Petronas Gas Berhad - Governance and Financial Report 2020 PDF

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GOVERNANCE AND FINANCIAL REPORT 2020

RATIONALE PGB has remained strong and robust since the liberalisation of the gas market in 2016. We have embraced the challenges presented by the ne business landscape by adapting our strategies and operations accordingly. We are now well-prepared in shaping the path ahead of us. Our steadfastness and resilience are driven by our ongoing strategy – R2 Game Plan: 301Q99 Pushing Forward. We are focused on being th preferred solutions partner to our stakeholders. We became a leaner and more streamlined organisation. We also increased our efforts in digitalisatio while also reinforcing our systems and processes to drive growth and create long-term value for our stakeholders. Befitting our role as a Leading Gas Infrastructure and Centralised Utilities Company, we will continue Pushing Forward towards Shaping our Ne Norm as we progress responsibly to meet the nation’s needs.

At PETRONAS Gas Berhad (PGB), we advocate transparency to stakeholders and we are honoure to present this report as the primary source of information on our Group’s financial a non-financial performance for 2020. It forms part of our reporting suite which comprises: OUR REPORTING SUITE

INTEGRATED REPORT

GOVERNANCE & FINANCIAL REPORT

SUSTAINABILITY 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 for the year.

Our Sustainability Report details our efforts and commitment towards creating a sustainable business, positioned for long-term success.

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

SCOPE AND BOUNDARY OF REPORTING This report covers the primary activities of the Group, our business segments and o subsidiaries as well as joint venture operations, with the aim to address the information requirement of long-term investors. We also present information relevan 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 2020, unless otherwise stated.

APPROVAL BY THE BOARD PGB Board of Directors (Board) acknowledges its responsibility in ensuring the integrity of this Integrated Report, which in the Boa opinion address all the issues that are material to the Group’s ability to create value and fairly presents the integrated performance of Group. This report has been prepared in accordance with the IIRC Framework. ADNAN ZAINOL ABIDIN Chairman

Scan this QR code with your smart device to acces our Integrated Report suite.

01 2 4 16 15 16 18

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Board at a Glance Profile of the Board of Directors Profile of Leadership Team Organisation Structure Chairman’s Statement on Corporate Governance Corporate Governance Overview Statement 40 Board Audit Committee Report 48 Independent Financial Advisor’s Opinion 52 Nomination and Remuneration Committee Report 56 Statement on Risk Management and Internal Controls List of Internal Policies

02 73 74 79 79 80 81 82 86 87 88 89 90 91 174 177 180 188

RESPONSIBLE GOVERNANCE

FINANCIAL STATEMENTS

Statement of Directors’ Responsibilities in relation to the Financial Statements Directors’ Report Statement by Directors Statutory Declaration Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Changes in Equity Consolidated Statement of Cash Flows Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Inco Statement of Changes in Equity Statement of Cash Flows Notes to the Financial Statements Independent Auditors’ Report Analysis of Shareholdings Summary of Landed Property, Plant and Equipment Top 10 Landed Property, Plant and Equipment

P ET RONA S GA S BERHA D GOVERNA NCE & F INA NCIA L REP ORT 2 0 2 0

BOARD AT A GLANCE COMPOSITION

1

AGE GROUP

1

3

2

2

2

2

3

Senior Independent Director Independent Non-Executive Director* Non-Independent Non-Executive Director (including the Chairman) Executive Director

1 3 3 1

Age Age Age Age

2 2 2 2

70-79 60-69 50-59 40-49

* Excluding the Senior Independent Director

GENDER

2

TENURE

1

1 4

4

4

2

Male Female

4 4

7-9 4-7 2-4 0-2

years years years years

1 1 2 4

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BOARD SKILLS AND EXPERIENCE MATRIX

Regional/ International

Shipping/Logistics

Banking and Finance

Oil and Gas

ICT

Human Resource

Corporate Planning and Development

Industry Experience

Operations

Commercial/ Marketing

Engineering/ Technical

Economics

Legal/Regulatory

Finance/Audit

Skills Matrix

Adnan Zainol Abidin Abdul Aziz Othman Habibah Abdul Farina Farikhullah Khan Dato’ Abdul Razak Abdul Majid Datuk Yeow Kian Chai Emeliana Dallan Rice-Oxley Marina Md Taib

Finance/Audit Operations Banking and Finance

Legal/Regulatory Corporate Planning and Development Shipping/Logistics

Economics Human Resource Regional/International

Engineering/Technical ICT

Commercial/Marketing Oil and Gas

P ET RONA S GA S BERHA D GOVERNA NCE & F INA NCIA L REP ORT 2 0 2 0

PROFILE OF THE BOARD OF DIRECTORS as at 10 February 2021 ADNAN ZAINOL ABIDIN Chairman Non-Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

59 Years/Male

Malaysian

2 July 2020

Length of Service •

7 months

Number of Board Meetings Attended •

4/4

Academic/Professional Qualifications •

Bachelor of Science in Chemical Engineering, University of Leeds, United Kingdom

Present Directorships Listed issuer: • PETRONAS Gas Berhad Other public company: • NIL

4

Present Appointments • • •

Executive Vice President and Chief Executive Officer of PETRONAS Gas and New Energy Business Member of PETRONAS Executive Leadership Team Board Member of various companies in PETRONAS

Past Experience • • • • • • •

Senior Vice President of PETRONAS Project Delivery and Technology Vice President of PETRONAS LNG Assets Vice President of PETRONAS Global LNG Projects President and Chief Executive Officer of Pacific Northwest LNG (Canada) Chief Executive Officer of Egyptian LNG (Egypt) Chief Executive Officer of PETRONAS Chemicals Ammonia Sdn. Bhd. 35 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 five directorships in listed issuers

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ABDUL AZIZ OTHMAN Managing Director/Chief Executive Director Non-Independent Executive Director

Age/Gender

Nationality

Date of Appointment

55 Years/Male

Malaysian

1 January 2021

Length of Service •

1 month

Number of Board Meetings Attended •

NIL

Academic/Professional Qualifications • • •

Senior Executive Programme, London Business School INSEAD Programme, INSEAD Business School Bachelor Science Mechanical Engineering, University George Washington, United States of America

Present Directorships Listed issuer: • PETRONAS Gas Berhad Other public company: • NIL Present Appointments • • •

Vice President Gas and Power, Gas and New Energy Business Member, Gas and New Energy Executive Leadership Team of PETRONAS Board Member of various companies in PETRONAS

Past Experience • • • • •

Vice President, Strategy and New Ventures of PETRONAS Energy Canada Limited Head, Strategic Planning and Ventures of PETRONAS Chemicals Group Berhad Chief Executive Officer of Vinyl Chloride Malaysia Sdn. Bhd. General Manager, Centralised Utilities Facilities of PETRONAS Gas Berhad Engineer, Peninsular Gas Utilisation Project of PETRONAS Gas Berhad

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 five directorships in listed issuers

P ET RONA S GA S BERHA D GOVERNA NCE & F INA NCIA L REP ORT 2 0 2 0

Profile of the Board of Directors as at 10 February 2021 HABIBAH ABDUL Senior Independent Director

Age/Gender

Nationality

Date of Appointment

65 Years/Female

Malaysian

13 September 2013

Length of Service •

7 years and 5 months

Number of Board Meetings Attended •

7/7

Academic/Professional Qualifications • • • •

Fellow of Institute of Chartered Accountants in England and Wales Member of Malaysian Institute of Certified Public Accountants Member of Malaysian Institute of Accountants Bachelor of Economics (Accounting), University Malaya

Present Directorships Listed issuers: • PETRONAS Gas Berhad • KLCC Property Holdings Berhad

6

Other public company: • NIL Present Appointments • • • • •

Chairman, Nomination and Remuneration Committee of KLCC Property Holdings Berhad Member, Board Audit Committee of PETRONAS Gas Berhad Member, Nomination and Remuneration Committee of PETRONAS Gas Berhad Member, Board Audit Committee of KLCC Property Holdings Berhad Board Member of KLCC REIT Management Sdn. Bhd.

Past Experience • •

• •

Member of Securities Commission Experienced in providing audit and business advisory services to several large public listed, multinationals and local corporations Partner of Arthur Andersen Partner of 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 five directorships in listed issuers

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FARINA FARIKHULLAH KHAN Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

48 Years/Female

Malaysian

1 September 2018

Length of Service • 2 years and 5 months Number of Board Meetings Attended • 7/7 Academic/Professional Qualifications • Advanced Management Program, Harvard Business Schoo United States of America • Fellow member of the Institute of Chartered Accountant Australia • Bachelor of Commerce (Accounting), University of New Sout Wales, Australia Present Directorships Listed issuers: • PETRONAS Gas Berhad • KLCC Property Holdings Bhd • AMMB Holdings Berhad • Icon Offshore Berhad Other public company: • Ambank Islamic Berhad Foreign listed company: • EnQuest PLC Present Appointments • Chairman, Board Audit Committee of PETRONAS Gas Berhad • Chairman, Board Audit Committee of KLCC Property Holdings Berhad • Chairman, Group Nomination and Remuneration Committee o AMBB Holdings Berhad • Chairman, Risk Management Committee of Ambank Islamic Berha • Member, Nomination and Remuneration Committee of PETRONA Gas Berhad • Member, Nomination and Remuneration Committee of KLC Property Holdings Berhad • Member, Audit Examination Committee of AMMB Holdings Berha • Member, Audit Examination Committee of Ambank Islamic Berha • Member, Audit Committee of Icon Offshore Berhad • Board Member of KLCC REIT Management Sdn. Bhd. • Member, Safety, Climate and Risk Committee of EnQuest Pl • Member, Remuneration and Social Responsibility Committe of EnQuest Plc • Member, Audit Committee of EnQuest Plc Past Experience • Board Member of Progress Energy Canada Ltd • Chief Financial Officer of PETRONAS Chemicals Group Berhad • Chief Financial Officer of PETRONAS Exploration & Productio Business • Chief Financial Officer of PETRONAS Carigali Group of Companie • Senior Manager, Corporate Planning & Development Division o PETRONAS • Senior Associate, Business Services of Coopers & Lybrand, Austral 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 othe than traffic offences, if any

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Profile of the Board of Directors as at 10 February 2021 DATO’ ABDUL RAZAK ABDUL MAJID Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

70 Years/Male

Malaysian

1 September 2018

Length of Service •

2 years and 5 months

Number of Board Meetings Attended •

7/7

Academic/Professional Qualifications • •

Masters Degree in Business Administration, Ohio University, United States of America Bachelor of Electrical Engineering, Brighton University, United Kingdom

Present Directorships Listed issuer: • PETRONAS Gas Berhad Other public company: • NIL Present Appointments • • •

Chairman of Energy Council of Malaysia Chairman, Nomination and Remuneration Committee of PETRONAS Gas Berhad Member, Board Audit Committee of PETRONAS Gas Berhad

Past Experience • • • • • •

Chief Executive Officer of MyPower Corporation MESI 2.0 (Government of Malaysia Undertaking) Chairman of Energy Commission Malaysia Chief Executive Officer of MyPower Corporation MESI 1.0 (Incorporated by Ministry of Energy) Senior Vice President, (Corporate Affairs Division) of Tenaga Nasional Berhad Vice President (Generation) of Tenaga Nasional Berhad Secondment, Economic Planning Unit of 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 five directorships in listed issuers

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DATUK YEOW KIAN CHAI Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

70 Years/Male

Malaysian

30 July 2020

Length of Service •

6 months

Number of Board Meetings Attended •

4/4

Academic/Professional Qualifications • •

Masters of Marine Technology, University of Strathclyde Degree in Mechanical Engineering, University College London

Present Directorships Listed issuer: • PETRONAS Gas Berhad Other public company: • NIL Present Appointments • • • •

Chairman of PETRONAS Abandonment Cess Fund Board of Trustee Independent Non-Executive Board Member of PETRONAS Carigali Sdn. Bhd. Independent Non-Executive Board Member of PETRONAS International Corporation Limited Member of Nomination and Remuneration Committee of PETRONAS Gas Berhad

Past Experience • • • • • • • •

Advisor of PETRONAS Carigali Sdn Bhd Vice President of PETRONAS Chemicals Business Director of Project Interface Directorate Co-Champion PETRONAS OPI Initiative Chief Executive Officer of PETRONAS Chemicals Fertiliser Kedah Sdn. Bhd. Chief Executive Officer of PETRONAS Carigali (Turkemenistan) Sdn. Bhd. Head of Exploration and Production Technology Centre 35 years of extensive experience in oil and gas industry experience

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 five directorships in listed issuers

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Profile of the Board of Directors as at 10 February 2021 EMELIANA DALLAN RICE-OXLEY Non-Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

58 Years/Female

Malaysian

1 September 2016

Length of Service •

4 years and 5 months

Number of Board Meetings Attended •

7/7

Academic/Professional Qualifications • •

Advanced Management Programme, Harvard Business School, United States of America Degree in Geology, University of South Carolina, United States of America

Present Directorships Listed issuer: • PETRONAS Gas Berhad

10

Other public company: • NIL Present Appointments • • • • •

Vice President, Exploration of PETRONAS Upstream Member, Upstream Leadership Team of PETRONAS Member, Upstream People Development Council of PETRONAS Champion, PETRONAS Leading Women Network Board Member of various companies in PETRONAS

Past Experience • •

•

•

Vice President of Exploration Malaysia of 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 five directorships in listed issuers

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MARINA MD TAIB Non-Independent Non-Executive Director

Age/Gender

Nationality

Date of Appointment

48 Years/Female

Malaysian

1 September 2019

Length of Service 1 year and 5 months Number of Board Meetings Attended •

7/7

Academic/Professional Qualifications • • • •

Advanced Management Programme, Harvard Business School Masters of Petroleum Business Management, University of Adelaide, Australia Fellow, Institute of Chartered Accountants in England and Wales (ICAEW) Bachelor of Social Studies Accountancy, University of Exeter, United Kingdom

Present Directorships Listed issuer: • PETRONAS Gas Berhad Other public company: • NIL Present Appointments • • •

Member, Board Audit Committee of PETRONAS...