2019


2nd MISC Group Directors’ Training FY2019 05 December 2019

Dato’ Abdul Razak Abdul Majid

Effective Strategy for Stakeholders Management Advanced 2 08 July 2019

Talk on “Challenges toward Grand Energy Transition” and “Innovations on Renewables & Hydrogen”, by Sam Muraki

10 July 2019

Board Strategic Conversation/Site Visit 22 – 23 October 2019

Related Party Transaction Seminar 18 November 2019

Audit Committee Seminar for the Public and Private Sectors 17 December 2019

Emeliana Dallan Rice-Oxley

CERA Week, Speaking Panel Session;(1) Strategic Dialogue on Deepwater Revival(2) Women in Energy

11 – 15 March 2019

Audit Committee Conference 15 April 2019

European Association of Geoscientists (EAGE) Conference & Exhibition 03 – 06 June 2019

Wood Mackenzie Exploration Summit 2019 10 – 13 June 2019


Women in Engineering & Technology Working, KL – Speaker 01 August 2019

Landmark Innovation Forum & Expo – Speaker 26 – 29 August 2019

SIS Global Forum 2019 – Speaker 17 – 19 September 2019

Asia Petroleum Geoscience Conference & Exhibition (APGCE) 2019 – Patron 29 – 30 October2019

Africa Oil Week – Speaker 04 – 08 November 2019



p.30


Marina Md Taib PETRONAS Board Excellence Programme: Advanced 2 – Effective Strategy For Stakeholders Management

08 July 2019

Onboarding Programme for New Director (Part 1 – Governance) 02 October 2019

Onboarding Programme for New Director (Part 2 – Business Overview & Performance Update)

17 October 2019


Mandatory Accreditation Programme (MAP) 11 – 12 November 2019

CERA Week 11 – 15 March2019



04 November 2019

Datuk Mohd Anuar Taib (resigned on 1 July 2019)

CERA Week 11 – 15 March 2019

ELT Delegates to Canada for PETRONAS Board Away Day 15 – 16 April2019

Wan Shamilah Wan Muhammad Saidi (resigned on 1 September 2019)

CERA Week 11 – 15 March 2019

Digital Refining Round Table 22 – 23 May 2019


PETRONAS 2019 Compliance Conference 07 October 2019

Women’s Global Leadership Conference 28 October 2019

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p.311

QUALIFIED AND COMPETENT COMPANY SECRETARIES

The Company has two Company Secretaries who are qualified to act as Company Secretary pursuant to Section 235, CA 2016. One of them has a legal qualification and the other is a Fellow of the Malaysian Institute of Chartered Secretaries and Administrators. The Company Secretaries play an advisory role to the Board, particularly with regards to the Constitution of the Company, policies and procedures and the Company’s compliance with regulatory requirements, codes, guidelines and legislations.

The Company Secretaries ensure that the discussions and deliberations at Board and Board Committee meetings are well documented, and subsequently communicated to the relevant Management for appropriate actions. The Company Secretaries update the Board on the follow-up of its decisions and recommendations by the Management.

The Company Secretaries constantly keep themselves abreast of the evolving capital market environment, regulatory changes and developments in corporate governance through continuous training.

The Board is satisfied with the performance and support rendered by the Company Secretaries to the Board in discharging their functions.

DEVELOPMENT PROGRAMMES ATTENDED BY THE COMPANY SECRETARIES

Company Secretary Training Attended in 2019 Date

Syuhaida Ab Rashid Baker McKenzie’s 3rd Global Renewable Energy Conference 13 March 2019

Minute Taking and Listening Skills: Write Minutes Clearly, Concisely and Professionally 28 June 2019

MAICSA Annual Conference 2019: Next Dimension In Governance 02 – 03 July 2019

SSM National Conference 2019 23 – 24 July 2019

MCCG: Adoption of Practices For Meaningful Corporate Governance 07 August 2019

MACS Conference: Company Secretaryship in the Digital Landscape 18 – 19 September 2019

Yeap Kok Leong Read, Interpret and Analyse Financial Statements for Company Directors and Company Secretaries

05 April 2019

MAICSA Annual Conference 2019: Next Dimension In Governance 02 – 03 July 2019

ADP Partners Executive Convention, Vienna: Placing Global Payroll Center Stage 06 – 08 November 2019



p.32

Directors’ Remuneration

Directors’ fees, which are aligned to the Company’s strategic objectives, allow the Board to attract, motivate and retain high calibre talents. The design of the fees architecture complies with regulatory requirements, embraces market practices and trends, and provides attractive and balanced rewards.

The Board has established a formal and transparent Directors’ Remuneration Framework which comprises retainer fees, meeting allowances and benefits in-kind. In compliance with Section 230(1) of the CA 2016, the resolution on the payment of the following Directors’ fees from the 36th AGM until the conclusion of the next AGM will be tabled at the forthcoming AGM for shareholders’ approval:

Meeting allowance per attendance

Monthly Fees BoardBoard Audit

Committee

Nomination and Remuneration

Committee

Chairman RM24,000 RM3,500 RM3,500 RM3,500

Member RM12,000 RM3,500 RM3,500 RM3,500

Note:INEDs are entitled to fuel allowance of RM6,000 per annum

The fees and allowances for Non-Executive Directors are determined by the Board and are subject to the approval of the shareholders of PGB.

The Directors’ fees and meeting allowances for NINEDs who are also employees of PETRONAS are paid directly to PETRONAS.

The breakdown of the detailed Directors’ fees paid during the year under review is disclosed in the Corporate Governance Report which is accessible to the public at the Company’s official website at www.petronasgas.com.

The remuneration package for the Executive Director of the Company is balanced between fixed and performance linked elements. A portion of the Executive Director’s compensation package is variable in nature and is Key Performance Indicator (KPI) based, which includes the Group’s performance. As an Executive Director, he is not entitled to receive Directors’ fees or meeting allowance.

Kamal Bahrin Ahmad is an employee of PETRONAS and is seconded to the Company. The Company pays PETRONAS the payroll costs and benefits ordinarily incurred by him in the cost of his secondment. During the financial year under review, the Company paid RM1,581,336 to PETRONAS being his services as MD/CEO of the Company.

Senior Management’s Remuneration

The remuneration philosophy reflects the Group’s commitment to be compliant with best practices in the areas of remuneration, retention and reward to ensure that the Group attracts and retains exceptional talent. The remuneration packages and incentives are regularly evaluated against market-related surveys.

The Senior Management are employees of PETRONAS and seconded to the Company. Their remuneration has been benchmarked with the industry and is aligned with the market.

PETRONAS REMUNERATION PHILOSOPHY AND GUIDING

PRINCIPLES

Competitive and differentiated remuneration to attract & retain talents to drive business needs

PAY FOR JOB & PERFORMANCE

COMPETITIVE WITHIN THE RELEVANT INDUSTRY

INTERNAL EQUITY

CONFORMANCE TO STATUTORY REQUIREMENTS

AFFORDABILITY OF THE COMPANY

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COMPOSITION

The BAC was formed by the Board on 14 August 1995. During the year under review, there was a change in the composition of BAC whereby Marina Md Taib was appointed as BAC member effective 1 January 2020, in place of Emeliana Dallan Rice-Oxley. Nonetheless, this change did not affect the total composition of the BAC, and Emeliana Dallan Rice-Oxley remains as Non-Independent Non-Executive Director (NINED) on PGB Board. The BAC wishes to record its appreciation and gratitude to Emeliana Dallan Rice-Oxley for her contribution and guidance during her tenure as BAC member.

The Board Audit Committee (BAC) of PETRONAS Gas Berhad (PGB or the Company) is pleased to present the BAC Report for the financial year ended 31 December 2019 in compliance with Paragraph 15.15 of the Main Market Listing Requirements (MMLR) of Bursa Malaysia Securities Berhad (Bursa Malaysia).

FARINA FARIKHULLAH KHANChairman, Board Audit Committee

The composition of the BAC is as follows:

Independent Non-Executive DirectorFarina Farikhullah Khan (Chairman)Date of Appointment as BAC Member:21 November 2018Tenure on the BAC:1 year 3 months

PUSHING - PETRONAS Gas Reports... · 2020. 4. 7. · 62 List of Internal Policies 1 2 RESPONSIBLE...

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